Smart Strategies for PES Investing in Real Estate

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Local Developers are turning to foreign markets to attract Indians interested in abroad property buying.

Mr. Ashwinder Raj Singh, CEO, Residential Services, JLL India quoted in Hindustan Times “If you are looking to invest abroad, tourist locations such as Malaysia, Sri Lanka, Singapore and Mauritius may be a good bet. Prices are low compared to the UAE and Western markets, and since they attract expat tourists, it is easy to rent your home out too”.
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Start-ups to offer a record pay hike in 2016. How will this impact real estate market?

Start-ups to offer a record pay hike in 2016 and it is not just the employees who are all set to laugh their way to the bank. The steep pay hike projection of 15.6 percent by Aon Hewitt, a global talent, retirement and health solutions will have a direct impact on the property market. Experts believe it will set the cash registers ringing.

Ashwinder Raj Singh, CEO of Residential Services at JLL told that a lot of investments are coming into the start – up space in India. India stands at position 3 in terms of start – up action and funds flows in India. Start – up always involves in attracting the right kind of talent. The move is likely to have a positive impact on the real estate sector with an increase in employment and remuneration. The first time buyers will have a boost and encouragement in investing in realty.

Bengaluru followed by Mumbai and NCR will have more benefits from this start – up push. The mid- size segment ranging between 50 lakh to 1 crore should have a positive impact on these 3 cities. He feels that the push do not have an adverse affect on the rentals and it should have a marginal increase.

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What makes this year’s Budget critical ?

A combination of global headwinds and stalling internal momentum makes this year’s Budget particularly critical. It will demonstrate whether the administration is willing to accept a degree of risk in order to pursue growth through pump priming, or stick to a safer course of fiscal consolidation. The arguments appear strong on both sides but we believe the desire to revive growth may be overriding due to global conditions. Recent market volatility has wiped out USD 3.2 trillion of global wealth sending investors into a sulk, while rising bond spreads indicate waning risk appetites across the board. Only nations with strong growth prospects can hope to attract capital at such times. – IMA

Expert: Affordable housing in Dubai a mirage?

With most Dubai developers fixated on building the next big luxury property, is affordable housing in the the emirate a myth?

Dubai has always been an exciting destination for employment – for Indians as well as the rest of the world.

The petro-dollar ensured that the country grew in leaps and bounds, and provided excellent employment and living conditions. This explains the swanky high-rises, glittering malls and commercial centres sprawling all over the country.

Investors with deep pockets have shown market preference to invest in residential projects catering to the luxury segment, thus prompting developers to come up with projects that cater to the affluent.

This resulted in a shortage of affordable housing for the service class which generally lives on rent and cannot afford to buy homes in Dubai.

The average household income of service class citizens is between Dh10,000- Dh30,000. At this income, given the cost of living, they can afford to pay annual rentals of Dh72,000 and maybe buy a property costing around Dh800,000.

However, as per the UAE mortgage regulations, a prospective buyer needs to deposit 25 per cent of the property’s cost in advance.

If a property costs Dh800,000, the buyer needs to deposit Dh200,000, not an easy amount to cough up at a  moment’s notice for the average citizen.

In the case of off-plan sales, the loan-to-value is 50 per cent maximum, which means that a borrower has to pay 50 per cent using his or her own resources in savings, equities or other sources.

A 2-bedroom apartment in areas such as Dubai Marina and Dubai Downtown sells for approximately Dh4 million.

Even though Dubai’s property prices and rentals have stabilised in the past year or so, they are still higher than two years ago and look set to rise again by 2017, owing to Expo 2020 being hosted by Dubai.

Besides, developers are currently not investing in building projects catering to the middle-income segment. As per the records till the 3rd quarter of 2015, out of the 19,500 projects launched in the country, a mere 22 per cent meets affordable to middle-income housing criteria, despite the substantial demand in this segment.

The primary reason is the low margins in this segment, compared to the high margins in high-end properties. Some big developers in Dubai have as much as 50 per cent gross margins in their projects, thanks to government-provided land banks and other tax benefits.

The so-called surge in affordable housing projects development in the past year-and-a-half is not making much of a difference, as these are being sold on freehold title and mainly to investors in bulk.

This way prices of such properties are subject to market influences and do not necessarily reach the targeted middle-income group.

This has resulted in more and more people moving away from the centre of the city for the more affordable homes being made available on the fringes. However, it has also led to an increase in rentals in these areas, as well as a longer commute for employees.

It has’nt helped them build on savings either, required for those advance deposits.

Sharjah has proved to be an attractive destination though, with property prices here being almost half of those in Dubai.

But long distances and the comparatively lower quality of life than that being offered in Dubai are matters that concern the working class when considering the move to Sharjah.

Another factor that has led to a higher demand and lower supply of affordable housing in Dubai is non-compliance with government regulations, one of which categorically states that developers building high-end luxury projects should reserve a certain percentage of the property for the mid-housing segment. The rule has largely remained on paper.

That said, regulators and developers alike realise the escalating demand for affordable housing in Dubai. This has resulted in a flexible payment plan, which has met with some success.

Under this plan developers either provide finance to buyers themselves or ensure that buyers pay a fixed monthly amount instead of a huge initial lump sum.

Things may not change overnight, but the fact that demand clearly exists will ensure that more funds flow into affordable housing projects.

However, developers will not compromiseon minimum profit saturation; being business establishments, they are answerable to their shareholders as well as financiers.

Once that is ensured, the supply of affordable housing in Dubai will begin to match demand more logically.

– The writer is CEO, Residential Services, JLL India

Originally published in Gulfnews

Weekend homes the price of luxury

Weekend homes, also called second homes or vacation homes, are currently an oasis of market activity in India’s the otherwise lackluster residential real estate sector. In earlier years, only the affluent could and would invest in these whereas now these properties are generating interest even from the country’s middle class.

Weekend homes

After the basic needs of shelter are met, most people have an in-built desire to own properties to use purely for relaxation. Obviously, such properties need to be in the more bracing and beauteous environs than the cluttered, polluted cities. Because quality hotel rooms in most getaway cities are limited and also very expensive, people like to invest in weekend homes there for short, hassle-free getaways. With the basic luxury factor vested in such locations — mountains, lakes or religious shrines — these homes provide their owners with quality family time away from their routine city lives and often serve the extended purpose of providing a peaceful post-retirement life.

Where are these weekend homes?

The weekend homes segment exists in towns and cities that lie within 2-3 hours of road, train or even plane travel. The most famous weekend home destinations have been Shimla, Kasauli and Kerala, with Wayanad in Kerala being the most sought-after in the state. However, with increasing demand, more and more places are being successfully marketed as weekend home destinations: Lavasa, Lonavala, Alibaug and Igatpuri near Mumbai for weekend getaways, vacation spots like Mussourie, Ooty, Coorg and Goa, and the likes of Haridwar, Rishikesh, Vrindavan etc for the religiously inclined. What attracts buyers in this segment are primarily a serene location with good weather, good infrastructure and potential for rental income.

Current trends

Because weekend homes have caught on big time with the middle class, developers are now falling over themselves to cater to the demand. The primary reasons for the increased demand are the growth of the Indian economy, rise in High Net-worth Individuals (HNIs) and the steadily growing aspirational middle class.In absolute terms, the growth registered by the vacation home segment in 2014 was 57 per cent over the year 2013. The total number of properties sold was 1.3 million, and made up almost 21 per cent of all real estate transactions. On an average, the second homes market is growing at a healthy rate of 10-12 per cent per annum.With the larger real estate sector not showing any immediate signs of revival, the weekend/vacation homes segment is showing attractive growth. All major developers are vying to get a slice of the pie with options priced from a few lakhs to a few crores being launched quite regularly to cater to different end-users and investors.

The future

Unlike America, where almost 25 per  cent of the population has a second or a weekend home, India is just waking up to the idea. The potential of this segment is considerable and growth is assured, given that a luxurious lifestyle ranks high among the priorities of the current generation.As a buyer, perform your research diligently and only invest if your financial goals are in place. These homes may not offer the best in terms of monetary returns on investments, but they can certainly make you rich when it comes to peaceful living, even in small spurts.

— The writer is Ashwinder Raj Singh, CEO -Residential Services, JLL India

(Originally published in tribuneindia.com)

 

 

 

 

 

 

 

Mr. Ashwinder Raj Singh answers the queries from Real Estate Sector.

Economic Times features Mr. Ashwinder where he answers queries related to property. Real Estate queries related to joint ownership, investment in bangalore etc sorted . ‪#‎EconomicTimes‬ ‪#‎RealEstateQueries‬ ‪#‎PropertyQueries‬

Read this article to know more:http://economictimes.indiatimes.com/wealth/real-estate/here-are-answers-to-your-queries-from-realty-sector/articleshow/50843437.cms