New Delhi, Aug 22 () : Finance Minister P Chidambaram has asked banks to put pressure on real estate developers to tell builders to complete projects as per schedule and lower prices of apartments that are ready for possession but not getting sold.
They have to impress upon builders to complete projects as per schedule and lower prices of apartments that are ready for possession but not getting sold.
Banks are unable to free their Rs 1.2 lakh crores saddled with builders who quote high inventories for such a long time which means that builders have already increased their costs. Sitting on an inventory of 500,000 flats, builders are refusing to bring down prices.
CREDAI (Confederation of Real Estate Developers’ Association of India) rules out there is no scope to cut prices given the finance cost escalation, unless cost and requisite margin are recovered.
The first quarter results show that real estate companies “requisite margin” for the real estate players does not seem to be in line with other industries. 40 per cent operating costs show up while net margins stand between 18-20 per cent.
National Capital Region’s flats unsold are equivalent to 23 months of sales.
Indian real estate prices are among the world’s highest when the supporting infrastructure leaves a lot to be desired.
Their high profit margins clearly show there is room for builders to bring down prices as Indian real estate prices to be among the world’s highest.
Registrations for the month of July in Mumbai was below 5,000, (including both sales of new and old flats) did not pick up even ahead of the pre-festive season demand. Registrations for the second month running in Mumbai was below 5,000 (including both sales of new and old flats).