Cannibalization impact on re-sale premium

Updated: Jul 22, 2020

Finding tough to get premium in re-sale & to get buyers - cannibalization is one of the main reason

We all buy property either for end use or for investment purpose but the intent and desire is always to get premium, our properties should appreciate by X% over 4 years window. Buyers buying property for investment purpose and want to exit in 1 to 2 years from the date of purchase often find very difficult to find buyers in re sale and more importantly to get premium on the money invested.

The worse happens when someone is not able to recover the interest cost and had to sell in loss, the little premium is not good enough to recover transfer charges and bank interest in that window of 1 to 2 years.

What is Cannibalization in Real Estate?

Cannibalization happens in Real Estate when a developer launches back to back projects in vicinity & hence buyers of the first project launched find tough to get premium in re-sale due to following reasons:

  1. First Project launched in Location A at say 4000 per square feet

  2. Builder manages to sell 80% inventory in 2 years

  3. Second Project gets launched at same price after 2 years

  4. Old buyers wants to liquidate their inventories bought for investment purpose or due to situation based reasons

  5. They don't get buyers in secondary market

  6. New Buyers getting at less rates in new project, first project buyers demanding premium

  7. If old buyers decides to charge nominal premium, they would like to recover at least transfer charges which comes to nearly 3 lacs plus on a size of 1800 square feet.

  8. New buyers gets inventory of their choice in new project

  9. New buyers do not want to get into the hassle of buying in re-sale unless the location of first project is unmatched

  10. At times, builder also stops transfer of property till possession or demands heavy transfer charges.

  11. New buyers compare pricing with new project of same builder and hence expects same rates in old project in re sale

  12. Then third project gets launched in near by location hence opening up more and more options for new set of buyers.

In nut shell it becomes very difficult to find buyers and liquidate inventory at loss most of the times.

The above grim situation can be avoided with proper research and consulting before buying your dream home.

An independent real-estate consultant not only makes sure that you do the best property investment but also extend lifetime "Managed Property Services" support. It's high time, we should value our hard earned money and never take rushed decisions, always cross check the information, try to get as much info and then think and decide.

Understand More

Reach out at 91+9105055555 for an exclusive discussion. Send your queries at

Property eye opener was started because all of us believed that we had to rely on word of mouth largely coming from Property Dealers & Friends | Family. As buyers, we ends up in getting mix of opinion from people operating in an unorganized market & advice from friends were just to follow “foot step theory”. The only reason we are dependent on market forces because there was a huge information asymmetry in the market. Property eye opener is a platform that removes this information asymmetry and provides a marketplace for free & smooth flow & exchange of this information that at times used to become “Life Time Regret” by taking a wrong decision.

We have done 2 things to help you find that perfect home:

Firstly, we have painstakingly verified that each rating given is genuine & there is no room for anyone maligning a builder project or indulging in any malicious activities. We use a lot of heuristics and techniques to make sure that you get a true and genuine rating platform. Thus the ratings given by actual users are as per their personal experiences and opinion given by us is based on real-time analytics arising out of in-depth market research on builder projects performance.

Secondly, we have also tried to make sure that high decibel of information is available to you in as easy to use format. This ensures that you get a very good idea of the property even before you visit it. Thus, you can shortlist property sitting at the comfort of your home without actually traveling all the good and bad properties. This saves your time and effort and with a quick shortlist of 4-5 properties you can actually get a house in few days!

Disclaimer: Do keep in mind that the information that has been provided on 'the Website', including property details, forecasting, layout, comparative analysis, project rating etc. have been displayed for reference purposes only and cannot replace the primary source i.e. an independent verification by buyer/ agent. Any investment decisions that you take should not be based relying solely on the data that is available in this blog. The writer is an experienced real estate consultant giving unbiased & unfiltered insights, views of the writer are personal and not bound by any organization!

Please read through the detailed Terms of Use & Disclaimer as attached below for Property Eye opener.

PropertyEyeOpener - Terms of Use
Download PDF • 452KB

47 views0 comments