Rented accommodation – a ray of hope in unaffordable scenario
Jan 04, 2014
Source : The Times of India


DELHI: Affordability is the need of the hour. However, with an increase in the cost of material and high land prices, many developers have already voiced their concern over offering affordable homes. Thus, going ahead, the real estate scenario may best be described in one word – ‘unaffordable’. This is applicable for commercial as well as residential properties. This scenario is giving a push to rental markets in the country and opening up broad vistas for people who cannot afford to buy their own home.

However, the approach of Indian investors is quite inexplicable at times. Despite knowing that investment in real estate requires a minimum stay of 5 to 10 years to reap good returns, they want percentage rental returns of ten years ago and the capital appreciation of today. That is something which is not possible.

As an increasing number of people are unable to afford commercial or residential places, demand for rentals is going to increase. However, expecting a certain percentage return on property as rental income is impractical.

The way to view rental income is actually very simple. If in a given market, rental takes care of all outgoings such as taxes and society charges, repairs and maintenance and also leaves a decent surplus, it is good enough. The absolute rental value is more important than percentage. This is simply because a rental customer is one who either cannot afford a property or does not want a property in a specific city in the first place. So, it is very unrealistic to peg a return to it.

We can liken this to the stock markets. If we buy a share of a company at Rs 100 and the dividend declared is Rs 2 on a face value of Rs 10, we do not calculate the return and say the share or the company is bad. We are investing for a longer term capital appreciation or quick upswings in prices. Similarly, a property is a good long term investment giving high capital appreciation.

Thus, it makes sense to take a property and ensure it is ideally not kept vacant at any point of time. Commercial spaces command higher rentals as a percentage, but it is only a matter of time before these also start dropping. So, just rent out your property, make money and wait for capital appreciation.

Latest Realty News

Subrata Roy moves SC for permission to go abroad
Jan 04, 2014
DELHI: Sahara Group chief Subrata Roy, who has been restrained from going abroad for failing to refund Rs. 20,000 crore investors' money, today moved the Supreme Court seeking its permission to go overseas for business purposes.
Investments in realty sector grow 53% in Jan-Sep 2013
Jan 04, 2014
DELHI: Investments in the real estate sector grew by 53% in the first three quarters of calendar 2013 with an infusion of $1,885 million against $1,235 million during the same period in the previous year.
CCI rules out abuse of dominant position by two realty firms, SG Estates Ltd and SKI View Hotel
Jan 04, 2014
DELHI: Fair trade regulator CCI has dismissed the allegations of abuse of dominant position against two realty companies -- SG Estates Ltd and SKI View Hotel -- with respect to development of a commercial real estate project in Vasundhara in Ghaziabad region.
Lenders bank on home loan portfolio, cut interest rates
Jan 03, 2014
DELHI: With competition in the home loan space getting intense, banks are looking to spruce up their products by either cutting rates or allowing customers to borrow larger amounts at the same rate, reports Shashidhar Jayakumar in Mumbai. M Narendra, CMD, Indian Overseas Bank, told FE his bank was toying with the idea of giving home loans at 10.25% for a value of up to Rs 75 lakh, way more than the current R30 lakh that it allows.
Four years on, DDA announces housing scheme 2014
Jan 03, 2014
DELHI: Announcing the launch of a new housing scheme in 2014, Delhi Development Authority (DDA) said its scheme would cover all segments of society and would provide accommodation ranging from one-room tenements to three-bedroom flats. The flats will be made available in different parts of the city, DDA officials said.
Land Bill may push up prices 15-45%, say realty players
Jan 03, 2014
DELHI: Amid concerns over cost escalation and execution delays, the Land Acquisition Act has come into force from January 1, 2014. Real estate players say that for large infrastructure and residential projects, cost escalation due to the Act may range between 15 per cent and 45 per cent.
Demand for commercial property still good in Delhi
Jan 03, 2014
DELHI: Despite odds, the Delhi NCR’s commercial realty market is still considered as one of the most favourable investment destinations. This owes a lot to the political heft that Delhi commands—being the national capital, the city houses the headquarters of major political parties, as well as all administrative offices. Naturally, this attracts corporates wanting to be in close proximity to the bureaucrats and other decision makers.
Developers optimistic of revival in realty sector in 2014
Jan 03, 2014
DELHI: With high property prices and costlier borrowing hitting real estate, developers are hoping for a reversal of the slowdown in the new year and sales picking up post general elections.
Real estate boom takes toll on groundwater
Jan 03, 2014
DELHI: Noida and Greater Noida fall in the water-rich doab — lying between two confluent rivers — area. It has Yamuna’s catchment on the one side and Hindon on the other. Yet, mindless extraction of groundwater for massive construction has caused irreparable damage to the water table in New Delhi.
Old allottees waiting, DDA announces new scheme
Jan 02, 2014
DELHI: Even as people allotted houses in DDA’s previous scheme are still waiting to take possession of their property, the agency on December 31 announced a new housing scheme “covering all the segments of society”.

Latest Realty News Of State

Realty Talk's