It is perhaps the best time for a value purchase in real estate with developers going big on affordable home launches. Buyers seeking a steal deal must go home shopping now, says Shri Ram Shaw

Jaago, yeh hi right time, scream property exhibition advertisements in newspapers. So what if residential real estate prices are going up, a majority of the middle class that aspires to own a home is still taking the plunge. The reason being that homes are still affordable, and also thanks due to availability of funds and rising trust in the borrower. SBI, Deutsche Post Bank, ING Vysya Bank and P&SB are funding up to 80-85% of property value.

It is perhaps the best time to look around for a value purchase in real estate. With lower price points in locations that were not earlier within the affordable range, buyers are scouting for good 'value' bargains at this time. And with developers going big on affordable home launches, the timing may just be one of the best for buyers seeking a steal deal. The scene has improved with the Reserve Bank of India cutting lending rates to record lows and pumping in unprecedented amount of money into the system.

According to Anoop Pabby, joint managing director of Deutsche Post Bank (home finance), "The economy has improved and the liquidity situation is much better and interest rates have eased off considerably. It is only natural then that home buyers expect the reduced risks to result in reduction in interest rates and relaxation of margin money norms."

The housing finance company is now funding up to 80% of the property value to most salaried people, and 85% in a few cases, depending on the creditworthiness of the borrower. This is more than the 70% it used to lend a few months back.

According to Anshuman Magazine, CMD of global real estate consultancy CB Richards Ellis (CBRE), value buying is happening mostly in suburban locations, as that is where the current supply is. "Certain pockets in Gurgaon and Noida, where the price used to be Rs 65 lakh to Rs 1.5 crore earlier, have deals to offer anywhere between Rs 35 lakh to Rs 50 lakh today! Developers have reduced the total ticket sizes, adjusted area, price and given amenities. This has got people back and is making them lust for value deals right now."

According to Navin M Raheja, chairman and managing director of Raheja Developers, "Locations such as Gurgaon, Faridabad, Noida in Delhi NCR are some of the good locations for value buying. Anything that is available between Rs 2,500 to Rs 3,000 per sq ft is the right price depending, of course, upon the location and infrastructural facilities available in the vicinity with specifications offered.

"There are three kinds of value buying that are taking place in the real estate market right now. Ready to move in residential property in and around metros and their suburbs, ready to move in commercial property which is already leased, or generating income and low income and middle income housing ranging from Rs 15 lakh to Rs 40 lakh are the primary types of value purchases," Raheja adds.

On the other hand, lenders such as ING Vysya Bank, and Punjab & Sind Bank have reduced the margin money requirement to 15-20% from 25-30% towards the cost of the home on their home loans, as they try to tap potential homebuyers. This leads to a borrower investing lesser capital than before. So on a home loan of Rs 25 lakh, a customer would need to pay only Rs 2.75 lakh against Rs 6.25 lakh demanded earlier, where the margin norm is relaxed to 15% from 25%. State Bank of India, which has cut the margin requirement to 20% from 25%, may reduce it by a further 5%.

G S Vedi, the newly appointed chairman and managing director of Punjab and Sind Bank, said, "Interest rates are likely to harden over the next six months with the credit offtake improving and inflation moving into the positive territory. This is the best time for a potential buyer to go home shopping."

Many of those who were holding out have also decided to make a purchase now as prices have bottomed out. Plus, with many affordable housing launches by developers, the view is that prices are now pocket-friendly at this time. "Prices have reached the bottom and in these prices you are bound to get good appreciation in future. So, if you are buying a particular property now, one is definitely going to feel later that they grabbed a good deal," said Vijay Jindal, CMD, SVP Group.

But it is best not to overlook the pros and cons before deciding on such value buys. Though the pricing and the product may both look highly appealing, it is best to read the fineprint carefully. This will hold in good stead for the future. As far as dos are concerned, one must set their benchmarks on the price, location, size etc, so if you have been thinking of investing your money in a home, it's the right time to go deal hunting.

Affordable houses to provide Rs 5,00,000 crore biz opportunity: The affordable housing segment will offer business opportunities worth over Rs 5,00,000 crore as India requires more than ten million houses to be built by 2013-14. According to a report prepared by property consultant Knight Frank on Public-Private-Partnership model on housing in India, an estimated 11.84 million dwelling units are required to be built in India by the end of 2013-14 across all income segments in 37 cities.

The need from the economically weaker section (EWS), lower income group (LIG) and lower mid-income group (MIG) is nearly 90% of the total housing requirement, the report says. "The cumulative task of delivering over 10 million units in affordable housing category in top 37 cities of the country quantifies to a business opportunity in excess of Rs 5,00,000 crore," the report, prepared for realty body NAREDCO, said.

Commenting on the potential of the segment, the report said though the margins realized from affordable homes are comparatively lesser, the segment offers an opportunity to exploit volume of transactions to derive higher profits. The consultant pointed out that government alone would not be able to meet the pan-India housing requirement, "thus venturing into a joint model with the government can be a practical solution". The synergies could be utilized towards achieving the central government's objective of 'housing for all' and making India a slum-free nation, the report said.