Buyers are increasingly looking for a completed property rather than the one in the development as some of the projects getting late due to various issues in the City. There is also a trend towards buying flats in gated communities where developer needs more permissions, compared to stand-alone apartments.
Gated community project requires at least 13 permissions. It is important to have all the permissions in hand before launching the project. Earlier, some developers used to start the project, thinking permissions will come in the process of development. Permissions cannot be taken for granted any more. It is taking almost 15 months to get all the permissions in the hand for the developer, said PV Ravindra Kumar, CEO, Vasathi Housing.
Insufficient labour is also one of the main reasons for the delay of the properties. There are few instances in the City, where legal issues were also responsible for the project delay, he added.
“One can’t generalise projects getting delayed with legal issues and such issues may pop up in any industry. It is just not specific to real estate. Developer doesn’t want to buy a property that has legal issues. The investments that have gone through are huge and all of it would be at stake if something goes wrong,” said Rama Krishna Rao, vice president, CREDAI.
As there is increasing interest in the buyers for the completed flats, the developers need spend from their pockets rather than depending on buyers’ money. Many completed gated community projects with good facilities were sold out in less than six months. Customers are also ready to pay 25 per cent more for these than those under development, said Ravindra Kumar.
“Labour problem is very huge. Real estate development activities are highly labour intensive. It is not an industrial product where one can have assembly line production. The only way to solve this issue to bring in technology but unfortunately customer is not ready to bear the costs for it. He doesn’t bother how we built rather see at what price he gets the property. Over time, certain extent can be mechanised but some of it need to done manually with labour,” said Rao.
It is always a good to buy a flat in the development stage where there is huge choice. The customer can also get a property at a cheaper price than the completed one. Undoubtedly, there will also be huge demand of the property in the second half of 2013 and 2014 as the developers who went for the sanctions is extremely low in last 15 months. The demand may further push up the property prices in that time, he added.