Indian real estate has evolved a lot over the years and it has become easier for buyers and investors to find information on properties. The availability of property portals, social media, YouTube, developer sites, property listing platforms and real estate marketplaces enable an investor to find hundreds of properties within minutes. This can be extremely beneficial but more information does not always translate into clarity of choices

In many cases, the situation can result in information overload with an investor looking at multiple projects in the same city, comparing dozens of options, facing calls from multiple brokers and developers, and being presented with different viewpoints on how property prices in a certain area may evolve in the future. A person may face a dozen projects, all of which will have a different perspective on the same issue or one may highlight the growth in infrastructure while another may point to demand in rentals and a third the potential of a particular project.

What an investor needs to do is identify which information is relevant. Here is where real estate advisory plays a significant part in the lives of property investors. Real estate advisory is not about showcasing projects but understanding the relevance of a certain opportunity for an investor, including his or her financial capacity, risk appetite, location preferences, and time horizon.

The transition is simple. Investors are depart “What properties are available?” to “What opportunities are relevant for my investment objective?”

The Real Estate Market Has More Choices Than Ever

Finding properties has become remarkably simple. A person looking to buy a residential property can identify options within a budget, location, property type, configuration, amenities and possession timelines and, within minutes, generate a long-list of potential opportunities.

However, generating a long-list is only the beginning. Suppose one finds 20 apartments in a dozen projects. 

• What is one to do next? 
• Is the price rational for the location? 
• How does one property compare to another? 
• Does the developer have credibility? 
• What is the level of demand for the property?  
• Are the infrastructure plans that have been mentioned credible? 
• What additional costs will one incur? 
• Is the property suitable for rental income, capital appreciation, personal use or a combination? What documents do I need to check? 
• What risks can impact the investment in the future? 

While portals can enable discovery, they cannot always answer these questions. 

Information Is Not the Same as Insight

One of the biggest challenges for a property investor in today’s world is distinguishing between information and insight. For instance, one may read that a certain location has positive infrastructure development. This is data, although the investor should know that it may not necessarily apply to all properties in the locality. 

What one must also consider is: what exactly is changing? When is the change expected? Is the information credible? Which micro-markets in that location will benefit? Has the potential already been factored into prices? What are the risks?

This is important as the investor must realize that headlines alone cannot form the basis for an investment.

A real estate investment consultant can ensure that the information is organized appropriately and the investor gets a holistic view of opportunities. Instead of simply offering a property, a consultant can help realize the factors that may contribute to an opportunity being right for the investor.

The objective is not to alleviate uncertainty as real estate investment always comes with uncertainty. The objective is to make the uncertainty easier to understand.

Why Investors Are Turning Toward Real Estate Advisory. The rising appetite for advisory is linked to a simple realization that property dealings can be expensive and long-dated. Investors want a structured approach before making such commitments.

1. Too Many Properties Create Decision Fatigue

When there is a choice between a few properties, it may be easy to make a decision. However, a situation where there are hundreds of options on the table can prove to be more challenging.

A professional advisor can help narrow the search in a manner that considers location, budget, property type, investment horizon and objective. This can save an investor time spent on looking at properties that would not be suitable.

2. Investors Want Objective Evaluation

When a project is marketed, it will tend to do so in a manner that spotlights its positives. One can find beautiful pictures, great amenities, a desirable location, attractive offers and more. That is not to say that marketing is inherently misleading but simply that it does not necessarily provide a balanced perspective on whether the investment is right or not. An investor will also want to understand the non-promotional aspects of a property, such as:

• Legal and documentation considerations
• Developer track record
• Location-specific risks
• Resale potential
• Maintenance costs
• Rental demand
• Supply in the surrounding market
• Connectivity
• Development timelines
• Exit considerations

A professional advisory process can provide a balanced view. The objective is not to be negative about one project while championing another. The objective is to have an understanding of the complete picture before one makes a decision.

Real Estate Investment Advisory Begins With the Investor

One of the mistakes that most people make while purchasing properties is to look at the property first rather than the investor.

For instance, a person may call a consultant and the first question may be about the best property in a certain city. But this does not have to be the case because what works for one investor may not work for the other.

Someone looking for long-dated capital appreciation may have different priorities than an investor looking to generate rental income. An individual looking to use the property personally may have different requirements than one who wants to simply hold the asset. This is when real estate investment advisory may become more personalized. 

The conversation must start with questions, such as:

• What is the investment objective?
• What is the available budget?
• Is financing involved?
• What is the expected holding period?
• Is regular income important?
• Is personal use part of the plan?
• What level of risk is acceptable?
• How important is future liquidity?
• Which locations are under consideration?

Only after these questions are considered can one move on to property selection.

Due Diligence Is an Important Part of Property Decisions

A property that one might find fascinating on the exterior could involve several considerations before one commits to a purchase.

This is especially critical as a real estate transaction involves multiple documents, approvals, ownership clearances, agreements, and financial commitments. Depending on the transaction, an investor may have to consider title documentation, approvals, permissions for development, registration (in specific cases), terms of the agreement, payment schedule, encumbrances and more.

A professional advisory can help an investor identify what areas must be considered with greater scrutiny.

That said, investors must understand the limitations of advisory services. Legal matters must be reviewed by legal professionals while tax-related matters must be discussed with tax experts. A good advisory process will not replace these professionals but will help an investor understand their relevance.

A Consultant Can Help Compare Opportunities on Common Parameters

At times the task of comparing two properties can prove to be difficult, especially if they are highlighting entirely different attributes.

One project may be talking about its amazing amenities while another showcases its incredible location. A third talks of value for money while the fourth promises future developments. To compare one against another, an investor will need a common framework. An organized advisory process can help compare opportunities on certain parameters, such as:

The purpose of these parameters is not to arrive at a simplistic scoring system. The purpose is to allow a better understanding of the differences.

Real Estate Advisory Is More Than Property Brokerage

The terms broker, agent, consultant and advisor are often used interchangeably but there are subtle differences based on the services provided. A traditional broker’s job is to connect a buyer and a seller and facilitate a deal. An advisory-led approach can include a more involved process of understanding the buyer, analyzing location options, shortlisting opportunities, comparing them, conducting due diligence, and ensuring that the buyer fully understands the transaction.

It is important that an investor recognizes the subtle difference, especially if he or she does not want to make an investment decision on the basis of a sales pitch. An investor may want an involved process that goes beyond simply shortlisting properties.

That is why the advisory model is gaining attention among more informed property buyers.

Technology Has Made Advisory More Important, Not Less

It could be argued that the availability of information online reduces the value of a professional advisor.

In reality, technology has helped create a new challenge: the amount of information that an investor has to sift through.

Online reviews can be personal opinions that may not have universal application. Social media posts can oversimplify the dynamics of the real estate market. Advertisements will always want to promote the positives of a certain project. YouTube videos can help educate but may not consider an investor’s unique circumstances. The problem is that an investor has more information than ever before but he or she has to interpret it all.

A professional advisor can help organize information and ask better questions. Technology is about information. Advisory is about context.

Location Selection Requires More Than a Popularity Check

Location is one of the most important aspects of a property but choosing one simply on the basis of popularity can sometimes be misleading. Investors must understand the reasons for demand.

For instance, a location can see demand because it has employment hubs, is witnessing infrastructure development, has tourist appeal, offers education, has better connectivity, has a lifestyle appeal or has restricted supply. Each of these factors can have different implications for a property segment. 

An advisory approach can ensure that an investor looks at the micro-market rather than the city as a whole. This is even more critical in a city such as Gurgaon, Goa, Bengaluru, Mumbai, Delhi NCR and other fast-evolving markets. One can have well-established residential markets, burgeoning corridors, premium micro-markets and markets that are still waiting to take off.

Investors Are Becoming More Focused on Risk

When a discussion around real estate investment takes place, it is often about the rewards. However, experienced investors will always look at risk.

There are obvious and not-so-obvious risks. Some risks can be apparent while some come out only after deeper research. Examples can include:

• Overpaying for a property
• Weak documentation
• Limited resale demand
• High recurring costs
• Excessive supply in a micro-market
• Delayed infrastructure development
• Mismatch between property type and local demand
• Unrealistic rental expectations
• Poor exit liquidity

No advisory process can alleviate all investment risks but identifying them before one makes a commitment can help an investor make a smarter choice.

The Value of Advisory Often Lies in the Process

People tend to think that the value of a consultant lies in the recommendation that he or she provides. That is only one part of the value. The larger part lies in the process that leads to the recommendation. A good process can look something like:

• Investor Objective 
• Market Research 
• Location Shortlisting
• Property Evaluation
• Comparative Analysis
• Due Diligence
• Financial Review
• Decision

This helps ensure that there is no emotional investment in a property before one makes a decision.

What Should Investors Look for in a Real Estate Advisor?

Not all advisory services operate from the same standpoint. Investors can ask certain questions before finalizing a deal with a consultant.

Does the advisor have a good grasp of the local market?

This is sometimes beneficial, as the micro-market can be relevant to a property purchase

Is the advice focused on what the investor is buying?

A competent advisor will ask why they want to make the purchase rather than focusing on the budget.

Is due diligence involved?

Investors should keep in mind what checks are being made, and if there are external legal, tax or technical advisors that should be consulted.

Are limitations spelled out?

Any competent advisor will clarify that nobody can control future prices, taxes or demand for the property in question

Is the fee structure visible?

Investors should understand the nature of the advisory and whether there are additional transaction-specific expenses or relationships

Is discussion of alternatives included?

An effective advisor will be able to explain why the specific property was singled out, and what alternatives were considered. All of these criteria can be used to determine if investors will be satisfied with the overall service.

Advisory Does Not Mean Giving Up Control

Sometimes, investors are hesitant to turn to an advisory service due to the belief that the input of a professional eliminates their own responsibility.

This does not have to be the case. A competent advisor should enable the investor to make the most qualified decision, even if it is negative

The advisor is an external party that utilizes research, experience, analysis and other tools to highlight factors that the buyer may not have considered. This does not eliminate the need for the buyer to finalize the choice on their own.

This is especially important in real estate, as the ability to purchase a property is dependent on the financial capacity of the buyer, and the reasons for making the purchase.

The same property cannot be said to be a valuable investment for all categories of buyers.

Read More: How to Verify a Real Estate Agent in Gurgaon Online

Why This Shift Matters for the Future of Indian Real Estate?

As the Indian real estate space generates more data points, there will be a growing need for people to interpret this information. Investors do not necessarily need another source of purchase options.

They require a source of understanding what these options may mean. What details should be reviewed? What questions should be asked? How can a given property be integrated into the investment portfolio? These are some of the key issues that due-diligence and advisory can tackle.

Furthermore, successful advisory services are not ones that drive investors to the purchase. They are the services that prepare the buyer to make the purchase, by ensuring that they know what they are buying.

This philosophy reflects a broader cultural shift, in which the question is no longer

What can I buy?

but

Why should I buy this?

Conclusion

Indian real estate affords a broad variety of investment opportunities, but greater choice does not always equal better choices.

With property portals, advertising, social media, online forums and websites from developers providing a steady stream of information, it can be difficult for investors to consolidate the relevant data points to make an informed choice. This is where the real estate advisory can make a difference.

From one standpoint, an experienced real estate investment consultant can streamline the process: helping buyers identify what to look for, where to look, what options to review and how to consolidate the information for decision-making.

At the same time, such an advisor should recognize that their personal expertise does not replace broader legal, tax or technical expertise.

Furthermore, a real estate advisor should understand that their expertise is not an end in itself, but a means to an end: enabling buyers to understand the nitty-gritty of the deal, in a manner that fits their needs and priorities.

Overall, such an approach can help transform unstructured (and potentially overwhelming) buyer choices into a coherent sequence of actions. This can enable investors to make a well-informed decision regarding one of the biggest expenditures in their lifetime.

Why More Investors Are Looking for Real Estate Advisory: FAQs