Property punting picks up pace

Flats Are Being Sold Like Hot Cakes; People Trying To Make Quick Money

Bangalore: It’s like in the stock markets. The 3-year upward spiral in property price has begun to encourage ordinary folk to speculate in property.

Earlier this month in Bangalore, the 3,000 up-market apartments offered as part of an integrated township project was entirely booked in less than a week. People from the day the project was launched swamped the property developer’s office, and the developer was compelled soon to make a public announcement that there were no more flats to be had, in order to stop the continuing rush.

The phenomenon is not unique to Bangalore. An official of a global property consultancy says projects in Gurgaon with flats valued at Rs 1 crore each have been booked within a week. “Everybody’s buying 2-3 flats,” he says.

The strategy is simple: Pay up the initial installment, which is a fraction of the total flat cost, for, say, three flats. The point at which you are unable to pay an installment, sell one of the flats to make the necessary payment. When a payment issue arises again, sell yet another flat. The assumption is that property price would continue to rise and a tidy profit would be made with every sale.

“This kind of vulture speculation is higher than normal today,” says Chanakya Chakravarti, joint managing director of property consultancy Cushman & Wakefield India.

“We have had people coming to us wanting to book as many as 30 flats. We don’t encourage speculation, so we decline such requests. But there are others who entertain such booking,” says Jackbastian Nazareth, vice president in sobha Developers.

But is it creating a potentially risky speculative bubble? When it become necessary to sell the flats, will the property punters find buyers?

“The property market is still very vibrant. There is a lot of genuine investor interest as well. But investors need to keep their eye on the ball,” says Ankur Srivastava, managing director of property consultancy DTZ Debenham Tie leung.

Experts say investors should look closely at a property’s location, pricing and credibility of the builder and designer before putting in money. “I may not buy something in Bangalore’s south-eastern corridor, where prices appear to be nearing a peak. But the northern corridor and Whitefield still look very promising,” says Chakravarti.

There’s also near unanimity among experts that the emerging integrated townships hold a lot of potential, since they provide all support system an urban professional looks for, from security to schools and retail/ entertainment facilities. “A good integrated township will definitely find end user,” say Mayank Saksena of Chesterton Meghraj property consultants.

• In Bangalore, the 3,000 up- market apartments offered as part of an integrated township project was entirely booked in less than a week. Projects in Gurgaon with flats valued at Rs 1 crore each have been booked within a week with many buying 2-3 flats.
  
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