Builders are offering customers a “buy now, pay later" scheme for ready-to-move-in homes—buyers can move in with a small down payment and pay EMIs after a year or two—as property developers take “desperate" measures to liquidate their bulging inventory amid slowing demand.

The easy payment schemes, which were earlier offered only for under-construction projects, have now found their way into projects with unsold inventory, as the sector continues to be buffeted by poor demand and a cash crunch.

Most of the projects in which such schemes are being offered are high-end homes in India’s top cities. While these schemes are being selectively offered by some developers in Bengaluru and the National Capital Region, they are more common in Mumbai, where homes are the least affordable and unsold inventory has seen the steepest rise this year.

In recent years, buyers have favoured ready projects, which have no execution or delay risks. Yet, selling luxury homes has been a challenge for builders, as interest costs pile up on unsold inventory.

Realty firms are also marketing these offers to buyers, saying occupancy certificate has been obtained and no goods and services tax is applicable.

Mumbai-based Sheth Creators has multiple schemes running across a couple of its ready projects. At “Vasant Oasis" in suburban Marol, where apartments cost 2.3 crore and above, buyers can pay 10% now, move in and the builder will take care of equated monthly instalments (EMI) for a year. The EMI payment for buyers starts only after that. In the “Beaupride" project in upscale Bandra, buyers can pay 25% now and 25% annually for the next few years.

“The primary reason is to sell the ready apartments as quickly as possible, but you don’t want to lose out on customers, and want to give them the time and comfort to pay in a staggered manner," said Hiral Sheth, head of marketing at Sheth Creators. “It’s not easy for builders to bear the EMI costs, but it’s less expensive than holding on to inventory."

Property advisory Knight Frank India’s half-yearly July report India Real Estate said unsold inventory is at 450,263 units in the top eight cities. Mumbai recorded a 14% rise in inventory overhang between January and June.

Gulam Zia, executive director of Knight Frank India, said that while interest subvention schemes have been common in under-construction schemes so far, similar easy payment schemes for ready properties reflect the desperation or urgency to sell. “... Properties are ready, but there are no sales. Developers have to do this. Tough times call for desperate measures," he said.

If Oberoi Realty has introduced such schemes for its high-end homes in suburban Mumbai, Lodha Group has an offer for its Palava smart city project.

“... This trend indicates overpriced properties in a micro market, which a developer is struggling to sell and now, trying to make them a bit affordable for buyers," said Pankaj Kapoor, CEO of Liases Foras Real Estate Rating and Research Pvt. Ltd. “If you have a 3 crore apartment in Goregaon (East) in Mumbai, it will not sell. Investors aren’t participating any more and end-users are not finding such projects attractive."

Developers of luxury projects Total Environment Building Systems Pvt. Ltd and Embassy Group in Bengaluru, said these schemes make it easier for customers to buy ready homes, where payments start immediately.

Sometimes, instead of a discount such a scheme is offered, according to Kamal Sagar, principal architect and chief executive officer of Total Environment.

“The developer may add to the price but it’s a staggered payment timeline," said Sagar, who is offering such a scheme on some duplex units in its “Windmills Of Your Mind" project.

Reeza Sebastian, president of residential business at Embassy Group, said 70% of its buyers are self-funded and the firm is contemplating to introduce a scheme to widen the net of buyers for its luxury projects.

The Bengaluru developer has apartments priced at 10-17 crore in “Embassy Grove", 5-18 crore in “Embassy Lake Terraces" and 8.5-25 crore in “Embassy Boulevard".

Embassy held back sales in some of these projects in the last year or so, after selling around 65% of inventory, in a bid to complete them and then resume sales.

“... The impetus on us is to spur buyers to make faster sales," she said.

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