real estate sector

The Data from the real estate sector in the early months of 2016 has revealed that property sales in the six major cities of India have increased by nearly 15 percent. Real estate research and consultancy firm Liases Foras has reported that maximum gain in sales has been recorded from Ahmedabad, Bangalore, Mumbai Metropolitan Region (MMR) and Delhi. The highest number of sales were reported for houses that are between the Rs50-lakh to Rs1-crore bracket (31 per cent) followed by those in the Rs25-lakh to Rs-50 lakh bracket.

According to The survey, the weighted average price of apartments in Ahmedabad increased by 11 per cent, while it has declined by 2 per cent in MMR and Delhi. The managing director at Liases Foras, Pankaj Kapoor observes that although the overall Indian real estate sector is going through turbulence, people cannot stop buying property and the survey tells that most of the buying activity is happening in the affordable segments only.

“Even though property sales have picked up, the average cost of flats has decreased. The cost of a 2BHK unit in 2015 is Rs1.31 crore, as against Rs1.32 crore in MMR, while in Greater Mumbai, in 2015, the same house cost Rs2.82 crore as against Rs3.2 crore in 2014. This shows that property prices have declined resulting in the significant increase in property sales,” Kapoor added.

Investment learnings of 2015

2015 will not be remembered for the gloom it brought to the residential real estate sector but for forging a solid base for sustained future growth. Few of the notable highlights of the year gone by are as follows:

• FDI rule relaxation will facilitate the flow of more investment in the country with the removal of the two major obstacles: Minimum capital of $5 million and minimum of 20,000 square metres of development.
• The passing of the Real Estate Bill by the Union Cabinet implies a more vibrant, efficient and highly transparent real estate sector, beneficial for both the buyers and developers.
• The proposed recommendations to increase the salary of state as well as central government employees by almost 23.6 per cent by the seventh Pay Commission will have a positive thrust to the demand side of residential real estate.
• A burgeoning economy with reduced inflation and a rate cut of 50 basis points by the RBI will result in lower home loan rates.
• Launch of pioneering initiatives such as Smart Cities, AMRUT, and Housing for All by 2022 will create a revolution upon their respective implementation. Despite the sectors below average performance, it attracted investments worth Rs. 53,000 crore which might become the highest in the preceding seven-year period.

Many factors will contribute towards the growth of the real estate sector going forward. However, one may apply a touch of pragmatism while deciding the purchase of residential property in 2016. Some of the points to be noted are as under:

• Due to the slump experienced by the realty market over the past 2-3 years, the demand and supply alignment has experienced a lot of stir. While the days of exponential returns have become past; returns have become more aligned to actual market forces rather than speculation.
• In current scenario more than ever before, investment decisions must be made post doing a thorough due diligence and expert consultation. Even if the wider parameters are remaining the same, the market will perform differently in different areas, budget ranges, configurations and typologies. The due diligence to be undertaken must involve a thorough background check of the developer and all-encompassing research about the project — whether or not the various statutory permissions have been obtained, its location, etc. If there is the slightest of reasons to worry about, expert consultation is a must to avoid getting trapped in the wrong project.
• For under-construction projects, expecting the ROI is not as important as establishing a developer’s cash flows. The liquid squeeze in the market owing to the recent slump in the realty market has further limited the ability of developers to undertake newer projects or sell out the existing ones with ease. In other words, it is far more important to scrutinise the builders ability to fund the project rather than anticipating the profit one will earn from investing in the project.
• Real Estate sector is a risky sector to invest as there is no guarantee of assured returns. It is therefore important that every investor assess their resilience and preparedness for risk
• Buyers who are looking for a home for their personal use, should go ahead and buy it as it is a buyers’ market right now. For investors looking for sizeable returns, it would be advisable to have a wait and watch approach and enter at the right time.
• A need assessment may be carried out by both buyers and investors as the same is more important than liquidity. In simple terms, one should understand whether the identified property actually has the characteristics what one is looking for, or if the same exceeds or falls short of one’s requirements.
• Investors can think out of the box by taking a chance with upcoming markets rather than safer bets such as mature markets.
• End-users must decide whether to buy or rent. The current employment market in the country suggests frequent movement of employees across cities. In such a situation, investing in real estate while one lives on rent in another place doesn’t make much sense and should be reconsidered.
• While planning to invest in a property with a loan, studying the identified market’s performance in over the last few years as well as its expected future performance is critical. The performance of the rental market should not be ignored, either. Situations where one’s outgo on interest or maintenance on a property is more than the generated income must be avoided.

Recommended markets to invest in:

• Noida & Greater Noida – National Capital Region (NCR)
• Thane – Mumbai Metropolitan Region (MMR)
• Navi Mumbai – Mumbai Metropolitan Region (MMR)
• Whitefield – Bangalore
• Viman Nagar and Nagar Road – Pune
• Kochi – Kerala

Bungalows – an ideal investment option

With beautifully crafted and lavishly furnished interiors, bungalows have been symbolizing a grand lifestyle since times immemorial. They usually comprise a single floor and cover a larger space on ground. Thanks to Hindi films, bungalows are perceived as a more attractive alternative for one’s dream home than a simple apartment in a building.

In India, there are two ways in which one can live in a bungalow. The first is purchasing a plot and constructing a house on it as and when you can and second is by booking a home in a large township project by reputable developers. Most people desirous of staying in a bungalow opt for the latter method.

So, why are bungalows an ideal choice for your dream home? Although bungalows cost much more than a flat, they promise a sophisticated lifestyle in a fairly established society, making them totally worth it.

The timeless appeal of bungalows has always kept them in fashion in the real estate markets. A big house in a prosperous locality is sure to enhance your social status and is often viewed as a sign of affluence.

Larger space in a single floor is good for joint families, keeping the culture of togetherness intact. Moreover, bigger outdoor space in the compound allows children to create childhood memories and ease of movement for senior citizen in the comfort of their home.

Bungalows may cost one more than an apartment, but their value appreciation over a period of time is also double over a flat in a building. The value of the property is even higher if it is situated in a flourishing locality. It is better to buy a bungalow in a township as you get a ready-made, ready-to-live home and superior quality view due to the sheer scale of the project.

Tom Cruise

Eva Longoria is the new owner of a Hollywood Hills pads courtesy Tom Cruise. According to a report from Variety.com, the Desperate Housewives star bought Cruise’s palatial Hollywood Hills estate for $US 11.4 million ($15.7 million). Cruise has already handed over the deeds of the compound to the actress.

The two-storey main residence is a European-style villa with Venetian plaster walls and a “chef’s quality” Italian farmhouse kitchen.  The home has entire walls of glass offering lush views of the Hollywood Hills, and a wooden footbridge that leads to a large pool with waterfall and spa. The guest house has four bedrooms and four bathrooms which is larger than the main house having only three bedrooms and bathrooms.

Tom Cruise had actually listed the property for sale in March for $US 13 million and sold it for nearly $US 2 million lesser than what he expected. If rumors are to be believed, Cruise’s Beverly Hills mansion is also up on the block & can be shown on request holding a price tag of about $US 50 million.