Why Real Estate is a Highly Flexible and Profitable Investment?

When it comes to investing with an eye on earning a sizeable return in the future - Gold, Equities and Real Estate are generally considered more profitable than others. However, each comes with their own unique set of characteristics, risk factors and advantages. Gold is a stable investment but yields lower returns compared to equities and real estate. Equities, on the other hand, provide higher returns in intermittent periods but are sometimes highly volatile and involve a high amount of risk.

As the old adage goes, “The best investment on earth is earth”. Real estate investment is comparatively safe, and comes with assured returns as long as investors plan their investment astutely. This means carefully considering locational trends, upcoming developments, and establishment of hubs that generate employment and then make an appropriate investment. Real estate as an investment takes time to mature. Real estate can generate a regular rental income and can also generate long term returns, as their value matures with time.

In the year 2011, when the stock market tanked by almost 25%, real estate grew at a steady rate, and prices rose in 9 out of 15 metropolitan cities in India showing how it’s a better investment than equities and even gold. As long as the Indian economy continues to grow, real estate would continue to be valued; therefore property prices are likely to rise. We look at the various ways investors can benefit from investing in the real estate market -

• Attractive Tax Benefits

Tax benefits are available for investments made in real estate. Section 80EE covers tax rebate on the interest of home loan for ‘first time buyers’. It also provides an additional deduction of Rs. 50,000 over and above the tax deduction of Rs. 2 lakh under Section 24 and Rs. 1.5 lakh under Section 80C

• Better Sense of Control

Owning real estate property equips one with a greater sense of control over the performance of the real estate asset, to an extent. Investors can decide on furnishing or renovating the property in order to make it an attractive offering if the investor wishes to sell, lease or rent out the property.

• Convenience of Rental Income

This is one of the safest investments which can generate regular income that gives lifelong returns while simultaneously enhancing the value of the property over time. However, it is important to have a property with the right attributes to be able to avail the desired benefits.

• Diversified Portfolio

An astute investor is aware of the need for maintaining a diverse portfolio in order to minimise the risks. Real estate, being a palpable asset, works as a trust-establishing factor in the portfolio thus allowing an investor to attract risk-averse investors

• Economic Growth Enhances Value

Development of any kind of infrastructure, setting up of office or commercial hubs, upgrades in social infrastructure like hospitals, malls, colleges, or public infrastructures like highway, airport, railway or bus stations pushes the value of properties. If an investment is located in a suburb, better connectivity and accessibility will result in profitable returns.

• Flexibility

Investments in real estate can be made according to one’s need or budget. Options like building a retirement home for long-term capital growth, buying a home in a sought-after location for continuous flow of income are solutions investors could look at. Also, one can always invest in buying an old home and refurbishing the property as per one's requirements which would greatly boost the value of the property.

• Get Attractive Finance Options

Investment in real estate is often acquired through attractive financial schemes. As interest charged on housing loans in India is much lesser than other loans, developers offer investors a host of interesting and feasible financial schemes such as 80:20, 25:75, 10:90, etc. which reduce the financial burden.

• Highly Valued Real Estate Fund

There are some managed funds which invest in multiple real estate projects across geographies. Therefore, risk can be diversified, instead of investing in a single project. However, an investor will have to evaluate and select funds as the ticket size is large and includes a larger holding period.

In Conclusion

India's real estate market has been on the rise since the last couple of years. The real estate reforms have greatly increased customer’s trust in developers and have driven sales. There has been a significant rise in the sale of inventories across major metropolises in the country. This is going to increase considerably with time, as more people are in need of housing in the country. We, at House of Hiranandani have built a robust and a diverse portfolio spread across residential, commercial, retail, townships, SEZs and offer a wide variety of options for investors looking to invest in high growth corridors of Bangalore and Chennai. 

For a quick comparison between Real Estate, Gold & Equity as an investment options, head on to our latest newsletter – Long-Standing Realty. 

OMR - Why It's One of Chennai's Preferred Residential Destination

There are few stretches of roadways as iconic, scenic and steeped in culture as Old Mahabalipuram Road in Chennai popularly referred to as OMR. This 20 km long highway stretches from Madhya Kailash Temple on Sardar Patel Road in South-East Chennai right up to Mahabalipuram in the south where it connects with the equally famous East Coast Road (ECR). OMR, also known as the Rajiv Gandhi IT Expressway, has witnessed huge growth and development in the last decade as it gained a reputation for becoming the IT Corridor of Chennai. Life in OMR has upgraded in a big way and it has become the residential destination of choice for both - families, and developers looking to meet this rising demand. Here’s why:

Connectivity

Ease of travel is a major USP of any good residential area and OMR boasts of excellent infrastructure which boosts connectivity. This includes the entire stretch of OMR with its flyovers and dedicated MRTS routes and direct connectivity to the Chennai airport as well. East Coast Road and the GST Road further enhance connectivity to other suburbs of Chennai such as Thiruvanmiyur, Palavakkam, and Neelankarai. Other arterial routes such as Velachery-Tambaram Main Road and Kelambakkam-Vandalur Road provide a good road network. Proposed infrastructure such as a 17.7 km elevated road from Siruseri to Taramani, alongside the upcoming Metro line on OMR will be a game changer for residents and businesses along the OMR.

Employment Hub

The IT and ITeS industry is one of the highest employers in India. OMR is home to one of the biggest agglomerations of IT and ITeS businesses such as TCS, Cognizant, Syntel, Mahindra, Wipro, Infosys, Hexaware and more. Most of these companies are set up in large IT Parks such as SP Infocity, RMZ Millenia, Ascendas, SIPCOT, ELCOT SEZ and TIDEL among others. The presence of major companies such as these means numerous employment opportunities and further growth of the city’s ecosystem.

Well-Developed Social Infrastructure

The commercial and residential growth of OMR in the last few years has meant an upgrade in the civic amenities and infrastructure as well. A number of good education institutions and hospitals serve residents here. IIT-Madras, Hindustan University, Sathyabama University, St. Joseph’s Institute of Technology are some well-known higher education institutions, and among schools there’s Gateway International School, Hiranandani Upscale School and Ramana Vidyalaya among others. Apollo Hospital, Global Hospital and Chettinad Hospital are among those that provide excellent medical care and services.

Gateway to Adventure

Located close to the coastline means residents of OMR have an easy access to the many popular beaches. Besides the many coastal picnic spots and resorts there are water sports such as scuba diving and surfing to indulge in. Other easily accessible attractions in OMR are MGM Dizee World, VGP Theme Park, artisans’ villages like Dakshinchitra and the Cholamandalam Artists’ Village. The drive along OMR is also scenic and pleasant as one passes long stretches of water bodies such as the Great Salt Lake, Sholinganallur Lake as well as Guindy National Park, and Pallikaranai Marshland which is well-known among bird watchers. For those who prefer indoor entertainment, there are several malls and multiplexes as well.

At House of Hiranandani, we understand the value of living close to work and amidst nature. Our City by the Sea project in Egattur is a sprawling 120 acre residential project with amenities such as a school, spa, salon and crèche. Choose from among 2, 3, 4 and 5 BHK spacious and luxuriously designed apartments across some of the tallest towers in OMR. While the project is located right opposite SIPCOT Park, it also has easy access to many other IT Parks and most social infrastructure. The project is surrounded by lush greenery so residents can enjoy clean air, and picturesque views of the nearby lake.

Mumbai Development Plan 2034: All set to make Mumbai a world-class city

The much-awaited Development Plan (DP) 2034 by the Maharashtra government is finally here, paving the way for the space-starved city to have more land available to build homes and commercial spaces. The Mumbai DP 2034 has increased the FSI (Floor Space Index) which means developers can now build more on the given plot. More supply of homes coupled with Govt focus on infrastructure is going to be instrumental in changing the city’s skyline for a better tomorrow.

All you need to know about the DP Plan Mumbai 2034:

• The new Mumbai DP 2034 offers promising FSIs for commercial and residential properties. For commercial, it is raised up to 5 & for residential properties, the revised FSI is 3. Earlier it was 1.33 for both residential and commercial developments. For suburbs, new FSI will be up to 2.5 and 5 for residential and commercial properties, respectively. The existing FSI for the two categories is 2 and 2.5, respectively. 

• The Mumbai Development Plan for 2034 intends to utilise salt pan lands for affordable housing. According to the plan, out of the 3,355 hectares in no-development zone, BMC has earmarked 2,100 hectares as well as 330 hectares of salt pan land for affordable housing.  

• A provision has been made to add 42 hectares of open space. The DP plan Mumbai has also designated 12,859 hectares to natural spaces, a new category where no new construction will be allowed.  

• The Mumbai Development Plan is all set to create approx. 1 million affordable houses and 8 million jobs in the city. 

• The new plan encourages the growth to create parks, theatres, playgrounds, theme gardens and museums- something that the city desperately needs. 

• For the first time, Mumbai’s Development Plan has placed the focus equally on commercial real estate with double benefits– firstly decongesting existing CBD areas and secondly, extending the ‘walk to work’ aspect in newer locations.

Post independence, this is the first time wherein a serious effort has been put up for the holistic development of the city.

A Move Towards Sustainability

As per rankings of MoneySuperMarket, India ranks 75th globally in terms of human impact on environment per person. This ranking looks at the impact of human activities on the environment, biodiversity and other resources. More importantly, it also looks at the human use of sustainable and renewable sources of energy. This raises a strong concern as for a country of 1.34 billion people; the renewable energy that India is currently producing is only 15.2 %. Needless to say, producing renewable energy is a major need of the day. Relying on non-renewable sources of energy is not sustainable because these sources will not be replenished in our lifetime. Also, population growth and infrastructure development are only pushing for the increase-in-need of sustainable energy for the near future.

With vast lands and access to natural resources India has a huge potential to switch to sustainable energy. But what is sustainable energy? It is a form of energy that meets the demands of today without creating a danger of its depletion for the future generations.  This form of energy is found to be free of cost and does not harm the environment. Various renewable forms of energy are known to be sustainable forms of energy. Solar, wind, geothermal, hydropower and ocean energy come under this category. In 2016, India signed the Paris Climate Agreement and this move has brought a huge shift in India's attitude towards climate change. Our country has been developing sustainable forms of energy in order to control climate-change and remain self-sufficient.

Here are a few developments that highlight India's initiative to embrace sustainable forms of energy:

• Cochin Airport became the first fully solar powered airport in the world.
• The newly-built Kochi Metro will get 25% of its electricity from solar energy very soon.
• Pune airport will run on fully powered solar energy by next year.
• India made its 1st solar boat named 'Aditya' and this boat completed 150 days of voyage.
• Indian railway is installing rooftop solar panels on 250 trains.
• Indian railways also launched the first solar powered train from Safdarjung railway station in Delhi very recently.

We hope to see many more such developments in the future to ensure sustainability in India's energy generation. 

GST & Real Estate

In the recent past, India has seen extensive developments with respect to the laws and policies that are being implemented. The first was Demonetization, followed by the RERA Act and the most recent being the implementation of Good & Services Tax Act (GST Act). GST Act has been implemented with the intent to remove cascading effect of taxes & to bring in more people under the tax net, however, many have been struggling to understand what it exactly does and how it would affect people.

With respect to real estate, it is unlikely that GST will have any impact on property prices.The current rate of 12 per cent on under-construction projects might marginally bring down prices in the affordable segment owing to input tax credits, but it is unlikely that similar impact will be felt in mid-priced or premium developments. Developers may get some benefits fo projects that are in the nascent stages, but will have to bear the tax burden of ready-to-move in projects, since they are kept out of GST ambit. 

One aspect that needs government’s immediate attention is the stamp duty charges. Since, they continue to remain along with GST and vary from state-to-state. The stamp duty rate averages between 5% - 7%. Abolishment of this would bring down the final costs of apartments.          

Broadly speaking, the act will be a game changer for the industry. Its comprehensive approach and uniform tax structure will not only ensure more transparency in the economy but also would be helpful in boosting the investor confidence.

Infrastructure Highlights: India’s March Towards The Future

  

Infrastructure is a key indicator of a nation's development. In the current scenario, India has been seeing a sustained infrastructure development. The expenditure on infrastructure rose by 10%, its total worth being Rs. 3,96,135crore. The sector has seen the launch of initiatives such as 'Housing For All' & 'Smart Cities' with a view to fast-track India’s progress. Indian urban centres are also seeing tremendous infrastructural investment and here are 5 significant initiatives that are likely to have a major impact in the not so distant future:

Bangalore just launched its 1st Metro phase

Bangalore's metro has expanded commute options to ease pressure on its roadways. The city very recently launched metro services; it connects JP Nagar, all the way till Nagasandra. The initiative is under the Smart Cities mission with a budget of ₹ 107 crore. The length of this phase is 42 kilometres.

Chennai's Satellite Bus Terminal

Chennai is developing better ways of commuting for its citizens, one of the projects being its satellite bus terminal located in Madhavaram. This project will cover 8 acres of land and will have capacity of handling 200 buses per day, thus improving connectivity and easing traffic.

Hyderabad to get its metro

The city of Hyderabad already ranks among the top Indian cities with a high standard of living (Mercer’s Quality of Living Rankings for 2017). Currently, this city is working towards building its own metro system. The projected length of this project is 72 kms, passing across 3 corridors. This project will set up 64 metro stations out of which 32 stations will have buildings or parking spaces.

Trans Harbour link in Mumbai by 2019

Known to be India's longest sea bridge, this link will cover a length of 22.5 kilometres. It would bind Mumbai and Navi Mumbai through roadways. The areas it would connect are Sewri, South Mumbai and Thane Creek, north of Elephanta Island. Also, it will provide access to the proposed Navi Mumbai International airport in the future.

Mumbai's Costal Road

Mumbai city is looking forward to decongest its traffic by building a 30km long costal road. This project will connect Mumbai's iconic Marine Drive, all the way till Kandivali. The total investmentfor this project is worth Rs. 12,000 crores. The project aims to bind South Mumbai to the Western suburbs and ease the road & rail commuting pressure in the Western line.

The infrastructure developments that are taking place, spell good news for India’s future. All corridors of transport that we construct will eventually raise values of real estate properties. We at House Of Hiranandani have great offering of apartments in Bangalore, Chennai & Hyderabad that ensure great connectivity and hassle-free commute.