Due diligence, can be the game changer for Indian Real Estate

Indian real estate

In the absence of due diligence the Indian real estate market can loss basic fundamentals and get drive by the positive news stories. However there are no analytical techniques are available to support those stories. The market intelligence of the prospective buyers is only reflective in macro level market which often goes off track. Most of the buyers are agree that due diligence is the way for to manage the risk and returns in terms of property evolution. More than that, it can give the much needed facelift to real estate sector. Due diligence is probably the most important aspect of a transaction involving real estate immediately following a broad understanding of the commercials.

According to Bilateral business body of India and America and economics experts “when market is fulfill with potential of growth and debt price is higher than equity so it demands for a greater common sense”.  In the eco-system of Indian real estate market there is financial disorder, as investors are getting the higher interest rate in market, which is giving the best ROI. The problems with these investments are that, high returns are available in market with high risk with the absence of reliable data. The answer to the dilemma of the investors and funding of the serious developers lies in creating a plain and simple mechanism of due diligence.

A section of the analysts mention that due diligence has always been done in the Indian real estate, but the Bull Run made some of the developers a bit over ambitious to ignore the fundamental in order to get the higher profits with far higher risk. However the slowdown has taught  everyone a lesson and now developers are over cautious at the each level, but the fact remains that in the absence of scientific and industry accepted mechanism of due diligence the challenges and risk exposure are as much for the realtors as for the investors. According analysts the developers and independent property consultants should focus more on micro markets than general trends which could be misleading. Whenever there are many grey areas where in the absence of proper research and search and reliable data even assessment of ground realties is not feasible.

According to Rohit Gera, MD of Gera properties, agrees over the need of proper due diligence across the real-estate sector of country. Unfortunately the home buyers still do not undertake the requisite amount of due diligence especially when buying the homes from fly by night operations. The cost of reliable due diligence often is less than one month’s EMI and this offers peace of mind through 240 months of loan payment. Sometimes customers blindly believe that they will not be the victims and they can go forth without proper due diligence. There are number of reasons for the absence of due diligence in real estate sector.  The growth of real estate transaction combined with the growing participation of the organized sector in real estate, which resulted in heightened awareness of the risks involved and, consequently, the need for ensuring that the risks are identified and minimized in such transactions