Benefits of real estate as short term investment

Benefits of real estate as short term investment

In times where the market is facing volatile conditions, with stocks market often closing at a tip and interest rates recording at low, people are looking to park their money in short term investment rather taking in risks with long-term investment. Amidst the prevailing risks and chances with regards to options such as mutual funds, real estate market had turned out to be lucrative for many.

With the Reserve Bank of India reducing its benchmark interest rate by a higher-than-expected 50 basis points to a four-year low, the step has further encouraged the new home buyers to avail home loans at a much lower interest rate. Although, the banks have been slow in passing on the benefit to the home buyers, they have still deducted their home rates by 30 to 35 basis point.

Despite the advantages, many perceive the positives to be a temporary scenario and hence advice investing in other options as well, apart from real estate. However, another segment believes real estate to be one of the best option when it comes to short term investment option. Some of the benefits with short investment with real estate are:

It isn’t so risky: When compared to intangible nature of investments such as stocks and bonds, real estate provides much more assurance, as the prices of the sector do not get affected by daily media news. Besides, investing in real estate further secure an asset, which eventually tends to provide regular income stream, especially in case commercial space.

In proportion with the inflation: Undoubtedly, inflation in on the constant rise. As per the experts, real estate prices are directly proportional with the inflation. Therefore, with every rise in inflation, your real estate prices are set to surge. Therefore, with an investment today in real estate, the value of asset is set to appreciate in couple of years.

Maximising the benefit:real investment becomes one of the best way to leverage the tax benefit provided by the government. There are several tax benefits such as the ability to recover the cost of income-producing property through depreciation, road to earn benefit from personal residence exemption, deduction for mortgage interest and likewise.

Proud ownership: Buying a real estate would only be an investment but would also make you the owner of the property, thereby inducing a sense of pride in you. Being the owner of the property, you would not only have asset but also have a complete control over it, which you cannot have in case of investments like stocks and bonds.

It can be inherited: Real estate can be a good investment in terms of passing to the next generation. While a short term investment can assure you several benefits, a long term possession of the asset can also guarantee some financial support to your next generation as well.

Outlook 2017

Outlook 2017-the story will focus on where real estate sector are headed in 2017.

I feel that the year 2016 will be remembered as the year of key reforms in Real Estate Industry for India. It’s a landmark year as the Union Government passed GST, RERA, Benami Transaction (Prohibition) Amendment Act. To top it all, the move of demonetizing the higher currency laid full emphasis on eradicating the black money component from the market. With RERA ready to be implemented this year in all states, it will strengthen the association between a buyer and a developer. This will improve the buyer sentiments as the customer will gain trust in the market. This will help to propel the growth of organised real estate in India. Post RERA implementation, we will also come across many challenges that government would have to resolve with time to make the real estate industry more transparent and professional. There still is scope of improvement from the government by launching initiatives like single window clearance. This will smoothen the process for the developers and ensure timely delivery of their projects.

With a lot of transactions getting digital post demonetization, we will automatically observe a much transparent realty sector in 2017. This year I anticipate good sales to happen post the Budget and after RERA implementation in May. Customers will regain faith once the government announces its Budget and RBI announces its policy. The road ahead is visioned to be in the right direction and sales gradually picking up after the mid year. The real estate developments will shift towards tier 2 and tier 3 cities with the smart cities coming up. This will eventually widen the real estate growth outside the parameters of metros and capital cities. All these policies by the union government lead to a positive growth with interest rates going down and property prices heading towards realistic pricing after the price reductions. The end users who were sitting on the fence and waiting will be able to now take a decision and buy the property desired.

 It’s the right time for the realtors to focus on customer service and gain momentum in the market. Opportunities are going to be immense for realtors who are agile to grasp the changing processes and adapt to the professional style of working.

****************

Forecast for the year 2017?

Forecast for the year 2017?

The year 2017 will definitely shed the dark clouds and despite the slowdown, Indian Real Estate sector will pose a bright picture. This positive belief develops from the foundations that have been laid in the year 2016 by the Modi Government in making our economy stronger that will have a direct impact on the Real Estate Sector.

India’s Real Estate Sector has seen a paradigm shift in the way trade is conducted in the country over the last 10 years. With the right kind of people entering the trade at all levels, this industry has a future that is going to change the image of the real estate consultants and also developers. The word Professionalism and organised sector are not the thing of the past any more. We are in the ERA where real estate business is holding its roots strong enough to compete with some of the developed countries in the world. We as RE/MAX firmly believe that the year 2017 is going to be imperative in shaping up this industry to be transparent and customer centric.

Gazing back at the year 2016, we saw some historic steps that have laid foundations strong enough for the sector to revive the buyer sentiments. For any individual owning a house is the key necessity that they aspire to own one day. High prices and high rate of interest compel them to settle for rented property. However, the current reforms taking shape could transform their dream of owning a home into reality. The government’s move to curb the black money from the market and clamp down black money hoarders is a step that eventually will lead to reasonable reductions in the Residential market. With the ban on the higher currency of Rs 500 and Rs 1000/-, government has been successful in the transmission of hoarded cash into the banks and making our banks richer than never before. The positive side effect of the move is the reduction in the interest rates for home loans. This will come as a huge relief for the people who have the aspirations to buy a house and have not been able to take the decision of buying the property due to high EMIs. Demonetization’s after effects will be visible in the year 2017 that will lead to growth in the affordable housing sector as we can expect a sharp reduction in the Interest rates on home loans. This will drastically narrow down the gap in the price difference of the EMI and rent for the same property. With the Rent, almost same as EMI, an individual will prefer buying the property.

Moreover, with the implementation of RERA in all states, the industry will strengthen further by becoming more structured and transparent. The organised developers and realtors who follow the RERA guidelines will gain trust of the buyers. It will also build a sense of security for a buyer and make this industry strongly buyer driven. The home buyers can now bet on reputed developers for their property investments and can feel safe with their investments. With this change, will come another major change at the brokerage front. It’s the perfect time for large organised players to grasp the opportunity and work towards building a professional brokerage business. With the changing profile of the customers, it is important for the broker to work ethically and provide full support and service to the customer. Gone are the days when brokers were mere Sales people. The new age broker is there for the smart customer; he is there to hand-hold, guide, advise and take the customer through the entire process of making a property purchase decision in a transparent, thorough and clean manner.

FDI in real estate is also expected to boost the sector with the greater inflow of foreign capital. Government’s projects like “Housing for all by 2022” and “100 Smart Cities Project” will give an additional boost by substantial participation by the government and the foreign investors. This in turn will strengthen our Real Estate sector and revitalize the growth of realty sector.

The Realty Sector plays a significant role and has been a key contributor in the growth and development of the Indian economy. With Indian Real Estate market size expected to touch US$ 180 billion by 2020, growth in the Indian economy will definitely witness positive expression in the real estate sector.

Current Economic and Policy Changes lead to a positive 2017 for Real Estate Industry

 With the government seeking advice from the industry experts for the RERA act,  it’s a good move towards building the Real Estate community stronger and making the act feasible for the industry to prosper in the right direction. The act has covered many aspects of the industry but still there are a few provisions in the act that are prejudicial to  the legitimate business of the brokers. There are a few changes that the government should consider keeping in mind the interest of the serious and professional brokers. For example the Single Window Clearance for the developers that will help them to avoid delays. Also, a few qualification barriers should be added for agent to be a registered broker. Apart from this, the government should also try and incorporate a few suggestions from the broker community to safeguard their business as well. 

RERA norms, will bring long-term fundamental changes in the Real Estate sector which is also set to gain from the increased transparency.

With the positive move in the right direction, buyers will feel secure for his investments and will help in regaining the market sentiments.

With the Ongoing Demonetization drive by the Government, we as Real Estate Industry are going to be the biggest benefiters in the long run.  The concept of parallel economy is going to be a thing of the past. This will also help our industry by making it stronger and transparent. With the transactions taking place through a transparent channel, the industry will grow towards becoming more organized and hence increase the general public’s trust in this industry.

In the Long run, bigger and structured companies are going to play a larger role in shaping up the industry and making it more professional with their business model and education system.

With the RERA coming in, the time has never been so perfect for the real estate industry to move in the right direction. Coupled with reforms like Demonetization, FDI in Real Estate and Benami Transaction Act; this industry is going to witness a ground-breaking change in the way real estate is dealt in India. The coming year 2017 is going to be  a great year for the industry and I assume that the annual sales of 2017 will be higher than the combined sales of 2015 & 2016. The significant change in the way business is conducted will also lead to the buyers regaining confidence. The Professional Realtors and Brokerage houses are going to prosper in the long run. 

Second Home in Delhi NCR

Second Home in Delhi NCR

1.      What should be the areas of focus in terms of amenities in a project or apartment?

As an investment option, the buyer needs to look at the amenities that are going to be a part of the project once delivered. Since the second home purchase is generally for investment purpose and once delivered it will be reaping rental income for the investor, the buyer needs to ensure that the project has good amenities like swimming pool; separate kids play area, club, gym etc. These amenities are a good tipping point for families who are looking for house on rent.  They add value to your property and help you in quick rental deal.

Also, second home is purchased by joint families who are looking to live nuclear due to long work travels. For these kinds of buyers, it is essential that they invest in a property that gives high security and surveillance, beautiful landscaping and good connectivity.

2.      Which areas in the region are most suitable to buy a second home at?

There are a variety of options in the real estate market, you can have second home in the city and lease it with a steady income filling up your assets. Delhi NCR is a growing market and the real estate sector is picking up momentum in the resale market. Areas like New Gurgaon, Golf Course extension in Gurgaon; Central Noida, Greater Noida Expressway, Noida Extension locations are gaining traction from the buyers for second home investments.

Since the sole motto is investment, buyer prefers the projects by trusted builders who have delivered good quality before and have good expected rate of return in future. The areas that have high infrastructure development plans with good connectivity, metro accessibility, proximity to corporate and retail hubs are always the safe bets to invest for long term.

3.      Other legal issues that the buyer should keep in mind while going for a second home.

As a buyer, you must conduct proper research about the property and avoid any impulsive decisions based on the marketing gimmicks by the builders. While buying a second home, one needs to keep in mind the credibility of the builder and the delivery date promised. Also the buyer needs to do his research and check the project viability and whether the land deed and other title deeds are clear. Also one needs to consider if all the necessary approvals have been taken by the builder for the said property that the buyer is willing to invest in.  

RE/MAX Agent count crosses 110000 gobally!

Big news for everyone in RE/MAX: The worldwide network has topped 110,000 agents!

The global network, in over 100 countries and territories, has grown every quarter for four straight years. That growth means more yard signs, more homes sold, more satisfied clients and more top professionals working together to serve buyers and sellers.

It’s another reminder that RE/MAX is the right choice for agents who strive to be great – and for clients looking to work with the best. This milestone confirms that greatness attracts greatness and the immense talents and achievements of the agents have built a brand others want to join.

Quote by Dave Liniger, Founder, RE/MAX LLC- “The people drawn to RE/MAX are a mix of established producers and newer agents aspiring to get better. And the growing agent count benefits us all – it brings more listings, more yard signs, more advertising, more brand power, more phone calls, more web traffic, more referrals and more satisfied buyers and sellers.

So celebrate the fact we’re 110,000 agents strong. And know you’re in good company – because more and more professionals are choosing to call RE/MAX home”

Quote by Sam Chopra, Founder & Chairman, RE/MAX India- “ The network’s global presence is exciting to me, and it’s a significant addition to my business. The fact that there are so many services available and that RE/MAX promotes the individual agents makes me very excited. In 2009 We decided that we had the experience, dedication and drive needed to bring the RE/MAX brand to the country. Our goal is to be the dominant real estate organization in the country and we took the master franchise of RE/MAX in India. We play pivotal roles in organizing the local real estate market into a cohesive professional marketplace.”

RE/MAX thrives to grow across the globe and cover the world by appointing the likeminded people in all the countries and further spread the RE/MAX business. The International development team at RE/MAX LLC works very proactively to appoint the Master Franchises across the globe. With a presence in over 100 countries and territories, the RE/MAX network’s global footprint is unmatched by any other real estate brand.

As RE/MAX India our focus is also to build a strong network of agents pan India and target a 4 digit agent count in the coming year.

The Real Estate market of India has always been an attractive market for investment purpose, the reason being the increased economic growth. India is a growing economy and has witnessed many big infrastructure and Real Estate companies keen on undertaking projects in both the big as well as small cities in India. I feel that if our sector becomes more structured and introduces some industry standards, the way it happens in developed countries; the major challenges can be taken care of.

RE/MAX has been a successful phenomenon in around 100 plus countries. It has played a pioneering role in organizing the unorganized Real Estate market in various countries. As RE/MAX India our aim was to recruit and train Real Estate people at various levels of the Business Model to create an unprecedented network spanning the entire country which will not only organize the Indian Real Estate Market but also create an unmatched referral system.

The RE/MAX concept combines maximum commissions and the best support services to attract top agents. The agents share office overheads, pay management fee, and in return receive a wide variety of Real Estate services like International as well as National Referrals, high commissions, benefits from National as well as Region centric advertising campaigns, superior training, professionalism and growing market share. It was something that no one in the Indian real estate industry had thought of but was much needed to enable the agents to not only provide quality services to their prosperous clients but also change the way real estate is taken

Impact of Demonetization in Real Estate

Impact of Demonetization in Real Estate

The year 2016 has been very imperative in shaping the Real Estate industry with the government of India initiating some key reforms in this sector. The Major initiative being the implementation of Real Estate Regulatory Bill (RERA) on pan India basis. Other key reforms like REITs, Benami Transactions and FDIs in Real Estate. These reforms have a common agenda to bring in transparency in the Real Estate sector and help the industry become more organised and professional.

The latest “Surgical Strike” against black money is the historic Move taken by the Modi Government. The long-term impact will lead to stabilization of economy which ultimately will be in the favour of the Real Estate sector. Since this sector has significant amount of cash involvement, the impact of this government crackdown will be felt in the short term and eventually help in correcting the market sentiments. There is undeniable truth that there is 20-30% of cash component involved in the real estate transactions due to the disparity between the circle rate and market rate.

The ratio of cash involvement is dependent on the type of property transaction. In Primary market majority of the residential purchases are financed through mortgages. Though the sales will decrease for a certain period but eventually with Banks getting richer and having high liquidity, the Interest rates will decrease in the days to come. The service class population who have been sitting on fence to buy the property will finally purchase their long dreamt homes with easy mortgage plans offered by banks. With the lack funds for a developer to park it in a land for new projects, they are also finding it difficult to monetise their land bank to cut down debt obligations. These developers in the short term will fall prey to the cash crunch. To get some money in their accounts, they will have to offer price cuts to sell out the unsold inventory. This will be the Bonanza time for the buyers to purchase their dream home at never before offered prices.

Secondary market transactions essentially involve higher cash payouts. As discussed this is generally due to the variation in the circle rate and market rate of the property. Now that the government has come down heavily on black money, the cash component in property transactions will go down. This will result in a drop-in land prices and land deals will likely see a considerable dip for few months. 

As RERA becomes effective and home buyers are secured under RERA of their investment, sales will additional pick up, especially in the affordable segment, much to the benefit of the government's Housing for All mission. The government has taken some brilliant moves all in sync with the Master stroke of Demonetizing the higher currency from the market. And, since corruption and approvals' bottlenecks are major factors responsible for price inflation, demonetisation, coupled with the government's next big reform to introduce a single-window clearance system, will make property affordable for the masses. 

All in all it is a positive step taken towards increasing transparency in the Indian real estate industry.