Ready for possession (ready-to-move) projects or projects nearing completion are costlier than under-construction projects. Nevertheless, many buyers prefer such ready properties rather than waiting with an under-construction property. There are sound reasons behind such a decision to buy ready-to-move properties.
Reduced Cost Difference
The real estate sector has gone through a serious downward spiral over the past couple of years, resulting in lower new launches, price reductions and higher volume of unsold properties. This has forced developers to offer attractive discounts and various freebies to attract buyers of ready-to-move properties. Also, prices are beginning to rise again, and the market is looking up steadily. This is the best time to invest in property. A property that’s ready for possession obviously has a better appeal, particularly for end-users looking for their first homes. As developers of ready projects want to liquidate their assets as soon as possible, it is fairly easy to get a good deal on such ready-to-move properties.
Cost of Rentals
Most people buy their homes with bank loans. For most buyers, it is fairly difficult to maintain the dual financial burden of paying home loan EMIs and home rentals. Paying a little bit extra to acquire a house right away is cheaper than paying rentals over a period of time, which is an additional cost for the buyer.
Rental Income Potential
Even investors have a good reason to buy ready-to-move homes. Investors buy apartments/houses with the objective of earning rental income or re-selling them for profits. When the objective is to generate a regular rental income, purchasing a property in a completed project helps them to start earning immediately out of it through rentals rather than waiting a few years and locking away their money.
Eliminating Risk Factors
In India, the real estate sector is still fragmented. Investors getting duped by fly-by-night companies/developers is not unheard of. Even if the developer is genuine, projects get stalled or scrapped and the investors in the project find their money locked for uncertain period. People want security and assured returns. Ready properties offer this stability and guaranteed safety.
Uncertain Delivery Time
Unfortunately, the cases of delayed delivery of projects have been on a consistent rise owing to various factors plaguing the real estate sector. This directly impacts the financial burden on a buyer, for whom the uncertainty costs a lot of money. Also, the extended periods of EMIs and other expenses take a toll. Therefore, it makes more sense for buyers to invest in a completed projects rather than ones that is mid-way or about to begin.
Infrastructure Development
A lot of new projects are coming up in the vicinity of major cities where the supporting infrastructure such as roads, electricity, water connections, etc. are yet to be developed. These are promised to be in place when the projects are completed, but even when the projects are complete the social infrastructure might be missing or not sufficient for supporting a residential community. Residents of projects developed in new localities/suburbs have to wait for long periods of time for proper infrastructure such as roads, water supply and sewerage to be in place.
For instance, thousands of families have already started living in the few residential projects such as Gaur City & Supertech Eco-Village that have been handed over to the owners in Greater Noida (West), or Noida Extension. However, they are yet to get municipal water supply and sewer infrastructure is also not fully ready. Security and public transport are also areas of concern for the residents of this upcoming locality.
Such problems with infrastructure development puts off buyers who want to move in their new homes and also derive the benefit of ready infrastructure instead of waiting for basic amenities to be provided to them.
Author: Ashwinder Raj Singh, CEO – Residential Services, JLL India. JLL is a global real estate consultancy firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. (The article has been edited with inputs from PaisaWise..com)