DLF, the country's largest real estate player according to market capitalisation, has re-launched its Bannerghatta Road project in Bangalore with a revised price tag of Rs 2,100 per sq ft from Rs 2,775 a sq ft earlier.
The specifications have changed, too. The homes will now be 1,085-1,820 sq ft in size, down from the minimum size of 1,310 sq ft planned earlier. The project was first launched in October last year and DLF sold about 50% of the total 440 flats, said an analyst report.
The developer will compensate its existing customers who paid a higher price by adjusting the outstanding amount against future payments. Earlier, the cost of a 1,310-sq ft flat was Rs 36.35 lakh. Now, this cost has come down to Rs 27.51 lakh, a fall of Rs 8.84 lakh. A DLF spokesperson said, "We have launched our Bangalore project in 4 categories, where the base price ranges between Rs 1,800 and Rs 2,100 per sq ft."
This relaunch comes close on the heels of DLF's Hyderabad project launch at Rs 1,850 per sq ft last month, which received a fairly good response after a dismal December quarter. JP Morgan analysts Saurabh Kumar and Gunjan Prithyani, in a February 2 report, wrote, "Mid-income housing performance was most disappointing as the company booked just 77 units in the last two months against almost 400 units per month over the last two quarters. Expected rate correction and reducing unit prices may trigger a volume recovery at the earliest by second half of FY10."
Analysts, however, said developers who have already launched their projects would find it hard to compete with DLF's prices. The real estate firm's price cuts are to the extent of 40%, much more than what others are offering. This could hit competitors' sales as they are offering a minimum size of 1,445 sq ft with a base price of Rs 2,500 per sq ft.
DLF's rivals in Bangalore include the Prestige group and L&T Properties. Ravi Ramu,
director at another competitor Puravankara Projects Ltd, said, "We are selling projects at about Rs 2,750 per sq ft. We cannot go lower than this." Analysts warn that sticking to their pricing could cost developers volumes and hurt their topline. Sobha Developers, another major real estate player in the IT city, is offering a paltry 8% discount on its ready projects.