by FranchUnder construction or ready to occupy?
A constant struggle that all home buyers will face is deciding whether to opt for a property that is ready to occupy or a property that is currently under construction. Buying an under construction property can be an attractive option for investors in India, as it can have a 20-30% difference in price compared to a completed project. However this way of purchasing property does have some risk involved.
Here, We will identify the pros and cons of buying an under construction property and hopefully it will help you make the right choice.
PROS :
Choice of unit – If the project in question is a multistorey apartment or a row villa project , making a purchase while it is still under construction will give the purchaser the option of selecting the most suitable units out of many.
Low Cost of entry – Making a purchase while the project is still under construction gives the builder/promoter incentive to offer more discounts and offers. The reason being is that some developers have to finance construction in some way and need to secure some early sales quickly. Particularly a new developer might have some trouble getting financing from a bank or other financer who has enough confidence in them. This is also why most of the times the biggest parts of the payments are made before completion of the property. This allows for more room for value appreciation for the purchaser.
Customization – One can make cosmetic changes to the property as per their taste and liking because the final paint, flooring, bathroom fixtures, woodwork etc have not yet been done.
Structured/Differed payment – For many buyers the possibility of having to pay just a reasonably low deposit when committing and having staged payments according to construction progress enables them to get that dream home , which they would maybe not be able to afford when the payment had to be made in one go. This way they are able to secure a high value asset for a low initial capital outlay
High/Quick profit – Sometimes people purchase Under Construction properties never intending to wait until it is completed. They sometimes take advantage of the staged payment and put the property back onto the market just before it is completed or almost sold out. By doing so, they take the profit from the natural increase in the property value. There might be some risk involved but when you have selected the right property in the right location good profits can be achievable.
CONS :
Identification – One of the major disadvantages for many people is that, when buying under construction properties, there is nothing to see. You are depending on the ‘Artist impressions’ and other marketing material that the developer has to try to convince you that what you are going to buy is the right choice.
Protection – Some developers are well known because they already have completed a few projects while others are less known because they are newer and/or smaller. The buyer has to be careful to find the right developer because during the entire construction period he is at risk. There is some security since the buyer has only paid a deposit and has staged payments according to building progress. However, reality is that there is nothing really to protect you or your money. Here is where the use of an agent such as FRANCH REALTY is helpful because they know the market and are familiar with the developments and developers and can advise you which ones are good and which are better to stay away from.
Risk of market crash – If you are buying under construction properties with intentions of re-selling the property when it is completed or nearing completion, there is the risk that prices can fall as well as rise. However, experience has learned that with the real estate market so far hardly affected by outside influences it is at present highly unlikely that prices will drop dramatically in the foreseeable future.
Poor quality of living – When buying under construction projects in the first phase of a development which will be developing multiple phases, you might be having the impression you are living on a building site for some time unless the developer really separates the different phases from each other. This could affect your quality of life and/or rental potential.
Expenditure of Capital – one of the major down sides of investing in under construction properties is that you will be paying out for something for a while before being able to benefit from it by living in or renting out the new property.
It is all about speculating carefully and taking into consideration all the elements which might affect your investment in the future. The more you do so the greater the chances are you make the right decision. Buying under construction properties is a good idea with clear benefits but you have to be careful where you are buying and who you are buying from. As mentioned above this is where the assistance of a reputable agent such as FRANCH REALTY is very useful.
