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Developers dangle discounts, buyers circumspect

Tuesday, May 12, 2009 (15:44:29) Tags: Business, Real Estate, India New Delhi: Have realty prices in the National Capital Region (NCR) come down because of the slowdown? Developers say yes, flaunting discounts of up to 40 percent. But buyers find a different story in the fine print. "If you have a budget of Rs.35 lakh (Rs.3.5 million), you just cannot buy a three-bedroom house in Delhi in one of the decent colonies," says Rakesh Bhardwaj of Shri Aditya Estates, a leading property dealer in the capital. "Forget Delhi, if you want a three-bedroom apartment in main Noida you will not get anything for less than Rs.60 lakh (Rs.6 million)," Bhardwaj told media. "With a Rs.35 lakh (Rs.3.5 million) budget, your option is limited to lesser developed areas in Noida, Greater Noida, Indirapuram, Gurgaon or Ghaziabad," he says, questioning the advertisements offering huge discounts to woo customers in the extended National Capital Region (NCR). Sharing his own experience, Bhavesh Taneja, a senior researcher with a legal outsourcing firm, says he approached some property dealers after reading the advertisements, suggesting both a cut in property prices and low interest rate. "But, to my surprise, the total cost of the house came to the same amount as I had checked eight months ago," says Taneja. "They said discounts are only on the 'unfinished projects'," he says, referring to projects that are not yet ready for possession. He says he even asked if the developers could guarantee the completion dates, but they were not giving any fixed deadlines. In addition, Taneja adds, there were other costs like external development charges of as much as Rs.200, 000. "So the total cost came to the same as what it was six-eight months ago and beyond my reach. So tell me where have the prices come down? I am not going to risk my hard-earned money in such projects." According to Neeraj Bansal, a realty industry expert with the global consultancy and accounting firm KPMG, property prices had come down a tad in India but had not really crashed for existing properties - at least in the metros. "Buying a house is still a dream for a large set of the capital's population," Bansal maintains, adding the recent scramble for the 5,000 flats of the Delhi Development Authority was a manifestation of the housing crisis in the capital. "This reflects the situation as there are enough buyers at the right price." Bansal adds that the marginal interest rate cut also does not help existing projects as current prices were way above the loan limit set by banks. Sameer Nayar, managing director and Asia Pacific head of real estate unit for Credit Suisse, a leading financial services company, says realty developers needed to make a realistic assessment of the market before launching projects. "What we need are not costly condominiums but middle-market apartments. There is still a lot of demand in this segment in the region of Rs.2-5 million. I think developers should focus on them."(IANS)