As if real estate was not already out of reach of the average Mumbaiite, new stakeholders entering the market as investors are pushing realty rates even higher.
The last three months have seen a slew of pre-launches or soft launches by developers in which investors or ‘speculators’ have bought residential realty in bulk.
Developers conduct pre-launches to generate capital. Investors pay up 50 to 100 per cent of the apartment cost at the initial stage and are offered discounts in return. Investors sell these apartments at higher prices later.
Kumar Builders started the pre-launch of its Tardeo project at Rs 18,000 per sq ft where the existing booking rate in the area is approximately Rs 25,000 per sq ft. Vardhaman developers have opened bookings for their 45-storey twin tower at Mazgaon at Rs 13,000 per sq ft where the rate is Rs 15,000.
Three developers have started pre-launch bookings for their projects at Bandra (West) and Khar at Rs 16,000 to Rs 18,000 per sq ft where the booking rates are in the range of Rs 20,000 to Rs 23,000 a sq ft.
The Maharashtra Chambers of Housing Industry (MCHI), the apex body of developers, have defended this strategy. “Given the exorbitant land rates and also because banks do not fund us, we need investors to meet our cash needs,” said Sunil Mantri, president, MCHI. “These investors give us seed money and hence we have to give them discounts.”
Lalit Kumar Jain, chairman, Kumar Builders, said investors are playing an important role in the market. “We do sell flats to investors but they are very limited in our projects,” said Jain. “Discounts depend on the amount investors are ready to pay initially.” Experts say investors play a dominant role in determining the prices of the projects for buyers. “It is not genuine buyers but investors who are buying flats,” said Pankaj Kapoor, chief executive officer, Liasas Foras, a real estate research firm. He blamed developers for keeping the rates high to protect the interests of investors.
Recently, a builder opened bookings for an 18-storey tower near Plaza cinema at Dadar for Rs 14,000 per sq ft where investors are expected to pay half the amount in the first phase.
Most pre-launch bookings take place even before all the developer obtains permissions for construction. There is a gap of at least three months between the pre-launch and official launch.
Investors book property for less and sell at higher rates later
Malad- Kandivli: A Malad-based developer opened bookings for his project at Kandivli at Rs 5,500 per sq ft and at Malad at Rs 6,200 per sq ft. Actual rate Rs 8,500 approximately.
Juhu: A leading builder has priced his Juhu project at Rs 13,500 per sq ft for investors. Actual rate Rs 18,000 approximately.
Andheri: A 20-storey project at D.N. Nagar, Andheri, has been opened to investors at Rs 10,000 per sq ft. Actual rate Rs 12,000 approximately.
Borivli: Several small builders in Borivli have had soft launches at Rs 7,000-Rs 8,000 per sq ft. Actual rate Rs 9,000 approximately.