Real Estate Developers Upcoming With Innovative Ideas To Boost Sales

Indian Real Estate Trying To Regain Market With Innovative Ideas

Indian real estate market is trying to regain momentum with creative schemes and futuristic ideas to boost up sales. There is no doubt that the toughest times are often periods of immense creativity, and, the real estate developers are proving this adage by finding their feet even in this period of economic slowdown.
Stagnating sales, mounting debt and rising inventories are pushing them to offer the best deals to customers who face risks in acquiring real estate assets in the current market scene.
Innovation is important to any business, but in an uncertain environment, innovation in structuring deals and offering incentives becomes nothing less than a key to survival.
Real estate developers continue to innovate depending on the dynamics of the micro market in which they operate, and its demand-and-supply situation. No fundamental shift in the slowdown situation is expected in the near future, and hence incentivizing the decision of home-buying becomes mandatory.
Some of the most popular schemes in Indian property market include ‘EMI post-possession’. BPTP is offering this for those who invest in their projects — the clients just pay 15% upfront and the EMIs are applicable only after possession of the units.
Then there is a scheme where the EMI kicks in after 8-9 months. Vatika launched a discount scheme where the buyer pays 15% upfront and then the next EMI is after 8-9 months. This is a relatively new scheme and appears to be catching up with buyers.
Soft launches at an attractive price for a limited period are another way of offloading inventory. To attract buyers and generate funds, developers offer above-average discounts even before they launch their projects formally. For instance, M2K is offering an attractive pre-launch price of Rs 5,800 per sq ft in Sector 104 Gurgaon. This is a good price for anyone who wants to invest on Dwarka Expressway.
“Today, planned supply looks bigger than supply under construction in size and value,” says Anand Moorthy, head of Real Estate Services, RBS Financial Services (India) Pvt Ltd. He adds that innovative schemes give the market a better momentum where the “outflow or commitment at this stage from the buyers or investors is only 15-25%”.
A popular scheme is ‘20-80’. Each developer who offers the financing scheme differs slightly depending on the scope of their project and finances. DB Realty is offering 19.9% for buyers to put down upfront and rest when the property is complete; Sunteck Realty is asking for 30% upfront in the same scheme.
Moorthy of RBS says: “It is a great proposition for the end user provided his liability for 80% is on actual possession. Interestingly, even in the case of an investor, if he invests today at the asking price, say Rs 100, and gives Rs 20 for it today, and exits at Rs 125 after five year, his return on equity would be around 18%. Important thing to note, however, is that these purchases should be backed up with sanctions and right loading factors. If there are issues on sanction or there is a 60% loading on the asset, then there could be significant risks.”
“Sales have picked up with the 20:80 scheme,” says a realtor, pointing to a report of the US financial major, Merrill Lynch, which says that new launches with discounts by real estate developers have perked up sales volumes across cities this year.
The realtor says that the 20:80 scheme gives buyers a breathing period and they are not under pressure to pay EMIs, while the developer gets funds and the banks are happy as they get good business. What buyers realistically want is that developers offer the scheme only when at least 20% of the project is complete. This gives the much needed confidence to the buyer. But one must verify whether there is sufficient evidence of the developer being equipped to meet the stated delivery timelines, the realtor says. It is very important also for the buyer to do a market valuation of the fair market value and to understand whether there is a benefit. One always has to remember that home loan repayment is a long-term process and they must consider whether a concession during the initial years will prove to be beneficial or not, the realtor says. Market is buzzing with bright ideas at the moment. Newer projects are being launched with futuristic features as developers want to be sure they have USPs
that will hold water with the customer over the long term. Take the case of Griha Pravesh project in Sector 77, Noida.
With fast depleting water, they have identified integrated water management and sophisticated parking as one of their USP and have invested in a water-softening plant, rainwater harvesting, and double-height parking with provision for hydraulic stack system. Abhay Kumar, CMD of Griha Pravesh Buildteck Pvt Ltd, says: “The need for more efficient parking will become more pronounced as the amount of available space diminishes and gets more expensive. We realize that and are offering the space to park two cars in the place of one by providing the residents of our project with the option of an auto stacker.” Besides, there are also state-of-the-art electric vehicle charging points at the
parking lot in this residential complex.
Many developers say that buyer-sentiment is not impacted by freebies and discounts. What spurs the home-buying sentiment in India is simply Navaratras — the most auspicious season of homebuying and not freebies, says a spokesman of Supertech.
“Specific limited-period schemes are launched by Supertech during festive period. Last year also, we launched ‘SACS-2012’ scheme (Supertech Annual Condo Sale-2012) during the Navaratra in which certain benefits were given to the buyers across all properties of Supertech. Buyers today look at the track record of developers along with their brand image in the market,” the spokesman says.
Some developers are downplaying the economic slowdown saying it is just a temporary phase. A Gurgaon-based realtor says, “I don’t believe it is a slowdown; it’s a temporary phase, and market will pick up after another four-five months once roads, connectivity and other infrastructure are ready in the new developing areas.”
That slowdown is a boon for homebuyers is not unheard of, even in recessionary markets. Shop for a home, and get a car free. When the Dubai property market went bust, many reputed developers were seen giving luxury cars along with purchase of luxury houses (DAMAC Properties was giving away luxury cars like Lamborghini, BMW or MINI); more recently, at an Ahmedabad real estate exhibition, customers were offered a shop free on booking an apartment — the shop was nearly the same size as the apartment! Shop for a home to get a shop free!
Source-TOI

Posted By-
Alok Kumar Upadhayay

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