Compact Homes and its trends

Jan 13,2020 / By Supriya Mogarala / No Comment

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.

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.

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Real Estate Investment in India Bounce Nearly 9% in 2019

Dec 20,2019 / By Prahalad Singh / No Comment

Highlights:

Investment in India’s real estate market surged nearly 9% in 2019 compared to 2018 and reached $6.2 billion (Rs 43,780 crore).
The foreign funds estimated for nearly 78% of the overall investment in 2019, the highest share ever.
Office properties pulled 46% of the total inflow and raised nearly Rs 20,000 crore this year.
Bengaluru emerged to the 2nd place overtaking Delhi-NCR in terms of collecting investments with inflows of Rs 4,650 crore ($655 million) in 2019.
Mumbai managed the investments with a 25% share of the influx in 2019 and remains to be the most attractive investment destination in the country.

According to global property consultant colliers, investment in the Indian real estate market is estimated to jump by nearly 9% to Rs 43,780 crore during this calendar year on higher inflow from foreign private equity (PE) investors, including pension and sovereign funds, infused money despite the economic slowdown. The research shows that the foreign funds estimated for nearly 78% of the overall investment in 2019, the highest share ever.

Office properties pulled 46% of the total influx and raised nearly Rs 20,000 crore this year.

Colliers predicts that there is more growth ahead in 2020, admitting at a slower pace and investments inflows would total Rs 46,170 crore ($6.5 billion) or growth of nearly 5%.

The Rs 43,780 ($6.2 billion) investment in 2019 is however lower than what the Indian realty market received in 2017 i.e. $8 billion. Considering 2008, India’s real estate sector registered overall inflows of Rs 4,10,000 crore ($56.6 billion), according to Colliers. “After 2014, a bundle of reforms added such as the implementation of the Real Estate Regulatory Authority (RERA), the introduction of the Goods and Services Tax (GST), the rise of the Insolvency and Bankruptcy Code (IBC), and relaxation in foreign direct investment norms. These all reforms together have encouraged investor engagement in Indian real estate,” the firm says.

Global property consultant Colliers suggests investors look at opportunistic assets including under-construction office assets supported by strong demand signals in IT-influenced markets such as Bangalore, Pune, and Hyderabad giving enough possibilities to investors, said Managing Director and Chairman at Colliers International India, Sankey Prasad.

Office assets accounted for 46% of the total inflows during 2019 totaling Rs 19,900 crore ($2.8 billion) with the sector supported by strong demand signal and rental appreciation. The experts assume investors to remain focused on taking commercial office assets over the next 3-years supported by robust occupant demand and rental appreciation.

Besides Mumbai and Delhi/NCR, Bangalore should continue to rank among the most attractive commercial office markets. Bengaluru emerged to the 2nd place overtaking Delhi-NCR in terms of collecting investments with inflows of Rs 4,650 crore ($655 million) in 2019. And the consultant firm noted that the strong appetite for commercial office assets propelled Bangalore’s place to the 2nd in 2019 and believe that it should continue to be among the top 2-most attractive markets for investors over the next 2-years as funds continue to remain strong in commercial office assets

The consultant firm states that Mumbai managed the investments with a 25% share of the influx in 2019. The city of Mumbai remains to be the most attractive investment destination in the country by reason of an extensive range of asset classes, giving diverseness to investors’ portfolios.

Throughout 2020-2023, an annual average gross absorption at 52 million sq.ft. across the top 7-cities, exceeding the gross absorption of the past 5 years by 12%, projected by Colliers.

The report further said that there is a flurry of commercial investment activity in 2020 and 2021 as funds total assets to list them as real estate investment trusts (REITs).

While the commercial office sector is registering strong growth in investments, India’s residential real estate is undergoing a continued slowdown in investment size, considering only 9% of the total investments in 2019.

Colliers expects investments in the residential sector to continue soft during 2020, as money matters in non-banking financial companies (NBFCs) continue.

The firm also suggests that residential developers, including those with weak credit marks, were heavily dependent upon NBFCs to finance their projects over the last few years. And they believe that investors should continue to choose a conventional way towards residential assets, excluding a few top-tier developers, as the demand in the sector has not fully recovered yet.

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34th GST council meeting highlights.

Mar 25,2019 / By Supriya Mogarala / No Comment

34TH GST Council meeting in INDIA Highlights:

Decisions captured by the GST Council in the 34th meeting held on 19 March 2019 concerning GST rate on Real Estate Sector at New Delhi has discussed the details for implementations of the proposals made by the council in its 33rd meeting for lower efficient GST rate of 1% on affordable houses and 5% on the construction of houses except affordable house. The council has made a decision that the approach of the transformation is as follows:

Option in that respect of ongoing projects:

• The promoters shall be given one time option to pay tax at the previous rates (8% or 12% with ITC) on ongoing projects (projects where the construction and booking have started before 1st April 2019) which have not been finished by 31st March 2019.

• The option shall be operated once within the prescribed time frame and where the option is not regulated within the prescribed time limit, the latest GST rates shall be applied.

New Tax Rates:

New tax rates shall be appropriate to new or ongoing projects which have operated the option to pay tax in the new government are as follows:

New rate of 1% without ITC (input tax credit) on the construction of affordable housing will be available for all houses those who meet the description of affordable houses as determined by the GSTC and affordable houses being established in ongoing projects existing under the central and state housing schemes presently eligible for compromising rate of 8% GST (after 1/3rd land discount)
The new rate of 5% without input tax credit shall be suitable for the construction of all the houses other than affordable houses unless the affordable houses are booked before 1st April 2019. New rates shall be available to pay on installments on or before 1st April 2019. Also, commercial properties in which the carpet area is not more than 15% of the total carpet area of all the properties.

Circumstances for the new tax rates:

The new tax rate of 1% (on affordable housing) and 5% (on other than affordable houses) will be available under the following conditions.

The input tax credit may not be available

80% of input services can be purchased from recognized and registered personalities on the shortfall of purchases from 80%. Tax should be paid by the builder at 18% on RCM basis. However, tax on cement purchased from the unregistered person should be paid at 28% under RCM and RCM under capital goods at applicable rates.

Conversion for ongoing projects electing for the new tax rates:

• Ongoing projects and projects that have not been completed by 31st March 2019 opting for new tax rates shall changeover the ITC according to the prescribed method

• The changeover formula approved by the GST Council for residential projects to deduce the ITC taken for percentage completion of construction as on 1st April 2019 is to arrive at ITC for the entire project and then based on the percentage booking of flats and percentage invoicing the ITC eligibility is the determined transition would thus be on the pro data based on a formula that credit in proportion to the booking of the flat and invoicing done for the booked flat available to subject to a few safeguards.

The following analysis that will be applied to TDR/FSI and Long term lease for those projects those originate after 1st April 2019:

• The supply of long term lease of land by the owner to the developer will be an exempted subject to the condition that the constructed flats are sold before the issuance of completion certificate and tax paid on them. The exemption shall be withdrawn in case of flats that are sold after the issuance of completion certificate, but such withdrawal will be limited to 1% of value in the case of affordable housing and 5% of the value in case of those other than affordable housing. This will achieve fair taxation between the under construction and ready to move property.

• The accountability to pay the tax on TDR, FSI, and long term lease will be shifted from the landowner to the builder under the reverse charge mechanism (RCM)

Modification to ITC Rules:

• ITC rules will be modified to develop the clarity on the monthly and final determination of ITC and reversal theory of Real Estate projects. The change would clarify the procedure for accounting the input tax credit to commercial units that would continue to be eligible for input tax credit in a mixed project.

• The decisions of the GST Council have been presented in the simple language for better understanding and the same would be effective through circulars which alone shall have the force of law.

The progress for the implementation certainly of the new tax structure is acknowledged as it will give enough time to adapt operations to the latest structure. Justifying GST on under construction properties has been one of the Real Estate sector’s foremost requests. The move to reduce GST, combined with the implantation of RERA, will boost the demand and firmly renovate the sector.

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Most preferred Cities for NRI Investment

Mar 8,2018 / By Priyanka / No Comment

Non-Resident Indian are often in a dilemma when it comes to investing in properties. They have a budget but have little idea about the supply in various cities of India. At times property buyers’ end up buying properties that they were not searching for in the first place. Thus, it is necessary to know the demand-supply graph in the locations of your choice so you can make the right decision.

Mumbai: It is one of the real estate markets where the supply of flats is quite high. The price is on the higher side but the availability of flats is not an issue in this city. Home buyers mostly search for flats followed by houses, plots, villas, and penthouses in Mumbai.
The city has witnessed vertical growth which is the only solution for Mumbai which is not only highly populous but has seen significant demand for residential housing. Here it remains a challenge for experts to increase the supply so high-rise construction is the trend in Mumbai.

Bengaluru: Bengaluru real estate market has witnessed a growth in urban population owing to demand from the IT/ITeS sector. Flats are the most supplied property type in the city. IT professionals mainly prefer apartments in Bengaluru where rates are on the higher side and availability of land remains problematic.

Pune: In this city, under-construction properties witnessed equal preference as ready-to-move-in properties. This means that sales are not focused on only one segment.

Delhi: The demand for the housing sector in Delhi has undergone alterations over the years due to change in the availability of properties. As the property prices are a bit on the higher side, homebuyers prefer flats over independent houses.
For those who cannot afford apartment complexes or independent house can opt to purchase builder floor apartments which are available across the city.

Chennai: Investing in Chennai real estate market is considered a safe investment because of the fact that there is unending demand for homes driven by the notable industrial mix including technology, healthcare, automobile, and manufacturing sectors. Areas in the southern part of the city are touted to be fast growing.

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