Which is beneficial, buying a property or staying on rent? In the absence of a robust and reliable tool, these decisions were traditionally taken with gut feel or with the guidance of a close relative / friend, leaving scope for error.
Which is beneficial, buying a property or staying on rent? In the absence of a robust and reliable tool, these decisions were traditionally taken with gut feel or with the guidance of a close relative / friend, leaving scope for error. Makaan.com ( www.Makaan.com ), India’s fastest growing real estate website from People Group has launched India’s first Buy vs. Rent Index. Christened Makaan.com Buy Vs Rent Index (MBRI) the tool aims to help property seekers make informed choice between buying and renting of property in top Indian cities / sub-cities.
The launch of MBRI follows the launch of hugely successful Makaan.com Property Index ( MPI ) which has been disseminating valuable information regarding the movement of residential property prices in key Indian cities for over a year. MBRI is yet another step to empower the property seeker with tools and intelligence that helps them take informed decision based on in-depth research.
MBRI, is a numerical value, arrived at after taking into account several factors including average capital value of property, average rental value, rental yield, historical capital price movement, historical rental movement and inflation. A low MBRI indicates that it is much less expensive to buy a home than to stay on rental whereas a high MBRI denotes that it is much more expensive to buy a home than to stay on rental. MBRI has been collated both at city and sub-city level.
MBRI of 1-20: This denotes that it is much less expensive to buy a home than to stay on rental, in these cities / sub-cities. Property seekers looking at investing here are advised to buy a property than staying on rentals.
MBRI of 21-25: This denotes that it is relatively more expensive to buy a home than to stay on rental, in these cities / sub-cities. This is a neutral range and property seekers looking at investing here are advised to take the final decision based on their financial situation.
MBRI of 25+: This denotes that it is much more expensive to buy a home than to stay on rental, in these cities / sub-cities. Property seekers looking at investing here are advised to rent a property rather than buying.
The table and illustrations below explain what the MBRI is and how it is to be used. MBRI for key Indian real estate markets for the period October – December 2010 is given below.Interpretation of MBRI
· Coverage - Each city is divided in sub-cities (micro-markets) and micro-markets into localities. Prices of properties are obtained across micro-markets through listings on makaan.com as well as makaan.com’s nationwide sales force
· Database - The current Index comes from 32 micro-markets across the above cities. The Index is based on minimum database size of 20,000 data points every month
· New & Resale properties - The MBRI database includes a good representation of new as well as resale properties. Most reports on the property sector today are based on new developments, whereas actually new properties are relatively small % of the real estate supply with resale being the majority of supply
· Index algorithm - The Index is calculated quarter-on-quarter for each of the above cities & sub-cities. It is a derived index using an advanced algorithm which factors in the average value of properties available for sale and rent.
· Coverage - The MBRI covers Ahmedabad , Bangalore , Chennai , Delhi-NCR , Hyderabad , Mumbai , and Pune . Other cities may be added in subsequent issues. These cities account for over 80% of the Indian Real Estate market.
· Factors that have been taken into consideration while selecting the cities:
Population – The real estate sector is dependent on the demand of houses, which in turn is dependent on the population. Populous and ever growing urban agglomerates like Mumbai and NCR have an ever growing demand for housing.
· Economic Importance – Cities which are hubs of certain industries have constant influx immigrants from across the country, which also creates a strong demand for housing – beyond the needs of the resident populations – e.g. Bangalore, Pune. Hence such cities have also been included
Makaan.com , the fastest growing property website in India was established with the mission to connect relevant buyers and sellers of real estate , massively increasing the propensity of transactions. The website is committed to help its users make wise and profitable decisions relating to buying, selling, renting and leasing of properties in India and key global geographies. Makaan.com is part of Anupam Mittal promoted People Group , owners of well renowned businesses such as Shaadi.com & Mauj Mobile .
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