The real estate sector saw the balance of power shifting from sellers to buyers in 2009. Developers were forced to cut prices of new projects by up to 50% to bring in the elusive buyer. The shift prompted consumers to fight back for their rights. In Chennai, a group of customers forced DLF to extend them the same discounts that were being offered to new buyers. This prompted the formation of similar groups to take on builders in other cities as well.
Home owners who wanted to sell learnt an important lesson in 2009. Property prices are not immune to declines, and while leverage may not be a bad word, betting on real estate for the short term on borrowed funds can be a perfect recipe for disaster. Speculators learnt that real estate is not a short-term investment and flipping properties is not always profitable.
For buyers, however, the slowdown meant they could negotiate aggressively. On the other hand, as developers faced credit crunch, project delays became commonplace. Even established companies could not guarantee timely delivery, underlining the need to assess the antecedents of the promoter before buying.
Also, 2009 showed that the resale property market can sometimes offer better deals than new projects. Buyers managed to bag good bargains from distressed sellers.
Signs of revival in the real estate market have prompted developers to raise prices. Buyers must also watch out for the new tricks they are using. The difference between super area and carpet area has widened. Even common facilities may not be as promised. Some developers offer a single club house or a pool for up to 2,000 units or levy very high maintenance charges for such facilities.
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