BENGALURU: Builders are adopting a cautious approach towards the launch of premium and luxury projects in Bengaluru, as demonetization begins to hit demand in this segment, and customers shift to lower priced apartments between Rs 50 lakh and Rs 80 lakh.
Embassy Group, which boasts of projects such as Embassy Lake Terraces and Embassy Springs in north Bengaluru, said sales of luxury apartments have dropped by 10%-15% after demonetization, and customers are seeking discounts of 20-25%.
“Enquiries have been below par, but we are not in a position to give such discounts. While typically we would take about 90% in upfront payment, customers at present are ready to pay about 40%. We are holding on to the inventory while a steady line of construction finance will help us complete our projects,” Reeza Sebastian, head of residential marketing and sales, said.
Shriram Properties MD M Murali said he expects prices of luxury apartments, those above Rs 2 crore, to drop by 10%-15% in the next six months. Unishire MD Pratik Mehta said the drop in new launches will be “significant”.
“We have decided not to concentrate on the premium segment in the near future,” Mehta told TOI. “Rather, the plan is to re-design two premium properties, which are at the foundation level. We will place them in the mid-segment category by reducing the sizes of the apartments to about 1,400sqft, from 2,000sqft.”
Builders have repeatedly said that Bengaluru will be the least affected real estate market in the country as it is end-user driven rather than a speculative market like Mumbai and Delhi NCR. But the economic downturn is beginning to affect the choices consumers are making.
Kamal Sagar, founder and MD of Total Environment, said customers are expecting big discounts. “But there is no scope for further price correction. Though enquiries continue, 30% of our clients have decided to wait till March to conclude deals,” he said. Total Environment, however, is going ahead with the launch of two of its projects as scheduled, and has sold three villas, priced on an average at about Rs 5 crore this week.
Bijay Agarwal, managing director of Salarpuria Sattva, said his company is holding some ready-to-launch projects in Bengaluru until March, as he expects the market to settle down from the current uncertainty by that time.
Vaishnavi Group says it deferred launch of two of its luxury projects from January to the second half of 2017. “With existing stock high and cash flow under pressure, there will be very little traction both in sales and new launches,” founder C N Govindaraju said.
Credits ET Realty