The current scenario in realty sector has been witnessing a surge in demand for ready – to – move in or close – to – possession homes. People in the metropolitan cities these days do not see projects under construction as their first choice.
The industry experts state that some time ago people use to invest in houses under construction specifically those scheduled to deliver 2 to 3 years down the line due to a wide array of reasons. Firstly, the under construction projects were 20% to 30% cheaper than the ready to move in houses. Moreover they promised a price appreciation in the future. Presently, the builders are inadequate to deliver housing projects on the specified time as well as uncertainties surrounding the projects has loaded the dice in favor of the ready for possession homes.
Talking about the delays in projects Mr. Rahul Singla, Director, MAPSKO Group said,” Project delays have become an industry norm these days, while in case of ready to move in homes a quick and hassle – free possession is guaranteed. Such homes have also reduced the chances of fraudulent practices and are available at competitive rates. Moreover, developers are currently offering attractive deals, discounts and various freebies to the buyers on such houses. This explains why they are more in demand these days.”
The major drawback projects under construction face is that they are highly susceptible to the possibility of last minute changes whereas ready for possession flats do not face this stumbling block.
Another major hook up that has caused people to invest in ready for possession projects is that the pile up of inventory has kept the prices of all types of property in check. Commenting upon this Mr. Santhosh Kumar, CEO (operations and international director), JLL India said,” With absorption having been slow until this point and serious price rationalizing in all markets, even in ready to move projects or those almost complete, buyers have the distinct advantage of buying into such projects without having to break the bank. It is indeed a unique point in time for the Indian residential market.”
Majority of people purchase their homes by taking loans from the bank. This adds to their misery since they have to pay both the EMIs and the rentals till the builders complete their projects and possession is granted to the buyers. The cost of rentals is one deliberate factor that is pushing the buyers towards ready for possession homes.Ready for possession homes not only ensure savings on rental costs but also have the potential of giving good rental returns. A JLL report says that a lot of investors buy houses with the objective of earning rental income or re-selling them for profit. 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 their money away in a non- income generating project.
Talking about the current scenario Mr. Sumit Berry, Managing Director, BDI Group said,” Ready to move in homes seem to be the best bet for end users who can be benefited by the possibility of quick possession at competitive rates. They hold good value even for investors, as the real estate scenario is bound to change drastically with the arrival of RERA.”
On the contrary ready for possession homes are a bit costly than those under construction. Moreover they have limited scope for price appreciation and tend to be less profitable for the investors since the incubation period is quite less. While flats under construction will always be cheaper, the risk factor will always be high and first time buyers will have to incur the rental costs until delivery.