Why real estate should be good to investment in this lockdown

Fight continues in the world due to the outbreak of COVID-19. To further maintain the risk from snowballing, the Indian government has indicated to fully affect the lockdown. As a result, nowadays, most of us are working from home. Outside life has come to a grinding halt. No matter how uncomfortable it sounds, it is probably the only way to prevent perennial corona viruses from spreading further.

Although our daily routines have been affected, this does not mean that people should lock themselves inside their homes, stop all their plans and only watch worrying news on TV about this threat. These are some of the best times when one can spend time with family, do various hobbies and introspection. The current situation is an ideal time to think about investing in sources of passive income. Eventually, some of the best opportunities emerge from a crisis.

Zoning on various options can be seen in various options like term plans, stock market and real estate. While every investment option has its pros and cons, as of now, when the stock market is recessionary and the banking sector is in a tailspin, real estate can be a great asset to place bets on. If anyone wants to do it risk-free yet, makes a commendable return, with many residential and commercial real estate options available.

Full of attractive offers: Recognizing this opportunity, developers are coming up with many attractive offers. Property prices have already corrected in the last few quarters. After COVID, many developers are offering further discounts and attractive offers to maintain their financial books. There are projects where one now needs to pay 5% to book a property. The remaining payments will start after 60 days. By that time, it is expected that the crisis will mostly end.

However, such plans are a fleeting event that developers are launching to boost sentiment. Prices have already come down and once the situation returns to normal, such attractive schemes will also be lost. Therefore, this may be the best time to buy real estate. It should not be surprising if one gets ready-to-use assets for a price equal to a new launch.

Higher yields: Real estate can offer risk-thrilling competitive returns. Although residential real estate has been stable in recent years, commercial real estate has been issuing attractive returns. A commercial property in a prime location can easily give an average annual appreciation of around 7-10%. At a time when share prices and financial markets are volatile, such a comeback can be a game-changer.

Concurrent Rental Income: Real estate can provide continuous income in the form of monthly rent. The rental component always makes real estate a very unique proposition for investing. A quality commercial property can provide returns of around 5-8%. Similarly, residential projects can give returns of around 2-3%. Therefore, this is the right time to capitalize on those possibilities.

Increased liquidity: This is a good time to invest in real estate because home loan is going to be cheaper. RBI has recently cut the repo rate by 75 basis points. The rate drop is a welcome move for the industry. In a short period of time, as a calibrated response to the reduction in repo rates, most banks will also reduce their home loan rates.

Feasible Hard Asset: The biggest advantage of real estate is that it is a tangible asset. At a time when there is too much risk investing in paper money, real estate is a safer and safer asset for betting.

Real estate is a separate asset class that can ensure appreciable ROI, hedge against income and provide recurring income in the form of rental yields. However, it has its drawbacks, as a real estate asset will take at least 2-3 months. Nevertheless, investment in real estate is always made keeping in mind the medium to long term perspective. A short-term perspective can be counter intuitive.

So in these times of social distinction, do not just shut yourself down. Use isolation downtime, do some in-depth research, learn about the various sources of passive income and make the most of this time to make meaningful investments.

STAY HOME, STAY SAFE, STAY ALIVE

SUGANTA REALTY SERVICES LLP

Impact on Indian Housing Market due to COVID-19

Corona virus proliferation has further delayed a recovery that may be due to measures launched to revive various government demands, however, it does not appear that prices will fall immediately. Niranjan Hiranandani, national president, NAREDCO, says that "reviving Indian realty is the second largest employment generator, not only from the point of view of GDP growth, but also for job creation as the multiplier effect of more than 250 affiliated industries in the region is.

Recently, the Center announced more tax breaks and lower interest rates on home loans to make purchases more attractive, besides setting up Rs 25,000 crore stress fund for speculation.

He called for a slowdown in the residential segment, which has already stalled housing sales, project launches and price increases in India's residential realty sector, which is under pressure due to mega regulatory changes due to Real Estate Regulatory Authority (RERA), Goods and Services Tax (GST), Demonetization and Benami Property Law.

According to rating agency ICRA, the epidemic, if not soon included, will not only significantly affect the economy, but will adversely affect the cash flow and project delivery capabilities of developers.

"Although in the case of a prolonged outbreak, the impact on overall economic activity is likely to be deeper and more sustained, resulting in a more significant impact on developer cash flow and project execution capabilities, leading to a wider credit negative impact." ICRA said in a recent note that the three-month deferment announced by the RBI on loan on March 28 would provide some comfort to the builders.

“The injected liquidity of Rs 3.74 lakh crore (by RBI) with a three-month moratorium on all loans by financial institutions will ease short-term liquidity concerns and help developers as well as homebuyers. It is a great relief for developers and buyers to help ease the challenges they currently face,” says Ramesh Nair, CEO and Country Head of JLL India.

Anticipating the delay in completion of the project and supporting the builder community, the Real Estate Regulatory Authority in Maharashtra has announced a 3-month extension in the completion deadline of the project.

Recall here that real estate developers in Mumbai, the state capital and India's financial nerve center, have the largest selling stock in the top nine markets.

“Due to the 21-day lockdown outbreak of COVID-19, both manufacturing and sales activity has come to a complete halt in the entire real estate sector. At many sites, construction workers have also moved back to their hometowns. Even after the lockdown, the activity will only recommend slowly, which will cause project delays anywhere between at least 4 to 6 months,” said Sharad Mittal, CEO and head, Motilal Oswal Real Estate Funds. Welcoming the announcement of Maharera, Mittal said that although it cannot fully compensate the sector with actual project delays that are likely to be direct, 'it is certainly a decision in the right direction, to support real estate developers and the region. Overall in this global crisis.

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Corona virus outbreak 2020 - affects real estate growth in India?

Today, at the endemic of this severe corona virus, experts are busy calculating abnormal human loss worldwide. People are suffering or out of home due to the outbreak of this virus. In the meantime, the effect of the unexpected opposition to this deadly virus spreading on the global economy has been agreed.

Considering COVID - 19, the estimated loss to GDP in the world so far has been assumed to be 0.2 percent. For the grace of God, the effect is by no means limited in India. But in this scenario, it is clear that the Indian economy, which has already seen a 4.5% lower growth in the July - September quarter, will probably not remain uninhabitable due to the worldwide economic slowdown. And, the realty industry of the Indian residential market is telling a different story altogether.

COVID - 19 affects the property market in India

If the data collected from SuGanta.com is analyzed together, it is clearly visible the fall of 9 important residential markets of India by 30 percent during the time span of October to December last year. It is deteriorating for the fifth consecutive time of Q3 financial year 2019.

The trend is also the same for the launch of new projects. Since the third quarter of the last financial year, the task of starting new projects has been facing a continuous decline in the mega markets. This caused an annual decline of 44% in the October to December time period.

Despite all the government-issued schemes, including the lowest interest rate on home loans and the maximum tax exemption on purchasing any residential property in India for the first time in the history of real estate, all efforts failed to revive property demands among homebuyers are in India. He still chose to remain unaffected by all the tricks played by the stakeholders to force him to go out of his fence. For example, the government took an action to limit GST to 1% for affordable flats, which also went into the vein.

Usually, the craze of buying and selling property in India increases during the festivals of October to December, which did not happen even in 2019. And now in early 2020, there has been an outbreak of the corona virus. And, it has also probably brought the worst times in the residential property market in India. 1705732 Corona positive cases reported globally as of April 10, 2020. And, it is only growing and causing more fear around the world.

The rate of property visits has fallen surprisingly

Well, impressed by the government's plans, given how interested some consumers were in searching for property on the Internet, the Corona virus outbreak just seized them again from doing any such thing. To date, on April 10, 2020, India has reported 7600 corona positive cases. The activation of social media and news channels has succeeded in making people truly aware of COVID - 19 and everyone tries 'Stay Home Stay Safe'. People are really creating social distance by listening to the words of PM Modi. Currently, India is on a 21-day long social lockout to stop the spread of pollution. So, in such a scenario, nobody is dreaming for a site coming to buy a property in India.

Plans for project delays !!

Indian real estate is largely dependent on China, which is the source for COVID - 19 outbreaks. India needs support in matters of sourcing home furnishing essentials, construction materials, plastic to steel to electronic materials and construction equipment from China. Now, India needs to look for alternative sources as China is busy controlling the epidemic of viruses. It will shoot project delays to make sure.

Noida developers present housing society as quarantine facility

Two NCR-based developers have offered the Noida administration a deported housing society that can be used as a temporary quarantine facility.

Under the Uttar Pradesh chapter of the National Real Estate Development Council (NAREDCO-UP), realty developers Supertech and Antriksh Group have offered 500-bed facilities at two locations in Noida. Noida has the highest number of COVID-19 cases in UP.

In this regard, NAREDCO UP has sent a letter to the district administration. While Supertech has offered 400 bed space, Antriksh Group has offered 100 bed space for quarantine. In addition Supertech has dedicated a special tower for quarantine if necessary.

“Naredco UP has offered 500 bed spaces to the district administration to fight coronovirus. As the number of positive cases of COVID in the region is increasing, it is our duty to provide a place for quarantine to the district administration,”said RK Arora, president of Naredco UP and chairman of Supertech.

Supertech has offered 400 bed space in the upcountry project (Yamuna Expressway) and has reserved a tower for this reason. Other members Antriksh Group have offered 100 bed space in the Antriksh Golf view project.

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COVID-19 Impact: Extends the full timeframe of MahaRERA projects by 3 months

Mumbai: Maharashtra Real Estate Regulatory Authority (MahaRERA) has extended the validity of registration of projects for which completion date, revised completion date and extended completion date is expiring on or after March 15, 2020.

With this, realty developers will get a three-month extension to complete their projects. Developers are asking for time to complete the project and the exemption from penalty fees can be extended for up to one year.

The authority has extended the date after considering the government declared Covid-19 pandemic, lockdown, its impact on material procurement and construction stagnation.

It has also extended the deadline for all statutory compliance as per the Real Estate (Regulation and Development) Act, 2016 which were in force from March, April and May to June 30, 2020.

Since mid-March, the Maharashtra government has announced a controlled lockdown as a precaution in a way that a partial workforce has been able to participate in work and construction sites in the state.

From 24 March, a complete lockdown was declared for 21 days across the country, allowing only the operation of essential services. In view of these partial lockdowns and recently completed lockdowns, construction work has been affected in MahaRERA registered projects.

“Due to the aforesaid lockdown, the supply chain to obtain construction material was disrupted and the labor force moved back to their home states. Due to these circumstances, real estate projects across Maharashtra will take some time to resume work,” the authority said in a statement.

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India 2020 Statutory Liquidity Ratio (SLR)

What is the Statutory Liquidity Ratio (SLR)?

The SLR stipulates that the ratio of appropriate securities should be maintained in relation to their demand and time liabilities (DTL) as directed by the central bank

Current SLR rate

The current Statutory Liquidity Ratio (SLR) is 19.00%. It was last revised on April 13, 2019, when it was reduced by 0.25% from its previous level of 19.25%. To date, i.e. on February 11, 2020, the policy rates will also include the reverse repo rate of 5.15%. Repo rate is 5.40%, Bank rate 5.65% and Marginal Standing Facility (MSF) rate has come down to 5.65%. According to data on key monetary policy rates and reserve requirements set by the Reserve Bank of India, the Reserve Ratio, which also includes the Cash Reserve Ratio (CRR), reached 4.00% and the Statutory Liquidity Ratio (SLR) at 19.00%.

The main objectives of SLR are:-

•     SLR (Statutory Liquidity Ratio) is one such medium that acts to the RBI to ensure the security of a commercial bank.
•    SLR helps in regulating the development of bank credit. By modifying SLR rates, the RBI can reduce or increase bank loan growth.
•     Through SLR, the Central Bank implements commercial banks to fund government securities.
•    SLR (like CRR) is a means of monetary policy to regulate and control the money supply in an economy. Low SLR rates provide liquidity in the system, as banks want to bear many government bonds and vice versa.

Statutory Liquidity Ratio (SLR) in India

The statutory liquidity ratio is directed under section 24 of the Banking Regulation Act, 1949.

Current level  

The Reserve Bank has defined that each SCB will continue to manage special assets in India, the profit of which will be less than 19 per cent of the total NDTL (not more than 40 per cent of its total DTL) if it is close to business on any given day.

Property for Special SLR

• Cash or
• Gold valuation not to exceed current market value,
• Investments in the following instruments related to "Statutory Liquidity Ratio (SLR) securities"
• Securities announced as of May 06, 2011.
• Treasury Bills of the Government of India.
• Government of India dated securities issued under the Market Stabilization Scheme and Market Financing Program.
• State Development Loans (SDLs) of the State Governments announced from time to time after the market lending program.

Procedure for calculation of SLR

The procedure for calculating the total NDTL for consideration of SLR under Section 24 (2A) of the Banking Regulation Act, 1949 is broadly very similar to the method of CRR apart from any exception on special liabilities directed to maintain CRR is not.

NDTL and SLR assets are treated according to the process of valuation defined by the Reserve Bank of India from time to time.

Maintenance of SLR on a daily basis

Unlike CRR, RBI does not approve or allow any adaptability in the maintenance of SLR, that is, if the SLR must be maintained at 100% or higher on a daily basis.

A punishment

If a banking company disappoints to maintain the required amount of SLR, it will be responsible to pay RBI in respect of the failure, at the reduction of bank interest rate at the rate of 3% pa ​​for that day If the failure persists on the following successful working day, punitive interest may be increased at the rate of five percent per annum above the bank interest rate for the required failure on the reduction.

Return to Form VIII (SLR)

Banks must submit before the 20th day of every month to the Reserve Bank, a return in Form VIII determining the quantum of SLR with the specifications of their DTL in India continued on alternate Fridays through the following month To support the Negotiable Instruments Act, 1881 at the end of business on the following working day on such Friday or if any Friday LA will be a public holiday.

Banks should also submit a statement as an attachment to the eighth set providing daily status of adjusted assets for consideration of agreement with SLR and the additional cash balance should be managed with RBI in the format managed by them.

30,000 housing stock to be built in Maharashtra in two years: Maharashtra government

Maharashtra cabinet minister Jitendra Awhad had said in the assembly on Tuesday that the Maharashtra government would stock 30,000 housing units in the next two years. He also said that the affordable housing scheme in Maharashtra will start from May 1 and is expected to be completed in the next two years and 10% of the houses constructed by the Maharashtra Housing and Area Development Authority are reserved for each police personnel and class IV government employee will go (MHADA).

"Unused land in 25,000 acres of land acquired by SEZ developers will be taken back by the Maharashtra government and after payment to these firms, the land will be used to construct affordable homes" The minister announced. He also said that the government is seriously paying attention to bring a bill on this issue because if it is done then more than 5 lakh affordable houses can be constructed in the next five years and this will change the state of poverty in the state.

The work of submitting the proposal for final approval will be done through a single-window system in an interval of 90 days.

With sufficient space in a unit, one does not have to worry about size issues. This is even true for the convenience of big families living under one roof. If you are looking to buy or rent a place in a city it will be an ideal choice as it is cost effective and accessible to all places of business as well as your office. Login with SuGanta Realty Services llp which is India's newest real estate website.