Rupee depreciation helping UAE NRIs buy properties in India: Survey

DUBAI: The decline in value of rupee over the last one year is luring NRI’s living in the UAE to buy property in India even if the price stretched up to one crore or more, according to a survey.

According to the survey conducted here by Sumansa Exhibitions who are organisers of Indian Property Show, 89 per cent of NRIs (non-resident Indians) in the UAE are planning to leverage the power of their additional income by investing in properties worth up to 1 crore and beyond.

The weakening rupee gives more power to dirham currency that they have and current sluggish market enables them to buy properties at a cheaper rate in India, it said.

It added that 26.7 per cent NRIs are looking to buy properties as additional investment, a sharp rise of 6 per cent in one year.

NRIs in the UAE mostly prefer investing in property as it is one of the safest option and gives good return as the capital value of any property appreciates, Sumansa Exhibition CEO Sunil Jaiswal said.

“Plus, there is always feeling of returning home since NRIs don’t get citizenship in this region, so property investment becomes natural choice. We can support this further as the survey also reveals that Mumbai, Bengaluru and Delhi feature in the top five destinations list,” he said.

This shows that they are looking for cities which will give them good returns, he said. “Even if the NRI takes home- loan, his payouts are much cheaper as compared to last year. Hence, overall investing in this sector when rupee is low, makes sense,” Jaiswal added.

Honey Katiyal, CEO of Dubai-based Indian real estate consultancy Investors Clinic, said over the last year, his company has witnessed demand for properties which are higher in value as the NRIs want to cash in on this situation and invest more to get better returns in future.

The trend is to invest in additional property in metro cities and enjoy the capital appreciation in 4-5 years time, he added. A representative of Indiabulls said with rupee depreciating in the past couple of years, there has been a good amount of remittance going back to India.

Additionally, the bank deposits have also started yielding good returns making that as a good investment alternative.

“However properties continue to be a preferred choice for expat Indians for investment and asset creation. What they look for is a good brand to invest and a price point which is good to enter. For NRIs, a reputed developer with good track record, quality and possible price appreciation is an important factor,” he said.

Revival in Mumbai luxury market likely despite slow growth

Mumbai’s prime property market has been ranked 18th during the June 2011 and June 2012 period on the Prime Global Cities Index, released by international property consultants, Knight Frank LLP.  While the city’s luxury market has seen a correction of 2.5 per cent during this period it has remained unchanged during the December 2011 to June 2012 period indicating slow growth. However, comparing the second quarters of 2007 and 2012 the city has been ranked 6th with 27.8 per cent change.

Compiled every quarter, the Index monitors and compares the performance of prime properties across key sales markets within the key global cities. Prime properties correspond to the top 5 per cent of the mainstream housing market in each city. While Bangkok tops the chart of Prime Global Cities in terms of change over a year, Jakarta tops the chart when the change is being measured over a five year period.

However, despite the slow growth of the market, there could be a revival. “The declining number of sales registrations has been arrested, with numbers remaining largely flat for September 2012. On a year-on-year basis, sales witnessed a jump of 9 per cent,” said Kejal Mehta, a Mumbai-based real estate analyst at Prabhudas Liladhar.

“We expect sales to pick up on account of some amount of pent-up demand,” Mehta further added. Despite sluggish growth Mumbai’s real estate has been witnessing healthy demand for luxury properties. The findings of consultant firm, Jones Lang LaSalle India provided a similar view.

A recent study from the firm said despite buyers’ expectations of a likely fall in city property prices, this possibility seems limited as developers continue to hold on to their prices. “While premium areas of Mumbai will record slow growth in capital values, suburban markets are likely to witness some appreciation over the next nine months,” said Ramesh Nair, managing director – west, Jones Lang LaSalle India. MagicBricks.com estimates suggest a healthy demand of 35 per cent for properties priced above Rs 1 crore during the Jul-Sept 2012 quarter.

Real Estate Exciting Only At Places

 

Diwali is considered an auspicious occasion to buy a house. This year, though, the high property prices seem to have dampened the festive spirit. “Residential real estate rates have risen in Mumbai and Delhi during the past three quarters, though the price rise is not backed by proportionate demand,” says Anuj Puri, chairman and country head, Jones Lang LaSalle (JLL) India. He does not see price reductions for ready-to-occupy projects in the main seven cities any time soon.

Lacklustre buying activity
Little wonder then that home-seekers are dragging their feet. “The space has not yet seen any revival in demand for residential properties,” says Gulam Zia, Executive Director, Retail and Hospitality, Research and Advisory Services, Knight Frank India. “This trend is common across the country except Bangalore where the scenario is slightly better. The festive season was supposed to provide a boost, but it has not reflected in the demand so far. However, the season has just started and the situation may change in the coming days.”

Falling rates offer little respite
Though home loan interest rates are heading south, they are not yet at comfortable levels. “Interest rates have to decrease substantially to spur noticeable buying activity. Even if that happens, chances of an all-out increase in demand look slim,” says Zia. “The most important criterion in the current scenario is overall affordability, in which the actual unit pricing plays the leading role,” adds Puri.

Let objective be the determinant
The scenario may be grim, but holding back your decision may not bear any fruit if you plan to live in the house. “If your objective is self-use, there is no point postponing the purchase,” says Zia. “After all, the prices are not going to come down substantially, by say 25%, in the next six months. It is not worth waiting for a price reduction of just 5-7%.” But make sure to bargain hard to land a good deal. Also, tread cautiously if you plan to buy an under-construction property, where the going rates are lower than completed properties. “Launches are already pegged at marginally lower rates, but completion timelines of many of these properties could be in question due to the liquidity crunch,” says Puri. Even if you are keen on making a decision now, you should consider the areas that are likely to witness growth. “If the purpose is purely investment, it is advisable to look at upcoming residential destinations on the peripheries where price points are lower, provided that the areas are seeing sufficient infrastructure and connectivity augmentation,” says Anuj Puri.

Realtors rope in foreign stars to push projects

From hiring domestic brand ambassadors to international ones, Indian real estate companies are going global. So far, realty companies have been hiring Indian icons like M S Dhoni, Shah Rukh Khan, Sushmita Sen, Yuvraj Singh and Gautam Gambhir to promote their projects. But now, with increasing purchasing power and more and more premium products being launched, companies are tying up with foreign brand ambassadors to push their projects.

This also helps them in marketing their apartments and houses in international markets, mainly to NRIs.

Realty company Homestead has roped in Michael Schumacher and Maria Sharapova to promote its projects in Gurgaon.

Formula One racing legend Schumacher told TOI that he has a global face and his endorsement will certainly help in attracting buyers in the international markets.

Both Schumacher and Sharapova said they would also be active in the projects’ designing. As part of an effort to bring in the ambience of a racing track, the Michael Schumacher World Tower project will refer to floors as ‘laps’, according to Schumacher. Though the project to be endorsed by Sharapova is yet to be announced, Homestead COO Manoj Shrivastava said it would also be a boutique property with a world class sports facility.

Another realty player Supertech is tying up with Italian luxury brand Giorgio Armani for promoting its 80-floor Supernova residential project in Noida.

Similarly, Lodha Group has tied up with Armani for its luxury 117-floor residential project in Mumbai. For its other designer home project Lodha Fiorenza also in Mumbai, the group has partnered with Jade Jagger, daughter of ‘The Rolling Stones’ legend Mick Jagger.

Another Mumbai-based realtor Nirmal Lifestyle has struck an alliance with US Open, the tennis event, to develop India’s first sports lifestyle apartments. The project has a state-of-the-art fitness centre on the 46th floor.

As the market becomes more mature, definition of luxury housing will evolve with newer offerings and services, says a spokesperson of global realty consultancy firm Cushman & Wakefield. Growth in the luxury housing segment is expected to improve over the next five years with offerings matching international standards. At present, she adds, this trend is concentrated mainly in Mumbai and Pune, but soon more cities will offer branded homes with international associations.

Endorsement of projects by celebrities not only help in attracting buyers’ attention but also in providing credibility to the projects, says Anshuman Magazine, MD of CB Richard Ellis (South Asia). Ten years ago, there were only three to four players. Now the situation has changed and there are more than two dozen developers in the NCR market, developing hundreds of projects, he adds. With the number of wealthy people on the rise, builders are developing boutique properties in the premium segment.

Prices of most of these projects, which foreign celebrities are endorsing, start from Rs 3 crore. As margins in the premium class are higher, developers can afford to spend more in brand promotions.

Should you Renovate or Relocate?

After living in his house for two years, 31-year-old Vincent Noronha realised that he needed a bigger house because he was planning to get married. So he began scouting for new property, but a few weeks of research made him change his mind. “The property rates being quoted were quite steep and beyond my budget even if I had sold my old house,” says the Thane-based assistant brand manager in a multinational company. There were other factors to contend with too. “My house is very conveniently located in terms of commute to work and the neighbours are very friendly,” adds Noronha. However, his problem for additional space remained. The only option seemed to be to tweak the current house.

Luckily for Noronha, the house where he lived had a high ceiling. “We had not renovated the place since purchasing it in 2010, so my parents and I decided to take advantage of the high ceiling and add a slab to the rooms to create another room,” he says.

Since the developer had already approved the plan while selling the property to them, all that Noronha had to do was take permission from his housing society for the planned structural changes. “We had to spend nearly 3 lakh to add an extra room measuring around 200 sq ft. It took us about three months to do so,” he says.

Like Noronha, many homeowners often discover that they need more space. Remodelling can help them expand their current house. However, if it’s an old house, it may need extensive modification, which could be complicated, expensive and time-consuming. The effort may not compensate for a cramped space, congested locality or bad neighbours. Under these circumstances, swapping houses could be a more sensible option and it could also allow you to enjoy better amenities. However, migrating to a new location may not always be a cost-effective option, and in some cases, you may have to sacrifice moving from a centrally located area to the suburbs. The decision to move or modify is a critical one, because a misstep could cost you a significant sum of money and a lot of your time.

EVALUATE YOUR NEEDS
A house is not just an investment; there’s an emotional attachment too. So, while earning profit by selling your house is a major factor in decision-making, other considerations also carry weight. The most important one is the quality of life, neighbourhood and the location. Here’s how to determine whether you should change addresses.

Is it time to move?
Many young couples buy their first house based on what they can afford at that time. However, as the family expands, the cosy house seems to be cramped. This is the most common reason for people to upgrade to a bigger house. In a situation like this, relocating is probably a better option as a renovation project has its own limitations in terms of adding space to the house. This would again be a financially beneficial decision after your professional life ends and the children move out (see When downsizing makes sense).

Is it the house?
If you do not like the floor plan of your house, there may be little you can do to change it through renovation, which may either be too expensive or not feasible at all. For instance, you can’t change the location of the wet areas, such as bathrooms and sinks. Some houses may also have restrictions in terms of the already approved plans and may require new permissions from the housing society or the local building authorities. Moving to a new house may work out to be more costeffective in this case.
Is it the location?

You may need to move to a new location for a specific reason, such as a change in job. When young couples choose their first house, their top priority is to look for one in an area close to the office. However, a few years later, the pressing need is a good school in the neighbourhood. Whatever may be prompting your decision to shift, calculate how long you will need to stay there. If it’s not a long period, renting a house for some time while retaining your old property, and earning rental income from it, may be a better option.

Is it the money?
The price of your house may have escalated more than in most other locations due to a major infrastructural development, say, an airport or a big hospital. You may be able to get a good price for it, which may enable you to buy a comfortable house in another location that is also suited to your needs. This could also be a feasible option for those facing a financial constraint since it allows you to not only tide over your financial problems but also buy a new house, even if you have to compromise a bit in terms of location or size.

Is it a lifestyle choice?
One thing that makes housing projects built in the past few years more appealing is the common facilities they offer. This can be as basic as a lift, to more aspirational ones like a swimming pool, which you may not be able to access easily in an older housing society. If the quality of life matters more to you, shifting to a swanky society may be more to your liking.

Calculate the cost
Don’t be pushed into a move by emotional reasons. After all, relocating involves hard cash too. So, compute how much it will actually cost you to transfer. The first cost will be the one associated with selling your current house. This could include the fees for professionals like a property broker or a lawyer. You may also have to spend money in preparing your house, such as repainting it, for sale and making it more attractive for prospective buyers. Then there are one-time expenses for the new house, such as registering the property, which could cost you up to 10% of the property’s value, stamp duty, and fitting a new electricity meter. In case of a resale property, there may also be costs incurred in transferring the title of the property, also known as conveyance.

Other than the home loan you may have to take, there will be additional costs to bear. “Since most homes are bought through home loans, lenders prefer if you also take an insurance policy to cover the loan. This means having to pay the premium for the policy,” says Ramesh Nair, managing director (West), Jones Lang LaSalle India.

Also, if you have moved to a bigger house, you may need to buy extra furniture and furnishings. You should also be prepared to pay a higher maintenance charge for the better common facilities that you will enjoy. “Maintenance charge and annual property tax are some of the costs that most buyers do not factor in prior to a purchase. In a new high-end construction, a lot of facilities, such as swimming pools, gymnasium and landscaped garden, involve a one-time additional cost,” adds Nair.

The expenses incurred during the initial period of a property transaction can amount to as much as 10-12% of the overall cost of the property.
Before you move
Choosing a new location is not easy. “You may have the funds to shift to a more spacious house, but you should first ascertain whether the new place will be more comfortable in terms of travelling to your place of work, the market or your child’s school,” says Ganesh Vasudevan, CEO of Chennai-based Indiaproperty.com. You need to keep such intangible factors in mind when you shift. A change in location may also mean an impact on the quality of utility services you are used to. “A new location may result in a change in the municipal limits or utility service providers, which could affect the quality of services that you have been consistently receiving. For instance, many localities have the problem of load shedding while some don’t,” adds Vasudevan.

From a purely financial aspect, you should consider the future capital growth potential of the area that you reside in compared with the area you may relocate to. This could influence your final decision.

However, don’t shift simply because you do not want to spend time and money on a problem that has occurred in the house. This is because a potential buyer will also look at the problem and the resale value of your apartment will go down. In such a case, overhauling the house could be more financially viable.

IS RENOVATION A BETTER IDEA?
Remodelling a house can be a great opportunity to not only keep what you want, but also add value and years to it. If you manage your costs well, a renovation project will be a more valuable investment than the upfront cost of the project itself. You get what you want: The biggest advantage of a renovation is that you do not have to choose between four or five template houses that a builder shows you. You have complete control over the project and can decide when to start, who to hire, the colour of your walls and the design of your wardrobes. Neither do you have to worry about an unfamiliar neighbourhood. However, rewarding as it may be, a major renovation is not an instant one and requires a lot of time and patience, apart from the money. The need for renovation: If you had bought your house 8-10 years ago, it’s probably time to spruce it up. How much you need to spend will depend on the condition of the house. It will be higher if you have a major problem like seepage or corroded plumbing as this may require not just fixing the problem but also spending money on accompanying modifications like the treatment of walls or flooring.

According to market experts, the average lifespan of a modern residential building is 60-75 years, depending on the quality of construction and climatic condition. A house needs to be renovated every 8-10 years, though a fresh coat of paint should be applied every 5-6 years. Waterproofing and plastering is required every 10-12 years. The cost of renovation: The cost will depend on the extent of repairs required, the age of the property and the kind of materials you use. The level of customisation that you seek will also have a bearing on the cost. For instance, a modular kitchen which can be fitted with units of standard sizes will cost less than the one that requires odd-sized ones.

Another important aspect that needs to be taken into account is time management. A full-fledged renovation project can last 2-6 months. If you are planning to shift to an alternate location till the house is refurbished, you will also need to factor in the additional rental costs for the time period, the brokerage and the deposit money.

Choosing the right person for the job:
Other than the quality of work, your choice of contractor will also determine the financial and emotional stress, so it is important that you research before you finalise who will redo the house. It is important to take in writing the break-up of various costs, the kind of work he will do and the time frame in the budget that he has quoted. This will help you determine if you need to give the entire project to him or choose several contractors for various jobs in the house. You should also check his past references and the work he has done. This will give you an idea about the quality of his work. Many contractors do several jobs at the same time and leave the task of renovation to foremen. So, you should fix the time limit for completing the job and the penal action in case of delay.

When downsizing makes sense
For most of us, relocating also means upgrading to a bigger house, but there may be situations when shifting to a smaller house may be more beneficial.

When N Pattabhi Ramiah received his retirement corpus a few years ago, he thought of investing it in a new house. “My earlier house was fetching me around 60 lakh. So, I decided to pool in 10 lakh from my retirement corpus and move to a bigger 2-bhk house at Andheri in Mumbai,” he says. However, for Pattabhi (66) and his wife N Giribala (63), the move was just the beginning of their troubles. “The monthly maintenance charge, 6,000, is twice what I used to pay earlier. I hadn’t taken this into account while buying the house, and now it has become a bit difficult to pay. Also, I don’t may not have to worry about any repair work right now, but eventually, this will be a monetary concern too,” he adds.

A bigger house may not always be advantageous and could even be financially detrimental for people whose income has shrunk.

How the cost escalates
The monthly maintenance charge of a house is based on its area and ranges from 3-20 per sq ft, based on the amenities and the locality. So, you will have to pay more for a larger house.
Other than this, you will need to pay property tax on the value of the house, which depends on factors like the age of the building and its location. Usually, for residential premises, the tax is 75-80% of the rateable value, which is based on its fair annual rent. A standard deduction of 10% is allowed on this value. Then there are taxes like the water tax levied by the local municipal authorities, which is again based on the rateable value.
If you plan to insure your home, the premium will depend on the size of the house, among other things. So again, a larger house, keeping all other things the same, will mean a higher premium. A bigger house will require more furnishing, furniture and daily care too. Obviously, it would also require a larger corpus to be kept aside for repairs and longterm upkeep.

Benefit of downgrading
Downsizing to a smaller home may be inconvenient for those who have been living in a bigger property for a long time. However, the financial benefits could outweigh the discomfort in the long term. Says Pankaj Kapoor, MD of Liases Foras: “You would be able to boost your savings corpus substantially by selling the bigger house and shifting to a smaller one.”

Are you ready to make a move?
The decision to remodel or shift will depend on the option that is better in terms of time and money.REASONS TO MOVE

• The size of your family has changed.• You want to move to an area that has better common facilities, such as clubs.

• There are better schools in the area.

• You want to reduce the commuting time.

• Remodelling will be time-consuming.

• You have received a windfall and can afford a better home now.
COST OF MOVING

• Getting a house ready to sell.

• Real estate agent’s fee.

• Taking a bridge loan to fund the difference in new and old property.

• Possible increase in property taxes.

• Increase in maintenance charges.

• Stamp duty and registration costs.

EASONS TO RENOVATE

• You will get exactly the home you want.• Remodelling can be a good investment.• You don’t want to take another home loan.
LIMITS OF RENOVATION

• You can’t alter existing horizontal or vertical dimensions, or change location of wet areas.

• You can’t remove load bearing walls or load the existing structure.
WHEN TO RENOVATE
60-75 years
is the average life span of a modern residential building.
8-10 years
is the time after which a home needs to be renovated.

HOW TO FUND A RENOVATION PROJECT
If you are the owner or coowner of the house, you can opt for a top-up loan in case you are still paying a home loan, or go for a home improvement loan.
Requirements

• Banks usually do not give renovation loans for properties that are older than 35 years.• The maximum age, plus repayment period, should not be beyond retirement in case of salaried persons, and 65 years in case of others.• A quotation must first be obtained from a civil contractor, engineer or architect, and submitted to the lender. Only after its technical department has approved the quotation will the loan be disbursed.
How much can you get?

• A salaried person can get up to two times his gross annual income.

• Others (professionals, selfemployed, etc) can get up to three times their net annual income.
What’s the cost?

• Interest rate: 13-14%

• Margin: 25% of the project cost

• Repayment period: Up to 10 years

• Processing charges: 0.5%
Tax benefits

• Under Section 24, the interest paid on the home improvement loan is tax deductible up to 30,000 a year, subject to a limit of 1.5 lakh on the interest paid on all home loans. No deduction is available for the principal portion of repayment.

HC pulls up builder for delay in seeking approval for plan

 

The Bombay high court has declined to grant relief to Mana Builders and Developers who failed to take any steps for more than two years to get the construction plans for redevelopment of Firdous Park Cooperative Housing Society approved and obtain Intimation of Disapproval from BMC.
Justice SJ Kathawalla noted that the development agreement had been executed by the housing society in favour of the builder in March 2008, but the developer did not take any further step despite the society extending every co-operation to the developer.

Mana Builders and Developers had approached the high court in April 2011 seeking specific performance of the development agreement. They also filed a plea for interim orders restraining the housing society from appointing some other developer. The developer had contended that the delay was a result of the housing society failing to obtain individual agreements from each of its members.

The judge, however, found that during the initial stage, the developer himself had informed the society that he had entered individual agreements with its members, and each of the members had consented for the redevelopment work. Justice Kathawalla, therefore, concluded that the housing society was not under any obligation to get individual agreements executed by each of its members.

The judge further noted that at a particular stage prior to filing of the suit, the developer was not ready and willing to perform its obligations as agreed under the development agreement, and therefore, the developer was not entitled to any relief. The housing society, which has 138 members and a plot admeasuring 5,335 square meters, had decided to go for redevelopment as its building was dilapidated, and the BMC had issued notices for its demolition.

The Realty Sector voices its displeasure on the Reserve Bank

STATUS QUO
The realty sector voices its displeasure on the Reserve Bank of India’s recent decision to keep the key policy rates unchanged once again

LALIT KUMAR JAIN, NATIONAL PRESIDENT,CREDAI
The cost of funding of Real Estate is very high and home buyers as well as developers expected the RBI to come out with a positive policy and facilitate drastic reduction in interest rate. We have been pointing out that the real estate industry is not only the second largest employer in the country but also contributes handsomely to the GDP and growth of 400 other industries. After the recent meeting with the Finance Ministry officials, CREDAI was hopeful that the government and the RBI would come out with a pragmatic policy. However, we are thoroughly disappointed with this stingy approach of the RBI. We have given a representation to the RBI and we wish they consider it seriously.

PARAS GUNDECHA, PRESIDENT, MCHI-CREDA I
MCHI-CREDAI, the voice of the developer community, strongly advocates further reduction rate cuts to bring down the cost of funding of homes. The government and the central bank should facilitate lower interest rates. Many home seekers have been waiting on the fence and the RBI must help improve the market sentiment. The cost of inputs is very high and hence the RBI should help bring down the interest rates.

MANJU YAGNIK,
VICE – CHAIRPERSON, NAHAR GROUP
The recent wave of reforms had turned the market sentiments for the better and to a great extent pushed up hopes of a rate-cut which would have boosted real estate (housing sector pre-dominantly). Rising raw material costs, lack of single window clearance and an industry status which would have made it possible for developers to acquire finance at lower rates are factors which have added to the sluggishness in the sector. If one carefully analyses the market, it’s apparent that there’s a dire need but low demand due to high loan interest rates.

Rate cut was a ray of hope, and with just 25 basis points this was quite disappointing. This has been voiced out clearly by industry representative bodies like MCHI and CREDAI. While I understand that the government is restricted by the pressure of inflation, I feel there is a dire need for it to take a bold step if something as basic as a home has to be brought within the reach of a common man.”

DR. SAMANTAK DAS
DIRECTOR- RESEARCH AND ADVISORY SERVICES, KNIGHT FRANK INDIA
While initiating action is the prerogative of the government, expectation from the central bank is also high to help in arresting the faltering economic growth. Not withstanding high expectation to reduce interest rates, the RBI has kept the key repo and reverse rate unchanged in its second quarter (July-September) monetary policy review. Only the Cash Reserve Ratio (CRR) has been cut by 25 bps in a bid to increase liquidity in the system. This move however, is not expected to yield much respite because anyways the credit growth has been mute and the biggest concern is the high cost of capital. Thus, reducing repo would have helped corporate and households alike.The actions of the central bank are more on account of the high inflationary expectations than anything else, implying that rejuvenating growth will remain the second priority of the bank.

ANSHUMAN MAGAZINE, CHAIRMAN AND MD, CBRE SOUTH ASIA PVT. LTD
The RBI’s decision to keep the key policy rates unchanged once again is a disappointment for the realty sector. While a cut of 25 base points in the CRR Rate does infuse some liquidity, a reduction in the repo rate would have helped boost investor sentiment. The festive season coupled with an expected change in policy rates would have been ideals for improving consumer confidence.

SANJAY DUTT, EXECUTIVE MANAGING DIRECTOR, SOUTH ASIA, CUSHMAN & WAKEFIELD
Given the stressed liquidity scenario in the economy, RBI has announced a cut in Cash Reserve Ratio (CRR) by 25 basis point from 4.5% to 4.25%. This step by RBI is expected to infuse INR 175 billion into our banking system, which is expected to have a positive impact on the realty sector, as some part of it will flow into the industry, which is already facing a liquidity crunch. The primary objective of this policy is to focus on taming inflation and hence the interest rates remained unchanged. An action on rate cuts would have been encouraging for the industry, as it would have provided a positive boost to market sentiments and resulted in increased transaction activities in the residential sales markets, which have been slow for some time.

SIMON RUBINSOHN, CHIEF ECONOMIST, RICS
The decision of the RBI to leave on hold the repo rate at its latest policy meeting was not entirely unexpected given the ongoing concerns surrounding the inflation picture. The rise in the WPI measure to a 10-month high in September of 7.8% coupled with elevated household inflation expectations, which currently stand at 12% for the next year, provided the justification for the cautious stand of the authorities. However, it is significant that the RBI still took the decision to lower the cash reserve ratio by a further quarter point. The importance of this move, although relatively modest, should not be overlooked as it will have a direct bearing on borrowing rates and the capacity of the banking sector to lend. That said, it is unlikely to be sufficient to reverse the course of the economy in the near term. More likely, pressure will build on the authorities to take further action in the early part of 2013 particularly if there are signs of both the inflation dynamic improving and the recent plan outlined by the Finance Minister Chidambaram to address the country’s large budget deficit is a runner.

As far as the real estate is concerned, this move should offer some support for the residential sector and underpin the improving trend in both launches and sales visible in the third quarter; they are now showing a positive year-on-year trend after a sticky couple of years. Our suspicion is, however, that the commercial market will remain broadly flat over the coming months.

ANSHUL JAIN, CEO, DTZ INDIA
Given that the government has not been able to reign in the fiscal deficit which had risen to 5.8% of GDP at the end of FY 2011-12, the RBI remained conservative during the Second Quarter Review of Monetary Policy for 2012-13. Maintaining its anti-inflation stance, the Central bank left the key policy rates unchanged. As a trade-off, a cut in the CRR by 25bps has been announced. The CRR cut will infuse Rs 17,500 crore into the banking system. However, with the policy rates unchanged, the additional liquidity will have marginal impact. In the past, we have seen that a cut in the CRR has resulted in PSU banks lowering their lending rates anywhere between 0.25% and 0.5% depending on the type of loan (home loan, car loan etc.). From real estate perspective, the potential home loan seekers have been eagerly waiting for lowering of the policy rates to go ahead with the purchase of their dream home. But the high interest rates have been quite discouraging. A reduction in the policy rates is urgently required to boost the market sentiment and make any visible impact on the demand.

In order to revive the sluggish domestic economy, the central government has unveiled a slew of policy reforms along with a five-year fiscal consolidation plan that aims to almost halve the deficit by 2017 and cut it to 5.3% of the GDP in the current financial year. The key to achieving the objective of these announcements lies in their successful implementation. As soon as the impact of these reforms start appearing, hopefully by third quarter of the current financial year, we expect RBI to cut the key policy rates by 25-50 bps.

Lodha Township City – Planned to perfection

Situated at the junction of Dombivali and Navi Mumbai, at the heart of the IT triangle of Thane, Mhape and Panvel and just 20 minutes drive from the upcoming international airport, is Mumbai’s largest integrated township. Forming part of a new town spread over 3,600 acres, the first phase spread over 300 acres and comprising four projects – Casa Bella, Casa Bella Gold, Casa Rio and

Casa Rio Gold – is fast approaching completion. Located on Kalyan Shil road, next to the famous Khidkaleshwar temple, the development offers easy connectivity on the Central Line (Dombivali), Harbour Line (Vashi) and Diva-Panvel line (Nilje).

High living: The vision of this development is to ensure the highest quality of living for its residents with focus on high quality infrastructure, community facilities and best-in-class construction. Since its launch in March 2009, almost 16,000 families have already bought into this megacity and have ensured a world-class quality of life for their families. The development already offers a completed 9-hole golf course, clubhouses, landscaped greens and the 5-lakh sq. ft. mall, ICSE school and speciality hospital are moving fast towards completion. In addition, a full sized football ground and a cricket ground are under development, ensuring that every convenience is at your doorstep.

Sound infrastructure: What’s more, special attention has been given to the infrastructure with design by Tata Consulting Engineers (TCE). Wide roads, futuristic fibre optics, ample water supply, reliable electricity and environmentally friendly CNG buses will be hallmarks of this development.

Refined luxury: And to top it all, there are the superb units – finished with imported flooring, European fitments, French windows and beautiful sundecks, every unit offers the hallmark of luxury that Lodha is well known for.

This festival season brings the launch of the last phase in Casa Rio. And for the first time, exclusive garden residences are being launched in this grand development. At the moment, bookings are on for this 21st Century megacity where one can buy a dream home at just Rs 36 lakh onwards.

QUICK BYTE
EVER SINCE THE FIRST PHASE OF THE MEGA CITY – SITUATED AT THE JUNCTION OF NAVI MUMBAI AND DOMBIVALI – WAS LAUNCHED IN MARCH 2009, 16,000 FAMILIES ALREADY BOUGHT INTO THIS 300-ACRE DEVELOPMENT

Raj Infinia at Malad West – New Launch – Special Deal

Rajesh Lifespaces Raj Infinia at Malad West – New Launch – Special Deal.

Builders in Mumbai, First Home Buyers, First Home Investment, Home Loan, infrastructure, Latest Property News Mumbai, Mumbai Property, Mumbai Property Exchange, Pre Launch Sales, property exhibition, Property in Mumbai, Property Investors, Real Estate Mumbai, Real Estate prices, Sandeep Sadh November 8, 2012 Leave a comment

Raj Infinia, Opp. Movie Time Cinema, Ramchandra Lane, Link Road, Malad (W), Mumbai – 400 064.

Call on +91 9820030685 0r +91 (0) 9999 723740 for more details and Offer.

Highlights

• Imposing multi-storeyed towers with contemporary architecture

 

• Spacious apartments with floor to floor height of 10′

 

• Well planned 2, 3 & 4 BHK apartments

 

• Beautifully landscaped garden with children’s play area

•   Well oriented tower to maximize view, light & air ventilation

Those in a league of their own, deserve a club equally exquisite. Reason why Raj Infinia sports a clubhouse so well-appointed, it demands a second look. Now add to it thoughtful open spaces and play areas for your children, and you get a life your family deserves.

• Best in class gymnasium

 

• Steam and sauna room to get cleanse the body

 

• Game rooms to retain the attention of the young ones and the ones young at heart.

 

• A multi-functional hall to celebrate the endless joys of life

 

• Free-flowing jogging track

 

• Special play area for children

Space-conscious. Security-conscious. Eco-conscious.

• Spacious and naturally ventilated lobbies for elevator on each floor

 

• Rain water harvesting and solar water heater for an eco-friendly living

 

• State of the art security, surveillance and fire fighting systems

 

• High speed lifts with power backup

 

• Multi level car parking

Room for thought. Room for luxury. Room for high life.

• Homes with an inspiring height of 10 feet

 

• Living and dining room decked with stylish marble flooring

 

• Luxurious wooden flooring in the Master Bedroom

 

• Smartly designed kitchen with vitrified flooring, granite platform, piped gas and water purifier

 

• Soothing designer tiles, vitrified flooring and top of the line fittings in all bathrooms

 

• Vanity counters as well as segregation of wet and dry areas in the bathrooms as per Indian sensibilities

City’s old properties hold more value

Old apartments up for resale provide better investment opportunities in Mumbai as compared to new properties because of redevelopment prospects. Although new projects are quoting the same rate as old properties, the usable area in these properties is far less than what is mentioned.

Broking house Karvy conducted an on-the-ground survey by inspecting 65 Mumbai and suburban properties that are on the block.

The survey comes to the conclusion that the resale market will continue to thrive as long as the redevelopment story is there. It also says an investor should give preference to “old resale flats” versus “new construction”.

Although the research report aimed at identifying real estate stocks that will do well, it also ends up answering questions in the minds of buyers looking to invest in an apartment. Are houses worth investing in at current prices? Which localities have better investment potential? And, most importantly, will prices come down?

According to the author of the report, Parikshit Kandpal, an analyst with Karvy, there are not many buying opportunities considering that he finds only four flats out of the 65 worth buying.

“A home buyer looks at various factors, including locality, the condition of the building, the view or the availability of elevators,” he says. He adds that all the flats had some issue or the other.

“Redevelopment is going to be the major re-rating story and over the next two-three years, we will see some major price appreciation in the Chembur, Ghatkopar, Andheri, Kandivali, etc (Mumbai suburbs), where prices still remain at Rs 12,500/sq ft, and have potential to move as high as Rs 15,000-18,000/sq ft depending on location within these pockets,” the report says.

The hidden value in older properties is the extra floor space index (FSI) or the permissible ratio of built-up area to land area, available to them. Most older properties were built with a developable areato-land area ratio of 1:1. But properties up for redevelopment can build with a ratio of 2.5:1. This makes the older societies more lucrative from an investment point of view.

Another interesting finding of the survey is that although supply increases as one moves away from the “central business district”, the price change is minimal at 5-10% within a distance of 20km.

Despite apartments being unaffordable for a large section of buyers, Kandpal does not expect prices to crash. He expects the correction to be in the form of a ‘time correction’ where sellers take longer to find buyers or one where prices come down slightly over a couple of years.

The report identifies nonavailability of land as the main reason for high prices and the absence of liquidity.

A majority of sellers quote a random rate and prefer to hold on. This is partly because there is a lack of reinvestment opportunity. Supply has reduced after the state government clamped down on releasing development rights for redevelopment schemes and slum rehabilitation projects in the wake of the Adarsh scandal. “Credai (a builders’ confederation) has told the state government that if there is no supply of land, investors will leave the state and move to other cities such as Bangalore or those in Gujarat,” says Kandpal.

TIMING IT RIGHT

• A survey by broking house Karvy of 65 Mumbai and suburban properties found all had some issues, with only four worth buying

• It advises investors to prefer older flats over ‘new construction’

• It found prices change 5-10% up to 20km from central biz areas

• No price crash expected despite flats being unaffordable

• Only projection is for ‘time correction’ — sellers take longer to find buyers or prices come down slightly over a few years