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The surge in demand for pre-move-in apartments following the epidemic has encountered the obstacle of escalating expenses. Due to growing real estate costs, experts claim they are presently seeing a significant movement in investor preference towards more reasonably priced under-construction properties.
As to a research published by real estate advisory firm Knight Frank India, the average cost of owning a home in the nation rose by 5.9 percent in the third quarter of 2023 compared to the previous year, which is the second fastest growth rate in Asia.
For instance, local brokers in Bengaluru’s upscale Indiranagar neighborhood report that ready-to-move-in prices range from Rs 18,000 to Rs 30,000 per square foot.
Homebuyers Or Investors Are Searching For Under-Construction Properties
However, a number of 1,400–2,400 square foot homes are priced at an astounding Rs 50,000–62,000 per square foot, meaning the total cost of the residences will be between Rs 5 and 14 crore. In contrast, the cost of an under-construction apartment ranges from Rs 14,000 to Rs 15,000 per square foot.
According to Kiram Kumar, vice president of Bengaluru-based Hanu Reddy Realty, “as a result, the majority of queries we are getting from homebuyers or investors are for under-construction properties, which are typically priced 15-20 percent less than ready properties.”
Before the pandemic, when purchaser confidence was at its lowest due to delays and stopped projects, most consumers chose to purchase a ready property, according to Prashant Thakur, regional director and head of research at real estate consultant ANAROCK Group.
Furthermore, a sense of owning combined with rising rental yields and speedy returns in the early aftermath of COVID-19 drove more investors toward ready homes.
Why Demand For Ready-To-Move-In Houses Is Declining?
“When we talk about the last one to two years, we are seeing a trend reversal with buyers now choosing for newly launched projects as well as under-construction ones, particularly with the regulatory forums like RERA in place,” he stated.
According to a recent consumer mood study conducted by ANAROCK, demand for ready-to-move-in houses is declining and is positioned at the bottom of the buyer’s choice chart. The ratio of completed dwellings to new launches as of the second half of 2023 was 23:24. When compared to the first half of 2020, when the ratio was 46:18, this shows a trend reversal.
Quarterly demand for buildings still under construction increased by 7.8% from January to March of 2024. According to statistics from online real estate consultant MagicBricks, there was a prior quarterly growth of 6.32 percent between October and December 2023, which is followed by this momentum.
Significant Price Increase In Ready-To-Move-In Properties
Under-construction properties in Gurgaon typically cost between 10% and 15% less than ready-to-move-in ones. The price differential may be as much as 10%–30% in some areas.
According to Magicbricks’ head of research Abhishek Bhadra, the cost of these projects has increased by 30.6 percent a year in the top 13 cities as a result of the rising demand.
The most significant price increases in Q1 of CY2024 were observed for under-construction homes in cities and suburbs including Noida (7.1 percent quarterly jump), Greater Noida (6.1 percent QoQ), Bengaluru, and Mumbai (5.7 percent apiece).
Under-Construction Properties Leading Over Ready-To-Move-In Properties
This can also be explained by a decrease in the amount of available merchandise. By the end of 2023, the top seven cities collectively had almost 6 lakh units in inventory, according to ANAROCK Research.
Of this, 85% were under different phases of construction, with the remaining 15% consisting of ready-to-move-in residences. By the end of 2022, the inventory of these top seven cities amounted to 6.31 lakh units, of which 17% were ready-to-move-in apartments and the remaining 83% were in different phases of development.
We’ve noticed that developers are starting new projects and finishing ongoing ones quickly in response to this changing demand, Bhadra continued.
Under-Construction Properties VS Ready-To-Move-In In A Nutshell
The decision between under-construction and ready-to-move-in real estate ultimately relies on personal preferences, financial restrictions, and investment goals.
Although they are more expensive, ready-to-move-in houses provide convenience and instant ownership.
In contrast, under-construction properties come with delays and uncertainty but also provide opportunities for customisation and possible financial growth.
Source-Moneycontrol
