By Dr. Atul Goel

Property investment is a time-tested and one of the most secure investment instruments in India. Whenever a common citizen has surplus money to invest, real estate generally remains the first option to be considered and explored. No doubt, in terms of long term security and handsome returns, there are only a few competitors of real estate. However, before making an investment intensive decision, there are some key factors that are a must to be taken care of. The investors must factor in the following pointers before finalizing a property.

Location

If you are investing your hard-earned money for investment purposes or for self-use, location is the primary factor of consideration. The return on the investment potential of the property is directly proportional to its location, ambience, neighbourhood and connectivity. If a property is too remotely located, the ROI potential will decline proportionately. It must be ensured that the location is connected to social amenities such as schools, hospitals and markets.

The investor must be convinced that the location is served by the connectivity means readily and is reachable. Even if the property is for self-use, the location will remain the paramount factor before finalization.

Approvals

Despite stringent checks by the Real Estate Regulatory Authority (RERA), the instances of land and property-related frauds keep appearing in the newspapers. The real estate investor must ascertain that the property in question is duly approved and all the documents are in place. Some of the key approvals to check are Encumbrance Certificate, power of attorney (PoA), completion certificate, municipal approval, fire NOC, RERA registration and so on. In the absence of the required approvals, the investor might be at the receiving end in cases of disputes or legal exigencies.

The reputation of the Developer

In the era of RERA administered regime, the absence of RERA registration raises doubts in the minds of investors. Before investing in or shortlisting a property, an investor must consider the track record of the real estate developer. The property investor must endeavour to go for an established and reputed developer as it minimizes the chances of fraud and unnecessary delays in property acquisition. As reputed developers have experience in delivering multiple projects successfully, the investor can rest assured of the decision.

Finances and Home Loans

If you are considering a property investment, the money factor is one of the most important aspects of the process. You must be well aware of the sources of finances to buy the property. If you have the entire money at your disposal, well and good. However, if you plan to take a home loan, you must be aware of the payment plan or conditions of the developers. In most cases, the payment is made in accordance with the construction status of the property. If the property is ready to move in, you must ensure that you get the possession as soon as you deposit the money.

If taking a home loan is on your mind, it is always suggested to do good research about the loan interest rates. You must explore all the options and select the institution which offers the lowest rate of interest. However, you must beware of the hidden charges if any.

In addition to banking institutions, Non-banking finance companies and housing development companies also offer loans at attractive rates. However, you must be double sure of the legitimacy of such agencies.

In summation, in addition to being a financially intensive decision, property investment is also an emotionally intensive decision too. Investors must keep in mind the aforementioned factors.

Dr. Atul Goel, is MD, Goel Ganga Group & President (Elect.), NAREDCO Pune

Note: The views expressed in the article are solely that of the author, nor that of SquareFeatIndia

Also Read: Sanjay Raut’s Property Attached by ED

The post How to pick the right property for real estate investment? appeared first on Square Feat India.

By Annuj Goel

Housing being the basic need of the citizens, Governments across the world have been focussing on the providing low-cost housing schemes . In the wake of Coronavirus and its resultant challenges, both the need for affordable houses and the inclination of the governments are at an all-time high. However, it remains a point of discussion that ‘Are affordable houses really affordable?’. A multitude of myths and misconceptions have shrouded the affordable housing sector.

Let us dismantle a few of them.

Myth 1: Affordable housing is not affordable anymore

With the Indian Government’s flagship mission of ‘Housing for All’, the affordable housing sector has remained the focus for many years now. The Government provides a ‘Credit Linked Subsidy’ on loan availed to take home under popular ‘Pradhan Mantri Awas Yojana’ (PMAY). This mass housing programme has sanctioned over 114 lakh houses, with a stupendous outlay of 7.52 lakh crore investment.

An investment of this scale and substantial financial help under many categories has indeed made housing affordable for the weaker sections of society.

Myth 2: Affordable houses are of substandard quality

The Indian Government is focussing on the affordable housing idea in a long term and sustainable manner. With lakhs of crores already sanctioned, the Government is focussing on good quality projects designed by well-known architects, big contractors, engineering firms along with panels of town planners. A tender is usually issued and after various rounds and scrutiny, the contact is given to design and build the projects if the project is under a housing board. Or else real-estate developers have to build and hand over a certain part of their plot to the housing and development boards (for example – MHADA in Maharashtra). In addition to this, the Government is bringing in the latest housing technologies to make housing units attractive and at par with a normal house. The myths of a substandard output are unfounded.

Myth 3: Affordable housing drives the property prices down

 The sites for affordable housing projects are chosen after careful analysis and survey. The needs, demography, connectivity, physical infrastructure, and social amenities are ensured before shortlisting a site. In fact, affordable housing projects have been found to expedite the development of the concerned area. When a large number of housing units are planned in an area, economic activities and demand for services automatically increase in the region. It increases the property prices and Return on Investment (ROI) potential of the properties manifold.

Myth 4: Affordable Housing is only for ultra-poor

The affordable housing schemes rolled out by the Indian Government serve are not limited to only the Economically Weaker Sections of the Society (EWS). The primary aim of the affordable housing schemes is to make the dwellings available at a reasonable price. For the same reason, the Government not only categorises the schemes under the EWS category but also offer houses to Middle Income Groups (MIG) and Higher Income Group (HIG). These are classified on the basis of the income potential of the applicants.

Myth 5: A difficult and tiresome process is involved

The rollout of the affordable housing schemes is primarily aimed at the poor and homeless sections of society. However, in many instances, it has been observed that the fraud and undeserving applicants try to grab the low-cost units in fraudulent ways. These instances have led to a verification process where the actual and needy applicants get a fair chance to get affordable houses. Now the process in most stated have been completely been digitalised, right from the application, registration and allotment through an online lottery system. Case example: MHADA and CIDCO’s lottery process  is projected live through youtube and facebook.  It results in a fast and fair manner of units’ allocation to the applicants.

Myth 6: Affordable houses are not available in metro cities

The Indian Government is focussing on the providing housing options across Indian cities. Be it a metro city like Delhi, Bangalore, Mumbai, or Chennai or Tier 2 or Tier 3 cities such as Surat, Jodhpur, Agra, Lucknow, Raipur or Palakkad, the affordable housing schemes are everywhere. A holistic approach driven by the idea of providing homes to the needy is behind the conceptualisation and rollout of such schemes. In fact, the Government is focussing more on Tier 2 and Tier 3 cities so that they can turn into the engines of economic growth.

Conclusively, affordable housing is still a reality, and the deserving applicants are seamlessly getting affordable housing units under the Government schemes.

Annuj Goel is MD at Goel Ganga Developments

Note: Views expressed in this article solely belong to the author and not that of SquareFeatIndia.

Also Read: Affordable Homes may become Unaffordable

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By Varun Singh

Affordable homes may soon become unaffordable, the reason being the rising input cost of raw materials. Now the apex body of real estate developers in the city CREDAI-MCHI has sought government intervention for introducing new measures to control rising input costs.

From raising prices of unsold inventory to reducing supply chain costs, tops the consideration list for CREDAI-MCHI. The apex body for real estate developers confirmed that it looking at rigorous measures to control the rising input cost of raw material which catapulted the cost of construction to the tune of Rs 400-600 per square feet in the affordable housing segment. This has negatively impacted the developers nationwide as the pressure continues to pile on.

While CREDAI-MCHI denied claims of halting construction work in the state as of now but will consider if other ongoing measures don’t provide necessary respite. Some of the measures that are currently being considered include raising the prices of the unsold inventory which has not been delivered, by 10-15% to cover the rising input costs. This move will not only impact the 2,773 projects which were approved by MCGM in 2021 but many more to the extent of 2.60 lakh units over the course of the next three years.

While the recent plea for deferment of the Metro Cess along with discussions on reducing the stamp duty, reforms CREDAI-MCHI continues to stress upon, Secretary Dhaval Ajmera stated, “AS an apex body, we are deeply concerned about the evolving situation on increasing costs of raw materials like steel, cement and its strong impact on affecting the ongoing growth. Developers have absorbed this incremental cost for a long time now and will now look at passing it on to the homebuyers as they have no choice. We will continue to engage in dialogues with various ministries and concerned authorities to consider our recommendations regarding gradual reduction in steel exports, input tax credits being allowed under the GST scheme and the tax saving option of section 80-IB to be extended to the affordable housing category.”

While the price hike forecast was long foreseen given the steep rise in prices of steel, cement, aluminum, PVC rose sharply between 30-100% during the last year itself, the continuously dynamic situation has not helped provide a conducive environment for business as well. Now as an impact of the war, rising, cement and steel prices along with the rise in prices for fuel, have turned into one of the main points of concern.

The rise in pet coke, coal, and fuel coasts as well as freight rates, are all contributing to an increase in cement prices, one of the most integral part raw materials for the real estate industry. While the sector has remained resilient, more than a 40% increase in raw material prices is a concerning sign for the realty industry.

A recent report by CREDAI-MCHI drew insights based on the analytics drawn in the MMR Housing report, which foresees a 7-8% price rise over the next 12 months if the quarterly rise of 2% price hike continues into the current year. The forecast is that prices will rise much more in the coming quarter given the current disruptions in Russian and Ukrainian businesses as well as daily increment in fuel prices, this could lead to an impediment to the growth of the sector. CREDIA has urged the government to show promising support and intervene in price escalation.

Saransh Trehan, Managing Director, Trehan Group said, “Prices of cement and steel have increased sharply over the last two years. Steel price has increased over 100%, whereas cement price has gone up by more than 30% in the last two years. Similarly, be it cost of aluminium materials, electric wire, Paints, stone all are up by more than 50% during the same period. This has led to a sharp increase in our per square feet construction cost. We have not been able to pass on the increase in input cost to customers. But relentless rise in input costs is hurting our profit margins in a big way, and forcing us to think about the future course of action.”

Also Read: Cost of construction up 10-12% likely to push up real estate prices

The post Affordable Homes may become Unaffordable appeared first on Square Feat India.

By Varun Singh

MHADA’s Konkan Board has put a total of 8,984 affordable homes up for sale.

These homes are located in Thane, Kalyan, Mira Road, Virar, Navi Mumbai and Sindhudurg area of Maharashtra.

The registration process for the lottery will begin from Tuesday.

Those who wish to apply for the lottery of affordable homes of MHADA will have to register online.

The registration will be online from 12 noon on August 24, 2021. From 3 pm the same day the applicants will be able to apply for their affordable home of choice.

The application shall be accepted by MHADA till 11.59 pm of September 23, 2021.

The Earnest Money Deposit (EMD) will be accepted by MHADA till 11.59 pm of September 24, 2021.

Under the lottery there will be 6,180 homes under the Narendra Modi’s ambitious Pradhan Mantri Awas Yojna.

Under PMAY there will be 624 homes under the EWS category in Shirdone (Kalyan), in Khoni athere are 586 homes, in another scheme in Khoni there are 2016 homes, in Bhandarli there are a total of 1761 homes, in Goteghar a total of 1185 homes are included in the lottery.

In Mira Road under the EWS category there are 15 homes. Under LIG in Virar-Bolinj 1,742 homes, in Bhandarli there are 88 homes that are included in the affordable homes lottery.

In MIG category in Virar there are 36 homes in the lottery. There are two homes in Vengurla, another 196 homes in Mira Road are being made available in the lottery.

The homes are also located in Titwala, Ghansoli Kasarwadawli and other prominent areas of the Thane district.

Applicants can apply under the four categories of EWS, LIG, MIG and HIG depending on the salary they draw.

An applicant under EWS will have to pay Rs 5,000, LIG applicant will pay Rs 10,000, MIG applicant shall pay Rs 15,000 and HIG applicant will pay Rs 20,000 as EMD along with the application for the affordable homes.

The lottery shall be conducted in Thane’s Dr Kashinath Ghanekar auditorium on the day of Dusshera that is October 14, 2021.

Also Read: MHADA Lottery For 7,500 Homes In Thane & Kalyan

The post 8,984 Affordable MHADA homes to be Sold on Dusshera appeared first on Square Feat India.

By Varun Singh

Hard to believe, that developers in the Q2 of 2021 launched less affordable housing, but yes it is true.

A report by Anarock Property Consultants, says that, while premium home launches stood at 36% while the share of affordable homes dipped to 20%.

Of 36,260 units launched in Q2 2021 in the top 7 cities, the premium segment (priced b/w Rs 80 lakh to Rs 1.5 Crore) had the highest share (approx. 13,130 units); mid-segment (Rs 40-80 lakh) had a 32% share (nearly 11,760 units).

In the pre-COVID-19 period, affordable housing supply share dominated; post-pandemic, share dropped dramatically from 40% in 2019 to 30% in 2020 and now at 20% in Q2 2021.

Developers strategically are following trends – buyers of affordable homes most affected economically by COVID-19; high unsold affordable housing stock another concern at 33% of total 6.54 lakh unsold units in top 7 cities by Q2 2021-end

The pandemic has significantly altered previously dominant trends in the Indian residential market. It has dented the overall new affordable housing supply share across the top 7 cities.

ANAROCK research indicated that out of the total new launches of approx. 36,260 units across the top 7 cities in Q2 2021, the affordable segment (priced Rs 40 lakh) contributed a mere 20% share (approx. 7,230 units).

Anuj Puri, Chairman – ANAROCK Property Consultants says, “The main Southern cities of Hyderabad, Bengaluru, and Chennai together accounted for at least 72% of the total new premium supply in the second quarter. Prominent realty hotspots NCR and MMR had the highest share of affordable housing supply at 52% of a total of 7,230 units launched in this category.”

The new launch trends in both the pre and post COVID-19 periods across the top 7 cities indicate that the new affordable supply share has been reducing post the pandemic.

• In 2018, out of approx. 1.95 lakh units launched in the top 7 cities, affordable housing had the highest share at 40%, followed by 36% in the INR 40-80 lakh budget category and 16% in the premium segment.
• Likewise, of the total 2.37 lakh units launched in 2019, the affordable segment accounted for a 40% share, followed by the mid-segment with a 33% share and the premium category with a 16% share.
• However, in 2020, of the total 1.28 lakh units launched in the top 7 cities, the affordable segment’s share reduced to 30%. The mid-segment had the highest share in 2020 at 40%, while the premium category saw its share increase to 21%. The dramatic drop in affordable housing’s new launch share was profound from Q2 2020 onwards – the period since the pandemic.
• In H1 2021, affordable housing’s share of new launches dropped further to approx. 26% of 98,380 units launched between January and June. The mid-segment had the highest share at 39% while the premium housing segment had a 25% share. Further quarterly trend analysis reveals that in Q1 2021, the affordable housing supply share was at 30% while in Q2 2021 it dropped to just 20%.   

Factors Impacting Affordable Housing Supply

Notwithstanding the incumbent government’s continued focus on affordable housing, private players have changed their strategy on the back of the new pandemic realities. Various factors could be responsible for the drop in affordable housing’s supply share drop:

• Abundant new affordable supply was launched in the top 7 cities after the government began incentivizing this segment post-2014 to back the ‘Housing for all by 2022’ scheme. Demand for affordable housing remains high, but there is now a pileup of unsold stock across cities. As per ANAROCK data, of a total of 6.54 lakh unsold units in the top 7 cities as of Q2 2021-end, the affordable segment has the highest share at 33%.
• The target audience of the affordable segment (many employed in MSMEs) has been severely impacted by the pandemic in contrast to premium and luxury category buyers. Many affordable housing buyers have had to defer purchase decisions.
• Affordable housing developers’ profit margins are wafer-thin. Amid rising inflationary trends of basic input costs (cement, steel, labour, etc.), it has become difficult for them to launch budget homes since increasing prices in this highly cost-sensitive segment are inadvisable at this time. Also, overall sales volumes have declined in the last year because of the pandemic.
• Home loan eligibility for many affordable housing buyers has been impacted by the pandemic due to the loss of jobs and many MSMEs being shut down – resulting in significantly lower sales in this category.

Also Read: Rohit Sharma Sells Villa for Less than He Bought it for

The post Affordable Housing Share Dips, Builders Launching More Premium Homes appeared first on Square Feat India.

By Varun Singh

Affordable housing had become the go word in the real estate industry. However, with the advent of the pandemic of Covid 19, it is one of the worst hit sector.

According to ANAROCK’s latest report., around 6.1 lakh units in this sector are impacted in top seven cities.

These 6.1 lakh units is 39% of total 15.62 lakh under-construction homes in the top seven cities.

NCR has the maximum under-construction affordable housing stock with more than 1.87 lakh units. Unsold stock in this budget category is nearly 64,430 units in NCR.

MMR is next with nearly 1.72 lakh units under construction. The unsold stock as on March 2020-end is 68,970 units.

In Pune, under-construction affordable housing stock is close to 1.31 lakh units, while unsold homes stand at nearly 46,630 units.

Bangalore has merely 16% (or 32,300 units) under construction in this category, out of a total of 2 lakh units under construction. This is the lowest share among all top 7 cities. Unsold affordable housing stock in Bangalore is currently just 14,800 units.

Hyderabad has the lowest share of both under-construction and unsold housing stock in this category. UC stock stood at 11,000 units and unsold inventory was just 3,370 units.

There are altogether over 6.1 lakh affordable units under construction across the top 7 cities, of which NCR and MMR alone account for nearly 59% – or 3.59 lakh units. These units were launched between 2013 to 2019. Both cities together also have a 57% share (approx. 1.34 lakh units) of the overall unsold stock of 2.34 lakh units in the budget homes category.

“The Government’s ‘Housing for All’ push coupled with multiple sops to buyers and developers brought on an avalanche of affordable housing projects in India,” says Anuj Puri, Chairman-ANAROCK Property Consultants.

“As much as 40% of the new supply added across the top 7 cities in the past few years was in the affordable segment (units priced < INR 40 Lakh). Resultantly, there is a huge under-construction supply of about 6.1 lakh units in the affordable segment,” Puri said.

Also Read: Affordable Homes: Biggest Beneficiary of Budget 2020.

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