DLF undoubtedly has been a pioneer in the Indian real estate industry. In a first-of-its-kind, the giant recently announced a new business model under which it will sell apartments only when it gets occupancy certificate after completing the project.
The announcement was made recently by DLF’s group CFO Saurabh Chawla who declared that the company would sell only completed products from now onwards. The move is expected to remove uncertainties regarding costs and delivery timelines.
“Customers are now averse to taking risk and they prefer to buy ready-to-move-in apartments,” Money Control quoted Chawla as saying.
Chawla further added that DLF will apply for occupancy certificates once the structure of the building is complete along with other infrastructure. He also mentioned that the additional cost on increased working capital requirement would be marginal.
DLF’s declaration comes as a bold move in the times when the Indian real estate market, especially in Delhi-NCR, has been facing huge delays in project executions, forcing home buyers to protest and move courts. Several real estate bigwigs like Jaypee group, Amrapali, Unitech and The 3C Company are being accused delay in possession by lakh of home buyers.
DLF’s recent announcement seems to set a new benchmark for other developers. As of now, the company has completed inventory worth about Rs 13,500 crore, which would be sold over the next 5-6 years. It would continue to build a fresh inventory of completed product.
Under its new venture, DLF, along with its partner GIC, has started construction on the first phase of its 7 million sq ft housing projects in central Delhi. The company even declared that it will open sale in this project too only after the structure is complete and they get occupancy certificate.
It is noteworthy here that there is no GST on completed units while effective GST of 12 percent is applied in the case of under-construction flats.