Thursday, December 15, 2011

"Kitana deti hai ?"

An investment in knowledge pays the best interest. ..Benjamin Franklin.

We are in December & the New year is on the edge now! There is so much to discuss,speak about the various aspects of the growth of this very city that how a year has passed I really didn't noticed but kept writing on this blog!

Recently saw an advertise series on TV , in one of the ad a guy has been shown explaining NASA rocket to bunch of Indian tourists & at end of his small speech, an Indian Tourists asks casually
" Kitna deti hai?" obviously stunning the NASA guy with the question, as this question is about average of the rocket! Moral of the ad was our country is obsessed with mileage of a vehicle & not any other quality it has. Come to real estate & one question haunts every person who is looking for the investment opportunity in the segment & that is " Next year how much will be the rate here?"

Now here the quote of Franklin come in to the picture as no one is interested in investing in knowledge but wants direct result. Investing in knowledge means get the information about the real estate! Many a goes by the stories like "Gold rush" in USA in early 20's where all are thinking the investment just get doubled in some six months in real estate! Well unfortunately its true in some cases but not in most is a fact! One needs to take a close look the way city has grown in past few years & study the pattern of this growth & then should decide how much & where & why you are investing in real estate.

Remember flat,shop or piece of land is one of the costliest investment at any time in compare to other commodities like shares or gold which you can buy in smaller quantity. That option isn't here as you can't buy just one room or few sq fts as per your budget. Rather in our country most people buy home one time in their life span & that what makes its a good investment option, as demand is the key! If on one hand increasing population of our country is a curse on other hand it acts as a boon to real estate. Land we can't create so the more population grows the more scarce land is going to become is a fact. If we observe the last decade, urbanization is a reality & which is going to stay. More & more people are & will be migrating from smaller places to bigger towns, making Towns as Cities & Cities as Metros! In this process one factor will be vital, the city which will offer more jobs & better living standards will have maximum preference. And here on this front Pune is on top of chart in our State!

Now we have to look for the options the city offers for real estate investment.
First of all we have to decide the time span for which we want to invest as well the budget. As in any investment its always better to enter at lower end to get maximum returns. But at the same time we should know that real estate is one of the most unorganized sector in our country so we have to choose real carefully with the people with whom we will be investing. So personally speaking I will give maximum weightge to the pay degree of the developer or builder or the persons from whom you will be buying the flat or piece of land. rather again my personal view is if you are not in real estate development line by yourself then stick up to buying flat/office or shop instead going for a raw piece of land. Here many will judge my opinion but day by day its difficult to maintain a open piece of land is a fact. Its not only physical encroachment but legal encroachments also from which one has to protect the land. Legal encroachment means changing of bylaws or zone or reservations about the land. For eg the current issue of BDP i.e. bio diversity park over the hill top hill slope zones. There are hundreds of cases where when common men have bought small piece of lands few years back thinking of good investment near by city or even for building their own home & now the whole lands has been in jeopardy of making it no development zone or minimum FSI like 4%, making its value far below than what these people might have expected. Similar things happen about road widening as when you buy you may feel its adjoining to existing road & the in regional or development plan the road gets widened & you found your piece of land has gone under road widening! Agreed there is TDR value but its a long process for a common man to get the TDR! So unless you are not in day to day touch position with your piece of land physically as well legally its better to go for something which you can keep in lock & key & ready to use form like a flat! Though one can always think of some thing in plotted sanctioned lay out from competent authority like Municipal Corporation of Collector! There its much safe game. But then the price of investment is obviously higher here.

Once we have zeroed down about going for built in thing then the search mode should focus on time span. Never go for the short cuts is the first principle as in real estate look for minimum of 3- 5 years time span which is ideal to ripe the investment. I haven't yet come across a person who has invested in buying a flat or shop & after 5 years he thinks he has wasted his money! Again in investing flat or row house is ideal option as when you go for buying the shop, the developer has all ready charged the premium on it so you mostly enter at high end. Still look for the kind of growth potential in the neighbouring area & choose the size as well location of shop. In our city mostly only the shop fronting to main road & at ground floor fetch good premium rate is a fact & keep it in mind choosing the one. Big sized show rooms often find difficult for takers latter on & only if you are ready to wait a bit long of looking for giving it rental on long lease then only serves good.

Flats / Row houses if budget permits are the safe bait in compare to any other option. Here don't just look for the rent they will offer as that equation will never match ,rather look at the rent as bonus as your basic investment keeps growing with each passing year & yet you keep on getting some rent as incentive. While selecting residential options look for the trend of growth & rates varied in adjoining suburbs. Rates are bound to go reducing as you go away from city center but its not always true like in Baodhan rates are higher than Bhusari colony or in Baner higher than some part of Aundh Gaothan. Its the physical as well social infrastructure around that decided the demand of any particular area & which in end decides the appreciation in that area. Many a times in our country we find buildings get developed first & infrastructure like roads, water, drainage follows later. So don't just go by the present scenario but make one thing sure that what ever building you have been choosing has a legal/ official road existing to reach the same. As that's one thing which after making no developer can guaranty about making the same.

Similarly take total information of surrounding development as today's open plot adjoining may be tomorrow's reservation which may affect the price of your investment. And this information you can easily get by asking few questions around at proper places & that's why its very important to choose proper developed who will not only provide you a brouture of his own project but will give you detail & true information of surrounding also.Usually a two BHK flat is best for selling as well for rentals as that size has been always in demand is a track record. Three BHK is better if you what to keep both option i.e. selling your existing home & shifting to new one. One BHK is best for sole selling purpose as rent isn't a much attractive issue here.

About selecting location see the way surrounding suburbs have developed in recent past & pattern of their growth i.e. what kind of constructions have come up there. The areas who offers jobs & eduction facilities are the best potential for real estate growth as people prefer to live near by the work place & in most cities especially in Pune public transport is weak naturally all are depending on private transport,so to avoid time in travel people choose near by destinations. That's why at Nagar road first the IT hubs grew & the the residential a growth followed which in turn attracted shopping malls type development & hotels. Similar pattern is being seen on western suburbs around Bangalore-Mumbai by pass as Hinjawadi infotech park lots of educational institutes & PCMC industrial area is on this side of city. Most of the time its seen that any city grows towards the bigger city adjoining to it. Its natural phenomenon, see Nagar, its growing more on Pune-Aurangabad stretch than Kopergao-Solapore stretch. Aurangabad has grown more on Pune side & so is Kolhapur. With same logic Pune is bound to grow along the stretch of Mumbai-Bangalore way,though it has Nagar & Solapur on East & Northen side respectively.

Frankly when this country's millions of people are homeless & needs home as there first basic requirement , looking real estate as an investment option is on one hand means making the homes costly! But to every bright side is there is dark side too, all we need to do is balance the coin!
Last but least remember the one who can see tomorrow today ,he only can get best returns on investment in real estate! And for that as the quote says knowledge is the key! So go ahead welcome the New Year with best of the investment & be part of this city's growth & beneficiary too!

Sanjay Deshpande

Sanjeevani Dev.

Envo-Power Committee, Credai, Pune

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