Choosing the right property – What a consumer should keep in mind

The ongoing upheaval in the realty market has prompted the consumer to think hard before investing their hard earned money in property of their choice. The consumer, even though well aware, is apprehensive and is constantly looking for safe investment options. Considering that Indian economy is booming at a steady rate and is expected to hit a much higher note in time to come, the investors have gained an array of options with a promise of high returns.

With a large variety of developers to choose from and the fact that most of the time the first time home buyer ends up paying 5 to 10 years of his annual income for purchase of property, it is important that the customer does due diligence before he buys the property.

There are several key aspects that a buyer should consider while making his investment decision;

Be careful about fly-by-night operators:

While the sector has matured from what it was, say 10 to 15 years ago, property investors need to be watchful about fly-by-night operators and even the more established players who are unable to fulfill their commitments to the buyers.

Know developer’s legal background:

Taking keen interest in knowing the legal background of the developer will help the buyer ensure that the developer has not been in any legal hassles.

Location of the project:

Of prime importance is the location of the project. The real estate development in the surrounding areas and the accessibility of the project to important centers in the city is something the buyer should first look at before planning to invest.

Developer’s financial stability:

Another aspect the buyer needs to keep in mind is the financial stability of the developer. It determines the credibility that the developer enjoys in the market. Most listed firms have an edge over other real estate companies as they are under the scanner of Securities and Exchange Board of India (SEBI).

They have to follow principles and guidelines issued by SEBI and are required to submit financial statements. This allows the ‘smart customers’ to make their own analysis of the financial stability of the firm and the resources available with it to carry on development at a fast pace. Due to better corporate governance and audited financial statements, such listed real estate firms have better chances of sourcing funds from financial institutions, provided they are performing well.

Transparency and accountability of the firm:

A listed firm definitely provides higher transparency and accountability as its misgivings start to impact its share prices and directly affect the promoter group. It is also helpful that general state of a listed company is more visible to the buyer and it can help in taking a comprehensive investment decision.

Aspects such as financial leverage, delivery versus commitment, internal and external focus, etc should be carefully studied.

Land title & regulatory approvals:

The title to the land that the project is being built on and all the regulatory approvals being in place need to be thoroughly vetted. This needs to be done irrespective of the nature, size and reputation of developer. The buyer should insist that the developer make available all documents pertaining to land title, approvals of building plans and commencement of construction. It is always a good idea for a group of buyers to get together and hire professional legal expertise to get due–diligence done.

Developer’s track record:

The management team and the track record of the developer in delivering projects – amount of space delivered, timelines for delivery and quality of work produced is critical for the buyer to analyze. A developer with an impressive track record will surely win more credibility than any other developer.

Master planning & amenities provided:

The buyer also needs to evaluate the various aspects of the project like the master planning and the amenities provided. Developers these days are getting international expertise to master plan their project. The consumer can get important information about how the project will finally look like, going by the master plan.

The various amenities provided by the developer should also be considered for buying a prospective project.  24/7 Power back up, security back up, health centers, shopping arcade, sports complex, club, entertainment centers, etc are advantages for investing in the project.

‘Tech-capable’ developer:

In today’s scenario, with technology ruling the roost, it is a boon for the consumers if the developer is “tech capable” and is always implementing the latest technology in not just constructing the project but also in the various amenities and facilities provided to the consumer.

• The final decision of the customer should be a combination of credibility of the company, an assessment of the project fundamentals and his understanding of the market situation.
• A perfect combination of legal propriety, price, quality, and track record will attract the customer and facilitate his final decision to invest in property.

 

This article has been written by Mr. Ravi Saund, COO, CHD Developers. He holds a Bachelors Degree in Commerce from Sydenham College, Mumbai and he further pursued an MBA from Sydenham Institute of Management and Research, Mumbai. He is a proud alumnus of The Scindia School, Gwalior, Madhya Pradesh. With over two decades of experience in the real estate sector, his impeccable knowledge of market dynamics has helped him successfully launch various projects in sync with the requirements of the market.

 

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