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WHY THE REALTY PRICES IN MUMBAI HIGH? JUST A BUBBLE?

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You must have heard of this? If not experienced.
Well amidst all buzz around demonetization. And real estate prices taking a hit here’s a series which will put a light on how things just might not the be the way they are being portrayed and how this just might be the best time for you to make a plunge for your dream home. What you are going to see just might baffle you. That is how internet has confused you forever.
It can’t start without a reference point and first of this series is to decode why prices in Mumbai are so high? Is it just bubble? Will it ever burst?
The second in the series is the impact of demonetization? Is that the end of the road? Or a new chapter?
Third, the real estate prices may fall as per the current report or just might see a surge contrary to popular belief. So, let’s get started with first. MUMBAI AND MYSTERY AROUND IT’S PRICE? THE BUBBLE WHICH AIN’T BURSTING FOR YEARS?

 

A HELLO FROM REALTY NXT!

Well there might be 1000 reasons to why MUMBAI Estate prices are so high. With this AV we aim to decode the mystery in the simple manner.

 

Assume This is india. With a population of 10000 People residing in 20 Cities.

And population is all the cities was equally divided. I.e. every city with 500 People each.

Now there’s one city which starts doing too well. Becomes the financial Hub of the country, Gets best of MNC’s. Gets the best infrastructure to boast of. It suddenly witnesses people from other cities migrating to this city. But, then it could house only 500. How does it accommodates the new   100?. This is where the city starts expanding (vertically and Horizontally both). Once it starts expanding the affluent decide to park themselves in the most coveted area of the city. Now that area could only hold 100 of them. Thus, starts a price war. Those already residing in the coveted areas seek more to empty their present space and to shift to the expanding part of cities. Because of this gap in supply and demand. With supply remaining stagnant and demand increasing. This city find itself amidst a price war. Those who can afford can only live in this coveted areas. Those who can’t start shifting to expanding areas. But, then city keeps fairing even better. Attracting another 100 to the city. Now, helping demand of nearby areas of the coveted areas too to grow. With space being limited the price war surges further and it keeps accommodating more people by having them pay a premium. With another 100 People getting added the city kept expanding with affordable areas shifting far from the main city. And with time the Rich in other cities smell the appreciation and ROI this city has been giving to it’s residents. They also, decide to invest in the city. They may not be staying but they very much own a piece of this city. Thus taking the property prices a notch higher than usual.

Thus, what you think can break this bubble? Is this bubble about to burst!

Yes! Only when the job creation stops! When infrastructural growth stops! Only when the MNC’s shift their base from this city and only when this city stops being the financial hub of the country.

Well this seems like a distant probability. So, next time you meet your friend wondering why the prices of real estate so high in the city. Please do not shy away from sharing this link.

Watch out for our next in series. Real Estate and Impact of Demonetization.

 

 

Ahmedabad Real Estate News

Under Construction Flat Booking Finds Tax Deduction Under Time Constraints

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Tax Deduction

If a buyer makes a transaction to book an under-construction flat and if he acquires it within the three-year period of the sale of his old house, then he is entitled to a tax deduction, says a ruling from the Mumbai bench of the Income-tax Appellate Tribunal (ITAT). If an apartment is booked in an under construction project than it must be viewed as a method of constructing residential tenements, says the December 18 judgment.

That means if the buyer uses the entire gain from the transaction to buy another house within two years or construct another house within three years. The two- and three-year period applies even if the buyer bought another house a year before selling the first one. But the property should have been bought in the name of the seller.

It is mandatory that within a period of two years after or one year before the date of transfer of old house, the taxpayer should construct a residential house or acquire another residential house within a period of three years from the date of transfer of the old house. The date of receipt of compensation will determine the period of acquisition or construction in a case of compulsory acquisition.

This exemption is effective and can only be claimed in respect of one residential house property purchased/constructed in India. In the case of multiple house purchases or constructions, the exemption under section 54 will be available in respect of one house only. Any purchases made outside the country does not fall under any kind of exemption. Section 54 gives relaxation in such cases by providing relief to the taxpayer who sells his residential house and acquires another residential house from the gained capital.

After the sale of an asset, the difference between the buying price and the selling price is a capital gain or a capital loss. These are further classified as long-term or short-term. If a property is held for 24 months or less, with effective from 2017-18, then that asset is treated as Short Term Capital Asset. Then an investor can make

treated as Long Term Capital Asset. Then only a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) can be made on that investment.

ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”, hence following the earlier decisions of the Bombay high court and the tribunal itself. Further ITAT allowed the fact that the construction can began prior to the date of sale of the old asset. Same was stated in the earlier judicial decisions of the Karnataka high court and Ahmedabad ITAT, that the date of commencement is not relevant but it is the completion of construction that comes in relevance to section 54.

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India Real Estate News

HDFC and Quikr Make A Deal

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HDFC and Quikr Make A Deal

According to a deal between HDFC and Quikr, a stake of more than 3 percent will be given to the mortgage giant in return to its transfer of offline and online real estate brokerage business to the classified ads platform.

After acquiring Commonfloor in 2016 Quikr already has a major presence in online real estate broking.

“Most of the searches for real estate are moving online. Quikr has a much bigger presence online. Through this deal, we are partnering Quikr in the broking business,” said HDFC MD Renu Sud Karnad. According to her, this deal will strengthen Quirks position with offline support.

The deal suggests that HDFC will transfer to Quikr its entire shareholding in HDFC Realty, a real estate brokerage platform, and HDFC Developers, which runs the HDFC RED online platform.

Karnad added that the deal expects Quikr to generate home loan leads for HDFC. The transaction consists of a co-branded alliance between both parties and the HDFC brand will continue to be used online for a year.

The e-real estate classifieds platform HDFC RED has around 7,000 project listings and generates traffic of over 80,000 unique visitors per month. HDFC Realty has a 300-member, in-house sales team, and 7,000-strong nationwide broker network. Avendus Capital was the exclusive financial adviser to Quikr while Kotak Investment Banking acted as the exclusive financial adviser to HDFC on this.

30 million monthly users make Quikr India’s largest classifieds platform. It runs multiple vertical businesses across real estate, automobiles, jobs, services, and goods. The Quikr Home, its real estate vertical generates 3.5 million monthly unique visitors.

Both companies intend to work closely and conduct analytics and identify potential homebuyers, and therefore home loan customers, early in their home-buying journey. Quikr founder and CEO Pranay Chulet said, “We see great synergies between Quikr and HDFC as we start working together to bring a seamless online-to-offline platform to developers and consumers.”

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India Real Estate News

Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes

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GRIHA Launches Star Rating For Urban Homes

Green Rating for Integrated Habitat Assessment (GRIHA), is the National Rating System of India, a Sanskrit word meaning – ‘Abode’. Human architecture has always consumed resources in the form of energy, water and material from the environment. From their construction to operation, these habitats absorb the resources throughout their life cycles, emitting wastes in the end. This emission could be direct in the form of municipal wastes or indirect emission into the atmosphere, such as from electricity generation. Hence GRIHA was formed to reduce an architecture’s resource consumption, waste production and overall environment impact up to certain national acceptable limits.

In attempt to quantify all these aspects, like energy consumption, waste generation etc. GRIHA tries to manage, control and bring down the respective to the best possible limit. Being a rating tool, it helps people to assess the performance of their respective projects against the national benchmarks.

Hence it becomes an evaluation of the environmental performance of an architecture on a holistic level. Covering its entire life cycle, this evaluation provides a specific standard for a ‘green building’. This rating system aims to strike a balance between established institutions and emerging concepts, on a national as well as the international level.

The process starts with an online submission of documents according to the criteria. Then a team of professionals and experts from GRIHA Secretariat takes a site visit for the evaluation of the building.  There are four different sections categorized by 34 criteria in GRIHA rating system. Some of them are site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and innovation. 

Sanjay Seth, CEO, Green Rating for Integrated Habitat Assessment (GRIHA) Council says, “A rating between one and five stars is being provided, helping the costumers to know about the sustainability of the houses”.

According to the Union Minister, Hardeep Singh Puri, the climate resilient and sustainable buildings are the need of the hour. As the government is aiming to construct around 1.2 crore houses for the urban poor under the affordable housing scheme.

In one of his keynote addresses, Andreas Baum, Ambassador of Switzerland to India and Bhutan said that the Indo Swiss collaboration is operating with the Indian Bureau of Energy Efficiency in the development of guidelines for energy efficient housing.

“At present India is witnessing a rapid urbanisation, if each building becomes greener than the last one, then we have a huge opportunity and hope for our country. We need to look beyond the conventional methods of building, in order to provide our citizens with a good quality of life. Hence, GRIHA gains important in meeting our national goals with respect to a sustainable society”, says Dr Ajay Mathur, director general, TERI & president, GRIHA Council.

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