Star-ratings by CRISIL also becomes relevant for developers and financial institutions as with its aid developers are able to better market their project and lenders or financial entities are able to identify the viability of the project and provide funds accordingly.
Some of the major parameters adjudged while rating the project include authenticity of legal documents, financial viability of the project, sponsors track record and construction-specific risks. Other parameter that are looked upon by the rating agency include developers systems and process; innovation in respect of project finance, construction technology and building design; financial flexibility; restrictive covenants; after-sales service; accounting quality, probability of time and cost-overruns amongst others.
Star Ratings scale of CRISIL
The city-specific STAR rating is a eight-point scale with 'Non-Deliverable project' being the lowest rating while '7 Stars' being the highest rating that is assigned for any real estate project.
Utility of Star ratings for Property Buyers
In case the property you have zeroed in for the purchase is assigned a higher rating by the CRISIL, you can make the deal without second thought. However, if the property holds a lower rating of '1Star' or ' 2 Star' or '3 Star', you should re-examine the projects.
As many of the real estate projects come up simultaneously and CRISIL takes a minimum of 4-5 weeks to examine the project, you should wait for the rating which the rating-agency assigns to the project. In certain other cases, some of the project developers do not apply for the STAR ratings by CRISIL so you as an investor need to evaluate the project on your own on several important parameters mentioned above.