In Maharashtra, Diwali is definitely the time of choice for property buyers to invest in their dream home. The Pune real estate market is no exception. In fact, Pune property buyers look forward to this festival to sign the papers on their homes because this city cherishes this traditional time of investing in the future.
Obviously, builders also respond to the vastly improved market sentiments and do all they can to sustain them. During the Diwali period, Pune property buyers can expect to see various value-added offers which developers introduce to boost sales during the festival.
The Diwali period in 2011 will see a lot of such activity, because Pune property developers are eager to create sufficient interest in their projects. The Pune property market has seen slackness over the last six to seven months, and Diwali is the time that developers have been looking forward to as much as property buyers.
The question here is – do such ‘freebies’ constitute real value for property buyers? The answer to this does not depend solely on what is being offered. It is a normal market phenomenon for incentives to be offered during the festive season, but property buyers should consider the actual value of the property.
Buyers should be cautious about extravagant freebies and take a close look at the factors that add or reduce value in the case of real estate. If the project is by a developer known for sub-standard construction, or if it is located in a ‘blind spot’ of the local real estate market, no amount of freebies can compensate. The property itself will not represent a good investment, and the buyer will not benefit in the long run.
Another aspect to watch out for is freebies being offered for properties in over-priced projects. At a time when Pune property buyers seek the best options for their money, getting a free car along with an overpriced flat does not make sense. If the flats in this project are not affordable, freebies will not improve the situation. If a buyer wants to buy a flat in such a project, it is best to negotiate for a better price than to accept freebies.
Property buyers should remember that as a rule, the freebie offers on flats do not translate into rates that are lower than the developer’s base cost, which includes the cost of land and construction.
Pune home buyers should especially beware of freebies being offered by investors who have put their money into properties in locations that are known to be ‘overheated’ (in other words, where rates have been artificially inflated by excessive investor activity). In such cases, freebies are meant to act as psychological encouragements to make an unwise property purchase. It is always safer to buy directly from reputed developers with a sound market standing.
There are certain incentives that Pune property buyers can definitely take seriously. These are not in the form of cars or vacations, but represent actual savings to them. Such incentives include:
- Reduced down-payments to book flats, with balance payable on possession, resulting in an extension of the period between booking and full payment. Normally, buyers would have to pay the balance as the building progresses
- A waiver on stamp duty charges
- Free or significantly reduced clubhouse memberships
- Free parking, furnishing, air-conditioning and enhanced security features
- Reduction of waiver on premium for floor-rise
Anil Pharande is Vice President of CREDAI Pune Metro and Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.
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