Tuesday, May 24, 2022

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RERA has had a salutary effect, check its website before investing

New Delhi, April 23, 2022- RERA has brought around some order to the business, with almost no major defaults after it came into force.

Ashutosh Kashyap, Director, Advisory Services, Colliers India, says that primary segment buyers are back in the market, reflected in the good response to some of the new launches. Good brands with good execution track records are getting good launch responses even with premium pricing.

Kashyap lists points or a consideration set before selecting a project. Some of the basic checks that one should do are as follows:

One should always check for RERA approval and visit the website to access all documents

Always attach value to a developer with a good track record of execution and delivery with quality

Buyers should visit a couple of executed and delivered projects but the developer to ascertain quality

In case, a developer has suddenly expanded and launched multiple projects, one should examine and understand and question the execution capabilities of the entity.

Buyers should also attach value to projects by entities that have a good corporate structure, where good corporate control and management is not just a “one-man show”. Good systems, processes, and dedicated departments to take care of multiple activities, minimizes the chance of delay and poor execution.

Kashyap says that pre 2012, the residential real estate dynamics of NCR were characterized by double-digit capital value appreciation coupled with robust absorption. On one hand, prospective buyers were in a hurry to buy, apprehensive of price rise, while on the other hand, robust absorption motivated developers to go on a project launch spree.

“In absence of a proper regulatory regime (such as RERA, which came later), the financial ring-fencing of projects was not proper, which allowed developers to use booking money from one project to acquire more land, which was only based on the underlying premise that the robust absorption will sustain. The reason, most of these happened in Noida was because the city offered the option of staggered payment for allotted land,” he adds.

Kashyap adds this allowed builders to accumulate and launch more projects in anticipation of robust demand. The residential real estate segment witnessed a prolonged muted period (till 2020-21), especially for the primary market.

Most of the developers that built their pipelines on anticipated demand found it difficult to sustain this phase and what we see today is the result of the same, he adds.  (Agency)

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