What is attracting FDI is the India story

CB Richard Ellis is the world’s largest multinational real estate consultancy, and also the largest in India. It was the first foreign real estate consultancy to set up shop in the country way back in 1994. Anshuman Magazine, Managing Director, CB Richard Ellis, South Asia, feels that despite the rise in prices and interest rates, you are still better off buying a house provided you are going to live in it. He also fielded a host of other questions from Sanjay Kr Singh: the shortage of commercial space in Delhi, the SEZ imbroglio, and on allowing large-format retailers into the country.

After three years of continuous rise in the price of property, and with interest rates also up, have we reached a point where it is smarter to live on rent rather than buy a house?

Despite the price rise and the rise in interest rates, Indians still prefer to buy. Your calculations could tell you that you should stay on rent and invest your capital in high-yield financial instruments. Nonetheless, people buy because living in your own house brings a sense of security. You create an asset that can be bequeathed to children. For a house that you are going to live in,
my recommendation would be that you buy it.

And what about an apartment purchased as an investment?

If you are buying with borrowed capital, you should calculate: what is the cost of capital? What will my rental returns be? What capital appreciation can I expect? To answer the last question, look at the demand-supply situation in the area, and whether an infrastructure project is underway that could boost prices significantly in the area.

A large number of Special Economic Zones (SEZs) are being created, many of them in land locked states. Will these SEZs be viable when most goods are exported via the sea?

These SEZs could be viable if they are linked to ports, either by an airport or by a transport corridor. Container depots and custom clearance facilities should also be available within these SEZs.
Remember that if SEZs are being created within these states, there are probably good reasons for doing so: there may be cost advantages due to availability of raw material or of trained manpower, or the state government may be offering significant benefits. So despite higher transportation costs, their overall cost might be lower.

SOURCE -http://www.expressestates.in/full_story.php?content_id=75458