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.
 

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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.

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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.