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Risk and advantages associated with investing in phase 2, phase 3 or phase 4 of a project

Nahar Group Management CMD MR. Sukhraj Nahar
MR. Sukhraj Nahar, Chairman & MD, Nahar Group

There are a lot of apprehensions a potential home buyer goes through before investing in a property. In-fact buying and owning a property is a lot more complicated than investing in equities and bonds. But like any investment, it’s better to be well-versed in the area before investing. However, in order to take full advantage of any opportunity, home buyers need to empower themselves with information to guide them on how to make the best possible investment decision. It is important to evaluate the credibility of a project as well as a developer to ensure that the money invested remains secure.
Encapsulating below what can be potential risks and advantages for buying properties which are in the later phases:

Advantages of investing in later phase (2nd, 3rd) of the project:

  • One of the key factors while investing in later phase of a project is that, you get to see the overall view of the house. You can be sure with the pace of the construction that is going on. Due to unavoidable circumstances project delays have happened in the past. Hence projects closer to completion are the ones that make safe choice.
  • Home buyer must verify all the amenities, clearances, and the necessary approvals. During first phase of project, customers might miss on background check, but when the construction is midway or completed it can be considered that all the approvals have been acquired.
  • Every developer tries to sell 20 to 25% 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.

Advantages of buying a flat in the first phase of the project:

  • Generally investors jump into the first phase of the project, because first phase gets the maximum appreciation. The investors get that benefit of buying at a lower cost when a developer successfully sells 20 to 25% of the project inventory at a special price, during the initial phase.
  • It’s 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 first phase.
  • 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 lower rate.

Factors that should be considered while investing in later phase (2nd, 3rd) of the project:

  • 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 up front amount.
  • Thoroughly check for any hidden charges.

External factors that affects buyer’s decision :

  • Generally policy changes do not impact the home buyer highly, but it may affect the developer to a great extent. Developing a project is a long process so purchases like TDR or approvals, take time. Some developers take partial approvals in various steps during construction. Sudden policy changes then impacts the developer not the buyer.
  • Change in the tax implementation can impact the buyer directly. If buyer is purchasing a property and service tax is introduced, then this will affect the buyer reflecting on the cost.


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