Flats on sale before project launch
Rising realty prices are forcing developers to resort to the old tactic of pre-launch sales, which will help them gauge the market and raise money for their projects, reports Naresh Kamath.mumbai Updated: Mar 16, 2010 02:08 IST
Rising realty prices are forcing developers to resort to the old tactic of pre-launch sales, which will help them gauge the market and raise money for their projects.
In a pre-launch sale, bookings are done before the formal launch of a project.
These sales are usually targeted at investors, who book flats only to make profits. Developers also offer these prospective buyers hefty discounts.
Investors could pay between 40 to 100 per cent of the total cost of the flat. They are given a range of discounts.
A.A. Estates Private Limited, which is constructing 391 luxury flats at Sunder Nagar, Kalina, has also had a pre-sale launch. The base price is fixed at Rs 14,500 a square foot and investors are being given discounts between 15 to 40 per cent based.
“It is one of the best ways to raise money,” said the company’s managing director, Anand Gupta. “This is just to lure the investor to the real estate market.”
Hicon Builders at Bandra, Patel Builders, Kandivli, and Karnani Developers at Khar have had pre-launch sales in the past few months.
Maharashtra Chambers of Housing Industry’s President-elect, Sunil Mantri, described this strategy as a soft launch.
“This is mostly reserved for close associates, brokers and investors,” Mantri told Hindustan Times. “The most advantageous aspect of this it gives a developer confidence before introducing his project in the market. He can get valuable feedback on the project and can modify it before going to general buyers.”
A pre-sale launch, which begins at least two months before the official launch of a project, has other advantages too. Brokers pick up housing units in bulk and guarantee the developer a fixed amount irrespective of market conditions.
Industry experts, however, have reservations about this practice. “This is not the real market as these investors are just there to make a quick buck,” said Pankaj Kapoor, managing director, Liasas Foras, a real estate research firm. “In many cases, we have seen that work has not yet started but developers have already made money.”