Real estate in Chennai

The home loans segment has been growing at a robust rate over the past few years. Obviously, most of the growth has come from borrowers residing in India. However, non resident Indians also account for a portion of the home loans business. This article takes a look at home loans for NRIs and how they differ from home loans for resident Indians.

The home loan offering for both resident Indians as well as NRIs is fundamentally the same. The basic difference lies in the eligibility criteria. Given below are 3 such parameters across which home loans for NRIs differ as compared to those for resident Indians.

1.The NRI loan seeker has to be a graduate. The same is not necessarily the case for resident Indians- they can still qualify for a home loan subject to fulfilment of certain criteria. He also needs to have a minimum monthly income of $ 2,000 (this criterion may differ across HFCs). The NRI also has to route his EMI (equated monthly instalments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

2.Another difference lies in the home loan tenure. Loans to Indian residents are available for a 20-year tenure. In fact, some housing finance companies (HFCs) even offer home loans on a 30-year tenure, if the applicant fulfils certain criteria. NRIs however can avail of a home loan only for a maximum of 15 years (depending on the HFC).

3.NRIs are also required to submit additional documents than is normally required for a resident Indian. For example, certain documents like a copy of the passport and a copy of the works contract (also sometimes referred to as the contract card/labour card) are required only for NRI loans.

Another important document required while processing an NRI home loan is the power of attorney. The POA is required because the borrower is not based in India and in such a scenario, the HFC would need a 'representative' 'in lieu of' the NRI to deal with. Although not mandatory, the POA is usually drawn on the NRI's parents/wife/children.

The rate of interest is another area that separates the NRI from the resident Indian. Home loans to NRIs are costlier. The difference is to the extent of 0.25 per cent-0.50 per cent. As is the case with loans for resident Indians, some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. For example, certain locations are marked as being 'negative' in the books of HFCs. An NRI who hails from a negative location may find it difficult to get a home loan.

Finally, NRIs should take due care while selecting their HFC. Considering the geographical distances involved, it is pertinent that loan seekers associate with a proactive and responsive HFC.

The property market in India was always seen as unorganised and fragmented. However, the past three years have seen a big shift in the fundamentals that drive the growth. This has attracted private equity players and other real estate funds from abroad. In addition, existing and new players in the development business are eyeing viable and profitable projects.

The market continues to grow in all major markets of the country. Mumbai, Delhi, Bangalore, Chennai and Hyderabad have attracted interest from IT and ITES companies, who are either setting up their bases or looking for expansion. The suburban localities in these cities are experiencing high level of activity due to easier availability of land, construction of large floor plates; offer of built-to-suit facilities and at lower rental.

The real estate sector is riding high on a strong economy and the commercial real estate is being driven like never before by the booming IT/BPO/Call Centre sectors. To make most of the opportunity, developers have geared up to provide more efficient and high-class developments. These offerings are of global standards, matching the requirements of corporates. Not just that, developers are using new age techniques to act delivery times.

This is clearly evident from the large number of transactions across various metros resulting in high volume of absorption. Bangalore recorded 1.6 million sq. ft. of office space in 2004 Q3 while Hyderabad recorded 3 lakh sq. ft. of office space. As much as 8 lakh sq. ft. of office space was absorbed in NCR in Q3 2004. In Chennai, 9 lakh sq. ft. of office space was absorbed in Q2. The high absorptions have resulted in low vacancy rates. In Mumbai Central Business District (CBD), it's 10-12 per cent. In Delhi CBD, the vacancy rate is 14 per cent, while in suburban Gurgaon it is 15 per cent. In Pune, which has emerged as hot corporate destination, the vacancy rate is just 15 per cent.

Hot and happening

According to data provided by Chesterton Meghraj, property consultants, five of the 12 cases where property prices doubled were from Chennai. For instance, Velachery, Tambaram, Nilankarai, Tiruvanmiyur, Valmiki Nagar and Mogappair doubled property values in the past five years after Chennai started attracting IT talent. Old Mahabalipuram Road is a great example of heightened IT/BPO activity which has set residential property prices soaring. On an average, Chennai realty prices rose 72 per cent during the five-year period. It needs to be mentioned here that Chennai realty prices have been lower than other metros and hence for a given price rise, it would naturally show higher appreciation in percentage terms than others.

The new trend of campus facilities is also contributing significantly to steady increase in corporate occupancy as more and more corporates ardemanding greener and low-rise office surroundings. With Chennai being the flavour of the season among IT companies, the likes of Infosys, Tata Consultancy Services, Wipro and multinationals like Cognizant, Covansys, Ford Information Technology, Xansa, and Verizon have invested in land and are building their own campuses on the old Mahabalipuram road. Says Anuj Puri, MD, Chesterton Meghraj Pvt Ltd: "Chennai is on the threshold of an IT/ITES revolution, thanks to a large skilled work force, low operating costs, good infrastructure and proactive government policies. While Delhi, Mumbai and Bangalore have hogged the limelight till now, the next hub will be Chennai, on the back of the underlying compelling offer."

The city is getting increasingly cosmopolitan; it has the requisite manpower pool; the cost of living is 35-45 per cent lower than Delhi, and has cheaper real estate options. Several MNCs are therefore evaluating Chennai for their second phase of growth in India and developers have already started creating IT-focussed developments in peripheral locations.

Many developers are already planning malls in the suburbs. There are two malls coming up within city limits, one on Nelson Manickam Road and the other on Radhakrishnan Salai.
A new study by Jones Lang LaSalle, a global real estate firm with operations in 100 countries, found that locations like Sao Paulo, Brazil and Buenos Aires, Argentina may "compare favourably with current offshoring favourites such as Delhi and Shanghai when companies expand their locational criteria beyond labour cost reductions."

The Index contains data for 45 variables that affect the choice of cities for various offshoring activities. The real estate researchers grouped these variables into six sets of drivers:
1. Cost: labour, business, real estate, telecommunications and utilities
2. Human capital: labour supply and quality
3. Business environment: innovation and competitiveness
4. Market: growth and population
5. Infrastructure: physical and telecommunications
6. Real estate: structure and availability

Not surprisingly, Delhi topped the list, followed by Manila, Chennai, and Bangalore. The residential development is mainly in Velachery, East Coast Road, Old Mahabalipuram Road and Vadapalani, as these areas have moved up the value chain and offer good qualityresidential clusters. The development in these areas is largely a spin off from the IT and ITES businesses on the OMR and Ambattur belt. Providing a more stable and favourable IT environment, amidst the inherent potential of a vast and varied knowledge pool, robust infrastructure and cost-effectiveness, Chennai has emerged as a southern star on the property scene.

Real estate websites offer sellers and buyers of property a meeting point in cyberspace, which cuts down some of the hassles involved in doing so through conventional means. The Internet has revolutionised the way the world works. You can reach out to the world with just the click of a mouse or a button.

Like all spheres, the real estate market too has felt the impact of this technological revolution. As in every other business arena, finding a prospective customer from outside your locale for selling your property or house involves several processes. To find an NRI customer for selling your property at a better value you had to depend on friends in other countries to spread the word or advertise in the newspapers there. Or if you were lucky, the NRI would be relaxing at home during his holiday in India when he would come across your advertisement in a local newspaper.

The Internet has changed things totally. With a computer and Net access at home or elsewhere, you can easily advertise on the Internet. The process takes only about five to ten minutes. You are now just a click away from a probable customer waiting at the other end of the earth or maybe just next-door.

The mechanics

In some websites, you can list your properties for free (they charge a fee only after the deal is complete). But most of them charge a nominal amount. All you have to do is create an account to log in, to fill in the required details and have your advertisement posted on the website.

Finding property of the kind you want to sell or buy is easy with the tools available online. You can find land, houses, villas and apartments to suit your budget and preferred location with the help of simple search options by giving your preferences. The tiring process of going through the local broker or making numerous calls can be avoided.

Communication happens fast in case of selling and buying property online, even when the probable customers are in another part of the globe. Getting a detailed listing is another advantage. In print classifieds, the advertisements are mostly limited to one or two lines. In online advertisements, the sellers can be more descriptive and go on to specify the locality highlights, accessibility from prime locations in the city, number of yielding plants in the plot, the materials used for flooring, doors, ceiling of the house, detailed descriptions of the rooms in the building along with the expected price. This is the bright side of the picture. The dark side, is that only 40 per cent genuine enquiries are made in response to an advertisement posted on the website. This can lead to wastage of time.

Service provider

Most service providers basically function alike except for the range of services they offer. If you want assistance in finding a buyer, choose someone who does that. If you are confident and have time to deal with all the responses that come your way, opt for direct selling schemes. In direct selling schemes, you advertise by paying the service provider and do the rest of the processing on your own. Whichever service provider you choose, have a close watch of their websites to check if these are updated regularly and if the page downloads are fast.

In case you are the seller, play with words to create a powerful advertisement to pull in prospective buyers, take shots of your land or house ready for sale - do everything you could to increase the chances of your property being sold at a better price. A word of caution for the buyers - check the credentials of those involved thoroughly before you make a deal.

Noted service providers are 99acres.com,indiaproperty.com