Real estate is the preferred avenue of investment for consumers with disposable income. Market conditions notwithstanding, Indian investors believe it to be wise and safe to invest in a home. Home buyers are always contemplating over when, how much and where they should invest in a property. The fundamental question on most people’s mind is: ‘Is it the right time to invest in the real estate market?’ Though the answer is in the affirmative, certain influential factors come into play. In a constantly fluctuating market, consumers need to be cautious about where they are putting their money, and ensure that the investment is beneficial to them.
Buying a home made easier
Buying a home is much easier today than it was a few years ago, with lower home loan rates available thanks to RBI’s repo rate cut. Not only is the government making life easier for buyers and catalyzing the market, banks and developers have taken steps to attract increasingly cautious investors. Affordable housing has seen a boost thanks to the government’s initiative of Housing for all by 2022 focus proposed as part of the Union Budget, in addition to the civic authorities stepping in to place system to make home buying simpler.
The Budget 2016 announced 100 percent deduction for profits to housing projects building homes upto 30 sq meters in the four metro cities and 60 sq meters in other cities. This is also likely to increase the supply of affordable homes which currently makes up for 90 percent of the housing demand in India. First home buyers will also get a deduction of Rs 50000 per annum for loans upto Rs 35 lakhs sanctioned in 2016-2017 where the house cost doesn’t exceed Rs 50 lakhs. First time home buyers will get deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17, where house cost does not exceed Rs 50 lakh.
End users who have been sitting on the fence, and waiting for prices to drop further, the proposed RERA Bill comes like a breath of fresh air. The bill proposes to bring about additional accountability in the real estate industry.
The Centre’s Smart Cities Mission, under which it plans to redevelop 100 cities, will also fuel more positive energy into the real estate sector. It might be a good time now to invest in real estate since the sector is set to see a boom with all these new initiatives from all quarters.
Location! Location! Location!
Location forms a very important consideration when buying a home. An ideal location to buy property is one that provides accessibility to transit and amenities.
Metro cities, Tier 2 and 3 towns and peripheral localities are considered leading markets for real estate investments. Home buyers stand to gain if they buy property in suburban areas of big cities. Factors such as good transport links and connectivity to a city’s central business and commercial district have escalated the value of real estate. Growth of micro markets has developed sub-cities such as Bangalore’s Electronic City and Gurgaon near Delhi. Investing in these areas gives leverage to buyers as they have their share of businesses, markets, shopping complexes, retail outlets and other necessary infrastructure that benefits residents. Social, economic and infrastructural development in Tier 2 cities such as Pune and Bhubaneswar is giving an impetus to real estate activity, thereby making them favorable for investments. In peripheral towns such as Kalyan-Bhiwandi, Badlapur, Dombivali, Thane and Virar, there is an increased activity of affordable and quality lifestyle projects. The affordability element makes these areas profitable for real estate investment.
Buying from established players
An interesting trend has emerged — consumers prefer buying property from well-known and established developers rather than standalone players. Projects by established players are likely to get higher resale values. When you buy properties constructed by established players, you are likely to adhere to all the key criteria for an ideal home such as strategic location with accessibility to key surrounding areas and facilities. One is also assured of signing up for premium amenities on the property.
The biggest advantage of investing in a home developed by an established and preferably national real estate company, is the surety of timely possession and thorough paperwork. Consumers are not burdened with the uncertainty of being tangled in a non-reliable deal. Many a real estate brands are also offering Ready to Move in flats, a concept which in this day and age of instant gratification is a boon for consumers. Receiving ready-made flats, gives the home buyer a tangible view of the promised features both inside and within the premises of the property, along with minimal fuss required to move in.
Good time to buy second homes
It is also a good time to buy a second home purely for investment purpose or even a vacation home, which is a privilege for many. If you invest in property in popular destinations such as Goa, Lonavala or Kasauli, then you stand to gain from the associated perks that established projects offer. Nowadays, young couples with disposable incomes are looking to invest in second homes. Vacation or second homes provide ideal rental income opportunities and also becomes a long-term asset as its value increases over time.
Investing in a home is a deal of a life-time. Certain elements that need your attention before you sign on the dotted line are approval and licenses for the project, list of banks financing it, reputation of the developer, size of the apartment, layout, or site plans, and registration of the plot. While you have all the checks and balances in place for investing in real estate, it might be a good to be mindful of the fact that the drop in prices and sales has been contained in the past couple of months but bound to see an increasing upward trend.
The author is AVP Sales & Marketing , Tata Housing Development Company Limited