Real estate in India has traditionally been one of the most exciting investment opportunity for people. The growing economy, booming sector and the increasing purchasing power of people has only contributed to an increase in demand for more real estate investment opportunities. However, as we say this, there are also certain myths that are deep rooted in the real estate industry, which largely determine consumer purchase decisions. There are also some misconceptions that lead the investors into making some wrong investment decisions, which eventually cause them dearly. Whether you are into the realty business or are planning to invest in real estate, here are certain myths you will come across rather frequently when it comes to the real estate market.
1.The only criteria for choosing the time to invest in property is the market scenario
So, while this statement maybe partially true, there are various other factors that will enable you to decide when you should be investing in your property. There are several investors who are first time investors who need to consider other factors also before investing in a property apart from what the market scenario looks like. Several aspects like personal affordability, bank home loan interest rates, your age factor and so on can play an important role in making the wise home buying decision. The purpose of investment is also an important factor. If you are considering buying your home at a younger age, then you are likely to own your home sooner. It is important to get the right assistance from a financial planner, rather than keeping the market condition as the sole base for your property investment decision.
2. Real Estate investment is a risk
Real estate investments are often considered a highly risky proposition due to the market being highly volatile. While yes, there are often chances that the market can suddenly go down considerably lowering the sales returns that you will get at the time of sale, but the fact is that every investment comes with a certain amount of risk. Be it the stock market or investing in gold, the risk factors are present in all sorts of investment avenues. Real estate investments are considered to be investments in real term when they are held for longer periods of time. You can considerably reduce your risks by investing in a property that is surrounded by some infrastructural haul. Again, the type of property you invest in also makes all the difference on the expected returns from the investment. While the risks are present, they are calculated risks and can be reduced to a large extent by making an informed buying decision.
3. Developers purposely delay projects
Property investment is often guarded by a severe misconception that the project will be delayed by the investor. Most people think this to be a gimmick by the real estate developers, however while project delay seems to be the most common complaint, most of the big developers will vouch by the fact that developers never delay the projects out of choice. A professional developer is likely to try their best to ensure delivery and completion of the given projects as a delayed project is also an additional expenditure for the developers. Real estate in India, is largely governed by several government and civic bodies for approvals. Premium residential properties have to undergo a series of approvals to go through, including land approvals, environmental clearances, occupational certificate and so on. These certifications are a mandate and often take anywhere between 24 to 36 months to come through.
4. You should only trust big names for better value
At the onset of your home buying project, you are likely to go through several real estate websites, gaining more information about projects and the builders. The myth that is often associated with the home buying process is that only big builders and developers give complete value for the investors money. This myth has however emerged as the biggest misconception of the sector as real estate trends have shown how several large developers have failed to keep up their commitments and timelines on certain projects, while mid size developers have delivered projects in the promised timeframe as well as maintained high quality of construction. In fact, some of the mid-sized developers are even committed to delivering quality amenities and even keep a check on the projects for further maintenance after the completion of the project.
5. Metro cities are the only places for good real estate investments
The fact is far from this myth. According to sources, the metros are now saturated with developments and are not seen as a much value-buy from an investment perspective especially for the middle class. Focus for the next phase of real estate boom is now shifting towards Tier II and Tier III cities, which are now experiencing the infrastructural boom, making it the right time for investors to plug in their funds. Pune, Ahmedabad, Ludhiana, Coimbatore and Lucknow are some of the cities that are being looked at as viable investment propositions guaranteeing good returns for the future.
6. Developers increase the property prices intentionally
While the real estate prices keep rising, investors often blame the property developers for the price hike. However, it is important to note that the price hike doesn’t benefit the developers either, since the property demands automatically come down with a rise in the monetary value. Professional developers such as Indya Estates and others who stick to quality do not inflate prices or approve unrealistic price hikes. Hiking up the prices of the projects is not in the hands of the developers and is more area or market driven.
7. Discounts offered by developers helps in bringing down the overall cost of the property
The reality is indeed far from this. If you thought the cash discounts that are offered by builders and developers helps in bringing down the cost of the property, then you are mistaken. The amount that is discounted is often added to the overall cost of the buyer as a hidden cost, which the buyer eventually has to pay in the form of amenities or facilities offered. However, having said this, the upfront discounts are different from the offers that are put up during festivals and special home buying occasions. Before going ahead with an investment based on an offer, it is important to go deep into the mathematics to avoid any surprises later. It is also important to ascertain that the discount offered at start is not included later as a hidden cost, which eventually dilutes the value you see with the discounts.
8. Top Floors come with a premium
If you are investing in a premium property, then you certainly want to get it with the best view, which is often attached to a top floor buy. While in some cases top floors do come with a premium cost, it is important to understand what the difference in the cost is and whether the value is justified as per your expectations. In tier II and tier III cities, the top floor premium is still not quite heard of, however in cities like Mumbai and Delhi, where living on a higher floor is a craze this myth may have some truth.
Property investment is a huge investment, and hence requires some amount of research. Visiting real estate websites, speaking to real estate developers, reviews, following up on some real estate news as well as getting first hand reviews about the project or developer are some of the best ways to find authentic information that can help you manage and minimize your risks. While every form of investment entails certain associated risks, real estate is no exception. However, when investing in real estate it is important to keep these myths aside and do your homework for a sound and wise investment decision that will fetch you good future returns.