What’s in a name?

Naming a real estate project is an integral ingredient of a marketing strategy. After completing the layout, one thing that keeps tickling the developers’ mind is naming the project. In order to lure buyers, it is very important to break out the real estate naming rut and come up with exclusive names. And by any means this is not a simple task.

As Sushant Muttreja, MD of Cosmic Group explains, “Naming a project is an exhaustive process. First step is to understand the project as the name should justify the kind of project we are building. Hence it requires a lot of understanding and comprehensive research. Second parameter is that the name should be easy to speak and remember. Third, it should be innovative and different from everyone.”

“Based on these parameters, a primary research is conducted where the whole team comes up with multiple options and the best one is chosen,” Muttreja adds.

Overall the process needs a comprehensive look on the location of the project, features and the segment of the population that the project is catering to.

A few examples of how developers decided the names of their projects will help us delve further into understanding the naming procedure-

Manoj Gaur, MD of Gaursons says, “Naming of a project is a tricky process, which depends on several factors such as location and audience. But to carve out a niche for one’s project, there has to be something extraordinary. Since, Hindi is our mother tongue; we give importance to vernacular names. One of our best selling projects was ‘Saundaryam’. We feel somewhere it touches the chord with the Indian buyers.”

Talking of their way of nomenclature, Dhiraj Jain, Director of Mahagun Group says, “The name of a project should ideally reflect the character of the project and relate to its target audience seamlessly. With the consideration of the above, Mahagun also prefer names that begin with the alphabet ‘M’.”

M Arun Kumar, MD of Casa Grande is of the opinion that the project name should entirely be decided on the basis of the concept. The essence is that there has to be a synergy between the project and the concept.

Source: Magicbricks.com, September 2013
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Real estate investors go slow, home buyers in NCR to benefit

A lack of activity from the investor and underwriter segments is increasingly leading to a situation where real estate developers have no choice but to cater to the requirements of an end-user – as a result, a home buyer is in a better position to negotiate and take benefit of the softening prices.

It is due to the upcoming general elections and volatility in the national and global financial order, investors have adopted a cautious approach.

“Underwriters enter the market for short-term gains. Their presence may provide developers a sense of comfort, but at the same time, it results in escalated prices, of which an end-user has to bear the brunt,” says Abhay Kumar, chairman and managing director, Griha Pravesh Buildteck.

This is why, developers in the NCR cities such as New Delhi, Gurgaon, Noida, Faridabad and Ghaziabad, are seen fine-tuning prices to keep the ball rolling.

For instance, in sectors 76, 77, 119 and 120 in Noida, 1,000-sq ft multi-storey apartments that had touched the levels of Rs 50-52 lakh in the beginning of 2013, are now available in Rs 45-48 lakh.

“The recent price correction is a result of withdrawal of investors from various projects,” said Aman Agarwal, director, KV Developers.

Property prices in many parts of Gurgaon such as sectors 84 and 92 are down by 10-15 per cent as compared to the prices that prevailed until March 2013. A similar trend has been observed in Kaushambi and Vaishali areas of Ghaziabad as well.

The prime South Delhi areas such as Vasant Vihar and Defence Colony are reportedly witnessing a correction of 20-35 per cent, mainly because of cash-strapped investors who are now losing their patience and want to liquidate their holdings. Thus, a 1,000-sq ft apartment which was earlier priced at Rs 4.5-5 crore in these areas could now be purchased in Rs 3.5-4 crore.

Source: Magicbricks.com, September 2013
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‘Noida is transforming into a luxury destination’

From being an affordable housing destination, Noida – Greater Noida is slowly transforming into a hub of luxury and high-end projects. Many developers have recently launched residential projects in this segment. Unnati Fortune World that caters to the demand of an integrated community that includes Corporate IT Park, 5-star hotel & club, manmade-lake, playing area, residential units, entertainment zone and commercial places, is one of the developers who have launched maximum projects in the high-end segment. Anil Mithas, CMD, Unnati Fortune shares insights on the demand in the luxury segment of Noida and how it is transforming into a luxury destination. Excerpts from his interview with Neha Nagpal of MagicBricks.com Bureau:

Affordable housing is the need of the hour, but you have maximum launches in the luxury segment? What is the reason behind it?
There is demand in the market for luxury products. We are trying to meet this demand by creating affordable luxury. Considering the land cost, which is now demanding premium pricing, the projects are catering to the niche luxury segment. At the same time, we also have projects like Aranya Homes in Greater Noida West, which is an affordable housing project to meet the requirements of customers looking to buy/invest in the affordable housing segment.

What do you mean by affordable luxury?
We are offering a lot of amenities including gym, pool, power back-up, parking as part and parcel of the package at very affordable rates. A lot of builders offer these separately as luxury. Hence, we believe in the concept of amenities becoming basic necessities.

What is the demand and supply of luxury projects in Noida?
The demographics of the current society suggests a generation which wants to move away from the traditional concepts in housing. This in turn has created demand and is pushing the residential segment towards the premium and luxury segment. There is also an increase in double income families wherein, people are looking at investing in the luxury segment. Also, a lot of our clientele is looking to upgrading from 2 to 3/4BHK to augment their lifestyles.

What is the profile of the buyers?
Demand for luxury housing is mainly from high net worth individuals (HNIs), who aspire to reside in spaces which are in sync with their aspirational lifestyle with traction more towards end users.

There is a huge supply in Noida and Greater Noida and the occupancy rate is low. What makes you launch maximum of your projects in these areas?

Noida–Greater Noida is slated to be the destination next in Delhi–NCR. Basis our understanding of the various market forces we believe in creating solutions for the demand which would create an environment to support the potential growth in this region.

Source: Magicbricks.com, September 2013
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Greater Noida authority launches industrial plots scheme

The Greater Noida Industrial Development Authority has launched a scheme offering industrial plots of sizes greater than 2,100 square metres.

Industrialists who want buy the plots need to fill up a form and submit it to select banks, along with a registration and processing fee, project reports and other statutory documents, as per the terms of allotment.

The sale of application forms will start from September 21. Forms will be available at select bank branches on payment of Rs 1,100. These are the Bank of Baroda branch at Gamma II, HDFC Bank at Alpha commercial belt, and Indian Bank at Jagat Farms – Gamma I.

The forms can also be downloaded from the authority’s website. For downloaded forms, a demand draft of Rs 1,100 in favour of authority has to be submitted along with the application form.

GNIDA will scrutinise the applications and ask applicants to appear before the allotment committee. The final approval will be done after seeking nod from the GNIDA board.

GNIDA Chairman Rama Raman said: “The scheme is open ended. It will remain open till authority announces closure.”

Source: Magicbricks.com, September 2013
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Of stamping and registration

An agreement to sell (ATS) requires compulsory registration and payment of substantial stamp duty.

an ATS with possession is equivalent to 90% of the total stamp duty applicable on sale/ conveyance of the property. The amount of stamp duty paid on such an ATS will get credited in the stamp duty payable on the sale deed. To cite an example, if the total stamp duty payable on the sale deed for a flat is calculated to be ` 10 lakh, the buyer is required to pay ` 9 lakh at the time of execution of ATS with possession and the remaining ` 1 lakh at the time of execution of the sale deed.

Registration:
As per the Registration Act, 1908, an ATS, under which the buyer receives possession of the immovable property, requires compulsory registration.

If a buyer wants to protect the possession of the property that he wants to purchase, he will be able to do so only if the ATS has been duly registered. In the absence of a registered document, the buyer will not be able to protect his interests where the property is concerned. The other consequence of not registering a document that requires compulsory registration is that the document would be rendered inadmissible as evidence in courts. Hence, the court may refuse to grant relief to the buyer, making it difficult for him to defend his right of possession.

To summarise, the parties must make sure that an ATS with possession is duly stamped and registered as per applicable state laws.

Source: Hindustan Times (Estates), September 2013
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Secondary market feels the heat

Exit route for investors becomes tough due to less demand.

Correction is stark in the case of projects where the composition of investors is higher than end-users. It is because of this reason that there are more ‘sweet’ deals in areas such as Gurgaon, than in primarily end use-driven markets such as Ghaziabad or Noida.

Pankaj Kapoor, founder and managing director of Liases Foras, says that the secondary market has also felt the impact of the slow moving economy. The exit route for investors has become tough and they are being forced to sell at a lesser price.

While Delhi NCR, Ghaziabad and Noida have seen prices correct by 2% to 6%, Gurgaon prices have declined by 15% and Faridabad by at least 20%.

According to a research by Cushman & Wakefield, Delhi NCR continued to witness a s l owd ow n i n launches during the second quarter of 2013 exhibiting a quarterly decline of 11% in the number of units launched.

Shveta Jain, director, residential services, Cushman & Wakefield, says that the residential sector is in a phase where quite a few projects are nearing completion, prompting investors to exit from the market. “This has made units available in the secondary market at a lower rate than the new launches in the primary market. This has also made developers cautious of infusing more inventory in the market,” she says.

Deals in the secondary market have also come down. Dhruv Khanna of LJ Hooker, says that there were 20 deals in this category last year but there have been only ten this year.

Source: Hindustan Times (Estates), September 2013
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A correction on The Cards?

Thanks to the approaching festive season of Navratras and Diwali, considered auspicious for buying and selling of property, many prospective buyers are planning to invest in homes of their own. What they, however, need to know is if the market is ripe for a correction and if they should wait for a while before making a decision to buy, given the state of the economy.

Real estate experts confirm that there is pain in the residential real estate market which is there to stay at least till the festive season next year and that a correction in the range of 12% to 18% is expected, depending on housing projects and the holding power of developers. Freebies and discounts are likely to rule, too, as developers will be under pressure to generate liquidity from sales.

The Reserve Bank of India’s recent directive to banks to not lend money to builders under the 80:20 and 75:25 schemes has created ripples in the market as this has come close to the festive season when tractions are generally high as builders float these schemes to increase sales. This is likely to impact the holding power of developers who then may be forced to reduce prices considering the high levels of inventory they are currently saddled with.

Real time appreciation in property prices, adjusted for inflation in tier-1 cities during the last few years, has not exceeded 4% to 5%. This could dissuade developers from reducing property prices, and force developers, especially those with holding power, to keep their prices at current levels.

A marginal correction in prices could, however, be in the offing for certain projects aimed at the mid segment. “If a correction happens, it would be within the range of 12% to 18%, depending on the project and the holding power of the developer. A correction in prices beyond this level will impact developers’ profitability to a non-acceptable extent,” says Ashutosh Limaye, head, research and REIS, Jones Lang La Salle.

Anshuman Magazine, CMD, CBRE, South Asia Pvt Ltd, says that India’s economic growth prospects continued to face strong challenges from a depreciating currency, weak industrial output and a stagnating policy environment, thereby hurting investor sentiment in the real estate sector. RBI’s latest ruling on disbursement of loans on special schemes will further impact the residential market across most micro markets. “I expect the market to remain sluggish in the short to medium term,” he adds.

According to the National Housing Bank residential housing index, Residex, 22 of the 26 cities it tracked have seen a decline in home prices in the April to June quarter. Mumbai has seen a 0.5% drop, Delhi a 1.5% fall in property prices and Hyderabad a 4.6% cut in prices.

Shobhit Aggarwal of Protivity says that investor-driven markets will be largely impacted. Sahel P, vice chairman, Lotus Greens, however, has a different view. The current economic slowdown has been playing spoilsport for the real estate sector, too. Customers have been cautious about their decision to buy new houses. High inflation and increasing cost of raw material, however, has left little scope for any price correction. Projects with good location, construction quality and amenities will continue to attract buyers, he says.

Unsold Inventories:
A report by Liases Foras, a real estate rating and research firm, puts the unsold stock figure across the country at 700 million sq ft. The unsold inventory in Delhi NCR was 277.31 million sq ft, MMR was 146.10 million sq ft and Bengaluru was 88.68 million sq ft.

Data made available by Liases Foras also points out that sales in Mumbai, Pune, Chennai, Hyderabad and Delhi NCR declined in the April-June quarter from the January-March quarter. In the April-June quarter sales of residential units declined by 13% in Delhi NCR, 12% in Mumbai and 7% in Chennai.

Inventories in the Delhi NCR market are also at an all-time high. Delhi is sitting on an inventory of 21 months, Bengaluru of 25 months and Mumbai of 48. The comfortable inventory level is 14 to 15 months of unsold supply; offloading this huge stock that has piled up is a difficult task.

Supply-demand mismatch:
According to a recent report by Knight Frank, launches and absorption of residential projects in the country’s top seven cities plummeted by 37% and 23%, respectively, during the last two years (2011-2013) thereby aggravating the structural problems in the sector. Real estate developers have been caught in a trap of ambitious expansion, decelerating sales, hardening interest rates and weakening cash flows.

Unlike earlier occasions, the sector has no bailout package, and alternative funding options have also dried up. Banks are shying away from lending as they are troubled in their own backyard with increased non-performing assets, tightened monetary policy, currency depreciation and volatile debt markets.

Private equity funds have also been seen exiting the Indian markets. The aftermath of the dried-up fund scenario is also apparent in the market, as some real estate companies have defaulted on their debt repayments. Run-up to the elections is generally characterized by a period of policy paralysis and the upcoming elections as well as the general elections in 2014 are expected to have the same impact. Realty firms are now in deep trouble, and the sector is likely to witness more pain in the foreseeable future, the report states.

Source: Hindustan Times (Estates), September 2013
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Sleep in Comfort

Retire to a cosy, inviting space at the end of a long, hectic day.

A tastefully decorated bedroom is a haven to relax and recharge after a long, tiring day. At the same time, bedrooms should be welcoming with use of attractive and stylish accessories. Here are some tips to give your bedroom the right look, and make it as stylish as the more visible parts of your home:

1. Use of fabrics like chenille, raw silk, and soft wool imparts a feeling of warmth to the room. Woollen tartan sheets are a perfect addition to any bed during the monsoon and winters
2. For a cosy feeling during the monsoon, lay a woollen rug on your floors. Even otherwise, they are just perfect for tired feet after a long day at work
3. While selecting lampshades, opt for soothing colours like yellow and gold to illuminate the room. It is a good idea to have a dimmer switch to control the brightness as per requirement
4. Attractively-shaped mirrors make a room look more elegant. If your rooms are small, then a mirror, appropriately placed, will make the room seem larger. Mirrors are available in a variety of styles to suit any style of decor
5. In case of small rooms, a mirror attached directly to the wall or the wardrobe will save the extra space otherwise required by the dressing table
6. Window valances available in a variety of patterns, colours and textures lend an aura of sophistication to the bedroom. These inexpensive decorations are a one-time investment and are well worth the price in terms of style
7. Attractive headboards give a good getup to the bedroom. They can give your old bed a new lease of life, and, with adequate cushioning, also add to the comfort factor
8. Bedside tables enable greater accessibility to essential items like spectacles and creams. It is also the ideal place for a night lamp and books that you are reading
9. If you are not fond of bedside table lamps, you can opt for foot lamps. They do not emit much light and are also not harsh on the eyes. These lamps add a warm glow to the bedroom
10. While selecting the colour scheme for your bedroom, it is preferable to use light, cool shades as this makes for a calm and relaxing ambience after a weary day

Source: Times of India (Property), September 2013
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Deduction against HRA and Loan Interest

How these two income tax deductions apply.

You can claim an income tax exemption on your house rent allowance (HRA) as well as on interest paid on a home loan. Many salaried employees take a home loan to acquire a residential property but do not stay in that property for various reasons. They may stay in a rented premises and be in receipt of HRA from the employer. The exemption of HRA is covered under Section 10 (13A).

The conditions for allowing the exemption on HRA are:
The rent must actually be paid for the rented premises which you occupy The rented premises must not be owned by you

The amount of HRA exempt is the least of:

1. The actual amount of allowance received by you in respect of the relevant period The amount by which the expenditure actually incurred by you in terms of rent exceeds one-tenth of your salary in the relevant period
2. Half of the salary in the relevant period if the rented house is in Mumbai, Kolkata, Delhi, or Chennai
3. 40% of the salary in the relevant period if the rented house is anywhere else

As long as the rented house is not owned by you, the exemption of HRA will be available up to the limits specified in the relevant rules. In case of interest paid on a home loan, the deduction is allowed while computing ‘Income from House Property’. In order to compute the ‘Income from House property’, the net annual value of the property is reduced by 30% and from the balance, the interest payable on the loan taken for acquisition or construction of this property is deducted.

In case the property is given on rent, the annual value will be calculated based on the rent received and the final ‘Income from House Property’ will be calculated. In case the property is lying vacant and is neither rented out nor self-occupied, the rental that could have been derived had it been rented out is taken as the deemed rental income and the calculation has to be then made.

There are a few circumstances under which the annual value of a self-occupied or vacant property is treated as ‘nil’. First, where the property is located in a city different from where you work, and you stay in a rented house.

You will be able to take the annual value of such property as ‘nil’ even though it is not occupied by you.

Second, where the property is located in the same city as your rented house but is in your occupation, and used to live in. In the case of a self-occupied property, the annual value is taken as ‘nil’. The only deduction is on account of interest on housing loan, which is restricted to a maximum of Rs 1.50 lakh.

Quick Bites:

• As long as the rented house is not owned by you, the exemption of HRA will be available up to the limits specified in the relevant rules.
• In case of interest paid on a home loan, the deduction is allowed while computing ‘income from house property’.

Source: Times of India (Property), September 2013
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Festive season, Market Conditions Beckon Investors

This festival season, as always, the real estate market is likely to see more offers from lenders and industry with rates holding steady.

People are slowly returning to the real estate market as an investment avenue. It began with the Reserve Bank of India (RBI) initiating some gradual steps to infuse more liquidity into the banking system to promote lending and growth. The industry has been demanding a softer monetary policy for some time now and these steps led to more interest in property on the back of expectations of easier loan terms.

This festival season, as always, is likely to witness more offers both from lenders and industry with rates holding steady.

Another development that is pointing to more investor interest in the real estate sector is the steady depreciation in the value of the rupee. With the dollar bringing in over Rs 60 now, NRIs earning in dollars are looking at investing in property here given the increasing capital values and rentals. The dollar gaining value translates to lower property prices for investors from abroad, making property an even more attractive option given the market conditions here.

Also, the rapid urbanization leading more people to relocate to cities in search of better opportunities is leading to a growing demand for property.

Given these market conditions, it makes sense for investors, especially high net worth investors, to evaluate their portfolio again. Property has a strong case to be a part of an investment portfolio. A portion of equity and equity-based products that are taking a beating at the bourses can be liquidated to raise the margin money. The tax benefits on a home loan to acquire a second property bring down the effective interest cost of the funds, and make the investment even more efficient.

A large number of investors entering the property market will mean a spike in the price graph. In this context, a project makes a good buy at the pre-launch offer stage, given the fact that it will command higher prices even as the construction progresses. Add to this the benefit of festival season offers from lenders, and investors have an attractive option that promises to beat the inflation effect over a period of time.

A key aspect of leveraging property to draw more from your investment portfolio is in efficient management of margin money and home loan finance.

Quick Bites:
A key aspect of leveraging property to draw more from your investment portfolio is in efficient management of margin money and home loan finance.

Source: Times of India (Property), September 2013
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