Developers Are Offering Discounts

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.

Ram Yadav, head of a finance company says, “It all depends on how you position your project. Builders are trying to put together all these three elements for their customers, but again, it is not across the board.”

Buyers can get good options and there is room for negotiations, point out industry sources. Builders are now ready to meet customers and do not want to let go of those coming in. Incentives are given across the table, depending on the project. Where there is 100% down payment, the incentives are greater. It can go up to 3-5 % depending on the developer and his need.

Explains Ramakant Sharma, a realty agent, banks are giving advance disbursement facilities, based on the developer and his project besides profile of the buyer. Where the developer gets a lump sum amount in advance at an early stage of the project, he is ready to give more benefits to the buyer. The benefits in such cases would be more compared to a project at its fag end.

“There are small discounts in the rates to accommodate customers,” feels Suresh Singh, a local builder. Builders who have purchased lands at high costs will find it difficult to offer discounts but those who have bought at cheaper rates will, depending on the project, offer 2-5 % discounts.

He adds that the rising interest rate costs means that banks too should come up with innovative products as their business too is affected.

Cash discount is the best discount, says Vinod Singhvi, a builder. Developers point out that a home buyer can get a good deal for himself by enquiring with various builder offices on discounts being offered. Brokers too will be in the know of the best discounts available and projects giving value for money.

The overall mood of the home buyer with the interest rate costs and inflation is to wait and watch, feel experts. He, however, adds that in new projects where a builder requires cash flow, he doesn’t mind going ahead with discounts. Also where there are five to six builders coming together for a project, they would like to come out of the project at the earliest and would be offering discounts even to the tune of 2-7 %, as they need to run the show. Such discounts will definitely trigger sales amongst the fence sitters.

One Comment

  1. Posted August 19, 2008 at 1:26 am | Permalink

    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.For more view-

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