Real estate in India may lag be- hind in plucking the fruits of enhanced technology but, glob- ally, technology has made
Delhi, November 25, 2017 Advertorial, Property Promotional Feature
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Transformative
impact of Technology There are at least six technology-driven changes which can potentially transform the real estate sector in India eal estate in India may lag behind in plucking the fruits of enhanced technology but, globally, technology has made deep inroads into the construction industry. Essentially, these evolutionary steps in technology can usher in an era of ‘experiential’ real estate for consumers, developers, and consultants and, as a direct consequence, transform the way in which real estate business is done.
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AUTOMATION ● More and more real estate marketing is done via online channels these days, be it online portals or cross-platform mobile applications. ● There is a huge opportunity in more evolved automation of these online channels, where the updating of property listings may be carried using advanced machine learning techniques. ● Also, since it is now mandatory for builders to notify all residential sales and similar project-related updates on the RERA websites, real time updates for units sold, localities where maximum sales have taken place, and infor-
mation on other forthcoming projects can help close deals faster. ● Faster access to such information can help brokers and consumers close transactions more efficiently.
standardized, presenting a challenge in evaluating one versus another. ● Soon, advanced AI techniques (loosely known as ‘deep learning’) will help machines comprehend the clauses and sub-clauses in such leases. ● A lot of data is currently stored physically, in the offices of builders
ARTIFICIAL INTELLIGENCE ● Moving further up from automa-
tion, technology performs tasks which require higher forms of intelligence. ● Artificial Intelligence (AI) tools allow computers and machines to function more intelligently. In the real estate sector, the increased use of machine learning techniques and ‘deep learning’ will boost the quantity of information available, as well as the efficient processing of this information. ● Digitizing data assets is becoming less cost and labour intensive with the help of AI technologies. ● Information in the sector is currently available in varied forms. If we look at commercial real estate markets, lease documents are often not
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and brokers. From brochures of forthcoming projects to ‘stacking’ plans of malls or other buildings, legal documents, contracts, administration-related paperwork—all will gradually migrate to the digital format. ● From a client’s perspective, the emergence of more online portals showcasing a higher number of commercial and residential properties will simplify the customer’s journey towards a buy, sell or lease decision.
DRONES TO ENHANCE THE HUMAN EXPERIENCE ● Advancements in artificial intelli-
gence, specifically in machine learning and deep learning, have contributed to the increasing use of drones. ● These are helpful in creating 3D images and videos of office spaces, which help customers narrow down on property options. Drones are being used in America and Europe for marketing real estate properties with compelling and dramatic images. ● Such images help differentiate properties, especially on online portals, which are continuously compet-
ing for consumer mindshare.
VIRTUAL REALITY ● Virtual reality or VR technology—a
mix of architecture design and gaming software—will soon help consumers in India get real-time experience of living in their yet-to-be-constructed homes. ● Through the use of special glasses, customers can view 3D videos of the properties they are interested. This can help them shortlist properties before making the final choice. ● Since this is still an expensive technology, it is currently being used only in high-end property marketing—mostly in marketing luxury housing options to NRIs.
INTERNET OF THINGS (IOT) ● Internet of Things (IoT) is a giant
network of connected factors, including people. The relationship could be of people-with-people, people-withthings, and things-with-things. ● The use of sensors to track the movement of objects is commonplace today. With sensor technology getting cheaper, we will soon find a much larg-
er use of sensors across office, retail, as well as residential spaces. ● This will become especially useful for the facilities management business. From small requirements like identifying the need for changing a fused bulb to larger ones like managing car parks in large office complexes, IoT is ready to take off in a big way. ● On a much larger scale, Smart Cities will have digital technology embedded across all city functions.
BLOCK CHAINS ● Information held
on a block chain exists as a network of nodes. It is a shared, continuously reconciled database, which is hosted by millions of computers, and its data is accessible to anyone on the Internet. ● This is still an evolving concept, but block chains will soon play an important role in the storage of information for real estate transactions. ● For instance, we will see the evolution of Smart Contracts, which make the execution of real estate transactions much more efficient. ● As an example, let us take a person purchasing a property in the secondary sales market. Currently, such a person is dependent on the bank for basic due diligence on the property. ● All this information could be stored in a block chain and easily accessed by a buyer, who can trust this encrypted block of information without physically examining the title or contacting prior owners. —Ramesh Nair (The author is CEO and Country Head of JLL India)
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WHICH IS A BETTER
option — Plot or Flat? Ramanathan Aiyar retired early this year but is facing a big worry. Where to invest his lifetime savings so that it is safe and gives him good return on investment too! With a budget of around Rs 50 lakh, he is in a dilemma over buying a plot or a flat nvesting money in a property is not an easy task. Not only does one need to find a safe avenue, but also think about what to buy–an apartment or a built-up house, or a plot. The decision depends on your needs, lifestyle preferences, and other aspects like taxation and bank loan. While investing in plots or land means building a house as per one’s own requirements and approved layout, a flat is a multi-floored construction with no free-
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dom to change the construction layout and size. In a plotted development, you are responsible for the construction and security of the built-up house, whereas, in an apartment, there is the benefit of security, location, and accessibility. So which one is a better option–plot or flat?
land is worth considering; for shorter terms, go for a relatively small apartment unit,” Kalyan Chakrabarti, managing director of Red Fort Capital, says. Location, surrounding infrastructure, and the quality of neighbourhood push up the value of apartments, as they do for plots too.
EFFORT
TAX
While buying a plot, one has to plan construction on an approved layout and hire an architect or a contractor to execute it. Apart from supervising the construction, arranging finances and dealing with local bodies and contractors, it involves a lot of leg work over little things. But, when you buy an apartment, the developer is in charge and gives possession upon the completion of the flat. One only has to worry about furnishing the house and not the actual construction. Moreover, a flat comes with basic amenities like power back-up, water, maintenance, and security and some added amenities like a clubhouse, swimming pool, etc. If you decide to buy a plot and build a house on it, you will certainly have to make all arrangements on your own. This makes buying a flat a good proposition.
Tax treatment for plots and flat is different. When you take a home loan to buy an apartment or a builder floor, the monthly loan repayment allows you to save tax. “You can also avail of a deduction of up to Rs 1.5 lakh in a financial year for the interest you have paid on the loan. Also, Rs 1 lakh deduction can be claimed for repayment of the principal. In the case of plots, tax deduction on interest is allowed only from the time the construction is completed,” Kunj Kaushal, a chartered accountant based in Delhi, says.
DELIVERY While it may take some months or even years to get the possession of an apartment, plots are usually ready for possession. If your choice of plot is part of a township, you are likely to get possession of the plot earlier than a flat.
RETURNS Experts say that plots appreciate faster than apartments. This is mainly because plots are less in supply in the market. Age does not affect your investment in plots, as it does in the case of apartments. Appreciation depends on the location and proximity to big infrastructure projects. Also, during stable market conditions, the worth of a plot rises with time. As developing a plot is easier, it has more takers, therefore, it is easy to exit your investment when you want to. “If you are looking for a regular yield, going for an asset like commercial, office, retail, etc, would be useful. If you wish to use it as a store of value, then it boils down to your outlook. If you have a long-term outlook, buying a piece of
Ready-to-move-in or homes under-construction? Here are the pros and cons of buying read-to-movein homes and houses under construction homes
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ith the change in economic conditions and introduction of new reforms, there is a natural shift in buyer’s preferences towards ready-to-move-in projects these days. However, if we analyse further, there is a merit (of course with a caveat) in making an investment in projects under construction as well.
INVESTING IN ‘READY-TOMOVE-IN’ HOMES
INCOME If earning a regular rental income is on your mind, you must invest in a built-up flat. An apartment can be rented out to fetch you some income, whenever you want, which is not possible in the case of plots. There is no income from plots till the time you construct upon it. “Today’s market is driven by end users. A project located in a developing area Thinkstock or in a gated community and, one which has been approved by local authorities, is a safe and profitable investment,” Ramesh Menon, founder of Certes Realty, an investment advisory enterprise, said.
FUNDS A buyer can raise finance to buy a plot or land, but there are some conditions. “You can only get a loan for buying a residential plot if the land has been approved by the local authority. We allow 80% Loan-toValue (LTV), but in the case of resale land, only about 50% of LTV is allowed,” Nitin Singhal, relationship officer at PNB Housing Finance Ltd, said. “In the case of a home loan, a buyer can get nearly 80-85% funding. Moreover, the maximum loan tenure for a land loan is 15 years, but, for a home loan, it can even go up to 30 years,” Singhal said. –Preeti Sharma, Magicbricks Bureau
Immediate possession: One of the primary advantages of investing in a ‘ready-to-move-in’ house is: “Homebuyers get the possession of their houses immediately, without any waiting period–thus avoiding future uncertainty. One is only required to complete all the documentation related to the purchase of the property,” says Amit Chawla, associate director (valuation & advisory services) at Colliers International India. Financial stability: The buyer will be in a position to make his financial decision with certainty, that is, he can close the rental outflow and can have only one outflow–that of the EMI. In simple terms, only EMI, whereas in projects under construction, the EMI will start once the home loan gets disbursed and one will also have to pay the rent until one gets the possession of the flat. Getting project details: Also examine the location of the project and learn about the residence prior to purchasing the property. “In a ready-to-move-in project, it is possible for a buyer to
visit the project site and check in detail not only the flat he is planning to buy, but also the amenities available there. One can get what one actually sees, which is not possible in the case of a project under construction,” Rahul Singla, director of Mapsko, says. No risk of discrepancies: “Unlike a project under construction, in a readyto-move-in project, buyers actually get what they have paid for. As the unit is ready for the buyer to inspect before he finalizes the purchase, there is no risk of discrepancies,” Ssumit Berry, managing director of BDI Group, said.
INVESTING IN HOUSES UNDER-CONSTRUCTION Bargain margin: All the projects under construction must now be registered with RERA, and have to adhere to quality and timely delivery. Due to this, the developer will have a committed timeline to develop and deliver the project to prospective buyers. “Developers will also be keen to sell the project on a firm timeline for project viability and profit realization. Thus, buyers will have an added advantage of negotiating the best deal,” Amit Chawla says. Deferred payment: Buying a property under construction in today’s time is a good option considering that it is relatively cheap. –Mamta Sinha
