Why urban Indians are heading to buy weekend homes, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/residential/why-urban-indians-are-heading-to-buy-weekend-homes/57699589

Why urban Indians are heading to buy weekend homes

Urban India's increasing quest for solitude is turning places like the Himalayas & the countryside around Mumbai into vacation-home hotspots

Elegant farmhouses, koi ponds, equestrian facilities, themed event venues, beachfront gardens, and private golf courses – India's uber-rich have always splurged on their lavish vacation homes. Now, people of more modest means are getting on to the leisure-property ladder, buying weekend retreats to escape the madding city crowds.

Urban India's increasing quest for solitude is turning the foothills of the Himalayas or the Aravalli, and the verdant countryside around Mumbai or Bangalore into vacation-home hotspots, building in the process an ecosystem that appears to follow conventional market economics – of balanced supply and demand.

Take, for instance, Diana Gonsalves, a 34-year-old software executive from Mumbai. For the Holi weekend, she chose to give the tropical paradise of Goa a miss, choosing instead a villa in hill station Lonavala for Rs 7,000 per day. "I wanted to get away from the hustle and bustle of the city life," she said. "And it didn't charge me a bomb."

While Gonsalves sought a weekend getaway, Tanni Mandal wanted to rent out her villa at Lonavala, which is barely 82 kilometers from Mumbai. Mandal bought the vacation home last year, and it has been lying idle for most of the time since then. "I bought it for personal use, but who minds the additional income," says Mandal, who put her property on TripVillas, Asia's largest holiday-home rental company.

Consumers such as Gonsalves, who are not affluent enough yet to buy weekend homes, and buyers such as Mandal, who can afford to go for an additional property miles away from city, have driven expansion in the weekend-home market over the past year that wasn't rewarding for the urban property industry. With projects coming up near cities and providing modern conveniences, several affluent consumers are now buying vacation homes.

"While it would be an investment, it also doubles up as a getaway for short breaks," says AS Sivaramakrishnan, Head, India Residential Services at CBRE South Asia.

Tata Housing would attest to the trend. The Tata Group's real estate arm, which has second-home projects at Lonavala, Kasauli, Talegaon and Goa, has seen increasing investor interest. There is demand, says Tata Housing's corporate marketing head Rajeeb Dash, for second homes in locations that are well connected to bustling metros, yet serve as a convenient retreat from the cities. The properties, he points out, range from Rs 40 lakh to Rs 14 crore.

India's holiday-home industry, says Roshan D'Silva, founder of TripVillas, is a good investment and is expanding. For an astute real estate investor, the outgo is below Rs 40 lakh, and the buyer may make more than 10% on the investment, while reducing hotel expenses on annual vacation trips. In 2011, TripVillas started with just 200 weekend homes. The number has increased to more than 8,000 homes now, and another 3,000 are in the pipeline. "More and more customers see the value both in the space they get and the money they save by booking a holiday home," says D'Silva.

This segment of the property market has remained largely immune to the November 8 currency demonetisation. Tata Housing's Dash says demand continues to expand, underpinned by larger disposable incomes, constant innovation, and the need for periodic retreats. The first project, Prive, was a sellout in 2010, and the second project in Goa in 2016 was also oversubscribed. More than half of the second-home inventory at Myst, India's first project using biophilic architecture, were sold last year, claims Dash. With innovation and greater exposure, second homes have assumed a more evolved definition, including theme-based villa townships, he adds.

Nirvana Realty, a Mumbai-based builder, is focusing on theme-based villa townships. It has built a music-themed township on the Mumbai-Pune Expressway, a Bollywood-inspired township at Wada, and an outdoor-sports themed project at Murbad in the Western Ghats.

From music and Bollywood to community farming and adventure, theme-based weekend homes offer a unique lifestyle experience that goes beyond plain-vanilla homes, says Punit Agarwal, CEO of Nirvana Realty. More disposable incomes, nuclear families, DINK (double income no kids) consumers have combined to drive this industry. "On an average, 19 units are sold every month," says Agarwal, adding that weekend homes are no more a status symbol. It has become more of an investment option to yield future returns and maintain an ideal work-life balance. The real estate player recently tied up with TripVillas, allowing owners to enjoy their holiday homes and also get additional income throughout the year.

Mehak Chopra is one such discerning consumer who opted for a weekend home in Dehradun when she travelled with her family during the last weekend of February. A frequent traveller, Chopra never settles for any luxury exotic hotel at hill stations. "The idea is to have quality time at a place where you can be yourself without any disturbance," she says. "Weekend homes let you do that," she says. The Delhi-based marketing honcho, who stays on rent in the capital, is exploring the option of buying one such property this year and putting it on rent. "It's value for money."

Santosh Naik, Managing Director of Mumbai-based real estate company Disha Direct, is not surprised with the changing profile of weekend buyers. While 49% of weekend home buyers are salaried, about 32% come from business background.

Until only a few years ago, says Naik, owning a home was a lifetime financial commitment, involving major retirement savings. Today, however, many Indians buy their first home in their late 20s, as strong economic growth, rising income levels, easy and attractive home loan options, and the wide range of lifestyle homes have altered the market dynamics.

"In fact, most of them are investing in residences on the outskirts," says Naik, who has sold more than 12,000 weekend homes in the past 13 years. There's another dimension to the weekend homes, and that is driven by Corporate India, says Agyendra Jha, founder of Wings Lifespaces, a real estate player in Mumbai. Companies, Jha says, have started providing weekend homes to their top executives as a perquisite. Also, many invest in real estate for the long term.

"Gone are the days when the weekend home was only within the reach of a select few business-class people," he says. Jha's properties range from Rs 8 lakh to Rs 2 crore, with a strong focus on customization, and are located within 100 km of Mumbai. He says one can earn easily up to Rs 40,000 per month by listing these properties for rent. The consumer should need no bigger incentive, therefore.

Arun Gupta

This Millennial Might Be the New Einstein | Rising Stars | OZY

http://www.ozy.com/rising-stars/this-millennial-might-be-the-new-einstein/65094

THIS MILLENNIAL MIGHT BE THE NEW EINSTEIN

Now 22, Pasterski is getting her Ph.D. at Harvard.

SOURCEMICHAEL NOBLE JR. / LANDOV

RISING STARS

WHY YOU SHOULD CARE

Her research could change our understanding of the fundamentals as we know them.

By Farah Halime

THE DAILY DOSEJAN 12 2016

Why you should care

JAN 12 2016

One of the things the brilliant minds at MIT do — besides ponder the nature of the universe and build sci-fi gizmos, of course — is notarize aircraft airworthiness for the federal government. So when Sabrina Pasterski walked into the campus offices one cold January morning seeking the OK for a single-engine plane she had built, it might have been business as usual. Except that the shaggy-haired, wide-eyed plane builder before them was just 14 and had already flown solo. "I couldn't believe it," recalls Peggy Udden, an executive secretary at MIT, "not only because she was so young, but a girl."

OK, it's 2016, and gifted females are not exactly rare at MIT; nearly half the undergrads are women. But something about Pasterski led Udden not just to help get her plane approved, but to get the attention of the university's top professors. Now, eight years later, the lanky, 22-year-old Pasterski is already an MIT graduate and Harvard Ph.D. candidate who has the world of physics abuzz. She's exploring some of the most challenging and complex issues in physics, much as Stephen Hawking and Albert Einstein (whose theory of relativity just turned 100 years old) did early in their careers. Her research delves into black holes, the nature of gravity and spacetime. A particular focus is trying to better understand "quantum gravity," which seeks to explain the phenomenon of gravity within the context of quantum mechanics. Discoveries in that area could dramatically change our understanding of the workings of the universe.

Arun Gupta

affordable housing: Stamp duty on affordable homes may be abolished - The Times of India on Mobile

http://m.timesofindia.com/india/stamp-duty-on-affordable-homes-may-be-abolished/articleshow/57503991.cms

Stamp duty on affordable homes may be abolished

Affordable houses may soon be exempt from stamp duty, which varies between 4% and 8% of the transaction value.

Union minister for urban development and housing M Venkaiah Naidu said that his ministry has written to state governments to exempt affordable houses from stamp duty. Stamp duty is a state subject, with the state government fixing the rate and collecting the duty.

Addressing Credai, the Confederation of Real Estate Developers' Associations of India, the minister said that the Centre would ensure that there was no net tax escalation in the housing sector, particularly the affordable housing segment, following the implementation of the goods and services tax (GST).

He said that the inclusion of the real estate sector in the GST framework would help the industry.

Affordable housing is exempt from service tax, which is around 5.35% of a property's selling price. He said his ministry had already taken up with the finance ministry the need to continue the exemption under GST. He added that his ministry had also recommended to the finance ministry that the sector be taxed at a rate which is revenue neutral, and not a higher one.

The minister expressed his helplessness vis-a-vis the exclusion of stamp duty from GST, saying, "States have, in their wisdom, not adhered to the inclusion of stamp duty under GST." "Thus, we need to move forward from this debate," he said.

Arun Gupta

Central scheme to help govt boost affordable housing - The Times of India on Mobile

http://m.timesofindia.com/city/pune/central-scheme-to-help-govt-boost-affordable-housing/articleshow/57484308.cms

Central scheme to help govt boost affordable housing

PUNE: Maharashtra may soon join the list of states that have been promoting the Public Private Partnership (PPP) model to boost affordable housing under the Pradhan Mantri Awas Yojana (PMAY). This model will involve private builders entering into a partnership with the government to construct affordable housing.

With guidelines expected from the Union government next week, the state may be set to boost the affordable housing segment through the model.

States such as Rajasthan, Madhya Pradesh, Gujarat, Orissa and others already have the model in place. Senior officials from the housing department told TOI that this will definitely give the necessary impetus to the sector which will see many private players making their entry into this segment.

Officials from the housing department said that the guidelines were to establish clarity of roles of the government and private players. "If it is a PPP model, there should be specific guidelines under the PMAY project. If it is spelt out clearly then private builders will come forward to participate in the projects. They would be clear on the benefits and the government would be clear about the title post completion of the project,'' said a senior official from the state housing department.

The 'housing for all' initiative, formulated under the PMAY is to be implemented in 51 cities in the state. As part of the initiative, the government has charted out four approaches to provide low-cost housing - slum redevelopment on the existing plot, an interest subsidy scheme, creation of housing stock on a public-private participation model and beneficiary-led individual houses.

Recently, minister for housing and urban poverty alleviation Venkaiah Naidu had stated that there was poor response from private builders for the affordable housing schemes in almost all states. The government had granted infrastructure status to the segment in the Union budget 2017.

Builder Sachin Kulkarni, who is into affordable housing, said that the model is not yet applicable in the state. "Since the state is yet to declare a dedicated affordable housing policy, the statement does not hold in the state. On the other hand the state has now started allocating land and funds for affordable housing in cities. These projects will be executed through MHADA or local governing bodies,'' he said.

He said that they have been observing the PPP models of other states and as members of CREDAI they have been participating in some projects and have made presentations. "I have also been a part of the drafting of the state policy for affordable housing where we stressed on the PPP model. It's in the ambit of the state and local government to implement the policy as well as the PPP model,'' shared Kulkarni.

Officials from the housing department said that the project was delayed due to the election code of conduct. "The rules should come through next week and it would spell out the guidelines,'' stated the official.

Another industry expert said that the market is down and if some announcements are made it can help the consumer as well as the developer. "Private builders will get into such projects if they are suitably compensated. In cases were the land is provided by the government, the model will be more successful,'' said the expert.

Arun Gupta

Should you reverse mortgage your home in wake of fall in interest rates? Find out, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/industry/should-you-reverse-mortgage-your-home-in-wake-of-fall-in-interest-rates-find-out/57353729

Should you reverse mortgage your home in wake of fall in interest rates? Find out

Reverse mortgage is in a way a mirror image of home loans, where you take a lump sum loan and repay it through instalments.

There was a lot of expectation when reverse mortgage, a scheme that allows people aged 60 and above to mortgage their self-occupied home in return for a loan—paid in instalments or lump sum— was introduced in 2007.

But user interest in this product has remained low, primarily because of the high interest rates on reverse mortgage products. "Reverse mortgage makes more sense in economies with low interest rates," says Sriram Kalyanaraman, MD and CEO, National Housing Bank (NHB).

Reverse mortgage is in a way a mirror image of home loans, where you take a lump sum loan and repay it through instalments.

The 'cheapest' plans
The interest rates on reverse mortgage plans are still higher than home loan rates.

IOB : 9.40%
United Bank : 10.70%
IDBI Bank : 10.85%
PNB : 11.05%
SBI : 11.90%
Source: BankBazaar

In reverse mortgage, you take loans in instalments and repay the lump sum later. But interest rates for reverse mortgage are much higher than those for home loans, though not without reason. For instance, banks have to pay tax on the accrued interest, even though they receive the payments from the borrowers much later, which increases their costs. "In reverse mortgage, banks have to take over the house and sell it, which is a costly and time-consuming process," says Adhil Shetty, CEO, BankBazaar.

The bank can recover the loan only upon the death of the borrower, and there is always the possibility of the borrower outliving the loan tenure, which can postpone the bank's recovery of the loan. Because of this added risk, banks also offer a lesser loan to value (LTV) in the case of reverse mortgages. "For reverse mortgage, banks usually cap the LTV value at 40% of the value of the house," says Dipak Samanta, Founder and CEO, iServeFinancial.

Despite these drawbacks, the fall in interest rates, has made the product more appealing. "At current rates, it is a viable option for retired persons to go for reverse mortgage products," says Samanta. The fall in interest rates, especially bank fixed deposit (FD) rates, has brought the annual income of several senior citizens under stress. If one had invested Rs 50 lakh in bank FDs and was getting Rs 4.5 lakh annually (9% interest), it is likely to be down to around Rs 3.5 lakh now (at 7%). Reverse mortgage can help manage this income shortfall. Also, the NHB in the process of making the product more user-friendly, says Kalyanaraman.

Who should go for it?
"Reverse mortgage works well for families where kids are well settled and don't need the parents' house," says Brijesh Parnami, ED and CEO, Essel Finance Wealth Zone. Similarly, it is also a good option for retirees facing regular shortfall in their annual income and expenditures.

However, experts say that if the short fall is small, it is better to manage it using alternative routes than opting for reverse mortgage. "If the short fall is small, increased tax efficiency—for instance, moving from bank FDs to short-term debt funds—may serve the purpose," says Shetty. "Small shortfalls can be mitigated by increasing the portfolio risk a bit and going for balanced funds. Anyway, you are putting the house on risk with reverse mortgage," says Parnami.

The suitable plan
Reverse mortgage can be of two types: Either the bank can pay you money at regular intervals— monthly, quarterly or annually—or, it can pay you a lump sum, which you can use to buy a pension plan from life insurance companies. It is better to avoid the second option, say experts.

Pension from insurance companies is fixed forever, while banks usually review the annuity amount every five years and there is a probability of the annuity going up after five years. Also, regular payouts received from banks are treated as loans and, therefore, will be tax-free in your hands. Pension from life insurance companies, however, is treated as income and you will have to pay tax at marginal rates.

Things to know about reverse mortgage
* Only citizens aged 60 or more are eligible. For married couples, jointly taking the loan, one of them should be above 60. Some banks may have additional conditions —joint applicant to be above 55, etc.

* Reverse mortgage is allowed only against self-occupied residential property. The title of the property should be clear—there should not be legal, ownership issues with the property.

* The tenure for which the loan is granted varies across banks, but the maximum period for which is its allowed is 20 years. The loan tenure usually is the same as the residual life of the property.

* Banks can recover the loan only on the death of both the borrowers. For example, the loan tenure is 20 years and the borrowers live for 25 years, the lender can only recover the loan after 25 years.

* The heirs have the right to settle the loan—principal and interest. If they decide not to settle it, the house is sold and any proceeds in excess of the sum due to the bank, is returned to the legal heirs.

* The documentation is similar to that of a housing loan. Just like other loans, the processing fee needs to be borne by the borrower. The borrower also has to cover all the home insurance premiums.

Arun Gupta

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/regulatory/private-builders-should-take-up-affordable-housing-in-a-big-way-no-proposals-under-pmay-yet-venkaiah-naidu/57271983

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu

NEW DELHI:Union minister for housing Venkaiah Naidu on Tuesday said not a single proposal has come from private builders under Pradhan Mantri Awas Yojana (Urban) and urged developers to rise to the occasion and take up affordable housing in a big way.

Expressing his disappointment, Naidu said, "Not a single proposal has come from private builders so far even though PMAY(Urban) has been designed envisaging a big role for private sector."

The minister of Housing and Urban Poverty Alleviation (HUPA) also directed the ministry to convene a round table with all the developers bodies, banks and housing finance companies and others concerned to deliberate in detail why there has been no private sector participation under PMAY(Urban) so far.

"I would expect this round table to come out with appropriate business models so that the goal of ensuing Housing for All by 2022 is met," Naidu said.

Private sector can participate in PMAY(Urban) mission under in-situ slum redevelopment (ISSR) and affordable housing in partnership (AHP) models.

ISSR, constituting a major portion of the housing mission in urban areas, is entirely to be taken up by the private sector, using land as a resource.

"For each slum unit to be rebuilt, central assistance of up to Rs 1 lakh has been committed by the government to make the projects viable. But you have not come forward so far," the minister said refering to private developers.

The government has announced a slew of supporting measures to revive real estate sector over the last two years, including announcing the long-awaited infrastructure status for affordable housing in the latest Union Budget.

To boost rural and urban housing post demonetisation, prime minister Narendra Modi on December 31, 2016 announced interest subsidy of up to 4% on loans taken in the new year under PMAY.

The government also created two additional categories under PMAY(Urban) for interest subvention. Under this, home loans up to Rs 9 lakh will receive interest subvention of 4% and home loans up to Rs 12 lakh will receive interest subvention of 3%.

It announced new scheme for people in rural areas which provides an interest subvention of 3% on loans up to Rs 2 lakh, for construction of new houses, or extension of old houses.

Over 15 million affordable houses need to be built for economically weaker sections and low income groups alone in urban areas, as per government estimate.

The government has so far approved construction of over 16 lakh affordable houses under PMAY(Urban), with an investment of about Rs 90,000 crore, with a central assistance of about Rs 25,000 crore.

Arun Gupta

Office Space: Bengaluru sees highest office space absorption in 2016 after five years, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/commercial/bengaluru-witnessed-the-highest-office-space-net-absorption-after-five-years/57204970

Bengaluru sees highest office space absorption in 2016 after five years

Large part of the activity stemmed from the last quarter of the year when projects spanning a whopping 7 msf came into supply

BENGALURU: Bengaluru's net office space absorption rose 28% to 12.7 million square feet (msf) during 2016, cementing the city's numero uno position. The new high in 2016 is roughly 5% higher than the last net absorption peak that Bengaluru witnessed in 2011.

Large part of the activity stemmed from the last quarter of the year when projects spanning a whopping 7 msf came into supply, with majority of them previously pre-committed to by occupiers. The spurt in supply in the last quarter of the year was driven by a substantial number of projects receiving their occupancy certificates. The Outer Ring Road submarket accounted for 54% of the net absorption during the year, distantly followed by the Peripheral East submarket comprising of Whitefield.

"The demand for office space, though similar to that seen in 2015 was better than market expectations, especially in the second half of the year. Despite many changes globally, that could change the course of business, India remained one of the most optimistic markets in the recent times. We expect this positive outlook to continue into 2017," said Anshul Jain, Managing Director, India Cushman & Wakefield.

The total leasing activities that took place in 2016 across the top eight cities amounted to 42.3 msf which was lower by 22% over the previous year. The top sector leading the total leasing table were IT- BPM at 52% of total space uptake in 2016. Bengaluru remained the preferred IT-BPM destination constituting 37% of the total leasing activity followed by Hyderabad at 26%. These were followed by Chennai and Delhi at 11% and 10% share respectively. Consulting services took up approximately 6% of the total office space leased while BFSI amounted for abnout 4% of the total leasing in 2016.

Pharma & Healthcare constituted about 3.2% while E- commerce formed about 1.5% of the volume of office space leasing transactions in 2016. While all major sectors saw a slowdown in the total volume of transaction, Energy & Chemicals was one the only sector that recorded a rise in total leasing activities at approximately 53% growth y- o- y over the previous year.

Total supply of approximately 36.6 msf was infused during the year, with the last quarter accounting for 30% of the completions as developers, especially in Bengaluru received completion/occupancy certificates for their projects from local authorities. Developers scrambled to get their projects operational during the fourth quarter encouraged by the strong demand pipeline from occupiers.

Arun Gupta