Parsvnath Developers Sees Diwali Sales Drop, But Resists Price Cuts
Parsvnath Developers experienced a significant drop in sales during the Diwali festival season, with sales figures down 40-50% compared to the previous year. Despite this downturn, the real estate developer does not intend to implement price reductions to stimulate sales, according to Chairman Pradeep Jain.
The decline in demand is attributed to two primary factors, elaborated by Jain: elevated interest rates on home loans and regulations imposed by the central bank. These rules have pressurized banks to classify real estate loans as higher risk, placing further constraints on market activity. Speaking at an industry conference, Jain highlighted the challenges in accessing finance, stating, “Liquidity is a large concern. Banks have frozen everything. The indirect message to financial institutions is not to lend.”
Analysts see the current high property prices as an element necessitating a correction before stronger demand reemerges. Parsvnath Developers, however, is not following a strategy that involves price reductions. Jain explained this stance by pointing to the rising input costs. “We’re not going to cut prices. There is no softening of prices, the end-user demand is still there,” he affirmed, while declining to provide any specific details about estimated sales for the fiscal year ending in March 2009.
Cost Reduction Measures to Be Implemented By Real Estate Developer
Instead of lowering property prices, Parsvnath will concentrate on reducing internal expenses. In particular, these will include targeted salary reductions and the termination of "non-performing staff." They plan to aggressively expedite projects to effectively increase cash flows. Jain emphatically stated, “We are not abandoning any project and not considering to do so.” These cost-cutting measures are expected to be enacted in approximately one month.