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Sambhar Mafia - Cooked To Kill!

Sunday, March 08, 2009

DLF Faces An Acid Test In Chennai

DLF is a recent entrant to the Chennai property scene and is facing quite a few headwinds. Sometime ago, there was news that DLF collected about Rs. 5 lakhs Earnest Money Deposit (EMD) from interested buyers even before the project managed to get all the necessary approvals. As the property prices continue their downtrend, buyers who were among the early birds to sign up are pushing DLF to drop the price to be in tune with the falling market. Although DLF has acceded to their request, the buyers feel that the discounts are not sufficient enough. DLF has very little choice other than to give in to the dissenting buyers. If DLF doesn’t cut the price more aggressively, it risks losing willing buyers who wouldn’t mind foregoing the EMD (as worst case) as their potential losses might even surpass that of Rs. 5 lakhs. DLF on its part has assured buyers that it would refund EMD if required as per the terms of the agreement.

Credit is becoming increasingly scarce for corporates and more so for the property sector. The project is about 50% booked and I wouldn’t be surprised if some of the original buyers back out if prices are not slashed. DLF might need more bookings and upfront / progress payment to fund working capital. I feel that the project delays might also be quite disconcerting to buyers as they need to wait longer to get their dream home. Without enough bookings, DLF might not be in position to continue construction at the required pace. Instead of being more aggressive on the pricing front, DLF seems to be concentrating on rewarding agents by offering them more commissions. I really doubt if such incentives can lure the ultimate buyers. If DLF has long-term plans of being a reputed player in the Chennai property market, it needs to make serious amends to appease existing and prospective customers. 

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2 Comments:

  • There is quite a bit of storm gathering about this garden city project in new vs.old media as well.
    TNIE vs Internet activists

    1. First NIE reports Garden city project turns nightmare

    http://www.expressbuzz.com/edition/story.aspx?Title=DLF+project+turns+a+nightmare&artid=iXJ2UTefVLY=&SectionID=lifojHIWDUU=&MainSectionID=wIcBMLGbUJI=&SectionName=rSY%7C6QYp3kQ=&SEO=DLF

    2. It prints official version of DLF

    http://expressbuzz.com/edition/story.aspx?Title=DLF:+We+are+committed++to+our+customers&artid=4T%7CXdxZ/X1o=&SectionID=lifojHIWDUU=&MainSectionID=wIcBMLGbUJI=&SectionName=rSY%7C6QYp3kQ=&SEO=

    3. Then it attacks internet groups working against DLF as "Faceless unworthies"

    =wFVrv0UQ95A=&SectionID=XT7e3Zkr/lw=&MainSectionID=XT7e3Zkr/lw=&SectionName=HFdYSiSIflu29kcfsoAfeg==&SEO=

    4. It has printed a version of the internet activists - can't find it online

    A bad strategy by DLF and using media to report biased is only going to hurt

    By Blogger Sabs, at 6:13 PM  

  • There is a new group of DLF Garden City project buyers active at the below site.

    http://groups.google.com/group/dlfgardencityassociation

    Sankar

    By Anonymous Anonymous, at 7:56 PM  

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