‘Projects with ready oc­cu­pa­tion cer­tifi­cates in greater de­mand’

Hindustan Times (Chandigarh) - Estates - - NEWS - Ash­winder Raj Singh n ht­spe­cial­pro­jects@htlive.com The au­thor is CEO at Anarock Prop­erty Con­sul­tants

With the im­ple­men­ta­tion of RERA, the res­i­den­tial real es­tate in­dus­try is wit­ness­ing sig­nif­i­cant changes on the ground. The Act strictly pro­hibits builders from ad­ver­tis­ing their un­der- con­struc­tion projects while al­low­ing the free­dom to at­tract buy­ers for projects that have Oc­cu­pa­tion Cer­tifi­cates( O C) ready. With the new rules, buy­ers are nat­u­rally show­ing in­creas­ing in­ter­est in such prop­er­ties, which are es­sen­tially ready to move in.

It is no se­cret that ready-pos­ses­sion projects are costlier than un­der-con­struc­tion projects. Nev­er­the­less, buy­ers are now more than ready to pur­chase prop­er­ties on an im­me­di­ate ba­sis rather than wait for con­struc­tion to be com­pleted. There are very good rea­sons for buy­ers to look for prop­er­ties that are ready-to­move-in or OC ready in to­day’s mar­ket en­vi­ron­ment:

COST DIF­FER­ENCES

The real es­tate sec­tor has gone through one of the worst down­ward phases in the last cou­ple of years, re­sult­ing in lower new launches and higher un­sold in­ven­to­ries. These dy­nam­ics in­duced de­vel­op­ers to of­fer very at­trac­tive deals, dis­count sand­lot of free­bies to at­tract buy­ers.

There­fore, it makes a lot of sense for buy­ers to in­vest in a ready-pos­ses­sion projects rather than wait for new projects to come up over pro­tracted pe­ri­ods of time. While prices are be­gin­ning to rise again on the back of a grad­ual mar­ket re­cov­ery, this dy­namic is still in its ini­tial sta- ges. This makes the cur­rent time op­ti­mal for buy­ers and in­vestors to fo­cus on ready-to-move-in op­tions.

DATE OF DE­LIV­ERY

Un­der-con­struc­tion projects in In­dia are in­fa­mous for de­lays in com­ple­tion, and that leads to buy­ers pay­ing dou­ble the cost: EM Is as well as higher rentals while await­ing pos­ses­sion of their prop­erty. Even though de­layed de­liv­ery of projects is due to sev­eral fac­tors plagu­ing the real es­tate sec­tor, many buy­ers’ fi­nan­cial sit­u­a­tions do not per­mit them to wait beyond a point in time. EM Is plus the ad­di­tional ren­tal ex­penses take a toll on buy­ers who have in­vested in de­layed un­der-con­struc­tion projects, so the de­ci­sion to in­vest in ready-to­move-in or OC-ready projects makes a lot of sense to them.

REN­TAL IN­COME

A lot of in­vestors buy homes with the ob­jec­tive of earn­ing ren­tal in­come, with an eye on even­tual re­sale to cash in on cap­i­tal a pp re- ci at ion. Pur­chas­ing a prop­erty in a com­pleted project helps them to im­me­di­ately start earn­ing out of it through rentals rather than wait­ing a few years and lock­ing their money away in a non-in­come gen­er­at­ing projects.

DI­MIN­ISHED IN­CI­DENCE OF DU­BI­OUS DE­VEL­OP­ERS

The In­dian real es­tate sec­tor is still very frag­mented, and there have his­tor­i­cally been a lot offly-by-night op­er­a­tors who duped buy­ers of their hard-earned money by col­lect­ing the ini­tial sums and then van­ish­ing into thin air. With RERA, such du­bi­ous de­vel­op­ers will di­min­ish in num­ber; over the long term, the strict guide­lines will en­sure that only se­ri­ous and gen­uine play­ers op­er­ate in the mar­ket. For now, buy­ers still feel jus­ti­fi­ably vul­ner­a­ble and want the as­sur­ance that fin­ished projects of­fer them.

SUP­PORT­ING IN­FRA­STRUC­TURE

A lot of new projects are com­ing upon the pe­riph­eries of ma­jor cities where the sup­port­ing in­fra­struc­ture like roads, elec­tric­ity, wa­ter con­nec­tions, etc. are not de­vel­oped.

They are promised only when the projects are com­pleted, but un­der-con­struc­tion projects have to wait much longer for deployment of ba­sic in­fra­struc­ture.

This nat­u­rally puts off buy­ers, who want to move into their new homes and start liv­ing life with de­cent fa­cil­i­ties in­stead of wait­ing in­def­i­nitely for them to be pro­vided.

IM­PACT OF GST

GST im­ple­men­ta­tion has re­sulted in re­duced tax bur­den on buy­ers pur­chas­ing ready-to­move-in apart­ments.

The tax on the en­tire cost of the project, in­clud­ing the land, will be levied at 12%— this should be enough for the builder to claim in­put credit, thus mak­ing OC-ready projects eco­nom­i­cal for buy­ers.

PUR­CHAS­ING PROP­ERTY IN A COM­PLETED PROJECT HELPS BUY­ERS TO IM­ME­DI­ATELY START EARN­ING THROUGH RENTALS RATHER THAN WAIT­ING AND LOCK­ING MONEY AWAY IN A NON­INCOMEGENERATING PROJECT

SHUTTERSTOCK

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