32Manish

hi
Need your advice on a buying decision. I want to invest in a residential plot. I have been researching for 6 months and have shortlisted a plot in sec-31, greater noida.

It is purely for investment purpose and horizon is 7 years post which i want to sell it off and book profits.

I had also considered 'apartments' and 'commercial office space' but concluded that they are in over-supply at least for the time being and might see correction over next 12-18 months.

I was upbeat about 'retail spaces' but again ignored it as i wanted to invest in a prime retail space of a prime locality but was getting small
'covered area' in my budget of 60 Lacs.

I finally concluded on residential plot (200 sq. m) in sec-31, greater noida.

While I am totally satisfied about the future of this town over a 20 year
investment horizon, but I have the following apprehensions:

- Whether this is the 'right time' to buy ? Various analysts feel that world economy is slowing, US has a looming recession, indian economy is showing signs of deceleration, inflation and interest rates are hardening and realty prices are tapering off and correcting.
Research reports are saying of a possible further correction of 15% from here.

- i have observed that in last 1 - 1.5 years realty has stagnated in general. In particular, there has been mixed trends. eg. gurgaon has corrected, rohini (i.e. delhi) has appreciated hugely and greater noida (a tier-II city) has remained static. This is further confusing my decision. It seems that satellite towns might not appreciate for the time being and there could be stagnancy for 2-3 years. Since my investment horizon is only 7 years i am apprehensive about my 'timing' of buying.

- My funds are presently parked in FDs, yielding after-tax returns of 8%. If greater noida remains static i will lose on the opportunity cost of FDs.
Also if there is any forecast for correction, i can buy this plot at a lower rate in 1-2 years.

- some reports say that correction will only apply to residential apartments and commercial office spaces and not on residential plots and retail spaces

Kindly advise on -

- View on future price trends for greater noida 'plots' (not apartments) . will there be major corrections?

- should i buy now or hold on the decision for the time being.

looking forward to your help and advice

rgds

Manish Gupta

indian shelters

Hi Manish
You have to consider one thing in property that if the location which you are choosing is good then irrelevant of the market conditions your property can always fetch you returns.

Moreover you are ready to invest in property for a horizon of 7 years which by any standard is not a small investment horizon and if you are thinking to wait for another 1-2 years chances are that prices may not go down drastically in noida area bcoz you have to consider the fact that commonwealth are planned for 2010 and noida in anycase being one the best satellite towns can not escape from the real estate fever .

Apart from this reason there are many other factors like formula one racing track ,proximity to delhi,airport,public transportation system is best in noida compared to other satellite towns ,this area offers you the best it job opportunities and due to the debacle in u.s.a it is possible that large nos of indians may come back to india and once they are back then possibly the demand may go up coz they will be the people hvng money and wld like to invest in property as this is still the most preferred investment area,