When the real estate sector was booming, the seller was the king of the regime. Property prices were touching the sky and only luxurious properties were at sale. But after the slowdown, buyers have taken over the regime. Indian Property Buyer is the King again. As in a discount sale, you can easily pick up a readymade garment at 40% of its original price; it’s how manufacturers are attracting buyers to get rid of unsold stock in the off season. But the meltdown in the
real estate market has forced real estate developers to offer discounts to buyers even during, what is considered, the peak season for selling. And because of the slowdown, there have been sluggish sales of high-end projects, which have forced developers to refocus on the mid-price and budget segments residential properties.
The five months between October and February are the most crucial for the realty sector. It’s during this holiday and festival season that buyers are usually flooded with cash. According to Mr. Abdul Bari, a real estate consultant, “This period usually sees bonuses earned during Diwali used for investing in real estate. The NRIs who come visiting during the New Year holidays often strike
property deals.” During this season, developers usually make a killing by driving hard bargains for their properties. This year, things seem to be very different and it is anticipated that buyers will be pampered all the more. Till now, inflation and interest rates show have not receded much and most real-estate companies have witnessed a 40-50% decline in sales in the past one year. “Markets are unlikely to revive soon. So it is better to sell a project at a 10% discount and reinvest the proceeds rather than hold it for a year. Who knows, the loss might be higher next year,” according to a developer.
Developers are offering discounts on almost all projects. However, before buying such a property, you need to read the fine print of the so-called offers carefully because the actual benefit may be very small. For instance, if a developer has promised to pay the EMIs on your home loan for a year, he might mean that it is the pre-EMI interest. This pre-EMI interest can be as low as 10% of the full amount.
Though cash discounts usually work best for buyers, they are also not as simple as they come across. What developers give out with one hand to buyers, they try to take that back from the other. For example, there are some developers who force buyers to pay extra for covered parking or club membership to avail such discounts. According to Mr. Pankaj Renjhen, Managing Director (Mumbai), Jones Lang Lasalle Meghraj, “When observed closely, these incentives do not have any significant monetary value.”
Developers are trying to lower their construction costs by building low-rise projects and smaller units of
residential property and commercial units. By keeping the structure of a project simple and doing away with parking spaces, basements, large lobbies and extra elevators, a developer can easily reduce the overall costs by about 25%. This also suggests that a project will no longer have the premium tag that had become the hallmark of projects between the year 2006 and 2007. Before the slump had hit the realty sector, big builders were focusing mainly on the premium segment, where margins were as high as 60-70% compared with the 20-30% earned in the mid-budget segment.
Now, even the real estate majors are going for low-cost developments to play the volumes game. Puravankara Projects, a Bangalore-based developer, plans to build 65,500 low-cost flats in five cities in south India in the next five years. “We are using modern technology for faster and cost-efficient construction,” said Mr. Ashish Puravankara, director of Puravankara Projects. “The flats will be 50% cheaper than the existing prices,” he added. This is close to similar forays by Mumbai-based developer Matheran Realty and Delhi-based Omaxe Ltd. Unitech’s luxury township in Gurgaon, Nirvana Country, was planned with villas and high-rise apartments but the low demand for villas at Rs 1.2-3 crore has forced the developer to launch two- and three-bedroom flats at only Rs 40-50 lakh.
India is mainly ruled by the middle-class and with projects being developed targeting mainly them, it is definitely good news for buyers.
Sukhpreet Kaur writes on behalf of
99acres.com, which is an internet portal dedicated to meet every aspect of the consumers needs in the real estate industry. It is a forum where buyers, sellers and brokers can exchange information. At 99 acres, you can advertise a
property in India , search for a property, browse through commercial property and
residential property. 
