Real Estate Investing Basics in a Challenging Market

Its common knowledge that since the economic recession hit India, many markets have been in decline. However, as things began to look up at the end of 2014, it’s time to start considering real estate investments again this year. No one is pretending that real estate isn’t still a challenging environment for investors, but it’s a completely different marketplace than it was at this time last year. It’s just a matter of being cautious in how you invest and adjusting your expectations to realistic levels.

  1. Understanding the Risks

The Economic Times lays out some key factors in determining the reliability of real estate as investment:

  • Transaction costs can be lofty, such as interest, broker fees, and taxes
  • Rent rates can be unreliable
  • The Indian real estate market is not based on simple supply and demand, but rather on two types of buyers who are either searching for a home versus an investment
  • Vague claims of future potential based on overly simplified factors of an area
  • Flow of funds coming in from outside the country
  • Property demand is fueled by funds, equity, and borrowing

That being said, developers are still building and developing townships that will appeal to renters and would-be homeowners alike. Unitech flats in Gurgaon by reputable developer Unitech is a good example of a more sound investment than other locales that contain delayed projects and townships that don’t have functioning amenities despite builder promises.

  1. Amenities that Improve Investment Potential

It might seem obvious, but searching out investment properties that offer the types of amenities that renters want is important to remember. Unitech flats, for example, offer green spaces within each township and ample access to major highways such as the NH-8. Keeping in mind that many residents in these smaller townships may be seeking out rental properties due to the fact that they’re commuting into larger, more expensive areas such as Delhi, transportation will be a major selling point. Access to the rapid transit metro is also important.

Indian renters expect high standards of living today, and you want to make sure that you’re investing in a property that includes basic features like backup generators for rolling blackouts and security measures. Also, take into account the size of the property you want to purchase. Just because you see an apartment that’s large and seems like a good deal, doesn’t mean that it’ll be attractive to potential renters. Balance aesthetics with size and stability.

  1. Some Forecasts Predict Prosperity Ahead

The future is also not bleak. Business Today reports that, according to financial experts, the demand for housing loans in the latter half of 2014 had actually increased. This bodes well for a market that has seemed unstable since the recession. Although early indicators point to a recovery in market growth, you still need to be cautious about where you put your money. Keeping your eye on fluctuating trends in the real estate market as you prepare to invest in property is important. Don’t rely solely on brokers to feed you information.

  1. Eliminating Unnecessary Investment Risks

Some of the biggest problems that investors have run into have been unfinished projects as developers lost funds during the recession to finish properties and the over saturation of the market. However, one way to contend with these problems is to search for locales that have solid growth potential. Areas that already contain astronomical prices or cities that have experienced setbacks in terms of social and civic progress are locales to be avoided. A city like Gurgaon, for example, is a real estate hotspot with lots of offerings and also an area that’s growing in many ways. There have been many transportation improvements and it’s overseen by an NGO that’s supportive of civic improvements and environmental reform. The Millennium City is also far less expensive than nearby Delhi, an area that many renters can no longer afford to pursue. As a buyer, taking these factors into account is a good way to make sure you’re approaching real estate investment in a practical, informed manner.

  1. Old-fashioned Politics

Investopedia points out that the improving Indian economy which saw equities increase by 26 percent last year is due in part to the election of Prime Minister Narendra Modi, whom they describe as being especially business-friendly. This bodes well for future investments, including real estate. While politics don’t necessarily directly correlate with hard numbers in the real estate investment game, it’s something to definitely keep in mind. A government that’s actively interested in making sure business continues to thrive means only good things for investment sectors like real estate and other markets.

The bottom line is that the real estate market has definitely been hit with major difficulties mostly due to the recession. However, as the economy continues to improve at a steady pace, real estate is potentially still a good investment. Don’t necessarily expect to see major returns right now, but if you make the right types of purchases in reliable locales, then you’re ahead of the curve.

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.