Investing at the pre-launch
stage of a residential project involves higher risk when compared to a
completed project. It is imperative
therein to verify the developer’s reputation and check previous track
record to avoid jeopardizing your real estate portfolio. Some of the benefits
and drawbacks of such a venture are as follows.
Advantages
- The offered capital rate is comparatively lower than the capital values of on-going projects.
- You have plenty options to choose a flat location (view, direction and floor) suiting your requirements.
- Good for investment purpose; likely to fetch good appreciation in medium term.
Disadvantages
Approval and Execution risk; As
against a completed project, developments at the pre-launch stage may run in to
delay due to the following reasons.
1.
Lack of sufficient funds for construction.
2.
Delay in obtaining necessary government
approvals.
3.
In case of self-occupation, the waiting period
to get the possession is long and delivery deadline is often stretched.
4. In case of an investment alternative, rental
income will also be delayed.
5.
No tax benefits.
Macro-economic risk
Market slowdown is likely to
dampen the sales and thereby negatively affecting appreciation. It is always possible
to avail loans through banks and Housing finance industries.
There are certain factors that
influence the pricing of an apartment apart from its location such as-
1.
Developer reputation (Grade A or Grade B
developer).
2. Project positioning – Ultra luxury / premium or
medium segment.
3.
Quality of construction.
4.
Amenities (number and quality of items
provided).
5.
Project specifications.
These need to be thoroughly
verified when choosing an apartment and determine the cost of the property.
