Real estate industry rejects Raghuram Rajan's call to cut prices, seeks low rate regime

If prices fall further, it will lead to NPAs and non delivery of projects, warns industry

A day after Reserve Bank Of India governor Raghuram Rajan urged property developers to cut home prices, real estate developers have rejected the call, saying it is unviable for them to reduce prices.

Getamber Anand, managing director at Delhi based ATS Infrastructure and president of realtor body CREDAI, said 90 per cent of the home supply in the country has already shown price correction. 

“If prices fall further, it will lead to NPAs and non delivery of projects,” Anand said.

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Rajiv Talwar, chief executive at DLF, said home prices have already come down by 35 to 40 per cent. 

“Public figures are only talking about prices in prime locations. Those prices are high because they are prized locations. All over, prices are between Rs 3000 to Rs 5000 a square feet and between Rs 5000 to Rs 8000 a square feet in good locations. Its bare minimum given cost of land and cost of construction.,” Talwar said.

He said all parties including developers, Reserve Bank of India and commercial banks have a role to play in boosting housing demand.

“Everybody is doing a blame game. But I feel developers need to offer low prices. RBI should keep rates low and banks should offer lower rates for two years to encourage people to buy homes,” said Talwar.

“Real estate has seen a eight year slump and everyone has to make efforts to lift the situation,” he said.

Added Amit Bhagat, CEO at ASK Property Investment Advsiors: “Developers are in a dilemma. If they reduce prices in an already launched project, they have to face cancellations from those who booked earlier. That is why they are not cutting rack rates but negotiate and reduce rates on individual basis,”

Bhagat said developers have aleady started cutting prices through schemes and offers.