From surat, a new community constructed right across my home. It has 8 buildings in total, each with 11 floors and each floor has 2 flats on it so, in total 176 flats. All priced between 4-5 crores and the project sold out in 6 months. I had the exact same question and here are my findings.
* majority of the people buying these houses were business owners. 90% of those belonging to diamond textiles industries which is quite big in surat.
* rest 10% saw some weird combination from Bakery owners to pickle distributors
overall I think top 1-2% of indians are really getting wealthy and considering the size of population that’s a lot of people.
I have seen at least 10 new such projects pop up in Surat.
Im from vesu, at least 10,000 flats are under construction in this area alone. The question isnt even about who can afford pricey apartments, its about who will be using them ?
The brokers here say "most of the flats are purchased by the locals because no. of family members goes up with time due to having kids and marriages and brothers want separate places etc." I cant wrap my head around this. Surat doesnt even attract a lot people from other cities. If u start looking to buy a flat, there are already so many options available, meaning a lof of existing constructed apartments are vacant and we have soo many new ones under construction.
Any thoughts on this?
Many of the flats that are constructed are sub par and will look badly maintained in a few years. This is the classic issue in India of quantity over quality. So there is always market for new houses which look good.
I used to wonder on how the owners are able to hold their vacant flats. Turns out many have a lot of black money and will keep doing bare maintenance for years (Think 5+ years). I don't think there will ever be a case of housing collapse in India unless there is severe curbs on transactions which will never be the case as the policy setters themselves benefit from this state.
Lots of business analysts look at data that is available and there is no data on how much black money the economy holds. Also most of the data cannot be trusted(The way the data is collected, less said the better). So the analysis is very inaccurate as to what is actually happening in the ground.
Im aware of the black money's contribution to real estate. Its a wonderful way to safe guard your black money. There are so many commercial properties in Surat that were brought to park black money. Results: All those properties attracted 0 tenants and fell in value since there were just wayy too much supply than demand. Now these people need to pay property tax and bare minimum maintenance costs on a property that will never see a tenant and will only fall further in value unless millions shift to surat overnight. The fun part is, new commercial properties are still under construction here, literally next to the failed ones.
Nothing makes sense here
Commercial properties don't make much sense as the tenants of these properties generally need to get their paper work in order for them to be compliant with tax laws. It is different in case of housing. Also from what I have seen there is not much commercial activities that need that kind of scale. Many who want to scale move outskirts and buy it outright. Housing is a different matter.
Also many of them don't worry about their black money not getting the kind of returns that they are expecting. It is just a pinch for them.
black money is the reason why NCR real estate is so expensive
the acquisition cost for many owners is practically 0. They can hold forever since it cost them nothing to acquire ("free money" from corruption) and they have to pay no EMIs or interest.
>They can hold forever since it cost them nothing to acquire ("free money" from corruption) and they have to pay no EMIs or interest.
Exactly.
For homes I see a trend of buying the next shiny thing and dumping their older mess on some white money guy. For commercial real estate they generally hold.
I am one of those guys. And I think my dad made the dumb at investments in that. Theres no way it’s worth the hype. My building was the first project a decade ago which was supposed to have a wave pool in terrace. It was surats most expensive building and most wanted project after swim palace.
The dude never built the pool, just built a jazccui on top. I own a penthouse. The shit leaks.
All these dumb builders have no idea what they doing. I have my dads business partner w venture into building construction. Surats top builders are my family friends. This shit is sad, any illiterate is pricing it however they feel it and then illiterates are buying it without much thought.
Agree on this one, even the flat which cost 4-5 crore doesn't have build quality, mostly because the builders are not some company but family run businesses and most of the time none of them even have civil engineering degrees.
Maari dukaan che textile market ma, 1 crore for 1 shop 1001 sq foot. Own 3, it’s a dead project. Dumbest shit.
I went to my friend in raipur, he owns India’s third largest steel company. The price of industrial land in the states capital and steel city prime area is 1 cr per acre.
In surat the builder charged 1 cr for just 1 shop.that too it’s like he knows my dad and he gave a lot of concessions else it would be 20 L more expensive. People here have no clue what to do and how to do things. That’s what happens when too many illiterates get access to a lot of money. Every third textiles guy is going real estate. Most of them are marwadis who never were educated and have no clue how it works.
Dads business partner double sold plots, and then used political connections to silence people he wronged
Arre tamhe secret kholo cho. That's pretty much the best Gujarati I can write. So much for corruption free India. Looks like influence and connection leads to price appreciation for the few while the rest get shafted.
>Dads business partner double sold plots, and then used political connections to silence people he wronged
That is how it works. If everything fails to hold the price then get the muscle power to silence. Word does not go out due to the shame of bearing the losses and the cycle continues.
Real estate is probably the easiest investment option for people who don't know what to do with money they have. I know a few from Surat who are into IT and not continue with their parents businesses.
BTW what do you do? Continue with your father's business or have you ventured on your own?
Most of the Indian laborers have poor workmanship. It is like going through hell to make them work with quality. They are simply illiterate with no idea on how things are supposed to be done. If simplest things are made to be done with decent quality it will cost the same as these luxurious houses/flats. Anyone who has taken keen interest in renovation or building a house knows the headaches.
Unfortunately in India many people just want features instead of build quality. This is because many are buying it for investment purposes and will not live in them. It is the tenants and eventual buyers headache.
Yup true, going through the process of interior decorating my new home was a hell. Either the laborers are unqualified for the work or they were thieves. I had to keep account of all the wood, fevicol I am buying and how much is used where. Govt of india is trying to address the exact skill gap issue with [vishvakrma yojna](https://www.india.gov.in/spotlight/pradhan-mantri-vishwakarma-scheme).
But I think it's not just the laborers at fault for poor quality construction it's also builders who doesn't care as their incentive is to only build faster and sell. They don't have to worry what will happen to the building after it's sold out.
>But I think it's not just the laborers at fault for poor quality construction it's also builders who doesn't care as their incentive is to only build faster and sell. They don't have to worry what will happen to the building after it's sold out.
Yes of course. It is a chain of stupidity starting from the customer down to the labourer. Nobody cares about quality and durability as the attention span is short. The customer will be holding the property for a maximum of 5-10 years in Tier 1 city before he offloads it to someone else for another shiny stuff. Unless the person is planning on retirement and passing on the house to their children then they would think of quality. This is why I feel the construction in Tier-2 and Tier-3 are much better as the construction is built to last for sometime and is much slower than Tier-1 crap.
I will not put much weight on the Yojanas unless the regulations demands that the labourers have some skills before working on a building and that too if it is enforced properly.
man seeing Indian laborers work at construction sites, especially of small builders, is sad. They have no safety gear, and have to resort to shoddy make shift tools to get things done
There's some shitty builder building a builder floor apartment across my house. His workers use weaved baskets and discarded cement bags to haul stuff around
mfer, you're charging 4cr for a 1300sqft apartment, the least you can do is buy your workers a wheelbarrow and some proper baskets
>man seeing Indian laborers work at construction sites, especially of small builders, is sad. They have no safety gear, and have to resort to shoddy make shift tools to get things done
Oh boy and this is another part of the equation. The way the labourers work and the greedy contractors is crazy. Safety is an absolute joke.
The extremely sad part of it is there is simply no awareness with these labourers. They spend money on their mobiles but don't want to buy some simple PPE gear which does not cost much. Even if they have it they don't wear it. Also the people who grind granite etc are guaranteed going to die in the next 5- 10 years. It is heartbreaking to hear them send money to their homes in Bihar and UP and thinking that their wife and the kids will lose their husband and father in the most painful way due to silicosis. The amount of dust that flies around while grinding is crazy. Water,mask and eye protection are a must. Also the chemicals used to clean are all very strong and will cause some kind of problems later on.
> the least you can do is buy your workers a wheelbarrow and some proper baskets
You should see the way how they haul plywood. One of them put those heavy board on his back and climbed 3 flight of stairs to my home. I wasn't aware and was surprised at this. The guy was completely out of breath and was asking for water. I was worried that he would collapse or something.
If you go to granite,quartz cutting centers you will go mad. They have to bring those slabs from the truck down and they don't even employ proper cranes. There will be a set of labourers lifting those massively heavy slabs from the truck and it is extremely dangerous. Heard some story of a truck toppling over the labourers and crushing them because some useless contractor wanted to bring those slabs down fast and did not understand that the slabs had to removed in a balanced way. This labourer had his leg crushed and could not work. He asked the contractor for some money to atleast start some small cigarette shop but the contractor didn't pay a single rupee.
Some of the stories are really crazy. Many of the home owners don't care. They only come for inspection once in a while. I have been with these labourers during my house renovation and have seen them very closely. Their lives are brutal. Enforcement of labour laws regarding safety are an actual joke.
This is generally a very baffling attitude I’ve found across the board: refusal to spend money on better equipment. So many plumbers and electricians who come to my house use makeshift tools even when they self admittedly make good money.
Even among my own friends making 50L+, there is a baffling refusal to invest in good gear. Two friends worked all through the pandemic on tiny desks and dining room chairs instead of buyinh a good table and office chair
Bhai rajhans group wala maare friend Che. They at least do work to on outside. Dads business partner and others can’t even speak English, they all mafia guys who been opening weekend homes and shit. Laxmipati is opening a weekend home right next to belizza. I own belizza it’s a failed project
My point. Anyone with no experience and education is going around doing anything, and indian regulators are sleeping. That causes a whole culture and system of mediocrity where fairness and quality are swept under the rug.
This is interesting, but I'm not sure how much can I generalize it for what's happening in the rest of the country.
Surat just opened their diamond bourse. From what I heard, there is a migration of diamond related business from Mumbai to Surat. This trend of high cost real estate market in Surat could just be a special case in time and space.
Not saying the information is not useful. Just wondering how generalizable is it.
Surat doesn’t have good education nor does it have liquor and clubs. Most Diamond folks in mumbai are used to living a very luxury lifestyle with celebrities. I doubt the migration would happen with families, I feel people would move and buy property do business a few days a week and handle it same way from mumbai.
A good part of these investments is handled by NRIs.
In 2022, financial year, over $14.6 billion USD was sent by NRIs to invest in real estate in India.
At Vance, we spoke to 500+ of our customers and all of them are interested in real estate in India. It's safer investment and has fast growth - considering tier 1 cities.
Another audience would be millenials - working population in tier 1 cities is on a rise.
Couple questions
1. Are they buying them for themselves or to lease them out ?
2. What is the year over year appreciation for say apartments in these buildings?
I for one have not been happy with maintenance in so called luxury communities in India - they look great for a few years then everything goes downhill.
Interesting question u/sharadov
**Insights from my conversation with Vance customers -**
$112 billion came to India last financial year. $14.6 billion USD is reported to be directly invested by NRIs. Should be much higher given many NRIs put money in their parents account (gifting to family is tax free on capital gains) and then use this money to invest as well.
**Answers -**
1. They move out of the country but they always have this in their back of mind to return to India. Many NRIs invest in their hometown, and not just flats or apartments but land as well.
2. Year on year appreciation differs city to city. Eg. I read somewhere it has taken about less than 10 years for Bangalore to pay off the entire cost of property, while that is 20 years for Bhubaneshwar. Interestingly, next in race after Bangalore were Indore, Vadodra and Ahmedabad, not Mumbai or Delhi.
Paying for maintenance again comes with reasons. Example - Half the people in Bangalore do not know what is costing them 5-6k every month additional - and an insight here is the water bills that their society is paying for those tankers. Maintenance can go down drastically in areas where there is Kaveri water.
>I for one have not been happy with maintenance in so called luxury communities in India - they look great for a few years then everything goes downhill.
I can give some insights here I guess. Many of the buildings constructed are difficult to maintain. People who buy such luxury properties are superficial people who are least interested in the details of the buildings like what cables have been used, water supply to their buildings or the sewage lines etc. All they are worried about is the showoff factors.
The vendors hired to manage and maintain these luxury buildings will not be cheap. They will increase the prices and why not as they know the clientele living in the building will throw money. Nobody is going to courts and suing anyone as we all know nobody has the time for it. Eventually the owners will sell it someone else who is equally ignorant and the cycle continues. So the people who make the most money are these maintenance vendors and the builders.
NRIs might be contributing to this mania.
But I don’t think “it’s safer investment” is true.
Countries like USA offer much better returns in real estate than India and with almost zero legal/political/mafia headaches.
Do you have a breakup of the people's hometown states who are buying real estate in India? I am seeing a growth in investments in Pune and Hyderabad and people investing in neighboring states. My data is anecdotal.
good to keep in mind that salaries in the US have skyrocketed, especially for sectors where Indians are over-represented.
At the same time, rupee has been weak
Consider a situation where your salary shot up from 150k/year to 225k/year, plus you got 25k/year in stock options, and rupee went up from 70 to 82. If you were sending 20% of your income back to India, you are now sending back 41L instead of 21L before
I was talking to a couple of agents recently and as per them not everything is booked by individuals. There are big businesses booking in bulk as soon as pre-launch happens blocking good chunk of prime units. They are infact intimated by the builders during pre-approval phase itself much before any of us mango-people even know of the project. This gives them & the builders 2 major advantages:
1. Builder gets to market high demand showcasing 50-60% units sold out already which leads to giving general buyers the FOMO and they end up booking in hurry.
2. Once rest units are sold out and closer to delivery the initial blocked units are released at much higher prices(50-60% depending on demand) than initial launch. This helps the initial firm doing bulk bookings book profits. Mostly the profits are shared between the builders & such firms.
then the best time for individual investors to buy is when it is booked 50-60% from the begging and when the firm opens up the block the prices will inflate and individual investors can profit heavily in just 2 years?
Well in that case you have a risk if project is not completed as promised. Hence you see big builders like prestige/sobha who have a track record of completing projects end up with higher demand eventually leading to higher prices
So choose your poison accordingly
> Once rest units are sold out and closer to delivery the initial blocked units are released at much higher prices(50-60% depending on demand) than initial launch.
What is the guarantee that the units will be sold at these higher prices? Aren't the big businesses also just betting here? Also what is preventing the individuals to join in with big businesses to sell their units with them?
Well once project is completed, buyers line up moreso for tier-1 builders like prestige/sobha. Since more than half is already sold out and projects are from tier-1 builders, status completed, they are anyday a safer bet than unfinished mid-sized builder properties
About betting, that’s what businesses do. If they were to play conservative they won’t be businesses. Nobody stops individuals from selling, infact so many people already do it
Yes Tier-1 builders generally do well in the market. My question is why would big businesses want to block for Tier - 1 builders? Their names are sufficient and 50-60% margins is very high for Tier-1 as it is a safe bet. It looks more or less that these Tier-1 builders are under pricing their units.
Prelaunch drives usually are more show than go. Hence you see relatively lesser pricing but when you try to book all preferred units would be gone already. Who do you think are booking all those?
Yes and looking at the recession I feel no way in hell are the IT folks in Bangalore booking these 2-3cr apartments at this pace. This made-up-demand is just there to hold prices till market recovers and people eventually get comfortable paying those. Hope the day never comes and there is a correction
Makes sense. I went to launch day of 2 projects of Prestige builders in Bangalore. For 1st project, Even on launch day, they informed all units till 25th floor as sold out (except ground floor)
For 2nd project I gave cheque of 10 lacs as EOI (expression of interest) even 3 months before project launch to get preferred unit.
On launch day, they tried adjusting me to some completely different unit, I just cancelled my booking the same day as well as cheque. Can't deal with this bull@@## anymore
[save taxes](https://incometaxindia.gov.in/Acts/Finance%20Acts/1982/102120000000036022.htm) captail gain when used to buy house save you from taxes, so people who know this mostly buy such houses.
Wealthy in India is getting wealthier. However unlike in the past as well as in many similar economies, poor and middle class isn’t getting poorer. They have some amount of yearly revision to their income to adjust for inflation, thus giving this sense that they are better off, without actually not being better off.
Probably also a reason why there aren’t any major movements or uproar against economic situation.
Coming to OPs question, a lot of this rich class is now purchasing real estate. After demonetisation and increasing digitalisation, real estate is one of the few domains that still remains attractive to traditional investments. Also, there is this mindset change. Earlier generations preferred land area over a house and its facilities. Our generation prefers convenience, accessibility and proximity and thus more focus on the construction bit and the location, than the land. Our dads would have said “thats a lot of land for that price” and we would say “that flat is super close to school/office/mall etc”
Mostly companies executives.
When these CXOs retire, they usually liquidate their volatile assets (equity) and need to spend it in fixed low risk assets to avoid taxes (which usually amount to ~30% of overall capital gains).
Now these equity shares are worth crores and what asset do you think provides lowest risk and almost 10-12% CAGR in india? Ans - plot, apartment.
Also, govt has provided a backdoor to avoid taxes in such cases - Section 54 of capital gains.
Thats the reason why you find 1 bhk apartment in mumbai worth almost 3-4Cr.
good point.
also to consider - FIRE number - most CXOs retire by 40s instead of 60s these days. Once they have enough capital earned, they just invest in real estate in tier 1 localities.
Long term capital gains on equity in India is 10%, even short term capital gains is 15%. Capital gains on real estate is 20% and section 54 bonds are capped at 50 lacs. It does not make much sense to sell assets taxed at 10% to buy assets taxed at 20% other than for diversification. Even then I can always sell one equity and buy a diversified mutual fund.
Literally every property in tier 1 city-region (in high income group area) provided at least 10% CAGR in last 5 years. In fact some flats in high income society generated almost 15% CAGR in noida.
You wont expect these return in middle income or low income zones (where properties are worth 50-75 lac max), but had you bought a flat worth 1.5 cr in noida, in 2019, that flat is now priced 2.5-3cr
Not an answer to your query, but adding to it.
Just driving around Bangalore even in not so high end localities you will always see even basic apartments starting at 60 - 70 Lakhs. And been better one's start from a crore.
Then there are the niche one's, roman style villas, Greek mythology based cottages, almost underground style villas. These start from 5-7 crore. It's insane.
My friend and ex colleague (working at an MNC and doing very well with a 2 cr package), purchased a DLF property at Gurgaon at 7 cr.
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As per him, he had to apply a lot of sources to get an allotment here in pre booking. Got an appreciation of 1.5 cr within few months after launch.
So, there are people who have lot of disposable income and somehow these premium properties are in high demand.
Don't know why.
Trust me these questions damage you more than helping out. People who earn such amount rarely get into for the money. It’s a competitive world so you should things in which you can be competitive than choose your vocation based on how much money you can earn.
Not entirely true.
I know a bunch of such high earning folks. CS graduates from IITs. They didn't get into it for their love of computers or engineering. They got into it for money. And worked towards clearing JEE, securing seats at good IITs and then towards placements or company jumps.
So yes, you need to keep improving and competing. But this doesn't take away from the fact that they got into it for money. If working in agriculture paid as much they would probably have gone to agriculture college.
Hi u/notsosleepy. Thank you for reminding this and to anyone who reads it. Though enamored by these figures, I am wary of the hardwork and networking needed for it. I like to keep knowing about how money flows and where, sometimes we get to know about interesting careers generally not popular. Guys who read it, money is coming, just do well what you like (and can do).
Ok, so I work in this industry in Mumbai and varied individuals are buying these flats. From salaried professionals to business owners (diamond traders, tech workers, petrol pump owners, industrialists, etc.)
If this is a bubble, we are definitely in the middle stage as I don’t see it popping for a while
even after demonetization a lot of black money is in circulation, property is the easiest way to make black money white and remember govt also made an economic policy that money from stocks etc will not be taxed if invested in property.
Am interested to know about this. I was planning to liquidate some MF units (more than a year old) for investment in an apartment down payment. Would I need to pay 10% LTCG or will it be exempted as that’s a RE investment?
What ? You can buy a villa for around 1.6 crores in Chennai that too in a township. Most apartments decent ones are around a a crore. Only super luxurious apartments cost 5 crores above.
I’m only talking about super luxurious apartments. And my question was not to find decent affordable apartments for myself. My question is these luxurious apartments are being constructed a lot, like really a lot. So how come they’re always full and who is buying them?
I live in ggn bought a 2bhk and while the deal was going on i was offered 5 lakhs to relenquish my deal. I took out a home loan and did not sell…today seven months later im being offered 30 lakhs more for the same flat!
Real estate in India is one of the most opaque industries there can be. It's almost a perfect storm of corruption, price manipulation, huge leverage, greed and a general lack of ethics.
I see people pointing to demand-supply gaps, upward mobility / the expanding middle class etc., but it is difficult to fathom what causes such spikes in prices when cities are becoming less livable and core infrastructure is forever playing catch-up.
With rental yields being so low, I'd imagine it makes a lot more sense to rent rather than to buy, for the average or even upper-middle class person, who doesn't have a lot of cash lying around.
All that said, the majority of people buying these expensive apartments are likely to be business owners, NRIs, and general HNI folk (docs, sr. execs, govt. employees with _other_ income streams). The percentage of aspirational / leveraged purchases is hopefully low, else things can go really bad when there are adverse economic events.
>I see people pointing to demand-supply gaps, upward mobility / the expanding middle class etc., but it is difficult to fathom what causes such spikes in prices when cities are becoming less livable and core infrastructure is forever playing catch-up.
Many of the statistics collected by agencies is bullshit in India. They don't account for any of the underground economy which requires in depth work on data collection which nobody is bothered which is a very difficult job so many like to play with imaginary numbers in their AC offices. They act like India is Japan or something and collect those numbers as if real estate is transparent and regulated.
There are many who buy houses at ₹5Cr and immediately renovate it. Heard from my contractor that all the tiles of the brand new house was broken and new set installed. Wife didn't find the kitchen to be of her specs and the counter tops were broken to build a new modular kitchen.
There are many cases where the contractor is told to make sure the interiors look like they have spent ₹60+ lakhs with the budgets going upto ₹80+ lakhs.
This India is not your father's India. People are very rich now.
I met a real estate reseller in Bangalore. He gets into an agreement with owner to buy a property for the cheapest price( they send about 10 of their own personel asking for lesser price to bring the property value). Then they put it on market for a price with a markup of 25 to 75 lakhs more!
Yes, in each such transactions, they are making 25 lakhs atleast with an investment of 25 lakhs for agreement!
This reseller was a carpenter 8 years back and now his net worth is around 100CR. He rides a swift and lives in outskirts of Bangalore. When his children grow up, they will get all fancy about this 40CR flats, and liquidate their father’s money to buy such house.
This is just my theory. There are 1000s of such people making similar money with such mafia business.
Mostly NRIs. And some companies. And not to mention that previous 10-15 years have been quite good for some people (and no, this has nothing to do with politics just economics).
And there is also marketing hype - everything is sold so every unit left is gold.
That said, a lot of them remain empty as the owners don't stay there. A lot of high rises in my area have like 20-30% empty apartments.
Read this article from The Ken, it might give you some good insight
https://the-ken.com/story/this-is-no-time-to-buy-a-luxury-house-but-homebuyers-dont-care/
lol "luxury" according to that article is houses worth over 1cr, and houses over 2cr are "ultra luxury"
1cr gets you a 600sqft apartment in a shitty locality in Delhi
Sharing it here for everyone
[The Article ](https://cdn.discordapp.com/attachments/969240641022361610/1187930289998135326/This_is_no_time_to_buy_a_luxury_house_so_why_are__231223_070031.pdf?ex=6598ad4b&is=6586384b&hm=f1e5704da8ecec7db24c709750f5fa2766eca00671bb808660eb8f5b48044fed&)
If I had that kind of money, I would surely go for an independent bungalow with a huge courtyard, garden and all that jazz. It makes no sense to spend such humungous sums of money and end up with a flat. I guess these flats are just investments because for the purpose of living, a bungalow is infinitely better in all aspects.
These are luxurious flats. They are at the city centre and have all the amenities. The big problem with individual houses not inside a township is that you need to fight for services to come to your house. In a flat/township/rowhouses the association is generally powerful to get facilities.
My question is who is buying them?
Either NRI's or people in India having Black Money. For Indian salaried people, buying these Luxury apartments does not make sense.
These apartments are conventionally too expensive than US houses
No, they are not . Decent apartment prices in tier 1 US cities ( SF bay area, NY, Seattle ) starts around $1 million. They are much smaller is size as well ( <2000 sqft ) .
> For Indian salaried people, buying these Luxury apartments does not make sense.
An acquaintance of mine has 1cr+ package plus bonuses. They are living in a temporary rented house whose rent is coming close to a lakh I believe and renovating a house in the same area/township whose final cost is going to be around 4Cr minus the renovation.
Not into business but a VP in an MNC bank. I am wondering how safe that job is though for such extravagance.
I wonder that too. People are living like there will never be another recession!
Friend of mine who works in a US-listed company takes home nearly 1cr. Wife makes 40-50L as well. Yet he lives in a 2bhk he bought in Marathahalli back in 2015 for 38L.
>People are living like there will never be another recession!
Was there ever a recession in India? There were a few bumps down the road but I have not seen anything crippling from 2000 onwards. Even the dotcom bust was a boon here. I have missed a lot of investing opportunities especially during the subprime crisis where I was certain our banks would collapse. Nothing like that happened here.
I really don’t know how it will play out. Salaries for mid career professionals in India are often at the same level as Europeans and even Americans. That wasn’t the case back in 2008
Will there be enough appetite to pay $120k salaries in a recession? No idea. But if you’re heavily leveraged and in debt, its never a bad idea to deleverage
No doubt that there are layoffs and salaries are coming to precovid era. There is hiring freeze ongoing in a lot of companies and the situation does not look good. Yet I see jam packed malls and traveling and hotels booked to capacity during holidays. Alcohol sales have hit new highs in many places. Mind you that this is with high inflation. I don't see much of deleveraging.
>But if you’re heavily leveraged and in debt, its never a bad idea to deleverage
I am reminded of Radhika Gupta in the Bombay shaving company interview saying things need not be so cyclical where in good times you overstretch and in bad times cut down drastically. That is a good rule to live by.
>Will there be enough appetite to pay $120k salaries in a recession? No idea.
With the announcement of recent rate cuts in the US and the elections fast approaching the can will be kicked a little bit further down the road. We might see some pain after the elections though.
I’m just in general flabbergasted by prices and salaries in India. I’m a freelancer and I used the “earn in USD, spend in INR” loophole for years to make good money. A common thread among all my American freelancer friends was hitting the “six figure” mark - $100k+ usd.
Yet now I see most of my Indian friends working in MNCs easily hit that 100k usd mark themselves. Suddenly seems like Indians are earning as much as Americans, yet when I see the working class people around me - or even government employees - their salaries are barely in the $10k range.
Yes, salaries have been crazy especially in the past 7 - 8 years with a significant jump during COVID. I just saw some having a CTC of 30LPA with YOE of just 3.5 years in VMware.
>yet when I see the working class people around me - or even government employees - their salaries are barely in the $10k range.
Many working class people have alternate incomes which can be earning significant black money. I got fooled many times to think their salaries are average but if you scratch the surface you would be surprised how much they make or have assets on the side.
True true. Working class people also start earning earlier, don't have expenses like ours, usually have entire families working and don't pay taxes.
What's really lagged behind is government salaries and all the other "safe" jobs like public sector banker, and to some extent, doctors. A lieutenant in the Indian army makes around 56k/month. Even the chief of army staff makes 2.5L/month
I know they get a ton of perks, but man, it must feel weird knowing that you, the chief of an army of 1M people, makes less than some kid who learned to code Android apps in college
> I know they get a ton of perks, but man, it must feel weird knowing that you, the chief of an army of 1M people, makes less than some kid who learned to code Android apps in college
The kid doing Android apps is not going to save much in a Tier 1 city. The person renting the flat for this kid knows that he is earning a good amount and will jack up the prices. Every other service around them i.e. maid, vegetables etc will be high, knowing their clientele. Whereas in other professions not tied to a city, they can make good amount, save a lot, afford quality and may also retire early. Consider a flat in Mumbai vs a house in Mysore. I see ₹3-5 Cr flats in Mumbai with kitchens looking like railway bogie kitchens.
I never really understood the fascination with earnings. At the end of the day savings and net worth matters.
Tier 1 cities in US are also Austin, Dallas, Philly, Miami etc which also consists of suburbs, and I’m comparing these apartments prices with those suburbs family houses.
And if you want to compare SF, NY, and Seattle. You might wanna check out apartment prices in south Mumbai area. It is def more than Sf and Seattle. A decent 2k sq ft apartment in Lower Parel will cost you approximately $2M or more in India. Which is insane.
Might wanna check out DLF camellias project in Gurgaon, they’re going for 40-50cr.
Austin, Dallas, Philly etc are tier 2 cities and not tier 1. Austin maybe is gradually moving in to Tier 1 category in terms of jobs but Texas has plenty of land so prices are still tier 2
* This is incorrect. Apartments in greater Seattle area costs between $400k to $ 1 million. Yes 400k ones are much smaller usually 800sqft. With $ 1 million you can get 2000 sqft.
* Single family homes, which we call bunglows in india start at $ 1.4 million.
* Comparing the purchasing power parity why are apartments so costly in india is still a mystery for me. Probably because land in india is far costlier?
A 800 Sqft apartment ( mostly 1 bed ) in Cities like Hyderabad,Bangalore,Pune will cost you around 1-1.5 Crore. Still much cheaper than 400k USD.
Real estate in India is high compared to salaries due to black money.
Many of these apartments are actually not sold, it is only projected by the builder to increase prices. If you actually go to the sales office their tactic is to tell you all the project is sold but we can try for 1 apartment on this floor it's the last unit left blah blah. Or mostly these channel partners or brokers or investors will buy with some very minimum down payment (5% or something like that) to sell it immediately at a nice profit
Here in south Delhi, a lot of old owners either died of Covid or are selling off their houses and moving to these flats. Reasons being the lack of parking space in Delhi and poor maintenance and facilities.
In my area, ongoing rate for land is between 4.5-5cr/100sqyd
Why is so much construction happening in the first place? People buy flats to get tax concessions, a false demand is generated which in turn makes the prices go sky high. Later these flats lie either at dilapidated state or are resold. This cycle just continues. Or people with disposable income just keep buying to get appreciation and later sell off. The wealthier keep getting wealthier and the poorer just keeps struggling. Also, at this rate we would hardly have any land to cultivate or anything.
It's a bubble. No one is considering the climate change. See the map of the world and which area will be affected badly. I intend to sell all my immovable properties in the near future.
I may be wrong but the data doesn't lie. The uber rich are investing in food and water because of uncertainty of climate. Most of the region will have harsh living conditions. What will be affected the most? Food and water sources.
What bubble, when have you ever known the real estate market to actually crash. Covid was a catastrophic event and yet that hasn't stopped housing prices to go nuts. This shit is economic downturn proof.
Here is a pretty decent article and analysis about real estate prices in Mumbai over the past decade. A regular bank FD would have done better than property investment in Mumbai.[https://www.freepressjournal.in/mumbai/mumbai-real-estate-a-decade-of-stagnation-or-opportunity-insights-from-celebrity-sales-market-dynamics](https://www.freepressjournal.in/mumbai/mumbai-real-estate-a-decade-of-stagnation-or-opportunity-insights-from-celebrity-sales-market-dynamics#:~:text=According%20to%20a%20study%20by,declined%20by%20one%20per%20cent)
Idk man. Buff Jezos just dropped half a billion on homes.
https://medium.com/collapsenews/jeff-bezos-acquires-500-million-worth-of-single-family-homes-driving-up-house-prices-even-more-f53afa88cfa4
It is inevitable. Work force is being reproduced like a burst hydrant. Wages are degrading, earlier you would have to give employees houses, vacations, all that is gone now. Property is being held on from generations. And the land quantity is the same. I firmly believe it is called gen-Z because it is the last generation. After that will come the revolution. When these truths have percolated down to the brainless masses. When you cannot look in any direction without seeing the results of these truths glaring them in the face.
Actually real estate still seems to be a safer bet .
Not only Surat, even tier 2 cities in Odisha have the same effect .
Reputed builders such as Lodha , Raheja and Hiranandanis build projects in such cities , where land is relatively cheaper.
And second generations in these places have no aspiration of living here , however want sometjinh for their parents. And hence go in for such projects .
No doubt these projects are all premium projects.
And the builders usually don't skimp on quality. But flats above 50 lacs were unheard of in Bhubaneswar, but you easily find projects with about a crore and above now .
I have recently shifted from Hyderabad to Ahmedabad.
Ahmedabad is not as big as Hyderabad, but apartment prices for good 3bhk are as good as Hyderabad.
Builders in Ahmedabad give hardly 50% of carpet area compared to 30-35% in Hyderabad, getting carpet area of 1000bhk requires one to buy apartment of atleast 2000 sft super built up area. Value of flat reaches 2 cr with registration and this in areas on other side of SG highway, SP ring road. and Amenities are name sake, a small garden, gym/pool on one of the above floors
The size of townships is not as big as My Home in hyderabad , where you find long walking tracks, play courts.
In recent visit to Bengaluru saw Shapurji palanji scheme in Binnypet which is core city and not outskirt. it is around 1.7 CR, the township if huge with hell of amenities. The apartment walls are also RCC.
Feeling Ahmedabad prices are too high
don't buy the flat. rent it, don't follow the rat rice. contribute more towards your mutual funds SIP and other investments. Don't get into societal pressure of owning an apartment if you can't afford it, especially if you're young with no kids.
Yea that's true. Gotta experiment living outside a city now. Never spent time outside City where i lived a routine life. Let's see. I'm not young though but no kids lol.
In Mohali city, flats might be 5 cr but most new flats are in New Chandigarh and other arts of Mohali district. Thpse cost 1-2 crore and are definitely affordable for many people working in and moving to Chandigarh (where GDP per household is 15-20 lakh already so you can pay it off in 20 yrs).
Then you have speculative investment by elites and NRIs.
I suspect it's similar in other big cities, the top 10% (that's 0.5 to 2 million ppl in tier 1 cities btw) can genuinely afford these properties. That's your elite softwareworkers, lawyers, doctors, SME owners etc.
Around 2 lakh ppl graduate from elite institutions every year, they earn 15+ LPA and need a place to live in tier 1/1.5 cities.
From surat, a new community constructed right across my home. It has 8 buildings in total, each with 11 floors and each floor has 2 flats on it so, in total 176 flats. All priced between 4-5 crores and the project sold out in 6 months. I had the exact same question and here are my findings. * majority of the people buying these houses were business owners. 90% of those belonging to diamond textiles industries which is quite big in surat. * rest 10% saw some weird combination from Bakery owners to pickle distributors overall I think top 1-2% of indians are really getting wealthy and considering the size of population that’s a lot of people. I have seen at least 10 new such projects pop up in Surat.
Agree on this, born and brought up in Surat and this seems to be the case all across the city!
Im from vesu, at least 10,000 flats are under construction in this area alone. The question isnt even about who can afford pricey apartments, its about who will be using them ? The brokers here say "most of the flats are purchased by the locals because no. of family members goes up with time due to having kids and marriages and brothers want separate places etc." I cant wrap my head around this. Surat doesnt even attract a lot people from other cities. If u start looking to buy a flat, there are already so many options available, meaning a lof of existing constructed apartments are vacant and we have soo many new ones under construction. Any thoughts on this?
Many of the flats that are constructed are sub par and will look badly maintained in a few years. This is the classic issue in India of quantity over quality. So there is always market for new houses which look good. I used to wonder on how the owners are able to hold their vacant flats. Turns out many have a lot of black money and will keep doing bare maintenance for years (Think 5+ years). I don't think there will ever be a case of housing collapse in India unless there is severe curbs on transactions which will never be the case as the policy setters themselves benefit from this state. Lots of business analysts look at data that is available and there is no data on how much black money the economy holds. Also most of the data cannot be trusted(The way the data is collected, less said the better). So the analysis is very inaccurate as to what is actually happening in the ground.
Im aware of the black money's contribution to real estate. Its a wonderful way to safe guard your black money. There are so many commercial properties in Surat that were brought to park black money. Results: All those properties attracted 0 tenants and fell in value since there were just wayy too much supply than demand. Now these people need to pay property tax and bare minimum maintenance costs on a property that will never see a tenant and will only fall further in value unless millions shift to surat overnight. The fun part is, new commercial properties are still under construction here, literally next to the failed ones. Nothing makes sense here
Commercial properties don't make much sense as the tenants of these properties generally need to get their paper work in order for them to be compliant with tax laws. It is different in case of housing. Also from what I have seen there is not much commercial activities that need that kind of scale. Many who want to scale move outskirts and buy it outright. Housing is a different matter. Also many of them don't worry about their black money not getting the kind of returns that they are expecting. It is just a pinch for them.
black money is the reason why NCR real estate is so expensive the acquisition cost for many owners is practically 0. They can hold forever since it cost them nothing to acquire ("free money" from corruption) and they have to pay no EMIs or interest.
>They can hold forever since it cost them nothing to acquire ("free money" from corruption) and they have to pay no EMIs or interest. Exactly. For homes I see a trend of buying the next shiny thing and dumping their older mess on some white money guy. For commercial real estate they generally hold.
I am one of those guys. And I think my dad made the dumb at investments in that. Theres no way it’s worth the hype. My building was the first project a decade ago which was supposed to have a wave pool in terrace. It was surats most expensive building and most wanted project after swim palace. The dude never built the pool, just built a jazccui on top. I own a penthouse. The shit leaks. All these dumb builders have no idea what they doing. I have my dads business partner w venture into building construction. Surats top builders are my family friends. This shit is sad, any illiterate is pricing it however they feel it and then illiterates are buying it without much thought.
Agree on this one, even the flat which cost 4-5 crore doesn't have build quality, mostly because the builders are not some company but family run businesses and most of the time none of them even have civil engineering degrees.
Maari dukaan che textile market ma, 1 crore for 1 shop 1001 sq foot. Own 3, it’s a dead project. Dumbest shit. I went to my friend in raipur, he owns India’s third largest steel company. The price of industrial land in the states capital and steel city prime area is 1 cr per acre. In surat the builder charged 1 cr for just 1 shop.that too it’s like he knows my dad and he gave a lot of concessions else it would be 20 L more expensive. People here have no clue what to do and how to do things. That’s what happens when too many illiterates get access to a lot of money. Every third textiles guy is going real estate. Most of them are marwadis who never were educated and have no clue how it works. Dads business partner double sold plots, and then used political connections to silence people he wronged
Arre tamhe secret kholo cho. That's pretty much the best Gujarati I can write. So much for corruption free India. Looks like influence and connection leads to price appreciation for the few while the rest get shafted.
It’s there everywhere man. The whole country operates on mafia culture
>Dads business partner double sold plots, and then used political connections to silence people he wronged That is how it works. If everything fails to hold the price then get the muscle power to silence. Word does not go out due to the shame of bearing the losses and the cycle continues.
Yup indian toxicity is responsible
Real estate is probably the easiest investment option for people who don't know what to do with money they have. I know a few from Surat who are into IT and not continue with their parents businesses. BTW what do you do? Continue with your father's business or have you ventured on your own?
Most of the Indian laborers have poor workmanship. It is like going through hell to make them work with quality. They are simply illiterate with no idea on how things are supposed to be done. If simplest things are made to be done with decent quality it will cost the same as these luxurious houses/flats. Anyone who has taken keen interest in renovation or building a house knows the headaches. Unfortunately in India many people just want features instead of build quality. This is because many are buying it for investment purposes and will not live in them. It is the tenants and eventual buyers headache.
Yup true, going through the process of interior decorating my new home was a hell. Either the laborers are unqualified for the work or they were thieves. I had to keep account of all the wood, fevicol I am buying and how much is used where. Govt of india is trying to address the exact skill gap issue with [vishvakrma yojna](https://www.india.gov.in/spotlight/pradhan-mantri-vishwakarma-scheme). But I think it's not just the laborers at fault for poor quality construction it's also builders who doesn't care as their incentive is to only build faster and sell. They don't have to worry what will happen to the building after it's sold out.
>But I think it's not just the laborers at fault for poor quality construction it's also builders who doesn't care as their incentive is to only build faster and sell. They don't have to worry what will happen to the building after it's sold out. Yes of course. It is a chain of stupidity starting from the customer down to the labourer. Nobody cares about quality and durability as the attention span is short. The customer will be holding the property for a maximum of 5-10 years in Tier 1 city before he offloads it to someone else for another shiny stuff. Unless the person is planning on retirement and passing on the house to their children then they would think of quality. This is why I feel the construction in Tier-2 and Tier-3 are much better as the construction is built to last for sometime and is much slower than Tier-1 crap. I will not put much weight on the Yojanas unless the regulations demands that the labourers have some skills before working on a building and that too if it is enforced properly.
man seeing Indian laborers work at construction sites, especially of small builders, is sad. They have no safety gear, and have to resort to shoddy make shift tools to get things done There's some shitty builder building a builder floor apartment across my house. His workers use weaved baskets and discarded cement bags to haul stuff around mfer, you're charging 4cr for a 1300sqft apartment, the least you can do is buy your workers a wheelbarrow and some proper baskets
>man seeing Indian laborers work at construction sites, especially of small builders, is sad. They have no safety gear, and have to resort to shoddy make shift tools to get things done Oh boy and this is another part of the equation. The way the labourers work and the greedy contractors is crazy. Safety is an absolute joke. The extremely sad part of it is there is simply no awareness with these labourers. They spend money on their mobiles but don't want to buy some simple PPE gear which does not cost much. Even if they have it they don't wear it. Also the people who grind granite etc are guaranteed going to die in the next 5- 10 years. It is heartbreaking to hear them send money to their homes in Bihar and UP and thinking that their wife and the kids will lose their husband and father in the most painful way due to silicosis. The amount of dust that flies around while grinding is crazy. Water,mask and eye protection are a must. Also the chemicals used to clean are all very strong and will cause some kind of problems later on. > the least you can do is buy your workers a wheelbarrow and some proper baskets You should see the way how they haul plywood. One of them put those heavy board on his back and climbed 3 flight of stairs to my home. I wasn't aware and was surprised at this. The guy was completely out of breath and was asking for water. I was worried that he would collapse or something. If you go to granite,quartz cutting centers you will go mad. They have to bring those slabs from the truck down and they don't even employ proper cranes. There will be a set of labourers lifting those massively heavy slabs from the truck and it is extremely dangerous. Heard some story of a truck toppling over the labourers and crushing them because some useless contractor wanted to bring those slabs down fast and did not understand that the slabs had to removed in a balanced way. This labourer had his leg crushed and could not work. He asked the contractor for some money to atleast start some small cigarette shop but the contractor didn't pay a single rupee. Some of the stories are really crazy. Many of the home owners don't care. They only come for inspection once in a while. I have been with these labourers during my house renovation and have seen them very closely. Their lives are brutal. Enforcement of labour laws regarding safety are an actual joke.
This is generally a very baffling attitude I’ve found across the board: refusal to spend money on better equipment. So many plumbers and electricians who come to my house use makeshift tools even when they self admittedly make good money. Even among my own friends making 50L+, there is a baffling refusal to invest in good gear. Two friends worked all through the pandemic on tiny desks and dining room chairs instead of buyinh a good table and office chair
Bhai rajhans group wala maare friend Che. They at least do work to on outside. Dads business partner and others can’t even speak English, they all mafia guys who been opening weekend homes and shit. Laxmipati is opening a weekend home right next to belizza. I own belizza it’s a failed project
>The dude never built the pool, just built a jazccui on top. Consider yourself lucky.
Bro it’s unhygienic. It’s a shared jacuzzi with 16 families.
You don't have to use it. If the jacuzzi is leaking, the wavepool would have crashed through your ceiling while you were sleeping.
My point. Anyone with no experience and education is going around doing anything, and indian regulators are sleeping. That causes a whole culture and system of mediocrity where fairness and quality are swept under the rug.
How much the penthouse has appreciated over last decade?
This is interesting, but I'm not sure how much can I generalize it for what's happening in the rest of the country. Surat just opened their diamond bourse. From what I heard, there is a migration of diamond related business from Mumbai to Surat. This trend of high cost real estate market in Surat could just be a special case in time and space. Not saying the information is not useful. Just wondering how generalizable is it.
Surat doesn’t have good education nor does it have liquor and clubs. Most Diamond folks in mumbai are used to living a very luxury lifestyle with celebrities. I doubt the migration would happen with families, I feel people would move and buy property do business a few days a week and handle it same way from mumbai.
Glad to see so many Surtis in a single r/IndiaInvestments thread :)
A good part of these investments is handled by NRIs. In 2022, financial year, over $14.6 billion USD was sent by NRIs to invest in real estate in India. At Vance, we spoke to 500+ of our customers and all of them are interested in real estate in India. It's safer investment and has fast growth - considering tier 1 cities. Another audience would be millenials - working population in tier 1 cities is on a rise.
Couple questions 1. Are they buying them for themselves or to lease them out ? 2. What is the year over year appreciation for say apartments in these buildings? I for one have not been happy with maintenance in so called luxury communities in India - they look great for a few years then everything goes downhill.
Interesting question u/sharadov **Insights from my conversation with Vance customers -** $112 billion came to India last financial year. $14.6 billion USD is reported to be directly invested by NRIs. Should be much higher given many NRIs put money in their parents account (gifting to family is tax free on capital gains) and then use this money to invest as well. **Answers -** 1. They move out of the country but they always have this in their back of mind to return to India. Many NRIs invest in their hometown, and not just flats or apartments but land as well. 2. Year on year appreciation differs city to city. Eg. I read somewhere it has taken about less than 10 years for Bangalore to pay off the entire cost of property, while that is 20 years for Bhubaneshwar. Interestingly, next in race after Bangalore were Indore, Vadodra and Ahmedabad, not Mumbai or Delhi. Paying for maintenance again comes with reasons. Example - Half the people in Bangalore do not know what is costing them 5-6k every month additional - and an insight here is the water bills that their society is paying for those tankers. Maintenance can go down drastically in areas where there is Kaveri water.
>I for one have not been happy with maintenance in so called luxury communities in India - they look great for a few years then everything goes downhill. I can give some insights here I guess. Many of the buildings constructed are difficult to maintain. People who buy such luxury properties are superficial people who are least interested in the details of the buildings like what cables have been used, water supply to their buildings or the sewage lines etc. All they are worried about is the showoff factors. The vendors hired to manage and maintain these luxury buildings will not be cheap. They will increase the prices and why not as they know the clientele living in the building will throw money. Nobody is going to courts and suing anyone as we all know nobody has the time for it. Eventually the owners will sell it someone else who is equally ignorant and the cycle continues. So the people who make the most money are these maintenance vendors and the builders.
> It's safer investment and has fast growth - considering tier 1 cities. What about INR currency depreciation?
NRIs might be contributing to this mania. But I don’t think “it’s safer investment” is true. Countries like USA offer much better returns in real estate than India and with almost zero legal/political/mafia headaches.
>It's safer investment and has fast growth - considering tier 1 cities. Lmfao. Did these clowns learn nothing even after the us housing bubble burst?
Hey. Please check DM
Do you have a breakup of the people's hometown states who are buying real estate in India? I am seeing a growth in investments in Pune and Hyderabad and people investing in neighboring states. My data is anecdotal.
good to keep in mind that salaries in the US have skyrocketed, especially for sectors where Indians are over-represented. At the same time, rupee has been weak Consider a situation where your salary shot up from 150k/year to 225k/year, plus you got 25k/year in stock options, and rupee went up from 70 to 82. If you were sending 20% of your income back to India, you are now sending back 41L instead of 21L before
I was talking to a couple of agents recently and as per them not everything is booked by individuals. There are big businesses booking in bulk as soon as pre-launch happens blocking good chunk of prime units. They are infact intimated by the builders during pre-approval phase itself much before any of us mango-people even know of the project. This gives them & the builders 2 major advantages: 1. Builder gets to market high demand showcasing 50-60% units sold out already which leads to giving general buyers the FOMO and they end up booking in hurry. 2. Once rest units are sold out and closer to delivery the initial blocked units are released at much higher prices(50-60% depending on demand) than initial launch. This helps the initial firm doing bulk bookings book profits. Mostly the profits are shared between the builders & such firms.
This makes a lot of sense, actually.
then the best time for individual investors to buy is when it is booked 50-60% from the begging and when the firm opens up the block the prices will inflate and individual investors can profit heavily in just 2 years?
Well in that case you have a risk if project is not completed as promised. Hence you see big builders like prestige/sobha who have a track record of completing projects end up with higher demand eventually leading to higher prices So choose your poison accordingly
> Once rest units are sold out and closer to delivery the initial blocked units are released at much higher prices(50-60% depending on demand) than initial launch. What is the guarantee that the units will be sold at these higher prices? Aren't the big businesses also just betting here? Also what is preventing the individuals to join in with big businesses to sell their units with them?
Well once project is completed, buyers line up moreso for tier-1 builders like prestige/sobha. Since more than half is already sold out and projects are from tier-1 builders, status completed, they are anyday a safer bet than unfinished mid-sized builder properties About betting, that’s what businesses do. If they were to play conservative they won’t be businesses. Nobody stops individuals from selling, infact so many people already do it
Yes Tier-1 builders generally do well in the market. My question is why would big businesses want to block for Tier - 1 builders? Their names are sufficient and 50-60% margins is very high for Tier-1 as it is a safe bet. It looks more or less that these Tier-1 builders are under pricing their units.
Prelaunch drives usually are more show than go. Hence you see relatively lesser pricing but when you try to book all preferred units would be gone already. Who do you think are booking all those?
This is the game going on! People hardly gets launch offer price, its just there for promotion.
Yes and looking at the recession I feel no way in hell are the IT folks in Bangalore booking these 2-3cr apartments at this pace. This made-up-demand is just there to hold prices till market recovers and people eventually get comfortable paying those. Hope the day never comes and there is a correction
Makes sense. I went to launch day of 2 projects of Prestige builders in Bangalore. For 1st project, Even on launch day, they informed all units till 25th floor as sold out (except ground floor) For 2nd project I gave cheque of 10 lacs as EOI (expression of interest) even 3 months before project launch to get preferred unit. On launch day, they tried adjusting me to some completely different unit, I just cancelled my booking the same day as well as cheque. Can't deal with this bull@@## anymore
[save taxes](https://incometaxindia.gov.in/Acts/Finance%20Acts/1982/102120000000036022.htm) captail gain when used to buy house save you from taxes, so people who know this mostly buy such houses.
I recently read in another thread that this exception can only be claimed once in lifetime, is that true
yeah, in some cases twice. Afterwards you need to invest in your relatives names. So can be done more than once based on family size
No idea on this, maybe a CA can help
Wealthy in India is getting wealthier. However unlike in the past as well as in many similar economies, poor and middle class isn’t getting poorer. They have some amount of yearly revision to their income to adjust for inflation, thus giving this sense that they are better off, without actually not being better off. Probably also a reason why there aren’t any major movements or uproar against economic situation. Coming to OPs question, a lot of this rich class is now purchasing real estate. After demonetisation and increasing digitalisation, real estate is one of the few domains that still remains attractive to traditional investments. Also, there is this mindset change. Earlier generations preferred land area over a house and its facilities. Our generation prefers convenience, accessibility and proximity and thus more focus on the construction bit and the location, than the land. Our dads would have said “thats a lot of land for that price” and we would say “that flat is super close to school/office/mall etc”
Mostly companies executives. When these CXOs retire, they usually liquidate their volatile assets (equity) and need to spend it in fixed low risk assets to avoid taxes (which usually amount to ~30% of overall capital gains). Now these equity shares are worth crores and what asset do you think provides lowest risk and almost 10-12% CAGR in india? Ans - plot, apartment. Also, govt has provided a backdoor to avoid taxes in such cases - Section 54 of capital gains. Thats the reason why you find 1 bhk apartment in mumbai worth almost 3-4Cr.
good point. also to consider - FIRE number - most CXOs retire by 40s instead of 60s these days. Once they have enough capital earned, they just invest in real estate in tier 1 localities.
when has property provided 10-12% cagr in india lmao.
Long term capital gains on equity in India is 10%, even short term capital gains is 15%. Capital gains on real estate is 20% and section 54 bonds are capped at 50 lacs. It does not make much sense to sell assets taxed at 10% to buy assets taxed at 20% other than for diversification. Even then I can always sell one equity and buy a diversified mutual fund.
30% tax on capital gain kaise ? Equity comes in the top list when it comes to capital gain
Surcharge, cess wgerah bhi lagta hai high capital gain pe.
Property in India does not give 10-12% CAGR. Lmao you’ve to be delusional to think that
Literally every property in tier 1 city-region (in high income group area) provided at least 10% CAGR in last 5 years. In fact some flats in high income society generated almost 15% CAGR in noida. You wont expect these return in middle income or low income zones (where properties are worth 50-75 lac max), but had you bought a flat worth 1.5 cr in noida, in 2019, that flat is now priced 2.5-3cr
Not an answer to your query, but adding to it. Just driving around Bangalore even in not so high end localities you will always see even basic apartments starting at 60 - 70 Lakhs. And been better one's start from a crore. Then there are the niche one's, roman style villas, Greek mythology based cottages, almost underground style villas. These start from 5-7 crore. It's insane.
My friend and ex colleague (working at an MNC and doing very well with a 2 cr package), purchased a DLF property at Gurgaon at 7 cr. ||| As per him, he had to apply a lot of sources to get an allotment here in pre booking. Got an appreciation of 1.5 cr within few months after launch. So, there are people who have lot of disposable income and somehow these premium properties are in high demand. Don't know why.
my boss earns about 1 cr pa yet struggles to find a nice property, he's just turned 30 and does as his dad says.
There are not many people having package of 1 cr Or more, even with 1 cr, your take home is around 5 lac.
exactly, but in tech I have seen many people above 1 cr annualy
NRIs and ppl who have spend 4-5 years outside India are driving the Real estate market.
I don't think NRIs with 4-5 years outside India can spend 10cr-20cr+ in luxury apartments. Let alone can pay EMIs on it.
1 crore at 30? what does he / you do?
He took loan to buy ? 2 Cr is CTC. Take home will not be high as most part of it is bonus and stocks.
Yes. Has a lot of ESOP from earlier company too. Salaried can't do much without ESOP.
Makes sense thanks for sharing. Many dont have this option, so better to put this our here.
In which industry do you work, that package is huge.
FMCG. Marketing
Trust me these questions damage you more than helping out. People who earn such amount rarely get into for the money. It’s a competitive world so you should things in which you can be competitive than choose your vocation based on how much money you can earn.
Not entirely true. I know a bunch of such high earning folks. CS graduates from IITs. They didn't get into it for their love of computers or engineering. They got into it for money. And worked towards clearing JEE, securing seats at good IITs and then towards placements or company jumps. So yes, you need to keep improving and competing. But this doesn't take away from the fact that they got into it for money. If working in agriculture paid as much they would probably have gone to agriculture college.
Hi u/notsosleepy. Thank you for reminding this and to anyone who reads it. Though enamored by these figures, I am wary of the hardwork and networking needed for it. I like to keep knowing about how money flows and where, sometimes we get to know about interesting careers generally not popular. Guys who read it, money is coming, just do well what you like (and can do).
Ok, so I work in this industry in Mumbai and varied individuals are buying these flats. From salaried professionals to business owners (diamond traders, tech workers, petrol pump owners, industrialists, etc.) If this is a bubble, we are definitely in the middle stage as I don’t see it popping for a while
even after demonetization a lot of black money is in circulation, property is the easiest way to make black money white and remember govt also made an economic policy that money from stocks etc will not be taxed if invested in property.
Am interested to know about this. I was planning to liquidate some MF units (more than a year old) for investment in an apartment down payment. Would I need to pay 10% LTCG or will it be exempted as that’s a RE investment?
yes, it comes under section 54f, though there are. some conditions look into it
What ? You can buy a villa for around 1.6 crores in Chennai that too in a township. Most apartments decent ones are around a a crore. Only super luxurious apartments cost 5 crores above.
The average price of a 2bhk in my far north suburb of Mumbai is 2cr
Mumbai will be expensive even Bangalore is expensive OP mentioned Tier 1,2,3 cities hence I gave an example.
I thought Chennai is Tier 1 only
It is , but it’s not as expensive as others.
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Chennai is a metro city. You don’t make up tiers as per your choice.
Yep. Not much difficult to find 2bhks at 3/3.25cr either if in a finished society.
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That’s what I mentioned in my comment
I’m only talking about super luxurious apartments. And my question was not to find decent affordable apartments for myself. My question is these luxurious apartments are being constructed a lot, like really a lot. So how come they’re always full and who is buying them?
Mostly NRI's, doctors from big hospitals like apollo , business folks take your pick.
Doctor at Max. Can't afford it
I live in ggn bought a 2bhk and while the deal was going on i was offered 5 lakhs to relenquish my deal. I took out a home loan and did not sell…today seven months later im being offered 30 lakhs more for the same flat!
What’s the % wise upside in seven months?
Real estate in India is one of the most opaque industries there can be. It's almost a perfect storm of corruption, price manipulation, huge leverage, greed and a general lack of ethics. I see people pointing to demand-supply gaps, upward mobility / the expanding middle class etc., but it is difficult to fathom what causes such spikes in prices when cities are becoming less livable and core infrastructure is forever playing catch-up. With rental yields being so low, I'd imagine it makes a lot more sense to rent rather than to buy, for the average or even upper-middle class person, who doesn't have a lot of cash lying around. All that said, the majority of people buying these expensive apartments are likely to be business owners, NRIs, and general HNI folk (docs, sr. execs, govt. employees with _other_ income streams). The percentage of aspirational / leveraged purchases is hopefully low, else things can go really bad when there are adverse economic events.
>I see people pointing to demand-supply gaps, upward mobility / the expanding middle class etc., but it is difficult to fathom what causes such spikes in prices when cities are becoming less livable and core infrastructure is forever playing catch-up. Many of the statistics collected by agencies is bullshit in India. They don't account for any of the underground economy which requires in depth work on data collection which nobody is bothered which is a very difficult job so many like to play with imaginary numbers in their AC offices. They act like India is Japan or something and collect those numbers as if real estate is transparent and regulated.
There are many who buy houses at ₹5Cr and immediately renovate it. Heard from my contractor that all the tiles of the brand new house was broken and new set installed. Wife didn't find the kitchen to be of her specs and the counter tops were broken to build a new modular kitchen. There are many cases where the contractor is told to make sure the interiors look like they have spent ₹60+ lakhs with the budgets going upto ₹80+ lakhs. This India is not your father's India. People are very rich now.
I have been a terrible son man. My daddy had more money than me at my age and will always be richer than me. I just turned out to be a wanker.
I met a real estate reseller in Bangalore. He gets into an agreement with owner to buy a property for the cheapest price( they send about 10 of their own personel asking for lesser price to bring the property value). Then they put it on market for a price with a markup of 25 to 75 lakhs more! Yes, in each such transactions, they are making 25 lakhs atleast with an investment of 25 lakhs for agreement! This reseller was a carpenter 8 years back and now his net worth is around 100CR. He rides a swift and lives in outskirts of Bangalore. When his children grow up, they will get all fancy about this 40CR flats, and liquidate their father’s money to buy such house. This is just my theory. There are 1000s of such people making similar money with such mafia business.
Mostly NRIs. And some companies. And not to mention that previous 10-15 years have been quite good for some people (and no, this has nothing to do with politics just economics). And there is also marketing hype - everything is sold so every unit left is gold. That said, a lot of them remain empty as the owners don't stay there. A lot of high rises in my area have like 20-30% empty apartments.
Business owners. Know a few personally.
Read this article from The Ken, it might give you some good insight https://the-ken.com/story/this-is-no-time-to-buy-a-luxury-house-but-homebuyers-dont-care/
[https://archive.ph/sexJ9](https://archive.ph/sexJ9) Without the paywall
That's not even 20% of the article. I've shared the full article above
lol "luxury" according to that article is houses worth over 1cr, and houses over 2cr are "ultra luxury" 1cr gets you a 600sqft apartment in a shitty locality in Delhi
Can you gift me this article? I remember the Ken used to have gift article share link feature.
Dm
Could you send me the article too? Sorry, don't have access and it seems like an interesting read.
Sharing it here for everyone [The Article ](https://cdn.discordapp.com/attachments/969240641022361610/1187930289998135326/This_is_no_time_to_buy_a_luxury_house_so_why_are__231223_070031.pdf?ex=6598ad4b&is=6586384b&hm=f1e5704da8ecec7db24c709750f5fa2766eca00671bb808660eb8f5b48044fed&)
i have my property for sale in central bangalore for 3cr and no one is buying. clearly i am searching for the wrong people.
Can you share the ad link
You have underpriced it. Anything under 5 crores does not get people going. Sorry about the bad joke, hopefully you get a buyer soon. All the best.
If I had that kind of money, I would surely go for an independent bungalow with a huge courtyard, garden and all that jazz. It makes no sense to spend such humungous sums of money and end up with a flat. I guess these flats are just investments because for the purpose of living, a bungalow is infinitely better in all aspects.
These are luxurious flats. They are at the city centre and have all the amenities. The big problem with individual houses not inside a township is that you need to fight for services to come to your house. In a flat/township/rowhouses the association is generally powerful to get facilities.
These bungalows start at 20cr range
My question is who is buying them? Either NRI's or people in India having Black Money. For Indian salaried people, buying these Luxury apartments does not make sense. These apartments are conventionally too expensive than US houses No, they are not . Decent apartment prices in tier 1 US cities ( SF bay area, NY, Seattle ) starts around $1 million. They are much smaller is size as well ( <2000 sqft ) .
> For Indian salaried people, buying these Luxury apartments does not make sense. An acquaintance of mine has 1cr+ package plus bonuses. They are living in a temporary rented house whose rent is coming close to a lakh I believe and renovating a house in the same area/township whose final cost is going to be around 4Cr minus the renovation. Not into business but a VP in an MNC bank. I am wondering how safe that job is though for such extravagance.
I wonder that too. People are living like there will never be another recession! Friend of mine who works in a US-listed company takes home nearly 1cr. Wife makes 40-50L as well. Yet he lives in a 2bhk he bought in Marathahalli back in 2015 for 38L.
>People are living like there will never be another recession! Was there ever a recession in India? There were a few bumps down the road but I have not seen anything crippling from 2000 onwards. Even the dotcom bust was a boon here. I have missed a lot of investing opportunities especially during the subprime crisis where I was certain our banks would collapse. Nothing like that happened here.
I really don’t know how it will play out. Salaries for mid career professionals in India are often at the same level as Europeans and even Americans. That wasn’t the case back in 2008 Will there be enough appetite to pay $120k salaries in a recession? No idea. But if you’re heavily leveraged and in debt, its never a bad idea to deleverage
No doubt that there are layoffs and salaries are coming to precovid era. There is hiring freeze ongoing in a lot of companies and the situation does not look good. Yet I see jam packed malls and traveling and hotels booked to capacity during holidays. Alcohol sales have hit new highs in many places. Mind you that this is with high inflation. I don't see much of deleveraging. >But if you’re heavily leveraged and in debt, its never a bad idea to deleverage I am reminded of Radhika Gupta in the Bombay shaving company interview saying things need not be so cyclical where in good times you overstretch and in bad times cut down drastically. That is a good rule to live by. >Will there be enough appetite to pay $120k salaries in a recession? No idea. With the announcement of recent rate cuts in the US and the elections fast approaching the can will be kicked a little bit further down the road. We might see some pain after the elections though.
I’m just in general flabbergasted by prices and salaries in India. I’m a freelancer and I used the “earn in USD, spend in INR” loophole for years to make good money. A common thread among all my American freelancer friends was hitting the “six figure” mark - $100k+ usd. Yet now I see most of my Indian friends working in MNCs easily hit that 100k usd mark themselves. Suddenly seems like Indians are earning as much as Americans, yet when I see the working class people around me - or even government employees - their salaries are barely in the $10k range.
Yes, salaries have been crazy especially in the past 7 - 8 years with a significant jump during COVID. I just saw some having a CTC of 30LPA with YOE of just 3.5 years in VMware. >yet when I see the working class people around me - or even government employees - their salaries are barely in the $10k range. Many working class people have alternate incomes which can be earning significant black money. I got fooled many times to think their salaries are average but if you scratch the surface you would be surprised how much they make or have assets on the side.
True true. Working class people also start earning earlier, don't have expenses like ours, usually have entire families working and don't pay taxes. What's really lagged behind is government salaries and all the other "safe" jobs like public sector banker, and to some extent, doctors. A lieutenant in the Indian army makes around 56k/month. Even the chief of army staff makes 2.5L/month I know they get a ton of perks, but man, it must feel weird knowing that you, the chief of an army of 1M people, makes less than some kid who learned to code Android apps in college
> I know they get a ton of perks, but man, it must feel weird knowing that you, the chief of an army of 1M people, makes less than some kid who learned to code Android apps in college The kid doing Android apps is not going to save much in a Tier 1 city. The person renting the flat for this kid knows that he is earning a good amount and will jack up the prices. Every other service around them i.e. maid, vegetables etc will be high, knowing their clientele. Whereas in other professions not tied to a city, they can make good amount, save a lot, afford quality and may also retire early. Consider a flat in Mumbai vs a house in Mysore. I see ₹3-5 Cr flats in Mumbai with kitchens looking like railway bogie kitchens. I never really understood the fascination with earnings. At the end of the day savings and net worth matters.
Tier 1 cities in US are also Austin, Dallas, Philly, Miami etc which also consists of suburbs, and I’m comparing these apartments prices with those suburbs family houses. And if you want to compare SF, NY, and Seattle. You might wanna check out apartment prices in south Mumbai area. It is def more than Sf and Seattle. A decent 2k sq ft apartment in Lower Parel will cost you approximately $2M or more in India. Which is insane. Might wanna check out DLF camellias project in Gurgaon, they’re going for 40-50cr.
Austin, Dallas, Philly etc are tier 2 cities and not tier 1. Austin maybe is gradually moving in to Tier 1 category in terms of jobs but Texas has plenty of land so prices are still tier 2
DLF Camellias price appreciation has been insane They were going for 12-18cr 2-3 years back
* This is incorrect. Apartments in greater Seattle area costs between $400k to $ 1 million. Yes 400k ones are much smaller usually 800sqft. With $ 1 million you can get 2000 sqft. * Single family homes, which we call bunglows in india start at $ 1.4 million. * Comparing the purchasing power parity why are apartments so costly in india is still a mystery for me. Probably because land in india is far costlier?
FSI limits ig. A Land Value Tax will solve this
A 800 Sqft apartment ( mostly 1 bed ) in Cities like Hyderabad,Bangalore,Pune will cost you around 1-1.5 Crore. Still much cheaper than 400k USD. Real estate in India is high compared to salaries due to black money.
In Hyderabad, it is mostly the NRI folks
Don’t be fooled by these advertisements- most of them are money laundering schemes. They just keep rehashing the same projects with different names.
Many of these apartments are actually not sold, it is only projected by the builder to increase prices. If you actually go to the sales office their tactic is to tell you all the project is sold but we can try for 1 apartment on this floor it's the last unit left blah blah. Or mostly these channel partners or brokers or investors will buy with some very minimum down payment (5% or something like that) to sell it immediately at a nice profit
EMIs and loans.
Here in south Delhi, a lot of old owners either died of Covid or are selling off their houses and moving to these flats. Reasons being the lack of parking space in Delhi and poor maintenance and facilities. In my area, ongoing rate for land is between 4.5-5cr/100sqyd
Why is so much construction happening in the first place? People buy flats to get tax concessions, a false demand is generated which in turn makes the prices go sky high. Later these flats lie either at dilapidated state or are resold. This cycle just continues. Or people with disposable income just keep buying to get appreciation and later sell off. The wealthier keep getting wealthier and the poorer just keeps struggling. Also, at this rate we would hardly have any land to cultivate or anything.
It's a bubble. No one is considering the climate change. See the map of the world and which area will be affected badly. I intend to sell all my immovable properties in the near future.
The funniest take here
I may be wrong but the data doesn't lie. The uber rich are investing in food and water because of uncertainty of climate. Most of the region will have harsh living conditions. What will be affected the most? Food and water sources.
Interesting viewpoint. Would you have something worth reading on these lines?
It’s a bubble , and of course still a popular way to launder money
What bubble, when have you ever known the real estate market to actually crash. Covid was a catastrophic event and yet that hasn't stopped housing prices to go nuts. This shit is economic downturn proof.
Here is a pretty decent article and analysis about real estate prices in Mumbai over the past decade. A regular bank FD would have done better than property investment in Mumbai.[https://www.freepressjournal.in/mumbai/mumbai-real-estate-a-decade-of-stagnation-or-opportunity-insights-from-celebrity-sales-market-dynamics](https://www.freepressjournal.in/mumbai/mumbai-real-estate-a-decade-of-stagnation-or-opportunity-insights-from-celebrity-sales-market-dynamics#:~:text=According%20to%20a%20study%20by,declined%20by%20one%20per%20cent)
Probably Ambani, Adani, Tata etc
lol I can assure you that Ambanis, adanis and tatas are not buying these apartments, most likely might be building them instead.
Idk man. Buff Jezos just dropped half a billion on homes. https://medium.com/collapsenews/jeff-bezos-acquires-500-million-worth-of-single-family-homes-driving-up-house-prices-even-more-f53afa88cfa4
You may need to give source about Tata and Ambani and not Bezos. Different markets.
No source. I have edited my earlier comment.
Great question! I would love to read answers from those who actually work in this field...
Its not the NRIs. Properties in India are boosted largely by black money. It is one the best means for converting ill-gotten black money to white.
It is inevitable. Work force is being reproduced like a burst hydrant. Wages are degrading, earlier you would have to give employees houses, vacations, all that is gone now. Property is being held on from generations. And the land quantity is the same. I firmly believe it is called gen-Z because it is the last generation. After that will come the revolution. When these truths have percolated down to the brainless masses. When you cannot look in any direction without seeing the results of these truths glaring them in the face.
Actually real estate still seems to be a safer bet . Not only Surat, even tier 2 cities in Odisha have the same effect . Reputed builders such as Lodha , Raheja and Hiranandanis build projects in such cities , where land is relatively cheaper. And second generations in these places have no aspiration of living here , however want sometjinh for their parents. And hence go in for such projects . No doubt these projects are all premium projects. And the builders usually don't skimp on quality. But flats above 50 lacs were unheard of in Bhubaneswar, but you easily find projects with about a crore and above now .
Most of these apartments remain unoccupied as they are investments by folks having a lot of black money.
I have recently shifted from Hyderabad to Ahmedabad. Ahmedabad is not as big as Hyderabad, but apartment prices for good 3bhk are as good as Hyderabad. Builders in Ahmedabad give hardly 50% of carpet area compared to 30-35% in Hyderabad, getting carpet area of 1000bhk requires one to buy apartment of atleast 2000 sft super built up area. Value of flat reaches 2 cr with registration and this in areas on other side of SG highway, SP ring road. and Amenities are name sake, a small garden, gym/pool on one of the above floors The size of townships is not as big as My Home in hyderabad , where you find long walking tracks, play courts. In recent visit to Bengaluru saw Shapurji palanji scheme in Binnypet which is core city and not outskirt. it is around 1.7 CR, the township if huge with hell of amenities. The apartment walls are also RCC. Feeling Ahmedabad prices are too high
I think it's all those FIRE and FAT FIRE chaps lapping up all these properties since their quarterly dividends amount to a few crores.
Here in Bangalore( and also in Hyd), the IT guys
1. People who sell some property 2. Startup employees selling ESOPs and RSUs 3. Business owners making hard money 4. Investors using leverage
Builders hold good inventory. Black money people buy too and there is real portion of genuine demand from people who want to live jn new house.
Dang, this thread is a reason why I doubt and feel terrible about myself. I can't even afford to buy a flat in Tier 2 City let alone tier 1.
don't buy the flat. rent it, don't follow the rat rice. contribute more towards your mutual funds SIP and other investments. Don't get into societal pressure of owning an apartment if you can't afford it, especially if you're young with no kids.
Yea that's true. Gotta experiment living outside a city now. Never spent time outside City where i lived a routine life. Let's see. I'm not young though but no kids lol.
You're in your early 30s, that is still young in terms of investing timeline of 15-20 years.
In Mohali city, flats might be 5 cr but most new flats are in New Chandigarh and other arts of Mohali district. Thpse cost 1-2 crore and are definitely affordable for many people working in and moving to Chandigarh (where GDP per household is 15-20 lakh already so you can pay it off in 20 yrs). Then you have speculative investment by elites and NRIs. I suspect it's similar in other big cities, the top 10% (that's 0.5 to 2 million ppl in tier 1 cities btw) can genuinely afford these properties. That's your elite softwareworkers, lawyers, doctors, SME owners etc. Around 2 lakh ppl graduate from elite institutions every year, they earn 15+ LPA and need a place to live in tier 1/1.5 cities.