02/04/2013
30 % of one’s salary should go for housing
Investment in property is everyone’s dream. However, what to invest in, where to invest, and the return prospects are few queries continuously playing in the consumer’s mind. Neeraj Bansal, Director (Risk Consulting) KPMG India answered all such queries on the MagicbBricks.com expert chat forum Gurutalk. He says that “40 per cent of the salary should go for housing as the preferred allocation.” The topic of discussion was ‘Growing your wealth through property investments’.
Bansal says, “It is a good time to invest wisely in real estate by choosing a great location and a good builder. As the real estate prices for the right sized property (specifically in the 2BHK/ 3 BHK segment) will see good appreciation and continuing demand, with higher inventory with the real estate players, you can also get some benefits with more negotiation”
In property market, for better returns he advises to invest in large sized apartments. He says, “If the demand in the location is higher for low budget flats, investment in two flats will offer both greater flexibility and also convenience of disposal and one can even be retained for higher capital appreciation. On other hand, a high budget flat in a good location can get you better returns in percentage terms on the investment since the growth percentage in prices is usually higher for large sized flats.”
However, he adds that a plot will always get you higher liquidity and potentially better returns in the long term. But location, rights over land, usage of the land etc need to be carefully seen.
Should one invest in old or new property? Bansal says that old property investments fall into the resale category, and offer complexity in verifying the past ownership records, structural stability and potential for future returns. Moreover, a full down payment is needed for the same. New property on the other hand allows wider choice of investment and flexibility of getting into construction linked plans etc.
Those interested in investing in old property, should to be careful about the legal verification of the entire chain of ownership, especially at the time of freehold conversion. Also it is important to be aware of the structural strength, seepage, common area if any and also parking etc.
He also suggests that it is wise to be careful in dealing with pre-launch property as well. There are fewer options available to enforce the same on the builder in case the builder subsequently is unable to launch it because of clearance/ approvals, etc or because of any other reason. Pre-launch investment, therefore, is a riskier option.
