Hi All,
I am searching for a 3BHK flat in ORR, Sarjapur, Whitefield area. I realised that suddenly (last month) every builder seems to have increased the prices together by around 500 – 600 psft. Now a 3 BHK for about 1500/1600 is not available below 80 lakhs any where for a tier 1 builder. It is very strange that all builders are raising prices together. In one case I have a long list of 3 BHK flats for sale but they are not ready to reduce the price.
Seems like a Cartel !
Have you experienced the same ?
Besides, who are the real buyers ? It is scary to pay this price of Rs. 4200 – Rs 4800 psft when there is hardly any Water available and borewells are running dry !
Need some assistance – It would be good if you could share your experience.
Cheers,
Ashish.
http://www.moneycontrol.com/news/business/why-property-is-biggest-con-jobinvestors_852422.html#toptag
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this is very much useful for guys who are looking to buy a flat in blore especially–.
many of them has done very nice calculation.
i agree with RS point — there are no new IT parks coming like — EC, ITPL. — also adding to that, no new jobs are getting created like earlier. Leave about new jobs, companies are not taking replacement if anyone leaves, unless it is critical. — as far as it is happening in my company and heard with other fellows too.
I stay close to ITPL, and the prices if we see from the past two years it is ridiculous.
the ground water is very bad there, it is very dangerous for the kids over a period of time.
i started looking for a flat few months ago and i really got scared after seeing those prices. Better wait for few more months …. and drop my plan if the trend continuous like this 🙂
thanks a lot for your valuable comments.
I was searching for a flat for almost a year.Majority of the flats are built by violating the law, which may cause legal issues and fine ( fine can be a minimum of 2 lakhs to max) also prices are gone up and now even 2 bhk costs 40 lakhs to 50 lakhs from a non premium builder.Is it worthfull? I am in IT, but my salary increase is close to 10%.only Also due to recession, the IT industry is dull.all builders and real estate mafia is eating up our money…
Hi All,
I went through the entire thread. Few suggest to go for it and others says this is not the right time. I have been looking for an apartment for the past 2 years, yes 2 years still I have not booked one. I switched jobs inbetween thinking that I might be able to afford one apartment and thus waited for 1 more year but eventually when I started searching for an apartment for the past 2 months, the price of the same apartment which I enquired 2 years back and now when I went to enquire has gone up many times. In 2 years times the price has gone up close to 25 lakhs for a 2 BHK. With the current job situation and IT market scenario I think I am going to put off apartment buying for another 2 years but is this worth the wait? I am first time home buyer and very badly need an flat.
Thanks,
Same here Mani, I suggest not to buy any single flat or land in Bangalore as i know there are so many issue with new land area and documents approval so many other issue. in-spite of this Builder just ignoring them and construction building to touch the sky 🙂 and playing with aam admi emotions..in future BDA and BBMP is surely showing notice to destroy all of them as same happened in Delhi because of land and approval issues…better to take land near by some village where we have natural water at least..
Subramani,
I am in the same boat as yours.
I am searching one for last 1.5 years.. Even I stretched the budget by 15%, even that’s not helping….
A 1200sft apartment with decent construction in a pathetic location is also costing 60L+..Tier 1 builders’ is even more.. 🙁
You will get some apartments in the budget, but their quality is pathetic. Am just sitting with my downpayment cash.. The rents are increasing too.. But one good sign is the apartment booking has slowed down and the rental houses are not picked up fast.. 2013 will be a bad market,not sure whether that will be translated to crash in prices
http://www.tflguide.com/2012/12/should-i-buy-or-rent-a-house.html
Similar situation for me too, nearly 1yr over , currently unable to afford a flat in bangalore ,
these people are artificially raising prices wthout any basic facility, I think those who are supporting for buying apartments are people from builder side faking comments. There are some 10-15 people from my office who were searching flats, hardly 2 brought , tht too 2 bhk for around 60 lakhs , remaining all dropped due to unstable IT
The Mumbai, Delhi NCR, Pune etc. markets have already become unaffordable. Bangalore is moving in that direction. Buying now means one will pay the highest prices the flat will ever fetch. The current scenario in Bangalore real estate is unsustainable and some change is bound to happen. Either the prices will stabilize or even come down or the focus will move to Tier-2 cities. So one can start looking in Tier-2 cities. There was a episode of in NDTV property which talked about 10 best Tier-2 cities of India. Why concentrate the wealth only to metros? Let’s spread it across India 🙂
@ sandy… The comment was on dec 2012. Though the feeling was that Bangalore property prices was at its peak and it couldnt go further, still now when you check out in 2015, the prices have drastically increased from what it was in 2012. The decent good quality 2 bhk was around 40 to 50 lakhs is now no where to be seen. At least you have to shell out 20 to 25 lakhs more for the same. Therefore, nobody can foresee what is the peak of real estate prices at any point of time. Previous history shows that although we may always feel prices are high now, still whenever we look back 3 or 5 years, we feel butterflies in our stomach, that we should have bought at that time only. Now, it has become still unaffordable for common man like us. Though we keep on wishing that the prices have to come down, it will not happen. As the buliders who have sold their flats at such prices will not be ready to sell them at drastically lower prices, citing ever increasing inflation of raw materials n labour costs, land prices, etc.. So, i feel that the best time to buy our dream homes is now when the prices are comparatively stagnant if not gone down in Bangalore. Instead of again having the same feelings of ” oh, i should have bought my home in 2015 only, now after waiting for 2 more years, the prices never came down :(” . In my personal opinion, anytime is a great time to buy your home, prices may vary anyway. In history, prices have mostly gone upside except in cases like 2009 recession….
Very similar situation here also. Almost 2 years over and sitting with my down payment. And now butterflies in my stomach because of unaffordability. Just recently saw the madness in prestige casebella within a week the rates have gone from 3150 to 3800 per sq feet. I would request all genuine buyers not to buy a flat in resale in casebella or any other projects where rates have gone drastically high in just a short span of time then these so called INVESTERS
will sit with their not so wanted flats.
I wish I was a lawyer so that I can file PIL in supreme court against these builders so that some basic rules can be brought in reality sector.
You can get the same deal as these people who are buying flat for investment. Put your eyes and ears on particular builder/upcoming project/location. Take some risk on floor plan and approvals, reputed builder will take care of these.
Prestige Casebella price rise was shocking. Within 3-4 days it went from 3150 to 3500. That too when no floor plan, designs and approvals were in place. The day they released their floor plans the rates went from 3500 to 4000. There has to be some regulation to control this madness. Surprises on what basis people are buying properties. I was looking at this project, but how does one decide without knowing how the flat will look, And by that time it becomes unaffordable.
Arti,
Look at the Prestige Shanthikiketan.. the project is old but still there are lot of flats available.these are from investors..
Hi Rajesh,
I agree with you, as i daily look at PSN(prestige shanthinikethan) i work for of the company there, our building is also from prestige, the quality of building is worst. I dont know how they are called A list builder. Already tiles are broken,wall quality is not good, even rats enter into building. Coming to apartments, i leave office around 9pm, there is one complete block without any illumination and other blocks also more 30% are without any light my assumption is they are vacant. For water i think prestige has arranged tanker lorries for initial two years, once this contract is over i dnt know how much tenant has to pay for this hard water which they get on tanker, This is just my observation. It will be nice if any one staying at PSN apartment throw some light on this.
Good to hear that Rajan.
Now I wonder how much returns they are fetching out of their investment.Moreover thats an old property and may give some reasonable returns. But in the current scenario when you buy flat at 65 -70 lacs for investment and you are not getting rents not more that 20 thousand then what returns it is giving.
yes, huge problem in PSN , the prestige guys sell it as if it is ” The project”…. Also there are too many brokers involved … who want huge cash component!… You know converting all the black into white through us!.
Its just not worth it!..
Very good topic. Lets put this in facebook and aware everyone in bangalore.
I bought a property from a reputed builder in 2009 for our family house in a gated community. The area was far away from city, and expensive too. The property price was so high that I couldn’t afford 2400 sq ft even after taking loan from bank. it never appreciated after 3 years. I have no choice to build house there since I can not afford another loan.
Rise Bangalore property price is not only by builders but also because of people who buys and sells to make profit.
Lets come together and don’t buy property at high price for just 1 year, this will turn them down like what happened in Mumbai in between 2009 – 2010 – real state market – loan crashed due to buying and resell at higher price.
Hi,
We should not stop buying a home, however the catch is never fall this hyper market. I feel the two main reason a end user want to buy home.
1) To save rent
2) Fear of non affordability of own house
The builders know this very well and for them its very easy to get their buyers.
To save rent do not purchase over priced property, anyway you will end up paying huge interest on loan and if could not afford EMI you will be totally bankrupt.
True , real estate lobby is looting the common man , and making us devoid of buying our first home too
Nice discussion. One of the frank and informed discussion on real estate that I have come across. Information shared in this discussion should be very useful to someone buying home or investing in it. So, I think this should be shared with others so that they can make a better decision while buying their dream home. Idea is to make others aware of what one should look for while buying and not to influence them into buying/not buying. Let that be individual choice.
Builders and brokers combine to push up prices, so we consumers should also combine to exchange information openly so as to counter the builder-broker nexus. Apart from this I have also observed same kind of cartel like operation by ‘ONLINE’ property agents in the way the rents in Bangalore are increasing. One of the reason for this is that these people use the internet effectively to post false information and swindle people. So we should also start using this medium in a better, effective way. This discussion is certainly a step in that direction.
Latest:
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/buying-a-home-to-get-cheaper-as-rbi-says-no-to-restructuring-of-real-estate-loans/articleshow/17406901.cms
The Reserve Bank has turned down banks’ demand for restructuring stressed real estate loans without providing for potential losses, a move that could mount pressure on builders to lower prices as banks push to recover loans.
SBI has about 1.5 lakh CR exposure in real estate loans. So, now builders have to “pay back” the bank loans on time, otherwise banks will have to show that as nonperforming assets and take losses in their books. It seems till now even this obvious thing was exempted.
After all these comments – Ashish – What is the conclusion? Did this help you in taking a decision?
####### Excellent Topic and Excellent Commnets by Ashish, Mayur, RS & Gaurav ########
Have gone thru the entire thread, with some reasonable commnets. But Sadly I feel ASHISH’s Question was completely and had left him his own choice.
My Opinion is only for those who are expecting more more and more returns.
Lets Quickly get back to the THUMB RULE of LIFE. ” Your last dress has no Pocket “. This means you will not carry everything you earned. So Whats the Point in Over Investing and having the EMI Burden for the rest of your life time.
There are two Things “Must Have ” and “Nice to Have”, so its very important for one to decided what are his “must haves” in life. Like ( A own House, your favourite food, A sound sleep, possible decent Living , A small Car, some surplurs cash in case of emergnecy and some decent Health Insurance ) . Thats its. Please plan your Basic Life first and then Run Behind the Investments.
Sadly , When i see most of them, I have my own friends as an example. They have over invested in properties more than one Apartment / plot, Big EMI’s . unstable Income, Uncertain Scenarios. always under pressure and Lastly eating some Junk to call it a day.
As most you said, Demand Vs Supply. Just for example, I was staying in Indiranagr in a 2 bhk rental house. In 2009 when there was a financila mealt down, I saw ppl vacating the appartment and leaving blr , either they have been moved to a new project or have been sacd. My Appt owner has dropped the rent to 10k from 12k as he cudnt afford it to keep it vacat for long due to less demand.
Any investment is based on Time and Scenario. All you need to do some home work.
Safe Investments
– Gold ( Always Appreciated and Easy to Sell )
– FD, RD ( smaller returns but 100% returns Guranteed)
Dicey Investments ( Unless you are not using them )
– Plots ( Again one has to make sure it has all clear documents and titles , suggested in gated communities )
– Apartment ( Remember The Maintenance and EMI’s are constant and not the Rent ), so its very important to chose the right location, right price and right quality of construction. Pls do not run behind the Brands , as said there are many good developers , you just need to spend some time.
One last Suggestions. Do not get carried away with the EMI offers, Pre launch rates, Property shows, Cosy payment options. All you need to check first your pocket and the do some howe work.
Cheers
Swath
I dont think ppl should invest in property by taking a loan….he will find it hard to make good profit as bank already loaded 10% p.a to the loan amount…. that means the property should grow more than 10% p.a to make a profit…
I share exactly same thought. House loan is killing innovation. No one wants to be an entrepreneur. More and more are just willing to settle in life in their youth. The most important asset of life is youth. Dont waste it in EMI/2BHK. Come out of it. There is nothing wrong in having a house at age of 45, otherwise you will get 50 and realize what you have achieved in life is one (or couple of ) 2BHKs 🙂
You said it… Atleast some satisfaction that one has tried to make billions, if not actually made it, than tried all life to pay mortgage..
I have waited just too long for real estate prices to become reasonable. I saw a great chance in 2009 which happened due to great recession was undeyway. however, it lasted only for a year and prices rebounded. It happened because govts across the world printed lot of money and money found its way in unproductive assets like land, gold and other commodities. in short, money printed to lift the economy was wasted in speculation.
soon, money disappeared and we were staring low growth and effects of stimulus going away. we hoped that prices would come down. it has gone up ridiculuously by 20% up. even in mumbai,delhi where there is no demand, prices have gone up.
Now, people are creating Bangalore real estate story. Bangalore is deiffrent from mumbai and delhi as its single industry city. and IT is not doing very well since last 4 yrs. and there is no way that it would do better.
There are many reasons for that… high productivity in IT, cluod computing, outsourcing tapped already mostly, no incremental budgets or technology revolution. secondly, Indian salaries are already becoming uncompetitive.
in nutshell, IT story is mature and heard. its not going anywhere. so, bangalore is not mumbai,delhi and it will not be unless there is great hardware, pharma , biotech and energy innovative energy sector takes off here. which is distant dream for India, let alone Bangalore.
Bangalore population has grown by more than 50% in a decade. but same time, city also expanded 4 times in geography. there is no reason that land shoudl be so expensive.
now, prices like 6000-7000 rs/sqft are not supported by income levels of people. think about it, fresher in IT used to get 2.5 lacs /yr 5 yrs back. they only get 3.2 mx /yr now. and thir salaries grow max by 10%. they can afford max 30-35 lacs flat if they are double income family.
median income in IT is highest in India among all service sector and it is not more than 8-9 lacs/annum. they can afford only 40-50 lac house.
whereas avg hose cost in bangalore for 2 bhk is 60 lacs(any decent apartment). most of such houses do not have govt water supply. they sustain on borewell or tanker water. there is no social infrastructure around those buildings as they are on highway road or in village.
If our salaries grow by avg 10% for next 5 yrs, we would instantly become incompettitive compared to US. everypne know that productivity of a remote resource is 70% compared to onsite resource. so, I predict that we would lose business purely based on cost arbitrage in 5 yrs to other countries or simply back to US.
There is no great surge in NRI income levels too. as cost of living difference is simply disappearing now. and US and European countries are making it much harder to employ foreign workers.
so, we should price the houses based on income levels of people in India.
so, I am in wait and watch mode. I feel that I make very decent earning compared to my fellow indians. If I feel that its too expensive, it is too expensive. and remember.. there is no asset that just keeps giving positive returns. i feel that people who have looked at past 6-7 yrs as benchmark for returns are taking serious risk.
Hey Mayur,
Could not help agreeing, seriously!
I was a passive observer for a long, long time…waited for the prices to be more rational, stable etc… but they never became except the brief period in 2009…and since the last year, prices have zoomed up like anything….not more than 50% of your take home (current) should be your EMI in my opinion, because one should always plan for exigencies in life….even with IT slowing down and assuming 5-10% hikes becomes a norm , the proportion of EMI of your salary will only decrease…
With the kind of madness that I see on weekends of people hopping on from one property to the other, marketeers trying to run them dry by saying that prices will increase by next weekend or few flats left etc. and people falling prey to that…I do not see the prices decreasing…
My advice is if you are planning to stay in the house you purchase, go for it but with due consideration to value (i.e. location, proximity and other parameters) rather than be value driven by short-term frenzy…
Mayur, kind of agree with you. It is good that people can manage their house for living. But i think investment is a dead goat in bangalore, and in other places as well. As per today’s news, Delhi/NCR which is basically an investment driven real estate sector, has dropped in sales by 42%. Mumbai around 34%. http://articles.economictimes.indiatimes.com/2012-11-06/news/34946408_1_propequity-total-absorption-sales-dip
Now coming to IT. Infosys/Wipro/TCS have reduced new hires by a significant amount. Cost cutting has also started. Some organizations are publishing their efforts on that, like Infosys and some are doing more quietly like Wipro.
IT is going into a phase of consolidation, where there will be cut throat competition in terms of pricing of new projects, as each company will fight for their revenue and share. I am not worried about increase in salary, but about reduction, which can be to an extent of 30% for higher band employees. Today, the performance linked compensation is about 20-30%, and that component will effectively drops to zero, when such situation starts to come up, and IT have a very very handy tool to significantly vary the salary of a person, in case it is needed. This policy around this compensation is always variable and changes with time.
My worry will be only for people who have take huge loans either because of investment reasons or for self use.
But all thing said, it is extremely difficult to predict any market. Today’s trend is a -ve sentiment though. There were times where equity gave 20-30% returns, but since past few years it has been a absolute junkyard investment.
Great post and superb analysis! I have been in IT for the past 12 years. I too think India salaries and the salary growth driven by inflation(of 8-10%) is not sustainable for the IT companies. So the growth will stop soon. We will see what happens to the real estate in Bangalore then.
NRI income does not increase as much every year because there is only 2% inflation(compared to 8-10% India) in USA, UK and other developed countries.
Even for NRIs, 60 lakhs is 100,000 USD which is a lot of money to be put into a 2 BHK. So they cant do it often. It would take minimum of 5-6 years to clear that loan.
But all these facts apart, there is still some unknown … some factors that are driving the real estate prices up in Bangalore. They amaze me though. Let us see what happens. Though i have invested in real estate in Bangalore, I really would want to see a regulation happening and want the prices to get corrected.
Excellent analysis indeed. We tend to think that prices should correct since the prices have gone well beyond our budget. But there are many factors that may not let the price correction to happen, at least any time soon, some of them being:
– INR has depreciated considerably making Indian real estate market “attractive” for “NRI investors.” Many of my friends staying abroad are buying second/third property here in Bangalore.
– Many middle aged (30-40 YOs) double income couples are earning very good amount of money. Even at these elevated prices, the properties are well within their reach and most of them invest in multiple properties.
– With the kind of colored money floating around in the country, real estate is considered to be safe haven. Haven’t we all read in papers about babus in city caught by LA for having crores worth or property?
– Businessmen from the city and outside investing in real estate for their kids’ future use.
– Short term speculators.
– Vested interests of real estate companies/banks to keep the rates artificially high.
– Real estate investment trusts pumping in hundreds of millions of dollars into city’s real estate.
As you can see, there are so many factors that can keep the prices high. I agree that for most of the IT professionals in the city, the prices have just gone beyond reach. Can it go further up? Nobody knows. “Markets can remain irrational a lot longer than you and I can remain solvent.” It is for the individual to assess the risks and take the decision.
I agree with you Ashish, even I think prices are overinflated. I think it is far cheaper (based on price-income ratio) to buy a property here in the UK than buying in Bangalore.
I think the property developers are purely milking the “everything is comlpetely sold” mentality to push people to buy at any price.
You might have come across developers/brokers saying everything is sold out and then within a day or two coming back there is only one available as someone cancelled/withdrew (I bet half their plots will crop up if you wanted) 🙂
I think property crash is imminent but the million dollar question is when:-) I am guessing any event like Eurozone crisis or China crash will cause it!
Nicely written.
Bangalore economy is primary driven by outsourcing IT jobs.
US$ inflation is much lower compared to rupee. Bangalore becoming expensive..
10 years back, an average one IT engineer in India used cost 1/6 of an US engineer.
Now it around 1/2. Slowly cost of leaving shooting UP. At some point, outsourcing will be expensive.
So there will be less jobs.. So Real estate has to come down..
Rental price is a good indicator of real estate pricing. In some place, rental return is not even 2% of the cost of the flat.. That’s way too expensive…
May be a correction is going to happen soon…
I completely agree with RS about investing (not for staying) on an apartment.
Eg:
Cost of an apartment at pre-launch: 40L (let’s assume that the cash is available)
Time taken for completion: 3 years.
You should be able to sell the apartment for be atleast 54L after 3 years (10% compound interest for 3 years on 40L) which is quite possible.
Now, after 5 years, the compound interest on 40L would become 65L. The rental income for 2 years would be around 4L and you have to sell the house for atleast 61L to match the compound interest. This is not a so easy process.
Things will only get worse as time goes by…
Pl correct me if I have missed anything.
Something wrong in your calculation as investors still prefer flats to invest in. Flats are safest and ongoing demand by migrators to city makes it preferential.
Property reports shows that in Bangalore last year return on investment in property was upto 15%.
I dont think in essence there is anything wrong with AA’s calculation. Please see the NCR/Mumbai sales data of today , and i am sure you will have the answer on preference of investment. There is nothing permanent about any investment area.
People are usually taking absolute value increase in terms of returns, and not factoring interest/tax into account. 15%-20% could be rise in property prices,and that is not equal to return a person has if he has invested via a normal route like bank loan. If somebody has loads of black money then that’s a different story altogether.
slightly Off-topic: So, where to invest? 🙂
what ever may the scenerio be, one thing is sure real estate will not do bad in india, i m not saying it will do gr88 but not bad as some people might think of, even if we not consider the peromance of real estate in past 10 to 15 years against all the odds. Yes there might be a slowdown for sometime, but in long term it will be Ok. Lot has been discussed already on the reasons, so i will not go into details.
Before making any decision for buying house, ask few questions to urself. Is this ur first house?? Than better look at this as ur need n satisfaction rather than only from the pure invesment perspective. Ur second house will be ur pure investment.
Plan ur budget and if not sure of future earnings as in private jobs there is no stability factor, instead of worrying of the real estate, better think of controlling ur uneccsary expenses and ur lavish lifestlye. For example instead of buying 3 bhk go for 2 bhk, instead of going with tier 1 builders for a flat which will cost 80 lakh +, go for tier 2 builder costing within 50 to 60 lakhs (there r plenty of good builders in bangalore). with basic amenities.
Once the decison is taken, back it fully and have peace of mind. leaving aside all other worries of real estate. And suppose you have got ur first house when u r are around 30 years, finsih up ur laon with the target of maximum 10 years, and if all goes well in future. Shift to a bigger better house of ur dreams. Cheeeers.
Updated calculation (Update 3). And thanks for your comments.
There are additional benefits in terms of tax rebate on interest part of calculation for 2nd house, which i had not taken into account. It deducts upto 7.22 Lakhs to the overall amount paid:
So Total amount paid in 10 years: 77 Lakhs (rounded)
Total amount earned in 10 years: 96 Lakhs
Profit made in 10 years, over investment of 77 lakhs: 96 – 77 = 19 Lakhs
Yearly returns ~ 2.46%
=============================
The returns must be to the tune of 50-60 lakhs in 10 years to match most of the basic risk free investments in the market.
Btw i have not added tax payment during the sale, which will be applicable on the above amount.
As usual, you can change the values, and tweak it as you feel best ! 🙂
I will rest the case here. In case anybody else is interested, please take it up further, and bring more accuracy to the overall calculation, it will be very helpful.
too early to rest your case : your basic assumption is that 60 lakhs flat will appreciate to 85 lakhs in 10 years is wrong ! property has traditionally appreciated @ 10% across all markets and specially over long term as 10 years . ( this 10 % is assumed on the overall cost and not land and udf split i have checked with JLL and CBRI for this data )Pls see historic data . ( now dont say u cant trust historic data if that is so then all stock market assumptions and other statistical assumptions dont mean anything )
An opinion: After few years (10, 15 or whatever is that number), it has to be appreciation of land only. If life of an apartment complex is 40 years, construction cost can’t keep appreciating till the last day when that complex is demolished to build a new one. Given a choice between a 10+ year old apartment and a new one (espcially in a place life Bangalore that is not land locked), many may go for a new one (as long as that is affordable and at right location). Cost of constructed part ,may increase for few years due to inflation part (+ the factor that people start living in that place – hopefully an ecosystem developes in that area).
In some countries they quote life of a complex as 70 years or may be even higher. Situation may be different in that case (but land doesn’t appreciate in some of those countries). Of course, there are always some exceptions.
i am an end user, but here is my view after taking some look into the property market in the last 2 months.
I found no basis of the present exorbitant pricing. No business can survive without demand. I find it highly unlikely that there is a demand in property market in bangalore. A majority is investor money and they need to capitalize from end users like us. Howe many people live in bangalore with a permanent job? IT is highly volatile. Where will the investors go if there is no demand from us? Bangalore has got no infrastructure and supportive economic structure like ano other metros e.g Mumbai/Delhi/Chennai. Everything is based on IT. The population is highly dynamic and most are not permanent considering the nature of their job. A sudden market down or a negative US policy or a bomb in the west or even US president election and it’s policy can take the IT market for a ride. A crore worth of property will come down to bottom within a month. In such a volatile Bangalore how can one invest in such overpriced scenario?
Since bangalore is only dependent on IT which in turn is highly volatile based on outside factors, it’s unwise to invest in the highly overpriced property in the long term. I myself don’t know if the project I am working with will survive in the next 5 yrs or not.
e.g you invest 50L in a property (for 5 yrs). You get 40L loan. You pay 40000pm approx as emi. In 1 yr=rs4,80,000. In 5yrs you pay around 15% of the loan=600,000. So In 5 yrs you pay almost 24L to bank. Out of 24L, (24L-6L)=18L is interest paid. So your 50L investment becomes a liability of 50L+18L=68L. So after 5 yrs you need to sell your home at min 68L to get even,
Same 50L if invested in FD will give you almost 5L per year i.e 25L guaranted income at 10% i.e 17.%L net profit after 30% taqx deduction.
So for property, whether it’s for own use or investment purpose, your property of 50L needs 68L+17.5L=85Lakhs to be sold at after 5 yrs. With a few wxceptions of good/premium properties I find it very risky or uncertain in Bangalore. Any other metro is ok, but not Bangalore only because of it’s lack of supportive economy other than IT and poor, inefficient govt and it’s infrastructure.
You can agree or disagree. Doesn’t matter much to me. Hope it helps someone.
Thanks,
Please adjust a few lakhs here and there since I did not include 1.5L tax deduction per yr which again in turn will neutralise your HRA by some amount. e.g a 20,000HRA and 1.5L tax deduction in your payslip will save an amount of 70,000+ in your CTC approx, but again I am focussing on the idea not the cent percent accuracte calculation.
That’s right, it adds up to about 7 lacks. But still it is not much. Unless some magic happens and overall addition is in the tune of 40-50 lackhs, it doesn’t even match the most basic investment available in the market. That’s quite a surprise for me.
clarification –
When you say “” Same 50L if invested in FD will give you almost 5L per year i.e 25L guaranted income at 10% i.e 17.%L net profit after 30% taqx deduction.”” . where is this 50 L coming from.
In the house buying scenario . you are only invest 10 L ??
My dear frnd, If u take loan of 40 L from bank then investment will go UP arnd : 85 L it means u r investing more monly and getting less retrun. I agree with Mr. Kolabang Sonabang.
Thanks
Updated Calculation.
Few points that were raised:
1) Interest paid is tax free. However, in case of investment it is 2nd house/property. In that case interest paid is not tax free. Tax rebate is only on 1st property for self residential use
2) Rent paid can be shown tax free by moving under wife’s name: This is also not true, as income needs to be shown as income under your name, and is taxed as per the tax bracket applicable.
3) Rental gains are not added. This part is correct, so I have added the same below.
4) Constructed building always deprecate, as it is by the law of nature. It is like your car whose value always depreciates with time. It is the land price which increases with time, as it is part of earth, and has a very long expiry time 🙂
People who are planning to buy 1st house for residence purpose, should be concerned more about affordability, and perhaps not ROI. However, everybody should plan to retire rich and not poor. Paying a huge EMI for a greater portion of your earning life will definitely make you retire poor and not rich ! So, first buyers need to take their house purchase seriously and plan with retirement goals together.
====updated calculation =>
Take 300 plots, in 4 acres of land , per person land is about 580 sq feet. [If builder has given all the built share]
Cost of apartment: 60 Lakhs. , Total cost after 10 years assuming a loan of 40 lakhs for 10 years, with 10.25% interest: 84 Lakhs.
Assuming land is 1/3 of the cost:
1/3 of 60 = 20.
Assuming 300% appreciation in 10 years, from current levels:
60 lakhs.
Assuming 15% construction cost depreciation:
Construction depreciated cost: (60-20) = 30 , 15% less =~ 25 Lakhs
Total appreciated price after 10 years: 85 Lakhs
Furnishing cost for rental living : 5 lakhs.
Rental income:
Starting rent: 15K.
Consistent yearly appreciation over previous year rent: 5%
Returns after 10 years, after removing taxes: 1584814 Rs. Rounded: 16 Lakhs
Total profit in 10 years: Total appreciated price after 10 years – Furnishing cost for rental living + Rental income:
= 85 – 5 + 16 lakhs
= 96 lakhs
Total amount paid in 10 years: 84 Lakhs
Total amount earned in 10 years: 96 Lakhs
Profit made in 10 years, over investment of 84 lakhs: 96 – 84 = 12 Lakhs
Yearly returns ~ 1.4%
=============================
You can change the values, and tweak it as you feel best !
seems you confidently MISGUIDE PEOPLE :
http://articles.timesofindia.indiatimes.com/2012-04-30/personal-finance/31506262_1_deductions-second-house-rental-income
You can avail of a high deduction since there is no limit on the interest paid on the second home loan. In case of a home loan taken for a selfoccupied property, the principal amount repaid up to 1 lakh qualifies for deduction under Section 80C, while up to 1.5 lakh of interest paid is tax-deductible under Section 24. However, in case of a home loan for the second property, only interest payment is eligible for deduction . But the good part is that there is no limit on the deduction for interest payment on the second loan.
as FOR THE SECOND POINT : RENTAL RETURNS UNDER WIFE AS ASSESSE NAME WILL BE TAX FREE UPTO 2 LAKHS AND ALSO ACCOUNT 30 % STD DEDUCTION FROM THAT RENT …..SO WHY WILL IT BE CLUBBED IN YOUR INCOME !!!
pls EDUCATE YOURSELF BEFORE POSTING MISINFORMATION !!1
Yep that part is right. However, your second point is wrong.
I have openly asked people to update calculations in case they find it not so correct, as i myself need to convinced that it is an appropriate investment.
In case you find it in error, fell free to calculator and update it, and put it across for the benefit of others.
1. If the property is self occupied, then only 1.5L of interest per year is exempted from tax.
2. If you rent out your property ( Usually 2nd / 3rd … house) then entire interest component of your EMI is exempted from tax ! But, the rental income from the property is added to the total income.
Because of 2, people invest in property ! They buy second /third… home to avoid taxes and hope for decent appreciation in the long run with fixed rental income !
Example for scenario 2:
If one pays a emi of 50000 ( 45000 interest + 5000 principal) then
1. 45000*12 = 540000 is exempted from tax.
2. Assuming rental income of 20000, then 2,40,000 is added to the total income.
Net Net 3,00,000 income is exempted from tax.
I also get the feeling of a real estate bubble getting created in Bangalore. After the Mumbai & Delhi markets became unaffordable suddenly a lot of money is flowing into Bangalore and even never heard of builders are launching higher end projects. Don’t know the source of funding. There are very few people who can afford 80-85 lac + property and there is a huge supply in this range. At least in Whitefield there are plenty. My suggestion, if you do not get anything of your liking in your budget then invest in FD and wait. One need to consider that in IT there is slowdown (or shall I say sanity after years of insane greed) and also the political situation in country n state is not stable. So wait, see how the market behave for another 6months-1 year. There will always be a good project in future which suits you. But one need to proactive and keep monitoring the real estate space for good deal. After all builders also need to grow and provide returns to their investors and for that they need to sell.
I go with RS! His calculation is good enough. Others are those who have just gone behind the shepherd, increased the land prices, made ‘Reddy’s’ wealthy, and sacrificing their whole life to pay the loans.
Problem with Indians is they get too emotional and disturb the whole ecosystem, without understanding what’s the reality. I have seen taking loans for 50L, and deposit 5L in FD to pay the loans. How foolish!
Here’s my simpler calculation: If you have no house and you have 50% of money to pay of initial payment, then go for it, land or apartment.
When trying to invest in to flats be vary if it is for an investment purpose, as when you try to sell the apartment there is always another new one available right in the next street. so the buyer would prefer to buy the new one instead of the old one you are trying to sell. my friends flat in whitefield which he invested in is still not sold because there is always another flat available in the corner offered at the same market price as his and with slightly better price. so why would someone buy an older apartment which has depreciation compered to buying a new one. so as an investor my suggestion is to never invest in an apartment.
if it is for your own use go ahead and buy and forget it as an instrument of investment
Agree – I am looking for staying and not as an investment. However these rates are reducing the buying power. !
I don’t totally agree to BK, there could be many reason why would someone wants to buy particular property irrespective of whatever available outside. Some of the reaons could be
1. Property is well located and settled
2. has been given good appreciation in the past
3. Rental value is good becasue of some strategic location
4. you ahve friends or relative staying in the same property.
5. From a reputed builder etc.
Tell me what’s wrong with this calculation:
====
Take 300 plots, in 4 acres of land , per person land is about 580 sq feet. [If builder has given all the built share]
Cost of apartment: 60 Lakhs. , Total cost after 10 years assuming a loan of 40 lakhs for 10 years, 10.25% interest: 84 Lakhs.
Assuming land is 1/3 of the cost (Delhi case):
1/3 of 60 = 20.
Assuming 300% appreciation in 10 years, from current levels:
60 lakhs.
Assuming 15% construction cost depreciation:
Construction cost: (60-20) = 30 , 15% less =~ 25 Lakhs
Total appreciated price after 10 years: 85 Lakhs
Total amount paid in 10 years: 84 Lakhs
Total profit in 10 years: (85 – 84) = 1 Lakhs
Add furniture cost: 3-4 lakhs.
=============================
U r argument is only the land cost appreciates !! i am sorry the whole flat cost appreciates …the whole argument is completely flawed.
so as per you if share of land is X tin total flat cost only that component appreciates rest of the cost depreciates …wow . As u site delhi case …pls go and have a look at flats in gurgaon or elsewhere and see how they appreciate ….maybe you will learn a thing or two about property prices.
what about ” time value of money ” ( google it ) 85 lakhs today and 85 lakhs after 10 years is it the same …..also the house will not yield any rental return !! lol ……..this is the most hilarious calculation i have seen in a while !!
Well , laughing is good for you, so no problem there 🙂
BTW you cannot add value of money there, as this is what you have ‘paid’. There is no money to add interest too. Show your math skills, put your calculation, and lets see how that works out. I might be wrong, and will be happy to get corrected, on specific values below, no issues there.
In a flat, only land cost appreciates over a longer period of time. In 40 years, as far as construction goes you are left with rotten cabbage.
Rental is good argument, if you are putting it on rent. Assuming 20000 Rs rent for 10 years, (20 is not current value, mostly it goes for 13-15K, still lets have 20000 rs assuming rental will increase over time), you get about 7Laks, assuming 30% tax bracket as income tax, which can be added below in returns.
For rental the furnishing cost will be around 4-5 lakhs as i have in post already. So you end up with 5-6 lacks returns over 84 lakhs investment in 10 years… What next ?
RS, its not only the cost of land which appreciates… its the cost of apt on whole as it increases base on the current rate going on in the market. my apt in blore has got appreciated by 150% (overall from 25L to 60L) in last 5 years. If I would have bought around 1 year back before that which my frnd did, it would have been another 5 Lakhs less. its simple demand vs supply, when the new apts are coming up at 80L there will be definately buyers for same size flat which is 10 yrs old for 70L.
No point sweating it out seems …its a grapes are sour and i cant afford story here ….hilarious arguments being given here …. 20k rent for 10 years .. i just hope it was this way ….what abt 10% clause enforced for appartments to increase rent year on year !! sometimes even more !!!
also no accounting for tax benifits of 1.5 lakhs a year and unlimited deduction after showing rental income loss ( see tax rules are rented home loan property )
also rental income has been taxed at 30 % bracket of the reciever !! lol pls see the income tax laws they allow 30 % standard deduction in rent for aloowing for maintainence etc for the flat !! MOreever who is assuming u need to club that in your income ….what abt u r wife( housewife) rental income then its tax free upto 2 lakhs …..
ALL IN ALL : convinently ignoring facts underestimating profits and overestimating losses / taxes and ignoring other dimensions (listed above) seems to be a flawed approach ….i rest my case ….no point arguing with a uninformed person ….who just want to prove it to himself how bad a apprt buying decision is !
Not sure, which books you have read. However you are completely wrong on taxation part.
Even if you show rental on wife’s name, it is fully taxable, as income gains under your income. Even if you have purchased the flat on your wife name, it remains the same. Check with your CA or any other income tax officer.
Provide the URLs to prove your point on this if you can.
Tax benefit is the right point, i will get the calculation updated with the same.
Coming on affordability , it was very personal question, but anyway let me reply. I do have sufficient property for my well being. However, i have not invested in high rise yet. Have a villa where i live, and plots in my native place, which covers me sufficiently. So, there is no sour grape case. Now i have choice to invest, so i am wondering what is the right choice of investment. Any investment which doesn’t give 100% returns in 10 years, is basically a junk investment.
My wish was to have a gentlemen argument, but you seem to be on a cocaine of real estate to argue well.
RS ….u are sounding like that fox, who never got the grape…..UR calculation is ridiculous and i too just cannot stop laughing…and if i say from my personal experience, those who calculate too much in life will never make an investment…as you will always find flaw in it .and never take a decision..and time never stops for anyone…and u shall be left out…
Difference between Delhi, Mumbai with Bangalore is, it’s a developing market and have huge inflow of migrating crowd…from all round india…with equally good high quality job opportunities. Hence the market and prices shall continue to rise for next coming years…who ever thing the market will correct…is still living in dreams…
Replied already, there is no sour grape case as i have sufficient for myself. As i told, copy paste and correct my calculation in case you have a point. This is an open challenge, assuming you know basics like maths, compounding interests, taxation, depreciation etc.
I call this real estate emotionally sentiments. People are just too attached to its success story, that they cant even argue suitably.
Coming to case of Bangalore, there is not even a single significant area which has come since past few years like EC, ITPL, Infosys park etc. IT margin is reducing constant and consistently. You can check company results over internet if you want. There was a time of 30-40% salary increase. Now if you are a best performer, you will get 15%, otherwise consider 8-9% if there is any. Iteration in TCS has been 11% this time. It is not because people have stopped jumping, it is because there is not many openings anywhere now. Infosys/Wipro are not really recruiting significant number of freshers any more, though they come dirt cheap. Yes, there was a good time, but it is not now anymore.
Yes, the salary rates are not increasing as much. This shows that the industry is maturing. That does not indicate that the industry will vanish into thin air.
No it wont, and it should not !! It is one of the good industries we have. However, time for insane growth is over, and it will be more humble/muted growth which is actually true for anything across the world. A heavy growth is always met with time where it tapers and normalizes. One major part of salary, also known as organization performance linked compensation, is getting siphoned off now almost regularly, actually ‘reducing’ salaries by 20-30%, depending on which band you are in.
And if Obama wins, then onsite will continue to become a very rare occasion, as now each organization be it Wipro/Infosys/TCS are hiring people in US. This year Infosys is hiring around 1000 people in US.
RS,
I think your calculations are more or less correct, all the points raised by people are valid but they will have minor impact in your calculations, and you can modify the same.
there r 2 main things:
1) If you buy a flat and take loan, all your profits in price escalation is actually eroded by the interest u pay to bank. So unless u r staying in the flat which u r buying then there is no point in investing in apartment. By staying u r enjoying the flat and hence u can absorb the cost. Its the cost of living in one’s own home. The rental / tax benefits etc are peanuts compare to the interest cost. Because banks are not fools, they run on our money.
2) The point u raised on land is correct, actual appreciation of flat is because of land appreciation. That is the driving force, rest has minor impact. Construction cost adds minimal. Land appreciates, because of scarcity, like gold, but depends on location and infrastructure development and the most important thing INFLATION, which has been the highest since last few years, coupled with the demand.
Hence to get the best return on investment u should go for a land in such a place where 10 years down the line cost will escalate. That prediction u have to make. Also one suggestion, do not settle for small amount, invest in bigger chunk of land.
One needs to consider life of an apartment too.
x years. x?
In India 🙂 Please take your guess. Right now, these builders/buildings are new phenomenon (started around 10 years back ?), so nobody has faced it. However, as per my googling around goes, maximum usable life is around 40 years, for a high end construction. I have a case of “very known” builder, and have seen it myself. All items are chinese made, as it reduces cost. Marble flooring is already cracked, lights are not working, STP is not in working condition and people are getting brownish water back to their toilets (they advertised water recycling as a great stuff in their sale), walls have started to show crack marks, paint is peeing off in many places, and it has yet to reach 10 years of age. *sigh*.
Found a somewhat related calculator on web though this is for buy vs rent:
www dot itrust dot in
(one needs to go to Tools and Calculator on the right side – after hot topics
An item there – Is it better to buy or rent a house)
Thanks for the link. Had a chance to refine my financial knowledge.
Guys, I suggest you think on your feet and try to understand the point RS is trying to make. I do agree his calculations has holes but wait to throw his argument out of the window.
Let me take a simple example of “Raheja Residency” in Koramangala. Today this property is about 17 years old. The going rate is about 70 to 85 L for a 3BHK (Check 21-Oct-2012 Classified advt in Deccan Herald). As banks do not want to be caught with their pants down, the speculative boom for this apartment is over and prices have started to drop. In 2003 I bough one here for about Rs40,00,000/- (3BHK) but today I cannot even sell it for Rs.85,00,000/- No doubt it has generated rental income for past 9~10 years.
On the other hand, builders in Sarjapur Road are quoting 1.3Cr’s even before the first brick has been laid. Compared to Sarjapur Road, Koramangala is a far more peaceful with plenty of water and connectivity.
I advice you kids to stop being carried away with this boom and think about 15 years from now when the IT boom has dried up.
I think people get very emotional when it comes to real estate 🙂
I got some good comments, and i will update the calculation. However, i do feel it wont change the overall picture too much, perhaps 10-15 lakhs here and there.
Another problem, there is almost no regulation in industry, which is a bit scary, and keeps me towards either a land or a villa, where the buyer has some control. One of the post that i have written over here, in that context, there are cases logged in court against a tier 1 builder for bad quality construction. So, frankly, i don’t know for how long those buildings and building assets are going to stand. There is absolutely no transparency or long term binding in case of builders.
Hi,
And all the high rates are benefited to the builders not to common man. If you book apt today by 50 lakhs. By the launch/occupy date it would be 80 L. But you can not sell your apt for 80 L, Only builder can sell his apt to that amount. If you try to sell that, you wont get more than 60L.
Hi Soldel,
Thank you for the information. One of my friend stays at raheja , he pays 23k rent. If place like raheja can get only 23k with all connectivity to IT parks like EC,Sarjapur, ORR, EGL, Manyatha, Baghmanhe other small offices in Koramangala and MG road, Cauvery water near CBD. I can’t think how people are quoting 1.3cr for jungle like Whitefield,Sarjapur,KR puram and other such areas there is no cauvery water, with phase 4 also i think only 14000 people are benefiting with cauvery water after waiting for so many years. For time being all these new areas are surviving on water tanker lorries which charge around 300rupees for tanker which may last for a week per family and again for drinking they should buy separately. Bangalore is one of the cities where ground water has deflected largely. In satyameh jayathe program i saw people in gurgoan with 1cr home are going to clubs to take bath, Bangalore is not very far from this situation. I stay near indranagar and work in ITPL it takes more than 60min to travel, when there was shadow cyclone recently Bangalore came to halt. I am Bangalorean i love this place from heart, however with current situation given chance i am ready to move to some other place where i can live a peaceful life.
raheja residency on commonfloor is showing 1.4cr for a 3BHK. from where did you come up with 85l ? !
RS,
your math may hold for some cities, some cases, but not everywhere. In Mumbai even 30 year old properties get sold at several ‘x’ times than their purchase price (e.g. what my parents bought for 1.5 L in ’84 fetches 75L today). The key to understand here is what other place could you have invested 1.5L and expect it to grow to 75. Of course, Mumbai is an exception, but if the apartment is in a good, desirable location and made by an A-grade builder, it will hold value for longer. Of course, the location should run out of land which is when the property will truly appreciates. Case in point for Bangalore, Koramangala.
Cheers,
A
How come no one talks about the land owners, where the whole equation starts. Almost all the projects are co development projects, depending on the location the percentage of the shares are decided (i assume the area we are talking commands a 60 – 40 to 65 -35 in favor of the landowner)
They usually is a goodwill or advance to huge amount in cash besides this.
These people usually have invest long time ago, 20 years at average. They are in no hurry to sell and are in for the maximum returns.
Now that the builders getting into contracts with such high price. i don’t see the way they can come down at later stage. entry into a high price and then greed makes it more bad.
Last year we had people questioning the high prices @ 3000 – 4000 . now we are looking at 4K – 5K which we are questioning. Like some of the people have written in the above comments, if you are planning to stay in the new flat , anytime is good time to buy. make sure you stay within reasonable limit on the leverage.
if it’s for investment, i cannot see the logic i crying it’s high price for me, but i will sell it at the highest possible rate once i buy the flat.
With the rental going up the way it is, it will be a tough choice to wait for the price to stabilize ..
comparison against FD, gold, and other investment have all be discussed a million times before and will continue to be discussed, when the rates go up. i guess people have made favorable decision to invest in real estate before they go out to all these projects to inquire about the rates and other info.
My 2 cents – if you are buying for our own use anytime any rate is good . investors are assumed to be smart people who understand risk and returns , they don’t need advice here.
My guess it’s people who have their own place to stay and now want a second property for cash flow are the guys really worried. neither they plan to use it for own needs nor they confident on making money on their investment.
Since last 3 months i am searching a 2 bhk flat for buying. but wherever you go builders always says sir only few flats left, only very limited choice either pre-launch or about to completion. price are going crazy. a flat which i visited 2 months before was coating 3000 sqft, but now increase by 500 rs /- . now a days builders are very rude, not even ready to negotiate more than 25-50 rs /- sqft.
Parmila trinity project near ORR looks me good. any feedback about project and builder share me in my
I too feel the rates are increasing and feel the rates will stabilize now.
Some are booking scared of it’ll increase further and
Many have booked at 2500-3000, thinking of they can resell at 3500-4000 by the time construction is over. The prices you see are two-three years down the line.
So it’s not advisable to book now and invest your money which can give 10-15% returns annually, definitely that’ll grow fatser than real estate.
Insane and immaturity reigning here. Don’t know how still this market is surviving!!!!
I concur. this is insane. Seems it is a must to have black money to buy property 🙁
Btw. – Bangalore is supposedly of the sane markets in India. Mumbai and Delhi have gone off limits .
There are investors who buy and trade 100 flats and more in a single shot. There are genuine buyers and genuine investors. But unfortunately real state story doesn’t end there. Unfortunately this is one of the biggest unregulated industry and perhaps one of the biggest engine for converting black money to white.
i will suggest to go for it but yes within your budget since taking a home loan is not sufficient you need to repay it back in 6-7 years. I have gone for Mahaveer Tranquil since might be this builder is in between tier2 and tier1 but I have compromised since i plan to stay here for few years and then sell it off or rent it out.
So now where are the self proclaimed bangalore property experts who advised against buying property when rates were around 4000 per square feet just about a year back?
If we think who has the money, there are a good number of buyers even today at the current rates. Builders know this and have no reason to reduce prices even if it means they it takes them a while to sell off inventory.
For anyone buying to stay there’s no reason to wait. And going by the way things have been in the last one year on the price front, a 20-25% return would’ve been possible even for those getting into the market from the investment viewpoint!!
20 to 25% returns is not a good return. Fd will give 9% and compound it over 10 years you have about 100% returns. If Fd is taxable put in gold and other debt instruments long term and pay long term tax equal to the sale of property. Remember the long term tax. Though land portion appretiates the constructed portion depreciate with time. Land portion is very small in high rise. Constructed portion depreciates by 45% in 30 years (as per my memory check the govt tax depreciation calculator) . There is no “genuine long term investment” in “high rise”. Land is a different asset type altogether.
Always wondering
From where they get so much money
Who buys these flat
How much everybody is earning on an everage these days
Went to enquire to SJR
SJR – regent – No 2 BHK left and only very few 3 BHk left, even when the project is in prelaunch.
Do you believe this???????????????????/
Relaible gardenia – almost all of them are booked.Planning for 2nd phase.
Basically they want to sell 3BHK first because they are harder to sell.
2bhk are easier to sell..
In another project I looked at, the builder told me that 1st floor and 4th floor are completely booked.But after a lengthy conversation, the representative told me that the they are “reserved” by owner for renting out.. 🙂
Hi Arti,
this is completely false. I booked a 2bhk there on 13th Nov.
I think property will never do bad in india atleast for another 10 years, for 2 simple reasons 1. Thanks to the population 2. Our govt policies..no focus on tier 2 cities. Only major cities like Bangalore, delhi, mumbai, hyderabad where our population migrates in huge no. So i feel in india it is always the right time to buy Property. But yes you should not buy beyond your budget. And yes if u feel tier 1 builder rates are high u can always consider tier 2 and as per my research u can easily get in 3500- 3800.
Looks like some thing going wrong….
Where is the money coming from…..
Who are the real buyers ….
I see people getting more than 10 Lakh salary(still uncertain tomorrow) are struggling a lot for surviving on the regular needs…
I believe this will burst suddenly like US real estate market…
Yes, the crash is very much likely but it may not be the same intensity as US’s.
I see that the rent has increased by a large extent.With the rent increasing, I should infer that many customers are waiting on sidelines for buying apartment.
With increasing rent, the prices should be decreasing!But not so.. something fishy out there 🙂
RBI has decreased the interest rates, and hence bank loans gets attractive to buyers..and there are chances of people going to buy apartments going for loan..so builders knows this fact, and have increased the price. Also the most developing area in Bangalore from last one year is the same outer ring road stretch, lots of malls, schools, flyovers getting built, IT companies have come up and still coming, and easy access to herbal, whitefieldy, electronic city…but the water problem still remain, hence you will end up paying more maintenance charges. But where else in Bangalore you have water bed and if there the prices over there would be so high…….but I agree the prices are high..but this will be going on increasing..and later you will have to compromise moving into outskirts for living..
Seriously, who buys all these flats. These days they are even pre-launching at insane levels of 5000 /sqft, a 1600 sqft flat for almost a crore.
Ravi,
One small builder told me that he is holding onto some Sobha apartment.
He confessed to me that it is not very common for the small time builders to invest in the so call ed big builders apartments for investment..
Mostly These are the guys , who take the pre-launch offer at such insane prices.
Ya i stay in Bangalore south and work in White field…
I see the price go up … like crazy though ther is no water here….(water table is bad)
Only suggestion dont buy beyond your limits. If you are in IT then hold on, as times are too uncertain as of now.