Comments on: A close look at Real Estate Returns in India http://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html Financial Planning , Insurance , Mutual Funds , Investments Fri, 10 Feb 2012 17:41:32 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Manish Chauhanhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-36668 Manish Chauhan Wed, 08 Feb 2012 17:42:28 +0000 http://www.jagoinvestor.com/?p=483#comment-36668 Bethune We have long term return history of Equity , but for real estate we do not know if that kind of return is alreayd there.. best thing would be to discuss it on our forum : www.jagoinvestor.com/forum Bethune

We have long term return history of Equity , but for real estate we do not know if that kind of return is alreayd there.. best thing would be to discuss it on our forum : http://www.jagoinvestor.com/forum

]]> By: bethunehttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-36631 bethune Wed, 08 Feb 2012 08:51:34 +0000 http://www.jagoinvestor.com/?p=483#comment-36631 Hi, Thanks for the interesting article, which challenges traditional perceptions on Real Estate. However I noticed something contrary when I was trying to do my own analysis: Option 1 – Buy MF SIP for 30k per month for 15 years at 15% CAGR Result – At the end of 15 years, total amount is approx 2.16 Cr Option 2 – Take a ready to move apt for 30l and pay 30k monthly EMI for 15 years Result – At the end of 15 years, total amount is approx 2.78 Cr (assuming apt was growing at 15% CAGR) If I count a rent of 7500 per month, the compounded value is 54l at the end of 15 years. Even if I exclude about 25l for repair, Option 2 seems to fare much better. Whats your view on this? Hi, Thanks for the interesting article, which challenges traditional perceptions on Real Estate.
However I noticed something contrary when I was trying to do my own analysis:
Option 1 – Buy MF SIP for 30k per month for 15 years at 15% CAGR
Result – At the end of 15 years, total amount is approx 2.16 Cr
Option 2 – Take a ready to move apt for 30l and pay 30k monthly EMI for 15 years
Result – At the end of 15 years, total amount is approx 2.78 Cr (assuming apt was growing at 15% CAGR)
If I count a rent of 7500 per month, the compounded value is 54l at the end of 15 years. Even if I exclude about 25l for repair, Option 2 seems to fare much better.
Whats your view on this?

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-36137 Manish Chauhan Thu, 02 Feb 2012 11:01:47 +0000 http://www.jagoinvestor.com/?p=483#comment-36137 Raj Thanks for your views on this .. Raj

Thanks for your views on this ..

]]> By: rajhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-35886 raj Tue, 31 Jan 2012 10:49:38 +0000 http://www.jagoinvestor.com/?p=483#comment-35886 Good article with indepth analysis. many of us do get carried away, but sometimes these are also emotional issues. The other reason of course is the black money angle. If I sell somewhere and do not get 100 % white then how to invest? that is the elephant in the room that will never go away. hope it does. NHB does not have for many states including odisha, hope they start collecting soon as there is a lot of activity going on in these smaller towns and cities and I am speaking from my own experience Thanks for the article. it does help to strike a balance Raj Good article with indepth analysis. many of us do get carried away, but sometimes these are also emotional issues. The other reason of course is the black money angle. If I sell somewhere and do not get 100 % white then how to invest? that is the elephant in the room that will never go away. hope it does.

NHB does not have for many states including odisha, hope they start collecting soon as there is a lot of activity going on in these smaller towns and cities and I am speaking from my own experience

Thanks for the article. it does help to strike a balance

Raj

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-35409 Manish Chauhan Thu, 26 Jan 2012 11:37:38 +0000 http://www.jagoinvestor.com/?p=483#comment-35409 Piyush While all the points you have raised it really true .. the prices of real estate in reality are not coming down because to too much money supply in real estate from investors Manish Piyush

While all the points you have raised it really true .. the prices of real estate in reality are not coming down because to too much money supply in real estate from investors

Manish

]]> By: Piyushhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-35242 Piyush Tue, 24 Jan 2012 19:53:23 +0000 http://www.jagoinvestor.com/?p=483#comment-35242 Good write-up. Its amazing to see how people always exaggerate real estate's potential and claim it never comes down. All the more if its Mumbai. (Wondering how easily they forget the last two such cases). Concepts of CAGR, transaction costs, borrowing cost, illiquidity risk, over-leveraging risk etc seem to be rarely appreciated. And people born in late 70s and 80s seem to think nothing can or will go wrong with them on job front. Weird to think all economic parameters have deteriorated sharply in India, jobs are being cut,salary hikes and bonuses have waned off, equity returns are negative for last 4 years, savings are under stress due to inflation. However, despite all this, flat prices in a town like Mumbai are not just up in last 2- 3 years, but actually a large chunk still thinks it will keep rising rapidly. Guess only time will tell. Good write-up. Its amazing to see how people always exaggerate real estate’s potential and claim it never comes down. All the more if its Mumbai. (Wondering how easily they forget the last two such cases). Concepts of CAGR, transaction costs, borrowing cost, illiquidity risk, over-leveraging risk etc seem to be rarely appreciated. And people born in late 70s and 80s seem to think nothing can or will go wrong with them on job front. Weird to think all economic parameters have deteriorated sharply in India, jobs are being cut,salary hikes and bonuses have waned off, equity returns are negative for last 4 years, savings are under stress due to inflation. However, despite all this, flat prices in a town like Mumbai are not just up in last 2- 3 years, but actually a large chunk still thinks it will keep rising rapidly. Guess only time will tell.

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-34859 Manish Chauhan Sat, 21 Jan 2012 07:57:01 +0000 http://www.jagoinvestor.com/?p=483#comment-34859 Ranjan Yea its not considered in this example ,we are only talking about the value appreciation on the asset price . .not the rentals recieved .. note that if you talk about the rent recieved , then there are many headaches also which comes along with buying a house like maintenance, tax , property tax , regular follow up etc and at times period where you dont get rent, finding tenants etc .. Manish Ranjan

Yea its not considered in this example ,we are only talking about the value appreciation on the asset price . .not the rentals recieved .. note that if you talk about the rent recieved , then there are many headaches also which comes along with buying a house like maintenance, tax , property tax , regular follow up etc and at times period where you dont get rent, finding tenants etc ..

Manish

]]> By: Ranjan Banerjeehttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-34730 Ranjan Banerjee Fri, 20 Jan 2012 11:05:01 +0000 http://www.jagoinvestor.com/?p=483#comment-34730 hello sir, first of all thanks for the wonderful piece of information that you have provided in the article. i would like to put up a query. what about the rental value. now let's say i buy a property worth 20 lakhs and rent it out then should we not consider the rental earnings received as a return on the investment. even if one uses the property for his/her own residential or business purposes, then that would mean a saving worth the amount of rentals received. kindly solve this query if possible hello sir, first of all thanks for the wonderful piece of information that you have provided in the article. i would like to put up a query. what about the rental value. now let’s say i buy a property worth 20 lakhs and rent it out then should we not consider the rental earnings received as a return on the investment. even if one uses the property for his/her own residential or business purposes, then that would mean a saving worth the amount of rentals received.

kindly solve this query if possible

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/12/returns-of-real-estate-in-india.html#comment-32773 Manish Chauhan Sat, 07 Jan 2012 07:23:22 +0000 http://www.jagoinvestor.com/?p=483#comment-32773 Truth Better get into real estate if you feel it will give you 20% CAGR for next 10-15 yrs .. Manish Truth

Better get into real estate if you feel it will give you 20% CAGR for next 10-15 yrs ..

Manish

]]>