Noida and Greater Noida: The land of Property Appreciation

New Okhla Industrial Development Authority, better known as Noida is the region which has witnessed rapid urbanization over the last decade. In the present day, this city has emerged to host major media houses, leading IT and ITeS corporations and expansive residential pockets. Along with catering options of rewarding occupation and habitation to migrant population, Noida and Greater Noida have been a respite to ever increasing pressure on limited Floor Space Index in Delhi and its peripheries.

As witnessed, Noida and Greater Noida primarily flourished owing to the dire need of cheaper residential, commercial and institutional assets in Delhi NCR. This is the region which tops the list of home aspirers and India Inc. looking to establish their base in North India. Subsequently, in tandem to substantial absorption rate of assets here and need to enhance the infrastructure support, now the Noida development authority has decided to revise the circle rate properties with a hike of 10 percent, beginning August 1st 2014.

The latest decree to revise property circle rates in Noida and Greater Noida has come to cheer the investors who made the right choice and speculated an appreciation in the future. Not just the investors, buyers looking out for investing over the next few months can also hope for a natural price correction and stable market with enhanced social and civic infrastructure in the coming years. Increased circle rates will eventually lead to more investments in developing regions like Greater Noida and Yamuna Expressway.

Most importantly, the buyers can now benefit from a rational evaluation method for properties which will no longer bear fixed circle rates. Unlike the current procedure, now the circle rate of assets in residential flat category will be computed against services provided by developers in respective projects. Furthermore, the cap of 25% has been fixed for services which include club, gym, security, power backup and swimming pool. Earlier, 25 percent was levied irrespective of the number of services available in a residential project. However, this will now change to attract 5 percent for each service wherein the maximum charge for all services would go up to 25 percent only.

As discussed above, Noida and Greater Noida are the regions which have witnessed massive urbanization and absorbed migrating exodus from across the country. Growing commerce and residential sectors have been the drivers of growth for this region. Moving forth, with the revised property rates of residential properties, the real estate market in this area is expected to advance and prove more lucrative for buyers and investors in the near future.   

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A Rejigged Land Acquisition Act To Attract More Investments In Realty Sector

The conventional diktats operating in realty sector are now being rearranged to be responsive to current population pressure and demand of assets in the country. Such endeavors to reorder the land acquisition and mixed-land use policies aim to blend with rapid population growth across the metro cities in India. In this direction, the central government’s rounds of consultation with other parties/stakeholders have emerged to be reassuring for investors in the realty domain.

The Land Acquisition Act in practice during the present day is conformist to the interests of farmers/landlords. Conceding to the ever increasing demand of residential and commercial units, this act falls short of striking a balance between the privately owned land tracts and scarcity of land to host fresh projects. Hence the rural ministry, has now undertaken the realignment of the land acquisition act to stimulate a smoother industrialization and construction process.

Real estate market in 2014As reported by Zee News, the clauses like ‘mandatory consent’ of 70 and 80 percent locals for Public Private Partnership and Private projects respectively, need amendments in the present day. Consent for PPP projects could be diluted as the ownership of land remains with the government in these projects. Furthermore, the requirement of 80 percent support by the locals for commissioning private projects could also be brought down to 50 percent.

Being at the stage of informal discussions amongst the political parties, these amendments are regarded as major boosters of growth for realty sector. Once the balance between demand of construction and rights of farmer is realized without compromising the interests of latter, a fresh decree will pave way releasing land pools for construction. It would also induce some respite to the skyrocketing property prices in the metro regions which now vouch for huge absorption numbers for assets across the subsectors of realty domain in India.

Deliberations accounting concerns of all stakeholders and a speedy enactment of a fresh Land Acquisition Act will certainly complement the realty sector’s growth which has started showing signs of revival over the last quarter. With the pro-development government at the center and efforts to attract further investments into the Indian industries via various revised measures, the near future looks promising for realty and infrastructure domains in India. 

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Bangalore: The City With A Bond Of Commercial And Residential Growth

The continual growth of commercial assets in Bangalore has led to a recurrent spread in the housing sector of this city, known as the Silicon Valley of India. Mushrooming residential pockets, numerous new launches by leading developers and enabling social and physical infrastructure is the spectacle in Bangalore which attracts home buyers and investors across the country. The remarkable growth of construction in Bangalore appeals a probe for triggers boosting the demand of residential units here.

Triggers at work for sprawl of real estate sector in Bangalore:High-Storey-Bangalore-City

  • The IT and ITeS service’s domain is the foremost attraction for migrant population in this city. Rewarding employment opportunities have enticed the exodus of working population across the country to aspire for a livelihood in Bangalore
  • FDI funded projects in the residential and commercial realty projects have maintained the cash flow for growth and development of construction in Bangalore. With numerous fortune 500 companies establishing their headquarters here, the demand for office space and residential enclaves has been on a continual rise
  • Rapid expansion and the reach of infrastructure facilities have facilitated a composite of residential and commercial assets in emerging localities of Bangalore which are recurrently expanding
  • Well planned residential pockets with state-of-art civic amenities and connectivity to IT parks/Commercial hubs have lured home buyers to move towards Bangalore for securing a rewarding habitation
  • A perfect balance of well distributed daily utilities, eatery joints, market places, schools, hospitals and transit depots around the residential belts in and around localities like Sarjapur Road, JP Nagar, Electronic City and Kanakapura Road in Bangalore have elevated the living index of this city
  • Rising demand of assets in Bangalore have also been significantly upheld with the enhanced connectivity via Namma Metro, the Bangalore Metro Rail

Summing up the reassuring spectacle of realty sector in this city, the contribution of massive investment in infrastructure domain, pro-development land use policies and growth in the commercial sector can be attributed majority of the credits. Moving forward, with the new pro-growth government at the center and ever increasing demand of fresh residential/commercial properties, Bangalore in expected to fare better in the coming future.

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Budget 2014: Miles to Cover Between Proposals and Performance

The union budget 2014 and its proposals for real estate sector have been the lawn of talks amongst stakeholders over the last few days. The Budget resonates progressive stance of the new government with key projections in favor of construction in the country. However, the months to follow shall witness a critical conversion of proposals into real time execution for progress of this perennially cash starved sector.

Key projections for real estate sector in Budget 2014:

Emphasis on easing FDI capital for affordable housing, development of 100 new smart cities (thrill of the day), enhanced availability of cheaper residential assets, introducing the REITs and increased home loan rebate for individual properties.

As illustrated above, the budget at first sight, looks promising while it seems to unhook realty sector off the fetters restricting its full potential growth. However, it leaves few unresolved issues which once deliberated on a definitive note will certainly entail the true might of realty sector in the months to follow.

Issues which need to be redressed for realty’s potential growth:

Allocation of 7,060 crore for development of 100 smart cities came as a trail blazing initiative towards expansion of realty sector in the country. Along with the enhanced availability of residential pockets, the commercial and hospitality sectors view this proposal as a boost to their scope of operations and development in the coming years. However, the size of proposed investment falls short to the required monies needed with the present costs of construction material and manpower. Furthermore, timely sanctions of funds and apportioning the investments remains key factors which will matter as much as the timely approval of projects in the near future.

Provisioning 4,000 crore for affordable housing and Corporate Social Responsibility (CSR) to subsume slum redevelopment are the proposals which need an inclusive approach. Durability and an enabling living index for pockets of such affordable housings will primarily depend on the availability of infrastructure support. More to the optimal realization of CSR initiative lies with the concerted stance of leaders in India Inc. who are required to set precedents in direction of concern for social responsibility.

For REITs, the current tax structure needs moderation in accord with best international practices which have helped REITs thrive in other nations. In order to yield profit for SPVs acquiring the functional commercial assets and distributing substantial earnings amongst investors, the preferential tax regime in the country needs critical deliberations.

In summation, the union budget 2014 has paved way for a positive market sentiment with reassured confidence for the stakeholders in realty market. Moving forward, implementing the budget proposals with desired changes will enable the realty sector to unfurl its true potential of growth and development in the coming months.

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Samarjit Singh talks about the growing optimism in realty market

SamarThe Budget 2014-15 brings confidence to the Indian economy which yearned for pro-growth initiatives during the last few months which proved to be testing times. As opined by market experts, real estate and construction are the domains which have received significant push from the proposed changes to be realized in the year 2014-15. Adding on to this, Samarjit Singh, Founder and MD at IndiaHomes, talks about the improving customer sentiment while he participates in industry discussion at The Economic Times.

Samarjit Singh is widely regarded as one of India's smartest young business leaders. Having founded and built numerous companies that have powered their way to market leading positions in diverse sectors, Samar is widely regarded as a serial entrepreneur and company builder.

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Budget 2014: A stride towards growth and expansion in real estate sector

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The pro-trade stance of the new government is evident with the budget 2014 and the array of incentives for real estate sector, a sector which contributes more than 5% to Indian GDP. Believed to be trendsetting for the Indian economy, budget 2014 brings provisions for further growth of the housing sector in India.

Closely linked and dependent upon the availability of infrastructure, the real estate sector has been reassured with substantial allocation of 7,060 crore for growth of infrastructure across 100 smart cities in the country. Known to be the spine of growth for numerous ancillary sectors, with this allocation, the real estate sector will witness appreciation of assets and improved livability indices to be the immediate outcomes.

One of the most important takeaways from this budget that helps the common directly is the purchase of homes made more attractive for the middle class. This was effected by raising the deduction against interest payment on home loans from the taxable income to INR 2, 00,000 from the original INR 1, 50,000. Enabling a home buyer to save an additional amount of INR 15,450 from their liability, the budget will also, in effect, lower interest rates for home loans. Likewise, the slum redevelopment initiatives by private sector are also expected witness an upscale owing to its inclusion into the Corporate Social Responsibility domain in the budget.

Strikingly, the investments, a significant element for growth of real estate sector are now expected to augment with a ‘pass through’ status given to REITs. Along the course that has been paved for REITs, the commercial realty sector will significantly benefit with investment in stocks similar to the structure of mutual fund trade in India.

Moving forward, a boost has been granted to Foreign Direct Investments by reducing the minimum built-up area requirement for FDI funded projects. From 50,000 sq. mt, the norms have now been rationalized to the minimum levels of 20,000 sq. mt. to attract more foreign venture capitalists. Furthermore, the reduction proposed ($10 million to $5 million) in the minimum paid-up capital for wholly owned subsidiaries of foreign partners will draw more foreign investments in the Indian property market.

The budget, year on year, is continually regarded with diverse and at times conflicting outlooks across the segments of India Inc. As voiced by various stakeholders in the realty sector, the logjams in approval mechanism, lack of a roadmap for the revival of SEZs and availability of cheaper loans for all segments of construction, still remain a concern. However, this time around, the fresh hopes of growth for Indian economy realized by a stable polity at the center have been able to effect greetings to the budget 2014-15.

The budget aims to aid sustainable growth and development for realty sector in the coming years. Already showing signs of revival with strengthening market sentiment, growth for realty sector has been reassured with the budget 2014 which aims for inclusive growth while the government upholds its commitment to the maxim “More Governance, Less Government.”

Bhaskar Bagchi

Chief Operating Officer

An alumni of IIM Ahmedabad, Bhaskar is a corporate leader who has held board level positions in global organizations and also has helped establish various startups. With IndiaHomes, Bhaskar has successfully steered the company through two rounds of fundraising and expansion across more than 50 cities in India. 

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Novel Investment Tools And New Hopes Of Growth For Realty Sector

The Indian real estate sector fared resilient during the last year which proved harsh for other investment sensitive sectors. However, the present juncture is more critical with high hopes of growth and expansion along with the rejigged economic and political profiles at the center. Today, the realty sector is exhibiting improved traction of construction and absorption of assets across tier one and two cities.

As the last few quarters were testing for economies around the world, the Indian real estate sector also had its logjams of funding, plummeting demands and speculative market sentiment. Even though faced with snags like political instability and uncertainty amongst the buyer segment, the realty domain fared strong with emerging micro markets of growth and reassuring property appreciation in the urban regions of the country.

Interestingly, the Indian housing sector sourced funding from novel channels like the Non-banking financial companies and foreign equity. Utilitarian outlook of Indian developers enabled sustained flow of cash for recurring constructions and realization of optimal potential in this sector. This time around, the real estate arena is witnessing yet another trend of investments which have not been so conventional.

As Finance from banking institutions gets harder with stringent regulations, the investment sale mode of funding is gaining ground in the present day. With realty sector being graded ‘risky’ and not yet awarded an industry status, the investment sale mode has come to be a respite for this cash ravening sector. The investment sale mode entails investors/developer groups to acquire operational assets rather than venturing into the development of projects from ground zero.

Such an acquisition facilitates investors’ regular income in terms of rents and lease along with the capital appreciation values in the longer term. With this type of acquisition, the investors avoid risks of choked funding and delays in the development process of projects. On the other hand, such investments are beneficial for original developers of such projects who avail competitive evaluations of their property.

Moving forward, the investment opportunities in India are striding robust towards further diversification. The pro-trade stance of the new government, upheld flow of FDI, soon to be implemented REITs (Real Estate Investment Trusts) and reformatory initiatives across sectors will certainly be a fillip to realty’s exponential growth in the near future.

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Mumbai Metropolitan Region: The Warehouse Of Growth For Realty Sector

marine-drive-mumbai

Mumbai, the financial capital and house of Indian cinema is the region which tops the wish list of home buyers. Known to be the growth hub for housing and other domains of realty sector, Mumbai is striding robust with consistent expansion across regions in its metropolitan region. Owing to the sustained property appreciation, Mumbai Metropolitan Region, comprising the city and its satellite towns, has emerged to be the hotbed for real estate sector in India.

The rate of property appreciation in Mumbai has rather been a riddle for property buyers, irrespective of their budgets (earmarked for investments). Even while other metro cities in India didn’t fare that well with property sales over the last year, Mumbai constantly captured the focus for its massive land deals and hyper construction activities.

In pursuit of triggers for realty growth in Mumbai Metropolitan Region, mentioned below are few of the findings:

  • Healthy and sustained growth of art and commerce and stock market traction entailed an ever increasing demand of residential and commercial assets in Mumbai  
  • As reported by Zee News, current spell of realty sector has been complemented by the ongoing infrastructure projects like the Eastern Freeway; the terminal connect between South and Eastern Mumbai suburbs
  • The Eastern Freeway has essentially been a fillip to Mulund, Bhandup and Vikhroli and other surrounding areas which witnessed expansion of numerous residential pockets with enhanced connectivity to all directions
  • Connecting East to West, Phase I of Mumbai Metro has further accentuated the worth of realty investments in Ghatpokar and Vikhroli. A stimulus to demand and appreciation of residential assets along its stretch is the result of commissioning the metro project
  • The mono rail, expanding wide expressways and redevelopment activates in and around prime areas of this city have also played a significant role in boosting the realty profile of Mumbai city

Discussed above are few of the many factors triggering growth of realty sector in Mumbai during the present day. Most captivatingly, the outcome of political stability post general elections and pro-trade stance of the new government are yet to realize the optimal potential of realty sector in Mumbai and other tier 1, 2 and 3 cities in India. In tandem to developments elaborated above, Mumbai Metropolitan Region is expected to attract even more aspirers of assets across subsectors of realty sector in the coming future.

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The Upcoming Budget: Housing Sector Awaits Reforms

The Indian realty sector is a significant contributor to India’s GDP and is the garrison of employment for millions of natives. This sector has been known for its resilient and robust stride even while the economy struggled to clock healthy growth over last year. Housing in particular, has been the domain which contributes more than 5% alone for the GDP.  However, it longs for reforms, crucial for its optimal output to be realized in current times when the economy is showing signs of revival.

Moving forward, the Union Budget FY 2014-15 is opined to be real estate’s first milestone post the recently concluded general elections. This milestone has hopes tied for much needed reforms to effect transparency, clarity, elevation and recognition of realty's stature which looms for many years.

A glance at the performance of realty sector over the last year:

  • Funding channels dried up along with the increased dependence on NBFCs (Non-Banking Finance Companies)
  • Raising funds from the capital market proved tough for the new entrants in the construction sector
  • In tandem to slowing economic activities, the residential sector took the brunt with decreased sales of residential units across metro regions
  • The Real Estate Regulation and Development Bill, 2013 came as a hope of respite to the current situation as it proposed for transparency and consumer right protection
  • Overall, the realty market emerged resilient to the slowdown when compared to other investment sensitive sectors

Expectations from the Upcoming Budget:

  • Industry Status: The real estate sector, as mentioned above, has been the spine of Indian economy and hosts foundation of growth for numerous ancillary sectors. This is the time for this sector to be bestowed an industry status for it to get out of the ‘risky’ grade and attract more investments
  • Monitory Policy: Reducing the base and repo rate would entail more funding for the upcoming projects and subsequently add to the expansion of residential sector
  • Credit Reforms: As reported by The Economic Times, there is an acute need to reform the transfer of ‘development rights’, service tax credit on construction activity and the mandate of parking 70 % sale proceeds in an escrow account to encourage the developer groups for more profitable development activities
  • Real Estate Regulation and Development Bill: Speedier ratification and implementation of this bill would be a positive move for streamlining of development activities, sustained flow of FDI and protection of consumer interest in realty sector

As the days pass by and the budget gets closer, the Indian realty sector gears up for a revived spell of easier funding and streamlined approval mechanism. Along with the rising demand of affordable housing and ample investments in the infrastructure domain, the Indian realty sector is all set to march towards expansion and growth in the coming years. 

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Real Estate Investment Trust: A Recurrent Income For Investors

The Real Estate Investment Trust (REIT) is destination next which is eyed upon by investors in the Indian economy. As the upcoming budget is critical for stakeholders in Indian trade and commerce, the REITs have emerged as Special Purpose Vehicle for common investors to leverage income yielding assets for profitable returns.

As reported by The Economic Times, REIT is an instrument of investment in the operational realty projects where the units are traded and profits are distributed amongst the shareholders.  Anticipated to be operationalized in the Indian stock market, REIT regulations submitted by SEBI (Securities & Exchange Board) are now in accord with the global benchmark.

Captivatingly REIT, a novel investment instrument and the subsequent scope be cognizant with the health of existent realty projects will benefit the investor segment in Indian realty sector. With proven success in leading economies around the world, introducing the REIT in India has been opined to be a prudent initiative.

Looking at the present spell, the Indian realty sector is back with expansion across numerous urban regions in the country. Stable polity at center and the increasing brand recognition have augmented the prospects of advance for Indian realty sector over the recent past. Noticeably, the pro ‘inclusive growth’ outlook of the economists in the government has started showing signs of revival for investment sensitive domains of the Indian industries.

Along with the REIT being implemented in Indian stock market, the realty sector is envisioned to scale further heights of transparency as the formal banking route will come into play for all trade transactions.  Furthermore, it would cater a recurrent source of income for investors, while attributing for inflation and appreciation quotient in the open market. Last but not the least, REIT once executed with tax benefits will attract more investments in realty sector and aid further expansion in the coming years. 

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