Tag Archives: Indian property market

What makes Bangalore best investment destination?

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Bottom Line: What has made Bangalore real estate market so very different? Has Bangalore been just blessed with climatic conditions, thriving economy of the region and talent pool or the developers in the city have been conscious to learn from the mistakes of other markets?

Bangalore, Bengaluru, Bangalore real estate, Bangalore property market launches, Infrastructure in Bengaluru, Investment in Bangalore infrastructure, India real estate news, Indian realty news, Real estate news India, Indiaproperty market, NRIs in Bangalore, Track2RealtyBangalore real estate market has been the brand differentiator of Indian property landscape. Be it transparency, fair trade practices, construction quality, project delivery timelines or consumer satisfaction; the developers in the city have a much better track record.

What has made Bangalore real estate market so very different? Has Bangalore been just blessed with climatic conditions, thriving economy of the region and talent pool or the developers in the city have been conscious to learn from the mistakes of other markets?

In order to understand Bangalore it is imperative to assess the demand & supply equilibrium in the city, balance between commercial spaces and housing stocks, price point & median affordability and last, but not the least, the fair competition among the city-based developers.

Trivita Roy, Associate Director-Research & REIS, Jones Lang LaSalle India maintains there are multiple of factors to make Bangalore best investment destination. According to her, Bangalore is a stable market. It may not give the kind of returns that investors may get in other speculative markets, but it gives them the confidence that it is a stable market. So, Bangalore makes a safe market to invest. Second is the kind of quality, transparency and professionalism that a developer shows here is comparatively best in the country.

“A lot of developers here are listed companies. Also, even if they are not listed at least they have the processes in place that gives a confidence to the investors that it is a process-oriented market. And then the transparency and information availability in Bangalore is far more stronger compared to other markets of India,” says Roy.

Ashish Puravankara, Managing Director, Puravankara Projects points out that the developers in Bangalore have inherited a market where the demand is so high that they are not competing on demand. It is better to support each other on the issues that are affecting the industry. There is a huge demand in Bangalore and it is probably the only city in the world where the population has doubled in the last once decade. 

“Most of the investment in Bangalore is for end use and it is a long-term investment; there is no speculative investment in Bangalore for capital appreciation. Just look at the demand of office spaces; it is the highest in Bangalore. The most important factor here is the cost of housing and if you compare the same quality of apartments in other cities you will find that Bangalore housing market is really value for money. What we are selling at 6,000 rupees per sq feet, you won’t find that at less than 17,000 to 18,000 thousand rupees in other metro cities,” says Puravankara.

J C Sharma, Vice Chairman & Managing Director, Sobha Limited adds that the overall culture of Bangalore as a city is very different. The way IT industry flourished here, the expectations of the customers were very different. The developers in this market just raised their bar to meet those expectations. 

“The IT professionals wanted that kind of professionalism and transparency that they were providing to their customers. So, there has been healthy competition among the developers; they have been competing to provide quality projects. Professionalism in Bangalore market has been the best,” says Sharma. 

What is also keeping the Bangalore property market realistic is that most of the housing stock in the city is below rupees 5000 per sq feet that is  quite reasonably priced. The analysts fear that the moment price point goes to Rs. 7,000 or 8,000 per sq feet then that would lead to the saturation point. Of course, some of the secondary locations are reaching up to that price point.

Moreover, the new locations in North part of South-East part still have the potential to grow. Bangalore has been growing from all sides. In 2002 everyone thought Whitefield is not a good location to invest but those who invested are today enjoying. The way the commercial spaces are being added and the projected export of IT by 2020 worth 200 billion dollars from India in which the share of Bangalore is expected to be 40 per cent. So, when 2 million people will be catering to IT only, even a layman understanding of real estate would say that the growth has just begun.

By: Ravi Sinha

GST not tax neutral for homebuyers

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Bottom Line: GST was supposed to be tax neutral, if not reducing, the high tax burden of homebuyers. However, it has increased the tax burden and prompted the prospective homebuyers to wait for ready to move property.

Tax, Tax in Real Estate, GST, GST in real estate, Goods and Services Tax, GST liability for homebuyers, Tax liability for homebuyers, GST on ready to move property, Tax burden on homebuyers, GST increasing taxes in property, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2Realty “GST was touted to reduce our tax burden in the housing market. Even though I had moderate expectations with the new taxation, the least that I was expecting was to make housing costlier for the average homebuyers like me. A few developers are openly advertising to share the GST burden of the buyers whereas it is not sharing but only passing on the advantages of Tax Input Credit with the buyers. I feel the GST has by and large failed its purpose in the housing market add made houses costlier,” argues Anubhuti Roy, a fashion designer in Gurgaon.

It is true that the GST burden is today a huge deterrent in the housing market and a large share of homebuyers are now waiting for the project to be ready as the ready to move apartment won’t attract GST burden. The problem, however, is with millions of buyers who are in the mid cycle of construction and the GST has suddenly added to their already over stretched budget in the housing market.

Take for instance, a typical apartment in Noida would cost INR 60 lakh. Since the cost of construction was estimated to be 25% of the project cost, the Service Tax burden has been 3.75%. Add to it, the Stamp Duty of 7% and a few thousand rupees in the registration process. So, all in all it has not been more than 11%.

Now with the new taxation, the project would cost 12% GST (18% GST minus land component) with the additional burden of 7%. So, the tax burden for a new homebuyer is 19% that was earlier around 11%.

Of course, over and above the tax calculation lies the fact that the developers can get Input Tax Credit that they can pass on to the buyers. The way the real estate market operates and to the extent demand-supply is lopsided, added with the developers’ financial clout to hold on the inventory, only a handful of developers have thus far announced to pass it on to the buyers, glorifying it as sharing of GST burden.

Why GST is not tax neutral for housing? 

GST replaces Service Tax only and not entire set of taxation including Stamp Duty & Registration

Even with anti-profiteering clause, a check on developers passing the benefits of Input Credit to buyers a tricky affair

Tax difference between Service Tax and GST is huge to be bridged with Input Credit

Higher tax slabs on construction materials (Cement 28% for example) will escalate prices

Developers have their own reasons why they are not reducing the prices to pass on the Input Credit to the buyers. It is generally maintained within the built environment of real estate that calculation of revised sale price is a complex as well as time-consuming task. Developers have to depend upon their contractors to know the VAT and Excise Duty and also have to wait for the project to complete before they know how much price difference is possible in the final calculation. Moreover, the price difference in not enough to bridge the gap between GST at 12% and Service Tax at 3.75%

Aditya Kedia, Managing Director, Transcon Developers maintains that the real estate sector is used to be the most complicated sector as far as taxation is concerned. Almost all kind of tax that can be thought is levied on this sector in direct or indirect manner. In GST regime also, other than GST many state & local taxes are levied on the sector e.g; Stamp duty, registration charges, Labour Cess, Property Tax, Municipal Tax, Development Charges etc. and there is yet no means to subsuming them.

“With 12% GST, 6% Stamp Duty and Registration and many other local taxes, the sector is burdened with many invisible taxes. If all these taxes have to be subsumed under GST, then rate has to go up or the government has to compensate the local bodies,” says Kedia.

Parth Mehta, Managing Director of Paradigm Realty agrees the the GST will not totally reduce the overall tax burden but yes it will portray a good picture of the real estate sector which was a dire necessity. The real estate the market may witness maximum tax evasion is a myth as confirmed by Finance Minister Arun Jaitley. Also, he has recently said that GST council will consider bringing it all under the indirect tax levy.

“Higher tax slabs are extensively hurting the real estate sector. Cement prices are going up marginally, as the GST council has announced 28% tax rate on the product. As the cement industry, this rate was above than expected. The increase in the tax slabs like this on materials will be naturally transferred to the customers,” says Mehta.

Nikhil Hawelia, Managing Director of Hawelia Group points out that  the aim with GST has been to keep it more or less revenue neutral with taxation of the entire set of material being procured for construction of a single project. But in case of an ongoing project where the stages of work progress is different, there this statement is difficult to justify as most of the material being used for finishing is in the highest tax slab which directly affects the cost of construction.

“At this juncture of almost 5 months past implications of GST most of the manufactures are satisfying their greed by not passing on the benefit of Excise Duty being charged in the previous tax system and directly increasing their profits by the percentage taxation of this duty. So, studying the entire effect of GST on the overall taxation cannot be judged today and in practical terms, there is a wait and watch situation to see how the market moves based on the GST effect, to evaluate the actual burden,” says Hawelia.

It can be vouchsafed at this point of time that the overall cost of the houses even after passing on the benefit to the buyers is marginally higher and GST has thus failed to its objective of lower taxation or being tax neutral in the housing market. A back of the envelope calculation indicates that with GST of 12% on property transaction, cost has increased by 6-8%, in case no Input Credit is passed on by the developers to the buyers. Of course, with the provision of anti-profiteering clause, the developers are mandated in theory to pass on the benefit of Input Credit but even if they do so, the property price still increases to 1-3%.  

By: Ravi Sinha

 

Job losing NRIs not to fuel India’s housing

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Track2Realty Survey: The job losses of the NRIs won’t bring them back to India and fuel their investment into the Indian property market.

NRI, Non Resident Indian, Indian Diaspora, NRI investment in property, Property market for NRIs, India real estate news, Indian property market, Track2Realty, Track2Media, Indian Diaspora investment, NRI property management, NRI property management services, NRI due diligenceA perception has gained ground that the NRIs (Non Resident Indians) losing jobs in the US and other parts of the world have no choice but to land back home and invest in India’s housing market. The ground reality, however, is that these expat Indians don’t think this is a logical conclusion, finds a global survey by Track2Realty.

Nearly two third NRIs, as many as 62%, would wait & watch for the next few quarters. 54% are not convinced with the short to medium term economic growth prospect of the country. Even larger number, 74% feel it is not wise to get stuck with the investment in the Indian property market.

These are the findings of most comprehensive global online and off-line survey by Track2Realty, the real estate think-tank group. Track2Realty conducted this survey online, and then its global alliance partners also conducted off-line sampling.

The NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius participated in the survey. They were given a mix of open-ended and close-ended questions to assess their job prospect and investment choice in the Indian property market. The data was then collated by Track2Realty team to read the mood of the NRIs with regard to their investment choice in the Indian property market.

Key Highlights 

62% NRIs would wait & watch for the next few quarters even if lose the job

54% are not convinced with the short to medium term economic growth prospect of the country

74% feel it is not wise to get stuck with the investment in the Indian property market.

54% NRIs have apprehension to settle back to India

46% NRIs feel there are still better options in some other countries

Absence of skilled jobs & business opportunists deter as many as 58% NRIs to settle in India; 28% NRIs have blamed absence of lifestyle & quality education to their children; and 14% have other issues

74% NRIs don’t feel it is time to invest in Indian property

60% NRIs maintain Indian real estate is too over priced; 26% cite lack of clarity in the Indian market; 14% are yet not about frequent regulatory changes

68% NRIs fear a price correction, and 32% feel it is a game of long term investment

52% NRIs feel the property investment in Dubai is safer than India

58% maintain that Dubai offers pretty professional level playing field for both employment and conducting businesses 

What actually deters these expat Indians to come back home amidst the slowdown in the global market? After all, the policy changes in the USA and some other countries are discouraging foreign employees. Opinion is divided and while 54% of the NRIs have apprehension to settle back to India, 46% of them feel there are still better options in some other countries.

Among those who are not thinking to come back to India absence of skilled jobs & business opportunists deter as many as 58%. 28% NRIs have blamed absence of lifestyle and quality education to their children, while the rest 14% have other issues ranging from peer pressure to long-term career goals.

Do they feel it is time to invest in the Indian property market? Majority of them, as many as 74%, feel No. For a vast majority of the expat Indians who are not betting on the Indian real estate, exorbitant property prices is a big deterrent with 60% clearly saying Indian real estate is too over priced. 26% cited lack of clarity in the Indian market and the rest 14% are yet not sure whether frequent changes in rules and laws would jeopardise their investment.

In terms of the ROI expectations, more than two thirds of the respondents, 68% said they fear a price correction, if not crash. Rest 32% feel it is a game of long term investment and they might get stuck if invest into the property market.

Surprisingly, the majority of the NRIs who have employment issues in Europe, the USA and other parts of the globe, feel Dubai is a better destination than India for both employment and real estate investment.

52% NRIs feel the property investment in Dubai is safer than India as prices are realistic and not prone to fluctuate. Even more in number, 58% maintain that Dubai offers pretty professional level playing field for both employment and conducting businesses.

A substantial number of NRIs, as many as 44%, are pretty sure that the global job uncertainties are temporary and cyclic in nature. 48% have apprehensions that exit from the Indian property is a dicey proposition, if tomorrow they would get a better job abroad. And 64% even maintain that the country can’t give them employment of choice even if they settle back in India with a locked investment like the home purchase.

The survey definitely is not music to the ears of the Indian developers for whom NRI clientele is always on top of the mind. Their wishful expectations of NRIs job loss translating into their real estate investment back home does not seem to be realizing.

Infrastructure push to ease commuting in Hyderabad

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Bottom Line: Some of the ongoing and proposed infrastructure projects promise to transform commuting in the city.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Hyderabad, Andhara PradeshMany of the urban centers of India are crumbling under the weight of its poor infrastructure, leading to commuting nightmares. Hyderabad, on the contrary, is a case study where the constant infrastructure growth promises to change the living and commuting experiences of this ever-growing city.

It is hence no surprise that in the Mercer’s Quality of Living Rankings 2016, Hyderabad was picked as the top Indian city to live in for its socio-infrastructure.

There are certain on-ground projects being executed as well as upcoming infrastructure projects that promise to make this city one of the global best in living and working.

Some of the mega infrastructure projects, when completed, like Hyderabad Metro project next year and the other projects like Strategic Road Development Project of INR 3000 crore and four major flyovers/skyways to decongest busy junctions and nodal city points, are very promising from the standpoint of transportation in the city.

Projects to change Hyderabad

Hyderabad Metro

Strategic Road Development Project

Outer Ring Road

Regional Ring Road 

The 158 kms stretch of Outer Ring Road (ORR) is near completion now and this eight land Expressway constructed by Hyderabad Municipal Development Authority (HMDA) promises to decongest Inner Ring Road and other metropolitan areas.

It is not just a faster access to International Airport but also the office goers of Hitech City, Nanakramguda Financial District and IKP Knowledge Park. It also offers easy connectivity to NH7, NH9, NH 161 and NH765. Linkage between proposed MRTS and bus system will make commuting in the region really hassle free.

Similarly, the countdown has started for the Hyderabad Metro to be operational. The trial run between Begumpet to SR Nagar and Ameerpet interchange station are ready and the metro with three lines including Miyapur-LB Nagar, Nagole-Shilparamam and JBS-Falaknuma, covering a total 72 kms will ease the traffic bottlenecks and make commuting far easier for the city working class.

Regional Ring Road is another ring road project around the city from Sangareddy to Kandi that will ensure that the vehicular traffic in the Hyderabad metropolitan region will be a hassle free movement. It is a 90 meter wide (300 feet), 288 kms long road that connects the districts around the city of Hyderabad. It will also link major National Highways like NH65, NH44, NH163 and NH 765.

The NHAI has already awarded a detailed project report (DPR) for the proposed Nagpur-Hyderabad-Bengaluru Expressway. The 1,100-km-long expressway will pass through four states, including Maharashtra, Telangana, Andhra Pradesh and Karnataka and the cost is estimated at INR 35,000 crores.

In addition to these major infrastructure projects, there are many other projects that promise to decongest the city of Hyderabad in terms of traffic bottlenecks and vehicular movements. For example, Hyderabad-Aurangabad Corridor and the proposed Hyderabad Nagpur Corridor have the potential to completely change the urban landscape in the city.

By: Ravi Sinha

 

Can real estate get one GST?

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Bottom Line: Some ground realities about GST in Indian real estate suggest that beyond the political overtones the economics of the taxation structure does not indicate a smooth transition.

GST, Goods & Services Tax, GST in real estate, one GST in real estate, taxation in property market, Tax burden in home purchase, Stamp duty in house purchase, Indian realty news, India real estate news, Real estate news India, Indian property market news, Track2RealtyThere are many issues and grey zones to be ironed out before GST becomes a reality in the real estate. For instance:

 Land is a state subject and stamp duty on the registration of property is a major source of revenue

Combining present rate of 12% GST plus 5-7% stamp duty would make housing beyond the reach of almost everyone in India 

Offering a slab of 5% and 12% for low-cost and other housing projects might sound buyer friendly, but revenue sharing between the Centre and the States at this rate would be bone of contention

It is still not clear how real estate inclusion in GST would check tax evasion from the property market

The Finance Minister Arun Jaitley nevertheless has announced that the issue of bringing real estate under the GST’s ambit is being mulled because it is one sector where maximum amount of tax evasion and cash generation takes place.

“The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I personally believe that there is a strong case to bring real estate into the GST,” Jaitley said.

The real estate industry stakeholders are elated with such a prospect since the tax slab being discussed at 5% & 12% is lower than the present taxation. Niranjan Hiranandani, President, NAREDCO said the move would benefit the consumers who will only have to pay one ‘final tax’ on the whole product. This is obviously a good thing to happen, and the real estate industry will welcome the move.

“From the perspective of the homebuyer, not only will RERA bring in transparency, but bringing real estate within the ambit of GST should also make it less of a burden vis-à-vis taxes payable at the time of buying the home. Not only will this create positive sentiment but it should also boost actual sales,” said Hiranandani.

CREDAI National President, Jaxay Shah echoed the similar sentiments when he said that CREDAI recognizes earnestness in eradicating the parallel economy as a positive and defining feature of the policies of the government.

“GST is being levied on construction services already, while land is subject to stamp duty by states at rates varying between 5-8%. CREDAI believes that the burden on home buyers needs to be kept to a minimum, especially at this juncture,” said Shah.

However, such optimistic overtones are reflection of an expected and Finance Minister’s announced assessment of GST in real estate falling in 5% and 12% slab. There is no denying that if implemented with this rate of GST, the developers as well as homebuyers have every reason to rejoice.

However, it is to be seen how the Finance Minister takes the states on board to create a consensus. Will the majority of states, especially those where real estate transactions are major source of revenue, be ready to compromise with the higher taxation through stamp duty and property registration?

It is highly unlikely as already some of the states, most notably the BJP ruled Maharashtra has raised its objections. The Maharashtra Government has opposed the inclusion of real estate in GST and does not want any decision in this matter to be taken in a hurry. Maharashtra Government has cited that it annually earns over INR 20,000 crore through stamp duty and registration charges.

The real estate industry stakeholders are watching the developments closely. They are conscious of the fact that if the real estate is brought under the GST ambit to reduce the multiple taxation and lessen overall tax burden of the homebuyers, they would be the real beneficiary in the final analysis.

However, it would not be as easy as making a public statement since it is a question of compensating the states with major source of revenue. And if the real estate GST is finalized above 12% then already unaffordable property market will hit the dead end for both the buyers and the developers.

By: Ravi Sinha

End-user property markets not struggling: Ashish R Puravankara

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View Point: Ashish R Puravankara, Managing Director of Puravankara Limited feels the new regulatory changes and the changing market dynamics are not that challenging for the end user driven markets. 

Ashish R Puravankara, Puravankara Ltd, Puravankara Projects, Bangalore real estate market, Provident Housing, India real estate news, Indian realty news, Indian property market news, Real estate news India, Track2RealtyVisualising an industry consolidation soon, Ashish Puravankara feels it is time to invest in technology and make affordable housing the growth driver. Excerpts of an exclusive interview with Ravi Sinha: 

Ravi Sinha: How are you coping up with the challenges of market slowdown?

Ashish Puravankara: Beginning with demonetization to Real Estate Regulation Act (RERA) and Goods and Services Tax (GST), all come with their own implications to the real estate industry. The announcement of demonetisation created a sort of disruption in the market that largely impacted buyers’ sentiments. In preceding months, the rollout of RERA and GST followed, which made the buyers tread cautiously with their investments and spending. We believe these initiatives from the government will pave the way in transparency, accountability and efficiency in the ecosystem.

Ravi Sinha: To what extent has it affected your top line and bottom line?

Ashish Puravankara: The same has not impacted us much. Though in the initial phase there was a slight stagnation in the sales due to the overall slowdown and uncertainty among the buyers. But once things started settling down, there was a spike in the customers’ enquiries for our projects. Out of these queries, many were converted to sales deals. A large credit for this performance goes to our focused fiscal planning and preparedness for the structural economic reforms.

Ravi Sinha: What has been the learning of the last 5 years of market uncertainties?

Ashish Puravankara: The transition of the real estate market has changed the dynamics of the sector completely. After the advent, multiple policies and regulation of the real estate industry has seen a paradigm shift with systemic checks and streamlined process.

Post the IT and its revolution, there is a significant rise in the job opportunities which is further fuelled by the emergence of e-commerce and start up culture. This has led to a significant increase in the white-collar migratory population especially in the metros. These demographic transitions have also pushed demand for homes in these cities. But post the initial rush the residential sector witnessed a slight stagnation in the last two years.  Realising the undercurrent, several developers have seen the value in   diversification of their offerings by venturing into affordable housing segments.

Ravi Sinha: What has been your experience in the affordable housing?

Ashish Puravankara: Realizing the burgeoning need of high-quality, affordable homes in the country, we launched Provident Housing Ltd., (a wholly-owned subsidiary of Puravankara) in 2008 to meet the aspirations of mid-income and first-time homeowners. We have the distinct advantage of being the first organized player to move into the affordable housing sector. Till date over 16.28 million sq. ft. of projects have been launched across 4 Southern cities with over 5000 happy and satisfied homeowners. Additionally, about 6000 units have been planned for new launches.

Ravi Sinha: Has the after effects of demonetization been a real challenge for the sector?

Ashish Puravankara: Demonetization has an impact on the residential market sentiment, especially regarding new launches, sales and enquiries, which dipped a little during the initial phase (of demonetization). The impact was a little hard in those markets which were dominated by investors.

But in the South, specifically the Bangalore market which is primarily driven by end-users, coupled with steady economic activity and powered by a high percentage of the white collar migratory population, remains stable in comparison to other key markets. In fact, post the initial lull, Bengaluru’s real estate market, witnessed renewed consumer confidence in the quarter of January –March 2017. 

Ravi Sinha: How about RERA and GST affecting the business cycle?

Ashish Puravankara: As with the implementation of any new policy there will be some teething issues but the long-term views will be positive. Market buoyancy can be envisaged post RERA implementation. The same will not only bring back confidence in the end users but will give the customers better clarity to make an educated decision to buy a home they desire. For the developers in the initial phases, we adapt to the new environment. I believe that RERA will be a game changer for the overall industry which eventually will transform into growing customer and investor confidence.

The role of GST for the Indian real estate sector will be of an enabler as it will create a level playing field for all organised developers in the country. There are multiple benefits for both developers and homebuyers with the GST implementation. A single consolidated tax system brings more clarity, transparency and avoids double taxation which is relevant in the sector where developers and end users end up paying multiple taxes and duties.

Ravi Sinha: How is GST affecting the supply chain of real estate?

Ashish Puravankara: Inefficiencies in the supply chain will slowly decline, resulting in prudent working capital management and better pricing power for all stakeholders in the value chain. Specifically, the impact of taxes on construction materials, cement and steel will come down considerably for developers which ranges between 12-18%. With the rates in place now, the implementation of GST to our business is expected to bring down the project cost for developers, thereby leading to lower acquisition cost for under-constructed apartments.

Ravi Sinha: What has been your understanding about consumer psychograph with these policy changes? 

Ashish Puravankara: RERA has now put the buyer in the driver’s seat as exhaustive data is available at the click of a button and is ratified by the regulatory body. The confusion and any allied fears that a potential customer could have are now abated and there is certainty of project completion and most importantly peace of mind. With enhanced transparency the customer confidence will only see an upward trend. 

Ravi Sinha: To what extent the slow moving market in the metro cities is tempting you to go for Tier II and III cities? 

Ashish Puravankara: While there are immense opportunities in Tier II and III markets, we are not planning to enter any new markets in the immediate future. Currently, our core focus is to strengthen our operations in markets where we exist. The appetite is big in markets like Pune, Hyderabad, Kochi and Coimbatore where we already exist. We are identifying land parcels in these locations to scale up our presence. Having said that, we are also keeping our options open. We regularly conduct feasibility studies, research and identify demographic trends in the secondary market. If we come across any feasible business potential, we intend to pursue the same.

Ravi Sinha: Which are the segments that you find safe bet today?

Ashish Puravankara: Affordable Housing is a segment that will gain momentum in time to come. We are investing significantly in our premium affordable housing arm – Provident. In the next couple of quarters, you will witness Provident launching new properties in existing markets. With the government giving ‘infrastructure’ status to affordable housing projects, this has given the needed impetus to the real estate industry. 

Ravi Sinha: What would be the next growth driver in real estate?

Ashish Puravankara: With the RERA-rollout, the real estate market will witness consolidation in the next two to three years. Only serious and focused real estate players will survive. With new launches slowing down, this is a great opportunity for us to invest in technology which will be the next growth driver in real estate.

Ravi Sinha: Moving forward, what is your outlook of the business in the medium to long-term perspective?

Ashish Puravankara: We aspire to evolve into a lean and strong organization, by leveraging on our expertise in the areas of land acquisition, design and innovation, sanctions and marketing.  We have set aggressive growth targets for the next five years which we are confident of achieving by implementing concrete measures focused on human capital management, project management and advances in construction technology.

Our vision for the next few quarters is 8-10 million sq. ft. of launches between both our brands, Provident Housing and Puravankara Ltd., with Provident having a larger share of the pie in terms of volume. We could leverage our existing land bank or sign up new deals especially JDs & JVs in the upcoming years.

Realty terms buyer needs to know

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Bottom Line: Track2Realty tries to simplify the real estate terminologies in practice that often confuses the buyers.

Realty terms, Real estate terminology, Property market terms, Understanding of real estate terms, Carpet area, Super built up area, FSI, Loading,  CAM, Common Area Maintenance, Stamp Duty, Registration Charges, PLC, Preferential Location Charges, India real estate news, Indian realty news, Real estate news India, Track2Realty, Track2Media ResearchThere is no rocket science in real estate that buyers can not adopt and understand for their own better understanding of the most valuable asset called house. Proper understanding of the real estate terminology also helps the homebuyers to safeguard against the misleading sale.

Carpet Area is the area within the walls of an apartment that is for the exclusive use of the buyer. While computing the carpet area, the terrace and balconies are usually considered as half the actual area. Normally in large societies with many common amenities, the carpet area could be as less as just 50% of the built up area.

Built-up Area includes the carpet area and thickness of external walls, internal walls, lobbies and corridors, basements, atriums, in some places lift areas, staircases, generator & electricity rooms etc. Normally while purchasing a flat you will have to pay for the built up area where as you will get to occupy or use exclusively only the carpet area.It is typically 10-20 per cent more than the carpet area and is also sometimes known as the plinth area. 

Super Built-up Area includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flats. The common usable areas, such as a swimming pool, garden and club house, may also be included in it.

Per Square Foot Rate quoted by the developer is typically applied on the super built up area to determine the value of the flat. This is the reason super built-up area is also sometimes referred to as the saleable area.

Loading: Loading is the cost of additional space that a homebuyer is paying in the name of ‘Super Built-up Area’ that has all the amenities. For he buyers the cost of the additional space that one pays for in the name of Super Built-up Area over and above her Carpet Area is loading. There is no acceptable definition of loading in the Indian housing market and different developers define it differently as per their convenience. Loading is always a reason of suspicion on part of the buyers and more so in the affordable and mid-segment where the market is very price sensitive.

Floor Space Index (FSI) is the ratio between the total built-up area and plot area available allowed by the government for a particular locality. In plain English this means, the buildable area on a plot of land. An FSI of 1 means that the area of construction should be equal to the area of the plot—for example, a plot of 10,000 sq ft can only have a built-up area of 10,000 sq ft and no additional construction would be allowed.

Premium FSI refers to permission obtained to build extra floor space by paying a premium. For example, if the normal FSI in the area is 1.5 the builder can pay premium FSI charges (a certain per cent of the guideline value of land) and build area more than 1.5 times the plot area. This would help builders better utilise space where the price of land is prohibitively high, resulting in extra value for the buyer.

Guideline Value & Market Value Guideline Value of a land is the value of the land as determined by the government, based on the facilities and infrastructure growth in that locality. The stamp duty and registration charges for registering a property deal, is based upon this Guideline Value. The Guideline Values are revised periodically to have them in sync with the Market Value. Market value as the name denotes is determined by the demand and supply forces in the market and factors like type/age of property, quality of construction, location, infrastructure and amenities available, maintenance etc. Market Value of the property is the price that the property commands in the open market. This will invariably be the price, which you will pay for your property. Depending upon the location and the city the difference between guideline and market value can be low or high. In Indian cities the difference range is between 30-70 per cent.

Stamp Duty is the tax paid to obtain the stamp paper on which the sale deed is written and signed by both the parties prior to registering the same. The payment of proper Stamp Duty on instruments like Sale Deed bestows legality on them. Such instruments get evidentiary value and are admitted as evidence in the court of law. Stamp duty is payable usually by the transferee/purchaser, or if agreed by both the seller and buyer equally.

Registration Charge is the fees associated with getting the legal title registered in the buyer’s name. This legal activity is conducted in the sub-registrar’s office in the local court.

Common Area Maintenance (CAM) is a charge that is payable after possession of the property and is recurrent. Common area maintenance charges is the specified share of certain defined costs that include maintenance, repair, replacement, inspection, improvement, operation, and insurance of the common area shares by all the residents of the building together with any costs allocated to administration and overheads.

By: Ravi Sinha

10 mn sq ft of office leasing in Q3; gross absorption 29 mn sq ft in YTD Sep 2017

Posted on by Track2Realty

News Point: Despite slowdown in the overall economy, the office market has continued to perform well in 2017.

Office space in India, Office space absorption, Commercial real estate in India, Commercial property trends, Indian real estate market, Indian property market, India office market report, Real estate news magazine, Real estate news portal, Real estate website, Track2Media Research Pvt Ltd, Track2Realty, NRI investment in IndiaWith about 10 million sq ft (0.9 million sq m) of office leasing in Q3, gross absorption totalled around 28.9 million sq ft (2.7 million sq m) over the first nine months.

Although the number represents a marginal decline of about 1% from last year’s absorption during the same period, we expect leasing momentum to pick up in Q4 2017 and maintain Colliers International’s yearly forecast of more than 40 million sq ft (3.7 million sq m) for 2017.

“As expected, Bengaluru has remained the frontrunner in office leasing with a 31% share of overall demand followed by NCR on 25%, Hyderabad and Chennai on 12% each, Mumbai on 10%, Pune on 8% and Kolkata on 2%. With an 8% share of total leasing volume in Q3 2017, coworking operators are making their presence felt in the market. Overall, the commercial market will remain stable despite the economic slowdown and increasing concern about disruption from artificial intelligence, automation and stringent data security laws”, says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India. 

While the traditional demand drivers of the Indian office market, technology occupiers, represented 39% of total absorption, Banking, Financial Services and Insurance (BFSI) also formed the bulk of transactions and accounted for 17% of total absorption. On the supply side, 90 million sq ft is under various stages of construction, which would likely to increase the current total stock by 16% in the next 3 years.

“Despite the temporary slowdown in the economy in the aftermath of several major government reforms executed in 2017 office market remained upbeat with increased investor activity, sustained leasing demand from technology companies and growing leasing interest from various industry occupiers like manufacturing, coworking, logistics and warehousing. We expect the commercial real estate market to remain on track with sustained demand from occupiers in short to medium term. Rents are likely to see an upward growth trajectory specially in Grade A buildings; average annual increase of 4-5% over the next three years likely in India across cities”, says Surabhi Arora, Senior Associate Director, Research, Colliers International India. 

Bengaluru

In Q3 2017, Bengaluru witnessed gross absorption of 3.0 million sq ft (0.27 million sq m) indicating a drop of 5% qo-q. However, the city recorded gross absorption of 10.0 million sq ft (0.9 million sq m) over the first nine months, representing a considerable increase of 16.5% from the same period last year.

Chennai

With about 1.23 million sq ft (0.1 million sq m) Q3 gross absorption, Chennai has reached around 3.25 million sq ft (0.28 million sq m) office leasing so far this year, indicating sustained demand. Gross absorption recorded an increase of 7% compared to Q3 2016.

NCR:

“We expect the commercial real estate market for NCR to remain on track with sustained demand from occupiers in short to medium term. Rental values are likely to remain stable across most micro-markets in Gurgaon, with expectation of a slight increase in CBD of Gurgaon. Rental values in Delhi will strengthen further due to consistent demand and limited Grade A stock/supply. Noida continues to be a tenant favorable market given high vacancy levels” added Sanjay Chatrath, Executive Director, NCR at Colliers International India. 

Delhi 

In Q3 2017, total gross leasing volume amounted to 0.26 million sq ft (0.02 million sq m) representing a significant increase of 30% in comparison to Q3 2016.

NOIDA

The market recorded about 0.6 million sq ft (0.05 million sq m) of gross absorption which was 20% up from the previous quarter.

Gurugram 

With 1.58 million sq ft (0.15 million sq m) of gross absorption in Q3, 2017, Gurugram was the most active office market in NCR. Gross absorption over the first nine months accounted to 3.3 million sq ft (0.3 million sq m) which is about 14% up from the same period in 2016. About 30% of the total lease volume was concentrated on Golf Course Road followed by Sohna Road 18%, Cyber City 14%, Golf Course Extension Road 13% and NH8 including Udyog Vihar 16%. MG Road and Institutional sectors represented only 1% and 4%, respectively.

Hyderabad 

Commercial leasing witnessed a drop of about 21% in Q3 2017 with about 1.24 million sq ft (0.12 million sq m) of gross absorption. The YTD absorption is recorded as 3.32 million sq ft (0.31 million sq m).

Kolkata

During Q3 2017, commercial market demand in Kolkata was in line with Q1 and Q2 absorption numbers, leading to a gross absorption of 0.2 million sq ft (18,150 sq m).

Mumbai 

Gross office absorption amounted to only 1.0 million sq ft (0.1 million sq m) in Q3 2017, making it 4.0 million sq ft (0.4 million sq ft) YTD, which is similar to the YTD absorption in the same period last year.

Pune

In Q3 2017, leasing activity gained momentum with 0.82 million sq ft (77,100 sq m) of gross absorption, bringing the total for the first nine months of 2017 to 2.0 million sq ft (0.2 million sq m), a 24% YOY decline.

Amnesty to builders at what cost & for whose benefit

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Track2Realty debates whether amnesty given to the developers by the banks, development authorities and the courts actually serves the purpose of safeguarding homebuyers’ interests.     

Rules Changed, Favour to builders, Government favours builders, Amnesty to builders, Builders control government, Builders change policies, Indian realty news, India real estate news, Real estate news India, Indian property market,  Best news site for Indian real estate, Track2Realty, Track2Media ResearchContrary to the general perception that the eco system is getting tougher for the builders due to home buyers’ activism, vigilante media and judicial intervention, the facts suggest that the developers have been given too long ropes to cross the bridge over the buyers’ interests. As a matter of fact, there are many instances of amnesty to the developers in the last few years.

When the homebuyers of Amrapali in Delhi-NCR announced massive protest, the Noida administration immediately intervened to deny permission of protest with Section 144 and instead asked the buyers to come to table with the builder

The authorities of Noida, Greater Noida and Yamuna Expressway that allotted the land parcels to developers on deferred payment have time and again heeded to their request to reschedule the payment plan when the builders have defaulted

The authorities of Noida, Greater Noida and Yamuna Expressway cleared an exit policy for developers if they fail to fully or partially complete project after land being allotted

In the wake of non-payment to the banks the builders have on many occasions been allowed to restructure the payment

In some instances even the courts have granted the developers extra time to complete the project with strict warning or some fine

The Supreme Court has given stay on the demolition order of extra towers by High Court with project Emerald Court by Supertech

UP and Gujarat dilute RERA law; UP provided four exemptions to exclude incomplete projects from the category of “ongoing projects”, Gujarat has exempted all projects launched before notification of the rules 

All these instances clearly suggest that once the home buyers have made the payment to the builder, the policy makers and the judiciary take a lenient stand to offer the developers amnesty. The basic philosophy is that any punitive action against the developers will hurt the delivery timelines and hence the buyers’ cause.

The moot point nevertheless is that amnesty to the builders is at what cost and for whose benefit. The home buyers allege such amnesty does not help their cause and rather give the developer an escape route.

Gaurav Gupta, a home buyer in Paras Tierea, Sector 137, Noida is extremely critical of such amnesty to the builders. According to him, instead of penalizing the builders if they are offered amnesty after failing to fulfill their business commitment then the policy makers are setting a bad precedent for the future.

“To the best of my knowledge majority of the builders in Uttar Pradesh and Haryana who were offered amnesty have failed to take advantage of it and correct their wrong doings. This is what compels the buyers to take it to streets. Unfortunately, there is no amnesty for buyers if they default,” says Gupta.

Grey zones with amnesty to builders 

Majority of the builders who are beneficiary of various amnesty schemes have failed to reverse their fiscal mismanagement or delivery delays

Amnesty to builders lends a perception that builders who have compromised with the buyers’ interest can get away without getting penalized

There is no mechanism to verify whether the builder has defaulted by will or due to market dynamics 

The developers naturally have reasons to stand with the peer group. Vineet Relia, Managing Director, SARE Homes maintains that considering that the real estate sector has been facing a slowdown in the wake of weak demand, measures like these are important in sustaining momentum to some extent. Some development authorities like Greater Noida have restructured their payment plans to help allottees, while restructuring of debt by banks is a move to tackle mounting bad loans in the banking system and bring relief to the banks.

“While the recent judgment of NCDRC does place a higher financial burden on developers, but the move will only help improve efficiency and transparency in the sector.  While these measures are welcome, the realty sector is yet to come out of the slump which can only happen when demand picks up,” says Relia.

Parth Mehta, Managing Director – Paradigm Realty feels quasi ownership in real estate makes it so unique that policy adaptations are required to suit the real estate sector. Till the time the project is not delivered the ownership doesn’t get fully transferred. The turnaround time for a project delivery is generally 3 to 4 years and when the business cycle changes it generally hurts the project during the execution, thus buyers as well as builder is affected.

“In my view such amnesty definitely helps to solve buyers and builders problems at large. Amnesty provided to builder helps in getting the possession or regularization of the flat, thus at any given stage even with certain loss of time buyer receives the possession or occupation of the flats. In the final analysis buyers are definitely getting benefited,” says Mehta.

Interestingly, these amnesty schemes are not just Indian reality. In the neighbouring Pakistan too the government is designing an amnesty scheme to address the concerns of the real estate sector, which was reflected in freezing investment and reduced number of property transactions.

The only difference is that in Pakistan the policy makers have favoured a targeted amnesty, which could benefit genuine property buyers and real estate developers rather than those parking their ill-gotten money in plots. Thus, it is a purpose specific amnesty for real estate developers and first time property buyers.

In India, it is an awkward situation in the real estate sector today where amnesty to builders is lending credence to the perception of the developers getting escape route. While exceptions are always there, the general trend has been that of delay in delivering projects which has had a negative impact on the sector. Unless consumers’ confidence is not restored, the sector will not be able to stand back on its feet.

In this context, developers insist that the relaxation to builders is an attempt to help them serve the consumers better by expediting delivery of projects. But whether the amnesty is actually serving its purpose is quite debatable today. 

By: Ravi Sinha

Bhiwadi grows beyond magnet of affordability

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Bhiwadi as a destination is more than affordable housing market today.

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha“Let me put it straight! I had moved to Bhiwadi because I could not afford to buy in more upscale neighbouring markets of Gurgaon or even Manesar. It was not a choice but my budget constraint that brought me into Bhiwadi five years back. But looking back I think it was one of the best decisions of my life, not just from investment standpoint but overall in terms of living a peaceful and quality life,” says Joginder Rawat, a retired bank employee.

Rawat is not alone who earlier carried this impression that Bhiwadi is the poor cousin of Gurgaon-Manesar. However, it is also true that today he is not alone to think that the impression back then was myopic vision. As a matter of fact, Bhiwadi has today grown beyond the magnet of affordable destination. Today, Bhiwadi is no more seen as a poor cousin of Gurgaon-Manesar.

Bhiwadi, of course, was conceptualised as an affordable destination for blue-collared workforce who could not afford to buy in Gurgaon or Manesar. With the shift of industries it seemed to be quite natural evolution of the market. But with the increasing economic activity in the region and expat workforce prefering to not only work here but also stay in this till recently sleepy town, it completely change the outlook of the market.

Today, Bhiwadi is still by far among the most affordable markets of extended NCR region. In terms of the quality of life while it still gives the comforts of a Tier II city, infrastructure, amenities and access to business destination is very much metropolitan. Since it is within a radius of 100 kms from three key business deatinations of NCR, Delhi, Gurgaon and Faridabad, and good connectivity makes travelling far easier, the expat profesionals are increasingly shifting to this market.

The property prices in the region are hence reflective of this change. Facts speak for themselves. In 2012, that property that was sellig at Rs. 1900 to 2000 per square feet has today appreciated to Rs. 2900 to Rs,. 3100 per square feet. The property analysts point out that such an appreciation is extremely good keeping in mind the slowdown in the last five years across the adjoining markets.

Bhiwadi USPs

Bhiwadi most affordable market of extended Delhi-NCR

Prices are one-fifth of neighbouring Gurgaon

Price appreciation from 2012 to 2016 is 50%

Affordability not the only USP, oincreasing economic activity changing market outlook

Once the market picks up the momentum, added with the proposed infrastructure projects completed, a sizeable price appreciation in the range of 60 to 70 per cent can not be ruled out. According to Master Plan of Greater Bhiwadi 2013, the Greater Bhiwadi Complex comprising Bhiwadi, Tapukara, and Khushkhera has been outlined as the priority areas for the overall spatial development.

Ashiana Housing has been among the first to spot the potential of the town and move into Bhiwadi market. Its Joint Managing Director, Ankur Gupta agrees that when the promises of major infrastructure like roads, transportation, water, sewage facilities and education facilities are provided, the real growth of Bhiwadi is inevitable. Retail and commercial projects like Village Center, Angan Plaza are already there and many more landmark developments are also coming up.

“Good number of healthcare facilities, including private clinics and hospitals, nursing homes and government hospitals are located here. Shopping complexes and malls are also coming up fast. Top-notch recreation facilities like Treehouse, Classic Golf Course, Wet & Wild Resort, Country Club Resort and Heritage Village are in proximity too,” says Gupta.

Obviously all these facilities have elevated the market positioning of Bhiwadi in the last few years. It may still carry the tag and price point of affordability but the pace of growth suggests it will no longer be a market with only the USP of affordability.

From an investment point of view, it is one of the safest markets of the extended NCR, since there has been no land acquisition issues in this market. More importantly, the prices have appreciated in the wake of even the overall slowdown. Due to the lower cost of doing buisness per square feet, the corporate sector is also increasingly spreading out in Bhiwadi.

If the growth projection is any indication, Bhiwadi may turn out to be a case study in how a Tier II city can be channelized as the investment magnet. It has already come out of the perception of being only an affordable destination for the habitation of budget-constraint buyers.

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