The Builder lobby despite going through an extremely tough phase, has so far resisted the attempt to bring a check on their spiralling rates. But the Govt RBI policy of tightening rates, Banks refusing to lead, not many end-users ready with the moolah needed and investors now wary of the segment - the builders are facing a torrid period.
Will they finally break and bring rates to a more sensible level...??
Tthe Economic times of India (30 Aug 2011) carried the following article which is pretty indicative .. some excerpts.
NEW DELHI/MUMBAI/KOLKATA: That dream home that you have waiting to buy may become a tad more affordable - new home prices could decline by between 10 to 15% by Diwali. Real estate companies that have accumulated huge inventories as sales dipped over the last two years, are under pressure from banks and investors to sell in order to generate revenues. Adding to the pressure is a growing mountain of debt, over Rs 38,000 crore for the top 11 builders.
"The property market cannot sustain the current price levels. Mumbai and Delhi are the most investor-driven markets. This is where the first crack can come from," says VK Sharma, chief executive officer of LIC Housing Finance, . A 10% price correction is likely in Mumbai and Delhi around the festival season, as that is the only way to revive sales, Sharma says.
Niranjan Hiranandani, managing director of Hiranandani Constructions speaks the hard truth when he says that "Developers will hold onto their stocks, unless someone is over leveraged."
But a consensus seems to emerging among many market participants that the crucial Mumbai and the Delhi-National Capital Region (NCR) markets will correct soon. "A price correction in Mumbai and Gurgaon is bound to happen... There will be fractional break of 15% in the Mumbai market," says V Hari Krishna, director at Kotak Realty Fund, a private equity arm of Kotak Bank.
"We are keeping our fingers crossed. But in all probability, we will have to resort to a price correction during the festive season when buyers go for new homes," says a leading builder in the NCR region, who didn't want to be named. He says his bank is refusing to lend any further and is instead asking him to service his debt by selling vacant apartments, even if that meant cutting prices. So far, builders have managed to avoid doing this, fearing any correction could lead to a crash.
Will they finally break and bring rates to a more sensible level...??
Tthe Economic times of India (30 Aug 2011) carried the following article which is pretty indicative .. some excerpts.
NEW DELHI/MUMBAI/KOLKATA: That dream home that you have waiting to buy may become a tad more affordable - new home prices could decline by between 10 to 15% by Diwali. Real estate companies that have accumulated huge inventories as sales dipped over the last two years, are under pressure from banks and investors to sell in order to generate revenues. Adding to the pressure is a growing mountain of debt, over Rs 38,000 crore for the top 11 builders.
"The property market cannot sustain the current price levels. Mumbai and Delhi are the most investor-driven markets. This is where the first crack can come from," says VK Sharma, chief executive officer of LIC Housing Finance, . A 10% price correction is likely in Mumbai and Delhi around the festival season, as that is the only way to revive sales, Sharma says.
Niranjan Hiranandani, managing director of Hiranandani Constructions speaks the hard truth when he says that "Developers will hold onto their stocks, unless someone is over leveraged."
But a consensus seems to emerging among many market participants that the crucial Mumbai and the Delhi-National Capital Region (NCR) markets will correct soon. "A price correction in Mumbai and Gurgaon is bound to happen... There will be fractional break of 15% in the Mumbai market," says V Hari Krishna, director at Kotak Realty Fund, a private equity arm of Kotak Bank.
"We are keeping our fingers crossed. But in all probability, we will have to resort to a price correction during the festive season when buyers go for new homes," says a leading builder in the NCR region, who didn't want to be named. He says his bank is refusing to lend any further and is instead asking him to service his debt by selling vacant apartments, even if that meant cutting prices. So far, builders have managed to avoid doing this, fearing any correction could lead to a crash.