Dear friends,
I am new member here and this is my first post.


I wish to invest in a property in Gurgaon. I am not going to live in it and my investment horizan is 5 years. I have following queries and any directions and guidance will be appreciated.

    Should this investment be in a plot or an apartment for maximum appreciation?
    Which one of Golf Course Ext Road or NH-8 has better potential considering approach, connectivity, infrastructure development etc.
    I am inclined towards buying a plot (minimum 200 Sq Yd) on Golf Course Ext Road. Any recommendations?
    Thanks in advance.
    Cheers.. Thanks in advance.
    Cheers.. Thanks in advance.
    Cheers.. Thanks in advance.
    Cheers.. Thanks in advance.
    Cheers.. Thanks in advance.
    Cheers..
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  • If there is change in FAR then plot market may move; otherwise plot market was quite flat last year.

    Venky you should make a difference between plots in developed areas and the plots in undeveloped areas.
    In Gurgaon ; there are a lot of vacant plots in the already developed areas which is usually not the case in normal circumstances . This is due to hoarding by investors.

    It is plots in undeveloped areas that are the riskiest during the recession time and not the plots in developed areas.
    CommentQuote
  • Originally Posted by stervale
    I was having a similar discussion recently. I had a question, wondering if your friend did any research on this. What are the pockets in Gurgaon that provide decent security for houses. For me that's always the biggest plus point for apartments. Security and power/ water supply.

    Totally agree with u...but considering he has the option of moving to a flat later on by selling the house if it does not suits his reqs.
    However, optimistically looking at a time frame of min. 3 years before new GGN starts to be worth living with all the infra such as schools,hospitals etc. comes up before moving in....
    CommentQuote
  • plots in sector 27/42 should be around 1.1-1.2K & good for investing
    CommentQuote
  • Another point of view. Read this on FB.

    Does buying a 90 lakh apartment make sense as an investment ?

    At 30 years of age should you buy that 90Lakh(1500 sqft) Apartment in a large city ? Is the question which many of my friends have asked me over the last 2-3 years and each time i wanted to tell them it is a foolish thing to do because …. But held myself back and advised them to really think if is makes sense allowing them to commit hara-kiri. Most of my friends tell try to justify this as retirement planning , i think that’s a convenient justification . Today after reading the wonderful article on i felt that this needs to be examined in several lights (Practically as well as from a Finance point of view)

    Buying an apartment at 30 years thinking that you are making an investment towards retirement planning is almost akin to buying a car and using it for the rest of your life , the car will simply not last long enough. Let me explain

    If you decided to buy a 90 Lakh apartment(1500 sft) for which you have made down-payment of 30lakhs and the rest of the 60 lakhs is own loan it would mean that you will pay ?59k EMI over 20 years . This means that the total cost of apartment would be Rs 1.4 crores(towards EMI) +1.3 crores (30 lakhs down-payment earning compounded interest of 8 %). Thus the apartment costs 2.7 crores Rs in practical terms and not 90 lakhs as u imagined . This is the most important aspect which is missed in investment i.e people always say i paid 90 lakhs for my apartment and now it is valued at 1.5 crores and boost about it to friends.
    Average Life expectancy of Indian male is now 68 years , since this is the average across people living with access to lower income and healthcare level , it would be safe to assume that you and ur wife would live for 75 years. You may live longer , but hey am quoting statistics here
    Average life of a RCC structure is 30-40 years, with enough focus being given on maintenance of the building else it would be much lower at 20-25 years . This means that when u are 70 years and still statistically can live for another 5 years your home may not be livable ! or worse you may need to spend money out of your pocket for repairing the home to make it livable. This is the reason why flats are never to be seen as investment opportunity because the value of the building starts to depreciate fast in fact most bankers start depreciating the value of the building in 10 years !
    Now come to the value of land (undivided share of the land belonging to you) i.e if the building is demolished and sold how much will your share be worth ! . As the building as such is not worth anything after 15-20 years only thing that is valuable is your share of land. From my personal experience and discussion with several of my friends who own apartment i understood that a 1500 sq ft apartment would mean that you get an undivided share of 600 to 800 sft (depending on project having open amenities like garden , swimming etc) . So the valuable portion of what you have invested in an apartment is only 800 sft (higher side), which means that when you are investing Rs 2.7 crores towards the 800 sqft of land this translates to Rs 33,000 /sqft in real terms. Now what is expectation of the land prices after 20 years ? Will it be more than Rs 33000/sqft if so by how much more ? i will leave the judgement to you .. If Mumbai was a benchmark i think it is possible that in a city like Bangalore we may have a rate of 33000 Rs in a normal locality of Bangalore after 20 years . So it really is not an investment as there is no returns or returns if at all would be very low !!!
    Also when we consider the practical issue of flats aging and needing to be demolished . Imagine what would be the situation then ? You need to get all the owners together to agree to demolish the building before you can sell the land to another developer . Each owner would have his /her own dynamics so getting all of them to agree to a common terms will be a big challenge. I know this has been done in Mumbai where apartments over 50 years have been demolished and the land sold to new developers , but imagine the hassle of doing this when u are old !
    So what is the practical way out, should one not invest in an apartment at all ? I think it would be simpler to do the following

    Stay in a rented home during most of your working life (say till u are 55) => Lets calculate what this means . Lets us assume you would spend 15k to rent a apartment of your choice(similar apartment to what you can buy) . Assuming rental inflation of 5% each year you would end-up spending 85lakhs over 25 years. This way you always get to njoy the best maintained properties without the hassles of owning it !!! , but you dont own any asset :) . Yes that is a downside but upside is that you have only spent 85 Lakhs as against 2.7 crores , so you still have 1.9 crores in net savings as opposed to a home purchase !.
    Now when it time to retire i think of 2 real options => Move to another city (tier-2 or tier-3) . Remember that 25 years down the line most cities will have all infrastructure that we will take from granted in a major metro cities , so moving to tie-3 town does not mean you are compromising on any thing at all in terms of life style , but yes properties there will be much more lower prices than the major cities. So buy an apartment with your corpus of 1.9 crores ...

    Second option would be to continue to stay in rented home , but of lesser requirements i.e move into a 1 bhk instead of 3 bhk now . Anyways kids will not be around then
    I am sure these options may be sounding outlandish and too idealistic , but what am trying to highlight is that your 90 lakh apartment is not an investment !!! At best it is a way of saving money up for long term. The same objective can be achieved by putting money into stocks, fixed deposits over a long time. To give you the prespective , it is believed that over long term 20-25 years equities offer 10 -15 % returns thus instead of investing into an apartment you can save up a bigger corpus from the same money spent towards EMI. I can understand the emotional angle to own a house is also there but my point is that we should never mix up the emotional parts and the financial parts. Purely from financial point of view i think buying an expensive apartment (90 lakhs +) is akin to buying a lottery and hoping that you make much more than what you have paid for !
    CommentQuote
  • Hi
    Greetings

    If job/business 30yrs age is transferable/not stable and objective is planning for retirement. Current take home 80K pm, budget 80 lacs, inhand 30 lacs :

    Pay rent 15-20K for an apartment of your choice/need/comfort and in proximity to your POI/Employment/Business (save on transportation/vehicle maintenance/installment cost) and invest the surplus money in Land/Business/alternate investment.

    If buying land, buy an approved for residential land in proximity of a large city or a small plot inside a big city for 30-50 lacs. Try to avoid loan. Do not hesitate to borrow from friends/family/relatives (atleast one comes to know whom to trust in future and truth about life;))
    With increase in income in future, switch to a larger plot or can undertake a project for builder floors and earn rent or plan to construct for own use and save rent.
    With fall/incapacity/stable income in future, you sleep comfortably as no emi is payable and keep rent within 20% of earning.

    Why not invest in an apartment:
    - It will always become old in terms of technology, facilities, design, specifications, materials, trends, preferences.
    - Structure of Apartments depreciates
    - With time requires regular maintenance & updation expense.
    - Susceptible to the whims and fancies of unethical builders in case of delays by many years
    - Susceptible to missing public infra by authorities causing immense delays ending in situation where both rental and emis are paid
    - Susceptible to terms of super area increase, high maintenance, poor and defective design/inputs, no/less flexibility to change structure in future in accordance with need, escalation clause etc..
    - Susceptible to increase in interest rates (between 2008 and 2012 Prime lending rate was increased 12 times and even after paying regular emis for 4-5 years, outstanding number of EMIs were still the same. All major projects promised to be delivered by 2010 are still to be delivered)

    Why not to take a loan for such an apartment:
    A 20 year loan at current rates mean that for every 10000 EMI paid, 6000-7000 was actually earned for the bank. Why work for banks??

    If one buys 80 lacs property with 30 lacs own and 50lacs finance.
    Installment would be about Rs 50000 (appx 10.5-11%, this can always increase/decrease) and
    Rs 30000 of this is towards Interest payable to the bank!!!
    { some will ask how.. simples;).. Principal amount of installment = 20000pm X 12 months X 20 years= 48Lacs. This is appx equal to the principal amount.}

    Therefore net interest paid over 20 years = 30000X 12monthsX 20 Years = 72 Lacs!!!!

    Imagine for a property worth 80 lacs one is committing 72 lacs as interest to the bank!!!
    Imagine if builder increases super area by 10-30%, escalation of 10%.. KAAPOOT!!! Gehna Girwi!!! Missed installments!!! Children not going to best school!!! No Holidays for years at end!! Poor quality of Life!!! Old trouble making Car!!!

    30-50 Lacs Plot after 20 years will have grown enough. At least enough to buy an apartment that costed 80 lacs initially.. and without the hassles highlighted above...try it.. it works.

    Cheers
    CommentQuote
  • Originally Posted by rbhalla
    Does this mean one should always go for plots or builder floors over the apartments, given the fact that it has large maintenance cost attached and the structure of apartment depreciates once it crosses a certain period or age.

    I wonder how the apartment structure is demolished and reconstructed , say it has become very old say 40-50 or 60 years old. Are there any concerned laws or specific guidelines related to it. How does everyone come on the same page to attest that now is the time to completely renovate it.


    Hi
    Greetings

    If your job/business is not stable or ever changing in position/location, buying a flat and then living in a different city on rent serves no purpose. Your apartment many not be well preserved or utilised in case you rent it out. Returns are hardly 2-3 % out of rentals.
    Maintenance expenses eat out these small returns. The building if not properly maintained soon goes out of shape. If construction is not good, seepage, wear, cracks appear, exterior weathers out, lifts become a regular problem, water and sewerage has to be regularly maintained..

    In such case plot works out best as you pay only for the land (Normally 40-50% of cost of equivalent flat on basis of eligible FAR or construction area entitlement), Flexibility to build Flats/House/collaboration, when convenient in terms of time, resources, favourable credit terms, development of the area around the plot, low maintenance. Max construct boundary wall with a gate or allow a dhobi to make a hut to ensure people dont use it as a dumping ground or worse gets encroached on. Appreciation of plot moves in line with the general market and normally higher than apartments, given lower input.

    In future, if income increases, build your own floors in 9 months flat under "self certification scheme" rather than buying an apartment and keep waiting endlessly for many many years in the wait for license, EC, Construction, Occupation Certificate and 100s of uncertainties tagged with unethical builders. The biggest attraction about apartments is the common areas, which builder do not develop, handover part possession, charge exorbitant maintenance and/or poor service, low greens, never sign deed of declaration in the name of RWA for many many years .

    Besides when you build on your own plot, you are assured your money is in your own hands. The builder is not using your credibility and siphoning your funds for expansion of his own land bank. You make your own profit, own loses, own design, own mistakes, hire good contractor with proven track record, good architect for functional and spacious buildings etc.

    I guess your second question is appropriately answered by the Haryana Apartment Owners Act 1983

    2. Disposition of property, destruction or damage. –If within sixty days of the date of damage to or destruction of all or part of the property it is not determined by the association of apartment owners to repair, reconstruct or rebuild, in that event:-
    (a) the property shall be deemed to be owned in common by apartment owner;
    (b) the undivided interests in the property, owned in common which shall appertain to each apartment owner shall be the percentage of the undivided intrest previously owned by such owners in the common areas and facilities;
    (c) any encumbrances affecting any of the apartments shall be deemed to be transferred in accordance with the existing priority to the percentage of the undivided interest of the apartment owner in the property as provided herein; and
    (d) the property shall be subject to an action for partition at the suit of any apartment owner in which event the net proceeds of the sale together with the net proceeds of the insurance on the property, if any, shall be considered as one fund and shall be divided among all the apartment owners in percentage equal to the percentage of undivided interest owned by each owner in the property after first paying out, all the respective shares of the apartment owners to the extent sufficient for the purpose and all charges on the undivided interest in the property owned by each apartment owner.


    Hope that helps.

    Cheers
    CommentQuote
  • Plot vs apartment

    Hello, i would like senior's suggestions regarding below,

    I have a 260 sq yd plot in HUDA sector 57 gurgaon, to the best of knowledge its market value is 70 k/yd.

    This is an investment only, i stay in a self owned house in Delhi.

    Shall i sell this plot and re-invest in some GCX multi apt project for gaining on some rental or should i keep this plot as an investment?

    Basically i'm in a bit of dilemma land vs apartment.

    Kindly advise.
    CommentQuote
  • Dear senior members BlessU, ManojA, request you to kindly sort out my query.
    CommentQuote
  • Originally Posted by Iris911
    Hello, i would like senior's suggestions regarding below,

    I have a 260 sq yd plot in HUDA sector 57 gurgaon, to the best of knowledge its market value is 70 k/yd.

    This is an investment only, i stay in a self owned house in Delhi.

    Shall i sell this plot and re-invest in some GCX multi apt project for gaining on some rental or should i keep this plot as an investment?

    Basically i'm in a bit of dilemma land vs apartment.

    Kindly advise.


    you should keep this plot for future use, rental return from apartment can't match land investment in long run. It would be silly if you sell it for rental return.
    CommentQuote
  • Originally Posted by tgupta
    you should keep this plot for future use, rental return from apartment can't match land investment in long run. It would be silly if you sell it for rental return.

    Not entirely true sir. Let us try to see if it makes sense by taking an example.

    Current price of land: 70k per sqyd
    If I consider 12 percent increase per year
    After 3 years price will be: 98345 k per sqyd approx
    So total profit after 3 yrs = 98345X260 - 70000X260 = approx 74 L
    If he sells land now and buys two RTM properties.
    Say CHD 71 1621@ approx 6000 psft and Tulip orange 1137@6400-6500 psft (I have taken examples to approximately match net value of his sale of land for these purchases)
    After 3 years, assuming 12 percent increase every year, CHD 71 rate = 8430 psft
    For Tulip = 9132 psft
    So, total profit = 2430 X 1621 + 2632 X 1137 = 40L + 30L = approx 70L
    Now, if you consider rent for 3 years for RTM properties = approx 35K per month
    so, after 3 years = approx 12L
    So, RTM properties will fetch 70L + 12L = 82L
    I haven't even considered tax benefits of RTM for a salaried individual.
    All calculations are just approximate and we have considered a healthy growth rate for both the properties. But I just wanted to give an example that it is not entirely true that land fetches better returns over apartments. On the contrary, land prices have been quite stagnant since last 3 years or so.
    Now if you consider much longer run say 15-20 years. Then it is more of a guessing game on which will rise faster and no one can guarantee anything.
    CommentQuote
  • Have u considered const few floors on the plot and gv it on rent?
    CommentQuote
  • Originally Posted by BlessU
    Hi
    Greetings

    If job/business 30yrs age is transferable/not stable and objective is planning for retirement. Current take home 80K pm, budget 80 lacs, inhand 30 lacs :

    Pay rent 15-20K for an apartment of your choice/need/comfort and in proximity to your POI/Employment/Business (save on transportation/vehicle maintenance/installment cost) and invest the surplus money in Land/Business/alternate investment.

    If buying land, buy an approved for residential land in proximity of a large city or a small plot inside a big city for 30-50 lacs. Try to avoid loan. Do not hesitate to borrow from friends/family/relatives (atleast one comes to know whom to trust in future and truth about life;))
    With increase in income in future, switch to a larger plot or can undertake a project for builder floors and earn rent or plan to construct for own use and save rent.
    With fall/incapacity/stable income in future, you sleep comfortably as no emi is payable and keep rent within 20% of earning.

    Why not invest in an apartment:
    - It will always become old in terms of technology, facilities, design, specifications, materials, trends, preferences.
    - Structure of Apartments depreciates
    - With time requires regular maintenance & updation expense.
    - Susceptible to the whims and fancies of unethical builders in case of delays by many years
    - Susceptible to missing public infra by authorities causing immense delays ending in situation where both rental and emis are paid
    - Susceptible to terms of super area increase, high maintenance, poor and defective design/inputs, no/less flexibility to change structure in future in accordance with need, escalation clause etc..
    - Susceptible to increase in interest rates (between 2008 and 2012 Prime lending rate was increased 12 times and even after paying regular emis for 4-5 years, outstanding number of EMIs were still the same. All major projects promised to be delivered by 2010 are still to be delivered)

    Why not to take a loan for such an apartment:
    A 20 year loan at current rates mean that for every 10000 EMI paid, 6000-7000 was actually earned for the bank. Why work for banks??

    If one buys 80 lacs property with 30 lacs own and 50lacs finance.
    Installment would be about Rs 50000 (appx 10.5-11%, this can always increase/decrease) and
    Rs 30000 of this is towards Interest payable to the bank!!!
    { some will ask how.. simples;).. Principal amount of installment = 20000pm X 12 months X 20 years= 48Lacs. This is appx equal to the principal amount.}

    Therefore net interest paid over 20 years = 30000X 12monthsX 20 Years = 72 Lacs!!!!

    Imagine for a property worth 80 lacs one is committing 72 lacs as interest to the bank!!!
    Imagine if builder increases super area by 10-30%, escalation of 10%.. KAAPOOT!!! Gehna Girwi!!! Missed installments!!! Children not going to best school!!! No Holidays for years at end!! Poor quality of Life!!! Old trouble making Car!!!

    30-50 Lacs Plot after 20 years will have grown enough. At least enough to buy an apartment that costed 80 lacs initially.. and without the hassles highlighted above...try it.. it works.

    Cheers




    Originally Posted by BlessU
    Hi
    Greetings

    If your job/business is not stable or ever changing in position/location, buying a flat and then living in a different city on rent serves no purpose. Your apartment many not be well preserved or utilised in case you rent it out. Returns are hardly 2-3 % out of rentals.
    Maintenance expenses eat out these small returns. The building if not properly maintained soon goes out of shape. If construction is not good, seepage, wear, cracks appear, exterior weathers out, lifts become a regular problem, water and sewerage has to be regularly maintained..

    In such case plot works out best as you pay only for the land (Normally 40-50% of cost of equivalent flat on basis of eligible FAR or construction area entitlement), Flexibility to build Flats/House/collaboration, when convenient in terms of time, resources, favourable credit terms, development of the area around the plot, low maintenance. Max construct boundary wall with a gate or allow a dhobi to make a hut to ensure people dont use it as a dumping ground or worse gets encroached on. Appreciation of plot moves in line with the general market and normally higher than apartments, given lower input.

    In future, if income increases, build your own floors in 9 months flat under "self certification scheme" rather than buying an apartment and keep waiting endlessly for many many years in the wait for license, EC, Construction, Occupation Certificate and 100s of uncertainties tagged with unethical builders. The biggest attraction about apartments is the common areas, which builder do not develop, handover part possession, charge exorbitant maintenance and/or poor service, low greens, never sign deed of declaration in the name of RWA for many many years .

    Besides when you build on your own plot, you are assured your money is in your own hands. The builder is not using your credibility and siphoning your funds for expansion of his own land bank. You make your own profit, own loses, own design, own mistakes, hire good contractor with proven track record, good architect for functional and spacious buildings etc.

    I guess your second question is appropriately answered by the Haryana Apartment Owners Act 1983



    Hope that helps.

    Cheers



    Got my answer, thanks a ton.
    CommentQuote
  • If only money the standard of living is much higher in aparments and well maintained. The get along feeling and safety is unmatched. Know of people who live in apartment and will not leave apartments at any cost and will only invest in apartments. Apartments are easy to sell as compared to plots not many buyers same deal goes on for years. Money is not the only consideration in life.
    CommentQuote
  • Originally Posted by Iris911
    Hello, i would like senior's suggestions regarding below,

    I have a 260 sq yd plot in HUDA sector 57 gurgaon, to the best of knowledge its market value is 70 k/yd.

    This is an investment only, i stay in a self owned house in Delhi.

    Shall i sell this plot and re-invest in some GCX multi apt project for gaining on some rental or should i keep this plot as an investment?

    Basically i'm in a bit of dilemma land vs apartment.

    Kindly advise.




    Originally Posted by ADIT11983
    If only money the standard of living is much higher in aparments and well maintained. The get along feeling and safety is unmatched. Know of people who live in apartment and will not leave apartments at any cost and will only invest in apartments. Apartments are easy to sell as compared to plots not many buyers same deal goes on for years. Money is not the only consideration in life.



    As noted, Iris911 is keeping this as an investment only, apartments are constructed asset, the appreciation observed is mainly due land app of that area and partly on society, rwa, upkeep, etc. Gradually the construction will depreciate with approx life span of 30 odd years.

    Plots are much easier to maintain and are hassle free investment ( provided the title is clear, etc).
    CommentQuote
  • My friend if u are born in 1983 and you are 31 years after 30 years u would be 61 years...ha ha planning for what my friend .......so plan for next 5 years after that god knows
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