Pages

Friday, November 19, 2010

On sector 78 NOIDA flat booking

Hi buzz.

Since you are saying you want to buy for own use, the only thing which should influence your decision should be - what can you afford? Are you financially able to make this EXPENDITURE?

For own living, a flat is an expenditure, not an investment. It has to be close to your work place, have decent schools and shops, have good traffic and a decent neighborhood.

I dont know your personal background, but Sector 78 etc are not so well located and essentially belong in the "affordable" category. They dont have the best of everything.

Secondly, poorer quality builders are more frequently found in the "affordable" category. These builders are more likely to cheat, to go slow, deliver substandard construction and also for total abandonment of the project.

Since you are planning to make the biggerst expenditure of your life, going slow is a virtue. Your best option and also for everyone in the 78 and surrounding projects, is to wait for 1-2 years and see which one is nearing completion and quality looks good. Buy in a resale, before registration, but shop around with brokers for 1-2 years to get the hang of the way things work, so that you buy the best possible flat for yourself.

Making a booking in a "prelaunch" etc kind of situation is for RE investors and should not be the modus operandi for an end user. This is for high risk high reward kind of investors and not for people stretching themselves on loan to buy a home for themselves.

MM and SBajaj and others may have made multiple bookings, but none of them are for own use - they are for resale to people like you. They take the risks so that people like you can buy without risk - but they make a profit in the bargain while you pay for safety. They take the risk that job market might collapse and prices of flats dont rise. They take the risk that the builder defaults or gives substandard product. They take the risk that they may not be able to sell the flat for various reasons. Why should you take this risk needlessly? You are making an expenditure and it should be risk free.

Trying to do both together is not advisable, unless you can afford to do so - i.e you have a big salary and dont mind living on rent for prolonged periods and can afford to pay both rent and EMI - in which case, sector 78 is anyway not for you. Killing 2 birds with one stone means you stick to the best builders like 3C or logix etc for new bookings and have enough financial muscle to last rhough extended staying periods. It is unfortunate that a lot of people mix their investment and expenditure.

Just like insurance - it is an expenditure and mixing investment with expenditure is silly. And yet almost every insurance policy is sold as investment - and every flat is sold as investment - which actually affects one's judgement and proper selection.

So yes, I would definitely urge you to only buy nearly constructed flats, before registration and after due diligence. New bookings are risky and not worth it.

Yes, there is some loss of choice in taking over a booking, but not much - almost all projects have investors booking the best and choice flats only, because they know they can get a better price for it. So you will get your choice, provided you pay a few lakhs extra - which is worth it.

Negotiation and timing are the key things - and if you plan to live in a flat for 10-20-30 years, spending a lot of time and effort in selecting the best is well worth it.

Vikky, your idea - buy plot, target flat, sell plot and buy flat is excellent. Lots of people I know have been doing that

Arihant, your concept of buying a flat as insurance is also a good idea. While term insurance is a necessity for many, for those who can afford, flat is a good partial replacement for insurance. While insurance premium is a dead loss expenditure, you can turn a "insurance like" purchase of a flat into a good investment.

For this, I assume you currently rent a flat close to work but want to buy close to where relatives live.

That makes it basically an early retirement flat purchase.

You can exercise options of early retirement, shifting your job near where you want to live, getting an easier job there and finishing substantial part of repayment early in your life.

There are some caveats.

1. If you are younger than 30 and have no children, it is better to wait. Expenditures tend to bloat with Children - and salaries tend to rise a lot between 30 and 40.

2. If you are 35-40 or so, its the right time. Your ultimate peak salary is probably close to where you already are and family/children's requirements will be clear

3. If you buy too early, you might under buy - instead of a 3-4BHK which is ideal for final settling, you buy a 2BHK which you will later have to sell for the better house. Also, you will tend to buy with poorer quality builders because of cost effect - and these dont last 20-50 years (usual post retirement period which you should budget for)

4.A retirement house is actually the first purchase you should target before making other arrangements for children's education and marriage.

Location: Close to your relatives

Builder: if its your retirement home, you should buy a ready built flat. Since you are buying this as "insurance", you want to transfer an asset and not a risk. The risk is already there (untimely death). You should buy on a loan a property close to relatives and take out a loan insurance in case of death.

Buying a booking means you actually transfer a liability and not an asset. You multiply your risk. You are adding to risk of death, builder default risk, EMI risk, "living on rent while all your money is locked up in under construction flat" risk - thats not what you want to do.

A good compromise would be an almost finished flat. Then you can "risk it" that you will live for 1 or 2 years and get possesion.

Unfortunately, you wont get anything for your 25L without heavy compromise.

Is that 25L already with you or is that your loan amount? And how old are you? And how many children do you have - boys or girls or what? What kind of job are you in? How safe, what field? How much is your current rent and what percentage of salary is going out on rent? Where are you currently located?

There are so many unknown factors. Without taking all that into account, one cannot say anything

[QUOTE=pravinchaudhary;126900]Hi Venky,

Sector 78 is very far from NE, leave alone crossings. After 3 years, people will access 78 thru Dadri road. An operational (not proposed) SEZ is very close by. [/QUOTE]

I have visited 78 and the SEZ. I know where the place is.

What people are not seeing is

1. Sez will provide very low salary employment. People planning to live in 78 are actually higher income people currently working in NOIDA.

2. There are only 3 roads in future which will go from main NOIDA to 78.

3. The currently existing road is too small to handle traffic from main NOIDA to NE and 78 - and also all the developments in 120/1 etc as well. There is likely to be a lot of Crossings to NE, Crossings to NOIDA and Crossings to 78/SEZ traffic which will make commuting difficult from this side.

4. Dadri road is also very congested and cannot handle so much traffic. If GN expressway is tolled, a lot of traffic will shift to Dadri road - which currently take the longer GN expressway route because it is such a smooth drive

5. Commuting from 78 to main NOIDA and the expressway, where newer IT jobs will come up, will be tiring and hectic. There are only going to be 3 routes for going from 78 to main NOIDA/expressway and all 3 will be congested.

6. FNG is meant for truck traffic and it will be unpleasant to drive with trucks. It will not lead to where people buying flats in 78 will want to go for work.

If a place is disadvantageously located, only the people who have no choice - i.e. those with less money - are going to buy. That makes 78 a lower income/affordable section housing area. No matter how many wide sector roads get built in 78, the main link to NOIDA and through that to Delhi is going to remain just 3 bottle necked and congested roads.

Those thinking otherwise are making a mistake. Buying a premium flat here makes sense if you work in SEZ or nearby and not for main NOIDA. And if you will be happy for your children to take up SEZ jobs - again that indicates lower middle class only

Try driving in NOIDA between 10 and 11AM and you will know what I am talking about. Office will not change its timing to suit the traffic congestion. Vice versa actually.

In GN also, the best projects might now shift to the expressway and Yamuna eway and the adjoining GN areas on other side of FNG might turn into poorer quality/disadvantaged locations

Tuesday, November 16, 2010

On plot price movements in Gurgaon and NOIDA

I dont think Gurgaon and NOIDA plot prices will match Delhi prices in 10 years.

Plots in GGN and Noida are mostly in the hands of investors and are not being built upon. This trend will continue for at least 15 years.

Delhi plots are already built and in most cases re-built as builder floor. Prices upwards of 3L plus psy - GGN and Noida max 1-1.5L psy in best areas.

As GGN and NOIDA appreciates, Delhi will also appreciate in line to maintain difference.

After 15 years I expect DLF rates to be same or similar to South Delhi, after good amount of end user construction. Maybe will take even 20 years.

10 years is too small a time frame for this to happen.

People with plotted house in GGN are not happy - security is poor and water electricity and road woes.

People are selling kothis and moving to posh apartments - putting a cap on the plot price.

For plots in GGN and NOIDA, HUDA/NDA plots will not have as much value as Jaypee/Vatika etc who have integrated township plans. Only those plots will command premium because they are part of township and problems will be properly solved.

More and more people are going to abandon the Kothi style of living for apartments in Delhi as the advantages become clear over the next few years.

Building own Kothi in own plot is anachronistic and will die down. It came up in 60s and persists till now in Suburban USA because land was very cheap and abundant in USA and promised a good life.

In India, apartment life will be found to be better than kothi (kothi is not exactly a villa though called villa - our so called villa is very different from the Western concept of villa which has ample garden space >4-5 times built up space).

Still, plots in GGN and NOIDA will appreciate better than flat - so worth investment