There are pros and cons to investing in under-construction projects vs ready-to-move properties:

Under-construction projects:

Pros:

• Lower cost - Prices are usually lower during construction phase compared to ready properties. This allows you to enter at a lower cost and benefit more from future appreciation.


• Customization - You can customize the property to your needs before construction is complete. This is not possible with ready properties.


• Tax benefits - There are tax benefits available for housing loans during construction. Interest paid can be claimed as a deduction. These benefits may not apply once construction is over.

• Completion risk - There is a risk of the project getting delayed or not reaching completion. This results in loss of rentals or interest on capital for the period. Your funds also remain locked in during this time.


• Quality risk - There is a possibility of poor construction quality since you cannot see the finished product before purchase. Defects may surface later leading to loss in value.


• Price uncertainty - The final cost of the property could be higher than initial estimates due to changes in raw material costs, plan approvals or additional charges. There is little price protection during construction.

• No completion risk - The project is finished, so there is no uncertainty about delays or quality. Possession can be obtained quickly.


• Transparent pricing - The final price of a ready property is fixed and non-negotiable. There is no escalation in costs due to construction overruns or changes. So financial planning is easier.


• No rent loss - You earn rental income soon after purchase. There is no rent loss during the construction period as with under-construction properties.

• Higher costs - Prices are usually higher for ready properties compared to under-construction ones due to appreciation over the construction period. Your capital needs to be higher.


• Limited customization - It may be difficult to make structural changes to ready properties. You have to accept them as-is.


• No tax benefits - Ready properties do not qualify for tax benefits like interest deductions which may be available during construction.