Things To Consider Before Investing In A Real Estate Project
Developers or properties that offer transparency in pricing need to be carefully evaluated and narrowed down
Investing in real estate is one of the most important financial decisions as it makes up a large part of an investor’s portfolio and each investment consumes a significant amount of capital. The security that comes with owning a tangible asset, the relatively non-volatile nature of the asset class, and the predictability of the return on investment are likely reasons behind the popularity of real estate as an investment. While the above factors are proven attributes, there are a few important factors that need to be considered before venturing into purchasing a property, especially one that can generate savings over several years.
One of the most important factors to consider before heading out to buy property in the city. If the intended purchase is for investment only, consider the nation as a whole, not your city. The best investments are made in fast growing cities, and not all cities grow at the same rate when demand is growing rapidly. While people understand how growth in demand can help increase prices, not everyone realizes that growth in demand is also important in reducing the risk of investing. Real estate is a capital intensive industry that requires many years of investment and effort to bring a project to market. Therefore, there will inevitably be oversupply times. In cities with rapid population growth, developers tend to hold onto prices and wait for demand to grow to absorb the excess inventory. However, in cities with slow population growth, the oversupply is often remedied by lowering prices, which is never good for an investor.
In addition to population growth, another important aspect should be growth in income levels. Real estate prices move in parallel with household income, so cities with many high-paid knowledge workers are better suited for real estate prices than cities with many construction contracts. Knowledge-based industries like the tech sector tend to have a high percentage of their employees making good incomes. The manufacturing sector, on the other hand, tends to be top-heavy, as a high percentage of employees earn low wages. For real estate prices, cities with a knowledge-based economy are safer in the long run.
Once a city is delimited, the selection of micro-markets must take into account proximity to high-density employment areas, schools, socio-cultural infrastructure, public transport and road links. Proximity to subway stations will be an important factor on home buyers’ checklists in the years to come. The subway will have a two-tier effect on property prices over time as projects near subways are significantly more expensive than other projects in the same region but not within walking distance of the subway. Another effect of the proximity to the metro is that the price differential between different parts of the city may narrow as it is no longer so impractical to take advantage of the social infrastructure or employment opportunities in other parts of the city. Taking the comfort of living in part of the city and commuting anywhere in the city without breaking a sweat leads to projects near subway stations that offer investors better returns than comparable projects that are not in the vicinity of the stations.
The connection and proximity to public transport give a property enormous added value
An often ignored but important aspect when choosing a property is architecture and design. In the past year, both more and flexible spaces within the four walls as well as wide open spaces and sports facilities within the communities have gained in importance and will continue to do so in the coming years, as more and more people spend long periods of time in confined spaces in their homes . You have to look closely at the master and floor plans, not just the numbers related to the carpet area, but also the functional aspects of the design. For interiors, it is necessary to study whether the floor plans take into account the furnishings of the furniture, the space needed to carry out the intended activity, and at the same time the size of a typical Indian family for whom the house is intended. Usable outside decks must also be considered for spending time outdoors.
Floor plans need to accommodate all of your furniture and still have room to move around comfortably
Extensive outdoor areas within your own community allow you to relax and at the same time meet your fitness and leisure requirements. These must be at the top of the priority list when selecting projects. As the country develops, the ability to engage in pastimes that enable us to be fit and healthy will become a priority, and projects with many amenities will be more desirable than projects without. A critical factor in considering these characteristics would be the per capita density of amenities. If every tennis court is to be shared with thousands of apartments within a community, the chances are that it will never be used when it is most convenient, for example on the weekend. When fewer residents share the same equipment, the equipment becomes much more user-friendly, which increases the popularity and demand for the project in the marketplace.
Open spaces, sports and leisure facilities and their density play a decisive role
A well-designed property makes a significant contribution to creating wealth by not only being visually appealing, but also representing an inestimable factor for the functional user-friendliness in its design and thus making it future-proof. A perfect amalgamation of beauty and functionality will be the catalyst that will allow a property to appreciate faster than others in the same market. Projects that have incorporated all of the above elements into their design and make them relevant to both end users and investors should be considered in any market.
The infinity swimming pool at the highest point of the tower makes it both beautiful and usable
Everyone thinks of the brand when they invest in real estate. However, in many cases this can be a mistake. Most of the larger brands have large teams that run projects quickly to achieve scalability. They rarely have the ability to devote time and attention to the details of the design that make a house a home. As a result, their projects tend to have a cookie cutter and a soulless feel when they are completed and occupied. As an investor, it makes sense to ignore the brand and pay attention to the underlying reality of the project, as a completed project will determine its price based on its merits rather than its brand.
Everyone wants the best price when buying a property, but the experience for most people is quite the opposite, with the price depending on the ability to haggle with the developer. The price you pay must be tied to the value of the underlying unit and not to the ability to negotiate. This is an important consideration for an investor as you never want to be the person who paid a high price while other investors get a deep discount and later dump their inventory at a lower price. Developers or properties that offer transparency in pricing need to be carefully evaluated and narrowed down. This avoids stress and saves time, which allows the buyer to concentrate on the other important factors when completing a property, be it for an investment or for their own use.
To sum up, the right location, the superior design in the master and floor plans, a wide range of amenities, outdoor areas and transparent prices are the most important attributes to consider when buying a property – safe and robust foundation of your own Wealth. As Franklin D. Roosevelt famously once said, “Real estate cannot be lost or stolen or carried away. Bought with common sense, paid for in full and managed with reasonable care, it is the safest investment in the world. “
The author is the CEO of SmartOwner, Asia’s leading real estate fintech company
DISCLAIMER: The views expressed are the authors’ own and Outlook Money does not necessarily subscribe to them. Outlook Money is not liable for any damage that may arise directly or indirectly to a person / organization.