Monday 11 November 2013

Should we do one big Real Estate Investment or break it into parts: Gaurav Gupta, Director, SG Estates Ltd.

India is a country with increasing population and it is currently seeing unprecedented growth in urbanization which is resulting in increased demand for Houses and sustained demand is leading to sustained growth in Real Estate Values. Real Estate has been a preferred choice of investment and as per one survey youth is preferring real estate over gold and stocks as an investment option. There is hardly any household which is not affected by the bug of Real Estate Investment. Talks on real estate can be heard everywhere from parks to parties. One major question that crosses many people mind who are putting money for pure investment is whether to put all money in buying one property or put that money in parts by buying multiple properties.
Experience shows return on investment in Real Estate is maximum if investment is made at just launch projects and diminishes as the project progresses and reaches completion. Choosing one Developer as against multiple developers is suggested because to crack the best deal .  Of course, it has to be ensured that Company / Developer is chosen, who are known for their commitment and timely delivery. Every care to be taken that person is not trapped with Company/Developer whose track record of Delivery of project is not sound.  

Supposedly a person has Rs.1.5 crore to invest and he is looking to invest in Ghaziabad. He may buy a flat of 2430 sq.ft. In SG Homes in Vasundhara or buy 3 units in SG Grand in Raj Nagar Extn. with average size of 930 sq.ft. And one unit in SG Homes in Vasundhara of 1000 sq.ft.

I personally believe that investing in parts in small properties  has major advantages over putting the entire money in single property. Small properties have more demand because they fit easily in the budget of the first time home buyers (segment which is driving the sales in Ghaziabad region) and are generally sold faster due to the small ticket size/actual users. Also if a portion of money is required to be sold to  meet some expenses, then one of the various properties can be sold rather than liquidating the entire investment.  Investing in 3-4 properties also safeguards against the market forces viz. in case  some property doesn't appreciate as per anticipated return, then other have a chance to compensate for the same. A person can also choose to invest in both residential and commercial real estate if he choose to invest in parts. Buying a single property is like putting all the eggs in a single basket which may turn to be risky.

Gaurav Gupta
SG Estates Ltd.
(Note: Example of projects of SG Estates Ltd. have been taken for reference purpose only and figures quoted are example and not the actual prices)

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