What is the concept of ready to occupy Realestate projects
The viability of ready-to-occupy projects is getting understood in all circuits and the number of investors opting for it are increasing by the day.
Buying a house is one of the most important decisions of one's life. Usually, there might be a long wait, mixed with anxiety with respect to realising the dream of owning a house. This wait has decreased substantially with ready-to-occupy projects gaining in popularity .With income levels rising and increase in the number of HNIs, ready-to-occupy property is finding more takers in the city.
There are many advantages that a ready-to-occupy property has over an under-construction development. Instead of a sample flat or just the floor plan, you actually get to see the finished project. Also, in case of under-construction project, there are many cases where in they are not completed within the promised time-frame much to the distress of buyers.
Explaining the concept of ready-to-occupy projects, K S Manian, chairman, Radiance Realty says, "Ready-to-occupy homes refer to second-hand apartments or apartments that are ready for performing house-warming sessions within a quarter or two. Projects which are 95 percent complete (internal finishes are done, interior related work is in progress and common area finishes are in the final stages of completion) are classified under this category." Popularity of ready-to-occupy apartments has increased in recent times and individuals are actively investing in such projects. "The primary reason is that supply has increased. There are more ready-to-occupy projects available today as compared to earlier years. These apartments come at a higher price as compared to under construction apartments. However, the buyer is clear as to when he can move in and also saves on rent, which can then be used to pay the EMI. Roughly, half the buyer segment is interested in ready-to-occupy projects," says Manian.
R Kumar, managing director, Navin's says, "The demand for ready-to-occupy projects is increasing. People prefer such property as there is no uncertainty about the completion of the project. It is a good bargain for the customers as they can actually see and feel the finished product and have a better understanding of the project. The customer can weigh all the options in the truest sense and get a good idea about the area and infrastructure planning." He feels that the buyer must be careful and do his research while investing in ready-to-occupy projects. "It is important that the investors ascertain that all the required clearances are in place before they go ahead with the investment. A completion certificate is must and they should also ensure that all the service connections are in place," Kumar explains.
Even from the finance angle, a ready-to-occupy property is beneficial to the buyer. Mathew Joseph, member of executive management, HDFC, explains, "In case of a ready-to-occupy home, it is a win-win situation for both the lender and the borrower. For the lender, the risk factor is zero. There is absolute certainty about the project. Also, the financial institution lends the bulk amount at once instead of periodic amounts. From the borrower's perspective, ready-to-occupy project has an advantage of 'what you see is what you get' something that no brochure or video can provide. Double cash flow with rent and EMI does not happen and pre-EMI interest is not there." Perhaps the biggest economical financial advantage for the individual investing in ready-to-occupy project is the tax benefit. "Buyers get income tax benefits for a ready property and there are concessions on interest and principal amount," Joseph adds.
According to Devina Ghildial, Managing Director, South Asia, RICS, a major issue in the Indian housing market has been delay in delivery of the project. "Customers end up paying rent as well as EMI of the housing loan. As projects are delayed, developers also escalate prices with respect to inflation or other outside variables. Demand for ready homes is growing as homebuyers are becoming even more wary about the projects that are under construction. The price differs significantly, however, with thousands of old inventories now available in the market for sale in the festive season, the difference has narrowed," she says.