Varun Manian for Times of India – Twin Win

Varun Manian
Varun Manian for TOI
Buying in a second home is a sound investment decision. It becomes even more viable when the investment is done in a ready-to-occupy home.

It is a known fact that there is no investment like in property. Over the last one year, there has been a spurt in the number of ready-to-live-in homes in Chennai.In such a scenario, the best way forward would be to invest in a second home one that is a ready-to-occupy property.

Ready to move-in houses offer an edge over the other due to various reasons. Sumit Jain, national director, residential services, Colliers International India explains,“Buying a ready-to-move-in home ensures that it is a more informed purchase.You are aware of the state of the existing place, the amenities there and your neighbours.Your site inspections are substantiated with an all-round evaluation of everything that will help you imagine your future at the house.“

There are other advantages too. “The buyer gets to see the finished project before investing which helps in decision-making. Another key reason is that investors want to avoid delay in construction timelines and save on rent and pre-EMI payments. However, the housing sector has always been un predictable, if it is for investment then property under construction is generally preferred; first homesecond home or self-use buyers go for ready-tooccupy flats,“says Arun Kumar, founder and managing director of a real estate group.

Experts believe there are many factors that favour a purchase decision now. As Varun Manian, a Chennai-based realtor, puts it, a combination of capital appreciation and rental income along with support from banks for low interest loans has made this an ideal time to buy a second home. But if you are buying a second home to let it out on rent, there are a few factors you need to keep in mind.“The location is important as it should be a micro-market where rents are high. In many cases, builders also provide fully furnished homes at an additional price, making renting easier,“says Manian.

When buying a second home, it is important to research and plan your finances as it will be an additional investment.While the advantages of a ready-to-occupy home are quite well known, it assumes all the more significance when analysed through the lens of rental income.“The biggest advantage,“ says Kanchana Krishnan, director Chennai, Knight Frank,“is with respect to the pre-EMI cost. Ready homes offer tax savings and eligibility for deduction can be availed only if the house is in your possession. A second home can also double your income as one can get an income yielding asset from day one. In today’s context buyers can get a good bargain.’ But the immediate occupancy might come with a higher price tag, say experts.“While the pricing of such homes will be higher than under construction ones, it does provide immediate rental income to the buyer. Moreover, the other amenities are usually open by the time the project is completed, making it an attractive rental option,“says Manian.

As Habib W S, president-elect for Credai, clarifies, there is a price difference of 10 to 15 per cent between similar housing units that are ready and that which are still being made.“The ongoing projects are comparatively more economical. But investing in the other kind of house has its benefits too.“

Speaking about the localities and neighbourhoods where such projects can be looked at, Arun Kumar says buyers should look for places where there are huge employment opportunities or a potential for such growth.“In Chennai, the apparent locations are OMR and in Ambattur, that has developed as an extension of Anna Nagar. Perumbakkam,Thoraipakkam, Medavakkam, Pallavaram and Tambaram are other preferred localities followed by North Chennai,“he says.

According to Varun, many people are opting for the suburbs to buy a second home.“People prefer the OMR, Mahindra World City, Perambur, Porur and its surrounding areas.There is also a smaller segment of home buyers investing in ECR, a lot of it for personal use for weekend getaways,“he says.

(With inputs from Ranjitha Iyer)

Five Trends That Will Reshape Indian Real Estate Market in 2017 -Varun Manian

Varun Manian - Time of India Interview
Varun Manian

One of the globally recognised sectors – the real estate market is expected to grow exponentially in the upcoming years. The real estate industry is, in fact, the second largest employer in India. According to a report by Indian Brand Equity Foundation, the real estate sector is expected to grow by 30 percent over the next ten years.

Thanks to globalisation and the subsequent growth of corporate environment, the need for real estate – be it retail, hospitality, housing, or commercial has increased vastly. Since real estate is a huge industry by itself, there are a lot of factors that influences its development. I have compiled five of the emerging trends that will reshape Indian real estate market in 2017.

Increase in Start-ups Leads to Increase in Subleasing Commercial Spaces

With the start-up ecosystem booming significantly, demand for office spaces that would match the startup culture has gone up in the past couple of years. With a lot of individual contributors and freelancers working with these startups, co-working spaces have become a trend.

More and more companies are purchasing or leasing commercial spaces and are sub-leasing it to start-ups and other companies as shared office spaces. Approximately, there are more than 100 such business centres in India that function as co-working spaces and incubators for the startups.

This trend has already made many real estate investors to show interest in commercial office spaces. In 2017, it is expected that the trend of investing in co-working spaces will be beneficial for both startups as well as the real estate sector.

Technological Advancements Will Transform Real Estate Requirements

With smart technological advancements like Amazon Nest, real estate will now move forward to become a genuinely technology-focused sector. Various other advancements, like tech-enabled workspaces, wireless connections, automated security systems, etc., have reshaped people’s expectations from the property they are investing in, no matter whether it is commercial or residential.

Particularly in the commercial properties, the need to establish a full-fledged IT infrastructure is constantly increasing. Therefore, in the future, the buildings are going to be more technology focused, thus more convenient.

Indian Real Estate Sector Becomes More Transparent Than Before

According to a recent Global Real Estate Transparency Index (GRETI) 2016, India is one of the semi-transparent markets. As India has made an improvement this year in the overall transparency scores by moving four places up, the country’s real estate sector is bound to undergo significant structural changes.With more and more investors expecting real estate transparency, the fact that Indian property sector is becoming more transparent is good news for both investors and builders.

Excellent Return on Investment for NRI Investors

In India, non-resident Indians (NRI) are allowed to invest in real estate under the same rules and regulations that apply to the residents. This is an advantage for NRI investors as Indian real estate investment is bound to give them a higher return on investment in comparison to investing in the country they are living in.

Therefore, in the forthcoming years, the real estate sector is expected to incur more non-resident Indian investments in both residential and commercial categories. To cater to these various investors the real estate development will undergo various changes regarding construction aspects, like contemporary interiors, advanced technological infrastructure, premium amenities, etc.

Crowdfunding in the Real Estate Field Will be the Next Big Thing

Crowdfunding helps innovators to raise money online for their product or cause. Although crowd funding is in nascent stages in India, it is expected to grow steadily in the Indian market, especially in the real estate field.

While other industries have already started to utilise crowdfunding efficiently, real estate sector is catching up slowly. With more and more NRI investors with good credibility preferring to invest in Indian real estate, crowdsourcing is expected to be the next big thing in the real estate sector.

These trends that are expected to reshape the real estate sector will not only benefit real estate developers, builders, and investors but will also be favourable for homebuyers and other property buyers, who are the most important stakeholders in the Indian realty market.

Source: Silicon India Magazine

FLY AWAY HOME – Varun Manian, MD Radiance Realty

Varun manian

Most Indians who live abroad secretly nurture a desire to come back to their home country sometime in the future. Sriram C, who has lived in the US for the last 15 years, is yet to get a green card because he wants to settle down in India once his son goes to college. While he has never lived in Chennai, his family has roots in the city which encouraged him to buy a house in a gated community in the city. “I bought a house in Chennai as I have relatives here. I found exactly the kind of place that I was looking for, where my lifestyle will be similar to the one I have in the US. This will make it easier for me to settle down here,“ he says.This is a sentiment prevalent among many NRI home buyers. According to Sarita Hunt, managing director Chennai, JLL India, “Chennaiites have moved to different parts of the world. And many of them still opt to buy a house in the city. Of course, this could also be because they are from Chennai and when they come back they prefer to settle down here.“ With the dollar at an all-time high of `68, NRIs, especially from the US find investment in real estate a sound proposition. “For the last 10 years, people from the state have moved abroad and many of them look to buy a house in Chennai. Since the time to invest in real estate has been bright over the last two to three years, it is a good bet for people looking to invest,“ says Navin, director, Navin’s. Another reason would be the rising oil prices in countries where many Chennaiites are employed. This results in more cash in their pockets resulting in the desire to invest in something stable. With prices in the real estate sector being stable over the past two to three years, Chennai comes across as a good real estate investment option, he adds.

The fact that land prices in Chennai are lower as compared to other metros makes it an attractive investment destination.“Chennai offers a huge advantage to NRIs mainly because of the cost factor and also better infrastructure,“ says Varun Manian, director, Radiance Realty. Stable electricity supply, sustainable environment, safety, good governance, sanitation, efficient transportation, better lifestyle, all give an edge to the city. “NRI investors primarily look for these characteristics in a location, and they also prefer to have a hassle-free investment process,“ Manian says.

When it comes to buying in the real estate sector, location plays an important role. Over the years, the development on the outskirts of the city have resulted in the growth of newer areas such as OMR and ECR which are fast becoming hotspots of residential activity. The major advantages here are increased space and new buildings that specifically take into account the needs of NRIs. “OMR, Anna Nagar, Porur and Perambur are some of the best areas that NRIs can invest in. While OMR is known for its IT presence and infrastructure, Anna Nagar is for people who prefer a contemporary and luxurious lifestyle. Porur, apart from its strategic location is fast becoming a hub for education, manufacturing and IT and has a growing number of residential communities.Perambur on the other hand, is a fastdeveloping area with good price appreciation,“ Manian says.

There are also areas within the city that are seen as safe bets due to their locational advantage and social infrastructure. “Areas such Adyar and Indira Nagar have established markets and good social infrastructure like schools, work places, hospitals, entertainment and stores for dayto-day needs. From an investment point of view, location matters. Areas around Kathipara, Gemini, Medavakkam, Perungudi, Sholinganallur, Chrompet, Tambaram, Porur, Perambur, Moolakadai and Avadi are good options,“ adds Navin.

Some of the factors that NRI investors should consider before investing in real estate are the price appreciation of the area, the connectivity of the particular location to other parts of the city, the credibility of the builders, the social infrastructure in the locality and facilities in the apartment complex, says Manian.

But before making any purchase it is important to do due diligence. “With the Real Estate Regulatory Act (RERA) they now have a voice and can make developers accountable. They could also take the help of credible consultants who are aware of the markets and will be able to give them a good deal. While real estate may not be as good as having investments where it is easy to convert into cash instantly, people who feel that money is just lying in the bank with hardly any interest, real estate investments that result in an 8 to 10 percent increase is any day a better option,“ says Hunt.

Predictions for the Union Budget 2017 by Varun Manian

Every year when the budget is read out, people from various professional sectors watch it in anticipation. Real estate builders, buyers, and investors also eagerly wait for this to unfold. The Union Budget 2017, like every year’s budget, has already triggered many expectations and wish lists.

From clarity on GST to relaxation in income tax rate, there are many predictions made by real estate and financial experts about the Union Budget. 2017 will be the year for real estate as we can expect a lot of dark clouds to shed off. Also, even after 70 years of independence, India still has lakhs of people who do not have their own homes. With ‘Pradhan Mantri Awas Yojana’, we can expect that ‘housing for all’ scheme comes true in the next few years. Affordable housing segment already has an infrastructure status, which is fuelling its growth.

From affordable housing to luxury homes, from residential to commercial spaces, real estate sector has seen a lot of significant changes in the last decade. Post budget announcement, we can expect some more positive changes in the real estate sector in India. While we can know the complete details of the budget and its impact on real estate only on February 1, here are some predictions from our end.

Clarity on GST

The goods and services tax (GST) structure was announced in 2016. However, the real estate sector is anticipating with bated breath about more clarity on the same. While GST seems to be positive for real estate, it is still unclear which tax rates will be applied when it comes to the construction industry.

One definite prediction that can be made regarding Union Budget and Real Estate for 2017 is that the GST law will get implemented this year, most likely by Jul 2017. Speaking of service tax, it is expected that the budget this year also brings the much-awaited clarification on the abatement scheme.

Increase in Income Tax Incentives for First-time Home Buyers

One of the biggest things in the mind of every potential first-time home buyer is, “Will the 2017 budget bring in some additional income tax incentives for us?” Only the actual budget can throw more light on this. However, it is predicted that government might increase the income tax incentives for the first home buyers to reach the objective of ‘Housing for All by 2022.’

If the government brings across this increase in tax incentives, affordably-priced real estate projects, especially in metros, will boom. Most India cities lack institutionalised rental housing, and a move that benefits first-time home buyers in taxation will not only make more people buy their own homes but will also encourage more builders to come up with affordable housing projects.

Increased Tax Saving on Housing Loan

One of the other things that is predicted about the budget is that the government might increase the tax deduction limit in case of housing loans. The current tax deduction limit is INR 200,000. This is quite insignificant, especially for home buyers in Metro cities. With property prices appreciating, at least home buyers in cities like Chennai, Mumbai, Bangalore, NCR etc. should have increased tax savings on housing loans, thereby bringing down the overall cost of buying a home. Furthermore, it would be beneficial if tax concessions on house insurance premiums get introduced in this year’s budget. This would encourage every homeowner to insure their homes.

Increase in House Rent Deduction Limit for Entrepreneurs and Self-employed

If you are someone who earns a monthly salary, you would know that you would get house rent allowance (HRA) as a component in your salary. This amount can be used to claim a tax deduction. However, if you are self-employed, i.e. if you freelance or run your own business, the HRA claim can be made for only 24,000 INR. This is quite low. For salaried people, the HRA varies based on their overall salary. As their pay increases, their house rent allowance might also increase. To neutralise this across all professional sectors, the budget should address this anomaly.

Clarity on Definition of Beneficiaries Under Pradhan Mantri Awas Yojana (PMAY)

As we all know the government recently announced the new interest rates under the Pradhan Mantri Awas Yojana, where loans up to 1,200,000 INR would have 3% interest and loans up to 900,000 would have 4% interest. We can say that two new income categories will be able to avail these high loans at this interest rate. However, there is no clarity yet on who will be beneficiaries under this scheme.

We expect that the Budget 2017 will throw some light on the same. This way, young urban professionals looking to buy their own apartments can enjoy these low-interest benefits despite not falling under Economically Weaker Section (EWS) or Low Income Group (LIG). We must also wait for the budget to know whether loans taken for affordable housing in metro cities will also be granted similar benefits.