Indians love to invest in real estate, it generates income and more often, multiplies the money. It is also the most common form of investment for Indians. But the sector has shown a slow growth for the past few years, add the demonetization woes that have completely taken away the spark from this sector. With the strong impact of demonetization, the investment in this sector has gone down and the inventory across major cities has increased. There is a lack of enthusiasm for investment in the hot spots across the big cities, instead, there are many who are interested in investing in the Tier 2 cities across India.
The Government is focusing on the smart cities and aims to reduce the cost of living, which has made this sector quite lucrative. The low property costs also attracts investors to the Tier 2 cities. There are two advantages of an investment in Tier 2 cities- the price and growth potential. With a low cost of investment, you can expect a higher return in the price, which also depends on the overall growth of the city. Many experts see no difference between investments made in Tier 1 cities or Tier 2 cities, the returns from the investment should also consider factors like amenities and the location. However, the experts also mention that the current market is sluggish and no appreciation can be expected in the next few months. If you are planning to invest in Tier 2 cities, you need to be careful while choosing the city. Hitting the bullseye in the real estate sector, is a lot about the city and the micro market. Consider emerging cities that are a part of the smart cities project, carry out a detailed research before you finalize the city.
If you are planning to invest and have chosen a Tier 2 city, take the required precautions, like clearance of the property titles. This is slightly difficult when it comes to the developers in Tier 2 cities, hence one should take utmost care while investing. If you are investing in a city other than the one in which you reside, be ready to deal with the additional responsibilities. You will not be able to inspect the property regularly, if you rent it out, you will have to fulfil the duties of a landlord which includes the rent collection and the payment of statutory charges to the regulatory authorities. If not stationed in the same city, you could lose track of these functions. Hence, if you are inclined towards making an investment in the Tier 2 city, look for a property that is situated close to where you live and the one where you can visit often. It only makes sense to invest in a property where the maintenance charges are less and the expected increase in the price is higher. Ensure that the property has all the basic amenities and shows a higher potential for growth.