Why is real estate considered one of the safest options?
Real estate in India is the second largest employer after agriculture and is set to grow even more in the coming time. Owing to the increasing population and the limited supply of land, the demand for land is increasing and this is leading to higher returns from real estate market in the long term. The thought of investing in real estate is a prudent one and also gives the joy and satisfaction of owning a property. It is one of the easiest places to invest with no specific need for technical knowledge. Here are some of the reasons why real estate is one of the best places to invest your money:
Leveraging your investment
Real estate investment always gives the benefit of leverage. This is because it allows you to use borrowed capital to increase the returns of investment. We can use property loan as an instrument that reduces the amount of capital required to purchase a property. Whenever we buy a property, we just put a fraction of the cost from our pocket and actually end up investing in an asset which is way more than what we have. And while we are on our way to pay up the loan over the years, we start enjoying the appreciation in the property.
Tangibility
Satisfaction of actually seeing and feeling your asset is unmatched. Real estate is the only option of investment that gives the benefit of tangibility. It is an appreciating asset. It may go through crests and troughs and lose some value at times but when held on to for a longer period, it only earns for you. The joy of owning a property keeps you satisfied and gives you the sense of security.
Benefits of taxation
Owning a property not only gives happiness and satisfaction but also allows us to enjoy multiple tax benefits and exemptions. Under Section 80C of the Income Tax Act 1961, we can claim tax benefits on the repayment of the principal amount of the home loan, whereas Section 24 allows us to claim exemptions on the interest we pay on home loans. We can also claim capital gains on income taxes. Depreciation expense is typically the largest tax deduction available to real estate investors for commercial buildings and can help improve their cash flow by reducing their tax liabilities.
Maintaining regular cash flow
One of the biggest benefits that real estate offers is the certainty of rental income that the property can yield. Unlike other investments, especially the ones related to the stock market where returns are at the mercy of the market volatility, real estate properties give stable and regular monthly income through rent along with the additional benefit of increase in the capital value.
Wealth creation and estate planning
Majority of the times we buy real estate with small upfront investment in the form of down payment and we prefer to get the rest of it financed. Over time, the principal amount of the mortgage starts getting paid and that gets faster towards the end of the amortization period. This reduction in payment of the principal amount helps build equity. Real estate is an investment which yields returns over longer periods. This makes it a perfect investment for retirement. Many people also prefer to use real estate investments as part of estate planning where the property ownership is passed on to the legal heirs.
5 common mistakes to avoid while buying a property
Real estate has always been an aspirational asset class. Whether we buy a property with the idea of investment, security or utility, a careful thought and due consideration must be given to all aspects before the purchase. It is a popular option amongst people today but it is often seen that people make blunders while investing in real estate. Some of the common mistakes are highlighted below:
Builder Credentials
When buying a residential or commercial property, choosing a reputed developer is vital. Reputed builders ensure quality construction, best amenities and adequate facilities. They understand buyer sentiments and hence design buildings suited to the dynamic needs of the buyers. Moreover, the biggest benefit of buying from a reputed builder is on time delivery. Managing timelines in real estate is crucial and builders who are conscious of their reputation will never go back on their commitments of delivery, possession, documentation and quality.
Selecting the right location
Price must not be the only consideration when it comes to real estate purchase. We often get lured by lower prices but overlook the location of the property. If a property is purchased for the purpose of utility, it must be located in an area that offers basic facilities of daily life, absence of which might create major hassles in life. Even in case of commercial property, the location must be accessible and public transport must be easily available.
Facilities to look for
Today when we buy a property, we do not just see the four walls, we look for additional facilities. With a fast moving life, recreation and relaxation is a must and we all look for that in the comfort of our own house. It is essential to check the amenities being offered by the builder. They must serve the needs of all members of the family. We buy properties with a view to use them for a long term, so it is essential that the facilities provided must take care of all our needs. Parking should be one of the major consideration. While buying a property, we must always look into the future and buy additional parking now than spending a huge amount on the same later.
Adequate research
Incomplete research while buying a property can lead to bad decision making. While the location of the property is important, there are other factors also that might be ignored by buyers at times. It is important to ensure the immediate surroundings of the building. Health and hygiene must not be compromised in case the property is located in an area near to dump yards. Also, we should check if there are chances of air, water or noise pollution in the vicinity. The area we choose must inhabited appropriately and safe.
Hasty decisions
Buying real estate is always an emotional decision. We tend to get attached to the property the moment we see it and start dreaming of owning it. While we are in the research phase, it is essential that we keep our minds open and also free of biases and filters. These might cloud our decision making. All factors must be carefully considered which includes – adequate research on location, facilities, choice of builder, paperwork and documentation.
Advantages of buying a property during its ‘new launch’ phase
If you have ever gone out searching for a property, you surely would have heard of the term ‘pre-launch’. Pre-launch refers to the period where the building project is announced. It is definitely a good proposition for the buyers and even investors to purchase the property in its pre-lunch stage. Here are some advantages:
A day late and a dollar short
If we put in the right efforts at the right time, we are sure to book monetary gains in the pre-launch phase. During this phase the builders offer a price that is comparatively lower than the one offered during the semi-construction or the ready to move in phase. Once the property is ready, we cannot avail this early bird price benefit. The money saved here can easily be allocated by the buyers for interior designing or other needs. With RERA coming into existence, buyers are completely safe and secure when buying a property in this phase.
Tailor made choices
When you buy a property in its launch phase, you get to make your own choice with respect to the desired floor, unit, view, direction and much more. Buyers can also get interior modifications at this stage. This brings the dream home or workspace closer to the expectations. Once the building is fully done, making changes is not easy. There are clearly more choices available during this phase and compromises can be avoided.
Smart Investment
Buying a property in the pre-launch phase opens up the opportunity to get the best return on investment. We can take the advantage of price escalation that trickles in after pre-launch. Once the building is up for possession, the prices tend to rise. So if we plan to sell off, we can make huge returns. If we plan to allocate more funds to real estate investment, this is just the right phase to put in our money.
While we understand that it is wise to invest in properties in the pre-launch phase, it is imperative to buy the property from reputed buyers. When we plan to put in our money in real estate, working with established builders always gives us the needed security and peace of mind.
Work Life Harmony
At a very early stage of my entrepreneurial journey, I realised that accomplishments at work will only make sense when there are people around to relish it with you. Relationships have always mattered to me as much as my work has. Times were tough and challenging in the initial years of business establishment. When a business is in its nascent stage, it rightfully has its own demands. I always compare a new business with a new born who needs all the attention, has myriads of demands and gets moulded the way we do it. That is how I treated Shilp and nurtured it like a baby. I did break the so-called norms of work life harmony back then quite a few times. That also took a toll on my health, my me-time, my hobbies and my family life.
I constantly needed to find an equilibrium between my business needs and my personal life. I always played on my value of authenticity. I realised that I did not have to fragment my life into compartments called work and personal. I needed to bring in a harmony in all aspects of my life. I learnt to adjust and readjust expectations of work and family as and when needed. There were and still are times when my work needs me more but I know that there will always be times when my kids need me. I give the due share whenever needed.
I did some introspection to understand the importance of continuing to pursue my interests alongside my work. Giving up on my health needs, my passions and my hobbies did not fend for good. Temptation to overwork is always there. However, today I am happy that I have a fixed morning schedule where I give time to my body and my soul, I give quality time to my work, I spend cherished moments with my family. I even take random vacations apart from the long-planned ones. I have understood that when one aspect of our lives is in peace, the other automatically falls in place.
Journey of Shilp Group
Everything begins small. The seeds of Shilp group were laid in 2004 when Mr. Yash Brahmbhatt, CEO and Founder of Shilp Group bid in a land auction by AUDA. That was his first step into one of the largest sectors of the country. Making the right beginning is one third the work done is true in his case. He pushed his limits and raised his own bar each day. He is a man with grit, determination and diligence and he never looked back.
Today Shilp is an unbeatable name in the Ahmedabad real estate. With the first building at Jodhpur crossroads, the group today covers an expansive area across the city. Shilp group proudly made the impossible possible by pioneering construction on Sindhu Bhavan Road which was unthinkable back then. Powered by the CEO’s vision and gut, the group today owns a large share of SBR. Shilp boasts of over 40 buildings across various geographies in Ahmedabad. There have been numerous phenomenal constructions by the group both in the commercial and the residential space. The office buildings are fully equipped with the buyers’ requirements and provide all amenities needed to have the best working experience. On the other hand, the residential space boasts of beautiful elevation, ample space and leisure and recreation facilities for the end user. Affordable housing was also added to the kitty looking at the market needs and that segment is doing remarkably well too.
The strength of the Shilp group lies in Yash’s envisioning and team management skills. Yash relies heavily on close family members being part of his business. A first-generation entrepreneur, he feels that when family becomes a part of business, trust remains intact. The company runs on its robust planning and efficient strategies. The group consciously decides where to invest and which lands to buy. Effective decision making backed by extensive research and market knowledge is a major determinant for success.
Shilp group lays the foundation of each structure on trust and is convinced of its quality. The group sets high benchmarks each day.
Upcoming trends in Ahmedabad real estate sector
Year 2020 has been an arduous journey for the real estate but 2021 has witnessed the sector finding its feet again. People everywhere missed the social life and can be seen gathered in public places like malls, restaurants and shopping malls. Work has also picked up pace as major corporates have returned to their workplaces.
Co-working spaces took a kick with the pandemic, however, with covid cases plummeting, this space is set to boom again as an alternative to working from home. Commercial buildings are now loaded with amenities more than ever before. The buyers are availing benefits like designer foyers, distinct welcome desks, plush waiting areas, conference rooms, splendid cafeterias, roof top spaces and much more. The builders are getting more conscious about providing attractive building elevation to buyers. Increasing heights of buildings today are also paving way for professionals like façade consultants.
Parking facility in commercial buildings is being extended with the trend of podium parking setting in. This will give ease to end users and reduce the vehicle clutter on the roads. Stack parking is also an option being availed by many buildings. We are likely to witness skyscrapers of over 40 floors in major cities of Gujarat in the coming few years. Green buildings are in vogue and builders are in the endeavour to provide eco-friendly environment to users. Installation of solar panels on commercial buildings is also a rage and is in the best interest of the end users. In commercial buildings, charging stations for electric vehicles may soon turn into reality.
In the residential space, people are largely looking at more liveable spaces with all possible amenities. Infact, amenities that a building provides has become a major decision-making point for buyers. Open space gardens, sports amenities, walking tracks are all the need of the hour. With businesses springing back to normal, housing demands are increasing. People are open to migrating to cities. That is giving a boost to the affordable housing zone.
Where on the one hand, smaller houses and affordable buildings are in vogue, on the other hand, people are bingeing on land purchases. Luxury lifestyle is the in the high. People are taking keen interest in luxury villas, bungalows and even apartments. Weekend homes is a need for many especially in the covid era.
Legacy of Sindhu Bhavan Road
It was all a game of vision and foresight. We envisaged Sindhu Bhavan Road as the future. At the time when Sindhu Bhavan Road, SBR as we know it today, was just a land mass, we saw the possibility of making it a business and shopping hub. There were no street lights and no infrastructure. It struck to us that this would be the next hot destination after Judges Bungalow Road.
We were sure in our heads and clear in our minds. We got our first building on SBR – Shilp 3 in the year 2008. And then there was no looking back. We knew this area will soon be inhabited, hence, we made Shilp Elanza premium bungalows in 2014. We went on a spree with commercial buildings with Shilp Aaron in 2015, Shilp Asian Square in 2016, Shilp Arista in 2018 followed by Shilp Epitome and Shilp Satved in 2019. In 2022, we came up with Shilp Corporate Park and the Corporate House of Shilp.
One of the reasons why we chose SBR and why it flourishes today is the wonderful connectivity that the road provides. It is the centre of SG Highway and connects more than 5 areas including Ambli, Bopal, Thaltej, SP Ring Road, Bodakdev and Makarba. After we set the trend, various other builders followed suit and did some real good work here making it one of the best places to be. In fact, SBR has been declared as a model road today.
Be it the location or the prices, SBR is the most premium location of Ahmedabad today. Major hotels including Taj and Marriot have also found their home on this road which makes it even more exclusive. There are fitness centres, shopping centres and eateries and that is what makes it the most sought after place for youngsters. The night life is booming here and people just love to flock around this road.
One thing that we definitely boast of is the Shilp Circle that we created and continue to maintain. This is our tribute and a symbol of permanence. We will always cherish being the pioneers of Sindhu Bhavan Road.
Last 5 Years in the Real Estate Sector
The last 5 years have been quite eventful for the real estate sector. With new government policies, schemes, regulations, increased investments and new taxes, the face of the industry changed.
Introduction of RERA (Real Estate Regulation Act) 2016, came as a major game changer for the industry. It is proven that whenever a regulator steps in, it is in the larger interest of everyone. The Act has transformed the way real estate transactions happen in India. There is greater transparency and trust has increased among both the investors and the end users. The systems are more streamlined now and the transactions are process driven. This is ensuring more security to the foreign investors and there is no place for false commitments and delays anymore.
Demonetization in 2016 brought about a lot of confusion and uncertainty. Without a doubt, all economic activities had slowed down initially but the dust settled quickly and within few months, the real estate market in Ahmedabad sprang back. People realized that hoarding money would not lead them to earn, hence they started investing. Interest rates also reduced and people invested more. Developers who had fair and transparent business practices actually stood to gain from this government measure as opposed to the initial market sentiment.
In 2017, implementation of GST brought about a structured tax regime. Post initial resentment, it was realized that the GST regime made calculations simpler for developers to charge and buyers to understand. With GST coming in, builders now operate with greater accountability and stringent solvency requirements. The buyers need to pay GST for properties under construction which might be slightly higher than the taxes levied earlier, but that hasn’t had an impact on sales over a period of time.
Covid-19 had devastating effects on the economy as a whole. The sentiments were low, the spirits of the common man were dampened. Surprisingly, post the first wave, there was a surge in the demand for residential properties in the Ahmedabad market. People valued their homes more than ever and realized the need for upgrading their dwellings. Work from home requirements clubbed with home quarantine needs made people invest in newer and more equipped properties.
The government has also been instrumental in backing one of the most important sectors contributing to the GDP. Schemes like Pradhan Mantri Awas Yojana aiming at affordable houses in urban areas across the country are giving a major boost to the residential sector. The government has brought down the GST rate and has allowed FDI to the tune of 100% for townships and settlements development projects. Interest rates on home loans were also reduced by the government. With increased transparency and results, there is a surge in the private investments in the real estate sector.
Real estate continues to be one of the best tangible investment to grow one’s money. In the long run, it can easily beat the returns from other asset classes. It is safe and secure and the sector is slated to grow.