Pre-sale Figures Inflated By Real Estate Developers
Pre-sale Figures are when customers hold a unit in a development by giving the developer a small payment. But the figures developers proudly display frequently conceal a nuanced reality.
Real estate developers across the country, including in the Mumbai real estate market, engage in pre-launch operations to ascertain potential prices and assess market demand, despite rules such as the Real Estate Regulatory Act (RERA). These incremental releases
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Real estate developers flaunt pre-sales figures in the thousands of crores every quarter, particularly towards the conclusion of the financial year, portraying them as markers of the health of the market. However, underneath the surface is a mixture of real sales and overstated figures.
According to insiders, developers in the real estate markets of Mumbai and other parts of the nation occasionally record transactions based on token amounts that are as low as 1 to 5 percent. Sometimes they even falsely inflate sales figures to reassure investors by selling units to other developers or channel partners.
So, what are pre-sales?
Pre-sales are the initial commitments made by investors or homeowners to acquire a unit in real estate, usually in exchange for a small payment to the developer. These numbers are very important to developers since they help them get loans. And show that there is a market for their projects when they are first launched.
Impressive pre-sales numbers provide developers leverage throughout the launch phase, boosting confidence in both investors and purchasers. But reaching these targets frequently calls for calculated risks, including providing discounts or working with channel partners to boost sales.
Developers have been known to revive plans such as ‘buy now, pay later’ in order to stimulate buyer interest in the Mumbai real estate market, among other markets. These programmes, which are common during recessions. Let purchasers pay a portion of the total amount up front and collect the remaining balance upon delivery.
Builders can attract buyers by presenting their house as a quick-selling asset. Which is reinforced by impressive sales figures obtained through flexible plans and incentives.
In order to obtain bookings from purchasers, it also helps developers and channel partners—also known as real estate consultants—create an atmosphere that fosters the Fear of Missing Out (FoMO) effect.
However, what about pre-sales prior to project approval and launch?
Developers participate in pre-launch activities in violation of laws such as the Real Estate Regulatory Act (RERA) in order to assess market demand and determine possible pricing. Before receiving official permissions, these soft launches allow developers to gauge demand and adjust their plans.
However, since developers are not allow to market or sell projects prior to RERA registration. These methods sometimes straddle legal lines. Authorities resolute in their vow to prosecute developers who violate these restrictions. Such as the Gujarat RERA, have recently indicated a tightening of control over pre-launch activities.
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