Group Buying and Probability of Timely Delivery

Adarsh Palm Retreat, Bangalore during rains
Group buying isn’t a new concept even in real estate in India. It has existed for a long time with localized brokers trying to aggregate demand offline. Even corporates such as ITC and Shell have negotiated bulk deals with large developers for their employees. Group buying hasn’t been digitized as yet. The potential of an online platform, such as Verticl, that brings together demands from all geographies and professions is just tremendous. 

Digital syndication is the need of the hour as buyers hunt for lower prices more and more, and the developers are hard pressed to maintain a certain speed of construction to get necessary sales. In this article, we share brief insights on how bulk buying increases the probability of timely delivery of homes. 

Builders need to book healthy sales volume to construct the project. Bigger sales volume implies higher liquidity (more money) that is then used to construct faster and service interests without any delays. This bigger sales volume was provided by affluent buyers in the pre-demonetization and GST era, who used to buy multiple apartments at an early stage and reap the benefits of capital appreciation by flipping properties to end users post completion. 
These affluent investors have turned wary because of the sluggish sales driven by negative sentiments, a general economic slowdown, and millennials delaying their home buying decisions. Builders, consequently, are unable to sell in bulk and are grappling with significantly lower liquidity (working capital) to carry out construction after covering financing costs. Because of this reason, there are delays in handing over homes to buyers.

Hence, if a platform can aggregate demand on a large scale and help builders achieve or exceed their sales targets real quick, they would be happy to sell their inventory at significantly lower prices, finish off the project and move to the next one. Furthermore, builders have all-the-incentives to offload their inventory at the maximum possible speed because holding inventory, usually financed with debt, is expensive. The interest costs eat up the profit. Bulk sales, therefore, increases the probability of a timely handover of a project.

For more information on group buying, please reach us on +91-9108447825 or +91-9108447829.

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