Investment learnings of 2015

2015 will not be remembered for the gloom it brought to the residential real estate sector but for forging a solid base for sustained future growth. Few of the notable highlights of the year gone by are as follows:

• FDI rule relaxation will facilitate the flow of more investment in the country with the removal of the two major obstacles: Minimum capital of $5 million and minimum of 20,000 square metres of development.
• The passing of the Real Estate Bill by the Union Cabinet implies a more vibrant, efficient and highly transparent real estate sector, beneficial for both the buyers and developers.
• The proposed recommendations to increase the salary of state as well as central government employees by almost 23.6 per cent by the seventh Pay Commission will have a positive thrust to the demand side of residential real estate.
• A burgeoning economy with reduced inflation and a rate cut of 50 basis points by the RBI will result in lower home loan rates.
• Launch of pioneering initiatives such as Smart Cities, AMRUT, and Housing for All by 2022 will create a revolution upon their respective implementation. Despite the sectors below average performance, it attracted investments worth Rs. 53,000 crore which might become the highest in the preceding seven-year period.

Many factors will contribute towards the growth of the real estate sector going forward. However, one may apply a touch of pragmatism while deciding the purchase of residential property in 2016. Some of the points to be noted are as under:

• Due to the slump experienced by the realty market over the past 2-3 years, the demand and supply alignment has experienced a lot of stir. While the days of exponential returns have become past; returns have become more aligned to actual market forces rather than speculation.
• In current scenario more than ever before, investment decisions must be made post doing a thorough due diligence and expert consultation. Even if the wider parameters are remaining the same, the market will perform differently in different areas, budget ranges, configurations and typologies. The due diligence to be undertaken must involve a thorough background check of the developer and all-encompassing research about the project — whether or not the various statutory permissions have been obtained, its location, etc. If there is the slightest of reasons to worry about, expert consultation is a must to avoid getting trapped in the wrong project.
• For under-construction projects, expecting the ROI is not as important as establishing a developer’s cash flows. The liquid squeeze in the market owing to the recent slump in the realty market has further limited the ability of developers to undertake newer projects or sell out the existing ones with ease. In other words, it is far more important to scrutinise the builders ability to fund the project rather than anticipating the profit one will earn from investing in the project.
• Real Estate sector is a risky sector to invest as there is no guarantee of assured returns. It is therefore important that every investor assess their resilience and preparedness for risk
• Buyers who are looking for a home for their personal use, should go ahead and buy it as it is a buyers’ market right now. For investors looking for sizeable returns, it would be advisable to have a wait and watch approach and enter at the right time.
• A need assessment may be carried out by both buyers and investors as the same is more important than liquidity. In simple terms, one should understand whether the identified property actually has the characteristics what one is looking for, or if the same exceeds or falls short of one’s requirements.
• Investors can think out of the box by taking a chance with upcoming markets rather than safer bets such as mature markets.
• End-users must decide whether to buy or rent. The current employment market in the country suggests frequent movement of employees across cities. In such a situation, investing in real estate while one lives on rent in another place doesn’t make much sense and should be reconsidered.
• While planning to invest in a property with a loan, studying the identified market’s performance in over the last few years as well as its expected future performance is critical. The performance of the rental market should not be ignored, either. Situations where one’s outgo on interest or maintenance on a property is more than the generated income must be avoided.

Recommended markets to invest in:

• Noida & Greater Noida – National Capital Region (NCR)
• Thane – Mumbai Metropolitan Region (MMR)
• Navi Mumbai – Mumbai Metropolitan Region (MMR)
• Whitefield – Bangalore
• Viman Nagar and Nagar Road – Pune
• Kochi – Kerala

Ahuja Constructions Launches O2

Recently, one of the Mumbai-based real estate developer, Ahuja Constructions launched its brand new luxury residential project at Sion suburb, Mumbai. This new residential project O2 is strategically located at Sion, Priyadarshini Park and this location is one of the most prominent locations in all over Mumbai. Apart from that this project is also equidistant to the Eastern Freeway Santacruz -Chembur Link Road, Eastern Express Highway and BKC. It is also only few kilometers away from the business centres, malls, finest hotels and other premium enterta­inment hubs.

About O2 Residential Project:

O2 residential project is located in the heart of Mumbai at Sion suburb. This 19 tower residential project is spread o the area of 2.5 acre with total 310 apartments spread across 6 wings. Here you can find different size of apartments as per need such as; 3 BHK with 1,660 sq ft size, 2.5 BHK with 1,320 sq ft and 2 BHK with 1,130 sq ft to 1,230 sq ft area. The base price for apartments are Rs 14,499 per sq ft, however; the apartments cost is about Rs 1.65 crore onwards. Currently, project is in under construction and it is expected that till December 2018 apartments will be ready for possession.

Advantages with O2 Project:

The significant advantage this residential project is that it will provide hassle-free connectivity with all over city, no matter you want to access the domestic or international airports at the other end, Bombay-Pune Express way, Navi Mumbai or any other place. Apart from that location will also provide great connectivity will all the other premium destinations such as; Nariman Point, Bandra, Andheri, Ghatkopar, Thane and Worli. According to officials O2 project has an oasis of nature in an urban setting as it is providing vibrant life style with tapestry of experiences. Apartments in O2 project will provide both luxury as well as safety to the buyers. Project has G+19 storey tower with 310 apartments spread across 6 wings with lavish 3 BHK, 2.5 BHK and 2 BHK apartments with sunshine¸ modern conve­niences, fresh air and all the other essential amenities to live comfortable life, the company claimed.

All the modern amenities at this new residential project will include multipurpose court¸ clubhouse, spacious designs, indoor games room, swimming pool with kids’ pool at a height of 70 metres, library, outdoor space for yoga, open air party deck, gymnasium and ample parking space. You will find an air conditioned lounge in grand entrance lobby with separate elevators for each wing. Apart from that this project is also offering a lot of green space, charismatic aroma garden with sculpture garden and landscape garden at podium and terrace with children’s play area and senior citizens’ area.

If you are ideal destination lovers ad love to enjoy metro city life at weekends or evenings, so with emphasis on contemporary architecture and quality construction, O2 is one of the best residential project in all over Mumbai, said Gautam Ahuja, MD of Ahuja Constructions.

Festive season offers

If we will look the business of real estate market at the time of festive season, so we will find that developers and the consultants are on the same side because they are accepting that it will continues to go through a slow time. There are many real estate developers in country which have strong financial support and they tend to challenge or complete the convincing progress of real estate market with their under-construction projects. Unfortunately fact this has been overly hyped by the media and real estate developers that they have strong financial background and they are able to complete their projects on time. But still there is drop in the overall confidence of end buyers because they are worried that if they will commit their money into properties which will not be delivered on time, so it could be problem for them.

Price Correction in Projects:

In last one year, the prices of property in Mumbai has been increased by 3.7 per cent, in Chennai its increased by 15 per cent, but in Delhi or NCR no change recorded in the price of property. All this rise represents the more or less stable scenario and it is expected that it will continue for another 2 or 3 quarters as there are many fence-sitting buyers, who are waiting for the time when real estate prices get correct. But according to real estate experts price correction will be location specific as well as developer and will happen only if there will be nothing to attract the buyers. There are few cities where demand is still sufficient and prices are more or less affordable and in those cities there will be no price correction. Apart from that the regions where people looking for more affordable property certainly price correction will happen in those areas. However; there are much activity to make the real estate market more affordable because developers are actively re-configuring their projects as per market conditions in process to save the cost and pass the benefit to buyers. Much number of real estate projects are about to launch and they all have been at lower rates than those of earlier projects launched in the same locations in such category projects.

Economical Scenario:

In present, economy has not shown any type of perk for which real estate developers are waiting. However; market has definitely improved in comparison of last year. But market is still improving and recently, RBI as cut the interest rates to help the sentiment of buyers and it is expected that it will be factor to drive more sales in real estate market. With the cut in interest rate, the RBI has sent the signal to the real estate market that inflation is under control and buyers and developers can be more confident about economic growth. However; these kinds of signals are positive for buyers and developers as well. If you will show the actual pertinence on property purchase, so it could draw big impact on the savings because impact may not be very significant, in expensive regions such as; MMR, NCR, Delhi and more. If property prices will be expensive in any case, then marginal reduction in the cost of borrowing will not make any big impact. However; the reduction in interest rates will draw a bigger impact on the buying behavior in less expensive markets such as; peripheral locations of tier I and tier II cities.

NRI Investment:

If will take a step towards the domestic real estate consumption and analyze the demand and supply ratio in metro cities so you will understand that outlook looks very upbeat. In present, there are many non-resident Indians (NRIs) who are extremely active while investing in Indian real estate market. In India, NRIs are among top five investor communities who are investing in countries property sector. Apart from that there is natural affinity to India that NRI with high intrinsic value prefer to buy property in India than buying property anywhere else in world. However; sometimes due to weaker rupee value NRIs prefer to invest in India.

This festive season it is expected that buyers will see the mixed bag, but still question remains same, is it a good time to buy? Definitely yes, for end buyers because they have never been more spoiled for choice with bargaining power and lower interest rates. There are many real estate developers who are offering hard discounts registration charges and waive on stamp duty, VAT service tax and on other services such as; floor rise premium, free parking space and more. This festive season is an ideal time to make the best deal of your life and turned your dream home into a reality.