A. Real estate is a very stable and a good long term investment, provided it is sold in the future. Otherwise it is a good asset serving the basic need of a person i.e; shelter (home) with no income or/& working place. Always consider inflation & taxation before returns on any investment. Also, the tax after rental income or selling has to be considered.
Whether you invest in metros suburb or tier-I & II cities, the key is the value at which one is buying property & the scope of capital appreciation along with his/her own financial goals.
However real estate trusts and mutual funds (REITs/REMFs/REVCs) are being offered. It is still in its nascent stage in India.
One should have real estate as one of the important item in their investment portfolio.
A. The real estate investment gives following benefits
A. The best returns would always be from land, then under construction and ready to use property in this order. As the land is developed its appreciation increases and reaches its peak till the construction is completed. After that the returns is not that high as it is at the time of land acquisition. Redevelopment properties also give higher returns. But as with the returns, the risk is directly proportional to type and stage of property
A. It will depend upon the short or long term returns one is expecting and his risk taking capability. Residential might give little returns with less risk than commercial properties at different time and different places. Your returns might vary if you are investing by mortgaging the premises (also you can take advantage of leverage).
Commercial would be short term (3years) & residential properties would be long term investment (> 5years).
Commercial may give good rental returns while residential property offers long term capital appreciation. It is better to consult a very eligible property consultant who understands your personal financial short or long term goal.
A. The returns for middle to upper middle segment are always fluctuating according to the market trend, whereas the high-end properties are comparatively immune to correction in the market.
Advantages for middle segment are low liquidity, low risk and might give moderate returns in short-medium period (3-5years). Whereas in the high-end properties, it is only long term returns one should think.
A. It can be following in respect to long term returns
A. Apart from the points mentioned in the check list & due diligence (Property Matters FAQs), following can be the factors strictly for investment purpose
A. There are broadly two investment groups in India viz; end-users & the investors for commercial spaces.
The end-user comprises corporations or business organization whose need varies from small, medium to large offices. These properties are own by individual or private/public limited companies.
The investor comprises individual or institution/s looking for capital appreciation or constant rental inflow. It is considered being the most preferred asset for growing & maintaining wealth among investors.
A: Ideal is what an organisation feel is perfect for them.
However some of the features to make it perfect could be as follows
Investment parameters for commercial space
Rental value
Status
(Demand : Supply)
Result
Inference
Type of market
Annual yield
Capital appreciation
High
High demand & no/low supply
High absorption & low vacancy
Good
Medium/Good
Matured
Medium
Medium/high demand & low/no supply
Medium/high absorption & low vacancy
Good/medium
Developing/growing
Low
High supply & no/low demand
Low/no absorption & low/no demand
Medium/low
Immature/raw/failed
Note : These are gross guidelines & each property is different and have different investment model.
A. Following would be the factors responsible for success of the mall
A. Following may be some important points to buy land
A. REMF is an investment vehicle that buys, develops, manages and sells real estate assets. It provides an opportunity to retail and institutional investors to include professionally managed real estate in their portfolio and share the gains of escalation in property prices without making large amounts of investments. REMF acts as a conduit between an investor & real estate market.
A REIT (Real Estate Investment Trust) is an investment instrument which allows you to own a small part of a large pool of Pre Leased Commercial Real Estate. Globally, REITs are a $2tn market and are a well established asset class in developed markets such as US, Europe ,Singapore etc. It is a company that accumulates a pool of money, through an IPO, which is then used to buy, develop, manage and sell assets in real estate. Almost all the rent received (over 90%) from the Commercial Real Estate is distributed to the REIT investors on a pro rata basis. The REITs in India will make rent distributions on a quarterly basis. The REITs enables one to diversify risk since it owns multiple office parks / office buildings in different cities and has a large number of world class tenants with long term leases. REITs units are listed on the stock exchanges and are tradable freely and hence an otherwise illiquid asset class becomes extremely liquid. REITs in India are regulated by SEBI and ensures transparency, a high degree of governance and compliance. REITs have characteristics of both debt and equity investments : * The rent received gives you a high yield and a quarterly cashflow on your investment like a bond *The price of the listed REITs unit may increase over a period of time which captures the capital appreciation in properties owned by the REITs. The icing on the cake is that REITs taxation is very favourable for investors.
It has two unique features i.e;
A. Capital gain is the profit on sale & transfer of immovable asset, which is an amount of difference between cost of acquisition asset & its subsequent sales price.
Under the section 45 to 55 A of Income tax Act, capital tax is charged whenever the sale price is higher than the acquisition cost of original asset.
The cost of acquisition of property, stamp duty, registration, brokerage, legal fees, improvement in the property, other incidental charges are deducted from the capital gain. These all benefits are only available for residential properties.
The commercial property will be treated as business income & treated accordingly.
However consult your chartered accountant before any transactions for maximising the tax reductions.
A. The property which is held for one year will be applied for short term capital gain tax while those held for more than one year & less than three years are for long term gain taxes.
For arriving at the capital gains following amounts are deducted from sale price for computation purpose:
For long term capital gains along with above mention items following factors are considered
A. Following are the transactions excluded from the taxes