Realtors across India are in a do or die situation. And true innovation is clearly being born out of desperation. Faced with decreasing demand, real estate developers are using unique, innovative schemes in a bid to clear their housing inventory pile-up even as they sit tight on declared prices.
For instance, not only are unsold properties being offered at a special discount, developers have also tied-up with banks and other loan companies for immediate sanctioning of loans within a limited time of 48 to 72 hours, discounts, or even waiver of club membership or car park.
But what probably showcases the tight liquidity conditions of developers best, is probably the fact that they have started 'rebranding' areas with swanky addresses like Upper Worli, Upper Juhu, BKC Annex, BKC Extension and New Cuffe Parade to lure buyers. However, these addresses neither have a pin code nor do they find mention in the administrative records of the Brihanmumbai Municipal Corporation, an Indian Express report pointed out.
With conventionally expensive south Mumbai localities such as Malabar Hill and Altamount Road becoming saturated, areas such as Worli and Lower Parel are emerging as the new tony neighbourhoods in the country's financial capital. However, builders cannot sell the 'exclusive tag' with pin codes such as BKC, Parel and Wadala.
A recent wealth report byKotak Wealth Management and Crisil Research said forwealthy individuals with net worth upwards of Rs 25 crore and annual income of Rs 3.5-4 crore, the key factors in buying a luxury home are: location (25 percent), interiors (18 percent), size (16 percent), exclusivity (15 percent), architecture (13 percent), automation (8 percent) and price (5 percent).
With location being the priority, builders are unlikely to find high-end buyers withoutrebranding the premium.
The biggest player in this 'rebranding exercise' is Mumbai-based Lodha Group.
"Lodha presents the World's Tallest Residential Tower in Mumbai- World One will be located at Lodha Place, a landmark development on a 17 acre site, located on Senapati Bapat Marg and Shankarrao Nikam Marg in Upper Worli," reads the company's brochure.
In reality, the project is being constructed atthe defunct 17-acre Shrinivas Mill plot at Lower Parel, and is 3.5 km from Worli. The same group is also planning a luxury project at Wadala,close to the newly opened Eastern Freeway but is advertising the pin code as "New Cuffe Parade."
"Mumbai's new city centre, New Cuffe Parade, provides the perfect setting for the city's elite. Of its 23 meticulously planned acres, 15 acres are dedicated to landscaped greens and serene water bodies. And every comfort of a world-class urban lifestyle - gourmet restaurants, the finest schools, hospitals, leisure hubs and cultural attractions - is in the neighbourhood. While New Cuffe Parade will have its own commercial and business hubs, getting to Mumbai's other key locations will be equally effortless, and a 20 minute ride away. This is the only spot in the city where the Eastern Freeway, Monorail and Metro will come together, for incredible connectivity. And with the completion of the Mumbai Trans Harbour Link, even the upcoming airport at Navi Mumbai will be a short drive away," says the company website.
Picture a "balance between the finest cuisine with regular exercise; spirituality with entertainment; professional success with quality life".... at Wadala and that too in the middle of a bus depot and an industrial refinery? Think again.
No wonder the name had to change to New Cuffe Parade. But here's a reality check: This pin code is not even remotely close to the Taj or the sea and the nearest restaurant is surely kilometres away.
"We take this approach only for select marquee developments that are similar to landmarks that change the face of the city. New Cuffe Parade bears a striking resemblance to its roots in Cuffe Parade in terms of size, creator and type of development. Since real estate is a long term, futuristic product category, a name gives our customers a visual representation of what the development envisions," R Karthik, chief marketing officer at the Lodha Group has been quoted as saying by the Indian Express.
However, Om Ahuja, CEO Residential Services, Jones Lang LaSalle India, cautions that NRIs have always been soft targets for hyped-up real estate marketing by developers.
"The objective of such marketing is to make NRIs believe that the projects being offered have been especially created for them - that are not standard offerings on the market and even though Indian real estate market holds the highest possible investment potential. no such investment should be done on impulse and should not be sentiment-driven," he said.
It is a good time for end users to buy property, but a bad time for investors
So while the luxury market may be riddled withtraps, the upcoming festive season is a buyer's market at least for the professional class.
End users have a variety of options to choose from in most locations, and are in a position to bargain with developers. According to Pankaj Kapoor, CEO, Liases Foras, a real estate research firm, price cuts are inevitable considering how difficult it is for builders to hoard such a large unsold inventory.
The Maharashtra Chamber of Housing Industry has announced a property exhibition next month, where builders will propose sops for buyers.
As Firstpost said earlier, builders are willing to offer a 10 percent discount on the current market rate, as well as freebies such as free stamp duty registration, free floor rise charges etc. The otherwise chargeable club house or the common amenities membership fees are also being waived off. Then there are certain direct gifts in terms of cars or modular furniture. Some developers are also offering international holidays to rope in buyers, while others are advertising cash-back offers of up to Rs 50 lakh.
Even a Business Standard report this morning said thatabout 400 projects across India including Delhi and Mumbai are offering various deals and discounts and may go up to 800 projects if small realtors join the party.
"In the ensuing two quarters, developers will come out with more incentives and discounts to attract buyers. In other words, the primary market will continue to maintain its appeal. Buyers are, as always, advised to do a complete and thorough due diligence of the credibility of any developer they seek to deal with," said Santhosh Kumar, CEO Operations, Jones Lang LaSalle India.
"The genuine customer is now once again king, and no longer at the mercy of the market. The festive season is an ideal time to buy a home if one has studied the available properties on the market carefully. Developers look on the festive season as 'peak time' for sales, and are therefore very responsive to genuine buyers who are looking for a better deal,"Kishor Pate, CMD - Amit Enterprises Housing, told Firstpost.
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Updated Date: Dec 20, 2014 23:24:01 IST