r2i forum

My friend is planning to buy an apartment in the IT corridor of chennai mainly for investment purposes.

IT corridor is filled with activity with so many IT companies, malls, schools, the 8 lane high way and so on and so forth. As we all know, one cannot buy any apartment in the IT corridor area for less than 3000 rs per sq foot. She has two doubts.

1. Will an apartment purchased in IT corridor appreciate for sure given the present scenario? If so , by how much.

2. Which is the more logical/wise investment option - to buy from her own funds or to take a bank loan (assuming he has funds to buy it with his own funds).

I have no background or knowledge to answer both the above questions. Can anyone in the group please give your opinion on this.

thanks

Buying with own funds is always wiser. Ask your friend to buy an apartment which is "under construction" for maximum appreciation. The good part is that you do not have to pay the entire amount until the apartment is constructed, you can pay in installments.

http://www.goldenhomeschennai.com/altius.html

http://www.appaswamy.com/ongoing.htm

OP,

If I were you I'd post the question 'which option is better?' in the 'Finance General' where it might receive the attention of Sr. Members w/ vast finance knowledge.

1. Obviously no one here knows the future. We can speculate anything we like. End of the day it is your money you have to feel you are doing the right thing.

2. who is selling it for 3000/sqft ? Can you give me some more details ?

3. Own funds or loan depends on what you will do with the money if you dont use it for buying the property. Please refer to earlier discussions on this subject in R2I finance forum.

RRK

I think the following builders are selling around 3500 rate in the OMR location.

1. www.jainhousing.com
2. www.vishranthi.in
3. www.lancor.in
4. www.victoriatowers.in
5. Arihant

Not sure about the actual present cost per sq ft though.

In your opinion , do you think the rate of 3000 plus in that location is a good price? Do you think it will appreciate further? What do you think will be the appreciation level if one buys an apartment for around Rs 3200 in that OMR location?

hellome,

It depends whether the investment is for short term or long term. The Chennai apartment RE has not shown any signs of slow down. Which means there is still a lot of upside potential for apts no matter where you buy it(i mean places like OMR, adyar ). If they are shooting for 1 to 2 years max then they can pay all cash and buy it.

In the long term if your friend is going to use the apt then also they can go ahead and still buy it. But if they are buying it only for long term investment then it might not be a prudent idea to buy an apt. If they are shooting for R2I then they can go with a loan for the apt and invest the cash in some other nearby Chennai lands which I feel safer than an apt in the long term.
This is just my opinion, may be correct or wrong, only future will tell us.
ananth

I would recommend to buy from your funds if you are in European region as euro / sterling is much stronger. but this is not the case with dollar as you aware :).

regarding investment in OMR, i'll share my experience. I've blocked a flat with victoria towers for 2700INR in nov 06. When in visited india April 07 they were selling it for 3700INR, and only 32 apartments remaining.

most of the other famous builders including hiranandani (navalur), puravankara, jains (kelambakkam) selling for 3800-4200INR.

HTH

[QUOTE]I would recommend to buy from your funds if you are in European region as euro / sterling is much stronger. but this is not the case with dollar as you aware

Don't you think even Euro and Sterling have become much weaker against the rupee. Sterling was around Rs 86 in January and now I think its around rs 81. I think even Euro has weakened against the rupee in the recent past. What are your views on this?

hello,

I feel if one needs a house to live then price is NOT one must look at, cause its a necessity and one buys what he/she can afford.

Now coming to investments, if you are looking at the currency fluctuations then the rupee is the strongest in 6 years and markets are only inflated cause of the black money floating in the market, which is also becoming scarce.

With current Indian interest rates(mortgage) at 11-12% and rising i think these are dangerous waters to test for an investment. The thing to also remember is most of the NRIs dont have black money to invest,so wheather he invests his own cash turning them from $,£...etc etc he loses cause he has earned them outside India and its devalued cause of the strong rupee, within the last 2 mnths. If he raises a loan in India he pays 11-12%, where as current rates are 5.25% in the USA and will come down, 5.5% in the UK(rising) and 3,75% in the euro zone, does he expect his investments to grow over 12% a year? if he is already paying 11% interest(cause its money lost), cause i know rental yields are very low in India and don't yield over 12% income on residential properties.

One alternative, but risky, but its the sensible thing to do, is release equity on your foreign home in the USA,UK OR EURO ZONE, fix interest rates @5-6% for 2 years and buy the home with that money. That way you are secured for 2 years when most prolly rates might come down, as Uk should join euro zone and we will have 2 major currencies and lower interest rates, with UK not playing the devil with higher attractive and manupulative rates within the euro zone.(all hope and speculation).Australia and NZ have higher rates but that is another issue if one is migrating from that end.
Before, you convert the $ or£ or etc ... i would personally wait for the RBI to restart buying the dollars, cause a high rupee is hurting India , its exports and stunting it's growth, this high rupee is a short term measure to control inflation and RBI cannot let it continue, similar with china(yuan/renmimbi), if they let these 2 currencies appreciate they would become very strong and would HURT THEIR GROWTH.

The topic here is whether to buy using own funds or bank funds.

There is a diversion of the topic here. We are generally talking about chennai RE market. And several posts are moved to the below thread.

MT: Chennai Real Estate Discussion