News & Views on Indian Real Estate

Thursday, September 04, 2008

Realty Firms Opting For Bizarre Marketing Activities To Attract Buyers

As builders are facing a fall in residential demand, they are trying to woo home buyers with cars, fitouts, parking discounts. Especially the Bangalore property market, which has entered the wooing phase with home buyers being offered gratis cars, lifestyle accessories and clubhouse memberships as inducement. According to people familiar with property market, this initiative is unhealthy. They are doing this as they have put their money into properties at overheated locations and are now desperate to exit. "When looked at closely, these incentives do not have any significant monetary value. Rather, they are psychological encouragement put in place to catalyse the project’s off-take. Gratis offered by investors or speculators is valued around 12-14 per cent of the flat or plot price," said Mr. Anuj Puri, country head, Jones Lang LaSalle Meghraj. This practice is not unique to Bangalore, but is also practiced in other metros in less-preferred locations and more prominent in Tier II cities. "This phenomenon exists at some level or the other all over the world, but probably not with the lack of finesse and reservations that exist in India's current real estate scenario," he added.

Pawan said...

There are three stages in a property (bull) market:
1. Properties sell at higher and higher prices and still there is huge demand.
2. Developers start "sweetening" the deals for buyers as prices become stagnant and volumes fall .
3. Even with falling prices and free add-ons, volumes and prices keep falling lower and lower with minimal interest from buyers.

We are at step 2 - just the beginning of it. Stage 3 is yet to come. It will be a buyer's market then.

Anonymous said...

Good to know the stages Pawan, but on what analysis are these comments based.. ofcourse everything is cyclic, in any market.

waht could be the likely scenario as each part of India has different % of +, -. For eg: Delhi canot be compared to A'bad, Bangalore canot be compared to Mumbai,etc. in its corrections.

Divya Arora said...

Developers today are offering discounts, freebies and value add items. This includes discounts in values, freebies in amenities like discounted parking space or lifetime club membership, value adds like providing interiors and ready-to move homes at little discounted rate. Discounts would mean reduction in the upfront money the customer would be paying to the developer. Discount in parking spaces would mean anything between Rs 10,000 to Rs 20,000. Value-add interiors will include goods like fans, wardrobes and so on. To read More Visit


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