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Friday, December 19, 2014

Which are the Research organizations in real estate sector in India?

Real estate is a large sector and contributes about 6% to nation’s GDP. The sector is also the second largest employer of labor (formal and informal), just behind agriculture. The practices that were followed 10-20 years ago may not be relevant in today’s fast paced economic growth. The sector as a whole and its participants carry out research & development on a regular basis to improve upon construction methodologies, manpower skill enhancement, and improvement in building technologies, housing finance, and production of raw material.

India aims to house all its households by 2022, an ambitious target. There is a shortage of about 18.76 (till 2012) million housing units at the ‘bottom of pyramid’ segment of the society.  With so much at stake, the focus on research and development shall increase manifold to achieve the goals set up by government of India.

While builders, housing finance companies, material manufacturer focus on building & delivering short term targets, organizations involved in research & develop continue to innovate for long term results.

Several institutions, organizations and companies in India and the world offer educational and research opportunities in the field of housing and housing finance. Most of these institutions promote technical education and cultivate a constructive environment for promotion of scientific methods and technologies to improve quality of products and services offered.

Which are these organizations and institutions in India? We list them below:



Monday, December 15, 2014

What are the benefits of applying for a home loan in Joint name?

Sumit Sharma had planned to buy his home from a reputed developer in the locality that he was satisfied with. The cost of home was rupees 75 Lacs. Sumit had arranged for the 20% payment (Rupees 15 Lacs) from his pocket. For rest of the payment, he approached the bank to avail home loan.

Before sanctioning Rupees 60 Lacs, bank asked Sumit for following documents:

  1. Salary slip/Form 16 A
  2. A copy of the first and last pages of the ration card or a copy of PAN/Telephone/Electricity bills as a proof of residence
  3. Details of investments (FD certificates, shares, any fixed asset, etc. or any other documents supporting the financial background of the borrower)
  4. A photocopy of LIC policies with the latest premium payment receipts (if any)
  5. Passport size photographs (as applicable)
  6. A copy of bank statement for the last six months
  7. Age proof
  8. Financial details of guarantor, wherever guaranty is required


Having produced the above documents, Sumit was confident that his loan application will be approved. However, to his surprise, bank rejected his loan application on account of low monthly salary.

As a thumb rule normally most of the banks/HFCs (Housing Finance Companies) have a provision that one should be left with at least 50% to 60% of income after repayment of monthly loan installment, to take care of the family expenditures.

Sumit’s monthly salary was Rupees 80,000. For which he was eligible to avail about 40 Lacs Rupees as loan amount from his bank.

Cost of home: 75 Lacs Rupees
Upfront money arranged by Sumit: 15 Lacs Rupees
Loan eligibility: 40 Lacs Rupees
Remaining amount: (75-15-40) = 20 Lacs Rupees

Now, how will Sumit arrange for the remaining 20 lacs rupees?

To this, Sumit’s bank manager suggested that he can make his spouse as joint applicant for the home loan. Sumit’s wife was employed for last 3 years. Her net monthly income was Rupees 60,000. By combining the monthly income of both Sumit and his wife, bank was willing to sanction the loan amount of Rupees 60 Lacs. Finally, Sumit was able to buy his dream home jointly with his wife.



So, what are the benefits of applying for home loan in joint name?


  1. As can be seen from Sumit’s case above, applying jointly for home loan increases the amount of loan that bank can sanction for people to buy home.
  2. Moreover, banks or HFCs feel comfortable to sanction the loan in joint name because of greater security for the lender in view of the option to take recourse to either of borrowers.
  3. Besides improving your loan eligibility and enabling you to get a larger amount of loan, co-borrowers are eligible for deductions under the Income Tax Act. Both the borrowers can claim deduction, to the extent of their share in the loan, under Section 80C of the Income Tax Act 1961 for repayment of loan, subject to the condition that they are joint owners as well.
  4. Section 24(b) grants deduction for interest up to Rs 150,000 per year on a loan for acquiring a residential house. This deduction is available individually to both the co-borrowers. To be eligible for the deduction, the home loan needs to be taken in joint names, property be owned and financed jointly in equal shares, with both spouses being joint owners.


All the co-borrowers or joint-borrowers are jointly and severally liable to repay the loan availed from the bank/HFC, subject of course to the terms and conditions stipulated in the loan agreement. Thus, before volunteering to become co-applicant in a loan transaction, it is advisable to properly understand the implications of such decision.

Thursday, December 11, 2014

What landlords need to know about renters given the sluggish real estate market?

If you’re a landlord owning a residential or commercial property for the purpose of renting it out, then you’re probably well aware of the rental market. Demand is limited but there is ample supply of real estate including the office space properties and residential houses. So, your property would fetch less. Except for the markets of Bangalore, and Pune, rental market is sluggish across all other cities in India.

A look at the commercial office space market in Gurgaon. See how rents have fallen across micro markets during the period of July - September 2014.

source: Magicbricks


It’s a buyer’s market to say the least. As renters sit comfortably in the driver’s seat, here’s what else they are up to:


  • Saving money:

Renters who are looking to rent out office space or residential houses are able to save more in current market scenario. Barring the places like Pune, and Bangalore where there is steady demand for real estate, all other markets across the country are in downturn. Renters are getting office space or residential property at a substantial discount, thereby, able to cut their operating expenditures.


  • Negotiating harder:

Renters are able to negotiate hard with landlords. Whether they are looking to rent office space or residential property, tenants are taking their time, sometimes months to finalize the deal. By doing so, they are being able to get substantial discounts on rent paid to the landlord. Many well settled tenants have also moved out of their existing properties to get new spaces at lower rates.


  • Getting lucrative deals:

A rent deal these days is not just about rent and maintenance charges. Tenants are having a considerable say in the use of common facilities of the building. In addition to getting price cut on rent, tenants are bargaining for free car parking spaces, shorter lock-in period, and less upfront money which goes out in form of security deposit & advance rent. For example, a typical office space deal in past would have standard lease terms of 3 years lock-in period, 6 months security deposit. However, tenants are now negotiating hard for 12 months lock-in period and security deposit of just 3 months.


  • Getting posh facilities:

Common facilities such as toilets, corridors, parking spaces, reception, signage boards, etc. are being renovated by the landlords to attract renters. In some instances, landlords are going out of their way to provide high quality interior work for furnished office spaces and residential properties.

Keeping all these factors in mind, many prospective buyers are also evaluating the pros and cons of renting versus owning. And in many instances, buyers are postponing their decisions to buy real estate and instead they are opting for lucrative rental deals.

Monday, December 8, 2014

What are the parameters that I should pay attention to in order to maximize my returns on Property Investment?

Real estate is a complex business to be in. Not only one needs to understand the market (supply and demand element), but at the same time, one should be aware of tax laws, registration processes, title conveyance, planning the development of project, rent laws, and state government’s land policies. Therefore, as an individual investor, what is it that one should take primary note of in order to maximize his/her returns on investment made? Let’s explore below:


  • Micro market trends
Although not foolproof, the market trends with respect to movement of property prices present an insight into the gains and losses of micro markets within a city. If a micro market or locality is showing downward trend for 3-4 consecutive quarters, then it is a clear signal that there is something wrong with the locality that investors are wary of. However, if whole city is showing downward trend because of slow down of economic growth or political instability, then, one needs to be patient before investing in any locality within that city.

There are 3 to 4 major property indices in Indian real estate market. Analyze them in detail before investing in a property. The most talked about property index in India is released on a quarterly basis by National Housing Bank. One should definitely pay attention to this residential index.


  • Master plan of a city
Master plan of a city is another key indicator as far as maximizing returns on your property investment. Master Plan is developed by town planning authorities or city civic bodies. It is a plan that takes into consideration city’s existing population, future expansion in population, need for infrastructure, and industrial development within a city. To accommodate population growth and facilitate industrial development, civic authorities earmark or zone the city. Certain pockets or sectors are demarcated for residential development, and some other for industrial or commercial development. Therefore, what master plan tells you is that how the city’s development would pan out for coming 10-20 years. Pay considerable attention to this aspect before investing in a property. Here are the links of civic bodies across India that deal with master planning.


  • Where are builders building the new projects?
Once master plan is prepared, civic bodies then invite applications from private developers to develop the land. Therefore, it is no surprise that builders are allotted land in one cluster or certain specific clusters of the city. Which are these clusters? In addition to finding it out in master plan, one can simply analyze the market and see the launch of new real estate projects.

In addition, one can find below the detailed document comprising the Guidelines for achieving maximum returns on real estate investment in India.




Friday, December 5, 2014

What Newly Arrived Expats Need To Know About Rented Housing Options in Chennai

Chennai has attained an enviable stature in very short span of time. Industries, modern infrastructure, a lifestyle to go for and booming state economy are some of the factors that have placed the state in a list of developed cities. Southern part of India is developed and has ample opportunities in terms of career and a better lifestyle for one and all. If analyzed broadly, the state’s name shines bright in automobile and the banking sector and these sectors have also created a lot of career options for professionals or entry level job seekers for quite some time now.

Moreover, major IT companies and manufacturing firms have their branches here and this has surged the migration rate to a good number. Job aspirants and experienced professionals from different parts of India are coming to the amazing south Indian state for job and finally getting settled. On the arrival, an expat may look out for a rented accommodation for himself in an area that is close to his/her work setting and is also well-connected to the essential social as well as commercial infrastructure around the locality or the region.

Here are some of the things that an expat should consider when opting for a rented accommodation in Chennai:


Few Important Pointers to Take Note Of

  • North-West & Central Chennai Can Be the Best Deal
Now this is not a hard and fast rule but northern and central part of Chennai can be a best fit for expatriate relocation. There are localities like Beach Road, Egmore and Anna Nagar, to name a few are some of the regions that are a good mix of residential and shopping areas. The localities are also well-connected through roads and also offer close proximity to railway stations and airport. So, the first step could be selecting the right location and any of these localities can be a best fit.
  • Serviced Apartments Are Good to Go
The southern part of India is riding high on realty success and one of the yields is the serviced apartments. The apartments are relatively cheaper than luxurious 2 BHK homes and have all the amenities intact within. The person residing within needn’t worry about adjusting as the apartments are spacious and are apt for both temporary and permanent stay. Expats can have a pleasant stay in such flats and this could be a good bridge towards finding a new and better housing option. Places that have already adopted the concept of serviced apartments include Bangalore, Chennai and similar developed areas.
  • The Cost of Living
Compared to developed cities like Bangalore, Chennai has quite an affordable cost of living. The daily recommended minimum amount of money for food per person is Rs. 240, which is just within the price range of monthly recommended minimum amount of money for food per person (assuming 31 days), Rs. 7,439.88. The expats who have just arrived and have spent a good number of days will find their pockets not much exploited when expending on groceries, healthcare or simply on leisure.
  • Flats For Expats
Areas like Old Mahabalipuram road and Besant Nagar are some of the densely flocked areas; majorly by the expat populace. There are realtors who have constructed a range of residential spaces that are being offered at an affordable price range. Expats are favoring mostly small-sized apartments and 1 BHK house for rent in Chennai. The flats are constructed in areas that are near to the social infrastructures and also have a close proximity to the IT hubs.

Here are some hard facts that reflect price trends in one of the most popular regions of Chennai:



There are other aspects about Chennai’s realty market that an expat needs to understand. The aspects are pretty much related to the rented housing options. Here are the facts:


Few Lesser Known Facts

  • Safety
Safety matters and it definitely holds importance for the novices in town. The expats should make sure that the localities they are choosing is surrounded by friendly areas so that chances of thefts and miss happenings rarely exist. The facts say that Chennai is one of the safest Indian cities and the populace is extremely law abiding.  Still, there are certain things one can take note of:
    1. Huge amount of cash should not be kept in the flat
    2. Dress inconspicuously as Chennai is a little conservative south Indian city
    3. Try to be friendly with neighbors but be cautious while revealing your personal and professional data.
    4. Other safety measures could be traffic safety as the roads in Chennai are crowded and a little carelessness can be hazardous to life.
  • Dig in Company’s Relocation Package
An expat should be aware about all the clauses in the relocation packages and papers. They need to know that there are companies that include finding a home in their relocation clauses. This can be a great helping hand for expats who are relocating for professional purposes and are looking forward to staying there for long.  The best part is that though you will have a rented option in hand, still an expat will be offered information about accessing to maids and drivers as a part of the relocation package.
  • Power of Internet& Agents
While on a search for a perfect home, an expat can take advantage of the realty portals and websites. There are sites like 99acres.com, realestatechennai.com, to name a few that can be accessed and considered for searching homes on rent. The person can see through the price range, locality and varieties of housing option for himself.
There is another option that will definitely hit the bull’s eye and that is reaching out to the real estate agents. These agents have been into the business and have met the people in the domain. Moreover, the agents will also help you in stopping onto the right deal and making a feasible agreement documents for the expats and people who have less knowledge about the localities.
  • People & Languages
An expat’s stint with the new city can be fruitful as well as challenging both. In an effort to find a rented option in Chennai, an expat should also have some basic know-how of people, culture and language spoken. This makes the scenario, exciting as well as a learning experience. Considering the language here, the people native to Chennai considers Tamil to be their official language, with Telugu at the second rank. If the expat is an English-speaker, then surviving in Chennai will be easier.


Few Final Words


Chennai is a place to be at the moment and an expat can have plenty of options in the rented arena. The apartments are of varied style and are all provided with the necessary facilities. Moreover, the prices tagged on the apartments and housing options are within the reach.


This is a blog post by Pawansingh kumar

Wednesday, December 3, 2014

3 quick tips for a first time Property Investor in Chennai

Chennai’s realty market has shown positive signs of growth which has attracted a number of home buyers and investors here. And with the market being very profitable, thanks to its high ROI (Return on Investment), the city has become a haven for many first time home buyers. Despite the attractive returns, owning a piece of real estate today seems to be a tedious task. From managing resources to zeroing down on the right location, there are a number of aspects that one needs to take care of. If you are a potential first time investors and wants to invest in properties for sale in Chennai then follow these tips before finalizing your property.



  • Buy properties near government approved infrastructure

As a rule of thumb we always tend to invest in an area where infrastructure projects are materializing, thinking that the capital values of homes will escalate. However that is not the case. Investing in areas close to projects like the metro rail, upcoming airport or even any IT Park will result in government taking over your land. Changes in routes and expansions along a tech park and airports are bound to happen which will force the authorities to acquire neighboring land. Once your property falls under the radar, you will not be able to sell your property according to the market prices. The compensation you receive by the state bodies will be based on the government guideline value which is indexed at a relatively lower price. The best thing to do is to wait for the authorities to approve the project and invest in properties for sale in Chennai only after the work has commenced. It will not only save you from hassles but also result in a formidable investment option in the near future.


  • Don’t invest in stagnant suburbs

A number of apartments for sale in Chennai especially in the outskirts of the city are finding many takers due to their affordable prices. However, one should remember to invest in a suburb that is in its growing stage. Peripherals along the north of Chennai especially localities like Ennore, Minjur and Ponneri have several approved industrial projects that are going to come up, however, all those advancements will not be able to formulate for the coming 10 years. So you’d rather invest in suburbs that have already shown signs of growth like Navallur, Sholinganallur and Kelambakkam. Apartments for sale in Chennai especially in the southern region of the city have many buyers due to its economical prices and reliable civic facilities.


  • Strike the right balance while investing in IT hubs

Many IT corridors attract number of investors due to its high rental yield, however it is very essential to understand the market first. The IT/ITes insurgence has already provided many home buyers varied options and investing in an open market would not yield high returns, so it is very important to identify pockets where there is a demand and invest in only those projects that meet the needs and requirements of the working cosmopolitan crowd.

This is a guest post by Sulabha Kulkarni

Monday, December 1, 2014

Looking to buy that elusive dream home for your family? What are the home loan rates in India?

Looking to buy that elusive dream home for your family? Even after identifying the location and builder, the next big question is home financing. Which bank to approach and what are the current home loan rates that are offered by these banks? These are some of the questions that need clarification. At the same time, one might begin to wonder what, if any, are the basic differences between various home loan products offered by banks.

Here we help you in clarifying those questions:

Types of mortgage loan:


  • Fixed Rate Mortgages - Constant Payment Mortgage Loan (CPM):

In this type of loan, the interest rate remains fixed during the tenure of loan. Rate of interest is normally higher in these types of Loans.


  • Fixed Rate Mortgages – Graduated Payment Mortgages (GPM)

Some individuals have less income in starting years of their careers; those individuals are not considered for loan. To overcome this effect, lenders have designed a mortgage loan that retains a fixed rate of interest but includes a series of stepped up payments that are lower in earlier years, thereby better matching borrower’s incomes, and then rising over time.


  • Adjustable (Floating) Rate Mortgages (ARM) also known as Floating Interest Rates:

These mortgages provide an alternative method of financing through which lenders and borrowers share the risk of interest rate changes. In this type of loan, since interest rates are adjustable, they are indexed to say wholesale price index (WPI) or other market interest rates.


  • Hybrid Adjustable Rate Mortgages

This is the most common type of mortgage loan used these days. Hybrid ARMs combines elements of fixed rate mortgages for periods of 3, 5, or 7 years, after which interest rates are reset and the loan becomes an ARM.

Read here for more on Home Loan interest rates and the process of securing home loan in India.


Interest Rates in India – Dated November 28th 2014.

Loan upto Rs 75 Lakh (Floating Interest Rates)
Bank Amount Tenure (Years) Interest Rate (%)
HDFC Ltd Up to Rupees 75 Lakh Up to 20 years 10.15
ICICI Ltd Up to 10 years 10.15
State Bank of India (SBI) Up to Rupees 75 Lakh Up to 20 years 10.15
Punjab National Bank (PNB) Up to Rupees 75 Lakh Up to 20 years 10.25
Punjab National Bank (PNB) Above Rupees 75 Lakh Up to 20 years 10.5
Axis Bank Up to Rupees 75 Lakh 10 Years 10.15
Bank of India Up to Rupees 75 Lakh Up to 20 years 10.2
Canara Bank Up to Rupees 75 Lakh Up to 20 years 10.2
Union Bank Up to Rupees 75 Lakh Up to 30 years 10.25
Dewan Housing Finance Corporation Limited (DHFL) Rs 30 Lakh - 75 Lakh Up to 20 years 11

Loan Above Rupees 75 Lakh (Floating Interest Rates)
Bank Amount Tenure (Years) Interest Rate (%)
HDFC Ltd Up to Rupees 75 Lakh 10 10.15
ICICI Bank Rs 75 Lakh - 5 Crore 20 10.5
State Bank of India (SBI) Up to Rupees 75 Lakh Up to 20 years 10.15
Canara Bank Above Rupees 75 Lakh Up to 20 years 10.45
Union Bank Up to Rupees 75 Lakh Up to 30 years 10.25

Note: Floating Rates changes as and when bank changes their base rates. There are also other kinds of interest rates that bank offer such as 2 year fixed interest rates or 3 year fixed interest rates as described above. Contact your bank for those kind of home loan interest rates.



Friday, November 28, 2014

Selling your house? Enhance its marketability

Ask any corporate honcho or the guys in the sales & marketing division about the product their company manufactures and its marketability, all of them will nod in agreement that besides product features, it should be packaged and presented brilliantly.

Same can be applied to your house. It’s a product and you are the marketing manager of this product. Besides possessing features such as large spacious rooms, attached toilets, balconies, excellent floor plan, it should be presented beautifully to prospective buyers.

Just like a buyer purchases a product he or she feels connected to, similarly, your house that you are putting up for sale shall generate the feeling of belonging to the buyer. How can you do it? How can you make sure that buyer feels attached to the house when he/she visits it? Below are some tips:


  • Stage the house:

Have you ever visited the IKEA store Or for that matter, any other large supermarket to buy furniture; groceries; kitchen utensils; etc.? What you see there is staging of items you wish to buy. A bedroom is staged with bed, table, carpet, etc. Even, walls are designed in such a way that it feels like your own bedroom. One begins to feel it, fantasize it.  Therefore, before you decide to put your house for sale, you should stage it and never keep it empty.

An empty house is a terrible way of presenting your house to prospective buyers. A buyer finds it extremely difficult to visualize him living there. The rooms, kitchen, and even toilets in an empty house appear smaller. Therefore, one should stage his / her house in order to sell at high value.




  • House should be presentable:

While you should never show the empty house to prospective buyers, one should be careful in placing the furniture. The furniture should enhance room’s best features. Be creative and arrange the furniture in such a way that it downplays the negative characteristics of your house and augment the best characteristics. When arranging the furniture, follow the mantra ‘less is more’. Do not ever block windows or crowd out furniture at one place. Keep furniture at an optimum distance from the door.


  • Remove unwanted items and clutter:

There are always some unwanted items in the house that you would have accumulated over a period of time. It was not in use for you but still you kept it in the house. This is the time to sell those unwanted things to make your house clutter free. Any prospective buyer visiting the house will not be distracted by these items and instead will be focused in visualizing the house for his / her family. At the same time, keep away all extraneous things like bottles, papers, cosmetic items, bathroom collections, etc. The idea is to present your house as neat as possible without all these distractions.


  • Keep it clean:

No point in highlighting this simple yet overlooked fact. Many a times, we have seen, seller becomes callous and on a typical house tour what one find is unclean toilets, unhygienic kitchen, pile of newspapers, poorly maintained cupboards, greasy electric boards & switches. This surely puts off the prospective buyer. All it takes is 3-4 hours of work to clean the house including the toilets, kitchen, cupboards, flooring, switches, etc. In fact, one can get it done by a house keeping staff for as low as Rupees 1000 or less. Therefore, one should not overlook this simple factor before putting his /her house for sale or for that matter for rent.


  • Comfort:

Home is one place where one finds comfort at the end of a hard day of work. A buyer when visits your house, unconsciously or consciously, he / she is visualizing it from many angles including the comfort factor. Pillows arranged on the couch or bed and soft, clean towels in the bathroom will give your home a more appealing look and are easy additions to a space. Decorative candles, even when unlit, are a great styling tool and provide a light scent in the room.

If you can’t do all of these on your own, you can hire one of the housekeeping companies. There are many housekeeping companies that will clean your house and will also give it an appealing look.


Monday, November 24, 2014

How to calculate Reverse Mortgage Loan Monthly Payments?

In our previous post, we covered the concept of Reverse Mortgage Loan (RML). We covered elements such as definition of Reverse mortgage Loan, eligibility criteria, amount that can be availed, and modes & nature of payments.

People from across the country showed substantial interest in Reverse Mortgage Loan.  And there were queries from ‘formula to calculate monthly payment’ to ‘paying the amount back to bank’. We cover all of this below:

Installment Amount = ((PV*LTVR-OTDA)*I)/ (((1+I)^n)-1)

Where, PV=Property Value;
LTVR=LTV Ratio;
OTDA=One Time Disbursement Amount;
n=No. Of Installment Payments;
I= the value of 'I' will depend on Disbursement Frequency selected.

For Example,
Property Value (PV) = 10, 00,000
LTV Ratio (LTVR) =80%
One Time Disbursement Amount (OTDA) =0
Loan Disbursement Period=15 Years
Disbursement Frequency=Monthly
Interest Rate (IR) = 9.25 %

Calculations: On the basis of the inputs:
The disbursement frequency selected is Monthly so 'I' will be IR/12(i.e. 9.25%/12)
No. of installment payments (n) will be calculated monthly e.g. if 15 is selected then the n=15*12=180
Putting the values in the formula:
Installment Amount=Rs.2, 070;


Here is a detailed example of Mr. Sharma, 62 years of age and own a property worth Rupees 1.5 Crores in Gurgaon. Mr. Sharma lives with his wife 59 years of age. Both his sons are married and settled abroad. On knowing about the merits of Reverse Mortgage Loan (RML), Mr. Sharma decided to check on the eligibility and monthly payment that he will be getting.

While he is clearly eligible for the same (find Reverse Mortgage Loan Eligibility criteria), he found it rather cumbersome to calculate the monthly payment that he will receive.

Property Value PV = 1.5 Crores (15000000)
Loan to Value Ratio (LTVR) = 80% (As specified by RBI)
One Time Disbursement Amount (OTDA) = 0 (No amount is disbursed in one go, instead banks pay monthly payments to applicant)
Loan Disbursement Period (n) = 15 years or 180 months
Disbursement frequency = Monthly
Current Interest Rate (I) = 10.25% yearly or (10.25/12)% = 0.854167% monthly

Calculating the monthly installment amount by putting all these value in given formula in excel:
Installment Amount = (((PV*LTVR)-OTDA)*I)/ (((1+I)^n)-1)
Installment amount = 28294

So, Mr. Sharma will be getting a monthly payment of Rupees 28294 for 15 years. Upon completion of 15 years, Mr. Sharma can either extend his Reverse Mortgage Loan (RML) payments or pay the outstanding amount to bank to get back his house.

Friday, November 21, 2014

How waste is currently collected and disposed in India? Is the current process efficient? What can be a better way?

We all know every households produce waste on a daily basis and the garbage collector comes to every house to collect garbage. A typical process involves household emptying their bin in the dilapidated truck or vehicle of the garbage collector, the garbage collector takes waste from all the households in an assigned territory and then dumps it on a secluded piece of land. Garbage collectors from all territories in the city meet there to do the same. And it creates a landfill which stinks and is not good for the health of the citizens.

This landfill method is hazardous and detrimental to environment. It creates land pollution (and in some cases, ground water contamination). The waste is not recycled. No electricity, bio-gas, or fertilizers are made from this extremely useful waste.


Part I - The current process of collecting and disposing of waste in India:




M - Municipality
C - Contractors
H - Households




An example of how Municipalities in India invite tenders from contractors to collect Waste:





Part II - The suggested process of collecting and disposing of waste in India:



M - Municipality
V - Vehicle used by Municipality to collect waste bags from Households
H- Households



A typical 30 liters waste bag:



Part III - Benefits of new Process of collecting and disposing of waste in India:

  1. Household waste will be in sealed waste bags, therefore no possibilities of littering on the streets.
  2. Eliminates or minimize the role of contractors.
  3. Segregation of waste in the plant becomes easy and fast.
  4. Pay as you produce. Citizens will now pay based on the waste they produce. Each waste bag to cost Rupees 5 or the cost determined by each municipality.
  5. No need for the municipal body to dump waste at various sites. All waste bags go to a central waste plant.


Part IV - Challenges of implementing new Process of collecting and disposing of waste in India:

  1. People are resistant to change – therefore change management practices to be implemented including the robust media campaign.
  2. Municipalities may resist the new process because of lobbying from contractors.
  3. Investment is needed to build high quality waste management plants along with investments to be made in waste collecting vehicles.
  4. Low Income Group (LIG) or Economic Weaker Section (EWS) of the society may not be able to afford the cost of Waste Bags. However, their costs can be reimbursed by way of Direct Cash Transfers.
  5. Spending on media campaign – can become part of Government of India’s Swacch Bharat Abhiyaan.


Part V - Implementation – A staged Process:

The entire campaign needs to be carried out in phased manner:
  1. First phase: Implementation of the process in one district (or MP Constituency) in India
  2. Second phase: Implementation of the process in one district in each state across the country
  3. Third phase: Implementation of the process across all districts (MP Constituencies) across India

Note: Waste Plants can be developed on (Public Private Partnership) PPP model.

Monday, November 17, 2014

How can NRIs-PIOs-OCBs open and maintain the NRE-NRO-FCNR-bank accounts in India to buy, sell, rent out immovable property?

Foreign exchange management act (FEMA) of 1999 allows Non Resident Indians (NRIs), Person of Indian Origins (PIO) to buy, sell, rent immovable property other than agricultural land or plantation property or farm house in India. One can invest in a piece of land and construct it or buy an under construction property directly from the real estate developer. Overseas Indians can invest in commercial or residential property of their choice. The acquisition of immovable property by person resident outside India is governed by terms of Section 6(3) of the Foreign Exchange Management Act (FEMA), 1999, as well as by the regulations contained in Notification issued by RBI vides Notification No FEMA. 21/2000-RB dated May 3, 2000, as amended from time to time.

Persons resident outside India are categorized as Non- Resident Indians (NRIs) or a foreign national of Indian Origin (PIO) or a foreign national of non-Indian origin. A person resident in India who is not a citizen of India is also covered by the relevant Notifications.

To carry out this entire process of buying, selling, renting out the immovable property, NRIs/PIOs are allowed to repatriate an amount up to USD 1 million per financial year (April-March) out of the balances held in NRI account subject to tax compliance. This amount includes sale proceeds of assets acquired by way of inheritance or settlement. Thus, NRIs can purchase property and transfer money earned in India to their country of residence through authorized banking channels.

How can NRIs/PIOs/OCBs open and maintain the bank accounts in India? Find below the detailed document:



Friday, November 14, 2014

Housing Prices in India - June 2014

National housing bank’s residential index for the quarter April – June 2014 has been released and the residential prices in various cities across India have stayed stagnant over the last quarter.

Here is the synopsis:



Hyderabad: Residential prices in Hyderabad have remained stagnant over the last quarter. Marginal increase in Kapra, Uppal Kalan, L.B.Nagar have been noticed.

Faridabad: Residential prices in Faridabad have also remained stagnant over the last quarter of April – June 2014. Areas such as NIT - 1 (NH); NIT - 2 (NH); NIT - 5 (NH); Sector - 62; Sector - 63; Sector - 64; Sector -65; Sector - 21; NIT-3; Sector -14; Sector -75, Sector -76, Sector -83, Sector - 85, Sector – 86 have shown little appreciation.

Patna: Residential prices in Patna have shown an appreciation of 2-3 %. However, localities such as R-Block; Mountasari Lane; Gandhi Nagar; Basant Vihar Colony; Patliputra Colony; Rajapur; Kidwai Puri; Krishna  Nagar; Buddha Colony Part-1; Krishna Nagar Park; Mandiri Kath Pul; Shanti Vihar; Paschim Boring Road; Purvi Boring Kenal Road; RK Bhattacharya Road have shown appreciation over the last quarter.

Ahmedabad: There has been a marginal rise of 2% in residential prices in Ahmedabad. Micro markets of Bhadra, Dudheswar, Gaikwad Haveli, Girdhar Nagar, Wadigam; Gomtipur Gam; Old Viratnagar; Vastral; Zulta Minara; Buddh Nagar; Saijpur-Bogha; Sardar Nagar; Vishnu Nagar have appreciated.

Chennai: There has been 2% price rise in Chennai over the last quarter. However, Perambur; Choolai; Edapalayam; Ayanavaram; Purasawalkam; Kolathur; Virugambakkam; Anna Nagar; Kilpauk; Nungambakkam have shown substantial appreciation.

Jaipur: Residential prices in Jaipur have remained stagnant. Localities such as Khatipura; Kalwar Road; Jhotwara Road; Vidyadhar Nagar;  Sikar Road have shown appreciation of about 5%.

Lucknow: Prices in Lucknow have also remained stagnant over the last quarter of April – June 2014. Localities such as Lalkuan; Wazirganj; Maulvi Ganj;   Gola Ganj; Janki Puram; Daali Ganj; Maha Nagar; Nirala Nagar; Ali Ganj have appreciated by a margin of 5-6 %.

Pune: Residential prices in Pune have shown an appreciation of about 4% in last quarter. Micro markets such as Kasba Peth; Nana Peth; Shivaji Nagar; Hinjewadi; Thergaon; Chinchwad; Baner; Yerwada; Wakad; Pimple Saudagar; Chakan have appreciated by around 8-10% in April – June 2014.

Surat: Residential prices in Surat have fallen by about 2% in last one quarter. Localities such as Rander; Adajan; Jahangipura;   Palanpur; Udhana; Bhestan; Pandesara; Bamroli; Piplod; Vesu; Rundh;Sultanabad have seen 4-5% fall in prices. However, Limbayat; Dindoli; Paravat witnessed about 4% rise in residential prices during the last quarter.

Kochi: Prices in this coastal city has remained stagnant. Areas such as Palariwatam, Panampally Nagar; Thevara; Maradu; Konam; Paluruthi Kacheripadi; Mundavelli; Chullikal have shown about 3% rise in residential prices.

Bhopal: Prices in Bhopal have remained stagnant as well. Localities such as Koh – e- Fiza, Shyamala Hills; Bagh Mugaliya, Katara Hills have shown marginal increase of about 4% over the last quarter.

Kolkata: There has been a rise of 2% in Kolkata residential prices. However, there has been a 5% rise in prices in areas such as Jodhpur Park, Dhakuria; Behala; Thakurpukur, Sorsona.

Mumbai: There has virtually been no gain/loss in residential prices in Mumbai. Lower Parel, Matunga East, Mahim West; Bandra West, Andheri East, Oshivara; Pokaran Road 1 & 2; Mira Road witnessed a rise of 7-8 % over the last quarter.

Bangalore: Prices in Bangalore have remained stagnant. Lavella Road; Richmond Town, Indira Nagar, HAL II & III stage, Domlur Layout, Sadashiv Nagar, Benson Town witnessed a rise of 3-4 %.

Delhi with NCR: Prices in Delhi with NCR region fell by 2%. Most localities witnessed fall in prices except the areas of Mayur Vihar,Dwarka, Pitampura; Noida, Greater Noida, Gurgaon & Ghaziabad; Vasant Vihar & Friends Colony where prices rose by around 4-5%.

Monday, November 10, 2014

Chennai real estate round up

Chennai commercial real estate witnessed a good amount of absorption in 2013. Most of the absorption was in the prime real estate hubs in Chennai, like the IT corridor of OMR. The residential real estate in the city has witnessed a slowdown in the recent past only because of the pricing of housing units in Chennai. Compared to other metros, Chennai housing and residential real estate market has been on the higher end of the spectrum in terms of pricing. Influx of MNCs and IT companies has been the foremost growth factor in the city. Adding to this trend is the fact that Chennai city is a trade hub and a coastal city with a port that acts as one of the major trade link in the country. Having such potential, the city’s real estate sector has also grown in proportion to the economic development. Additionally Chennai attracts investment in various sectors like education, healthcare and infrastructure. Chennai is definitely a preferred investment destination among all cities of south India.

The Chennai real estate market, which used to be traditional and populated with independent houses has opened up to many other real investments options in the past 20 years. The year 2014 saw the revival of the real estate sector in Chennai. Mostly an end user driven market, 2014 saw a new lease of life in the city’s real estate sector. The city is in the fast track of development and has gone beyond the IT sector today. Manufacturing sector has also contributed to immense growth in the commercial real estate sector. However in terms of pricing the real estate sector has not shown much progress as there has been an increase in labor, material and construction cost over the years. This has added pressure to the overly expensive Chennai real estate market. There has been a record 15% increase in the cost of construction over the years and this applies to all the markets across the country.



Chennai lags behind most cities in terms of transport infrastructure. Although the state of Tamil Nadu has one of the best road network in the entire country, the intra city transport has been poor and unable to support the growing population. The delay of metro rail has also added to the pressure. Although the pockets near the metro stations have seen a marginal increase in prices, the constant delay has been a cause of concern for many home buyers. Apartments in Chennai are a preferred investment choice as it is the most affordable piece of real estate one can invest in. Independent house for sale in Chennai or land and plot require deep pockets, which amounts to the least kind of investment in the city. Many apartments in Chennai are near the newer investment hubs like Oragadam and the Outer Ring Road.

“Focus is on the Outer Ring Road (ORR) where the Phase I (Vandalur to Nazarthpet – NH 4) has already been completed. ORR Phase II where land acquisition is in advance stages will boost the real estate activity along this corridor. Chennai and its adjoining cities are among the best for primary and higher education in the country today. Healthcare and medical facilities in the city are also among the best available in the country. Development of new hospitals, schools, malls and multiplexes in the emerging locations are all stimulating growth for the city’s residential real estate industry.” Says Sanjay Chugh, Head- Residential Services JLL India to Money Control.

This is a guest post by Sulabha Kulkarni

Thursday, November 6, 2014

How can Indian Real Estate Developers reach out to NRIs and target Overseas Indians?

Real estate is an extremely important industry in the growth of Indian economy. The sector contributes about 6% to the nations’ GDP. The sector is also the second largest employer of labor (formal and informal) behind agriculture.

Real estate developers buy land from the city authorities or directly from the farmers/landowners. Once the land acquisition process is complete and titles are transferred in the name of the developer, the construction work starts. What kind of development will take place on a given plot of land depends on the market conditions. A developer can develop commercial or residential buildings based on the market elements of demand and supply.

The next step for the developer is to sell or lease the project to investors who are willing to use it for their end-use or for investment purposes. When market conditions are not favorable; it becomes extremely difficult for the developer to clear the unsold stock of inventory and that seems to be the case today in India. About 7.6 Lacs of housing units were unsold at the end of June 2014. And new project launches have been greatly reduced.

In this scenario, what can a developer do? Wait for the economic conditions to improve? Wait for the interest rate cuts? Wait for the improvement in job market? No doubt, all of these factors will certainly help the developer in clearing off the existing inventory; however, real estate developers can still tap into the highly lucrative Overseas Indians market.

This is a massive market with a population in excess of 21 million. The market constitutes of Non Resident Indians (NRIs), Person of Indian Origin (PIO), and OCI.



In 2013 alone, Private remittances from overseas Indians into India stood at whopping 71 Billion US $, the largest for any single country in the world.

Where are they investing? A closer look at the RBI data reveals preference for NRE/NRO accounts.



What can Real estate developers do to tap into this segment of the market?

A well thought out strategy is based on 4 principals

  1. Customers
  2. Product or services
  3. Region
  4. Channels


Having identified the customers (overseas Indians), the next step for real estate developers is to pay attention to the behavioral patterns of Overseas Indians. What kind of home sizes they prefer? What are the amenities that they demand? What kind of on-site infrastructure they desire, etc. etc. A well prepared survey can help real estate developers in decoding the behavioral patterns of NRI audience.

After studying the behavioral patterns, the product (homes) can be conceptualized and sold in chosen regions. The next challenge is the choice of channels to reach out to NRI audience?

  • Web:
Use of web to reach out to NRIs is an inexpensive approach, but it is too generic and crowded in nature. However, it helps in creating awareness about the developer and the projects. If combined with other channels such as local brokerages and property shows, significant results can be achieved.

  • Partnership with local brokerages:
NRIs still transact through Indian Channel Partners and some international channel partners (Brokers of Indian origin settled abroad). A real estate developer can tie up with a few local channel partners (brokers) in the respective countries and had them invite their customers. However, not all real estate developers can successfully do it because of limited brand exposure and competition from other reputed developers.

  • Own office:
Having an office in a country can certainly help a real estate developer in reaching out to NRIs in that particular country. However, it is an expensive approach and developers with big pockets can manage to afford it. There are some developers who have set up their own offices in Singapore, Dubai, California, London, Malaysia, etc.

  • Property Shows:
Property shows or exhibitions are country specific in nature, wherein 40-50 real estate developers participate and showcase their properties to overseas Indians in that particular country. Past Indian Property Show in Singapore, Dubai, London indicates a footfall of 2500-3000 visitors a day. Even though, a developer may or may not make on the spot bookings, the exhibition certainly helps in brand building and that helps in future sales.

Having identified the NRI audience, a real estate developer must make the optimum use of different channels to reach out to this segment. One cannot simply afford to ignore this massive and profitable market segment. And the developer must continuously invest in reaching out to Overseas Indians.

NirrtiGo works with Indian Real Estate developers in order to reach out to overseas Indian community. NirrtiGo organizes Indian Property shows in overseas markets, utilize web based platforms, and create awareness on the vast property investment opportunities in India. Real Estate developers looking to target NRI markets can contact NirrtiGo for upcoming Indian Property shows in overseas markets at nirrtigo@nirrtigo.com


Tuesday, November 4, 2014

Integrated Townships: Resolution to Urban Crisis in India

The restricted land availability and therefore the immense unbridgeable gap between the demand and supply for individual plots in addition with rising populace within the metro cities like Ahmedabad, Bangalore, Delhi, Gurgaon, Mumbai, etc. have provoked the demand and development of condominiums, flats, complexes and gated associations. Moreover, higher wages, up-style, increasing objective levels and enlarged data on international movements have created the existing new-generation property buyers further acutely aware relating to the properties they need to invest in.

Nevertheless, the feeble urban planning – coming up with across most of the states, lack of conveyance, longer moving time to the offices and inadequate infrastructure, urban planning has supplementary woes to the property buyers instead of sanctioning them for an enhanced and improved living. In most of the cities, new development areas don't seem to be planned accurately and therefore; don't act as satellite cities, however just as residential district areas.

However, the answer to the existing complicated concern in key metros and tier I cities lies in integrated townships. Usually, an integrated township, the kind of township that is coming up in Gujarat state has the subsequent key features and elements like:



Public infrastructure:- 

  • Institution: A high faculty with education up to a minimum of 12th standard must be normal and is setup within the township in Ahmedabad, shortening the traveling time between home and school and successively providing the kids with longer time for play and studies.
  • Medicare: A decent health care facility with a minimum of 50-plus beds associate in nursing and emergency care unit is ready inside the township, thereby assisting residents.
  • Amusement: Adequate area for basic sports like soccer, cricket, court games and fitness facilities together with a gymnasium and swimming pools area unit discovered among the integrated township in Gujarat state to reinforce social way.
  • Community Center: A spacious, well-decorated community center with a club house and a function hall is set up within the township in Ahmedabad.


Infrastructure & Services:- 


  • Road Networks: Well-planned road network within the township in Ahmedabad and connecting to the closest main road or highway, thus easing communication.
  • Water Supply & Management: A well-organized and continual water management system is made within the integrated township in Gujarat, providing 24x7 hours of water facility to residents and furthermore treating the waste water generated among the township and recycling it. This additionally reduces the dependence on municipal facility. 
  • Electricity & Management: Though an integrated township based on a public or non-public utility provider for basic power supply, it's sufficient, if not exuberant, back-up power for each home and customary areas throughout temporary or regular power cuts or disruptions by the utility provider.
  • Communication infra: sensible quality telecommunication services also are created and accessible among the township division and nearby.


Estate management:


  • The Waste Management: Sensible waste/garbage collection, aggregation, treatment and disposal system could be a better solution for an eco- friendly township. By this way, life remains healthy.
  • Infrastructure maintenance: Correct and regular maintenance of roads, footpaths, parks, electrical and plumbing infrastructure, kids play areas and customary areas as well as community center are important for a developed integrated township in Ahmedabad city.
  • Security: Advanced estate security associated safety for all residents could be a vital part of an integrated township.


Shopping and entertainment:


  • Entertainment: Quality cinema or multiplex, widespread games and child recreation facilities ought to be established within the integrated township.
  • Shopping: Well-stocked grocery stores likewise shopping centers as well as branded garment stores, electronic merchandise ought to be established within the integrated township. 
  • Food courts: Sensible quality, and hygienic food courts with plentiful menu choices ought to be established with within the townships to cater to the style buds of all sorts of residents.


Proximity to workplace:

While the intent of an integrated township in Ahmedabad city is often to own the geographical point and also the residential domicile in close proximity, within the current background of double-income families, it's not possible to realize this objective totally. However, it will establish sufficient, well-equipped workplace house infrastructure and provide lower rentals to draw in firms, banks and company homes and make ample use of opportunities for residents. Except for this, to develop communication between the township and also the geographical point for the remainder of the residents, the situation of the township ought to be specified it's simply accessible from numerous components of the city.


This is a guest post by Suhaag Srivastava




Friday, October 31, 2014

The government of India has relaxed the rules for Foreign Direct Investment (FDI) into real estate sector in India. What will be the benefits to realty sector and what is missing from these new policy changes?

As presented by Union Finance minister Arun Jaitely during his July budget speech, the changes to relaxation in FDI (Foreign Direct Investment) into real estate sector in the country has now been notified.

The changes - FDI into Real Estate
  • Minimum area requirements, in case of Construction-development projects - built-up area of 20,000 sq. mts now from 50000 sq. mts.
  • Investment - Minimum capitalization for wholly owned subsidiaries - US$ 5 million now from US$ 10 million. However, the lock-in period for investment has not been relaxed from 3-years. Foreign investors can still exit earlier if the project is completed. The Government may also permit repatriation of FDI or transfer of stake before project completion on a case to case basis by Foreign Investment Promotion Board.
  • For serviced plots — where roads, water, drainage and other conveniences are available — the minimum land size has been waived, from a requirement of 10 hectares earlier.
  • To boost funding to affordable housing projects, the conditions of minimum floor area as well as capital requirements are waived if at least 30 per cent of the total project cost is committed for low-cost affordable housing. To qualify as an affordable housing project, at least 60 per cent of the floor area must be used to build small homes (not more than 650 sq feet).

These are all welcome steps by the government to boost real estate sector in India. The sector which is starved of liquidity can breathe a sigh of relief. However, the notifications would not result in pouring of FDI in short term. It may take 9-12 months before we see results on the ground.

Reduction in minimum built up area to 20000 square meter and reduction in capital investment to US$ 5 million will have rippling effect on the state of the property market in India. Experts and analysts believe that these 2 initiatives can in fact help in doubling the FDI into the real estate sector. FDI into construction development sector was 1.22 billion US$ in fiscal year 2013-14 (1 April 2013 to 31 March 2014). Whereas FDI into real estate sector in fiscal year 2012-13 (1 April 2012 to 31 March 2013) was 1.3 billion US $. This year from 1 April 2014 to 31 August 2014, the FDI flows into real estate sector have been 446 million US $. Below one can find the history of FDI in India in various sectors including the real estate.



What will be the benefits?

  • Liquidity
It is a well known fact that developers are cash strapped and are in dire needs of funds to complete projects. Since 2011, the repo rates have been hovering in the range of 8%, making it extremely costly for developers to raise funds from banks and financial institutions. With these relaxations in place, developers can now have access to institutional funds.



  • Small Projects
Prior to this, small projects of size less that 50000 square meter were not allowed to access FDI. However, this has been changed now. Small scale real estate developers coming up with housing societies, multi family developments can now be exposed to institutional funds.

  • Affordable Housing
The government is of the view that state of affordable housing is in dire straits of special attention. Till 2012, approximately, 18.78 million units were needed to be built. And about 99% of the total shortage of housing in urban areas belongs to the Economic Weaker Section and Low Income Groups of the society. This new policy initiative will give boost to affordable housing in India and will be a step in right direction to achieve housing for all by 2022.


What is missing from the new policy initiative?

Land-use rules for the sector have not been mentioned in this new proposal by the union government. Norm on land-use is a local issue which will vary from State to State, remarked a DIPP official.


Monday, October 27, 2014

Do not forget to check the loading factor, super area, carpet area when buying an apartment in a builder project

Sumit Sharma recently bought a 1685 Square Feet apartment in an upcoming locality of Gurgaon. The apartment was a typical 3BHK apartment. The configuration of the apartment was as follows:

Category Carpet Area (Sq. Ft.)
Bedroom 1 144
Bedroom 2 168
Master Bedroom 180
Kitchen 120
Hall 240
Toilet 1 56
Toilet 2 56
Toilet 3 56
Balconies 159.5
Carpet Area of the Apartment 1179.5
Saleable Area of the Apartment 1685
Efficiency of the Apartment Unit 70.00%
Loading 30.00%

As can be seen from the above example, Sumit got this 3BHK apartment with 30% loading. His apartment’s carpet area turned out to be 1179.5 Square Feet.



Initially, Sumit was taken aback and even contemplated legal action against the developer because what he saw in sample flat was different. The rooms, toilets, Hall appeared bigger to him than what he got in actual. However, on verifying the apartment units of other buyers, he came to realize that carpet area of all the apartments was substantially lower than the sale-able area.

Why? It is due to the term called ‘loading’. While announcing new residential projects, real estate developers come up with plethora of amenities within the gated apartment complex. All these amenities look attractive to prospective buyers on paper and in brochures. However, they forget to realize that more the number of amenities such as club, swimming pool, tracks, gym, more will be the loading. In addition to the development of basic facilities such as lifts, corridors, staircases, the developer will now be constructing all the amenities that he has promised to the buyer. Construction of all these amenities costs and there is no way a builder will keep the cost to himself. These costs are passed on to the customers in form of loading.

In essence, customer pays for the amenities he is getting within the gated apartment complex.

Loading shall not be confused with FSI. While FSI determines how much area within a given piece of plot can be developed as per the local municipal guidelines, loading implies addition of common areas and amenities to an individual flat owner. Loading is generally calculated on a pro rata basis.

In addition to paying for these common areas and amenities in capital value terms, a flat owner would also be subjected to pay a monthly common area maintenance charge for the upkeep of these common areas and amenities.


  • Can loading be reduced?

Loading is usually on a lower side in a low rise structure, standalone developments, villas, builder floors. In Government allocated plots, loading is zero. Even in high rise gated communities, loading can be reduced if space utilization is optimum and wasteful amenities are eliminated.


  • What is the loading pattern in cities across India?

Loading varies from cities to cities and in fact from project to project. Lavish projects with wide open spaces and extra amenities will command high loading. Typically, in Delhi NCR region, loading stands at 22 to 30%. In Mumbai, loading stands at almost 50-60%.


  • Is there any government guideline for 'loading'?

The government of India in its Real Estate Regulatory Act made it mandatory for developers to charge only on carpet areas. However, it is yet to be seen in practice. The bill says that “Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc.’’ For more about Real Estate Regulatory Act, read here.

Thursday, October 23, 2014

Happy Diwali 2014

NirrtiGo wishes each and everyone a very Happy Diwali.

॥ॐ॥
।।।दीपावली की हार्दिक शुभकामनाएं।।। ॥ॐ॥


Monday, October 20, 2014

Will growing popularity of online commerce put an end to boom in shopping retail malls?

Take it or not, e-commerce is here to stay. A survey by industry body ASSOCHAM reveals that online shopping this Diwali 2014 season will touch Rs. 10000 Crores. Phew…this is a stupendous jump of 350% over the last season. Despite Flipkart’s ‘Flopkart’ day glitches, online shopping is surging with Amazon launching a 6 day Diwali Dhamaka. Snapdeal is also not far behind and there are options galore for consumers to choose from.

What does it mean for shopping malls that mushroomed from 2003 to 2010? Is this the end of the road for new shopping malls? Time will tell, however, a survey by ASSOCHAM reveals that in 10 major cities across India shopping mall footfalls have fallen drastically. The survey was carried out in Mumbai, Delhi NCR, Chennai, Kolkata, Bangalore, Ahmedabad, Hyderabad, Chandigarh, Pune, and Dehradun. Delhi NCR has registered a highest drop (49.5 %) in footfalls at city malls. Ahmedabad registered a fall of 48.2%, Chennai a drop of 46%, Mumbai a drop of 42%, and Hyderabad a drop of 39%.

Those are sharp fall in footfalls in one year period. And with institutional funds backing the e-commerce space, there is all the likelihood, that new e-commerce ventures will come up and put more pressure on the shopping mall sales.


Why are consumers flocking to these e-commerce sites as opposed to visiting the shopping malls? There are various reasons and we list them below:



  • Convenience:

No debate about it. This is the most common reason for the success of e-commerce sites. Let’s have a look at the typical process in online purchase:

    1. Consumer logs on to the e-commerce site(s). Or one can visit the aggregator site that shows the products by 10-12 e-commerce sites.
    2. Search for the product
    3. Compare the products (reviews, price, etc.)
    4. Purchase
    5. Home delivery
    6. Payment


In a matter of minutes one can purchase the product he/she desires. It’s as simple as that and the consumer is rest assured that he/she is not overpaying for the product.


  • Rising fuel and parking prices:

Going to a shopping mall is a project in itself. Get ready, ask your family members to get ready, take a car, drive, and park the car. All of it costs. Fuel costs and Parking costs are rising with every passing year. Finding the car parking space in a metropolitan area is a hell and even within a shopping mall it is cumbersome and expensive. With online shopping, one can certainly save on these costs. Does it mean that people will stop visiting the malls altogether? No way, people will continue to visit the malls for leisure activities such as movies, restaurants, window shopping, kid’s play zones, etc. However, the footfall at malls will decrease due to the change in shopping habits. And this is clearly evident from the ASSOCHAM survey.


  • Online discounts:

Other than the convenience of buying products on e-commerce sites, one can also find various offers, discount deals on display. In fact, during the festive seasons, major e-commerce sites come up with lucrative offers to sell products to consumers across cities in India. Flipkart recently came up with ‘Diwali Day’ and registered a whopping sale of Rs. 600 Crores. Similarly, Amazon and Snapdeal have also launched special Diwali sales. Other e-commerce websites are not far behind.


  • Variety of choices:

It goes without saying that consumer is spoilt for choices on these e-commerce sites. One can only find limited choices if he/she visits a showroom in a shopping mall, however, e-commerce sites have no end (or tail as it is called) and there is plethora of options to choose from.


What will be the impact of 'rise in online shopping' on Retail Malls?


  1. As discussed, footfalls will continue to drop.
  2. There are possibilities that launch of new malls will be postponed by the real estate developers to assess the larger impact of online shopping on retail development.
  3. Rental across shopping malls may begin to fall.
  4. And subsequently, Capital values at retail malls will fall.