Hello Folks - I have a flat in hinjewadi and worndering if pune is a good place for buyinng another property as well. I know that property rates have gone up in the last 5 years in pune, but will the same trend continue for next 5-10 years.
I stay in Hyderabad and appreciation in real estate is not that great here.
So, I dont want to invest in hyderabad.

ANy thoughts ?
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  • Guys,
    Just a thought here! Assuming (and seems correct at this point in time) that Pune RE will appreciate at each location. Looking at next 5-6 years scenario, here is just simple calc with an example:
    Current situation
    - 2 BHK total Cost say 53L (suburb location)...purchased in 2013... rate 4300 sqft
    - Downpay say 15L
    - Loan amount say 38L (EMI Rs 36k)
    - Optimistically you make part pre-payment of total 11L till 2019 (6 yrs)

    Future scenatio:
    - Rate appreciates to Rs. 7500 (very optimistic)
    - Flat sold at 75L
    - Outstanding loan amount at that point would be around 15L (post parepay + Principle from EMI)
    - Thus total Cash in hand would be 75L - 15L = 60L
    - But till date you have paid 50L (DnPay + Part Prepay + Interest + Principle -Rental income for 6 yrs)
    - This means total Profit is 60L - 50L = 10L (21% over 6 yrs)

    Is this really the profit u will expect after 6 yrs?

    If you save this (DPay + Part prepay: 15L + 11L = 26L) in Low Risk Savings instrument, say FD 8%, over 6 yrs, you will have interest of Rs11.5L + If u put equal EMI amount in say risk free RD for 6 yrs, you will earn intest of 9L. So total 20L. Chalo we will deduct max 30% TDS...still u will get Rs 14L as net profit.

    10L out of flat sale V/s 14L from plain FD!! WHat you say guys?
    Does it make ay sense? Or am I wrong somewhere?
    CommentQuote
  • RE is profitable only if yearly RE appreciation beats the rate of interest of loan. A simple formula. So for loan rate of interest 10% - If RE appreciates by 15% every year it is a very good deal. 11 or 12% is no bad deal. Anything less than 10 is actually a bad deal.

    So in your case
    If resale property rate after 6 years is 9500 - very good deal 15%
    If resale property rate after 6 years is 7600 - neutral deal 10%

    Your calculations are wrong anyway. How the hell will anyone pay 50 lakhs in 6 years on things you mentioned?

    1. Do not confuse the calculations with part pre-payment - It is irrelevant here - just assume no part pre-payment.
    2. Interest component is directly deducted from income upto 1.5L - this will straight away save you 45K per year - consider this as well.


    P.S - I am not considering transfer costs here(which you have considered). What I mean is increased transfer costs will hardly provide any profit to you unless property appreciates at least by 15%. But when you are planning to buy for end use (1st apartment) even 10% appreciation is probably worth it.


    Originally Posted by YK2013
    Guys,
    Just a thought here! Assuming (and seems correct at this point in time) that Pune RE will appreciate at each location. Looking at next 5-6 years scenario, here is just simple calc with an example:
    Current situation
    - 2 BHK total Cost say 53L (suburb location)...purchased in 2013... rate 4300 sqft
    - Downpay say 15L
    - Loan amount say 38L (EMI Rs 36k)
    - Optimistically you make part pre-payment of total 11L till 2019 (6 yrs)

    Future scenatio:
    - Rate appreciates to Rs. 7500 (very optimistic)
    - Flat sold at 75L
    - Outstanding loan amount at that point would be around 15L (post parepay + Principle from EMI)
    - Thus total Cash in hand would be 75L - 15L = 60L
    - But till date you have paid 50L (DnPay + Part Prepay + Interest + Principle -Rental income for 6 yrs)
    - This means total Profit is 60L - 50L = 10L (21% over 6 yrs)

    Is this really the profit u will expect after 6 yrs?

    If you save this (DPay + Part prepay: 15L + 11L = 26L) in Low Risk Savings instrument, say FD 8%, over 6 yrs, you will have interest of Rs11.5L + If u put equal EMI amount in say risk free RD for 6 yrs, you will earn intest of 9L. So total 20L. Chalo we will deduct max 30% TDS...still u will get Rs 14L as net profit.

    10L out of flat sale V/s 14L from plain FD!! WHat you say guys?
    Does it make ay sense? Or am I wrong somewhere?
    CommentQuote
  • You are making a mistakes.

    Firstly in FD you are considering putting 15 L + 11 L prepayment .
    Now remember back in 2013 . You didnt had 11 L. You got this over a period of time and hence you cant put that 11L in FD for 6 yrs atleast.
    Insted you can calculate putting 2 L evey yr in FD for period of 5 yrs, 4 yrs, and so on to simulate it.

    Secondly looking at current scenario, a 50 L house turning into a 75 l property will take not more than 2 yrs in developing parts of pune like wakad or P.S.

    So when you are talking about a horizon of 6 yrs , the price to look out is somewhere in 1.2 Cr. ( given how inflation rises in india , its very likely).

    Then you will get the real picture of real estates.

    nyways i still feel RE is a bad choice for investment esp residential.
    it has lots of overheads like SD+ Reg + Vat+ now TDS which eats up your appreciation by almost 10 % .
    Also its too much of hassel to actually get property registered in your name and then to sell it again.
    + the initial investment is huge and investment is illliquid.

    The only incentive for owning a RE for investment is tax benefits and low cost loans for Homes.



    Originally Posted by YK2013
    Guys,
    Just a thought here! Assuming (and seems correct at this point in time) that Pune RE will appreciate at each location. Looking at next 5-6 years scenario, here is just simple calc with an example:
    Current situation
    - 2 BHK total Cost say 53L (suburb location)...purchased in 2013... rate 4300 sqft
    - Downpay say 15L
    - Loan amount say 38L (EMI Rs 36k)
    - Optimistically you make part pre-payment of total 11L till 2019 (6 yrs)

    Future scenatio:
    - Rate appreciates to Rs. 7500 (very optimistic)
    - Flat sold at 75L
    - Outstanding loan amount at that point would be around 15L (post parepay + Principle from EMI)
    - Thus total Cash in hand would be 75L - 15L = 60L
    - But till date you have paid 50L (DnPay + Part Prepay + Interest + Principle -Rental income for 6 yrs)
    - This means total Profit is 60L - 50L = 10L (21% over 6 yrs)

    Is this really the profit u will expect after 6 yrs?

    If you save this (DPay + Part prepay: 15L + 11L = 26L) in Low Risk Savings instrument, say FD 8%, over 6 yrs, you will have interest of Rs11.5L + If u put equal EMI amount in say risk free RD for 6 yrs, you will earn intest of 9L. So total 20L. Chalo we will deduct max 30% TDS...still u will get Rs 14L as net profit.

    10L out of flat sale V/s 14L from plain FD!! WHat you say guys?
    Does it make ay sense? Or am I wrong somewhere?
    CommentQuote
  • +1. But if you have avenues to enter a project as financer (by which you can avoid all such charges) - it is still a lucrative option.

    Originally Posted by Ashishjagani

    anyways i still feel RE is a bad choice for investment esp residential.
    it has lots of overheads like SD+ Reg + Vat+ now TDS which eats up your appreciation by almost 10 % .
    Also its too much of hassel to actually get property registered in your name and then to sell it again.
    + the initial investment is huge and investment is illliquid.

    The only incentive for owning a RE for investment is tax benefits and low cost loans for Homes.
    CommentQuote
  • Originally Posted by tushart
    RE is profitable only if yearly RE appreciation beats the rate of interest of loan. A simple formula. So for loan rate of interest 10% - If RE appreciates by 15% every year it is a very good deal. 11 or 12% is no bad deal. Anything less than 10 is actually a bad deal.

    So in your case
    If resale property rate after 6 years is 9500 - very good deal 15%
    If resale property rate after 6 years is 7600 - neutral deal 10%
    This is valid point! But I don't think area like PS, Balewadi will appreciate so much (4200 to 9500) in 6 yrs

    Your calculations are wrong anyway. How the hell will anyone pay 50 lakhs in 6 years on things you mentioned?
    Here is the calc:
    Assuming that I'm starting the full EMO even during 3 yrs of underconstr phase. Means more EMI amount going to priciple
    thus for 6 yr
    Total EMI towards princ : 12.3L
    Total DnPay : 15L
    Total Part Prepay: 11L
    Total Interest paid : 17L
    This equals: 55L

    Now I'm also deducting following income after possesion (3 yrs)
    Rent : 3.6L (min 10k/month)
    Tax saved: 1.4L
    This equals : 5L

    Means total cost of flat after 6 yrs is 55L-5L = 50L.
    Hope this is clear!

    1. Do not confuse the calculations with part pre-payment - It is irrelevant here - just assume no part pre-payment.
    2. Interest component is directly deducted from income upto 1.5L - this will straight away save you 45K per year - consider this as well.


    P.S - I am not considering transfer costs here(which you have considered). What I mean is increased transfer costs will hardly provide any profit to you unless property appreciates at least by 15%. But when you are planning to buy for end use (1st apartment) even 10% appreciation is probably worth it.
    I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:( I'm also not considering transfer cost. This will be further deduction to profit.:(
    CommentQuote
  • I thought you are considering transfer costs
    53/43 = 1.23
    75/75 = 1.00

    I hope you got my point.

    Originally Posted by YK2013
    I'm also not considering transfer cost. This will be further deduction to profit.:(
    CommentQuote
  • @Ashishjagani:
    Ys dude! I';ve considered this FD tenure as well.
    15L for 6 yr: Interest amount is 9.5L
    5L for 3 yrs:Interest amount is 1.4L
    3L for 2 yrs:Interest amount is 50K
    3L for 1 yr:Interest amount is 24K
    RD for 6 yr: Interest amount is 9.3L
    Total: 20L (without TDS)

    Do u think in 6 yrs PS or Balewadi will appreciate from 53L to 1.2cr???..and then who would be the buyer to buy 2BHK (carpet area of 700sqft) for 1.2 cr...
    CommentQuote
  • Originally Posted by tushart
    I thought you are considering transfer costs
    53/43 = 1.23
    75/75 = 1.00

    I hope you got my point.


    Absoultely.... this is about 2nd home....and profit is considerable only if, as you said, prop appreciates by least 15% per year....which with current prices sounds difficult..

    What say?
    CommentQuote
  • Agree. With respect to 15% increase - it is difficult to happen for majority of the areas/projects and sustain for 6 consecutive years.


    Originally Posted by YK2013
    Absoultely.... this is about 2nd home....and profit is considerable only if, as you said, prop appreciates by least 15% per year....which with current prices sounds difficult..

    What say?
    CommentQuote
  • go for it (2nd flat). Pune has consistently shown 15-20% rise YOY ( key areas). No sign of any hinderance for this growth for next 3-4 yrs. consider hyd also if planning for long term as the real estate will appreciate once political turmoil ( telangana) subsides.
    CommentQuote
  • i have seen one video on youtube about pune development plan for next 20 years , this evil plan made for builders giving them FSI of 4 and more .. so that they can make Pune MEGACITY in world by 2032 .... they are trying to accommodate 2 to 3 cr ppl more in this city .... with this concentric growth only in pune and mumbai ...w.r.t job and business , migration will never stop .... Pune will be 3 to 5 cr population city by 2030 .... you and me can not stop it .... all plans already made .... they want half of Maharashtra to fix in only in two cities pune and mumbai majorly .... we like it or not this will not be virtual appreciation on paper , it will be real physical appreciation ...so i think demand will be always there , it will never go down ,
    CommentQuote
  • @NowOrNever:
    Thanks for sharing. Can you share the UTube URL as well?

    Again, FSI 4.. Megacity..means Supply will increase along with Demand.... but question is ..will the property price go from 53L to 1.2 cr in 6 yrs? Even if it's gone, can ppl buy it (I don't think salary or market condition will increase comparitively). Only businessmen can buy it....and y will they buy tiny 2BHK?

    I know it's very difficult to judge the RE future; but we can think of most likely scenario and save/grow our hard earned income
    CommentQuote
  • HI propertyinvt,
    you have done a great thing buy purchasing a flat in Hinjeadi, Pune.
    I assure you you will get great returns after few years. Considering to buy a 2nd property in pune will be a wise decision, places like Baner, Bavdan, Balewadi near Hinjewadi has got great demand these days.
    I visited a site in Balewadi called "Grandeur", by KBD Group and found it pretty amazing, they are providing all the amenities a good builder provides in the city. Also i have got reviews about the from the local people living nearby.
    CommentQuote
  • i think if in 5-6 years your flat cost hasn't doubled, THEN you've made a bad investment.

    so in those many years the flat should have been sold for at least 1cr. and profit should ideally be 35lakhs...
    CommentQuote
  • Originally Posted by Ashishjagani
    The rent to cost ratio is too nice in pune esp in and arnd hinjewadi.
    You get 1 bhk in 35 - 40 L and gets arnd 10 K per month as rent.


    Mmmm. Not exactly. I think the return on capital appreciation is higher than the rental income accrued from the property acquisition.

    If one uses the example cited to calculate the percentage returns, the number comes up to between 0.25% and 0.3%. Hinjewadi is a good location for monetary returns but one needs to approach it from the right perspective.

    The prospective returns from purchases in select properties, in Hinjewadi are far greater than those earned from renting those properties. A few select projects, like Peninsula Land Limited’s Ashok Meadows, are particularly high potential investment options.

    A premium gated community nestled in the heart of the IT zone, it is set to set a new standard in quality of Pune residential property.
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