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.

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.

Carnival Group

Currently, Indian property market is witnessing boost after the two mega commercial deals; In first deal; Carnival Group buys real estate project from L&T Group in Chandigarh and the deal price was Rs 1,785 cr and in second deal; Abbott Group buys office space from Godrej Properties in Mumbai and deal price was Rs 1,479 cr.

About the deal of Carnival Group:

As per the reliable sources, Carnival Group, which is leading multiplex player in our country bought a commercial project in Chandigarh City directly from the Larsen & Toubro (L&T), which is leading engineering and construction player in country and for that deal price was Rs 1,785 crore. This two million sq ft mixed use real estate project in Chandigarh City will include a mall, office space and a Hyatt luxury hotel. Before one and half year, L&T had put the project on the block and company was in talk with Carnival Group from last one year. According to the statement of Shrikant Joshi, CEO of L&T Realty, “It was our strategic decision to not to run the malls and hotels”. The more he added that at this point of time we are looking for opportunity to sell out upcoming malls in  Navi Mumbai’s Seawoods region and regarding that we are in talk with other investors. It is expected that this acquisition will help the Carnival group to widen up the portfolio and this deal will also help the company to achieve a leadership position in the retail sector of country, as per the officials of the Carnival Group.

According to Shrikant Bhasi, Chairman of Carnival Group, “This acquisition is the part of our current asset creation initiative where we are trying to create new assets for the investment portfolio of company. The more he added that this deal will also help to expand our capabilities and make inroads into newer markets, however; this project will be operated as a separate unit and it will be led by Indi based management team. Off the records, it’s very clear that Carnival Group has been on an acquisition drive because it is third real estate acquisition after Leela Technopark in Thiruvananthapuram and Leela Infopark in Kochi. Previously, Carnival Group has also bought out the Big Cinemas multiplex business from Anil Ambani’s Reliance Group. Apart from that this group has acquired Glitz Cinemas, which was the part of Capital 18, a subsidiary of Mukesh Ambani controlled Network 18 Media

About the deal of Abbott Group:

deals of Carnival Group

In another deal Abbott Group, leading pharma company of India purchased 0.43 million sq ft of office space from Godrej Properties, which is located at Godrej Bandra Kurla Complex (BKC) in Mumbai and for that deal price was Rs 1,479 crore, it is one of the biggest office space deals in India. As per the statement of Ashok Kumar, MD and Director of Cresa Partners¸ a property consultant company, “The price of Rs 34,000 per sq ft, it is the higher than the market price and Abbott Group has paid 10 to 15 per cent higher price than market price, but as it is for self use and they are about to use it for Indian headquarters, so they didn’t bargain on the price”. However; for lease or rent offices properties prices are between Rs 250 and Rs 300 per sq ft in BKC and for sale property prices are between Rs 28,000 and Rs 30,000 per sq ft. at the same region.

The space which was bought from Godrej, Abbott Group is planning to build Mumbai office headquarters and it will be house of more than 1,500 employees. Godrej BKC is the joint development project of Jet Airways and Godrej properties for the development of a 1.3-million-sq-ft project. According to Sanjay Dutt, MD of Cushman & Wakefield, who also worked as the advisor for the deal, “Companies such as; Abbott and other large banks or fast-moving consumer goods companies (FMCG) continue to see India as a large market and this is why they are not hesitating to own the permanent space in India at high price. So, it makes sense for them to buy strategic assets. The more he added that valuations of the property and deal sizes are going to go up in the developing countries and it is just the beginning.

According to Pirojsha Godrej, MD and CEO of Godrej Properties, “Company will use the earning for debt repayment and to explore the new opportunities in the real estate market of India. The more he added that in present, two-thirds of the company’s debt pertained at BKC project.

Lucrative offers- Combo of residential apartment

If you think that it’s impossible to own apartment in low cost or get job in the city like Mumbai, so this time you are wrong because now real estate builders are making an unusual promises as recently one of the Mumbai based real estate announced that his company is offering residential apartment in just 6.25 lakhs in Mumbai’s far outskirts with a helicopter joy ride and a job for one of the female member (from buyer’s family).

Karrm Infrastructure, which is famous for providing budget home in Mumbai, has promoting their latest project with lucrative offers on newspapers and on local radio. Their latest project is coming up at Shahapur, which is about 56 miles away in northwest of Mumbai. Karrm Infrastructure is offering residential units at seek 90 monthly payments of Rs. 7,000 rupees each and they are claiming that there are no hidden cost as well as project is as per the standard of “Vastu,” a local version of Chinese feng shui. It seems that company is seeking to tap the affordable market in Mumbai and that Cushman & Wakefield Inc. estimates has estimated the worth of company about $11.8 billion. According to Karrm, the low budget projects provides swimming pool, a hospital, school and a super market and apart from that the largest unit offered is about 202 square feet – all of one room, toilet and kitchenette.

In the metro cities like Mumbai, the demand for low-cost units is rising as PM Narendra Modi announced his “Housing for All by 2022″ scheme, however; builders prefer to construct high-end apartments in the cities like; Hyderabad, Mumbai, Delhi, but now they are struggling to clear the inventory pile-up of high-end apartments. According to Sanjay Dutt, Executive Managing Director of South Asia at Cushman & Wakefield, “Urban residential units has long been neglected in India because of certain reasons such as; high land prices, low margins in the segment and delays in getting approvals, but now with renewed focus from the state and central government, we are expecting that this segment will get proper momentum in near future”.

20 percent discount on full payment:

According to the statement of sales representative at Karrm Infrastructure’s office site, “All units will be ready in next two to three years and job offer for female member of the buyer’s family will be at food processing factory which is coming up at same region”. As per the statement of Shyamsundar Kamat, a Chauffeur in Central Mumbai, “This offer is not good enough because it’s too far from work location, and if he will buy Karrm’s units, so it could shave his five to six hours in day. The more he added that it doesn’t make sense for me because I can use my traveling time to do extra productive or non-productive work. Shahapur region is too far for those who are working in Mumbai. This is the true reality of land starved Mumbai, where the premium paid for a home near the work place is too high. But Ketan Patel, project Head at Karrm Infrastructure was not available in his Thane office and didn’t respond to requests seeking comments.

Building residential units for those who are from lower or middle class can make sense as it can help to boost the volumes in a real estate market as Indian real estate companies are struggling with the sales of residential units. In last quarter, the sales of residential units in India’s top eight property markets has fell by 4 per cent, however; the percentage of unsold inventory rose by 18 per cent, as per the research and data of Liases Foras, which estimates that it will take at least 45 to 50 months time to find potential buyers for unsold homes in Mumbai alone. It is expected that by the end of 2031, urban population in India will reach 600 million from 377 million in 2011 as per the estimation of central government, and there will be the shortage of 18.78 million residential units in urban housing segment. Now Central government is focusing on reducing squalor in modern cities and towns and due to that central government have shortlisted 305 cities and towns in nine major states of country to start building houses for affordable segment.

RBI cut key interest rate

With the recent news that RBI has decided to cut the key interest rate, it is expected that this move of RBI will boost the affordable as well as premium housing demand and it also improve sentiments in the sluggish property market. Property consultants and real estate developers have demanded that interest rates should be further reduced. According to one of the realty Magazine, “This move is hope for the reduction in mortgage rates, which would improve residential sales in all over the country that have been suffering from general slackness in recent times. As per the recent research of JLL India, “Housing sales drop by 1.75 lakh units in the primary markets of 7 major cities in 2014 against nearly 2 lakh units in the previous year due to less demand. Happy with softening inflation, RBI decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.

Positive views of leading realty developer:

According to Rajeev Talwar, Group executive director of DLF, “It’s an awesome New Year gift and it seems that the finance ministry has putting his effort to convince RBI governor. Given the background of RBI governor, even the small beginning will be marked as big signs of hopes for the Indian economy”. The more he added that, this move would definitely encourage buyers now to invest in new homes or second homes.

Anuj Puri, Global property consultant JLL India Chairman & Country Head stated that “I expect this cut in interest rate to be the first of several to come and these will cumulatively make a big difference for home loan borrowers, as in present, the current interest rate cut will help revive market sentiment, which is very timely”.

Parsvnath Developers Chairman Pradeep Jain, appreciated the RBI decision and stated that realty sector has been struggling from the last 3 quarters with lower demand and more inventories. This decision would help reduction in EMIs and thereby encouraging fence sitters to conclude deals. Developers would also get funds at comparatively lower rates.

This move will instill hope as well as confidence in the real estate industry which is recovering from housing sales is around the corner, stated the Sanjay Dutt, Cushman & Wakefield Executive Managing Director, South Asia. Whereas; David Walker, MD of SARE Homes, said, “This step of RBI will cheer up the markets and hoped that financial institutions will pass on this reduction to customers, which in turn would boost housing demand”.

As per the Lalit Kumar Jain, Chairman of CREDAI, the apex organization of real estate developers, RBI’s decision is as a good beginning but said this is not enough as a reeducation of 200 basis point within short span is needed. Whereas; the Consultant Knight Frank India CMD Shishir Baijal, stated that This decision of RBI is positive approach that would benefit the debt burdened developers and stretched households alike and to comment on this RBI decision Anshuman Magazine, Chairman & MD of property consultant CBRE South Asia, said that this decision is good and in current market situation this reduction in the base rate is an important step in improving home buying sentiments.

According to CREDAI (NCR) President Rohit Raj Modi, “The rate cut will help the real estate developers to expedite projects that were otherwise facing tight fund crunch”. The more he added that home buyers are dreaming to own a home that would also get a boost as we expect an accelerated purchase cycle. Mohit Goel, CEO of Omaxe stated, that this move clearly shows RBI’s shift in stance in favor of positive growth and it is also correct time to usher in a slew of out-of-policy measures such as; to allow the banks to lend more to real estate, easy funding norms and more. Now real estate sector will play role of a catalyst in driving the overall economy.”

Amit Modi the ABA Corp Director said, “This was the most awaited change and development in policy and now easing interest rate will help to revive the health of businesses such as; Real-Estate which are highly sensitive to interest rate movements.” According to Ansal API Vice Chairman Pranav Ansal, “This is so positive step from RBI, which will boost housing sales and improve overall sentiments in the real estate market. The more he added it is a good sign and now real estate sector will look forward to RBI take the drastic steps in its forth coming monetary policy”.

Do you live in a small apartment? Many of us whether by choice or necessity live in smaller apartments. But do you know that you are not alone. Many people are going for smaller apartments as residential flats in Mumbai, Thane and Navi Mumbai have become more affordable due to the reduction in their dimension, says global real-estate consultant Cushman & Wakefield. In its report published in a local newspaper, it says apartments in Mumbai and other cities have become more affordable following a reduction in their sizes in 2014 launches.

Mumbai this year witnessed a 12% reduction in apartment sizes, easing cost by 9% over the last year.

Noida recorded the sharpest decline of 16%. In the over 50,000 mid-segment units which comprise one and two BHKs of new projects across top eight cities in the first quarter of 2014, most cities have seen a reduction in size of approximately 100 sq ft.

Significantly, not just Mumbai but other markets also saw unit sizes drop including Ahmedabad (8%), Chennai (3%), Hyderabad (9%), Pune (6%), and Gurgaon (3%).

Executive Managing Director, South Asia, Cushman & Wakefield Mr Sanjay Dutt, said: “The residential sector is banking on end-user driven demand and developers are tweaking products to make them more affordable. It also signals a degree of stress among developers, which is forcing them to launch products to inject doses of robust sales numbers into their balance sheets. Affordability holds the key right now. End-user buyers have been shying away from making purchases for a long time, owing to lacklustre economic conditions and low confidence.”

Chennai, Gurgaon and Hyderabad witnessed an additional push towards affordable options as they saw a decline in prices of new launches, though most of these launches have been in the peripheral or futuristic locations with lower benchmark pricing. “These locations are generally price-sensitive and driven by end-user purchase, making it necessary to meet price expectations,” the company said.

The decision of the Reserve Bank of India (RBI) to keep  has disappointed the real estate fraternity that has already been reeling under a slowdown.

RBI Governor Raghuram Rajan has key policy rates on hold in his second bi-monthly monetary policy review, the first under the Modi regime.

According to Shrikant Paranjape, Chairman, Paranjape Developers, both home buyers and developers are disappointed with the RBI leaving the interest rates untouched. Paranjape said that this would have a negative impact on the already suffering real estate sector.

“We had expected the new government to bring hope to the real estate sector and the industry was looking forward to some relief in the form of interest rates being brought down. Business is already slow and I do not see a recovery soon.” said Paranjape.

Hemant Naiknavare, Vice President, Credai Pune Metro and Director, Naiknavare Developers, said that it would be favourable for the government to bring down the home interest loans to a single digit from the existing 10 to 11 per cent. He said that prospective home buyers are finding property rates and home loan rates quite high to make property purchases. “Housing is the biggest barometer of a country’s economy. There is a need to bring down the home loan rates to almost five per cent to fulfil the aspirations of home buyers,” Paranjape said.

Sanjay Dutt, Executive Managing Director, South Asia, of real estate consulting firm Cushman & Wakefield, said that the RBI’s stance to keep key rates unchanged was expected. “The RBI has stuck to its stance that there will be no rate cuts unless inflation is tamed. However, we anticipate that this is the end of a liquidity tightening cycle. We expect that the annual budget and monsoon will be key factors on the basis of which RBI will begin easing the interest rates.” Dutt said.