Realty The Way To Go For Investors - GurgaonScoop

Source: Times Of India By Mamta Sharma & Tanushree Roy Chowdhury 24 Feb 2013?
Sanjeev (name changed) is a big-time investor in the real estate sector in Gurgaon who has so far invested in six residential units in the city. For Sanjeev, the real estate sector reaps faster and better benefits than a bank or other financial schemes.? Gurgaon is increasingly becoming an investor-driven market where people park their money in real estate projects to earn quick dividends. Investors, who can range from second-time home buyers to bigger players, push property prices north despite already high-valued launches by developers. TOI takes a look at this market trend in the city with over 300 residential projects.? According to Sanjeev, "When a project is launched and a unit is costing, say, Rs 1 crore, an investor needs to just pay an upfront amount of say Rs 10 lakh (10% of the total cost). In six months or so, the resale value of that unit increases by Rs 200-300 per square ft. So as an investor, even if I sell the unit at that rate, I end up earning a profit of Rs 6 lakh on an investment of Rs 10 lakh in just a span of 6 months (a profit of 60% in a matter of six months). Then again, by just investing Rs 15 lakh in another new launch one can look at earning a similar profit."? The longer an investor can hold on, the better the chances of earning profits, explained Sanjeev.? Market watchers believe that in the beginning when a project is launched the appreciation of that property is investor-driven but the latter is due to demand-supply and the end-user drives the appreciation.? The most important aspect is that an end-user will have limited funds in his lifetime to probably make one or maybe two investments in housing projects at the same time. Investors do not have such worries and can put down the booking amount for a larger number of apartments. They are also more amenable to taking risks by being associated with projects which are still in the pre-launch or soft launch phase, feel real estate analysts.? "Investors have access to lots of funds which may be lying unutilized. The investor class comprises mostly businessmen, HNIs, industrialists and other private individuals. Most of the end-users and buyers from the middle class are dependent on bank loans for financing their home price requirements and can only put down the initial 10-20% as the booking amount," explained Rohan Sharma, senior manager - Research and Real Estate Intelligence Service, Jones Lang LaSalle India.? The price trends of properties over the past one year show that there are two distinct kinds of residential properties. One are the new launches where the price rises are the highest seen on year-on-year basis in the last five years, and second in the ready-to-move properties or properties in an advanced state of construction where there is price stagnation. The inference that can be drawn is that investors looking to flip property after making partial payments are investing more aggressively in the new launches, while the demand from end-users who generally look for properties in an advanced stage of construction or ready properties is cooling.? According to Dr Sanjay Sharma, managing director, QuBREX, in order to attract investors, builders have to keep on increasing the prices.? Added Samir Jasuja, founder and chief executive officer at Prop Equity, a real estate research intelligence firm in the city, "Gurgaon real estate growth story is driven by investors only. On Sohna Road the number of houses sold out last year was less (occupancy was less). While it has slightly risen in the past one year but it is still visible. Price movement is faster within the first 2-3 years of the project launch and usually sees a 40-50% appreciation but after reaching a benchmark it stops."? Also, there has been a growing interest in the assured return schemes given by under-construction properties where returns of 9 to 12% are offered, say market watchers.?Rohan Sharma?said, "Some developers are now inserting lock-in clauses in their buyer agreements, which restrict the initial buyer from selling the property on the secondary market for a specified period (which is usually 3-4 years or till physical delivery of the unit has been provided to him). Developers are also more willing to buy back the units from investors at pre-agreed prices to prevent secondary market prices from adversely affecting the primary market. This also keeps the primary market insulated in case the investors look to exiting at lower price points which in turn will impact the ability of the developer to sell his unsold units at the market price."? Also, a trend by?DLF?Ltd for its project "New Town Heights" of "one?PAN?card one booking" is no longer in practice. Most initial bookings are done at widely advertised price rates. The developer thus ensures that a person making the booking also attaches his PAN card during the purchase. Since investors are larger players, even multiple investments can be easily made by them as they have sufficient liquidity. However, PAN is required in most initial bookings. Even in secondary sales, PAN is required, even though the reported value may be lower than the actual transacted value, explained Sharma.

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