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.

Why Getting Home Insurance Could Be One Of The Most Important Decisions You'll Ever Make

Returning to the comfort of our home is probably one of the most relatable sentiments we can all share and appreciate. Your home is the most expensive and precious asset of all, not only because of the financial aspect but also because so many of your emotions are invested in that one home. This is why understanding home insurance is so important and evaluating the pros and cons of home insurance before making your decision is a real necessity.

Understanding home insurance:

On a very basic level, you avail of home insurance to safeguard your property against physical and financial liabilities. Nowadays home insurance packages are tailored to cater to the specific requirement of the home owners. Here are a few pointers to help you understand these requirements:

1.    Insurance can be for only the building (structure) of your home, or only the contents (belongings) or both.

2.    You will receive a complete coverage against financial liabilities arising from the damage/loss of your home and/or its contents due to natural or man-made reasons.

3.    Additional covers like Burglary and Theft Cover for the contents in your property are also available.

4.    Another feature is additional expenses of rent for alternative accommodation. If you are forced to shift into an alternative accommodation because your home is destroyed or damaged by any insured peril, the insurance will cover your rent.

5.    Besides this, financial institutes also provide home loan protection plans. The insurance company settles any outstanding amount on the home loan with the bank/lender in the event of death of the borrower. The policy term is usually the same as the loan tenure. This way, a borrower can ensure that his/her family will not have to vacate the house due to non-repayment of home loan after demise of the borrower.

As per a survey by Bajaj Allianz, 64 per cent of homeowners felt earthquakes and other natural calamities were the biggest risks their homes were exposed to, followed by fire (28 per cent) and thefts and burglaries (8 per cent).Yet, according to Business Standard, home insurance penetration in the country is a mere 0.07%, this means that 99.93% of the population is willing to leave an important asset unprotected.

What most homeowners need to understand is that in the event of a calamity that could leave you financially crippled, insurance will become your precious backup.

Most people in India won’t commit to insurance because it is not considered a necessity. The Tribune also pointed out that willing Indians are intimidated by the vague nature of home insurance. The fact that the penetration of general insurance industry in India was 0.78 per cent of GDP in 2014 and has barely increased since then does not help either.

It is important to realize that you cannot leave your home at the mercy of fate, because it could potentially be an act of god that wrecks your home. Home insurance will also safeguard your family from financial trouble and displacement. Face the legal aspects of home insurance head on, do your research, consider your options and take one of the most important decisions of your life. Get your home insured.

The Evolution of Indian Home design

The 21st century has seen a major shift in the Indian architectural landscape. Each succeeding year has seen the emergence of newer and more innovative design trends. Whether it’s adapting ideas from the West or reverting back to the age-old Eastern systems, home designing has become a very important aspect of the developer’s plan for their next township or gated community.

Today, more and more homeowners are placing a premium on the way their homes are designed and planned. While different buyers choose different aesthetics when styling their homes, every buyer agrees on their desire for a well-designed space. This is one of the most important reasons for the constant evolution of Indian home designs. History is the best way to gain an insight into this evolution.

Centuries of Tradition

 Although traditionally designed homes faced stagnation post liberalization in the 1900s, we cannot ignore the fact that traditional Indian homes are an amazing tribute to a passive form of architecture that optimizes the environment around them. They have spacious verandahs and rooms that ensure air circulation throughout the house and keep the temperature inside cool and breezy.

Whether we talk about the red oxidized floors of Kolkata, Naalukettu homes in Kerala, Chang houses in the north-east or the Havelis of Punjab, traditional homes are almost reminiscent of an India from a different time. For some of us these homes are a reminder of our native place or childhood days. These homes are a reflection of a different era of home design and the incorporation of our rich culture. These homes were also beautiful tributes to the art, culture and tradition of the region that they belonged to.

The Advent Of The Modern

Jumping ahead to the 21st century, the home design scenario has changed and more importantly, people’s needs and tastes have also changed.

It is quite interesting to observe how an increase in land values and the demand for floor space has pushed architecture on the fast track of change Skyscrapers began to emerge mid- 1990s and an estimated 3000 high rises have emerged in Mumbai alone. Under the pressure of urbanisation and the influence of globalisation, it seems that cities have become the centrepieces of modern design thinking in just the span of a decade. 

Unlike traditional homes with extensive availability of space, our modern homes have begun to kiss the city skylines and embrace heights like never before. These homes are built to provide comfort and luxury to nuclear families. These homes are equipped with automations and planning that ensures that every space has a purpose and the entire home is optimised to the best of its abilities.  This is why, not only are we now used to the idea of more compact homes, we’ve began to appreciate the ease of managing them as well. Contrary to what you’d expect, apartments do not hinder us from making social connections with our neighbours. Just like traditional homes were once part of larger communities, high rises and apartments today have also become strongly bonded communities.

Though modern homes may lack grand verandahs and large social spaces, they have been planned to include clubs and gardens that work just as well in facilitating social connections.

Because of them, living in apartments has started to become preferable to the inconveniences that come with managing a bungalow or row house.

The Contemporary Touch

As modern homes began to dominate the real estate market, our homes began to reflect the modern design and aesthetics as well. As our needs evolved, we’ve learned to adapt. While the current generation gave certain precedence to the functional value of a house, they also crave a cultural touch to these modern structures. The modern homes need to look unique, a reflection of its inhabitants. Herein lies the beauty of the contemporary Indian home design with its ability to retain our traditional touch while allowing for modern needs. Between energy efficient lighting, matte finish paint and hardwood floors, we will still have stylish timber doors, baithaks and ornate walls and as a result, contemporary home design that is still evolving and ever-changing.

The old perception of architecture design as creating spaces of rest, containment, comfort and protection are changing swiftly. Architecture designs are influenced by real life conditions and built on an assumption that any desired change is effective only if it alleviates one’s present living situation. It is safe to say that home design evolution in India is yet to reach its absolute zenith. 

Local vs. Out of State- Where should you invest?

Investing in property is not simple. We need to decide the where, why, when and how before we risk our money. The ‘where’ factor in particular bears great importance especially if you want good returns from your investments. You can either invest locally or explore investment options outside your state.

Here are some factors you need to consider before you invest:

Advantages of investing locally:

●     The local real estate market is a familiar territory. Also, even if you are not familiar, you can still trust a person to guide you in your venture.

●     You are aware of the culture and trends of your local area. This will help you predict the direction in which real estate development is headed in your area.

●     The media and advertisements cannot necessarily fool you into making a bad decision because you regularly monitor the property you intend to invest in.

While you can rely on familiarity as an important factor, there are certain risks you cannot ignore. Here are some drawbacks of investing locally:

●     You may not get the optimal value for money that you hoped for; the market you live in might be very expensive (especially in cities like Mumbai).

●      Only looking at your immediate area narrows down your options considerably.

These disadvantages could drive you to look at property out of state. While investing in property out of state can be daunting - because it is an unchartered territory - it also has certain benefits.

●     No market is out of bounds once you decide to pursue land out of state. Your investment option increases manifold.

●     You can choose a thriving real estate market without compromising your budget. In fact, you might even get better returns than you might expect.

However, investment made out of state come with certain risks; here are some of the disadvantages of investing out of state:

●     Investing out of state is literally entering unchartered territory. You can make an informed decision and do all the research you need to, but you will still not have the intimate day-to-day knowledge that you would have of the local market.

●     There will always be a fear that you might get cheated or that the real value of your investment is less than its face value. Trust will always be a serious concern in an out of state property investment.

●     You will also need to start from scratch in finding quality professionals such as real estate agents, property managers and workers. These people are instrumental in zeroing in on a good investment; your choice will dictate the failure or success of your investment.

Knowing the pros and cons is important when such heavy investments are involved. This is why one must diligently monitor the real estate trends of the chosen location.

It is important to realise that real estate investment is all about having options, especially about where you want to watch your wealth grow and expand, whether it is local or out of state.

The Evolution Of Indian Architecture Over The Past Two Decades

A lot has changed over the past 20 years. Bombay became Mumbai and globalization has taken over the country by storm. There has been a noticeable shift in the lifestyle, food habits, clothing etc. of the Indian populace.These changes have spelled a seismic shift in architectural practices as well.

Over the past 20 years, architecture has been about accommodating people and creating good functional living spaces. It breaks away from traditional aesthetics and strives to create home designs that go beyond “standard” ideas and tries to pursue projects inspired by location, and function.The main objective of architecture in 2016 is creating clutter free homes from the limited space available due to the immense population crunch.

While builders adhered to this concept practically, they also implemented their own tweaks because architecture in India is all about harmony between the old and the new. A very good example of this is Mumbai city. The city has Gothic, Victorian, Art Deco and neo classical styles, most of which were left behind by the British. Even as architectural aesthetics evolved over the past two decades, these traditional styles were incorporated into contemporary architecture.

History also plays an important role in deciding the architecture of a city. Take Delhi for example, it was a combination of 8 cities, which each one built in a different era by a different ruler. Today, even with the rise of modern architecture, the legacy left behind by these rulers is one of the defining aspects of architecture in Delhi.

In more recent years, architecture is not just about the form and style of a structure, it is more responsible now. Architects make conscious efforts to incorporate designs which promote sustainability, vertical gardens and reduce harmful impact on the environment. Not just this, over the past few years, buildings are about promoting a quality lifestyle as well. Clubs, parks, landscapes etc. become serious aspects when designing a structure. 

This evolution of architecture can easily be witnessed through various properties throughout India. Bungalows are making way for spacious apartments and people are opting for more efficient and practical homes.

The continuing evolution of architecture will shape (and reflect) the evolution of India as the country steadily moves towards becoming the best it can be.

The Vertical Garden: Made For Modern Urban Life

Modern cities are some of the most innovative areas on the planet. However, all cities are forced to deal with unique issues brought on by the concentration of large populations in limited spaces. One of these issues is definitely the lack of greenery within the city. In classic concrete jungles, the city becomes stifling for its residents and there is no respite whatsoever. The continuing expansion and growth of the city just adds to the mess.

The French botanist Patrick Blanc says, “Living in a city doesn’t have to mean abandoning the natural world”. He backs up his argument with an amazing solution that he promotes very enthusiastically, i.e., the vertical garden, a fresh and innovative idea meant to improve life in the city. The term ‘vertical garden’ refers to any kind of construction and support structure for growing plants in an upwards-directed, vertical way, efficiently and productively making use of the existing space for other purposes.

Growing a vertical garden is very simple, all you need is a good, solid structure which can be hung onto the wall, a plastic sheet to stop water from leaking, a tube running through the soil to irrigate the garden and the plants of your choice.

Vertical gardens can act as great greenery boosters. According to Patrick Blanc, “Any human being standing in front of one [vertical garden] will feel the breath of the wilderness in the midst of the city." Not only are they simple to create, they also have many advantages, such as:

Maximization of small spaces: A vertical garden can be grown on a wall or a kitchen window, owing to the fact that it can grow on loose soil; a small layer of soil is more than enough to develop a beautiful and fragrant vertical garden.

Excellent Aesthetics: A vertical garden wall can change the entire look of your balcony or terrace. These kinds of gardens add a certain charm to your house as well, lending your home a feeling of lush abundance and a connection to nature.

Reduce Pollution, Noise and improve air quality: Due to its very versatile nature, vertical gardens can be used to tackle pollution very effectively. Thomas Pugh, a ‘biogeochemist’ at the Karlsruhe Institute of Technology in Germany, observed that a green wall absorbed large amounts of nitrogen dioxide and particulate matter—both pollutants harmful to people. These fragrant life walls also cool the surroundings and reduce noise pollution, both of which are the need of the day in modern cities.

Given the relative ease of setting one up and the innumerable benefits that accrue from integrating a vertical garden into your space, one could argue that every home and planned urban space should invest in this facility.  

The Space Crunch That’s Driving The Vertical Growth Of Cities

An aerial view of Mumbai is enough to provide us a glimpse of the unconventional growth of the city.  Mumbai is the third densest city in the world trailing just behind Bangladesh’s capital Dhaka and the Pakistani city of Hyderabad. There are approximately 32,400 people in every square kilometre of its land area. The city has, technically, run out of space and yet, it is more than accommodating at the same time. How is that possible? The answer is vertical growth.

What is Vertical Growth?

Vertical growth is the emergence of high rises and skyscrapers that outline the horizon of the city. These structures support the population of the city, providing additional living space to the thousands who migrate here every day. It is the modern world’s solution to the space constraint faced by cities.

Another important reason why the city is witnessing vertical growth is because Mumbai has the largest number of ultra-high net worth individuals (UHNWIs) in India, at 1,094, followed by Delhi with 545, according to property services firm Knight Frank’s Wealth Report 2016.

 HNIs most preferred investment opportunity tends to be property. The average number of residential properties owned by wealthy Indians stands at four, which is the highest in the world, while the global average stands at 3.7. 

When not only immigrants, but also HNIs occupy the city, the need for vertical growth has become necessary. Vertical growth helps in population management; high rises provide sufficient living space even with the limited land space.

Luxurious living

High rises integrate various facilities like gyms, clubs and departmental stores within their building space instead of occupying more land surrounding the high-rise. This is indicative of the fact that vertical growth inspires sustainable ideas.

Vertical growth also frees up more land space: While the whole intention of high rises was to cope with the limited land space, vertical growth is ensuring that we are actually conserving precious land space which can be turned into green spaces or public recreation zones.

 Redevelopment in the city

One of the best examples of vertical growth in the city is redevelopment.

Housing redevelopment refers to the process of reconstruction of a residential premise by demolition of the existing structure and construction of a new one as per approvals from the Municipal Corporation of Greater Mumbai (MCGM). Redevelopment is a concept that uses vertical growth as a driving force to provide good living spaces for people in a crowded city like Mumbai.

Of course, redevelopment is dependent on FSI or Floor Space Index. In India, FSI restrictions tend to hinder the optimization of a concept like vertical growth.  Compared to international cities, India is far behind. Shanghai has an FSI of 13.1, while New York and Manhattan have an FSI of 15. Mumbai, on the other hand, is still grappling with an FSI of 3.0. Higher FSI is a need of the day because taller buildings are necessary to combat city- congestion.

 A versatile concept that can incorporate sustainable development, vertical growth helps us to make the best of the very real space-crunch situation we find ourselves in.