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Do real estate ratings offer any benefit to home buyers?

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Do real estate ratings offer any benefit to home buyers?

Real estate ratings have the potential to offer home seekers with an objective assessment of projects and also help financing of projects, provided developers are willing to shed their reluctance and not try to control the ratings

Although a rating system for real estate exists in India, this system has not evolved and is also prone to criticism, vis-à-vis its objectivity. Analysts maintain that real estate ratings have to evolve beyond the mere financial rating of their account books. There has to be a standardized and comprehensive rating system that includes the brand equity, buyers’ trust, past track record and the developer’s overall standing in the market.

“Now that the Real Estate Regulation Act is a reality and the demonetization will help to curb black money in the sector, the issue of lack of financial modelling in the business, needs to be addressed,” says Nikhil Hawelia, managing director of the Hawelia Group.

Why can’t ratings be used as a benchmark, to assess a developer’s credibility? he asks. “As of now, a higher rating is just another token of appreciation for developers. It is high time that we make it count, as something that can be a substantial catalyst for funding,” he maintains.

Major concern areas in the property market

Objective and comprehensive real estate ratings can also help the buyers in making an informed choice, by giving them an objective perspective on all the critical parameters of a project. This can be invaluable, in a business where authentic research is a critical missing link. Today, in any given micro market, the projects of various developers in the same segment of housing, have similar specifications. Consequently, buyers are left confused, with no scientific tool to verify the developers’ track record.

A large number of unorganized players, poor institutional funding, shortage of manpower and raw materials and lack of adequate and timely information, are some of the other problems that plague the real estate sector. Legal clearances and financial backing for the project, the ability of the promoter and quality of construction, also affect the project’s timely delivery. In such a scenario, ratings have the potential to be the differentiator.

How effective are real estate ratings?

Revati Kasture, CGM-CARE Ratings, points out that the effectiveness of the rating exercise, depends on the due diligence process, methodology and rating/grading expertise of the rating agency. “Ratings across projects, enable comparison and provide a decision making tool to the purchaser of the property. Increasing acceptance of ratings amongst the developer community and lenders will improve the transparency in the sector and can also boost institutional funding to the sector,” says Kasture.

How real estate ratings can help home buyers

The question is, how will this rating help the sector? A committee set up by the Finance Ministry a few years ago, had recommended a rating-based mechanism for lending. The committee went to the extent of suggesting that a developer with a certain level of rating, could avail of capital at a lower rate of interest, compared to those who do not have a similar rating. Many developers had then objected to these recommendations, saying that it should not be made mandatory. Nevertheless, this does not change the fact that developers who get themselves rated, may benefit. Once the developers who have a high rating, start the capital at cheaper rates, it may even encourage others also to adopt it.

Analyst’s points out that credibility and transparency are the most important factors of a brand’s image. When a builder gets his projects rated by a credible third-party firm, it sends positive signals to the home buyers, as well as other key stakeholders, such as bankers, financers and suppliers. This boosts the developer’s reputation and brand.

Advantages of an objective rating system in the realty market

Ratings on four crucial parameters of a project – the developer, legal clearances, construction quality and financial stability, can help buyers to take an informed decision and also be used to avail of home loans.

A higher rating (on a scale of 1-7, with 7 being the highest) could instill confidence that the project will be delivered on time and according to the agreed specifications.

Objective ratings can also impose a sense of discipline among developers and encourage competition.

Developers too, can use the rating for marketing and branding purposes and to obtain financing for their projects.

SOURCE:Housing

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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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