Mumbai: The real estate sector in India lacks a standard process for valuation of prices. Unlike in the West, there are no standard agencies in India that value real estate properties. Individual investors in real estate may, therefore, find it daunting to narrow down on a fair-price range for the property of their choice.
Evaluating real estate is roundly difficult, if not impossible. It involves two major steps. The first is to take the prevailing valuation in a specific area. The second step is to consider the individual property and add a premium based on the features and parameters outlined here.
Govt plan for the area
From time to time, governments select a specific area to set up factories, airport, technology parks, export zones or entertainment zones as part of town planning schemes. When such schemes are planned, the valuation of the properties in those areas shoots up.
Property without dispute
Disputes and litigations on properties are a major source of headache for many buyers. However, banks have professional teams that do effective due diligence before sanctioning loans, so it may be safer to prioritise on bank-approved properties. Properties without any litigation and dispute command higher price than disputed ones.
Social milieu of locality
Property prices also depend on the social and economic condition of the locality. Properties located at upper middle class zone are more expensive. Similarly, there are specific colonies for NRIs, expatriates, and foreign nationals, which command higher prices.
An easily saleable property commands higher prices. This is also linked to the demand and supply situation in the market.
Technology & safety
Properties with video surveillance, security guards and gated premises enjoy higher valuation. Many housing complexes instal intercom for communication, guest arrival system, burglar protection system and many such technology-enabled services, all of which come at a price.
Properties having schools, hospitals, parks, station, shopping malls or cinema halls nearby are more expensive. Self-sustained ecosystems in themselves, these are dubbed ‘hubs’ in real estate parlance, and can command a premium over properties in remote areas or city outskirts.
Some dos and don’ts
Buyers must have a list of parameters that are important to them and apply their wisdom. Different property buyers may prioritise on different aspects of the property in question. For example, location may be of prime importance to some, whereas the builder and the amenities provided may matter more to others. These parameters must be tangible and measurable.
From time to time, the government comes up with new zoning norms that divide the geography into different areas called circles and stipulate the rates of these circles. Market prices are usually higher than these rates or ‘guidance values’. Buyers should acquaint themselves with these guidance values and market rates.
Also, buyers must go and see the property for themselves instead of relying on advertisements and information given out by builders during promotional offers. Finally, do not pay more based on hype. Buyers should talk to people who have bought property before. The generally accepted myth is that property prices always go up. Property prices are just like any price. If demand is more, the economy is looking up, and incomes are rising, only then do property prices go up.