Buying property before it's built is standard practice in many markets and it's a fundamentally different transaction from buying something that exists.
The discount to completed property reflects that difference. Whether it adequately reflects it is the question buyers should be asking and frequently aren't.
What you're actually buying
A contractual right to receive an asset in the future, conditional on the developer completing it.
That's not the same as owning property. If the developer fails, you hold a claim in an insolvency process rather than a flat.
The payment structure compounds this. Construction-linked plans require payments at defined stages, which means your capital goes in progressively over years while you receive nothing until completion.
And if you've financed the purchase, you're typically servicing a loan on an asset you can't occupy or rent. Where you're also paying rent to live somewhere, the cash burden is substantial and lasts for the entire construction period, which is frequently longer than projected.
The delay problem
The most common adverse outcome, far more common than outright failure.
Projects overrun for a range of reasons — approvals, funding, labour, materials, litigation, and simple over-commitment by developers running multiple projects from pooled cash flow.
The financial impact of a two-year delay is significant. Additional rent, additional interest, and the opportunity cost of capital committed to something producing nothing.
Contracts typically provide compensation for delay, and the rates are frequently below the buyer's actual cost, and enforcement requires action that many buyers don't pursue.
What regulation changed
Regulatory frameworks introduced in various markets have addressed some of the worst practices, and it's worth knowing what protections exist.
Common provisions include mandatory project registration before marketing, requirements to deposit a proportion of collections in a dedicated account usable only for that project, standardised definitions of area to prevent inflated measurements, penalties for delay, and dispute resolution mechanisms.
The escrow requirement is the most significant, because the classic failure mode was developers using money collected for one project to fund another, so any disruption cascaded across all of them.
Implementation and enforcement vary considerably by jurisdiction, and the framework has reduced rather than eliminated the risk.
Due diligence that matters
What to actually check before committing.
Registration and approvals. Whether the project is registered with the relevant authority and whether all required approvals are in place. Projects marketed before approvals are a serious warning sign.
Land title. Whether the developer owns the land outright or holds it under an arrangement with a landowner. Joint development arrangements introduce additional parties and additional ways for things to go wrong.
The developer's completed projects. Not their marketing material — actually visit projects they've delivered. Talk to residents. Ask about delays, about quality, about how handover went and whether promised amenities materialised.
Financial position. Publicly listed developers publish accounts. For private ones, look at how many projects they're running simultaneously and whether they've completed anything recently.
The agreement itself. Read it, ideally with a lawyer. Key terms: the exact area definition and what's included, the delay compensation clause, the penalty for your own late payment compared with theirs, the specification of fittings, and what happens if approvals change.
The area definition
Worth its own note because it has caused enormous disputes.
Property is variously described by carpet area — the usable floor inside the walls — and larger figures including walls, common areas and shared amenities.
The difference between these can be substantial, meaning a flat advertised at one size delivers considerably less usable space.
Regulation in several markets now mandates that carpet area be stated. Check which measure any quoted price is based on, and compare like with like when assessing value.
The alternative
Ready-to-move property costs more and eliminates most of these risks. You see exactly what you're buying, occupy immediately, and pay no rent while paying a mortgage.
The premium is real and, once you account for the rent and interest paid during a construction period, the gap narrows considerably — and can close entirely if the project is delayed.
Which suggests the calculation buyers should be doing: the under-construction discount, minus rent and interest during the expected build, minus a realistic allowance for delay. Run that honestly and the case for buying early is weaker than the headline discount suggests, particularly with a developer whose track record on timelines is unproven.
The possession-to-registration gap
One further stage that catches buyers out. Receiving possession of a flat is not the same as owning it, and the two can be separated by a long interval.
Registration transfers legal title and requires the developer to have completed various formalities, including obtaining an occupancy certificate confirming the building is fit for habitation. Buildings are occupied without one more often than anybody should be comfortable with.
A buyer living in a flat without a completion or occupancy certificate has limited legal recourse, may have difficulty selling, and can face problems obtaining utility connections in their own name.
The practical guidance is to make possession conditional on the certificate wherever your negotiating position allows, and at minimum to know its status before accepting handover. Once you have moved in, your leverage is gone.