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Chat Transcript

02 Dec - 10:00 hrs

Amit Kumar Singh | Senior- VP, 99acres.com


Is this the right time to invest in real estate?

Chat Transcript

guest: Are there any good REIT that one can look at? Also where do you see Hyderabad Market heading
Amit Kumar Singh: REITs are a different kind of financial instrument, which have ,for now, an unknown measure of risk and return. They are in their infancy and the majority of investors are in a wait and watch mode. We would suggest that you wait for your favorite financial analysts to give a go ahead on these instruments. Hyderabad market is showing positive signs after the election of a new government, but prices are still stable. The market mood is slightly difficult to ascertain, as you get both positive and negative news, depending on who you speak to.
guest: It is reported that the real estate prices have become down or at the most stable. If possible kindfly intimate the area where real estate prices will show goods increase in coming 2 years.
Amit Kumar Singh: Hi, 2 years is usually not the right investment horizon for property. If you want to invest in real estate, you should be looking to hold on to the investment for at least 5 years. Sub-urbs of metropolitan cities - e.g. Noida/Greater Noida for Delhi, Navi Mumbai, North Bangalore etc are good areas. If your investment budget is smaller, Tier II cities like Jaipur, Indore, Mohali, Coimbatore etc are also going to come up in a big way
guest: In last seven years price of property increased 5 times same trend will continue in next 7 years or will it be different?
Amit Kumar Singh: Over the last 7 years so in India`s fast-growing economy, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. It is impossible to predict the exact trend for next 7 year specifically. However the fundamentals of the market, the way demand and supply works, the economy boom, increase in population, boom in IT Software industry, introduction of REITs, increase in concept of nuclear families. We see similar trends going forward over the next 5-10 year period.
guest: Is it right time to purchase site in bangalore. Is there any chance of rates will come down
Amit Kumar Singh: There is no wrong time to invest in real estate. While it is true that land prices have remained sluggish to stable during the past year, but still you can find pockets of land , especially in South and West Bangalore where you can safely invest. While the possibility of rates coming down a little cannot be ruled out fully but the expectation is that by the time the new government at the center presents its next budget, the real estate industry will start to show clear signs of improvement and the influx of investment is expected to go first to IT cities like Bangalore and Pune.
guest: There is res. aproject URBANA JEWELS in jaipur price is Rs 3000/ sqft is it a good option for investment purpose
Amit Kumar Singh: The price for Urbana Jewels is in line with locality prices in nearby residential area of Sanganer. This is a good investment at this price.
guest: Where can I invest in Mumbai suburb (bandra - andheri)below 1.5 cr, where good infrastructure is coming up and sure shot excellent returns expected. Be it resale or new.
Amit Kumar Singh: The property rates in most of these areas are to the tune of Rs. 26,000 - Rs. 33,000 per sq. ft. With the specified budget of 1.5 Cr, you will be able to invest in only a 1 BHK or 1.5 BHK. Property prices in these areas have been growing at rates of 5%-10% per quarter and are an attractive destination for investment. But the budget will prove to be a constraint as these are very high priced localities. I will suggest you to look at areas like Vile Parle, Santacruz and Vikroli. Do check out our price trends section to have an idea of property rates in Mumbai. http://www.99acres.com/property-rates-and-price-trends-in-mumbai
guest: I got to know from online education firms that we need to evaluate 1% return per month rule for any real estate investment. However I feel its hard to get 1% per month on Capital in Indian market with intrest rate around 10%, Can you suggest any formulae / check list to knock off before we finalize on real estate purchase ?
Amit Kumar Singh: Return on Investment is always calculated on the cost of capital. Any return which is greater than your cost of capital (10.5% or so if you are taking a home loan or your usual returns on cash if you are paying upfront) is good. There are a number of checklists before purchasing a property, a simple google search would give you a lot of results. These checklists are more about maintaining a clear head and not getting duped than making most out of your investment.
guest: which are good residential areas in hyderabad to buy flat
Amit Kumar Singh: Prices for flats have remained flat and sluggish in Hyderabad over the past year. Still there are localities one can invest in and expect to get decent returns. For example Hi-Tech City and Banjara Hills both have given decent 10-12% return over the last two years. The above two localities fall in the premium to upper mid segment. If one`s budget is constrained one can also look at Kondapur and Miyapur which have provided 4-5% of annual return over the last 2 years. Gachibowli which is one major center of builder activity has remained flat in terms of growth , but might show some recovery in the time to come as IT crowd and NRIs prefer to invest in Hyderabad among other cities in India and with a new government at center the scenario might improve soon.
guest: I have been living in my lease hold floor measuring 60 sq yd in New Delhi (28 lacs). As the rates of the property are down these day. I do not want to sell my house. I am going to buy a property 900 sqft nearby my house for Rs. 54 lacs.and I will take 20 lacs homeloan from LIC. I will shift in that house and give my old property on rent (rental income 10,000) . Is it the right decision or I should sell my leasehold flat instead of taking home loan of 20 lacs)
Amit Kumar Singh: I would advise you to see it this way: you have an option between buying one home after selling another and paying some more or you can buy two homes at the same time, buy taking an extra loan. Depending on what your objective is, I hope this way of framing the question would help you in your decision.
guest: Is it a good idea to invest in pune, where the property prices are too high compared to the rental value? Which areas in Pune would have growth in next 5-7 years?
Amit Kumar Singh: Property prices compared to rental prices will obviously remain higher but considering the investment in real estate in pune along with the rising demand, it is expected that property prices are going to increase further. Some localities in Pune where a lot of good projects are coming up are Baner, wakad, hadapsar, wagholi,Singhad road etc. These areas have seen significant investment in terms of projects by reputed builders and are set to see good growth in the next 6-7 yrs.
guest: sir can you comments on investment in Palva Project at Dombivli
Amit Kumar Singh: Lodha Palava is a new project comprising of 1, 2 and 3BHK apartments in Dombivili. Since it is a new project therefore it is difficult to predict how the prices will appreciate, but looking at the trends in the locality and also at the Builder`s other projects it might be safe to invest here with modest returns in the short term and even better once the market improves. Since Dombivili and Kalyan are projected to be next growth areas in MMR therefore it would be prudent to invest in this region.