The Real Estate Sector in India is Set to Grow to New Heights in 2015

Since the inception of the new Government, there have been a growing positivity amongst the real estate Indian sector. The builders are coming up with new projects hoping good returns from the investments and new developments that has taken place.

Within a time period of six months or so, the new Government shows new hopes for the growth of the property market in India. Be it the residential or the commercial segment, the Government has taken a toll to create new policies that are two-pronged, providing better access to fund on the one hand as well as prolong liquidity to the end-users strengthening affordability. These steps are aimed to offer a balance to this sector of demand and supply in the near future.

Allowing the foreign direct investments upto 100%, the Indian government has shown a green signal to

The Indian developers and encouraged them to come up with real estate projects. This is applicable to the townships, commercial, housing as well as industrial developments so as to boost the infrastructural activities in the nation. There is a provision for reduction in area ranging from 50,000 sq.m. to 20,000 sq.m. as well as reduction in minimal capitalisation for the FDI investment from $5 million to $10 million. It helps boosting urbanisation, particularly in th tier-2 and tier-3 localities, which are struggling to get bigger projects.

Remarkably, the government has been encouraging investments from the Person of Indian Origin (PIO) and Non-Resident Indian (NRI) communities. Developments such as REITs shall open new channels for both the residential and infrastructural or commercial sectors. All of these measures lead to rise the confidence of developers, investors and end users. It is expected to change the way 2015 is perceived for the sector dealing in property in India. This will definately create a better an environment for growth for the real estate, supported by a stronger economy as well as a better consumer or end-user confidence. Some of the localities that are already experiencing this growth are:

• Chennai
• Pune
• Kolkata

Chennai

Navalur is also among those regions which give higher rental rental as the workforce don’t mind paying rent on a bit higher side, as it is close to their workplace  and helps them to maintain a balance between their professional and personal life. Hence  Sholinganallur, Thoraipakkam and Navalur are worth exploring as good investment options for those buyers who look for long-term results in terms of rent.

Moreover, the region is growing infrastructure development and employment opportunities are another reason for the rise in property value terms of resale as well as for renting purposes.

Pune

When it comes to luxury projects in Pune, they are defined to have units which measure more than 3500 sq. ft. and are in addresses that signify prestige and status. The prices per square feet of such properties are more than Rs 12,000. The top three localities in Pune that are buzzing with the residential projects are: Koregaon Park, Kalyani Nagar and Baner. The large numbers of ITeS-BPO and IT companies have completely changed the shape of the property market of the area. High quality residential property options have come up in the city all over. 

Kolkata

The top four suburbs on which home builders such as Godrej and Unitech are concentrating on are:

1. Rajarhat-New Town
2. BT Road
3. Tollygunge
4. VIP Road

Numerous schools, hospitals and shopping zones are in the vicinity of the area. There are various options for those who are looking to invest in property in India.

NRI’s Legal FAQ's - Frequently Asked Question Part -1

This is a three part series, wherein our experts answer all NRI questions related to buying property in India.

Whenever an NRI or PIO plans to buy a new home or any property in a foreign country, they tend to seek clarity in certain areas. These questions will answer all the common customer queries about owning and buying a property in India. Refer this NRI guide sectioned into legal, home loan and tax categories, to accustom yourself with laws, rules and important information on the Indian real estate sector. 

Legal FAQs

Q1. Why to invest in property in India?
Ans: To tap the potential of Indian real estate market and expedite the sector with a double digit growth rate, the developers have shifted their focus to offer timely possession of projects and adapt to the new FDI rules.
The economic contribution of the real estate sector is most likely to increase significantly during the period, from 6.3% in 2013 to almost 13% in 2025. This spiral growth is attributed to the intensive demand for first-rated projects that can be delivered on time.
During H1 2014, prices in Bangalore have appreciated at the fastest pace of 11%, compared to H1 2013. Mumbai, currently suffering a downfall of 49% is expected to recover the sales volume by the end of FY 2014. As real estate demand in India improves, capital values in other major cities are also likely to increase, albeit marginally.
Purchasing a property in India, thus, stands as a top priority for a non-resident Indian (NRI). The purchase transaction is governed by the Reserve Bank of India (RBI) and the rules and regulations that fall under the purview of the Foreign Exchange Management Act (FEMA).

Q2. Who is an NRI?

Ans: Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).

Q3. Who is a PIO?
Ans: Person of Indian Origin (PIO) (NOT being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who
(a) At any time, held Indian passport, or
(b) Who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

Q4. Can an NRI/PIO purchase immovable property in India?
Ans: Under the general permission granted by RBI, the following categories can freely purchase immovable property in India:
(a) Non-resident Indian (NRI) - that is a citizen of India residing outside India
(b) Person of Indian Origin (PIO)- that is an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who:
(i) At any time, held an Indian passport or
(ii) Who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). 

The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land/plantation property/farm house in India. OCI can purchase immovable property in India except agricultural land/plantation property/farmhouse.

Q5. Can an NRI/PIO acquire agricultural land/plantation property/farm house in India?
Ans: It requires specific approval of Reserve Bank of India and the proposals are considered in consultation with the Government of India.

Q6. What is the Tax treatment for income generated from property selling or renting for NRI/ PIO/OCI?
Ans: The mere acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (it is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner.
  
Q7. Is there any restriction upon the number of properties bought by NRI/PIO/OCI?
Ans: There is no restriction on the number of properties that can be bought.

Q8. Is there any specific way of payment for buying / acquisition of immovable property by NRI/PIO should be made out of?
Ans: There are multiple ways as mentioned below:

      (a) Funds received in India through normal banking channels by way of inward remittance from any place outside India
      (b) Funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank
       (c) No payment of the purchase price for acquisition of immovable property shall be made either by traveler’s cheque or by foreign currency notes or by other mode other than those specifically permitted as above

Q9. What are the key points to be considered at the time of purchase?

Ans: Investment in real estate is a simple but long-term move so, one should be cautious enough at the time of purchase to secure the deal.

Few points of consideration are mentioned below:
   (a)  Property Title: The title of property should be clear from the issues and the seller should have the required right to sell it, especially if it is inherited or any joint property.
  (b)  NDC: Always check that there will be no outstanding electricity/water bills or any other authority dues pending with the property. Take a no dues certificate from the seller at the time of purchase
   (c) Bank release letter: It is advisable to take the bank release letter from the concerned bank, if the property had been mortgaged as security in any type of loan
  (d) Permits: The property for sale should have all approvals and permits from the civic authorities in terms of construction
  
Q10. What are the key points that ensure a safe deal to buy a property in India?

Ans: Below are the key safety measures to be considered while buying a property:

  (a) Whenever you plan to invest in real estate, you should go through the proper channels, either through a Reliable Broking Firm, friend or relative to ensure the authenticity of the property
 (b) You can also approach through property expos and seminars to choose a right property and select reputed developer
  (c)  It will be wise to get the title papers of the property verified by a lawyer before going ahead
If and when you want to purchase /dispose the property, you can give Power of Attorney to a reliable person who is resident in India & who may be able to act on your behalf to complete formalities such as registration, possession, execution of the agreement of sale, etc.

Read Other FAQ's:  Tax NRI FAQ's , Home Loan FAQ's

About the Author: Naveen Kr. Jain, VP, Head of Operations & Customer Services, IndiaHomes Property Group, is an MBA & LLB with 16 years of experience in operations and customer services. At IndiaHomes.com, he is responsible to ensure that all processes, policies and practices followed by the organisation are customer centric and should result in an optimal solution for the end user. Naveen has held senior leadership roles in ING Vysya Bank, HDFC Bank & Stock Holding Corporation of India. Being a certified six sigma black belt & ISO 9001: 2008 lead auditor, the implementation of quality management systems and standards for operational excellence have been Naveen’s key strengths and areas of focus.

Transforming home buying experience

Home buying experience has been much simplified compared to what it used to be even a decade ago. No more do home seekers have to rely solely on brokers to locate the best properties within their budgets. Real estate websites provide a holistic solution to home seekers in netting their dream home within an affordable budget.

Real estate websites not only work as property consultants, advising you about the different profitable residential communities coming up within the city, but also accompany you for site visits and help you with the paper work. For instance, on IndiaHomes, more than 600 employees work collectively to make home buying a pleasant, fruitful and hassle free experience for home seekers.

As a buyer or investor, you should look for the parameters to choose the best property available within your preferred location(s), budget or specification(s). Consider the nearby projects, the profitability of investing in certain areas around the city and similar factors. Home buying may be a personal affair, but there is no harm in trying to find out the best value of your selected property. You can also participate in the discussions being held on several websites where people share their myriad home buying experiences. You could take a tip or two from their experiences to ensure that you get the best option.

To transform the experience of buying a property, you can register your name, mobile number and other details on the website. IndiaHomes provide a 5 minute call back facility to discuss your requirements. They will explain you the pros and cons of the residential community. Not only will they help you in selecting the right property, but also in getting your loan approved at the lowest possible interest rate with a feasible repayment plan.

Reputed real estate websites often give special offers on occasions. For instance, IndiaHomes offered to pay Rs. 1 Lac to select home buyers on completing 5 years in business. Recently, the company conducted a real estate sale for buyers to pick the best properties in India as per their budget. 

If you liked this, you may also like to read.

What’s bringing the investors to the Indian real estate market?

How & when should you start planning for buying a home?

Are you paying the right price for your apartment

Despite an expansion in cities, property prices are far from being affordable. Even in the far-flung areas of cities, prices of apartments are more than Rs 10 lakhs or so. Buying individual houses is out of the question for salaried individuals. Developers release attractive ads for the properties they are building, advertising the amenities that they are building within the residential community. Think this over- should you pay 20-30 percent more for an apartment simply because it has a swimming pool or a community hall built in? These amenities would hardly count at the time of valuation of the property.

There are certain factors that you must use to determine the correct price of the apartment. Some of them have been discussed below:

  

Possibilities of Capital Appreciation:Even though most of us buy property India for end use, it does not harm to find out the prospects of capital appreciation for the property India. Rarely does land depreciate in value and hence you should know the growth trajectory of capital value before buying it. Some aspects which determine the capital value growth of a property India are:

Connectivity of the property:For rapid capital appreciation, a property has to be well connected to the rest of the city. Properties which are located near a railway station or the airport undergo rapid capital appreciation. Modes of transport such as autos, taxis, rickshaws and buses must be available from the property to the central business districts. Having a metro station near the locality is an added advantage. 

  Infrastructure available: A locality which is self-sufficient does well in the property market. Greenery, wide roads, proper sewerage and water connection, garbage collection facility, cleanliness, absence of slums, uninterrupted power supply and security are some of the infrastructural factors that determine the rate of capital appreciation. There is no point in buying a luxury apartment in a residential community which is based in a slum area.

  Social Fabric: You would not be too inclined to travel 4-5 kilometers for your everyday needs. Therefore, the locality that you select should have grocery stores, super markets and departmental stores, banks and ATMs, schools, entertainment areas nearby.

  Projection of the builder for a flat: Builders use a lot of technical jargon in order to attract buyers. By quoting large numbers, they want to impress buyers into booking properties. However, research a little into the quality of the construction and the flats on offer before booking one. The common configurations on offer are 1/2/3 BHK flats by builders. However, the area of each flat is projected in a different way. 

Some of the common terminologies used include:

  Carpet Area: The area of an apartment from wall to wall.

Cover Area: The area under the roof of an apartment.

  Built up Area: The area of the apartment including the thickness of the walls and columns. Compared to what the actual area of the property India is, this is almost 10 percent higher.

  Super Built up Area: This measurement not only considers the built up area but also common spaces used by the flat such as the lift, staircase etc. This can go up to almost 50 percent of the flats.

Many builders tend to dupe buyers into booking for properties by quoting the built up or the super built up area. As a conscious buyer you must always consider the carpet area on offer as that is the space that you will actually enjoy on the property.

How Online Property Listings Help You

Prior to buying anything today, we look up the internet even though we do not necessarily buy the item online. From books to cars to property, everything can be bought online nowadays. India real estate has progressed much not only in terms of sales volumes but also quality of construction because of online property sites. These websites have informative articles which inform buyers of the amenities that they should look for, the type of apartment to buy, calculation of property prices in a city and overall information regarding India real estate.

Online property listings are sorted according to the locality in which they are based, the type of property, configuration of the apartments, amenities available and other information. Buyers can look through the listing to find properties that suit their requirements and budget. Most major builders list their under construction properties on these websites for better information dissemination. The gap between buyers and sellers are bridged by the online property sites. The involvement of brokers is reduced in property dealings greatly buyers can directly interact with sellers and buy from them. Brokerage charged usually by middlemen is usually 1-2 percent in cities, which can be almost Rs 1 lac for a property worth Rs 1 crore. Buyers can save this amount if they do not get in touch with a broker but directly contact sellers.

Online property listings not only inform you of the different properties available in a particular area of a city but also have property articles, live chat forums and interviews scheduled with experts of India real estate. Participating in these live chat forums and interactions with eminent participants of the Indian real estate market can offer insight to buyers regarding the kind of property they should buy. It would not only be cost effective but also more rewarding in terms of capital gains.

Property listings also include links to the builder’s official websites that you can visit for obtaining the floor plan of a building. Videos of the sites under construction are often uploaded on the website and by viewing these, buyers can get a clear idea about the type of property that they are looking forward to buy. Most of these property websites have launched apps which can be downloaded from the application stores such as iOS, Android and Windows. These apps allow you easy access to the latest property listings from a tablet or a smart phone.

Online property listings not only help end users find good properties based on their requirement but also aid investors who cannot visit a particular site to see the project under construction. Usage of these websites is very simple and they do not require payment of any charge for the services rendered. In fact, you can sign up for the weekly or fortnightly newsletters that these websites send out. These news letters not only bear information regarding their own company but also property development in India real estate. These newsletters are very important when it comes to developing your knowledge base in Indian real estate.

Online listings can provide more than simple listings and therefore you should visit them before buying any kind of property.