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THE TIMES OF INDIA BENGALURU SATURDAY OCTOBER 31, 2015

INDUSTRY

Property is a high-yielding long-term investment

SPEAK

roperty is considered a high value asset. To own a

house is a significant benchmark for most Indians and
has always been an integral part of a homebuyer's
portfolio. It is not just because of the high returns it yields
but also the sense of ownership it associates the homebuyer with.
Investing in a property for a long term has lesser risk
when compared to other investment options like stocks. It
is more about securing inventory at present which will yield
better returns later. One should consider a single investment to begin with that will grow into long-term wealth in
the future. With Real Estate Investment Trusts (REITs) in
place, investors have the pass-through taxation option. Here,
investors pay the tax and not the fund, and this has made investing more attractive.
One invests on the basis of 'buy low and sell high'. With the recent repo rate cut, the
market allows one to purchase a home at a reasonable value and lower interest rate. However, it is important to choose the right real estate developer with a good track record,
credibility and high degree of transparency.
Land can provide the highest capital appreciation as long as the investor has chosen
the proper location and plot size, and most importantly, can afford to wait for a longer period. Also, it is suggested that if you are the sole owner of the property, you should ideally hold on to it for a long term. For the rentals and value of the building to appreciate, one
should undertake the necessary maintenance.
Tej Singh
AVP Sales and Marketing
Shriram Properties

High demand in expanding market

assures high returns

f you want to make an investment that's grounded in

the form of a solid, tangible
asset, real estate is the best option. With the core of the investment, land, being an evershrinking commodity, its value
goes up as demand increases - as
it's bound to, in a country with
a constantly-rising population
like India. Add to that a city like
Bengaluru, where there's an influx of migrant population
drawn by the allure of high paying IT jobs and you have
the perfect recipe for an investment that rises steadily over
the long term. With IT parks expanding and new IT zones
being created, demand for quality housing is also created
simultaneously, having the effect of expanding Bengaluru
into new pockets of development.
Socio-economic conditions create demand backed by
huge disposable incomes. Buying a home is the logical investment avenue for this disposable income, with trends
showing that not only are these affluent families buying
upmarket homes and villas to live in, but they are also buying second homes to rent out as a source of regular income.
The market for these rented homes and villas is huge and
it includes the working crowd which needs a home close
to office and the sizeable expat population which needs luxurious accommodation on a time-based basis, having been
transferred to Bengaluru on work stints.
With bank rates coming down, bundled with the tax benefits one reaps, it's an even more favourable climate for investors, bringing high-end themed and exotic Spanish, English, Balinese villas within reach. And with the high demand always present, resale is easy and very profitable
due to the appreciation factor.
Investing with a reputed builder takes care of the allimportant paperwork, with clear titles and all approvals
in place, adding peace of mind to the process.

Property investments for risk-free, high returns

eal estate is certainly a better investment as compared to many

other options, especially when it has to be a long-term investment. Historically, buyers investing in the pre-launch or commencement stage of any project have witnessed their investments
double in value, by the time of the project's completion. The pace at
which a property appreciates depends as much on the micro factors
such as its location and its connectivity to important public conveniences, as also the macro factors such as development in the region
and city.
Investing in property is also a very useful risk management option
for a balanced investment portfolio, protecting against the unpredictable drop in the value of investments in other financial products.
Property is also a tangible asset, unlike many other investments. It can be leveraged for a shortterm funding requirement.
Investments in stocks are prone to volatility, prevalent in the stock markets, experiencing
steep drops many a time. But it is not the same with property investments which are invariably quite stable and yield a steady, and at times, steep returns.
Pratap Kunda
Managing Director
Golden Gate Properties Limited

Girish Puravankara
Chairman and Managing Director
LGCL

Track growth zones for high

returns on investments

any view investing

as a major project
that needs elaborate planning. Many do not
invest much, thinking they
have not done enough
groundwork. They typically have committed the common investing mistakes like
investing in gold, bank fixed
deposits and insurance policies for forced tax-saving.
Deploying your money is
more important than choosing the perfect investment.
You cannot go wrong investing in real estate from a reputed and credible developer.
Over 10 years, one asset class that has created enormous wealth for investors, irrespective of timing of
the investment, is real estate. Investments in real estate have out-performed gold, stocks, bank deposits and
bonds. It provides leverage to an investor considering
the attractive loan rates offered by banks and the tax
benefits.
Investments over longer durations like 20 years have
created enormous wealth for investors. For example,
on Sarjapur Road a villa was Rs 30 lakhs in 1999, and
today it is Rs 8 crores. This effectively means over 20
percent annualised returns - more than twice the returns from a bank deposit or gold.
One needs to identify a high growth zone in the city.
Look at the city's Master Plan. Budigere Cross (Old
Madras Road zone) where connectivity from Whitefield to Airport, road widening and an upcoming hardware tech park are going to change the dynamics is
one such zone. Whitefield, a prime hub where most of
the IT jobs currently exist, but the real estate is considerably under-priced, is another. Devanahalli is another high growth zone with the airport being the key
growth driver.
Identifying the right developer is another important
step. A developer with a reputed track record of delivering projects should be the first point in the checklist.
Urbanisation will drive growth in key cities. Bengaluru is generating the maximum jobs in the country.
With this momentum, you can expect real estate to grow
three-fold in the next 10 years.
Om Ahuja
Chief Executive Officer Residential
Brigade Enterprises Limited

Start-ups, e-commerce push

demand for property

High returns draw overseas

investors to property

eal estate is a booming industry in

India. It has huge demand across segments from housing to commercial,
hospitality, manufacturing, retail etc. Property is a wise investment with assured returns, especially if it is with an eye on ROI
over a longer period. While buying a home,
location and builder's reputation can add
further value, with an assured return of
10-20 percent year-on-year in a city like
Bengaluru.
Not only is there demand for property
from a growing population of younger people who have now started owning homes at an early age, there are also people who wish to
own more than one home to generate extra income through rentals
or just as an investment for the long term. The burgeoning population in cities that has boosted the demand for social infrastructure
has in turn increased the demand for commercial and retail spaces.
The attractive returns from a real estate investment are also attracting overseas investors.
There are clear benefits of investing in real estate. In a situation
where an economic boom is at its end, real estate would still yield
good returns. Real estate provides steadier capital appreciation in
the long term. There is no other investment which can beat inflation as consistently as real estate.
Another benefit worth considering is the substantial saving on
income tax - interest paid against home loan is eligible for tax deduction.
Bijay Agarwal
Managing Director
Salarpuria Sattva Group

Property is a potential
investment option

ne of the key reasons for the steady

demand for office space is the high
growth in the e-commerce industry
with firms taking up new and additional office spaces. NCR and Bengaluru have
emerged as e-commerce hubs, and this has
led to the e-commerce companies emerging
as the second-largest occupiers of office space
in these regions with an estimated share of
around 17 percent, followed by banking and
financial services at 16 percent.
The ITeS sector remained the largest occupier of office space across the seven leading cities. Of the approximately 40 million sqft of office space available overall, Bengaluru
alone has absorbed close to 11 million sqft in the calendar year 2015.
Growth in the absorption of commercial space and the consequent
job creation has led to demand in the residential sector. The products
that cater to these segments, i.e. the middle and premium segments
- an average pricing of Rs 5,500-6,000 per sqft - has picked up, and we
could see an improvement in this segment for residential space absorption.
Bengaluru provides an excellent ecosystem for start-ups in terms
of talent, venture and HNI funding, and opportunities. Hence, it is a
preferred destination of a majority of the global IT/ITeS, bio-tech,
research and e-commerce companies to set up their facilities and
businesses.
Also, the recent regulation on the Real Estate Investment Trust
(REIT) listing by the government has led a renewed interest by large
overseas funds, HNIs and NRIs in the commercial space.
Kishore Jain
Managing Director
Jain Heights and Structures Pvt Ltd

ong-term gains from

a property investment
is a common strategy
and probably the most secured one, in that, you buy
a property, hold onto it for
a considerable period and
reap the benefits on capital
growth since the value of
the property increases in
line with market prices. For
sure, a property investment
is the best option and to build long-term wealth, you
must buy and hold real estate.
The returns are high when you enter at the prelaunch offer. Investing in property is a good add-on to
a traditional stock and bond portfolio because of the
appreciation. Your equity investments can get you better returns than the property market, and yes, it is
also more liquid. But investors still prefer parking
their funds in property for the simple reason that the
risk associated is relatively lower and there is a definite appreciation over a period of time.
Also, the price band plays a major role in your investment options. With the mid-range between Rs 6080 lakhs, property has a much better appreciation and
hence most prefer to invest in this segment.
We have also seen investors, after taking possession,
prefer to earn rental income and over a period of time
wait for a favourable market and exit. One needs to
draw up a broad asset allocation plan and include property as a long-term option.
Nitin Agarwal
Managing Director
SNN Builders

A FAVOURED DESTINATION
FOR NRI INVESTMENTS
The growth potential of Bengaluru makes it a sought-after destination
for NRIs and entrepreneurs based in the US
Rajeev Rajpal

ndian real estate is one

of the most globally
recognised sectors. It
ranks third among the 14
major sectors in terms of
direct and indirect investments. This sector is expected to see growth in investments, by non-resident
Indians (NRIs) in the near
future. A recent survey
showed a 35 percent growth
in inquiries from NRIs in
the last year alone. Bengaluru is expected to be one
of the most favoured destinations for the segment.
The country's GDP
growth is projected at 5.50
percent this year, leading to
better job and income
prospects. The govern-

ment's initiatives for affordable housing, relaxation of

norms for foreign direct investments (FDI), and additional infrastructure financing will result in higher foreign cash flows, creating additional liquidity. The
real estate industry should
dramatically benefit in the
years to come from all these
initiatives.
A sluggish US economy
and favourable exchange
rate, propensity to save
and invest - especially in
real estate - are major factors that encourage many
NRIs to look at India as an
ideal destination to invest.
Local US banks offer personal as well as home equity loans at as low as
three percent lending rate

GLOBAL

VIEW
which NRIs can avail and
move that money to India
for investments. An average eight lakh people leave
the country every year but
over one lakh come back
for permanent settlement.
An estimated 30 million
NRIs across the globe will
drive the demand for real
estate in various parts of
India.
Studies have shown Bengaluru to be among the top
investment destinations in
the country and one of the
fastest-growing cities in the

world, creating new millionaires every day. It has

already attracted over USD
14 billion in FDI in the recent years. NRIs buy property either for self-use or as
an investment. In the first
instance, they usually buy
in their hometown, but in
the second instance, they
buy in the city that shows
the most growth potential
ensuring high demand for
real estate. Bengaluru was
ranked by the global HR
consultancy Mercer as 'the
best place to live and work
for expatriates' and it also
tops the charts in appreciation consistently.
Among the south Indian
cities Bengaluru is the preferred choice for several
reasons like its cosmopoli-

Joe Louis D'anto

tan look, good climate, and

a large group of HR consulting companies operating in the city. Fiscal incentives by the government
also make the city attractive for people who want to
set up or expand businesses. This makes it very at-

tractive for NRI techies

working in the US, for alternate employment opportunities and business expansions in India.
Bengaluru offers an excellent choice in apartments, with facilities like
power back-up, uninter-

rupted supply of cooking

gas, benefits like well-maintained landscape, and hassle-free renting, making it a
preferred choice for investments for most NRIs. Apartment complexes also offer
more security making it attractive for people working

extended hours, which is

common in the IT sector.
The year 2016 is expected
to be good for real estate in
Bengaluru, being an enduser driven market.
(The author is a US-based
home mortgage consultant)