December 2018 Vol 02

Real Estate sector has a choppy ride in 2018

Residential real estate has gone through a choppy ride this year, initially hinting at a recovery only to be sucked into a liquidity crisis later. The year also marked a significant rise in consolidation across geographies and the demand for affordable housing that saved the day for realty developers. Armed with the Insolvency & Bankruptcy Code, homebuyers get the same treatment as financial institutions when it comes to recovering dues from real estate firms that go bankrupt. The disruption caused by the implementation of the Real Estate (Regulation & Development) Act, 2016, and the Goods and Services Tax was quite evident on the sector.

Realty developers aligned themselves with market realities by offering more ready-to-move-in apartments to provide more certainty to homebuyers than just selling off the plan. Homebuyers are also showing more preference towards picking up such properties. Mid-income housing has clearly been the frontrunner in driving the housing growth this year on the back of the government’s reformatory push and participation of private players leading to increased demand.

Source: The Economic Times, Wednesday 19 December 2018

2019 getting Real with Realty

If purchasing a home is among your New Year resolutions, experts share a step-by-step roadmap towards making your dream a reality. Just as you step into your ‘earning’ phase, a number of commitments and investments have already taken up a share in your monthly income. These include mutual funds, insurance, medical care, planning for your family and other day-to-day expenses, not forgetting the lifestyle that urban youth is used to these days – traveling and dinner at fancy restaurants are just other necessities. While battling these, if you are ambitious about owning your home – the struggle gets real! This means your personal finances need to be managed and invested carefully, in order to secure a decent home loan that will fund your dream abode.

As a thumb rule, the monthly EMI on a home purchase should not exceed 35 percent of the income. When you purchase a new home, apart from the cost of purchasing the property, there are several other allied costs that are involved like stamp duty and registration, processing costs, brokerage, etc. It is advisable to calculate these costs while applying for a home loan. Extra money can also come in handy during your lean periods. It is crucial that you pick a RERA registered developer so that you can trust the project’s credibility. – Sona Gaharwar, business head, Tata Capital Housing Finance Limited

Invest in Assets: Investing your money is a good way of making your money work for you! You can also make profits by investing in an asset. One of the best ways of approaching a home purchase at a young age when you are just starting out in your career is to invest in a ‘starter home’. This is essentially a compact unit not exceeding the 1-BHK configuration, in a cheaper suburban area with a good appreciation value. This way, you already have an asset, which you can leverage on later as your aspirations evolve. One should not make one’s first home purchase a financially crippling undertaking; rather, the monthly outgo should dovetail reasonably with one’s other expenses. – Anuj Puri, chairman, ANAROCK Property Consultants

Source: Times Property, Saturday 24 December 2018

Institutional investments in Real Estate seen at $5.5b this year

Institutional investors have picked the Indian real estate sector as one of their favorite investment destinations over the past decade, focusing significantly more in the second half, post the global financial crisis that erupted in late 2008. With the government initiating a series of reforms, institutional investors, including private equity, sovereign wealth and pension funds, continue to express a healthy appetite for Indian real estate. While the sector attracted $30 billion of institutional investments between 2008 and 2018, over $20 billion was invested during 2014-2018 alone, reflecting the positive impact of reforms, showed a JLL India report.

With the year coming to an end, institutional Investments in Indian real estate this year is expected to touch $5.5 billion, the decade’s highest since 2009. Commercial real estate segment has turned out to be the most preferred asset class for institutional investors with a five-fold increase in capital flows to $8.2 billion in 2014-18 from $1.6 billion in the preceding five-year period starting 2009. In terms of cities, Mumbai, Delhi-NCR, and Bengaluru have been the preferred markets accounting for over two-thirds of institutional investments from 2009 till 2018. Global investors, including CPPIB, Blackstone Group, Singapore’s sovereign fund GIC, Goldman Sachs and Qatar Investment Authority have been investing in Indian realty assets for the past few years. Also, more funds are eyeing investment and alliance opportunities.

Source: The Economic Times, Thursday 27 December 2018

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