– by Akash Pharande, Managing Director – Pharande Spaces
In India, no home is bought purely from an end-user perspective. The expectation is that it will also gain value over time. Regardless of how comfortable and otherwise attractive it is, no Indian will purchase a residential property that does not have appreciation potential. What factors impact resale value of a home? Let’s get right to it.
In the last three years, several Indian cities have witnessed significant real estate price growth. In the last two years, all eight of India’s largest cities – Mumbai, Pune, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Ahmedabad — recorded increases in their housing price index.
This is encouraging, but does it also help resale home values?
Yes, it does. Trends in new property prices certainly influence the resale market, as they set benchmarks for property values in the area. When new properties are priced higher, it leads to an overall increase in the perceived value of real estate in that location. This has a positive impact on resale housing values.
But of course, not all resale homes are created equal when it comes to value growth.
Various factors affect the potential return on investment on a residential property and understanding these elements is crucial for homeowners looking to re-sell their properties.
1. Developer’s Brand Influence
In recent years, the brand of the developer has been playing an increasingly important role in the resale value of apartments. A reputed developer not only assures quality construction but also instills confidence in potential buyers regarding legal compliances – and, in the case of newly-launched projects, timely completion.
Today, buyers will pay a premium for apartments developed by well-known brands, as these names carry a legacy of trust and reliability. Additionally, top developers usually choose prime locations, adding to the value proposition. These aspects hold true for all properties in the project, including resale homes.
2. Impact of Facilities and Amenities
The facilities and amenities offered in a housing project also play a significant part in its resale values. Contemporary Indian homebuyers look for conveniences that enhance their living experience.
Features such as swimming pools, gyms, community halls, and green spaces are no longer considered luxuries, as they were a couple of decades ago, but have become generally expected. Such amenities attract buyers looking for a lifestyle upgrade and can significantly drive up the resale price.
This is one of the key reasons why residential townships by leading developers specialized in this genre are in such high demand today. Unlike smaller projects which are cramped into minuscule plots and therefore have limited amenities, large integrated townships have these as integral parts of the overall value proposition.
In short, homes in integrated townships command a higher resale value. The convenience of having essential services and amenities as well as lifestyle add-ons within easy reach is a significant draw for buyers of new as well as resale homes in such projects.
3. Evaluating Market Conditions
To judge whether the housing market is supportive for good resale value, one should consider several indicators. These include current real estate trends, interest rates, economic conditions, and demand-supply dynamics in the locality in question. Monitoring these factors can provide insights into the best time to sell. For instance, a seller’s market, where demand exceeds supply, can be an ideal scenario for resale.
However, if there is currently a lot of supply in this market, it may be wiser to hold on to the property until it is absorbed and demand for homes there rises. Remember, land is a finite resource and eventually, it is consumed by development.
When developing new projects is no longer possible in the micro-market, it becomes more supportive of good resale value. Playing this waiting game calls for patience and also diligent upkeep of the property so that its appeal does not erode.
4. Tips for Maximizing Resale Value
Regular Maintenance – Keeping the apartment in good condition is essential. Regular maintenance and timely repairs can significantly enhance the resale value.
Upgrades and Renovations – Modernizing the apartment with contemporary fittings or technology can attract more buyers and justify a higher price.
Effective Marketing – Very few properties sell themselves. To get the best response from the resale market, it is necessary to make the property visible to potential buyers. Apart from posting your own listings with photos of the home on property portals, you may also want to engage a real estate agent with local market knowledge. The agent will not only have a database of buyers but can also provide valuable insights – for example, at what prices other properties like yours are currently selling, and which price expectations may be too ambitious currently.
All Essential Paperwork Available – Ensuring all legal documents are in order and that the property complies with local regulations will smoothen the resale process and enhance value. The documents mentioned below collectively prove the legitimacy of the property and its ownership, facilitating a smoother resale process:
Title Deed – This document proves the owner’s right over the property and should be in the name of the seller. There should also be documentation that transparently traces the origin and subsequent transfers of the property, to establish the ownership chain.
Sale Deed – This document records the transfer of property from the seller to the buyer and is executed at the time of property purchase.
Encumbrance Certificate (EC) – This certificate proves that the property is free from any legal or monetary liabilities such as mortgages or unpaid dues.
Approval Plan of the Building – This document is issued by the local municipal authorities or the jurisdiction under which the property falls and is a must-have for resale.
Occupancy Certificate (OC) – This is issued by the municipal corporation after the completion of construction and certifies that the building is suitable for occupancy and complies with all the norms set by the local authorities.
Possession Certificate – Issued by the developer, this document proves that possession of the property has been given to the buyer.
Completion Certificate – Issued by the municipal authorities, this verifies that the building has been constructed according to the approved plan and is ready for occupancy.
No-Objection Certificate (NOC) – This is issued by the housing society on request when the owner seeks to sell the home.
Property Tax Receipts – Keeping up-to-date property tax receipts shows that taxes have been paid regularly.
The resale potential and value of a home is influenced by various factors. While some of these may be beyond the scope of the seller to influence, it is important to focus on the aspects that are within your control. In short, maintain the property well, keep its legal documents ready, and make sure that the property is visible to potential buyers.
Timing is also very important, and this requires knowledge of the local market and often also patience. Unless there are compelling financial circumstances which require immediate liquidation of the property, waiting for a market upturn if it is currently slow is very advisable.
About the Author:
Akash Pharande is Managing Director – Pharande Spaces, a leading real estate construction and development firm famous for its township projects in West Pune and beyond. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in West Pune.