Chennai developer launches OMR project at 25% discount

Chennai’s developers have been trying out various out-of-the-box ideas to increase their revenues — from focussing more on warehousing to renting out unsold apartments.

But the city’s builders are now resorting to perhaps their last option: heavy discounts. CNBC-TV18’s Jude Sannith reports that the city’s well-known player Doshi Housing recently stunned competitors by launching a project at 25 percent below prevailing market rates.

The developer launched phase one of the Risington project: 496 apartments in all with a special discounted price of Rs 4,850 per square foot, but only for early birds. This price, that is 25 percent below the market rate of Rs 6500 per square foot, is only for the first 100 bookings.

The project is based on Old Mahabalipuram Road, or OMR as it’s more popularly called. and it is one of Chennai’s emerging realty corridors.

“There was an apprehension in people’s minds that ‘If I delay my purchase, I would get a better price’. So, we tackled that by offering an investment protection guarantee,” says Doshi Housing director Mehul Doshi. “What we said is: ‘This is the lowest price you can get, and if there is anybody who launches a product which is lower than this price tomorrow, we will refund the difference to you’.

” Downsizing the carpet area of apartments — or what Doshi housing calls smart sizing — is the other strategy the builder is relying on to lure buyers. Restricting the apartment size to less than a 1000 square feet has enabled Doshi to keep the final price between Rs 30 and 50 lakh.

Developers have been struggling to hit double digits in the number of apartments being sold per month. The fact that Doshi Housing, on the other hand, has managed to sell close to 50 units in just three days – at competitive prices – is proof that their formula is indeed working.

Other builders are following suit and drawing plans to launch smaller and cheaper properties with basic amenities and nothing over the top.

Says Kanchana Krishnan, Director – Chennai, Knight Frank India, “Chennai is an end-user-driven market. It might sound like a cliché, but 85 percent of demand here comes from end-users, which means there is an inherent demand in the system, which we need to capitalize on.”

“The moment you launch a product between Rs 3,000 to Rs 5,000, which is the flavour of the season, you create a robust demand within the system and then you can boost sales.

” The over-supplied stretch of OMR alone is home to nearly 65 percent of the city’s new projects, with an average inventory overhang period of 28 months.

To help shore up sales we’ve already seen builders offer various schemes like free car-parking, and the waiver of extra charges for higher floors.

But experts are convinced nothing will bring back buyers except for aggressive pricing.