First of all, apologies for a
delayed post this time. We were hooked up with some Real Big issues!
So tell us, where do you think is
money in RealT Sector? Or is it just a fad & small investors can never make
out anything from this sector?
As far as what we have concluded from
our secondary research data, it seems that more than 65% of people are not
interested in investing in real estate primarily because they think – “we require huge investments to buy a
property!”
We would not completely deny this
fact but at the same time, it doesn't entirely hold too. Before we go any
further and clarify this ‘myth’, let us first give you a glimpse of where money
lies in RealT Sector:
So as apparent from the above
categorization (we are assuming that you are a normal investor with not much
knowledge of other fields of real estate), there are several fields apart from
transactions and development from which you can make money in this sector. Take
for example Relocation Services. By
relocation services, we mean that you can provide services to relocate people or
businesses & arrange for accommodation and other services in case required
by them. This will provide you with an opportunity to make some handsome
amounts with fewer efforts.
Services like ‘Appraisal’ require technical know-how of
how to value a given property. If you have the proficiency to do this, you can
make this as your career and trust us, you won’t require anything else to
pursue as your profession.
On the similar lines is another vertical
– ‘Property Management’. As Portfolio
Manager is to Stock Market, Property Manager is to Real Estate. And we think
that we need not to reiterate how much fortune a Portfolio Manager makes! If you
have some expertise and experience in the field of real estate, this is your
place to be.
How can Small Investors invest in Real Estate?
This is probably the most
important question that haunts every middle-class individual when he/she starts
earning. With the rise of middle class population in India in recent years,
people who just graduate from the universities look forward to invest in some
vehicle. But due to unavailability of any structured or convenient vehicle for
investment in Real Estate, the obvious choice that they are left with is –
Stock Market or Fixed Deposits.
We would like to throw some light
on how a mid-income group person or a small investor can invest & make
money in this market. There are several measures available for this purpose,
few of which include:
- Affordable Housing
- Attractive EMI schemes
- Joint Investments
- Private Lenders
- REITs
Within the scope of this post, we
will just try to explain Affordable Housing & later we will take on other
measures.
Affordable Housing
As per JLL’s report on ‘Affordable Housing in India – 2012’,
there is no clear-cut definition of the term ‘affordable’. This is because it
has different meanings in different scenarios as it is a relative concept. Just
going by KPMG’s definition of affordable housing, it can be seen as:
Income Level
|
Size of Dwelling Unit
|
Affordability
|
|
Economically Weaker Sections
|
<INR 1.5 lakhs pa
|
Upto 300 sq. ft.
|
EMI to Monthly Income: 30% to 40%
House price to annual income ratio: Less than 5:1
|
Lower Income Groups
|
INR 1.5-3 lakhs pa
|
300-600 sq. ft.
|
|
Middle Income Groups
|
INR 3.0-10 lakhs pa
|
600-1200 sq. ft.
|
Source: KPMG
Affordable housing is a new concept
which emphasizes on catering the needs of the above 3 mentioned income group
individuals. The differentiation is based mainly on the size of dwelling unit
and the location of the unit.
Small investors, typically falls under
the umbrella of Middle Income Group. There are a number of trusted and reputed
players in the business of affordable housing all over India, mainly in the metropolitan
cities where the concentration of LIG’s and MIG’s is maximum:
 |
| Source: JLL Research, 1Q12 |
Closing Remarks: It is said “where there is will, there is
way..” This falls apt in case of real estate investing. Though seemingly very
tough, it becomes simple if you want to devise ways in this sector. And believe
us, the pace and size of returns which you can expect from real estate is far
more than any other investment.
---- Thanks for
reading J ----
