Residential property investment: Things to consider

residential property

Residential property investment: Things to consider

residential property

Residential property purchase has been a significant milestone in one’s life since time immemorial, whether as an investment or as a dream home. With rising income levels, especially among the urban population, the importance of owning residential real estate in India has grown in recent years.

While commercial real estate has become increasingly popular among high net worth individuals (HNIs) as a means of generating consistent income, residential real estate is more accessible and easier to manage for the majority of investors.

Because the investment is much larger than a typical investment in capital market instruments, some important factors must be carefully considered before investing hard-earned savings accumulated over many years into a residential property purchase.

Factors To Keep In Mind When Selecting Your Residential Property
Choose the City Wisely

If you’re looking for a property to add to your portfolio rather than live in, the city you choose is the most important factor to consider. In India, real estate is not homogeneous, with different demand-supply dynamics in different cities. As a result, cities that are experiencing rapid demand growth should receive priority.

The length of time it takes for a typical real estate project in India to reach the open market, as well as the amount of capital required, can lead to periods of excess supply. Developers reduce prices to cope with slower supply absorption in cities that do not generate the appropriate number and type of job opportunities, resulting in slower population and demand growth.

Developers tend to hold onto prices in cities that attract talent with better job opportunities, resulting in faster population and demand growth, making investments in these cities safer. An increase in demand in a city not only increases market value but also makes an investment safer.

Growth in Household Income of a City

Property values relate not only to inflation but also to the growth of the city’s workforce’s median household income. Another important factor to consider when looking for a city to invest in is the rate of increase in income. A study of the demography of jobs in a city is a reliable way to assess this.

Knowledge-based economies, such as technology, have much higher median salaries than manufacturing-based economies.

Accessible Socio-cultural Amenities

The process of selecting an investment destination does not begin with selecting the right city. Micro-markets within each city have varying growth trajectories due to various dynamics.

People migrate more to locations with a higher density of knowledge-based jobs, which boosts housing demand in these areas. People prefer that their children do not have to travel long distances on a daily basis, so proximity to good schools is an important factor to consider when buying a home, and it should be at the top of the list for those considering property investment in the area.

Connectivity 

Micro markets with easy access to wide roads and public transportation, particularly the metro, are expected to become more popular in the future. Metro connectivity allows people to work and commute anywhere in the city while remaining in their preferred location.

Metro stations add value to homes faster than those located in less crowded areas, especially in congested cities. Investing in projects close to metro stations yields a greater return than projects far from the stations.

Architecture and Design 

People in major cities have spent more time at home as a result of the pandemic’s multiple waves and the ensuing lockdowns. As a result, there is a greater demand for spacious homes and large open spaces within neighborhoods.

Typically, buyers look at the numbers as the carpet area of a home, without looking at how the carpet area is laid out. To understand the practical usability of the design and the magnitude of usable spaces in the project, a buyer must thoroughly examine both the master and floor plans.

The dimensions of the house and belongings of the family must be considered when designing a floor plan. Only if the plans feature plenty of work and study space for everyone, the homes will be in demand.

Additionally, family relaxation in privacy of one’s own home can also be enhanced with open decks.

Outdoor Spaces and Density of Amenities 

Priorities for shortlisting projects should include outdoor spaces in one’s community and superior floor plans. Most buyers prefer having all of their needs met in their own neighborhood, both during lockdowns and later on.

As income levels rise in high-growth cities, fitness and leisure become a higher priority. As an investor, you should look at a project’s range of amenities, as well as their usability and functionality.

It is more accessible when its demand is at its peak, such as on a Sunday. Investor value is more likely to be higher in communities with a variety of functional amenities.

Take Note of Underlying Reality Before Investing

For many years, most developers focused on ironing out system inefficiencies while building projects that didn’t make sense. Buyers felt the need to upgrade within a few years of moving in, so these projects quickly became obsolete.

  • Residential property buyers should consider design-focused developers in the market.
  • Investors and end users will benefit from these projects as they intend to incorporate functional usability.
  • Before buying a property from a developer, transparency in pricing is a very important aspect to look at. Investors and end users may encounter complex and variable costs when seeking the “best deal”.
  • Buyers who negotiated a lower price may offload units at a lower price, thus affecting other companies’ profits. In order to ensure complete transparency we need to dig deeper into how developers price and sell.
  • Saving time also means avoiding unnecessary stress, which frees up time for other project components.

ALSO READ: Investment in Real Estate: A Beginner’s Guide

Bottom Line

For investors in residential real estate, the Indian market currently offers a diverse range of options. Residential real estate could prove to be an apt investment avenue for those seeking safe and predictable asset classes if one is willing to invest sufficient time to research the right property based on the above-mentioned factors and also give the investment sufficient time to perform.

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