Govt. postpones revision in guidance value of Karnataka till budget session

Bengaluru: The State government in an effort to stabilize the real estate market of Karnataka and Bangalore has decided not to increase the guidance value of the properties for the whole of Karnataka including Bengaluru as well. Guidance value is important for any property transaction from the individual’s stand point. The reason is the stamp duty and the registration with the government would only happen at that price no matter what price the property is sold at. The decision is being taken probably to churn up the real estate market of the urban areas and especially Bangalore. This decision of the government comes at a time when the real estate market is in a lull with a huge back log of unsold inventory lying in Bangalore. It is a norm that the government revises the guidance value every November and in the year 2015 the government has been witnessed to postpone it by about three months or more. The decision was that the government would keep the revision of the guidance value in abeyance till the next state budget session.

The state government led by Mr. Siddaramaiah had earlier set a target for the government exchequer of Rs. 8,200 crores from the stamps and registration department for the financial year 2015-16. At the end of the month of November 2015 the amount mobilized by the land registration department is Rs. 4,910 crores which is still short of the set target by about a sum of Rs. 30 crore. The government data revealed that the department had collected Rs. 7, 070 crore as against the set target of Rs. 7, 450 crore. Mr. N V Prasad, the Inspector General of Registration and the Commissioner of Stamps said that the department earlier proposed a revision of the guidance values but received varied comments and objections too from the different stakeholders. The department is currently engaged in handling and investigating these objections after which an appropriate decision will be taken.

The department of land registration issued preliminary notifications with the proposed increment of the guidance value in places like Jayanagar, Rajajinagar, Gandhinagar, Shivajinagar, Bangalore Rural and Ramnagara registration areas. The proposed increment of the guidance value ranged from 10 percent to 200 percent in few of the cases. The sources from the government opine that there have been objections from few of the stakeholders which the department is looking in to. The department officials noted that the usual registration shoots up just before the time of the revision of the guidance value to avoid the payment of the extra stamp duty. But this year it did not which is not a good indicator due to which the government kept the revision of the guidance value in abeyance. The government exchequer receives three fourths of the registration fees from the BBMP (Bruhat Bengaluru Mahanagara Palike) and the different urban districts of Bengaluru. 

There is a section in the political circles who are of the opinion that the buying sentiments have gone down as noticed in the last six months due to the different macro-economic issues and varied market factors. Along with that they opine that in many places the guidance values are not rational due to which it is affecting the real estate transactions in Bangalore too.

China eyes Indian real estate market

Chinese developers are eyeing the Indian market and are of the opinion that the next ten years of growth cycle in the Indian real estate market will be like that of what China had experienced in the past decade. This was said by a spokesman of the heading team of Singapore of JLL. He also added that a considerable number of Chinese developers and builders have been studying the trends of the growth patterns of the Indian real estate market investments since the last twelve months or so. Another spokesman of the company who heads a continent said that now the Indian markets are fetching more returns than the most mature and fast growing markets of the world over.

 In lieu of the intentions of the International Property consultant JLL, they are holding high level exploratory talks with the Indian developers also to explore the investment opportunities for their Chinese clients. The Chinese developers are looking forward to make strategic partnership with the Indian developers to invest in large scale residential projects too.

The statistics reveal that the Chinese outbound investment in the global real estate market has risen by about 50 percent to a figure of $15.6 billion since the month of January 2015. The investment destinations include places like London, Sydney and New York which are among the leading investment hubs among others.

Alongside the investment spree of the Chinese developers in the world market, India has also become an investment hotspot and one of the leading groups of builders has announced the intention of investing $10 billion in the Indian markets in the ensuing ten years. They intend to construct industrial townships and retail and commercial properties too.

Know More On : Current Real Estate Industry 

The Chinese market watchers opine that while there is a call of better prospects of the Indian markets the slowdown in the Chinese real estate markets is also a reason for the Chinese developers and builders to look for greener pastures overseas including Indian subcontinent. The top officials of the international property consultant JLL remarked that a minimum investment of $ 3 - 4 billion from China can be expected to the Indian property market in the next three to four years.

Indian Real Estate Market - Investment Opportunities for NRIs

 The NRIs undoubtedly have a tie with India and it’s surely an emotional tie. If the NRIs want to buy any property for a long term purpose, the country that they remember first is India. The Indian realty boom has made the NRIs more eager to invest in their home land. There have been various surveys and reports by many and varied agencies, government bodies and private companies on the NRI’s interest in Indian property market. Out of all these there was a recent report published by ASSOCHAM, Associated Chamber of Commerce of India which has revealed that NRIs feel more confident about investing in Indian property market compared to few years back. We delve into the opportunities laid down to the NRIs in few of the sectors where there is low risk and there is an advantage too from the price point of view too.

Changes in the Indian Real estate sector

The Indian realty sector had been changing in the last one and half decade and accordingly the whole macro-economic environment of India has also undergone a change. In this spree of development, the tier 2 and 3 cities have undergone much of development with influx of various types of industries and sectors. These properties in these cities are comparatively cheaper than their counterparts in the established metropolis of the nation.

There is another important point that the NRIs need to remember is that they should target the ready-to-move-in properties rather than the under construction ones. There are realtors and developers who takes advantage of the absence of the NRIs and on top of that the under construction property will give an upper hand on the developer to do unnecessary delay which can go beyond the control of an NRI. In case the NRIs choose the constructed projects the risks of delay are totally nullified.

Investment in REIT (Real Estate Investment Trust).

REITs have added a new dimension to the real estate investment in India by the NRIs. This has allowed the NRIs to be a part of the Indian real estate growth story. The advantage is that the NRIs can still invest in the Indian property market without physically purchasing the property. Additional good news is that the REIT governed by SEBI will make it fairly transparent for them to participate.

Read On : Land Pooling System

Smart Cities – An area of smart investment.

Smart cities have been drawing everyone’s attention since its announcement. Smart cities offer a perfect opportunity for the NRIs in the Indian Real estate industry. Not only that the Smart City projects offers you both short and long term investment opportunities for the NRIs. Talking about the projects that has already kick started including the ones in Gujarat like Tec City (GIFT), Lavasa Smart City or even Kochi Smart City in Kerala, it has been noted that there had been an increment of 10 to 15 percent in the property value in less than a year. This thus is an ideal investment opportunity for the NRIs.

Know how about the construction cost involved in building a house

Every family has a dream of owning a roof over their head and each member of the family would like to add a dash of his/her ideas while building a house, which they may later call it as ‘home’. While planning to build a home there are many factors that needs to be considered beforehand or else you may run into trouble mid-way.

Know the condition on Real Estate
 

  Building a home involves costs revolving around the location of the house whether it is an urban or a sub urban area, if the structure is simple or complex, the size of the building, labor cost at that location and many more. Let’s take a look at them individually to see how these costs add up while building a home.

The shape of the outside boundary is very important while making an estimate of the construction cost. The more complicated the shape of the building, the higher the construction cost. The outside boundary includes the garage area as well.

 Also read on : Select Right Color for home Interiors

 The type of house you are planning to build also determines the cost. If you are willing to build a regular house with standard fittings and fixtures it might cost a little lesser but if you are planning to build a house with your ideas and choices then the costs will increase exponentially. You might like to create home with designer tiles, branded fixtures, high quality paints, attractive cabins and storage space etc., all this will only build-up on your existing cost.

The size of total built up area also decides the cost. This area includes all the common area and the total carpet area. This does not comprise of basement and garage area as they will be calculated separately. The bigger the size of the building, the pricier the construction cost. However, it works out lesser when compared to cost per square foot when compared to smaller buildings

Finally, the quality of materials used in construction like sand, bricks, iron bars, gravel, and wood also matters. The labor charges too differ in different cities. They will work out lesser in suburban areas but it will be expensive in urban areas.

So, if you are excited to build your home, don’t rush with your plan. Slowdown, get all your construction costs estimated and covered. Then enjoy a smooth flow of work and also peace of mind which comes with it. Happy constructing!

New places to attract investment in Bangalore as Reach 3B will be up and Running by March 2016

As the demand for homes in Bangalore is upbeat, new metro route is unlocking hidden corners of the city. It is one great buy-out for those smart home buyers who are waiting to grab such opportunities.

It is a well-known fact that as the infrastructure of a city develops, so does the prices of houses in that surrounding neighborhood. The prices of the land is sure to rise in the surrounding areas of Bangalore compared to the city center as the new metro train Reach 3B will connect to the corners of the city from the key locations. This trend is predicted to increase for the coming decade as the Reach 3B is all set to connect the heart-of-the-city to the south India’s largest industrial area- Peenya, Nagasandra and beyond.

Building new metro links to areas that are under-developed opens up an array of potential properties that attract smart investors quickly. Metro Reach 3B has been constructed on a stretch of 42.5 kilometer and was scheduled to be operational by May 1, 2015. But due to technical difficulties the timeline has been extended to March 2016.
 

Read on : The cycle rules the real estate industry

Metro Reach 3B will improve the connectivity to important locations, in terms of employment, such as Peenya Industrial area, Jalahalli Cross, Dasarahalli and Nagasandra. This will decrease the time of transit from 1 hour to just 25 minutes making life easier for thousands of people in the city.

The property prices are responding according to the market. According to sources the plot value is priced at 23,000-38,100 per square yard. The value of the flat too has shown year-on-year increase of 8% in the surrounding areas such as Jalahalli. A 2 bedroom home is priced at Rs. 3,900 – Rs. 4350 per square feet.

In addition to these areas, the development of real estate has extended towards Dasarahalli. It was a long drive from city to Dasarahalli, but looks like metro Reach 3B will turn it all around in favor of Dasarahalli. With many new residential and commercial projects too mushrooming across this place it is soon to be a ‘big cheese’ among the home buyers and investors.

The flats in these areas are priced at around Rs. 70 Lacs and more, by various major real estate developers. This is just the beginning and the city is yet to witness the best. It is predicted to increase exponentially as the potential of this area will increase with the advent of Reach 3 B in March 2016.

Approvals delayed in Hyderabad for Infrastructure development plans.

Hyderabad: There has been a check on the furtherance of the builders’ and developers’ plans in the city of Hyderabad. The realty sector stake holders are worried as the red tape has put an abeyance on the permissions and clearances in the city. This is primarily due to the Telangana government’s grand plans of construction of the physical infrastructure like the sky-walks and the expressways which has put approvals of thousands of buildings on hold.

The builders ruefully comment that the approvals and clearances that require to be taken before commencing any construction are moving very slowly in the regions of Greater Hyderabad Municipal Corporation (GHMC). This has an impact on the construction costs due to delay and escalation of material costs which is affecting the end user who has already invested in lakhs for their homes with expectations.

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The realtors remark that GHMC officials had been given circulars by the government in March 2015 to put all the permissions and approvals on hold as the government plans for acquisition of more land for its major projects. One among them was the construction of Strategic Road Development (SRDP) which also includes the construction of skywalks, flyovers and expressways at major junctions and nodes of the city. The higher officials of the GHMC remarked that permission of new projects would have hampered the land acquisition process.

GHMC has 47,000 pending approvals and permissions which have accumulated in the department during the last five years and out of that it has put 1500 new projects on hold. The officials remark that applications once rejected have often been seen to be re-applied which causes more delay in the system. Out of the 47, 000 requests around 38, 000 were approved and 5, 600 were rejected in the month of November, 2014. The officials of GHMC remarked that civic officials are having difficulty in identifying the different land use patterns of the city.

The officials of the top realty firms remarked that in GHMC it normally takes three months to get the building plans sanctioned which is sorted out at the zonal level. But due to the government’s plan of infrastructure development and land acquisition they are scrutinizing the plans at the head office level which is taking six to eight months to obtain approvals.

Bengaluru Landlords opens doors for Expat Tenants

Bengaluru is the most happening city of India. It has taken a place in the global map. It is the backbone of the IT and the ITeS segment of the nation. The education sector here is also flourishing with many renowned schools, chain of schools and colleges being established here. All this has called for an increasing influx of expats in the city be it high or middle level officials of foreign companies or be it foreign students.  

This has spurted the market of expat students and tenants in the city. Landlords of Bengaluru are looking for expat tenants as few of them had a bad experience with native tenants. On top of that the landlords can charge more from the expat tenants. So in this scenario with more and more migration of expat tenants it is easy, lucrative, more convenient and safe for the Indian landlords to rent their premises to expatriates.  

In areas like Koramangala, Whitefield, Electronic City and the heart of the city as well there are landlords who give rent to expatriates alone. When asked about the pros and cons of giving rent to expats the land lords opined that it is more safe and secure. They opined that they had bad experience with Indian tenants who had previously damaged their houses and now that chance is comparatively lesser from the expatriates as they are all foreigners.

One more important point that was raised by the landlords was that the problem of eviction is not there in case of expats at all. They come to India with assignments which is time bound or for educational purposes which is for a limited time. In these cases they automatically leave the premises when their Visa expires. This is surely a plus.  

When asked about the problem of getting an expatriate tenant the landlords remarked that it may be difficult for the first time. But after the first expat tenant, landlord asks the tenant to get a replacement which they normally do.  

But the expats remark that they usually pay higher rent to the landlords compared to the Indian counterparts. In case of expat tenant the expectation of the landlord is more with more advances. They usually give it back when the new expat tenant occupies the premises again. Talking about the advance payment to the landlord and the rent the expats remark that they pay much more than the Indians. Leslie from Koramangala and Daniel from Viveknagar opines that the expats are generally single male or female who comes for office work from different countries. They take houses of their choices which suit their lifestyle and this is where the landlords win in the bargain process. Leslie pays Rs. 40 000 for a 2 BHK and Daniel pays Rs. 30, 000 for a well-furnished and spacious 1 BHK which both of them think is way more expensive than the prevailing rates in the area.  

The market watchers opine that this trend of directly renting the property to expat tenants has caught up due to the trend of leasing by the company going down. The procedure is that the expats who come to the city as employees of multinational companies used to find a house through the brokers which was leased by the company. The company was the leasee and the rent was usually paid by the company and the employees used to stay there. This is good for the landlords also as the companies do not damage the properties and even if they do or in case of any unexpected events getting the compensation is easy. Even today few of the landlords prefer the premises to be leased to companies instead of the expats directly. But the realtors and the market watchers feel that this trend of directly renting it to expat tenants has picked up for the last three years.  

As far as the higher officials of the companies are concerned there are companies who rents bungalows, Villas and houses in gated communities which ranges between Rs. 1 Lakh to Rs. 4 Lakhs. The agents remark that in a city where there is a taboo of renting the bachelors and the single male or female, the expats should be given more freedom to keep pets or bring guests of the opposite gender or even for cooking food of their like.

  

The realtors opine that there is a favour towards the western tenants than the blacks. Even people from West Asia are also accepted as they are comparatively rich as the notion goes. But there is a bias being noted by the agents and realtors of the landlords towards the white skinned westerners. The realtor remarks that even for the landlords who decline the entry of Indian female tenants are liberal in case of foreign female tenants. When asked the reason, the answer was it is probably the money that changes the attitude.  

Will the unsold stock of Bengaluru impact property prices?

Although people are of the impression that Bengaluru has one of the most favourable real estate market conditions in the whole country that is not really the case. Bengaluru registered a stock of unsold inventory which was an all-time high since 2008 with more than 1.01 lakh inventory lying unsold. This stock collectively amounts to Rs. 85, 000 crores in terms of revenue. This is primarily the reason for the market to be stagnant.
 
The primary reasons for over supply

The market watchers opine that 85 percent of the unsold stock which tantamount to over supply is in with the upper and the midrange builders. The excessive supply and the fear of unsold inventory are perpetrating the builders to sell the apartments at lower prices. Broadly the reasons for the oversupply are; firstly the saturation of demand in the high and midrange markets; Secondly there is a high demand in the affordable segment for which there is a lower supply and the developers have been from mid and higher segments and thus many are forced to lower the prices and tailor make the projects for the affordable segment. An excess of new launches at this moment of time can worsen the situation remarks the expert realtor and the trend watchers. 

What’s the impact of over supply on pricing?

The expert realtor remarks that prices of luxury and the high priced segment will be mostly unaffected by this problem of oversupply. There is a huge demand for the affordable segment but simultaneously there is a demand for the luxurious segment too. Few projects at Jayanagar, Koramangala and Sadashiv Nagar where per square feet price is estimated at a range of Rs. 20, 000 to Rs. 30, 000, the pre-sales was fabulous with many enquires and fast sales. This signifies that there is an increasing demand in the higher segment with a simultaneous demand in the cheaper housing. 

Subsequent stagnation of projects:

There is a prediction from many market watchers that the prices are expected to drop and the market to stagnate. This will happen, opine the realtors as the market struggles to get back on track. The budget that was announced was primarily a remedial one. In such a situation most of the prospective buyers with affordability is hesitant to buy and are waiting for the market to stabilize. So, in such a situation it is expected that developers will revise the prices of the project with the introduction of attractive schemes to attract the buyers. 

A buyer’s market is expected very soon

The magnitude of the unsold stock makes the trend watchers predict that there is a possibility of the prices being pushed lower.  They say that there is a possibility that the market of Bengaluru becoming a buyer’s market where the buyer will be having the choices and all the options to negotiate. But Bengaluru real estate market is too complex to become a solely buyer’s market.
 
But the credit rating agency ICRA has stated that despite poor absorption rates, oversupply and unsold stock the prices are expected to remain stable for a considerable point of time or even there is a possibility to increase by 8 to 10 percent in short term. This may happen due to increment of prices, construction cost and the service tax increment. The infrastructural improvement like metro connectivity can make the prices steady in spite of the pressure of unsold stock. But still the expert notes that unsold stock will impose a higher pressure which is time bound which is unlikely to be offset by the infrastructural growth like Metro.

But even then few others state that unsold stock is really not a great problem and does not restrict the new entry so much as they cite the example of 2010 when there was huge pile up of unsold inventory and even then large scale real estate players like Reliance and Microtek infrastructure entered the industry.

Read More: On Selling the Property

Invest in emerging localities for higher return.

Bengaluru

A property is desired by all and is obviously is a long term investment option which one may need for various reasons. In terms of capital gains also a property is viewed as an indispensable asset. Property investment also comes handy as an option of increasing wealth which becomes useful even at the post retirement stage. Even as well a land plot or a site can serve the purpose of much needed cost of higher education of children. Not only higher capital gains are what a property yields but the property also helps in capital protection as well. For an investor who doesn’t want to take much of a risk, property is a much stable option that one goes for which can be encashed at anytime and any stage of life.

The tax deductions that an investor can avail of against the repayment of home loan gives an additional benefit and makes it more cost effective. If the amount of tax deduction against the principal repaid is within Rs. 1.5 lakhs per year the total interest paid on the home loan amount can be claimed as a tax deduction if the property is residential in nature or is rented out. It is also true when the house is self-occupied by the investor. 

The rapid pace of urbanization along with simultaneous sprawling of emerging residential townships and localities supported by proper infrastructure is leading to the increased demand of upcoming residential areas. Numerous residential projects are seen to be developed in these zones and few of them are even in the nascent stage of infrastructural development. Thus in these areas the properties can be a value buy as with the gradual development of the area and simultaneous influx of population the prices  of properties are sure to go up. But the advantage is that as the prices go up the rate of increase of prices in these areas will be higher, yielding a higher return on investment in a short span of time. The investors need to keep a close watch on these factors and can take advantage of such situations. 
 

Physical infrastructure and Connectivity

Investors can keep a watch on the localities near metro railway projects as these corridors gradually do increase in the influx of the population as the metro project is in progress with road widening and gradual increase of the density of social infrastructure improvement. 

 Social Infrastructure

The city of Bengaluru is high on increasing the state-of-the-art healthcare facilities and there are an increasing number of malls and retail centres that are burgeoning at a rapid pace. The property prices are bound to increase as the population increases due to spurt of the social infrastructure and slowly the neighbourhood turns into a self-sustaining area. The intelligent investor also needs to track the pace of social infrastructure which is an indicator of the higher prospect of the place in terms of return on investment. 

The advantage of the early movers 

The projects which are just launched are better opportunities for the real estate investors as the buyer can avail the lowest prices. With the gradual development of the locality and improvement of connectivity and social infrastructure these projects will surely pose to be even more lucrative and will definitely yield higher rental income. 

Choose the right builder for your desired home.

We all have a desire of a dream home in our minds and we toil for it day and night and arrange for the sufficient  budget. The expert says that’s is nothing. Many of the things go into building a dream home like architectural and Vastu design, cost estimation, plan of the interiors, etc. These are of course the ambit of the home builder and thus choosing the builder is certainly a crucial factor that affects your building the home.

 
All of us want to choose the type of furniture, upholstery,right colour for home interiors and the decor to be used as a part of building our home. If the home is built rather than chosen from already built homes then there is a chance that you build up the home as per what your heart longs for. The builders are surely many in number and there are of course many options to choose the builders from but before going to that step decide what kind of home you would like to go for. Whether it’s a villa, penthouse, bungalow or an apartment. This step is undoubtedly crucial as different structure of the home are unlike from the others and there are different builders who specialize in different sectors. 
 

Have a proper discussion with the builder about the materials, labour and the expenses involved. While estimating the cost you should keep in mind that cost is subdivided in to four elements like material procurement cost, construction and labour cost, interior decoration materials and labour charges and unforeseen emergency expenses if any. 
 

The blue print of the plan has to be first of all prepared and it should be figured out whether any amendments or changes are required and whether the land plot is suitable to go ahead with the proposed plan keeping in mind the Vastu compliance. If you plan of any changes it is wise to notify the builder at the beginning stages rather in the middle as that may cost much more money and time as well. 
 

Whether the builder will be able to carry out your plan is a criterion which can be made clear once you go through the achievements of the builder. This can be done by asking or going through the website of the builder.  It is always wise to consult many builders and take an estimate and go for the least after a background check of the builder. After you decide to go ahead you should keep in mind that as it is a matter of huge expenses and may be a lifetime investment, the best option is be safe or rather be sorry at the end.

Realty portals rule the roost with innovative ideas

If you think that a real estate portal means where you get the property listings once you key in your preferred area and the city, you are mistaken. A real estate portal means much more than that today in the web parlance. These websites gives the users a plethora of choices and options right from choosing a locality, comparing it, comparing the child friendliness of localities, nearness to school, colleges and infrastructures, calculate EMIs, provide real estate news and much more to aid the user in selecting and finalizing his or her home. 

Not only just few online extras the real estate portal companies extend personal help and services too to the potential and prospective customers to buy the property and help in all ways possible. Apart from listing the properties of the brokers and agents the portals are now offering and keeping a separate section for on new launches and luxury homes too. 

The market and the trend watchers say the real estate portals are doing all the things possible under the sun to keep the customers happy and meet their needs and they have walked many extra miles in competition with each other and started to offer innovative services to the audience at large. Few first and foremost things that almost all the portals offer are a mobile app which makes the portal reach a larger number of audiences and reach larger amount of people and this increase the ease of use too. 
The portals nowadays do not just offer or exchange information but are offering advice to the potential customers and buyers of property. For a live example there are many portals that help their clients with information as comparison of locality, child friendliness, criminal records and other such information about the neighbourhood for one to make an informed decision about the change of location. Few sites provide information and comparison from rent to ownership with EMI calculators too.

To enhance the customer experiences many sites have introduced 3D picture of the location and the property for a better visibility. The innovative customer services of these portals are of special mention with many sites offering advice right from property counsel to loan advisory services. There is a website which even sends a representative once a property is enlisted on the site within 90 minutes of hosting of the requirement. Other such ancillary services include providing assistance for home or land loan, legal assistance, preparation of loan agreements and community management software that enables smooth functioning of the maintenance and the functioning of the apartment communities.

This is especially helpful when the buyers are have a paucity of time to spend on one’s search for a home and that’s the reason the portals are walking the extra mile and coming up with innovative services to make the buyer’s experience of buying a home more hassle free and perfect. This is quite unusual as probably a decade or so back no one would have ever imagined buying a dress or furniture from web portals but now it has become the norm of the day. Few youngsters prefer buying from the internet rather than any other traditional ways. The day is not far off when homes will be bought and sold over the internet.

Peer-to-Peer lending in real estate is a better option.

For instance if you need a loan of about $ 5,000 which comes to about Rs. 3,00,000 for renovating your home or even buying a car you can avail it through these sites. This may be paid to you through 15 or even 50 members paying this amount to you. When you pay back the money with interest on every month these lenders who lent you the money makes a profit from the interest amount paid.

Well, the times have changed dramatically. If you think that banks are the only ways of procuring money then you are probably not updated. The times have become very desperate with 100 percent financing becoming a thing of the past and a new concept has come into vogue that is loan from a peer-to-peer network through the internet. If you need money for any miscellaneous purchase and are looking for cash you can post your requirement in any of the property sites  and you can avail a loan of about $ 30, 000 for personal use. This has been in vogue for about few decades and is called p2p network.

 
Out of all the peer-to-peer groups special mention can be made by property websites who are quickly becoming the leaders in the lending industry with other established organizations too. The market watchers opine that procuring money through sites like these and the peer-to-peer network is gradually becoming tougher. 

Not only from the borrowing perspective but from a lending perspective too it is a worth while investment solution that proposes to produce high yields in a relatively shorter period of time. These p2p networks through the internet is used to provide a creative source of finance that makes lending and borrowing more easier and more accessible too. The advantage is that the borrowers are able to access various capital sources and borrowing options without having to deal with the rigorous procedures of the lending processes of the traditional banks and financial institutions. 

A market place lender is able to make loan approvals by him and with the absence of rigid laws, rules or regulations the people are able to enjoy a speedy loan process in competitive interest rates. In the past the borrowers have been relying on the rules of the financial institutions to cater for their need of funds but p2p is relatively much easier and quicker.

 
Similarly for the marketplace lender it becomes much easier as he can have direct access to the borrower who is being determined about his or her eligibility from his or her credit worthiness. In this respect the real estate investment and lending has become a popular aspect of money lending though the networks.

 
Real estate investors also can be rest assured that they will procure faster financing for their projects compared to the banks and financial institutions and can look forward to investing or establishing their asset base through solid real estate investment. At times when people are ready to invest in properties it becomes beneficial if there is a quick access to the loan facility.

 
With the p2p markets lending, the interest rates tend to be reasonable and the investors are able to cut down on the cost of capital who are desirous of investing in the real estate industry. The lenders are pretty much clear on the criteria of making approvals of loans.

 
Borrowers also do not have to wait for receiving the feedback for their status of granting of the loans and the requests of funds. Using such an alternative source of funding is a safe way to become actively involved in the real estate industry. It does make lot of sense to get the money from sources which are so quick and which also supports one’s credit scores.

How much do you end up paying on a home loan?

In buying a home you do not only end up procuring more financial security for you and the family but you also save lot of money that would have otherwise being paid as rent to the landlord. Due to the rampant migration in the cities of India and many shifting their location for job and education there is a necessity of new homes which has further being boosted by the easy availability of home loans.

In an attempt to ride this wave the banks have simplified the procedure for home loan financing which had lot of borrowers in the last decade. Banks finance typically up to 85 percent of the property value and the rest 15 percent has to be borne by the buyer or the borrower using his or her own finances.

The home buyers look at the interest rate and the equal monthly installments as the major affordability factor. Even then a pertinent question that haunts all the home buyers is ‘How much did I end up paying for my dream home?’

This answer has two components one of which is the interest and the principal that the buyer has to pay and next is the tax implications. We will analyze the issue from both angles.

Mr. Sharma decided to buy a 3 BHK apartment in a posh locality of Bengaluru and he got the apartment comparatively cheaper at a price of Rs. 63, 00, 000.  He paid the 15 percent of the full amount as the down payment which is Rs. 9, 45, 000.  The remaining amount which comes to Rs. 53, 55, 000 had been borrowed from a bank by Mr. Sharma at a lower rate of 10.15 percent as the other bank offered him a higher rate of interest of 10.25 percent. The full tenure of the loan was twenty years and the Equal Monthly Installment (EMIs) for Mr. Sharma came to about Rs. 52, 210.

For a home loan amount of Rs. 53, 55, 000 at the rate of interest of 10.15 percent for duration of 20 years EMI will come to about Rs. 52, 210. At the end of the tenure of the home loan period assuming that the rate of interest is fixed Mr. Sharma will have to end up paying a whooping sum of Rs. 71, 75, 453 as interest which makes him pay 135 percent of the principal amount which is about Rs. 1, 25, 30,453. 

How could Mr. Sharma possible avoid this situation? This would have necessitated an extra surplus amount that Mr. Sharma needs to invest.

The first option with Mr. Sharma is to foreclose the loan amount by pre-paying it with some amount from his savings. By doing this he can invest the amount saved from the lesser EMIs in different portfolio till he repays the full loan amount.

The second option is, he can invest his savings or the surplus amount somewhere in a diversified portfolio and continue with the same EMIs that he was paying.

Let us evaluate both the instances and scenarios and do a comparative analysis.

The first instance:

If we consider that he prepays an amount of Rs. 5 lakhs by the end of the 5^th year, his outstanding principal amount Rs. 48, 17, 328 will be reduced to Rs. 43, 17, 328 and subsequently the EMI will get reduced to Rs. 46, 791 where he can save up to Rs. 5, 419 per month which Mr. Sharma can invest into diversified portfolios. This will make Mr. Sharma save an amount of Rs. 22, 64, 732 at the end of the loan tenure and will additionally save Rs. 4, 75, 420 on interest. In total this will make him save a total amount of Rs. 27, 40, 152 at the end of 20 years.

Know your investments here

The second instance:

In the second instance let’s assume that Mr. Sharma invests his savings and the surplus amount of Rs. 5, 00, 000 into diversified portfolios and continues paying the same EMIs for repayment of the loan amount. Assuming that the rate of return is 10 percent and he saves Rs. 20, 88, 642 which is still lesser than the amount of the first instance.  

As we see the first option is much more advisable out of the two options at hand which will not only allow to save more money but also reduce the liability of the loan to a great extent.

Home loan repayment also entitles one of tax benefits under section 80 C of the IT Act. which can be availed for the repayment of the principal amount. Section 24 B entitles one to get a tax benefit and a deduction of Rs. 2 lakhs which can be availed for the interest paid on the self-occupied home. Under section 24 B the interest paid on a loan for a second home is allowed for deduction.

Outlook:

Going for a home loan is a long term commitment of liability and thus one should go for a loan that is manageable in one’s finances. There are indeed lucrative offers given by the banks to increase the borrowers but one should be careful about the hidden cost. It is always wise to choose a home loan product that does not disturb one’s financial standing. 

Are legal checks mandatory for new properties?

Due diligence is an essential part of property purchase be it commercial or residential property especially in India where litigations are on the rise. When one thinks of owning or investing in a new property which is a crucial process and involves lot of money as well one should necessarily take precautionary measures just to avoid future litigations.

Few of the mandatory checks that a purchaser while buying property needs to do are:

• Check whether the title is clear.
• Check that there is no encumbrance on the property. 
• Check that the property is not mortgaged. 
• Check that the property is constructed according to the approved plans.
• Check the Completion Certificate (CC) and the Occupancy Certificate (OC) in case of newly constructed properties. 
• Ensure that there isn’t any builder’s loan pending on the property and if at all there is a loan, insists on a bank NOC. 

The realtors suggest certain guidelines and state that it’s legally not advisable to buy a property at the pre-launch stage although the offer may seem lucrative as the prices are low but there are no legal rights or interests being created at this stage. Even if someone buys a resale property one should still insist on the original legal deeds and should get a proper due diligence conducted on the property to ensure that there are no encumbrances. 

 
When the experts were asked about the ways of checking the authenticity of a property claimed by the builders the answer was to get a thorough due diligence done both from legal and technical point of view.

 
Regarding the credibility check of a local builder the experts feel that there is no steadfast way to do it. The ways are that one can get the financials audited by a Chartered Accountant if the builder allows. Although a good track record for the last three or four years may indicate that there was good financial standing. Searching on Google on the internet about the builder can be a better option. Different aggregator sites and review sites can be browsed by checking the reviews about the builder. 
The question often arises in the minds of the customers that whether they should trust reputed builders. The people who are already stuck in legal hassles can get recourse which depends upon the termination clause which is there in the agreement being entered into. In case the seller represents a clear and sellable title, one may adopt proceedings. In case the property is being bought with the knowledge of the legal hassles then negotiation and amicable and mutual settlement may be of help. 

 In case one is buying a land plot with the Gram Panchayat one should ensure that the proposed plot is properly demarcated and a separate revenue card is available for that particular plot. A thorough due diligence regarding that plot is strongly advisable. 

The expert’s advice to the seller is one should give the photocopy of the title documents to the proposed buyer. However the seller should collect a sum as earnest money deposit to ensure the authenticity of the buyer. 

Not withstanding all these hassles and the paraphernalia attached with the purchase of the property one must keep in mind that buying a property is a lifetime affair involving one’s life time saving. If one have to spend few more bucks in due diligence and investigation it is always advisable rather than getting stuck in legal hassles later. 

Looking for larger homes here are few options

Do you dream to live in bigger and a larger super luxury apartment or a home and preferably close to your work place? If that is so we bring you some of the destinations which you can opt for and look for luxury homes as well.

Marathahalli

Marathahalli is a place where echelons of the IT and the ITeS industry stay in luxury apartments or villas. Here, one can get a large unit of 3000 to 6000 square feet but the price level is a bit higher with the majority of the residents being in the young age group. The quality of life being offered in this area is higher and this adds to the value of the place and surges the prices higher than areas like Kanakapura Road or Whitefield.

Kanakpura Road
 

This locality is high on demand as regards to luxury housing and the growth of Namma Metro Phase II has surged the growth of residential segment with more and more builders developing super-luxury apartments. This place has good communication network with Whitefield and Electronic City being equidistant from it. People living in this area are mostly echelons and young CEOs of industries and senior level executives. Properties sized about 2,500 to 4,500 square feet are available which can be availed through local builders as well as from big brands too. The pricing of the apartments are almost the same. 

Mahadevpura

Mahadevpura has an advantage as it is close to Marathahalli and Brookfield and thus has a winning edge over other localities too for the the people who work in adjoining areas. This area provides many super luxury apartments in ready-to-move-in and in under construction stage. One of the shortcomings of the area can be the water supply which is a concern in some of the localities in this area.

In case of scarce water supply one has to depend on water tankers if the building doesn’t have an underground storage tank or the supply is exhausted. Owing to the scare water supply of the area few of the projects in this location are coming up with solutions like rain water harvesting and also with the provision of Cauvery water supply. The realtors caution that buyers have to be cautious about this aspect and should check multiple sources of water in the building.

There are few other localities too where super luxury homes or even larger homes are being constructed. To name few of such areas would be Hennur, Devanahalli and Hebbal but the realtors suggest that  the distance from the office hubs are more and as travelling takes lot of time and energy, one should judge this factor and should take a decision.

Trend Of Premium Housing On The Rise In Bengaluru.

 

Bengaluru has one of the fastest growing real estate markets in India with an assured 20 percent returns on investment year on year. The influx of IT companies and the growth of the sector along with other sectors like textile, biotechnology etc. has always been the propeller for employment and high income generation. Thus there has been an increase of High Net Worth Individuals (HNIs) due to the availability of opportunities and the influx and growth of service industries and the IT and the ITES sector along with the financial sector as well.  

Not only that Bengaluru stood at the 23rd rank among the most preferred destinations of the Asia Pacific region with more and more NRIs and foreigners coming and staying in the city. Due to the recent drop in the value of the Indian Rupee in the world financial market it has even boosted the interests of the NRIs real estate investment as they find Bengaluru as the most green pasture . Thus the NRIs and the echelons of the Indians settling down in Bengaluru has propelled the demand for luxury housing over the years and today more and more developers are plunging into the luxury housing segment owing to the surge in demand.  

The study of the total luxury residential projects in the city revealed that there has been a gradual rise of the units constructed and the demand for luxury housing units. In the table below we depict the figures for the gradual increase of the construction of luxury projects in the city. 

  

Year

Projects

Units

2010

8

950

2011

11

1, 350

2012

17

3, 800

2013

18

4, 200

2014

35

6, 000

Premium locations are at the core city areas. 

The Central Business District of Bengaluru has most of the concentration of premium and luxury apartments with a few micro-markets in North Bengaluru and Whitefield which are preferred locations for premium and luxury housing. The market watchers and the veterans of the real estate industry opines that due to the offices in locations like Residency Road, Vittal Malya Road, M.G. Road, Cunningham Road, Lavelle Road, Kasturba Road and Langford Town there is a demand of luxury and premium housing in the micro-markets of North Bengaluru, Hebbal and Sadashivnagar. Other locations where premium housing is noticed are Palace Road, Frazer Town, Lalbagh Road, Indiranagar, Rajajinagar, Koramangala, Yeshwanthpur, Sanjaynagar, Hebbal, Thanisandra Road and Whitefield. Few experts opine that over the last few years a demand for premium housing had been noticed in Bellary Road, Rajajinagar and Whitefield. In areas like Devenahalli, Electronic City and Kanakapura Road there has been development of premium housing with many villas being seen.  

 The homes offer high quality lifestyle.  

These homes offer luxurious lifestyle and while detailing about the amenities few of such developers of the luxury housing segment stated that these homes come with extra high-end amenities like 360 degree wi-fi coverage, plug and play homes and other superior quality amenities. Apart from that they remarked that as the buyers want superior quality they also provide the best of building materials and also to attract buyers the developers give high quality interiors like the plush hotels or branded high quality homes. 

  

Pricing and the options. 

The research conducted by the top real estate survey organizations reveal that such luxury apartments in this segment in and around Cunningham Road, M.G. Road, Kasturba Road and other adjoining areas is about Rs. 23, 000 to Rs.27, 000 per square feet.  Luxury apartment around the places like Yeshwantpur, Malleswaram and Rajajinagar would cost about Rs. 6, 500 to Rs. 18, 000 per square feet.  

The real estate market analysts have pointed out that the average price increase of the luxury homes in the areas like M.G. Road is 16 percent, around Cunningham Road is about 18 percent and in and around Richmond Road is about 15 percent. The rise of prices in areas like Langford Road is 12 percent and in and around Kasturba Road it is 30 percent.  

Outlook  

Thus as the trend goes it seems that the demand for the luxury housing will increase year on year and there will be far more areas where luxury homes will be constructed with various price ranges.