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Property investment is considered to be one of the safest means of investment in India which is also capable of earning you good returns over a period of time. The prices of the properties rarely fall and this makes it a relatively better proposition for investment when the risk of making loss is considered. In price stabilisation and appreciation the investors or the financers play a key role. In fact, the financers have often been accused for the speculative increase in the prices of the properties since their actions tend to shield the true demand which is prevalent in the market. How do they operate? The property financers do not want the properties for their own use. They are only concerned with short or long term gains in the property. They would make the down payment to buy the apartments and hold these over a period of time, till the time the project is fully sold out. As the demand queries for the property rises, the financers seek higher prices from the genuine buyers. If the holding capacity of the financer is good even in times of recession, they prevent the prices of the properties from falling. However, if the holding power is good, there could be distress sales which reduce the property prices significantly. Builders Perspective There are two different perspectives which the builders have of the financers. When the project is under construction and there is a need for selling the units, the financers might be invited to buy the units. Actually, there is no specific way to differentiate between the financers or the genuine buyers since a financer might decide to hold the unit for his own use and, at the same time, a genuine buyer might sell the property in short time. So, ultimately, it boils down to the sale of the units without worrying about financers or buyers. Problems with financers The financers play a crucial role in hiking the prices of the units which they hold. But, since the builders need to effect the sales of their units and too much of price hike could be a serious blow to their sales effort there could be a conflict of interests. At the same time, if the financers decide to pull out their money from the properties, the prices would fall which, in turn would hurt the profitability of the projects which are under construction. There is a speculative increase in the prices of properties under the financers as they look for booking profits that they want. This largely defeats the basic rationale of the government to encourage housing in order to provide a home to the middle and lower income classes of population. Therefore, there are both the up and down sides of role of financers or investors. Their over-activity leads to speculative increase in prices, putting the housing sector out of reach of many who want to buy a home. Kamal bhatt is writer who frequently writes about neharpar property like Diplomatic greens, Diplomatic greens gurgaon & Diplomatic greens by puri .
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