Prelaunch is a term used by developers to soft-launch projects. As per RERA guidelines, no project can be sold without the approval of the RERA authority and without quoting the unique RERA number allotted to the project
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Investing in Pre-launch Homes in Bangalore: The Advantages
Bangalore is growing at an exponential rate. Proportionately, demand for housing in the city is on the rise. When you decide to invest in a home in Bangalore, you have choices to go for a home that is ready to move in or one that is already launched and being constructed, or a prelaunch home. In the case of opting for the latter, you gain a lot. Read on and get to know how.
Prelaunch in Real Estate
Before getting into the details, let’s first examine what is a prelaunch project. What exactly does it mean by the term ‘prelaunch’ in real estate? When a real estate developer plans to come up with a project, they announce it with the RERA number, to assess the interest in the market. After a certain period of time, they formally proceed with a grand launch. Typically, developers offer units at attractive prelaunch prices in this phase.
Why do Real Estate Developers Prelaunch Projects?
The most important reason for real estate developers to prelaunch a project in Bangalore is to create traction in the market & generate excitement among buyers. In the prelaunch phase, prices are lower than usual to attract more buyers. This phase lasts for a limited period, and usually the inventory available for sale is also limited. This creates urgency in the market, and encourages early buyers to invest in the project. Prelaunch helps build momentum for the project, which can propel it during launch phase once the price is hiked to normal levels. Also, homebuyers who are highly interested in a certain area / developer / configuration are more likely to book their home in the prelaunch phase.
Benefits of Investing in a Prelaunch Residential Project in Bangalore
As a prospective homebuyer, you have an array of reasons to invest in a prelaunch residential project in Bangalore. Unlike a ready-to-move-in home or a project that is being constructed, a prelaunch project in Bangalore offers you immense benefits in the form of special prices, appreciation, customisation options, early possession, and the potential to earn rental income. Let’s take a look at each in detail.
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Lower Prices
A prelaunch project offers special prices, usually 10 to 30% lower than usual. As a result, you get to own your home in Bangalore at a lower price. But what makes it possible? To create traction of the project among buyers, developers offer few units at a lower price. It helps the developer spread word of mouth about the project, which eventually helps to get more buyers to the project. Pre-launch also helps developers test the acceptance of the project pricing, so they can adjust the final launch price as per customer feedback / response.
When you invest in a home that is ready to move in or under construction, you pay a higher per square feet rate. This is because developers spend money upfront on the construction, for which they need to take loans and pay interest. However, if it is a prelaunch project you are investing in, it is quite likely that the developer will not have to spend money upfront and the construction cost shall be funded by the buyers. Since the amount is devoid of interest, the benefit is partly handed over to the end customer. This is the reason prelaunch prices are 10 to 30% lower compared to the launch price of the same project.
As you might have realised by now, the key benefit of investing in a prelaunch project in Bangalore is that you pay a lesser amount to own it. Additionally, in the long run, owing to appreciation, you can enjoy handsome returns. Let’s examine this further and in detail.
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Capital Appreciation Potential
In a city like Bangalore, real estate prices are constantly on the rise. Quite naturally, seasoned investors consider real estate as an important asset in their investment portfolio. When you invest in a prelaunch project in Bangalore, you do it at a price lower than the current price for a ready-to-move-in or under-construction project. Considering the timeframe for the completion of the project – for instance, if it is five years – your investment, in all likelihood, will grow immensely.
As per property consultant Knight Frank India’s report – ‘India Real Estate – Office and Residential Market July-September 2022’, Bangalore recorded the highest growth in average housing price during the third quarter of the calendar year 2022. In comparison with the year-ago period, per square foot price rose 10%, from Rs. 4,928 to Rs. 5,428. Considering that the average real estate price saw a leap in just one year, in the long run your money can yield significant returns, if invested in a prelaunch project.
As experts often say, in real estate you make money when you buy, not sell. It suggests that a prelaunch property you purchase today in Bangalore has the potential to grow beyond your imagination in the next 10 or 15 years. Checking the property prices in some of the prime localities today, such as Outer Ring Road, Hebbal, Electronic City and comparing them with the price 10 or 15 years ago in those localities will give you a fair idea of how important it is to invest in real estate in Bangalore at the right time to maximise your returns.
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Early Selection – Option of Preferred Units and Customisation
When you turn up first, you get the best. When you book your home in a prelaunch project in Bangalore, you have the option of choosing the prime unit – one in the corner, with a view to the garden, or with the most splendid views.
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Access to Modern Amenities and Infrastructure
When a reputed real estate builder announces the prelaunch of a project in Bangalore, they might have already done their research, including feasibility studies. Hence, the new prelaunch project would often come up in a developing area with robust infrastructure and transportation facilities in the making. By the time of the completion of the project, the locality will have all the amenities in place, increasing the overall value of your property.
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Early Possession and Rental Income Potential
Yet another advantage of a prelaunch property from the investor’s point of view is early possession. Since the entire project is often booked during the prelaunch stage itself, developers don’t have to rely on bank loans to start working on the project. This way, the project gets completed in a short span of time. Consequently, a prospective homebuyer gets possession of his home soon and has the option of renting it out and earning / gaining their return on investment at the earliest.
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Exercise Due Diligence to Mitigate Risks
While a prospective homebuyer has plenty of reasons to look forward to choosing a prelaunch project in Bangalore, it is not devoid of risks. Let’s examine some of the risks and the ways to avoid them, in order to keep your money safe.
You can do certain background checks to mitigate your risk. The first and foremost of them is the reputation of the builder. If they have a good track record of completing and delivering quality projects on time, investing in their prelaunch property in Bangalore is a good idea. Also, you can safeguard your investment by adhering to the following measures:
- Check the RERA approval & RERA number of the project
- Get an in-depth understanding of the project proposition and plan
- Do not invest huge amounts of money at one go
- Thoroughly inspect all documents available, particularly land-related, by a legal professional
- Always pay the money through cheques / demand receipts / online mode. Never pay any component in cash.
- Carefully analyse the location and feasibility of the project in the proposed location
- Invest in a prelaunch property only if you have excess funds
- Take a bank loan to invest in the project, since banks perform a lot of due diligence before approving loans for any property
Read More- What is Due Diligence in Property Buying?
Investing in a Prelaunch Property – A Recap
A city that is growing at a phenomenal pace, Bangalore offers great opportunities for real estate investments. Investing in a prelaunch property in Bangalore can be hugely beneficial in the long run as it offers higher returns. As discussed above, with an eye on possible risks and taking appropriate measures to mitigate risks, you can invest in a prelaunch home in Bangalore and earn great returns.
FAQ’s
1. Is it good to buy prelaunch projects?
Prelaunch projects are a good investment opportunity. The most important reason to invest in a prelaunch project is that it offers great returns. If the prelaunch project is offered by a reputed developer with a decent track record, it is a good idea to invest in a prelaunch project.
2. What are the benefits of a prelaunch project?
From a homebuyer’s point of view, investing in a prelaunch project is hugely beneficial. The most important benefit is the price factor. A prelaunch project offers lower prices, typically 10 to 30%. In addition to this, it can offer great returns in the long run.
3. What is the difference between prelaunch and launch in real estate?
Prelaunch and launch are just different ways in which a developer announces a new project. In either case, no real estate project can be offered or promoted without RERA approval & RERA number. Developers generally prelaunch a project to get good traction, which helps them during & after the main launch.
4. What are the advantages of buying a property during its prelaunch phase?
There are many benefits of buying a property in the prelaunch phase – first and foremost being the special prelaunch price, a buyer can avail. Second is the option to choose the best unit since the project is in the nascent stage and almost entire inventory is available to pick from.
