Lodha and Indiabulls cut luxury home prices by 15 per cent in Mumbai

Two leading realtors in Mumbai have announced cutting prices of luxury apartments in Mumbai up to 15 per cent, which may trigger a price war in this segment.

Lodha Group and Indiabulls Real Estate seem to have kick-started the most awaited exercise of easing in property prices with around 10-15% lower price tags.

In a bid to attract buyers in a slow market, both have launched their premium offerings at around Rs 25,000 per square feet, against earlier prices of Rs 28,000-30,000 per square feet, according to a media report.

Lodha Group has recently launched the first phase of its Blue Moon project on a 17.5-acre parcel acquired from DLF at an effective price of around Rs 23,000-25,000 per sq ft. Indiabulls Real Estate has also now launched Sky Forest project at Lower Parel at a base price ofRs 22,000 per sq ft, says a report from investment bank JP Morgan, says a TOI report.

According to Indiabulls Real Estate, an all-inclusive price at Sky Forest is Rs 25,000 per sq ft, including floor rise and charges for preferred view. Indiabulls has also thrown in a 20:80 financing scheme, where the customer can pay 20% at the time of booking and the rest at the time of possession.

"For Lower Parel residential properties, a price point of around Rs 25,000 per sq ft is not a bad offering, it's competitive; especially when some other properties in the extended vicinity are still going at around Rs 28,000-30,000 per sq ft," said Om Ahuja, CEO of residential services at Jones Lang LaSalle India.

According to him, prices in Lower Parel had touched even Rs 32,000 per sq ft at the peak of 2008. Since 2011, only four major launches have taken place in this market where few developers have land parcels, and therefore many market observers see this as a direct price war between two major developers.

Market experts see this as a good opportunity for prospective home buyers even as developers rush to clear their inventory. Lodha's strategy to offer competitive pricing with configuration tweaking did help the developer get a good response to its volume play. The company claims to have received over 1,300 applications worth Rs 6,000 crore from prospective buyers, against 750 units launched in phase I.

Lower Parel, Mumbai's central-most part, earlier known for its textile mills, is now transforming into a district of malls and commercial complexes along with most ambitious high-rise residential projects. Relaxed development norms in 1992 for mill lands in this area resulted in the rise of new commercial and residential space.

Will it be the beginning of property bubble burst in Mumbai? Only time will tell.