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. 

Why One Should Invest in Devanahalli - Bangalore's Emerging Industrial and IT Hub

Bangalore, the Silicon Valley of India, is home to a large number of IT companies and startups, and is one of the leading employment hubs in the country. This aspect of the city draws professionals from all over the country and abroad. To accommodate this influx of people, the city’s borders are gradually but steadily expanding, and newer suburbs are emerging. North Bangalore is one of the recent areas to experience a growth spurt.

Devanahalli, a suburb located in North Bangalore is one of the emerging real estate destinations of choice. Popularly known as the birthplace of Tipu Sultan, it is now better known as the location of the newly built Kempegowda International Airport. Devanahalli is also developing as an industrial and technology hotspot. Let’s look at why homebuyers are attracted to Devanahalli.

Location & Connectivity

Devanahalli enjoys excellent connectivity to the main city centres via the NH-7 or the Bellary Road which has been widened to a 6 lane highway, thus ensuring better and efficient flow of traffic. The Bangalore Metropolitan Transport Corporation [BMTC] buses operate a regular service, catering to the ever-increasing demand of public transport. It has major transport nodes located at easily accessible distances. The international standard airport located here is the second busiest airport in the country, with flights to various cities all across the country and the world. Devanahalli is also well-connected to the nearby suburb of Yelahanka, and Bangalore City by railway.

Upcoming Transport Infrastructure

Devanahalli’s multi-modal transport connectivity is set to receive a boost with future infrastructure developments. The suburb has been included in the construction of Phase 2 of the Namma Metro network which will connect the Airport to central Bangalore and thus Devanahalli as well. The proposed Peripheral Ring Road (PRR), which will complement the existing routes of NICE and ORR, will connect the outer suburbs of Bangalore and major roads like OMR and Bellary Road. This will enhance connectivity between Devanahalli and the rest of Bangalore.

Social Infrastructure

Devanahalli benefits from a well-established social infrastructure such as schools, hospitals and recreational spaces. Some notable schools in this area are NPS School, Delhi Public School, Akash International School and Canadian International School. The healthcare options available to residents include Leena Multispecialty Hospital, Akash Hospital and Cyte Care Cancer Hospital. This suburb also has a D-Mart outlet as well as numerous convenience stores to meet residents’ daily needs. Devanahalli is also a popular tourist destination due to the many temples and the Devanahalli fort.

Industrial and IT Hub

The relative affordability of land in Devanahalli, as compared to many other suburbs in Bangalore, has made it a focus area for real estate and infrastructure development. This includes some of the biggest projects already operational here such as IT Investment Region [ITIR] and the Aerospace SEZ, making them employment attractions. Some big companies which have been set up in the Aerospace SEZ are Thyssenkrupp Aviation, BEML, Dynamatic and Centum Electronics.

Popular IT companies such as TCS, Infosys and Wipro are expected to set up base in the Devanahalli ITIR. Companies such as Shell already have a significant presence in this area. Also, an upcoming Science Park as well as a Financial City, is expected to compete with India’s financial capital Mumbai and the Gujarat International Finance Tec-City in Gandhinagar. This, proximity to industrial clusters and IT Hubs, is another key attraction of Devanahalli.

To Conclude...

As highlighted above, this north Bangalore suburb is experiencing a growth surge and is developing economically, demographically and infrastructurally. As the connectivity improves, and more companies set up base here, more residents will also follow. This will enhance the investment value of homes in Devanahalli. Hence, there is no better time than now to invest here.

House of Hiranandani understands the growth opportunity Devanahalli presents. We are developing an integrated township here which brings together elements of luxury living within green expanses. We offer 2, 2.5, 3 and 4 BHK apartments as well as 3 & 4 BHK villas and cottages. The project boasts contemporary designs, neo-classical architecture and lavish lifestyle amenities. Irrespective of the reason you choose to invest in Devanahalli, you can be assured of higher yields in the future.

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.

The City We Deserve

It is estimated that over 50% of the world’s population now lives in urban areas and that this will rise to 70% by 2050. Cities are without a doubt, the future of mankind. As someone who has been a curator of fine living and views architecture through a magnifying glass - the most important question I ask myself is "what goes into making an ideal city"?

Strong infrastructure and innovative design, i.e sustainable architecture, is imperative to the creation of an ideal city. However, the liveability aspects of the city, i.e, those facets that result in an ideal community, are just as important to create the city that we deserve.

Today, the most important concept of a good liveable city is its high streets. How successful a high street is in a city will indicate how healthy a city is, how lively a city is. The city sidewalks, the city footpaths, the city pedestrian walkways provide the soul and life to a city, not enclosed areas where pedestrians hang out.

Cities are here to grow. Designing public spaces benchmarked to the best cities in the world is the need of the hour. Central Barcelona has a higher density of population than Mumbai. It also has less green spaces than any Indian city. It has the same rainfall pattern as India wherein there is a lot of rain for a few days and is water stressed the rest of the year. It however creates superb hardscape public spaces with few trees interspersed in the city. The word green spaces need to change to public spaces.

Our ventures in South India are all about contributing to the creation of such a city. Whether you look at Devanahalli or OMR, we are always striving to create an engaging locale, an ideal community in which style meets substance because of a healthy high street culture and public spaces. Where the community brings to life an ideal metropolitan experience in harmony with nature that magnifies the way we live.

However, a beautiful house is of no value if it leaves a massive carbon footprint on the surrounding environment.  The ideal city demands a sustainable setup with a high street culture and innovative concepts like hardscaping. The end goal of an ideal city will always be its residents’ joy and happiness. The best way to attain this goal is to create a sustainable and liveable city.

The Real Estate Forecast for 2017

Deregulation will be the key to future success of the sector

The year 2016 brought in ground breaking changes and transformation in the real estate industry that had not been witnessed for the past two decades. The various policy initiatives taken by the government will boost transparency and credibility of the sector in the long run.

Deregulation will be the key to the success of various government initiatives such as Housing for All by 2022, AMRUT, Smart Cities. A major impediment to real estate development in India remains the approval process. While the government has done a lot to ease the functioning of the real estate sector and protect the consumers, it must get the statutory authorities responsible for clearing the projects within the purview of law. Administrative reforms should be made to facilitate quicker approval process which will help developers complete and handover projects on time. This will infuse confidence in home buyers and make it attractive to global institutional investors as well thereby providing a huge opportunity for the sector to grow and mature keeping customers as priority.

The Government has rightfully laid great emphasis on improving India's ranking in the World Bank global Ease of doing Business Index and continuously monitors the same looking at improvements in ranking as a success. The same World Bank released an Ease of obtaining Construction Permits Index. Here India ranks a shocking 183 out of 187 countries. We are in the same club as war torn countries where institutions have collapsed and literally offices which accord approval have been bombed to rubble. It would be welcome if the Government can look into this as well and take pride to improve our rank on this index also.

In terms of policy changes in 2016, Demonetization seems to have had the maximum impact on the economy. While it has led to short term disruption, a long term analysis indicates it will positively impact the economy. Minimizing cash transactions will bring down the unorganized players and formalize the banking system. Keeping a hawk-eyed watch on cash transactions, the Government is trying to get a grip over unfair trade practices, one step at a time. Demonetization along with deregulation will work in favor of the sector and produce the desired results.

What’s in store for the buyers in 2017

It will be an extremely favorable year for home buyers on back of strong reforms implemented in 2016. To begin with, borrowing rates are expected to taper off in 2017 given the huge influx of money in the banks post demonetization. This can set off a cycle, wherein lower rates of interest will direct borrowers to avail more loans at attractive interest rates. In future, owing to low returns it will not be feasible to park one's savings in bonds or fixed deposits, so consumers will prefer to buy property in the future. A simple back of the hand calculation shows that a 1% reduction in home loan rates will lead to almost 7.5% savings in EMI, thereby putting more money in the hands of the consumers. The official economy will see a positive growth in the following months, elevating the purchasing power of the consumer, encouraging the consumers to invest more.

Home buyers can get excellent deals in the market as the industry has just begun to adjust to the new rules. This holds true especially for the first quarter of the year as most developers will look to sell existing inventory, so consumers must make the most of this opportunity and purchase property at attractive prices. New launches will get impacted early on so the demand for available inventory and ready to move in homes will increase. The rise in demand will ensure that prices remain firm and start the ascent once again. So, it will only benefit those buyers who act swiftly and purchase the property in the interim period.

Developers stand to gain too

While the first three months may test the waters for the real estate sector, as the year progresses the tide will turn in favor of the developers as well. There will be a spurt in demand as buyers will return to the market owing to attractive rates and good deals. The coming year will also see the demand shift from secondary market to primary construction owing to erosion of cash-linked sales. This will lead to better inventory utilization and ensure launch of new projects in the second half of the year. We can also expect significant foreign investments in the sector and increased participation from financial institutions, owing to better transparency and credibility post the policy changes initiated last year.

Also, 2017 will see consolidation in the industry on the back of the changing economic scenario that is likely to weed out devious real estate developers. The focus will be on creating products for varied segments of buyers instead of only catering to the luxury market. Demonetization will not affect the established players as transactions take place only through the legal route. The commercial real estate sector will also not be hurt as they cater to office/industrial leasing where all transactions are done through banking channels.

The demographics of our country ensure that the real estate sector needs to grow to meet the demands of an ever growing economy. India is currently growing at 6% per annum, but could reach double digits by 2019 if deregulation is in place. The future of India and the future of real estate are intertwined with each other.