Sell, downsize or redevelop? Real estate lessons from retirees who are trading bungalows for cash and gated living

After his wife died, 83-year-old S. Jagannatha Rao sold his three-bedroom house in Bhopal to move closer to his two sons in Bengaluru. Since the locality was expensive for buying a property in, he chose to rent instead.

He invested the proceeds from the sale of his Bhopal house in Section 54EC capital gains bonds, government securities and fixed deposits. Separately, Rao also sold an ancestral property in Andhra Pradesh.

“I was not reluctant to sell the Bhopal house as it was in everyone’s best interest to sell and move on,” Rao told Mint's Shipra Singh. “However, I was emotionally attached to my ancestral property in Anantapur.”

After weighing the pros and cons and discussing the decision with his sons, Rao said he realised it was far more prudent to sell it during his lifetime. While selling off these two properties did not dramatically alter his retirement budget, since he already had enough saved, it simplified his life.

“Having my net worth in liquid instruments rather than physical real estate brings immense peace of mind,” he said. “Had something happened to me, managing and selling the properties remotely would have been a significant administrative burden for my sons.”

India’s population aged 60 and above is projected to reach 347 million by 2050, according to the United Nations Population Fund. This highlights an important question for ageing homeowners: how much real estate do they actually need in retirement?

With family structures changing — children increasingly move to other cities or countries — Kalpesh Ashar, CFP and Sebi-registered investment advisor, told Mint that it is changing retirees ’ relationship with property.

“Homes accumulated for the next generation may have little practical use if children have settled elsewhere, while maintaining and eventually selling those properties can become a burden for heirs,” he said.

However, selling is not the only way to unlock the value of a family property; some retirees are opting to sell secondary real estate during their lifetime and move the proceeds into financial assets that are easier to manage and divide.

Several seniors are also opting to move into managed or gated housing.

A 67-year-old Noida resident shared with Mint that he has sold his large independent bungalow to move into an apartment in a gated complex.

“It was my family home–a two-storey house with six rooms, two kitchens and five bathrooms. My children grew up there, went to college and started their careers,” he said. “Eventually, however, the children moved out and I was left there with my wife and elderly father.”

The ancestral home, which once housed a multigenerational family, was becoming a burden for three older residents; it needed major repairs, and security was a concern.

And the family was uncomfortable leaving it locked for extended periods as it moved the elders to Noida.