Industry Speaks: Watch Out For These When Investing In Different Project Phases

Investing in any phase or life-cycle of a project requires research. Some homebuyers look for a price advantage, while some want to invest based on the pace at which the project has been developed and then choose a particular phase. 

PropGuide interacted with Manju Yagnik, vice chairperson, Nahar Group and understood about the pros and cons and what to watch out for when investing in different phases of a project.

Homebuyers need to empower themselves with information to guide them on how to make the best possible investment decision. Yagnik encapsulates what can be potential risks and advantages for buying properties which are in the early and later phases:

Advantages of buying a flat in the first phase of project

Scope for maximum appreciation: Generally, investors enter in a project in the first phase of construction, because this phase gets the maximum appreciation. The investors get the benefit of buying at a lower cost when a developer successfully sells 20 to 25 per cent of the project inventory at a special price, during the initial phase.

Mind these

It is important to gather information about the project and cross-check the findings with the developer's past projects and earlier deliverables. If the developer has got sound credentials and track record, one can surely be an early bird and invest or buy property in the first phase.

Watch out for the pricing

Sometimes when phase one is ready and sold out, developers sell the later phases for a higher value. So, early buyers get the advantage of a lower rate.

External factors

Generally, policy changes do not impact the homebuyer much, but it may affect the developer to a great extent. Developing a project is a long process so purchases such as a term-deposit receipt (TDR) or approvals, take time. Some developers take partial approvals in various steps during construction. Sudden policy changes then impact the developer and not the buyer.

Change in the tax implementation can impact the buyer directly. If a buyer is purchasing a property and service tax is introduced, then this will affect the buyer reflecting on the cost.

Advantages of investing in second, third phase of project

See and believe: One of the key factors while investing in the later phases of a project is, you will get to see the overall view of the house. You can be sure about the pace of construction. Projects closer to completion are the ones that make for a safe choice.

Easier to keep a tab on approvals

A homebuyer must verify all the amenities, clearances, and the necessary approvals. During the first phase of the project, customers might miss on the background check, but when the construction is midway or completed it can be considered that all the approvals have been acquired.

Developer's motive: Every developer tries to sell 20 to 25 per cent inventory initially at a lower rate to raise funds for the construction cost. But this may not happen in all cases. If due to unjustified prices, inventory doesn't sell at first, it brings down the prices.

What to consider

Be sure of approvals for the flat, all clearances, land title and other due diligence should be in place.

Bank loan for the flat should be available. These issues usually surface only after the flat is booked by paying the upfront amount.

Thoroughly check for any hidden charges.