Factors Which Influence Price Appreciation Of An Area

Property prices in an area are governed by various factors, some of which are intrinsic to that particular area while others are dependent on the current economic, social or political situation. Some of the general factors influencing property price appreciation in an area are Population growth, Demand and supply dynamics of the area, Inflationary trend, Home loan rates and Realty drivers in the area.

Population Growth

Growth in the population of an area directly influences the demand for residential accommodation in an area. This is not alone related to the local population of that area but also to the migratory population who relocate for education or employment.

Demand and Supply Dynamics

Property prices in an area generally go up due to the increase in demand for residences in that area. Moreover, if there is a mismatch between the demand and supply due to which supply of residential units is not consistent with the demand in that area, then there will be price appreciation. Also, demand for residences in an area is higher if buyers feel that living in that particular area has considerable benefits. The long-term prospects that the area holds also has a bearing on the demand for property in an area, which indirectly results in price appreciation.

Inflation

Inflation has a direct influence on price appreciation. Inflationary trends generally exist when there is an excessive amount of money in circulation, which results in a fall in its value. This results in the rise in prices of various commodities associated with the real estate sector. They include land prices, prices of construction materials, labour charges, legal building charges as well as various other charges related to the sector. However, inflation cannot be solely responsible for the appreciation of realty prices in an area. This is dependent on various other factors like the accessibility, the connectivity, the social and physical infrastructure and the availability of residential projects in the area.

Home loan rates

The interest rates on home loan also have a direct bearing on the demand for residential property in an area, and thereby on the price appreciation. Where there is an increase in the interest rates charged by banks on home loans, the demand for residential property decreases due to the increase in the total amount that buyers will have to pay. Similarly, if there is a decrease in the interest rate on home loans, the demand for residential property will be higher as home buyers will need to pay only a lower amount.

Realty market drivers

They are various other factors that increase the liveability quotient of a particular area and hence in overall price appreciation. They include factors such as:

·  Employment opportunities in the area. Good presence of office space including reputed companies.

·  Overall connectivity to other areas across the city.

·  Accessibility to various transportation facilities that include road, rail and air.

·  Social infrastructure facilities like schools, colleges, hospitals, shopping centers, entertainment facilities etc. being in the vicinity.

·  Physical infrastructure features like good roads, bridges, flyovers, dedicated water and electricity supply, playgrounds, parks and gardens being present

·  Zoning regulations being applicable to the area, whereby permission is not granted for constructing too many projects. This facilitates the presence of more open spaces and greenery in the area, which promotes healthy living.

Spaces That Drives Residential Market Of Pune

Pune

Pune’s property market remains buoyant and expectant about the upcoming year, despite the economic slowdown and the general mood in the market. Given its performance last year, of being the second highest office space growth market after Mumbai, Pune’s realty sector is all set to get a boost this year. Infrastructure has always remained one of the leading factors for driving this growth. Great connectivity to Mumbai and a slew of projects on the anvil, such as the metro rail and Bus Rapid Transit System (BRTS), will augment this growth in the future.

Most cities have witnessed a decline in net absorption in the range of 20-40 per cent during the year 2013, except Pune, where incremental new space take-up increased by 15 per cent in 2013, according to a Cushman & Wakefield report. “Investments in office assets have been concentrated in the cities of Bengaluru and Pune. Large investment funds have also invested majorly in office assets in Pune, primarily in the micro-markets of Hinjewadi and Kharadi. According to the year-end realty report from DTZ, this decrease in vacancy reflects an increase in the office space demand, primarily in Delhi-NCR, Pune and Mumbai, in the fourth quarter. Pune reported the highest growth in office demand at 26 per cent, quarter-on-quarter. At the end of 2013, the total take-up for the entire year stood at 27 million sq ft – in line with but slightly lower than the 27.3 million sq ft recorded in 2012. Pune and Mumbai witnessed the highest growth in take-up of 52 and 17 per cent, as compared to their take-up in 2012, according to the DTZ property report.

“The absorption of office space in the year 2013, stagnated to 27 million sq ft, showing no growth over the previous year. The net absorption or new demand was even lower as bulk of the above demand came from relocation/consolidation into better buildings or location. The year 2014, will continue to be challenging for the commercial realty market. Although the global economy is expected to improve, the uncertain political and business climate in India will continue to create uncertainty in the business houses, which is likely to result in low uptake of fresh space,” opines Anshul Jain, chief executive officer, DTZ Realty.

“Investors have taken a keen interest in office spaces, especially in future highgrowth locations. Of the total investment in the commercial real estate market, majority has been in the Hinjewadi region, which is expected to see the majority of office leasing activities. These markets will remain tight, with a balance in office absorption and supply and will see the highest quantum of leasing activities at competitive pricing in the next 12-24 months,” adds Dutt.

According to the Cushman & Wakefield report, the commercial real estate market of Pune witnessed total net absorption of 3.5 million sq ft, recording an overall increase of 15 per cent, nearly 78 per cent of which was in Grade A spaces. This significant rise in net absorption of Grade A spaces can be attributed to the growing preference amongst occupiers for quality developments.

The city witnessed a total supply of 3.5 million sq ft, of which 3.2 million sq ft was contributed by Grade A development. The total supply increased by nearly 66 per cent as compared to 2012, with the majority spread across locations like Viman Nagar, Kharadi, Hinjewadi, Airport Road and Kalyani Nagar. This led to a rise in vacancy levels from 21 per cent in 2012, to 23.5 per cent in 2013. Approximately, 5.7 million sq ft of office space is expected to come into the market in 2014, of which Grade A spaces are expected to contribute nearly 65 per cent. Most of this supply will be concentrated in areas like Airport Road, Yerwada and in the suburban and peripheral areas of Kharadi, Viman Nagar, Nagar Road, Hinjewadi, Baner and Balewadi. This inflow of supply is expected to drive up the vacancies across sub-markets, as transaction activity is expected to remain stable.

Driving residential growth

The city’s rising clout as a preferred destination in the country and its growth story of having the distinction of being the only city that recorded a positive growth of 15 per cent in net absorption in 2013, makes it ideal for investment in residential units. “In 2013, mid-segment (Rs 40-80 lakh) apartments accounted for 50 per cent of the new launches in Pune. Demand for the mid-segment housing category has been observed in Hinjewadi, Wakad, Thathawade, Ravet, Kharadi, Wagholi and Talegaon,” says Shrinivas Rao, CEO-Asia Pacific, Vestian. “Neighbourhoods in west and east Pune, like Hinjewadi, Hadapsar and Kharadi, are steadily witnessing high residential activities due to the presence of IT/ITeS clusters. Capital values in these locations are likely to witness appreciation in the short-to-medium term due to its proximity to IT/ITeS hubs and the Mumbai-Pune Expressway,” adds Rao. The demand for housing close to these belts, has given rise to the development of many residential units and the rise of social infrastructure such as retail outlets, schools and hospitals to cater to the workforce living here.

According to Ganesh Vasudevan, CEO, IndiaProperty.com, “The demand in the mid-segment is still there but buyers are more inclined to buy flats which are already constructed, as against those in the planning stages. The reason for this has been attributed to the slowdown in the economy and thus, buyers are not willing to take a chance on whether the builder will be able to complete the project or not. A marginal price hike is expected in this segment by the end of the year.” With many auto giants, IT and manufacturing companies located in these localities, employees prefer to live close to their offices.

“Over the last two years, Pune has prevailed as one of the country’s best-performing residential real estate markets and will not witness a price correction across the range of housing categories. Owing to its strong end-user driven market, this city is likely to witness demand for mid-range housing in the short-to-medium term. The primary contenders for residential space, chiefly comprise of employees from the IT/ITeS, automobile, manufacturing sectors and investors from Mumbai,” concludes Rao.

Realty Sector to Witness Healthy Growth in 2014

After a long period of slump in the country’s real estate sector, the markets are slowly making a come-back this year. While some macro markets performed poorly last year, others outperformed expectations. Most of these markets included tier-II and III cities. Overall the real estate market across the country remained stable in 2013. With the union budget coming up this year and other supporting factors, the real estate market may start showing signs of full recovery.

Reality sector has a positive outlook

There are several positive indicators that show a possible recovery of the real estate sector. One of these are the projects that are nearing completion this year and the availability of the most sought-after ready-to-move-in apartments across the country. There are various cities that are attracting buyers as well as developers due to the ongoing development of the infrastructure such as monorail, metro, flyovers and ring roads. Some of these real estate markets include Bengaluru, NCR, Ahmedabad, Chennai and smaller cities such as Lucknow, Chandigarhand Indore.

Interestingly, despite the sky-rocketing prices in Mumbai and Delhi and rising property prices by at least 50% by last year, the markets saw either slightly negative or stable growth. These markets did, however, perform lesser than other cities such as Bengaluru, Kolkata and Chennai.

Predictions for 2014

Real estate consultants and experts opine that overall, residential markets across the country will witness stable capital values except for those that are over leveraged and are unable to attract sales. These markets may expect some price corrections or slow movement. Some of these localities include micro-markets of Mumbai and NCR. Though the first half of the year is expected to have negligible improvements, the real estate market is expected to significantly improve post elections, during the second half of 2014.

Important factors that are keeping the hopes high for the real estate players include anticipation of a stable government, favourable government policies after the general elections and reasonably priced projects focused on the middle-class segment in good locations. Apart from location, good connectivity, social infrastructure and reasonable prices will be key points a buyer will be focusing on. The previous year taught several developers and buyers to be more realistic about property prices, owing to the huge inventory pile up. Hence, one can look forward to more reasonably priced projects in the coming times.

Areas that attract buyers

Several areas are expected to attract end-users as well as investors. These include some already well performing markets as well as newly emerging markets in the tier-II and tier-III cities. For example, Bengaluru remains a favourite amongst investors in the present conditions. A consistently growing infrastructure and decently high inventory level in the city will help buyers secure attractive deals. Kolkata, Chennai and Pune are other cities that are doing well in terms of absorption of projects. Emerging markets include cities such as New Chandigarh,Coimbatore, Indore and Kochi. These cities attract investors majorly due to the low property values compared to the tier-I cities, improving infrastructure and good connectivity to tier-I cities.

In the end, the verdict from the real estate experts is simple. Housing projects that are launched in good locations with good infrastructure and are reasonably priced will help in improving the real estate sector across the country. Since, several macro-markets are emerging that will cater to the buyer needs, the year ahead may look at positive trends in the realty sector.

Pune: 6 reasons to invest in Sinhagad Road

With ever-increasing property values in Pune’s city centre, peripheral areas have started grabbing the eyeballs of many home buyers. Sinhagad Road is one such stretch that has shown tremendous growth in the last five years.

Here’s why.

Connectivity

“Located in North-West side of Pune, Sinhagad Road provides good connectivity to Mumbai-Bangalore highway and IT hubs such as Baner and Hinjewadi,” says Sanket Mungad, a city based realtor, Preet Properties.

Infrastructure updates

To reduce the traffic snarls on this stretch, a nine kilometre road is planned directly leading to the Sinhagad Fort. In addition, one of the four corridors planned by the Pune Municiapal Corporation (PMC) for the Bus Rapid Transit System (BRTS) is Dhayari to Hadapsar that will pass through Sinhagad Road.

Capital appreciation

Not only haven for end-users, Sinhagad Road is also a potential option for investors. As per the data with us , the area has recorded an appreciation of about 38 per cent in the last one year. Thus, if you had purchased an apartment in Sinhagad Road for Rs 44 lakh in Dec 2012, you may well be able to encash it for Rs 61 lakh by now – an appreciation of Rs 17 lakh in a mere one year.

New projects

Owing to well-built connectivity and sound infrastructure, several developers have launched their projects on Sinhagad Road. Some of them are D S Kulkarni Developers, Shree Saikrupa Developers, Rohan Developers, Hemant Group, Saarrthi Group, and Shree Malhar Associates, among others.

From multi-storey apartments to villas, there is an array of housing options available. As per data with Magicbricks.com, the capital values of newly launched projects are in the range of Rs 60 lakh to Rs 3 crore. These projects offer all kinds of BHK configurations; however, buyers’ preference is mainly inclined towards 2BHK units.

Nanded city

Nanded City, a 700 acre mega township is another reason fuelling demand in Sinhagad Road. Launched by Magarpatta City, this township will have several corporate houses, IT companies, and animation and gaming companies. This will not only create ample job opportunities, but will also enhance the housing demand in the area.

Social and physical infrastructure

“Sinhagad Road has all the amenities required by the residents. Hospitals, banks, schools, restaurants and entertainment centers are all within the radius of 5km,” says Seema, Seema Group.

Due to proximity to Khadakwasla Dam (1.2km), Sinhagad Road does not face any water woes. Hence, the area is also sought for rental accommodation. The prevailing rates for 1BHK unfurnished apartments are Rs 5,000-10,000 per month and a furnished or semi-furnished are available for Rs 10,000-15,000 per month. For 2BHK apartments, it varies from Rs 15,000-20,000 per month

Four Reasons To Invest in Manjri, Pune

Pune’s Manjri is seeing high demand for housing owing to several favourable factors. Located close to Mundhwa in South-East Pune, the locality has swift connectivity through NH-9, proximity to developed localities and availability of basic facilities nearby. Let’s have a detailed look on what it has to offer to a real estate buyer.

Connectivity and infrastructure: It is located close to Pune – Solapur Highway, which makes it well connected to other parts of the city. Localities such as Viman Nagar, Magarpatta, Hadapsar and Kharadi are located within 8 kms from Manjri. Also, the International airport at Lohegaon is about 15 km away whereas railway station is about 13 km away. The area also boosts schools, hospitals and restaurants in the vicinity.

Price appreciation: The data with Magicbricks states that the capital value of apartment ranges from Rs 4,000 to 4,500 per sq ft. “Manjri was a rural area about 4-5 years back, however, from the past couple of years the area is witnessing new real estate developments,” says Ashok Mane of Shree Sai Consultancy. The data also reveals that the area has seen about 10 per cent increase in propertyvalues in the last one year. Also, many new projects are coming up which are still affordable when compared to nearby areas such as Viman Nagar and Kharadi.

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Proximity to IT hubs: Due to its proximity to IT hubs such as Kharadi and Magarpatta, the area is seeing high demand or properties that are compact. “Young professionals who are bachelors or have small families look for smaller units. The smaller units are mostly in demand as these are easily maintained,” says Suresh Agrawal, owner of Laxmi Construction, a local development firm.

Small apartments in demand: Magicbricks data reveals that in Oct-Dec 2013 quarter, against the 67 per cent demand for 2BHK units; the supply constitutes about 65 per cent for the same property type. The supply of one BHK stands at 19 per cent out the total against the 25 per cent of the demand. However, against 7 per cent of demand for 3BHK units, the supply is about 19 per cent for such property type. This indicates that the area is seeing high demand for small and compact units.

So, if you are looking to buy small apartments within your budget, Manjri can be a best bet to opt for!

10 Tips for buying ready to assemble kitchen cabinets

The ready to assemble kitchen cabinets offer multiple advantages compared to traditional kitchen cabinets and are spreading their wings. There are so many options and variants when it comes to selecting the right kitchen cabinet for one’s home.

Here are the top ten tips one must keep in mind before buying a ready to assemble (RTA) kitchen cabinet.

Short-list the required kitchen cabinet: Before embarking on any decision to buy ready to assemble kitchen cabinets, it is essential to short-list the kind of cabinet for one’s specific requirements. There are several cabinet variants available in the market today. From wood based cabinets to laminated ones and cabinets made up of stainless steel, the options are endless. The key is to finalize a budget and choose the desired type as per the space available in one’s kitchen.

Focus on Material: Choosing the right material is another important point to consider before finalizing your cabinet purchase. While most kitchen cabinets are made up of different variants of wood like pine wood, oak wood and even bamboo, there are other options available in the market as well. Laminate and Thermofoil are gaining popularity owing to their extreme durability and value for money. The downside of stainless steel or laminate based cabinets is that it is heavier compared to traditional wood cabinets.

Know Your Dimensions: Knowing your cabinet dimensions before making any purchase related decision. The standard sizes available in the market may not necessarily fit into your kitchen space. The best way is to get the approximate dimensions of the cabinet and explore other sizes until you find the perfect kitchen cabinet. People having an open kitchen, for example, would need a broader than usual cabinet that can be customized according to personal requirements.

Compare Installation Price: Different ready to assemble kitchen cabinets have different installation charges. Enquire with the kitchen cabinet dealer about this before finalizing the purchase.

Don’t Ignore Customer Service: Purchasing a kitchen cabinet is just a one off thing, but having to deal with its customer service mechanism is quite another. Even the most well oriented product with a bad customer service loses its significance in the long run.

Focus on the Layout: Ready to assemble kitchen cabinets comes in various designs. The key is to short-list the design best suited for your personalized requirement depending on the size of the kitchen.

Domestic Vs International Brands: Many domestic and international companies are offering ready to assemble kitchen cabinet modules today. Rather than saving money with a new company, it is better to go in with a well established brand with a good dealer network.

Eco-Friendly Designs: There are a lot of eco-friendly kitchen cabinet modules available in the market today. If you are designing an eco-friendly kitchen, having an eco-friendly kitchen cabinet can add the perfect touch to your kitchen design and ambiance.

Embrace Cabinets High On Technology: Just like most kitchen accessories, kitchen cabinets have also evolved over the years. A lot of modern day kitchen cabinets use technologically advanced in designs to offer the best of convenience. Rather than going in for a traditional kitchen cabinet, one is better off looking at modern day kitchen cabinets.

Finishing and Features: Whether one chooses a rustic style kitchen cabinet or a modern day kitchen cabinet, focus on the finishing and features before selecting one design over the other. What may work for one home may not be necessarily good for another. If for example, your interiors design is made up of wood, then having a stainless steel designed kitchen cabinet in your open kitchen may just act as an eyesore. Remember, kitchen cabinets play a very important role in enhancing the overall beautification of the home’s interior design and decor.

Important Tips For Investing In A Plot

Property always appreciates in value under any prevailing market condition. However, the appreciation of value depends primarily on the location of the apartment or plot of land, and the availability of good infrastructure and basic facilities in the vicinity.

Choice of Location

While investing in a plot of land in the city, the choice of location will depend on the buyer’s various personal requirements. The choice of whether it will be a long-term investment or for a short tenure where the buyer wants to construct a house within say two years of purchase of the land, depends again on the buyer’s preference.

Most of the time, the choice of location of the site depends on the rate of appreciation prevailing in the area at the time of purchase or what it could be worth as an investment with future appreciation. The choice of location while buying a plot of land for a house rests on the buyer’s area of employment and the commuting required, good infrastructure connectivity, education and healthcare facilities for the family, and other social infrastructure.

“Growth drivers for residential property are proximity to metro rail, malls, infrastructure corridor, townships, IT belts, improved connectivity, large land parcels, townships, international airport, and schools and colleges,” says Nitin R Jajoo, principal, L J Hooker reality firm. “As long as there are good transportation facilities and basic amenities, people are willing to invest,” he adds.

For resale of the plot of land, these factors and facilities will add up to fetch a higher value. The coming up of various large infrastructure projects in and around the city will result in the availability of large tracts of land. This, in turn, will lead to a spurt in more people opting for plots of land here as a favourable investment choice. This will further result in appreciation of the value of land, better connectivity and improved infrastructure.

Potential Returns

Real estate experts advise buying land on the outskirts for appreciation rather than in prime residential areas. Buying land on the outskirts gives room for more price appreciation as the buyer gets the property at a relatively lesser price. In the case of properties in prime residential areas, the values are very high and the returns on the investment might not be in the same growth proportion as in the case of outskirts.

 “Between 2004 and 2007, the cost of a regular site, approved and with clear titles, purchased in the city of Bangalore, saw an appreciation between 75 percent and 150 percent in a matter of 12 months. Today, any investor wanting to buy legally approved land will have to go to the outskirts, about 45 km away from the location of the first purchase, if he wants the same appreciation.” He advises caution while buying land beyond a 45 km radius on the outskirts.

Finance and Legal Aspects

Balaji also cautions purchasers of plots to cross-check for clear titles and legal approvals on land deals. All plots of land which are planned and demarcated as layouts should be checked for statutory approvals from the authorised civic agencies concerned with layout approvals. Very often, one plot of land could have more than one owner. When it comes to acquiring finance for the purchase of plots, it is not as easy as getting 90 percent loan amount on a residential apartment. While banks have tie-ups with developers for finance schemes, they are not very bullish on releasing more than 60 percent of cost.

“Banks are not ready to fund purchase of land and may only release 60 percent on the guidance value and not on the market value”. “The investor needs to have enough cash liquidity to seal the deal,” he adds.

Source: The Times of India, Chennai