Improved affordability in housing requirement

With fall in interest rates in the last eight months, affordability factor of house buyers has improved substantially. During the period, interest rates on home loans up to Rs 30 lakh have declined by around three percentage points to 9%, from 12%. This sharp decline in rate has improved the capacity of borrowers.For instance, at 12%, the EMI on Rs 10 lakh loan to be repaid in 20 years is Rs 11,010. But, with interest rate at 9%, a person can borrow Rs 12,30,000 with the same EMI. That means, now he can buy a house that is almost of 20% higher value than what he could have done in 2008.

In the meantime, since January, prices of residential units have also fallen by up to 30%. Together, these two factors have led to an increase in construction activities in the country. This has also brought housing within the reach of a large number of buyers. As per the Housing Development Finance Corporation Limited (HDFC), the largest lender in the housing loan market in India, the maximum affordability of a household has been computed to be 5.1 times its annual income. In other words, for a household earning Rs 3 lakh a year, an affordable house should cost at most Rs 15 lakh. The report of a high level task force under the chairmanship of Deepak Parekh, chairman of HDFC, delves into the various aspects of providing affordable housing and has recommended a similar definition of affordability. In fact, it has been seen that if one buys a house within these limits, the chances of default go down substantially. A prospective buyer's purchase decision is influenced by a host of factors ranging from price points to location. Due to the growing awareness among consumers, choice of facilities and amenities are also found to be important determinants. Uninterrupted power supply, water supply and safety and security are the other three important factors influencing a buyers decision with respect to residential project in a preferred location. The potential buyers are not much concerned about developers brand and goodwill. The survey has brought out factors influencing preferences of potential buyers pertaining to locations, projects and amenities within the projects.

Many of the so-called affordable projects are offering apartments with an area of 1,200 sq ft and above. In such cases, even though a project is affordable on the basis of rate per sq ft as calculated by Knight Frank research, the larger size of the apartments make them unaffordable. Higher cost of living and lifestyle have adversely impacted affordability of households in Mumbai and Bangalore, compared to cities like Kolkata and Hyderabad. For instance, middle class households in Kolkata, Chennai and Hyderabad can afford houses valued at Rs 14-45 lakh, whereas households of a similar status in Mumbai can only afford houses valued at Rs 12-38 lakh.The primary deterrent in providing affordable housing in cities is the high land cost involved in developing such projects. While construction cost has increased marginally in the last few years, land cost in contrast has gone up several times.

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With fall in interest rates in the last eight months, affordability factor of house buyers has improved substantially. During the period, interest rates on home loans up to Rs 30 lakh have declined by around three percentage points to 9%, from 12%. This sharp decline in rate has improved the capacity of borrowers.For instance, at 12%, the EMI on Rs 10 lakh loan to be repaid in 20 years is Rs 11,010. But, with interest rate at 9%, a person can borrow Rs 12,30,000 with the same EMI. That means, now he can buy a house that is almost of 20% higher value than what he could have done in 2008.

In the meantime, since January, prices of residential units have also fallen by up to 30%. Together, these two factors have led to an increase in construction activities in the country. This has also brought housing within the reach of a large number of buyers. As per the Housing Development Finance Corporation Limited (HDFC), the largest lender in the housing loan market in India, the maximum affordability of a household has been computed to be 5.1 times its annual income. In other words, for a household earning Rs 3 lakh a year, an affordable house should cost at most Rs 15 lakh. The report of a high level task force under the chairmanship of Deepak Parekh, chairman of HDFC, delves into the various aspects of providing affordable housing and has recommended a similar definition of affordability. In fact, it has been seen that if one buys a house within these limits, the chances of default go down substantially. A prospective buyer's purchase decision is influenced by a host of factors ranging from price points to location. Due to the growing awareness among consumers, choice of facilities and amenities are also found to be important determinants. Uninterrupted power supply, water supply and safety and security are the other three important factors influencing a buyers decision with respect to residential project in a preferred location. The potential buyers are not much concerned about developers brand and goodwill. The survey has brought out factors influencing preferences of potential buyers pertaining to locations, projects and amenities within the projects.

Many of the so-called affordable projects are offering apartments with an area of 1,200 sq ft and above. In such cases, even though a project is affordable on the basis of rate per sq ft as calculated by Knight Frank research, the larger size of the apartments make them unaffordable. Higher cost of living and lifestyle have adversely impacted affordability of households in Mumbai and Bangalore, compared to cities like Kolkata and Hyderabad. For instance, middle class households in Kolkata, Chennai and Hyderabad can afford houses valued at Rs 14-45 lakh, whereas households of a similar status in Mumbai can only afford houses valued at Rs 12-38 lakh.The primary deterrent in providing affordable housing in cities is the high land cost involved in developing such projects. While construction cost has increased marginally in the last few years, land cost in contrast has gone up several times.

Office rentals to fall 20% in 2009 realty to recover in 2010

Office space rentals in India are expected to fall up to 20% in the next three quarters, with key cities like Delhi and Mumbai slated to witness a sharp decline of 50%. According to the global real estate consultant Jones Lang LaSalle (JLL), the decline in property prices in India is expected to continue through the year with office rentals expected to fall by 15-20%, as the slowdown-hit realty sector is likely to see a recovery only in the second half of 2010.

"The largest decline in rentals is expected in Delhi and Mumbai, expected to halve its peak," JLL said in a report on global market perspective. The consultant further said the office rentals in Chennai, Kolkata, Hyderabad and Pune are expected to decline between 30% and 40% from their peak during the next three quarters, while the same in Bangalore will fall 15-20% from its peak. On the current economic scenario, the report said the recent gains in the equity market propelled optimism in the economy and if it continues, a recovery is expected by early 2010.

"Although the effects of this upturn would start showing signs in the real estate sector, the gains would definitely come in second half of 2010, when fresh demand again builds up in the market and the latent demand suppressed on fears of a downslide comes back," it added

The Indian Real Estate Story

The Genesis

At the turn of the millennium, when multinationals began shifting their back-end offices to India and BPOs demanded vast office spaces to accommodate their staff, existing business districts in Indian metros could not match up to their requirements. Private builders established in metros found a way out by creating cyber cities and technology parks on low-priced land on the outskirts of metros, supplementing these workplaces with smart residential projects for their employees.

The Transformation

The success of one project led to another, and 7 years since then, the transformation of the Indian urban landscape is almost unbelievable. As the IT industry flourished, the barren patches of land in satellite towns attracted global attention, and cities like Gurgaon, Noida, Mohali, Pune, Bangalore and Hyderabad became investment hotspots.

The spillover was imminent, and Kolkata, Chennai, Ahmedabad, Visakhapatnam, Nagpur, Bhubaneswar and Thiruvananthapuram similarly leveraged on their skilled manpower to welcome the IT and biotech industry. Manufacturing, and services, which have performed remarkably well in the last few years, propelled cities like Jalandhar, Ghaziabad and Surat.

The urban landscape in India is currently undergoing a transmutation as the real estate wave engulfs low profile locations in Tier II and III cities. As incomes grow, and retail makes inroads, shopping malls and multiplexes, luxury and budget hotels, resorts and serviced apartments, residential townships and condominiums, IT Parks and Special Economic Zones are not the preserve of Tier I cities like Delhi, Mumbai, Bangalore, Hyderabad and Chennai anymore.

Inviting Global Attention

The Indian Government opened the doors of real estate to foreign direct investment as late as 2005. Waiting on the wings were a host of investors, currently 35 in number, who rushed in with funds that are expected to touch USD 10 billion by the end of 2007, from a figure of USD 4 billion in 2006.

The Tier II cities of Pune, Kolkata, Ahmedabad and Chandigarh, and the emerging Tier III cities are being viewed as lucrative investment projects by global equity players, venture capitalists and mutual funds.

Growing - Laterally and Vertically

Betting on the enormous potential of the real estate market in India, real estate developers from overseas have cut across all verticals to establish themselves in residential, commercial, hospitality, SEZs, health and infrastructure.

Indian real estate developers have not been found wanting either, adopting the latest construction technology to projects which meet global standards. Supported by round-the clock power and water supply, contemporary architecture and state-of-the art facilities in aesthetically designed environs, India's real estate has much to offer.

For more information about Hyderabad Real Estate log on to http://www.maaproperties.com

Why do we invest in real estate hyderabad only

Hyderabad has always been the most popular place in India because of its visitor friendly policies. There are many investment opportunities available to people in Hyderabad. In the past 2 years other cities have also noticed the profitability from Real Estate development and they are also beginning to contribute to the growth of the region.

Hyderabad is among the leading choices for people who wish to invest in Indian Real Estate. Hyderabad is a place with a high economic growth, excellent architecture, modern infrastructure, and a booming Real Estate and construction industry.

A lot of the property is still in the form of plans on paper but already the sale and purchase of these properties is good business. There are numerous properties that have already seen many owners despite the fact that construction has not even started. People are making money from property in Hyderabad that is just land with nothing on it.

Because of factors like these Hyderabad has become the best place for investing in NRI Real Estate. It is a remarkable sight to behold in the middle of the country. Hyderabad offers some of the highest standards of living when compared to any other cities of India and this only spurs on the Real Estate market growth.

Hyderabad is a place that is also centrally located in the Middle of the country and it is a convenient location for business meetings among surrounding cities as well as countries. Because of the great business infrastructure it has also gained a good corporate presence that has lead to excellent employment opportunities. This results in an even stronger economy because of the companies and jobs.

Hyderabad is among the fastest growing places in India. There are many skyscrapers that are scheduled to open over the next 5 years. Because of the highest construction rate in India and the growing economy there are many people that are increasingly looking to Hyderabad as their preferred location for NRI Real Estate investment. Despite the fact that it has so much going for it you should remember that the Hyderabad market is quite young.

Because of the heavy investment in the tourism, infrastructure has further encouraged the growth of the Real Estate market. The increase in the population has increased the cost of rentals there. In fact, Hyderabad has all the potential requirements for avoiding the issues that are threatening to hinder the growth of Real Estate market in India. These issues include shortage of manpower and large-scale construction projects that take too long to complete.

So stay tuned, and be prepared to learn something about real estate in Hyderabad India.

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