Which is your best option: Ready-to-move flats or under-construction properties?
Due to falling home loan interest rates, demonetisation, India's real estate industry is witnessing a revival with developers observing preference for ready-to-move flats over under-construction ones for the upcoming Akshaya Tritiya festival.
1. Investors presently are opting for ready possession flats due to rising instances of developers delaying possession of under-construction properties, says property dealer Sai Estate Consultants
2. This Akshaya Tritiya, ready-to-move flats will be more in demand as home buyers are now gradually opting for ready possession flats, says Nahar Group
With the government's people friendly initiatives, falling home loan interest rates and demonetisation, the real estate industry in India is witnessing a revival with developers observing preference for ready-to-move flats over under-construction ones for the upcoming Akshaya Tritiya festival.
Akshaya Tritiya is a Hindu festival, which is considered to be auspicious day for buying new house, car, gold, etc., This year the festival will be celebrated on April 28, Friday.
The country's real estate sector has recorded a high unsold inventories for the last few years due to rising home loan interest rates, expensive property prices, delay in possession of properties, demonetisation, etc., which have resulted in fall in investors demand.
Zeebiz.com managed to speak to some of the experts from the industry to understand the demand and benefits for the ready-to-move flats against under-construction ones this Akshaya Tritiya.
"This Akshaya Tritiya, ready-to-move flats will be more in demand as home buyers are now gradually opting for ready possession flats. Under-construction purchases lead to consumers bearing additional financial burden of paying rent for existing accommodation along with home loan installments," Nahar Group's vice-chairperson Manju Yagnik told Zeebiz.com in an e-mail interview.
"With keeping current scenario in mind, buyers would want to go with the safer option, which is ready to move flats. With a downturn in the last couple of years and a high unsold inventory, it is a good option for buyers to invest in a ready-to-move flat, rather than wait for a new project to come up over a period of time," Yagnik further added.
Commenting on buyers' demand for housing this festive season, Ajmera Realty's director Dhaval Ajmera told Zeebiz, "With interest rates softening and industry situation becoming more encouraging for home buying, this Akshaya Tritiya, we are definitely expecting a rise in consumers purchasing homes this year."
According to a property dealer Sai Estate Consultants, which is a channel partner in outright and leasing cases with over 49 developers, the investors presently are opting for ready possession flats due to rising instances of developers delaying possession of under-construction properties.
"It is a era of instant gratification, buyers today are looking for flats that are 90% ready. Due to the rise in defaulters in the city the buyers today are more and more conscious while buying a property. Hence ready to move in options are the best as there is no risk attached to it," Sai Estate Consultants director Amit Wadhwani told Zeebiz.com .
For the Akshaya Tritiya festival this year, the Mumbai-based property dealer is confident of selling properties worth crores in both housing segments.
"We are confident of selling under-construction primary inventory worth Rs 120 crore from April 25 to May 2 and Rs 45 crore of ready-to-move in homes across Mumbai," Wadhwani said.
The real estate consultancy firm has said that people are opting for under-construction projects this Akshaya Tritiya due to discounts, schemes offered by developers on such properties and expensive cost of ready-to-move projects.
"Confidence and demand for ready-to-move in properties is higher but due to higher price points buyers are unable to subscribe. To summarise, we see 65% buyers opting for under-construction options and 35% opting for ready-to-move in homes," cited Wadhwani.
However, there are some advantages of buying ready-to-move flats over under-constructions ones, according to experts.
According to Wadhwani, the ready-to-move flats have zero delivery risk, tax benefits on home loans, rental yield, savings on service tax and VAT which amounts to savings upto 6% in most states in the country while under-construction flats could come cheaper but carries performance risk considering dynamic nature of real estate compliances.
Echoing similar views, Yagnik of Nahar Group said, "While the cost of a ready possession houses may be higher than an under-construction ones, this difference can largely be compensated by the advantages of a ready flats."
"The primary benefit of buying a possession-ready house is that you save on rent for current accommodation while shelling out equated monthly installments (EMIs) on the home loan. Also, if you do not plan on using it as your residence, you can let it out on rent and start earning an income right away," Yagnik told Zeebiz.
One of the key factors while purchasing ready-to-move in apartment is that one gets to see the overall view of the house, the apartment and amenities, she further added.
"Primarily, home buyers save it on rent as it is ready-to-move. Also an under-construction house costs less, but home buyers have to pay interest on the home loan plus rent for the present accommodation," Ajmera Realty's Dhaval Ajmera said.
As per Sai Estate Consultants, the demand for ready-to-move flats across Mumbai Metropolitan Region (MMR), National Capital Region (NCR) will continue to see slow but steady absorption provided the price correction is sustainable for developers.
The consultancy sees cities like Pune, Jaipur, Coimbatore, Chandigarh and Bengaluru to register growth in demand for under-construction properties for the next five years.