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Saturday, Nov 16, 2019

To sell or not to sell

Pre-used homes have been a steady segment, even in recent years. But that may not mean it is time to sell. Calculate your timelines and returns with precision

real-estate Updated: Apr 06, 2019 20:14 IST
Dipanjan Sinha
Dipanjan Sinha
Hindustan Times
Even in a dismal real-estate market, there have traditionally been takers for resale or pre-used homes. If you’re buying one to sell, or planning to sell yours, it helps to keep track of current trends.
Even in a dismal real-estate market, there have traditionally been takers for resale or pre-used homes. If you’re buying one to sell, or planning to sell yours, it helps to keep track of current trends.(Hindustan Times)
         

What is a good time to sell your house? Should you renovate and refurbish first? What’s a good way to calculate return on investment?

In a sluggish time for the real-estate market, pre-used flats make up 60% of total sales, says Hitesh Thakkar, vice president of the National Real Estate Development Council, Maharashtra.

The hotspots for such sales in the city are also growing. “For any secondary or re-sale market to do well, the thumb rule is that new supply there should be limited or there should be limited scope for further development,” says Prashant Thakur, head of research at Anarock Property Consultants. “A land-starved city like Mumbai, by default, has several such pockets where demand is high and new supply is limited.”

Predictable prime locations stretch from Napean Sea Road and Malabar Hill — where there are virtually no pre-used flats available — to Mahalaxmi, Bandra and Juhu. “The prices in most of these locations are sky-high but price appreciation is also relatively steady,” Thakur says. The real movement is in the newer areas of developments — Bandra-Kurla Complex, Andheri, Powai, Santacruz and Vile Parle; Dahisar and Mira Road; parts of Thane and Navi Mumbai.

“Here the factors keeping demand perennially high are either affordability or impeccable connectivity to business hubs; because demand stays high, appreciation is steady too,” says Manju Yagnik, vice-chairperson of realty developers Nahar Group.

But location isn’t everything. “If you’re trying to decide whether to sell your flat, first consider how old it is,” says Parth Mehta, managing director of Paradigm Realty.

The trick is to hit that sweet spot between a high return on investment, and a building age that does not detract from the price of your flat.

“If you’re trying to decide whether to sell your flat, first consider how old it is,” says Parth Mehta, managing director of Paradigm Realty.

“A seller who has owned a flat for more than a decade can definitely look at an exit and reinvestment in some new project,” says Mehta. “However, if it has been less than five years since the purchase, the returns won’t be good enough as prices have remained stagnant for large parts of this period.”

If there are still compelling reasons to sell — the building is poorly maintained; the value of your asset is eroding; the housing society is ineffective; redevelopment plans look shaky — then calculate a return on investment of at least 10% to 12% for each year that you have stayed invested.

Because supply is so limited in most of Mumbai, you will still likely get the rate you need in order to hit this target. “But in areas where new supply is significantly high, the seller should ideally just wait,” says Thakur of Anarock.

As for areas on the outskirts of MMR where people have invested in projects expecting good returns within a few years, only to find rates stagnate, chances of getting good returns are low. You can either just cash in your chips and start over, or dig in your heels and stay in it for the long haul.

In such cases, it is probably best to sell to someone already living in the neighbourhood — they will likely pay more for the convenience of living near family, or not having to move or alter their commute.