[ZenMaster]

The probable reason for the sudden rise in Rents all accross metros is the return of "WORK FROM OFFICE".

This trend of rise in Rents is most prevalent around IT Hubs.

[Hayek]

Very interesting to see how real estate prices in Bangalore (and other IT hubs like NOIDA and Gurgaon) have shot up in the last few years.

The way I think of it is that your own house is your biggest consumption expense - you buy it because you want it and not because it makes economic sense on an Excel Spreadsheet. So if you see a house you like and can afford it, go for it in the here and now - and don’t worry if prices will rise or fall - esp if you are likely to stay in the same City for the foreseeable future.

However, I do worry that some of the activity we see in these threads and in the market is because people have seen house prices double in the last three years. These bidding wars remind me of the Bombay real estate market between 2009 and 2012 - or more broadly between 2004 and 2012 - prices quadrupled between 2004 and 2009, and then more than doubled again by 2012. But since then, at least in central Bombay, prices have flatlined. They fell sharply during Covid but now bounced back to pre Covid levels.

And this is in a city which is fundamentally land constrained due to the sea, hills and national park. Betting on house price increases in excess of inflation in cities with infinite land like Bangalore or NCR seems quite foolhardy. There may be very specific properties with views of Cubbon Park or the Gurgaon Golf course which are not replicable - but for anything else, prices will be at land value on the periphery plus construction cost plus a small commute premium.

[Mystic]

Very interesting discussion which is same across real estate of major Indian cities in general and Bangalore in particular. As I have multiple properties across many cities in south India, I can relate to the discussion.

When it comes to Bangalore, it is popularly compared to Tokyo due to size and population etc. Bangalore is on the path to becoming a major hub in the world especially in IT but we face the risk of it growing without a master plan from visionaries like our beloved Bharat Ratna Sir Mokshagundam Visvesvaraya. The number of personal cars in Bangalore is many times over when compared to Tokyo. Each Govt comes up with its own development plans for Bangalore. In Tokyo for example, their public transport system is taken to another level. One can go from end to end in a time which can be predicted. The average speed of a vehicle in Bangalore during peak hours is one of the slowest in the world. Hence, if my office is in whitefield, I want to buy my home in a walking distance from it which is making the real estate prices go skywards in IT hubs. Fortunately, Bangalore is 3000 feet above the sea level and it is called air conditioned city and garden city etc. Hope this original character of Bangalore is retained for posterity due to unscientific growth of real estate by occupying lake beds etc.

I am not saying Japanese are right or we are wrong. Even in Tokyo they have their own set of problems like land is measured in square inches like in NY city and Hong Kong. I had an opportunity of renting houses in all these top 3 costliest cities on this planet. Our Bombay is not far away from these cities in terms of cost.

Various state governments are taking different routes to handle this situation and most donot have any long term vision. Some states are doing better than others. In AP, my native place for example, Government is taking various decisions by looking into other countries etc. In AP, the cars registration is same AP 40 XX XXXX across the whole state. There is a new title law for land:

https://www.deccanchronicle.com/nati...sts-in-ap.html

India being a developing country and growing at a very fast pace, our way of handling this growth especially for affordable real estate is plagued by fundamental problem with the way humans think. Let me quote my grandfather UG on this root cause “There has been no qualitative change in man's thinking; we feel about our neighbours just as the frightened caveman felt towards his. The only thing that has changed is our ability to destroy our neighbor and his property-UG”.

My 2 cents on the present generation of kids not interested in owning cars and homes is largely because of affordability including my kid. I had to impart my piece of advise for the millennials.They may have to adapt to the changes and move on in life. What works for one country may not work for other countries. For e.g when my son got offers from all top 5 universities in USA as tenured faculty, the main important parameter that is considered is the real estate affordability / parking for personal automobile in the city where the university is located. Some universities to lure the talent is giving home loans with negligible interest along with down payment.

[DigitalOne]

Originally Posted by Hayek

Very interesting to see how real estate prices in Bangalore ....

...However, I do worry that some of the activity we see in these threads and in the market is because people have seen house prices double in the last three years.

Thanks for bringing a fresh perspective. Even in Bangalore, the prices/rentals have doubled only in certain areas like east ORR/Indiranagar/towards airport. I would be very surprised if someone claims the same for Electronics city. This area which used to be a hot RE micro-market till a few years back houses major WITCH companies, and their employees are reeling under pay cuts, bonus deferrals and such.

2024 is going to be more brutal for startups and IT companies. New funding for startups have fallen 70-80% in 2023 compared to 2022. The startups which raised 2-3 year tenure funds in the boom of 2021-22, will find it difficult to raise funds for a second time unless they show profitability. WITCH companies have stopped giving guidance now. FAANG and other product companies are wary of how AI will shape up and are implementing hiring freezes.

Please don't drive looking at the rear view mirror. Be very careful before making major RE investments!

[BhayanaV]

Isn't population the broader issue of all this? There are cartels of people making money out of this mayhem (at least in NCR) and this will not stop easily. People are making money like anything and investing again, though most of them will not be able to encash this so called profit anytime. You get a fat profit and reinvest it to make another profit, don't see people enjoying this profit

[vishnurp99]

Just wanted to share my two cents here as somebody who has studied and worked in Bangalore and visit quite frequently. I live in Germany currently. I have worked in many different cities including some in the states, India & Europe now.

I feel that the bangalore real estate prices especially in places like ORR,Indiranagar, Bannarghatta road, Koramangala, HSR layout etc are a bubble. Like all bubbles it will probably take 2 or 3 years to burst. Unless you have black money which you want to park somewhere I would think really hard about value before going ahead with a property purchase in any of these areas.

This is especially applicable if you are in IT & not from Bangalore and are in your early to late 30s. Why buy in an overpriced inflated highly polluted market - when you can rent and have the flexibility of moving to work all across the world and different cities in India too?

I am originally from kerala and found the quality of life, air, water & Amenities & hangout spots much better in places like Trivandrum & Kochi than in Bangalore.

[KumarS]

Originally Posted by vishnurp99

I am originally from kerala and found the quality of life, air, water & Amenities & hangout spots much better in places like Trivandrum & Kochi than in Bangalore.

I experienced this first hand last week when I was visiting Ernakulam and apart from weather, I felt Kochi is better in all aspect. I liked even airport, better organized than Bangalore T1 and T2.

I have visited Kochi earlier several times before owning the vehicle but this time it was different.
I could not believe the quality of road between airport area and Ernakulam, no potholes, no speed-breakers.
In Bangalore city area, you can not drive even 100 meters without a patch or potholes or speed-breakers.

[am1m]

Originally Posted by vishnurp99

I feel that the bangalore real estate prices especially in places like ORR,Indiranagar, Bannarghatta road, Koramangala, HSR layout etc are a bubble. Like all bubbles it will probably take 2 or 3 years to burst.

I keep saying this too, but some how this never seems to happen. I've never seen real estate prices drop long-term. Rentals go all over the place, but when it comes to buying, it just seems to be up and up. I don't understand this either, I don't see value in most apartments in Bangalore. Generator, tanker water supply, bad roads, bad traffic, no parking, poor quality of construction, etc etc. Yet when it comes to prices, they just seem to keep going up. Probably there is a lot more black money in the market than we suspect. Or the demand just keeps rising.

Originally Posted by vishnurp99

I am originally from ... and found the quality of life, air, water & Amenities & hangout spots much better in places like...

Again, as someone who is pretty sure I'm going to leave Bangalore when it comes to retirement (though I was born here), I've also realized that there is something that keeps bringing people here. Especially younger folk.

Perhaps the weather, perhaps because it's one of the 2-3 truly cosmopolitan cities in India, maybe just the job market, schools, maybe because right now it's the least polluted metro. I really don't know for sure. But I think far more people will come in, than leave, for some years yet. Hence the housing demand.

[ValarMorghulis]

Walked to check out a couple of new properties near HSR. Purva Meraki and Casa Grand Flamingo (right next to each other by the Somsundarapalya Lake).

Mind.blowing.prices.

I mean I understand these are next to HSR but Purva asking ~Rs.17,000 per sqft for "ultra luxurious 3 & 4BHK" is kinda rich. That too when the entire master plan is for just 1 acre!

I wonder who is buying these houses for such prices. I couldn't see the charm.

Casa Grand Flamingo was selling a 1200sqft 2BHK for 2cr as well and that too the prices were valid only for "12 hours" and "only 4 were left".

Gave a hard pass to both. No metro nearby, perennial traffic jam on the road in front and no views. The asking price is perhaps only because of HSR next door.

[alpha1]

Originally Posted by ValarMorghulis

I mean I understand these are next to HSR but Purva asking ~Rs.17,000 per sqft for "ultra luxurious 3 & 4BHK" is kinda rich. That too when the entire master plan is for just 1 acre!

I wonder who is buying these houses for such prices. I couldn't see the charm.

Casa Grand Flamingo was selling a 1200sqft 2BHK for 2cr as well and that too the prices were valid only for "12 hours" and "only 4 were left".

Gave a hard pass to both. No metro nearby, perennial traffic jam on the road in front and no views. The asking price is perhaps only because of HSR next door.

Perhaps Mumbaikars?
South Mumbai folks, loaded with money, may find it attractive to "invest" in other cities because for same price you can't get the same deal (carpet areas, locality, facitlities, luxuries etc) in Mumbai (especially the SoBo parts which are already congested and with old type of construction)

I know that when I was in Pune, a huge percent of houses being bought were by Mumbai folks.




Just to put a perspective, for 2 crores you may get a gated community with club house, swimming pool, 650-750 sqft flat (2 BHK) in the central SUBURBS and Thane. The pecking order is South Mumbai > Western Suburbs > Central Suburbs > Thane / Navi Mumbai.

Originally Posted by Hayek

Betting on house price increases in excess of inflation in cities with infinite land like Bangalore or NCR seems quite foolhardy. There may be very specific properties with views of Cubbon Park or the Gurgaon Golf course which are not replicable - but for anything else, prices will be at land value on the periphery plus construction cost plus a small commute premium.

Fact.
Another point is whether the house is being used for
a) consumption = people are living there
b) speculation = people may or may not live but the owner's aim is to push it off to a greater fool for a profit in due course of time

Since the property buying market is split between both the categories, the only good measure of the consumption is rentals - the rental yields specifically.

[casnov]

Hello guys,
I need some advice on a conundrum I am facing and I can’t think of asking anyone but this esteemed group.

I own an apartment in Whitefield which is given on rent,I don’t intend to live here, ever. I live in north Bangalore on rent. The rent I am getting on the flat in Whitefield is paying off the EMI. Rent is 48k and my EMI for it is also 48K. The existing loan is for another 10 years

I want to buy an apartment in the same society where I currently stay on rent.

The dilemma is :

1. Should I sell the existing apartment, and buy a new apartment?
   
2. Keep the existing flat and take a fresh loan to buy the new flat?
   
3. If I keep the current flat, then I have to put another 40 lakhs for the downpayment of the new flat and the EMI for 12 years will be around 1.8lakhs.
   
4. The current owned flat is paying for itself. Does it make sense to sell it?
   
5. If I invest 40 lakhs required for the downpayment, at a conservative rate of return of 11%, it will be 1.13Cr in 10 years.

Any advice on this dilemma?

[Sebring]

Sorry to go OT, but for guys who have given flat on rent do you declare that flat as self occupied or 'given on rent' to BBMP, as the tax is double for commercial application (I just discovered)

Originally Posted by casnov

I own an apartment in Whitefield which is given on rent,I don’t intend to live here, ever.

[Way2Jimny]

Originally Posted by casnov

[*]If I keep the current flat, then I have to put another 40 lakhs for the downpayment of the new flat and the EMI for 12 years will be around 1.8lakhs.

Any advice on this dilemma?

It depends on various factors.
Can you easily afford to pay 1.18L for the next 12 years without major cutback on lifestyle?

Do you think the new apartment will be a worthy investment? If the current rent outgo minus the EMI is less, then yes you can go ahead.

My advice will be not to sell the old apartment. It is just paying for itself and book value will be good in your asset list. Down the line you will also earn profit after the EMI payment.

[sunilch]

Originally Posted by casnov

Hello guys,
I need some advice on a conundrum I am facing and I can’t think of asking anyone but this esteemed group.

I own an apartment in Whitefield which is given on rent,I don’t intend to live here, ever. I live in north Bangalore on rent. The rent I am getting on the flat in Whitefield is paying off the EMI. Rent is 48k and my EMI for it is also 48K. The existing loan is for another 10 years

I want to buy an apartment in the same society where I currently stay on rent.

The dilemma is :

1. Should I sell the existing apartment, and buy a new apartment?
   
2. Keep the existing flat and take a fresh loan to buy the new flat?
   
3. If I keep the current flat, then I have to put another 40 lakhs for the downpayment of the new flat and the EMI for 12 years will be around 1.8lakhs.
   
4. The current owned flat is paying for itself. Does it make sense to sell it?
   
5. If I invest 40 lakhs required for the downpayment, at a conservative rate of return of 11%, it will be 1.13Cr in 10 years.

Any advice on this dilemma?

Do you plan to and are ok to maintain multiple properties over long term? It may look like a wonderful investment at different points in time but RE is highly ill-liquid and it consumes time and money to maintain over long term.

It is not easy, and over time apartments depreciate in value (relative to the newer ones in same locality). This might be OT here but seems to be an often ignored fact.

So it is better to sell the apartment when the going is great and utilize the profits to book the one where you want to live (there will be capital gains and hence selling first and selling letter will be tax efficient).

11% rate of return may not be really conservative over long term but rather optimistic, based on my personal experience but you may have better avenues of investment than me.

[casnov]

Originally Posted by Way2Jimny

It depends on various factors.
Can you easily afford to pay 1.18L for the next 12 years without major cutback on lifestyle?

Actually its 1.8 and not 1.18 but yes, the EMIs are affordable.

Originally Posted by Way2Jimny

Do you think the new apartment will be a worthy investment? If the current rent outgo minus the EMI is less, then yes you can go ahead.

Yes, its worth. I am planning to stay here indefinitely.