A decade and a half back, both the supply as well as demand of under-construction projects were limited. This was also the period when state governments were on a land-use conversion (industrial/institutional to residential) spree. Soon, governments started selling the land parcels to private builders and by the end of last decade, the buying capacity of individuals also grew manifold. What used to be the choice of select few (mostly businessman and the corrupt), now became a toast of investment for working class as well. But, like always, nothing is permanent in life, come what may. By 2013, supply far exceeded the demand and the dreams for ones already invested, were hard to come by. We anticipate that with the current balance of demand and supply, decent returns will not be seen in next 7-8 years (of course, there will 0.5 to 1% exceptions). For regions, where land parcels are yet to be explored, this period of lull could be as high as 12-14 years. For instance, in Noida, Greater Noida, Gurgaon, a lot of land parcel already identified as Residential is still begging to come to market, only to be thrown to supply garbage. So, it is certainly a no-no for investors.
Now, coming to end users. End users have chosen under-construction projects for their own use or for use of their future generations. A decade back, they bypassed the thought of buying ready-t0- move options for the differential of total sale price that was more than 20%. However, with the given supply and demand imbalance, this differential has come down to as low as 10%. That too after waiting for an average of more than 5 years. Means you lose out on tax rebate on interest amount, quite enough to negate this 10% bracket. Moreover, when you invest in an under-construction project, you are most likely to be handed over the below:
- An unprecedented delay where you eventually lose out on some benefits of tax rebate on home loan interest.You end up paying EMI and rentals both.
- Unprecedented change in floor and site plan that may completely nullify the very reason for which you bought the flat.
- An unsatisfactory quality product where you end up spending 4-5 lakhs extra in bringing it to the level of a ready to move unit in some other already delivered unit.
- Poor maintenance standards and highly unexpected maintenance charges.
- Lot of stress, enough to stamp you with a high-BP-patient tag.
- Lot of time wasted into meetings, complaining, protesting, travelling to site and returning with a heavy heart and cursing your bad luck of course.
Incident of a really good builder like Stellar (with good track record) giving one of the worst flat quality deliveries of Noida extension, has further led to lack of faith in builder credentials and nothing is left for granted in this industry now.
For those looking to buy under construction projects for their future generations, don’t do that. Reasons are there for everyone to see but we simply don’t like seeing the ugly: 1) The property will not be fit for selling due to degraded quality in 20-25 years from today, 2) They will most likely not stay there courtesy the growing dissatisfaction among human breed in constant push for more and more comfortable and independent life, 3) In case your children decide to stay at those houses, they will only curse you more than ever.
Our advice today is very straightforward: “DO NOT BUY IN UNDER-CONSTRUCTION PROJECTS”. Spend quality time with your near and dear ones in your own home. A home where you always knew how staying at will be like.
Last Updated on July 12, 2016 by Go4Reviews