Pre-launch properties: A cautious approach
Given the rising number of obstacles and inordinate delay in procuring building clearances, 8 out of 10 developers sift out pre-bookings, before all the require approvals are in hand. Also tagged as soft launch/pre-launch, buying such a property in India, often leads the investor in a pit of problems such as rise in construction cost and delay in completion. As per industry experts, pre-launch booking is a lucrative and easy way out for the developers to raise cheaper funds.
Pre-booking equips the investors with the golden opportunity to avail of discounts. Before laying the hands on basic approvals, developers initiate marketing and promoting the projects to buyers and brokers at a discounted rate. Such a process is commonly worded as A soft launch in industry parlance. The key purpose of such a move is to rope in bulk investors and agencies which books more than five flats in residential real estate projects.
The risk involved
When a buyer books an apartment at a said price, the builder in return, offers a tentative number. This, however, may or may not change, reckoning on the sanctioned construction strategies. In addition to this, if the builder falls short of his operational cash, bank funding is paused or there is a sudden market crash, the fate of the project can be in doldrums. In such instances, it is likely the buyers may not retrieve the money invested. Hence, it is highly recommended to take professional aid, before zeroing in such projects.
Increase in price, is another risk that often puts the investors of pre-launch projects in a state of fix. Rise in price after the construction hits off, scales down the number of buyers. Prices are raised depending on the sales volume. To be more precise, if 20-30 percent units are booked in the initial months, price of the properties are increased gradually in the coming quarters. Hence, experts confirm that an early bet can often prove risky. Investors with ‘low risk-taking ability’ should shun away from such tempting property investment offers.
How soft launches benefit the developers?
As per developers, soft launch is an easy medium bring to pass huge cash flow. Typically, it starts off with bookings from local to old property agents. The discount given by developers is for a short period and limited bookings. Such discounts aid the realtors to gauge the market feedback, before the particular project is formally launched.
In addition to the builder, soft launches also bring cheer to the investors and brokers face. With the help of pre-launches, brokers offer apartments to the at easy rates. When the project is formally launched, the investors sell them at a premium rate, hence bagging in good profit in a small span. Builders prefer pre-booking as the ultimate mode of raising funds, since they cost less than the bank loans. However, in the absence of a single-window clearance system, it can take up to 18 months before the construction actually hits off.
