Its Cheap, But Not Without Cost: Devesh Srivastava From Miami Estate

By Ni3, Section Miami Properties
Posted on Sat Jul 19, 2008 at 12:55:58 AM EST

Transactions in real estate are done on promises of fast delivery and quality construction, when there is no physical presence on ground. After this, credibility of the developers factors in. Buyers risk their investments in such deals. Such deals, even if they deliver, do not guarantee a good infrastructure around.

One such example, where buyers are investing having faith in the developer is sector 37 of Gurgaon. Two major developers BPTP and ILD Millenium have launched their residential projects in sector 37 D and 37 C, respectively: ILD Spire Greens is being built by ILD Millenium, a joint-venture company of Millenium Spire and ILD. Millenium Spire is a Singapore-based investment firm, which has operations in India also. BPTP is developing Park Serene at sector 37 D.

As one move towards Manesar, various sub-divisions of this newly created sector come on the right side oh NH 8. Very close to this sector, Reliance is setting up an SEZ. The farmers in the region recently protested against the selling of land to Reliance blocking the Pataudi Road at the entry point.

But this is not all that is happening in this sector. The area still lacks infrastructure. So buying an apartment in these newly launched projects will be an investment for the future. It would take at least four to five years for an overall development.

Reaching there
Drive straight along the National Highway 8, till you reach Hero Honda Chowk. A sector road takes you to sector 10 A. This road further bifurcates into two different directions forming the Basai Road and the Pataudi Road. Along these two village roads, developers are coming up with their projects.

However, one cannot take a right turn from the Hero Honda Chowk, as the highway does not have a cut over here. So to reach sector 10A, person has to go straight for another two kilometers till Kherki Dola toll tax collection point and then take a U-turn to come back to Hero Honda Chowk.

A New Strategy
Precautions before you buy
Poor infrastructure

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A new strategy
The two projects: ILD Spire Greens and Park Serene have been launched with a new strategy. One can opt for an apartment in ILD Spire Greens at a rate of Rs 2,222 per sq ft with additional mandatory costs. At Rs 1,995 per sq ft as basic rate, Park Serene is selling at a rate lower than that of the Spire Greens. But again, the project has mandatory costs.

As per the new strategy, the developers are now offering affordable price in their newly launched projects. But if you are to invest your money in a project because of its low costs, read the fine print. For example if somebody has to shell out money at a rate of Rs 350 per sq ft if he wants only vitrified tiles. But if he chooses to have high-end specifications like modular kitchen, air-conditioning and wood-laminate flooring, he has to spend a good amount at a rate of Rs 500 per sq ft. The worst part - developers do not allow sale at the basic price. The buyer has to choose an option. It is not just the basic sale price but also the additional cost on the specifications that one has to pay for.

And this is being sold when there is nothing on ground except fencing. Ashish Bhalls, managing director, Millenium Spire says, "We have sold around 190 units. This shows that buyers have faith in the developers. And development will happen, as it happened in other parts of Gurgaon. We are developing a total of 700 acres of apartment space on a 16-acre plot of land. We are not passive investors. So we synergise ourselves with the developer for sales. The area has good potential for growth but only when the government will do something about the development."

Commenting on the issue of mandatory costs, Amit Jain, vice president-marketing, BPTP says, "It is impossible to sell the apartments at the basic price only. There is an operational hazard attached to this." He further explains, "If a person chooses to buy an apartment at the basic sale price and moves into a flat above your flat, he will try to make some modifications as per his requirements to his floor. These minute changes will affect the texture of your ceiling. Also, the noise created by any construction activity will disturb your peace and living."

In projects like Park Serene and Spire Greens, one would get vitrified tile-floor at an extra rate Rs 350 per sq ft. If somebody chooses wood-laminate flooring, and modular kitchen he will have to shell out money at a rate of Rs 500 per sq ft. Jain adds, "This kind of pricing increases the options for the buyer and also gives him the flexibility of investing. If such things are hidden at the broker level, buyer can easily come to know about the finer details if he goes through the agreement."

Precautions before you buy
Real estate consultant Pradeep Mishra says, "It is advisable that at the time of inquiry, one should ask for the PLCs, extra charges in terms of parking, club-membership and external development charges. Buyers are at times misguided. But they should enter a deal after due diligence."

Jain of BPTP adds, "A smart buyer should ask for the copy of licences of approval from the developer and look at the approval letters."
Bhalla adds, "As an investment firm we mitigate the risks. We derisk the real estate by bringing transparency. So we constantly keep a check on the partner firm, which is the right way to do business. A buyer should ask for the date of delivery and should get it into his agreement papers. The developer should mention the delay compensation in the agreement papers."

Poor infrastructure
The Basai Road and the Pataudi Raod are in bad condition. Narrow roads, filled with rainwater are dangerous to drive. Heavy-duty trucks and commuter buses ply on these roads all the time, which make the travel even difficult. As the ground situation is, it will take at least four to five years for a complete makeover of this area. Good quality schools and colleges are far away from this place.

But the market is witnessing slump and the realty prices have come down. Experts believe this is the right time for investment. A rate in the range of Rs 1,995-2,222 per sq ft is affordable if seen in comparison to the prices elsewhere or if compared to the upmarket locations of Gurgaon. The rate at this stretch is much more than the affordable limit. And for an investment in a place like sector 37, a long-term investment horizon is needed.