Builders Fail to Attract Buyers For Pre-Launch Sale

May 7, 2007	(1 votes, average: 1 out of 5)  Loading ...
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Nowadays, no smart homebuyer wants to be a part of any pre-launch real estate project. And, sky hitting borrowing costs is not allowing the real estate developers to have solace anywhere.

Adding to their woes are higher home loan rates and the prospects of a market correction that have made it difficult for them to woo buyers for their pre launch residential projects. Those who actually want to buy an apartment are waiting for the apartment building to be constructed completely.

Pre-launches are generally looked upon as the builder’s scheme to raise capital for the projects as it allows him to take advance bookings for a project after getting the required building permits, but much before beginning construction, providing them virtually free cash.

Indeed, many builders are largely dependent on the money from a pre-launch to fund their real estate projects. Some of them may use the cash to complete another project or acquire land as per their business models.

Consequently, a majority of developers prefer launching projects while raising funds through debt and private placements.

Due to declining demand for real estate, a Delhi based real estate developer has put off the launch of two residential projects and a commercial complex in the National Capital Region.

Realistically, such a phase comes when the developers are hit by cash flow problems after a two year high.  Domestic banks will not lend to them for less than 14-15 per cent.

News Published Under:   Real Estate Trends |