What is the market checklist before buying a re-sale property?
Some important tips one should keep in mind before buying a re-sale property are:
comes to price rise, it will always be proportionate to its strategic placement which
could be linked to accessibility to highways, markets, business districts and overall
living conditions.
There is a price differential between different properties within the same complex or
even the same building. In India vastu compliant units have a premium on them.
Similarly, East or South facing properties fetch better values than North and West
facing properties. Users pay more for a view in urban settings. In Mumbai, for
instance the price per unit rises as you go higher. If the property is sea-facing, there
is a hefty extra that the buyer has to shell out. In other cities, that are not quite used
to high-rises yet, the premium is for the ground to sixth floor. Higher floors do not
command a premium vis-a-vis lower floors. Pool or park facing properties have a
higher value.
The concept of Preferred Location Charges (PLC) for new properties was based
on these principles. Currently, PLC is arbitrary and there are no fixed norms for it.
There are developers who charge a PLC on every unit in the complex, which
defeats logic.
dependent on the volume of supply. Qualities such as good infrastructure, access
to markets and office and entertainment hubs are common to a locality. However,
the volume of units available for sale in the market also determines the prevailing
price. If it is a new growth corridor, the first project to get off the ground normally
comes at a reasonable price. As more developers launch projects, it becomes an
area in demand and the values keep rising steadily, normally by about 8-10 per
cent per year. A developer may break the norm in an existing locality by launching
a project that is richer in features and therefore commands a higher value. Once
there are a couple of projects in a locality that command a higher value, it pushes
the base value up.
Developers too, allow investors to make money by periodically revising values of
projects that are still under construction. Once this new value is released, brokers
and underwriters, small and big investors offload their properties at a value higher
than the original sale price but lower than the new sale price. They thus, book shortterm
profits. This cycle happens at least two to three times during the
development cycle. End users enter towards the end of the cycle and purchase at
values that are at least 50 per cent higher than the original sale price. However,
with very little holding time, they get to buy very close to possession.
If you are buying on a corridor where there are several projects, check on price
and specifications of multiple projects to get the best deal. If there is more stock
than demand, you have a better chance of negotiating a better value in the
secondary market.
to deliver on time, construction quality and the payment terms, especially in the
case of a local builder.
Some important tips one should keep in mind before buying a re-sale property are:
* Locality:
Generally, the price difference prevails for different locations but when itcomes to price rise, it will always be proportionate to its strategic placement which
could be linked to accessibility to highways, markets, business districts and overall
living conditions.
There is a price differential between different properties within the same complex or
even the same building. In India vastu compliant units have a premium on them.
Similarly, East or South facing properties fetch better values than North and West
facing properties. Users pay more for a view in urban settings. In Mumbai, for
instance the price per unit rises as you go higher. If the property is sea-facing, there
is a hefty extra that the buyer has to shell out. In other cities, that are not quite used
to high-rises yet, the premium is for the ground to sixth floor. Higher floors do not
command a premium vis-a-vis lower floors. Pool or park facing properties have a
higher value.
The concept of Preferred Location Charges (PLC) for new properties was based
on these principles. Currently, PLC is arbitrary and there are no fixed norms for it.
There are developers who charge a PLC on every unit in the complex, which
defeats logic.
* Area-wise Demand and Supply:
Price of properties within a certain area is alsodependent on the volume of supply. Qualities such as good infrastructure, access
to markets and office and entertainment hubs are common to a locality. However,
the volume of units available for sale in the market also determines the prevailing
price. If it is a new growth corridor, the first project to get off the ground normally
comes at a reasonable price. As more developers launch projects, it becomes an
area in demand and the values keep rising steadily, normally by about 8-10 per
cent per year. A developer may break the norm in an existing locality by launching
a project that is richer in features and therefore commands a higher value. Once
there are a couple of projects in a locality that command a higher value, it pushes
the base value up.
Developers too, allow investors to make money by periodically revising values of
projects that are still under construction. Once this new value is released, brokers
and underwriters, small and big investors offload their properties at a value higher
than the original sale price but lower than the new sale price. They thus, book shortterm
profits. This cycle happens at least two to three times during the
development cycle. End users enter towards the end of the cycle and purchase at
values that are at least 50 per cent higher than the original sale price. However,
with very little holding time, they get to buy very close to possession.
If you are buying on a corridor where there are several projects, check on price
and specifications of multiple projects to get the best deal. If there is more stock
than demand, you have a better chance of negotiating a better value in the
secondary market.
* Builder/Developer:
Check the builder’s track record, his financial strength, his abilityto deliver on time, construction quality and the payment terms, especially in the
case of a local builder.
