Homeownership is a comprehensive process including planning, saving for a downpayment, property searching, negotiating, securing a home loan, drafting agreements and property registration. Each stage requires significant time and effort, making early planning essential for an efficient experience.
The Union Budget 2024 has made changes to the capital gains taxation that affect real estate transactions. The tax rate on long-term capital gains (LTCG) from property sales has been reduced to 12.5%, however, the removal of indexation benefits means higher taxable profits. This shift could lead to increased tax payments for those selling properties.
In today’s market, even seasoned investors need to reassess their real estate strategies. The year 2024 presents both opportunities and challenges for the Indian real estate sector. With ongoing digital advancements, shifting demographics and evolving urban landscapes, developers and investors must stay updated on emerging trends to seize opportunities and manage risks effectively.
The Indian real estate market, a major driver of economic growth and GDP contributor, has faced challenges, such as liquidity issues, regulatory changes and the COVID-19 pandemic. Despite these hurdles, the sector showed resilience and began recovering in 2023, driven by pent-up demand, favourable government policies and increased digital adoption.
Essential strategies for real estate success in uncertain times
Navigating the real estate market during uncertainty requires a strategic approach. Homebuyers and investors should consider the following key strategies:
Stay informed
Keeping abreast of the latest economic developments and trends is vital. Understanding the broader economic context helps in making informed decisions. Subscribing to newsletters, attending webinars and joining real estate investment groups can provide valuable insights and updates.
Diversify investments
Diversification is a time-tested strategy for mitigating risk. In real estate, this can involve investing in various property types, such as residential, commercial and industrial. Additionally, spreading investments across different geographical locations can safeguard against downturns in specific sectors or regions, leading to a stable portfolio. For example, one can diversify their portfolio through fractional ownership. Instead of purchasing a luxurious beachfront villa or prime commercial space alone, they can co-own it with other investors. This allows them to invest in high-value properties with a proportionally smaller investment, making it more affordable and accessible.
Focus on long-term goals
During economic uncertainty, it is important to concentrate on long-term investment goals rather than seeking short-term gains. Real estate is a long-term investment and historical trends suggest that the market recovers over time. Patience and perseverance are essential – staying focused on the objectives and avoiding impulsive decisions based on short-term fluctuations is crucial. For instance, Goa’s real estate market offers diverse investment opportunities, from luxury villas and heritage homes to modern apartments in gated communities. This allows investors to target niches that fit their goals, whether for capital appreciation, rental income or personal use.
Strengthen financial position
Maintaining a strong financial foundation is critical. This includes having sufficient savings, a good credit score and minimal debt. A solid financial position provides greater leverage and options when negotiating deals. Additionally, having a contingency fund offers a safety net for unexpected expenses or market downturns.
Leverage technology
Adapting to uncertain times involves leveraging technology effectively. Online platforms for property searches, virtual tours and digital transactions can streamline processes and enhance decision-making. Staying connected with market trends through these technological tools is vital for operational efficiency.
Build a network of investors
Creating a network of fellow investors can provide significant advantages. Engaging with local investment groups, participating in online forums and attending industry conferences can expand an individual’s network. These connections lead to collaborative ventures, shared resources and deeper market insights, revealing new opportunities.
Assess government policies and incentives
Understanding and assessing government policies and incentives is a crucial strategy. Governments often introduce measures to stabilise the real estate market during economic turbulence. Staying informed about available tax benefits, grants and subsidies can reduce costs and improve profitability, making these incentives valuable for managing investments.
Prepare for various scenarios
Preparation for different market scenarios is essential. Developing strategies for best-case, worst-case and most-likely outcomes enables investors to respond quickly and make informed decisions as market conditions evolve. Being ready for different situations helps manage risks effectively.
Emphasise risk management
Effective risk management practices are crucial. Regular financial reviews, appropriate insurance coverage and contingency planning are necessary to protect assets and ensure long-term stability. Proactively addressing potential risks allows for better investment protection.
Successfully navigating the real estate market in uncertain times involves strategic planning, thorough research and adaptability. By embracing technology, building a strong network, assessing government incentives, preparing for various scenarios and focusing on risk management, investors can handle challenges and capitalise on opportunities. With the right approach, it is possible to weather economic downturns and uncover profitable prospects in the real estate sector.
(The author is the CEO and Director – Axis Ecorp)
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