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Second home can be investment with long-term perspective
Source: Economic Times

	There were times when money flowing into real estate was purely for the sake of investment, people used to park money in affordable properties, say a 10x10 sq ft commercial space in an upcoming district centre or a development authority flat, a la DDA studio/2 BHK, only and just, with an idea to encash that asset in due course, rarely to use or live in. Typically, people would invest in projects, the term being as short as one year, then exit with minimum profits and plough back this profit into some other lucrative projects or some would stay invested for maximum gains. Many others would look at these investments as ones yielding rental returns in their sunset years. Today, with increased risk associated with real estate investment plus changing values, people want to invest in 'bigger and plusher homes' for self use; so, investment it is but with a long-term enduser perspective. Today's upwardly-mobile class has started investing in residential real estate where they can stay, say five to seven years down the line. Obviously, the second homes are way more expensive, and offer things which these people are missing in their first homes. This, then, is clearly a sign of rising expectations, aspirational living and greater affordability, some or all these factors coming into play. Abhishek Mehta bought his first home in Dwarka in 2005 for Rs 30 lakh and last year, bought a bigger flat for Rs 1 crore in Dwarka itself. He says that "when I bought my flat for Rs 30 lakh in 2005, I think I had done a great job for a first home. We were just a young couple, newly married and with my wife's and mine previous savings we could manage a decent property for ourselves. But with time, bigger flats were getting constructed, some of them centrally airconditioned, some over 2,000 sq ft built-up area and I felt we were ready to invest in a 'lifestyle accommodation', which would initially fetch good rental income and later be a selfuse property." As for the methodology of its financing, he says: "Affordability has not increased significantly but my mortgage on my current home was over, so I had some flexibility to get take another mortgage. I cleaned out my PF and other savings for the down payment and the balance was financed by a bank." But he was only keen on a readyto-move-in property not because there was a hurry to shift in but more because past experience has shown that unexpected delays in new projects have held up deliveries for years resulting in problems for investors. "I explored a few properties in Gurgaon and Noida but preferred Dwarka as I was more confident on investing here compared to NCR," says Mehta. Talking about his immediate plans for the new flat, he says: "I had a plan to lease out the flat to the organized sector and this required some minimum criteria be met (3BHK + 2 car parkings, etc), which come at a minimum base price in Dwarka. However, I have a longer-term view on this investment and will shift there in the mediumto-long term." Rajeev Kumar, a senior executive at a multinational company, had his own property, a Noida authority flat, but his new investment is in 3Cs in Sector 100 in Noida. He invested in a second home "mainly for better facilities - club, swimming pool, market, good power backup, etc". According to him, "The first house was built by the Noida authority, where carpet area is good but does not have lifestyle amenities." So, what drew him to invest in a far more expensive property; has the affordability increased, or is it aspirational living? Rajeev says that it is both, better quality living as well as affordability. He financed this mainly through a loan with about 25% of personal contribution. "I have taken the house for living. Move-in-property was definitely important. However, the premium for a similar type of move-in-house is quite high." Hence, he chose a property under construction. Consultants say some projects score over others in quality and timely delivery. According to S C Jaisimha, MD of AsiaPac International India, "As far as Noida is concerned, there are innumerable projects which have been launched in the last 6-9 months. The two main corridors which are in news are the projects on the Noida Expressway (Sectors 100, 107, 108, 110, 137 and the Jaypee township) while the other one comprises Sectors 75, 76, 78, 119,121. Any development has to be looked at from many perspectives like location, deliverability of the project, builder credibility, past experience of the developer, specifications, time frame, etc." Considering all these factors from an investment perspective, we would suggest projects like 3C Lotus Boulevard in Sector 100, Lotus Panache in Sector 110, Eldeco Sharanam in Sector 110, Paras Tierea & Logix Blossom County in Sector 137 on the Noida Expressway corridor. In the other corridor, we would recommend Mahagun Moderna in Sector 78, Prateek Laurel in Sector 120. Jaisimha adds that the competition in the market has sparked off a price war. Subsequent to the increase in the FSI (floor space index), especially in Noida, the pricing has come down to realistic levels, which everyone was looking forward to. Today, a two bedroom flat with all modern amenities and good specifications is available in the range of Rs 30 lakh to Rs 35 lakh. So, a good quality accommodation with lifestyle amenities is now available at various price points. Aman Bansal stays in a bungalow in West Delhi and works as director (Business Development) in an IT company in Gurgaon. Recently, he invested in DLF Belaire, as he wanted lifestyle amenities in his apartment. He says, "In summers, especially when there is a tremendous shortfall in the supply of power and water across Delhi, these apartments score over independent bungalows as they have 100% power backup. Moreover, maintenance is leased out to independent agencies, which makes a world of difference in the overall maintenance of the building, its utilities, etc." Yeh dil mange more…that seems to be the mantra for the New Age buyer, who is certainly not averse to change and looks at upgrading the standard of his or her living and place of living, in tandem with affordability and aspirations. Home is not for keeps any more, it seems!

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