cayogeshgupta

[LEFT][FONT="Verdana"][SIZE="6"][SIZE="2"]Post year 2000, we have seen plethora of pre launch offer both from well established national and state level players as well as from small time builders. This offer, invite people to come and see their bind blowing castle of dreams which will be delivered to them in years to come. In order to buy a piece of that castle, gullible investors/ prospective home owners like us, would be required to pay either full or part of the total amount payable at the time of booking, with delivery of dream castle slated to take place some 3 to 5 years afterwards.
At the time of pre-launch, investor/ prospective home owner are told about various amenities, facilities which will be provided both in the apartment and in the immediate surroundings upon the completion. Fair promises are made of such facilities and we are told that such facilities our part of the new master plan, which I am sure no one from us have ever heard of and still in the drawing board of the respective government department. For example, if you visit any decent property in gurgaon now days, they will talk about proposed metro route or proposed fast lane highway or something else. However the fact remains that an investor/ prospective home owner pay today for the dreams/ facilities which might be available in future and property developer have no control whatsoever on such facilities. So in fact we pay for the dreams.
It is also very effective tool in the hand of developers to recover whatever little investment they have made in the project. This steam from the fact that in the current environment, majority of the developer both established national & state player as well as local developer don’t own the cruel land and land holding happens to be through land development rights (for the verification of same, please refer to IPO prospectus of any real estate player). So for acquiring the land, either little cost or no cost is being incurred by the developer. Now, it is only the cost of development, which in any case ranges from Rs. 500 to Rs. 1,500 per sqft of super build up area, which is incurred over a period of time generally being referred to as construction schedule. Oh I forget the most important cost, which is most essential to their ingenious plan, Marketing Cost, which can range from anything 5 to 25% of total project cost (one good example which comes to my mind is excellent marketing strategy adopted by IREO or that matter by DLF in selling its inventory in west Delhi).
It’s the marketing, which attract, catch our eye balls to first visit the website or call up the relevant person and afterward, make the investment or buy the castle of our dream. At that time, information about project is scare like water in desert & whatever little information sales representative have is sold like if you don’t catch the dream right then, it would never be yours again and you will always feel guilty about not catching it right there (e.g. Katrina Kaif selling potatoes and if you haven’t happen to bought from her at that time, you will always feel guilty whenever potatoes is served to you).
So the developer, by just incurring marketing cost and little or no land acquisition cost, ask its potential customers to fund the entire development of the project. It’s very good strategy on part of developers as the bank and FI generally do not provide finance for land acquisition. And it has to be from developer own pockets. Bank & FI will fund the development stages, at very prohibitive interest rates of over 15%, which is now a day’s funded by gullible investors and home owners like us at no interest cost to developer. Hence its clear cut profit venture for the developer. It is he who is going to decide on the construction schedule, contractors, and its progress, which is funded by people like us.
So in the end, we people end up having bought a Cinderella dream, which may or may not be fulfilled in the end.
Please let me know your opinion on the same.

maxcapri

absolutely right !
well said...n its very very true