Key factors to keep in mind before investing in real estate

Real estate has seen a boom over the past decade and is expected to grow more in the years to come. Both commercial and residential estates are currently witnessing a major increase in investments made by the people of India.

In the first 6 months of 2021, there was a significant rise in investments by 52% making it worth USD 2.4 Billion. In India, real estate is the second largest employer after agriculture. It is estimated that by 2040, the real estate sector of India will rise to INR 65,000 crores (US$ 9.30 billion) from INR 12,000 crore (US$ 1.72 billion) in 2019.

However, to reap the benefits of investments in real estate, one must gather useful information from verified sources.

Here are 5 key points you need to keep in mind before investing in real estate:

1. Proper survey of the property and the location:

- Survey of the location and the property is of utmost importance

- Special focus should be given to factors like road connectivity, distance to facilities like supermarkets, pharmaceutical stores, parks, and more

- Review the property through RERA (Real Estate Regulatory Authority) and take assistance of legal experts throughout the entire purchasing for enhanced transparency

2. Observe return on investment of existing investors:

- Conduct an in-depth research on ROI for the investments by previous and existing investors

- Keep a record of factors or improvements that add to the value of a property

3. Check ownership of the property:

- Take a look at the ownership and other details of the property to to prevent any frauds or hassles

- Check up on ownership details to know if there are any charges/unpaid dues hidden by the seller or broker in the documents of the property

4. Study on-going market dynamics:

- Understand the dynamics of real estate market before making an investment in residential properties

- Gather complete information about the interest rates on the home loans, developers’ offers, and government guidelines or reforms such as reduced stamp duty for women buyers

5. Rely on REITs (Real Estate Investment Trusts):

- They help in making investments less risky as 80% of the real estate under the Real Estate Investment Trusts must be operational and income-generating

- They ensure that long-term scenario of return on investments in real estate is still intact even after the pandemic

Even though real estate is a rapidly growing market, it is still a volatile one. The investments made in this industry are huge and are subjected to the market risks. Therefore, it is highly recommended to make careful observation and informed decisions before making any kind of investment in the estates.

With inputs from Heena Sehrawat, CEO, Geetanjali Miracle Makers