Month: July 2017

What Makes Apartments Better for Investment than Homes?

What Makes Apartments Better for Investment than Homes?

The greatest opportunities to grow wealth in today’s time are yielded by the real estate industry. In Bangalore, at the wake of revolutionary development in the real estate market, things are looking up for investors. In the given situation, the best way to pitch in your money is multi-family housing units, something that Bangalore is suffused with.

Investors who have been pro players in this business recommend apartments over houses. Those who have held multiple properties in Bangalore over the past 10 years opine that apartments make better investments than homes at this point. A home, they say, is more of a liability than an asset. Alternately, an apartment is an asset that exhibits a better growth curve in the city of Bangalore.

Three Key Reasons to Invest in Apartments

Millennials earn, aspire, and spend for style

The first indicant that speaks in favor of multi-family apartments as a rewarding investment now and in the future is the IT boom in the city. Bangalore is officially the IT headquarters of India. Hundreds of thousands of professionals make a living in this Silicon Valley of India. The millennials who are associated with the industry are earning enough to afford a fair standard of living in Bangalore. That way of living includes a nice place to call home, an independent medium of communication, good schooling for children, vacations and weekly entertainment, and such. Thus, buying a high end condominium is a life style for the IT professionals in Bangalore.

Fully loaded homes, all amenities are pre-packed

The second point that says buying an apartment is a wise investment decision that will keep sending profits your way a long time is the fact that most millennials are more interested in apartments than homes. Today’s apartments come with a complete package of amenities most of which are a matter of personal choice in homes. With an apartment, everything comes ready and served in a platter. Buyers happen to like that and that’s why they choose apartments over homes.

Land is costly; apartments are less expensive

With the city rapidly running out of its stock of raw lands, it’s becoming increasingly expensive for developers to build individual homes. Apartments cost them less, considering how many families it can accommodate at a time. That makes apartments a less expensive choice for buyers too. Inversely, when it comes to selling them off when the price touches the apex, these apartments fetch amounts twice their purchase price.

Roadblocks along the Way

The first roadblock on the way of getting an apartment is the hefty down payment. Once you get past that part, procuring a loan becomes pretty easy. Loans for apartments are easier to get than loans for homes, offices and other real estate properties. Alternately, if you have a stash of cash with you, then go ahead and pony up whatever you can to clear up the first part of the payment. The deficit you can either fix with a loan or from your income.

Finding the right investment property is another challenge faced by seekers. It’s not easy to spot the best property your money can buy. Some buildings are generous with amenities but are unimpressive in their locations. Then there are apartments in plush locations with scanty amenities. There are only a few that strike the middle chord. In apartment buying, location is the peak of the pyramid. A good location is marked by proximity to important places in the city, connectivity with the rest of Bangalore, minimal crime rate, decent neighbors and such.

Some Handy Tips

If possible, prefer an apartment on the higher levels.

Always, always choose to buy apartments from reputable builders who have a name for fine properties, timely completion and honest dealings.

Even if you live outside India, make sure to personally visit the site before you decide to buy.

If you are new in the business, do not hesitate to shop around. If possible, be accompanied by a realtor who can advise you on the properties.

Surf along the online listings. it is age-old, and quite a comprehensive approach to finding properties. Do not underestimate the power of the property portals.

Supply & Demand of Luxury Residences in Sarjapur Road are Dictated by Start-up Generation

Supply & Demand of Luxury Residences in Sarjapur Road are Dictated by Start-up Generation

Many developers have adopted marketing tools to balance the supply and demand of new apartments in Southeast, Bangalore for the start-up generation. Should you wish to live in a luxury bubble, look for significant developments in the segment of 3 BHK apartments in Sarjapur Road.

Premium apartments are in demand

People with high net worth have increased. These are the budding entrepreneurs who have led the homebuyer bandwagon for premium apartments in the city.

The new generation needs private space and are ready to shell out the dough for it. Unlike their parents who managed in the space crunch, they have moved on from their nest to bigger places. As the need for privacy grows, so does the demand for the appropriate spaces.

Bangalore has embraced start-ups that come from different parts of India. Even the local youngsters have set their eyes on better living quarters. As the young population increase in the city, they have set demands for the type of apartments they want. They give premium to the privacy and that accounts for several developers heeding to this request while building apartments. No wonder, when they announce the projects they use marketing tools that target this generation of buyers.

Why go the extra mile to woo buyers?

Understanding the psyche of the new age home owner is a must. Developers need to adopt new strategies to balance the new demand and supply of residential properties.

Recently, when a luxury residential project was launched in the Pink City, Jaipur, the developer invited 3,510 Hindu priests to perform the puja and get divine blessings for the buyers. This was the very number of apartments of the residential enclave to be sold-i.e. one priest per apartment.

Bangalore, being a city of God loving citizens also seeks divine blessings. Such new beginnings are quite good to make buyers aware of projects before buying apartments in Sarjapur Road, Bangalore or in any other part of the city.

Even a luxury abode requires divine blessings. When a builder launches luxury projects offering freebies to the buyer, the demand for new homes rises. In Bangalore itself a dance fiesta was created by a leading developer to get buyers to take interest in their properties. Getting the genuine buyer on-site is being seen as an important exercise to make the supply of inventory more quickly.

Beyond the Bhoomi Puja
Lies the actual need of luxury

After the developer has created hype around a project, it is time to focus on the nitty-gritty that buyers look for. Not every buyer may need the swimming pool but the gym and garden are essential to get any buyer hooked. The apartment interiors matter to the budding buyer.

The new generation of homeowners like to have pads that let them get personal spaces- Perhaps a cool balcony from where they can look up at the sky and dream or look below the horizon line to get a glimpse of reality.

Being a generation aware of their needs, they know which building materials will cut the glass ceiling for them. Their demands are met by the builders who try to get architects, engineers, and interior experts to match the luxury quotient for premium apartments.

New apartment, new lifestyle
The latest mantra is to sell inventory that introduces a novelty to the residents.

Just having an event to launch and attract the buyer will not get bookings. It is done with further introduction to the new lifestyle that a residential enclave promises. Developers who promise lavish lifestyles are realistic in their offerings as the RERA rope tightens around them.

A luxury project cannot be sold like an affordable housing scheme. It has to be innovative and designed to meet the sensibilities of the prospective buyer. Today’s prospective buyer knows what goes in the international market and demands the same in the city they live.

Lifestyle product and not property is sold to the buyer
Buyers are often invited keeping in line with the limited signature homes.

Special invites are sent out to potential HNW clients to check out the projects offered by a builder. The idea is to sell a concept of living and not just a property. This is crucial to get interest of the right buyer profile.

A luxury home developer will think of ways to present the project in a new light. The buyer profile is typical, which is exposed to global living and parameters for luxury living. Many start-up owners who have worked abroad and lived for a considerable period know what they are looking for in a premium apartment they wish to invest in.

GST’s Impact on Real Estate—Is it a Boon or a Bane?

GST’s Impact on Real Estate—Is it a Boon or a Bane?

There is enough furore already that the roll out of GST has created in almost every sector in the country. Home buyers and property developers are also affected, but most of them are yet to know how. Let us try joining the dots one by one.

The Good and Services Tax roll on July 1st 2017 was historic to say the least. Prime Minister Narendra Modi’s vision of “One Nation, One Market, One Tax” finally saw the day of light. Needless to say ever since the news of GST broke out, it created anticipations like no other. Almost every industry and people from every walk of life are sure to be affected by the new tax reform.

Coming to the real estate sector in the country, the confusions don’t seem to end even few days after the official roll out. To set the record straight, irrespective of whether you are a home buyer, property seller, broker, investor, financier or property developer, you are bound to be impacted.

The confusion predominantly looms around whether buyers will have to shell out more to own a house and whether developers will now be forced to spend more to buy materials. Let us zero in more to get the much needed clarity.

GST impacts on property prices and the industry as a whole

Facts and figures that matter the most

  • Developers save on construction costs: With just 2% increase for cement but 5% reduction for limestone, lignite, coal, etc developers can save good money on construction costs.
  • Manufacturers can lower the prices: Manufacturing industry gets relieved and are now expected to lower the prices of their products, which in turn will further lower the property prices.
  • Double taxation or may be not: Under construction flats will be taxed at 12% with 6% of land tax being separate. The new projects, on the other hand, will go with 18% tax.
  • Cash component goes out: Demonetisation, RERA and now GST put together make the labour sector an organised one. This makes the real estate industry running well with major cash components.

How does it turn out for the home buyers?

On the whole it is a definite win for the buyers who get simplicity and some price deduction as part of the GST rollout.

Things become simpler for the home buyers. The earlier tax structure was complex with conditions related to the construction status and the state the project was located in. To make it worse home buyers were obligated to pay stamp duty, service tax, registration charges and VAT even for under construction homes. What complicated the matter further was VAT, stamp duty and registration charges varied from one state to another. Service tax was a central charge and was applied on construction. All these put together made the whole calculation a confusing and tedious one.

The developers get input credits for under construction projects and a part of the benefit can be transferred to the home buyer. So, GST makes things simpler and more economical for an average home buyer.

Do the developers benefit too? Let us find out

Raw materials prices go down, resulting in lowered construction costs

The project cost for real estate developers will go down as a result of GST, which will actually make homes cheaper. Naturally, along with home owners the property developers also enjoy the perks of GST.

Now developers no more need to break their heads over Central Sales Tax, entry tax, customs duty, excite duty, and so on. GST eliminates all these taxes and makes it a single tax, which will boost home sales and increase liquidity in the real estate market. The input credits further boost the profit margin for developers.

Right from steel, cement, raw materials to work contracts, everything has been standardised. Sure there are some minor tax increments on few items but on the whole they are easily outweighed by the GST benefits.

How is real estate industry coping with the roll out?

The present and future looks simple, stable and economical.

Post roll out of GST, the real estate sector has come to terms with the fact that the Input Tax Credit will change the game for good in very near future. Builders can claim the tax paid at each stage and the benefits can also be passed on to their buyers.

All the state governments have been instructed to roll out necessary approvals as soon as possible in order to bring instant relief to the sector. On the whole, the compounded advantage of the Good and Services Tax may not result in too much of price deviation immediately. What comes instantly is the simplicity of taxes in the Indian real estate.