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Real estate companies face ire as homebuyers band together

Real estate companies face ire as homebuyers band together
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First Published: Thu, Feb 26 2009. 12 01 AM IST

Buyers market? DLF’s Hamilton Court building in Gurgaon. The company has announced a price cut of between 10.5% and 18% on Garden City project flats on Old Mahabalipuram Road near Chennai. Harikrishna
Buyers market? DLF’s Hamilton Court building in Gurgaon. The company has announced a price cut of between 10.5% and 18% on Garden City project flats on Old Mahabalipuram Road near Chennai. Harikrishna
Updated: Thu, Feb 26 2009. 09 09 AM IST
New Delhi/Chennai: It may not grab as much attention as the online campaign to send pink lingerie to the Sri Ram Sene, but home buyers across the country are coming together in online groups to negotiate with developers such as DLF Ltd, Raheja Developers Pvt. Ltd and Vatika Ltd over several contentious issues, the prime among them being a reduction in prices in the wake of the lower demand for housing.
Buyers market? DLF’s Hamilton Court building in Gurgaon. The company has announced a price cut of between 10.5% and 18% on Garden City project flats on Old Mahabalipuram Road near Chennai. Harikrishna Katragadda / Mint
Around 950 buyers of DLF’s Garden City project on Old Mahabalipuram Road near Chennai have banded together on Google Groups, an online group run by the eponymous Internet search giant, to put pressure on the developer on several issues. DLF Garden City is a 3,493 apartment project, of which 1,800 apartments have been booked so far. Top on the demands is that DLF reduce prices of apartments by at least 25%.
On Monday, DLF announced a price cut of between 10.5% and 18% on the apartments from Rs2,800 per sq. ft to Rs2,500 each, from Rs3,000 to Rs2,550, and from Rs3,200 to Rs2,600 per sq. ft depending on which stage the buyer comes in. DLF is also offering a special price of Rs2,650 per sq. ft till 1 May, after which it will be revised upwards by Rs100 each.
“This is not enough,” said one of the members of the group. “When DLF announced a price cut of 32% for one of its projects in Bangalore, they should cut prices in Chennai by at least 25%,” he insisted, asking he not be identified.
Some 600 buyers have “submitted letters to pull out,” he said, adding not all of them have received letters from DLF stating the company will refund their booking amount. “There could be another 300 more” sending the letter, he said. This could not be independently verified by Mint.
A DLF spokesman said it expected very few buyers wanting to exit the project after the recent price changes. “After the announcement of new package, most of the customers expressed their satisfaction,” he said on email.
A similar group has been formed for DLF’s New Town Heights project, launched last June, in Gurgaon. “I am a member of both the groups, the Chennai one and the Gurgaon one,” said a person who is spearheading the Gurgaon group, which he said has around 200 members. The person did not want to be identified.
No work has happened on the project, he insisted, adding, “the members of the group have stopped payments to DLF for the project.”
The Gurgaon group is also demanding a 25% reduction in prices of apartments for existing and new buyers. New Town Heights has apartments ranging from 1,760 sq. ft to 2,505 sq. ft that are priced between Rs2,250 a sq. ft to Rs2,350 each.
A Yahoo group has also been formed by buyers of a Vatika project in Gurgaon who are concerned about the delay in India Next.
Buyers of Raheja projects have also formed a group as the builder has not been responding to the buyers’s complaints, Nitin Goel, a member of the group, said.
“Raheja has also been demanding payment on a time linked payment whereas they had said they will take payment on a construction linked plan,” Goel said. “There is also a delay in Raheja’s Vedaanta project where I have invested.” Mint couldn’t ascertain the veracity of these claims.
“If the group has any problems they can discuss it with the developer,” Dimple Bhardwaj, a Raheja spokesperson said. “We haven’t asked for time-linked payment plan... ours is always a construction linked plan,” she said.
“The buyers probably think it is time linked because we are demanding payment every two months. We have only demanded for what we have constructed. As for the delay in Vedaanta project, that is because there is a water retention problem in the soil at the site because of which we have not been able to construct.”
A realty expert saw the banding together of home buyers as symptomatic of young investors using technology to bargain better with realty firms.
“These days we have far more discerning buyers...these are not people who have invested money in a project at a later stage in life and are dependent on the developer for delivery of the project,” said Aditi Vijayakar, executive director, residential at Cushman & Wakefield Asia.
shabana.h@livemint.com
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First Published: Thu, Feb 26 2009. 12 01 AM IST