building under construction

Is Investing Under Construction Flats Beneficial?

December 8, 2023

Investing in under-construction flats is gaining in popularity these days. The investment landscape in real estate is dynamic, with various pros and cons of investing during various stages of development.  So, is investing under construction flats beneficial? 

Yes, absolutely. The potential for higher returns, price appreciation, the ability to enter flexible payment plans, customization prospects with futuristic technologies, and buyers’ safety ensured by The Real Estate Development and Management Act 2010, etc. are the main reasons for this surge in under-construction flat purchases.

But there’s a flip side to this coin as well that you should be mindful of before making a choice between under-construction vs. ready-to-move-in flats. Let’s take an in-depth look at the pros and cons of choosing an under-construction flat for investment. 

The Pros of Choosing An Under Construction Flat

There are many advantages that come with investing in an under-construction flat. However, to make a good investment that will benefit you, the reputation of the developer, location, and construction quality are important factors to ensure. Here are the pros of making such an investment.

  • Lower Initial Investment

As an incentive for investors, during the construction period, the value of an apartment is usually lower than a ready-to-move-in flat. 

It also balances the fact that the possession of the property is delayed when investing in under-construction properties. Since you have to wait for some time, you get flats at more lucrative prices to make the deal worth it.

  • Appreciation In Property Value

Appreciation in property value means an increase in property value over some time. When construction is completed, the value of the flat goes up automatically. 

Additional factors like the development of the neighborhood during this time and the surrounding infrastructure, and amenities also can drive up the cost. 

A lot of investors opt to sell the flat at this point and cash in the profit. Others choose to rent it for a steady income stream.

  • Flexible Payment Plans

Investors can pay in installments tied to various phases of construction. This reduces the financial burden for investors and makes real-estate investments accessible to a larger category of people. 

When it comes to ready-to-move-in or RTMI properties, you have to make full payment in a much shorter span of time. Making that investment option more cumbersome. 

  • Potential for Higher Returns

The above benefits also mean that you can make a higher return on investment by purchasing an under-construction flat and waiting for it to be completed before selling. 

Additionally, getting a more flexible payment contract allows you to utilize the lower price point of an under-construction flat. 

Not only do you pay less, but you also get to pay it during longer intervals. Making your final return on investment very lucrative if you consider the time value of money. 

  • Advantageous Interest Rates

The interest rates for home loans for under-construction properties are more favorable than RTMI properties. In the long run, you have to carry less financial burden. Low borrowing cost is a critical factor to consider if you will be lending money for your purchase. 

  • Customization Opportunities

When you intend to live in the home you invest in, the ability to customize will matter a lot. A RTMI flat will have certain aspects you love, some you like just fine, and others you tolerate. 

But when you get a flat under construction, you can customize all the design elements, even floor plans, and final touches as per your wish and budget.

This means you get to upgrade your property with the most futuristic appliances and technology. A lot of us buy a flat only once in our lifetime, so being able to design it according to our taste is a huge plus.

Your home can reflect your personality and become way more comfortable for you in a way with these customizations. 

  • Higher Buyer’s Security

Real estate sales and transfers are governed by The Real Estate Development and Management Act 2010 in Bangladesh. Under this act. Buyers are given certain rights that add to their security while investing in real estate.

What are The Risk Factors for Investments in Under Construction Flats?

There are a few drawbacks that you must consider if you want to invest in under-construction flats. 

  • Delay in Project Timeline

When you invest in under-construction flats, a lot of unexpected things can happen that can elongate the project duration. The more the completion date is pushed back, the more delayed will be the possession of the property. 

  • Quality of Construction 

Even when investing in projects under reputed builders, there’s a risk of quality. Since you don’t invest after seeing the full product, there’s no way to ensure beforehand that the project will be of top quality.

  • Slower Return on Investment

You may get higher returns, but there’s the catch of slow returns as you can’t occupy the flat or rent it out till completion.

  • Law & Compliance

While the Real Estate Development and Management Act 2010 gives buyers security, it also adds complications for developers. Maintaining compliance can be a challenge.

Moreover, handling disputes between buyers and sellers through legal proceedings under this act can be time-consuming. 

Final Words

Is investing under construction flats beneficial? Yes, if you can wait before possession and would like more financial flexibility in the buying process, it’s a great option. 

Moreover, if you want to turn and sell the property, this is a good route to take. The initial price is lower and the appreciation in property value will lead to higher returns.

On the flip side, there can be delays in the completion of the project, you have to wait before getting any returns from the investment. 

You can consult GLG Assets Ltd. to get a better idea of which investment will be most fruitful for you.  

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