Coming soon: 25,000 ready-to-move-in affordable homes


If recent reports are to be believed, Mumbai Metropolitan Region (MMR) is set to create an additional stock of Ready-To-Move-In (RTMI) homes by the end of 2020. And those seeking affordable housing stand to benefit.

Growing up in the distant suburb of Dombivli, 36-year-old Dentist Dr Ashwin Bhosale always dreamed of owning a home in Mumbai and finally made that dream purchase in 2012. "Although I was investing in a credible property by a reputed developer, I wanted to be sure of the product being delivered. Hence, I only considered ready homes or projects that were very close to completion. It was essential for me to be 100 percent sure of the space and amenities as I planned to set up my practice close to home," he shares.

Eight years ago, when Dr Bhosale made his dream investment, RTMI homes were the exception and Under-Construction (UC) properties were the go-to choice of home-buyers due to easy availability and significant price advantage.

However, the market is starkly different today with RTMI homes becoming the default choice of discerning home-buyers. ANAROCK Property Consultants reveals that about 2.75 lakh ready homes are likely to enter the housing market in the top seven cities by end of 2020 (see city-wise breakup of six cities in box). Elaborating on this trend, Sunil Mishra, CEO, Trespect India Pvt Ltd, says, "Waiting period for UC homes in Mumbai (and many other metros) is about 1-4 years, while Delhi NCR has a slightly higher waiting period of around 2-5 years.

Waiting period for UC homes depends on factors such as developers' financial health, execution capability, and at times, unexpected restrictions by courts and state governments."

The most visible advantage of RTMI over UC properties is the GST savings. However, there is no denying that the pre-tax cost of RTMI is much higher than UC homes. Today, the average price difference between these two categories has reduced from 8-12 percent in 2017 to about 3-7 percent in the top seven cites. "RTMI homes do not attract GST while UC is charged at 5 percent of the overall property cost without ITC benefits.

This added cost of acquisition has no redeeming features for the Indian middle-class. After all, when one puts the same property on the resale market at some point, one cannot recover the GST cost because it is not applicable on secondary sales," says Anuj Puri, Chairman, ANAROCK Property Consultants.

Infrastructure development is also a deciding factor when choosing between RTMI homes along proposed infra projects or UC homes that offer perceived cost savings. "For example, a 1-BHK flat in the Neral-Karjat area right now costs Rs 20 lakh, but due to upcoming infra projects, this property is likely to appreciate to Rs 25 lakh within a few quarters.

Hence, a home-buyer ought to consider connectivity and rate of appreciation too. With Metro lines coming up, real estate rates in Mumbai will be massively impacted with increased sales of RTMI properties around the metro line," says Kamlesh Jain, member, CREDAI MCHI Raigad Unit.

It is understandable that Mumbai and Delhi, as two of the largest property markets in the country, are leading this shift towards RTMI homes as a large number of buyers and investors in these metros are still saddled with delayed projects or UC homes that are in various stages of completion. Jain explains, "The trend of home-buyers preferring RTMI properties is widely seen in Mumbai as it comes with many benefits.

The ready-for-possession segment allows homebuyers to avoid the risks associated with UC properties that are prone to inordinate delays. When buying a ready home, you can save on rentals too. Even in areas like Neral-Karjat, interest in RTMI is greater due to more clarity on space, size of rooms, quality of construction, amenities and fixtures, etc."

Highlighting the psychological satisfaction of buying a home that you see (in RTMI homes), Manju Yagnik, VP, NAREDCO (Maharashtra), concludes, "Ready apartments' premium is primarily on 'instant gratification', freedom from rent and zero construction risk. Buyers prefer to see the end product rather than a floor plan and are usually eager to get off the rental treadmill.

The government took some decisive steps last year to address the concerns of the real estate sector, and the ripple effect of these strategic initiatives will be seen this year in the form of affirmative sales."

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