The property gamble: Making it yield good returns

K Sathya Anand bought his first house in Perumbakkam because he strongly felt that investing there would always yield good returns.

Homes have always been a great form of investment. Rarely does it depreciate or fail to yield good returns. It was this aspect of homebuying that appealed to K Sathya Anand. Nearly a decade ago, at the age of 41, he purchased his first house and had expected a good return on his investment.

“Conventional forms of saving do not yield good returns. Take fixed deposits – it doesn’t provide enough returns that would help sustain you, especially in an age where the cost of living keeps increasing. The returns increase in proportion to the inflation. If the cost of living increases, so will the rental income,” says Anand, the Vice-President of a global financial technology company.

Elaborating on why he purchased a 3-BHK flat in Perumbakkam, he says, “We wanted to buy a house that was in close proximity to OMR because there would be good returns in terms of rent there. This house fulfilled all the criteria, and it is also close to other important industrial parks and offices. Our house is located within a villa community, which has a serene and calm environment.”

Though he expected good returns, he opines that the price of the apartment has not appreciated much in the last 10 years. “I expected a good return on my investment. However, that does not seem likely. Having bought the house at Rs 3500 per sqft, it has only appreciated to Rs 4,100 per sqft. And if I intend to sell to potential buyers, they would expect a discount. In the process, I wouldn’t get a good return,” says Anand, adding, “This was the only thing that I did not foresee.”

Ranjitha G, Times Property, The Times of India, Chennai

Making Chennai brave the weather Editor

The flat terrain of Chennai demands that we find efficient ways to tackle the rainy season and the flood it brings with it. The city is not Monsoon ready though.

Come monsoon, and the city of Chennai is seen grappling with various problems – the most glaring one among them being infrastructure that, at times, cannot handle even short spells of rain. The consequences of these issues include stagnant water and flooded houses that lead to other problems like water borne diseases or sanitation issues.

While the city receives rainfall every now and then, the crucial question remains if the city is prepared for the rainfall. Kiran Rajashekariah, an expert in urban policy and planning, explains “This year the India Meteorological Department (IMD) has predicted normal rainfall, which means there will be a little more than average amount of rainfall. The cities, including Chennai, need to prepare for the monsoon. The problem is our arrangements (solutions) are on ad-hoc basis. We come up with temporary solutions to resolve the problems. This should not be the case.”

Nalas to the rescue

The problem lies not in excess rains or for that matter even average rains. The lack of sound drainage system is one of the problems that leads to the flooding of roads. But that is not all. Rajashekariah elaborates: “Chennai is a city that is on a lower elevation, a few feet above sea level. So, the chances of flooding are higher. Restoring natural drains, often referred to as nalas, should be the foremost priority, which will be a long-term solution. Wetlands, in the natural topography, act as a sponge which absorb and store water. Due to rapid urbanisation and the resulting change of land use, they have been encroached upon, and destroyed. Also, roads are designed in such a way that the water will not percolate into the ground. All that needs to change.”

The city on the other hand is trying to cope up with the rainy season by making a few improvements.

He strongly insists that effective maintenance of the four major waterways, 30 canals that run through the city, and the numerous temple ponds, is imperative for the safety of the city.

The ISWD project is one of the ambitious plans of the government but there are reports that indicate it could be delayed by another few months.

According to Shaju Thomas, Director, Office Services (Chennai) at Colliers International India, “This means that the city may not actually be ready to face what the northeast showers could bring about. While a lot of plans are being thought about, including construction of missing storm water drain links, desilting tank beds and the like; one is yet to see action on ground. Apart from the government, there are a lot of things the common man should ensure as well,” he says and adds, “Free flowing drains get choked with garbage that gets dumped irresponsibly. There are many cases of unfinished storm water drains ending up as garbage dumpyards and one that stands out is on the Velachery-Taramani bypass road, where thanks to increased retail activity and disregard for the ecosystem, citizens of the city continue to dump just about anything. The area has always been known to be low-lying, which requires to be treated with extreme care.”

A Shankar, Coo, Strategic Consulting (India And Sri Lanka), JLL India, Says, A detailed project report had been prepared in 2016, for Kosasthalaiyaru, Cooum, Adyar and Kovalam basin for a length of 1069 kilometres at a total cost of Rs 4034.30 crore

This forms part of activities planned under Phase 1 of the Integrated Storm Water Drain (ISWD) project for improvement of the basins.

Improvement activities under this project and projects such as the Chennai Mega City Development Mission, covering other extended areas and the core city must be expedited.

Considering that the city is prone to floods and cyclones attributed to rapid development, it is vital that the initiatives to prevent these calamities, be progressive and planned to keep up with the pace of developmental activities.

source Ranjitha G, Times Property, The Times of India, Chennai

Property tax in Coimbatore higher than in Chennai

 

With the revision of property tax in the state, tax payers in Coimbatore corporation will be paying higher tax for their buildings than those in Chennai.

“The revised property tax might be appropriate for buildings in Chennai corporation, but it definitely is not appropriate for those in Coimbatore,” said K Kathirmathiyon of Coimbatore Consumer Forum.

During 2008, civic bodies other than Chennai corporation revised property tax not extending up to 25% of the existing slab for residential buildings, up to 100% for industrial buildings and up to 150% for commercial buildings, he said, explaining that Chennai corporation last revised property tax during 1998.

Though the land value is higher in Chennai, building owners from other parts of the state are paying higher tax than those in Chennai, he said.

“For instance, if a building owner in Chennai is paying Rs 2,000 as property tax until revision, we have been paying Rs 2,500.” He explained that now the tax amount has been increased to Rs 3,000 for the building owner in Chennai and to Rs 3,750 for people elsewhere.

“Why should we pay a higher amount,” Kathirmathiyon asked.

Former counsellors said that if the local body council had been in place, such a thing would not have happened.

The hike is exorbitant, C Padmanabhan, a former counsellor, said. The civic body, without knowing how to manage funds, has spent lavishly. “How will the civic body have funds if they privatise all projects?” he said.

The state government in general recommends that the civic body hike the tax up to a certain point and during the discussion at the council meet the exact hike percentage per building type would be decided, said S M Samy, former counsellor.

Since there is no council this year, civic body officials had accepted the government recommendations without any discussion, he added.

Source: Economic Times, Chennai

Alwarthirunagar – The residence of serenity

Chennai

With the best of social infrastructure and amenities, this area is the ideal destination for home-buyers.

Chennai has seen real estate boom that has resulted in the development of many areas. And Alwarthirunagar is one such place.

Located between two busy localities, Valasaravakkam and Virugambakkam, it is a quieter locality with developed social infrastructure and amenities.

Alwarthirunagar, in close proximity to these areas, too reaped the benefits of the development. It saw a lot of real estate growth in the 1990s.

Located between Valasaravakkam and Virugambakkam, many residents choose the area to escape the dense population of the adjoining areas, while simultaneously having access to good infrastructure.

Residents of Alwarthirunagar have access to all the facilities and developed parts. There are emerging high streets very close to the area with several prominent brands.

Also, it is in close proximity to the IT hub at Porur. With several employees from the place renting out in the area, Alwarthirunagar has proven to be a good investment for home-buyers.

Areas around Alwarthirunagar include Vadapalani, Valasaravakkam, Virugambakkam, Ashok Nagar, KK Nagar and Porur. It is easily connected to the rest of the city.

The neighbourhood has reputed English convent schools, private speciality hospitals and clinics, super market chains among other social infrastructure.

A few years ago, a huge mall opened nearby which has all the big retail brands besides having a huge multiplex and several restaurant joints.

source Ranjitha G, Times Property, The Times of India, Chennai

Metro rail track-laying in North Chennai by end of year

Chennai

As the construction of the 9km metro rail corridor in North Chennai is progressing in full swing, Chennai Metro Rail Limited (CMRL) has started preliminary work to lay ballastless tracks required for the operation of metro trains. The 9km Phase 1 extension line between Washermenpet and Wimco Nagar is expected to be ready by March 2020.

“We have floated tenders for both MEP (mechanical, electrical and plumbing) and for track work. We are expecting to start track work before the end of this year,” a metro rail official said.

The extension line in North Chennai includes a 2km underground section connected by two stations and a 7km elevated stretch linked through six stations. Once the line is ready, commuters from north Chennai can travel to several localities in the city that are connected by metro rail network.

Work for the extension line in north Chennai was launched in 2016. Towards the end of 2017, construction of two tunnels along a 2km stretch from Washermenpet to Korukkupet was completed. Soon after, work began for construction of the elevated corridor and is still under way.

CMRL is also constructing the elevated maintenance depot at Wimco Nagar. A tender was recently floated to find a company that can supply, install and commission electrical and mechanical systems at the depot. Metro rail is expecting to get these systems in place within a period of 18 months.

Source: The Times of India, Chennai

Government order lifts ban on multistorey buildings in Chennai

The government has lifted the ban on construction of multi-storeyed buildings (MSB) on approved plots in the Chennai metropolitan area (CMA). The move is expected to trigger a spurt of new multi-storeyed projects in redevelopment ventures, mostly initiated by the Tamil Nadu Housing Board (TNHB).

In a government order, housing and urban development secretary S Krishnan said the approval of the government was based on an announcement made in the assembly. However, there would be restrictions on construction of MSBs in select areas. As per the order, MSBs will not be allowed in aquifer recharge areas including the Buckingham Canal, areas near the Cooum river between Park railway station and Napier Bridge and Redhills catchment areas.

Realty sector sources said the move would ensure more space within the city for MSB projects. Confederation of Real Estate Developers’ Associations of India (CREDAI), Chennai chapter vice-president S Sridharan, said the move would result in developers revising their existing plans from special category buildings to MSBs. “The development regulations of the CMDA allows MSBs only on roads with a width of 60 feet. Against the backdrop of the government order, it is likely that revised applications could be filed for proposed projects that would qualify for constructing MSBs,” he said.

However, the question of developers renegotiating with land owners in joint ventures passing on the benefits following the move remains unanswered.

Source: Economic Times, Chennai

Tamil Nadu govt sets guidelines for officials in charge of property tax collection

Did you receive an SMS alert from Chennai corporation to make a self-declaration of your house/flat details for property tax purposes? This is part of a system put in place by the state to introduce a revised tax regime.

A detailed set of guidelines has been issued to commissioners of all local bodies on the preparation of a master list of properties and a time frame has been set to map them. At a meeting, officials were asked to first accumulate records of all properties available with housing society, housing board, slum clearance board, ration cards maintained by civil supplies department and other registers maintained by municipalities and corporations to verify omissions in assessment.

Officials are to cross-check records by going door-to-door and finally submit the verified data to seniors. Armed with this verified database, officials will ensure that residents file returns from October 20.

“Field staff will be deployed and 100% filing of returns must be ensured. The returns filed by the owners will be kept in safe custody with no room for tampering. Wherever returns could not be obtained before the due date, the property concerned should be inspected by the revenue staff and returns prepared and submitted to the office,” said a senior official.

Officials of the municipal administration department told TOI that all officials were informed of these guidelines and the deadline. “While everyone is aware that property tax has been revised, we wanted to create a system for officials to implement it which is why we came out with a set of guidelines for them,” said a senior official.

Source Komal Gautham, Economic Times, Chennai

Parent documents mandatory for land registrations in Tamil Nadu

Parent documents mandatory for land registrations in Tamil Nadu

Three days after mandating parent documents for registering properties, the registration department has eased the process. Now, the sub registrar offices will accept statement from banks that they were in possession of the parent documents, in case of mortgage. This apart, a written undertaking is necessary for laminated parent document that cannot be scanned for registrations. Furnishing parent document was mandated from June 11 to prevent fraudulent registrations.

In a circular, the inspector general of registration said that people, whose parent documents are with the financial institutions, can furnish statement from the respective banks that financial institutions are possessing the parent documents. The statement can be considered as a document for registrations, it added. As far as registration of plots and flats are concerned, the parent document was required to facilitate registration of the first unit from the same property. “However, the parent document is must during the resale of property to another person,” the circular added.

The registrations department made parent document an essential document for property registrations, wherein the document would be completely scanned by the sub registrar ahead of processing the registration. However, sources said, it caused inconvenience for the public since not all those registering their properties had the parent document, which are lying in different places including mortgaged with banks. Also scanning every document at the sub registrar office led to delay in registrations.

Against this backdrop, the registration department issued certain clarifications on June 13 to its previous order stating that only the first page of the parent document would be scanned for the verification purpose. It further said that those coming for registration must give an undertaking that documents, which are laminated could not be scanned for registration of land documents.

Source: Economic Times, Chennai

Chennai Metro Rail: Track work on Anna Salai underground line nearing completion

Chennai Metro Rail: Track work on Anna Salai underground line nearing completion

Laying of tracks in the underground section on the Anna Salai has reached the final stages.

Chennai Metro Rail Limited (CMRL) has floated tenders for the final finishing of track works from AG-DMS to Thousand Lights. The remaining 10km section of phase-1 between Washermenpet and AG-DMS is expected to be ready by December 2018.

While the laying of tracks has been completed, CMRL is now looking for a company to do finishing work on the downline for a stretch of 1.7km.

“Track work is still underway between Central Metro and Government Estate. We are likely to begin trial run by September,” an official said.

Metro trains are operated on ballastless tracks.

Construction of the stations and its entry structure is in full-swing between Government Estate and AG-DMS. One of the entry structures of stations Government Estate and AG-DMS is being integrated with the existing pedestrian subway.

Civil and track work between Washermenpet and Central Metro stations are nearing completion and installation of signal systems have begun.

U Tejonmayam, The Times of India, Chennai

Registration of properties may soon need Aadhaar

Property registrations in Tamil Nadu may no longer be facilitated without Aadhaar card as the state government is mandating the 12-digit unique identification number for the purpose. The move stems out of a recent fraud involving creation of forged Power of Attorney (PoA) for a plot worth Rs 4 crore at Madhavaram of a city-based resident currently residing overseas using impersonated identity proof with the alleged connivance of the sub-registrar.

Registration department officials told TOI a proposal has been sent to the government to make Aadhaar card compulsory for land registrations. “Once Aadhaar is mandated, people should provide their Aadhaar card as an identification proof. Our biometric devices would be linked to the Unique Identification Authority of India (UIDAI) central server to authenticate that the seller is the real owner of the property,” a registration official said.

It is learned that the proposal is in the advanced stage with the government as it has to amend the Tamil Nadu Registration Rules to make authentication through Aadhaar card for land registrations. Registration department sources said that mandating Aadhaar would help eradicate fraudulent registrations.

According to data available with the state government, Tamil Nadu has a 95% Aadhaar coverage. Of the 7.65 lakh population in the state, 7.27 lakh have Aadhaar cards. “In the cases, where people do not have Aadhaar cards, the procedures of the UIDAI would be followed to facilitate the registrations,” the source said.

In a recent case of fraudulent registration at Madhavaram sub-registrar office, a fake document was created in the name of the original owner of the 4,200 square feet vacant plot such that she has given the PoA to another person. “The forged PoA came to light when encumbrance certificate was applied to sell the property, whose market value is worth Rs 4 crore,” the official added. The case is under central crime branch police for investigation and an FIR has been registered, in which four persons, including George, the sub-registrar of Madhavaram, have been named as accused.

Yogesh Kabirdoss, The Times of India, Chennai