This festive season may be a good time to buy your dream home, for property developers are showering discounts.
Most realtors are already advertising cash discounts of 5-10 per cent on upfront payment and buyers can get up to 25 per cent discount if they book properties and are willing to wait for two to three years until possession.
According to consultants, developers may even give 15-20 per cent discount on the price as they are eager to clear inventories.
Normally, the October-December period accounts for 60 per cent of the sales. What is worrying developers is the sharp decline in property sales this year.
From the beginning of the year, home sales have halved because of high interest rates and a sharp rise in the monthly loan payouts of borrowers.
According to a recent national poll conducted among top property brokers by Mumbai-based brokerage Edelweiss Securities, nearly 90 per cent said they have seen a drop in transactions in the last one month and almost 80 per cent witnessed a reduction in enquiries during the same period.
Oberoi Constructions was planning to launch a 300-apartment complex called Oberoi Island in the Goregaon suburb of Mumbai during Diwali.
The realtor was mulling to offer apartments under construction, which were expected to be completed in two years, at Rs 9,000 per sq ft from the current price of Rs 12,000 per sq ft.
Developers such as Mumbai-based Sunil Mantri Realty are more candid about the price cuts, as the company has already advertised a 6 per cent discount for its 206-apartment complex Mantri Royale in Bangalore, which was launched last Thursday.
The company would be selling flats at Rs 2,590 per sq ft, instead of the normal Rs 2,750 a sq ft, for the next 15 days and was planning to extend it further, depending on the buyers' response.
Mantri Realty was also planning to give similar offers at its upcoming projects at Gwalior in Madhya Pradesh and Solapur in Maharashtra, slated for launch in the second and fourth week of October respectively.
"It makes much more sense to give discounts and waive off stamp duty to persuade customers to buy apartments when the market is facing a slowdown. Every buyer demands a little more for his money and we are doing that," said Sunil Mantri, promoter of Sunil Mantri Realty.
Seeing the sharp decline in property sales, the Maharashtra Chamber of Housing and Industry, a trade body of realtors, has already advised its members to bear the stamp duty charges and pay a part of the interest cost on loans to improve the declining sales.
In the National Capital Region of Delhi too, where price correction was more deeper than Mumbai, developers are doling out discounts to woo customers. Delhi-based Pearls Infrastructure is giving 6 per cent discount on down payments in its Nirmal Chaaya Tower at Zirakpur and 8 per cent discount in the Pearl City project at Mohali in Punjab.
Though big developers such as DLF, Ansal API, Parsvnath Developers and Raheja Developers have not advertised discounts, they are launching their new projects, mostly in the mid-income segment during Diwali to attract buyers in the mid-income segment.
"We want to launch our projects during Diwali because properties launched at this time get better response. At a time when sales are down, Diwali comes as a major sentiment booster for developers as well as customers," said Dimple Bhardwaj, spokesperson, Raheja Developers, which is launching a 412-apartment project at Gurgaon.
However, some realtors and consultants said the discounts and offers would not help improve property sales since home loan rates are high and property prices are out of reach of ordinary buyers.
"This Diwali will not be like that of previous years. The current market sentiment is down and the developers are feeling the heat. I do not think that the discount offer of Rs 100,000-200,000 will make a customer buy an apartment that costs more than his pocket," said Anshuman Magazine, managing director, property consultancy CB Richard Ellis.
Adds Akshaya Kumar, MD of Park Lane Property Advisors, "This Diwali will be a damp squib for the property market. Only in 2010, developers can do some good business.
"Developers may offer 5-10 per cent discount this time depending on their strength,'' Kumar says.
Prakash Gurbaxani, founder and chief executive of Bangalore-based QVC Realty, said competitive pricing is the key to sell property than discounts. QVC is launching its 100-villa project QVC Hills, with each villa costing Rs 2-4 crore (Rs 20-40 million), in Bangalore during Diwali.
"Nobody will wait for a Rs 500,000 discount to buy a Rs 2-crore (Rs 20-million) house.You have to price the property right and product should be good,'' he said.