I just purchased a small apartment in Saket in Delhi. It is a small apartment with the ground and basement, or what is referred to as a duplex. Given that this was the first time for me to buy in India – it was quite an interesting experience – since the real estate sector in India is quite unorganized! There is no concept of MLS Listing or such - where you are able to view the entire inventory of what is available in the market or registered real-estate agents.
First and foremost in terms of difficulty is the lack of availability of data to understand what prices are in a particular region. Then there are no places that you can go to see prior transaction sales – or registered prices – and even if there were – given the high variability in black and white monies, it would be hard to understand what the prior sales prices are. There are a few Internet sites that are currently offering listed prices summary.
So I had to rely on friends and family, brokers and ofcourse my own research. Some Internet sites are quite good for data collection. The only downside is that unlike an MLS listings in the US – the same property may be listed multiple times, most are listed by brokers, there are limited pictures and descriptives and the listing are nowhere near exhaustive.
I used 99Acres.Com quite a lot in my home search. IT was a GODSEND. I also used Makaan.com and Sulekha classifieds. I was not pleased with either of these last two. 99Acres.com not only afforded me the ability to see properties available in different areas of South Delhi but also understand what areas are in my budget. By quickly creating a spreadsheet of listed prices in South Delhi from several different sites and speaking to friends I quickly learned that South Delhi is very very expensive with the top areas fetching upwards of $1000 sq/Ft for an apartment. The price that you will pay for an apartment in South Delhi is more expensive than most large cities in the US – ie. Chicago or Boston.
When you scan the classified listings, it is mindblowing with Houses in Vasant Vihar listed for for $4 – 5 Million. I was shocked. The last couple of years have seen a doubling of prices every year. And even in the slowdown, there has been some prices declines – but most people living in South Delhi believe that Delhi is Delhi, and South Delhi is South Delhi – and will be mostly immune to the downturn. Aaah – I remember the same being said for Manhattan – and look at it now. I think that prices will adjust ... but thats just me!
It is really a question of availability in Delhi. Delhi is expected to be the third most densely populated metro bu 2025. The third – after Japan and then Mumbai. From my own experience when I narrowed in on Saket area due to its affordability and close proximity to my sister’s in laws family) – the broker was able to show me 4 -5 flats in my price bracket. That’s it. That was the inventory that my broker had. Since all flats are not listed – there may have been more. There is a lot of information asymmetry and hence you may need to work with a few brokers to see all the inventory. My fourplex – which was completed only a few months ago – Is fully sold – with the last flat sold only last week.
In South Delhi, it is mostly houses that are being converted into apartments 0r what is referred to as builder floors. These are mostly constructed by lots of small small developers. And if you have seen Khosla Ka Ghosla – you really do feel like you are in a movie - when you are buying a house. You need to have an excellent broker with a good sense of the market trends and negotiating skills. Negotiating is also nothing like putting in a formal offer – it is all done face to face – and everything is agreed, with brokers on both sides skillfully managing expectations and trying to conclude a deal. Honestly, the whole experience for me was like a movie scene – but one in which there is no director – but lots and lots of actors. The entire negotiation for the purchase of my apartment was concluded in one meeting with the developer and in two hours flat. You need to go in knowing what is your walk away price and be ready to close a deal. I was ofcourse given 5 days to check all the paperwork (this is again a nightmare – you need an expert here!).
All in all, I am happy I bought in South Delhi. But if I had known how complex it would be – I may have opted for a developer flat from a large builder in Gurgoan after all. Gurgoan and Noida are the more straight forward ways to go.
Here is where the action is in Delhi:
· Tier 1: JorBagh, SunderNagar ( the prices here are so high – that one can only dream)
· Tier 2: Vasant Vihar ( don’t even think about this area unless you can think > $800 Sq. Ft)
· Tier 3: Pansheel Park, NitiBagh, Hauz Kaus, Safderjung Enclave, New Friends Colony
· Tier 4: Greater Kailash, Defence Colony, Vasant Kunj ( Prices > 300/Sq Ft)
· Tier 5: Saket, East of Kailesh (Prices > $200 / sq ft)
· Tier 6: Chittaranjan Park, Shivalik, Kalkaji, Sarita Vihar (Prices > $150/sq ft)
· Tier 7: Josola ( Up & coming area and hence not very well developed)
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