Is it Worth Investing in Real Estate in India?

Real Estate market directly addresses one of the three basics human needs, shelter. Investment in the Indian real estate is a very lucrative option for investors. Thus, the real estate industry in India has a constant demand. In 2017, Indian real estate has attracted $32 billion in private equity. The global capital flow into Indian real estate in 2016 stood at $5.7 billion.

Let’s look at the reasons that can influence one’s decision to invest in real estate.

Factors That Affect Real Estate in India

• Demography Analysis

India has one of the youngest demographics in the world. This is an important factor for real estate buyers and investors. Demography comprises of details about people age, population growth, income, and migration pattern. Knowledge about these factors would help you narrow down on the type and location of the property to choose.

• Economy of the country

The Indian economy is one of the fastest growing economies in the world with Gross Domestic Product (GDP) growth around a healthy 7.1%. With the Indian economy doing well, real estate sector has appreciated at a considerable pace.

• Government policies

This is another factor that can affect investment in real estate. With introduction of The Real Estate (Regulation and Development) Act, 2016 (RERA) and Goods and Services (GST) is bound to impact the real estate market. Before deciding to invest in this sector, it is advisable to verify the new taxes, charges, subsidies have been levied on the property.

Things to Consider Before Buying A Property

• Location – Invest in a property that is situated in a desirable location. A good location should have a safe neighbourhood, proximity to schools, hospitals, shopping stores, restaurants and shops. Access to public transportation and freeways is also critical when choosing a home.

• Affordable prices – Price is one of the main factors while buying or selling a property. If you are a builder, you should price the property that the standard middle-class can easily afford. This would ensure people always have a reason to choose you over other sellers. When buying a property, ensure that you negotiate to get the best price possible.

• Consider emerging cities – Cities like Indore, Pune, and Kochi are picking up pace due to reasonable prices and better development. Employment options are also drawing people to these places. This has led to spike in real estate prices in such cities. Investing in real estate in such developing areas might increase the chances of you getting good returns. You can invest in such cities during the initial stages and then reap benefits when the value of the property increases.

Be Updated!

Ensure you pay attention to the tax system for the real estate sector. Taxation on real estate is determined on how long you own a property. Returns on investment in real estate also attract a significant amount of tax by the government.

The short-term gains from real estate are taxed at 30%. However, property held for over 2 years is considered to have long-term gains. These could attract a tax of 20%. Also, there is Service tax exemption on construction of affordable housing.

Educate yourself to take benefit of these exemptions and deductions. Implementation of Goods and Services Tax bill will have an impact on your investment.  Thus, ensure that you follow-up on the developments to know how it would affect your property and returns.

To Sum it up

India is emerging as a strong economy in recent times. Many bold decisions like increasing the Foreign Direct Investment (FDI) and demonetization are giving economy new directions. It is therefore imperative to analyze all the factors well before you invest in real estate.

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How GST will Impact Real Estate Sector in India

The real estate sector in India is one of the most important revenue generating sector in the country. Real estate in India contributes around 6% to the GDP and generates demand in more than 250 odd ancillary industries. Over the past few years, the real estate in India has witnessed a phenomenal growth not only in the metropolitan cities but also in Tier II and Tier III cities. However, the main complaint against the real estate industry is the lack of transparency that plagues end users and makes the industry a complex one to understand.

The recent introduction of RERA (Real Estate Regulation and Development Act) effective 1 May 2017 has helped to bring transparency in the land dealings and protects the interest of the homebuyer. It is expected that the introduction of Goods and Services Tax (GST) too will bring in greater tax compliance and enhance greater transparency in real estate India. Though prima facie, the cost impact of GST is expected to be negligible, GST levied on real estate will certainly ease concerns over tax structure for those who wish to buy property.

A Unified Tax Regime

Currently, there are two major taxes levied on the real estate sector. These are service tax and value added tax (VAT). However, given the multiple options exercised by developers under the aegis of tax authorities in different states, there are constant disputes over multiple discharges of taxes that even differ from location to location within the same state.

Those purchasing residential property in India have to bear the highest tax burden as they are compelled to pay various elements of non-creditable tax costs, such as customs duty, excise duty, entry tax, Central Sales Tax (CST) which is included in the pricing of the unit. This is apart from VAT and service tax that they must pay on the purchase of a residential property in India. All these taxes add up to 20-25% of the actual price of the unit. This is same even if you buy a property online or otherwise.

Reduction in procurement costs

With the implementation of GST, these taxes will be replaced by a unified tax regime and also ensure a smooth flow of input credit, which in turn will reduce the procurement cost for the developer. Unlike the previous tax regime, builders will now be able to claim input tax against the procurement of key raw materials such as cement and steel. Further, GST will play an important role in simplifying the current tax structure by identifying work contracts as services.

Under the new GST regime, steel products will be taxed at 18% (as against 17.5% currently), cement 28% (as against 23-24% currently) and work contracts will be charged at a rate of 12% (as against the multiple tax structure on work contracts where the Centre levied a 6% service tax, after a 60% abatement and states imposed VAT that could range between 1-4.5%). While the new tax regime looks higher for the construction segment, real estate experts opine that the overall tax incidence will come down significantly as a result of input credits now being available for developers in both residential and commercial segments. 

Under the new GST regime, steel products will be taxed at 18% (as against 17.5% currently), cement 28% (as against 23-24% currently) and work contracts will be charged at a rate of 12% (as against the multiple tax structure on work contracts where the Centre levied a 6% service tax, after a 60% abatement and states imposed VAT that could range between 1-4.5%). While the new tax regime looks higher for the construction segment, real estate experts opine that the overall tax incidence will come down significantly as a result of input credits now being available for developers in both residential and commercial segments.

Neutral impact from cost perspective

Under the new GST regime, a uniform tax of 12% (exclusive of stamp duty) will be applicable on the purchase of residential property in India. However, this does not automatically mean that it will lower the cost of property for those who wish to buy, as real estate pricing is more a result of market forces than principals of cost. Further, the stamp duty is outside the purview of indirect tax regime and will thus continue to be levied as before.

The same principle holds true for the commercial real estate segment. Under the new GST regime, credits related to construction will now be available for commercial property developers. This is expected to bring down project costs for developers thus reducing rentals as well. However, if all commercial real estate business entities including trading companies are not allowed to take credit on the GST paid on rentals (similar to the current regime where service tax on rentals is considered as credit) it will have a contrarian impact as project cost may even get escalated.

Overall Positive Impact

While prospective homeowners and the real estate sector as a whole may not see prices cooling off in the short term, the successful implementation of GST augurs well and will prove to be quite a game changer for the real estate sector. The clarity of a unified tax regime and establishment of a common market will help break the perception against the opaque structure of the real estate market and bring about efficiencies in the sale of the online property.

The existing grey areas of taxation will be eliminated as paper invoicing becomes passé and will bring about greater transparency in tax compliance. This will bring in the much-required accountability for real estate developers as there is a large part of project expenditure that remains unrecorded due to the invoicing clout. A greater transparency in the sector will thus help prospective home buyers make an informed choice. The developers too will benefit from the smooth inflow of input credit and reduced procurement costs.

Finally, the implementation of GST will improve supply chain efficiency and create a lucid audit trail and result in better monitoring of the sector. All of these, benefits will uplift the real estate sector as a whole and will attract more Foreign Direct Investment (FDI) in the sector. The key, however, lies in the successful implementation of GST that will improve sectoral efficiencies and result in better reformation. 

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Versova or Oshiwara – Where Should you Consider Investing?

Investing in real estate Mumbai can be a wise choice since the property rates have been constantly increasing with an increasing rate. Almost all places in Mumbai are good in terms of investing but when it comes to a comparison between the two places, then one needs to carefully check out the real estate market and its development at that particular location. One needs to study the real estate market of the past few years to get an idea of what has been the trend and several other factors affecting the market of real estate needs to be carefully studied. Versova and Oshiwara, both the places are good in terms of investment in real estate but Oshiwara has numerous advantages than Versova for investing.

Reasons Why Oshiwara Has Added Advantages

There are several advantages why one should choose Oshiwara for the purpose of investment are as mentioned below.

• Oshiwara gets a lot of benefits from the transport facilities of the Andheri West. The place has a good connection with both the road and rail network. These networks connect Oshiwara to other regions of Mumbai. Oshiwara also benefits from the Andheri railway station which is one of the busiest in the country. Several buses are deployed by the municipal corporation of the state so that it becomes easier for the people to commute. Several people are choosing this place for living and there are several new residential projects in Mumbai coming up in this area which are ideal for investment purposes.
• The upcoming metro rail project in this area will be of immense help to the people who travel from the eastern areas of the state to Navi Mumbai or Central Mumbai. This would be a mono rail project and would go above the ground. This facility is sure to increase the price of real estate Mumbai in Oshiwara and so this would be a good place from the point of view of the investors since this would give good returns on their investment.
• The recreational and the entertainment facilities are well developed in recent times.  One can find several shopping complexes, luxury shopping malls, multiplexes, multi cuisine restaurants etc. which are the major source of attraction of this place and all these facilities are further adding up slowly to the price of real estate in Oshiwara and hence a very suitable place to invest in properties.
• One can see the steady development of the residential properties in Oshiwara in the recent times. Some of the well – known property developers of Mumbai have invested here and there are several new luxury projects in Mumbai at Oshiwara which are coming up. These kinds of developments make it a favourable place for the investors. The developers have very well realized the potential of this particular area in terms of both residential and commercial growth as well.

Thus, all the above - mentioned factors contributes to make Oshiwara an ideal destination for the purpose of investment. The prices of real estate have still not achieved the sky rocketing limits but it will happen in a matter of a few years and hence is perfect for investors. 

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Alipore Offers Better Prospects For Real Estate Development in Kolkata

Alipore is located in southern Kolkata in West Bengal and is the headquarters of South 24 Paragans District. It is the poshest and costliest area of Kolkata with homes costing up to Rs. 12.7 crores. The higher real estate market and increasing property rates are due to Alipore’s good connectivity and proximity to major areas. Some of the most famous luxurious flats of Kolkata are built in this area. It is a commercial and residential hub with price trends increasing up to 10% - 12% in the past three years.

Connectivity

Alipore is well connected to its surrounding areas and major cities by a network of railways and roadways. It is surrounded by Tolly Nullah in the north and Bhowanipore in the east. On the west, it is surrounded by the Diamond Harbour Road and new Alipore borders it from the south. Alipore is connected to different parts of the city by the KSTC bus service. The nearest railway station is the Majherath Railway Station and New Alipore Railway Station. Netaji Subash Chandra Bose International Airport is the nearest airport located at a distance of 10 kms. It is also connected to the Kalighat Metro Station which connects it to major areas of the city. The roads are wide and the traffic area is sufficient, causing no problems whatsoever even during the peak hours.

Profits

With a well-developed infrastructure and increasing property rates, the locality of Alipore also provides all the civic amenities required to lead a posh and luxurious life of peace and content. The educational facilities are well provided for with some major institutions like Army Institute of Management, University of Calcutta, Lakshmipat Singhania Academy among others. Health services provided by the area are exceptional with some of the famous hospitals like Woodlands Multispecialty Center, Calcutta Medical Research Institute, BM Birla Heart Research Center among others being located here. Other then these, recreational centers and some of the city’s finest eateries are present in this locality. The Zoological Garden and historical monuments in the area are an attraction for tourists and people from all walks of life.

Property Market

The property rates in the city of Kolkata are continuously rising and Alipore is one of the leading localities to have the costliest property of Kolkata. Property rates in the area have risen upto Rs. 10 crores and the average buying price is Rs. 7210 per sq ft. The average rate for renting an apartment in Alipore is Rs. 35500 per month. Apartments in Alipore cost between the range of Rs. 60 lakhs – Rs. 2 crores and plots are placed at the rate of Rs. 5 Crores. Commercial space in Alipore can be rented at Rs. 55000 per month and most of the projects are residential housing.

Upcoming Possibilities

With increasing population, the real estate market of Alipore is continuously rising. The increasing property rates and price trends are attracting some of the known developers like Zenith Constructors, Urban Buildtech Pvt Ltd, Unique Constructions among others to invest in the area.

With well-developed infrastructure and a large number of the residential properties, Alipore is sure to become the most lavish and posh suburb of Kolkata with elites of the society residing there. 

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Top Reasons to Choose Hyderabad as Your Residential Destination

"From a buoyant economy and dynamic workforce to an affordable real estate market, Hyderabad is trending as a buyer’s market. It not only boasts practical perks, such as a relatively lower crime rate and international schools, but it has that intangible quality that makes it both desirable and trendy.

Here are top reasons to consider Hyderabad as your next city of residence.

• Economical Market

When it comes to property rates, Hyderabad is attractive in comparison to the top residential real estate markets across the country. The city is probably one of the most affordable among tier 1 cities of India. If you are looking for budget homes in Hyderabad, then this is the city is the right choice. According to the Buy vs. Rent Report 2016 by ArthaYantra, Hyderabad has witnessed de-growth in real estate costs by 3% since 2007. This is a far cry from top cities, such as Mumbai, Delhi-NCR and Chennai, where real estate is still beyond the reach of a middle-income household. In Mumbai, the average cost of buying a 1,000 square feet home is Rs.1.91 crore. On the other hand, you can buy flats in Hyderabad in well-developed residential areas such as Kukatpally, Manikonda, Sainikpuri and Miyapur in the budget range of Rs.30-50 lakh.

• Infrastructure and Connectivity

An IT/ITes investment zone II is coming up in the south and southwest part of Hyderabad. The upcoming Hyderabad Metro Rail will further enhance the city’s attractiveness as a real estate destination. More international schools have cropped up in recent years, contributing to making Hyderabad a city of choice. In addition, the city is located 22 km from the Rajiv Gandhi International Airport, which offers a good variety of international flights.

• Be a part of the Growing Industry

Major companies such as Uber, Salesforce, and Flydubai have queued up to set up or expand their operations in Hyderabad. Industry giants such as Apple, Google and Amazon took the decision in 2015 to set up their development centres in the city. Little wonder that the Telangana government announced that the city’s IT exports reached a milestone of Rs.75,070 crore in 2015-16. This was 13.26% more than the previous fiscal year. What is more, Hyderabad generated nearly 35,611 new jobs in IT industry during 2015-16, taking the total workforce to 4,07,385.

• One of the safest Indian cities

Mercer’s survey has listed Hyderabad as one of the safest cities across the world—a list that also includes Chennai and Bengaluru. The city has a personal safety ranking of 121, a number that was accorded after a thorough study of crime figure levels, internal stability and performance of local law enforcement agencies."

Source Reference: http://www.bajajfinserv-homes-and-loans.in/blog/is-hyderabad-the-next-best-city-to-buy-a-house-in/#.WT599t_I4l8

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