Buy Property in Mumbai

If you are looking for the best time to buy property and you are looking for the indicators in real estate market such as; price and sales, so you can say that in many cities property market could be head for a revival. As per the reports of RBI, the average prices of residential units have increased by 13.7 percent in 10 major cities of the country in the period of July to September 2015. If we will see the brokers sales reports, so we can easily say that sales in real estate market have got a boost too.

According to one of the most reputed developer, “We are going for the pre-launch of our project because buyers are lined up outside of the office to book a flat. And at this point of movement we are expecting some good sales and price in near future”. According to statement of Sanjay Dutt, MD of Cushman & Wakefield, India, “It doesn’t mean that in near future real estate market will witness a turnaround, but it is expected that the trend will sustain for the next 6 to 8 months and we can call it revival”. The more he added that there are contradictions in the data as there are many launches in real estate market where buyers and investors are frenzy to buy. In past few months office and commercial demand has picked up, which means city is creating new job opportunities and if it will sustain for next few months so there will be a turning point for the industry.

Why it’s good time to buy property?

According to real estate experts, if you are end user, so it’s good time to buy residential property. As per the statement of A S Sivaramakrishnan, Head of Residential Services at CBRE South Asia, “These days smart buyers are already scouting for a property, as these days realtors are still flexible with the demand of buyers”. In Mumbai there are more than 77,000 apartments are in the inventory, as per reports of JLL India and it is expected that it will take 11 to 12 quarters to clear off that inventory against a healthy expected cycle of 5 to 6 quarters, as per the statement of Ashwinder Raj Singh, CEO of Residential Services at JLL India. The more he added that there are chances that developers will not raise up their prices if the sales pick up because it can make buyers uncomfortable.

Apart from that there are some developers in city which are offering flexible payment option with attractive interest rates, but they are aiming to sell houses at little higher price than the rates prevailing in those regions. Ashutosh Limaye, Head of Research at JLL India, Don’t just go by the quoted rate of the flat because developers might offer little lower priced with some additional charges such as; club fee, and fee for other amenities. Apart from checking the track record¸ titles and approvals, its recommended to check the discounts, offers and schemes for different real estate developers before making any kind of purchase, as per the statement of Mudassir Zaidi, National Director of Residential Agency at Knight Frank.

If you are looking for the under-construction flats, so its recommended to take some time and evaluate the projects and ideally buyers should take 30 to 60 days to visit the site and check if the construction is happening as per schedule or not. If there is any kind of deficit, then better to stay away from that project. However; buyers can find the good deal for old flats, which was constructed 5 to 10 years ago. Apart from that if you are at real estate investor, so better to wait and watch for the trends and developments for next two to three quarters.

Real Estate Sector

Real estate experts believe that the 2016 will start with the positive note for real estate sector and in coming year it may witness pickup in the sales with improvement in the number of unsold inventories. In simple words we can say that year 2015 was little bit good for realty sector as it has witness some  regulatory changes, which will do the big impact in year 2016 as regulatory changes have relaxed the foreign direct investment laws, after the direct approval of Union Cabinet and it was much awaited Real Estate Bill. On Real Estate Bill there were mixed reactions from real estate experts, but broadly everyone sees it as a positive move as currently real estate sector is in sluggish mood.

As per real estate experts, In September the rate cut of 50 basis points by the RBI under monetary policy review will also increase the demand and supply in the real estate sector as well as government panel is also planning to bring seventh pay commission. As per the reports of Financial Express, “Investment in the real estate sector in 2015 was about $ 8 billion or Rs 53,000 crore and it was even year high even when the sector is not in a good shape. However; BSE Real Estate index also plunged by more than 16 percent on a year to date basis at the December 18. According to reports of Cushman and Wakefield private equity players have invested about $ 2.8 billion or Rs 18,700 crore in the real estate market till end September 2015. Add to that estimation $ 4.5 billion, or Rs 30,500 crore was of NCDs till the end of November 2015 and due to that the overall tally was up by 74 percent in comparison of last year which was about Rs 17,600 crore.

As per the statement of Anuj Puri, Chairman and Country Head of JLL India, “In past two years the real estate market is seeing some improvement and it has been adjusted to new trends in terms of aligning supply for relevant demand. The more he added that now real estate developers are paying more attention to the requirements of buyers and they are developing more property as per need of middle class which is in the price range of Rs 75 lakhs to Rs 90 lakhs in tier-I cities”.  According to Vikas Malpani, co-founder and Head of CommonFloor Groups, “The real estate bill approval is positive sign for real sector, which along with other trends could shape the real estate sector in 2016”. There are many experts, who are giving thumps up to the recently approved Real Estate Regulatory Bill as it can be helpful to clear the unsold inventory. We all know that whenever any new bill or law comes in the existence, the real estate developers tend to adopt a wait and watch approach. And due to that in present, the completions of existing projects are the prime focus of developers for some more months.

On the other side at the positive note the developers are focusing more on completing their existing projects as well as clearing the inventories and according to JLL India listed that following regions as the best bet for real estate sector in 2016; Noida & Greater Noida, Thane – Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Nagar Road – Pune, Whitefield – Bangalore, Navi Mumbai – Mumbai Metropolitan Region ( MMR), Viman Nagar and Kochi.

Commercial Property

According to real estate experts, it’s good times to make an investment in the commercial property as companies are expanding their business with an aim to improve their business sentiment. If you are looking for regular cash flow with higher return and rental, so investment in commercial property is better than residential property.

As per experts, now commercial real estate space is witnessing a revival with little high demand at the time when real estate developers are not building commercial space from last four to five years due to global financial crisis and now its expected that soon existing stock will get consumed. And in simple words we can say that it’s the main reason why real estate developers and commercial property owners are receiving higher rental yields and now people are looking it as good investment option. Indian economy is growing with growth rate of 7.3 percent, apart from that inflation has been reined in with the gradual growth in manufacturing sector. However; with all these kinds of growth commercial office spaces are also gaining momentum because companies are looking for expansion due to improved business sentiments. These days big e-commerce such as; Snapdeal, Amazon and Flipkart are looking for commercial spaces to set up their warehouses, followed by IT-enabled services and the information technology sector as well as financial services and insurance (BFSI) segments and banking sector and they all are resulting in high absorption levels in commercial properties and quality office spaces.

It is expected that in near future the industries such as; engineering, pharmaceuticals and manufacturing will provide further impetus to the real estate market. According to Amit Bhatia of Assets and Business Banking in Deutsche Bank India, “Its best time in India to invest in the commercial properties as it is giving low capital values with high rental yields. However; there are many micro markets where price of commercial properties are still low than the residential property and commercial properties are offering double the rental yields”. The more he added that Grade-A properties including offices, retails or other spaces at high street are also are bound to deliver capital appreciation and higher rentals. However; for commercial properties the capital appreciation is low due to many speculative buying in residential property. On the other hand office spaces are more driven by end users whereas; commercial space might not be as easy to sell as residential spaces are and its also easy to find tenants for offices spaces in comparison of residential.

Why it’s best time to invest in commercial property:

From investment point of view the difference between commercial and residential property is that in commercial real estate you will get more rental in comparison of residential property, but when it comes to sale property, so its pretty easy to sale residential property, but its tuff to sale commercial property, as per the statement of Viral Desai, National Director at Knight Frank India. The more he added that in past few years, residential real estate market has seen more appreciation, but now its on peak and about to get over. However; it is expected that in near future office spaces are continues to give better rental yields. In residential property the annual rental yields are about 2 percent, but when it comes to office space annual rental yields are about 8 to 11 percent. Offices spaces are offering good opportunity for investors as tenants are looking for good quality lock-in of leases spaces.

Income from commercial property:

It is suggested to invest in the property which is on the lease already because it will provide you regular cash flow, as per the statement of Desai. In normal cases, people prefer to go for the rental agreements of two to five years, if the space is for office and during that duration the tenants are locked in for that period. So if you are about to invest Rs 5 to 6 crore in an office space, so you can expect to get Rs 50 to 60 lakh as annual rental income. Apart from that you should also check that which kind of company has leased out the property and for what kind of business, for example if banks or some other brands has leased out that property, so you can expect that they will continue for next 15 to 20 years at least because they will avoid to change their address. If you are planning to buy property no multiple owners and large part of property is with real estate developers, so property maintenance will not be big challenge. As per the statement of Sanjay Dutt, Managing Director of Cushman & Wakefield, “The top three cities which have saw good supply and demand in the period of January to September 2015 were Pune, Delhi-NCR and Bengaluru. However; till now they have collectively contributed 77 percent to incremental supply and 65 percent to commercial absorption and on the same time you can expect annual rental yields of 11 to 12 percent for Bengaluru, whereas; in Delhi and Pune you can expect annual rental yields of 7 to 9 percent.

Why should you leverage the opportunity?

We all know that unit size of commercial real estate is larger than the residential and due to that investors need to invest much larger amount in commercial property. And apart from that they will get no tax incentive for investing in commercial real estate, as they are used to get for homes. If you are thinking that price of property is too high and you will be not able to manage it, so you can take loan for the property against rental income.

Checklist before buying commercial property:

1. It’s recommended to check the background and experience of real estate developer in commercial property.
2. If there are any existing tenants, so better to consult with them and its suggested to check that what kind of companies have leased out the space and the business the tenants are into

• Check the infrastructure, society, location as well as surrounding area.

1. If you are taking loan or borrowing money, so never keep your property vacant for long periods.
2. If buying resale property, so prefer to buy leased out property.

State Bank of India

According to latest reports, in Odisha SBI, a public sector lender had advanced home loans of worth Rs 400 cr for year 2014 – 2015 and now country’s largest public sector lender SBI (State Bank of India) has set a target to extend Rs 500 cr worth home loans in Odisha for the year 2015 – 2016.

As per the statement of the BVG Reddy, Chief General Manager of State Bank of India, Bhubaneswar circle, “At the end of November 2015, our bank has already extended Rs 280 crore home loans and at this point of time we are expecting the closer with Rs 500 crore advances to the sector. This public sector lender had advanced a home loan of worth Rs 400 crore in the year 2014 – 2015 however; the NPA rate for the same sector was about one to two per cent. State Bank of India has extended its finance portfolio with tune of Rs 3325 crore which comes under home loan portfolio on the current date.

According to reports, SBI is all set to organize its own property expo “Utsav -2015”on date December 11 to 13 at Bhubaneswar. In present, about 40 real estate developers and builders which are affiliated to CREDAI (Confederation of Real Estate Developers Associations of India), NAREDCO (National Real Estate Development Council), Real Estate Developers Association of Odisha and Association For Odisha Real Estate Developers are seems to participate in the property expo “Utsav -2015”.

Last year at the same event people has booked more than 200 housing units and loan of Rs 30-40 crore were sanctioned. Currentl y, SBI is operating in more than 800 branches in the state Odisha and has an NPA of more than 6 percent with maximum slippages in the agriculture sector, education loans, micro, small & medium enterprises (MSME) sector and others.

Real Estate Sector

At the end of 2015, the investment into real estate sector is ready to close with $ 8 billion or Rs 53,000 crore and it highest among last seven years. However; most of the money has come from borrowings as well as private equity (PE) route through NCD (non-convertible debentures).

While looking to size of the inflows you might get surprised as it is not in good shape nor systematic. From past few years, the residential space has been under pressure whereas; the pieces of commercial properties have also done the same reasonably. But its less than 5^th of the PE funds and it has find its way to the commercial real estate, on the other side the bulk is flowing into residential ventures. According to experts if real estate developers have not dropped prices than all credit goes to investors backing. As per the estimation of Cushman and Wakefield, about $ 2.8 billion or Rs 18,700 crore had been find a way in real estate market through private equity players till the end of Q3, 2015. While adding to that estimates $ 4.5 billion, or Rs 30,500 crore, of NCDs the tally is already up by the 74 percent with Rs 17,600 crore.

The investments are not materialized, whereas; real estate developers can drop their prices to monetize inventory at the point of time when demand is decreasing. However; there are large group of real estate builders which are holding on the inventory and refusing to pay back to their lenders. According to reports of CRISIL the debt obligations on real estate market is Rs 30,000 crore. On the other side the cost of alternative funding has jumped in past one year as real estate developers strapped for cash and for NCDs the internal rate of return are 20 percent whereas; in 2012 there were no were virtually comparable issuances. If you are expecting higher return on PEs, so it will also increase the refinancing risk for the realtors for long terms, as per reports of CRISIL. It is hard to see that how real estate builders going to refinance the about what they have borrowed through NCDs as banks were not financing to this sectors.

However; still builders are not into much trouble, as Vikas Oberoi, MD and Chairman of Oberoi Realty, points out that its seems that there are no shortage of money because real estate developers are backed by different ventures. Whereas; the financial schemes which was offered by the real estate developers can be considered to be in the nature of a discount as real estate builders have managed to sell the apartments and for that they have reduced the size of apartments. There are many investors who are big game player and now they are betting on the real estate market. From GIC (Government of Singapore Investment Corporation) to Blackstone and Warburg Pincus to Goldman Sachs, they are picking up stakes in different residential and commercial projects at the level of the enterprise. CRISIL, one of the major rating agency estimates that for a clutch of 25 companies; in next five to six years the payout to PE funds could be Rs 85,000 crore and it is nominal return with 20 percent. According to Samantak Das, Director of research at Knight Frank India the prices may hold for next two years, but in the absence of demand they’re unsustainable.

Apart from that when it comes to domestic funds, so alone they have been a share of more than $ 2 billion into the residential sector in 2015 and it is expected that it is 80 percent of the of structured debt. For real estate developer, structured product means; it ensures they can exit at a pre-determined return. According to Abrol; the risk for investors today is far lower than they were facing in 2008 and due to that most of the time PE players ensure they have the first charge on cash flows.

Image Credits : DNA

This week, the Central Government is seems to intend the passage of Real Estate Bill in parliament, and the Cabinet is likely to approve the previous few changes that have been made after the recommendations of the select committee. According to sources, the housing ministry has incorporated approx. all the amendments which were recommended by the panel and due to that now there is no scope for political party to oppose this Real Estate Bill with an aim to protecting the interest of home buyers or other consumers in the real estate industry.

According to one of the Government official, “We are positively hopeful about the Real Estate Bill since there are many home buyers and other people in the real estate industry who are suffering from no mechanism or framework to get protect from any kind of unfair trade practice or exploitation by the real estate developers and real estate firms”. The more he added that the Cabinet has approved the changes which were mandatory as the revised bill is taken up for discussion. It is expected that new recommendations which have been accommodate in the bill will include the provision of parity in the interest payable by consumer and developer in case of any default by either.

In Presents, real estate developers only pay 2 to 3 percent interest in case of their default whereas; consumers are liable to pay about 16 to 18 percent for their default. However; on the same issue the Rajya Sabha panel had said that the interest rate payable by the promoters and the interest rate payable by the allottees should be the same in eventuality of any default by either of them. The panel was also recommended that 50 percent of payments made by the home buyers for a real estate project be kept in a separate account and it should be used for that specific project only.

However; in addition to the provision of imprisonment of up to three years proposed by the government, the committee had recommended that the clause of imprisonment for a realtor should be failing to abide by the orders of the appellate tribunal.

CREDAI Odisha

With a concept and objective to offer all facilities and services to its real estate members and other stakeholders, the CREDAI (Chapter of Conference of Real Estate Developers Association of India), Odisha if going to organize much awaited Property Expo 2016 at Janata Maidan, Bhubaneswar from the date 21^st Jan to 24^th Jan 2016.

While interacting with press, Dillip Patra, President of CREDAI Odisha reiterates the objective as well as need and importance of CREDAI in its Odisha Chapter. Sharing the thoughts with other important members Binay K Das, member of CREDAI Odisha unveiled the brand new logo for the CREDAI Property Expo 2016 with an attractive tagline “CREDAI for CREDIBILITY”. The more he added that fair business deal, constructive policy formation as well as transparent complain redressal system are three core areas of focus in the year 2016 and it is expected that this Expo will reflect the true character of CREDAI Odisha. According to statement of the Arup Dasgupta, CGM of SBI, “We are proud to be associated as main sponsor with CREDAI Odisha Property Expo 2016 and we are looking for long term association with CREDAI. Apart from that we will try to work for the mutual benefits as CREDAI Odisha Property Expo is one of the prestigious platforms.” However; it should be noted that Odisha Chapter of Conference of Real Estate Developers Association of India (CREDAI) is the apex body of real estate developers which aims to bring the private as well as corporate real estate developers at same place or under one roof. Since its inception, the main objective of the CREDAI ODISHA is to offer all-round platform to its real estate members, so that they can facilitate their overall growth in state Odisha and turn fueling growth of economy. According to SwadeshRoutray, Vice President of CREDAI Odisha, “CREDAI Odisha Property Expo 2016 aims to be the single window real estate market to the designers, policy makers, congregate developers, financial institutions and above all customers under one roof to exchange information and the real business along with food, fun and other interesting activities”. Apart from that Sangram K Sahoo, General Secretary of CREDAI Odisha was also present in the meeting to deliver vote of thanks to the members¸ press and other partners.

While addressing to media D S Tripathy, CREDAI Odisha National Member stated that “This year we have unique plan to create scope for more than 120 stalls in two Air-Conditioned Hangers, which have state-of-the art facilities, whereas; the USP of this year’s Expo is Maximum Visibility with the support of media as well as buzz and promotional activities on social media and on-ground innovations. Apart from that there will also other attractions such as; Entertainment Extravaganza, Celebrity Presence and Ensemble of Food-courts. The more he added that here are three build-up events prior to the Expo to create much desired hype amongst visitors.

Lodha Group – Biggest Property Deal

If you will see the real estate market of the country so you will find that on one side there is India’s debt-laden property market which is still struggling to sell thousands of apartments which have worth of billions of dollars and other side there is news that luxury residential apartments being sold at 160 crore.

Recently, Times of India reported that Lodha Group¸ one of the best real estate developers has sold its under-construction luxury tower for Rs 160 crore, which is located at Altamount Road in Mumbai. This property deal which has worth of Rs 160 crore and has taken the entire real estate market by storm in Mumbai. The report further added that the duplex, which is spread across 10,000 sq ft is believed to brought by a pharma company. Quoted as the biggest apartment deal in country, the base rate of property was Rs 1.60 lakh per sq ft

Currently, in country all the major real estate developers are offering deep discounts, gold coins, motorbikes, free parking space, foreign holiday tour and other gifts with different offerings to attract the end users and investors with an aim to turn property inventory into cash.

It may be recalled that in August 2015, a sea-facing triplex penthouse, which was located at South Mumbai’s Napean Sea Road was bought by an industrialist at the price of Rs 202-crore.

Real Estate

Now at least there is little cheer for real estate developers because of just concluded festival season, and all credit goes to the lukewarm response of end users and investors. Apart from better property price now key markets such as; Delhi, NCR and Mumbai are witnessing positive response from buyers.

This festive season, which was just ended and was between Navratri and Diwali, accounted more than 60 per cent of all planned property purchase decisions and it was also bulk sales opportunity for real estate developers. However; to attract property buyers most of the real estate developers were offering freebies as well as heavy discounts. We all know that from last three years real estate market was sluggish for developers because most of the buyers were holding their property purchase decision as they were hoping for better price. As per the reports of 99acres.com, in Mumbai the price of property in terms of per square foot saw a insignificant rise between the period of second and third quarter of 2015 (April-June quarter to July-September quarter). However; the rental for commercial property have increased from the September quarter again after little rise in January-March 2015.

As per the statement of Narasimha Jayakumar, Chief Business Officer of 99acres.com, “Currently, real estate market is filled with lucrative offers, heavy discounts and easy payment schemes due to high level of unsold inventory which resulted in buyers to adopt a wait-and-watch approach. Samantak Das, Chief Economist and National Director of Knight Frank India stated that “Stakeholders which are from the supply-side believe that in present situation is much worse in comparison of what it was six month ago. In real estate market stakeholders are pessimistic due to heavy demand in residential sector and because of that they are not forcing for any kind of recovery in next six month. Whereas; the main optimism about the future was driven by the commercial spaces because it is expected that rental value will increases due to robust limited supply and leasing volumes of property”. Apart from that some of the real estate watchers are saying that in eight major cities of country real estate market has been improved by 17 per cent from 57.8 msf (million square feet) in the second quarter of 2015 in comparison of last quarter. According to Pankaj Kapoor, MD, Liases Foras, “A decline in commodity prices is favoring the real estate developers because it bringing down the cost of construction and correcting the property prices”.

CRISIL Report:

CRISIL report stated that demand revival is expected to be marginal and due to that price will also increase. CRISIL analyze the top 25 realtors of country while comparing the 95 per cent of the real estate market’s capitalization to show that still there is debt obligations of Rs. 30,000 crore with high refinancing risk. However; it is expected that demand of commercial and residential properties will be tepid over the medium term. According to Sushmita Majumdar, Crisil Director, “These 25 real estate developers are accounted for more than 50 per cent bank lending in real estate sector and most of them are facing high refinancing risk in the areas like NCR. However; with net exposure of banks it is expected that it will decrease by 5 per cent for the first time in this fiscal year, whereas; banks were used to meet more than 90 per cent of the requirements for real estate developers till last year due to increasing proportion and funding gap. Sale ability of real estate projects has also been declining, especially in North region states.

Porperty Channel – MagicBricks Now

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Times Network is ready to launch India’s first housing and property channel known as “MagicBricks Now” and it is going on air from November 1, 2015.

On last Wednesday, officials from Times Network formally announced in New Delhi that they are ready to launch India’s first property channel “MagicBricks Now”. It is all set to go on air from November 1, 2015, and announcement was made in the presence of Union Minister of Urban Development, M Venkaiah Naidu.

According to M Venkaiah Naidu, “I am happy that now onwards there will be more focus on real estate sector and first time investors or buyers will have place to learn something in real estate sector. News and views should remain separate and it is expected that it will help to create the platform for the housing sector and it will help to tie up the government and real estate builders with an aim to create houses for all segments, to get succeed in central government’s mission “Housing for all by 2022”.

Why property channel?

In present the advertising market of real estate in India is about Rs 2,500 crore of which more than Rs 900 crore is garnered by the Times Group itself, especially in the print segment. And now by launching new channel MagicBricks Now”, the Times Group is attempting to increase the market share of real estate advertising as well as want to educate people about real estate trends and pricing factor. Faye D’Souza, the channel’s editor explained that how this new channel will focus on the end consumer with an aim to serve as a platform for the real estate development and infrastructure sector. The more he added that MagicBricks Now” will have singular focus i.e. to educate the end consumer.

How this new channel will deliver information and analysis?

This new channel will showcase rich array of programs which will range from debates to news bulletins and leadership insights to experts views and all about real estate market. These things will help the Times Group to keep the end consumer informed and on the same time to serve as a common meeting ground for experts, first time buyers, sellers, big investors, and real estate developers  who are looking for serious business in real estate sector.

MK Anand, MD and CEO of Times Network stated while explaining the positioning of the channel, “MagicBricks Now has been launched with sole ambition to guide the consumer through process and decision making process with the help of views, analysis and debate of real estate leaders and experts. In present, real estate is of paramount importance in the life of normal people and real estate market is full of jargon, confusion and complexities. “MagicBricks Now” will be first and best unbiased, trustworthy and most authoritative property channel in the Indian property market to help the consumers”.

Channel Programs:

The channel programs will include The Home Buyer’s Guide, The Vastu show, Real Estate Tycoon’s, The Property Guide, Property Hotline, The Interiors Show, of course, ‘The News’, every hour. However; the main spotlights of the channel will on the relevant issues such as; local civic amenities, national property, sustainability, and environment issues will make the channel accessible to all. The marketing campaigns for channel will be unfold post Diwali and MK Anand expects that there will be more viewership for MagicBricks Now in comparison of other English News channels. He expects the channel to reach on the break even in next 4 to 5 months.

While speaking about the association with Times Network to create new channel “MagicBricks Now” Sudhir Pai, CEO of MagicBricks.com stated that “Now onwards we will be the part of MagicBricks Now and we are delighted to be a part of this initiative. Our endeavor is to make our brand ubiquitous across media with an aim to provide real and trustworthy analysis and in-depth information to the consumers. And with this association we will leverage the visual appeal of television to communicate with end users through rich data and experts view”.

The channel will have four partners; Hiranandani, Magicbricks, Mantri and Lotus Green.