Is this the right time to invest in an under-construction property?

Here is the lowdown on why this may be the best time to invest in an under-construction property.

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A real estate investment is not only an emotionally-intensive decision, but also a financially-heavy one. While investing in a property, an investor is in perpetual confusion about whether to invest in a ready-to-move-in property or an under-construction one. While a ready property allows for immediate possession, an under-construction property lets you take possession at a later stage and deposit the finances accordingly.

Here is the lowdown on why this is the best time to invest in an under-construction property.

Affordable Interest Rates

Despite the falling rupee value against the dollar, the interest rates in India have not risen exponentially. If you wish to invest in an under-construction property, the banking institutions are more than ready to disburse loans, subject to the financial conditions of the borrower. Affordable home loans are available within the interest rate range of 8-12 percent. While the tenure is 15 plus years or more, it puts no burden on the borrower and he/she can repay the loan in the long term.

No immediate Burden

Under-construction properties are very suitable if the finances are a concern. Unlike ready properties where the entire residential unit has to be paid upfront, the under-construction property allows a homebuyer to repay the easy home loan in regular EMIs. With a lot of financing options from banks or NBFCs, you can consider an under-construction property over a ready one.

Attractive Offers

While promoting their real estate projects, realty developers provide attractive offers such as a rebate on payment of stamp duty, partial payments for booking, no-cost EMI facilities, payment starting after possession and upfront discounts for serious buyers. An under-construction property would not be too heavy on your pocket and you will have an asset of the lifetime.

Opportune Time

In the backdrop of the Coronavirus pandemic, the real estate sector is getting back on its feet. Real estate prices are not steep and still affordable as compared to their heydays. Serious homebuyers must make use of this once-in-a-lifetime opportunity for investment as once the sector is fully recovered, the prices would skyrocket and will render properties costly. Meanwhile, the projects which are under construction can be booked with only 10 percent of the cost in most cases. If you do not have a requirement immediately, an under-construction project is best for you.

New Construction

A key advantage of buying an under-construction property is that it gives you freshly constructed property. Unlike a property available for resale, you cannot estimate the quality of construction beyond a limit. In under-construction investment, the new construction ensures that the life of the building will be better than a property in resale.

Appreciation Potential

When you decide to book an under-construction property, you get the possession after 2-3 years in most cases. If you change your mind and wish to sell the property, the returns will be far better than a ready property as the construction would be new and investors would be more willing to spend on this property than on an older one. Moreover, under construction commands a better return on investment than the ready properties in general.

Conclusively, there cannot be a more opportune time to invest in under-construction real estate properties. The Covid-19 pandemic has resulted in the price correction to a great extent. However, it is also true that the prices will not go down further. This makes it an apt period to invest in an under-construction property. However, the buyers are advised to check for the RERA registration of the developer and other factors before investing.

(By Mukesh Goel, Partner, Auric Group)

Disclaimer: This is the personal opinion of the author. Readers are advised to consult their financial planner before making any investment.

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