Investment
Tips -
Right
Property, Right Place and Right Time
by Mr, Om
Ahuja, Jones Lang LaSalle India
We hear often enough
that real estate prices have gone through the roof. A few years ago, the same
property was available at 1 / 3rd of the price being quoted now. When not
equipped with relevant market facts, we tend to agree with the negative
opinions about an irrational market & artificially inflated prices.
Meanwhile, who does not want to cash in on it, irrational or / not?
One
Mantra..!
Investors and
speculators feel that buying a property cheap & selling it high is an ideal
strategy.
End users say buying
value and taking a call on selling in the long term - if at all - is the
way to go.
From either
perspective, there seems to be a consensus on at least one mantra, and that
is buy cheap.
 |
Mr. Om Ahuja
|
Right Product at
Right Price..!
It definitely makes
sense - but to be able to do that in today's property market, one needs to be
an early investor into the right market, for right product & at the
right price. A good investment horizon (the duration over which one holds
the property before selling it) is also important.
Identifying the right
markets becomes easier if one looks for certain at key market triggers. The
critical ones that highlight the potential of any property markets are..!
^ Existing infrastructure readiness
^ Execution / or implementation timelines for
new infrastructure initiatives,
^ Demand for
commercial space in the market (leading to job creation),
^ Social
infrastructure
^ Price trends
Top
Residential Property Investment Cities..!
Factoring in all
these 5 aspects and considering them against the prevailing market environment,
the top residential property investment cities today are..!
*
Hyderabad
*
Bangalore
* Chennai
* Pune
* Noida,
and
* Navi
Mumbai.
To a large extent, the aforementioned growth
drivers are clearly visible to varying degrees in these cities. The on-going
trend in their commercial real estate space tends to reflect a serious growth
& expansion of various corporate offices.
There is certainly
very healthy demand for Grade A commercial spaces in cities like Hyderabad,
Bangalore & Pune. In these cities, the demand for Grade A commercial real
estate exceeds the supply scheduled for the near and long-term future. Their
employment generation potential is established & assured.
In Noida & Navi
Mumbai, there are market drivers over and above job creation at play - namely
superior infrastructure and affordability.
Navi Mumbai &
Noida are absorbing investor demand from Mumbai & Delhi, where
affordability plays important role for investors.
In the case of Navi
Mumbai, one can further extrapolate the investment potential to Kharghar,
Kalamboli and Ulwe. For Noida, the extended growth corridors are Noida
Extension and Noida Expressway.
Massive Job
Creation..!
In all these cities,
massive job creation will further fuel the demand for residential property for
quite a while to come. As already mentioned, job creation is a major trigger
for residential real estate demand.
Every individual
employed by IT / ITES & BFSI industries is eventually a buyers of a
residential apartment.
The current
absorption of residential apartments in Bangalore, Hyderabad, Pune &
Chennai shows the lion’s share of demand coming from IT / ITES and BFSI
employees.
Average Age
of Property Buyers..!
The average age of
these buyers ranges from 27 to 33 years, with the easy availability of
mortgages and the desire for a self owned apartment before marriage being the
key drivers. The highest demand is for apartments where price tags fall within
the Rs. 40 lakh - Rs. 1 crore range.
This takes care of
the challenge of identifying the right product, leaving only the question of
what kind of investment horizon works best.
The Indian property market is definitely not
geared up for property 'flipping' (buying & selling speculatively within
very short periods).
India's conservative
banking system has been & will continue to be the country's most reliable
insurance against the kind of boom bust buying & selling cycles were the
undoing of the US property market.
This leaves us with
mid-to-long term investment options.
Considering the
current market dynamics, price trends, supply of residential stock & rental
yields, the best period over which to invest is about 5 years.
Such an investment
horizon is a safe hedge against risk related to market vagaries, and ensures
that the property will have gained very healthy appreciation regardless of
short-to-medium term market dynamics.
About the
author..
Mr. Om Ahuja is CEO (Residential Services) at
Jones Lang LaSalle India
Om AhujaCEO – Residential Services
+91 22 6620 7575
For more details..!
Mr. Arun Chitnis
Assistant Vice
President, Marketing, Jones Lang Lasalle India
Level 6, Amar Avinash
Corporate Plaza
Bund Garden Road,
Pune - 411 001.Tel: (020) 30930441 Fax: (020) 40196101
Mob: +91 93227 38464
Website:
www.joneslanglasalle.co.in
Blog:
www.joneslanglasalleblog.com/realestatecompass
Great post! I’ve been trying all the above advice and, little by little, it seems to work!
ReplyDeleteThanks again for posting!