Sales at Parsvnath Developers’ in the festival season of Diwali are down to half from a year ago, but the real estate developer does not plan price cuts to boost sales, its chairman said.
High interest rates on home loans and central bank rules forcing banks to assign a higher risk weight to real estate loans have dented property demand in India.
“There is a substantial fall, 40-50%” in Diwali sales, Pradeep Jain said on the sidelines of an industry conference.
“Liquidity is a large concern. Banks have frozen everything. The indirect message to financial institutions is not to lend.”
Analysts say property prices are still high and need to correct some more before demand picks up. But Parsvnath has no such plans, Jain said, citing rising input costs.
“We’re not going to cut prices. There is no softening of prices, the end-user demand is still there,” he said, but declined to comment on the firm’s expected sales in the fiscal year to March 2009.
Parsvnath would focus on reducing costs by reducing salaries and firing “non-performing staff,” and would speed up projects to improve cash flows, Jain said.
“We are not abandoning any project and not considering to do so,” he said. The cost cutting measures would come in within a month, Jain said.