In fact despite the current economic boom and increase in salary levels, relatively a very low percentage of the overall population owns a house property. Interest deduction on housing loan and deduction for repayment of principal amount of the housing loan under the Income-tax Act, 1961 have indeed encouraged many individuals to take housing loan and buy a house property.

Many a time, a small relief under the tax law could have far-reaching impact in many identified as well as non-identified areas; housing loan deduction is one of these.

Individuals

It is pertinent to note that ease in availability of housing loan for individuals has been one of the key reasons for individuals, especially salaried employees, to invest in house property.

Till a few decades back, a person used to buy a house property generally towards the middle of his career. Many a time it would be even close to retirement age, by when he had accumulated a large amount of funds.

For the last decade or so, this scenario has changed, and many salaried employees have, early in their careers, come forward to buy house property as the equated monthly installments (EMIs) could be easily structured and because of the two important tax benefits available under the income tax laws.

The first is a deduction of upto Rs 1.5 lakh that may be claimed for interest paid on housing loan for a self-occupied house property subject to fulfillment of specified conditions.

The second condition: a deduction up to Rs 1 lakh may be claimed under Section 80C of the Income Tax Act for the repayment of the principal amount of the loan.

Further, the interest deduction on the housing loan could be adjusted against the tax payable on salary income.

Therefore, there is a case to continue and even increase the deduction for interest on housing loan to say Rs 3 lakh in the Budget 2010 and for repayment of housing loan to Rs 2 lakh.

Industry

From the industry’s perspective, construction/realty industry is known to provide direct employment to millions of individuals. Many of these include unskilled labour which is primarily dependent upon construction and related industries for a gainful employment. Further, a boost in construction also leads to employment opportunities in other sectors including cement and steel industries which also contribute to the overall growth and development of the economy.

Government

Even though, there would be a loss to the Government in terms of the direct personal tax collection due to increased deductions, however, this loss in revenue is likely to be off-set by increase in direct as well as indirect tax collection resulting from increase in economic activity in realty and associated industries in near future. In this context following points merit attention.

More employability would ultimately result in more personal tax collection or even otherwise would at least result in more income, savings and consumption wherein a large population including labour would demand goods and services in the market, which in turn would trigger demand of basic goods and services.

Further, increase in activity in the realty, cement, steel and other industries, would result in increased corporate income and thereby increased corporate tax collection. Also, increase in number and volume of financial transactions would also provide stimulus to the banking/financial sector.

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The middle-class Indian population is the worst sufferer of the real estate demand-supply gap and hence it is this part of the Indian demography that is the largest group to avail itself of home loans in India. Home Loans in India are facilitated by all public and private sector banks operating in India. Financial institutions specializing in home financing are also cashing in on the latest boom in home loans. The loan schemes offered by such institutions are easy to repay and thus are hugely popular with the middle-class Indians.

Home Loans in India are provided by -

* State Bank Of India
* Bank Of Baroda
* United Bank Of India
* United Commercial Bank of India
* Allahabad Bank
* Bank Of Maharashtra
* Oriental Bank Of Commerce
* ICICI Bank
* HDFC Bank
* Axis Bank ( or UTI Bank)
* LIC Housing Finance
* and others

Home Loans in India are provided for the -

* Purchase of residential accommodation like House or Flat
* Purchase of land for construction of House
* Renovation or repairs or extension of an existing House or Flat
* Purchase of consumer durables and furnishings as included in the project cost

Eligibility criteria for availing home loans in India are -

* The applicant must have attained the minimum age of 18 years
* The applicant must not have attained the maximum age of 70 years which is the age by when the loan should be fully repaid
* The applicant must have sufficient, regular, and continuous source of income

Maximum and minimum home loan amount are calculated as follows -

* Applicant aged over 18 years and up to 45 years can avail maximum loan amount 60 times of his Net Monthly Income (NMI) or 5 times Net Annual Income (NAI)
* Applicant(s) aged over 45 years of age can avail maximum loan amount 48 times NMI or 4 times NAI

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Chennai as compared to its southern counterpart states like Hyderabad and Bangalore, do not appear to be as happening as them. But its economic prosperity cannot be underestimated, with its treasury being run mostly by the automobile industry as it is the home base to several leading automobile companies. Since the first motor car came to India in the year 1898, the automobile industry set up assembly lines in Bombay, Calcutta and Chennai (then Madras) between 1910 and 1920. Leading car manufacturers of the world like General Motors (GM) and Ford Motors of the US; Volkswagen and Toyota have made Chennai their hub for car manufacturing. It also hosts the manufacturing facilities of Hindustan Motors Mitsubishi Lancer, Ford, Hyundai and Ashok Leyland, a leading truck manufacturer.

Moreover, Chennai has been the production bases to numerous industries, which supply auto components to manufacturers across the country. Tyre manufacturing company MRF is based in the city. These small-scale industries and auxiliary industries have constituted one of the pillars of industrial growth and have contributed significantly to the city’s economic growth. And along with economic growth came employment opportunities and upliftment in the living standards of the people. This has in turn contributed in investment procedures and real estate investment as always became the best bet for buyers and developers alike.

Real estate Chennai over the last few years has seen a scaling rise as more industry giants – both from the automobile and IT industry started their operations base from the city. Even though this boom in the industrial sector has contributed to a substantial expansion of the real estate business in the city, the relatively cautious and conservative approach of property dealings in Chennai have prevented extremes of speculative activity. Thereby, making Chennai’s progressive real estate slower and steadier compared to other new-age cities. But there has been no dearth of co-operation from the government in creating congenial environment and infrastructure for industry bigwigs to make Chennai their base for investments. The recent decision by the automobile giant BMW to invest about Rs 900 crore in the long-term at their manufacturing facility in Chennai is a reference to the fact. Such inflow of investments will surely make Chennai, the most-favored place for real estate investments for years to come.

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Of late, these cities have caught the attention of real estate developers and a number of projects in both the segments of commercial and residential are underway.

Subsequently, the retail industry at these cities is also developing fast with improving business environment and rising income levels. As per the industry reports, more than 35 per cent of the total space required by the retail sector will come up in these growing markets, in the years ahead.

Tier II cities—Hyderabad, Chennai, Pune and Kolkata—are the ones that have already set themselves on the trajectory of rocketing real estate development, and are witnessing unprecedented activities, in terms of size and volume of deals.

Besides, Tier III cities—Chandigarh, Lucknow, Ludhiana, Jaipur, Ahmedabad, Guwahati, Surat, Nagpur, Goa, Mysore, Coimbatore, Visakapatnam, Kochi, Vijayawada, Mangalore, Trivandrum and Baroda—is where a large room for growth exists.

After all, the emerging markets are known for their high-growth potential and these cities too have all the reasons for making a sound real estate investment decision.

Growth Drivers

Advantage of cost is the biggest factor that makes these cities a preferred destination for business and real estate activities.

At times when capital values at metros go as high as Rs 35,000 per sq ft, prices in these cities are seemingly moderate between Rs 200 and Rs 12,000 per sq ft.

Similarly, the cost of operating business is also lesser than that of big cities. Rental values are proportionate with the capital prices. Manpower is cheap owing to the low cost of living in these cities.

Perhaps, that’s why, almost every IT and IT enabled Services (ITeS) company is enthusiastically setting up its centers in these towns. Nevertheless, these places are already on the radar of retail giants and other corporate conglomerates.

Sufficient availability: Options. These markets delight you by offering numerous alternatives for buying real estate. With a number of construction projects under progress, there is sufficient availability of options, be it commercial obffice space or residential house or apartment.

In Tier III cities, you get a 2,000 plus sq ft of luxury duplex bungalow or a villa at a cost between Rs 15 lakh and Rs 30 lakh, whereas in bigger cities, a small-size flat would cost you anywhere above Rs 15-20 lakh.

Congestion-free environment: Against the polluting environment, traffic jams, shortage of power and water, and choking civic systems at metropolitans, Tier II and III cities offer a pleasant professional and personal life.

Social Network: People in smaller cities remain under social-connections with each other. A large number of professionals also now prefer to return to their hometowns to spend rest of their lives with their closed ones.

As evident in cities of Punjab and southern part of the country, the Non Resident Indians (NRIs) are also coming back in large numbers.

Brain Gain: Combination of aforesaid factors has been translating into a soaring housing sector. On the other hand, influx of knowledge professionals in these cities is accumulating far reaching benefits to the local economies.

Times Ahead

Given the ongoing trends, the real estate markets at emerging cities promise a bright future. Government policies are favorable and the allied infrastructure projects for capacity-expansion in power, physical and digital connectivity, and other civic amenities are going on at considerable pace. And, thus great times are ahead…

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There are plenty of sites where you can find the home of your dreams in Chennai easily. Here you can access thousands of properties including apartments and bungalows. Real estate in Chennai is growing and finding an ideal property through regular real estate brokers can be a time consuming task. Usually realtors take up a lot of time in showing you around the different properties. Then there are also so many plans for upcoming constructions. All of these can be seen on the internet instead of going apartment house-hunting.

The rate of properties in Chennai varies on the basis of area or location of the property, whether it is a commercial property or residential property and many other similar considerations. OMR, old Mahabalipurum, Medavakkam, Annanagar and other posh areas have higher rate of property. Another advantage of online real estate browsing is that realtors charge certain fees and commissions and hence this will raise your over all budget.

Chennai real estate industry is also booming because of the higher pay packages also with the easily availability of loans. Apart from these factors there has been a surge in this business. Chennai real estate has seen tremendous growth and change of vision of construction with international corporations setting up their establishments and headquarters here. This has resulted in modern and compact constructions with a rise of skyscrapers and condominiums. All of these factors have altered the entire scenario of the real estate industry. Hence one can find apartments
, penthouses, bungalows, etc. with ease and pay for the same through easy installments.

Some of the vital factors that would affect your overall property cost in Chennai include size of the property, interiors of the apartment, kinds of construction and many other factors. Most of the times, prospective clients can also see a model home, which is displayed for the convenience of buyers. Some of the basic amenities available at these new apartments include swimming pools, gyms, parks, etc.

Commercial property rates are much higher here, and they are available for both proprietorship and rental. Chennai is amongst the leading cities who have witnessed the growth of plush apartments and modern homes along with a huge commercial sector. Major players in the real estate industry in Chennai property are the giant chains, shopping malls, restaurants and other commercial sectors. They have altered the structure of this once colonial city and made the concept of buying homes much easier.

By Vaneet Gupta