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Real estate for beginners
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Like every industry Real Estate also goes through cycles of boom and bust and stagnation in between. In India real estate boom has been witnessed in the last 5 years because of various reasons.
Indian economy is growing at a rapid rate. The increasing disposable incomes and easy availability of credit and that desire of owning ones own home are some of the factors. The recent slowdown in the real estate market has been witnessed because of a reversal of some of these factors; interest rates have risen and it has become difficult to raise credit both for developers and end users.
In the commercial real estate sphere the coming of special economic zones, increasing need for office space, mega retail outlets etc have pushed up the prices of land and eventually constructed space.
The entry of big corporates into the real estate space has provided further impetus to this industry. Consumers have got more choices in terms of accommodation, prices and payment options.
The availability and price of real estate varies according to location and city. In India the real estate sector is still largely unregulated but the Government is coming up with an act to regulate it in 2008.
Investing in Real Estate
There are many type of investors in Real Estate including Corporates, Institutions, Multinationals, Industry, Retail, Developers and Builders and lastly individual buyers. Here we are going to discuss individual buyers as following:
Speculators: This is a group of real estate investors who ride on the booming property prices and want to make a quick buck. Their investment horizon is very short. Speculators buy property in the hope of selling it very soon at a higher price and taking out their profit and reinvesting it.
Although speculators do make money in a real estate boom they also lose money if the cycle turns and can suffer heavy loss. In a real estate slump they might get stuck with property they do not want and may find difficult to sell it.
Investors: People with spare cash and looking for avenues to invest their money . Investors expect a certain return on their investments. They look for property the value of which will appreciate over time. In case of a downturn in the real estate cycle investors can usually hold out and wait till the prices begin to stabilize or start appreciating again.
Following things should be kept in mind if you are an investor
1. Your investment time horizon. It is important to know how long you will stay invested.
2.When you are going to need the money that you have invested.
3.What kind of returns you are expecting on your investment.
4. For regular income investors can choose between residential and commercial property.
5.The rental value of the property.
6.Cost of maintenance and upkeep of the real-estate.
7. The Future demand of the property you invest in and its re-saleability.
Home Buyers(end users)
End users are the people who buy a residential or commercial property for their own use and not for resale. Most of the real estate Industry targets the end user.
For people buying a house (home buying check list) it is a very important decision and lot of factors should be kept in mind. After you have decided how much accommodation you need an |
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