News & Views on Indian Real Estate

Tuesday, April 08, 2008

Count those Discounts!

You must have noticed the various kinds of discounts that many developers are offering to persuade buyers. Most of them are just marketing gimmicks. In actual there is no reduction in the real value of the flat. There may be various expenses that the buyer is forced to incur during the possession of such discounted properties.
In Thane, a developer was apparently offering a car with each sale. The promotions also claimed home loan interest rates at 8 per cent through two cooperative banks. The customers later found that the car was a bumper prize. Worse, the 8 per cent interest rate was only for the first few months!
No Developer offers discount below the base cost, which includes the cost of land and construction. However, developers do offer value-additions and incentives to prospective buyers to speed up the willingness to buy. When looked at closely, these incentives do not have any significant monetary value. It’s observed in a falling real estate market, small developers start with such practices before going for distress sale. It’s also noticed that most of these practices are adopted by Dubai-based developers. For luxury apartments in the Middle East, developers tie up with car companies or offer other such discounts. Most of the products bundled with the house are either phased out or in the process being phased out.
Such offers are from smaller realtors only. The bigger ones have sufficient holding power to await the natural progression of the property cycle.According to me a simple rate cut, perhaps, makes more sense than goodies.

Vikas Bamotra said...

Nice article.
Ya some dealers show something else but reality is behind the doors so buyer must see each and ever terms and clause before deal.

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