Valuation of a property, location: 5 things to keep in mind when investing in real estate


Whether investing in remote suburbs or closer to downtown, there are a few important factors to be aware of.

Real estate is by far one of the most preferred long-term investments, followed by gold and bank deposits or long-term stocks / bonds on the stock exchange. In recent years, urban cities in India have experienced rapid infrastructure development which has led to massive growth of suburban areas. Even as new clusters of homes and commercial spaces are being developed further from the city center, this has opened up huge real estate investment opportunities for people looking to own a second home / weekend home. end or even just to keep a property for better returns. long-term. Bargain prices, a relatively peaceful and cleaner environment, open spaces and an opportunity to get away from the hustle and bustle of city life are also important aspects that make people buy and invest in real estate. However, whether investing in remote suburbs or closer to downtown, there are a few important factors to be aware of when it comes to real estate.

1. Location: This is always the most crucial aspect when looking for a property for investment. It is important to have a thorough understanding of the neighborhood, upcoming projects, infrastructure development in the pipeline, etc. However, outside of the neighborhood it is also important to know the real location of the property, in relation to the access road, the view, the surroundings and if they will stay the same in the future after the purchase of the property. For example, a lush green area in the yard and a view of the mountains from the bedroom might sound dreamy right now, but a few years later a new project could be coming up that will block the view and devour the lush green pasture. ! Therefore, a thorough understanding and inspection of the location is essential when considering a long-term investment.

2. Property valuation: Once you have chosen a location, it is important to understand the property valuation, as insurance premiums, investment analysis, taxation, depreciation, and future growth and returns of the property will largely depend on the baseline valuation. Factors to keep in mind when valuing may be either an income approach – if one seeks to derive rental income from it, or a cost appreciation approach – if one sees a profit in the return on investment of the new property upon sale, or a basic benchmarking – based on the analysis of similar properties in the area with similar characteristics, etc. The cost of the property, the loans and the amount of depreciation all need to be fully understood to arrive at the right valuation.

3. Potential for appreciation: This is another essential factor when selecting a property for investment. The property’s appreciation potential may vary depending on market scenarios and the pace of development in the area. However, in the case of a long-term investment, one must be assured of substantial growth as it is a high value investment and moderate risk. Factors such as the development of expensive infrastructure (mega highways, airports or elevated connected subways and corridors, etc.) or a proposed shopping / business center in the neighborhood, for example, can be great accelerators for appreciation. of the property.

4. Features and amenitiesWhile some properties under construction or completed boast amenities that will be added or upgraded later, it is wise to look at the entire property in terms of features and amenities, to understand ease of living. and the likely benefit if seeking rental income. From elevators and open spaces for children and the elderly, to quality fittings in bathrooms and safe electrical wiring, etc., all are equally important. Even when one is not looking to use the property itself, a well-located location and good amenities automatically increase in value and returns.

5. Documentation and ownership: After carefully checking all of the above factors, checking the documentation for accuracy – clear title deeds, clear adherence to RERA and other government policies, loan eligibility, builder track record and structural reputation quality, electricity and water connectivity and supply, etc., are all important aspects. Once satisfied with all the information, when buying / investing in a property, you must ensure that you have foolproof documentation that is legally registered, with all due diligence, taxation, insurance and stamp duty etc. . These processes, although lengthy and sometimes costly, are important in ensuring the authenticity and value of property documents. For example, there are properties located on the outskirts of town, which come with landholdings along with the villa / property. These are a great value investment because they allow you to own the land and not just the house.

Agnelorajesh Athaide is co-founder, SAVV Global VNCT Venture, Global Developments. The opinions expressed are personal.