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Assess Before You Invest

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Do you have a Dream?

Mr. Intikhab Chougle,
Associate Vice-President,
HSBC India

It has always been a fascinating thought for me to observe people chasing their dreams throughout the life, off which few are achieved and many other are compromised. Many a times in life the compromises accepted were not really essential, only if the person chasing the dream would have not given up and continued to pursue a little more, maybe the he would have been living his dream.

Also a common dream that most of us from middle class society share is to have a house of our own, right from the day we start earning money. A home bought by yourself is a significant achievement in life and we humans have this continuous need to 'prove certain things' to ourselves and people around us. Also every third person who has the capability to invest would want a real estate to be a part of his investment portfolio and hence real estate has gained momentum and plays a important role in a long term investment plans of people.

Real Estate boom is a somewhere also a result of this desire in people, where all of us want to progress in life and move ahead from where we have started. Most of us surely come from a humble background and in the past have spend time in houses which have been small or accommodations which were shared and having a burning desire to create a bigger & a better house for your family is very natural. Also there are few of us, who have taken our houses and currently we look at investing in a second home from an investment prospective or as an option to earn income by buying & renting out the place.

This entire realisation should help us think and plan our move according to our need or desire. It is essential to analyse the options available to us and not blindly fall into the offers made by the developers, as there are no 2 people with similar needs in life, the requirement to identify can also never be the same. Every Individual will have a different goal, preference, budget for investment, expectations of returns etc.

I can very broadly categorise the requirements in following:

Identify what suits you / your requirement - This is the most crucial stage where you must spend time and contemplate your requirement, plan what will be suitable for your need and how much you would want to stretch at this stage of your career for the real estate investment that you are planning.

Budget / Financial Planning - Once your need is identified taking into consideration your requirement, second most important attribute is to know your financial status. It is important to you to assess your savings and you eligibility to procure loans or raise funds from your alternate resources. The most easiest alternate resource is borrowing from know sources for a sort term / long term and returning the amount back as and when possible depending on the comfort level. But if you plan to go for a structured loan, then it is very important to calculate how much you can stretch to make a monthly commitment, one thing that should always be accounted while doing this calculation is that you must not compromise on your essential expenses. As the essential expenses will always stay constant or keep increasing with time and there will be some emergency expenses from time to time basis as well. So do not over-leverage on the loans that you borrow from institutes, it is also very essential that as an individual one should maintain a clean pay-back history and should never default on repayments as that might result into a bad credit history in the long run.

Future development plans in and around the area - Once you have identified the kind of property & budget, the real ground work starts and you get to get into some realistic assessments of developments around. Things like infrastructure development like malls, several other construction plans, upcoming luxury hotels, international schools/colleges, upcoming airport, new metro connectivity’s, road access etc. These factors will surely add up to your property value appreciation in the long run. It is also essential that you select your developer very carefully, the project and the developer has a huge impact on the future value of the project.

If you observe the real estate trend over past 3 years, it can be highlighted that there was a phase where the property markets dipped to the extent that there were no deals that were going through few years back. Investors with good appetite for returns started picking up properties which were closer to completion as there was a good margin to be booked as profit as the projects complete. At the same time there were newer projects being announced at a approximately more then 20% lesser rate then the prevailing market price and this encouraged a shift of preference for a retail investor from a ready property to a under-construction proposals. As under construction proposals offered the investors the options of making deferred payment over a period of time and would also let the investor to plan his finances well.

Better Infrastructure and well planned townships closer to the city limits have gained popularity. For investors who cannot actually buy a house in the main city would prefer to buy a house with better amenities and facilities within a township and hence you will find lot of AA+ developers announcing township proposals for this set of investors. Also the point to be noted is, along with these townships the focus is also on providing a better connectivity to the main city. I would like to share an example of places like URAN, JNPT, Panvel, Dombivli, Ulve on outskirts of Mumbai are fast gaining popularity as investment destination. They offer options of good connectivity to main city in a very short span of time and with the plans of future airport, metro lines and waterway transport infrastructure, life can only get better.

Also my observation in the current situation shows that as an average investor, the Indian middle class member is today out to buy a property irrespective of the price movements and as a result of this the prices might not really see much of a dip from their current levels. This argument can go on and on but the fact remains that an individual will have to decide at what level he wants to enter the real estate market and buy his home, it maybe to meet his real need for family or investment for future or just a social status.

Before ending this article I would like to share an interesting analysis which I have recently read, a recent edition of ‘The Wealth Report’ by Knight Frank & Citi Private Bank, mentions about Mumbai’s importance being increased by 118% from 2010, the highest among 20 World Cities like London, Hong Kong, New York etc.

People who change after change are Survivors, People who change with the change are Successful, but it’s really the people who bring in the change who are known as Leaders.

It is better to make use of a Chance to be the Change rather then try to Change your Chances.

Mr. Intikhab Chougle, is Associate Vice President with HSBC Group in India and has been a retail banker for past 11 years. He has completed his Bachelors in Commerce from Mumbai University and is currently pursuing his MBA with major in 'Banking & Finance'. With a total working experience of close to 15 years in Mumbai, he has been an active member in social service in Mumbai for promoting causes like 'education for girl child' and promoting medical assistance for old and deserving people. He has also traveled to Malaysia, Paris, a part of UAE market for professional reasons and has acquired vast market knowledge about investments and business approaches adopted in different markets.

He believes, it is very important that we must return back to the community what we have earned and learned from the society and hence is willing to extend his support to the people who would want to seek his expertise in setting and achieving their financial goals.

He can be reached on his email id This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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