Home prices are
not likely to fall anytime soon, experts say. There is no pressure on
developers / builders to slash prices, as they have the backing of investors
& do not have to think about the ordinary housebuyer.
Mr.
Anuj Puri, Chairman, CII Real Estate conclave and country head of Jones Lang
LaSalle India said, “What we will see is a lowering of prices in
individual projects,depending on the level of stress the developers / builders
involved are going through” .
The high
property prices are not even helping developers as they are also in debt. The
cash generated by selling properties today is much less than what developers
require for construction.
Many analysts
said, ''There is no pressure on developers / builders to reduce prices as it is
investors who drive the market today with excess capital, and not people in
need of homes. The high returns investors get in Mumbai & Delhi only means
the housebuyer is always overlooked.
Mr.
Ramesh Nair, MD (Mumbai), Jones Lang LaSalle India said, “If a developer faces financial trouble, he will sell 5 to 10
apartments to a HNI (high net individual) investor at a discounted price”
Mr.
Pankaj Kapoor, Liases Foras said, "The widening
gap between the prices & affordability is because of the speculative market
practices of investors, who buy housing stock knowing that prices will keep
going up. One big deal made by an investor can have cascading effects and
prices can shoot up overnight".
Earlier, many
such deals went through in Mumbai, when the market was booming.
Mr. Pankaj
Kapoor also said, “One would notice that all the high- priced land deals were
later blessed with incentive FSI (Floor Space Index) to make a project viable.
Developers, and perhaps the politician (policy makers), did gain but it spoiled
the urban economic balance, leaving the whole city lurching on high prices. All
the affordable (low cost) housing schemes are plagued by investors: you have
empty buildings while the needy live on the road, or are being forced into the
slums.”
One of the major
reasons why the investor controls real estate is that banks are not too keen on
lending to the real estate sector, and this has affected the cash flow of
developers, forcing them to look for investor funding. And there is no
regulatory body to keep a check on them.
Mr.
Anand Gupta, General Secretary, BAI (Builders Association of India), says developers are not holding back stock. “The blame should be put
on foreign investors, including NRIs, who buy homes in Mumbai. It is because of
them that so many houses are unsold.”
Developers say
they are also affected by high construction costs and stringent regulatory
regimens. They say that a lack of government initiative makes it hard to keep
up the housing supply, making it harder for property prices to go down.
Mr.
Sunil Mantri, Chairman, Mantri Realty said,''
Many projects are stuck, waiting for
various clearances such as those from the environment department, and there is
also much confusion about the payment of value added tax, premium charged on
fungible FSI, the liquidity crunch, and other issues. These hurdles also
discourage developers from launching new projects. If they release the supply,
prices will automatically fall.”
Developers are now trying many means to
catalyse sales and attract homebuyers, but with little success.
Source :
Hindustan Times
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