Experts claim there has been a recent decline in primary sales in the Mumbai real estate market. Additionally, due to an excess of inventory brought on by the rise in launches over the previous two years, developers have been pushing sales through these various initiatives.
In the Mumbai real estate market and its environs, more and more builders are reintroducing “buy now, pay later” schemes, which let buyers pay only 10 or 20 percent of the total price up front and the remaining amount upon possession. These programs, which became popular during the 2015-2019 real estate slump, are designed to increase buyer confidence.
Diminished demand?
The Mumbai real estate market has seen a spike in launches and a rise in residential property sales over the past four years.
The Maharashtra government’s announcement in January 2021, waiving half of the permission fees developers had to pay, is credited with this growth. Several developers have had flexible payment options or subsidy programs during the last six months.
According to experts, this may be due to a decline in primary market real estate sales. Due to excess inventory from the increase in launches over the previous two years, developers have had to offer such schemes to boost sales.
In the past few months, developers including Wadhwa, Runwal, Ambit, Raymond Realtors, Microtech Developers (Lodha), Keystone Realtors (Rustomjee Group), and Wadhwa have all introduced flexi-payment options.
For instance, Lodha offers a 255 upfront payment option and a 75% payment option upon receipt of the occupation certificate (OC) for its Thane project. Like this, the Raymond group offers the option to pay 20% in advance and nothing at all until January 2025 in Thane. In November 2023, just in time for Diwali, several projects from the Rustomjee group had flexible payment options.
Directly from the horse’s mouth
Reintroducing the 20:80 subvention scheme is a calculated move to draw in buyers and speed up inventory offtake, which will increase cash flow and lower carrying costs, according to Rajendra Sharma, Chairman and MD of Ambit Realtors and Developers.
As a result, according to Navin Makhija, managing director of the company, the Wadhwa Group is providing subvention in projects where the OC is due in three to six months.
Experts in real estate also credit increased competition for the revival of developer subsidy schemes in the Mumbai market.
“Developers are forced to provide incentives to stand out and sustain sales momentum due to a high volume of launches. The real estate consultancy firm JLL India’s Ritesh Mehta, Senior Director and Head of West & North, Residential Services & Developer Initiatives, stated that the flexibility of staggered payments “aligns with developers’ robust cash flows post-Covid-19.”
Listed companies comply with investor requests to release their pre-sales figures every quarter. To create cash flows, developers must rely on banks or find innovative ways to sell their property for less money. First-time homebuyer promises can be used as collateral by developers to secure bank loans, according to RK Mumbai Realtors’ Director Ravi Kewalramani.
More launches
The number of units introduced within Mumbai city limits climbed from 25,404 in 2020 to 52,771 in 2023, according to the Maharashtra Real Estate Regulatory Authority (MahaRERA).