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How to effectively reduce real estate investment risks

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The real estate sector is one of the largest markets and most prominent contributors to India’s GDP, with many people wanting to invest in it. But like any other industry, investment in real estate should be preceded by a holistic, practical, and risk assessment approach to maximise benefits and minimise losses. The real estate sector has been attributed as one of the top investment picks in India in recent studies as it has long-term advantages, and its craze will never die down.

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One of the crucial steps to take before investing in real estate is to do a thorough real estate market research of the city where you are planning to buy a property. It is far easy to study market trends, compare sale prices, and gain an overall perspective before deciding on what works best for you in today’s digital age. It allows you to make error-free decisions and gauge an understanding of when, how and where to invest. Deciding on the right city is also an important decision. Everything comes into interplay here – the economic and infrastructural developments in the region, road, highway and expressway connectivity, and the property’s strategic location.

Before finalising any property, check whether the real estate offering has all the relevant approvals such as ownership certificate, building layout approval, occupancy certificate, non-agricultural permission, various NOCs, NHAI permission, energy, water & firefighting department approval. To make an informed decision, it is necessary for you to oversee all the veracity of the documents and safeguard yourself from acts of knavery and unscrupulous activities. The RERA registration should also be checked to ensure the sanctity of the project and whether it complies with the guidelines.

The real estate developer or builder is the backbone of any project. So, before investing, track the past record of the builder, how many projects he has delivered, the average delivery time, and the construction quality of the offerings. It helps you understand the builder’s brand and the solid attributes and weaknesses that you should be aware of beforehand.

Studying the past record of the builder also involves checking his cash flow & land bank. It reassures the buyers of the builder’s net worth and also validates his reputation as a brand, enhancing the trust factor between the builder and the investor.

While going for investment in real estate, it is of vital importance to be rational & not fall into the vicious trap of lucrative schemes which are unviable and non-practical. It is often projected to belie customers and inveigle them into making non-profitable, one-sided and regretful investments. Therefore, buyers are often advised to practise caution and use a logical approach and take an expert’s help, if needed, in such cases.

Exploring micro-market possibilities is also an important task. Buying properties in locations that are nearby major roads, metro stations or have an established connection with public transportation like buses and autos promotes safer and easier travel. Buyers should also ascertain whether there are schools, shopping complexes, and hospitals in the vicinity of the property. It improves the living experience and makes fundamental necessities easily accessible to them.

Buyers should also overlook the various stages of the project and the state of the groundwork. It shows their interest and awareness of the subject and asks questions if there are any delays or loopholes. It increases the developer’s accountability and makes them answerable to the buyers.

These are ways to reduce the real estate investment risks and make a profit-worthy investment. You have to be confidently aware of the market analysis, and research and confidence stem from knowledge.

(By Sheeshram Yadav, Founder & MD, TimesPro Consulting)





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