Residential
Perks of Investing in Under Construction in Chennai
September 19, 2023
A high return on the initial investment, property appreciation and developing localities are advantages every homebuyer wishes to have. Some of these benefits are beyond the scope of a ready-to-move apartment. It steers people to the doorway of an under-construction property.
If the prospects convince you to invest in in-development apartment complexes, Chennai is an excellent place to consider. Host to India's second-largest IT and Business Process Outsourcing (BPO) sector, the city is a magnet for professionals.
Beyond this, Chennai boasts exceptional social infrastructure, a transport system, picturesque beaches and a cultural heritage.
This blog will explore the top factors that may entice you to invest in under-construction residential properties in Chennai.
Potential for Appreciation
Formerly known as Madras, Chennai is India's vital economic, cultural and educational hub. The place is also a potent medical tourism destination, drawing people who reside on a permanent basis or stay as tenants in the city. These scenarios are among many factors that promote property value appreciation in Chennai.
The capital city's IT and industrial hub position has significantly contributed to the area's real estate growth. Places like OMR (Old Mahabalipuram Road) and Porur have witnessed an influx of IT companies and startups.
It has resulted in a steep rise in housing demand amidst a low property inventory. This demand-supply imbalance has set the property value soaring. It is the right time to invest in under-construction projects in areas like OMR and Porur among others in Chennai.
Wide Range of Choices
A high residential demand has prompted builders to establish modest 1-2BHK homes to lavish villas. It has left buyers with various real estate choices that suit their budget and requirements.
The choices are as wide as selecting from 0.5 BHK homes that became a phenomenon in the Chennai realty landscape in 2022. According to a Times Property report, a sharp 10% housing price rise prompted homebuyers to shift their preference for 0.5 BHK houses to stay within their budget. Developers stepped up to fulfil the specific demand, giving people the home of their choice and funds.
Quality Construction
Another advantage of investing in development-stage properties is the high-quality construction they promise.
Reputed builders like Brigade Group in Chennai understand that skimping on quality can negatively affect their reputation. They adhere to building codes, safety standards and quality requirements to ensure durable construction. In this vein, Brigade Icon stands as a testament to their dedication. This newly launched integrated lifestyle enclave epitomises sophistication and elegance. Boasting an array of luxurious residences, Brigade Icon is strategically positioned in the heart of the city offering breathtaking sea and city views.
The Real Estate Regulatory Authority (RERA) protects the interests of consumers by setting construction quality mandates. As per these mandates, builders must summarise the materials they will use during construction. The summary must also include all the structural details and architectural blueprints.
With buyers getting detailed information about the construction project, there is a minimum to no chance of any quality compromise in the real estate project.
Amenities and Facilities
Amenities are an integral part of a housing complex that defines the kind of lifestyle for its residents. The quantity and quality of such facilities play a crucial role in deciding the price of an apartment.
Newly constructed houses feature amenities that are in brand-new condition, ensuring spotless functionality. Such features add significant value to the lifestyle of professionals in the busy cityscape of Chennai.
In addition, builders tend to add facilities based on the recent trends and expectations of people in a metropolis like Chennai. This ensures buyers access world-class amenities that elevate their living experience.
Strategic Locations
With a thriving IT sector, developing industries and infrastructure, Chennai presents a compelling landscape for real estate investments, particularly in under-construction properties.
Here are some of the top areas you must consider:
OMR - Old Mahabalipuram Road: Often referred to as Chennai's IT corridor, OMR is a hub of technological innovation and modern infrastructure. The location is dotted with numerous IT parks, multinational corporations and educational institutions, attracting a significant population of working professionals.
Velachery: Its strategic location between the OMR and the city centre makes it a sought-after residential area. The area's connectivity, proximity to business districts and a range of entertainment options make it attractive for real estate investments in under-construction homes.
Anna Nagar: The area features a well-planned layout and is among the upscale neighbourhoods in Chennai. Excellent connectivity with the rest of the city, plush entertainment centres and educational and medical institutions make Anna Nagar a high-value residential market. Brigade Xanadu enjoys a strategic positioning in Mogappair West, with the added advantage of being a mere 10-minute drive away from Anna Nagar.
Potential for Rental Income
Rental income is a great way of recovering your initial property investment. Chennai offers a plethora of educational and professional opportunities and top-class medical care. It draws many people across the country and abroad for a certain period of time. They prefer to stay in a location that is close to the source of these opportunities.
It is a strategic move to invest in under-construction homes in those areas. Upon completion, owners can lease the apartments to get rent as a passive income source. An article by The NoBroker Times cites a 3.99% rental income generated in Chennai.
Tax Benefits on Home Loans
Investing in an under-construction property in Chennai can facilitate significant cost savings in the long run, thanks to the central government-sponsored tax benefits.
Section 24B of the Income Tax Act 1961 levies up to Rs. 2 lakh tax benefit annually. The amount is deducted from the taxpayer's home loan's interest rate.
Section 80C provides a tax benefit of up to Rs.1.5 lakh annually. The amount can be deducted from the home loan's principal amount.
Section 80EE grants an additional tax benefit of Rs.50,000 on home loan interest settled after the Section 24B limit is reached.
A Secure Investment Option
Investing in properties that are currently under construction has the potential to yield substantial returns for investors. These properties stand to benefit from an increase in value over time, a phenomenon known as capital appreciation. As the development progresses and the property is completed, its market value will likely rise. The value growth allows investors to realise significant profits when they sell or lease the property.
Moreover, under-construction homes, especially in areas with high demand, can offer an additional avenue for income through rentals. The passive source of income contributes to a consistent cash flow, enhancing the overall investment returns.
Strategic locations characterised by robust demand and limited availability have the potential to command attractive rental rates. The prospect, in turn, ensures a steady income stream for investors and fosters a favourable cash flow situation.
Personal Satisfaction
A homeowner's satisfaction is that their house reflects their personality and preferences. It is a benefit that may not come with a ready-to-move apartment in Chennai.
Opting to invest in under-construction apartments offers a significant advantage, which is ample scope for customisation. You can tweak multiple facets of the apartment, including kitchen furnishings, tile colours, wall paints, window styles, attic placements and numerous other specifics that cater to your taste.
When a property is in the construction phase, it is notably simpler to request particular modifications. Prospective homeowners can effortlessly acquire a flat that aligns with their distinct preferences and requirements.
Lower Initial Investment
One of the primary reasons under-construction projects are appealing is the lower upfront cost compared to ready-to-move-in properties in Chennai. This lower initial investment can make it more accessible for first-time homebuyers or those with budget constraints.
Real estate prices often appreciate over time, and purchasing a property at an early stage of construction could lead to higher returns on investment as the project nears completion and market values increase.
Conclusion
There is no doubting the fact that the decision to invest in under-construction projects in Chennai entails lower initial costs and the potential for higher returns once completed. However, they also come with inherent uncertainties. The real estate market can be influenced by factors beyond one's control, such as economic fluctuations, regulatory changes and unforeseen construction delays.
Investors considering under-construction projects should thoroughly research the developer's reputation, track record and financial stability. Scrutinising the project's location, amenities and market demand is essential to gauge its long-term viability. Additionally, understanding the legal and contractual aspects is crucial to safeguarding one's investment.
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