At the outset, I’d like to state that investing in real estate is a high-risk-high-reward proposition. There are several ways to invest in real estate. One can invest in commercial property like an office block or a mall. Then there are REITs that typically give a low yield from the rentals collected and offer scope for capital appreciation. And finally, we have residential real estate, which is the safest. They could be in an apartment, a condominium or a gated community.
Why are they the safest? Two reasons: The developer sells his stock well before construction is completed. The developers’ equity only goes in for land and permissions and after that construction finance is available and housing finance is available.
(This story appears in the 24 January, 2014 issue of Forbes India. To visit our Archives, click here.)
Though the points are valid, of late greed has caught up with these smaller towns too. Builders, in a rush, have paid large amounts to buy the land and are now struggling to sell these stuff.
on Jan 20, 2014