The festive season is here, and so are fabulous offers from developers, offering you freebies galore. Real estate prices haven’t budged in 3 years. Take an average annual inflation of 5%, bundle in the discounts and sweet payment plans and you’ll find residential property is already cheaper by 15% to 20%. Top it up with the beauty of buying a ready-to-move in apartment, over buying an uncertain promise of getting a home in the future, and you my dear buyer, are truly in the driving seat. So here’s a simple guide to making the right bet with property.
Narrow down on location
Your first step here is to figure out what location or neighbourhood to buy into. Every geography within a chosen city offers multiple choices. Look for areas right next to IT Zones and office hubs. If those are out of your budget, go for areas with the best connectivity to employment hubs, even if your heart dictates that you stick to familiar areas, surrounded with friends and family. The future appreciation of your property will depend on the economic buzz and connectivity. Pay special attention to locations with good schools, even if you don't have school-age children. When the time comes to sell, you will find many more takers for homes close to schools, especially with most parents struggling to cut down commute time on heavy traffic roads of India.
"There's only one reason to buy property today, to live in it. It's a brilliant time for end users to buy ready to move in apartments from the secondary market which is down by 15-20%, if not more. You can never time the bottom of the market, but it feels that the market has bottomed out. And if the project is inhabited, in a proven location you cannot go wrong." Anshul Jain, MD, Cushman & Wakefield India
Research the right price
Gone are the sweet days of buying a property with the belief that property prices go only one way – up! The last 3 years have been a grim reminder that buying overpriced property can lead to losses. It’s critical to buy at the right price and it’s easy enough to check the going rates of any area today on the internet. What’s important to remember is not too get frazzled by the variance in prices you see across platforms for the same project. Take for example Golf Course Extension, – you’ll find sellers selling at Rs 7,200 per square foot, to Rs 9,000 per square foot for the exact same project. The layout, floor, view etc. could be responsible for a small difference, but not that huge. So use your Indian bargaining brain. You want to buy a 3 BHK? Take 10 apartments of 3 BHK in that project, and start your negotiations at the lowest price, and close the deal at not more than 10% higher. Remember there are many more sellers than buyers in the market today.
"I think there are very exciting markets still in which you can get more than 10%, but you have to have patience. You have cherry pick based on infrastructure, employment generation and price points. Essentially you need to back your buys with a lot of research to make money on property." – Samir Jasuja, CEO, PropEquity
Grill the Builder
If you’re buying a ready-to move in flat, location and price is all you have to research and of course, fall in love with the property you’re buying. But if it’s an under construction or half-done flat, you’ve got to dig much deeper into the company’s financials, its reputation, its investors and its bankers. A lot of this is in news and just a Google search away. Don’t hesitate to ask for proof that there is enough money to complete the project – either through private equity or bank funding or their own cash. And if they try and convince you that your risks are taken care of because all that you have to pay is 10% now and rest on possession, do NOT fall for that gimmick – it’s simply not enough. You need the builder to tell you where the money is coming from, to complete the project.
“If the track record of the developer is good and you are buying a house to live in, this is a good time to buy. For investors – research based, cherry picking is the only way to go – which financial institutions have funded the project, what is the track record of the developer, what are the existing customer in the existing projects saying about the developer? A right pick could give you good returns over a 3-5 year horizon." – Vikram Goel, CEO, HDFC Realty
Work out the math realistically
Start with the funds you have and the loan you can get to arrive at a budget. Banks will fund only 85% of the apartment price. The rest should come from your savings nest. There are plenty of loan calculators, where you can plug in your and spouses income to arrive at your loan eligibility and EMI. Don’t bother stretching yourself for that perfect home today. Buy within comfortable means of a loan you can service, without stress. You can always upgrade in 5 years when you can afford more. Remember to keep a reasonable cushion for the expenses involved in moving into a new home. Even a brand new home takes money to become livable. Keep at least 2% of the flat cost aside for that.
Spend some money on professionals
Irrespective of how diligent your research is – get a lawyer to look at your buyer seller agreement and make sure you know your rights and obligations. Seek the help of an architect to check out the property for structural issues, and hidden wear and tear, in case you’re buying into a second hand property. Almost all of us have architect friend who will do this for the price of a good home-made dinner!
SIX PROPERTY MARKETS WORTH YOUR TIME AND MONEY
Our experts culled out the hottest property markets across India on The Realty Debate, looking for those which have the potential to give you 10% + returns over 3-5 years. This is the list.
Gurgaon : Golf Course Extension
Navi Mumbai : Kharghar
Hyderabad : Gachibowli & Madhapur
Pune : Wakad & Baner
(Manisha Natarajan is Executive Editor – Business & Real Estate, NDTV)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.