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Volume IconWhat to check when buying an under-construction property?

Property prices are northbound again. But, under-construction properties are a better option when compared to ready-to-move homes which are costlier. Here's a for buying under-construction properties

ImageSanjay Kumar Singh New Delhi
Construction, workers, housing, residential property

Buying a property is no easy task. And in India, buying an under-construction property is fraught with risk like no other. Delay possession, compromise with quality and increase of property price are some of the common risks buyers are faced with.    

After numerous cases of defaults and delays by developers across the country, market preference has shifted decisively in favour of ready-to-move-in properties. Here, the buyer gets what he sees. 

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However, such properties are costlier than under-construction properties. But buyers with lower budget or are prepared to take higher risk in anticipation of higher reward go for under-construction properties. But what steps can such buyers take to reduce risk?

As with all real estate, the first factor is to look at is the location. The project should be located close to, or within easy travelling distance from, an economic hub. Such properties tend to witness higher appreciation. Tenants are also easier to find for them.

If the area is being develop, you need to be careful. The basic infrastructure, physical and social, must be in place. Don’t entirely trust the seller’s word that these developments will come up quickly.

Make enquiries about proximity to highways and metro lines. Such upcoming infrastructure tends to provide a big, one-time boost to the price of a property.

Next comes the reputation of the developer. With some legwork, you can check this out easily. Visit two or three of the developer’s older projects. Speak to the residents there about the builder’s track record. Had he delivered the project to them on time? If he delayed possession, did he pay the penalty as promised? How about the quality of construction? 

Besides the quality of construction, did the developer offer all the specifications he had promised? And was the carpet area of the flats exactly as promised?

A leopard never changes its spots, nor does a developer. A developer that has been fair to its customers in the past is likely to be so in the future as well.

Next, check the financials of the developer. This is easier to do in the case of listed companies. Avoid a developer that is incurring losses… 

If brokers and vendors of a real estate developer receive their commissions and payments on time, the latter is likely to be in good financial shape or is weighed down by debt. In the case of unlisted companies, try to speak to brokers and vendors, which include suppliers to the developer. 

On the other hand, those who delay payments are likely to be in financial trouble. If the project is already underway, visit the site and make sure that construction is not at a standstill.

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First Published: Oct 24 2022 | 7:00 AM IST

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