Tag Archives: Infrastructure

Other Charges When Buying a House

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When you start your property search, you will be amazed by the extra charges involved in buying a house or investing in property. There are two options: buying a ready-to-move-in property or an under-construction property. However, most people prefer to buy a ready-to-move-in property because it is less risky than an under-construction one. So, let’s assume that a property is coated at Rs. 3000 per square feet—this is its basic rate—but there are also other charges on top of that which people often fail to consider and which can be more than 40% to 50%. Let’s discuss all the additional charges so that you can make an informed decision about the total price of any given property before agreeing to purchase it.

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Let’s look at an example:

Suppose a property’s basic price rate is Rs. 45 lakhs. When we make the final payment for this property, it will be around Rs. 58 – 67.5 lakhs—which includes the basic price of the property and the extra other charges when you buying a house. We will discuss all these charges in detail below:

First comes the basic charge. It is the charge excluding all the extra charges. Before RERA Act came into force, properties used to be sold on the super built-up areas; after the enactment of the RERA Act, properties are supposed to be sold based on the carpet area. For example, if the property has a carpet area of 1500 square feet and the rate per square feet is Rs. 3000, then its total basic cost would be Rs. 45 lakh. And this is just the basic cost; you will also have to pay multiple charges on it, as mentioned below.

PLC (PREFERENTIAL LOCATION CHARGES) –

Property taxes are charged according to the property’s location. Like; a corner flat, park-facing, sea-facing, lower floors, or higher floors. For example, sea-facing view residences have higher PLC charges than non-sea-facing. Therefore, if you own any such property there is a PLC charge coated. Generally, PLC charges are Rs 150-200 per square feet.


PARKING CHARGES –

When you purchase a property, you will pay a parking fee of 5-7% of the base price of the flat. For example, if you purchase a property for Rs. 45 lakhs, you will be charged Rs. 2 to 2.5 lakhs for the parking facility.

INFRASTRUCTURE DEVELOPMENT CHARGES (IDC) –

An infrastructure charge usually consists of complete internal infrastructure within a complex. For example, water and electricity supply, as well as sewage treatment plants may be charged separately. Developers usually charge these services together because it costs less to do so. However, if we add them together in one place according to IDC’s input-demand curve, there will be an IDC charge added at around 6% of the base price of the flat or house.

EXTERNAL DEVELOPMENT CHARGES (EDC) –

In some cities, there is also an external development charge. For example, in Gurgaon and Faridabad. This charge goes to the government and includes the infrastructure of a complex—for instance; road facilities, sewage, water, and electricity. The EDC charges are applied to all these expenses so it is approx. 5% of the base price of a flat. The total cost of IDC and EDC ranges from Rs. 300 to 400 per square foot.

CORPUS FUND/ IFMS –

Builders collect corpus funds, also called IFMS. It is interest-free maintenance security, similar to an emergency fund, and not like regular monthly maintenance. To purchase a property costing Rs. 45 lakhs, builders can collect from Rs. 50,000 to Rs. 1,00,000.

POWER BACK-UP –

The power backup charge is provided on an kWh-basis for each flat in the complex. Backup is available from 3KVA to 5KVA, ranging from 1 lakh to 1.5 lakhs.

AMENITIES AND CLUB CHARGE –

These charges apply to luxury flats with a clubhouse, swimming pool, and gym. The developer will charge you for these amenities at a lump sum of Rs. 50,000 to Rs. 1.5 lakhs.

STAMP DUTY AND REGISTRATION CHARGES –

In this case, stamp duty varies from state to state. So you must pay the stamp duty according to the state. Therefore, stamp duty and registration charges are 5-10% of the property value.

GST –

In an under-constructed property, both stamp duty and GST are levied where GST is 18% on ⅔ of the property cost. Therefore, the effective GST rate is 12%. It is the payable tax and added as a extra other charges before buying a house.


BROKERAGE –

Most resale property or ready-to-move-in property transactions are closed through a real estate agent or broker, who typically charges 1% to 2% of the property’s final value as a fee.

Commercial investment, more attractive in Top cities

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Investment on commercial properties remains the best options in major cities which have good infrastructure. In top cities commercial investment is better option.

Commercial investment is better for those who do it in top cities.

Commercial investment is better for those who do it in top cities.

Commercial property is good for investment, only if it is supported by good infrastructure. Connectivity too plays vital role. Close proximity to the international airports remains key-factor. All these factors make commercial investment in tier I cities more profitable.

As the major cities offer comparatively better infrastructure and appreciable connectivity, business in these cities is boosted well. However this is not the case of tier II cities. In such smaller cities the best option of investment would be residential properties.

Though there is commercial activity in these small cities too, the activity is not as large as that of bigger cities. There is a disparity between the commercial space demands as well.

The growth of any city depends on the connectivity and infrastructure. When these factors get better, the commercial activity also gets better. However the growth of the city will be slower if the development is slow. Continue reading →

Iyyapanthangal in Chennai Entices Buyers With Connectivity

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With infrastructure growth in the area, Iyyapanthangal in Chennai has become one of the most sought after destinations in Chennai. The area now offers better connectivity to the people here.

Connectivity boost the growth of Iyyapanthangal

Connectivity boost the growth of Iyyapanthangal

The home buyers are always keen to know the connectivity of the area. Once they feel that a residential property is located in a location where they can enjoy better connectivity, their sentiments are boosted and they readily buy out the property. This is what happens in Iyyapanthangal in Chennai now.

Iyyapanthangal; an area located in the Sriperumbudur Taluk of Kancheepuram district, has carved a place for itself in the Chennai’s real estate landscape. The growth of the area is mainly due to its improved connectivity and infrastructure development.

Iyyapanthangal is rightly supported by better connectivity and infrastructure. The residents of the location enjoy better advantages as it is situated between the Bangalore Highway and the Grand South Trunk Road which provides better connectivity.

Connectivity and infrastructure development affects the property prices of the area which move upward day by day. The average capital value for the properties here range from Rs.4000 to Rs.6000 per sq. ft. There is an increase in the rental rates of the area as well. Continue reading →

Real Estate Sector: A look at urban investments in Mumbai.

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India’s growth story has many facets; one of the integral parts of growth – and arguably the most important one – is urbanization. In fast-growing economies, cities are significant investment and employment generators, which in turn carry the growth momentum forward. The sustainability and liveability of any city depends largely on the quality of its infrastructure and real estate stocks. Needless to say, cities also require large sums of money to create urban asset stocks, including buildings and infrastructure.

Over last decade, India’s population grew by 18% while its urban population grew at almost double that rate (at 32%). Currently, about 31.2% of India’s population lives in urban areas. The country’s share of urban population has increased by almost 3.5% over the last decade. What is even more astounding is the increase in the built-up real estate stock in its cities and towns.

Data from the 2001 census shows that about 110 million ‘Census Houses’ exist in the urban areas, which indicates an increase of 39 million over the last 10 years. In other words, real estate stock shows a compounding growth of 4.5 % per annum as against the growth rate of 2.8% in urban population. Obviously, such massive growth needs adequate support from infrastructure.

However, the state of affairs with infrastructure in Indian cities is not very encouraging. Most of the cities still have to deal with issues in terms of roads, public transportation, sanitation, storm water drainage, solid waste management systems, etc. on a regular basis. With the volume of real estate stock increasing inexorably in the cities, there is an acute problem with the basic needs like energy and water in the store for urban India.

The private sector contributes most of the development of real estate stock; however, the responsibility of infrastructure development lies squarely with public sector entities such as ULBs and other utility companies – most of which are Government agencies. The investment pattern in our cities shows a similar trend – the private sector invests in the development of real estate stocks, while the public sector invests largely into infrastructure development.

The quantum of investments in most infrastructure projects is huge, and the agencies responsible for its development are seriously under-financed. They depend either on domestic grants like JNNURM or on intercalation financing involving bilateral and multilateral agencies. In some instances, funds are mobilized from private sources in the form of Public Private Partnership. The private sector generally tends to shy away from investments into city-level infrastructure projects, as most of these projects are considered non-remunerative. They prefer to focus on investing into the development of real estate stock.

Mumbai, India’s financial capital attracts massive investments – largely in the real estate sector. The city being the nation’s epitome of high real estate prices and land scarcity, huge sum of money keep chasing land in the city – while infrastructure augmentation lags behind. Way behind.

CREST brings a new product; Real Estate Rating

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On Thursday, Crisil, the leading credit ratings agency, introduced real estate ratings in order to help buyers in making informed purchases so that greater transperancy can be achieved. This concept of rating is launched for the first time by any Indian organization
Roopa Kudva, the Managing Director and Chief Executive Director of Crisil, told that there will be a scale of seven stars through which rating would be given to specific projects as compared to the other alternative available projects in the city.
Also, CREST publically declared that they are currently considering 21 projects spread across Tier-I and II cities.
The parameters of rating will be previous record of the developer, the infrastructure of the project, cost overruns, timely completion, finishing, after-sales service, project innovations and the legal issues associated with the project.
Also, this rating will be revised after the project completion.

Accor and InterGlobe entered a Joint Venture

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Dubai, UAE | Emirates Towers ¦ Two Sisters
Last Wednesday one of the leading hotel operators, Accor and InterGlobe, a travel corporation announced that they are establishing an investment fund for a chain of hotel assets.

In the fund, both InterGlobe and Accor would hold 32% equity share.

Also, according to a press statement, an affiliate of Pacifica Partners (Pacifica) will have 36% equity share.

Currently, InterGlobe and Accord own seven hotels in India which would contain 1,750 rooms in all. An approximate amount of 325 million dollars is expected to be the cost of these hotels infrastructure.
It is expected that between 2011 and 2013, all the seven hotels would start operating.

Madhucon Gets $3.9 Million Nepal order

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Madhucon Projects Ltd, a Hyderabad-based infrastructure company, has secured a $3.9 million order for a road project from the Government of Nepal.
According to a company statement, the mandate involves upgradation of Sanfebagar-Martadi road under the road improvement project of the Exim Bank of India, Mumbai.
It had commissioned its first BOT project on NH 11 on the Bharatpur-Mahua section in Rajasthan, for which toll collection started from May. . National Highways Authority of India has recommended starting toll collection for the company’s second BOT project between Karur and Dindigul.
Meanwhile, Madhucon, which is establishing a 540 MW thermal power project in Krishnapatnam, proposes to increase the capacity to 1920 MW.