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Business News/ Opinion / Online-views/  De-Jargoned | Primary market
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De-Jargoned | Primary market

De-Jargoned | Primary market

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What is it

In real estate, the term primary market is used for new projects in the residential and commercial space. Even projects recently announced are considered part of the primary market.

When does it become secondary

The first buyer of a unit in a new project becomes the “primary" buyer of that unit. He buys at the primary rate the developer offers. The moment the primary buyer sells off this unit to another buyer, the property becomes part of the secondary market. For subsequent transfers of title and sale, the term secondary is used.

Advantages

A lot of times, developers give promotional discounts to primary buyers, especially if the apartment complex is coming up in a distant suburb. However, the pricing depends upon the location and the surrounding infrastructure.

Remember that if you miss the initial discounts and there is good response to the project, you may have to buy at higher rates in the primary market itself. Often, developers do not sell all the apartments in the first phase. So, late entrants have to bear the extra cost.

A property locked in dispute can remain unoccupied for several years and cause huge loss to multiple owners. That risk gets mitigated in the primary market. Investing in the primary market ensures clear titles.

Moreover, there is transparency in transaction. There is no cash component over and above the advertised price in these deals and that is a relief for most belonging to the salaried class.

Drawbacks

Transactions in primary market come at a cost. In case your developer delays the project, you may have to wait for possession. This may mean shelling out rent for that much time, apart from your equated monthly instalments.

Also if the project is coming up in a far away suburb, you may have to wait for the surrounding areas to develop before you can actually move in your new house. Lack of infrastructure may hold other homebuyers from moving into the complex creating vacancy.

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Published: 26 Jan 2011, 10:07 PM IST
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