July 2018 Vol 02
Office Leasing Activity in Top 9 Markets Rises Over 10% in H1
Office leasing activity across India’s top nine markets rose more than 10%, with a total leasing of over 20-million sq ft in the first half of 2018. Bengaluru, Delhi-NCR, Hyderabad, and Mumbai led the leasing activity with 80% share, showed data from CBRE South Asia. Continuing the trend, office space take-up was dominated by small and medium-sized transactions. Transactions with less than 10,000 sq ft space accounted for 44% of the transaction activity, while mid-sized transactions ranging between 10,000 sq ft and 50,000 sq ft held a 42% share. The share of large-sized deals with over 1,00,000 sq ft also rose marginally to about 5% from 4% in the previous quarter.
The ‘real’ty scene of Lonavla
Lonavla is by far a favorite with Mumbai residents and there is a good supply in the pipeline of row-houses and bungalows by leading players. There is also a healthy demand for plots in Lonavla. The prices for row houses range from Rs.1 crore to Rs 2.5 crore, for bungalows from Rs 1.5 crore to Rs 4.5 crore and for plots from Rs 25 lakh to Rs 1 crore. The Municipality is trying to better the roads by providing street lights and water. The future real estate potential is bright for Lonavla and experts predict that if planned aptly, Lonavla will become the center of Mumbai and Pune. The investment potential will be high for Lonavla as it assumes the character of a city.
However, one has to keep in mind that Lonavla is an extremely popular second home destination, and one has to calibrate his budget accordingly. Looking for the cheapest options may land one in locations and projects that offer nothing in terms of natural beauty and access to entertainment. Lonavla is a hotbed for local brokers, but it is advisable to deal only with established and reputed real estate consultants as this will ensure that there is complete transparency in the transaction and that the buyer’s interests are kept paramount.
Living in the clouds has its downside too
Most Mumbaikars look out of their windows at familiar sights of building blocks, unending construction, clogged streets or neighbors’ homes. Then there are those tucked away in apartments that climb into clouds and offer airliner views of the city. Up there the sights are sweeping and most spectacular — entire parks, zigzagging roofs, trains rendered toy-like, treetops and a whole lot of sky. Sounds of city life evaporate, along with closeup shots of urban squalor. Kicking back, watching wisps of cloud drift into the balcony or a storm roll in over the bay is just another day in the life of those crested 500 feet above the ground. However, in times of extreme weather, inhabitants of the upper levels of these rarefied flats feel the most vulnerable. Even as rain and winds bring relief to a sweltering Mumbai, the onset of monsoon can seem like a kamikaze attack for those living above the 30th floor as dark clouds blot out the sun, wind howls and raindrops pelt the window like little stones.
Those seeking a trophy apartment in the sky pay a premium for privacy, noiseless environment, and scenic views but loftiness requires time, effort and more than a little money to maintain. Mumbai currently has close to 30 major high rise projects of more than 50 stories. “Due to less friction on higher floors and lack of shading, the effect of rain and winds is multiplied,” says Tanvi Goyal, of Liases Foras, a real estate rating, and research firm. Then there are some veiled risks of living above ground. Not just in physical terms but in the minds too. When low clouds obscure the ground beneath, it is easy to lose all sense of time and perspective, they say. “Instead of seconds and minutes, you judge time in sunrises and sunsets. It lulls you into laziness,” confesses Hazel while her mother rues. “More clouds mean more calories. It’s hard to combat the craving for chai, pakora and bhajji all day.”
Non-residents’ real estate deals under TDS lens
Income tax (I-T) officials will intensify their focus on tax deducted at source (TDS) in the coming months, especially in relation to the sale of property by non-residents and other international transactions. Surveys will also be carried out for detecting noncompliance with obligations regarding withholding tax — a move that has come in for criticism from some tax-practitioners as it could result in harassment, even for smaller taxpayers. Last fiscal year, the I-T department had issued hundreds of prosecution notices, which also covered cases for short deduction or delayed remittance of TDS even by smaller business entities.
In its action plan for the current year ending March 31, 2019, the Central Board of Direct Taxes (CBDT), which is India’s apex direct tax policy formulation and administration body, points out that in several cases when real estate is purchased from nonresidents, the buyer of the property only deducts 1% TDS instead of the required 20%. These are ‘high risk’ cases and must
be dealt with on a priority basis, it adds. Further, I-T officials have been asked to collate data of sale of immovable property — available in annual information returns (AIRs) filed by property registrars — and match it with transactions on which TDS has been deducted to generate a list of defaulters. Action should then be appropriately taken, adds the CBDT plan for fiscal 2019.
‘Office leasing up 13% in H1’
The Indian office property market clocked its highest half-yearly leasing transaction volume in 6 years with 21 million sq ft of space leased across seven major cities in the country in the first half of 2018. The segment showed a robust growth at 13% on-year, said a recent report by Knight Frank India. This was led mainly by higher leasing activity in other services sectors, including consulting firms. Co-working service providers account for 13% of total transacted space, an emerging trend, while the share of information technology/ IT-enabled services declined. The office sector has been doing well with the vacancy levels at near zero levels in many cases, and rentals steadily moving up.
Introspection before investment
Sure, we all want to see our name-plate on our very own property. But there is more to it than just wishful thinking. Like the financial aspect of home-buying. There are several parameters to be considered before going for the big buy. This comprises of the following: Return on investment: The return on your investment should decide whether you want to keep your money in the bank or invest in a property. There are some important tools to evaluate this like the price-to-rent ratio where you can base your buying decision by dividing the cost of the house by the annual rent. If the ratio is below 15, you should buy else rent the house. Financial strength: You are a better judge of your own financial position. A realistic evaluation of how much will help you make a better buying decision. You will also be eligible to the amount of loan depending on your salary. Also, there should be some surplus after you pay the monthly EMI and household expenditure to cover your investment needs and any immediate rise in interest rates.
Income stability: Home loans are for long tenures, typically, 20 years or more. Banks will also check your employment record thoroughly before approving your home loans. But as a home-buyer, it is important that you are confident about your job stability. Economics: However, it is important to have an eye on the market indicators of the economy which can help you financially and make it easier to buy your dream home. Ease of disposability: It is a good idea to keep a future selling prospect in mind while buying a property. It is always better to buy in areas with good connectivity and accessibility to basic infrastructure. Also, good roads, schools, hospitals, malls earn good appreciation in your property. Such houses fetch quicker and better money when you dispose it.
Source: Mid-Day, Friday 27 July 2018
NRI not far away
With major regulatory reforms underway, this is the right time for Non Resident Indians (N R Is) to enter the Indian realty market. The real estate sector, in the recent past, has been impacted by several policy changes. All these changes influence the decision of buyers not just in India but also those located outside the country.
A Non-resident Indian (NRI) can legally purchase or sell residential or commercial property in India, except agricultural land. This is applicable for both NRI citizens and Persons of Indian Origin (PIOs).
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