The Real Estate Investment Option

PROFESSIONALS PREFER INVESTMENT IN REALTY TO STOCK MARKET: SURVEY
New Delhi, December 13, 2010
The Hindu Business LineThe HinduThe Economic Times |

Majority of the professionals surveyed by industry body Assocham said they prefer to invest in real estate sector over stock market as they find promise of high returns on investments in property.

“Over 60 percent of professionals like doctors, financial experts, companies’ directors and executives prefer to invest their money in real estate on a long-term basis as they believe it guarantees them higher future returns,” the survey said.

The chamber has surveyed 1,500 respondents from different cities including Delhi, Mumbai, Chennai, Kolkata, Pune and Hyderabad. The study said that there are huge prospects of investments in different segments of realty like commercial, hospitality, retail, manufacturing, healthcare and housing.

Of the total people surveyed, majority of them are interested in investing in Tier-II and Tier-III cities properties, as prices in Tier-I cities are much beyond their reach, the study said.

REAL ESTATE: WHEN BUYING ANOTHER HOME MAKES SENSE
December 13, 2010
The Economic Times


Should you invest in a second house? Real estate experts and personal finance consultants believe it’s a lucrative investment. “It is a good time to buy a second home because a lot of residential projects have been launched over the past two years,” says Arun Chitnis at Jones Lang LaSalle India, a real estate consultancy.

People usually buy a second home to earn rental income or to gain from appreciation in value, to use as retirement home or as holiday getaway but it’s mostly meant to supplement income. “Buying a house is unlike any other investment. It creates wealth unlike a car that erodes money,” says HDFC managing director Renu Sud Karnad.

NRIs

THE DOLLAR GOES FURTHER HERE FOR A PROPERTY BUYER…
B S Manu Rao, December 12, 2010
The Economic Times (Delhi edition)

Many Indians living in the US are looking for a residential property here. This trend is beginning to gather pace in the light of the economy recovering and the brighter job prospects in the IT sector here. T Raj Basappa, a realtor based in northern Virginia, shares some thoughts on what’s prompting people in the US to buy property here.

What’s drawing US property investors to India?

After the downturn, the property market in the US is yet to pick up. Property investors are looking for options in India increasingly as the US realty market does not work well for them at the moment. The federal government has tightened the rules governing lending for homes, and this has made it more difficult to acquire residential property in the US. There is a lot more documentation needed now than before. It is easier for a US investor to invest in property in India at the moment.

Another factor that draws investors to markets such as India is the exchange rate advantage. The dollar goes further here. It is therefore easier to acquire a quality investment property in India than in the US for many.

EVEN EXPATRIATES NESTING NEAR METRO STATIONS
Vivek Shukla
The Times of India (Delhi edition)

As the Metro rail is moves at a steady pace to the various parts of the capital and the NCR, it has greatly eased the life of locals as well as the large expatriate community in the capital. Rental market watchers say that it is a matter of great surprise that even those with luxury cars are now shifting over to the Metro for their regular commute to office, markets, malls or social outings

Real Estate Finance

ENDING TEASER RATES MAY HIT GENUINE HOME-BUYERS
Dhirendra Kumar, December 13, 2010
Hindustan Times

The Reserve Bank of India’s has finally eliminated the concept of teaser rates from the country’s home loan market. Coupled with the central bank’s insistence that borrowers put down at least 20 percent of the cost of a home, this changes the home loan landscape considerably. Both these measures have been taken to make the banks’ home loan-portfolios safer by preventing marginal borrowers from accessing housing finance.

Rental Sector

THE YEAR OF SOARING RENTALS
Munieshwer A. Sagar
Hindustan Times (Chandigarh edition)

This has been a good year for residential rentals, which showed consistent growth throughout. “In most areas of Chandigarh, the rentals increased by 25 percent to 50 percent. A 450-sq m independent house, available early this year for around Rs 50,000 to Rs 60,000 per month, is now going for Rs 80,000 to R1lakh,“ says local real estate consultant Mangat Rai.

Similarly, say realty experts, paying guest accommodation a year ago, available for Rs 1,500 to Rs 2,000 per month, is now going for Rs 3,000 per month. A 200-sq m house with a rental of Rs 15,000 to Rs 20,000 per month was going for Rs 10,000 to Rs 12,000 a year ago.

Infrastructure

2011 TO 2014 WILL BE A GOLDEN PERIOD FOR INFRASTRUCTURE IN INDIA
Ritu Kant Ojha, December 13, 2010
The Indian Express

Chief Investment Officer of ICICI Prudential Asset Management Company, Sankaran Naren remains bullish on Infrastructure story despite ICICI Pru Infrastructure fund remaining an underperformer last year. In conversation he says that currently while the consensus is on consumption our conviction is on infrastructure, which he believes is a multi-decadal opportunity in India.

Excerpts:
What kind of emotional factors and personal biases come into play when you as a fund manager are creating/changing portfolio, which can impact investment of thousands of people?

Emotional factors and personal biases are natural human traits and will also be a part of every fund managers’ experience curve. However, efficient and active fund management is about effectively leveraging these biases with the support of factual data and research. For instance it is this blend that helped us be overweight in pharma and technology and underweight in infrastructure in the year 2007 which we saw play out beneficially in the market correction of 2008. In the recent past, being overweight in telecom 6 months back and being under weight in banking 2 months back played out well for us. Currently while the consensus is on consumption our conviction is on infrastructure which we believe in India is a multi-decadal opportunity. In our opinion 2011 to 2014 will be a golden period for infrastructure. Given the global economic downtrend of 2008, the government had to support consumption to give fillip to the economy and sustain growth. However, given the recovery and the fact that corporate profitability and growth is on track, the government is now expected to realign its focus on infrastructure spending.

HARYANA AGAIN URGED TO SHARE AIRPORT ROAD LINK COST
Rajmeet Singh, Mohali, December 13, 2010
The Tribune

With the Airports Authority of India (AAI) finalizing the architectural designs and building maps of the proposed international terminal to be set up at Chandigarh airport, Punjab has again asked Haryana to share the cost of constructing a road that will eventually link the airport with Panchkula.

EXTRA FSI COULD LEAD TO DROP IN REALTY RATES: EXPERTS
Naresh Kamath
Hindustan Times

The amendment to the Maharashtra Regional and Town Planning Act, 1966, allowing additional floor space index of .33 in the suburbs for a premium is expected to reduce realty prices to some extent, real estate experts said. The reason: rates of Transfer of Developmental Rights (TDR) that a builder has to purchase from private parties to increase the buildable area of his project are expected to drop.

Sukhraj Nahar, director, Nahar Group, expects the rates of apartments to come down by 5 to 10 percent. “If TDR rates drop, we will pass on the benefit to consumers,” Nahar said.

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