Investors usually prefer residential projects as demand for homes in metros and other cities is high and would only rise. In larger cities, commercial and retail spaces also present potentially lucrative investment propositions. Returns on residential property are significantly lower (4-6 per cent) than commercial spaces (10-12 per cent) making it a low risk, low return option. Commercial spaces need higher capital investment and are also more difficult to exit.
In residential space, the focus should be on properties that have potential for assured rental yields and capital appreciation. This includes residential projects close to workplace catchments, industrial hubs and locations with high aspirational value. Mumbai, Delhi-NCR, Bangalore, Pune and Chennai are witnessing the highest demand.
In broad terms, the most sought after configurations are 1-2 BHK flats in the central areas as well as the suburbs, and 3 BHK flats in good township projects on the outskirts.
Investors need to take informed decisions on under-construction residential projects, regardless of location and developer. The same negative financial dynamics that are compromising completion dates of many office buildings hold true for residential projects, as well. If an investor decides to avail of the lower rates of an under-construction residential project, he should ensure that at least 50 per cent of the available units in the project are already sold and that construction progressing according to schedule is at least at the half-way mark.
Luxury and super luxury housing should be avoided for at least a year, since demand is at a low ebb at the moment. Investors can take an informed call on certain projects in high-value locations, since there is always a core group of HNI buyers who would purchase units in such projects. However, such a call must be taken only on the basis of extensive local market research.
Non Metro Property Investment
For investors looking at non-metro and emerging cities, there are quite a few options.
Ahmedabad, Surat, Vadodara in Gujarat definitely hold potential. Gujarat is among the fastest growing states, and has achieved remarkable progress in industries, finance and infrastructure. It also has the highest per-capita income among the states.
Kochi and Coimbatore are good cities for property investment in South India. Kochi is the commercial capital of Kerala, a major tourist destination and a major growth nexus for medical tourism and eco-tourism, along with a boom in its local IT/ITES sector. Coimbatore is the largest industrial centre in Tamil Nadu after Chennai, and has transformed into a preferred destination for IT/ITES. It offers excellent business infrastructure, quality of life, a highly skilled work force as well as low cost of living, low pollution, and a rapid pace of infrastructure development.
Vishakhapatnam or Vizag too is a promising city. It is a major port and also a major industrial centre and hub for the petroleum, steel and fertiliser industries. The city has a biotech SEZ and industrial developments like the steel and power plants in the south. The major growth corridor is northwards, along NH-5 towards Vizianagaram. The Government of Andhra Pradesh has also started an IT SEZ in Rushikonda hills at Vizag.
In the north, Jaipur and Jodhpur are good property destinations. These two cities form a part of the golden triangle on the tourism circuit, and are major tourist destinations. Strategically located on the Golden Quadrilateral, Jaipur has excellent connectivity to Delhi NCR and has been identified as a very promising emerging city for the IT/ITES and BPO industry. Construction on the Jaipur Metro project has already begun, and this will enable rapid transit within the city.
Chandigarh is one of the most excellently planned cities in India and has the highest per capita income in the country. The Rajiv Gandhi Chandigarh Technology Park, spread over 400 acres, has put Chandigarh on India’s IT/ITES map. Major Indian firms and multinational corporations such as Quark, Infosys, Dell, IBM and Tech Mahindra have set up bases in the city and its suburbs. In 2010, Chandigarh was ranked 8th among top Indian cities identified globally as ‘emerging outsourcing and IT services destinations.’ Its satellites – Mohali and Panchkula are rapidly developing and attracting a lot of investment. Source>>>