Don’t let of­fers sway your house buy­ing de­ci­sion

HT Estates - - FRONT PAGE - Ash­wini Ku­mar Sharma ash­

Cus­tomers are re­set­ting their ex­pec­ta­tions to buy homes given that the cost of bor­row­ings have gone up,” Goenka added.

On the project fi­nanc­ing front as well, there will be de­lay in fi­nan­cial clo­sure and re­fi­nanc­ing of projects.

While ear­lier com­mit­ments were be­ing hon­oured, new projects and new fi­nanc­ing were be­com­ing slightly chal­leng­ing.

“There will be over­all slow­down in terms of growth in the real es­tate mar­ket. We are only left with two quar­ters and these are peak quar­ters for the sec­tor. Some­times 65-70% of the sales hap­pen in these two quar­ters. The liq­uid­ity is­sue among NBFCs is go­ing to sig­nif­i­cantly im­pact growth,” said Goenka.

The sec­tor has al­ready been fac­ing a lot of head­winds be­fore the new woes hit them.

Over the last four years, the sec­tor, par­tic­u­larly the res­i­den­tial seg­ment, has been reel­ing un­der­pres­sure dueto weak­mar­ket sen­ti­ment and slow de­mand, es­pe­cially in lux­ury hous­ing.

Cou­pled with slow pace in home sales, de­mon­e­ti­za­tion, the roll-out of goods and ser­vices tax (GST), and the in­tro­duc­tion of new real es­tate reg­u­la­tions have se­verely im­pacted new launches and ex­pan­sion plans of sev­eral de­vel­op­ers in the past two years.

Home sales and new launches had just started pick­ing up since the be­gin­ning of this year after a sharp fall in the pre­vi­ous year due to the lin­ger­ing ef­fect of de­mon­eti­sa­tion.

In the first six months of this year, home sales in the last eight cities have grown by 6% to 1.38 lakh units as com­pared to the same pe­riod last year.

New launches had al­most dou­bled up to over 100,000 units in the first six month­soft­his year after a se­vere slump pre­vi­ous year.

Real es­tate con­sul­tants, how­ever, are hope­ful that while the liq­uid­ity crunch may fur­ther im­pact mar­gins of de­vel­op­ers, it may not have much ef­fect in home sales or se­verely im­pact new launches.

“NBFCs con­trib­ute 50-55% of con­struc­tion fi­nance to the de­vel­op­ers. There may be a bit of a slow­down in the con­struc­tion of projects, but builders will have to find ways, es­pe­cially cus­tomer ad­vances, to take care of project fund­ing. Mar­gins have been un­der pres­sure be­cause of the heavy cost of fi­nanc­ing. Mar­gins will be un­der fur­ther stress,” said Pankaj Kapoor, man­ag­ingdi­rec­tor, Li­ases Fo­ras, a real es­tate ad­vi­sory firm. Dhar­mvir Singh, an IT pro­fes­sional, is plan­ning to up­grade to a big­ger house at a bet­ter lo­ca­tion. With most de­vel­op­ers al­ready out with their an­nual fes­tive of­fers, he can eas­ily set­tle for oneof the most­suit­able deals. “I have been get­ting calls from them now of­fer­ing dis­counts and schemes so that I make a de­ci­sion soon,” said Singh. Though some of the of­fers sound good, Singh wants to take his time to find a house that is just right for him.

Singh booked a two-bed­room apart­ment in Greater Noida West (ear­lier known as Noida Ex­ten­sion) in 2013 while it was un­der con­struc­tion and got its pos­ses­sion re­cently. How­ever, the 34-year-old, who works in Vas­ant Vi­har and lives with his wife and­child in Vaishali, Ghazi­abad, can’t think of mov­ing into the house as it’s far from his work­place, is too small for his needs and has poor con­nec­tiv­ity. “I want­tosell this apart­ment and buy a big­ger house, which should also be closer to my of­fice,” said Singh, who ex­pects his mother to shift with him in a year or two.

Ev­ery year, around Di­wali, de­vel­op­ers come up with of­fers and­schemestoat­tract buy­ers, in the hope of giv­ing a leg up to the slow sales that the real es­tate in­dus­try is reel­ing un­der over the past few years. “We are op­ti­mistic that this sea­son will im­provethe sen­ti­ment and­bring back fence sit­ters in the mar­ket,” said Suren­dra Hi­ranan­dani, CMD, House of Hi­ranan­dani.


Dis­counts and tax waivers

As per Mag­, a real es­tate por­tal, Dim­ple’s Group, a Mum­bai-based de­vel­oper, is of­fer­ing dis­counts of up to ₹44 lakh to home buy­ers in its project, called 73 EAST, that is com­ing up in Kan­di­vali West, Mum­bai. The project of­fers twoand three-bed­room apart­ments at a start­ing price of about ₹1.7 crore. An­other de­vel­oper in Indi­ra­pu­ram, Ghazi­abad, is of­fer­ing var­i­ous ameni­ties free of cost, along with free car park- ing and waiver of the 12% goods and ser­vices t ax ( GST). To­gether, all these can bring down the cost by ₹30.57 lakh.

Pu­ranik Builder is of­fer­ing a dis­count of up to ₹10.95 lakh for its project named Abi­tante that is comin­gupinPune. The­p­ro­ject of­fers 2- and 3.5-bed­room apart­ments at ₹60-90 lakh.

Lodha Group, a Mum­baibased de­vel­oper, is of­fer­ing to pay stamp duty and GST along with giv­ing an early bird dis­count of ₹6 lakh to buy­ers who book an apart­ment in their un­der- con­struc­tion project named Lodha Amara, lo­cated in Thane, Ma­ha­rash­tra.

Sub­ven­tion and part­pay­ment

Some de­vel­op­ers of­fer sub­ven­tion and part pay­ment schemes, es­pe­cially at the time of projects launches or for un­der-con­struc­tion prop­er­ties, round the year, while a lot of oth­ers start of­fer­ing them specif­i­cally dur­ing the fes­tive sea­son.

“For newer launches, lower up­front pay­ment and the re­main­der on pos­ses­sion are stan­dard sub­ven­tion schemes,” said An­shul Jain, coun­try head and manag­ing di­rec­tor, Cush­man & Wake­field In­dia, real es­tate con­sul­tants.

Un­der a sub­ven­tion scheme, the ini­tial pay­ment or down pay- ment that a home buyer has to make to buy a prop­erty is de­lib­er­ately kept low to at­tract more buy­ers. For in­stance, M3M Group, a Gurgaon-based de­vel­oper, is al­low­ing book­ing in their project, namedM3MSierra68, in Sec­tor 68, Gurgaon, by just pay­ing 5% of the apart­ment value; the re­main­ing has to be paid at the time of pos­ses­sion.

In case of part- pay­ment schemes, home­buy­ers have to pay the prop­erty cost in three or four parts. Usu­ally, the first part of the pay­ment is lower at 10-30% of the prop­erty value; an­other part is paid dur­ing the con­struc­tion phase and the last part at the time of pos­ses­sion. For in­stance, Sa­tra Group, a Mum­bai-based de­vel­oper is of­fer­ing 10:80:10 sub­ven­tion scheme in its project Sa­tra Har­mony, lo­cated in Chem­bur, Mum­bai.

Other of­fers and free­bies

De­vel­op­ers are also of­fer­ing var­i­ous other free­bies, in­clud­ing gold coins, I-Phones and cars, at the time of book­ing. Some oth­ers are of­fer­ing free air-con­di­tion­ers, mo­du­lar kitchen, fur­ni­ture and so on.


The de­clin­ing sales vol­umes over the past few years has led to huge un­sold in­ven­tory of readyto-move-in prop­erty. With chances of improve­ment in de­mand or price bleak, it doesn’t make sense for de­vel­op­ers to hold on to them. “There could be new launches around this time, but de­vel­op­ers are fo­cus­ing on eas­ing ex­ist­ing in­ven­tory,” said Hi­ranan­dani.

In or­der to clear such in­ven­tory, var­i­ous de­vel­op­ers are of­fer­ing waiver of tax and other fees. “For ex­ist­ing in­ven­tory which is closer to com­ple­tion free­bies are ac­com­pa­nied by waiver of GST, stamp duty or reg­is­tra­tion charges or the ad­di­tional costs over and above the ba­sic cost of the apart­ment,” said Jain.

A lot of buy­ers too now pre­fer com­pleted projects be­cause of the un­cer­tainty in­volved with un­der-con­struc­tion projects. “We are wit­ness­ing strong de­mand for ready-to-move flats over un­der-con­struc­tion ones,” said Hi­ranan­dani.


Realty por­tals are go­ing hand-in­hand with de­vel­op­ers and pro­vid­ing them a plat­form to reach large num­ber of po­ten­tial home buy­ers. Hous­, a real es­tate por­tal owned by Elara Tech­nolo­gies Pte Ltd, which also owns real es­tate por­tals PropTi- and, has an­nounced its an­nual, on­line home shop­ping fes­ti­val, Home Ut­sav 2018, from 1 Oc­to­ber to 31 Oc­to­ber, of­fer­ing deals, of­fers and new fea­tures. About 150 de­vel­op­ers and 500 chan­nel part­ners will show­case over 350 projects in the event across In­dia.


“Buy­ers should not be swayed only by pack­ages and of­fers and do thor­ough due dili­gence on the project and the pro­moter,” said Jain. Like Singh, you should not let free­bies and dis­counts drive your pur­chase de­ci­sion. Buy only when you find a prop­erty that suits your needs.

“These of­fers can be re­ward­ing if the cus­tomer has picked the right de­vel­oper and project. White goods free­bies make sense if the prop­erty it­self is of in­her­ent value to the buyer,” said Anuj Puri, chair­man, Anarock Prop­erty Con­sul­tants.

You should be es­pe­cially care­ful about fi­nan­cial schemes like No- EMI till pos­ses­sion, sub­ven­tion schemes, part pay­mentsand so on. It’s im­por­tant to un­der­stand these thor­oughly to as­sess if it can ben­e­fit you. “They can be mis­lead­ing if the fi­nan­cial scheme­sarenot trans­par­ent and the buyer does not read and un­der­stand the fine print,” said Puri.

Ideally, one should eval­u­ate all the free­bies and of­fers in terms of money. In­stead of ac­cept­ing a free­bie, try and ne­go­ti­ate with the de­vel­oper for cash dis­counts. “Straight up dis­counts on prices are def­i­nitely ben­e­fi­cial for buy­ers. In other cases as well, waiver of cer­tain charges or cer­tain free­bies help keep the over­all cost within the buyer’s bud­get,” added Jain.

“A price dis­count is the clear­est and most de­ci­sive in­cen­tive that a de­vel­oper can of­fer, but a buyer should fo­cus equally on the value ob­tained and the money saved,” said Puri.

So be­fore you con­sider an of­fer or scheme, find out the mon­e­tary­ben­e­fit that you would de­rive, avoid of­fers that you don’t need and in­sist that the de­vel­oper ad­justs the value of gifts in the prop­erty value. But most im­por­tantly, don’t look at real es­tate only be­cause there are of­fers on the rack.


Ev­ery year, around Di­wali, de­vel­op­ers come up with of­fers and schemes to at­tract buy­ers


Cus­tomers are re­set­ting their ex­pec­ta­tions to buy homes

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