Should investors buy property now?

Magicbricks Moderator says: Property prices have stabilised over a period of time. Reports by real estate consultants suggest that property prices will still suffer set back of 30-40%.

Is this the best time to buy then? What do you suggest? Should investors park their funds in property? Or will the prices sink further?

Have your say in the 'comments' section.

Upcoming Second Homes in India

Magicbricks.com moderator says:
Recently the property market in India has greatly evolved. As a result, several trends are emerging as per the property demands and needs. For the past few years, India is facing a boom in the upcoming trend of second homes. Today, more and more people want to invest their hard earned money in property related matters. Thus, these kinds of people tend to explore all kinds of markets. This is the reason that now-a-days India has become the top priority among people to invest in properties. Moreover, the emerging concept of second homes is a kind of investment and is generally, famous at places which are away from the bustling crowds and far away from the city noise.  This form of owning a second home in India is no more restricted to wealthy people.

It has become a top priority, especially for who really want to invest in some kind of property dealings. With this changing scenario, the real estate industry in India is flourishing. This upcoming trend in India has also made middle and upper middle level people start investing in it through more feasible options. Many new schemes have been evolved for them, so that can easily figure out their property investment plans. In today’s changing scenario, those who are planning to purchase second homes are crating another investment option for them, whereas, those who own a beach house or a farm house of their own are enjoying that status symbol of living a luxurious life. Moreover, if we talk about the pricing structure of this trend, then the prices are getting higher and higher at few specific locations. As people generally, owe second home from the investment point of view, in this case the location of your second home matters a lot.

If we talk about India, then the concept of buying second homes is booming up at places like Goa, Alibagh, Pune, Khandala etc. Moreover, there are people who love to buy second home in locations such as Shimla, Manali, and Dehradun etc. In this current scenario the ratio of demand and supply is highly applicable to the real estate industry in India because of the increasing demand of the second homes. Thus, to match up with this fast pace, many builders are coming up with multiple real estate projects at places away from the city crowds. This concept has also enhanced the levels of regional economies as people are investing their money in integrated luxury housing complexes. Moreover, it is likely said that the demand of these kinds of second homes will increase in coming years and builders are coming up with great deals along with many special offers to further attract buyers.

Best Second Home Spots:

India is experiencing a new real estate layout in terms of second and luxurious homes. The real estate majors such as DLF, Ansal’s have already created some of the master projects, which have changed the entire infrastructure. Some of the luxurious projects by these trusted majors are on the verge of completion. As far as the famous hotspots in India for second homes are concerned, Kerala is acquiring the top position. As this place is famous for best holidays, the investment for second homes is flowing to the remote and safe areas of the state. The major attraction to buy a second home at this place is the surrounding greenery, providing a peaceful and a calm atmosphere, away from the bustling city life. Generally, people those who want to invest in their second home in Kerala are either from North India or Bangalore. According to the studies, Kerala is the most preferred location in India.

Mumbai – Another Preferred Location:

Another well preferred location for people investing in second homes in India is Mumbai. The second home concept in Mumbai has recently started with the growth of real industry spreading to nearby locations including Pune, Lonavala, and surrounding areas. Today, the property prices are soaring high in Mumbai and Delhi. According to the recent studies there has been at least 15 to 20% growth in the property market. It greatly contributes in development of the overall real estate industry. This budding concept of second homes especially in India is due to the phenomenal opportunities that India offers to all the investors. People from all walks of life are venturing to invest in this matter and it is no more only the game of entrepreneurs.  Moreover, the study shows that the age bracket of those investing in these kinds of projects is usually 35 to 45 years. Thus, we are looking at the fact that both the middle income as well as the higher income groups are venturing in this property zone.

The basic thinking of people has changed in respect to property related issues. As far as the concept of second home is emerging, people buy such properties so that they rent out that property. Opening a resort is a good way to fetch good returns for their investment. Some people sell off their properties at much higher rates that what they purchased for in order to earn huge amount of money. One more reason for people getting interested in buying second homes is that the banks and other financial institutions have diligently crafted various convenient policies and schemes. Moreover, the interest rates are regularly being revised upwards. With rising stocks people prefer to invest in second homes in and around metros. This is because people have started realizing the potential of real estate industry in India and moreover, they have started realizing the investment potential.

Price Range of Second Homes:

If we talk about the price range of these second homes, then the actual cost of these properties costs anything between 15 lakhs and the figure goes up to crores. Even after calculating this kind of huge amount of money, the demand of these kinds of properties is soaring high. Hence, developers are coming up with many latest projects to cater to this increasing demand.

Points to Ponder:

What are the other areas worth investing for second homes? Do you think this concept will emerge as successful 15 or 20 years down the line? Some people might think that given that cities are ever expanding, soon the homes in outskirts would be a part of cities. In such scenarios, what sort of investment options should be wise?

Why people should invest in Indian Real Estate market?

Magicbricks.com moderator says:
Real Estate is spreading its branches in every direction, and lately the market trends have touched new heights. This kind of exponential growth has boosted the real estate market in India as well. There is a rise in the entire industrial, commercial and residential projects thus; multiplying the number of foreign investors.

As per the current real estate market trends, during the first half of the year 2005-2006, India has attracted more than three times foreign investors as of those in the US. Today, it has become the budding sector for all investment lovers. Moreover, this has turned into a possible venture, by the initiative and positive outlook of the Indian government.

Why people should invest in Indian Real Estate market?
This seems a big question mark in front of every property investor, who wanted to invest their hard earned money into it.
The most promising and the key factor for this is that, India has released some relaxed Foreign Direct Investment (FDI) rules. On the basis of which, many foreign investors have decided to create India as their new property investment land.
It has even encouraged several financial and private firms to catch hold of this ultimate opportunity to make property investments targeting the Indian Real Estate Sector.
Foreign investors can now invest in integrated townships by two means. It can be done either, through a wholly owned subsidiary or through a local partner in India. However, in the later case, it will be a joint venture between both of them.
Lot of changes has been incorporated in the investment policies.

The entire spectrum of this real estate industry in India has been created for all property buyers-sellers in order to gain maximized profits. Moreover, it has become the second largest employing sector in India. In the past few years, the Indian real estate market has witnessed a revolution. As per the emerging trends in this sector, the industry is estimated to grow at the rate of 30 percent annually over the next decade.

Demand of commercial and Residential Properties:
The rapid growth of Indian economy has had a gushing effect on both commercial as well as residential property demands. More and more commercial property is required to meet the modern business needs. Moreover, the growth in this sector, especially the commercial one is led by the outsourcing and the Information Technology (IT) industry in India. These industries acquire approximately 70percent of the property market. In the coming years IT sector is likely to grow about 35 to 40percent. If we talk about their evaluation, then commercial sector is rated as per their location, commercial viability and of course the infrastructure. These days the hot commercial property markets are in Bangalore, Mumbai, Delhi, Gurgaon and Hyderabad.

As far as the residential property matters are concerned, the Indian market constitutes approximately 80percent of the Indian real estate market and is growing rapidly. In the last two years the growth of residential sector is grown about 15 to 20 percent. Thus; as India is emerging as a common grounds for property related matters, the developers are coming up with some world class buildings including the design and architecture to attract more and more foreign and local property investors. This step proves to be significant when it is the matter current real estate as it has given new dimensions to this industry that can now be compared with the international standards.

Leading India Real Estate:   
This is a significant component of the Indian real estate market as the growing trends have boosted the property sector. Some of the vital and leading real estate funds are:
• HDFC property Fund
• India Advantage Fund (ICICI)
• Kotak Mahindra Realty Fund
• DHFL Venture Capital Fund

Steps to be taken care of before investing in any property:
These are some of the very basic steps that everyone associated with the real estate industry should know.
• The value of commercial property depends upon the businesses around it and the growth of those businesses. However, the value of residential property depends upon the location and the amenities the apartment or flat is providing you.
• Secondly, you should be well aware of the cost of arranging funds in order to manage your property.
• Last, but not the least, you have to deal with the recurring expenses, which include maintenance etc.

I’m sure there are tips other than those mentioned here. Do share them for the benefit of all real estate enthusiasts!

Patriotism in Real Estate

Magicbricks.com moderator says: 

Recently I met someone who hails from the state of Jharkhand. I know him since many years. He was a gardener in the local nursery where I grew up. He seemed overly delighted. On enquiring I learned that he recently sold part of his land back home with a huge profit. All for the development of multiplexes and malls in Jharkhand. He kept part of his land for opening up his very own nursery of herbal plants for an upcoming expansion of an ayurvedic medicine venture. I thought it was a wise move.

The buzz goes that a certain popular, award winning Bollywood director has taken the initiative of changing the realty face of the states of Jharkhand and Bihar. His of Rs. 1,100 crores worth of investment is aimed at setting up agri-malls with a purpose to educate the farmers apart from increasing the retail scope in the states. Foreign investors are said to have queued up for holding stake in this innovative venture. In addition known retail brands are moving in to tie-up and establish themselves in these states as well. Sources have said that about six months ago, the valuation of this novel initiative was confirmed to be approximately Rs 200 crore. Given the real estate scenario in the country, the value has further moved up the realty ladder to 2-3 times its initial worth.

According to wikipedia, as part of the changing economic status of Bihar, the average literacy rates are on an upward trend. With special real estate and education hub initiatives for the masses, India is destined to get a face lift. The budding real estate avenues in cities other than the metros prove how rapidly the commercial realty segment is expanding. If this is how the moolah is utilized, India surely will confirm its India Shining status with the hope of spreading its brilliance worldwide very soon.

Unitech share down 5 percent, realty heading for real correction?

That’s astonishing news (may be not for hawkeyed share market pros). Shares of Unitech, supposedly India’s largest real estate developer has soared by 26,869 times in the last three years. If you consider that as fluke and wonder it's stridden through luck let us tell you that Anant Raj Industries Ltd., Unitech’s formidable competitor also has risen 39,548 percent in the share bazaar in the same time.

But seems like the gold run hits a halt and both the shares dropped by 5 percent since November-December. The report says that further losses may lie ahead. Why this fall? Well, the reasons they cite are, highest interest rates in four years, tighter lending requirements, not so favorable market conditions, more players and more than half a dozen sale of share are badly hurting real-estate stocks like these.

Parameswara Krishnan, who manages US$150 million (US$1 = RM3.50) at DNB Nor Asset Management in Chennai, India said, “Property stock valuations are approaching bubble territory, we should see some correction"

When brokers turn developers

It seems everyone wants some pie in the booming tipsy curvy ride of real estate. So after entry of non-realty players into the sector its not astonishing to discover that bigger and influential city real estate brokers are also turning into developers. It is reported that Bangalore based broker Feroze Estate & Properties has just leased 150,000 square feet to the Reliance group in the Cunningham Road. Real estate prices in the area have risen three times in last three years. Feroze Abdulla, the owner of the firm, on this transition from broker-to-builder feels that there is nothing new in it as most of today’s builder were once upon a time were brokers.

Well, his notion is not senseless as you can find successful instances like Parsvanath Builders not only in the heart of Delhi, NCR and but also in the entire northern zone of the country. Now considered as inspiration for many brokers, Parsvanath Builders also started as a brokerage firm in the capital.

Realtors opt for vertical rising

Gone are the days when rich and influential set for sprawling bungalow, now people are paying Rs. 6-8 crore for multistoried apartments. Mantri Altius, a 15 apartment complex has just sold half a dozen super luxurious apartments in the range of 6-8 crore.

But it seems superior amenity and the security that comes with apartment housing are perceived as big draw for the well heeled. Analysts believe that there is hardly any space left for horizontal growth in the metors. Cities like Tokyo, Shanghai continue to thrive on high-rises. What’s more, retail giant Wal-Mart has to embrace multistoried concepts for its malls in Tokyo. So, saving space means sense for developers as at one go in stead of utilizing 100 acres for 600 vilas they comfortably opt for 6,000 large sized deluxe apartments in the same area. Not only environmentally, it makes good sense economically too.

More here

Realty companies to double headcount

The real estate industry is on a hiring spree as the top ones are planning to double their headcount in 2007. Names like DLF, Emaar MGF, Omaxe, Unitech intend to recruit almost two times this year. With the sector witnessing attentions from all the quarters and dolling out top salaries not to mention stock options by many, the industry is getting best of talents from B-schools, investment banks, equity funds, retail and what not. The HR teams from these companies are visiting campuses for entry level positions and also bringing in domain experts as beyond realty, the companies are also expanding on retail, hospitality, education and healthcare.

In the last year the sector has successfully got rid of the perception of being family run businesses to professionally managed ones by dint of its revisions in employee remuneration packages and other multilevel branding exercises. To attract top talents many a real estate companies are offering 25-30% premium over other corporates.

New Birds flocking to real estate gold rush

With the Indian real estate boom showing no signs of calming down, corporates from alien sectors are also flying in to make hay while the sun promises a long shine. What’s more, in a bid to enter into the sector, many non realty corporates are actually amending their memorandum of association rules. Others are acquiring large stake in unlisted small companies which already have interests in realty.

Companies which are planning to foray into the real estate with vengeance include BK Birla Group’s Century Textiles, Gulf Oil, Vardhaman Industries, BF Utilities, Hyderabad Industries and Shree Pre Coated Steel among others.

Mumbai based brokerage SSKI Securities foresees a total demand of 160.5 million square feet in the IT and ITES sector alone. Gulf Oil along with other projects will also build knowledge parks and special purpose vehicles for infrastructure development.      

Similar News in The Economic Times

IT/ITeS companies grabbing office space in big cities

Despite the buzz around Tier 2 and Tier 3 cities, the space uptake by IT and BPO companies in metros and large cities will continue unabated with global research firm CB Richard Ellis (CBRE) putting the incremental supply estimates for corporate grade and IT/ITeS space in the region of 35 million square feet in 2007.

“The IT/ITeS companies are driving the office market and they account for about 80-85% of the total office space requirement. A large part of the supply in 2007 would be fuelled by large established companies which are on aggressive expansion mode, and a smaller part of it by new entrants,” Anshuman Magazine, managing director (South Asia region) of CB Richard Ellis, said.

The incremental figures will take the total space supply in metros/large cities to just under 200 million square feet in the coming year. “The overall space supply by end of 2007 is expected to be about 190 million square feet, in the National Capital Region (NCR), Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata,” he said.

“We feel that the talk about Tier 2 and Tier 3 cities undergoing massive expansion is somewhat exaggerated. Although they offer several advantages such as cheaper operational costs and lower attrition rates, the smaller cities still face challenges in terms of manpower and the right skill sets. So most of the activity is still focused around the metros,” he said.

Read More in The Times of India-Delhi Edition-13/12/06