RERA effect: Developers rush to sell ready-to-move-in properties
Ready apartments are easier to market as they are out of the purview of RERA and GST
Mumbai: Zero GST. OC obtained. Ready-to-move. If you open any newspaper these days, you’re likely to see advertisements from builders, big and small, hawking finished homes, where you can pay up and move in. No waiting, no construction risks, and no need to pay loan instalments and rent while your house gets built.
With a new real estate law slowing new launches and sale of under-construction projects, large builders like Lodha Group, Tata Housing, Hiranandani Communities and Raheja Universal are aggressively promoting ready properties, in sharp contrast to the established practice of marketing new launches and projects under construction.
Ready-to-move apartments with occupation certificates (OCs) are kept out of the purview of the Real Estate (Regulation and Development) Act (RERA) and the goods and services tax (GST), making it much easier for builders to market these products.
Raheja Universal has launched an outdoor campaign to sell its ready-to-move apartments in a few of its projects, including Raheja Ridgewood and Raheja Reflections Odyssey in Mumbai’s suburbs. Similarly, the Lodha Group is promoting “New Cuffe Parade”, a luxury residential project in Mumbai, for three of its completed towers. The Lodha ad says that buying apartments in these three towers “can save 12% on agreement compared to under-construction projects by paying 0% GST”. Both Lodha Group and Raheja Universal declined to comment.
“Builders are pushing to sell ready-to-move-in properties and that is a drift from what has happened in the past. Since under-construction projects could not be marketed as they need to be registered under RERA, developers are focussing on ready projects as it does not fall under the new law,” said Vikram Goel, chief executive officer, HDFC Realty Ltd, a property advisory arm of Housing Development Finance Corp. (HDFC).
Goel said while investments have slowed down in the last two-three quarters, actual users continue to buy, particularly ready-to-move-in apartments in the mid-income range between Rs70 lakh to Rs1.5 crore. Last week, HDFC Realty ran a campaign to help customers buy houses in completed projects across the suburbs of Mumbai. The firm is now planning to run a similar initiative across the country.
According to Niranjan Hiranandani, chairman and managing director, Hiranandani Communities, builders are now willing to invest, complete the projects and then offer them to the market in order to comply with RERA. The company is also running an ad campaign for its ready-to-move-in apartments at Hiranandani Estate, a residential project at Thane in Mumbai.
“The market is maturing. A large number of developers including myself, in many ways, are bringing finished products into the market place. Earlier, people didn’t care if the projects went slow or fast as the market was investor-driven and buying a property was mostly for investment per se,” Hiranandani said.
The last one year has also seen consumers increasingly opting for ready properties over under-construction ones due to growing uncertainty in the real estate market. As per data compiled by property advisory firm Liases Foras, ready properties account for currently 25% of the total housing sales in the country. In the last 12 months ended 30 July, around 75,000 ready-to-move-in apartments were sold across 51 cities in India.
Pankaj Kapoor, managing director of Liases Foras, said demand for ready properties has been gradually rising and is likely to soar in the next six to 12 months period. According to him, completed projects contributed just about 5% to the overall sales three years ago.
Tata Housing is also currently running advertisements on ready projects for six of its projects located in five cities including Delhi-NCR, Mumbai and Bengaluru. Similarly, several smaller firms like Noida-based Civitech Group are running campaigns to sell completed projects.
Avneesh Sood, director of Eros Group, a Delhi-based realty firm, said most of its buyers have been investors, though end-users are slowly coming back. “Though the market is slow, people are more willing to buy ready apartments and that is going to be the scenario going forward. Customers are ready to pay full down-payment and get the keys,” he said.
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