Buying a home?

Buying a home is a complex process. Buying a home for the first time can be overwhelming for many first-time home buyers because few know where or how to begin the home buying search.

The first step should be to align yourself with a pro who has experience working with first-time home buyers and can show you the ropes. Because buying or selling a home involves such a large amount of money, the brokerage and real estate agent hired to represent your financial interests should easily meet your list of high quality standards.

Now, some people make the mistake of thinking that all home consultants or real estate agents are the same and, as with any profession, the cream of the crop sits shoulders above the rest. There are a large number of differences among agents.

And there are too many of them who are ready to take you on a ride. Better be ready with some decisive questions for your consultant. This will tell him that you can not be taken for granted.

The questions could be :
1) How Long Have You Been in the Business?

2) What is Your Best Action Plan or Strategy for My Needs?

3) Will You Please Provide References?

4) What documents are required and do you have a sample?

5) What are the charges: both lender and the consultant?

6) What Kind of Guarantee Do You Offer?

7) What Haven't I Asked You That I Need to Know?

These questions will make him make the effort in providing the service you deserve.Real estate agents represent buyers, sellers, or both--and they can work as neutral facilitators for either party. It's essential to understand agent duties and loyalties before you make that first phone call.

Last but not the least, a successful real estate transaction requires cooperation from everyone associated with the sale. There are things you can do to help your agent, which in the long run gets you to closing faster and with fewer bumps along the way. Foremost being honest and transparent with the agent as much as you would like him to be the same.

Picking Stocks in Real Estate Sector

One of the questions asked of my earlier post was how to choose a stock to invest in.

It is alright to say, " You can start with identifying a list of 10-15 companies out of 3-5 sectors which you know or which interests you. You can keep a tab on their management team, financials and future outlook and over a period of time, you will be able to take a call on them." I guess, it's good in theory.

How about we do an analysis of a sector and then take a look at some of its stocks. Let's take a look at the Real Estate/Infrastructure sector which is so much in the news.

When we do an industry analysis, what are the things we look at? Companies producing similar products are subsets of an Industry/Sector. For example, National Hydroelectric Power Company (NHPC) Ltd., National Thermal Power Company (NTPC) Ltd., Tata Power Company (TPC) Ltd., etc. belong to the Power Sector/Industry of India.

It is very important to see how the industry to which the company belongs is faring. Specifics like the effect of Government policy, future demand of its products etc. need to be checked. At times prospects of an industry may change drastically by any alterations in business environment. For instance, devaluation of rupee may brighten prospects of all export oriented companies. Investment analysts call this Industry Analysis.

To start with, let's look at some macro facts and observations about the industry.

• The Tenth Five Year Plan has estimated a shortfall of 22.4 million dwelling units in the country. According to one estimate, over the next 10 to 15 years 80 to 90 million housing units will have to be constructed.
• The investment required for constructing these dwelling units and for providing related infrastructure during this period will be of the order of $666 billion to $ 888 billion at roughly $33 billion to $44 billion per year ($1 billion = Rs 4,400 crore).
• There is a steady growth in Housing Finance sector of approx. 30% over last four years. The rate of interest for housing finance has become reasonable and affordable which has resulted in more credit offtake and subsequent maturing of the housing industry. Even though there is an increase, the rates are still reasonable to my mind after factoring in the tax benefits.
• Fiscal benefits provided by the Government of India have encouraged the end users and investors alike.
• Income of the urban buyer has grown substantially. There is tremendous scope and growth in the Infrastructure Development.
• Foreign investment by way of FDI has been approved. Emergence of professional builders in the market with proper accounting standards. There has been an emergence of rating systems for building projects.
• The high growth of the real estate sector has led a lager financial institution to launch a dedicated real estate fund. These funds are simultaneously enticing large institutional investors as well as High Net worth Individual (HNIs) to expand their portfolio.
• The award of ultra mega power projects and privatization of airports demonstrates a commitment at the highest level. So the momentum to build up roads, ports and urban infrastructure is building up for sure.
• The JawaharLal Nehru Mational Urban Renewal Mission (JNNURM) initiative in 63 cities and urban transport projects will also drive up Investments in Infrastructure. Water Supply projects and sewerage projects would be part of the JNNURM.

So what do you think about the future of Infrastructure stocks in India? Ready to take a call?
There are three major stocks in the Infrastructure sector which are worth talking about: 1. Nagarjuna Construction (NJCC) 2. IVRCL and 3. HCC

Remember, do not go by the order book size alone, which is what many people do without understanding the intricacies. We need to understand the execution period of the order book, and the kind of margins that the company would make, given the kind of raw material prices at which it has booked these orders.

Even though it may look daunting, a little bit of research helps you in understanding the stocks as well as improving your general knowledge.

Reviews, Tips, Calculators with an Indian perspective.

Picking Stocks by Industry or Sector Analysis: Real Estate/Infrastructure

One of the questions to my earler post was how to pick stocks? It is allright to say that, " You can start with identifying a list of 10-15 companies out of 3-5 sectors which you know or which interests you. You can keep a tab on their management team, financials and future outlook and over a period of time, you will be able to take a call on them."

But I guess, it's good in theory. How about doing an analysis of a sector and then take a look at some stocks of that sector. Let's take a look at the Real Estate/Infrastructure sector which is so much in the news.

So when we do an industry analysis, what are the things we look at? Companies producing similar products are subset of an Industry/Sector. For example, National Hydroelectric Power Company (NHPC) Ltd., National Thermal Power Company (NTPC) Ltd., Tata Power Company (TPC) Ltd. etc. belong to the Power Sector/Industry of India. It is very important to see how the industry to which the company belongs is faring. Specifics like effect of Government policy, future demand of its products etc. need to be checked. At times prospects of an industry may change drastically by any alterations in business environment. For instance, devaluation of rupee may brighten prospects of all export oriented companies. Investment analysts call this as Industry Analysis.

To start with, let's look at some macro facts and observations about the industry.

• The Tenth Five Year Plan has estimated a shortfall of 22.4 million dwelling units in the country. According to one estimate, over the next 10 to 15 years 80 to 90 million housing units will have to be constructed.
• The investment required for constructing these dwelling units and for providing related infrastructure during this period will be of the order of $666 billion to $ 888 billion at roughly $33 billion to $44 billion per year ($ 1 billion = Rs 4,400 crore).
• There is a steady growth in Housing Finance sector of approx.30 % over last four years.
  The rate of interest for housing finance has become reasonable and affordable which has resulted into more credit offtake and subsequent maturing of the housing industry. Even though there is an increase, the rates are still reasonable to my mind after factoring in the tax benefits.
• Fiscal benefits provided by the Government of India have encouraged the end users and investors alike.
• Income of the urban buyer has grown substantially.
• There is tremendous scope and growth in the Infrastructure Development.
• Foreign investment by way of FDI has been approved.
• Emergence of professional builders in the market with proper accounting standards.Emergence of rating systems for building projects.
• The high growth of the real estate sector has led a lager financial institution to launch a dedicated real estate fund. These funds are simultaneously enticing large institutional investors as well as High Net worth Individual (HNIs) to expand their portfolio.
• The award of ultra mega power projects and privatisation of airports demonstrates a committment at the highest level. So the momentum to build up roads, ports and urban infrastructure is building up for sure.
• The JawaharLal Nehru Mational Urban Renewal Mission (JNNURM) initiative in 63 cities and urban transport projects will also drive up Investments in Infrastructure. Water Supply projects and sewerage projects would be part of the JNNURM.

So what do you think about the future of Infrastructure stocks in India? Ready to take a call?

There are three major stocks in the Infrastructure sector which is worth talking about. 1. Nagarjuna Construction (NJCC) 2. IVRCL and 3. HCC

Remember, do not go by the order book size alone, which is what many people do without understanding the intricacies. We need to understand the execution period of the order book, and the kind of margins that the company would make, given the kind of raw material prices at which it has booked these orders.

Even though it may look daunting, a lil bit of research helps you in understanding the stocks as well as improving your general knowledge.

Reviews, Tips, Calculators with an Indian perspective.

Union Budget for Real Estate Sector

Below are the aspects of the Union Budget 2007 that are relevant to the real estate sector brought to you courtesy Magicbricks

• Tourism infrastructure to get an allocation of Rs.520 crore as against Rs.423 crore last year
• Five year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad & Gautam Budh Nagar.
• Initiatives would provide impetus to growth of hospitality sector in NCR region in view of the upcoming Common wealth games.
• Allocation for National Highway Development programme to be stepped up from Rs. 9,955 crore to Rs.12,600 crore.
• Work on Golden Quadrilateral road project nearly complete. Considerable progress made on North-South, East-West corridor and likely to be completed by 2009.
• Tax free bonds to be issued by state-owned urban local bodies.
• Northeastern region will get Rs.405 crore for highway development.
• Road-cum-rail project over Brahmaputra in Bogibil, Assam.
• Total Budget for the Northeastern region raised from Rs.12,041 crore to Rs.14,365 crore.
• New Industrial Policy for the northeastern region to be in place before March 31.
• Section 80 IB not mentioned at all.
• Modified VAT applicable to developers.
• Commercial rentals included in Service tax.
• Textile parks: Allocation up from Rs.189cr to Rs. 425cr.
• MAT extended to IT companies.
• Annual target of 15 lakh houses under Bharat Nirmal Programme to be exceeded.
• Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.
• Excise duty on cement reduced from Rs.400 per tonne to Rs.350 per tonne for cement bags sold at Rs.190 per bag at retail market. Those sold above Rs.190 will attract excise duty of Rs.600 per tonne.
• Indian investors to be allowed investment in overseas capital markets through mutual funds. Mutual funds to set up Infrastructure Fund schemes.
• Rs.150 crore to be given to Ministry of Youth and Sports for Commonwealth Games and Rs.350 crore to the Delhi Government for the purpose.
• Rs.50 crore to be provided for the Commonwealth Youth Games in Pune.
• Export duty on iron ore and concentrate at the rate of Rs.300 per tonne. Excise duty for plywood reduced from 16 per cent to eight per cent.

Reviews, Tips, Calculators with an Indian perspective.

Housing Finance Satisfaction survey for Indian HFCs

The following is an attempt to form a questionnaire for a Satisfaction survey for the Housing Finance companies in India.

Real Estate Sector review

I'm glad to have readers like Deepa who has some interesting insights and would like to know more about real estate sector. Here I make an attempt to understand the goings on in the Real Estate sector and how and why it is a good investment option.

• The Tenth Five Year Plan has estimated a shortfall of 22.4 million dwelling units in the country. According to one estimate, over the next 10 to 15 years 80 to 90 million housing units will have to be constructed.
• The investment required for constructing these dwelling units and for providing related infrastructure during this period will be of the order of $666 billion to $ 888 billion at roughly $33 billion to $44 billion per year ($ 1 billion = Rs 4,400 crore).
• The real estate prices have stabilised and showing a steady growth after the boom and crash in the mid 1990s.
• There is a steady growth in Housing Finance sector of approx.30 % over last four years.
• The rate of interest for housing finance has become reasonable and affordable which has resulted into more credit offtake and subsequent maturing of the housing industry. Even though there is an increase, the rates are still reasonable to my mind after factoring in the tax benefits.
• Fiscal benefits provided by the Government of India have encouraged the end users and investors alike.
• Income of the urban buyer has grown substantially.
• There is tremendous scope and growth in the Infrastructure Development.
• Foreign investment by way of FDI has been approved.
• Emergence of professional builders in the market with proper accounting standards.
  Emergence of rating systems for building projects.
• The high growth of the real estate sector has led a lager financial institution to launch a dedicated real estate fund. These funds are simultaneously enticing large institutional investors as well as High Net worth Individual (HNIs) to expand their portfolio.
• Last year in July, 2005 SEBI approved the country’s first venture capital fund, HDFC Property Fund, in real estate. Thus SEBI has not allowed to a property fund to come up as a mutual fund but as a venture capital fund. This will allow only the high net worth individuals and corporates to subscribe for this fund. HDFC board had approved the corporation’s entry into business of real estate venture fund after SEBI amended, the venture fund act.
  With the real estate prices of both residential and industrial properties in major cities sky-rocketing in the last two years and with housing still remaining a major bottleneck for urban planners and developers, the bullish outlook on the real estate market is justified. And many are projecting a 15-25% growth for the sector in the next 5 years.
• A report by the CII has pointed out that globally the real estate is and should always be considered as an attractive investment option.
• The scrips in the construction sector are doing very well. The Mutual Funds who have invested in Infrastructure stocks are doing well too.
• Key Construction stocks to my mind are Gammon, GMR, Mahindra Gesco, Hind, Patel Engg., Era Constructions.

RBI thinks the real estate sector is a bit heated up or prone to be over heated. So there might be some go slow on Real Estate Mutual Funds and Real Estate Investment Trusts (REIT) but they are bound to come, sooner or later.

About Real Estate

Is the Real estate story real? The size of the real estate industry in India is estimated by FICCI to be around $12 billion. It is growing at a pace of 30 per cent.

Everyone is taking a look at Real estate these days. Specially after the stock market volatility, there are questions on whether Real estate is also a bubble built up on bull behaviour or is it really a goldmine.

We must understand the background of the growth story and various market cycles involved before reaching any conclusions.

The background of the growth story will be
1. Demand supply gap
2. Growing purchasing power
3. Fiscal benefits provided by the govt.
4. Growing economy
5. Off-shoring business, including high-end technology consulting, call centres and software programming houses.
6. Huge potential for growth ( India's mortgage to GDP ratio is only 6% compared to more than 50% in US)

Real estate cycles are generally classified into 4 stages. 1. Recovery 2. Growth 3. Post growth 4. Contraction. These stages are based on property rent and vacancy rates. Presently it appears that India is in the growth phase.

Another development in this field is the number of web portals dedicated to making the real estate market more transparent. They provide internet and technology services to the real estate industry and listing of allied services to the target audience with interest in Indian Real Estate sector. Developed with a motto to reach the millions of users across the globe and reach the potential buyers and tenants, the sites is a definite improvement for the real estate scene in India. Prominent among them are www.99acres.com , www.magicbricks.com , www.realestateonline.in , www.indiaproperties.com , www.abodesindia.com, www.indiahousing.com .