MUMBAI: Are you wondering if you should buy a property right now or wait for the dust to settle? If you are buying a home and planning to live in it, this may be a good time to be on the look out. This is because there are many unsold homes and builders are willing to negotiate with serious home buyers. However, risks of project delays and defaults will have to be factored in before you actually ink a deal.
Home buyers in Mumbai were driven as far out as Virar to find a home to suit their budget, says Mudassir Zaidi, National Director, Residential Agency, Knight Frank. Falling prices may now offer an opportunity to find an affordable home closer to the city. Before identifying a location, ensure that infrastructure and basic amenities such as water are provided for.
After deciding on the budget, research various projects coming up in the area. In addition to new launches, there may be deals available in the secondary market as well; be sure you don’t miss them. Check for approvals and evaluate the amenities offered.
Due diligence on the builder is a must in this market. Sunil Rohokale, MD & CEO, ASK Group, advises buyers to opt for developers who have been in the business for over a decade, have completed over one million sq. ft. of construction and have a track record for timely completion of projects. Knowing the financial situation of the builder will also be helpful, but this information may not be available.
A builder with a loan from a reputed bank or backed by PE funds is more likely to be financially sound.
Be sure to check the legal terms of the contract with respect to payments, interest on late payment and clauses covering delays.
Remember this is a buyers’ market, so go ahead and bargain heavily. “Do not show too much enthusiasm in the project while negotiating”, advises Ganesh Vasudevan, CEO of Indiaproperty.com.
You must know the market rates in the neighbourhood and keep another project as a back up.
Premium buyers — wait
While mid-priced houses in most markets seem resilient so far, buyers in the premium segment may want to wait and watch. Experts believe that prices may correct or even if they don’t, there is high risk of delays in these projects.
Those who are buying a home as an investment may also be better-off waiting as the near-term risk-return profile is not favourable. For instance, in some markets, prices may stay low over a three-five-year horizon. Unlike markets such as the US, home prices may not fall, as our population is growing, says Rajesh Vardhan, Managing director, Vardhaman Group.
However, asset allocation to real estate has been increasing; its been over 50 per cent in the last few years.Property should ideally be between 30 per cent and 40 per cent of portfolio, says Sumeet Vaid, CEO, Ffreedom financial planners.
Re-assess the current risks and return expectation of property investment in your overall portfolio before deciding to make an investment.
Additionally, Rohokale cautions against buying outside one’s home market for investment for the purpose of diversification.
He advises that you seek the advice of property consultants who specialise in the regional market before investing.