Real Estate News
July 30, 2016
Ready-possession and almost ready-possession projects are preferred FOR THE financial cost-benefit as well as reduced risk
Every builder and banker is aware that buyers across the Mumbai Metropolitan Region are showing a clear preference for ready-possession and almost ready-possession projects. The real question to be asked is why are these people opting for projects where they can move in right away or those, which are scheduled to give possession within a few months.
On one hand, there is a price differential between these projects and new launches, which have a comparatively lower rate per square foot.
Moreover, with a new launch, the buyer has a longer time frame to arrange for funds and the repayment also starts at a later date. So why are home seekers going against their natural instinct, which is to save money and repay debt over a longer duration?
Well, there are various factors at play such as the cost that would have to be paid for a few years towards rentals till a recently launched project would give possession. If the lessor refused to extend the leave and licence agreement after 11 months, one has to again pay two months brokerage, not to mention the cost and damages incurred while moving house.
For families with children, changing schools is not an easy task and the amount involved in new admissions can be considerable to say the least, not to mention emotionally upsetting for the young ones. If possession is delayed, these costs can multiply and spiral out of control.
Plus, the uncertainty of getting possession by due date also plays on the minds of home seekers. With project approvals delayed considerably at each stage of the process during the past few years as a result of changing norms and uncertainty about the implementation of policies, home seekers are a bit wary about a recurrence by the authorities.
While the number of approvals has been cut by 52% and it now takes 60 days compared to 365 days earlier, buyer sentiments are still driven by the adage of ‘once bitten and twice shy,’ so it will take visible changes before their trust is regained by the project approving bodies and committees.
So the process of evaluating or comparing residential properties from a holistic financial cost-benefit angle, which many people were not taking into account earlier plays a key role in driving this new trend.
Of course, there are aspects that one needs to keep in mind even while buying a ready-possession and almost ready-possession home. The point to consider there is, do you really bother to look beneath the facade?
Aspects like the quality and facilities of a project as well as the developer’s brand image dictate the type of return on investment it will provide in the future.
They used to say that the three most important things in real estate are location, location and location. Now, wiser than before, analysts are grudgingly accepting the ground reality that the three most important things in real estate are location, quality and the brand.
Go to any prominent location across the Mumbai Metropolitan Region, you will find that certain projects command a premium over the others at every stage.
Some buyers try to save money by opting for cheaper projects, reasoning that the location is everything when it comes to determining future pricing. They learn the hard way, that contrary to expectations, all projects in the same ‘prime’ area do not command an equal pricing five years down the line. Aspects like the quality and facilities as well as the developer’s brand image eventually dictate the type of return on investment it will provide in future.
Look for details of ready-possession and almost ready-possession projects to facilitate your purchase decision in the next issue of dna of property
Source: DNA Newspaper
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