Real Estate & Freedom

Recently, was watching a TV serial where a family, undergoing serious financial stress, was contemplating about selling their flat in Mumbai and moving to Pune.  The protagonist in the serial listed the real-world possibilities of enchasing on the booming real estate prices in Mumbai, moving to a bigger house in Pune, and still having some money to spare that would have helped the family tide over some liquidity related problems.

Last evening, was watching the business news channel and got to know about a major corporate house moving their headquarters from the Nariman Point area to the suburban Goregaon area, in Mumbai. And the reasons included the attractive commercial rentals of 100 rs per sqft at Goregaon vis a vis the 200-300+ range in Nariman Point. Hence the ability to move to a double sized office premises, and also avail the associated advantage of a relatively easy commute for its employees.

The stark coincidences of both these moves, to something closer to my personal journey, were quite fascinating.

Also, investment in residential real estate is something that is very close to my style, and the last 6-8 years has been just mindboggling, to say the least, for anybody dealing in such investments in India.

Having moved from Mumbai to Pune for professional reasons some 8 years back, and then later settling down permanently in Pune, I did experience the benefits of the inter-city move. Of course, this was a completely unplanned move and it just happened because of a job-change motivation at that time.

And recently, looking at the future needs of our lives both personally and professionally, my wife and I decided to move from our current place within Pune to a place about 3 kms away, which actually afforded a better living and was available at almost half the rate as the market rate of our current place. In the process, it generated an ability for my wife and self to pursue some long desired career moves. We are also considering fulfilling some personal desires for the kids that was simply not affordable before. Net net the future looks not only more fun, but also more secure.

50-100% appreciation in 3-4 years is something that is unimaginably good by any yardstick in any part of the world. And most of us in India almost shrug this off as a “So What’s New” kinda thing.

The boom that started in mid-2000’s still continues, with not much of a regard for the macro or even the micro economic factors around. Mind you, this is not restricted to some specific parts of the country. You could have pretty much blindfolded yourself and picked any area of your choice in the India map, and there is a comparative case for real estate investment avenues there. Even today, the 30-40% in 2-3 years is much better than the alternative investment avenues !

To recap, the formula that existed in mid-2000’s still holds true today. A suburban flat of Mumbai can fetch you a flat double the size in a relatively upmarket area in Pune. And an up-market flat in Mumbai can fetch you a similar kinda deal in suburban Mumbai. And after all that, you will still have some money to spare !!!

Of course, whether inter-city or intra-city, these decisions cannot be made purely from a financial perspective. There are family considerations involved.  The kid’s education/school change is not an easy thing in today’s times. Elders (senior citizens), if involved in the move, may have their very valid reasons of not wanting to change their social environment at that age.  Support systems in the family have to be thought out deeply. And most importantly, the new place has to have equal/more appeal for your’s and your spouse’s professional interests as well.  Also, houses tend to have emotional connects too with many warm memories attached. All these views have to be respected, discussed and due decisions made.

At the end of the day, the real estate boom in India of the last 7-8 years has indeed been very useful in providing more options, both financially and personally.  At the same time, it should not be an easy way out to solve one problem ,and in the process ends up compromising the happiness quotient within the family.  The Happiness Quotient needs to always remain the supreme factor above everything.

Happy Investing !!!