Property developers in Gurugram have doubled commission to brokers to clear their under construction and ready inventory.
“Many developers are giving 7-8% commission to brokers so that they get buyers fast which will help them clear their inventory,” said head of a finance company. Real estate brokers normally get a brokerage of 2-4% across the country with brokers in the National Capital Region (NCR) getting close to the 4% range.
According to industry estimates, at least Rs 5000 crore worth of inventory has been sold in Gurugram in recent months where apartments are priced between Rs 5-7 crore.
Besides, in Gurgaon ‘flipping charges’ or transfer fees are being waived off in most cases to drive sales.This helps the buyers to further sell their apartments further without worrying about registration, the NBFC head said. Flipping charges are levied when the original allottee sells a flat before the flat is ready and handed over to the buyer. Waiving off this charge helps in faster sale because this price does not get passed on to the buyer.
While launches in Gurugram have come down by 57% on a yearly basis, sales have gone up 12% and unsold inventory has fallen by 35% in March quarter, at nearly 33,000 units, as per Anarock Property Consultants.
According to a head of a PE firm, transfer fee is non- existent in first and second sale.
“Since real sales are not happening, it will definitely lead to a bubble,” he said, adding that such sales are ‘parchi sales’, which means change of property ownership without formal sale and without formal registration .
“Many developers are selling these flats to underwriters at Rs 8,000 per square feet which in turn the brokers sell at Rs 9,000 or Rs 9,500 per sq ft. It’s nearly 20% margin for brokers.”
Santhosh Kumar, vice chairman at Anarock Property Consultants say big developers are not doing this . “Bigger developers are not resorting to any tricks. But it is interesting to see who is buying so many flats,” Kumar said.
Private equity investors such as Sunil Rohokale, chief executive and managing director, ASK group, said that there is no inventory issue in Gurugram as inventory levels at an eight month low. However, Rohokale thinks there is disproportionate increase in prices.
“In the last two years, prices have have almost doubled. Affordability will be at play at some time. If more supply comes, sales velocity and prices will be normalised,” he said.