Housing sector hit on the back of steep hike in guideline values

Chennai

At a time when land values started stabilising in and around Chennai, the Tamil Nadu government has increased the guideline values for land registration purposes by hiking the values from 60 per cent to 300 per cent effective April 1. This has sent shock waves among the industry and the land owners and property developers are in a piquant situation now.

The government’s reduction in stamp duty by 1 per cent has not gone well with the industry when the guideline values were raised to abnormal levels. The real estate sector is in for turbulent times due to sudden and abnormal hike in guideline values and the worst hit sector will be affordable housing segment.

According to official sources, though the revenue for the two month period (April and May) was up by Rs 100 crore, the volume of transaction has come down drastically. Industry sources say that city area transactions fell through due to reluctance on the part of buyers to absorb the hike in stamp duty.

In vibrant commercial areas like Whites road, the guideline value soared to Rs 16,000 above the market value, say property consultants. In other city areas like Abhiramapuram, the value for residential area is more than the commercial value (see table). The state government in their anxiety to curb the unaccounted money in real estate transaction has sent a wrong signal to the market which will adversely impact the housing development.

Land transactions are not happening nowadays not because of the steep hike in guideline values alone but due to the cascading impact of RBI restrictions on bank funding to realty sector, uncertainty in FDI investment, global meltdown, higher expectations of PE funds and soaring land value. What has aggravated the whole scenario further is the sudden hike in guideline values.

The worst hit in the current scenario is the affordable housing segment and the common man for whom the dream of owning a shelter will only get longer. Though official sources claim that the hike in guideline values range from 60 per cent in suburbs and peripheral areas, lack of infrastructure and diminishing margins for developers will not encourage them and only prolong the overall development of affordable housing in the coming months.

Yet another segment that bore the brunt of the hike in guideline values is the land owners in exigencies. The distress sale is not happening due mainly to the hike in guideline values, say industry sources.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/housing-sector-hit-on-the-back-of-steep-hike-in-guideline-values

Techies moonlight as real estate agents, rake in cash

CHENNAI: Professionals in the IT sector may be paid big bucks but a little extra money doesn't hurt. Many techies, including several who work for top companies, have found that moonlighting in the city's booming real estate market can be a very lucrative part-time job.

Software professional A Vignesh, who started dabbling in real estate four years ago, now has six partners in a real estate firm that he launched with his friends when they were second year undergraduate students. "We now work in various software and BPO companies but we continue to do the realty business on the side," he said.

Vignesh says his company mostly looks for IT and corporate clients. Techies like him who have got into real estate usually do business in apartments and residential complexes in posh areas of the city.

But Vignesh's partners say it's not an easy job. "We visit sites and meet buyers over the weekends," said K Raguram, who also works for the firm. "Only few deals work out. When we get buyers and sellers to come to an understanding, we make good money," he said. Software professional K Ramesh purchased an apartment through Vignesh two years ago. "I bought a second-hand flat in Thuraipakkam in 2010. It was a furnished house and the price was reasonable," he said.

T Balakrishnan, who works for a multinational corporation, entered the real estate business after an unpleasant incident while purchasing an apartment. "I'd been searching for a flat for more than three years before I bought a second-hand apartment in 2008," he said. "I paid agents Rs 90,000 as commission and later learned that they had overpriced the apartment."

Some of Balakrishnan's friends who wanted to buy apartments asked him for help. "I started searching for flats myself because I knew that many brokers cheat people," he said. "I visited many apartments before I found a place for a colleague in Adyar. He forced me to accept a gold chain for my trouble." He soon started accepting commissions for his services and found that he could make a tidy sum by being a part-time realtor.

The trend of professionals from other industries getting into the housing market has been on the rise, said K Velmurugan, a realtor for more than 10 years. He said the market is big enough for everyone, so part-timers do not pose a threat to those in the business.

Source: http://timesofindia.indiatimes.com/city/chennai/Techies-moonlight-as-real-estate-agents-rake-in-cash/articleshow/14380875.cms

Demand for land picks up in Chennai

Chennai

After a considerable lapse of time demand for vacant plots is gaining momentum across all micro markets in Chennai. Among the factors attributed to the sudden revival are investment inflow into growth corridors like Oragadam, improved connectivity level, transportation and spurt in the number of housing projects under development in suburban and peripheral areas.

“There is a perceptible shift in demand for plotted development projects in that enquiry levels are up by 15-20 per cent over last year”, says Dinesh Babu, Manager, Marketing, ABI Estates Pvt Ltd. This is in spite of the fact that government has recently hiked the guideline values for land across the state.

Yet another factor that is convincing homebuyers is the postponement of homebuying decision due to a combination of factors. Those who are unable to take a firm decision due to locational preferences and price, are convinced that the only way to compensate the growing home prices is to plough back smaller investments which is one reason for the sudden spurt in demand for vacant sites across the city.

The rate varies from Rs 500 to Rs 1200 per sqft for units located in 50 km radius from city centre and Rs 250 to Rs 1,000 per sqft in 100 km radius. Here again prices vary depending on the location, road width and proximity to landmark areas. If the project is well maintained and has a club house, a premium on the sale price is demanded by select developers.

Plot loans are available from a few institutions but at a higher lending rate and the quantum of loan is restricted to the guideline value of the property which is less than the market value. This increases the upfront margin money for investors seeking plot loans. A majority of the housing finance institutions insist on construction within the prescribed period and so investors may not be able to benefit much out of plot loans if the intention is to just make medium to long-term gain.

According to industry sources, investors should enter into plotted development projects only if their investment horizon is beyond five years. This is because 100 per cent price appreciation is possible in 50 km radius in five years and in 100 km radius, it might take 7-9 years to reach that level of appreciation, say developers undertaking plotted development projects.

Though the number of organised players in plotted development projects do not even cross double digit figure, mushrooming of unorganised players in far flung areas is a disquieting feature. Apart from the 24×7 maintenance, ground realities have to be observed before plunging into investment as that will bring value to the overall investment, caution property experts on condition of anonymity. This is because a number of investors have been taken for a ride by unscrupulous elements in the industry and moving from pillar to post to seek justice.

Among the basic documents that need to be verified by investors in plotted development projects specific mention must be made about title deeds, death certificate in case of inheritance by intestate succession, Will and probate in the event of testamentary succession, revenue documents like Patta, chitta and adangal, encumbrance certificate for a minimum period of 30 years, layout sanction for the plot, proof of documents to show EB connection, MMWSS&B system, and authentic document to establish the identify the vendor.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/demand-for-land-picks-up-in-chennai

Chennai faces decline in PE realty transactions

Chennai

Realty deals in Chennai market have shown a gradual decline over the years. The private equity deals which peaked to 11 during the year 2010, declined to 6 in 2011 and no deal has been reported so far this year. While the quantum of funds invested during 2010 was $136 million, it went up to $154 million during last year, according to Venture Intelligence survey.

There were two exits during last year with an estimated value of $54 million. According to industry sources, while the level of interest continues to remain in realty sector, PE funds have become wary of market gyrations and prefer committing for residential projects in the changing market scenario.

“There is no dearth of opportunities for funds in the Indian real estate market today. But the real issue is the limited options available for funds to exit today”, says Ashutosh Limaye, Head of Research, India, Jones Lang LaSalle. In the absence of REITs, they can sell it to some other funds where again there are very limited options. But for residential sector exit is automatic which is one of the reason for the overriding thrust on investment in the sector, he adds.

There are two types of funds, one with greater risk appetite and keen to invest in projects that are under development and the other is conservative that prefers income generating assets where the yield will be in the region of 9-10 percent per annum. There are funds which are looking at 18-20 per cent return on investment with the project lead time spanning three years and above.

Unlike earlier, realty funds have become more matured now as they have learnt many lessons over a period of years on how India is operating, urbanisation drive, market potential and the opportunities shrouding the residential sector. Valuations have become more realistic people are looking at current market value of land.

According to industry sources, out of 300 funds that entered the Indian market since 2006, only 100 funds are active in the last five years. A checklist of criteria for selection of real estate projects includes track record of the developer, transparency, market volatility, demand for quality homes, infrastructure in the city in terms of master plan, tolerance of people, cosmopolitan outlook, etc.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennai-faces-decline-in-pe-realty-transactions

Chennai: demand for residential properties go up

CHENNAI: The stability in Information Technology (IT) and Information Technology Enabled Services (ITES) and the dip in inflation are expected to spur the demand for residential properties in Chennai, according to a real estate research firm.

Siva Krishnan, Head of residential services (Chennai), Jones Lang LaSalle India, told City Express on Friday that Chennai’s residential real estate market this year looked quite rosy. The increased job security in the sector has helped the real-estate market to maintain buoyancy and a positive outlook, he said.

“Over the last 12 months, it has become increasingly evident that Chennai’s residential real estate market is significantly dependent on the IT/ITES sectors. With employment stability in these sectors looking a lot better now than it did in 2010, demand for homes has now reached a comfortable and dependable growth trajectory from which developers are taking their market cues,” he said.

“We expect overall demand for residential properties in Chennai to increase once the interest rates stabilise from their current peak,” Krishnan said, in his report. He also said FAIRPRO 2012 ( the annual real estate expo of Tamil Nadu) will give a fillip to the real estate market in Chennai in terms of clarity and benefits to the developers.

During the last six months, the real estate sector had taken a hit, as approvals were not happening. T Chitty Babu, President of Confederation of Real Estate Developers’ Associations of India (CREDAI), also highlighted this problem recently.

However, during the last two months, things have improved and Babu said he feels that FAIRPRO will ride on the stability of the IT and ITES sectors. “We have been receiving a lot of queries from the IT sector since last quarter and this is due to the stability in this sector,” said Babu. He is also hopeful that the timing of the expo, which will begin just before the budget, will give ample time to customers to think and plan their buying decisions accordingly.

Interestingly, the preferred size for three BHK flats in Chennai has increased from 1,200-1,300 square feet during the recession to 1,400-1,500 square feet in the revival phase. The preference size for 2BHK flats has also increased from 850-950 square feet to about 1,100-1,200 square feet.

“The main reason for this upgrade in preferences is increase in budgets, which was made possible by improvement in the performance of the IT/ ITES sectors,” Krishnan said.

There is a very healthy demand in the primary and secondary markets, since supply is scarce in both due to the severe lack of land within the city. Land pricing has, in fact, surpassed the buying capacity of developers and this has put pressure on their ability to come up with viable residential products.

“Lack of supply and exorbitant pricing are causing both the end users and the investor segments to take a closer look at suburbs with decent infrastructure,” Krishnan said.

Source: http://ibnlive.in.com/news/demand-for-residential-properties-to-go-up/231298-62-130.html

Bangalore developers expand operations in Chennai

Chennai

With the overall size of the housing market growing every year, it is the turn of property developers to enhance their area of operation in neighbouring states. The companies which went public a few years ago are now compelled to enlarge their operations across the country. In Chennai alone, around ten Bangalore developers are operating today.

While a majority of them are developing residential projects, companies like RMZ Corp. have focused on commercial development but are now planning to diversify into residential sector as well. The early entrants are Puravankara Projects and Mantri Developers.

Puravankara has two ongoing residential projects in Kelambakkam and Pallikaranai which is the largest project in the city with 3,000 apartments. Mantri has one project in Padur. Ozone group is doing a mixed-use development of 42 acres in Anna Nagar.

Embassy group is developing an integrated township with 2482 apartments spread across 25 acres of land in Perumbakkam, near Sholinganallur. Prestige group and Sobha Developers are the new entrants. While Prestige group has launched a joint venture project in Porur to build 2613 homes on 25 acres of land, Sobha Developers has launched two projects, comprising development of international apartments on OMR and luxury apartments near Porur. Besides, Sobha Developers has also built an ancillary unit to undertake production of building materials in the city.

Brigade Group is developing a hotel project in Kottivakkam and retail development in Perungudi besides planning to launch more projects in the coming months.

There are other developers like Nitesh Estates, Shanders, Salarpuria and a few others who have been exploring the market to identify suitable land parcels for maiden entry but somehow it is getting postponed due to a combination of factors, according to market sources. Whereas, Shriram Properties has more projects under development in Bangalore than in Chennai and has also expanded its operations across Hyderabad, Vishakhapatnam and other cities.

Among the very few developers from Bangalore who have specifically focused on commercial development so far in Chennai is RMZ Corp., but they are also planning to diversify into residential development and considering multiple options. Most of the projects undertaken in the residential sector by the Bangalore developers are under joint development.

Source: http://content.magicbricks.com/bangalore-developers-expand-operations-in-chennai

Builders seek changes in proposed bill

CHENNAI: The Real Estate (Regulation and Development) Bill, set to get Parliament's assent soon, has been dubbed by builders as a unidirectional legislation aimed at strangulating the developer community.

The bill, in its present form, aims at safeguarding the interests of consumers and taxing developers, said Confederation of Real Estate Developers' Association of India secretary T Chitty Babu, at a seminar organized by the Builders' Association of India ( BAI) here on Tuesday.

Listing out lacunae in the bill, Babu said other stakeholders like government agencies, regulatory bodies, financial institutions and banks had been left out of the purview of the bill.

He said a developer had to obtain nearly 50 clearances to complete a project. Often, residential projects were delayed due to obtaining plan approval from regulatory bodies and getting service connections like water, power and sewerage, he said. If banks were not brought under the bill's purview, they would withdraw funding for projects when the market became sluggish.

Babu doubted the effect the bill would have the real estate sector when land is a state subject and wondered if there was any guarantee that all states would follow the Central legislation.

Another drawback, he said, was that the bill sought to cover only projects that were 4,000 sq m and above. Since a lion's share of development projects was on a small scale, the bill would cover a very small section of builders, he noted.

He, however, welcomed the provisions to create transparency in apartment sales by making in mandatory for builders to specify carpet area and common area. Similarly, the condition that only approved projects could be marketed would put curbs on unauthorized buildings, he said.

Source: http://timesofindia.indiatimes.com/city/chennai/Builders-seek-changes-in-proposed-bill/articleshow/12076895.cms

CMDA initiates measures for prospective buyers

Chennai

The Chennai Metropolitan Development Authority (CMDA) has initiated several measures for investors in real estate in the city to update themselves on the land use pattern, approval status, etc. This is a virtual boost to buyers and investors in real estate who are otherwise taken for a ride by unscrupulous people in the industry.

A counselling centre provides a wide range of services free of cost to those looking for guidance with regard to land use, approval and acquisition status prior to investment. In fact with the e-governance initiative taking shape, one can obtain the status of land use through CMDA website today by providing location specific information sought for.

A long standing requirement of the real estate sector in Tamil Nadu is the need to speed up the planning approval process. Towards this objective, the CMDA is conducting a trial run of the automatic approval process mechanism that will scrutinise the application as and when it is submitted to the authority. Through this process, architects may submit it in a CD. The department is now conducting a trial run before ensuring that developers can safely submit it online.

The NSC software is expected to be ready shortly, according to senior official sources in CMDA. Once implemented there is no need for developers to swarm the authorities with voluminous documents to represent their cases. They can submit the application online and ascertain the status of their application also online. In fact the system is modified in such a way that they can see at what stage or with whom the application is lying i.e. assistant planner or senior planner or member secretary.

While delivering the inaugural address at the recently held 3-day Credai property show in Chennai Trade Centre, Phanindra Reddy, IAS, Secretary to the Government, Housing and Urban Development Department, has also assured the industry to look into the paramount need of speeding up the planning approval process.

The industry has also voiced concern that the 18% per cent growth rate recorded in real estate development in the state could have been 30% had there been a pragmatic approach on the government front in reforming the archaic rules that act as deterrents in the housing sector.

Source: http://content.magicbricks.com/cmda-initiates-measures-for-prospective-buyers

1BHKs become popular in Chennai

Chennai

With soaring property prices and high disposable incomes among young working professionals, one bedroom flats (1BHKs) are gradually becoming popular among end-users and investors alike.

Chennai, as any real estate expert will tell you, has always been an end-user-driven market. Which is precisely why 2BHKs (bedroom hall kitchen) and 3 BHKs continue to be popular here, thanks to the fact that Chennaiites have conventionally moved in with their families and preferred larger spaces.

However, parallel to the booming market for 2 and 3 BHKs, a small but steady market for 1 BHKs has evolved over the last few years. One of the reasons cited is the CMDA’s (Chennai Metropolitan Development Authority) mandate to reserve 10% of the space in larger projects for economically weaker sections (EWS). As Rajkumar Kamdar, Director, Prince Foundations, points out, “According to the provisions under CMDA’s Second Master Plan, projects spread across 2.5 acres or more must reserve 10% of their area for construction of 45 sq m units (or less) for EWS. Only one bedroom apartments can be constructed in that space. And since 2 BHKs and 3 BHKs are out of reach for the EWS (and the general public, at large), most of them feel that it makes economic sense to purchase a one bedroom apartment.”

But do these apartments necessarily cater to the EWS category? How many of them can really afford an apartment, no matter how small? Mehul Doshi, MD of Doshi Builders, believes that it depends on the location of the project. “One bedroom apartments in the heart of the city are definitely not affordable. But those in the suburbs and outskirts of the city are well within their reach,” he explains. Doshi clarifies that CMDA’s norm classifies these apartments based on size, not necessarily on income levels of buyers. So who are the buyers? Deepak Shah, Senior VP – Sales and Marketing, Prestige Estates Projects Ltd, says, “The buyer profile includes newly married couples, single working professionals from the IT sector, etc.”

These apartments also come to the rescue of bachelors (from the city and other places) who find it difficult to rent a place in the city. Suresh Jain, MD, Vijayshanthi Builders, says, “With the IT boom and the consequent influx of MNCs, owners/developers have been leasing out one bedroom apartments on OMR, GST, etc, to companies. Besides, a lot of young working professionals (from other cities) purchase one bedroom apartments in these areas and dispose of it once they leave the city.” Kamdar agrees that this is becoming a prominent trend. He says, “It serves as a small ticket investment for these working professionals. They pay EMIs instead of rentals, and since these apartments do not cost much, they do not feel financially burdened. They can either decide to keep the apartment and rent it out, when they leave, or sell it as per the market value.” Besides, with changing lifestyles and family structures, the single bedroom concept has found many takers from the younger generation.

As Deepak points out, “The emergence of nuclear families, growing trend of single men and women preferring to stay on their own, high income levels of buyers and the influx of people from other states who are keen on investing in apartments here, as opposed to paying rent, has led to an increase in demand for one BHKs.”

Whether as an investment or rental option, the saleability of one bedroom apartments cannot be overlooked. Take the Prestige Group, for instance. Their new project Bella Vista in Porur has 600 1 BHK apartments, each of which is about 600 sq ft in size. These apartments cost 25 lakhs onwards. Similarly, Osian Chlorophyll, by SPR &RG Constructions, in Porur has 232 single bedroom apartments (665 sq ft each) costing 29.9 lakhs onwards.

Prince Foundations’ Prince Village in Tondiarpet sold out its one bedroom apartments on the first day of its launch. Almost all projects have recorded good sales of one bedroom apartments. While exclusive projects for single bedroom flats may not be in the offing anytime soon in Chennai, developers are waking up to the potential of this segment. Mehul Doshi says, “We launched Doshi Etopia II on OMR a few months ago, and this project has 40 single bedroom apartments, most of which are sold. We’re planning to launch a project consisting of studio apartments and 1 BHKs in Perungudi very soon.”

Deepak Shah is of the opinion that the sector is set to grow further. He says, “As the city is on the fast track to growth and industrialisation, thanks to the booming IT, service and automobile sectors, demand for smaller houses, especially in the age group of 25 to 30, will grow.”

While many developers believe that single bedroom apartments are in vogue, thanks to CMDA’s mandate, some like Rajesh Babu, chief real estate consultant, RECS Group, are sceptical. He points out that single bedroom apartments were popular decades ago, when the apartment concept in the city came into existence. “With the introduction of G (ground floor) +3 or multistoried buildings, 2 and 3 bhk apartments grew in popularity. However, now, as per the second master plan, single bedroom flats have made a comeback of sorts but their proportions continue to be less and they cater to a small section of buyers. It will take ages for our city to even match the volumes that Mumbai, for instance, has recorded, in terms of single bedroom apartments that are popular there for a variety of reasons,” he explains.

Sandeep Pantvaidya, VP – Marketing, Sales and CRM, SPR & RG Constructions, also agrees that 2 and 3 BHKs continue to be the preferred choices. “While there is an opportunity to rent or sell single bedroom apartments as serviced apartments, it is still in its nascent stage. There isn’t much scope for further growth in this sector, otherwise.”

Opinions are divided on the growth prospects for single bedroom apartments in the city. While comparisons to the market in Mumbai may be unrealistic, at the moment, it is however, clear that the needs of a certain section of buyers are being addressed through single bedroom apartments. Where is it projected to go from here? Only time will tell.

Source: Times Property, Times of India, Chennai

Credai Tamil Nadu showcases over 250 projects

Chennai

The fifth edition of Credai Tamil Nadu’s Fairpro 2012 has witnessed participation of 65 developers showcasing around 250 completed projects ranging in value from Rs 10 lakh to Rs 10 crore. An estimated 100,000 people are likely to visit the 3-day event starting Friday, 17th February at Chennai Trade Centre.

This is the first time that a larger area has been taken at the Chennai Trade Centre venue in response to the overwhelming demand from member developers to display a wide range of housing options to homebuyers. Last year’s show generated business worth Rs 100 crore.

Inaugurated by D Jayakumar, Tamil Nadu Assembly Speaker, the highlights of the show include spot booking incentives and discounts, spot approval of home loans, competitive lending rates by housing finance companies and banks besides legal and financial advice from experts in the field. In order to simplify the home-search exercise, a special published report has segregated the availability of various residential projects with developers offering projects in the respective locations.

Speaking on the occasion, K Phanindra Reddy, IAS, Secretary to the government, Housing and Urban Development Department, said the state government has already started interaction with Credai to address the industry’s concern over the delay in planning approval process and assured that it will be proactive in tackling the issues. He said that despite recession and its impact on the economy, real estate sector was doing reasonably well and contributed to the exchequer by way stamp duty revenue besides generating employment to people who have migrated from other states. He assured the industry that the state government would work towards making the approval process as easy and smooth as possible.

Credai members are anticipated to induct 30,000 residential units into the market this year. Though the state housing board has land parcels in Chennai and tier III cities, not much development has taken place since five years. While the state population is 7.2 crore, the state slum clearance board has built only 2 lakh housing units so far and Tamil Nadu Housing Board has built 4 lakh units. Additional 6,000 units are under construction. So the development will have to invariably come from the private sector if the pent up demand in housing and the growing hiatus between demand and supply is to be bridged in the state.

Though there are several developers across the state, there are stringent norms to become a Credai member. Among the criteria specified for membership, specific mention must be made about completion of a minimum area of 2 lakh sqft and the need to abide by the prescribed Code of Conduct and standby the ethical practices. There are 117 members in Credai Chennai and the state has 260 members.

Source: http://content.magicbricks.com/credai-tamil-nadu-showcases-over-250-projects

Myths about real estate

MYTH 1: There is a ‘bubble’ in the Indian real estate market, and it will burst soon.

Fact: There is no evidence of a ‘bubble’. When a bubble develops in any market, it is because prices for that particular commodity or asset have gone through the roof and beyond affordability. This is far from the case in Indian real estate.

The residential sector is led by end-users and it is they who dictate the state of the market. Neither is there a significant correlation between the state of the stock market and that of the property market. There are no indications that investor activity has overtaken genuine buyer activity. In residential, the proportion is approximately 80% end users and 20% investors. In the commercial sector, the proportion is almost 100% end users who are taking property on lease. There are instances of overheating but these are localised.

MYTH 2: Indians do not figure very large as property buyers on the international property market.

Fact: Residential rates at Mumbai’s Nariman Point or Cuffe Parade are priced anywhere between Rs 25,000-55,000 per sq feet. For the price of a 2BHK flat in these areas, one can buy a villa in Dubai or London’s suburbs, a luxury flat or a standalone house in New Jersey. Many Indian buyers have woken up to this fact and are buying homes abroad.

Myth 3: Thanks to India’s booming economy, higher salaries, higher aspirations and easier home loans, most Indians are buying high-end homes now.

Fact: The accent is still very much on affordable housing. As before, the Great Indian Middle Class is not motivated by its need for greater convenience, but by the ability to pay for a home. In that context, the greater demand will always be towards affordable housing options.

MYTH 4: Major Indian developers are abandoning the MIG sector and concentrating on high-end residential projects because it makes better business sense.

Fact: Most big-banner developers still see sense in constructing mid-income housing projects, since they can construct more volumes. The demand in terms of units is phenomenal and developers getting into this segment can build for years to come. They have the assurance of sure-shot absorption, as well. Most major Indian developers are NOT shifting from affordable to high-end housing-only branching out. While they get into middle-segment housing, they continue to build high-end projects.

Myth 5: The metros are still the best places to invest in real estate.

Fact: The real estate boom is causing many of our metros and even some of the previously popular Tier II towns to saturate at an incredible pace. Property prices there skyrocket beyond the reach of middle-income homebuyers, causing them to look a little further afield each year. Investors observe these migration trends, analyze the magnitude and scope of activity, and identify one or the other new town as the next coming thing.

A fundamental real estate investment mantra is that emerging localities are preferable to established and often saturated ones. Established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates. Moreover, there is little scope for new market drivers such as malls to find a place in saturated localities - meanwhile, prices remain high.

This is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic time-frame. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight.

Source: The Times of India