Bangalore Real Estate: Builders vs. Buyers
Over the past few years, real estate prices have pretty much gone straight up across India; this meant that buyers & builders were buddies, with both parties minting money.
Now that we have reached somewhat unsustainable price levels, interest rates (and EMIs) have gone up, registration fees / taxes are increasing, and renting is waaaaaay cheaper than buying, it’s time to see some friction between builders and buyers.
If a builder is in the midst of completing a project but hasn’t managed to sell off all the properties, what is he/she to do? Given the cash-intensive nature of this business, he has to adopt a go-slow approach (to minimize cash outflow), and figure out a way to get the existing buyers to fork out more. And what of promised “deadlines” to customers. Well, those can go to h*ll!
Here’s an example (perhaps others can corroborate this) at Bangalore Craigslist:
What next? It seems that some of the people who booked apartments are trying to get together & initiate action against the developer. Any bets on their chances of success? How many of them are going to think of the money that they have already put in (sunk cost)?
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April 30th, 2007 at 6:44 pm
This was bound to happen..question was when and upto what extent?
Big buiders have sufficient cash with them and hence can manage to slow down their construction activity and wait for the buyer(greater fool:)) to buy at the high prices.On the other hand, small time builders who have taken loans from banks for their projects can’t afford to let their apartments unsold and hence are forced to reduce the prices of the apartments.Wait for few months and you’ll find apartments selling at premium discounts from the current price when all the speculators try to get out.