Is it better to make an investment in redeveloped residential or commercial projects?

Now builders are targeting the existing structures in Mumbai, which are either in bad condition or dilapidated because centers of Mumbai is running out as there is no more space for residential development. But still it’s a big question, is it better idea to invest in these properties for redevelopment as down payment is very high in these areas (Approx. 50 per cent).

As per the research on seller or buyer sentiments, who belongs from west and south India most of the people raise their query about investment prospects in existing buildings or re-developed projects. Redeveloped projects are in the good flow of demand as they are like modernization of the area with new infrastructure. Before investing in existing buildings buyer should check the background of the developers as these properties comes with several risks in respect to FSI such as; government approvals and conversion regulations.

On side, where investment in re-developed infrastructure can be beneficial for buyer or end user, the same can be risky for investors, who are looking for capital appreciation. The opportunities for capital appreciation much less in established localities in comparison of areas where there is huge potential for new infrastructure planning. Some areas in Mumbai like; Khar, Bandra and Santacruz are already saturated and developed with property cost in a range of Rs 18,000-44,000 per sq ft whereas, other areas like; Navi Mumbai and Vashi is still in the development stage in terms of re-development, infrastructure and connectivity .

CIDCO (City and Industrial Development Corporation) has allowed FSI up to 2.5 for new affordable housing buildings and it is expected that these buildings will be able to get a better scope of appreciation for those investors, who are looking for capital gains as well as the base value. In general re-developed infrastructures require more investment from consumers as builders, who are involved in re-development projects can ask for more down payment and it can range up-to 60 per cent of the total value. Most of the matured commercial and residential areas are undergoing for re-development in Mumbai to bring new supply of buildings for catering the needs of people, now end user can find multiple way to invest in these properties to earn maximum profits.