What’s in store for home buyers in 2016?

What’s in store for home buyers in 2016?

As the first month of 2016 comes to an end and as we power through the first quarter of the financial year, now’s the time to evaluate, introspect and look at property forecasts for the year.

The last two years have changed the status quo for the real estate sector, with home sales being rather dismal.  Inventory has been piling up and investors, though keen, have been following a wait-and-watch policy.

But it’s a good enough estimate that things will change this year, for the better. Let’s take a look at what the Indian home buyer can look forward to, in 2016:

Prospective home buyers will not stop at just inquiries: The last two financial years have seen a massive rise in the number of inquiries. This could have stemmed from stagnant prices, smaller unit sizes being available and reduced interest rates, thanks to RBI.

Realty companies also adopted innovative marketing practices, such as selling through popular e-commerce portals like Snapdeal.com & Amazon.in etc. For the potential home buyer, all these micro-economic factors have consolidated and will work favorably for them.

Hence, there could be a balance in the demand-supply situation, reducing inventories across the board in most cities. Home buyers will definitely rethink their stance on inquiries and take it to the next step.

Easy Payment Plans will make home buying an attractive option: Realtors and financial institutions are ensuring that advantages are in favor of buyers.

Several innovative schemes are coming into play right now:

  • Customized payment plans: Buyers can modify payment schedules according to their convenience. While this may result in a marginal increase in the price of the project, it works out beneficially for the buyer.
  • Schemes that work for buyers: The two popular versions right now are Construction Linked Plans (CLP) and Possession Linked Plans (PLP). These are offered in ratios such as 20:80, 30:40:30 and 5:85:10. The PLP 20:80 scheme is popular among home buyers, and many also opt for the 30:40:30 scheme for popular areas. For those who can get a good deal from banks – the 5:85:10 works ideally.
  • Reduced Pricing: Many builders with a huge inventory on hand are offering options of purchasing a 3BHK at the price of 2BHK. This is a relatively new scheme, but perfectly suited to today’s buyer.
  • Besides these, there are also discounts based on referrals and loyalty schemes. Cash back offers and  the no-EMI scheme are also popular. Some buyers are even offering a fully furnished home as well as additional car park spaces. Such schemes are bound to go up during the festive seasons this year.

More affordable units:  Over the last two years, builders have progressively moved towards aligning themselves with market requirements. This is why we are witnessing an increased supply in the mid-segment apartment range. These are primarily in the Rs 25- 40 lakhs price range and are available in Tier-I cities. Converting 2BHK homes into 1BHK models with basic amenities is also on the rise, ensuring there is balance of home spaces.

Real Estate (Regulation and Development) Bill (RERD Bill) 2013: For the last two years, the Government of India has been under immense pressure to pass the RERD Bill. The immediate benefit for potential home buyers if this bill is passed, would be the establishment of a real estate regulator, independent of the government.

A Real estate developer can register only if they deposit 70% of amount received for a project in a single bank account, and this amount has to be used for the purpose of that project only. This will act as a safeguard ensuring the project is completed on time and that the buyer’s money is not locked indefinitely.

Pro-Growth Movements:

Housing for All initiative: The Housing for All by 2022 is an initiative of the Prime Minister, Narendra Modi and is aimed at urban centers with the following agenda

  • Slum rehabilitation with the help of realty developers
  • Promotion of affordable housing options for the poor through a credit linked subsidy
  • Creating affordable housing with the help of the Public and Private sectors
  • Subsidies for individual house construction or enhancement if beneficiary-led

Smart Cities Mission: The Smart Cities Mission is an innovative initiative by the Government aimed at enhancing economic growth and improving the quality of life of people. This will be done by promoting local development and harnessing technology for the benefit of citizens. A 100 such cities have been identified and the focus will be on the development of core infrastructure. In the long run, this will have a positive effect on the growth of realty in the region.

Make in India: Indian Prime Minister Narendra Modi launched his ambitious “Make in India” program last September. This was aimed at bringing down barriers for international companies to do business and to promote foreign investment. The idea is to transform India into a manufacturing powerhouse. This is a move in the right direction considering the increase in FDI in the recent month. Data shows that industrial production is up by 2.7%, up from a dismal 0.6% in the previous year.

GST: The impact of the impending GST Bill across various sectors will be undeniable, ensuring transparency and better markets for international brands doing business in India. All this will translate to a better real estate industry.

So if 2015 was not really your year to buy a home, 2016 promises to have a lot in store. 

The Benefits and Pitfalls of Pre-booking Homes

The Benefits and Pitfalls of Pre-booking Homes

Home Deed pre-bookingMadhu and Kishore recently decided that it was the time for them to invest in a home of their own. Of course, the advice poured in from all sides on how they must go about it.

One of the aspects of home buying they were looking into was that of pre-booking a home and the possible benefits.

Pre-booking an apartment that is not complete may be done at 3 stages – pre-launch, at the launch and midway through the project. Here is clear look at the possible benefits and pitfalls of pre-booking at these different stages.

Pre-Booking at the soft and pre-launch

A soft launch is done when the builder does not have most approvals in place and is simply looking for the initial momentum to test response and gather funds for promotion.

The primary benefit here is a monetary one where you get a competitive price that may be up to Rs 500 or more per sqft lesser than the launch offer. This ensures you a great deal of savings and will make the appreciation rate of your property more worthwhile going forward.

Another major benefit is the fact that you, based on the plans, may choose an apartment of your choice – right from views to direction and to floor.

While these may be the benefits, the downside may be that:

  • Your builder may not have all approvals in place and this may lead to delays in completion, negating your savings.
  • Without necessary documentation in place, especially the sale deed, you may find legal verification a problem.
  • Since the building will still be under construction, there are chances that the plans will change and your home may not look the way you envisioned it.

This soft launch stage then moves into pre-launch, where the builder will offer numerous early bird discounts. At this stage, construction may be yet to begin, but most approvals are in place. This is the stage where market hype is created.

While the benefits may be the same as above, the risk involved may be slightly lower. This is especially in relation to the conscious delays by the builder in completion of the project, which will block your investment.

Choosing a Home during the Launch Phase

Now this will be time when prices will be at least Rs 200 per sqft lower than the final price for the home. With approvals in place, your risk in terms of documentation is significantly lower. But, a flipside would be that pushy salesmen may try to influence your choice of homes.

Your scope for negotiation will be lowered, considering there will be more people vying for the same apartment complex. The possibility of delay, change in floor plans, etc. will remain.

Buying a home under construction

This is a stage where all documentation is in place and you may verify it to your satisfaction. You will also have the sale agreement in place for verification. You will have to be prepared for a rise in price, which is natural at this stage. You will also be faced with a pre-EMI burden.

Each of these stages has their own benefits and pitfalls. Based on your position at the time of booking a home, you may choose the stage at which to make your booking. If you are booking at the pre-launch stage, these pointers may help in you making a better decision.

  • Research the track record of the builder to look into delays that may have been there in earlier projects.
  • Scrutinize all property documents by the builder, especially those related to municipal and land authorities.
  • Try and source sale deeds from home owners of the builder’s brands and look into the clauses included.
  • Examine your legal options if you are faced with the delay from the builder.

Madhu and Kishore were presented with all of these options and realized that research is the key to making the right decision when booking a home. Examine the pros and cons of every stage before signing on the dotted line.

How to make the most of Property & Home Loan Expos?

How to make the most of Property & Home Loan Expos?

Property Expos

Property Expos

As a potential home buyer you are on the constant look out for good opportunities for a sound investment. Hectic lifestyles make it difficult to do the groundwork that is needed to narrow down on a few potential prospects for a home. Over the years, what has gained favour among home consumers is the property and home loan exhibition. Here is how you can make the most of the next property and home loan exhibition in town.

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3 lesser-known facts about buying a property that will fetch good returns

3 lesser-known facts about buying a property that will fetch good returns

Home with good returns

Buying a home that will fetch good returns

Earlier the key aspects to buying a property was ‘Location, Location and Location.’ And today we see a shift in the mindset to ‘Value, Value and Value.’

This shift in mindset is due increasing urbanization, which has made location less important, yet value the key for deciding on any property.

While both-location and value are the most critical aspects of investing, there are other influencing factors that make a property more worthwhile. I was once asked, is it apples or oranges to decide between two equally good properties. Well, an investment this heavy in nature, cannot just be made by playing pick and choose. In that situation, we would advise you to weigh out other aspects that include-

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7 Tips to Simplify Vastu for Your Home

7 Tips to Simplify Vastu for Your Home

Tips to Simpify Vastu for Your Home

Tips to Simpify Vastu for Your Home

 

I remember a few years back it was with some trepidation that I had gone to see the movie ‘Vaastu Shastra’. Since I was investing in my first home I had imagined the movie plot to have some thrust on vastu and because of which the hero had to fight evil!! Alas! The movie had no such signs. However, the name spurred me to find out a few essential vastu elements for our homes.

You may ask, why is vastu so important? I don’t believe in vastu, so why should I invest in a vastu compliant property  Vastu in the simplest words, is the science of direction that combines all the five elements of nature and balances them with man and materials. It is a subtle way of bringing in harmony and channelizing energies around you.  And for the latter, think about it, you might not be a vastu believer, but to increase the worth of property, whether you resell or you rent, your successor, might be a believer. Why not give your investor that benefit?

Vastu Shastra is often considered very complex and lot of investors . These are few aspects that answer most of the questions I have been asked frequently. (more…)