Chennai: The Next Real Estate Investment Hub

Chennai’s advancement over the past decade as an industrial hub with the rise of various manufacturing industries has led to the development of a lively real estate market in the city. As per the Mercer Survey 2017 Quality of Living Index, which compares all major cities of India, the one city that has made improvement is Chennai. Once considered a less significant investment opportunity in India, Chennai has steadily emerged as a real estate hub to be reckoned with.

If you’ve been sceptical about investing in Chennai, here are some reasons which could make you reconsider:

Safest City in India:

Chennai has been assessed as one of the safest cities in India, jumping ahead of metros like Bangalore, Hyderabad and Pune. The Mercer Survey finds Chennai to be the safest Indian city with a global rank of 113. Chennai achieved this, based on points for internal stability, lower crime levels and efficient and capable local law enforcement. These factors would go a long way in influencing a potential real estate investor looking to enter a new territory.

Booming Business and Industry Sectors:

Sectors such as IT, the automotive industry and electronic manufacturing industry in Chennai have been constantly growing. Many companies have been investing in the city, which has given rise to employment opportunities, good connectivity and an abundance of housing options. Back in 2013, commercial offices had occupied spaces around 4 million square feet. Most of these occupants were IT/ITES companies that employed around 4.5 lakh people. Four years later, the growth has only been exponential.

Public Transport:

Chennai offers a variety of public transport systems for commuters, making it easy and fast to reach destinations. These diverse transportation systems include the Chennai Metro Rail, Chennai Mass Rapid Transit System, buses, taxis, rickshaws, etc. The government has been making efforts to improve its bus services and routes to ensure hassle free commutes. Also, in a country like India where women’s safety is a huge concern, Chennai is a city which offers safe commute to all.

An efficient and modern transport infrastructure makes any city a preferred choice for investors. With its long-term investment in developing urban transport, Chennai is now a much sought-after investment with long-term potential.

Education and Health Care:

Chennai is known to be one of the best destinations in terms of education in India. There are well reputed educational institutions such as NIFT, IIT and Loyola College. Known to be the ‘Health Capital of India’, Chennai has access to the best health care and medical facilities. Examples of such health care centres are Apollo Hospital, Fortis Malar Hospital, etc., marking Chennai for its quality of life.

As you can see from the above points, with abundant opportunities and thriving development, Chennai has a very bright future as an investment hub.

At House of Hiranandani, Chennai has been an area of focus for a while now. With a number of important developments, like our world class projects on the Old Mahabalipuram Road in Egattur, we have ticked all the boxes for location, luxury offerings and connectivity. In fact, one of our projects at the OMR - the Anchorage - is designed to be the tallest building in Chennai. As a company, we are committed in our focus to develop world-class housing projects in the city of Chennai.

Why Bengaluru Could Be The Indian City Of The Future

According to Knight Frank’s 11^th edition of The Wealth Report 2017, Bengaluru is among the top seven hotspots around the world that present exciting opportunities for private property investors in 2017 and beyond.

In another survey - Jones Lang LaSalle's fourth annual City Momentum Index of cities around the world – Bengaluru is placed right at the top of the World’s Most Dynamic Cities, beating out the likes of Shanghai, London, Dubai, New York and even Silicon Valley in the US. This index tracks the speed of change of a city's economy and commercial real estate market. It covers 134 major established and emerging business hubs and identifies cities that have the potential to maintain the greatest dynamism over the short and long term.

According to Jones Lang LaSalle, "Most dynamic cities share the ability to embrace technological change, absorb rapid population growth and strengthen global connectivity.”

The Passport Cities Database projects that Bengaluru will be one of the three Indian cities to record the fastest rate of real GDP growth over 2016-2030, making the future of the former ‘Garden City’ look very rosy indeed.

With an eye on the future, House OfHiranandani has already been steadily developing a diversified portfolio of properties in Bengaluru. In case you haven’t seen them yet, have a look at these impressive video vignettes of the well planned developments in Devanahalli, Hebbal and Bannerghatta.  Also, this video explains why we continue to push for growth in South India.

Bengaluru’s success can be attributed to three major factors:

One, known as the ‘Silicon Valley Of India’, it has attracted some of the brightest and most ambitious scientific and technological minds from around the world.

Two, government involvement seems to have worked to Bengaluru’s advantage. Here, the government has, over time, promoted investments in the city and developed a positive relationship with business and industry. There are a number of government initiatives that are bound to further enhance Bengaluru’s reputation as a city with an eye on infrastructure development: the proposed Mumbai-Bengaluru Industrial Corridor, the under-development NICE expressway that will connect the city to Karnataka and Mysore, and the expansion of the Namma Metro system.

Thirdly, Bengaluru, with its high standard of living and ease of doing business, has been steadily attracting some of India’s wealthiest individuals. According to ET Realty, “the city has 220 Ultra High Net Worth individuals, a number which has grown by 15% in the last one year.”

Many decades ago, India’s first Prime Minister Jawaharlal Nehru had predicted that the then-sleepy Garden City would be India’s ‘City Of The Future’. Now, with Bengaluru being declared ‘The Most Livable City in India’ in 2012 and with its most recent accolades, it would seem like our esteemed late Prime Minister’s prediction might be truer than we could have imagined. 

Follow Passion, Find Success

Looking back at my journey, though I had initially started my training in the medical field, destiny led me towards architecture which in turn is what I am today.

In those days (1980s), land was easily available on deferred payment wherein you could put up your signage, start selling and use that money to get approvals and then start constructing. Our first bad experience with one of the initial land proposals that came our way, is where we got to learn of the risks involved in starting anew. Nevertheless we took that risk and started our first project in Versova at a rate of Rs.241 per sq ft.

Since we were always short of capital, we believed in purchasing something that could be available on the above terms and then launch it.  Later we bought this land in Powai where there were multiple land owners which added to the risks though but we still went for it, Powai being a big challenge.  Slowly we assembled this into a large land parcel and started selling it at Rs 450 per sq ft in 1986. In the initial years, we suffered losses in Powai, but the continuous thought in mind that we would definitely profit in the next phase made us accomplish a lot of land in the interim. Post this we started aggregating land in Thane.

I have always done only architecture and construction. Legal, accounting and liaising have been necessary evils. We are better known for our engineering function rather than finance circles as we have never raised money. People who have worked for us always get promoted faster when they go elsewhere. We had huge training programs set up by Anthony Remedios, a Goan [architect] who was passionate about design and architecture.  

For me, at the end of the day, I want my business to be about creativity of design rather than creativity of financing.

Following my passion, I can feel the rewards.

Budget 2017: A Push for Reform

As business leaders, the annual budget is always an occasion we await with a mix of optimism and trepidation. This year’s budget, presented by Finance Minister Mr. Arun Jaitley was a welcome push for stability and calculated, measured growth.

A positive outlook overall

I would call this year’s budget a ‘reform oriented budget’ where the expenditure is focused on economic growth and development, especially in the rural areas. It also reflects the government’s intention to improve the investment climate with a view to stimulate growth. The massive push for improvement in infrastructure -  including record capital expenditure for roads and railways  - will indirectly benefit the real estate sector in the long run.

A step In the right direction

Another positive initiative is the move to grant infrastructure status to affordable housing as it will act as a catalyst to the government's vision of Housing for All by 2022. This will lead to higher participation by private players in this segment as they can have access to institutional funding and other government subsidies. Along with tax rebates for the salaried class which will lead to higher disposable income and interest subventions, this can be a potential winner in the long run.

A suggestion: the government should redefine affordable housing clearly, keeping in view the different geographies in India.

Similarly, the decision to increase the qualifying unit area for affordable housing from built up area to carpet area will lead to an increase of around 20% per unit for the end user. Also, increasing the time frame for completion to 5 years indicates that the government acknowledges the practical and operational difficulties faced by developers in this category.

Sound Policy

The decision to tax capital gains on Joint Development Agreement upon completion of the project is a significant move. However, more clarity is required to avoid litigation which is bound to happen given the current ambiguity. The tax break of 1 year post receipt of the completion certificate, for the unsold stock, and reduction of long term capital gains to two years will provide respite to investors and developers alike.

Looking To The Future

While these initiatives are noteworthy we need to remember that Deregulation will be the key to the success of various government initiatives. 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.

The other major concern remains that corporate taxes and dividend distribution tax remains the highest in the world. We hope this is addressed in the future to attract more investments in the corporate sector.

Here’s looking forward to a prosperous and stable 2017 for India and our industry.

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.

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.