There has been a noteworthy shift in consumer preferences towards move-in-ready residential properties over the past year, despite a 30% increase in new launches recently. This trend has been witnessed across all market segments, but especially in the affordable and mid-budget segments. This is because of project delays. The majority of bookings for residences in under-construction projects are primarily attributed to the luxury and ultra-luxury segments, where buyers are not constrained by budgets and developers are more incentivised to complete the project.
Currently, the driving forces behind the rising demand for move-in-ready homes is inflationary pressure and supply chain disruption which is adding to the cost of under-construction properties and extending delivery timelines. Due to mounting raw material costs, it is projected that the expenses of under-construction projects may see an increase of up to 10%.
The heightened demand for move-in-ready homes can also largely be attributed to the post-pandemic proliferation of remote working options as people sought to take advantage of the abundant financing options and record-low interest rates to shift to more spacious homes in less-crowded suburban areas.
With rapidly increasing social infrastructure development and job opportunities in tier-2 and tier-3 cities, there has been a sustained trend of reverse-migration from metros. Prospective homebuyers are increasingly drawn to turnkey properties as they seek to avoid the uncertainty of purchasing homes that may not be completed within their required timeframe. The appeal of a fully functional, move-in ready home lies in its ability to facilitate seamless and stress-free relocation, providing homebuyers with the assurance of immediate occupancy upon purchase.
The potential for immediate rental income presents another significant benefit for those investing in a move-in-ready home, especially in the case of NRIs where it is primarily an investment property. This rental income may be used to offset loan repayments, effectively allowing the home to pay for itself. Conversely, buyers of under-construction homes do not have the advantage of immediate rental income, as they must first wait for the development to be completed.
Acquiring a move-in-ready home also presents a significant financial advantage in the form of tax benefits. After securing a home loan to fund the purchase of a completed property, the buyer becomes eligible for tax advantages in the year of occupancy.
The robust demand for move-in-ready homes signifies the resilience of the real estate sector, especially in light of the 2.5% increase in home loan interest rates in the current year. This resilience is the result of overwhelming demand for residential properties in the suburban areas of metros, as well as tier-2 and tier-3 cities, which has contributed significantly to the market’s buoyancy.
The writer is Director, Aparna Constructions.
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