Factors affecting valuation of property in India

Recent real estate in India proved beyond doubt that property valuations have taken a turn for the better.

Correct insights in regards to the right time for purchase of property, price escalations, recessions in the real estate market and other indicators, help in making valuable purchase decisions. So, what are these factors which drive real estate prices in the subcontinent?

Location 

Buildings, real estate and properties, located in commercial and market areas, hold higher value than their counterparts in the residential areas. It is common to find brokers quoting a higher price for buildings in well developed and approved colonies and areas as against those in the lesser developed and upcoming areas. Similarly buildings which are constructed on freehold land tend to command a higher valuation than those on leasehold plots.

Infrastructure:

Valuation of property is clearly based on the availability of necessities and facilities connected with comfortable housing.

Infrastructural development is one of the most important factors which influence real estate prices in India. The presence of roads, airports, flyovers, malls and bus terminals and other facilities in the vicinity of the property, helps in value escalation of the same.

It is a known fact that connectivity is one of the most important requirements for investors looking towards purchasing land or property. This leads to the concept which explains a rise in the valuation of property which is well connected to entertainment hubs, medical facilities, educational institutions, retail markets and business centers, along with other day to day facilities.

Commercial market 

Places such as Noida, Gurgaon, Pune, Hyderabad, Navi Mumbai and Andheri-Borivili in Mumbai, are striking examples of commercial development which have affected the valuation of property in these areas.

The development of malls, IT offices and Special Economic Zones near residential areas help in cutting down the time and energy wasted in commuting to workplaces and increase the price of real estate in the area.

Disposable Income

Properties which are located in agricultural areas or those dominated by manufacturing units attract a lower price than those situated near the IT hubs. The valuation of property is in direct proportion to the quantum of disposable income in the hands of the purchaser or the majority of population in that area.

Availability of land

In places where there is ample land available for residential purposes or development of real estate, the graph reflecting the valuation of property shows a slower rise than in areas where land is comparatively scarce.

Demand and Supply

Demand for real estate in a particular area is inversely proportional to its supply. As the supply or availability of real estate decreases, the valuation of property increases. Changes in population are the key drivers for demand. Along with an increase in the number of people inhabiting a particular area, the popularity of a particular locality in terms of people wanting to be a part of the locality also increases its price.

Affordability

Affordability refers to the cost incurred by the owner in the process of enjoying or retaining a property. In layman’s term, it is the term which establishes a relationship between interest rates, property prices and wages. If any of above three variables reach their maximum level in a particular area, then the inhabitants start looking towards a better lifestyle elsewhere.

Structure

The valuation of property is dependent on the specifications of materials used, layout, design, durability and life cycle of the building. The quality and cost of materials during construction, size, current rates of labor, frontage and other physical attributes such as roof covering, height of the building, type of foundation , waterproofing and plinth level, also affect the price of a particular property.

Customization

The cost of real estate becomes higher in the event of builders undertaking customization of residential space on the lines of the purchaser’s requirements. For example, some investors may want landscaped terraces or verandahs connected with their apartments, upgraded kitchens, specifically designed internal stairways in duplex apartments, higher quality paint and flooring, or other user defined changes. This leads to an escalation in the ultimate price charged to the buyer.

Before making their real estate purchase decisions, investors should conduct an analysis of these drivers to get a fair valuation of the property that interests them. Careful investigation and homework can lead to better returns, easy liquidity and more lucrative investments.

Outdated records major cause for land disputes

Buyers have to be very careful while entering into lands deals. Existence of fake land records and selling of same property for multiple buyers through either forged documents will generate land disputes.

Existence of outdated land records, land sharks forging documents, lack of knowledge of land records and laws are the major causes for land disputes in cities like Bangalore, Mysore and other towns. Therefore, it is better to have a legal opinion before finalising land deal.

The Revenue Department has shown laxity in updating revenue records. Issues such as failure in inter-departmental communications regarding property issues and confusion over custodians of documents are other major causes come in the way of land transactions. Taking advantage of loopholes in the system, real estate agents have either sold property to multiple buyers through either forged documents or the properties have changed hands after suppression of records.

In fact, violation of laws and forging of documents is a common factor in Bangalore. Lands notified by the Bangalore Development Authority (BDA) for acquisition in 1982 have been sold to buyers by forging documents. Similarly, flat owners in South City are at a loose end with the suppression of the fact that a portion of the land had been relinquished in favour of BDA even before the apartments were sold.

In both the cases, validation of titles, which was an important step, could not be done at the sub-registrar's offices as records were not updated.

Titles

The Registration Department has rights for giving “presumptive titles” to the property, but validation of titles and legality of transactions are in the legal jurisdiction. Presumptive title is given on the understanding at face value that both buyer and seller are undertaking a genuine transaction.

By registering properties, the department only give a constructive notice to say that such a transaction has taken place. One has to cross check various documents such as earlier revenue land records, change of hands, tax paid receipts, status of present lands, khata etc, officials in the revenue department maintained.

On a question related to sub-registrar’s office could verify the documents before registration, the official said legally, it can only register the document. If verification process is also given to it, it would be cumbersome and time-consuming.

So, we request all those buyers of lands be doubly careful while entering into land transactions. Do home work, before discussing issues related to price and land registration.

In view of the complex issues involved purchase lands, housing sites and flats, experts suggested that it is better on the part of the buyer to consult legal experts and seek their opinions on land records and validity of legal documents.

Realty portals push many property brokers out of business

BANGALORE/NEW DELHI/MUMBAI: Falling home sales and rising competition from real estate portals has pushed many traditional property brokers out of business while forcing others to work on wafer-thin margins. 

The market for property brokers, who had flourised during the real estate boom not so long ago, has shrunk with builders and individual sellers preferring direct sales or the services of real estate portals that are ready to facilitate deals for free. The shrinking market is also driving down the number of applications for real estate broking licences. 

In Bangalore, it has fallen by 10% over the last two years, said Rahul Pai, governing body member of Bangalore Realtors Association-India (BRA-I). "At the BRA-I AGM in August, members talked at large about the competition from various sources like internet portals that are posing stiff competition to the traditional brokers," said Pai. 

"This, added to the unfavorable market conditions in real estate, has made it worse for brokers. In fact, several small-time brokers have actually gone out of business and are coming to us looking for jobs." The gloom is evident in Delhi, Mumbai and Kolkata too. 

In Mumbai, builders are approaching clients and investors directly through in-house marketing teams, which offer dedicated service to prospective investors and help save the 3% commission builders would have paid to property dealers. Developers are increasingly using direct marketing initiatives like e-mails, text messages and pre-launches to push their offerings. 

The few builders that are still working with brokers have reduced brokerage charges to 3%-4% from 6%-8% earlier. Most developers have also withdrawn the preferential location charges that were earlier being promised to brokers. 

"All large developers who are members of CREDAI (real estate apex body) have their own marketing team or are in the process of developing their own sales team for better customer service and building direct relationship with customers," said Harsh Vardhan Patodia, president, CREDAI Bengal and vice-president CREDAI National. 

Gaurav Gupta, joint secretary of Raj Nagar Extention Association, said: "With the slowdown happening in the market, most developers are now getting into direct sales and cutting down on the cost of the brokerage." Referral clients, too, are posing a threat to the broking community. 

"Builders are now luring new buyers through their present clientele, eliminating the role of agents and brokers," said Jyoti Shroff, partner at Bangalore-based real estate consultancy Tirupati Associates. "A reference of a prospective client gets the buyer up to Rs 50,000 discount. This has led to fall in our business by about 50%, especially in the last six months." 

Akhil Kapur of real estate brokerage firm AJ Housing said his revenue is down by 20%-30%. "The number of transactions has not changed but the price band of transactions has come down, which indirectly affects my revenue," Kapur said. Brokers in Delhi echo the same sentiment. 

"Transactions are not happening and there is no movement in the market. Our business has come down by more than 50%," said Sumit Joshi, director, Real Credit Consultancy, a mid-sized real estate broking firm in Noida. "Brokers who are unable to sustain are relocating from premier locations to smaller offices elsewhere and are also trying their hand at other businesses." 

Websites, too, are playing spoilsport for brokers. "Certain developers are at the moment more bullish on the online sites and social media to promote their properties among NRIs and strengthening their direct sales," Gupta said. 

Bangalore-based Common-Floor.com is sending out chauffer-driven BMWs and Mercedes to pick up premium clients for sight visits—facilities that a broker would never be able to match. "There is now a market trend of online customer enquiries, which are being serviced directly by the builders, and this is picking up to the extent of 15% to 20% of the total sales in the below Rs 50 lakh segment. In this category, the main lead generation takes place through the project publicity and promotion," CREDAI's Patodia said. 

Unlike the markets of north and south, the role of brokers was elementary in the east. But, over the past few years, the trend of brokers marketing a project had picked up in West Bengal. Following the rough patch now, brokers across the east are in a fix as builders endorse orthodox ways of direct sale. 

"Kolkata market is not only run by end users but also salaried speculators, who do not live in the city. The latter generally seek brokers' help to locate and zero in on a property. As investments have gone down in real estate, the broking market too has invariably seen a crash," said Sanjay Jain, MD, Siddha Group, which recently sold 70% of its property through direct sales.

Source : http://economictimes.indiatimes.com/markets/real-estate/news/realty-portals-push-many-property-brokers-out-of-business/articleshow/22471456.cms

Bangalore IT pros finding it difficult to service home loans

BANGALORE: Economic slowdown has cast a shadow on Bangalore's housing market, with the rising cost of living and poor salary increments forcing an increasing number of IT professionals in the city to put their upscale homes on sale. 

Gen Y techies, who had invested in apartments, row houses and bungalows in Bangalore — India's IT capital, some 15 years ago, are now finding it difficult to service their expensive home loans or even maintain these houses amid falling rental yields. Resale inventory in this housing segment has grown 30-35% over the last six months, according to property portal CommonFloor.com.

Six of every 10 such properties are owned by IT executives, up from around four about two years ago, it said. "The booming real estate market was a major incentive for techies, but now that salaries are not going any higher, inflation is getting the better of these people, they are feeling the heat and the burden of hefty EMIs," said Mohandas Pai, the former CFO and head of HR at Infosys, who has seen the IT industry grow in Bangalore over the last 20 years from close quarters.

Resale inventory in this housing segment has grown 30-35% over the last six months, according to property portal CommonFloor.com. "Now they are eager to get rid of any excess property they possess while they can still getting a good deal," added Pai, who is chairman of Manipal Global Education. Since 2001, the city has seen an addition of 350,000 apartments, about 8% of which are now up for sale. During this period, about 45,000 villas and penthouses were added to the city and 8% of these are now in the resale market.

"These properties would fetch a huge premium now, running into a crore or more. Why not sell them off," said Kalpana Murthy, associate director — residential services at Cushman & Wakefield, a property consultant.

Bangalore's realty sector had witnessed steady investment by salaried IT professionals till a few years ago, with well-paying jobs making even a second or third home affordable for some. Around this time, real estate prices were low and the return expectation high, which helped push up rentals. That demand, however, began to peter off as recession set in, hitting company bottom lines and employees' salaries. Salary increments in the IT sector this year have been in the 6-8% range, compared with a minimum of 15% between 2007 and 2010. Adding to the gloom is IT industry body Nasscom's forecast that the domestic IT sector could generate 50,000 less jobs this year, down 17% compared with last year.

"Looking at the appraisals for the year, I stalled my shifting plans, which would only increase my expenses," said 35-year-old Ankit Jain. The Accenture employee recently sold his 1,500 sq ft, three-bedroom apartment on Sarjapur Road, which he had bought in 2009, for twice the purchase price. But not everyone is as lucky. With several such professionals in the market to sell, and builders launching new projects every month, Bangalore is facing an oversupply of sorts while demand has been dropping steadily. "The market is certainly slow and sellers are finding it difficult to find buyers.

The slowing economy and rising inflation is making matters worse," said Srinivas Reddy NS, senior manger — research at Jones Lang LaSalle, another property consultant. Home sales across the country have been slipping over the last few quarters. According to property research firm Liases Foras, new home sales in Bangalore in the June quarter were down 23% from a year ago. Another techie, Shameer VK, 35, who works with Cisco and lives in a 2,000 sq ft apartment in Marathalli, said his home is "too lavish", given the current economic scenario.

"I bought my apartment for close to Rs 50 lakh in 2008, and I pay an EMI of Rs 39,500. A similar house in the same project now goes for Rs1.3 crore," Shameer said, adding that if he is able to find a buyer for his flat, the money will help him pay off his debt and also buy a smaller property in the neighbourhood. The housing resale market in Bangalore is dominated by peripheral localities in the east and south of the city, which are close to major IT hubs.

According to Sumit Jain, chief executive of CommonFloor.com on Sarjapur Road, which is equidistant from Whitefield and Electronic City, more than 11% of all properties are available for resale. At Whitefield and Bannerghatta, it is 10.9% and 6.9%, respectively. Marathalli has 4.9% while JP Nagar has 4.6%. With the rupee having fallen sharply against the dollar, experts say it could be an opportunity for non-resident Indians who are repatriating dollars.

[Source : http://timesofindia.indiatimes.com/tech/tech-news/software-services/Bangalore-IT-pros-finding-it-difficult-to-service-home-loans/articleshow/22322735.cms ]

Nagawara in Bangalore attracts buyers

Sale price of multi-storey apartments in Nagawara has increased by 20 per cent in October-December 2012 quarter.

Nagawara in North Bangalore is fast becoming a one-stop destination for people looking for a peaceful backdrop. The growing popularity of Nagawara can be credited to its close proximity to schools, hospitals and IT companies.

As per the data, sale price of multi-storey apartments in Nagawara has increased by 20 per cent in October-December 2012 quarter.

“The sale prices of multi-storey apartments in Nagawara have increased by Rs 10 lakh approximately due to several reasons. The area is peaceful with good security measures. There is ample parking space and the area is also well-connected,” said an official.

The airport is just 30 minutes away. Nagawara is attracting IT professionals and emerging as a popular IT hub. “It is also near to the Railway Station and Ring Road. It is close to offices like IBN software, BHEL, Manyata Tech Park and many other MNC offices also which is making it a hot locality,” added the official.

Experts in the industry said that Nagawara is accessible to all important places of the city and its value has the potential to increase further with time. Lumbini Gardens is a famous tourist attraction and Karle Technology Park is expected to come here soon. 1, 2 and 3 BHK apartments are much in demand.

The cost of 1 BHK in 600-800 square feet area is Rs 30-40 lakh, for 2 BHK in 1100-1200 square feet area one will have to pay around Rs 50-60 lakh. Whereas a 3 BHK flat is in Rs 70-80 lakh price bracket which is spread in 1500-1600 square feet area.

The buyers mostly are IT professionals and businessmen. The user- investor ratio is 75:25. Experts also hint that a metro station is in the pipeline. Shobha Developers have a lot of under construction projects in the area.

Demand for property growing in and around Whitefield

The suburb of Whitefield in Bangalore works as a good bet for many in the city due to various factors. These include connectivity, the creation of a micro-market, proximity to workplaces and other social infrastructure. Here are some of the most prominent infrastructure projects that give a head start to this locality.

Metro connectivity

The most ambitious project in the city, the Metro Rail network, will reinforce the alreadyexcellent connectivity to Whitefield. The operational phase of the Metro till Baiyappanhalli provides a glimpse into what a mass transit system like this can do for the realty segment. With the extension of the Metro up to Whitefield and stations at Kundalahalli, ITPL and Kadugodi Industrial Area, residential and IT belts will be hugely benefitted.

Road connectivity

In addition to the Outer Ring Road (ORR) becoming a signal-free corridor, the eight-lane Peripheral Ring Road (PRR) will be connecting Tumkur Road, Hessargatta Road, DB Pura Road, Bellary Road, Hennur Road, Old Madras Road, Whitefield Road, Anekal Road, Sarjapur Road and Hosur Road. This proposed infrastructure corridor will further give rise to extensions and layouts around them. Residential belts will spread along its length as is already seen along the ORR.

IT and industrial belts

The IT sector is spearheading growth in this region resulting in the development of residential and retail spaces too. The presence of industries and IT Special Economic Zones has ensured that many employees prefer to either rent or buy homes close to where they live. This has in turn led to the rise of social amenities. Whitefield has many good schools, hospitals and malls and most residents in this area very rarely find the need to travel into the city, as most of their shopping needs are taken care of.

The Karnataka Industrial Areas Development Board (KIADB) has given a significant boost to industrial growth and this has spread beyond Kolar. The Malur Phase IV and Narsapura Industrial Belts are well-connected with access to rail and road networks. Residential catchments too can be seen till Kolar.

Supply of premium housing

A vital factor pushing demand for residential property in this region is the supply of top grade housing to suit every budget. From gated communities to villas and high-end apartments Whitefield offers a host of options for investors to choose from.

Is real estate next in line to collapse?

Unless govt deflates the housing bubble in an orderly manner, the collapse by market mechanism will surprise generations

While the spotlight so far has been on the rupee and the equity markets, real estate prices have started to bear the impact as well. A Business Standard report points out that of the 26 cities surveyed by the National Housing Bank (NHB), as many as 22 including Delhi, Mumbai, Pune, Bangalore and Chennai saw a drop in property prices during the April-June quarter, compared to the first quarter of this calendar year. An all-round squeeze in liquidity and dearth of buyers have led to a fall in prices across the country.
 
Developers who were holding on to their prices despite sluggishness in demand have blinked first. Yet the NHB chairman and managing director R V Verma feels that there is more to come.
 
A report by Manish Bhandari of Vallum capital says that the endgame of speculation in Indian real estate has begun. Bhandari says that a multitude of factors are converging after a decade, setting the stage for a deep correction in real estate. The story in India has all the ingredients of a making of a bubble a la Mississippi Scheme, the South Sea Bubble or the Tulip Mania.
 
Real estate prices in India are among the highest when compared on a per capita basis. Rent yield in India, which can be used to compare returns within real estate across countries as well as to compare across asset class, is one of the lowest in the world. Indian real estate earns a rent yield of only 2.7 per cent compared to 4.7 per cent in the US and 4.5 per cent in Japan.
 
Within emerging markets, Indonesia has a yield of 9.3 per cent while Philippines real estate investment earn a rent yield of 8.6 per cent. The only other country which has a 2.7 per cent yield is China which is already facing a bank-fuelled bubble like scenario in its real estate sector, which its government is desperately trying to control.
 
RBI is sucking out liquidity like a sponge and the sector that will be the worst affected is real estate. Bhandari says that the fall in property prices is likely to start from the deleveraging cycle by Indian banking sector which is running a multi-decade investment to deposit ratio of 108 per cent. Balance sheets are expected to be deleveraged over the next three-four years. The previous deleveraging cycle in 1997-2003 saw real estate prices correct by 50 per cent in Mumbai Metro Region.
 
Adding to the liquidity crisis is the likely exit of private equity (PE) players from the market. Average life of private equity in real estate is seven-eight years. Year 2013 marks the beginning of private equity returning back to shores. Manish says that PE players entered India at an exchange rate of 45; they will now be exiting at around 70 levels a loss of nearly 50 per cent in currency conversion itself. The exit of PE funds will create a distress sale situation in the real estate market, shortly leading to depressing price situation for the next 18 months.

Bhandari feels that unless the government deflates the housing bubble in an orderly manner, the collapse by market mechanism will surprise generations on how a nation on its way to prosperity by speculating on a piece of land eventually lost a fortune.

[Source - Bussiness Standard  - http://www.business-standard.com/article/economy-policy/is-real-estate-next-in-line-to-collapse-113082800322_1.html ]

First, define your requirements!

Size of a house required differs from one family to other.

 Requirements differ from one buyer to another depending on their lifestyle, family size, preference, usage etc. Buying a good apartment or flats from reputed dealer or developer offers you or its residents the convenience of lifestyle facilities like a club-house, swimming pool and gymnasium. 

Defining your preference or requirement helps to save time on unyielding and time consuming deals for inappropriate properties. It will also help your real estate agent to come up with the right property faster. You will have to focus on factors like financing, real estate service providers, paperwork involved and other legal and regulatory issues. 

Once your requirement is defined and you found right property, check the legal aspect of the property. Be sure that the developer has acquired approvals and No-Objection-Certificate (NOC) from the Municipal Corporation, Area Development Authorities, Electricity Boards, Water Supply & Sewage Boards and concerned authorities. Ensure that the developer has entered into proper development agreements and property has clear titles. 

A home buyer books the property when builder or developer launches new project or property under construction. For a project under construction, you should ask for the allotment letter and development agreement. The development agreement is linked between the builder and the landowner and contains details regarding the terms and conditions on which the landowner has permitted development of his property. In case of constructed properties, you should ensure that the seller has the title and possession of the property as well as the right to transfer the property.  

Understanding Government policy and other legalities such as Stamp duty and Service tax will be extremely handy in making an informed choice of property. The stamp duty is usually a percentage of the transaction value levied by the state government, on every registered sale. The final sale deed should be stamped and registered at the appropriate local area office. The service tax will be charged on those payments made on residential projects which are still under construction. Before buying property, it is advisable to appoint a solicitor to inspect the original title documents of the property being purchased.

Price no bar for premium apartments in Koramangala

 
South Bangalore is the way forward of taking the city to the world or at least in terms of premium living. Being crowded by the well travelled expat population, Koramangala has seen unprecedented rise in the premium living properties. Inevitably, with the escalation of demand in the segment, prices of such properties according to industry experts have doubled in the last two years.

Looking at the demand, many builders too are coming up with options for the HIG and HNI clients when it comes to luxurious living. On the other hand the projects that are already there are cashing in on the demand in the secondary market.

"In Q1 2013, the luxury residential market witnessed ample supply. More than 520 projects have been supplied in last one year in the category. These projects show a healthy absorption of around 60 percent," said Sumit Jain, co-founder and CEO, CommonFloor.com.

According to Q1 2013 Residential Real Estate Market Report Bangalore, by LJ Hooker, there has been a general oversupply of high-end inventory. In luxury and super luxury segments there is a potential oversupply of stock being put into the market. The report maps 470 residential projects in categories of apartments, villas, row houses, villaments, and plots.

These projects show a supply of approximately 1.3 lakh units across the city and its suburbs with 42 percent of unsold inventory as of end Q4, 2012. The average area of an apartment in the Bangalore market is quite large by national standards at 1,753 square feet, while that of row houses and villas were 2,831 and 3,545 square feet respectively.

"In last one year we have seen a lot of new entrants in lifestyle oriented high rises in the city including Rajajinagar, Maleshwaram, Ulsoor, Indiranagar and especially Koramangala, that over the years has become a hub. Well travelled population in Koramangala are now looking for all those features in their homes too," added Jain.

The under construction projects in the segment include Chourasia Signature and Indus Oasis priced at Rs 1.63crore and Rs 2.63crore. The existing ones that completed within 2 years are Sipani Grand, Raheja Vivera, Prestige St Johns Wood and Embassy Pristine. Their prices vary from Rs 1.4crore to Rs 3.49crore.

With shortage of space being an ever existing problem in the South Bangalore hub, demand exceeds supply in at Koramanagala. However there has been a 30 percent increase in new launches in the premium segment with high sales velocity. According to Jain, clients are not shying away to invest in properties that start at as high as Rs 9000 per square feet. These prices for the luxury residential nevertheless are lesser than what the present rates are at other metropolitans like Mumbai.

"Presence of old Bangalore charm, boulevard line ups, social infrastructure and a heterogeneous metropolitan crowd makes the place a niche neighbourhood. The value for money hence, being huge in these segments. In last two fiscals, the capital values of these projects have also gone up by 100 percent," added Jain.

According to data available with Cushman & Wakefield, average capital value as on Q2 of 2013 has been between Rs 6,000 to Rs 10,000 per sq ft whereas houses in premium segment have prices 10 -15 percent higher even if similar size.

"Premium projects could be ground level or top level penthouses with extended wooded decks, or be a villa or a simple spacious apartment with facilities like swimming pool, a thermal pool, private elevators, three sides open structure, multi-gym, community halls, state of the art security system, joggers track and various other features," said Kalpana Murthy, associate director, residential services, India, Cushman & Wakefield.

She also mentions that while buying a project that has an extended terrace or balcony and been played up with, one must take into consideration the legality of the construction. "Calculation of super built-up area is also an important factor buyers should look at while zeroing on a certain project because of the maintenance to be paid later. Cost of space could be anything like 50 percent of per square feet cost or 1/4 th or anything else and is the discretion of developer," adds Murthy.

The housing projects with penthouse and luxury apartments also try to accommodate a mini super market, spa, golf course view, lake view and creche facilities inside the compound itself. Though demand has been softening in the city according to builders due to the recent slowdown, Koramangala has remained unaffected by any adversities.

NRI investments too have gone up and the secondary market in the segment has also seen an upward trend with old houses being refurbished into luxury apartments where property owners have enjoyed a 15-18 percent ROI.

Source - Economic Times 

Bangalore a Favourite Market for Debuting International Brands

Thanks to lower rents and a more cosmopolitan crowd, Bangalore is fast outpacing Mumbai and New Delhi.

Bangalore seems to be the favourite testing ground for international brands debuting in India. Besides its cosmopolitan nature, the comparative cheap rentals to set up a store here make it the first choice for brands abroad.

Sample this: To set up a store in one of the leading malls in the city, the rentals vary anywhere between Rs190 and Rs400 per sq ft. The average rate for the same in Delhi and Mumbai is about Rs500 per sq ft and Rs650 per sq ft respectively.

“The market is as good as Delhi and Mumbai with lower rentals. Hence, it makes more sense to set up a store in Bangalore first and see how the response is. Mumbai and Delhi are important markets, but the rentals are on the higher side,” says a real estate consultant.

Not only cheap rentals, but also Bangalore is viewed as the ‘city of class’ by international brands. After Krispy Kreme’s debut earlier this year, Kids Kinderdreams, an Indo-German joint venture company to market German babycare products and toys in India, marked its entry by registering in Bangalore first.

“Bangalore is an important market for us. We never had two thoughts on whether we wanted to debut in Bangalore or not,” says S Sampath Kumar, founder & managing director, Kinderdreams.

Players who marked their India entry through Bangalore share the same thoughts. “It is better to test the water here than in bigger markets like Delhi and Mumbai, where rents are sky high.

Bangalore, in this respect, is perfect. The crowd in the city is more cosmopolitan when compared with Mumbai or Delhi and the market size is neither too small nor too big,” says founder and managing director of one of the companies which recently launched itself in the city.

“The percentage of people who are young, have high income and international exposure is higher in Bangalore when compared with other big cities in India. Hence, international brands prefer to mark their Indian entry through Bangalore,” says Harminder Sahni, founder and managing director, Wazir Advisors, a consulting firm.

The past two years have seen about eight to 10 international brands making Bangalore its first market in India. In fact, the city was also the first to witness the India entry of brands like KFC, Taco Bell, Tommy Hilfiger and GAS among others.

“The demography of the city matches expectations of an international brand. It is a good testing market wherein you can feel the pulse of country. People from different cities have their presence in the city,” says Audrey D’Souza, regional director, Indo German Chambers of Commerce. According to her, there are more than 150 German companies that have started their India journey through Bangalore.

[ Source - DNA]

Cell to monitor property prices on the cards

It will help assessment of property values more realistically.

The Karnataka government has decided to set up a separate cell to monitor property prices across the State.

It will also suggest revision of guidance value on a scientific basis is on cards with the Department of Stamps and Registration seeking the Government nod.

The cell with property valuers, town planners, engineers and statistical officers will be created shortly, and it will monitor price variations in the market.

Currently,  the guidance value was being fixed unscientifically and always remained on the lower side of the market value. “It is the clinching factor for the Government to raise revenue and should not be based on whims and fancies” an official said.

Currently, the guidance value is revised after seeking reports from sub-registrars. A central valuation committee (CVC) headed by the IGR and comprising members from the public, studies the reports, announces the values and calls for objections before the final notification is issued.

The proposed cell will assist the sub-registrar and will give its suggestions to the CVC, following which the guidance value will be revised. Members of the cell will also scout realty and property exhibition to understand the market, the official said.

The cell will enable the department to revise the guidance value annually as mandated by the Karnataka Stamps Act.

Incidentally, guidance value of the properties in Bangalore was revised after more than four years.

The proposal will be submitted to the Finance Department for approval as it involves creation of new posts.

Authority plans to develop a few layouts on the outskirts of Mysore

On account of lack space in the main city, the Mysore Urban Development Authority (MUDA) has proposed new layouts on the periphery of the Mysore city. 

The proposed new layouts of MUDA include the extension of Swarna Jayanti Nagar,  Lalitadri Nagar 2nd stage, Nalwudi Krishnaraja Wadiyar Nagar, Shanthaveri Gopalagowda Nagar 2nd Stage, Lalitadrinagar north phase and Balahalli Layout.

The MUDA’s plans were enunciated in its budget for 2013-14 unveiled last week and the authority has already submitted plans for approval from the government.

The final administrative approval for MUDA’s proposed plans is expected in due course. In anticipation of the approval, the authority has earmarked Rs. 37.67 crore for the development of these layouts.

Swarna Jayanti Nagar, Lalitadrinagar and Shanthaveri Gopalagowda Nagar have been locked into the city landscape since the last few years and are being developed by the MUDA, the inclusion of Balahalli which is about 17 km from the city.

The new localities - including the Rabindranath Tagore Nagar which is mired in a legal dispute - are adjoining the Outer Ring Road, where a slew of private property developers have new apartment projects in the pipeline.

Many of these developments are concentrated close to ORR and along the Mysore–Hunsur Road, Mysore–H.D. Kote Road, Mysore–Bannur Road, Mysore–T. Narsipur Road.

CREDAI’s argument

Though the Confederation of Real Estate Developers Association of India (CREDAI), Mysore chapter, has sought designated high-rise areas close to the city to promote vertical growth so as to check the city’s horizontal sprawl, the authorities have ignored it.

Given the current backlog of nearly 1.47 lakh site applications before the MUDA, the CREDAI has argued that promoting vertical growth could be an ideal solution as customised plots for nearly 1.5 lakh people cannot be met by any government agency.

Stakeholders such as CREDAI has said that real estate activity in Mysore may gather fresh steam in the days ahead due to MUDA’s plans of new residential layouts for future. But it also underlines the need for a fresh look at the present policy of freezing or limiting vertical growth in the city.

Track-doubling

The demand for housing is expected to increase with the improvement in city’s connectivity with Bangalore and the consequent growth of industry due to the imminent completion of track-doubling work between Mysore and Bangalore.

This will expected to usher in a demographic change in Mysore with more number of people commuting between the two cities, thus driving the demand for housing. But, in the absence of a clear-cut policy, Mysore’s outer boundaries, as indicated by the inclusion of Balahalli for development, will continue to stretch, gobbling up large swathes of agricultural land in the process.

Ways to check delays in a construction project

There are about 70% projects which were delayed from the actual date of completion in the year 2011

A construction project when started is set with an original schedule and a completion date, but most of the time it ends up being delayed.

There are various reasons because of which a construction project is delayed. Perhaps most of the construction delays can be prevented and planned properly for the set date.

There are various other factors which are inevitable and lead to a construction delay. One of the important aspects before a construction starts is to maintain the construction schedule in order to stay on budget and complete it on time.

However the project delays in real estate have become very common. There are about 70% projects which were delayed from the actual date of completion in the year 2011. Most of the projects are running behind the schedule by many months. In such instances it becomes very complicated for the home buyers to check any potential delay in his/her project.

Project delays have become a nightmare to most of the home buyers as they will have to wait for years. Most of the builders have an array of clauses for the delay. Also most of them pay their home loan EMI even without getting their home possession and other issues like building plans being changed midway through the construction, or common facilities falling short of expectations arise.

Major causes:  No proper planning

In most of the cases, the construction projects are delayed due to the improper planning of the project. It is very important that a builder should plan beforehand about the project he is going to launch.

Both the customer and the contractor will be responsible for a proper planning. It is very important that the contractor should schedule a sub-contractor for a project on time and if delayed, the schedule will be delayed too. Also in most of the cases items of the contract are inaccurate and are omitted unintentionally.

This will apparently lead to the delay of the supplies on time and the contractor will have to wait until he gets hold of all the supplies. Another reason for the delay is due to the customer’s unstable decision making. Since there will be various options, the customers will be confused between the choices which will again lead to a delay. Also the back-orders and failure to place orders on time will cause a delay in the project and schedule.

Shortage of workers

Shortage of workers is a major problem. The contractor or the subcontractor is short of workers which eventually lead to a delay. There are various problems which a worker and a contractor face while working on a project. Also due to the lack of workers, there will be very few workers who will be employed on the same project which also leads to a delay.

Most workers also do not show up to their work in case they find another preferable job. Also the subcontractor might not be regular to his job causing a delay in the job.

Waiting approvals

There are various approvals before the start of any construction which should be approved by the concerned people. In most cases, the approvals are ignored and delayed. Most of the contractors fail to obtain these necessary documents.

Also in most cases the contractors have to wait for the city inspectors to perform routine inspections before starting the work on the project. In case there are minor errors through the inspection, the contractor will have to wait till they are set right.

External factors

As mentioned earlier, there are various external factors responsible for the project delay. This involves poor weather conditions like rains, tremors, landslides and so on. Also scarcity of water, sewer problem and other factors also lead to a project delay.

How to avoid delays

The authentication: It is very important that a property buyer should check the relevant documents and the authentication of the project from the builder. The buyer can visit the developer’s office to check the authenticity.

Documents like the land ownership detail, land being approved for residential development, project clearance and layout approval, environmental clearance and others should be checked thoroughly.

The most important documents are the sanctioned plans. If the sanction plan is tested while signing the deal, the buyer can confidently go ahead with the builder. All of these documents should be scrutinized well before choosing a developer and signing a deal. Also the property buyer can file an application to the PRO of the authority in order to verify the land title, approved building plan and the completion certificate of the property. All of these procedures should be carried out in the earlier stages.

Online group

It is always better that the home buyers should be a part of an online group. In case if the regulator is absent being a part of the online group will safeguard the interest of the home buyers. There are various online groups like Yahoo, Google and many more wherein one can either state a group or join an existing one. Doing this will help the home buyer to share his/her concern among members and get the right deals.

One of the most important steps to minimize the risks attached with a delayed project is to go in for a construction linked payment plan. It is advisable for the home buyer that he/she should opt for a CLP at the time of signing a document.

Monsoon is good season for investment in real estate

Developers offer discounts during monsoon due to slump in demand. Bankers too offer attractive loans to meet their target on the housing front. Problems like leakage, waterlogging will be known only during monsoon.

In an agriculture-dominated economy like India, the realty sector is generally witness less transactions on account of several factors. After spending money during summer, the middle class and upper class look down for investing heavy amount during the monsoon. Moreover Ashada – inauspicious days – discourage families from buying properties and new goods.

The monsoon is normally a dull period for the real estate industry and house hunting during the rains could bag you a good deal. In Monsoon, Sale or booking of flat falls and real estate builders in India could be facing a liquidity crunch too, so the developers readily gives out discounts. The real estate builders or developers have no option but to give discounts to sell. Banks and financial institutes come up with monsoon special offers on home loans.

During the rainy season, developers usually find it difficult to push sales and many people postpone buying a house during these months. Developers finally start offering discounts on properties. The quantum of discount varies for different cities, depending on how badly it is affected by the monsoon.  Most buyers prefer to keep away from investments during monsoon because of religious belief in ‘Ashada’. There is lesser number of site visits by prospective buyers and demand for property buying also goes down. The developers have no option but to give discounts.

Get Best Deal

But buyers can turn this monsoon season as an opportunity to get flats or sites at lesser prices. To get a best deal for your real estate investment in Monsoon, bargain for lower rates with your builder or developer.

Locality

 Buying property in monsoon can help you to find right property and good location. It will give you an idea about problems regarding water logging and traffic or time consuming to commute in that locality during monsoon. Such a search becomes especially important if you have moved to a new city and are not familiar with the locality and the geographical problems.

Monsoon discount: The builder wants to get rid of existing project so he can start a new project in the upcoming festival season. They are willing to offer lower rates to serious buyers. The quantum of discount in Mumbai and Kolkata is likely to be higher than other cities.

 Due to hike in Home Loan, banks and financial institutes are strict in lending developers and the onset of monsoon, Real estate business in the city has taken a dip. Builders and developers are willing to offer special rate for serious buyers.

Monsoon Home Loan: Though not many banks are likely to offer formal discount offers this year because of the recent rate hikes by the RBI, Banks and Financial institutes are willing to negotiate the rates and charges depending on your credit profile.

Good for Building Inspection: Most property buyers opt for buying a property in festival season or in summer. You can check for building structure and signs of dampness or leakage before signing on the dotted line.

So, if you looking for a property,  see it during the monsoon and it is good time to buy. The monsoon is normally a dull period for the real estate industry. More realty companies will offer discounts as sales are not taking place and banks are willing to negotiate the rates and charges with property buyers. The developers will not publish the discounts that they are offering but you can bargain for lower rates and get best deal. During monsoon, you can check for signs of dampness or leakage before signing on the dotted line.

Guidelines for renting a house

A home is not only place for dwelling but also a source of income.

Many people invest in property as it provides good income. Renting a home is one of the successful real estate businesses. In City like Bangalore, several people construct houses for earning rent. A landlord would earn better income if he or she built a house suitable for giving rent. If you are a landlord and wants to rent your home, here are some guidelines to choose tenant for your property.

Screen your tenant: Let your property after screening tenant and never rent your property to person having criminal background. For screening your tenant, ask for proof of identity such as their copy driving license, letter from employer, credit history etc. You can ask any references or previous landlord’s contact detail.

Rental agreement: Make a rental agreement in written where you and tenant need to sign them. Rental agreement must contains all details such as amount received as deposit, monthly rental, period of rental agreement and condition or property or appliance such as detail of number of fan, lighting and fixtures and other appliances provided. Copy of rental agreement should be handover to tenant. Allow tenant privacy: Landlord must not interfere in tenant’s matters that generally annoy them. Allow them to enjoy their own privacy in rented property and let your tenant notice when you access to the property.

Realtor or agent: If you are hiring a realtor or agent, specify the terms and condition, type of tenant you are looking for like renting property as PG, only for family, for Men or women etc. This helps your agent to search prospective tenant for your property.

Fair Rent: Rent for your property should be fair rate and current market rate. To fix rent for your property, make research in market and discuss with realtors in your neighbourhood. Fair and cheap rate attracts most of tenant and help you to get good income from your property.

Repair and Maintenance: The building need to be repaired and maintained at regular interval. Offer your tenant a decent living by repairing and maintaining your property in prompt time. Prompt repair and maintenance help to build good and friendly relation with your tenant.

Secured Deposit: Landlord accepts deposits for ensuring reimburse on loss or damage caused by tenant. Landlord should return the security deposit and give in written details of deduction if any. It will be simple if you setup a fair system of collecting, and returning the deposits.

Cleanliness: Provide proper waste management for your house and its surrounding. Ask your tenant to dispose waste or method you adopt for handling wastes to garbage collectors. Keep your property and its surrounding clean.

Insure your property: Insure your property and ensure you get best from insuring your property against fire, theft, and damage made by tenant or from other natural calamities.

Right and Duties: Know your rights and duties as a landlord and explain the rights and duties of tenant. Remember to settle disputes without lawyers and lawsuits. If required consider neutral third party for resolving the disputes.

Insuring New Apartments

The newly bought apartments should always be encouraged to be insured for the future uses and also to ensure safe living.

One of the home insurance provider companies reported saying that the insurance over the apartment would help any owner to get safe guarded from natural calamities like flood and earthquakes. These insurance policies are such that if at all the owner owns the apartment and after any disaster they are just paved way to do the re construction of the whole building wherein the insurance amount paid by the customers will be funded from it. Neelesh Garg, executive director, ICICI Lombard General Insurance reported saying that the insurance is done only with the consideration of the built-up-area and the construction costs.

The insurance for the apartment needs to be done individually by the owners irrespective of the placement of the flat in the apartment.

Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance reported saying that any insurance rejection is possible wherein the case of any apartment carrying down the commercial activity in it. However until and unless the house owner breaches the insurance agreement the insurance will serve the purpose completely.

If in case of the apartment is ahead taking care of the re-construction of the flat, in these kind of situations the apartment will hold the responsibility for the same but not the insurance companies.

Tips for buying apartment

The demand for property is rising day-by-day. Buying an apartment from reputed dealer or developer offers you or its residents the convenience of lifestyle facilities like a clubhouse, swimming pool, gymnasium etc. Buying property is the decision of a lifetime and you need to be equipped with the right know how. It’s important to learn of the origin of the property, continuous flow of the title and present status of the property before buying the property. Buying a property for self occupation or investment is perhaps one of the biggest investments made by a person during his lifetime. A landmark decision like purchasing property need a well thought out.

Tips for Buying an Apartment : A lot of care is needed while buying new flat to avoid legal hassles. If proper planning is not done prior to property buying, your property can turn into a nightmare. A well thought out helps you to avoid future problems and buying an apartment that meets your requirement. Following tips helps you to buy an apartment or property.

Define your requirement : This is first and important thing you need to consider for buying an apartment or property. Requirement of home buyers differ from one buyer to another depending on their lifestyle, family size, preference, usage etc. Defining your preference or requirement helps to save time on unyielding and time consuming deals for inappropriate properties. It will also help your real estate agent to come up with the right property faster. You will have to focus on factors like financing, real estate service providers, paperwork involved and other legal and regulatory issues.

Legal aspects of property : Once your requirement is defined and you found right property, check the legal aspect of the property. Be sure that the developer has acquired approvals and No-Objection-Certificate (NOC) from the Municipal Corporation, Area Development Authorities, Electricity Boards, Water Supply & Sewage Boards and concerned authorities. Ensure that the developer has entered into proper development agreements and property has clear titles. Every bank conducts a legal check on your documents to validate their authenticity before sanctioning Home Loan. As a buyer, it gives you confidence that your property has been inspected by experts and your property is legally clear and technically sound.

Property under construction : A home buyer books the property when builder or developer launches new project or property under construction. For a project under construction, you should ask for the allotment letter and development agreement. The development agreement is linked between the builder and the landowner and contains details regarding the terms and conditions on which the landowner has permitted development of his property. In case of constructed properties, you should ensure that the seller has the title and possession of the property as well as the right to transfer the property. Check whether dues such as property tax, society, water and electricity bills, etc. have been paid in full. Make sure to take possession of all relevant documents.

Duties and Taxes : Understanding Government policy and other legalities Stamp duty, Service tax etc will be extremely handy in making an informed choice of property. The stamp duty is usually a percentage of the transaction value levied by the state government, on every registered sale. The final sale deed should be stamped and registered at the appropriate local area office. The service tax will be charged on those payments made on residential projects which are still under construction.

A lot of care is needed from the beginning right from site visits till the registration of flat. Check the distance from facilities like schools, work place, colleges, transport facilities, markets, hospitals, etc. Check on amenities provided in the building and if any additional cost is involved for the use of these amenities. If the building is under construction, confirm tentative time for completion and enforce suitable penalty in case of delay. Visit the developer’s earlier projects to check out the quality of the construction, landscaping, and other amenities.

Before buying property, it is advisable to appoint a solicitor to inspect the original title documents of the property being purchased. It is advisable not to secure any property in a hurry and without subjecting all the property documents to rigorous legal scrutiny.

Find out any minor claims, court litigations, government acquisition proceeding, zonal regulations and other subsisting charges on the property. You should approach  a financial institution in order to check if they would provide a loan for that particular property. Planning will help you be out of the panic mode and keeps you on your toes for unplanned emergencies. Do your homework well before buying apartment or signing any agreement to buy the property.

Serviced apartments catching up

 
With no or limited entry barriers, several individuals, with some cash on hand, too joined the serviced apartment bandwagon, which was once considered to be a poorer cousin of large hotels.

The concept of serviced apartments, where guest stay for a longer period against regular hotels, has been around in India for close to a decade. With the ushering in of economic reforms resulting in large scale FDI into manufacturing sector in the mid-to-late 90s, as well as the subsequent IT boom spawned this concept as a new age business opportunity.

With no or limited entry barriers, several individuals, with some cash on hand, too joined the serviced apartment bandwagon, which was once considered to be a poorer cousin of large hotels. Taking a few apartments on lease and fitting and furnishing them was all one needed to foray into this emerging business segment.

As the flow of FDI increased and a wider base of MNCs entered India, they started demanding still better facilities and amenities on par with star-rated hotels. While smaller players found it difficult to cope with increased demands, this also led to the entry of global serviced apartment chains that normally manage such facilities.

“In India, the serviced residence industry is still in its nascent stages. There is a limited supply of international standard serviced residences. However, demand for serviced residences is expected to grow as FDI into India is increasing and the IT, auto and manufacturing industries continue to grow,” said Ajit Kaushik, area general manager – India, Ascott International Management.

The company claims to have pioneered the international-class serviced residence concept more than 28 years ago when it opened its first property in Singapore in 1984. Today, it has more than 30,000 apartment units across over 70 cities in 21 countries. In India, it has already opened its two properties with a total of 283 units in – Somerset Greenways Chennai (187 units) and Citadines Richmond Bangalore (96 units). Ascott has five other serviced residences with more than 1,100 apartment units under development in the country.

“Often, the executive traffic of many MNC and domestic companies is too erratic to justify a stand-alone company guesthouse. Also, the needs of such business occupants are very different from those of the usual hotel occupants. Service apartments, which invariably offer a suitable four-star service and facilitation level, are the natural choice,” says Sudeep Jain, executive vice-president – Jones Lang Lasalle Hotels (India).

According to him, serviced apartments offer business travellers fully-equipped kitchens with self-catering facilities and various bedroom choices, and are far more cost-effective than hotels in the vicinity of workplace hubs “Today, it works very well in the metros and larger tier-II cities, where starred hotels are notoriously overpriced and are the emerging trend in the corporate hospitality sector,” says Jain.

But T Raghunandana, managing director of Chennai-based Updater Services (UDS), the country’s one of the largest fully integrated facility management player, has a different view. “The concept of serviced apartments, as it existed in the past, has died because the players changed it to the hotel model. With large hotels themselves offering hefty discounts on their room rates, the scenario became much more hostile to independent players,” he pointed out.

According to him, over three to four years, the market was very good and the demand too was at its peak. “With hardly any entry barriers, anyone with about Rs 25 lakh could enter the serviced apartment business by taking a few apartments on lease and furnishing them. While this led to a glut in the market, the subsequent global recession only added to the trouble,” Raghunandana says.

Earlier, in a city like Chennai, the IT/ITeS companies entered into long term deals with service providers, who had to “make up the place as per the company’s specifications”. Sub­sequently, the companies only insisted on the specifications, but did not guarantee occupation and adopted “pay when used” model. “Already, the large companies had their own premises. And serviced apartment operators had to depend only on smaller companies. With them adopting the ‘pay when used’ model, there was yawning gap in the revenue flow and soon several independent operators either folded or moved out of business,” he said.

In the case of Kolkata, it is a different story, where the concept of serviced apartments started picking up three to four years ago and a number of leading realty players decided to join the bandwagon. Buoyant over the prospects of Rajarhat, the new happening destination in the eastern fringes of Kolkata, quite close to the international airport, many developers came up with service apartment projects in and around that area. And more so with a large number hotels, banks, IT offices, convention centres fast beginning to come up there.

Sureka Group decided to put up a full-scale service apartment project at Rajarhat. Bengal Peerless Housing Development Company decided to keep part of their upcoming projects in the new township reserved, which would eventually be converted into service apartments, mostly for the employees of the IT companies. Neither Rajarhat came up the way it had originally been envisaged, nor was the response to these service apartments so encouraging, that developers will replicate the model.

“With the passage of time one needs to innovate and move up on the value chain. Service apartments se­ems to be passé, studio apartment is in. Studio apartment is more than a service apartment and you can actually own it,” says Sanjay Jain, joint managing director, Siddha Group, that is developing “country’s first ‘New York-style one-room multi-facility studio apartments, called Xanadu”.

While the first movers in the segment may not have come with their second such project, Siddha Group is still bullish. “We aspire to take this novel concept beyond Bengal to the rest of India” Jain, said. Competition and a slowing economy seem to mock at serviced apartment providers in Pune too. “Just like the real estate business, service apartment business is cyclical in nature with the singular advantage of it being used for long stay between two weeks to six months in the city,” Hemant Naiknavare, director at Pune-based Naiknavare Developers. The company runs “Seasons”, a 50-service apartment property at posh Aundh area, close to bustling Hinjewadi IT Park and the Express Highway to Mumbai.

But the developer has put on sale its 27 one-two BHK service apartments and suites in Koregoan Park area, close to the airport as well as the railway station, due to lack of business. “With high competition specific to this locality, there’s no decent business and hence, we have decided to disband service apartments and sell them,” Naiknavare said.

Another builder Mon Vert Associates, who is completing construction of its 87 one BHK units to be launched as service apartments in December this year, said builders in the last two years were cautious to the concept of service apartments due to the sluggish market. “It all depends on location in the city and the brand operator, who will manage the property,” Jayant Kaneria, managing director at Mon Vert Associates. Since his property would be managed and operated by Starlit, a national brand, the company is not worried about lack of business.

On the other, the focus in Hyderabad is on offering high-end service apartments. For instance, luxury hotel, Park Hyatt, which started operations recently in Hyderabad, has 42 service apartments. According to Olesya Ostapenko Majid, director (rooms), the service apartment segment in Hyderabad has a lot of potential. What the city has seen so far is the initial concept. In days to come, the focus will be on offerings.

Hyatt has service apartments in three sizes 1BHK, 2BHK and 3BHK to suit guests coming solo or with families, with monthly rentals ranging from Rs 2,50,000 to Rs 4,50,000. The guests coming here have a varying stay at the service apartments- from one month to sometimes extending to a year, she said, adding that guests with longer stay will be able to get better prices.

They could prefer to use the restaurants, spa and other facilities of the hotel. They can also request a personal chef to suit their tastes even as they can buy the required groceries, which will be priced in the same way like in a super market, she said.

Before commissioning the service apartments at Hyatt in Hyderabad, her team conducted a survey to assess the market situation. “The prevalent understanding of service apartment was limited to provision of breakfast and housekeeping. What we offer is all five-star hotel standards,” she said adding that Hyatt offers a private parking to the guests.

According to Pochendar S, CEO, Lanco Hills, the mixed development project coming up in over 100 acre in Hyderabad, too has drawn up plans for 120 luxury service apartments in the project. This will be adjacent to the hotel coming up in the premises. He said the company has been studying the market conditions and for now is going slow with the serviced apartment projects. “The service apartments we are planning will be for the niche segment. They will spell luxury,” he said adding that service apartment segment has seen good growth in Hyderabad mainly due to the IT sector. However, there needs a further development of the IT segment that will fuel the demand for luxury serviced apartments.

On the whole, the serviced apartment concept, which is just about a decade old in the country, is still evolving. The potential is there. But, the players may have to tread a long path before they can have a sense of accomplishment.