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.

SBI is planning to include Kingfisher House on its next e-auction block

After getting unexpected response from its mega auction of Rs 1,200 crore worth properties belonging to defaulters, now SBI is planning to include Kingfisher House on its next e-auction block for the next round. On last Friday, State Bank of India put the block 300 pieces of residential, commercial and industrial properties across the countries which it had attached from defaulters in a bid to recover bad debts.

Till now SBI was selling its assets of defaulters in a piecemeal basis, but the problem was that most of the response was coming from localized and specific group of people who specialized in purchasing stressed assets at a discount price. In present economy is turning around and due to that now banks are hoping that investors from all over the country will be drawn to mega auction there will be a genuine price discovery based on demand and supply. According to Deputy Managing Director of SBI, PK Malhotra, “It was too early for us to include and put the Kingfisher House in the e- auction and now we are planning to include this during the next auction. Like other we are also looking for good business house to buy it rather than have a reseller come in. Our valuation of this was quite dated and now we are doing a fresh valuation which is expected to be through in a couple of days.

The latest e-auction included residential units as well as industrial plots from all over the country. While there was a good response to the residential properties, now SBI expecting some work on the larger industrial plots. According to Malhotra, “We are expecting to get over 10 to 14 per cent (over the asking price). Few of the industrial properties are very good with the entire infrastructure available. It is like a `plug and play’ asset for any entrepreneur.”

It is expected that these e-auctions and valuation of assets will add few hundred crores to SBI’s bottom-line for the third quarter as successful bidders have to make full payment by March 29 2015. As per the statement of Malhotra, there was good interest in the bank’s auction because the properties have clear title and buyers see value in them. The extent of profits would depend on the level of provisions made by the bank. If the asset has been fully written off the entire realizations would add to the banks bottom-line.

Indian investors investing in US

Indian real estate market is lucrative for investment and attracting the investors, but now Indian investors are also investing in the US real estate market, which is emerging as an attractive investment destination. Indians are showing a lot of interest to buy properties in US, according to property consultant Jones Lang LaSalle (JLL)

As per the report published by the US National Association of Realtors, Indian buyers have purchased the residential properties in US, of worth $5.8 billion in last one year period ending March 2014. This investment magnitude recorded a growth of around 6 per cent over 2013. According to recent reports, Indians have spend $459,028 or Rs 2.81 crore on an average to buy properties in the cities of US such as; Las Vegas, Chicago, Dallas, Los Angeles and New York..

The most interesting finding is, that Indian High Net worth Individuals (HNIs), who have obtained American citizenship and are settled there have several reasons for investing in properties in US. Apart from the love of Indians to country, most of Indians who have become naturalized as US citizens have family interests and as well as they have their business in major American cities, as per the statement of JLL Chairman and Country Head Anuj Puri. He also added that after the steep post-Lehman downturn, several countless investors have been able to snap up properties in American cities at unbelievably low prices as these investments are seeing good ROI because now US real estate market is reviving.

The Reserve Bank of India (RBI), has recently increased the ceiling on outward remittances for those who are buying the overseas property under the (LRS) Liberalised Remittances Scheme to $1, 25,000 from $75,000. This enhanced investment limit is a small, but it’s an important window. For example, Now a married couple can together buy a small property in a US suburb only if they have the inclination to do so., whereas; earlier real estate as an option was entirely withdrawn from the LRS scheme and the limit purview, according to Puri.

Puri, further added that, since a few apartments in the US are currently held by institutional investors who had bought them during crisis from distressed sellers, so for foreign buyers it’s easy to deals with such institutions rather than with individual US house owners.

Small sized property

Residential property sizes are reducing in all over MMR (Mumbai Metropolitan Region) from last two years because now real estate developers are constructing the small size apartments to target the middle and low income groups and keeping the price factor in mind. From 2012 to till now property size has decreased by 8 per cent and it is expected that it will continue as the population grows, property prices increase and most of the people are looking for affordable housing units.

After recent survey by real estate portal it is stated that “It is found that from 2012 property sizes have constantly decreased as prices have almost remained the same or marginally increased in last two years”. This particular trend was started in 2009, but because of huge success it becomes visible in last two years.

In present buyers are ready to compromise on the size of property, if the price falls in their budget and the location is hot. Another reason for the increased number of small-sized property is the affordability aspect. In Mumbai residential properties have seen a meteoric rise over the last few years, but still every individual aspires to own a home in Mumbai. Real estate developers are well aware about this fact and due to that they are working on affordability aspect of buyers and started to launch a property that are in small size.

Mumbai Metropolitan Region is witnessing a rapid growth of population over the last two decades. In world Mumbai is the seventh most populous city and it is in the league of Tokyo and New Delhi. Due to increase population the demand of property in Mumbai is more with the concern of available space. This can be the key contributor to the reducing property sizes because of low price.

Invest in ATM to generate income

Investment in commercial real estate is more lucrative investment than investment in residential property because of much higher rate of return. Apart from doing a job, running your own business or renting the space to other business is good option but now you can also consider another option ie. Renting the commercial space to for setting up an Automated Teller Machine (ATM).

According to RBI, there is need for more ATMs in the country to address the issues of financial inclusion. Recently RBI has allowed seven NBFCs (non-banking financial companies) to open white-label ATMs. ATMS, which is owned and operated by an NBFC is known as; white-label ATM, while most of the white-label ATMs are to be set up in rural areas with a small percentage to be installed in urban and semi-urban areas. Vakarangee is about to manage and set-up a minimum of 15,000 white-label ATMs in next three years with the ration of rural-to-urban as 2:1. The TCPSL (Tata Communications Payment Solutions) will set up almost 5,000 of the mandated 15,000 ATMs in metros and urban markets. When it comes on semi-urban and urban locations, than there are basically two ways in which you can use your commercial to earn additional income via the white-label ATM route.

Rent out your commercial space for white-label ATMs:

If you have commercial space so you can rent out the same to white-label ATM provider, in which Prism Payment Solutions is one. Prism Payment Solutions deploys ATMs at most popular areas with good visibility across the country. Another investment option is to rent out a commercial space while you continue to use it for your own business. Payments Solutions is ATM-in-a shop concept, it set-up the ATM in existing businesses premises, such as; shopping centers, standalone shops, retail chains and businesses in urban locations such as; Hyderabad, Mumbai, Chennai, Bangalore and more. You will get the rent from NBFCs, which will depend on the factors such as; city and location of the ATMs.

How much investment it needs:

If you are offering the commercial space for the ATM, so you should know that it will be not installed in free. For whole process you need to shell out a security deposit of Rs 2 to 3 lakh or it can depand on the space, location and the number of ATMs you plan to install. As ATM is owned by the company, so you need to pay the security deposit, which can be equivalent to few months rent. The fixed monthly rent which you will get can range from Rs 25,000 to 30,000.

Franchise ATM:

If you own a lobby space of 20 sq ft or at least a room of 50 sq ft, so you can take the franchise of Indicash TATA ATM. TCPSL, take care the operations and repairs of Indicash, and company will also bear the electricity charges and install the required electronic security equipment.. As ATM franchise is another way to leverage the commercial space so TCPSL launched the this model with the collaboration of Franchise India. People can invest money in an ATM franchise and earn a return on their investment.

ROI:

A franchise will earn Rs 5 for nonfinancial transactions and Rs 15 for every cash withdrawal. The return on investment depends on location and return is calculated directly on the basis of the volume of transactions. Any ATM starts making money when it clocks 100 transactions per day.

Rent, Earnings and Franchise:

If you want to rent out your commercial space, so there is an opportunity to earn Rs 25,000 per month from the NBFC, which installs the teller machine. And if you have decide to take a franchise than there will be no rental income, but you will also bear the maintenance cost.

In franchise scheme, if, over a period of time your ATM sees 200 transactions a day, of which 40 are non-financial transactions and 160, are withdrawals, so you will earn a total of Rs 2,600. Even after deducting your costs, you could earn around Rs 53,000 (Rs 78,000—25,000) a month. Hence your income depends on the transactions that your ATM receives and it is the element of risk. So, it is recommended to weigh your options before deciding on the route that suits you.

CREDAI-BANM 15th Property exhibition

Event Venue: - CIDCO Exhibition Centre, Vashi.

Date: - Dec. 12, 2014 to Dec. 15, 2014

CREDAI and BANM is going to organize the 15th Property Exhibition for the duration of Dec 12 to Dec 15 in the city Navi Mumbai. CREDAI stands for “The Confederation of Real Estate Developers’ Associations of India” and BANM stands for “Builders Association of Navi Mumbai”, which is the apex body of the organized real estate developers in Navi Mumbai. Whereas; CREDAI is the apex body for private real estate developers in India, which represents 8,800 developers through 20 states and 114 cities.
In present Mumbai is one stop destination for international standards real estate properties for commercial to residential properties. Mumbai is one of the global hot spot for foreign real estate developers and as well as national developers. As we all know that, property investors and buyers have become price and quality conscious and because of that they are searching for affordable property with good quality. In past few decades Indian real estate market is seen to be more investor-friendly as it is attracting the NRIs and foreign investors, which is the main reason for the boost in real estate market that drive demand to greater heights.
As the real estate sector witnessing a positive trend in Mumbai, so it is expected that record number of properties will be exhibit and sold in exhibition, as last year more than 350 properties were sold by the developers under the code of conduct adopted by the members of the CREDAI-BANM. The expo will feature the presence of real estate developers from across Mumbai Metropolitan Region (MMR) and country with the presence of housing finance segment with the organization like; LIC Housing Finance, Tata Capital Housing Finance Limited, HDFC, ICICI Bank, Kotak Mahindra Bank, L&T Finance, Bank of Baroda, Bank of India, Axis Bank, Union Bank of India, Reliance Capital and Canara Bank.
This expo is expected the presence of Bollywood and sports celebrities as in 2013 the same expo has witnessed presence of celebrities like Actor Sunil Shetty and Shilpa Shetty. In property expo there will be plethora of offers housing options for customers to take spot decisions. With the strong membership of more than 1800 leading Developers in Mumbai it is expected that expo will witness the huge success. This year it is expected that participation will be twice as compared to last year.
Life is all about taking the right decision at right time and this time the 15th Property Exhibition 2014 will kicks off at CIDCO Exhibition Centre, Vashi, so it’s great opportunity as it promises something more to everyone who is interested in real estate.

Affordable Housing

According to data of 12^th, 5-year plan (2012 – 2017), the housing shortage in India has reduced to 18.78 million, but according to experts data collection is questionable, and we can understand the data is not so correct because we belongs from same society and know the situation of affordable housing in India.

More than 80 per cent Indians still find it hard to fulfill the desire to own a home in affordable price. This is the era of luxury items such as; Tvs, laptops, smartphones, and other items, they all are now in the reach of common man and are affordable, but when it comes to houses situation is reserve as houses are getting more and more expensive day by day. In Indian most of the people still living below average standard homes, but it doesn’t mean the average income of Indians is reducing, however the housing prices have been increasingly exponentially. For affordable housing there is huge gap between supply and demand and people have less choice when it comes to living standards. In some cases developers are asking the peoples to queue up and take part in lotteries, and according to that they will sell the home to winners only. As per the Ministry of Housing and Urban Poverty Alleviation, Affordable housing constitutes living units due to that his equated monthly installments (EMIs) should not be more than 40% of the owner’s gross monthly household income. Whenever the homes priced between Rs. 25-45 lakh are still referred as the affordable house by builders. The exact definition of affordable housing should be the main concern, as there is huge shortage of supply in this segment.

If the current backlog is maintained, then by the end of 2020, India will be facing an extra demand of more than 30 million additional homes; however 80 per cent shortage is still concentrated in the economically weaker section (EWS) of the Indian population. As per the 12th 5-year plan (2012 – 2017), Housing shortage in country is reduced by the 18.78 million, but according to experts data is not real and still questionable and current government departments continue to argue on the exact figure. In present the land is not easily available asset in India, in most situations acquisition of a plot for housing development is time-consuming and highly expensive process because of various charges apart from land cost. Due to rise in population and rising urban density, in past few years the demand for land has also seen an exponential rise.

If the person is from economically weaker sections and look for properties, so it’s difficult for them to deal with finance as well as they are also finding it difficult to meet the transport, water and power supply systems, sewage treatment lines and other conveniences. In India, land prices are much higher than the rate which is compatible with the development of real estate, in past few years there has been rise in cost of construction and construction material, which directly reflecting in the housing prices and the other issue is the lack of infrastructure. The majority of Indian home seekers is moving into first, second and third tier cities to earn the livelihood. These in respect to that there is no difference from home buyers from the middle or upper middle class. These are the some basic things for which any home buyer look while purchasing, no matter the construction is done by government of self-governing bodies of real estate developers. There is still lack of affordable homes in India and government need to do the hard work in real estate sector, not the main question; Is PM’s Housing for All scheme will work?, well the answer is in future and let wait for the best for the residents of India, who want to own the home.

Godrej properties, Dubai, UAE

On November 23, 2014, Godrej properties opens its first representative office in Dubai, UAE. Godrej Properties opens representative office in Dubai Godrej properties today announced that it has opened its first international representative office in Dubai, UAE. This office is located at Regus Nassima Tower in Sheikh Zayed Road, Dubai, which is key business district in UAE. In past few years Godrej properties has been constantly engaging and attracting the customers through various exhibitions and events in international market and this market includes, Africa, U.K, , Singapore, Hongkong, Dubai, Australia and USA.

After the opening of this new representative office, Godrej properties Ltds. will directly engage with Indian Diasporas located in all over the GCC market. According to Mr. Girish Shah, EVP, Marketing & Sales, Godrej properties, “We all are happy after launching the first international representative office in Dubai and Godrej properties has always believed in connecting with customers on personal approach”. Most of the NRIs are living in the Dubai and they all are constantly looking for home buying options in India, but with this office they all will have the easy choice to make the property buy buying decision.

About Godrej Properties Ltd:

Godrej properties help to bring the Godrej Group in the philosophy of innovation and excellence for the real estate industry. Godrej properties development combines a 117 year legacy of trust and excellence with cutting edge technology and design. Godrej properties provides end to end services, by working with best designers, architects and contractors within India and in all over the globe to deliver creative, sustainable and imaginative dream spaces.

Presently, Godrej properties is developing the several commercial, residential and township projects in all over the country, which is spread across 9.6 million square meters in more than 12 cities. Godrej properties has always embraced the notion and notion with the essence of excellence. With the help of best talent in real estate sector, Godrej properties works to create developments for next generation, which is the need of every resident.

Awards:

In last few years, Godrej properties has received more than 80 recognitions and awards, which includes the Popular Choice Developer of the Year -2013 by awarded by ET NOW.

Maharashtra and Haryana, the two states which went for legislative Assembly elections on October 15, have another thing in common. They are among the most prominent property markets and together are estimated to constitute 30-40 per cent of the pan-India real estate universe.

While the polls might not substantially impact the property prices in the state, these could slow down policy clearances and infrastructure projects critical to real estate, say analysts. Since the elections happened just about a week ahead of Diwali, a time for the biggest real estate launches, those tracking the sector say there could be some changes and delays in new projects.

A short-term impact on real estate activity and approval processes is likely because of these elections, says Anshuman Magazine, chairman, CBRE, a global consultancy in the sector. “It is usual for project approvals to come to a standstill before elections.” he said and added that infrastructure projects in the states could also be hit, affecting real estate. A Cushman and Wakefield study put the total estimated unit launches at 172,500 across major eight cities of India in 2013. As for prime residential, Mumbai made for 17600 new apartment units in the first half of 2014 and Pune 5,000, according to CBRE data.

The study also shows Mumbai is one of the biggest chunks, constituted 2.2 million sq ft of new prime grade-A commercial supply in the first half of 2014 of a total of 14 mn sq ft across this segment in India. So, in grade-A commercial space itself, Mumbai is the primary real estate driver in Maharashtra and together with Haryana forms more than a third of the pan-India new supply.

Real estate players are a bit cautious and do not want to dampen the Diwali spirits. Lalit Jain, chairman of the Confederation of Real Estate Developers’ Association of India, told a newspaper: “In Maharashtra, the political system has no role to play on project approvals.” Niranjan Hiranandani, managing director, Hiranandani Constructions, said there would not be any perceptible change due to elections before Diwali. However, people would look forward to new policies in housing and incentives for affordable housing. Those policies would depend upon the result of the elections and who forms the new government. Many issues in real estate are governed by state laws. The actual loss to real estate caused by policy uncertainties will be clear after the poll result and how quickly the new government is able to take charge, an analyst said. “The silver lining in all this is that the real estate market is already slow, limiting the impact of elections,” he added.

If you are having small budget, but still want to own the property, so 1BHK, 2BHK and studio apartments are the best option for you. Now most of the developers in Mumbai are coming-up with the configuration of small apartments as they are in great demand. Larger configurations offers the better amenities within and outside of apartments and it also need less number of buyers, compared to small apartments, but it comes in high price. Before 2005 large apartments was in trend, but between 2004 to 2010 when property prices increased substantially for large configurations, than this trend went beyond the middle man’s reach. Nowadays in metro cities it’s a trend to buy small apartments as residential flats and due to reduction in size, it’s become easy to own the apartments.

1BHK, 2BHK and studio apartments are right choice for low budget and one can easily afford it if they are living in metro cities like; Mumbai, Delhi, Gurgoan, Hyderabad, etc. These small size apartments are best option because of two reasons; first it requires the small investment and second one can easily sell it as it requires the less ticket size, while selling the apartments. All metro cities are situated on the strategic locations and they play a major role to drive the economy and because of that apartment prices in these regions are growing up. According to recent survey, apartments in metro cities are now more affordable because of reduction in dimensions. In past two years, these cities have witness the 15% to 25% reduction in apartment sizes.

Recently, central government also announced the benefits for affordable housing segment and has also increased the tax deduction limit for section 80C, from Rs. 1Lakh to Rs. 1.5Lakh. And in the same process the budget has also increased the deduction limit on interest payment for home loans from Rs. 1.5Lakh to Rs. 2Lakh. Mumbai has recorded the sharpest decline in size and it is about 20%, while other cities have recorded the decline of 5% to 15%. In metro cities growth drives by end-user, so it is essential for developers to meet the price expectations of end-users.