Vikas Rikhye, Gurgaon Real Estate Consultant and Blogger

The historic Global meltdown has also shown nationwide fall of Real estate prices. After a bubble like boom the bubble bust has claimed more than 30% drop in prices. It is also observed,that some of the builders are at the point of insolvency.Government is strongly adopting positive methods to restore the “confidence of common man” to acquire an affordable home.

Since, in the real-estate market has been hit most at the higher segment, therefore, it is felt that prospective buyers are showing interest in Low Budget houses / apartments, mainly in the range of 30-35 lacs & in some cases even lower.

It is understood from sources that in the month of January 2009, “the builder lobby” had expressed to the media that affordable houses were unviable.

But, after having sensed the market demand, many of Gurgaon Based builders and developers are being seen, launching new Projects , offering various low budget options.

With a most interesting observation, it is felt that, while under the Wave of Recession some of the prominent builders who had put their existing projects on hold , the same builders, now on other hand are launching new Projects , offering various low budget options.

All as stated above gives us a food for thought as to how: “affordable houses which were unviable are viable now”

Disclaimer

The Author is a freelance Blogger and real-estate consultant. The readers are advised to do their own research & analysis before taking any action. The author is not responsible for any consequence good or bad . The author is only delivering his views & inviting response in the way of comments/views from the readers.

Vikas Rikhye, Real Estate Blogger and Promoter

In absence of regulatory authority or a governing body, the real estate activities in India had been in highly un-organized manner but with socioecnomic awareness the real estate sector is also moving toward a positive direction.

Professional attitude of real estate companies and the presence of MNCs like CB Richard Ellis,Knight frank, Chesteron Meghraj & fast growing trend of property portals like 99Acres, Magicbriks,Indiaproperties etc are the indicaters of a “Professional Real estate” of tomorrow.

Still there is a large section which remains unorganised and non-professional. Add on of property dealers and so called Property conultant, who neither have proper knowledge nor experience in this field are making this profession as “Third Rate”. They seem to be a preffered choice of that sectionof society that believes in parellal Economy, as both can understand each other’s language very well.

Real Estate is a backbone of every economy be it a developing economy or a developed economy. In most of the developed countries real estate is a organized sector with licensed real estate agents who act as a very important intermediary between buyer and seller. The real estate agents is a specialized and organized work in developed countries where proper licenses are issued to real estate agents after going through a training procedure.An un-organized sector with no regulating authority /governing body reduce the transparency in transactions make them shady, speculative with uncertain market conditions thus making it a distant dream, for a common man, to own a property

Remedies suggested:

• Form a governing body: It is very important to form a governing body whoch has direct influence on the real estate players and which can give direction to the real estate market for its growth. 
• Fix the brokerage: there should be fixed brokerage for sale, purchase and rent deals etc in the market and no broker should charge a price above or below the market rate at any time. The prevailing rate of sale and purchase is anywhere between .5% to 2% of sale/purchase price.
• Education: learning is a very important tool for innovation and growth of an industry. If an Insurance agent is needed to clear an IRDA paper, an mutual fund seller needs to pass an AMFI exam and even a stock broker needs to clear a minimum no. of papers in order to exercise hid ticket in the stock market. So it is very important to device a paper which has a mix of mathematics and legal issues so that a real estate agent has proper knowledge on various obstacles or legal issues which can surface in a deal.
• Give License and code: After an agent is able to clear his exam then he should be issued a real estate agent license along with a code eg. xxx1986xx. Each and every agent should be provided with a unique code which will ascertain his identity and thus lead to reduction of frauds by brokers to buyer/seller.
• Get them in the Tax net: As the real estate sector was unorganized thus there is high level of tax evasion by the real estate agents. There is a remedy to prevent this. The unique code given to the real estate brokers will be given registered on legal papers of the deal and the records of same can be given to IT department. As each and every deal will be registered the brokers will be bound to disclose their brokerage.

Some of the thoughts & remedies as stated above have come from Mr. Saurabh Dhawan. Saurabh is 22 years of age and is pursuing MBA from IIPM. Saurabh is a Blogger, is promoting Medical Tourism in India

This a Guest Blog Post by Mr . Saurabh Dhawan. Saurabh is 22 years of age and is pursuing MBA from IIPM. He can be contacted at saurabh [dot] 3767 [at] gmail [dot] com.

With the passage of time the definition of luxury has changed in the last decade. Every product has its own market from guest houses to hotels to luxury hotels everyone has its own niche market to offer. Service apartment is one such type of market which is a growing market with a good demand in Metros and is being catered by Hotels and Guest houses. A service apartment is a furnished residential space which gives a homely look and has all the facilities from a fully furnished modular kitchen with all the cooking utensils, refrigeration, cooking gas, home appliances to other useful utensils in the kitchen. In the room it has Home Theater along with heating or cooling systems and other utilities which are generally found in a home and also telephone and internet connectivity. In certain cases security and power back are also prevalent. In short it is a home away from home.

The concept of service apartment is quite prevalent in western countries but it now coming up in India. Service Apartments are generally taken by corporates who have to stay for longer duration in India. When these corporates come to India they face some problem with culture, environment and food. The foreigners who come to India are not able to adjust themselves to the local food and environment and they are not able to enjoy the lifestyle they are used to.

This is where a service apartment comes to there rescue. These foreigners can cook their own food, maintain their own apartment and can also be provided with domestic help in India which is relatively cheap as compared to western countries. This helps them to feel like home and enjoy their stay in India with the best of health and spirits.

Service Apartments have a great future in Delhi NCR because it is a BPO and MNC hub, NRI tourism destination and an important diplomatic destination in South Asia.There is a constant increase in inflow of business travelers and tourists which are increasing year on year and the Medical tourism boom in coming years will supplement these demands as a service apartment can give feel of a home to a patient who can enjoy home cooked food after and before treatment.

The tariff of a service apartment can vary with the duration of stay by a traveler. Tariff for a service apartment can start from Rs. 7000/- Per month to Rs. 300000/- Per month depending on size of apartment and the level of luxury offered in the Apartment. The tariff generally includes the maintenance and water bills but may or may not include the electricity bills for the apartment. In all a service apartment have a great demand ahead in India

This a Guest Blog Post by Mr . Saurabh Dhawan. Saurabh is 22 years of age and is pursuing MBA from IIPM. He can be contacted at saurabh [dot] 3767 [at] gmail [dot] com.

There has been an uptrend in property prices in Delhi NCR which has gone up really fast and out of the hand of a common middle class population to buy a flat in NCR. Its high time that the builders should experiment with the taste buds of buyers and try their hand at STUDIO Apartments. A Studio apartments are typically one room sets that have an attached kitchen and bathroom. Such apartments may or may not have an attached verandah too. Studio apartments are quite popular in places like Mumbai and Banglore etc but the trend has not yet picked up in Delhi NCR.

If we look at feasibility of an Studio Apartment in NCR then they are very much feasible. A large number of young executives are working in Delhi NCR coming from different places around India. A number of foreign Banks, BPOs, Multi national corporations and big Indian companies have their offices in and around Delhi. The young executives generally enjoy a rich disposal income and enjoy a superior lifestyle along with young married couples or for even that matter for guests of corporate houses who prefer to live and cook alone a studio apartment can provide a home along with privacy.

A Studio apartment can be in range from 250 Sq Ft onwards till 1000 Sq Ft depending on the luxuries one wants to enjoy or add. Like a 300 Sq Ft apartment can have a room with kitchen and attached bathroom and say a 600 Sq Ft room can have a lounge for sitting with a study and 1000 Sq Ft can have a big room with Dining and Lounge along with a verandas and optional parking lots can also be offered to the buyers. A studio apartment can range anywhere between 8,00,000 to 45,00,000 in case of super luxurious studio apartments.

The concept can be a hit if the Builders sell fully furnished ready to move studio apartments to buyers who want single rooms yet elegant and luxurious rooms along with all the facilities like modular kitchen, furnished and augment the profit of the builder thus saving the wasteful time and cost of the buyer to get it furnished.

In the time when the interest rates are high and the buyers do not want to dig deep into their pockets to purchase a home these studio apartments can be a life saver for builders too who are facing liquidity crunch and lack of demand in market.

Saurabh Dhawan

Vikas Rikhye,India Real Estate Blogger

In one of my articles I had mentioned that we never seem to hear about real estate investors who go bankrupt.I had also cautioned that it does not happen very often unless the decision is rash or it is due to lack of basic relevant information and facts.

But I am sorry to state that in the recent past many innocent investors have been trapped by the” Rosy pictures painted” by some of the masterminded Broker Turned Builders (BTBs) who wanted to enter the real estate market as New Players for New Real Estate Projects.Neighbor’s prosperity, News paper &,T.V. advertisement backed up with lucrative assurance of their neighborhood broker was good enough for them to be tempted them to get ready for a Bright & Prosperous future through investment in property.

The new investor having lured by “Real Estate Prosperity” all around got eager to join the “Prosperity Race”. It is understood that while some had
put in their life time savings ,others managed to raise funds at a very high rate of interest & some had raised funds to invest in property by selling their personal belongings as well as inherited gold ornaments.

In 2006-2007 as we all know that “Unheard investment destinations” were being advertised with New Townships besides NCR townships with:

1.Pre-launch offers

2.Rock bottom Prices

3.Assuring heavy return on investment

4.Costly Sales Brochures depicting Quality of life matching International Standards supported by strategically designed marketing techniques

5.Heavy commission to Brokers

6.Cocktail Dinners on Pre-launch (In ***** Hotels)

7.Luxury Cars as gifts on achieving Sales Targets

All this as stated above was good enough for these investors to have the direction, they had in mind.

I often use to wonder ,that how would a builder be able to bear such expensive cost of marketing and yet would be able to deliver the promised project.

I could feel very close to the answer, when I remembered my Business Guru’s saying ‘The Brower who pays 10% interest never returns the original capital”

As I understand almost same thing happened, as while many of the smart investors made a quick buck at the same time where “Fly by Night Operators “have disappeared or Builder/ Promoter has failed to deliver the project, many of the victims are either running from pillar to post for refund or some accepted it as a bad luck/wrong decision .

At the same time some of the ‘Stay Back’ Builders are asking for future installments without any visible progress as the payment plan seems to be time bound & not construction linked

In Gurgaon after master plan 2021 has earmarked 58 new Sectors,
I understand from news paper advertisement that some of the new Developers are offering apartments in remote locations at a lesser price ranging 2200-2500 per sq.ft with 15% Cost along with application along with a 45day PDC of 10%, which means that with 25% of the selling cost builder receives almost more than 40% of his cost ,without even starting the construction & since the remaining payment is construction linked, therefore apparently the developer has already got his chunk of profit and yet stays in the business at the cost of his investor’s money having a stake free existence .

Secondly, even if the builder delivers the project in time in these remote locations, how would that become livable in absence of basic infrastructure like Public Transport , Sewer, Electricity ,Water etc.

Whereas , so called booming almost 12 years old “New township of Gurgaon” still is awaiting its “Infrastructure dream” to come true

It is also noticed that some of the better known builders are selling Builder floors , which as per present rules do not enjoy a clear title on secondary sales ,where, in some of the cases the builder has already taken more than 25% of the price, without any visible progress

I very frequently get, desperate phone calls from some of such investors, that they would like to get rid of their investment at any cost in some cases they are ready to sell out the booked property below cost

The scene of the Gurgaon shopping malls is no less gloomy as few of the specialized malls give a deserted look awaiting the occupants & investors/owners are asked to pay Maintenance charges, while others Malls which are under construction have slowed down the construction process with a fear of lack of occupancy.

IT office space / IT Parks ( victim of overtrading) had become an investor’s craze , who are continuing to invest ,without realizing the Government’s Plans & Policy.

To me it seems “Some can not think due to lack & greed of money others
Can’t think due to overdose of money”

Mr. Vikas Rikhye,Real Estate Blogger

Why invest in India ?

The liberalisation in FDI Policy where Foreign investors other than NRIs allowed to invest only in development of integrated townships and settlements either through a wholly owned subsidiary or through a joint venture company in India along with a local partner has made it Foreign investor friendly.

It is an amazing fact that India is the 4th largest economy, in terms of purchasing power parity and Tenth most industrialized economy moreover. Political stability and broad consensus on reforms and also liberal and transparent foreign investment regime has made it a strong investment destination.

A very well developed banking system and vibrant capital market, with National Stock Exchange being the third largest, and Bombay Stock Exchange the fifth largest in terms of number of trades and also a Strong and independent judicial system,brings the comfort level to all concerned.

A strong blend of scientific and technical manpower specially in IT sector ,where over 50000 IT professionals are added each year, has attracted over 255 Fortune 500 companies getting services resulting into a remarkable increase in number of BPOs & call centres.

The massive progress in development of infrastructure can be seen as:

• Over 13,000 Kms of Highways being developed.

• Major advances in telecommunications sector and sharp decline in telecommunications costs.

• For easy commuting Metro -network is on its expansion.

• With opening of Modernized and well equipped Hospitals the progress on health care is remarkably visible.

• Development of Ports ,Shipping upgradation ,operation of cruise terminal and Operation of Dry Port at Mumbai.

With some of the points covered as above, it seems to give an open invitation to Foreign Investors to participate in booming sectors of growth like Roads & express highways , Urban Infrastructure, Ports , Power projects , Telecommunications and many more with Opportunities at glore……..

What are the facts you should check before buying a property??

Mr. Rikhye,Realtor and Real Estate Promoter

Real Estate in Gurgaon still has its Graph moving upwards .The new investor having his eyes on the neighbor’s “Real Estate Prosperity” is eager to join the “Prosperity Race”.

The new investor musters his resources, raising funds may be in some cases taking loan, to prepare himself for this rat race.

Before investing hard earned money one has to ensure the following:

• Financial Credibility of the promoter/builder.

• Professional Capability of the promoter/builder to deliver the Project in time.

• Past Projects delivered by the Promoter/Builder.

• Ownership title of the Project.

• Necessary Government approvals to start the project.

• Names of the Banks which have approved the project for Loan Purposes.

• Exit Clauses (That is in case, you wish to sell your property before completion of Project)

Not forgetting to go through the clauses of ” Buyer Seller Agreement” with the Builder and if required take an Expert’s opinion before getting into this Race…….

Comments Please

Mr. Vikas Rikhye,Realtor and Real Estate Blogger

Will the Dreams really come true…………………….

The master plan 2021 has earmarked 58 new Sectors covering over 14500 hectares of land as Residential Zone which includes a very large segment for Malls and commercial space.

There is a wave of happiness & prosperity with the implementation of Gurgaon master Plan 2021 as the original land owners are the 1st beneficiaries to get the best prices for their land from private Builders & Promoters thus bringing them prosperity overnight resulting into Swanky Cars parked in place of cattle & cows.

The common man for a with a ray of hope is looking for a niche in this Master Plan to own a small dwelling unit for his dreams to come true.

The Private Builders can envisage a heavy windfall of profit arising out of land acquired by them at right moment and the right time, as they are already being offered more than 10 times of their purchase price by the New Players in the Market.

According to sources, Group housing projects with total area of more than 490 acres have been granted licenses & hundreds of Licences are awaiting approval ,where some of them have been issued letter of intent (LOI).The sources add that more than 600 licences are including commercial projects, are under consideration.

*Some of the private builders and promoters have already started booking Apartments with a Price Tag of 2300-4500 plus per sq.ft.( the hidden cost of Car Parking ,PLCs etc being extra. On visiting the sites , there are no encouraging signs of developing the Basic infrastructure .

The existing Township of Modern Gurgaon is suffering from acute shortage of Power Supply & lack of Basic infrastructure having Sky High prices beyond the reach of a common man.

A common man still hopes for a small dwelling unit for his dream to come true………?

Mr Vikas Rikhye,Realtor and Real Estate Promoter

The History of Pre launch goes as back as about four years that is late 2004, when the real estate business was about to “Take off’. Some of the masterminded Broker Turned Builders (BTBs)wanted to enter the real estate market as New Players for New Real Estate Project.

Having a basic support of the large client/investor-base & Fellow Broker Network they designed a scheme to raise funds from profit hungry small investors from the market with a very clear objective to generate interest free money to implement the project.

Usually in real estate the word Pre launch means that the Builder/ Promoter has purchased the land on which a project is to be developed (& in some cases, the builder may not have the possession of the land, he might have an agreement to sell/collaborate with the owner of the land).

The promoter/builder offers to sell the property at discounted price (directly or thru Broker net-work) before the formal launch.

It means the following:

• At this stage Regulatory, legal and formal Government approvals are awaited.
• Land title might not be clear.
• Due to some other Legal reason its Formal Launch can not be done

It is also undermined that Builder instead of utilizing his own investment resources, is trying to raise interest free monetary reserve from investors, to pay off the Land owner Govt .fees, Initial infrastructure/construction cost etc.

Many experts feel that there is no wrong as the investor is aware of the risk involved.

In many states pre-launch bookings have been banned to Curb the malpractices by dubious operators. It is also understood that the Promoters /Developers have been banned to release advertisements about projects that do not have necessary approvals.

It is noticed that “Reputed Real estate companies” have never launched any of the luring Pre launch schemes.

The Pre-launch fever started spreading in other part of Northern including prominent towns like Amritsar, Patiala,Luhiana,Japur,Bhewadi,Neemrana,Alwar,Rudharpur and many more are under its grip.

While many of the smart investors made a quick buck at the same time where “Fly by Night Operators “have disappeared or Builder/ Promoter has failed to deliver the project, many of the victims are either running from pillar to post for refund or some accepted it as a bad luck/wrong decision.

Mr Vikas Rikhye,Real Estate Blogger

Gurgaon Progress/ Prosperity vs Common Man (The CM)

Someone has to monitor the progress/ growth of this New Township of Gurgaon in more balanced & Planned manner having Prime focus on the following:

• Housing : While Prominent Builders are competing with each other in offering Luxurious Villas & Apartments with a price tag ranging 50 lacs to 2.5 crores and above leaving no scope for a common man to even own a simple shelter, as the uncontrolled land prices are much beyond his means.

• Education: The most modern education systems are being introduced in best of institutes finding their place in Gurgaon, making Education a luring business but what is in store for a child who is studious but does not have resources.

• Health care :With appearance of well known expensive Hospitals & Medicity, remarkable progress is noticed , awaiting the Financial boom from “Medical Tourism”. Yet ,hundreds of poor patients are left to their fate for the want of resources.

• Local commuting/Transport: Speeding Swanky Cars reflect of an affluent culture prevailing all around, forgetting the basic need of a humble commuter who is the one of the pillars of today’s Glittering Gurgaon.

Time is warning us that we are not far away from the crucial stage of “Haves & Have-nots” ……………… which can be disastrous for the society.