Indian developers offer incentives to boost sluggish market

Indian developers are now offering incentives to buyers in an attempt to boost the sluggish market.

"Mumbai’s residential real estate market continues to remain lack-lustre," writers Ramesh Nair, COO- Business of JLL India, on MoneyControl.com, "and unsold stock is piling up. Currently, the inventory overhang in the MMR region stands at a staggering 30 months."

As a result, developers have started to offer schemes that make property more affordable, as well as offering guaranteed rentals or included furniture.

"The most popular schemes include 20:80, 10:90:10, 8:92 and 5:95 schemes. Also known as subvention schemes, buyers opting for these are only required to pay an amount equivalent to the smaller number of the ratio. The rest is funded by a bank after it has approved the borrower’s eligibility," explains Nair.

"A variation of these subvention schemes is the 20:80 scheme without bank funding. In this, a buyer needs to pay 19.9% of the total contribution, and will pay the balance 80% on possession or after such specific period as mentioned by the developer. Registration may or may not be compulsory in these projects."

Other schemes include waiving interest for up to 42 months, lower interest rates for up to three years, guaranteed rentals for up to three years and flats with pre-installed modular kitchens.