Buy dream home in india

Having a house of one’s own is on everybody’s wish list, but while you are at it, ensure that it is not a hurried decision. Buying a property is a huge investment and involves a great deal of financial planning and strategy. If you are thinking of purchasing that dream home for yourself in 2016, we’ll help you make a smart choice.

Experts in the real estate industry believe that the government initiatives for enhancing infrastructure announced in 2015 will give a boost to the sector and restore investor confidence. The realty segment will certainly record an increase in sales thereby aiding reduction in unsold inventories across regions.

Promotion of 100 Smart Cities, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), Housing for All by 2022 and infrastructure development projects are some of the steps that will benefit Indian economy. Moreover, reforms like easing of FDI policy, the apparent implementation of the Real Estate Bill and and the introduction of REITs(real estate investment trust) is set to bring in the much-needed  transparency into the real estate sector thus improving  investor confidence.

“The year 2016 is likely to begin on a positive note on the back of these reforms and increased investor confidence. Overall, the next few years may witness building of some strategic partnerships with select developers, private equity investors also looking at liquidating assets. Consolidation through joint ventures in development would unlock the potential of major cities,” opines Sanjay Dutt, Managing Director, Cushman & Wakefield.

If you are looking to buy a property in 2016, you need to be very careful with legal documents of the shortlisted projects as there are innumerable enticing deals in the market. We advise you to not get tempted with freebies and discounts rather conduct a detailed scrutiny on the project, the builder type, locality, etc to list a few.

We have attempted to enumerate some of the cities which may give you a good return on investment in the next five years.

 Thane:

This neighbourhood of India’s commercial capital is emerging as an attractive region for investment in the Mumbai Metropolitan Region in 2015 because of abundant options available here. The rapid growth in infrastructure such as the proposed extension of Mumbai metro is making Thane city a sought after residential destination.  Thane west saw considerable movement due to good connectivity and proximity to important commercial and industrial areas in the vicinity.

In terms of affordable areas, the Kalyan and Dombivli region ruled the roost. With the selection of Kalyan and Dombivli as smart cities, significant commercial as well as residential activity in these areas is anticipated.

 Mumbai:

Madh–Marve has been branded as a destination with an expected price appreciation of 94 per cent, emerging as a potential asset class for the next five years. Ulwe, scores second, with a 70 per cent price appreciation by 2020, while Majiwada– Kasarvadavali may experience an appreciation of 59 per cent during the same time period.

Ghaziabad:

With significant real estate activity seen across three prominent markets including NH -24, Raj

Nagar Extension and Krishna Vihar, Gaziabad has emerged as the dark horse of NCR. The Centre’s nod for road widening of NH -24 towards Ghaziabad coupled with the location advantage of the highway and the direct link with Delhi, Noida and other areas of Ghaziabad have driven growth here. The realty prospects in 2016 in this region look promising.

South and East Bangalore:

Abundant new supply and affordable prices, high consumer demand and wide range of options across segments have boosted buyers’ interest in these areas of Karnataka. Good connectivity and reasonable property prices will drive growth in areas like Whitefield, Panathur, Electronic City Phase 1, Begur Road, Kanakpura Road and Bannerghatta Road in 2016.

Bhiwadi:

An emerging industrial and real estate hub bordering Gurgaon, Bhiwadi is well connected with highways such as NH-8 and NH-71B. It falls along the Delhi-Mumbai Industrial Corridor, making it a potential destination for property investment. The proposed Neemrana airport in the vicinity is also expected to boost demand in the real estate sector.

 Hyderabad:

Low ticket prices and buoyant office space activity has boosted the realty prospects in the city in recent times. Post clearing of the political clout and division of the state, Hyderabad has emerged as one of the promising realty markets of India.

Knight Frank ((based on its report on Residential Investment Advisory 2016, has identified select locations in major Indian cities which will give good returns – New Airport Road in Viman Nagar and  Vishrantwadi in Pune, Thanisandra and Panathur in Bangaluru, Golf Course Extension Road and New Gurgaon in Delhi-NCR and Puppalaguda– Narsingi cluster  in Hyderabad. According to JLL India, Noida and Greater Noida (NCR), Thane, Navi Mumbai – MMR, Whitefield in Bangalore, Viman Nagar and Nagar Road in Pune and Kochi Are among top investment options in 2016.

Niranjan Hiranandani

If you are the one who is seeking for affordable housing unit in Maharashtra, so here is good news for you as recently NARDECO or the National Real Estate Development Council has come up with news in festive season that it is going to build more than one lakhs affordable housing units with no profit and no loss.

NARDECO is the umbrella developer body which works under the Ministry of Housing and Urban Poverty Alleviation, Government of India has recently announced that they are going to construct affordable housing unit. Niranjan Hiranandani, Founder and First President of NAREDCO, Maharashtra stated that this is possible, and we can do it. The more he added that high cost of the land is big hurdle in the construction of affordable housing units, but this issue could be easily resolved if the state government can provide salt pan land for those projects which are affordable and with no profit and no loss objective. Niranjan Hiranandani stated that “We are planning to put forward this proposal in front of Devendra Fadnavis, Chief Minister of Maharashtra. We will meet him with all the details of affordable housing project and our main objective will be to make sure that one lakh low-cost and affordable houses get built every year for next five years in MMR (Mumbai Metropolitan Region) with the co-operation and support of state government”.

According to Niranjan Hiranandani, Game plan is very simple; At NAREDCO, Maharashtra we will deploy all the best possible technologies and equipments to make sure that cost of these project get within the budget. In Maharashtra there are several region where land for these kinds of projects are available, if state government will allow us to use land for these projects, so real estate developers who are the member of NAREDCO will build such housing units not in juts MMR region, but in all over Mumbai. The more he added that at this point of time we want to earn good name for entire industry and on the same time we want to help people to own dream homes in affordable price. Through this initiative it will be easy and clear to help people to get dream homes in reasonable price.

This is positive idea and there are many real estate developers who are ready to construct and help in these kinds of projects for a specific number of houses. There is no pressure in this project because we have seen real estate developers are voluntarily coming up with numbers of homes which they want to build.

MHADA

The Maharashtra Housing and Development Authority (MHADA) has allocated land parcels spread over 1,100 acres across the Mumbai Metropolitan Region for developing affordable housing projects. Mumbai Metropolitan Region comprises cities of Mumbai, Thane and Navi Mumbai. The identified land parcels are in Thane, Raigad and the newly formed district of Palghar including Vasai and Virar.

Prakash Mehta, The state minister of housing, labour and mines had announced that Maharashtra is contemplating on opening up land parcels under the no-development zones as well as plots belonging to Indian defence personnel with a view to build affordable houses in Mumbai. “If needed the government will even look at the salt pan land, defence land, airports authority and BPT (Bombay Port Trust) for these projects,” said Mehta stressing on the need for affordable housing in the financial capital.

This exercise by MHADA to earmark land parcels for affordable housing projects holds significance in the backdrop of the government’s vision of achieving Housing for All by 2022. “We have identified these land parcels based on connectivity and infrastructure as well as availability of vital facilities like water supply that are prerequisites for conception of housing projects there,” said SS Zende, vice president and chief executive officer of  MHADA.

The bulk of expenditure for any real estate project which is the cost of land is least in this case since these land parcels are being allotted to the state housing authority by the government itself. The process of planning and drawing of a roadmap for these housing projects will be initiated after the land is allotted.

Affordable homes in next one year

NARDECO (the National Real Estate Development Council), the umbrella developer body was formed under the ruling of Ministry of Housing and Urban Poverty with an objective to alleviate the work of central government. Niranjan Hiranandani, MD of Hiranandani Constructions Pvt. Ltd is now act as the president of Maharashtra NARDECO unit.

The National Real Estate Development Council has decided to construct one lakh affordable homes on the basis of no-loss no-profit. However; with this condition government has to provide land for the construction of homes. Niranjan Hiranandani, President of Maharashtra NARDECO unit stated that soon we will meet Chief Minister Devendra Fadnavis with detailed plan of action for the construction of affordable homes. Apart from that he also ensured that over one lakh affordable and low-cost houses to be built each and every years for the next five years in MMR (Mumbai Metropolitan Region) in sync with the government of Maharashtra. The more he added that “It will ensure the delivery of best possible technology at lowest possible cost. However; the allotment of the housing units will be based on the certain criteria and lottery system.

“If state government will provide land for such developments, so we will be able to construct home in Mumbai too. We want to earn good name and reputation in all over country. We want to show that this initiative aim to complete the dream of people, which is to own home in Mumbai. After throwing this idea now many real estate developers are coming forward and taking their responsibility to build certain number of houses” said Hiranandani.

Few Builders have different strategy:

According to Pankaj Kapoor, MD, Liases Foras, the real estate research firm, “In Mumbai real estate developers will never construct affordable home, no matter you provide them land or not. Because; first thing; Why we need real estate developers to construct affordable homes at government land? Government needs contractors to construct homes rather than the developers, apart from that urban bodies such as; CIDCO and MHADA should stop their habit to sell land in the open market rather use them for the construction of houses only”.

Mumbai real estate

A report by brokerage house JM Financial at the back of a bi-annual property expo Of MCHI, highlights that even innovative discounts will not help boost residential property sale in Mumbai this year as the prices are much higher & beyond the reach of end buyers.

The firm says the subvention schemes, stamp duty/floor rise/maintenance bill waivers or freebies like iPhone or holiday trips offered by developers form only 1-5 percent of the property value, which is insignificant in altering purchase behaviour. The report notes that discounts available on execution of deal (10 – 15 percent) remain a preferred way of giving discounts than a cut in declared property rate.

The MCHI property exhibition had 150+ developers participating in it, covering more than 300 projects. Based on the visit to developers in the exhibition, the report notes that the pricing had been maintained. The Mumbai Metropolitan Region (MMR) witnessed a marginal (1 percent) decline in pricing over last year. A Few areas like Kalyan, Virar, and Dahisar saw material price correction while no change was seen in other regions.

Furthermore, the inventory is mounting in Mumbai. The unsold houses are at a 50 month high.

Motilal Oswal Real Estate

MORE, (Motilal Oswal Real Estate) the real estate arm of Motilal Oswal Group plans to raise about Rs. 1000 crore through its third real estate fund. The funds will be utilized for development of residential projects by reputable developers in the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), cities like Bengaluru, Pune, Chennai and Hyderabad. The money will primarily be raised in about a dozen transactions of Rs 80-120 crore each from high net worth individuals and family offices.

Explaining the move, Sharad Mittal, director and head of the fund said, “the realty market is consolidating right now and prices are expected to remain stagnant for some time. This therefore, is the correct time for investors to invest through indirect investing since we would participate in the project profits rather than relying entirely on the future price rise.”

The fund has been set up as an alternative investment fund or AIF category II, registered with stock market regulator SEBI. “We expect to achieve first close by mid-January 2016 and conclude fundraising in the next six-nine months depending on the market conditions. Given the current scenario, direct investments may not fetch superior returns,” he added.

Motilal Oswal has in its two earlier funds invested capital under a mezzanine structure in top five property markets with developers such as ATS, Shriram Properties, Godrej Properties, Rajesh Lifespaces, Ahuja and Casa Grande. The new fund will also focus on top six property markets in the country. The first fund worth Rs 200 crore, raised in 2009, has been fully deployed and is currently in exit mode. The fund has exited its four out of total seven investments and given returns of about 82% of the capital. In March this year, MORE had raised Rs 500 crore through its second fund which is presently in investment mode wherein around 80% of the capital has already been deployed.

The third & the new fund, with a tenure of five years from final close looks to target a gross internal rate of return of about 23 – 25%. “We shall continue to undertake mezzanine investments with established developers for their mid-income housing projects across top cities. We shall also undertake structured equity investments depending on the market scenario,” said Mittal.

Loan EMIs

Are you among the people who have been waiting to get the key of their houses from past couple of years? Well Sachin Kala is indeed one such man waiting to start staying in the flat which he had booked nearly 4 years back. According to his builders, he was supposed to get his flat back in December 2013 however looks like the wait might be for more long time. He has already paid about 80% value for worth of the property and this property is nowhere close to completion. The only solace for his is that he is not the only one who is going through this. Most of buyers are going through the same problem across the country. With the builders facing financial problems, properties are not being completed on time leading to huge delay in the completion of the projects. Being cash strapped is causing problems in completing the projects. As per the review of the real estate analytics firm PropEquity, between the years 2011-2014, 3,753 projects were offered for possession in the Mumbai Metropolitan Region and out of these projects nearly 45% of them are still under construction. This problem is severe in the NCR region wherein 856 projects were up for possession and out of these projects, 78% are still incomplete and running behind the deadline. The company saw similar patterns in some of the other cities like Chennai, Bengaluru, Pune, Hyderabad, and Kolkata among others.

Reasons for the delay:

There are many reasons, which can be attributed to the delay in the completion of the housing projects. The reason being, there has been a considerable amount of decline in the demand for residential housing due to constant increasing prices of the property. During the boom period, the developers and builders have highlights so many new launches that they are now facing difficulty to complete these projects. Most of the developers are under financial problems as they have used all the money collected from the new projects towards the projects that are still not completed.

The new hope:

From the buyers’ perspective, they have a new hope in the form of the Real Estate Regulatory Bill. The bill has been targeted towards bringing out balance in the currently chaotic real estate industry and has many clauses favorable to the buyers. For example, the bill has proposed that builders and developers are required to deposit around 50% of the amount that they receive from the customer in a very different escrow account. By this way, they will be able to stop diversion of some of the funds. According to this bill, the buyer will have the complete control over their funds as they will be able to ask the developers to return the complete amount in case of the property not being completed in the promised time. At present approval has been given to the bill and it is ready to be presented in the Parliament.

Influences of delayed projects:

When it comes to a first time property buyer, any kind of delay in the completion of the project and them taking over the flat can cause them to undergo serious financial problems. Most of the times buyers will atleast anticipate a delay of about 10-12 months in the completion of the project however, none would have expected the same to go beyond 2 years. According to the reports on PropEquity, the Mumbai Metropolitan Region has seen an average delay of 25 months in the completion of the projects. The average delay in the NCR region is about 33 months. In simple, the bigger a residential project is, the buyer can anticipate a longer delay in possessing the property. Buyers who took loans to pay for the property and expected the EMIs paid to the bank to replace their monthly rents have now landed into a situation, that requires them to pay all these amounts. According to one of resident from Ghaziabad, it is very difficult to pay both the EMIs as well as monthly rental but they are left with no choice. When it comes to a double-income family, the problem remains the same. The same problem is also for the investors especially the ones who have put money towards their second or third houses. For them investment was about earning through the monthly rentals that would have easily covered up the EMIs they need to pay to the bank. Potential delay in the completion of the project can completely make the entire calculations go downslide. Even though everybody is paying EMIs to the bank, there is no sign on earning the monthly rentals.

Loss of tax benefits:

Any delay in the completion of the project means that you will not be able to avail any tax deductions until the project has been completed. Buyers look of tax deduction of about Rs1.5 lakh, which is towards the principal repayment, and a further saving of tax deduction of Rs2 lakh meant for interest on the payment. However, it is important for the buyers to have the possession on the property within 3 years of taking loan to avail benefits under Section 24. In case the buyer is unable to do the same in the span of 3 years they will end up paying tax for about Rs30,000 a year. The buyers however have one option; they can sell out the delayed property and always invest in ready to move in properties. However, they still have the roadblocks in terms of transfer fees and registration charges. People who have taken the property with the intend of renting it out have benefits as the complete interest is tax free even if the project has not been completed in the 3 years of time.

Avoid delayed projects:

Always have enough information pertaining to the construction project as well as the developers. This will avoid any problems later on. Attentiveness among the customers is the key to avoid many problems in the future. Customers can protect themselves from fraud developers and projects. Keeping a track on the record of accomplishment of the developers also avoid lots of problem in these kind of projects. Referring to online forums will help to learn about these developers and it is important to avoid investing and dealing with new groups and developers.

It is important to ensure that the developers have valid license and government’s approval to run the project. There are many instances where in developers have tried to sell out property even before they have ownership of the land. It is important to ensure that the payment of construction is linked with the stages of project completion. Customers need to ensure that they have clauses of delay in the contract and ensure that the developers do not hike the price of the property.  Never fall prey to lure or other offers which talks about big properties for lesser price.  Carefulness is everything today and especially when there is lot of money involved.

Smart Cities in India

Recently, CM Fadnavis informed that 10 cities of Maharashtra would compete with other states to bag the ‘Smart City’ projects which meant to get the more advanced and well developed urban infrastructure.

Maharashtra CM Devendra Fadnavis stated that there are 10 cities from our state which is being nominated for the Centre’s “Smart Cities” project and we will compete with the entries of other states to bag funds from central to develop more advanced and developed urban infrastructure. Edged out emerging towns from the developed cities of Maharashtra are in the race to bag the funds from central. However; the name of shortlisted cities are; Mumbai, Kalyan – Dombivali, Navi Mumbai, Thane from MMR (Mumbai Metropolitan region), Pune, Solapur, Pimpri – Chinchwad from Western Maharashtra, Nagpur and Amravati from Vidarbha, Nashik from North Maharashtra and Aurangabad from Marathwada.

Recently, Central Government of India, has identified development of new towns close to those cities which are well developed because its key behind the smart city initiative where central government will contribute Rs 50 crore each year towards the smart city project. According to Comptroller and Auditor General (CAG) of India there are lacks of infrastructure and basic amenities in the new emerging towns of Maharashtra and due to that soon CM will announce next plan for development, which will focus on the urban areas or Maharashtra. This report observed that out of 36 none of the town has even the basic service level benchmarks for solid waste management, sewage management and water supply, however; the audit was for the period of 2011 to 2014. According to CAG report, water supplied in 50 per cent of the audited towns are between 25 to 69 litres per day per person, however; according to government norms it should be between 70 to 70 litres per day per person. It was observed that due to loss from distribution system, treatment plans, reduced efficiency of water the problem of irregular water supply comes in existence.

Almost there is no town which found to be segrating municipal waste; the more CAG added that the numbers of towns are not even authorized by the state pollution for the waste disposal facilities. However; the CAG has also identified irregularities in the main irrigation projects in all over the state and there are many mini projects which don’t have approved master plan.

mumbai_realestate

The percentage of ready to move yet unsold residential property is more than 3.5 per cent out of total unsold residential inventory in the MMR (Mumbai Metropolitan Region) and Navi Mumbai, as per the latest report released by CREDAI (Confederation of Real Estate Developers Association of India) and JLL India. However; the total estimated value of ready to move residential inventory is more than Rs. 2,430 crore. From last 30 months, inventory level is continuously increasing in Mumbai Metropolitan Region. Housing inventory level is increasing to record level and it’s just due to the weak sales and unaffordable property prices even than when real estate developers are offering lucrative discount and schemes such as; big discounts, foreign tours, free cars, free ACs, free parking space and more.

In Navi Mumbai, the percentage of completed flats and apartments, which are still waiting for owners or buyers are at 8.13 per cent of the total unsold residential inventory. In Thane and Mumbai, 1.33 per cent and 1.10 per cent of the total unsold residential apartments or flats are ready for possession. According to report, these inventories are overhang in Mumbai Metropolitan Region including Navi Mumbai and Thane from the duration of more than 30 months. There are total 3.35 per cent or 2,600 residential units are available as ready to move inventory out of total 77,460 residential units, which are available in Mumbai, Thane and Navi Mumbai. Currently there are total 5,311 residential units available as unsold inventory which have price more than Rs. 5 crore and about 17,000 residential units have price between Rs. 2 and Rs. 5 crore, however; more than 35,700 residential units have price between Rs. 65 lakh and Rs. 2 crore whereas; 19,500 residential units are priced below Rs. 65 lakh.

According to Ashutosh Limaye, National director of research at JLL India, “For the real estate market of Mumbai there are slow absorption rate because currently buyers are holding their purchasing decisions as they are expecting little more correction in the weak real estate market. It’s just representation that how buyers are showing interest in the completed residential projects. These days real estate market is becoming the end user driven and investors don’t have longer funds to invest in real estate market to get the high rate of return”. The reason behind slow sale of residential unit can be the more price of these 2,600 residential units as they have price more than Rs 1 crore, which is unaffordable for normal Mumbaikars as most are from middle class. However; real estate developers are thinking that they are offering affordable and reasonable ticket sizes and this price is justified as per market conditions.

Suburbs from Goregaon to Vile Parle have more than 205 completed ready for possession unsold units which have price more than Rs. 2 crore. However; the areas where residential units have price below than Rs. 65 lakh are emerging as one of the most affordable region in Navi Mumbai and these areas are; Dronagiri, Karanjade and more which are far away from suburbs off Ghodbunder Road in Thane. In present, some of the real estate developers are already accepts the demand of consumers. Now it’s time when real estate builders should realize that buyers are ready to buy residential projects, but developers should stick to their construction deadlines and they have to complete whole project at correct time.

Even after completion, real estate developers are taking at-least six month of time to sell their entire inventories. As per recent data there are 18 per cent buyers are investing money in starting of project however; 27 per cent buyers are investing money in real estate market near the completion period.

Maharashtra Government is planning to launch rental housing scheme

State Government of Maharashtra is planning to re-launch its one of the most ambitious rental housing scheme for MMR region with a hope to succeed with more liberal norms as they were failed to draw better impact previous from private real estate developers.
It is expected that FSI (Floor Space Index) for the projects which is under public-private partnership will be between 3 or 4 as earlier it was 3, as per the statement of official of Mumbai Metropolitan Regional Development Authority. Above this for additional FSI, real estate developers will have to pay apprx.60 per cent or reckoner rate as premium. However; FSI refer to the size of the piece of land on which it is built and the ratio of a building’s total floor area. Mumbai Metropolitan Region (MMR) includes Thane, Mumbai and Navi Mumbai.

According to the Maharashtra State Housing Policy of 2007, the rentals housing scheme was first time introduced by the state government in 2009, which was allowing the participation of developers from private sector with an aim to reduce the slum clusters, however; on that time some developers received the sanctions for such projects and later this scheme extended to suburbs such as Karjat, Virar and Thane. Because of few changes in norms the scheme failed to take off., but this time it including an increase in the size of the housing units from 280 sq ft to 160 sq ft. However;in 2013, the state government lowered the highest permissible FSI (Floor Space Index) under the scheme to 3 from as earlier it was 4.
Later in November 2013, the original rental housing scheme was modified into an affordable housing scheme. And under the modified scheme the private developers will offer the additional FSI as incentive in return for self contained tenements. These houses or flats will be allotted by the state agencies to only those households who are from low income groups. In Maharashtra, the three main state agencies are; Slum Rehabilitation Authority, MMRDA and Maharashtra Housing and Development Authority and they will get the responsibility to implement the scheme properly. The modified scheme is emphasizing on connectivity, civic and social amenities and opportunities to earn livelihood.