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Under construction vs ready-to-move-in: Where to invest for better returns


Industry professionals in the real estate sector generally advise homebuyers to consider their needs and priorities before deciding between under-construction and ready-to-move-in properties. Real estate experts generally recommend that homebuyers weigh the pros and cons of both under-construction and ready-to-move-in properties before making a decision.

Under-construction properties can be a good option for buyers who are willing to wait and have a long-term investment horizon. Ankit Aggarwal, MD, Devika Group said these properties are often offered at a lower price, and buyers can benefit from price appreciation over time. Industry professionals also advise buyers to consider the reputation of the developer, location of the property, and quality of construction before making a decision. 

Buyers should also factor in the hidden costs associated with under-construction properties, such as maintenance charges, property taxes, and loan interest payments during the construction phase, added Ankit.

Under Construction properties in India can provide higher returns compared to RTMI properties due to the lower initial cost and appreciation potential. 

“Investors can also leverage the flexible payment options offered by developers to maximize their returns. Investors can potentially benefit from the price difference between an under-construction property and an RTMI property,” said Suren Goyal, Partner, RPS Group.

Investing in Under Construction properties can be advantageous as they provide buyers with the flexibility to choose their preferred location, floor, and amenities, which can add value to the property and result in higher returns.

According to Gurmit Singh Arora, national president of Indian Plumbing Association, investing in Under Construction properties gives investors the flexibility to customize their properties according to their preferences. This can add value to the property and potentially result in higher returns. 

Ready to move in also has it’s advantages of ready delivery and to assess the promised quality , Sq feet area and amenities of the site. There are also less chances for delay of under construction properties and non compliance to RERA requirements, he said.

Under Construction properties can offer potentially higher returns than RTMI properties in the Indian real estate market, depending on various factors such as location, market conditions, quality of construction, and demand. 

“The advantage of investing in Under Construction properties in India is that the cost of the property is usually lower during the construction phase. This means that you may be able to purchase the property at a lower price and benefit from significant appreciation in value once the project is complete. Additionally, many developers offer attractive payment plans and other incentives to buyers who purchase Under Construction properties, which can make them more affordable,” said Siraj Saiyed, Director, Arete Group.

Buying a ready unit insulates the buyer from the execution risk of delay or non-performance by the developer, and enables buyers to move in immediately. The major reasons why a prospective buyer should consider an under construction property are greater choice in terms of available inventory, the financial burden of the house purchase can be spread over an average period of 2-3 years, and the introduction of RERA has brought in a lot of transparency to increase buyer awareness and accountability. Prospective buyers should carefully weigh the risk and reward before committing.

If it is the return on investment that the buyer is seeking and the nature of purchase is purely for investment, then the conspicuous choice has to be UC, said Mrinaal Mittal – Director, Black Teak. 

On the other side of the spectrum fall the end user buyers. In view of increasing bank interest rates, they don’t want to get stuck in a situation where the possession is delayed and they have to keep paying not just the EMIs but also rentals on their existing house. Over and above this, the 5% GST benefit in RTMI is an additional lure for end use buyers, explained Mrinaal Mittal.

The decision to buy an under construction or a ready-to-move-in (RTMI) property is based on one’s individual preference, risk appetite, and financial condition.

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