3 Mistakes Property Investors May Have Made In Slump

There was no taming the negative sentiment that possessed consumers when many predicted this could be the end of the road for those who invested large sums in property markets. A lackluster performance of major property markets in India beginning early 2014 led many to believe a crash was on the cards, and made them forecast those expecting big gains would have to suffer big loses.  While green shoots are now making their way, owing to the tremendous efforts made by all sector stakeholders, a great deal of damage to investors' personal finances surely took place during this period. On looking back, many of them might realise it was a big mistake to lose faith and make hurried moves.

Losing faith

One does not enter a market such as real estate without doing one's homework. Those who helped you learn the tricks of the trade and the rules of the road must have told in the very beginning — do not lose heart when things go bleak; do not make haste; property investments are supposed to provide you big gains in the long run, do not look for shortcuts. Sure you know all that by heart, but, when the time to strictly follow these dictums came, you forgot everything about them. Those who gave up on their property investments because others predicted a bad future made the biggest mistake by doing so. The inherent characteristics of any asset class are highly unlikely to change irrespective of the changes that go around.

The lesson: Property investments will never be out of fashion in India. Do not we know that for a fact? Bad times, if they come, shall nothing but pass.   

Offloading the burden

So overwhelming was the story about the doom and gloom that many real estate investors may have started to perceived their priced asset a burden. Driven by such sentiments such landlords made their best efforts to sell off their assets quickly lest they have to suffer major loses. Such investors ended up selling their assets for much than its worth.  If they bought a property for Rs 50 lakh expecting it to provide them at least Rs 15 more lakh in the next five years, they offloaded it for the amount they bought it for in three years, taking a major monetary hit.  An upwards movement in the rates of property in major cities now makes such investors regret that decision immensely.

The lesson: At the risk of repeating ourselves, let us say it out loud once more—real estate investments are long-term bets. Quick movements are not to be made in this asset class.

That overreaction

Not all of you were overcome by the negativity around you. In fact, some of you would have seen a great opportunity in the middle of all the gainsaying. Taking advantage of the falling prices, this class of investors over-invested.  As numbers prove, such investors would certainly make gains, not as big gains as they might have initially thought though. With certain reformatory laws in place, real estate is now going to be a buyer-centric market. If you invested in property expecting windfall, you may have to suffer a slight disappointment.

The lesson: The upwards movement in property rates would be much more controlled from hereon.