Home RUN

Home RUN
The Economic Times, March 22, 2009, Page 9

With developers offering major discounts and agreeing to attractive price negotiations, this is perhaps the right opportunity for first-time home buyers to take the plunge. And things are only getting better, say Neha Dewan & Raja Awasthi

PLANNING to buy a house? If you are worried that this is not the right time, you may be mistaken. While market sentiments may still take some time to perk up, there are a whole lot of benefits in store for the first-time buyer, who decides to take the plunge. Be it in terms of deep discount offers, scope for attractive price negotiations and developers promising timely completion of the projects — the time is right for the buyer looking at owning a dream house for the first time. But should you opt for a new house or an existing property?

Mona Chhabra, associate director, real estate practice, Ernst & Young, feels developers across the country are not only adopting typical marketing tools such as discount schemes/limited period offers but are also coming out with unique schemes attracting new home buyers. “Among the most outrageous discount offers we have seen is the ‘one house free on purchase of one house’. Other offers include 25% discount on price for a specific period, premium cars such as BMW and Mercedes with purchase of an apartment. Some are offering discounts in the form of sharing interest cost of customers by bearing their home loan EMIs till possession,” she says.

Dwindling demand and falling property prices appear to have created a platform for buyers to negotiate prices with developers, which till a year ago was unheard of. And with more price cuts in the offing, buyers seem to be having the upper hand. The slowdown in sales and cash crunch delaying real estate projects had made some developers adopt the new marketing mantra of on-time completion as their USP — a commitment that until recently was taken for granted. Experts feels that sentiments are improving, albeit slowly.

Many in the industry feel that when the market was booming, completing projects on time was taken for granted. Now with funds drying up and projects getting stalled, real estate buyers are already feeling the heat — for some, possession has been delayed by over one year. So developers are now hoping to differentiate themselves from the rest, by meeting project deadlines.

Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) says they have been able to secure advantageous deals for a number of clients in projects that would otherwise have been unattainable previously. “The primary advantage would lie in the current pricing — which is, in many locations, the most favourable in many years. Today, first-time buyers account for roughly 60% of the overall residential market. The remaining 40% consists of second and third-time buyers, who may or may not be investors. This derives from the fact that the currently rationalised property rates regimen is causing the highest amount of activity among first timers,” says Raminder Grover, CEO, Homebay Residential, JLLM.

But what is the kind of property purchase that a new buyer should opt for right now — a new property or an existing one? The answer to that may depend on the buyer’s budget and location choice as well. But the trend is more tilted towards the primary sales market, feels Grover. Others feel that the first-time buyer is essentially looking for the cheapest deal, whether it is an existing property or a new house. “Buying an existing house could be more beneficial right now as it will offer him the best deal in terms of a greater resale value,” says Kamal Taneja, MD, TDI. The developer recently launched a Rs 9 lakh down payment scheme for an older project, Kingsbury Terraces which is now sold out. The scheme being that customers had to pay Rs 9 lakh now and nothing for the next 24 months, till the time of possession.

But even if you plan to buy right now, keep a few dos and don’ts in mind. Conducting a due diligence on the property’s title, looking at the financial backing of the company and choosing locations with a future appreciation potential are some pointers that will help.

Rajeev Rai, V-P of Assotech, however, feels that even though the choice between the two would vary on a case-to-case basis, buying a new house is always beneficial to the buyer as he gets most of the things of choice in a new project. Assotech has incentives such as helipad on rooftop, flexi home etc for first-time home buyers.

Besides all these measures, the developers might also come up with more freebies with the discounts. In fact, falling sales and rising inventory over the last two years have forced developers to admit that they are looking to offer more discounts, in the coming few months.

Says Rohtas Goel, president, Naredco & CMD, Omaxe Group: “Today’s smart buyer knows his needs and enters the real estate market only after doing thorough market analysis. He is fully aware of the financial implications of such freebies. These days the buyer is more keen on the delivery and how he can prolong the payment schedule. The buyer wants to get value for money in the present market conditions.”

ROOM FOR MORE

A lot of benefits in store for the first time buyer
Dwindling demand and falling property prices have created platform for buyers to negotiate prices with developers
Among the most outrageous discount offers has been the one house free on purchase of one
Other Offers include 25% off for a specific period. Discounts in the form of sharing interest costs of customers by bearing their home loan EMIs till possession
Developers might come up with more freebies. Falling sales and rising inventory over last two years may make developers offer more discounts in the coming few months.