Monthly Archives: April 2018

Realty sector on recovery path, HNIs pouring money: Report

The Indian real estate market is on a recovery path and is witnessing investments by HNIs, with further improvement in the sector likely in 2020, according to a report by IKON Marketing Consultants.


The Indian real estate market, which was at its lowest level in the past four to five years, has witnessed a recovery in 2018, owing to greater transparency and greater consolidation, says a report by IKON Marketing Consultants, which was released on March 30, 2018. The report is based on a pan-India study, conducted by the Ahmedabad-based marketing consulting firm. The study revealed that HNIs (high net-worth individuals) have already started investing in the realty sector at current prices, expecting returns of 20 per cent to 30 per cent, within the next two years.


More foreign investments are likely, due to the government’s decision to allow 100 per cent FDI (foreign direct investment) in the sector, the report said.


However, the residential sector can become more about space than size, going forward, the firm said. “Home buyers in leading 10 cities like Ahmedabad, Surat, Mumbai, Pune, Bengaluru, Chennai, Patna, Vijaywada, Kanpur and Jamshedpur, are now looking for more livable space than overall area,” it said. “In the commercial and hospitality segments, no major changes can be expected in the near future but demand may pick up gradually, for ready-to-move properties from 2020,” it added.


The report said tough sectoral reforms, such as demonetisation, the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST), have already been factored in and the market will see their positive impact in the coming years.


Azaz Motiwala, founder and CMD of IKON Marketing said, “2020 will be the year of boom for the real estate market in India and (the trend) it is likely to stay for the next three to four years. FDI flow and demand from actual buyers, may increase at the beginning of the coming decade.” Today, buyers have become very choosy and real estate companies will have to change their approach to attract them, Motiwala added.




Do NRI’s Require Pan Card to Sell Property in India?

Property is an important resource, and for ages, it has been an exceptionally time-consuming and taxing process to sell property in India from overseas. One faces procedural difficulties only due to the dearth of accurate information regarding the process. But in order to encourage greater investment in the real estate sector, the Indian Government has simplified the field of real estate for NRI’s.


PAN or Permanent Account Number has essentially been created in order to regulate and track taxable income in India. This unique ten-digit code is required by NRI’s only when they have a taxable source of income in India.


Due to the huge amount of diaspora abroad, India has started schemes such as Overseas Citizenship of India (OCI) and Person of Indian Origin (PIO) schemes. In order to enter into a property transaction, it is not necessary for an NRI or a PIO (origin being dated up to the fourth generation of ancestry) to have a PAN card. However, if the sale proceeds that an NRI has received have to be repatriated, i.e. if the money has to be sent back to ones home country, an NRI is supposed to require a PAN card for the same. The facility of remitting the proceeds that have been acquired from the sale of property is not available to citizens of Iran, China, Nepal, Bhutan, Pakistan, Afghanistan, Bangladesh and Sri Lanka. Individuals not required to possess a PAN card and are exempted from the same can make a declaration in Form 60 when partaking transactions that require it. Even though a PAN card is not a compulsion, most experts suggest that it is advisable to apply for the same since it is of great aid in order to claim tax exemption after the sale of the property.


Checklist of documents for selling property in India

Hence, the standard document checklist for selling property, apart from the state-specific documentation requirement is as follows –

  • Passport, to act as a proof of identity (doesn’t necessarily have to be an Indian passport);
  • PAN card, or form 60, for the purpose of tax exemptions
  • Address Proof
  • Allotment Letter which was initially provided by the developer;
  • Sale Deed
  • Tax Returns, if an income is accruing from the property and the same is taxable, tax returns for the period should be maintained
  • No Objection certificate and other society related documentation
  • Encumbrance Certificate
  • POI or OCI Card.


Which is more attractive: Rental income from residential or commercial property?

The operating expenses of rental housing properties are minimal, as the tenant only requires basic, yet functional infrastructure.


On the other hand, commercial property investments (i.e., offices and malls) typically entail high investment and come with leasing and vacancy risks. Moreover, there’s a direct impact of the economy and real estate market cycles on this segment. This is unlike housing, which is uncorrelated with markets, as it is end-user driven and there exists a huge shortage


Residential versus commercial realty spaces


  • Commercial properties are always costlier compared to residential, unless you are investing in individual shops.
  • Commercial properties have longer lease periods and higher rental value, compared to residential projects.
  • For repairs and maintenance, the tenant is generally responsible for it in commercial properties, while it is entirely the landlord’s responsibility in residential properties.



Dos and don’ts for buying a property to earn rental income

An investor, who is looking to buy a property and lease it out, should approach the process with a lot of forethought, to get optimal returns and avoid a serious financial setback from a wrongly-chosen property. Here’s what you should consider, when looking for an income-generating property


From the initial choice, to finalising the purchase of your first rental property as an investment, there’s plenty of planning and work involved. You should begin hunting for your rental investment property with an unbiased approach, to the areas and all of the properties in your investing range. Let us have a look at the foremost things that you need to consider, when trying to find the best rental property.


The quality of the location in which you purchase a rental property, will determine the kind of renters you will find and how frequently you may face vacancies. For instance, in case you purchase the home in an area near a university, the odds are that your pool of expected renters will largely consist of students. You may be faced with frequent vacancies, during the time when students return home for the holidays. Also, there would be a higher churn of tenants, when, ideally you should look for long-term leases.


Examine the location and the project, for existing and planned public parks, shopping malls, gymnasiums, cineplexes, public transportation and all the other factors that would conceivably entice tenants. You can use developers’ project brochures and also do online research, to determine the availability of such facilities in a neighborhood.


You also need to know what new developments are coming up and what has been zoned for special purposes by the local municipality. Ideally, you should look for a region with excellent growth prospects, where schools, business parks, shopping malls and entertainment zones are either already in place or planned.