Monday, February 2, 2009

Rohan Builders cuts property rates of Leher and Mithila by Rs. 600 per sq. ft. and 'agrees' to reduce your booking rate in case of future reduction!

Could Rohan Builders' Price Protection Scheme motivate you to book a flat in Rohan Mithila at the reduced property rate of Rs. 3,500 per sq.ft. and in Rohan Leher at Rs. 2,900 per sq.ft.?

Property rates in Pune real estate market are going to go down further!:

With this offer Rohan Builders, most renowned builder in Pune, accepts that property rates in Pune are going to hit the bottom very soon.

But you don't have to wait for that to happen.

There is no need to postpone booking a flat in Rohan Leher and Roahn Mithila.

Because with "Price Protection Scheme", Rohan Builders are adding a clause in your agreement which gives you a guaranty that by default the reduced rate will be applicable to you too!

Just like the reduction of 600 rupees has become applicable to the old property buyers who had booked at Rs. 3,500 per sq.ft. in Rohan Leher and at Rs. 4,150 per sq.ft. in Rohan Mithila; by default, without asking, automatically!

What about the property rate of Rohan Tarang at Wakad?

No! The property rate, Rs. 2, 800 per sq.ft., of Roahn Tarang at Wakad, is not reduced and the "Price Protection Scheme" is not applicable to it. Because Rohan Builders claim that Rohan Tarang is ready for possession (in a couple of months!)!

However, one of the property buyers, who has booked the flat when Rohan Tarang was launched, 3 years ago and going to take a possession, after a delay of almost 1 year, said,"Considering the market, Rs.2,800 is too much. It should be less!!"

When i asked him at what rate he booked, he said, "at Rs. 2,300 per sq.ft."

"Wasn't Rs.2,300 too much at that point of time in Wakad?," i asked him.

He said, "Yes, it was! This only proves that Rohan can easily reduce the property rate of Tarang!"

Why not cut the rate more than offer Property Price Protection?

"When you are expecting property rates to go down further, instead of waiting for that to happen, why not reduce the property rates today itself?," i asked to Mr. Mohan Mehta, marketing manager of Rohan Builders.

"Further reduction at this point of time may affect the quality of the construction. Rohan Builders, you know, never compromise on quality!" Mr. Mehta gave smart answer to my dumb question. "Rate cuts are from our profit margins. We have reduced our profit margins. If our construction cost goes down further, we will, certainly, announce more cuts in the property rates," Mr. Mehta added.

"Go and get your booking rate reduced! Good for you and your builder!," Rohan Builders

For me, Rohan Builders' Price Protection Scheme means, for sure, days of "Pune Builders don't see any cuts in the property rates" or "Pune realty rates won't drop any further" or "Not rock bottom for Pune property buyers" are over!

Rohan Builders also confirms that, now, as a property buyer, it's your fundamental right to demand for a rate cut of your flat if your project is under construction.

In fact, Rohan Builders tells you that, it's your duty to inform your builder that you are ready for the rate cut and you are happy to free him to reduce the rate of his ongoing project, get the enough booking and complete the project as early as he can.

When Rohan Builders thinks that it is essential to reduce the property rates to survive in the current economic conditions, I am sure, most of the builders in Pune will be happy to cut the property rates.

First, because builders in Pune know well that delay means loss in the profit.

Second, though PBAP is an official association of builders in Pune, when it comes to doing business they follow Rohan Builders. For example, it was Rohan Builders who introduced the concept of 3 side open flat when they launched Rohan Garima. It was Rohan Builders who introduced the concepts of "smart homes - digital homes", "eco homes", "plus homes" in Pune. It was Rohan Builders who launched first high value project in Pune - 1 Modibaug. It was Rohan Builders who made "penalty for the delayed possession", a clause in the agreement. Today, every good builder is following Rohan Builders and trying to incorporate these features in their projects!

However, you can understand, Rohan Builders can't tell other builders in Pune to reduce the booking rate of the under construction project. But you can!

Are you going to jump or sit on the fence?

What is your take on Rohan Builders' Price Protection Scheme for Rohan Mithila and Rohan Leher?

Is this type of a protection and home loans at 8% or lower interest rate, enough for you to stop worrying about property rates going down in Pune real estate market and start booking in the projects which are under construction?

Are you happy with this or you expect something more? Please, share your views in the comments. (Comments Policy)

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28 comments:

  1. Hi Ravi,

    First place, I congratulate Rohan Builders to take this initiative, though VERY LATE.

    I say very late, because, at this moment, every prospective buyer in Pune (namely - IT Worker) is unable to visualize their future. In the situation where a buyer can not guarantee his job for atleast 5 years from now, can not create any liability even for 1 lac - forget about 20 lacs liability.

    Pune builders are very late to realize the situation. They lived in their own dream sequence and kept the prices inflated till the time their audience lost the confidence on their own future.

    Nevertheless, being one such prospected buyer myself, I liked the idea of Rohan builders. I will go ahead and book the flat IF:

    - I sail out of the current blues and can guarantee my own job for next 2 years. I am not clear about this at the moment.

    - I can trust BUILDER COMMUNITY of India that they will not cheat. Even the banks cheated to existing home loan customers by not passing on the benefits of reduced rate after signing off the flexible home loan interest rates, how can I trust BUILDERS, who are known to be notorious community in this country? What is the guarantee that builders will pass the reduced rate benefit to the EXISTING buyers if the rates fall for another 25% in next 3 months? Please do not tell me that it is agreed in the agreement. You, me and all know what is the meaning of going to court for settling this claim.

    ReplyDelete
  2. Hello Atul!

    Yes, i agree with you. Very late.

    In fact, most of the builders know this well. And share the same concern - of the job prospects - with the home buyers! Because property buyers not only buy flats but finance their ventures too!

    I wish you all the best. You will sail out soon and safe. You know well who has the power to set the rules and who is just a service provider!

    ReplyDelete
  3. It is desperate time for builders so hell they will not only drop their prices they will even drop their pants just to get a customer.
    I do not trust anyone for a future price drop refund even with written agreement. I just want the best price today so "Show me the money not a carrot"

    I would prefer to get a best deal on a ready or almost ready possession apt today and not go for under construction flats. Even with the deep price break they are offering it seems too high compared to may other projects situated in similar or better location. Nothing against Rohan but they need to drop the rates further.

    By the way Rohan could not have been the first to have a 3 side open apt concept in Pune there were at least a dozen good ones before them. I rented a place in Pashan with 3 sides open way back in 1999-2000.

    I already own a primary residence but am now looking for a second home as investment. I am looking at few places on Wakad, Baner, Pashan area.

    Great blog Ravi.

    ReplyDelete
  4. Rates still on heigher side for under construction projects!
    Rs. 600 reduced per appartment out of proffit, Just see how these builders are earning & fooling common man.

    ReplyDelete
  5. # ref: "Rates still on heigher side for under construction projects"

    OK! Good!! What is the rational rate for these under construction projects - Rohan Mithila and Rohan Leher, according to you?

    I think, now is the right time for us, the property buyers, to start quoting our rates for the particular projects!!

    Ultimately, builder's asking price is his expectation.

    But in reality, how much majority of home buyers would like to pay influences, some times decides, the market rate.

    So, let us start quoting our price. What say you?

    ReplyDelete
  6. Hello Ravi
    You are right, buyers should quote their prices.
    You are regularly mentioning in your blogs that the risk is more on the buyers side for under construction projects.
    If the most reputed builder like Rohan can delay a project for one complete year then what about mid size & small builders commitment?
    The Builders should immediately give discount in final price if possession is delayed so that the buyer can take less loan from the bank.
    Just buy writing in agreement about penalty claws will not help a lot.
    Some builders (PBAP members do not mention possession date in agreement)

    For very good specifications (Rohan, Amar etc.) the rate may be more by 200 / 300 (Approx 2-3 Lacks) but for average standard specifications (Goyal Ganga, Kumar etc) the rate should be Rs. 2000 & below officially.
    However now a days there are very few prime locations left and infrastructure is yet to develop in areas like Wakad & Bavhdan.
    2 BHK 1000+ Sq. Ft. with good amenities should not cost above 25 lacks for standard specks (25 inclusive all) for Very good internal specks max. 30 L.
    For projects with 1 or 2 buildings & with very few amenities price for 2 BHK 1000+ should be below 25 Lacks.
    Small 2BHK compact 850 and below sq. ft price should be below 20L
    I am sure with such prices builder will still get 300 to 500 net profit to run his show.
    Builders should react fast as it is high time now !!!
    Before Rohan builders I think that Kalpataru has corrected the market.
    Kalpataru in Pimple Gurav project almost 80% completed & rate 2200 officially & further negotiations possible, specks are also very good !!!

    I would further say that Builders with strong financial background should sell ready possession flats for above mentioned rates.

    Do you agree with me Ravi?

    ReplyDelete
  7. Yes, i agree with you.

    Rs. 300 land cost + Rs. 1,200 to 1,400 construction cost including corporation charges + Rs. 700 marketing + admin expenses + profit is the price line any professional builder follows when he plans the project. So bottom price is Rs. 2,200 - Rs. 2,400 per sq.ft.

    Rest is the perceived value. Which majority of people are not happy to pay. Only minority do not mind and pay.

    Result is as a real estate salesman what i have seen is - 2,000 people visit my site. 1,800 people do not agree to pay what i expect. Only 200 people are convinced or not in a positions to disagree.

    However, i play with them, keep on creating notional value, keep on increasing price in small amounts to prove the worth and make them buy and succeed. Though majority is against my pricing!

    Kalpataru is a good example. They failed to create the perceived value about their project.

    Initially, they tried to create by calling Pimple Gurav "Center of Pune"

    But for the people working in Hinjewadi earth in not round - they take it as straight line - which starts from Hinjewadi and Wakad and Jagtap Dairy are the closet point on their line!

    After the initial efforts, Kalpataru simply gave up! Now what they are selling is a hardware. At the price of steal + cement + labor and adding profit to it.

    But who want's hardware? Most of the buyers are software professionals who don't have much experience of running a family.

    Now, question is:
    "Is it good to be rational?"

    Because irrational people own home. And when you become a home owner, you stop bothering about the property rate and the worth of you asset!

    I ask myself:
    "What i wish to do with my blog?"

    -- Increase the level of awareness, provide information, have a good debate and more readership

    OR

    -Help people own a home?

    - I am not a critic. I am real estate salesman and i blog for those who want to book a flat.

    When people call me, i tell them above formula but also tell them to feel free to pay more but don't forget that you are paying more than it's worth!

    Why? because property is an investment instrument not only a product or a consumable.

    This is democracy! I go with the majority. But principally, i agree with you. You are the most rational person i have ever seen. I respect you a lot! Thanks for the comment!!

    ReplyDelete
  8. Rs. 700 marketing cost per sq ft. Good joke, Ravi. Make it Rs. 700 for one flat being sold.

    Rs. 1,200 to 1,400 construction cost including corporation charges. I doubt. The rates are on lower side than this. I know people spent nearly less than Rs 1000 per sq ft with all bell and whisltes of luxorious fittings.

    admin expenses - Heard the term for first time, exclusive from construction cost.

    profit - Haan. Here comes the real thing. How about making builders compensate for irrational profit made to the tune of 300-500%of the input cost ?

    So bottom price is Rs. 2,200 - Rs. 2,400 per sq.ft. --> For the best project in Pune, I will give no more than 1750 per sq ft. Period.

    ReplyDelete
  9. # ref: "Good joke,"

    Please, see what 700 includes.

    # ref: "I know people spent nearly less than Rs 1000 per sq ft with all bell and whisltes of luxorious fittings."

    Yes, you are right. But you have to include infrastructure development cost + corporation charges too. You are considering only the cost of constructing the building.

    # ref: " admin expenses"

    Really? Doesn't any organization require it? Your co-op housing soc needs it!

    # ref: "1750 per sq ft."

    Good! But why? Why not 1,650?

    Here i am not talking about what you wish to give. Please, keep in mind that whatever you pay, you pay in advance!

    I am talking about what is general current price structure of an average project in the typical developing area.

    # ref: "builders compensate for irrational profit"

    "Compensate" ?!
    Is making a profit crime?
    Is there any legal restriction on making a profit?
    Are there 2 types of profits - rational and irrational?

    In fact Government of India had a scheme by which builders do not have to pay income tax on profit from a particular type of a scheme!
    Only because of that we see so many projects, payment by cheque and housing loans at lower rates in last 7-8 years!

    Plus, in this transaction, as in any, there are 2 parties!! Hope, you do not want to punish both the parties!

    ReplyDelete
  10. #Please, see what 700 includes.
    > Great. I know actual property prices itself were around this much just a few 3-4 years back in some good places in Pune. No one can justify this as marketing cost alone. Thats bullshit and does nto justify 500% price rise in 3-4 years.

    #infrastructure development cost + corporation charges too >> So how much exactly per sq ft ? How can they contribute 500% price rise in 3-4 years ?

    #Doesn't any organization require it? Your co-op housing soc needs it! >> What organization ? What size ? Comment out of thin air. Even sales offices have no staff these days unless you make an appointment. Count other people and compare against totla no. of sq ft being sold in all projects done by that builder. The number is insignificant for 500% price rise in 3-4 years.

    #Good! But why? Why not 1,650?
    >> First time you are right. I should pay no more than 1650 to the most premium project in Pune. Thast real worth. Anything else is speculation. We know that. :)

    ReplyDelete
  11. Forgot to include this one
    #"Compensate" ?! Is making a profit crime?
    >> Alright. Lets say No. Builder can quote Rs. 500000000000000 per sq ft price and get 500000000000% profit.

    Only thing is I will not buy such pricing. I will buy if pricing is 1500-1650 / sq ft with good location and amneties. I am sure most of end user buyers are willing to pay no more than this.

    ReplyDelete
  12. # ref: "I will buy if pricing is 1500-1650 / sq ft with good location and amnesties."

    Sorry, i got carried away.

    There is no point in talking about the past.

    You are right. Now, at this point of time, focus should be on you. How to develop a project as per your expectations, in your budget.

    Location is a problem. Not because of the cost. But the availability is an issue. Not impossible to manage if you support.

    But, i do't know any builder or a project which is working on these lines? Do you?

    Nanded City Pune had an opportunity but they missed it. If you know any project, please, share in the comments.
    Thanks for expressing your views. I am sure, your wish will be fulfilled.

    ReplyDelete
  13. Hello Ravi
    In your previous blogs (08th Jan. 09) you had informed that you have personally requested PBAP to quote the lowest rates & Mr. Jain has informed you that the rates are reduced in range of 10 to max 30%.
    Buy still the same is not yet reflected in the market.
    Do you know any projects which have reduced the rates to 20-30% in areas like Baner & Wakad or in any corner of PUNE
    Please can you collect the data from Mr. Jain as he must be definitely aware of some projects of PBAP members who has reduced rates in tune of 30% !!!
    This data will definitely help the real home buyers.

    ReplyDelete
  14. hi ravi,
    reading all the blogs n discussion regulary !!
    very less is said abt kothrud prop rates...
    heardly any correction seen here.I am very keen on buying apartmetn here in kothrud..
    ur view please on
    1 is correction alreayd seen in prices?
    2 what cud be the price range i shud wait for?

    ReplyDelete
  15. Rohan Builders has taken a step in the right direction - by reducing property rate. Their promise/agreement to reduce the rate further after agreement however is just a marketing brag - they are no saints and we shouldn't expect them to be one either. Jan - Oct is generally a lean phase - if you can wait out untill this Diwali - expect even further cuts and 'distress' sales. There is nothing like an 'absolute' rate like 1650 or 2650 or even 5650 - it's all driven by supply and demand - in today's market - supply will have to adjust to lower and low priced demand by either reducing existing prices or by creating new supply which meets today's demands. My 2 cents - save cash and wait untill Diwali - and then bargain hard with the project which best meets your requirements - think Linking Road in Mumbai - customer is the king - that's how it's gonna be like - good luck.

    ReplyDelete
  16. #But, i do't know any builder or a project which is working on these lines? Do you?

    Thanks Ravi. Exactly, this is the crux of the matter: Real estate slowdown.

    Builders do not want to align themselves according to market requirements. That's the main problem. First they attempted to put price on their flats more than what buyer want to give.

    Now they might commit second mistake by offerig area less than what buyers want to take. If they go ahead with this, nothing, absoluetly nothing can save them.

    Ths business model will collapse as it is not in the tune with market requirements which calls for comfortable 2-3 BHKs around 20 lakhs in good locations and priced downwards accordingly in fringe locations. No, no, do not term this as impossible. Slowdown can cause many things come back to ground. It caused earlier too amidst all denials.

    Btw its not that I 'missed' nanded city but I 'kicked' nanded city offer since the city has nothing inside except empty land and ads all over in media, and a experienced buyer will not give more than 1000 Rs. rate for such remote location. Days of using hype and hoopla are history.

    ReplyDelete
  17. Respected Sir,

    I appreciate your blog. I am a simple IT professional who bought a flat in the middle class locality of Kothrud, few years ago, when the real estate market was not so hot.

    I have read several of your blog posts. I think a "have and have not" competition was deliberately created by builders even among their customer target group of IT professionals.

    When 1 Modibaug was launched for 1 crore price, as early as 2003, the equivalent of "American Illusion" started.

    The builders used false marketing very effectively! e.g. The eco friendly homes are not really eco friendly. The smart homes are not really smart.

    Simple IT people who live in Kothrud, Sinhagad Road, and Warje keep wondering how come their peers afford the multi crore homes in 1 Modibaug and Kalyani Nagar. Who are the people who can afford the expensive monthly maintenance at such buildings? A lot of peer comparison and jealousy has been fueled.

    Rates have skyrocketed. False demand is being reported. Only God will save us from this kind of greedy mess.

    If I was to buy a flat today, I would be so scared of the prices, I'd continue to live in a rental house, like my father did all his lifetime. For people like us, houses are not something we "flip". They don't "appreciate". Houses are things we buy with sweat, blood, tears, and fear (whether builder will cheat us?) and then stay in that house for a lifetime. Today's market is not for people like us.

    Simpleguy

    ReplyDelete
  18. Prices in Pune are rediculous. Builders have nicely pocketed the fortunate gains made by IT professionals. Actually they also did not deserve it but were foolish enough to loose it over their greed.

    Anyone who has purchased after 2002 is the victim of fear and greed cultivated by builders. I feel sorry for the non IT punekars who got caught in the wind.

    From my experiences prices in the remote areas will drop even below their construction costs. Economic downturns can be very brutal and anyone leveraged will have to get out at any cost. All your project cost calculations wont matter.

    Only possible upside I see is that USA will be sending an estimated 1 million indians back in next 3 years. If they start living in their investment properties, the empty buildings may start seeing some life. If they bring their jobs with them then sone pe suhaga...

    ReplyDelete
  19. Hi Guys,

    Recently I visited the Property exhibition at Hotel Orchid at Balewadi..

    And was shocked by the increased in the rates by the all builders for Wakad and Pimple Sudagar area….

    The rates observed are as below ---

    Ready possession flats – 2500 – 2700 (Approx)
    Future possession flats (dec 2010) – 2300 – 2500 (Approx)

    Is the real estate market in the boom again??
    Why the builder’s are still increasing the rates???

    Have I missed the best buy period????

    Please provide you valuable thoughts ….. also suggest the good property within 25 lacs….


    Thanks
    Parag
    9822282391

    ReplyDelete
  20. I believe Kalpataru is still available for 2200/sq.ft.

    I must accept that the sample flat of Kalpataru is superb.

    Is it a good buy? Or should we wait for this quarter and see what happens in July?

    DJ

    ReplyDelete
  21. What is the construction including land price, under the table money, providing daru-ladaki to the great Pune Politicians and beaurocrats, NOT MORE THAT Rs. 1000 per sqft of carpet area? Why you need INR 2900 per sqft of Builtup taht is INR 3700 per sqft of carpet? Rupees 2700 per sqft profit??????????? Bullshit..prices are yet tooooooo high and IT Industries GROWTH is DEAD..

    ReplyDelete
  22. At Rohan Leher prices should not be more than 2400psf since it is too far from city. Don't book flats in such high rates.

    ReplyDelete
  23. Anyone knows the current rates at Rohan Mithila?

    ReplyDelete
  24. I recently visited Rohan Leher, They quoated INR 3900 /sq ft for their new phase booking. Is it worth to buy for Investement at this rate in this area??.. Their schemes are good and have noticed their price is usually 200-300 Rs more than neighbouring schemes in the same area...Do you suggest investing at such a high price in Leher at this time??

    ReplyDelete
  25. Yes, Mandar! More people would be renting in coming years and they would be thankful to you for providing cheap rental housing. If you decide to sell, finance minister would be glad to collect your capital gain tax!

    ReplyDelete
  26. Oh! Yes!! You will increase the profit of HDFC!! See today's results:
    Strong growth in demand for home loans, higher spreads, improved margins and better asset quality helped HDFC to post a 22% jump in net profit to Rs 808 crore for the quarter ended September 2010, compared to Rs 664 crore in the corresponding quarter in 2009. The home loan major also reported a total income of Rs 2,970 crore during Q2, up 4% from Rs 2,850 crore a year earlier.


    Read more: HDFC posts 22% jump in Q2 net profit to . 808 crore - The Times of India http://timesofindia.indiatimes.com/business/india-business/HDFC-posts-22-jump-in-Q2-net-profit-to-808-crore/articleshow/6772425.cms#ixzz12s00H2ND

    ReplyDelete
  27. i wish to buy property either baner/ balewadi, wakad or sus road. Wht would be the rate of rohan lehar, kalpataru.
    can some body tell me the latest rates??

    mallappa

    ReplyDelete
  28. mr karandikar can you guide me for purchasing a property in wakad, hinjewadi, baner, pashan at a reasonable rate new or resale.
    omkar360@gmail.com

    ReplyDelete