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FAQ

Buyers Guide

The borrower will have to pay additional interest for three months (for deferring equated monthly installment (EMIs)) to your lender. To pay this additional interest, you may get an option to either increase your loan tenure without increasing your EMI amount or increase your EMI amount without increasing your loan tenure or make a one-time payment in June of the interest that accrues in March, April and May.

Moratorium simply refers to a legal authorization to existing borrowers to defer or postpone their loan repayments for a pre-determined period. It is not a loan waiver. You will have to repay the outstanding loan amount after the end of the moratorium period. You will also have to pay additional interest, as mentioned above, for the period of the moratorium for deferring the EMIs.

If you take the moratorium, your credit score will not be affected. However, you will have to pay additional interest for three months (for deferring equated monthly installment (EMIs)) to your lender.

Check out which banks and NBFCs are asking their borrowers whether they want to avail the loan repayment moratorium, which are choosing the default ‘opt-in’ option and which will offer the moratorium only if the borrower asks for it on their own.

Borrowers should keep a close watch for any loan-related communication from their lenders. Alternatively, they can also contact their lending institutions on whether they need to specifically request their lenders to stop the auto-debit of EMIs or interest in case they want to avail the moratorium.

Finance

Finance cost is the third most important attribute in determining the correct cost of the property. Finance cost is not only the debt cost (cost of capital) but also the establishment cost of the enterprise. The cost of capital ranges from 8% to 24%. This results in the end product bearing an inflated cost. The establishment cost can increase the cost of the end product from Rs 500 to Rs 1,000 per sq. ft. Attractive infrastructure pulls us to make a swift decision, but at the end it makes the property more expensive. The developer also adds brand value delta to his selling price (delta can be as high as 25%) which the homebuyer builds in while evaluating his buying decision. The combined cost (land cost + cost of construction + finance cost) gives an idea of the cost to the developer. On top of this, the developer adds his profit which ranges from 12 to 18%. This is the cost which is offered in the market or in simple language, ‘The Selling Price’. For the home buyer, it is very important to understand how the big branded national developer impacts the pricing of the product at the same location with the same specification. They have a well-formed legacy and hence an advantage over other developers. They get their capital at a low-cost (8 to 12%) versus regional local developers who get their capital starting from 14% to 24%. Hence, the big brands are able to sell their product at a price (15 to 25%) higher than the regional local developers. It is a trade-off for the home buyer to buy safety — trust versus cost of the product.

Land cost contributes approximately one-third towards the total cost. Location of the land plays an important role in fixing the price, for example, if we talk about Gurgaon – cost of land on Golf Course Road is much higher than Golf Course Road Extension or Sohna Road for that matter. Whereas in Noida, land cost in Sector 43 is higher than that of Sector 104, which is further higher than the cost of land in Sector 150. Land cost generally varies from Rs 400 per sq ft to Rs 4,000 per sq ft or more based on location.

The type of material being used in the construction of the property is the second most important attribute to evaluate the correct cost of the property. The material and technology used in construction process play a vital role in consolidating the cost of the property. The cost of construction starts from as low as Rs 1,200 per sq ft, the range could further vary from Rs 1,400-1,800, Rs 2,300-2,500 and Rs 3,500-4,000 per sq ft. Check the material, viz. specification in detail to evaluate which range and type of material is being used for construction.

Price of the Property

While buying a property, the home buyer should always give preference to appropriate accommodation over the size of the accommodation. The general mistake people do is they aspire for bigger size apartments and not the appropriate accommodation that they need. Generally, different brands offer same accommodation in various sizes.

Cost of the land which is based on location: Land cost contributes approximately one-third towards the total cost. Location of the land plays an important role in fixing the price, for example, if we talk about Gurgaon – cost of land on Golf Course Road is much higher than Golf Course Road Extension or Sohna Road for that matter. Whereas in Noida, land cost in Sector 43 is higher than that of Sector 104, which is further higher than the cost of land in Sector 150. Land cost generally varies from Rs 400 per sq ft to Rs 4,000 per sq ft or more based on location. Cost of construction — based on material being used The type of material being used in the construction of the property is the second most important attribute to evaluate the correct cost of the property. The material and technology used in construction process play a vital role in consolidating the cost of the property. The cost of construction starts from as low as Rs 1,200 per sq ft, the range could further vary from Rs 1,400-1,800, Rs 2,300-2,500 and Rs 3,500-4,000 per sq ft. Check the material, viz. specification in detail to evaluate which range and type of material is being used for construction. Finance Cost Finance cost is the third most important attribute in determining the correct cost of the property. Finance cost is not only the debt cost (cost of capital) but also the establishment cost of the enterprise. The cost of capital ranges from 8% to 24%. This results in the end product bearing an inflated cost. The establishment cost can increase the cost of the end product from Rs 500 to Rs 1,000 per sq ft. Attractive infrastructure pulls us to make a swift decision, but at the end it makes the property more expensive. The developer also adds brand value delta to his selling price (delta can be as high as 25%) which the home buyer builds in while evaluating his buying decision. The combined cost (land cost + cost of construction + finance cost) gives an idea of the cost to the developer. On top of this, the developer adds his profit which ranges from 12 to 18%. This is the cost which is offered in the market or in simple language, ‘The Selling Price’. For the home buyer, it is very important to understand how the big branded national developer impacts the pricing of the product at the same location with the same specification. They have a well-formed legacy and hence an advantage over other developers. They get their capital at a low-cost (8 to 12%) versus regional local developers who get their capital starting from 14% to 24%. Hence, the big brands are able to sell their product at a price (15 to 25%) higher than the regional local developers. It is a trade-off for the home buyer to buy safety — trust versus cost of the product.

First-time homebuyers go through the arduous task of deciding which property to buy based on their budgetary constraints. Hence, a genuine question pops up in their mind, “What is the correct price of a property?” Abhishek Pathak speaks to Sanjeev Kathuria, COO, CRC Group, who talks about the major attributes that affect the price of a property, addressing many previously unresolved queries of first-time homebuyers

Whether for self-use or investment purpose, the purchase decision of a first-time home buyer depends on many factors — the price of the property, brand, location, facilities and amenities, builder’s credentials, possession time etc. Buying a home is an expensive affair and needs careful planning beforehand. Financial considerations largely determine the right and affordable choice among a plethora of available options. However, price of the property is one such factor that can single-handedly decide the outcome of the decision-making process of a prospective home buyer. The price fluctuation of property varies according to the type of developer the home buyer opts. If the home buyer chooses a big brand national developer, he will end up paying extra to the tune of 20-25% at a low risk. If he opts to buy from a regional brand with good past track record of delivery at a lower price compared with big brands then moderate risk is involved. The home buyer could also buy from a new developer from start-up real estate groups, at a lower price, compared with above two options. Some good players in the industry carry good vision and use the same architects and consultants like the regional or national developer, but have no debt or capital cost and use the same material for construction, so even they could satisfy the home buyer with a complete transparent process.

As far as the demand-supply economics is concerned, price of the property is directly related with this. If there are large numbers of unsold homes (more supply) in the area, price appreciation is likely to be slower. However, if the area surrounding the housing society, or the society itself, is well-occupied then the price of the property and its price appreciation in future will be high. The location with ready infrastructure or ready-to-move-in homes comes under huge demand leading to higher prices. For the first-time home buyer, a location that has good connectivity and transportation facility and is available at a moderate price should be a right product to buy within the budget.

The millennials are very aspirational towards the amenities and facilities that go with their choice of lifestyle. To avail the benefit of choicest of amenities and facilities, millennials prefer to shell out extra to live the high life in their dream home. No wonder then it is an important factor in the decision-making process of a home buyer. It is also a matter of one’s financial readiness to choose amenities as per his requirements.

Analysis at the start of the year (Real Estate Outlook 2020) gave thumbs up to commercial real estate together with a positive bias on warehousing spaces and student housing. Residential real estate was predicted to have a Luke farm response with affordable housing still the best bet through the year 2020,

Real Estate in Corona pandemic

With the reduction of home loans, the EMIs reduce and affordability increases. The housing market will get a booster and it is a super good time for the customer to buy his home

Commercial real estate will take a little hit. Industries will pause their expansion because of business being hit. The business will also see a reduction in manpower and also new employment will take a back seat. with these new developments new office space off-take will take a hit and also the current occupancy levels will see rationalization, consolidation leading to reduction

The world economy is badly hit and the IMF first projections show a 0.5 % drop in world GDP. US FED has brought down interest rates to zero. all countries in European Union France, Germany etc have announced huge stimulus packages to maintain liquidity.

The home loan rates to reduce further (SBI has already reduced its MCLR and the home alone reduced from 8.35 % to 7.75 %). With the reduction of home loans, the EMIs reduce and affordability increases. The housing market will get a booster and it is a super good time for the customer to buy his home

With this new development of CORONA PANDEMIC there will be behavioral changes in consumption patterns because of the change in economic condition. The world economy is badly hit and the IMF first projections show a 0.5 % drop in world GDP. US FED has brought down interest rates to zero. all countries in European Union France, Germany etc have announced huge stimulus packages to maintain liquidity

This is the time for residential developers to go aggressive and sell their inventory and the commercial developers must be cautious enough in launching new space, on the other hand, they should focus on selling or leasing the current space available at current prices or even at a little lower price.

The developer can use this as an opportunity to offload their inventory and generate positive cash flow. this will help in completing projects and also paring debt.

Connectivity to Delhi via Metro and wide Highways from Greater Noida(W) via Delhi- Meerut expressway to Meerut, Modinagar Connectivity to Yamuna expressway which will take you to upcoming JEWAR AIRPORT establish the popularity of Greater Noida(W). Greater Noida(W) has a fantastic commercial hub created with large malls carrying all the famous brands. Hospitals, Schools and Cinemas are all functional and at arm distance. Greater Noida(W) offers affordable office space which is favourite with professionals carrying small budget. Affordable and mid budget housing have made this region popular among the millennial. Young couples see this region as value investing in residential zone. All In All Superb Infrastructure, Physical and social affordable commercial Infrastructure for startup and small entrepreneurs & professionals Budget and mid size housing for first time home buyers, young couples have made Greater Noida(W) the most sought after destination in DELHI NCR.

Real Estate Industry

Talking about issues, I can see there is still a lot of doubt and fear in the mind of the consumer regarding the Economy (GDP), Unemployment and Global factors like Trade War between major economies, Conflicts between nations and so on, which hamper sales for sure. Also, liquidity will remain a problem in 2020. While the stress fund created by the government will help the stuck projects, provided the regulator – the SBI Cap fund manager is able to deploy funds on time, to move towards completion and bring in money into the system. However, this process itself is time-consuming and hence the solution to current crisis is not immediate.

The infrastructure of RTM property can be inspected and audited.Touch and Feel of the apartment are possible. The quality of the material used, viz. tiles, sanitary fittings (taps, wash basin, WC, counter), kitchen slab and sink, electrical switches, paint and polish, doors and handles, balcony grills and, finally, the facing of the apartment is all predetermined and can be audited if it suits the choice.Facility or complex maintenance can be inspected.Quality of security guards and maintenance staff can be assessed.Cost of living in the said area can be understood and evaluated whether it fits the budget or not. Most importantly, you pay EMI alone and not EMI and RENT.

It is expected that Commercial Real Estate will definitely do well, leading to growth in absorption in this segment. Leasing volumes will further increase. Commercial Rental space will see appreciation, however, these will be city-specific growth. In 2020, foreign investors will further pour in funds in Commercial Real Estate in India. More developers will be seen going the REIT way. However, Residential Sales will remain sluggish for the first part of the year 2020. There will be further consolidation. The absorption will happen more in the Affordable Housing segment in Ready-to-Move-in properties, with prices remaining flat. The consumer will buy residential space for self-use in central localities with all established social infrastructure. Notably, there might be a change in buyer behaviour where consumer will prefer to buy accommodation based on his choice, irrespective of its size – 2 Bedrooms in 900 sq. ft. v/s 2 Bedrooms in 1100 sq. ft., 3 bedrooms in 1400 sq. ft. v/s 3 Bedrooms in 1800 sq. ft. When we talk about Warehousing segment, GST, e-commerce, Modern infrastructure of roads, air and water will further boost the use of warehouses. The investment will pour in from foreign and domestic institutions in this segment for at least a decade – this will be the space to watch out for investors in Real Estate. Similarly, investing in Student Housing will usher in a new era in the industry, as it is a high-potential market, considering the wave of demand that exists in this segment. Given the Union Government’s ‘Study in India” initiative, which aims to attract 200,000 overseas students to study in Indian universities, the growth opportunities for realtors in this Student Housing segment is just limitless. The other factors attributing to the growth in this segment are ­ – acute deficiency of campus accommodation facilities, demand for convenient and hassle-free housing options, and demand for furnished housing amenities among students. So, definitely Student Housing segment will pick up pace in 2020 and further in future. One another interesting area of focus for investors will be investing in Co-living and Co-working spaces. However, the strength of these business models will be ascertained in 3-5 years. I don’t think they will be the best real estate investment ideas for the long-term, however, could be a choice for short-term goals.

With RERA and other compliances and checks set up by the government, UC property translates into a great opportunity. In RERA, the developer is liable for any infrastructure default or construction issue up to 5 years after possession, so buyer feels more secure in case there’s some of construction default. Taking GST factor into consideration, GST for RTM property is not applicable and is another deciding factor between the two types of properties.

Buyers should take cognizance of the location of the RTM. If the location is well-established, it suits the choice. This is also true for UC apartment. A good location ensures better social infrastructure around the apartment like schools, hospitals, commercial establishments, business offices, etc.Most importantly, RTM comes with an established neighborhood, where you can always check the profile of the people residing in the community.Available infrastructure around the area such as nearby markets, common public areas and parks, connectivity issues, is a boon for RTM buyers. Remember, you have to live in this property for years to come; hence, the location is super important and becomes a major deciding factor between RTM and UC properties.

In 2019, the Government of India went to great lengths to revive the Real Estate sector by formulating laws and policies to restore confidence in consumers. In 2020, developers will need to adapt more organised and professional ways of marketing and selling their product, to gain consumer trust basis timely delivery and quality construction. Also, RBI has cut Repo rate to 5.15%, translating lowering of Home Loan rate. Government has rationalised GST to 1% for Affordable Housing, income tax incentives for first-time homebuyers, and provision of stress fund (Rs. 25,000 crore), announced in 2019, for stuck projects will have positive impact on the Real Estate Industry.