the coastal town that, before the crash of 2008, was expected to eventually turn into Mumbai’s version of The Hamptons.
The conversation was about Padmini’s property in Alibaug. An accounting clerk, Padmini said at current prices she didn’t earn enough to be able to afford a holiday home in Alibaug. But she had bought her property just at the turn of the millennium when the picture was rather different in Alibaug.
Back then, the bungalow located on a main road didn’t command anywhere close to the astronomical sums she’d been offered for it recently.
AYE OR NAY
Stories like Padmini’s make a strong case for buying a home on the outskirts of a major metro. “It makes absolute financial sense for a renter who cannot afford to buya home in the city to buy a cheaper home located on its outskirts,” says Sushil Vaswani, partner, Outpost Real Estate Advisors. “As time passes, the appreciation of the vacation home will be higher than the inflation adjusted value of the rupee.”Sushil gives the examples of Mumbai areas like Chembur and Vikhroli. “Once consideredto be really far away from south Mumbai— over an hour’s drive—the commute time to these areas has halved since the Eastern you’ll be paying interest on your EMIs,” she says.
Kavita instead recommends investing in a mixed basket of financial products until city real estate prices reach a rate you can afford. “While there’s enough black money in the system to ensure that real estate prices don’t fall, India’s middle-income group cannot afford properties even in suburban areas of cities,” she says.
“So while a property worth Rs.1 crore may not slip to half that price, it could remain there for several years.”Expressway was formed and that drove realty prices upwards, naturally.” But financial planner Kavita Menon offers a different perspective. She’d always choose to rent, as it requires you to pay just one to two per cent of the value of the property.
“Also, you won’tbe able to rent out a property that’s located far away from the centre, and if you’ve taken a loan.
