The developments of end-2016 saw an altered landscape in the real estate segment. This gave rise to possibilities of piled-up inventories in the subsequent months, with many projects having reached the completion stage, yet waiting to be offloaded.
Anticipating this, quite a few developers came up with attractive schemes to lure customers to invest in units that were completed and waiting to be occupied. Though the schemes did not result in actual reduction in selling price, incentives such as attractive payment schedules and financial plans were brought in.
For instance, Mantri Group offers an investment proposal of 5:20:75 whereby the customer has to make an initial down payment of 5 per cent of the total cost of the unit at the time of booking along with 20 per cent of the cost sourced from a bank loan. The rest, 75 per cent, comes up for payment only at the time of possession.
Provident Housing, a subsidiary of the Puravankara Group, offers an equally attractive financial plan for its ready-to-move-in homes. The Group, in partnership with leading home loan providers, has come up with a 36-month EMI holiday for its customers whereby they can move into their unit by paying Rs. 9,999 per month, which is equal to the average rental that this segment of customers would be paying per month.
“The idea is to make it attractive for them to purchase the unit and move in, without facing the resource crunch of an altered monthly financial outflow”, says Ashish Puravankara, Managing Director, Puravankara Projects.
While schemes such as the above serve as an incentive for customers to purchase completed apartment units, investors tend to think twice as the units purchased are not for personal use. Aspects such as rental prospects and maintenance come in, making the prospective investor hesitant.
Solutions
Recognising this post-sales property management issue, developers are coming up with possible solutions to lure customers. End-to-end solutions such as finding a tenant, completing the documentation, handling the apartment unit’s maintenance during the rental period as well as post the unit falling vacant, are schemes that developers are actively looking at and promoting.
The Brigade Group offers one such solution in collaboration with rental solutions provider NestAway, where comprehensive rental assistance to its existing customers as well as new buyers is provided. Under this service, besides documentation as well as maintenance of the rented unit, an assurance of finding a new tenant within 15 days of the unit falling vacant is given besides a rental default guarantee where the owner is assured of timely rent even in case of default.
Incentive
This service gives an incentive to invest, says Om Ahuja, CEO-Residential, Brigade Group. “Investors, especially NRIs, rely on friends and family to rent units. Hence addressing maintenance during the rental period as well as once the premises becomes vacant can be an issue, which can deter a possible purchase. Services such as these take care of the concerns, prompting the prospective buyer to make a purchase.”
The Ozone Group offers similar services where it earlier had a two-year rental assurance at the time of possession of the unit purchased. Currently the Group has in place a team to find the right tenants, handle documentation and the forthcoming deposits, besides maintenance services for rented units as well as for units that are not occupied.
Mantri Developers offers similar rental and maintenance facilities. Says Snehal Mantri, Director-Marketing and HR, “We have been offering property management services to our NRI customers for the last decade-and-a-half, covering both rental and resale. On request, this facility is offered to residents in India. Under this facility, not only renting of the unit, but property management, documentation process, and finding a new tenant once the premises are vacated, are assured.”
While a completed unit undoubtedly puts forth a higher sale price, services and attractive offers such as these certainly make it worth the while for not only the end-user but also the investor looking for hassle-free returns on investment.
In the current economic scenario, with tightening liquidity and spiralling construction costs, these sops may become the rule of the day, with developers eyeing options that go beyond physical reduction in selling price.
