Clipped from: https://www.deccanherald.com/
Government says builders must reduce prices and sell to clear inventories and tide over losses.
Voices of dissent against builders are getting shriller in what could be an early indication of crash of real estate prices in India.
The Centre has been demanding that builders cut prices and offload their inventories instead of waiting for the government stimulus. The India Inc is echoing the same sentiment.
“I recommend that every real estate player move inventory and clear the stock they have. Any decision to cut prices will bring home-buyers back into the market,” billionaire banker and newly appointed Confederation of Indian Industry (CII) president Uday Kotak said on Thursday, soon after taking charge.
He was echoing Commerce and Industry Minister Piyush Goyal, who, without mincing words, told them they must reduce prices and sell to clear inventories and tide over losses.
Real estate rates in Indian metro cities are among the highest in the world. According to a recent survey, New Delhi’s Connaught Place was ranked the ninth most expensive office location in the world. It was costlier than prime market space in London. Mumbai was the 16th most expensive prime residential property market in the world.
But one of the reasons for the soaring rates of residential space in the country is that a few lenders of real estate, mainly the non-banking finance companies, insist that their borrowers (builders) do not sell the product below a certain price, according to Koshy Varghese, MD of ‘Value Designbuild’, a Bengaluru-based real estate firm.
Goyal, during his interaction with developers on Wednesday, told them if they thought the government would be able to finance them in such a way that they could hold longer and wait for the market to improve, then it was not going to work that way. His comments created a stir at a time when the real estate firms, battered by a fall in demand due to Covid-19, were pinning hopes on more relief in the form of further cut in taxes, relief on stamp duty and steps to bring down cost of credit.
“The market is not improving in a hurry. Things are seriously stressed and your best bet is to sell,” Goyal had said.
Shares of real estate developers came under pressure in trade on Thursday after two back-to-back comments by the government and India Inc. Godrej Properties became the top loser with a 5% fall. Prestige Estates, Brigade Enterprises, Sunteck Realty, Phoenix Mills, Indiabulls Real Estate, DLF and Sobha Developers also saw their stocks shedding weight.