No Comments

A Guide to Home Loans For First Timers

A Guide to Home Loans For First Timers

Buying your first home can be daunting and if you feel that way, you’re not alone. It’s understandable because it will no doubt be the most expensive thing you’ve ever bought in your life, so it isn’t for the faint-hearted. It can be overwhelming when you apply for a home loan, not knowing which grants you might be eligible to apply for, how to get approved, let alone where to search for your home. Add to that the confusing jargon, but here are some tips to help you feel more confident:

Check your eligibility for a home loan

The first step is to make sure you’re eligible. To get an idea of how much you can borrow give a few lenders a call. You’ll get a realistic idea of what kind of home you can buy and where you can buy it if you know your borrowing limit. You can also check the Internet for a borrowing power calculator.

Do your research for options

You’ll find the market is complex and competitive when it comes to home loans. Shop around to find a rate that is competitive to make sure it’s not higher than average. Mortgages vary, and you can have a variable (rates change as the Reserve bank raises or lowers them) or fixed interest rate (the rate stays the same, but they’re usually higher) or an interest-only mortgage, depending on your circumstances.

Get your debts sorted and save for a deposit

You could find it harder to get the home loan you want if you have much debt, especially if you’ve missed payments and it has affected credit rating. Before you apply, it’s advisable to pay off as much debt as you can, or you could try consolidating your debts. Remember, credit cards are more troublesome than a HECs University debt. Also, you have to come up with a deposit, and the larger the deposit, the more likely you are to be successful in your loan application and the more you can borrow. A five or 10 percent deposit will perhaps get you a home loan, but usually, you will need 20 percent of the purchase price.

Calculate your costs and any concessions

There are many hidden costs to consider when buying a home, and that’s apart from home loan repayments. You need to calculate loan registration and application fees, removalist costs, building and pest inspections and conveyancer fees. Check whether you will pay any stamp duty and if you’re eligible for a grant. The states all have different rules but if you’re buying your first home in NSW e.g., the government changed the rules in 2017 as follows:

New rules in NSW

  • Stamp duty abolished on all homes up to $650,000
  • Stamp duty relief for homes up to $800,000
  • Grant of $10,000 for builders of new homes up to $750,000, buyers of new homes up to $600,000
  • Abolished insurance duty on lenders’ mortgage insurance


Check your state for grants and stamp duty.

Home buyers beware

Caveat emptor means ‘let the buyer beware!’ You wouldn’t buy a car without checking it for problems, so the same goes for a house. As the buyer, you are responsible for making sure you get what you pay for and that it’s in the condition stated in the contract. If there are necessary repairs, make sure you either have the cost taken off the house price or if you can live with them get a quote and add that to your extra expenses.


Author’s Bio


Alex Morrison has worked with a number of real estate agents for over 10 years. In this time he has worked with a range of businesses giving him an in depth understanding of many different industries including home decoration, improvement, renovation and sales.


No Comments

Compact Homes –new trend in Australian housing market

Compact Homes –new trend in Australian housing market


When it comes to buying homes in Sydney, Melbourne and Brisbane in Australia, ‘Small is nice’ is the new buzzword with several Aussie home-buyers and investors.With the ever-increasing pricing of housing in Sydney, Melbourne and Brisbane, buying a large house with big land area is not a suitable option for several new home buyers and investors. Large land area and construction cost of extra built-up area makes the property very expensive and un-affordable for the buyers. With bankers and lender tightening their coffers for housing finance, it is becoming more difficult for the new buyers and investors to avail loans for expensive properties. Contrary to this, taking a small loan and paying up the monthly re-payment on affordable property is easier and workable, with less burden on purchasers.

The new age buyers in Australia are less focused on size and look for homes in locations closer to or well-connected to their workplaces, shopping, education and medical facilities so that their daily commute is reduced and work-life balance is maintained. Compact homes are also low on maintenance and are invariably very budget-friendly in all respects.

On the back of prevailing market sentiment and many house buyers / investors looking to shy away from heavy investment in property market presently,compact or smaller homes with affordable pricing are much safer and feasible options. House sizes in major Australian citieshave alreadystarted shrinking as developers and builders are increasingly building affordable priced homes for which the demand is currently very high. Smaller units, apartments, townhouses, villas and compact houses with smaller land sizes are coming up in most of the city areas and suburbs in Australia, paving way for more space usability, multi-functional and efficient planning of houses.

  • Housing Industry Association figures show the average size of a home has condensed over the past five years as builders grapple with skyrocketing land prices and rampant population growth.
  • The average floor size of an Australian home (houses and apartments) has fallen to a 20-year low. Data commissioned by CommSec from the Australian Bureau of Statistics shows the average new home size is 189.8 square metres, down 2.7 per cent over the past year and the smallest since 1997.
  • HIA development analyst Kristin Brookfield said the average floor space of Sydney homes has been decreasing because fewer families could afford large homes following a $170,000-odd jump in the median house price over the past three years.
  • The smaller home size reflects the increased building of apartments (around half of all new building is apartments). Apart from increasing percentage of apartments, compact houses like town-houses, villas, row houses and terrace houses are also being offered in various markets.
  • Councils have also made it easier for builders to construct smaller dwellings by increasing density regulations.


Price points play a big role in sale of houses today, and the entire eco-system currently revolves around the first-home-buyers looking to buy affordable homes to avail the government rebates on Stamp Duty and FHOG. With most of these rebates are on under $600,000 house price, or part rebate on upto $850,000, the developers and builders doing their best to bring some of their offerings within this price range.

This phenomenon of shrinking house sizes is most pronounced in Sydney, where property prices are the highest.According to a report, a standard Sydney property has gone from 312 square meters in 2010 to 285 square meters, a reduction of 27 square meter floor area. Forecasts suggest properties will continue to get smaller in cities like Sydney as scarcity of land resulting in higher prices.While we can see this trend gradually transferring to other cities of Australia as well, Sydney is the most land constrained city where the only alternatives for budget constrained homebuyers are in the distant outer suburbs of north-western and south-western regions.

However, since infrastructure developments in such distant areas is relatively slow and it will take time for the amenities to develop, most families are looking at townhouse or apartments at relatively developed areas, which have good infrastructure amenities like public transport, schools, shopping and entertainment avenues.

Other cities like Melbourne and Brisbane are also following suit, however, one can still get large houses and apartments in some areas or suburbs. In most cities, many working couples have changed their long term plans of owning a quarter-acre block to a compact but more city location primarily for two reasons ­ 1. they can’t afford a house that big a size without it being more than an hour commute from the CBD, 2. Lack of infrastructure and other amenities does not make suburban areas more livable for present day families who want to be closer to their jobs, friends and families.

Clearly, generation Y, millennials, couples and small families want to live closer to work, cafes, restaurants, shopping and public transport, and are ready to giveaway living space for better proximity to the desirable amenities.


No Comments

Indian Real Estate – an Outlook for 2018-2019

Indian Real Estate – an Outlook for 2018-2019


Indian real estate is going through a major transformationin the recent years. Some of the big decisions and new policies of the Indian Governmenthave affected the real estate sector in big way, albeit in positive or negative manner. Few of the policy changes introduced by the government, such as demonetization, RERA, and REITs in 2016, followed by GST and FDI in 2017, have made huge impacts on Indian real estate sector. Apart from this, there are various other reforms anticipated by the expertsin Indian economy, which may come into forcein the coming time.However, the new legislation and trends that have come up in the real estate market have the power to reshape the Indian real estate sector for a long term and year 2018 can be a starting point towards the Indian real estate growth story.


Looking at the positive aspects of the reforms, there is a big possibility that years 2018-19are going to be the bumper years for the Indian realty market. The transformation of market has attracted the eyes of domestic and foreign investors, and there are various positive trends observed by the experts, which point towards a more pro-active, positive and growing Indian Real Estate sector. Listed below are seven major positive trends in the Indian Real Estate market, which shows that there is great depth in the market and the so-called revival of real estate in India has already started.


  1. Global capital flow into Indian real estate:

One of the major signs of revival for Indian property market, investments by global investors has increased recently, with various international property funds and investors acquiring strong positions in Indian realty space. As per World Investment Report 2016-17by the United Nations Conference for trade and development, India has been ranked fourth in terms of FDI inflows, which shows strong interest by the foreign buyers and investors in the Indian markets. Improvements in India’s overall credibility with transformation of regulatory framework has built up an attractive destination for both global and Indian investors. Thanks to improvement in transparency, NRIs and foreign investors find country’s real estate market more reliable than ever before. Thus far, Indian real estate has attracted USD 32 billion in private equity and various other foreign investors are willing to invest in various sectors in India. As per Economic Survey of India, Indian Real Estate sector witnessed significant improvement attracting a total Foreign Direct Investment of USD 257 million in the second half of 2017 only. Looking at this trend, the expectations from private equity is high in the coming years and it is projected that 2018 and 2019 will be even bigger years for FDI investments in India.


  1. Developers will revamp their business models

From year 2000 to 2016, because of lack of strong regulations of Indian property sector, developers used to launch many projects at the same time and there was no guarantee of completion of projects on time. There are numerous instances where investor’s hard earned money went down the drain, simply because the developer is highly over-leveraged and could not complete the project. Now, with the enactment of RERA Act (Real Estate Regulation and Development Act, 2016), a deadline has been fixed for the projects to be completed, which will force developers to re-zig their business models. The developers will require to bring more transparency as well as accountability in their processes, and do a lot more to increase consumer confidence in the project. Also, other legislative reforms such as The Goods and Service Tax (GST) Act 2017 as well as The BenamiTransactions (Prohibition) Amendment Act 2016, will have a major impact on the business models and work ethics of developers. This also means that most of fly-by-night developers will be out of market and Indian real estate will have more reputed and serious property developers. This will bring in more confidence of domestic and foreign investors into the market, which may result in higher and sustainable demand in the long run.


  1. Ever increasing housing demand

Although past few years have observed comparatively lower transactions in the residential sector, housing demand in the country is quite high, thanks to its ever-growing population size. In India, there is an estimated shortage of around 40million houses (urban and rural). In addition, population growth of 1.3 per cent per annum, favorable demographics, rise of concept of ‘nuclear families’, increased migration to urban areas, fiscal benefits, rising income/aspirations, etc. could lead to another 10 million demand for housesper annum. However, in the recent times, most of the property developers focusedon luxury to mid end housing only, whereas much of this demand is in the affordable housing segment. Moreover, with time, the definition of affordability also has changed and with ever increasing land prices, high finance rates, construction cost and stringent development regulations, affordable housing was not at all profitable option for real estate developers. This required some impetus from the government for developers to focus on affordable housing segment.


With the government nod of infrastructure status to affordable housing in Union Budget 2017-18, this sector is expected to grow at a high pace. The affordable housing segment is expected to be the next big growth driver of the Indian economy with property experts predicting a phenomenal growth rate of over 30% in the medium term. Developers may now haveoptions for diverse and cheaper sources of funding, including external commercial borrowings (ECBs), which eventually can lower the borrowing costs of developers, who should pass on the savings to the buyers and investors. New reforms also amended the size of affordable housing units in big cities, which is more in line with the markets. Moreover, banks may also be willing to lend these projects at attractive interest rates, which will result in easy and cheaper financing options to end users as well. With this in mind, various property developers and builders in India are gearing up to develop affordable housing projects, which is expected to improve the market sentiments in the time to come.


  1. Commercial market shots

One of the major leader of property sector, commercial office market, is turning out to be the frontrunner in witnessing positive changes in the market owing to various legislative revolutions. RERA, REIT, demonetization, GST, make in India and various other reforms have given numerous positive shots to commercial real estate market, which has started springing back towards high growth curve.


  1. REITs:With the government making way for REITs (Real Estate Investment Trusts) in Indian realty market, the commercial office market has already started bouncing back in Mumbai, Bangalore, Delhi and Pune. With major market players such as Blackstone, Embassy and DLF making fast in-roads for REIT model in India, the trickle down impact on other realty players in anticipated in 2018-2019, which may result in improvement in other commercial office markets of the country with higher investment returns to its investors.


The REIT potential in India is huge, with around 229 million sq. ft. of office space currently being REIT compliant. As per industry experts, even if 50% of this space is listed in the next few years, it will be mammoth $18.5 billion worth of REIT listing. Moreover, India’s stock of Grade A commercial assets is also increasing with more and more developers are looking to contribute to this sector and REITs acting as a sure-fire growth catalyst. The long term results should show investments in other markets such as retail, industrial and hospitality, which is expected to improve the overall market sentiments.

  1. Co-working spaces:Indian office sector is moving into ‘hybrid’ spaces or co-working culture, looking at the strong demand for flexible working spaces in India. The rise of numerous start-ups in Indian markets has paved the way for this market, which is turning out to be a big boost for the commercial office sector. Co-working spaces are popping up across Indian metros as well as Tier-II cities, providing start-ups with flexible working options at affordable rents. Presently, there are more than 100 operators in this space across India, though there is still very limited supply of co-working spaces available. This sector is slowly moving to become a big success story, with various other countries also following the same model.
  2. Industrialization and Trade: Apart from various other factors, improvement in industrialization and trade opportunities in the recent past are also fueling the demand for commercial office space in various cities in India. Moreover, with recent changes in FDI policy, demand for warehousing industry is expected to increase many-folds in 2018-2019, which will have a positive impact on other sectors including commercial office market.


  1. Tourism and hospitality industry

Tourism in India was always a big revenue generator for the Indian economy and one of the key driver for creation of jobs in various cities and region in India. It is a critical and economically important industry in India, which has started to show signs of revival in the recent years.


As per World Travel & Tourism Council, tourism in India has generated USD 230 billionin year 2017, which is equivalent to 9.4% of the nation’s GDP. Apart from being the main GDP contributor, India Tourism has supported 41.622 million jobs, almost 8% of its total employment. The sector is predicted to grow at an annual rate of 6.9% to USD 490 billion by 2028 (9.9% of GDP), which should result in good demand and high growth for the hospitality industry. Apart from leisure, religious and business tourism in India, medical tourism is also increasing at a high growth rate, thanks to economical and quality medical services available in the country. In October 2015, India’s medical tourism sector was estimated to be worth USD 3 billion, which is projected to grow to USD 7-8 billion by 2020.


All these changes are reflecting in the present trends in hospitality industry. It is observed that 2016-2017 was a great year for hospitality industry in India, with overall ARR clocking at approx. USD 90, with average hotel occupancy observed at 65.6%. Although these figures are much lower than the 2007-08 results, the steady improvement suggest a strong outlook for the hospitality sector, which is showing all signs of revival and expected to grow in mid to long run. Consequently, various international and domestic hotel and hospitality investors have started scouting for right investment opportunities in various cities in India.


  1. Alternative asset classes

It is quite heartening to know that it is not only the residential, commercial and hospitality sector, which are showing revival of trends. Instead, various alternative and new asset classes have emerged in the Indian real estate sector such as short term stays, specialty hospitals and medical institutes, schools, student housing, aged care facilities, etc. These emerging sectors are showing great signs of high growth in the recent times and promises to push the sector further up with induced investments by various domestic and foreign investors.


  1. Market consolidation

In the past few years, owing to slowdown of realty sector, comparatively few sales and lack of financingoptionsin India has led to various developers over-leveraging themselves. This means that most of small time developers may either have to sell off their assets or enter into JV with big and more reputed developers to save them from this financial mess and deliver their projects. With this consolidation of property development market on the cards, the highly overcrowded real estate sector in India is expected to become a lot leaner and meaner. With consolidation happening by ways of joint developments and joint ventures between landowners and/or small developers with bigger, better-organised players, smaller developers being bought out by larger players, and struggling developers cashing in their land banks by selling them toplayers with stronger balance sheets and appetite for growth.


This may be a lengthy process for the time being, however, the signs of this process are prominently visible in various markets in India. Several small builders with half-baked projects are already looking for investments and rescue from big brothers, with many more sitting on the fence to gauge the initial results. This consolidation will surely flush out all the bad elements from the real estate market and it is expected to be more transparent, level playing and promising market for foreign and domestic investors.



No Comments

Bust or breather???

“Size of construction activities in a region is good indicator of growth of the region…”everyone related to real estate industry would have heard, read or said this more than once. However, with the property prices going over the roof and sales slowing down in some of the prominent markets, does this proverb still hold true in present day context in Australian real estate market? Since 2011, real estate market of Australia is continuously on upward trend, with some cities like Sydney and Melbourne shown exceptional growth rate. However, despite a great run of sales and development of properties, 2016 is observed as damp year for the Aussie real estate market, with most of the real estate stalwarts observing a slow down in demand owing to ever rising property prices. Although the last quarter of 2016 result in high rate of property sales and steady prices in Sydney and Melbourne, and closed the year on a high note, other prominent markets such as Brisbane, Pert and Adelaide could not generate the spark. With unsold inventories are piling up in almost all the regions, the fear of market crash is impending.


However, despite a sluggish 2016 for real estate market in Australia except Sydney and Melbourne, construction of numerous new residential, commercial and industrial projects going on in almost every market of country. Suburbs are extending almost every month and new DA approvals for commercial and mixed use projects, large residential estates, apartments and condos are being obtained at quite a decent rate. The scale of development is quite large and billions of dollars are being pumped in by real estate developers, investors and end users. Huge gatherings in real estate seminars also point towards the fact that almost all stakeholders; developer, investor and buyer, are equally interested to sail together in this wave of real estate growth. Apart from local buyers and investors, large number of off-shore investors and developers are also showing keen interest in Australian real estate, following and analyzing Aussie real estate trends almost on daily basis.


Australia Federal Government as well as all state governments are equally participating in this real estate development phase by playing their respective roles – keeping interest rates low, allowing off-shore investments and providing fast approvals for new as well as redevelopment projects. The government is also investing hugely into development and upgradation of infrastructure and have commissioned various infrastructure and urban planning projects, viz. roads and motorways, development of metro and new train lines, airports expansion, and various new residential precincts, industrial estates and commercial zones. West Connex and Sydney Metro in Sydney, Western Distributor and Melbourne Metro in Melbourne, and Queen Wharf Project and Airport expansion in Brisbane are some of the largeinfrastructure projects taken up by government, looking to change development profile of these cities.


So, if the story is all positive with strong investment trends, then why all major reports and expert analysis are pointing towards slow-down in real estate in Australia?


The answer lies in the scale of development of real estate sector in the country. The increase in demand over past two years has given too much impetus on real estate developments in Australia, resulting in all local and foreign real estate developers investing in huge number of projects across almost all markets. Drastic escalation in real estate prices over past couple of years have boosted investor’s confidence in the market and most of them have over-committed themselves in various real estate projects, resulting in supply of too many projects in short span of time. This spurt of supply may result in oversupply of stock for a short while, but stable economic condition and strong demand for real estate, coupled with high demographic growth rate, in-migration and huge infrastructure development activities would result into upwards growth in the long run.


This so-called slowdown of real estate provides an opportunity to serious buyers to have much needed breather, and they may be able to negotiate better for new investments. According to areal estate expert, “In 2015 it was a pretty aggressive market, if you were going to secure a property you had to be quick – you had just 15 minutes to decide which puts a lot of pressure on people. The market is tipped to “take a breather” in 2017 which should give buyers increased confidence in the property process”. 


However, there is no shortage of demand in real estate sector, especially in the housing market. Barring some of the overpriced regions, rental market in Australia is quite strong, resulting into good long term demand for properties. Prices are holding good and there is no reason that they will go down drastically in near future. It is expected that eventually the pace of demand will overtake the supply, resulting in stronger growth in real estate prices over a period of time.


No Comments

Sydney – The City of Prospect…

Having visited some exquisite cities in the recent past, I was wondering why this largest urban agglomeration in Australia has emerged as one of the best liveable cities in the world. Is it because of its cosmopolitan nature, vertical sky-scrapers, large population size, or state of the art infrastructure? Incidentally, there are various other established and important cities in the region, namely Tokyo, Shanghai, Hong Kong, Mumbai, Singapore, etc., but Sydney has its own charm and character. It is the only city from the APAC region listed in “The world’s top most liveable cities for 2016” byMercer. This recent survey of approx. 230 cities of the world is based on factors including political stability, crime, currency exchange, recreational facilities, housing and climate. This shows the potential of this quality city, which is attracting the population from all parts of world and growing rapidly in size year after year.The Global Cities Index recognises it as number fourteen in the world based on global engagements and presence of multinational businesses in the city.

Sydney is best known for its harbour-facing Opera House, an impressive man-made structure having a distinctive sail-like design. Other features include Sydney Harbour, the Royal National Park, Bondi Beach, and Botanic Gardens. The city receives over 10 million international and domestic visitors every year. Sydney is also a gateway to Australia for many international visitors. Moreover, Sydney has been ranked amongst the top fifteen cities in the world for tourism every year since 2000. Given its vibrant economy, favourable weather, rich history, heritage and architecturally important places and diverse lifestyle options, it is not surprising that Australia’s largest city is such a popular destination for tourist and migrants. Sydney has an advanced market economy with strengths in finance, manufacturing and tourism. There is a significant concentration of foreign banks and multinational companies in Sydney and the city is known as Asia Pacific’s leading financial hub. All these achievements make Sydney as one of the best cities in the world.

The CBD of Sydney has a distinct cosmopolitan character. From Darling Harbour to Kings Cross, and from Harbour Bridge to Ultimo, the CBD of Sydney is packed with tall office skyscrapers, shopping malls, eateries, hypermarts and various heritage and architecturally important landmarks, making it an extremely significant and commercially driven downtown of the continent. Its complex on-ground and underground road, rail, water-based and upcoming MRTS networks are seamlessly integrated with pedestrian areas and plazas, creating a unique sense of connectivity and openness. City has undergone many transformations in the past and most of its new age buildings and structures are redevelopment projects, with many more still in pipeline. Being a financial capital of the continent, there is high demand for quality commercial space which is continuously putting pressure on the rental and capital prices in the region. Similarly, there is very high demand for residential and retail spaces as well in the city, owing to very high population influx and growth in the region.

As per NSW Planning and Environment, the population of Sydney Metropolitan area is increasing with a growth rate of 1.6% per annum, the highest in the NSW region. Sydney Metropolitan is largest urban agglomeration in the country, comprising more than 60% of total population of NSW and 20.6% of total population of Australia (Australia Bureau of Statistics, 2015). Some of its suburbs are the fastest developing suburbs in the country and the region continue to attract more and more people. This continued growth is expected to strongly push infrastructure and real estate sectors in the region to match needs of better quality housing, office, shopping and recreational areas, and above all, intra and inter regional connectivity for this expanding urban agglomeration.

Increaseddemand for real estate has resulted in development of new SBDs at various prominent locations in the suburban areas, with an aim to develop new residential destinations in the region, and to ensure balanced and planned development of its suburbs. Prominent commercial centres outside the CBD of Sydney are North Sydney and Chatswood in north, Parramatta and Blacktown in west, Bankstown and Liverpool in south-west, Hurstville in south, and Bondi Junction in east. Most of these areas have exhibited distinctive importance to emerge as true SBDs of Sydney metropolitan region, and demonstrated good growth over years. It is expected that these regional SBDs will play a major role in the growth of Sydney metropolitan region, to provide more commercial, housing, retail and recreational areas in region. Being one of the best cities in world, expectations are always high from town planners and policy makers to develop infrastructure of future, and the city has demonstrated high capability in achieving same in the past. Various new infrastructure plans of government, such as Sydney Metro, expansion of M4 and other highways, development of new roads, train stations and shopping centres, are some of the great steps towards ensuring a seamless and state of the art connectivity and infrastructure in region.

New infrastructure initiatives will definitely shape the future of Sydney, and ensure planned and holistic growth of metropolitan region. City is going through transformation phase once again,expectations are very high and the competition is getting tense as more and more world cities are aspiring to be in top ranks. However, the charm of this cosmopolitan city, economic health, best in class present and upcoming infrastructure and natural beauty of the region will absolutely help Sydney to remain one of the most prospective and progressive cities in world.


(Manish Kumar)

No Comments

Senior Living In India – Homes For The Golden Years

India had approximately 100 million senior citizens aged 60 and above in 2012. This number is expected to double by 2030; by 2050, it is likely to reach approximately 320 million – constituting 20% of the country’s total population. There are reasons behind this monumental projected growth.


India’s population has undergone a change in character, which we can also call a ‘demographic transition’. From higher mortality and fertility rates in the beginning of the decade, the country has now entered a stage where there is a fall in birth rate. However, the fall is not as steep as the fall in death rates, as average life expectancy and quality of life has improved dramatically in India in the recent time.


More Senior CitizensThan Ever Before


Though India is still younger than the US and Japan, the process of ageing has begun in the country. India’s elders will increase both in absolute numbers and relative strength, indicating a gradual swing to a greyer population.The marked increase in percentage of India’s senior population expected in the foreseeable future will involve a change in an important sociological aspect -the ‘old age dependency’ratio. Currently, the ratio is approximately 8-9%; however, according to an estimate of United Nations, this ratio will be closer to 20% in India by 2050.


Rapid advances in medical breakthroughs, proliferation and improvement in the overall quality of medical facilities and care and increasing access to medical insurance have much to do with it. Another factor driving India’s increasing elder population is growing awareness related to diet, exercise and personal care.  That is the good part, but there is a more worrisome aspect too.


As per the findings by National Family Health Survey in 2005-06 (NFHS-3), every three Indian household out of five – or about 63% – are nuclear families. This changing social environmentmeans that India’s younger generation is facing serious challenges when it comes to taking care of their elders.


Housing India’s Seniors


In the past, generic old-age homes – and all the real and perceived drawbacks they presented – were more or less the only answer. However, the country is now witnessing the gradual evolution of a concept that is already well-entrenched in the developed countries – senior living homes, sometimes called retirement resorts.


Currently there are approximately 30–35 senior living projects in the country. Unfortunately, this represents a major shortfall – they accommodate only 0.0001% of the target segment (India’s senior citizens) as compared to 10% in the US and approximately 4% in Australia. India currently contributes less than 1% of the Global Senior Living industry, highlighting the huge demand and supply gap and growth potential of the sector.


This begs the question – if the demand for senior living projects is so high in India, why is the sector’s growth so slow? Actually, thesenior living concept took hold in the country in the early 2000, but the sector started gaining any kind of serious momentum only after 2010. Also, growth in this sector has been happening in pockets rather than holistically.


Stilted Geographic Distribution


Most of the country’s senior living projects have cropped up in the Western and Southern regions. This is because these regions have a greater prevalence of nuclear families, higher level of education among their population, and a more pronounced yen for young professionals to migrate to other countries. Two other factors very visible in West and South India are higher purchasing power, resulting in a lower dependency ratio of seniors on family members.


It is only after witnessing the high acceptance rate of senior living projects in West and South India that developers began training their sights on the northern and eastern regions of India, predominantly targeting tier 2 and tier 3 cities.



Senior Living – The Finances Involved


Unlike other parts of the World, Senior Living a new concept in India and hence is not part of social infrastructure sector, which means it is purely private developer led sector at present. Many developers and operators find venturing into this sector profitable and are developing various senior living projects, albeit with different financial models as per the local demands, financial viability of projects and sale plans.


Broadly, three financial models have been observed in India, to acquire/reside a senior living project. These are the outright purchase model, the pure rent model and upfront deposit with periodic rent model. All three models have their advantages and drawbacks.

  • OutrightSale Model

Outright salemodel involves the transfer of title of the property in name of the end user. It works like a typical residential real estate purchase, where the developer sells the residential stock in the market while the construction is still in progress.

Advantages: The developer is obviously able to make higher and quicker returns using this model, and it appeals most to customers as well. This is because actually owning the property means that it can thereafter be used for mortgage or collateral purpose, which makes it easier for buyers to raise bank loans or other forms of financing from the property.

Disadvantages: When a developer sells a senior living property, it becomes difficult for him to differentiate between an end user and a speculative buyer. Also, it can lead to a lack of control of the developer or senior housing operator, which may have a bearing on the quality and ease of day-to-day operations of the project.Seamless operations are a critically important aspect of a good senior living project and hence most of the Senior Living developers and operators are willing to have more control on usage of these projects, which is difficult to achieve in pure Sale model.

Some of the senior living projects operating on an outright sale model in India are:

  • Ashiana Utsav
  • Serene Covai Properties
  • Golden Nest Pune


  • Pure Rent Model


Under the pure rentmodel, residents pay a monthly rent along with nominal deposit over their period of stay. This model is suitable for developer and operators from the point of gaining control on usage of properties, but with no upfront deposit or sale revenues, it is difficult to manage profitability in this model.


Advantages:This model ensures that the customers (senior citizens) subscribing to the project are most likely to actually occupy their unit. It also allows the developer or operator to determine the scale of day-to-day operations required in the project. Customers benefit from this model since their entry cost into the project is much lower, thereby reducing their financial burden.Further, it is ensured that the essence of the project is maintained since the end users occupying the project would be of a pre-determined similar age group, having similar preferences and requirements.


Disadvantages: The pure rentmodel exposes the developer / operator to higher level of financial risk because of low and deferred returns. Further, there is an increased tendency among the end users to switch projects. For the customer, the drawbacks of this model would include lack of participation in capital appreciation associated with the project.


Some of the senior living projects operating on a pure rent model in India are:

  • RakIndo Senior Living Coimbatore
  • Dignity Lifestyle Neral


  • Upfront Deposit and Lease Model


Upfront deposit and lease model is fusion of above two models. Under this model, a percentage of capital value of the project is charged upfront, while the rest of the amount is paid in the form of monthly rentals over the period of stay.


Advantages:This model allows flexibility of payments for entry cost into the project. The customer can pay an upfront fee followed by regular lease rentals. This model is preferred by end users because it reduces their entry cost into the project. The developer can retain the ownership and control in the project.


Disadvantages: For the developer, the payback period and returns are generally lower vis-à-vis an outright sale model. For customers, the drawback of this model could include payment of substantial amount of upfront deposit (though lower amount than in case of outright sale model), yet very little or no participation in the capital appreciation associated with the project. Further, switching of project in case of mediocre or unsatisfactory services and facilities could become a challenge for the end user in case of lack of defined rules for refund of deposit / upfront payment.


Some of the senior living projects operating on a lease/deposit model in India are:

  • Brindavan Hill View, Coimbatore – Deposit Model
  • Dignity Lifestyle, Neral – Lease and Deposit Model
  • Impact Senior Living, Amritsar –Deposit and Sale Model


The way forward


With families getting smaller and nuclear, children travelling across the globe, and a paucity of social security programs, upwardly mobile Indians see senior living as an attractive option for their elders. Senior living industry in India is poised for significant growth and the industry is expected to see the entry of new players from various backgrounds, predominantly from the real estate and healthcare sector. However, since the sector is still at its nascent stage in India, it is expected to undergo various changes to mature into a new cornerstone for Indian real estate and healthcare industry.

No Comments

Australian property market –the opportunity in price correction

Buying a house in their dream city is an important milestone and a lifetime decision for mostAussies and people residing in Australia. It requiresyears of savings, diligent planning, property market research and various other factors reach a decision of purchasing a house. It can be considered as an asset, financial security, a source of rental income and a place to live andsee their children growing carefree for most families, without paying huge rentals and accommodating routine property manager’s inspections. In addition, a home purchase also helps in tax savings.


Although there is much talk about correction of real estate market in Australia and many experts still projecting a price correction, a cursory look at average property prices in various markets of Australia reveals that overall there isn’t too much variation in sale prices as compared to the previous years.Also, property prices differ in each city and vary hugely as per the location and its inherent growth drivers.


However, a deep-dive assessment of the market conditions reveals that a pseudo-price correction has come in the form of freebies, discounts, offers or schemes. Although developers and builders are not in favour of visibly reducing the prices as it transmits negative sentiments in the market, there are some discounts being offered to serious buyers who are ready with their purchase decisions.


The problem in Australian housing marketis comparatively lower demand as most of overseas investments are drying up and huge unsold / under development / planned inventory in almost all states. Some of the high growth areas like Melbourne CBD and outer markets, suburban regions of Brisbane including Gold Coast and Ipswich, and north-western and south-western suburbs of Sydney are presently dealing with this issue of more supply compared to actual demand over short span of time. Most of the developers and builders are battling with huge unsold inventory and are keen to offload the same at the earliest, creating pressure on real estate pricing.

All-in-all, this could be the ideal time to purchase a house for end-uses and for investors looking to invest in the property market. The market is a totally purchaser-friendly at the moment and builders are taking out time to discuss in details with purchasers for their home buying requirements. If one has good financial planning and feels that the future is safe, it is the right time to purchase a house and seal the deal.In addition, with pressure on inflation rates, house financing is likely to harden in the future. Therefore, for end-users and investors, it is the right time to avail the home loan at best possible rates.

A home purchase is a long-term investment, and for properties at good locations and with the right configuration and amenities, there will always be good demand and should appreciate over the long termin all likelihood. However, it is important to understand that the fundamentals of location, connectivity and amenities of the project are essential for price growth to happen. The projects which are closer to or well connected with business centres, retail areas and job markets (present and future) have more potential for price appreciation and sound rental returns in the long run.


Also, property market is bound to have price fluctuations. In an established market, investors and buyers generally keep a minimum horizon of 2-4 years before putting the property on the market again.At the end of a sufficiently long period, prices for the right type of properties should appreciate, and in the meanwhile, if the home is not for personal use, it can earn rental income as well.


The best way for all homebuyers to address a property purchase is to think like an end-user and focus on buying a home that meets one’s own needs. This way, they should be able to appreciate the right project amenities and automatically pick properties which have the right attributes such as connectivity to workplace hubs, availability of public transport, hospitals, schools and shopping, and is resultantly investing in a property which can certainly appreciate in future.

Price corrections tend to happen in projects and locations which are bereft of the right fundamentals. Areas which have not taken off because of lack of the requisite infrastructure, and located away from job markets, public transport, schools, hospitals and retail areas, are bound to see price corrections as demand will flow to areas and projects which have the right attributes. 

Although prices in locations and projects that tick all the right boxes may remain stagnant for a while, but their inherent advantages will safeguard against any serious short-to-mid-term corrections. Also, these areas would be the first ones to witness price appreciation as and when there is any price increase in property market. Therefore, it is a perfect opportunity for investors and self-users to pick up the right property at right prices. For the intelligently chosen properties, the inevitable law of demand vs supply should gradually bring in capital value appreciation.


Finally, one should remember that every asset class witnesses fluctuations, but homes are also ‘performing assets’ which one can live in or rent out till the time you don’t put it in the market again for the capital price gain.