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MODERATOR:
Hello and Welcome to the webchat with Gulam Zia, Executive Director, Knight Frank on whether one should invest in real estate in the current scenario
GULAM ZIA:
Hello!
Disclaimer: We will refrain from giving any project recommendations.
SIRISH
I have bought an under-construction apartment in Noida (NCR) purely from an investment perspective. The possession is still a couple of years away. What is the broad outlook for prices in that region? My purchase price was around Rs 3,800/sq-ft. Would you advise exiting this investment over the next six months?
GULAM ZIA
Prices in that region have remained more or less flat. In a few location/projects there has been a downward trend due to environmental and land holding issues. This side of NCR has always remained a end-user market rarely giving super returns to investors. Going forward too we don't see much movement for next year or two. So may want to sell only if in dire need of money, else please hold on.
ARNAB
Hi, I have 2 properties in New Town Rajarhat, Kolkata Action area 1 bang on the main road (close proximity to IT offices in Sector V & New Town). Both are 3 BHK of around 1450 Sq Ft each. I bought them as investments in 2004. A lot of development has already happened since then. Metro rail is also underway. I would like to know whether I should hold on to them or sell them. What could be a proper valuation of these flats now? (Eastern High Apartments & Millenium Towers)
GULAM ZIA
We believe that the worst is over for Kolkata. Last few years has seen improvement in civic amenities and infrastructure. Action Area 1 has been the better and well connected locality in the New Town. Current prices in such buildings as you mentioned are touching Rs 6000 per sqft, of course exact price depends on a proper valuation which can't be done on this platform. I believe you should hold on to it till infrastructure improves further, say another year or two.
INDRANEEL GHOSH
Hi Mr. Zia, Are we looking at a price increase in the Sarjapur Outer Ring Road area for residential property prices? Prestige Jade, Assetz East Point, Rohan Iksha properties are coming up in Bhoganahalli Area. How are they justifying pricing at INR 6500/sq ft, INR 6200/sq ft and INR 5100/sq ft. Why so much of difference? Are prices expected to be stable or is it likely to go up in next 12-24 months?
GULAM ZIA
We see new location in North and West of Bengaluru fast emerging and challenging the monopoly of East and South-east of the city. Sarjapur Outer RIng Road has seen huge real estate activities for a long time now. Still a better market compared to the rest of the city. However, buyers are exploring options in Hebbal, Yeshwantpur, etc. Difference in specific project prices may be justified with differences in amenities, product specifications, developers branding, etc. Prices are expected to remain almost stable. We predict a yearly growth of 5 to 7% in the city, which mean negative inflation adjusted return.
INDRANEEL GHOSH
What are the prospects in C.R. Park, New Delhi area? Property prices have dipped almost 20-25% in last 1 year. Is it expected to go up?
GULAM ZIA
Whole of NCR is going through a severe crisis with sales dipping to all time low. This has a detrimental effect on prices. It is the same all across. Going forward, at least for next year or two, we may see the prices softening further. Not before next three to four years do we expect markets to bottom out and only thereafter may you expect any upward movement.
RAHUL
There is such a huge inventory of unsold flats. Even then, the prices of flats are not coming down. Why?
GULAM ZIA
Inventories look huge only if you compare it with current sales figures which are at an all time low. Imagine, who would have believed that the Delhi market will sell under 25,000 apartments against the normal sales on around 100,000 homes. That said, the low sales figures have pushed many a developers to bring the prices down. However, a big challenge for builders is how to reduce prices in a project where they have already sold few to others at a higher price. This compels them to offer lower prices on their new launches. Even the half sold buildings will see the price correction in near future.
SAMARTH
Hi I am from Jaipur , would like to do some investment in Property purchasing. Please let me know whether this is right time or should I wait for some more time?
GULAM ZIA
You should hold on. The markets are going through serious turmoil and as in investor you may expose yourself to avoidable risks. You may want to look at other asset classes instead of real estate.
RUCHI MEHTA
We have recently purchased a residential unit in Gurgaon. Though the cost of the property is more than Rs 1 crore, the rentals are abysmally low. What could be the reason? Is this a pan-India anomaly or could this be this a location specific issue?
GULAM ZIA
Rental returns all over the country, with rare exceptions, are 3% or below. You may get better returns only if it is a location where rental housing demand is far stronger, like around some IT/BPO office areas. Gurgaon of late has seen huge increase in housing inventory while the demand for rental housing has remained lower. SO the markets may see sustained pressure on rental returns in times to come.
SANDEEP RAI
My flat is nearing completion. However, there are a number of things mentioned by the builder in the buyer agreement but the builder is not delivering despite repeated reminders and talks. As a result, we stopped making payments / EMIs. The builder has now levied an interest on the overdue payments but has not yet delivered on the items he promised to install before handing over the flat to us. Is there any recourse for us? We have even threatened to sue the builder as it is our hard earned money that has gone into buying this unit. Please advise.
GULAM ZIA
Existing real estate practices are more favorable to a developer. Buyers have little choice when it comes to taking them head on. Unless a sizable group of buyers come together and challenge the malpractices, very little can be done. Most of the buyers fear of further victimization in case of direct conflict. The legal process is too lengthy to gain something encouraging out of it. The answer to all of it lies in a strong real estate regulation act, which unfortunately is still lost somewhere in the power corridors. So the home buyer like you may have to suffer for some more time.
KK NAIK
Hi,I have a property in Vatika Iris, Sector 82 ,Gurgaon. I want to sell it and purchase an apartment in Bangalore. Is it the right time to sell the apartment in Gurgaon or should I hold on for some more time? I have time till 2022,ie the period when I retire.Thanks
GULAM ZIA
Delhi house markets are going through a severe crisis situation. There are very few buyers and the property prices are on a free fall. You may want to refrain from selling your property unless in a desperate situation. Further, investing in Bangalore hasn’t given buyers super returns so far as it is a steady and matured market that doesn’t grow like Mumbai or NCR. SO, if you can, please hold on and review the situation in NCR after 3 to 4 years to see if you are getting good appreciation.
SID
Hi, I'm an NRI and wish to invest in the property market in India, preferably in cities like Indore or Bhopal. Do you think now is a good time to invest with an intent to either rent it out or sell off at a profit in 2-3years timeframe? Secondly, if yes, then could you suggest good properties that I can go for? (ticket size INR 50lacs to 1Cr, although I can stretch if a good deal comes by). Happy to provide more details on my requirements if needed. Thanks and regards
GULAM ZIA
Current real estate markets don’t make any sense to enter as an retail investor. Buying an apartment or two, even if it is Bhopal or Indore, will give you rental returns under 3% per annum and the price appreciation possibility would be not more than 5 to 8% per annum. Inflation adjusted returns can even be negative. It may make sense only if you buy an under-construction property and expect some respectable returns. However, such returns are directly related to the development and marketing risk that you would expose yourself to. My apologies for not answering the second part of your question, as it may sound like us promoting one project or the other. Further, it is not good to get into specific suggestions unless your requirement is clearly understood.