Demand for Semi Luxury Real Estate in India May Stall

The demand for much of the middle premium range of real estate in India may fall in the coming few months thanks to the layoffs of middle management employees. Over the past month, IT industry leaders have expressed that to remain globally competitive will require them to hire employees overseas rather than from India.

Outsourcing Jobs to India

Over the past two decades, Indian IT companies grew rapidly on the back of a large and well trained workforce. Such a workforce could be deployed for work at client’s site overseas at a fraction of the cost the client would have to pay to hire workers onshore. The term offshoring became a buzzword that was heard usually in the context of India.

Well trained Indian engineers would usually work at a fraction of the cost of foreign workers. Outsourcing became such a concern among educated American and European techies that they told the generation still in school not to pursue a technical degree because in all likelihood, their job would be done by an Indian at a fraction of what they would have to be paid.  properties websites in india

Indian Techies Living Large

Many mid-level Indian techies earn between 20 to 60 lakhs per annum and make up a significant bulk of buyers of semi luxury properties in India. Most such working professionals are between the ages of 30 to 40. Because such workers earn a large income at a relatively young age, they make up the biggest segment of buyers of flats priced between 4,000 to 7,500 rupees per square foot.

Risks Looming Large

In addition to the protectionist policies of important foreign markets which are harming Indian IT companies; Indian IT companies are also suffering due to a large number of jobs being automated and by the advent of Artificial Intelligence.

Cities such as Pune and Bangalore depend on mid-level technology workers for job creation and to spur demand for office and residential real estate. This makes such cities especially sensitive to layoffs of mid-level IT workers.

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There are nearly 16,000 Indian IT companies that employ close to forty lakh tech workers. Today middle management is such companies is particularly at risk of layoffs because many in this working segment have skills that are less irrelevant today. Employing workers in this segment is also more expensive for IT companies who require the skill sets of fresh graduates yet may be able to do without such a large middle management.

Impact Upon Real Estate

If there is a meltdown in the Indian IT sector, then many in the middle management may be the first to go. This would lead to a fall in the demand for semi luxury and even luxury properties in the country. According to this property site, there is a significant possibility that a recovery in the mid premium real estate sector will be delayed.

Four Guidelines to Follow Before You Buy Real Estate in India

Prospective homebuyers who are eager to buy realestate in India should know that the Indian real estate market is highly dynamic changing constantly during the course of each year. Because the Indian real estate sector is in a state of constant flux, buyers often feel daunted and find it difficult to judge the correct value of a property and to accurately judge the investment potential of a house.

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The few tips below, if they are followed, will relieve buyers from a great deal of guesswork they will face when they decide to buy a house.

Follow Price Trends for the Locality

For most households a new house is the biggest investment they will make in their lifetime. Before deciding to buy a particular house, the investor should be certain that the property they buy will prove to be an asset for them over the long term. Thus prospective buyers should always track the price trends of the locality where they are considering buying a house. To do this, prospective homebuyers should learn of the prevailing price and compare it to the price at which properties had been sold in the past. Learning of the real estate price movements over the past three years in a locality or region will provide a useful estimate of the direction home prices are heading. Gathering information about home prices in the past will also help prospective buyers arrive at a reliable estimate for home prices in a locality in the future.

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Understand The Growth Drivers

After understanding the price trend in a locality, buyers should try to understand why prices have risen or dropped in the region. According to the best real estate sites in India, micro and macro factors have an impact upon the price of property in a region. If new social and civic infrastructure is created or is planned in a locality this usually leads to higher real estate prices in that region. Macro factors including changes in interest rates, tax reform, and regulatory guidelines also result in changes in realty prices.

Who Does the Market Favor?

It’s important to understand whom the market favors. If a market is a buyers market it means that the number of properties for sale exceeds the number of buyers who are willing to buy at the prevailing prices in that market. Thus a buyer’s market is one where buyers have the upper hand because sellers have fewer willing buyers they can sell to.

In a sellers market, those who are selling the property call the shots because the number of willing buyers exceeds the number of those willing to sell a property in that market.

A prospective buyers can judge for himself whom the market favors by gathering data about how long properties in a region remain on the market before they are sold.

Regions With Potential for Spillover Demand

Buyers who have been focused on home buying in central regions should realize that certain parts of a city are susceptible to spill over demand after more central regions become saturated with developments. Because the regions near central regions already have easy access to good social infrastructure that lies in the central region, once the central region becomes saturated, the surrounding underdeveloped and inexpensive regions become highly desirable localities to live in. According to this property site, prices in the surrounding underdeveloped regions begin to rise dramatically due to demand which spills over from central regions.

Real Estate in Bangalore’s KR Puram Lake, Destructive to Water Body

Many who own realestate in Bangalore are pleased to live in their home and enjoy living in a city that has been bestowed the twin titles “city of gardens” and “city of lakes”. Once Bangalore had hundreds of lakes yet according to reputed sources the number of lakes in Bangalore has fallen drastically and today stands at eighty one.

The Death of a Lake

Much has been reported about the state of the Bellander Lake in recent days. It has been reported that the lake’s future as an important water body is in jeopardy because human waste from numerous developments that surround the lake flows into the large water body.  new residential projects in hyderabad

However another lake that is not at too great a distance from Bellandur Lake is also seriously ill and its future is also uncertain. The KR Puram Lake is rapidly degrading due to the lack of a maintenance system that could prevent sewage from being disposed of in the lake. Encroachment on the lake’s borders is also leading gradually to the lakes demise.

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An Important Body of Water

The KR Puram lake is an important body of water for the locals who depend on a daily supply of water from the lake for essential activities. However today any visitor to the KR Puram lake could see for themselves that the quality of the lakes water is putrid and that illegal encroachments are taking possession of the land from which water has receded. Those who want to buy property in Bangalore so as to be near pristine lakes, today may need to do a double think before they go ahead and buy a house in the city.

Efforts By Those Most Impacted

Residents who have been the most impacted by the deteriorating condition of the lake have decided to hold a hunger strike on the twelfth of this month to compel the concerned authority to take action and establish a functioning maintenance system to reclaim the lake. There have been complaints by local residents who state that the dumping of untreated sewage water, non recyclable waste, and chemical effluents is turning the lake’s water into poison.

A resident has filed an RTI which reveals that a sewage treatment plant in the vicinity of the lake that had thus far been believed to treat 21 million liters of sewage a day is only capable of treating a maximum of 20 million liters of sewage a day. Claims by locals which are backed up by strong evidence point to sewage flowing into the KR Puram lake from nearby residential projects in Bangalore,

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Under RERA, Little Respite for Buyers with Investments in Unfinished Property in India

Home buyers who had hoped that work on their delayed best property in India would be fast tracked thanks to the RERA may have reasons to be concerned. Experts feel that buyers who had purchased houses in projects on which work has stalled or stopped because of legal issues may not experience any benign impact due to the Real Estate Regulatory Act. Furthermore there may also be no relief to homebuyers who had been hoped to receive their home speedily post RERA led enforcement in cases where the builder responsible for the project had used up all the money designated for the project.

RERA’s Is Geared Towards the Future

The goal of the RERA may in fact be to make home buying in the future a more transparent and speedier process, it’s power to serve buyers who had invested in undelivered projects in the past is less visible. Due to disclosures about projects by promoters after RERA has come into force, buyers will be able to make more informed decisions.

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Promoters Have Option to Extend Completion Date

Under the RERA, promoters have the option to extend the date of ongoing projects while promoters register such projects. While the law requires that all ongoing projects must be registered with the state regulator before July 31, the law still empowers the builder to extend the deadline of the ongoing project while he registers the project with the state regulator.

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The newly established Maharashtra State Regulators website has stated that while a promoter registers a project, the revised date of the projects completion must be provided. This revised date must correspond with the work that has thus far been completed on the project. Hence, realistically a project that is only week away from completion cannot ask for a revised completion date of several months or a year.

Experts have commented on real estate sites that by providing an extension date to promoters when they register their projects, promoters are in effect being granted a fresh extension on projects that are delayed or projects that are about to be delayed.

The Problem for Home Buyers

If a builders inaction has led to delays on a yet to be completed project; home buyers who seek action against such a builder using the RERA will discover that the RERA has no clause to help them deal with such a scenario. Additionally if builders have been unable to complete projects despite receiving funds from buyers for partially or fully completed units, under the RERA, builders are eligible to seek an extension on the project while they register the project.

In case buyers had hoped for a swift resolution to projects that had been delayed due to legal issues, they will be disappointed as the builders, under the RERA will have to disclose the status and delays on past projects in accordance with the RERA.

Conclusion

Home buyers who have thus far been suffering under the burden of EMI’s paid for delayed projects may not find an immediate respite due to the RERA. According to this property website, home buyers who have yet to receive ownership of fully or partially paid for homes may have no recourse but to approach the District, State, or National Consumer Forum to vent their grievances.

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Lack of Regulatory Authority Creates Confusion Among Builders in Ahmedabad and Gujarat

Many builders in Ahmedabad are facing a problem with regards to RERA as the Gujarat Government as yet has not formed a state level regulatory authority which is to frame regulation for builders to follow. Real estate developers in much of Gujarat are uncertain and confused with regards to how to register ongoing projects.

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What the New Law Requires?

According to the new RERA law, new and ongoing projects shall have to be registered with the regulatory authority. By July 1 of this year, realtors have to register their ongoing and new projects. However because the Gujarat Government is yet to appoint a state level regulator who will frame regulation, builders are left in quandary concerning whom to approach to register their projects.

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Builders in Confusion in Gujarat

Builders in all of Gujarat including those in Ahmedabad are confused regarding how to proceed as there is no regulatory authority in the state with which they can register their projects. According to industry insiders, builders have stated that they hope that a authority would be established soon. For all their wanting of a regulator with whom they may register their projects, builders are also anxious about where and when they will get their registration numbers and which receipts from the bank accounts of new and existing customers will need to be deposited.

The questions mentioned above are of serious concern to builders and developers and are leading to confusion among not only builders and developersin Ahmedabad but also among builders across India in states that have failed to appoint state level regulators. According to a member of the CREDAI, the question of how and when builders will get their registration numbers and the question of customers bank receipts are paramount among those being posed by builders.

RERA: Bringing Transparency

Developers have stated that the RERA will bring transparency in the real estate sector, however developers have stated that the government should also create a dialogue with consumers in addition to a dialogue with builders. In such a dialogue the government could clearly explain its plans to build the required infrastructure.

The Word on the Street

The word on the street is that by the time the government takes the necessary steps to create a state level regulatory authority, there will be a shortage of time for builders to register their projects leading to a mad rush among numerous builders to register projects once the necessary infrastructure is in place.

Time is Of the Essence

It is expected that nearly a month will pass before the authority can be ready to create registration numbers for builders. According to estimates, there are 750 to 800 upcoming new projects in Ahmedabad and these have some 70,000 units all of which will have to be registered costing a lot of time and man hours in the process.

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What is the impact of circle rates on property transaction made in India?

In recent past many cities including Noida, Gurgaon and Ghaziabad saw changes in circle rates. One of the objects behind cutting down circle rates was to reduce property prices and to encourage the buyers and investors of invest in real estate market.

Cut in circle rates came as a good move in the stagnant market. Real estate developers also appreciated the move as it helped them get some business. Property sites in India have also seen increase in the traffic from the people looking for new homes. To know who property demand is increasing due to change in circle rates, let’s check its impact on the market.

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In June last year, Ghaziabad saw correction of around 4 to 5 percent in circle rates on residential plots. It tremendously affected the real estate market in the city. A spokesperson of Raheja Developers said on this topic, “This is one of the appreciated course of actions by the local body to cut the circle rate which will lead to correction in property prices. It has been noticed that in some areas of NCR circuit, circle rates are higher than the market rates of land. So this has to be justified accordingly also to boost the realty market.”

Not just the developers, property consultants and agents also appreciated the decision of cut in circle rates. After the move, real estate websites in India are expecting some positive movement in the realty market. At least, people looking for affordable homes will start searching their dream homes to avail the benefit of reduced prices.

This will help the homebuyers save money on stamp duty as they will now have to pay less for getting their property registered. It is completely a win-win situation for the government, builders, investors, agents and end-users.

When talking about circle rates, some people mistakenly consider it market rate. Let’s have a look at both of them and the difference between them.

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Circle rate:

It is the minimum cost at which independent homes, commercial buildings, residential apartments and plots are sold and purchased. Local state government’s revenue department decides the rates.

Market rate:

This is the value of the property decided by the buyers and sellers. Generally, the existing market dynamics of demand and supply affect the final property price. However, some best real estate websites in India show both circle rates and market rates of projects.

Now when you have understood circle rates and market rates, make sure next time when you buy a house, you pay attention to them and grab the best deal.

Builders Altering Plans Midway To Construct Affordable Property in India

Builders who construct Property in India have an additional reason to build affordable housing since the builders will be able to borrow capital for such projects at a lower rate of interest.

Housing for All by 2022

The government is offering numerous incentives and tax benefits to encourage the construction of affordable housing with the end goal that by the year 2022 there would be housing for all in the urban regions of the country. Builders of real estate in the country have been building a larger number of smaller houses since the government granted affordable housing infrastructure status. Some builders have even begun to alter buildings currently under construction into affordable houses and buildings whose plans had been decided before the government granted infrastructure status to affordable housing are being tweaked and reshaped to be completed as affordable houses.

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Benefits to Builders of Affordable Housing

There are tax benefits to builders who take steps to begin and successfully complete affordable housing projects in India. Additionally because affordable housing has been granted the status of infrastructure, the builders who begin such projects are eligible for institutional funding at better than normal terms.

After the government’s encouraging plans to promote construction of affordable housing in India, a prominent builder in Mumbai modified its project in Borivali into one of 400 apartments where each unit size is now to be of a 1 BHK configuration. This developer now offers the flats of sizes 350 to 380 square feet at prices ranging between 60 to 63 lakh rupees.

Developers are choosing to build homes for the affordable housing segment because doing to leads to a better management of cash flows which in turn leads to better management at the construction site and to a higher sales velocity. According to this site and to some of the best property sites in India the demand for homes in the affordable housing segment is genuine and thus the sales velocity is high in this segment. One of the top builders of who launched an affordable project in Mumbai stated that they sold two thirds of the units they launched three months ago.

Why Affordable Housing is Catching on?

Experts in domestic real estate have stated that the affordable housing trend is catching on and besides the quality of the builders work and easy financing options for buyers, the ticket size plays a vital role in decision making and ultimately in sales conclusion. According to this property site, numerous builders are gravitating to towards building affordable property as building and selling such property has now become financially viable.

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