Stages In Construction Of Property And Its Connection With Home Prices

There are only three secrets to real estate — location, location and location. It's an old adage. There is an addition to it. What stage is your property in? The answer to this question determines the price of the property, the timelines of your investment and the risk involved with the purchase. There are cases where many projects are announced by the builder but not launched as the builder is yet to get enough commitments from investors.

The broad answer to the question is under construction property and ready to move in property. Broadening the answers might give you a stage-to-stage idea of your investment.

Here is a stage-wise classification of properties which can give you an idea of time of possession of the property irrespective of what is promised by the builder:

1. Pre-launch property: The project is planned and the location and the kind of building is announced. But, there is no official launch of this project. It means that the builder is yet to tie-up funds and is looking for it from two sources -- early-bird investors who will come to him before it becomes official exclusively interested in the location that he has selected and banks, for loans. Typically, the builder has the land in possession and is at the drawing board. From here, it is very hard to predict the possession time, home prices, the size of the building, number of units and many other things.

2. Launched property: After a property is launched, it means that the builder has seen some interest from initial investors and has tied-up for funds from banks. While the banks might not allow the builder to draw money until construction of property starts, they have promised to give money. The builder also has roped in construction partners and has zeroed-in on the blueprint of the building and has all the necessary approvals in place. The possession time from here would be anywhere between four-five years.

3. Early-stage construction property: The property becomes more 'concrete' after the excavation of the land has started and ground work for the first few floors is done. This also the stage where a number of investors show interest in it as there is much more confidence on the builder and the property. The possession time for this property is around 3-5 years depending on the builder and the location.

4. Middle-stage construction property: This property has the entire structure in place. The other work like plumbing, electrical work is under way. The possession time of this property could be anywhere between two-three years.

5. Late-stage construction property: The apartments are almost ready and only the interior work like flooring, doors, windows and other fixtures are underway. The possession time for these flats would be either a year or even less.

6. Ready to move in property: This is the final stage of a property, the keys of which can come to you as soon as registration and other formalities are done.
    

(The writer has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)