It is perhaps the best time for a
value purchase in real estate with developers going big on
affordable home launches. Buyers seeking a steal deal must go home shopping
now, says Shri Ram Shaw
Jaago, yeh hi
right time, scream property exhibition advertisements in newspapers. So what if
residential real estate prices are going up, a majority of the middle class
that aspires to own a home is still taking the plunge. The reason being that
homes are still affordable, and also thanks due to availability of funds and
rising trust in the borrower. SBI, Deutsche Post Bank, ING Vysya Bank and
P&SB are funding up to 80-85% of property value.
It is perhaps
the best time to look around for a value purchase in real estate.
With lower price points in locations that were not earlier within the
affordable range, buyers are scouting for good ‘value’ bargains at this time.
And with developers going big on affordable home launches, the timing may just
be one of the best for buyers seeking a steal deal. The scene has improved with
the Reserve Bank of India cutting lending rates to record lows and pumping in
unprecedented amount of money into the system.
According to
Anoop Pabby, joint managing director of Deutsche Post Bank (home finance), “The
economy has improved and the liquidity situation is much better and interest
rates have eased off considerably. It is only natural then that home buyers
expect the reduced risks to result in reduction in interest rates and
relaxation of margin money norms.”
The housing finance company is now funding up to 80% of the
property value to most salaried people, and 85% in a few cases, depending on
the creditworthiness of the borrower. This is more than the 70% it used to lend
a few months back.
According to
Anshuman Magazine, CMD of global real estate consultancy CB Richards Ellis
(CBRE), value buying is happening mostly in suburban locations, as that is
where the current supply is. “Certain pockets in Gurgaon and Noida, where the
price used to be Rs 65 lakh to Rs 1.5 crore earlier, have deals to offer
anywhere between Rs 35 lakh to Rs 50 lakh today! Developers have reduced the
total ticket sizes, adjusted area, price and given amenities. This has got
people back and is making them lust for value deals right now.”
According to
Navin M Raheja, chairman and managing director of Raheja Developers, “Locations
such as Gurgaon, Faridabad, Noida in Delhi NCR are some of the good locations
for value buying. Anything that is available between Rs 2,500 to Rs 3,000 per
sq ft is the right price depending, of course, upon the location and
infrastructural facilities available in the vicinity with specifications
offered.
“There are
three kinds of value buying that are taking place in the real estate market right now. Ready to move in residential property in
and around metros and their suburbs, ready to move in commercial property which
is already leased, or generating income and low income and middle income
housing ranging from Rs 15 lakh to Rs 40 lakh are the primary types of value
purchases,” Raheja adds.
On the other
hand, lenders such as ING Vysya Bank, and Punjab & Sind Bank have reduced
the margin money requirement to 15-20% from 25-30% towards the cost of the home
on their home loans, as they try to tap potential homebuyers. This leads to a
borrower investing lesser capital than before. So on a home loan of Rs 25 lakh,
a customer would need to pay only Rs 2.75 lakh against Rs 6.25 lakh demanded
earlier, where the margin norm is relaxed to 15% from 25%. State Bank of India,
which has cut the margin requirement to 20% from 25%, may reduce it by a
further 5%.
G S Vedi, the
newly appointed chairman and managing director of Punjab and Sind Bank, said,
“Interest rates are likely to harden over the next six months with the credit
offtake improving and inflation moving into the positive territory. This is the
best time for a potential buyer to go home shopping.”
Many of those
who were holding out have also decided to make a purchase now as prices have
bottomed out. Plus, with many affordable housing launches by developers, the
view is that prices are now pocket-friendly at this time. “Prices have reached
the bottom and in these prices you are bound to get good appreciation in
future. So, if you are buying a particular property now, one is definitely going to
feel later that they grabbed a good deal,” said Vijay Jindal, CMD, SVP Group.
But it is
best not to overlook the pros and cons before deciding on such value buys.
Though the pricing and the product may both look highly appealing, it is best
to read the fineprint carefully. This will hold in good stead for the future.
As far as dos are concerned, one must set their benchmarks on the price,
location, size etc, so if you have been thinking of investing your money in a
home, it’s the right time to go deal hunting.
Affordable
houses to provide Rs 5,00,000 crore biz opportunity: The affordable housing
segment will offer business opportunities worth over Rs 5,00,000 crore as India
requires more than ten million houses to be built by 2013-14. According to a
report prepared by property consultant Knight Frank on
Public-Private-Partnership model on housing in India, an estimated 11.84
million dwelling units are required to be built in India by the end of 2013-14
across all income segments in 37 cities.
The need from
the economically weaker section (EWS), lower income group (LIG) and lower
mid-income group (MIG) is nearly 90% of the total housing requirement, the
report says. “The cumulative task of delivering over 10 million units in
affordable housing category in top 37 cities of the country quantifies to a
business opportunity in excess of Rs 5,00,000 crore,” the report, prepared for
realty body NAREDCO, said.
Commenting on
the potential of the segment, the report said though the margins realized from
affordable homes are comparatively lesser, the segment offers an opportunity to
exploit volume of transactions to derive higher profits. The consultant pointed
out that government alone would not be able to meet the pan-India housing
requirement, “thus venturing into a joint model with the government can be a
practical solution”. The synergies could be utilized towards achieving the
central government’s objective of ‘housing for all’ and making India a
slum-free nation, the report said.
