Indian developers use Diwali as property discount season

They are calling it Diwali madness but it is a sign of the times - property developers in India are offering massive discounts as the markets suffer from the global finance crisis.

Everywhere you look there are offers. Posters declare – discount bonanza – and the deeper you delve the better the bargain.

Offers include free covered parking spaces, exemptions from preferential location charges, discounts on the rate per square feet of the property, paid interest and holidays.

Some developers are also offering to pay stamp duty and registration fees which can account for between 4 and 10% of the cost of buying a property. Then there are offers to pay electric bills for a set period.

'These offers are being used as a marketing tool mostly by developers in Delhi, Mumbai and Chandigarh. The trend is likely to continue till the interest rates come down to a moderate level and capital values cool off,' said Sandeep Goel, managing director of MSX Developers Pvt Ltd.

It is interest rates that are causing property prices to fall as purchasers can't afford to buy. The rate has gone up from 7.5% to more than 12% and this has obviously shocked the homebuyers whose budgets have gone haywire. 'As a result, the buyers are going in for smaller tenements or waiting for interest rates to fall. This festive season, we are offering heavy discounts on down payments,' said Rakesh Yadav, managing director of Antriksh Housing Constructions.

However developers remain focused and they believe that prices will start rising again. 'For actual buyers it is the right time (festive season) to buy property because the coming time will be more costly. The industry senses that the long-term forecasts for the sector continue to be good,' said J B Kramchandani, senior vice president of Parsvnath Developers.

'Two and three tier cities are also driving the investment and growth phase of the country owing to the huge unexplored potential in these cities. Still, these offers are a good deal in terms of potential price appreciation,' he added.

However not all developers are making offers. Sanjeev Srivastava, managing director of Assotech Limited, said his company does not believe in offering sops to sell apartments. 'The kind of quality we have delivered to date and our past record of timely delivery of property has created a strong goodwill in the minds of our prospective buyers,' he pointed out.

'Buyers who are booking their properties with us during the current Diwali season, are pretty confident about the Assotech brand and its commitment to provide innovative and cost effective product in due time,' he added.