Urban Youth Prefer to Invest in Real Estate

July 01, 2013

Real estate seems to be the hottest investment instrument for urban youth in India, with a whopping 85 percent of those surveyed inclined to put their money into immoveables on hopes of higher and guaranteed returns.

"Over 85 percent of urban working class prefer to invest in real estate saying it is likely to fetch them guaranteed and higher returns," says a survey conducted by industry body Assocham.

Those surveyed also said they cautiously stay off from investing in gold, stocks and mutual funds as these instruments are found to be riskier, the survey said.

A majority of urban youth surveyed believe that investing in the yellow metal is not as profitable as in real estate since they expect gold prices to fall.

Besides, global slowdown and the weak rupee have started casting a shadow on stocks, as many corporations are rationalising the salary structure of their employees with an emphasis on cost cutting which dampens the spirit of investment in the capital markets.

However, a few respondents still chose to invest in stock markets, gold and mutual funds.

The maximum concentration of real estate investments from urban working class and professionals is seen towards residential properties in emerging Tier-II and Tier-III cities.

These include Jaipur, Bhiwadi, Rishikesh, Haridwar, Nainital, Chandigarh, Dehradun, Sonepat, Panipat, Pune and Nasik, it said.

Most respondents felt that investments in real estate, residential and commercial properties are found to be lucrative and much safer since they are completely insured in contrast to those in gold, stocks and mutual funds.

Over 62 percent respondents, especially professionals, chose real estate properties in Tier-I cities like Mumbai, Delhi, Kolkata, entire Northern Capital Region (NCR), Hyderabad, Bangalore, etc for gaining maximum returns.

However, 78 percent of those working professionals with double-income, who bought a house in a metro city, want to invest in their home town for a second home, the survey added.

GHB defers Ahmedabad housing schemes

July 03, 2013

The wait has got longer for those aspiring for a house at the schemes of Gujarat Housing Board (GHB) in Ahmedabad. Change in usage type, higher cost quoted by bidders for construction and provisions in the new revised Development Plan (DP) have delayed three residential schemes in the city.

GHB had announced the launch of seven residential schemes for lower income group (LIG), middle income group (MIG) and higher income group (HIG) in the four major cities of the state before the assembly elections. It had also floated tenders for the seven projects, three in Ahmedabad, two in Rajkot and one each in Vadodara and Surat. Of these, work has already started for projects at Munjka in Rajkot, Tarsali in Vadodara and Ganeshpura in Surat. However, the schemes planned in Ahmedabad have been stalled.

The bidders had quoted 5% to 17% higher price compared to the ‘already high’ estimated project cost for Hathijan-I, Hathijan-II and ‘transport node’ projects in Ahmedabad. Therefore, fresh tenders would be invited. Moreover, instead of the earlier plan of a 3-BHK residential complex for HIG at the transport node in Naranpura, GHB plans to come up with a residential-cum-commercial scheme at the site.

The location of transport node has potential for commercial-cum-residential project, so why should we waste the opportunity, commented a senior office-bearer of GHB. During the discussion period, a mixed development plan at transport nodes was suggested, but the officials did not pay heed, he said, adding that the Board, therefore, rejected the proposal.

GHB also seeks to benefit from the higher ground coverage offered as per the new General Development Control Regulation (GDCR) of the DP, which proposes to increase ground coverage from 30% to 51%. “We are also exploring options to benefit from the new GDCR to bring down construction cost by reducing the height of the building,” said a senior official of GHB.

Under the circumstances, GHB will have to entirely revise its outline for the three schemes, resulting in a delay in implementation.

While planning the LIG housing scheme in Hathijan, GHB will have to consider the impact of the proposed affordable housing zone in one km area along SP Ring Road. If GHB’s price is too high, people might opt for schemes launched by private developers.

Unsustainable housing price rise....

June 04, 2013

According to the Reserve Bank of India’s House Price Index, residential property prices in India have grown at a compounded annual growth rate (CAGR) of 21.4% between the first quarter of 2009 and fourth quarter of 2012.

Further, there has been a large divergence between growth in metro1 cities (CAGR: 24%) and non-metro2 cities (CAGR: 15%).

Nomura points out that the growing divergence between metro and non-metro prices cannot be solely due to supply factors. It also appears to reflect growing investment demand, which is typically concentrated in large metro cities due to higher liquidity. In contrast, the economic slowdown over the last few years has likely affected real demand in non-metro cities.

Given the elevated house prices, subdued job markets and lower household incomes, real demand should remain subdued.

Consequently, in the absence of real demand, investment demand alone may not be able to sustain the excess return in metro cities. 

Ref : http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23583&cat_id=1

State drew most realty investments - Gujarat

AHMEDABAD: Gujarat had the maximum share - about 41% - of new investments in the real estate sector across India during the last fiscal, a survey by Associated Chambers of Commerce and Industry of India (Assocham) said on Monday.
Overall, realty in India attracted new investments worth over Rs 42,000 crore as on March 2013, which slipped from over Rs 92,600 crore a year ago, according to a real estate-specific analysis carried out the industry body.

"While most states have seen a decline in new investments in realty, Gujarat has seen a surge of over 700%, as the state attracted investments worth over Rs 17,000 crore as of March 2013, from just over Rs 2,000 crore a year ago," said D S Rawat, national secretary general of Assocham.
Kerala is another state which has seen massive growth of over 550% in attracting new investments in real estate, followed by Uttarakhand at 400% and Rajasthan at 175%. Most other states have seen a 50% dip in investments, according to the survey.
Apart from Gujarat, states like Maharashtra (over 17%), Karnataka (10%), Tamil Nadu (8%) and Uttar Pradesh (over 6%) are among the top five states with the maximum share of new investments in real estate across India.
With a share of about 15%, Gujarat is second only to Maharashtra which has the maximum share of about 20% of the total outstanding investments worth over Rs 14 lakh crore attracted by the real estate sector across India as of March 2013.
"The real estate sector in India has, of late, been plagued by serious problems like falling sales, rising construction costs, dampened market sentiment overall, sluggish economic growth, high interest rates, high inflation and poor industrial production ( IIP) due to which leading players had to sell off land to reduce debt, private equity players trimmed exposure to the realty sector and a general slowdown in various industries hit commercial real estate," Rawat said.

Few takers for affordable housing scheme in Mumbra

April 16, 2013

The response to state government's rental housing scheme.

aimed at stemming slum proliferation and preventing unauthorised structures from sprouting in the city's metropolitan region, has so far been dismal in the Mumbra-Shilphata belt, an area that probably needed the scheme the most.

There have been just two proposals from developers in this region for creating affordable houses under the rental housing scheme. Of the two, only one could be approved as per norms.

"The scheme was market-based. Wherever there was enough market demand, real estate developers submitted proposals to construct houses under this scheme. The response in the Mumbra-Shilphata region in particular might be low because, from what we understand, developers tend to agglomerate in clusters and probably there is paucity of continuous stretches of vacant land there," said Uma Adusumilli, chief of the rental housing project, being implemented by MMRDA.

Earlier this month, the collapse of an illegal building in Mumbra had brought to light the rampant growth of unauthorised structures in the Mumbra-Shil Phata belt.

The sole scheme approved in this region is by the Dosti Group at Mumbra junction. It is likely to yield about 1,800 units for affordable housing. The only other proposal could not qualify as the developer did not have a continuous plot.

Rajesh Prajapati, president of MCHI-CREDAI's Raigad unit, said the price builders get in this area is lower than the cost of construction that they incur in a rental housing project.

"To use the FSI of 4 under this scheme, the building has to be at least 30-storeyed and the cost of construction comes to at least Rs 3,000 per sq ft. Looking at the cost overruns and other issues, the cost that the developer will want to sell at will be Rs 5,500-6,000 per sq ft. The market is not able to sustain such a high price," Prajapati said. He added that the soil in that region is mostly clay and a building foundation has to go very deep, raising the cost of construction.

The rental housing scheme was floated in October 2008 with the intention of creating five lakh affordable houses within five years. However, so far MMRDA has approved only 54 schemes across MMR.

Only 25 of these have got commencement certificates and are at different stages of construction. These are expected to yield 45,000 units. There are about 140 proposals under scrutiny.

Clearance of new proposals is currently sluggish as MMRDA is awaiting Chief Minister's nod to make changes in the scheme, mainly changing the nature of the project from rental to affordable housing. Other changes include increasing the size of tenements to 300 sq ft from the current 160 sq ft. 

CREDAI-NCR plans to regulate property brokers

April 15, 2013

Realtors' body CREDAI-NCR today said it will direct developers to disclose both saleable and carpet area in their brochure and is considering measures to regulate brokers who are engaged in mis-selling projects.

The NCR Chapter of the Confederation of Real Estate Developers Association of India (CREDAI) also plans to boost end-user demand in housing by imposing lock-in-period for re-sale and higher transfer charges.

Announcing the new team for 2013-15, CREDAI-NCR said Anil Sharma, the Chairman and Managing Director of Amrapali Group, has been elected as its new President.

"A new team has been formed. We will focus on consumer awareness and consumer redressal," Sharma told reporters while listing out his priorities for the next two years.

CREDAI-NCR has already formed a consumer redressal forum last year and has so far received about 700 complaints and out of that 90 per cent cases have been resolved.

Asked about non-disclosure of carpet area by developers in their brochure and application form, he said: "We will ask our members to disclose saleable as well as carpet area and also method used for calculation of such areas". The saleable area is built-up area plus common area, he added.

On property brokersmis-selling products, Sharma said: "We have come across situation where some of the brokers are not providing full information to buyers. The governing council will take up the matter how to regulate them."

Asked about rates being lower in the secondary market compared with developers price-list, Sharma said this is because of investors selling their units with some premium.

In order to curb investor demand and encourage end-user demand, he said the association would consider steps like lock-in-period for re-sale and higher charges for transferring the property on some other name. 

Ashiana Housing gets land clearance for Rs 100 cr project in Gujarat

April 10, 2013

Marking its foray into the real estate space in Gujarat, Ashiana Housing Ltd, a New Delhi-based real estate developer on Tuesday informed that the company has received land conversion approval for its project in Halol near Vadodara.

The company will develop low-rise affordable housing project with over 500 units spread across 10.65 acres. “We have received the land conversion approval. The project cost is around Rs 100 crore, which will be met through internal funds,” said Sunit Gandhi, vice president, Ashiana Housing Ltd.

The BSE-listed Ashiana Housing, which has also developed luxurious residential properties in Lavasa near Pune, will focus on industrial houses in Gujarat.

“This will be our first project in Gujarat. With large number of industries in the state, we see huge potential in industrial housing, which will be located closer to the industrial area,” he said.

The company expects to receive the remaining approvals and launch the project shortly. 

Real Estate in Ahmedabad : "Old wine in New Bottle"

                       Every alternate person in ahmedabad you will find talking about 'Mandi' (slowdown) in real estate market. Everyone want to sell their property just to keep their money secure and buy in deep market. Property seems like commodity here. Each has different opinion here, i.e.: It will crash down. still 1 year more for slowdown. now we will never get the same pick in the market. There is not real buyer it is all of investor. 

                      Developers in the city has slowdown new project launch to narrow demand supply gap. New offering seems like "Old wine in New Bottle". Per Sq.Yd rate... Including all Cost... Starting from... Amenities... Pre-Launch Offers... are on the top of their advertisements. Affordable word has secured place in the eye of marketers, They try to convince the buyer about affordability of their offerings. It is very much hard to guess intrinsic value of property in current market.

                      Teaser campaign - Pre-Launch - Last chance - Only for few - Limited Period offer - Festive season offer ... this words in the communication have no value. Buyers become smart they checks after while over whether the offer was real or not. On table discount is secret between buyer and seller. Seller gives best offer only after confirming buyer is real till then they don't open the cards.

                     What is real scenario?  Is Ahmedabad's market is Investor-driven market? Will it go deep from current state? Will smaller companies  be able to survive? Will this market again go in the hand of few developers with strong capital base? Analysts gives the figures of past years, obviously seems attracting. but What is real scenario?

                      Investor's are evaluating all the offers but still stay away from market for time being(for how long . it's a question mark?, Real users are the real buyers. Brokers trying hard to get in real buyers. Investors/Sellers trying to manage fund from alternate source.  Real buyer get's good deal but they just keep it secret so that they get the benefit of market  price. Buyer's still can not judge,  good to buy now or 6 months later or a year later. Those who want to go for home loan's demanding low upfront payment/margin money. Lower ticket size is still in demand but buyers are not ready to negotiate with the basic requirement i.e.: usable area, location, transportation, amenities, parking space etc...

                    There's a definite sign of slowdown. Other market's also not supporting liquidity in the market. Developers using alternate source of money to clear backlogs. They now are very much attentive about the need based offerings for the future.

                    For Buyer's

Should they invest in current market?
                    Yes, It's a good time to get good deal till the time of equilibrium(less gap in demand-supply) in Ahmedabad market. This year we will see highest possession of property of those projects launched in past three years. this will also open up another supply of ready to move properties.

A’bad realty rates rose by 16% in ’12? It Was stagnant during this period.

Ahmedabad: Indications of the figures released by the National Housing Bank (NHB) run counter to what Ahmedabad’s builders have been claiming about the state of the city’s property market. 

 

NHB figures show a 16% rise in property rates in Ahmedabad in the calendar year 2012 but realtors and consultants say the property market in the city has not witnessed major growth for the last two years. One builder went so far as to say that the market had stagnated in 2012 and had “bottomed out” in 2013. 

 

According to the property price index, Residex, growth in Ahmedabad is third highest in the country, with the city coming after Kochi and Patna. Kochi tops the list with 20% annual growth in property prices. Interestingly, Ahmedabad has beaten Delhi, Mumbai, Kolkata, Chennai, Pune, Bengaluru and other high-end markets in property price rise. 

 

The National Realtors Association (NAR) India, prepares the Residex on behalf of the NHB, on basis of the value of property transactions provided by the association members in different cities of the country, said Sachin Shroff, president-elect of NAR, India.

 

The NHB releases quarterly property price trends in 20 cities across the country. According to the Residex, Ahmedabad’s property price index stood at 164 points in the January-to-March quarter in 2012. 

 

This increased to 191 points in October-to-December 2012 quarter, showing a growth of 16%. Property prices in Surat on the other hand had grown only by 4.2% during the same period.

 

Builders and local real estate consultants, however, do not agree with the Residex results. They believe that the city’s real estate market has been stagnant for almost two years and has not witnessed any major growth. A leading real estate consultant of the city said that some properties at good locations with good amenities might have seen growth in prices but such properties cannot change the trend. 

 

Interestingly, Residex shows that Ahmedabad realty market appreciated only by 1.2% in the calendar year 2011. Jaxay Shah, national president of Confederation of Real Estate Developers Association of India (Credai), has a contrary view. He said that the local market was in good shape in 2011 and even in the first few months of 2012. 

“But the market has been stagnant since the latter half of 2012 and has bottomed out after Vibrant Gujarat Summit 2013,” said Shah. 

 

Rushabh Shah, president of Gujarat Institute of Housing and Estate Developers (GIHED), expressed similar views. He said that the market had not witnessed much movement in the last couple of years. The real estate market in the state is not in a good condition as investors have kept a distance from it, Shroff said.

Source : http://daily.bhaskar.com/article/GUJ-AHD-a---bad-realty-rates-rose-by-16-in----12-4204130-NOR.html

Godrej launches affordable housing project in Ahmedabad

AHMEDABAD, MARCH 28:  

Godrej Properties Ltd on Thursday said it has launched one bedroom-kitchen-hall (1BHK) houses in the affordable segment at its upcoming Godrej Garden City in Ahmedabad.

The Mumbai-based real estate developer would market these affordable apartments at prices starting at Rs 16.5 lakh, the company said in a statement here.

Five new towers, each having 13 storeys, including the ground floor, will offer these apartments measuring 600 sq. ft. each. Each tower will be equipped with 2 lifts and all apartments are open from two sides with no two apartments overlooking each other.

The project is within the Ahmedabad Municipal Corporation (AMC) limits. Godrej Properties is creating facilities for public transport, education, health-care, recreation, hospitality, retail and banking within the development.

Important civic facilities and public utilities will be added to make Godrej Garden City fully self-sufficient.

The master plan has been created by world-renowned architects Skidmore, Owings and Merrill (SOM), thas has designed numerous landmark projects across the globe such as the Burj Khalifa (currently the world’s tallest building), said Pirojsha Godrej, Managing Director and CEO, Godrej Properties.

Godrej Properties is developing residential, commercial and township projects spread across 82 million square feet in 12 cities.

With the demand in luxury segment in housing sector falling and that in the affordable segment increasing, many real estate developers are have started similar projects across Gujarat in recent past

Online property a hit amongst home seekers

April 05, 2013

Want a house on rent? Visit an online property site which would help you rent a property without any middleman.

According to experts tracking the realty sector, sites such as Magicbricks.com, 99acres.com and makaan.com are fast-becoming the choice of consumers looking for renting a property, as such sites let them directly connect with the owner and save time and money. Besides rentals, these sites also offer primary sales (new apartments — under construction or ready to move in) and secondary sales of properties.

Though the share of online property sites in the overall property business in the country is still a miniscule one per cent, analysts expect this segment to grow to 15-20 per cent in a few years.

Advertisements in the realty sector, including the ads by such property portals, went up 14 per cent in print media and three per cent in the TV space in 2012, compared to 2011, according to data by TAM.

These portals are also increasingly becoming a tool for research on buying, selling and leasing residential or commercial properties in many parts of the country. According to industry estimates, people in the age group of 30-45 years do most searches and the the property price range varies from Rs 50 lakh to Rs 1 crore.

“Digital media is increasingly being used for fact-finding and initial level of research. But since buying a property is a high-value decision for many, it will take time, may be another five years, before we see a huge number of transactions happening through the online medium,” said Sanjay Dutt, executive managing director-South Asia, Cushman and Wakefield, a real estate consultancy.

He said portals such as Magicbricks and 99acres received tremendous hits, but maximum were for renting properties. It is definitely a fast-emerging channel of sales and is expected to grow 15-20 per cent every year, Dutt added.

Harinder Singh, managing director, Realistic Realtors, said the online property segment had great potential and would grow very fast in the coming times. “There is a huge scope for this business model. It makes decision-making faster. In the next three-five years, the government is expected to come out with a set of regulations. And if everything goes well, this miniscule share of one per cent can increase to 15-20 per cent.”

The portals are mainly driven by revenues through advertisements, commissions from developers or brokers and funding from private equity funds.

Initially, when such online portals had started, there was very limited information available and customers were not comfortable in taking decisions on that basis, said Manish Mehta, vice-president of property brokerage IndiaHomes. “However, now we have quality information, with latest updates / launches, more and more people are researching through these tools. The chances for closure of deals through online will increase with time,” he added.

However, there are many challenges that need to be overcome before such sites establish a strong foothold in this industry. According to experts, the main challenge is buying the consumer’s confidence and the need to have more localised information, which is currently given by brokers operating in that area. These sites offer services only in select cities now. Secondly, the system needs to be more organised.

The lack of benchmarking in such sites is another problem. Moreover, enquiries by potential customers are answered by telemarketing people, not real estate professionals, who can only give limited information to people, an expert tracking the sector, said.

Source :http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23327&cat_id=1 

Govt considering FDI for low cost housing

April 04, 2013

In line with its policy to encourage low-cost housing projects, the government is considering allowing foreign direct investment (FDI) in such projects, subject to a host of conditions, including a lock-in period and minimum capital requirements.

Currently, FDI is prohibited in the real estate business but 100% FDI through the automatic route is allowed in “construction development” projects (read townships and special economic zones) subject to riders.

According to sources, in a similar way, 100% FDI would be allowed in low-cost housing projects as defined by the government and subject to riders that may be slightly less stringent than those for construction development projects.

Last year, the RBI allowed external commercial borrowings up to $1 billion (aggregate) in low-cost housing projects, which it defined as those where at least 60% of the permissible FSI is reserved for units with a maximum carpet area of 60 sq m.

The ECB limit can be used for slum rehabilitation projects as well. Sources said this cap could soon be raised.

According to sources, 100% FDI in low-cost housing would be part of the upcoming revised FDI policy. The move is in sync with the government's objective of giving a boost to the slowing economy with special incentives for infrastructure and construction sectors. Increased housing construction activity helps allied sectors such as cement, steel, wood, brick, glass and furniture, creating jobs.

There is, however, a hurdle. The RBI has had reservations about allowing FDI in pure-play real estate, considering its speculative nature and consequent risks to the banking sector. It remains to be seen what stand the central bank would take, in regard to the new proposal.

The conditions the government intends to impose on FDI investors in low-cost housing projects include minimum capitalisation (say $10 million) and a lock-in period (of three years). There will also be a ban on selling undeveloped plots. Project completion within a certain time period could be made mandatory.

“We hope the relaxation (to allow FDI in affordable housing) will come soon and give a boost to the sector, substantially reduce the housing shortage and bring in renowned developers,” an official in the ministry of housing and urban poverty alleviation ministry said.

The housing finance regulator National Housing Bank (NHB) has pegged the overall market size of affordable housing at around Rs 25,000 crore. The move may encourage private developers to focus more on affordable housing projects.

Developers too feel the move will help reduce shortage and spark investor interest, besides attracting multilateral institutions like the World Bank and Asian Development Bank in affordable housing in India.

Tata Housing Development Company CEO and MD Brotin Banerjee said: “The move will bridge the huge shortage of housing in the country and attract new technologies to the housing sector. It is also likely to increase the fund flow in this area to build economical housing for the masses.”

“India holds huge a potential to attract foreign investments into real estate due to stable demand, demographic factors and the focus on affordable housing,” Banerjee added.

In 2011, the government had exempted construction-development activities in the education sector and in old-age homes, from the conditionalities in construction-development, after noting that these riders posed a constraint to FDI coming to these two segments. 

Source :http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23313&cat_id=2

It's raining affordable homes in Gujarat

Both state govt and real estate industry set to build a slew of residential units for low and middle income groups

It's raining affordable homes in Gujarat with both the state government and real estate industry set to build a slew of affordable residential units. On one hand, the state government, as promised in assembly polls manifesto, plans to start work for building 120,000 homes for the year 2013-14. On the other hand, organised real estate players like Tata Housing, Adani Township & Real Estate, DBS Affordable Home Strategy Ltd. and Arvind Real Estate have announced low cost housing schemes for low and middle income groups.

Almost all the players are offering residential properties in the sub Rs 20 lakh category, thereby catering to the lower income group (LIG) and middle income group (MIG). Add to that, city-based DBS Affordable Home Strategy Limited recently announced a project of providing 25,000 affordable homes in next five years in the sub Rs 10 lakh and Rs 15 lakh category.

Gujarat government has announced that it will build more then 120,000 by the end of this year for the poor and home-less people of the state. For the year 2013-14 state government has allocated Rs 1,650 crore for the rural housing, of which Rs 1,062 crore has been earmarked for providing regular houses to BPL families. It has further initiated a state-wide survey of the slums and mud-houses which is likely to be completed by the end of March and then work on building affordable housing would begin.

"The conversion rate for an affordable housing is the highest as compared to mid-premium or luxury segment. There is humongous demand within the segment which needs to be taken care of and this has attracted organised players like us. As against affordable housing, lifestyle segment finds very few takers," said a senior official of Adani Township & Real Estate on condition of anonymity.

The company is in the process of completing its three-phased affordable housing project of 800 units.

The 'Pratham' project of Adani Township & Real Estate offers 1BHK of 650 sq ft at Rs 16 lakh while 2BHK property of 900 sq ft is priced at Rs 22 lakh. "We have already completed 500 units in two phases and about to complete the third phase," the official added.

Similarly, titled 'New Haven Compact', the affordable housing project in Ahmedabad has been jointly developed by Smart Value Homes, part of Tata Housing along with Arvind Real Estate, under the banner of Arvind Smart Value Home LLP, a special purpose vehicle (SPV). The project currently has around 300 units of 1 BHK of 570 sq ft size. According to Sarda, currently the affordable residential units are priced at around Rs 13.5 lakh.

"Affordable housing is attracting the people to Ahmedabad and the real estate industry is witnessing a constant demand these days. According to JLL, the rate of conversion has been the highest among affordable housing, especially in the sub-Rs 10 lakh and sub-Rs 15 lakh category. It has been rising constantly by over 15 per cent, as against other segments of residential property market," said Brotin Banerjee, MD and CEO, Tata Housing.

DBS' 25,000 affordable homes are being built at a project cost of Rs 2,000 crore in 14 different parts of Ahmedabad.

"The affordable housing segment in Ahmedabad is slowdown-proof and reaps quick sales at any given point of time. In fact, the conversion rate in an affordable housing project is 100 per cent unlike luxury or premium segment where there is still uncertainty over sales," said S Sudarshan, director at DBS Affordable Home Strategy which is looking at a target group with a family income of around Rs 10,000-25,000 per month. DBS currently constructs 1 room Kitchen and 2 room Kitchen apartments in the price range of Rs 5 lakh to Rs 10 lakh.

However, what is it that has been attracting corporate organised real estate players? "There is large number of actual users that results in quicker sales unlike other segments. Add to that, one can plan a larger project over various phases and enjoy better economies of scale. Though the margins are low compared to premium and luxury segments, affordable housing can be profitable if dealt in large volumes," says Shrenik Shah, chief executive officer of Space Management, a city-based real estate consulting firm.

And though the margins may be low, according to Sudarshan, the solution is to go for larger volumes and faster delivery.

"There is no such situation as oversupply in affordable housing. Whatever is built gets consumer within three to six months. Hence, even if the margins are low, it is advisable to produce large volumes and offer faster delivery since the conversion is almost 100 per cent," he adds.

According to a recent Monitor Group survey, the Ahmedabad city is believed to witness a demand of two million affordable homes in the range of Rs 5 lakh to Rs 15 lakh.

http://www.business-standard.com/article/companies/it-s-raining-affordable-homes-in-gujarat-113031800627_1.html

Why the real estate market could crack in 2013

For middle class Indians, investing in property has been the surest bang for the buck. On an average, property values have quadrupled in the last decade.

But now there are increasing signs that the dream run that real estate has enjoyed over the last decade could be coming to an end. Real estate practitioners point to slowing sales and rising inventories. As this story in The Economic Times explained, there is a glut of independent homes in south Delhi. Around the country, in separate micro-markets, the story is no different.

And so the question: could 2013 be the year when real estate begins to crack?

First, lets start by looking at the last period of low economic growth. Between 1995 and 2002, the Indian economy chugged along at an annual rate of 4.9 percent. Those who’ve been in the business long enough will tell you that real estate prices eased by 2-3 percent a year across large cities. “So by the end of 2002 you had a 20 percent decline but the year-on-year decline was very gradual,” according to a Mumbai-developer who declined to be named.

According to him three years of 5-6 percent growth and the situation could be repeated.

Second, the rise of the professional real estate investor. The last 10 years have seen a growing number of middle class Indians trying their hand at the property market. Their speculative behaviour is not unlike that of middle class Americans who during the go-go years bought houses only to flip them a couple of years later for a 15-20 percent gain. That came crashing down in early 2008 and the rest of the story is well known. It is only now that housing prices in America have started to rise.

India circa 2013 is no different. Dinner parties are filled with casual conversations on which apartment or piece of land to invest in. There’s this sweeping confidence in real estate giving a 20-25 percent return every year. According to Sanjay Dutt, chief executive at Cushman and Wakefield, if a developer sells 2,000 flats and 70 percent of those are to people who plan to put them on the market in a couple of years, those shouldn’t be counted as sales.

This leads to a situation in large metros where houses in under-construction projects are available anywhere between Rs 1,000-1,500 less than what the builder is selling them for. Those who want to sell houses are willing to take a small haircut. What happens when this becomes too acute is not too hard to see. The market would correct.

Lastly, according to the Ministry of Housing and Urban Poverty Alleviation, 11.09 million homes in urban areas are lying empty. Sellers are holding out in the hope that capital values continue to appreciate while buyers find the prices too steep. When that stock comes on stream this could also portend a correction.

Read more: http://forbesindia.com/blog/author/samar-srivastava/#ixzz2PTH8jTuS

CREDAI against 1% TDS on property deals

April 01, 2013

Confederation of Real Estate Developer's Associations of India (CREDAI), has sought withdrawal of Budget proposal to levy 1% tax deducted at source on any property deal other than agriculture land.

In a recent representation sent to the finance ministry, the realtors' body has argued that implementation of this proposal will lead to more complexities and harassment of consumers. "We are seeking withdrawal of this proposal completely. This will lead to harassment of consumers, especially the buyer who is being burdened with additional responsibility to withhold the amount, deposit this to tax authorities and file returns," said Lalit Kumar Jain, chairman, CREDAI.

CREDAI, the apex body representing organised real estate developers and builders across the country, has sent a written representation to the finance ministry in this regard. Under the proposal, the tax is mandated to be paid if the property consideration is over 50 lakh in specified urban areas and 20 lakh in any other area. The transaction will be registered only after the buyer provides proof of deduction and payment of TDS. The proposal will be effective from June 1, 2013.

According to Jain, around 80% of realty transactions in top six markets in the country including Mumbai Metropolitan Region, Delhi, Bangalore, Chennai, Pune and Hyderabad will be affected by the proposal, given the current property rates. 

Source : http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23283&cat_id=1

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