Effective investment in residential property requires the chosen location to meet certain parameters. Fundamentally, the area should have good social infrastructure, availability of adequate public transport and sufficient economic activity to sustain development and growth. These parameters apply equally to investment in NA-certified land approved for residential development and flats in a residential project.
In order to mitigate most of the investment risk, one should restrict one’s residential property investment to Tier 1 and select Tier 2 cities. It is also most prudent to invest in properties where the price tag falls between Rs. 2500-5000/sq.ft., since such a price tag provides downside protection against any capital value erosion. Simply put, the cost of construction and minimum cost of land literally makes this price segment safe, and almost guarantees capital appreciation.
Finally, the investor should keep an eye on the market and sell the residential property at the right time in order to multiply wealth. If all the above precautions have been taken, the property should have appreciated at a consistent rate of 15% per annum for three years. It is important to remember that one can almost never sell at the peak, just as it is impossible to always catch the lowest price.
Best Cities For Residential Property Investment
Some of the markets that currently show the highest residential property investment potential:
Within these cities lie the opportunities for a higher delta of capital value appreciation, depending on the demand and supply dynamics of their micro markets and also the quality of the development, reputation of the developer, strategic value of the location and timely completion of projects.
Authored By: Anuj Puri, Chairman & Country Head, JLL India
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