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Is Indian Real Estate Sector Going to Revive in 2020?

Feb 11,2020 / By / No Comment
About Indian Real Estate 2020

Real Estate Sector in India

The real estate sector in India has been witnessing weak sales for the last few years, resulting in a sharp drop in its significant contribution to the country’s Gross Domestic Product (GDP). Overall, the year 2019 proved to be a mixed year for the nation’s realty sector as the commercial sector flourished but that was not the case with residential real estate. However, some positivity has been seen in the market as a result of various announcements made by the government last year. Government announcements like NHB raising liquidity for Housing Finance Companies, relaxation of External Commercial Borrowings (ECB) funds, and approval of a Rs 25,000-crore alternate fund have all been made at a positive pace.

Nation’s real estate sector saw a fall after banks limited lending activity post the NBFC crisis in 2018 and the situation worsened further in 2019 to a sharp demand crisis. Not just the real estate sector but a large number of other industries indirectly related to the sector have also suffered the heavy winds of low demand.

Real estate developers, consumers, and investors have been facing the burden of the fall in the housing segment for the last few years. From unsold inventories to incomplete construction to delayed projects, the segments had faced a lot of difficulties that have been pointing to negative sentiments.

In spite of the government’s measures to revive the weak realty market, there has been no positive result except limited growth of just 1% in the year 2019 but far from reaching its full potential.

According to the International Monetary Fund, India’s economy grew by about 4.8% in 2019, a sharp drop from 6.8% in 2018. Similarly, unemployment rose to 7.5% in the last 3 months of 2019.

There is an urgent need to approach the challenge of liquidity suffered by the sector, especially after the NBFC cash crisis. Liquidity will improve sentiment in the market with a regular supply of ready to move-in homes. If the challenge is not tackled on priority, it will block the confidence of developers as well as buyers which may seriously affect the realty sector as well as the economic growth of the country.

Few bold govt measures that could revive the real estate market in the year to come including tax rebate hike, personal tax relief, higher liquidity, better land reforms and fast infrastructure development for raising homebuyer sentiments.

The industry body has also suggested the government to reconcile the Insolvency and Bankruptcy Code (IBC), GST and individual taxes to help increase demand for unsold properties, which increased sharply in 2019.

The reviving real estate sector would also improve overall demand as the sector employs a large number of laborers belonging to lower-income groups. As a result, it could lead to a strong rise in rural demand.

However, it needs to be noted that the measures are not yet sufficient in size and will not be able to cater to real estate developers (small and big) and players in Tier 2 and 3 cities. Most importantly, the measures need to be backed by other factors mentioned below to bring in a proper resolution. Instant step in terms of implementation of several schemes and processes is expected to bring momentum into the sector in 2020.

Budget 2020-21 Fails to Address Major Concerns of Realty SectorFreal estate

It offers a few solutions to revive the nation’s weak economy. The government’s $428 billion budget for 2020-21 considered a series of modest initiatives, including planned investments in new roads and airports and personal income tax cuts, along with an increase in bank deposit insurance to encourage customers worried by high-profile bank failures.

But it offered no large incentive plan to produce more jobs or money in the pockets of India’s 1.3 billion residents, most of whom rarely get their food through farming or work in the informal economy. Nor did the budget offer any additional support for the country’s weak financial institutions.

Few Govt measures that may put real estate back on track in 2020 includes:

Industry Status

For a long time, the real estate market demands an industry status that can help it with finances at a lower cost, especially at times when the availability of funding is a major barrier for the industry.

Single-window clearance

The sector, which is struggling to deal with multiple government offices for project approval, wants a single-window clearance facility to initiate the project implementation faster.

Removal of Multiple Rates or Taxes

Multiple rates or taxes need to be removed into a single standard GST rate.

Incorporation of Stamp Duty under GST

The cancellation of stamp duty or its incorporation under GST.

Lowering Interest Rates

In 2019, the Reserve Bank of India (RBI) reduced the policy rates (Repo Rate) by 135 basis points. But the registered commercial banks didn’t follow the procedure. So the average marginal cost of lending rate (MCLR) of banks has decreased by only 64 bps. The lower interest rates will benefit to decide the existing liquidity crisis and boost housing demand.

Rebate in Income Tax

Rebate in individual income tax will be another help to the sector as it will decrease the financial burden of the buyers and improve their expendable income.

Housing Loan Interest Rates to be Reduced

Interest rates on housing loans also need to be reduced to encourage demand and sales. Restoration of income tax gains on a 2nd home can benefit homebuyers in a big way.

Notional Rental Income

We expect the government to release organizations involved in real estate business from the burden of tax on notional rental income or the period of 1 year should be extended to 5 years. This is pushing buyers away from the market and affecting the sector as well.

Restriction on Home Loan Interest Paid

The govt should also remove the restriction of an additional deduction of Rs 1.5 lakh paid on a home loan up to Rs 35 lakhs with total values not exceeding Rs 45 lakhs.

The government should implement land reforms and amend the acquisition process.

People’s Expectations:

It is expected that the real estate sector will hopefully observe a growth story in 2020. Covering 1,600 projects with 458,000 housing units under the center’s announcement will help in raising buyer confidence and is expected to generate significant employment. We expect the govt to give full support to the sector not just in terms of the announcement but also implementation. The year 2020 needs a device to protect developers from the existing liabilities and stuck projects. It also needs to incentivize stressed projects in various ways.

At the same time, the central government has projected that the economic growth would rebound to as much as 6.5% for the current fiscal year.

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Compact Homes and its trends

Jan 13,2020 / By / No Comment
compact hey

With an increasing population of nuclear or small families in India, the trend of Compact Home is extending energy in the realty market of the country. Remarkably, in the metropolitan cities where more than half of the population is working, these homes represent a very significant part as they are closer to business districts and above all are much affordable in price.

A compact home is composed of a hall, bedroom, study and a kitchen with washrooms and balcony. These houses differ in size from 500 sq. ft. to 800 sq. ft. which is well-suited for a tiny family. Compact Living is conclusively smart living, where build space is inadequate, yet the quality of facilities and design remain high. It tends to be more commonplace in countries where space comes at a premium price, for e.g. the Netherlands.

Real estate experts state that in cities like Delhi, Mumbai, Bangalore, Chennai, and Kolkata, where land is minimum and prices are steep, the concept of compact homes has scaled up a lot. Also, selling a high and luxury apartment can be much challenging for the developers and due to which they are in approval of launching small-sized apartments that not only decrease the cost but are also space-efficient to satisfy the requirements of the homebuyer.

Advantages of Compact Homes for Homebuyers

To accomplish their financial goals and protect their earnings, nuclear families, millennials these days favor financing compact homes. Apart from that, a compact home comes with a variety of advantages which incorporates well-defined advantage of space and additional propositions.

Thoughtful Construction

A compact home is BuiltWith smart construction and excellent space utilization. Although it is small in area and size they are created in such a way that it comfortably supports every essential necessity of a home without misusing any part of it. These houses are built having in mind the latest technologies, interiors and other décor trends.

Cheap Maintenance

As numerous working professionals invest in compact homes, they prefer a home with comfort and low maintenance cost. There are numerous cost-effective methods to maintain a compact home than a big-sized apartment. Also, a home buyer has to pay less on furniture, other décor items and has to pay less for electricity and additional bills and charges.

Design Home your own way

Compact homes provide you the freedom to design and decorate your dream home in your own way. These days families want to give the best look to their home with innovative and compact furniture, stylish décor items, etc.

Budget-friendly Price

Due to small size, these homes come at a relatively cheaper price as compared to traditional apartments. Also, with the central Government concentrating more on ‘Housing for all’, more and more developers are constructing such units to attract home buyers. Also, you don’t have to compromise on sound infrastructure, amenities, and facilities.

Good Resale Value

With an expansion in trend and market for compact homes in today’s real estate landscape, more people are looking for such projects which facilitate such units. Because of this, the resale advantages of such units are more associated with spacious apartments. These houses are sold off very fast and hence offer better Returns on Investment to the property owner. Compact Living offers a living where one compromises on space, yet still enjoy the merits of living in a prime city location, with quality design at an affordable price.

Within Bengaluru, areas like North Bengaluru, Whitefield, Sarjapura Road, and Hosur Road are recognized as preferable locations for compact housing projects. Their vicinity to the city’s tech and economic hubs presents them as preferred locations considering the confined customer market. North Bengaluru has emerged as the clear winner, as the region that has witnessed the launch of many Compact Housing projects in the previous years.

It is obvious that the compact housing section will improve in the following years. With more knowledge about the product, its long-term advantages, and more immeasurable resale value, compact housing will arise as a more powerful segment. It has tremendous business potential and is demanded to apprehend at least 25% of the whole addressable market (16,000 units) by the year 2020.

shutterstock_755748241

Are Compact Homes the Future of Indian Real Estate?

 

Today’s generation requires smart spaces with ease of furnishing. India is on its approach to grow into the world’s youngest nation. Our youth stimulates our economy, and the real estate segment is accurately in the midst of this growth path. Nevertheless, it’s not just a transformation in preferences. Another compelling idea following today’s generation turning towards compact housing is the sky-high costs, non-availability of land, and the Indian government’s “Housing for All by 2022” initiative.

Developers are also making a conscious effort to develop affordable houses for lower and middle-income groups and thus deliver the dream of owning a house to everyone.

The influx of young professionals in Tier I and Tier II cities

In the preceding decade, cities like Bengaluru, Mumbai, Delhi, NCR, and Chennai have seen an enormous influx of young professionals aged between 25-34, thereby, managing to a rush in demand for residential properties. Interestingly, these cities also appear to be the destinations that require large land parcels, which paves a way for efficient houses, with modern features, if not a huge floor plan.

The “Pradhan Mantri Awas Yojana” factor

The government intends to build about 20 million affordable houses by March 2022, which has moreover cemented the position of compact housing in Indian real estate. These houses are equipped with all basic amenities, along with being affordable and compact. Not to mention, they arrive at reduced rates and a fleet of incentives. All the before-mentioned factors associate themselves with the future of Indian real estate that concentrates principally on compact housing. With a stronghold on today’s real estate and tremendous business potential, the compact housing segment is particularly expected to expand in the following years.

 Image Source: google

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Why police verification of tenant is important & how it’s done?

Sep 11,2019 / By / No Comment
Why police verification is so important?

Renting out a property sounds a profitable choice for many of us. The high demand for rental homes from the migrating population in cities makes it an attractive journey for homeowners. However, the landlord must be careful while choosing tenants. Since the benefits of your investments depend solely on the kind of tenant you have chosen for your rental property. Police verification of your tenants is an essential component of this safeguarding process which must be properly followed for your own security. In case you are renting out your property without going through this safeguarding process, it is possible that trouble may strike you in the future.

The law makes it compulsory for landlords to fulfill police verification of their tenants. Under Section-188 of the Indian Penal Code (IPC) which concerns the violation of order rightfully declared by a public servant, a convict may be “punished with simple imprisonment for a term which may extend to one month or a monetary penalty of Rs 200”.

Why police verification is important?Since the monetary penalty is insignificant, proper attention is not taken usually to follow the laws. By the look of it, the tenant seems fine to the landlord and the difficulty to follow the method could well step aside. Does a landlord think that what harm could the tenant cause him or the system? Even if everything is fine, a landlord could still be accused or charged.

It is often seen that the landlord ignore the importance of tenant verification and rent out their property without performing legal due diligence. This is not only risky for the property but at the same time well-being as a landlord. If your tenant is involved in any criminal act, You can be held responsible for this negligence.

To make sure that you are renting out your property to an honest tenant, it is necessary to follow up these simple steps:

Police Verification:

You can get Police Verification Form online for tenant verification. Every landlord should download this form and give it to the tenants for verification before handing over the house or flat keys. The tenant should fill his original name with father name, permanent address, and other essential information in the given form. It verifies a tenant and makes it easy for the landlord to involve the police in case of a dispute.

Background Check:

A background check is a first and most important step in tenant verification. If your tenant has a history of averting rent or destroying rented property, in this situation, you may be able to find out through a background check.

Contact Your Tenant’s Previous Landlord:

If the tenant has lived in the same locality/city, then you can do a check with his previous landlords. You can also ask for the previous employer’s contact number and address. You can ask all relevant questions to make sure the person is reliable for you to rent out your property.

Ask for the personal references:

The landlord can also ask for 1-2 personal references whom the landlord can call and ask about the person and verify his details. Family and friends are a good source to verify the tenant. If the person has no unlawful records he won’t hesitate to share a few references but it is not always necessary that you will get all the information as some tenants may not be comfortable sharing their parent’s contact numbers. In this situation, it is better to ask for friends’ numbers or colleague’s details just to keep them as a record.

Tenancy Agreement

How does police Verification help?

Police verification can help in below-mentioned ways:

Unlawful practices on-premises:

It is often seen that college students, bachelor, and even young working professionals live alone or want privacy. They enjoy parties, consume drugs, drinking on their premises. Some live-in with partners. When police verification is completed, tenants do not resort to such activities in the premises as the fear of getting arrested.

It helps in tracking crime:

It is very easy to track the absconding culprit and those who connive a heinous crime in the rented apartment/flat. Once the tenant submitted his identity proof, the fear of a police trial ensures that there are very few chances of committing a crime.

It helps in tracking terror activities:

Many terrorists rent places to stay in the city from where they carry out plans of attacks in the city. A police verification can easily find out these monsters with fake identities.

It helps in tracking foreigners identification:

Many foreigners overstay after the expiry of the contracts and disappear into the smaller cities. With the help of police verification, these unauthorized citizens can easily find out in case they rent out a place to stay.

It helps a landlord if he lives abroad or out of town:

It is often seen that landlords rent out the property and stays out of the town or country. If he has done the police verification, he is relieved that his property is let out to a decent person with a good background.

It creates fear of law for the tenants:

After police verification, tenants always fear of police action and being hauled up and put behind the bars. If a tenant has submitted his official details, he fears that police can reach the workplace and he will lose his jobs and he will not get another place to stay.

It helps in better maintenance and safety of the premises:

Tenants take good care of the rented property and pay rent on time when there is a police verification completed. He does not mess around with the structure and does not cause any damage to it. He is aware that his documentation lies with the police and his record gets blackened if the landlord registers any complaints with the police.

The FAQ on Police Verification:

How do I get police verification for tenants?

To perform that, you can visit the nearby police station in your area and ask for tenant verification forms. The correctly filled documents that would have all the details of you and your tenants should be submitted with the police. You could download the form, on the website of police stations.

What is a tenant verification form?

The tenant verification form is a document utilized by a landlord when verifying the past rental information of an aspirant for tenancy. The landlord must send the form to the applicant’s current or past landlord in order to get all the details linked to the tenancy of the individual.

Is police verification of tenants mandatory?

Police verification of your tenants is an essential part of this screening process which must be properly understood for your own safety. The law declares it necessary for landlords to perform police verification of their tenants. Any negligence in this concern may invite a jail term or a monetary penalty.

What is a rental verification form?

A rental verification form is a permission form that a tenant applicant will sign to give permission to the landlord to do a background check. This also involves the ability to call the current employer, previous landlord, and current landlord.

What is the method for an online tenant police verification?

  • There are several methods to be followed:
  • Download the Tenant Police Verification Form online first.
  • Complete the form with both tenant and landlord details.
  • Affix the current photo of your tenant.
  • Sign at the bottom of the form confirming that the information stated in the form is true and you are agreeing to it.
  • Submit the filled form to your nearest police station.
  • Collect your acknowledgment receipt and keep it as a reference.

 

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Impact of the Statue of Unity on Real Estate in Gujarat

Sep 3,2019 / By / No Comment
Statue of Unity in Gujarat

About Statue of Unity:

Sardar Vallabhbhai Patel’s statue is also known as the Statue of Unity. It is situated in the Indian state of Gujarat. Sardar Vallabhai Patel (1875–1950), who was the first Home Minister of India. After completion of the construction work, his statue is the world’s tallest statue standing at a height of 182 meters.

The project was first announced in 2010 and the construction of the statue began in October 2013 by Larsen & Toubro, who received the contract for Rs 2,989 crore from the Govt of Gujarat. The sculptor was designed by Indian sculptor Ram V. Sutar.

The statue is located at the shore of the Narmada River facing the Sardar Sarovar Dam. The statue was inaugurated by Prime Minister Narendra Modi on October 31, 2018, on the 143rd birth anniversary of Sardar Vallabhbhai Patel.

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To support the construction of the statue, the Statue of Unity movement was started to support the construction of the statue. This movement helped a lot to collect the iron needed for the statue. By asking farmers to donate their scrap farming instruments. It is heard that by 2016, a total of 135 metric tonnes of scrap iron had been gathered. Out of 135 metric tonnes, about 109 metric tonnes of it were utilized to make the foundation of the statue after processing.

On 15th December 2013, a marathon entitled “Run For Unity” was held in Surat and Vadodara to support the project.

The world’s tallest “Statue of Unity” is a pride of India and a decent honor to the fearless who undivided and integrated India, our precious Sardar Vallabhbhai Patel. He was highly respected for his leadership in uniting the 552 states of India to form the single Union of Indian.

Real Estate market of Gujarat:

Gujarat is known for its rich culture and has a population mix of professional and business class. It is well-known for the industrialized state. It is home to many prominent cities including Ahmedabad, Jamnagar, Mandvi, Gandhinagar, Surat, etc. The city of Gujarat has made rapid progress in real estate developments.

The transformation of Gujarat has been slow and steady but today anyone who is visiting the state can see skyscrapers buildings and malls in place of old aged residential and commercial buildings.

Day by day growing employee demand is pushing up the rental markets in Gujarat as well as real estate capital values in the city. Rentals at famous locations such as Ahmedabad or Jamnagar can range from Rs.8,000 to Rs.15, 000 per month for 2/3 bed-room units, while purchase prices for the same can range in between Rs.17 to 30 lakhs onward.

At the same time, real estate developers betting big on affordable homes in Gujarat. As per  Gujarat Real Estate Regulatory Authority (GujRERA), 1/3rd of all the realty projects registered with GujRERA fall under the affordable housing category. Among 2000 affordable housing projects, 880 are only residential and 820 are mixed-use with residential and commercial units.

The Statue of Unity and its Impact on Real Estate Market of Gujarat

Impact of the Statue of Unity on the Tourism Industry:

The government’s plan to set a large tourism center on the routes of the Kutch. The winter festival near the statue will boost tourism in the region. This tourism center will offer adventure activities and water sports to the tourists such as world-class light and sound show with musical fountains. In the first place, basic infrastructure such as a tent city near Sadhu Bet will come into view with 250 tents that will remain operative during the year.  The site will attract foreign tourists and holds the potential to be developed as an eco-tourism site. The Statue of Unity is fair to draw numbers of foreign tourists along with domestic visitors across India and is creating huge revenue for the country The Gujarat government has made every effort to develop the entire neighborhood as a world-class tourist center.

Infrastructure development:

The government’s decision to construct basic tourist infrastructure at different destinations in the State such as the Narmada district. It will surely boost their attractiveness index. It will not only spark commercial real estate growth in the region, but it will also offer an endless chance to add to social development and stability, all-around economic growth and heritage conservation.
The development of transport modes to reach the location will gradually propel both commercial and residential growth in the nearby areas.

As of now, there are several projects in the card to assure that this place turns out to be a popular tourist point. A world-class zoo will be developed across 1,300 acres over seven levels by the name Sardar Patel Zoological Park near the statue.  Moreover, there is a plan to start boating activities near the statue as a jetty is being constructed in the Narmada.

Employment Creation:

It’s not just about India’s pride in building the tallest statue but it’s about creating employment and revenue for the country. At the same time, it will create new business opportunities for the people living in nearby areas.

An increase in tourism and other related sectors will create huge employment opportunities for the locals and tribals living nearby the Narmada district. As of now, it has been decided by the state govt that the tent city will employ at least 15% locals. Going forward, training is also being provided to guides to face the increased tourist traffic that is hopefully to be generated after the inauguration of the statue of Unity. On the other hand, to flourish tourism center, the employment of qualified and skilled manpower is required which will be a serious task for the government.

Growth of allied sectors:

In the last few years, it has seen that the tourism and hospitality sector attracting investments worth Rs 11,000 crore. Increased tourism activities due to the newly-inaugurated Statue of Unity will create a way for establishing new industries in the associated sectors such as hospitality, transportation, and handicrafts. A 3-star Shrestha Bharat Bhavan hotel has already been built near the statue.

Conclusion:

As of now, there are several projects in the card to assure that this place turns out to be a popular tourist point. A world-class zoo will be developed across 1,300 acres over seven levels by the name Sardar Patel Zoological Park near the statue. Moreover, there is a plan to start boating activities near the statue as a jetty is being constructed in the Narmada. Local businesses have been seen in lots of progress. Earlier nearby restaurants used to remain profitable only during monsoon while dam overflowing. An increase in transport, restaurants, accommodation, and other service sectors will turnaround and will improve the economy of India.
Navagam, Gora Colony, Vasantpura, Thevadia, Nana Thavadia, and Mokhadi are nearby localities to the Statue of Unity.  The Gujarat government has made every effort to develop the entire neighborhood as a world-class tourist center. Once these projects will be in place, will change the outlook of Gujarat real estate market.

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Commonfloor presents “Open House”

Jun 28,2019 / By / No Comment
CF Open House

Commonfloor presents “Open House”

What is an Open House event?

CommonFloor, along with its business partners, is conducting Open House events, showcasing properties in select neighborhoods. These events are conducted on specific dates. You can just walk-in in any of the participating properties during the visiting hours.

How do I benefit from an Open House?

When searching for your home, you spend more time waiting for the keys to the property than in actually viewing it. Through the Open House, we make your property search more effective. The doors of the participating properties are open; you just walk-in.

Why should I schedule a visit?

You should schedule your visit for each property you like. When you schedule a visit, we send the Google Map location of the property to your mobile number. This makes it easy for you to reach the property. We also inform the property owner/broker when to expect a visitor, but do not share your contact details with them.

Here is a short video which explains the product in detail.

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