Gurugram Realtors Increase Broker Commissions to Boost Sales Amidst Inventory Surge

In a bid to expedite the sale of their under-construction and ready-to-move inventory, property developers in Gurugram have doubled broker commissions, according to a recent report by the Financial Express. Traditionally, real estate brokers across India receive commissions ranging from 2 to 4 percent, with those in the National Capital Region (NCR) often at the higher end of this spectrum.

Motivation Behind Increased Commissions

The move to increase commissions to 7-8 percent aims to attract buyers swiftly, thereby helping developers clear their substantial inventory. This strategy aligns with recent trends where developers are keen to offload apartments priced between Rs 5 to 7 crore, resulting in Gurugram witnessing sales amounting to at least Rs 5,000 crore in recent months.

Additional Incentives to Stimulate Sales

Moreover, developers in Gurugram are also waiving "flipping charges" or transfer fees to further incentivize purchases. Typically, flipping charges are levied when the original allottee sells a flat before its completion and handover, but these exemptions facilitate quicker transactions by alleviating registration concerns for subsequent buyers.

Market Dynamics and Sales Performance

Despite a 57 percent decrease in new project launches, Gurugram has reported a notable 12 percent increase in sales. This uptick has corresponded with a 35 percent reduction in unsold inventory, totaling nearly 33,000 units by the end of the March quarter. However, concerns have been raised regarding the nature of some transactions, labeled as "parchi" sales, indicating changes in property ownership without formal registration or sale.

Expert Opinions and Industry Insights

Santhosh Kumar, Vice-Chairman at Anarock Property Consultants, noted that larger developers refrain from such practices, highlighting a divide in market strategies. Meanwhile, a private equity firm executive raised concerns about the authenticity of reported sales, describing them as transactions sold to underwriters at Rs 8,000 per sq ft, subsequently marketed by brokers at higher prices, yielding substantial margins.

Regulatory and Industry Response

The implementation of self-declaration certificates (SDCs) for advertisements has also impacted the real estate sector, with the Advertising Standards Council of India (ASCI) urging compliance amidst regulatory uncertainties. The Supreme Court directive mandates SDCs for all new advertisements across television, digital, print, and radio mediums, effective June 18, pending further judicial clarity post-July 9.

Gurugram's real estate sector is navigating a complex landscape marked by strategic commission increases, incentive-driven sales tactics, and regulatory adjustments. These developments underscore ongoing efforts to address inventory challenges amidst evolving market dynamics and regulatory frameworks, influencing buyer behavior and transactional patterns in the region.

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