In what could be signs of a potential correction in the residential properties segment in Ahmedabad, developers are increasingly offering freebies like discounts on equated monthly installments (EMIs) and free modular kitchens.
“While some are offering free furniture to first 50 customers, others are offering free modular kitchens. In the last one and half month, freebies have risen in the Ahmedabad real estate market,” says Vijay Shah, a city-based developer.
Industry experts say the move is a precursor to an eventual correction in the market. What's more, the industry in Ahmedabad has also seen a slowdown in brokerage business by 30 per cent since January.
“There has been an eventual slowdown in the market, thanks to rising interest rates. Purchasing power of the people has taken a hit. But it is to be seen till how long will this trend continue,” says Rajesh Vaswani of Venus Infrastructure.
Seconding his thoughts is Nirav Kothary, regional director, Jones Lang LaSalle India (JLL), a real estate consulting firm. “Incentivised schemes and freebies have risen in the past few months. However, these are some of the gimmicks by developers to hold on to their prices. Instead of reducing prices, they are offering value additions or freebies which are not any innovation in the products,” says Kothary, adding that since January, real estate brokerage firms in Ahmedabad have seen a slump in business by about 30 per cent.
However, while some believe the move to offer freebies may continue, it may also result in correction of prices.
“Offering freebies are a sign of an eventual correction in prices. It is only as long as developers are able to offer freebies that they will be able to hold on to prices. Once the freebies dry up, it may result in correction,” adds Kothary.
Moreover, freebies are also being seen as a way to offset loans availed by the developers.
“These are the times when developers badly to need to repay their loans. But by offering freebies, they can avoid discounts which can help them use the extra money to offset loans,” says Shah, a city-based developer.
