Is Investing in Under-Construction Flats Beneficial?
Buying a real estate property is all about making choices. One of the toughest choices is deciding between an under-construction and a ready-to-move one. Undoubtedly, in today’s dynamic real estate market, investing in under-construction is a strategic choice. It can help you to leverage the highest benefits of your investment. However, as with every decision, it comes with significant disadvantages, and learning about them helps make an informed approach. In today’s article, Investing in Under-Construction Flats we will delve into the definition, advantages and drawbacks of buying an under-construction property.
Let’s begin!
What is an Under-Construction flats?
As the name suggests, an under-construction property is a real estate asset that is under development and not ready for possession. These properties are typically available from the start of work until the issuance of the Occupancy Certificate (OC). Once a property receives the Occupancy Certificate, it is considered a ready-to-move property.
What are the Advantages of Investing in an Under-Construction flats?
Low Purchase Price
One of the biggest benefits of investing in an under-construction property is the lower purchase price. Builders tend to ask lower prices than other properties in the area to attract potential buyers and secure financing. As the construction progresses, property prices typically rise.
Diverse Payment Plans
Flexible payment plans play a crucial role in reducing your financial burden. Under-construction properties often offer staged or flexible payment options, so you don’t need to pay the entire amount at once. You can pay based on the construction’s progress. This “construction-linked plan” reduces the immediate financial burden and gives buyers more time to arrange funds or secure home loans. At Vinayak Realtech, we offer a range of payment plans, including customised ones, to help you live in your dream home without the stress.
Higher Profitability
An under-construction property is always priced much lower than a completed one. By the time you get possession, the asset price has doubled. Additionally, during this time, the area’s infrastructure also develops, helping double real estate returns. For example, you have invested 20 lakhs in an under-construction project in 2023 in the Rajarhat area. The flat price is now around 25-30 lakhs, allowing you to make a neat profit of 5-10 lakhs. This makes such investments particularly lucrative for those looking to maximise returns in the medium- to long-term.
Scope of Personalisation
Booking an under-construction unit allows you to select the layout, fittings, and flooring within certain limits. It helps in customisation and adds the touch of your personality to the interiors. However, it is rarely possible with a ready-to-move-in property.
Updated Amenities
Under-construction projects are designed to incorporate modern architecture and lifestyle. Commonly, it comes with smart home features and lifestyle amenities such as clubhouses, gyms, landscaped gardens, and children’s play areas. Investing in these projects helps you enjoy the best amenities available in the market and ensures the highest level of comfort.
RERA Regulations
Real Estate (Regulation and Development) Act, 2016 (RERA) has made the real estate industry more organised and transparent. Under this act, developers must register their projects, disclose progress, and deliver within the committed timelines. Hence, you don’t need to worry about delays in handing over the keys or fraud.
Freedom of Choosing the Units
The unit of an apartment plays a crucial role in deciding the comfort level of your life. For example, the top floors of a building can be too hot due to their higher elevation, while the lower floors might lack privacy. In an under-construction project, buyers can choose from a wider range of units. It includes preferred floors, views, or directions. In ready-to-move apartments, most of the desirable units remain sold, and you end up buying whatever is available.
What are the Drawbacks of Buying an Under-Construction Real Estate Project?
Investing in Under-Construction Flats:Probabilities of Potential Delays
One of the most common and feared drawbacks of investing in an under-construction project is the delay in project handover. Often, developers face funding shortages, regulatory hurdles, or construction setbacks, which delay possession dates.
- What You Should Do To Avoid It:
Partner only with a reputable real estate dealer. With steady resources and a wealth of experience, these realtors can handle unexpected disruptions effectively. Additionally, ensure the developer follows the RERA guidelines.
Volatile Market
Undoubtedly, the real estate market is volatile, and investing in it is risky. Often, locations have lost their credibility by the time the investor gets the property.
- What You Should Do To Avoid It:
Evaluate the location’s prospects accurately and invest in areas for future growth. For instance, the Rajarhat, Newtown area is the newest economic zone of Kolkata. MNCs such as TCS and Infosys are setting up offices in this locality. Therefore, it is clear that the region’s growth will continue, and demand for real estate will increase.
Discrepancy in Final Delivery
Many homeowners face a discrepancy in the final delivery. It means the final property delivered does not match the promised specifications or the sample flat shown during the sale.
- What You Should Do To Avoid It:
Check the developer’s previous work and review the website’s review section. You will understand the quality of their deliverables and whether the clients are satisfied. You can also ask your friends and acquaintances for feedback on the developer.
Financial Burden
Buying an under-construction property can be financially draining, as you must pay rent and EMI. It can be extremely difficult to handle if the dual financial commitment continues for an extended time.
- What You Should Do To Avoid It:
Some developers offer a payment option called “no EMI till possession”; look for it. Remember, proper communication can solve every problem. Hence, share your concerns with your realtor for the right guidance.
Hidden Costs
Although the under-construction flats cost less, the buyers often face a shock of hidden costs. It includes increased development fees, GST, maintenance deposits, or parking charges.
- What You Should Do To Avoid It:
A sudden rise in material charges or GST is inevitable, and you must bear it as a buyer. To prevent burnout, maintain a contingency fund and avoid spending your entire budget on the property.
Final Thoughts:Investing in Under-Construction Flats
Investing in an under-construction flat is a rewarding decision and a strategic move toward a flourishing future. However, it is essential to consider the disadvantages of an under-construction property and to follow the right approach to handle them.
Do you need more expert guidance regarding this? Contact us. At Vinayak Realtech, we offer the right guidance and support to help in making the right decision. In addition, we have a range of under-construction properties to choose from.
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