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WHAT IS REAL ESTATE?

Real estate is property made up of land and the buildings on it, as well as the
natural resources of the land, including uncultivated flora and fauna, farmed
crops and livestock, water and mineral deposits.

Although the media often refers to the "real estate market," real estate can be
grouped into three broad categories based on its use.

 Residential real estate includes undeveloped land, houses, condominiums,


and townhouses. The structures may be single-family or multi-family
dwellings and may be owner occupied or rental properties.
 Commercial real estate includes non-residential structures such as office
buildings, warehouses, and retail buildings. These buildings may be free
standing or in shopping malls.
 Industrial real estate includes factories, business parks, mines, and farms.
These properties are usually larger in size and locations may include
access to transportation hubs such as rail lines and harbours.

The Basics of Real Estate


Real estate is a tangible asset and a type of real property. Real property includes
land, buildings and other improvements, plus the rights of use and enjoyment of
that land and all its improvements. Renters and leaseholders may have rights to
inhabit land or buildings that are considered a part of their estate, but these
rights themselves are not, strictly speaking, considered real estate.

Real property is not the same thing and should not to be confused with personal
property. Personal property includes intangible assets like investments, along
with tangible assets such as furniture and fixtures like a dishwasher. Also, even
renters may claim parts of a home as personal property, provided you bought
and installed the property with the lessor's permission.

Skill Shortage.

Non Availability of Statistics.

Overvaluation of Property.

Highly Fragmented.

Lack of Transparency.

IMPACT OF RECESSION ON REAL ESTATE

Incompletion of previous projects.


Bad Debts.
Less Demand in all segments.
Cash Starvation.

DESIGN AND DEVELOPMENT PROCESS


Phase-1 RESEARCH AND BUDGET
Phase-2 INITIAL “GO” NO-GO DECISION
Phase- 3 PRELIMINARY DESIGN
Phase- 4 LAND USE (ENTITLEMENT APPROVAL)
Phase-5 FINAL GO NO-GO DECISION
Phase-6 CONSTRUCTION DOCUMENTS
Phase-7 BUILDING PERMITS
Phase-8 CONSTRUCTION ADMINISTRATION

OC (OCCUPATION CERTIFICATE)
Once the project is completed, it is important for the builder to obtain an
Occupancy Certificate also known as Completion Certificate. This certifies that
the building has complied with the approved plans.

“The OC from the planning authority is essential for any construction as per the
provision of law. A buyer can move into his/her new apartment only once the
OC has been received, says Asha Nayar Basu, managing partner, S Jalan & Co.

Why is OC important?

In Bangalore, it is mandatory for every residential complex – which has more


than five units, to obtain the Occupancy Certificate. “A flat owner can occupy
an apartment only once the OC is issued, as per law. He should take the
physical possession of the said new property only after the builder procures an
OC, certifying that the entire project is legally constructed and is now fit to be
occupied by residents,” says Biren Somaiya, CEO, Whitebird Realtors.

The certificate is also required when the buyer applies for Khata. However, note
that OC is not required for registration of the property during purchase. Because
of this buyers tend to ignore or overlook the OC. A buyer will face problems
obtaining Khata without an OC. Please note that Khata is a must in case the
owner plans to sell the flat in future. The OC also plays a significant role while
applying for home loan or loan to purchase a re-sale flat.

Under-construction property

In case you are buying an under construction property, make sure you check the
Commencement Certificate (CC) before signing any agreement. “Often builders
continue to build first and second floors without getting a CC as they are
confident they will be able to get it in future. This is illegal and can create
problems in getting an OC. It is mandatory for a builder to possess this
document before beginning construction of a property. These certificates are
evidences that the commencement and completion of the building are as per the
approved plan and in compliance of locals laws,” says Basu. Also, while
applying for a bank loan, the banking authorities may demand CC instead of
OC.

How to obtain an OC

The OC is generally obtained from the Bruhat Bangalore Mahanagara Palike


(BBMP). It is processed once the Palike gets information from the owner or the
buyer that the construction of the property is complete.

To obtain the certificate, a builder needs to fill an occupancy certificate


application form along with a few other documents (mentioned in the ‘box’).
After submitting the form, BBMP authorities will inspect the complex and
confirm whether it has been completed according to the approved plan and then
issue the certificate.

Legally, a builder or owner should submit an application with the commissioner


for the OC within 30 days of completion of the building/property. The
commissioner also replies to the applicant within 30 days whether the
application has been accepted or rejected. It is wise and significant for the buyer
to get the OC before moving into the flat or signing the agreement.

However, in case the builder has deviated a little than the allowed percentage,
say about 5 per cent from the approved plan, then as per Basu, “The authorities
may impose a penalty and regularise the building and issue the OC. The penalty
is charged based on the extent of the deviation.

Commencement Certificate and


Occupancy Certificate are
important documents while buying
property.
Check out the genuineness of the
documents with
the concerned authorities What happens if there is no OC?

If there is no OC, the Palike can also initiate action against the flat owners, as
the law says no person can move into a building without the OC. Such cases
have been seen in Mumbai and Delhi real estate markets. The classic example is
the Campa Cola case in Mumbai.

the owner does not have the OC. If the building does not have an OC, a flat
owner or buyer can approach BBMP directly.

6 P’S OF REAL ESTATE MARKETING


Positive attitude

Promotion

Perfection

Prepration

Pricing

Pre listing

FLOOR SPACE INDEX (FSI) / FLOOR AREA RATIO


(FAR)

FSI, FAR, GCR and VPR are related to the field of real estate. It represents the
calculation based on the ratio derived by dividing the Gross floor area with the
total size of land on which the building is made. Thus, simply FSI, FAR, GCR
or VPR = Gross floor area/ Area of the plot.
HOW REAL ESTATE COMPANIES
RECOGNISED REVENUE?
The core principle of IND AS 115 is that an entity will recognise revenue to
depict the transfer of goods or services to customers at an amount that the entity
expects to be entitled to in exchange for those goods or services.

This core principle is described in a five-step model framework:

Step 1: Identify the contract with the customer.

Step 2: Identify the separate performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to separate performance


obligations.

Step 5: Recognise revenue when (or as) each performance obligation is


satisfied.