It's A Deal: New Launches In Mumbai Have More Takers Than Unsold Inventory
The real estate market is slowly gaining momentum after two years of slowdown. The much-awaited price correction has come in top realty markets including Gurgaon and Noida. According to industry body Associated Chambers of Commerce and Industry of India (Assocham) prices in these two markets reduced by around 20 per cent.
Interestingly, Mumbai's real estate prices are correcting too, but, in a much different manner. The city, in recent past, has witnessed many new launches, which offer apartments at a price lower than the existing unsold inventory. The unsold inventory in Mumbai stands at around 1,00,000 units.
New launches: A success story
Consider this. Godrej Properties sold 300 apartments within a week of the launching of its project, The Trees, a mixed use development. The project is located in Vikhroli, a central suburb of Mumbai. “The value of apartments sold is in excess of Rs 700 crore making this Godrej Properties' most successful ever launch in terms of value of real estate sold. This is also one of the country's most successful recent launches,” the company press release stated.
Godrej's success is no exception. Mahindra Lifespaces, too, kicked off its pre-launch activities for its premium residential project at Andheri East. The activities fetched the 1BHK and 2BHK aparments in Vivante a number of buyers. “Pre-launch interest levels for our new project, Vivante, have been robust with a significant number of units already blocked by customers. As markets begin to show early signs of recovery, we remain hopeful of a revival in consumer sentiment,” said Anita Arundas, MD & CEO of Mahindra Lifespace Developers, in a press release issued during the quarterly results of the company.
Oberoi Realty's new project at Borivali East, too, sold over 600 apartments out of a total of 900 units, raising as much as Rs 1,570 crore in total. A number of smaller developers, too, are planning to tread the way, by launching new projects, capturing the attention of home buyers.
New launches: At your own risk
The developers, with new launches, have worked out their economics and design in a way that builds the sentiment of price correction. The developers are making soft launches, during which the home buyers are being offered lucrative discounts and deals. These offers make the price of the property much lower than market prices, to early buyers. The resilient demand for housing, which has been fence-sitting waiting for a price correction, see such soft launches as an opportunity to snag potentially good deals, setting off high sales especially of quality developers.
Soft launches, for developers, are a strategic way of raising seed money for the project, too. Yet, soft launches of real estate projects come with riders, especially for buyers.
In some cases, developers do not own the land that they intend to build the project on. They make a deal with the owners of the land and buy it depending on the initial sum paid by buyers.
The risk of buying a soft-launched project, is the fact that developer is yet to obtain all the approvals necessary to kick the project off-the-ground. This could present delays. In some cases, projects have been stalled or declared as illegal constructions leading to heavy losses for buyers. The promised date of possession in case of a soft launch realty project could be delayed.
So, as a home buyer planning to invest in soft-launched project should do a strong background check about the developer and also, know the status of the land possession and other approvals needed.