Real estate companies are now aggressively pitching projects highlighting 2-bedroom apartments available for around Rs 20 lakh, hoping to lure buyers and revive the moribund housing market.
“It is not as if there is a dramatic reduction in prices, but developers want to take advantage of the lower interest rates being offered for home loans up to Rs 20 lakh,” says Sanjeev Shrivastava, MD of Assotech Realty, a Delhi-based firm.
For instance, prices were always in the range of Rs 25-30 lakh at the Crossings Republic in Ghaziabad near Delhi, a case that illustrates Mr Shrivastava’s point. Even when realty prices were wallowing in irrational highs, two-bedroom houses at Crossings Republic were going for under Rs 30 lakh because of the isolated location and poor connectivity.
Gaursons, Paramount, Panchsheel, Skytech Developers and Orange Properties are some of the players which have come out with advertisements for two-bedroom houses priced at the Rs 20-lakh level.
However, for a prospective buyer, the catch lies in the end cost and the location.
The advertisements often conceal additional costs such as external development charges, parking fees, club membership and power back-up charges. So, a house priced at Rs 20.50 lakh may actually cost Rs 26 lakh while an apartment at the second or the third floor may cost Rs 2 lakh more.
Market analysts also point out that some of the projects being advertised are located far away from city limits, or are yet to obtain approval from lenders.
Recently, Bangalore-based real estate marketing firm Orange Properties launched big budget campaigns to attract buyers to its maiden project consisting of 800 apartments, 270 villas and 40 row houses at Devanahalli near Bangalore. It offered a 800-square feet two-bedroom house for Rs 13.5 lakh and a 1,500 square feet villa for Rs 70 lakh.
The offer came with added inducements — assured rental of Rs 5,000 for two-bedroom apartments for two years, and a free Mercedes car worth Rs 28 lakh for villa buyers.
“The offer was initially open for four days, but we extended it for another four days given the overwhelming response from across the country,” says Orange Group senior vice-president Pericho Prabhu, who claims to have sold at least 200 apartments in eight days flat.
However, the project doesn’t fall in areas covered under the Bangalore draft master plan 2015. That means it is at least 48 kms away from the city centre with no guarantee of a public transport system.
There are certain other cases where home buyers are not getting their loans sanctioned, as the projects are yet to be approved by mortgage lenders. Recently, a well-known builder in Gurgaon sold off several apartments in his project after a similar heavy budget advertising, but buyers are now in a fix, as banks are not sanctioning loans for the project.
Another project by Falcon Realty, which promises to give a one-room-kitchen flat for Rs 5.5 lakh and a one-bedroom apartment for Rs 9.9 lakh in Alwar, is also yet to obtain the approval from lenders.
