By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects
Track2Realty Exclusive: Subvention schemes have gained popularity with developers in the North India, particularly after the economic slowdown. The scheme conceived by developers in conjunction with banks, allows the home loan applicant to defer EMIs and interest payments, on a property under construction, for the first two years of the loan period.
All expenses are borne by the concerned builder. In effect, the buyer enjoys an interest-free period for 24 months. Of late, banks have become more stringent, and are extending this form of financing only to reputed builders.
Several other financial schemes and sops have been rolled-out in a bid to woo customers. Assured return scheme (ARS) is one such offering. Consumers, having borne the brunt of stock-market volatilities, are increasingly seeking low-risk investment options.
As a result, ARS has made its way into the real-estate sector. Initially, it was offered by developers of commercial properties, but now the residential segment too has joined the fray.
Under the ARS construct, an investor enters into an agreement with a developer, which assures monthly returns until possession. This is a win-win proposition for both parties: the buyer benefits from the guaranteed return; the developer taps into an alternate source of credit, at a lower cost of capital than bank rates.
Another variant of this scheme, is allowing buyers to rent the apartment, for a stipulated monthly rent including deposit, for a three-year lock-in period, with the option to purchase at a later date. Should the buyer exercise the option, the rent is treated as down payment.
Collecting a down payment on under-construction flats in the builder’s on-going projects, with the pledge to repay the greater of current and future value when the market corrects, is one more ingenious proposition. So is partial payment of interest rates on the buyer’s home loan for a year, subject to a three year lock-in period.
Referrals, as illustrated earlier, are an effective marketing lever. As such, they are indispensible to the developer’s marketing arsenal. The strategy is to draw buyers into the selling process via rewards/incentives. Obviously, a prolific referral program depends on a positive experience with the developer through the sales process and beyond. Therefore, investing in training and CRM is critical.
Whereas the North India has traditionally relied on broker databases and referral programs, in the South, marketing has largely been print-driven. Print advertising has been the cornerstone of marketing campaigns, with radio serving as the reinforcement medium.
…to be continued
