DLF starts phased payment plan in Gurgaon project

The slow real estate market is now driving even the largest developer DLF to offer a variation of a typical ‘’subvention scheme’’. While companies have been using the scheme as a marketing tool to attract buyers, it is for the first time that DLF is offering such a plan. It’s starting with a 20:20:60 plan for a project in Gurgaon.

Although subvention refers to the government paying a certain portion of home loan interest in affordable real estate projects, the industry is using the scheme in different ways to make it easier for the buyer in terms of structuring of payment for the house.

According to the scheme that DLF is offering, a buyer has to give 20 per cent of the total cost within one month of booking, another 20 per cent on application of occupation certificate and the remaining 60 per cent plus other charges on offer of possession.

The project is already under construction at sector 90 in Gurgaon, it is learnt. However, before launching the scheme, the unit prices rose, sources said. A house here could be priced at anything between Rs 6,000 and Rs 11,000 per sq ft, depending on the features and amenities.

When contacted, DLF refused to comment.

Some brokers, tracking Gurgaon, say the company might extend this scheme to its other projects as well to push up sales.

Despite a slowdown, the prices have not come down significantly in NCR. Property prices have been mainly stable but there is scope for correction in the prices in many locations, according to experts. “In the current market situation, DLF has increased the prices by 3-4 per cent in one of its project. It shows the confidence of the developer, which is a good sign for the market,” says a realty consultant based in NCR.

In March this year, DLF had for the first time offered discounts across 16 of its projects including Delhi, Bengaluru, Chennai, Kochi, Lucknow, Panchkula, Bhubaneswar, Kasauli and New Chandigarh.

The company has been trying hard to sell its inventory in a market where sales have been declining and supply piling up. It has also been reeling under huge debt, currently pegged at over Rs 20,000 crore. It had to divest many non-core assets to generate cash and focus on its core business of real estate.

Developers began cutting prices about two years ago to revive the flagging sales in order to beat the slowdown and generate cash flows, that had dried up after banks piped down funding to the sector.

DLF has been in the news for wrong reasons as well. Last year, DLF was penalised by the competition regulator for allegedly abusing its dominant position by imposing "unfair and discriminatory" terms on its buyers in several of its projects. The case is now being heard in the Supreme Court, but DLF had to deposit the penalty amount of Rs 630 crore with the court during pendency of the litigation. In February, two fresh probes were ordered by CCI against DLF involving its Skycourt and Regal Gardens projects in Gurgaon.