While property investments in cities other than one’s own require a lot of research and preparation, they can definitely be extremely profitable. Here’s an essential checklist you should follow, before proceeding
The tendency of most property investors in India is to focus on the cities that they actually live in. This is because they are already familiar with the locations that have highest demand and who the reliable and reputed developers are. Also, most people will have a fairly broad network of people within their city, who can advise them on potential property investments.
However, the internet has opened up the real estate playing field in India. A simple online search involving the keywords ‘buy home’ or ‘buy property’ will yield thousands of results from across the country. This trend is no longer limited to people who own computers, as smartphone penetration has made access to the internet available to a staggering number of people. Consequently, property investors now have access to information on a large number of geographies. For example, Pune is a high focus area for real estate investors from Mumbai and Bangalore, because of its amenable property prices, favorable appreciation and the fact that properties in all budget ranges are available.
Demand drivers
The primary driver for residential demand is job creation. If an identified city, town or periphery is seeing a lot of demand for homes from people who are attracted by a good job market, then, it can be a good residential property investment bet. The other important variable is affordability. Quite a few non-metros as well as peripheral areas of larger cities, currently qualify on these parameters.
However, these areas have large organized builders with a strong market reputation, as well as unknown small-time players with no verifiable track record. This brings up the second important factor for an investor to focus on – namely, which projects to invest in.
Where to invest?
Buyers should fully investigate the reliability and market standing of developers active in such a market. Although the Real Estate Regulation bill may eventually weed out all fly-by-night operators, the fact is that many unscrupulous developers have historically been active in emerging locations. Such developers may not have obtained all the necessary clearances for their projects, or even have clear ownership of their plots. They may also engage in shoddy construction and often lack the capital to complete their projects on time. Such developers often offer lower property rates, to attract demand. Investors should only patronize reputed developers who have been delivering quality projects on time, so that they can avoid unforeseen risks to their investments.
To sum up, it definitely makes sense to consider other cities for property investment, especially if one’s own city does not yield very attractive returns on investment.
