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Types of Real Estate Investments

admin — Tue, 30 Jan 2007 05:07:43 +0000

Real Estate Investments – A bird’s eye view

Investment properties range from apartment buildings, condos, rental houses, and even commercial or office establishments. The real estate investment sector has evolved over the years, and is no longer what it used to be 50 years ago, where property investment just comprised of finding a suitable place to live in, an affordable home or just a piece of raw land. It has gone beyond that, making it a lucrative business. Research reveals that some of the wealthiest people in the world have chosen the real estate industry business as their calling. Investing in real estate goes beyond ownership, and here we shall discuss the different types of real estate investment, which is beyond say, just buying a home!

Basic Rental Properties
This type of property investment constitutes landownership. What is landownership? Well, a person buys a property for example a house, and rents it out to a tenant. In other words, a landlord who owns the house and takes it upon himself to maintain the property, pays the taxes and the mortgage related to it. Usually, the rent paid by the tenant covers all the above mentioned costs. However, depending upon the location of the property and other factors, the landlord may charge the tenant additional amounts as rental charge which in turn produces a monthly profit. In this type of investment, however, patience is the key while strategizing. This is because; over a period of time the property turns into an invaluable asset to the owner as the property usually appreciates in value.
However, like any other investment, it is not completely risk-free and can have downsides to it. One would be lucky to get good tenants and who would not want that? If one were to get bad tenants, who would damage property or holdup the monthly rent. That could burn a hole in the landlords pocket and prove to be a hassle. Worse still, would be having no tenant at all. This would result on losses as he would have to scramble to cover the mortgage payments.

Research is the key before making this type of an investment. The primary factors that come into play are the area and the demand for rental property. One has to exercise prudence and try to buy property where tenancy rates are high (which means more demand for rental property) and vacancy rates are low.

Real Estate Investment Groups
Okay, sounds new or sounds like jargon? What exactly are real estate investment groups? In this type of investment, the investor buys the property through a company. The company is responsible for building and buying the property which usually comprises of set of apartments or condominiums and then in turn allows the investor to buy that through them. The investor in turn becomes a part of that group of company. It is entirely up to the investor whether he wants to own a single or multiple properties within that company. Now, it is the responsibility of the company operating the investment group to take care of the property units ranging from maintenance costs to advertising the vacant units and other minor obligations entailed within the written agreements. Now, why would the company do this? What is their share of profit? What’s in it for them? Well, in exchange of management of all the units, the company pockets a certain percentage of the monthly rent.

So basically, it saves you the hassles involved of being the landlord and let the company take care of the property units. Furthermore, it gives the investor the advantage of paying off his mortgage even if his rental unit is vacant. How is that possible? It involves a very basic strategy. All of the units pool in a certain amount of rent to guard against occasional vacancies. Here again, research is vital. One has to keep in mind the company one is investing in, based on its past records, credibility etc.

Real Estate Trading
Real Estate Trading is in no way a risk free venture. This kind of investment requires a keen acumen and good strategizing. It is also called property flipping. This is an investment strategy where the investor buys the property and waits for its appreciation and sells it on a profit and then reinvests the funds realized from the sale on another property with the same motive.

This kind of investment is usually a short term investment for the investor as he plans to dispose or sell the property at a good profit. Fair amount of evaluation goes into this kind of investment as it carries tons of risk factors. Usually, purchase is made when the property is in a hot market or is significantly depreciated.

This kind of investment can also be viewed as a long term, wherein a few property flippers add value to their property by renovating and sprucing up the purchased holding and then selling it at a profit.

REITs (Real Estate Investment Trust)
Here a corporation or trust is created with a motive to use the investors’ money for purchase of income properties. Unlike the above mentioned types of investments, REIT gives the investor the benefit of investing in non residential properties like offices, malls, etc. and hence proves to be a highly liquid asset. In order to maintain and sustain itself, REIT has to keep a momentum of paying out 90% of its taxable profits as dividends and hence save themselves from paying huge amounts of corporate income tax. So if a stock market investor is looking for a steady income, this is the type of investment to be considered.

Leverage
To many of us this again sounds as a corporate jargon. So, first let’s see what leverage is? Leverage is the use of funds borrowed from a bank or other financer with a motive of investment.

By paying only a fraction of the total worth or value, the investor can control the entire property the minute the mortgage papers are signed. Certain mortgages require as little as 5%. This type of investment tool is not available to stock market investors. The real estate flippers and landlords get the advantage of taking out a second mortgage on their homes, with a chance of investing in more properties by paying only a meager part of the total value.

In the light of the above, it can safely be concluded that investment in real estate is not as simple, and requires a fair amount of research, expertise, prudence as well as experience. In fact what we see is just the tip of the iceberg. Although the industry has enormous potential, it entails its risks and not necessarily assures us gains.

Real Estate Boom in India

admin — Mon, 29 Jan 2007 11:04:41 +0000

Real Estate Boom in India – Is it over yet?

The Indian Real estate industry has not experienced a lull in a long time now. Its almost like a huge ripple effect with big metros as epicenters, the boom is consistent and the real estate market is indeed growing at a fast pace.

As opposed to the archaic regulations, that stifled the real estate industry a few years ago, all that is fast changing and hence lending a distinct irrepressible bounce to the real estate market.

Statistics reveal that at this rate the real estate market is expected to grow from US$ 12 billion to US$ 45-50 billion in the coming five years. The influx of MNCs, has spurred the income levels and the international consumer now demands value for money in terms of convenient affordable luxury. This demand in quality real estate, has in turn spurred the developers to act as catalysts for the real estate market. Moreover, with various home loan provisions, low interest rates and easy bank finance for developers, the construction business is flourishing consistently. The most significant step taken by the Indian Government was allowing 100% FDI (Foreign Direct Investment) in this sector. According to recent reports, “FDI inflows have already increased by 326 percent in January 2006 outrunning the US FDI inflows by about 6 times”. [Source: indiabooming.com}. Many foreign companies are making a beeline here and investing into funds that invest in Indian developers. The likes of J.P.Morgan are planning to invest $4 billion in the Indian real estate. Morgan Stanley and Merrill Lynch have invested $68 million in Mantri Developers and $50 million in Panchsheel Developers respectively.

The attitudinal shift among the Indian consumer coupled with growing income levels, is creating a huge demand in the residential and commercial real estate sector. The lifestyle savvy consumer is ready to shell out money, and the developers are not lagging too far behind to keep pace to this burgeoning demand. This trend is expected to spiral upwards, as it is increasingly becoming evident by the growing townships, state of the art apartments, futuristically designed buildings, shopping and entertainment complexes etc.

The demand for commercial property is steadily on the rise, especially in the retail sector. With the MNCs rapid influx into the country, a huge necessity for office space has been created. It is estimated that by the year 2010, a demand for 150 mn sq.ft. of office space will be created by the IT industry alone across the major metros of the country. So, we can envisage an exponential growth in the real estate industry in the coming years as well. In fact, according to recent reports, “the real estate industry in India has been growing at 33 per cent CAGR (compound annual growth rate) and could be a $50 billion industry in the next four years”

The retail sector is not too far behind either. With shopping malls mushrooming all over, one can envisage the real estate industry as playing a vital factor in the county’s economic growth. Bangalore will soon be boasting of its first furniture mall and Delhi will soon have an auto mall. The Indian skylines are getting more and more ornate, with stunning architectural wonders coming up, at par with international standards. Top Indian builders are vying against each other to get a share of the real estate booming pie. The Rahejas, DLF, Unitech and many others are establishing a pan-Indian presence, with launching new townships and catering to the lifestyle demands of the “cant settle for anything less” consumer.

Many international groups, the likes of American International Group Inc (AIG), High Point Rendel of the UK, Edaw-US, Japan’s Kikken Sekkel, Lee Kim Tah Holdings and Cesma International from Singapore can foresee the potential in the Indian real estate market, and have expressed interest in the Indian real estate. The retail segment plays a vital part in the Indian real estate.

According to recent reports,” the global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and predicted an impressive 20 per cent growth rate for the organized retail segment by 2010″. [Source: ibef.org]. The Royal Indian Raj International Corporation is investing a whopping $US 2.9 billion in a prestigious Bangalore project called Royal Garden City. The Likes Of Emmar Properties a Dubai based group, which is one of the largest real estate developer in the world, has linked with Delhi based MGF Developers. This will be India’s highest Foreign Direct Investment (FDI) in the realty sphere amounting to over US$ 50 million in various projects. This boom is expected to further momentum in the foreseeable future, primarily due to easy financing facilities. It is being estimated that by the year 2015, the investment in real estate will touch up to $90 billion. In 2005 these investments were hovering around $12 billion. Hence this would be a giant leap, and there is no looking back henceforth. The U.S. based Tishman Speyer has joined hands with ICICI bank to invest US$ 1 billion. Other companies who are venturing into investments in the real estate sector include U.S. pension fund, CalPERS, hedge fund Farallon Capital Management, US-based developer Tishman Speyer and NRI fund Trikona Capital.

However, analytics do believe that things could go out of control if urbanization would be the only focus. Since India has been a predominantly agro based economy, eating up our land resources could backfire in an irremediable way. Careful planning is required to balance the nation’s economy, especially because of the country’s overpopulation.

Rising interest rates is yet another concern. With interest on home loans increasing, retail investors are losing interest in creating mortgages. But this would not pose a big hurdle in the path of ongoing boom in the real estate and at present, the rise in incomes is much more than the rise in interest rates.

Speculations of an impending bubble are also ripe, nonetheless, the Indian real estate is expanding exponentially, and if this tempo is maintained… the boom shall continue well into the future as international investors are lining up to emblazon the Indian skylines.

Share Market

admin — Mon, 29 Jan 2007 05:25:45 +0000

Fundamentals of Stock Markets for beginners

What are Shares?
As the meaning of the word denotes, Share, in the context of stock market, means a portion of the ownership of the company or in other words having invested in shares of a company means that you have brought in a part of the capital of the company and you become an owner of the company to the extent of your holding. A person holding more than 50 percent shares of a company is able to exercise control over the affairs of the company as he has the maximum proportion of shares as compared to other shareholders.

Every company has a share capital and the persons who contribute that share capital are called shareholders. Initially the company starts its operations as a closely held company with the capital contributed by its promoters and as the company progresses, it may require more funds. The available options are to raise further equity or share capital or raise debt by securing loan from various banks and financial institutions. In the case of debt the principal as well as interest is payable and the transaction may also require the company to pledge its assets. On the other side if the company decides to raise further equity, it is not required to repay the principal and no interest is payable either. But the promoters have to share their ownership and profits with the new shareholders. Now when the company decides to raise further capital, again, it has two options. One, to raise capital through private placement and two, to raise capital through an IPO (Initial Public Offer). In the former case the equity is issued to a few large investors who buy stake in the company and in the latter case the equity is issued to public at large where a number of retail investors subscribe to the issue and a small portion of capital is contributed by each of them. A company can have two types of share capital. Equity share capital and preference share capital. In case of preference share capital a fixed rate of dividend is paid on the shares every year out of the profits of the company but the preference shareholders do not have voting powers exercisable at the General Meeting of the company. Equity share holders are paid dividend out of the profit left after distributing fixed dividend to the preference shareholders but they can exercise their right to vote at the General Meeting of the company where all the important decisions are taken.

What is share market?
Putting money in an investment is useless unless it is saleable. Shares once issued remain afloat until the company is running and the life of a company is perpetual, it never dies. But a person having shares of a company might not hold them for life; he would like to sell them for profit. To provide liquidity to the investments made by retail investors in shares of companies, stock markets were evolved. Stock market is a place where buyers and sellers are provided with a platform called an exchange where they can buy and sell shares of the companies listed on that stock exchange. In India two popular stock exchanges are Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Trading on a stock exchange
Stock markets are organized markets controlled and regulated by various governing agencies and regulatory bodies. Trading on stock exchanges is done through stock brokers who are regulated by SEBI (Securities and Exchange Board of India). All trades on stock exchanges are done in the electronic form, the trading is completely paperless. The shares are also held in electronic form at various depository participants and deliveries are given and taken through these depository participants. Depository participants are like banks, you can hold your shares in the accounts maintained by depository participant. To put it simple let us take an example. Let’s see how a beginner can enter the stock markets.

The first step to buy shares is to open two accounts. One with a depository participant and one with a SEBI registered stock broker. All you need to have to open these accounts is a Permanent Account Number (PAN), a passport size color photograph, an address proof and an identity proof. After opening these accounts you can place your bids on the terminals of stock exchanges maintained at the trading premises of stock brokers. Live trading can be seen on the terminals, buy and sell bids can be put online and the trades are done on matching bids of buyers and sellers. You may buy a stock either at the prevailing market price or you may put a bid of your choice and wait for the price to come down to your target. Bids once put in the system remain valid for the whole trading session. However these can be modified or cancelled at the option of bidder. Similarly orders can be placed to sell the stocks.

Once the orders are executed, settlement is done by the exchanges and all those who have sold the shares, have to give deliveries of the shares sold and all those who have bought the shares, have to make the payments as per the price at which the shares were bought. Both NSE and BSE follow T+2 rolling settlement systems. It means that settlement of trades executed shall be made on the second day from the Trading day. For example trades executed on Monday will be settled on Wednesday. Payments and deliveries are to be given to the stock broker where the bids were executed and he will then settle the trades at the stock exchanges on behalf of all his clients on the settlement date. Payments can be made by check to the broker and deliveries can be given by issuing delivery instruction slips to the depository participant, where you have your account, in favor of the clearing member (your broker’s pool account). The depository participants would take a maximum of 24 hours to execute your delivery instructions, therefore you have only one day to give delivery instructions to your depository participant after the trading day and before the settlement day.

Now you can open an account and start trading. But be careful, stock markets are risky, be informed about the company you are going to invest in, track the progress of the companies on your portfolio, have an expert advice and remember that a stock price can come down as much as it can go up. Happy trading.

Property Prices in India: A cost estimate

admin — Fri, 26 Jan 2007 05:23:48 +0000

A cost estimate for buying a residential plot or built-up house

India is currently witnessing a real estate boom for some time now, although speculations and resulting analysis is vague, there seems to be no de-escalation either in the real estate boom or in the property prices. In fact, the property price graph just seems to be growing higher, as income levels are rising, so is the consumer demand for a better lifestyle. The Indian consumer is more aware, demands value for money as well as with MNCs hiring on a big scale, affordability is reaching a peak with a certain strata of society. Furthermore, with copious provisions of bank loans, home loans are just a phone call away. Today’s consumer looking for a fine housing does not have to look too far. Of course, with a plethora of options, one can find a fine deal that suits their budget.

Property is an investment which turns into an asset, that everyone is aware of. Now, property prices are currently on the rise especially in cities like Mumbai, New Delhi and Bangalore. In fact, in certain areas the property prices equal that of New York or London.

So, land prices are only going up primarily due to the rising building material cost. Over a course of time, the cost of constructing a house has gone up by 30-40%. Building material comes expensive at Rs2600 per thousand bricks and a packet of cement at Rs.200+. Similarly, the cost of steel has escalated to Rs2800 per ton as opposed to Rs.2200 last year.

With easy loan facilities and rising income groups, people are more than eager to move into high class state-of-the-art functional apartments, as the developers vie against one another to pace up with increasing demands. As the income brackets of Rs.20000-25000 becomes higher, so does the demand for high quality residential property. With lucrative schemes and easy installments, bulk bookings are made in advance for ready to move in flats.

Although property rates vary according to the location, city and a host of other factors determine the property value …. It seems developers are now venturing into providing affordable luxury to the lifestyle savvy consumer. In Mumbai Goregaon (West), a luxurious housing project comes at Rs.25-28 lakh. If one is looking for high-end housing, the top developers are offering this quality between Rs.60 lakh to 2.5 crore. The high cost appreciation of condos, justifies the rising demand for such properties. DLF’s premium apartment complexes have witnessed a price appreciation of 15 to 30 percent since last year.

In Bangalore, while the capital value has risen by 10-15 percent, Delhi and NCR experienced an escalation in capital value by 20 percent over the past year. This upward trend seemingly, is here to stay.

The demand for residential especially condominiums is on the rise as it proves to be quality and cost effective housing for the MNCs expatriate staff as well as corporate honchos.

In Mumbai, a quality residential property ranges between Rs.20-30 Lakh. The costs of “A” class buildings in Mumbai like ‘golden triangle’ hover at Rs 15,000-17,000 per square feet. Cuffe Parade in Mumbai comes at a price of Rs.8,000-12,000 per square feet and at Bandra it is Rs.8,000 to 13,000 per square feet. Nariman Point is supposedly the most expensive locale in India, where commercial properties command a price of Rs.8,000-12,000 per square feet. The Bandra Kurla Complex in Mumbai is again highly priced at Rs.7,000-9,000 per square feet.

Cities like Bangalore are witnessing a boom and a need for service apartments is on the rise as well. In the past year, there has been a two-fold increase in land prices in Bangalore, especially in areas like Whitefield and Sarjapur. According to statistical data, “In 1999, a premium spot fetched Rs. 2200 per sq.ft, while an average middle class space now commands Rs. 2500.” . A premium luxury apartment commands a price of over Rs.2700 per square feet. An average functional flat comes at Rs.900-1200 per square feet and a life style apartment with facilities like pool, gym, and club are priced at Rs.1500-1800 per square feet. For ultra luxury housing, the apartments are ranged between Rs.10 million to 25 million.

The residential market in Chennai has not witnessed any dip in prices over the years, and has surprisingly remained consistent. With state of the art apartments high on the demand list; Chennai is experiencing a definitive boom in residential property, especially due to the IT industry dominating the city’s commercial activity. People are settling for areas like Kotturpuram, Boat Club, Poes Garden and Wallace Garden, East Coast Road(ECR), Adyar, Vellacherry, Perringudi.

Kolkata on the other is gradually rising to the mark, albeit after a long lull. The residential property market is gradually and steadily evolving although not as fast as compared to Delhi, Mumbai or Bangalore. With Alipore considered one of the posh areas of Kolkata, the property prices are soaring and so is the demand for luxury abodes. To give an estimate, three to four bedroom flats and penthouses in Ashoka Complex provided by the Merlin Group are priced at Rs.74-130 lakh with the carpet area varying between 2,450 and 3,800 square feet. Likewise, four to six bedroom flats (2400-2800square feet) at the Merlin Terrace , are ranged between Rs.72 to 144 Lakh.

The residential demand is on the rise in Hyderabad and Secunderabad as well, primarily because of rising software companies. Among the most preferred and prime locations remain Banjara Hills, Jubilee Hills, Somajiguda, Panjagutta etc. which are again high priced. The epicenter of the city has become saturated and that has created a demand to develop better lifestyle structures and amenities away from the city.

Providing futuristic lifestyle remains the focus of the developers and with the income levels on the rise and easy loan provisions, people are ready to invest in an asset that delivers value for money clubbed with convenience, luxury and various options of affordable schemes.

10 things your real estate agent wouldn’t tell you

admin — Tue, 23 Jan 2007 05:21:33 +0000

10 things your Real Estate Agent wouldn’t tell you. And why?

All potential buyers are a tad skeptic about their agents initially, which is indeed natural, as buying a house is the most important decision as well a lifetime investment. First off, weigh all your options; get the facts and figures right, lap up on all the information available. There are a few things that your agent does not want to reveal to you, so get your antennae up, don’t necessarily rely on your feelings and gut, first get the facts right.

1. Whose side are they on? Who are they really representing?
Okay, let’s face it. It’s the buyer who puts the money on the table. It’s only fair for you to expect that the agent gets you a deal that would deliver your money’s worth without being too commission-hungry. Now, usually that is NOT the case. The agent in most cases is representing the seller and is not looking out for your best interests. He is in fact, representing the seller’s best interest. So, this the number one thing that the agent is not going to reveal to you, that he is in fact on the sellers side and is representing the seller.

However, you have an option of choosing an agent or broker who will represent you and your best interests. In all probability, it would not cost you much. He would charge you the commission just as he would charge the seller. Just make it very clear in the beginning, so you know that he would try and get you the best deal possible and preferably has no ties to the seller’s agents.

2. Are you paying too much for that house? Get your facts and figures together
This step is vital. You are about to zero down on the house of your dreams and now come the big decision. How much is it worth? Before you make the offer, do a thorough research of comparable sales in that area. Try to weigh the pros and cons by defining your search parameters and see if that suits your budget as well as convenience. According to real estate analyst Karl Case, “Check out comparable sales in the neighborhood, then drive by each house to make sure you’re comparing apples to apples.”

This is the one thing the agent will not tell if the house is well worth the asking price. Remember, the more you pay for the house, higher the commission the agent gets. So, he will not offer you anything lesser than the asking price. Therefore, research is the key. Reconnoiter the immediate vicinity, lap up on sale figures of houses similar to yours. So, before you make the decision, it should be based on facts and figures, not just blind trust.

3. Investment value of a house. Is your agent telling you the truth? Do not get fooled
Buying a house is a lifetime investment and the most significant one. Why? In most cases, people look at it as an asset because of property appreciation over a period of time. In other words, it is important to ascertain the investment value of the house before you close the deal. This is the other thing that the agent will not be able to explain to you, and may sound overly optimistic about the investment potential. That’s because it is not easy to predict the long term future value of a house, just as in the case of stocks. However, don’t get stumped. You could hire an expert to analyze the investment potential of your house. Although that would give you only a rough estimate. Alternatively, you could do an online research or get any real estate analysis firm to track past prices and sales. This again would only provide you sketchy details. Many factors come into play while making long term predictions like demographics, economic trends, population shifts, and crime rates.

4. A preliminary sweep of the immediate vicinity. Is the agent revealing everything about the neighborhood, location etc?
Reconnoiter the area where you are planning to buy the house. Chances are that many facts are likely to unravel that your agent might not tell you, knowingly or unknowingly. You would then want to rank the crime rate prevalent in that area as also things like whether you have a shrieking neighbor! Weigh all pros and cons. Do not rely entirely on your agent to give you all the information about the locality, neighborhood etc. Get a firsthand feel of the place.

5. Will I get my deposit back in case the deal goes bust?
Caution and awareness is the key here. Make sure that before you sign the purchase-and-sale agreement, it explicitly mentions to protect your deposit amount just in case the deal goes bust. There have been many cases in the past, wherein people have lost their deposit money due to lack of information. The real estate board issues the following warning; “Don’t sign any agreement or pay any money until you’re completely comfortable with all the terms and believe the agreement protects your interests”.

6. How old is this house? How much repair and mending does it need?
Get a thorough home inspection done; chances are many things will yet again unravel that your agent might not tell you. Check for electrical fittings, plumbing, wiring, heating systems, leaky faucets. Furthermore, ask the owner as many questions. Most importantly, make sure that the sale-purchase agreement does not prevent you from getting a home inspection done. This would save you tons of trouble and money in the long run.

7. “I am really a real estate broker with a great track record!”
Make sure not to hire an agent without a few reliable references. Make enquiries about him/her, he should be a renowned broker with credibility, lest your deposit amount should be at stake.

8. Don’t reveal too much about yourself to the agent
Don’t get schmoosing with your agent especially not if he is representing the seller. Chances are he could reveal all that to the seller. So, if you slip out your financial details or the urgency to buy the house; that could weaken your negotiating or bargaining stance.

9. You may want to check the piping, electrical connections etc. before finally closing the deal
Some sellers can be very petty and for all you know after completing all the documentation, they could shave off the house of a few essentials like the water pipes, fans, electrical gadgets, etc. So, make sure that you inspect the house thoroughly before signing the sale-purchase agreement and that you are buying the house with all accessories fitted which have been seen at the time of inspection. You could be unpleasantly surprised.

10. “My Commission is negotiable”
Most agents are not going to tell you that their commission is not necessarily fixed. So, just in case the seller and the buyer are not able to decide on the selling price, a little flexibility on the agent’s part will prove to be beneficial, as then you can make up some of the difference between the asking price and selling price. This would help you get a productive transaction, and most agents would agree for a few thousand, as even then the commission is substantial.

Popular Indian Real Estate Developers

admin — Sun, 21 Jan 2007 05:18:43 +0000

List of prominent real estate developers/builders active in India

Over the years, India’s skyline has metamorphosed drastically, lending not only a more modern appeal but also striving to be at par with world-class commercial and residential structures. It is indeed a refreshing change from the unassuming facades that one used to witness earlier, but all that is changing fast. Seemingly, this momentum of growth will continue, only to contribute towards the Indian real estate boom. Well, it is not really a magic wand that worked abracadabra; it’s the brilliant expertise, planning, strategizing that goes behind every minute detail of every project. Today top Indian real estate developers are not leaving any stone unturned, and are equipped with highly trained architects, engineers and managers. Below is the list of the top Indian real estate developers/builders:

1. DLF Group
This group was established in 1946 and is led by Mr. Singh. You could almost term it as a pathfinder as it has revolutionized the vision of the real estate developer. It has been instrumental in building tastefully designed structures, both residential and commercial. DLF city that is spread over 3,000 acres has completely changed the face of Gurgaon in just a few years. Gurgaon now boasts of aesthetically designed structures, well suited to international tastes and standards – ranging from condos to malls; from entertainment complexes to some finest residential complexes and much more. Reports suggest that “There are over 42 million sq. ft. of quality retail space developed and under development in metros and other urban destinations across the country”.

2. Unitech Group
Unitech Group is one of the prime developers in Indian Real Estate, and has established its pan-Indian presence, carving its significance as a leading township planning and real estate development company. This Rs.1600 Crore worth company has carved itself a niche and is rapidly stretching its wings spanning the nation, hence lending India a brand new façade from building top of the line apartments to amusement parks as well as hotels. It is rapidly changing the Noida skylines by building 4,000 world class apartments, priced at Rs.2 crore each.

3. Ansals’ API
Ansal Properties and Infrastructure Limited (APIL), led by two brothers Sushil and Deepak Ansal is one of the leading real estate developers in Northern India.
Having grown in leaps and bounds, the company has completed some prestigious projects like some of the famous landmark buildings like Statesman House, Antariksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal Bhawan. This proves its significance and credibility in today’s booming real estate arena as a pioneering developer. It is also actively involved in developing
IT cities, commercial and residential complexes.

4. Eros Group
The Eros Group is credited with building and developing integrated townships like Charmwood Village, Eros Garden, and Lakewood City lending a modern and an ultra urban appeal to the some of the posh and prime locations in Delhi. It has successfully sustained itself in this arena for over 50 years. Furthermore, it has branched out towards hospitality and entertainment segments as well. It boasts of some of the most stunning and finest aesthetically designed structures such as the Eros corporate tower, an architectural marvel. The International Trade Tower and American Plaza are also some of its prestigious undertakings, adding another feather to their hat.

5. K. Raheja Corp.
K.Raheja is successfully led by Mr.C.L. Raheja, and was established in 1956. There has been no looking back for this group since its foray into real estate. It is currently engaged in giving India an IT park at Cyberabad, Hyderabad. It has also ventured in retailing and hospitality segments. Its retail venture of Shoppers Stop has changed the way the Indian consumer buys. Crosswords, India’s finest book retailer, is another retail venture of this group, which has now spread to over seven cities in India.

6. Omaxe Limited
It was in 2001, that Omaxe made its foray into the Indian Real Estate, and since then it has successfully made its presence felt as a rapidly growing prominent Real estate developer. Pacing to keep in rhythm with the burgeoning demand for high quality residential and commercial real estate, Omaxe has proved its significance in just a span of 5 years. Offering true value for money, this group has provided real estate solutions to NCR of Delhi.It has successfully completed 10 projects worth Rs.360 crores i.e. high quality, 8 residential and 2 commercial. According to reports “Some of Omaxe Group’s major commercial ventures include Omaxe Plaza, Wedding Mall and House 2 Home (Gurgaon), Wedding Mall (Patiala), Omaxe Plaza (Ludhiana), Omaxe Arcade and NRI city centre (Greater Noida), Park Plaza (Indirapuram), Wedding Mall (Agra), and Citadel and Pearls Omaxe (Delhi)”. The group’s commercial undertakings include IT Parks, Hotels, Multiplexes, Shopping Malls, Group Housing and much more.

7. Parsvnath Developers Limited
One of the leading Real Estate developers of the country, it is currently engaged in 85 projects as its commercial and residential undertakings, across 13 states and 37 cities. These include Group housing, IT parks, Shopping Malls, Hotels etc. According to recent reports, this group is also planning to venture into InfoTech, Departmental Stores, Amusement Parks, Exports and Imports, etc.

8. Vatika Group
Again, one of the leading real estate developers, the Vatika Group has an impressive business portfolio with project developments ranging from commercial complexes, shopping malls, as well as group housing and Five Star Hotels. Established almost 15 years ago, it has come a long way and has given India some of the best landmark structures. Some of its best ranked structures are the Vatika First India Place, Vatika Triangle, and Vatika Atrium., all architectural marvels and house the topline MNCs. Also, changing the face of Gurgaon, Vatika has offered some of the best quality residential townships like Vatika Greens, Vatika farms, and Vatika Woods, providing worldclass infrastructure, amenities as well as true value for money to the lifestyle savvy Indian.

How to sell your house for a good price

admin — Sat, 20 Jan 2007 05:17:04 +0000

Selling your house? How to get a good price?

So you know its time to bid goodbye to your house and to make it available for sale. Now, you know at the time you did buy your house, it was with this conviction that its going to prove as a valuable asset in the future by bringing you amazing return profits, either by rentals or by selling. In most cases, residential properties get appreciated over a period of time, and that is the time to hit the iron while it is still hot. Everyone wants to close the deal on their property with a maximum profit possible, however do not rush. With the right kind of presentation, research, and patience you will be on the right track towards a productive transaction. So, let’s just analyze what needs to be done to procure the best deal possible while your house is set to steaming hot in the real estate market.

Research is the key. Get your house appraised by a professional
First off, get the internet search engines working for you. Try to determine the value of your house, by finding out what price did other houses like yours in your area, sold for? There are many property listing websites which would give you an estimate of similar houses like yours and the prices and quotes that people are offering. This would give you an idea of attaching a sensible price tag to your property.

Try to also assess the features in your house that would outweigh the others and give you an advantage in procuring a better deal. For example, the basic amenities, location, neighborhood and most importantly the condition of your property. Try to weigh the bonuses, before you draw out a comparative analysis.

Better still, get talking to a few people be it friends or family, internet message boards or blogs or even your neighborhood. The idea is to get a good handle on the real estate market to ascertain the true value of your house. After all, its not every month that one gets to close a deal on property for a profit.

Having done your own homework and bit of research, its now time to get your house appraised by a professional. This is your next step. Ask your real estate agent to provide you with a detailed “comparative-value analysis” on your home. This analysis would provide you with information like the sale price estimate on houses similar to yours that have been sold only recently. Next step would be to get a fair appraisal on your property by your agent: At what price should you be listing your house and how would they help you sell it?

Time to spruce up your house and put its best face forward!
Let’s face it, looks do matter especially when you want to place a heavy tag on it to extract your property’s full worth, and the first impression is the last. Get rid of junk. Anything that you think has not been of any use to you for over a year, its time to dispose it. Do not exhibit too many personal possessions, empty out your closets, drawers, attics etc. Preferably, just the furniture should be present so it gives the buyer an idea of the kind of space and arrangements that he could make. Try to make the room appear more spacious as well as retaining the purpose of each room.

Most importantly, clean up to a sparkle! This step is vital. Clean corner to corner, even places that you had not thought of cleaning before. Certain buyers scrutinize every fine detail. Alternatively, you could hire a cleaning service to get the best job done. The walls, floors, light fixtures, ceiling fan blades, carpets, windows, faucets – everything needs to be cleaned and polished to a sparkle. Make sure you get rid of cobwebs in the basement and attics as well. This would impart a good impression that you have maintained your house well.

Usually a fresh coat of paint works like magic, and lends a brand new appeal to your house. Try to uncover and detect where repairs need to be made. Check every minute detail. The door knobs and handles as also the floor or counter tiles. Do any of the walls have a gaping hole? Are there any dripping faucets or jammed cabinets/drawers? Get everything fixed to the minutest detail possible. You are working on upping the oomph factor of your house; it will all be well worth it at the end of the deal.

Create Curb Appeal
Ask yourself how your house looks from the outside? The exteriors impart the first impression. Usually it is repainting the outside wall that works wonders. Check the landscaping outside your house. Try to plant a few flowers or place a few fancy pots. Do not let it look barren. Better still, mow the lawn. Make sure your door bell functions properly and if you have a front gate, it should not be creaky or look bedraggled. Most importantly, your house number should be clearly visible, if not get it painted anew.

Well, you are almost there. Now, best option is to get a real estate agent to help you sell your property. Avoid doing it all by yourself. Why? Research reveals that a good real estate agent could get you a price which may be up to 15 percent higher than in case of your doing it on your own. But at the same time you should not rely completely on your real estate agent. Try giving an advertisement in a leading daily and on the internet sites to get options. Weigh all options and more options you have more is your bargaining power.

With the right guidance and exercising prudence you are sure to close the deal at a fine profit. Till then, happy selling!

Purchasing your first Dream House? Read this

admin — Fri, 19 Jan 2007 05:34:55 +0000

Thinking of buying your first house?

Okay, so you have come to a point in life where you need to make the big decision. Buying yourself a house that you can call “Sweet Home“, ready to bid goodbye to the shrieking landlords and be ready to bask in the pride of ownership. Believe me, it can be the most daunting task to buy a house for first timers at least. In fact, it can be more daunting than finding your perfect groom!

With considerable amount of research and preparations, it is not really such a scary proposition after all. With a little extra effort of lapping up on information, doing your homework well, you could land yourself a magical deal! With a little help, and exercising prudence, generations would benefit from this one decision, as it usually happens that property plays an heirloom in most families.

Many factors come into play when deciding to buy a house. Here are few tips that would guide you in this process.

Are you mentally and financially prepared to make the purchase?
Being mentally prepared is still easy, because by now it has settled that you need to buy your own home as it has been reiterated to you for the umpteenth time that its time to do so. Having made that decision, one still needs to rethink and strategize a bit further. Delve a little and ask yourself these questions:

Do you have any budget constraints?
Do you have a steady and regular source of income?
Do you have a job or business, good enough to sustain your expenses?
Are you planning to live in that area for a few years to come?
Most importantly, weigh your affordability. Do you have enough funds to make a down payment?

Although many mortgage programs are available, research reveals that your total payout on repayment of loan including interest and tax should not exceed 30-40 percent of your total monthly income. Larger the amount of the down payment, lesser the amount of your mortgage. So, weigh all your options before you dive in.

After much deliberation, one is able to make judicial use of one’s funds. Mental preparation is paramount. Rest assured, with the right guidance your home will prove to be a valuable asset.

Explore, Research and define your search
By now it has sunk in that you need to put aside a certain amount of funds towards purchasing your house. Next step is to find out what is available, what kind of neighborhood you want, what kind of housing are you looking for – condo, single unit apartment, a builder’s floor, a flat or a bungalow. Most importantly, a preliminary sweep of the immediate vicinity is vital. That would give you an idea of defining your search parameters in terms of safety, distances from work place or market place, basic amenities, etc. Survey your surroundings. Is there a park? If you have kids, how far is the school? Take all these factors into consideration.

Again planned research is the key. The most common tool is of course to surf the web to find the kind of abode you are planning to buy. This kind of preliminary search gives one an idea of the kind of vicinity, neighborhood, etc and in some cases with the help of web-based tools such as google maps even aerial views of the area you plan to live in. With all this information just a mouse click away, you would have figured out by now where and what are you looking for. That done, it would be a good idea to get in touch with an agent, preferably someone whom you know and most importantly, who listens to you and understands your needs.

By now you know that you are almost there and just a few steps away from owning your dream home!

Time to explore and narrow down your search
Given that your agent by now understands your needs and exact requirements, he should be showing you homes that fit your particular parameters. It’s time to narrow down your search in terms of the features of the house that suit you best. Features like a backyard, garage, basement, single or double bedroom etc. That done, make sure you don’t look at to many houses in a single day, chances are you would be confused and would not remember the specific details. Best would be to carry a camera (or a mobile with camera phone as is very common these days) and take pictures for future previews before making your decision. Or you could even carry a paper notebook for jotting down some key points regarding the specific properties.

Now you would want to zero down on a couple of houses that suits and fits your parameters.

Thorough home inspection and negotiation
Once you have finalised the house you are interested in buying (after much deliberation of course)., it is now time to do a thorough inspection of the entire house and immediate vicinity. This would help you uncover and detect major or minor defects, which need to be fixed. Discuss with the seller all the details and ask him or her to either lower the cost or pay for the repairs.

According to Reggie Marston, a home inspector “A home inspection should uncover defects that could become very costly to repair after (buyers) assume ownership,” he says. “It will also uncover safety issues, water infiltration issues, roof problems, structural issues, etc”.

This way, you save yourself time and unnecessary expenses. Try to negotiate further with the seller, to get full worth of your money. After all, it’s not every month one goes house shopping.

Time to close the deal on the house
Having completed all the major work, it’s time to close the deal and finally move in. Phew! By now you know it was all well worth the efforts. Now comes the documentation of the deal which should be reviewed by an attorney. The closing paperwork should be thoroughly reviewed by your attorney to make sure that it is in your best interests.

Having labored so hard, it is time indeed to relish and enjoy your new sweet home.

Real Estate or Stock Markets – Where to Invest?

admin — Wed, 17 Jan 2007 05:38:19 +0000

Where to Invest – Real Estate or Stock Markets - The Difficult Question?

Where should you invest – Stock Market or Realty
Who wants to keep his money in the bank any more when there are so many investment options to make your money grow exponentially? Well you have to put that minimum amount to those standard post office instruments, provident fund and insurance to save that 30 percent tax allowed by the taxman, and will you be interested in putting even a single penny more than that in those instruments? With its robust and booming economy India has become one of the favorite investment destinations in the world. Almost all sectors are witnessing strong growth, per capita income and spending is at all time high levels. Disposable income in cities is increasing and finding its way to spending and investing. A lot of investment is being pumped in stock markets and real estate. Both are high risk high return markets and have witnessed tremendous growth in the past five years.

The risk factor
The stock markets are definitely more risky than the real estate market and therefore have the potential to give you more returns than the real estate market. You won’t see many multi-baggers in the real estate, I mean to say that in bullish markets stocks are seen to be rising 3 to 4 times in a year where as the increase in property prices is more or less secular in a particular area. But at the same time the stocks can also reduce to half or one third of their value which is rarely seen in real estate. Further you can easily find stocks on upper or lower circuits of 20 percent which means that they can increase or decrease up to 20 percent in one single day and in real estate it takes months to increase or decrease 20 percent. Therefore, of the two we can safely conclude that the real estate investment is safer than the stock market investment.

The information and knowledge factor
As discussed above stock market is a high risk high return game, but if you play it professionally you stand to make a lot of money out of it. Unlike real estate markets stock market investments require a lot of information and in depth knowledge of the companies you are going to invest in. The stock prices are a mirror of the performance of the company which is reflected through quarterly results announced by the company and on the positive and negative news flows. Further these prices also depend on other factors like overall market trend, performance of the particular sector and industry, macro economic factors, global factors and announcements and policies of Government. Therefore, investment in stock markets will require beforehand knowledge of the company you are going to invest in and you will have to keep yourself informed on all other price sensitive factors.

Minimum investment
One good thing about stock markets is that you can make an investment of as low as Rs. 500 and more importantly you can plan your investments like you can put some money every month or you can invest in small tranches and you can have a portfolio of many stocks. In real estate I think a small investment would not make sense and even the smallest investment would not be less than Rs. 10 lacs considering the investment to be made in a metropolitan city.

Transaction costs
The transaction costs of buying a property would be much higher than buying a stock. On purchase of stocks you would be charged a brokerage of about 0.5 percent plus service tax and the security transaction tax (STT) is 0.125 percent. In all you pay about 0.75 percent of the value of security as transaction cost. Whereas in case of a property the agent’s commission would be about 2 percent and the stamp duty on registration of property would be about 8 percent plus some other documentation and incidental charges would take it beyond 10 percent. Since the transaction costs are high, you cannot buy and sell property as soon as you can buy and sell the stocks. Thus you can rotate the money in stock market more frequently than in real estate.

Power of finance
One good thing in real estate investment is that you can buy a property by investing only 10 percent of the total value and rest will be financed by the bank. The interest rate charged by the bank will be fixed and any appreciation over and above the interest rate will be your gain. The finance term can be as long as 20 to 25 years. In the stock markets also margin trading is allowed and further you can buy stock futures in the derivatives market by giving a 20 percent margin of the value of futures. However a position can be built only for a period of one month and can be rolled over every month till the position is settled with rollover costs involved but there is no interest charged. Again, as discussed above, the trading in derivatives market requires a lot of information and knowledge.

The stock exchange advantage
When you have invested in stock markets, you know the exact value of your portfolio on any given day because the prices of stocks are quoted on stock exchanges and you can exit the market any time you decide. Whereas in case of real estate investment you only have an estimate of the value of your property and it takes considerable time to sell the property when you decide to exit the market. Therefore your investments in the stock market are more liquid than in real estate.

Initial allotment
Whether real estate or Stock markets, initial allotment route is always safe. In real estate the allotment is generally made by the State level Urban Development Authorities at prices which are lower than the prevailing market prices, therefore these investments have a very low risk of depreciating. In stock markets also the initial public offerings are made under strict guidelines of SEBI and other governing bodies which control malpractices in the stock markets. Secondly the companies offering equities to public do it at reasonable prices to make the issue fully subscribed. The IPOs are generally listed at a premium and good IPOs can be said to be a safe investment.

Lastly, I would say that investment in stock markets require investment of your time as well. You need to spend time to track your portfolio and the news flows on your stocks. If you have time to invest and if you have an appetite for taking risk, you can go for investment in stock markets and if you just want to invest and forget for a long term, go for real estate investment.

15 tips for real estate investments

admin — Mon, 15 Jan 2007 05:40:10 +0000

Top 15 tips for investing in Real Estate

The real estate market in India is hot and booming. The property prices are sky rocketing and ever increasing. Indian property market has never seen such a boom in real estate and escalation in prices. The increase in prices or appreciation is from twenty percent to one hundred percent per annum. The prices are going out of reach every day and owning a house is becoming more and more costly. It is a bit difficult to speculate about realty prices, whether they will come down or keep increasing. However, if you have decided to buy a house of your dreams or you want to put your savings into real estate to ride the high flying prices, here are some tips to help you to strike a good deal.

1. Always go for the approved properties
Sometimes you may be lured by cheap unauthorized properties, which might give you a good return also, but they would never give you peace of mind and the prices will fluctuate on the government announcements and change in government policies. Secondly there is a huge risk involved with them and you have chances of complete erosion of your investment. So always go for the approved properties, they will give you good returns in the long run.

2. Save on stamp duty
Different states have different stamp laws, prescribing different rates of stamp duty on registration of property. Generally stamp duty for females is less than that on males. For example stamp duty in Delhi is 8 percent for males and 6 percent for females. And if you want to own property in joint names of a male and female then the average rate would apply and in the above case it would come out to 7 percent. So you have an option to buy property in the name of your wife, mother or sister, thereby saving some amount on stamp duty.

3. Always visit the actual site before buying
Do not buy property on papers only. Visit the site before purchasing. There are some developers who sell plots and flats by showing brochures, maps and approved plans in some distant locations, guaranteeing the returns to be more than 20 percent or so. Recently there has been increase in the appetite of investors for investment in tier II towns adjoining metropolitan cities like Delhi, Mumbai, Hyderabad and Chennai. It becomes very difficult for a person residing in New Delhi to visit a site in Panipat or Karnal, therefore he tends to rely on the reputation of the developer and invests in the property by just going through the brochures. However it is always recommended that you should actually visit and see the property you are going to buy, because reality is always different from dreams.

4. Explore all means viz. property dealers, media, websites, etc.
When you go to buy some thing the prices are very high and when you want to sell something the prices are very low. This happens to all of us, because the brokers and property dealers tend to show huge demand to the buyers and huge supply to the sellers because the difference is their profit. Some dealers are big enough to keep a stock of properties. When you are out to buy some property try and explore all means like newspapers, websites, etc. In newspaper advertisements you can directly talk to the other party and have a realistic estimate of price and if you search through some good real estate websites you would get an idea of a fair price of the area you are targeting. Now with this estimate of prices from all other sources you can go to a property dealer and you would be in a better position to bargain a good deal.

5. Try to make use of bank loans for financing
It is always prudent and easy to go for bank loans for buying a property. Here your investment would be only up to 20 percent as margin money and rest will be invested by the bank and if the bank interest is 12 percent and the property appreciates at the rate of 20 percent per annum you get a return of 20 percent on your own investment and also a return of 8 percent on the amount financed.

6. Always buy real estate with a long term view as transaction costs are high
You pay about 8 percent to the Government as stamp duty and about 2 percent to the broker as commission. Further there are some other costs involved in documentation, legal charges, attorney’s fees, stamp papers, etc. In all you end up paying more than 10 percent as transaction cost to buy a property in a city like Delhi. The transaction cost is much higher than other options of investment; therefore the investment horizon should be from medium term to long term.

7. Check the fair rental value of the property before buying
If you are buying a ready to move in property and the goal is pure investment, then the property, during the period of investment, would be let out. It would always be prudent to check the fair rental value of the property. The rent would cover a part of your installment and will reduce your burden. In some areas the value of property is very high but the rental value is very low, whereas in some areas the value is low and the rental value is high. If a property is of Rs. 50 lacs and its rental value is Rs. 8000 and another property is of Rs. 30 lacs and its rental value is Rs. 10000 you should go for the latter.

8. Look for the reputation and track record of the developer
If you are going for a property developed by a private builder, check his credentials, reputation and response to his earlier schemes.

9. Compare the returns with other options of investment
Well, your decision of investing in real estate should not base only on the fact that the real estate market is booming and every one is investing in real estate. Compare all options of investment and the estimated returns from them. Go for real estate only if it comes out to be the best option. There are people who are good at stock markets or commodities, mutual funds can also be another good option. Closely look at the risks and returns of all the options and then decide.

10. Check the legal status of the property before buying
Never buy a property before checking its legal status. Verify the title deeds and other papers relating to the property carefully. You may also consult a lawyer in case you suspect the legality of the title deeds or any other papers.

11. The property should not have any unauthorized construction
You should also check that there is no unauthorized construction in the property and the building has been built up with approved construction plan.

12. Look for the surrounding infrastructure
The value of the property depends on the surrounding infrastructure. Have a close look around the property. Whether the roads are sufficiently wide, whether there are sufficient parks, schools, markets and hospitals in the surrounding area. The distance from the nearest Bus stand, railway station and airport will also matter.

13. Do not ignore the recurring maintenance costs
Apart from the initial fixed cost, there would be several other recurring costs like common area maintenance, electricity charges, cable charges, maintenance of lifts, parks and security and parking charges. Have a prior estimate of all these costs as they would vary for different housing societies.

14. Don’t forget to see the parking space, for your own and your visitors’ vehicles
There should be ample parking space for the vehicles of the residents and their visitors.

15. Don’t forget to check the quality of construction
Last but not the least, do take care to ensure the quality of construction. This can be verified from the residents of the society and the people living in the surrounding areas with similar constructions.