Real Estate Resolutions for 2019......

Disclaimer: views expressed here are my own, without any prejudice to anyone, and your serious perusal and consumption of the same may induce an irresistible desire to own something which might result in some revenue coming my way which you shouldn't begrudge. my endeavour would always be to help you make an optimal decision w.r.t. real estate and chances are you might be better off by the end of it.

"Investments in Real Estate are subject to judgemental risks" - this one phrase captures the essence of the current scenario of real estate in India. Irrespective of all the sloganeering and media blitz that are directed at you, the market is still in depression. Barring few tendrils and offshoots belying the trend, buyer confidence and in turn transactions are yet to hit a high note. All the major micro-markets that were tom-tommed as the destination of future are still reeling under the shockwaves of last couple of years and along with the developers who had jumped headlong into the gold rush. Only the brave who have brought their projects to delivery stage are the ones feeling rewarded though moderately still.

Does that mean that real estate is not a preferred investment option anymore or people should stop buying real estate altogether - certainly not. In a scenario where Jurisprudence seems to be dictating terms for once Top Grade developers, "Prudence" is the key to moving ahead. Baby Steps with absolute clarity on the investment size, tenure, sustaining capability, and above all realistic expectations is the path forward. Speaking of which and without much ado, let me share some possible resolutions for 2019 for real estate investments in India.

There's only ONE : Buy your first real estate asset

Buying your first house - noitce the emphasis on the word house, because I mean exactly that - a dwelling unit and not the place which you can necessarily call home and make your residence. Whether it is a studio, 1 BR or larger, whatever you can very very comfortably manage within your limited means. Start with say a budget of 20 lacs and move upwards if you can find a livable one bedroom in an area that is showing signs of getting populated or becoming a commercial hub. if you see at least 10-15 office buildings and that too operational, or see around 500 families already settled with convenience stores, play schools, food and dining options coming up; that should be your cue to evaluate the place. If its not in the same city, head out to any of the cities in the Smart City program and you are sure to find something within that budget. Buy it, nd absolutely forget about it and start saving for your primary home in the city where you work. Years down the line, this first house would be your first right decision made.

Buying a commercial asset : There's no such thing as assured or guaranteed return. The only assured return possible in real estate is the money you get as lease rental from an asset that you physically own or about to get possession of. Everything else is hogwash. The big numbers and grand projections do not stand the test of time or law. Some of the canny developers who have long realised the virtue of selling bite sized pieces instead of large areas have been duly rewarded with customer confidence and investor money.

Instead of trying to sell to large investors, they have gone ahead with creating smaller ticket sized units which supported with pre-lease arrangements or even signed agreements with the end user, allows the buyer the safety net of some assured income once the asset is operational. They are able to sell small chunks of their assets leading up to the delivery of their projects with locked-in users - whether retail brands or corporates for office spaces. Without a minimum of 50% area being signed up for lease, its futile to even waste your breath on understanding their proposition.

For either of the above options, please bear in mind following points :

• Read the fine print and if it isn't there, ask uncomfortable questions: approvals, possession timelines, agreement clauses, exit clauses, either side default scenario clauses, post Occupancy Certificate possibility of extra charges etc. These are the proverbial last straws that vitiate the transaction and become sore points for buyers. Remember to read about them or clarify them before you handover the first payment instrument.
• Negotiate Hard: Irrespective of the standard hustling of limited inventory, high demand, your preferred units being sold out, flexibility in payment not possible and whole host of other such stories - always remember that your business counts even if it is for the smallest possible inventory. Whenever possible, sit across the table with the decision maker with your wire transfer or cheque leaf in front of you and be prepared to walk out. No developer can afford to lose a willing prospect even if the deal squeezes away most of their profits. It's time to liquidate inventory, period.

For those owning a primary home - is it time to upgrade? NOPE. In today's scenario unless you have practical unmanageable challenges viz. space constraint, travel constraint, social infrastructure problems (schools, colleges, healthcare etc) upgrading can be postponed. Upgrading your home though would definitely be a step up socially and psychologically, it serves little purpose in terms of your asset building goals. Whenever you upgrade you usually always end up paying the premium for the space, location, community which wipes out your potential asset value enhancement. Instead of upgrading resolve resorting to following possible avenues:

• Diversify: buy a commercial or retail asset within the same budget. Could be an ATM space, could be a virtual office or a food court space, could be a shop in a residential complex - any or all of these options would help create an additional revenue stream
• Buy a plot of land which would surely give you sufficient returns for future upgradation or buying another yielding asset. Trick would be to find the right location which could be a upcoming suburb or a Tier 2 city or even new sector being carved out by government (not by private developers unless you see a whole host of them working hard to create a new destination with government pitching in with infrastructure support)
• Buy a vacation home for your family - allows you to spend money on being able to create memories as well as builds an asset that can give rental income when not being used. https://www.dhirubhai.net/pulse/beginners-guide-vacation-homes-no-frills-lowdown-kumar-gaurav/

2019 might be a watershed year in India's history with lot of political undercurrents, economic and technological disruptions and new business ideas breaking ground. All of these would surely have an impact on the real estate market and it is advisable to take decisions based on facts rather than gut or paid promotions. After all, it's your own hard earned money at stake. Resolve to be judicious and prudent, and 2019 real estate resolutions would surely come through.

Wish you all a superlative 2019 and happy investing!!