NRI realty investments drop by over 50%

NRI realty investments drop by over 50%

The NRI season is now at its fag end. Despite undertaking tours to the US, the UK and Middle East and doling out freebies and discounts, realtors have been unable to catch the attention of this cash-rich community.

The result: NRI investments in India-based properties dropped by over 50% this season, with the four metro cities and “NRI-heavy” mirco markets in states like Gujarat and Kerala being among the worst hit.

“Compared to last year, the drop in NRI interest in India-based properties has been almost 50% in all sectors. The metros showed a sharp drop in demand, largely owing to the steep prices”, says Sanjay Dutt, CEO - business, Jones Lang LaSalle Meghraj (JLLM), a global real estate consultancy firm. “Very few luxury homes have been sold as compared to last year”, he adds.

At a time when the domestic demand in micro-markets in Tier-I, II and III cities began to slump in the third quarter of this financial year, the developers were hopeful that the demand from the NRIs will pep up the sentiments in the realty markets.

However, the global slowdown and the resulting slump froze the bullish sentiments among NRIs. “Though a far-from-spectacular number of transactions have indeed taken place this season, generalised job insecurity and a desire to conserve available cash among IT employees abroad has curbed investment demand for high-end properties, Mr Dutt said adding that the response was “significantly muted” from the NRI community this season.

The sharp corrections seen in some larger cities has also led to an “acute wait-and-watch attitude among NRIs who - just like everyone else - are now very price sensitive”, he explained.

Source:Economics Times

Good News On Its Way For Realty Sector

Good News On Its Way For Realty Sector

Rakesh Pathak is an MBA and works in Tata Forum. He is planning to buy a house in the range of Rs 30 lakh to 40 lakh. When he calculated the EMI on a loan for the prospective property, he cancelled the plan.

A house that suits his requirements is way beyond his budget - he is waiting for the home loans interest rates to come down. Like Rakesh, many middle class salaried people would like to buy a property through home loan - while others put money in shares, rather than invest in property.

Dr Mamta Chaubey, reader in Delhi University, wishes to buy a house through home loan. Though she is of the opinion that for middle class people a home loan is affordable, she is nevertheless reluctant to take the plunge as high interest rates have put a dampener on everything.

Sakshi Malhotra, working in an MNC, has been planning to buy a house for a long time She used to wait for prices to come down every year and would keep deferring her plans each year. This year, she was determined to buy property but the thought of paying a hefty EMI dampened her spirit.

One wants property price or interest rates to go down because real estate market is uncertain. With the worldwide financial crisis showing no signs of ending, India too, is keeping its fingers crossed.

Tremors are being felt everywhere - from the volatile stock market to the unpredictable rupee, and from the spiralling inflation to rising home loan interest rates.

Property is of two kinds - movable and immovable property. While movable property, also called chattels , such as money, securities and goods, which can be moved from one place to the other, immovable property such as land and the objects permanently attached to it such as buildings, constitute immovable property.

There also exists another property called intellectual property, which refers to the right over artistic creations or inventions.

Immovable properties have the essential characteristic that only the title to the property changes by virtue of the transfer, whereas, the physical location of it does not change. Property investment is usually referred to as real estate investment or investment in immovable properties or assets.

The investment in property essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future stream of income will accrue to the investor and the alternative investment opportunities.

Real estate investment can be attractive if viewed as a business opportunity ; it can generate rental income, using it as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale.

Investment in property is treated as a long-term gain and investment professionals argue that 5%-20 % of investment portfolio should be directed towards property or real estate . So, everyone in this sector is waiting for some good news, to pick up the threads from where they left, at the beginning of the year.

Source:Economics Times

Tatas, Birlas to Invest in Real Estate

Tatas, Birlas to Invest in Real Estate

Two of India’s large business houses, the Birlas and the Tatas, are looking at real estate as a major investment area, albeit in different ways.

While the Birlas, through a financial services arm, are offering real estate as an alternative investment option to clients, the Tatas are planning to develop surplus land held by group companies. The Tatas may also invest in the sector part of funds raised through recent public offerings.

These moves come at a time when real estate prices are correcting and low demand for projects has prompted large developers to default on financial commitments and project deadlines.

Aditya Birla Management director Ajay Srinivasan, who also heads the financial services business, said the conglomerate is merely gearing up for the future. “We are now putting a team in place and want to be ready when the time is right,” he told ET.

The financial services arm of the group is setting up a real estate and private equity arm for its wealth management units. To be headed by Sashi Kumar, the real estate business would be managed through Birla Sun Life Asset Management. The Birlas plan to subsequently launch two real estate funds, one offshore and the other local, for the sector.

Although funds will be raised overseas as well, the investment destinations will be in India and can include distressed real estate assets. Tata Housing Development, a real estate player, has already said that it plans to leverage its tie-ups with banks by developing properties on surplus land owned by other Tata group companies.

Tata Housing is now identifying excess landbanks owned by companies such as TCS, Voltas, Rallis India, Tata Motors, Tata Coffee and Tata Tea. Tata Capital, the financial services arm of the Tatas, is scheduled to close a largely successful non-convertible debenture issue on Tuesday; it has so far raised Rs 2,300 crore against a targeted Rs 1,500 crore. Although Tata Capital has said that it won’t lend to group companies, it has proposed to invest in most asset classes.

Anticipating a large value erosion in the realty space, Indian corporates are planning to float new funds to acquire assets in the domestic property market. Real estate funds such as Saffron Advisors have either floated or are in the process of floating funds with corpus ranging between Rs 500 crore and Rs 1,000 crore.

“As far as Indian realty is concerned, for the right projects, funds are still available,” said Saffron Advisors MD Ajoy Kapoor. “Conservative European investors, after conducting extensive due diligence and research, are more comfortable with investing in Indian real estate, provided they are able to align with right partners,” he added.

A few months ago, Munich-based retail aggregator Deutsche Capital Management underwrote $20 million for Saffron India Real Estate Fund I, an India-focussed real estate fund. DCM is raising a specific fund for investing in Indian real estate through Saffron Advisors.

Tough lending norms, unfavourable primary market and global financial worries have affected fund flow into the Indian property market. Real estate deals have fallen and fancy valuations by developers are being corrected to a large extent.

Source: Economics Times

Information That NRIs Need For Buying Real Estate Property in India

Information That NRIs Need For Buying Real Estate Property in India

In the case of NRIs there is a general permission to acquire any immovable property (other than agricultural land, plantation or farm-house property) by way of purchase, provided the payment is made out of foreign exchange inward remittance or any Non Resident bank account in India, i.e. Non Resident External Account - NR (E), Foreign Currency Non Resident Account - FCNR or Non Resident Ordinary Account - NRO account. Although immovable property is not defined, the same will include:

• Residential property being house property, bungalow, apartment, villas and all other kinds of residential properties
• Commercial property being shops, offices and show rooms
• Industrial property being factory premises and godowns
• Land for construction of any of the above properties

Acquisition can be made by way of

• purchase
• receiving the property as a gift
• inheritance, and
• share of joint property received upon partition of family or property.

Transfer: Although transfer is not defined under the Regulations, but the definition of FEMA, 99 [Sec. 2(ze) of F.E.M.A. 1999] will apply & include:

• sale for consideration
• exchange of property
• gift of property
• relinquishment of right in a joint property.

Repatriation of Sale proceeds: An NRI being an Indian citizen or a foreign citizen of Indian origin is allowed to repatriate the sale proceeds of an immovable property subject to the following conditions:

• the acquisition should be in accordance with the existing Foreign Exchange Laws (i.e. FERA, '73 or FEMA '99).
• the purchase price was met out of Foreign Exchange Inward Remittance or NRE / FCNR (B) account, and
• in case of residential properties, repatriation is restricted to a maximum of two properties.

The NRIs who are staying abroad may enter into an agreement through their relatives by executing the Power of Attorney in their favour if it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or developer, drafting and signing of agreements and taking possession). Rental income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.

George Gonigal provides you the best and latest info on India Property and Real Estate India. He would also let you know about Real Estate in Gurgaon for NRIs.

Real Estate Trends For 2009 and Beyond

Real Estate Trends For 2009 and Beyond

Real Estate Trends For 2009 and Beyond
By [http://ezinearticles.com/?expert=Ryan_Tollefsen]Ryan Tollefsen

The year 2009 will likely be a year where trends in real estate will change greatly from what we have seen over the last ten years. Bank failures, stock market crashes, and government bailouts are bombarding the American public every day. It is no wonder that people who need to buy or sell a house are discouraged. Many would like to wait to sell their home but can't afford to wait due to job relocations, change in family size, or divorce among other things. The show must go on, but it will be done differently than it has in the last few years.

The prospective home buyer of this year will likely settle for less house than they would have five years ago but they will still want a quality home that they will be happy with for many years. Some buyers will still hesitate to purchase a home even with the real estate deals that are available today because they are waiting for an even bigger bargain. Many home buyers will have to continue renting to save up significant down payments to qualify for mortgage financing since the banks have tightened their lending standards.

It is likely that FHA loans will have a revival in popularity since a smaller down payment is required to qualify for these loans. These loans are expected to be a key instrument for homebuyers throughout 2009, especially first time home buyers. Some officials feel that these loans will have a great impact on jump starting the real estate market.

It is a fact that real estate agents will have to work harder to sell homes; homes will not sell themselves in the near future. Real estate agents will have to work as consultants with buyers and help them get qualified to buy a home; by researching what the buyer can afford and by helping the buyer find ways to obtain financing. Some real estate agents will have to relearn their job, it will require more to sell a home than sticking a for sale sign up in the yard and putting a few pictures in the local paper.

Research has shown that many buyers use the internet when searching for a home to purchase. Realtors will have to adjust to this surge in internet house shopping by providing more thorough websites with more virtual tours set up for homes they are trying to sell to attract out of state buyers. User friendly web tools to help prospective home buyers search for homes on the internet will be a plus for those realtors that want to attract buyers that can qualify for home financing.

Realtors are going to have to put one hundred percent into their work to locate buyers for their real estate listings and to help them find the help they need to get qualified to purchase a home. There won't be as many quick sales so the smart real estate agent will help those prospective buyers to ready themselves to purchase a home and hope that loyalty will bring them back when they are ready and able to purchase a home.

These trying times may bring us all back to reality and force us to adjust our ways to survive and possibly even benefit from the economic downturn that we are in. Home buyers will have to take a realistic look at what they can afford and what they have to do to get ready to purchase a home. Hopefully, when we look back at this period in history we will see that some good has resulted from this period of time.

Learn more about the [http://www.akhomeshow.com]Alaska Real Estate market or search [http://www.akhomeshow.com]Anchorage Real Estate on Ryan Tollefsen's Alaska Real Estate web site.

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Seven Interview Questions to Ask a Buyer Agent

Seven Interview Questions to Ask a Buyer Agent

Seven Interview Questions to Ask a Buyer Agent
By [http://ezinearticles.com/?expert=Joshua_Ferris]Joshua Ferris

Not all that long ago the concept of buyer agency (a real estate agent representing the buyer only in a transaction) was relatively uncommon to the real estate industry because, at the time, most agents represented the sellers of property or both parties.

Buyers of real property were in need of a real estate professional to represent their needs exclusively and buyer agency was born. Fast forward to today, there are tens of thousands of agents who represent buyers in real estate transactions so here are seven questions to help you find the right buyer agent for you.

How many homes have you sold in the past year? - The real estate industry is home to over one million practicing professionals and each agent can choose whether to work part-time or full time.

Sometimes you have an agent who may be licensed to help friends and family sell real estate and other times you have the full time professional who assists in the buying and selling of dozens of properties each year. Find out how many properties your buyer agent has participated in the sale of over the past 12 months to get a better idea of how much experience they have in today's real estate market.

How many times have you represented the buyer only in a home sale over the past year? - The representation ratio is as important to the agent's ability to help you as their overall sales experience. Ask your buyer agent how many times they have represented the buyer only in a real estate transaction because buyer representation and seller representation are two very different concepts.

What area do you sell the most homes? - When you begin looking for a home you will need to narrow down where your ideal living areas will be. Using an agent with extensive knowledge of the area you're most interested in will aid you in finding the right home much faster. There are many real estate agents who specialize in one county, city or even one town!

What's the most you have negotiated off a home's price in the past 12 months? - Part of being a buyer agent is negotiating the best price possible for your buyer client. When interviewing your buyer agent you should know what their most recent successes have been for other buyers because there's a very real chance you will see similar results.

There are agents who constantly push for the maximum possible price reduction before you purchase a home and there are also agents who will be happy if you buy a home at asking price without negotiating at all. It's your money and future so knowing their negotiating success is crucial to your investment.

What type of incentives are being offered by builders and homeowners right now? - During down markets you will find a lot of home builders and sometimes even homeowners who offer incentives to entice you to purchase their home. Incentives can range from the seller paying closing costs and HOA fees to car leases and free appliances.

Do you have a network of contacts that I can use to make my buying process easier? - Who your buyer agent knows really does matter. What happens if you need a new home inspector at the last minute? Having a solid network of contacts will help streamline your home buying process making it much less stressful for you.

How quickly can I expect a response from you? - A big concern for home buyers is what is going to happen once you do start the home buying process. Will your agent be available by phone, text or email? Will you have to wait three days for a response? These are important questions to ask before you choose your buyer agent.

Knowing more about your buyer agent will make you much more comfortable about working with the agent and give you a better relationship to candidly discuss aspects of home buying like sale price, contingencies and what to expect throughout the transaction.

Joshua Ferris is an associate real estate broker in Orange County NY and specializes in both [http://housemeetsowner.com/orange-county-new-york/monroe/]Monroe New York and [http://housemeetsowner.com/orange-county-new-york/newburgh/]Newburgh New York real estate.

Article Source: http://EzineArticles.com/?expert=Joshua_Ferris http://EzineArticles.com/?Seven-Interview-Questions-to-Ask-a-Buyer-Agent&id=1805235

Chennai Real Estate - Forging Ahead

Chennai Real Estate - Forging Ahead

India's real estate development is expected to grow at a pace of 30 per cent annually. This has a direct impact on the mega cities, especially the four metropolitans that provide real estate opportunities to grow manifold. Chennai real estate cannot be far behind.

There has been a huge demand for real estate in Chennai amongst the commercial and residential properties. In recent years, the city of Chennai has experienced a complete turnaround in its all-round infrastructure. The combined initiatives of the Government of Tamil Nadu and the Central Government are paying rich dividends in terms of approval of real estate projects related to infrastructural upgradations in Chennai.

Tata Realty and Infrastructure Ltd (TRIL) announced an agreement with Tamil Nadu Industrial Development Corporation (TIDCO) to jointly develop an IT special economic zone (SEZ). TRIL is a new enterprise of Tata Sons Ltd, the holding company of the Tata Group.

The SEZ will be implemented in two phases - the first phase of 2.30 million square feet will be ready by end-2009 and the remaining 1.70 million would be completed by 2011. TRIL has embarked on several projects for real estate and infrastructure development.

Located on a 25-acre plot in Taramani, the SEZ will include a five-star hotel or service apartments, an international convention centre and help generate direct employment for 40,000 people and indirect employment to another 15,000. Chennai real estate most certainly contributes in boosting economy of the state.

Not only Chennai Real Estate is developing rapidly along side the government of Tamil Nadu but also foreign developers are showing valuable interest in the Chennai real estate. For instance, the Lee Kim Tah Township development in Siruseri, near Chennai, reflects the success of Singapore companies who have forged successful partnerships with their Indian real estate counterparts.

George Gonigal provides you the best and latest information on Chennai Real Estate Builders, If you want to Houses for Sale in Bangalore, he suggests you log on to magicbricks.com

Properties For Sale in India

Properties For Sale in India

A fundamental real estate investment mantra in India is that emerging localities are preferable to established and often saturated ones. Expressing their views on real estate markets in the year ahead, property consultants say that established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates, moreover, there is little scope for new market drivers such as malls to find a place in saturated localities-where, property prices remain high.

According to property consultants Jones Lang LaSalle, this is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic time-frame. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight. Here is an overview on some emerging Properties for sale in India:

. Chandigarh: Though there has been a lot of speculation on Punjab's real estate market, Chandigarh is among the emerging cities that are seeing very encouraging real estate trends. It is India's first planned city, and it conforms perfectly to the key parameters by which we judge a city's growth - property market, people, physical infrastructure, social infrastructure, and business environment. Areas where properties are available for sale include Panchkula (Rs. 2500-3000/sq.ft.), Mohali (Rs. 1500-2500/sq.ft, Dera Bassi (Rs. 1300-2000/sq.ft.) and Zirakpur (Rs. 2700-3200/sq.ft.).

. Indore: Indore's Real Estate star is fundamentally on the rise, and offers good investment opportunities in project with low entry cost that are located in an area with good appreciation potential. Areas where properties are available for sale : Vijay Nagar (Rs. 3000 - 10000/sq.ft.), Bypass, A B Road (Rs. 3000 - 10000/sq.ft.), Rau (Rs. 600 - 1200/sq.ft.), Gulmohar Colony (Rs. 3500 - 6500/sq.ft.), Green Park Colony (Rs. 800 - 3500/sq.ft.).

. Nashik: Nashik is displaying an increasingly buoyant industrial scenario, with considerable growth expected in the IT/ITES industry. Overall infrastructure and connectivity Mumbai and other regional towns is improving rapidly, lending increased credibility to Nashik's real estate market. It is a vertex of the Pune-Mumbai-Nashik Urban Golden Triangle.

George Gonigal provides you the best and latest information on Real Estate News India, if you want to Buy Apartments in India. He suggest you visit magicbricks.com

Drop in Mumbai Suburb Prices - Hopes For Buyers

Drop in Mumbai Suburb Prices - Hopes For Buyers

Owing to nil supply the property prices in the core areas of Mumbai are buoyant as ever. However, the suburban areas are witnessing a drop in prices by 10-20 percent. As the supply side is in excess the values of property are much less in the suburbs as compared to the main city.
According to market research reports, while in Borivali, prices are likely to come down by 10 per cent, the drop would be in the range of 15-20 per cent in Thane and Navi Mumbai. Industry experts feel that it would take a long time for the real estate industry to recover from the current slump.
As per a recent survey, Mumbai is the 10th most expensive city in the world. Having said so to buy an apartment in Mumbai remains a distant dream for a larger section of population. The profile of the prospective buyers mainly consists of youngsters who have come to make a career in Mumbai and spend considerable years of their life in rented apartments and homes. The rented options cost a bomb as well. So, owing a house in Mumbai is a task in its self.
As it is the property are so high in Mumbai and on top of that the rising interest rates has hit the home sales hard. Since long the transactions have been very low all across Mumbai. Mumbai real estate builder, Neelkanth Group, has seen its sales dropping by over a third in the same period.
But the news of a drop in residential real estate prices has brought array of hope for many who are in search of a home in the city.
Mumbai Real Estate Developers, who have their projects in the city suburbs, are now hoping that their projects will soon find some takers. They are optimistic of a good business ahead. Real estate in Mumbai has always been a trendsetter in the property market of the country. Therefore, considering prices declining in its suburbs the property agents and developers are hoping the same trend in other metros as well.
George Gonigal provides you the best and latest information on Mumbai properties. If you want to Buy Apartments in Mumbai, he suggests you log on to magicbricks.com.

Chennai Real Estate - Victim of Market Slump

Chennai Real Estate - Victim of Market Slump

Real Estate in Chennai is on the verge of a crashing market, believes industry experts. Chennai property prices have seen an escalation of almost 200 per cent in the last few years. But with the global slump in the real estate industry Chennai real estate has also slowed down.

Number of Chennai real estate developers has been able sold only a few of their properties in the last quarter. R Mohanty, real estate agent from Chennai states, "The residential real estate prices in Chennai have grown by leaps and bounds making it difficult for buyers to purchase a home in the city. The increased loan rates have now made it worse. Though the prices are witnessing correction people are awaiting the market to further stabilize."

Research reveals that there has been a 90 per cent drop in demand for residential projects since the start of the year.

Notably, Old Mahabalipuram Road, the hottest real estate destination in Chennai is also loosing pace. Cursing the fading effect of the place on lack of infrastructure facilities, Chennai real estate agents say there have been only a few transactions in the area for quite sometime.

The commercial sector is also witnessing a downfall. The Central Business District in Chennai has seen a 15 per cent drop, media reports.

IT companies largely drive the demand for Chennai properties but due to the current market recession many companies have postponed their expansion plans. As a result supply of office space in the city has exceeded demand. Huge chunks of office space are lying unoccupied. Subsequently, Chennai real estate builders are now waiting to launch their projects.

Besides global recession, inflation, the rising home loan rates and increasing input costs have also resulted in slump in property transactions in Chennai. Realtors in Chennai are struggling to sell properties. Though price correction is taking place in Chennai Real Estate sector but realty experts predict that the market will bounce back.

Mutual Funds - Capitalizing on Real Estate Potential

Mutual Funds - Capitalizing on Real Estate Potential

The real estate stocks are difficult for an average retail investor to read. Wild swings have been the order of the day. However, mutual funds that have 3-4 per cent investments in real estate stocks allow a small investor to benefit from the surges but remain protected from the troughs.

Making an informed decision is necessary for the success of your investment goals. Mutual Funds (MFs) are certainly among the most sought-after investment instruments in the market but since you have to select from dozens of mutual funds and not all funds perform well, here we demystify the world of mutual fund investing for you.

What are MFs?

MFs are the professionally managed funds that invest in the equities of various companies, including real estate, listed on the Indian stock markets. These funds are governed by the Securities and Exchange Board of India (SEBI) that safeguards rights and interests of retail investors. Any citizen of India can buy mutual fund units that are available at certain Net Asset Value (NAV) declared every day by the fund managing company.

Should you invest in MFs?

As an investor you could well think of investing in the stocks of real estate companies directly. However, in order to make successful investment, you must take a look at the kind of volatility realty stocks witness on the stock exchanges. The Realty Index clocked whopping returns of 48 per cent between Feb 7, 2007 and Feb 7, 2008, on Bombay Stock Exchange (BSE) but it’s not that every investor who pumped in his money in realty companies directly into stock markets got such returns. In fact, there would be many who bought shares at the wrong time only to witness substantial erosion in the value of their investment.

Mutual funds, at the other end, are run by fund managers who have specialized knowledge over stock-market investing, and track market movements on professional basis. This way, they are well-positioned to make suitable decisions to invest and de-invest in the markets as per the circumstances. Though mutual funds do not guarantee a win-win situation all the way, investing in proven funds actually has the capacity to meet your objectives. As a matter of fact, the specialized investment management by mutual funds has evidently produced returns as high as 80 per cent a year, which a naive investor rarely achieves in the course of direct stock market trading.

Types of Mutual Fund

Selecting a mutual fund scheme mainly depends on your risk appetite, investment horizon, and future needs. Once you work out these factors, you can choose a suitable scheme for yourself.

Meanwhile, Brix Research brings you the insights on the various types of mutual funds classified on the basis of their investment strategy and time horizons.

Corpus investment Equity or Balanced - Equity funds park their corpus anywhere between 65 and 100% in equities. Balanced funds, on the other hand, maintain a fine balance between equity and fixed income securities. The latter option offers you security and the rate of return is relatively lower than the equity fund.

Growth or Dividend - Under a Growth fund, the returns generated over the capital invested keep on accumulating, and your cost per unit increases in tandem. You can redeem your mutual fund units, in case you want to book profits. Choosing the dividend option, on the flip side, entitles you to receive returns in the form of dividend that is distributed among the investors, on a periodic basis. Although it depends on the company’s policy, dividends are generally distributed 2-3 times a year.

Open-ended or Close-Ended - On the basis of investment horizon, mutual funds are divided into two categories: open-ended and close-ended. Open-ended funds allow you to purchase and redeem units at any time, however, in case of close-ended funds; there is a lock-in period under which you cannot redeem your mutual fund units for a certain period of time.

Specialty or Diversified - A Diversified Fund allocates its corpus into different sectors of FMCG, Auto, Petro, Pharma etc. In the event of slowdown in one sector, the other one may be able to compensate it. This way an investor invests his entire corpus in different companies and enjoys the advantages of diversification.

Get the best and latest deals on India Properties and Real Estate in India.

For a Diversified Real Estate Portfolio

For a Diversified Real Estate Portfolio

The Indian real estate boom means good news to you. As a young Indian who earns well, has spent wisely and drive his own car, live in his own house and is able to meet daily expenses without too much effort, good returns from real estate investments should typically be next on your investment agenda. So how do you determine how much of your investible surplus you should invest in real estate and how much to put into financial instruments such as mutual funds and Unit-Linked Insurance Policies (ULIPs). How will your investment in a second house allow you to capitalise on the current real estate boom?

“Anybody who is looking at real estate as an investment option is currently at least in the post-35 age group,” says chartered accountant Raghu Marwah. “In the current scenario, other financial instruments score over real estate as a long-term investment option. The returns in the short and long term are more attractive.” Portfolio advisor Sanjay Mittal too agrees. “Investment in mutual funds and stock markets is liquid. But investments in the property market are not. Mutual funds yield at least 40 per cent year-on- year returns. One of my investors put in Rs 20,000 per month in the Reliance growth fund and his returns are currently over Rs. 3.6 crore in 10 years.”

This is way above that in real estate. In fact, he gives a thumb rule based on the worst performing systematic investment plan mutual fund over the last 10 years. If you have invested for over seven years, returns are normally the amount invested multiplied by the number of years it was invested for. In the current scenario there is a phenomenal growth expected in sectors such as hospitality, logistics, warehousing, healthcare, etc. “Investment in real estate mutual funds, especially at a time when the SEBI has framed the guidelines, will be a bonanza for retail investors,” explains a market analyst.

The retail investor has more to look forward too in the future from real estate markets. The Securities and Exchange Board of India (SEBI) has already issued draft guidelines for Real Estate Investment Trusts (REITs) a sound financial instrument in developed real estate markets around the world. “This will open up a class of investment to the real estate retail buyer that was earlier not possible,” says Goel. Till now investors ended up exposing themselves to segments of the real estate market and their risks were high.

REITs function as funds which consolidate investments in property in different segments and geographies and allow the retail investor to truly encash the potential of the entire sector. It thus minimizes his risk. The investor has different yields and rewards to choose from. Recently SEBI has also issued clarifications on the functioning of Real Estate Mutual Funds. According to these guidelines the REMFs have to be close-ended and have to declare Net Asset Values every three months.

While REITs invest in physical properties and capitalise on regular rental returns, REMFs invest in the real estate stocks. So why are people investing in real estate at all? Where did all the hype about real estate growth come from? Explains Arun Vikram Goel, CEO of Dewan Housing Finance Venture Capital, “The hype around the real estate market comes primarily from speculative, extremely short-term investors. They have bought at launch prices and sold as the values of each subsequent release by the developer was raised and encashed their investment in the short term. These would have yielded very high gains. Nobody who has invested for the long term has contributed to the hype because chances are that they have not exited the market and their computed returns are notional. A long-term investor should not be looking at hyped gains.”

Explains another property investment advisor, “At the height of the boom, I had advised various investors to put their money into multiple projects and to recycle the investments for maximum returns. In fact, I managed portfolios of investors who had upto Rs 1 crore to invest by putting in the 10 per cent that was required to book a property and then to exit when the next installment was due. The gains so achieved were then reinvested in newer launches and the money was constantly increasing.”

But the current scenario is different. After 8-10 months of slow-down in transactions, developers are completing projects rather than launching numerous new ones. Even the rate of hike of value is steady and therefore the short-term speculator is kept at bay. Goel explains this phenomenon. “Immature markets tend to behave erratically. Initially rental markets are not stable and more users think of purchase rather than rentals. Once the supply comes in the rental markets pick up and those who do not want to occupy, lease out property. This hike in demand brings in the speculators and short-term buyers. Finally when there is a glut and capital values stop rising, the rentals will rise. But typically yields from residential real estate investments are only 5-6% in stable markets and 3-4% in unstable markets.”

So again why invest in real estate at all? Why not only in mutual funds if you are a retail investor? “To diversify your portfolio,” says Goel. And he has a simple mantra for the retail investor:

” Do not make investments on the basis of hype. Remember that in a market correction hype comes down and you get a realistic picture.

” It is wise to hold a diversified portfolio with real estate as one of the options.

” Time your entry correctly. The hype typically starts when the peak is reached. If you enter at the peak, you will not get the best rates and you may be part of the slide.

During investing for the long-term remember that returns average out. The property advisor, who does not wish to be named, maintains that normally even in weak market cycles property values double in five years. So if you are a 35+ age group, your property value will at least double every five years and you will never lose out. However, the rate of enhancement of the mutual fund investments is greater in the short term. Sanjay Mathur of Pearls Infrastructure says long-term real estate investments can be upto 200-300 per cent if you choose your investment destination correctly. If you invest in what is the periphery of the city today and hence cheaper, but if there is good economic activity there, the returns in the long term are definitely positive. Short-term returns are only high during speculative high-growth immature market cycles.

Goel agrees that the choice of investment destination is very important. “But real estate decisions are often very emotionally driven too. Aspirational considerations may drive the investors to look at property purchase than yield analysis alone. However, if the investor reads the future potential of markets correctly, he can get good returns. Goel sees younger investor opting more for systematic investments in mutual funds that is more speculative but has greater returns.

The REITs, which is expected to be functional by the next year, if the government gets its policy framework right, will attract an older investor who takes less risks, but opts for steady returns.

Source: Indian Real Estate (Vol.I)

Brixresearch.com

Commercial Real Estate Developments in Kundli - Leaps Ahead

Commercial Real Estate Developments in Kundli - Leaps Ahead

Kundli real estate is bustling with activities. The commercial industry is hyper active with malls, office complexes, industries, SEZs and industrial parks all ready to be set up in the region. Brix Research tells you why.

The Kundli-Manesar-Palwal (KMP) expressway has already been a path beaker in the real estate scenario of the city. There have been number of notable developments along the expressway. These include the Rai-Kundli Multi-Functional Complex, which has an Export Promotion Industrial Park and a Food Park.

Global business corridor

Reaching new heights the proposed 135-km state of the art “global business corridor” to come along KMP expressway is likely to add-on to the already growing commercial real estate of Kundli. The business corridor is expected to further boost the residential segment. It is believed to see a huge demand for residential property from the workforce to be employed by companies on the corridor. According to industry reports, the corridor will also attract large influx of foreign investment of over Rs 2 lakh crore and generate a large pool of job opportunities. Some Japanese and European companies are already showing huge interest to establish their operation centers on the corridor.

Industrial and office space

The demand for office space in Kundli is growing with number of MNCs and IT companies venturing into the city. About 65 lakh sq ft of office space is likely to be on hand for IT companies in the next 2-3 years. Meanwhile, a second refinery has been announced at Panipat, which is expected to accelerate the development of this region.

Organised Retail

The retail like the industrial and residential segments is also growing immensely. Most of the new projects are mixed-use developments. Mapsco, Krishna Artec, Express Builders, DD City, TDI Group is all coming up with residential cum commercial township projects. A shopping complex called Roman Court Shopping Complex is also on the cards.

Mall culture like any other part of the country has gripped Kundli as well. Quite a handful of malls are on platter in Kundli by renowned real estate developers.

Mall Count

CMD Mall

Omaxe City

AMR Shopping Mall

TDI Mall

Rodeo Drive Mall

Parker Mall

Future Outlook

Though Kundli is witnessing massive development on commercial front there is lot more to be done before it can be termed as a real estate destination. According to M K Mishra, real estate agent operating in Kundli the value of commercial properties in Kundli is reported to be around Rs 4, 000-6,000 per sq ft.

25 acres of land has been allotted to DLF and Anant Raj Industries in Kundli for developing IT parks. The total constructed area of the projects is 51 lakh sq ft and 32 lakh sq ft respectively.

There is also a massive 20,000 acre multi-product SEZ in the pipeline being developed by Unitech group. Food processing, auto-components and textiles are some of the industries that will be set up within this SEZ.

Currently, the market is going through a slowdown phase. But, the proposed IT Parks, SEZs, malls and other ongoing infrastructure developments are expected to bump up Kundli’s economic prospects. These developments are anticipated to generate more employment opportunities. Further, all this will escalate the property prices in Kundli to new heights.

Value chart

Commercial unit type	Capital value (Rs/ sq ft)
Office space	3,000-5,000
Shop	3,000-6,000
Industrial land	15,000-20,000/sq yard

Source: Brix Research

Source: Times Property (31^st August’08)

www.brixresearch.com

Kolkata Real Estate Market - A Stable Market For Investors

Kolkata Real Estate Market - A Stable Market For Investors

Girikunj Phase II adjacent to New Alipore, is the newly found residential option in Kolkata. Private real estate developers have lined up their projects in the range of Rs. 28 -36 lakhs. Capital values of builder floor apartment in Tolly Gunj near Menoca cinema hall is Rs 65 lakhs and the rental value of an 1800 sq ft apartment in Tolly Gunj near Menoca cinema hall is Rs. 15000 per month. In Jadabpur the capital values of a 1000 to 1200 sq.ft is in the range of Rs. 25 to 48 lakhs whereas the premium apartments in this region is between 52 to 60 lakhs for a 1000 to 1200 sq.ft multi-storey apartment.

Kolkata Real Estate has witnessed an unprecedented price rise in the South Kolkata localities like Ballygunge, Prince Anwar Shah Road and Elgin road. The factors behind such a steep rise in select localities are the limited availability of real estate options, successful retail and commercial projects and improved connectivity with improved urban road build quality.

Rajarhat, unlike Salt Lake, is being developed as a new city, with not only residential projects but SEZs, IT Parks, hotels, malls and commercial and shopping complexes as well. This well balanced approach towards development has increased the possibility of commercial office demand shifting along with residential requirements. A gradual change is in the offing, with Park Street and its adjacent areas likely to emerge as retail high street locations. Over the last two-three years, residential property prices in the area had gone up by over 50 per cent. Developers are anticipating more than 15-20 per cent rise in the prices by this time of the year also.

Thus, it can be concluded by saying real estate in Kolkata is in a high growth phase, especially in office, hospitality, retail and residential sectors. For commercial, it is the EM Bypass, Sector V in Salt Lake, Park Street, Camac Street and Theatre Road. For residential, the majority is again around the EM Bypass towards the Rashbehari Connector and New Town. There are some pockets in Central Kolkata, but not too many projects are happening here due to the non- availability of large plots of land.

George Gonigal provides you the best and latest info on Real Estate India. He would also let you know about Kolkata Real Estate. To know more, visit Real Estate in Kolkata.

What will real estate cos do now ?

What will real estate cos do now ?

Following an appeal by finance minister P Chidambaram to the entire real estate industry to cut prices and make houses more affordable to the buyers, the developers’ associations — National Real Estate Development Council (NAREDCO) and Confederation of Developers Associations of India (CREDAI) — both responded with appeals to their members to come up with whatever cuts that are possible.

So have developers cut prices and what does this mean for the end user buyer who had been priced out of the market during the boom years?

Rohtas Goel, Naredco chairman and CMD of Omaxe, says his company is offering 1-5% discounts to existing clients who have not defaulted on any payments. The discount is applicable for the Noida and Greater Noida projects. This discount would be offered on the balance amount to be paid. The discount would be applicable for about a year or according to market conditions.

Future projects in Noida, Faridabad, Ludhiana, Indore and Chandigarh, which are to be launched in 25 days or so, have discounts of between 5% and 10%. Affordable housing projects, the first of which is to be launched in Indore on January 26, come with a 15% discount.

Explains Prodipto Sen of Alpha G Corp, “We have not cut prices per se. But even before the FM’s appeal, we had launched a special category in our Karnal project where defence officers and public sector undertaking employees had been offered price discounts. This worked very well and we were overwhelmed by the response to our offer. So the price discounting is often market-linked rather than because of a specific appeal. After all, the developer has to factor in the cost of land, debt servicing and construction.

The appeal by the developers’ bodies has evoked mixed response across the board. Explains Pradip Jain of Parsvanath Developers, who is also a part of Credai, “We have not specified who has to cut how much. Some may have already cut prices according to market conditions. We can’t force them to cut prices again.” Jain maintains that he feels it is difficult for developers to drop prices on existing projects. New projects with lower specifications, sizes or facilities can be launched at lower prices.

“In our Greater Noida project, for instance, we had launched premium projects with high-end specifications. To suit the clients’ affordability today, we will launch the next round at lower prices with lower specifications such as tiled or stone floors instead of Italian marble floors.”

Kumar Gera, chairman of Pune-based Gera Properties and chairman of Credai, says it is important to understand what the association had issued in its appeal. “We had talked about five agencies that need to cooperate to bring down prices — the developer, government, material suppliers, service institutions and financial institutions. Simply dropping prices does not trigger sales. The fence-sitting buyer then waits for prices to fall further. The decisions to tinker with prices are largely on a project to project and location to location basis. The only reason for cutting prices is to impact the sentiment in the market and change the mood which will trigger buying.”

Suresh Jain of Vijay Shanti Developers in Chennai says prices had come to realistic levels even earlier because of market corrections about three to four months ago. Properties on the outskirts of the city that had been launched at about Rs 2,600/sq ft and progressively raised to Rs 4,300 per sq ft have come back to the launch price. This is a realistic value. However, if the government too can match this realism with a reduction in stamp duties and service tax that would help trigger sales.

Says Jain, “We are a group that has traditionally focused on the mid-segment buyers. That consumer is still worried. Earlier, getting a loan was not a problem for him. Today, even when loans are expected to be in the range of 85% of the published prices, many banks are only lending about 60% of the value. That leaves a deficit of 40%. If the government agencies can match the developers’ efforts with some financial trigger, it would help boost the markets.”

A West India-based developer who did not want to be quoted said they were reducing rates on a case to case basis. “Where the project had already sold almost 90%, we do not reduce rates but if a project is just being launched we have offer discounts between 2% and 15% according to the merit of the project, the location and various other factors.”

Ultimately, the rate cuts are not altruistic at all. The developer needs to cut rates to trigger sales as much as the government wants them to do so. However, policy measures to boost finance to the sector too may be required before the reluctant consumer is converted into a buyer.

Source: The Sunday ET, 30th Nov, 2008
Author: jayashree.kurup@magicbricks.com

Is It a Right Time to Invest In India Real Estate Market?

Is It a Right Time to Invest In India Real Estate Market?

The market slum has forced Indian banks to reduce Home Loan Rates and increase rates for Fixed Deposits. And on the other side the Indian Real Estate biggies admit that there have been some shocks in the real estate market of India, yet a good number of them believe it’s a good time to buy a new house. For this you ought to go and gaze for great offers value.

But with the current scenario, only the property rates should not be the sole decisive issue. As the prices have already be so low that any person who buy a residential flat or apartments would be ahead of those who still are waiting for the property rates to fall more. This is a situation similar to that of Gold. Gold prices had dipped so low that those who have purchased them in September, 2008 would be feeling lucky than those who still are waiting for more drop in the price. Hence, don’t wait more and choose the best product that suits your pocket as well as fits your dream house criteria like location, amenities, etc.

So, it’s the right time for the home buyers to buy their dream home or for the property investors who are in the property investment business.