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.

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.

Image Credits: DNA

If you are the one who is cursing the Mumbai city due to lack of space, proper amenities and other shortcomings, so here are some heartening news for you; Mumbai is one among top five emerging world cities. According to the report of JLL, a global property consultant, “Mumbai is 4^th on the list of emerging world cities, however; the top three are Shanghai, Beijing and Dubai. Apart from Mumbai; New Delhi and Bengaluru were also in the report which titled “Globalization and Competition: The New World of Cities”.

In report, According to JLL emerging world cities are the business capitals of major economies as these cities are experiencing higher growth percentage, attention of governance and implementation of strategies to become more stable and establish regions. These cities often get support from the national government, as government is in the process of economic adjustment and busy in the restructuring and optimization of urban and metropolitan regions for the benefits of global engagement. The report explains that Mumbai is witnessing urban consumer demand between now and 2030, along with other regions such as; Jakarta and Istanbul. According to experts, this growth can help the retail sector as demand and supply ratio is different in these cities as per region preferences and requirements.

JLL Report Findings:

According to report, it is expected that 26 percent firms have the revenue of more than $ 1 billion and by the end f 2025 this share could reach 50 percent. However; report, also pointed out that in present real estate market of Mumbai is performing well as it is attracting real estate investment and outsourcing activities, but still at certain points its facing chronic infrastructure supply challenges and these challenges can be hurdle for transnational firms. Apart from that Manila and Jakarta also reported the same issue. In these cities transnational firms are performing well as they are able to expand their operations in South and South East Asia in very low cost with huge market opportunities, whereas; on certain pints they are also facing considerable urban infrastructure shortages.

Recommendations of JLL:

It is recommended to these cities that now its need of time to focus on the other aspects such as; reducing complexity of preparation, assembling and project execution because it could prevent capital investment budgets on a year-by-year basis. However; there are substantial improvements in Mumbai as government has taken steps to improve transparency, reduce red-tapism, and strengthen governance with aim to reduce the complexity in execution of projects. For example; In Mumbai the civic corporation has cut building permissions from 150 to 70 and it also reduced the time limit to give such permissions. Apart from that state government is also working on a plan to digitize permissions which real estate developers need. It is suggested that there is need to address three major issues as it could be hurdle in the growth and success of the cities and these three issues are; how to build and sustain multiple sources of investment, how to attract talent and local skills and co-ordination in metropolitan space.

In the absence of strategies and systems of address these issues, the emerging world cities will struggle and find it difficult to manage their growth effectively in the ratio of economic development.

New depreciation formula, the taxes on old properties 

Recently, Maharashtra State Government circulate new circular, which aims to increase the stamp duty revenue with the help of change in method of calculation of depreciation in old residential as well as commercial building  and it has caused a flutter in the real estate industry of Mumbai.

As per the statement of legal experts, The department’s November 4, 2015 circular showed that property value has rise by up to 35 percent. Consequently, it is the combined liability of both seller as well as buyer of the property as it can increase by up to 75 percent when they pay stamp duty¸ capital gains tax and income tax. Apart from that it could also do the negative impact on the real estate market in the Mumbai city as well as in state. A realtors’ body, National Real Estate Development Council (NREDC), recently wrote to the finance minister of state by stating that people will find it hard to sell and buy immovable property in an in an already “depressed and a very slow real estate market”. The more he added that “This circular will change the method of calculation when it comes to the depreciation of property in respect to the old buildings and due to that we increase the value of all kinds of constructed properties”. However; the real estate experts warned that this change in the method of calculating depreciation will also add substantially to the cost of premises and it can make the property even more burdensome for those who want to buy property.

Till now the state government guidelines were specifying that buildings age will be taken into the consideration and due to that the value of the building can be depreciated due to the age of building.  However; in present, land is no longer a consideration for calculation of depreciation. According to Lawyer Anil Harish, a real estate specialist stated that this new method of calculation of the property will increases the ready reckoner value of at least by the 30 percent because the depreciation is not allwed after certain level. And therefore it will increase the stamp duty directly amount.  The more he added that the circular now allows that depreciation to a lower extent and due to that the value of premises will be higher for any property and it would increase the quantum of the stamp duty without any confusion”.
According to Ashok Narang, the property consultant “This circular will have a negative impact on the real estate market and the volume of business in real estate in the city Mumbai as well as in state because it will create little more complications for valuation of property for computation of capital gain tax as well”. It will draw a impact on property buyer as they have to pay the excess stamp duty while the seller has to pay additional amount for the capital gains tax. However; government will receive additional revenue by increasing the stamp duty in long run, it will dampen the number of transactions.

How new rule will hit the real estate market?

According to the circular of November 4, 2015;

If you have a 150-square-metre office, which is equal to the 1,614 square feet and it is located at the 4^th floor of a 30-year-old building in the area of Veer Nariman Road, Zone 2/16 of Fort division.

So the value of land will be;

1. As per old method of calculation:

For commercial building the rate per square metre * Area of office * Depreciation factor for age of building

Rs 5, 01,300 * 150 * 0.6 = Rs 4, 51, 17,000

Total value of the property = Rs. 4, 51, 17,000 (Rs 4.5 crore)

2. As per new method of calculation:

Rate per square metre of open land * Area of office

Rs 2, 19,400 * 150 = Rs 3, 29, 10,000

Rate per square metre of commercial building Less Open land rate * Area of office * Depreciation factor for age of building

Rs 2, 81,900 * 150 * 0.6 = Rs 2, 53, 71,000

Total value of the property = Rs 5, 82, 81,000 (Rs 5.8 crore)

Image Credits : DNA

Recently, Abbott India Ltd. has closed a deal of Rs 1,400 crore in Mumbai, where Abbott has bought 500,000 sq. ft. commercial space and it is one of the largest commercial real estate deal in present time, as per the real estate experts who are familiar with the real estate transaction. This deal is clear example that demand for commercial space in Mumbai is increasing and its IT companies, Pharma firms and Start-ups which are looking for commercial space.

Abbott India Ltd. which is one of the fastest growing pharmaceutical firm has brought the space for office at Godrej  BKC in Mumbai’s BKC  (Bandra Kurla Complex). The real estate market in Mumbai has seen a positive shift in last two years and when it comes to commercial property, so we can say that it has seen a pick-up over past year because demand for commercial space and office space from IT, pharmaceutical firms, multinational and start-ups has risen. However; it is well known fact in present the level of unsold inventories for residential market is risen for major markets in Mumbai and deal of Abbott has clearly reflects that there is little pick-up in commercial properties. According to real estate experts it was phenomenal deal because it was a  single-cheque transaction and its well-known fact that Pharmaceutical companies never prefer to spend this much money on property or real estate, especially at BKC where commercial property is expensive and where Banks and financial organizations prefer to set-up their headquarters, as per unknown sources who declined to be identified  because it was not a public deal.

However; according to another person, the deal had been clinched in the month of Sep 2015, and till now it was subject to approvals, whereas; Cushman & Wakefield, a global real estate consultancy was advisor to the deal, but Cushman & Wakefield has declined to comment on the deal. Apart from that an Abbott spokesperson also stated that we don’t have any comment to share on this matter. Godrej BKC  is about to come up with 19-storey commercial project in same region and it will be developed by Jet Airways (India) Ltd. and Godrej Properties Ltd (GPL). However; previously in 2011 Godrej Properties had acquired the construction and development rights from Jet Airways to build the property. And the spokesperson from Godrej Properties stated that he don’t want to comment on the matter. In past two to five years, BKC has emerged as one of the most prime commercial hubs in Mumbai and due to that the average price for commercial property at BKC region ranges between Rs.20,000 and Rs.34,000 per sq.ft., however; the rental rates go up to the Rs.270 per sq.ft. per month as per the estimation of JLL India which is property consulting firm. According to the Ashutosh Limaye. who is research head at JLL India, “Now Multinational firms are looking for long term business in India and because of that they are increasingly choosing BKC to set up their head offices”.

According to real estate experts this is great time to sign up the real estate deals in Mumbai because property prices and rent will rise soon because of huge demand of commercial and residential space. In present, Abbott deal is one of the largest commercial real estate transactions in India. However; in 2012, Cipla Ltd which is another fastest growing pharmaceutical firm in India has brought 1.30 lakh sq.ft. at Peninsula Business Park in Lower Parel for about Rs.985 crore. From last one year the demand for commercial spaces in Mumbai is growing. As per the latest reports of property advisory CBRE, the uptake for commercial space has rose by 70 per cent in the second quarter of 2015 in comparison of previous quarter, which was led by BFSI (Banking, financial and insurance services) sector.

Mumbai real estate

Swiss chemical giant Clarian on Wednesday sold its 87 acre land parcel at Kolshet in Thane district to the Lodha Group for Rs 1,154 crore. The plot has a development potential of nearly 6 million square feet. Earlier, Oberoi Realty and Tata Housing also went land shopping in Mumbai for development projects.

Niranjan Hiranandani, Managing Director, Hiranandani Group has observed resurgence in real estate demand as a lot of builders have been looking for land parcels in the last 10-15 days. A part of the revival in this demand can be ascribed to expectations of a stable government at the Centre.

Executive MD Cushman & Wakefield (South Asia), Sanjay Dot notes that real estate prices have bottomed out in Mumbai. He says Lodha’s recent big land deal signals a lot of on ground activities. When asked about the pockets in Mumbai that have the highest growth potential in terms of rate appreciation, this is what he had to say.

“If you talk about property within the Municipal limits of Mumbai, Sewri, Wadala, Goregaon (East) and certain pockets of Chembur. Further, there is a big delta in Bhandup, Kanjur Marg, LBS Marg and in terms of valuation this pocket seems very attractive.

If you go corridor by corridor, we have seen enough upside between Vasai-Virar belts and now it seems to be between Kalyan and Dombivli on the central corridor beyond Thane city towards Bhiwandi where there is lot of traction and appreciation. In the eastern corridor, it is the pockets between Kalamboli & Panvel.

So, despite the present dismal sentiment in the realty sector, we would see these pockets appreciate the most in the near future”.

mumbai flats

Did you get an amazing discount on booking a new flat? Before rejoicing, complete a few checks.

Real estate experts say many developers have increased the super built-up area by 60-70%. Which simply means that if you are buying a 1,000 sq ft apartment, yourcarpet area will only be 40-30%. So, you are not actually paying anything less. Developers simply reduce the carpet area and increase the super built-up space and lure home buyers with attractive discounts.

For beginners, carpet area is the livable part, the wall-to-wall area that can be carpeted while super built-up is the non-livable area like the lobby, lift space, flower beds, swimming pool, staircases etc. Since you pay for the super built-up area, discounts actually carry no meaning.

The real-estate jargoncalls it ‘loading’. In effect, it means that if you are buying a 1,000 sq ft apartment, your carpet area will only be 40-30%. Therefore, although you get a discount for your carpet area, since you are paying for the entire 1,000 sq ft, you don’t save anything with the discount. Earlier in Mumbai, there was only 20-30% loading.

According to Pankaj Kapoor, MD of property research firm Liases and Foras, , said that the super built-up concept is deceptive wherein buyers are literally squeezed. He appeals to buyers to first check the local body approved plan of the building and ask for carpet area only. Another property expert, Ajay Chaturvedi says, “Besides increasing super built-up areas, most developers also reduce the height of the ceiling. As per development control rules, the ideal ceiling height should be 11 ft, however, developers are limiting it between 9 and 9.3 ft,”.

Manohar Shroff, general secretary, Maharashtra Chamber of Housing Industry,said that since ‘super built-up’ is a very technical term, he appeals to developers to sell property on the basis of the carpet area. In super built-up, the rates look low.

Even Cidco was observed to be selling apartments with almost 65% loading. If a government body like Cidco does not hesitate in cheating buyers, properties advertised by private builders cannot be guaranteed at all. Home buyers only have to exercise caution before getting tempted with the striking discounts offered by developers.

E-Registration for Realty Market

In the real estate market of developing countries land dispute is one of the most common disagreement and the cases can range from illegal land sales to grabbing the land of relatives and from fake purchase to land purchase at zero price. In India the real estate market has been plagued by many of these kinds of issues and due to that in present the government is planning to initiate the e-registration with an aim to streamline the registrations of immovable properties, which will be helpful to bring the transparency in the Indian real estate market. In present, there are many nations which are using the same platform for extremely progressive transparency in the real estate market.

E-registration is simple process which is able to provide evidence of title with an aim to facilitate the transactions to prevent the unlawful disposal of land. It is expected that the system of online registration will be effective and it will be able to solve various underlying problems, apart from that according to real estate experts this system will be able to fill the loopholes of the traditional land registration process, which is fully based on the Land Registration Act of 1925 and that rarely involves the Powers of Attorney, transfer of property under rent and sale or mortgage of land. However; the Land Registration Act of 2002 has introduced the new system according to which they will use the verified electronic signatures for registering and transferring the immovable property online.

If you are getting the land which has been passed from the generations or it has been seen multiple owners in particular time period, so there is need to maintain a hierarchy of land which will available online so that potential buyer or tenants can ascertain the exact rental or value on that land according to the current market conditions. But it’s not an easy to implement this system because government needs to have the complete access over the document verification as well as full disclosure of property details such as; number of rooms, foundation details, gross carpet area, wiring blueprints and more. It is expected that e- registrations will provide a much-needed level of transparency in property dealing and no one will be able to hide anything from future buyers and investors.

Role of real estate agents:

E- Registrations will negate the need for real estate agent or not? It’s very fair question, because the details of all properties will be available online and there are chances that the information mentioned on the website will not be enough for the large investments. The main question is that whether specific property details are able to make good investment decision in regard to other options or not.

Benefits of E- Registrations:

1. The details of property will be available online and due to that they can be accessed online at any time.
2. There will be more transparency in the registration process and there will be no need of bribes to official.

• Software will calculate the stamp duty on the basis of few factors such as; stored data and more.

1. Buyer will be able to pay the stamp duty online.
2. There will be less property disputes in sensitive market.

Procedure of E- Registrations:

As we all know that property available in urban and rural areas comes under the jurisdiction of the same government and it managed by the Tehsil, which means e-registrations for both property (housing or commercial rental) will be similar. However; the process can be different for vacant or occupied property because for vacant land, valuation is based on the current market price, whereas; the property valuation for occupied land such as; flats, cottages, shops and more can be done on the basis of gross investment. The procedure to do the e-Registration is very simple and easy because you can download the form and application of land registration online or you can also obtain it offline from the concerned state authority’s office in your state. After the verification of property details and its related documents the concerned person will be able to register the land in few days and soon after that owner will be able to establish full-accredit ownership of the property.

South India Property Exhibitions

Before few years, In Gulf, Middle East and Europe South India Property exhibitions were take place for those who want to remain connected with their roots and want to invest in their respective home town, But now trend is changing and now Mumbai is one of the favorite spot to hold these kinds of property exhibitions, which are helping investors to buy property in Kerala and other south Indian states.

It was the 28^th edition of exclusive South Indian Property exhibition where real estate developers have showcased their property which is located in Kerala, Chennai, Bengaluru and Coimbatore. However the location for event was the Gloria Banquet hall in Ovala.

In South India Property exhibition more than 17 real estate developers came to showcase their more than 100 projects, including; apartments, villas and plots, which are located in south India and price is ranging from Rs 30 lakh to Rs 1.5 crore. The name of few developers are; Puruvankara, Sreerosh properties, Veracious, Abad builders, Alfa venures Baashyam, Hoysala Projects, which are affiliated with Confederation of Real Estate Authority of India (CREAI) for their respective states. According to some of the real estate experts, all the projects are offering beautiful scenic spots with all the needed facilities and amenities with natural surroundings.

Home selling tips

These days many real estate investors are looking for buyers to leverage their investments through flat sales. Here are some tips which will help you to get the maximum price of flat, when you sale them in buyer’s market;

Property Guide:

In present, our country is witnessing huge growth in buyers market and it’s just because of slow economy in which buyers are trying to leverage their real estate investments. According to estimates of real estate experts, it can take many months for brokers to offload the current inventory. Normally, any property takes more than two months to crack sale and in that scenario if home owner want to sale his property in very less time, so sellers can find it difficult to get the good price for property. But as home seller you should not be disappointed because still there are some tricks through which you can get good deal for your property. Here are few important suggestions in an order to make a deal at good price;

1. Take a help from real estate agent:

Buyers market and sellers market is totally different and its real estate agents who can help you perfectly in this situation.  Help from real estate agents will be very useful because they are the person in market who constantly receives inquiries about residential and commercial properties. Apart from that you can also list your property on real estate portals because in present these real estate portals are accessible from large number of audience. While listing your property on real estate portals make sure that you are adding good quality images of your property from different angles because it will allow buyer to sneak peek into the property. If you are not good in clicking images than you can also hire a professional to click the photos and this property pictures will be good enough to flatter the buyers. It’s strongly recommended to not touch the images because it can provide false impression of your property. However; real estate agent will change some fee on their service.

2. Quote your home at right price:

It’s very important to quote your property at right price as per latest market trends because to earn more profit if you will set your home price higher than the market trends so there are chances that you will find it difficult to get the buyer in stipulated time. It’s recommended to consult with your real estate agents and select correct price with some elasticity, so that buyer can also negotiate till some extent. If you want to sale your property soon, so you can fix your property price little lower than the properties of your neighborhood.

3. Be ready for negotiations:

In the country like; India, every buyer prefer to leverage the situation and negotiate on the price no matter they are buying properties in lakhs or electricity gadget in thousands rupees. Never hesitate to negotiate with prospective buyer, who is ready to offer little low prices than your demand. If there are any taxes due on the property, so you should discount the price and tell the buyer that you will clear these dues before settling a deal.

4. Try to be flexible:

Whenever buyer asked you to show your home, so try to offer them visit because most of the time during weekends and daytime buyers love to visit the property and on that time you should be there, so that you can represent your property in good manner.

5. Fix –up issues:

If you have any issue at property location or in building so try to fix that issue because if you will keep your property in tip-top condition so it will impress your prospective buyer. If you are sure that you are going to sale your property, so you can get the fresh coat of paint at your home and it will enhance the valuation of property.