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.

The real estate sector is considered as one of the most important sectors for the economic growth of the country. With very promising plan of providing housing to everybody maximum by 2020, the new government headed by Prime Minister Narendra Modi has taken a very important decision in making few amendments in the law related to the real estate sector.

Finance Minister, Arun Jaitley is encouraged to take pragmatic approach towards the current Income Tax Act scenario. Mainly real estate sector should be given some relief with some positive amendments in the Income Tax Act which will in-turn act as a booster for the growth of real estate sector.

Here are some key pointers for the Finance Minister:

• Loan amount with Higher deduction

In the previous years In 2001, Finance Minister has raised the interest deduction limit on housing loan from Rs 30,000 to Rs 1,50,000 for individuals and Hindu Undivided Families (HUF).

In the record history of last 14 years, the house prices have raised only. On the other hand, with high paying jobs people have better financial conditions which is further adding to investment costs. So, it is very evident that new real estate development and the investment, both, are going up.

But we should not forget that along-with increasing number of millionaires and multi-millionaires coming up, demand of housing is also rising constantly. Currently, the amount of deduction allowed for the housing loan is just Rs 1,50,000 per annum, which implies that on an average, just for Rs. 15 lakhs  a house can be purchased and the deduction for interest on loan being allowed up to Rs 1,50,000 only.

The government’s take on this for improving the real estate sector should be an increased deduction for interest on housing loan to minimum Rs 2,50,000 especially considering the rising prices.

• Developers with small housing projects should be given tax exemption

Currently, all the developers have too pay taxes on their income irrespective of the size of projects they are building, thus, even if a builder is developing a residential house of 1,000 sq ft he has to pay the taxes. So, if the government wants all the developers of India to construct affordable houses for the common man, it should grant exemption in the income tax to the developer and also developers should also be asked to reduce the selling cost. Such dynamic approach can help in resolving the housing problem in the country.

In fact, this type of provision was there before in the past, in which tax deduction was allowed through Section 80IB (10). According to which if a housing project was taken on minimum 1 acre of land and the houses were built up to 1,000 sq ft in metropolitan cities or 1,500 sq ft in other cities of India, the developer was provided with complete exemption.

• Reduce the Stamp duty rates

There is a different stamp duty rates in different states of India for all real estate transactions. If the government is really keen on a big growth in the real estate sector and would want to see a fast turnaround of property buying and selling transactions, then this is the time to implement the concept of stamp duty in India, which is widely applicable overseas where half per cent or one per cent stamp duty is payable.

• Investment restriction on commercial property

Currently, if a person is selling his residential/agricultural property, he can save tax on capital gains taxes through investment in another residential/agricultural property of his choice. But, in case of a commercial property, he can’t reinvest in any other commercial property or a commercial space in a mall or a shop. Hence, the current Income Tax Law should be amended for allowing investment in commercial property out of the sale of another commercial property in order to save tax or Long Term Capital Gains.

• Bring in the concept of Real Estate Investment Trust (REIT)

In the last few years, government did try to implement the concept of Real Estate Investment Trust (REIT) in the past which is already a well-developed business concept in many developed countries of the world. The government should make realistic rules and regulations for framing guidelines to set up REIT especially for the small investors there should be a provision to form REIT.