The new property millionaires

Making money from real estate is no longer the pensioners’ prerogative. Twenty-somethings are today buying and selling homes and offices and booking bumper profits in the bargain. Varun Soni The first time that Sudhanshu Mishra invested in property was when he was 29 years old. He bought a home in Lucknow, which is now occupied by his parents. Subsequently, after relocating to Bangalore, he invested in property by buying two three-bedroom apartments, one of which is in the process of being sold. Bought for Rs 33 lakh, the market rate of the apartment in question today is Rs 65 lakh, giving Mishra a profit of Rs 30 lakh.
The same goes for interior designer, Lavina Khanna. She bought her first property when she was 30 years old in Dwarka, which was just beginning to make a mark on the property scene in Delhi. She bought the three-bedroom apartment for Rs 15 lakh and sold it Rs 30 lakh after four years. “Appreciation was not as fast then as it is today. Now, it does not make sense to hold on to property for more than two-three years,” says Khanna, who has bought two apartments in Gurgaon and one in Greater Noida at Rs 2,200, Rs 2,100 and Rs 1,800 per sq. ft respectively. Earlier, she has sold one apartment for Rs 3,000 per sq. ft., which she bought at Rs 2,100 per sq. ft, two years ago.
The lure of big bucks is too great to resist and if you can perfect the art of garnering them periodically, then why not! Investing in real estate is the new mantra for a lot of people in India today, considering the boom that the sector is witnessing of late. But, the investment bug has bitten the young more and with them they bring in new ideas and values.
The most prominent trend that is being witnessed today is the decreasing period of ownership in property. Most youngsters today— in the age group of 25-35—are buying property and holding it only for two-three years. The reason—they prefer short gains rather than sitting on property for life, and the best way to do this is by buying through pre-launches.
Take the case of Vikas Khokha, a senior executive with Bharti Airtel, who prefers to invest in pre-launches, as it gives him the opportunity to make quick profits as and when the property is launched and the prices appreciate. He bought a three-bedroom apartment on Sohna Road in Gurgaon when the area was just coming up. Bought for Rs 32 lakh, 34-year-old Khokha sold the apartment for Rs 40 lakh after two years. The market rate of the same apartment today is Rs 70-80 lakh.
“In a pre-launch, not only are the rates less, but I also don’t have to pay the entire amount. Payment for pre-launches is usually done in regular installments. As it is banks and financial institutions do not provide loans for pre-launch offers,” he says.
Khokha is a part of a growing tribe of youngsters who are looking for short-term gains, instead of sitting on a property and passing it on to the next generation.
Generation Y wants to partake of the fruits of investment in this life itself, even though it means getting a profit of only a few lakhs. “Whatever profit I get, I again invest a part of it in property,” says Khokha, who has subsequently invested in plots in Faridabad and Agra as well as an apartment in Noida.
In fact, with interest rates rising, a number of youngsters today prefer not to go in for home loans and buy property by putting in their own savings. An example to boot is that of 35 year old media professional Vivek Makkar, for whom investing in property today has become a ‘way of life’. After selling his plush bungalow in West Delhi, Makkar had the cash to spare, which he wisely used in investing in property by buying space in a mall in North Delhi and buying apartments in Gurgaon, Faridabad and Noida. As soon as the property appreciates, he sells it off and makes a cool Rs 15-20 lakh per property, a part of which goes into more investments in real estate.
In fact, a number of investors today are investing in malls. They buy space in a mall under construction (for Rs 200-300 per sq. ft., depending upon the location) and then rent it out to big brands for Rs 450-550 per sq. ft.) and reap the benefits for all times to come.
Another trend that is doing the rounds is that of many mid-level professionals joining hands and buying property together. Even though the property is in an individual’s name, the money put in is that of four-five people. They prefer to invest in Tier II and Tier III cities, which are accessible to the metropolitan areas that they live in. Like advertising executive Atul Arora, 32, has invested in Meerut, Jaipur, Zirakpur and Panipat with four of his friends. “We divide the profit that we get after selling and depending on everyone’s requirements again invest it into property. We choose Tier II cities because being mid-level professionals we cannot afford the high rates that the Delhi NCR is recording these days. Tier II cities fall into our budget and give good returns as well,” he says.
However, if you look at prevailing rates in metros, then investing in property there always fetches you the best possible profit. The present rise in rates is making old time investors laugh all the way to the bank. As is the case with Mumbai-based KK Rajaram, vice president (Finance), Shri Chakra Udyog who bought two flats in Vikhroli in 1993 at the rate of Rs 1,400 per sq. ft, whereas now the value currently stands at Rs 6,500 per sq. ft With plans to sell the properties, Rajaram plans to utilise the profit he receives in buying new property.
But, what is making young professionals invest in property today instead of in shares, apart from good returns? “Liquidity is more in real estate as compared to investing in the stock market. Shares do sell outright as compared to property, but then unlike real estate they also witness a downward graph as well. Even though there is a slight correction happening in the high-end segment, property price never goes down,” says Khokha.
Like Khanna says, the “boom will never go bust.”
—With inputs from Mona Mehta
Tips on investing in property
• The obvious driver is good returns, fuelled by the real estate boom in the country. Property never shows a downward trend unlike shares• It is always better to invest in Tier II and III cities like Nagpur, Coimbatore, Panipat, Indore, Jaipur etc. as they have a much higher scope for appreciation. In terms of buying bulk properties, customers should focus on buying properties outside of metros for investment purposes• Appreciation is faster today than it was a decade ago. It does not make sense anymore to hold on to property for more than 2-3 years• Investing in a pre-launch, though risky, enables you to dispose off the property sooner. Also, you do not have to pay the entire amount as payment for pre-launches is usually done in regular instalments


URL: http://www.financialexpress.com/fe_full_story.php?content_id=165310