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Low risk real estate investment bet: Ready to occupy flats

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Low risk real estate investment bet: Ready to occupy flats

Ready to occupy residential properties eliminate risks associated with project execution. It brings in benefits such as tax benefits on repayment of loans raised to fund such property, scope for price appreciation as well as some savings in the form of rents earned.

With the cash-strapped developers invariably delaying their projects in almost all major cities of India, many buyers, especially the end users have started preferring ready to move in, or properties nearing possession. In cities like Gurgaon, NOIDA and Mumbai, the average project delay is anywhere between one and two years, however, southern cities have relatively less delay in the range of three to six months. In some cases, the project delay has stretched to more than two years.

Not only there is delay in project delivery, there is also the problem that, most of the time after waiting so long for possession, the buyer feels that he did not get what he paid for. According to the National Consumer Helpline data, complaints in the real estate sector mostly pertain to delays in delivery of the apartment or plot, and/or the delivered product not being as promised at the time of booking in terms of quality, specifications and carpet area. Moreover, some times the developer even changes the layout plan of the project and adds a few extra floors.

A ready to move in property is considered as relatively low risk compared to under-construction properties as they do not suffer from risks such as variances from the promised layout plans and quality, delays and price escalations. However, as they say there is “no risk no return” the ready to occupy properties come with a price tag. Generally, the ready to move in properties are priced 25-40% higher than the under-construction properties which makes them unaffordable. In such a situation, a number of buyers, especially end-users, started showing an inclination towards projects nearing possession. Investing in such projects offers various advantages besides early possession.

A ready to move in property is considered as relatively low risk compared to under-construction properties as they do not suffer from risks such as variances from the promised layout plans and quality, delays and price escalations. However, as they say there is “no risk no return” the ready to occupy properties come with a price tag. Generally, the ready to move in properties are priced 25-40% higher than the under-construction properties which makes them unaffordable. In such a situation, a number of buyers, especially end-users, started showing an inclination towards projects nearing possession. Investing in such projects offers various advantages besides early possession.

Tax benefits: According to the income tax Act 1958, there are certain tax advantages available for home buyers. For example, the principal repayment upto INR 1.5 lac is eligible for deduction under section 80Cin loan taken for ready to move in properties. The interest paid for a loan on a first home is eligible for a deduction upto INR2 lakh per year, and for a second home the entire interest payment can be deducted from the income for the purpose of income tax calculation. However, one can only take advantage of these deductions after taking possession of the property. In the case of under-construction properties, one has to wait until possession to claim the tax shield available under the Income Tax Act as the interest paid during the construction period of the property can only be deducted in five equal instalments after the completion. Early possession comes with early tax advantages and saving on rent if the property was purchased for self-use. Moreover, the buyer can avoid the complexity of claiming tax advantages.

Room for price appreciation: As mentioned earlier, the ready to move in properties are priced 25-40% more than the under-construction properties and any short-term appreciation is generally unlikely if the market is already mature. Projects nearing possession not only limit the risk of delays, variances in quality and layout, there is also the scope for appreciation in the near future once the project becomes fully operational. Generally, the project gets another 10-15% appreciation once it is habitable and fully operational. This appreciation depends on occupancy, demand, amenities offered at the project and a number of other factors.

Savings on rent: The ready to move in properties nearing possession are best for end users who are living in rented premises. If one is planning to occupy the property there can be savings on rent. Moreover, if it is being purchased as a rental property, the rental income can also help you to pay EMIs. In the case of under-construction property, one ends up paying the EMI as well as the rent and if the property possession gets delayed, the whole financial situation may become distressed. However, if a loan is being taken to buy the property,one should never rely huge on the rent yield to pay EMI as the property may sit empty for a month or two.

Despite all the above pros of investing in ready to move in or nearing possession property the bottom line is that both under-construction and ready to move in properties have their pros and cons. Selecting between ready to move in and under-construction or nearing possession projects entirely depends on your property requirements. For immediate requirements, it makes sense to go for completed properties. If you are looking for higher returns and have idle money for investment, an under-construction property yield a better ROI and gives decent time to arrange for funds and offers flexibility in payments.

Source: moneycontrol.

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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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