Factors defining the Real Estate Industry in 2015

The government`s reform focused agenda for reinvigorating the real estate sector will possibly give fresh impetus to the real estate industry in 2015, with inflation gradually going down and borrowing rates expected to go down,  will encourage potential buyers planning to buy a house to finally go ahead and avail home loans. 

The market saw a revamp and developers are now by and large focusing on affordable housing, this will go a long way though not completely in bridging the existing wide gap between demand and supply of affordable homes, also with property rates staying stable and good deals being offered by developers to clear their inventory will encourage buyers. With the economic activity picking up and Corporate India making it clear there will be hiring of new talent in various sectors to take care of the growing business needs which means that there will be rise in jobs and income which is favorable for both residential and commercial real estate projects. 

In 2015 developers will be focusing more on right-sizing and right-pricing of their projects, better designed and more efficient homes will define the real estate industry.  Affordable housing will be the key word in 2015. While the government at the center has spoken very clearly about their agenda to push for affordable housing it is the state governments that will have to carry out these initiatives. Affordability is a term that has different meaning in different markets in India. 

Each city has its own benchmark for affordability; developers in each city are aware of these facts and must focus on providing affordable housing in their cities. Affordable housing is not a difficult thing to deliver the challenge for the developer however lies in co-coordinating this format in a way that their existing brand image is not affected.  

In commercial real estate over the last few until 2014 the supply was greater than demand with the developer expecting a turnaround in economic activity, because of the slowdown of the economy the office real estate prices failed to recover up to late 2014 however we did see the start of a gradual turnaround. This can be associated to the fact that real estate developers began to reduce the supply which was high earlier to a normal level of demand which helped them to bring down the vacancy rates. In 2015 the probable demand should be around 26 to 30 million sq ft improving slightly from the level witnessed in 2014 however with India`s GDP set to strengthen further a positive growth in commercial real estate cannot be ruled out, in fact one positive development seen soon after general elections in 2014 are in the office market leases, this moderate to healthy leasing activity should continue in 2015 as well. 

5 Advantages of taking a real estate loan than paying cash

For people who invest in real estate with the intention of occupying the property for at least a few years, arranging the finances for the same is a primary concern. With the easy availability of property loans in the modern times, it is not a really good choice for such people to use up their savings for paying the price of a property of their choice. As it is, the sky rocketing prices of property around the globe are making it increasingly difficult for people to purchase real estate of their choice, with just their limited savings. In such a scenario, taking a bank loan for property investment is definitely the best choice.

In fact, taking up a bank loan rather than using cash down payments for investing in real estate sector actually proves advantageous in the following five ways.

1) Retain Liquid Funds: One of the major advantages of taking a loan for buying property is that it enables people to retain their liquid funds, which might have taken them years to accumulate. This ensures that they do not get tied up in a financial crisis, when faced with any emergency situation. Most financial institutions offer great flexibility in setting EMI’s as per the repayment capacity of individual clients, which further ensures that they not need to use their savings for any aspect of property investment.

2) Establish a Credit History: Given the fact that most property loans are spread over an extensive time period, they are great means of setting up credit history especially for people who are taking up a loan for the first time. Individuals with good credit history generally have to fulfill minimal formalities and verification processes in case they need to take out any other loan. In fact, most financial institutions give preference to clients with a good credit score based on property loans over those who might have gained a similar score through other loans.

3) Provide A Sense Of Security: With the bank backing up individuals, they tend to be more confident about investing in a bigger property as opposed to what they might have opted for based on their personal savings. This not only provides individuals with a sense of security but also ensures that the get better return on investment. With financial institutions arranging the money for property investment, individuals can choose to buy a house that might earlier have seemed well beyond their reach. Most importantly it eliminates the need of individuals to plan about buying a bigger space to suit their changing needs and requirements of their expanding family.

4) Offer Tax Benefits: Individuals taking bank loan to pay for property investment are eligible to claim tax benefits in almost all countries across the globe. The money thus saved can be used for paying the EMI’s or can be invested in other profitable options for enhanced financial security. On the contrary, people buying properties with personal cash down payments not only have to pay additional tax but also need to prove that the money has been earned through legitimate means.

5) Add Credibility To Property: Whenever an individual applies for a property loan, the financial institution in question ensures to get a through verification done about the authenticity of the property. This can prove especially important in a country like India, where the validation of a property by a renowned bank or financial institution enhances its sale value by a significant margin. In addition, the property gains additional credibility in terms of confirmation of property title and proper documentation which is critical for ensuring its sale in a easy and hassle free manner in case of an emergency.