Do not purchase last few flats

By Dr. Sanjay Chaturvedi

In a project, where first few flats are sold on discount to cope up with initial investment in the project, the last ones are kept to take just double the amount of cost of first few flats.
The practice in real estate development is that the builder usually starving for funds to acquire land and FSI in initial stages. The major funds goes in land acquisition and making plans sanctioned. In this process, neither debt funds nor private equity funds give any amount. After the stage of plans passed, builder do not require private investors or customer’s funds. To sustain its selling price, usually builder average out its sales. Say 30 flats he is going to construct. First 10 flats he will sell for Rs.7500/- per sq.ft., next 10 flats he will sell for Rs.9000/- per sq.ft, 7 flats he will sell for Rs.12,000/- and last 3 flats he will sell for Rs.15,000/- in a span of 18 to 24 months of construction period.
If you are buying from that last 3 flats, you are paying almost double the selling price of the flat. Investors, realty funds and overseas investors are active in primary speculation of the project’s initial stages. The advantage of first 10 flats never reach to the actual buyer. Hence, look if you are buying from a right slot.