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Is it time to invest in real estate market?
Source: The Times of India Jan 20, 2014
Is it time to invest in real estate market?

The Times Of India

Real estate investment happens to be one of the cornerstones of the asset classes that people invest in. There are two kinds of investments in real estate that deliver good returns. One is when you invest on the basis of the fundamentals of a project, and another when you invest when the property market is on an upswing. And of course, also in a rare good scenario when the both these factors are at play.

When you invest on the basis fundamental strengths, the decision can rarely be bad or ill-timed, simply because your investment is made after a diligent study that takes into account all the factors and variables that are at play. This includes the location of the project, regulatory directives on its usage, licenses received and so on and so forth. Hence this leaves behind little room for nasty surprises later on.

When a real estate investment is made on fundamental grounds, there is no hot air bubble artificially supporting it. No wonder, the chances of your investments turning sour are less. Yes, such an investment may or may not see a quick appreciation. If it appreciates quickly, it is a reinforcement of your decision and the market is rewarding you for that.

However, if your investment is not showing a sharp upswing remember that such swings are often associated with speculative buys and you surely are not in the speculations game even then be assured that if you have taken the right decision, appreciation will follow. So following are the key factors you can keep in mind to ensure that you have taken a wise decision based on fundamentals:

* Required Approvals: Has the project got all due approvals from the government and concerned authorities? Also, what is the permitted mix between residential and commercial projects?

* Land Titles: Has the builder got fair and clear titles to the land where the proposed project is located? Are there any disputes on it?

* Reputation of the Builder: What is the reputation of the builder? How many projects has he executed? What is the state of their ongoing real estate projects?

You can speak to a few owners of their existing projects to get a feel about the builder. You should also see all the licenses, titles, developmental plans etc. that the builder has in connection with the project.

Know about other Builders in the Area: Who are the other builders in the area? Get a feel of the overall attractiveness of the location. Normally an area with more builders and projects turns to be a property hub that attracts builders and buyers alike, making it an attractive and promising real estate zone.

Know the Area and the Market: Figure out the market by speaking to the developers, brokers and by doing Net research. What is the area and project mix like - does it have a decent mix of end-users and investors? What are the long-term prospects of the area?

City Development Plan: Look at city development plan and see the area's planned development. Also evaluate the expected infra development and civic amenities such as schools, banks, office complexes, petrol pumps, neighbourhood markets and so on.

After doing your homework, you can be reasonably sure whether you are taking a right decision or not. If everything looks ok and also the area where the project is located has good growth prospects, then you can go ahead.

These days you may also hear some people saying that this is not the best time to buy as the market is down, there is unsold inventory with the builders and so on. An intelligent investor, however, knows that in such times, a contrarian approach works the best. So you can actually talk to various good builders and may arrive at a deal which was not available earlier. In this way, you can actually get a great deal when the inventory with the builder is high. It is actually a blessing in disguise for you!
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