This is despite PRESENT DEPRESSED DEMAND AGAINST HUGE OVERSUPPLY of housing dwellings in this region.
Why? The simple answer is that many accommodation seekers or buyers have no factually correct information about the true monetary value of the Flat or Apartment that they wish to rent or buy second hand.
For example, the rent that prevailed in 2005-2006 for a 3BHK (1650 square feet ) Flat/Apartment in Sector-62 of Noida was Rupees 6,000 per month.
In many housing societies, the first purchase price for Flats with 1650 sq feet area in 2003 was around Rupees 15 lakh.
Now, let us see how the second hand buyers or tenants have been victimised...!
Let us take up the GAIL Apartments, a housing society floated by the Gas Authority of India limited for its employees in Sector-62. The 3BHK (Bedroom, Hall, Kitchen) Flats in this society were given possession to the owners in the year 2003 at prices not more than around Rupees 15 lakh per such a Flat.
A CRITICAL EXAMINATION
(1) LET US FIRST EXAMINE THE RENT PATTERN AT THE RATE OF 10% INCREASE PER ANNUM SINCE THE YEAR 2005:
YEAR MONTHLY RENT YEARLY RENT
2005-06 6,000 72,000
2006-07 6,600 79,200
2007-08 7260 87120
2008-09 7986 95832
2009-10 8785 105420
2010-11 9664 115968
2011-12 10631 127572
2012-13 11694 140328
2013-14 12863 154356
2014-15 14149 169788
2015-16 15563 186756
2016-17 17119 205428
The monthly and annual rent figures are in Indian Rupees. The year is taken from April to March. The monthly rent is inclusive of all housing maintenance charges. It is clear from the table given above that the current RENT in GAIL APARTMENTS and other housing societies in the Sector-62 for the financial year April 2016- March 2017 should not be more than Rupees 17119 per month for a 1650 sq. feet 3BHK accommodation!
So, you have either been fooled into paying more rent or else are being forced to pay more rent per month if you are paying more than Rupees 17,119 as the rent for 3BHK, 1650 Sq. feet Flat in Sector-62...! You can easily see with the help of the table given above whether you have paid hugely unreasonably inflated rent or not...!
(2) LET US THEN EXAMINE THE RETURNS ON RUPEES 15 LAKH PAID BY THE FIRST PURCHASER FOR BUYING ONE FLAT (1650 SQUARE FEET) IF IT WERE DEPOSITED IN BANK FROM YEAR 2003 TO 2016:
YEAR AMOUNT DEPOSITED AMOUNT WITH INTEREST
2003-11 Rupees 15 lakh Rupees 30 lakh
( assuming the principal amount doubled in 8 years' time)
2011-12 30 33.00
2012-13 33 36.30
2013-14 36.30 39.90
( assuming the 10% per annual returns on fixed deposit)
2014-15 39.90 42.89
2015-16 42.89 46.33
( assuming the 8% per annual returns on fixed deposit)
The above table clearly shows that the GAIL employee who purchased a 1650 sq. feet 3BHK Flat by paying Rupees 15 lakh in 2003 would have earned Rupees 46 lakh and 33 thousand Rupees had that amount been deposited in a nationalised bank such as the SBI with attendant interest rate fluctuations. The interest rate fluctuations given here are for simplicity sake. The actual interest rate fluctuation may not be much significantly.
Now, supposing that the GAIL employee gave her/his above cited case Flat on rent from April 2005 to March 2016. The rent table shows clearly that such an employee has already earned Rupees 18.68 lakh as rent till 2016 since April 2005. Such employee must have in addition earned further recurring interest on monthly rent earning if she/he had invested this monthly earned rent in recurring/savings account..!
For the sake of simplicity, we will consider only Rupees 18.68 Lakh earned as rent. In other words, this means that the employee has already recovered Rs 18.68 by way rent which means she/he should actually need recover only 46.33-18.68= Rupees 27.65 lakh. This also means that the current value of the 3BHK 1650 Square feet Flat is Rupees 27.65 Lakh only.
NOW, LOGICAL MORAL QUESTION IS FOR HOW MUCH MORE SHOULD THIS EMPLOYEE SHOULD SELL THIS APARTMENT...? NOT MORE THAN RUPEES 30 LAKH, TO BE PRECISE...! ALRIGHT, LETS ADD FURTHER 5 LAKH...! IT BECOMES RUPEES 35 LAKH.
THUS, YOU MUST NOT PAY MORE THAN RUPEES 35 LAKH FOR BUYING A FLAT OF THE SIZE 3BHK 1650 SQUARE FEET IN GAIL APARTMENTS SOCIETY IN SECTOR-62, NOIDA...!
IN ADDITION TO ABOVE-EXPLAINED LOGIC, FOLLOWING REASONS ALSO SHOULD WAKE YOU UP DEAR BUYER AND NOT PAY MORE THAN RUPEES 35 LAKH IN THE ABOVE CITED CASE:
(I) Most housing societies in NOIDA are on leased land and not free-hold land. It means the land belongs to state government which can throw you out of your Flat after the period of lease is over, say which may be 90 years out of which 40-50 years might have already been over...!
(II) In the case cited above, the flats have already aged-out, that is, have become old by almost 14-15 years. They are no more new! That means, you will have to spend a lot of money on renovation/maintenance work!
(III) The upcoming Metro railway in Sector-62 can not in any way logically justify any artificial hike or inflated selling price of these above mentioned Apartments...! If owner asks you high selling-price by quoting the new Metro coming to the town, it would mean that the Delhi Metro Railway Authority would/should charge a certain percentage as fees from the owner at the time of sell of such a Flat, SAY 5% AS METRO-PROXIMITY FEES SAME WAY THAT THE NOIDA AUTHORITY CHARGED 5% AS TRANSFERENCE FEES...! But, in reality, the Delhi Metro Railway Authority doesn't do that...! So, don't be fooled by the logic of Metrorail-Proximity pushing up the price of the Flat/Apartment...!
(IV) THERE IS DISPROPORTIONATELY HUGE OVER-SUPPLY OF FLATS/APARTMENTS DUE TO GREAT CONSTRUCTION WORK DONE BY BUILDERS IN NOIDA, GREATER NOIDA, YAMUNA-EWAY, ETC. SO, THERE ARE MORE DWELLING UNITS AVAILABLE, BUT THERE ARE ONLY FEW BUYERS...! SO, THE PRESENT HOUSING MARKET IS BUYERS' MARKET...!
(V) BUILDERS AND BANKS HAVE COME OUT WITH "NO INTEREST FOR NEXT 10 YEARS' SCHEME" FOR BUYERS WHICH MEANS YOU NOW HAVE TO PAY ONLY RUPEES 40 LAKH IN 10 YEARS INSTEAD OF 80 LAKHS IN 20 YEARS IF YOU ARE PURCHASING A NEW DWELLING UNIT COSTING 40 LAKH...! SO, THIS IS THE CORRECT TIME TO PURCHASE A NEW HOUSING UNIT IN THESE NEW BUILDING COMPLXES...!
The 5 factors elaborated insightfully above must wake you up dear prospective buyer and educate you to not waste your money by buying old dwelling units at unreasonably high price. For example, a property website shows the current sell price as Rupees 60-65 lakh and Rupees 19000-21000 as monthly rent for a 3BHK 1650 Square feet Apartment in GAIL Society of Sector-62 in Noida...! BUT, THIS DOES NOT REFLECT GROUND REALITY. WHEREAS THIS ARTICLE HAS GIVEN YOU THE CORRECT WISE INSIGHT INTO THE CURRENT MONETARY VALUE OF SUCH A FLAT WHICH SHOWS THAT ANY GAIL EMPLOYEE WISHING TO SELL GAIL APARTMENTS FLAT MUST NOT ASK YOU MORE THAN RUPEES 35 LAKH AS SELL PRICE OR MUST NOT CHARGE YOU MORE THAN RUPEES 17119 AS MONTHLY RENT INCLUSIVE OF ALL SOCIETY CHARGES...!
IF SOME OWNER ASKS YOU TO PAY RUPEES 60 LAKH TO 75 LAKH AS PRICE OR A MONTHLY RENT OF RUPEES 22,000 FOR ABOVE CITED APARTMENTS, YOU HAD BETTER SAY NO TO SUCH A BAD AND HIGHLY INFLATED UNREASONABLE DEAL....! INSTEAD, YOU SHOULD MOVE OUT TO NEWLY CONSTRUCTED DWELLING UNITS THAT ARE ON OFFER IN DIFFERENT PARTS OF NOIDA AND NCR...! THESE NEWLY CONSTRUCTED DWELLING UNITS ARE REASONABLY PRICED IF YOU WISH TO PURCHASE THEM OR HAVE THM ON REASONABLE MONTHLY RENTS.
FOR EXAMPLE, A 3BHK IN NOIDA EXTENSION HAS THE CURRENT GOING MONTHLY RENT OF RUPEES 14,000-15,000 AND A SELL PRICE OF RUPEES 40-45 LAKH....!
So, be wise while deciding to buy a new Flat/Apartment/Villa or any other property in NCR. Also, do some real ground work while moving anywhere as a tenant so that you don't end up paying unreasonable/inflated rent.
WHEN MANY OF YOU CRY SO MUCH OVER EVEN A MARGINAL INCREASE IN TUTION FEES OF YOUR CHILDREN BY SCHOOL AUTHORITIES THEN THERE IS NO REASON WHY YOU MUST PAY RUPEES 60-75 LAKH FOR BUYING A PROPERTY/APARTMENT THAT IS REALLY WORTH RUPEES 35 LAKH OR PAY A MONTHLY RENT OF RUPEES 22,000 WHEN THE REAL RENTAL VALUE IS JUST AROUND RUPEES 17,000 ONLY AT THE RATE OF 10% ANNUAL INCREASE...! ADD TO THIS THE FACT THAT THE CURRENT INTEREST RATES FOR FIXED DEPOSITES FOR MORE THAN 5 YEARS HAVE BEEN BROUGHT DOWN TO NEARLY 7% PER ANNUM BY THE INDIAN GOVERNMENT...!
- SPECIAL NOIDA PROPERTY CORRESPONDENT
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