In response to declining apartment sales and persistent inflationary pressures, real estate firms are increasingly opting into joint development agreements by offloading land parcels to fellow builders. Pankaj Jaju, who heads the real estate practice at Enam Securities, stated, "Metros and Tier II towns having a huge pipeline of projects have witnessed a 60% drop in sales of apartments in the last six months." This strategy of selling land parcels for joint development is viewed as a pathway for land owners to reinvest in acquiring additional land, thereby expanding their property portfolios, he noted.
Echoing these sentiments, Rohit Gera, executive director at Gera Developers, commented on the dramatic sales decline, specifically highlighting that the real estate market in Pune has mirrored this 60% reduction in sales. He added, "If inflationary trends continue till December 2008, land value will undergo a price correction of about 30% by March – April 2008." Importantly, this anticipated drop in land pricing is unlikely to place a financial burden on consumers, as Gera pointed out that developers will refrain from imposing premiums. "Large, medium and small developers have already started offering land to us for joint development. We are, in fact, waiting for price discounts at which we can borrow land from them for constructing their projects," he revealed.
Industry analysts suggest that the property prices in Navi Mumbai and the Bandra-Kurla Complex (BKC) are poised to rise by an estimated 10-15% in the upcoming six months, contingent upon developers meeting existing project timelines.
Similarly, the situation is not markedly different in Bangalore and Chennai, where labor costs in the real estate sector are surging primarily due to labor shortages, as indicated by sources within Puravankara Projects. Moreover, raw material input costs—accounting for 40% of total project expenses—are predicted to experience further increases, which could exacerbate the ongoing slump in apartment sales nationwide.