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Investing in Property

Questions Answered (17)

Must we invest in apartments or in plots for higher appreciation in bangalore ?

Aditya Verma

CEO & Business- Head
Makaan.com

It is completely your choice whether you want to move into apartment or construct a house. However, for better appreciation, you can look at following localities which comes under Top 50 investment options in India , a research conducted by Makaan.com. These localities appreciated from 10-30% last year, which is mentioned below and expected to give good returns in future

hi, how would you rate kundli, greater Gurgaon (Sohna) and dwarka express way from investment perspective with a 10 year time horizon.

Aditya Verma

CEO & Business- Head
Makaan.com

I see a good future for Sohna compared with Dwarka expressway as it has been planned very well. There is a good mix of residential and commercial activity which is critical for the success of any region. The corridor starting from Golf Course extension towards Badshapur and all the way to Sohna is at a stage that Gurgaon was about 7-8 years back. So between the two options I will prefer Sohna. Good luck for your investment :). Dwarka Expressway - Dwarka Expressway has come up essentially as a residential area with very little commercial activity. Typically such areas have limited grown potential.

Hello sir , 1)Want to ask is there gone be a price correction in real estate market in coming months? if yes what would be the margin of it 2)I am looking for 1rk in goregaon east or 1bhk in mira road east around 50lakhs what do u think is better option in terms of growth maximum i can stretch my self with 60 lac including all after sale expenses.

Aditya Verma

CEO & Business- Head
Makaan.com

Real estate sector went thru a challenging 1 ˝ years with high input cost, low transaction and unsold inventory. These factors kept a lid on the price appreciation. Many cities in India did not experience any significant price rise. With the new government coming in, we can hope for a sentiment revival and increase in transaction. I do not foresee a price correction in the coming months.

I would like to buy an apartment in Bangalore for around 40 Lkhs. But the water scarcity in the city is alarming should this be taken into account while buying the apt. or is it better to invest in a plot.

Aditya Verma

CEO & Business- Head
Makaan.com

Water is a very basic human requirement and needs to be taken into consideration if anyone would like to stay at a place for next 20-30 years. I am sure the local government would have the water table level for various locations in the city. If you are unable to find the relevant government department that has this information, you can look at online services that show the water levels of cities on a map. Among the areas that you finally shortlist, prefer areas that have adequate water table. It would be helpful both for investing and self use.

hi Aditya - i am selling my property in gurgaon over which i am getting an additional premium of Rs. 2.50 lakhs. the buyer is ready to pay this additional premium amount of Rs 2.50 lakhs through DD in my name.. as this amount is going to be reflected in my bank statement , is it liable for income tax and how much income tax , do i need to pay for receiving premium amount of Rs 2.50 lakhs.. please advise

Aditya Verma

CEO & Business- Head
Makaan.com

Yes, you will have to show this in your current year income. If you do not invest the proceed in another property, the premium will be considered as short term capital gains and income tax slab equivalent to your income will be applicable.

I would like to know about a project named " Navyangan " Intergrated Township in Pirangut - New Pune. Is it a good investment option ? or can you give me a better option in pune?

Aditya Verma

CEO & Business- Head
Makaan.com

I am sorry, as a policy we do not comment on any specific Builder / Project in public. However, I would urge you to check the past track record of the builder before making any investment. The property prices in Pune varies from 4000 to 6000 psf on an average depending on the location and the reputation of the developer. There are areas on the outskirts that may come in at a cheaper arte. In the given market situation, you can expect an appreciation of 5-8% per annum in the overall residential property market in Pune.

I wish to make an investemnt of around 15-20 Lakhs from a long term ( 10-15 year) horizon. I am residing in Delhi and loactions like NCR,Jaipur, Chandigarh shall be preferable. I already have bought a 2 BHK flat last year in Noida Extension. Maybe this time I would like to consider a plot. Request you to kindly guide on what are my options.

Aditya Verma

CEO & Business- Head
Makaan.com

If your preference is for plot, you can get good options in the Noida area specifically along Sector 150, Sector 166, Noida Extension, Sector 88

more (10)

Property rates in India

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Note
  • Excessive supply in a city or area means less demand

    Most cities have pockets with excessive supply, as well as pockets wherein supply is severely constrained. Despite concern about economic...

  • The metros are still the best places to invest in real estate

    Property prices in many of the metros have skyrocketed. Investors observe these trends, analyse the magnitude and scope of activity,...

  • Major Indian developers are abandoning the MIG sector and concentrating on high-end residential projects because it makes better business sense.

    Most big-banner developers still see sense in constructing mid-income housing projects, since they can construct more volumes. The demand in...

  • There is a 'bubble' in the Indian real estate market, and it will burst soon

    It is certainly true that many units in cities are not proving to be slow movers because of the current...

Tools

Dhruv Agarwala

Co-Founder , PropTiger.com

(24 Sep- 16:00hrs)

Property Prices

The agreement to borrow money in order to buy property is known as

Personal loan

Mortgage loan

Business loan

Auto loan

SUBMIT

CLASSROOM

Types of documents to check before buying property

Naushad Panjwani, Sr ED ,Knight Frank India explains what are all the important documents one should check before buying any property.

Feb 03 2014,19:19

FAQs

Q.
In whose name are the stamps required to be purchased?

The stamps are required to be purchased in the name of any one of the executors to the Instrument.

Q.
What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?

Market value of property is the price at which there is a willing buyer and a seller agreeing to the transfer the property at an arm's length transaction. Stamp duty is levied on the ready reckoner rate or the agreement price, whichever is higher.

Q.
What are the possible returns of investing in commercial versus residential property on rent?

The rental yield for commercial property is usually 9-12%. In contrast, the yield for residential property is much lower at 3-4%.

Q.
What are all the important documents one should check before buying any property?

While purchasing a property, you have to look at the approved layout plan, approved building plan, ownership documents, carryout title search, etc.

Q.
Does it make sense to buy a home now?

That depends on one's actual objectives and level of need. If one is a first-time home buyer, attempting to time the market makes little sense. Any correction will be a brief phenomenon, and prices inevitably rise again. This is a risky game that only investors should play.

Q.
What are the different ways of investing in commercial property?

There are three ways to invest in commercial real estate - directly buy office space from a developer, buy shares of a commercial developer from the stock market, or invest in a real estate fund focused on commercial real estate. As the quantum of investment is usually huge, the prospective buyer needs to take more informed decisions.

Q.
Which are the instruments that attract the payment of Stamp Duty?

The instruments like Agreement to Sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.

Q.
What are the factors to keep in mind while investing in residential property for capital appreciation?

The fundamental aims of any residential property investment should be to maximise yield as well as capital gains and to reduce the risk as far as possible. To illustrate, renovating and embellishing a property makes it eligible for a higher rent, which means maximised yield. Property investment aimed at capital gains involves buying real estate cheap and selling it at a higher rate, thereby maximising one's ROI. An astute investor will also buy a well-located property at a high price if the rental market is booming, since this makes it possible to rent it out for as long as it takes price to rise again.

Q.
Does availing of a teaser loan make sense?

Availing of a temporarily discounted home loan without taking a protracted view of one's financial position is not advisable. One should be aware of the manner in which one's finances will be affected after the teaser period is over and real-time lending rates kick in.

Q.
What is the difference between built up area, super built up area, and carpet area?

Carpet Area: Carpet Area of a property is defined as the net usable area from the inner sides of one wall to another. Carpet Area comprises of the carpet area of the demised premise, toilet areas within the demised premises, AHU room/s within the demised premises and dedicated service areas for the demised premises. Built-up Area (BUA): BUA consists of carpet area, area covered by inner and outer walls and additional areas mandated by the authority such as flower beds, dry balcony etc. Super Built-up Area (SBUA): SBUA consists of BUA and the proportionate area under the common spaces of a building like lobby, staircases and elevators.

Q.
Is a POA revocable?

Yes, a POA can be either revocable or irrevocable, depending on what sort of a POA one has made.

Q.
What exactly do we mean by a Free Hold flat? What are the advantages and disadvantages, if any?

A freehold property flat is one where there is a whole and sole owner/s, ownership is full and unconditional and there is no lessor / lessee involved.

Q.
What are the risks associated in buying a flat on Power Of Attorney (POA) basis?

Purchasing a flat on a POA basis is not permitted.

Q.
Who is liable to pay Stamp Duty-the buyer or the seller?

The buyer is liable to pay the stamp duty.

Q.
Is there any way by which I can claim exemption from tax on capital gain?

Several options are available for saving capital gains. For example, in the first place invest in a residential house property or a flat to make investment so as to see that capital gains are exempted. Likewise, if a person were to make the investment in REC or NHAI bonds then also he enjoys complete exemption from the long-term capital gain payable by him in respect of capital gains due.

Q.
What are the tax implications of sale of any house property, commercial or residential?

For the purpose of Real Estate the Long-term Capital gain would be only if you hold the property for more than three years, then it is subjected to tax @20%. In case you sell the property in less than three years time then it would become short-term Capital Gain and the same is required to be taxed at the prevailing tax schedule of the rate applicable to the assessee depending on his other incomes.

Q.
What are the risks involved in residential property investment?

The risk factor in real estate investment lies in the possibility of buying at a higher price and having to sell at a lower one in a depressed market. It is also risky to try time the market to discern the 'best' time to invest. Much like in the stock market, it is impossible to predict the point of lowest ebb in the real estate market. The danger in delaying investment too long is two-fold - firstly, one may lose out on the best properties, and secondly, the market may pick up ahead of one's predictions, meaning that the lower rates may no longer be available.

Glossary

Abatement notice

A notice served on the owner(s) or occupier(s) of a property from which a private nuisance arises, warning them of the intention to enter on the land in order to abate the nuisance.

Absolute title

The right of ownership of a mortgage deed, which gives the right, in certain specified circumstances, to demand repayment in full, of the outstanding debt than the due date. Or a clause in a deed or contract, which provides for the early termination of an exciting interest in land, in certain specified circumstances, thereby advancing the future interest.

Agreement for lease/sale

A contract to enter into a lease (or sale), which in order to be enforceable either must be evidenced in writing and signed by the person against whom action is taken for the breach of the alleged contract and there must be a sufficient act of part performance.

Alternative user value

The value of land and buildings which reflects a prospective use which is different from that of the current use.

Anchor tenant

One or more department or variety chainstores, or supermarkets, introduced into a shopping centre in key positions to attract the shopping public into the centre for the purpose of encouraging other retailers to lease shops en route. The larger the developments the more anchors required.

Asset valuation

In the property market this expression is applied to the valuation of land and buildings or plant and machinery. The term is often used to describe an expert opinion of the worth of a property which may be incorporated into company accounts, where the ownership of the asset is not necessarily to be transferred but the valuation is required for the company takeovers, share flotation or mortgages.

Assignment

The transfer of a property interest, especially a lease, from one party to another.

Atrium

An entrance hall of a building, often rising through a number of storeys and containing lifts, reception areas and plants. Originally the hall or chief apartment of a Roman house.

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  • Excessive supply in a city or area means less demand

    Most cities have pockets with excessive supply, as well as pockets wherein supply is severely constrained. Despite concern about economic growth and high inflation, areas with excessive supply will continue to see demand, and therefore price appreciation. As long as an area is seeing infrastructure development, it remains a safe investment bet.

  • The metros are still the best places to invest in real estate

    Property prices in many of the metros have skyrocketed. Investors observe these trends, analyse the magnitude and scope of activity, and identify one or the other new town as the next coming thing. A fundamental real estate investment mantra is that emerging localities are preferable to established and often saturated ones. Established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates. Moreover, there is little scope for new market drivers such as malls to find a place in saturated localities – meanwhile, prices remain high. This is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic timeframe. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight.

  • Major Indian developers are abandoning the MIG sector and concentrating on high-end residential projects because it makes better business sense.

    Most big-banner developers still see sense in constructing mid-income housing projects, since they can construct more volumes. The demand in terms of units is phenomenal and developers getting into this segment can build for years to come. They have the assurance of sure-shot absorption, as well. Most major Indian developers are ‘not’ shifting from affordable to high-end housing -- only branching out. While they get into middle-segment housing, they continue to build high-end projects.

  • There is a 'bubble' in the Indian real estate market, and it will burst soon

    It is certainly true that many units in cities are not proving to be slow movers because of the current price points, and developers do need to re-calibrate their bottomlines while still remaining viable as businesses. Since the only way to catalyse healthier sales at this point is offering buyers tangible financial relief, a reduction in rates will work best. In fact, new projects are already being launched at lower rates and good deals are available at the negotiation table for serious buyers. In other words, we are not looking at a bubble that is likely to burst, but at a gradual and perceptible relaxation on hard pricing norms.