The real estate market in India is observing a growing trend of offers and schemes to attract homebuyers, amongst them are pre-launches and soft launches. You may have heard of these terms quite often, but are they the same and what do they mean, remains unanswered.

While you may think the two mean the same, pre-launch and soft launch are different from each other. Pre-launch is when the approval processes are not initiated or still in progress and the builder makes an announcement about his project to start collecting funds. A soft launch is when some of the approval processes of the project have been received while the rest are underway.

Advantage

Savings! Homebuyers can save up to 30% of the cost price of a property by investing at the pre-launch stage of a project. Pre-launch properties usually offer the lowest entry-point as the developer is looking for funds at this stage. In addition to the low selling price, you can also get some freebies and discounts at this stage.

Disadvantage

In a pre-launch, the project might not have all required approvals or may not be clear for home loan approvals by lenders. Pre-launches have almost no legal validity and the risks are very high. Soft launches fall into a grey area, but are legal to the extent of the permissions obtained.

Since nobody can predict how long it will take the developer to get all the required approvals before construction can commence, there is a high possibility of a delay in possession.

Suitable for?

Soft launches are ideal for speculators looking to make a quick buck. At the official launch stage, the rates go up dramatically, at par or on a premium to the ongoing market rate.

If you plan to invest in a pre-launch property as a homebuyer, it is important to check the performance history and brand reputation in terms of legal formalities, timely project completion and the experience of the builder.

The project must have a commencement certificate and an Intimation of Disapproval (IOD), a set of instructions a developer must comply with so that he can legally construct the building. The IOD is valid for a year and needs to be reissued if the project has not been completed within a year.