0 Are branded apartments worth the premium that you pay? – today news Share February 5, 2024 admin BUSINESS A reputed residential real estate developer, say DLF, Godrej, Tata, Prestige, Purvankara or Shriram, can easily command a 20-30% premium for their branded apartments, as compared to a local developer, say real estate experts. View Full Image Graphic: Paras Jain For instance, M3M the Cullinan located at Noida Expressway in the National Capital Region charges ₹25,000 per sq.ft for the carpet area, compared to an average rate of ₹13,000 per sq.ft in that locality. To be sure, an apartment is priced on its super built-up area and not the carpet area. So, if the super built-up area of a 3 bhk (bedroom, hall and kitchen) flat is 1,200 sq.ft, its carpet area will be just 70-80% of this based on the project but a buyer will need to pay for the entire built-up area, also known as saleable area. DLF’s ongoing project—DLF One Midtown—at Moti Nagar in New Delhi demands a whopping ₹53,000 per sq.ft carpet area, compared to an average locality rate of ₹13,000 per sq. ft. Godrej 101 at sector 79 in Gurugram is quoting a rate of ₹19,500 per sq. ft, compared to an average ₹9,250 per sq. ft in that sector. Is it worth paying the huge premium? Not everybody is happy with the concept. Puneet Khurana (51) who stays at Raheja Atlantis in Gurugram is sceptical. “They charged an insane amount as premium when I bought my flat in 2010 but they have not delivered on many of the promises made when they gave possession of the flat. While it is a beautiful apartment, we don’t have basic amenities such as a clubhouse or 24-hour power backup. The construction quality is so poor that you can’t hammer a nail into the wall,” he says. “It is an old property and has been handed over to the RWA,” says an executive from Raheja Developers. Separately, Khurana also bought an apartment at DLF Capital Greens in 2011. While he has no complaints about the quality and fittings, he decries its customer service. “The builder had promised to hand over the flat it 4-5 years after the advance was paid but it happened only after 8-9 years. A court later asked the builder to compensate buyers,” he says. Builders everywhere continue to play truant on delivery dates, say most flat buyers. The situation has not really changed even after Rera, or the Real Estate (Regulation and Development) Act, 2016, was enacted. “I bought M3M Heights located in sector 65 in 2021 at ₹11,000 per sq. ft. The possession was supposed to be in October 2023 but we are still waiting for it even as we have paid full money,” he says. Notably, M3M Group is mired in a money laundering case. “Our money is stuck and we have no clarity if the possession will happen,” says Khurana. One of the properties by Godrej Properties—Godrej Summit in Gurugram—suffered from major quality issues and the developer finally offered to buy back all units from its residents last year. DLF and M3M Group did not respond to emails from Mint. What then is the point in big developers charging such high premiums if their projects are delayed or face quality issues, one may ask. Akhil Saraf, founder & CEO of real estate service provider Reloy, says, “It is not that top builders do not face issues, but they are best positioned to sort it out. They can liaison with authorities to get the work done,” says Saraf. Rising premium Real estate prices are on a roll, but this is mostly driven by demand and supply, say experts. Ravi Shankar Singh, managing director-residential transaction services, Colliers India, says people working with multinational or tech companies, start-up founders and non-resident Indians have enough liquidity to deploy in the real estate. This has created demand in the ecosystem. Supply, on the other hand, is limited. View Full Image Graphic: Paras Jain “The new generation wants a great lifestyle which is environment-friendly and is backed by technology. To cater to this demand, developers are reducing the size of the apartments but providing amenities that this generation seeks. These are fully furnished apartments, with premium fittings, and not the bare shell structures hitherto sold to buyers, who then had to furnish it,” says Singh. Amenities add to the premium. “Prices do appear higher but one needs to understand that you get so many amenities. It is not an apple-to-apple comparison,” says Saraf. While RERA has brought in more transparency and accountability, it has also added to the costs. Efforts at identifying and acquiring land parcels and rising construction costs due to an increase in the prices of raw materials also add to the premium. “Nobody can afford to delay a construction unless it is due to force majeure or change in rules. The developer will have to pay interest from the date of possession promised by the builder till the date of actual possession, as per RERA. The buyer can demand a refund with interest if the project is delayed. Developers have begun to price in this risk,” Reshmi Panicker, executive director, land services and residential, Knight Frank India, says. Where brand premium is concerned, Panicker says, there are buyers at those price points as well. “Developers gauge the extent to which the market will accept the premium for a branded project. They can adjust prices if they don’t get traction at a particular price point. Some developers tailor make schemes to assist buyers with flexible payment options, stamp duty waivers or discounts,” says Panicker. The missing middle While high net worth individuals are able to afford premium apartments, the middle class—particularly salaried people— cannot afford the prices and is in a quandary. This segment is delaying its purchase decisions while others with deep pockets have moved beyond consumption to investment. Delhi-based Mohit Srivastava, 36, a business consulting professional, has been exploring the housing market for 3-4 years. “A basic apartment in Gurugram will cost you about ₹2 crore. Even if I manage to pay about ₹50 lakh in down payment, I would still be paying more than ₹1 lakh as equated monthly instalments. How will I bear my other monthly expenses?” he wonders. There are additional costs apart from registration and stamp duties that a buyer has to bear. “When I rented a premium apartment in Gurgaon, I realized that the services of the plumber and electrician were too expensive if these were arranged by the developer. The maintenance cost in itself could be more than ₹15,000 per month at some apartments,” he says. But such high costs are not a deterrent for the well-heeled who would rather be associated with a brand. Some people even compromise with the size of the apartment for the brand. “I chose to buy a 2bhk of 778 sq ft carpet area in Gurugram by Godrej Properties instead of a 3bhk by a mid-tier developer. The delivery is expected in 2026. I chose Godrej because I believe they will deliver on time and even if they delay it, the resale value will be better,” says Prateek Pruthi (34) , a treasury manager at an IT company, and based out of Noida. Bengaluru-based Sucharita Ghosh (34), a senior executive at a multinational firm, is a loyal Prestige buyer. She explored over 40 apartments before buying a flat in Prestige Kew Gardens in April 2019. She got possession of the flat a year later in May 2020. She bought another flat in January 2022 at Prestige City which is supposed to be delivered by May 2025. “With Prestige, I feel an assurance that the flat will be delivered on time. I accept there will be growing pains in a new home, but they are prompt at resolving those,” she says. Thane-based Suresh Mandhare, a senior citizen, bought a premium 1,350 sq. ft home at Lodha Paradise in 2010. “I, along with some other residents, faced seepage issues in the apartments after 4-5 years, but the premium was worth it because the construction quality is better. There are fewer instances necessitating repair and repainting and the price appreciation is much higher. I bought the flat for ₹4,100 per sq. ft, and prices have soared to ₹13,000 per sq.ft now,” he says. Do your research Experts say buyers need to thoroughly research the project that they are interested in, be it for investment or self-use. Panicker advises customers to check with real estate tracking agencies for transaction data on sales and also visit the Rera website to understand title and approval status and risks associated with a project. Source Link Table of Contents Toggle Rising premiumThe missing middleDo your research Tags: dlfGodresj real estateLodhaMint moneypremium apartmentsPrestige housingReal estatereal estate newstata real estate Share on Facebook Share on X You may also like... Elijah McClain case: Colorado officer jailed over 23-year-old’s death – news today Do snitches net fishes? 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