Buying into a New Development from an Established Builder

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By Rajkamal Rao 
 
Go back to Buying property in India and financing a home purchase

Real estate has always been big business in India.  But with the entry of major corporate players, development has taken off exponentially in the last decade.  Names like DLF, Brigade, Prestige, Tata Housing, Godrej Properties, Mantri and Puravankara constantly advertise to promote their brands and emphasize an aura of quality, reliability, transparency and prestige. Buying from such players, therefore, costs a whole lot more upfront.  For the returning Indian family, these attributes are vital and as a result, we see many NRI families either booking properties with these developers for investment purposes or for their own use.

There are numerous smaller players in the market that offer reasonable housing options at much lower costs.  Locals tend to invest their lot with these smaller players but also assume risks because there is no one to go to when things don't happen as promised.  The Confederation of Real Estate Developers’ Associations of India (CREDAI), the industry group for private Real Estate developers in India, says it represents over 8,800 developers through 20 member associations across the country.  There are thousands of additional developers who are not members of CREDAI but continue to prosper in this booming market.

The steps of buying into new development are not different from those in the west.  [The one major difference is in the schedule of payments which we describe in Point 6 below].  We will limit our discussion to the majors - and for ease of understanding (and because they are so popular), restrict ourselves to new flats.

1. All majors have attractive web sites - with many of them expressly going after the NRI segment - so this is obviously the place to start. 
   
   Sites provide location information and extoll virtues of the community.  Information about walk paths, hiking trails, tennis courts, swimming pools, play areas for children, community center, security, power back-up and water resources is detailed.  
   
   The site then describes your specific flat - the quality of construction, flooring, fixtures, walls, ceilings, kitchen, maid quarters, balconies and bathrooms.  Site plans and video tours of model units give you an excellent idea of what to expect even before you leave home.


2. The next step is to visit the sales office for a tour of the property and the model home.  This is a vital part of the buying process because you need to be comfortable in getting to and from your new home on a daily basis. 
   
   India's infrastructure and approach roads within cities are still third world; and in the suburbs stretching out from the cities, worse.  Non-road public transportation (metros, trains, trams) is still poor by world standards.  Because existing space within cities is already used up and zoning laws are practically non-existent, developers are forced to buy land outside city limits.  These were formerly rural areas and so, it is not uncommon to see a shining new development of apartments nestled around zinc-sheeted shanties and mud huts.  Local government based infrastructure development in these areas is very poor - so expect to live most of your life within the confines of your new development.
   
   If your work place is at the other end of town (modern office buildings too have to be built outside the city for the same reasons), you will have to figure out a way to drive from your new development into the city via clogged roads; navigate the city through roads which are really clogged and exit the city at the other end via less dense roads.  Two hour commutes each way are common in major metros such as Bangalore, Delhi, Chennai and Mumbai.  Residents counting on fast highways and ring roads to bring them into and out of the city have to wait a while longer.  India Today magazine, in its March 25, 2013 edition, reports on how major highway projects around the country have come to a grinding halt.
   
   Enough said, though.  Location matters.

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