TruEstate

Only 𝟭 𝗶𝗻 𝟯 real estate investors make returns that are higher than FD interest rates. Here are the top 3 reasons why: ⏱ 𝗣𝗿𝗼𝗷𝗲𝗰𝘁 𝗱𝗲𝗹𝗮𝘆𝘀 When investors calculate a project's potential appreciation - they don't factor in potential project delays by a developer - a common occurrence in India. Since most of the value capture in real estate happens between the start of construction and the time of possession - investors can make significant returns if this time is short. But if a project is severely delayed - it compete with other newer projects in the area (which will always be a buyer's first preference) - reducing its overall returns. 🛣 𝗠𝗶𝗰𝗿𝗼𝗺𝗮𝗿𝗸𝗲𝘁 𝗱𝗼𝗲𝘀𝗻’𝘁 𝗱𝗲𝘃𝗲𝗹𝗼𝗽 Most real estate investments are made in upcoming areas on the outskirts of town. Appreciation depends on whether companies move their offices there, or if the area has been earmarked for a new industry. It also depends on future infrastructure projects in that area like highways, metro, etc. If these developments doesn't happen reasonably quickly, your investment fails to appreciate significantly. 💸 𝗣𝗿𝗼𝗷𝗲𝗰𝘁 𝘄𝗮𝘀 𝗼𝘃𝗲𝗿𝗽𝗿𝗶𝗰𝗲𝗱 𝘁𝗼 𝘀𝘁𝗮𝗿𝘁 𝘄𝗶𝘁𝗵 Like most other asset classes - real estate follows a typical business cycle of alternating phases of growth, stagnation, and occasionally a recession as well. Buying into a property at the peak of the 'hype cycle' reduces your long-term gains - unless of course you're lucky enough to exit your investment at the peak of another cycle. When you consider investing in a property - ensure that you evaluate it end-to-end to get outsized returns. Follow TruEstate for more insights and information about real estate investing.

It’s been 12 months now since we started building TruEstate. Some thoughts: 1.⁠ ⁠I’ve been investing in the stock market for almost 20 years now - but real estate is completely different. Information is everything - and most investors don’t have enough data to make educated decisions. Even seasoned investors ignore fundamentals and buy into hype. 2.⁠ ⁠Anyone who claims that they can guarantee the timeline of a project is lying. Even if developer has the intent - he is highly dependent on the Government, local bodies, courts, RERA, NGT and other stakeholders to finish a project on time - which makes things highly unpredictable. 3.⁠ ⁠Several investors don’t plan sharp exit strategies in advance. Because real estate is illiquid and there tend to be emotions involved with it (everyone has a relative who was chided for selling a property too early), investors hold on longer than needed, reducing their overall returns. As our investing community at TruEstate (Link in comment) grows - excited to share more learnings and insights on the latest real estate trends and opportunities! #RealEstate #Investment #TruEstate #Community #InvestmentOpportunities

The Indian real estate sector just recorded the highest ever equity investment since 2018 according to a CBRE report released today. Here are the highlights: 🏙 Metro cities (Mumbai, NCR, Bengaluru, Chennai, Pune and Hyderabad) accounted for 88% of equity investment inflows. 🇸🇬 Foreign investment was 21% of total investment. From that, 73% of foreign investment came from Singapore, followed by 22% from the USA. 🌆 Land and development sites accounted for 45% of investments. Within that, approximately half of the capital was invested in residential developments. Follow TruEstate for regular updates and insights on real estate investing in India.

Caught up on Nikhil Kamath recent podcast episode on real estate (link in comments). It’s a 3 hr episode covering everything related to the space, but here are a few things that stood out for me from an investment angle: 1.⁠ ⁠Liquidity - high stamp duty and registration charges in India increase the cost of real estate transactions - making a relatively illiquid asset class even more so. 2.⁠ ⁠Interest Rate & Inflation - High inflation leads to high interest rates and high cost of capital. However, a lot of investors still don’t understand leverage and IRR in RE and calculate returns in CAGR. 3.⁠ ⁠Unit vs. Fractional vs. REIT: RE is a unit-investment heavy market. Under-penetration of financial instruments with retail investors is an awareness problem. REITs will see growth. 4.⁠ ⁠Litigation and Disputes - Almost 60% of civil cases in India are related to real estate. Slow legal resolution keeps the cost high for the entire industry, and deters investors.

For an RE investor, evaluating a micro-market is as important as evaluating the project itself. Here are 4 things to look out for when evaluating a micro-market: 👨💼 Buyer preferences - the demographic profile of a micro-market is often associated with the industry present there. For eg - Whitefield is known for IT and has several young, white-collar workers living there. If your micro-market has industries that are upcoming (for eg - semiconductor-related companies) - it could see high demand in the near future. 🏠 Supply constraints - micro-markets created in areas where development is already planned might see supply constraints - leading to a potential increase in prices. For eg - a residential area surrounded by land that has been earmarked for building IT parks might see significant appreciation as renters prefer to stay close to their place of work. 🚆 Infrastructure impact - the distance of micro-markets from roads projects, public transport options like metro, etc plays a big role in evaluating its future appreciation. Urban planning in Indian cities is highly skewed, which means that certain areas will see far worse infrastructure compared to others, making them less attractive for investors. 🏫 Proximity to amenities - most micro-markets are self-contained, i.e. amenities like schools, hospitals, parks are in close proximity and ideally - within walking distance. Micro-markets that don’t have important amenities, or designed in a way that they cannot come up there in the future (for eg - space for creating open areas like parks) will be less preferred. Bengaluru has seen several successful micro-markets created which fulfill most of the above criteria. Older ones include Indiranagar, Jayanagar, etc while newer ones include Whitefield, E-City, etc. As Bengaluru continues to grow - investors can expect new micro-markets to be created near the Bengaluru airport, Sarjapur, Hoskote, etc.

At TruEstate - we’ve been focussing on creating and curating in-depth, high quality, data-driven information and discussions for real estate investors (primarily for Bengaluru supply). For this - we’re starting an exclusive, safe and secure community for genuine real estate investors that’s free of spam, paid promotions and other selling tactics. Some of you’ll might remember an earlier WhatsApp group we had started to announce real estate opportunities. We’ve just started a new one that’s invite-only. Every investor in our community joins only after being verified manually. Do apply to join if you’re interested (WhatsApp group link in comments).

NRI investment in real estate will be 20% of all investments by 2025, up from 10% in 2020. Here’s what’s driving the trend: 1. Nearly 9 million NRIs live in GCC countries (UAE, Saudi Arabia, etc). This number has increased rapidly in the last 30-40 years as Gulf countries have seen steady economic growth. However, most NRIs from the GCC return to India after retiring - which incentivizes them to invest in real estate as part of their retirement plan. 2. 43% of NRIs who invest in real estate are buying property for their family in India. This trend is expected to grow amongst NRIs irrespective of geography due to increasing number of gated community options that ensure safety and convenience. 3. RE Investments in India tend to outperform those in other countries. For eg - residential real estate CAGR in California (where real estate is in high demand) ranges from 6-8%, against 8-10% in Indian metros. 4. Additionally, several NRIs in North America, Europe and other OECD regions tend to be unsure about whether they want to settle out of India in the long term. 70% of NRIs in the US and 75% in the UK have considered returning to India at some point. Investing in real estate turns out to be a hedge for them. Despite increasing levels of investment from NRIs in this space, concerns regarding developer due diligence, lack of transparency and information, property management, etc continue to exist. Contact TruEstate to know more about how we’re addressing these concerns. 

Today's India Today article talks about the allure of buying second homes in non-urban areas. Here's the full picture on second homes from an investment point-of-view: 💰 Restricted to the luxury market - the second home market is restricted to HNIs and UHNIs. This makes second homes more illiquid compared to primary residences. 🛣 Infrastructure - the value of second homes is also a function of how accessible they are, and the amenities they offer. Homes in remote areas with no roads or regular power and water - a common problem in several rural areas - will have low appreciation. 📌 Location proximity - most second homes need to be situated far enough from cities to offer a genuine non-urban experience. However, anything more than 3-4 hours away makes them less desirable as they cannot be marketed as a weekend getaway. 🏠 Rental yield - AirBnB, etc have made it very easy to discover and book weekend homes. With rentals upward of Rs. 20,000/night common on weekends for villa homes, a highly-rated second home can have a very high rental yield. 🏵 Urban quality of life - the standard of living in Indian cities is much lower than its Western counterparts. In the following years - there will be an increased demand for high-quality weekend getaways by those who can afford it. To sum up - second homes can be a good investment only if the investor is willing to actively manage and maintain the property for the long term. Follow TruEstate for more detailed and nuanced insights on real estate investments.

Today's The New Indian Express carried an article about a builder who sold the same units to multiple buyers. Curiously - both buyers were able to get home loans on the same unit as well. A similar fraud at a much larger scale happened in Noida as well recently. Here are a few pointers form TruEstate founder Dhananjay Mishra on how this fraud happens and what to keep in mind when investing in under-construction projects: 1.⁠ ⁠When you buy an under-construction unit, you enter into an "agreement to sell" - that unit is still not yours. In fact - that unit doesn't exist (its individual Khata isn't there). 2.⁠ ⁠An agreement to sell isn't mandatory to be registered with the sub-registrar. There is no way to guarantee that multiple agreement to sell doesn't exist for the same unit. Multiple agreement to sell on the same unit, however, is a case of cheating but buyers and banks have no way to know till someone comes forward. 3.⁠ ⁠If the developer defaults or doesn't deliver, it's a contract enforcement issue and hence agreement to sell is an extremely important contract. 4.⁠ The bank is lending to the buyer and not the builder - for them the unit is a security but they will go after the buyer even when builder defaults and unit doesn't exist. Risk for bank is different than the buyer. Don't depend on banks due diligence when you are making an investing decision. 5.⁠ ⁠A unit becomes a property of buyer only when the "Sale Deed" is executed. Title ownership transfer happens only at this stage. Contact us to know more about what to look out for when investing in under-construction projects. Buy with 100% trust and transparency.

Anurag Yadav dons many hats at TruEstate - from graphic design to UI/UX to front-end development. He represents the culture we're building - to learn, grow, hustle and to have fun while doing it! Here's a bit more about his experience at TruEstate: "At Truestate, I’ve grown both creatively and technically as a design intern while also coding websites. The hands-on projects have enriched my skills, and I’m grateful for the growth and opportunities I’ve experienced here."