Is it a good idea to invest in a property going under redevelopment?

Investing in a property that’s earmarked for redevelopment in Mumbai can seem like a gamble at first glance. However, the potential benefits make it an enticing option for savvy investors. Below are TWO reasons why this may well be the option many investors are looking for.

Potential for High Returns – Investing in properties in buildings set for redevelopment often come at lower prices compared to their future potential value post-completion. As a result, investors stand to make excellent returns on their initial investment. It’s the classic real estate win: buy low, sell high.
Modern Amenities and Infrastructure Redevelopment projects in Mumbai aren’t just about sprucing up old buildings. They’re synonymous with modernization, bringing with them the promise of updated amenities and infrastructure such as state-of-the-art fitness centers, smart home technologies, same environment for kids, etc., all of which are much in demand by buyers and renters.

Disclaimer: Please note this is not a blanket yes towards investing in redevelopment properties, please conduct your own research and due diligence before making any purchase. 

 Factors to Consider Before Investing
Before diving into the world of property redevelopment in Mumbai, pause and evaluate several crucial aspects. Here’s a simple rundown to keep you informed.
Location Matters
The importance of the location of your potential investment cannot be overstressed. You must research upcoming infrastructure projects, transportation upgradation, proximity of schools and universities, easy access to major highways, etc., play an important role in driving the appreciation of your investment.
Registration of Development Agreement (DA)
There are many older buildings in the market today claiming that their building is going ahead with redevelopment. Be cautious, take legal opinion and conduct property due diligence to ensure the seller’s building has signed and registered the DA with the Developer.
Developer Reputation
In the current market, there are many new names that have come up and are taking up redevelopment projects. Due to this, it is hard to verify their track record or financial strength. Any unknown local or global event could potentially put the project in jeopardy. Hence, aligning with a reputable developer having a record of timely deliveries, quality construction, and adherence to legalities becomes very important.
Financial Viability
Make sure you crunch the numbers. Ask yourself if you are getting the property at a good price, are you taking a loan, calculate interest charges, consider the cost of doing up the property once it is delivered to you, calculate all expenses versus the expected returns once it is completed. Only then, purchase the property.  

 

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