With Economic conditions still uncertain isn't this right time/opportunity for RESALE DEALS in secondary market rather than again stucking your hard earned money in new projects when all indicators are pointing towards big delays in projects & no signs of builders reducing Prices.

This article in ET throws light on similar trend starting. I think 2012 shall be known as Secondary MArket deals year........
Comments are Welcome..

Jittery investors selling flats below market rate - Page2 - The Economic Times


NEW DELHI: Investors who spoiled the real estate market for the buyer by blindly buying new homes are now spoiling the builder's prospects by selling apartments at values lower than what the builder is selling them for. If you are a buyer, look out for the investor, who is desperate to get out of a sluggish market. Manisha had been looking for an apartment in Noida for almost a year and was worried about the pace at which developers were raising property prices. She had also read about the stress real estate developers have been under for the last few quarters.

So, when a broker told her about an apartment on resale in Noida, which came at a 30% discount from what the developer, 3C, was offering for a similar flat in the same project, she jumped at it. The investor who was selling had bought the flat in 3C's Lotus Panache in 2010 at a significantly lower price of around Rs 3,000 per sq ft. Manisha got it for Rs 4,300 per sq ft, while the basic selling price offered by the developer is Rs 5,500 per sq ft.

In a market full of uncertainties, both investors and buyers are jittery. "The apartment complex is already half way through and the risk is lower for us," says Manisha, who will now get the flat in two years compared to at least 3-4 years if she had bought it from the primary market.

"Buyers today are concerned about delivery timelines and of course high prices," says Sumit Joshi, director of Noida-based Real Credit Consultancy. The steep hike in home loan rates in the last one-year hasn't helped either.
The concerns of buyers are not unfounded. The debt level of real estate companies has risen considerably in the last few years and input costs have gone up. Delivery timelines for a number of projects have been pushed back because developers are finding it difficult to fund projects.

According to property research firm PropEquity, nearly half of the 930,000 under-construction residential units in the country, scheduled for delivery between 2011 and 2013, are likely to be delayed by up to 18 months. In recent months, secondary market property sales have been higher than primary sales by developers.

"This is especially true for projects where a considerable portion of construction work is already complete," says Prashant Kaura, director, GenReal Property Advisers. There has been a rise in secondary sales because many investors are looking at cashing out of projects. The reasons for wanting to exit might differ- while some are facing a cash crunch themselves, others are unsure about the developer they are invested with.

Some others want to exit to invest in other projects. "Some investors had gone overboard in 2009-10 and had bought multiple apartments. They have paid over 50% of the price but some of them are now are feeling the pinch," says Abhay Khemka of Khemka Investments and Properties in Gurgaon.

A Mumbai-based wealth manager with a multinational bank had bought an apartment in Unitech's Vistas project in late 2009 for around Rs 3,000 per sq ft. This was around the time real estate prices were looking up and jobs were secure. She is looking at exiting the project now and is getting offers for a price of around Rs 4,500 per sq ft, while the developer is selling atRs 5,600 per sq ft.
Read more
Reply
1 Replies
Sort by :Filter by :
  • Your Strategy..


    CommentQuote