Real Estate Investment Selection and Empirical Analysis of Property Prices: Study of Select Residential Projects in Gurgaon, India


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Sanjay Sehgal, Mridul Upreti, Piyush Pandey, Aakriti Bhatia

523 / 566




International Real Estate Review


The paper studies the residential micromarket of the Gurgaon region of the Delhi National Capital Region in India, to identify the key determinants of real estate investment selection and perform empirical analysis of property prices. A primary survey suggests that the goodwill of the developer is the most important factor for investors in the case of residential properties that are under construction (forward projects). Other factors include location, amenities, project density and construction quality. These factors enjoy almost equal importance in selecting completed projects (spot projects). The factor information can be used to construct property quality rating classes. High risk adjusted returns are provided by high quality spot projects and low quality forward projects. A long run equilibrium relationship is observed between spot projects and forward prices with the former playing the lead role. Gross domestic product and non-food bank credit are the macroeconomic variables that can predict property prices. The highest pre-tax internal rate of return is observed for forward projects in the first quarter holding itself while for spot projects, it is around the eighth quarter. The research has implications for property developers, real estate investors and market regulators. The study contributes to the real estate investment literature on emerging markets.

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Property Prices, Real Estate Investment Analysis, Holding Period Returns, Goodwill of the Developer, Cointegration

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