New Year’s expectation challenges, political focus and the market scenario has once again brought commercial real estate to the spotlight, but the reality is that real estate industry somehow remained confusing for the common people. Unable to differentiate between myths and reality, buyers often fall prey to various misconceptions. Here in this blog, we are trying to demystify the most common misconceptions surrounding the real estate industry. Trust us, its not only we Indians that are scared of these myths but people from across the globe follow them and thus remain away from the most profitable form of investment – The Real Estate Investment.
Let’s start the race to the finish.
Developers purposely delayed their projects
Buyers face project delays very frequently and this is one of the most common complaint that developers face. And such distressed buyers often come to the conclusion that developers delay their project purposely, to earn higher profits. But according to the industry experts, delayed projects are not good for developers too. In India, the overall process of real estate development is both affected and regulated by efficacy of local, urban and civic bodies. These regulatory bodies sanction approvals, which in itself is quite a lengthy process and can take around 2 to 3 years prior to construction and close to 6 months to 12 months post-construction. A few examples of important approvals include – land approval, construction plan sanction, environmental clearance, occupancy certificate, completion certificate, etc.
The Commercial property buying decision must be directed by the market condition
The statement is half correct, the rest half we will clarify. Most first-time buyers don’t take into account their personal affordability, which is the most important step before making the buying decision. It is important for everyone to enter the buying zone when they have enough resources to support their purchase. Similarly, there are many factors attached to the property loans, if one buyer gets the property loan early on in life, he or she can own a property earlier than those still waiting for the right market conditions.
Investing in Commercial real estate is too risky
Most people out of lack of market knowledge consider commercial real estate investment extremely risky. But the fact is every type of investment involve some kind of risks, the only thing the investor can do is – invest time and resources getting information about the project and then make an informed decision of investing the money. Today, real estate industry is not only stable, but expected to grow at a good pace. A calculated decision of buying a commercial space at a location that is going to be a value proposition in years to come, is likely to bring better returns on your investment.
Investment in Commercial space will always reap monetary benefits
Yes, this is also a misconception. Some people come with a belief that the value of property always increases; thus, one should invest for achieving huge profits. Again, half of this is true. While a value of property does increase in the long term, expecting unlimited gains is unrealistic. There is nothing like – Unending Price Appreciation – the time market reaches its saturation, the prices become stagnant.
Big-shot is deliver best
Anyone with good planning and jurisdiction use of resources can deliver the best, Hence the view that only big name developers can only deliver a good and timely project is misconception. There are many mid and small-scale real estate developers who are doing the best in terms of delivering quality projects that too as per schedule.
Developers advocate price hike
Professional developers do not advocate speculative and unrealistic price hikes, as a continuous rise in prices are not good for developers either. Let’s take an example – if a developer sells his projects at a very high rate, he will eventually end up spending similarly high rates for the purchase of land for his next project if it is in the vicinity.
All the development is being done in metro cities
Another misconception that must be debunked. According to the industry experts, the metro cities are becoming unreasonable and saturated for further development. The middle-class and the start-up investor is interested in investing, hence the real action is shifting to the Tier II, III towns and extended suburbs or micro markets. With saturation and shortage of vacant land in metro cities; adjoining areas, smaller and developing cities are the best development options.
Now that we have busted a few common misconceptions long associated with real estate industry, its time you start thinking about investing to a good project. Let us know if you need further clarification on any of the points mentioned above.