Real estate holds a lot of opportunity in 2008

The real estate sector has experienced a phenomenal growth over the past few years. According to Arvind Parakh, CEO, corporate strategy & finance, Omaxe, the ‘fragmented’ nature of the industry will change once more companies go public, thereby making promoters adopt a proper corporate structure. The year 2008, he feels, holds a lot of opportunity and challenging times in store for the realty industry.

RENT OR BUY
With real estate prices at all-time high, investors are unsure whether to buy a property or stay on rent. Mr Parakh feels this decision depends on your ability to service the debt. “Ideally, for your own occupation, you may aggressively borrow a little more as it is a life-time decision to have your own property. However, if it is an investment, you should take care in choosing the amount of investment and the location, which would be able to appreciate in value or give enough rental income to service the obligation,” he says.

CHECK-IN OR PRE-CONSTRUCTION
Parakh believes that if you are looking for an apartment/ house in the bracket of 6,000-7,000 per sq ft area, then ‘ready-to-move-in’ flats will be a good idea. However, if you are opting for a house in the lower bracket, then it is desirable to go for ‘pre-construction’ as higher specification material of your choice can be used. He cautions that as the prices have gone up in the last two years and have not seen a major correction, investment in property at today’s market rates should be done with an objective of a reasonable return in a period of at least three to four years.

VERIFY BEFORE BUYING
According to Parakh, while buying a house, you should verify the title of the plot and necessary approvals/ sanction of the plans. “You should also check on the necessary approvals required by the local authorities. These approvals should be carefully inspected and the decision should not be taken on hearsay, that is, if approvals are pending or applied for. Unless the approvals are in place, you should not take the decision of buying the house,” he says, adding as an investor, it is pertinent that you should check the developer’s track record.



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