India`s debt-laden property developers are turning to deep discounts, free parking spots and even gimmicks like gifts of gold coins and motorbikes as they struggle to sell billions of dollars worth of as-yet unfinished homes.
Now outstripping China as the world`s fastest-growing major economy according to official data, India has a real estate market mired in debt piled up in a 2006-2007 construction boom that gave way to slowdown.
It now takes developers about 4-1/2 years to turn property inventory into cash, more than a full year longer than it takes developers in China, according to Thomson Reuters Starmine data.
It`s not just bad news for developers in megacities like Mumbai, now seeking ways to offload inventory with increasing intensity. It`s also making it harder for many debt-burdened lenders to pass on interest rate cuts to borrowers, hindering central bank efforts to accelerate growth: India`s central bank has cut rates twice this year, with more cuts expected.
“It is a buyer`s market,” said Preeti Patil, a 28-year-old who works for a large Indian media group and was in the market for a two-bedroom house in the suburbs of Mumbai. “Last week, we turned down a deal, two days later we had the builder call us to offer $8 (500 rupees) per square foot discount.”
Even worse for developers, Patil is among those who have little confidence property prices will rise in future. Despite cut-price offers, she abandoned plans to buy, saying she feared the investment would not reap near-term returns.
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