Sobha team and brand is not the same what it was 3 years ago. We bought Sobha Daffodill in HSR Layout, Bangalore in September 2006. The delivery date was March 2008 and it has been delayed to November 2009. Sobha has not made any effort to expedite the project, rather they are fooling new buyers by offering crazy schemes like "3bhk at 40% discount, occupation by May 2009". Please do not fall in the Sobha trap, as once you sign the contract and pay money, the builder will take you for a ride.
Sobha is continuously sending us project getting late information. Every time they say the project will be ready in next 3 months, and as a buyer you should start planning the interiors, shifting etc. However, just 15 days to the handover they send you a communication that the project is further delayed by 3-6 months. Reason - downturn in the market & they are having cash problems.
Below is an excerpt from their official communication:
"We regret to inform you that due to the unexpected slowdown, liquidity and financial crunch, the construction work of Sobha Daffodil slowed down over the past 3 to 4 months. We are sure you will understand the situation that we are in; we request you to bear with us for this additional delay and sincerely apologize for it. Commencement for handover of the apartments for interiors will start now wef 30th Nov ’09. Please do understand that the apartment will be handed over for interiors only.
If in their existing projects, if they are having cash problems, how can they start other projects and commit delivery by May 2009. It is nothing but plain cheating and fraudulent activity.
The Sobha brand name is no more. They are here to cheat innocent people.
Thursday, April 9, 2009
Sobha Misleading all the way
I would highly recommend that you avoid sobha. I wish i had taken the advice of a friend before i made this booking. Never mind the nearly 3 year delay for the sobha daffodil project or the constant misleading statements that their CRM dept. makes. They are not the "A" grade builders that they advertise. Even in good times they take customers for a ride but now since they are heavily in debt they milk their customers dry.
Consider this that even after paying 80,000 extra for water and electricity post agreement they are now demanding we pay another ~2 lakhs or else no handover. They are also refusing to refund the service tax that government has rescinded stating that they have already made the payments but at the same time are unwilling to provide any receipts. If you are late in making a payment by a single date their ever vigilant finance dept will gleefully impose fines and penalties on you by the thousands but they are delayed by 3 years and you will be lucky to get a paltry sum if at all. Once you sign on the dottled line be prepared for a long list of surprises.
Consider this that even after paying 80,000 extra for water and electricity post agreement they are now demanding we pay another ~2 lakhs or else no handover. They are also refusing to refund the service tax that government has rescinded stating that they have already made the payments but at the same time are unwilling to provide any receipts. If you are late in making a payment by a single date their ever vigilant finance dept will gleefully impose fines and penalties on you by the thousands but they are delayed by 3 years and you will be lucky to get a paltry sum if at all. Once you sign on the dottled line be prepared for a long list of surprises.
Shriram in talks to buy Sobha assets
In what could perhaps be the first sign of consolidation in the slowdown-hit realty sector, Shriram Properties — part of the $5.5-billion Chennai-based Shriram group of companies — is believed to be in talks with Bangalore-based residential market leader Sobha Developers.
It is understood that Shriram may be looking to buy some of Sobha’s asset portfolio — up to seven of them. These assets could be land with development rights or projects under development, a source close to the process said. The deal is likely to be worth Rs 200-300 crore. “Sobha is in discussions with us. But we have not taken any in-principle decision.
Sobha is evaluating to hive off assets/projects and merger options with Shriram,” a top Shriram group official told ET. Talks between both companies are going on for the past four weeks, another source said. ET learnt that Sun Apollo, an equity partner in some of Shriram’s properties, may help Shriram by putting in some of the money, even though this could not be confirmed.
When contacted, Shriram Properties MD M Murali denied any deal with Sobha. He, however, said the company was actively pursuing its expansion plans. Sobha’s JC Sharma, too, denied the development, although he maintained the company was pursuing various options to raise capital.
Sobha MD JC Sharma had earlier told ET that the company was looking at dilution of stake in the company at the entity level by up to 26% and was also open to divest stakes in its SPVs. Sobha, which is facing a liquidity crunch like many other realty players, is looking at a variety of options to raise up to Rs 600 crore in the coming months.
It was also looking to sell some of its land holdings in Chennai, Bangalore and Pune. Sobha holds about 400 acres in these cities.
The deal, if and when happens, will help the Rs 480-crore Shriram Properties — a pure-play fund manager and development company — scale up its size in the residential market. It is not known how Shriram will raise funds for the purchase.
The deal will also generate much-needed cash for Sobha. The Bangalore-based developer has debt of about Rs 1,850 crore on its books. Sobha also needs cash to develop its various projects. It is developing about 1,400 apartments in Bangalore and other parts of the south. Promoters hold 87% stake in Sobha Developers. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.
The realty sector is groaning under the collective weight of heavy debt and slump in consumer demand. Many firms bought land when prices were very high hoping to sell the apartments at those rates and make decent returns. But the fall in prices has quashed those plans, putting many of them in quandary. They have to complete the building for which there are few takers. Banks are still unwilling to lend while public markets have turned unfriendly to builders. One solution is to consolidate, get rid of non-core properties and projects while focusing on the important ones which can generate returns. Shriram has completed projects covering 4.5 million sq ft in Bangalore, Chennai, Coimbatore and Kolkata, while 80 million sq ft of projects are in the pipeline at Vizag, Kolkata, Chennai, Coimbatore and Bangalore. Walton Street Capital made its first investment in India through Shriram Properties, while Starwood is the other investor at the entity level of the Chennai group.
Shriram also has a 50:50 joint venture with Sun Apollo, which has brought in Rs 600 crore for executing two special purpose vehicle projects in Chennai and Vizag.
The Sobha scrip closed 6.03% up at Rs 94.05 on BSE on Wednesday.
It is understood that Shriram may be looking to buy some of Sobha’s asset portfolio — up to seven of them. These assets could be land with development rights or projects under development, a source close to the process said. The deal is likely to be worth Rs 200-300 crore. “Sobha is in discussions with us. But we have not taken any in-principle decision.
Sobha is evaluating to hive off assets/projects and merger options with Shriram,” a top Shriram group official told ET. Talks between both companies are going on for the past four weeks, another source said. ET learnt that Sun Apollo, an equity partner in some of Shriram’s properties, may help Shriram by putting in some of the money, even though this could not be confirmed.
When contacted, Shriram Properties MD M Murali denied any deal with Sobha. He, however, said the company was actively pursuing its expansion plans. Sobha’s JC Sharma, too, denied the development, although he maintained the company was pursuing various options to raise capital.
Sobha MD JC Sharma had earlier told ET that the company was looking at dilution of stake in the company at the entity level by up to 26% and was also open to divest stakes in its SPVs. Sobha, which is facing a liquidity crunch like many other realty players, is looking at a variety of options to raise up to Rs 600 crore in the coming months.
It was also looking to sell some of its land holdings in Chennai, Bangalore and Pune. Sobha holds about 400 acres in these cities.
The deal, if and when happens, will help the Rs 480-crore Shriram Properties — a pure-play fund manager and development company — scale up its size in the residential market. It is not known how Shriram will raise funds for the purchase.
The deal will also generate much-needed cash for Sobha. The Bangalore-based developer has debt of about Rs 1,850 crore on its books. Sobha also needs cash to develop its various projects. It is developing about 1,400 apartments in Bangalore and other parts of the south. Promoters hold 87% stake in Sobha Developers. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.
The realty sector is groaning under the collective weight of heavy debt and slump in consumer demand. Many firms bought land when prices were very high hoping to sell the apartments at those rates and make decent returns. But the fall in prices has quashed those plans, putting many of them in quandary. They have to complete the building for which there are few takers. Banks are still unwilling to lend while public markets have turned unfriendly to builders. One solution is to consolidate, get rid of non-core properties and projects while focusing on the important ones which can generate returns. Shriram has completed projects covering 4.5 million sq ft in Bangalore, Chennai, Coimbatore and Kolkata, while 80 million sq ft of projects are in the pipeline at Vizag, Kolkata, Chennai, Coimbatore and Bangalore. Walton Street Capital made its first investment in India through Shriram Properties, while Starwood is the other investor at the entity level of the Chennai group.
Shriram also has a 50:50 joint venture with Sun Apollo, which has brought in Rs 600 crore for executing two special purpose vehicle projects in Chennai and Vizag.
The Sobha scrip closed 6.03% up at Rs 94.05 on BSE on Wednesday.
Friday, April 3, 2009
Realtor Brigade cuts rate by 15% across projects
Plans to build cheaper flats for buyers with Rs. 25-30 lakh budgets, construct hospitals, residences and malls
Close on the heels of DLF Ltd slashing ticket prices of its homes by 30%, Brigade Enterprises Ltd cut rates by 10-15% in all its projects and will build small, cheaper apartments to cater to buyers with budgets of Rs25-30 lakh.
The Bangalore-based developer has lined up 12 projects, which include hospitals, residences and malls, and would start building them before the end of this year. It plans to raise Rs1,000 crore for its ventures.
“We are planning to raise the money this year through a combination route of private equity and institutional funding,” said chairman and managing director M.R. Jaishankar.
Brigade, which has around 14 million sq. ft under development in southern India, is aggressively looking at expanding its hospitality business in 2009.
On Friday, the company, in partnership with Accor hotels and resorts, launched Mercure Homestead, which is a 126-room luxury service apartment complex in north-west Bangalore. This also marked the launch of Accor’s global Mercure brand in India, with the next property lined up at the hill station of Lavasa, near Pune in Maharashtra.
“We are positive on the Indian market and are planning 50 properties here by 2012 under our various brands, such as Mercure, Novotel and others,” said Daniel Tannenbaum, Accor’s India regional director of sales and marketing. He was responding to a query on a dull hospitality sector and dipping demand in the serviced-apartments segment.
Brigade has a debt of Rs. 350 crore, but will not restructure its loans like other developers that include Unitech Ltd, Sobha Developers Ltd and Housing Development and Infrastructure Ltd.
“We didn’t commit the mistake of buying land indiscriminately and only bought enough that would be developed within five-seven years. So, if there is a good piece of land, we are still looking to buy,” said Jaishankar. The company has a land bank of about 450 acres.
Brigade’s net profit for the nine months to 31 December dipped by 17.3% to Rs67.44 crore from Rs81.55 crore in the same period a year earlier.
The company’s stock closed at Rs. 38.75, up 5.59%, on the Bombay Stock Exchange on Thursday, on a day when the Sensex rose 4.51%.
Close on the heels of DLF Ltd slashing ticket prices of its homes by 30%, Brigade Enterprises Ltd cut rates by 10-15% in all its projects and will build small, cheaper apartments to cater to buyers with budgets of Rs25-30 lakh.
The Bangalore-based developer has lined up 12 projects, which include hospitals, residences and malls, and would start building them before the end of this year. It plans to raise Rs1,000 crore for its ventures.
“We are planning to raise the money this year through a combination route of private equity and institutional funding,” said chairman and managing director M.R. Jaishankar.
Brigade, which has around 14 million sq. ft under development in southern India, is aggressively looking at expanding its hospitality business in 2009.
On Friday, the company, in partnership with Accor hotels and resorts, launched Mercure Homestead, which is a 126-room luxury service apartment complex in north-west Bangalore. This also marked the launch of Accor’s global Mercure brand in India, with the next property lined up at the hill station of Lavasa, near Pune in Maharashtra.
“We are positive on the Indian market and are planning 50 properties here by 2012 under our various brands, such as Mercure, Novotel and others,” said Daniel Tannenbaum, Accor’s India regional director of sales and marketing. He was responding to a query on a dull hospitality sector and dipping demand in the serviced-apartments segment.
Brigade has a debt of Rs. 350 crore, but will not restructure its loans like other developers that include Unitech Ltd, Sobha Developers Ltd and Housing Development and Infrastructure Ltd.
“We didn’t commit the mistake of buying land indiscriminately and only bought enough that would be developed within five-seven years. So, if there is a good piece of land, we are still looking to buy,” said Jaishankar. The company has a land bank of about 450 acres.
Brigade’s net profit for the nine months to 31 December dipped by 17.3% to Rs67.44 crore from Rs81.55 crore in the same period a year earlier.
The company’s stock closed at Rs. 38.75, up 5.59%, on the Bombay Stock Exchange on Thursday, on a day when the Sensex rose 4.51%.
Real Estate Developers On the Debt Bed - Sobha Developers Situation?
Real estate firms may be opting for loan rescheduling for some breathing space, but additional interest rate is only adding to the stress.
The real estate sector, which received a shot in the arm in the form of debt rescheduling package, is unlikely to get the full benefit as the package comes with several riders.
While rescheduling helps realty firms realign the payment tenure, it comes with an additional burden of 1-2 per cent interest, more collaterals and pledging of receivables. Bankers, taking into account the risk involved in rescheduling loans for real estate sector, raise interest rate. Confirming the move, a senior official of HDFC said, without wanting to be named. “When extending the time, banks can levy extra interest rate to compensate for the additional risk they take in restructuring accounts.”
However, additional interest rates can put severe strain on real estate companies as they had taken loans at high rates in the past. Levying extra interest would mean additional pressure on the troubled companies. T Y Prabhu, executive director of Union Bank of India says, “The idea of restructuring is to provide respite to the beleaguered companies. Increasing the interest rate only adds to the stress. Staggering of repayment is a better option.”
Until last year, builders and developers went on an overdrive to acquire land and launch projects, borrowing heavily for the purpose. However, the global slowdown has brought about a reversal of fortune for the once-booming realty sector, which is now saddled with liquidity crunch and falling property values, forcing companies to request banks to re-schedule loans.
Bangalore-based Sobha Developers, New Delhi-based Unitech and Mumbai-based HDIL have requested for rescheduling of some of their debt. These companies are not willing to comment on the rates at which they had borrowed money. However, according to a research report compiled by Credit Suisse in January, quoting NSDL data: “Sobha and Unitech borrowed at 19-30 per cent. Also, average borrowing for property companies was 200-300 basis points higher than most other sectors during the same period, indicating the higher risk attached by lenders to the sector.”
The report further added: “Sobha borrowed funds at 24-30 per cent for short periods of 1-2 months in October-November 2008. Further, it also appears that Sobha defaulted on some of the repayments during this time. Unitech borrowed at 19 per cent in November 2008.” The present rate of interest on commercial loans for real estate companies is 14-16 per cent. Banks reassess cash flows and viability of a project while restructuring and give preference to projects that are nearing completion. S Ananthakrishnan, executive director of IDBI Bank said, “As per the restructuring norms, the net present value (NPV) of principal and interest over the term of the loan cannot be diluted.” He also said that “to compensate for any such dilution, interest rate would need to be appropriately increased if the duration of repayment has to be extended to protect the NPV.”
Companies such as Sobha and Unitech are looking at easing their monthly quarterly obligations towards servicing debts.
“Real estate companies want the period of loan to be extended by converting short-term liability into long-term debt. Though it may result in higher rate of interest, a builder would be happy so long as his monthly obligation is reduced,” said Shuva Mandal, managing partner of Fox Mandal and Little, a law firm that specialises in real estate projects.
“If a developer furnishes more collaterals, then the interest rate is kept unchanged. Otherwise, additional interest burden of around 1-2 per cent is levied. We have been involved in 2-3 such instances in the last 45 days,” said Ameet Hariani, managing partner of Mumbai-based Hariani & Co, another law firm.
R Nagaraju, general manager for corporate planning and strategy at Unitech, said, “Interest rates are linked to prime lending rate (PLR).” He refused to comment specifically on additional interest burden because of loan rescheduling. Unitech had earlier revealed that the company had a debt of around Rs 8,000 crore, of which it had to pay Rs 1,100 by March 31 to various banks as opting for loan extension could give some breathing space. Besides Unitech and HDIL, another Mumbai-based real estate company is in the process of rescheduling non-convertible debentures of around Rs 1,275 crore that are due for payment starting April 2009.
S Baaskaran, chief financial officer of Sobha Developers, said, “We do not know about other players, but for us there is no additional burden. It depends upon the project completion and the revised cash flow of the company.”
The real estate sector, which received a shot in the arm in the form of debt rescheduling package, is unlikely to get the full benefit as the package comes with several riders.
While rescheduling helps realty firms realign the payment tenure, it comes with an additional burden of 1-2 per cent interest, more collaterals and pledging of receivables. Bankers, taking into account the risk involved in rescheduling loans for real estate sector, raise interest rate. Confirming the move, a senior official of HDFC said, without wanting to be named. “When extending the time, banks can levy extra interest rate to compensate for the additional risk they take in restructuring accounts.”
However, additional interest rates can put severe strain on real estate companies as they had taken loans at high rates in the past. Levying extra interest would mean additional pressure on the troubled companies. T Y Prabhu, executive director of Union Bank of India says, “The idea of restructuring is to provide respite to the beleaguered companies. Increasing the interest rate only adds to the stress. Staggering of repayment is a better option.”
Until last year, builders and developers went on an overdrive to acquire land and launch projects, borrowing heavily for the purpose. However, the global slowdown has brought about a reversal of fortune for the once-booming realty sector, which is now saddled with liquidity crunch and falling property values, forcing companies to request banks to re-schedule loans.
Bangalore-based Sobha Developers, New Delhi-based Unitech and Mumbai-based HDIL have requested for rescheduling of some of their debt. These companies are not willing to comment on the rates at which they had borrowed money. However, according to a research report compiled by Credit Suisse in January, quoting NSDL data: “Sobha and Unitech borrowed at 19-30 per cent. Also, average borrowing for property companies was 200-300 basis points higher than most other sectors during the same period, indicating the higher risk attached by lenders to the sector.”
The report further added: “Sobha borrowed funds at 24-30 per cent for short periods of 1-2 months in October-November 2008. Further, it also appears that Sobha defaulted on some of the repayments during this time. Unitech borrowed at 19 per cent in November 2008.” The present rate of interest on commercial loans for real estate companies is 14-16 per cent. Banks reassess cash flows and viability of a project while restructuring and give preference to projects that are nearing completion. S Ananthakrishnan, executive director of IDBI Bank said, “As per the restructuring norms, the net present value (NPV) of principal and interest over the term of the loan cannot be diluted.” He also said that “to compensate for any such dilution, interest rate would need to be appropriately increased if the duration of repayment has to be extended to protect the NPV.”
Companies such as Sobha and Unitech are looking at easing their monthly quarterly obligations towards servicing debts.
“Real estate companies want the period of loan to be extended by converting short-term liability into long-term debt. Though it may result in higher rate of interest, a builder would be happy so long as his monthly obligation is reduced,” said Shuva Mandal, managing partner of Fox Mandal and Little, a law firm that specialises in real estate projects.
“If a developer furnishes more collaterals, then the interest rate is kept unchanged. Otherwise, additional interest burden of around 1-2 per cent is levied. We have been involved in 2-3 such instances in the last 45 days,” said Ameet Hariani, managing partner of Mumbai-based Hariani & Co, another law firm.
R Nagaraju, general manager for corporate planning and strategy at Unitech, said, “Interest rates are linked to prime lending rate (PLR).” He refused to comment specifically on additional interest burden because of loan rescheduling. Unitech had earlier revealed that the company had a debt of around Rs 8,000 crore, of which it had to pay Rs 1,100 by March 31 to various banks as opting for loan extension could give some breathing space. Besides Unitech and HDIL, another Mumbai-based real estate company is in the process of rescheduling non-convertible debentures of around Rs 1,275 crore that are due for payment starting April 2009.
S Baaskaran, chief financial officer of Sobha Developers, said, “We do not know about other players, but for us there is no additional burden. It depends upon the project completion and the revised cash flow of the company.”
Job losses spur cancellations in luxury residential projects
The developer fraternity now faces a new crisis: buyers queuing up to cancel transactions after months of paying the booking amount
When Sobha Developers Ltd, a listed realty firm, was recently approached by a buyer who wanted to cancel an apartment purchase in Petunia, a luxury residential project in north Bangalore, out of fear that her husband could lose his job, the developer promptly transferred her booking to one of its more affordable projects.
The buyer, who had already paid Rs. 1.25 crore of the Rs. 1.65 crore for the under-construction Petunia apartment didn’t have to pay anything more.
An economic slowdown and fears of job losses are forcing realty firms to accommodate such requests, said Keshav Menon, executive director, Sobha Developers, without divulging the identity of the buyer. “The idea is not to lose a customer and try to accommodate him within what we can offer,” he said.
At Sobha, which has been grappling with dipping sales and sizable debt, at least one in 10 cancellations every month are due to reasons involving sudden unemployment and the fear of losing jobs, Menon added.
With monthly sales down to single digit at several projects and serious liquidity issues, the developer fraternity now faces a new crisis: buyers queueing up to cancel transactions after months of paying the booking amount. There is no readily available estimate for job losses across the country, but there have been reports of layoffs in sectors such as software services and automobiles.
As such instances increase, developers are beginning to ignore a forfeiture clause that typically allows a refund only after a deduction of 5% to 20% from the booking amount in case of a cancellation.
“The panic to withdraw from bookings is particularly noticeable in high-end projects where the buyer is simply scared of financial insecurity. We try to counsel and retain them but if it is a case of genuine job loss, we ask them to provide some proof and then refund,” said A.R.P. Raman, global head (marketing and sales) for Shriram Group, which has eight projects in Bangalore, Coimbatore, Chennai, Visakhapatnam and Kolkata.
Developers stress it is only in genuine cases that the deduction is held back. At Sobha, for instance, in cases where a refund is demanded without a job loss, “around 25% is deducted from the booking amount and returned”, said Menon.
Six months ago, as the economic slowdown started settling in, Sobha introduced a clause in its sale agreement that the developer will refund the booking amount only after re-selling the same apartment and after a 25% deduction.
Another luxury project, Aquilla Heights in Bangalore has also seen cancellations over the last few months with job loss being cited as a reason. The project, being developed by Tata Housing Development Co. Ltd and billed the tallest residential project in the technology hub, has 244 apartments priced between Rs. 70 lakh and Rs. 1.2 crore. But, “we are also telling buyers to hold on as there are exit options. They are allowed to sell the unit six months after allotment,” said a senior executive at Tata Housing, who asked not be identified citing company policy.
Mint reported on Tuesday that DLF Ltd, the country’s largest developer by market value, has assured around 250 buyers who want to exit a housing project in Chennai that they will be refunded this month after they demanded that the company cut prices by 25%; DLF had previously offered to do so by 10% to 18%. A DLF spokesperson told Mint that a small portion of the buyers, numbering up to 30, wanted refunds claiming job loss.
At least one developer said it was not in a position to make refunds even when the reason was genuine. “We can’t refund right away and if the booking is or an under-construction project, the deductions are 15-20%,” said Mohan Kumar, vice-president (sales and marketing) of Bangalore’s Alliance Infrastructure Pvt. Ltd.
Some can afford refunds but “how many builders can refund immediately with each one suffering a cash crunch?” asked Raminder Grover, chief executive of Homebay Residential Pvt. Ltd, a unit of Jones Lang LaSalle Meghraj, a property advisory firm. Nearly 70% cancellations are in the luxury segment where buyers are feeling jittery about paying a huge monthly installment, said Grover.
When Sobha Developers Ltd, a listed realty firm, was recently approached by a buyer who wanted to cancel an apartment purchase in Petunia, a luxury residential project in north Bangalore, out of fear that her husband could lose his job, the developer promptly transferred her booking to one of its more affordable projects.
The buyer, who had already paid Rs. 1.25 crore of the Rs. 1.65 crore for the under-construction Petunia apartment didn’t have to pay anything more.
An economic slowdown and fears of job losses are forcing realty firms to accommodate such requests, said Keshav Menon, executive director, Sobha Developers, without divulging the identity of the buyer. “The idea is not to lose a customer and try to accommodate him within what we can offer,” he said.
At Sobha, which has been grappling with dipping sales and sizable debt, at least one in 10 cancellations every month are due to reasons involving sudden unemployment and the fear of losing jobs, Menon added.
With monthly sales down to single digit at several projects and serious liquidity issues, the developer fraternity now faces a new crisis: buyers queueing up to cancel transactions after months of paying the booking amount. There is no readily available estimate for job losses across the country, but there have been reports of layoffs in sectors such as software services and automobiles.
As such instances increase, developers are beginning to ignore a forfeiture clause that typically allows a refund only after a deduction of 5% to 20% from the booking amount in case of a cancellation.
“The panic to withdraw from bookings is particularly noticeable in high-end projects where the buyer is simply scared of financial insecurity. We try to counsel and retain them but if it is a case of genuine job loss, we ask them to provide some proof and then refund,” said A.R.P. Raman, global head (marketing and sales) for Shriram Group, which has eight projects in Bangalore, Coimbatore, Chennai, Visakhapatnam and Kolkata.
Developers stress it is only in genuine cases that the deduction is held back. At Sobha, for instance, in cases where a refund is demanded without a job loss, “around 25% is deducted from the booking amount and returned”, said Menon.
Six months ago, as the economic slowdown started settling in, Sobha introduced a clause in its sale agreement that the developer will refund the booking amount only after re-selling the same apartment and after a 25% deduction.
Another luxury project, Aquilla Heights in Bangalore has also seen cancellations over the last few months with job loss being cited as a reason. The project, being developed by Tata Housing Development Co. Ltd and billed the tallest residential project in the technology hub, has 244 apartments priced between Rs. 70 lakh and Rs. 1.2 crore. But, “we are also telling buyers to hold on as there are exit options. They are allowed to sell the unit six months after allotment,” said a senior executive at Tata Housing, who asked not be identified citing company policy.
Mint reported on Tuesday that DLF Ltd, the country’s largest developer by market value, has assured around 250 buyers who want to exit a housing project in Chennai that they will be refunded this month after they demanded that the company cut prices by 25%; DLF had previously offered to do so by 10% to 18%. A DLF spokesperson told Mint that a small portion of the buyers, numbering up to 30, wanted refunds claiming job loss.
At least one developer said it was not in a position to make refunds even when the reason was genuine. “We can’t refund right away and if the booking is or an under-construction project, the deductions are 15-20%,” said Mohan Kumar, vice-president (sales and marketing) of Bangalore’s Alliance Infrastructure Pvt. Ltd.
Some can afford refunds but “how many builders can refund immediately with each one suffering a cash crunch?” asked Raminder Grover, chief executive of Homebay Residential Pvt. Ltd, a unit of Jones Lang LaSalle Meghraj, a property advisory firm. Nearly 70% cancellations are in the luxury segment where buyers are feeling jittery about paying a huge monthly installment, said Grover.
Sobha Developers to declare FY 2009 results by Jun 30, 2009
Sobha Developers Ltd has announced that the Company will publish the Audited Financial Results for the entire financial year 2008-09 within three months from the end of the financial year ended March 31, 2009.
In view of the above, the Un-audited Financial Results of the last quarter ended March 31, 2008 will not be published.
The stock closed the day at Rs.81.55, up by Rs.2.10 or 2.64%. The stock hit an intraday high of Rs.82.05 and low of Rs.79.
The total traded quantity was 27114 compared to 2 week average of 55152.
In view of the above, the Un-audited Financial Results of the last quarter ended March 31, 2008 will not be published.
The stock closed the day at Rs.81.55, up by Rs.2.10 or 2.64%. The stock hit an intraday high of Rs.82.05 and low of Rs.79.
The total traded quantity was 27114 compared to 2 week average of 55152.
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