COUNTRY HOMES IN DELHI – THE MULTIPLE OF ‘X’
By Ramesh Menon
Director, Certes Realty Ltd.
The First weekend of August 2012 beset a tizzy of activity in the Farm House & country homes segment in Delhi, with every newspaper, with or without valid knowledge, publishing news that the farm house policy of Delhi has been approved by the Lieutenant Governor, Delhi, and sent to the Urban development ministry, for notification.
The question to ask is – “Are the buyers aware of the facts & fine print? Does it make sense to invest in the proposed Farmhouse & Country homes policy in Delhi today? If yes, where?
My sense is that the buyers are relying on some unconfined news articles written by junior journalists, rather than experts who actually know the ground reality of Land in Delhi.
Here are some pointers and interesting revelations from the research undertaken by www.delhifarms.com, the online initiative from Certes Realty Ltd, with the sample drawn from the investors’ community in the Delhi NCR area, qualification being their participation in the NCR real estate story from the year 2007 onwards.
Who should buy?
Agreed that the highest returns on Investment (ROI) is always made on land, only those with an appetite for investment in Land, and those with “Patient capital” have had made the desired returns. Investors, overleveraged, “very short term outlook” better stay away from this opportunity, as the prices don’t fluctuate on a daily basis (a la some other punter favourites). Ideal candidates who are likely to reap the Big X return would be those who take a 2-year outlook, capital which need no overnight liquidity, and the asset need not be leveraged. Such investors would not make any less than a BIG X return.
When should I buy?
Although there is no ‘right time’ better than today in Real estate, there are certain distinct advantages that you should consider today. The land prices in Delhi, after remaining constant for a reasonable period of time, are now on the upswing. Most information about the Delhi master plan MPD 2021 & country homes are available in the public domain, and you are no longer ‘punting’. The difference between yore & today is – Buying knowledgably.
Where should I buy?
In my observation of being in the business for the past few years, every buyer for Farm House & country homes in Delhi, is sure about three things – BUDGET, USAGE & TENURE.
If you are intending to create a place to build & live in, develop an emotional quotient (although the concept is slightly misplaced now), do not look beyond the mature markets, where the price appreciation has already been garnered by some other early stage investor.
If you are intending to build “sometime in the future, maybe”, remember the thumb rule of investing in Land – “Buy more land for the finite capital”. My money would go to the markets, which would evolve over the next couple of years, wherein the yield can be the Big X, loosely defined as double.
What’s a risk free price?
There can’t be any risk free price however much the pseudo experts working from glass cubicles try to engage us with complicated formulae. The simple formula of land investments is to “try & remain as close as possible to the circle rate, or be close to the mean of the registration value of the past 4 months”. In the current context, stay away from markets which have seen more than 100% appreciation in the preceding 12 months, and focus on markets that are forecasted to grow by 100% in the next 12 months. The closer you are to the 1 crore per acre mark, you are not likely to grow wrong in your investment estimation.
What can go wrong?
Most people, who read, write & talk about their expertise on site selection for investments, tend to ignore the requirements of urbanization, infrastructure and essential services.
Off the total land available in any particular locality, not more than 60% would be available for built up structures & private possession. The rest would be consumed towards Power, water, roads, sewerage, and other essentials. What if your land is marked for these services?
Besides acquisition, why not factor in advance, the local level vagaries, the inconsistencies of the rural folk, the documentation anomalies, the social, cultural & local factors etc.
Who can help?
Here’s the classical argument favouring expertise. People, who are investing top dollars , rely on their “gut feel approach” for buying land, but engage experts like Architects, planners, Interior & horticulture specialists for the development of the same land. Isn’t land buying an Expertise vocation?
Agreed, the decision rests with the one writing the cheque, but in the long term interest of the safety of your money, rely on Land Experts, with a strong local connect, who also understand the policy & regulations, to assist you in land matters.
The subject of Country Homes in Delhi is likely to be the most rewarding for investments today, compared to any other vehicle (see Chart for research findings). It has so many twists & turns that those who can interpret these correctly, would be rewarded by the ‘BIG X,
I am compelled to repeat the quote from one of the founders of my company – Land rewards are directly proportional to the wealth between the ears”