2016 – Is it the right time to invest in residential properties in India?

Is it the right time to invest? Should I wait? These are the most common questions we hear from our customers. Given the size of investment, that is an important question to ask before investing. While there is temporary downturn in the market, fundamental economics of housing market are strong.We are cautiously optimistic about investing in Residential Real Estate Market – our caution is in choosing right location, right project and at right price. Our optimism is in fundamental economics and opportunities to invest at right price.

Here is why we believe in our rationale –

• Proactive Policy Reforms –With the cabinet approving the Real Estate (Regulation and Development) Bill, the industry will see a lot more transparency and compliance of rules by the developers which can only be good news for the home buyers. Once the builders are subject to strict regulations, the buyers will have more confidence and hence the industry can have a better access to structured capital.

In 2016, the budget also tipped the scales in the favor of home buyers. With the tax benefits on home loans announcing additional deductions under section 80EE, all that a home buyer/investor needs to do is a careful research on where and from whom to buy.

• Tale of Supply vs. Demand–With a humongous increase of almost 50% percent in unsold housing inventory, a smart buyer should take advantage of the weak market. People looking at good returns after 5-6 years should tap into the existing unsold inventory by reputed builders, in prime locations and drive hard bargains.

According to Liases Foras, a real estate research firm, the top six cities – Mumbai (MMR), Delhi (NCR), Chennai, Bangalore, Hyderabad and Pune are stuck with an unsold inventory of nearly 7 lakh. Instead of avoiding the turmoil in the market, a smart investor can turn the situation in their favor by getting good deals due to a noticeable lack in demand. Although the past 2 years have seen a huge dip in property price appreciation, experts believe that 2017-18 is when the prices will shoot up again. Just keep a check on the location and development quotient and 2016 could be your year of amazing deals!

• Mouth watering deals in offing –Apart from looking at the unsold inventory, it will also be a smart idea to invest in an under-construction project which will be handed over by 2018. With a lot of builders offering “No EMI till Possession”, home buyers stays in a win-win situation provided he deals with reputed developers and not get taken-in by any and every kind of scheme floating in the market.

• Variety of Destinations to choose from –2016 is also a good time for investors to look beyond their home towns or big cities as a lot of Tier-II cities and outskirt regions are rapidly becoming the preferred destinations for large-scale investments. Additionally, with the Smart City programme kicking off, people have a lot more places to choose from when it comes to buying a house from an investment perspective.

Another way to select potential investment hub is by keeping a check on how developments are happening around major cities.

For example, in Chennai localities such as Padur, Navalur, Kelambakkam, Siruseri, and Thalambur are transforming into residential hubs due to the presence of SIPCOT IT Park at Siruseri. The expansion of IT parks and other commercial activities have brought about a good demand for residential properties.

In Mumbai, places like Boisar, on the outskirts of Mumbai is noticing a surge in commercial activities. From being under a Gram Panchayat, to being connected to Delhi through the Delhi-Mumbai Industrial corridor and a 4 lane railway track to Gujarat, it is soon going to be a prime real estate market. Similarly, outskirts of most major cities have seen exponential growth in terms of development. Thus, for low to medium budget investors, these upcoming hubs are the perfect opportunities.

Everything said and done, the turbulence in the market is probably going to take at least 1-2 years to settle down. Therefore, taking a calculated risk based on a clear analyses of the personal as well as market factors in the real estate segment might prove to be the best investment decision you make in 2016!