Kerala Real Estate 2012 - Predicting the future and Investing Smartly

The year 2012 for Kerala and for India in general has been one filled with scams, news of corruption and fear of a brewing bubble among real estate investors. For Kerala home buyers, there was no way of checking the veracity of claims made by developers when it came to new projects, costs, fair value of land in Kerala. More than 50% of home buyers we spoke with during our surveys,  were tentative in their approach and unsure if they should invest in real estate at this time, when markets like Kochi were tanking. As projects got delayed, developers earned the wrath of families who had the dream of entering a new home.

When we clubbed together Kerala real estate investor concerns into major categories few of them stood out:

• Fair reviews about developers and projects - Whom should I believe before I buy a home? The marketing executives or the advertisements or the agents?
• Should I park my money in real estate or should I look at mutual funds or gold or some other avenues?
• What is the realistic appreciation for the property and which location should I buy my next property while investing in Kerala or Trivandrum?

A closer look at the above investing parameters will tell you that some are qualitative in nature and others are quantitative. When it comes to investing in real estate in Kerala in 2012 we believe it's a combination of science and art.

The Art - Like an expert artist sways his brush to make the perfect portrait, an experienced real estate investor knows from his empirical judgment whether a property is worth going for. And none have made it bigger than Donald Trump who earned millions by investing in real estate.Trump wrote a book called THINK BIG which is quite a motivator for not only real estate investors but all businesses and people alike. Many would say Donald Trump is like an artist who knows his art quite well. You can draw analogies of similar worldwide personalities from across different sections of society, like Warren Buffet who mastered investing in the stock market. 

The Science - When it comes to the science of investing in real estate, you need to be armed with data and information. Not only do you need information on historical sales values, trends and growth figures, but you also require information on the future i.e. predictive forecasting of property values considering macro and micro economic trends in the market. Human beings can do these predictions only to a limited extent. But today software has evolved to a considerable extent making such tasks much easier.

Which is why, some of our analytics guru's at Nandanam use tools like SPSS Statistics and SPSS Modeller and the like to do predictive modelling scenarios and come out with results which to a large extent accurately foretell the future.

So what does this mean to a real estate investor in Kerala? When we use historical data, spanning  many years in the past and draw realistic future estimates by considering interest rates, investments, projects, rentals, expat growth and many other inputs, we reach a point where technology tells us what the future might be like in 2014 or 2015. Of course predictions can be made as long as 10 or 20 years down the line, however these may not be as useful considering how fast things could change in today's real estate world in Kerala and in India.

A combination of art i.e. empirical judgement of our real estate agents coupled with science, which combines data and information to present a future scenario, is the right mix that one needs to accurately conclude whether a property is worth an investment or not.

With many setbacks which people have apprised us about while investing in real estate in the recent past, it is worth considering, whether you have all the information at your disposal to make a prudent investment. If not, a simple call to a reputed real estate consultant, might just be the right approach to take to ensure a secure future for you and your family.