A boost for land owners in Chennai

With the Japanese funds plunging into real estate market, there is yet another option available for prospective landlords who wish to convert their assets into profitable ventures. The traditional joint venture development is still there but the DM model provides a complete package for landowners as a comprehensive range of services including funding, development including architecture and approvals, and marketing services are taken care of by the funds. 

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After deducting the expenditure towards the overall project cost, a service charge of 15 per cent is levied on the net profit by way of service charge to the landowners. This will work out in favour of landlords as he gets a better return on investment on his land asset in comparison with joint venture model, say property consultants.

At present, the option is restricted to residential development only including plotted development projects. A few projects have recently been undertaken in Bengaluru and Chennai.

PE investments may go up

Investments in real estate could even surpass the $4.8-billion fund infusion seen in 2015. While the way PE investments are structured could see a change, the money is set to be invested in selected cities and projects.

Anywhere between $3 billion and $4 billion are either raised or close to be raised by funds that are real estate focussed.

Taking an average investment cycle of eight years, these funds will have to deploy all the money in next four years, which means at least $1 billion will have to be invested in 2016.

Experts say the additional $1 billion that could be invested in the sector is over and above investments made by PE firms which are already sitting on funds.

Residential projects cheaper

In an end of the year report for residential market for metropolitan cities of NCR, Mumbai and Bangalore, Cushman & Wakefield research records a drop in launch prices in high development activity markets of these cities. The analysis records that new residential projects in select micro markets are cheaper by 4 per cent 20 per cent on Average Weighted Basic sale price over the last two years.

The report tracks the development activities in locations of Dwarka Expressway, New Gurgaon Southern Peripheral Road Sohna, Noida Expressway and Noida Extension in NCR; Thane, Goregaon and Malad in Greater Mumbai and SouthWest and Southern submarkets in Bangalore.

The suburban location of Goregaon in Mumbai registered the biggest decline in Average Weighted Basic Sale Price at 20 per cent where the psf rate averages at INR 10,500 per sf in 2015 followed by Thane which saw 18 per cent decline. Southern Peripheral Road in Gurgaon also saw a decline of 10 per cent in average base selling price of new launch projects compared to 2013.

In contrast, most of the submarkets in Bengaluru witnessed steady launch prices except in Far South and Western submarkets where average new launch prices in 2015 declined by 2-7 per cent compared to 2013. South East micro market of Bangalore was an exception to the rule where both the Average Weighted Basic Sale Price (19 per cent) and the Average Ticket Size (18 per cent) of apartment saw an increase.

Source - TOI 

Chennai market opening up to new developments

Chennai

Plagued by uncertainties and a lukewarm response from buyers, the realty market is now opening up to new developments which have created a positive investment environment.

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Real estate, by large, is a dependent sector. The success of the realty market relies on many factors. It is interesting to see the developments that governed this sector in Chennai as we draw closer to the end of 2015. Though witnessing slow growth, there have been many developments which promise a better scenario in the coming months. The start of the metro rail service early in the year enabled adjoining areas to enjoy high demand and rise in rental rates. The announcement of the smart cities project at the national level also stirred market sentiments. The success of the recently organised Global Investor's Meet (GIM) opened up windows for foreign investment in the realty sector like never before.

T Chitty Babu, chairman and CEO, Akshaya, attributes the positivity in the market to the GIM. He says, "The overall sentiments in the market have improved with GIM happening in the city. The plans for industries and the nature of investments planned over the next two years will help in job creation and will further be a driving factor for the real estate sector." He believes that Q3 of FY16 will be phenomenal and 2015 will end on a high note.

The recent rate cut by the Reserve Bank of India left the market abuzz with prospects of growth. Development of social and physical infrastructure has been another aspect which has encouraged establishment of new projects.

While the demand for IT and SEZs remained stable, residential sale also improved in the period. Sarita Hunt, managing director, JLL, Chennai and Coimbatore, says, "Residential sales improved significantly. Improved home buying sentiments along with developers offering discounts supported housing sales during this period. Submarkets in the southern and western suburbs contributed to most of the residential sales. With more quality projects being launched in these locations they are witnessing improved sales. Investors, however, are cautiously optimistic and have been undertaking significant research before concluding any investments. New launches have been less as compared to the same period last year and with improving demand the overall vacancy in the market has also been reducing."

The market has picked up as the first two quarters of the current financial year ended and experts believe that it will be a smooth road ahead. Sachin Sandhir, Global MD, Emerging Business, RICS, says the smart cities project is perfect to revive and drive growth in the affordable and mid-segment housing segment in Chennai as the city is primarily end-user driven. He says, "Inclusion of Chennai in the list of smart cities will help push property demand in this region. The city has seen a lot of activity with several investment proposals by the government and global companies. The metro rail project and the Bus Rapid Transit (BRT) will act as a catalyst to the infrastructure development of Chennai."

Surendra Hiranandani, chairman and MD, House of Hiranandani, says, "In a bid to boost demand the government has also undertaken initiatives like incentives for infrastructure financing by the RBI, lowering of interest rates on home loans, framework for Real Estate Investment Trust (REITs), relaxation of FDI norms in the construction sector. We hope to see the effects trickling down in the near future."

Source - TOI

4 localities to consider in Chennai in Rs 50L budget

Do not wish to spend a fortune on property yet want to spend right? Magicbricks has identified a few localities in Chennai that are catching up among home buyers. While property values are still affordable at the moment, perhaps it is the best time to buy! You can also save money by using the deals and discounts that are being offered by developers 

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If you are looking around for localities that are rationally priced and popular, consider the following-

East Coast Road (ECR)

Thanks to urban sprawl, this over 100 km stretch is popular among those looking for a house. The area suits home buyers of every budget segment because there is ample supply of properties starting Rs 25 lakh to the lavish ones priced at over a crore.

“The exact location matters a lot. ECR is a hotspot for many because of the connectivity factor. However, where premium properties have come up, the physical infrastructure is much better. Through many residential pockets of Akkarai to Puducherry, roads are in need of repair. Accidents were very common and it is just recently that some attention is being paid to these civic problems,” says B Narasimha, Vaidyanathan Properties.

Tenants turned prospective home buyers have been considering this area but are waiting for developmental works to take shape. However, enquiries have gone up. Some of the new projects include luxury facilities, such as children's play area, indoor games zone, roof top cafés, amphitheaters etc. It hints at the kind of lifestyle choices the city is moving towards.

Ambattur

After Old Mahabalipuram Road, Ambattur seeks to dawn the image of the next IT hub in the city. Ambattur’s proximity to Anna Nagar, Mogappair, Padi, Avadi and Koyambedu has helped generate housing demand in the locality.

“Avadi was a more popular pick in the yesteryears but with the number of IT parks that have set base in Ambattur, the area is fast picking up. Moreover, localities such as Anna Nagar have become out of a common man’s reach. At a distance of 10 km is Ambattur for relatively affordable prices and hence it is picking up in the buyer’s priority list,” says Karuna Vyasa of Value Props.

If you are hunting for a 2BHK house, properties are available in the range of Rs 25 - 60 lakh. 3BHK units may cost you up to Rs 1.5 crore and if you are eying spacious independent houses or villas, prices may go up to Rs 3 crore.  

Connectivity through Chennai-Tiruvallur highway is an additional benefit for commuters. More so, the Pattaravakkam railway station is close to Ambattur Industrial Estate area while the Ambattur railway station serves most residential pockets in the locality.

Madipakkam

When it comes to social infrastructure- be it hospitals, schools, colleges, Madipakkam has climbed up the preference ladder. With a proposed metro, investors have been banking on the livability quotient which would be an added benefit for those looking at affordably priced properties.

Watch out for drainage issues in select pockets like Ram Nagar South. If you consider Madipakkam in the entirety, there haven’t been any major water crisis issues or electricity issues. The locality’s recent inclusion within corporation limits has also ascertained future development.

Since it is an oft-frequented route, parking is a difficulty. “Rides are very bumpy causing a lot of physical stress to commuters and we would like the authorities to look into the physical infrastructure,” says N Iyer of Vinithsons and Properties.

The area currently is witnessing a maximum of 2BHK apartments, while few 1 and 3BHK units are also offered. The price of 1BHK unit sized 450-750 sq ft area ranges from Rs 18-29 lakh, while a 2BHK apartment sized 800-1200 sq ft, can be bought for Rs 35-65 lakh.

Pallavaram

For those employed in the automobile hub near GST Road, Pallavaram can be an option. The Pallavaram-Thoraipakkam 200 ft radial road is close to this area and it makes sense for a buyer since he needn’t commute long distance to reach his workplace.

As compared to some of the older, established areas in the city, public transport may not be as robust however with the urban sprawl, it surely has increased. Property prices are affordable unlike central parts of Chennai.

“For an investor, this is the right time to buy since property prices haven’t escalated in tandem with the growing popularity. The future could be promising since commerce is catching up,” says M Maney of Fame Realty.

Source - TOI