Real estate is one of the most attractive and trustworthy investment avenues. However, it is very essential to decipher the market dynamics and choose the appropriate property to ascertain that your investment results in the best and expected returns.
Some key factors which must be considered before finalising a property for investment are:
Location and surroundings
The location of the property is the most important element to consider while shortlisting a property. Areas with sound physical and social infrastructure, such as those near train stations, metro stations, popular markets, etc., will almost always yield higher rentals as well as price appreciation. Those aspiring for handsome rental investments should invest in areas already having road connectivity and social amenities, while long-term realty investors must explore emerging corridors and peripheral areas which are likely to get infrastructure boost in the coming years.
Motive of investment
Before commencing the search for a suitable and investment-worthy property, an investor must ascertain his motive for investment. Is it for a regular rental income, or is he more interested in capital gains out of the property? It has been observed that price appreciation is the preferred motive for long-term investors with greater risk capacity. This kind of investor tends to focus on developing locations contrary to the ones looking for rental income. This investor group prefer locations with easy access to social and physical amenities.
Real estate developer
It is always better to go for a reputed developer. Choosing the wrong realty developer can be as devastating as choosing the incorrect location. Thus, potential buyers must carry out adequate pre-finalisation checks about the real estate developer to verify their genuineness and track record. With the Real Estate (Regulation and Development) Act (RERA) in effect, real estate developers now have greater compliance prerequisites (Including a unique RERA ID) which will sideline fraudulent operators. The enhanced transparency in the real estate market is expected to make it easier for homebuyers to invest in the best projects.
Property segment and type
Potential real estate investors also must be able to figure out which segment is the appropriate fit for them based on their risk potential, budget, and investment portfolio. Residential, commercial, office spaces, and retail real estate; all of them have their own advantages and disadvantages, which must be carefully scrutinised.
Further, property investors would also have to choose between ready-to-move-in and under-construction properties as well as newly constructed and resale properties. Experts shares that ready housing units come with advantages such as zero risk of construction delays, immediate rental returns, tax savings such as on service tax and GST, which amount to savings of up to six percent across states of India.
On the other hand, under-construction properties can be acquired at lower prices and enjoy various tax benefits on home loan approval but carry significant risks, given the dynamic nature of the property market.
In this context, residential plots are also an attractive investment option with a great scope of higher capital appreciation, ready possession, lower input costs, and reduced hassles. However, similar to any other investment asset, residential or commercial plots also have their drawbacks. The most notable disadvantage is no tax gains, no capital aid from financial institutions, and no immediate gains.
Property prices
Investing in a property at the right price is the core part of investing. In order to achieve attractive capital returns, Investors must find a shortlist a property that meets all their investment needs and still remains within their budget.
Real estate experts point out that while the majority of affordable locations will witness delayed development, the localities that are already expensive have minimal scope for future price growth.
Conclusively, real estate investors must take care of various factors before investing their hard-earned money in the property market. The right decision in terms of location, developer, physical infrastructure and connectivity will go a long way in deciding the Return on the Investment potential of the property.
The writer is MD, Goel Ganga Developments.
