Mr. Desai was looking to invest Rs. 40 lakh in real estate – of his overall portfolio of Rs. 2 Cr. During the initial discussions, we found out the following.
- He was interested in single location carrying moderate risk and returns
- He was not looking for a loan – however, was open to the idea if the property value exceeded Rs. 40 lakh
- His investment horizon was 5 years or higher
- He had a preference for residential property over commercial property
- He had no intention of converting the property into own use house and hence was fine with any location within India – however, had a bias towards larger cities
- He has a son, whose higher educational expenses begin in 3 years’ time. He wanted to be sure that he has enough liquid assets then after the investment
Drawing from our research, we recommended to him a property – Prasanna Heights of ABC developers in Hyderabad – near Jubilee Hills (illustrative details). The rationale for the choice was as follows.
- Amongst the cities, when current rates were compared, Hyderabad emerged as the one with highest upside potential.
- Jubilee Hills is an attractive moderate risk-return location within Hyderabad. It is close enough to the Hi-Tec city to benefit from IT boom in Hyderabad.
- However, it is not very far from the upmarket locality of Banjara Hills – thus hedging the risk of IT boom underperforming expectations.
We also provided details of the developer and property.
Developer: ABC Developers have a national presence (across 15 cities) and have led prestigious projects such as XYZ city, PQR township etc. It is known for quality construction and reliability of project schedules. In the recent times, there have been few controversies in their Kolkata projects. However, as per our background check, the specific project in Hyderabad is unlikely to have similar issues.
Property: Prasanna Heights is a project launched in 2006 – targeted at the upper end executives in IT industry of Hi-Tec City. Work on it is divided in three phases – adding up to 230 apartments. Of these, 70 under the first phase are already in use. Our proposed investment is in second phase of 80 apartments – ranging from 2BHK (1,050 sq.ft.) to 4BHK (2,560 sq.ft.) in size and Rs. 40 lakh to Rs. 1.3 Cr in value.
Prasanna Heights offers a good entry into the Hyderabad Pune Road and is one of the more attractive destinations within Jubilee Hills. Its size acts as a positive in attracting a large number of prospective buyers. The profile of residents is likely to be white-collar salaried employees of the IT companies. It has good proximity to schools, hospitals and commercial areas. However, the nearest mall and multiplex is ~5 km – somewhat of a dampener. While, this may change over next 2-3 years on account of the strong growth of organized retail within Hyderabad, it remains a negative for Prasanna Heights as of now.
Mr. Desai was happy with the property. He made a quick trip to Hyderabad to see the property personally and decided to go ahead with it.
The above case is illustrative. In real life cases, the rationale for location/property selection and specific details provided on property are more comprehensive.
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