India’s Real Estate Adjusts To COVID19 Reality | Gulf News

The COVID-19 pandemic has irreversibly changed the world order as we know it, and the economy, forever. We thought we lived in an adamantine world controlled by humans, until a contagion microbe – that’s killing harder and faster than any missile – showed us we obviously don’t. Every human and business is hurting, held hostage in quarantine in the absence of a vaccine or cure, at least not yet. Real estate too, is an altered reality.

Indian realty witnessed an unequivocal shift in perspective, long before the virus struck. The enforcement of the Citizen Amendment Act beleaguered India, leaving a trail of bloodbaths and mayhem in New Delhi in its wake, with non-violent protests across the country since December 2019 being the norm. Unsure of the future of their inherent national identities and citizenship, the unrest and uncertainty propelled some Indians and NRI’s to re-evaluate their assets in the country, in particular real estate. Sale listings went up in Mumbai, in many cases because the of very concerns related to the CAA enforcement. These listings didn’t strictly adhere to the market’s competitive and demanding numbers, but veered more towards liquidating the assets at flexible, albeit profitable prices.

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Gateway of India Mumbai | Photo: Rubina A Khan

Virtual tours, an unheard of thing in Mumbai, have slowly started via FaceTime and WhatsApp, but it’s hard to say if that will become the norm. Virtual show-arounds will suffice for a preliminary showing, but to make a final decision, a physical tour is a must, particularly as the amenities are a big part of the tours. The innumerable fake listings for Mumbai properties that lure in susceptible renters and buyers, will cease to exist soon enough as the health clearance of a broker will become as vital as that of a prospective ROB (renter-owner-buyer).

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Bandra-Worli Sea Link Mumbai | Photo: Rubina A Khan / Getty Images

Brokers will by default have to become photographers and videographers, health screeners and learn how to disinfect their listed properties themselves. It will become standard practice for them to call a prospective buyer or a renter before a showing to make sure that he or she is feeling fine and has no cough or sore throat, and has not been out of the country recently – even after COVID-19 is contained. A short-term effect is that buyers will be less inclined to purchase or rent if they have no idea when they will actually get to visit the properties. The long-term effects are yet to unfold, but the virus will cripple sales despite lowered prices. There is no guarantee of buyers if self-isolation, travel bans and border closures continue indefinitely or intermittently.

I don’t see a likely upswing for the next two years at least. The economic uncertainty has sparked off a growing sense of unease and doomsday panic, and is likely to cost the global economy $1 trillion in 2020, according to the UN’s Trade and Development Agency (UNCTAD).

This feature first appeared in Gulf News on March 27, 2020

©Rubina A Khan 2020

India Gets An Updated Model Tenancy Act 2019 | Gulf News

India’s rental housing market, trammelled by archaic laws and ambiguity, is adapting to the pragmatic ameliorations outlined by Finance Minister Nirmala Sitharaman in her inaugural Union Budget 2019 speech. Sitharaman’s proposed regulations in the Indian realty market have since made way for the Model Tenancy Act 2019, drafted by the Ministry of Housing and Urban Affairs, that addresses the relationship between the lessor and lessee realistically and fairly.

The new tenancy law limits the security deposit to two months’ rent and lists heavy penalties for tenants overstaying and not adhering to the contractual terms of their rental agreements. An overstay will cost a tenant twice the rent for the first two months, that quadruples in the subsequent months. However, during such a period, the landlords are not allowed to cut off essential utilities like water and electricity. The Act also talks about creating special courts to deal with disputes between tenants and landlords and puts the obligation of carrying out repairs, maintenance and upkeep of the property like painting on the owner. While the landlord can’t increase the rent during the middle of the tenancy contract, the tenant can’t sublet the premises without prior consent of the owner. The Act aims to increase accountability in alignment with the government’s equitable development plans in the housing sector. The Centre has left it to the states to implement the Act or to amend it in accordance with their existing rental laws.

Mumbai | Rubina A Khan

Bandra-Worli Sea Link | Photo: Rubina A Khan

The Maharashtra government has decided to enact it for new constructions and introduce an amendment that protects properties governed by the Maharashtra Rent Control Act 1999. Landlords have domineered the rental business in India, and how, for far too long, especially in Mumbai, the only Indian city to feature in a top 20 list of expensive prime residential markets in the world recorded in Knight Frank’s Wealth Report 2019. In Mumbai, a real estate agent’s opening and closing has always been about what the owner wants, demands rather, barely skimming the surface of what a tenant wants, barring the monthly rent and astronomical security deposits. The broker is almost always submissive to an owner’s preferences, despite the tenant being as much a paying customer as the landlord. This parti pris dynamic needs to change along with the Act towards a balanced equation between tenants and landlords. Tenants need to rent and owners need their money – it’s a simple business deal and it’s about time it’s conducted like one.

The realty business in India is inescapably going to change with the Act, giving impetus to luxury rentals at the expense of buys. The biggest incentive in the rental sector is the security deposit being restricted to two months’ rent, allowing a tenant to utilise and invest the money for herself/himself, rather than blocking it with a landlord that earns interest off it. The Mumbai rental market stands to gain the most from the new Act.

Luxury rentals are far more fiscally appealing and viable with the new Act coming into play than ever before. The Act increases the confidence and security for both, landlords and tenants, getting into rental agreements aligned with the new norms, leaving minimum room for legal discord. Landlords will have to desist from imposing delusional demands on a tenant like sky-high security deposits and maintenance of the property and tenants will be legally bound to pay the weighty fines for overstay and misuse of a rented property.

This feature first appeared in Gulf News on August 3, 2019

©Rubina A Khan 2019

India’s Property Market Rides Election Wave | Gulf News

The triumphant win of Narendra Modi as Prime Minister of the Indian subcontinent for a second term, in the world’s largest election, has lent maximal credence to the country’s realty business in a manner most exceptional. The ruling government’s first term, contentiously driven by infrastructural development and financial realignments like Demonetization, RERA (Real Estate Regulation and Development Act) and GST (Goods & Service Tax) hit the cash-rich realty business particularly hard. Predictably, it was met with uproarious dissent. But, luxury realty seems to have taken a real turn since the legalized reorientations in the business, with antagonism giving way to smarts.

The luxe life is an addiction like no other. As long as there is human desire to live like royalty and be an in-your-face show-off, luxury real estate in India is headed forward. It stands at a profitable vantage point today, espousing all three acts, advantageous to both, builders and buyers. Indian realty expects investments to double to $10 billion in 2019. The paper trail and financial transparency accorded to the business is dominant, making it a streamlined, and somewhat trustworthy experience today. But there’s no denying that the business is devoid of the robustness and speed it once basked in, languishing ever so often in protracted sales.
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RERA seems to have had the most impact so far, not so much on newer developers as it has on the bigger players with large, unsold inventories, given it is now mandatory for 70 percent of the money to be deposited in bank accounts through cheques, restricting unaccounted money being flushed into the realty business. Aside from its financial transparency, a RERA requisite that’s very conducive to prospective buyers, is that builders are obliged to quote prices based on carpet area (inclusive of usable spaces like the kitchen and bathrooms) and not super built-up area. Having said that, RERA needs to hasten the pace, and frequency, in providing aggrieved buyers who need long overdue compensations from unscrupulous developers across India. The clean-up in the business has only just begun. It is anything but cleaned up, as far as realty racketeers are concerned, despite the new regulations and progressive revamps of archaic Indian property laws like Insolvency & Bankruptcy Code and the Benami Transactions (Prohibition) Act being in place. For the business to regain the implicit trust of consumers and hit immediate sale highs, compensating buyers for their losses is vital, and it should become a regular occurrence as compared to the rarity it is today.

Luxury residences and serviced luxury residences make for accelerated buys and sells in India, and rightly so, as time is a luxury the wealthy can’t afford to indulge in. Newer developers in Mumbai like Aditya Kilachand, Partner at Innovation Estates LLP, seem to be on the right beach of luxury realty, building villas by the sea in Alibag, a mere three-hour drive from Mumbai. Tapping into Alibag’s infrastructure, the improved connectivity and proximity to Mumbai, its existing community and fairly undervalued land prices is just realty forethought and judiciousness. Seven luxury serviced villas called L’Hermitage, custom-designed by Sussanne Khan of The Charcoal Project, will be ready for some serious selling upwards of 10CR by Sotheby’s International Realty India, come July 2019.
villWith all the luxury constructions and developments, there is a new shift in the market of late, that of “aspirational luxury” residences that aren’t remotely luxurious, barring their price points. Priced at 7CR upwards for a 3BHK in the business suburb of the Bandra Kurla Complex in Mumbai, these residences allude to a luxurious lifestyle with cleverly scripted and assertive marketing hype. The insides of these residential towers are at most basic, with a garden path, a swimming pool and some semblance of a gym thrown in, with views of the city’s under-construction skyline off a balcony, masquerading as luxury amenities. Needless to add, it’s a “white elephant” investment for owners as resale inventory is at its lowest and unrealistic rentals dictated by the builder’s team, with few takers, stand testimony to the “mimic luxe” gimmick it’s established on. These kind of constructions need to be reined in, as these will lead to a catastrophically high, over-priced, unsold inventory in the country that will affect consumers far more than the builders.

This feature first appeared in Gulf News on June 9, 2019

©Rubina A Khan 2019

Indian Realty Adjusts To New Realities | Gulf News

Luxury realty is the obsessive reality of the moneyed order. Spending money is the only currency that fortifies the social standing of the affluent – both on the Forbes list and off it. Real estate buys and sells make for a fiscal haven in these propitious months of the Indian calendar, but this time around, there are no buyers. The Indian realty index is stable, but it doesn’t compare to what it was prior to demonetization. The immediacy in the market is non-existent but it remains a lucrative market for investors, expats in particular, after the sharp depreciation of the rupee. But time is the key component at play here. Buying property today equals buying time too as a vital appendage.
GULF NEWS COLUMNA luxury apartment in Mumbai valued at Rs70 million will sell, eventually, but time will play a starring role in the sale today. Slashed to Rs55 million at a sizeable paper loss to the owner, it’ll sell within six months to a year. Cutting losses on luxury property investments was unthinkable, the crash of 2008 notwithstanding. I wouldn’t call this a seller’s market – it’s the buyers that decide the when and the where, with no ready money in the market. Realty purchases are entirely need-based and not investment-based, barring corporates who have the money and readily-available loans to enable their investments. Individual investors shirk buying as that entails endless tax probes and exhausting paperwork.

Realty projects are akin to a big Bollywood production that’s high on the collaborative trend today, making for sound business strategy, sharing profits and losses in the entertainment business. This seems to have found favour with realty developers too. But developers don’t really have a choice unlike Bollywood producers who can swing an independent film with Salman Khan playing the lead at whim. They’re compelled to co-build, sitting on overpriced plots that aren’t feasible to build on one’s own financial steam with the continued deceleration of money in the market. Few independent developers build in the luxury segment today. Co-building is a profitable proposition for developers but it makes it a larger liability for buyers to commit to new constructions.

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Under construction development in Mumbai | Photo: Rubina A Khan

India’s leaning more towards luxury rentals than luxury buys. Selling seems impossible. The return of investments on purchased property through leasing is abysmal, and not even marginally close to purchase costs. Reselling isn’t easy either. Future-forward individuals are now choosing to rent luxury homes with all the trappings versus buying. Fiscally, it’s more conducive to live the luxe life without a home owner’s liabilities. The freedom to shift in and out of cities, upsize and upgrade to glamorous homes and neighbourhoods when the mood strikes far outweighs setting up immoveable roots in one place – and all of it with clean bank transfers that comply with realty regulations.

Green is the new luxe word and agricultural neighborhoods is the trend du jour. India being an agrarian economy can take to agri-hoods swiftly, integrating agriculture into residential neighborhoods with working farms and green space. Agri-hoods suit the natural Indian landscape and will appeal to environment-conscious, rich millennials who are always seeking the “next level” in their lives. Living concepts of clean eating, organic produce, solar energy, climate change, rainwater harvesting and the great outdoors with fresh air are selling successfully through smart adverts worldwide. Under-construction properties advertise zealously with a definitive emphasis on green cover and integrating sustainable and organic food produce everyday – a miniscule attempt, but important nevertheless. Full-scale agri-hoods is the future of luxury realty and building agri-hoods will unify Indian community living.

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Under construction development in Mumbai | Photo: Rubina A Khan

Art that no longer hangs on a wall or is vulgarly placed in the middle of a room nor discussed in hushed tones, but tactile art is taking over luxury realty. Established and emerging artists are designing not just pieces of art, but entire residences, harmonizing their artistic voices with the distinct individualism of home owners. Fashion couturiers Rohit Bal and Tarun Tahiliani are both engaged in residential design, adding their genius to concrete. Fashion and art create a historical archive of the times we live in.

Architecture is almost incongruent to individualism with high-rises taking over Indian metros, cities and towns. But the highest honor in the architectural world – the Pritzker Architecture Prize Laureate – went to an Indian for the first time this year. Professor Balkrishna Doshi won the honor for his deeply personal and poetic architecture that touches lives of every socio-economic class across a broad spectrum of genres. If only the Indian realty business could turn a page as poetic as his works in its design ethos.

This feature first appeared in Gulf News on September 29, 2018

©Rubina A Khan 2018