Property at Kolkata: To Invest or To Buy For an End Use

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Buying a property at Kolkata is an excellent investment. Real estate is one of the most profitable investments in India, with real estate prices going up by an average of 2-5% year on year. There are many upcoming residential projects in Kolkata which makes it a primary real estate market. This is because of several reasons. One reason is that many centrally located neighborhoods in Kolkata are up for redevelopment. This means that areas like EM Bypass, New Town, Beliaghata, etc. have many new properties with numerous amenities available for sale. Secondly, the suburbs of Kolkata have gone through massive development and growth. Many areas such as Rajarhat, Salt Lake, and New Town are fully developed and have in-demand properties on offer. The third reason is that compared to many cities like Mumbai, Kolkata’s real estate market is relatively affordable, especially for the quality of construction.

Let us elaborate on the different criteria you should be looking at when you’re buying a property at Kolkata for investment vs when you’re buying a property for end-use.

Property at Kolkata: Investment Vs End-Use

Are you looking to buy a property at Kolkata? Usually, people buy properties for two main reasons. Either they buy the property to live in with their families. This is called buying a property for end-use. Or, they buy a property for investment purposes. This means, either to earn income through rent or wait for the property value to appreciate to sell it and make a profit. Most times an investor will do both – put the property on rent to earn rental income and then sell the property when the value appreciates enough.

Advantages of Buying a property for end-use

When you buy a property for end-use, that is, for the purpose of staying there yourself, you’re buying an address that will serve as an extension of your identity as well as a place to call your own for a long time to come. Let’s have a look at the advantages & disadvantages associated with buying a property at Kolkata for end-use.

• Saving on rent: Unless you own the house you live in, rent outflow will always constitute a large part of your monthly expenses, sometimes constituting a number as high as 30-45% of total income. By owning a property at Kolkata, you save on this recurring long-term expense.
• Customizing your home to suit your needs: There are certain limitations of staying in a rented apartment such as restrictions towards making changes in the home to suit your and your family’s changing requirements. You will not be able to modify the layout, change the furnishings, and make permanent changes in the house you occupy as a tenant.
• Asset Appreciation: Even properties in Kolkata that are purchased with the intention of end use are ultimately real estate assets that can appreciate and deliver high returns if and when the need arises. This value creation can prove to be a tremendous source of financial security for you and your family.

Disadvantages of Buying a property for end-use

• Financial Burden: Most people can’t afford to buy flats or apartments in Kolkata without availing of a home loan. Paying off the recurring monthly installments over the long-term can leave you feeling quite stretched to meet other living expenses.
• Limited Mobility: Buying property at Kolkata is a long-term commitment. Once you buy a flat at Kolkata, you are rather restricted to the home in terms of space, location, and amenities. It’s not easy or financially feasible to change your house in the event of relocation due to a change in a job role, kids’ education et cetera.

Advantage of buying a property for investment

Buying a property in Kolkata as an investment can prove to be a wise idea for long-term value creation. Let’s have a look at the advantages & disadvantages associated with buying a property at Kolkata for end-use.

• Recurring Rental Income: Most people who invest in real estate in Kolkata in the form of flats, houses, or duplex houses in Kolkata derive a fixed monthly rental income from tenants of the property over a typical contract time period of 11 months or more. Moreover, rent is revised every year to the tune of 7-10% which further improves the rental yield from the investment.
• Capital Appreciation: Real estate is an appreciating asset. If you buy and hold land, building, or apartments in Kolkata over the long-term, you can expect multifold returns in the future. Buying a property at Kolkata is one of the most secure tangible investments you can partake in.

Disadvantages of buying a property for investment

• Huge Capital Investment: Buying houses in Kolkata is a capital intensive activity. Irrespective of the type of property at Kolkata that you’re investing in, it is going to cost you a few years’ worths of savings as a down-payment as well as the amount you will end up paying as an EMI and interest to service a typical home-loan. Making these recurring payments can prove to be a financial burden.
•  Lack of liquidity: Whether you’re buying ready to move in flats in Kolkata or an under-construction property at Kolkata, it’s relatively hard to find buyers for real estate as compared to other assets such as stocks or gold. More often than not you have to engage a real estate broker, go through several rounds of visits and negotiations before registering a sale. This is an expensive and time-consuming process.
• Maintenance: Renting your property to tenants over the long-term will cost a fair bit of money in terms of upkeep. You’ll have to repair fixtures as they get older, paint your home every two or three years, and invest in the general hygiene of your home. Moreover, you have to shell out a quarterly fee to the residential complex as a charge of owning property in the society; sometimes this charge also carries a non-occupancy fee of approximately 10% of the quarterly maintenance amount.

Both these reasons, buying a property for end-use and buying a property for investment purposes, have different considerations that need to be kept in mind when deciding which property to buy. Different kinds of research have to be done for the property depending upon your objective. 

So, the first step when trying to decide which property to buy is defining your objective. Are you buying the property to live in or for investment? The second thing to decide is how long you are willing to wait after purchasing the property for the property prices to appreciate. Thirdly, you need to decide your budget. 

Considerations before investing or buying a property at Kolkata

The following are the main differences to look at between properties for sale in Kolkata for end-use and for investment purposes.

Location

As they say in real estate, the most important thing is location, location, location. But that means different things when the property is for your own use and when the property is for investment.

For End Use: If you’re buying the property for yourself, obviously you want to buy it in a location that is convenient for you and your family. For this, you will have to keep in mind the connectivity with your work, with your children’s school, with entertainment and leisure options etc. It depends on what you want from the area you live in. Once you decide what you need in the close proximity of where you are going to live, narrow down your search to those areas. For example, if it is very important for you and your family to go to the mall every weekend to watch a movie, look for a house near shopping malls. If you want the metro to be easily accessible, make sure the house you look at is located close to a station. You may also consider reducing your commute to work as much as possible. Some areas to consider for this purpose are the new residential projects in Kolkata North at New Town, Salt Lake and EM Bypass, which are all very close to the upcoming IT hub areas of the city. Try to research the liveability index of the location you choose. A place with a higher liveability index is generally close to schools, hospitals and transportation which means that it is easier to live in. The municipal authority responsible for the development of the area should also be considered.

For Investment: If you’re buying a property for the purpose of either reselling at a later date or for renting, then the location you choose should be a popular or upcoming location that you know is going to be in demand over the time period you want to own the property. The more popular the area, the more return on investment (ROI) you can expect from your purchase. These areas might not be fully developed right now, which means they are probably not ideal for moving in right away, but in the near future a lot of development is expected in them. This will depend on how long you want to keep the property. If you want to keep the property for a short period of time, look for areas that are already in high demand like EM Bypass and Beliaghata. If you’re looking for upcoming areas where price is expected to escalate to its peak in the near future, then consider the new residential projects in Kolkata South in areas like New Alipore and Joka. 

Ready to Move or Under Construction

The stage of construction of the property is also crucial because it will affect your timelines.

For End Use: If you’re buying a property at Kolkata such as a house to live in yourself, you would want to go for a property that will be ready before the time you want to move in. If you are looking to move in immediately, then you should go for properties that offer ready to move in flats in Kolkata. But if that is the case, then the property might cost more since the value increases closer to possession. On the other hand, in case you buy a cheaper flat that is currently under construction and live in a rental apartment till it is ready for possession, you will have to pay rent in addition to any loan payment. Hence, it makes sense to weigh the pros and cons depending on your income and monthly installments loan as well as your needs. Ideally, if you want to move to your new house immediately, you should buy a property that is ready to move in flats.

For Investment Purposes: If you’re planning to buy a property for investment purposes, then you can probably afford to wait for prices to increase for a couple of years. In which case, it makes sense to buy a property that is still under construction in an in-demand area. This will mean that you will be able to buy the property for cheaper right now and then can sell it at a much higher price when the property is ready for possession. If you are looking to buy a property to put it on rent immediately or looking for a short term investment, then you should buy a property that is almost completed construction and will soon be available for possession. 

Design and Amenities

For End Use: When buying a property at Kolkata for yourself, you want as many amenities as you can get within your budget. Many premier properties in Kolkata like PS Group’s 102 and The Soul are packed with so many amenities that you will not feel the need to step outside your premises for any needs. Newer developments may come with gyms, swimming pools, gardens and even sports courts inside the premises. Some even provide for ATMs, grocery shops and banquet halls. Look at whether or not the property you are considering comes with parking spaces, elevators with power backup, security features, sustainability features, etc. The aim is to make sure that the property you buy for your own use makes you as comfortable as possible. 

For Investment Purposes: When buying a property for investment purposes, obviously it will fetch a higher price for the number of amenities it has. But here, an investor can be more economical in his or her considerations. Because although amenities will increase the attractiveness of the property when you plan to sell or rent it in the future, it will also increase the cost for you right now. So weigh the costs and decide on the trade-off you can afford to make. If you can afford it, go for the property with the maximum number of amenities within your budget. It will increase the property’s price over time.

Property Configuration

Do you want to buy an apartment or an independent house? How many bedrooms do you need? 

End Users: This is a decision that is based purely in personal preference. What kind of property will be ideal for you and your family? Keeping budget considerations in mind, you should deliberate on this decision and make it carefully before you start looking for your ideal home. In case you are planning on expanding your family soon, you might want to consider having an extra bedroom. The area of the property will also change depending on the number of family members and their ages and whether or not you have any pets. Whether you want to live in a gated locality with added security, apartments and amenities or whether you want an independent house will also depend on your preference. In case you have elderly people living with you, you might decide to live on a lower floor or an apartment complex with elevators. Make this decision wisely. 

For Investment: For investment purposes, you should check the most popular layouts in your area. Generally, in Kolkata 2BHK and 3BHK apartments are the most common for reselling or renting. You can find out which configuration is most popular in your specific area by speaking to agents or a property dealer in Kolkata and doing an online search. You can guess the demand for a certain type of property at Kolkata by seeing how many listings there are for it on website portals.

Conclusion

Buying a property is one of the biggest and hardest decisions one can make. But hopefully, this article cleared some doubts as to what criteria you should consider for your purposes. There are many upcoming residential projects in Kolkata that can meet any need you may have. Keep these considerations in mind to help you narrow down your choices.