Hi All,

Just want to share and understand plans from everyone on their RE investment strategy over short to medium term i.e. next 1- 4 years.

Please do drop a word on rationale behind your plans i.e. both pros and cons.

Short term: UK

Pros: UK looks attractive with low interest rates and bearish house market. With BOE interest rates at historic low and QE for almost 1Tn$- ROI will be good with expected wage and retail inflation.

Cons: Euro, Scotland referendum and current debts may play spoilsport over medium term.

Medium Term: Chennai and Bangalore

Pros:

Chn: With current inflation and expansion of corporation limits- Selected Chennai locations (plots) do look attractive over long term. Expected RE slowdown due to drop in Industrial output and high interest rates- may open good avenues. Liquidity is key!

Blr: With Namma Metro covering more areas-Blr with high FSI and stable price outlook, city properties looks affordable. With large floating population- ideal for flats investment.


Cons:

Chn: There are signs of RE asset bubble in both Chennai city and sub-urbs. Quality of construction and amenitites are much to be desired. Infrastructure still remains on paper dream in most of the location. ROI for investors from flats in both city and sub-urbs are abysmal.

Blr: Over-supply of flats, Pollution,Governance deficit and lack of ownership among dwellers for better amenities.
Read more
Reply
26 Replies
Sort by :Filter by :
  • Very good initiative

    Let me speak for myself, my own personal plans for next 1-4 Years

    1. Increase my investments in Bangalore

    Plots between Yelahanka and Devanahalli on International airport road look attractive

    Pros:
    Almost 10 flyovers are getting activated on 20 Kms stretch of that road, which itself is a expanding into a 8 lane signal free carriageway. So you can travel at 120 Kms/hr minimum for 25 Km distance from Airport to City areas. It's already happening and not just in paper.

    Plots on backside (1-2 kms interior) of outer ring road ORR.

    Pros:
    Malls, Multiplexes, lots of flyovers coming up. Signal free outer ring road. Biggest IT corridor within in the biggest IT/Tech city.

    Plots in Bannerghetta Road

    Pros:
    6 malls & hypermarkets in just 10 kms stretch. 3 multiplexes. Another important IT corridor of Bangalore, though most companies are here will eventually shift to SEZs in ORR. But still one of most important residential corridor.

    2. Cash out my investment in Chennai

    I love Chennai. But I am Bangalore bred, wherever in the world New York or Paris - to my heart Bangalore is best. So I have no plans to hold to Chennai investment forever. So will cash it and exit fully in next 2 years max.
    CommentQuote
  • I'll probably buy a plot in ORR stretch in the next 5 yrs, need to study how the area is developing first, waiting eagerly for the first 14 KM from Vandalur to Nemilicherry to become operational, probably by mid-2013.
    CommentQuote
  • Hi,
    I don't associate with any other RE than Chennai. Wait and watch for 4 years now. Probably proceed with construction of house in Guduvanchery after 2-3 years.
    Also planning for reconstruction of old flats within city limits (near ashok nagar/virugambakkam), but that's a long and tedious process and need to get all owners support for proceeding.
    Buying Sobha developers stock at this point of time - not sure if it's apt, but I felt that as an easier way to expose myself in small amounts into diversified RE on the whole of South India instead. The PE is 15x current earnings and debt is considerably low with dividends making it attractive.
    Problem is once you start owning more than 2 properties, it's difficult to monitor them closely considering the following:
    1. I have another job with 9-5 on weekdays.
    2. Travel onsite on a regular basis.
    3. Having 3 plots in suburbs and it is pain to track existing ones - priced weekends.
    4. AND I AM LAZY.
    So to ease it out and to gain on the RE growth happening it's easier to buy RE stocks (provided you analyze the financial reports and ensure the PE and leverage is not high). Not sure how many follow such an approach...

    Looking for resale (10+ yrs old) apartments in Nanganallur area where some fool can sell it for 50 cents on the $, but hard to find such deals. It's a good-to-have and not pursuing it aggressively. Maybe if some good deal comes I might grab one..
    CommentQuote
  • I'm new to RE or investments in general.

    Right now, I'm hoping to purchase a plot where I can construct a house for self use maybe 5 yrs later.

    After a couple of years, if I have the money and energy to invest, I might invest in a old resale flat in the city, that yields good rental or a plot where I can construct small mansion like units and rent it out. But this is a long stretch and depends on my financial needs then and how I mature as an investor.
    CommentQuote
  • Originally Posted by sh1729

    Buying Sobha developers stock at this point of time - not sure if it's apt, but I felt that as an easier way to expose myself in small amounts into diversified RE on the whole of South India instead. The PE is 15x current earnings and debt is considerably low with dividends making it attractive.


    Agree with you, at this point it is better to buy Sobha's stock than their apartment. They have just published the latest investor conference call meeting minutes, looks like they have recently purchased 19 acre land in Chennai. I'm guessing it is somewhere close to or within city limits.

    They have slightly increased their debt exposure, but much better than other big developers, currently their debt equity ratio is 0.62. Also they have reduced land monetization, they have recently sold a small landholding in Coimbatore and nothing major. It is a positive sign and shows they still have faith in their real estate operation in major cities.
    CommentQuote
  • Thanks everyone for sharing your views so far! I completely agree on challenges around time management with respect to RE investments. RE is more conducive for family run businesses, untill it attains industry standard with regulations and transperency.Probably forum like this may be one of the outlets to take informed decisions- to share and learn on developments/legal pitfalls and trends.

    I will encourage other users to share their views at macro level- so respective individual can do their ground work.

    On Equities- more than P/E ratio, personally I would look at controls around Corporate Governance. It will provide stable and long term returns!

    On a side note-It's not a bad time to make your hand dirty with farming. May be at micro-level (1-2 acres) to test waters and opportunities are immense- with scientific know how available; retail and storage infra to follow in next decade or two.
    CommentQuote
  • Originally Posted by Love4land
    Agree with you, at this point it is better to buy Sobha's stock than their apartment. They have just published the latest investor conference call meeting minutes, looks like they have recently purchased 19 acre land in Chennai. I'm guessing it is somewhere close to or within city limits.


    When I was passing through Pallikaranai, I saw a small board advertising Sobha Meritta, which I have never seen before. May be that is the land they bought? Do anyone know any information on this 19 acres land?
    CommentQuote
  • Outlook on RE next 1- 4 years:

    To be brutally frank, I would wish to stay away from RE in Chennai for next 1-4 years. I am not into any other cities but even if i had the time and money and the network, will keep off RE for next 1-4 years.

    But as far as outlook, I would repeat what i said - w.r.to RE, there will be maximum appreciation in next 1-4 years (relatively only ) in a) Newly added areas to city corporation (mogappair, mugalivakkam, madipakkam etc) and b) In those areas to be served by the Metro Rail.


    I personally feel that equity market will do better than RE market in next 4 years in India/Chennai, but again that is all to do with what a person is comfortable /able to understand etc.

    Would love to revise my outlook after say one year when any signs of a big correction happens. Let us c.
    CommentQuote
  • Originally Posted by Clairvoyant
    Thanks everyone for sharing your views so far! I completely agree on challenges around time management with respect to RE investments. RE is more conducive for family run businesses, untill it attains industry standard with regulations and transperency.Probably forum like this may be one of the outlets to take informed decisions- to share and learn on developments/legal pitfalls and trends.

    I will encourage other users to share their views at macro level- so respective individual can do their ground work.

    On Equities- more than P/E ratio, personally I would look at controls around Corporate Governance. It will provide stable and long term returns!

    On a side note-It's not a bad time to make your hand dirty with farming. May be at micro-level (1-2 acres) to test waters and opportunities are immense- with scientific know how available; retail and storage infra to follow in next decade or two.


    On equities - agree on corporate governance but most of time, this is factored into valuations. Whether we like or not, government (read as central govt) policy decisions are the biggest drivers of corporate profitability even in such sectors like FMCG and so factor in all that. generally a lot of stocks today, including some good Real Estate players (not all are frauds and chors) are cheaper than in 2007 .

    Reg Farming, i am not familiar but what i get to understand(from others) is biggest problem for commercial farming is cost of inputs (read as fuel/power and diesel) and these days people are resorting more to automation. If one cultivates niche crops (veggies etc) instead of standard rice/sugarcane and uses scientific techniques and finds ways to reduce water and fuel costs, one can win in farming. Needless to say this is not for all, only for select set.
    CommentQuote
  • Well this report by Artha Yantra- Buy vs Rent ArthaYantra | The Buy Vs Rent Report addresses lot of issues raised in past- whether to buy or rent in Chennai. Various parameters like tax saving, maintenance cost, down-payment etc..were considered. Not surprisingly Chennai comes as the worst- reiterates why it's good idea to rent in Chennai than buying. Buy/rent ratio is one of the worst in India (even Mumbai is better) and VFM is one of the lowest.

    Chennai can be attractive only when prices stabilise or rent catches up with property value.
    CommentQuote
  • Originally Posted by ramki830
    On equities - agree on corporate governance but most of time, this is factored into valuations. Whether we like or not, government (read as central govt) policy decisions are the biggest drivers of corporate profitability even in such sectors like FMCG and so factor in all that. generally a lot of stocks today, including some good Real Estate players (not all are frauds and chors) are cheaper than in 2007 .

    Reg Farming, i am not familiar but what i get to understand(from others) is biggest problem for commercial farming is cost of inputs (read as fuel/power and diesel) and these days people are resorting more to automation. If one cultivates niche crops (veggies etc) instead of standard rice/sugarcane and uses scientific techniques and finds ways to reduce water and fuel costs, one can win in farming. Needless to say this is not for all, only for select set.


    Yes, Corporate Governance is still a luxury and not a mandate- where politicos and Corporates hold sway over toothless regulators and policy decisions. There are Ltd companies who do business in transparent manner, but may not be the darling of street.

    Agri- different beast and not for faint hearted. Till a decade or two back- most of the families were into it, and unattractive- then the great migration to cities. The one variable which have changed now from past is automation. You will not get resources like in past to plough, cultivate and harvest- NREGA is a blessing in disguise- automation is not a choice now. When we look here, where 100 acres are managed by 2-3 person, and within family- present generation have subscribed and already trying it as the way forward.

    Definitely we can't have same cycle like in past- cash crops are not attractive, thanks to monsoon and power dependency.
    CommentQuote
  • Home prices may soften as RBI acts tough on realty NPAs - Moneycontrol.com

    Another news. All information I am receiving reflects that the RE prices in all metro's are hyper-inflated.
    CommentQuote
  • Housing prices in Chennai will never drop. Requesting members not to be day dreaming. I have seen this discussion so often about price drop, peak etc in this forum. Nowadays even newspapers are confusing with articles.

    Population is growing so where will people live. Also this is not stock market to use terms like peak, correction, bubble etc. I am noting down all these terms.

    Agriculture unfortunately is worst profession in our country. Thousands of farmers have committed suicide already. Risks are high.

    Like Ramki was mentioning with diesel, and electricity charges so expensive what farming can a person do. Even power cuts are rampant like 12-16 hours in villages.

    If interested in farming, then may be migrating to some other country like Australia, New Zealand could be good idea but not our country. Worst policies.
    CommentQuote
  • Agriculture is profitable if done right. There are numerous examples given in recent times where ordinary people have taken the profession, done right and reaping the reward. Food commodities prices are hitting the roof and I am bullish on them.

    organic farming is one interesting area and have lot of potential.
    CommentQuote
  • RE market in India as whole is enjoying due to supply/demand and sudden economic sprout. In developed countries this is not the case, time being say another 10 years RE would be the safest investment vehicle in India. Due to very high population there is demand for everything starting from shaving blade to luxury car, this is not a consumer market this is sellers market.

    Would it be a wise decision to invest in land rather than apartment? I think the answer is based on every individual, my choice would be land as I'm not expecting an immediate ROI.
    CommentQuote