Investing in newly launched commercial projects; Things to check before – INVESTO 101.13

If you are an investor trying a head start into commercial investment, newly launched projects are worth considering! Offering advantages such as lower entry costs, customization options and newer amenities, potential price appreciation makes them a highly appealing option among investors. However, is there a checklist to these projects? Let’s find out!

As the name goes, new launch commercial projects are the ones that are recently launched in the market. Developers launch their projects at the time of construction to attract investors. This, in turn, funds their project and advertises it further in the market. Though offering the advantage of lower entry costs, it is imperative to be aware of a checklist before heading into such investments.

Checklist for newly launched commercial projects

Before investing in a newly launched commercial project, it is advisable to consider several factors. Here are some key things to check:

• Check if the property is registered under Real Estate Regulation and Development Act, (RERA) 2016, introduced to safeguard the buyers’ interest. As per the act, be it ready-to-move or under-construction property, it is mandatory for the developers to register all the properties to ensure transparency in property-related transactions.
• Research the developer’s track record, experience, and reputation in the real estate industry. Look for their completed projects, quality of construction, and delivery timelines.
• Verify that the project is located in the designated commercial zone and has obtained all the necessary legal approvals for construction. Request for relevant documents such as environmental clearances and building permits to ensure compliance with regulations.
• Review the project plans, layouts, and specifications in detail. Assess the quality of construction, amenities and facilities offered, and the overall design of the project. Ensure they meet your expectations and align with your preferences. Confirm if the builder offers flexibility for customization as per the investor’s requirement.
• Assess different payment plans offered by the developer. Check if the developer has a transparent payment plan and if there are any hidden charges or additional costs involved. It is also imperative to know whether the developer is financially stable to ensure that the project isn’t halted mid-way.
• If you plan to buy the property, carefully review all the legal documents and contracts related to the purchase. Seek legal advice, if necessary, to understand the terms and conditions, payment schedules and cancellation policy.
• Conduct a market analysis of the area for the potential for appreciation in property value. Look at the demand and supply dynamics, future infrastructural development plans, and overall market trends in the locality. Also, take into account factors such as proximity to key transportation points. The rates are more likely to increase for well-connected properties.
• Research online for customer reviews and feedback about the developer and their previous projects. This will provide insights into the developer’s reputation and any possible concerns.

Pitfalls to consider while investing in a newly launched project

When considering investing in a newly launched real estate project, it is important to be aware of potential pitfalls. Here are some common pitfalls to consider:

• At times, newly launched projects are offered by new entrants in the market who have limited experience. Investing with an inexperienced or unreliable developer can pose risks in terms of project delivery, quality, and adherence to timelines.
• Developers may withhold information about regulatory approvals, funding issues, or construction challenges that can lead to project delays, which may impact your investment plans and return on investment.
• Developers may make changes to the project plans, layouts, or specifications after the initial launch. Ensure that you have a clear understanding of what is included in the project and any potential changes that may occur.
• Real estate markets can be subject to fluctuations, and the market conditions at the time of the project launch may not remain the same over the construction period. Consider the potential impact of market volatility on the project’s value and your investment returns.
  

  How to make sure that the deal is legal?

  To ensure a legal deal for commercial projects, research the background, reputation, and track record of the developer or seller involved in the transaction. As stated above, check their credentials, past projects, customer reviews, and any legal disputes or complaints against them. You should also opt for legal assistance to ensure that all the documents related to the commercial property are genuine, valid and legally binding. This legal assistance can help in identifying for any encumbrances, liens, disputes, or pending litigation related to the property. Verify the builder-buyer agreement and check the tentative possession date. Here’s the checklist of all the documents required:

  • Title document of the property.
  • Land use permit or if the land has been converted from its original nature, the conversion permission.
  • No objection certificate (NOC) from the pollution board, sewage board, traffic department, environment department
  • Occupancy certificate.
  • Encumbrance certificate from the jurisdictional sub-registrar office.
  • RERA (Real Estate Regulatory Authority) approval.
  • Check documents related to outstanding taxes, if any, by the developer

  Cross-verifying the building plans and layouts with the approvals granted by the local planning authority ensures that the construction adheres to the approved plans and that there are no unauthorized modifications or deviations. In addition, to ensure transparency in financial transactions, make payments through legal banking channels, maintain proper records of all transactions, and obtain receipts and proof of payments.

  Remember, it is crucial to conduct due diligence to ensure that your real estate deal is legal, compliant, and protects your interests as developers may overpromise in terms of features, amenities, or delivery timelines of newly-launched commercial projects to attract buyers. To mitigate these pitfalls, it is advisable to conduct thorough research, seek legal advice, and consult with experienced real estate professionals who can provide insights and guidance throughout the investment process.

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