Real Estate Prices Increase Irrespective of Slow Demand

A recent study by India Ratings & Research has showed a negative sign regarding the unchanging view of reality industry in 2014-15, which is based on the unrelenting depressed end-user demand and the differing consumer sentiments.

The rating agency also showed that the real estate market is seeing drop in sales, reduce in income, Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) limits and sustained deterioration in credit metrics and inflow of cash.

The agency rated most of real estate companies with a steady view, based on the hazards impacting the sector. The companies or group rated at investment level are residential companies with robust sales and resilient cash flows or single commercial properties with long-term lease agreements.

The rating agency believes credit metrics will continue to decline in fiscal year 2015, due to increase in residential prices that will lower the sales, that will lead to increase in bank credit and an increase in inventory for the sector.

In the first half of 2013-2014, the sale of new residential units has recorded a decline and the reason behind this is the reducing consumer sentiments and high price of real estate properties.

Though, the end-user demand seem to be weak, prices continue to remain high and it is considered due to the restrain of gold import by the government that has regarded to have boosted the investors and speculators.

This rise in property price is also justified by the report of National Housing Bank's house price index in the second quarter of financial year 2014, which recorded after a decline in the earlier two quarters, as it overlaps with the obligation on gold import.

According to Ind-Ra, it is likely that the commercial property demand would continue to subdue in 2014, because of decline in economic growth and it is due to the continued slow economic growth that would affect the new requirements in most sectors of the real estate market. It is also anticipated that demand in retail will be sluggish in Financial Year 2015, as retail companies would endure to enhance their store ranges.

In 2013, the private equity and foreign investors interests was observed to be strong in the real estate sector and strong investment was seen in rent-yielding commercial properties where several large transactions took place by the leading private equity players like Blackstone.

Ind-Ra also anticipated that the starting of real estate investment trusts (REITs) would be optimistic for the sector, as it would attract new investors and enhance finance convenience. It is also anticipated that REITs would give easy liquidity option for commercial property developers as most of their funds are invested into rent-yielding commercial properties.

In Depth Analysis of Real Estate Appreciation

When it comes to real estate appreciation, a question pops up as to what are the reasons behind the rise in property prices in certain areas. The whole procedure of augmentation of a property’s market value over time is a prime idea behind real estate investment. This procedure is known as appreciation. There are basically various causes to real estate appreciation which includes: Inflationary pressures; the supply and demand dynamics of a particular location; Arrival of new real estate market drivers in a location; Population growth and Home loan interest rates (cost of borrowing).

Inflation: Inflation results due to an excessive amount of money in circulation. What else happens in this procedure is that there is over-abundance of money which leads to a situation wherein its value falls. During the course of this action the prices go up for a number of things which includes construction materials, the prices of land, legal building permits, number of other things and labor.

Demand and Supply: When there arises a situation wherein there is a noticeable increase in demand for homes in a certain area, then if in case the amount of residential real estate projects is not catching up fast enough, the property prices shoot up. To put in other context, self-use buyers are more than ready to pay extra for a property as they tend to find living in that area extremely favorable.

As a resultant factor, when this demand brings in real estate investors, who eventually buy properties there to sell them at a profit when supply slows down again. As a result what happen is that the property prices in that particular location tend to shoot even further.

Home Loan Rates: There is a direct bearing on property appreciation of behavior of home loan interest rates. When there is an increase in the home loan interest rates, then the demand for property also slows down owing to lesser buyers as they can afford to shell out the extra money required by the banks. On the same facet, what leads to an upbeat in the demand for properties is that a sufficient decrease in home loan interest rates which leads to an increase in affordability.

Population Growth: On the same note, the growth in population in area such as PCMC obviously shots up the demand for residential properties there. This eventually, transforms directly into appreciation in real estate rates.

Aerospace Park in Bangalore Urged Not To Be Treated As a Real Estate Project

According to the head of UTC Aerospace Systems (UTAS), in Bangalore, the aerospace industry has the prospect to gain $20 billion in revenues over the next 10 to 15 years. This is possible provided the state government can encourage an ecosystem that pulls global companies.

Bangalore is considered to be the aerospace capital of India.

According to the VP of UTAS, the government needs to draw companies to invest here. It has been noted that the state has formed a 1,000-acre aerospace park near the Kempegowda International Airport Bengaluru. However, the project isn't pulling global tier I aerospace manufacturers. It is a known fact that Bangalore has the right talent pool. This talent pool has been cherished over the years by public sector enterprises like DRDO, ISRO and HAL. The VP stated that the government surges ahead about the project (Aerospace Park) by merely selling land parcels, then they would definitely not be giving rise to an ecosystem concept. He also stated further that in order to for the tier I companies to set up shop, an aerospace SEZ must have tier III and IV suppliers along with training and academic institutions.

He also laid stress on the fact that they were insisting the government to cultivate the park as an ecosystem. They were against the park being given to a real estate developer as they believed doing so would give rise to problems. Instead, the park must be given to an ecosystem developer.

He also stated that industry should invest in people and technology and not in infrastructure and land. Currently, the aerospace industry is focused in the US and Europe. China and India seem to be gaining increased attention what with majority of companies looking forward to expand outside of the given two markets. But given the fact that China has been facing issues over intellectual property rights, hence, aerospace companies are inclined towards India. UTAS gained a position in India with its global $19 billion purchase of Goodrich two years ago. UTAS produces lighting systems, evacuation slides, seating systems, cargo systems, integrated systems, electrical power systems and sensors for Boeing aircraft and Airbus.

He further stated that on an average around 60 percent of the global production of those products were done out of Bangalore. Moreover, UTAS employs approximately 2,000 people. It has also expanded its 700,000 sq. ft. facility which is situated in the IT hub of Whitefield. Apart from this, he added that they were looking forward to reach a stage wherein they can develop, design, support and manufacture products from India. Besides, there were many areas which needed attentions such as the design side, he stated.

Take a Reality Check before Buying a House

According to a recent report from property consultancy firm Knight Frank, it has been stated that real estate prices in certain Mumbai areas have come down by 10%. The report also states that nearly 45% of the new properties that are coming up in Mumbai are unsold.

According to real estate consultants, the situation is not any different in other cities too where prices have softened. The question that props up in the mind of the people is that whether it is the right time to invest in real estate.

According to national director, residential agency, Knight Frank India, he states that it is a good time for investing in property. Owing to the uncertain economic scenario and political situation, the prices are submissive across cities. These are considered to be the two macro factors which influence property prices.

He further states that post-elections in mid-2014, in case a stable government comes to power at the Centre, prices might shoot up due to improved confidence levels. However, in the event of a fractured mandate, the reverse might also be true. He added that it is a short-term trend wherein presently there is pressure on prices.

An executive from Cushman & Wakefield states that from an investment point of view, if some of the fundamentals like job or business security, financing options, etc are in place for an individual, then this might be considered to be a good time for real estate investments.

The report further states that, the fact that real estate prices are showing signs of weakening is indicative of the fact that the long-standing stalemate between buyers and builders is finally turning in favor of buyers.

It is advisable that by taking into account various factors, one must make an investment in real estate. To start with, one must be convinced about the potential of the location. Other key factors are existing and upcoming infrastructure developments and access to prime locations of the city.

Apart from this, the area must also have social infrastructure, which is necessary for attracting tenants. Proximity to places of work, colleges in the neighbourhood and quality of schools, entertainment and healthcare facilities, retail malls and other amenities are something that people usually look out for.

In case it happens to be a suburban location, it must have unabated access to the main city locations. Moreover, one must check for infrastructure development plans which are announced or the ongoing development projects. The chosen location must also have a development authority to make sure future development prospects.

Bangalore Real Estate Is On a Positive Note

It has been noticed that the Bangalore’s real estate market is on a positive note as the new government has gained stability and is looking forward to address some problems of the previous one. The interest rates too have fallen. What is making it more attractive is the fact that the property prices have been comparatively steady in the last past few.

According to a senior executive of a renowned realty firm, the mood among investors is positive. He also stated that good infrastructure and governance played a crucial role in the building Brand Bangalore. Moreover, the quality must be maintained in the ongoing projects and they must be completed on time.

With the rupee weakening, builders opine that Bangalore is attracting huge foreign buyers. In terms of foreign currency, a weaker rupee made Indian goods cheaper. According to an executive from a renowned realty firm, this was the ideal time to invest in Bangalore by foreign investors.

Besides, the home loan interest rates which had gone up to 11% and higher are currently down by around 10%. With the inflation rate dropping, the bankers are expecting the tendency to continue. Since most buyers take large loans to finance their property purchases, interest rates play a crucial role in real estate.

According to another executive from a renowned realty firm, what is helping bring buyers into the market is that systems like wherein the builder takes the ownership of the customer's EMI until the project is complete. What is keeping prices stable in Bangalore is that Bangalore is known to be an end-user market instead of a speculative one, according to him.

However, there seem to be major concerns about the job market. Though IT companies are not creating many jobs as they were doing earlier, still this is not an instant fear.

In this scenario, the realtors are looking forward to the latter half of 2013. This would be the time when the Rehabilitation and Resettlement Bill, and Real Estate Regulatory Bill and the Land Acquisition, are likely to be passed. In case the "The Real Estate Regulatory Bill, is passed, this will help in the growth of the country’s realty section. It would also give rise to a healthy business and erase all the unethical operators.

Eco-friendly wallpapers for your home - Bangalore Property News VNUBY4HFV24G

Conservation of environment reads like a fashion statement these days or so it seems. We celebrate the Earth Hour one Saturday every year to let ourselves believe we have done our duty toward saving the planet. We definitely need to be a little more involved in the environment saving project.

Charity begins at home they say, so why not decorate our homes in a way that does not threaten but protect the ecological system from collapsing? By simply choosing the right fabric, non-toxic paints and other decor articles that are eco-friendly and encourage use of recycled materials, we can make a difference by going organic in home decor.

Interior designer Meenakshi Agrawal tells us how to design our homes while keeping our eco-consciousness intact. She gives out useful tips on selecting wooden furnishing, wallpapers, flooring and centrepieces for an overall classy home decor while promoting the mantra of going green as well. She talks to us about a unique eco-friendly wall decor concept, 'DecorCoat' that she with her partner has introduced in the market as a viable alternative to paints and wallpapers for home renovation.

Wallpaper designs and patterns

There are diverse options when it comes to choosing wallpapers. Designs like classic retro prints, metallic geometrics, botanical prints and those that mimic the look of natural landscapes are among the popular trends this season, informs our expert. When asked how DecorCoat is different from and advantageous than ordinary wall decor methods, Meenakshi explains, "Normal wallpapers have VOC i.e. Volatile Organic Compounds. These are chemicals that we smell when wallpapers are applied; it adds to the indoor air pollution and directly affects our health. Organic wall decor on the other hand is low on VOC. These are made up of grass cloth and cotton fiber that do not have a negative impact on the environment. DecorCoat is a substitute of wallpapers made up of cotton cellulose, paper products, cotton thread and other recycled materials. This is later processed by techniques of Canadian technology.

Going the green way
In the choice of wood, Meenakshi recommends bamboo-based furniture. She explains, "Bamboo is not only an organic product, it is strong, firm and stays durable for years. Termite-free and suited to all kinds of climate/weather conditions; it is also easy on the pocket vis-a-vis other expensive options in wooden decor." Wrought iron is another pick that adds elegance to an ordinary home setup. You do not need to hassle about chipping; fading or scratching with wrought iron furniture. It is competent in withstanding harsh weather changes.

Affordability issues are further solved when you decide to incorporate creative Paper Mache, cane-baskets and terracotta cushion covers stitched in heavy embroidery and thread work to your living space. Speaking about the sustainability of eco-friendly decor items, Meenakshi convinces, "The maintenance cost with eco-friendly options is far less than the initial cost put in by the client. The durability extends sometimes beyond four-five years."

Synthetic products not only demand huge sum of money, the toxicity in them pollute the home's atmosphere. Add green plants within the premise of your balcony, set up a small garden if you take to planting and you'll see what blessing that is to the environment.

Maintaining eco-friendly wallpapers

Eco-friendly wallpapers are extremely easy to maintain and safe for children too. Toxic fumes that arise from paints can have harmful affects. DecorCoat for instance is a three-dimensional textured decorative material for interior walls and form a protective layer as a base that is completely odourless. It is an integration of technology, aesthetics and natural properties product. These wallpapers are anti-mold and anti-fungal and therefore can easily stand the unpredictable monsoon months. With a touch of varnish, these wallpapers retain the polished finish and glaze for years.

Other environmental benefits
-Quick and easy to apply
-No joints
-Hides uneven, old and faded walls
-Partial repair possible
-Crack resistant and long-lasting
-Antistatic - does not attract dust and dirt
-Additional insulation of heat, moisture and sound
-Permeable (allows walls to breathe)
VNUBY4HFV24G
Source :indiatimes

Bathroom-an important factor in buying a house: Bangalore Property News

The significance of the bathroom in recent times has increased in terms of the amount of space dedicated to it and what it offers in the form of rejuvenation and indulgence. Consumers today perceive the bathroom as a personal haven for relaxation while transforming daily rituals of bathing and cleansing into a sensational and invigorating experience.

Grohe India, a wholly owned subsidiary of GROHE AG- the global market leader for sanitary products and systems, is constantly working towards understanding their customer. This helps the company offer customized bathroom solutions that spell impeccable quality. Accordingly, a consumer survey was conducted in May-June 2013 to engage end consumers in a meaningful product led dialogue. As per this survey, over 85% respondents considered the bathroom to be one of the most important consideration while deciding on a house. The in house study was conducted in 6 cities including Bangalore, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune.

The customer profile of the target group for this survey focused on Sec A and B individuals over 30 years of age while concentrating on people who have recently bought a house or are shortlisting a property. Chennai and Delhi based homeowners were found to be the most particular about their bathroom with functionality and aesthetics being given top priority by 45% and 39% respondents respectively. A shower was judged as being integral to the bathroom as a symbol of personal space as compared to just another me-too zone.

Shower quality was found to be equally critical while deciding on a property, as evident from as high as 47% of respondents, with most willing to spend money on brand, design and quality. South India had as high as 80% respondents going by the brands being used in projects they were investing in, followed by Mumbai and Pune. 55% respondents believed that a German brand reflects a commitment to quality and premiumness. More than 2/3rd respondents collectively rated Brand and Service as the key drivers while extending recommendation on a project.

More than 57% property owners clearly indicated their desire to have the World’s No. 1 bath fitting brand that brings with it the most innovative and wholesome shower experience. Renu Misra, MD, Grohe India elucidated, “People who enjoy higher disposable incomes today are well versed with international standards of quality and service when it comes to bathroom solutions. This has sharpened their desire for better products in their personal living space. With the bathroom being an extension of their high end lifestyle and sense of comfort, the bath fittings and sanitary needs of this consumer warrant a brand that is befitting of their status. A German brand like Grohe perfectly fits with the desired functionality, aesthetic value and design as well as service promise that people seek when it comes to bathroom solutions.”

Key Findings of the Report

• More than 85% of respondents consider the Bathroom to be the most important consideration while deciding on a house.
• Functionality and Aesthetics [Design] are on top when it comes to what a bathroom shall offer.
• For 1/3rd respondents, a Shower is what separates their “personal space” from “me-too” zones in the house.
• More than 20% respondents look forward to a German Shower brand in their bathroom.
• South India has as high as 80% respondents making their decisions for buying a property, on the basis of Brands being used by the developer, closely followed by Mumbai and Pune
• A commitment to quality and premiumness is what a German brand reflects. While Mumbai relates it more to Quality, Bangalore relates it more to Premiumness
• There is a clear desire for a home to have World’s No. 1 bath fitting brand that brings with it the most innovative and wholesome shower experience.

ref:timesofindia