Know Why Under-Construction Homes Are Still Popular?

Purchasing a home is everyone’s dream so homebuyers prefer a well-known company with a clean track record to trust with their money.

You may go for a ready home or an under-construction one. Under-construction homes are still popular among investors. In an under-construction property, homebuyers get a lot more home options than a completed project.

They can easily choose their houses from many options while in ready-to-move-in properties the options become less. Since you are paying a much lower price for your house, the appreciation is likely to be higher. As the construction progresses, the price of your property also increases.

The value of the property will go up by the time you get the possession.

Outlining some of the basic advantages of such an under-construction home, Traditionally, it is the price-point increasing over some time – from booking to until one gets possession of the unit vis-à-vis the growth once the property is handed over. Historically, the price-points increase over some time. Logically it stands to reason that ready possession units will also increase in value, but the quantum increases for the under-construction stage would be at a higher rate.

Outlining some of the basic advantages of such an under-construction home, “Post RERA, there is an added advantage of booking a unit in an under-construction project – the buyer is safe and secure. Having factored in this aspect, the biggest advantage is that when you enter an under-construction project, the price-points are low – which, very simply, means that your investment grows in value over some time. For example, from the time one book until the time possession is given, the price-point – consequently, the value of the unit – grows. Secondly, one gets the unit of one’s choice, in terms of unit number or unit location within the tower’s layout.”

 “Real estate is an established reliable asset class and buying it directly from the developer creates a wide pool of options for the buyer. With interest rates reduced to historic low post-pandemic, under-construction properties are a popular choice because of favorable prices, that can be between 10-30% lower than that of possession-ready properties. Investors can gain from a lower entry price and benefit from rental returns or appreciation that usually come with construction and location infrastructure progress.” 

“In recent times, developers offer discounts for buying under-construction property and provide ease of payment terms like periods when the buyer does not have to pay EMIs. Developers offer good discounts to attract potential homebuyers who have a variety of schemes and plans to choose from. Another advantage that makes under-construction property a popular choice is the novelty factor – the brand-new feel, extended durability, lesser maintenance issues, and the latest amenities to enjoy.”

some key things to look for while investing in an under-construction property

 Location Feasibility: The desired location should be selected as per the buyers’ regular commute requirements. The location should be economically viable and have solid growth fundamentals. It is important to remember that higher appreciation or rent, from an investment perspective, has a lot to do with construction progress and surrounding infrastructure. 

Developer’s Reputation: Buyers should check for reviews on the project and earlier projects by the developer to understand. All information concerning those associated with the project, such as the developer, advisories, banks, etc. should be obtained, to check for glitches in quality and feasibility or delays in possession. It is always advised to be invested with a reputed developer with a good track record even though it may come at a premium. 

RERA Compliance: The property must be RERA registered, have a valid RERA number, and have all necessary approvals and licenses. As of May 1, 2017, any property with an Occupation Certificate (OC) must be compulsorily registered with its state’s RERA authority. As a result, under-construction projects are required to comply with RERA. As a result, they are obligated to engage in transparent and fair trading practices. Potential purchasers can obtain information on such homes via the RERA websites of their respective states. Homebuyers who are dissatisfied with their purchase can even file a complaint with the RERA Appellate Tribunal, which was established under the Real Estate (Regulation and Development) Act.

Financial Viability: A homebuyer essentially needs to ascertain his/her budget for purchasing a property and ensure in advance that the finances are in place. The buyer should have the wherewithal to service long-term debt. A lot of developers offer a variety of schemes and plans including customized payments for buyers to avail. What’s important to realize here is whether one is buying for an end-usage or an investment purpose as the benefits vary. The choice ultimately depends on what the buyer is looking for.

Modifications and Customization: During the under-construction stage, homebuyers can modify the floor plans as per their convenience and change the various specifications.

Possibility of customization: An under-construction property gives the purchased ample choices, unlike a secondary or resale property. One can choose between a higher or lower floor, preferable view from their balcony/window, any kind of customization or change one may like in the house for instance have the kitchen walls tiled and so on.

Prospect of higher Appreciation: Along with the benefits of an early-bird homebuyer, the consumer also benefits from the rise in prices depending on the progress of the property. The development of the surrounding infrastructure is beneficial to upgrade the value of the property. 

Under-construction properties are very popular among homebuyers for many reasons. The very first advantage is the availability of flexible payment options. Homeowners are not under any urgent obligation to pay a substantial sum all at once. Payments for properties under construction are collected in line with the varied and scheduled construction phases. This allows homebuyers to pay the amount in a more relaxed way. The price of the property rises as construction of the building progresses. The growth of the property’s surrounding neighborhood increases the value as well. That is why it is always better to invest in a home that is still under development. Apart from this, at an under-construction stage, homebuyers can avail many exciting offers, given by the developers.”

“Under-construction properties offer flexibility in home design and attractive payment methods. But without a proper background check, one may go wrong and may have to wait for years to get possession of their home. While there are multiple advantages of buying an apartment in under-construction projects, there are risks as well hence evaluating the benefits and drawbacks needs to be done before sealing the deal. Payment plans are also spread over the construction period; hence low payments are considered during the initial stages. Usually, 3 to 5 percent of the property value is considered as the booking amount and asks for 10-25 percent in the months to come this can go up to a year. The remaining percent of the property value purely depends on the progress of the property. This entire procedure usually takes three to four years. This deal gives the buyer enough time to save finance for the property till they take possession of the apartment.”

Highlighting the advantages of parking money in an under-construction property, The fact that investors can save as much as up to 10 – 30 percent of the cost price of a property by investing in a project at its pre-launch stage is a strong enough reason to consider an under-construction home over ready-to-move-in units. Though this is seen as a risky step towards real estate investment, since a buyer is investing in a ‘product’ that is still ‘in the making’, the bet is placed on the developer. It is the confidence and trust a developer offers to his buyers that proves to be his greatest asset. On the buyers’ part, it is the credibility and reputation of the developer in the market that matters, which they need to be wary of. And irrespective of the developer’s standing in the industry, investors need to be aware of certain facts. For instance, the size and layout of the flat, the project completion and delivery timelines, and the amenities and facilities that will be offered.”

Another factor that contributes to the very many benefits of an under-construction property is the facility of being able to perform due diligence on a project.

“Not to mention the multiple online information sources emerging frequently offer an added layer of protection to verify all that’s being committed. Under-construction homes are thus no longer exposed to the high risks that defined the real estate industry in the pre-RERA era,”.

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