Description
real estate market
1. Executive summary
While most home buyers purchase a property to use as their primary residence, many also purchase a vacation home or a residential investment property. Because the purchase of each type of property is often influenced by different factors, it is important to understand how changes in the market environment affect each segment. The meltdown in the global and Indian real estate has brought in some level of apprehension amongst these seekers. The following survey also focuses on the prevailing market sentiments; property seekers are either mulling over or delaying their decisions to invest in real estate at present. In order to understand these existing trends and to gauge the most influential factors relating to property investments. The goal of the ‘Understanding the Consumer / Investor Preferences in Property Market’ survey report is to estimate the number of home sales that fall into each category and track how sales, the approach for purchasing a property, the different characteristics of property considered for finalizing the purchase and the various modes of financing considered to fund the purchase of property in each vary over time.
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2.
Research Problem:
To understand the existing trends in the property market today, to gauge the most influential factors relating to purchase of property in India, the various modes of financing seeked, the objective behind these acquisitions, to understand the effect of high prices of property on the buying decisions and so on. The following survey has been carried to understand the preferences of the buyers / investors. The entire property market has been categorized as follows: ? Residential property ? Vacation homes ? Investment property
2.1 Problem statement: Understand the Investment Preferences of Investors / Consumers in Real Estate Market.
2.2 Unit of analysis: Investors / Consumers.
2.3 Characteristic of: Investment preferences of investors / consumers. interest 2.4 Time and space: 6 months boundary
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1. Objectives of Research:
? To understand the investment preferences in Real Estate/property.
? To understand the buyer characteristics of Real estate/property. ? To understand the various characteristics of property considered while making the purchase decision. ? To understand the Method of Purchase and Financing for the purchase of property. ? To understand the various reasons that motivated the buyers to purchase a property. ? To estimate the levels of Return on Investment expected by the buyers.
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1.
Research Design and Methodology:
Research Design is the basic framework which provides guidelines for the rest of research process. In this project we have used the survey method of data collection, to be more specific questionnaire method. We conducted a survey, of which the sample size is 50. Respondents in the sample size were asked to fill the questionnaires to gather the data.
1.1 Research Design: 1.2 Sample size:
Exploratory
The sample size taken into account for this research topic is of 50. There are different age groups of investors / consumers been targeted in this survey.
1.3 Sources of data:
Primary data: Primary data are those, which are collected for the first time, and original in character. A situation combination of questionnaire techniques, and discussion with the respondents was used to collect the required primary data. Primary data gives higher accuracy and facts, which is very helpful for any research and its finding. The aim of primary research was to understand buying preferences of the buyers as it is seen in the actual practice. Mr. Prathamesh Sahay the research team member at Makaan.com gave me an interview and helped me in trying to understand the topic and collect primary data looks after the needs of the buyers. A survey was done by me with the help of Mr. Prathamesh Sahay; data was collected by me through questionnaire.
Secondary data: The secondary data are those, which are already collected by someone for some purpose and are available for the present study.
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Secondary data collection sources: internet, articles, property survey reports and blogs
1.4 Technique of Analysis: Data collection through questionnaire
resulted in availability of the desired information but these were useless until there were analyzed. Various steps required for this purpose were editing, coding and tabulating. Tabulating refers to bringing together similar data and compiling them in an accurate and meaningful manner. The data collected by questionnaire was analyzed, interpreted with the help of column chart and pie chart as explained in the performance data analysis.
Column
Pie Charts
2. Limitations:
Investment in real estate is a vast topic to cover the all the aspects. The various limitations of this survey are as follows:
? This survey takes into account only the preferences of consumers
in Metro and Tier -1 cities. The buyers from Tier – 2/3 or smaller towns are ignored. ? It doesn’t considers the NRIs and foreign nationals purchasing property in India.
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? There is no consideration of the institutional buyers like the
corporate houses, NGOs, Government bodies and others. It only considers the individual buyers for the survey.
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1.
The Real estate / Property Market Profile
The origins of Indian Property Market Bubble can be traced to the interest rate reductions made by the NDA coalition government in the years following 2001. Home Loan Rates fell to a (then) historical low of 7.5% in early 2004. This prepared the basis for the increase in real estate property prices across India. Low interest rates triggered interest in individuals to borrow to own their own homes and this triggered an increase in demand for real estate across India. The Indian Property Market has been growing fast since March 2005, when the current UPA government decided to open FDI in Real Estate.
The relaxation of the various laws regarding foreign direct investment in the country in the year 1991 which led to growth in Real estate industry includes; 2. Development of Special economic Zones (SEZ) with special incentives for investors, such as exemption on various export, import duties, value added taxes, income taxes etc. 3. Formation of a Foreign Investment Implementation authority (FIIA), which directly deals with regulating and facilitating the foreign direct investment in the country. 4. Special laws pertaining to the development of private sector in the country. 5. Foreigners residing in India were given the laws to buy, sell or possess immovable property without any permission from Reserve Bank of India (RBI). 6. NRI’s (Non-resident Indians), were given almost the same rights for their monetary transactions as the Indian residents. 7. Foreign investors were given the rights to purchase, sell, buy and made transactions in a hassle-free environment. 8. The opening up of FDI in Real estate from March 2005 has resulted in rapid growth of Indian Property Market.
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6.1 THE YEAR THAT WAS… Commercial Real Estate Leasing activity in the office space realm remained healthy across the major cities in 2011. These cities also saw strong pre-leasing activity in buildings under construction. Occupiers mostly expanded their renewed leases or consolidated office spaces, with an emphasis on the secondary and suburban sub-markets of the prime cities instead of the central business districts because of ample availability of leasable spaces in these areas. Special Economic Zone (SEZ) spaces saw stronger demand as compared to non–SEZ office spaces in 2011. Due to the prevailing uncertainty regarding the global economy, a marginal slowdown in leasing activity was observed. Office space rents and capital values also increased marginally in some sub-markets in 2011, since vacancy levels remained range-bound. Residential Real Estate The residential real estate market was sluggish in 2011. Sales dropped in the prime cities of India, except in Bangalore, which saw healthy sales. In Delhi NCR, the Noida sub-market had led absorption over the past 11 quarters but witnessed a decrease in 2011. Cautious buyer sentiment prevailed due to the adverse impact of the prevailing macro-economic factors such as rising interest rates and surging inflation. The spate of hikes in interest rates by the Reserve Bank of India (12 times over the past 18 months) led to a steep rise in the EMIs of home loan borrowers. While rising home loan rates have exerted pressure on buyers, developers have been constrained by the rising costs of construction and debt. We are now looking at a scenario where both developers and buyers are impacted by adverse macro-economic factors. Rising input costs caused developers to slow down on construction and new launches. Most of new launches in 2011 were in the mid-income and budget homes segment. Capital values increased to a limited extent. Although brochure prices either remained stable or increased marginally in select projects, developers offered discounts on their prices or other freebies during the festive seasons to improve sales.
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6.2 FORECAST FOR 2012… Commercial Real Estate In 2012, several IT companies are looking to pre-lease office space to take advantage of the favourable commercial terms currently being proposed by commercial office space developers. Demand is expected to remain stable. However, the office space supply is expected to outweigh demand in most prime cities of India. Corporate expansions are likely to decrease due to the uncertainties in the global economic situation, which will have an impact on business budgets for next year. Demand will derive from consolidation in and relocation to Special Economic Zones by large IT occupiers, who will seek to reduce costs and avail of the related tax incentives. Commercial office space rents and capital values are expected to increase across all cities, albeit marginally. Commercial office space investor sentiments will remain cautious in the year ahead. The suburban sub-markets will continue to be preferred by tenants, especially in the case of the IT sector, due to the cost advantage and availability of substantial supply.
Residential Real Estate Because of the prevailing uncertainties on the global market and the likelihood of further interest rate hikes by the RBI in the early part of 2012, sentiments on the residential market will remain cautious over the short term. The absorption rate – meaning the ratio of sales over inventory in the market – is likely to be low, and the incidence of new launches will decline. Rise in capital values will be marginal because of low sales. Project-specific price increases can be expected across all sub-markets – this pertains specially to projects that are being delivered or are nearing completion. The mid-end and affordable housing segments will record healthy appreciation in capital values in the short term from a low base. We expect these trends to continue during 4Q11 and 1H12. Overall macro-economic conditions will keep investor sentiments at cautious levels, both in terms of FDI and FII. FDI inflows, which are currently muted because of the slowdown in the country’s GDP growth rate, will probably remain sluggish over the short term. However, as the Indian economy continues to show its resilience in 2012, foreign investors will gain
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in confidence and India will become attractive among competing investment destinations. Meanwhile, residential developers will continue to tackle the current liquidity crunch due to high interest rates and slow sales. We will see a slowdown in construction activity for the time being. However, as demand improves, improving sales will benefit developers who will focus on execution of their on-going project portfolios.
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6.3 Real estate / Property Trends in India
Real Estate business in India has emerged as one of the most profitable businesses in the recent years. Investing in Real Estate in India is sure to fetch you a rewarding deal as the returns on investment in this sector are at an all time high. Thus, the real estate business has attracted several foreign investors also, who are investing in the properties all over the country. Numbers Say It All Many big infrastructure and real estate companies are undertaking several construction projects in the small and big cities of the country. According to the data released by the Department of Industrial Policy and Promotion (DIPP) which comes under Ministry of Commerce and Industry, housing and real estate sector including Cineplex, Multiplex, Integrated Townships and Commercial Complexes etc., attracted a cumulative foreign direct investment (FDI) worth US$ 1,048 million during April-January 201011. Higher Returns One can also witness an array of upcoming projects, both in residential and commercial sector, in the Tier 2 and Tier 3 cities. Property prices in the metropolitan cities of India are spiraling upwards and investing now can assure greater returns. Real Estate Investments in India are particularly good for foreign investors because India being a developing country requires less amount of investment but much greater returns. Multiplicity Of Sectors The diverse sectors of India viz. the Agricultural sector, IT sector, Industrial sector all offer high returns on investment. Metro projects and Road projects have lead to tremendous increase in the value of residential properties. Having a property in any metropolitan city of India is a huge financial security as investment in this sector can never let your money go down the drain. The recently released report titled ‘Emerging trends in Real Estate in Asia Pacific 2011?, by PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI) states that India is the most viable investment destination in real estate.
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Here are some reasons why: ? India is one of the most prominent countries in the Asian continent, which is right on the track of development. ? The wide cultural diversity and traditional heritage offers a very pleasant environment for foreign investors in terms of residential needs. ? Increased economical growth is attracting companies to expand business here and they are buying property in large numbers. So, if you are looking for an investment with attractive returns in the near future and in the long-term, then Indian Real Estate is the sector to go for.
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6.4 Top 10 Property price trends - Pan India in FY 20102011
Following real estate price trends across India, last Financial Year saw massive appreciations and indicators of a booming property market in this country. Here is a list of top 10 price trend we witnessed in 2010-2011. 1. GOLF COURSE ROAD YIELDED THE BEST RETURNS ACROSS INDIA: This could well be one of the best years for a property investor if you happened to be someone who has invested in the right place at the right time, in this case this happens to be Golf Course road in Gurgaon in the beginning of the FY 2010. Investors were already sitting on a return of 128 per cent on their investments within a single year time frame. Average psf rates have moved from Rs 3757 in the first quarter of 2010 to Rs 8576 by Q4 of 2011.
2. MOST OF MUMBAI CAPITAL PRICES STILL ROSE IN DOUBLE DIGITS DESPITE ALREADY HIGH BASE PRICES: Close on the heels of NCR as the most investor friendly locality in India, is Mumbai south west, already one of the most expensive real estate in the country. Juhu in Mumbai SW was the next most attractive destination (after GC road) for investors giving a 90 per cent return within the last one year despite already being the seventh most expensive locality in the country. We’re talking a base price of almost Rs 12100 psf going up to almost Rs 23,000 by the end of the year. Even Panvel, in Navi Mumbai, which has come up as an alternative to the very expensive maintown Mumbai could give a return of 52 per cent in this past one year despite the fact that there is more aggressive investor activity around Navi Mumbai as compared to more rental and resident activity in SW Mumbai.
3. GURGAON AND SW MUMBAI WERE THE TOP GAINERS APPRECIATION WISE: On the whole, the top ten movers in terms of real estate gain in India were split between localities/sectors belonging to Gurgaon and Navi/SW Mumbai with the exception of Pune hogging the third place. Koregaon Park appreciated by 74 per cent, just after Golf course road and Juhu.
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4. ROHINI IN NCR PICKED UP IN THE CLOSING QUARTER OFFERING THE BEST RETURNS IN THE SHORTEST TIME: The largest quarter on quarter price appreciation when we compare 2011Q1 data with 2010-Q4 data, took place in North Delhi-in Rohini where investors made a killing at 28 per cent return within a single quarter, this was more than what investors in Rohini made over the entire year which was just 25 per cent return. In 2010-Q4 psf rates were around 6380 and in 2011-Q1, this was 8165.
5. DELHI NCR, MUMBAI AND BANGALORE DID BETTER THAN OTHER CITIES WITH RESPECT TO CAPITAL PRICE APRECIATION: The localities across the country that have seen maximum gain over the last two quarters is Rohini (Delhi), Chembur (Mumbai), Panvel (Navi Mumbai), HSR Layout (South Bangalore), in this order.
6. NCR-GURGAON OUTDID NOIDA AS A CHOICE FOR PROPERTY INVESTMENT: Gurgaon strode ahead of all the other regions as the choicest destination for residents and investors. Despite all the noise, Noida appeared totally lwo key in the final analysis with an average of 10-11 per cent return in the past one year. What is even more noteworthy is that Faridabad and Ghaziabad appeared to have lost out completely with a loss in capital value of 48 per cent and 12 per cent respectively. This could therefore be a good time to purchase property in these areas for end users.
7. MUMBAI-CERTAIN PORTIONS OF NEW MUMBAI ACTUALLY FELL
INDICATING CASHOUTS: Palm Beach in Navi Mumbai saw a drop in rates of almost 12 per cent in the last one year. All other localities in Mumbai rose on the whole with the star performers being Mumbai S/SW. Gains made across the year appeared to slow down with some localities already dropping value such as Powai and Khar in the last quarter.
8. BANGALORE-TRADITIONAL FAVOURITES SAW SOME LOSS OF
VALUE THIS YEAR:
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Investor hotspots such as Whitefield and Bannerghatta saw a withdrawal of sorts with capital values dropping in double digits in last one quarter itself. Whitefield, psf rates fell by 13 per cent and Bannerghatta, by 14 per cent. Hebbal, another hot destination for investors traditionally, saw a downtrend of almost 6 per cent over the past one year. Bangalore, on the whole saw a lot of volatility with some areas gaining value in double digits and others losing these in double digits.
9. PUNE SAW UNPARALLED APPRECIATION IN ONE LOCALITY AND DROP IN VALUE ON ANOTHER SUGGESTING HIGH VOLATILITY AND INVESTOR MOVEMENT: Pune saw great volatility in terms of property price movement. While Koregaon park offered a price appreciation of 74 per cent over the past one year, NIBM depreciated by 2 per cent in the same time period. The rest of the localities in Pune saw a double digit appreciation.
10. KOLKATA-SOUTH REMAINED A FAVOURITE SUSTAINING CAPITAL VALUES: Garia in South Kolkata gave a 37 per cent return over the past one year bettering East Kolkata and even Tollygunge in the South that used to be the traditional favourite.
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6.5 Process and formalities involved in buying a property:
Buying property anywhere in the world can be a long and drawn out experience. However in India, buying property is a particularly demanding task with several possible hurdles along the way such as inexperienced brokers, title defects, complicated tenancy laws, the condition of the property itself, and financing, to name just a few. It is therefore important that the entire procedure be dealt with systematically to reduce the hassles that accompany it.
Stages in Purchasing Property:
1. Identifying a Realtor 2. Budgeting 3. Identifying a Property 4. Assessment of Value
5. Legal aspect of purchasing property
6. Due Diligence 7. Agreement to Sell 8. Sale Deed
1. Identifying a Realtor: A realtor can assist in locating and evaluating the right property, providing useful market information and resources, and eventually guiding the buyer through the whole process until the purchase is complete. However real estate broking firms in India are often not institutionalized, and therefore it is essential that the buyer proceeds cautiously and chooses a broker who is experienced and knowledgeable about the market, transparent and informative through the entire process, and objective while providing information.
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2. Budgeting: While determining the budget for the purchase of property, there are several expenses besides the purchase price that must also be accounted for, such as: ? Stamp duty ? Registration fees ? Legal fees ? Brokerage fees ? Society transfer charges (in buildings with societies) ? Cost of renovation/improving the property ? Cost of furnishing the property ? Future house tax/property tax payments ? Maintenance fees, whether at actual or in the form of monthly payments to a society
For newly constructed properties, it is also possible that the builder/developer may not be fully transparent at the time of booking with regards to the gross pricing of the property. The gross price should typically be a sum of the base price, external development charges (EDC), infrastructure development charges (IDC), preferential location charges (PLC), car parking charges, club membership if applicable, MSEB charges, maintenance charges, etc. While external development charges are levied by the developer on the buyer for developing infrastructure within the complex, infrastructure development charges are levied by the government on the developer and, in turn, passed by the developer on to the buyer. This charge includes development charges for water supply, sewerage, storm water drainage, roads, street lighting, community buildings, horticulture, public health maintenance, road maintenance, and street lighting maintenance MSEB charges are levied by the developer on the buyer for availing of an electricity connection on behalf of the buyer.
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1. Identifying a Property: There are numerous factors a buyer might consider while purchasing property, each with its own benefits and disadvantages. Independent House vs. Apartment in a Co-operative Housing Society: Setting aside advantages related to independence and privacy, some of the most important factors to consider while making this decision in India are maintenance costs and responsibilities, amenities that may be provided by housing societies such as swimming pools, health clubs, and gardens, and arrangements for parking, security, power backup, etc. Old vs. New construction: Sale price is generally determined on the basis of built-up area i.e. the measurement of the residential unit at floor measurement, including projections and balconies, and is measured from the external perimeter of the walls, whereas the carpet area i.e. the total area of a premises measured from the internal walls, is the area that is actually usable. In new constructions, the difference between the two might be substantial, and a buyer can end up paying a hefty sum for a smaller apartment, whereas in old constructions this difference is far lower. Further, property and municipal taxes on new constructions are assessed at a higher rate and therefore the monthly outgoings would be higher. However, maintenance standards of new buildings are generally better than those of old buildings, and new buildings often provide amenities such as swimming pools, health club, garden, earthquake resistant designs, etc. which an old building might not possess. Location, Location, Location: This is an oft-repeated mantra, which in India is taking on new meaning with the construction of new infrastructure such as highways, bridges and metros –which has generally resulted in appreciation of values in neighbourhoods being served.
Investigate before executing sale deed:
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? ? ? ? ? ? ?
Title is free from defects. There are no encumbrances on the property. Property is not locked in litigation. Inherited property has a probated will. Utilities. Property Tax. NOCs
1. Assessment value: Another factor while choosing a property is whether the price is commensurate with existing market values. Information on previous transactions can be obtained from the market (brokers, residents of the neighbourhood/complex, registrars office, etc.), but the best option would be to consult a good realtor for advice on the last transacted sale price, comparable sale transactions etc. However it is pertinent to state that brokers may be motivated to inflate prices, and it is therefore not always easy to accurately determine the value of a property in India.
2. Legal aspects of purchasing property:
When a buyer has found the property that is the right fit for his needs and budget, there are several legal intricacies that must be dealt with to complete the purchase. It is highly recommended that the buyer instruct a good lawyer while purchasing property. Once the buyer has agreed upon a price with the seller, the rest of the process should be handled by his lawyers. Buying property in India involves lots of paperwork and diligence, and the lawyers should be well equipped to handle the entire process. To that end, the lawyers should ideally be those who are proficient in transactions in the region of India in which the property is located as rules, regulations and procedures can vary between states and also between districts.
Buying from a developer: There are several factors to consider when buying property that is still under construction. Reliability of the developer is paramount, and the buyer should enquire as to his reputation and record before committing to buying any property still in development. Financial institutions and banks funding the developer can help the buyer with his enquiries and to gain a better understanding of the developer’s
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financial status. It is important that the buyer look into aspects such as timely possession, quality of construction, compliance with the buyer’s agreement (especially penalty clauses), providing the amenities mentioned, etc. It is also important for the buyer to gain first-hand knowledge and the perspective of a previous buyer who has dealt with the developer.
If the buyer is convinced that the developer is reputable, a lawyer should be instructed to commence a search of the necessary documents such as; ? An approved plan of the building along with the number of floors, and that the floor on which the apartment intended to be purchased is approved or not, as sometimes developers exceed the permissions granted to them. ? Whether the developer owns the land on which the building is located, or whether he has undertaken an agreement with a landlord. If so, the title of the land ownership, development agreement with the landowner, and power of attorney executed by the landowner in favour of the developer must be checked. ? That the land is not designated as agricultural land, else the construction will be illegal. ? The building byelaws as applicable in that area and whether the builder is not in violation of front setback, side setbacks, height, etc. ? Whether the specifications given in the “agreement to sell” or the sale brochure correspond with the plans of the construction. ? Whether urban land ceiling NOC (Non Objection Certificate), if applicable, has been obtained, and whether NOC from water, electricity and lift authorities has been obtained.
Buyer may back out of the final sale if: • • • Defect in title Non-payment of property tax (if not remedied) Material structural defects in the property
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• • • • • •
Zoning/ land use related issues: Constructing unsanctioned floors Unsanctioned construction on agricultural/coastal land Unsanctioned construction plan Previously undisclosed encumbrances on property such as mortgages, liens, or claims Absence of probated will (if previously undisclosed) Note that the seller has the right to back out of the final sale if the buyer delays the process unnecessarily.
Once the buyer’s agreement is executed, the buyer would typically pay about 10% sale price as a deposit. As the property being purchased is as yet incomplete, there are several options a buyer can choose from as far as the remaining payment is concerned. ? Down Payment Plan: In a down payment plan, the buyer would be required to make a payment of 10% of the purchase price upfront with another 85% within 30 days of the booking date. The remaining 5% has to be paid at the time of possession, which could take several years. The advantage to this plan is that the buyer would almost certainly avail a discount of 10 to 12% on the Basic Sale Price. However, a down payment plan is not generally recommended as construction – and consequently possession – might be delayed, but the buyer would have already parted with the bulk of the purchase price. ? Construction Linked Payment Plan: In this plan, payments are made to the developer in instalments over a period of time spanning the time taken for construction of the building. The buyer pays 10% at the time of booking and another 10% after 30 days from the booking date, and thereafter instalments of 8 to 10% at each stage of construction. This is the most practical payment plan as the instalments are linked to stages of construction, and therefore the buyer’s capital is not blocked if the developer delays construction. ? Time Linked Payment Plan: This plan is also based on payment in instalments, usually with payments being made approximately every 2 months over a period of 20 to 24 months. However, the payment schedule is decided by the builder and is structured based on time and not the stages of construction, and the buyer would have to pay the instalments on schedule irrespective of whether the construction is
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proceeding on schedule or not. This option is not as viable as opting to pay under a construction linked payment plan and should ideally be avoided. ? Flexi Plan: The flexi plan includes features from both the down payment and the construction linked payment plan. Under this plan, the buyer would, as in a down payment plan, have to pay 10% at the time of booking and another 30-40% within 30 days. Thereafter the payments are structured as with the construction linked payment plan. A flexi plan can earn a buyer a discount of 5 to 6% of the purchase price.
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1. Due Diligence
Once the property has been identified, and a price agreed with the seller, the buyer’s lawyer will conduct a ‘due diligence’ or a search of all the documents related to the property to ensure that there are no deficiencies with the property that will hinder the proposed sale. In certain geographies, prior to due diligence the buyer and seller may sign a letter of intent or memorandum of understanding, accompanied by ‘earnest money’ or deposit. Title: Probably the first – and most important thing – the lawyer will check is the title of the seller with respect to the property. It is essential to know that if the seller does not have perfect title, he cannot transfer the same to the buyer. For example, if the seller is not listed as the owner of the property, he cannot sell it. Similarly, if the property is jointly owned by more than one person, each joint owner would be required to sign the agreement to sell and sale deed, unless any one of them is authorized to act on behalf of the others by way of power of attorney. A title search is taken at the office of the local sub-registrar. The buyer should ask for all title documents (and copies of the same) right from the first owner of the property or, in the case of property that is extremely old, title documents thirty years prior to the search. This process can take between 8 and 10 days. The lawyer should also ascertain the survey number, village and registration district of the property as these details will be required for registration. Encumbrances: The office of the local sub-registrar would also have to be searched to see if there are any encumbrances on the property, such as a mortgage, lien, or claim from a third party. Although mortgaging properties is not an exceptional practice, one needs to consider the implications of purchasing a mortgaged property very carefully.
In case the seller defaults in paying his debt, the mortgagee – usually a bank – can attach the property and sell it to recover the debt, despite the fact that the mortgagor/seller no longer owns the property. Also, the mortgage deed might contain a stipulation that the property cannot be sold unless the mortgagee gives a no objection certificate and in the case of mortgaged property the buyer must insist that the seller clears the mortgage obtains a NOC from the bank. Alternatively,
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the buyer may contract with the seller to make payment directly to the bank and remove the encumbrance. Property Tax: The lawyer must also check tax receipts for the past three years to determine whether the seller has paid the requisite property tax to the housing society or, in the case of independent houses, to the municipal authority. Litigation: It is also essential to ensure that the property is not the subject-matter of any litigation, as cases pending before the courts can take several years, if not decades, to be finally decided. Probated Will: In case of property that the seller has inherited, the lawyer must check the will by way of which the property was acquired. Although Indian law does not require a will to be probated (i.e, authenticated by a court), this is preferable as a probate ensures legitimacy of the will and is valid against any claims thereafter made against the seller’s right to inheritance of the property. Although challenging a probated will is not unheard of, it is extremely difficult for someone to do so successfully if the will is not fraudulent. Buyers’rights: ? To examine all documents of title that the seller possesses or can produce
? To be informed of any material defect in the property of which the
seller is award ? To the execution of a proper conveyance upon payment of purchase price ? To possession of the property as per the agreement of sale
StampDutyPayable: ? Delhi: 4 % (Females); 5 % (Joint); 6 % (Males) ? Noida: 5% ? Gurgaon: 5 % (Females); 6 % (Joint); 7 % (Males)
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? Pune: 5 % ? Chennai: 8% ? Kolkata: Municipal area – Price 25 lacs then 7.1%; Panchayat area 6.1% ? Mumbai: 5% ? Bangalore: 6.72%
A buyer must also release an advertisement in a newspaper stating his intention to buy the property from the seller, and for our sale properties Cushman and Wakefield will assist with this. This is done so that any objections to the proposed sale are raised in advance and may be dealt with accordingly. The objections may bring to light certain hidden facts, such as an encumbrance, or title defect which might significantly impact a buyer’s decision to purchase the property. In case there is a defect in the title, the entire sale can fall through if not rectified. Once the buyer’s lawyer is satisfied that the seller’s title is free from defects, he will issue a title certificate, which is a document stating that the seller has the necessary title to sell the buyer his property.
1. Agreement to Sell
After the buyer’s lawyer has issued the title certificate, the seller’s lawyers will draw up a document known as an ‘agreement to sell’ (in certain geographies like Mumbai, a deposit may be required from the buyer prior to the title search and agreement to sell; the buyer’s lawyers will furnish the exact details). The agreement to sell will contain the terms and conditions of the sale, and while there is no standard format for the same, it usually contains the following vital information: ? Description/location of the property ? The purchase price for the property
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? The amount of deposit payable by the buyer – usually it would be in the range of 10% to 20% of the purchase price to be paid in advance ? Date of closing – the date on which the purchase price is to be fully paid to the seller and the sale deed executed and registered by him ? Date on which the buyer will be given possession of the property The agreement to sell might also contain provisions to deal with breach by either party – e.g. forfeiture of deposit in case of buyer’s default, or return of deposit along with interest in case of seller’s default – an arbitration clause or a clause specifying the court which would have jurisdiction in case of a dispute, and provisions for inspection or investigation of title, such as the time in which this is to be completed. The agreement to sell must be attested by the signatures of at least two witnesses and must be registered by the seller’s lawyers. It is imperative that a buyer not sign any documents unless both he and his lawyer are satisfied with its contents.
1. Sale deed When the agreement to sell is duly registered and the purchase price (or a portion thereof, If so agreed upon), the seller’s lawyer will draw up a document known as a sale deed. This is the document by which the buyer will acquire ownership of and title to the property. There are certain fees that are required to be paid with respect to the sale deed. Stamp duty, a levy imposed by the government on certain instruments, is payable on the property under the Stamp Act of the state in which the property is located (see box for the applicable stamp duty in various states). The stamp duty is payable either by printing the sale deed on stamp paper of the appropriate value or by franking of the sale deed for the value. In case the buyer has paid the stamp duty and the sale falls through, he would need to apply for a refund, which could take 4 to 6 months.
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Like the agreement to sell, the sale deed too is required to be attested by two witnesses and registered, and the PAN cards of the buyer and the seller will be required. Registration of the sale deed is carried out by lodging the original stamped agreement with the relevant registration office. Registering the sale deed is crucial as the title to the property does not pass to the buyer unless it is duly registered in accordance with the Registration Act. Please bear in mind that stamp duty and registration fees are two entirely separate costs, both of which are to be borne by the buyer unless otherwise agreed between the buyer and the seller. If the property purchased is in a housing society, the buyer would need to complete certain forms of the society once the property is registered in his name. Once the forms are submitted the society president will raise the issue in the next AGM and admit the buyer as a member. In certain cases, a NOC (no objection certificate) from the society may be required.
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6.6 Things you must check before buying a property:
The most important thing to do before you buy a particular piece of land you are interested in is to see whether the land can be sold by the person who is selling it. Just like how "Bunty & Bubly" sold the Taj Mahal, you do not want to be on the other side of a "Bluffmaster's" brilliant plans. So before you even take the first step towards buying the land you are interested in, you got to check a few things. ? Check the ‘ Title deed / Certificate of Title ‘ of the property: A title deed is "a legal document proving a person's right to property" as defined by a law dictionary. An advocate prepares a title deed after studying and scrutinizing the property and verifying that all is in order. So as a buyer what you need to do is ask the owner of the land you wish to purchase for the tile deed and review it properly. Do not accept a xerox copy of the deed. Ask for the original "Title Deed". Some times the seller might have taken a loan and given in the original deed. You need to make sure through the title deed that the land is in the name of the seller. Also you need to verify that he has full right to sell the land and that he is the sole owner of the land and no one else is. It would be wise to get the title deed reviewed by a trusted lawyer just to make sure that there are no loop holes.
? Ask the ‘ Encumbrance Certificate ‘ : The next step is to demand an "Encumbrance Certificate". This is basically a certificate that says that the land is not under any sort of legal dispute. The encumbrance certificate can be obtained from the sub-registrar’s office where the deed for the land has been registered. The encumbrance certificate for the past 13 years should be taken and verified. You could even ask for the encumbrance certificate of the last 30 years for more clarification.
? In case of the ‘ Pledged Land ‘ :
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Some people may have pledged their land previously for taking a loan. In this case, it would be wise to ensure that all the loan payments have been made and that no amount is due. Ask, the seller to produce the "Release Certificate" from the bank that is necessary to release all debts over the land legally. ? Measure the property: Get a recognized surveyor to measure the land and see that the dimensions, area, borders etc. are accurate as stated by the seller.
? If there is more than one owner: If there is more than one owner, it would be wise to get a "release certificate" from everyone involved before going ahead with the process.
? If the owner is an NRI: If the owner of the land is a NRI, then the seller of the land in India should be given "Power Of Attorney" to sell the land on behalf of the NRI. The power of attorney has to be signed by an officer of the Indian embassy in the presence of a witness. After all these initial checks are made you can go about the actual process of buying the land.
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6.7 Registration:
Once all the initial checks are made and the land to be bought is properly examined and the negotiation of the price is done, comes the process of actually buying the land. The first step of actually buying the land is to draft an agreement between the parties involved in the transaction. An agreement is made to make sure that none of the parties involved in the transaction change their mind and go back on what has been decided about the transaction. This agreement has to be made on Rs.50 stamp paper. The agreement should cover the following basic things: ? Agreed cost of the land between seller and buyer ? Advance amount given by the buyer ? Time span in which the actual sale should take place ? What procedure has to be adopted if any of the parties default on the agreement ? How the losses have to be covered if any of the parties default ? Particulars of the land
An experienced lawyer should carefully draft this agreement. Many a times, because of an agreement that is not well drafted it becomes possible for one of the parties to default and get away with it. A long with this agreement, the agreed advance has to be paid by the buyer. After the document is drafted and verified it has to be signed by both parties and two witnesses. The next step is to prepare a title deed. You could get the title deed written by a government licensed “Document Writer”. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Only those who hold the “scribe license” can prepare handwritten documents. Make sure all the details mentioned are accurate.
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? After the agreement is prepared the next step is ‘Registration’ The land is to be registered in a sub registrar office. If there is incorrectness in the documents after registering, new documents with the correct details have to be registered and depending on the incorrectness, the registration expenses will have to be repeated. Make sure that the title deed is registered within the time limit mentioned in the agreement. Along with the title deed, the other documents that are required for registration are: ? Original title deed ? Previous deeds ? Property/House Tax receipts
? Tolerance Plan (optional) etc. plus two witnesses are needed for
registering the property.
? What is a Tolerance plan? Tolerance plan is a detailed plan of the property prepared by a licensed surveyor that will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than 5 lakhs, the seller should submit either his Pan card or Form Number 16 during registration.
? The expenses involved. The expenses involved during registration include Stamp Duty, registration fees, Document writer’s/lawyer’s fees etc. The stamp duty will depend on the cost of the property and varies from location to location. 2% will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit.
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? The process of registration at the Sub – registrar’s office ? Take all the documents mentioned above. ? Submit the document along with “input form” at the token window and get the token number. ? Wait till the token number is announced. ? On token number being announced, all parties to the document must present themselves before the sub-registrar to admit execution of the document, photographed, thumb impression and signature taken on additional sheet of paper in presence of sub-registrar. ? Pay the required registration fees and computer service charges in cash as per the receipt (Computer service charges are @ Rs.20 per page) ? The document will be returned within 30 minutes of getting the receipt
Note: Please deal only with Officers and staff of the Registration Department who always display government identity card with Government Seal. Having completed all the above formalities, your land is now registered in your name. Congratulations!
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7. Questionnaires and Analysis
7.1 Chapter : Buyer characteristics. 1. What is the average age of buyers of property?
Drawings:
? A large chunk of total property buyers are below the age of 45years
belong to the matured generation and lookout for properties that suites their tastes.
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1. What is the annual income of the property buyers?
Drawings:
? Majority of the property buyers belong to Middle income group. ? A builder must take into consideration the price constraints of this
segment and build property accordingly. ? Also the banks may offer special loan schemes if they want to take advantage of this 6o% of market segment.
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1. Are the buyers First-time buyers or Repeat buyers?
Drawings: ? 92% of Vacation home buyers are first time buyers. This show the shift in the lifestyles of the people.
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7.2 Chapter: Property characteristics. 1. What is the preferred city / destination to buy property?
Drawings: ? Despite the soaring high property prices in Mumbai and Delhi they both together attract almost 51% of the property buyers in the country
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1. What is the preferred location of the property?
Drawings:
? The localities like the suburbs and nearby small towns attract a large
chunk of the buyers. This shows that the people are ready to travel small distances to work place if they find better and cheaper deals in these localities. ? While for vacation homes and investment properties buyers don’t hesitate to head towards far of resort areas.
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1. What is the percentage share of different categories of property in total sales?
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2. What percentage of new/existing properties do buyers purchase?
Drawings:
? The above graph indicate that buyers are more interested in buying
new properties as they offer better space, amenities, localities and accessibility.
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1. What type of property the buyers are interested for? ? Residence
Drawings: ? The building apartment is the most preferred type of residential property buyers opt for mainly because they fit into the budget of the middle class buyers. ? There can also be seen an increasing trend among people buying studio apartment. This indicates the shift from joint families to single families.
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? Vacation Homes
Drawings : ? The bunglows are the most preferred type of vacation homes people buy in the resort areas. ? Then comes the rows houses as second most preferred type.
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? Investment property
Drawings: ? The Commercial, Residential and N.A. plots are the most favourite properties that buyers invest in.
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1. In what price range do you look out for real estate / property investment ?
Drawings: ? Buyers investing in real estate / property generally have a budget restriction of around Rs. 30 lakhs
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7.3 Chapter: Methods of Purchase and Finance 1. Where did the buyers find the property they want to purchase? ? Residence
? Vacation Homes
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? Investment Properties
Drawings: ? With the advancement of technology and newer property website portals coming up daily internet has emerged as the most preferred way of searching for new property. ? There can also be seen an increasing trend of buyers visiting the Property Expo to search for the property they want to purchase.
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1. What is the preferred mode of Financing for the property acquisition? ? Residence
Note: Others include Fixed deposits, borrowing from unorganised sector, selling of assets like – Pre-owned property, Gold and silver biscuits, shares, mutual funds, etc.
? Vacation homes
? Investment Properties
Drawings:
? The increase in the income of the middle class and the banks citing
opportunities in the property loan market are the major sources of funding the purchase of property.
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What percentage of your monthly income are you ready to pay as EMIs for purchasing real estate / property?
1.
Drawings: ? The majority buyers are ready to shell out more than 25% of the income for buying a property.
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7.4 Chapter: Period of Investment and Expected Returns
1.
What period of duration are you willing to invest in real estate / property?
Drawings: ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
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1.
What % of returns does one expects from their investments in real estate / property?
Drawings: ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
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7.5 Chapter: Motivation and Reasons for Buying / Investing in Property. 1. What are the reasons for Buying / Investing in property?
? Residence The only reason for buying a Residential property is to have a Home that one can call it as their own. Therefore no graphs or statistics can be made in regards to Residential property.
? Vacation homes
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? Investment Properties
Drawings: ? For vacation homes i) family retreat, and ii) investment opportunities tops the list of reasons for purchasing a property. ? The other major reasons are to diversify investment, generate income and to gain tax benefits.
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1. What is the likelihood of buying another property in the next 2 years?
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8. Conclusion:
? A large chunk of total property buyers are below the age of 45years
belong to the matured generation and lookout for properties that suites their tastes.
? Majority of the property buyers belong to Middle income group.
? A builder must take into consideration the price constraints of this segment and build property accordingly. ? Also the banks may offer special loan schemes if they want to take advantage of this 6o% of market segment. ? 92% of Vacation home buyers are first time buyers. This show the shift in the lifestyles of the people.
? Despite the soaring high property prices in Mumbai and Delhi they
both together attract almost 51% of the property buyers in the country. ? The localities like the suburbs and nearby small towns attract a large chunk of the buyers. This shows that the people are ready to travel small distances to work place if they find better and cheaper deals in these localities. ? While for vacation homes and investment properties buyers don’t hesitate to head towards far of resort areas.
? The above graph indicate that buyers are more interested in buying
new properties as they offer better space, amenities, localities and accessibility. ? The building apartment is the most preferred type of residential property buyers opt for mainly because they fit into the budget of the middle class buyers. ? There can also be seen an increasing trend among people buying studio apartment. This indicates the shift from joint families to single families. ? The bunglows are the most preferred type of vacation homes people buy in the resort areas.
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? Then comes the rows houses as second most preferred type. ? The Commercial, Residential and N.A. plots are the most favourite properties that buyers invest in. ? Buyers investing in real estate / property generally have a budget restriction of around Rs. 30 lakhs ? With the advancement of technology and newer property website portals coming up daily internet has emerged as the most preferred way of searching for new property. ? There can also be seen an increasing trend of buyers visiting the Property Expo to search for the property they want to purchase. ? The increase in the income of the middle class and the banks citing opportunities in the property loan market are the major sources of funding the purchase of property. ? The majority buyers are ready to shell out more than 25% of the income for buying a property. ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property. ? For vacation homes i) family retreat, and ii) investment opportunities tops the list of reasons for purchasing a property. ? The other major reasons are to diversify investment, generate income and to gain tax benefits.
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1. Bibliography: 9.1 Print media: ? India Brand Equity Foundation Report, 2011 ? National Association of Realtor’s Property Buyers Report, 2011
9.2 Internet websites:?
www.indianrealestateforum.com www.joneslanglasalle.co.in ( website and blog )
? www.makaan.com
?
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doc_349620987.docx
real estate market
1. Executive summary
While most home buyers purchase a property to use as their primary residence, many also purchase a vacation home or a residential investment property. Because the purchase of each type of property is often influenced by different factors, it is important to understand how changes in the market environment affect each segment. The meltdown in the global and Indian real estate has brought in some level of apprehension amongst these seekers. The following survey also focuses on the prevailing market sentiments; property seekers are either mulling over or delaying their decisions to invest in real estate at present. In order to understand these existing trends and to gauge the most influential factors relating to property investments. The goal of the ‘Understanding the Consumer / Investor Preferences in Property Market’ survey report is to estimate the number of home sales that fall into each category and track how sales, the approach for purchasing a property, the different characteristics of property considered for finalizing the purchase and the various modes of financing considered to fund the purchase of property in each vary over time.
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2.
Research Problem:
To understand the existing trends in the property market today, to gauge the most influential factors relating to purchase of property in India, the various modes of financing seeked, the objective behind these acquisitions, to understand the effect of high prices of property on the buying decisions and so on. The following survey has been carried to understand the preferences of the buyers / investors. The entire property market has been categorized as follows: ? Residential property ? Vacation homes ? Investment property
2.1 Problem statement: Understand the Investment Preferences of Investors / Consumers in Real Estate Market.
2.2 Unit of analysis: Investors / Consumers.
2.3 Characteristic of: Investment preferences of investors / consumers. interest 2.4 Time and space: 6 months boundary
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1. Objectives of Research:
? To understand the investment preferences in Real Estate/property.
? To understand the buyer characteristics of Real estate/property. ? To understand the various characteristics of property considered while making the purchase decision. ? To understand the Method of Purchase and Financing for the purchase of property. ? To understand the various reasons that motivated the buyers to purchase a property. ? To estimate the levels of Return on Investment expected by the buyers.
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1.
Research Design and Methodology:
Research Design is the basic framework which provides guidelines for the rest of research process. In this project we have used the survey method of data collection, to be more specific questionnaire method. We conducted a survey, of which the sample size is 50. Respondents in the sample size were asked to fill the questionnaires to gather the data.
1.1 Research Design: 1.2 Sample size:
Exploratory
The sample size taken into account for this research topic is of 50. There are different age groups of investors / consumers been targeted in this survey.
1.3 Sources of data:
Primary data: Primary data are those, which are collected for the first time, and original in character. A situation combination of questionnaire techniques, and discussion with the respondents was used to collect the required primary data. Primary data gives higher accuracy and facts, which is very helpful for any research and its finding. The aim of primary research was to understand buying preferences of the buyers as it is seen in the actual practice. Mr. Prathamesh Sahay the research team member at Makaan.com gave me an interview and helped me in trying to understand the topic and collect primary data looks after the needs of the buyers. A survey was done by me with the help of Mr. Prathamesh Sahay; data was collected by me through questionnaire.
Secondary data: The secondary data are those, which are already collected by someone for some purpose and are available for the present study.
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Secondary data collection sources: internet, articles, property survey reports and blogs
1.4 Technique of Analysis: Data collection through questionnaire
resulted in availability of the desired information but these were useless until there were analyzed. Various steps required for this purpose were editing, coding and tabulating. Tabulating refers to bringing together similar data and compiling them in an accurate and meaningful manner. The data collected by questionnaire was analyzed, interpreted with the help of column chart and pie chart as explained in the performance data analysis.
Column
Pie Charts
2. Limitations:
Investment in real estate is a vast topic to cover the all the aspects. The various limitations of this survey are as follows:
? This survey takes into account only the preferences of consumers
in Metro and Tier -1 cities. The buyers from Tier – 2/3 or smaller towns are ignored. ? It doesn’t considers the NRIs and foreign nationals purchasing property in India.
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? There is no consideration of the institutional buyers like the
corporate houses, NGOs, Government bodies and others. It only considers the individual buyers for the survey.
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1.
The Real estate / Property Market Profile
The origins of Indian Property Market Bubble can be traced to the interest rate reductions made by the NDA coalition government in the years following 2001. Home Loan Rates fell to a (then) historical low of 7.5% in early 2004. This prepared the basis for the increase in real estate property prices across India. Low interest rates triggered interest in individuals to borrow to own their own homes and this triggered an increase in demand for real estate across India. The Indian Property Market has been growing fast since March 2005, when the current UPA government decided to open FDI in Real Estate.
The relaxation of the various laws regarding foreign direct investment in the country in the year 1991 which led to growth in Real estate industry includes; 2. Development of Special economic Zones (SEZ) with special incentives for investors, such as exemption on various export, import duties, value added taxes, income taxes etc. 3. Formation of a Foreign Investment Implementation authority (FIIA), which directly deals with regulating and facilitating the foreign direct investment in the country. 4. Special laws pertaining to the development of private sector in the country. 5. Foreigners residing in India were given the laws to buy, sell or possess immovable property without any permission from Reserve Bank of India (RBI). 6. NRI’s (Non-resident Indians), were given almost the same rights for their monetary transactions as the Indian residents. 7. Foreign investors were given the rights to purchase, sell, buy and made transactions in a hassle-free environment. 8. The opening up of FDI in Real estate from March 2005 has resulted in rapid growth of Indian Property Market.
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6.1 THE YEAR THAT WAS… Commercial Real Estate Leasing activity in the office space realm remained healthy across the major cities in 2011. These cities also saw strong pre-leasing activity in buildings under construction. Occupiers mostly expanded their renewed leases or consolidated office spaces, with an emphasis on the secondary and suburban sub-markets of the prime cities instead of the central business districts because of ample availability of leasable spaces in these areas. Special Economic Zone (SEZ) spaces saw stronger demand as compared to non–SEZ office spaces in 2011. Due to the prevailing uncertainty regarding the global economy, a marginal slowdown in leasing activity was observed. Office space rents and capital values also increased marginally in some sub-markets in 2011, since vacancy levels remained range-bound. Residential Real Estate The residential real estate market was sluggish in 2011. Sales dropped in the prime cities of India, except in Bangalore, which saw healthy sales. In Delhi NCR, the Noida sub-market had led absorption over the past 11 quarters but witnessed a decrease in 2011. Cautious buyer sentiment prevailed due to the adverse impact of the prevailing macro-economic factors such as rising interest rates and surging inflation. The spate of hikes in interest rates by the Reserve Bank of India (12 times over the past 18 months) led to a steep rise in the EMIs of home loan borrowers. While rising home loan rates have exerted pressure on buyers, developers have been constrained by the rising costs of construction and debt. We are now looking at a scenario where both developers and buyers are impacted by adverse macro-economic factors. Rising input costs caused developers to slow down on construction and new launches. Most of new launches in 2011 were in the mid-income and budget homes segment. Capital values increased to a limited extent. Although brochure prices either remained stable or increased marginally in select projects, developers offered discounts on their prices or other freebies during the festive seasons to improve sales.
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6.2 FORECAST FOR 2012… Commercial Real Estate In 2012, several IT companies are looking to pre-lease office space to take advantage of the favourable commercial terms currently being proposed by commercial office space developers. Demand is expected to remain stable. However, the office space supply is expected to outweigh demand in most prime cities of India. Corporate expansions are likely to decrease due to the uncertainties in the global economic situation, which will have an impact on business budgets for next year. Demand will derive from consolidation in and relocation to Special Economic Zones by large IT occupiers, who will seek to reduce costs and avail of the related tax incentives. Commercial office space rents and capital values are expected to increase across all cities, albeit marginally. Commercial office space investor sentiments will remain cautious in the year ahead. The suburban sub-markets will continue to be preferred by tenants, especially in the case of the IT sector, due to the cost advantage and availability of substantial supply.
Residential Real Estate Because of the prevailing uncertainties on the global market and the likelihood of further interest rate hikes by the RBI in the early part of 2012, sentiments on the residential market will remain cautious over the short term. The absorption rate – meaning the ratio of sales over inventory in the market – is likely to be low, and the incidence of new launches will decline. Rise in capital values will be marginal because of low sales. Project-specific price increases can be expected across all sub-markets – this pertains specially to projects that are being delivered or are nearing completion. The mid-end and affordable housing segments will record healthy appreciation in capital values in the short term from a low base. We expect these trends to continue during 4Q11 and 1H12. Overall macro-economic conditions will keep investor sentiments at cautious levels, both in terms of FDI and FII. FDI inflows, which are currently muted because of the slowdown in the country’s GDP growth rate, will probably remain sluggish over the short term. However, as the Indian economy continues to show its resilience in 2012, foreign investors will gain
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in confidence and India will become attractive among competing investment destinations. Meanwhile, residential developers will continue to tackle the current liquidity crunch due to high interest rates and slow sales. We will see a slowdown in construction activity for the time being. However, as demand improves, improving sales will benefit developers who will focus on execution of their on-going project portfolios.
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6.3 Real estate / Property Trends in India
Real Estate business in India has emerged as one of the most profitable businesses in the recent years. Investing in Real Estate in India is sure to fetch you a rewarding deal as the returns on investment in this sector are at an all time high. Thus, the real estate business has attracted several foreign investors also, who are investing in the properties all over the country. Numbers Say It All Many big infrastructure and real estate companies are undertaking several construction projects in the small and big cities of the country. According to the data released by the Department of Industrial Policy and Promotion (DIPP) which comes under Ministry of Commerce and Industry, housing and real estate sector including Cineplex, Multiplex, Integrated Townships and Commercial Complexes etc., attracted a cumulative foreign direct investment (FDI) worth US$ 1,048 million during April-January 201011. Higher Returns One can also witness an array of upcoming projects, both in residential and commercial sector, in the Tier 2 and Tier 3 cities. Property prices in the metropolitan cities of India are spiraling upwards and investing now can assure greater returns. Real Estate Investments in India are particularly good for foreign investors because India being a developing country requires less amount of investment but much greater returns. Multiplicity Of Sectors The diverse sectors of India viz. the Agricultural sector, IT sector, Industrial sector all offer high returns on investment. Metro projects and Road projects have lead to tremendous increase in the value of residential properties. Having a property in any metropolitan city of India is a huge financial security as investment in this sector can never let your money go down the drain. The recently released report titled ‘Emerging trends in Real Estate in Asia Pacific 2011?, by PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI) states that India is the most viable investment destination in real estate.
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Here are some reasons why: ? India is one of the most prominent countries in the Asian continent, which is right on the track of development. ? The wide cultural diversity and traditional heritage offers a very pleasant environment for foreign investors in terms of residential needs. ? Increased economical growth is attracting companies to expand business here and they are buying property in large numbers. So, if you are looking for an investment with attractive returns in the near future and in the long-term, then Indian Real Estate is the sector to go for.
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6.4 Top 10 Property price trends - Pan India in FY 20102011
Following real estate price trends across India, last Financial Year saw massive appreciations and indicators of a booming property market in this country. Here is a list of top 10 price trend we witnessed in 2010-2011. 1. GOLF COURSE ROAD YIELDED THE BEST RETURNS ACROSS INDIA: This could well be one of the best years for a property investor if you happened to be someone who has invested in the right place at the right time, in this case this happens to be Golf Course road in Gurgaon in the beginning of the FY 2010. Investors were already sitting on a return of 128 per cent on their investments within a single year time frame. Average psf rates have moved from Rs 3757 in the first quarter of 2010 to Rs 8576 by Q4 of 2011.
2. MOST OF MUMBAI CAPITAL PRICES STILL ROSE IN DOUBLE DIGITS DESPITE ALREADY HIGH BASE PRICES: Close on the heels of NCR as the most investor friendly locality in India, is Mumbai south west, already one of the most expensive real estate in the country. Juhu in Mumbai SW was the next most attractive destination (after GC road) for investors giving a 90 per cent return within the last one year despite already being the seventh most expensive locality in the country. We’re talking a base price of almost Rs 12100 psf going up to almost Rs 23,000 by the end of the year. Even Panvel, in Navi Mumbai, which has come up as an alternative to the very expensive maintown Mumbai could give a return of 52 per cent in this past one year despite the fact that there is more aggressive investor activity around Navi Mumbai as compared to more rental and resident activity in SW Mumbai.
3. GURGAON AND SW MUMBAI WERE THE TOP GAINERS APPRECIATION WISE: On the whole, the top ten movers in terms of real estate gain in India were split between localities/sectors belonging to Gurgaon and Navi/SW Mumbai with the exception of Pune hogging the third place. Koregaon Park appreciated by 74 per cent, just after Golf course road and Juhu.
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4. ROHINI IN NCR PICKED UP IN THE CLOSING QUARTER OFFERING THE BEST RETURNS IN THE SHORTEST TIME: The largest quarter on quarter price appreciation when we compare 2011Q1 data with 2010-Q4 data, took place in North Delhi-in Rohini where investors made a killing at 28 per cent return within a single quarter, this was more than what investors in Rohini made over the entire year which was just 25 per cent return. In 2010-Q4 psf rates were around 6380 and in 2011-Q1, this was 8165.
5. DELHI NCR, MUMBAI AND BANGALORE DID BETTER THAN OTHER CITIES WITH RESPECT TO CAPITAL PRICE APRECIATION: The localities across the country that have seen maximum gain over the last two quarters is Rohini (Delhi), Chembur (Mumbai), Panvel (Navi Mumbai), HSR Layout (South Bangalore), in this order.
6. NCR-GURGAON OUTDID NOIDA AS A CHOICE FOR PROPERTY INVESTMENT: Gurgaon strode ahead of all the other regions as the choicest destination for residents and investors. Despite all the noise, Noida appeared totally lwo key in the final analysis with an average of 10-11 per cent return in the past one year. What is even more noteworthy is that Faridabad and Ghaziabad appeared to have lost out completely with a loss in capital value of 48 per cent and 12 per cent respectively. This could therefore be a good time to purchase property in these areas for end users.
7. MUMBAI-CERTAIN PORTIONS OF NEW MUMBAI ACTUALLY FELL
INDICATING CASHOUTS: Palm Beach in Navi Mumbai saw a drop in rates of almost 12 per cent in the last one year. All other localities in Mumbai rose on the whole with the star performers being Mumbai S/SW. Gains made across the year appeared to slow down with some localities already dropping value such as Powai and Khar in the last quarter.
8. BANGALORE-TRADITIONAL FAVOURITES SAW SOME LOSS OF
VALUE THIS YEAR:
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Investor hotspots such as Whitefield and Bannerghatta saw a withdrawal of sorts with capital values dropping in double digits in last one quarter itself. Whitefield, psf rates fell by 13 per cent and Bannerghatta, by 14 per cent. Hebbal, another hot destination for investors traditionally, saw a downtrend of almost 6 per cent over the past one year. Bangalore, on the whole saw a lot of volatility with some areas gaining value in double digits and others losing these in double digits.
9. PUNE SAW UNPARALLED APPRECIATION IN ONE LOCALITY AND DROP IN VALUE ON ANOTHER SUGGESTING HIGH VOLATILITY AND INVESTOR MOVEMENT: Pune saw great volatility in terms of property price movement. While Koregaon park offered a price appreciation of 74 per cent over the past one year, NIBM depreciated by 2 per cent in the same time period. The rest of the localities in Pune saw a double digit appreciation.
10. KOLKATA-SOUTH REMAINED A FAVOURITE SUSTAINING CAPITAL VALUES: Garia in South Kolkata gave a 37 per cent return over the past one year bettering East Kolkata and even Tollygunge in the South that used to be the traditional favourite.
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6.5 Process and formalities involved in buying a property:
Buying property anywhere in the world can be a long and drawn out experience. However in India, buying property is a particularly demanding task with several possible hurdles along the way such as inexperienced brokers, title defects, complicated tenancy laws, the condition of the property itself, and financing, to name just a few. It is therefore important that the entire procedure be dealt with systematically to reduce the hassles that accompany it.
Stages in Purchasing Property:
1. Identifying a Realtor 2. Budgeting 3. Identifying a Property 4. Assessment of Value
5. Legal aspect of purchasing property
6. Due Diligence 7. Agreement to Sell 8. Sale Deed
1. Identifying a Realtor: A realtor can assist in locating and evaluating the right property, providing useful market information and resources, and eventually guiding the buyer through the whole process until the purchase is complete. However real estate broking firms in India are often not institutionalized, and therefore it is essential that the buyer proceeds cautiously and chooses a broker who is experienced and knowledgeable about the market, transparent and informative through the entire process, and objective while providing information.
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2. Budgeting: While determining the budget for the purchase of property, there are several expenses besides the purchase price that must also be accounted for, such as: ? Stamp duty ? Registration fees ? Legal fees ? Brokerage fees ? Society transfer charges (in buildings with societies) ? Cost of renovation/improving the property ? Cost of furnishing the property ? Future house tax/property tax payments ? Maintenance fees, whether at actual or in the form of monthly payments to a society
For newly constructed properties, it is also possible that the builder/developer may not be fully transparent at the time of booking with regards to the gross pricing of the property. The gross price should typically be a sum of the base price, external development charges (EDC), infrastructure development charges (IDC), preferential location charges (PLC), car parking charges, club membership if applicable, MSEB charges, maintenance charges, etc. While external development charges are levied by the developer on the buyer for developing infrastructure within the complex, infrastructure development charges are levied by the government on the developer and, in turn, passed by the developer on to the buyer. This charge includes development charges for water supply, sewerage, storm water drainage, roads, street lighting, community buildings, horticulture, public health maintenance, road maintenance, and street lighting maintenance MSEB charges are levied by the developer on the buyer for availing of an electricity connection on behalf of the buyer.
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1. Identifying a Property: There are numerous factors a buyer might consider while purchasing property, each with its own benefits and disadvantages. Independent House vs. Apartment in a Co-operative Housing Society: Setting aside advantages related to independence and privacy, some of the most important factors to consider while making this decision in India are maintenance costs and responsibilities, amenities that may be provided by housing societies such as swimming pools, health clubs, and gardens, and arrangements for parking, security, power backup, etc. Old vs. New construction: Sale price is generally determined on the basis of built-up area i.e. the measurement of the residential unit at floor measurement, including projections and balconies, and is measured from the external perimeter of the walls, whereas the carpet area i.e. the total area of a premises measured from the internal walls, is the area that is actually usable. In new constructions, the difference between the two might be substantial, and a buyer can end up paying a hefty sum for a smaller apartment, whereas in old constructions this difference is far lower. Further, property and municipal taxes on new constructions are assessed at a higher rate and therefore the monthly outgoings would be higher. However, maintenance standards of new buildings are generally better than those of old buildings, and new buildings often provide amenities such as swimming pools, health club, garden, earthquake resistant designs, etc. which an old building might not possess. Location, Location, Location: This is an oft-repeated mantra, which in India is taking on new meaning with the construction of new infrastructure such as highways, bridges and metros –which has generally resulted in appreciation of values in neighbourhoods being served.
Investigate before executing sale deed:
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? ? ? ? ? ? ?
Title is free from defects. There are no encumbrances on the property. Property is not locked in litigation. Inherited property has a probated will. Utilities. Property Tax. NOCs
1. Assessment value: Another factor while choosing a property is whether the price is commensurate with existing market values. Information on previous transactions can be obtained from the market (brokers, residents of the neighbourhood/complex, registrars office, etc.), but the best option would be to consult a good realtor for advice on the last transacted sale price, comparable sale transactions etc. However it is pertinent to state that brokers may be motivated to inflate prices, and it is therefore not always easy to accurately determine the value of a property in India.
2. Legal aspects of purchasing property:
When a buyer has found the property that is the right fit for his needs and budget, there are several legal intricacies that must be dealt with to complete the purchase. It is highly recommended that the buyer instruct a good lawyer while purchasing property. Once the buyer has agreed upon a price with the seller, the rest of the process should be handled by his lawyers. Buying property in India involves lots of paperwork and diligence, and the lawyers should be well equipped to handle the entire process. To that end, the lawyers should ideally be those who are proficient in transactions in the region of India in which the property is located as rules, regulations and procedures can vary between states and also between districts.
Buying from a developer: There are several factors to consider when buying property that is still under construction. Reliability of the developer is paramount, and the buyer should enquire as to his reputation and record before committing to buying any property still in development. Financial institutions and banks funding the developer can help the buyer with his enquiries and to gain a better understanding of the developer’s
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financial status. It is important that the buyer look into aspects such as timely possession, quality of construction, compliance with the buyer’s agreement (especially penalty clauses), providing the amenities mentioned, etc. It is also important for the buyer to gain first-hand knowledge and the perspective of a previous buyer who has dealt with the developer.
If the buyer is convinced that the developer is reputable, a lawyer should be instructed to commence a search of the necessary documents such as; ? An approved plan of the building along with the number of floors, and that the floor on which the apartment intended to be purchased is approved or not, as sometimes developers exceed the permissions granted to them. ? Whether the developer owns the land on which the building is located, or whether he has undertaken an agreement with a landlord. If so, the title of the land ownership, development agreement with the landowner, and power of attorney executed by the landowner in favour of the developer must be checked. ? That the land is not designated as agricultural land, else the construction will be illegal. ? The building byelaws as applicable in that area and whether the builder is not in violation of front setback, side setbacks, height, etc. ? Whether the specifications given in the “agreement to sell” or the sale brochure correspond with the plans of the construction. ? Whether urban land ceiling NOC (Non Objection Certificate), if applicable, has been obtained, and whether NOC from water, electricity and lift authorities has been obtained.
Buyer may back out of the final sale if: • • • Defect in title Non-payment of property tax (if not remedied) Material structural defects in the property
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• • • • • •
Zoning/ land use related issues: Constructing unsanctioned floors Unsanctioned construction on agricultural/coastal land Unsanctioned construction plan Previously undisclosed encumbrances on property such as mortgages, liens, or claims Absence of probated will (if previously undisclosed) Note that the seller has the right to back out of the final sale if the buyer delays the process unnecessarily.
Once the buyer’s agreement is executed, the buyer would typically pay about 10% sale price as a deposit. As the property being purchased is as yet incomplete, there are several options a buyer can choose from as far as the remaining payment is concerned. ? Down Payment Plan: In a down payment plan, the buyer would be required to make a payment of 10% of the purchase price upfront with another 85% within 30 days of the booking date. The remaining 5% has to be paid at the time of possession, which could take several years. The advantage to this plan is that the buyer would almost certainly avail a discount of 10 to 12% on the Basic Sale Price. However, a down payment plan is not generally recommended as construction – and consequently possession – might be delayed, but the buyer would have already parted with the bulk of the purchase price. ? Construction Linked Payment Plan: In this plan, payments are made to the developer in instalments over a period of time spanning the time taken for construction of the building. The buyer pays 10% at the time of booking and another 10% after 30 days from the booking date, and thereafter instalments of 8 to 10% at each stage of construction. This is the most practical payment plan as the instalments are linked to stages of construction, and therefore the buyer’s capital is not blocked if the developer delays construction. ? Time Linked Payment Plan: This plan is also based on payment in instalments, usually with payments being made approximately every 2 months over a period of 20 to 24 months. However, the payment schedule is decided by the builder and is structured based on time and not the stages of construction, and the buyer would have to pay the instalments on schedule irrespective of whether the construction is
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proceeding on schedule or not. This option is not as viable as opting to pay under a construction linked payment plan and should ideally be avoided. ? Flexi Plan: The flexi plan includes features from both the down payment and the construction linked payment plan. Under this plan, the buyer would, as in a down payment plan, have to pay 10% at the time of booking and another 30-40% within 30 days. Thereafter the payments are structured as with the construction linked payment plan. A flexi plan can earn a buyer a discount of 5 to 6% of the purchase price.
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1. Due Diligence
Once the property has been identified, and a price agreed with the seller, the buyer’s lawyer will conduct a ‘due diligence’ or a search of all the documents related to the property to ensure that there are no deficiencies with the property that will hinder the proposed sale. In certain geographies, prior to due diligence the buyer and seller may sign a letter of intent or memorandum of understanding, accompanied by ‘earnest money’ or deposit. Title: Probably the first – and most important thing – the lawyer will check is the title of the seller with respect to the property. It is essential to know that if the seller does not have perfect title, he cannot transfer the same to the buyer. For example, if the seller is not listed as the owner of the property, he cannot sell it. Similarly, if the property is jointly owned by more than one person, each joint owner would be required to sign the agreement to sell and sale deed, unless any one of them is authorized to act on behalf of the others by way of power of attorney. A title search is taken at the office of the local sub-registrar. The buyer should ask for all title documents (and copies of the same) right from the first owner of the property or, in the case of property that is extremely old, title documents thirty years prior to the search. This process can take between 8 and 10 days. The lawyer should also ascertain the survey number, village and registration district of the property as these details will be required for registration. Encumbrances: The office of the local sub-registrar would also have to be searched to see if there are any encumbrances on the property, such as a mortgage, lien, or claim from a third party. Although mortgaging properties is not an exceptional practice, one needs to consider the implications of purchasing a mortgaged property very carefully.
In case the seller defaults in paying his debt, the mortgagee – usually a bank – can attach the property and sell it to recover the debt, despite the fact that the mortgagor/seller no longer owns the property. Also, the mortgage deed might contain a stipulation that the property cannot be sold unless the mortgagee gives a no objection certificate and in the case of mortgaged property the buyer must insist that the seller clears the mortgage obtains a NOC from the bank. Alternatively,
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the buyer may contract with the seller to make payment directly to the bank and remove the encumbrance. Property Tax: The lawyer must also check tax receipts for the past three years to determine whether the seller has paid the requisite property tax to the housing society or, in the case of independent houses, to the municipal authority. Litigation: It is also essential to ensure that the property is not the subject-matter of any litigation, as cases pending before the courts can take several years, if not decades, to be finally decided. Probated Will: In case of property that the seller has inherited, the lawyer must check the will by way of which the property was acquired. Although Indian law does not require a will to be probated (i.e, authenticated by a court), this is preferable as a probate ensures legitimacy of the will and is valid against any claims thereafter made against the seller’s right to inheritance of the property. Although challenging a probated will is not unheard of, it is extremely difficult for someone to do so successfully if the will is not fraudulent. Buyers’rights: ? To examine all documents of title that the seller possesses or can produce
? To be informed of any material defect in the property of which the
seller is award ? To the execution of a proper conveyance upon payment of purchase price ? To possession of the property as per the agreement of sale
StampDutyPayable: ? Delhi: 4 % (Females); 5 % (Joint); 6 % (Males) ? Noida: 5% ? Gurgaon: 5 % (Females); 6 % (Joint); 7 % (Males)
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? Pune: 5 % ? Chennai: 8% ? Kolkata: Municipal area – Price 25 lacs then 7.1%; Panchayat area 6.1% ? Mumbai: 5% ? Bangalore: 6.72%
A buyer must also release an advertisement in a newspaper stating his intention to buy the property from the seller, and for our sale properties Cushman and Wakefield will assist with this. This is done so that any objections to the proposed sale are raised in advance and may be dealt with accordingly. The objections may bring to light certain hidden facts, such as an encumbrance, or title defect which might significantly impact a buyer’s decision to purchase the property. In case there is a defect in the title, the entire sale can fall through if not rectified. Once the buyer’s lawyer is satisfied that the seller’s title is free from defects, he will issue a title certificate, which is a document stating that the seller has the necessary title to sell the buyer his property.
1. Agreement to Sell
After the buyer’s lawyer has issued the title certificate, the seller’s lawyers will draw up a document known as an ‘agreement to sell’ (in certain geographies like Mumbai, a deposit may be required from the buyer prior to the title search and agreement to sell; the buyer’s lawyers will furnish the exact details). The agreement to sell will contain the terms and conditions of the sale, and while there is no standard format for the same, it usually contains the following vital information: ? Description/location of the property ? The purchase price for the property
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? The amount of deposit payable by the buyer – usually it would be in the range of 10% to 20% of the purchase price to be paid in advance ? Date of closing – the date on which the purchase price is to be fully paid to the seller and the sale deed executed and registered by him ? Date on which the buyer will be given possession of the property The agreement to sell might also contain provisions to deal with breach by either party – e.g. forfeiture of deposit in case of buyer’s default, or return of deposit along with interest in case of seller’s default – an arbitration clause or a clause specifying the court which would have jurisdiction in case of a dispute, and provisions for inspection or investigation of title, such as the time in which this is to be completed. The agreement to sell must be attested by the signatures of at least two witnesses and must be registered by the seller’s lawyers. It is imperative that a buyer not sign any documents unless both he and his lawyer are satisfied with its contents.
1. Sale deed When the agreement to sell is duly registered and the purchase price (or a portion thereof, If so agreed upon), the seller’s lawyer will draw up a document known as a sale deed. This is the document by which the buyer will acquire ownership of and title to the property. There are certain fees that are required to be paid with respect to the sale deed. Stamp duty, a levy imposed by the government on certain instruments, is payable on the property under the Stamp Act of the state in which the property is located (see box for the applicable stamp duty in various states). The stamp duty is payable either by printing the sale deed on stamp paper of the appropriate value or by franking of the sale deed for the value. In case the buyer has paid the stamp duty and the sale falls through, he would need to apply for a refund, which could take 4 to 6 months.
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Like the agreement to sell, the sale deed too is required to be attested by two witnesses and registered, and the PAN cards of the buyer and the seller will be required. Registration of the sale deed is carried out by lodging the original stamped agreement with the relevant registration office. Registering the sale deed is crucial as the title to the property does not pass to the buyer unless it is duly registered in accordance with the Registration Act. Please bear in mind that stamp duty and registration fees are two entirely separate costs, both of which are to be borne by the buyer unless otherwise agreed between the buyer and the seller. If the property purchased is in a housing society, the buyer would need to complete certain forms of the society once the property is registered in his name. Once the forms are submitted the society president will raise the issue in the next AGM and admit the buyer as a member. In certain cases, a NOC (no objection certificate) from the society may be required.
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6.6 Things you must check before buying a property:
The most important thing to do before you buy a particular piece of land you are interested in is to see whether the land can be sold by the person who is selling it. Just like how "Bunty & Bubly" sold the Taj Mahal, you do not want to be on the other side of a "Bluffmaster's" brilliant plans. So before you even take the first step towards buying the land you are interested in, you got to check a few things. ? Check the ‘ Title deed / Certificate of Title ‘ of the property: A title deed is "a legal document proving a person's right to property" as defined by a law dictionary. An advocate prepares a title deed after studying and scrutinizing the property and verifying that all is in order. So as a buyer what you need to do is ask the owner of the land you wish to purchase for the tile deed and review it properly. Do not accept a xerox copy of the deed. Ask for the original "Title Deed". Some times the seller might have taken a loan and given in the original deed. You need to make sure through the title deed that the land is in the name of the seller. Also you need to verify that he has full right to sell the land and that he is the sole owner of the land and no one else is. It would be wise to get the title deed reviewed by a trusted lawyer just to make sure that there are no loop holes.
? Ask the ‘ Encumbrance Certificate ‘ : The next step is to demand an "Encumbrance Certificate". This is basically a certificate that says that the land is not under any sort of legal dispute. The encumbrance certificate can be obtained from the sub-registrar’s office where the deed for the land has been registered. The encumbrance certificate for the past 13 years should be taken and verified. You could even ask for the encumbrance certificate of the last 30 years for more clarification.
? In case of the ‘ Pledged Land ‘ :
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Some people may have pledged their land previously for taking a loan. In this case, it would be wise to ensure that all the loan payments have been made and that no amount is due. Ask, the seller to produce the "Release Certificate" from the bank that is necessary to release all debts over the land legally. ? Measure the property: Get a recognized surveyor to measure the land and see that the dimensions, area, borders etc. are accurate as stated by the seller.
? If there is more than one owner: If there is more than one owner, it would be wise to get a "release certificate" from everyone involved before going ahead with the process.
? If the owner is an NRI: If the owner of the land is a NRI, then the seller of the land in India should be given "Power Of Attorney" to sell the land on behalf of the NRI. The power of attorney has to be signed by an officer of the Indian embassy in the presence of a witness. After all these initial checks are made you can go about the actual process of buying the land.
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6.7 Registration:
Once all the initial checks are made and the land to be bought is properly examined and the negotiation of the price is done, comes the process of actually buying the land. The first step of actually buying the land is to draft an agreement between the parties involved in the transaction. An agreement is made to make sure that none of the parties involved in the transaction change their mind and go back on what has been decided about the transaction. This agreement has to be made on Rs.50 stamp paper. The agreement should cover the following basic things: ? Agreed cost of the land between seller and buyer ? Advance amount given by the buyer ? Time span in which the actual sale should take place ? What procedure has to be adopted if any of the parties default on the agreement ? How the losses have to be covered if any of the parties default ? Particulars of the land
An experienced lawyer should carefully draft this agreement. Many a times, because of an agreement that is not well drafted it becomes possible for one of the parties to default and get away with it. A long with this agreement, the agreed advance has to be paid by the buyer. After the document is drafted and verified it has to be signed by both parties and two witnesses. The next step is to prepare a title deed. You could get the title deed written by a government licensed “Document Writer”. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Only those who hold the “scribe license” can prepare handwritten documents. Make sure all the details mentioned are accurate.
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? After the agreement is prepared the next step is ‘Registration’ The land is to be registered in a sub registrar office. If there is incorrectness in the documents after registering, new documents with the correct details have to be registered and depending on the incorrectness, the registration expenses will have to be repeated. Make sure that the title deed is registered within the time limit mentioned in the agreement. Along with the title deed, the other documents that are required for registration are: ? Original title deed ? Previous deeds ? Property/House Tax receipts
? Tolerance Plan (optional) etc. plus two witnesses are needed for
registering the property.
? What is a Tolerance plan? Tolerance plan is a detailed plan of the property prepared by a licensed surveyor that will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than 5 lakhs, the seller should submit either his Pan card or Form Number 16 during registration.
? The expenses involved. The expenses involved during registration include Stamp Duty, registration fees, Document writer’s/lawyer’s fees etc. The stamp duty will depend on the cost of the property and varies from location to location. 2% will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit.
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? The process of registration at the Sub – registrar’s office ? Take all the documents mentioned above. ? Submit the document along with “input form” at the token window and get the token number. ? Wait till the token number is announced. ? On token number being announced, all parties to the document must present themselves before the sub-registrar to admit execution of the document, photographed, thumb impression and signature taken on additional sheet of paper in presence of sub-registrar. ? Pay the required registration fees and computer service charges in cash as per the receipt (Computer service charges are @ Rs.20 per page) ? The document will be returned within 30 minutes of getting the receipt
Note: Please deal only with Officers and staff of the Registration Department who always display government identity card with Government Seal. Having completed all the above formalities, your land is now registered in your name. Congratulations!
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7. Questionnaires and Analysis
7.1 Chapter : Buyer characteristics. 1. What is the average age of buyers of property?
Drawings:
? A large chunk of total property buyers are below the age of 45years
belong to the matured generation and lookout for properties that suites their tastes.
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1. What is the annual income of the property buyers?
Drawings:
? Majority of the property buyers belong to Middle income group. ? A builder must take into consideration the price constraints of this
segment and build property accordingly. ? Also the banks may offer special loan schemes if they want to take advantage of this 6o% of market segment.
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1. Are the buyers First-time buyers or Repeat buyers?
Drawings: ? 92% of Vacation home buyers are first time buyers. This show the shift in the lifestyles of the people.
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7.2 Chapter: Property characteristics. 1. What is the preferred city / destination to buy property?
Drawings: ? Despite the soaring high property prices in Mumbai and Delhi they both together attract almost 51% of the property buyers in the country
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1. What is the preferred location of the property?
Drawings:
? The localities like the suburbs and nearby small towns attract a large
chunk of the buyers. This shows that the people are ready to travel small distances to work place if they find better and cheaper deals in these localities. ? While for vacation homes and investment properties buyers don’t hesitate to head towards far of resort areas.
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1. What is the percentage share of different categories of property in total sales?
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2. What percentage of new/existing properties do buyers purchase?
Drawings:
? The above graph indicate that buyers are more interested in buying
new properties as they offer better space, amenities, localities and accessibility.
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1. What type of property the buyers are interested for? ? Residence
Drawings: ? The building apartment is the most preferred type of residential property buyers opt for mainly because they fit into the budget of the middle class buyers. ? There can also be seen an increasing trend among people buying studio apartment. This indicates the shift from joint families to single families.
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? Vacation Homes
Drawings : ? The bunglows are the most preferred type of vacation homes people buy in the resort areas. ? Then comes the rows houses as second most preferred type.
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? Investment property
Drawings: ? The Commercial, Residential and N.A. plots are the most favourite properties that buyers invest in.
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1. In what price range do you look out for real estate / property investment ?
Drawings: ? Buyers investing in real estate / property generally have a budget restriction of around Rs. 30 lakhs
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7.3 Chapter: Methods of Purchase and Finance 1. Where did the buyers find the property they want to purchase? ? Residence
? Vacation Homes
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? Investment Properties
Drawings: ? With the advancement of technology and newer property website portals coming up daily internet has emerged as the most preferred way of searching for new property. ? There can also be seen an increasing trend of buyers visiting the Property Expo to search for the property they want to purchase.
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1. What is the preferred mode of Financing for the property acquisition? ? Residence
Note: Others include Fixed deposits, borrowing from unorganised sector, selling of assets like – Pre-owned property, Gold and silver biscuits, shares, mutual funds, etc.
? Vacation homes
? Investment Properties
Drawings:
? The increase in the income of the middle class and the banks citing
opportunities in the property loan market are the major sources of funding the purchase of property.
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What percentage of your monthly income are you ready to pay as EMIs for purchasing real estate / property?
1.
Drawings: ? The majority buyers are ready to shell out more than 25% of the income for buying a property.
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7.4 Chapter: Period of Investment and Expected Returns
1.
What period of duration are you willing to invest in real estate / property?
Drawings: ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
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1.
What % of returns does one expects from their investments in real estate / property?
Drawings: ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
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7.5 Chapter: Motivation and Reasons for Buying / Investing in Property. 1. What are the reasons for Buying / Investing in property?
? Residence The only reason for buying a Residential property is to have a Home that one can call it as their own. Therefore no graphs or statistics can be made in regards to Residential property.
? Vacation homes
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? Investment Properties
Drawings: ? For vacation homes i) family retreat, and ii) investment opportunities tops the list of reasons for purchasing a property. ? The other major reasons are to diversify investment, generate income and to gain tax benefits.
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1. What is the likelihood of buying another property in the next 2 years?
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8. Conclusion:
? A large chunk of total property buyers are below the age of 45years
belong to the matured generation and lookout for properties that suites their tastes.
? Majority of the property buyers belong to Middle income group.
? A builder must take into consideration the price constraints of this segment and build property accordingly. ? Also the banks may offer special loan schemes if they want to take advantage of this 6o% of market segment. ? 92% of Vacation home buyers are first time buyers. This show the shift in the lifestyles of the people.
? Despite the soaring high property prices in Mumbai and Delhi they
both together attract almost 51% of the property buyers in the country. ? The localities like the suburbs and nearby small towns attract a large chunk of the buyers. This shows that the people are ready to travel small distances to work place if they find better and cheaper deals in these localities. ? While for vacation homes and investment properties buyers don’t hesitate to head towards far of resort areas.
? The above graph indicate that buyers are more interested in buying
new properties as they offer better space, amenities, localities and accessibility. ? The building apartment is the most preferred type of residential property buyers opt for mainly because they fit into the budget of the middle class buyers. ? There can also be seen an increasing trend among people buying studio apartment. This indicates the shift from joint families to single families. ? The bunglows are the most preferred type of vacation homes people buy in the resort areas.
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? Then comes the rows houses as second most preferred type. ? The Commercial, Residential and N.A. plots are the most favourite properties that buyers invest in. ? Buyers investing in real estate / property generally have a budget restriction of around Rs. 30 lakhs ? With the advancement of technology and newer property website portals coming up daily internet has emerged as the most preferred way of searching for new property. ? There can also be seen an increasing trend of buyers visiting the Property Expo to search for the property they want to purchase. ? The increase in the income of the middle class and the banks citing opportunities in the property loan market are the major sources of funding the purchase of property. ? The majority buyers are ready to shell out more than 25% of the income for buying a property. ? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property.
? The above graph shows that there is high rate arbitration among the investors who after a certain period of time book their profit by selling their investment property. ? For vacation homes i) family retreat, and ii) investment opportunities tops the list of reasons for purchasing a property. ? The other major reasons are to diversify investment, generate income and to gain tax benefits.
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1. Bibliography: 9.1 Print media: ? India Brand Equity Foundation Report, 2011 ? National Association of Realtor’s Property Buyers Report, 2011
9.2 Internet websites:?
www.indianrealestateforum.com www.joneslanglasalle.co.in ( website and blog )
? www.makaan.com
?
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