Developers start dropping Mumbai real-estate prices

The industry is now offering unadvertised discounts to customers, after sky-high realty prices kept buyers away from the market

Developers in Mumbai have finally started offering discounts on properties. Orchid Woods, a residential project in Goregaon (a Mumbai suburb) by DB Realty, is offering customers through ICICI Home Search, (a division of ICICI Home Finance Company) flats ranging from two bedroom, hall and kitchen (2 BHK of 1,420 sq ft), 2.5 BHK (1,635 sq ft), 3 BHK (1,820 sq ft) and 4 BHK (2,465 sq ft) at Rs9,500 per sq ft plus Rs45 per sq ft for floor rise.

All the flats at Orchid Woods are currently priced at Rs10,881 per sq ft. The discount offer is valid till 30th June or 20 apartments sold, whichever is earlier. As the monsoon is approaching, there might be more discounts on the platter for customers. During the rains, developers usually find it difficult to push sales. Now they have started to offer discounts.

"The prices of properties might not see a rise till September and we expect a slowdown in sales during the next quarter due to rains and holidays. But going forward, by October, we shall see a price rise of 10% as we approach the festival season. Usually during that period, the sales pick-up and demand comes back to the market," said Mayur Shah, chief sales-business unit, Ackruti City Ltd.

Pankaj Kapoor, founder, Liases Foras, believes that current trends are indicative of another asset bubble. "In the quarter ended March 2010, prices have gone up further by 15%-20% and we are estimating sales to be down further by 25%-30%. Despite the gradual decline in sales and market efficiency, the rise in property prices is indicating the creation of another asset bubble."

Mumbai is expected to report lesser volume of real-estate transactions over the next six months, according to industry experts. "We are going to see lower volumes of transactions in the next six months compared to the last six months, if the prices do not come down," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.

"More realty companies will offer discounts as sales are not taking place," said Sheetal Malpani, analyst, BRICS Securities Ltd. According to industry sources, developers are not publishing the discounts that they are offering. They are offering discounts to customers personally as published discounts would bring down the valuation of their projects. It is likely that developers will not advertise discounts till September. If sales do not pick up, they will be forced to openly advertise discounts to clear inventories and also to free up liquidity.

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Progress Software launches market surveillance and monitoring solution

US-based Progress Software Corp said it launched its market surveillance and monitoring solution accelerator product in India which can do the job on a real time basis.

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ICICI Bank shareholders approve merger of Bank of Rajasthan

IClCl Bank Ltd said its shareholders approved the merger of Bank of Rajasthan with itself in an extraordinary general meeting held on 21st June.

The amalgamation is subject to the approval of Reserve Bank of India (RBI) and such other approvals as may be required. The share exchange ratio has been fixed at 25 equity shares of ICICI Bank for every 118 equity shares of Bank of Rajasthan, the lender said in a regulatory filing.

On Tuesday, ICICI shares ended 0.9% down at Rs893 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.7% down at 17,749 points.

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