Typically there is a 10 per cent escalation in prices annually across city areas.
If you are investing in a new property in a virgin corridor where development work is
yet to begin, before infrastructure comes into the new corridor, prices are very low.
Once infrastructure work begins prices rise by about 25 per cent. When the property
development reaches mid-way point, there is another 25 per cent escalation in
prices. Six months from completion there is another 25 per cent escalation. Once
possession is handed over there is another 25 per cent increase in rates. This is true for
places where Greenfield development is taking place.
The mid-end and affordable housing segments will record healthy appreciation in
capital values in the short term from a low base. High-value property yields lower rates
of appreciation.
In new growth corridors where development work precedes real estate, the growth in
values is normally about 50-70 per cent. However, these are broad estimates.
There is another return that has not been factored in which is the rental yield. Property
value attains its true potential when the neighbourhood is fully populated. If you are a
long-term investor and want to wait for the property to attain full potential, lease out
the property and capitalise on the regular rental returns. The annual yield is computed
as a ratio of capital to rental values. Normally residential property gives a simple yield
of 2-4 per cent.
Appreciation largely depends on industrial, commercial and infrastructure
development in the area. Project-specific price increases can be expected across
these markets. This pertains specifically to projects that are being delivered or are
nearing completion.
If you are investing in a new property in a virgin corridor where development work is
yet to begin, before infrastructure comes into the new corridor, prices are very low.
Once infrastructure work begins prices rise by about 25 per cent. When the property
development reaches mid-way point, there is another 25 per cent escalation in
prices. Six months from completion there is another 25 per cent escalation. Once
possession is handed over there is another 25 per cent increase in rates. This is true for
places where Greenfield development is taking place.
The mid-end and affordable housing segments will record healthy appreciation in
capital values in the short term from a low base. High-value property yields lower rates
of appreciation.
In new growth corridors where development work precedes real estate, the growth in
values is normally about 50-70 per cent. However, these are broad estimates.
There is another return that has not been factored in which is the rental yield. Property
value attains its true potential when the neighbourhood is fully populated. If you are a
long-term investor and want to wait for the property to attain full potential, lease out
the property and capitalise on the regular rental returns. The annual yield is computed
as a ratio of capital to rental values. Normally residential property gives a simple yield
of 2-4 per cent.
Appreciation largely depends on industrial, commercial and infrastructure
development in the area. Project-specific price increases can be expected across
these markets. This pertains specifically to projects that are being delivered or are
nearing completion.
