Have the elec­tions played spoil­sport?

De­vel­op­ers could be of­fer­ing just a few free­bies be­cause po­ten­tial buy­ers de­fer mak­ing real es­tate in­vest­ments due to the im­pend­ing polls

HT Estates - - NEWS - Van­dana Ram­nani

If you were scout­ing for an apart­ment dur­ing the Navra­tra last year, you were prob­a­bly promised a gold coin, an all- ex­penses paid trip to Sin­ga­pore or a no-EMItill-pos­ses­sion op­tion. This year, with the Lok Sabha elec­tions just around the cor­ner and most de­vel­op­ers go­ing through a liq­uid­ity stress, those plan­ning to in­vest in res­i­den­tial prop­erty should not ex­pect too many free­bies.

Now the ques­tion is, have the of­fers been re­duced to a trickle be­cause of the Lok Sabha elec­tions? While it’s true that many prospec­tive home­buy­ers are wait­ing for the elec­tions to get over be­fore they take the plunge, ex­perts point out that end-users will not be di­rectly im­pacted by any such factor and will make a home pur­chase as and when they find the right prod­uct in the mar­ket. Only in­vestors will wait and watch.

What, how­ever, is be­ing of­fered is in the form of di­rect fi­nan­cial ben­e­fits such as bulk pay­ment on pos­ses­sion, pay­back schemes, free park­ing, waived stamp duty and reg­is­tra­tion charges.

Most de­vel­op­ers are of­fer­ing cus­tomised pay­ment plans to buy­ers wherein the pur­chaser gets the ben­e­fit of time and value. He pays 20% up­front and the re­main­ing amount at the time of pos­ses­sion. An­other trend that is be­ing seen is that many builders are repo­si­tion­ing parts of ex­ist­ing projects, launch­ing a new tower with a new name in order to cre­ate in­ter­est and boost sales.

“While the high-net-worth in­di­vid­u­als are not putting their money in real es­tate, it is the end-user who is re­turn­ing to the mar­ket and look­ing for bar­gains. He is also aware of the fact that once a sta­ble gov­ern­ment re­turns, prices are only go­ing to shoot up. As a mat­ter of fact, the re­sale value for projects in the range of ` 4500 sq ft to ` 5500 sq ft have gone up by 3% to 5%,” claims Anckur Sri­vast­tava of GenReal Ad­vis­ers.

There has been a re­cov­ery in the re­sale val­u­a­tion be­cause end -users have re­turned to the mar­ket. Elec­tions im­pact the sen­ti­ment of the mar­ket but do not af­fect the end-user much. So, if a buyer has lo­cated a prop­erty that’s pop­u­lated, in­fra­struc­ture has al­ready de­vel­oped, the price is right and all the fun­da­men­tals are in place, elec­tion or no elec­tion, he is bound to pur­chase it, he adds.

T he el ecti ons may im­pact mar­kets where in­vestors are in ma­jor­ity and the spec­u­la­tive el­e­ment is largely pre­dom­i­nant. Af­ford­able mar­kets will al­ways find buy­ers.

The slow­down in the real es­tate sec­tor has al­lowed de­vel­op­ers and bro­kers to de­vise new marketing strate­gies fo­cused on fac­tors which in­flu­ence buy­ers. To cite an ex­am­ple, t he s ub­ven­tion scheme (or no-EMI-till pos­ses­sion scheme, EMI-hol­i­day-till­pos­ses­sion scheme) to ad­dress the liq­uid­ity con­cerns of a buyer has proved to be a highly ef­fec­tive marketing strat­egy. How­ever, such schemes though banned by the Re­serve Bank of In­dia (RBI), have ini­ti­ated a drive for in­no­va­tive sell­ing strate­gies. Th­ese in­clude 20% amount to be paid on book­ing and the rest on of­fer of pos­ses­sion,

In the light of the slow­down and even the elec­tions in the off­ing, de­vel­op­ers are faced with the dif­fi­culty of clear­ing the ex­ist­ing un­sold in­ven­tory of prop­er­ties.To clear the un­sold in­ven­tory, de­vel­op­ers are of­fer­ing free­bies ie gifts, in­cen­tives or spe­cial dis­counts and even fi­nan­cial ben­e­fits such as free reg­is­tra­tion.

It is es­ti­mated that th­ese free­bies, in­clud­ing the ex­ist­ing dis­counts, are in the range of 5% to 10% of a prop­erty price.

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