Properties in Bangalore

Buying, Investing and Renting Properties in Bangalore

Buying property will net you 15-20% appreciation per annum, as a lot of contributors have pointed out. Add to that the 1.5% or so rental yields you will net (if you do not stay there yourself). In addition, if you use a loan you get some amount as tax deductible on the interest and I think even principal.

On the contrary, renting would be cheap (only 2% or so of the property price) and on top of that you will most likely get a bulky lump deducted as HRA tax benefits.

Now for the qualitative stuff,

pros to buying: evade against real estate inflation (if your eventual goal is to buy there, even if in an additional place in the city), regular saving forced upon you, esteem & security, heritage, wife’s happiness (assuming you’re a guy), no stress about landlord asking you to vacate, etc.

cons: risk exposure (real estate is quite risky, as evidenced by the returns. Don’t let the past 5-10 years history blind you – downs also happen frequently), low liquidity, low flexibility (you are tied down to the city for admin to some point), black/white money stress, upkeep/maintenance, time needed to find/deal, etc.

If you do the pure financial math on this (and I have), renting comes out somewhat ahead if your substitute investment mode is the stock market. As a rule over a longer period, real estate has underperformed the stock market by a little bit (and for excellent reason, there is an emotional payment attached to hard assets in India), and the HRA deduction and low yields add up. But there are a lot of non-quant considerations to be kept in mind.

But in the final reckoning, you can go with the other contributors – if still in doubt, buy. There is certainly a big emotional payoff, and you can not enumerate the effort that goes into getting a place ‘just so’ and taking pride in that. This is particularly true if you are pretty convinced that you will stay in the property you will buy for a really long time.


Investment Advice

Those who are looking to own a home in Bangalore in the next six months can certainly go ahead. The city’s housing market is a very stable one and can provide good value on short-to-medium term investments, depending on the location and type of housing product. As the market is still not very seller-driven, there is a window of prospect for end-users to negotiate in upcoming locations.

For end-users looking for budget projects, Mysore Road can be a good option. This area, which has largely seen reasonable housing projects launches so far, has a price range of Rs 3,050-4,500/sq.ft.

For investors involved in buying villas, Whitefield and other parts of South Bangalore are an outstanding option. Investors looking to purchase plots can look at locations along the Bellary Road all the way up to Yellahanka Dhoddaballapur in the North Bangalore.