Homes in suburbs turn costlier as Chennai grows


A significant rise in land prices and escalating cost of construction have seen apartments in most city suburbs appreciate by over 1,000 per sq ft in the past two years. A look at six comparable residential localities on the outskirts reveal that the prices have gone up by up to 75% in some of the areas. Apartments in Medavakkam , considered among 13 most happening residential hubs as per a report released by realty consultant Knight Frank , has seen a growth of 1,200 to 1,400 per sq ft in the last two years , depending on the location of the project .

The price of apartments has gone up from 2,900 to 4,100 per sq ft. The real estate market in Medavakkam might grow even faster in the next few years , citing the presence of social infrastructure like schools, shopping facilities and above all , its proximity to Velachery , Old Mahabalipuram Road ,Pallavaram and Tambaram , which are costlier locations.

However, it is Manapakkam, which has witnessed the maximum appreciation in the last 24 months. One of his projects in Manapakkam was selling at 3,600 per sq ft two years ago, but now it goes for 6,300 per sq ft. T Vathsala Menon, who owns an apartment in Maduravoyal , said , “We booked the apartment at 2,800 per sq ft in 2008 . By 2010, prices went up to 4,000 per sq ft and today it is 5,500 per sq ft”. She said the same builder is likely to launch another project next door at a higher price.

Places like Thiruneermalai and Madhavaram also are emerging residential hubs. While the price has gone up from 2,500 per sq ft to 3,900 per sq ft in Thiruneermalai in two years , it has gone up from 3,300 to 3,900 per sq ft at Madhavaram . Similarly , Semmancherry has witnessed a growth of 1,100 per sq ft – from 3,400 to 4,500 – during the said period. “A city’s tendency is to grow either in concentric circles or along traffic corridors,” . Even North Chennai, once considered a backwater region, is growing now, thanks to the Metro Rail project and good road connectivity.

Cost of construction has goneup by 30 % to40% in the last couple of years. “Earlier, builders used to be worried about mounting cost of construction material only at the time of budget. Now, the prices are rising every month, if not on a weekly basis,”.

Source: The Times of India, Chennai

Five real estate terms you should know


Carpet area, super area and FSI are commonly used terms, but it is important to understand the exact meaning of each of them.

Carpet area is the area within the walls of an apartment that is for the exclusive use of the buyer. While computing the carpet area, the terrace and balconies are usually considered as half the actual area.
Built-up area includes the carpet area and thickness of external walls, internal walls and columns. It is typically 10-20% more than the carpet area and is also sometimes known as the plinth area.

Super built-up area includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flats. The common usable areas, such as a swimming pool, garden and clubhouse, may also be included in it.

Per square foot rate quoted by the developer is typically applied on the super built-up area to determine the value of the flat. This is the reason super built-up area is also sometimes referred to as the saleable area.

Floor Space Index (FSI) is the ratio between the total built-up area and plot area available allowed by the government for a particular locality. Premium FSI refers to permission obtained to build extra floor space by paying a premium.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL).

Source:economictimes

 

What do NRI investors prefer in real estate?


An estimated 30 million non-resident Indians (NRIs) spreadover 140 countries have an estimated combined wealth of USD 1.2 trillion. Expatriates constituted the highest remitters of foreign exchange consecutively for the years 2010 and 2011. Over 6-8 lakh resident Indians leave the country in search of greener pastures and an estimated one lakh NRIs return home every year.

Among the various investment options contemplated back home, real estate plays a key role as the rate of appreciation and periodical returns on investment are more in India . Moreover, a number of NRIs, particularly in West Asia, who cannot continue to stay there due to domicile restrictions will have to return home one day or the other. This is one major reason why they always look at various investment options including real estate back home for permanent settlement.

There are three kinds of investors in real estate – low, middle and high income groups. Within these categories there are end-users as well as investors. In the Association of Gulf Cooperation Council countries (comprising UAE, Saudi Arabia, Qatar, Oman, Bahrain and Kuwait), an estimated 55-60 lakh NRIs are working today including semiskilled and unskilled labourers.

Similarly, out of 1.6 million NRIs in Malaysia the preference is more towards southern cities here from where a majority of them come. In Canada, there are NRIs predominantly hailing from Delhi , Chandigarh and other regions . In the US, out of 2.5 million NRIs, southern cities of Bangalore, Chennai and Hyderabad dominate in terms of real estate requirements. The specific real estate needs of NRIs vary depending on the region, savings potential and a combination of other factors. The largest market for affordable housing in the price range of Rs 15-25 lakhs is the Gulf region where there are a large number of expatriates who are either semi-skilled or unskilled, and the salary levels are not too high. There are high net worth individuals and technically-qualified professionals who constitute 10 percent of the NRI population. Many of this segment are looking for apartments in the price range of Rs 50 lakhs to Rs 1 crore and villas in the price range of Rs 1.5 crores plus. There are also others keen on investing in commercial property .

According to banks in the Gulf, the average home loan size is Rs 30-70 lakhs and the predominant demand revolves around apartments. The overall home loan business in Dubai alone ranges from Rs 720-800 crores.

Among the cities that drive real estate demand overseas are Bangalore, Chennai, Jaipur, Kochi, Mumbai, NCR, Pune and some other smaller cities. Even some Tier II cities are in demand. A majority of the NRI buyers are end-users . There are buyers looking for a second home for use by their family members, to earn periodical returns on the investment , or even to retain as a buffer to meet contingencies.

Investing in land is quite popular among NRIs too as those who cannot buy an apartment immediately are keen to invest in a lesser value asset. Land value appreciates fast.
With the relocation of more skilled professionals to developed countries such as UK, USA, Japan, and Australia, there is a growing requirement of apartments in the price range of Rs 70 lakhs plus in metros. Villa developments are sought-after especially in the price range of Rs 1.50-Rs 2.50 crores.

A significant factor is that these days many high net worth individuals prefer income-yielding assets such as leased commercial property or opt for pre-launch offers which yield 18-25 percent during the project implementation stage. A section of NRIs are also keen on investing in project level entities on non-repatriation basis by forming a partnership firm or incorporating private limited companies.

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Source:The Economic Times

Realize Your Property Dream With NRI Housing Loans


Buying a house is no more a painstaking task for NRI’s. The NRI housing loans have facilitated smooth investment in real estate properties. This is applicable for any Non Resident Indian, including government servants posted abroad on duty with the Indian missions or deputed abroad on assignments with foreign Governments or regional/international agencies. Many prime banking institutions are engaged in providing these NRI housing loans to their clients.

Repayment capacity plays another important role in deciding the amount of loan to be offered. Considerations like income, age, work experience, number of dependants, partner’s income, assets, liabilities, stability and continuity of occupation are the deciding factors for this.

While applying for a home loan in India, following documents are required to be submitted:

 Documents related to employment:

  • Employment contract
  • Latest salary slip
  • Latest work permit
  • Identity card issued by current employers
  • Visa stamped on the passport
  • Continuous Discharge Certificate (if applicable)
  • Last four months’ Overseas Bank Account Statement

 Documents related to property:

  • Receipts for payments made for purchase of the dwelling unit
  • Agreement for sale/sale deed/detailed cost estimate from Architect/Engineer for property to be purchased/constructed/extended
  • Copy of approved drawings of proposed construction/purchase/extension
  • Allotment letter from the co-operative society/association of apartment owners

 Power of attorney

The period of loan repayment is identified once the loan has been sanctioned. Generally, it lies between three to ten years. Equated Monthly Installments (EMIs) facilitate smooth loan repayment. It is paid at the end of every month. It is paid through post dated cheques from your Non-Resident (External) Account/Non-Resident (Ordinary) Account in India.

The NRI Housing Loans have made real estate investment easier for the Non- Residential Indians. This has turned out as a boon for them as they can now conveniently purchase a new property without bothering about the time taking procedures.

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============================================================================================Source:http://blogs.realestateindia.com/2011/11/17/realize-your-property-dream-with-nri-housing-loans/

For stability, NRIs turn towards realty


Recently an acquaintance, a fund manager by profession, relocated to India to set-up a domestic private equity fund. He had invested in a Mumbai residential property strategically located close to the primary business district and an international school. This investment, done a few years back, helped him crystallise his plans for relocation to India and start his venture without spending time in finding the right location, house and school.

What I found most interesting was that he had not even considered eventually relocating to India when he bought this apartment. He had simply done it for investment five years previously.

The Way Of The NRI

To date, I have not met a single NRI who is not keen to buy real estate in India. Home ownership in this country is one of the most satisfying means available to them to stay connected to their motherland. Very often, such investments in their country of origin help them to maintain their relationships back home while they seek their fortune abroad.

Another NRI businessman based in Europe and now relocating to NCR on the heels of the Euro crisis, was seeking to build a local business base here. Achieving this while resettling family on all fronts has not been an easy task for him. He is on the lookout for the ‘best’ location for a residential property in NCR and naturally finds the cost of properties in the prime areas staggering and beyond belief.

He had not considered investing in a property earlier. Completely out of sync with the market dynamics back home, he blithely assumed that his foreign-earned savings would make finding a luxurious home a breeze. He was ill prepared for the astronomical ticket sizes that now prevail.

Over the past few years, we have noted that NRIs are investing in residential real estate specifically in large Indian cities to build a back-up base in the country. This particularly applies to NRIs with professional/entrepreneurial ambitions who intend to set up businesses in these cities in the future.

After the 2008-09 global financial crisis, India has stood out as a showcase example of financial stability, specifically in terms of its conservative banking sector. More than anything else in the past, the crisis caused NRIs to seriously contemplate owning homes in India as their rattled confidence in all things foreign gave way to a yearning for familiarity and stability on both on the personal and professional fronts.

Rules Of Engagement

NRIs have no restrictions limiting them with regards to how many commercial or residential properties they can own in India. However, there are restrictions on the repatriation of sale proceeds, which is limited to two units. Effectively, this means that NRI face no restriction while investing into commercial or residential real estate in India. However, when a NRI decides to sell and take the money back to the country of residence, he can do so with the sale proceeds of only two units.

NRIs can invest into real estate by remitting funds to India through normal banking channels, or by invest through funds in NRE/FCNR/NRO accounts maintained in India. They cannot make payment via traveller’s cheque or foreign currency notes. They are also restricted from making any payments outside India or settling payments through exchange of funds outside the country.

NRIs can avail home loans from institutions approved by the National Housing Bank, and loan repayment can be done either through inward remittances, debit to NRE/FCNR/NRO account, via rental income earned in India or by borrowing from close relatives residing in India. NRIs can also avail of home loans from the employer in India, provided specific terms and conditions listed by RBI are met.

NRIs can mortgage residential property in India with a financial institution without any approval from RBI and a foreign financial institution with prior approval from RBI.

NRIs can rent out their property without the approval of the RBI. Rent received can be credited to NRO/NRE account or remitted abroad. Authorised dealers have been empowered to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIOs who do not maintain an NRO account in India, based on appropriate certification by a chartered accountant confirming that the funds proposed are eligible for remittance and that applicable taxes have been paid or provided for.

No one can exactly predict the fate of any currency, or the stability of any economy. Economies are notoriously ‘subject to market risk’ — for instance, no one had expected that west Asia would see political uncertainty a few years back. However, when it comes to personal and career stability, there must be no margin for error. The current trends suggest that more NRIs are taking important decisions with regard to owning residential real estate in India as a bulwark against uncertain times.

Source:http://www.financialexpress.com/news/for-stability-nris-turn-towards-realty/953968/0

What do NRI investors prefer in real estate?


An estimated 30 million non-resident Indians (NRIs) spreadover 140 countries have an estimated combined wealth of USD 1.2 trillion. Expatriates constituted the highest remitters of foreign exchange consecutively for the years 2010 and 2011. Over 6-8 lakh resident Indians leave the country in search of greener pastures and an estimated one lakh NRIs return home every year.

Among the various investment options contemplated back home, real estate plays a key role as the rate of appreciation and periodical returns on investment are more in India . Moreover, a number of NRIs, particularly in West Asia, who cannot continue to stay there due to domicile restrictions will have to return home one day or the other. This is one major reason why they always look at various investment options including real estate back home for permanent settlement.

There are three kinds of investors in real estate – low, middle and high income groups. Within these categories there are end-users as well as investors. In the Association of Gulf Cooperation Council countries (comprising UAE, Saudi Arabia, Qatar, Oman, Bahrain and Kuwait), an estimated 55-60 lakh NRIs are working today including semiskilled and unskilled labourers.

Similarly, out of 1.6 million NRIs in Malaysia the preference is more towards southern cities here from where a majority of them come. In Canada, there are NRIs predominantly hailing from Delhi , Chandigarh and other regions . In the US, out of 2.5 million NRIs, southern cities of Bangalore, Chennai and Hyderabad dominate in terms of real estate requirements. The specific real estate needs of NRIs vary depending on the region, savings potential and a combination of other factors. The largest market for affordable housing in the price range of Rs 15-25 lakhs is the Gulf region where there are a large number of expatriates who are either semi-skilled or unskilled, and the salary levels are not too high. There are high net worth individuals and technically-qualified professionals who constitute 10 percent of the NRI population. Many of this segment are looking for apartments in the price range of Rs 50 lakhs to Rs 1 crore and villas in the price range of Rs 1.5 crores plus. There are also others keen on investing in commercial property .

According to banks in the Gulf, the average home loan size is Rs 30-70 lakhs and the predominant demand revolves around apartments. The overall home loan business in Dubai alone ranges from Rs 720-800 crores.

Among the cities that drive real estate demand overseas are Bangalore, Chennai, Jaipur, Kochi, Mumbai, NCR, Pune and some other smaller cities. Even some Tier II cities are in demand. A majority of the NRI buyers are end-users . There are buyers looking for a second home for use by their family members, to earn periodical returns on the investment , or even to retain as a buffer to meet contingencies.

Investing in land is quite popular among NRIs too as those who cannot buy an apartment immediately are keen to invest in a lesser value asset. Land value appreciates fast.
With the relocation of more skilled professionals to developed countries such as UK, USA, Japan, and Australia, there is a growing requirement of apartments in the price range of Rs 70 lakhs plus in metros. Villa developments are sought-after especially in the price range of Rs 1.50-Rs 2.50 crores.

A significant factor is that these days many high net worth individuals prefer income-yielding assets such as leased commercial property or opt for pre-launch offers which yield 18-25 percent during the project implementation stage. A section of NRIs are also keen on investing in project level entities on non-repatriation basis by forming a partnership firm or incorporating private limited companies.

source:http://articles.economictimes.indiatimes.com/2012-05-26/news/31860951_1_nris-real-estate-price-range

Black money: Govt targets real estate


In order to check generation of black money in the real estate sector, the government’s white paper has suggested introduction of tax deduction at source (TDS) on sale-purchase of properties.

“One of the measures for deterring use of the real estate sector for generation and investment of black money could be the provision of deducting tax at source on payments made on real estate transactions and mandating it as a pre-condition for registering of the transacted property,” the White Paper on black money prepared by the Finance Ministry said.

The current provisions of the direct tax legislation provide for mandatory furnishing of the tax identification number by the buyer and seller of an immovable property if the value exceeds Rs 5 lakh, it said.

Also, every registry of property is required to furnish annually information regarding transactions in immovable property if the value exceeds Rs 30 lakh, it said.

However, it said, as many registrar offices still operate on a manual system, there are a number of gaps and lapses in the reporting of such transactions.

Besides, the paper has suggested more effective reforms in the real estate can yield a significant dividend in the form of reducing generation of black money in the long term.

It has also suggested for introduction of the provision of no objection certificate (NOC) in the income tax law with safeguards to reduce administrative complications and increased ease of compliance, so that an appropriate and uniform database is set up and a proper national-level regulation also put in place.

The real estate sector in India constitutes about 11 per cent of the GDP, it said, adding, investment in property is a common means of parking unaccounted money and a large number of transactions in real estate are not reported or are under-reported.

The report noted that due to rising prices of real estate, the tax incidence applicable on real estate transactions in the form of stamp duty and capital gains tax can create incentives for tax evasion through under-reporting of transaction price. This can lead to both generation and investment of black money.

The buyer has the option of investing his black money by paying cash in addition to the documented sale consideration.

This also leads to generation of black money in the hands of the recipient, it said.

The other vulnerable sectors of economy with regard to generation of unaccounted money is gold trading.

Source:financialexpress.com