Investing in property requires sizeable capital. Several times, people who do not have experience and expertise in the real estate market prefer to stay away from it. They are aware that investing in real estate could be rewarding, especially at a time when other financial instruments such as equities, mutual funds and commodities have been generating average returns which are lesser than a good investment in real estate. So what is the solution? Should they just jump the gun, invest and run into uncalculated risks? Is there any other way? Here are some ways through which one can invest in real estate and generate hassle-free returns.
Real Estate funds
Often mistaken as Real Estate Mutual Funds (REMFs), these funds have no relation to the equity markets. REMFs invest in the shares of real estate companies listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Given this nature of investment, REMFs are intrinsically associated with stock market volatility. Real estate funds, at the other end, invest in real estate projects.
How to invest in Real Estate funds?
At present, there are six Real Estate funds operational in India: HDFC, ICICI, Birla, Piramal IndiaREIT, Milestone and Dewan Housing. Now the question is how to invest in these funds and what is the minimum level of investment?
Currently, only Piramal IndiaREIT Fund V is open for subscription. The fund aims to achieve the target of Rs 1,000 crore and has collected Rs 750 crore so far. “I think, the rest of the amount will be collected in the next two weeks,” said Dhiraj Mittal, chief executive officer, Prime Capital Services. The minimum ticket size for investing in this fund is Rs 25 lakh, and then one can buy units in the multiples of Rs 1 lakh per unit.
An investor does not need to pay the entire amount upfront. At first, he has to pay 10 per cent of the total amount, and then the rest of the amount in a period as specified by the Fund house. The payment is spread over several months.
What is the expected Return on Investment (ROI)?
“These funds generate post-tax annual returns in the range of 10-20 per cent. The returns may vary depending on the economic and business environment,” Mittal added. Also, there is a lock-in period of 6 years as well. Large and mid-cap funds, at the other end, generated returns to the tune of 6.31 per cent in 2012-13.
As per the company reports, the Piramal IndiaREIT Fund I which was launched in 2006, posted an internal rate of return (IRR) at 30.2%. Fund II posted IRR at 20.9 per cent. IRR for Fund III and fund IV have not been declared yet.
Who can invest?
As per the guidelines of the Securities and Exchange Board of India (SEBI), all Indian resident individuals, Hindu Undivided Families (HUFs), corporate houses, financial institutions and trusts are allowed to invest in the Real Estate funds. “NRIs cannot invest in such funds,” said Rajat Dhar, managing partner, Cogent Advisory.
Though all projects launched in the affordable category have been sold out, the good news is that you can tap the secondary market units, which come at affordable prices — starting from R35 lakh to R40 lakh.
Is it possible to buy something decent in the R40 lakh price range in Delhi? Not very likely, but Noida’s real estate market will not disappoint you. You may not get wide-ranging residential options, but a small decent unit is certainly within your reach if you are ready to shell out R35 lakh to R 40 lakh.
Some such options are available in the 1 to 2BHK category in 3C’s Lotus Zing and Paras Seasons in Sector 168; Jaypee Greens’ Aman in Sector 151 and Kosmos, Kingston Boulevard, Kasa Isles, Klassic in sectors 128 to 134. Logix’s Blossom Zest in Sector 143 and Unitech’s Unihomes phase 1 in Sector 117 also have some great options.
“These projects are spread in various upcoming Noida sectors. The demand for studio flats and smaller units is so high that almost all such apartments have been sold. Just a few are available in the secondary market. For instance, a 1 BHK flat in 470 sq ft area in Logix’s Blossom Zest in Sector 143 costs R22 lakh in a secondary sale. Similarly, in Lotus Zing located in Sector 168, a 1BHK in 575 sq ft area costs around R29 lakh in the resale market,” says Gaurav Tiwari from Reliable Homz.
These projects were launched just a couple of years ago and their launch price were within R15 lakh to R20 lakh. They were all sold out within a few weeks of their launch because they were in the affordable range.
Even 2BHK flats in 750 sq ft to 850 sq ft area are in great demand because they are in the affordable range of below R40 lakh. For instance, a 2BHK in Jaypee Aman in Sector 154 is available in the secondary market for R28 lakh to R30 lakh, Tiwari adds.
Property experts say that since these upcoming projects offer excellent amenities and services such as green surroundings, power backup, great locations, latest security systems and designated parking space, among other things, they are selling like hot cakes.
“Noida in the past few years has been emerging as a planned, integrated and a modern industrial city that is well-connected to Delhi. It is also one of the largest planned townships of Asia. That’s the main reason why buyers from all price categories are attracted to this city,” says Raj Sharma from Best Property Deal, a real estate consultancy firm.
“For those interested in investing in real estate as well as end-users, private developers’ projects offer several good features, outstanding facilities and locations. Nothing, however, is available in the R40 lakh price range in the ready-to-movein-category as they all are under construction. Possession will take two to three years and the apartments are likely to give very handsome returns when completed and handed over,” Sharma adds.
Many real estate experts are of the view that in another few years the real estate market in Noida will witness a huge number of ready-tomove-in flats and due to this “the possibility of steep price rise is quite dim. The market will appreciate quite slowly and steadily. For example, for the last six months, there hasn’t been any significant movement in the property prices. So one can wait and take time to take a decision on investing here,” says real estate broker.
In the ready-to-move-in category, Noida Authority’s 1 BHK LIG flats measuring 550 to 750 square feet in sectors such as 55, 71, 73, 82, 99 and 135 are available in the secondary market for R5200 to R7000 per sq ft.
“If we calculate the purchase cost, including registration and transfer, these flats will cost anywhere between R34 lakh to R40 lakh, depending on the number of floors and their location. This is the best you will get for a small budget,” says S C Malik, a local broker from Radhey Krishna Real Estate and Developers.
He adds, “One good thing about these LIG flats is that in many sectors they are located in the same complex as other high-end properties such as HIG flats and duplex houses. Thus, they share many facilities such as shopping complexes, parks etc. Besides, they are quite well ventilated as there are balconies on both sides. Many home owners have covered the balcony area and converted it into another room.”
Local brokers say that these LIG flats have witnessed a good price escalation in last few years.
Bangalore topped the chart of the11 city index at seven per cent increase followed by Gurgaon and Noida at five per cent. Mumbai and Kolkata registered a rise of four per cent each while Delhi and Ghaziabad saw a rise of three per cent each in the city index values.
Indicating a resurgence of the real estate market, the MagicBricks.com National Property Index (NPI) rose by three per cent in the January to March 2013 quarter. The NPI is a weighted average of city indices. The growth was tracked by PropIndex, a quarterly report which is based on dynamic data mined from the portal, to show the levels of supply and the type of property listed in each locality, in 11 cities across the country. These are cleaned with complex algorithms to remove outliers and arrive at the index values at locality, city and national levels.
Among the 11 cities tracked in the apartment index, eight have seen a rise but others registered a marginal drop in the city index. While Bangalore, Gurgaon, Noida, Mumbai, Kolkata, Delhi, Pune and Ghaziabad witnessed a rise in city index values, Chennai, Hyderabad and Ahmedabad recorded a 2-6 per cent drop during the quarter.
Bangalore topped the chart of the 11 city index with a 7 per cent increase followed by Gurgaon and Noida at 5 per cent rise each. Mumbai and Kolkata registered a rise of 4 per cent each while Delhi, Pune and Ghaziabad saw a rise of 3 per cent each in the city index values. Developers attribute the growth in Bangalore to increasing buyer confidence due to improved scenario in the IT sector. Upward price trends in 75 per cent localities of the city too pushed up the price monitor.
The Gurgaon and Noida index rose 5 per cent each during the January-March 2013 quarter. The upcoming sectors in Gurgaon undergoing a change in landscape with the development of residences, offices, commercial shops, recorded an appreciation of property prices. In Noida, the rise in average property prices in 89 per cent localities, led to a spurt in the listed price monitor. Sector 50, 62 and 61 remained the most preferred locality for consumers in this category, for buying and renting.
The Mumbai and Kolkata index rose 4 per cent each during the same quarter. Multi-storeyed apartments of 1-BHK units, continued to be most in demand, especially in Thane. Buyers’ budget preference analysis showed that property in the Rs 50-100 lakh range topped the consumer demand chart. In Kolkata, 63 per cent localities across the city witnessed positive trend in capital values.
The Delhi index registered a rise in index value by 3 per cent quarter-on- quarter in the past nine months. The listed price monitor showed that close to 59 per cent localities in the city witnessed an uptrend in average capital values. The Pune city index registered a 3 per cent growth rate quarter-on-quarter in the past six months. Most areas in the city witnessed an uptrend.
The Ghaziabad index witnessed a 3 per cent increase. Indirapuram, Raj Nagar Extension and Crossings Republik witnessed maximum buyer interest and remained the most active areas in the last six months.
The Ahmedabad city index recorded 2 per cent drop in the January-March 2013 quarter. Multi-storeyed apartments, especially 2-BHK units in the price range of Rs 20-30 lakh continued to witness maximum consumer demand.
The Chennai property index dropped by 6 per cent during the January-March 2013 quarter as compared to the previous quarter. The Chennai listed price monitor too reported a fall, primarily due to an oversupply in certain localities. The Hyderabad city index fell 3 per cent during the same quarter. In the last one year, the city has not witnessed any major expansion of IT/MNCs. There has been cautious buying by the existing IT population.
Key findings of PropIndex
• Residential property in the Rs 30-50 lakh range continued to top the consumer demand chart by (23 per cent).
• Premium residential properties in the Rs 2 crore and above range, witnessed healthy buyer interest (13 per cent).
• In spite of a cautious approach among buyers, listings price continued to remain up.
• Six out of 11 cities witnessed over 50 per cent demand for 2-BHK units.
Gaursons and Saviour would develop about 25,000 housing units in the township ‘Gaur City’ over the next five years.
Realty firm Gaursons and Saviour today said they are jointly developing a 240-acre township in the Noida Extension with an investment of Rs 5,000 crore.
Gaursons and Saviour would develop about 25,000 housing units in the township ‘Gaur City’ over the next five years.
“We have got about 240 acre land from local authority for township development. We have so far launched 12,000 homes for sale,” Gaursons India Ltd Managing Director Manoj Gaur told reporters.
The units are available at an all inclusive price of Rs 3,500-4,000 per sq ft, he added.
“The total cost to develop the township would be about Rs 5,000 crore,” Gaur said, adding that the investment would be funded through bank debt, advances from customers and internal accruals from both the partners.
The construction has started in Noida Extension after settlement of land acquisition issues with farmers, he said.
“We will give possession of about 2,500 flats in 2014. The entire township will be completed in the next five years,” Gaur said.
Asked about the nature of partnership with Saviour, Gaur said it’s a 50:50 joint venture between the two partners.
In the township, he said the company will develop a 18- acre sports complex, shopping malls and multiplexes among other infrastructure facilities.
On completing 18 years of operations, Gaur said that the company would organised a property exhibition for next 60 days for sale of the housing units in this township. It would offer 60 cars and Rs 1 crore as gift in the lucky draw.
Gaursons has delivered many housing projects in last 18 years mostly in Ghaziabad and Noida.
West Delhi compromises of three subdivisions – Patel Nagar, Rajouri Garden and Punjabi Bagh. It has a population of about 25, 31,583 as per the 2011 census. The major areas of West Delhi in addition to those mentioned are Janakpuri, Tilak Nagar, Vikaspuri, Paschim Vihar, Karol Bagh, Subhash Nagar, Uttam Nagar, etc.
Multi-storey apartments (1, 2, 3 and 4 BHKs), residential houses, builder floor apartments and residential plots are the types of housing dominant in West Delhi. The capital value of multi-storey apartments range between Rs 22 lakh to Rs 2 crore and above while the capital value of residential houses begin from Rs 45 lakh to Rs 6 crore and above. Builder floor apartment’s value ranges from Rs 13 lakh to Rs 2 crore and above while the worth of residential plots range from Rs 16 lakh to Rs 3 crore. Realtor Surish Sharma of Shanti Properties says, “Market seems stable. There has been no major increase in the transactions till now. The value of properties in West Delhi is currently very high. Buyers of residential and retail properties are waiting for a decline in prices.”
The rental value of residential property here is anywhere between Rs 5,000 to Rs 40,000 per sq ft. Sharma says, “The tenants of West Delhi opt for properties in the same part of the city as it is very convenient for them. Close proximity to local markets, malls, hospitals influence their decision.”
In terms of connectivity, West Delhi is connected by the Delhi Metro Rail to other parts of the capital, which has increased property values significantly. Major roads such as the Outer Ring Road connect West Delhi to the rest of the city and the NCR. Buses, taxis and autos ply regularly in the region.
Key hospitals in West Delhi compromise of Indraprastha Hospital, Deen Dayal Upadhyay Hospital and Rajeev Gandhi Cancer Hospital. West Delhi is famous for offering a unique shopping experience via local markets and malls. Major schools and colleges include Delhi Public School, Dwarka, St. Francis De Sales School, Hansraj Model School, Punjabi Bagh, Millennium School of Business, Delhi College of Art and Deen Dayal Upadhyaya College.
Real estate broker Rahul Vashishta of Mann Real Estate says, “Both residential and retail real estate market of West Delhi is doing well. Good infrastructure, social and civic amenities are the main drivers.”
Source: MagicBricks.com Bureau
Manu Bhatnagar, principal director, Natural Heritage Division, Indian National Trust for Art and Cultural Heritage (INTACH) spoke to HT’s Aakriti Vasudeva on the groundwater issue:
What are the policy level measures that can be taken to recharge groundwater reserves?
We need an aquifer management strategy. This does not mean only recharge of groundwater but substituting its use with recycled water. Another measure, which we have recommended in our draft water policy for Delhi, is water-metering or measuring water use. Currently, our metering is broad-based but we need to go down to the micro level, which countries such as Israel have done. If we can measure the intake and discharge of each home, each user, problems like illegal connections can be checked.
What can citizens and institutions do to remedy the situation?
Rainwater harvesting systems at institution-level, colony-level and even individual residence level can help recharge groundwater significantly over a period of time. Citizens and institutions should reduce groundwater usage and substitute it with recycled water. Also using water-efficient toilets, low-flow taps, low-flow showers can help reduce consumption.
What laws currently exist for regulation of groundwater?
A groundwater bill was rejected by the Delhi assembly a few years ago. So there is some political resistance. Currently, regulation of groundwater is not being done adequately.
Noida and Greater Noida authorities are gearing up to start the construction work on the 30 km-long elevated Metro line connecting Noida with Greater Noida from the middle of this year after the final approval of the DPR (Detailed Project Report) came in.
Earlier estimated to cost around Rs 5,000 crore, the revised estimate of the cost of extension of the Metro line from City Center in Sector 32, Noida, to Bodaki in Greater Noida is now Rs 6,000 crore, including land cost.
The extension of the Metro project is to be funded by both the authorities and will be built by the Delhi Metro Rail Corporation (DMRC). The proposed Metro line will have 22 stations, with 15 stations under Noida’s jurisdiction and seven under Greater Noida.
According to the DPR prepared by the DMRC, the construction work will be completed by 2016.The DMRC estimates that nearly 65,000 passengers would be using the Metro every day. The Noida-Greater Noida Metro track is estimated to costs around Rs 125-150 crore per km.
The Metro line will run along Noida-Greater Noida Expressway. The line will extend from City Center in Sector 32 in Noida and terminate at Depot Station (Bodaki).
The proposed stations on the route will come up in Sector 51, Sector 50, Sector 78, Sector 101, Sector 81, Dadri Road, Sector 83, Sector 137, Sector 142, Sector 143, Sector 144, Sector 147, Sector 153, and Sector 149, Noida and Knowledge Park 2, Pari Chowk, Alpha 1, Alpha 2, Knowledge Park 4, and Depot Station Bodaki in Greater Noida.
The authorities have also approved a proposal to extend the City Center Metro line by 6.67 km to Sector 62, touching NH-24. In addition, the Noida-Greater authorities have decided to go ahead with civil work on the Metro link between Noida and Greater Noida West (Noida Extension).
The authorities of the twin cities will raise funds for the project through real estate development. For this, the authorities have proposed to increase FAR from existing 2.75 to 3.5 in certain areas. A 1 km special corridor along Noida-Greater Noida Expressway is being developed for this purpose. The FAR would be sold in group housing projects dotting the expressway.
The existing Sector 32-based Noida City Centre Metro line will be extended up to Noida Extension via Sector 72. The 7 km-long stretch will cost around Rs 1,400 crore of which Rs 1,100 crore would be shared by the Noida and Greater Noida authorities, depending on the territory falling under their jurisdiction.
At least two stations are proposed to be built on this line. The City Centre Metro station, which is proposed to link Sector 62, would branch out at Sector 71 to take the line till Noida Extension (Greater Noida West).
A 4 km line between Kalindi Kunj and Botanical Garden in Noida will be constructed at a cost of Rs 845 crore. The Noida authority will pay Rs 492 crore for this. Another extension, nearly 6.7 km long, will be made on the line from Sector 32 to Sector 62, at a cost of Rs 1,816 crore. The Noida authority has agreed to pay Rs 1,923 crore for this project.
Tarun Shienh, the CMD of Premia Projects Ltd, says, “The Noida-Greater Noida Metro project will be a boon for the twin cities and resolve the connectivity and traffic issues faced by residents of these cities.”
Rakesh Yadav, the MD of Antriksh Group, says: “The work on extension of the Metro line will bring a lot of cheer among buyers. A lot of uncertainty was looming over this region, but now, the confidence of investors and end users in this area is back and it will lift the prospects of real estate sector here.”
Ashwani Prakash, the executive director of Paramount Group, says: “The extension of the Metro line to Greater Noida will certainly improve connectivity and reduce the travel time to Delhi, which in turn will helps boost the realty market of the regions like Noida Expressway. In addition, it will also help in clearing any uncertainty or doubts in the minds of numerous property buyers and investors who were counting upon this decision – this project has brought a lot of security into the investment made here.”
Anil Sharma, the CMD of Amrapali Group, says: “The importance of any residential area around Delhi depends on its connectivity to Delhi and the travel time taken to a particular location in the capital city. The extension of the Metro network will improve connectivity and reduce the travel time to Delhi, which will boost the market prospect of this region.”
R K Arora, the CMD of Supertech Limited, says: “The recent positive developments on the new alignment of the Metro network will encourage the entire real estate industry to continue with the good work in the region and collectively build dream homes for thousands of aspiring home buyers.”