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abhi · 08-04-10

Developers Lure Real-Estate Buyers With `Assured' Returns

Real-estate prices are rapidly going up all across the country, but sales of commercial properties are still recovering from the slowdown of the past year. Developers in Delhi are now trying every trick in the book to lure commercial real-estate buyers.

Thanks to the sky-high prices, commercial properties are facing a tough time in attracting investments across the country. Neither the banks nor high net-worth investors are ready to invest in under-construction commercial properties. Developers in Delhi have found a new way to raise funds for commercial properties. Since they have to pay a minimum interest rate of 17%-18% to banks if they have to borrow for developmental activities--and provide collateral--developers seem to have pounced upon a new opportunity. They are promising 12% `assured' returns if an investor is ready to pay down-payment for a property--which sometimes exists only on paper.

"Banks are not ready to give loans for (construction of) commercial properties, as there is an over-supply of such properties. If at all some banks agree to grant a loan for such properties, they charge the developer 18%-19% interest rate--plus the developer has to keep something with the banks as security. On the other hand, retail consumers are giving upfront down-payment seeing such mouth-watering returns (12%). Consumers pay this money without any security. Such investments are unsecured investments," said Pankaj Kapoor, founder, Liases Foares, a real-estate consultancy firm.

Most of these properties for which the potential buyer is being offered an `assured' return are located along the various national highways in northern India, near urban settlements. These types of schemes are being offered by many developers like MVL Ltd, ARN Infrastructure and Piyush Group. These developers are offering commercial spaces in under-construction properties (of a minimum of 100 square feet). In a few cases, the construction has still not started. Investors are supposed to pay a down payment (which can start from a minimum of Rs11 lakh, and which varies according to the size/location of the property) for such commercial properties. They are offered 12% annual returns for a specific period (two years, three years or more).

Moneylife contacted a few places to check out these offers. AMR Infrastructure India (P) Ltd is constructing a technology park, `Kessel I Valley', in Greater Noida, spread over 25 acres. The company is offering 12% assured returns for three years for retail investors who are ready to make a down payment of around Rs17,57,500 for 500 square feet (the property is valued at Rs3,700 per sq ft)--which is 95% of the base price.

08-04-10	#8
abhi Member Join Date: Oct 2008 Posts: 150 My Mood: Thanks: 0 Thanked 4 Times in 4 Posts	Developers Lure Real-Estate Buyers With `Assured' Returns Real-estate prices are rapidly going up all across the country, but sales of commercial properties are still recovering from the slowdown of the past year. Developers in Delhi are now trying every trick in the book to lure commercial real-estate buyers. Thanks to the sky-high prices, commercial properties are facing a tough time in attracting investments across the country. Neither the banks nor high net-worth investors are ready to invest in under-construction commercial properties. Developers in Delhi have found a new way to raise funds for commercial properties. Since they have to pay a minimum interest rate of 17%-18% to banks if they have to borrow for developmental activities--and provide collateral--developers seem to have pounced upon a new opportunity. They are promising 12% `assured' returns if an investor is ready to pay down-payment for a property--which sometimes exists only on paper. "Banks are not ready to give loans for (construction of) commercial properties, as there is an over-supply of such properties. If at all some banks agree to grant a loan for such properties, they charge the developer 18%-19% interest rate--plus the developer has to keep something with the banks as security. On the other hand, retail consumers are giving upfront down-payment seeing such mouth-watering returns (12%). Consumers pay this money without any security. Such investments are unsecured investments," said Pankaj Kapoor, founder, Liases Foares, a real-estate consultancy firm. Most of these properties for which the potential buyer is being offered an `assured' return are located along the various national highways in northern India, near urban settlements. These types of schemes are being offered by many developers like MVL Ltd, ARN Infrastructure and Piyush Group. These developers are offering commercial spaces in under-construction properties (of a minimum of 100 square feet). In a few cases, the construction has still not started. Investors are supposed to pay a down payment (which can start from a minimum of Rs11 lakh, and which varies according to the size/location of the property) for such commercial properties. They are offered 12% annual returns for a specific period (two years, three years or more). Moneylife contacted a few places to check out these offers. AMR Infrastructure India (P) Ltd is constructing a technology park, `Kessel I Valley', in Greater Noida, spread over 25 acres. The company is offering 12% assured returns for three years for retail investors who are ready to make a down payment of around Rs17,57,500 for 500 square feet (the property is valued at Rs3,700 per sq ft)--which is 95% of the base price.