Friday, March 28, 2014

What is the role of municipal corporations in cities and how do they help for harmonious living?

Author: Sachin Gupta | Find me on Twitter

Owning a home is a dream that most individuals and families cherish. Not only it provides for stable shelter, societal acceptance, financial well being, but it also enables easy access to the credit market by working as collateral comfort / security. As per the Census 2011, 31.16 per cent of the total population is in the urban areas. However, owning a home is just one piece of harmonious living in the city of your dream/choice. There are other pieces which provide for the true wholesome living experience in a city. Some of these pieces are civic amenities such as water supply, sewage, drainage, recreational parks, internal roads, maintenance of buildings, etc.

And all of these amenities are provided by the local municipal corporations. Without the proper functioning of these corporations, living in a city would hardly be enjoyable. Even though, private developers are coming up with self sustainable townships that can address some of these issues, but importance of municipal corporations cannot be underestimated. These are government official bodies that provide civic services and administer a city with a population of 200000 or more inhabitants.

Therefore, having the knowledge about these municipal corporations is important in order to make sure that above listed civic amenities are provided continually. In the following table, information about municipal corporations is provided for Indian states and union territories such as West Bengal, Uttar Pradesh, Uttarakhand, Tripura, Tamil Nadu, Sikkim, Rajasthan, Punjab, Puducherry, Orissa, Nagaland, Mizoram, Meghalaya, Manipur, Maharashtra, Madhya Pradesh, Lakshadweep, Kerala, Karnataka, Jharkhand, Jammu and Kashmir, Himachal Pradesh, Haryana, Gujarat, Goa, Delhi, Daman and Diu, Dadra and Nagar Haveli, Chattisgarh, Chandigarh, Bihar, Assam, Arunachal Pradesh, Andhra Pradesh, Andaman and Nicobar Islands.




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Tuesday, March 18, 2014

An overview of Bangalore residential real estate market

Author: Sachin Gupta | Find me on Twitter

When one thinks of Bangalore, the first picture that comes to mind is beautiful weather and the hub of information technology companies. Since past few decades, among all cities in India, Bangalore has grown the fastest. The driving industry in Bangalore is IT and ITES and this has had a positive impact on the supporting industries as well.  The revenues from IT-BPO sector has grown substantially over the last 5 years which has resulted in increased job opportunities for engineering talent from across the country.

India’s technology and BPM sector (including hardware) is estimated to have generated USD108 billion in revenue during FY13 compared to USD100.9 billion in FY12, implying a growth rate of 7.4 per cent. The IT-BPM sector in India is estimated to expand at a CAGR of 9.5 per cent to USD300 billion by 2020. The sector increased at a CAGR of 25 per cent over 2000–13. This whole economic activity generates employment opportunities and at the same time enables growth opportunities for other industries.



Real Estate in Bangalore has grown on account of job creation by IT/ITES industry. Multi-cultural population with good social infrastructure, excellent educational institutes and constantly upgrading physical infrastructure has presented real estate developers with the opportunity to develop quality real estate projects, particularly in the residential space.


Number of ongoing projects in respective regions

Approximately 672 residential projects till 2013 (high-end, mid segment, and affordable segment) are under various stages of construction in Bangalore. 

  • Here is a snapshot:
South Bangalore (Banashankari, Electronic City, Hosur Road, Gottigere, Chanda Pur, Bannerghatta Road, JP Nagar, Koramangala, Vijayanagar, BTM Layout, Kudlu Gate, Jayanagar, Bommanahalli, ChandaPura, Attibele, Kanakapura Road, Begur Road, Anekal, AnjanaPura, Ananth Nagar) – 168 residential projects out of which approximately 26 projects offer villas/row houses.

East Bangalore (Haralur, Sarjapur Road, Horamavu, Whitefield, HSR Layout, Sarjapur, Hoodi, Hosa Road, ITPL, CV Raman Nagar, Nagavara, Haralur Road, Banasvadi, Marathahalli, Mahadevapura, Old Airport Road, Indira Nagar, Bellandur, Brooke Field, Basava Nagar, Amrutahalli, Varthur, Outer Ring Rd, Old Madras Road, Ramamurthi Nagar, Kadugodi, Panathur Village, Doddanakkundi, TC Palya) – 255 residential project under various stages of construction out of which 55 are villas/ row houses project.

North Bangalore (Devanahalli, Doddaballapur Road, Yeshwanthpur, Malleswaram, Hebbal, Hebbal Flyover, Jakkur, Jalahalli, KR Puram, RT Nagar, Yelahanka, Airport Road, Bellary Road, HBR Layout, Hennur, Hennur Road, Rajaji Nagar, Sahakar Nagar, RMV Extension, Thanisandra, Tumkur Road, Vidyaranyapura) – 149 residential real estate projects under various stages of construction out of which 31 are villas / row houses project.

West Bangalore (Mysore Road, Rajarajeshwari Nagar, Kengeri, Sanjay Nagar, Magadi Road, Uttarahalli, Nagarbhavi) – 24 residential real estate projects under various stages of construction out of which 3 are villas / row houses project.

Other areas including Bangalore central – 76 residential real estate projects under various stages of construction out of which 19 are villas / row houses project.




Total number of apartments in each respective region till 2013

1.87 Lacs of housing units including the high-end, mid segment, and affordable segment are in the process of construction.




Types of apartments

Out of the total of 672 residential projects under various stages of construction, the proportion of projects offering 1BHK, 2BHK, 3BHK housing units are given below in a detailed graph. The graph signifies that more than 70% of all projects offer 2BHK, 3BHK housing units with about 10% of projects offering 1BHK, 5BHK units.




Housing Prices trend

Prices in Bangalore central have been stable over the last few quarters. However, in micro markets such as Madivala, Banaswadi , Jagjeevan Ram Nagar, Yeswanthapura, Mathikhere, BTM Layout, Sultanpalya, Lingarajpura, BCC Layout prices have fallen in last 2 quarters.




Recently launched projects

Following residential projects have been launched in the Oct-dec 2013 quarter.

Skylark Ithaca (Phase-I), SJR Blue Waters, Patel Smondo 4.0, Brigade Cosmopolis, Shriram Chirping Woods, Monarch Aqua, Sumadhura Silver Ripples, Prabhavati Daffodils, Goyal Orchid Woods, Nitesh British Columbia, Golden Panorama, Prestige Ivy Terraces, Adarsh Premia, Purva Skydale, Century Ethos, Ajmera Stonepark, Sterling Ascentia, Prestige Jade Pavillion, Mahaveer Amaze, Bren Paddington, Saroj Symphony, Concorde Epitome, Purvankara Purva Sunflower, Concorde Tech Turf, Mahaveer Oleander, Atlantis Liberty Square, Salarpuria Clarinet, Arge Helios, Zonasha Vista, Pranjape Wind Fields, Samruddhi North Square, Concorde Wind Rush, Shriram Chirping Woods, Radiant Elitaire, Salarpuria Aspire, Living Walls Another Sky, Pushpam Woods, JR Nexus, Eternity Ecstasy, Sarvana Esplanade, Vineyard Chrystolite, Nakshatra Celestia, Surya Shakti 80 Trees, Sipani Classic, Radiant Silver Oak, Chaitanya Sharan.


Data Source: In-house data collection, and National Housing Bank for price trends





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Friday, March 14, 2014

7 Ways That Help to Save for a Home in 2014

How can I buy an apartment this year? How much should I save or plan to help myself achieve the goal? These were the questions from my friend, who got me to remember the steps, the research, and the planning before buying an apartment.



Stage – 1

For a buyer, the most critical factor is the investment. First, you must plan to save the money for the down payment. Saving should start early in the process, so that it makes it easier for you to pay as large an amount as possible.

The other advantage of paying a bigger amount upfront is a smaller future burden. Making a size-able upfront payment reduces the tenure and the equated monthly installment (EMI) amount.

Once you decide to buy an apartment, start with a good saving habit. Keep the goal of owning your apartment and start saving every buck. To realize the   goal of saving, here are some tips…


  1. Tighten your control on expenses
      • Eating out, frequent movies and random shopping pushes up your monthly bills and inevitably eat into your savings. 
        • Ask these questions:
          • Do I need to subscribe to all these channels?
          • Can I reduce eating out? Instead, can I make food and drinks at home?
          • Do I need to use that expensive club subscription?
          • Do I really need that outfit/smart phone/book?
        • Try to exercise restraint and that will slowly reflect in your monthly statements.

      1. Whittle down your credit card purchases
          • We all know the notorious interest rates charged by credit card companies, but most of us go weak in our knees when we see that lovely ring or a deal on Groupon! 
            • Simply put, being over-dependent on credit cards will hurt your finances.
              • Here’s a way to reduce credit card dues. Try to pay more than the minimum amount towards your credit card account. Consider using cash or even deferring certain purchases to a later date.

            1. Set timelines for payments
              • Payment delays result in fines, service severance and last-minute hassles. Instead of finding yourself in that mess, create a schedule (time and date) to pay your bills. Following a regular routine makes it easier to meet all your financial commitments in time. A better way is to setup automatic online payments and that also works wonders for utility bills. 

            2. Invest wisely
              • Investing in a bank through a savings account is secure, but there’s very little growth. Instead of putting all your bucks into savings, you can distribute your money into other investment avenues like stocks, gold, term deposits, mutual funds, etc. The idea is to make your money generate higher returns and possibly save more.

            3. Check deals and get the best buy
              • When you’re planning to buy anything, check for the best deals before you sign your cheque. Compare various offers, and finalize on the most value-offering deal. 

            4. Stay within budget
              • Maintain more control over money by keeping track of funds and expenses. Cut costs to keep your expenses within budget.

            5. Finally, do thorough homework
              • Don’t just depend on what you hear from brokers or the hearsay on prices. Take an all-external advice and add your findings to it. While calculating the final price, add additional elements like stamp duty, legal fees, inspection fees, etc. 

            This is a blog post by Bharath Joshi a Marketing Executive for apartments in hebbal

            Monday, March 10, 2014

            Was 2013 really bad for real estate sector in India? Yes, there is data to prove that!

            Author: Sachin Gupta | Find me on Twitter

            There were indicators, there were informal chat with property brokers, there were unsold supply of housing inventory lying with the developers, and now there is concrete data to prove that “YES” real estate prices across the country didn't produce yields which one has associated with property sector in India.

            Compared with housing prices appreciation in Jan-Dec 2012, the price appreciation remained substantially low in Jan-Dec 2013 period. In fact, certain cities such as Kochi, Jaipur, Bhopal, Kolkata, Delhi, Ludhiana, Vijaywada, Indore, Chandigarh, Coimbatore, and Meerut registered housing price depreciation over the year 2013. Housing prices in Mumbai remained stagnant with no appreciation or depreciation in 2013. Cities such as Chennai, Pune, Surat, and Nagpur registered price appreciation in excess of 6% in 2013.



            However, within cities, there were micro markets which fared better when compared with the overall price appreciation in the city.

            Micro market price appreciation in 2013 in major cities across India:

            Delhi with NCR: Housing Prices in Micro markets such as Yamuna Vihar, Inderpuri & Rohini, Vasant Kunj, Punjabi Bagh & Shalimar Extension depreciated sharply in 2013. Whereas prices in Govind Puri, Raghubir Nagar, Tri Nagar, Dilshad Garden, Karampura, Nirankari Colony, Pandav Nagar, Dakshinpuri, Hari Nagar, Jahangir Puri, Jhilmil Colony, Sangam Vihar, Mangol Puri, Ghazipur Dairy, Khyala(I-III), Sriniwas Puri, Sultan Puri appreciated handsomely.

            Bangalore: Housing prices in most micro markets of Bangalore remained stagnant for the year 2013 with marginal appreciation in Jaya Nagar, Rajaji Nagar, Koramangala, Air Port Road, Basveshwar Nagar, Malleshwaram, J P Nagar, Banashankari, R.T Nagar, and Vijay Nagar.

            Chennai: Housing prices in Chennai’s micro markets such as Tondiarpet; Narayanappa Garden, Perambur; Choolai; Edapalayam, Virugambakkam; Anna Nagar; Kilpauk; Nungambakkam, Mylapore; Adyar; Velachery; Thriuvanmiyur appreciated in 2013. Whereas micro markets such as Ayanavaram; Purasawalkam; Kolathur, Ashok Nagar; Thyagaraya Nagar; Saligramam, Kodambakkam; Guindy; Chromepet witnessed a downward trend in 2013.

            Mumbai: Kurla East, Tungwa/ Chadivali, Chembur, Malad, Borivali/ Kandivali, Dahisar, Goregaon, Bhandup, Mulund, and Mira Road are some of the micro markets of Mumbai where housing prices actually appreciated in 2013. However, prices in Cuffe Parade, Malabar Hill, Bandra West, Andheri East, Oshivara, Vashi, Khar Garh Road, Pokaran Road 1 & 2, Virar, Nala Sopara, Badlapur fell in 2013.

            Hyderabad: Housing prices in Kanchanbagh, Begumbazaar, Rajendra Nagar, Qutubullapur, Alwal, Malkajgiri, Begumpet, Marredpally, Tarnaka, Mehdipatnam, Abids, Kachiguda, Narayanguda, Himayathnagar, Tolichowki, Khairatabad(West), Panjagutta, Ameerpet, Srinagar Colony, Somajiguda, Jubilee Hills increased slightly in 2013. While micro markets such as Shamshabad, Kapra, Uppal Kalan, L.B.Nagar witnessed significant price fall.

            Pune: Micro markets such as Kharadi, Parvati; Bibvewadi; Dhankawadi; Katraj; Hadapsari; Ghorpadi; Kondwa Khudra; Wanowarie; Undari; Kodwa, Hinjewadi; Thergaon; Chinchwad; Baner; Yerwada; Wakad; Pimple Saudagar; Chakan saw price appreciation in 2013. Whereas Erandawana; Aundh; Pashar; Kothrud; Bopadi; Vadgoaon Bhudruk witnessed price fall in 2013.

            Kolkata: Bhawanipur, Jadavpur, Rajpur Sonarpur witnessed significant housing prices appreciation in 2013. While Jodhpur Park, Dhakuria, Santoshpur, EM Byepass, Behala, Madhyam Gram, Rajarhat witnessed price fall in 2013.

            Appendix:

            Housing Price trends across Indian cities till December 2013.


            Data Source:
            National Housing Bank



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            Friday, March 7, 2014

            Grab a slice of the property pie at Gachibowli

            In 2013, Hyderabad witnessed fall of housing sales by 4% to 16500 housing units and the overall residential market remained stagnant during the entire last year. With absorption rate slowing down and sales volume dropping, property developers had no choice but to postpone the new launches and it is no surprise that new launches in 2013 dropped by 15% compared to year 2012.

            However, with the government finally passing the Telangana bill, real estate developers and trade bodies across the two states have heaved a sigh of relief. Hyderabad is under the scanner again, as the prolonged phase of uncertainty is finally ending. Many experts believe that the Telangana bill will greatly benefit Hyderabad real estate where prices of residential units have been stagnant since 2009.



            Gachibowli- a major IT suburb in Hyderabad is one such locality that is expected to benefit from the real estate resurgence. According to a real estate survey done in 2013, Gachibowli has been listed as the next popular IT/ITES destination of the city after HITEC City in Hyderabad. This IT node has grown into a software hub for companies operating from Hyderabad. It is home to some of the top IT companies like Microsoft, Amazon, Accenture, TCS, WIPRO, Capgemini, Polaris and DLF Cyber City.

            With such a high concentration of software companies and being close to HITEC city, majority of the population is composed of cosmopolitan IT professionals, many of who have migrated from other parts of the country. Due to the employment generation potential of this locality, many working professional prefer staying in and around Gachibowli where they can also enjoy the benefits of the walk-to-work concept.

            Additionally infrastructure projects like Hyderabad Metro and Outer Ring Road that connect Gachibowli to the international airport have contributed to the demand for residential apartments in Gachibowli and apartments in Hyderabad.

            Gachibowli also offers top educational institutions for residents such as Oakridge International School, Kendriya Vidyalaya, Delhi Public School, Indian School of Business (ISB), International Institute of Information Technology (IIIT) and the soon to be opened Indus International Junior school. With projects like the Lanko Mega Mall planned in the future, Gachibowli will also grow into a recreational hub boosting the social infrastructure in the locality.

            Several builders in Hyderabad are offering 2BHK, 3BHK and 4 BHK apartments and villas in Gachibowli, most of them are ready for possession. Popular residential projects in Gachibowli include Aparna Sarovar Grande by Aparna Constructions, The Botanika which overlooks the picturesque Botanical Gardens by Universal Realtor, Mayfair villas spread across 27 acres of land by Pranit Projects etc. According to a recent reports, prices of homes range from Rs.3,700 to Rs.6,000 per sq. ft. while commercial properties are available from Rs.6,000 to Rs.14,000 per sq. ft. Property prices are likely to go up by about 20 per cent over the next few months.

            With political stability in place, growing economic opportunities and rising property prices, it is the right time to grab a share of the property pie in the upcoming locality of Gachibowli.


            Monday, March 3, 2014

            Will falling Rupee lead to investment in real estate sector in India by Non Resident Indians? How can property developers tap this?

            Author: Sachin Gupta | Find me on Twitter

            Data Source: Reserve Bank of India, Ministry of overseas affairs

            The Indian Rupee has fallen substantially against US dollar, and other international currencies. The value of one US dollar was Rupees 53.289 in Jan-2013, whereas in Jan-2014 it stood at 62.4768. It’s a fall of whooping 17.24% in one year, reaching a low of Rs. 69 odd.

            During the course of this one year, at one point of time in August 2013, the rupee stood at 66.5742 against 1 US $. If not for the measures taken by RBI and finance ministry, the free fall of rupee would have continued. Exporters were happy but importers were crying and this had an adverse impact on current account deficit because of India being a net importer country.

            Here is the sharp fall of rupee against US dollar in last 6 years.



            Now, the question to be asked is if the fall of rupee results in increase in NRI remittances to India? And the answer is resounding ‘YES’. According to World Bank report, in 2013 international migrants (NRIs) will remit $71 billion of their earnings back to India, highest among all developing countries. "With the weakening of the Indian rupee, a surge in remittances is expected as nonresident Indians take advantage of the cheaper goods, services and assets back home.

            Here is a look at what NRIs are remitting back to India on a yearly basis:





            Now, the second question to be asked is, where is all this money going to? Is an NRI buying Property in India, or investing in NRE/NRO accounts, or investing in capital markets, or bond market, or in entrepreneurial activities? Although, there is little segmented data with regards to the share of each asset class, a quick look at the RBI database highlights that NRE/NRO accounts are the preferred choice by Non Resident Indians.

            As per the RBI definition, Non-Resident Ordinary Rupee Account (NRO Account) may be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one million per financial year, subject to payment of applicable taxes. The limit of USD 1 million per financial year includes sale proceeds of immovable properties held by NRIs/PIOs. NRO (current/savings) account can also be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India. Whereas Non-Resident (External) Rupee Account (NRE Account) may be in the form of savings, current, recurring or fixed deposit accounts. Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney. Accrued interest income and balances held in NRE accounts are exempt from Income tax and Wealth tax, respectively.

            Whereas as per RBI definition; Foreign Currency Non Resident (Bank) Account – FCNR (B) Accounts are only in the form of term deposits of 1 to 5 years. All debits / credits permissible in respect of NRE accounts, including credit of sale proceeds of FDI investments, are permissible in FCNR (B) accounts also. Account can be in any freely convertible currency. Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B) deposit either to the depositors or third parties. The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. When an account holder becomes a person resident in India, deposits may be allowed to continue till maturity at the contracted rate of interest, if so desired by him.

            There could be various reasons for preference of NRE/NRO accounts by NRIs ranging from volatility in stock markets, risks involved with entrepreneurial activities, low yield on bond market, relative safe nature of NRE/NRO accounts, and poor execution by real estate developers of their projects.



            Why is real estate market in India not being able to attract NRI money to ease the current liquidity pressure? Our team debated on this issue and came out with 4Cs.



            Cost - No Escalations – costs escalations during the course of the project construction has been a key detriment for NRIs wherein it has been noted that real estate developers escalate the cost of the project arbitrarily on account on various parameters such as rising labor cost, regulatory cost, and raw material cost. Why do we still observe a builder asking for additional funds from buyers for parking slots, development charges, and so on when those were not included in the builder buyer agreement at the time of selling of the project inventory? Why can’t there be transparency as far as project pricing is concerned? There needs to be more transparency in builder-buyer agreements.

            Commitment to timeline – It is a common practice that developers sell their projects by claiming that they will deliver the housing units in 36 months at the time of agreement between them and the buyer. And yet, we have noticed umpteen numbers of cases where projects have been delayed by not just by 1 year but by more than 2-3 years. And in some cases, project delays have stretched to 4 years. Why can’t developers stick to their promise which they had made at the time of agreement? Or else, simply state the time it will take to develop the project (say 5 years). This matter needs to be addressed directly in contractual terms or through legislation.

            Construction quality – With NRIs living in different parts of the world, it becomes difficult for them to verify the construction quality of the project? What are the construction materials being used? Will the specifications and amenities be as per the builder buyer agreement? To overcome this, a 3rd party periodic construction quality check can be brought in.

            Carpet area to sale-able area ratios – maintain a transparent mechanism to calculate carpet area and sale-able area. This is a regulatory function, that authorities need to address. 

            Along with the 4 'C', An NRI also worries about who will manage or take care of his/her Property? Sumit Bhargava bought a 3 BHK in Gurgaon, but he had to relocate permanently to UK for his work. Since, there were no Professional Property Management Company in Gurgaon, Sumit eventually sold his apartment at lower rates.

            It is widely believed that if real estate developers can focus on these 4Cs, then there is absolute certainty that NRI money will flow in property sector in India at a scale unprecedented in real estate history of India and eventually it can ease the pressure of liquidity on real estate developers, and for that matter speculators, investors, banks, and other financial institutions that finance this huge economic activity.

            Are the developers listening??? Real estate developers can reach our team of professionals for advisory at nirrtigo@nirrtigo.com


            Data Source: Reserve Bank of India, Ministry of overseas affairs


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            Appendix – I
            As per the May 2012 estimates by Ministry of Overseas Indian Affairs, the population of Indians living abroad is 21.91 million. However, more than 50% of them live in high income countries and have been the major contributor to NRI money flowing in India. We present below the overall break-up of population of Indians living in high income countries:

            • United States of America (USA) – 2.25 million
            • United Kingdom (UK) – 1.5 million
            • United Arab Emirates (UAE) – 1.75 million
            • Singapore – 0.67 million
            • Saudi Arabia – 1.79 million
            • Malaysia – 2.05 million
            • Canada – 1 million
            • Australia – 0.45 million
            • And in other countries across the globe – 10.45 million

            Total Population of Indians living abroad– 21.91 million


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