Benefits of Sukh Shanti being a ready to move in property

Sukh Shanti - Move-in into luxury

9th Floor of Sukh Shanti, JVPD Scheme, Mumbai, is a designer home built for luxury. One can immediately move-in into this paradise. Being a ready-to-move-in flat is a much bigger advantage than most people realize. The overall financial benefit may be well over ₹2 Crores in addition to the intangible benefits depending on what flat it is being compared to.
Let us understand the benefits of a ready to move in property.

Note: The images below are actual images of Sukh Shanti 9th Floor which is up for sale.

1. Time - give yourself a headstart of 9-12 months

A property usually requires 9-12 months to be fully furnished assuming dedicated involvement in the process. What value can one put to 1 year of his life?

2. Efforts - save 9-12 months of agony and effort

Furnishing a house is indeed an intensive task. Starting from Designing, visualizing, making iterations, getting everyone's approval, selection of details, executions, labour problems, change in plans, finalizing changes, etc. Furnishing a house is a long process. You can give yourself a headstart of 9-12 months by skipping that step. The value of these efforts is different for different people

3. GST

Ready-to-move-in home where Occupation Certificate (O.C.) has been received does not attract GST of 5%. This is a big benefit in absolute terms. 5% of ₹10 Crore is ₹50 Lacs. O.C. has been received for the Sukh Shanti flats up till the 11th floor.

4. Interest Cost/ Opportunity Cost

Whether one is buying a flat out of his own money or loaned money, any delay is costly. Interest cost here refers to the interest that one has to pay on a loan, even while he hasn't shifted to this property. Opportunity cost refers to the amount one could have earned by investing this money elsewhere for the given time.

Assuming an interest rate of 8.5% on 10 Crore, interest would amount to ₹85 Lacs (EMIs would be even higher) for a 12-month delay which is caused by the furnishing of the flat.

For those investing from their saving, the opportunity cost may be much higher than the above figure. e.g. Average long term returns in equities is ~15%. 15% of ₹10 Crores is ₹1.5 Crore.

Note: The above interest cost has been calculated only for an 12 month period (the time required for furnishing). If one is investing in a non-O.C. flat, this figure will multiply significantly due to the additional time required.

5. Rent for the interim period

While moving from one flat to another, many times one has to sell a property. 

Between selling one property and going into another property, if he has chosen a raw flat, he would have to stay on rent for some time till the new property is ready to move in. 

So, in case one is choosing a ready to move in flat, this cost of rent for the interim period is saved.

An estimate for this cost may be as follows:

12 months * ₹2 Lakhs (for 4BHK) = ₹24 Lacs

6. What you see is what you get

A ready to move-in flat is not a promise of something beautiful which may or may not materialize. One can see for themselves what they are going to be living in. One does not have to worry about multiple iterations that are required in a design process because of non-viability or about compromising because of execution not going the way it was planned.

7. No wait for O.C.

In the context of Mumbai, getting an Occupational Certificate is a big task and mired with bureaucracy and red-tapism. In the past, the delay for O.C has been as much as 4-5 years! Legally, one cannot live in a property where O.C. hasn't been received. Given the uncertainty around receipt of O.C. it's best to buy a flat with O.C.

Imagine the opportunity/interest cost for a delay of a few years with such high capital investment! e.g. On a 10 Crore investment, 2 years of delay at 15% compounded opportunity cost equals to ₹3.225 Crores!

8. Cost of furnishing

This is the most obvious cost that one saves on in case of a ready to move-in property. The price of Sukh Shanti 9th floor is inclusive of the cost of furnishing.

Typically, the actual cost of furnishing ranges anywhere between ₹5000-₹15000 per sq. ft for designer homes in premium properties. ₹1 Crore may be considered as a ballpark figure for furnishing a 4BHK.

Conclusion

Assign a monetary value for all the subjective and objective factors mentioned above. Add up the estimates for all the benefits to derive the total benefit of choosing a ready to move-in property. Keep this figure in mind while making a decision.

Summarising all the factors

Financial Factors:
1. Cost of property furnishing ~1 Crore
2. Interest/ Opportunity Cost of furnishing ~ ₹85L - ₹1.5 Crores
3. Interest/ Opportunity Cost of delay in O.C ~ ₹3 Crores
4. GST ~ ₹50L
5. Rent for the interim period ~ ₹24L

Subjective factors:
1. Time required for furnishing
2. Efforts required for the complete furnishing process
3. Possibility of furnishing not going as planned