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Builders’ body urges members to lower prices

19th November, 2008

The Hindu Business Line

Builders’ body urges members to lower prices
The Hindu Business Line
Our Bureau
Mumbai, Nov. 19 The Confederation of Real Estate Developers’ Association of India (CREDAI) call to its members to lower prices comes at a time when the builder fraternity has already seen a price erosion of 30 per cent over the last six months.
CREDAI on Wednesday urged its members to ‘lower prices to the levels possible’ in a bid to stimulate demand and tide over the current slowdown.
Developers on an individual basis, have been doing all that is possible to attract buyers with a plethora of freebies, from car parks to deferred payment after possession, besides EMI subventions.
Mr K.P. Singh, Chairman, DLF, responding to the Finance Minister’s call to India Inc to slash prices to spur demand, said on Tuesday that real estate prices were already down and they will further come down as input prices come down.
In a press statement, Mr Kumar Gera, Chairman, CREDAI, said given the diversity of real estate prices across the country, varying stages of work of projects compounded by the micro market factors that affect prices, the apex body was unable to recommend any specific percentage of price reduction that could be workable.
Mr Gera told Business Line recently that the average price per square foot across the country was Rs 2,900 with little scope for prices to drop further given the construction and land cost. Sales had come to a near standstill as liquidity had practically dried up. Builders were hemmed in as both buyers and banks were on a wait-and-watch mode. The General Secretary of the Builders Association of India, Mr Anand J. Gupta, said it would be extremely difficult for developers to lower prices any further as they were already working at a discounted rate.
Apart from Mumbai, Delhi and Pune, where the correction has been 10-15 per cent, there has been a 40 per cent drop across the country. In major metros, the land component was 70 per cent and the rest construction cost.
No reduction was possible in construction cost and land as such had been bought and factored in the pricing.
Besides, whatever freebies and discounts offered came after the price corrections took place.

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