Investment Appartment Vs Plot. whats better??

[gurukiran20]

Hi Friends,

Of late I have been noticing majority people inclined to buy an apartments than building a house. As I understand Investors buy apartments for living and site for an investment.

My point here is:
What if everybody invest on plots and nobody build houses where will we get the return. (best example BSK 6th Stage, Anjanapura etc…) growth is not even close to Bank FD rates.

Whereas investing on apartments giving lucrative returns: this is because builder controls the price and hardly bargains and there are enough buyers too.
Ex: If you have invested in Patel Realty (Smondos in Electonic City) in 2009 it was Rs.1880/- psft where as today its Rs.3000/- sft. And i have many similar examples.
May be another reason is easy repayment of loan in 20 yr tenure for house than 10 yrs for plot (in case of bank loan) lower ones monthly burden..

hence I am a little apprehensive about investing on plots.

Recent study has shown in coming years there will be so many apartments built that people will have choices and sellers would be forced to reduce the margin at this point probably plots will have greater demand as construction of villas will be on the rise.

Any expert opinion on this topic??

Thanks & Regards

Gurukiran Shetty

[PlotGuy]

Your point about BSK6th and Anjanapura is not really valid. People are not building homes because these places are unlivable. Have you gone to Anjanapura and imagined living there ?

Between apartments and lands, lands would easily win as avenues of investments. Try doing the maths for a piece of land in BSK6th in 2009 vs 2011. It would work out better than your example.

Apartments, of course, are low maintenance since you can find a renter. You can also move in anytime you want if you don't rent. They are relatively safe without anyone living in them. With lands you have to worry about encroachment, land mafia etc.

[msn1270]

Everything is good as long as it gives positive returns. All depends on your wise decision, not only on the present - but also considering the future. If you look at the BDA Plots, those who got allotment in BSK, Anjanapura and SMV Layout paid around Rs. 2+ lakhs for a 30X40 Site. But they're able to get a minimum of 15 lakhs and upto 30 lakhs depending on many factors.

in the same way, couple of my friends/colleagues who bought apartment at around 13-15 lakhs 5-6 years back are able to fetch a minimum of 35 lakhs now. Similarly one of my relative who bought a Flat at around Rs. 1900/sq.ft- in 2008 is now getting a price demand of around Rs.2800 to Rs.3000/sq.ft.

on the other side, those who invested for sites in many areas during the year 2007(real estate peak time) are also getting profit now.

[tvsh]

Everything depends on investment time horizon. In a market, where the material prices are increasing rapidly, investing in apartment gives better returns in the short run. However, in the longer run, the land is an appreciating asset and the buildings are generally depreciating assets. hence if you are investing for long term, the plots will handily beat investment in apartments. Try looking at the values of apartments that are 15 to 20 years old, most of the "value" of the apartment is due to the increase in the value of the land underneath the apartment.

Invest in an apartment, if you have spare cash lying around and want some monthly income as well as moderate capital appreciation.

[gurukiran20]

@ plotguy - it becomes livable only if people start building houses. empty plots will not develop on its own. Moreover layouts near Kanakpura road (ex. Bank officers layout) and Vijayabank colony Bannerghatta road was developed during the same time and i am sure you know the price difference now. almost double.

Layouts near the software companies have fetch good return compared to others.. Ex: Banneghatta Road, Sarjapur Road, Whitefeild, ITPL etc..

@msn1270 - Agree with you. but BDA plots are subject to Allotment** my father have applied 3 times but in vain.. And regarding the appartment your friends bought depends on the brand and the builder. Ask Sobha and Prestige (Acropolis) owners who bought appartments in 2007 now they must have taken volentary retirement.

@ tvsh : i guess once we buy an appartment we need to keep upgrading once in 10 yrs.. This will probably will get best returns. we dont have issue with ageing and waste money on rent and over 10 years we will have better credibility over buying as our monthly income will also rise.. And not to forget to save on Tax..
(as we know inital years the tax component is high and capital amount is lower and a new loan in 10th year will help save on tax)

[jaggims]

there are many factors one need to consider before deciding upon what is best for himself, whether its a plot or a Flat.
for short term or immediately someone want to avoid paying rent and to get tax benefits its good buy flat, wherein to buy a plot and construct a house for the money what you pay for flat is impossible to buy a plot in a relatively good residential area where you can already start a construction, Flat will always be closer, relatively hassle free than buying and maintaining/safeguarding a plot.

if some one is planning for a long term investment, its always good to go for a plot, preferably in any BDA layout, which are mostly reliable for your money in the long run.

I personally prefer to live in independent house than a flat.

[bloggist]

Mostly depends on what is the time you are willing to wait. Basically inflation and land scarcity is the deciding factor.

To read the detailed analysis refer this link
if you are interested only marketing your blog then this is not the place.This forum works on give and take policy.first share genuine info ,people are not intrested in one sided analysis[
Edited by admin

[keshavachandras]

Have been thinking on these lines and getting confused everytime I think of Plot or Flat. Here is a few things I have captured hope it might help in taking the topic next level and some expert advices should help in tilting the balance one way or the other.

[keshavachandras]

Friends, hope i did not add much to confusion; any comments or updates?

[girishshk]

Below is a good article i came across Real Estate Investment.. Please Check it out..

The most popular real estate investments are commercial spaces, residential villas or apartments, and plots. In case you need a home to move into quickly there is no better option than buying in an apartment or villa. In case you have not decided on what to do with your real estate investment in the future or the time frame of the investment, the best option is investing in a plot. It could be a residential plot. Plot for long-term investment As an investment strategy, a residential plot in a reputed gated community is good – the reasons being simple.A residential plot never attracts the normal accounting depreciation.
Even the best building or apartment in the city center or anywhere in the world depreciates in terms of construction value over a period of time. In case of an apartment or building, the price could be appreciating, but the basic price appreciation is from the land price appreciation and not the building’s price appreciation. So, if your investment is long-term, you should invest in a plot because you get 100 percent appreciation on your investment, contrary to the case of an apartment or building where the plot of land on which the building stands is appreciating but the actual building. is depreciating and you get only a percentage of value appreciation. It is easier and less complicated in case you want to hand over your real estate investment to your next generation in the future. Like with everything else, even a building’s styling and architecture keep changing with international trends, new materials, and changes in construction techniques.
What is the best today may not be appreciated as the best tomorrow. So, it is always prudent to pass on a vacant plot to the next generation, and leave the choice to them to construct whatever they want to.You can buy more land for the same amount. When you are investing in an apartment or building, you are paying for both the land and building. In that case, there is some restriction as you have to pay for the building also. In case of a plot, you can invest all the money on land, and hence buy more for the same amount.The resale price of a plot will be better as these points can be easily accommodated for a buyer. But, in case, immediately or at short notice, you want to move into a new home, an apartment or villa is best-suited. A leading firm conducted a detailed study in the metro cities on the effect of the recession on different types of investments – plots, apartments, villas and commercial spaces. Investments in plots, on an average, grew between five and 30 percent even during the recession. Investments in apartments had a growth of -20 percent to 10 percent. Investments in villas had a growth of -30 percent to 12 percent, and investments in commercial spaces had the maximum variation of -40 percent to -5 percent.
This clearly indicates that a long-term investment in a plot will appreciate irrespective of the trend in the economy. Investing in a plot in a gated community of a reputed brand is advisable because the legal titles will be well-scrutinized, the layout usage percentages will be well-maintained, and all necessary approvals will have been obtained. As per the regulations, in an approved layout, only 55 percent can be used as residential plots out of which three percent can be commercial plots. Mandatory, 10 percent should be a park and five percent should be civic amenities. The balance should be roads. These mandatory requirements may not have been followed in case of an unapproved layout.Gated communities not only provide better safety systems but also a better neighborhood in the future. Also, gated communities by reputed developers have always appreciated much faster and higher.Also, when you invest in a plot for the future, you should look at the current development around, approach roads, and future planned developments in and around the gated community, and necessary approvals. As the popular saying goes, ‘not a square foot of new land is being produced, hence own your space before every square foot is sold out’. And what better place than Bangalore to do that? But to say the least, every form of investment in realty has its own benefits.
So Finally I suggest Plot or Villa in Gated Community with all the Required Approval (from BDA, BBMP, BMRDA) fetch you good returns and acts as a good asset.