As property development booms throughout many major markets in India, several NRI real estate investors are finding they have something in common: construction delays.
Delays are commonplace for a number of reasons, so much so that many residential real estate developers integrate a six-month “grace period” into contracts in anticipation of setbacks. According to Jones La Salle India, delays are fairly common, but they are not always down to the fault of the developer. There can be many reasons leading to a delay in construction, ranging from changes to planning permissions/grants and sanctions.
What’s the hold up?
It can sometimes be the case that apartments on the upper levels of developments are sold to investors before being officially sanctioned.
Rather than being an intentional deception, this is often a case of delayed paperwork, and not a major cause of concern. According to property experts, sanctions are often stalled rather than withheld, and provided there are no glaring objections or issues with the construction, the sanctions will be granted and development will restart.
So what can investors do to minimise the likelihood of buying into a delayed project?
Firstly, real estate investors should conduct thorough research into the history of the developer, and query the financial standing of the project. A lack of, or partial funding can cause construction to grind to a halt while the remaining financing is sourced, so it’s wise to invest in a development that has 100% of the funding required for successful completion. As there are no regulations surrounding who can open a realty firm, anyone can become a real estate developer in India regardless of experience in property. For this reason, investors should conduct a thorough background check when considering a property. You can also arrange to agree to a construction schedule, which will clearly outline each phase of development, and an expected date of completion.
While many investors do take possession of their new investment property within the expected time frame, others may find themselves having to wait a little longer – which isn’t necessarily a bad thing. During this delay, the price of your property is likely to still be appreciating if it is in the desired area, so if you are looking to earn money through capital appreciation over rental income, a construction delay may not have an adverse effect on your investment after all.
To learn more about how to deal with construction delays on your investment property, follow the Unesta team @UnestaRealty to keep up to date with all the latest Indian property developments, market news and opinion.
