Things Might Look Up for the Mumbai Realty Market with Pre Launches!

The realty market in India had been going through an overall slump of sorts owing to global recession and the downturn among other factors. Realtors are still anxious about the tides of revival hitting this indispensable sector for the Indian economy. Mumbai, as one of the prime cities for real estate development, had also been hit badly by the downturn with sluggish development in the sector. Alongside, the market in Mumbai remained dull and placid through most of last year and this was a worrying sign for leading developers. However, as per latest news and reports, things may just be looking up for the Mumbai realty market. This is mainly due to the sudden flurry of pre launches which are back on the horizon. This mainly underlines the continuation of new projects and the discovery of a viable market for the same which augurs well for the sector in general.

What are pre launches at a very basic level? Pre launches are a time tested method with regard to raising and generating funds even before the actual construction process starts off. This method has been used by real estate developers in the past to fund ambitious projects. The real estate market has been very dull in Mumbai, as mentioned earlier. In order to shake things up a bit, developers and real estate companies in Mumbai are steadily putting up more and more pre launches for residential apartment projects. This is seen as a positive move to shake up the sector and spur into some much needed growth.

The commercial and financial capital of India has witnessed close to twenty five pre launches over the last few months. Buyers have readily accepted most of these including some big projects by the Lodha, Runwal and Kalpataru groups, which are among the top real estate companies in Mumbai. These projects have been readily accepted under the pre launch model, owing to the smaller sizes of these apartments and subsequently, the considerably lower and better prices as per leading real estate consultants. When a pre launch takes place, developers usually expect to sell approximately between 20-30 percent of the entire project. Buyers also need to shell out 30 percent of their total asking price as an advance to the developer.

According to Ashutosh Limaye, the research head at Jones Lang LaSalle India, Mumbai is witnessing a revival of the pre launch market. According to him, real estate companies and developers are not taking any risks with regard to piling up unsold inventory. They are playing totally safe and getting buyers locked into a particular project before all necessary approvals are garnered. The pre launch model is favored even more owing to the prevailing conditions in the real estate market in Mumbai. As per Knight Frank’s report, the global consultants have pinned down almost 130, 000 of the total 290, 000 residential properties under construction, which have still remained unsold. This is mainly because of low levels of demand and the extremely high prices of real estate in today’s times.

According to Limaye, all discounts provided to buyers are taken into account and all financial costs are also considered especially as real estate developers expect to get all necessary approvals within a time period of 12 months at least. Pre launches are doing really well in a real estate market which has been plagued by rising prices and dwindling sales volumes and new launches. The Runwal Forest was recently pre launched by the noted realty company, Runwal group, to be located in the Kanjur Marg (west) area. The developer has priced this project at a viable INR 9, 900 per square feet while market prices stand at INR 12, 000 to INR 15, 000 per square feet approximately. This generated huge demand and the company managed to sell off a whopping 400 units in only a couple of weeks! The fabulously enticing price point and the smaller sizes were huge selling points for this project. The developers sold 1.5 BHK apartments measuring up to 725 square feet and two bedroom apartments measuring up to 1025 square feet as well. Prices started from INR 73 lakhs in this case.

According to the Gatere managing director, Raja Kaushal, most developers do not commence on small apartments in the area mentioned. As a result, the INR 70-80 lakh proposition must have greatly appealed to mainstream buyers. According to Kaushal, these purchases are highly favored by those who are investors. This is mainly because investors can gain up to 20 percent in the very first six months of the launch or about 40 percent on an annual basis. Kalpataru managed to sell 400 units during the Thane project pre launch, titled Kalpataru Sunrise. Again, they sold off these units in only a few days and the USP of this project remained the same, i.e. lower pricing and small sizes.

Sunrise came with an INR 7, 500 per square feet price tag as compared to prevailing market prices ranging between INR 9, 000 to INR 10, 000. Two bedroom apartments measuring 801 square feet came with a price tag of INR 60.08 lakhs while 813 square feet apartments with two bedrooms were listed at INR 60.98 lakhs. In a similar fashion, approximately 2, 500 units were sold off by the Lodha group at its Palava project pre launch. This Dombivali area project listed one bedroom, 729 square feet apartments at only INR 34.19 lakhs, or in other words, INR 4, 689 per square foot. Runwal group is also looking at the pre launch model for another Thane based residential project named Runwal Eirene at prices of INR 7, 499 per square feet.

According to Runwal group director, Vvikas Aroraa, there is a prevalent demand for particular price points and sizes and this is prompting the company to launch suitable products for the same. However, there is a note of caution sounded by market experts, with regard to pre launch purchases not actually translating into great deals for buyers as possession would take up to 3 or even 4 years. Yet, pre launch models are working wonders to revive the hitherto dull real estate market in Mumbai.