Assotech Chief - Rajeev Rai speaks
Discounts Are Not The Answer, Says Assotech Chief
Rajeev Rai speaks to Pallavee Dhaundiyal Panthry of how radical discounts on real estate inventory, harms the customer rather than helping the cause of the buyer or the industry
Developers today say that realty prices in NCR have come down and they are flaunting up to 40 per cent discount? Is it true? How?
Such level of discounting is not true in our case. Our group believes in launching projects at low rates, which can easily be absorbed by the local market. The BSP rates of apartments in our mass housing project in NCR was reduced by 5% to honor the call given by the then finance minister P Chidambaram and to show solidarity with developer's associations like CREDAI and NAREDCO. Moreover, we never ask our customers for additional payments on account of increase in the prices of construction material as our prices are escalation free. As we don't charge premium for our property, there is no need to reduce the prices or give heavy discounts.
What was the profit margin earlier and what is it now? Please give example from your own case? How is the response to sales now?
We operate on low profit margins though we use best quality raw materials in our construction . To maintain the level of low profit margin, we have tried to reduce our overhead costs. Sales have started picking up since this April with low mortgage rates and improved market sentiments .
What do developers mean when they say 2 BHK home for just 12.5 lakh in NCR? What's the story behind?
The National Capital Region comprises of Delhi along with certain areas of Rajasthan, Haryana and Uttar Pradesh and its total area is estimated at around 30,000 sq. km including around 13,000 sq. km in Haryana and around 11,000 sq. km in Uttar Pradesh. As we move away from the CBD of Delhi, the FSI cost keeps on decreasing thereby making it possible for a developer to offer such properties in peripheral areas.
What is your opinion on housing offered by Tata in Mumbai starting from Rs 3.9 to 6.7 lakh in Mumbai? Have you got any such plans in the offing?
It's a good initiative from TATA group. They are building apartments at Boisar, which is around 105 kms from southern Mumbai. This housing project is located quite away from the city limits and is expected to cater to the needs of EWS, LIG and MIG population. Area of these apartments would be 283 sq.ft., 360 sq.ft. and 465 sqft respectively. The per square feet selling cost comes out to around Rs 1,400, which is possible for a low rise structure in a place where the FSI cost is very low. Maharashtra government also provides certain incentives on group housing projects for EWS / LIG segment through additional dwelling density and additional FSI norms for the project.
Since the FSI cost in areas like Noida and central areas of Ghaziabad is too high, TATA model cannot be replicated in these areas. The dwelling density norm of the State come in way of providing such kind of solution to provide low cost housing to the EWS/ LIG segment.
Rajeev Rai speaks to Pallavee Dhaundiyal Panthry of how radical discounts on real estate inventory, harms the customer rather than helping the cause of the buyer or the industry
Developers today say that realty prices in NCR have come down and they are flaunting up to 40 per cent discount? Is it true? How?
Such level of discounting is not true in our case. Our group believes in launching projects at low rates, which can easily be absorbed by the local market. The BSP rates of apartments in our mass housing project in NCR was reduced by 5% to honor the call given by the then finance minister P Chidambaram and to show solidarity with developer's associations like CREDAI and NAREDCO. Moreover, we never ask our customers for additional payments on account of increase in the prices of construction material as our prices are escalation free. As we don't charge premium for our property, there is no need to reduce the prices or give heavy discounts.
What was the profit margin earlier and what is it now? Please give example from your own case? How is the response to sales now?
We operate on low profit margins though we use best quality raw materials in our construction . To maintain the level of low profit margin, we have tried to reduce our overhead costs. Sales have started picking up since this April with low mortgage rates and improved market sentiments .
What do developers mean when they say 2 BHK home for just 12.5 lakh in NCR? What's the story behind?
The National Capital Region comprises of Delhi along with certain areas of Rajasthan, Haryana and Uttar Pradesh and its total area is estimated at around 30,000 sq. km including around 13,000 sq. km in Haryana and around 11,000 sq. km in Uttar Pradesh. As we move away from the CBD of Delhi, the FSI cost keeps on decreasing thereby making it possible for a developer to offer such properties in peripheral areas.
What is your opinion on housing offered by Tata in Mumbai starting from Rs 3.9 to 6.7 lakh in Mumbai? Have you got any such plans in the offing?
It's a good initiative from TATA group. They are building apartments at Boisar, which is around 105 kms from southern Mumbai. This housing project is located quite away from the city limits and is expected to cater to the needs of EWS, LIG and MIG population. Area of these apartments would be 283 sq.ft., 360 sq.ft. and 465 sqft respectively. The per square feet selling cost comes out to around Rs 1,400, which is possible for a low rise structure in a place where the FSI cost is very low. Maharashtra government also provides certain incentives on group housing projects for EWS / LIG segment through additional dwelling density and additional FSI norms for the project.
Since the FSI cost in areas like Noida and central areas of Ghaziabad is too high, TATA model cannot be replicated in these areas. The dwelling density norm of the State come in way of providing such kind of solution to provide low cost housing to the EWS/ LIG segment.