Monday, Jan 22nd

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Response to Kalim Kazi Sahab

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Kalim Sahab, Thank you for your kind words and your views which are very close to reality. I sincerely agree with you on many points highlighted like on investment instruments like mutual funds and gold. Your views about real estate surely draw a lot of support from my end and I am fully i agreement when you say 'none of the investment instrumets can give you such an big return on your investment what would a Real Estate Investment may give by the end of the project'. I would once again lie to re-iterate my point that your returns are always synchronised with the risk that you have taken, so higher the risk higher might be the returns you may earn. To answer your question, I would like to be honest and straight forward while answering the same. Your Investment in Real Estate should be mainly driven by facors like the developer, the location, the project benifits offered and then there are hindrance which the project might hit during the ongoing progress towards completion. These hindrances can be of administrative nature (comencement certificate, IOC, approvals etc) OR other kinds (labour issue, supply of sand / cement etc or even the fluctuation in the pricing of the raw material required). So while calculating the real time risk factor these points should be included. They might not have a direct impact from a individual investors point in terms of your financial calculation but however the time to deliver the end product can surely be impacted resulting into Financial impact in someway or the other. To answer your second Question, all investments done by us see a cyclic effect in terms of the rise and fall in demand but however yor calculations should be kept at very basic and that is at what rate you have purchased and what is the valuation at the time of sale. You will realise at any pont in time your propety related investment would give the highest cumulative returns when compared to any other instrument of investent. Also do not forget if the investment done in real estate is not for your use then the rental income earned only adds up to the end returns. I would also like to add something over here, which I feel should be shared with readers. Today for real estate we follow a mentality which is more of herd mentality, If you ask a person why did he bought a flat in Vashi and other areas around. The most immediate answer you will hear is because so and so bought it and he said it is a good deal, so i went ahead with it. Also there is an 'International Airport' coming up, this is the answer you will get from 95% of the buyers. But has somebody thought, the airport that we are talking about has been on plans for last 5/6 years, there is no blue prints / plans prepared of the same, the approvals are yet coming and all these activities will go on for atleast another year or 2. Actual airport will be constructed in another 5/7 years as per the study released in some newspaper. But this is interesting, the conclusion is that we are sheling out appoximately 30/40% more for a real estate investment then the actual pricing for a benefit which might take another 5/6years to acually materialise. Think of the information that I have shared in the paragraph above, I would like to end this response with inviting views to the above fom you and other readers. Jazzak ALLAH Khair, Regards Intikhab Chougle

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