|October 15 2007, 12:08 PM||#1|
Real-estate Pre-launches Under Scrutiny
October 15, 2007
The Hindu Business Line
Pre-launch offers are a popular mechanism for financing of real-estate ventures internationally. It cannot be termed as an unfair trade practice and, therefore, banning them is not an apt solution. Risk is inherent in any business venture and those seeking Investment returns from these pre-launch offers must be aware of the risks involved and gauge whether the returns promised are commensurate with that risk. Investors should not get lured by catchy advertisements and should do a thorough background verification of the credentials and track record of the builder.
To be on the safe side, they could take proper legal opinion from an advocate, crosscheck governmental regulations on real estate development in the proposed area and personally visit the site area. In order to limit downside risk, the Government can make it mandatory for the builders to deposit the proceeds of such pre-launch offers in an escrow account with the banker so that the bank can keep a check against embezzlement.
Above all, the recent subprime crisis in the US should serve as a warning for all investors not to speculate on risky investments such as pre-launch offer
So Look Before You Leap. Let not the promise of super profits lure you.
As they say, BUyers Beware... I would say Investors Beware
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