Go online, pay later: buyers get special builder offers
Compensation for price corrections also being promised
Hit hard by demonetisation, real estate builders are now coming up with special schemes to lure buyers and encouraging online payments. Compensation is also being promised for price corrections in the near future.
H o m e b u ye r s a r e b e i n g assured of adjustment of compensation if prices fall further. This has led to a significant rise in interest in ready- tomove-in properties and projects nearing completion, says Brotin Banerjee, MD and CEO, Tata Housing.
“We have also encouraged the use of the most convenient mechanisms for transactions through our online portal which allows customers to make payments online, ensuring transparency and ease for both,” Banerjee says.
In Delhi NCR some developers are planning to provide price guarantees which will be included as a clause in the builder-buyer agreement. If property prices were to correct, the balance would either be returned to the buyers or adjusted in their installments. Realty experts, however, warn buyers about this measure, asking “How will you measure correction? What is the criteria and how can the same value be true for all cities and all asset classes?”
D e v e l o p e r s w h o h av e introduced the book now, pay after three months include Delhi Infratech. It has allowed buyers hit by demonetisation to book apartments in its luxury project DeNest on the Gurgaon-Faridabad Expressway and pay later.
It has also been reported that some builders, especially those with huge unsold inventory, have been accepting old currency notes from buyers to repay debts. Many local builders have managed to settle their old debts in this way. Similarly, broking firms are reportedly booking properties with old currency to pay off sums they owe as commissions to sub brokers, say sources.
Buyers are also being encouraged to transfer the booking amount for properties online. PayUmoney has partnered with Ansal Builders for payment of booking and utility costs. “Eight to 10 builders are live on our platform,” says Pradeep Shekhawat, head-SMB Business, PayU India.
What could probably work better at this juncture is for developers to offer rebates for timely payment of EMIs to customers. After the housing bubble crisis in 2007-2009, many developers offered 5%-10% discounts on the overall cost of the product and adjusted the discount with the last payment. “That is a better way to address the current market situation and will help encourage sales,” says Shveta Jain of Cushman & Wakefield.
H av i n g s a i d that, the uncertainty in the market is only temporary. “Right now it is more a function of uncertainty in the market and buyers adopting a wait and watch approach. The situation is expected to ease by March next year,” she says.
Are housing deals materialising post demonetisation? Most all-cheque transactions in the pipeline before November 8 have more or less concluded. Majority of cash transactions, however, have failed to materialise due to uncertainty in the market.
Primary markets are most of the time driven by all-cheque and all loan transactions. An affordable, well priced product still has traction in the market. Many potential buyers are opting to wait for big discounts because of low demand. For many buyers, the joy of receiving possession of their homes is fast turning to dismay as they cannot rustle up the finances for relocation – that too in cash. Some builders are citing demonetisation and the subsequent labour crunch as reasons for delay in projects.
Santosh Kumar, who received delivery of his Greater Noida West apartment earlier this month, says he cannot move in before April as he does not have cash for the movers and other expenses. His project is one of the many housing societies where even though 1,300 people have registered their apartments, only 500 people have moved in.
Shweta Bharti, general secretary, Noida Extension Flat Owners Welfare Association also confirms that some developers are citing demonetisation to justify the slowdown in work and late delivery of projects – but orally. No letters have been sent to buyers. “Whenever we visit the construction site and inquire about the progress in work, we are told that the cash crunch and lack of labour has delayed work,” says a buyer.
Out of 50,000 houses that we r e t o b e d e l i ve r e d by end of this year in Greater Noida West, only 12,000 have been handed over for mally.
Unorganised labour from Bihar and Madhya Pradesh hired by developers on a short term basis have gone back to their states due to the cash crunch. Usually, a project site has 15% permanent labourers. About 85% temporary labourers. most of whom do not have bank accounts, have gone back. This has had an impact on project construction and led to delay in delivery of projects, says Praveen Jain, president of Naredco.
A m i t M o d i , wh o l e t i m e director ABA Corp and vice president, Credai Wester n UP, says that there has been a 25% l abour shortage. His company has taken the initiative to open bank accounts for workers and even decided to provide them daily meals.
“B u i l d e r s we r e u n d e r pressure to complete projects before the real estate regulator is put in place across states and were hoping to complete them by February next year, but demonetisation will lead to further delays. If projects were delayed by a year to three years earlier, they will be further delayed by six months to a year due to cash flow issues,” Jain adds.