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LET'S CONNECT

April 2015

EDITOR Menka Shivdasani menkaipieditorial@gmail.com CONSULTING EDITOR Raju Kane EDITORIAL

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A TASTE OF HOME

n a world where the Internet has taken over almost all aspects of life, and there are dozens of property websites, what role can a print magazine devoted to

question you are asking yourself as you hold the inaugural issue of India Property Insider, a new monthly publication from Young Media (www.weareyoung.in). no matter how much information – and misinformation – streams out about Indian real estate, there can never be a substitute for the solidity and substance of a print publication, which has information that comes to you from authentic sources. While the Internet can often provide data that is confusing, a publication like the Insider prove to be a trusted friend and advisor – a credible source you can turn to when you are about to invest a substantial sum of your hard-earned money in an Indian Insider is brought to you by people who have been deeply associated with the growth of the real estate industry for more than two decades, and have seen it close up through all its ups and downs. We bring not only our own insights and understanding to the publication, but

also a host of expert views from those who have actually

CONTRIBUTERS Archana Sinha Shilpa Vyas Saee Bandekar Jessu John PUBLISHER Wilfred Fernandes wilfredf@weareyoung.in MEDIA DIRECTOR Anup Kotekar anupk@weareyoung.in

up-to-date information. As a non-resident Indian (NRI), you, or your family members, probably already own property in India. Traditionally, this is one asset class that has seen and comfort of providing a roof over your head. Over the last decade, buying property in India has proved to be an even more satisfying decision, with the range of options available, both in the better known destinations, as well to suit all budgets, and all lifestyle needs in locations you may not have heard of two decades ago, but which have become prime localities today. It’s a phenomenon that is being repeated across the country, from Mumbai to Mysore, Kolkata to Kerala, and Vadodara to Varanasi, just to name a few.

and rewarding in every sense of the term. Join us, and experience an India you may have never known!

ADVERTISING Jitendra Boricha - Business Head jitendrab@weareyoung.in Richard Mendes - Associate Sales richardm@weareyoung.in DESIGN & INOVATION Dallas Fernandes - Creative Head Sachin Rane - Art Director DESIGN & LAYOUT Shilpa Dinesh PRINTING & DISTRIBUTION PARTNER G N Media, UAE.

Printed and published by Wilfred Fernandes on behalf of Yo Sports Management Pvt. Ltd. Published at Young Media from 506, A-wing, Western Edge II, Western Express Highway, Borivali (East), Mumbai 400 066 and Printed at Al Nisr Publishing Press, Sheikh Zayed Road, Dubai, UAE. Editor Menka Shivdasani India Property Insider takes no responsibility for unsolicited photographs or material. All photographs, unless otherwise indicated are used for illustrative purpose only. Views and opinions expressed in the articles are of the Authors/subjects and do not While the editors do their utmost to verify information published, they do not accept responsibility for its absolute accuracy in matters which may be sub judice.

MENKA SHIVDASANI Editor

offers is being provided for the reference of readers. However, readers are cautioned to make inquiries and take their decisions on purchase or before investing after consulting experts. India Property Insider holds no responsibility for any decision taken by the readers on the basis of information provided herein. Subject to Mumbai jurisdiction only.

For business enquiries and to know more,

Call: +91 022 28700303/2299/2277 or write to us at ipi@weareyoung.in www.indiapropertyinsider.in

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CONTENTS

Inside Insider

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INSIDER REPORT: TOP 20 EMERGING CITIES A Sm@rt Cities Council study on promising destinations

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SNAPSHOTS: SENTIMENTS ON THE RISE A JLL report on how the Indian tortoise could overcome the Chinese hare

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INSIDER INSIGHTS : A MARKET FOR DISCERNING BUYERS Black Olive Ventures on how the real estate sector is moving towards maturity

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A CROSS-COUNTRY JOURNEY Some key markets of South, West, North and East India

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CITY FOCUS: BENGALURU BOOMING WITH PROMISE Jessu John on Bengaluru as an investment destination

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CITY FOCUS: NASHIK BECKONS! Saee Bandekar on Maharashtra’s third largest city

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INSIDER VIEW: REAL ESTATE IS A REWARDING ASSET Sanjay Dutt on growing metro markets

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THE INSIDER STORY: NOW IS THE TIME TO BUY PROPERTY IN INDIA The economy is poised on the brink of sustained growth, says Menka Shivdasani

April 2015

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INFRASTRUCTURE: MUMBAI EXPANDS ITS METRO PLANS The ambitious Metro 3 project will transform the city

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CONVERSATIONS: ‘OPT FOR UNDER-DEVELOPED REGIONS’ Dubai-based Dr Ram Buxani has some advice for home buyers

THE INSIDER INTERVIEW: A WINNING PROPOSITION Vikas Oberoi on investing in Indian real estate

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INSIDER FINANCE: SOME GUIDELINES FOR PROPERTY PURCHASE IN INDIA Saurabh Gupta of IIFL Realty on funding

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TAXATION: TAX FACTS FOR NRI INVESTORS Nishith Desai Associates on regulatory frameworks

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INSIDER ADVICE: SEVEN FACTORS TO CONSIDER BEFORE YOU BUY CRISIL’s Anurag Jhanwar offers a checklist

Coldwell Banker on choosing a property

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FAQS: TEN FACTS EVERY NRI MUST KNOW CA Ramesh Prabhu answers some common questions

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PROJECTS ON OFFER Some options around the country

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PROPERTY PRICES Average Residential Apartment Rates

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PROPERTY TERMS: JARGON SIMPLIFIED Speak the language

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We'd Like to Hear From You! India Property Insider would be happy to hear from readers. Write in to ipi@weareyoung.in with your comments, suggestions, experience of buying property in India and anything else that you would like to share. Send in your responses today!

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THE INSIDER STORY

April 2015

NOW IS THE TIME TO BUY PROPERT Y IN INDIA With the economy poised on the brink of sustained growth, now is the best time to acquire real estate in a country you have always known as home, says MENKA SHIVDASANI

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here is one issue that always worries investors – how does one time the market? What is the right time to enter, and to exit it? This concern is even greater when the asset class is as well discussed but little understood as real estate. Adding to this dilemma is the conflicting news emerging out of India about the sector. On one hand, property prices seem to be reaching the stratosphere; on the other hand, there are reports about unsold inventory piling up. So what should an investor do? Is it the right time to buy property in India or should you cash out your investment instead? Any investment analyst will tell you that people who try to “time” the market almost invariably end up losing. The key is to ignore short-term fluctuations and look at the fundamentals. The legendary investor Warren Buffet once said that not only does he not bother about current prices of his holdings, but because of their intrinsic value, he wouldn’t be concerned if the markets shut down and there was no trading for ten years. This same logic is even more important when it comes to 6

real estate — by its very nature an asset class in which one has to stay invested for the long term. And on fundamental analysis there is only one answer; this is the right time to buy in India, as the economy is poised on the brink of sustained growth.

THREE REASONS FOR OPTIMISM Three factors underscore this sense of optimism. Experts ranging from the International Monetary Fund (IMF) and World Bank to analysts at financial institutions like Goldman Sachs have predicted that India will soon emerge as the world’s fastest growing economy. In fact, according to the IMF, this could happen as soon as 2016. The economic policies of the Narendra Modi government, including its ‘Make in India’ initiative, are said to be the reason behind this economic growth. The second factor is the initiative to develop 100 smart cities. This is expected to channelise the coming wave of urbanisation into smaller, more modern and more manageable urban agglomerations. Smart cities are defined as those that offer decent living options; a high quality of

life, comparable with any developed European city; costefficient physical, social and institutional infrastructure such as adequate and quality water supply, sanitation, 24 x 7 electric supply, clean air, quality education, cost-efficient health care, dependable security, entertainment, sports, robust and highspeed interconnectivity, and fast and efficient urban mobility, among other things. The third cause for optimism is the Modi government’s intense focus on infrastructure. From power to roads to sanitation, new policies are being implemented, and bottlenecks removed to enhance investment and ensure speedy completion of projects. A combination of these factors augurs well for the Indian real estate markets.

THE PUSH TOWARDS INFRASTRUCTURE If the plans being announced by the central and state governments fructify, India’s infrastructure is expected to see a major boost over the next decade. On the anvil are major expressways coming up in states as diverse as Uttar Pradesh and www.indiapropertyinsider.in | A

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Tamil Nadu and massive investments in Metro rail networks in practically all major cities in the country. New dedicated industrial corridors are being set up linking most major cities – Mumbai-Delhi, Delhi-Kolkata, Chennai-Bengaluru, to name a few. These will not only upgrade the infrastructure in these regions, but also create industries and jobs. To fund some of these projects, as the finance minister mentioned in his budget speech, the government is looking at innovative financing options like bullet bonds. State-level initiatives are also gaining momentum. In Maharashtra, for example, Chief Minister Devendra Fadnavis personally heads a newly set up ‘War Room’ to remove bottlenecks and speed up key infratructure projects. India still faces many challenges, no doubt, but it is acutely aware of them and is dealing with the obstacles head on. No wonder then, that a leading developer like Niranjan Hiranandani, managing director, Hiranandani Group, believes it is the right time to buy property in India. “There will be good returns in three to five years,” he says. With his Hiranandani Communities creating Signature, an information technology and financial centre at the Gujarat International Finance Tec-City (GIFT) in Gandhinagar, Mr Hiranandani is seeing this new momentum close up.

WORLD-CLASS PROPERTIES In this modern India, change can be seen everywhere, and certainly in the real estate markets. With higher disposable incomes and rising aspirations among well-travelled home buyers, developers have had to gear up to meet fresh demands in a competitive scenario. The transformation began with clubhouses and other lifestyle amenities being included as standard offerings, not only in the townships that began to dot landscapes across the country, but in smaller housing complexes and even individual residential projects. Soon, swimming pools and gardens weren’t enough; these had to be taken to the next level, catering to a variety of niche segments. Indian properties today are designed for a wide range of personal requirements, from super-premium spaces to child-friendly homes and and facilities for senior citizens. In the super-luxury segment, for instance, is Lodha Group’s The World Towers, which includes World One, billed as the tallest residential tower across the globe. For child-friendly homes, there’s Rustomjee, who ensure that every property is designed for little ones, complete with playgrounds and learning rooms involving child psychologists and trained

QUICK FACTS • Any investment analyst will tell you that people who try to “time” the market almost invariably end up losing. • The key is to ignore short-term fluctuations and look at the fundamentals. • With India likely to emerge as the world’s fastest growing economy in the near future, now is the time to buy.

Continued on pg 10

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April 2015

and international agencies, including IIT Kharagpur and International Testing Centre. Indian developers are also consciously reaching out to NRI real estate investors exhibitions and community events, to name just a few. Innovations for NRI investors include the ‘Just 3 Clicks Away’ online initiative from Godrej Properties Limited (GPL), which allows customers to choose a house and block it by paying a minimum amount of around ` 30,000/-

then given a two-week window wherein he/she can decide whether to go ahead or wants the money refunded, which the company refunds without any deduction. an Indian property in the current scenario. While there are Centre and an economy on the upswing, think about it – haven’t you ever wished you could build a long-term asset in the place you have always known as home?

YEAR-WISE NEW LAUNCHES IN THE TOP SIX CITIES

experts. In the seniors category, Tata Housing is investing ` 1,200 crore, with plans for 12 projects in eight cities including Ahmedabad, Mumbai, Kolkata, Chennai and National Capital Region (NCR). Recently, JLL India structured an agreement for the development of a senior living project in Chennai between Ashiana Housing Limited and Escapade Real Estate, a group company of Arihant Foundations & Housing and JP Morgan. In a competitive market, developers are constantly on the lookout for new ways to woo buyers. In March 2015, Noida-based K V Developers Pvt. Ltd (KVD) even homes”, available at their WindPark project at Tech Zone has been tested and recommended by various national

Source: Knight Frank Research

‘ R e a l e s t a t e i s c on s i d e re d a g re a t l on g - t e r m i nve s t m e n t ’ momentum with NRIs investing in the realty sector and this upcoming trend has been mainly prominent in the Indian metros. developments which have led to improved market sentiment for the real estate sector in the past one year. Recent RBI rate cuts housing in the cities will also drive business. In the current scenario, NRIs living could

Brotin Banerjee,

MD & CEO, Tata Housing Development Company

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price. Many from the NRI community look to invest in residential apartments that have comprehensive amenities and safety features required for a comfortable living. Some NRIs residing abroad look for opulent

homes with absolute luxury; a property that can be used as a second home investment and eventually be used as a retirement home. Second homes are extending good support and are an attractive investment option for investment avenue, as the second home segment all over the country has appreciated astronomically in recent times. Real estate is considered a great long-term investment, and a second home is a great way to get into the action. Given this, many domestic

real estate sector has over the past few increasing per capita income will help usher relaxation of FDI rules in the construction sector and easing of the exit norms will bring in more foreign investments in the sector and also aid in creation of much

sites

government to reduce project delays will go a long way in making India the destination for investments in the real estate sector.

and positive demographics have attracted

of the projects thereby reducing the project risks and eventually attract more investors in the sector.”

upcoming property attractive to NRIs.

development

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‘ I n d i a i s w i t n e s s i n g h i g h e r c a p i t a l a p p re c i a t i on a n d g row t h’

India is one of the fastest growing economies in the world and the housing demand in India is very high and expected to further increase due to increase in urbanisation over the coming years. While other economies have faced challenges, India continues to grow and property value has steadily appreciated here, making it one of the safest and high return yielding assets. Also, with increased transparency on account of reputed corporate players entering the real estate market, there is a sense of comfort that these developers will deliver on their promise. On the personal front, the reasons are twofold – emotional as well as financial. The biggest high is having the comfort of owning properties back home, which are

available for future use or upgrading to a better lifestyle in some cases considering the fact that NRIs have parents/ families who still reside in India.

On the financial front, where most markets are struggling, India is witnessing higher capital appreciation and growth promising higher return on investments. In addition to this, there are several benefits like availing of a loan if the house is being bought/ constructed for self-use. Repatriation of Rental Income and Sale Proceeds of Property is also possible including tax rebates and holidays in some cases. Last but not the least, the clear growth mandate from the new Government at the centre has made it even more exciting for

Even an astrologer would not be able to predict the upward / downward market trends of properties in India, which was some time ago considered a steady growth sector. With huge volume of construction being generated, each area / pocket carries different calculations, workings and depending on the demand – supply in each of these areas, property prices in the coming future are going to take shape. Generally, when the GDP is growing at a 7% to 8% pace and interest rates are also @ 7% to 8%, it is considered as one of the best times for property buyers. Of course, then property-driven aspects should be realistic and justified to the consumer, which becomes a key factor as well. On many occasions, if the property prices are too high, the consumer is a bit reluctant to make an investment in the property but vice-versa if the pricing is attractive, very reasonable and the pre-launch marketing is alluring then; he will be attracted towards buying. Many new areas are emerging in a big way and infrastructure is playing a major role in creation of the huge land bank of properties and newer areas as an opportunity. This is also going to change the dynamics. For instance, Hyderabad infrastructure has changed the dynamics of Hyderabad and it has brought substantial pricing at a reasonable / steady level, for a couple of years continuously, since with the strong infrastructure and connectivity, a huge land bank got created; one can reach the central business district in a very short travel time. This also is going to be vital / crucial in the coming time and the

NRIs to invest in property in India.

The Gulf Cooperation Council (GCC) region contributes the highest to Indian real estate purchase from NRIs and has a lot of appetite for real estate purchases across India. Considering the high potential here we have set up a representative office in Dubai which helps us generate leads for our various projects in various cities in India. Investors can expect significant returns in the medium to long-term basis given the fact that India and especially metros like Mumbai, Delhi and Bengaluru give very high returns on investment today. India has been witnessing higher capital appreciation and growth, thereby promising higher return on investments.

Positive Trends

Steady returns of @ 12% to 15% appear to be comfortably achievable, believes SUNIL MANTRI

potential buyer should hunt for such areas where infrastructure is being created because there is a big boost factor here, with property prices swinging in an upward direction. The government is working vigorously and many decisions have been taken in a positive manner, helping to create large job opportunities, stability, huge fund flow in the domestic market from international players as well as generating and raising investor confidence to make investments in Indian properties. These are going to give the markets a big boost in the near future.

Girish Shah,

EVP- Marketing & Sales, Godrej Properties Limited

I feel the commercial properties may see a bit of an upward trend now, wherein more leasing of office space has been happening and supply has been comparatively less compared to the residential segment. This will also be followed by the residential market wherein Gross Domestic Product, job opportunities and fund flow is coming in a big way, which will enhance the buying / investment sentiments in properties. REITs too will also be a huge portfolio in the commercial market segment, which will give easy liquidity in the hands of developer / leased out assets as well; this will help to deploy more money in the new projects. I believe that we are headed towards a good time in the property market, wherein there would be a very positive segment, and steady returns @ 12% to 15% appear to be comfortably achievable.

Sunil Mantri

President, National Real Estate Development Council (NAREDCO), Chairman, Mantri Realty Limited 11


POLICY

April 2015

Invest in India

The Indian budget for the year 2015-16 opened up a string of investment opportunities for the NRI segment, says SHILPA VYAS

Pic courtesy: The Wadhwa Group

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hile the industry argued that not much relief was provided by finance minister Arun Jaitley to the Indian real estate sector in the Union budget, the budget did provide a fillip to investments in realty and infrastructure sectors. The Union Budget FY16 was presented in the background of easing inflation, interest rates along with growth challenges. The improvement in the macroeconomic situation in terms of investment and growth, lower inflation leading to lower interest rate will result in consumer confidence, which is important for the growth of real estate. The focus of the budget was on improving ease of doing business. To curb black money transactions in real estate, it introduced the ‘Benami Transaction Bill’, which prohibits any transaction above ` 20,000 in cash. The budget also proposed an overhaul of capital gains taxes to increase listing of Real Estate Investment Trusts (REITs) in the country. An allocation of ` 70,000 crore for development of infrastructure – roads, rail and agriculture – was announced.From the real estate perspective there were positives, coupled with a few 12

missing links. No direct measures were announced to boost the sector; however the budget allocated is ` 22,407 crore for housing development. This would involve construction of two crore urban and four crore rural housing units across the country under the ‘Housing for All by 2022’ scheme. For Non-Resident Indians, the budget did try to make Real Estate Investment Trusts (REITs) a feasible investment option. The pass-through facility being extended to REITs was a welcome change. REITs, a new investment avenue in India on the lines of developed markets, allows one to trade in units of REITs like any other security on stock exchanges. Infrastructure Investment Trusts (INViTs) are also set up for similar purposes. The finance minister has proposed to rationalise the capital gains regime for the two. The tax incentives would give much needed relief to the real estate sector, which is facing a huge slowdown in demand that had led to liquidity crunch and delay in completion of projects.

QUICK FACTS • The improvement in the macroeconomic situation will result in consumer confidence, which is important for the growth of real estate. • For Non-Resident Indians, the budget has tried make Real Estate Investment Trust (REITs) a feasible investment option.

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– Research, Colliers International says, “REITs are publicly traded, therefore provide more advantages in terms of liquidity compared to direct real estate investment. In addition, they have potential for capital gains if the share price of the REIT rises. Investors around the world have recognised real estate as an asset class that is an essential part of a diversified portfolio. The listed REIT will provide a cost-effective and efficient way to access investment grade real estate to the investors. It also comes with professional management and exit is easy. The listed REITs will be registered and regulated by SEBI, and they will adhere to high governance and information disclosure standards, due to which the market will provide better transparency and the interest of the investors will be intact.” The finance minister exempted units of the REITs and INViTs from capital gains tax and the rental income will have a pass-through facility and would be taxed in the hands of the unit holders. This move will help unlock the value of various projects and enable developers to undertake new projects. Mona Jalota, VP - Operations & Strategy, Coldwell Banker India says, “This instrument was a way to encourage retail investors to invest in the projects. However, the rental income earned by these projects is comparable to the returns offered by other asset classes like bank deposits and mutual fund. Also the perceived risk in these asset classes is comparatively lower than real estate. Hence this option is not as attractive to the domestic retail and institutional investors. However for NRI investors, this is an attractive option as rental yields in these units are higher than other developed countries.”

HIGH INVESTMENT OPPORTUNITIES Sam Chopra, Founder & Chairman, RE/MAX India says, “The budget has definitely provided a thrust to the real estate sector and if we particularly look at it from the NRI’s perspective, it has opened up very high investment opportunities to those looking at long-term investments. With the plans and a long-term vision of building India from the infrastructure perspective, I feel it is very encouraging for NRI investors who have been waiting for the development of the right infrastructure to invest in. In addition, with the tax-benefits and plans of growth that have been projected, NRIs now have an opportunity to streamline their investments and look forward to positive return on their short as well as long-term investments, especially for sub-markets in and around Tier II cities. With the Modi government, Foreign Direct Investments to the real estate sector have been steady. Any positive rectifications in the same will be a welcome and encouraging step for them. We are glad to see that the government has allowed foreign investment in Alternative Investment Funds (AIFs), a category of pooled-in investment vehicles for real estate, private equity and hedge funds. With this initiative, it is a win-win situation for the developers and investors. Also, as the government has promised to do away with different categories like Foreign Portfolio Investors (FPI) and Foreign Direct Investment (FDI) for such investments, we can look towards making it easier for 14

overseas investors to invest in AIFs. Since the government has also proposed to raise investment in infrastructure to ` 70,000 crore, it will be a big boost to new initiatives like “100 Smart Cities” and “Housing for All” that have been introduced. Also, the introduction of a new and more comprehensive Benami Transactions (Prohibition) Bill will be a good move to curb domestic black money.” According to PS Jayakumar, Managing Director and Co-Founder, Value Budget Housing Corporation, the removal of the capital gains tax irregularity that was present for REITs and other listed securities is a welcome move. He explains, “The existing provision stated that an investor had to wait for three years to claim long-term capital gains tax exemption, which made REITS unfeasible. The Union Budget has done away with this with proposed equal treatment for REITS and other listed equity shares.” Previously, the RBI was entrusted with rules on capital controls on equity flows from abroad. The government has now transferred this control and is a part of a broader effort to abolish Portfolio Investment Scheme (PIS), treating the NRI investor on par with the resident investor. He adds, “Post the transfer of this power, we can expect more NRI investment inflows into the market.” Anuj Puri, Chairman & Country Head, JLL India says, “The implementation of the Goods and Services Tax (GST) from 2016 will lead to elimination of multiple taxes which were being passed by the developer on buyers. A rationalised tax regime will

“Investors around the world have recognised real estate as an asset class that is an essential part of a diversified portfolio. ” -

April 2015

bode well for home buyers. The Budget has announced major measures like the Benami Prosecution Bill which will seek to curb the black money which is channelised to real estate markets. Such measures will definitely bring about greater transparency to the residential sales market. On the other side, the finance minister has abolished wealth tax, which will incentivise property owners/ holders. However, an additional 2% surcharge has been put on the super-rich with annual income of more than ` 1 crore. This will have an impact on luxury residential transactions; though property ownership may increase due to abolition of wealth tax. Increased allocation to states and setting of the National Infrastructure Fund shall positively impact infra creation, thus bringing in more areas under capacity building and improving living standards in cities. The rationalisation of tax regime for REITs and pass-through status to rental income bodes well for the sector going forward.” Abhishek Kapoor, Partner, Neumec Group concludes, “The Budget has announced several positive measures for the real estate sector well aligned with the government’s and the industry’s target of ‘Homes For All by 2022’. The government’s renewed focus towards infrastructure by completing existing one lakh kilometres of roadways and adding another lakh km give impetus to housing. The aim of creating four crore rural and two crore urban homes amplifies the government’s priority and commitment towards the housing industry. In order to facilitate the vision the budget has encouraged investments through Alternate Investment Fund, thereby doing away with other instruments such as Foreign Portfolio Investors (FPI) and Foreign Direct Investment (FDI) for such investments. The budget has proposed an overhaul of capital gains taxes to pave the way for the listing of REITs; this certainly will be a game changer for the industry.”

Surabhi Arora Associate Director – Research, Colliers International

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A CROSS-COUNTRY JOURNEY

April 2015

SOU TH INDIAN MARKETS GAIN IMPETUS ARCHANA SINHA examines some investment hotspots in South India

Pic courtesy: Sobha Ltd.

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hough the Mumbai and National Capital Region (NCR) have been the focus of real estate investors over the last few years, the South Indian real estate market has been slowly inching up on the demand quotient, thanks to continuous and consistent infrastructure development, corporatisation and setting up of industries. Besides information technology (IT) and information technology enabled services (ITES) companies, the cities Chennai, Bengaluru Hyderabad, Kochi and even Vishakhapatnam have been attracting new industries for more than a decade. Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says: “Bengaluru, Chennai, Hyderabad, Kolkata, besides, of course, Mumbai, NCR and Pune have many aspects that are in their favour. To begin with, their economic fundamentals are strong, which attracts corporate as well as

investor investments. They also are the hubs of job creation leading to growth in housing and retail and growth in other services.” Ashutosh Limaye, Head Research and Real Estate Intelligence Services, Jones Lang La Salle India, says, “Many foreign companies have established their back offices in prime locations of South Indian cities. They have been offering prestigious jobs to the local populations, who are equally well qualified. This has resulted in the South Indian economy witnessing rapid growth over the last few years and consequently given a boost to their real estate markets, as well.” Jaggy Marwah, MD, South India Operations, JLL, India adds: “Of late, the most important South Indian real estate markets — Bengaluru, Chennai, Hyderabad and Kochi

QUICK FACTS

• Cities like Chennai, Bengaluru Hyderabad, Kochi and even Vishakhapatnam have been attracting new industries for more than a decade now • As hubs of job creation, they are witnessing growth in housing, retail and other services.

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— have been faring very well. This dynamic was evident even when the nation was going through a phase of low sentiments. While the burgeoning IT sector in these cities is the main reason behind the real estate boom in these cities, some of them also have a rapidly strengthening industrial base which is further augmenting real estate demand.” The other factor instrumental in pushing up the demand is the fact that many South Indians are working in Middle East countries. They are pumping in a sizeable amount of money into real estate and investing in properties in Kochi, Coimbatore, Hyderabad, Bengaluru and other cities. CHENNAI Talking about Chennai, residential property prices in the city have escalated the fastest among the Southern cities in India, witnessing an appreciation of almost three times of what they were in 2007. Manoj Sai Namburu, Chairman & Managing Director, Alliance Group says, “The city has grown in size and expanded to many suburbs which where earlier ‘No-Go’s’. One reason for this growth is that Chennai is a multi-industry city.” Mr Namburu further reveals that Chennai now attracts developers from all over the country, making the real estate development more professional, offering dozens of gated communities with many lifestyle amenities. North Chennai and Pallavaram Thoraipakkam radial roads are the hottest destinations today. They are so promising that these areas see good volume of sales even in the worst market conditions. Ponneri in Chennai has been announced as one of the hundred Smart Cities, attracting a lot of investor interest; earlier, it had very limited residential real estate development. Mr. Namburu does feel that traditional areas have a challenge of infrastructure. “As disposable incomes of families and aspirations increasing the number of vehicles on the road are doubling up every five years, they are putting tremendous stress on the infrastructure. So the scope of large volumes of inventory being sold in such traditional areas is a challenge,” he says. The outer peripheral road is nearing completion, but there is a supply constraint in the city’s prime locations in terms of new and organised development. Being conscious of the address, traditionally, buyers in Chennai were hesitant to move to the suburbs. But the new generation executives have moved along the expansion lines. Rapidly developing social and physical infrastructure in the suburbs and extended suburbs such as Velacherry, Peringudi and Old Mahabalipuram Road (OMR) are witnessing an increase in property prices with correspondingly surging demand. Velacherry, being adjacent to IIT and developing as an IT corridor, is seeing good demand for modern properties. 16

Ayanavaram, Virugambakkam, Nungambakkam and Ashok Nagar areas have logged in good appreciation. With limited supply and a few organised developers in Annanagar and Kilpauk, end-users and investors are finding prices attractive in these areas. Premium property developers such as Chaitanaya, Vijayshanti and Arihant-Unitech are active in these areas, offering attractive options in villas, bungalows and flats complete with modern amenities.

April 2015

WEIGHTED AVERAGE PRICE MOVEMENT

The Central business district of Chennai, Nungambakkam, continues to be the premium area for offices, but new areas such as Ashok Nagar, OMR and others with a host of reputed and local developers active along the belts are fast catching up. Ashok Nagar is connected with metro rail and offers an array of large commercial and entertainmentshopping establishments such as Phoenix and Forum. Good social and physical and surface infrastructure such as quality educational institutions and hospitals have augmented the demand from end-users and investors. Industries such as IT / ITES, automobile manufacturing and education sector are instrumental in driving the job creation in Chennai. “The price appreciation in specific pockets is expected to be extremely good over the next 12-18 months. Some of the projects which are garnering attention from end-users and investors are Falling Waters in Peringudi, Oceanique on ECR Road, Embassy Residency and Pristine Acres in OMR,” says Mr. Marwah. BENGALURU The garden city of Bengaluru has seen tremendous changes since the last 10 years. World-class premium apartments and villas dot every road. Prime roads and areas have seen transformation in terms of road widening, coming up of premium shopping and entertainment destinations, offices, hospitals and other amenities. The commercial office leasing trends in Bengaluru clearly reflect the city’s capability to attract multinationals (MNCs); the city tops all others in terms of space and job creation. IT, ITES and retail are driving employment creation in the city. Bengaluru is expanding in all directions, and with most phases of the Metro on track in terms of deployment, Bengaluru has emerged as one of the best investment destinations for affordable, affordable luxury and luxury segment housing. North Bengaluru has seen residential prices doubling in the last four to six years, and many other pockets have witnessed good appreciation as well. Brigade Gateway, one of the best integrated townships in Bengaluru featuring the World Trade Centre, a mall and a five-star hotel, was launched at a price of ` 5,000/sq. ft. almost five years ago, and is now transacting at above ` 10,000/ sq.ft. There are numerous such examples wherein reputed developers and landmark developments have been instrumental in prices doubling and going even higher in the last four to six years. The finest developments in Whitefield by Sobha, Brigade, Prestige, Total Environment, Chaitanaya,

Source: Knight Frank Research

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April 2015

Pic courtesy: Mantri Developers

“One factor instrumental in pushing up the demand is the fact that many South Indians are working in Middle East countries. They are pumping in a sizeable amount of money into real estate and investing in properties in Kochi, Coimbatore, Hyderabad, Bengaluru and other cities.”

Nitesh Estates and others have practically doubled in terms of capital values in the last five years. New infrastructure development around the north and north-western side of the city along Yelahanka and Tumkur Road and their surroundings are witnessing significant augmentation and improvement in terms of infrastructure in general and connectivity in particular. Some of the key infrastructure projects which have recently become operational include the Elevated Expressway, Bengaluru-Mysore Infrastructure Corridor (BMIC) and Bengaluru International Exhibition Center (BIEC). Other on-going and proposed infrastructure initiatives are Metro Rail Phase 1 & 2 and Peripheral Ring Road. These infrastructure projects, along with the proposed Mumbai-

Bengaluru Industrial Corridor, are expected to significantly improve the physical characteristics of the area. These will result in the development of large integrated projects, as there are large industrial land parcels waiting to be unlocked for quality real estate development with the growth of economic drivers in the area.

and HM Constructions are offering exclusive properties, including Villas and gated complexes with premium facilities to HNI and NRI customers in the price bracket of ` 70 lakh to 2.5 crore. Some exclusive properties are also available in the range of ` 3 crore and above around Cunningham Road, MG Road, Koramangala, Brigade Road and others.

Only a few years ago the population around these new areas was dominated by blue-collar workers as the areas had clusters of small-scale industries manufacturing ancillary parts for PSUs, automobile industries and garment industries, among other things. However the profile of these areas has seen a dramatic change with the arrival of large Indian and multinational industrial entities such as Kennametal, Widia, ITC, Volvo, BOC and Reliance Packing Industries.

HYDERABAD

Select arterial roads and sub and sub-arterial roads are being revamped to ease congestion on main thoroughfares and facilitate smooth flow of vehicular traffic. In fact, Bengaluru is expanding all around. The eastern sector from Varthur Road to Sarjapura road to Hosur road of 4,560 acres will cater 1,63,589 housing units and 11,560 sites. The Western sector comprising Mysore to Magadi Road, along the BMICAPA and Hi-Tech City Corridor connecting Electronic City for a length of 8.5 kms are also on the offing. The Metro rail and Mono rail project will further enhance connectivity. Premium developers such as Century Real Estate, Sattva, Sterling Developers, Godrej, DLF, Brigade Group, Prestige Group, Nitesh Estates, Mantri Developers, Puravankara Group, RMZ Corp, Sobha Developers, Embassy Group

With the creation of Telangana and Hyderabad being its capital the socio-political and economic scenario is now far more favourable for the real estate sector. Hyderabad’s real estate market is likely to grow at a relatively faster pace now and is expected to provide a new round of competition to Bengaluru, Chennai and Kochi. In the mid-to-long term, investor confidence in Hyderabad real estate will emerge as a force to reckon with. Companies such as Facebook, Google and Apple have long-standing plans to expand their bases in Hyderabad, resulting greater demand and absorption of properties. Consequently appreciation will also be faster. One of the hottest emerging locations is Vijaywada, where land prices have increased by almost 300% because of speculation. This renders Vijaywada unviable for residential projects over the short term, but a price correction from the speculative levels is anticipated over the next one-and-a-half years. After that, many more corporates will move into Vijaywada, thereby boosting residential demand as well. “Interestingly, despite the financial crisis, the reality is that realty in India has given positive returns in most instances. Nowadays, for NRIs investing in real estate, there are few 17


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hassles, tax provisions are simpler, and innovative vistas are available to save tax. If NRIs invest today in real estate, it is surely bound to bring higher appreciation in the years to come. After all, it is an asset which can be used by self or leased out or sold,” avers Sanjay Dutt of Cushman & Wakefield.

to attract investment from IT and pharma sectors. World-class healthcare facilities with good hospitals, entertainment options and malls have already been dotting the city’s skyline for quite some time. Kanakia Spaces, Lodha Group, Unitach, and other national level builders have been developing quality properties in residential, commercial and retail segments with premium facilities. Some of the property prices have doubled. A few such instances are Jayabheri’s Orange County, which has seen 33% absolute appreciation within a horizon span of three to four years and Jayabheri’s Silicon County, which has almost doubled in the last four years. Aparna’s Sarovar Grande has seen about 43% absolute appreciation in the

The infrastructure in Hyderabad is gaining impetus towards the development of highways in an integrated way. The Hyderabad Growth Corridor enabled the construction of Outer Ring Road as road-cum-area development project leading to the development of well-planned and well connected urban settlements around the city. The 158 km-long outer ring road connects the newly developed areas beyond Madhapur. Besides, the existing roads are widened to be the express highways. The longest flyover of the country, PVN Rao Express Highway, connecting the International Airport and JN Express Highway, has shrunk distances within the city. The commuting has become easy for citizens in far corners of the city, enabling free movement to city centres.

“Interestingly, despite the financial crisis, the reality is that realty in India has given positive returns in most instances. Nowadays, for NRIs investing in real estate, there are few hassles, tax provisions are simpler, and innovative vistas are available to save tax. If NRIs invest today in real estate, it is surely bound to bring higher appreciation in the years to come. After all, it is an asset which can be used by self or leased out or sold,” avers Mr. Sanjay Dutt of Cushman & Wakefield.

Regarding industry besides IT and ITES companies, many pharma companies have set up shops in Hyderabad. Significantly, except for a few patches, headquarters of the nine other districts are well connected to Hyderabad through four-lane roadways. The government of the united Andhra Pradesh has already notified forming of the 290-km long Regional Ring Road, an outer layer of the existing Outer Ring Road encompassing the neighbouring districts of Ranga Reddy, Medak, Nalgonda, Warangal and Mahbubnagar.

In fact, Hyderabad’s growth prospect is unlimited because there are no geological constraints. Separate high-speed rail corridors to improve interconnectivity among various districts of state, is also planned. Expansion of the existing Metro Rail project to other thickly populated areas in the city and Cyberabad, the IT hub of Hyderabad, is also being planned. Gadchibowli Miyapur, Manikonda, Kukatpally, Kompally, Chandanagar and Kokapet and Pupallguda are some of the areas in which appreciation of properties are expected. These areas are offering some of the best properties in Hyderabad. The presence of IT and Financial Services giants like Microsoft and Cognizant Technologies, ICICI Towers make this area a truly viable investment. What is noteworthy is the fact that despite the political uncertainty over the last two years, the city continued 18

Pic courtesy: Blue Crest

The real game changer is expected to be the government’s plan to build a rail network within the radius of 100 km of Hyderabad, to bring the middle-class to the city for jobs, while living in their native village. This will also result in rapid growth of newer areas and spreading of the population in a planned manner.

April 2015

last two years. Good projects by reputed developers have shown very robust capital appreciation in the city. Though Bengaluru and Chennai have clocked better appreciation of properties, Hyderabad by no means has lacked appreciation. KOCHI Kochi is an emerging metropolis where modern urban lifestyles are merging with the city’s traditional structure. During its initial realty boom, Kochi grew exponentially, with more people migrating to the city and settling in even far and beyond areas of Kakkanad, Palarivattom, Vytilla, Edappally and Kadavanthra. Development of IT/ITES based Kochi Smart City and initiatives to channelise traffic and improve connectivity - such as the Mobility Hub at Vytilla - have further augmented the current real estate boom, with more and more developers making an entry to the city. The days when builders in Kochi focused only on affluent buyers are over. The Kochi residential real estate market is now full of affordable housing projects, which account for about 60% of the total housing development in the city. The soaring land prices are giving way to the apartment style of living and people are slowly migrating from independent houses to community living in apartments. There is an increased demand from the emerging mid-income segment that wants homes packed with amenities at affordable prices. The demand for budget housing is so strong that supply has penetrated even the poshest areas. Premium localities that offer luxury multi-storey apartments, such as Marine Drive, are also seeing the arrival of affordable and mid-income housing projects in the vicinity to the more expensive waterfront apartments and villas. Interestingly, while the global recession in 2009-’10 impacted most markets in the country, there was no decrease in Kochi residential real estate between 2012-'13. Kochi is predominantly an investor market with NRIs working in the Middle East countries investing heavily in real estate. In most cases, flats in new projects are sold out to the tune of 80% almost immediately, while only 20% would be actually occupied. Luxury apartments on Marine Drive would sell at as much as ` 6000/- per square foot, doubling in almost three to four years. Mid-range apartments by local developers are usually sold out by upto 90% of the inventory over a period of one-and-a-half to two years. Apartments in non-prime areas are also selling at ` 70 lakh. Vishakhapatnam and Coimbatore are the other hot property destinations. Vishakhapatnam, being a port city, has the advantage being close to the sea. It is attracting several industries and the demand for good quality, premium houses and apartments is soaring. The city administration is contemplating measures to protect the city from cyclones as well. Coimbatore, on the other hand, is a favourite destination for South Indians who wish to invest in resorts and villas for weekend getaways. www.indiapropertyinsider.in | A

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April 2015

Western India has Much to Offer With proximity to commercial hubs and scenic locations for vacation homes, Western India has always been a focus area for investors

QUICK FACTS

• Mumbai, the country’s commercial capital, has been undergoing a major transformation.

• In Gandhinagar, the Gujarat International Finance Tec - City (GIFT) is coming up on 886 acres of land.

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ome to prime investment destinations such as the commercial capital of Mumbai, the holiday destination of Goa, and the rising business magnet of Gujarat, Western India is a region that has always been a focus area for property buyers.

MUMBAI Mumbai, which is often seen as a gateway to India, is undergoing a frenetic transformation. South Mumbai’s business district has for decades been seen as the nerve centre of the Indian economy, but new commercial hubs are thriving in suburban locations such as Bandra-Kurla Complex, Andheri and Navi Mumbai. A host of infrastructure projects has brought greater

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connectivity to these regions, including the Bandra-Worli Sea Link, the Eastern Freeway, Santacruz-Chembur Link Road and the Versova-Ghatkopar Metro. Work on the Metro – III is also poised to begin soon. A new development plan (DP) is under discussion and proposes a variable Floor Space Index (FSI) regime, to enable taller buildings around transit stations; multiple use of open spaces and much more to cope with the demands of a rising population that is projected to be around 1.4 crore by 2034, with 80% of people living in the suburbs. The DP 2034 for Greater Mumbai, has been conceived in the form of a long-term broad zoning plan, with allocation of land for city level infrastructure and broad Development Control Regulations, according to the municipal commissioner Sitaram Kunte. www.indiapropertyinsider.in | A

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While the DP will take its time to impact the city, Mumbai has already seen a radical transformation in the last decade. Redevelopment of erstwhile mills and other dilapidated structures in the island city has led to swanky new towers in south and central Mumbai. The World Towers by Lodha Group at Upper Worli includes ‘World One’, billed as the world’s tallest residential tower. Wadala, once considered a central suburb, is now seen as being well within the city limits and, thanks to the Lodha Group, is even referred to as New Cuffe Parade, a reference to one of the most upmarket localities in South Mumbai. In Wadala, Dosti Realty is also an important player.

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The suburbs have also taken on a life of their own, with developers like K Raheja Realty Pvt Ltd, Keystone Realtors Pvt Ltd and Marathon Realty Pvt. Ltd. working their magic there. Far-flung locations like Goregaon, Virar, Thane, Mulund, Powai and Navi Mumbai across the creek have become destinations of choice for home buyers.

Source: Knight Frank Research

Mumbai’s expanding geography now extends into places like Panvel, where the new international airport is coming up, and beyond into Raigad, a rapidly expanding destination.

PUNE Barely two hours away from Mumbai, past the state-ofthe-art and scenic Mumbai-Pune Expressway, is a city that has grown from being perceived as Mumbai’s poor cousin to a bustling metropolis in its own right. Once known as a Pensioner’s Paradise – a nomenclature that often annoys its new cosmopolitan residents – Pune has become an information technology (IT) hub, and a destination for automobile manufacturing. As you near the city towards the end of the Expressway, you will see a host of properties being advertised, in locations that were barely known a couple of decades ago. The new ‘it’ addresses in Pune include places like Hinjewadi, Kharadi, Magarpatta and Baner, to name just a few. Magarpatta Township Developers & Construction Co. Ltd has played a pioneering role in the development of the Eastern corridor. Good connectivity and social infrastructure have also led to the growth of places like Wagholi and Pimple Nilakh in East Pune and Wakad in the West, and locations like Sanaswadi, Lonikhand, Talegaon Dhamdhere, Shikrapur on Nagar Road and Shirwal towards Satara are thriving industrial hubs. If you are looking for super-luxurious properties, Pune has more than its share of them. Panchshil Realty is among the major players in the ultra-premium space in Pune.

GOA Now Goa is the place that many of us dream about, when it comes to owning property in India. Imagine a home near those spectacular beaches, lolling on the sand all day and gorging on amazing sea food! There was a time when people were worried about buying

property in Goa because land titles could be dicey, but the good news is that the situation is very different today. Of course, as you would elsewhere, you would still need to do your due diligence before buying a property, but reputed builders like Acron and Pune’s Gera Developments, which entered the Goa market recently, have been transforming the real estate market here. If you are looking for a great lifestyle in your own housing complex, check out Corlim Gardens by Nitin Developers Pvt Ltd, which even offers a skating rink! Locations like Dona Paula, near Panaji, Palolem in the south and Morjem in the north are seeing a flurry of development. Goa is also seeing a major shift, with corporates buying up large commercial spaces, and major retailers seeking to enter this state.

NASHIK Nashik in Maharashtra, India, is another location that bears watching. It is perceived as having high investment potential, its economy resting on four pillars – pilgrimage, industrial, defense and a strong agriculture base. It also has three well-developed industrial estates at Satpur, Ambad and Sinnar. The IT/ ITeS sector and the BPO sector have discovered Nashik in recent times. (For a detailed report on Nashik, turn to page 30.)

GUJARAT When Narendra Modi left Gujarat to become the prime minister of India, his legacy included a state with strong investment and growth potential. Ahmedabad, the Gujarati city that is the hub of the textile, pharmaceutical and chemical industries, is now also recognised as a major

IT/ ITeS and retail destination. Residential property has reportedly appreciated by about 50 per cent over the last three years, and the areas that are said to be in demand are South Bopal, Bodakdev, Vastrapur, Nicol, Nava Naroda and New Ranip. The locations with the highest potential for the future include the growth corridors of Sarkhej-Gandhinagar Road, Sardar Patel Ring Road, Maninagar and on the north side of the Inner 132 ft Ring Road in areas like Nirnaynagar and Ranip. In recent times, several bungalow and farm house developments have also come up around S-G Road and Sardar Patel Ring Road. Gujarat’s second-largest city, Surat, is poised to become an international diamond trading hub, with the advantages of being located on the Golden Quadrilateral Highway and enjoying excellent connectivity with Mumbai and Delhi. Vadodara is another real estate destination to watch out for – an education hub, centre for industrial growth, and a cultural haven. The Gujarati city that is particularly in the news today is Gandhinagar, where GIFT (Gujarat International Finance Tec – City) is coming up on 886 acres of land on the NH8 Highway, which is on the Mumbai-Delhi Corridor. This global financial hub, strategically connected to Ahmedabad airport, includes an integrated township with commercial and residential complexes. Hiranandani Communities, a Niranjan Hiranandani initiative, is building Signature, an IT and financial centre here. Western India has much to offer; if you are investing in India, check out the many options. 21


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April 2015

North India is Attractive to NRIs While Delhi is the first location that often comes to mind in North India, others like Faridabad and Kanpur are growing too

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orthern India consists of Haryana, Jammu and Kashmir, Himachal Pradesh, Uttar Pradesh, Punjab and Uttarakhand. Delhi, officially the National Capital Territory of Delhi, is the Indian capital. In some ways, culturally and linguistically, states like Rajasthan, Bihar and Madhya Pradesh are also perceived as belonging to northern India, though they do not formally belong to this region as defined by the Indian government.

Delhi’s infrastructure is expanding rapidly; the Delhi Metro network, with 193 operational kilometres and an Airport Express Link, has revolutionised travel within the city and even crossed the boundaries of Delhi to reach NOIDA and Ghaziabad in Uttar Pradesh and Gurgaon in Haryana. JLL India notes that the Noida-Greater Noida metro link route has been finalised with the originating station to be Sec-71 and running 28 km to Bodaki in Greater Noida.

DELHI

Connaught Place in New Delhi has emerged as the fifth most expensive office location in the world, according to Cushman & Wakefield’s annual global survey based on office rental values at the end of 2014. The survey, which ranks locations across Americas, Europe, Asia Pacific, Middle East and Africa, noted that Connaught Place rose in position from previous years on account of renewed demand and a strengthening economic environment. It has been witnessing high rentals for reasons of limited supply of grade A office space in the

When one thinks of Northern India, Delhi is often the first location that comes to mind. The Indian capital, situated on the banks of Yamuna and extending over an area of 1483 sq. km. is the largest commercial centre in North India. Engineering, textiles and chemicals take centrestage, but electronics and electrical goods are also gaining prominence, and the service sector is expanding as well. 22

area, whilst witnessing some latent demand from sectors such as the banking and financial sector (BFSI) for front office operations, consulting and media houses that would be interested in paying high rentals for aspects such as ease of location, proximity to government and quasi-government establishments and other related businesses. Office space in Delhi NCR witnessed total take-up of 1.7 million sq ft in Q4, representing an increase of 20.7% q-o-q and 33.6% y-o-y, according to a recent DTZ report. The city’s annual take-up of 6.1 million sq ft in 2014 is 50% higher than the take-up of 2013, showing the increase in business confidence.

GURGAON Gurgaon, the sixth largest city of Haryana, is well connected to the rest of India, lying on the Delhi-Jaipur-Ahmedabad railway line and with NH-8 cutting through it. Home to many Fortune 500 companies, it has gained recognition as www.indiapropertyinsider.in | A

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the third largest hub for the information technology industry and is believed to be the only Indian city that has electricity connections in every household. It is also home to a host of industries, from agriculture to automobile industries, electrical, rubber, leather, handlooms, pharmaceuticals and much more. As with many other parts of the country, infrastructure is on the upswing, with six-laning of NH-8 between Gurgaon and Jaipur and the Delhi-Gurgaon Corridor to be developed as a solar city. “A good ‘life to work’ environment, a well entrenched corporate hub with good career options across the spectrum, state-of-the-art infrastructure including the metro, the best of healthcare, education and retail make Gurgaon one of the most sought after living destinations in the country,” says Ms Smeeta Neogi, Vice-President – Marketing, Mahindra Lifespaces. “Barring the last couple of years where growth has been slower than expected, the Gurgaon market over the last 10 years has consistently given both the investor and the end users a significant return on investment. Buyers across the globe, including those in Dubai and the GCC countries, in other parts of India and of course the Delhi NCR region have been attracted to this market consistently and continue to look for the right project to invest in.” Mahindra Lifespaces has two ongoing projects in Gurgaon. Aura at Sector 110A was launched in 2009 and has received a tremendous response across all its five phases. The first phase has been handed over and subsequent phases will be handed to customers in the near future. September 2014 saw the launch of Luminare, a luxury project. Located at Golf Course Extension Road, in Sector 59, each apartment of Luminare is a corner

unit, boasts of wrap-around balconies, along with private elevator lobbies for each unit besides best-in-class specifications and amenities. “Luminare has been well accepted both among end users and investors and we have recorded significant sales in the last six months,” Ms Neogi says.

GHAZIABAD Ghaziabad, home of agriculture, information technology, manufacturing, steel and small-scale industries, is modernising in multiple ways. The ‘Gateway of Uttar Pradesh’, as it is known, has had its Master Plan 2021 under implementation since 2005 and there are various laudable initiatives such as a private-public partnership for street lighting and a rapid sanitation force. Infrastructure includes a Rapid Rail Transit System between Delhi and Meerut; upgradation of the Ghaziabad-Aligarh on NH-91; sixlaning of Eastern Peripheral Expressway of NH NE-II and the Eastern Peripheral Expressway (Kundli-GhaziabadPalwal) and various elevated roads.

April 2015

“Barring the last couple of years where growth has been slower than expected, the Gurgaon market over the last 10 years has consistently given both the investor and the end users a significant return on investment. Buyers across the globe including those in Dubai and the GCC countries, in other parts of India and, of course, the Delhi NCR region have been attracted to this market consistently.” Smeeta Neogi, Vice-President – Marketing, Mahindra Lifespaces

FARIDABAD Sharing its boundaries with the National Capital and Union Territory of Delhi to its north, Gurgaon in the west and Uttar Pradesh to its east and south is Haryana’s largest city, also known as India’s industrial capital and the ninth largest industrial estate in Asia. Large corporates like Yamaha Motors, Whirlpool, JCB, Goodyear and Larsen & Toubro, among others, have given it the status of a manufacturing hub and complementing these are 50,000 small-scale industries manufacturing mostly mechanical, automobile and light engineering goods. With

the city lying on the Dedicated Freight Corridor, Faridabad has tremendous potential. In terms of infrastructure, there are plans for a Faridabad-Gurgaon metro; an expressway to Noida and Ghaziabad and six-laning of the Delhi-Agra highway, among other things. Other projects include a ` 7,000-crore initiative to improve water supply till 2031 and various bridges to boost connectivity.

KANPUR On the banks of one of Narendra Modi’s pet projects, the river Ganga, and the main Howrah-New Delhi railway line is Uttar Pradesh’s largest city, Kanpur. For decades, it has been known as the nerve centre of the leather industry but if all goes well, it will metamorphose into a smart city. Among the several infrastructure projects that aim to change the face of Kanpur are the development of a special economic zone on the left bank of the river; an integrated traffic management system, and a riverfront development. There are also projects aimed at improving the sewage system, and roads, besides a metro. Kanpur currently has great connectivity with the Grand Trunk Road from Amritsar to Kolkata running through the city.

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LUCKNOW

Source: Knight Frank Research

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Most people associate Lucknow, the capital of Uttar Pradesh, with handicrafts like Chikankari and Zardozi. The good news for investors is that it offers several opportunities for growth, with a train route connecting it to all cities within Uttar Pradesh. Infrastructure projects include one to tackle solid waste; a metro rail; an access controlled expressway to Agra; Jhansi-Kanpur-Lucknow-Gorakhpur-Kushinagar and Lucknow-Barabanki Nanpara Link Expressway and four-laning of Lucknow-Sultanpur section of NH-56. www.indiapropertyinsider.in | A

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April 2015

Rising Real Estate Markets in East India One of the most important real estate growth centres is Kolkata, along with industrial centres such as Durgapur, Burdhwan, Asansol and even Siliguri, says ARCHANA SINHA

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ontrary to the general perception, the real estate dynamics of Eastern India are changing rapidly. The realty market is on a high due to a combination of factors such as the arrival of reputed multinationals (MNCs) and big corporates looking for the right assets and a sudden increase in the number of developers of upmarket property. One of the most important real estate growth centres is Kolkata, along with industrial centres such as Durgapur, Burdhwan, Asansol and even Siliguri.

KOLKATA “The Kolkata market has the distinct advantage of having good human resource base coupled with some recently announced growth strategies. The centre has the legacy of being an economic centre. With incentives announced by the government, such as creation of IT and Financial Hubs in Salt Lake and Rajarhat and proposal for setting up of Industrial Parks on a public-private partnership (PPP) model has given a fillip to real estate. Infrastructure is rapidly developing in the location, putting Kolkata in an advantageous position

for future growth,” says Sanjay Dutt, Executive Managing Director, South Asia, Cushman and Wakefield, India. Kolkata, an important economic hub on India’s eastern side, is indeed poised for a fresh round of growth stimulus. This is evident from the amount of successful property exhibitions that take place frequently, avers Mr. Sayan Bhador, Regional Manager, ReMax property consultant in Kolkata, who has had the experience of successful transactions of highend properties in Kolkata, Durgapur, Siliguri, Guwahati, Bhubaneshwar and other cities in Eastern India. Mr. Bhador says, “Kolkata‘s real estate is growing at a steady pace. Most people who buy properties in Kolkata are those whose families have lived here for generations. Among them, of course, Bengalis are the maximum. Many young Bengalis living in the United States, United Kingdom, Canada and Australia invest in properties for sentimental reasons or because of the aspirational value the new properties offer them. Kolkata properties also see takers from business communities around the states, which include Marwaris, Gujaratis, Sindhis, Punjabis and a few from neighbouring states of Orissa, Assam

and Bihar. Reputed developers from all over India, such as DLF, Unitech, Shapoorji Pallonji, India Bulls and Lodha Group are launching projects here.” The Kolkata real estate market is promising and has garnered more than 25% market share in East India in the past three years. The potential of the market can be gauged by the fact that current construction activity covers almost 85 million sq ft. (approx.) across office, retail and residential in Kolkata and are expected to be completed in the next two to three years. Of this, 12 mn sf (approx.) is estimated to be office space, 1.7 msf (approx.) is the upcoming retail space. An estimated 40,000 units is expected in organised residential supply while demand for residential far exceeds supply at 77,000 units (estimate). Although traditionally not an investor destination, Kolkata is attracting investments now in select pockets. Interestingly when the property graph in India was showing a downward trend, the property sale in West Bengal remained steady, prices continued to move upward. Dhruba Bagchi, a real estate housing finance professional says, “Of late, it is seen that the markets have started maturing 25


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and there are region-specific trends. More specifically, the eastern part of the country has shown muted growth, but a steady upward trend. The growth is seen more specifically in the affordable segment, which is in the high middle and middle-income group (MIG) segment. The true growth is seen in the price bandwidth of 5 per cent, 7. 5 -10 per cent rise in a three-year time cycle. With the thrust on industries and corporate offices, back in the eastern corridor, Kolkata looks up to a bright future in the coming years.” Some other factors that have contributed to the growth are new successful commercial projects (mostly retail and entertainment), good education institutes, good healthcare facilities, new improved roads and connectivity and an aspirational quotient. The city has been successfully connected to the golden quadrangle highway project, bringing industrial belts of Durgapur, Asansol and Burdhwan closer in terms of commuting. Mr. Bhador explains that Kolkata is growing in all directions. The airport, which was considered way beyond the city outskirts until a few years ago, is now buzzing with activities with many IT offices teeming with young executives. Rajarhat and New Town are developing at a rapid pace. Garia, Madhyamgram, Barrackpore, Eastern Metropolitan Bypass, are in expansion mode with massive infrastructure, both physical and social, besides surface transport. Beleghata, Rajarhat and Eastern Metropolitan Bypass area are some of the other areas in which real estate prices have risen remarkably. The prices of property in Rajarhat have more than doubled over the past two years. “Even the rental market in both residential and office properties are seeing good return in Kolkata,” says Sayon Bhador. Towards the southern end, development is taking place beyond Joka, bringing the Indian Institute of Management (IIM) within the city limits. Prices are still within affordable limits and the large township complexes are offering some of the most modern housing projects to attract buyers and investors.

AVERAGE RESIDENTIAL APARTMENT PRICES

K O L K AT A LOCALITY

CAPITAL VALUES (RS/SQ FEET)

Action Area 1

4660 to 5970

Alipore

8860 to 11880

Barrackpore

2490 to 3020

Beleghata

5620 to 7180

Bhawanipur

8000 to 10090

Dhakuria

4720 to 5950

Dumdum Park

3590 to 4300

Durganagar

2460 to 2880

Hazra

8120 to 10270

Howrah

3420 to 4450 Source: Magicbricks.com

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April 2015

Old favourites such as Park Street, Camac and Shakespeare Sarani continue to be on top of the mind when it comes to office premises and many buildings have been redeveloped. South Kolkata, Bhowanipore and Ballygunge continue to command their premium prices. Some of these areas are being redeveloped to suit modern needs, which include modernising roads, building of flyovers and building a metro rail corridor to offer multi-modal transport options. Regarding transportation and communication Kolkata has surprised all the other metros in India. In the last three years West Bengal has achieved one of the highest growth percentages in real estate. One of the most successful development models has been PPP projects with the Bengal government. Most developers who have come from other cities have experienced success with the joint venture ( JV) model and this has helped to organise the market in a way that transactions are completely transparent and to create a large housing stock in Kolkata. In each project the developer has to create a certain percentage of high-income group (HIG), MIG and low-income group (LIG) flats. The pricing of HIG flats is left to the developer, but the price of LIG flats are subsidised while the MIG flats are made available at cost price. This has worked beautifully in Kolkata compared to the cities of Mumbai and Delhi. Property management facilities have also shown greater professionalism, reposing trust among investors. Many property consultants are offering end-to-end integrated services, beginning from searching, arranging for loans to professionally closing the deal. They also provide rental services and maintenance of the property, making property buying a good, hassle-free experience. Kolkata real estate prices are far more realistic compared to other tier-I cities like Mumbai, Delhi, Bengaluru or Hyderabad. The property values in WB are comparatively lower than other metropolitans; but the risk factor is less and the property market is stable. The end users are currently driving the market. At the moment the Kolkata market seems to be very vibrant and growing at a pace one has never seen before. Yet one cannot deny the fact that the demand for investment property in Kolkata is on the rise. Top-notch real estate developers also have caught the market nerves and coming up with projects that are focused on investors. Many interesting projects are coming up in the state. With recent changes in policies it is expected that the demand will continue to steadily rise in Kolkata.

DURGAPUR, ASANSOL AND BURDHWAN The three cities of Burdhwan, Asansol and Durgapur are coming up rapidly to shoulder the responsibility of housing other properties with Kolkata. The cities being closer to Kolkata are offering an array of choices who want to be close to the city and yet away in a smaller town. Some buyers are picking up second homes in these cities which are being refurbished massively in terms of infrastructure development. The prospect of a second airport coming up in Durgapur has escalated buyers’ interest, thus escalating prices and expectations. Property developers are seizing

QUICK FACT • When the property graph in India was showing a downward trend, prices continued to move upward in West Bengal

the opportunities and coming up with modern integrated townships such as the airport city and others.

SILIGURI Siliguri is yet another destination to watch out for. This city, based at the ‘chicken neck’ of West Bengal, offers connectivity to the North-eastern state, which increases its importance in terms of real estate and businesses as well. The business community, which travels to and from Assam, Meghalaya and beyond is also setting up centres at Siliguri, making it a vibrant place for development of hospitality, retail, commercial and residential real estate.

GUWAHATI Guwahati in Assam is growing for the similar reasons. Its affordable properties, and the fact that it is the gateway to the Oil and mineral wealth of upper Assam makes it an important destination. People from Assam and elsewhere are buying properties in Guwahati. Some people from Bengal are also buying properties in Guwahati, which include office spaces, residential, retail, entertainment and hospitality categories.

BHUBANESHWAR AND CUTTACK The twin cities of Cuttack and Bhubaneshwar in Orissa are also developing at a rapid pace, offering real estate options in all categories, ranging from residential, commercial, retail, entertainment, hospitality and other asset classes. www.indiapropertyinsider.in | A

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CITY FOCUS

April 2015

Bengaluru is Booming with Promise A resilient city, Bengaluru proves itself time after time as a competitive destination for property investments, says JESSU JOHN

“A mix of traditional values and modernism is a great blend for an NRI who wants his children to be exposed to the new emerging India without losing its cultural values. Bengaluru has often topped the charts because of its greenery, weather, educational institutes, employment opportunities along with facilities like malls and hypermarkets as well as infrastructure development.” Tanuj Shori Squareyards Consulting

I

f a range of reports and opinions is to be averaged out, more than a decade after the housing boom began, the conclusion around India’s earliest information technology city is that it’s always remained a strong contender for investor interest. Regardless of volatile macroeconomic conditions, Bengaluru’s real estate market, along with some other cities in India, seems to be driven by actual demand and supply rather than speculation. A lot has contributed to this. A new international airport, a continuous demand for talent in the IT industry and attractive industry events actively draw visitors and residents. The growth of the services sector and employment opportunities rising in emerging hubs like Noida or Gurgaon and Pune and stiff competition from markets like Chennai means Bengaluru has had to remain on its toes. Even against that landscape, a steady, if not rising, migratory population continues to fuel demand in this rapidly developing city, which some sources record as India’s third or fourth largest.

UNFLINCHING GROWTH Home to competitive names like Prestige, Puravankara, Sobha, Embassy, RMZ, Gokaldas Lifestyle and Brigade, Bengaluru has not failed to attract the best developers into the 28

fray. The ultra-luxury home segment also features players like Total Environment. Shantiniketan by Prestige and Getaway by Brigade are some landmark projects, and nearly all the brands have defined the real estate landscape in Bengaluru making it a remarkably attractive option for NRI investors. Tanuj Shori, CEO and Co-founder of Squareyards Consulting, an advisory and brokerage firm, says, “State initiatives, like the Global Investment Meet, have led to infrastructure development, a major impetus in attracting investors. With the aerospace, Special Economic Zone, hardware manufacturing units coming up in the city, population migration has increased as well.” Some of this growth is reflected directly in the success developer brands like Sobha and Mantri have had over the years in the Bengaluru market. As one of the earliest entrants and a strong player today in the city’s real estate sector, Sobha Limited

has found that Bengaluru’s resilience amidst fluctuations and uncertainties over a decade matches its own. Says J.C. Sharma, Vice Chairman & Managing Director, Sobha Limited, “Bengaluru has stood the test of time. Over years, the city has evolved with the influx of immigrant population on account of exciting employment opportunities. “Research by Knight Frank indicates that between July and December 2014, Bengaluru had one of the highest sales volumes in the country, second only to Mumbai. The prices in the city grew at a rate of 7% in 2014, again an indicator that despite unfavourable economic conditions, the market continued to hold its ground.” Mantri Developers has had an equally good run in South India thanks to investor interest in Bengaluru. Snehal Mantri, Director – Marketing & HR, Mantri Developers

Bengaluru is one of the healthiest markets with the lowest unsold inventory and minimum age of unsold inventory. This indicates that it continues to remain an end-user demand driven market. ” - J.C. Sharma, Sobha Limited

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April 2015

Pvt. Ltd. shares, “The IT sector boom in Bengaluru has contributed to positive developments in the real estate market. In recent years, North Bengaluru has seen major real estate development and activity. The demand for residential units in this area has been on a high since 2008. Most of our projects are in growth areas, commanding high premiums.”

INFRASTRUCTURE MOVEMENTS Across two quarters of 2014 ( July to September and October to December), the Bengaluru Insite Report featuring on 99acres.com reflects a steady average growth of 5% with respect to the city’s real estate market. Bengaluru’s West and South markets are increasingly seeing healthy demand among buyers, with the East not lagging behind much. Personal links to the city that factors in place of birth or proximity to family and relatives dictate purchases. But what’s important for anyone investing in these areas will be important to the NRI, especially ones who park a lot of their capital in multiple purchases across cities, and not to forget, the quality of life that a city offers. “A mix of traditional values and modernism is a great blend for an NRI who wants his children to be exposed to the new emerging India without losing its cultural values. Bengaluru has often topped the charts because of its greenery, weather, educational institutes, employment opportunities along with facilities like malls and hypermarkets as well as infrastructure development,” explains Tanuj Shori of Squareyards Consulting. The state government’s focus on infrastructure has a lot to do with how attractive the city becomes for real estate investment. “The focus is on the quality of roads, building flyovers, underpasses and bridges across railway crossings.

HEALTHY INDICATIONS

QUICK FACTS • The IT sector boom in Bengaluru has contributed to positive developments in the real estate market. • The state government’s focus on infrastructure has a lot to do with how attractive the city becomes for real estate investment.

Opinions on traditional locations in Bengaluru are mixed. Players like Sobha Limited believe there isn’t further scope in areas like Gandhinagar, Ulsoor and Chickpet. With the BDA developing Koramangala, Indiranagar, Banashankari and Jayanagar over time, these locations remain attractive. But private players are invested in Sarjapur Road, Outer Ring Road, Bellary Road and Kanakapura Road as they emerge as hot real estate destinations. Younger brands like Mantri Developers see even traditional locations as niche areas for real estate investment because of their cultural charm. This is exemplified in Malleswaram where Mantri Square has become one of the city’s landmarks.

Development of select arterial and sub-arterial roads should go hand in hand with this,” says Snehal Mantri, Director – Marketing & HR, Mantri Developers Pvt. Ltd.

Sobha Limited’s J.C. Sharma says, “Bengaluru is one of the healthiest markets with the lowest unsold inventory and minimum age of unsold inventory. This indicates that it continues to remains an end-user demand driven market. The city also led in the commercial front in terms of occupied space at 102 million sq. ft.

The Bengaluru Development Authority (BDA) has plans to construct an eight-lane peripheral ring road connecting Tumkur Road, Bellary Road, Old Madras Road & Hosur Road. With Tumkur being proposed as a Smart City for Karnataka, and infrastructure that supports similar movements, real estate developers are likely to have more of a canvas to work with. Investors can then potentially look forward to more choice between housing projects and much desired lung space. The city’s aesthetics stands to improve with connectivity bringing about decongestion and leading businesses being able to disperse their presence in a way that contributes to local growth.

According to Squareyards Consulting’s assessment, delays aren’t the norm in Bengaluru; Category A developers, among others, have been known to stick to deadlines, there is clarity of timelines while they choose ethical practices, and Government scrutiny has also reportedly improved. “Even in a worst case scenario, an investor can easily make a 3040% appreciation today,” says Tanuj Shori of Squareyards Consulting. The city has not had a neat history of keeping up infrastructure development with the migration boom. But all things considered, Bengaluru proves itself time after time as a competitive destination for property investments, not least for NRIs.

AVERAGE RESIDENTIAL APARTMENT PRICES

BENGALURU

Pic courtesy: Sobha Limited

LOCALITY

CAPITAL VALUES (RS/SQ FEET)

Bannerghatta Main Road

4020 to 5400

Electronic City

3060 to 4120

Hebbal

5220 to 7030

Hennur Main Road

4450 to 5610

Kanakapura Road

4210 to 5520

Langford Town

10130 to 12760

Marathahalli

4080 to 5500

Richmond Town

8830 to 11520

Sarjapur Road

4330 to 5860

Whitefield

4090 to 5420

Yelahanka

3930 to 5180 Source: Magicbricks.com

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CITY FOCUS

April 2015

Nashik Beckons!

Maharashtra’s third largest city is among the most Tier II locations for investors, including NRIs looking for a second home or property investment, says SAEE BANDEKAR

Pic courtesy: Parksyde Homes

‘E

ven God lived here!’ proclaims the official website of Nashik – and it must be so, considering the natural beauty and welcome weather that they have bestowed upon Nashik. Nashik has retained its natural glory in the wake of growing urbanisation. It ranks 16th in the list of top fastest growing cities and urban areas in the world, according to a survey conducted by the City Mayors’ Foundation. With Mumbai at a distance of approximately 180 kilometres (km) and Pune 210 km, the city boasts to be the third largest flourishing city of Maharashtra. It is included as one of the districts to be developed as ‘smart cities’ under one of the largest infrastructure projects planned in India, the Delhi-Mumbai Industrial Corridor (DMIC). It is also part of the Jawaharlal Nehru National Urban Renewal Mission ( JNNURM). Based on the banks of the holy Ganges, it is one of the four places in India that have the rare privilege of hosting the revered Kumbh Mela every twelve years. Nashik has a strong agro-base and is the largest producer of grapes and onions in Maharashtra. It has sustained itself on this and grown without heavy industries coming in since the last 15 years. It is also known as the ‘Wine Capital’ of India. It is one of the most preferred Tier II Indian cities for investors,

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including NRIs looking for a second home or in terms of investment. It is also an education hub in North Maharashtra, with international schools, two state-level universities and institutions providing professional education. The city is well connected with the time taken to travel between Mumbai and Nashik being shortened, thanks to the four-lane express highway. Four-laning of the Nashik-Pune highway is underway. Connectivity to Gujarat will improve once the recently announced Gujarat-Peth highway is in place. With a population of around 14.86 lakh as per the last census, the city area covers around 259 sq. km. Avinash Shirode, Past President, Confederation of Real Estate Developers Associations of India (CREDAI) says, “The area under development is around 5875.36 hectares, which is less than one-third of the total available area. The biggest edge to Nashik is that there’s still plenty of land under the ‘no development zone’ within the city limits, unlike metro cities like Pune which have reached saturation point and are merging the surrounding villages. Thankfully, our infrastructure is in place for the next two decades. There’s abundant water supply with two dams and the drainage and storm-water systems are in place. The airport is fully equipped and in place to start operations anytime. The

weather is pleasant all around the year.” He adds: “The new Development Plan (DP) will offer increased FSI depending upon the road width. This would result in concentrated vertical development which will reduce infrastructure inventory and maintenance cost of the local body i.e. Nashik Municipal Corporation. Igatpuri, Sinnar and Ghoti are important growth centres which will play a key role under the DMIC. The ` 2,500 crore budget for the Kumbh Mela will go a long way in contributing towards infrastructure development of the city. Trimbakeshwar and Igatpuri are natural hubs for developing eco-tourism. The four-laning of Trimbakeshwar road is in the final stages owing to which it would be reachable within twenty minutes from the city. Considering the speed of urbanisation infrastructure in rural areas should be in place soon.” The long-awaited new development plan will bring about welcome news for land and property owners, professionals and investors. As per the authorities, the new DP will bring about a paradigm shift in the concept of planning where land owners and authorities both will benefit. The land availability will increase and a lucrative Transfer of Development Rights (TDR) will be offered to land owners. The plan, which takes into account the next 20 years of www.indiapropertyinsider.in | A

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CITY FOCUS

April 2015

QUICK FACTS • Nashik ranks 16th in the list of the top fastest growing cities and urban areas in the world • The new DP, which takes into account the next 20 years, offers an excellent road network, traffic circulation and public amenities.

His advice to NRIs is: “A city grows when infrastructure grows. The Kumbha Mela budget is playing a crucial role in infrastructure development. The right time to invest is before infrastructure is fully developed because you get a good price. Nashik is an ideal place to invest owing to the above practical advantages and also considering the quality of life offered due to excellent climate, abundant water resources and basic amenities.” The Samraat group offers projects satisfying all price brackets, ranging from ` 30 lakh to ` 2 crore and above. Considering the potential of this city, established developers from Pune are also looking at Nashik as a good opportunity for development. Abhay Sakare, Amit Enterprises says, “Mumbai has extended upto Navi Mumbai and almost Shahapur. One can reach Thane within two hours from Nashik and it takes barely one-and-a-half hours to reach Shahapur. Hiranandani, Powai and Bandra-Kurla Complex are the new commercial centres for Mumbai. A lot of development is going on near Airoli too. People working in the outskirts of Mumbai will get better prospects in Nashik in terms of value of money and quality of life. It’s on the 32

Pic courtesy: Amit Enterprises

development, will offer a win-win situation with regards to excellent road network, traffic circulation and public amenities. With land availability cost will also become competitive. The published State Housing Policy proposes re-development of established areas of the city with cluster development of small plots and slum-rehabilitation, which will further optimise land use. Owing to pleasant weather and low pollution levels, vertical growth and the trend towards floor rise is widely accepted amongst buyers. Speaking about the price brackets as compared to the ease of living, Sujoy Gupta, CMD, Samraat Group elaborates: “Mumbai is totally saturated. Property cost in suburbs like Kandivali and Vashi range anywhere between ` 1 crore to 2 crore while Pune too has gone beyond reach and one has to travel long distances even after shelling out this amount. In comparison, Nashik offers real good projects in the range of ` 30 lakh to 1 crore and above with fantastic quality. There is the added advantage of Mumbai at a distance of hardly two hours and Pune soon to be at a distance of three hours.”

NASHIK PROPERTY RATES (APPROX) LOCALITY

CAPITAL VALUES

College Road, Gangapur Road,Trimbak Road (Established city areas

5000 to 6500

Extension of Anandwalli and Gangapur Road and towards Makhmalabad Road

3500 to 4500

Wadala, Pathardi near Mumbai Agra Road

3000 to 4000

Tapovan, Takli Road

3500 to 4000

Aurangabad Road, Adgaon-Nashik Road Link Road

2700 to 3200

Gandharvanagari, Motwani Road

4000 to 4200

Upanagar, Artillery Centre Road

3200 to 3800

Deolali (mostly twin houses, row bungalows)

3500 to 4500

way to becoming an extended suburb of Mumbai.” Their project is coming up in the upcoming area of Pathardi, which is adjacent to the Mumbai highway. A huge 1,800 flat township on land admeasuring 26 acres is coming up within a price range of ` 30 lakh to 50 lakh. It is strategically located, considering the above points with good connectivity to the city, industrial area, schools and colleges. There are several varied investment opportunities available in Nashik. The city offers a home for anyone who wants to invest in properties from price brackets ranging between ` 2,500 per sq. ft. to ` 7,000 per sq. ft., thus satisfying all segments. It offers great facilities and infrastructure with the added benefits of healthy environment and comparatively good social safety. The townships and projects are replete with in-house facilities and amenities right from secured compounds and gated communities which NRIs generally prefer. They can also avail bank loan facilities that ensure the credibility of a project. While sharing his views about what NRIs consider while investing in Tier 2 cities like Nashik, Nasrullah K Japanwala,

Managing Partner, N K J Consulting, Dubai notes, “Investors look at Nashik as a good prospect, owing to its proximity to a metro like Mumbai. Better infrastructure facilities and affordable land prices make it an ideal investment location. There’s scope of quick return of investment and rental income is better too. The cosmopolitan fabric of society, access to quality educational institutions, availability of quality entertainment and dining also play an important role in considerations for investing in property as a long-term retirement home.” Anushka Sharma, a Dubai-based NRI, who is an architectural professional says, “I preferred investing in Nashik owing to its proximity to Mumbai, amazing weather and pollutionfree atmosphere. Once you arrive in Nashik you feel peaceful, owing to its relaxed pace of life and abundance of greenery. And compared to most other cities, it is safer to take an auto or walk even in late evenings.” Nashik is adapting well to modern ways while retaining its culture. It can very well become a second home for hundreds of families from Nashik who are settled in Dubai. www.indiapropertyinsider.in | A

MEDIA PUBLICATION


INSIDER VIEW

April 2015

Real Estate is a Rewarding Asset

SANJAY DUTT, Executive Managing Director, South Asia, Cushman & Wakefield, says that all metro markets will remain on the growth path in the next few years

How has the real estate sector in India grown in the last few years? The sector has been witnessing a steady change in the right direction with the government and the key stake holders changing their ways of working to ensure that there are better synergies and that they are a part of the growth story. Which cities today are most attractive as investment destinations, and what makes them so? All metro markets are good locations and will remain on a growth path in the next few years. National Capital Region (NCR), Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Pune have many aspects that are in their favour. To begin with, their economic fundamentals are strong, which attracts corporate as well as investor investments. They are also hubs of job creation leading to growth in housing and retail and growth in other services. Tell us about emerging locations and how you expect them to grow.

Realizing that the Tier I cities are burgeoning, many corporates are consciously looking towards Tier II cities for future growth and expansion. Tier II cities are providing a plausible alternative to their Tier I big brothers as some of the necessary infrastructure for urban growth are already present in these locations. However, the biggest advantage that has made Tier II cities gain ground is the cost advantages these cities provide to the corporate through lower operational and maintenance costs, lesser overheads and initial costs and even lower salary costs as compared to Tier I cities. The diversification and specialisation of operations not only fetches savings but also ensures business continuity and expansion in a phased manner. Availability of fresh talent further encourages the development of multidelivery centres in these Tier II cities. In order to decide which Tier II cities will facilitate future expansion, the companies also look at aspects such as availability of ample land at lower costs and the attractiveness of the locations measurable through additional subsidies provided by the state government. The top 10 cities are not only witnessing increased economic activity but also are nudging the real estate industry to cater for the impending growth of the city.

QUICK FACTS

• Despite the financial crisis, realty in India has given positive returns in most instances. • However, NRIs must be clear about the purpose of investing in real estate. * Before booking a flat, they must ask for the Intimation of Disapproval (IOD) and the Commencement Certificate (CC).

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INSIDER VIEW

What would you say are the major advantages for a nonresident Indian investing in this city today? Why is it something they must look at seriously?

money by selling them. However, in this case, it is advisable to hold on to the property for a minimum period of three years so as to save on a substantial amount of income-tax.

Data for the past few years has established real estate as a rewarding asset class. Despite the financial crisis, the reality is that realty in India has given positive returns in most instances.

Any advice that you could offer NRIs while house-hunting?

Nowadays, for NRIs investing in real estate, there are fewer hassles, the tax provisions are simpler, and innovative vistas are available to save tax. If NRIs invest today in real estate, it is surely bound to bring higher appreciation in the years to come. After all, it is an asset which can be used by one’s self or leased out or sold. An NRI can invest in residential property for self-occupation purposes. If he avails of a loan to fund the purchase, he can enjoy a deduction from his Indian income in respect of interest paid on the loan. NRIs can also invest in a residential or in a commercial property and rent it out for a regular flow of rental income. The provisions of taxing rental income are simple, easy and investor-friendly. Another advantage is that the entire interest payment for purchasing the property, which is leased out, is allowed as a deduction from the rental income. Hence, it is worthwhile for an NRI to invest in real estate, especially the real estate acquired for receiving a fixed flow of rental income. NRIs can purchase properties with the sole objective of making

P

ost the formation of the new government in India, the sentiment is positive and the government is making efforts to ease norms and push industrial and agricultural growth, which are the key drivers to the economy. Emphasis has been given on infrastructure and power development with sops, which would help speed things. With the overall sentiment being upbeat, most people who were on wait-and-watch mode have started looking at options. Foreign and domestic institutions pouring in money are igniting the confidence in the India story. India is amongst the few countries to have the best and latest in infrastructure with the Delhi, Mumbai, Bangalore and Hyderabad airports counted amongst the best. Metros and improved road connectivity are adding more time to people’s personal lives. There are investment opportunities in residential properties in the outskirts of Mumbai and some within and around the Navi Mumbai belt. There are projects in locations like Mulund, which offer opportunity buying for investors or actual users. The Delhi - Mumbai Industrial corridor (DMIC) is the next big thing for India. DMIC is India’s most ambitious infrastructure plan aiming to develop new

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NRIs should be clear about the purpose of investing in real estate. The reason for this is that the strategies and the way forward will be different in each case. While house-hunting, NRIs should be aware of the list of approvals required by the builders before commencing a project. There are as many as 25-30 clearances a builder needs to procure for a project, which include approvals and sanctions from various civic agencies and government departments. These include the city development authority, land department, power and water departments, Airports Authority of India and so on. While investing in a property, buyers must look into the record and reputation of the builder. Prior to booking the flat, buyers must ask for the Intimation of Disapproval (IOD) and the Commencement Certificate (CC). Sometimes, the builder might have clearances up to the plinth level or up to, say, eight floors, but offers flats at a higher floor, in anticipation that clearance for higher floors will come. However, there is no such guarantee. Hence, while booking the flat, it is advisable for buyers to book only up to the level

New India

With the overall sentiment upbeat, most people who were on wait and watch mode have come out and started looking at options, says CHETAN NARAIN

industrial cities as “Smart Cities” and converging nextgeneration technologies across infrastructure sectors. The objective is to expand India’s manufacturing and services base and develop DMIC as a ‘Global Manufacturing and Trading Hub’. The plan will provide a major impetus to planned urbanisation in India with manufacturing as the key driver. In addition to new industrial cities, the plan envisages development of infrastructure linkages like power plants, assured water supply, high capacity transportation and logistics facilities as well as softer interventions like

April 2015

for which the project has received the IOD and CC. Having said that, in some cases the builder might say you can shift to a higher floor when the clearances come through. By then, the prices may go up. That is a risk the buyer will have to take. It is always advisable to ask the developer for all documents related to his rights on the plot, as well as legal permission to construct and market the project. Builders prefer to raise funds through pre-booking because the cost of funds works out much lesser than bank loans. That is why the prices of such properties are much lower. But in the absence of a single-window clearance system, it can take up to 18 months before the builder can actually start construction. However, once the new housing bill is implemented, such practices (of builders accepting booking before clearances) will stop.

Sanjay Dutt

Executive Managing Director, South Asia, Cushman & Wakefield skill development plan for employment of the local populace. In the first phase seven new industrial cities are being developed. The plan has been conceptualised in partnership and collaboration with Government of Japan. These new smart cities, although they do seem distant, will offer opportunities of investment across all segments. South India too has a spectrum of investment opportunities in Bangalore, Cochin, Chennai and other cities and towns in the region. Having personally surveyed a few of these locations, certain new developments do seem to be attractive at current levels with a two to three-year exit perspective. Smart investment will reap good returns. Use a reputed local broker/agent for advice. Here’s my advice for investment: Always be clear about the reason behind your investment. Is it capital appreciation? Or rental return and capital appreciation? Or just a quick profit motive against appreciation? Either which way as a Non-Resident or PIO, be aware of taxation, capital gains and repatriation laws of India and visit the Reserve Bank of India official website for the latest information. Chetan Narain is President and CEO - Narains Corp and former President - India Institute Of Real Estate.

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MEDIA PUBLICATION


INSIDER REPORT

April 2015

THE TOP 20 EM ER G I N G C I T I E S The FIRST Sm@rt Cities Council recently identified 20 promising cities in India and potential investors would do well to check out real estate options in these Tier II and Tier III markets

T

he FIRST Sm@rt Cities Council recently identified 20 promising cities in India and potential investors would do well to check out real estate options in these Tier II and Tier III markets. As India moves towards greater urbanisation, several smaller cities are increasingly gaining prominence and need to be planned well before their growth over-runs them. FIRST Sm@rt Cities Council, with the support of premier economic research firm Indicus Analytics, recently identified 20 such emerging cities, analysing factors like household income, expenditure and variables related to standard of living. The report focused on the Top 20 Promising Cities with a population of over a million and excluding the metros in India. FIRST Sm@ rt Cities Council also further explored the infrastructure opportunities in these already promising cities. The cities that made it to the list include Surat (Gujarat),

Nagpur (Maharashtra), Lucknow (Uttar Pradesh), Vadodara (Gujarat), Thane (Maharashtra), Jaipur (Rajasthan), Visakhapatnam (Andhra Pradesh), Pimpri Chinchwad (Maharashtra), Indore (Madhya Pradesh), Navi Mumbai (Maharashtra), Kanpur (Uttar Pradesh), Chandigarh (Chandigarh), Kalyan-Dombivli (Maharashtra), Faridabad (Haryana), Gurgaon (Haryana), Ghaziabad (Uttar Pradesh), Bhopal (Madhya Pradesh), Rajkot (Gujarat), Ludhiana (Punjab), and Nashik (Maharashtra).

public interface and participation, the cornerstones of sustainable urbanisation.

Prof Jagan Shah, Director, National Institute of Urban Affairs, said, “Today, it is evident that other than the six existing metros – Chennai, New Delhi, Kolkata, Mumbai, Hyderabad and Bengaluru – new economic centres of growth are emerging. It is equally evident that we need to shift focus to these smaller cities, to plan carefully before growth overruns them. We will have a better chance to integrate the city within its regional context, both in terms of space and economy.” Smaller cities also allow for greater

Indeed, Tier-II and Tier-III cities, once untapped assets, are now a part of the country’s growth race, the report notes. Their progress will widen the market, help modernise rural India and contribute to the overall development of the country. As it stands, several promising cities could qualify for the next set of major metropolitan cities. But what will it take to develop these cities optimally?

Pratap Padode, Chairman, FIRST Sm@rt Cities Council, added, “Every city has a commercial logic for its existence. Cities that have a sustainable commercial existence hold promise. No wonder that Maharashtra, which hosts the commercial capital and contributes 6% of GDP has six of its cities among the top 20 while Gujarat has three.”

Many of these cities do not have master plans – but this may 35


INSIDER REPORT

20 TOP PROMISING CITIES IN INDIA

• • • • • • • • • • • • • • • • • • • •

Surat (Gujarat)

Nagpur (Maharashtra),

Lucknow (Uttar Pradesh) Vadodara (Gujarat)

Thane (Maharashtra) Jaipur (Rajasthan)

Visakhapatnam (Andhra Pradesh)

Pimpri Chinchwad (Maharashtra) Indore (Madhya Pradesh)

Navi Mumbai (Maharashtra) Kanpur (Uttar Pradesh),

Chandigarh (Chandigarh)

Kalyan-Dombivli (Maharashtra) Faridabad (Haryana) Gurgaon (Haryana)

Ghaziabad (Uttar Pradesh), Bhopal (Madhya Pradesh) Rajkot (Gujarat)

Ludhiana (Punjab)

Nashik (Maharashtra).

actually be a boon as they can now prepare their plans on the basis of improved standards, more advanced knowledge about how cities work, and greater public participation.

COMMISSIONER SPEAK The researchers also spoke to municipal commissioners to understand the potential of such cities. Dr Amit Agrawal, Municipal Commissioner, Municipal Corporation Faridabad, for instance, told them how his city holds great promise to be a good urban centre. “The most important factor is the city’s location and connectivity,” he reasoned. “Faridabad is strategically located between Delhi and Agra and with the Metro likely to be inaugurated in May, there will be good connectivity to Delhi. Also, Jhevar Airport is being planned, which is in close proximity to Faridabad. And a large part of the Dedicated Freight Corridor is passing through the city. Thus, there is lot of scope for industrial development.” Rajeev Jadhav, Municipal Commissioner, Pimpri Chinchwad Municipal Corporation, said that infrastructure was the key, especially transportation infrastructure. “Appropriate road connectivity makes a city liveable; proper public transport is the need of the hour,” he affirmed. He also commented: “Home to a population of over 20 lakh people, we are now developing 50 km of BRTS road,” and added that the first such route was expected to start in March. The Nashik Municipal Commissioner, Praveen Gedam 36

extolling the benefits of his industrial city, observed: “We have educational and medical infrastructure and engineering colleges along with good human resources. We can reach Mumbai in two-and-a-half to three hours. Air and rail connectivity is good and there are good places for excursions, with a pleasant environment. Also, Nashik has religious importance with the Kumbh Mela taking place this year.” Gurgaon’s Vikas Gupta said: “The city has excellent infrastructure like vast roads. It lies on the Delhi-JaipurAhmedabad railway line and the NH-8 passes through it.” Mr Gupta, who is Municipal Commissioner of Gurgaon, added, “Along with sound water and sewage infrastructure, the city’s offices are occupied by Fortune 500 companies.” Speaking about Uttar Pradesh’s largest city, which has a population of over 30 lakh, Umesh Pratap Singh, Municipal Commissioner, Kanpur Municipal Corporation said: “Four National Highways (NH-2, NH-25, NH-86, NH-91) pass through the city. And at present, Kanpur is the hub of the leather industry. It is under consideration as a potential smart city by the Ministry of Urban Development and is one of the major cities in the Swachh Bharat Mission.” Representing the Uttar Pradesh capital, Uday Raj Singh, Municipal Commissioner, Lucknow Nagar Nigam, observed, “Both the corporation and government aim to improve the road and transportation system. The increasing population is prompting us to provide facilities such as sewage lines, water supply and roads, which, in turn, are creating demand for manpower and money. Lucknow is on the train route and well-connected with all cities within the state, creating opportunities for investors. For these and more reasons, it is poised to be one of the better cities on the world map.”

HERE ARE SOME SNAPSHOTS OF SOME OF THE CITIES MENTIONED IN THE REPORT.

Area: 467 sq km Population: 3,073,000 (2011 census) State: Rajasthan Highlights: Known as the Pink City, Jaipur is the capital and largest city of Rajasthan and 10th largest city in India. It is the first planned city of Modern India. With 100 per cent electrification achieved in 1998-99, the city is known for its Annual Jaipur Literature Festival and is the headquarters of the North Western Zone of Indian Railways.

April 2015

Industry: Tourism, small-scale craft industries. Educational institutes: Jaipur Engineering College & Research Centre, Jagadguru Ramanadacharya Rajasthan Sanskrit University, Jaipur National University, Jayoti Vidyapeeth Women’s University, Nims University, LNMIIT, Rajasthan Health Science University, etc. Projects: Jaipur Metro; elevated road at Durgapura; bus rapid transit service; ring road project around Jaipur; four-lane high level bridge on Amani Shah Ka Nallah; bus terminal on south of Niwaru Road at the periphery, South of Kalwar Road at the periphery, Sirsi road near Nimera, South Delhi Railway Line near Khatipura Railway Station, at the intersection of Jawahar Nagar Bypass with Shanti Path; Delhi-Jaipur highway; Jaipur International Centre; amusement park with snow theme at Jawahar Circle; International Convention Centre & Golf Course; 11 satellite towns and four growth centres within Jaipur region; development of third phase of the affordable housing scheme close to the approach road; Ashiana Housing’s upcoming Ashiana Umang with a total saleable area of about 12.42 lakh sq ft. Existing infrastructure: Open Theatre in Smriti Forest Area; two-level underground parking project at Ramniwas Garden; Ghat Ki Guni Tunnel Project; 62.5 mld STP in Delawas; Mahindra SEZ, among the largest IT SEZs in India; NH-8, NH-12 and NH-11 pass through Jaipur district with a total length of 366 km

Area: 369.01 sq km Population: 2,817,105 (2011 census) State: Uttar Pradesh Highlights: A historical city, Lucknow is the capital of Uttar Pradesh. The growing population has impelled the municipal corporation to provide a host of facilities such as sewage line, water supply and roads. The ‘Golden City of the East’ is on the train route and well connected with all cities within the state, creating ample opportunities for investors. Industry: Handicrafts like Chikankari, Zardozi and Kamdani, agriculture. Education institutes: University of Lucknow, Uttar Pradesh Technical University, Dr Ram Manohar Lohiya National Law University, Babasaheb Bhimrao Ambedkar University, Amity University and Integral University, medical institutes like Sanjay Gandhi Post Graduate Institute of Medical Sciences and management institutes like IIM-Lucknow. Projects: Solid waste project; with sewer line in half its areas, proposal for the second phase awaiting government nod; www.indiapropertyinsider.in | A

MEDIA PUBLICATION


April 2015

Lucknow Metro Rail; Agra to Lucknow Access Controlled Expressway (greenfield) project; Jhansi-Kanpur-LucknowGorakhpur-Kushinagar and Lucknow-Barabanki- Nanpara Link Expressway; four-laning of Lucknow-Sultanpur section of NH-56; meat processing plant; proposal submitted to provide LED lights to two zones; tendering for construction of government degree college Targawa, Jaithra; Vascon Engineers building multi-storied flats; Uttar Pradesh Avas Evem Vikas Parishad to construct multi-storied (stilt+8) residential houses; IT city-Chak Ganjaria City project on LucknowSultanpur highway; L&T to augment power supply networks and its transportation infrastructure business to construct six-lane access controlled expressways from Unnao district (village Neval) to Lucknow. Existing infrastructure: Amausi International Airport serves as the city’s main airport; Charbagh station, with 15 platforms, is the country’s busiest station; IT park spreads accross 25 acre on Kanpur road; Aishbagh Tower housing scheme; Ring Road along Indira Canal.

Research and Mercantile (Dream) City; smart IT city constituted by Microsoft CityNext Initiative; construction of cable stayed-bridge and its approaches on Tapi river joining Athwalines-Adajan in Surat. Existing infrastructure: Host to ONGC, GAIL, Narmada

Cement, Ambuja Cement, UltraTech Cement, NTPCKGPP Power Plant, Essar Group of Industries, L&T, Reliance PVC, Reliance Petroleum, Cairn India Ltd, GSPC, Gujarat Gas, Shell, LNG, Naiko Gas, Rama Paper Mill, etc. SME domestic IT companies and MNC IT companies include IBM, TCS, HCL and Wipro.

Area: 326.515 sq km Population: 4,466,826 (2011 census) State: Gujarat Highlights: One of India’s cleanest cities, Surat is also known as ‘The Silk City’, ‘The Diamond City’ and ‘The Green City’. Rapid industrial development has ensured a practically zero-per-cent unemployment rate. The world’s fourth fastest growing city, it will be the development model for India’s 300 Tier-II cities based on the use of renewable energy including grid-connected solar rooftop project, PPP model of solid waste management, treatment of wastewater through tertiary treatment plant and e-governance through mobile app. The city has bagged over 34 projects under JNNURM. Industry: Diamond, embroidery and textile industries. Education institutes: AURO University, Veer Narmad South Gujarat University, and Sardar Vallabhbhai National Institute of Technology. Projects: Mumbai-Ahmedabad bullet train with a halt in Surat; reconstruction of city railway station on PPP model proposed; air-conditioned double-decker train between Indore and Surat in next Railway Budget; four-lane highways between Dakor-Savli, Vadodara-Dabhoi, SuratOlpad- Bardoli by Gujarat Infrastructure Development Board; ` 90,000-crore Mumbai-Surat tunnel road planned; expansion of runway from 2,250 m to 2,905 m and construction of modular cargo terminal; conversion into solar and global city; 100-storey buildings in the Diamond

K E Y TA K E AWAY S

Here’s a quick glance at some of the FIRST Sm@rt Cities Council report • The world’s fourth largest growing city, Surat, is to be the development model for India’s 300 Tier-II cities; and why not, considering the Microsoft CityNext Initiative to constitute it as a smart city. • While both Chandigarh and Navi Mumbai enjoy the status of being planned cities, Chandigarh takes the lead in being the first smoke-free Indian city. • With the dedicated freight corridor passing through the city and the Jhevar airport being planned, industrial development is the call for Faridabad. • Environment conscious Pimpri-Chinchwad is now developing 50 km BRTS road. • While smart planning and infrastructure is the focus for most of the 20 promising cities including Surat, Vadodara, Thane, Navi Mumbai, Kalyan-Dombivili, Gurgaon and Nashik, the current big opportunity seems to be with port city Visakhapatnam, which is all powered up to set up about 96,000 solar street lights. • From train to metro, Thane is on the go: While being the one-end destination for the first ever railway train in 1853, MMRDA is considering the extension of the proposed Wadala-Thane-Kasarvadavali metro

corridor to Colaba passing through Mumbai Port Trust. India’s 10th largest city Jaipur’s Master Development Plan 2025 has 725 villages, 11 satellite towns, and four growth centres. Benefiting the walled city is the recent new Model Building Bylaws 2014 that is now part of the plan. Twin city Pune-Pimpri Chinchwad for improved distribution infrastructure in next three years. What’s coming up: Power utility to set up 27 sub stations, 1,015 km underground cables, 841 transformers and 2,592 feeder pillars. Ninth largest industrial estate in Asia and India’s industrial capital, Faridabad plans for water and slum-free living with projects worth ` 7,000 crore (under JNNURM) and ` 2,500 crore (submitted to government), respectively. Swachh Bharat mission is the focus for Kanpur and Bhopal; but Bhopal at present takes the lead in the hygiene league with the city’s plan to construct 2,400 individual household toilets with twin leach pit under Mukhyamantri Sahri Swachhata Mission.

37


INSIDER SHOWCASE

April 2015

Own a Hotel Suite! Rhythm Resitel at Lonavala near Mumbai offers individual investors the opportunity to buy fully furnished hotel suites that offer regular returns, capital gains and a maintenance-free vacation home

Just off the busy Mumbai-Pune Highway, in the heart of the hill station of Lonavala, a new concept in Indian real estate is taking shape. By June, when it becomes operational, Rhythm Resitel will be India’s first Five-Star Resitel – on the lines of the Address Hotel in Dubai. The concept allows individual investors to buy fully furnished, tastefully decorated hotel suites that are managed by an international hotel management company, earning them regular returns, capital gains as well as a maintenancefree vacation home for 30 days in a year. India Property Insider spoke to Vaibhav Jatia, Managing Director of Rhythm Realty, the promoters of the Resitel, to understand the concept better. India Property Insider (IPI): What is the Resitel? What advantages does it offer the buyer? Vaibhav Jatia (VJ): The concept is new in India, but quite popular globally. The concept starts off with a basic assumption. Many people buy vacation homes. Most don’t 38

• Rhythm Resitel will be India’s first Five-Star Resitel, on the lines of the Address Hotel in Dubai. • Each suite will be sold to investors and then leased back f rom them, to be managed professionally as a resort. • In addition to earning on the rentals, investors can stay at the resort for 30 days a year.

spend more than a couple of weeks or at the most a month at such vacation homes during the year. They are, however, saddled with hassles of paying maintenance charges, property upkeep and so on. Also since the property is locked

almost 11 months in a year, the capital they have invested is not getting them any returns. The Resitel concept addresses all these issues. It is first and foremost designed as a five-star resort and will be managed by Absolute Hotel Services, one of South Asia’s top hotel management companies. The amenities we offer range from landscaped gardens, children’s play area, lagoon pool, cigar club, mini-theatre, multi-cuisine restaurant to banquet halls. Each of the suites in the Resitel will be sold to investors and then leased back from them. The property will be managed as a resort and half of the room rentals will be paid back to the investors. In addition they have an option of enjoying a stay in the resort for 30 days during the year, provided they book at least a week in advance. This way, the investors own a vacation home, the property is properly looked after and they don’t have any maintenance hassles, they get regular returns on their investment, besides being able to enjoy their vacation home for 30 days in a year. It is a win-win situation. Needless to say, as and when the investor wants to exit, he/she also enjoys capital gains. www.indiapropertyinsider.in | A

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April 2015

IPI: How many units do you have at the Resitel and at what stage is the construction?

IPI: What are your other plans? Are you looking at building more such resorts?

VJ: In the first phase, we have 90 units, along wtih all hotel facilities such as banquet halls, restaurants, spa, gym, lounges etc. Construction is almost complete and the resort will be operational from June this year.

VJ: Once the first phase becomes operational, we will look at building Phase II on the adjoining land parcel. We are also looking at building similar resorts in other parts of Maharashtra like Alibaug and holiday destinations in South India.

IPI: Why should an investor choose to buy a suite in your Resitel, as opposed to buying an apartment? VJ: The fact is that real estate prices have plateaued. While high prices are being quoted, no real deals are happening. If you try and put your apartment on rent, the returns you would get won’t be more than 2-3% annually. On the other hand, in a Resitel concept, you are likely to get 10-12% returns annually. In addition, you don’t have any maintenance issues and the property is managed by professionals and you get to enjoy it as a vacation home for 30 days in a year. Whatever capital gains that happen over the medium/long-term are, of course, a bonus! If you look at similar properties, like The Address in Dubai, you will find that there are several new investors keen to put in money, but the existing investors don’t want to exit. Clearly something is working for the concept!

Besides the Resitel, we have a 14-storey residential apartment complex at Andheri, Mumbai, which is in an advanced stage of construction. We have also completed a shopping / retail centre in the heart of Lonavala town. IPI: Tell us a little about the background of the Rhythm Realty Group.

The key to running a successful real estate business is land and access to funding. The Group has a large land bank, acquired over several decades. Both Ashish and I, given our professional backgrounds, understand the financial world but above all we understand that transparency and fulfilling commitments to all stakeholders is of primary importance. Contact: +971 55 260 3028 Email: sales@rhythmrealty.in Website: www.rhythmresitel.com

“Construction is almost complete and the resort will be operational from June this year."

VJ: I come from a business family with interests in various enterprises in verticals like garments and metal trading. Along the way, the family has been wisely investing in land. The land on which the Resitel stands, for example, has been with the family since over a decade. My brother, Ashish, and I have both done our management from Wharton School of Business and worked with global private equity majors. Ashish worked with Blackstone, while I worked with Lehman Brothers.

Vaibhav Jatia

Managing Director Rhythm Realty

39


SNAPSHOTS

April 2015

Sentiments on the Rise The Indian tortoise may soon overcome the Chinese hare, suggests a recent report from JLL. Here’s a quick look at how markets across the country are doing

apartments, affordable housing in the city outskirts continued showing traction. A new project, Sky City Villa, was launched in Shela. Among the key precincts, Naroda had capital values of ` 2,200 -7,500 per sq ft, while the SG Highway showed the highest rates, at ` 5,500 – 7,500 per sq ft. Rental values for these two locations for a 1,000 sq ft 2BHK apartment were ` 4,0006,000 and ` 10,000 – 15,000 respectively. The development of the healthcare and educational block in the GIFT (Gujarat International Finance Tec city) has commenced and is expected to contribute to overall growth of the sector.

BENGALURU

P

40

rof. Nouriel Roubini of NYU Stern, who foretold the global financial crisis, believes that the Indian tortoise will overtake the Chinese hare over the next decade. Quoting Prof Roubini in its Pulse monthly real estate newsletter (February 2015), JLL’s Real Estate Intelligence Service points out that in May 2013, India was considered to be one of the ‘Fragile 5’ nations; now, barely 20 months later, it is counted as one of the best economies. India may not be out of the woods as yet, as Anuj Puri, Chairman and Country Head, JLL India points out in the report, but “with just a few decisive tweaks, we will definitely live up to Prof. Roubini’s prediction”, he says. So far, as analysts point out, the new Narendra Modi government has certainly shown its willingness to do what it takes.

since May 2013. Following reduction in the repo rate, the reverse repo rate has been adjusted to 6.75 per cent and the marginal standing facility (MSF) rate and bank rate to 8.75 per cent. With this rate cut, banks and non-banking financial companies have more cash to lend, and loans, including home and auto loans, are likely to get cheaper. JLL also points out that the finance ministry has floated a draft cabinet note to amend the Foreign Exchange Management Act (FEMA) to permit overseas funds in real estate investment trusts (REITS), which have already received a policy green light. Investment sentiments are improving, JLL adds.

The report notes that encouraged by softening inflation the Reserve Bank of India had decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent in January with a view to boost growth. This is the first cut in interest rates

AHMEDABAD

HERE ARE SOME HIGHLIGHTS OF THE REPORT.

The Bengaluru Metro Rail Corporation Limited (BMRCL) was set to commence trial runs on the Reach 2 of the EastWest corridor between MG Road and Mysore Road in the first quarter of this year. Launches continued to remain strong in this city; key launches included HM Indigo, Radiant Elitaire and Platinum Lifestyle in J P Nagar; NVT Arcot Vaksana, Abhee Lake View and Around the Mangoes in Sarjapur; Mahaveer Horizon and Gayatri Good Life in Whitefield and Bren Trillium in Electronic City. Office leasing activity remained strong along the Outer Ring Road and retail also saw expansion in malls and high streets.

CHENNAI Chennai recorded improved housing demand in the beginning of this year and launches remained stable as well. New launches included Nest Njoy on East Coast Road,

RECENT DEALS

A sea-facing 1,750 sq ft three-bedroom apartment at Worli in South Mumbai was sold for about INR 225 million. Source: JLL Pulse

Though the residential market in Ahmedabad saw tepid demand in the bungalow scheme and high ticket size www.indiapropertyinsider.in | A

MEDIA PUBLICATION


April 2015

Aquality on GST Road, North Town Chaitanya at Porumbur, Isha Gayatri at Kolapakkam, Osian Chlorophyll at Porur and Casa Grande Aldea at Thoraipakkam. Retail continued to see expansion, though office leasing remained modest. The key precinct of Adyar saw rental values in the region of ` 20,000 – 30,000 for a 1,000 sq ft 2BHK apartment.

DELHI NCR As with other markets across the country, the sales traction is greater in low-ticket size apartment projects, particularly in the affordable segment. New launches include Raheja Ayana in Gurgaon and Ecnon Kings Court on Yamuna Expressway – Noida. Office demand remains steady though no new large requirements have been seen. In terms of policy and infrastructure changes, the extension of Noida Metro from the existing City Centre to Sector 62 has been given the go-ahead.

HYDERABAD Major residential launches in Hyderabad included Sri Hemadurga Lakshmi Pride at Miyapur and Tree Storie at Madhapur. In the retail segment, both malls at high street witnessed good demand, and leasing activity in the office segment was stable too. Hyderabad has taken a cue from the central government’s Swachh Bharat initiative, and GHMC has declared Road No 1, 2 and 12 in Banjara Hills, Road No 36 and 92 in Jubilee Hills, Khairatabad Main Road, Begumpet Main Road and Secretariat Road as ‘litter-free’ zones. Residential demand in the city was stable. Absorption levels continued improving in the budget segment housing. Meanwhile, number of new launches declined with the present high level of inventory in the city. New launches included Tiru Elysia at Thakurukur, Behala and Signum Parkwood Estate at Mankundu – Chandannagar. As far as policy and infrastructure go, land belonging to state PSUs can now be auctioned and a minimum of 50 acres will be required to set up a township. Of this, 25% of the total land area will be reserved for economically weaker sections (EWS) and another 25% area will be reserved as an economic zone. The townships will enjoy single-window processing for government services like sanctioning of online building plans.

PUNE Demand for the residential properties remained stable over the month. A few large projects are in the pre-launch stage. A few developers are currently offering flexible payment schemes such as 5:85:10, 20:40:40 and discounts to spur sales velocity. New launches include new towers launched inside Life Republic and Megapolis Townships.

MUMBAI Mumbai’s residential sector, specially the Eastern Suburbs, witnessed a moderate increase in new launches whereas

AV E R A G E R E S I D E N T I A L A PA R T M E N T P R I C E S KEY PRECINCTS Rental value (INR Capital Value per month for 1,000 sq ft INR per month 2BHK apartment)

KEY PRECINCTS Rental value (INR Capital Value per month for 1,000 sq ft INR per month 2BHK apartment)

AHMEDABAD

HYDERABAD

Naroda

4,000 – 6,000

2,200 – 2,500

Banjara Hills

20,000 – 30,000

7,500 – 14,000

Gota

5,000 – 8,000

2,500 – 2,800

Begumpet

12,000 – 20,000

4,000 – 5,500

Navrangpura

15,000 – 20,000

6,000 – 7,000

Kondapur

10,000 – 20,000

3,200 – 5,000

SG Highway

10,000 – 15,000

5,500 – 7,500

Gachibowli

10,000 – 18,000

3,500 – 4,200

Satellite

12,000 – 15,000

4,000 – 6,000

Tellapur

8,000 – 15,000

2,800 – 3,500

South Bopal

8,000 – 12,000

3,000 – 4,000

Kukatpally

8,000 – 15,000

3,500 – 4,000

Miyapur

8,000 – 10,000

2,400 – 3,700

Alipore

45,000 – 60,000

15,000 – 22,000

Prince Anwar Shah Road 20,000 – 32,000

7,000 – 14,000

EM Bypass (Topsia)

15,000 – 23,000

6,000 – 10,000

Lake Town

10,000 – 16,000

3,800 – 7,500

New Town (AA-I, II & III) 10,000 – 16,000

3,500 – 6,000

Rajarhat

8,000 – 14,000

2,500 – 4,700

Behala

8,000 – 14,000

3,000 – 5,500

Lower Parel

60,000 – 1,10,000

25,000 – 40,000

Wadala

35,000 – 55,000

15,000 – 23,000

BENGALURU Old Madras Road

15,000 – 25,000

5,000 – 7,000

Indiranagar

20,000 – 30,000

10,000 – 25,000

Bellary Road

12,000 – 18,000

4,500 – 9,000

Hosur Road

10,000 – 14,000

3,000 – 6,500

Whitefield

18,000 – 25,000

5,000 – 8,000

Tumkur Road

8,000 – 12,000

3,200 – 6,500

Kanakapura Road

8,000 – 12,000

3,200 – 6,500

Mysore Road

8,000 – 10,000

3,000 – 4,000

CHENNAI

MUMBAI

Adyar

20,000 – 30,000

15,000 – 22,000

Andheri

32,000 – 55,000

12,500 – 21,500

Medavakkam

7,000 – 14,000

3,750 – 5,500

Ghatkopar

30,000 – 45,000

11,500 – 17,000

Tambaram

6,000 – 12,000

3,500 – 4,500

Ghodbunder Road

12,000 – 25,000

6,000 – 9,500

Anna Nagar

15,000 – 25,000

9,000 – 15,000

Kharghar

10,000 – 18,000

6,000 – 9,000

Porur

5,000 – 10,000

4,00 – 6,200

Sholinganallur

9,000 – 12,000

4,250 – 5,800

Wakad

10,000 – 13,000

5,000 – 6,500

Hinjewadi

9,000 – 11,000

4,800 – 6,500

DELHI NCR

PUNE

Golf Course Road

27,000 – 32,000

13,000 – 19,000

Kharadi

11,000 – 15,000

5,000 – 6,800

Sohna Road

17,000 – 20,000

5,800 – 7,500

Hadapsar

13,000 – 18,000

5,500 – 7,500

Golf Course Extn Road 19,000 – 22,000

8,500 – 11,000

Undri

8,000 – 12,000

4,000 – 5,500

Dwarka Expressway

5,500 – 7,500

Pimpri-Chinchwad

8,000 – 15,000

4,500 – 6,000

NA

Noida-Greater 13,000 – 15,000 Noida Expressway

4,300 – 6,500

Noida City

12,000 – 14,500

4,700 – 6,000

Indirapuram

11,000 – 12,000

4,500 – 5,300

demand remained stable. New Launches included Oberoi Eternia and Enigma at Mulund, Lodha Codename Blockbuster at Thane and Runwal Bliss at Kanjurmarg. The office market also witnessed robust activity at the beginning of the year, and in retain categories such as apparel, accessories and F&B

Source: JLL Pulse, February 2015

continued to lease. There was some consternation over the fact that the Maharashtra State Government has increased Ready Reckoner Rates for Mumbai from January 2015. While the average hike across the city is between 15% and 20% for 2015, the highest increase is about 40%. 41


INSIDER INSIGHTS

April 2015

A Market for Discerning Buyers The real estate sector in India is moving toward maturity, says a recent Black Olive Ventures report

I

ndian real estate is entering the final and Third Phase and is leaving behind the PHASE – I (pre 2000) where buyers did not have the money to buy basic real estate and it had not emerged as an asset class and the Phase – II (2000-2013) years of real estate emerging as an asset class and real estate mania. This third phase will make buyers and investors more cautious and real estate will gradually move towards maturity, according to Sunil Agarwal, Managing Director, Black Olive Ventures (BOV). BOV, which recently released its Real State of Estate Yearbook 2015, observes that one section of the industry performed reasonably well, i.e., mortgage bankers and large real estate investors. Both had a choice of where they wanted to put their money. “It may be a different issue that in case of large investors, ‘good deals’ with ‘good / famous developers’ were still hard to come by and there was a lot more money chasing those good deals,” Mr Agarwal notes. “The true winner investors of the year were the funds or investors who took the very un-conventional route to make money in real estate, i.e., stock markets.” In early 2014 the real estate stocks were trading at rock bottom prices. The investors who punted on a Modi win made a killing, the report says.

“The true winner investors of the year were the funds or investors who took the very unconventional route to make money in real estate, i.e., stock markets.”

The BOV report points out that there were some notable policy initiatives taken by the government in 2014. These were: • Union Budget FY2014-15 gave affordable housing infrastructure status. • New FDI norms were notified, lowering the ceiling of investment and size of the projects that can be invested into. This may push some HNI investment in the country, especially by NRIs and family offices. • The new government made its first decisive move by relaxing land acquisition norms for certain purposes, i.e., Power, Highways, Housing, Defence and Infrastructure projects. This gave a breather from the very rigid Land Acquisition Rehabilitation and Resettlement Act. No consent is required for such acquisitions and also the multi-crop land can be acquired under the new provisions. This may give a push to some of the large projects that have been stuck for long. • Through a few things need to be tied up, Government 42

notified the REIT Guidelines, paving way for REITs to become a reality. BOV believes that in 2015, policy rather than economy will decide the next course in real estate. There is likely to be an increase in India investment by international investors if the Modi government makes the right moves and continues to change real estate policies for betterment, Mr Agarwal notes. This is the only way in which good market sentiment will encourage foreign and domestic investors to put real money into various sectors of economy. Here are some trends that BOV foresees: • Goods and Services Tax (GST) is likely to become a reality and this, coupled with popularity of e-retailing, will

encourage development of large warehouses. This may be a new asset class that investors and developers can evaluate. • 2015 may see the very first REIT hitting the market and encourage retail investors to try a new real estate product. • Falling Inflation is likely to encourage buyers sitting on the fence, especially in the affordable segment (below `50 lakh) and for ready-to-move-in projects. The mortgage market is likely to perform better on account of increase in secondary market sales. • The IT and ITeSsector may see a spurt in investments and demand for large real estate space from these sectors is likely to be an important driver for the commercial real estate market. Although office vacancy rates are reducing, it is not likely to improve the rentals. • The 100 smart cities initiative will generate a lot of urban re-development and new development debate. We foresee some “politically visible” projects will be underway, however the seriousness with which government will adopt the essence of the debate and convert them to suitable practices and policies remains to be seen. Buyers will need to be more discerning and need to do more homework before buying. They have to ask and inquire about the developer and the project. www.indiapropertyinsider.in | A

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INFRASTRUCTURE

April 2015

Mumbai Expands its Metro Plans

Pic: Shashikant Patil

If all goes well, the ambitious Metro 3 corridor from Cuffe Parade to SEEPZ will be in operation by 2020

E

lectrified rapid transit train systems – commonly known as the Metro – have been taken for granted across the world, with more than 160 such transport networks existing in 55 countries. In India, commuters first got a taste of such travel through the Kolkata Metro and the Chennai Mass Rapid Transit System beginning operations in 2002. The Delhi Metro has, however, been recognised as India’s first modern metro. The world’s 13th largest metro system in terms of length currently has consists of five colour-coded lines, plus a segment linking New Delhi Metro Station to the

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Indira Gandhi International Airport. The Delhi Metro has a total length of 193 kilometres serving 140 stations, with six more for the Airport Express. Mumbai, India’s commercial capital, has only recently discovered the delights of a Metro Rail network, with a 11.40 km line linking Andheri in the western suburbs and Ghatkopar on the eastern side. Though the connectivity it offers is quite limited, with 12 stations, it has revolutionised East-West linkages in the city and transformed the way people commute.

M E TR O 3 : TR AV E L T I M E R E DUC TI O N Mode

Travel time Travel time (Cuffe Parade to airport) (Cuffe Parade to SEEPZ)

Metro

50 minutes

60 minutes

Car

100 minutes

130 minutes

Suburban rail

80 minutes

120 minutes

Source: Mumbai Metro Rail Corporation

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MEDIA PUBLICATION


April 2015

27 locations that will be impacted by Mumbai Metro–3 Experts agree that property values go up exponentially near major infrastructure projects. Take a look at the locations from Cuffe Parade to SEEPZ , where Metro stations will be built in Mumbai. 1) Cuffe Parade 2) Vidhan Bhavan 3) Churchgate Metro 4) Hutatma Chowk 5) CST Metro 6) Kalbadevi 7) Girgaon 8) Grant Road Metro 9) Mumbai Central Metro 10) Mahalaxmi Metro

Five projects that will transform Mumbai Devendra Fadnavis, Chief Minister of Maharashtra and Chairman, Mumbai Metropolitan Region Development Authority (MMRDA) recently approved a ` 3,832.30-crore budget for the year 2015-16 during the 137th Authority meeting on March 26, 2015. “The intent is to provide easy, comfortable and congestion-free commute within the city and its metropolitan region”, said Mr Fadnavis. Here are some of the priority infrastructure projects in Mumbai.  Mumbai Urban Transport Project (MUTP) receives ` 1,000 crore  ` 750 crore for Extended MUIP  Monorail Phase-II allocated ` 400 crore  ` 180 crore spared for Metro-III *  Two flyovers and elevated road at Chheda Nagar Junction

East-West connectivity has been limited in Mumbai, but this is changing

11) Science Museum 12) Acharya Atre Chowk 13) Worli 14) Siddhivinayak 15) Dadar Metro 16) Shitladevi Temple 17) Dharavi 18) Bandra Metro 19) Vidyanagri 20) Santacruz 21) Chhatrapati Shivaji International Airport (Domestic) 22) Sahar Road 23) Chhatrapati Shivaji International Airport (International) 24) Marol Naka 25) MIDC 26) SEEPZ 27) Aarey (car depot)

Now, there are ambitious plans for ` 23,136 crore Mumbai Metro Line 3, a fully underground 32.5 km network with 27 stations linking six commercial centres, including Cuffe Parade in South Mumbai and SEEPZ in Andheri. The metro, formally known as the Colaba – Bandra – SEEPZ Metro Corridor, will travel via Nariman Point, Fort, Girgaon, Mahalaxmi, Worli, Bandra-Kurla Complex and the domestic and international airports. “Though Mumbai has had a robust

transport network, these areas have not been served by suburban rail,” says Ms Ashwini Bhide, Managing Director, Mumbai Metro Rail Corporation Ltd. There will also be interchange facilities, including with the Metro Line 1 at Marol Naka, Western Railway stations such as Churchgate, Grant Road, Mumbai Central; the Chhatrapati Shivaji Terminus of the Central Railway and Sant Ghadge Maharaj Chowk on the Monorail system. Metro 3 is expected to commence operations by the year 2020 and will offer late night services to the airport, in addition to significantly reducing traffic congestion – by 35%, Ms Bhide says – and also hopefully minimising road accidents and noise and air pollution. By 2021, Metro 3 is expected to have a ridership of 13 lakh people per day, going up to 17 lakh per day by 2031. Ms Bhide says the bids for Mumbai Metro - 3 are expected by April, and contractors would be in place by the end of the year. Work will start on the construction by end of the next calendar year. The project is funded by Japan International Co-operation Agency ( JICA) who will provide loan assistance to the tune of ` 13,235 cr. The rest of the expenditure will be made available by Government of India, Government of Maharashtra/ Mumbai Metropolitan Region Development Authority (MMRDA) in the form of equity and subordinate debt and funds from Mumbai International Airport Ltd (MIAL).The project will

see state-of-the-art technology in underground tunneling, used for the first time in an infrastructure project in Mumbai. While the TBM (Tunnel Boring Machine) technology will be used for the Metro Tunnels, the construction of stations will be either the cut and cover method or NATM (New Austrian Tunneling Method) as per site requirements. In a crowded and chaotic city like Mumbai, there has been much discussion over the disruption that the Metro 3 will cause during the construction phase, and in terms of the land required. Citizens have also proposed alternative alignments, and suggested that the Metro might be more useful if it passed via the Gateway of India to benefit commuters taking water transport to places like Uran across the creek. Some 2,000 houses, including those in crowded areas like Kalbadevi, will also have to be rehabilitated. “If you have to create something, you have to disrupt something,” Ms Bhide remarks, adding that everything has been in the public domain since 2004. “We cannot change the alignment now, because even a small change will mean that everything will have to go back to the drawing board.” She is also clear that penalty clauses for contractors will be implemented in the case of project delays. “The city needs mass public transport,” Ms Bhide notes. “There will be challenges, but the benefits will be immense.” MENKA SHIVDASANI

“The city needs mass public transport. There will be challenges but the benefits will be immense.” - Ashwini Bhide MD, Mumbai Metro Rail Corporation Ltd

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CONVERSATIONS

NRI CALLING

April 2015

‘Opt for Under-Developed Regions’ DR. RAM JIVATRAM BUXANI, Chairman, ITL Group, came to Dubai from Hyderabad 55 years ago. Here’s what he has to say about investing in Indian real estate

How long has it been since you left India and what was your reason for leaving? I left India in 1959 to pursue my job in Dubai. Do you ever think of returning to India, if not immediately, then after retirement? I believe in moving with waves. I have allowed myself to be taken where the waves of the worldly ocean take me. Would you say that investing in real estate in India is a worthwhile decision? Please elaborate. Investing in real estate is always advisable. One needs to stay with this sort of activity and should not necessarily take a short-term view. I believe it is better to get into under-developed regions which are close to Metropolitan cities. If you were to buy property in India, which locations would you favour and what is it about these locations that appeal to you? What kind of property would you be looking for – residential, commercial, etc.

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India has a lot of room for residential properties. I would prefer that. Do you currently own any property in India? If so, is it family owned, or has it been purchased by you as an investment? I hold a few properties which I have purchased for my own use. What advice would you give to others who would be looking to purchase property here? My advice to people who are looking for purchasing property is that please avoid getting into off-plan projects and always see that all the permissions and paper work is in order. I have a property for which possession was given to me over 15 years back but the builder still has to provide the occupation certificate. This is very common but at the same time, we all know that it is not legal. So we should not enter into an agreement in excitement and first ascertain that documentation is in order.

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THE INSIDER INTERVIEW

April 2015

A W i n n i n g Pro p o s i t i on Vikas Oberoi believes that investing in Indian real estate makes good business sense for non-resident Indians

VIKAS OBEROI

V

Chairman & Managing Director, Oberoi Realty

ikas Oberoi, the youthful Chairman and Managing Director of Oberoi Realty Ltd, manages a portfolio spanning across Residential, Office Space, Retail, Hospitality and Social Infrastructure projects, including Oberoi Mall, The Westin Mumbai Garden City and the Oberoi International School in Mumbai. The 42-yearold real estate developer has more than two decades of experience in the industry, and has been on the Board since its incorporation. The company he heads is focused on premium real estate developments in Mumbai, the commercial capital of India. Oberoi Realty recently forayed into the central suburbs of Mumbai with the launch of its twin developments, Eternia and Enigma, at Mulund. Oberoi Exquisite is another exclusive residential project at Oberoi Garden City (OGC), Oberoi Realty’s flagship development. Esquire is an ongoing residential project which comprises three towers with large format apartments in 3 / 4 BHK configurations. Priviera at Khar (W) has expansive fourbedroom apartments, with one per floor. Vikas is an alumnus of Harvard Business School and is on its India Advisory Board. He is an avid reader, a keen traveller and has a passion for flying and skiing. Here’s what he has to say about India as a real estate investment destination. Is investing in Indian real estate a worthwhile proposition for NRIs today, and if so, why would you say this is so? Yes, investing in the Indian real estate sector surely makes good business sense and is a sure winning proposition for NRIs looking at investing here in India. The demand for

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luxury housing has always been there, irrespective of any trends witnessed by the industry. There is a huge demand for property here, especially so from NRIs wanting to invest in their country, as it ensures an appreciation in value and guaranteed returns. The global slowdown, in fact, had a positive impact in this segment as many NRIs began showing a keen interest in investing in Indian realty. Factors like a robust economy, easy access to capital, higher disposable incomes, most importantly; aspirations towards a better quality of life are the key drivers for the demand of luxury real estate among overseas buyers. The recent Rupee depreciation has given a fillip to property investments by NRIs into the country. NRIs look at buying residential properties both for their own use as well as for investment. High economic growth, improved infrastructure, connectivity to major cities in the world and commercial space demands are some factors that help sustain NRI interest in India. What is the estimated demand for Indian property from Indians settled in the Dubai/ GCC regions. How, if at all, are you reaching out to them? There is a huge demand from Indians settled in the GCC region towards luxury housing in metro cities of India. The global meltdown in the recent past was, in fact, a turning point which resulted in NRIs once again turning towards their home country to make investments. India, a growing economy with a stable political climate, is a preferred choice for NRIs when it comes to investing in property. As long as there are buyers and the city is developing at such a fast scale, the demand for luxury homes will never stop. The demand for luxury homes is constantly increasing. Our NRI customers account for approximately 11% of our total sales. In addition to this we believe that there is always demand for the right location at the right price from a trusted developer. We reach out to the NRI community through regular interactive meets which are organised to update them on project development status and new projects on the anvil. This is well taken care of by trained representatives who reach out to our customers based out in the Gulf region on a regular basis. Which are the most promising destinations they should be looking at in India, and why?

Most NRI buyers prefer buying properties at popular and strategic locations in Metros. The most promising destinations NRIs should be looking in India are the Western region and Southern region where the property market is booming at a very rapid pace. In the Western region, Mumbai, Pune and Ahmedabad look very promising. Being the premier city of India, Mumbai leads the race in providing luxurious housing to its affluent class. The city houses the who’s who of the nation; corporate honchos, Bollywood celebrities and leading cricketers are among those who live in Mumbai, which is also the financial capital of the country. This makes Mumbai one of the biggest markets in the country for luxury living. The Southern region of the country too has huge potential. IT hubs like Bangalore and Hyderabad have really grown fast in the real estate segment whereas Chennai is not far behind. Given the current market scenario, do you think developers are going out of their way to offer incentives to woo buyers? Are there any incentives that your own company offers? This is especially true for developers who cater to the lower to mid-segment of housing who offer various incentives to home buyers. We are in the high-end luxury segment of housing catering to home buyers who include HNIs, NRIs, and celebrities, who are aware of our brand and look at buying property for their own personal use or as an investment. Investment in luxury housing assures the buyer of high capital appreciation in the long term. What kind of returns can a potential investor expect today? Investments in real estate have always been the most preferred investment option the world over and India is no different. The country has in recent times been emerging as a hot real estate investment destination. NRIs based in the Gulf, United States, United Kingdom and Far East have shown an interest. Appreciation of property prices, coupled with the everincreasing demand, assures investors of attractive returns. As the saying goes ‘there exists a market for the right property at the right price’. www.indiapropertyinsider.in | A

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FINANCE

April 2015

Some Guidelines for Property Purchase in India Real estate is one of the lucrative investment options for NRIs, says SAURABH GUP TA

I

n the past few decades, non-residential Indians have achieved success across the world irrespective of their professions. Despite staying in faraway lands, they have remained in touch with a changing India. Besides Bollywood and regional cinema, one thing that keeps NRIs hooked on to India is the local property market. Most NRIs earn in currencies stronger that the Indian rupee, and the rupee has depreciated significantly in the past few years making real estate as one of the lucrative investment options for NRIs. Also, the Reserve Bank of India (RBI) and Foreign Exchange Management Act (FEMA) regulations, which cover such property transactions, have fairly simple rules for individual NRI buyers.

HOW TO DECIDE ON A PROPERTY PURCHASE IN INDIA Check if the property papers are clean. It will be wise to get the papers verified by a lawyer before going ahead. Make sure to check the title papers of the property, especially if it is inherited or jointly held, and take a bank release in case it was at any point of time under mortgage. Also, take a no dues certificate from the seller at the time of purchase to ensure there is no water, electricity or any other pending bills with the authorities. For new constructions, land title should be clear and the builder should have taken all approvals and permits from the civic authorities in terms of construction.

HOW TO FUND THE PURCHASE Lenders will be more than happy to fund your purchase

Pic courtesy: Tata Housing

An NRI or Person of Indian Origin (PIO) can own both residential as well as commercial properties in India and there is no restriction on the number of properties you can buy. However, you cannot purchase any agricultural land, farm house and plantation property. You can have ownership of such property only if they’ve been gifted or inherited. Also, the monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account. provided you are eligible and property is clean. Also, education qualification and profession play a role in deciding your loan eligibility. Many lenders have provisions that only graduate NRIs can avail home loans in India. According to RBI norms, a maximum of 80% of the value of property can be funded by a financial institution. The rest has to come from the NRI’s personal resources. Indian financial institutions give rupee loans and so the same needs to be repaid in rupees only. Since all transactions must happen through the banking channel, repayment has to be done by inward remittances. You can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or Foreign Currency Non Resident (FCNR) account. In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative’s local account can also

QUICK FACTS • An NRI or Person of Indian Origin (PIO) can own both residential as well as commercial properties in India and there is no restriction on the number of properties you can buy. • The monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account.

49


FINANCE

April 2015

be used to make the loan payments.

POWER OF ATTORNEY If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker. A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust. Also, if and when you want to dispose the property, it is a good idea to have a PoA to be a resident India who may be able to act on your behalf to complete formalities such as registration, possession, execution of agreement of sale, etc.

TAX BENEFITS A property is also a good tax-saving tool for both residents and non-residents. The benefits for a non-residential Indian (NRI) are very similar to the tax benefits of a resident Indian. An NRI is entitled to all tax benefits related to purchase of property that a resident Indian is. So, you can claim a Rs 1 lakh deduction under 80C.

SALE OF PROPERTY BY NRIS: RULES TO BE FOLLOWED: Under the FEMA rules, if you are an NRI, you can sell any residential or commercial property you have bought or inherited to anyone you want. If you have any inherited agricultural property, plantation or farm house, you have to search for a resident Indian to buy it. However, you are allowed to gift them to another NRI or the person of Indian origin. There are some specific RBI guidelines on the repatriation of sale proceeds which need to be adhered to. Also, it must be noted that an NRI cannot repatriate proceeds of more than two properties.

By Saurabh Gupta Fund Manager and Head of Strategy at IIFL Realty.

50

A Checklist  Indian properties are an attractive investment opportunity for NRIs due to their high appreciation and affordable valuation compared to developed country markets.  A depreciating rupee aid buying capacity of NRIs.  Property transactions by NRIs are regulated by Reserve Bank of India (RBI) and primarily through Foreign Exchange Management Act (FEMA) regulations  FEMA rules and RBI directives are fairly simple for individual NRI buyers.  An NRI or Person of Indian Origin (PIO) can own both residential as well as commercial properties in India and there is no restriction on the number of properties you can buy. However, you cannot purchase any agricultural land, farm house and plantation property. You can have ownership of such property only if they’ve been gifted or inherited.  The monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account.  Check if the property papers are clean. It will be wise to get the papers verified by a lawyer before going ahead. Make sure to check the title papers of the property, especially if it is inherited or jointly held, and take a bank release in case it was at any point of time under mortgage.  Take a no dues certificate from the seller at the time of purchase to ensure there is no water, electricity or any other pending bills with the authorities. For new constructions, land title should be clear and the builder should have taken all approvals and permits from the civic authorities in terms of construction.

HOW TO FUND THE PURCHASE  Indian lenders are generally happy to fund NRI property purchases provided you are eligible and property is clean. Also, education qualification and profession play a role in deciding your loan eligibility. Many lenders have provisions that only graduate NRIs can avail home loans in India.

 According to RBI norms, a maximum of 80% of the value of property can be funded by a financial institution; the rest has to come from the NRI’s personal resources. Indian financial institutions give rupee loans and so the same need to be repaid in rupees only.  Since all transactions must happen through the banking channel, repayment has to be done by inward remittances. You can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or Foreign Currency Non Resident (FCNR) account.  In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative’s local account can also be used to make the loan payments.  If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker.  A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust.  Also, if and when you want to dispose the property, it is a good idea to have a PoA to be a resident India who may be able to act on your behalf to complete formalities such as registration, possession, execution of agreement of sale, etc.

TAX BENEFITS  A property is also a good tax saving tool for both residents and non-residents. The benefits for a nonresidential Indian (NRI) are very similar to the tax benefits of a resident Indian. An NRI is entitled to all tax benefits related to purchase of property that a resident Indian is. So, you can claim a ` 1 lakh deduction under 80C. Source: IIFL Realty

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MEDIA PUBLICATION


TAXATION

April 2015

Tax Facts for NRI Investors

While NRIs should keep the regulatory and tax framework in mind, the Indian real estate market remains a sound investment opportunity, say SRIRAM GOVIND and DEEPAK JODHANI

QUICK FACTS • NRIs are allowed to take home loans as well so long as they are serviced through their NRE/NRO accounts • NRIs should ensure that they purchase real property in India at or above the reckoner value so as to avoid a tax liability, which should ordinarily not arise on purchase

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he Indian real estate market has always been the dream investment option for NRIs. Over the years, NRIs have shown great interest in owning property in India either as an investment or to maintain property in their native areas to ensure that their roots in India are preserved by setting up holiday homes or retirement homes for themselves and their families. In the last year or two, the depreciation in the rupee has also incentivized NRIs to acquire property in India as a better INR value may be obtained for the foreign currency held by them. Therefore, understanding the regulatory and tax implications involved in investing into Indian property has become critical for NRIs looking at this route. EXCHANGE CONTROL PERSPECTIVE At the outset, it is important to note that except by way of inheritance, an individual who is not a resident of India is generally not permitted to acquire real estate in India under the regulatory framework. However, a specific carveout has been provided for NRIs, allowing them to acquire both residential and commercial properties in India by way of purchase, gift or inheritance without any limitations. Moreover, NRIs are also allowed to take home loans as well so long as they are serviced through their NRE/NRO accounts. To that extent, NRIs have almost unrestricted access to residential and commercial properties in India from an investment perspective. However, it must be noted that NRIs are not allowed to acquire agricultural/plantation land or farm houses, except by way of inheritance.

At the point of sale/disposal, there are a few regulatory restrictions on the repatriation of sale proceeds. Although NRIs are allowed to sell/gift their Indian residential or commercial properties to any Indian resident or to another NRI, the repatriation of sale proceeds is restricted to the amount paid (through foreign currency sources) for the original acquisition of the properties. Further, in case of residential properties, only proceeds from sale of two such properties are allowed to be repatriated. However, the remaining amount and proceeds from sale of properties which were acquired through rupee sources, can be deposited in the NRO account, from which NRIs can repatriate upto USD 1 million per financial year. It should also be noted that the sale proceeds of a property acquired by way of gift have to be necessarily deposited in the NRO account. TAX PERSPECTIVE The taxation framework for immovable property transactions in India may be segregated into four broad heads – (i) Income tax payable by the buyer, (ii) Capital gains tax payable by

the seller, (iii) Indirect taxes payable, and (iv) Stamp duty payable. In the context of NRI investments, each of these have been discussed below in greater detail. Any purchase of immovable property in India at a price which is below the stamp duty reckoner value of the property would lead to a tax liability on the NRI purchaser on the difference between the reckoner value and the actual consideration paid. This tax has been introduced to deter buyers from buying property below the reckoner rate for the purpose of curbing ‘black money’. Similarly, any gift of immovable property to an NRI recipient by an unrelated person would lead to a tax liability on the NRI recipient on the reckoner value of the property. These taxes would be added to the NRI’s total income and chargeable based on slab rates. Therefore, NRIs should ensure that they purchase real property in India at or above the reckoner value so as to avoid a tax liability, which should ordinarily not arise on purchase. However, please note that the gift of immovable property between close relatives is exempt from taxation in India. 51


TAXATION

Stamp duty may vary from state to state and is payable on the reckoner value or the actual consideration amount, whichever is higher, on both purchase and gift transactions involving immovable property.

Any sale of immovable property in India by an NRI would lead to capital gains tax, computed on the amount paid on sale/ reckoner value of the property, whichever is higher, reduced by the cost of acquisition and cost of improvement of the property. The cost of acquisition and cost of improvement for this purpose would be inflation adjusted based on the cost inflation index defined by the Government annually. If the property is held for more than three years at the time of sale, long term capital gains would be applicable (the current tax rate is 20%, exclusive of surcharge and education cess) and if otherwise, the gains would be added to the NRI’s total income (slab rates would be applicable). This capital gains tax liability can be reduced to an extent or neutralised if: a) the NRI has purchased a house one year before the sale; or b) if the NRI purchases a house within two years from the sale; or c) if the NRI constructs a new house within three years from the sale; or d) if the capital gains (or a portion of the same) arising on the sale are reinvested into the bonds issued by REC or NHAI within six months from the sale

subject to other specific requirements being fulfilled. In addition to the income tax liability, stamp duty and indirect taxes (service tax and value added tax) must also be accounted for. Stamp duty may vary from state to state and is payable on the reckoner value or the actual consideration amount, whichever is higher, on both purchase and gift transactions involving immovable property. Indirect taxes may become applicable in case an NRI purchases an under-construction flat from a builder (i.e. a flat where occupation certificate has not been received). As per industry practice, these taxes are usually borne by the purchaser, though the purchaser may contract otherwise with the seller. However, it may be noted that certain rebates are provided in respect of these costs in some states. ROAD AHEAD Although the real estate market in India is not at its prime at the moment, the new Government has been emphasising

Six Myths about Property Buying

So you want to buy a home in India but aren’t sure whether it’s a good idea to do so? Here are some misconceptions about the Indian market that you need to get rid of right away! Real estate is like medicine – most of us think we know something about it, but in reality, quite a lot of our knowledge is plain old-fashioned myth. Our understanding of real estate usually comes from sensationalised news, office chatter and rumours, and very few of us can distinguish fact from fiction. SOME COMMON MYTHS ABOUT BUYING REAL ESTATE IN INDIA. Isn’t real estate risky? So is jaywalking across a busy street. The truth is, while all investments have their risks, in a country like India, where the housing demand is going to exceed supply for a long time, real estate carries the lowest risk. The key to successful investing – finding the deal with the right value.

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Isn’t real estate in India overpriced? The misconception is that real estate in India is presently over-priced and for an NRI best avoided. This image stems

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from the bloated property prices you will hear of in some metros. But look beyond the metros and there are plenty of places where you will get great deals that can end up providing excellent long-term returns.

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Aren’t below market rate prices rare? Businesses in need of liquidity or sellers with an urgent need for money are always willing to sell at below market rate prices. All it takes is a bit of research. And if you come up empty, you can always hire a professional!

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Is real estate a debt trap? Think about this for a minute. You pay anywhere from 24 -36% interest on your credit card debt. But on a home loan the current interest rate is about 10.25% (For NRIs banks will charge between 25 to 50 basis points, i.e quarter to half a per cent more). In effect a home loan is the cheapest loan you could get. And what’s more it helps you create a long-term asset. If God forbid,

April 2015

on promoting the sector by aiming for every family to have a house by 2022 and by providing incentives for affordable housing which should improve the condition of the market. Further, measures such as the reduction of the repo rate by the RBI and increased tax benefits on home loans are providing a much needed push to the real estate sector. Also, once the recently introduced Real Estate Investment Trust regime kicks off, it would provide a major boost to the sector and also provide NRIs an opportunity to acquire interests in large-lease generating commercial properties at the same time. In sum, while NRIs should keep the regulatory and tax framework in mind, the Indian real estate market remains a sound investment opportunity.

Sriram Govind is a member of the International Tax Practice and Deepak Jodhani is a Senior Member of the Real Estate Investment Practice at Nishith Desai Associates

you are in financial trouble, those Gucci bags won’t help you much. But a 3BHK flat will be of great help.

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But isn’t the market bad? – This is a classic example of herd mentality. The market is ‘bad’ because everyone thinks the market is bad. Don’t follow the herd. Be a contrarian. For all you know, if everyone thinks the market is bad, it will actually help you get a great deal. Just remember that the key difference between real estate and the stock market is that property is a long-term asset. You should never look at the current market trends while buying property but have a time horizon of five years or more.

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Isn’t managing the property a hassle, especially if I am an NRI? This was probably true some years ago, but not today. You will find several property management services which do a very professional job of managing NRI-owned properties. And even if you want to do it on your own, just remember, increased internet penetration, online banking etc. have completely changed the landscape. Post your property on rent on any of the dozens of listings sites, pay your bills online. Everything is now possible at a mouse click. So ignore the myths. Go forth and conquer! DAMINI KANE

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Presenting the best platform to interact with NRI property buyers in the UAE. The only real estate magazine to be personally handed over to the HNI Indian households based in UAE with a free direct to home access to advertisers. A unique medium, created with the single-minded objective of being the catalyst in facilitating sales for Indian real estate developers from the NRI customer segment. Needless to say, no other media can deliver your advertisements better.

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THE INSIDER GUIDE

April 2015

Three Deciding Factors While there are many aspects to consider before buying a property, there are three crucial ones

“Buyers should know that the cost of the property is not the only expense reflected in the sale agreement, there are several other expenses attached”

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n unrepresented buyer faces many challenges while trying to find the right property. Negotiating the deal and going through the tedious documentation process without any guidance increases the hassle and makes the buying process strenuous and time- consuming. Buyers with limited or no knowledge of the market face even greater difficulties during this time. Property-related laws in India differ across different states and as a buyer, one may not always be aware of the latest developments or changes happening around. This could put the buyer transacting with the seller directly at a significant risk. Hiring a good property consultant helps simplify the entire process.

DECISIVE FACTORS 1) Choosing between newly constructed homes and resale properties A fairly common dilemma that consumers face while buying property is making a choice between a newly constructed structure and an existing one. Research has proven that both options have their own pros and cons in reference to the pricing as well as the facilities on offer. A buyer needs to be extra careful while evaluating the gross price of a newly constructed property. The gross price consists of the sum of the base price, External Development Charges [EDC], Infrastructural Development Charges [IDC], Preferential Location Charges [PLC], Car Parking Charges, Club Membership (if applicable), electricity dues, water connection charges and

maintenance charges along with other applicable taxes. An existing structure also offers many benefits to a prospective buyer. He /she has the freedom of knowing the ins and outs of the property beforehand. The buyer also knows exactly what he/she is getting into before making the investment. Buyers also do not have to pay for the super built-up area as in the case of newly constructed structures. Existing structures also have minimal to no waiting time and possession of the property is usually handed over immediately after purchase. The buyer can move in or give the property up for rent as per his preferences and terms. All the necessary legal permission and documentations for existing structures are usually already in place, hence there is less paperwork and possession becomes easier and seamless. There many advantages of buying a newly constructed home. For starters their maintenance standards are always much better when compared to old structures. They provide amenities such as swimming pools, health clubs, gardens, earthquake- resistant designs and so on, which a buyer might struggle to find in an old construction.

2) The Budget The primary factor in buying almost always revolves around the individual budget of the buyer. Home loans usually cover about 80-85% of the total property cost. A buyer may also need to evaluate the amount that is to be paid up front and make arrangements for the remainder if necessary. Salaried professionals who intend to take a home loan are advised to break up the payment into Equated Monthly Installments (EMIs) and in such a way that the monthly amount due

does not exceed 40% of their take home salary. Buyers should know that the cost of the property is not the only expense reflected in the sale agreement, there are several other expenses attached and it is both advisable and prudent to take all factors into consideration before preparing a budget for the purchase. Peripheral Expenses • • • • • • • • •

Stamp Duty Registration Fees Legal Fees Brokerage Fees Society Transfer Charges (If applicable) Cost of Renovation Cost of Furnishing Future house taxes/property tax payments Maintenance Fees

3) The Locality Whether for end use or for investment, a buyer should be well informed about all the nuances of the area in which the prospective property is located. One should also know all about the advantages one particular area has over all the other options available. Availability of proper civic infrastructure, close proximity to business hubs, good connectivity to arterial roads and the city centre are crucial factors to be considered before finalising the location. Source: Coldwell Banker’s NRI Buyer’s Guide. Excerpted with permission. 55


FAQS

April 2015

Ten Facts Every NRI Must Know CA RAMESH PRABHU, Chairman, Maharashtra Societies Welfare Association, clarifies some key points impacting NRI investments in Indian real estate

Pic courtesy: Shashikant Patil

1. Can an NRI or Person of Indian Origin acquire immovable property in India?

property other than agricultural land or plantation property?

Yes, an NRI can acquire immovable property in India. However, investment in agricultural property, plantation and investment in farmhouses is prohibited under Foreign Exchange Management Act (FEMA), for all classes of persons resident outside India, including Non-resident Indians or foreign citizens or any foreign entities.

If an NRI or Person of Indian Origin wants to acquire immovable property in India, other than agricultural land or, plantation property or farm house, he/she can acquire the property in any of the following ways:a. By using the funds held in any type of non-resident bank accounts to make the purchase. b. By receiving the property as a gift from a person resident in India or non-resident Indian citizen or even a non-resident

2. How can an NRI or Person of Indian Origin acquire

56

Person of Indian Origin c. By inheriting the property from persons who are eligible to give such inheritance. Persons of Indian Origin can transfer immovable property in India either by way of sale to persons resident in India. 3. Are there any restrictions on an NRI to buy property in India? the NRI community is developing a keen interest in making

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April 2015

of NRE / FCNR / NRO account.

QUICK FACTS • NRIs holding Indian passports do not require prior permission of Reserve Bank of India to buy residential or commercial immovable property in India. • Investment in agricultural property, plantation and investment in farmhouses is prohibited for all classes of persons resident outside India.

investments in India which can reap good returns, many developers and government agencies across different states in the country are coming up with attractive schemes for such investors. 4. What is the procedure for NRIs holding an Indian passport to purchase property in India? The procedure for NRIs holding Indian passports to purchase property in India is as follows: • NRIs holding Indian passports do not require prior permission of Reserve Bank of India to buy residential or commercial immovable property in India. • The purchase consideration may be paid either by remittance of funds from abroad through normal banking channels or out

• NRIs of Indian nationality do not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantations property under general permission. 5. What is the general permission required for foreign citizens of Indian origin to purchase property in India? The general permission to NRIs holding foreign passports is that the RBI has allowed them to acquire, hold, transfer or dispose off by way of sale or inheritance, immovable properties situated in India provided: a) The property is for the purchaser’s bonafide residential use; b) The purchase consideration is met either by remittance from funds abroad through normal banking channels or out of NRE / FCNR. c) Income accruing by way of rent from the properties purchased or acquired by inheritance will not be allowed to be repatriated abroad even if the purchase consideration was met out of NRE / FCNR account. 6. What are the procedures for letting out immovable property? The RBI has granted general permission to NRIs and foreign citizens of Indian origin to let out their residential properties acquired for their bonafide residential purpose but which on account of their residence abroad, are not required for their immediate residential use. However, there are restrictions regarding the repatriation of the rental income earned from such letting out of the property. The rental income is on a non-repatriation basis. Thus funds (rental income) must be credited to the NRO Account/ Resident Accounts in India.

property in India by Non- Resident Indians for Residential and Commercial Purposes? No, RBI approval is not required to purchase/sale of immovable property in India by Non-Resident Indians for Residential and Commercial Purposes. 8. How can NRIs make funds for investment in property? NRIs can make the funds for investment in property in the following ways: a. Direct remittance NRO/NRE A/c b. Loans against NRE / FCNR Deposits for Residential House only. 9. Do NRIs require RBI approval for letting out of property? No, RBI approval is not required for letting out of property by NRIs. 10. What are Proceeds repatriable / non-repatriable by NRIs and foreign citizens of Indian origin? Repatriation of sale proceeds equivalent to the original investment is permitted for a maximum of two houses as well as Commercial Property after three years of acquisition (ie. possession) or payment of the last installment, whichever is later, provided the investment is out of direct remittance or NRE/FCNR account.

7. Is RBI approval required to purchase/sale of immovable

D id you kno w…?

… that repatriation of sale proceeds equivalent to the original investment is permitted for a maximum of two houses as well as commercial property after three years of acquisition (ie. possession) or payment of the last installment, whichever is later, provided the investment is out of direct remittance or NRE/FCNR account.

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INSIDER LISTINGS

April 2015

Pro j e c t s on O f f e r NAME White City LOCATION Kandivali (E) DEVELOPER Rajesh Lifespace SPECIAL FEATURES 2,3 & 4 BHKs, flexible payments

option.

127-acre township

NAME Rodas Enclave LOCATION Hiranandani Estate, Thane DEVELOPER Hiranandani Group SPECIAL FEATURES 18 buildings of 18, 24, and 28

NAME Corlim Gardens LOCATION Goa DEVELOPER Nitin Developers Pvt Ltd SPECIAL FEATURES 2BHK Optima and Prima homes;

floors, lavish 2, 3, 4 and 5 BHK apartments, a floating clubhouse, green zone, numerous avenues of recreation and entertainment, all on an elevated podium. All towers to be built on podium garden. NAME Acropolis LOCATION Borivali (West), Mumbai DEVELOPER Vora Skyline SPECIAL FEATURES 13-storey tower close to entertainment

vehicle-free landscaped garden, walking and jogging tracks, tennis and badminton courts, skating rink, 20 minutes from Panjim NAME Downtown, Palava City LOCATION Kalyan-Shil Road, Mumbai DEVELOPER Lodha Group SPECIAL FEATURES 1, 2, 3BHKs in Palava, a 4500-acre

NAME Glade One LOCATION Sanand-Bavla Road, Sanand, Ahmedabad DEVELOPER Safal Constructions Private Limited SPECIAL FEATURES A 270-acre estate, with premium plots,

1200 Sq Yds. Onwards; Gary Player Design Championship Golf Course; Golf, Lake, Woodland Villas; Club & Resort Designed by WATG. NAME Neco Skypark LOCATION Pimple Nilakh DEVELOPER Vasupujya Corporation SPECIAL FEATURES 2 and 3BHK apartment, ready-to-move

and under construction, from 1065 – 1335 sq ft. 2BHK from ` 70 lakh NAME: Stargaze LOCATION: Chandani Chowk, Pune DEVELOPER: Kolte-Patil SPECIAL FEATURES: 2, 3 and 4 BHK smart technology

zones, hospitals, schools and a national park

planned city at the strategic junction of Thane, Navi Mumbai and Kalyan.

enabled homes, with views of Pashan Lake

NAME Ekta Tripolis LOCATION Goregaon West, Mumbai DEVELOPER EKTA world SPECIAL FEATURES Home formats in 2 and 3BHK.

NAME Dosti Landmark LOCATION Balkum, Thane (Near Piramal Factory) DEVELOPER Dosti Realty Limited. SPECIAL FEATURES 2BHK Optima and 2BHK Prima

NAME: Godrej Infinity LOCATION: Pune DEVELOPER: Godrej Properties SPECIAL FEATURES: River-side, greenery and over 50% open

Landscaped garden, jogging track, gymnasium, play area, modular kitchens.

apartments, ` 72 lakh onwards and ` 83 lakh onwards respectively. Pre-launch phase 1 upto April 19.

NAME:Lumina, Kalpataru Radiance LOCATION Goregaon West, Mumbai DEVELOPER Kalpataru SPECIAL FEATURES 2 and 3BHK air-conditioned

NAME Godrej Garden City LOCATION Ahmedabad DEVELOPER Godrej Properties SPECIAL FEATURES 1BHK, 2BHK & 3BHK apartments at

apartments; clubhouse; sundecks; pool and open-air Jacuzzi

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NAME Urbania LOCATION: Thane DEVELOPER Rustomjee SPECIAL FEATURES 2 BHK and 3 BHK. No floor rise,

Godrej Garden City.

spaces 1, 2 & 3 BHK Spacious Apartments

NAME: Socorro Gardens LOCATION Goa DEVELOPER Nitin Developers Pvt. Ltd. SPECIAL FEATURES Book between March 20 and May 3

and save up to `2.72 lakh on service tax and get any one of eight property charges waived.

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NAME Parksyde Homes LOCATION Panchvati Annex - Nashik DEVELOPER Jaikumar Constuction SPECIAL FEATURE 2 & 3 BHK Luxury Apartments,

pergola walkway to homes, gazebo, overflowing swimming pool, multi-sports hall, party lawn. 2, 3BHK apartments, including 3BHKs with space for domestic help.

`26 lakh onwards. State-of-the-art Gym, Landscape gardens, Premium Club House, Spiritual Temple & Creche

NAME The Promont LOCATION Bengaluru

NAME Niyati Elan LOCATION Wagholi, Pune DEVELOPER Niyati Group SPECIAL FEATURES 1, 2 & 3 premium apartments

internationally renowned architect; indoor temperature controlled pool, private gymnasium, squash court, children pool and play area.

NAME Moksh LOCATION Bangalore DEVELOPER Gokaldas Lifestyle SPECIAL FEATURE 3 BHK Boutique Residence, ` 1 11Cr

onwards. Roof Top Gym, Swimming Pool with Spa. Book before April 30 to avail free property management services for two years NAME Golf Shire Club DEVELOPER Prestige Group LOCATION Nandi Hills, Bangalore SPECIAL FEATURES 4BHK villas, 209 mansions. NAME: Sobha Valley View LOCATION: Bengaluru. DEVELOPER Sobha Developers Ltd SPECIAL FEATURES Close to major corporate offices,

educational institutions and hospitals. Amenities include

DEVELOPER Tata Housing SPECIAL FEATURES Designed by Moshe Safdie, an

NAME House of Hiranandani LOCATION Devanahalli, Bengaluru DEVELOPER House of Hiranandani SPECIAL FEATURES Luxury villas, cottages and apartments

in an integrated township, very close to the Bengaluru international airport. Villas @ 1.93Cr onwards, cottages @ 1.2Cr onwards, Apartments @ 55lakh onwards. Book the property online by paying ` 4 lakh; price increases April 10.

NAME Gardencity LOCATION New Indore DEVELOPER DLF SPECIAL FEATURES Launching Phase 3; residential plots

starting at ` 17 lakh. Pay 30% now and balance on/ near possession; 192 acres of eco-friendly urban living on 6-lane Agra-Mumbai bye-pass; fully secured township with amenities; GD Goenka School coming soon

Disclaimer: Before investing in any of the properties listed here, readers are advised to carry out their own background checks and seek further information and legal advice.

APRIL – MAY 2015 April 9- 12: MCHI-Credai Property 2015, MMRDA Ground, Mumbai. Developers from Mumbai, MMR, Ahmedabad, Vadodara, Surat, Nasik, Goa, Bengaluru and Delhi; housing loan options available too. April 10 –12: The Luxury Festival, Pragati Maidan; real estate and fractional ownership feature among the watches, jewellery, accessories and other items. April 18–19: Prompt Property Festival, Sri Vasudeva Thirumana Maaligai, Chennai. Showcases building construction, home furnishings and textiles, architecture and designing and real estate agents. April 24&25: India Property Show - Dubai 2015, Hotel Conrad- Hilton -Sheikh Zyed Road, a Magicbricks.com event. May 7–9: The Concrete Show India, Bombay Convention and Exhibition Centre. Featuring a range of products and services for the concrete industry. May 15-16: Realty India Expo 2015, Hotel AlBustan Rotana, Dubai, a Mindscape Exhibitions Pvt Ltd. Show. May 20-22, 2015: Smart Cities India 2015 Expo, Pragati Maidan; energy-saving, urban transport, water management and much more on show. If you would like your event featured in this column, write in to ipi@weareyoung.in Developers who are planning road shows may also contact us at this email address with details.

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PROPERTY PRICES

Average Residential Apartment Rates

PUNE LOCALITY

CHENNAI

April 2015

GURGAON CAPITAL VALUES (RS/SQ FEET)

LOCALITY

CAPITAL VALUES (RS/SQ FEET)

Balewadi

6260 to 7390

Ansal Plaza

Baner

6500 to 7980

Central Park

14010 to 16270

Bavdhan

6240 to 7450

Cyber City

10230 to 13230

6150 to 8490

Dahanukar Colony

9220 to 11960

Dhorka

Hadapsar

5230 to 6900

DLF Phase 5

12380 to 14190

Hinjewadi

5280 to 6350

Golf Course Road

12340 to 15040

4340 to 5570

Kalyani Nagar

8190 to 10650

Dwarka Expressway

4760 to 6340

Kharadi

5680 to 6900

Golf Course Extn Road

7610 to 9470

Koregaon Park

9570 to 12710

Green Woods City

LOCALITY

CAPITAL VALUES (RS/SQ FEET)

Kolathur

4620 to 5720

Law College Road

Kotturpuram

11150 to 14890

Magarpatta City

Madipakkam

4600 to 5490

Medavakkam

4260 to 5150

OMR

3750 to 4770

Pallikaranai

4490 to 5420

Perumbakkam

3830 to 4620

Porur

4350 to 5770

14140 to 16830

10080 to 13390

Gurgaon - Faridabad Road

7300 to 8780

7060 to 8720

Kendriya Vihar

6970 to 8250

NIBM Road

5600 to 6750

MG Road

Pimple Saudagar

6070 to 7130

Malibu Town

7200 to 8960

Viman Nagar

6760 to 8260

Mayfield Garden

6500 to 8210

Wagholi

4090 to 5020

New Palam Vihar

2590 to 3120

Wakad

5660 to 6730

Orchid Island

8040 to 9450

Pataudi Road

3880 to 4880

11410 to 13380

Santhome

9580 to 12630

HYDERABAD

Thoraipakkamm

5130 to 6080

Banjara Hills

6980 to 9130

NASHIK

Velachery

5870 to 7530

Gachibowli

3570 to 4610

Ashoka Marg

3870 to 4320

Himayath Nagar

4720 to 5710

Deolali Camp

3670 to 4690

GOA

Hitec City

4050 to 5100

Gangapur Road

3770 to 4860

Calangute

5680 to 7510

Kondapur

3440 to 4360

Govind Nagar

4010 to 4520

Candolim

5810 to 7480

Madhapur

4450 to 5630

Indira Nagar

3170 to 3710

Dona Paula

6340 to 7660

Manikonda

2460 to 2920

Jail Road

2870 to 3760

Mapusa

3840 to 4720

Miyapur

2690 to 3340

Panchvati

3060 to 3870

Porvorim

4210 to 5300

Nandagiri Hills

8010 to 9880

Pathardi Phata

2980 to 3550

Siolim

4100 to 5060

Banjara Hills

6980 to 9130

Pathardi Road

3100 to 3620

Tiswadi

5070 to 6330

Barkatpura

3090 to 3910

Tidke Nagar

4340 to 5840

Source: MAGICBRICKS.COM

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PROPERTY TERMS

April 2015

J a r gon S i m p l i fi e d Acceleration clause If a borrower defaults on a loan, or transfers the title to another person without informing the lender, an acceleration clause in the mortgage may allow the lender to demand payment of the outstanding loan balance. Appreciation Every investor’s favourite word. This is the increase in value of a property owing to a variety of changes, such as market conditions and inflation, among other things. Assessed value The amount that the authorities believe they can tax you on; the valuation placed on the property by a public tax assessor. Broker Usually, the first person you would meet while trying to buy or sell a property. A broker is someone who acts as a gobetween, to bring two parties together for a transaction and earning a fee for his/ her services.

62

Chain of title Who were the previous owners of the property in question? The chain of title is an analysis of the ownership transfers that have taken place on a property over the years. Clear title The first thing you need to look for while buying a property. A clear title is one that is free of any legal questions as to the ownership of the property. Collateral If you take a home loan, the collateral is the property you are buying. If you do not repay the loan in time, according to the terms agreed upon,, you could lose the property that you gave as collateral. Default Something you must never do if you have taken a home loan. If you fail to make the mortgage payment on time, you are in default. Banks do not look kindly to this at all.

Deed The legal document conveying title to a property. Earnest money deposit If you want to indicate that you are serious about buying a house, then making an earnest money deposit is the best way to do so. Lease option This is an alternative finance option, which allows you to lease a home with the option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on a specified price towards the property. Power of attorney A useful and necessary legal document, especially for nonresident Indians who live far away from the property they own. The power of attorney authorises another person to act on one’s behalf. It can grant a completely free hand, or be limited to certain acts or time limits. Be careful who you trust with this!

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India Property Insider - April 2015