New Delhi: After slashing prices in Bangalore, Hyderabad and Chennai, DLF Ltd, India’s largest developer by market value, is offering a discount of 20% on apartments in its New Town Heights project in Gurgaon, on New Delhi’s outskirts, for both existing and new customers.
DLF sent a letter to its customers on Wednesday announcing the price cut. But, unlike the flat cuts on DLF’s projects in the three south Indian cities, the discount on apartments in New Town Heights is structured in a complicated fashion and comes with caveats.
Wooing customers: A DLF project in Gurgaon. The firm said the price cut was to pass on the benefit of lower material costs to the buyers. Harikrishna Katragadda / Mint
In February, DLF cut prices of some projects under way in Bangalore, Hyderabad and Chennai by about 20-30%. That price cut was for both existing and new customers.
Real estate developers are cutting prices to retain and attract buyers after a property market slump in the face of slowing economic growth caused land and apartment valuations to drop sharply, dampening demand.
New Town Heights is a 23-acre project consisting of three- and-four-bedroom apartments in Sector 86, 90 and 91 of Gurgaon. The apartment size ranges from 1,760 sq. ft to 2,505 sq. ft, priced between Rs2,250 and Rs2,350 per sq. ft.
DLF said in the communication to buyers that the price cut was to pass on the benefit of lower raw material costs to them.
DLF has given a 5% discount on the basic sale price of the property. The company has also said that it will increase the area of the property by around 5% free of cost which would decrease the cost of the apartment by 5%.
It is not clear whether the increase in the area would be in the super-area or the carpet area of the apartment. While super-area is the entire area of the building including the common area such as the lobby, carpet area refers to the actual usable area within the apartment.
DLF has also promised a 10% rebate on timely payment by customers.
This rebate will be on the sale price and will be credited to the buyers’ account in the last instalment if the payments are made on time.
The developer has also changed the payment plan for some customers from a time-linked plan, under which customers have to make payments in line with a pre-set schedule. Those who have paid 35% of the sale price would now be allowed to pay the remainder according to progress made in the construction of the project.
Customers who have not paid 35% of the sale price will get the benefit of the construction-linked payment plan only if they pay the balance payment before 25 April, the letter says.
“I am not happy with the discount,” says a customer, Rahul Bhambri, 32, who bought a 1,760 sq. ft apartment in the project by making a down payment of Rs42 lakhs in July. “The discount has been structured in a very complicated way...also prices have gone down in Gurgaon by 30-40% and they have only given an effective discount of 5%.”
Bhambri is a member of the online forum of New Town Heights buyers on Yahoo Groups. The forum has around 500 members.
Though, unhappy with the discount, Bhambri has decided to stay invested in the project. “I have taken a loan from HDFC and I am paying an interest on that and even if I exit, DLF will charge me a penalty, so I will lose money if I exit,” he says.
DLF has, however, steered clear of talking about an exit plan for its buyers. “The deal has been structured with a bias towards compelling people to stay in the project,” says Sanjay Sharma, managing director of Gurgaonscoop.com, a real estate portal on Gurgaon. “What is also missing is explicit terms and conditions for exit... There are lots of people who want to exit but DLF has been non-committal on this.”
DLF is offering buyers other benefits. The developer is giving its customers so-called price protection, which means that if the basic sale price is reduced by the company before handing over possession of the property, existing buyers will get the benefit of the reduced price.
DLF has also doubled the compensation in case of a delay in handing over possession of the apartment from Rs5 per sq. ft per month to Rs10 per sq. ft per month. The same amount would also have to be paid by buyers if they delay in taking over possession of the apartment.