When big boom was going on in the real estate market my friend purchased the property for a price that was 30% less than the prevailing market rate. His prime purpose in buying this property was to invest in the real estate market to get a good return. The only mistake he made while purchasing the property was that he overlooked the slum area present beside this property, as no buyer was available, he could get this property 30% lower than the market rate. After 5 years still, this property has not appreciated much.
Remember when you are buying property for investment you are making the most expensive decision of your life. So before buying property for investment, you need to consider various factors that affect the price appreciation of your property.
Location of property:-
The location of the property is the most important aspect in deciding the future price appreciation of the property. You should avoid mistakes like my friend has done. Property near a workplace hub or property surrounded by schools, colleges, market areas, or hospitals in its immediate vicinity appreciates much faster than others. Most people prefer to stay at a location where they can get all these facilities nearby.
Apart from the above placement of property also matters. Property facing a park, swimming pool, or property placed at the corner with a more open side may fetch more value than others.
A simple example is the property at Marine Drive, Mumbai “Queen’s Necklace”. As Queen’s necklace is a beautiful place to live hence price appreciation is seen at a much higher rate than in other places.
Infrastructure nearby property:-
Any infrastructure project like fly over, a bridge that is scheduled to come up in the area increases the value of the property, as this will become a unique selling proposition for property owners.
In some cases, it is found that property prices went up by 50% just be the announcement of new infrastructure projects.
A simple example is property price appreciation at Surat in the various areas due to the announcement of the Metro Rail project.
Connectivity:-
One should avoid locations which are far away or places where public transport is a problem. Place close to the railway station, airport of other good transport system is preferable. Price appreciation will be higher and faster at these places.
A simple example is the “Noida Extension” project for Metro Connectivity to Noida Extension is announced this place will see price appreciation once this connectivity is established.
Locality:-
Some area commands a premium in price just due to the locality of people. Locality where upper middle class people or upper class people are living may appreciate in value faster compared to other. These areas are called posh areas.
Like “Nariman Point” is one of the posh areas of Mumbai and the business hub of Mumbai. You will see the price of the property will appreciate faster here.
Extra Amenities & Quality of the Building: –
Many people prefer extra amenities in the project like a garden, swimming pool, gym, security system, intercom, recreational areas, parking place & auditorium these extra facilities may fetch higher returns.
Many people while buying property in resale look for quality of building structure. Occasional painting, renovation or revamping in the building can help you to bring a better price.
The size of property also matters you should not purchase too small or too big a house. Generally, 2 BHK flats are more in demand compared to others. Apart from this many people consider factors such as Vastu while purchasing a home so if possible one should look from that perspective while investing.
Places to avoid while doing property Investment: –
If your prime purpose in buying property is for investment you must avoid the following:-
Property near Slum Area: – This is very common sense that one should not make investment near a slum area. Still many people make mistakes like my friend has done and later stage they don’t have any option. Either they have to wait till the property price appreciates or make losses.
This area may have a high crime rate where people do not like to live. Apart from that these places may be unhygienic due to garbage dumps or sewage area. You should avoid places like this for investment.
Property nearby Religious places:- Buying property near a temple or mosque is not advisable. The reason is that regular prayers during odd hours on loudspeakers may disturb people. If it is a popular religious place then it may cause problems related to parking or traffic.
Apart from this, you should avoid areas where prices are already raised extensively. It may be possible that the price has reached to peak when you purchase and you have to wait for a longer period to witness price appreciation.
In short, you must take extreme care before buying property for investment.
