Dubai real estate investment

According to Dubai government’s data, Indians were the most prolific foreign investors in the first six months of 2015, with a total of 3,017 real estate transactions worth more than $2 billion.

“The typical Indian mind-set of solidifying assets in multiple arenas compliments the dynamics of Dubai real estate which offers a range of options to buyers as per their budget and preferences. Recent trends of purchasing properties in locations such as Downtown Dubai, Dubai Marina, Jumeirah Lake Towers and The Palm also suggest that the buyers are looking at profitable dividends in the shape of rents and resale value,” said Sunil Jaiswal, President, Sumansa Exhibitions. The company had organized Dubai Property expo in India from November 6-8. lower rates of property in Dubai in comparison to some metropolitan cities in India, interest in exploring foreign markets for a balanced real estate investment portfolio and the latest move by the Reserve Bank of India  permitting investors to send up to $2,50,000 freely overseas to buy property has positively impacted investor sentiment.

“hassle-free commuting to Dubai for both business and recreational requirements is one of the reasons why purchasing property there is convenient. Moreover, there is no tax on rental income; investors can make free and clear profit on rents also draws Indians to Dubai’s realty market,” Jaiswal added.

Stamp Duty for property transfer

Following representations received by the prime minister’s office (PMO) from both domestic and foreign private equity players in the past two months, Finance Minister Arun Jaitley is expected to consider the issues of scrapping stamp duty on transfer of properties by private individuals and firms to real estate investment trusts (Reits) and making dividend distribution tax (DDT) ‘pass through’ for Reits and investors in the trusts. Tax levies, including DDT and stamp duty issues, were flagged by top investment bankers and chief executives of companies like JP Morgan & Blackstone.

The real estate industry, equity investors and international trusts have represented to the government for granting “pass through status” for dividend payments by Reits. In effect, rental income from assets with the trusts would not be liable for tax as and when these assets or units are returned to the investors.

The demand for exemption from payment stamp duty and DDT was put forward after the government recently scrapped long-term capital gains tax on transfer of Reits units by their sponsors or investors. An exemption on payment of minimum alternate tax (MAT) when investors transfer shares to the Reit or on sale of Reits units was also granted by the Government recently.

Pending tax issues have been dissuading equity investors and real estate companies from making it big in real estate investment trusts (Reits) and infrastructure investment trusts (InvITs), rating agency CARE said in a note. In his last budget, finance minister Jaitley had given hope to real estate companies looking to list their rent-yielding real estate assets through Reits. Reports from various analysts suggest that the potential for Reits listing in India was about $ 20 billion since in May, the Union cabinet allowed foreign investors to take exposure in Reits to bring in capital and reduce the debt liability of domestic real estate companies.

As per estimates made by real estate firm Raheja Group, the top seven cities of India have more than 400 million square feet of operational office space; of which, over 150 million sq feet would be ready for Reits listing by April.

The largest realty developer, DLF has announced plans to start two Reits, with one exclusively for commercial office space. The company plans to monetize about 30 million sq feet office and retail space by the end of this financial year.

“The government may not wait till presentation of Budget in February next year, instead, it may shortly notify the exemption on payment of stamp duty on transfer of properties to Reits,” confirmed a PMO official. “Exempting Reits completely from payment of DDT might need further discussion,” he added.

residential_property

With appropriate budget and clarity on location, you can easily select the best residential property for yourself. At some point of time in our life, we all dream to have perfect home, but it’s not an easy task to find the perfect residential properties which synergize your all requirements and needs. If you are planning to buy residential property, so it may take to plugging into lifetime savings with countless and long iteration of property search as well as discussions and negotiations after identifying the correct property. But there are few factors which can simplify your over all property search as well as it can help the end users to identify the best residential property.

While selecting any property, budget plays an important role as it is social and economic identity of humans in society. However; basic and most fundamental step towards property selection exercise is budget and location and no one can underestimate the importance of them. Its helps in the management of one’s financial resources and effective utilization of them. However; it also helps in the filtration of right kind of property from wide range of property options to selected properties. While deciding the budget you should be careful, because if you are running with lower budget, so you might end with the selection of poor property which can cause inconvenience and dissatisfaction in future. Since each and every property needs high amount of investment, so sometimes you find it difficult to revise the decision after compromising with quality, location and budget of the property. In the same way fixing an overall budget which falls off the threshold limit of one’s financial capacity will result into the waste of time with unwanted property search exercises. International quality, beautiful landscaping, wide range of state of the art facilities with correct combination of amenities can dazzle the buyer, but high property prices will not take these things anywhere. Whereas; if you are looking for lavish homes and you already have certain expectation which is very high, so in later stages of property selection it will be tough for you to pull down the expectations.

Location of property:

Location is the vital element in any kind of property search and selection. It serves many objectives, as we all have to fix the set of  needs and requirements like; distance from office, schools, market and availability of malls and other social amenities such as; hospitals, banks, and more in the nearby vicinity. So it’s recommended for the end users to do a proper calculation with these parameters before making the final decision about property selection at key locations. In the same way you should keep in mind that significance of residential property purchase in respect to the property investment objectives should matters a lot because it help to decide the ROI. It is advisable to select the appropriate location to robust social infrastructure in the form of colleges, schools, hospitals and restaurant. Locations connectivity is key in commercial markets that are crucial to get the high ROI through higher demand.

Facilities and amenities:

As per the need and requirements, the configuration of facilities and amenities can alter, based on the personal and family needs, you can select the right number of bedrooms and home size. However; its recommended to analyze the exact size of the home in respect to that family size. While choosing the size of home make sure that you are analyzing the property size with carpet area because it defines the exact area within the walls of a house however; other specifications such as; most of the time floor area and built up area can give the misleading results. However; the buyers should understand that available range of amenities and significance f property matters a lot. These days apartments are coming up with large range of amenities such as; swimming pools, gymnasium, 24*7 electronic surveillance, Health zones, Yoga center, food joint and more.

Credibility of real estate developers:

Before buying property its your responsibility to confirm the credibility of real estate developers in the form of past construction work, experience, financial strength and ability to manage the multiple projects as well as track record of past projects. Because of economic uncertainties in past, as smart buyer you should emphasis on purchasing a property from top quality real estate builders. It will ensure you that you will get better ROI in future.

Time for final decision:

If you are doe with property selection at right location and within your budget range, so the next step is to estimate the desired time to move in the property. Every time you will find different property at different levels such as; pre launch, under construction, ready to move and more. So its recommended for you to know the correct status of project and consult with the real estate developers to know the desired time to move in property.

Property selection and financial angle:

In present, more than 80 per cent of the property price can be found by home loans, and its great alternative to finance someone’s dream home. But you should choose the home loan option carefully as it comes with certain limitations so you should try to minimize the cost and the risk of home loan. Before applying for home loan, as buyer you should check your credit score if you are loan defaulter and according to that you should apply for home loan. Most of the time banks and financial institutions provide hassle free borrowing and for that all you need to showcase your stable employment track record to make sure that you are able to pay the monthly installments.

As a buyer it’s your responsibility to select the type of interest such as; fixed or floating interest. The rate of interest plays an important role in the calculation of EMI and it also important for the financial planning of the buyer. In 90 per cent cases, latter is preferred as it is perceived to be cheaper.

Under-construction _ property

Whenever any end user buy property from under construction project directly from investor, so its means that indirectly he is willing to enter into the multi-party transaction. And sometimes it can be complicated, so it’s recommended to know some facts before entering into it. If you are buying property from investors, so deal will not the same as you do while buying property from real estate builders. If any property investor want sell his own under-construction property to any buyer or end users to earn profit, so he have to transfer all the property rights to new buyer in exchange of money. However; whole transaction needs builder to be the part of deal as in starting buyer will neither get the possession of the property nor all rights about the property. This tripartite deal known as the “Assignment Deal” (Assigner, assignee and builder).

Most of the people are unaware about these kinds of deal because its bit complicated as it involves multiple transactions. Sometimes it become stressful and so people need to get alert before entering into any deal with investors. Most of the buyers (assignee) don’t know that they have to deal with other parties too, if assigner or seller has taken loan for same property, so it could be bit more complicated because formalities will also includes closure of the assigner’s loan. Before entering in these kinds of deal you should ask these questions;

1. How much money for property are still dues?

You can ask to builder to show up the statements of account, where you will be able to see the made payments with dates and you should also get the instrument numbers to get the lending. If there is any unaccounted payment, so never consider it until builder is showing you receipt.

2. At the time of inception of the project, what was deal cost between builder and investors?

For fresh buyers it is important to know that actual price of deal at the inception of the projects and he or she should also get the documents such as; copy of deal sale agreement or sale agreement between seller and the builder. If you are planning to take loan, so you need to submit these documents. However; some seller never disclose these facts, but you need to understand that it’s mandatory.

3. There are any pending dues or not?

Ask the seller that there are any pending dues or not because it can attract the large amount of penalties during possession if you will do delay in paying those dues. And in that case builder will charge on new buyer with interest rate.

4. If assigner is struggling with home loan problem, so clear that he will pay or new buyer will pay that home loan.

If seller has taken the home loan while buying same property from builder, so you need to close the loan the issue. You can do it in three ways;

• Seller pays his all funds.
• Seller asks buyer to pay the whole loan as a part of agreement.
• Buyers bank pay to the seller banks. This process is not so easy because product is not available with banks at this point of time.

5.  There are any other loans or conditions with property?

If property is attached with any other condition or loan, so better to clear the loan issues and conditions because if seller will not disclosure these things so you will not know about it. In India, we can search for loan and property of individual, but still there is no facility to search for the collateral created in a property.

6. What should be the penal clause, if assignee backs out from dues?

•    No fund arrangement from self-source
•    No loan eligibility 
•   Any other personal reason

It doesn’t seems to important at time when everything is going good, but its better and recommended to include it as a clause in Memorandum of Understanding to get clarity and basic understanding.

7. Who will be responsible to transfer the fee to builder and at what stage?

In normal conditions, sellers are used to pay the transfer charges, but still there is no rule back so better to clear this because sometimes buyer & seller both avoid paying the changes or they start bargain. The most important thing which matters in transaction is speed through which all parties pay their fees or amount because there will be following parties;

• Assigner
• Builder
• Assigner’s lender
• Assignee’s lender
• Assignee

Real estate market declined by 6%

After surveys it’s clear that the investment in real estate sector by various public and private sources in all over the country has declined by six per cent in last four years of duration. It is clear that for the year 2013 to 2014 the investment in real estate sector in country fell to Rs. 14.30 lacs crore whereas; for the year 2011 to 2012 it was approx. Rs 15.2 lacs crore.

After the survey of Assocham, real estate experts find that more than 76 per cent of total investment in real estate was attracted by the various real estate projects and rest was from non-starter real estate projects in the duration of 2011 to 12 and 2014 to 15.

State wise analysis of Assocham:

After state wise analysis it is clear that for the period of 2014 to 2015 the top five states by the highest share in real estate sector in terms of investments are 21 per cent by Maharashtra, 14 per cent by Uttar Pradesh, 13 per cent by Gujarat, 12 per cent by Karnataka and 8 per cent by Haryana. Coming to the CAGR (compounded annual growth rate) the Assam has witnessed the maximum growth rate in terms of attracting the rela estate investments for the year of 2011 to 2012 and 2014 to 2015 which was 82 per cent followed by 19 percent by Bihar, 17 per cent by Odisha, 16 per cent by Uttar Pradesh and 12 per cent by Uttarakhand.

However; the states which recorded the maximum fall in real estate investments are 40 per cent in Jharkhand, 37 per cent in Himachal Pradesh, 29 per cent in Madhya Pradesh, 16 per cent in Haryana and 7 per cent in Gujarat. The survey was draw by the feedback of 100 big and small companies who are active in the sector of real estate in top cities of the country such as; Chennai, Indore, Lucknow, Mumbai, Delhi, Bangalore, Jaipur, Ahmedabad, Hyderabad and Pune.

Most of the real estate developers are veering the poll and it’s clear that they are down just due to the lack of focus of government from improving demand or supply in real estate sector. Whereas; the survey indicated that the previous and latest Union Budgets was disappointed the real estate sector with the exclusion of the new plan ie. to develop the 100 Smart Cities in the country. Apart from all that the increase in the rate of service taxes by 14 per cent makes the real estate sector but more expensive and it has direct impact on the sales and it is clear that it will make down the real purchasing power of average investors and end users in country.

All the real estate developers are have concern about the increase in excise duty on goods and service tax on construction and also increased on petrol and diesel prices with increase in freight rates on the cement which lead the construction cost in real estate sector. Now there is need to speeding up procedural requirements in the field of real estate sector which have just passed through the single window clearance system from different approvals to increase the operational efficiencies and cost of investment along with the stable and predictable policy framework in real estate sector.

On Sunday, Two-days Times property exhibition kicked off at the Clube Tennis de Gaspar Dias hall, Miramar, where more than 10 well known real estate developers have showcased their properties and latest projects. Jai Bhuvan builders, Sinari developers, Shah Housing, Devashri builders, Vision developers, CMM Stores and Dempo builders were among few real estate developers who have showcased their residential projects.

Times property exhibition was perfect destination for those who were looking for premium properties as well as affordable properties because here one-bedroom flats, duplexes and luxury residential villas were available. With a wide variety of homes to choose from, residents of Goa were keen to find their own space to call home are spoilt for choice. The exhibition offered Goans a unique opportunity to review and select the most suitable residential or commercial project to call their dream office or home.

Here wide ranges of properties were available, which was good enough to appeal to every budget and with new projects coming up in various parts of Goa, location cannot be a problem either. After a slow down, there seems to be a revival in the real estate business with several promoters launching new projects. Some of the people queuing up to check the projects are also eyeing second homes as an investment.

If you are planning to buy home through bank loan, or your savings than make sure you are fully aware about the extra costs, which also known as hidden costs. These extra costs can be bit heavy on your budget and can increase the overall cost of property. If first time you are going to buy home, than you should research on these extra costs, as on the time of final deal you need to pay many other un-advertised and hidden costs.

In India, buying a home is not an easy task, as we all don’t want to bear an extra cost and on the same time we want to make smart deal, no matters its one-time fixed payment or ongoing payment plan even after possession. So, if you know the fact of extra cost, than there might be chances that you are prepare to hit your dream deal. First, you should know the basic selling price of property, which will be computed on the basis of size of the apartments. For Example: – If size of apartment is 1000sq ft and price is Rs 5,000 per sq ft then actual property cost will be 50lac, which means the Basic selling price is 50lac.

Some additional cost charge by developers/builders is below mentioned

Club Membership:

Nowadays every society in metro cities is coming-up with a club inside the residential complex, which provides the extra recreational facilities and few other activities. But what if you are professional and working from 9AM to 7PM, it means you will be not able to take utilize the club facilities and it’s clear that your family don’t need any of these facilities, but there is chances that still you need to pay the club membership fee because it’s not an optional in many of the cases.

External Electrification Charges (EEC):

When real estate developers charge the cost for wires and cables than in most of the cases it linked from the electricity meter of the apartment. These charges can include steel lighting, pumps, equipment, cables, common area lighting and installation of electronic meter.

Preferential Location Cost:

If you wish to buy an apartment on first five floors or on main road or pool facing, than you might have to pay an extra cost, rather than normal cost. Every builder normally charge an extra cost for preferred location

Un-finished Units:

In few apartments builder provides room with plug points, wires and other equipment, but no lighting, space for wardrobe they left but there will be no wooden doors for that, even in some cases builder provides sink but not modular kitchen furniture. So it’s recommended to check the credibility of developer and verify that they are providing these facilities or not and what is furnishing status of an apartment before an investment. 

Car Parking Space:

In society, developer offers the two types of parking, first open and second covered parking. According to the guidelines of Supreme Court in 2012, open to sky areas or covered parking (stilted) spaces cannot be sold by the developer or builder. Some of the buyers are still aware about these norms and facts as; developers are still charging an extra cost for parking space. If first time you are buying the apartment, so be careful about parking policy.

So, if you are going to buy the property than firstly check the cost sheet with the developer or an agent, which includes all other charges according to the choice apartment size.

Now builders are targeting the existing structures in Mumbai, which are either in bad condition or dilapidated because centers of Mumbai is running out as there is no more space for residential development. But still it’s a big question, is it better idea to invest in these properties for redevelopment as down payment is very high in these areas (Approx. 50 per cent).

As per the research on seller or buyer sentiments, who belongs from west and south India most of the people raise their query about investment prospects in existing buildings or re-developed projects. Redeveloped projects are in the good flow of demand as they are like modernization of the area with new infrastructure. Before investing in existing buildings buyer should check the background of the developers as these properties comes with several risks in respect to FSI such as; government approvals and conversion regulations.

On side, where investment in re-developed infrastructure can be beneficial for buyer or end user, the same can be risky for investors, who are looking for capital appreciation. The opportunities for capital appreciation much less in established localities in comparison of areas where there is huge potential for new infrastructure planning. Some areas in Mumbai like; Khar, Bandra and Santacruz are already saturated and developed with property cost in a range of Rs 18,000-44,000 per sq ft whereas, other areas like; Navi Mumbai and Vashi is still in the development stage in terms of re-development, infrastructure and connectivity .

CIDCO (City and Industrial Development Corporation) has allowed FSI up to 2.5 for new affordable housing buildings and it is expected that these buildings will be able to get a better scope of appreciation for those investors, who are looking for capital gains as well as the base value. In general re-developed infrastructures require more investment from consumers as builders, who are involved in re-development projects can ask for more down payment and it can range up-to 60 per cent of the total value. Most of the matured commercial and residential areas are undergoing for re-development in Mumbai to bring new supply of buildings for catering the needs of people, now end user can find multiple way to invest in these properties to earn maximum profits.

Very few cities have a capacity to create micro markets and Mumbai is one of them. Mumbai has a micro markets in his boundaries and here is small analysis from those areas, where micro markets have developed.

If you will analyze the Indian property market, so you can easily notice that Mumbai is on the top most position in the property pyramid. This financial capital of country can be defined as DNA of country as attributes of Grade A city. In Mumbai there are many micro markets and they are catering the various needs for socio-economic groups. Mumbai is rising as one of the most attractive destination for real estate investment by following the global growth pattern.  The growth in real estate segment is evolving the new pattern because various budget segments have surfaced in same region and this situation is not only for commercial development as the growth trajectory has co-relation with residential apartments. In Mumbai city for long distance has been dampener the real estate market and now many micro markets have emerging as city within the city of Mumbai.

Real estate market of Mumbai is very dynamic and people love the Walk-to-Work facility, but because of cost this facility is only available for CEOs and other top management of MNCs. In recent development scenario satellite towns are making it possible for average working class of city. For example, Bandra-KurlaComplex has made it possible to leave nearby professional space.  To make sure that Mumbai real estate market is beneficial, analysts are tracking the real estate market of Mumbai in respect of rest of world and buyers or end-users. Mumbai is successfully creating the sub cities like; Navi Mumbai to cater the present and future needs of housing, and it aims to improve the connectivity and infrastructure of city. City is preferred as perfect market to emerge as realty hub with a lot of appreciation potential.

Few emerging locations like; Thane, Bandra and more are providing the supply of more quality spaces with best rentals, which is the interest of corporate. From Navi Mumbai to Thane, one can find a lot of affordable options with in the real estate market of Mumbai. People want to buy property within the radius of 2 kms due to easy connectivity of community centers, hospitals, schools, colleges, and more. The development of micro-markets in the city is the reflection of history and culture of the Mumbai, the way it has developed in past few decades. The modern community places have shifted from Nariman Point to Worli, Parel and BKC and it indicates that these localities are shifting from commercial to preferred residential spaces. Due to heavy traffic people want to live near work places for easy connectivity and those places are; Chembur, Saki Naka, Bandra, etc. Now Mumbai is moving from community flavor to cosmopolitan flavor with the development of various micro-markets.

Micro-markets such as; BKC, Goregaon, Malad, Powai, Andheri has emerged as most important locations for commercial as well as residential spaces. Today end-users or buyers want to travel least possible distance to save their time. In present metro connective is working as game changer for real estate market with the potential to redefine and improve the Mumbai’s property market.

These days, Boisar in Thane is growing as one of the favorite destination for established real estate developers to launch affordable projects. Here buyer can own a home in very reasonable price, which starts from Rs 15-25 lakh. Some big names are such as; Mahindra Lifespaces and few mores are undertaking the residential projects in Boisar and later these projects will cater the demand of homes in affordable price. Soon this locality will tout to be the hub of premium affordable homes in Mumbai.

What attracts the real estate developer in Boisar?

Now big names of industry have started the real estate projects and because of that this location is known as the hub for affordable homes due to availability of easy parcels of land. Real estate experts are saying it’s just a simple demand supply statistics, and said that it is expected that Boisar will receive the proper local demand for home in affordable price from those people, who are working in the Boisar Industrial area. These peoples are looking or homes in the range of Rs 10-15 lakh budget. This current demand always existed in the locality for real estate investment. Boisar locality is also witnessing the high demand from nearby locations such as; Virar, and more because these locations have gradually become expensive.

Buyers are not comfortable to buy property in Virar region due to increased property prices.  Boisar is one of the perfect locations where one can buy the property in affordable price with quality and basic amnesties. Boisar location is the preference of buyers to find the home within the Mumbai municipal limits beyond their means. Developer are realizing that people are targeting the Boisar region for owning the property, and the locality also offers the large land parcels, which are comparatively cheaper for developers to acquire land.

Boisar is also one of the best regions for investment as projects that were launched before three years with Rs 1,500 per sq ft are now stands in the range of Rs 3,000-4,000 per sq ft. Locations in affordable price is the primary venues for commercial establishments like; SEZs, IT parks and many more corporate houses because they are moving in these areas for better space availability in low price and also to access the suburban manpower. So, if you are looking for affordability near Mumbai than buy the property in Boisar because here you will not have to compromise on amenities and luxury.