In the last couple of months we have been receiving a lot of queries from our readers with regard to projects offered by Artha Property, Disha Direct and Soft Corner. These three companies have of late been marketing several weekend and holiday home projects rather aggressively raising eyebrows of prospective buyers on their credentials and exact status of operations.
In this article we try to put to rest these concerns of our readers with regard to these three companies. So here goes:
We have increasingly seen over the past two years, a lot of activity in the Holiday Home market in Mumbai. This activity is driven by pent up demand from residents of Mumbai, looking to either retire, or else have a holiday home or second home in close proximity to the city. While the wealthier residents have bought properties in Lonavala or Alibaug, there has been increasing activity in the Eastern corridor with two marketing companies in particular – Disha Direct and Soft Corner properties. These two companies have recently been joined by a new company – Artha Property- a part of the Times of India Group. Being one of the experts in this space we keep getting asked about these three companies by worried prospective buyers – primarily two queries – Are they legitimate companies? Are they scam companies or do they fraud buyers?
Firstly, let’s be clear that we have not met either of these companies. We have tried to develop as much intelligence as possible using our network.
Who are these three companies and what do they do: Disha Direct and Soft Corner properties seem to be purely marketing companies. They do not own the land that they sell and are essentially brokers and commission agents for the actual developer. The developers in most cases we have seen are locals from the rural/ semi-rural area where these second home projects are situated or else older families who happen to own land in these areas. What is key, is the amount of due diligence that they have done on the actual landlord before the agree to market the property. Our assessment is that they must be very experienced in vetting the actual developers however it is important to keep in mind that their primary objective is to sell property. They spend significant amounts of money to promote the developments and pay for full page advertisements in mainstream newspapers like the Times Of India, DNA and Mumbai Mirror. The cost of these advertisements are definitely recovered from heavy commissions on the sales of properties. Artha Property seems to be a company that is part of the Times Group – known for having stakes in many businesses in return for advertising space on their network. Here it seems to be a closer relationship as the senior management seems to be ex-employees of the group. The Times of India group is a aggressive marketing machine and the same culture seems to have rubbed off on Artha Property.
There is nothing wrong with this and if they are able to provide a level of oversight and due diligence this is actually a good thing. However we see two important risks and buyers should be careful to take these into account when purchasing property via these two marketing agencies:-
1. Have firm due diligence of your own, on the title as well as permissions on the land. It is wise to not assume that these firms have done their own due diligence to an adequate extent and to go out and verify the same. While in many cases the title may be clear, experience has shown that conversion from Agricultural to Non – Agricultural may take a significant amount of time and face roadblocks, thus never happening. They also are like most commercial organizations prone to sales and revenue pressure and so it is in your interest as a buyer to verify all claims and legal documents related to the actual owner on your own.
2. Have a clear expectation of the kind of buyer that you are, and your intention to live in a location. We have visited some of the developments marketed by these agencies and while they are very glamorously planned and conceptualized no doubt, by a team well-versed in the desires of the upper middle class – there is a stark contrast between the lives and surroundings of these developments. It is our view that it is always dangerous to live in a bubble surrounded by under privileged and rural masses. If the developments are marketed primarily to non-residents, and there are no residents within close proximity apart from the rural poor, there are bound to be issues in the long term. These issues could focus around security, safety of the property and safety of the few owners who decide to reside there. Artha also seems to have properties in South India locations that are remote and so the infrastructure especially around senior citizens retiring in these destinations should be investigated in advance – e.g. how long would it take to get professional medical help in case you were to have a heart attack?
3. Lack of a clear strategy for creating activity in these developments to justify the significant upkeep and security costs in remote places. Most of the projects we have seen are in locations with no existing tourist traffic -e.g. Shahpur (or Shahapur), Karjat, Asangaon, Atgaon etc. This is unlike other locations like Lonavala, Mahabaleshwar etc. i.e. the earlier popular holiday home destinations. As such, it is unreasonable to expect amenities such as good restaurants, broadband, grocery stores etc. in the near future unless there is a concerted effort to build a tourism strategy in these destinations. We hope this is in the offing but have not seen any evidence apart from a token resort within some of the newer projects.
Lastly, we have heard of very aggressive sales tactics from fresh MBAs and DSA minded sales staff. Remember, a second home is not a trivial decision. Resist temptation and learn to say no. The last thing you want is to pay a small booking amount because you felt guilty. Remember you are entitled to look at various projects and say no if your mind or gut tells you something is wrong. ERR on the side of CAUTION.
It will be interesting to hear from others on their experience with these three companies in particular. I invite you to leave these as comments on this article.