Should you invest in an apartment or villa project?

[ecis2016.org] Should you invest in an apartment or villa project? We look at the advantages and disadvantages of each, to help you arrive at a decision

Even though some buyers may have the option of selecting between villas and apartments for their property purchase, the basic differences between the two, often determines which property one opts for. For example, the price difference between apartments vs villas, can be the crucial deciding factor.

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Apartments vs villas: Basic differences 

Apartment projects generally comprise of high-rise structures, offering living spaces in varying configurations. Villas, on the other hand, are luxury independent residences and in constructing these units, the developers lose out on marketing and selling valuable floor space index (FSI). Consequently, there is a wide difference in the pricing of these two residential options. It is pertinent to note here that a villa would often cost much more than a large luxury 4BHK apartment.

Why so? An apartment-based project allows the developer to construct high-rises, based on the FSI allocated to the builder under that city’s building norms. Villa projects, on the other hand, are low-rise constructions and do not exceed two floors. FSI, also referred to as floor area ratio, is the ratio of the area of floor to the area of the plot on which a building stands. If the FSI is 5, this means that the floor area of a building built on a land of 1,000 sq ft, should not exceed 5,000 sq ft. This vertical growth gives builders an option to build high-rises and utilise the full potential of the space.

If the builder were to develop a villa on this area, he would probably not be able to construct beyond 2,000 sq ft. The end result would be that the units would be priced in such a way that the builder does not have to incur any loss.

“Villas usually interest celebrities, bureaucrats, NRIs, etc., who prefer having a luxurious lifestyle. Sometimes their profession demands it,” says Dhiraj Jain, director, Mahagun Group.

Villa vs apartment: Price range

ecis2016.org data show that the average price of property in India’s technological capital of Bengaluru is Rs 5,194 per sq ft. This means, you could afford a decent apartment in the city for Rs 50 lakhs. The average price for villas in the city, however, is Rs 17,500 per sq ft. According to listings available on our platform, a villa might cost a buyer up to Rs 17 crores in this housing market.

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In Gurugram, the base price for villa projects ranges between Rs 8,000 per sq ft and Rs 16,000 per sq ft and villas mostly cost Rs 5-10 crores. As against this, the average unit price in the Millennium City is Rs 5,236 per sq ft.

According to Jain, the starting price for a new–age extravagant apartment is Rs 1 crore and can go up to Rs 12-13 crores in Noida and Greater Noida region. The starting price for villas on the other hand, is nothing less than Rs 4 crores in the same market. In both these NCR cities, buyers can get a decent 2BHK home within Rs 50 lakhs. “Sometimes, developers tie up with reputed hospitality brands, to create a luxurious set of independent luxury apartments that have a similar cost, as villas located on peripheries of the city,” he adds.

There is also a huge difference in the amount that one has to pay towards general maintenance and upkeep of a villa and an apartment. Smaller the space, the lower is the maintenance; similarly, larger the space, the higher is the maintenance. Also, while the residents’ welfare association (RWA) takes care of the maintenance in apartment complexes, the onus lies on the owner in case of villas.

“Independent villas are generally owned by the section, which has the potential to afford a team of maintenance and cleaning staff,” says Jain. As large spaces are a key requirement to build villa-based projects, these are typically found in the suburban areas. This is precisely why high-density cities like Mumbai and Delhi do not have any new villa-based projects. Apartments, on the other hand, offer a wider choice in terms of location, both, within the city limits and outside.

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Villas vs apartments: Scope for customisation

Villas offer huge scope for customisation. These can be easily modified to reflect the changing tastes and styles in the housing market. This degree of freedom is not possible in a flat in an apartment. There can be no easy expansion or reconstruction in a flat which.

“Celebrities or public figures who keep changing the interiors as per the changing trends and taste, tend to invest in villas, as renovation is easier in an individual property, due to the larger area and ownership,” opines Jain.

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Return on investment from apartments and villas

Apartments are a clear winner on this parameter. A vast majority of the real estate buyers in India are nuclear families, for whom smaller set-ups like flats in an apartment, are ideal. Owing to its affordability, apartments would find takers more easily, if the owner were to rent it out, irrespective of its location. The same is not true of villa projects. Owing to its expensive upkeep, apart from the basic value, the rental yield is also invariably low for villas. In case you would like your real estate investment to generate rental income, it is important to ascertain the kind of settlers in your area.

Pros and cons of investing in apartments

Pros and cons of investing in villas

FAQs

Should You Invest In An Apartment Or Villa Project?

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By A Resident Blogger

December 2, 2015: If you’re in the process of choosing between a villa and a flat in an apartment complex, here are a few things to keep in mind to help you make a real estate investment. In all likelihood, buying a house, be it for living or as an investment, will be one of life’s biggest expenses, which is why it is all the more important that you choose the right property with care.

Question 1: Which is costlier, a villa or an apartment?

Price is one of the most important determining factors that drives a real estate decision. When it comes to the villa vs. apartment debate, price favours the purchase of a flat in an apartment. It is no secret that villas are higher priced compared to apartments – even costlier than apartments those that fall within the high-end luxury category. Villas also trump apartments in terms of maintenance cost as they incur higher maintenance fees as compared to apartments. In case of an independent home or a villa, this can work out to be pretty steep as it involves not just regular everyday maintenance, but also upkeep of the garden and common area. Apartments and flats for sale appear to be the more practical option in this case as this aspect of everyday management is taken care of by builders/building representatives for a quarterly/maintenance fee.

Question 2: Villas in the outskirts or apartments in the city?

Location drives the decision too, just as the price does. A key factor behind deciding on a villa or an apartment, it is important to consider the proximity of the property to places of importance in one’s daily life such as offices, schools, hospitals and the city centre. Villa complexes tend to be located in the city outskirts; apartments, on the other hand, offer a wider choice in terms of location, both within the city limits and just outside, leaving you to decide between choices that offer you the best of city and suburban life.  This also depends on the family you bring with you. For instance, if you’re a single person who has moved for work to an area like Whitefield in Bangalore, you should ideally keep an eye out for studio apartments for sale, particularly if you’re going to be the sole occupant whose days will mostly be spent outside the home.

Question 3: Will your piece of real estate find any takers in the future?

A vast majority of the real estate buyers in India are nuclear families, for whom smaller set-ups like flats in an apartment are comfortable bets. On the other hand, larger families prefer independent homes or villas. Therefore, if you have narrowed down on the city and locality where’d you like to make a real estate purchase, it is important to account for the demographics of the area, before settling on a flat in an apartment or an independent home like a villa. While it is important to gauge the actual living space you require, it is equally important to ascertain the kind of family units that settle in your area to ensure that your property can be easily rented out or sold.

Question 4: Which is easier to customise – an apartment or a villa?

Villas offer more freedom when it comes to making modifications to your home. Independent houses can also be modified to reflect the changing tastes and styles in the housing market. This degree of freedom is often found lacking with a flat in an apartment. There can be no easy expansion or reconstruction in a flat which, on the other hand, can seem pretty straightforward in the case of a villa.

Villa v/s Apartment – Which One Wins?

While villas and flats/apartment complexes have their fair share of advantages and disadvantages, other factors to consider aside from the ones mentioned above are those of security, community, facilities etc. Where villas offer space and freedom to do with it what you’d like, apartments offers positives in terms of better security, access to club facilities, ease of being rented out and more. While there is no definitive answer to the villa or apartment debate, there are ways to work around it. You could, for instance, opt for a villa in a gated residential complex, which offers the same amount of security, facilities, ease of management and an equal sense of community. While you may not win in terms of price or location, you might get your money’s worth by investing in a piece of real estate that offers you a taste of apartment living mixed in with the luxury of independence offered by the villa life.

Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle