Why do people invest in real estate?

So you are a young Indian who earns well, has spent wisely and drive your own car, live in your own house and are able to meet daily expenses without too much effort.
Now you are concerned with the investible surplus that you have in hand and are confused whether to put it into financial instruments such as mutual funds and unit-linked insurance policies (ULIP) or whether you should buy a second house to capitalise on the current real estate boom.
“Anybody looking at real estate as an investment option is currently at least in the post 35 year age group,” says chartered accountant Raghu Marwah. “In the current scenario, other financial instruments score over real estate as a long-term investment option. The returns in the short and long term are more attractive.”

Portfolio advisor Sanjay Mittal too agrees. “Investment in mutual funds and stock markets is liquid. But investments in the property market are not. Mutual funds yield at least 40% year-on-year returns. One of my investors put in Rs 20,000 per month in the Reliance growth fund and his returns are currently over Rs 3.6 crore in 10 years.”
This is way above that in real estate. In fact, he gives a thumb rule based on the worst performing systematic investment plan mutual fund over the last 10 years. If you have invested for over seven years, returns are normally the amount invested multiplied by the number of years it was invested for.
So why are people investing in real estate at all? Where did all the hype come from? Explains Arun Vikram Goel, CEO of Dewan Housing Finance Venture Capital, “The hype around the real estate market comes primarily from speculative extremely short-term investors. They have bought at launch prices and sold as the values of each subsequent release by the developer was raised and encashed their investment in the short term. These would have yielded very high gains. Nobody who has invested for the long term has contributed to the hype because chances are that they have not exited the market and their computed returns are notional. A long-term investor should not look at hyped gains.”
Explains another property investment adviser, “At the height of the boom, I had advised various investors to put money into multiple projects and to recycle the investments for maximum returns. In fact, I managed portfolios of investors who had up to Rs 1 crore to invest by putting in the 10% that was required to book a property and then to exit when the next instalment was due. The gains were then reinvested in newer launches and the money was constantly increasing.”
But the current scenario is different. Today after almost 8-10 months of slow-down in transactions, developers are completing projects rather than launching numerous new ones. Even the rate of hike of value is steady and therefore the short-term speculator is kept at bay. Goel explains this phenomenon. “Immature markets tend to behave erratically. Initially rental markets are not stable and more users think of purchase rather than rentals.

Once the supply comes in the rental markets pick up and those who do not want to occupy, lease out property. This hike in demand brings in the speculators and short-term buyers. Finally when there is a glut and capital values stop rising, the rentals will rise. But typically yields from residential real estate investments is only 5-6% in stable markets and 3-4% in unstable markets.”
So again why invest in real estate at all? Why not only in mutual funds if you are a retail investor? “To diversify your portfolio,” says Goel. And he has a simple mantra for the retail investor:
Do not make investments on the basis of hype. In a market correction hype comes down and you get a realistic picture.
It is wise to hold a diversified portfolio with real estate as one of the options
Time your entry correctly. The hype typically starts when the peak is reached. If you enter at the peak, you will not get the best rates and you may be part of the slide
During investing for the long-term remember that returns average out. The property adviser who does not wish to be named, maintains that normally even in weak market cycles property values double in five years. So if you are in the 35-plus age group, your property value will at least double every five years and you will never lose out. However, the rate of enhancement of the mutual fund investments are greater in the short term.
Sanjay Mathur of Pearls Infrastructure says long-term returns on real estate investments can be up to 200-300% if you choose your destination correctly. If you invest in what is the periphery of the city today and hence cheaper, andif there is good economic activity there, the returns in the long term are definitely positive. Goel agrees that the choice of investment destination is important. “But real estate decisions are often emotionally driven too.
Aspirational considerations may drive the investors to look at property purchase than yield analysis alone. But if the investor reads the future potential of markets correctly, he can get good returns.
The retail investor has more to look forward too from real estate markets. The Sebi has already issued draft guidelines for Real Estate Investment Trusts (REITS), a sound financial instrument in developed real estate markets around the world. “This will open up a class of investment to the real estate retail buyer that was earlier not possible,” says Goel. He sees younger investor opting more for systematic investments in mutual funds that is more speculative but has greater returns. The REITS, expected to be functional by next year, will attract an older investor who takes less risks, but opts for steady returns.

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Property issues for the NRI

For many globetrotting Indians, owning property in India may be a cherished dream. For others who have set up permanent homes abroad, selling whatever property they own here might be more meaningful. Few others may have been born under a lucky star to be gifted property; still others may inherit property and may want to pass it on to their grandchildren.

The Hindu Business Line : Property issues for the NRI

Real estate prices seen rising by over 100 %

Real estate prices are seen rising by over 100 percent in the next few months owing to price increases in material, labour, transport, overheads, service connections, as well as the new tax levied by the government where five percent of the total construction cost has to be paid to the UDA even before construction starts.

Real estate prices seen rising by over 100 %

Singapore realty major offers high-returns bait

The Singapore real estate industry has come here wooing Indians with promises of high returns on investments made in the island nation.

Singapore realty major offers high-returns bait

BJP for real estate regulatory authority

The BJP will represent to Prime Minister Manmohan Singh no the need for setting up the Real Estate Regulatory Authority, in order to prevent fly-by-night builders from cheating innocent people, who put in their lifetime earnings into their dream house project.

BJP for real estate regulatory authority - Newindpress.com

India Bulls' premium project Castlewood launched in Delhi

One of the largest listed real estate companies in India and a leading national player across multiple realty and infrastructure sectors, India Bulls Real Estate Limited (IREL), with projects covering a total land area in excess of 10000 acres launched its premium project in South Delhi-Castlewood, limited edition luxury apartments in Delhi at the Intercontinental Eros yesterday byleading Brand management, promotions & event company-Brandsmith.

India Bulls' premium project Castlewood launched in Delhi

India Property Show expects to close Dh184 million deals

Some Dh184 million (Rs2 billion) worth of purchase contracts for real-estate projects across India are seen to be closed today at the end of the two-day MagicBricks.com India Property Show, in Dubai

Khaleej Times Online - India Property Show expects to close Dh184 million deals

New mantra: Why rent when you can buy

With rents in Mumbai shooting through the roof, more and more people now prefer to buy houses in the distant suburbs rather than seek accommodation on lease. Ameya Bhise finds out how spiralling rents are driving a changing real-estate trend

New mantra: Why rent when you can buy - Sify.com

Discover How Real Estate Investors and Speculators Can Take Their Business Global

Research and Markets (http://www.researchandmarkets.com/reports/c83767) has announced the addition of “The Global Property Investor's Toolkit: A Sourcebook for Successful Decision Making” to their offering.

The real estate boom has gone global, and those successful investors who want to keep up their profits are starting to look at emerging markets on other continents. Markets in South America, Eastern Europe, India, and Asia are currently experiencing the rapid growth that mature domestic markets experienced a few years ago. Based on the author’s personal experience buying and selling dozens of overseas properties, this book provides all the relevant data investors need to evaluate properties and markets anywhere in the world.

The key difference with this book lies in the subtitle: A Sourcebook for Successful Decision Making. Based on the authors first hand experience of building, buying and selling over 100 properties in overseas markets (and researching and writing three books on these markets), Colin Barrow has identified the key source of all the relevant data for all the facts required to evaluate any and every property market in the world. That data is usually available online, almost invariably free and always comprises the latest available facts.

This book helps solve the core problem for anyone buying property overseas: a shortage of reliable information on which to make sound decisions. Property buyers can gather superficial information by attending property exhibitions, talking to brokers and by reading books. But the brokers are often biased, parochial in that they focus on only a handful of areas and are themselves often ill informed.

Author's bio:

Colin Barrow (Hayle, Cornwall, UK) is a non-executive director of two venture capital funds and serves on the UK Government Task Force for Business.

Topics Covered:

Why Buy More Property?

Why Buy Abroad?

The World Property Markets - Segments and Drivers

It’s a Global World: the Coming of Capitalism.

Factors that Drive Property Yields and Returns

Evaluating Economies

Checking the Local Environment

Getting To and Fro

Money Matters

Researching the Legal Environment

Tourism Potential

Property Performance and Appraisal: Narrowing Down your Choice of Country.

Using an Estate Agent-Broker-Realtor

Finding a Property Yourself

Finding and Using a Lawyer

Undertaking Surveys

Renting before you Buy and other Non-ownership Options

Climate Matters

Language Matters

Getting Around the Country

Moving your Effects

Renovating and Building

Going into the Rental Business

Staying in Touch with Home

For more information, visit http://www.researchandmarkets.com/reports/c83767

Contacts

Research and Markets
Laura Wood, Senior Manager
Fax: +353 1 4100 980
press@researchandmarkets.com

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We guarantee faster returns

With a target of getting an annual return of 30 per cent, Redfort Capital has come up with Redfort Land and Realty Fund. The company has tied up with two banks for attracting investors. In a candid conversation with our correspondent, company’s director Parry Singh talked about the fund and the future plans of the firm. Excerpts:

Tell me about the newly launched Redfort Land and Realty Fund.
This fund is for the domestic market. We are looking on land banking. We have earlier acquired some land at a better value. And our portfolio will be diversified in a way that we will provide profits to our investors on the basis of land purchased across India.
In India there are no real estate vehicles; our fund is a way to gain diversification. We have received approval from the Sebi for this. For the same we have tied up with the ICICI Bank and ABN Amro Bank.

What is the lock-in period for this fund?
It is for five years.
So what are the exit modes for investors?
There are multiple exit routes. First we buy the land and then sell it at a profit; second, we build corporate campuses under a JV and lease the spaces; and third we make residential apartments in a joint venture with a developer and then sell the units.

How will an investor gain from this?
Investors will be the shareholders in the fund and the fund eventually buys land across India. Investors will then earn profit over the properties purchased. They will earn a dividend annually. For example a high net worth individual based in Delhi might face problems in acquiring land down south as his approach is limited to NCR. But the fund can facilitate this easily as we have a pan-India presence.

What kind of returns are you looking at?
We are looking at an annual return of 30 per cent.

You have decided to be selective about your investors, and you are looking at under-valued land. Why this kind of constraint?
We cannot go to the market. We are looking for investors in the bracket of Rs 25 lakh to Rs 50 lakh. And the land we are looking at is definitely a prime one but they are bought at a lesser value. There is very less liquidity in the market. Nobody can pay such huge price over a piece of land. The price appreciation on a plot is more than that compared to a flat. And we guarantee faster returns than a bank.

How much land bank you have?
At present we have some 1,100 to 1,300 acres of land. These are in patches in cities like Bangalore, Hyderabad, and Chennai. Kolkata would be our very next target, where we are also planning some project.

You will also focus on redevelopment projects in Mumbai. Why have you chosen such projects?
Look, in Delhi there is no constraint on expansion. There are a number of small townships and satellite towns that can be included in the NCR. There is lot of scope for expansion.
And if you talk of Mumbai, only northward areas like Virar, Borivilli, Panwel and Navi Mumbai can be used for fresh development. We take the existing land also because of the FDI rule, which says that developments can’t be done on a land less than 25 acres, which is roughly around 5 lakh sq ft. This much of land is not available in Mumbai. And the value of land is touching a new high everyday. So in Mumbai we are focusing on the redevelopment projects.

You have undertaken deals worth over Rs 7,500 crore till date. Mention some of those.
There are six important ones. There is one residential project in Chennai. Very soon we will launch our project in Kolkata also. We have invested around Rs 240 crore in Hyderabad in a residential project, Indu City on a 100-acre land. For this we tied up with the Andhra Pradesh Housing Board (APHB). Another one is a commercial project on a 20-acre plot in Bangalore. This is the Tech Park Phase II for which we have tied up with Prestige Group. There are two other projects in Bangalore.

Do you think REITs could be a success in India?
Let me first say this that in India many people have misunderstood the REITs. It is actually a tax structure. REITs in India will reduce a level of taxation. For example joint ventures companies should be taxed separately.
But there are problems with implementing REITs. REITS in India are used for investing and building grade A properties. Redfort supports the idea of Sebi that is playing smart by imposing a condition that REITs should not use more than 20 per cent of the money in development. It says that around 80 per cent investment should be in core assets. This provides security. But developers hold the property for long, which is wrong.

Is mezzanine funding a safe mode of investment in India?
Look, mezzanine is in between equity and debt. World over funding is done in debt and mezzanine form and very less equity. For example in US, equity was just 5 per cent during the sub prime crisis. While 95 per cent was through mezzanine and debt. But in India lending has become difficult. So there is more equity. Debt is just 13 per cent in India. Through mezzanine, there is a higher return. There is a big need of mezzanine in India. And when somebody is practicing lending then mezzanine is required. In India, anybody practicing this kind has to get the approval from the Non Banking Financial Corporation (NBFC), which comes under the RBI.

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Landlords build fortunes on EMIs

New definitions of haves and have-nots have emerged in the city. Those owning plush apartments are the privileged ones, those staying on rents are cowering. The owner-tenant divide is almost as pronounced as the rich-poor divide.

Shishir Baijal, managing director of Kshitij, the realty fund of Future Group, earns a fat, fat pay package, and yet he stands in the queue of have-nots. Having no home of his own, Baijal is in misery. The 3,500 sq.ft flat, to which he has recently shifted, is his second rented premise. And for it, he has to pay a staggering rent of Rs 4 lakh a month.

If Baijal is sulking, Rakesh Tandon (name changed) is grinning ear-to-ear. Nearly four years ago, in 2004, he had taken the risk of his lifetime, and it has paid off. Tandon went for a plush Juhu flat and the EMI for the home loan had initially looked intimidating. Today, with rentals skyrocketing, he reaps a rich profit even after paying an EMI of almost Rs1.5 lakh. His 3 BHK flat fetches him a rent of Rs 2.9 lakh.

Chetan Narain, CEO of Narains Corp and president of the India Institute of Real Estate, is not at all surprised by the steep rise in rentals. "With high rise in capital values, the rental rise was only expected," he said. "In premium locations like Napean Sea Road, Bandra, Juhu, Andheri and Powai, the rise has been as much as 80 to 100 per cent from the 2006-end rentals."

Experts feel that high home loan interest rates and steep property prices have pushed up the rents. "Rentals are always 5 to 6 per cent of the market value of the property. So, with the steep rise in property prices, it is not surprising that rentals have shot up," says Pranay Vakil, chairman of Knight Frank global real estate consultants.

Things could be worse, says SG Maheshwari, estate broker from south Mumbai. "I do not see rentals reducing till the property rates fall," he says.

But Narain says there is hope for the have-nots. "Not much further rise is expected or deserved. In fact, in case of some properties the owners will have to correct their prices," he says.

Mega income

In 2003, Ramesh Patel, a 50-year-old businessman, bought a 4BHK flat in a plush building on 15th Road in Khar. Now, after five years, Patel not only funds the EMI of his Citibank loan from the rent of the flat but also has a surplus.

“I rented out the flat in 2005 for Rs 3.15 lakh a month. In 2007, I was charging a rent of Rs 3.30 lakh a month. Today I earn Rs 3.75 lakh as rent from the flat. I pay an EMI of Rs1.65 lakh,” said Patel. “The rent not only helps me in paying my EMI but also serves as an additional income for me.”

Double take

Thirty-four-year-old Shyam Sethi, a financial advisor, bought a 2BHK flat in 2004, in a plush tower at Lower Parel near Phoenix mills for Rs75 lakhs. He rented out the flat the same year in 2004 for Rs 65,000 per month.

Today, he earns a rent of Rs1.5 lakh, an increase of more than 100 per cent in three years. Though he has no loan against the flat, if we assume that he had taken a bank loan of 80 per cent of the capital value of the flat for a period of 15 years at a 12 per cent rate of interest, his EMI would have been about Rs 72,000.

Neat deal

Gaurav Patil bought a posh 2BHK flat at Pali Hill for Rs 95 lakh against a loan from the bank. He now pays an EMI of about Rs 70,000 to the bank every month. Patil has rented out the flat and earns a rent of Rs1.2 lakh every month from the flat.

Through the rent that he gets from the flat he not only pays off his EMI to the bank but, at the end of the month, he is left with almost an additional Rs 50,000. Thus, the rentals have become an additional source of income for him.

Under license from www.3dsyndication.com

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Need reforms in the real estate industry

We have a list of suggestions and reforms that we expect from our Finance Minister this budget.

1. The newly introduced National Housing Policy, 2008 extensively speaks about affordable housing for the Economically Weaker Section (EWS) or Low Income Group (LIG) Categories. Adding the following sub-clause in Section 10 of the Income Tax Act, 1961 will give a thrust to this initiative.

S 10(43):

a. Any income arising to the real estate developers, who develop exclusive residential housing project for EWS and LIG categories upto 900 square feet, should be exempt from income tax.
b. In case, this housing project comprises EWS, LIG and other commercial units, then the developer should get exemption in proportion to the income arising from housing of EWS and LIG categories.

If introduced, the above provision will provide impetus to the development of housing sector particularly for the middle class.

2. The rental housing should be developed keeping in mind EWS and middle-income group of taxpayers. The Government should provide tax sops (under Section 10 of the Income Tax Act, 1961) to encourage individual taxpayers and corporate taxpayers to undertake rental housing. This amendment to the Income Tax Act would go a long way in increasing the rental housing concept:

S 10(44):
Rental income earned from letting out residential property (on and from April 1, 2008) would be exempt from income tax for five consecutive years if the accommodation does not exceed super built up area of 900 square feet of each such unit. This provision would be applicable only for such residential accommodation, which is ready for occupation only after April 1, 2008.

3. The Securities and Exchange Board of India (SEBI) has come out with detailed guidelines for Real Estate Investment Trusts (REITES). They are expected to come into operation very shortly.
The Government should amend the provisions of the Income-tax Law to provide for tax exemption of the dividend arising to the Real Estate Investment Trusts and similarly the income arising to the unit holder. The long-term capital gains arising on sale of REITES units should be tax exempted while the short-term capital gains should be taxed at 10%. Thus, the provisions relating to REITES and the investor in shares and mutual funds should be at par with the existing tax provisions relating to income of equity-oriented mutual funds. Also the holding period of REITES units should be twelve months so that it is will be considered a long-term gain.

4. The limit of exemption of service tax should be Rs 8 lakh per property. The service tax on commercial property should be made applicable only to properties given on rent on or after April 1, 2007.

5. The stamp duty rates should uniformly be slashed down to 2%. This would result in more revenue collection and would also reduce tax evasion drastically. The stamp duty on real estate purchased by the Real Estate Investment Trusts should be nil.

6. With respect to one self-occupied residential property, the maximum limit of deduction should be enhanced from Rs 150,000 to the actual interest payment without any upper limit. Providing higher tax deduction will give a boost to residential housing.

7. Presently tax deduction as per Section 80GG is granted to an individual taxpayer for rent payment. This deduction is up to 25% of the income but subject to a ceiling of Rs 2,000 per month. This upper ceiling should be scrapped and that the deduction should be restricted up to 25% of the income.

8. Higher rate of depreciation, ie 30% per annum, should be introduced on residential accommodation if an employer builds residential accommodation for its employees. This would inspire the corporate taxpayers to take up massive activity of building housing colonies and buying residential housing for its employees.

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I am confused about the present FAR…

…(floor area ratio) for residential projects in India. What is the current range of FAR prevalent in urban areas, and how is it calculated?
Ashley D’Souza, Panjim, Goa
FAR parameters vary from state to state and are governed by the respective city development authorities. Areas that come under municipal limits are governed by the municipal authorities. The FAR for areas outside municipal limits are decided on by the Town and Country Planning Organisation.
FAR is calibrated according to the nature of the project in terms of the intended usage. Generally speaking, on a plot of 100 square yards with a permissible FAR ratio of 2 allows a total built-up area of 200 square yards — in other words, the plot area multiplied by the FAR is the amount of construction one can have on that plot. FAR for various zones and type of usage is notified by the local Development Control regulations. FAR in restricted zones like, say, Lutyens Delhi may be 1 or even lower, while it may be higher in suburbs.

Which sector of Indian real estate is seeing the highest level of foreign investor focus?
Preeti Saldana, New Delhi
Residential real estate has been foreign investment’s most favoured asset class, since exit from such investments is assured and the internal rates of return meet investor expectations. With the middle-income housing sector is the primary driver, with an anticipated shortfall of close to 25 million housing units by 2010.
Commercial space in India is also in high demand. Rentals for grade A commercial properties in tier-I cities like Mumbai and Delhi have risen by more than 100% over the last two years. The IT /ITeS sector constitutes for the highest absorption of commercial office space, with a projected requirement of 150 million sq ft across major cities by 2010. IT/ITeS is, beyond doubt, a key driver of commercial real estate in India’s metro cities.

The IT/ITeS sector is making enormous waves in Indian real estate. Can this sector continue to deliver competitively even though countries like China and the Philippines are entering in a big way?
B L Harolikar, Kolhapur
India occupies the top slot as a Cost-Sensitive Destination for outsourcing. It is ranked a creditable 3rd in the People and Skills Availability criteria, and the highest amongst the developing countries. With less than 10% of the market being currently addressed, there is still a huge market opportunity for the sector in India, and this will ensure sustained demand-led growth.
Factors like the evolution of the global delivery model, unbundling of large IT outsourcing deals with larger India-based delivery shares, and the large contract values due for renewal are some of the positive indicators for the sector.

Despite India’s ‘developing nation’ status, there is an immense amount of interest in its real estate market. How would you compare India’s property market to those in ‘developed’ countries?
Dr. Nagesh Sirur, Ahmedabad
India’s property market has always seen typified by unorganised and fragmented growth. However, the contemporary scenario seems to state that growth, whether organised or unorganised, is growth nonetheless. India’s real estate sector is seeing a sustained and eminently sustainable boom, fuelled by new projects, superior quality products, new growth corridors, increased infrastructure spending and the common man’s increased spending power.
With the stock market being highly volatile, investment in real estate has begun to look competitive, with typical yields of 10-12% per annum achievable. With increased buoyancy, the real estate market now falls in league with stocks, bonds, mutual funds, gold and commodities, and insurance policies as a viable investment option for investors in all categories - individuals, corporates, and funds.

What is all the trepidation about foreign retail giants coming into India? It would seem to be a good thing for all concerned.
Pradeep Gaekwad, Kondhwa, Pune
Indian retailers have reservations of the global retail giants dominating the local landscape, as they possess a lot of financial muscle vis-à-vis the Indian retailers. However, such fears do not factor in the larger picture — these retail giant houses can bring their better managerial practices and IT-friendly techniques to cut wastage and set up integrated supply chains to gradually replace the present disorganised and fragmented retail market.

I have been following the stamp duty debacle for some time now. Will reducing stamp duty help the real estate sector in any real way?
Brijesh, e-mail
Almost 80% of all buildings are on bank financing, and banks disburse financing on the precondition that the property is registered. The lower the amount of stamp duty, the more buyers will be encouraged to register and pay it. Affordability will increase. In the current scenario, buyers have to avail of personal loans and other sources even if they are getting a loan because of high stamp duty.

I have been advised to model my next residential project in line with the needs of NRI clients. How many other developers are doing likewise, and why?
R T Vashisht, Bangalore
A large number of Indian developers are now gearing up to meet NRI demand for quality residential properties. In metros, the accent is now on development of high-end constructions that meet the parameters of NRIs and the IT/ITeS sector. This is still an emerging market component, but there will certainly be escalated efforts as more transparency comes into the sector. You would do well to consider the advice given to you seriously.

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Make real estate deals more transparent

The success story of the booming real estate market in India coupled with strong economic growth have spelt good news for the country. Nonetheless, reforms are necessary. Reforming the real estate sector in this budget will add to the success story of the country.
So this budget, the Government should further reform and tighten norms for the real estate sector to protect the interests of the investors. This will encourage the actual homebuyers and NRIs who are looking to invest in India. Certain reforms are needed to ensure housing at affordable prices to appeal to the masses.
The developers and builders in India have been having a field day with no control over built up and carpet areas, illegal property documents and constructions, possession related issues and other illegal entanglements. In Mumbai, rules and regulations for re-development of old buildings and the slum rehabilitation should be made more lucrative for investors and builders.
Our expectations from the budget with respect to the real estate sector are as follows:
1. Section 80 IB of the Income Tax should resume. This act gives tax relief to the builders who construct units less than 1000 square ft built up in metros. However, the benefits under this section have been stalled since last year.
A lot of builders have created houses under this scheme and consumers are benefited through the mass construction. The only problem here is that while the builder gets tax relief there is nothing passed onto the consumer.
A majority of home buyers are unaware of this tax respite which the Government had given to the builders. The Government should continue giving this subsidy to the builders as this will encourage them to make more affordable homes. This will also be in line with the Government's 10th Plan estimate where the shortage of housing units is expected to be in the range of 22.4 million square ft. This benefit is the need of the hour but with some rider that the benefit is mandatorily passed on to the consumer.
2. Under Section 24 of the Income Tax, the exemption of the interest on home loans should go up from the present Rs 1.50 lakh to atleast Rs 3 lakh. This is keeping in mind the average size of the apartment price has grown 200% over the past few years.
Also, the tax benefit should be given from the date of booking of the property and not from the possession.

3. Tax deducted at source (TDS) on housing rental income for individual home owners should be brought down from 16.83% to 10%. 
A flat slab of 15% or a tax holiday of initial 3 years should be considered on rental income for NRIs. This will boost NRI investment into the country or else they'll look towards other countries for returns on their investment. Also, this will rationalise the prices of rentals in many metros and more people will be willing to rent out properties.
A lot of NRIs lock up their apartments for fear of an upfront deduction of TDS of more than 30%, which affects return. Further, a standard deduction of 30% towards maintenance should be increased to 40% for local residents and 50% for NRI houses.
4. Stamp duty charges should be reduced to 2.5% from the current 5% as it will benefit the property buyers.
5. The interest given on bonds should be linked to bank interest rates on fixed deposits. This is extremely helpful to elderly in ensuring their safety for future. A lot of property owners still are conservative and prefer to invest their money in capital gain bonds and earn a living out of them.

6. The buyers should be allowed to invest in residential properties from the sale of commercial properties and purchase residential properties with the money recieved from the sale of commercial properties.
Buyers should also be allowed to invest in both commercial and residential properties from the proceeds of one single property.

7. The Government should take more steps to curb money made illegaly in the land deals. Cheque transactions will automatically yield in more money flowing out of bank accounts than from hidden lockers.
8. Presently, not many builders are making one Bedroom-Hall-Kitchen (BHK) apartments. The builders should be given incentives to build one BHK of less than 400 square ft carpet area particlaurly in Mumbai.

9. Fringe benefit tax (FBT) for corporate employees who rent properties should be reduced from the current 20% to 5%. This is because they already have an option to get into an individual lease without paying FBT.

10. Individuals, companies and employees of multi national companies should be given 100% tax exemption for the rent paid towards renting a house on leave and license/lease basis. This will help people make a decision to lease the properties and avail tax benefits if they cannot afford to buy the properties.
11. Tax incentive should be given to owners renting out their properties for a minimum lock-in period of 3 years with no right of termination to either the landlord or the lessee, and a built in fixed escalations in the rent price. This will encourage people to change houses once in 3 years.
12. Floor Space Index (FSI) should be increased within city limits with immediate effect to bring down real estate prices. Also, builders should be strictly made to create the required infrastructure to meet the demand for water, electricity, parking and sewage system by using innovative and latest methods available.
14. The Coastal Regulatory Zone (CRZ) should be further rationalised as a lot of prime properties are stuck because of this.
15. Incentive in the form of higher FSI should be given to builders who re-develop housing societies because the prices of real estate are unaffordable.
16. Buyers of real estate should be allowed to exit/sell after a span of two years with a lesser tax slab so that it becomes easier for them to exit. This will curb the black money movement in the market.
An artificial shortage of property is created and prices are hiked because the sellers are unable to sell within a short span and also because they pay higher tax.

17. Real estate brokers / agents should be given proper licensing to practice real estate business. By doing so there will be a decline of unscrupulous transactions.

18. Benefits to be given to developers who adopt area management schemes in and around their complexes for beautification and development of the area and keeping the location neat and clean.
19. The Government should manadate ratings to property developers. A regulatory body should keep a vigil on the activities of builders who create smaller dwellings of less than 100 units a year.
20. An code of ethics should be cerated for real estate developers and agents to help them offer better professional services.
21. Property taxes should be rationalised for leasing both residential and commercial properties.
22. Information Technology (IT) and Information Techonology enables services (ITes) benefits with respect to Software Technology Parks of India (STPI) should continue but with lesser rigid regualtion.
23. Commercial and retail premises given to banks/ATM’s should be exempted from property tax as they are given for longer periods of time and lesser escalations in the license fees.
Real estate sector is a big economy driver and any positive step towards the interest and welfare of the small consumer will have a macro impact on the economy.

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Indian real estate on a roll

The Indian real estate has gained a lot of traction from both within and outside the country in the past couple of years. A huge pent up demand and access to funds were the key drivers for propelling the Indian real estate market into an overdrive.
The industry received the much-needed first shot of funding in 2005 wherein the foreign direct investment (FDI) route was opened up for Indian real estate. Since then the Indian real estate sector has transformed to reach $57 billion in 2007, and has a potential to reach $90 billion by 2012 according to the Eleventh Five Year Plan.
The accelerating growth momentum has paved the way for exciting opportunities for both domestic as well as international investors. The real estate industry has multiple stakeholders right from developers to investors (including private equity funds), financiers, buyers (including Real Estate Investment Trusts) and service providers such as property consultants, contractors and project management companies. A typical consolidation may be triggered by any of these stakeholders.
Consolidation by way of land acquisition by the developer and real estate investor has been going on since ages. But the first real wave of classical consolidation came from the service providers — more specifically the international property consultants when Meghraj entered into a joint venture with Trammell Crow and later Trammell Crow Meghraj merged with Jones Lang LaSalle. Similarly, Colliers Jardine merged with CB Richard Ellis.
Project-specific JVs emanated from the need for real estate developers to get access to technology and requisite funds to carry out large scale projects. This triggered off a series of JVs with both Indian as well as international players.
Some of the large JVs that have taken place include Akruti with DLF, ICICI Venture with Tishman Speyer, Vornado Realty Trust with the Chatterjee Group, etc. In some other cases overseas developers and investors opted for a JV with a local partner as an entry strategy. While the foreign partner provided technical and financial muscle, the local partner provided a better reach in the local market, knowledge and consequent handling of all domestic issues. Some such well known JVs include Emaar with MGF, Walton Street with Sriram properties, Nakheel with DLF.
The market is also witnessing a contrarian approach whereby corporate houses, in order to monetise their real estate assets, have opted to take the de-merger route. These companies have hived off their real estate assets into separate entities (either listed or otherwise) and propose to carry out their future real estate activities under this. Some of the classic examples are India bulls, the Piramal group and Mahindra Lifespaces (formerly known as Gesco Corporation Ltd). Interestingly, certain government departments like railways, port trust and postal department have also indicated their interest in monetising their surplus real estate to enhance their revenue structure.
Another trend witnessed in the real estate transactions side is investments made by Real Estate Investment Trusts. REITs are listed on overseas markets and allowing investors to invest into rental yielding assets in India, for example Ascendas which is listed in Singapore is developing and investing in IT Parks.
Going forward, we expect the Indian real estate market to witness greater M&A activity driven by consolidation and the growing maturity of the market. This activity would ideally be supported by requisite regulatory framework and inherent attractiveness of the real estate sector (which in turn is based on sound market fundamentals and relatively stable economic & political regime).
Moving from a single project/SPV level tie-ups, in terms of JVs between developer and investor companies or local and international developer, developer and funds (private equity/ hedge funds/asset management companies/ financial firms), the industry is likely to move towards portfolio-level and entity-level participation, both from domestic and cross border investors and mergers, forming new entities for undertaking development activity.
From the perspective of investment activity on the funds side, a progression towards takeover of portfolios of existing funds by larger and newer funds is expected as this would be a faster and easier mode of entering the market.
Also, with existing players intending to offload their portfolios to book profits/exiting their buyouts or diversifying into specific region or asset classes, real estate would evolve into a commoditising mode.
In the medium to long term, we foresee some activity towards acquisition of Indian players by international developers, active investment play by PE funds instead of the current trend of being a passive financial investor, and lastly a greater willingness to go for a dilution of equity by developers, construction and infrastructure companies, etc.
Also, once the industry begins to become a more formalised sector, REIT activity would come in taking in individual investor money into circulation along with making the sector more investment savvy in terms of fair and comprehensible valuations and traceability.

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Primary Real Estate plans $500 mn fund

Indian fund manager Primary Real Estate Advisors is planning to launch a fund worth as much as $500 million, probably in the second half of this year, but said it will tread carefully as the country's property boom stutters.

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Finding Manhattan on India’s real estate map

In the US, the trip might take more than a day, but in Bangalore, anyone can hop from Tribeca to Brooklyn, stop off at the White House, and head out to Melrose in just a few minutes.

The miraculous journey unfolds in a new housing development in Bangalore’s Electronic City named “Concorde Manhattans”, which sits on prime real estate across from a Wipro Technologies campus. While location is the major draw, developer Concorde Group is also betting that its American naming scheme will help attract Wipro’s globetrotting employees.

“Manhattans is a brand associated with grandeur,” said the company’s marketing manager Alok Mishra.

Turns out naming each street and section of the gated community also was an exercise in workplace bonding. “We searched the Net, and everybody gave one name,” said the company’s human resource executive Gangadhar Gowda.

As buyers in India rush to book new suburban luxury flats before ground-breaking—with prices topping Rs45,000 per square foot, according to one report—developers must do more than acquire land and churn out projects: They must generate names by the dozen.

HIGH ASPIRATIONS (Graphic)

While no specific data exists on the subject, observers of the high-rises increasingly gracing the outskirts of cities note that the names tend to be of faraway places or concepts that conjure images of gardens and greens, luxury and exclusivity. Developers describe the process of naming as largely random, turning to the Internet for inspiration or even their own mothers.

But as they jockey to distinguish themselves from the cookie-cutter feel of developments and largely similar floor plans, some are finding they need to brand projects better, starting with the name.

“Many people go with English because they are more aspirational,” said Jagdeep Kapoor, managing director at Samiska Marketing Consultants, as he explains the phenomenon. “If they can’t pronounce it, then it’s very aspirational.”

Gurgaon, the suburb south of New Delhi increasingly defined as a gated community mecca, is filled with such aspirational places. In DLF City, Phase V, residential developments such as Wellington Estate, Princeton Estate and Carleton Estate overlook a landscape that is still defined mostly by construction and open dirt fields. A handful of security guards sit at the entrance to Princeton Estate, keeping track of everyone that comes in and out. Manicured shrubs and short, pruned trees line the paved roads that lead to each of the 20-storey peach-coloured towers that, again, have their own security guards.

The residents, though, aren’t quite sure what to make of the name. When B.K. Sharma first moved to the complex, he was dead set against the name, for example. “Once I had a big discussion with my brother,” said Sharma, who is a retired railways officer. “Our childhood has passed in total Indian culture, but the first name is giving (the idea) that we are living in an alien area.”

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Noida is hub of India's growth as economic superpower

Noida , an acronym for the New Okhla Industrial Development Authority, is located on the left bank of the river and is equidistant from Ghaziabad and Delhi. It was developed near Delhi, across river Yamuna, in the 1970s as a modern industrial city. There has been extensive growth of population in Noida during the last two decades and the population is estimated to be about half a million.

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New real estate opportunities include hospitals, logistics warehousing and airport

Traditionally , the major opportunity areas within real estate have been residential, commercial (office ), retail, and integrated townships. But in future, several new opportunity areas are set to open up. Popularly called the "neo-asset classes" , these include medicities , hospitals, logistics and warehousing, airport or portbased business districts, mass housing and slum rehabilitation , and education infrastructure . Let us examine a couple of these new asset classes, and opportunities they offer to the real estate sector, in detail.

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Real-ly!

A mobile real-estate agency in Bangalore that breaks several… well… ground rules.

Sevenraj, Bangalore-based realtor.

Ayesha Matthan

I bring real estate to the doorstep as I don’t believe in wasting time,” says Sevenraj, whose agency by the same name terms itself a “mobile estate”.

Sevenraj and his team drive around in a car in the Central Business District of Bangalore. The car is done up in flashy red-and-white colours and has the phone number and Web site spelt across. “It has an inbuilt TV on which clients can view property sites available for sale. It is also loaded with a compass, camera and a laptop.”

Query him about the red-and-white combination dominating his business — his suit, socks, shoes, handkerchief, mobile phone, office, furniture, stationery and cars are all in red and white — and he has this to say, “When I started out, I thought about the whole aspect of brand-building and the public identifying with it.” He came to the conclusion that film stars are largely recognised by their trademark dress code — like the late Tamil superstar MGR with his dark glasses. “At first people used to laugh at my sense of dressing, but it’s easier for clients to identify and stop me,” he says.

Another recurring feature in his business is the number seven. Apart from the ‘seven’ in his name, his blazer has seven buttons and he knows seven languages — Hindi, Kannada, Tamil, Telugu, Malalayam, Marathi and English. “The moment I recognise the language spoken from the accent and tone of the client’s voice, I immediately reply to them in their language,” says this polyglot.

There is an interesting reason behind his name too. As the seventh child, he was named No. 7 by his father, who didn’t want his children to have names indicative of their caste or religion. Hailing from Badagara in Kozhikode district of Kerala, his family later moved to Bangalore. “When my father admitted me at a school, they didn’t accept ‘No. 7’ and changed it to spell ‘Seven’,” he says.

Inspired by his father, an artist who carved figures out of ivory, Seven had enrolled at the Government College of Art, Chennai. But financial troubles forced him to drop out of college and he started dabbling in the world of films. “Raj was a very popular name in the industry — there was a Sathyaraj and a Mohanraj, so I added ‘Raj’ to ‘Seven’ and it has stuck since then.”

After doing small roles in a few Kannada films for about eight months, he was out of work and despaired.

“I used to sleep on the railway track in Chennai in a bid to attempt suicide, but no trains went past!” Then he worked for a General Insurance firm which, he says, made him “a real businessman”.

Sevenraj recalled how when he was in class V or VI a friend’s father had casually asked him for advice on a house to buy. “I pointed to an empty house that I knew and I was rewarded Rs 100!” The memory of this resulted in a real-estate business in Bangalore the late-1970s.

In five years he plans to retire and work at his ashram and charitable trust.

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