Properties in Rs 2,500-5,000/sq ft range good investment: JLL

This price tag provides protection against capital value erosion and guarantees appreciation, says realty consultant

People looking to buy homes should invest in properties in the range of Rs 2,500-5,000 per sq ft as this price tag provides protection against any capital value erosion and guarantees appreciation, according to realty consultant JLL India.

In its report 'Creating Wealth With Residential Real Estate Investment', JLL has listed out various parameters for safe investment in housing segment with reasonable price appreciation.

"Effective investment in residential property requires the chosen location to meet certain parameters. Fundamentally, the area should have good social infrastructure, availability of adequate public transport and sufficient economic activity to sustain development and growth," JLL India Chairman and Country Head Anuj Puri said.

In order to mitigate most of the investment risk, he said residential property investment should be restricted to Tier 1 and select Tier 2 cities.

"It is also most prudent to invest in properties where the price tag falls between Rs 2,500-5,000/sq ft, since such a price tag provides downside protection against any capital value erosion," Puri said.

The cost of construction and minimum cost of land literally makes this price segment safe, and almost guarantees capital appreciation, he added.

"Finally, the investor should keep an eye on the market and sell the residential property at the right time in order to multiply wealth. If all the above precautions have been taken, the property should have appreciated at a consistent rate of 15 per cent per annum for three years," Puri said.

JLL India has listed best cities for residential property investment along with checks that a prospective home buyer should do before putting in money.

In north India, NCR, Lucknow, Chandigarh and Jaipur, Dehradun show the highest residential property investment potential. In east India, Bhubaneswar, Kolkata and Guwahati, Ranchi are best locations for investment in housing segment.

In west India, Ahmedabad, Mumbai, Pune, Nasik and Nagpur, while in south India, Hyderabad, Bangalore, Chennai, Coimbatore and Vijaywada have potential.

"Within these cities lie the opportunities for a higher delta of capital value appreciation, depending on the demand and supply dynamics of their micro markets and also the quality of the development, reputation of the developer, strategic value of the location and timely completion of projects," Puri said.

The consultant advised that it is important to remember that one can almost never sell at the peak, just as it is impossible to always catch the lowest price.