Thursday, 26 March 2015

Lansel D'Souza, Senior Vice President, Expat Properties, on Invest in outskirts of city for supernormal returns

If there were a non-renewable product that commands a fair amount of demand but only has limited supply and cannot be replicated, economic principles would dictate that its value would only appreciate. Of all investment options available in the current day, land checks all the right boxes.

If you’ve made the decision to invest in land, you’re on the right track. You need to ask the right questions to make the best of this opportunity in land investment. There are some indicators to identify the best land options. The key determinant in this equation as in most real estate investments is location.

Land in urban areas is typically scarce and it generally means lack of options for the mid-income buyers. Suburban areas have a relatively better outlook where there are a fair number of choices; options in the nature of land you want to purchase and a diverse pool of developers from which to choose. Most importantly, as an investor, suburban land has potential. Purchasing land in the suburbs is the right choice if you want to reap high returns on low volume of investment. If you’re looking at a low entry investment with high benefits over the long term then areas in the outskirts of cities is the place to be. 

If the plan is to save for your retirement in keeping with the lifestyle you desire, a long term investment in areas that show promise of development would provide ideal returns over approximately a 10-year horizon. It is largely a myth that good land investments are only found in urban areas. The areas outside of cities have shown huge profit margins in the past 10 to 14 years.

From 2000 to 2011, the value of land in suburban areas around major cities such as Kolkata, Bengaluru, Mumbai, Chennai and Delhi has grown by over 1000 percent and more in some cases. The diminishing nature of land puts it in a prime position to gather returns of this nature over a long period.

The Koramangala area of Bengaluru exemplifies this growth. In the 1990s, it was considered the outskirts of Bengaluru and land would have been available at the price of Rs. 300 per sq. ft. Today, the same land owner could charge over Rs. 6,500 per sq. ft. owing to Koramangala becoming one of the central business districts in the city. Areas around modern day Bengaluru such as Chandapura, Bidadi and others today show the same promise.

If you’re willing to do some scouting and research on the upcoming suburban areas or rural sectors, it usually offers a low entry rate and could provide massive returns over the long-term. Of course, all investments do not see growth of 2000 to 4000 percent, but it’s still a safe bet to say that the investment will keep you ahead of the inflation rate and hence, profitable. 

It’s a good idea to avoid ignorance in any aspect of the transaction to ensure that it remains transparent and legal. If you’re unsure of any decisions while deciding to buy land, it is wise to approach an expert. Find a real estate developer or land investment expert you can trust and through them you could get a better idea of where the best scope of investment in land may lie.

The complex nature of investing in land has often been a primary deterrent for investors to shy away from the sector. However, with the benefits of investing in suburban land, doing your due diligence can put you in a great position to reap the dividends. Investing in suburban areas could make for a more robust and diversified portfolio.

Investing in suburban land
Area (Suburb)
Bangalore witnessed notable residential growth in 2014. The outskirts of Bangalore has seen some infrastructural growth and a fair share of realty has popped up in the past few years owing to a growing demand in Chandapura and the areas around it. It is a location that’s easily drivable from industrial areas such as Electronic City and Bommasandra among others and can offer relatively low prices

Mumbai’s rail and road network has greatly expanded beyond Greater Mumbai. This growth has seen the rise in stature of some areas around Mumbai such as Karjat. The proximity to the upcoming International Airport in Panvel is an added dimension of connectivity

Properties in central Mumbai have been priced out of reach, Taloja is one of the upcoming suburban areas that can offer properties at a lower price with the social infrastructure and connectivity to go with it. It is also ideally located near a CBD of Navi Mumbai – Kharghar

In 2014, Union Finance Minister Arun Jaitley proposed that Ponneri, an area slightly north of Chennai be developed as a smart city for the Chennai-Bangalore corridor. With the government keen on developing the area, infrastructure development and connectivity in and around Ponneri has been stepped up, making it a candidate that has potential to profitably invest in land

SOURCE: MoneyControl

Santosh Shetty, CMD, Expat Group, on Budget 2015 and the affordable housing segment

It is time for another budget. Will it bring good news for the realty sector? asks Bindu Gopal Rao, as she speaks with experts on the need for FDI, tax rebates on loans and an overhaul of the property laws.
Come February and there is a sense of expectation and anxiety in the air, thanks to the impending financial budget. Every year, industries look forward to the same in anticipation of better tidings. The realty industry puts forward its wish list.

Friendly policies
Real estate industry is pinning its hopes high on this year’s budget with the Finance Minister indicating the start of second-generation reforms in the country. 

Recently, the Finance Ministry floated a draft cabinet note to amend the Foreign 
Exchange Management Act (FEMA) to permit overseas funds in Real Estate 
Investment Trusts (REITs). “Easing the REITs norms and making it investor-
friendly by reworking the provision of three-year lock-in period and minimum 
alternate tax (MAT) will benefit the sector largely,” says Sumit Jain, co-founder and CEO, 

With the plan of 100 smart cities in the country, there is promised growth in the real estate sector. For this, it is essential that the government comes clear on REIT 
policies. “Most real estate projects have come to a standstill because of lack of funds.  Through REITS, this will become easy and we should be able to mobilise many projects. This will not only propel growth for the sector, but shall also increase 
employable opportunities,” seconds Susil Dungarwal, chief mall mechanic, Beyond Squarefeet Advisory Pvt. Ltd. 

Anil Mithas, CMD, Unnati Fortune Group, adds, “Even the long-term capital gains should also be exempted for sponsors of REITs. Even for people who avail home loans, this will be a noteworthy effort for the sector.”

Bank on it

Apart from REIT policies, the recent cut in repo rate is being hailed as a good beginning. “What is needed is a roll back of all liquidity-tightening measures and easing the situation to make cost of funding for both, home buyers and developers cheaper than what it is today. A reduction of 200 basis points (reduction of interest rate by two per cent) within short span is needed. And if the RBI doesn’t act, the government must take appropriate steps to ease fund restrictions for realty,” opines Lalit Kumar Jain, CREDAI chairman and CMD of Kumar Urban Development Pvt. Ltd. 

Anil Kothuri, president and head, Retail Finance, Edelweiss, adds, “The 
housing finance industry (HFI) should be given infrastructure status. HFIs can issue 
infrastructure bonds which qualify for tax benefits. Further, they can raise funds in the overseas markets through the External Commercial Borrowing (ECB) route. Funds raised in these ways will be cheaper, even after factoring the cost of hedging, thus leading to lower lending rates.” 

Another rate cut by RBI can invoke positive sentiment in the investor and 
buyer community. “Foreign Direct Investment (FD) in the real estate sector should be pushed harder since it will not just infuse liquidity in the system, but also bring along technological expertise and global standards in business practices,” says Ramesh Nambiar, cCo-founder and managing director of Nambiar Builders. 

According to Srinivasan Gopalan, CEO, Ozone Group, “Developers should be able to get contractors from abroad, to help speedy construction, using modern 
technology and processes. External commercial borrowings should be allowed for residential projects.” 

The loan factor 
Currently, the real estate sector is struggling with low-demand and hence it is imperative to stimulate the home buyers to make positive decisions. “If more tax benefits are given to the prospective home buyers, they will definitely flock to the 
market in large numbers. And the developers, on the other hand, have been delaying their future expansion plans due to low business sentiments in the market, that has emerged out of the policy uncertainties,” says Manoj Kumar Singh, chairman, Mangalya Group. 

Vikas Arora, director, sales and marketing, Runwal Group, explains, “We expect that the exemption for home loan interest payments should be increased from the current limit to at least five lakh rupees per annum.” Inventory level tells that the customers are postponing buying decisions for two reasons – one, little elbow room because of low savings and second, high interest rates. “If government announces tax rebate on home loan interest and increases tax slab, it will ultimately promote saving. And, when the people make savings, they will buy properties,” says Aman Nagar, director, Paras Buildtech.

“Further, the government could also extend additional benefits to the affordable housing segment. By bringing in clarity on the issue of taxation in case of JDAs, rationalisation in applicability of service tax and VAT on construction contracts, they can open many doors,” says Santosh Shetty, chairman and managing director, Expat Group.

According to Arjunpreet Singh Sahni, executive director, Solitairian Group, “If the provision of remarkable tax incentives for the development of affordable housing projects in this budget is given, more and more developers would be encouraged to develop housing for the masses and they will be instrumental in supporting the 
government’s vision of providing housing for all by 2020.”

There is also a need to reintroduce the interest subvention for affordable housing, which was one per cent on housing loans of up to Rs 25 lakhs for houses that were 
valued at up to Rs 40 lakhs. “The Government should provide tax benefits for green 
developments like solar installations, water recycling and energy-friendly installations. This will spur new development and will also lead to a greener future,” opines Sandeep Ahuja, CEO, Richa Realtors. 

Administrative reforms

A long-pending issue in this sector is single-window clearance. Currently, the approval process is very lengthy and takes around one-and-a-half to two years. The cost of delay in approval adds further to customers’ spending by 25-40 per cent. Says Suresh Hari, secretary, CREDAI, Bengaluru, “This sector is covered under innumerable labour laws, some of which are repetitive and also archaic. A 
comprehensive law to govern the industry with clear rules to avoid misinterpretation would be welcome.” 

There is also a need to demolish the cost of borrowing as capital has always been a matter of concern in real estate. “Cost of building material should be 
standardised as fluctuation in the cost of materials lead to rise in property rates. There should be fast project approvals as it will help bring the prices down,” says Deepak Mittal, director, Pushpanjali Realms and Infratech Pvt. Ltd. 

The long-pending Real Estate 
Regulatory Bill needs to be settled upon and implemented at the earliest. “Another major concern is making more land available to the developers; revised and re-revised version of LARR Act has been a big disappointment in this regard,” says Prashant Tiwari, chairman, Prateek Group and vice president, CREDAI NCR, 
Western UP Division. 

The country needs to boost low-cost or affordable homes to fulfill the dream of 
housing for all. “For this, government can bring easy land acquisition steps to avoid disputes and allow deduction in compensation, too. Another major provision should be cost of building materials that hugely affects projects offering home for common people,” says Shivakshi Gogia, CEO, Ascent Buildtech.

Tax woes
Currently, housing sector pays about 36-37 per cent of sale prices to the Centre, State and local municipal bodies by way of direct and indirect taxes. There is a strong need for the government to reconsider the decision to impose levies such as MAT and Dividend Distribution Tax (DDT) in SEZs. “Introduce uniform tax regime Direct Tax Code (DTC) and Goods and Services Tax (GST) and rationalise stamp duty across states so that there is a higher degree of standardisation,” says Sanjay Dutt,executive managing director, South Asia, Cushman & Wakefield. 

Kumar Bharat, director, BCC Infrastructures Pvt. Ltd. says, “The government also needs to focus in the direction of scraping the service tax for under-construction 
projects and higher tax exemption limits on repayments for home buyers in affordable housing projects. Providing tax holiday benefits for affordable housing projects will put impetus on this segment and ease the burden of the home buyers.” 

The need of the hour is to ensure that the customer is not burdened. “The 
government should also give some relaxation in the existing structure of service tax, at least for MIG and affordable housing, which will send a signal to the states also, to reduce VAT, stamp duty, making housing more affordable,” says Kailash Advani, CEO, Vaswani Group. 

Developers were allowed IT exemptions on their profit made between 2007 till 2012 in the process of developing housing units up to 1000 sq ft and 1500 sq ft under Sec 80IB (10) so as to mitigate housing shortage. “This has propelled large scale production of housing stock during that period resulting in reducing the shortage of housing to some extent. This exemption should be reintroduced and the benefit should be available for units starting from 250 sq ft to 1500 sq ft so that 23 million sq ft shortage of housing in affordable segment can be erased in the shortest time possible,” says A Balakrishna Hegde, managing director, Chartered Housing. 

Bijay Agarwal, managing director, Salarpuria Sattva Group, adds, “Many 
developers have planned projects based upon few schemes like 80IA, which has not been notified by the government later on. They should notify such schemes at the earliest, so that development on such projects can start immediately.”

Here’s hoping that the impending budget will bring good tidings for all the real estate players and make housing for everyone a reality.

SOURCE: Deccan Herald

Lansel D'Souza, Senior Vice President, Expat Properties, on Your weekend getaway

Escaping to a serene locale for the weekend after yet another exhausting and long week is an exciting prospect. But checking into a hotel or renting a place may not sound that appealing.
If you are planning to spend some quality time with your family and friends, what better way to do that than in your very own weekend getaway?
Weekend homes offer you just that — a home away from home — in the setting of your choice. Sprawling serene farm houses, picture-perfect beach houses and cosy cottages tucked away in a cool hill — you can pick and choose from an array of options.
Closer to home
A weekend home is often used interchangeably with a vacation home. But there are subtle differences. For one, a weekend-home is likely to be used more often. It is for this reason that such a property is usually adjacent to the city where the owner lives. For a nippy get-away and back, the place has to be easy to access and closer to home.
While people usually love idyllic surroundings, that is not the only driving factor. People also look for ways to entertain friends and family.
“Play area for kids is one of the key features many look for in a weekend home,” says N Hariharan, Head, Commercial Agency, South, Cushman & Wakefield, a real estate advisory. “Families with kids form over 60 per cent of the weekend home segment. But we are also seeing friends, young families with no kids and women coming for a short get-together,” says Raman Narula, Founder, Formula Group, provider of serviced apartments. They may prefer sports facilities such as golf courses or club houses to host parties.
While popular tourist locations near cities may seem to be in favour, other locations are also picking up. Near Mumbai for instance, many are finding that Lonavla, Lavasa and Mahabaleshwar are too crowded. “Places such as Karjat differ from the mainstream holiday destinations — they are largely untouched locations that are still reasonably distanced from tourist locations,” says Lansel D’Souza, Senior Vice President, Expat Group, that develops weekend homes near Mumbai.
While any property within one-three hours of drive is considered ideal, better road connectivity is stretching distances, notes Ramesh Nambiar, Managing Director of Bengaluru-based Nambiar Builders. “People are even open to options such as Chikmagalur and Coorg for their weekend homes,” he says. These places are around 250 km away from Bengaluru.
What’s on offer?
There is a wide choice for buyers with deep pockets. You can pick between cottages, bungalows, farm houses and row houses. The price can vary from ₹50 lakh to many crores based on location, size and features.
But there may be a few places where supply is limited. “Reasons can range from development restrictions to the simple lack of free land parcels,” says Anuj Puri, Chairman & Country Head, JLL India, real estate advisory.
In general, as more land is available in the outskirts, developers can add more luxury features. For instance, exclusively designed villas with large courtyards in gated communities are gaining popularity, says Hariharan. Some such as Casa Grande offer sports themed community villas with facilities for football and tennis, says Arun Kumar, Managing Director, Casa Grande, a Chennai-based property developer.
The projects list many standard features including swimming pools, landscaped gardens, play area, 24-hour power back-up, club house and gym. Some developers also offer additional zingers such as private pools, jacuzzi and mineral water supply.
Superior service
All these amenities can help you relax only if you don’t have to fret about housekeeping or worry about security. More so because weekend home locations have weather patterns that bring their own specific requirements when it comes to home upkeep, says Puri.
In the past, the only option was to own an independent home. But now there is a choice of custom developed properties in a community.
“Individually constructed weekend homes have to be maintained by the owners themselves and can be a bit of a hassle. In projects by developers, these issues are handled by the developer or Home Owners’ Associations,” says Hariharan.
Many developers offer additional services beyond maintenance and security. Imagine finding a plumber or an electrician in far-away places, when it is a challenge even within the city. Developers help you avail of these services through just a phone call, notes Satinder Bhasin, Managing Director, Bhasin Group, an NCR-based property developer.
Housekeeping services — cleaning and laundry — are also just a phone call away. In many cases, developers have tie-ups with property management service providers to offer routine upkeep. They can also keep the house ready before you arrive. You can also avail of concierge services, including organised local tours, car rentals and restaurant bookings.
Handling hassles
But before you start dreaming of your private pool party and lounging in your beach house, here are a few things you need to keep in mind.
For starters, do the necessary homework on your developer and other legal aspects.
“Smaller towns and cities are replete with developers who don’t put much thought into the quality of construction or even the need to get all necessary clearances for their projects,” says Puri.
It is therefore, important to look into the credentials of the builder, clearances and approval of project before buying.
Off-beat locations also require you to consider factors you may normally take for granted in a city. Connectivity to a market place or emergency medical facility will be critical.
Finally, make sure that your mains are switched off and gas pipes shut when you lock up.

SOURCE: The Hindu Business Line

Santosh Shetty, CMD, Expat Group, on RBI's Repo Rate cut - Construction: Business Today, Jan 2015

The Confederation of Real Estate Developers’ Associations of India (CREDAI) the apex body for private real estate developers in India expressed their happiness over the unexpected but long awaited move by RBI to reduce the repo rates by 25 bps ahead of the 6th Bimonthly policy rate review on February 2015.
Speaking on the development C Shekar Reddy President CREDAI - National says, “Considering the overall economic situation and challenges being faced by the industry, we welcome the reduction in repo rates, which will ease the burden on the buyers and developers. The decision of RBI to cut the interest rates was long overdue in the environment of lower inflation and poor domestic demand. The home buyers were upbeat but in a wait and watch mode due to high prevailing interest rates. We are hopeful that with this interim announcement of rate cut the banks will take the cue and pass on the benefits to the end user which will trigger the demand and offtake of housing. We are hopeful that keeping in view the low inflation RBI will continue the change of stance in the monetary policy and address the industry concerns for growth and give the necessary impetus.”
He further adds, “Housing has long been identified as a social priority next only to food and clothing. According to Housing and Urban Poverty Alleviation (HUPA) estimates present housing shortage is 18.7 million units with almost 96% shortage in the shelter for Economically Weaker Section (EWS) & Lower Income Group (LIG). There is an expected total housing requirement of 60 million units by 2030 in India. To further the efforts to meet the future requirement for housing we expect the government to announce the waited interest subvention scheme to further boost the RE demand and come out with the draft policy for the development of Smart Cities and special incentives to involve the private sector in the mission housing for all by 2022.”
According to Shishir Baijal - Chairman & Managing Director at Knight Frank India, “The RBI’s decision to slash repo rate by 25 bps is indeed a positive move which shall largely benefit the debt burdened developers and stretched households alike. This decision will also boost stakeholder sentiments for capital commitments. While lower interest rate alone may not be a reason for celebration for the real estate sector, however, a definitive indication about its future direction is reason enough to put consumer sentiments at a higher pedestal and infuse a sense of optimism.”

Sachin Sandhir, Global Managing Director – Emerging Business and MD – South Asia, RICS, adds, “The move by the Reserve Bank of India (RBI) to cut the repo rate by 25 basis points to 7.75 per cent from the earlier 8 per cent comes on expected lines. The primary reason for the repo rate cut is the consistent easing of the inflationary pressure, as indicated by the recently published government data. Confirming this, RBI Governor Raghuram Rajan in his statement said, “Since July 2014, inflationary pressures (measured by changes in the consumer price index) have been easing. The path of inflation, while below the expected trajectory, has been consistent with the assessment of the balance of risks in the Reserve Bank’s bi-monthly monetary policy statements.” With the rate revision, it is likely that there will be a surge in corporate lending. This would benefit the real estate and construction sector firms too. The wholesale price index rose by 0.11 per cent in December compared with zero change in November. Inflation based on the consumer price index also came in below expectation at 5 per cent according to the recently released data.”
Rajnish Bahl, Group Managing Director, Centrum Group, says, “Rate cut was expected but the timing was a pleasant surprise. It is the beginning of the reversal cycle and a further boost to sentiment. With inflation expectations reined in on falling commodity prices including crude, the reversal cycle augurs well for real estate, banks and capital goods.”
Mahesh Singhi, Founder & MD, Singhi Advisors Pvt Ltd adds, “Today's rate cut by the RBI is a positive surprise and a new year gift of happiness. It may not help much in lenders immediately reducing the lending rates but certainly helps in generating positive sentiments. It also suggest of a synergized working between MOF & RBI, reflecting positive outcome of recent meeting between RBI Governor and Finance minister. This is a small step in the right direction for the growth phase ahead, especially interest rate sensitive sectors like infrastructure, real estate, banking, capital goods and automobiles. Some of the companies in infrastructure and telecom will find it quite opportunistic, which are either already highly leveraged or whose future earnings are sensitive to the interest rates, with expected commitments towards licensing fees and it will certainly help in reviving the investment cycle which the government is trying to restore. Going forward, the low interest rates coupled with lowering in crude prices & controlled inflation will boost credit growth in the country, which will further help kick-start the economy.”
Santosh Shetty, Chairman and Managing Director, Expat Group, says, “The interest rate cut is a positive step by the RBI. The benefit of this move will take some time to filter down to the real estate sector, but it bodes well for those who were considering investing in property as they can expect to reach decision on it soon. Now is the time to narrow down their property investment options as there is a hint of further cuts in the future and all in all it promises an optimistic outlook for the rest of 2015."
SOURCE: Construction Business Today

Wednesday, 11 March 2015

EXPAT NewsBurst: New city 'NAINA' to come up over 600 square km near Navi Mumbai Airport

MUMBAI: Maharashtra government would be developing a new city - 'NAINA' - over an area of 600 sq km around the upcoming Navi Mumbai International Airport, Governor Ch Vidyasagar Rao said here today. 

He was addressing the joint session of the Maharashtra Legislature on the opening day of the budget session. 

"The government is committed to expedite the work of the Navi Mumbai International Airport Project. Due to comprehensive rehabilitation policy of the government, consent  .. 

SOURCE: Economic Times