Giving out gifts or ‘freebies’ during the festive season has been the norm for most developers in India, particularly in the residential sector. This year too, it is no different, except perhaps that this is the first Navratras/Diwali season after demonetisation, the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) and the introduction of the Goods and Services Tax (GST). This is also the time when the trust deficit among buyers with regard to builders has hit an all-time low, thanks largely due to the Jaypee and Amrapali insolvency cases.
In such an environment, most developers are going all out to woo buyers with realistic, sentiment boosting’ marketing strategies. And that explains why most developers across the country are offering freebies such as GST waivers and assuring buyers that their projects are RERA certified and are being sold on the carpet area basis.
Interestingly, while free white goods such as air conditioners, refrigerators, etc and fitted-out modular kitchens were given out to attract buyers in 2007-08 (they still are actually), the later years saw developers offering free car parks and gold as add-on offerings. In the more recent past, however, developers have banked on complimentary registration and EMI-free periods to attract buyers and this year G
ST waiver is the new kid on the block.
What should buyers keep in mind?
The insolvency proceedings against Jaypee Infratech and Amrapali in Noida have led to a huge trust deficit among buyers. Under these circumstances, it may not be too easy for builders to ‘entice’ buyers through the usual, run-of-the-mill festival marketing deals. Experts say that in such circumstances, the GST waiver scheme may still work as it is almost akin to offering a 12 percent discount but standalone free coin and foreign travel offers may not work. Schemes such as no EMI until possession may be attractive but buyers may consider it after taking into account the delivery record of the builder and get on board only if the developer has a proven track record.
Also, cautious buyers are likely to prefer ready-to-move-in apartments or RERA approved projects nearing completion rather than new launches. Experts advise that buyers should look for projects that are RERA compliant, habitable, not located in far-flung areas and are being sold on the basis of carpet area.
“This is a good time to buy because interest rates are at an all-time low and there are good discounts, financial freebies such as GST waivers and no EMI until possession schemes available in the market,” advises Pankaj Kapoor of Liases Foras. “Prices, too, are more or less at the same level they were three years ago. It is, therefore, an end-users’ market. Investors should be wary as prices will not increase anytime soon,” he says, adding the unsold inventory with developers today stands at 11 lakh units across the country.
Thanks to RERA being implemented in most states, buyers can now take a more informed decision. “They should study the project well by searching through project data available with RERA online or offline before taking a decision. Also, with most developers facing the volumes/sales challenge, there are many more deals/discounts available in the market,” says Samantak Das, Chief Economist and National Director-Research, Knight Frank India.
Quantum of freebies
There are various kinds of offerings given along with projects of a certain price range. Buyers should know that there are certain established developers, projects and locations where no discounts or schemes may be offered. Also, freebies are generally offered for projects where inventory levels are high and not for projects where sales have been healthy.
Having said that, the contribution of freebies in stimulating sales in the festive season is significantly high in a market that is experiencing low sales. Also, freebies largely work in the mid-income housing segment if they actually add value to the property or lighten the financial burden on the buyer in some way. For apartment buyers with a budget between Rs 35 lakh and Rs 75 lakh, discounts and freebies do matter as they are always on the look-out for a possible reduction in prices.