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Where are Indians investing today?

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Real estate is a good investment option, but not by taking leverage because returns will remain low when compared to cost of funding

Traditionally, there has been a high affinity among Indians for physical assets such as precious metals, jewellery and real estate. This trend has been changing over the past decade. The reasons are varied. One important factor playing a role here has been the increased penetration of financial instruments tapping populations living even in remote villages. The result has been that the ‘only store of value’ feature offered by physical assets is fast disappearing.

Also, technology is enabling banking solutions to reach remote villages much faster, while also making financial transactions easier and less expensive. With focus on direct subsidy transfers, opening of bank accounts is becoming mandatory for all, including those who were out of the banking circle so far. With these developments, the only reason left for an individual to invest in physical assets is for returns.

Real estate is a good investment option, but not by taking leverage because returns will remain low when compared to cost of funding. However, residential real estate can be rented out, which helps offset the monthly outgo of installments to some extent. And, of course, there is no denying the feeling of security and pride that every Indian derives from owning property.

Investing successfully in commodities or physical assets requires a higher degree of research, given their heavy dependence on fund flows.

Not many, in their individual capacity, would want to or can even indulge in research-oriented investments on their own. One saving factor in this scenario will be Real Estate Investment Trusts (REITs), which will play a crucial role in bringing such individual investors into the real estate investment fold.

A REIT provides the option to take part in real estate as an investment class without having to invest either a lot of money or a lot of research. For those investors who are interested in regular income along with the possibility of capital value appreciation, participating in REITs will be the ideal option.

Overall, real estate is still a preferred investment route for Indians from the standpoints of social status and financial stability. However, in a country where the population is rising at a rapid pace, land and house prices have increased exponentially, more so in the primary cities.

The unaffordability of real estate in many of these cities has not only affected the middle class but even the upper-middle class. While there is more than sufficient end-user interest for residential properties in India, what potential buyers are waiting for is reasonable and affordable prices.

In the past 2 years or so, almost all housing markets in India have been reeling because of weak demand. Over this period, the highest end-user interest has been seen for projects from developers of good reputation and credibility, with reasonably good amenities for the price offered.

Buyers have become significantly more educated about what works and what doesn’t in Indian real estate, and have been shying away from developers who do not appear to have the will or wherewithal to complete their projects in the promised timelines. The media have played a big role in bringing instances of developers misleading their customers to public attention.

On the positive front, many new opportunities are opening up in Indian real estate because of initiatives such as smart cities, tourist circuits and infrastructure developments.

Transparency in the sector is receiving several new boosts thanks to the government’s recent demonetization effort and its determined push towards deploying the much-awaited Real Estate (Regulation and Development) Act, 2016, across the country by next year.

Simultaneously, Indian property investors in the upper income brackets are also increasingly attracted to real estate options abroad.

The preferred locations include cities such as New York, London and Singapore, and also Dubai, because of the relatively cheaper options available there.

According to the leading UAE property portal Bayut.com, Indians looking for Dubai properties accounted for 66.86% of total search hits on the website in 2015.

The rationale driving such interest is not difficult to identify—$1 million will buy an investor a mere 96 square meters of land in Mumbai, while the same amount gets 145 square meters in Dubai.

So where does this leave Indian real estate as an investment class? Currently, the sector is moving out of the veritable limbo it has been in for the past 2-3 years, and back onto investors’ radar screens.

Real estate is by no means the most preferred investment asset class as yet. Though commercial real estate is once again hitting the high notes in India, this is an asset class which is firmly out of reach of any but high net worth individuals and institutional investors.

However, given the rapid-fire developments in terms of price corrections, increasing transparency and the possibility of Indian REITs seeing the light of day soon, we are likely to see Indian residential property move back into the preferred investment category in less than 5 years.

Source : Livemint

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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