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Construction : Web Exclusive | April 2013 | Source : Construction Update

Builders promote apartment as an asset, not as a home

With investment in real estate yielding good returns, apartments are being promoted as a profitable investment option by real estate groups. Many of the apartments are furnished, but rarely used before changing hands after years of purchase.

Representatives of several builders admitted that the occupancy levels in apartments were as low as 25-30 per cent. A spokesman of Confederation of Real Estate Developers’ Association of India (Credai) said the occupancy levels varied depending on the builder as well as the location. Only about 30 per cent of the apartments were occupied by owners because for most buyers it was a means of investment, said Habish. K, Senior Manager (Sales and Marketing), Hoysala Projects.

Low-cost housing projects were possible only in city outskirts where the land could be available at cheaper rates, he said. The maximum input cost in any project comes from land. A decade ago, the situation was different when land was a minor factor in pricing. The cost of land has pushed up the prices of apartments from about Rs.100 per sq. ft. 15 years ago to Rs.3,000-Rs.3,500 per sq. ft. today.

Subrahmanyam, vice-president of real estate venture Superstone Properties, said 70 per cent of buyers of apartment complexes in Kerala were NRIs. Among them are people who plan to return to the State after a few years. The apartments remain locked for a long time before being utilised. There are others who want to sell the units at a premium later.

The high land cost prevents builders from going for budget apartments. The land, labour and tax rates remain the same for luxury as well as budget homes, he said.

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