What Is The Ideal Time To Hold And Sell Investment Property?
by Mr.Anil Pharande,
CMD – Pharande Spaces
The Indian real estate
market is among the most lucrative for making investments. Barring grave global
crises such as the most recent one, this market will not go downhill and
provide very decent returns to investors.
Before the global
financial crisis (GFC) or recession that hit the world in 2008, real estate
investors made great profits on properties which they had held for just few
months. During the recession itself, property markets plummeted and there were
no takers for real estate.
 |
| Anil Pharande, CMD – Pharande Spaces. |
However, this was an
unnatural situation - as the situation improved and things came back to normal,
real estate market across the world became calmer. In a normal market
scenario, property rates rise at a steady pace and uneven or abrupt rises or
declines do not happen.
·
Types
of investors...
There are two types of
investors into properties – those who look at making a regular rental income
and have no plans of exiting the same, and those who look for capital gains.
For the latter type, earning good returns requires them to time the sale of the
property well. Only when the property has seen decent price appreciation does
it make sense to put it on the resale market. The question is – what is the
right time to sell?
·
Ideal
time span to remain invested...
This subject is
incessantly debated, and there are various opinions on it. However, it is
generally agreed that in normal market conditions, the real estate market
should be looked at as a long-term investment bet.
What this means in real
terms is that a good ‘holding period’ for properties purchased for capital
appreciation is around three years, with the ideal period being 3-5 years.
However, it has actually been seen that the best returns on investment on
properties are actually obtained in a period between 5-7 years.
·
Ideal
time for exiting...
The perfect time to
exit from a real estate investment will actually depend more on one’s
expectations than on market conditions. While exiting after three years should
ensure decent returns on investment, one would have to extend the horizon if
the expectation is for the highest possible profit.
Investors looking for
the highest capital gains from their property investments should target
residential projects that are under construction, rather than completed
projects.
The best time to invest in such properties is during the time of
launch. Thereafter, while some experts feel that the best time to exit such
properties is when the project is nearing completion (or latest when the
developer starts handing over possession to buyers); others advise investors to
target one year after possession as the perfect exit time.
Which of these
horizons make the most sense will really depend on local market conditions such
as demand, supply and infrastructure development of the region.
Before taking a
decision to either buy or sell an investment property, a thorough understanding
of the current local property market is in any case de rigueur.
About The Author:
Anil Pharande is
Chairman of Pharande Spaces, a
leading construction and development firm that develops township properties in
Western Pune. Pharande Promoters & Builders, the flagship company
of Pharande Spaces and an ISO 9001-2000 certified company, is a
pioneer in the PCMC area offering a diverse range of real estate products
catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at
Punavale in West Pune is among the company's latest premium offerings.
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