Realty check: Major developers too picking up buyers’ interest tab
Developers have been facing the pressure of the slowdown, resulting in high debt and low profitability
Jun 23, 2013
Source : The Hindu Business Line

DELHI: To clear the stock of unsold homes, real-estate developers are willing to wait for 80 per cent of a property’s cost as long as the buyer is ready to pay 20 per cent upfront.

The so called 20:80 scheme that smaller players used to hook buyers is now the marketing mantra of big players such as DLF, Parsvnath and IndiaBulls.

Also called the subvention scheme, it helps the realtor clear inventory and the buyer the time to mobilise funds as he need not pay the EMI for a set period or until getting possession of the property. The catch is that the developer picks the interest tab.

Developers have been facing the pressure of the slowdown, resulting in high debt and low profitability. Most new launches of the listed entities fall in the Rs 45 lakh to Rs 1 crore or mid-tier range.

The scheme, a brainchild of smaller real estate players, has caught on elsewhere in the country, mainly in places Delhi-NCR and Mumbai.

RISING inventory

All this show up the anxiousness of realtors to clear the piling unsold homes especially as new launches have not stopped. The inventory is rising in the Delhi-NCR market that accounts for much of the projects under development.

According to a Knight and Frank research, 33,500 units were launched in the Delhi-NCR residential market alone during the second-half of 2012-13, up 6 per cent over the first half. The market has an estimated 1,40,000 units of unsold inventory, which is approximately 27 per cent of the units under construction.Delhi-NCR and Mumbai Metropolitan Board account for about 80 per cent of the total residential units being developed.

Pradeep Jain, Chairman, Parsvnath Group, said: “We have also launched a 25:75 House of Happiness Scheme. This scheme is applicable on our 20 projects in New Delhi, Greater Noida, Ghaziabad, Sonepat and Dharuhera. We are seeing an overwhelming response and are delighted to see a huge number of first-time buyers.”

Positive response

DLF has also received positive response to its 20:80 scheme. The company expects to garner around Rs 3,500 crore from the new projects to be launched just in Gurgaon. Ashok Tyagi, Chief Financial Officer, said during a conference call that the company expected high net realisation from the 20:80 scheme.

Margin pressure

“Listed developers are under tremendous margin pressures. This scheme gives them enough liquidity but also puts pressure to execute projects faster,” said Manish Mehta, Vice-President, Indiahomes. “For offering such schemes, the nod from the bank is a must. Banks usually look at the credit history and the reputation of the developer. Projects that listed players are offering largely fall in the Rs 50 lakh to Rs 1.5 crore category,” he added.

A banking official pointed out that the scheme had swelled the home loan portfolio despite the risks.

Latest Realty News

Weak rupee draws NRIs to Indian realty
Jun 22, 2013
DELHI: Rupee depreciation may be bad news for the Indian economy, but not so for the non-resident Indians scouting for property back home. Cashing in on the opportunity to buy residential units cheaper by up to 20%, NRIs are queueing up big time.
Home prices inflated; aggressive lending dangerous: Deepak Parekh
Jun 22, 2013
DELHI: Terming the home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh on Friday asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.
Buyers seek 2BHK units, developers build larger homes in Noida
Jun 22, 2013
BHUBANESWAR: How often do we come across a situation wherein supply in the real estate market is not aligned with market demands? The probable answer may be – several times. A similar situation looms large on the Noida realty market. There is a significant mismatch between demand and supply of different configurations. While 2BHK seems to be the preferred size for buyers, developers are largely building 3BHK units.
Golf Course Extension Road: The ultimate luxury destination
Jun 22, 2013
DELHI: Over the years, Gurgaon has become synonymous with luxury living. Among the many localities offering high-end properties, Golf Course Extension Road stands out for the number of residential projects overlooking the golf course and state-of-the-art facilities.
Residential prices surge in sector 76 Noida
Jun 21, 2013
DELHI: In the last four to five months residential values in Sector 76, Noida have shown an upward graph. The capital values in the locality have moved up from approximately Rs 4,700-4,900 per sq ft in the Oct-Dec 2012 to Rs 5,900 per sq ft in the Jan-Mar 2013, the data further revealed.
CREDAI bats for realty reforms with Girija Vyas
Jun 21, 2013
DELHI: Praising the Union Government’s efforts towards real estate reforms, realtors’ apex body Chairman Lalit Jain expressed the hope that the new Housing and Urban Poverty Alleviation Minister Ms. Girija Vyas will continue with the unfinished task of her predecessor Mr Ajay Maken.
Opinion divided on housing regulatory bill
Jun 20, 2013
DELHI: The Real Estate (Regulation and Development) Bill, 2013, which seeks to regulate the housing market and protect the interest of homebuyers and developers has been cleared by the Union Cabinet and will be placed in Parliament for its approval.
How new real estate bill could reshape the realty ecosystem?
Jun 20, 2013
MUMBAI: 1) Project Registration When the Real Estate (Regulation and Development) Bill 2013 comes into effect, all projects will have to be registered with a real estate regulatory authority.
Focus on high-tech integrated townships
Jun 20, 2013
DELHI: High-tech, integrated residential township projects in metros and Tier I and II cities like the Delhi NCR, Mumbai, Pune, Bangalore, Ahmedabad, Lucknow, Kolkata, Indore, Hyderabad, etc, are promising good returns for prospective buyers and developers.
The Bill will be a boon for homebuyers
Jun 19, 2013
MUMBAI: The Real Estate Regulator Bill which was recently approved by the union cabinet, has been several years in the making now and hasn’t had smooth sailing from the start. Apart from inordinate delays, it faced much resistance from the real estate fraternity at initially who were afraid that this Bill would prove to be yet another regulatory bottleneck, rather than a regulation that would empower the industry and its homebuyers.

Latest Realty News Of State

Realty Talk's