Real Estate Articles
Reasons for Investment in Real Estate & The Deciding Factors There is a common trend in all civilized societies that people do earmark a part of their income in order to face unanticipated conditions in future and for fulfilling the future needs of self and family during the worst periods and also for old age.
Bank deposits, stocks, mutual fund, insurance policies and bullion have been the best options for decades and till recent time, it was the favorite for majority of people. But for past some years the scenario is changing rapidly. People are extracting their funds and deposits from banks, insurance policies, and mutual funds because of the unattractive low returns. The stock market is unpredictable and volatile and requires close monitoring.
Due to the downturn in above defined sectors, people are searching for other investment options. As a result of these events, majority of people decided to invest their hard earned money in real estate. The real estate sector provides a better and secured choice for the investors as investing is safe and there is rarely a chance of depreciation of the cost of properties. This took the shape of a trend and as a result of which the global real estate market is on a boom. There is continuous rise in property prices , be it residential, commercial or industrial.
Factors to be Considered Before InvestmentThe yields in the real estate market is computed on the capital invested and the annual rental returns minus the taxes like property tax, income tax and annual maintenance charges. If you want to make maximum from real estate investment then you will have to consider at certain points before investing in real estate.
- The selection of appropriate location is a major deciding element in property investment. The demand for all types of space in metropolitan cities is almost equal. The demand and supply position of each sector such as residential, commercial and office space needs to be carefully examined.
- Residential property needs smaller investment while commercial and office space require higher investment. In metros the market trends are lucid on account of competition and repeated transactions.
- The returns are higher in smaller towns due to deficit of accommodation with limited transactions.
- The investment in agriculture properties are not lucrative because the income from agricultural asset is seasonal and dependent upon weather and climatic conditions. Apart from that the sale and purchase of agricultural lands has many legal restrictions.
Shifting of Realty Investment to Smaller Cities With the boom in Indian economy and real estate, the metros or Tier I cities of India are flooded with burgeoning investments in the residential, industrial and the services sector. All the top cities like Delhi, Mumbai, Bangalore, Kolkata, Chennai are facing over crowding and are not able to meet the rising demand of commercial and residential spaces. The congestion occurred in realty structures has forced the realty investors to look for alternative emerging cities leading to a demand for Tier II and III cities.
According to a study conducted by real estate consultancy Knight Frank, Chandigarh is the hottest emerging cities of India in terms of real estate development, physical & social infrastructure, and business environment. Following it are Nagpur, Goa, Kochi, Visakhapatnam, Ahmedabad etc. As we can see that these are the small and tier II & III cities of India having lot of potentials and opportunities hidden in them to become the cities of future.
Availability of land and reasonable prices are the two main reasons for investments clustering in to the smaller cities. Apart from it the policy of central government to provide infrastructural facilities to the smaller cities and development of SEZs have helped these small centers to possess the potential to become the cities of future.
Availability of Land: One of the main reasons of large scale investment by the corporates and investors in real estate sector in smaller cities is the availability of large amount of land. The demand of commercial and residential space in premium cities isn't being fulfilled due to lack of sufficient spaces.
Affordable Prices: The property prices and manufacturing cost in top cities has reached such level that the investors and companies are not finding it ben eficial to setup offices or residential sectors. These smaller towns are providing spaces at suitable prices catering to their requirements.
Proximity to Big Cities: If we take a look on the main upcoming cities like Chandigarh, Ahmadabad, Nagpur, Jaipur, Ghaziabad etc, we find that these cities are close to big cities which make them a natural option to invest.
Proper Infrastructure: The infrastructure in these small cities is adequate to the need for development of real estate. The state governments are providing every facility to improve it further and to enlarge it to the nearest locations. These factors are helpful for real estate.