Real Estate Chennai Grows Faster Than Bangalore

Recent trends in Chennai real estate show that it will stand with Bangalore real estate. How far it will take place? Following comparative analysis will tell you how far.

chennai real estate seems to be in safer hands

Chennai Real Estate Seems to Be in Safer Hands. ( image source )

Chennai and Bangalore are two prominent South Indian cities which generate new business. Both the cities have witnessed a higher level of growth in the recent past yet Chennai real estate stands little higher.

Real estate sector in both these cities are growing very fast. Of course Bangalore might stand steps ahead regarding the maturity aspect. Market growth of Bangalore which preceded that of Chennai can be counted as the reason behind this. Continue reading

Real Estate Investing in Pune, India’s Other Growth City

Most of the funds are based out of Mumbai, which gives Pune obvious preference, as the city’s proximity allows these funds to track and monitor the market – and their investments – easily. Also, Pune is among the most rapidly growing cities in India after Mumbai, NCR and Bangalore.

According to Sameer Gholve, Manager of Capital Markets at Jones Lang LaSalle India, Pune has been favoured destination amongst Real Estate PE funds since 2005 – the year FDI opened for real estate.

The total flow of PE funds into Pune until December 2011 was approximately US$800 million. This consisted of both foreign and domestic monies through around 32 major transactions over the last five years. 2009 saw the lowest flow of private equity funds into the city, though Investors regained confidence in 2010 arrived. The renewed investor confidence resulted in a massive recovery of private equity deal closures in Pune

As expected, most of these funds have been invested in the residential property asset class. In fact, residential real estate has proved to be the most consistent and enduring magnet for private equity funds into Pune’s real estate sector. In comparison, investments into SEZs, industrial parks (STPIT) and mixed-use townships have primarily been seen only before mid-2008. From 2010 onwards, the interest in these formats as asset classes has been quite meagre.

Significantly, 61% of the total private equity investments that have been seen in Pune were done in projects located in East Pune. East Pune has the majority of the city’s IT industry developments such as Magarpatta Cyber City in Hadapsar, EON IT Park in Kharadi, CommerZone in Yerawada, Weikefield IT Park on Nagar Road, etc. These IT developments have had a major spin-off effect on the profile of these areas. The higher spending power and commensurate aspirations of the people working in these establishments has caused the arrival of massive malls and also generated a huge demand for quality residential projects. These projects are proving to be the major magnets for private equity investments into Pune’s real estate sector.

NRIs want to buy home in India

NRIs are investing into residential real estate specifically in large Indian cities to build a back-up base in the country as many of them intend to set up businesses in these cities in the future. I think there is  not a single non-resident Indian (NRI) who is not keen to buy real estate in India. Having a own home in this country is one of the means available to them to stay connected to their motherland. As they make their fortunes abroad, such investments in their country help them to maintain their relationships back home.

What I found most interesting was that they had not even considered eventually relocating to India when they bought property here as they have simply done it for investment.

NRIs are investing into residential real estate specifically in large Indian cities to build a back-up base in the country. This particularly applies to NRIs with professional/entrepreneurial ambitions who intend to set up businesses in these cities in the future.

As during 2008-2009 global financial crises (GFC), India has presented itself as an example of financial stability. This GFC has caused NRIs to seriously think about buying homes in India.

As per the limits regarding how many commercial or residential properties they can own in India, there is no restriction to the NRIs. But when a NRI wants to sell and take the money back, he can do so with the sale proceeds of only two units. NRIs can invest into real estate by transferring funds to India through normal banking channels, or by invest through funds in a Non-resident external (NRE)/ Foreign currency non resident (FCNR)/ Non- resident ordinary rupee (NRO) accounts maintained in India. But payment via travellers’ cheque or foreign currency notes is not permitted.

Home loan can be availed from Indian institution approved by the National Housing Bank (NHB), and loan repayment can be done either through inward remittances, debit to a NRE/FCNR/NRO account, through the rental income which is earned in India. NRIs can also apply for home loans from the employer in India, provided specific terms and conditions listed by RBI are met.

NRIs are allowed to mortgage their residential property in India with an Indian financial institution without any approval from RBI. They can also mortgage it with a foreign financial institution with prior approval from RBI.Also they can rent out their residential property without the approval of the RBI in India and the rent received can be credited to NRO/NRE account.

Pre-Slowdown Observed in Realty Prices

Residential Property Goa | Royal Heritage - Axiom Estates
HDFC, one of the leading home-loans lenders has observed that the prices of residential realty which were hitting the peak levels are now undergoing pre-slowdown.

Deepak Parekh, the Chairman of HDFC said that there is an improvement in the economic condition and therefore, developers have started charging premiums. Due to the land prices touching sky, the realty prices also shot up.

As per the report, there was a downfall of 25% in residential real estate prices in October 2009, but now it’s steeping upwards again.

Parekh observe this change in the most active markets of India, for instance, suburbs of Mumbai, NOIDA in the NCR, a Bangalore suburb etc which all are experiencing price hike.

Also, he plans for having a real estate regulator in place.

Big Deals in Real Estate

With a recovery in the residential portion of the real estate sector gaining ground, developers in Mumbai are banking heavily on the premium category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations have not been left behind. Developers said that the big-ticket deals in the sector are in the range of Rs 5 crore to about Rs 35 crore. The price starts from twenty-five thousand to one lakh rupees per square feet. Among the properties that are bringing in high levels of interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi are also viewing concern from buyers. A deal for the sale of a new apartment in Cuffe Parade was hit at Rs 33 crore, with the transaction expected to be completed in about a month. One more property in Cuffe Parade, Mittal Grandeur, has an asking price of fifty crore rupees per apartment. This is for eight thousand square feet property having six bedrooms.

Mumbai flat got record Rs 28 crore

Residential real estate prices are growing in Mumbai very fast. The highest price stands at Rs 97,842 per square feet for a flat at NCPA Apartments. The transaction took place about fifteen days ago in the Maker Tower B building located close to the World Trade Centre at Cuffe Parade.

In November 2007, the largest-ever residential transaction on record was completed when a four-bedroom flat at NCPA Apartments at the Nariman Point end of Marine Drive fetched a price of Rs 34 crore.

Real estate recovery story being scripted by investors

The real estate recovery story is being driven by the residential segment, but contrary to the claims made by a number of developers that end-users are their main buyers, the current trend is being driven by investors.

Investors are back in good numbers and before the curve goes up, they want to buy. Some who have bought are already hoping to book profits during this Diwali. This could be a precursor to further improvement in investor sentiments, since investors would take this as a sign to look towards a sustainable run in the future.

Investors moved away from the residential real estate market when the market crashed last year and many have not been came back. The last few months though have seen a number of affordable launches at price points, which have stimulated the market. Most developers have launched mid-income housing in the Rs 20-40 lakh range, which has created a movement.