Archive for the ‘real estate trends’ Category
May 10th, 2011 | 
Author: Be it residential or commercial, the demand today is for new and quality real estate, and Mumbai is religiously following this trend.
body:Be it residential or commercial, the demand today is for new and quality real estate, and Mumbai is religiously following this trend. In the current scenario, industry experts predicts Mumbai real estate sector to witness a price hike in the coming months.
Residential Scenario
Residential real estate of Mumbai has been on a high from past two-three years. The property rates are expected to shoot up more in near future.
With 14 lakh sq.ft of commercial and retail space by Indiabulls and 5 lakh sq.ft of Peninsula II properties under construction in Lower Parel, Mumbai, the demand for residential properties is anticipated to rise by 30 per cent from March 2008, says industry sources.
Also, amid township trend catching up with the end-user all over, the demand for high quality, luxury residential projects are escalating. This inclination is strong although property taxes and maintenance costs are exponentially higher, state real estate consultants.
Commercial Prospect
According to media reports, the commercial property rates in Mumbai are likely to rise by about 50 per cent with large number of premium buildings getting constructed.
As India’s costliest commercial hubs are now being located in Nariman Point and the SBD of Bandra Kurla Complex, Mumbai commercial real estate is seeing record escalation. Prices in Bandra Kurla Complex are as a minimum 25-40 per cent higher as compared to Nariman Point.
In fact, a strong demand for international standards of construction in office space from corporate has driven the values in the air.
Future Outlook
Since Rs 9,250 crores plan has been intended for Dharavi’s redevelopment, Asia’s largest slum is seeing a sharp rise in its property prices, whereby a one-BHK house is to cost the same as an elite house in Kandivli or Borvli.
Further, India is emerging as a sizzling destination for quality commercial enterprises, says industry sources, and builders are looking forward to cash on by setting up huge number of commercial properties.
With new developments and redevelopment plans being undertaken, Mumbai Real Estate industry can only ascend in the times to come.
Understanding the matters involved in commercial real estate is not just like eating a piece of cake. Though you gather a lot of knowledge and go through tutorials, hands on experience or live experience in ICI real estate market can get you better armed to fight the battle. Not everyone is interested in this commercial real estate but indirectly sometimes you get trapped in this ICI real estate world. For instance, if you are a home owner or you own a land scape, then it means that you own a real estate. Now, when you either try to sell it away or give it for lease – you are into the commercial real estate world.
Building For Lease:
If you are giving your building for lease, then understand how to get prepared for it. There will be a step by step format to assist you in preparing your building for lease. As a part of commercial real estate or ICI real estate, building for lease abides some specific set of rules for peaceful transaction.
Identify the basic building for lease charges:
The building for lease cost can be determined in two ways.
1. The cost of per square footage multiplied with the cost of square footage will give you the annual cost. Break it down or divide it with 12 months can give the exact monthly cost. This will be the monthly building for lease charges. You can also check the current commercial real estate or ICI real estate news and updates to find out the cost per footage.
2. This charges accumulates the surcharges called the common area maintenance (CAM). These charges are common for leasing real estate.
Charges generally included in case of lease:
• You pay the tax for the part of building occupied by you. It is a general real estate leasing condition.
• Maintaining the space outside the building (lawn mowing, parking lot repairing, snow removal, land scaping etc.).
• Utility services.
• Property Insurances.
When you are giving your commercial real estate for leasing, these are the common prime factor that should be taken care of. There will be several other charges based on the type of real estate you are dealing with.
Building for sale:
When you are selling your commercial real estate or transferring the ownership of ICI real estate then it is a multistep process. Before you try some other sources, place a big notice “Building For Sale”. You can get someone calling for purchasing the building. If you think that handling this commercial real estate or ICI real estate business is not your cup of tea, then interview some broker to get help for selling your commercial real estate. Neither depends on the broker completely nor go by his words. First of all evaluate the property and fix your price, then tell the broker what you want. The broker will of course keep his share which is not at all our look out.
Contact a good broker for getting the most from your ICI real estate matters. If possible take help from an advocate who is experienced in commercial real estate dealings.
For several years now, the real estate industry has faced hard times. Whether you measure this as slumping sales of new homes or resale homes, or falling home values, things have looked bleak. The negative press coverage about real estate, often with banner headlines about the most recent gloomy statistic, has fueled the attitude of pessimism we see. This has sometimes been a self-fulfilling prophecy: real estate “experts” predict continued falling prices or sales, potential buyers read this and either decide not to make a purchase. The result: lower sales and lower home values.
The problem with this pervasive pessimism is that it does not tell the whole story. The real estate market is actually many, many markets, not just one. There are regional markets such as the Northeast or the Midwest. Markets within cities such as Los Angeles, Las Vegas, and Seattle. And local markets within each of the cities. In any of these markets, conditions vary widely. Some real estate markets in the U.S. have already begun rebounding, or in some cases have experienced newly rising prices. Factors such as the state of the local economy, net in-migration of people to the market, and the existing supply of homes all play a part in how a given market performs. You can’t look at broad-brush national statistics and draw conclusions about whether it is a good time to buy or not. You have to research the local market where you are thinking of buying and evaluate market conditions there.
The second thing to keep in mind is that the news media are reporting past results; they have no more insight into what may happen in the future than anyone else. There have been many times when the stock market is overwhelmed with pessimism and the result is irrational selling of shares. Then, something sparks a rally and investor confidence returns. The point is, the stock market does not send every investor an e-mail saying: Hurry! Now’s the Time to Buy! Most equity investors do not recognize when the market is turning and so miss out on opportunities. Similarly, by the time it is commonly recognized that the real estate market has rebounded, the best buying opportunities will already be gone.
It is really impossible to predict when the real estate market will rebound on a national level. For individuals with a long-term perspective, five years or more, a home will continue to be one of the foundations of a wealth-building strategy. In an economy as strong as the American economy, where home ownership has for generations been encouraged by Federal government policy, there is no reason to believe that real estate values will not resume their upward climb in the near future. Will it be in six months? A year? Two years? That’s hard to say. What’s important to remember is that this down period in the real estate market will end. Smart investors know that and aren’t forced into unwise real estate investment decisions based on the whim of the media.
Where are home values going? Do real estate pros and economists have the inside scoop – and they just aren’t sharing? ………not quite.
A number of organizations compile and analyze data about housing values – often including projections about where prices are headed. To get the best possible information for use in real estate lending and investing, we’ve reviewed many of these reports. They generally belong to one of two major categories, each containing a critical flaw:
1) Realtors, Homebuilders, Mortgage Bankers and other “special interest” groups have their own full time economists. They produce data compilations and projections about home values and market activity.
Major flaw: It’s biased information. Those whose livelihood is directly
linked to the number of homes that sell have a vested interest in always predict-
ing a positive outlook for home values. During the most inflated home market
in our lifetimes, the 2006-2007 housing boom, the real estate brokerage industry’s
key economist indicated that the market was stable and that no downturn in prices
Advice doesn’t get any worse than that!
2) Legitimate research from economists, data providers, and governmental
bodies: This research tends to be from a wider range of sources. These providers are simply selling their research, (rather than influencing homebuyers) so they tend to give non-biased conclusions about the data.
Major flaw: The bulk of the data and analysis available from these providers consists of statistics for an entire county, city, or zip code, and not a specialized market area. Imagine your own zip code – if a number of lower priced homes happened to sell in a given period, the “average sales price” for your area would
be artificially low, failing to include more expensive homes that didn’t happen to sell.
For real estate lenders and investors, this doesn’t work. Given the importance of knowing where a market is going, we need accurate, unbiased information about what’s going in the specific neighborhoods in which we invest.
Finding a better way…
First, we went looking for reliable sources of information. We spoke to various
research providers in the real estate industry, executives at real estate and
mortgage companies, and to several appraisal firms. We were unable to find a
reliable source of research and analysis that addressed our concerns.
Then, working with our own staff, we defined what information we needed and
what the problems with available data were.
As a result of our research, we realized that we needed specific information
about homes in different markets, with the ability to spot trends in smaller
We had to develop our own
system. We did. – a proprietary system for data gathering, data analysis, and
value tracking.
The system consists of six key components;
1) First, we identified seventeen California homes and townhomes that
represented a cross section of the types of properties we make loans on -
homes ranging in size from 750 to 3,600 square feet, with market values
from ,000 to 0,000, and in areas ranging from inner city to suburban to outlying areas.
2) We documented all of the key information such as square footage, lot size, age, amenities, and similarity to other homes in the area. We always make the assumption that the property is in average condition, comparable to the other homes selling in the same market area.
3) We carefully re-appraise that same home every six months, (and sometimes more often, as necessary) completely starting from scratch, researching homes that have recently sold in the market, as well as similar homes listed for sale.
4) We then analyze the data, noting specific changes in the value of the home.
After determining if the home’s value has increased, declined, or remained stable, we start to research other data available on the neighborhood, the immediate market area, the zip code, the city and the county. Often, the specifics of a 0,000 home in a neighborhood may indicate no change in value, while the statistics relating to 0,000 homes in that same market tell a very different story. We often find large differences between our findings and the general statistics available about the same zip code or city.
5) We then research the surrounding local economy and changes occurring in the local city of county, etc. We study the reasons for any decline or increase in value that may be different from the available data about trends in the larger market area. This part of the process is critical. Understanding the “pocket areas” and smaller sub-markets that completely escape most commonly available research can help avoid making a “bad” loan or bad investment decision.
6) When we receive a loan request or evaluate an investment opportunity, we’re often provided with a property appraisal. We almost always re-appraise the property ourselves, or order an appraisal from an appraiser that we trust. As part of our review of appraisals, we use our value research. It’s unsettling to realize that most appraisers are generally unaware of this type of research and analysis in evaluating property.
This represents a lot of additional work – but does a tremendous amount for the lending and investing process. Many smaller areas, within larger cities or zip codes are increasing or decreasing in value, but not in the same direction as the zip code or city statistics show – all information unavailable from the special interest groups.
The risk imposed by property value fluctuation requires close attention,
careful research, and study. While we don’t have all the answers, this
approach to valuation improves the quality of investment and lending
decisions while reducing risk in the process.
In today’s housing market where there are a lot of foreclosures and loan company REO contracts, figuring out the sincere worth of a home can be difficult. The comparable sales technique is the most usually used — and still the most exact one — to discover the value of single-family homes, condominiums and smaller rental buildings (two to four units).
Get going by researching info about sold houses on your local bureaucracy Web sites for your target location. The tax assessor’s facility and county municipal building regularly offer searchable internet-based information sources that admit you to inspect the values for homes within a specific neighborhood. They frequently enumerate full facts about the properties, including square footage. Plus, paid Internet sites such as Electronic Appraiser (www.electronicappraiser.com) give you thorough information, especially in locations where internet-based data may be meager.
Free Internet sites such as Zillow (www.zillow.com) also present home data, but the info is less comprehensive than the to be paid sites. For example, the seller’s name might be left out, which can be relevant if the seller was a bank, as in the illustration of a foreclosure sale. If that’s the case, it shouldn’t be treated a similar sale because the residence was sold in distress.
Be vigilant about using Internet sites that provide a computer-authored valuation. These are called automated valuation models (AVMs), which assemble sales statistics from comparable residences to reveal an estimated price. While AVMs can be a gauge for deciding worth, they can be off by as much as 10% or more. With a small amount of research, you can home in on the worth to as close as 3 to 5% percent.
The most useful computer database for procuring information about comparable houses is the local MLS. This database shows the number of days on market and offers details that testify if the residence was modernized, if the seller presented adjustments on the sale and so on. This extra data is normally not securable through different sources, so asking a real estate agent or appraiser to aid you will be critical, because most MLS systems aren’t obtainable to the general public.
While different influences come into play when you’re judging the price of a home by “comps” (corresponding sales), the three key factors are location, size (square footage) of the property and the number of bedrooms and bathrooms. Of course, you’ll need to evaluate many other aspects before you can fixate on the exact price of a residence, but these are the “big three”. You must be able to examine visually at comparable sales involving properties with these three factors and get a good sense of the worth of the property you’re selling.
Location
Neighborhood is very imperative when you’re comparing sold houses. A professional appraiser usually looks at houses within an one-mile radius or less, and so ought you. In the case of a subdivision — where the homes are all same and constructed in the similar time span — you need to correlate identical residences with comparable styles in the identical community to get an conclusive valuation. If there’s a big mix of residences in the subdivision, you may need to go past it to obtain comparable sales. Just be thoughtful with “segmentation lines”. Geographic lines such as opposite sides of the river, the recreation area, or a premier thoroughfare can be masked breaking up lines that consign the product to another school locality and may not amass equitable comps.
Square Footage
When discovering a home’s price, be sure to rate the square footage. Note that appraisers ordinarily look at homes that are within 20% up or down in square footage as comparables. Ordinarily (particularly within a community), most properties fall within a somewhat constrained size range. Therefore, you have to be capable to generate a good benchmark for the selling price of residences in those precise sizes.
Of course, not all square footage is created equal. Most people think that if a home has 1,000 square feet and is worth 0,000, then the 1,100 square-foot house next door would be worth 0,000. Incorrect! The extra 10% in square footage equals merely a few percentage points in price. If these two homes offer the same locale, luxury, and number of bedrooms and baths, the 10% additional square footage won’t transfigure the appraisal much. Why? Because there is a fixed cost on a house based on the value of the land, outlay of fabrication, sewer, development plans and other considerations. An additional few hundred feet of space involves very little price paid — only wood, nails, carpet and perhaps some minor electrical and plumbing expenses.
Rooms
The number of bathrooms and bedrooms is more pertinent than simply the raw square footage. In other words, a three-bedroom home with 1,200 square feet might be valued at more than a two-bedroom home with 1,250 square feet. It is also important where the bedrooms and bathrooms are located – on the main floor or the basement. While done basements can add value, the level of that worth is smaller than it is for above-ground living areas. Furthermore, this significantly varies controlled by on unique areas of the country. In very damp areas, below-ground living room isn’t as valuable to homeowners as in dryer localities of the country.
To discover a home’s worth using comps, also look at the appearance and number of bedrooms and bathrooms. Three-bedroom residences are as a rule a large plus in comparison to two-bedroom homes, but four or five-bedroom properties don’t supply as much over a three-bedroom if they are roughly the equivalent size in square footage. Furthermore, two bathrooms is a big improvement over one bathroom, but three or more don’t contribute as much supplementary worth.
When comparing bathrooms, make certain you appreciate the distinct types of bathrooms and weigh them correctly. A full bathroom shows a shower, bath, toilet and sink. A three-quarter bath provides a shower but no tub, plus a toilet and sink. A half bath shows a toilet and sink but no tub or shower. A three-quarter- or full-bath create approximately the same worth, particularly if another bathroom in the home has a tub. A half bath has less value unless there are enough other bathrooms in the house. Also, a five-piece bath (separate shower and tub) may contribute more value than a standard full bathroom with a combination shower and tub.
Other Considerations
There are other considerations to ponder that influence the price of a house, but habitually you’d give these less weight than the location, size and number of bedrooms and bathrooms. Some houses have one-car or two-car garages, some have carports and others have neither. The garage considerations can affect value, depending on the rest of the area. For example, if the neighborhood comps all have two-car garages, this can change value as much as 10% on the subject residence if it only has an one-car garage or no garage. However, if the houses are all small and there’s a mix of garage alternative, choices the garage won’t be as serious of an issue. In the same way, a four-car garage in a three-car-garage-area in all probability won’t count for much either. One exception is with condominium buildings. Parking spots or garages are typically sold with condominiums and can have good price, in particular in large cities where parking is restricted to the street.
Furthermore, besides looking at houses sold in your specified locale, you have to look at residences that are for sale. While “asking values” are not “sold prices,” it will give you an sense where your local housing marketplace is heading – up or down. Also, keep in mind that if your strategy is to flip the house, the properties for sale are your direct competition and thus the asking prices are highly important. For example, if you find houses that have sold for 0,000 but the present-day inventory on the market is prices at 0,000, the asking prices of your competition become just as relevant, if not more, as the sold prices of other houses.
If you often invest in the equivalent neighborhood, take a little time to create a “due diligence” workbook of houses that have sold, are under contract and are for sale within your area. Notify your real estate broker to inspect the MLS every week for brand new listings and sold houses so that your info is perpetually up to date. Never forget, you are only as good as your info, and the more information you have, the more definitive your values will be!