Independent house vs. apartment – part 5
With some interesting comments from our readers in the last post, thought I’ll do one more post in this series. This being primarily to identify situations where apartments are better than independent houses purely on an investment basis.
Anyone who has read part 3 & part 4 would know in which direction my views lie. But if I have learned anything in life, it is that there is an exception to every rule and a negative to every positive and vice versa and inside out and forward backward. That’s why the world works and remains interesting to us. To cut short on the philosophy front and getting to the point – not all independent houses are necessarily superior. The ‘location’ matters a tremendous amount.
If you go and buy a villa/bungalow in a village/small town thinking it is a better investment, I am sorry!! You can wait till elephants roost on trees and relatively nothing would have changed on the price front for your villa. Real estate price increases is largely centred around urban centres and will continue to be so. Only exception I know of is Kerala where land prices have increased tremendously even in villages. The reason is unique to it – NRI Keralites are treating the entire state as a retirement home.
One of the good things when you buy an apartment is that you are naturally protected against the foolishness of buying something in a remote corner of the country. The apartment builders who are sinking in their money would have ensured that the location is relatively alright and ripe for future urbanisations. And the degree to which a locality gets urbanised is what will eventually determine the future value of homes in that area. When I say urbanised, I don’t mean noisy-polluted streets; rather that it is an area of job creation so that people will immigrate to it than emigrate from it.
So, to sum up the investment theme on homes:
If you are an average joe who doesn’t want think too much but want a good investment that is sure to appreciate, shut your eyes and buy an apartment in any of the top Indian cities. You will not regret it.
If you think you are smarter than the average guy and feel that you have what it takes to make indpendent decisions involving relatively large sums of money, buy a villa near a locality that you judge to be ripe for urbanisation. Reward is more if urbanisation happens; but if your judgement is wrong, prices can stay flat for upwards of 10 years..
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