Gated Community Infrastructure in Kumaon: What You Buy vs. What You Get!

During this half decade I have spent in the Kumaon belt I have seen very few developer Villa projects completed and delivered in time – particularly those kicked off Pre-RERA. (A reality check on the ‘Gated Community Infrastructure in Kumaon)

If you drive through the upper hill Kumaon region in and around the Nainital, Almora, Ranikhet, Mukteshwar & now beyond to Lamgara, Kasauni, etc. – One simply cannot miss the numerous sign boards all along (some new but mostly dated) offering you your once in a lifetime chance to own your “Dream Villa” in Heaven 😉

Out of inquisitiveness I normally stop by and visit such projects, many of them repeatedly, whenever I am passing by, to see the progress and development. 

Am now not surprised to see, that projects launched with much fanfare and claiming 60-70% booking in the pre-launch/introduction phase, even after 4-5 years have just on average 10% of cottages built/completed, and surprisingly plots still available for purchase directly from the developer, though the asking rate is much more than what it originally was, despite the infrastructure development in the project still incomplete. But what is more surprising is that I still come across buyers who buy from these developers now and then. 

Talking with a few sources, our team can gather information that many of these developers do sell a plot once every 3-6 months in these projects close to their asking land rate.

This led us to dig a little deeper into the rationale behind this, for I would have believed that a mountain home investor’s antenna will signal red on seeing a dated project that too with incomplete infrastructure.

So, in most such cases here is how the equation goes:

  • The developers are a group of individuals/small proprietor-led firms, who identify and book the project land from the local owners through a formal/informal ATS with a decent timeline to register the sale deed and effectuate the transfer. This happens through a token and an agreement.
  • The project layout is designed and the pre-launch offer is announced with all marketing collaterals, along with a special launch price.
  • A sample villa is fabricated on-site and normally a sales agency is engaged.
  • The first few sales of plots with/without a contract to construct are closed and often the cash flow is generated for the developer/s to register the land in the stipulated initial timeline.

So what’s so different and surprising – one would ask. This is the normal process this industry follows – Yes, I would agree. 

However, the tale twists here in all such instances I have outlined. 

When it’s time to invest in the infrastructure development of the project, either the developers have to be deep-pocketed to do so in advance in one go, and then sell the entire post-launch inventory at a premium, alternatively and in most cases, they aren’t, so they adopt the route to invest piecemeal in stages, selling inventory in lot’s, after each stage of infra. development, escalating prices also, and stage-wise

Most adopt the latter but fall into the classic paradox of the chicken and the egg!

They wait expecting the second stage sales at a slight premium to close and then commission the infrastructure development around stage one plots/cottages sold. 

Real Estate Sales cycles in Kumaon are quite unlike the cities and vacation home decisioning can take its time, particularly for small first-time colonizers/developers.

Therefore, cash flows are slower than planned, and infrastructure Development struggles in pace and/or promised quality.

This dampens the enthusiasm of the initial investors and very few of them move on with further investments to construct their cottages.

The impact cascades down and often we see stage three of the project still not reached, even after 3-5 years or more post the initial launch. And that explains my initial observations.

However, I did state that even such developers do consistently sell, though randomly and slowly – how? 

Well, that’s either more from word of mouth of the few initial investors who made their cottages and are eager to see the infrastructure develop in their project and also their ROI grow, which at best is stagnant till now and also through some estate agent/broker working with the developer who promises a great speed of development work with post-COVID interests, demand, and rates had shot up – topped up with the privilege of having an integrated neighborhood community in the mountains.

And there hangs another tale!

Dreaming of building your mountain abode in a “Gated Community” within Kumaon Uttarakhand – do check our Advisory, Qualification & Validation expertise before investing – RealEye

Mohit “Tiger” Oberoi

Managing Director

RealEye – Kumaon

“Enabling Rely-bility in Realty Investments”

Gated Community Infrastructure in Kumaon: What You Buy vs. What You Get!
Gated Community Infrastructure in Kumaon: What You Buy vs. What You Get!

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