Consumers are preferring to purchase ready-to-move-in homes, which command a price premium of up to 21 per cent, than properties under-construction because of huge delays in completion of projects, according to a report.
According to a report by realty portal Magicbricks.Com, ready-to-move-in properties command an average 5 per cent premium over under construction properties.
Ready-to-move-in properties in Greater Noida recorded a maximum 21 per cent price premium during October-December quarter of last year.
The report covers the quarterly price movement in the secondary/resale real estate market of the 14 major cities in the country.
"One of the biggest challenges in the current real estate market is lack of consumer confidence in developers to deliver the projects on time. This is reflected in the price differential between under construction and ready-to-move-in properties in the secondary/resale real estate market," the report said.
It said consumers are hesitant to buy properties under construction because of project delays which lead to consumers having to bear additional financial burden of paying rent over and above the home loan instalment.
"In the current market scenario, consumers are opting for ready-to-move-in properties and are willing to pay a premium as the delivery risk is low when compared to under construction properties and buyers can start using the property in a minimum time-frame," the report said.
Magicbricks.Com is owned by Magicbricks Realty Services, which is a subsidiary of Times Internet Ltd.
"Domestic funds were most active investors in residential
assets and accounted for 82 per cent of the total investments made in the asset class. The cumulative investments in the residential assets increased 9 per cent q-o-q in the third quarter of 2016," the report noted.
Anticipating a revival in the sector and given the potential to list under the Real Estate Investment Trust (REIT), retail assets are attracting large investments from various funds.
Therefore, the year-to-date investments in retail assets during 2016 increased almost three fold to Rs 3,800 crore, over Rs 1,020 crore noted during the same period of 2015.
"There has been a steady shift in ownership of assets, especially office, from being privately held to institutionally held, moving in line with the global trend. This will further assist the Indian market to attract more and more investment in the sector. It also opens door to the successful implementation of REITs in India," Cushman & Wakefield Managing Director, India, Anshul Jain said.
He further said that given that investible assets are fewer, we may see a moderate slowdown in investment in office assets in 2017, albeit end of 2016 still looking strong and promising.
"Even while residential asset class continued to attract the highest volume, it will continue to be dogged with challenges of end-user purchases, which has led to a decline in the number of launches in the segment. Retail, which saw a rise in interest from investors, should also be seen with some caution as the investments have been made in fully leased successfully operating assets," he said.
While this trend could see a few more commitments in the next 12-24 months ahead, this will not be the rising trends or be a salvage situation for ailing retail properties, he added.
