Tuesday, April 22, 2014

Low rental values make Miyapur the best place to buy property in Hyderabad

From being one of city's peripheries, Miyapur today boasts of having many multi-storied buildings and a number of housing projects. Although the landscape of Miyapur has changed in the past few years, this neighbourhood is blinking on the real estate map thanks to its great location and connectivity to other localities like Kondapur, Madhapur, Bachupally, HITECH City and Gachibowli. Located about 22 kilometers northwest of Hyderabad, Miyapur is part of Greater Hyderabad. This locality is home to many lakes, providing a picturesque view to all its residents. Another factor that is improving Miyapur’s real estate is its commercial developments.

According to recent reports localities like L.B. Nagar and Miyapur are considered to be the best places to buy a house. Due to low rental values, Miyapur is slowly becoming a destination for builders to create affordable housing options for potential buyers. Apart from these, the vicinity has a number of multi-storey apartment, independent houses and many residential plots. One is definitely spoilt for choice every time they decide to buy a property here. With the locality having all basic amenities like healthcare centers, schools and entertainment zones, a house for sale in Miyapur could cost anywhere between Rs. 2,600 to 4,000 per sq ft.

Being a developed industrial area, Miyapur is also a home to a number of government offices. Bharat Sanchar Nigam Limited, the bus body building unit of Andhra Pradesh State Road Transport Corporation and the Department Registration and Stamps for Miyapur has their offices in Miyapur. Because of these establishments, the land prices in Miyapur are all set to skyrocket in the near future. If buying is not your option, you could always opt to rent a property. Apartments in Miyapur for rent can cost anywhere between Rs. 8 and 11 per sq ft.

With its excellent connectivity, Miyapur has a number of significant roads that keeps this locality connected with the city. Hafeezpet Roads, Kukatpally Road and the upcoming Yellamma Banda road are driving the realty sector here. Apart from these internal roads, the Outer, Inner and Regional Ring Roads along with the state and national highway helps connect Miyapur to other sections of the state, making this locality a hotspot for builders and investors.

This is a guest post by Sulabha. Want your content to be published at NirrtiGo, contact us at nirrtigo@nirrtigo.com

Friday, April 18, 2014

Urban development authorities in India

Author: Sachin Gupta | Find me on Twitter

Real estate development within a city is an organized process wherein development authorities play an important role. The authority prepares the master plan for the city keeping in mind the population growth, employment opportunities, industrial growth, and educational activities.

At the same time, development authorities provide housing for middle income and low income strata of the society. DDA has developed many housing societies in Delhi. The development authority also acquires land from land-owners for the purposes of housing, industrial set-up, recreational set-up, and educational institutes. The whole idea is to prepare the urban map of the city keeping in mind future projections.

In recent times, development authorities across India have launched various housing, plotted, industrial plot schemes. People from all walks of the society participate in these schemes for their housing or business needs. In order to make sure that you do not miss on these schemes by development authorities, we have put together a comprehensive list of development authorities across Indian cities.

Visit the websites of these development authorities to keep an eye on new schemes.

Find below.

Have any Questions?

Tuesday, April 15, 2014

Don’t blame the ‘Babus’ of town planning departments and city development authorities

Author: Sachin Gupta | Find me on Twitter

Another one bites the dust! Well, we are talking about the latest scam or scandal or irregularity or blunder or whatever you may call it in real estate sector in India. This time, it’s the Supertech’s Emerald Court project in Sector 93-A Noida on Noida – Greater Noida expressway.

What happened? The project was started in 2006 and permission for 15 towers of 11 storeys each was given. However, in 2009, 2 towers namely ‘Apex Tower’ and ‘Ceyane Tower’ of 40 storeys each were added to the project. That means addition of 857 new apartments.

So what? It all looks fine, where is the irregularity? Well, these two new towers violate the UP government’s 2010 apartment act. The 2010 apartment act which was being designed by ‘Babus’ says that builder should take permission from existing buyers before construction, and should also follow the maximum density norm (maximum number of people in one acre), FSI norm, minimum distance between two towers, etc.

So, were these guidelines of the ‘Apartment Act’ flouted? Yes, that seems to be the case and therefore Allahabad High Court has ordered to demolish these 2 towers of 40 storeys each.

So, whose fault is it primarily? Builder says, we will appeal in the Supreme Court against the judgment because project is legal and has all the necessary approvals from the Noida Authority? Whose fault is it then? Is it the fault of ‘Babus’ of Noida Authority? Nah….it can’t be, they work hard to make sure that whatever they design (2010 Apartment Act) is implemented by hook or crook. Then whose fault is it? It’s the customer’s fault you stupid…why did they buy these apartments? They should have done their due-diligence….isn't it? Hmm…..

Well, on a serious note, time has come for Courts to look at the role of the ‘Babus’, and if necessary spank them at their back side severely for allowing illegal construction.

Customers can not be taken for a ride by colluding builders and authorities. The babus who are supposed to protect the interests of home buyers are busy amassing tens or hundreds of crores of illegal property for themselves by taking advantage of their positions.

Since, 2011, these scams have been a common phenomenon:

In 2011, DLF’s Belaire project in Gurgaon met the same fate wherein charges of project delay, illegal construction of additional floors were raised by the Resident welfare association of the project.

In 2012, Noida Extension fiasco came to limelight wherein farmers agitated against the authorities for acquiring land at throw away prices and also changing the land use from industrial to residential. The matter was resolved after courts intervened in and farmers were compensated adequately.

In 2013, we had Campa Cola fiasco in Mumbai wherein illegal floors were built in late 1980s and were ordered to be demolished in 2013.

And now in 2014, we have the Supertech Emerald Court matter in Noida wherein again the court has ordered demolition of illegal towers.

So, will this continue in coming years? Will the ‘Babus’ pay attention to the sufferings of home buyers? Will the ‘Babus’ stand up and implement the laws and acts in all fairness? We will see….But, thankfully for the common man; all is not lost as long as Courts discharge their duties.

Greed on the part of the property developer is ubiquitous, but what explains greed of these Babus who in reality are supposed to keep a check on the greed of developers???

Have any Questions?

Friday, April 11, 2014

Foreign Direct Investment (FDI) Flows in real estate and housing sector in India

Author: Sachin Gupta | Find me on Twitter

Foreign Direct Investment (FDI) is a good indicator of a country’s attractiveness to global investors. India has been able to attract substantial amount of FDI into various sectors such as services, construction development, telecommunications, computer hardware & software, drugs & pharmaceuticals, chemicals, automobile, power, metallurgy, hotel & tourism. Significance of Foreign Direct Investment can hardly be underestimated and therefore government of India has devised policies which have attracted FDI into various sectors mentioned above. Here is a quick look at the flow of FDI into India since April 2000.

It can be noted from above chart that FDI flows into India jumped from financial year 2006-2007 on account of policy initiative by the government which permits FDI under the following forms:

  1. Financial collaborations.
  2. Joint ventures and technical collaborations.
  3. Capital markets via Euro issues.
  4. Private placements or preferential allotments.


The FDI Equity flow in housing and real estate sector was 8.9% in financial year 2008-2009, 11% in financial year 2009-2010, 5.3% in financial year 2010-2011, 8.9% in financial year 2011-2012, 5.9% in financial year 2012-2013 of total FDI equity flows into India. Overall, the sector has attracted a total of 23046.61 US $ Million from April 2000 to January 2014. The total FDI equity flows into India during this same period has been 212153 US $ Million. In other words, from April 2000 to January 2014, the construction development sector including of townships, housing, built-up infrastructure has attracted about 11% of total FDI equity inflows.

In 2005, India relaxed the norms for FDI inflows into real estate and housing sector by allowing Foreign Direct Investment under the automatic route which means no prior permission is required for approval either from Government of India or the from the RBI. The policy permits FDI up to 100 per cent under the automatic route in townships, housing and construction development projects and hospitality sectors such as residential complexes, shopping centers, malls, multiplexes, Cineplex, commercial offices, hotels/service apartments, resorts, hospitals, educational institutions.

Here are the detailed guidelines for FDI in Real Estate:

Guidelines for fdi in real estate in india from Green Realtech Projects Pvt. Ltd

Can the sector see increased FDI in near future?

Have any Questions?

Tuesday, April 8, 2014

Will real estate stocks recover after elections?

Author: Sachin Gupta | Find me on Twitter

Real estate S&P BSE realty Index was introduced in July 2007 at the height of real estate boom in India. The S&P BSE realty Index was hovering at 7019.88 on 17th August 2007, whereas the S&P BSE Index was 14141.52 on the same day. However, by the end of 2007, the S&P BSE realty Index grew by whopping 81% to reach at 12727.42, while S&P BSE Index grew by 43% to reach at 20286.99.

And after growing in initial few months of 2008, the indices fell sharply in 2008. Realty index fell by 82%, whereas BSE Index fell by 52% in 2008 because of global financial crisis which was triggered by US sub-prime crisis.

Here is a history of S&P BSE realty Index compared with the S&P BSE Index:

Fall of real estate stocks
The BSE Realty Index stands at 1468.4 on 31st March 2014. The fall has been substantial and retail investors are shunning from buying the stocks of realty companies. Among 12 Indices such as BSE Realty, BSE Power, BSE Metal, etc, the BSE realty has been the worst performer. In 2013, the BSE Realty Indices fell by 32%. What could be reasons for under-performance of real estate stocks? We list down the reasons:

Reasons for fall

    • Rising debt levels
The debt on balance sheet of 11 listed firms in BSE Realty Index stood at Rs. 42000 crore till 31st December 2013. High debt levels erode the profitability of firms because major chunk of income generated goes in servicing of the debt. And which in turn, puts strain on sustainable growth of the firm.
    • Falling demand
Demand from home buyers has remained low on account of lack of job creation and high inflation. Companies have put off or slowed down their investment plans and therefore job creation has been low. At the same time, Inflation has put off the investment by home buyers due to falling savings rates. Unless, inflation moderates, the sector will continue to see weak demand from home buyers.
    • High interest rates
Interest rates have remained high for last 2 years resulting in high cost of borrowing for home buyers and it’s not surprising that transaction volumes have come down resulting in drop in sales of realty companies.

Recovery in last month (March 2014)
However, March 2014 witnessed some sort of recovery in real estate stocks.

Will the recovery continue? There is all the likelihood of it and post elections, economic recovery is expected. This in turn could result in revival of realty sector on account of the following:
    1. Improved GDP Growth
    2. Housing prices have corrected and it presents buyers an opportunity to buy the home now
    3. Moderation in inflation
    4. Reduction in interest rates

BSE Realty Index comprises of stocks of following companies:
Anant Raj, DB Realty, DLF, Godrej Prop, HDIL, Indiabulls Real, Mahindra Life, Oberoi Realty, Omaxe, Phoenix Mills, Prestige Estate, Sobha Developer, Unitech.

What do you think?

Have any Questions?

Friday, April 4, 2014

Why National Housing Bank’s move to allow lenders (banks and housing finance companies) to give 90% of property value as home loan can actually be detrimental?

Author: Sachin Gupta | Find me on Twitter

Recently, country’s National Housing Bank floated a proposal that seeks to allow banks to lend 90% of property value to home buyers. According to the proposal, people seeking home loan above Rupees 20 Lacs can avail 90% of property value as home loan from banks and housing finance companies. However, these loans need to carry mortgage guarantee cover from companies registered with RBI. Lending institutions (Housing Finance Companies) need to enter into a contract with mortgage guarantee companies when the loan application is originated.

With mortgage guarantee companies coming into the picture, there is widespread belief that it will help in reducing the default risk. And at the same time, it can help in securitization of home loan portfolios. Now, isn't this what is practiced in USA? Where, one can avail 100% of property value as home loan and that loan is guaranteed by Federal Reserve supported fannie mae and freddie mac. When a loan is guaranteed by State’s agencies, investment bankers jump in and create a portfolio of home loans and securitize it and sell it to investors. These investors get returns on installments generated from home loan buyers.

The only difference it seems in Indian context is that 90% of property value is given as loan as against 100% of property value in USA. The other difference is that in US, person availing the loan is not personally liable to pay in case of a default, but in India, person will be liable to pay the amount in case default happens.

What happened in USA?
We all know what happened in sub-prime crisis in USA in 2008. When property prices began to fall people simply walked away by putting the house key on the bank’s table and that triggered a financial crisis. Read more about the US sub-prime crisis here. We in India do not want to repeat that mistake. What can happen? Let us think, you buy a property worth Rupees 1 crore and avail 90 Lacs in Home loan with about 90K installment every month for 20 years. Now, due to slowing down of economy as is the case today, you are not able to pay those EMIs. What will bank do? Take possession of your house and sell it to claim their investment in that house. We all know, Banks will be left with no choice but to sell the house in distress in tough economy thereby making a loss. However, banks have already sold this portfolio to investors and the home portfolio is already guaranteed by mortgage Guarantee Company, who is registered with RBI. So, who bears the brunt of slowing economy, yes, mortgage Guarantee Company, just like fannie mae and freddie mac did in USA. So, ultimately, the system will be saved with tax payer’s money.

One can argue that we are stretching the matter too far, yes, we are stretching the argument, but there is ever so slight possibility of such a scenario happening in near future. Hope, policy makers will consider that scenario before bringing in this new policy. As we see today, real estate sector is in doldrums and property prices in India have in fact fallen or remained stagnant. Will people who have bought the property stay invested when returns from property investment are actually less than what they will be paying to the banks against home loan? If the returns from property investment stay low for several years, then we might see the US sub-prime situation repeating in India with the implementation of new policy.

As a matter of fact, Indians banks were praised in 2008 for being conservative. Looking around the globe, Chinese banks have a limit to what they’ll lend for housing. Currently, buyers need to put between 20% and 30% down on the value of a house before securing a loan. While in Singapore it is 80% for first home and 60% for second home. Why are Indian policy makers raising it to 90% when we do not have huge scale infrastructure plans? Isn't the whole move going to put pressure on existing cities, further increasing the property prices?

OK, let’s think of the consequences of this new move

  • More people will be able to buy a house

Of course, the move is aimed at encouraging people who are sitting on the fence to buy the house. Till now, it took people some time to arrange for the 20% of the property value. But with this new move, all they need to do is arrange for Rupees 10 Lacs to buy a Rupees 1 Crore house.

  • Revival of real estate sector demand

With increased sales velocity of homes, the demand for overall real estate sector can pick up. The industries such as cement, steel will also see revival in demand. Overall, the move can boost the economy.

  • More speculators will come into the picture

With only 10% of property value to be paid by the investor, it will encourage property flippers to take advantage of the new policy. One would simply invest in an under construction project and exit as soon as the prices have risen substantially. Can government bring in measures wherein property speculation is controlled? Can government differentiate between first time home buyers and second time home buyers as is the case in Singapore? It seems unlikely. Who will suffer? The real property buyer will suffer due to higher property prices.

  • Without new cities or infrastructure, it might increase the property prices further

Do we have plans in place for city infrastructure development? Or build new cities? Unless, those plans are in place, the new move will actually put pressure on the existing cities and property prices will further increase with the new move. Simple because, more people including the speculators will purchase a house in the existing cities.

What we instead need?

  • Securitization
Surely, securitization is the need of the hour. But it can be brought in at existing 80% Loan to Property Value (LTV) ratio. More on, how securitization can help in housing finance in India?

  • REITs
Real Estate Investment Trusts are important and we need them in India. REITs will encourage retail investors to participate in property markets who till now cannot afford to invest in real estate. REITs can provide the necessary financing for realty sector which it needs today. Find more about REITs in India here.

  • Rent Laws
The government needs to reform the Rent act which is outdated. There are large numbers of people in India who own multiple properties and do not bring that stock into the market because of the fear of illegal possession of their properties by the tenants. Reforming the rent laws will revive the rental market and that will bring some sanity to the property prices.

  • Policies to differentiate between first time home buyers and second time home buyers

Government is right in encouraging home ownership. But differentiate between first time buyers and speculators. It should be quite simple to track at registrar’s office and by making it obligatory for real estate developers to disclose the details of their buyers to a central authority. If the 90% Loan to Value (LTV) policy has to be brought in, it should be for first time home buyers and not for property speculators.

what do you think??

Have any Questions?

Thursday, April 3, 2014

Why should we all rate and review real estate and housing projects? Your opinion matters!

Author: Sachin Gupta | Find me on Twitter

Sumit is working in an IT company for the last 12 years. He got married 6 years ago and having been relocated to many parts of the country in these 12 years, he finally decided to settle down in Bangalore. With this in mind, he started hunting down for the house within his budget. After some 4 months of home hunting, he zeroed in for a developer project in an upcoming region within Bangalore. He signed in on the sale purchase agreement and made the booking amount. He booked an 1800 sq ft apartment in January 2008; he was looking forward to moving in by late 2011, as promised by the builder. But even after four years of paying the entire sum, the developer seems in no hurry to hand over the possession of Sumit’s house.

"I had aggregated mine as well as my wife’s savings to purchase this house. The company was to hand over the possession by December 2010, but even by January 2011, they had not begun any construction activity on the proposed site," he says.

Sumit is not alone. There are countless such cases where buyers are still waiting for their homes and have not received a single rupee as compensation from the builder. The wait has been particularly tough for those whose EMI clock has begun ticking.

There have been cases where cost of home has been unjustifiably escalated during the construction stage; possession has been delayed; short changing on carpet area and super area of the home; sub-standard amenities; and so on.

So what is it that is plaguing the industry?
Why does this happen? Why don’t builders deliver on their commitments as stated in the sale purchase agreement? There are many reasons ranging from lack of demand, paucity of funds for the developer, delay in getting regulatory approvals, unethical practices, greed, etc.

Steps taken to cure the problem (At Government and private sector level)
Can the situation be resolved? There have been efforts made by developer community. An industry body has come up with a code of conduct for its 6,000 members to 'maintain the honor and dignity of developers, promoters and builders'. The government has proposed to form an industry watchdog “Real Estate Regulatory Act”. However, will these steps solve the issues? There is cynicism among public and experts alike about these remedies.

What can we do as a community? Why should we rate and review the real estate and housing projects?

  • We seek advice of others when purchasing a smart phone, laptop, car, and many other commodities. For many buyers, buying a home is a lifelong commitment wherein one has to pay EMIs for several years. Therefore, it makes sense to share and discuss the details about a realty project before making a purchase.
  • Discussing at an organized online platform goes a long way in making an informed decision wherein people can express their opinions in form of reviews, ratings, common causes, and so on. The whole system would act as a preliminary home search tool wherein good developers are segregated from the bad ones.
  • People who have bought the property or have the knowledge of real estate sector can rate and review their housing project. This will not only help future buyers but also put a check on the current real estate practices.
  • Writing a review and rating a project on various parameters such as location, floor plan, amenities, etc. will clearly help in differentiating the good project.

How to rate and review real estate projects in India?

Step 1: Visit NirrtiGo

Step 2: Find your project by typing in builder name, or project name, or search by locality

Step 3: Click on ‘Rate this project’ button

And then simply write the “Title of the review” and “detailed review including your recommendation”. At the same time, rate the housing project on various parameters such as location, floor plan, amenities, specifications, value for money, ratio of carpet area to sale-able area, etc.

So, did you rate and review your project??

Have any Questions?