Luring Buyers: Affordable Housing Strategies Emerge in a Moribund Market
Real estate companies are actively promoting projects featuring 2-bedroom apartments priced around Rs 20 lakh, aiming to entice buyers and rejuvenate the sluggish housing market. This strategic move seeks to capitalize on reduced interest rates currently available for home loans up to Rs 20 lakh.
"It is not as if there is a dramatic reduction in prices, but developers want to take advantage of the lower interest rates being offered for home loans up to Rs 20 lakh," says Sanjeev Shrivastava, Managing Director of Delhi-based Assotech Realty.
Case Study: Crossings Republic, Ghaziabad
Crossings Republic in Ghaziabad, near Delhi, exemplifies this trend. Even during the peak of inflated real estate prices, two-bedroom houses in this area remained under Rs 30 lakh due to its remote location and limited connectivity. Current prices continue to hover within the Rs 25-30 lakh range, highlighting the sustained affordability factor.
Developers Join the Fray
Several developers, including Gaursons, Paramount, Panchsheel, Skytech Developers, and Orange Properties, have launched advertising campaigns showcasing two-bedroom houses priced around Rs 20 lakh.
Buyer Beware: Hidden Costs and Location Challenges
Prospective buyers must scrutinize these seemingly attractive deals. Advertisements frequently omit supplementary expenses such as external development charges, parking fees, club membership, and power backup charges, significantly impacting the final cost. For example, a house advertised at Rs 20.50 lakh may actually cost Rs 26 lakh, with apartments on higher floors attracting a premium of Rs 2 lakh, effectively making location and floor level factors increase affordability.
Market analysts caution that many advertised projects are situated far from city centers or lack approval from lending institutions. This raises significant concerns for potential buyers, as securing financing becomes challenging.
Bangalore's Orange Properties: A Closer Look
Orange Properties, a Bangalore-based real estate marketing firm, recently initiated large-scale campaigns to promote its inaugural project near Bangalore, comprising 800 apartments, 270 villas, and 40 row houses. An 800-square-foot, two-bedroom apartment was offered for Rs 13.5 lakh, while 1,500-square-foot villas were priced at Rs 70 lakh.
The company sweetened the deal further with incentives: a guaranteed rental income of Rs 5,000 per month for two-bedroom apartments and a complimentary Mercedes car worth Rs 28 lakh for villa purchasers. While successful the project's distance from the city center causes logistical concerns for some, it illustrates developer's intent to make up for it with incentives.
"The offer was initially open for four days, but we extended it for another four days given the overwhelming response from across the country," says Pericho Prabhu, Senior Vice-President of the Orange Group, claiming robust sales of at least 200 apartments in just eight days. However, the project's location outside the Bangalore Draft Master Plan 2015 area, approximately 48 km from the city center without reliable public transport, could present challenges.
Loan Approval Hurdles
Several instances have emerged where buyers face difficulties obtaining loan approvals due to the lack of project approval from mortgage lenders. A prominent Gurgaon builder recently marketed numerous apartments utilizing extensive advertising, but buyers now face a predicament as banks hesitate to sanction loans for the project.
Falcon Realty's Alwar Project: Awaiting Lender Approval
Another notable case is Falcon Realty's project in Alwar, promising one-room-kitchen flats for Rs 5.5 lakh and one-bedroom apartments for Rs 9.9 lakh. However, the project is still pending approval from lenders, adding another layer of complexity for prospective buyers.