8 Good reasons for buying an under construction apartment in Hyderabad!
An under-construction property is a great choice to buy for the simple reason that it gives us enough time to think and choose. If you are fine evaluating under-construction properties, you are clearly in no hurry. When immediate possession is not a priority, you can explore your options well, and choose well. We must know how this approach benefits us, and consciously optimize the outcome based on our priorities.
This wait of getting possession of an under construction property gives us many tangible and intangible benefits. What we end up getting is actually a ‘bundle of benefits:
In this article we shall explore 8 hard to ignore ‘bundle of benefits’:
- More economical initially
- Better choice of unit
- Staggered/lower outflow of money on loans or otherwise
- Protection against future price increases
- Design flexibilities where feasible
- An investment with better appreciation prospects
- Ability to engage, inspect and question the builder
- RERA watching against delays in possession
Let’s begin exploring…
More economical initially
When the project gains RERA approval and GHMC permit, the builder begins marketing efforts. That’s the time, the builder wants to sell off as many units as possible. The builder is usually high on energy, and is willing to offer more for much less. Of course, it may seem like a risk for the initial buyers, but if the builder is well-established, and has a proven track record, there is not much to worry. Besides, if the project is RERA and GHMC approved, the builder has already been tasked a lot by the regulatory bodies.
This is the time when builders offer lucrative pricing, attractive early bird offers, etc. They want to offload their inventory, and are willing to shower offers for the first lot of bookings. Unless, the project is already well hyped, or is actually much awaited for the right reasons, you are sure to get these early-bird offers from most builders till the project is at its early stage. Early stage for a gated community apartment is anything up to 1 year of launch. For a standalone apartment building, the benefits may last for a lesser duration, since completion usually happens within 12 to 18 months.
Either way, a new launch or under construction project comes works out more economical. On average, a project price gets revised upwards by at least INR 200 or 300 when approximately 50% to 70% of the inventory gets sold. This happens when either the demand picks up, or when the builder gets comfortable with cash flows.
So, a 1200 sft 2bhk apartment in Hyderabad may effectively cost you INR 2 to 4 lacs cheaper when it is just launched.
Better choice of unit
When the apartments are away from possession by more than 1 year in case of gated community apartments, and at least 6 months away for standalone apartment buildings, you can get the unit of your choice.
Early birds will have more inventory to choose from. The most stunning apartments with good Vastu are the first ones to get picked. You could be one of the lucky ones to pick the best unit suited to your requirements.
Apartments nearing possession are usually the leftovers, that are NOT chosen for some or the other reasons. These may be Vastu non-compliant, or the buyers may not find merit in them for some reason.
So, be an early bird, and gain from an ‘early mover advantage’. East, North, and North-East facing apartments are usually the first to get sold. They may even demand a premium.
Staggered/lower outflow of money on loans or otherwise
Should you buy an apartment nearing possession for INR 50 lacs, and the construction is at an advanced stage, the burden of monetary outflow is more. It is all the more when you are picking a loan. Your disposable income drops suddenly. With under-construction units, you are better prepared to adjust, and the outflow is not sudden, especially when taking a home loan.
For example, for a person with a family income of INR 1 lac, a home loan amount of INR 40 lacs results in an EMI of INR 30,534 per month at 6.8% interest rate with a 20 year tenure.
So, effectively, it’s a sudden decrease of disposable income: [INR 1,00,000 – INR 30,534 = INR 69,466 per month].
Protection against future price increases
The rates of homes go up when you chose a building that’s coming up well in a good locality. Marketing efforts of the builder results in footfall. Those visiting the area get attracted, and with activity happening, enquiries flow in. The situation gets better for the builder, and the efforts of marketing start showing results.
Normally, when the super structure comes up, the builders increase the price upwards. This is simply because the new [potential buyers can now stand on the floors and get an actual touch and feel of the apartments. The views from a higher floor become clearer.
This is the time when prices tend to go up.
Those who are early birds usually end up locking the best apartments at the lowest prices.
Design flexibilities where feasible
Each family and individual may have unique requirements. These can be catered to at an initial stage. Although not all builders are open to making changes or taking special requests, the possibility exists for modifications.
For apartments being constructed by standalone building builders, these flexibilities are normally easily accommodated. These could do with some internal changes, spaces, fixtures, fittings, etc. so far as they do not disturb the structural stability of the building.
Once the building is ready for possession, or in the final stages of finishing, such changes are not feasible. Builders would not want to suffer a loss of changing specifications or accommodating special requests.
An investment with better appreciation prospects
Goes without saying, many people buy an apartment as an investment and exit the property with profits. For that to happen, one needs to know the knack of identifying and investing in the best apartments with compelling benefits. The location, the reputation of the builder, the attractiveness of the overall project, and the design elements alone can give you such an edge.
At times, people buy properties for the short term such as 3 to 5 years, and exit when the time is just ripe. This happens for both gated community apartments. The possibilities are even better with standalone apartments because these are usually extremely high on locational advantages.
For example, a standalone building apartment in Madhapur booked five years back was averaging INR 5083 per sft. After five years in December 2020, despite the pandemic, the prices are hovering at INR 7877 per sft.
Ability to engage, inspect and question the builder
With an under construction property, we are able to see what’s happening on the ground. The specifications promised by the builder are open to your inspection. You could even see the materials like cement, tiles, wiring, plumbing, etc. being used when it is at an under-construction stage. Although the inspection is a bit difficult with big builders, and access to the site is not provided easily for safety purposes, inspecting small builders and standalone building projects is much easier. You even get access to the owners or developers of the smaller projects, and they are always under your scanner. Whether you question them or not, the future occupants of the building repeatedly visiting the site itself keeps the builder on their toes.
When things actually go wrong, like delays, slow pace of construction, or use of substandard materials, you can actually question the builder.
This advantage of access and ability to watch over the construction progress is not available when the apartment is ready for possession. Once the tiling is done, and the painting is completed, you just would know what’s gone into the making of your apartment.
RERA watching against delays in possession
Although the thought of delay in possession is unsettling, the remedy given by RERA Act gives a respite to home buyers. If the builder delays possession of your flat beyond the prescribed time frame, then RERA Act 2016 comes to your rescue.
This makes buying under construction properties safe. Gone are the days when there is no legal recourse to delay in possession. The buyers in the pre-RERA era were scared to book an under-construction apartment for fear or delay, or worse still losing their hard earned money.
Now, things are very safe, and in the event of an undue delay, one can file a written complaint indicating the amount of the damages you might have incurred. The disputes between 20 lacs to 1 cr can be filed within the State Disputes Redressal Commission, whereas disputes over INR 1 cr are filed with the National Commission in New Delhi.
You can even seek help from RERA of Telangana for a full refund of your money paid along with interest or damages. Telangana RERA keeps a strict vigil on the implementation of the RERA Act. This ensures that even while buying an under-construction property, the buyers are not left at the mercy of builders.
Even builders today do not want to be at the receiving end and face prison time with a buyer filing a case for delay in possession. No builder wants to pay 10% interest on the value of the property by delaying possession of their projects.
Although builders are not our enemies, there is a need for discipline and a deterrence mechanism to keep the home buyers protected.
“Deterrence is the art of producing, in the mind of the enemy, the fear to attack”.– Sterling Hayden
Buying an under-construction property given the right reasons makes sense in Hyderabad, especially, if you are not in a rush for getting possession.
It is required that we act on time, evaluate the home options that work best for us. Avoiding a last-minute rush, and making a well-informed decision pays good emotional and financial dividends in the long run.
Getting the best deal is about many things like getting the right property, at the right time and at the right price. With favourable regulatory environment in Telangana, buying an under-construction property in Hyderabad is indeed a safe and wise proposition.