HOME LAND - How to invest in Swadesh

NRIs wishing to benefit from the appreciation in Indian realty should exercise due diligence in their quest.

As the winter holidays begin, a large number of non-resident Indians (NRIs) visit India--some to meet their relatives and others to find grooms or brides for their grown-up children.

Nowadays, another important objective they have in mind during their trip is to buy real estate in India. Here, we look at some of the crucial points NRIs must pay heed while making such purchase.

Why NRIs Invest in India:
Many NRIs, especially those living in the Middle East, don't intend to retire there. They plan to return to India and settle down in their home country after retirement.With this objective in mind, many of them invest in residential real estate in India while still working abroad.

Many NRIs have relatives--old parents or brothers and sisters--in India. Sometimes they buy residential real estate for their use.

Nowadays, a growing reason for buying real estate is that they want to invest in Indian realty. The high returns from real estate in the previous decade though not in the past couple of years-has attracted many to invest in destinations like Gurgaon, Bangalore, Pune, etc.

Finally, Indians - both resident and non-resident are comfortable investing in physical assets and real estate ranks high in their list of preferred investments.

A large portion of the NRI population comes from states like Punjab and Kerala, where land has traditionally been a much-coveted investment option.

Will Returns be High?
Over the last 10 years, the returns from real estate have been significantly higher than the average over the past 30-40 years. The theory of mean reversion applies as much to real estate as to any other asset class.

According to this theory, the long-term returns of all asset classes converge towards a mean or average level. Hence, asset classes that have done well in the past are unlikely to give as high returns in the future.

Going by this theory, the returns from real estate may not be as high in the near to medium term as they have been in the past 10 years or so.

A study done by real estate consultancy Liases Foras found that the level of inventory available in most of the top cities of the country is very high now. The consultancy concluded that prices may not move up rapidly in most of the country's top cities for at least a year and a half due to this.

At the same time, one must keep in mind that India is urbanizing rapidly. Every year lakhs of people move from villages to cities, creating demand for real estate in urban centers.

Therefore, the returns from real estate will not be all that poor either. However, NRI investors will have to be patient and have an investment horizon of 5 years or more.

Exchange-Rate Risk:
NRIs should also be aware that the movement of the exchange rate will have a bearing on their ultimate investment return. Suppose that a US-based NRI invests in India and in 5 years the value of his property appreciates by 30%. But if over this period the Indian rupee depreciates in value against the dollar, it could significantly erode the NRI's gains.

Understand the Laws:
NRIs investing in India should understand the laws that govern their investments in India. There are, for instance, restrictions on how soon the profits from a real estate transaction can be repatriated.

NRIs also need to understand the taxation framework. In case of some countries, there could be double taxation of gains. “Only those with the wherewithal to tackle these ground-level issues should invest in Indian real estate. Those who don't have relatives or friends in India to run errands for them may find the entire experience difficult to manage,“ says Vishal Dhawan, chief financial planner at Mumbai-based firm.

The NRI should also check how many banks are lending to buyers in the project. At least 4-5 banks should be lending. If all these banks have done their due diligence, all the papers and permissions of the builder are likely to be in place.

Finally, NRIs should not get swayed by what has been said on the builder's website. “Many small and mid-level builders have developed glossy websites where they make exaggerated claims. The pictures posted on these websites are not real. The NRI should get the builder's claims verified by either visiting the site or getting someone to do it for them,“ Sharma says.

Fast Fact: High returns from real estate in the previous decade though not in the past couple of years has attracted many to invest in destinations like Gurgaon, Bangalore, Pune, etc.

High Point:
1.) Many NRIs, especially those in Middle East, don't plan to retire there.0
2.) They intend to return and settle down in India after retirement; so many of them invest in residential real estate here.

Source: PropertyatNeoDevelopers.Wordpress.Com

Globe Trot - Theme-based housing catches on like wildfire

Developers these days are finding themselves contending with increasingly evolved tastes among buyers with theme-based housing projects emerging as a major attraction.

Faced with growing competition and rising consumer aspirations, developers are nowadays foraying into theme-based housing projects to differentiate their offerings and add value to their projects.

A Harikesh, senior VP (marketing & sales) of Tata Housing Development Company, says: “With the upsurge in economy, Indian consumers are getting influenced by global standards that have majorly become differentiators for the real estate developers. Also, by traveling a lot for both work as well as leisure, people have become more aware of the different cultures and lifestyles. Therefore, they not only want a home, but opt for a luxurious lifestyle that should be an extension of the experiences they gather as global travelers."

Little wonder then that developers of housing projects are now finding themselves contending with increasingly evolved tastes among buyers.

“Exposure to international home concepts among many of India's well-traveled property buyers is raising the bar on differentiation in residential projects here as well. Besides, lifestyle aspirations have risen, and there is now a lot of demand for themed housing projects,“ Om Ahuja, CEO (residential services) of JLL India, said.

Theme-based housing projects, thus, have evolved into a major attraction in today's cluttered markets. Today consumers are not only interested in luxury homes with larger spaces, fancy facades and super luxury amenities, but are increasingly opting for theme-based housing construction and design like European, Arabian, Singaporean, Spanish, Victorian, and forest style themes. The latest trend to be enlisted in this high-end residential market is Mediterranean theme-based housing, which has of late started picking up in India. The Mediterranean concept, in fact, aims to convey a feel of the architecture popular during the Italian Renaissance and 16th century seaside villas. Certain developers who specialize in luxury villas and townhouses have adopted this concept in India.

For instance, Lavasa aspires to become a metaphor for the future Indian city with a township featuring lakeside apartments and Mediterranean-themed villas.

Mantri has come up with Mantri Espana in Bangalore, while ATS Infra has conceived ATS Lifestyle near Chandigarh on a similar theme.

Sobha Developers' Sobha City, Bangalore, is also a Mediterranean-themed town ship, which has got exquisitely built row houses as well as luxury and super-luxury apartments. Tata Housing, on the other hand, has launched La Montana, a Mediterranean themed town ship located at Talegoan, which is designed by renowned international architect firm F + A of the US.

“DLF's Ridgewood Estate and Sky Court in Gurgaon; Unitech's Vista Villas in Greenwood City, Gurgaon; Emaar MGF's The Villas at Mohali Hills and Ekaantam in Gurgaon; Jaypee Greens' Kasa Isles in Sector 129, Noida, and Lodha Luxuria in Mumbai are some of the projects inspired by the Mediterranean theme,“ Om Ahuja of JLL says.

These projects offer a residential format consisting of 3-5 spacious bedrooms, measuring between 2,000 and 4,000 sq ft and possessing world-class features and distinct interior architecture. It is needless to say that the Mediterranean concept is particularly popular with the elite and super-rich clients.

“The consumers who opt for such theme-based housing are the ones who want to live king-size. More over, they want their homes to reflect their sense of style, taste, and lifestyle. Hence, their homes need to go beyond just luxury homes,“ A Harikesh of Tata Housing says.

Fast Facts: Today consumers are not only interested in luxury homes with larger spaces and super luxury amenities, but are opting for theme-based housing.

Source: Times Property, Dec 06, 2014

RIGHT PLOT - Invest in land for handsome gains

When people think of investing in real estate, they usually favor buying an apartment. Purely from the returns perspective, however, investing in a plot may be a better idea.

Plot versus Apartment:
There are many advantages of investing in a plot. The entry barrier for investing in real estate is high if you buy an apartment. On the other hand, you can begin investing in a small plot with just a few lakh rupees.

Having purchased the land, you don't have to spend too much on it. “All you have to do is construct a wall around it. If the piece of land is large and there is a risk of squatting or forcible occupation, then perhaps you need to station a guard there. On the other hand, in case of an apartment, you may have to spend a lakh or more after getting possession before it is ready to occupy,“ says Pradeep Mishra, head of a realty consultancy.

In the case of a building, the value of land appreciates while the value of buildings depreciates as time goes by. In the case of land, your entire investment appreciates with time.

Choosing the Right Plot:
Connectivity is an important issue which you should factor when buying a plot.

Even if you are investing in a distant locality, say, on the outskirts of a city, you can be assured of getting a good return provided the plot is close to a highway or a main road. If a Metro line is planned for the area, then appreciation on the plot can be very high.

State governments and municipal bodies have their own websites where they put up information on infrastructure development in the area, the companies that intend to set up their manufacturing centers in that area, and so on.

“If you invest in a plot in an area where there will be a lot of infrastructure development, or where the prospects of employment generation are high, you are likely to get good returns,“ says Rajan Ahuja, director of Realty and Verticals.

The orientation of the plot also matters a lot. Most buyers prefer plots that face east or north. The road running in front of the plot should be wide enough to allow easy access.

Make sure that the plot is not close to a graveyard or a garbage dump, or else you will find buyers hard to come by.

If you are buying the plot in an already established area, look at the profile of the people living there. Brokers say the social and financial status of people living in an area also determines its attractiveness.

Pricing:
Make sure you don't pay excessively for the plot. Get information on the price at which recent transactions have taken place in the neighborhood. You should be able to buy in a similar range.

After the Purchase:
Make an assessment of how soon you will get possession of the land. The earlier you get it, the sooner you can put it to some productive use.

Squatting and forcible occupation are the biggest risks for those investing in land. To reduce this risk, you may invest within a colony or township being developed by a developer.

Alternatively, you may build a wall around the plot, construct a small room in one corner, and have a guard live in it. If the location is far away, make regular visits. If you get to know of some activity aimed at taking over your property, report to the police at the earliest.

Become a part of the RWA. If you are buying from a builder, enroll with the maintenance agency and pay the maintenance fee on time.

Fast Fact: There are many advantages of investing in a plot. Foremost being you can begin investing in a few lakh rupees while the entry barrier for investing in real estate is high if you go for an apartment.

Source: Times Property, Dec 06, 2014

Delhi NCR housing prices remained steady till Sept

Prices of residential properties in many parts of NCR have not changed due to a situation of oversupply and low demand.

Property prices in the Delhi NCR region remained stable during the July-September quarter and square foot prices remained unchanged when compared to the previous quarter, a report released by property website 99acres reveals.

“Analysis of price trends in the previous quarter reveals that the Delhi NCR real estate market is sluggish and investors are still cautious,” says Neeraj Sharma, senior vice president-sales, 99acres.com.

Interestingly, average rentals have decreased by about one percent in the last quarter. A comparison of the second quarter of this year with last year’s corresponding quarter reveals a 2% fall in prices per square foot. The rentals of three bedroom flats saw a 1% dip.

“Real estate supply in west Delhi saw a triple digit growth whereas saturated markets of south Delhi grew by 76% owing to the emergence of brand new localities,” the report added.

With respect to apartments, Vasundhara and Vaishali in Ghaziabad saw a capital value decline of 10% and 6%, respectively (quarter on quarter).

Residential apartments at Pitampura and Uttam Nagar in north-west Delhi and Greater Kailash and Saket in south Delhi have shown an upward movement. Greater Kailash II has been the frontrunner in capital value growth in this part of the city with 14% capital growth.

Sector Omicron 1 grew by 22% quarter-on-quarter due to rising occupancy levels. Many projects are approaching maturity and builders have started offering possessions, the report revealed.

Oversupply and decreased sales of residential properties in Noida Extension have resulted in static prices in the region. “No substantial price appreciation is expected here before the commencement of metro work in 2017,” the report suggested.

Gurgaon’s Sector 31, South City 1 and Sector 68 have emerged as the top gainers of the quarter. Sector 31’s closeness to Huda City Centre metro station and the proximity of Sector 68 to the Sohna-Gurgaon road worked wonders for these areas. Sectors-76, 77 and 87 in Faridabad too performed well due to their proximity to Delhi and the main bypass road.

Land prices in Sohna saw a 57% jump post announcement of the Sohna Master Plan-2031 last year.

There was good news for those invested in Neharpar areas in Faridabad, which witnessed a 70 % growth due to enhanced demand for apartments and builder floors.

Source: HT Estates, Nov 29, 2014

More clarity on immoveable property laws

The Department of Revenue of Delhi recently issued a circular to all registrars and sub-registrars to bring more clarity to the process of registration and certain other issues, and for the smooth functioning of the departments. Certain matters regarding instruments dealing with immoveable property were also clarified.

Collaboration and builder-buyer agreements:
The department has said that a collaboration agreement through which the owner transfers his property for development/construction to the builder under consideration is also compulsorily registrable under Section 17(1-A) of the Registration Act. Stamp duty should also be charged for it under the Indian Stamp Act. Similarly, a builder-buyers agreement in which possession is handed over against consideration, has to be compulsorily registered.

Agreement to sell:
It has been clarified that documents containing a contract to transfer an immoveable property for consideration where possession of property is handed over to the buyer, under Section 17(1-A) of the Registration Act, is compulsorily registrable, so as to protect rights of buyer. It is further clarified that such agreements to sell are valid documents and a sub-registrar has to register the same.

Assignment of lease:
Leasehold proper ties can be duly transferred through agreement for assignment of lease which is compulsorily registrable as per Section 17 of the Registration Act, for which stamp duty can be charged as per the Indian Stamp Act.

GPA in the nature of sale:
The sub-registrars have been directed to look into the contents of documents to ascertain their nature for the purpose of stamp duty. It has been noticed that to avoid stamp duty on conveyance, the documents are prescribed in the form of general power of attorney (GPA).

Therefore, it has been clarified that when the document is prescribed in the form of GPA but contains certain clauses in the nature of conveyance then the same shall be deemed as conveyance and the sub-registrar shall refer it to the collector of stamps. The few indicative clauses for identifying such documents are as under: The consideration has been paid for execution of the power of attorney. The power of attorney presented is “irrevocable” in nature. The power of attorney empowers the attorney to sell, gift, exchange or permanently alienate the immoveable property and the consideration received thereof is receivable in the name of the executants.

Not authorized:
Sub- registrars have been instructed not to register instruments that pertain to immoveable properties that have been booked as unauthorized constructions by the Municipal Corporation of Delhi.

Clarifications:
All compulsorily registrable documents have to be presented for registration within four months of execution of the instrument. If the document is presented beyond the permissible limit, it may be allowed for registration upon payment of fine up-to ten times and in such cases, provided this delay shall not be of more than four months. Further, such documents are to be presented for registration in the office of the sub-registrar, in whose jurisdiction part or whole of the property is situated. The sub-registrar should ensure that the site plan of the property is annexed to the instrument. The sub-registrar should ensure that relevant details regarding the property duly filled as per the relevant form is attached to the instrument. A will can be registered at any time after its execution. Also, it can be registered in the office of any sub-registrar. A sub-registrar cannot withhold the registration due to a complaint by any party regarding title unless there is a stay order issued by a court of law. A sub-registrar can demand Aadhar card/enrollment slip for identification of the parties. This circular will now ease the confusion and accord lucidity to the process of registration in Delhi.

Source: HT Estates, Nov 29, 2014

NDA ministers promise to walk the talk

The recently-concluded Credai Conclave 2014 has come as a shot in the arm for the real estate sector.

Aslew of senior minister of the NDA government addressed the two-day Credai Conclave held in New Delhi on November 24-25 and promised that the Modi government would pull out all stops in removing hurdles in the way of the real estate sector and help it achieve the Prime Minister's stated goal of “Housing for all by 2022“.

Prakash Javadekar, the minister for Environment and Forests, said that the long-pending demand of developers and builders to sort out problems in environment clearances, which cause immense delay in the implementation of realty projects, would be met soon. The minister assured the gathering of over 800 builders, developers, and other stakeholders that the government is serious on the issue and that he might announce something positive in the next 15 days.

He also said his ministry is actively discussing it and approvals processes would be streamlined and expedited and the productivity of the sector enhanced.

The government is also working out modalities to reduce the interest cost, which would further boost the prospects of the sector.

Piyush Goyal, the minister for Power and Coal and New & Renewable Energy said the government is committed in to providing housing for all by 2022 and would extend additional tax incentive on home loans to encourage people, especially the young, to buy houses.

The government has also proposed to set up a Mission on Low-Cost Affordable Housing to be anchored in the National Housing Bank; as power and housing sector go hand in hand, Goyal promised that his ministry would ensure power for all by 2019, which is a vision of the government led by PM Narendra Modi.

M Venkaiah Naidu, the minister for Housing and Urban Poverty Alleviation, said that the government is committed to streamlining the approval processes so that time required to implement projects comes down.

This would not only help in containing the cost of construction but also help the country achieve PM Modi's vision of “Housing for all by 2022“, Naidu said.

Source: Times Property, Nov 29, 2014