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Real estate market see return of pre-launches

By - Goutham Sampath

Key property markets such as Mumbai, Delhi and Bangalore are seeing a return of project pre-launches, signalling rising momentum in real estate sales as buyers and investors regain confidence in the sector. Mumbai will see a spurt in pre- launch activity this year after the state government removed hurdles in obtaining regulatory clearances for real estate projects. In a pre-launch, real estate firms begin selling a project ahead of a formal launch and buyers and investors, in return, get sharp discounts of 10-15% or more at this stage as an incentive for the risk involved. Over the past two years, pre-launch activity had dropped, especially in Mumbai, because of the depressed real estate market as well as uncertainties in obtaining approvals. That's changing now. If the pricing is right, investors who have been sitting on the fence for long due to the lack of launches in Mumbai will come in," said developer in Bangalore. Pre-launches offer developers an opportunity to lure back investor interest in the Mumbai realty market, as project approvals are trickling in and sales are picking up, and mop up much-needed cash flows. Investors had shifted their attention to projects in neighbouring Navi Mumbai and Thane districts where more projects were being launched. "Developers will also offer buyers attractive pre-launch benefits in a bid to accelerate sales momentum in the initial months following a launch," he wrote. Developers who traditionally avoided the pre-launch model are now adopting it for projects in new markets. Consolidating Many companies, taking advantage of a sluggish real estate market, are consolidating or moving their headquarters to bigger and better offices. Multinationals like VW, Bayer Crop Science, FedEx, Pepsi-Co and L'Oreal along with Indian majors such as Cipla, Britannia and HDFC have cleverly used the market trend to save on two fronts - cost and space.