CREDAI MCHI - Thane Unit: July 2016

Wednesday 27 July 2016

It makes sense to own a second home NOW

A look at some of the key reasons why this particular option could even be the best form of investing for a salaried individual

Most people with investable surpluses tend to stay focused on the financial markets, whether it is debt or equity. Very few venture into real assets such as gold or real estate. An investment in a second home is an effective way to build wealth in the long-term. Let’s examine the various reasons why this could even be the best form of investing for a salaried individual.

Outlook for real estate

Real estate prices in India have grown at between 15% and 20% annually, over the past 50 years, across cities and across various reasonably long (10 year) time frames. This growth is projected to continue, given the combination of various enabling factors. These include a favourable demographic distribution in the country, increasing urbanization and an increasing preference for nuclear families.

Such returns are comparable to those in the equity capital markets. In fact, there is the additional advantage that one is spared the variability and risks associated with investing in equities. For example while the BSE Sensex has multiplied 160 times since 1979, the components of the Sensex have been changing constantly.

Tax efficiency factor

There are several tax advantages that can be availed by investing in a second home. These include:

The rent received from the second home (less 30% for repairs and maintenance) can be set off against the interest paid on the home loan taken for the flat. If the rent received is less than the interest paid, then the resultant ‘Loss from House Property’ can be set off against your regular income. Thus, there is a tax hedge provided be the property till it begins to pay for itself.
When the house is sold, the acquisition cost (adjusted for indexation) is deducted from the sale proceeds and only the balance is taxable , if the house is held for more than 3 years.

Ability to leverage

The purchase of a second home is one of the few form of investment for which leverage is available for salaried individuals. It is possible to invest in a second home by putting only 20% of the cost of the home as one’s equity, and take a loan for the rest.

Financial logic involved

So then, the financial logic for investing in a second home is simple. Assume the following. You own the asset by paying only 20% of the cost. Your average cost of financing the remaining is 10%. The rental yield is 3% and property appreciates by 12% every year.

To understand your financial situation every year, see the box below. As is evident, the return on the investment is quite healthy. The municipal taxes to be paid and the costs of maintaining the property have not been shown. However, the overall picture does not change significantly even with their inclusion.

The psychological factors

A house is a stable asset and is not bought and sold frequently. Consequently, it allows a longer time frame for any appreciation to play out. There is no greed or desire to cash in when the prices are high and there is no panic when prices do not rise.

An important psychological factor is that real estate prices do not fluctuate on a daily basis and there is no mark to market that is available on a daily basis. This makes the house a comfortable asset to hold.

There's a flip side

There are some factors that one needs to be aware of, before buying a second home. You should be comfortable with the monthly installment to be paid over the long term. Also, a property takes some maintenance and monitoring. Those with transferable jobs will find this especially challenging.

Additionally purchase of property entails a thorough evaluation of the developer, his track record and other legal aspects of the property. In summary, a second property is a worthwhile investment, especially for the salaried class. It is an efficient way to build wealth in the long term.

To Buy Property in Thane or Know More about Builders and Developers Contact MCHI Thane at 022 2580 6868

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501, 5th Floor, Plot No - A-123/4,
Odyssey IT Park, Road No. 9,Wagle Estate
Thane (W) - 400 604, Maharashtra, India

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Telephone : (+91) 22 2580 6868
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Monday 25 July 2016

Advantage of living in Thane

The city has a desirable profiling on the Mumbai real estate map as it remains a mixed bag offering multiple housing options, which includes affordable to ultra-luxury projects.

With several new infrastructure projects in the offing, Thane has emerged as the preferred choice for any real estate investment.Besides the relative affordability factor it offers as compared to any other area in the Mumbai Metropolitan Region (MMR), several new-age home-buyers are zeroing in on a property in this part of the Central suburbs.

While Yeoor Hills and Parsik Hills envelop the city and add scenic beauty , about 33 lakes spread across Thane bring forth ample opportunities for watersports and recreation. Besides natural beauty , Thane has many landscaped gardens, including the famed botanical garden, which is built by the Thane Municipal Corporation in collaboration with the forest department.

The availability of large tracts of land vacated by industries has triggered the development of integrated townships in Thane. These townships offer a methodically-planned environment with better infrastructure, retail and commercial spaces within the premises.

In the past few years, infrastructure facilities have improved with the construction of SATIS (Station Area Traffic Improvement Scheme) and multiple new flyovers on Ghodbunder Road. The three flyovers and one upcoming flyover in Thane will help ease the overall vehicular traffic. It is well-connected to the eastern suburbs by the Eastern Express Highway and to the western suburbs. The city also has connectivity to Navi Mumbai by both trains and roads. Connected via three major highways, including NH3, NH4 and Eastern and Western Express Highways, the city is being equipped with superior infrastructure such as subways and flyovers that will boost the overall infrastructure of Thane. Mumbai Metropolitan Region Development's (MMRDA's) metro project aims to connect Ghatkopar to Ghodbunder Road followed by Dahisar, which will also improve connectivity between Thane and the western suburbs. Some of the major projects which have dramatically changed the overall profile of the area include SantacruzChembur Link Road (SCLR), proposed fourth phase of the metro, underground tunnel from Manpada to Borivali, and two proposed monorail lines that will connect Thane with Dahisar and Kalyan respectively. Currently, there are seven flyovers that are in various stages of construction which will connect Thane with Dahisar and Ghodbunder Road with Bhiwandi.

The development of infrastructure projects has also been instrumental in reducing the travel time between Thane and Mumbai and Thane and Navi Mumbai to 25 minutes from the earlier 40-45 minutes. Infrastructure develop ment has thus played a major role in bringing the city and its peripheral area into focus and making it an attractive destination for home-buyers.

Thane is likely to witness a sea of change in the infrastructure with the development of some of the following projects -Wadala Ghatkopar metro line to be extended to Teen Haath Naka and Kasarwadavali near GB Road.

Similarly, Thane-Borivali tunnel is scheduled to be completed by 2019, which will further improve connectivity and bring down this distance to less than ten minutes. In addition, Elevated High Capacity Mass Transit Route (HCMTR) will lead to equitable distribution of road traffic through Thane.

A large proposed infrastructure development, including tourism and water projects in Prime Central Thane. With the proposed smart city project, the realty landscape in Thane is set to witness a paradigm shift.

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Friday 22 July 2016

Real estate sector to be a $180 billion Indstry by 2020: CII

By 2020, the real estate sector will be a $180 billion industry, shared experts during the 12th real estate sector annual conference organised by Confederation of Indian Industry (CII). The major growth drivers for the same are government initiatives such as Real Estate Regulatory Act (RERA), 100 Smart Cities programme, real estate investment trust (REIT), Goods and Services Tax (GST) and Make-in-India initiative.

Commenting on this, Sriram Kalyanaraman, Managing Director and Chief Executive Officer, National Housing Board (NHB), shares that Smart City projects, digitisation of land records, relaxation of corporate tax from REIT will contribute to the realty growth which will infuse positive investor sentiments. Further, home loan disbursements done by NHB have been very encouraging.

Pinaki Misra, Member of Parliament and Chairman of Parliamentary Standing Committee on Urban Development, shared that the support from Centre will be crucial for real estate sector to grow.

The experts also felt that the government and private sector need to collaboratively contribute to the development and growth of the sector. Getambar Anand, Chairman and Managing Director, ATS, adds that the real estate sector is performing well due to good demand for housing and the government should ensure that the regulations do not drive away investments from the sector. Meanwhile, Anshuman Magazine, Chairman, CBRE - India and South East Asia, is of the opinion that for Indian real estate to sustain, there are two key pillars, namely, a balanced regulatory framework and healthy financing environment. Further, policies such as REITs and RERA will provide impetus to the sector.

Rumjhum Chatterjee, Chairperson, CII, shares that the Real Estate (Regulation and Development) Act 2016 will form a high-level framework to infuse positive investor sentiments. In addition, initiatives such as Smart city projects and 'Make In India' will aid the growth to the sector and attract foreign investments.

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Wednesday 20 July 2016

Central calls for stamp duty reduction to boost affordable housing

With an aim to boost the affordable housing in the country, the Union Government has urged all the states to slash the stamp duty charges on property registrations for poor people. Speaking at the Assocham's'Finance for Housing for All' event, Venkaiah Naidu. Union Minister for Urban Development. shared that a letter for the same has been sent to all the Chief Ministers of the states for reducing the stamp duty.

The charges are as high as 10 per cent in some states which adds to the burden on the affordable housing home buyers. While some of them have already agreed. others are expected to follow suit soon. Earlier, the stamp duties were charged for maintaining the records, however, now it has become a revenue source.

The 'Pradhan Mantri Awas Yojana' or affordable housing scheme for the urban poor will be executed in about 2,508 cities across 26 states. Naidu further added that the government is taking various initiatives to promote ‘Housing for All’ such as modernising and digitising the land record, single window clearance, online submissions and approvals within 60 days. These will help in ensuring transparency and accountability to curb corruption, harassment, delays and huge cost borne by end-users.

He also shared that with the passing of the ’Real Estate (Regulation and Development) Bill', the states will now be required to set up regulators within one year. This will further provide impetus to the ‘Housing for All' initiative.

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Monday 18 July 2016

HANE: Mapping the Growth Tale

With a slew of new projects, robust connectivity and social infrastructure, Thane has emerged as a hot investment destination among home-buyers.

Consistent buyer demand for properties in Thane has been well-received by the developer community, who have launched a number of new projects in the region. In the last two decades, this suburban region has transformed very rapidly and is now dominated by high-rise buildings.

MAKING A PROPERTY INVESTMENT:
Shirin Sudhakar acquired a ready-to-move-in 2-BHK house for an all-inclusive cost of around Rs 22 lakh last year. Having paid back the bank loan taken to fund this acquisition in 2010, Shirin decided to in-vest around Rs 80 lakh in another 2.5 BHK apartment in Thane near the Eastern Ex-press Highway.

Thane has both, affordable and luxury housing units to offer, thus diversifying the options for buyers. Due to the infra-structure development, the area boasts of the best residential townships, hospitals, schools and social infrastructure, thus making it one of the fastest developing districts for affordable, premium and luxury housing.

Moreover, the increasing cost of construction and continuous demand for properties has outstripped the supply in the area. Being the only affordable haven around Mumbai with a developed infra-structure, housing demand tends to in-crease for properties priced below Rs 70 lakh.

Property experts are also of the view that 2-BHK apartments are being pre-ferred, especially if they are priced below Rs 50 lakh. According to Magicbricks data, there are over 19,000 properties available for sale in Thane. More than 400 new projects are under-construction. The most available property types in the locality are 1, 2 and 3-BHK units. There are modem amenities available in these residential complexes such as club house, coffee lounge and restaurants, private terrace gardens, barbecue pits, a dance studio, including others.

A Harikesh, senior vice-president, sales and marketing, Tata Housing Development Company Limited, recently said that Mum-bai will always remain a preferred destination for property buyers. In fact, due to the robust connectivity, the Thane-Kalyan belt has immense market opportunity. The area is accessible to the island city and of-fers properties that fit a buyer's pocket too.

GOOD CONNECTIVITY TO THE SUBURBS:
Moreover, the suburbs beyond Thane are growing gradually as they have infrastruc-ture as well as the connectivity edge. Till a few years ago, the place used to be an industrial belt. Today, one can easily reach Navi Mumbai via Dombivali through the pipeline road. The area is directly linked to Chhatrapati Shivaji Terminus (CST) and is well-connected to Thane, Kalyan, Dombivali, Panvel and Navi Mum-bai via the state transport and local bus network.

The government has also proposed a monorail on the Thane-Kalyan-Badlapur corridor, which will further help to im-prove the connectivity in the city, adds Harikesh.

DO HIGH-STOREY BUILDINGS:
Most recently, the area has received the clearance from the municipal corporation for residential towers that will have more than 27 storeys. Presently, the height of several projects in Majiwada, Manpada and even Kolshet, has reached 92m and developers say there is a huge market for projects that can go higher. Structures in Thane can go much higher since there is no restriction on the maximum number of storeys in the Development Control Regu-lations (DCR).

"The approval will help increase the number of residential units in Thane. Pro-jects in areas like Pokhran Road, Manpada and Majiwada, are likely to benefit from this move as per our initial feasibility esti-mates," mentions Jitendra Mehta, secre-tary of MCHI-CREDAI Thane unit.

Besides these, government policy re-forms have also boosted consumer senti-ments towards first-home and end-user purchases. It is further expected that there will be a further acceleration in Thane's real estate market in the coming times. Therefore, home-buyers can consider Thane as the next investment destination!

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Friday 15 July 2016

Families with small children need to factor in proximity to educational institutions

Each year, the monsoon season brings one concrete reality to the forefront as small children leave home in the early hours of morning and queue up for transport to attend school, braving the torrential rains. At such occasions, the thought comes to mind that this pattern will repeat itself year after year. Parents who had done their best to keep children out of the way while selecting their home suddenly find themselves focusing on this aspect.

Basic questions come to mind. Will the rainwater drain off or flood the surrounding area? Does the public transport system directly connect this area to places where educational institutions are located or not? Will my child be able to commute from home to school and back without any hassles or do I stay on tenterhooks if there is constant heavy rainfall beyond three hours?

Managing floods
Each year, while Mumbaikars are battling floods and traffic jams, there are certain rare occasions when a holiday is declared for schools and colleges. The rationale here is that students make up a substantial portion of commuters and the influx of private school buses and individual vehicles used by parents ferrying children would only add to the chaos and hamper the restoration process.

Safer option
In situations where institutions are compelled to send students home earlier than usual due to incessantly heavy rains or flooding, it has been observed that walk-in students reach home much faster and safer than their counterparts relying on transport. This, by itself, is a vindication of sorts of their parents’ decision to opt for a home close by.

Priority factor
In fact, the recurring instances of heavy rains disrupting transport facilities has several young couples with small children opting for a home that has proximity to their schools rather than to other facilities. This trend has also shaped the demand pattern for housing from new residents in emerging locations to a larger extent. After all, if one is moving to a location where infrastructure is still being developed and public transport facilities are rudimentary, being able to ‘walk to school’ can really be a godsend.

Buying patterns
At places across the Mumbai Metropolitan Region, it has been observed that the demand for housing in certain areas has received an impetus primarily because of the infrastructure, including good schools. To a large extent, buying patterns have changed drastically once people began considering emerging locations. These days, most people look for a place with a very holistic view; it is no longer only the space within four walls that matters.

Holistic development
The complex as a whole, its amenities and facilities, the locality, kind of residents or inhabitants, proximity to various necessities like the railway station, bus stops, schools, the proximity to various other suburbs, the connectivity to other suburbs, also play their own role in the decision making process.

Given such a scenario, schools do influence the decision to a significant extent, especially when it comes to the double income families. In cases where both parents are working, they more often than not look out for homes near good schools as it becomes very convenient for children to return home safely even during floods.

Multiple benefits
Access to educational institutions has always been a key factor influencing home purchase decisions. At one stage, residential buildings within a short radius of a ‘good’ school were able to command a premium because it meant greater convenience in the child’s commute. The fact that having a home in proximity to the school also increased the chances of getting admission was etched in stone so to speak.

As Mumbai developed further, its extended suburbs and peripheral areas began to grow but the lack of quality education institution slowed down the process. The situation changed with projects where the presence of a school within the premises in addition to other lifestyle facilities actually encouraged people to buy homes there as it provided a completely holistic experience.

At this stage, the developer community began to actively get into a field that had once only been of academic interest to them. Instead of merely identifying quality schools and colleges, they began setting them up, initially in the prime suburbs and gradually extending them till the peripheral areas as well.

Essential element
In the current scenario, the presence of a school within a township is considered almost as essential as lifestyle amenities like a clubhouse or swimming pool. With both parents working, it is much more convenient for grandparents to drop off and pick up the students from the school gate itself.

Safety aspect
As the children grow older, they can go to school and return home themselves, in a safe and secure environment as they are not stepping outside the township premises at all. Not surprisingly, the guarantee of admission for children is considered to be a sweetner that encourages parents to opt for such projects over others.

Quality education
Home seekers perceive it as added value if their children can attend an international school within the complex premises. Also the fact that children are able to simply walk down to school and come back home safely without relying on other factors like autos, school buses, etc. is a huge advantage. For working mothers, knowing that their child can reach school and return home safely and on time ensures much-needed peace of mind.

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Thursday 7 July 2016

Things To Know About Navi Mumbai Development Plan

Mumbai, India’s financial capital, which is infamous for its highly expensive real estate, became out of bounds for the common home buyer long ago. Considering the limitations the city faces given its geographical location, accommodating teeming millions who migrate to the city has always been an insurmountable task for the city administration.

With more people flocking to the city in search of livelihood, the authorities started mulling the creation of a new township in its vicinity in the 1970s. Thus, the idea to build Navi Mumbai, a township that would be constructed learning from the past mistakes of Mumbai’s development, was born.

Under its Navi Mumbai Development Plan, the government in 1970 notified to acquire 159.54 sq km land under the Maharashtra Regional and Town Planning Act, 1966, and added another 28.70 sq km to the planned area in 1973. Meanwhile, the state government in 1971 set up the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) to plan the new township. Today, Airoli, Belapur, Dronagiri, Ghansoli, Juinagar, Kamothe, Kalamboli, Karanjade, Kharghar, Kopar Khairane, Mansarowar, Nerul, Panwel, Seawood, Sanpada, Taloja, Ulwe and Vashi fall in the Navi Mumbai jurisdiction.

Now, let us have a look at the key features of the Navi Mumbai development plan:

The state government sanctioned the General Development Control Regulations for land use in Navi Mumbai. This is why CIDCO’s draft development plan that was approved in 1979 and came into force in 1980 divided the city’s development zones into several segments i.e. residential, commercial, institutional, industrial, no-development zones, etc. This was done keeping in mind the fact that Mumbai’s urban development was highly saturated, thus, making it chock-a-block.
Today, Navi Mumbai covers a total area of 343.70 sq km. Of this, 50 sq km falls under MIDC, Gaothan and municipal councils. The 154,21 sq km of this area is divided among the Maharashtra Industrial Development Corporation, the Jawaharlal Nehru Port Trust, no-development zone, regional park zone, and areas for developing port, airports and railways network. The gross developable land is 139.49 sq km.
Through its land-use pattern, the development plan also promoted environment protection. Reserved green expanse under the plan will ensure Navi Mumbai does not turn into a concrete jungle.
Another key feature of the plan is not to follow any pre-set plan. Development tools will keep changing when the need arises. This will help the CIDCO change its strategy according to the needs of the time.
An independent township, Navi Mumbai has or will soon have everything — an airport, a port, a Metro link, a railway connectivity, among other facilities. A robust infrastructure along with affordability has earned Navi Mumbai the title of Mumbai’s New Jersey. For instance, property prices in Navi Mumbai’s central business district (CBD) Belapur stand at Rs 8,873 per sq ft, while rates at Mumbai's de facto CBD Nariman Point stand at Rs 28,000 per sq ft.

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Monday 4 July 2016

Real estate Developers demand relaxatin in Bank loan norms

The Confederation of Real Estate Developers' Association of India (CREDAI) has demanded relaxation in bank loan norms to revive the real estate sector, contribute to the country's Gross Domestic Product (GDP), and achieve Housing for All initiative in the country. During the meeting with Raghuram Rajan, Governor, Reserve Bank of India (RBI), Getamber Anand, President, CREDAI, and Jaxay Shah, President-Elect CREDAI, shared that currently the real estate market contributes only six per cent of the GDP as compared to other countries where the real estate contribution is around 10 per cent.

For instance, the real estate market in the United States (US), the contribution of real estate towards the GDP is 17 per cent. In India, the real estate sector is the second largest employer after agriculture and drives growth for housing as well as 250 ancillary industries.

They also pointed out that as per the government estimates, there is a shortage of around 18.78 million houses in the country. To address these concerns, the sector needs to upgrade at least 10 times the present situation.

Housing needs a supporting financial architecture and not a restrictive one stated, the CREDAI officials. Although the gross bank credit is less than three per cent and the net non-performing assets (NPAs) are at zero, the latest financial stability report by RBI shared that the sector has the maximum stressed advances ratio at 19.5 per cent, followed by services sector which is at seven per cent. Other sectors such as mining, iron, and steel, textiles, infrastructure and aviation contribute about 53 per cent of the total stressed advances.

Other suggestions shared by developers were:

Increasing the priority limits from 28 lakh to 50 lakh in housing sector in metro cities where the prices are high
Make private sector eligible to seek slum rehabilitation loans
Providing priority sector status for loans taken for affordable housing projects
Treat real estate as an infrastructure sector
Banks should aid in the purchase of land like it was done before 2006

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