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Investment Options For NRI in Chennai

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Investment Options For NRI in Chennai

Last updated: June 17 2012
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  • Investment Options For NRI in Chennai

    I am sure a number of phoren desis and those who plan to return visit this forum. Coming from a middle class background (With parents owning 1 home in Medavakkam after 40 years of work and that too due to an ancestral property that got sold), I can cover the gamut now after 11 years in the US and 2 years back in India.

    One thing from my worldwide experience that i can share - RE in India works as long as the right project is chosen. There is probably no market in the world like India that assures this kind of returns.

    - As a student hedge fund manager in the US my returns were 12% annualized over a 3 year period. Our team easily beat the indices and we touted our performances in front of investors. except the return below make our world class investments look like a joke.

    - we invested in a home in Gopalapuram area - approximately $27500 for the 2 bhk 20 year old apt in Gopalapuram in 2002 end and in late 2003, $100000 in the US for a fancy townhome with 3 BHK and 2 stories, 2 car detached garage and a lawn up front. As of today, the Gopalapuram home is worth at least $120K and the home in US is worth $80 K at best. Thank god for excellent rental returns in comparison to India though. But hands down India RE was the winner, even came close to outshining the 401K amount I had garnered over 9 years as a professional.

    - My return to India in Mumbai - Home in Mumbai - $150K (Loan of course.. and the 401 k did not make any sense based on india RE returns); Parents - mumbai outskirts home (2013 end) - $40K. In exactly a year and a half - the home values have shot up between 15-30% at a time when there is supposed to be a downward trend in Mumbai.

    So advice if you are planning on investing only (In my case it should be invest + stay if possible so if returns are not good, you are still happy) and increasing your net worth - don't worry too much about high prices etc. and invest with a good builder who has a track record of delivering quality projects, albeit a little late. Don't do this remotely.. remote sucks. The next trip to India can include 1 month of leave without pay where you are scouting for the right properties. Take an interest in what you are investing in. Most people in India aspire to be a home owner and are very aggressive in moving up the food chain (I know - I face it everyday on my return and have thankfully adjusted to this voracious need by others to move up the ladder - seems like I am becoming one myself ) - so demand for quality homes will never go away in India for the next 20 years no matter what anyone says unless some kind of black swan event occurs which none of us control.
  • #2

    #2

    Re : Investment Options For NRI in Chennai

    Originally posted by Traveller View Post
    I am sure a number of phoren desis and those who plan to return visit this forum. Coming from a middle class background (With parents owning 1 home in Medavakkam after 40 years of work and that too due to an ancestral property that got sold), I can cover the gamut now after 11 years in the US and 2 years back in India.

    One thing from my worldwide experience that i can share - RE in India works as long as the right project is chosen. There is probably no market in the world like India that assures this kind of returns.

    - As a student hedge fund manager in the US my returns were 12% annualized over a 3 year period. Our team easily beat the indices and we touted our performances in front of investors. except the return below make our world class investments look like a joke.

    - we invested in a home in Gopalapuram area - approximately $27500 for the 2 bhk 20 year old apt in Gopalapuram in 2002 end and in late 2003, $100000 in the US for a fancy townhome with 3 BHK and 2 stories, 2 car detached garage and a lawn up front. As of today, the Gopalapuram home is worth at least $120K and the home in US is worth $80 K at best. Thank god for excellent rental returns in comparison to India though. But hands down India RE was the winner, even came close to outshining the 401K amount I had garnered over 9 years as a professional.

    - My return to India in Mumbai - Home in Mumbai - $150K (Loan of course.. and the 401 k did not make any sense based on india RE returns); Parents - mumbai outskirts home (2013 end) - $40K. In exactly a year and a half - the home values have shot up between 15-30% at a time when there is supposed to be a downward trend in Mumbai.

    So advice if you are planning on investing only (In my case it should be invest + stay if possible so if returns are not good, you are still happy) and increasing your net worth - don't worry too much about high prices etc. and invest with a good builder who has a track record of delivering quality projects, albeit a little late. Don't do this remotely.. remote sucks. The next trip to India can include 1 month of leave without pay where you are scouting for the right properties. Take an interest in what you are investing in. Most people in India aspire to be a home owner and are very aggressive in moving up the food chain (I know - I face it everyday on my return and have thankfully adjusted to this voracious need by others to move up the ladder - seems like I am becoming one myself ) - so demand for quality homes will never go away in India for the next 20 years no matter what anyone says unless some kind of black swan event occurs which none of us control.

    ----------------

    You brought in a very interesting view point. Does not matter if it's a former NRI view point . In my opinion , it still is comical.

    Stats tell us that growth from 1% to 10% happens in a jiffy, 10 to 20 is brisk, 20 to 30 is fast, 30 to 40 is impressive ....70 to 80 ..sucks, 80 to 90 impossible.. and so on. .

    Gopalapuram (some nondescript place) in 2003 WAS at 1 or may be 10. Whereas the fancy apartment you bought with two car parking in USA was at - may be 95 in 2003. You are an NRI living in the most advanced country ( USA I suppose). And then you compare some Gopalapuram property with one that you bought in US ..where ? Atlanta or Tampa ?

    Vociferousness alone never commanded the economics. Industriousness did. India is a country of shortcuts. That theory falls flat.

    Comment

    • #3

      #3

      Re : Investment Options For NRI in Chennai

      There is probably no market in the world like India that assures this kind of returns.
      You could have bought landed property in Sentosa cove (Singapore) and got far better returns. Very popular with Indian citizens (truly high net worth individuals).
      Last edited June 16 2012, 08:31 PM.

      Comment

      • #4

        #4

        Re : Investment Options For NRI in Chennai

        Originally posted by Traveller View Post
        I am sure a number of phoren desis and those who plan to return visit this forum. Coming from a middle class background (With parents owning 1 home in Medavakkam after 40 years of work and that too due to an ancestral property that got sold), I can cover the gamut now after 11 years in the US and 2 years back in India.

        One thing from my worldwide experience that i can share - RE in India works as long as the right project is chosen. There is probably no market in the world like India that assures this kind of returns.

        - As a student hedge fund manager in the US my returns were 12% annualized over a 3 year period. Our team easily beat the indices and we touted our performances in front of investors. except the return below make our world class investments look like a joke.

        - we invested in a home in Gopalapuram area - approximately $27500 for the 2 bhk 20 year old apt in Gopalapuram in 2002 end and in late 2003, $100000 in the US for a fancy townhome with 3 BHK and 2 stories, 2 car detached garage and a lawn up front. As of today, the Gopalapuram home is worth at least $120K and the home in US is worth $80 K at best. Thank god for excellent rental returns in comparison to India though. But hands down India RE was the winner, even came close to outshining the 401K amount I had garnered over 9 years as a professional.

        - My return to India in Mumbai - Home in Mumbai - $150K (Loan of course.. and the 401 k did not make any sense based on india RE returns); Parents - mumbai outskirts home (2013 end) - $40K. In exactly a year and a half - the home values have shot up between 15-30% at a time when there is supposed to be a downward trend in Mumbai.

        So advice if you are planning on investing only (In my case it should be invest + stay if possible so if returns are not good, you are still happy) and increasing your net worth - don't worry too much about high prices etc. and invest with a good builder who has a track record of delivering quality projects, albeit a little late. Don't do this remotely.. remote sucks. The next trip to India can include 1 month of leave without pay where you are scouting for the right properties. Take an interest in what you are investing in. Most people in India aspire to be a home owner and are very aggressive in moving up the food chain (I know - I face it everyday on my return and have thankfully adjusted to this voracious need by others to move up the ladder - seems like I am becoming one myself ) - so demand for quality homes will never go away in India for the next 20 years no matter what anyone says unless some kind of black swan event occurs which none of us control.
        ------------------

        Worldwide or otherwise experience,

        one thing you said is true.

        If you acquire a property with dual purpose in mind ie , for personal use and investment, then , there is solace ( if not hope).

        What guarantee can you give that 1 crore INR property will not crash to 25 lacs INR in 5 years from now ?

        You said a 100K US$ US property , at present and at best fetches 80K$ right ?

        WHat makes to think builders make all the difference and not 'affordability' ?
        Last edited June 16 2012, 08:13 PM.

        Comment

        • #5

          #5

          Re : Investment Options For NRI in Chennai

          Thanks for sharing your story, Traveller.
          I agree with your view.


          Coming back to Tulips.
          Seems you are a big bear.
          Inflation in India is crazy. A 2Rs coffee 10 years ago cost 20Rs.
          Do you think it will come back to 2Rs.
          Inflation and Economic growth fuels RE.
          Inflation is 10% every quarter and is getting compounded.
          We had tremendous job growth in India particular Chennai in last 10 years.
          Both in IT (lags behind BLR but far ahead of others) and leads in manufacturing (overtaken Pune, Haryana, WB). Other Industries have also cropped up. Port plays an important role in Energy generation (coal & fossil fuel imports) which has become critical.

          I bet the cup of coffee will go to 40Rs soon in the next 5 yrs. Anyone on this board wanna take a bet?

          Comment

          • #6

            #6

            Re : Investment Options For NRI in Chennai

            Originally posted by k11 View Post
            Thanks for sharing your story, Traveller.
            I agree with your view.


            Coming back to Tulips.
            Seems you are a big bear.
            Inflation in India is crazy. A 2Rs coffee 10 years ago cost 20Rs.
            Do you think it will come back to 2Rs.
            Inflation and Economic growth fuels RE.
            Inflation is 10% every quarter and is getting compounded.
            We had tremendous job growth in India particular Chennai in last 10 years.
            Both in IT (lags behind BLR but far ahead of others) and leads in manufacturing (overtaken Pune, Haryana, WB). Other Industries have also cropped up. Port plays an important role in Energy generation (coal & fossil fuel imports) which has become critical.

            I bet the cup of coffee will go to 40Rs soon in the next 5 yrs. Anyone on this board wanna take a bet?
            -----

            Coffee is not a necessity. House is. Get that first. Begin your journey there.

            Petrol is a necessity. LPG is a necessity.

            We sit here and create intellectual theories while your gas cylinder ( hope you dont have induction cooking setup yet), is subsidized 65%.

            Yes inflation is a worry. But Inflation happened when your expenses exceed your earnings. Your wealth creation is sucked up by a b lack hole. Now, talk RE.

            And for once , stop imputing motives. What do you mean by BIG BEAR ? What are you ? a BIG RODENT ?

            Comment

            • #7

              #7

              Re : Investment Options For NRI in Chennai

              why housing market in USA crashed & why i feel the same can not happen in india?
              In india land is limited and men unlimited
              exactly opposite in usa land is unlimited but population is limited
              keeping above theory in mind i feel investment in good reputed residential projects having lasting construction quality will surely fetch you exponential returns over a period of min 10 years.

              Comment

              • #8

                #8

                Re : Investment Options For NRI in Chennai

                @bhuvan,

                In US supply exceeds demand, in India demand exceeds supply. As simple as that. In US they tried to artificially increase demand and it failed eventually. In India there is no such thing happening.

                Comment

                • #9

                  #9

                  Re : Investment Options For NRI in Chennai

                  Originally posted by tulips View Post
                  -----

                  Coffee is not a necessity. House is. Get that first. Begin your journey there.

                  Petrol is a necessity. LPG is a necessity.

                  We sit here and create intellectual theories while your gas cylinder ( hope you dont have induction cooking setup yet), is subsidized 65%.

                  Yes inflation is a worry. But Inflation happened when your expenses exceed your earnings. Your wealth creation is sucked up by a b lack hole. Now, talk RE.

                  And for once , stop imputing motives. What do you mean by BIG BEAR ? What are you ? a BIG RODENT ?

                  Food prices are important component of Inflation in India.
                  WPI uses this as a major portion. In India people spend far more % of income on Food. So that's why I bought up price of cup of coffee?

                  As I said 'Inflation and Economic growth fuels RE'.


                  When I said you are bearish (stock market lingo), I am referring you as a person who thinks prices will come down.

                  Comment

                  • #10

                    #10

                    Re : Investment Options For NRI in Chennai

                    Originally posted by k11 View Post
                    Food prices are important component of Inflation in India.
                    WPI uses this as a major portion. In India people spend far more % of income on Food. So that's why I bought up price of cup of coffee?

                    As I said 'Inflation and Economic growth fuels RE'.


                    When I said you are bearish (stock market lingo), I am referring you as a person who thinks prices will come down.
                    ----------

                    Actually that is a very sensible point ( long time on this forum). Food prices.

                    Why food prices increased 300% percent when the demand increased 2% Y0Y ?

                    Fuel is an important commodity and it sure drives the numbers. Because my food needs to be transported from production to consumption ( village to metro).

                    But fuel is a very highly subsidized item. Tax payer money is spent on subsidies. So the food producers are almost immune. So why the food cost increased like sin ?

                    Now, we can talk the coffee example. 75% of the money you spend on coffee goes into real estate. Actually more than 75%. Please try and use every math feasible.

                    Comment

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