Innovative Payment Plans
One of the silver linings that has emerged out of the sluggish realty market sentiments of the recent past is the emergence of new kinds of structured deals & innovative payment plans. Developers, real estate advisories & marketing companies have realized the significance of innovative payment plans that cannot only lure buyers to undertake investment decisions but also safeguard their investment, giving them a peace of mind.
2015 saw the emergence of many such plans in the form of Buy backs, Construction Linked Plans (CLPs), Subvention Schemes, Small Monthly Installments & Assured Rentals & much more.
Buy Backs
Numerous developers in the recent time have come up with the concept of Buy-Backs. Herein they come up with the concept of buying back a property at a higher rate after a stipulated time frame.
In Buy-Backs, the investors have the alternative to either get higher returns from the developer or just continue with their investment. Eventually this assures a guaranteed amount of return on the investment made & hence safeguards the buyer’s investment.
Many leading developers such as VVIP & Mantri etc. are successfully using Buy-Backs to attract investment into their projects.
Construction Linked Plans (CLP)
As the name suggest, the payments made to the developer is subject to the construction milestones achieved. Since the payment is linked to the construction progress achieved, it does not allow developers to divert payments made for a particular project into a different project.
There is a different version emerging in the recent past called Possession Linked Plans (PLP), wherein an upfront amount of 20-25% is paid during the time of booking & the remaining amount is paid once the possession of the house is obtained.
Almost every major developer in India is actively adopting CLPs & PLPs to safeguard buyer interest.
Subvention Schemes
This is one among the innovative schemes, which increasingly many developers are taking up to attract investors & buyers. In subvention three players are involved- Buyers, Developers & Banks. Under the scheme the buyer will pay an amount upfront to the developers, which is generally 10-20% of the total price of the unit. The remaining amount is paid by the bank in the form of loans to the developer.
Although the loan is the in the name of the buyer, but for a fixed amount of time, which is generally till the time of possession, the cost of interest on the loan is paid by the developer itself . This saves the buyers from the double cost, which otherwise they have to pay in the form of EMIs as well as rentals simultaneously.
Small Monthly Payment Plans
Developers are also coming up with monthly payment plans wherein they have to pay small amount upfront & the remaining amount could be paid in the form of small monthly installments thereafter. Antriksh Urban Geek, a project based out of Dwarka (Where the proposed smart city is located) introduced the concept of 0.9% monthly payments, wherein the investor has to pay a small amount of INR 10,000 as down payments & thereafter an EMI of 0.9% of the property price to be shelled out every month.
Assured Rentals
Developers have introduced the concept of assured rentals wherein a fixed rental will be given to the investor post possession, generally for a fixed time interval. The scheme was initially more popular in the commercial real estate segment, but thereafter is becoming popular in the residential market as well.
One of the developers that has adopted assured rentals has been Artha. The South India based developer has recently launched Emprasa Smart City project in Bangalore, which is a smart city dedicated to start-ups. The development will comprise of 5000 housing & equal number of office spaces.
The project has an assured rental yields up to 10% for 2 years. Interestingly the monthly EMI will be lower than the rental yields thereby safeguarding the investment of the buyer as the rental could cover the EMI.
In the coming time it is expected that the frequency of such schemes & innovative marketing plans will be more in number. Along with the existing schemes, developers in collaboration with real estate advisories & marketing companies will roll out more such schemes to lure buyers by giving them a better safety net & convenient payment plans. It will be a win-win situation in the real estate ecosystem as developers can sell more number of units faster & buyers can leverage from the innovative & easy plans.
