Developers usually opt for pre-launch of their projects to raise capital for infrastructure, labour and other construction costs. The advantage to the developer is that they do not need to raise capital from the market at high interest rates. Pre-launch phase in the lifecycle of a real estate project means that the project is registered with Real Estate Regulatory Authority (RERA) but is not actively promoted in the market through media or any other form of communication by the developer. Getting in at the pre-launch stage presents a golden opportunity for investors as well due to the prospect of great appreciation value. Even from an end-user point of view the price advantage is considerable. Besides, one gets the first mover advantage when it comes to choice of apartments as well as getting a few add-ons from the developer. The benefits of investing in a pre-launch are several:
Low Cost of Property
Compared to the final completion rate of the project, investors stand to benefit up to 30% by investing in the pre-launch stage of the project. The developers can pass on the benefit of saving on marketing costs and interest rates on loans to the investors. This not only presents a considerable saving for home buyers but big-ticket gains as well if they choose to sell upon completion of the project.
Spoilt for Choice
Rather than having to choose between units that are left for sale once OC has been received, buyers of pre-launch projects have the luxury of deciding exactly which floor and which view they want from their apartment. This is especially important if buyers are looking at homes that are ‘vaastu compliant’.
When a property is in the planning or under construction stage it is easier to make custom changes. For instance, a buyer may buy two adjacent homes and can ask the developer to combine the two at the construction stage so as to save on interior costs later. From tiles, to grills and even bathroom and kitchen layouts, there is high degree of flexibility in design available to the buyer at the pre-launch stage.
Shorter Time-frame for Appreciation
The value of the pre-launch property appreciates faster, and one could see returns on investment of between 10 – 40% once the project is completed and ready possession units are presented for sale. This offers a major advantage for those who are considering property as an investment rather than for end-use. Of course, here too, the percentage of appreciation will depend on location, the project and whether it is by a trusted builder of note.
However, investors would be wise to look into the following aspects before committing to investing in a pre-launch property, such as checking on the credibility of the developer. Research the projects the developers have constructed in the past to check their track record. Ensure that the project is registered with Real Estate Regulatory Authority (RERA) guidelines. As with any investment, there are risks associated with real estate as well, projects can run into delays or get stalled due to financial or regulatory issues. These can be avoided by opting for a well-established and reputed developer.