Andhra Pradesh – A thriving real estate community

Andhra Pradesh serves as a shining example of the IT revolution in the Indian subcontinent. The reform process during the early 1990’s has helped the Andhra Pradesh state to improve its major industries. Industries like Information Technology, Agro processing, Drugs and Pharmaceutical industry, Textiles business, Engineering sector, Leather materials and Jewellery Industry form the backbone of this affluent state.

The several industrial parks like Export Promotion Park, Vizag Export Processing Zone, Bobbilli and the Hardware Park have provided the much needed impetus to the Andra Pradesh real estate market. The economic affluence of this state can be determined by the FDI investment of over 4000 crore every year.

This state has developed lately into a major tourism hub in Andhra Pradesh. The major cities in Andhra Pradesh are Hyderabad, Vijaywada, Vishakapatnam, Tirupati; and they are all well connected by air and rail services.

Realty Trends of Hyderabad

The realty market in Hyderabad witnessed a slump during the global recession period. Today, the real estate market is in a gradual recovery phase reaching a consolidated level. Surveys indicate that the ready to move projects have taken off well during the last quarter.

The Western IT corridor has been showing good signs with new launches by reputed builders evoking positive response from the buyers. Budgeted villas and value housing segment has picked up market in northern and eastern corridor. The surrounding regions of the international airport at Shamshabad are viewed as the prime investment destination now.

Special features of Hyderabad

The Nehru Outer Ring Road stretches 158 kilometer and is an 8 lane ring road surrounding the Hyderabad city. It was built at a mammoth cost and serves ideally to decongest traffic in the suburbs of greater Hyderabad. This project has been completed and serves as a major boon for the residents.

The Hyderabad Metro rapid transit system is another anticipated project in this busy city. The rails are planned to cover a stretch of nearly 100 km. These special projects in Hyderabad are believed to provide a better lifestyle for the city’s residents and a better future.

To find and buy a property in Hyderabad, Please visit http://www.realtycompass.com/real-estate-in-hyderabad
Source: http://www.realtycompass.com/blog/category/advisory/

Coimbatore Realty is growing with time

Coimbatore Realty on a growing spree

The property prices in the city of Coimbatore are at an all-time high. The last couple of years have seen a price increase shot by 25 to 30 percent. The price increase however has not diminished the attractiveness of the Coimbatore city that serves as an ideal destination for real estate investments. The specialty and uniqueness of this metro lies in its laid back aura and traditional charm. This feature of the city attracts the middle-income segment contributing significantly to the city’s real estate market.

The property market graphs have been going steady and experts don’t see any lull for a few more years. There is an estimated demand of 1 lakh housing units predicted in the next few years. Various projects like the Akshaya Homes, Srivari Vaibhav, TVH Vista Heights and Trident Harmony constructed on important destinations like Avinashi, Mettupalayam and Trichy road has directed the Coimbatore’s property market on a growth spree.

Property Trends

The property prices in Coimbatore have been showing a tendency to climb. Some of the reasons cited by the experts are industrial sector, II industry, BPO; further Coimbatore is a major textile hub. The recent price inflation has wrecked havoc in the real estate market and the investors and buyers safely chose to withdraw during this period. However, the last quarter has witnessed buyers coming back and showing interest in the real estate market especially in the suburban regions. An average 5 to 10 percent increase has revived the hopes of the investors and buyers supported by a decent demand and supply mechanism. Coimbatore real estate market shows a regular increase of 25 to 35 percent every two years.

Property Prices

The Realty prices are quite high in the Coimbatore city due to the commercial and industrial sector. The City’s prominence and industrial role highly influences the increase and decrease of the property prices. A typical house in a multi-storied building costs anywhere between Rs 3,500 per sq ft. to Rs 5,500 psf.

The demand for houses is increasing steadily and the prices are growing proportionally. Many senior citizens prefer to live in villa styled houses with multiple bedrooms that start at Rs 17 lakh and run upto Rs. 2 crore. However, the trend in Coimbatore has always been to buy land parcels and build independent houses, as the cost for buying lands here is relatively cheaper compared to other cities.

To find and buy a property in Coimbatore, Please visit http://www.realtycompass.com/real-estate-in-coimbatore

Source: http://www.realtycompass.com/blog/category/advisory/

Chennai Realty – A brief excerpt

Please find excerpt’s interview of the real estate market scenario of Chennai realty:

What are the main market segments in Chennai?

Since, the middle class segment of the city is vast in the Chennai city, the mid-market segment has been a popular sector for the developers. The mid-market segment apartments are priced in the range between Rs. 40 and 80 lakhs. The high-end segment also has takers and is priced over Rs. 2 Crore. Grand luxury projects are proposed in upscale areas like Nungambakkam and Guindy with massive number of apartment units at elite prices. These apartments have world class facilities like business lounge, swimming pool, cafeteria, automatic car park etc.

What kind of market do we find in Chennai?

The market in Chennai is very robust. There has never been a crash in the past three decades in the real estate market. Therefore the Chennai market provides safe investment atmosphere with respect to real estate. The upscale segment is booming with proposed luxurious residential structures in the Central Business Districts like Nungambakkam, Poes Garden, Alwarpet etc.

Why are the prices going up in Chennai as opposed to other cities?

The main reason is to maintain the stability of the market. An erratic pricing scheme would only result in insecure builders and consumers. Early bird offers are offered with a percentage of deduction in the overall price. Apart from that every apartment unit is sold at a standard market price.

Is this a good time to invest?This is certainly a great time to invest in the housing segment. With the global market recovering from recession, there are many projects in construction at popular localities. Prices have stagnated for a while, so it is a good time to take advantage of this factor before liquidity.

To find and buy a property in Chennai, Please visit http://www.realtycompass.com/real-estate-in-chennai

Source: http://www.realtycompass.com/blog/category/advisory/

Bangalore – The Luxury, Mid-income and Affordable Housing Segment

Bangalore is among the fastest growing city in India. The Information Technology sector has played the major growth factor in the development of Bangalore realty. Bangalore is a unique city and is home to multi-cultural population that offers excellent social infrastructure and best educational institutes. The Outer Ring Road, Whitefield, Sarjapur Road and North Bangalore are some of the areas that are leading the race in the real estate market.

Luxury Market

Being the third largest region for high net worth individuals, Bangalore is easily home to thousands of millionaires. The reason is, most of the expatriates making a living in this city after their assignments in abroad. One can find well cultured people in this destination who have sophisticated taste. Lately, there has been an increased demand for luxury residential apartments in Central Business District, North Bangalore area, Whitefiled and Outer Ring Road. Moreover, the luxury market is expected to be steady on a short term basis.

Mid- Income Market

The Mid-income market is mainly driven by the techies in the IT and IT Enabled Services industry. Factors like good social infrastructure, nearby work places, physical infrastructure and access to medical and education facilities are strong driving factors to boost the mid income real estate market. There have been positive signs of growth as well as a steady demand in the mid-income segment in areas like Whitefield, Electronic city, ORR IT corridor and North Bangalore.

Affordable Housing

The affordable housing segment has been targeted at the price sensitive buyers, and is mainly developed in the suburbs of Bangalore. The suburbs such as the Mysore road and the Kanakapura road are witnessing high demand in this segment. Exclusive developers like Puravandara, Shriram Properties, Brigade group, Ozone group, Golden Gate and Nitesh Estate have ventured in this arena and meet the needs of the customers. Affordable housing is accomplished by reducing the unit sizes and compromising on certain civic amenities to fit within the budget. Further, the planned metro rail project and peripheral ring road have created demand for the outskirts projects.

To find and buy a property in Bangalore, Please visit http://www.realtycompass.com/real-estate-in-bangalore


Source: http://www.realtycompass.com/wp/advisory/

Paying Money to buy a Property in India by NRIs

Once you have decided to buy a property in India next question comes about the payments. An NRI / PIO make payment for purchase of residential / commercial property in India out of

(a) funds remitted to India through normal banking channels or

(b) funds held in NRE / FCNR (B) / NRO account maintained in India

Traveller’s cheque or foreign currency notes or by other mode except those specifically mentioned above, cannot be used to make the payments

Property buying is always a big risk. There might be cases when the deal does not go till the end. So the questions of repatriation arises. Is repatriation of application money for booking of flat / payment made to the builder by NRI/ PIO allowed when the flat or plot is not allotted or the booking / contract is cancelled?

The Authorised Dealers can allow NRIs / PIOs to credit refund of application/ earnest money/ purchase consideration made by the house building agencies/ seller on account of non-allotment of flat/ plot/ cancellation of bookings/ deals for purchase of residential, commercial property, together with interest, if any, net of income tax payable thereon, to NRE/FCNR account, provided, the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the Authorised Dealer is satisfied about the genuineness of the transaction.

In some cases NRIs might want to go for loans. In this case the NRI / PIO can avail of loan from an authorised dealer for acquiring flat / house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account / FCNR (B) account. Such loans are permitted subject to the terms and conditions laid down in Schedules 1 and 2 to the Notification No. FEMA 5/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time to time. Banks cannot grant fresh loans or renew existing loans in excess of Rs. 100 lakhs against NRE and FCNR (B) deposits, either to the depositors or to third parties. The banks should also not undertake artificial slicing of the loan amount to circumvent the ceiling of Rs. 100 lakh.

Such loans can be repaid in the following manner:

(a) by way of inward remittance through normal banking channel or

(b) by debit to the NRE / FCNR (B) / NRO account of the NRI/ PIO or

(c) out of rental income from such property

(d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.

NRI / PIO, can also avail of housing loan in Rupees from an Authorised Dealer or a Housing Finance Institution in India approved by the National Housing Bank for purchase of residential accommodation or for the purpose of repairs / renovation / improvement of residential accommodation.

But the loans are subject to certain terms and conditions laid down in Regulation 8 of Notification No. FEMA 4/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Borrowing and lending in rupees) Regulations, 2000, as amended from time to time. Authorised Dealers/ Housing Finance Institutions can also lend to the NRIs/ PIOs for the purpose of repairs/renovation/ improvement of residential accommodation owned by them in India. Such a loan can be repaid (a) by way of inward remittance through normal banking channel or (b) by debit to the NRE / FCNR (B) / NRO account of the NRI / PIO or (c) out of rental income from such property; or (d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.

Another option for loans by NRI/PIO avail of housing loan in Rupees from his employer in India but subject to certain terms and conditions given in Regulation 8A of Notification No. FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003, i.e.,

(i) The loan shall be granted only for personal purposes including purchase of housing property in India;

(ii) The loan shall be granted in accordance with the lender’s Staff Welfare Scheme/Staff Housing Loan Scheme and subject to other terms and conditions applicable to its staff resident in India;

(iii) The lender shall ensure that the loan amount is not used for the purposes specified in sub-clauses (i) to (iv) of clause (1) and in clause (2) of Regulation 6 of Notification No.FEMA.4/2000-RB dated May 3, 2000.

(iv) The lender shall credit the loan amount to the borrower’s NRO account in India or shall ensure credit to such account by specific indication on the payment instrument;

(v) The loan agreement shall specify that the repayment of loan shall be by way of remittance from outside India or by debit to NRE/NRO/FCNR Account of the borrower and the lender shall not accept repayment by any other means.

Source: http://www.realtycompass.com/blog

NRIs Should Beaware of Tax Before Investment in Property

There are few deductions which are applicable to Indian residences when they buy a property in India. An NRI / PIO also have the same deductions for the property.

Just like Indian residents the same deductions are applicable for NRIs. Municipal taxes paid during the year and housing loan interest payment are deductible. Standard deduction of 30 per cent of the net rent (gross rent less municipal taxes) can be obtained for repair and maintenance, irrespective of actual expenditure.
Housing loan principal repayment, stamp duty and registration charges are allowed as deduction from one’s gross income under the overall limit of Rs 1 lakh per year, under Section 80C.
Incase the NRI / PIO decides to give away his property on rent then taxes become applicable. When a certain threshold limit is reached rent received becomes taxable in India and NRI has to file a tax return in India in case the rent received along with other income exceeds the threshold limit.
The rent may be additionally taxed in the NRI’s country of tax residence. There may be some tax relief available under the Double Tax Avoidance Agreement (DTAA) for NRIs who are tax residents in certain countries. This may allow one to get credit for Indian taxes paid.
How does one handle a vacant property?
Again, treatment here is similar to a resident. A property which is not rented out is treated as a self-occupied property and the taxable value is NIL. The only deduction available against such property is interest on housing loan up to Rs 1.5 lakh per year. When there are more than one property that is not rented, then the owner can choose one property as self-occupied and all the other un-rented properties shall be deemed to be let out, even if not actually let out. For these, the rent that the property would likely fetch is considered as gross rent and all other deductions as applicable for a rented property will be allowed.
Deduction for principal repayment on housing loan can be obtained on all property, whether it is rented, self-occupied or deemed to be let out.
An NRI is exempt from wealth tax on a property that has been rented for more than 300 days. Also, one vacant house property can be declared as self-occupied property and is exempt from wealth tax. The value (net of outstanding loans) of second and subsequent vacant properties would be subject to wealth tax, at the rate of 1 per cent on the value in excess of Rs 30 lakh, says Parizad Sirwalla, Practicing Chartered Accountant, KPMG.
NRIs are subject to capital gains tax in India, similar to what is applied to residents. They can get long-term capital gains rate for property held for over 36 months and can claim exemption by investing in another house property or specified bonds. Capital gains may also be taxable in the NRI’s country of residence. Relief may be available in the form of credit for Indian taxes paid, in case the NRI is a tax resident of a country with which India has a DTAA.
Limits and conditions for repatriation are different based on the funds used for buying property. If the property was acquired as per the foreign exchange laws, the amount of repatriation is restricted to the extent of the initial purchase cost of the property. For example, assume the purchase price was $100,000 (Rs 40 lakh, with an exchange rate of Rs 40) and the sale price was Rs 75 lakh. Assuming the prevailing exchange rate at the time of sale is Rs 60, one can repatriate Rs 60 lakh ($100,000).
Gains made on foreign source funded properties (Rs 15 lakh in the example above) as well as all proceeds from property purchased with rupee sources, can be repatriated under the general limit of Rs 10 lakh per financial year.

Source: http://www.realtycompass.com/blog/