Investing in real estate has always been among the most favoured choices among individuals seeking to achieve financial growth and stability over the long run. When compared with other alternatives of property investment, under-construction properties have garnered substantial popularity among both homebuyers and investors. Properties of this kind are bought prior to the completion of construction and generally during the initial phases of construction or development.

Buyers usually prefer under construction properties as they tend to be more economical, offer lenient payment options and higher possibilities of future appreciation. However these investments require patience and careful research but once wisely chosen, may prove to be significantly profitable.

Major benefits of buying an under-construction property are as follows.

Lower property prices

The prime benefit associated with buying under construction properties is their relatively lower prices. Developers usually offer such properties at reduced rates during the launch of projects or in the early stages of construction to encourage more and more buyers to invest in it and generate cash to make the project run.

Generally, these properties cost much less compared to ready to move properties. They enable the buyers to own bigger or better located properties within their budget constraints. As the project reaches its possession time, the prices of such properties escalate, offering benefit to the initial investors.

Higher appreciation potential

Investing in under-construction properties is also beneficial as the rate of appreciation of properties can be higher. As it is assumed that the properties being purchased will rise in value with time as the construction continues and its surroundings get developed.

At the time when the possession is expected and infrastructure like metro connectivity, highways, commercial hubs, etc is being developed, property rates may rise much higher from the booking rate. The long term capital creation through property appreciation attracts such investors to buy these properties.

Flexible payment plans

Builders typically provide flexible payment plans for under-construction properties. Buyers are not required to pay the entire amount in lump sum and can do so in instalments according to the development phase. These construction linked payment plans help the buyers to manage their cash outflow without pressure. Along with such plans, many developers offer:

• Pre-launch discounts
• Easy instalment schemes
• Low booking amount
• Attractive finance options

These plans reduce the overall burden and make it feasible for even the middle class citizens to own a property.

Modern design and amenities

Properties developed under construction are built using latest architectural technology, latest trends and amenities that cater to the modern lifestyle. Many such houses are designed to possess unique amenities and designs that are not available in older constructions. Common features in such properties include:

• Smart homes
• Energy efficient systems
• Club houses
• Fitness centre
• Landscaped gardens
• Co-working spaces
•  Enhanced security features

As new housing trends and demands evolve the latest property projects are designed according to them.

Customization options

Sometimes, the early construction phase of a project allows buyers to customize the interiors of their houses according to their specific choices. Depending on the developer and phase of construction it is also possible to choose things like flooring options, wall color preferences, interior structure designs or fitting types. Such customisations may not be possible with ready to move properties.

Better investment opportunities in developing regions

In many of the developing regions, projects of under construction properties are launched. Since the infrastructure in such locations is still under development these regions tend to appreciate faster. Roads are built, metro becomes operational, schools and hospitals are established and as result such investment options yield high returns in the long run. Particularly in tier-2 cities and suburban areas such opportunities are abundant.

Tax benefits for home buyers

In India, under construction properties if bought by acquiring home loan provides some benefits in taxes as the buyer may avail tax deductions on:

• Home loan interest paid
• Principal repayment on home loan

These deductions are provided on the limits prescribed under the IT act. Though few of these benefits may not be available until possession; these could still be utilized for future benefits in planning finances.

Higher return on investment

Since, these properties are bought for comparatively less prices they may yield higher return on investment in future, especially after construction, due to increase in market value and rent income may also go higher if the location is of higher demand. For long term investment, this property class has more value. Commercial projects especially at emerging business hubs are a great investment option.

RERA has improved buyer protection

Buyers were reluctant to invest in under construction projects earlier due to project delays and lack of clarity about the future of project but introduction of RERA has led to transparency.

• RERA ensures that.
• Project is registered.
• Construction happens on time.
• Buyers are provided transparency regarding project details and builder fraud.

The buyer can verify project plans, property dealers and timelines by referring to the official government websites of RERA.

Risks to be kept in mind

The buyers of under-construction properties are also subject to various risks which should not be overlooked.

• Construction delays
•  Builder integrity
•  Market risks
•  Issues concerning approval and other legalities

Buyers need to verify each of the above points to eliminate the risks.

Tips to consider before buying

• Research the builder.
• Verify the legal documents.
• Estimate the value and potential of the location for its growth.
• Familiarize yourself with the payment plan and processional timelines.
• Understand all legal aspects related to home loan.

Conclusion

Buying an under-construction property is a strategic decision which has a high potential to yield good returns in the long run. With increasing opportunities in various developing locations, buyer protection from RERA and flexible payment schemes available, these properties have turned out to be a sought after real estate investment for those seeking higher gains in the future.