Just An Observation:

As we could see decent decrease (percentage may vary from location to location) in RE, I am wondering why still the house rent (even for residential purpose) is keep increasing (especially within chennai). I don't see any down trend / stabilization in terms of house rent.

Is there any other factors (school, college, hospital, etc) plays major role which OVERRIDES present RE trend ? Do we need to consider "HOUSE RENT" as different scenario ?

Suggestion are welcome :)
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  • Appreciate your response Nats. Thanks!
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  • Originally Posted by Natarajg007
    Ofcourse you can buy also for speculative and growth reasons but then flats are not the asset class for investments. Land is for investment. Land appreciates, Building depreciates. Cheers.


    Dear friend,

    Land appreciates faster than flat. Flat also appreciates and it may be aleast a little higher than the FD interest if one sees in a 5 or 10 year perspective. But not to the extent of high appreciation in many times like land.
    In any case, flat does not depreciate in terms of the value it may fetch if one is selling it after some years.
    ks2071746
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  • I believe in this:

    (Land purchased now + interest paid on the loan) after XX years ---> (A)

    (Flat purchased now + interest paid on the loan + rental value or benefits enjoyed + depreciation) after XX years ---> (B)

    (A) is always greater than (B)

    Also,
    the current money value that is spent on land will be less than the relative money value after XX years. So, it is actually a profit.
    but, in the case of flats, even if the price of the flat might seem to be more after XX years, it will be most likely more than the relative money value due to depreciation.
    This is of the same logic that yesteryears 10 Rs is todays 100 Rs.

    These are my personal beliefs. Expert opinions are most welcome
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  • Originally Posted by gone_mad
    I believe in this:

    (Land purchased now + interest paid on the loan) after XX years >
    (Flat purchased now + interest paid on the loan + rental value or benefits enjoyed + depreciation) after XX years.


    Dear friend,

    You may have to add the IT benefit one will get as house property loss in case of a new house.

    ks2071746:o
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  • Originally Posted by gone_mad
    I believe in this:

    (Land purchased now + interest paid on the loan) after XX years ---> (A)

    (Flat purchased now + interest paid on the loan + rental value or benefits enjoyed + depreciation) after XX years ---> (B)

    (A) is always greater than (B)

    Also,
    the current money value that is spent on land will be less than the relative money value after XX years. So, it is actually a profit.
    but, in the case of flats, even if the price of the flat might seem to be more after XX years, it will be most likely more than the relative money value due to depreciation.
    This is of the same logic that yesteryears 10 Rs is todays 100 Rs.

    These are my personal beliefs. Expert opinions are most welcome

    Cute way of presentation except mathematically the additions are not exact! In anycase it is understandeable to the layman very clearly. What I would add is that flats provide you a very important function. They provide you a place to live. Land on the other hand provides higher returns. Unlike what KS says sometimes Land and Flats dont return even FD rate of interest. I have a land in Tirunindravur purchased in 1988. It did not return the double every five years that FDs gave in those days. However today it has given a minimum of 20% returns even if I desperately sell it to a bear like Wiseman.
    Basically on this board, I find more than 95% of the folks talk of money but have LITTLE understanding of Mathematics (that includes Wiseman without doubt!). Remember Little is not A Little!
    The problem many think RE will appreciate linearly. It just wont. Between 1988 to 1993 my property gave me hardly any return, in next five years it just nudged the FD rate, but today it is 20% minimum and must be around 30% if I take realistic prices from sensible folks.
    In other words invest in RE for long term and dont expect linear growth. Growth is in steps and in bursts. (Sethugm and Wiseman...are your listening!)
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