Real Estate Evaluation:
Property without dispute..!
By Mr. Adhil Shetty, BankBazaar.com
The real estate sector in India lacks a standard process for valuation of
prices.
Unlike in the West, there are no standard agencies in India that value
real estate properties.
Individual investors in real estate may, therefore, find it daunting to
narrow down on a fair-price range for the property of their choice.
Evaluating real estate is roundly difficult, if not impossible. It
involves two major steps.
The first is to take the prevailing valuation in a specific area.
The second step is to consider the individual property and add a
premium based on the features and parameters outlined here.
Govt plan for the area..!
From time to time, governments select a specific area to set up
factories, airport, technology parks, export zones or entertainment zones as
part of town planning schemes.
When such schemes are planned, the valuation of the properties in those
areas shoots up.
Property without dispute..!
Disputes and litigations on properties are a major source of headache for
many buyers.
However, banks have professional teams that do effective due diligence
before sanctioning loans, so it may be safer to prioritise on bank-approved
properties.
Properties without any litigation and dispute command higher price than
disputed ones.
Social milieu of locality..!
Property prices also depend on the social and economic condition of the
locality.
Properties located at upper middle class zone are more expensive.
Similarly, there are specific colonies for NRIs ( non-resident Indians),
expatriates, and foreign nationals, which command higher prices.
Saleability..!
An easily saleable property commands higher prices.
This is also linked to the demand & supply situation in the market.
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| Adhil Shetty, BankBazaar.com |
Technology & safety..!
Properties with video surveillance, security guards and gated premises
enjoy higher valuation.
Many housing complexes instal intercom for communication, guest arrival
system, burglar protection system and many such technology-enabled services,
all of which come at a price.
Public utilities..!
Properties having schools, hospitals, parks, station, shopping malls or
cinema halls nearby are more expensive.
Self-sustained ecosystems in themselves, these are dubbed ‘hubs’ in real
estate parlance, and can command a premium over properties in remote areas or
city outskirts.
Some Dos & Don’ts..!
Buyers must have a list of parameters that are important to them and
apply their wisdom.
Different property buyers may prioritise on different aspects of the
property in question.
For example, location may be of prime importance to some, whereas the
builder and the amenities provided may matter more to others. These parameters
must be tangible and measurable.
From time to time, the government comes up with new zoning norms that
divide the geography into different areas called circles and stipulate the
rates of these circles.
Market prices are usually higher than these rates or ‘guidance values’.
Buyers should acquaint themselves with these guidance values and market rates.
Also, buyers must go and see the property for themselves instead of
relying on advertisements and information given out by builders during
promotional offers.
Finally, do not pay more based on hype. Buyers should talk to people who
have bought property before. The generally accepted myth is that property
prices always go up. Property prices are just like any price. If demand is
more, the economy is looking up, and incomes are rising, only then do property
prices go up.
About the author..
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