The question of ‘what to buy’ or lets put it this way, ‘what’s selling’ in the market is largely driven by who is asking the question? The majority stake in the question is undoubtedly owned by the developer(pushing inventory), hence the answer, in general, is heavily skewed towards the developers perspective. This article is an attempt to address the conundrum in the minds of most important, but yet smaller stakeholders’ and allay the fear for the ultimate king. The Fear, which is emanating from hearsay, all forms of media, and many other channels are driving the market sentiments, which in turn delays or defines the purchase decision of the buyer.
Reality of Developers
Developers today, by-and-large, are grappling with the woes of cash-flows at various stages of development — primarily — New Launch, Near Completion / Completed, Under-Construction. These 3 stages have also segmented the developers in these categories. You would be able to distinctively identify developers who belong to each of the segment. There are none who are hard-lined into each segment, however, there would some degree of difference or overlap.
Each segment is being projected differently to its prospective owners. Near Completion / Completed project have edge over its counterparts in the segment and wins the trust of the buyers. Developers are negotiating better deals for this segment, due to attributable reasons like GST savings and confidence in delivery.
The same is though not true for New Launch and Under-construction(midway). This is where the struggle or real test of a brand begins. Developers with strong past delivery records coupled with strong customer-centricity — without a doubt, wins the battle. This is where developers with strong corporate background are winning. Existing Brands are forced to redefine their performance and governance image, which will eventually make them perform or perish.
While the trust in the developer is an important success factor, pegging living ready property against a new launch or under-construction with the help of a supporting payment plan is another approach being adopted. Buyers, who need time to pay are opting for newly launched or under construction projects, though after careful due-diligence & selection of the developers’ profile, are preferring deferred payment plans — like — 10:90, 20:80 or even 20:30:30:20, wherein the plan confirms significant completion of the construction by the developer before asking for the money. These plans make buyers feel more in control of their finances vis-a-vis construction or surety of no overpayments not corroborating with the development, even though RERA or regulated regime ideally safeguard their investments.
It’s a known fact that any deferred payment plan, for a new launch or under construction, does not ensure smooth cash-flows or offer development sustainability for any developer, but is much-needed confidence-building measure in the environment of mistrust created in the past. Again, a developer with strong financial prudence and access to funds should be selected to go with such a deferred payment plan offer.
In reality, there are no investors or end-users in today’s scenario, its just buyers. The selection criteria of a project or developer by buyers, based on its utility, don’t change the evaluation parameters. Rules of engagement by developers for the buyers should be ideally undifferentiated. Today, both the stakeholder constituting buyers’ profile is at the driving seat and are calling shots with the developers.
- Markets have become competitive with the emergence of corporate players, who offer — timely delivery, trust, transparency, service and, customer experience as hygiene. It’s no longer a competitive advantage, as many old-time developers would like to see.
- Buyers are defining the market correction criteria, which is beyond pricing and delivery.
- Buying a home or any capital intensive product is an emotional decision first before the logic of affordability or price — whoever can win the buyers’ emotion with good pre-sales or post-sales experience, while all other parameters of selection being considered equal(amongst the developer), will succeed.
Lastly, while there are no set rules for any living ready, new launch and under-construction products or to say one is doing better than the other, as it may appear so at this time, it’s only a momentary phase, wherein buyers are cautious and trusting their judgments with what’s ready to use. It definitely doesn’t mean that there are no takers for the new launch or under-construction project.
While aspiration to buy a home(emotional reason to buy) and income(to support purchase) are not always coherent for the strong Indian middle class, the need to invest in a new launch or under-construction property is the perfect solution for this category of home buyers. That is why the segment(new launch or under-construction) could be DOWN, but definitely not OUT, provided the new entrants(corporate players) continue to set high standards of performance and the older ones become competitive.
Ready Homebuyers is only a segment of buyers, like under-construction or new launch buyers. One will have to go after each segment by knowing and addressing the differentiated needs. No one, in particular, wins the battle, at least in the long term.
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