Housing sector gets leg-up as RBI to lower minimum risk weight

Banks will be able to free more funds to lend for affordable housing as the Reserve Bank on September 30 proposed to lower the minimum risk weight on housing loans from the current 50 percent.

www.sevagiri.com

"With a view to improve affordability of low-cost housing for economically weaker sections and low income groups and giving a fillip to Housing for All, while being cognizant of prudential concerns, it is proposed to reduce the risk weights applicable to lower value but well collateralised individual housing loans," the RBI said.

The minimum risk weight applicable on individual housing loans is 50 percent, at present.

Detailed guidelines in this regard are being issued separately, the RBI said in its Fourth Bimonthly Monetary Policy statement.

"The RBI's proposal to reduce the minimum risk weightage on individual housing loans for low-cost homes will also help revive sales," said Property consultant CBRE South Asia Chairman and MD Anshuman Magazine said.

JLL india Chairman and Country Head Anuj Puri said for the affordable housing sector, "the outlook is nevertheless bright, since the RBI governor has made provisions for lending to this sector to become less stringent and broader in scope".

Lowering of minimum risk weight means that banks will have to set aside less capital for affordable housing loans leading to availability of more funds for the segment.

Meanwhile, real estate developers have hailed the RBI's decision to cut key lending rate by 0.5 percent. 

Source - ET Mumbai

Cidco tender plots go at high bids in New Panvel

NAVI MUMBAI: Six land tender plots of City and Industrial Development Corporation of Maharashtra Limited (Cidco) were sold to the highest bidders in the range of Rs 81,000 to Rs 1.31 lakh per sq metres in New Panvel today. 

www.sevagiri.com

Close to 35 real estate developers had bid for these residential-cum-commercial plots in various sectors of New Panvel. It once again shows the demand for realty in the satellite city. 

The secretary of Navi Mumbai chapter of Maharashtra Chamber of Housing Industry (MCHI) Manohar Shroff, commented: "The fact that these six tender plots have been sold at a decently high price range, once again shows that this is due to the various developments in the city, especially the upcoming Navi Mumbai International Airport." Shroff added that earlier this year in May, Cidco had sold tender plots in Nerul for as high as Rs 2.82 lakh per sqft, as the Nerul node is of prime real estate value. 

Details of the latest New Panvel land bids are as follows. Plot number 15 in sector 6 of area 12976sqm sold to highest bidder Shree Hari Enterprises for Rs 1.25 lakh per sqm. 

Plot number 19 in sector 17 of area 2586sqm sold to Satguru Infra Projects for Rs 1.12 lakh per sqm. 

Plot number 85 in sector 17 of area 2242sqm sold to TPV Life Space company for Rs 1.30 lakh per sqm. 

Plot number 87 in sector 17 of area 2200sqm sold to TPV Life Space company for Rs 1.33 lakh per sqm. 

Plot number 19 in sector 17 of area 500sqm sold to Meghdoot Infra Projects for Rs 81,300 per sqm. And finally, Plot number 20 in sector 7 of area 500sqm sold to Sai Ram real estate company for Rs 81,313 per sqm.

Source - TOI

Rupee gains 19 paise against dollar

MUMBAI: The rupee rose by 19 paise at 65.77 against the US dollar in early trade on Wednesday at the Interbank Foreign Exchange after the Reserve Bank cut interest rates by 0.50 per cent on Tuesday. 

www.sevagiri.com

Forex dealers said besides a higher opening in domestic equity market, the dollar's weakness against other currencies overseas, supported the rupee. 

The domestic currency had gained nine paise to close at 65.96 against the US currency in Tuesday's trade on persistent selling of dollars by banks and exporters amid sustained capital inflows. 

Meanwhile, the benchmark BSE Sensex jumped 265.94 points, or 1.03 per cent, at 26,044.60 in early trade on Wednesday.

source - TOI

Sensex surges 265 pts to regain 26K-level; Nifty above 7,900

MUMBAI: The benchmark BSE Sensex reclaimed the 26,000-mark by surging 265 points and the NSE Nifty was above the 7,900-level in early trade on Wednesday on continued buying by participants on a bigger-than-expected interest rate cut by RBI on Tuesday amid a rebound in global markets. 

www.sevagiri.com

The 30-share index rose by 265.94 points, or 1.03 per cent, at 26,044.60 with all sectoral indices, led by metal, realty and banking, trading higher by up to 2.12 per cent. 

The gauge had rallied by 161.82 points in the previous session. Similarly, the National Stock Exchange index Nifty went past the 7,900-level by climbing 80.95 points, or 1.03 per cent, to 7,924.25. 

Equity brokers said sentiments turned buoyant after RBI yesterday surprised markets with a bigger-than-expected 0.50 per cent cut in repo rates to 6.75 per cent, triggering buying activity. 

The central bank also hiked limit for FPI investment in government bonds to 5 per cent of the outstanding stock by March, 2018, a move that will bring in an additional Rs 1.2 lakh crore in G-Sec. 

Besides, a firming trend at other Asian markets influenced trading sentiments here, they said. 

Among other Asian markets, Hong Kong's Hang Seng was up by 1.16 per cent, Japan's Nikkei gained 1.84 per cent, while Shanghai Composite index was trading higher by 0.49 per cent in early trade on Wednesday. 

The US Dow Jones Industrial Average ended 0.30 per cent higher in Tuesday's trade. 

Source - TOI 

After RBI cuts rate, realtors want banks to cut home loan rates

MUMBAI: Real estate developers have welcomed the RBI's decision to cut repo rate by 50 basis points, but have also appealed to banks to pass on the benefits to consumers by easing the home loan rates. The reduction in the banks' lending rate is also expected to lower the borrowing cost of builders and ease the pressure on interest outgo.

www.sevagiri.com

"The reduction will have a positive impact on developers' borrowing cost. However, operating performance of these companies should not deteriorate any further as credit ratings have already worsened and resulted in higher cost of borrowing," said Sandipan Pal, analyst, Motilal Oswal Securities. "To see improvement in operational performance of developers, we need more of price correction than interest rate reduction." Realty developers' debt levels have been mounting in the backdrop of low sales for some time now and a saving of 40-50 bps in interest cost would be significant, reckoned analysts. The total debt level of the top 15 listed realty developers stood at over Rs 54,567 crore as on FY15 end, against Rs 50,400 crore during 2012-13 end. Developers are also expecting the easing of cost burden to result in better prices for consumers. "It will be easier for developers launching new projects to pass on the savings on borrowing costs to consumers. These can be significant savings for both developers and homebuyers, given that a project usually takes about two years for launch after land acquisition," said Sandeep Runwal, director, Runwal Group.

 Prior to Tuesday's 50-bps cut, the central bank had earlier cut the repo rate by 75 basis points since January, but the net loan rate reduction by banks so far has not been more than 25-30 points. "This is a helpful move, but was long overdue. We now appeal to banks to pass on the rate reduction to consumers. They can now pass an entire 1% rate reduction to home loans," said Getamber Anand, president, CREDAI. "If that happens, this year's Diwali will see a revival in home sales momentum." Apart from the rate cut, the RBI has also announced that it will lower the risk weightage for lowcost home loans. 

With a view to improving "affordability of low-cost housing" for the economically weaker sections and low income groups and giving a fillip to "housing for all" initiative, the RBI has also proposed to reduce risk weights applicable to lower value but well collateralised individual housing loans, the RBI said in its policy statement. The central bank will separately issue detailed guidelines on this. "Risk weightage for home loans need to be halved to 25% from 50%. And not only for the economically weaker sections but across categories, because the NPA in home loan segment is less than 1% and it's justifiable to lower the risk weightage," said Niranjan Hiranandani, MD, Hiranandani Constructions. 
 

Source - ET

Developers want banks to cut rates

NEW DELHI: The sharp cut in repo rate is expected to give a fresh lease of life to the struggling real estate sector while lowering of risk weight for affordable housing loans is likely to add to the recovery. 

www.sevagiri.com

Developers, who have been saddled with huge inventory, now want banks to cut their lending rates, particularly when the festival season is round the corner.
At present, the minimum risk weight applicable to individual housing loan is 50%. The RBI said it is proposing to reduce the risk weight applicable to lower-value but well-collateralized individual housing loan, in an attempt to improve "affordability of low-cost housing" for economically weaker section and low-income group and give a fillip to "housing for all". 
The general perception in market is that banks must cut lending rates to ensure a recovery in the real estate sector.
"We are hopeful that banks will take the cue and pass on the benefit to the end-user, which will trigger a rise in demand for housing ahead of the festive season," said Navin Raheja, chairman, National Real Estate Development Council.

SBI has already cut its base rate by 40 basis points to 9.3%. ICICI Bank has also expressed its intent to cut rate in due course. HDFC Bank cut its rate in the first week of September to 9.35%. Developers, however, feel rates should fall below 9% to enthuse buyers.

The 40 basis points cut effected by SBI will give a relief of only 2.8% in EMI to Rs 45,955 on a Rs 50 lakh loan for 20 years. A half a percentage point rate cut (50 basis points) will lead to reduction in EMI by only 3.5%. This means, on a loan of Rs 50 lakh for 20 years, EMI will come down from Rs 47,262 to Rs 45,631 if the interest rate goes down from 9.7% to 9.2%.
So, buyers feel that interest rate should be cut by at least one percentage point (100 basis points), which will give a relief of 6.8% in EMI. In 2015 calendar year, RBI has already cut repo rate by 1.25 percentage points in four tranches, but so far, banks have cut their rates by around 0.5 percentage points only.
Another key issue is whether developers will reduce prices or not. They say there is no scope to cut price as they are selling at the lowest possible price. "At the present price level we are hardly making any money," said Getamber Anand, president of Confederation of Real Estate Developers' Associations of India. Underlining the importance of availability of cheap fund, Anand said RBI must impress upon banks to cut lending rates. 
However, developers and investors are saddled with large inventory. So, in the coming festive season, developers in markets such as Mumbai, Banguluru and Pune are likely to offer large discounts and freebies to push sales and clear inventory.

Source - TOI 

RBI cuts interest rate more than expected as Rajan "front loads"

The Reserve Bank of India (RBI) cut its policy interest rate to a 4-1/2 year low of 6.75 percent on Tuesday, in a bigger-than-expected move that, with inflation running at record lows, could help an economy in danger of slowing down.

www.sevagiri.com

A Reuters poll last week showed only one out of 51 economists had expected a 50 basis points cut in the repo rate, while 45 had expected a 25 bps cut, the same magnitude as previous three cuts this year.

"I don't think we have been excessively aggressive," RBI Governor Raghuram Rajan told a news conference, explaining that falling global commodity prices had helped the RBI "front-load" the easing.

"Clearly this was about, given the state of the economy, how can we move forward," he added, reflecting widespread concern that growth was losing momentum.

At the same time, the RBI, in a statement written by Rajan, announced a slew of measures intended to further open debt and currency markets, signalling confidence in an economy expected to fare better than emerging market peers once U.S. interest rates are raised for the first time in nearly a decade.

The benchmark 10-year government bond yield dropped as much as 17 bps to 7.56 percent, its lowest level since mid-July 2013, but share indexes edged lower, tracking global markets.

The RBI justified the bigger rate reduction, saying consumer inflation was likely be running at 5.8 percent in January, below the 6 percent target, thanks partly to the government's efforts to contain food prices. Inflation dropped to a record low of 3.66 percent in August.

Analysts said the prospect of additional easing was unlikely for a while, with the focus now likely to shift to a government that has struggled to get its reform policies past parliament.

The bigger rate cut "highlights the central bank's concern over the underlying growth momentum, especially given the disappointing reform progress and leveraged banks, corporates," said Radhika Rao, an economist at DBS in Singapore.

Calls for lower rates began to grow louder after the economy grew by a slower-than-expected annualised rate of 7 percent in the April-June quarter - faster than China, but well below the government's target of 8 to 8.5 percent for the year ending in March.

Reflecting the soft going, the RBI lowered its own growth forecast for the fiscal year to 7.4 percent from 7.6 percent previously.

ENCOURAGING FOREIGN INVESTORS in BONDS

Cutting interest rates during the monsoon season, running from mid-June through September, is unusual for the RBI as it has tended to be on the defensive against food price pressures after disappointing rains. This is the first cut during that period since the repo rate was adopted as the policy rate in 2004.

This was also the biggest rate move taken by Rajan since he took the helm in September 2013. All his previous moves, up or down, had been by a magnitude of 25 bps.

The RBI said it would now target consumer inflation at around 5 percent by March 2017, while striving to keep real interest rates benchmarked to a 1-year Treasury bill rate of between 1.5 to 2 percent.

Rajan also announced a slew of measures to develop markets, a key objective for the former chief economist of the International Monetary Fund (IMF).

The measures included increasing the current $30 billion limit for foreign investments in government bonds by 1.2 trillion rupees ($18.13 billion) by March 2018 in stages, and allowing overseas funds to buy debt issued by Indian states.

"The steady relaxation for foreign investors in government securities is also a big positive for Indian debt market. I see a sustainable rally in bonds. The stance of RBI is leaning towards dovish side," Killol Pandya, head of fixed income at Peerless Funds Management in Mumbai, said.

source - TOI 

Rupee ends at 66.05 vs dollar, recovers 11 paise

MUMBAI: Snapping its four-day losing streak, the rupee on Monday recovered by 11 paise to end at 66.05 against the dollar on selling of the American currency by banks and exporters amid fall in domestic equities. 

www.sevagiri.com

The rupee resumed higher at 66.11 per dollar against the last close of 66.16 at the Interbank Foreign Exchange market. 

It gained further on bouts of dollar selling to 66.01 before ending at 66.05, showing a gain of 11 paise. It hovered in a range of 66.01 and 66.15 per dollar during the day. 

In global markets, the US dollar was up against the basket of currencies in Asian trade amid relatively uneventful weekend with the dollar showing potential for gains if upcoming data strengthen the case for a hike in interest rates this year. 

The dollar index was up by 0.13 per cent as against a basket of six currencies. 

Meanwhile, the benchmark BSE Sensex ended lower by 246.66 points or 0.95 per cent on Monday.

Source - TOI

Sensex gets the blues before RBI meet, tanks 247 points

MUMBAI: Spooked by a lacklustre European markets and a mixed closing in Asia, the benchmark BSE Sensex plunged over 246 points to close at 25,616.84 following some late sell-off asRBI got ready to announce its much-publicised bi-monthly policy review on Tuesday. 

www.sevagiri.com

The NSE Nifty gave in too, slipping below the 7,800-mark. 

RBI governor Raghuram Rajan is under pressure to cut the repo rate to a four-year low on Tuesday to 7 per cent and expectations for the same have skyrocketed, especially after the US Fed's status quo and a record low inflation here. Rajan has already eased the policy rate by 75 bps this year so far. 

Retail inflation dropped to 3.66 per cent in August and economy grew at a slower pace of 7 per cent in the same month. 

Even IIP for July put up a dismal show and exports continue to remain in choppy waters. 

The BSE Sensex opened higher, advanced to a high of 25,936.89 following the beginning of October series, but succumbed to profit-booking before ending at 25,616.84, loss of 246.66 points, or 0.95 per cent. 

This is index's weakest closing level since 25,610.21 on September 11. 

The 50-share NSE Nifty slumped below the psychological 7,800-mark and settled down 72.80 points, or 0.93 per cent, at 7,795.70. 

The risk-off trade was evident as Europe remained in a bearish grip where shares were trading in deep red after mining major Glencore sank to a record low on depressed commodity prices the world over. 

The China factor also added to the anxiety level as profits in major industrial companies saw their sharpest decline in four years last month. 

"We are in a wait-and-watch scenario ahead of the RBI policy meet tomorrow. We believe that the market has already considered a rate cut of 25 bps, hence the commentary will be more important," said Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services. 

The BSE metal index fell by more than 2.50 per cent even as auto shares tumbled 1.74 per cent. 

Meanwhile, data showed foreign investors net sold shares worth Rs 115.10 crore on Thursday. Markets remained closed on Friday for Eid.

Source - TOI 

Challenge for new civic body: Uniform land rule

KOLKATA: Drafting uniform land rules for all its areas seems to be one of the biggest tasks before the new Bidhannagar Municipal Corporation, once it starts functioning under a board of councillors from October. The challenge lies in the fact that the current norms for Salt Lake and Rajarhat are opposite of each other. 

www.sevagiri.com

Plots in Salt Lake are leasehold property, while that in Rajarhat-Gopalpur area freehold ones. In Salt Lake—which was conceived and developed as a residential area for the middle-class—residents are technically not the owners of the plots on which their houses stand, but mere leaseholders. The state urban development department leases out plots for 999 years. But in Rajarhat-Gopalpur, the new hub of residential towers, commercial complexes, IT houses and hospitals, residents can buy land and they are the plot-owners. 

"The character and nature of land rules in the two townships are ridiculously different from each other. It is to be seen how the municipal corporation comes up with a uniform rule," said Bidhannagar Welfare Association secretary Kumar Shankar Sadhu. Old residents are also curious about how the corporation deals with the matters of land. "It is a complicated issue. As the Municipal Corporation Act has already been notified, it is only to be seen what stand the civic body takes if somebody challenges the issue," said retired state law secretary Satyen Mukherjee, a resident of AD Block. 

According to the pre-2012 rules, plots in Salt Lake could not be sold or transferred as all were leased out for 999 years. But flouting all norms, plots and houses continued to be sold or transferred, with some plots changing hands twice or even thrice. In fact, 35% of the around 12,000 plots in the township had been transferred or sold illegally with the help of touts. Though the state urban development department set up a committee to look into the matter, the problem persisted. In 2012, the Mamata Banerjee government decided to legalize plot transfer in Salt Lake.

In Rajarhat-Gopalpur, however, individuals, organizations and cooperatives can buy land for which the municipality collects developers fee and other charges. The freehold property norm triggered a real estate boom in the township as well as on both sides of VIP Road, from Baguiati to the airport. 

Besides, hardky any rules seemed to apply to parts of Rajarhat and some panchayat areas, now included in the corporation, which used to be under the Bhangor Rajarhat Development Authority (BRADA) that was dissolved after the Mamata Banerjee government came to power. 

Unscrupulous promoters and touts bought land from villagers in these areas at throwaway prices and sold it off at astronomical rates, pushing up land rates. But BRADA did not seem to have any control on these unauthorized deals whatsoever. While 1 cottah under BRADA jurisdiction sold at Rs 10,000-20,000 about 10 years ago, the recent rate was between Rs 5 lakh and Rs 10 lakh. 

Source - TOI 

Won't Buy Cement From UltraTech, Lafarge: Industry Body

New Delhi: Real estate developers body CREDAI's NCR chapter has decided against buying cement from UltraTech and Lafarge, alleging that the firms are indulged in cartelisation and malpractices.

www.sevagiri.com

"This decision has been taken by the apex realty body in order to help fair price determination of key raw materials required for the realty sector," the Confederation of Real Estate Developers Associations of India (CREDAI) said in a statement.

The announcement to stop the procurement of cement from these companies was made at the AGM on Friday.

"We have decided to boycott Ultratech and Lafarge, as they have not delivered the cement to our members at the decided price, despite taking advances," CREDAI national president Getamber Anand said.

He also said if the situation does not change, they can also go on a national strike.

Echoing the similar views, CREDAI NCR president Manoj Gaur said, "There are about 220 members of CREDAI in the national capital region and all have unanimously decided to stop procurement of cement from UltraTech and Lafarge."

Mr Gaur added that these companies have increased cement prices by 40 per cent and it seems they are involved in cartelisation.

All members of CREDAI NCR have agreed to implement this ban with immediate effect.

CREDAI NCR is one of the largest chapters of the organisation and all leading developers in the region are its members.

CREDAI NCR has about 220 members from Delhi, Noida, Yamuna Expressway, Gurgaon, Ghaziabad, Rajnagar Extension, Faridabad Neemrana, Bhiwadi and other adjoining areas.

Source - TOI 

Mhada seeks restoration of FSI 4 for redevpt of its Mumbai colonies

MUMBAI: The Mumbai board of the Maharashtra Housing Area Development Authority (Mhada) has asked the government to restore the floor space index (FSI) for redevelopment of its colonies to four from the current three.

www.sevagiri.com

Mhada has argued that with FSI 4 it will be able to provide 1.5 lakh flats in the affordable segment while with FSI 3, can construct only 47,000 tenements. In 2013 the state government reduced FSI to 3 after it realized that in effect FSI actually went up to as much as 5.6.

Sambhji Zende-Patil, vice-president, Mhada, said he has proposed FSI 4 as proposals for redevelopment of Mhada colonies has dropped drastically after the change in policy. "The BMC, in its draft Development Control Regulations, to be implemented with the new Development Plan, though on hold, has proposed FSI 5 for Mhada and FSI 8 for some private plots. We want that till the new DCR is implemented, the government allow FSI 4."

The additional FSI will be used exclusively by Mhada to create affordable housing for low income groups, he said.

"Land in Mumbai is limited and the only way it can be enhanced is through FSI. Besides, there is a huge demand for affordable housing. But not enough stock is created. We intend to cater to this section," he said.

In his letter to principal secretary, urban development, Nitin Kareer, Zende-Patil said that prior to 2010, the redevelopment policy got a huge response and Mhada earned a revenue of Rs 2,518 crore and about 1,100 tenements of 484 sq ft were constructed.

He said the government's decision to stop the policy had resulted in 250 proposals being stuck. To enable the utilization of FSI, Zende-Patil has proposed that in case it cannot be used on the same plot, it should be allowed to be used on other buildings in the same ward. He has further said that in the case of plots that are less than 2,000 sq m, the society should be given the option of either paying Mhada or creating housing stock for it. In case of plots above 2,000 sq m, the option will be creating housing stock.

Pankaj Kapoor, MD, Liases Foras Real Estate Rating and Research Pvt Ltd, said that unless Mhada starts producing affordable housing in large numbers, the housing problem in the city can never be solved.

"FSI must be increased, but the entire FSI must be used solely for affordable housing. Mhada should not sell its land and allow a portion to be used for luxury construction... It is the only one in a position to bring economic balance in the real estate market."

Source - TOI 

Tips for buying home in the festive season

The festive season, as we can all guess, will bring with it big offers from the real estate industry. Glance upwards at any major traffic signal and one will see hoardings with unbelievable offers on homes. Buy one bedroom and get another free. Receive 12 percent per annum interest on any booking amount one pays. Book now and pay nothing until possession. Discounts on registration fees and stamp duty, free cars, parking, modular kitchens, club memberships, gold coins and cash discounts. If somebody is looking to buy a home, the upcoming festive season might bring the dream home within one's reach. 

www.sevagiri.com

One must remember to double and triple check the offer before signing anything.

Here is a list of things to keep in mind.

Builder's track record: All offers will seem attractive but not all of them are worthy of one's time. It is important to understand that in this market, separating the developers by reputation and track record has never been more important. One needs to look for a builder with a track record of delivery and quality, a company that has not only managed to meet its deadlines on possession but also delivered what had been promised at launch. Do a quick search online on customer forums, news reports and look for problems that the builder might have had with previous projects. Visit previous projects and speak to residents about their experience with the builder. A reputed builder will also be a member of an industry association like Confederation of Real Estate Developers Association of India (CREDAI).

Strong location: Make sure the project is in a strong location with potential for price appreciation. Growth in prices depends on factors like job creation. Is there an IT park or an SEZ nearby? Does the location have good infrastructure in roads, fly over’s, Metro or train stations planned in the future? Is there easy access to schools, colleges, hospitals and malls and parks? A neighbourhood that can check all these boxes will offer the fastest growth in prices.

Price Point: Making a decision on fair price might seem difficult in this market. Start by finding out the prices of similar projects by similar developers in the area. Speak to several local brokers to find out the rack rates and the possible room for negotiation. Speak to a customer who has just bought a home in that project and find out the ground reality of discounts the builder is willing to offer. Find out the monetary value of the offer or the freebie; work it into your price as a discount. When negotiating with the builder one should push for cash discounts over freebies. If one has a pre-approved home loan and the ability to close a deal at the table it will boost the ability to drive a bargain on discounts.

Use the festive season to find the perfect deal for the dream home. Remember, cherry picking in this market will ensure a great value that might not always be available.

Source  TOI 

Investors focus on HSR Layout-Marathahalli belt

Home to many corporate houses, this stretch of the Outer Ring Road holds promise of good growth resulting in high capital value appreciation and rental returns.

www.sevagiri.com

The approximately 14-km stretch of the Outer Ring Road (ORR) connecting Marathahalli and HSR Layout has turned out to be one of the busiest commercial destinations in the city. With a concentration of large tech parks and ITITeS Special Economic Zones (SEZs) in this belt, it has emerged as one of the prominent residential property markets in the east south.

While many first-time buyers are looking at new residential locations around this stretch to stay close to workplaces, with access to good social infrastructure, these areas work well for investors too, with their ability to draw those looking for a home close by. This ensures good capital appreciation and assured rental yields.

Locations to consider for investors

According to Idirees Chenakkal, Head Research and Consulting, L J Hooker India, investors should consider two and three bedroom apartments as the location is potential for good rental income as well as capital value appreciation.

"Investors can consider properties coming upon along Panathur Main Road and Doddakanelli-Kadubeesanahalli Road. These are two of the most potential locations in this belt. The main factor that fuels the growth of these localities is the easy accessibility from the Central Business District (CBD) and major IT hubs such as Whitefield, Sarjapur Road and the ORR," he says.

On locations and price range that investors should target in this belt, Naveen Nandwani, Executive Director, Cushman and Wakefield, explains, "Sarjapur Road, Panathur Road, Hosa Road and Haralur Road are some of the primary locations where new residential development is visible along this belt. At least 24,000 apartment units are currently under construction, with a majority comprising the mid-segment. Close proximity to office locations along the ORR and Sarjapur is an advantage. Further, office spaces located in Whitefield and Electronics City are easily accessible via Varthur Road and Hosur Road respectively. The northern section of the ORR is linked to the airport via K R Puram, Hebbal and Yelahanka."

The ORR offers enhanced connectivity to key destinations (both residential and commercial) in the city. "Additionally, this belt has good social infrastructure, including education institutions, malls, hospitals, and restaurants, within a 2-km radius of the ORR. The capital values in this market have witnessed an appreciation of 5-10 percent over the last one year, which makes it attractive for both investors and end-users," Naveen says.

Configuration and pricing

According to data with Cushman and Wakefield, residential options are primarily located on Sarjapur Road, Hosa Road, Haralur Road and Panathur Road. Most of the mid-segment apartment units are available in two-bedroom and three-bedroom configurations with an average unit size of 1,000-1,500 sqft and 1,300-1,800 sqft respectively. Overall, the average capital values in the belt range between Rs 4,200-6,300 per sqft for mid-segment apartment units.

Long-term market potential

HSR Layout-Marathahalli stretch of the ORR has evolved into a preferred residential belt owing to its well-developed infrastructure, efficient connectivity to different parts of the city, and proximity to education institutions, shopping malls, restaurants, hospitals and bus terminals, and hence holds good growth potential.

Satish B N, Executive Director South, Knight Frank India, points out, "The proposed 15-km elevated corridor connecting Central Silk Board junction to Jayamahal Road is envisaged to ease the traffic flow between north and south Bengaluru. This will also facilitate a much faster commute to the international airport. The residential markets along this belt will continue to witness demand for housing in the coming years, primarily owing to the growth of the IT sector in the region, good social infrastructure and connectivity."

Source - TOI 

Affordable realty lures buyers to Vizag Vizianagaram belt

VISAKHAPATNAM: Realtors in the districts of Visakhapatnam and Vizianagaram are rubbing their hands in glee as the demand for plots in the Vizag-Vizianagaram belt is witnessing a steady growth, which they claim is on account of the sharp increase in realty prices in the capital region of AP.

www.sevagiri.com

Soaring prices in the Vijayawada-Guntur region and steady growth in the prices of plots located on the outskirts of Vizag, are prompting buyers to look at realty in the Vizag-Vizianagarm belt as it is more affordable. Also it is not just buyers from the capital area but also those from Hyderabad that are lapping realty up in the belt, claim realtors.

According to realtors, while Anandapuram, Tagarapuvalasa and Bheemili have witnessed a nearly 30-40% hike in prices during the last six months on account of various announcements made by the AP government such as the greenfield international airport at Bhogapuram, convention centre at Madhurawada and IT Layout at Kapuluppada, many of the plot purchasers are now looking at the road leading to Vizianagaram for affordable investments in the range of Rs 5,000-6,000 per square yard. Also, realtors point out that Kothavalasa and S Kota are being sought after by customers as land there falls under the price range of around Rs 4,000-5,000 per square yard.

"No plots are available in Anandapuram, Tagarapuvalasa and Bheemili area for anything less than Rs 10,000-12,000 per square yard these days. So if a person wants to buy a 100-square yard plot in this area, he has to shell out at least Rs 10 lakh, which is not exactly affordable for everybody," said B Narayana Rao of Visakha Real Estates.

"Instead people are looking at the road towards Vizianagaram after the Y Junction, where the prices are hovering around Rs 5,000-6,000 per square yard. Interested property buyers are now coming from Odisha and Chhattisgarh, apart from various parts of AP itself," he added.

Concurring, T Ravi Shankar of Shriram Properties said, "There is a danger of land acquisition by the government in the capital area, which is causing a confusion among investors there, but that is not the case in Vizag. There has been no sudden jump or dip and prices, even though overall prices have gone up. A lot of projects are also being announced for Vizag and majority of these will happen between Vizag city and Bhogapuram area. With the development of the airport, other necessary infrastructure is also expected come up in these areas, which is driving the purchase in the areas north of Madhurawada."

Meanwhile, a real estate marketing agent, K Prabhakar, said, "Buyers, who are looking at the Vizianagaram area, are not only employees from Vizag city, but also from Hyderabad, who want to buy property here as an investment option."

Source - TOI 

Rajarhat comes closer to middle class, 50% price slump in fortnight

KOLKATA: Have properties in Rajarhat-Newtown suddenly become more affordable? With properties at Rs 2,600-3,500 per square feet being advertised with unfailingly regularity over the past two weeks, a decent 1,200-square feet three-bedroom apartment in a Rajarhat multi-housing complex suddenly appears more within reach at Rs 35 lakh, compared to the Rs 60-70 lakh months ago. 

www.sevagiri.com

The best part is that the options are not limited to only Rajarhat Main Road but dot the entire Rajarhat-Newtown landscape. 

An independent study by global real estate consultancy, Knight Frank, gives some indication of this. In a report, it says Kolkata observed a price correction at -3% in the first half of 2015 compared to the same period last year. This "price correction" the consultancy major attributed to the slew of mid-end and affordable housing projects that came up in peripheral locations like BT Road and the distant areas of Rajarhat, which were launched at relatively lower prices. 

Bidyut Kumar Singh, a real estate consultant who has been working in the Rajarhat-Newtown belt, explains the price correction rationale. 

"There had been some big ticket launches in Rajarhat-Newtown in 2007-09. In the beginning, they were affordable. But in their bid to show a quarter-on-quarter demand increase, they started spiking the prices by 20-30%. Now their prices have reached somewhere between Rs 5,000-7,000 per sqft. This is unrealistic and nudged out several potential buyers," Singh said. 

"Now several mid-tier promoters are aggressively pitching their properties. These are low ticket-sized properties. Their intention is to sell off quickly and hence the prices were dropped to lure buyers. These promoters were always there, but none knew about them before," he added. 

A senior bank executive, who heads the home loan division of a multi-national private bank, puts it more clearly. 

"These spiked prices have put off several potential buyers. A price correction is inevitable. People take loans to buy properties. Banks follow something called the Fixed Obligation and Income Ratio (FOIR). It basically decides to give you loan based on your repayment capacity. For example, a person with Rs 1 lakh per month income can pay EMI for Rs 60,000. The applicant will have some other EMIs to pay like personal or car loans. That leaves his repayment capacity to approximately Rs 40,000. He is then eligible for a Rs 40-lakh loan," he said. 

For a Rs 70-80 lakh property, he reasons, one would need a loan of at least Rs 60-70 lakh. This calculation would require the monthly salary to be Rs 1.5-2 lakh. "How many people earn that much in Kolkata? For high-end properties, one understands that the potential client-base would be NRIs or HNI, but by pricing mid-ticket size properties beyond the scale of the middle-income group, you only curb the client base. And that is what is happening here," he argues. 

Real estate consultant Abhijit Mitra said, "Properties behind City Centre-II, Rajarhat Main Road and some panchayat areas falling within the three Action Areas in Rajarhat-Newtown has always been affordable. Only the buyer focus was never there for its apparent lack of connectivity. Now connectivity has increased." 

"There has hardly been any big-ticket investment here and the flats coming up now are by Category-B and Category-C builders. The price range for the later will always lower," Mitra argues. 

According to the report, the Rajarhat area, excluding New Town, was responsible for the majority of the affordable and mid-end projects in the first half of the year, accounting for 50% of the total new launches below Rs 50-lakh. 

Source - TNN