In response to recent shifts in the Mumbai real estate market marked by softened demand and increased competition, developers are revisiting the once-popular “Buy Now, Pay Later” schemes. As the market adjusts to factors like economic uncertainties and evolving buyer preferences, notable developers, including Lodha, Rustomjee Group, Raymond Realtors, Wadhwa, Runwal, and Ambit, have reintroduced subvention schemes and flexible payment options over the past six months.
The resurgence of these payment schemes comes after a period of growth stimulated by the Maharashtra government’s decision in January 2021 to waive 50% of developers’ permission fees. However, the subsequent surge in property launches led to an oversupply of inventory, prompting developers to reconsider their sales strategies.
For instance, Lodha is enticing buyers with a 25% upfront payment option and the remaining 75% payable upon receiving the occupation certificate (OC) for its Thane project. The Raymond group offers a unique proposition in Thane, allowing buyers to pay 20% upfront and defer the rest until January 2025. Other developers, including the Rustomjee group, have introduced flexible payment options to attract homebuyers.
Experts, such as Rajendra Sharma, Chairman and MD at Ambit Realtors and Developers, suggest that these subvention schemes strategically aim to attract homebuyers, expedite inventory off-take, improve cash flow, and reduce carrying costs. The Wadhwa Group is aligning its subvention offers with projects expecting OC within three to six months, according to Navin Makhija, Managing Director of the group.
This resurgence is not only a response to softened demand but also a strategy to counter heightened competition. With an increasing number of launches, developers are compelled to offer incentives to maintain sales momentum. Ritesh Mehta, Senior Director and Head at JLL India, notes that the flexibility of staggered payments aligns well with developers’ robust cash flows post-COVID-19.
Listed players, aiming to demonstrate pre-sales numbers to investors each quarter, are also adopting these schemes. Ravi Kewalramani, Director at RK Mumbai Realtors, explains that commitments received from homebuyers making the initial payment act as collateral for developers, aiding them in raising loans from banks.
The surge in property launches, particularly in the 1-BHK category, has been noteworthy, accounting for 34% of units launched in the second half of 2023. Additionally, the 3.5 and 4-BHK categories witnessed the highest launches in three years in 2023, reflecting the evolving dynamics of the Mumbai real estate market.
In conclusion, the strategic reintroduction of ‘Buy Now, Pay Later’ schemes reflects developers’ adaptability to market challenges, providing buyers with flexible payment options in a bid to stand out and maintain sales momentum.
