Thursday 15 November 2018

Why Real Estate is a Highly Flexible and Profitable Investment?

When it comes to investing with an eye on earning a sizeable return in the future - Gold, Equities and Real Estate are generally considered more profitable than others. However, each comes with their own unique set of characteristics, risk factors and advantages. Gold is a stable investment but yields lower returns compared to equities and real estate. Equities, on the other hand, provide higher returns in intermittent periods but are sometimes highly volatile and involve a high amount of risk.

As the old adage goes, “The best investment on earth is earth”. Real estate investment is comparatively safe, and comes with assured returns as long as investors plan their investment astutely. This means carefully considering locational trends, upcoming developments, and establishment of hubs that generate employment and then make an appropriate investment. Real estate as an investment takes time to mature. Real estate can generate a regular rental income and can also generate long term returns, as their value matures with time.

In the year 2011, when the stock market tanked by almost 25%, real estate grew at a steady rate, and prices rose in 9 out of 15 metropolitan cities in India showing how it’s a better investment than equities and even gold. As long as the Indian economy continues to grow, real estate would continue to be valued; therefore property prices are likely to rise. We look at the various ways investors can benefit from investing in the real estate market -

  • Attractive Tax Benefits

Tax benefits are available for investments made in real estate. Section 80EE covers tax rebate on the interest of home loan for ‘first time buyers’. It also provides an additional deduction of Rs. 50,000 over and above the tax deduction of Rs. 2 lakh under Section 24 and Rs. 1.5 lakh under Section 80C

  • Better Sense of Control

Owning real estate property equips one with a greater sense of control over the performance of the real estate asset, to an extent. Investors can decide on furnishing or renovating the property in order to make it an attractive offering if the investor wishes to sell, lease or rent out the property.

  • Convenience of Rental Income

This is one of the safest investments which can generate regular income that gives lifelong returns while simultaneously enhancing the value of the property over time. However, it is important to have a property with the right attributes to be able to avail the desired benefits.

  • Diversified Portfolio

An astute investor is aware of the need for maintaining a diverse portfolio in order to minimise the risks. Real estate, being a palpable asset, works as a trust-establishing factor in the portfolio thus allowing an investor to attract risk-averse investors

  • Economic Growth Enhances Value

Development of any kind of infrastructure, setting up of office or commercial hubs, upgrades in social infrastructure like hospitals, malls, colleges, or public infrastructures like highway, airport, railway or bus stations pushes the value of properties. If an investment is located in a suburb, better connectivity and accessibility will result in profitable returns.

  • Flexibility

Investments in real estate can be made according to one’s need or budget. Options like building a retirement home for long-term capital growth, buying a home in a sought-after location for continuous flow of income are solutions investors could look at. Also, one can always invest in buying an old home and refurbishing the property as per one's requirements which would greatly boost the value of the property.

  • Get Attractive Finance Options

Investment in real estate is often acquired through attractive financial schemes. As interest charged on housing loans in India is much lesser than other loans, developers offer investors a host of interesting and feasible financial schemes such as 80:20, 25:75, 10:90, etc. which reduce the financial burden.

  • Highly Valued Real Estate Fund

There are some managed funds which invest in multiple real estate projects across geographies. Therefore, risk can be diversified, instead of investing in a single project. However, an investor will have to evaluate and select funds as the ticket size is large and includes a larger holding period.

In Conclusion

India's real estate market has been on the rise since the last couple of years. The real estate reforms have greatly increased customer’s trust in developers and have driven sales. There has been a significant rise in the sale of inventories across major metropolises in the country. This is going to increase considerably with time, as more people are in need of housing in the country. We, at House of Hiranandani have built a robust and a diverse portfolio spread across residential, commercial, retail, townships, SEZs and offer a wide variety of options for investors looking to invest in high growth corridors of Bangalore and Chennai. 

For a quick comparison between Real Estate, Gold & Equity as an investment options, head on to our latest newsletter – Long-Standing Realty

Tuesday 13 November 2018

A Checklist for Investing in the Real Estate Sector

The real estate sector has recently seen better performances in recent times, not only in terms of sales but also in terms of regaining customers’ trust. Just as with any other investment, investing in real estate also requires the investor to do their homework, exhaustive research and background check. This pertains to the location of the property, its surrounding, the general history of the location and its future prospects as well as the background of the company developing the property and documentation relating to the project.

Here’s a ready reckoner or checklist to follow while considering your next investment in property:

Background of Developer
It is imperative to check the track record of the developer - the number of properties developed, locations, execution, and timeliness of delivery of the project. One can also talk to other customers who have invested in the respective developer’s projects and get to know their experience.

Project Location
Location is everything in real estate. A good, thriving location ensures a steady growth in value of the property as well as rental and resale values. A number of sources provide ready data and trends about various locations vis-a-vis their price graphs, rental and resale values, and demand. Studying such data is useful in making a real estate investment decision.

Location’s Growth Prospects
Some areas are in the early stages of their growth with increasing infrastructure and commercial development, while others have seen better days. Where are you investing? Is your location of choice witnessing a phase of growth or decline? Are there plans for upcoming infrastructure or new business districts? For example, the Bangalore International Airport in Devanahalli has boosted the growth prospects of this suburb; more commercial and residential projects have been planned here making it a prospective location.

Location’s Social and Civic Amenities
Proximity of schools, hospitals, markets, business centres and multi-modal transport determine a location’s attractiveness. Check your prospective location for all these basic and necessary amenities which will ascertain how comfortable your life in this place will be. It will also determine the overall value of your investment.

Cost Benefit of Financial Schemes
Many developers enhance the attractiveness of a property by offering potential customers numerous financial schemes which aim to reduce the financial burden of purchase. Evaluate each one to understand its suitability to your individual financial needs. Some may seem more attractive but may be less suitable for you. Understand these differences so you can choose the best scheme suited to you and ensure the most value-based investment.

Read the Fine Print
All project offerings have many details encapsulated in legal language which many of us are not familiar or comfortable with. Some of these include the declaration by the promoters of the project, the stated completion time of the project and the legality of the land holding. Check the documents for these factors and ensure correctness and validity of all declarations.

RERA Registration
RERA has been a game changer in real estate ever since its implementation was enforced on developers. It has empowered customers and ensured their rights. Check the RERA registration of any project you are considering investing in and note the registration number. Projects with RERA certification are considered more attractive to customers as the developer is required to file numerous documents with the respective state RERA authority before receiving the RERA number.

Confirm Little Details
Recently there has been a spate of cases where homebuyers and investors were still waiting to receive possession from the developer. In light of such cases, an investor must be prudent about checking that the affidavit they receive from the developer carries a possession date and the rate of interest you will receive in case of a default by the developer.

The more prudent and astute one is while investing in real estate the better the results. Make the right choices, be patient, invest for long term, and watch as your real estate investment creates value and wealth for you. Read more about long-term investment avenues, their past trends, potential gains and the promising future of realty investment in our latest newsletter - Long-Standing Realty.