The Fundamentals of Smart Real Estate Investment in India

October 10, 2018

India is a dynamic country and all it takes to learn the dynamics properly in order to get rich.

The same philosophy applies to real estate in India.

If you’re aiming at the investment market of India, you need to understand how it is done, what all things work here and a few basic concepts about real estate investment in general.

Before, beginning, let’s answer the fundamental question that is popping right now in your mind.

Why Real Estate in India?

Real Estate in India continues to be a lucrative asset considering the multifarious growth that is constantly taking place in India. The population is rising, the jobs are rising, and everyone needs a house to live or stay in.

As this growth keeps pumping more demand in the market, there is a lot of money to be made in the process.

Apart from this fundamental reason, there are other benefits as well, that are listed below.

Secure Asset

Real estate is a safer investment as compared to other assets such as stock market, capital ventures, and your own run business, as the chances of loss are lower.

For instance, If you invest 50 lakhs in the stock market, chances are that you can convert the sum into 50 crores but at the same time, you can also end up losing everything in one go.

Whereas when you buy a house worth 50 lakhs, you can use it until you sell it off, and with each passing year, the value of the house will only rise. Even if you sell it for 50 lakhs after living in it for 5 years, you’ve saved 5 years of rent. So, the scope for loss is pretty thin.   

Heavy Returns

For the people who have the capacity to invest in large numbers, have the avenue to convert lakhs into crores. Real estate investments when done right, can fetch heavy returns with the passage of time and can be utilized in multiple ways to generate income.  

Most Probable Appreciation  

One great aspect of real estate is that unlike most of the things, it’s value doesn’t go down. The value appreciation may slow down or may not take place at all, but it doesn’t go down.

The market keeps up with its uncertain nature and there will always be opportunities to make some money.

Moving ahead, let’s look at some basic real estate concepts

Must Know Real Estate Concepts

Before you step into shoes of a real estate investor in India, it is advisable to know some basic steps that would help you get a better grasp of the industry.  

  • The Property Life-Cycle

Most real estate markets move through a definite process that determines how value will be made in it. There are four broad steps to it.

  • Recovery
  • Expansion
  • Hyper Supply
  • Recession

The recovery phase predominantly outlines the market condition when it is slowly improving from a recent disaster. Things are getting better and buyer interest is slowly rising again.

Expansion an Hyper Supply dictate the phase when the market goes from booming to ready-to-explode. Everyone is investing in this phase and little thought is given to the potents of sale.

Finally, the bubble breaks and everyone realizes that the demand just doesn’t exist. The property is ready but the buyer is not, hence it is sold at reduced prices and the overall profit nosedives.

Lesson – So, when you go out to buy, the market you’re interested in, will be going through one of these phases. You can take the decision to invest, the amount of investment or search for a new market accordingly.

  1. Growth Potent and Goal

It is hard to tell the future with certainty and real estate is all about playing with the uncertainties. Hence, don’t lull yourself in believing that you’d triple your money in five years.

But what can be done is that you can analyze the property trends and make a plan that will work for you. It will can include a plan B and full-fledged profit-making opportunity.

While most people say that, “choose a profitable location”, you must consider your goal first. Are you going to hold the property for 3 years or 10 years? Are you investing 10 lakh or 1 crore? Do you expect to make 10 lakh in 2 years or 50 lakhs in 5 years?

All of these considerations will make a certain location good or bad with you. The growth potential of a location must be aligned with your spending capacity and intended goal, then only you’ll make a smart decision.

  1. Kind of Investment  

Like everything else, there are a number of ways in which real estate investment in India works.

For instance, you can simply buy a house, or buy a plot and build a house, or buy a pre-leased house, or buy an office and give it on rent, strike a partnership and so on.

Certain investment types favor certain markets and the prerequisite about this can immensely help you in making a profitable decision.  

Where to invsest?

There are umpteen markets and micro-markets where you can invest wisely, but our focus in this article would be to consider upcoming smart cities in India.

The reason behind this is the high growth potential, upcoming builder projects, and an overall rise in buyer interest, making them a considerable option.

The top 5 choices among upcoming smart cities 

Vishakhapatnam 

The commercial hub of Andhra Pradesh and the largest city in the state, the city is amidst a complete industrial overhaul.

Developments

  • Upcoming Industrial Projects with Chennai
  • Metro Rail Project

Locations

  • Madhurwada
  • Seethammadhara
  • Beach Road
  • Gajuwaka

Chennai 

Chennai is the capital of Tamil Nadu and yet another industrial hub in south India. It is currently poised at becoming one of the best places to invest in India.

Developments

  • Ring Road 2
  • New Metro Circuit
  • Chennai Monorail   

Locations

  • Poes Garden
  • Kalathur
  • Perambur

Kochi

The soon-to-be IT hub of India which is currently expecting serious developments in the airport business and has been on the hot list for NRI real estate investment in India.

Developments

  • New Trans-shipment Terminal at Vallarpadam
  • IT SmartCity
  • Oceanarium

Locations

  • Kokkanad
  • Kaloor
  • Aluva

Pune

Pune enjoys a number of substantial reasons for the real estate market to boom in this city. Some of these being fast-paced IT developments, climatic conditions, and well performing real estate market.

Developments

  • International Airport
  • New Metro Connection
  • New Bus System

Locations

  • New Airport Road
  • Wakad
  • Model Colony

Indore

Presence of an IIT and an IIM in the same city brings a lot of interest from rest of the parts of the country to Indore, besides its proliferating pharmaceutical industry.  

Developments

  • Delhi Mumbai Corridor
  • Bus Rapid Transit System
  • Major Road 12

Locations

  • AB / Ring Road
  • Dhar Road
  • Khandwa Road

Conclusion

After having learned the various dynamics and options, you can take your decision with a much better state of mind. There are still a number of calculative aspects such as

how to tell the market trend?

How much investment will suit what market?

What are average ROI rates in the mentioned locations?

All of these questions can either be answered by getting on the roads and doing a close survey or by consulting a real estate advisor. Hence, if you’re not an expert in yourself, it’ll be wise to consult someone as these trends are hard to read off an internet article.



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