The Indian real estate sector has witnessed a high growth in recent times with the rise in demand for office spaces. When it comes to Mumbai, major corporates are now making Panvel their HQ. Thereby, the commercial property in Panvel is now in demand and new construction in Panvel is picking up speed to meet this demand. The tenants are ready to sign up office space even before it hits the market. The main reason for this is a shortage of ready-to-move-in offices and increasing rentals.
The growing demand for under-construction office space is on the rise
The property advisory firm CBRE has stated that more than 42 million sq. ft. office space was absorbed in 2017. About 29 million sq. ft. were fresh supply. Many real estate builders have seen growing interest in under-construction office spaces from technology, banking and financial services, and pharmaceutical companies. The other reason for the growing demand for under-construction office spaces is that there is a shortage of good quality space. There are many companies who are looking at consolidating into a large business park. According to property advisory firm CBRE, a total of 8 million sq. ft. is likely to come up in Bengaluru and 50% has already been pre-leased. Meanwhile, Pune and Hyderabad, which are in the National Capital Region, have seen 20% of new supply. Pre-committing to office space helps in negotiating rental terms and to block the space for future expansion.
Advantages of buying under-construction office spaces
- Fewer flaws with warranty period: If you buy an under-construction office space, you will be its first owner on completion. You will also expect lesser defects as it is brand new. You can also request the developer to rectify any flaws in your office space over a given period. Make sure the developer is genuine and has a proven track record for quality and commitment to deliver value to the buyers.
- Less capital intensive: Buying an under-construction office space is less capital intensive as compared to getting a property from the sub-sale market. If you opt to buy an under-construction property, you will get the first mover advantage and lower purchase price.
- Rebates and discounts ease your cash flow: The rebate, discounts, and free legal documents will ease your cash flow. Hence, most first-hand owners will reap better appreciation value for their property investments.
- Early buyers get to buy under-construction property at desired locations: The early buyers of under-construction properties get to choose properties of your choice located in excellent locations as they are the initial customers. This is an advantage over buyers who decide to buy a property at later stages of development.
Disadvantages of an under-construction office space
- Compromise on quality: The developer initially shows you the sample of the project which is built with all possible facilities and with the best quality products. However, when you receive the completed project, you might get surprised at the differences compared to the sample shown. There are times when the builder does not use good quality of material in construction. They either want to save money or reduce the construction cost.
- Disputes pertaining to the site and construction: The developer will not tell you at the time of selling the unit about the disputes regarding the construction or the site location. You will be shocked to learn that your property is stuck on account of disputes and the project gets deferred for many years.
- False promises: The major issue with under-construction properties is giving false promises. Builders and developers tend to make multiple false promises related to the infrastructure and facilities within the complex. But in most cases, you don’t get what you have been promised.