BUY sell RENT Patna

residential/commercial


Patna a Hot Property destination for NRIs,    (13/07/2013)



The Non Resident Indian (NRI) has gained more than 30% since 2011 by remitting money to India; no effort at all; As dollar appreciated .NRIs must take stock of how best to use their remittances. The traditional favorite has always been real estate. But in this volatile market, how great an investment is it? Is this a good time to buy property in Patna? What kind of property is a good bet? Let's try to find answers.

 

 

Is it a good time to invest in property in Patna?

 

"Yes". There are a number of reasons that come to mind. Firstly, Patna's growth story remains intact with just some relatively minor turbulence in the short term. Secondly, for NRIs, right now there is the straight advantage of exchange rate. The rate will eventually stabilize with Government intervention. Thirdly, property valuations, especially in the commercial space, have come down and are currently undervalued by 15-30%. Fourth, some of the developers are significantly leveraged (paying 13% interest rate for construction and 15% to 21% for land from private lenders). As a result they now want to take some cash out and invest in mid or low market fast moving residential projects in Patna. In short, there is pressure on developers.

 

Lastly, vacancy rates in the office space are expected to be high, 25% is expected to be vacant. This will force developers to either lease cheap and/or sell cheap. If NRI wants sustainable yields and capital appreciation, this is the best time. Investors must stay invested in a property for at least the next 5 years to see a good return.

 

One more reason is that the NRIs who have already acquired their first home in metros in India now have an opportunity to invest in their home town, Patna.

 

 

What kind of commercial property should NRIs opt for in Patna?

 

NRIs can choose the property in Patna based on their risk profile. For instance, one can buy a space in an under construction or new unit where one will be able to buy for cheap but one will also have to put in efforts to find a tenant and lease out the property.


NRIs should invest in 'pre-leased' properties, that is, those properties that already have a lease agreement in operation in Patna. They might have to pay a little more as compared to under construction or fresh properties but they’re assured of lease rentals. Pre leased properties usually have a 3-5 year lock-in with a lease term of 9 years. Even smaller office spaces will have a 3 year lease term.

 

Is it a good time to invest in residential property in Patna?

 

Anytime is a good time to buy a residential property inPatna, it all depends on the location, developer and risk appetite of investor.

 

What kind of residential property should NRIs invest in Patna?

 

Under construction properties are great bets for those investing in residential property in Patna. There are risks of delays and often these delays are beyond the control of the developer in Patna. For instance, there may be policy changes or genuine raw material shortages. But if you choose a reputed developer and are mentally prepared for a delay of about 24 months, the returns will be handsome.

 

Yields from residential property in Patna are not high, Yields can be as low as 3% but in the case of residential property, the important thing is capital appreciation. In residential property inPatna, giving your house on rent will be for reasons other than great returns. Your house will be maintained, your EMIs if any would get covered.


What is the capital appreciation one can expect?

I

Developer has just acquired land

Minimum 50% absolute returns until completion;

5-7 years

 

II

Plans are in place but approvals are not

Minimum 35-40% absolute returns until completion

3-5 years

 

III

Approvals in place, project is launched

Minimum 25-30% absolute returns until completion

Up to 3 years

 

IV

Ready property

Minimum 10-15% year on year capital appreciation

 

The above would vary depending on location of the property, developer reputation and overall economic sentiments but in general this is the return in Patna.

 

Another important thing in property investment inPatna, whether residential or commercial, is to buy from a developer of repute who has all his approvals in place. Secondly, it is best to appoint a lawyer to check all these approvals. Commercial property needs greater active management as compared to residential. So make sure you are prepared to put in the time and efforts.


Investing in property in Patna can be a challenging task, apart from being high ticket. It is best to consult a professional before taking the plunge.

To sum it up aptly: "Location, Title, Development - Mid and low segment residential or Office or Corporate office with financial closure and marketing ability of the developer, lower rental, covenant of the lease for tenanted property and tenant profile and finally 'timing' all add up to a 'good investment decision in property in Patna.




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