360 degrees Real Estate Services: October 2016

Young people should buy a house : Rakesh Jhunjhunwala’s investment mantra

6:29 PM

Rakesh Jhunjhunwala’s investment mantra:
'Young people should buy a house; jewellery should be the last thing to purchase'

Rakesh Jhunjhunwala is of the view that jewellery is the last thing that should be there on your 'Things to Buy' list!

Rakesh Jhunjhunwala advises focus on buying a house.

Rakesh Jhunjhunwala is of the view that jewellery is the last thing that should be there on your ‘Things to Buy’ list! In an interview with ET Now, Jhunjhunwala advises focus on buying a house. “One advise I will give to every young Indian is that the most difficult thing in urban India is housing. So, the first thing that you should do is try and buy a house. That gives a great sense of security,” he says. “…and although I am a shareholder in Tanishq, jewellery should be the last thing you buy. You must not only be investing in jewellery,” he says when asked for his investment tips.

Jhunjhunwala also feels that people should seek professional advise when investing for the future. “People seek advise from me thinking that it will help make them very rich. I always say take professional advise. If I have fever, I take a Crocin, but my mom and wife call a doctor for themselves. Similarly, for investing you should take professional advice and plan,” he says. “Don’t be a spend thrift, don’t be a kanjoos (miser). Strike a balance between the present and the future,” is another mantra that Jhunjhunwala believes in.

Earlier this month, Rakesh Jhunjhunwala told CNBC-TV 18 that he has committed to donate 25% of portfolio or Rs 5,000 crore, whichever is less, on July 5, 2021. Incidentally, that’s the date on which Jhunjhunwala turns 60. “I don’t want to lecture anybody, I would only say this to my fellow people would be to give, however small. Give what your pocket permits. I don’t think a person who is giving Rs 10, is giving less than me,” he had said. “Today the biggest worry for me is not that how much wealth I will earn tomorrow, the biggest worry is that I have to fulfill this commitment of Rs 5,000 crore to create an organisation that will be able to use this money in a way that can really make a difference to the society,” he added.

Source : The Financial Express

Ultra Luxury Housing

‘By Invitation’ only Projects : Ultra Luxury Housing

2:12 PM

‘By invitation’ only projects

Developers are catering to HNIs with ‘by invitation only’ projects, equipped with world-class amenities that most can only dream of. We look at what goes into making these exclusive projects

There is real estate and then there is something called ultra-luxurious real estate. It’s that property which is out-of-bounds to the well-heeled and information about it is available only to a handful of privileged ‘insiders’. Such properties come under the category of ‘by invitation only’ residences. One has to belong to a particular segment of society in order to even be considered as a potential buyer. This is a category of luxury real estate where aspiring buyers must prove their worth to the developer in ways that transcend the ability to pay unheard-of sums of money.

What are ‘by invitation’ residences?

These special projects are designed after a lot of research about potential buyers who can afford the best and rub shoulders with the who’s who of the world. Thus, these exorbitantly-priced projects include features and facilities which most mortals can only dream of. Some of the ‘by invitation only’ projects coming up in cities like Delhi, Mumbai, Pune and Bengaluru, are in prime locations with private elevators, indoor swimming pools and spas, and interiors provided by the world’s top-notch designers. These projects are designed by renowned architects, and the units are available either as villas or duplexes.

The selection criteria

The prices of such properties easily crosses the Rs 40-50 crore mark, sometimes a lot more. In fact, the prices are growing rapidly as this market segment is still evolving. However, money is not the only criteria. Developers look for buyers who fall in a very elite social bracket and pursue a lifestyle that complement this bracket. They build such projects for owners of billion-dollar organisations, CEOs and influential clients. They seek to create neighbourhoods to be exclusively inhabited by such individuals.

Benefits to owners

Owners of such homes need to do little else to proclaim their status. They move into homes with world-class facilities, and a level of privacy and a quality of life otherwise unheard-of in the urban context. Also, such a neighbourhood gives them limitless opportunities to further their business interests, and to grow their repertoire of elite social contacts.

Benefits to the developer

One might argue that this is a small size of the market segment, and is not worth the effort and time it takes to cater to it. However, such developers are looking at long-term benefits, far beyond the immediate business potential. Obviously, the profits from these exclusive projects are phenomenal but the brand value for a developer who creates such exclusive dream homes, is limitless. A builder who caters only to the mass market and churns out more or less similar projects, cannot appear on the radar of high net individuals (HNI).

Growth prospects

Indian HNIs are a fast-growing tribe. The ultimate goal for these buyers is to join the ranks of the most respected, powerful and privileged few. In other words, the market for ultra-exclusive, ‘by invitation only’ homes may be small, but it is growing. Additionally, to cater to this need, a far-sighted developer definitely will invest effort, time and massive amounts of money. In fact, the best strategy for any Indian developer today, is to be present at both ends of the spectrum of the real estate market: affordable housing as well the ultra-premium that caters to a handful of buyers.

- by Ashwinder Raj Singh

(The author is CEO – residential services, JLL India)

Source :- Housing.Com

Festive Season

Should You Rush Into Buying Property This Festive Season

5:05 PM

REITs

REITs: Real Estate Investment Trusts

8:30 AM

REITs: Real Estate Investment Trusts

REITs help make investments in real estate more accessible, long-term and income oriented.

Aniruddha Chowdhury/Mint

A real estate investment trust (REIT) is a platform that allows investors to make securitised real estate investments in small amounts. It works much like a mutual fund, pooling funds from various investors into one basket.

Real estate is a physical asset. Through REITs this asset is broken into several parts and converted into a paper investment, or securitised. REITs help make investments in real estate more accessible, long-term and income oriented.

They also help to build an efficient secondary market for developers to exit the projects. REITs usually invest in commercial properties and use the rental income to give dividends to unit holders. REITs mostly invest in completed properties to get a stable income stream. They tend to bypass under-construction properties .

Globally, there are two major kinds of REITs: Equity and Mortgage.

Equity REITs

These own or develop and hold the properties, either individually or through special purpose vehicles (SPVs). Hence, they are referred to as equity REITs. Their income is in the form of rent received from leasing the property. This rent gets transferred to unit holders as dividend.

Mortgage REITs

These operate mainly by lending money to property owners—in exchange for a mortgage claim on the property, or through mortgage-backed securities. Their earnings come from the interest charged on such loans.

Hybrid REITs are a combination of equity and mortgage.

The advantage of REITs is that you don’t need a large sum to profit from real estate. REITs are regulated and managed as a trust, which means there is accountability and audit of how investor funds are used. Real estate is often considered an unorganised sector and there can be ambiguity in transaction values.

With REITs, the transactions are monitored and there is a specified method of valuation, so ambiguity is reduced.

- by Lisa Pallavi Barbora

Source :- LiveMint

Festive Realty

Real estate festive discounts: Developers change strategy to focus on quality

3:33 PM

Real estate festive discounts: Developers change strategy to focus on quality

Contrary to previous years, many builders are likely to focus on showcasing key aspects of projects like approval status and completion stage

Real estate developers are ready with a slew of offers in the hope of boosting sales.

Photo: Aniruddha Chowdhury/Mint

This festive season, real estate developers are again ready with a slew of offers in the hope of boosting sales. But this time, many are going for a different marketing strategy in view of the upcoming real estate regulations.

While the usual freebies, discounts and incentives are around this time too, property advisors and brokers said contrary to previous years, many builders are likely to come up with more “intelligent marketing” and focus on showcasing the key aspects of projects like approval status and completion stage, thanks to the upcoming real estate regulations.

Few of the large developers like Oberoi Realty Ltd and Tata Housing Development Co. are staying away from introducing any special offers for the season, while many others said that they do not plan to release any new inventories during the next three months but rather focus on selling their finished products.

“Compared to last year, markets are slightly better in certain micro markets. Every quarter, sales are happening. During this festive season, unlike the previous years, developers will not only talk about incentives and price discounts, but will be more quality oriented. Lot of developers will talk about location, approval status and completion stage of the projects apart from amenities and social infrastructure around it,” said Vikram Goel, HDFC Realty Ltd, the real estate advisory arm of Housing Development Finance Corp. (HDFC).

Godrej Properties Ltd has lined up with gift vouchers like home furnishings and modular kitchens for some of its key projects. Another Mumbai-based realty firm Rustomjee said the company is offering flexible payment plans for few of its nearly-completed luxury projects in the city where buyers can book an apartment by paying as low as 5% of the total cost.

However, many of the builders in Delhi and National Capital Region (NCR) have already started rolling out gifts ranging from free car parkings, gold coins to giving away two-wheelers on every booking done till the end of the month.

For instance, Noida-based Ajnara India Ltd said it is gifting a Honda Activa Scooter on every booking in its project Ajnara Integrity till 10 October, while others like Ascent Buildtech Pvt. Ltd and SCC Builders are giving special discounts of up to Rs10 lakh on every booking in many of its projects. Delhi-based TDI Infrastructure is giving 15% discount on the basic sale price in two of their township projects in Kundli (Haryana) and Mohali (Punjab). Akshay Taneja, managing director, TDI Group, said both these projects have had slow sales in the past few months because of the slump in the market.

“We are giving away a discount of around Rs. 1 lakh for every booking in our project called Sampoornam in Greater Noida and also waiving some of the preferential location charges. Beyond that we are not offering much as special offers for the season but rather focus on delivering the products on time,” said Avneesh Sood, director, Eros Group, a Delhi-based realty firm.

He said around 80% of the project has been sold and the company expects to clear few of the bigger sized units like 3-bedroom apartments which are harder to sell by offering special discounts during the festive season. Around 300 units of such apartments are yet to be sold in the project, he added.

“This year, a lot of the projects launched between 2010 and 2012 have been completed and got a completion certificate. Till last year, people were apprehensive of the completion status and compliances. A lot of those doubts have been cleared and most buyers have also realized that prices cannot go down below the prevalent prices. As compared to last year, we are likely to witness some sales velocity,” said Pankaj Goel, secretary, Confederation of Real Estate Developers’ Associations of India (Credai), NCR.

However, many others believe that for sustainable growth, developers need to work on bringing back the confidence of buyers on a long-term basis. Samantak Das, chief economist and national director of property consultant firm Knight Frank India, said that though expectations are generally high, festive seasons have not been able to boost the market in the last three years.

“For sustainable growth, we need to bring the confidence of buyers and developers should focus on timely delivery as well as correcting the price points. It will take a couple of quarters to regain the confidence of developers,” he said.

- by Bidya Sapam

Source :- LiveMint

Repo Rate

RBI cuts repo rate by 25 basis points

2:43 PM

RBI cuts repo rate by 25 basis points;
real estate sector urges banks to quickly lower home loan rates

The real estate sector is pinning its hopes on lenders to quickly transmit the RBI's decision of 25 basis points cut in repo rate into lower lending rates to boost home sales.

RBI’s decision of 25 basis points cut in repo rate into lower lending rates to boost home sales. (Reuters)

The real estate sector is pinning its hopes on lenders to quickly transmit the RBI’s decision of 25 basis points cut in repo rate into lower lending rates to boost home sales.

“Following this rate cut, it is critical for banks to reduce interest rates so that the benefits can be enjoyed by the end user. The new governor, Urijit Patel’s move to cut rates by 25 bps will infuse confidence in the system thereby providing a boost to not only the real estate sector,” Surendra Hiranandani, Chairman & Managing Director, House of Hiranandani, said.

Hiranandani said lower home loan rates would provide greater filip to the real estate sector. “While RBI has cut policy rates at regular intervals, banks have not followed suit by reducing them proportionately. The combination of lower interest rates alongside the progressive measures taken by the government towards reforms has the potential to reinvigorate demand in all segments of the economy,” he said.

Shishir Baijpal, Chairman & Managing Director, Knight Frank India, agrees. “A 25 bps cut in policy rate is encouraging and signals well for the real estate sector. We do hope that the transmission of the rate cut is efficient and banks pass on the benefit to the customers in similar magnitude,” he said.

Leading real estate players also said that the RBI and government should impress upon lenders to lower lending rates. “The Finance Ministry and RBI should ask banks to transfer the benefits to the end consumer. This initiative has to be transferred to its end beneficiary for any positive effect on ground to the ongoing economic cycle,” Amit Modi, Director, ABA Corp and Vice President CREDAI Western UP said.

Anuj Puri, Chairman & Country Head, JLL India, says RBI move will improve sentiments, but only marginally. “Unless Real Estate Regulatory Act (RERA) and other pro-consumer policies come into play, buyers will continue to be wary. Therefore, we can expect only a marginal improvement in sentiment on the back of this rate cut. At this point, there is also no ready answer to the question of to what extent banks will actually pass on the benefit of the rate cut to borrowers,” Puri said.

Source : Financial Express

Office Space

Singapore’s DBS Bank set to lease 1lac sqft in Mumbai

4:37 PM

Singapore’s DBS Bank set to lease 100,000 sq.ft in Mumbai

DBS Bank’s plan to lease 100,000 sq.ft at Express Towers, Nariman Point is one of the biggest office space deals in the area since the 2008 financial crisis

A file photo of Nariman Point, Mumbai.
The DBS Bank deal comes at a time when many firms have moved their corporate offices to either Bandra Kurla Complex (BKC) or Lower Parel.

Singapore’s DBS Bank Ltd is close to leasing nearly 100,000 sq.ft at Express Towers, a 25-storeyed building in Mumbai’s Nariman Point, in one of the biggest office space deals in the business district since the 2008 global financial crisis that prompted many corporates to leave the locality.

The bank is close to signing the lease agreement at a monthly rental of Rs. 230 per sq.ft, which works out to Rs. 28 crore a year, three people aware of the development said, on condition of anonymity.

Global private equity firm Blackstone, which jointly owns Express Towers along with Pune-based Panchshil Realty Ltd, declined to comment.

A DBS Bank official involved in the development said the bank, which currently operates from a 72,000 sq.ft office space at Fort House in South Mumbai, has been looking for a more spacious office.

“We have run out of space and we need a bigger office. That’s one of the reasons why we want to move out to a new place. Grade A building with right amenities and good location are some of the factors we have considered while looking out for our new office,” said the official.

DBS Bank declined to comment on the development.

The transaction comes at a time when many multinational companies and financial institutions have moved their corporate offices over the last few years either to the city’s upcoming financial hub Bandra Kurla Complex (BKC) or Lower Parel in central Mumbai.

“The global financial crisis was a big trigger for many of the office occupiers to move out of Nariman Point. High rentals was one of the factors but the long term reasons were that the buildings were getting old, the floor plates were much smaller and expansion was not possible for many of the companies. In addition, there was no fresh supply of offices in the area,” said Ashutosh Limaye, head of research and real estate intelligence service at JLL India, a property advisory firm.

The last few years saw global banking companies such as Standard Chartered, Morgan Stanley, Deutsche Bank and Citigroup and consumer goods major Hindustan Unilever Ltd shifting their corporate offices to BKC and suburbs such as Andheri.

According to property advisors, leasing activity in Nariman Point has considerably slowed in the last few years, apart from few small deals. From a peak of around Rs 500 per sq.ft in 2008, rentals in the area have fallen to around Rs 220 per sq.ft, bringing them even below the BKC rentals of 230-250 per sq.ft.

“Every year, we have seen rentals falling by about Rs. 3-5 per sq.ft for the last two years,” Limaye said.

The last big deals in the area were Indian Hotels Co. Ltd leasing around 32,000 sq. ft and law firm led by Shardul Shroff leasing 26,000 sq.ft, both at Express Towers.

- by Bidya Sapam

Source :- LiveMint

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Young people should buy a house : Rakesh Jhunjhunwala’s investment mantra