Month: May 2013

Average size of Bangalore apartment highest in India

Bangalore tops in many things like weather, good, high-end schools and quality of life notwithstanding the traffic cribs. But there’s one not-so-well-known parameter of which the city can be justifiably proud: large apartments.

On an average, a typical apartment across major metros in the country is roughly 1,100 sqft to 1,200 sqft. In Bangalore, that size is 1,750 sqft making it 45% higher than the national average. The average size of apartments in Bangalore is the highest in India, 60% larger than those in Mumbai and 20% larger than those in the National Capital Region (NCR).

Data shared by global consultancy firm LJ Hooker states that the only other Indian city to match Bangalore in apartment sizes is its old IT rival Hyderabad, which also has apartments measuring approximately 1,750 sqft on an average.

Elaborating on the reasons why Bangalore has large dwellings, Alexander Moore, CEO, LJ Hooker India, says the primary reason is land cost. “The higher the cost of land, the greater efficiency you have to make of it, and that’s by building smaller apartments,” says Moore. Land prices in Mumbai and Delhi, says Moore, are 10 times higher than those in Bangalore.

The demographics of buyers in Silicon Plateau, who are primarily end-users located in tech hubs on the periphery, is another important factor. “This takes pressure off city areas and allows greater size. In Bangalore, you can travel 10kms to get access to land which is not the case in other cities, more so in Mumbai,” adds Moore. Mumbai and NCR have large investor populations who prefer smaller units close to city locations.

In Mumbai, the availability of developable land is so scarce that developers need to go vertical and keep the size of apartments units small to maximize land yield. As per data shared by LJ Hooker, the average apartment size in Mumbai is around 1,100 sqft. While average apartment size in NCR is 1,500 sqft, in Chennai it’s 1,300 sqft. “Affordability is the key to Bangalore’s real estate success,” says Jackbastian K Nazareth, group CEO, Puravankara Projects Ltd. PropEquity, a real estate data analytics and research firm in New Delhi, rated Bangalore as one of the most affordable real estate markets in the country.

Bangalore-based real estate major Sobha Developers sells 3-BHK units ranging from 1,850 sqft to 2,000 sqft, which account for 90% of its total apartment sales. At Puravankara Projects, sales of 3-BHK units contribute approximately 70% of its sales.

Prashanth Sambargi, partner, Mars Realty, points out that the city always had a culture of large bungalows with gardens, which is why people look for large apartments. That buyer mindset is visible in the real estate market as many Bangalore-based developers offer terrace/balcony spaces ranging between 600 sqft and 2,000 sqft per apartment.

Developer speak

Most of the demand for 3-BHK apartmens comes from the migratory population which wants to have one room for kids, one room for parents/in-laws and another for guests.

Source: GharaBari

Indian Real Estate Infrastructure

Real estate India has come a long way in the recent years with entry of several innovative and internationally acclaimed real estate developer.US based real estate company which has offered world-class constructions to the country. The real estate developer has its mark in several famous cities.Chennai and Delhi.developers have renovated the Indian real estate infrastructure with their international standard developments which include both commercial as well as residential properties. It is because of the presence of such real estate developers in country that today Indian real estate is shining high among the worlds best real estate investment destinations.

Today there are number of housing options available for investment in India. Both budget properties as well as luxurious housing options are available for investment. For those looking for budget property investments there are apartments and flats in 1 and 2 BHK formats while luxurious bungalows, villas, high end 3 BHK and 4 BHK apartments and independent homes found in metros are suitable investment options for the comparatively higher income sections of the society to make promising returns.

In the current scenario private equity players are considering big investments, banks are giving loans to builders, and financial institutions are floating real estate funds and therefore real estate investment scenario in India has become much flexible and easier. With 100 per cent FDI in real estate now being allowed, even the overseas developers are also closely looking at the market to make an investment to add on to their money. India is among the worlds largest republic or democratic countries of the world. There is good governing system with equally supportive, strong and transparent legal system. The country is providing legal protection for intellectual property rights of the investors or property buyers. Therefore demand for Indian properties is continuously rising on a global basis. Investing in India real estate in current scenario is definitely very profitable and therefore those who are looking to make property investment should rightly select a right property in a good location or city for the investment because it is after all the location of the property that really defines the terms and value of profits you get from your investment.

Source: Abodes India

Big discounts on resale flats/apartments

After the failed predictions over the past couple of years about a fall in property prices, you are more likely to witness the prophesied Second Coming before the promised correction. So what should cash-conscious buyers do? Wait endlessly in the hope that realty prices falter or take the bait of glossy schemes offered by developers? While most such offers for new houses seem tempting, you won’t derive any real benefit. Fortunately, there is a third option: cheaper flats in the resale market. No, these aren’t old, mouldy apartments in decades-old projects. Quite a few of these houses have not even been lived in, but you can get them at a discount to similar houses within the same project or vicinity.

If you’re wondering why resale flats are cheaper than the new ones being offered by the developer, it can be due to various reasons. One of them is that these houses have been snapped up by buyers and investors during the pre-launch phase with the intention of selling them after about three years to earn a profit. At this stage, they were only required to make the down payment. “Many investors book a property at the initial stage just to make a small profit. If they want to make a quick exit, they will price it cheaper than the one offered by the developer, for a faster sale,” says Yashwant Dalal, president of the Estate Agents Association of India, an apex body of real estate developers.

Another reason is that a lot of investors who book flats during soft launches are offered heavy discounts by builders. So, even if such investors sell the flats at a price lower than the one offered by the construction company, they make a hefty profit.

While individual buyers readily make the down payment, a few find out that their finances are strained when they have to start paying the home loan EMIs after the construction is complete, especially if they are also paying a rent. The only option is for them to sell the current house as quickly as possible to repay the home loan, even if it means earning a smaller profit than the one they had hoped for.

How you gain

The biggest benefit of buying in the resale market is that the construction is almost complete and some of the houses are ready to move in. Of course, in this case, you will also know that you are getting exactly what you are paying for. You can be sure that you won’t be duped by the developer, who promises to install marble or wooden flooring and, instead, puts in regular tiles. Another advantage is that you can avail of the tax benefit beginning with the first mortgage payment. The tax deduction of 1 lakh on the principal component of an EMI is available under Section 80C, while the interest paid on a home loan is tax-exempt up to 1.5 lakh under Section 24B. However, this is possible only after you take possession of a house. In case of a property under construction, you have to pay the pre-EMI, which is the interest on the home loan. Though the total interest that you pay as pre-EMI can be tranched into five payments that are eligible for tax exemption for five years after you take possession, they are included in the capped amount under Section 24B. So there’s hardly any benefit in this case.

Problems you may face

In the resale market, the down payment is higher than that demanded by a builder, which is usually 20% of the value of the property. Also, the seller may ask for a portion of the selling price to be paid in cash, which means that you will have to apply for a smaller home loan. So, you should be sure that you can afford to pay 25-30% of the price.

Also, when you buy a property in the resale market, you are dealing with an individual rather than the developer, who has a reputation to protect. “You can’t take anything at face value here, so you must thoroughly scrutinise all the property documents, especially those that verify the seller as the real owner of the property, who has the right to dispose it of,” says Om Ahuja, CEO, Residential Services, Jones Lang LaSalle India.

Beyond the sale price, there will be additional costs that you should factor in, such as registration costs and transfer fee to the housing society. Before taking over the house, make sure that the seller has paid all outstanding dues and taxes. However, to get the utility connections transferred to your name, you will have to pay a fee to the relevant state departments or municipal authorities.

Though these houses are practically new, you may want to carry out renovations or changes to suit your taste. So, include such costs while finalising your budget.

There could be other minor issues like not getting the membership to the society’s club because it is full or the lack of parking space. “If the first buyer did not buy the parking space, the new buyer may not be able to get a new parking lot even if he is ready to pay for it,” says Ahuja. The situation may be worse if your family owns more than one car.

What if the property is mortgaged?

If the house is already mortgaged with a bank, you should ask the seller to obtain a letter from the relevant bank stating that it agrees to relinquish the property documents when the loan is fully paid.

After you are satisfied with all the property documents, you can make a token payment to the seller and enter into a registered agreement with him. You can then deposit the balance payment to the seller’s loan account, after which the bank will initiate the process of releasing the documents. The bank and the seller will fix a date by which you will have to make the full payment. If you are unable to do so by the due date, the bank will levy either a penalty or a premium over and above the outstanding principal, which you will have to pay.

If you plan to take a home loan to pay for the house, your bank will directly transfer a portion of the outstanding amount to the seller’s loan account. Once the seller’s bank receives the payment, it will issue a ‘no objection’ or ‘no dues pending’ certificate to the seller and hand over the original documents to your bank, which will then transfer the balance payment.

Source: The Times of India

India realty space to see $4-5 billion foreign inflows in 2 years

India’s realty sector is set for robust inflows of USD 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, global real estate consultancy giant Jones Lang LaSalle has said.

“The early foreign investors in India, who came in around 2006-07, did not have very good experience, partly because of their inexperience in doing business in India and partly because of global financial crisis,” JLL Asia Pacific CEO Alastair Hughes said here.

“However, foreign investors are now looking with a renewed interest at India, given its still robust economic growth rate as that bodes well for good returns to their investments,” Hughes told PTI in an interview here.

Hughes, who was here to participate in the World Economic Forum Annual Meeting, said foreign fund inflows were expected to pick up in the Indian realty sector going forward.

He added: “They (investors) are now looking much more closely at India to put in their funds into Indian real estate sector. They had come in between 2006-2007 and first half of 2008, but they completely went away in 2009 and have been mostly away since then.

“The overseas investors are now looking to come back and what they are looking for right now is good partners in India, because it is a difficult place to do real estate business because of various reasons.”

Right now, many Indian developers and fund managers are seeking to get international money and that is much more likely to come in, Hughes said, adding that there is more international money today waiting to be invested in India than any of the last five years.

Overseas investors have invested USD 14 billion into the Indian real estate sector over the period from 2006 to 2012. In the last two years, foreign investment into Indian real estate has been around USD 1.2 billion per annum.

Around half of all transactions were invested in residential property, a quarter in the offices sector and the remaining quarter was split among the other sectors. Regionally, half these investment come from US with rest coming from the Middle East, Singapore, the UK, Hong Kong and Germany, Hughes said.

Terming the next two years as much more promising, Hughes said that 2013 and 2014 will have a total of USD 4-5 billion come into the sector, mainly to buy income yielding SEZ assets at a capitalisation rate of 10.75 per cent.

“We expect interest from global and US investors to maintain. Favourite location foreigners will be Bangalore, New Delhi and Mumbai,” he added.

Globally, Hughes said, there was a big boom in 2007 and then a big bust in 2008 for the realty sector, while there has been a gradual recovery since the end of 2009.

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As per a report released by JLL here at Davos, global investment capital is leaning towards real estate and the commercial real estate direct investment volume is expected to more than double to USD 1 trillion by 2030 and Asia Pacific region is leading the investment growth since crisis.

Hughes said investments into Asia Pacific commercial real estate market fell by around 10 per cent in 2012, from USD 98 billion to about USD 92 billion.

“That was because of a sense of caution prevailing in different countries. But now we are seeing a change in the sentiments.

“One of the reasons for that is people looking to divert their investments from bonds to equities and other asset classes and that include real estate. Therefore more money is coming to real estate and a bigger proportion of that we see coming to Asia Pacific,” he added.

Hughes further said: “We believe that the volume of real estate investment deals would go up in 2013 to something close to USD 105 billion, from USD 92 billion last year.

“This would make 2013 the biggest investment year for real estate market since the global financial crisis hit the world, although it would still be below USD 120 billion figure recorded by Asia Pacific in 2007. We are not back to where we were in 2007, but the scenario is getting better and closer to that level.”

Hughes said that 2012 was very bad for the Indian real estate sector, as there were difficult market conditions and India was probably the only country in the world where conditions were even worse than 2009.

Going forward, he said, the growth in Indian office sector would depend on the economic growth.

In the retail sector, a very high growth is expected with the entry of foreign retailers, as they would need large space to set up shop in the country and most of the current developments are not designed for the international retailers.

Besides, manufacturing and industrial sector would also benefit a lot as these companies would need to set up logistics and other facilities.

Hughes said that robust activities are expected in residential space also.

Source: The Economic Times

Will the investment in Kolkata Real Estate Market be profitable?

Kolkata, a major metropolitan city of India, has been known as the commercial capital of Eastern India as it is the only IT hub in that region. The city accommodates more than 15 million people in an area of 185 km2 (71 sq mi).

Kolkata can be divided into THREE main regions:

• Central Kolkata – Encompasses locations like Park Street, Elgin Road & Camac Street
• Eastern Kolkata – Micro markets like Salt Lake, Rajarhat and eastern parts of EM Bypass
• Southern Kolkata – Comprises locations like PA Shah Road, Rashbehari Avenue, Gariahat & southern parts of EM Bypass

The city is spreading in the following directions:

• Garia-Narendrapur in the southeast
• Behala-Joka in the south west
• Rajarhat in the northeast
• BT Road in the northwest
• Howrah in the west

According to estimates by the Confederation of Real Estate Developers of India, in the next five years 250 million sq. feet will be added to greater Kolkata, requiring an investment Rs 37,500 crore. Rajarhat in the north-east, Dankuni in north-west, Howrah in the west, Diamond Harbour road beyond Joka and Batanagar in the south-west and the Garia-Narendrapur stretch in south-east are areas which will see more than 50 per cent price rise in the next one year, said real estate sector sources. Kolkata has highest market potential value share among the States of India and the living cost is lowest among all major cities in India.

PRESENT SCENARIO:

Real Estate Properties in Kolkata is no longer a factor of safe investment for the investors rather this has turned out to be a place of high profit along with stability. A constant growth in the market graph is the perfect evidence that investors are really taking a serious part in the visible growth of the property rate in the city.

Real Estate circumstances have gone for an absolute revolution recently. It has been showing a marked improvement across all the sectors of the realty industry i.e. residential, commercial and retail. It has long shed off the image of being a “lazy city” and is emerging as an expansive and prospective city.According to real estate services firm Jones Lang LaSalle Meghraj, “The city is witnessing a resurgence driven by Government policy and support for the service industry and infrastructure development that is once again attracting industry and capital to the city.” IT revenue from Kolkata witnessed a growth of 70% , as compared to India’s IT revenue growth of 29%.

The Central Business District (CBD) in Kolkata has limited supply of land. Due to lack of space in the CBD area, areas like New Town Rajarhat, Salt Lake and EM Bypass (East Kolkata), are gaining prominence in the Real Estate market. The CBD area is not expected to have any significant addition to commercial stock in the near future due to unavailability of land.

The demand for residential real-estate in the city continues to derive from diverse quarters. The inherent latent demand of the city residents are added over by that from the investors. The demand for residential space at Rajarhat, definitely, is most noticeable. This is primarily because the perceivably higher living standards offered in the area, including connectivity and accessibility to
basic infrastructure, which remain high priority.

PROMINENT AREAS:

It is certain that Kolkata is on the threshold of modernisation and is rapidly adapting to establish itself as a world-class city. This will continue to drive demand for space in the city and also rentals upwards. Dankuni, Dum Dum and Ballygunje are amongst the other prominent places. ABSORPTION: The absorption rate for the residential developments is high especially in New Town – Rajarhat, E.M. Bypass and suburbs. Most major developments witness a high absorption ratio.

RETAIL SPACE:

The Retail market in the city is stabilizing and the projects which were stalled and delayed have restarted, however rental values in the mall may witness a marginal rise on account of buoyant demand, but rental values at city’s high streets are expected to remain stable in the medium term.

A few of the prominent high street retail destinations in the city include Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Gariahaat. Properties like Diamond Plaza, Lake Mall & La-Vida will contribute approximately 0.7 mn Sq.Ft of retail space by early 2011.

Kolkata is set to witness 4.03 million sq.ft of fresh retail space supply by end 2011. Eastern Kolkata is slated to address maximum supply infusion. The region would account for 38% of supply expected by the end of 2011 of which Rajahart shall delivered the maximum space. Central Kolkata is the second most
preferred region and will witness 19% of supply infusion.

The key upcoming project lined up is Varnaparichay Mall by Bengal Shelter. A number of mall projects are also lined up in North Kolkata contributing 18% of upcoming retail space. Sisirkunja Mall by Bengal Shelter & Diamond Heritage Mall by Diamond Group would be the space to look out for in North Kolkata.

West and South Kolkata shall account for around 15% and 10% of upcoming retail space respectively. While West Kolkata region has two projects by the Avani Estates and Forum Group underway to get operational by 2011, South Kolkata also expects to address new retail project Lake Mall at Lake Market.

Park Street and Camac Street have rentals in the range of ` 205- 360/Sq.Ft per month, while southern highstreets of Rashbehari Avenue & Gariahart commands in the range of `165-270/Sq.Ft per month. The quarter witness the retailers demand in locations like Gariahat, Behala and Shyambazar, however the
transactions in prime retail properties remained few owing to the lack of quality space and irrationally rents.

National developers like DLF, Unitech, Godrej Properties and Chaterjee Group are also looking at large scale development in the city.

RESIDENTIAL SECTOR:

Better connectivity and easy accessibility with the help of the upcoming Metro Projects and easy availability of land parcel is expected to boost the pace of construction of realty projects and influence the pricing in the near future. Enquiries for high-end luxury projects have increased by an appreciable
amount in the past one year and are expected to rise even further since the stability of the Real Estate market. Multinational companies are aiming at maintaining global standard of living despite spending extra money and by employing additional resources. Kolkata property market is perky with activity
as it welcomes new construction and re-developments.

At the moment, it would be safe to say that around 60% of Kolkata’s residential real estate market is driven by investors. As a matter of interest, the costliest residential areas in Kolkata today are Park Street, Ballygunge, Alipore and Camac Street, where rates range from Rs. 12000-15000/sq.ft. The cheapest areas are in the PBD, in areas such as Dumdum and Garia. Rates there range from Rs. 1500-2500/sq.ft. National developers DLF Limited and Unitech Limited will be developing theDankuni township over 4,860 acres of land, that will be allotted by the state government.

Overall residential property prices in the city appreciated in the range of 9–15% over the past nine months. High end residential rentals in Kolkata continued to see negligible rise over the previous quarter. The mid segment lease market, however, saw quarterly appreciation in the range of 4–10% for the first time during the year. The south east micro market, especially, saw the highest rise because of its status as the city’s emergent real estate destination with many locational advantages and large supply options in the housing market. Not unlike the rental market, the south east zone showed the steepest rise for high range capital rates too.

The north east micro market also saw cap rate growth in the high (9%) as well as mid (14.0%) segments due to burgeoning end user (especially from the IT sector) demand with gradually improving social and physical infrastructure in the region.

Both rental and capital values are likely to increase further in select micro markets. With steadily improving demand and appreciating prices over the past three quarters, the city’s residential market is likely to continue witnessing further improvement through year end 2010.

UPCOMING PROJECTS:

PROJECT NAME DEVELOPER LOCATION

Kolkata West Int.City Salim And Siputra Groups Howrah
Active Acres Ruchi Realty E.M. Bypass
Rosedale Garden Rosedale Developers Pvt. Ltd. Rajarhat, New Town
New Town Heights DLF Group Rajarhat, New Town
Bellagio Team Taurus Rajarhat, New Town
Urbana Bengal NRI Complex Ltd. E.M. Bypass

Unitech, one of the world’s top 50 Real Estate developers, is developing a 100-acre residential project called, “ Uniworld City” which is only 10 minutes to Dumdum Airport. Unitech is also developing a 50-acre IT project. The State Government of Bengal announced plans earmarking 500-acre for an IT-cumbiotech park near the city airport as part of a Rs. 5000–crore program to upgrade industrial infrastructure.

OUTLOOK:

Prices in prime locations will carry on witnessing an upward trend, making it the right time to explore investment options in Kolkata real estate. The announcement of key infrastructure projects and the expansion of existing metro connectivity to the peripheral region of Rajarhat will help drive new
occupiers to the PBD micro-market. Moreover, the recent government allocation of land parcels in Rajarhat to companies including Wipro and Infosys for campus style developments has further helped improve ailing sentiments. All these factors highlight a revival in market conditions in the Kolkata office
market.

Source: Axiomestates.com