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Old 21st February 2020, 15:55   #61
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

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Originally Posted by sunilch View Post
Look at Lodha for example. Large builder that has clean land titles, has great amenities, delivers of time (most of the time) but has many many other issues in its projects. And buyers are a very tiny fish to fight against them. Some of them do fight and come back with a win. But are you as a regular buyer ready to take that risk?
I agree that corporates are the lesser evil of the two, but enough to make them worth it for the peace of mind many a times.
About Lodha - IMO it cannot be counted as a conglomerate. They are Builders - that is their core business, unlike other conglomerates where real estate is a fraction of their portfolio.

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Originally Posted by ninjatalli View Post
but I know of many around neighboring areas who are still stuck in half finished setups or given apartments nowhere close to what they were originally promised; all of them have highlighted the limited power of RERA in their cases.

On this list Tata might be the only one that I might give credence based their past history across other industries. As for others, I really doubt their ability to deliver outside Mumbai. Even in Mumbai, I'll let others provide feedback.

When you say go for a clean & cash rich developer, how do we exactly determine that who fits into that? I'm talking outside the high-end focused players like Lodha, Prestige, Oberoi; although I doubt if any of them fit both the capabilities.
Firstly about Rera: As I explained in my earlier post - a lot of projects that were launched before RERA have a ton of loopholes that can be exploited since agreements are based on the MOFA Model Agreement & not the RERA model agreement.
RERA's true powers will shine on new projects that have been launched after formation of RERA.

We've invested in Godrej & Piramal. I found Piramal to be a lot more customer friendly with their policies (such as the Piramal Service Guarantee, etc.)
An NRI friend who also invested in Piramal was very happy - for some unforseen reasons the building he was purchasing had to be modified & they were very courteous and prompt in informing him & refunding his money. Despite such an experience - he was overtly positive about his experience with them!

Clean & cash rich:
Look at the approvals - it still isn't easy, but do try and understand the approvals, compared to the sales layout - what is free of FSI. Is the developer trying to get more area for free unlawfully - such as ducts that will be covered later, flower beds that will be filled up, etc. (by the developer before hand over)?
Cash rich: Honestly it is a little tough unless its a public limited company. In this case best bet would be to see array of projects they have in hand & the stages they are in. Rera also gives some information on sales numbers, and if the sales are going good - it could be a safe project since most of the sale proceeds would go into an Escrow account for the project completion only.
Lodha for instance is definitely in some financial trouble which any google search will throw up. Google is the best way to get information about the developer.

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Originally Posted by libranof1987 View Post
Or so you'd think. Have enough reliable information on how similar Godrej is to other builders. On a project constructed with Shapoorji & Pallonji, Godrej has turned a blind eye to serious lapses of quality and commitment.

From completely ignoring residents' requests and pleas to intervention, legal notices to hiring bouncers to shoo residents from their corporate offices, Godrej has been no saint.
Honestly, I am surprised to hear such feedback about Godrej.
Is this one of the projects where they were the developers, or were they the marketing & branding agent (and another developer is the actual developer?)?

We've purchased a couple of properties from them & apart from a little teething trouble due to their 'corporate policies' (which I actually understand because we wanted to shift from one project into another project).
I've also seen some of their developments in Mumbai - in Vikhroli. While I agree finishing quality is a lot to be desired yet - but actual construction quality is quite sound and they are keen to explore newer technologies (one of the reason for not having great finishes as newer methodologies like MIVAN are still in their nascent stage in India and it will improve over the longer run).

In the above transactions - what I appreciated about Godrej was that they were clean, transparent, had the approvals in place, etc. which a lot of competitors were not willing to offer & always wanted cash payments, etc. at that time.

Another advantage & reason I listed these firms here are that they don't do 'jhol' in their approvals.
Everything is relatively by the books & you won't see the project getting stuck or delayed or demolished because they tried to maximize their returns beyond what is legally permissible in the rules. In comparison many developers / buildings have faced issues - examples being Indiabulls, Palais Royale in Mumbai, etc.
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Old 21st February 2020, 16:13   #62
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

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Originally Posted by libranof1987 View Post
Or so you'd think. Have enough reliable information on how similar Godrej is to other builders. On a project constructed with Shapoorji & Pallonji, Godrej has turned a blind eye to serious lapses of quality and commitment.

From completely ignoring residents' requests and pleas to intervention, legal notices to hiring bouncers to shoo residents from their corporate offices, Godrej has been no saint.
Which project of godrej is this and in which city?
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Old 21st February 2020, 16:39   #63
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

I'm glad to see a topic which impacts so many of us being discussed - real estate! Since times immemorial, we Indians have had this 'lust' for real estate and that has led to so much grief over the recent few years. Actually, this consumer behaviour and subsequent real estate trends are quite unique to our country and could very well be the subject of an altogether new topic of discussion.

Having spent more than a decade in the real estate industry in the country across a few large cities, here are my much-more-than two bits!

1. It absolutely doesn't make sense to buy real estate for investment. Gone are they hey-days of property appreciating by 100% in a short span of time. In all likelihood, if you purchase property with a loan component, the appreciation will hardly beat inflation if you account for the interest costs. There are several other avenues for safer and better returns.

2. With rental yields in the range of 1.5-2% for residential property (amongst the lowest in the world), it makes much more sense to rent. I agree it is a hassle to shift every now and then and not all landlords are convinced to make your life smoother. In the same breath, if you're buying for self use (assuming that self use will last several years and perhaps decades), it makes sense to buy. Thereafter, of course one needs to evaluate the options wisely before taking the plunge.

3. Undoubtedly, buying ready to use real estate is safest - buy / get what you see. I noticed some people recommending buying in projects that are nearing completion. This is a fallacy as several other unlucky buyers have pointed out. I'll enumerate the reason here. Most developers are used to managing the business as 'cash-flow management' compared to 'project profitability'. In a nutshell, a developer would 'buy' land from the land-owner by paying only part of the actual value, then start marketing the real estate directly to consumers. With the advances received from the consumer, he would pay the land-owner off and some of the remaining money would be invested to start construction. Gullible prospective buyers would see the progress and be convinced to buy, thereby the project sees more buyers, more downpayments. By this time, the developer has used some money to acquire land for some other projects and the cycle continues. Needless to say, he has siphoned off a lot of money being circulated for his self use and probably some Swiss account. The moment any of these links in the 'roll-over' business stopped, the whole thing came crashing down. In most cases it so happened that the developer was not be able to attract more buyers (and their advances) and so he has no money to launch new projects to attract more buyers, or pay for construction or for approvals and so on. Effectively, he would go bust.

Buying in a 70-90% complete project is the riskiest because by then the developer has sold most of the inventory in the project and has received a large sum of money from the buyers already (construction-linked payments). However, he has been siphoning money for other projects or to his Swiss accounts and has no money to pay the contractor who will eventually stop work. So he has say 10% money due from the customer but 30% that he owes his vendors. Not much incentive to take the project further (apart from perhaps reputation and the law, which we all agree is twisted by the mighty to their whims and fancy). As a buyer, you paid 70-90% of the value of the apartment / real estate and got zilch for it. An apartment 90% completed is as good as that completed 0% - you can only dream about it.

4. Someone mentioned it not making sense to buy in a saturated market like Mumbai. I would differ on it. Eventually, the city would run out of land to exploit and the increase in apartments in a given area would slow down while the demand for it continues to grow (Mumbai attracts massive volumes of migrants looking for jobs). Hence, rents would continue to increase and yields would possible improve from the current 1.5-2% to maybe 6 - 8% (like in developed economies). This improves the pay-back period of your investment. Imagine an INR 2 crore apartment that pays itself back in 12-15 years and then keeps throwing out cash for a long period of time (we generally consider the life of real estate at 60 years). Nice annuity business eh! This is exactly why large organized investments are flowing into commercial real estate (IT Parks, Hotels, etc.). However, the difference there is yields are currently in the range of 7 - 8% which are expected to reduce, thereby increasing the valuations. I hope that isn't too much of confusing finance jargon!

5. To comment on yet another opinion I see - that of buying with established and reputed business houses like Godrej, Tata, etc. I would agree with this but there can still be surprises (quite similar to big car manufacturers launching dud products). There was a case of a 100 plus year old business house completing a project in Goa with sub-standard windows which resulted in a toddler's death. The mention of another project in Pune also reiterates the same.

6. If you can afford it, invest in commercial property - buy a shop or a small office unit. It will appreciate at least at the same rate as residential (or more) and you'll be able to rent it out at much better yields than residential. Within residential, it makes much more sense (subjective point) to buy into a small project as compared to a large gated community / township. The monthly maintenance is likely to be lower, there is better opportunity to form a 'community bond' and few shouting matches during society meetings. Moreover, years later when your property is up for upgrades / redevelopment, a smaller society moves faster down that route to unlock value.

Peace!

Last edited by Mlanuk : 21st February 2020 at 16:44. Reason: typos
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Old 21st February 2020, 19:38   #64
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

I know people who had released home loans worth 80 - 90 lacs in Bangalore and waiting forever paying 85k to 90k per month as EMI, for that apartment that had never been handed over.

For the common man, there is nobody to turn to. If they stop loan EMI to bank, there are repercussions too.

Neither Government will help nor courts intervene and help to change the outcome !! Very sorry state indeed. How will somebody invest in an economy if it is so easy to loose money.
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Old 21st February 2020, 20:27   #65
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

Hiland group of Kolkata is a reputed builder. We booked a property with them in 2014, and went back to ask about the status 2 years later. We were told that the property was cancelled. We could get the deposit back. Imagine giving a few lakhs out of your savings and being told 2 years later that the property was cancelled- they did not even bother to send an email or message.

Builders in India are amongst the most well connected groups. And that is why they are the least accountable.

They will compromise on the delivery of an apartment citing lack of funds, but you won't find them driving anything other than a 50+ lakh rupee car even when their company is bankrupt and their employees are not paid.

RERA is not judicially enforcible, so it is unlikely that builders will ever pay for their sins.

If you really want to see how bad the reputed builders are, search for the customer videos of the construction quality in 3+ crore Lodha flats in Mumbai on YouTube.
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Old 22nd February 2020, 11:45   #66
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

No one seems to have mentioned here yet, about the recent demolition of three big apartment buildings in Kerala, under supreme court orders. Those were completed projects with many occupants. Some of the owners got minimal compensation from the government. It must have been a heart wrenching experience for those who used to live there, whatever their economic status might have been.

Furthermore, if the environmental norms cited in the judgment are to be strictly enforced, many more completed projects are in the threat of being demolished. Prospective buyers beware of this, even for the completed projects.
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Old 22nd February 2020, 12:03   #67
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Default Re: Did you ever get cheated by a builder while buying a house? Share tips & advice here

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No one seems to have mentioned here yet, about the recent demolition of three big apartment buildings in Kerala, under supreme court orders. Those were completed projects with many occupants.
I read only the headlines and don't know the details. But did the buildings have OC?

If no then the project was not completely clean on paper.

If no then SC has opened a Pandora's box


Regards,
Sunil
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