Actual Returns & Performance
Rs.22,500 per month / 9.3% p.a.
On an investment of Rs.29.3 Lakhs (1 BHK)
Detailed year-wise & month-wise rentals paid out
to investors are shown further below.
- Full Fledged Operations started in January 2015.
- The operator is currently delivering 9.3% ROI per annum versus projected returns of 11% by the end of 3rd year of operations (they completed 3 years in January 2018)
- Due to sudden structural changes in Indian economy and massive disturbance caused in 2016 & 2017 due to historic policy changes & reforms like Demonetisation in Nov 2016, transition to GST in June 2017, slowdown in IT due to H1B visa issues and other big changes, businesses across India took a temporary hit in 2017 & hence operator could not realise full potential of the building.
- Also, due to an unexpected delay in completion of the tower – where only 60 out of 126 rooms were completed and handed over by the builder to operator – returns in the 1st and 2nd year were lower than initial projections (the remaining rooms were completed and handed over to the operator in batches over 1 year from date of initial launch).
- Despite these challenges, operator has been able to catch-up and deliver 9.3% ROI which is very close to projected income of 11% and by end of 2018, he is very confident of hitting 11% p.a.
- Even at current ROI of 9.3%, our investors are earning almost THRICE AS MUCH as what you can earn by renting out a regular apartment on your own – which FYI is just 2.5% to 3% across all major cities of India.
- Our investors are therefore satisfied with the current performance & have gone ahead and invested in their 2nd and 3rd such units at upcoming / operational locations like Delhi-Neemrana, Tirupati, Shirdi, etc which are very close to completion.
- Lot of demand for Resale Units where investors are ready to pay as much as Rs.45 lakhs for a unit – but none of the existing investors want to sell due to it’s high income, which you cannot easily replicate anywhere else (fyi, the original purchase price was Rs.29.3 lakhs – including registration, stamp duty and furniture).
- This means that you can easily resell Starlit Suites in any location, with lots of capital appreciation as can be seen above.
- Capital values have appreciated by a massive 45% within 36 months of commencing income / operations in 2015.
- FYI, projected income for Year 1 was 8%, Year 2 was 9% and Year 3 was 10% to 11%.
- Projected returns are average returns that operator expects to generate BY THE END OF EACH YEAR – which means he expects to generate 8% by end of Year 1, 9% by end of Year 2, 10% to 11% by end of Year 3, etc. Please keep this in mind while interpreting / comparing actual versus projected rental income.
- Lastly, due to a massive delay by the builder in completing construction of South India’s largest mall – titled “NeoMall” with 2.4 Million Sft of retail space – located right opposite our tower (literally 40 feet distance) – the operator has not been able to ramp-up room rates & occupancy as rapidly as initially planned, as this mall would have led to massive increase in traffic to this area.
Operator had visualised almost 12% returns by the end of 2nd year itself ambitiously keeping in mind commissioning of this mall. However, unfortunately, the mall is behind schedule by a stunning 3 years and looks like it will take another year for completion, post which you can expect a sudden increase in revenue.
Also the IT SEZ next to this tower just got completed recently (yet again 3 years behind schedule) but fitouts will take some more time, after which the operator expects 100s of high-end IT professionals to regularly visit this community – which will lead to a significant increase in both room rate & occupancy levels.
Year-wise & Month-wise
Rental Income Paid to Investors
Rs.22,500 per month / 9.3% p.a.
All Figures in INR
Rent expected to increase in 4th Quarter of 2018
Operator expects to increase rental income to Rs.25,000 per month or 10.3% p.a. from 4th Quarter of 2018 on account of gradual increase in occupancy and stable room rates.
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