What is a soft launch?

At the time of the ceremony inaugurating the construction site, many property developers face a liquidity crunch. To tide over the problem, they come out with a soft launch, where they offer the yet-to-be constructed commercial and residential project at a huge discount to a select few customers. For instance, a couple of years ago, a leading developer was offering a prelaunch rate of just 25,000 per sq ft for a property in central Mumbai, where the prevailing market rate back then was around 60,000 per sq ft. Sources say that 80-85 % of the property got snapped up even before construction began. Such soft launches are rarely advertised in a big way. Customers are lured in by brokers known to the developer in exchange for a fee. While customers are baited by higher than average discounts, the developers get ready cash. This is because while some developers will ask buyers to shell out 20-30 % of the property value upfront, others ask for the entire amount.

What Kind of Risk Involved in Soft Launch Projects ?

Risks Involved

Flying blind:

Developers are not in a position to showcase anything of the project during a soft launch, not even building plans. So, for any queries, say, regarding construction quality, you will be asked to check out the developer's earlier projects as an assurance of his current one. Such properties are generally sold directly or through a select group of brokers in a narrow time window, so the investor hardly gets any time for due diligence.

Incomplete paperwork:

The biggest risk is that most of the permissions or approvals are not in place at this early stage, nor is there any guarantee that the project will be able to get all the necessary approvals.

No bank loan option:

Banks take on customers only after conducting due diligence of the project in question. This is not possible at the soft launch stage due to the lack of official approvals and documentation. So customers have no option but to drum up the required cash themselves.

Project delays:

The possibility of the possession date getting pushed back is higher in such projects. This is because nobody can predict how long it will take the developer to get all the approvals from the various departments involved even before construction can commence.

Impromptu changes:

You may find that the proposed building plan has changed or that some promised amenities are missing, but there is no legal recourse available because there is no proof.

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