2014 Year To Invest In Real Estate

Overview and Gurgaon Property Market Forecast

The right time to buy property depends on few assumptions i.e. if one has enough funds spare without having much pressure on lifestyle and the financial part if sorted. Once done, the answer varies based on which city in India. Example in Gurgaon Property Market where the prices have been stable for last 24 months and in fact have corrected by 6%. Going deeper, any purchase in the range of 3800 to 4500 Rs per Sq. feet on Dwarka Expressway should be a real steal. The better the location i.e. projects closer to main roads, the more return on investment should be expected. On southern peripheral or Golf Course Extension Road, any buying in the range of 6500 to 7000 Rs should only be considered. Realistically, these prices should stabilize at 10,000 Rs both on extension and Dwarka expressway once the infrastructure and litigation is sorted in next 18 months i.e. by March, 2016 giving an easy return of 50% Plus.

Noida Property Market Forecast

Noida property prices have already appreciated quite a bit and now awaiting delivery of projects which are getting buyers impatient, there by leading to desperate sales. Any buying in this case should be only undertaken in the range of 2400Rs to 2750 and should be good in Noida and Noida Extension areas.

Bangalore Property Forecast

Bangalore property market is proving quite stable in terms of price, however the demand has really been affected in year 2014. Any purchase in the range of 4000Rs in and around NICE road, or 4200 in Electronic city should give healthy returns in next 24 months.

The basis of above price appreciation is
1) Stable government at center for next 5 years.
2) Domestic push in manufacturing and made in India programs should push productivity, and any surplus funds ideally could be invested in Real Estate.
3) There is global correction on Stock market expected which should last till March 2015, giving alternate opportunity for investment in Real Estate.
4) Easing of global oil prices should make business productive thereby giving opportunity for investing of surplus funds may be in Real Estate.
5) Only go for projects, which are clear of litigation, and trusted developers who has capacity and deep pockets to deliver. The details on India Real Estate can be found on BuyProperty.com

Buying Or Renting - Go Figure!

Background
I have been born confused about which of the above is right from me from financial standpoint. Have asked most of the astrologers I could get appointment from, financial pundits, my kids and am still spinning. Below is where I am and what I think may be you could contribute.

Buying

Buying is great if one have easy access to funds to close the deal and can afford to keep it like that for a while as suggested that investments could go up or down, I mean without constraining your lifestyle or compromising your current expenditure in any way. This in other words means that if a bank loan is availed, there needs to be sufficient provision for the EMI monthly payment without having to raise one’s Blood Pressure or compromising on biweekly family parties, or selling your sports car and may be dig in deep for long given current real estate scenario example in India where prices have depreciated by almost 25% from 2012 peak Real Estate in Gurgaon, Noida, Bangalore, Pune, Delhi and Mumbai. Property cycle typically rotates every 7 to 10 years with 7 or less (IF you are lucky) in under developed countries like India where GDP growth rate is in the range of 5% and 10+ years for countries with GDP in the range of 2%. GDP directly create employment, demand of products, improves lifestyle and eventually demand for property.

Renting 

Renting is great for one if there is no surety or access to funds. Rent ideally hovers around 5% of current capital price of the property per year. Example a 3BHK Gurgaon Apartment of 1863 Sq. costing around 2Crores in Vipul Orhid Garden in Sun city Or Vipul Belmonte should have 2Lacs EMI (Interest only) monthly with bank interest at 12% and one could rent the same apartment at 40K without breaking a sweat. This simply means a monthly saving of 1.6Lacs upfront which needs to be counted against possible property capital appreciation in long term ex Selling the same apartment after 2 years at 2.5Crores.

Now go figure, which is better. Buying or Renting!

Feel free to ask any query or leave your valuable feedback on this blog.

Emaar MGF Palm Drive 7 Years And Counting

Sorry Story So Far

Emaar MGF Palm Drive project was launched in year 2007. I must say that the property was sold like hot cakes, may be because of new entry of Emaar Developers in India as a Joint Venture with MGF Group. MGF is one of the top sellers of cars all across north India, with a solid reputation for last 30+years. Similarly, Emaar developers of Dubai has a impeccable reputation of being top real estate developer in Middle East and any piece of that action for India real estate buyers should be premium.

The So Called Joint Venture 

Emaar MGF joint venture is being managed as separate entity and in current year i.e. 2014 the situation is such that MGF has parted ways with this company and Emaar Developers is pulling back all their investments so far in the group. I am still not sure if any real estate development expertise was ever blessed to the joint entity i.e. Emaar MGF Developers. Result is just a tragedy waiting to happen. Delays, FERA and CBI enquiries, Penalties, Arrest, Court cases are just normal for Emaar MGF Developers. Director/Promoter Mr. Shrawan Gupta has been charged for FERA, FDI violations. Their premium projects are all but in trouble right from Commonwealth Games Village in Delhi, Boulder Hills in Hyderabad.

Lessons To Be Learnt

All most all of the rest projects launched by developer are substantially behind schedule right from Palm Drive-7 years, Palm Square-6 years, Palm Springs Commercial-7 Years, Marbella-5 Years, Gurgaon Greens-4 Years, Imperial Gardens-3 Years+ just a few in Gurgaon Real Estate. The developer does not have any shame of feel sorry for this and is only concerned for its pockets. Worst is that government is neither taking any action for buyers who are stuck with their purchase and investment in the developer. Any further expose with Emaar MGF Developers could very well be a disaster for so called Investment and is highly discouraged.

Thanks to KSTDC Cabs, Google Maps Save 200Rs

Love filtered coffee in Bangalore

After getting up at 3 AM to catch 5.25 Indigo flight 6E-111 from Delhi to Bangalore landing at 8.10, I was already half out of my senses for lack of sleep. Saw filtered coffee just outside Bangalore airport, which was quite helpful in bringing me back. Headed straight for office, I took the first cab available in the row (I did not knew that you cannot pick another cab beside the first) a KSTDC cab hopefully headed for my destination in Koramangala from Airport. Very conveniently the cab driver did not understand Hindi, but a little bit of conversation started in English.

Enlightenment! Thanks Google Maps 

Traffic I guess is still quite bad on this route once the airport new elevated toll road is crossed and we enter the city and I had estimated and hour and half travel time from my earlier journeys. Frankly I still do not have much idea about the routes in Bangalore, but strangely enough the road signs did show which way for Koramangala. Our dear cabbie conveniently forgot to see and headed right past it in opposite direction. I checked with cabbie, and he did a slight nod, which I am not sure was confidence or acknowledgement, but kept on heading into opposite direction. Out comes all guns with Google maps, which did take 2-3 minutes to load and map my location, but once online things were quite clear irrespective of language barrier as to where we were headed and only a U-turn would save cabbie from embarrassment.
Time for Mutiny
That was it. Once I asked the cabbie why we were heading for Banashankari, when Koramangala was in opposite direction, cabbie spoke equally good Hindi to justify the route and puzzled on my sudden enlightenment. My persistence made us take U-turn and guess eventually cabbie did acknowledge that the route suggested by Google Maps was a shortcut and surely a possible tool he was going to recommend to KSTDC to implement in all other cabs. Shortcut or the correct route is still a mystery to me, but thanks for Google Maps that did not cost me any thing to download, but did save me valuable time and not to mention my precious 200 bucks.

SEBI’s Penalty on DLF Create Ripples for Buyers

Why SEBI Penalized DLF
Securities and Exchange Board of India (SEBI) recently announced decision to penalize DLF for withholding vital information during its IPO in year 2007, there by de barring its top 6 promoters from tapping the financial market and access to fresh funds. What this means in nutshell is that DLF will find it very hard to convince Bankers, Fund Managers, HNI Investors to take any further exposure in its products. Because of high interest rate on existing debt of 19000Cr on its books, roll over to a cheaper vendor was planned by DLF, which not could be in jeopardy because of reluctance of vendors.

Buyers Getting Affected

Buyers of under construction projects of DLF especially in mega townships like Capital Greens in Moti Nagar, New Delhi, DLF Camellias on Golf Course Extension Road, Gurgaon, DLF Woodland Heights in Bangalore could now have to wait much longer than earlier estimates before the possession is handed over. With one sided builder buyer agreements favoring the developer completely, any chance of delayed penalty is hopeless so as the CRM teams whose only target is to pacify agitated buyers with whatever hopes. After investing one’s life savings, taking legal route proves to be too risky because of backlash from developer.

Road Ahead
The legal understanding between Law (SEBI) and DLF has become too complicated because of shift in political equation at center, that any hews and cries of actual buyers could go un-heard for a while. Wise decision at this juncture would be to re-invest in a safer ready to move in apartment and negate the risk of delayed possession by exiting the current investment in DLF, hopefully at whatever current premium if one is lucky. If this does not prove suitable for any reason, existing investors need to dig deep and prepare for long haul as currently happening with buyers of properties in Unitech Developers.