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"Investing in real estate makes great sense", says Richard Ellis
Anshuman Magazine is head of South Asia Operations for the largest real estate service provider in India, CB Richard Ellis. In a recent interview with Padma Radhakrisnan of BRIS, he had definite opinions to offer on: Whether realty investments are comparable to other financial assets In fact, real estate should be viewed as an investment besides being a provision of shelter. Like any other fixed asset, real estate too can be a revenue-generator. In most cases, real estate can yield capital gains over a period of time. The average yield an investor can generate from his investments in commercial properties It would range between 10% to 12%. Over the last decade, these investments have been stable. On how a stock market bust affects the realty market When the stock market busts, real estate provides comfort in the form of lower volatility or what is called the diversifiable risk component. On what trends he forsees in the commercial and residential property segments in the next five years Barring exceptional circumstances, we expect the commercial property segment to remain stable in the next five years. This is because we expect an increase in demand for office and retail space. Add to this the expectation that more funds would flow into real estate development. In the residential sector too, we expect a similar trend. As new commercial hubs develop and relocation gains pace, pressure on existing high-demand areas will go down. Housing and the Union Budget 2003 Jaswant Singh’s Budget 2003 gives the housing industry and home-buyers reasons to celebrate. The good news is:
Prepay loans as and when you can ! Citibank and Standard Chartered Bank have introduced Home Credit and Home Saver schemes that allow pay-as-you-like features. Your home loan account is linked to a savings or current account and all balances here are treated as repayments—even if the amount covers only one day! The amount paid on any given day is automatically used to reduce your principal outstanding and your interest payments as of that day are paid on a lower principal amount. This continues till your outstanding reaches zero. Effectively, these schemes let you prepay over and above the EMI amount. You continue paying your EMI cheques as before, but if you save anything more, it goes to reducing your principal amount earlier. Since additional savings over and above the EMI automatically bring down your outstandings steadily, your loan tenure and your overall interest payment become shorter. — Excerpted from Business Standard, Mumbai, 18 Feb 2003 Tax exemptions for NRIs
— R.N. Lakhotia, A Guide to Chennai Real Estate Tighter law encourages prompt payment of EMIs The recently introduced Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, allows any secured creditor—bank or financial institution—to enforce any mortgage credited to it without the intervention of the court or tribunal, with 60 days notice to the borrower. That the act has teeth is apparent by the fact that many defaulters have been coming forward to settle their accounts. Flat owners who default on their EMIs can seek redressal by filing an appeal with the Debts Recovery Tribunal within 45 days. However, this must be preceded by their depositing 75% of the amount claimed with the Tribunal, which is empowered to waive or reduce the deposit amount. If the appeal goes against the borrower, he can file a second appeal with the Appelate Tribunal within 30 days of receiving judgement. If the borrower wins the appeal, the Tribunal or Appelate Tribunal may direct the return of property to the borrower, along with appropriate compensation and costs in his favour. — Excerpted from TOI, Mumbai, 11 Jan 2003 Properties and the state Budget
Housing Loan Schemes
* Conditions apply. • The loans can be availed up to a maximum of 85% of the cost of the property, depending upon the housing finance institution • Processing and administrative charges extra • Loan amount limit depends on the income of the applicant • Security of the loan is the first mortgage of the property to be financed • Some institutions may require a local guarantor • Repayment period ranges from 5 to 20 years or on superannuation or on completing 65 years of age • Loans can be availed from leading financial institutions • Interest rates and EMIs are subject to change without notice, check with the financial institutions for prevailing interest rates. |
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