Hi Experts,
I have a quick query here.I am planning to invest 50 lacks in chennai and i have been to OMR and ponmar area.Bit confused to invest in a flat in padur or land in ponmar.

This is only for investment purpose .I would like to know which option will have good returns after 5 years.

Looks like i can buy a 2 BHK flat in a well maintained gated community in OMR for 50 lacks.But if i pan to buy a land i can get 2 grounds of land in ponmar/vengadamangalam which is 7-8 kms from navalur.

Which will have good appreciation after 5 yrs ?What value can we expect a flat in padur(rate per sq feet) after 5 years and plot in ponmar for the same time period.

I am bit confused with the 2 options.

Any inputs/ suggestions are very much appreciated.

Thanks,
Sankar
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  • both are good options. If you go for flat, go for higher floor, unblocked view and close to main road. This way you'll distinguish yourself from a person living in individual house in same locality and will have a unique pool of buyers when you intend to sell in future.

    Buying plot is tricky as you'll have to spend more time and effort on legal scrutiny. Make sure it is not greater than 1KM from nearest main road and has multiple routes to reach main road. Else you'll have nightmare once the area develops.
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  • thanks Love4land for your response.What would you think the price per square feet will be after 5 years in padur area if i buy a flat on the main road its self in OMR considering current rate of appreciation.

    Also the plot rate in ponmar after 5 years(if i buy a plot which is less than 300 mtrs from the nearest .

    I know its too much to ask at this point.But i feel experts can guess better than layman in real estate like me :-)
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  • shanki_31,

    Two years ago when I set out to buy a plot in Ponmar, I could find 1800 sqft plots (near to RR college) for 9 lacs and resale plots at Aishwarya avenue for Rs.850 per sqft. The price now being quoted varies from Rs.1000 to Rs.1200 per sqft depending on location and the adjacent neighbourhood. Resale plots near Casa Grande Urbano villas demand more premium.

    Regards,
    Wishland.
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  • So 5 years from now if there is no surprise that if the land rate in ponmar reaches 2500 to 3000 ??

    Ok what about high end flat in padur,
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  • Flats in Padur will only appreciate dramatically if there is a change in mindset.

    Plots in Ponmar are more likely to appreciate considering the current mindset of people. As someone pointed out, plots closer to Casa Grande Urbano are appreciating due to presence of houses nearby, which is the normal trend in suburbs. So if more people start building houses and settle down or if several apartment projects are announced nearby, value will appreciate quickly.
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  • I would suggest you prefer OMR flat, provided the location of the flat is not beyond Siruseri and preferrably within Chennai Corporation (New) Limits (that is within Semmanchery).
    But given that you may not get a reasonably priced flat in the limits i suggested, would urge you to consider the plot. Having said, that I would also caution on Ponmar/Sithalapakkam, the place has Long Term potential but has appreciated a lot in last few years while infrastructure and connectivity are seriously deficient so have a very long time frame for investment.
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  • PLOT PLOT PLOT all the time..NO FLAT FLAT....OMR will have over supply soon. Value of building appreciates less as compared to land (on a very long term). Land will not fetch you any recurring income like rent but saves you from many other things like finding tenant, paying tax, paying maintenance, taking care of your unit, furnishing etc...on the whole, you are better off with land.
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  • Ponmar plots will appreciate more than Padur apartment in any situation.
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  • Land for benefit after long time. Some times you may not see in your life time as people do not like to sell. It is a paper profit

    Flat gives monthly income
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  • Land has historically appreciated much more than flat. The appreciation will be exponential the moment people start building houses in that area and move in. Ponmar is slowing reaching that stage with so many villas and apartments coming up.

    Relying on rental income for apartment is not advisable as it is hard to get tenants in the first place in areas like Padur and beyond. Secondly, even if you get tenants, rentals will be less than 10 psf, which is pathetic when compared against the amount invested.

    Tenants may also not be from desirable background, mostly bachelors from other parts of India. I have nothing against bachelors or people from other parts of India, but landlords in Chennai are generally averse to such tenants.
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  • This is a old thread. OP prob bought something by now.
    Anyway for me, Plot is better than Flat for the money in hand. It is easy decision.

    But, if you are leveraging then Flats win all the way.
    Plots, the big issue is that banks cannot fund mostly and sellers do typically like black transactions. If you find both then the plot is over priced.

    Again, Leveraged flats is not for everyone. It is for younger people or people with good jobs, whose incomes are rising significantly and you can service the payments when the time comes.

    With 50L cash, I get to choose between.
    Option A - 30L per ground in Ponmar - 1.5 Grounds will be possible for 50L including reg.
    Option B - 4 2-BHK Apts @40L each with 20-25% down-payment new launch.

    After 3 years of really good returns from now - hypothetical,
    Option A - Ponmar could be 60L a ground, 1.5G plot is worth 90L.
    Cool 40L profit. Nice returns.
    Option B - Padur land prices also shoot up, if Ponmar is 60L then Padur should be 80L-1C. Even if you assume Construction cost remains unchanged, Flats hit 5-6K per sqft, 70L would become the new cost of Apt, even though it is only 50% built by now. 2.8C will your value of your asset. 2.8C - 1.6C = 1.2C Gain - 20L (Interest cost for new payments)= 1C Profit.
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  • K11,

    YOu are right, Flats for the people who dont have their money in hand.

    Benefit for others: From your scneario

    You invested total Cost 1.6 C after 3 years 2.8C CAGR is ~ 13.04%

    Plot in ponmar 50 L after 3 years 90 L CAGR is ~ 21.64%

    That is the nominal difference between the flats and plots

    Thanks
    Arunag
    Originally Posted by k11
    This is a old thread. OP prob bought something by now.
    Anyway for me, Plot is better than Flat for the money in hand. It is easy decision.

    But, if you are leveraging then Flats win all the way.
    Plots, the big issue is that banks cannot fund mostly and sellers do typically like black transactions. If you find both then the plot is over priced.

    Again, Leveraged flats is not for everyone. It is for younger people or people with good jobs, whose incomes are rising significantly and you can service the payments when the time comes.

    With 50L cash, I get to choose between.
    Option A - 30L per ground in Ponmar - 1.5 Grounds will be possible for 50L including reg.
    Option B - 4 2-BHK Apts @40L each with 20-25% down-payment new launch.

    After 3 years of really good returns from now - hypothetical,
    Option A - Ponmar could be 60L a ground, 1.5G plot is worth 90L.
    Cool 40L profit. Nice returns.
    Option B - Padur land prices also shoot up, if Ponmar is 60L then Padur should be 80L-1C. Even if you assume Construction cost remains unchanged, Flats hit 5-6K per sqft, 70L would become the new cost of Apt, even though it is only 50% built by now. 2.8C will your value of your asset. 2.8C - 1.6C = 1.2C Gain - 20L (Interest cost for new payments)= 1C Profit.
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  • I do not know if the time is right for leveraged buys in both plots or lands now. It is a slow market now. My example was a hypothetical scenario that even I do not see it happening. 2013 and 2014 might be slow years. Once the election is done, we might see better days ahead after 2015 or so.

    Once the plot hit 50L a ground, it takes a long time to reach 1C. Law of bigger numbers prob plays a role.

    Some places did it before in shorter time periods, Thoraipakkam became 1C market easily. Madipakkam is 1C market. People said it is because it is closer to city.

    Shols hit 50-60L long time ago. It trading nicely around 70-80L in decent locations. Let's exclude Gandhinagar Layout. Shols has to see 1C+ before we talks about Plots in Ponmar or Flats in Padur reaching highs.

    I am not familiar with Ponmar market, though I have used the V-K road for few years.
    I wonder what do our Ponmar experts think about OMR (Padur, Kelambakkam, Siruseri, Shols) and GST areas (Vandalur, Urapakkam, etc).

    Can Ponmar grow even if the OMR or GST remains stagnant.

    I am trying to understand the relative pricing, I do not have a clue where Ponmar or other V-K road areas stand when in relative comparison to OMR.

    For OMR main road (or closer to main road properties), I can say Shols>Siruseri>Padur>Kelambakkam.

    It is hard to see Kelambakkam side stepping Shols. The order is expected to be followed.

    So do the V-K road guys think OMR has to saturate first or would the growth be independent.
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  • K11,

    As Anurag points out, you are unfairly comparing the returns of a 50L capital and 1.6C capital.

    If 40L is the profit you are able to make with a 50L capital, then you will need to make a profit of 1.28C with the 1.6C capital in the same period to match the returns of the former investment.

    Clearly plot wins here.
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  • Flats in good localities grow at around 10-15% CAGR during the first 5-7 years and then the curve plateaus. If this is above your home loan at 10.5% rate of interest, then it makes sense to leverage, if you have the repayment capability. Sell after 5-7 years, book profits and reinvest.

    Plots in good localities can grow at 20+% CAGR for a longer time before plateauing.

    Therefore if you have the money, you buy a plot. If you're leveraging, buy a flat.
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