Investing in a budget apartment works as a hedge against inflation

Budget apartments have become a good choice for end-users and investors. In the range of Rs 20-30 lakhs, they bring affordability and easy repayment of home loans on the same platter. Lack of space in the city and high land cost has led developers to come up with such options in localities away from the city. Localities around Whitefield, HRBR Layout, Lingarajapuram, Sahakarnagar, Hennur Road, Hegde Nagar, K R Puram, and Hosur Road are witnessing the rise of budget apartment projects.

There are some projects in the range of Rs 8-10 lakhs also, with an area of 500-700 sqft. Such options are coming up on Bannerghatta Road, Hosur Road, Sarjapur Road, and Whitefield. Price is the main factor that works in favour of a budget apartment - for both investors and end-users. There is no recession for budget options. Anyone can afford to buy them.

For end-users

For an end-user, a budget apartment works out well from the price and the repayment angles. A joint loan of Rs 25 lakhs can be easily paid in 15 years at an interest rate of nine percent with a comfortable EMI of Rs 25, 350.

Investors

Investing in a budget apartment while looking at a resale, after two to three years, will work out well. New apartment projects that are under construction and will be completed in three years' time are ideal.

How it works as an investment?

An investor who doesn't have adequate cash flows right now can invest in a budget apartment. He can buy at a lower level and get the benefit of appreciation at a later date. This works as a hedge against inflation. The capital appreciation expected on a budget apartment after two years is 20-25 percent. Once the market picks up, you can expect a rental return of five to six percent.