The NDA government led by BJP is now all set to push the real estate bill to curb black money circulation in the real estate sector. The bill also talks about commencing a buyer grievance redressal system.
The government wants to make the sector consumer friendly for the middle class by making the real estate transactions more transparent and ensuring that this particular sector does not cater only to the rich.
As per government sources, Narendra Modi seems to be keen on the real estate bill expedition since it will protect the consumers from the dubious players in the real estate market.
In December 2014, the Real Estate (Regulation and Development) Bill had come up in the cabinet, but was deferred. Presently, a new cabinet note is ready for government’s approval.
Housing and Urban Poverty alleviation, the nodal ministry has removed the bar on buyers approaching consumer forum in case of any dispute. By addressing concerns over project completion timeline, redressal and funding transparency, the bill aims to help genuine buyers.
Under the new government, the ministry, after discussions with stakeholders, sent a note for the Union Cabinet’s approval in December. The Modi government amended the UPA bill to cover commercial properties. The earlier bill covered only residential real estate. The government also snipped the quantum of receivables from buyers that have to be kept in escrow account for other ventures from 70 per cent to 50 per cent, to ensure that consumers’ money was not diverted to other projects before delivering the earlier ones.
Meanwhile, the Supreme Court had also expressed concern over the delay in setting up a real estate regulator to keep a check on activities of realtors.
In this blog post, we are going to emphasize on the seventh and last habit of highly effective management committees to always cooperate with each other. Effective management committees understands change is natural and no one can hold a position forever and hence, move on and give a smooth handover to the next person taking over. In our earlier blog post, we talked about Habit 6: How effective management committees create an inclusive culture. Read more…
Pointers for committee members to always cooperate with each other:
Do not cling on to the committee post – Management committee members when get elected need to understand and prepare themselves that no one can hold a particular position in the committee forever. Elections will be held every year and one has to step down for the new members. Don’t cling to your committee posts. Honestly, it never helps!
Understand change is natural – Change is a natural process. As Socrates said – “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” While stepping down from the committee or moving to a new role, always cooperate with other committee members. Do not try to take revenge from a resident or a committee member who opposed you in your earlier term. Understand all the discussions happen for well-being of the apartment residents.
Give a smooth handover – A smooth and systematic handover or transition is very important for the apartment operations to go on smoothly. Old committee members should ensure that new committee members are given a proper handover so that they can operate smoothly after the transition. It is your duty and responsibility to give a smooth handover to the new committee members.
Extensively support as an ordinary resident – After you step down from the committee, do not part your ways from the new committee members. You can still extend support, give suggestion/advice to the new committee members. Become a part of the sub-committee or the task force and help out the new members. Do not sabotage against them with other residents. It will really bring their morale down!
Try to help out and cooperate with the new committee members as much as you can and create a healthy environment for both the committee and the residents in an apartment.
Do the management committee members in your apartment complex always cooperate with each other? Do let us know by commenting on our blog. You can find blogs on all the seven habits of highly effective management committees on www.apnacomplex.com
Over time, property investments offer handsome returns but the initial investment is always heavy on the pocket. Before buying the property, one should try to evaluate a property in every possible way. Always try to look at the appreciation rate of the property after given number of years. Let’s have a look what are the factors that affect the appreciation rate or the property valuation in India:
Location – Location is the prime factor that affects the property valuation rate in India. Properties based in commercial areas seem to have a higher appreciation rate in comparison to properties located in residential areas. If your property is close to a major IT hub, it is obvious that the rentals, demand and price for your property goes up since people working close by will have the desperate need to always rent or buy the property.
Properties located in the heart of the city surrounded with good infrastructure, schools, hospitals, markets, malls are more expensive than the properties in upcoming and under developed areas. Where would you like to invest and what seems to give you double returns is something you need to ponder upon. Talk to local property dealers, developers from a very developed part of the city and an upcoming area. Compare the property appreciation rate trend in both areas and then make a decision.
Connectivity – Connectivity is another major reason that affect the property valuation in India. Good infrastructure such as airport, metro, flyovers and roads, if are in near proximity to your property, you can expect your property rate to appreciate. When planning to buy properties in under developed areas of the city, always research about the nearby infrastructure that is yet to be built. If you invest in an under developed area, which has some great infrastructure plans in next five years, you may be looking at a whopping rate of appreciation for your property.
Construction Quality – The quality of construction to build a particular property is very important in valuation of a property.The material, design, layout, architecture and the longevity of a building all add to the valuation of a property. Buying a property from a known and reputed builder like Sobha, Lodha, Prestige, DLF who are known for their construction quality will always lead to a higher appreciation rate for your property. In case, you are buying property from one of the local builders, be very sure about it since you don’t want to spend on repairing etc. due to low quality of construction leading to a depreciation in your property rate. Look at some of their prior projects, talk to buyers, take feedback and then take a decision.
Amenities – Presently, common amenities such as pool, gym, parking, garden area and community centre all add value to your property. The urban buyers don’t just look at square feet area of the house anymore, they also want amenities, which makes their life convenient and comfortable. A property coupled with amenities will obviously appreciate more than a just a regular property with no amenities. If you are looking at a property to live in yourself, obviously amenities become an essential but in case you are just looking for a second investment in property, you may want to forego the amenities if the infrastructure next to your property is superb.
Interiors and customization – Good interiors like high quality wood work, top quality bathroom fittings, superior quality paint and top–end flooring etc. add value to your property. Some customers modify their regular kitchens into modular kitchens, a closed living room is customized into an open living room cum dining space, which obviously appreciates the value of the property. The properties with customized rooms or modern fittings obviously appreciate at a higher rate than the regular properties.
Evaluate all the above mentioned factors and then take your property investment decision; after all it’s your hard earned money and you don’t want to just give it away like that.
As per Cushman & Wakefield Report, there has been more than two-fold jump in property investments in the Indian real estate sector amounting to more than $5 billion. This has resulted in India grabbing a position in the list of top 20 global property investment destinations.
India currently holds 20th position in the global list and has exhibited third highest investment growth across the world. The total investments in India have increased by more than 140 percent at about $5050 million in 2014 in comparison to $2100 in the previous year.
Of the total investment volume, the domestic investments were recorded at $ 3,120 million (62 per cent) and foreign at $ 1,930 million (38 per cent).
As per the Report, corporate investments increased sharply at $ 2,550 million in 2014 against $ 900 million in 2013 in India. Corporate investments transactions include real estate purchases by companies including office or development site assets for end-use, development or investment.
Private Equity investments too increased to $ 2,500 million from $ 1,200 million. Residential emerged as the sector to receive the highest amount of investment totalling up to $ 2,600 million while office sector followed closely at approximately $ 2,000 million.
As per Cushman & Wakefield Report, the real estate investment sector in India saw a peak point in 2014, reaching the highest investment level in the last 5 years. However, in 2014, for the first time the global real estate investment fell down to $ 1.21 trillion, dropping by about 6.3%.
Currently, USA has grabbed the first position in the list with 16.2% increase in real estate investments amounting to $390.6 billion and is presently ahead of China by 16%. China and USA are currently dominating the global real estate investment market activity with a combined share of 60%.
For India to grab a position in the global property investment destinations list is a proof of how both domestic and foreign investors are now becoming increasingly comfortable to invest in India. The voluminous growth in the Indian realty investments has resulted from the ease of investing and doing business in India.
However, for India to grab a higher position in the global property investment destination list, government has to address the supply side bottlenecks. Bottlenecks such as poor infrastructure should be taken care of by the government so that position of India is enhanced as an outsourcing and global IT hub leading to a substantial increase in private investments including the foreign funds.
The real estate market in Bangalore is quite vibrant. The builders are developing villas and apartments of various categories to cater all sections of the society. The built up area ranges from 650 sqft to 10,000 sqft with a price range of Rs 30 lakh to Rs 10 crore plus. There are about 5oo upcoming residential projects in Bangalore, leading to addition of around 60,000 units.
The buyers have a large range to choose from once he narrows down his budget and location. But along with an array of choices one needs to exercise a lot of caution since buying a house involves many issues and legalities that one should take care of.
Please find steps mentioned below which you need to keep in mind before buying a house in Bengaluru:
Project Selection
Verify credibility and credentials of builder, construction quality, apartment facilities and prices offered by similar apartment in your chosen area. Make a note to check about zoning clearance, parking space, water supply and litigation display board if any.
Title Clearance of Land
After identification of the project and the builder, ensure title clearance of land. Projects are left in an incomplete stage mostly due to litigations arising on the account of title issues. After paying a token advance to builder, demand for the master file that’s consists of all land documents and then independently get the `Title Search Report’ (TSR) done. You can also get a detailed encumbrance certificate (EC) from the sub registrar office (SRO).
Approval of Building Plan
BDA needs to approve all layout plans in general and all apartment projects building plans. BDA approval is mandatory even if the project is in Bengaluru outskirts ad approval by CMC or panchayat is not enough. The approvals will have A khata only (entire land and individual flats). Check if the construction is as per the approved plan as builders tend to violate Floor Area Ratio (FAR) and build extra flats without approvals. It’s prudent to check the copy of the approved plan, A khata at the BDA office, as many fabricated plans are in the market.
Construction License
BMPBDA needs to issue a proper license to the builders for constructing the property. Check for deviation violation by matching the original plan approval with the floor plan approval of the apartment. There have been instances where the approved plan shows the apartment on the first floor, whereas it is actually constructed on the second floor, which is unauthorized.
Commencement Certificate
Verify if the builder has obtained proper CC from the BBMP.
Government Clearances
Obtain copies of clearances from Bescom, BWSSB, the pollution board, and fire service besides approvals for digging bore wells from competent authorities.
Builder Loans
Find out whether the builder has got any loan. The original documents of the land would be mortgaged to the banks who will have to issue a “letter NOC” for release of the undivided share of interest (UDS) of the land constructed area. Also ensure that such mortgage transactions are registered and reflected in the encumbrance certificate (Form 15). Otherwise, there is a possibility of the builder getting multiple funding from banks which can take possession of the flats.
Regular Visits
Purchaser should visit the project site periodically to ensure that the construction is as per plan, time schedule based on the agreement, and quality fittings & fixtures are used. The purchaser should insist and ensure that the builder provides a copy of the CC issued by the BBMP. Occupancy Certificate (OC): The builder has to obtain OC from the BBMP within three months of completion of the project obtainment of completion certificate. Buildings without OC are not entitled to power and water connections.
Builder Indemnity
Since the project takes 24 months to 48 months for completion, an “indemnity bond” and “letter of undertaking and affidavit” should be taken from the builder confirming that construction will be as per the approved plan and the completion certificate will be obtained within 3 months of the completion of the project.
Execution of MOE by land owner
If the project is under joint development and the builder has taken a loan, it is desirable that the landlords are made part of the Memorandum of entry, so that they cannot say later that they were not aware of the loan.
Legal Documentation
Be cautious while executing the agreement with the builder. Read and understand the implications of conditions in the agreements since they are normally in favour of the builder with very little scope for legal recourse. It is prudent to have a legal consultant to vet the documents.
Pay the Right Price
Get the apartment measured to verify the carpet area. Builders sell on the basis of super built up area, which includes balconies, common utilities such as swimming pool, gym and staircases, due to which the carpet area gets reduced drastically. Normally, the difference is around 15-20 %: an apartment with a super built up area of 2,000 sqft generally has a carpet area (actual usable area) of only 1600sqft.
Systematically Maintain all Records
Systematically maintain a “master file” consisting of all documents such as copies of receipts of instalments paid, title search report of the project flat, plan approval copy, agreement of sale and construction, commencement certificate, and the “Occupancy Certificate”.
In the budget for 9-months last year, the new government had stressed on the vision for making housing more affordable. What is the real estate sector in India expecting from the Budget 2015-2016. Let’s have a look:
Provisions to boost affordable housing:
In the budget last year, the new government had stressed on its vision to boost affordable housing. In the 2015-2016 budget, the real estate sector is expecting provisions to be provided by the government to the developers for making housing more affordable.
Offer incentives to develop green real estate:
The upcoming budget is expected to let the consumers clearly know the benefits of green real estate in the country. The residential real estate developers need much more encouragement for going green. Since the buyers of homes in India are not quite ready to pay extra premium and don’t fully understand the concept of a sustainable residential project, even the developers are averse to enter this segment. The Union Budget this time is expected to offer incentives to boost the development and consumption of sustainable real estate development in India.
Tax incentives for renting out residential properties:
For improving the supply of rental properties in metros and boosting the rental pan-India housing segment the Union Budget is expected to offer tax incentives on rental income. Presently, rental income is treated just like any other taxable income. Tax incentives is required for more residential properties to be rented out.
Speeding up project approvals:
The developers in India have been demanding for speeding up the project approval process. Quicker approvals are expected to widen the supply pipeline, which would in turn help in reducing the prices and ensuring real estate sector’s rise from the slump it has been in lately. The budget is expected to take measures for speeding up the approval process along with measures to ensure quality norms of construction are not compromised resulting in infrastructure failure for new projects.
REIT Fast Tracking:
Political instability, red – tapism and lack of apt regulations had kept the Indian real estate market away from foreign investment funds. The new budget has a great chance to make India friendlier towards foreign investment by introducing a revised tax code. Overcoming the tax counter-productive hurdles is very important for REIT, which can become an absolute booster for the overall economy and the Indian real estate sector.
Real Estate Regulatory Bill Implementation (RERA):
The RERA bill is expected to be implemented this time since the approval for the Real Estate Regulatory Bill has been delayed for quite some time now. With the implementation of the bill the Indian real estate sector is expected to be more open to the investors from foreign countries. This policy is an absolute must for the growth of the Indian realty sector.
LARR counter-productive clauses to be relaxed:
Land Acquisition, Rehabilitation and Resettlement (LARR) Act has been formulated and has been changed again and again for quite some time now. However, it has failed to deal with land bureaucracy. Currently, the LARR Act deters the developers and institutional investors’ big time. The realty sector in India wants to desperately cross this hurdle as a lot of land is required for infrastructure and real estate development. With the Union Government’s vision of affordable housing and development of 100 smart cities across India, the Budget should make suitable changes to the LARR Act.
The real estate sector is looking forward to some major reforms and reliefs from the Union Budget 2015-2016. Let’s see how much expectations this budget can meet for the Indian realty sector.
Haryana Government is now focusing on the lower and middle segments of the society and trying to make homes affordable for them by fixing the home prices.
As per the government, no builder is now allowed to sell affordable homes at a rate of more than Rs. 4,000 per square foot in Faridabad, Panchkula and Gurgaon, which are the high potential zones. In the medium potential zone such as Jhajjar, Mahendargarh and Rewari, the rates have been set at Rs. 3,600 per square foot.
A source from the Town and Country Planning department revealed that 34 licenses have been granted by the Haryana state government till now for affordable homes specifically in the Gurgaon circle, with 2 in Rewari, 9 in Sohna and 23 in the Gurgaon city.
Nearly, 20,000 homes are expected to be built under the affordable housing projects as 23 licenses have been granted in the Gurgaon city.
About 46 affordable projects have been approved all across Haryana, with 2 in Panchkula, 2 projects in Rohtak circle and 2 in Panchkula.
Since the house aspirants are exponentially higher than the affordable homes planned and sanctioned by the government, the flats will be allotted under the lucky draw system.
Typically, a 2–BHK flat in Sector -69, Gurgaon should cost somewhere between Rs. 18.66 lakh – Rs. 19.50 lakh and a 1-BHK flat would cost somewhere around Rs. 15.69 lakh p.a.
With the properties now becoming affordable, the middle class and lower middle class strata of the society can also plan to buy a house in a location like Gurgaon. The stand taken by the government is truly beneficial for the economically weaker section of the society.
The corporates in Delhi/NCR region are generally in a fix to choose between Gurgaon and Noida to set up their offices. Most of them choose Gurgaon due to its airport proximity. However, with the new airport coming up at Jewar, Yamuna Expressway near Noida, the tables might turn drastically.
Sources from a property research firm revealed that the new airport might help in boosting up the sales of the region, which have been showing a downward trend in the past few years. Noida has been losing out quite a bit since it was not in close proximity to an airport. The new airport is expected to increase the demand for offices in Noida, which in turn will increase the demand for homes.
An architect and town planner, Hafeez Contractor revealed to Economic Times – “A new airport transforms an area. Noida and its surroundings could get transformed from a poorer suburb of Delhi to an affluent one. A new airport near Noida will change the face of the area. Roads will change and get lit up, law and order will improve, hotels will come up and the area will get cleaned.”
Bengaluru seemed to experience a similar activity in the past. People were apprehensive about the launch of the new airport 20 kms away from the main city. However, today the main city seems to be moving towards the airport with immense development taking place in the areas nearby to the Bengaluru airport. The new airport at Jewar is expected to improve connectivity and encourage tourism in Mathura and Agra due to its strategic location.
Quite a few developers such as Jaypee, Gaursons, ATS and SuperTech have commenced real estate projects on the Yamuna Expressway in the last few years. Currently, there would be around 30,000 apartment units under construction. The sales were showing an upward trend in the initial years, after which there has been a major slowdown. The announcement of the new airport has now stirred up some movement in the new Yamuna expressway area.
As per a report published by PwC, the ranking of Bangalore, Delhi and Mumbai as a lucrative property investment destination has improved in comparison to last 2 years. Bangalore has climbed up to the 17th position, whereas Delhi and Mumbai have climbed up to 14th and 11th position respectively. In 2014, Bengaluru stood at 20th position with Delhi and Mumbai stood on 21st and 23rd position respectively. The improvement in the ranking of the three major cities mentioned above clearly indicates the improved investor sentiments in India.
The interest in commercial space is likely to increase in 2015. The surge in interest of investors can be a direct implication of – a) real estate global funds focused on India especially on residential projects, b) rise in the number of foreign institutional players, c) creation of smart cities focusing mainly on large-scale manufacturing, d) e-commerce picking up at a very quick pace leading to a high demand for large scale logistics and warehousing space.
In Mumbai, currently the occupancy rate is nearly 80%. The rentals and the property rates are expected to increase especially for posh and high-quality areas. In New Delhi, post the 2014 elections, the rates of commercial properties are now showing an upward trend. Bengaluru on is now witnessing increasing rents of business park facilities at a steady rate.
This year property investment in these three major cities may help you earn moolah but don’t expect too many new projects coming up since the focus this year will be on completing the ongoing projects rather than new project launches.
With the growing population in India and a significant number of youth now engaged in the IT/ITes sector, BFSI, pharma sectors, the number of offices in India is increasing rapidly. Not only the prospective employees are looking for jobs but the prospective employers are looking frantically for a space for them to employ people and provide them with a decent work space.
As per a recent report published by Cushman & Wakefield (C&W), a globally renowned real estate consultancy firm; Bengaluru, the IT capital of India is expected to absorb the maximum office space in comparison to other major cities in India.
Overall, India is expected to absorb approximately 36.8 million square feet (msf) office space in 2015. The demand for office space in India will be mainly driven by growth in the corporate activities undertaken by both domestic and global companies.
Bengaluru is expected to grab the maximum office space of nearly 11.1 msf with NCR following the same with grabbing about 6.8 msf office space.
The report reveals that the figures above show considerable improvement in comparison to 2013 and 2014, implying remarked improvement in overall macro-economic scenario, political stability and business sentiment.
This trend of absorbing more office space is expected to pick up in second half of 2015 and continue in 2016. Major cities in India are expected to have a robust supply pipeline of office space in 2015 except Hyderabad wherein the demand is expected to be more than supply.
The demand for office space is mainly driven by sectors such as BFSI, manufacturing and pharmaceutical sector, banking and majorly by IT-ITeS. The overall increase in supply of office space is expected offer options to tenants to choose and negotiate till they firm up on the best option for themselves both in space and the rent they pay.
The NDA government led by BJP is now all set to push the real estate bill to curb black money circulation in the real estate sector. The bill also talks about commencing a buyer grievance redressal system.
