Besides the usual demand for single-window clearance and industry status for real estate projects, what should ideally be included in the budget are further tax sops to homebuyers as well as investors
Author: Anuj Puri
Anuj Puri is Chairman, ANAROCK Property Consultants
- Overall unsold inventory of luxury homes (priced INR 1.5 cr – INR 2.5 cr) declines to 42,650 units in Q1 2019 from 48,300 units in Q1 2018
- MMR currently accounts for maximum share at 56%
- Bangalore sees 49%, Kolkata 37% yearly decline in total unsold ultra-luxury homes
- NCR and MMR each saw a 7% decline in pent-up luxury inventory during the year
- Mid-segment (INR 40 lakh – INR 80 lakh) saw max. reduction with 14%; affordable (<INR 40 lakh) saw a 3% rise in total unsold stock in this period
Anuj Puri, Chairman – ANAROCK Property Consultants
The slowdown in Indian residential real estate over the last few years caused most high net-worth individuals (HNIs) to shun luxury housing and look at other investments within or outside real estate.
However, ANAROCK’s latest study indicates that HNIs are now using the tail end of the slowdown in India’s luxury residential market to their advantage.
Stagnant prices and best-buy deals have brought back some of the demand luxury homes, leading to a decline of 12% in this segment’s overall unsold stock in one year.
Although investors are eyeing commercial properties and warehousing, the inherent demand for housing in India is beyond question.
Anuj Puri, Chairman – ANAROCK Property Consultants
As widely anticipated, RBI has once again reduced its key lending rate by 25 basis point. The lending rate now stands at 5.75, and this is the third consecutive rate cut since February 2019.
Even though the Indian economy is perceived to be in the grips of a slowdown, the markets are quite bullish on Modi’s return to power with a thumping majority.
This may eventually lead to mitigated risks in fiscal deficit – in all likelihood, it is sensing this that the RBI has made this rate cut.
As for the housing sector, this rate cut may send only send out positive notional signals – its real gain can be realised only if banks pass on the benefits to actual homebuyer borrowers.
The apex bank will need to ensure that this actually happens at the ground level since there has been little evidence of such transmissions in the recent past.
In the current scenario bereft with rising NPAs and the ongoing NBFC crisis, things look quite bleak at the moment.
The reason why most banks are not really able to pass on the benefits of RBI’s rate cuts is that their deposit rates are still very high.
Shajai Jacob, CEO – GCC (Middle East) – ANAROCK Property Consultants
Just like resident Indians, NRIs can invest in any number of properties in India and are also eligible to avail of home loans for as many properties as they like.
Of course, while there is no cap on the number of properties for which an NRI can take home loans for, repayment capacity must always be factored in.
Over-leveraging is never a good idea and regardless of what viewpoint a bank takes, NRIs must do their own repayment capacity calculations.
In India, most banks and non-banking financial institutions offer home loans to NRIs. However, the tenure of the home loan may vary, and the rate of interest is usually higher for NRIs.
Loan Tenure and Rate of Interest
An NRI usually has to pay a higher rate of interest than resident Indians. The tenure for a home loan to an NRI usually ranges between 5 to 20 years – only in select cases can it go up to 30 years for salaried professionals.
Most banks determine the loan amount eligibility of NRI borrowers based on their income and credit history.
The availability of land parcels in some micro markets in South-Central Mumbai has led to large-scale development of luxury homes and commercial spaces.
- Ahmedabad, Jaipur, Chandigarh, Nashik & Kochi top favourite among Tier 2 & 3 destinations
- Bangalore 2nd-most preferred investment destination with 21% votes in favour, followed by Pune with 18%
- For over 30% NRIs, Bangalore is the hot favourite investment hub
- Low property prices coupled with improved infrastructure facilities in Tier 2 & 3 cities the primary investment magnets
Anuj Puri, Chairman – ANAROCK Property Consultants
The quintessential Indian’s yen for investing in real estate continues. The latest data vouchsafes the visible return of investor sentiment for real estate, and the enthusiasm is not limited to traditional property hotspots of the big cities.
ANAROCK’s recent second edition of its Consumer Sentiment Survey confirms that investors are equally – if not more – upbeat on the prospects that India’s Tier 2 & 3 cities offer.
Lack of affordability in the larger cities is the primary hurdle to the largest investor base, and property investors are now looking at smaller towns and cities.
However, their increasing bullishness on Tier 2 &
Can the real estate industry’s strongest champion to date finish what he started?
Anuj Puri, Chairman – ANAROCK Property Consultants
Billions of Indians have given their verdict and the real estate sector has every reason to cheer. After all, the sector got the maximum policy-related attention during this government’s first tenure.
In retrospect, Modi’s victory in 2014 ushered in a new era of Indian real estate, unambiguously marked by his vision to set the ‘house’ in order.
He tightened the Centre’s grip on real estate – the favourite ‘laundromat’ for black money hoarders – and brought speculative activity to an all-time low even as big-bang schemes benefited genuine homebuyers and long-term investors.
His government gave a decisive impetus to all-around infrastructure development, major policy overhauls such as DeMo, RERA and GST, amended old Acts like Insolvency & Bankruptcy Code and the Benami Transactions (Prohibition) Act, and envisioned schemes like 100 Smart Cities, Housing for All by 2022, Make in India, AMRUT Cities etc.
Historically, no other government has done as much for the real estate sector. In just one tenure, Modi set the stage for Indian real estate to flourish in the long-term.
Anuj Puri, Chairman – ANAROCK Property Consultants
Co-living, like car-pooling and co-working, is the result of demand for more evolved rental housing solutions coming from millennials, students and young working professionals whose choices differ vastly from those of previous generations.
Currently, this new accommodation option is most popular with young and unmarried millennials aged anywhere between 20-30 years. Professionals who don’t live with their families in the city of work are also considering this option.
Co-living provides such individuals with a way to circumvent the isolation and loneliness that is often integral to a hectic, driven urban experience.
While the primary demand for co-living spaces currently comes from such tenants, the concept itself is a lot more ‘accommodating’. In fact, the future may very possibly see demand for co-living solutions coming single seniors, as well.
Cities such as Pune, Bengaluru, Gurgaon, and Mumbai first saw this new concept emerge in force, and it is now also taking root in smaller cities such as Lucknow and Jaipur – basically, in cities with a large student and millennial workforce population.
So, How Is Co-Living Different?
Anuj Puri, Chairman – ANAROCK Property Consultants
Inarguably, the Indian real estate vertical that in the direst need of funding is the residential sector. In a perfect world, the private equity that is now pouring into the country’s realty sector would focus on where it is needed the most.
However, PE firms have their own investment rationale, and Indian residential real estate has been far from attractive to them.
There are sound reasons for this. The Indian residential sector has been hounded by multiple problems for the last 3 to 4 years. These include the issue of stalled/delayed projects, liquidity crunch, and high property values despite weakened demand and slow sales.
The country’s housing market has also seen the highest impact of policy-induced disruptions. Given the fact that the housing market was tainted by malpractices and lack of customer-centricity by developers, the Government had to step in with policy interventions squarely aimed at cleaning up the sector.
The inevitable fallout of demonetization (DeMo) on an industry which was ‘thriving’ on black money aside:
- The long-pending enactment of the Real Estate Regulation Act (RERA) drew clear regulatory lines for the housing market –