Choose from these five real estate themes that hold great promise

Weve all heard that the Budget has a lot in store for the realty sector. The buzz is there will be a lot
of action in this market between five and 1 years from now. !ou can profit from investing now" but
the invariable #uestion is what to buy and where$ %hould you bet on integrated townships or small
pro&ects" plots or readymade apartments$ 'n big metros or tier('' cities$ )ollow these five strategies
and you wont be let down.
Tag on to townships
'ntegrated townships are large pro&ects that come up in a planned layout with readymade
infrastructure for education" healthcare" shopping and entertainment. These pro&ects tend to be
better managed and more self(sufficient than standalone blocks.
When you buy a home in a new neighbourhood" basics such as power" water" sewage and roads can
turn out to be grossly insufficient. This is because" unlike countries such as %ingapore" in 'ndia"
property developers are #uicker to foray into new localities than town planning authorities. Civic
and social infrastructure is seldom in place before a locality develops.
'n an integrated township" the planning part is handled by the developer. 'n a large pro&ect spread
over * acres or more" the developer takes a holistic view of the facilities re#uired within the
township with an eye on affluent buyers. +lso" features that can lower your maintenance costs ,
water treatment plant" solar power , are included due to scale. This may not be possible in a
standalone apartment block or villa.
The check(list while buying property in a town(ship includes whether the developer has partnered
with service providers such as schools and hospitals.
There is also a possibility that even when everything falls into place" the facilities outside the
township such as roads and educational institutions are less than what you e-pected. .etting
clearances for large townships is much more difficult than for one(off pro&ects. /igh(profile pro&ects
such as 0avasa near 1une have been held up due to approval issues. /ence" invest at a later stage if
you want to play it safe.
0ook at low(cost homes
0ow(cost homes are those that offer all basic amenities and facilities that you e-pect in housing
development at a price point that is affordable to most middle(income families.
When buying a low(cost home" you can hope to pay less but without compromises on #uality. 2ne
way this is managed is by reducing construction cost and time through the use of new building
technology" such as pre(cast aluminium forms instead of bricks.
Budget homes are usually small" 1(* B/3 units" but the design ensures that the space you get is
well utilised. )or instance" most floor plans tend to avoid corridors. )or a given area sold" the carpet
area is also typically higher than similar mid(income or premium homes" as the 4loading5 6ratio of
paid area to usable area7 is lower. 8ven with a smaller share of common area" you get standard
features such as parks" play area and car parking.
9+ffordable is a popular ad&ective in the property market" but finding genuine value re#uires some
work. )or e-ample" you have to assess how well the builder can meet the promise of #uality and
cost: so be sure to dig into the construction method and delivery record. +lso" since low(cost land is
available only in peripheral locations" you will find that there are not many infrastructure facilities
such as schools or hospitals. !ou must" therefore" see how liveable the area is and what transport
and other infrastructure developments are coming up. +reas where low(cost homes are seeing good
traction include Boisar near ;umbai" +ttibelle near Bangalore and %riperumbudur near Chennai.
Buy a plot in a developed layout
'f you have limited capital" instead of buying a completed home" buying small plots in a developed
layout can be an option. 9<eveloped layouts usually have roads" power and water connections in
place as well as common amenities such as parks.
0and can be an attractive investment from a long(term returns perspective. But there are two
important concerns in land purchases , legal due diligence and risk of encroachment. Buying a
plot in a developed layout addresses these issues. 1utting up a layout re#uires obtaining clearances"
such as zoning and local authority approvals: this reduces the legal risk.
!ou can also get a loan to buy land" but not ta- benefits. The interest paid for buying non(income
generating land is not ta- deductible and the principal paid is not eligible for any benefit. The
interest can" however" be capitalised to reduce capital gains ta- liability when selling the plot. These
are the red signals you need to watch out for in developed layouts. The minimum facilities in this
theme are road" water" power" sewage" open space and active security.
Before you buy a plot" you must independently en#uire about the infrastructure and other social
structures coming up nearby for two reasons. 2ne" these contribute to price appreciation. Two" if the
pro&ects are coming up too close to your layout" there is a risk of ac#uisition by the .overnment.
!ou have surely heard anecdotes about windfall gains made by investing in land. But the truth is
that not all land parcels turn out to be multi(baggers. %peculation" such as what is witnessed in the
%eemandhra region now" carries the risk of capital loss or being stuck with an asset that has no
inherent merit. %o be sure to look at the fundamental value of the land purchase.
%tep up to senior homes
'f you are getting close to your retirement" homes in a 9senior community may be something to
consider. The homes are usually available e-clusively to seniors and are typically designed to cater
to their needs , as they age from active living to re#uiring more support.
'f you dont mind relocating after your retirement" a home designed with the needs of the elderly
has some merit. )or one" the home would be designed with the re#uirements of the seniors in mind.
)or instance" the height of wash basins or the layout of the shelves will be such that bending is
reduced. +menities such as gym also have senior(friendly e#uipment.
!ou can also e-pect the community to be self(sufficient with access to medical facilities" shops and
entertainment as well. !ou will also get additional services such as catering and house maintenance.
0ocations such as Coimbatore" 1une and Bangalore have been popular for senior communities due
to their moderate weather. =ew communities are coming up close to ma&or cities for accessibility:
you also have a choice of more e-otic locations such as 0onavla" 3odaikanal" 3asauli and
<ehradun.
The concept of senior living is still evolving in 'ndia" so be sure to clarify on certain important
aspects. )or e-ample" many of these pro&ects have sale restrictions or may only be available on a
9lease model. %o clarify the ownership terms.
%ince a senior home is a long(term service contract" find out the providers history. !ou also need to
assess the risks of any service partnerships" for e-ample" to run a clinic or hospital. %ince many
senior communities tend to be in 9#uiet areas" check what options for medical and other facilities
e-ist nearby.
%enior homes come with a premium of around > per cent to other homes in the area. The
maintenance costs in the community can also be sizeable. =ot &ust that" the costs tend to escalate
much above inflation rates every year. <o the math on the costs to ensure that your savings will be
able to support this.
'nvest indirectly
!ou can also invest in professionally managed funds to get indirect e-posure to property. Choices
are currently limited to real estate private e#uity 6187 funds" which re#uire a minimum investment
of 1 crore.
/owever" you can wait for the newly proposed real estate investment trusts 6?8'Ts7" which re#uire
a minimum investment of * lakh.
)unds and trusts let you benefit from the property market without the hassles of ownership. 2ne
advantage is that the investment risk is lowered for an investor who may not be a property e-pert.
!ou get the benefit of due diligence when funds invest in a property: they also ensure that the value
is retained by proper maintenance: diversify their purchases across geographies and property types"
to reduce concentration risk.
+nother positive feature is that with these instruments" you can get e-posure to properties that may
otherwise be out of your reach. )or e-ample" ?8'Ts let you own a share of income(generating
commercial assets.
When you invest in property 18 funds" choose a fund based on your risk appetite. While
conservative investors may opt for rental income themes" those with higher risk appetite can opt to
invest in funds which offer high interest loans to developers or take e#uity stake in pro&ects.
The disadvantage with the fund route is that you cannot en&oy any ta- benefits" which is a ma&or
motivator for property investments. +nd the returns you get may not be spectacular. )or instance"
the rental yields on office properties are in the @(1 per cent range and the capital appreciation is
around >(A per cent. %o the total return for a ?8'T investment is likely to be not more than 1(1A
per cent.
While everything looks good on paper" the reality is that most 18 funds have not been able to
provide high returns" due to constraints on e-it. 0ook at the funds investment philosophy and ask
about its pro&ect evaluation method" details of the risks identified and the mitigation strategy.
+sk the e-perts
Bnlike the past" where your chacha was the resident e-pert on hot property markets" today" doing
ob&ective research is easy" thanks to online resources. +dditionally" consultants" both online firms
and advisors" work with you personally to guide you on location" price and financing options.
Ceroing in on a home of your choice is also made easy through online property listing sites. Brokers
are becoming more professional in the #uality and the range of services they offer customers. )or
instance" many offer help in finding a tenant and handling ongoing tenant relations.
1roperty maintenance is another area where you find support in handling operational issues. 'nstead
of 9voluntary residence association members who scramble to fi- plumbing" professional services
are available to handle routine maintenance issues in the apartment comple-. 0ikewise" online
portals make collecting maintenance dues easy and transparent. !ou can also find lawyers and ta-
consultants who are specialists in the property segment. 'n addition to banks" many home loan
providers help you in performing due diligence on a property.
%o" tap this wide array of service offerings and arm yourself with data before you venture into the
wild property market" where buyer protection is" unfortunately" very limited.