Real estate project approvals in Patna can take anything but not less than one year. During that phase nobody is going to stand by developers in Patna except the investor. Even the banks are not going to fund builders. All the organized funding starts once builders in Patna have something ready to offer to them. But developers cannot keep waiting that once the project gets approved then only they will launch it; they need some quasi investment at each every level. Here is the advantage of having an investor as project rider.
Not many developers in Patna would publicly admit it but the fact of the matter is that there are many advantages for the builders in Patna to have investors as project anchors. They are the one who bring to the table initial investment, often even without any collateral or receivable. The developers in Patna need investors to provide cash, to give them money even for land sometimes, and only and only investors will give them money at that early stage of the project (say the PLANNING STAGE).
There are two models that work in the Patna real estate investment arena. Mostly it is a pure investors’ pre-launch with minimum amount of understanding as to what kind of a project it would be in future. The second kind of pre-launch in Patna real estate is crowd-funding where there is little higher understanding.
In the second case the developer in Patna has the plans of what would be the shape of the project but he does not have sanctions. He has the layouts ready, even floor plans and unit plans ready and he would go for crowd-funding. So, it is a mass pre-launch and not depending only for the select set of investors.
Though the law of the land does not allow this kind of opaque transactions but it is an open secret in the Patna property market today. It is often done in an IPO model when the entire Patna knows about it. The advantage of this IPO style pre-launch for the developers in Patna is that the price point here is higher than the price point at which they offer it to the select set of investors in Patna.
However, the developers in the city have their own reasons to hail investors in Patna and calling them GENTLEMAN. According to him, unlike end users the investors are not problematic to ask so many questions. Even if there are some escalation charges, it is easy to deal with one such gentleman than 15 or 20 other people who will keep fighting. He will understand it. So he is an easier person to deal with once he comes in.
Whatever we are saying is unfortunate reality and we give credit to the developers in Patna who weather so many variables and still are delivering despite of all the odds. Everything is against them– court, ministry, municipality, local factors, environment and market forces. The fact is that investor remains an asset for the developer in Patna. It is not just about his entry that brings money to the table. But even when he exits in many cases he does not sell it to the end users but sells it back to the developer in Patna, who buys it at thousand odd rupees cheaper than the price at which developer, will sell to the end user.
So, other than the fact that the investor brings first flush of money to the cash starved Patna real estate sector, what also suits the developers is the fact that the investor is not going to ask them so many questions, like whether the apartment in Patna is vastu friendly or where is the wind blowing.
Investors just want a certain number of flats; not even bothered about the floors etc. He is not questioning the carpet and built up area. He is an easy guy to deal with as opposed to an actual user who will ask uncomfortable questions and make the life of builders in Patna miserable.
Moreover, once the investor in Patna has given in his money he is non-interfering. Whereas an actual user wants to visit the site every month and then he will seek explanation about the pace of construction and every other thing. But for the investors all that matters is that his money keeps growing and hence he has a win-win relationship with the developer in Patna.