Wednesday, February 24, 2016

Current state of real estate sector in India and why investment in real estate in Uttar Pradesh can prove to be fruitful for investors

By: Sachin Gupta | Twitter

Current state of Real estate in India

Real estate sector in India is going through a rough phase. Demand is weak because of variety of reasons such as high interest rates, delivery issues, lack of connectivity, lack of social infrastructure, and high home prices. While on one hand, in urban areas alone across India, there is a shortage of about 20 million homes. Most of this housing shortage (about 95%) falls in the affordable housing category. However, on another hand, there are about 12 million homes that are ready but are not occupied due to lack of connectivity and lack of social infrastructure such as schools, colleges, hospitals. In tier 1 and tier 2 cities, project delays have also contributed to the slowdown in the sector. Home buyers are not willing to put their hard earned money in under construction projects because of uncertainties involved as far as completion of project is concerned. This has created a vicious cycle wherein buyers are sitting on the fence and developers are holding on to the prices, thereby, there is no liquidity in the sector.

Project delays and significance of real estate bill

As per Assocham study dated October 2015, over 75% of total 3540 projects across India have remained non starter. This means about 2300 projects have failed to get going. And about 1000 projects have registered significant delays of approximately 33 months. The total value of these projects across all Indian states is over Rupees 14 Lakh crores. Therefore, Government would do well to pass the real estate regulatory bill in the current budget session. The bill will give much needed confidence to the home buyers and safeguard their interests. This in turn, will build the momentum for steady demand and cash in hands of the developers to complete realty projects.

States that are going to benefit

Once consumer confidence picks up in the sector on the back of real estate bill and falling interest rates, the demand momentum will benefit many states across India. Of the total value of Rupees 14 lakh crores in outstanding investments attracted by real estate sector across India, Maharashtra accounts for 21%, Uttar Pradesh accounts for 14%, Gujarat accounts for 13%, Karnataka accounts for 12%, and Haryana accounts for 8%, and remaining 32% by all other states.

Of all the states, Uttar Pradesh is better placed to reap the benefits of demand momentum because of following reasons:

  • Outstanding Investment potential
As highlighted above, Uttar Pradesh accounts for 14% of total outstanding investments attracted by realty sector. Which means about 1.96 Lakh crore (14% of Rupees 14 Lakh Crore). Passing of real estate bill, falling interest rates, improved GDP growth, and focus on urbanization will actually help the state of Uttar Pradesh in making this outstanding investment a reality.

  • Affordable housing
Cities such as Ghaziabad, Noida, Greater Noida, and Meerut in Uttar Pradesh are part of the expanded NCR (National Capital Region). While metros across India have seen surge in property prices and therefore making them out of reach of a common man. These cities in Uttar Pradesh offer plenty of affordable housing options. Greater Noida West (earlier known as Noida Extension) is one such example, where 1.6 Lakh housing units are under various stages of construction and houses in this micro market are priced in affordable range of about 3000-3200 Rs/Sq.Ft. New micro markets in Ghaziabad such as Raj Nagar extension, crossing republic, New Indirapuram also fall in the affordable housing category.

  • Improved infrastructure
The infrastructure in these cities of Uttar Pradesh has really come of age. Connectivity to national capital by road, or by rail is excellent. Metro Rail is already connected to Noida, Ghaziabad. Moreover, plans to expand Metro rail to Greater Noida and Meerut have been finalized. Recently, central government passed the development of 150 kilometers (93 mi) controlled-access expressway, connecting Delhi with Meerut via Dasna in Ghaziabad in India. This will further boost the realty sector in the state of Uttar Pradesh. Therefore, it provides ample opportunities for end-users and investors alike to invest in the growth story of realty sector in Uttar Pradesh.

In addition to physical infrastructure, social infrastructure in these cities of Uttar Pradesh has also leapfrogged. Schools, universities, hospitals, recreational centers have mushroomed in these parts of Uttar Pradesh.

Therefore, combining all these factors and the focus on urbanization, one can reap great dividends by investing in real estate sector in the state of Uttar Pradesh.

Data Source: Assocham, National Housing Bank

Monday, February 22, 2016

10 reasonably-priced property markets of India

With real estate prices shooting up, people are wondering which places have affordable properties. Check out some affordable property markets in India.

The metropolitan cities of India are considered to be the center of the country’s economy and cosmopolitan culture. They draw the most demand for providing better opportunities, infrastructure, and standard of living. Due to rapid urbanization, these cities are facing the challenges of high property prices, pollution, and traffic issues. Infrastructural developments support towns and cities with emerging or growing sub-markets. Here are some cities that offer real estate at a lower budget.

  • Hyderabad, Telangana

After the slump due to the global recession, Hyderabad’s real estate market is all ready for an upswing. Due to a thriving economy and dynamic workforce, along with redevelopment of plots in Shankarpally, the city is turning out to be a buyer’s market. People are witnessing a growing demand for residential, commercial, and retail plots in Hyderabad. Compared to other cities, Hyderabad is relatively affordable. Also, due to political uncertainty, land prices in Hyderabad have remained stable.

  • Pune, Maharashtra

Today, a blend of Pune’s manufacturing and service sectors make it a perfect economic powerhouse. Many players are entering this city with excellent expensive projects. New entries can also be seen making their way with affordable housing segment. This is where the major demand lies because the budget is far more attractive to investors.

  • Navi Mumbai

Real estate market in this area and other surrounding areas have shown impressive growth because of the planned approach taken during development. While property prices have become increasingly unaffordable in Mumbai, Navi Mumbai still provides multiple options.

  • Jaipur, Rajasthan

Jaipur is a fast-developing city that has progressed tremendously on residential and retail fronts. It is one of the most important real estate destination of North India. Due to its tourist attraction, the government too is taking a keen interest in developing infrastructure in this region.

  • Surat, Gujarat

Known as the diamond capital of the world, Surat is a famous city in Gujarat. It also gained recognition for being the cleanest town in India. Improving infrastructure helped modernize the city. The excellent road network comprises of well-constructed flyovers and wide roads.

  • Ghaziabad, NCR

Ghaziabad is slowly rising as an emerging residential neighborhood of NCR, which has a high supply of residential properties in the budget of 30-50 lakh. The city boasts of a large supply of ready-to-move-in properties by reputed developers. Residential corridors are widely attracting a large number of investors and end-users due to the relatively available housing units at affordable price.

  • Nagpur, Maharashtra

Though Nagpur has varied climatic conditions, it is a fast-growing city. Set to be the next IT hub of Maharashtra, real estate investors are carefully monitoring its success. Right now it is a great deal of real estate development, so, investors can dare to invest here.

  • Kochi, Kerala

This place has a modern and metropolitan lifestyle. It is known to be a smart city and townships in kochi have significantly increased demand for real estate. Today, the residential market of Kochi is dominated by affordable housing segment.

  • Coimbatore, Tamil Nadu

This city has gained momentum as a preferred destination for IT/ITes. With a proactive government in power, Coimbatore's property market has seen an upward push in demand for residential units in the core areas of the city such as R S Puram, Avinashi Road, and Race Course, which are considered posh areas.

  • Ahmedabad, Gujarat

Ahmedabad city is a prime example of fast-paced development with huge investments pouring into the state and advanced infrastructural development in the form of bullet trains.

These property markets are said to have a lot of potential when it comes to affordable housing. Based on one’s preference and budget, you can purchase a home or commercial property in any of these cities.

This is a guest post by Deepak D.Yewle

Monday, February 15, 2016

Gurgaon Master Plan 2031

Master plan 2031 for the city of Gurgaon has been conceived keeping in mind the projected population. Till 2012, Gurgaon Manesar urban complex had been developed to accommodate a population of 22 Lacs. However, by 2031, the city’s population will rise to 42.50 Lacs. Therefore, an additional area of 22957 hectares has been added in the form of urban area to accommodate an additional population of 20 Lacs by 2031. According to 2031 master plan, total land use in Gurgaon Manesar urban complex will be 32842 hectares.

  • 16010 hectares of total land use has been reserved for residential purposes in master plan 2031, out of which an area of 8000 hectares has already been developed.
  • 1616 hectares has been reserved for commercial purposes in master plan 2031, out of which HUDA has developed 480 hectares of land.
  • 4613 hectares of total land use has been reserved for industrial use in 2031 master plan, out of which an area of 1246 hectares has already been developed.
  • 4420 hectares of land use has been reserved for transport and communication.
  • 626 hectares of land use has been reserved for public utilities.
  • 2035 hectares of land use has been reserved for public and semi public use, out of which an area of 135 hectares has already been developed.
  • 2775 hectares of land use has been reserved for open spaces.
  • And special zone (114 hectares) and defense land (633 hectares) will take the remaining part of total land use.

Below you can find the high resolution Gurgaon Manesar Urban Complex Plan for 2031.

Source: Haryana Government - Town and Country Planning

Monday, February 8, 2016

Pradhan Mantri Awas Yojana – Housing for All by 2022

Since the new central government under the leadership of Prime Minster Narendra Modi took charge of governing the country, various initiatives have been announced. Some of the initiatives are ‘Make in India’, Digital India, Skill India, Start-up India, smart cities, Housing for all, etc. Work has started on all these initiatives and deadlines have been set for each program.

Housing for all by 2022 is an initiative under which every household will have pucca house with 24x7 electricity supply, water connection, and toilet facilities. The mission started from 17th June 2015 and will be under implementation in 3 phases till 31st March 2022. The 3 phases are:
  1. Phase 1 – Beginning from April 2015 to March 2017. Phase 1 will cover 100 cities states/UTs as per their willingness.
  2. Phase 2 – Beginning from April 2017 to March 2019. This phase will cover another 200 cities.
  3. Phase 3 – Beginning from April 2019 to March 2022. This phase will cover another 200 cities.

In all 500 Class I cities would be covered under this ‘Housing for all’ mission. Each house will have a carpet area of about 30 square meters. However, states/UTs will have the flexibility to determine the size of the house and basic amenities.

The mission will be implemented using following 4 methodologies:
  1. In Situ slum redevelopment
  2. Affordable housing through credit linked subsidy
  3. Affordable housing in partnership with public sector or private sector
  4. Subsidy for beneficiary led individual house construction

Find below the detailed ‘Housing for all by 2022’ report:

Source: National Housing Bank