I have an offer for a second sale 3BHK apt in a G+5 complex (~10 flats per floor).

This was built around 10 years back.

Apt quality is good
Basic, no-frills apt with small children play area and good setback - no other amenities.
1500 sqft SBA, with approx 1200 carpet and ~45-50% Undivided Share
Location is good - near Maharaja restaurant / Halcyon Service Apts.
Woodwork, kitchen etc done. Movable furniture not present.
No water issues (borewell + cauvery)

It will cost around 75L + regn, + some basic maintenance
I am wondering whether it is worth pursuing for own stay ?

What is the appreciation going to be if I decide that I need to sell it after say 5 years ? (this will become 3rd sale, at 15 years of apt life)

The other option is to go for an apt in other areas (1.5-2 years to go for completion) with some more amenities, in same or lesser budget. This will have to be done in areas such as Hosa Rd/Harlur Rd/Whitefield/ITPL. Don't want to consider Hennur Rd area at this point.

What are the other financial considerations that need to be taken into account ?

I am looking for VFM and good quality rather than senseless "brand" appeal, but some more area for kids to play and be engaged in activities is always welcome,.

Also, in bigger apts, what is the undivided share of land generally ? Is it of any practical use ?
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  • my 1 cent..

    This is common question comes to mind (it came to me too) , when i started searching for the apartment/villa. Get old apt/villa or go for so called pre-launch/soft launch ones...at far interior forest like places at least for now...

    I think(I am a buyer like you, not a RE guru) one of the things you need to make sure is the liquidity of cash you have. If for investment, think on the rental you can get. It never makes sense to do investment with loan, if you plan so.
    If for self use , which was in my case, i opted not to go for used ones, purely depend on certain things(i guess many new buyers will think that way)...
  • Hi Investec,

    This is for staying / moving in immediately. But end of the day, if we need to upgrade say after few years, then the basic thing is that we should not be losing much.

    To look at it another way : This same apt appreciated around ~12% annually (CAGR) since inception or when the first owner bought it. This is over first 10 years life of apt.

    My question is : what would be the appreciation 5 years from now , given the decent location advantage but negating the 3rd sale and "small" apt complex with lack of frills like clubhouse etc ?

    As I plan to stay there, I am not looking for huge ROI, but I would not like to lose out either (given the registration + maintenance / additional amt I will be putting in). But at same time, there is good chance that will need to upgrade to facilitate kid's activities etc.

    This apt, being small, has UDS of around 50%. In my mind, that means something tangible down the line. Not sure how UDS works in case of apartment complexes (say sobha or prestige etc) ?
  • Buddy- 1st question I would have asked is will there be any buyer for this apartment down the line (say 5 years). Land value can appreciate but apartment value always depreciate.. until 5-10 years you will not see depreciation in the apt value because land value will be so much visible.

    IF you are not looking for any ROI , its good. But one point you have to re sale that right?

    Shobha/prestige or so called A-grade builders say similar UDS. At least I never found its real.

    But RE experts , this is genuine question comes to many of us please answer...
  • Hi Investec

    We are both in agreement in our thoughts - I am also mentioning the exact thing, that I should be prepared to sell at some point (eg upgrade) and earliest that can be is 5 years .. at that point, ROI will matter to an extent (I should be able to offset the registration and some of the interest cost, and have an ROI of say 5-7%). Given that we're talking about an area where open land is not that much available (4th Block/ST Bed), is this achievable?

    Unfortunately can't find any threads that throw a light on such situations ..
  • Hi all
    I can understand the dilemma one faces while making a decision in the above case.
    Some of the Pros and cons you may like to consider:
    RTM 10 year old apartment:
    1. As rightly pointed out the building value will depreciate but the significant land value appreciation will more than compensate and increase the value for the flat over a period 5 years and above. This will refelct in the overall resale vlaue and you can expect to get the ~10 to 12% CAGR. But resale will be still tough.
    2. You may have to make provision for repairs and refurbishing of the apartment, lifts etc. Normally association build sinking funds for this purpose right from the beginning and is retained as FD's you become a part owner of this fund in continuation as owner member once you buy the flat and carry on from there.
    3. Check on your neighbours. You may be mismatch as most of your neighbours and their kids are likely to be 10 to 14 years + to yours and kids age and you may have a tough time adjusting especially your kids and wife!

    New project:
    1. ROI will be very high. Check on my earlier post: https://www.indianrealestateforum.com/forum/city-forums/bangalore-real-estate/44426-how-to-balance-roi-v-s-risk?t=46225
    2. You can select flat of your choice and also engage in any modification accepatable to the developer to suit your taste.
    3. Your neighbour hood is likely to be of same age. This can be a signifacnt factor when we are now looking at generation gaps in 1 year!
    4. Will provide much more facilities.
    5. Regarding land share you need to check. Some new projects are floated with different concepts like share holders where the issue of land share is not there. I recommend that you check on this and avoid such projects.
  • ^^

    Thank you pp1951. Some very good points to consider (age group, building maintenance).

    In this particular case building maintenance looks to be ok, with no major issues till now.

    Age group - is a very good point I did not consider. Will check it out more, but one thing is that with a lot of rental activity, this is in any case a dynamic situation.

    Your statement that value will increase, but resale will be tough is a bit of contradiction :)

    (But a very valid one and the main thing that I'm trying to factor into the decision).

    Increased value on paper is of no use if I need to sell, and have a tough time selling. This means that to actually sell, will need to push down the price (and also look for people who place more premium on location than amenities and find a value in this).

    So the question boils down to this : for a 75L + reg flat like this today, how much can I expect after 5 years, should I have to sell - will people see value in the location, low maintenance, lack of water problem or just "like it" but go purchase for same price in outskirts in a pre-launch/launch ?

    BTW : I saw some flats in Harlur Rd area, ND Passion, Mana Seldon/Jardin plan. None of them came close in terms of giving the sense of space for a 3bhk.

    I saw some similar flats (g+4) in Owners Court Kasavanahalli, which were similar/better. The problem their is high cost (4000-4300 psft) and water issues, due to which as of now itself maintenance being asked is 4-6k per month. (Of course, the water issue does not prevent the builders from providing a swimming pool).
  • Thank you Abhinav.
    I feel the needs of new generations are fast changing and it is becoming increasingly difficult to rope in new young investors with higher disposable incomes and newer needs to look at old properties. Especially with significant improvements in over all infrastructure. This gap widens with older the property.
    Hence if you are looking to resale + appreciation and ease of liquidity then I am of the opinion that you must look at a new good brand development.
    All the Best
  • Hi PP1951, Will there be more demand, say 10 yrs later, for the old apartment due to the location? I think there will be people who will be interested to invest in CBD.
  • I forecast that it may take another 25 years to 30 years for the demand when redevelopment will take place! So wait for an opportunity may extend over much longer period than that of 10 years! Normally redevelopment may happen over a building life span of 30 to 50 years depending on the condition of the structure and the collective and majority will of the owners!
  • Abhinav,When you are budget is 75 lacs you should look for other available options instead of going for a 10 year old apartment.

    you will get a good brand new 3BHK in and around HSR, BTM layout (you have stretch a budget of 5 lakhs more) You will have a peace of mind and rentals are also good.

    Salarpuria Serenity in HSR has some 3 bhk flats(80 lacs) available check with them.
  • ^^

    Sir Symphony is in Hosur Rd after Bommanahalli- If you meant Serenity (which is in HSR), on commonfloor I am seeing prices of 1Cr+ .. 2bhk is 89L

    Thanks !
  • Abhinav, Location were you r looking is great and I have seen people changing hands in apartments 15-20 yrs old and htey had never face any major issues. In terms of return also I think it will follow the trend.
    If you think the construction is good, coming in ur budget and its for you own use for next 10 yrs; then the risk you are taking is very less compare to any new setup.