Getting carried away with glistering ads, billiboards, campaigns, brochures and promises of developers, marketers, brokers and builders (or the smart guys, call them as you like) - many small investors are already losing millions along with the "Housing Dream".
Several times, SEBI and Legal Systems in our country warned investors taken for a ride by real estate companies that made false promises. Only lands or plots already owned and not projected investments should be included in their offers to public. And this is not the first and prominent case, there are many other such messages and real-facts being ignored by those who want quick bucks - be it an large or small investor or the brokers, builders and developers. We have gathered a few such incidents (many others may be in the cook, do comment here, if you know anything related!):
Delhi NCR Region - The Most Vulnerable: A reputed builder known more for its interests in non-property business faces an FIR by Haryana Planning Department for allegedly doing illegal pre-launch bookings in Rewari township in NCR.
Another FIR against a Delhi builder for indulging in illegal pre-launching of plots through brokers for a colony carved out in the controlled areas of Manesar. One more Delhi based builder is under investigation for collecting money for pre-launch of a Golf Homes project.
A small developer under the name of pre-launching a residential project in Indirapuram collects about Rs 3 crore and vanishes overnight leaving dozens of retail investors high and dry.
Leading Delhi based property developer is rapped by Haryana government’s Town & Country Planning Department for making a false claim through an advertisement about setting up a housing project near Chandigarh. Following this, a broker through newspaper ads solicited pre-launch bookings in this project for which no permission or license was reportedly granted to the company by the authorities, reported TV18.
Jaipur Development Authority had issued caution notice in city’s newspapers warning people against investing in few residential projects of well-known Delhi developers in the city who were allegedly engaged in bookings for these projects.
Recently Star News has reported a Rs. 800 Crores Real Estate Scam in Gurgaon Property Market, affecting housing dreams of many. It said some reputed Developers are involved in it. A simiar event was reported by Aaj Tak involving Senior Police Officials in Mumbai a week back.
Recently The Hindu has reported a scam in Pondicherry. Those cheated include engineers and doctors; the plot owner selling plots, which were not demarcated at the time of selling, to different people. The layouts were also not approved by the Pondicherry Planning Department at the time of sale.
The Tribune has unvelied an alleged property dealer and government official nexus to sell prime land acquired by the Chandigarh Administration. Prime residential and commercial land was reportedly acquired by the Chandigarh Administration in 1990. However, a few years after the acquisition, certain unscrupulous property dealers started selling plots on the general power of attorney (GPA) allegedly in collusion with revenue officials of the administration, sources said. A CBI probe is being sought here.
The entire business of new bookings and property pre-launches revolves around the chain formed by the builder, big investors and brokers. The investor comes first in the chain of command who is approached by the developer. He invests in the project, normally on the promise of about 40% appreciation in property price at the time of the launch. Some big brokers are also involved in underwriting the project. Keeping in view the dimension of the entire business, some big investors have even formed joint ventures with developers on revenue sharing basis for such projects.
These incidents mentioned above are not isolated ones as several properties and land/plots are being sold without proper layout and the approval of the authorities in many cities in India. Taking advantage of the boom time hype, some dealers and builders are adopting newer methods to cheat buyers. As always, small investors should be on alert - simple, do not look for quick money and ignore the hype. It's all about demand-supply - if small investors starts rethinking, there is no boom, no hype, no scams, only business-as-usual.
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