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Friday, March 6, 2009

Many more Pune builders may follow Mont Vert's solution - Rent Today Own Tomorrow

A Pune-based developer may have a solution — at least temporary—for the hundreds of realty firms faced with dwindling de-mand for homes: Rent out apartments and hard-sell apurchase option to the tenants.

Mont Vert Homes has kicked off a ‘Rent Today Own Tomorrow’ campaign, inviting potential buyers to rent apartments of their choice on 11-month contracts, with the option of buying the flat anytime in the interim.

Developers sold between 50,000 and 65,000 new apartments in Pune annually in recent years when the economy was booming.

Sales will lag significantly behind those numbers in 2009, according to Jayant Kaneria, another director of Mont Vert.

Sales had skidded to “near-zero levels” between August and December.

“It has now revived slightly with single digit sales after the price corrections but the situation is unlikely to improve before July,” he said. ...read more-livemint...

It's good news for Pune property buyer when the builder accepts the truth and finds solution!

It has happened before. We property buyers have seen the benefits of it. I am referring to Mont Vert Seville at Wakad. Which set the trend of "compact flat fitting in your budget". 2 bhk flat in 29 lakh!

When Mont Vert accepted the fact and decided to break the property price barrier and bring down the budget of the flat in the affordable limits, other builders followed the trend and launched "compact flats which will fit into your budget".

For example:
1) Palash 2i at Wakad
2) Pride Purple Group's Topaz Park in Park Street at Wakad
3) Recently launched Amit's Astonia at Balewadi
4) Gera's Park View 1 at Kharadi
5) Runwal Group's Euphoria at Kondhawa
6) Shagun Developers, Manav Promoters and Ashcon Builders' Sunshine Hills near Bishop's School at Kondhwa annex, means Undri
7) Even Kunal Sancheti Associates are launching one wing of compact flats in Venezia at Baner!

What a way to wait till the property rates come down!

More than the success of Mont Vert's "Rent Today Own Tomorrow", for me, what is important is the possibility of many builders following this solution to mounting inventory and offering my readers, Pune property buyers, "rent free falts to live till the property rates come down!"

Isn't it good idea to finalize your flat, live in it, save rent for the down payment but buy your flat only when property rates come down? I find this is cool. Please, share your views in the comments. (Comments Policy),

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  1. Hi Ravi,

    Cool down, buddy. You seem to have gone overboard on this scheme of Montvert. You seem to have found a great solution for RE market in Pune. But hold on- before creating such hype.

    Please understand, more then the prospected buyer, this scheme is helping the builders to generate some income in this bad market. However, by creating a hype around this, you are not serving any help to your readers. Because, Pune RE developers are finding an escape route in this scheme in place of reducing prices.

    I know and very sure that you do not have any personal interest in marketing Montverts' product. But your blog gives such mis-representation.

    Finally, there is nobody who wants to listen to the prospected buyers. Everybody is concerned more about the losses mounting for builders community only.

    Who says it is a buyers market???? Many prospected buyers like me had to leave the market because nobody till now have justfied 300-400% price rise between 2005-2007.

    If you think this is the best deal that a prospected buyer can get in any HEAVEN, please answer my simple question:
    Do you think Montvert will be transparent enough to tell their tenant that their property prices have come down. No-I am not talking about their list price that their salesman give you. I am talking about the price after bargain at which they are selling these days.

    It is a known fact in Pune today that very few builders have declared 5-8% price reduction in last 3 months. But on the background, good negotiators do get about 15-20% discount. Can Montvert provide complete transparency on the least price they have sold the flat in the month when a tenant wants to buy and also offer the same least price to the buyer?

    If this is happening - you add my name.

  2. Hi Ravi,

    It seems you are assuming that Mont Vert is a 100% honest and transparent builder. He has only the best interest of the customers in mind ;) He is not a wolf in sheep's clothing, but a genuine sheep.
    My opinion is different.
    Consider a scenario:
    After 11 months, I have paid 1.44 lakhs as rent. The builder has agreed to sell me the flat for 30 lakhs, less the 1.44 lakhs rent. Now the builder has a customer (bakra?) for the same flat for 30 lakhs.
    You think the builder is so honest he is going to sell the flat to me for 28.56 lakhs, and not to the other customer?
    I think he is going to qoute me a price of 31.44 lakhs and ensure that the rent goes into his pocket.

  3. # ref: "Because, Pune RE developers are finding an escape route in this scheme in place of reducing prices."

    - This is the main concern. Right?

    - But how can i subscribe to "corner the builder and force him to reduce the rate"?

    I don't belong to the anti-builder lobby. Nor i am a builder. I am real estate salesman.

    My views and my truth is different form the builder lobby as well as from anti-builder lobby. As a blogger my views are different form the reporters of the main stream media too.

    # ref: "because nobody till now have justfied 300-400% price rise between 2005-2007."

    - Because both parties - builder and buyer - went on doing the transactions at higher rates. Builder went on increasing property rate. Buyer went on paying. There were two parties involved. Not one. Not only builder. I don't see any point in blaming one.

    # ref: "Many prospected buyers like me had to leave the market"

    - I am sorry for that. But throwing prospective buyers like you was not the intention. It was an effect.

    Actually, both sides would have liked to have never ending supply of the buyers who are ready to pay more and more rate. Buyers for more appreciation. Builders for more profit.

  4. # Ref: "Can Montvert provide complete transparency on the least price they have sold the flat in the month when a tenant wants to buy and also offer the same least price to the buyer?"

    - Yes. Mont Vert will have a complete transparency about the current property price.

    - Mont Vert had already announced this. Still before writing this, i called Mr. Manish Kaneria, Director of Mont Vert, asked him your question and he has assured complete transparency about pricing. I trust his word.

    - See, Mont Vert was not my client. I am not representing or i am not associated with Mont Vert. But i know and have observed Mont Vert for more than ten years. I met Mr. Kaneria only as a Pune real estate blogger when Mont Vert launched Seville. Since then number of times, i have had serious talks with him about Pune real estate market. I have lot of respect and high regards for him. That's why when he says there will be transparency, i believe him.

    I can understand, it's difficult to believe, but you can maintain transparency and sell property at a fix rate. I have done it myself. Many builders do it. So, be sure about transparency in pricing.

  5. # ref: "You think the builder is so honest he is going to sell the flat to me for 28.56 lakhs, and not to the other customer?"

    - Yes. The builder, Mont Vert, will sell the flat to you for 28.56 lakh, and not to other customer. Because that's the deal. You rent it today to own tomorrow. I am very much sure about it.

    - By the way, anytime it's easy to sell the flat who is already staying in it.

    - From the first month, I am sure, Mont Vert would be eager to hear your buying decision.

  6. Ravi no there is no transparency here, builder is not going to sell flat to Abeer for 28.56 lakh, as its imaginary number. Lets not get into imaginary numbers. I think Atul's question has reality and Abeer is talking about imaginary numbers. And being salesman (builders-lobby) I can understand why you didn't answer Atul's question but Abeer's.

    Only way to get ride of transparency confusion is to publish details of each sale! If Montvert can pull this off, they have genuine scheme! else its just another sales gimmick.

  7. # ref: "And being salesman (builders-lobby) I can understand why you didn't answer Atul's question but Abeer's."

    - Hello Kiran, I have my own lobby. Ravi Karandeekar, Pune real estate blogger, lobby.

    There is one more shade between black and white. Gray! You can't divide things between Yes / No, Either / OR, Right / Wrong.

    One more suggestion, when you will go to book a flat at any project, please, do not consider that the salesman belongs to builder's lobby.

    If you treat him as an individual who has his own views and a role to play, you will get a good deal.

    - If you are talking about Atul's question bout "transparency about property rate" then, please, see my second answer to Atul.

    I have answered Atul's question in two parts. Because, before answering that question, i have cross checked with builder once again.

  8. Ravi, somehow realestate salesman is related to builder, as he is work for the builder to sale realestate which that builder offers. The way you portrayed yourself, I would say you are an buyers agent. Use of term salesman, and 4 posts in row praising Montverts scheme, made me believe that you belong to builders lobby, i don't think its bad either :)

    Promising transparency and taking actions to make sure there will be transparency are two different things. Yes Montvert has came up with good scheme, if they could resolve the transparency dilemma too, its really good scheme for genuine buyers, even if the rent is bit higher.

    Well I'm looking for deal too, but as an investment. Fact that prices are way too high and rents are low, its better to invest in hassle free FD's. I'm just spectator for now :)

  9. # ref: "4 posts in row praising Montverts scheme,"

    - because, i believe, Mont Vert's scheme is in favor of property buyer.

    - because, i believe, Mont Vert's scheme is good for Pune real estate market.

    For the builders.

    For the real estate investors who have invested in 2nd flat.

    For the property buyers.
    When private banks refuse to lower home loan interest rates, doubt about property buyers "credit worthiness", charge higher rate of interest for the home loans above 20 - 30 lakhs, prefer to park funds than giving loans, though the builder is aware about your job uncertainty - he is offering you "rent free flat for 11 months" because the builders trusts his buyers and has a positive attitude about Indian economy.

    Can you point out any other single positive initiative happened in the last week?

    I am not trying to convert, you or anybody from anti-builder to pro-builder. I am trying to show what's in it for the property buyer.

    - I am not the one who finds it good for the property buyers. See the response Mont Vert has received!
    From February 28 to March 6, '09 evening:
    - 1,700 property buyers called
    - 300 property buyers visited Mont Vert Office
    - 9 property buyers are opting for "Rent Today Own Tomorrow"
    - 3 flats booked
    - "Rent Today Own Tomorrow" has become a news in national print and TV media - business channels

  10. This scheme appears as a desperate last attempt by the builder lobby to defy the basic principle of supply-demand-price. Rather than honoring the market and adjusting accordingly they still are coming with such gimmicks.

    I don't think this scheme by Mont Vert will have any success. There can be a few takers but most of them will be wary of the hidden clauses and will be wary of being cheated at any time. This scheme depends on the assumption that the builder is honest and transparent. In absence of any sort of regulatory authority, it would be hard to convince buyers about builders’ transparency.

    Mont Vert specifically has a bad name in Pune IT sphere. You have referred to Mont Vert's 29L scheme, but many who visited the scheme believing it is true (as it was in newspapers) came back disappointed because the actual cost was much more than 29L. I will be glad to know if you know anyone who has booked a flat there at 29L and not a penny more.

    What if this scheme becomes successful? (Which I believe is bound to fail but still) And what if other builder's follow this suit? If most of the people who are presently staying in rented accommodation that is older, move to new flats offered by builders what happens to current rented properties and rent market?

  11. Hi Shashank:
    I have booked a flat at Seville. So I might be biased towards them. I don't want to get into anyone's bad books so I will keep myself anonymus. So I will just put my rates here. I booked 2BHK there in first 50 customers.
    Sale area 932sq ft X 2999=27.95 lacs
    minus 1 lac for fist 50 customers=
    26.95 lacs base cost.Plus Misc charges 2lacs = 28.95 lacs of what they charged me.
    and about 1.7 lacs For stamp and reg,

    So I think in all fairness they deserve a bit of credit here if you do not count stamp and reg charges. I think they kept these rates for about 125 units for 3 days as I was there every day of 3day launch to make sure they are not selling lower than intro price because when my friend went there after 3 days they told him rates were increased to 3099/- and that they have already sold 100+ flats. I tried to help my friend by requesting them to give him the same price but they did not do that which I did not like. My friend did not buy till date and now I think he will get a better deal than that somewhere in Wakad. So he tells me all happens for good.

  12. can some of us go as a group and confront them with all questions we have. We should talk to director level people not sales managers.
    Lets look for loopholes and see what their intentions are.

  13. Ravi please take it easy like Atul said. Ok agreed Mont Vert has done something different which looks good on paper but what if you are wrong in even 10% of the details.
    and that may hurt some genuine renters/buyers. Let people decide what to do you have given plenty of details.
    So like many others said please bring out the good points and bad points of any new project, or any new scheme or any new offer and then report it to folks here. Let it not look like a hard sell. You may be trying to prove your point of being Pro to this offer but it is coming out as if you are very pro Monte Vert.
    So please lets wait for a while and revisit this deal in few months from now and that will be a good exercise. Please do not get offended. I am just putting my idea here.

  14. Atul I agree with you on % price increase. What goes up must come down and come down hard.
    But it them goes up again. I hope the next time builders increase -their prices they remember year 2008-2009-? before shooting up their price in an irrational way.

  15. Ravi, ref should have been "Use of term salesman, and 4 posts in row praising Montverts scheme", not just "4 posts in row praising Montverts scheme". Its not about why you are posting same stuff again and again or if its bad sign, its about why I thought you belong to builders lobby. You already clarified your position, the end!

    Certainly rent-to-own scheme is positive sign, and you are doing right thing advertising same heavily. Why? as you already mention, it shows builder is connected to buyers, which is important. its going to force other builder think and comeup with better ways to attract buyers.

    Interest rates are fine, shouldn't drop below GPD+2/3 %, its not the problem. Think about average buyer looking for first home, even if bank provide loan at 2-3%, he is not in position to pay EMI of 30-40k per month. If interest rates fall, it would be greedy investors to jump in. Interest rates must remain high, high enough for greedy investors to look for other options.

    Shashank, it would be good if other builders follow, it would create competition. Builders are smart enough to take proper steps to convert their tenant into owners rather than loosing those and then look for another buyers for resale(used) flats. More rent today, more builders follow and take proper steps to ensure transparency, will be win win situation.

  16. Hello Kiran!

    # Ref: ""Use of term salesman, and 4 posts in row praising Montverts scheme"

    - One more reason: How to whisper in deaf ears!

    Besides real estate salesman, you may know, i am real estate marketing consultant. Along with the property buyer, mostly first time, my blog is read by Architects and builders in Pune.

    Now, if i have to send a message that property buyers are no more interested in buying your flat.

    One of you, major brand in an area near Hinjewadi has accepted this, given up the hope of revival and has come up with the offer which is well received by the property buyers.

    Now, point is, if you want to come out of this, be reasonable and rationalize the property prices.

    Lalit Kumar Jain, Chairman of PBAP and managing director of Kumar Builders, vision of
    ultimate victory of the builders,
    expressed in July 2008 has proved falls: "The need is there, people may want to postpone decisions on buying property but they can’t do it for long,” - property buyers are in no mood to give up.

    Now, builders have to come with the terms! Rationalize the property price. Property market, like any market runs on sentiments.

    For deaf ears you have to be loud and clear.

  17. What the builders should have done is to correct the prices at the very first sign of slow down. But the greed and constant harping of PBAP and its big bosses kept saying all is well and prices will go up was a joke.
    I keep on reading PBAP people kept on saying prices will go up by x% etc. Now the same guys are reducing the prices rediculously low. They laughed when we asked for fair price 6 months back and now we should laugh if they do not come to our terms. But lets not do that they did. We as buyer should ask for what we think is a fair price and not just any rediculous low price otherwise we will be back into the same circle.

  18. Ok one more thing,,,
    many builders are taking big cuts in their profit and compromising on their lavish profit margins.
    but mark my word...
    As soon as the market improves they will start hiking the rates and try to cover up- if not in full but in part- for the reduced margins they are working with now.
    All industries do this.
    So the wisdom is in deciding a good comfort point to get in and not regret if it dips a little further as long as it goes up again in a 2-3 years period.
    This has worked for me in my dad's business of Jira and Haldi and other commodities (with shelf-life and real estate has no shelf life)

    What good it is if you pay rent of 1.5-2 lacs a year and then after a year you buy at Rs 100/- to 150/- cheaper. You lost that rent so you did not gain anything. ( I am not talking about Mont Vert scheme here)
    One more thing I have never invested in real estate before so I amnot trying to type up as investor. I am just applying what i have learned in my commodity business. Which has worked well for me.

  19. This is more like Options/ Futures trading in commodities or stock market. The difference is stock prices are declared on exchanges. Exchanges are governed by SEBI and are not biased to anyone (buyer or seller). There is a lot of transparency there.
    In this scenario the prices will be announced by seller himself. Its difficult to believe the prices if they declared by seller.

  20. Do not agree with that SEBI thing.
    What regulation. Nonr of the IPO prices were justified. They are always tweaked up with tons of manupilation.
    Look at real estate company DL*, and others they based IPO prices on their land holding and the potential profit on it while sometimes the land was not eben fully paid for them.
    So what transparency. If we had SEBI working well why would Satyam saga happen.
    Why would have Harshad Mehta been a hero. and then it happens second time around.
    You are dead wrong on transparency in any industry in India. Just does not happen in India.

  21. If you think there is a tranparency and accountibility in any world market( forget SEBI) Please take my advice. DO NOT INVEST IN STOCK MARKET.

    God knows how many more Satyams to go in near future from many sectors in india and worldwide.

  22. Ref- "I can understand, it's difficult to believe, but you can maintain transparency and sell property at a fix rate. I have done it myself. Many builders do it . So, be sure about transparency in pricing."

    Ravi - I would be interested to see names of the builders with transparency

  23. It is a good one month since Ravi's post. I wonder what the response has been and whether this offer is still open.