The murky world of real estate brokers

In Delhi, or maybe even India, there’s probably a saying that goes – “Never ever trust your real estate broker”

The world of real estate is viewed as quick and easy money. Everyone wonders why they make 1% of the transaction amount or one month of the rental. These amounts can run into multiple of lakhs and even upto a crore, and surely a broker doesn’t do that much work to deserve that.

Here’s our take on it – For every transaction that a real estate broker closes, there are 10 more that don’t close and the broker works as hard on them if not harder. To close a real estate transaction is incredibly hard, and one of those multi lakhs deals happens once in a few months if not years. So yes, our fees is justified.

What is not justified is the way a real estate broker is treated. With complete mistrust and that feeling of disdain. While we’ll be the first to admit that all brokers are not equal and there are the bad elements out there, please do not generalise. There are enough brokers out there who work hard and honestly.

The other murky side of the real estate brokerage world is the inter broker relationships. This is an industry where knowledge is zealously protected and no one trusts the other broker even though they might have known each other for 20 years. Here’s a live example of how it works:

A has a mandate to sell a property, and therefore is comfortable in publicising and marketing the property and even spending some money in doing so. When any broker calls him, he does not hesitate to share the address and full details. Now lets say B calls him and gets all the details.

B will go to C & D and share the same details and you can see where this is going – the network effect takes place and before you know it, when A calls Z, Z tells him that P has already told him about this property. When A says he has a mandate, he is scoffed at.

A goes to meet the seller, and find out that F, Q and X have found out who the seller of the property is and have directly reached his office in a bid to cut out whoever gave them the property details and A in the deal. So while A might have shared the details with only a few trusted people, those people in turn shared it with their trusted network and so on and before you know it, the chain became so diluted, that no one has any control and the whole market is talking about the property.

It is a known fact that most real estate transactions happen with two sets of brokers involved, one side which represents the buyer, and the other side that represents the seller. Now let me educate you on something called a “margin”. A “Margin” for a real estate broker is like butter chicken for a North Indian, like Pamela Anderson was for every kid in the 90’s and like meeting Sachin Tendulkar is for like any cricket fan.

A margin is when the broker apart from making 1 % of the transaction value, makes something on top as well. So lets say the seller is asking for Rs. 10 for the property. The broker will go to him, and say if I get you Rs. 12, I will keep the 2 and you can keep the 10 as that is what you are asking for. They make a deal with the seller and basically hoodwink the buyer. Is this ethical? In my view, this is something that is completely wrong and only serves to ruin the long term reputation of a real estate professional. How can one be trusted when they are doing these manipulative transactions.

We were once accused of doing this, and to every allegation made to us from the buyer, we showed him documented proof and after it all, he apologised to us. We however, refused to transact with him further!

So the next time you treat the real estate broker with disdain, think about all these factors, take a judgement on the person and don’t generalise, and as always, Happy transacting!


Why does the government keep revising circle rates?

People with any interest in real estate in Delhi, must be wondering what they have done for the government to yet again increase circle rates by 20%.

For ignorant souls, circle rate is the MINIMUM rate at which the government mandates a real estate transaction has to happen. For example, if you buy a house in say Defence Colony, the government says that the transaction must happen at Rs. 500 (its an example, its more like Rs. 50 cr!), then no matter what the actual transaction is at, (i.e. Rs. 50 or Rs. 5000),  the stamp duty and registration should happen at either Rs. 500 OR Rs. 5000 whichever is higher. That means the government completely disregards the lower value in comparison to the circle rate.

Now that the circle rate explanation is out of the way, lets have a moment of silence for the poor souls living in New Friends Colony in Delhi. The colony falls in Category A, which means that the government mandates that the transaction should happen at Rs. 7,75,000 per square yard (its actually square meters, but for purposes of this example, I am not getting into the details). What is the actual market rate there? – about Rs. 5,00,000 per square meter.

Lets run through a live example now.

The government mandated price for a 500 square yard plot is Rs. 38.75 cr. The market price is Rs. 25 cr. Thats a difference of Rs. 13.75 cr!! Lets say you go for the transaction at Rs. 25 cr. – Here are the ramifications of that:

a) Stamp Duty – Stamp duty will be paid at the government mandated rate. Assuming 6%, it works out to Rs. 2.3 cr. vs Rs. 1.5 cr on Rs. 25 cr. Therefore, you are paying the government Rs. 80 lakhs on top.

b) Tax authorities – You pay stamp duty on Rs. 38.75 cr, but as a seller, you only receive Rs. 25 cr in your bank account (lets forget about black money for now!). Ideal scenario for the babu’s at the tax authorities to start sending you notices and harassing you. Where did the other Rs. 13.75 cr go? You tell one department of the government that the price is Rs. 38.75 cr and the other that its 25 cr.? Of course you’re lying!!

Spot the odd one out – Sundar Nagar, Golf Links, Jor Bagh, Amrita Shergill Marg, New Friends Colony.

Did you guess New Friends Colony – CORRECT !

Lets try and understand why the government raised the circle rates? Simply because they are not earning enough money from property registrations! This is what must have gone through their heads – Currently we are getting 6% of x, its not enough, lets increase the x by 20% and we make 20% more money! Genius! NOT!!

No one in the government understood the concept that if you lower x, and increase the 6%, there might be a higher windfall for the government. Of course for this they would have to know that the market is in a slump, but with the Modi wave, anything is possible.

What could the government have done? – They have the records of transactions registered in an area, and at what rate. Analyse that data! Does an area have a high number of transactions? Increase the circle rate there! Does an area have transactions at a rate much higher than the circle rate, Increase the circle rate there!

If anyone can forward this blogging rant to someone in the government, the residents of New Friends Colony will be eternally grateful!

Acquisition of Immovable Property in India through purchase/gift/inheritance


Always wanted queries regarding what you can do and cannot do in India as an NRI? Here is our two bits on trying to answer a few questions that come to mind! For further queries and consultancy, please don’t hesitate to contact us at 

Q.1. Who can purchase immovable property in India?

Ans. Under the general permission available, the following categories can purchase immovable property in India:
i) Non-Resident Indian (NRI)
ii) Person of Indian Origin (PIO)
The general permission, however, covers only purchase of residential and commercial property and is not available for purchase of agricultural land / plantation property / farm house in India.

Q.2. Can NRI/PIO acquire agricultural land/ plantation property / farm house in India?

Ans. No.

Q.3. Are any documents required to be filed with the Reserve Bank after the purchase?

Ans. No. An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents/reports with the Reserve Bank.

Q.4. How many residential / commercial properties can NRI / PIO purchase under the general permission?

Ans. There are no restrictions on the number of residential / commercial properties that can be purchased.

Q.5. Can a foreign national of non-Indian origin be a second holder to immovable property purchased by NRI / PIO?

Ans. No.

Q.6. Can a foreign national of non-Indian origin resident outside India purchase immovable property in India?

Ans. No. A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was resident in India. However, he / she can acquire or transfer immovable property in India, on lease, not exceeding five years. In such cases, there is no requirement of taking any permission of /or reporting to the Reserve Bank.

Q.7. Can a foreign national who is a person resident in India purchase immovable property in India?

Ans. Yes, a foreign national who is a ‘person resident in India’ within the meaning of Section 2(v) of FEMA, 1999 can purchase immovable property in India, but the person concerned would have to obtain the approvals and fulfil the requirements, if any, prescribed by other authorities, such as, the State Government concerned, etc. The onus to prove his/her residential status is on the individual as per the extant FEMA provisions, if required by any authority. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of the Reserve Bank.

Q.8. Can the branch / liaison office of a foreign company purchase immovable property in India?

Ans. A foreign company which has established a Branch Office or other place of business in India, in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, can acquire any immovable property in India, which is necessary for or incidental to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through the proper banking channels. A declaration in form IPI should be filed with the Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with an Authorised Dealer as a security for the purpose of borrowings. On winding up of the business, the sale proceeds of such property can be repatriated only with the prior approval of the Reserve Bank. Further, acquisition of immovable property by entities incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan and who have set up Branch Offices in India and would require prior approval of the Reserve Bank. However, if the foreign company has established a Liaison Office in India, it cannot acquire immovable property. In such cases, Liaison Offices can acquire property by way of lease not exceeding 5 years.

Q.9. Can a NRI/PIO acquire immovable property in India by way of gift? Can a foreign national acquire immovable property in India by way of gift?

Ans. (a) Yes, NRIs and PIOs can freely acquire immovable property by way of gift either from
i) a person resident in India; or 
ii) an NRI; or
iii) a PIO.
However, the property can only be commercial or residential in nature. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift.
(b) A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India by way of gift.

Q.10. Can a non-resident inherit immovable property in India?

Ans. Yes, a person resident outside India i.e. i) an NRI; ii) a PIO; and iii) a foreign national of non-Indian origin can inherit and hold immovable property in India from a person who was resident in India.

Q.11. From whom can a non-resident person inherit immovable property?

Ans. A person resident outside India (i.e. NRI or PIO or foreign national of non-Indian origin) can inherit immovable property from
(a) a person resident in India
(b) a person resident outside India
However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange law in force or FEMA regulations, applicable at the time of acquisition of the property.


Our view on Gurgaon


Gurgaon is a long story that has everyone hooked. Here is our break up and analysis of Gurgaon.

Gurgaon can be looked at in three parts. One, is the existing and the oldest developments on MG Road. These include Beverly Park, Garden Estate, Heritage City among others. These are currently trading in the range of Rs. 12,000 psf to Rs. 16,000 psf.

Then came the new development of Golf Course Road which started around 5 years ago. We are now at a stage where the projects are being delivered (Belaire, Park Place, Suncity La lagune).These projects are trading at Rs. 10,000 psf to Rs. 13,500 psf.

After this, and this is the most recent waves of development, there have been three new block of development in Gurgaon. One, golf course extension road, where a number of projects have been launched in the last few years and only a couple have actually come up. This is already expensive at between Rs. 8,000 to Rs. 10,000 psf. Second, we have Dwarka Expressway, which is the latest buzz word in the industry. Projects here started launching 2 years ago and launched in the range of Rs. 7,000 to 9,000 psf. They are currently at around Rs. 6,000 to 8,000 so we have seen decrease in prices. Third, we have new gurgaon, which is near Manesar. Projects here were launched in the range of Rs. 3,500 to Rs. 4,000 and are now trading in the range of Rs. 5,000 to Rs. 5,500.

Looking at other parts of DEW closer towards Delhi, apartments are selling at Rs. 8,000 to Rs. 10,000 per square foot. We don’t see these apartments appreciating more than 20-30% in the next five years. We look at the benchmark of MG Road and Golf Course Road where the prices are hovering around Rs. 18,000 psf and Rs. 13,000 psf respectively. We don’t see Dwarka Expressway going beyond golf course road in the coming years. New Gurgaon  has the potential of higher appreciation simply because our base in much lower at between Rs. 5,000 – Rs. 5,500 per square foot.

The other problem in Gurgaon for us is that its an investor driven market. Residential developments are lying empty because not enough end users are buying! This leads to a cyclical problem where when an end user visits the complex to see if he should move, he gets put off by the empty apartments.

For more information and credible advice on the gurgaon market, contact us on

Weaving through the Jargon!



We all have heard the terms super area, carpet area thrown around in advertisements and if we have bought a property in the past, we would know that there is a big difference between what is advertised and what we actually get. Lets try to make sense of the various terms that we hear:

Carpet Area: Simply put, carpet area is the area where we can spread a carpet. To get a bit technical, it means the area calculated from inner wall to wall distance inside the house. This also includes the steps if any inside the house.

Built up Area: Built up area is everything that carpet area is, and we also add the area covered by the walls, the ducts and part of the terrace. As a thumb rule, this is usually 10% more than the carpet area.

Super Built up Area: This is the term most thrown around and is used by developers to charge based on square feet. This is Built up area, and we add all the area occupied by common amenities like lifts, corridors, staircase, club house etc. As a thumb rule, this is usually 25% more than the built up area, but we have seen even 50%!

Most developers charge based on the super built up area. The different between the super built up area and the built up area is called Loading.

With the recent Real Estate Regualtory Bill (, the government is making it mandatory for developers to sell property based on the carpet area as opposed to the super built up area.

For further guidance and information, please contact us at

Recovery on the horizon?




Recovery on the horizon?

The thought in everyone’s mind these days, apart from Sachin retiring, the upcoming elections and who will be evicted from Big Boss next, is when will the real estate recovery take place?

Various thoughts of school exist on this and each has its own reasons behind it. Historically, the period immediately after Diwali has seen a spurt of movement in the market, with developers rushing to launch projects and consumers with fat bonuses thinking of ways to spend them.
This year however, it has been a bit eerily quiet. Yes a couple of projects were launched, yes a couple of transactions happened, but it was all too on the low key.

Everyone is talking about the next trigger point. When will the market recover? When should I sell my house? When should I buy a house are the questions we hear from everyone almost on a daily basis.

Here’s our view on it – When should you sell your house? Only when you need to is the simple answer to it. In hindsight, almost every decision we ever take is wrong so make the decision independently.
When should you buy a house? – The simple and boring answer is when you need to, but I would go a step ahead and say that buy when the information provided to you points to the price being correct or lower than it should be. Don’t wait in the hope that the market will fall further.

We feel that the next trigger point for the market is the 2014 elections and there will be impetus in the real estate markets post that.

To discuss further, please email us on or call us at +91 11 41040220. 

Safety features you must have in your home!


You want your house to have a perfect location, properly geared with basic facilities, social infrastructure, layout and designer features. Many of us even hire an interior decorator to give an exclusive look to our house. In the race of making our house stand up to our expectations we often forget to take into account the safety factor. Following are some points that you must inspect before giving away your hard earned money.

1)    Land Inspection

Delhi has become the new hub for skyscrapers and people are rushing towards investing their money solely attracted by the infrastructure and stupendous facilities. Aware of the fact that Delhi lies in the seismically active risk zone how many of you ask for a land inspection before signing the deal? Very few! It is important to know whether the skyscraper you are living in is actually earthquake resistant or not. You should insist your builder to provide you with a structural stability certificate to ensure that you are living in a safe home.

2)    Fire resistant construction

Fire safety is another feature that you must ensure before investing in any project. Fire fighting equipment like extinguishers, fire hoses, sprinkler systems, fire alarms should be installed. Moreover, every apartment building with three or more floors must compass a certificate of approval from the director of the local fire force or an authorised officer. These documents should be checked before purchasing the house. Following are some fire fighting equipment:

Smoke Detectors: Smoke detector is a device that indicates smoke intimating a fire around.  These devices detect carbon monoxide from a fire. They are placed in such a way that their alarms are audible. These are very helpful in cases where a fire is secretly brewing in your home.

Fire Extinguishers: In case there is a fire in your house, you quickly call 101. Till the time the fire ambulance shows up you have to take the charge and protect yourself. For this, you must have a fire extinguisher to smother it with. Never assume that you won’t need one, because the possibility is always present.

Sprinkler System: A sprinkler system is installed in the ceiling to quench a fire in extreme cases where it gets out of hand. It’s like a shield which will protect your house in case a huge fire erupts.

3)    Emergency Phone Numbers

You should always have a list of important phone numbers near the telephone. Any of the family members can fall in a situation where it is difficult to locate or remember phone numbers of those who could help. Having one may someday help you to prevent yourself from a miss happening.

4)    Emergency Ladder

If you have chosen a house on other than ground floor then you must have an emergency ladder which is designed in such a way that you can have access to the bottom floor in case of urgency. There is a huge possibility of an injury if you don’t have an emergency ladder in the house during a situation like this.

5)    Home Security System

A home security system is an electronic structure installed in the home to monitor locked doors and windows. In apartments there are usually CCTVs and other security systems to ensure their resident’s safety. But other than apartments, people should have a home security system installed at the time of construction only. Any criminal activity like theft is detected as soon anyone will try to open locked doors and windows.

So if you have not hired a safety expert till now, we advise you to hire one and get yourself secured. It is always better to resort to preventive measures than mourning over a loss. Natural or man-made disasters don’t come announced. So take measures and be safe! For more details and any queries contact us at