Bhiwadi – the next Gurgaon?

A lot of buzz is made around Bhiwadi as being an investor’s paradise. We thought of looking at it and share our views on the same. Here we go! We first heard about Bhiwadi from a close friend, a transport fleet owner. He proposed Bhiwadi as one of the best places to invest, about a year back. Let’s see what has been the price trend in property in last one year.

Source: www.makaan.com

The above chart depicts the trend of real estate prices for last 12 months in Bhiwadi. It shows a handsome growth of 13.72% YoY in the prices. So prima fascia our friend’s suggestion looks appropriate. Let’s now dig deeper in its details.

What is going positive for Bhiwadi?

There are several things working in favour of Bhiwadi at the moment. Some of which we could make out are:

Current Price Range	One thing to note from the above analysis by www.makaan.com is the price range, which lies comfortably between Rs. 2,200/sq.ft & Rs. 2,800/sq.ft. At this price range, it is extremely affordable and convenient for a small & medium investor to make the investment & one can expect a decent to good returns in the short term as we explained in our last post.
Strategic Geo-location	Bhiwadi is located at a small offset from NH-8, one of India’s most important National Highways. It connects New Delhi & Mumbai, the most important trade hubs in India. This location paves way for an enormous industrial growth in the region. Bhiwadi is making full out of this opportunity.
Proximity to NCR	Bhiwadi is located in Alwar district, Rajasthan at a distance of 50 kms from NCR (National Capital Region), Delhi. This proximity makes it an ideal home destination for the working middle class of NCR & Delhi.
Support by RIICO	Rajasthan Industrial Investment Corporation (RIICO) is taking every possible step to harness the growth potential that Bhiwadi is showing. New industries & corporations are being invited and SEZs are being developed in and around Bhiwadi to boost the economic growth of the region. It is a fast emerging Tier II city in Rajasthan.
Decline of Dharuheda	Dharuheda, another major industrial hub located in Haryana is just 10 minute drive from Bhiwadi. The non-cooperation by Haryana government in the development of Dharuheda is giving opportunity to Bhiwadi for development. Industries are now moving to Bhiwadi from Dharuheda where the land prices have already soared to more than 200% of that in Bhiwadi.
Positive Sentiments & Word-of-mouth Publicity	This is one aspect that is helping Bhiwadi the most in the current scenario. On every discussion forum, news articles, investors’ guides etc., Bhiwadi is getting only praises. Also the brokers and the investors favor investment in the town over any other place. This is one region that new investors are rushing to grab their piece of land in Bhiwadi.

Source: Indiatimes

Can Bhiwadi become the next Gurgaon?

If we look at the growth story of Gurgaon, it has emerged from rags to riches in a period of 15 years. The sole reason behind its success is industrial & real estate development. From what we can see in Bhiwadi, it looks like that it is also running on the same track as Gurgaon. The industries are growing like weeds and the town also lies on a node of upcoming mega development project DMIC by Government of India.

The only threat that we can see in front of Bhiwadi is the Master Plan of Gurgaon, which intends to smoothly take away the advantage from Bhiwadi. Also the now-quiet lion - Dharuheda can be a cause of trouble for Bhiwadi.

But looking through a bird’s eye view, Bhiwadi is on its way to next Gurgaon, in next 10 years & one can easily expect a property growth rate of around 15-20% per annum for next 5 years in Bhiwadi.

A NEWS article showing the potential of Bhiwadi to become a World-class city

Closing Thoughts: Bhiwadi offers an excellent investment opportunity for small investors and if you are looking forward to double your money in few years’ time, get your tickets done for Bhiwadi!

                              

                                  ------ Thanks for reading RealT Horizon :) Happy Investing ------

High Priced or Low Priced: Which one should I go for?

Many often, we come across this dilemma when we wish to make an investment, not only in Real Estate, but even while investing in Equities and Bonds. Let us try to decipher this confusion.

Define a Time Horizon

The first thing you should do is to decide is the time window you are looking at while making the investment. The decision of high/low valued assets will follow your time horizon. We typically define the windows as follows:

1-5 years: Short-term Investment

5+ years: Long-term Investment

Everything has a Limited Upside

This is one fact that you should imbibe in your thoughts if you want to be a successful investor in any asset class, real estate included. You cannot count indefinitely on the increasing prices and trust that they will keep on increasing forever. There will be a stage when the price movement will virtually halt and the growth rate will shrink manifolds.

The Decision!

Once you have decided your time frame and imbibed our above advice in your wits, it’s time to take the decision. Check the analysis done below:

Here we are taking an assumption that the upside for High Priced property is 10 years & for low priced, it is 7 years. This is justified because generally the high priced property is more sustainable as compared to the low priced property.

	Initial Investment	Initial / Long Term Growth Rate (%)	Short Term (1-5 years)	Short Term Returns	Long Term (5+ years)	Long Term Returns	CAGR
Low Priced	$ 100,000	13 / 8	$ 163,047	63.05%	$ 190,178	90.18%	7.40%
High Priced	$ 1,000,000	8 / 8	$ 1,360,489	36.05%	$ 1,999,005	99.90%	8.00%

As is apparent from the above analysis, the Low Priced Property yields more returns in short term and comparatively lesser returns in the long term as compared to the High Priced Property.

With this illustration, this discussion comes to a conclusion:

Low Priced  :	Short Term
High Priced :	Long Term

Disclaimer: The above analysis holds good for most of the cases, but not all. Hence it is advisable to take an informed decision before making any investment.

------ Thanks for reading RealT Horizon J Happy Investing ------

Is this the Right Time for NRIs to Invest in India?

NRIs (Non-Resident Indians) comprises of an important chunk of population which contributes the most to Indian economy, without even being physical present here. India is blessed to have such a huge Indian population fueling its growth from abroad and the same is true for NRIs, who are blessed to have India as their motherland which provides them such fantastic investment opportunities. Let’s see how.

INR vs. $: Who all get benefitted with their movements?

 If you follow the Asian Financial and Economic markets, you would know what is going on in the volatile Indian markets. INR has been falling continuously against US $ before lately regaining some strength. At the time of writing this post, INR was placed at Rs. 61.20 against $ 1. But the situation had been worse a few days back when INR had touched Rs. 67 = $ 1 mark, creating an all-time low record; So much so that people had started comparing INR with US Cents; Rs. 1 = 1.5 cents.

So how is the above information related to our topic on NRIs? Well, let us tell you how. We will be extremely straight forward in putting forth our views on this topic. Consider the following situation:

• Mr. A is an NRI, residing in Michigan, USA.
• He aspires to invest in India and his obvious choice would be to invest in Real Estate; because he is sane ;-).
• He wants to invest in a range of INR 5 million to INR 7 million.
• Let’s compare the scenario when INR was 67 and when it is 61 (rounded off for simplicity) against $.

Cost of Property	Cost in $ (Case: INR/$ :: 67)	Cost in $ (Case: INR/$ :: 61)	Absolute Difference	% Difference
INR 5 million	$ 74,627.00	$ 81,967.00	$ 7340.00	9.8%
INR 7 million	$ 104,478.00	$ 114,754.00	$ 10276.00	9.8%

Just look at the above figures. Mr. A would have saved a fortune, at a discount of ~10% if he would have invested in the same property when $ was making rounds near INR 67 as compared to the current situation!

Closing Thoughts

Dear NRIs,

India is a great destination for investment – this statement needs no evidence. So just be a little more rational and act as soon as possible to make investments. This is because you never know where our new Governor & upcoming new Government will take the INR ;-). It is always better to be late than never J.

Sincerely,

RealT Horizon

PS: We would have made the investments if we would have been in your place, you may not. It’s subjective as well as cognitive.

------ Thanks for reading RealT Horizon J ------