Real Estate Developers Inflating Pre-Sales Figures: The story behind the numbers

Despite regulations like the Real Estate Regulatory Act (RERA), real developers in Mumbai real estate market and country wide engage in pre-launch activities to gauge market interest and estimate potential pricing. These soft launches

Every quarter and especially at the end of the financial year, real estate developers boast pre-sales figures in the thousands of crores, presenting them as indicators of market health. Yet, beneath the surface lies a mix of genuine sales and inflated numbers.

Insiders reveal that developers in the Mumbai real estate market and other markets country-wide sometimes register sales based on minimal token amounts, ranging from 1 to 5 percent. In some cases, they even sell units to channel partners or other developers, artificially boosting sales figures to reassure investors.

Pre-sales refers to the initial commitment made by homebuyers or investors to purchase a property unit, typically secured by paying a token amount to the developer. These figures play a crucial role for developers, aiding in securing loans and demonstrating market demand during project launches.

During the launch phase, impressive pre-sales figures serve as leverage for developers, instilling confidence in investors and buyers alike. However, achieving these numbers often involves strategic maneuvers, such as offering discounts or collaborating with channel partners to expedite sales.

In the Mumbai real estate market, and beyond, developers have been known to reintroduce schemes like 'buy now, pay later' to stimulate buyer interest. These schemes, prevalent during slowdowns, allow buyers to pay a fraction of the price upfront, with the remainder due upon possession.

Impressive sales numbers by way of offering flexi schemes and offers help builders attract homebuyers build on narrative that their project is fast selling.

It also aids developers and channel partners, also referred to as real estate consultants, in creating an environment where the Fear of Missing Out (FoMO) effect is fostered to secure bookings from homebuyers.

Despite regulations like the Real Estate Regulatory Act (RERA), developers engage in pre-launch activities to gauge market interest and estimate potential pricing. These soft launches, conducted before obtaining official approvals, enable developers to assess demand and fine-tune their strategies.

However, such practices often skirt legal boundaries, as developers are prohibited from marketing or selling projects before RERA registration. Recently, authorities like the Gujarat RERA have pledged to crack down on developers who flout these regulations, signaling a tightening grip on pre-launch activities.