Dear readers,
there are two kinds of real estate investors-those who have the money to invest and those who don't. Considering the latter, does Noida present good investment opportunities, considering that such a person would raise all/majority of the investment capital through loans? The present real estate market in Noida is being viewed as a stable one owing to the supply largely meeting the demand and even surpassing it at times. This would cause the rate of appreciation in property prices to be low over the coming few years-an obvious loss-making-scenario for a small investor.I would like members to comment on this analysis of mine.

Another point of concern for an average 'small' investor in the real estate market is the 'rental return' on residential property. What, according to the members, is the standing of Noida in the house-rent market? Is it likely to become more attractive; if yes, then in which sectors of Noida and in which type of residential property.
Read more
Reply
19 Replies
Sort by :Filter by :
  • In this scenario, small investors (those relying heavily on bank loan) have to be extra cautious on builder reputation and location of flat. Once you choose your sector based upon factors like proximity to school, office etc, look which builder has best track record. After selecting the project, choose apartment location very wisely. You might have to wait or pay some extra premium for being specific but do not compromise and do not fall into what broker says and decide yourself.
    CommentQuote
  • Originally Posted by alien
    In this scenario, small investors (those relying heavily on bank loan) have to be extra cautious on builder reputation and location of flat. Once you choose your sector based upon factors like proximity to school, office etc, look which builder has best track record. After selecting the project, choose apartment location very wisely. You might have to wait or pay some extra premium for being specific but do not compromise and do not fall into what broker says and decide yourself.


    I certainly agree with u ....good location of a flat always pay you in future .....I myself had brought a flat in mumbai with out much taking care of the location so had to struggle a bit to sell it off . Its always better to pay extra premium to get a good location ....Regarding investment in noida good projects will pay u premium for sure when they are delivered
    CommentQuote
  • Originally Posted by trueanurag
    Dear readers,
    there are two kinds of real estate investors-those who have the money to invest and those who don't. Considering the latter, does Noida present good investment opportunities, considering that such a person would raise all/majority of the investment capital through loans? The present real estate market in Noida is being viewed as a stable one owing to the supply largely meeting the demand and even surpassing it at times. This would cause the rate of appreciation in property prices to be low over the coming few years-an obvious loss-making-scenario for a small investor.I would like members to comment on this analysis of mine.

    Another point of concern for an average 'small' investor in the real estate market is the 'rental return' on residential property. What, according to the members, is the standing of Noida in the house-rent market? Is it likely to become more attractive; if yes, then in which sectors of Noida and in which type of residential property.



    Investor without money? :bab (34):

    Answer. "YES and NO"

    YES - Buying a property on loan is only feasible if u have enough liquidity to manage 50% EMIs for atleast 5 years.

    NO - if above parameter is not met.
    CommentQuote
  • Buying a propery in Noida at persent rate with a loan is actually a very bad investment.

    There is a post regarding this issue where I have given a very negative view about that.

    Intrests rates are gonna go up significantly in next 2 to 3 years.
    CommentQuote
  • Dear Frnd,

    If you plan to take more than 30 percent home loan then it is not a good idea, infact it will be a bad idea to take home loan and buy a property, especially ready to move in.

    Consider you buy a flat for 50 lacs.( all loan)

    You get a rental income of Rs 10000 per month
    Total income every year= Rs 120000
    Please note there will be some expenses every year to maintian ur property.

    Present market scenario will not let the prices increase for at least 3 years. There is very big supply hitting the markets.
    The intrest you will be paying every year will be around 9 percent . which means u will be shelling out around Rs 450000 every year.

    Net income will certainly be negative. Any appreciation in property price will negated by this intrest cost.
    Unless your property starts apprecating more than 12 percent ( CAGR )every year which is highly unlikely in present market.
    In five years time unless your property prices double, you are unlikely to gain anything if u hve taken loan.

    Regarding tax breaks, there are other ways /investments by which u can reach to the tax exemption limit.

    Investing in property by taking loan in present secnario is not a wise choice.

    However if u plan to invest in new projects , you might be able to see some appreciation if the projects are delivered on time or with a delay of year or two.
    CommentQuote
  • For own use, i.e. to live in it yourself, buy on loan. Chose the location to suit your work, needs and your pocket. Do not call it an investment - it is an expenditure.

    Buying a flat on loan just to rent it out is a bad idea in the current scenario. Its true for anywhere in India, but most especially in NOIDA which is getting oversupply.
    CommentQuote
  • I agree that your home is not an investment, it is actually a expenditure. Loans shall be taken for this purpose.( for staying at house, end use)
    CommentQuote
  • I dont quite agree with digvijay,we all know that there are recurring expenes in a property and it is not a new fact.The point of discussion here is not whether buying a property on loan is worth it or not.Another debatable thing is people tend to cut down their expenditure which otherwise would have been spent in luxury needs.In the end u have some tangible item on which u can rely on for a lifetime.This was something off the topic.According to me investing in noida at present rate is really a nice idea because when we compare delhi with noida the prices are nearly half or even one third so i believe there is a lot of room for upward movement.I dont see the prices comming down at any point of time and according to an article in times property noida land bank is gng to get saturated within3-4 years and then the focus would shift even further to gr noida and even further.I dont see any harm if one has booked a good location and project gets completed in time
    CommentQuote
  • I think i completely agree with Bharat. People are thinking very short term here. The most important point is landbank of Noida, which i think will get over in next 3-4 years once all the new constructions complete. Then the next cycle will start.

    Watever happens in the short term, but i am 101% sure in the long term RE investment in Noida will give you a great return. But invest in a good product. :)


    Originally Posted by bharat204301
    I dont quite agree with digvijay,we all know that there are recurring expenes in a property and it is not a new fact.The point of discussion here is not whether buying a property on loan is worth it or not.Another debatable thing is people tend to cut down their expenditure which otherwise would have been spent in luxury needs.In the end u have some tangible item on which u can rely on for a lifetime.This was something off the topic.According to me investing in noida at present rate is really a nice idea because when we compare delhi with noida the prices are nearly half or even one third so i believe there is a lot of room for upward movement.I dont see the prices comming down at any point of time and according to an article in times property noida land bank is gng to get saturated within3-4 years and then the focus would shift even further to gr noida and even further.I dont see any harm if one has booked a good location and project gets completed in time
    CommentQuote
  • I was wondering what u call a short term and what u consider long term.

    And what are the property prices u are expecting in next five or seven years time or the returns expected in the long term as per you?

    What we were dicussing is investing in noida RE with the help of taking loan.


    Originally Posted by findingnemo
    I think i completely agree with Bharat. People are thinking very short term here. The most important point is landbank of Noida, which i think will get over in next 3-4 years once all the new constructions complete. Then the next cycle will start.

    Watever happens in the short term, but i am 101% sure in the long term RE investment in Noida will give you a great return. But invest in a good product. :)
    CommentQuote
  • long term would be 10 years for RE. The RE cycle of appreciation and collapse is close to 18 years ... what happened in 08 end / 09 beginning was a mild tremor and correction - not the kind of collapse as in the US ...
    CommentQuote
  • I dont know what you are discussing, but i put my comments based on the Thread name "Noida real estate:good investment or bad investment? ". :)

    In my opinion long term could be between 5-10 years in case of Noida. If Indian economy kept growing the way its growing now, with more people moving towards middle class with higher disposable incomes, we can see spike in prices in Noida, specially i feel the eWay projects. There are various reasons for me being more positive on eWay projects.

    But one will get better value only if one has put money in good projects. So dont consider all projects will give you similar kind of returns.

    Its hard to give exact numbers. But, do you know what were property prices in Delhi 10 years back and what are they now. Maybe it gives you few answers.

    Originally Posted by Digvijay
    I was wondering what u call a short term and what u consider long term.

    And what are the property prices u are expecting in next five or seven years time or the returns expected in the long term as per you?

    What we were dicussing is investing in noida RE with the help of taking loan.
    CommentQuote
  • Boom time for RE is over in India...Remember people buying flats atRs20lacs in 2003-4 sold in Yr2008 at Rs 60-Rs70lacs..Such time would never come.
    So, let's talk about incremental gains in property now. Its wellsaid that any appreciation which is giving less than 12%/year is a loss . So, Noida resale 15% every year is impossible in next 5 years looking at current supply situation.
    But we should try to find arbritrage opportunities whenever new project is launched. If you can pay 30-35% from yr pocket, you can make money in Noida RE in newly launched projects ( but it comes with heavy risk). 2 out of every 3 deal is not profitable.
    CommentQuote
  • Its very difficult to judge when is the boom and when are we heading for bust.
    FYI last one year in avg. Chinese RE market has given around 65 percent return. I was also amazed to see such figures.
    In India RE last year the property prices on average has given around 10 percent returns.
    In US RE the returns were negative, how ever the Canada RE clocked postive gains.


    But one should be realistic considering the demand and more importatly the supply situation. There is lot of supply coming to Noida, so the prices are not gonna go anywhere in hurry.

    Paying 10 to 11 percent per annum in intrest cost for a property which might or might now appreciate more than 12 percent is not a wise investment.
    CommentQuote
  • Well main thing is you need to account for all the direct and opportunity costs when identifying the property for investment as you will be paying interest on loan amount, paying house tax/property tax, other maintenance etc. Hence it may not give the return back in short term after getting the possession as the market will get flooded with the supply. So the investor need to make sure that the investment will continue in the form of interest and taxes till he expect some return.
    CommentQuote