Why it is the ideal time to invest in Mid-Budget Flats in Kolkata right now

Want to buy a home in your early thirties?
Are you looking for compact apartments in a metro city?

The industry experts suggest that investing in mid-budget flats in Kolkata can lead you to the throne. Research indicates that 80% of the young homebuyers consider property portals (esp video contents) while choosing an apartment. But there are other prime facts too which can return the maximum on your investment. One essential fact would be keeping yourself updated with the latest governmental announcements related to the residential realty segment. Keeping a close track on the institutional declarations is a pivotal fact to be considered while buying your home. If you miss out any, you could end up paying higher than the actual price.

Reportedly, the booking of mid-budget flats in Kolkata has increased over 20%-25% during the last fiscal. Want to know why?

Read on: In its recent announcement central government has allotted Credit Linked Subsidy System (CLSS) to the Middle-Income Group housing category coupled with an increased Floor Area Ratio (FAR).  It means middle-income group affordable housing (both MIG-I & MIG-II categories) are now eligible to claim the CLSS benefit provided by MIG-I category should have a carpet area of 160 sq meter or 1,722 sq ft and for MIG- II category it is 200 sq meter or 2,153 sq ft under the Pradhan Mantri Awas Yojana (PMAY-U) Urban. The CLSS for MIG scheme started gaining impetus in the last couple of quarters and the growth is indeed noticeable.

Since the affordable housing sector has turned out to be the newest sales outpouring source for the real estate sector in India, the Ministry of Housing & Urban Affairs (MHUPA) is absolutely leaving no stones unturned in order to give it a further boost.

It’s an open secret that the word ‘affordability’ varies from state-to-state based on several parameters such as- availability of land, socio-economic structure, cost of living, potential growth factors and lots more.
Buying flats in Kolkata meet all these said parameters successfully. And the best part is most of the top-level housing development of these days fit into the said CLSS beneficiary with ease.

Previously, there was an increment of carpet area for both MIG categories. It took the sales of affordable homes higher across the metros by 15%-17%.

Now under the revised rules, homebuyers with annual household income from Rs 6 lakh to Rs 12 lakh would be eligible for MIG I category, while MIG II for income needs to be above Rs 12 lakh up to Rs 18 lakh. Interest Subsidy for MIG I and II will be 4% and 3%, correspondingly for maximum loan tenure of 20 years.

The adequate home loan amount for interest subsidy will be Rs 9 lakh and 12 lakh for MIG I and MIG II category, in that order. Loan quantum above this limit will be at non-subsidized rates. In its recent release the ministry has declared that as on 11.06.2018, an amount of Rs.736.79 crore has been disbursed to 35,204 beneficiaries belonging to the MIG categories.

The range of the CLSS e was expanded to MIG category with the approval of the cabinet In February 2017. The scheme got its approval for implementation in the year 2017 has been stretched up to March 2019.

The recent home loan revision decision of Reserve Bank of India (RBI) foreshadowed the revised CLSS announcement by the housing ministry. As per the revised home loan structure of RBI, the housing loan limits for PSL eligibility from existing Rs 28 lakh to Rs 35 lakh in metropolitan centres (with population of 10 lakh and beyond), and from existing Rs 20 lakh to Rs 25 lakh in other centres, provided the by and large cost of the housing unit in the metropolitan centre and at other centres do not surpass Rs 45 lakh and Rs 30 lakh, respectively.

“Government’s decision to increase the carpet area further will expedite the construction part of affordable housing sector along with a close quality check. Since most of the mid-budget flats in Kolkata fall under the CLSS benefit scheme, the overall sales are expected to get a sizable augment in the coming years or so,”- says Mr. Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors, India.

The increased construction activity in residential segment is about to reflect on the demand and supply chain of the core segments like- cement, steel, equipment and the other related segments. There will be a wider open horizon for the skilled and unskilled workers with the growing housing construction process across the urban areas of the country.

This is like a digging gold mine opportunity for the MIG flat buyers. People who have been in search of mid-budget flats in Kolkata, this should be the perfect time to plunge in.

Builders might have to retaliate up to Rs. 20,000 crore in accordance with new accounting rules: (Industry insight)

A life-size wave is all set to bump on the realty builders. As per the wandering industry reports, the implementation of a new accounting standard from this fiscal (starting from 2018) will compel the listed real estate companies to write back profits, that have been consummated from all those projects under completion more than a year now.

This could be another socking line of attack to greet those real estate companies which have been reeling under insolvency code for the past few years or more. However, reports suggest that developers have already submitted their request in written to the government, seeking relief.

Conforming to the global industry standard, IND-AS 115 (new industry standard) mentions that all listed real estate companies will have to write back about Rs. 20,000 crore from their net profit of the current fiscal. The new industry standard started rolling since last April of this fiscal.

Real estate companies will have to run after their project completion with best of their efforts. They will have to switch to Project Completion Method from the existing Percentage Completion Method (POC).

Under the earlier regime, the booking amounts received from the home buyers for under construction projects, used to be shown as yearly turnover and the net income generated from those projects were regarded as gross profit by the builder companies.

Under the revised norm, the amount home buyers would pay towards an on-going project, would be treated as ‘advances’/ ‘loans’; but certainly not as income from sales. The developers have to write back the profit booked till date on all on-going projects that are not fully completed under the new norm.

A recent analytic report published by the ICICI Securities said, “This would happen in the first quarter on a retrospective basis and would lead to a hit on the net worth and lead to a temporary spike in companies’ debt-equity ratio.”

In a submission to the ministry of corporate affairs the National Real Estate Development Council (Naredco) said, “Any change from Percentage of Completion (POC) accounting to accounting on Completion of Project would have a very significant revenues and cost reversal as at the opening balance sheet and re-recognition of the same in ensuing period.”

This new industry standard is expected to impact on the credit rating part. Starting from the revenue generation to the net profit – every calculation will be under the finest institutional radar. This will not only have a direct outlook on the debt-equity ratio of the companies, but also restrict the borrowing capacity of the companies too.

Alike DLF and Lodha Group, many other leading real estate builders have kept their mum on this new industry standard and profit calculation part in amalgam.

“Real estate sector in India has been witnessing one after another massive changes during these past 3 years. Under these significant changes and stringent framework, there is no way a builder can escape from the ethics and the industry standards for his survival and sustenance, in the present market scenario. This change in particular, will definitely have a big bite on the revenue generation of the builders and also will give rise to higher tax outflow,” said Mr. Mahesh Somani, Chairman – National RERA Committee, National Association of Realtors, India.

-By LNN (Liyans News Network)

New Year Surprise: SBI Cuts Base Rate by 30 bps to 8.65%

State Bank of India has slashed its Base Rate – an earlier lending benchmark by 30 basis points to 8.65% which means loan borrowers can now lend money from the banks at a cheaper rate. This is a surprising move at the onset of the year and is likely to be carried out by other banks too in the coming days. Yet the bank hasn’t made any changes in its existing benchmark. Thus there will be no change in the marginal cost of the lending rate (MCLR).

From the banking source, it is revealed that over 80 lac borrowers are likely to get benefited from this reduction. On its website, SBI declared, “Base rate reduced from 08.95% p.a. to 8.65% p.a. w.e.f. 01.01.2018.” The bank has also lowered the BPLR (Benchmark Prime Lending Rate) from 13.70 percent to 13.40 percent.

The Base Rate is the minimum lending rate below which banks can’t lend money. The reduction in the Base Rate will definitely benefit the active borrowers, who had borrowed money as home loans from the bank before April 2016 and also people who rose at floating rate. Additionally, the bank has also decided to extend the active waiver on home loan processing fees till March 31 2018, for the new customers who are willing to purchase home and people who want to switch their loan account to SBI.

“This surprise move is likely to usher in more residential property sale throughout the country. A large number of people, willing to buy their dream home in Kolkata and other cities can actually avail easy to repay home loan accessibility. Additionally, the waiver on home loan processing fees will translate in bigger sales and credit growth for the mortgage lending financial institutions, – said Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).

However, along with this latest announcement SBI has become the lowest among the other mortgage lenders. Earlier, the bank has reduced its Base Rate by 5 basis points from 9% to 8.95% in September 2016 which had been followed by the other financial institution until this latest announcement. This reduction is an effort of SBI to certify the transmission of reduction in the policy rates in the recent past. However, around 30-40% loans in the industry are still linked to base rates.

According to the latest market predictions, lending rates are an unlikely trend downward unless there is a steady resurgence in credit growth and higher loan volume ad-lib for lower rates.

-LNN (Liyans News Network)- Interested in north Kolkata apartments? Explore luxury residential property in north Kolkata here. Get project details, location map, floor plan, price list and other details explained. Buy/Sell/Rent properties across 100+ cities in India.

Government To Use PSU Land To Boost Affordable Housing

In an attempt to support affordable housing, the government has already provided infrastructure status and now it’s considering to tweak the land use policy in order to meet the deadline for the project deliverance. Modi government now plans to allow a vast portion of surplus land belonging to sick public sector undertakings (PSUs) for building low-cost homes in urban areas.

A calculation, initiating this decision measures that more than 1 lac homes- of around 800 sq ft each- can be built on land with just 8 PSUs of about 2500 acres. “Housing for All by 2022” aims to develop 1.2 million homes. These PSUs include sick industrial companies such as- HMT Bearings in Hyderabad, Hindustan Antibiotics in Pune, Heavy Engineering Corporation in Ranchi, Indian Drugs and Pharmaceuticals in Gurgaon and HMT Watches in Nainital which are nearing to be closed down.

Reportedly, the cabinet will float tenders for the same in the next couple of weeks by the department of public enterprises. The state-run NBCC which is likely to be appointed as the land management agency for suffering PSUs will help in selling the land parcel. The profit from this land selling will be used to clear up their outstanding liabilities and implement of voluntary retirement schemes prior to the closing or privatization of the enterprises. Also, the unsold lands will be either auctioned by the government or used for affordable housing construction.

Earlier, in September the Ministry of Housing and Urban Affairs had given a hint about this move. After the announcement, it has induced eight public-private options, together with 6 for promoting affordable housing using government lands. Under this model, the public authority will make the payment of such buildings based on the progress on of the project as per lay down and buyers will be paying their part of the cost of the housing to the government. The government targets to deliver as much as low-budget flats before the general elections early in 2019.

The government has an ambitious target to develop as many as 12 lac projects under Pradhan Mantri Awas Yojana (Urban) PMAY-U, under which the urban dwellers with an annual income up to Rs. 18 lacs will get interest subsidy up to 4% on their borrowed housing loans up to Rs. 12 lacs. Of the approved 30.76 lac homes, 15.66 lac houses are under construction, while only 4.13 lac have been constructed since the introduction of this scheme. These affordable homes are set to bridge the gap between the demand and supply disparity in the urban areas. With the limited availability of land and its towering price, it is the biggest challenge for the private developers to deliver a quality house within a limited budget. This scheme gives a relief up to Rs. 1.5 lacs per EWS occupancy with an interest subsidy of 6.5% on home loans up to Rs. 6 lacs.

LNN (Liyans News Network)– Buy affordable flats in Kolkata with PMAY benefit. Easy home loan availability. Low EMI options. For project details and its offerings visit our real estate portal now!

The Future of Hospitality Real Estate in India

Tourism in India is driven by the rich historical and traditional heritage and topographical assortments spread across the country. The future of the hospitality industry inherently related to that of the tourism industry with both foreign and domestic travelers playing an important role in its rise. The industry is witnessing significant growth in every year with its changing business models and distinctive perquisites. The biggest reason behind this boom is India’s overall development as an emerging, favorable business destination in South Asia. The potential advancement in the hospitality sector has been attracting major global hospitality players towards the country.

Hospitality industry in India is one of the brisk expanding industries at present. It’s expected that the tourism industry single-handedly will be contributing about Rs. 9-10 lac crore by the year of 2020. The six rotating seasons of our country returns this industry huge take home. With the changing mindset of Indian travellers, there are numerous luxury resorts and boutique hotels have been mushrooming per diem. Both the domestic and international travellers visit has severely increased over the last few years. Tourism is also a large employment originator apart from being pivotal source of foreign exchange for India.

India is currently having more than one lac hotels. While there are established Indian names like- ITC, Oberoi, Leela and Taj, there are major international brands such as – Hyatt, Marriott, Starwood SPG, Carson Group, Accor Hotels, IHG, Zinc etc. have tapped the market of Indian hospitality business. Besides, there are multiple branded aggregators like Oyo Rooms, Zo Rooms, Vista Rooms, Trivago and others are delivering state-of-art service to expand the prominence of the industry.
In a bid to widening the landscape for the international players, the government has allowed 100% FDI in the hospitality and tourism sector. The industry will see more foreign hospitality brands investing in India in the coming days. Hospitality market in India is going to own many partnerships and tie-up business between different domestic brands as well.

With the changing market scenario, customers have become more price-conscious and they sought for better value for their investment throughout the experience. Hotel Industry is now approaching budget accommodations under their existing brand value thereby making the service available on a larger scale. Other than their core business, hotel industry will also be focusing on other avenues such as- event management, transport services, and other auxiliary services. Thus, they are zooming in tier II and tier III cities for their business expansion. Reportedly major global brands like- IHG, Starwood, Zinc Invasion and Hotel Behemoth expressed interest in launching branches aiming the mid and luxury market segment. Along with the supply of the construction materials, sale and lease of commercial lands will be integral parts of this business expansion. This business evolution will concrete the alliance between the domestic real estate development houses and the international hospitality players.

“Hospitality industry currently envisages about budget-friendly, standardized accommodation which could be a positive benefactor to the real estate industry. The industry is currently exploring development alternatives in tier II and tier III cities and that would spur the growth of urbanization as well as infrastructural development. As more big names are aiming towards India the better constructional and architectural progress will be assures and it will annex country’s present economical standing”- said Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).

-LNN (Liyans News Network) – Buy commercial property in Kolkata. Explore available office spaces/retail/warehouse/shops in and around the city.