Residential Housing in Lucknow for Demand Drivers

Manas Nag, a retired central government employee, has settled for a semi-luxury home in Gomti Nagar which has been gifted by his son, an IIM-Lucknow graduate working with an American multinational. Today, more and more buyers, especially those who have spent their active working years in the city, are considering residential housing in Lucknow as a hot investment ground.

The city of Nawabs is no longer a Tier-2 city in terms of its dimensions. Neither is the growth unidirectional. Development, disposable incomes, an increase in the number of jobs and the resultant growth in real estate is for everyone to see. Trend watchers believe that in the last few years, luxury projects have followed new corridors of growth and property prices have escalated. All this points to a rise in housing demand, attracting many end-users and long term investors. Like Nag, a number of government employees and bureaucrats have also taken to the local real estate.

Where is the residential moving to?

As per data with Magicbricks, Faizabad Road, Amar Shaheed Path, Gomti Nagar Extension Road and Rae Bareli Road have the maximum supply of properties. Ajay Prasad, a local broker at Sairam Properties and Consultancy says, “New growth corridors have surfaced over the last few years especially along the highways that link Kanpur, Hardoi, Sitapur, Rae Bareli, Sultanpur, and Faizabad. To add to its value, these are not small-time developers’ projects but realty giants known for their caliber across top active real estate markets of the country. Supporting infrastructural growth such as roadways, entertainment areas and commercial development along these areas has also encouraged buyers. In fact, the Gomti Nagar Zone that comprises of Vibhuti Khand and Vipin Khand is fast evolving into a secondary business district. Faizabad Road has also witnessed a lot of commercial developments.

Shankar Kishore, an individual consultant at Bibhor Lal Consultancy says, “Over the past five to six years, organized retail has led to the mall culture penetrating the upcoming areas. As a result, the younger generation of buyers who may or may not have large budgets but have a family in Lucknow and would want an early investment, prefer settling for such areas. Most leading research and data analytics firms have listed Lucknow as a top real estate market beyond the top ten Tier-I cities. Many of these young buyers for residential housing in Lucknow purchase property for their parents. Even buyers from smaller towns move to Lucknow for aspirational value,” adds Kishore.
“Influx of the well-placed migrant population has also been drifting towards apartments, although flats near Charbagh Railway Station in Lucknow has for long been known for buyers fancying the idea of purchasing large tracts of plots to build Nawabi households,” says Prasad.
The Lucknow would be a game changer in terms of real estate growth. Property values of flats in Lucknow that have seen some degree of rise in the last few years will then further escalate.

Property values

If affordability is your pick, most 1 or 2BHK units in size ranging from 500-1500 sq ft, are within Rs 30 lakh. If you are planning for a new property, you could also look forward to the above-mentioned areas that have new projects within the same price range and are scheduled to be delivered by end of 2019 to 2021 timeframe. In the case of small budgets, one could even go for investment in plotted developments. A majority of these are within Rs 10 lakh varying in sizes but mostly within 2500 sq ft.
It is interesting to note that the aforementioned areas are no longer concentrated with a particular property segment. Affordable properties are in vogue as much as luxury properties. If you are a buyer, you know where to invest! Read how- Lucknow Shaheed Path developing for housing

Lucknow Shaheed Path developing for housing

Flats in Lucknow is growing in leaps and bounds not only in terms of the populace but also in terms of infrastructure, development, and housing as well. In fact, the town and country planning department has drafted a much-farsighted master plan that accommodates 197 peripheral areas within city limits. For many, it may be difficult to imagine Lucknow grow beyond Shaheed Path before 2021. As of now, the city is asking for more and flats near Shaheed Path which was expected to be developing has caught up with the times. Back in 2001, it was just slowly shedding its city road project image. Today, it is among the most sought after investible destinations.
With schools, colleges, upcoming hospitals, an IT city in the vicinity, Lucknow is one of the most promising Tier II cities in the country. It has proved its caliber by making it to the list of Smart Cities. In fact, Lucknow Shaheed Path developing for housing to accommodate the lifestyle choices of the modern traveling Indian. Therefore, while medical tourism gains ground in Shaheed Path, certain developers have already started coming up with formats suited to one’s lifestyle. Hence, hotels find a substitute in serviced apartments where you are not restricted by limitations of space, movement or choice of food.

Development of residential housing in Shaheed Path

On the residential front, you could look for a 2 or 3BHK unit within Rs 65 lakh. Firoz Sheikh, the consultant at Cosy Homes says, “If you are an end-user, there is much to gain. Most buyers are not unduly liberal with cash in hand. End users look for the luxury of space and buyers who have their family and friends settled in Lucknow are looking for a comfortable abode. A spacious 3BHK means you have considered a growing family and its needs.”
For those who want to keep it small and flexible, plots starting at Rs 8 to Rs 20 lakh, varying in sizes and amenities are also popular choices. Theme based projects too are in line. Of the new projects lined up, most are rationally priced anywhere between Rs 38 to 70 lakh with possession timelines stretching beyond 2019.
Data also throws up interesting price trends. Compared to areas such as Amar Shaheed Path, Gomti Nagar Vistar Sector 4, Gomti Nagar and Gomti Nagar Extension, Shaheed Path has the lowest entry cost which stands anywhere between Rs 2,800- 3,500 per sq ft in general.
However, note that a healthy return on investment should be expected only in the mid to long run. A look at the graph shows that it is more or less stable when it comes to pricing and an upward trend quarter after quarter, also is most affordable in comparison.

Arguments for buying a ready to move in house

There is no dearth of supply in the residential real estate market across India, both in the ready-to-move-in and under-construction categories, thanks to low sales in the last few years. A report by LiasesForas, a Mumbai-based real estate rating and research firm, states that at the end of first quarter of the financial year 2018-19, there were 945,964 unsold units in 8 tier-I cities including Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR), National Capital Region (NCR) and Pune. Moreover, considering the sales volume during the quarter, it will take 41 months to clear these inventories, said the report.
If you are looking to buy property immediately then there are plenty of options. But there is merit in choosing a ready to move in property. We list the following benefits.
When you buy a ready-to-move-in house, the biggest risk that you eliminate is project delay. You are not required to wait for the completion of the apartment and other amenities in the project.
While the Real Estate (Regulation and Development) Act (RERA), 2016 has been implemented and developers are expected to adhere to timelines, most developers have listed a deadline of 5-6 years from now for their projects. Typically, the deadline earlier was for three years.
In other words, most developers have already made provision for project delays. Any penalty or compensation under RERA will get implemented only when the developer does not meet the mentioned deadlines.

Uncertainty about space, size of rooms, view from the apartment, and quality of construction, available amenities and fixtures can be eliminated when you buy a ready-to-move-in apartment. “It is important to consider the quality of the project; a ready to move in house project allows one to closely inspect the structure and quality of finish,” said Anshul Jain, country head and managing director, Cushman & Wakefield India.
You can start living in a ready-to-move-in house as soon as you buy it. “For those with an immediate requirement unable to afford both rent and EMIs, a ready-to-move-in home works well,” said Jain.
Though there are benefits of buying a ready-to-move-in apartment, the home buyers might have to shell out a little more on such purchases compared to under-construction ones,” said Jain. However, whether you buy an under-construction or ready-to-move-in property, be sure to do your due diligence regarding the quality of construction, location and surrounding infrastructure.

Read how – Demand drivers of residential housing in Lucknow

The vexed issue of reduction in GST rates

There are two reasons why home buyers aren’t willing to buy under-construction property. Firstly, bitter experience with delayed projects and frauds resulted in a lack of trust. Second is the GST rate on an under-construction property: it attracts a 12 percent GST. On Sunday, the government tried to address the second concern by slashing the rates on under-construction flats to 5 percent in the non-affordable segment and 1 percent in affordable housing. While the industry welcomed the move saying that “there’s a reason for the middle class to rejoice”, however, there is a catch. In fact, there are quite a few things to ponder over.

One, the GST rate cuts are not applicable immediately. It applies only from the next financial year, which means there would be no resurgence of demand in under-construction apartments immediately. Two, whether the middle class rejoices or not depends on if the costs of construction go down for the developer and how much of that is passed on to the consumer, Girish Vanvari, founder of Transaction Square, a boutique tax, regulatory and business advisory firm, says.

The reason why costs may not go down for the developer is that input tax credits have been disallowed. On the other hand, GST rates for some of the raw materials haven’t changed, or are still high. Niranjan Hiranandani, National President, National Real Estate Development Council (NAREDCO), said as much. “Industry lauds the GST rate cut on real estate to 5 percent on non-affordable and 1 percent on affordable housing without input tax credit as a positive move, which brings a big relief to the home buyers and helps to narrow down the demand mismatch gap,” he noted.

“This announcement gives an impetus to the affordable housing and enthuse home buyers to close the sale deals. The GST rate on cement has not been reduced as was expected, at 28 percent it remains among the highest taxed inputs for construction-and there will be no input tax credit, so developers will face a tough time. Also, if the announcement was ‘with immediate effect’, we would have seen sales of residential real estate units in the current financial year; w.e.f. 1 April clause means we will see a rise in sales figures only in the next financial year,” he added.

Some estimates say that today, 90 percent of the sale is of ready properties. The 10 percent in the under-construction market is going only to reputed builders. In many cases, buyers weren’t willing to pay the 12 percent GST and wanted the developer to absorb it. Stuck with inventory, many builders obliged. We will have to wait and watch if there is a revival in demand and prices post in April 2019.

Trends redefining the forthcoming of luxury housing in Lucknow

Over the years, luxury housing in Lucknow has perceived substantial prominence and appreciation, making it one of the most dynamic segments of the real estate sector.
The contemporary aesthetics of real estate infrastructure and the technology-driven luxury lifestyle have transformed the way we live in Lucknow. Today, these modern homes are considered as a lifestyle quotient, reflecting an individual’s aspiration and social status. A rapid rise in the number of high net-worth individuals (HNIs), increased aspirations, transforming lifestyle and investment interest from migration are the major factors pushing the demand for luxury housing.
Owing to the increased purchasing power and growing unending desires, many home buyers are also catching up with the pace to buy elite homes. The large chunk of NRI investment in the real estate industry comes into the luxury segment, making them the biggest driver for the growth of this sector.

Catering to the growing demand for luxury homes, developers focus on creating unique living spaces. They are coming up with the various formats of technology-enabled homes, apartments, penthouses, villas, bungalows, ultra-luxury houses, etc. Looking at the absorption rates of luxury housing over the last three years, the sector shows the signs of definite growth in the coming years.

Below are a few trends which will continue to redefine the luxury housing in Lucknow:

  • Branded Luxury Real Homes: Branded homes are launched under the banner of international luxury hospitality or lifestyle brands and cater to the exclusive niche category of buyers. These homes offer a unique lifestyle of global standards with hospitality services from the finest brands. This trend is fast growing in cities like Delhi-NCR, Mumbai, Pune, Bangalore and now also in Lucknow.
  • Themed Villas: Themed housing has gained a lot of attention amongst homebuyers. To cater to such evolving tastes and aspiring demands of the buyers, developers are launching exotic and exquisite theme-based projects.
  • Smart Homes: Owing to the constant technological advancements, the concept of smart homes has become increasingly popular and has tremendous potential to grow in the future. With the hi-tech technology-enabled systems, it provides the convenience and comfort in the day to day life of homeowners. It intends to incorporate comfort, entertainment, mobility, and security, providing occupants with connected solutions all the time.
  • Luxury Homes within The Reach: It is a niche market, gaining a lot of attention from the homebuyers of middle-income group. This home consists of major amenities and features of premium property and is affordable to a larger segment of the population. The growth of the Indian economy clubbed with the aspiring lifestyle of people living in the metros drives the demand of this segment. It lets middle-income group fulfill their aspirations of living in a luxurious home.

Hence, the luxury real estate flats in Lucknow Lucknow market is brimming with all such trends and developers catering to the segment that is striving to launch the best of their offerings to attract homebuyers.

Read this- Arguments for buying a ready to move in house

Budget 2019: 4 Booster Proposals that will encourage Realty Market this Year

Budget 2019: 4 Booster Proposals that will encourage Realty Market this Year

The Budget 2019 is set to bring few real estate sector-friendly proposals into the market to cheer the ailing Non-Banking Financial Companies (NBFCs) Liquidity crisis which played a perfect spoilsport last year. Financial Year 2019 has been a motley bag year for the Indian real estate scenario. This year witnessed the grand emergence of the new asset class- Industrial and Warehousing. Also, the commercial real estate class performed above expectations across various cities and filling of the Red Herring Prospectus for India’s first REIT was like the perfect icing on the cake of the prodigious performance in the commercial realty market. The residential sector showed positive signs as well this year but the NBFC liquidity crisis played the perfect spoilsport. Budget 2019 is ready with proposals that are sure to bring a sigh of relief and cheer the market. Let’s take a look at such Booster proposals that are going to give your property market a leg up:

Section 80-IB Deduction Allowances & Benefits:

The Budget 2019 proclaimed allowance of Section 80-IB benefits by yet another one year. The government’s “Housing for All” programmes will be aided by these allowances and will give a push to the affordable segment. The ailing housing sector has managed to revive itself with the help of Section 80-IB benefits. Many developers who were in the planning phase of 80-IB compliant projects will now get a respite in terms of receiving approvals for such projects. An increase in inventory of 80-IB compliant units will benefit more end-users. This is a seamless welcome move for the developers as well as the end-users.

Unsold inventory to be taxed as per notional rental income:

Previously unsold inventory was taxed as per notional rental income after one year of completion. This, in particular, was a subtle blow for the ailing real estate sector. In a slow market, it was anyway difficult to move the inventory and to add on to the problems, there was the burden of tax incidence on notional rental income within one year from completion. The government has now given the assistance of this to the developers. Unsold inventory will be taxed as per notional rental income only post two years of completion. This will give a respite to real estate developers sitting with unsold inventory.

Non-Leased second house property will not be taxable

Until the financial year 2019, notional rental income from second house property that was not leased was taxed. This created a huge trench on the cash flow of investors. The real estate market is slow and yield from residential properties is at an all-time low situation. In such a scenario it was prejudicial to tax notional rental on non-leased house property. The government has revised this rule and for the financial year 2020, second house property that is not leased will not be taxed.

Long Term Capital Gains Benefit from the sale of house

Long-term capital gains from the sale of house can now be invested for purchasing two other properties instead of the earlier mandated single property. This will enable home buyers to take a decision pertaining to purchasing property faster. This will also lead to residential sector growth. Large residential properties with momentous values made it very difficult for owners to sell and create multiple assets. With this new law, owners will now be able to invest in two residential assets and reduce the burden of capital gains.