“Real estate is a tangible asset that necessitates a great deal of patience. In contrast to the stock market, one should have a medium to long-term horizon available to reap the benefits of the investment.”
Indian real estate is making a spectacular comeback, with demand skyrocketing in most of the country’s major cities. Conducive market conditions, bullish economic sentiments, and lower interest rates are driving the market even higher. A hot real estate market has also rekindled investor interest. Along with homebuyers, investors are flocking to the market in droves in search of higher returns.
However, it should be noted that, like the financial markets, real estate is not without risk. In the sector, there are numerous types of risks, including market, economic, and developer-related risks. To make safe investments and earn higher returns, investors must implement a prudent risk management strategy. Atul Goel Pune, MD of Goel Ganga Group, shares his expertise in the real estate sector and offers five tips for managing and systematically reducing risk in real estate investments.
Market Research:
“Before making any significant investment, it is critical to analyse and scan the market. To access the likely appreciation, investors should learn about demand-supply, potential demand, market trends, and so on. Similarly, they should learn more about the physical infrastructure’s condition, upcoming projects in the area, business/IT parks, business catchments, social infrastructure, and so on. A thorough market analysis can provide investors with a wealth of useful information “According to Atul Goel Ganga.
Geographic Distinction:
“If someone is going to invest in more than one property, it is best to spread their money around rather than concentrating in one market. Regional disparities exist in a country like India, despite aggregate trends. Investing in multiple geographies can thus reduce risk while increasing ROI. Before investing in multiple geographies, it is best to conduct thorough research and gain insight into individual geographies’ track records “Goel elaborated.
Diversification of Assets:
“To reduce market and economic risk, one should invest in a variety of assets, similar to geographic diversification. Investing in assets such as residential, commercial, retail, and warehousing maximises overall returns. It will spread risk across assets, limiting the overall impact of any potential downtrend in a specific category “He elaborated.
Checking the developer’s credibility:
“Over the last 5-7 years, developers’ credibility has become increasingly important. There are numerous examples of projects that have been stalled due to non-credible developers. Though large developers fail, going with a reputable name can greatly reduce the risk. The functional dimension of the project, which includes utility, floor plan, design, specification, and so on, must be verified, just like the developer’s credibility. A high-quality project will attract more investors, buyers, and tenants, resulting in higher returns “He went on to say.
Determine your Time Horizon:
“Real estate is a tangible asset that necessitates a great deal of patience. In contrast to the stock market, one should have a medium to long-term horizon available to reap the benefits of the investment. If one can hold the property for an extended period of time, the downside risk of cyclical pitfalls is greatly reduced, and one can divest at the appropriate time. As a result, it is prudent to assess risk tolerance and time horizon “He finished.
