Tag Archives: Real Estate

20% Reservation for EWS will take time, Says Real Estate Industry.

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The real estate industry is at loggerheads with the state government after a directive by the Urban Development Department to private developers that they reserve 20 per cent of plots and tenements for the economically weaker sections (EWS). The move is being opposed not only by individual developers but also by the Confederation of Real Estate Developers Association of India (CREDAI) who is tagging the proposed policy as unworkable and not contemplated in totality. CREDAI has filed an objection with the Town Planning Department (TPD) arguing that Rajeev Awaas Iona gave thought to all aspects of such housing creation.

“The department is at present hearing people with stake in real-estate industry and have filed objections. The hearing report will be submitted to the government for approval,” said Avinash Patil, deputy director, TPD. The government notice, issued in January, specifies that out of development on plots measuring 2,000 square metre and above, the developers should reserve 20 per cent of the area for the EWS category in the plot size of 30 to 50 square meters. In case the developer is building apartments on the same area, it has been directed that minimum of a 20 per cent of built-up area be reserved in the apartment size of 27.88 to 45 square meters.

The real estate industry feels that implementation of such a policy should only happen after adequate thoughts as the notice can affect the industry adversely. “The notice lacks clarity. In the present form the move will hit us badly,” said Hemant Naiknavare, vice-president, CREDAI, Pune Metro.

Lalit Kumar Jain: Bihar is better than Maharashtra for builders.

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When it comes to ease of approval and a good bureaucratic set up for real estate, Bihar seems to be better opportunity than Maharashtra, according to Lalit Kumar Jain, real estate tycoon and president of Confederation of Real Estate Developer’s Association of India (CREDAI). Jain was speaking to DNA against the backdrop of the first ever all India CREDAI meeting to be held in Pune from Wednesday.

“In Bihar, the bureaucratic setup to get necessary sanction allows us to complete our projects on time. Thanks to the organised system there, the end buyer also pays less for real estate compared to Maharashtra,’’ he said.

The two-day conference, will discuss amongst other things, the various challenges faced by the industry in terms of approvals, government’s decision to reserve 20%flats for economically weaker section of society and other issues.

While commenting about various problems facing the industry, Jain saidthe apparent delay in the process of getting sanctions for the projects was a major concern. “In case, the sanctions are delayed, the cost of the project escalates which results in a burden on the customer,’’ he said.

The decision of the state government to compulsorily reserve 20% of the flats for economically weaker sections of society according to Jain would be have a negative effect on the industry. “To compromise on this, the builder will pass on the cost to other buyers who will feel the pinch,’’ he said.

Real Estate tops the PE chart in Feb.

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The second month of 2012 saw $922.7 million of private equity (PE) investments in Indian companies across 51 deals, 58% higher than the investments of $583.8 million across 24 deals in the same month last year.

However, the average deal size declined to $23.1 million from $38.9 million last year, as February 2012 was marked by a high number of smaller value deals.

During the month, the real estate sector topped the investment chart, accounting for 36.6% of the total investments, while the banking, financial services and insurance (BFSI) sector occupied the second slot with 23.6% share.

Mint, in association with Four-S Services, presents a snapshot of the PE landscape in India for February.

India loses $210 billion in Coal Scandal.

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The Indian Parliament erupted in hoots and jeers Thursday after a draft report by government auditors estimated that the national treasury lost $210 billion by selling coal fields to private excavation companies in sweetheart deals.

According to the report, leaked to the Times of India newspaper, the primary beneficiaries were about 100 private and state companies that were handed contracts for 155 coal fields between 2004 and 2009 without going through a competitive bidding process. The report said that $210 billion — five times India’s annual defence budget — was a conservative estimate given that it relied on prices for low-grade rather than medium-grade coal.

The report represents the latest in a string of corruption scandals to hit the ruling Congress Party — others have involved the telecommunications, real estate and sports industries — that has left India’s leadership weak and bereft of policy initiatives. Opposition leaders called the latest revelation the “mother of all scams,” accusing the government of looting the country.

But auditors with the comptroller/auditor general’s office countered that the leaked draft is misleading, adding in a letter to the prime minister’s office that the figures publicized were the product of discussions held at a “very preliminary stage.

“We are examining the news report and I have called for records,” Coal Minister Sriprakash Jaiswal told journalists, adding that he wasn’t in office at the time of the suspect deals. “After that I will reply.”

The government said it has not received the report yet from comptroller/auditor general’s office.

India, the world’s third-largest coal producer after China and the United States, has seen a series of mining scandals. In August, the top elected official in south western Karnataka state resigned after being implicated in a mining scandal that a watchdog said involved $400 million. Three months later, a report claimed that almost 50% of the iron ore exported from western Goa state was illegally mined.

India is hungry for energy to fuel its fast-growing economy, and coal accounts for 70% of the mix, a percentage expected to grow, given limitations on the further development of power from nuclear reactors and renewable sources. Environmentalists, however, say increased production is ecologically unsustainable.

The John Marshall Law School will present “Real Estate Investing in India: Opportunities and Challenges” at an event.

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The Centre for Real Estate Law at The John Marshall Law School in Chicago will present the lecture “Real Estate Investing in India: Opportunities and Challenges” on April 4, 2012.

Risks and benefits that come with purchasing real estate in India is the topic of an April 4, 2012, lecture at The John Marshall Law School in Chicago. Guests Shahrookh Cambata, Scott Eisenberg and Marc J. Strauss will speak at the event.

The free program, from 8:30 to 11 a.m., looks at the interest in real estate in India. Investments have grown as the expanding real estate markets in the U.S. and Western Europe have caused investors to consider developing markets for better opportunities. Speakers for “Real Estate Investing in India: Opportunities and Challenges” will discuss the risks and benefits of investing in India. Real Estate sales there have thrived since 2005 because the Indian government strengthened its protection of foreign ownership.

 

The lecture will feature three experts: Shahrookh Cambata, managing member and CEO of Greaves Travel; Scott Eisenberg, attorney and real estate entrepreneur for Lakeshore Investment Development; and Marc J. Strauss, general counsel for First Rockford Group.

 

Registrations are requested and are being accepted at http://www.events.jmls.edu/re-india. Attorneys can earn two hours of CLE for this program.

Real Estate Sops can’t impress Firms.

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The finance minister relaxed borrowing norms for real estate firms and extended the loan subsidy for low-cost affordable houses. The concessions have, however, failed to impress the industry leaders who termed it as a too-little-too late move that would have a limited impact on the sector.

“I propose to allow ECB (external commercial borrowing) for low-cost affordable housing projects,“ the Budget said.

The move has a dual aim of expanding the window of funds for real estate developers such that affordable housing projects do not face cash crunch and are completed within the time frame.

Global consultancy Deloitte said RBI had earlier allowed ECB for developers in integrated township projects of 100 acres or more till December 31, 2010.

The FM also extended, by a year, the 1% interest subsidy on loans up to R15 lakh where the cost of house does not exceed R25 lakh.

Budget 2012: 1 per cent TDS imposed on property sales.

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The government has proposed one per cent TDS (tax deduction at source) on transfer of immovable property if the sale value exceeds Rs 50 lakh in urban centres and Rs 20 lakh in other areas.

Finance Minister Pranab Mukherjee said in his Budget speech that the measure is proposed in the Budget and is being taken to “deter the generation and use of unaccounted money.” Immovable properties, other than agricultural land would be covered under the new provision.

The application of TDS would be effective from October 1 this year. It has been provided that transfer of property would not be registered unless the buyer furnishes proof of deduction and payment of TDS.

At present, tax is required to be deducted at source by the transferee on transfer of immovable property by a non- resident. But, there is no such requirement on transfer of such property by a resident except in few cases, it added.

Reacting to the proposal, the apex realty body CREDAI said that this would lead to increase in property prices.

“It looks like that the proposal of TDS would apply on transactions in the secondary market and not on sale of builder’s flat,” Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman Pradeep Jain said.

The new proposal intends to collect tax at the earliest point of time and have a reporting mechanism of transactions in the realty sector.

The provision would apply if the consideration exceeds Rs 50 lakh if property is situated in “specified urban agglomeration” and Rs 20 lakh if property is situated in any other area.

Realty Sector in Disappointment

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The Union Budget 2012-13 on Friday proposed allowing external commercial borrowing for low cost affordable housing projects.

Presenting the Budget in the Lok Sabha, the Finance Minister, Mr Pranabh Mukherjee, also proposed setting up of a Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans.

The Minister also proposed to enhance provisions under Rural Housing Fund from Rs 3,000 crore to Rs 4,000 crore besides extending the scheme of interest subvention of 1 per cent on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh, for another year.

Meanwhile, real estate players were disappointed with the Budget saying it failed to highlight the role of the housing sector in the economy.

“The proposal of bringing in an umbrella tax structure to the cement industry will increase the cost of housing and will negate the development process. Also providing ECB to affordable housing is a minor respite to the sector. There is an inherent risk of liquidity drying up wherein the exemption of capital gains tax to invest in small and medium enterprises may result in cash out from real estate,” Mr Lalit Jain, President, CREDAI, the industry body of real estate players, said.

The sector also said that the increase in service tax will increase the cost of construction by Rs 50-100 per sq feet.

According to Mr Anurag Mathur, Managing Director, Cushman & Wakefield India, “The increase in allocation in infrastructure implies a clear intent on enhancing the urbanisation process as well as providing a support to the slowing industrial sector. At the same time the increase in the service tax from 10 per cent to 12 per cent would lead to additional burden on the tenants as the service tax on rentals has remained unchanged.”

Builders say that Pranab Mukherjee has ignored ground realty in the Union Budget 2012-13.

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With predicting an escalation in property prices, top players in the realty sector said they had been ignored by the finance minister.

Chief of the Confederation of Real Estate Developers’ Association of India (CREDAI), Lalit Kumar Jain, said the announcement on external commercial borrowings (ECB) for affordable housing was a minor respite but still meaningless. Jain, who is also chairman and managing director of Kumar Urban Development Ltd, added, “We contribute 6.5% to the GDP and expected a big boost from the budget for affordable housing through special schemes, an interest subvention of 5-7 % for LIG (low income group) and EWS (economically weaker section) housing and promotion of rental housing through tax exemption.”

Jain also pointed out that the interest subsidy on home loans was too low. The Budget has extended the scheme of interest subvention of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh for another year.

In addition, Gaurav Gupta, director, Omkar Realtors & Developers, lamented that the realty sector had got nothing to boost market and customer sentiments. “There are no indications of this sector being granted the status of an industry, which it much deserves. On the contrary, the increase in service tax will push up realty prices as the additional cost will be passed on to the buyers.”

Tata Housing MD and CEO Brotin Banerjee added, “Initiatives to make affordable housing available to a larger section of the society have only been met partially.”

There were some who welcomed the proposals. Sachin Sandhir, MD, RICS South Asia felt it “exceeded expectations” given the pressures on the fiscal situation.

Home Loan Rate Should Be Restructured.

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With speculations about the Union Budget 2012-13 already doing the rounds, city’s real estate industry too has voiced its expectations. Mainly revolving around increased subsidy on interest rate for loans towards affordable housing and industry status for taxation and construction and relaxation of FDI up to 51 per cent into multi-branding, the industry is hopeful of a favourable budget.

Sushil Mantri, president of CREDAI, Bangalore, says that “The Indian real estate industry was riding through highs and lows in 2011. Last year, one per cent interest rate subsidy was offered for loans towards affordable housing. If the subsidy can be broadened, home buyers especially in mid and lower income groups will benefit.”

“Indian real estate, especially housing needs the government’s support for further growth. The government should consider restructuring interest rates on home loans to attract larger base of lower and middle income group to benefit. For loan amounts lesser than Rs 25 lakh, the interest rate should be lower and should scale up as the loan amount goes higher,” said Sankey Prasad, chairman and MD of Synergy Property Developments Services.

Further the Experts demanded that the glaring concerns of the real estate industry be addressed.

“The real estate industry will be looking forward to RBI’s intervention to control inflation which has adversely affected the industry. If FDI is relaxed up to 51 per cent in multi-branding, this will boost the growth path for the Indian retail industry,” Sushil Mantri added.

Realty players demand Industry status and affordable housing as a priority from the Budget 2012-13.

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The Union Budget 2012 to be presented by the Finance Minister Pranab Mukherjee is being looked at to provide relief in terms of policy reforms with the real estate sector of the economy coming under repeated credit pressures owing to high interest rates for borrowing.

Experts say that the real estate sector needs government support as well as further stimulus to get out of the current slump. With the first step, experts have sought industry status for real estate, since the sector is a major driver for economic growth and generates countless jobs across its various verticals and associated industries. Experts this feel will also help the sector raise debt from FIs at a much lower rate.

Common demand across all real estate companies is that of an industry status being assigned to the sector in the Budget 2012-13 with ways to make affordable housing available to a larger section of the society.

Samir Jasuja, founder and chief executive officer at Prop Equity said, “In this budget, we expect the central government to grant the real estate sector the industry status as that would help the reeling sector raise debt from financial institutions at a much lower rate, which may partly improve the liquidity crunch crisis.”

Realtors ask for Better home loans and tax cuts.

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Realtors from Chennai are expecting the Union government to enhance the income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year from the existing Rs 1.5 lakh which will help to boost the real estate market.

Siva Krishnan, head of residential services (Chennai), Jones Lang LaSalle India, said that  “The market, which was struggling last financial year, has picked up and we expect the government to enhance the income tax exemption limit.”

The Confederation of Real Estate Developers’ Associations of India have expressed that the realty sector and housing policy should be modified in order to address a huge demand of 26 million homes. “Inordinate delay in the sanction of approvals have hit hard. Provision of single-window clearance for real estate development projects is the need of the hour,” said CREDAI president T Chitty Babu.

In addition he also said that “Some of the measures like creation of Special Residential Zones can help. Affordable housing sector should continue to grow based on the incentive given for borrowings from banks for homes.”

Also the 36-month holding period should be reduced to 12 months.

Budget 2012: A ray of Hope for the Real estate sector.

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The real estate industry is very optimistic about the coming budget 2012 as the budget may bring a sheer relief  for the affordable housing buyers.

Real estate industry generates countless jobs across its various verticals and also the sector is a major driver for economic growth so it is  hoping to get an industry status.

To improve the significance of the housing sector sufficient steps were not taken in the Budget 2011-12 which in return gave very less to the developers and customers.

Shailesh Sanghvi, Director, Sanghvi Group of Companies said that,”We expect revision in tax for affordable housing projects in order to address the acute housing shortage in the country.”

The priority must be given to the banks who  in return offer concessional costs to the common man and also affordable housing should be considered important .

The interest subvention of 1% on home loans could be raised from Rs 20 lakh to 30 lakh.

In addition Ajmera also said that “The budget should look forward to extending the existing benefit of Section 80 IB(10) of the IT Act for developing affordable housing as the country is still in a huge shortage of tenement.”

Government must take steps which in return would be beneficial to both developers and also buyers. Real Estate sector is hoping the best from the Budget 2012.

As per the developers, Pranab Mukherjee, must present such a Budget that should bring happiness,joy and comfort to every sector.

 

 

Bengaluru has Impact Of IT, ITES on Real Estate.

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Advantages like available skilled workforce, a high quality of living and better career prospects are at Bengaluru but factors like the cost of real estate and ready access to international destinations also matters a lot.

Services such as call centers, transcription, data processing, online education, etc are included in ITES which has made a huge impact on international workflow into India, mainly because of low communication costs and the financial sense behind outsourcing non-core activities. It is an obvious advantage for any modern city to have a significant presence of this industry, which creates white-collar, high-profile jobs and has remarkable effects on its real estate market.

Commercial developments in the city have been done by the private sector and the Bangalore Development Authority (BDA), which controls the growth process of the city.

The city’s commercial market has three spatial limits – central business district (CBD), suburban and peripheral. Bengaluru has no true concept of a CBD which resulted in business growth from MG Road to other main roads such as Residency Road, Richmond Road and Brigade Road, Infantry Road and Cunningham Road.

Some of the prominent streets in prime off-CBD areas in Bengaluru are Commercial Street, Infantry Road, Cunningham Road, Richmond Road, Residency Road, Millers Road, St Mark’s Road, Vittal Mallya Road and Lavelle Road. The advantages they offer are reduced congestion, the availability of space and proximity to the City Centre.

Bengaluru suburbs are classified as areas near to Airport Road, Koramangala, Indira Nagar and Jaya Nagar. The peripheral areas consist of Bellary Road, Whitefield and Bannerghatta Road.

Two New Shows ‘Made to Order’ and ‘Big Style Icons’ launched by Big CBS Prime.

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BIG CBS PRIME has announced the launch of two new shows. The two new properties called Made to Order and BIG Style Icon are made keeping in mind the preferences of the people who live in style, the shows mainly focusing on the hottest properties in the Indian Real Estate market and an exclusive peek into the world of the elite, respectively.

Made to Order is like a journey into the best real-estate properties money can buy. Everyone dreams of owning a house so luxurious, so splendid that stands out amongst the others, but for most, these remain a dream. This show is targeted at the upper crest of society for whom nothing is out of reach!

Whereas, BIG Style Icons as the name suggests is a profiling of the lavish lives of society’s elite and the extraordinary and exclusive brands which are their favourites. The show will feature the people who are well known for their style quotient with hand-picked style icons which will see the likes of Vijay Mallya, Yash Birla, Shah Rukh Khan, MS Dhoni and Atul Kasbekar to name a few. The show will focus on an Icons’ favourite brands, preferred machines, his style statement, his workout den and much more.

Both properties offer an excellent and appropriate platform for marketers from the real estate, high end fashion brands and premium products, as the Channel ensures reach to a large relevant audience base with minimal spill-over.

Very soon BIG CBS Networks will be launching a multi-faceted promotional campaign for these shows. The properties will be extensively promoted and marketed across multi-media platforms of television, radio, OOH, print and social media platforms ensuring excellent reach for marketers associating with the properties.

Affordable Housing Policy to be implemented by the State Government from 15th April.

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From April 15, the state government’s affordable housing policy is set to be implemented. With a preliminary notification already out, the policy will be implemented after the final notification in a month’s time.

This decision took place at a recent meeting between Additional Chief Secretary (Urban Development Department) TC Benjamin and representatives of Confederation of Real Estate Developers’ Associations of India (CREDAI) from Pune, Nagpur, Kolhapur, Nashik and Aurangabad.

The government in the notification has made it mandatory for all projects on more than 2,000 sq m land to reserve 20 per cent of the land or constructed space for small-sized housing.

Benjamin said that, “The state has a dearth of such housing and this initiative will help bring about more such houses in residential projects. It will have to be implemented by the builders after April.”

Builders expressed reservations about whether the 20 per cent of the land should be reserved in the same area. However, it was decided that they could have a little farther but in the same zone. To this Benjamin added that, “They have to provide the housing with almost the same kind of infrastructure.”

However, most of the builders had reservations about having the economical housing on the same campus but agreed to have it a little farther away from their projects.

Pune CREDAI representative Satish Magar, who attended the meeting, said, “We are open to the policy but had some issues, which we discussed.”

NRIs want to buy home in India

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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.

US Ratings Downgrade, Will Interest Rates Come Down.

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How will the US rating downgrading from AAA to AA+ impact the real estate sector? Will it have a long-term or an immediate impact? What’s going to be hit, residential or commercial real estate sector?

The good news is that the interest rates might come down in residential segment whereas commercial real estate sector will be hit and the reduction will take place in office space. This is the first time something like this had happened and it is difficult to predict the consequences. It has created uncertainty in the global market and extreme instability across asset classes.

There could be some positives for emerging markets such as India, with the cut of prices of oil and other commodities, inflation too can be controlled adding to it interest rate should come down. Overall, impact on real estate in India could be positive.

The money that pours in will be further used to further for residential development as we already have reasonable capacity for commercial development that still needs to be absorbed. However, in the long run, the commercial property sector take-up maybe an issue, from the demand side from IT/ITeS sector which are closely linked with the USA.

Real estate may Feel Connectivity Pinch

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Metro connectivity and property rates in the capital goes hand in hand , its just like they run on parallel tracks as right from the announcement of new metro connections , property rates follows an upward swing.

With Delhi metro gearing up for the Phase III construction that will cover areas like Vasant Vihar, Dhaula Kuan, Munirka , Kalka Ji , lajpat Nagar , Botonical Garden (Noida) , real estate prices are expected to see a major rise in the prices. Metro certainly affectes real estate as it is a major factor to provide a safe and comfortable mode of transport. People prefers homes situated near the metro stations. How ever since the prices have already increased so much that it will be difficult to say how much impact the new lines will have now. Consultants further says that properties which are located near the Metro stations will have the maximum increase in the real estate price.

The entire scenario can be explained in terms of a U curve where in right from the announcement of the projects the price tends to go upwards and then it declines when the construction is underway and again goes up when the project is complete. On an average , a property may see 20-30% increase in price over three years. Proximity to the station may also effects an increase of 35-40%. Due to increase in the rates of properties which are near to Metro stations , the Municipal Valuation committee constituted by Delhi Government has also adviced that the residential colonies within half a KM radius of Metro line would be upgraded  by one level since they have witnessed the maximum amount of Infrastructure development.

DDA Relaxes Norms for Installing Lifts

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If you live on second or third floor in a DDA flat, then climbing those stairs is no more a back-breaking experience anymore. The DDA has eased the norms for installing lifts in its apartment blocks. The country’s biggest land development agency has been catering to Delhi’s housing needs for more than 40 years. Since, DDA structures have only 04 floors they do not have lifts.

Although flat-owners had so far been allowed to install lifts later on their buildings on their own, the procedure of getting permission was burdensome.  All the owners of an individual block, with eight to sixteen flats, have to agree to the proposal.

The new norm stipulates that lifts can be installed once most flat owners of the block agree. The consent of the ground floor owners is not required any longer. The cost of installing a lift is Rs 10-15 lakhs, which the flat owners would have to bear. The flat owners will have to apply for NOC to DDA for arrears. While applying for NOC, flat-owners will have to attain structural stability certificate from the registered architect.

Residential Growth Sustains Prices, but Outlook’s Changed

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The real estate market has witnessed more or less a stable pricing scenario in the last 03 quarters after seing a sharp increase in the 02 years that followed the subprime crisis of 2008.

A Delhi based research result for real estate, the volume growth in the residential segment has improved inspite the increase in the interest rates. This keeps the property prices at higher levels. The Chennai real estate market tops the chart with increase in demand from both commercial and residential segments.

However, the Mumbai market has witnessed a correction in the last 03 quarters due to a delay in project approvals. The outlook on future price trends is mixed. Also, a drop in property prices looks distant in cities with lower inventory. On the financial front, most real estate players have reported better results on the back of higher sales volume.

Real estaters normally have execution issues which impact their debt repayment schedules. To tackle such issues and achieve greater transparency, companies are focusing more on product positioning and improving project execution certainty. On the other hand, qualitative factors such as hassle-free land bank and developer’s goodwill in getting land approval will improve company positioning with customers.

Buying a House During Monsoon is Beneficial

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The monsoon is usually considered as a lean season in terms of sales for the developers. It’s not just the weather that affects the purchase of property, but also because it is considered inauspicious to buy anything for about two weeks during this period (because of shraadh or pitrapaksh). Buyers prefer to wait till the festival season to buy real estate. So, in order to increase sales, developers are willing to offer ‘monsoon discounts’.

Many people postpone buying a house during these months. This adds to the existing inventory of the real estate developer. The builder, on their part, wants to get relieved from it so he can start a new project in the upcoming festival season. Also, they would need some liquid cash in hand for the new projects.

While only a handful of developers advertise it as a ‘monsoon discount’, most are willing to offer lower rates to serious buyers. The significant of discount varies for different cities, depending on how badly it is affected by the monsoon. So, in Mumbai and Kolkata the quantum of discount is likely to be higher than that in Delhi and Chennai. In Mumbai, a buyer can expect discounts ranging from 10-20%,  a Mumbai-based real estate marketing company.

Besides the entice of discounted property prices, buyers can also avail of the monsoon special offers on home loans by banks.

New Attractive Real Estate Destination – Hill Stations of India

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Since family income is rising, hill stations in India are becoming attractive real estate destinations for more and more Indians. While some want an embode in hill stations as only a holiday home, others want it as a second home they can drop in any time they want a break from a fast life. According to a survey, Indian hill stations are budding as credible residential options. Gone are the days when owning a house in the hills was mostly looked from an investment point of view, today a large majority of home buyers are ready to move into the hills and are looking at these destinations for residing purpose in the near future.

With 37 percent, majority of survey takers articulated that for them the purpose of buying a house in the hills was clearly for self use, be it for now or for future. Another 29 percent people want to look at such options as a holiday destination or weekend getaway. Interestingly, only 21 percent want to buy real estate in the hilly areas as possible investment options. The remaining 14 percent  is made up of those who want to come out of the city life and plan to settle post-retirement in these areas.

Godrej Properties Stands Tall, But Weak Demand is a Concern.

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Worried about economic and political factors influencing the real estate sector, investors have dumped real estate stocks in the past few months. The 15-member BSE realty index is down by 40 percent in past one year. The members of the index have had varying degrees of fall in their stock prices ranging between 8.5 percent and 81 percent during the same period. However, through all this, the Godrej Properties scrip has not only held its ground, but also registered 19 percent appreciation in price in the last one year.

One of the few business houses to be in real estate, Godrej Properties is a national real estate developer with presence across 11 cities in mid-income housing development. One of the biggest advantage enjoyed by the company is the equity of its brand “Godrej”. At a time when the sector is losing investor confidence due to some of its players’ supposed involvement in corruption, having a strong and reliable brand in the realty space could not have been more cherished by Godrej Properties.

Given the command of high interest rates, high influence is yet another issue for real estate companies. The low capital-intensive model is a good change over other capital-intensive companies. The fourth quarter ended March 2011 has been the best one for the company driven by sales from its projects in Ahmedabad and Gurgaon. The company is expected to launch 4.5-5.5 million square feet area in fiscal 2012.

Though, one of the concerns is its geographic concentration of the company’s landbank around half of which is located in Ahmedabad and another concern is the weak demand in Mumbai market where the company’s ambitious project ‘The Trees’ is being constructed at Vikhroli. The demand should recover by the next 02 years.

2BHKs at the Top of Sale Chart in Housing

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The smaller apartments are selling big! Presently, the maximum demand is for 2BHK residential apartments and the supply is fullfiling this demand. No wonder, some developers claim 55-60 percent of their current inventories are 2BHK units, the GM – Marketing of Ashiana Housing Ltd., Atma Sharan, says the same, “About 55-60 per cent of our inventory comprises 2BHKs. It is definitely the fastest growing segment, particularly since for the first-home buyers as they are at the beginning of their careers and married life.”

The maximum demand for the 2-bedroom units is from the middle-income group nuclear families typically a middle-class salaried employee hailing across sectors, like government employees, school teachers, or employed in the BPO, IT, banking and service sectors. Also the middle level self-employed professionals. This is likely for nuclear families with small kids where a third bedroom is not a necessity and not worth the additional cost. A lot of developers, who were primarily focusing on luxurious housing earlier, have changed their focus to the smaller units as it is said that “the pot of gold lies at the bottom of the pyramid, and that is where everyone wants to get.” The 2BHKs are doing particularly well as they tend to attract the first time buyer who is young, has just married and taken the first few steps of his or her professional life.