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Thursday, October 23, 2014

Happy Diwali 2014

NirrtiGo wishes each and everyone a very Happy Diwali.

।।।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.

Friday, October 17, 2014

Lukewarm Diwali Season for Real Estate Sector

This Navratri 2014 and Diwali season has been rather disappointing as far as real estate sector in India is concerned. One can notice it easily; lack of new launches and the missing buzz in builder’s offices is there for all to see. Other than in Bangalore market, home sales across India have been slow despite muted prices. Buyers are still uncertain because they are still looking for greater surety and prosperity on their job front. Experts believe, market is waiting for a trigger such as high GDP numbers or interest rate cuts to revive the realty demand. And that is likely to happen post March 2015.

What could be the reasons for rather lackluster festive 2014 season?

  • Unsold stock
According to a report, there were about 7.6 Lacs apartment units that were unsold by the end of June 2014. New launches have dropped considerably. 27 new projects were launched in the month of September 2014 across top 15 cities in India. In comparison, in September 2013, about 279 projects were launched. It clearly shows there is too much inventory that needs to be cleared first.

  • High interest rates
Interest rates have remained rather high. RBI’s policy rates have remained at 8% throughout the 2014. However, good news is that inflation has moderated and therefore there could be possibilities of rate cuts in the future.

  • Builders focused on completion
In recent months, for right reasons, builders have gone back to drawing boards and have started focusing on completing the existing projects before launching any new projects. Focus on delivery is extremely important to get back the trust of home-buyers. With a series of cases of builder’s delaying projects by 2-3 years or more, the market needed the pill and this slow demand has provided that opportunity to builders to deliver projects on time.

  • Penalties Galore
In recent times, real estate sector has been hit by series of penalties being imposed upon some of the largest developers in the country by regulators and courts. Overall sentiment within the sector has diminished. We hope that lessons have been learnt by realty companies and from now on-wards there would be a positive atmosphere of transparency and trust among various stakeholders within the sector.

Lull before the storm

Having considered the reasons for rather lukewarm demand, we must now explore if and when the recovery will take place.

There are already signals that economic recovery is on the way up:
  1. 40 million square feet office space is likely to be leased by top companies over the next 12-18 months.
  2. The Union Budget 2014-15 has laid considerable emphasis on the realty sector and this has infused a positive sentiment for the future. The impact of which will be visible by early next year.
  3. Office space leasing up 31% in Jul-Sept 2014 at about 8 million sq ft.
  4. On the back of office space demand, home sales will also pick up.
  5. And if interest rates come down, we could see demand picking up by March 2015.

Monday, October 13, 2014

What is Property Tax / House Tax in India?

Municipalities across all cities in India charge a levy from local residents to maintain the city’s infrastructure such as sewerage, park, roads, other civic amenities, lighting, etc. The property tax shall not be confused with income tax payable on income generated from the property. While income generated from the property by renting it out comes under the ambit of income tax authorities and is calculated as per the income tax guidelines, the property tax is a municipal level subject. Income generated from the property is a central subject whereas property tax is a local subject. Property tax is also sometimes referred to as ‘house tax’.

Some municipalities do not charge property tax and instead bill separately for the services rendered to the residents. There are municipal bodies who charge residents for water and drainage facilities, maintenance charges. Moreover, MLA (Member of Legislative Assembly) and MP (Member of Parliament) funds are also utilized for the upkeep of the city.

How is property tax calculated? The tax is computed on the basis of rental income that the property under consideration may generate by way of letting it out. Usually, the property tax or house tax is a small percentage of the yearly rental income that the property can generate if it is rented-out. And it varies from state to state and from city to city. The property tax / house tax in India is to be paid once every year or every 6 months.

Below are the types of properties that are liable to be taxed under property tax / house tax provision in India:

  • Residential house (self-occupied or let out)
  • Office Building
  • Factory Building
  • Godowns
  • Flats
  • Shops

More details about property tax in India:

Saturday, October 11, 2014

Press Release: Gera Developments Among Top 10 Pune Residential Developers

Gera Developments Among Top 10 Pune Residential Developers

Bloomberg TV India along with knowledge partner JLL announced the top real estate developers for both residential and commercial projects across in major cities

Pune, 10th October, 2014: Gera Developments, with a track record of over 43 years is one of the pioneers of the real estate industry and the creators of premium residential and commercial projects in Pune, Goa & Bangalore, have been announced as one of the top 10 Pune residential developers by Bloomberg TV India, the country's leading English business news channel and knowledge partners JLL.

Commenting on the accolade, Mr Rohit Gera, MD, Gera Developments said, ”This recognition is a testament to our commitment to our customers. Our commitment to quality, trust and customer satisfaction is part of our continued efforts to fulfill our vision.  The scoring system adopted by JLL takes into account sales pricing as well as velocity along with the construction delays of the projects.  We believe we have been able to show sales velocity as well as sales premiums as our customers recognize the benefits of buying with a reputed developer with a track record and commitment to customer satisfaction.  This honor will further motivate us to achieve greater heights. We are happy with the acknowledgement from industry experts like JLL who have recognized our extended benchmarks in the real estate realm with our constant innovation techniques which are way ahead of time – be it India's first ChildCentricTM project or Pune's first intelligent building. ”

Gera’s vast expertise in the sector that spans across more than 4 decades, along with its commitment to trust, transparency and innovation have ensured them a place in the top players in Pune. They have established a footprint across Pune, Goa and have recently entered Bangalore by meticulously constructing and delivering over 50 projects, with close to 4 million sq.ft. of development.

The comprehensive analysis and research was carried on the basis of detailed parameters like total units launched, Launch Price (INR psf), average size of units in each project, sales velocity etc. The secondary factors for evaluating the companies were price and rental bench-marking, the total space built by the company and vacancy levels for commercial projects by the company etc.

The report is based on hard data and demonstrated deliverable, and is the most rigorous study of its kind to date.

The Top 10 real estate companies in Pune are: 

Note: The developer names have been arranged alphabetically

Top 10 Pune Residential Developers
Top 10 Pune Office Developers
Amit Enterprises
Gera Developments
Embassy Property Developments
Goel Ganga
K Raheja Corp
Kolte Patil Developers
Kolte Patil Developers
Kumar Properties
Marvel Realtors
Magarpatta Township Development & Construction Co.
Panchshil Realty
Panchshil Realty
Paranjape Schemes
Paranjape Schemes
Pride Purple Group
Pride Housing
Sukhwani Associates
Shapoorji Pallonji Group

About Gera Developments:

Gera Developments, one of the pioneers of the real estate business in Pune are recognized as the creators of premium residential and commercial projects in Pune, Goa & now Bangalore. Gera Developments has recently unveiled ChildCentricTM Homes, a new way to live for today’s young home buyer. It is a revolutionary concept and an innovative solution that is set to create a new category in the residential real estate industry and establish a benchmark in the product + services model.

Gera Developments prides itself on providing long term enjoyment to customers and innovation being a hallmark of the company’s projects.  There are many 'firsts' that stand to Gera Developments’ credit such as 5-Year Warranty on Real Estate consisting of Preventive Maintenance and Repairs for the first time in India and providing Insurance of buildings for 3 years (prepaid). 

Thursday, October 9, 2014

REITs: SEBI’s Next Move to Revive Indian Realty Market

After a long wait of almost 8 years, the Securities Board of India (SEBI) finally gave a nod for establishing the Real Estate Investment Trust (REITs) in India. Before marking a foray in India, REIT had already made a name for itself in more than 20 countries in different parts of the world. This operating body receives special tax treatment and takes care of the realty projects that comprise, office buildings, commercial and residential buildings, hospitals, shopping malls. There are other realty assets that the organization (trust) takes care of, such as construction of hotels & resorts, multiplexes and warehouses.

However, very few people know the organization has played a pivotal role in helping the Indian real estate grow big like never before. With continued support from REIT, Indian realty market has achieved an enviable stature on a global platform.

Let us have an inside perspective on this:

REIT: The Meaning Explored

Real Estate Investment Trust is actually a trust-like company or organization that operates income-producing real estate assets. The realty projects that are likely to follow on the company’s radar could be residential as well commercial projects; preferably commercial ones the most as they generate employment and income both in a good number. The people who are keenly following the realty market have to halt for a moment and take note of the organization as it is helping the realty market in a big way.

SEBI under its aegis brought REIT on to the main stage to help Indian real estate market come out of the unfortunate liquidity crunch and poor sales figures. The market regulator has jotted down few protocols that the trust company will be following. Here are some of them:

  1. Instead of launching any particular realty related schemes, REITs will raise funds through initial offers and will be allowed to raise additional funds through follow-on offers as well.
  2. At least 90% value of REITs assets should be incurred in ready properties and the rest 10% can be utilized in other specified assets. 
  3. REITs will be quiet far away from vacant and agricultural lands. 
  4. The assets held by REIT will have to be valued through physical inspection of properties, at least once a year.

However, one can’t figure out the benefits that the organization has brought in here, merely by reading through the protocols mentioned above. In fact, the figures are analytical in nature and straightaway just can’t understand the good things.

Here’s an inside perspective:

A Sigh of Relief For the Indian Realty Market

The biggest announcement made in the Union Budget 2014-15 brought some respite for the Indian real estate domain. One cannot imagine the potential benefits the REITs can bring in for the domain. Here are some of the advantages:

  • Improved Liquidity Situation

The decision to allow listing of the REIT in India will give a positive boost to the liquidity situation of cash-starved developers. These developers have been struggling really hard to fetch funds for their own construction activities. The advent of the trust company has already opened doors for an investment avenue that is fool-proof than under construction properties.

  • Indian Realty Market Yearning for REIT

Among major reasons behind India getting actually desperate for REIT was to pull in big time investors. Union budget’s green signal to open up such bodies in the country is expected to bring in globally accepted protocols to the Indian realty market’s funding schemes. Through this, revival of interest of both global and domestic investors is expected.

  • Benefit for the Buyers

REIT makes use of investors’ money to purchase real estate assets for the purpose of rentals and capital gains. Through this, buyers will also be benefited by realty price appreciation in preferred areas sans hassles associated with buying and maintaining properties. The buyers will now have seamless ways to pitch in for best residential or commercial realty projects.

  • Realty Market Will Now Mature

With stage set to allow fully-fledged REIT to enter India completely, Indian real estate domain is on the verge of getting matured and more productive. The organization will enable flow of more professional investment and management in the domain. Moreover, individual speculation in real estate assets will also be reduced.

  • Increased Reliability in Indian Realty Market

There are special benefits that the REIT is expected to bring in the Indian realty market. Advantages like increased accountability & reliability in the sector. The organization’s support to the Indian real estate market will also pull in greater FDI in the sector.

Indian Real Estate Domain On a Roll

There was a time in the growth of the Indian realty market when there was a persistent struggle for alternate avenues of funding. Other than traditional banks and financial institution, permission to launch REIT in India will act as a key launch pad for smoother capital markets inclusion and clean exit options for investors.

Once formally announced by SEBI on the full-fledged operation of the organization, REIT will help the property market in a long way and will also help in reviving global investor sentiments.

This is a guest post by Vineeta Tiwari who is a keen writer on Global Economy and Realty market.

Monday, October 6, 2014

What is FSI in real estate development? What is the floor space index that is allowed for various Indian cities?

FSI or floor space index is the ratio of total develop-able gross floor area to the total plot area. In other words:

FSI = Total covered area on all floors / Gross plot area

Higher FSI means, more area can be developed in a given plot. How is that possible? It is done by adding more floors to the plot of land. In metropolitan area of New-York, the permitted FSI is 17 and in Singapore the permissible FSI is 10. Whereas in Commercial Business Districts (CBD) of Mumbai, the highest allowed FSI is at Nariman Point (FSI – 4.5), and at Bandra Kurla Complex or BKC, the allowable FSI is 4.

There is always a case for increasing the FSI in Indian metro cities of Delhi, Mumbai, Kolkata, Bangalore, and Chennai. However, higher FSI requires building of infrastructure such as sewerage, roads, safety features, traffic management, water, and electricity. Without the proper infrastructure in place, higher FSI will choke the city and can cause great deal of discomfort to the residents.

At the same time, there is a widespread belief among real estate and city planning experts that doubling the FSI in metropolitan cities of India can bring down the cost of housing and commercial real estate. It is estimated that prices of residential real estate in the island city of Mumbai would fall by one third in such a scenario. The State Government, however, is reluctant to raise the FSI because they believe it will lead to crowding and create an additional burden on the city's infrastructure.

More on FSI is explained in the below document:

Thursday, October 2, 2014

Swachh Bharat Abhiyan - Citizen participation is must

Prime Minister Narendra Modi launched clean India or ‘Swachh Bharat’ campaign today 2nd October 2014 on the birth anniversary of Mahatma Gandhi.

As part of the 'Clean India' campaign that Prime Minister Narendra Modi launched today, he said he had invited nine people to join the cleanliness drive and requested each of them to draw nine more into the initiative to take it viral.

What are the most common things we the citizenry, municipalities, corporate, and activists do to make our cities and country clean? We list them here…

Swachh Bharat Campaign 

Monday, September 29, 2014

Will increasing property circle rates in Delhi stop black money transactions? We believe….No

Delhi Government has increased the property circle rates across all categories of colonies. The change in circle rates has been effected from 23rd September 2014. The increase in circle rates has been a whopping 20%. What are circle rates? Circle rate is the minimum property price set up by the local government to calculate stamp duty and registration charges for any property transaction within the city.

Here are the new circle rates for Delhi:

New Circle Rate for Land (in  Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Old Circle Rate for Land (in Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Differential (in Rs) Increase in stamp duty 100 Sq Mt  plot (in Rs) Increase in stamp duty 300 Sq Mt plot (in Rs) Increase in stamp duty 500 Sq Mt plot (in Rs) Increase in stamp duty 1000 Sq Mt plot (in Rs)
Category A 774000 38700 645000 32250 6450 645000 1935000 3225000 6450000
Category B 245520 12276 204600 10230 2046 204600 613800 1023000 2046000
Category C 159840 7992 133224 6661.2 1330.8 133080 399240 665400 1330800
Category D 127680 6384 106384 5319.2 1064.8 106480 319440 532400 1064800
Category E 70080 3504 58365 2918.25 585.75 58575 175725 292875 585750
Category F 56640 2832 47140 2357 475 47500 142500 237500 475000
Category G 46200 2310 38442 1922.1 387.9 38790 116370 193950 387900
Category H 23280 1164 19361 968.05 195.95 19595 58785 97975 195950

The stamp duty charges in Delhi are as follows:
Male - 6%, Female - 4%, Joint - 5%, Senior Citizen - 6%, Company - 6%

The idea behind increasing the circle rates in Delhi is to curb black money component which is rampant in property transactions across the country. Really, will increasing the circle rates curb black money transactions? We are doubtful; on the contrary, it may further push up the property prices and slow down the already subdued demand.

In our opinion, it is a lazy way of looking at the issue of black money in property transactions. So, what could the government do to curb black money component in property transactions?

  • Equalize circle rates and prevailing market rates, i.e. there is no circle rate, in fact, stamp duty and registration charges should be calculated on the prevailing market rates. But this will increase the stamp duty burden on buyers. And hence, property transactions will slow down considerably and therefore loss of revenue for the government and adverse impact on the economy. To overcome this issue, government must reduce the stamp duty charges.

  • Reduce stamp duty charges to 1% of property value.

  • Reducing stamp duty charges and equalizing circle rates with market rates will encourage the buyer and seller to report the correct property value. And hence, it will help in curbing the black money transactions.

  • At the same time, people will transact more frequently which will have a positive impact on revenue generation for the government.

  • Therefore, need of the hour is to reduce stamp duty charges and equalize market rates with circle rates. Increasing circle rates at the current stamp duty levels will in fact encourage more cash transactions.

Is the revenue generation department of local government listening??

Friday, September 26, 2014

Which are the happening micro markets in Chennai??


Madipakkam is a micro market located in the southern part of Chennai. It is surrounded by areas such as Velachery, Pallikaranai, Pallavaram and Medavakkam. It lies in close proximity to the IT corridor of Chennai, the Old Mahabalipuram Road (also known as OMR) and is well connected to it. It is also well connected to the East Coast Road. Since the Madipakkam area is well connected and is affordable, it is attracting end users as well as investors’ attention. If you are looking to purchase an apartment in Chennai, Madipakkam is one of the places to look out for.

The average going rate for apartments in Madipakkam stands at INR 4800 per square feet. In the third quarter of 2013, the prices here were hovering at INR 5300 per square feet on average which was an appreciation of about 27% when compared to the previous quarter. In the last quarter of the year 2013, the prices climbed up by 3% and stood at INR 5400 per square feet on average. The price then came down in the first quarter of 2014 by 11% to be at INR 4800 per square feet. Since then the prices have remained stable.

There is a massive demand for 2 BHK apartments in Madipakkam. This is followed by 3 BHKs. Small to medium sized apartments are in demand in this micro market. The most sought after unit size for apartments here falls between 751 to 1000 square feet category, which is then followed by 1001 to 1250 square feet range and the 501 and 750 square feet range. The most preferred budget range for properties here falls between INR 20 and 30 lakhs, which is followed by INR 30 to 40 lakhs range. Buyers are willing to spend anywhere between INR 4001 to INR 4500 per square feet on apartments here, that is followed by the INR 3501 to 4000 per square feet range.


Perambur is a north Chennai locality which is very much in demand. It is located in close proximity to Anna Nagar and is well connected to the central parts of the city. Buyers are willing to spend anywhere between INR 4501 to 5000 per square feet on properties in this locality, which is followed by the INR 4001 to 4500 per square feet range. Buyers are willing to spend anywhere between INR 30 to 40 lakhs on apartments in Chennai at Perambur locality. Thereafter, the preference is for INR 20 to 30 lakhs range. 2 BHKs are the most sought after choice in this locality followed by both 1 and 3 BHKs. The most sought after apartments are smaller units. There is a huge demand for apartments which fall between 501 and 750 square feet range, which is followed by the 751 to 100 square feet range.

The average going rate for properties here stands at INR 5400 per square feet. In the third quarter of 2013 the going rate was INR 6700 per square feet, which was an appreciation of 11% from the previous quarter. The prices dipped by 12% in the next quarter and stood at INR 5900 per square feet only to recover by 2% in the first quarter of 2014.

This is a guest post by Sulabha Kulkarni

Monday, September 22, 2014

Planning to borrow home loan? Pay attention to your CIBIL Score.

Ok, you have identified the residential property you wish to buy. Now comes the financing part of it. A residential property may cost you 50 Lacs or more. You may have arranged for the down payment cost of approximately 10 Lacs and are now looking to borrow the home loan for remainder of the property cost.

Borrowing home loan means you will be paying EMIs for several years. Therefore, one must be responsible and confident to service the debt over a period of time. Before sanctioning such a huge amount to an individual borrower, the banks carry out comprehensive due diligence that includes checking your credit history, bank statements, income statements, job or business continuity.

CIBIL score is one such parameter that banks and financial institutions look into before sanctioning loan. What is CIBIL score? Credit Information Bureau (India) Limited (CIBIL) is India’s first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and credit institutions, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to credit institutions in order to help evaluate and approve loan applications. (Definition Source: Wikipedia)

One can check the CIBIL score here

How can you maintain good CIBIL score?

Well, in order to maintain good CIBIL score, you must pay attention to the following factors:

  • Repayment:
First thing first, what is your repayment track record? In other words, are you paying your installments on previous loans or credit cards regularly within the stipulated timeline? If yes, then your CIBIL score is going to be good. Your ability to repay previous debt has 35% weight-age in calculation of the CIBIL Score. Therefore, make sure that you stick to due dates of servicing your EMIs.

  • Credit Utilization:
Credit utilization is the ratio of the
Balance amount that you owe to your lenders / Total of your credit card limits

Therefore, if your balance amount that you owe to lenders is high then it signals riskiness. The increase in balance amount indicates increase in repayment burden and may negatively impact your CIBIL score. Credit utilization has 30% weight-age in calculation your CIBIL score. Therefore to score high CIBIL score, keep your outstanding balance to banks and financial institutions as low as possible.

  • History of Debt servicing capacity:
Are you paying EMIs and credit installments successfully for several years? If yes, then this will have a positive impact on your CIBIL scores. Banks and financial institutions prefer applicants who have taken loans earlier and have serviced the debt regularly. It sends the signal that the individual has a long history of securing debt and has been responsible in his/her repayments. This has a weight-age of 15% in calculation of CIBIL score.

  • New Credit
If you have applied for too many loans or credit cards in recent times, then it has a negative impact on your CIBIL score. Banks and financial institutions will see this increased activity of loan applications as risky because your debt burden has increased and it may affect your repayment capacity. Therefore, be prudent with your loan applications. Unless, your income has increased substantially, do not apply for too many loans or credit cards at the same time or within a short interval of time. In other words, space out your loan applications prudently. This has a weight-age of 10% in calculation of CIBIL score.

  • Credit mix
Many a times, we have noticed that people have a great propensity to apply for unsecured loans. As the name suggests, unsecured loans are not secured by any mortgage or guarantee. If you have mostly availed unsecured loans (such as personal loans) or credit cards, then it will bring down your CIBIL score. Always have a mix of both secured loans and unsecured loans. Secured loans are car loan, home loan, etc. This has a weight-age of 10% in calculation of CIBIL score.

Now that, you have a thorough understanding of CIBIL scores and its impact on your loan availing ability, we hope that you will be disciplined in your finances.

Friday, September 19, 2014

Ajit Singh eviction from 12 tughlak road in Lutyens Delhi – A Question of 100s of Crores of Rupees.

According to an article published in Economic Times dated April, 2013, Property prices in Delhi's leafy Lutyens Bungalow Zone have increased 8-folds in the past decade on the back of rising demand for the area where homes are always in short supply.

While the value of the private portion of the Lutyens Bungalow Zone - around 254.5 acres, where industrialists Sunil Mittal, KP Singh, Naveen Jindal, LN Mittal and others stay - has gone up from around Rs 6,100 crore to Rs 49,000 crore in the past 10 years, the value of the 995 acres occupied by government bungalows has grown from Rs 24,000 crore to Rs 1,92,000 crore, albeit notionally, based on current market rates derived from recent transactions in the area.

Witnessing the rise in property prices, a number of old families that have been living in the area for over four decades are now ready to sell these British colonial bungalows. Some are even asking for astronomical sums of money - the owner of an 8,000-sq yards plot on Tughlaq Road is asking for Rs 700 crore. A similar-sized plot on Prithvi Raj Road has a tag of over Rs 600 crore while another 1 acre property on the same road could be bought for Rs 480 crore.

Some of the recent transactions at Lutyens Delhi:

And the asking rates are:

In this backdrop, it is fairly easy to understand why Ajit Singh of some political party in western UP has resisted vacating the bungalow ’12, Tughlak Road’. His party suffered a massive rout in the Lok Sabha election 2014 in western UP. This humiliation had probably infuriated Ajit Singh who defied the law and continued living in the residence which is specifically meant for the elected members of the Parliament. He should have vacated the house by June 26, 2014.

He and his minuscule supporters claim that the house should be converted into a memorial for Charan Singh as he stayed there for 36 years. Oh my gosh….this is similar to a situation when a tenant would rent a property and after staying there for 4-5 years, the tenant would take control of the property with the help of his goons and not vacate the property. Ajit Singh and his supporters are in the same mood.

"It is the wish of the people that 12 Tuglak Road be converted into a memorial. After all, Chaudhury sahib lived here for 36 years," he said.

At least 18 persons were injured as police fired rubber bullets and tear gas shells and resorted to lathicharge to disperse activists of Bhartiya Kisan Union and Rashtriya Lok Dal supporters, who turned violent as the cops thwarted their attempt to cut-off water supply to Delhi from Gangnahar Muradnagar regulator.

So what if number of people are injured, so what if they bring the traffic to halt on major highways, so what if they cut down the water supply to 10 million residents of Delhi, after all, it’s a question of 100s of Crores. How can Ajit Singh who had the control over the bungalow for so many years let it go so easily? Some lives here and there, some disturbances here and there. It happens. It is part of the democracy.

Tuesday, September 16, 2014

Why Home insurance is extremely important in India?

Jammu and Kashmir floods have been devastating to say the least. Many people have lost their lives. Businesses including restaurants, Shikaras, tourism, small workshops have been razed. Agricultural land has been eroded. Houses including the contents of a household have been damaged. The floods in Jammu and Kashmir have been the worst in over half a century.

Well, there could be man-made reasons such as aggressive construction, & lax regulations for this great disaster, however, one cannot take away the fact that it was a horrendous natural disaster partly assisted by man-made actions.

The focus of the state and central government is to rescue the people and then focus on relief work. We must congratulate Armed forces for their stupendous work for saving Thousands of lives. Food is being provided to the flood victims, Medicare facilities have been augmented.

However, to bring back the normalcy would take months, maybe year or two. The government has announced relief packages including financial assistance. However, one wonders, what will happen to the damaged houses and the contents of the houses? Will these be recovered? In such a scenario, home insurance would have been of great help. We are not sure, if home insurance was a common practice in Jammu and Kashmir.

Home insurance is extremely useful for people living in areas that are prone to the risks of floods, earthquakes or burglaries?

Home insurance can cover losses to the structure and contents of one’s home from any natural or man-made calamity. The disasters that can be insured against are fire, earthquakes, storms, cyclones, tempests, tornadoes, hurricanes, floods or inundation, lightning strike, explosion, landslides, impact by vehicles or aircraft, and bursting or overflowing of water tanks and pipes. However, care needs to be taken that only the cost of structure is insured and not the cost of land.

Mainly two types of home insurance policies are available in India:

  • Buildings Insurance

Insuring the building or building structure is important since it protects the policy holder against inevitable losses in case the insured building is destroyed or debilitated in any natural or man-made calamities.

  • Content Insurance

Contents insurance under home insurance plans includes protection to movable goods, possessions or contents in the house; anything that is not a fixed part of the home, for example appliances, electronic goods, furniture and clothing etc.

Find below the detailed info about Home insurance in India including the claim process, benefits of home insurance, and companies that offer home insurance in India.

Friday, September 12, 2014

What are the Real Estate and Property market Terms and Definitions in India?

Looking to buy an apartment in a builder project or a piece of land, Or for that matter, looking to buy/lease office space property? We are sure you will come across many terms and definitions which are new to you and therefore comprehending them is essential to make sure that you are not overpaying.

Take for example, the distinction between carpet area, built-up area, and super area. Most of the builders in India will charge you on the basis of super area. However, in some locations, they may charge you on the basis on carpet area. But the prices will be adjusted accordingly. For example, some builders in Mumbai charges on the basis of carpet area of the property and therefore their base selling price is higher as compared to the builder who is charging you on the basis of super area. Super area is the entire area of the building which includes carpet area, lobbies and corridors, walls, lifts, staircases basements, and other atrium and utility areas. Carpet area is the actual usable area within the walls of the floor. Since, you will using the lobbies, corridors, lifts, and other common areas, therefore, a builder will take all of these into consideration before rolling out the final base price. Whether you pay by carpet area method or by super area, all the charges will be included in the final price.

Similarly, when you go to the local registrar office to register your property, there will be terms like circle rates or market value that will be used to arrive at stamp duty and registration charges. In the below document, one can find all the terms and definitions that are used in Indian real estate and property market.

Monday, September 8, 2014

Trends to watch out for in India’s real estate in 2014

India is a land of many states and within those states are multiple cities and villages. These areas give ample opportunity for developing both residential and commercial infrastructures. The real estate industry in India has grown massively and continues to do so with every passing Year, however, with the induction of a new promising government, realty sector in 2014 is expected to revive and the smaller cities like Mathura, Varanasi are no exception to this revival.

The concepts which have received maximum popularity in 2014 are:

1. Studio or 1 BHK Apartments

The saying ‘Home Sweet Home’ fits Indian realty’s current demand perfectly. Studio or 1 BHK apartments have emerged as the latest and most promising developments in the current residential trend of the country. Studios or 1 BHK are mostly made on small Square feet of area and are generally more cost effective than the 2 or 3 BHK apartments.

According to Kapoor of Liases Foras, “around 15,600 studio apartments, accounting for 8.6 million sq ft, are being built in the top six cities-Mumbai, National Capital Region (NCR), Bangalore, Pune, Hyderabad and Chennai”.  Among these cities, NCR currently ranks on top with around 7 million sq ft, mainly on report of tentative activity and development regulations.

2. The Second Home concept

A study done by a Bangalore-based e Business consulting firm shows the purchase of second-home has increased by 50% from 2002 to 2007 in India. The movement declined a bit in 2008, mostly because of the bad economic conditions in the U.S., Amar Sodhi, proprietor of Avatar International, a U.K.-based property brokerage said.

According to Sodhi the boom has been highest in the upper class of the market. But now, as another 10 million people join the ranks of the middle classes, more affordable housing is popping up”. 

It’s not just the Indian investors; Non-resident Indians (NRIs) have also shown interest in these mid-levels housing. The benefits that NRIs get are that they can not only invest in India’s real estate because they were born here, but also for their parents or grandparents who still lives in India.

According to Sodhi, NRIs who belong to Delhi, the nearby cities like Gurgaon and Noida are the ideal spots to live in. The reason for this is their proximity to the capital city, but also because they’re very near to an international airport”.

Presently, Gurgaon holds over 1 million residents and the city is repidly expanding. The biggest attraction for the second home residents is the plethora of shopping malls in the locality. 

Noida, is known as an IT hub. But quite recently, it has been getting attention from the second-home investors with lavish real estate expansions and the 222 acre golf course. 

With increasing income on one hand and the growing need for relaxed weekends on the other, the concept of second homes appears to be gaining popularity. The National Council of Applied Economic Re¬search analyzed that the number of households that can be termed as rich is expected to become 11 million by 2013 from 3 million in 2003. While the population of mid¬dle class buyers is expected to grow even more drastically, from 46 mil¬lion in 2003 to 124 million in 2013. The number of High Net worth Individuals in India has grown at the rate of 20% YoY, second to Singapore.

Second Home locations:
  • Delhi
National Capital Region suburbs have farm house layout. These layouts are made in groups around Chattarpur, Rajokri, Mehrauli and Bijwasan; the hill stations of Uttarakhand, the religious grounds of Mathura and Vrindavan and also Haridwar.

  • Chennai
Chennai has the second home hub in the Pondicherry area and the Yercaud region near Salem, a hill station in the Shevaroys range.

  • Bangalore
People in Bangalore can live and buy a home in Bangalore, but as far as second home is concerned, Mysore always receives maximum eyeballs. The town is known for its cleanliness and hygiene. Moreover, it is known as the second cleanest city in India and was rated as the cleanest city in Karnataka in 2010. Ootacamund (or Ooty) is one of the most primary choices among people looking to buy a second home.

  • Hyderabad
Hyderabad's populace believe that Vizag is an ideal location for investment as a second home in the state.  The specialties of real estate in this land include affordable property rates, potential for good returns, pleasant climate and the point that it’s located on coast also adds value.

3. Smart Cities

Indian economy is 2/3 rural in 2014; but by 2040 it is predicted to be a completely urbanized country. Delhi and Mumbai are part of the league that includes largest cities in the world (giving rise to the demand for more development in the nearby regions).

Smart cities are all about incorporating the old India with the new. Hence creating a new prototype for Commercial real estate and housing, one example of a smart city is Singapore. The current government of India has budgeted Rupees 7060 crore for the development of smart cities all over the country. 

Delhi, Mumbai, 40% Rajasthan, Chennai, Bangalore, Amritsar and Kolkata are the cities chosen to be converted into the smart cities of India. The government of India has planned to collaborate with Singapore for providing its expertise in the development of smart cities. 

Gujarat’s GIFT City

The project, Gujarat International Finance and Tec City (GIFT City) will be designed and developed by the Gujarat International Finance Tec City Company Ltd, a JV of the state-owned Gujarat Urban Development Company Ltd and Infrastructure Leasing & Financial Services (IL&FS), reported The Economic Times.

The city is projected to provide a state of art design and will be home to finance and technological companies from states like, Mumbai, Gurgaon and Bangalore.

The proposed city will be established on 986 acres of land and is expected to have: special economic zone (SEZ), international education zone, integrated townships, an entertainment zone, hotels, a convention center, an international techno park, Software Technology Parks of India, STP units, shopping malls, stock exchanges and service units.

The city will be linked all the way through an Internet Gateway, supreme next generation IP-based network and International Fiber Landing System.

The city will open up many unique transportation systems-
  • A blend of Transport systems (MRTS/LRTS/BRTS, etc.) connecting both inter and (Ahmedabad, Airport, Gandhinagar and the City) and intra-city.
  • A concept of Walk-to-work with a nodal ratio of 10:90 between private and public transport.
The city will establish many landmarks including, GIFT Gateway Towers, GIFT Crystal Towers, GIFT Convention Center, a structure of salt crystals, inspired by Mahatma Gandhi's Dandi March.

This is a blog post by Tripti. She is a professional writer and avid reader who has been in the writing industry for 2 years now. Her work ranges from articles on property to education and employment. 

Friday, September 5, 2014

Housing Shortage and Housing Finance Facts in India

'Roti, Kapda, aur Makaan' was a famous movie that highlighted the 3 basic requirements of life. And yet, a closer look at the 'Makaan' or housing statistics in India, we notice that there is still a long way to go before we fulfill these basic requirements in the lives of millions of people in India.

The new government in the center promises to provide 'Housing for All' by 2022. However, in order to achieve such results, the housing finance sector has to evolve at a greater pace. Currently, Mortgage to GDP ratio in India stands at 9%, which is much below the average of advanced economies.

Find below the detailed info-graphics showing the housing shortage and housing finance facts in India. The task of 'Housing for All' may seem daunting, however, it also presents an opportunity unprecedented in human history.

Monday, September 1, 2014

Filth, noise and air pollution in Indian cities…a ticking bomb waiting to explode

While we build new townships, luxury real estate projects, branded homes, shopping malls, highways and what not….People are getting wealthier, buying luxury cars..Dining in star restaurants...wearing branded clothes, watches…but walk past the streets in cities and all we see is stockpile of garbage and filth. Open sewers, high level of noise pollution, air pollution and what we have is a ticking bomb waiting to explode and take away all our wealth and growth in just a matter of few years. Yes, few years. You read it right…

Consider air pollution…Half of the top 20 cities in the world with the highest levels of PM2.5 were in India, according to the pollution data released by the WHO in May 2014, which included 1,600 cities. PM2.5 refers to the diameter measured in microns of particulates such as ammonia, carbon, nitrates and sulfate -- which are small enough to pass into the bloodstream and cause diseases such as emphysema and cancer.

Noise pollution in the cities and towns is at record high and adversely affects people’s health: hearing complaints, sleep disturbance, cardiovascular issues, deteriorating work and school performance are some of the more serious effects of this deafening sociological epidemic, which is adding layer upon layer to the nationwide milieu of stress and environmental degradation. In a recent survey of the world’s noisiest cities, the capital New Delhi comes in first, with seven million plus vehicles on its streets every day (more than in India’s three other major cities combined), followed closely by India’s richest and most populous city (with 21 million people) Mumbai and then Kolkata.

As far as solid waste is concerned, we are not far behind. The cities alone generate over 100 million tons of solid waste annually, a large percentage of which is plastic (America by comparison in 2010 generated 31 million tons of plastic waste according to ‘Plastic is Rubbish’), and it is estimated that (if urban populations increase at the current rate) by 2045 they will be churning out nearly 300 million tons a year. New Delhi (population around 17 million) produces almost 700 tons of daily waste, much of which is plastic.

So, this is the enormity of situation we find ourselves in. Although, the focus on growth is justifiable in order to lift millions out of abject poverty, but surely, environment can’t be neglected. The polluted air we breathe, the noise around us, the filth around us needs to be controlled.

On his Independence Day speech, Prime Minister Narendra Modi talked about the ‘Swacch Bharat’ or ‘Clean India’ campaign that will be launched on 2nd October 2014. The whole campaign is dedicated to Mahatma Gandhi’s 150th birth anniversary in 2019.

But let us ask ourselves, do we really need a campaign for ‘clean India’? Much of the pollution that we are accustomed to in our daily lives is nothing but the making of our bad habits. In last 3-4 decades we have developed bad and lazy habits and that has destroyed our cities and our flora & fauna.

While government bodies, municipalities, NGOs, and activists may or may not come up with clean India initiatives. The citizens can do their bit by getting rid of the ‘bad and lazy’ habits.

What are these ‘bad and lazy’ habits? We all have read about these habits in our school text books, or watched a documentary or on social media…but let’s repeat them here.

Ok, we can’t move without the car….but can we stop the engine at traffic signal? Can we use the clean fuel? Can we pool the car for going to office? Can we not honk, yes its possible mate? Can we use the metro rail whenever feasible? Can we not throw the chips wrapper outside or any plastic bag outside on the road? Can we stop spitting on the road? Yes, it can be done.

Ok, as a growing company, we will produce waste including solid and liquid….but can we not purify the liquid waste? Can’t we dump the solid waste in accordance with the government or municipalities guidelines? Can’t we show the same kind of exuberance that we exhibit in production?

Ok, as a household, we will continue to buy stuff and produce waste….but can we not use homemade bag for carrying vegetables, fruits, groceries? Can’t we minimize the use of plastic bags? Can’t we dump the waste as per the procedure laid down by the local municipal body?

What the heck government got to do with all of this? Certainly, it’s our duty. Just like we like to live in a clean home….can’t we extrapolate this thinking to whole environment around us? The road outside our house belongs to us, the road on which we drive our car belongs to us, the air we breathe belongs to us, the water we drink belongs to us, then, why this apathy towards the environment around us? Let’s not point fingers at the government or municipalities for all of it.


Friday, August 29, 2014

Growth of Housing Finance in India

In order to provide housing for all by 2022, the government needs to develop the housing finance sector. In its current avatar, the housing finance sector is able to provide loans to borrowers working in the formal sector with proof of income and banking transactions. However, about 99% of the total shortage of housing in urban areas belongs to the Economic Weaker Section and Low Income Groups of the society.  (Overall housing shortage in urban areas - 18.78 million units till 2012).

Over a period of time, housing finance has evolved considerably. In the initial days, people either self funded their housing needs or participated in schemes launched by government owned institutions in the real estate sector like state housing boards and development authorities. Launch of HUDCO in 1970 represented a paradigm shift and for the first time housing finance was formalized. However, private sector participation in housing finance took shape only when HDFC was setup in 1977. In the late 1990s, commercial banks also got involved in housing finance.

On August 28, 2014, Prime minister launched the ‘Pradhan Mantri Jan Dhan Yojna’. The objective of the program is financial inclusion for all. Can this program cater to the housing finance needs of the BPL or marginalized Population in future? There is possibility of directly transferring interest subsidies on housing loans to the EWS and LIG categories.

In this section, we highlight the various steps taken by the successive governments to facilitate the need for housing and housing finance in India.