Home buyers are increasingly looking to purchase ready-to-move-in or OC-ready properties rather than going for properties that are under construction. Today, properties are required on an immediate basis. Experts believe there are good reasons for this trend.
Differences in cost
The primary reason for the massive spurt in demand for ready-to-move-in properties is that developers are offering attractive prices, deals, freebies and discounts. The Indian real estate sector has gone through a frightfully downward phase in the last couple of years. This acted as a speed-breaker on new property launches, higher unsold inventories and price reductions. The market is improving but these dynamics are still at play. This is why home buyers are not ready to wait for properties to get completed. There are a number of options, and they are taking full advantage of the situation. Prices of properties will again increase. Hence, it is best to make use of this time when prices are low.
Why pay double?
When a home buyer invests in an under-construction property, he/she must bear the loan expenses as well as pay the rent of the current accommodation. Bank loans are a significant burden on one’s financial portfolio. Hence, people are ready to pay a little extra and let go off one recurring expense.
Indian under-construction properties are infamous for delay in completion, missed timelines, and other such issues. As explained earlier, homebuyers have to pay double for accommodation – one for the UC property and the other for current living. Many a time it becomes impossible for homebuyers to bear this burden. If the UC property starts getting delayed, it could spell doom for the buyer. These problems can be bypassed easily by buying a ready-to-move-in property.
Lure of future moneys
Typically, a real estate investor looks at a property as an asset that could bring him money in future, if and only if he/she is not purchasing the property to stay. Many invest in properties in the hope of earning rental income and finally selling off the property at an opportune moment to cash in on capital appreciation. Purchasing a ready-to-move-in property helps the investor to start this process immediately.
Fear of fraudulent developers This has been a big problem that has plagued Indian real estate for long. There have been many cases of fly-by-night operators promising the moon and then vanishing in thin air with the initial sum paid by home buyers. While RERA is here now to put an end to such dubious developers, it will take some time to fully come into effect. Moreover, buyers will find it tough to come out of this far of fraudulent developers. While RERA will ensure that only genuine developers remain in the market, for the time being, buyers still feel vulnerable. Hence, ready-to-move-in properties are in demand now.
Basic amenities for living
Living in cities has become frightfully expensive. Buying an apartment in a prime location is not every man’s cup of tea. Hence, buyers are exploring city peripheries. A number of cheap projects are coming up in the suburbs but these areas do not always have proper supporting infrastructure. Affordable under-construction projects have to wait a long time for deployment of basic social infrastructure such as water connections, electricity, roads etc. However, it is expected that ready-to-move-in projects already have the basic amenities in place and that developers have put up such a project only after considering the infrastructure in the locality.
The GST impact
OC-ready projects have become more economical for buyers after the implementation of GST. The tax burden has been reduced for buyers going for readymade properties. Now, the entire project cost, including land, is being taxed at 12 percent. This is enough for builders to claim their input credit.