When it comes to real estate, there are all sorts of questions that can boggle us? Apart from the usual ones about location and price, we also receive questions from anxious readers wanting to know about different projects, the reputation of developers, and viability of investing in real estate. One of our readers wrote in asking us if he should invest in an under-construction project.
Since buying a property is one of the biggest investments that one makes, it requires serious deliberations. In this post, let’s understand the pros and cons of buying a property in an under-construction project.
The cost factor
When compared to ready properties, under-construction properties offer an attractive price point for buyers.
For instance, a ready project by an A-grade builder in Sarjapur Road is currently priced at Rs 5,200 per sq. ft. while an under- construction project by the same builder is currently selling at Rs 4,350 per sq. ft.
When buying a property that is ready for possession, a buyer is required to pay the whole amount within a stipulated time that varies from builder to builder. However, for a project that is in the initial stages of construction, buyers can opt from different payment plans like a construction-linked plan, time-linked plan, flexible payment plan, etc.
Moreover, for an under-construction property, a buyer typically pays 10-20% at the time of booking while the remaining amount is paid in instalments later. In a nutshell, one gets more time to manage their finances.
Higher returns
For investors, it is always advisable to invest in either pre-launch or initial stages of construction to reap the maximum profit.
In an ideal scenario, a project records about 15-20% appreciation from the time of launch to completion. However, this also depends on several other factors like the location of the project and developer.
Apart from finances, being an early bird in the world of real estate has some more benefits. From the desired unit to the desired floor to the direction, one can easily finalise a unit of their choice.
However, in a ready property, this might not always be the case as several units would be already blocked by other homebuyers.
Scope for modification
Unlike a ready property, one can opt for some customisation in an under-construction project (only if the builder allows). Constant monitoring of the construction work is another advantage that one gets.
Well, if you are convinced enough to buy an under-construction property, here are the some of the disadvantages that you should be aware of.
Construction delays have plagued the real sector for quite some time now. Thus, if one is staying on rent, the burden of EMIs and rentals can be stressful.
You may not get what you expected!
Investment is an under-construction project is usually decided after seeing the brochures or the model flat.
While these may appear perfect to an aspiring homebuyer, the result might not turn out to be the same. At times, the construction quality may not match the expectations.
Legal issues
Despite RERA, uncertainty can still dog the real estate world. Various cases of developers starting the construction work without getting all the requisite approvals have also come to light over the last few years.
And finally, we advise our reader to check the following before finalising a project:
- Check the credibility of the builder by analysing his past record
- Check your state’s RERA website for project details
- Get the sale agreement from the developer
- Also, a Title Certificate can be of great help in this case as it will state the legalities of the property
- Do not get blinded by offers and schemes
Do your calculations well before making the decision!
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