Buying a property is the most important decision in someone’s life as it is not only a financial but also an emotional decision that can be taken carefully. Various questions arise in the buyer’s mind before invest in a property. Among all those questions, the most important decision needs to be taken is, Where to invest? – In UNDER-CONSTRUCTION PROJECT or READY-TO-MOVE-IN PROPERTY?
Under-Construction means property for which commencement of construction has occurred but is not substantially completed.
Ready-to-move-in property is a property that is complete and ready for occupancy.
“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 comes with construction and location. In recent times, developers offer discounts for buying under-construction property and provide ease of payment terms like periods of time 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.” stated Gulam Zia, senior executive director, Knight Frank India.
There are some reasons to invest in ongoing projects instead of ready-to-move-in propert
1. Payment Flexibility
Talking about the ready-to-move-in project, there is an urgent need to pay the entire amount at once or within a short interval of time. On the contrary, in under-construction projects, there is flexibility in making payments. Initially, 10-15% of the token amount is required to book a property and the rest amount can be paid comfortably for a longer period of time until the projects get completed. There is no need of arranging a huge sum at one go while buying an under-construction property. If the property is financed by the bank, then EMIs can be paid within the investor’s reach.
2. Chances of risk
There is a low risk of getting cheated in buying an under-construction property because no buyers are involved previously. But in ready-to-move-in financial records of the previous owner has to be taken into consideration. Also, the RERA act gives complete satisfaction to buyers of ongoing projects as a buyer can gather all the information about that property before buying it. With RERA Act, the properties come under fair trade practices. In ready-to-move-in properties, there is a risk of some discrepancies.
Ongoing projects cost cheaper as construction cost is not included. On the other hand, buying a ready-to-move-in property includes the cost of infrastructure. As much as ready-to-move hurts the buyer’s pocket, the under-construction property does not hurt at the time of buying. A ready-to-move property costs more than an under-construction property if factors taken into consideration while buying a property are the same.
4. Return On Investment
Invest In under-construction projects, the buyer can get a high return on investment if the buyer resells it after constructing it in some time as a buyer will get the appreciation capital of constructing it. But ready-to-move-in property is sold along with the appreciation cost of building it. Also, there is an extended window period between the buying stage and delivery time in an under-construction property, which leads to yield a higher return on investment. If the under-construction property is sold closer to possession, a healthy appreciation can be obtained.