The great interest shown by people in real estate investments has led to a jump in property prices. Hence prospective buyers/sellers and all associated with the real estate fraternity need to take informed investment decisions. Investing in property is the safest bet against inflation since other investment opportunities today do not yield the same results. As the population and the economic standards are increasing day by day, property rates are bound to increase in the near future. Investing in property is a complex job and one should study the market in order to get the desired results.
Chennai and Bangalore are the third most preferred real estate investment destinations nationally. According to a survey by makaan.com, 34 per cent of the property seekers want to own a house in Delhi followed by Mumbai with 28 per cent. Bangalore and Hyderabad attracted 14 per cent property seekers nationally.
A total of 67 per cent want to buy a house for self-consumption, 23 per cent are looking for property options from a long-term investment perspective and 10 per cent are short-term investors.
There is no determined way to differentiate investors from end-users. Investors usually look at the project appreciation and are less concerned about specification, details, progress of the project etc.
Prices in the residential market in NCR-Delhi and Mumbai have started to climb up in the last two quarters and are slowly picking up in southern markets, especially in Bangalore, Chennai and Hyderabad. Though it gives investors a tremendous opportunity in the medium term, there is a concern that the few end-users who have started to show interest might be deterred from making purchases if the prices keep rising rapidly.
Some of the factors to consider while purchasing a flat are:
Location: It is a deciding factor for many home buyers as the infrastructure around must be well formed.
Social infrastructure: Connectivity to different parts of the city, availability of schools, hospitals, convenient shopping, business district, entertainment centres, hotels and restaurants are factors that give the maximum appreciation in a short time.
Efficiency: Quoted area of the apartment i.e. carpet, built-up area and super built-up area and the ratio of common area added to the carpet area are crucial for an investor as he aims to sell the apartment at an appropriate time when the investment yields a good return.
Quality of construction: The reputation of the developer becomes the driving factor but quality of construction, specifications and amenities create a deep impact.
Amenities: Ground coverage, good lung space, adequate water, uninterrupted power supply, security, community utilities such as swimming pool, gym, club, children play area etc. enhance the property value in the long run.
Cost components: Unit price or price per sq.ft., stamp duty, registration charges, transfer fees, monthly outgoings and society charges, and costs of utilities are of prime concern and are deciding factors.
Investment realisation: Potential for resale or renting out of the property, and appreciation in capital value depends on the success of the project.
Distinguishing features: The design concept, architectural facades, space circulation in the project, fittings and fixtures, management of the society / facility, privacy with in a community living are the advantages that add value to the property.
Master checklist
Trends and capital value: The pricing is a permutation and combination of land value, specification, amenities provided, classifications, fixtures and finishing. Market trends in prevalent rates of property in the vicinity, comparison between similar categories of development and last known transactions help taking a decision.
Legality and permissions: Request or demand for photocopies of all the title deeds related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, conversion from agricultural to non-agricultural usage, and village and registration district of the property as these details are required for registration of the property. Previous encumbrances, collaterals and mortgages, if any, on the property must be cleared before completion of purchase of the property. The title of the vendor to the property must be clear and marketable.
Sanctions: Check for approved layout plan and approved building plan with number of floors, floor area sanctioned and the count on total area of the land vis-à-vis the undivided share of land ( UDSL) prorate to the proportionate share of super built-up area ( SBUA).
Statutory clearance: From municipality, electricity, water and sewerage board, pollution control board, fire and environmental clearances, commencement and occupation certificates from respective development authorities.
Development bye-laws: Check the building bye-laws in that area to verify any issue with boundary, front and rear setback, side setback, building and floor height, etc.
Fees and charges: Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, corpus fund and maintenance charges.
Govt. plan: Should definitely check the future plans set by the government on acquisition and infrastructure developments.
(The author is Regional Director-South, Knight Frank India)
