Guidance for Residential and Commercial Property

Archive for the Real Estate Trends in India Category

Trends shaping the property market

Demand for office and residential spaces

It is expected that GDP growth will enable expansion and also attract investment the need for office space has increased by over 20% since the previous year because banking tenants have renewed interest and technology companies are also looking at expansion. With the increase in entrepreneurship and the related ecosystem in India, this has had terrible effect on multiple sectors which also include office space. In the last five years, co-working spaces have seen progress and now have over 200 players in this segment. There is also been a demand for residential housing especially with the growth in population and urbanisation. With the increase in nuclear families and disposable incomes demand for housing is only set to grow. There have been issues with sales mostly because of mismatch of prices. Home developers are putting in effort to sort the sizes of residential units to meet the both of the buyers. Buyers nowadays wish to make informed decisions. And now that the government is also focusing on housing that is affordable we can expect to see some traction in this segment.

Consolidation

With all the financial mess that is there, small players are seeking help from reputed players to help them complete their projects. In the recent past joint ventures, joint development and other similar management agreements have been made between the landlord and developers, both small and large and this trend is expected to continue. This will not only be related to developers but can also be extended to co-working operators.

Financial pressure

And the current crisis in NBFC has also slowed the disbursal of loans to the real estate sector. As banks become more and more cautious, it has become a challenge for developers to get funds for their projects and are now exploring other financing options, and this is making their cost of capital very expensive. The recovery of the sector will get extended and not happen as anticipated if the crisis of NBFC is not resolved. The sector has seen both growth and flux and this trend is likely to continue. There have been various reforms especially in the tax and the regulatory business environment. There has been a visible increase in accountability and transparency which has impressed the institutional investors who have now been re-evaluating the sector with keen interest.

Emerging trends in real estate

Affordable housing

The only segment where you can see some movement and transactions is the affordable housing segment. This trend is expected to carry on for some time. Both supply and demand in this sector have shown promise. This is seen as a key propellant in the residential sector in the near future by real estate consultants. Government incentives are being given to both homebuyers and the developers thereby boosting both supply and demand in the segment. It was announced recently that the government has extended credit link subsidy scheme on home loans for the middle income group till March 2020. This is being done under the Pradhan Mantri Awas Yojana. Under the scheme a homebuyer can get a subsidy of up to 2.67 lakh rupees. This is seen as a good incentive for the affordable housing segment. It is seen and felt that this will be beneficial for the Indian real estate segment.

Co living

Though the concept is not new, the name is. And a lot of students and young working professionals choose to share an accommodation usually with other students or coworkers. A lot of hostels which are privately operated or lodges usually operate on this concept of co-living. Well, co-living has been around for many many years now, and is getting a lot more organised now. It is not just about getting a bed and breakfast. Now it comes with bedrooms and also accessible common areas like the living room and kitchens. The spaces are very convenient and promise a whole new lifestyle for students and young professionals. These options are mostly available only in the metros. This demand is slowly moving to tier II cities like Lucknow and Jaipur, where they are attracting both student and young working professionals. Many start-ups have formed in the space in the past few years. Some of them include Oyo Living, StayAbode, RentMyStay, CoLive, Stanza Living, Zolo and many others.

Co working spaces

A new concept in India introduced nearly a decade ago, good working spaces are expected to become a norm now. These places have seen a lot of traction and have been accepted widely. Earlier it was only the smaller businesses or start-ups and individuals would use these spaces but now even the bigger companies are opting for this. As the share of co-working spaces in office leasing has increased more supply is expected in the near future.

Reasons for stagnation of the Indian Real estate market

Rigid rules

Policymakers should now be increasingly concerned about the quality of urban living as India moves towards an urban future. There are many deterrents to building an urban India. Rigid Rules is one of them. Rules, which lay down how much, can be constructed and in which places along with regulations and essential permissions for constructions have created some obstructions in the housing segment. Seeking clearances from multiple department is very cumbersome and is a tedious process for the developers. Compliance checks have to be done for a lot of regulations and rules that often get revised and have to be paid quite steep charges and fees. Delays in grant of permission and rejection of applications without any clear reason is what developers are faced with often. This causes an increase in bribery in the process which leads to escalation of cost. The rules laid out with respect to land use often end up restricting supply of land and increases the cost of land too.

Heavy litigation

Real estate and land are subject to heavy litigation. Data collected from the Maharashtra region shows that 16% of projects and 31% of built-up space are stuck in legal dispute. In Mumbai these figures go up to 50%. On average, in Mumbai, a legal dispute has to go through for cases, which are in different states of resolution in different courts. And because of this projects get stuck in the legal system for long periods and construction projects in India take ages to complete.

Delays and malpractices

To deal with these issues, the developers have found a way around the system for completing their construction projects. They manipulate cash flow by raising funds from the sales of apartments that have not even begun so that they can finance other projects that are probably stuck halfway or are underway to solve the availability of cheap finance. All these delays and malpractices in the end affect the home buyers who have no clue about why our project is being delayed. To address these issues, state governments have set up regulatory authorities for real estate. Most of the developers have to register with this authority and also required to provide complete information on the projects that are ongoing. They can be charged penalties for failing to provide complete and accurate information about their projects.

Trends in the real estate market in India

Evolving at a rapid pace

One of the most promising and evolving sectors for investment in India is the real estate market. Not only is investing in the real estate market safe, it also delivers good returns. Experts say that investing in real estate is better than investing in gold or any other scheme. Although the real estate segment was going through tough times in the last few years, demand has shown to increase and the property market is expected to grow in the coming years and give you favourable returns. The segment is growing at a rapid pace and is picking up momentum. The size of the real estate market is expected to touch $180 billion by 2020. The growth pace at 9% per annum looks promising. Rapid urbanisation and an increased demand for property in Tier 1 and Tier 2 cities. metro cities like Chennai, Bangalore, Mumbai and Hyderabad have become sought-after destinations for investment in reality. The increase in the number of IT companies in the cities is reason for this. Both luxurious and budget apartments are being constructed to suit the different demands of the people.

For both high end and budget buyers

India’s property market is not just for high-end property buyers, it also has a lot of room for the mid budget buyers. With various initiatives from the government, the budget segment is growing rapidly. Schemes like the Pradhan Mantri Awaas Yojana have been launched with the objective of being able to make housing affordable to everybody. Homebuyer rights have been given a lot of importance by the Indian government. RERA committees have been set up in every state by the government to keep a check on the real estate market, which is so crowded, and also to ensure that all construction projects are completed on time and handed over. This act requires all builders to register and provide regular updates about their ongoing project. Those who violate this law have been imposed harsh penalties.

Technology innovations

Technologically connected high end residential properties is very sought after and also offers a good and sustainable living environment. Success in the segment depends on such technology innovations. The concept of sustainability is seen being inbuilt in a large number of projects, both residential and commercial, by real estate developers. The promise of lush green spaces, good air, a better social life and so on attract a lot of homebuyers.

Steps to Start a Real Estate Business in India

The real estate plays the role of the most promising business in the market today. It has seen huge growth and is flourishing at a great speed. It has attracted many people from all walks of life to start their own venture in the flourishing and thriving business.

One would be amazed to know about the previous status of the real estate business in India. All thanks to the enforcement and transparency of the REITs, RERA and Title insurance, the industry is in its best and great form.

If you are planning to get involved in the real estate business, it is advisable to do a little homework to make a strong position for yourself. Let’s take a look at a few of the steps below that would help you achieve your goals.

Research and Evaluate – Just like the other professions, it is important to do a little research on the real estate field before blindly falling in the market. You can start by taking the advice from the industry veterans. Always believe in the first hand advises and guidance.

Pick and Choose a Specialty – There are many choices available in this field like the residential brokerage, commercial brokerage, and land investments. Depending upon the options available and your preferences, you can go ahead and choose your field. To start with, one must focus on a particular field and slowly move to the other field.
Obtain the required registration and licenses – This process was not given importance in the earlier years, but now it is very important in the registration and licenses as stated by the government laws. Also, it makes your profession stand out because of the clean paperwork. Starting from registration of your firm to real estate license, obtaining tax registration services, GST registrations every single step plays an important role.

Chalk out a Business Plan – Once you get hold of the licenses and registrations, the next important part is the business plan. Make a clear and detailed plan and make sure the challenges you have put on plays the basis of improvement in your field. The budget, business structure, team hiring and funds strategy must all be mentioned clearly in the blueprint. You can improve in the areas, as you proceed slowly.

Put Together a Brilliant Team – This plays a very important role. One cannot manage and handles all the work alone. You will surely need help but also don’t hire people lavishly. Make sure the person you hire does justice to your work and to yourself.

Myths When Buying a Home in India

When buying a home, few blindly follow some of the processes which they hardly question as they are believed to be followed by so many people. This so-called wisdom actually turns out to be myths where the people believe and follow blindly. Below are the few of the common myths when it comes to buying residential property.

1st Myth: RERA covers all projects

Real Estate also commonly known as the RERA came as a huge relief for the buyers of home. But most of the people assume all the projects are safe as it is hugely covered by RERA. Well, it is not true as RERA covers the project with an area of 500 square meters and more or eight units or more. A project can only be a compliant of RERA, only after the builder has registered. So before taking on the project one must first ensure that it comes under the state regulator. It is mandatory in the RERA projects that all the residential and commercial real estate projects must be registered where it is eight or more apartments and land that measures 500 square meters or more.

2nd Myth: Under construction homes are much safer at present than RERA

Before the RERA projects, many builders failed on their project leaving the home buyers at sway. So, the buyers started preferring the homes that are ready to move. But after the launch of RERA, the builders started focusing on the completion of incomplete projects instead of focusing the new ones and leaving the ones unfinished that is existing. So, is it safe to believe the under-construction projects safer?

At present, most of the states, RERA is either nonexistent or is available in the palest form. In other words, RERA has taken over in few states, whereas it is yet to find its strong place in other parts of the state.

3rd Myth: Subvention schemes help cut cost

EMI or the subvention plans never fails to attract the home buyers. Under these schemes, the home buyers are asked to pay an upfront amount of 10-30% to the developers. The balance is then paid by the bank in the name of loan to the buyers. The bank gets the interest payments from the developers for the under-construction project. As the construction progresses, the bank pays the money to the developer. The EMI of the buyer starts only after he gets hold of the possession. This may sound like a cut cost but actually is not when looked deep.

A Survey On Real Estate Market -2030.

A recent survey was conducted on real estate performance. The results of the survey predict that the real estate market would reach I trillion USD in the year 2030. Thus the real estate market in India would be ranked globally. Here you would know about the survey results conducted on the real estate market and the factors that influence its growth.

Insight On KPMG Survey

KPMG surveyed the future of the real estate market along with APREA and Naredco. The results of the survey were surprising. Based on the findings of the survey, it is expected that the real estate industry is about to grow and reach the 650 billion USD in the year 2025. It is also predicted that the industry would reach 850 billion in the year 2028 and USD 1 trillion in the year 2030.

From the year 2014, the real estate industry continued to perform better. This has made it rank globally. This has built confidence in the hearts of the investors and buyers. Neeraj Bansal of ASEAN corridor exclaims that this real estate growth is influenced by the asset classes and schemes like affordable housing, housing for all, etc.

The growth in the real estate industry would contribute to the economy of the country. The Indian gross product is about to double in the year 2025. The rise in the real estate industry would generate employment opportunities to millions of people in the future.

The real estate industry was indeed facing several challenges due to unavailability of funds, delay in projects, accumulation of inventory, etc. But the healthy initiatives and amendments proposed the government recently has contributed to the growth of the real estate industry.

Real Estate Investments-Statistics
In the year 2018, the majority of real estate investments, say 44 percent were from other countries like Singapore, Canada and U.S. Most of the foreign investments were focused on commercial real estate projects in popular cities like Bangalore, Mumbai, Hyderabad, and Pune. Thus the foreign investment resulted in USD 149 million, which is pretty high when compared with the domestic investment of USD 87 million. Local investors continued to invest in commercial and residential projects. Mumbai is the major real estate attraction, and nearly 53 percent of the total investments are towards the city of Mumbai. Foreign investors prefer to invest in Mumbai, and domestic investors choose Hyderabad and Bengaluru as their preferred choice for investment.

The above offers a detailed explanation of the survey results of the real estate market.

Expert Insight On Real Estate Trends

The real estate industry in India experienced several changes in the year 2018. The polices and amendments imposed by the government and demonetization has created a considerable impact on the performance of the real estate industry. GST and policies of RERA influenced the growth of the real estate industry. Housing for All and Affordable housing was given greater importance in the year 2018. Here you would know about the views on real estate trends of the year 2019 by Aditya Mishra, CEO of SwitchME Technologies.

Expert View On the Future Of Real Estate Market

Aditya supports the Housing For All scheme announced by the Prime Minister of India. He feels that this scheme would create a significant impact on the real estate industry. The scheme has made it possible for homeless people to build their own house. The popularity of the scheme has influenced the affordable housing projects. Thus big real estate owners and reputed real estate developers have started to take up projects related to affordable housing. Aditya predicts that there would be some increase in volume and price appreciation of the secondary market of the real estate industry. The primary market is expected to be resilient. He suggests that there would surge in the volume in the future in popular cities of Mumbai. According to Aditya, in the year 2019, there would stable real estate prices in Pune and high real estate rates in Bangalore.

Aditya also talks about the challenges faced by the real estate industry due to GST and demonetization. Unsold inventory was the critical issue experienced by the real estate industry due to the above government reforms. RERA and Benami Properties Act also influenced the growth of the real estate industry. In the year 2019, this situation would change, and big real estate owners would manage the market situation. Small realtors and developers would face difficulties in sustaining in the market.

Impact Of Elections And Budget

According To Aditya Mishra, the General Elections 2019 would create a significant effect on the future of the real estate industry. The economy would face cash infusion due to elections. This would result in inflation. People would plea the government to cancel the agricultural loans before the general elections. The factors mentioned above would influence home buyers and people who wish to invest in a property. Increase in the interest rates would result in consolidation, and this would affect small developers. It is not possible to predict the accurate performance of the real estate industry after the general elections.

The above are some of the expert insights on the future of the real estate industry.

Know About The Future Of Real Estate Industry

Real estate is a popular sector that influences the Indian economy. The real estate industry indeed faces specific challenges and problems. But there is a stable demand for real estate related business. There is a good future in store for the real estate industry due to the policies passed by the Indian government. Here you would know about the future trends of the real estate industry.

Future Real Estate Trends

The following are some of the future trends that you can witness in the real estate industry.

Demand For Affordable Housing Units: In the future, there would be a high demand for affordable housing units. The government has allocated funds for affordable housing. This would be a driving factor for the growth of the real estate industry shortly. Affordable housing seems to be a feasible option for people who wish to own a house.

Increased Trust On Real Estate Industry: Real estate experts predict that the real estate industry would build trust and confidence in the hearts of the buyers in the coming years. This is due to the recent legal amendments passed by the government. Thus small and prominent real estate agents and promoters must possess a license under the Real Estate Regulatory Authority. Therefore small and fly-by-night real estate promoter try work along with big and recognized developers. This has created a sense of confidence, and homebuyers can invest their hard-earned money without any fear.

Low-Interest Housing Loan: The Reserve Bank Of India has slashed the interest rates for housing loan by 1 %. Also, EMI costs have increased considerably. This is of great advantage for middle-class people who dream of investing in a property. Thus with lower interest rates for the real estate industry, there would be growth in the real estate industry.

Maximum Utilization Of Less Space: It is evident that the prices of the real estate property in the urban areas continue to increase. This is the main reason for the popularity of apartment in big cities. Housing developers work along with architects and interior designers to come up with innovative and trendy housing projects. These housing projects would offer maximum utilization of the available space.

Challenges Of Real Estate Industry

The real estate industry faces some common problems like the unavailability of funds and project delay due to approval formalities. There is constant change in the requirements and expectation of home buyers, and this influences the growth of the real estate industry.

The above offers a clear picture of the future of the real estate industry.

Buying A Home In The Current Real Estate Market: A How-To

The Slow, Steady Rise In Home Prices

  • From 2017 to 2018, the US home price market saw a massive jump of 10%. In 2019, the story is much different. Yes, the price is still increasing but at a plodding pace. Add to it the total number of houses up for sale this year is forecasted to increase by only one percent. The reason for this slow rate is twofold:
  • The interest rates on a mortgage have increased.
  • The overall economy of the country is uncertain.
  • The two factors are combining to make buyers more cautious about purchasing a house. Those who are still looking are in search for new construction.

How Do You Buy A House In High Price Market?

  • For those who are still adamant on buying a house in the current market, there are some necessary steps.
  • Find out your budget, an amount you can afford. Apply a mortgage calculator to determine out how much monthly payment you’ll be able to handle comfortably.

  • Stick to the budget. Do not end up buying a home because a competitor may bid on it. If you purchase a house that is not in your financial limit, you create chaos in all your finances. Don’t be pressurised by outside forces.
  • The best way to find out if you can afford a house is to see if you can secure a down payment of at least 10% on a loan for fifteen years. If it is not possible, then your monthly mortgage will be through the roof.

A Few Options To Consider While Buying A Home

If your heart is set on buying a home this year and you have a budget in mind, yet can’t find the perfect property, then consider these options:

  • Get rid of nice-to-have options. Commit to must-haves and look for properties that include it. For instance, a cheap home in a good neighbourhood makes sense as you can always improve upon it in the coming years. Make sacrifices.
  • Expand your search area to a less popular neighbourhood if the one you want is not within budget. It is smarter to shop in more locales than to stick to one.
  • Save for a year more and then look for a home. Patience and some time can do wonders for your budget!

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