Piramal Fund Management invests in Lodha Project

2:37 PM

Project Approvals

Govt must ease approval process for realty projects: Godrej

4:34 PM

Renting Property

Don’t forget to do these when you next rent your house

7:30 AM

Real Estate Act

Will the new Real Estate Act be a game changer?

1:22 PM

Will the new Real Estate Act be a game changer?

The new Act will force more transparency and disclosure from builders and will encourage investments into real estate

The new Real Estate Regulation and Development Act has just come into force. It is being hailed as a positive step. The Act envisages that the states and Centre will formulate specific rules for real estate regulation.

Broadly, every state will set up regulatory authorities for oversight of real estate projects, all of which will be registered. Guidelines and timelines will be laid down for projects and penalties imposed if those are not adhered to. Instead of legal disputes being processed slowly through normal courts, Appellate Tribunals will adjudicate disputes with time limits of 60 days.

There are time limits for states to pass new laws and set up the boards, etc. The process will, if timelines are adhered to, take about a year or so. Most likely, since state-level governance is very uneven, this will work patchily. Some states will set up efficient Tribunals and Regulatory Boards; others will not.

Many politicians have interests in real estate. That could work both for, and against the concepts of the new Act. Some smart and not-so-crooked politicians will back the new act and use it to accelerate activity. Others will try to hold up the new legislation or subvert it.

The real estate sector has endemic issues. Recessive conditions in the past three years have made things worse. For one thing, actual prices and “official” prices are often wildly at variance, with huge amounts of black money kept off the books. Builders are perpetually cash-strapped. Banks have been cautious about lending to builders because the Reserve Bank of India demands very high-risk weightage since there are high chances that such loans will go sticky.

Rentals are generally low as a percentage of price, while prevailing interests rates are high. A property owner could sell it, park the proceeds in a fixed deposit and rent the property back with a comfortable margin of profit. This makes the landlord model less than attractive.

Many builders used to rely on the booking amount to fund projects. But, over-supply means that builders have not been able to raise sufficient booking amounts. That in turn, has meant incomplete projects. Distress caused by two drought years has also cut demand in the rural and semi-urban segment.

Builders also notoriously divert funds. The new Act envisages forcing builders to use at least 70 per cent of booking amount for the specific project where the booking has been done.

Finally, real estate is too expensive. This is true in absolute terms. Indian property prices match and often exceeds that of real estate in most First World countries. It is even more true in relative terms, considering low median incomes prevalent across India.

Nevertheless, this Act along with the development of financial vehicles such as Real Estate Investment Trusts (REIT) will encourage investments into real estate. The new Act should force more transparency and disclosure from builders. It may trigger a shakeout and consolidation where only builders with deep pockets will survive.

It will take a few quarters before the enabling legislation is written and implemented and there will be a sequence of messy defaults and mergers and acquisitions. Also, in all probability, prices will have to drop to realistic levels, or interest rates will have to sharply reduce, before the inventory starts to clear. But, this could, hopefully signal the bottom of the real estate market.

There is one last caveat. Good legislation doesn't necessarily lead to good outcomes. The Electricity Act 2003 was excellent, for example. But, it was never properly implemented for a variety of reasons including political reluctance. One hopes that this new Act does not go the same way.

- by Devangshu Datta (The author is a technical and equity analyst)

Source :- Business Standard

Holidays

Planning summer vacation? It's a great way to teach kids the basics of investment

9:30 AM

Planning summer vacation?
It's a great way to teach kids the basics of investment

Vacations are also not one-time in nature. In addition to the above, a family vacation is intangible in nature which is why it is difficult to treat it as an investment. However

Travel or family vacations are generally not a family's largest expense when compared to buying fixed assets like a house or a car. They are not as frequent as household expenses either. Vacations are also not one-time in nature. In addition to the above, a family vacation is intangible in nature which is why it is difficult to treat it as an investment. However, a family holiday is not only an investment of money but also emotions and experiences.

Having discussed the merits of a family vacation, let us understand how we can fund the perfect family holiday. Below are five ways by which a family can save for a family vacation and enjoy beautiful experiences.

Create a Budget

One must have an estimate of what the outflow will be and what exactly is affordable. Once the family has decided on the holiday destination, cost associated with the holiday should be determined. Different modes of transport should be considered, which would help the family members strike a balance between cost and convenience. Next, things like accommodation, sightseeing and food should be discussed. Some amount should also be included for unaccounted emergencies, considering that one is travelling with children. Certain things like the time of the year for when the holiday is planned can have a huge impact on the trip budget. For example, travelling to popular destinations is always more expensive in the peak season when compared to the off season. Another thing to take into consideration would be the weather. If it is cold, then additional money should be earmarked for warm clothing. Once all these factors have been considered, a holiday budget is drawn up.

Set up a dedicated fund

After drawing up a vacation budget, the next step would be to determine the funding for the same. Infact, this is the crux of planning a great family vacation. Since it is not a regular expenditure, it is imperative that savings for the holiday start in advance. Each month, a certain sum of money should be set aside, in a disciplined manner, based on the previously estimated budget. Instead of simply parking the money in a savings bank account, it would be better to invest the money in short-term instruments which provide a relatively better return. If one is looking to invest a large amount of money upfront, then liquid funds and ultra-short term funds are a good option. These are relatively safe and have a potential to provide good returns. At the onset of savings for the vacation which is a year or two away, one can allocate a small portion to equity-equity related funds. If the vacation is not so far in future, investment can also be made through monthly income plans (MIPs) which have a portion of the fund allocated to equity investments.

It should be a team effort

Involve the children in the planning and saving phase. Encourage them to read up on the places that are a part of the holiday itinerary. Give the children some responsibility related to the trip. This could range from making a list of places to visit, to saving up their pocket money, to purchasing a memento from the trip. Also use this opportunity to teach your children about different currencies and their value.

Set up mini goals

Sometimes the whole idea of saving up for a big family vacation can seem daunting and unachievable. As a matter of fact, that is a reason why many people indefinitely postpone taking a vacation with their family. To help combat this problem, instead of just viewing the vacation as one big goal, family members can break up the holiday into a few mini goals. Some goals can be for the adults to achieve and some goals can be for the children to achieve. This strategy has many benefits. First and foremost it makes the bigger goal of taking a family vacation seem achievable. Secondly, it makes the children feel more involved and teaches them a sense of responsibility.

Plan ahead

A family vacation, especially one which is being taken with children should be planned in advance. They are multitude things that need to be considered, discussed and decided. Also planning in advance has the added advantage of creating opportunities to save on costs by availing early bird discounts and deals.

Adhering to the above five tenets will ensure that you are able to afford a fulfilling holiday with your family and return home with some amazing memories and experiences.

- by Shreyash Devalkar (The writer is a fund manager, BNP Paribas MF)

Source :- DNA

Mumbai Property Prices

Why home prices aren’t falling despite weak demand

6:30 AM

Why home prices aren’t falling despite weak demand

Rising costs limit builders’ ability to act on RBI Governor’s call to lower prices

High-rise luxury apartments

The real estate sector across India is witnessing a curious paradox. Builders and promoters are facing a pile-up of inventory and are under pressure to lower prices – most recently from RBI Governor Raghuram Rajan. But they find themselves unable to lower prices even to incentivise sales because of high construction costs arising from liquidity issues, and delays in obtaining approvals.

Vineet Relia, Managing Director, SARE Homes, said, “Most developers are running high debt, and servicing that is eating into their wafer-thin margins. I don’t think there is any room to cut prices further.”

Rajan’s call to developers to lower prices came in the context of a decline in housing demand in recent months. A Knight Frank survey for July-December 2015 put the unsold inventory across India at about seven lakh housing units. The survey covered Mumbai, NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata, and Ahmedabad.

Mudassir Zaidi, National Director, Residential Agency, Knight Frank India, said, “The market is a fraction of what it was in the best of times. In the residential segment, launches and absorption failed to impress, although there has been a marginal increase in transactions.”

North-South divide

In cities across northern India, real estate prices have since 2013 grown at their slowest pace, according to an analysis by real estate data and analytics platform PropEquity. The South, on the other hand, has done well largely on account of end-user demand, especially in IT-driven growth clusters.

According to the PropEquity data, in recent months, prices quoted by developers have remained stagnant, and are only marginal higher than in 2013.

“The North saw had the lowest price increase since 2013, led by a price decline of 1.4 per cent in Gurugram in 2015 over 2013. For all other cities, price increase has been subdued, in the 2-3 per cent range. NCR’s poor performance is largely attributed to poor project fundamentals and infrastructure issues,” Samir Jasuja, Founder and Managing Director, PropEquity, said. Southern cities have done relatively better, particularly Whitefield, Electronic City, Sarjapur Road in Bengaluru and Gachibowli, Hi-Tech City, Manikonda, Kondapur in Hyderabad, Jasuja said. Hyderabad, he noted, also benefited from political stability and attractive entry prices. Cities in India’s western region have been largely stable with a negative bias.

Discounts, freebies on offer

There is, however, a significant difference between the prices quoted by developers and the actual prices arrived at after negotiations. “Actual prices today can be 5-15 per cent lower than quoted prices across markets,” Jasuja added.

Developers have also been offering freebies such as attractive finance schemes, gift vouchers, foreign trips and free parking space to entice buyers.

Alok Kumar, President of Federation of Apartment Owners Association, Ghaziabad, said, “Builders are not cutting rates, but are offering free club memberships or parking. Builders say that selling existing inventory at lower prices will result in trust deficit with buyers who have already bought a property.”

“If we start cutting prices down, we are sending word out that the net asset value is going down,” Relia said.

The sector awaits the establishment of real estate regulatory authorities (RERA) under the Real Estate Bill, which is expected to infuse confidence among prospective buyers.

“There is still a lot of uncertainty about the recently announced reforms by the government, be it REITs or RERA. We believe market sentiment will get a boost if reforms by government and regulatory bodies are implemented,” Zaidi added.

Time for price correction

Real estate activist Chandrashekhar Prabhu said the housing market in Mumbai and other cities has to correct itself because there are no buyers. However, the sustaining power of builders, who continue to hold on to their housing stock, has checked a price fall, he said.

Prabhu claimed that developers are keen to attract FDI in their companies, and firms were carrying on internal trading to show ‘paper transactions’ at elevated cost.

Bengaluru: on the ascendant

Residential real estate prices have been increasing in Bengaluru for the past three years. “Builders cite the increasing cost of materials and cost to increase prices every quarter,” said A Thirumurugan, Proprietor, M/s Mayan & Associates, Property Consultant & Advisory.

Prices are up 10-30 per cent over the last three years depending on the areas, he claimed. South and Central Bangalore are stable, while the North is witnessing a rapid appreciation because of higher demand.

The city has a demand for 50,000 to 60,000 units a year, not counting the demand from migrant population.

The residential real estate market has a direct co-relation with commercial real estate. “The city is witnessing robust demand from companies to expand their presence, which in turn attracts migrants who stoke demand for residential units,” said Thirumurugan.

In the past three years, builders and developers have begun to move away from the city centre to where the demand exists. The city is seeing a push towards rural areas for affordable housing on Doddaballapur road, Kengari and Magadi road.

Farook Mahmood, CMD, Silverline Realty, and President of FIABCI-India, said: “Development is heading north of the city towards the airport and Devanahalli. The growth at the city centre is stagnant, and the outskirts are witnessing growth.”

According to Thirumurugan, “Despite slow sales, luxury housing still sells. Areas around Hebbal, Whitefield and Sarjapur are seeing mid-luxury offtake. Sale of super luxury units still revolve around Whitefield, where villas and plots are getting sold at ₹5-10 crore.”

Thirumurugan further said, “Apartments that were selling at around ₹3,500- 4,000 per square feet three years ago are now selling at ₹4,500- 6,000 per square feet due to good demand from the migrant population.”

Farook Mahmood said prices varied across locations. Overall, capital values had appreciated at an annualised rate of between 10 per cent and 30 per cent, he added.

Chennai: holding ground

The Chennai residential market is stabilising as home sales have improved slightly in tandem with a slowdown in new launches. Prices have remained stagnant over the past year and a half.

So, has there been a correction in the market? No, say builders. With prices holding for close to a couple of years now, where is the option to slash prices, they ask. Even with built-up, unsold stocks on hand, builders are not cutting prices; at best, they are offering flexible payment options.

Inventory estimates in Chennai and its suburbs range from 45,000 to 60,000 units. Typically, for a down payment of 10-20 per cent of the house cost, builders take on pre-EMI payments so that the buyer does not shell out money from his pocket before taking delivery.

Land prices have been high, and the cost of construction is going up, with increasing labour costs and other inputs, even though steel and cement have been relatively stable during this period, say builders.

Ajit Kumar Chordia of Khivraj Group, a leading residential and commercial space developer in Chennai, says inventory levels in the city have started to come down to about eight quarters’ sales. This has to drop to about 4-5 quarters’ stock before new launches get under way.

Chordia, who is also president of the Chennai chapter of Confederation of Real Estate Developers Association of India, says it is a buyer’s market for now. Yet, developers do not have much room to slash prices. “Whatever can be done has been done,” he feels.

Guideline values are continuously increasing, and VAT and new elements of service tax are all adding to the cost, as does inflation at 4-5 per cent a year.

Ravi Appaswamy of Appaswamy Real Estates, a premium builder with projects in the heart of the city, says that only those developers with land purchased at high costs are feeling the pressure of a slow market. Projects in a good location, with viable pricing, are in demand.

Appaswamy Real Estates does not have large unsold inventories, he claimed; “may be about 2-3 per cent of completed houses.”

Housing stocks in the city had increased because developers had been optimistic about projected growth, he felt.

Another Chennai-based developer with projects in the southern suburbs on the Old Mahabalipuram Road said apartments in Siruseri and Navalur, which had sold at ₹4,100/sft a couple of years ago are now being sold at about ₹3,800/sft. And these are apartments that are to be handed over in a couple of months. Under normal market conditions completed apartments should fetch a premium over apartments booked at launch. So the price correction is not just ₹300, but more than twice that.

Srinivas Acharya, Managing Director, Sundaram BNP Paribas Home Finance, says private equity funding has helped buyers to hold on to stocks. Also, such funds demand a high rate of return, so there is some resistance to lowering prices. The high price that builders have paid for land limits their options.

According to international property consultants Jones Lang LaSalle, the capital value ranges around ₹12,000-15,000 a sq ft in T Nagar and Nungambakkam in the heart of the city; around ₹6,500-9,000 in Guindy, in the periphery; and ₹4,500-6,000 in Sholinganallur, further to the south.

(With inputs from Navadha Pandey, Bindu Menon, Rahul Wadke, Anil Urs, and R Balaji)

Source:- The Hindu Business Line

Buying a House

Buying dreamhouse right builder important

7:00 AM

Buying your dream house from the right builder is a lot more important than you think

With the property prices likely to fall, home buyers are busy browsing the best options available to them. But considering the fact that there has been a steady increase in delays and undelivered apartments, it makes it imperative for a home buyer to evaluate a developer's reputation in the market before investing in his project. BI India lists down four factors as to why one must check a developer's credibility before buying his dream house.

The legal angle

A developer with a good reputation in the market assures that all legalities of the project are met with. It should be noted that for any real estate project, 57-odd permissions are required.

"Reputed developers will ensure that their projects have all the certificates and permissions required by the local authorities. Again, their reputation is at stake and they will not take such matters lightly," said Arvind Jain, managing director of Pride Group.

He added, "All instances of illegal construction that one reads of in the papers today have one factor in common - these projects are by unscrupulous or inexperienced builders who either did not care to get their projects properly approved, or did not know of all the approvals and permissions that they need to obtain."

Timely delivery

A developer enjoys a strong reputation in the market because of his work. And in the real estate industry, timely delivery of the flat is extremely important. Jain explained

According to industry players, reputed developers are sufficiently funded and hence generally don't push the deadline beyond an acceptable limit. "Besides, they will under no circumstances jeopardize their credibility on the market," noted Anuj Puri, country head for JLL India.

Zero-defect Homes

"For reputed developers, credibility is the key to their brand recognition - it is their primary competitive advantage in the market. They will never offer a homes that have construction defects like bad electrical fittings/wiring, faulty plumbing, water seepage, bad drainage, etc. Quality construction also includes the right size and shape of rooms that are in sync with the overall project design," stated Jain of Pride Group.

Quality Assurance

No one wants to buy a property where the basic structure constructed is shaky. A good developer ensures that the building erected is of the best quality with a strong quality check mechanism in place.

"Their engineers will check and monitor every aspect of the construction process, including soil compactness, proper cement/sand ration, slump testing, drainage engineering and earthquake resistance of the building. This ensures that the project will not suffer from construction-related defects in the future. Choice-based remodeling aside, buyers will not have to pay for structural repairs in the future," elaborated Puri.

- by Purba Das

Source :- Business Insider India

Mumbai Realty Prices

Mumbai realty prices may rise 6% in 2016 against 3.3% in 2015: JLL India

3:10 PM

Mumbai realty prices may rise 6% in 2016 against 3.3% in 2015: JLL India

The average residential property prices in Mumbai and suburbs saw a modest year-on-year appreciation of 3.3 % in 2015 against 7% in the year-ago period, according to real estate research consultancy firm JLL India.

The price rise for housing properties was expected to be in the range of 6-7% in 2015.

“The forecasted increase in residential property prices in 2016 is 6%. A sign of any residential market’s increasing maturity is evidenced by a gentler price appreciation—a process which has been very much in evidence in the country’s financial capital,” the report said.

Unlike during the period before the global financial crisis—when prices saw double-digit year-on-year growth across the city and suburbs—the market has seen a rather subdued growth in prices over the last couple of years.

According to the report, this demonstrates Mumbai’s maturing residential real estate market and brings in good news for scores of end-users who wish to own a house in the city that has India’s priciest real estate.

Indeed, factors such as a modest increase in prices, new launches at lower price points and flexible payment schemes have managed to pull fence-sitters to the market, especially in Mumbai. As reported by VCCircle, the city seems to be pulling out of a slump with a pick-up in sales momentum in Rs 1-3 crore bracket. The momentum is being led by pedigreed developers with better track record on delivery and corporate governance.

According to the JLL report, south-central Mumbai and the eastern suburbs saw the maximum appreciation at 4.3% and 4%, respectively, followed by north Mumbai and western suburbs at 3.9% and 3.5%, respectively.

Outside the city and suburbs, Thane saw a 3% appreciation in capital values, while the figure for Navi Mumbai stood at 6%.

However, the report cautioned that it does not mean that Navi Mumbai is doing better than Mumbai—there is a lot of unsold inventory in many of its pockets. It is only in select precincts that Navi Mumbai is witnessing good demand.

It further said 2015 figures also reflect how developers have shown unprecedented flexibility and kept costs stable by absorbing some of the increased holding costs. Some home buyers reciprocated by jumping the fence and buying houses at attractive prices.

Moreover, developers started to gauge market dynamics with greater precision and adapted their product offerings as per the changing demand. Smaller units have been in demand lately due to their relatively affordable ticket sizes and many builders are now offering them even in premium locations. Given the rather sluggish demand for larger homes as they are not affordable, the headroom for price appreciation in this category has reduced.

Source :- VCCircle

Buying Property

Indians buying land in Goa?

7:30 AM

Most Indians are buying land in Goa?

We tell you why...

Image Credit: Indiatimes.com

The high-flying Indians who love to travel within the shores of India are betting big on weekend homes. And Goa has been among the favourites with many scouting their second homes in the Goan surburbs.

"With increasing demand, more and more places are being successfully marketed as weekend home destinations: Lavasa, Lonavala, Alibaug and Igatpuri near Mumbai for weekend getaways, vacation spots like Mussourie, Ooty, Coorg and Goa, and the likes of Haridwar for the religiously inclined. What attracts buyers in this segment are primarily a serene location with good weather, good infrastructure and potential for rental income," said Ashwinder Raj Singh, CEO, Residential Services, JLL India.

This is followed by other weekend property markets such as Shimla, Kasauli and Kerala, with Wayanad in Kerala being the most sought-after in the state. So what really triggered the demand for weekend homes destinations in an otherwise dormant sector, where unsold inventories have been piling up?

"After the basic needs of shelter are met, most people have an in-built desire to own properties to use purely for relaxation. Obviously, such properties need to be in the more bracing and beauteous environs than the cluttered, polluted cities. Because quality hotel rooms in most getaway cities are limited and also very expensive, people like to invest in weekend homes there for short, hassle-free getaways. With the basic luxury factor vested in such locations' mountains, lakes or religious shrines, these homes provide their owners with quality family time away from their routine city lives and often serve the extended purpose of providing a peaceful post-retirement life," he added.

So will this segment spearhead the revival of the sector? Experts feel otherwise. According to Singh, weekend homes are bought by those home buyers, who have already purchased their primary homes.

"One spends only a limited amount of time per year in a weekend home. Nevertheless, there will be regular expenses on maintaining the property. If one does not wish to put the property on rent, the costs would include keeping a caretaker. Besides, if the property is to be put out on rent throughout the year, there would be expenses on regularly upgrading the basic amenities," he noted.

Well, looks like weekend homes may not be exactly what the sector has been looking for, nevertheless, they seem to be the perfect way to make a long term investments.

- by Purba Das

Source:- Business Insider India

Commercial Real Estate

Commercial real estate on a rise in India, upped 8% from last year

7:00 AM

Real Estate Act

Real Estate Act comes into force

4:09 PM

Real Estate Act comes into force from Sunday, 1st May, 2016

An official statement said that the rules will be made 'within a maximum period of 6 months' according to the provisions of the Act

The Real Estate Act, designed to protect consumer interest and improve accountability of developers, will come into force on Sunday, setting in motion the process of making necessary operational rules and creation of institutional infrastructure.

An official statement said that the rules will be made "within a maximum period of 6 months" according to the provisions of the Act.

It also said that the proposed authorities, which will ensure timely execution of projects, and the appellate tribunals to adjudicate cases will come up in one year.

The Act makes it difficult for promoters and builders to delay projects and gives relief to home-buyers and proposes imprisonment of up to three years besides monetary penalties for any violation of rules.

The law also makes it mandatory for all residential and commercial projects to register with the regulator and will apply to new and ongoing projects.

"As per the notification announcing the commencement of the Act on May 1, 2016, rules under the Act have to be formulated by the central and state governments within a maximum period of six months, ie by October 31, 2016, under Section 84 of the Act," the statement said.

The Ministry of Housing and Urban Poverty Alleviation (HUPA) has notified 69 of the total 92 sections of the Act on Wednesday, the statement said.

Appellate Tribunals will be required to adjudicate cases in 60 days and the regulatory authorities will have to dispose of complaints in the same number of days.

"...A committee, chaired by secretary (HUPA), has already commenced work on formulation of model rules under the Act for the benefit of states and UTs (union territories) so that they could come out with rules in quick time besides ensuring uniformity across the country," the statement said.

"The ministry will also will come out with model regulations for regulatory authorities to save on time," the statement added.

A proposal for a law for real estate was first mooted at the National Conference of Housing Ministers of States and Union Territories in January, 2009.

- PTI
Source:- Business Standard

Pages

Piramal Fund Management invests in Lodha Project

Piramal Fund Management invests Rs 425 crore in Lodha Project

The investment is towards construction of premium residences being developed by Lodha Group in a project with more than five lakh square feet of saleable area

Govt must ease approval process for realty projects: Godrej

Don’t forget to do these when you next rent your house

Don’t forget to do these when you next rent your house

Will the new Real Estate Act be a game changer?

Will the new Real Estate Act be a game changer?

The new Act will force more transparency and disclosure from builders and will encourage investments into real estate