Effective investment in residential real estate requires the chosen location to meet certain parameters. Initially, the area should have good social infrastructure and availability of adequate public transport with sufficient economic activity to sustain growth and development. You can meet this kind of requirements in metros like Mumbai the Epitome by Radius Developers.
In order to fight most of the investment risk, the investor should restrict his residential real estate investments to metro cities. It is most prudent to invest over a real estate where the price tag falls between INR 2500-5000 per sq. ft, because such a price tag provides downside protection against any capital value erosions. Putting the cost of construction and cost of land minimum literally makes this price segment safe, guaranteeing capital appreciations.
Few Guidelines for residential real estate investment in India:
- Investors need to have a clear comprehension of unearned increase or capital gain and the consequently higher stamp duty implication at the time of conveyance from the developer.
- Depressed market may result in poor design and construction quality so the quality of the development is important.
- All the finances for arranged by the developer for completion of the project must be verified.
- The investor must avoid buying flats on the top floors of high rise buildings as these artificially add the cost due to floor rise concept.
- Availability of the project’s development plans and all statutory approvals is must. If approvals are not yet in place then the investor should monitor them closely during the investment cycle.
- Though small plots or apartments cost less but they are also often difficult to resell.
- The price of the project must be lower than the highest achieved peak in 2008.
- The best ones also failed to deliver under the present market condition so the track record and credibility of the developer need to be well researched.
- The time delay penalties must be well understood.
- The time of conveyance of land and delivery must be clear.
- Along with the transfer charges, the investor must understand the sale agreement in case he wishes to sell the apartment during construction.
Moreover, the investor should keep an eye on the market and sell the residential real estate at the right time in order to multiply wealth.
The property should have appreciated at a consistent rate of 15% per annum for three years if all the above mentioned precautions are taken. One must understand that it is impossible to sell at the peak and similarly catch the lowest price during buying.
Some of the cities that currently show the highest residential real estate investment potential in India are:
- North India: Chandigarh, Jaipur and Lucknow
- East India: Kolkata, Bhubaneswar and Guwahati
- South India: Bangalore, Hyderabad and Chennai
- West India: Mumbai, Ahmadabad, Nasik and Pune
Opportunities for a higher capital value appreciation; depending up on the demand and supply dynamics of their micro market, quality of the development and timely completion of projects lies within these cities.