rahulverma

Hi,

I am interested in buying a flat on resale [somewhere around baner, aundh]. I have couple of queries

1) What is [or could be] the average life span of a Flat [in pune]?
2) What is the depreciation rate in general for residential flats?
3) What happens to Flat once the average life is over? Usually the buildings the constructed again? Or just a routine maintenance keeps them alive?
4) In terms of investment, after how many years resale of flat doesn't make sense?

I am a newbie in real estate/property thing and would be great if you guys can provide your valuable advice on this.

Thanks

sanav3

Great questions, waiting for some answers from senior members as I have the same queries....

bogusgenius

I'll try to answer some of them,

1) What is [or could be] the average life span of a Flat [in pune]?
Any office or residential building is designed to last 100 years. However, I don't see anything lasting beyond 50 years and be in reasonable repair.

2) What is the depreciation rate in general for residential flats?
There is no constant rate of depreciation. Depreciation is less in the initial years and accelerates later (exactly opposite as in the case of Cars).

3) What happens to Flat once the average life is over? Usually the buildings the constructed again? Or just a routine maintenance keeps them alive?
If the flat has been built on hold land and the hold is transferred to the society, after the life of the building, the society can choose to sell the land and divide the proceeds or construct a new flat in the land.
If the land is leasehold as in the case of Magarpatta city or Amanora, there is no such right vested with the flat owner. You just own the building.

4) In terms of investment, after how many years resale of flat doesn't make sense?
Flat is never an investment. The building value always, I mean, ALWAYS, depreciated. It is the land that the building is standing on that appreciates. So essentially, only the undivided land portion of the investment that you made in the flat is actually an investment. But in recent years, the land prices have gone up so rapidly that the depreciation of the building never manifested itself due to the appreciation of land prices many times over. However, thins are not likely to stay like that forever. Historically, the phase in which we're in currently is just an abberation.

Hope it helps.

aditi sharma

This is the reason I advice people to stay away from townships and any societies where land conveyance is not going to be done.
If you pay for the land, you must own it. These mp city and Amanora guys have created a MATRIX where you pay life-long rent at once and live there for 99 years(or 30-40 years max in real lifespan of building).
Guys, more things to consider, like in natural calamities like earthquakes, if buildings are destroyed, can society reconstruct it? If land is in societies name, society can rebuild building and all old residents can get a flat there. in these townships, all such rights remains with them. they will reconstruct buildings on their term and the victims wont have much say in it...

realacres

Aditi & BG have answered rightly. Here is some more:-
It depends on built quality. Poor quality flats may collapse even before your home loan tenure expires:p, but consider 25 yrs to be livable. After that repairs may be required.
Unlike car where value only goes down & the car is almost after 3 years, in case of flats it depends upon the market. During the recent boom times, people sold 15 yr old flats at sky high rates. But in case of non-bubble asset, this won't be the case. Flat depreciates, land appreciates.
If the build quality is good, some maintenace will be enough, if not, redevelopment will take place where builder gives you a flat & sells remaining ones as the FSI for redevelopment is more than building on a plot. Btw, if it is a township, I don't know what your rights would be.
8-10 yrs for flats/row houses.

Hope this helps.

wiseman

As far as I know the oldest flats in Bangalore (I mean the relatively high-rise ones) is around 35 years having been built around mid 1970s. And these flats are quite livable even now though you might not like the cramped feel and aesthetics (after all, do you remember the average janta's mentality in those days?).

The key factors seem to be
1. Build quality (back in those days flats were built like fortresses with a lot of overbuilding).
2. Regularity of maintenance (if regular maintenance was done, periodic painting and repairs to building, sewarage and water supply lines these buildings probably have a life of around 50 years or more).

Don't know if weather conditions (extreme heat/cold, coastal, etc) have a bearing on condition and rate of deterioraion of buildings.

To really figure these things out you might want to study flats in the bigger metros (Delhi, Bombay, Kolkata and Chennai) since most other cities were but towns even in the 70s.

Warning though! Expecting flats built today to have the same life of flats built in those days may not be the correct approach.

cheers

razer

I'm aware of several buildings that are 7-14 stories, and were built in the mid 70s. They are all going strong, and I'd probably say they have another 10 years at the minimum before major repairs are required.

But wouldn't you assume that with so many advances in construction, quality of cement, RCC, and other architectural improvements over the years, current generation buildings should last at least 50-years?

bogusgenius

Dude, can you name one advance in construction? My dad is a civil engineer, retired, and he says that buildings now cannot hold a candle to the older buildings.
The current crop of builders have not increased the building strength only decreased it. What they've done though is, have better finishing.

razer

Well, the fact that the average building is now 25+ stories high requires a different foundation at least? I assume that since the world's tallest building has been completed in 2010 that it would have some trickle down effect.

rahulverma

Guys,
Thanks for all your replies. It's really insightful.

Well regarding the construction quality I will definetly go by bogusgenius. Its more of builder herd mentality of booking profit with maximum margin. And that is for sure, will compromise in quality.

Btw Aditi, my understanding on buying a property was that its a lease for 99 years whether its a flat or land. And how does it matter whether I buy it in normal society building or township? You mean the terms and conditions are different in these cases?