Kumar
Mangalam Birla’s retail venture, Aditya Birla Retail, is reportedly open to
roping in a financial
investor to fund its expansion plans. Even
though the company declined comment, it is learnt from sources that the firm is
not averse to diluting its equity by about 10% to a sleeping partner. However,
it would rather wait for more clarity on the regulatory front with respect to
such investments.
Given
the rate at which Aditya Birla Retail is expanding, funding will be an
important factor especially with the rising rentals in the realty market,
industry sources said. Aditya Birla Retail operates supermarkets under the
‘more’ brand and hypermarkets under the ‘more. Megastore’ brand across the
country.
It
is opening its sixth megastore in Thane (the first in Mumbai/Thane) on Thursday.
With 632 supermarkets and 5 hypermarkets under its wings, Aditya Birla Retail
is gradually moving ahead with its expansion plans, even as it continues to
identify and shut down unviable stores.
‘‘We
may close down 40-50 stores which we feel are not viable. However, this year we
would also be adding around 48 more stores as part of our expansion drive,’’
Thomas Varghese, CEO, Aditya Birla Retail told TOI.
According
to Varghese, this year is critical for all the company’s stores from the
profitability point of view.
Courtesy:-
TOI dt:-11-Mar-2010
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Service
tax burden imposed by the Union Budget on realty transactions will affect the
sector, says Prabhakar Sinha
The
Union Budget 2010-11 is a big disappointment to the middle-class urban housing
sector. However,
it has bet on the economic growth to drive demand in the sector. By tweaking
the income slab, finance minister Pranab Mukherjee has put some extra money
into the pocket of middle-class tax payers. A person having an income of Rs 5
lakh per annum is likely to gain Rs 20,600 per annum from the provision. But,
if his income is more than Rs 8 lakh, his annual gains will be around Rs
51,500. These are a big booster to the economy as they will increase the
purchasing capacity of individuals. Ultimately, tax saving is equivalent to
money earned. Service tax on apartments
under construction But at the same time, the finance minister has
imposed service taxes on a number of services related to the real
estate sector.
Anshuman Magzine, MD of global consultancy firm CBRE Asia, says that these
provisions will be a dampener and affect the revival of the real estate sector.
Another realty consultancy firm, Knight Frank, also said that it would affect
the sector adversely.
According to a budget provision, in cases where a property
under construction
is bought and a consumer makes payment over a period of time, then it will
attract service tax. “In the ‘Construction of complex service’, it is being
provided that unless the entire consideration for the property is paid after
the completion of construction (that is, after receipt of completion
certificate from the competent authority), the activity of construction would
be deemed to be a taxable service provided by the builder/promoter/developer to
the prospective buyer and the service tax would be charged accordingly,” reads
the provision.
A senior tax consultant of KPMG says that this clearly
means that if a house or apartment is sold before the completion of
the construction, a buyer will have to pay the service tax. In fact, Sunil
Mitra, revenue secretary, said that even if a house is already sold but the
completion certificate could be secured from the concerned authority in 2010-11
or after March 31, 2010, the service tax would be levied on such transaction.
According to tax experts, this will lead to a tax outgo of 3.4% of the sale
value of the house. Mitra also confirmed that the department would allow an
abatement of 67% on the value of house to calculate the service tax at the rate
of 10.3%.
This means, if you have bought a house for Rs 50 lakh
at the time of launch of a project, your tax liability would be Rs 1.70 lakh.
However, with the service tax levied from service provider, a senior builder
said they would pass on the liability to the customer. He said that since they
have started launching affordable apartments, the margin is so thin that they
would not be able to absorb them.
The budget has also included the renting of immovable
property under the service tax net. Knight Frank says that this will have a
negative impact on the real estate sector. The levy of service tax will impact
rented commercial property with retrospective effect from June 1, 2007. Even in
cases where a developer takes land on lease and pays lease rent, the lease rent
will attract service tax. Preferred location will be taxed Interestingly, the differential charges for higher
floor, or for preferential view, better spaces, etc will also attract service
tax. “Certain additional services provided by a builder to prospective buyers
like providing preferential location or external or internal development of
complexes on extra charges. However, service of providing vehicle-parking space
would not be subjected to tax,” the new provision says. However, there are some
positive aspects also, which will benefit the construction
sector as a
whole. Hotel industry gets a boost
According to a new provision, all new hotels of 2-star
and above category will be benefited because of the investment-linked deduction
– 100% of the capital expenditure incurred by a hotel can be reduced from
taxable income. This will enhance the returns for developers of hotel projects,
says Knight Frank. “The provision will enable investments in the hospitality
segment and boost supply in the organized sector. It aims to provide support to
the hospitality sector in expectation of growth in tourism and both business
and leisure travel,” says Anurag Mathur, MD of Cushman & Wakefield India. Relief under 80 IB The budget has also given relief to developers
under Section 80 IB (10). It has provided the extension of income tax exemption
for housing projects by one year. It will give a relief to projects that were
delayed during the slump. These projects should have been sanctioned on or
before March 31, 2008 and be completed in five years. Similarly, the provision
for commercial establishments has been increased from 5% or 2,000 sq ft of
built-up area, whichever is less, to 3% or 5,000 sq ft of built-up area,
whichever is higher. Therefore, at least 5,000 sq ft of shop establishments can
now be developed in these projects while continuing to remain eligible for
income tax exemption, says Knight Frank.
The relief to developers by allowing extension for
claiming deduction of their profits within a period of five years under the
section, says Mathur, would help those developers who were impacted by the
global financial crisis last year. This announcement is likely to provide a
breather for developers who were finding it difficult to complete projects due
to liquidity crunch.
However, on the other hand, the announcement may be a
cause of concern for the consumer/end user as relief extended to developers
might result in further delay in project completion. In addition, it is
suggested that the norms for built-up area of shops and other commercial establishment in housing projects will be relaxed to enable basic
facilities for the residents. Interest rate subvention Interest rate subvention of 1% will continue to
benefit individuals borrowing up to Rs 10,00,000 for residential property
costing not over Rs 20,00,000 for one more year, and this will continue to help
affordable housing. Mathur said that the continuation of the interest rate
subvention on loans for low-cost housing would further provide a stimulus to
the demand for low-cost housing. However, the real positive impact of this
measure would be experienced only in peripheral locations of Tier 1 cities and
in Tier 2 and 3 locations.
Higher allocation for Rajiv Awas Yojana and Indira Awas
Yojana will benefit residential sectors aimed at economically weaker and LIG
segment in both urban and rural centers, says Knight Frank. Increased
allocation under schemes like Rajiv Awas Yojana, Bharat Nirman, Indira Awas
Yojana, amongst others, is expected to reduce the demand to supply gap for
low-cost housing and is also expected to provide increased opportunity for
developers to participate in government led projects, Mathur said.
Another positive aspect in the budget for the real
estate sector is
the impetus to SEZs, which will be beneficial and have a cascading impact on
the sector by way of development of satellite townships and cities.
Courtesy:-
Times Property dt:- 06-Mar-2010
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Service
tax burden imposed by the Union Budget on realty transactions will affect the
sector, says Prabhakar Sinha
The
Union Budget 2010-11 is a big disappointment to the middle-class urban housing
sector. However,
it has bet on the economic growth to drive demand in the sector. By tweaking
the income slab, finance minister Pranab Mukherjee has put some extra money
into the pocket of middle-class tax payers. A person having an income of Rs 5
lakh per annum is likely to gain Rs 20,600 per annum from the provision. But,
if his income is more than Rs 8 lakh, his annual gains will be around Rs
51,500. These are a big booster to the economy as they will increase the
purchasing capacity of individuals. Ultimately, tax saving is equivalent to
money earned. Service tax on apartments
under construction But at the same time, the finance minister has
imposed service taxes on a number of services related to the real
estate sector.
Anshuman Magzine, MD of global consultancy firm CBRE Asia, says that these
provisions will be a dampener and affect the revival of the real estate sector.
Another realty consultancy firm, Knight Frank, also said that it would affect
the sector adversely.
According to a budget provision, in cases where a property
under construction
is bought and a consumer makes payment over a period of time, then it will
attract service tax. “In the ‘Construction of complex service’, it is being
provided that unless the entire consideration for the property is paid after
the completion of construction (that is, after receipt of completion
certificate from the competent authority), the activity of construction would
be deemed to be a taxable service provided by the builder/promoter/developer to
the prospective buyer and the service tax would be charged accordingly,” reads
the provision.
A senior tax consultant of KPMG says that this clearly
means that if a house or apartment is sold before the completion of
the construction, a buyer will have to pay the service tax. In fact, Sunil
Mitra, revenue secretary, said that even if a house is already sold but the
completion certificate could be secured from the concerned authority in 2010-11
or after March 31, 2010, the service tax would be levied on such transaction.
According to tax experts, this will lead to a tax outgo of 3.4% of the sale
value of the house. Mitra also confirmed that the department would allow an
abatement of 67% on the value of house to calculate the service tax at the rate
of 10.3%.
This means, if you have bought a house for Rs 50 lakh
at the time of launch of a project, your tax liability would be Rs 1.70 lakh.
However, with the service tax levied from service provider, a senior builder
said they would pass on the liability to the customer. He said that since they
have started launching affordable apartments, the margin is so thin that they
would not be able to absorb them.
The budget has also included the renting of immovable
property under the service tax net. Knight Frank says that this will have a
negative impact on the real estate sector. The levy of service tax will impact
rented commercial property with retrospective effect from June 1, 2007. Even in
cases where a developer takes land on lease and pays lease rent, the lease rent
will attract service tax. Preferred location will be taxed Interestingly, the differential charges for higher
floor, or for preferential view, better spaces, etc will also attract service
tax. “Certain additional services provided by a builder to prospective buyers
like providing preferential location or external or internal development of
complexes on extra charges. However, service of providing vehicle-parking space
would not be subjected to tax,” the new provision says. However, there are some
positive aspects also, which will benefit the construction
sector as a
whole. Hotel industry gets a boost
According to a new provision, all new hotels of 2-star
and above category will be benefited because of the investment-linked deduction
– 100% of the capital expenditure incurred by a hotel can be reduced from
taxable income. This will enhance the returns for developers of hotel projects,
says Knight Frank. “The provision will enable investments in the hospitality
segment and boost supply in the organized sector. It aims to provide support to
the hospitality sector in expectation of growth in tourism and both business
and leisure travel,” says Anurag Mathur, MD of Cushman & Wakefield India. Relief under 80 IB The budget has also given relief to developers
under Section 80 IB (10). It has provided the extension of income tax exemption
for housing projects by one year. It will give a relief to projects that were
delayed during the slump. These projects should have been sanctioned on or
before March 31, 2008 and be completed in five years. Similarly, the provision
for commercial establishments has been increased from 5% or 2,000 sq ft of
built-up area, whichever is less, to 3% or 5,000 sq ft of built-up area,
whichever is higher. Therefore, at least 5,000 sq ft of shop establishments can
now be developed in these projects while continuing to remain eligible for
income tax exemption, says Knight Frank.
The relief to developers by allowing extension for
claiming deduction of their profits within a period of five years under the
section, says Mathur, would help those developers who were impacted by the
global financial crisis last year. This announcement is likely to provide a
breather for developers who were finding it difficult to complete projects due
to liquidity crunch.
However, on the other hand, the announcement may be a
cause of concern for the consumer/end user as relief extended to developers
might result in further delay in project completion. In addition, it is
suggested that the norms for built-up area of shops and other commercial establishment in housing projects will be relaxed to enable basic
facilities for the residents. Interest rate subvention Interest rate subvention of 1% will continue to
benefit individuals borrowing up to Rs 10,00,000 for residential property
costing not over Rs 20,00,000 for one more year, and this will continue to help
affordable housing. Mathur said that the continuation of the interest rate
subvention on loans for low-cost housing would further provide a stimulus to
the demand for low-cost housing. However, the real positive impact of this
measure would be experienced only in peripheral locations of Tier 1 cities and
in Tier 2 and 3 locations.
Higher allocation for Rajiv Awas Yojana and Indira Awas
Yojana will benefit residential sectors aimed at economically weaker and LIG
segment in both urban and rural centers, says Knight Frank. Increased
allocation under schemes like Rajiv Awas Yojana, Bharat Nirman, Indira Awas
Yojana, amongst others, is expected to reduce the demand to supply gap for
low-cost housing and is also expected to provide increased opportunity for
developers to participate in government led projects, Mathur said.
Another positive aspect in the budget for the real
estate sector is
the impetus to SEZs, which will be beneficial and have a cascading impact on
the sector by way of development of satellite townships and cities.
Courtesy:-
Times Property dt:- 06-Mar-2010
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DLF, the country’s largest
realtor by market value, is planning to build a premium residential apartment complex at Worli
in Mumbai instead of a high-end mall project, as demand for retail spaces has
come down sharply, according to a company executive.
“We felt residential will do well
here, and we will fix the price depending on market conditions,” he said.
According to DLF website, the project is under “planning and development” under
the high-end mall brand Emporio.
Rents of retail spaces are down by 25-30 per
cent from their peak in 2007-08 as demand slowed. Though demand for office
spaces have picked up slowly, property consultants expect lukewarm demand to
continue for retail developments.
Worli, which was a former hub of
textile mills, is witnessing modern office developments by realtors such as
Indiabulls, Bombay Dyeing and Century Textiles, and residential apartments command a price
of Rs 22,000 per sq ft and above.
DLF made news in 2005 when it
bought a 17-acre Mumbai Textile Mill land from National Textile Corporation
(NTC) for Rs 702 crore. The company at that time announced it would build a
futuristic retail-cum-entertainment complex on the land.
The new project is expected to be
launched in the next four-five months after taking all the necessary approvals,
the executive said.
According to property consultants,
the company changed the plan several times as real estate market went through a
prolonged slowdown.
However, DLF is not alone which
converted its mall project into a residential one. Host of others such as DB
Realty in Dahisar area of Mumbai, West Pioneer in Kalyan near Mumbai and TTK
group in Bangalore also changed their plans to build mall to apartment
projects.
Apartment prices have raised
15-20 per cent since mid-2009 as home buyers returned to the market. Earlier,
prices had declined by around 40 per cent as home buyers stayed away.
Buoyed by response for its apartment projects, DLF is expected to
launch 8-10 new residential projects in the next one year, according to
sources. DLF, which stalled some of its office projects during the slowdown, is
planning to launch two-three commercial projects in Gurgaon and Hyderabad.
DLF today sold 1,200 units of
independent floors in its Panchkula Valley housing project in Chandigarh within
a week of its launch.
The units were priced between Rs
30 lakh to Rs 60 lakh. The company is aid to have made around Rs 500 crore from
the sale of units. The company originally planned to launch 500 units, but
later increased it to 1200 due to good response, a release from the company
said. The project was launched on Feb 18, 2010.
The company, which had plans to
book these units in 45 days till March 31, 2010, closed bookings within seven
days of launch as the bookings crossed 1200 units within 15 days.
Courtesy:- BS dt:- 26-feb-2010
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The Budget proposals have thrown up a dampener for the housing industry. Construction
services have now been brought under the ambit of the service tax in an
unexpected move that would raise cost
of apartments that are still under construction. As per the Budget
proposal, the finance ministry has suggested that construction would be deemed
to be a taxable service if the building or complex is still under construction
and approval from the concerned regulatory authority — which in most cases is
the resident municipal authority — hasn’t yet been granted. The levy would
cover all construction of complex service or commercial or industrial construction
services, the Finance Bill suggested.
The service tax levy would be 10.3% and would also apply to
additional services such as those offering preferential locations for flats in
multi-storey buildings where flats in each floor are priced at a premium due to
their location. This too has been described as a service and hence taxable,
according to the proposal which was tabled in Parliament on Friday by finance
minister Pranab Mukherjee. The premium is typically levied on categories such
as flats or apartments that are
above a certain floor rise or have other high value locations such as being in
front of a garden or a sea or any other preferred locality.
“The proposal is to tax construction if the entire payment
for the flat is made before completion of construction,” said consulting firm
RSM Astute executive director K H Viswanathan. “This would increase the cost of
the apartment and may discourage potential buyers.” The service tax would be
10% on 33% of the price of the apartment, while on the remaining 67%, tax won’t
be levied.
Till now, for all apartments under construction, customers
paid in installments based on plinth level construction and also on the
progress in building activity. Banks too lent money to the customers according
to the requirement of the builder. Now most developers would ask customers to
pay the entire value of the building if they sought to lock in at a certain
value. This would mean paying the entire sum before the construction.
Typically, in cities such as Mumbai, where there is a pressure on space and
hence apartments and flats are much sought after, customers booking for flats in an
under-construction building, is very common. “The service tax and excise duty
hike on cement would increase the overall cost of apartment by about 10%,” said
Dharmesh Jain, managing director of Nirmal Lifestyles, a Mumbai-based
developer. “It’s a negative step and we are considering to meet the finance
minister to plead for a relook on this measure,” he added. But there are other
positive measures that the Budget proposes such as allowing pending projects to
be completed within a period of 5 years instead of 4 years, for claiming
deduction of profits, as one time interim relief. There is also a suggestion
that the commercial area included in a housing project would now be 3% of the
aggregate built-up area of the housing project or 5,000 sq. ft, whichever is
higher, compared to the existing limit of 2% and 2,000 sq.ft. respectively.
This would help developers and real estate
companies to make their projects more viable.
Courtesy:- ET dt:- 01-march-2010
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Half a dozen developers control 70 per cent of Transferable
Development Rights in the city.
A cartelisation of Mumbai’s real
estate, one of the costliest in the world, in the matter of transferable
development rights (TDR) has put upward pressure on prices and has also caused
concern in policy circles. In a recent development, just six-odd builders and developers hold 70 per
cent of the 2.5-3 million sq ft TDR available. The price of TDR has also surged
to Rs 2,500-Rs 3,000 per sq ft from Rs 800-1,000 sq ft in the past six months.
TDRs are rights granted by the civic or state agency to a
property developer who surrenders land to the government and, in exchange, is
allowed proportionate or more development rights on land in the vicinity or
northwards. He may sell that property so developed or sell the right itself,
the TDR; these are transferable.
Realty sector
sources said the Mumbai cartel had meant a rise in TDR prices practically every
month. The development is a sequel to a 2008 order of the High Court here,
which stayed a state government decision to allow 33 per cent extra building
rights (measured as more of Floor Space Index, or FSI, the ratio of what can be
erected on a plot of land to its area) in return for more premium.
The order was in response to a public-interest suit on the
issue.
A state government official, who did not want to be quoted,
said the government may approach the court shortly to reiterate its plea for
additional FSI (they may even go to the Supreme Court to get the stay vacated,
say officials). The higher FSI, if allowed, will stop the builders’ cartel from
jacking up prices at will, he said.
Maharashtra’s minister of state for housing, Sachin Ahir, said: “The
government will take all necessary measures to curb cartelisation in the use of
TDR in Mumbai.”
Sunil Mantri, chairman, Sunil Mantri Realty, said, “Prices
of TDR are unaffordable.”
However, Nainesh Shah, executive director of Everest
Developers, argued that TDR rates can be brought down only by an increase in
the stock of land and the government is the only entities that can make this
happen. “More land needs to be released,” he said.
Ashutosh Limaye, associate director, strategic consulting,
Jones Lang LaSalle Meghraj, said TDR trading follows the open market principle.
For areas that are popular and in demand for real estate development (Bandra,
Chembur, Vile Parle, etc), land prices is high and it makes sense to buy TDR
even at a higher rate.
Mumbai’s own peculiarity is that TDR, in practice, can only
be deployed in the northern suburbs, while it is generated in the area south of
this. This contributes to the upward pressure on its price. The government
order which the court stayed, on allowing more FSI on payment of a premium, had
sought to widen the supply, was the official argument.
Opponents of the way TDR has worked in practice, including
those who went to court on the issue mentioned, argue that it has led to
congestion in the suburbs, haphazard and unplanned development, and intense
pressure on infrastructure. It may be noted that this policy, pioneered in
Mumbai, has since been adopted by state and civic agencies through the country.
Courtesy:- BS:- 03-march-2010
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Realty sector, riding on the back of
affordable housing, is registering a robust growth with almost one lakh
apartments in various stages of construction in NCR. Prabhakar Sinha writes
Real estate
prices, after remaining flat in the first three quarters of 2009, have begun to
see some upward movement. The main driving factor behind revival in the sector
is the launch of affordable apartments coupled with the stimulus packages of
the government and liquidity infusion by RBI to keep interest rates around 8.5%
on fresh home loans.
As demand for affordable housings
in the range of Rs 15 lakh to Rs 40 lakh is large, the new mantra of
constructing low-budget houses to tide over the slowdown in the sector has led
to unprecedented construction activities in National Capital Region. According
to one estimate by real estate consultancy and research firm, PropEquity, at
present, over 1 lakh apartments are in various stages of construction in NCR
region. Anshuman Magazine, CMD of global consultancy firm CB Richard Ellis,
said developers’ decision to go for construction of affordable housing has
resulted in an unprecedented construction activity in NCR.
The good thing is, he says, as economy picked up, demand for commercial office
space has also started rising. After a lull of more than a year, a number of
MNCs have started enquiring about office space to expand operations, Magazine
said.
While IT/ITeS sector has been slower to get onto the
recovery path, corporate office space
being taken up has been quite encouraging, he says. Financial institutions,
FMCG and telecom sectors have all contributed to demand for office space.
Though volumes are still at lower end of the spectrum, market is not as
moribund as it used to be at the beginning of 2009, he says.
Demand for residential
real estate follows that of commercial space.
According to a thumb rule, the requirement for residential space to meet
housing needs of the employees working in newly occupied office space is 10 to
12 times the area of that office space.
According to a Cushman and Wakefield report, in 2009, 3.82
million sq ft of office space was absorbed in NCR region. At an average house
size of 1,000 sq ft, occupancy of 3.82 million sq ft office space is good
enough for the creation of a fresh demand for around 40,000 apartments. In
2008, according to the report, a total of 8.6 million sq ft of fresh office
space was absorbed. In 2010, the demand for office space is likely to increase
substantially over that of 2009. However, whether it will reach the 2008-level
is yet to be seen.
Because of a boom in the sector, as demand for both
office and residential space is growing year after year, the supply is also
increasing proportionately. Following the trend of the last few years,
developers in NCR were ready with a supply of 8.6 million sq ft of office space
in 2009.
But as demand fell sharply in the second half of 2008,
and also in the first half of 2009, there is a condition of oversupply in
commercial real estate. This has led to a fall in rentals ranged between 3% and
26%. Vacancy rates went up substantially. But, now, as demand for office space
has again picked up, there are expectations that there would be stabilization
in rentals across most locations in NCR. However, Gurgaon (IT/SEZ) may witness
some fall in rentals.
All this has made the demand quality conscious.
Magazine says: “As supply has overtaken demand, facilitating increased
competition, better quality developments are attracting demand. This is
encouraging for real estate sector
as a whole, with commitment to quality finally getting its due rewards.”
Another positive aspect to the story is the development
of infrastructure in NCR due to forthcoming Commonwealth Game. All government –
central and state, along with municipal and civic – agencies in NCR are working
overtime to develop physical infrastructure in the city.
In the main, intra-city connectivity is witnessing an
unprecedented improvement. Widening of major roads and de-congestion of other
main roads through construction of a series of flyovers, which began sometime
ago, is already close to completion. It is not Delhi administration alone, but
other local authorities of NCR like Noida, Ghaziabad, Meerut, Faridabad,
Gurgaon and Sonipat, which are also working overtime to improve connectivity of
their areas with other parts of NCR.
Kundli-Manesar-Palwal (KMP) and Kundli-Ghaziabad-Palwal
(KGP) Expressways are major projects in this direction. The alignment of KMP
Expressway, which is also known as western peripheral expressway, takes off
from National Highway 1 near Kundli, crosses NH-10 at West Bahadurgarh, crosses
NH-8 near Manesar and finally joins NH-2 near Palwal. It passes through
Gurgaon, Mewat, Rohtak, Jhajjar and Faridabad, which top urban growth in NCR.
On the other hand, KGP expressway, also known as eastern peripheral expressway,
provide signal-free connectivity between Ghaziabad, Faridabad and Palwal.The
expansion of Metro line to Gurgaon and Noida are other positive aspect to the
development of connectivity in the city.
These developments have considerably reduced travel
time from Noida, Mayur Vihar, Patparganj, Shahdara, and other parts of East
Delhi to Central Delhi like ITO, Central Secretariat and Connaught Place.
Improvement in connectivity will not only help traffic
flow and reduce travel time, but will go a long way in increasing development
of real estate at affordable prices in the region. This will bring in huge
chunk of areas, which were not developed so far because of poor connectivity,
into the city’s mainstream and spur development
of residential units there. Availability of land for
construction will lead to increase in supply of residential and commercial
units in the city. This will have a salutary impact on prices of real estate.
As supply improves, prices will remain under control. Improved connectivity to
far-flung areas has already started showing results. A number of townships are
developing in remote areas, which are going to get good connectivity due to the
new development in infrastructure. Some notable townships likely to become
residential hubs in the near future are Crossings Republik, Raj Nagar
Extension, Naharpar, Kundli, Sonipat and a large number of sectors in Noida and
Gurgaon, which are now considered remote from Delhi.
Due to availability of cheaper land in these areas,
developers are selling apartments at Rs 1,500 to Rs 2,400 per sq ft. That
means, a two-bedroom
apartment is available for as low a price as
Rs 12,00,000 in some of these new settlements. This has enabled a large number
of people from middle class to buy that sweet home of theirs. With improvement
in connectivity, these townships provide good residential solution to middle-class
residents. At the same time, as demands in this segment is huge, developers are
getting a good business.
Courtesy:
Times Property 27th Feb 2010
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Normal0falsefalsefalseEN-USX-NONEX-NONE You always have the option of closing a home loan.
This is done at the end of the tenure, or before the specified tenure if you
have an alternate source of funds. One may have excess funds or may be selling
off the property. Either way, the closure of the loan account is almost as
important as opening it.
While initially submitting your documents to the bank,
it is advisable to get an acknowledgement of the number of documents that you
have submitted. This will help you prove your point just in case you find that
certain documents are missing at the time of the loan closure. In case there
has been a change of address, you should get it updated in the bank’s records. Process If you have paid off the last EMI and all the
outstanding payments have been made, you need to write a letter to the bank stating
the facts and asking for the return of the original documents that you
submitted at the time of taking the loan. If you require other papers including
invoice copies, you could include these in your request to the bank.
The bank generally responds to such requests in about
seven working days. The bank returns your original documents and issues a
closure letter or a no-objection certificate indicating that there is no
outstanding amount to be paid. It will also issue a no-objection certificate that
states the termination of the hypothecation agreement that you had entered into
with the bank. It is a confirmation that the bank no longer has an interest in
the property.
In the case of a home loan where the mortgage is
registered, the no-objection certificate needs to be taken to the Registrar of
Properties to get the lien removed. Both the borrower as well as a
representative of the bank needs to do this at the same time. But if the
mortgage is not registered, the bank simply returns the title deeds. Prepayment In the case of prepayment of a loan, you need to
start the entire process with a request to find out the outstanding amount,
followed by one stating your inclination to pay the entire amount by a
particular date. Also, you need to find out the interest amount you need to
pay, particularly if you decide to close the loan in the middle of your monthly
repayment cycle or after the fixed date on which the bank calculates interest.
Check the interest calculation in addition to the
outstanding amount to ensure there is no confusion. Also, if you have given
post-dated cheques and decide to prepay the loan, you need to let the bank know
in advance, so that they can return the post-dated cheques with the other
documents. In case the postdated cheques have already been sent for clearance
by the bank, they will ensure they are eventually returned to you. It is best
to let the bank know 15 days before your next payment date. Prepayment fee Most banks do not levy a prepayment fee if the
funds have come from the borrower’s own resources such as from the sale of a
property. However, to avail of this benefit,
you need to be able to show proof of the source of the income.
Courtesy:
Times Property 27th Feb 2010
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Better connectivity and central
location make it the most prefered destination for investors
Puniet Singh
Central Delhi, designed in the shape
of a ship's helm, is one of the most happening hubs of the city. Government
ministries, large mansions, clean and long stretches of green neighbourhoods
best describe Central Delhi. The area can be divided into Old Delhi and New
Delhi, which can be further sub-divided into Karol Bagh, Paharganj and
Daryaganj.
Central Delhi, which inherits a
history of more than a 100 years - artistic Mughal structures, British
architecture and urban construction -is today one of the most premium zones of
the city. Central Delhi is one of the most preferred locations for investors,
as it is centrally located with good connectivity to all parts of the city and
the NCR Region thanks to the Metro. Being in the Capital city, it is also the
16th most expensive real estate market
in the world and one of the costliest retail destinations in India.
Improved infrastructure because of the Commonwealth Games will also give Delhi
world-class status and that's bound to attract more investors to these parts,
which also cinclude the Central Business District (CBD).
Preparations for upcoming
international events such as the Commonwealth Games has made all the
difference. Metro connectivity in the area, infrastructure upgradation and the
finishing touches being given to Connaught Place area have all led to a hike in
property
prices.
Connaught Place was designed by
renowned British architect Robert Tor Russell. Regarded as Delhi's best
business and shopping g district, it is an intrinsic part of the city's rich
heritage. It offers both commercial and residential options. The connecting
links of the city like Barakhamba Road, Tolstoy s Marg, KG Marg, Janpath Road,
Akbar Road and Tilak Marg are century-old connects. Huge mansions, villas,
bungalows dot roads such as Aurangzeb Road, Humayun Road, Babar Road,
Prithviraj Road, Golf Links, Sundar Nager, Shahjanhabad, and Ashok Road... with
many of these dwellings reserved for ministerial occupants.
The area offers both commercial
and residential properties, be it
apartments or plots, retail space, builder floors or independent houses.
It comprises Connaught Place, Hanuman Road commercial zone, Hanuman Road
residential zone and Lady Hardinge Road. The area outside the extended
commercial zone consists of Parliament Street, Panchkuian Road, Babar Road,
Jhandewalan, Barakhamba road, Janpath, Windsor Place, Jantar Mantar, Mandir
Marg, Minto Road, Bhagat Singh Market, Krishna Market -Paharganj and Motia
Khan.
Real estate consultants
have observed a rising trend in both capital values and rentals in this belt.
The capital value of apartments in Central Delhi range from Rs.15,000 to Rs
35,000 per sq ft, builder flats cost Rs 8,000-Rs 26,000 per sq yard and plots
Rs.1.50 lakh to Rs 5.50 lakh per sq yard. Rental values of 2 BHK apartments
range from Rs. 20,000 to Rs 1.50 lakh and builder flats cost anything from Rs
10,000 to Rs 30,000 per month.
Price per unit usually starts at Rs 22,000 per sq. ft. in and around Connaught
Place (source: Cushman & Wakefield).
NRIs, too, flock to Central Delhi
because of its being centrally located and having good infrastructure. Of late,
the changing face of real estate
structure and government initiatives for NRIs and FDI have been welcomed by
people in the real estate sector.
The author is CEO, Sherwoods Independent Property Consultants India (P) Ltd
Courtesy: HT Estates 20th
Feb 2010
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Here's a look at some legal formalities you will have to
complete before moving into your home
Vimal Punmiya
After having got the home loan
sanctioned from the bank, it's time you look at documents you will be required
to submit before moving into the apartment you've decided to purchase.
We list some of them here. Stamp duty Stamp duty is a type of tax that needs to
be paid to the State Government on transfer, i.e. sale or
purchase of an immovable property,
through the execution of an agreement. Let's try and simplify issues pertaining
to stamp duty and the related documentation required for the same. Execution of
the instrument: When a seller and buyer sign papers pertaining to the sale of
an immovable property, (like a flat or apartment), whereby the rights of the
seller are transferred to the purchaser, in such a case, the instrument is said
to have been executed. Who has to pay stamp duty: Stamp duty is payable on the
agreement through which the immovable property is sold or transferred. Usually
the purchaser pays the stamp duty.
Market value of the property:
Though stamp duty is payable on the agreement, the same is calculated based on
the value of the immovable property such as a flat. Stamp duty is payable
either on the market or agreement value, whichever is higher. The agreement
value refers to the value, consideration or price mentioned in the agreement.
This is the amount the purchaser will pay for the property. The market value,
on the other hand, refers to the price the property could fetch if it were to
be sold in the open market.
The market value is calculated based on a formula stipulated
by the stamp duty authorities.
Payment of stamp duty: After calculating the stamp duty in
accordance with the formula prescribed by the stamp duty authorities, the same
can be paid in any bank that has been authorised by the state government to
collect stamp duty.
You will have to request your bank for a pay order to pay
the stamp duty. The bank will give you a confirmation of the payment. You will
then need to give the original agreement to the bank.
Checklist for payment of stamp duty: The pay order should be
drawn in favour of that bank where stamp duty will be paid. For e.g. if the
stamp duty is being paid in XYZ bank, then the pay order will be drawn in
favour of `XYZ a/c Stamp Duty'.
Do not sign the agreement (either the seller or the buyer)
until the stamp duty is paid. Once the pay order of the stamp duty amount is
given to the authorised bank, the bank will frank the document. This means that
the bank will put the seal of the amount paid on the agreement, indicating that
the stamp duty has been paid. The parties to the agreement should retain the
original receipt issued by the bank.
This will be required when registering the agreement.
Risks of not paying stamp duty: You may be tempted to ask,
what happens if I do not pay stamp duty?
The downside risks of not paying stamp duty on the executed
transaction may be rather serious, so ensure that this leg of the transaction
is executed properly.
The agreement for the purchase or sale of immovable property
should be carefully stamped i.e. full stamp duty should be paid on such
agreements. If the stamp duty is not properly paid, it will lead to a number of
difficulties later such as: The agreement will not be accepted at the time of
registration. The purchaser will be liable to pay a penalty for such
nonpayment.
The title of the purchaser will not be clear and the courts
will not accept such agreements as evidence in case of litigation.
Rates payable on stamp duty: Land is a state subject and
hence stamp duty also falls within the state's jurisdiction. Thus, different
states prescribe different stamp duty rates. Stamp duty is payable in the state
where the immovable property is located.
Registration When the purchase/sale of the immovable property is completed after
paying the applicable stamp duty and both parties sign on the agreement, the
agreement should then be furnished to the registration authorities for
registration. The registration authorities will verify the agreement, take the
signature of the purchaser, seller and witnesses and record the contents of the
agreement. This way, the authorities give legal evidence of the transaction of
purchase/sale of the immovable property that has been entered into between the
purchaser and seller.
Advantages of registration: By registering the agreement,
both the buyer
and the seller stand to benefit in the following
ways: The title of the purchaser becomes clear and the same can be admitted in
the court as evidence, in case of any litigation. Registering the agreements
with the registration authorities automatically makes the government a witness
to the legality of transaction. If the owner wants to take a loan from a bank
against the property, then the bank generally insists on examining the
registered agreements and may not give a loan on unregistered agreements.
Place of registration: In India, the registration usually
takes place in the office of the Sub-Registrar, in whose jurisdiction the
immovable property is situated.
Registration fees: Registration fees refer to those fees
charged by the Government for registering the agreement. Such fees are
determined by the Government and the same should be paid through a pay order at
the time of registration of the agreement.
Checklist for registration: Each state has different rules
for registration. However, the following documents are essential to have:
Prescribed registration forms duly filled and signed by both parties to the
agreement, i.e. the purchaser and seller. Pay order of the amount of
registration fees. Original agreement duly stamped with the amount of stamp
duty paid and signed by both the parties, i.e. the purchaser and seller. Original
receipt of the stamp duty paid.
Along with the above papers, the parties should also arrange
for the following documents relating to the immovable property which has been
purchased / sold: The assessment bill from the municipality or any other
municipal authorities certificate as may be applicable from state to state. Certificate
from the society giving details of the property such as the area, year of construction, number of lifts,
city survey number, etc., duly signed by the secretary / chairman of the
society. `No objection' certificate from the society stating that the society
has no objection if the seller sells the immovable property to the purchaser
and that the society has no objection in admitting the new purchaser as a
member of the society.
`No dues' certificate from the society that all the dues, outgoing and
maintenance and other charges have been paid by the seller as on the date of
the sale.
Any other details, documents or evidences as may be required or applicable from
state to state.
If the purchaser or seller are being represented by some
third person for the purpose of registration, then a special power of attorney
in favour of such a third person which is properly signed, stamped and
notarised should also be furnished to the registering authorities.
You may also take two additional people along to the
registering authorities.
These individuals can sign as witnesses at the time of
registration. Bye-laws of a cooperative society Bye-laws simply mean those
rules and regulations that are framed for the internal working of the
co-operative society. These are the rules and regulations, which the society
has to follow to conduct its day-to-day activities.
These are laws that must be adhered to while making
decisions pertaining to the society. For instance, carrying out major repairs
or installation of lifts. The members of the society are also obliged to adhere
to these bye-laws of the society.
Condominium rules When there are less then 10 members occupying the premises
and where a cooperative housing society cannot be formed, a condominium is
formed. When an immovable property is transferred in a co-operative housing
society, registration is not compulsory. However, in case where an immovable
property is transferred in a condominium, then registration is compulsory.
Each unit owner in a condominium has to follow the bye-laws
and rules and regulations framed for such condominiums. Property
ownership A person who purchases or holds
immovable property in India is governed by various laws and acts. His/her
rights, duties, obligations and liabilities must be in accordance with such
laws and acts.
Transfer of Property Act 1882: This act contains various
provisions, sections and rules under which the rights of the owner of the
immovable property are governed.
Indian Stamp Act, 1899: These acts are important as under
the said acts, stamp duty rates are prescribed for various documents, including
purchase of immovable property. Any person who wants to purchase immovable
property should ensure that the stamp duty is paid in accordance with the
provisions of the act.
Income Tax Act, 1961: Any person purchasing or selling
immovable property should also ensure that the same is done keeping in mind the
provisions of Income Tax Act, especially those pertaining to capital gains tax.
Indian Registration Act 1908: The Indian Registration Act
1908 lays down different categories of documents for which registration is
compulsory. According to section 17 the following transactions of immovable
properties are required to be compulsorily registered.
Instruments of gift of immovable property Lease of immovable property
Instruments which create or extinguish any right or title to or in an immovable
property.
(The author is a Chartered Accountant with Vimal Punmiya and Co. The article
was published in Knight Frank's guide book titled Real Investment: A real
estate investment guide for India )
Courtesy:
HT Estates 20th Feb 2010
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Most
locations in Delhi are witnessing a rise in prices, thanks largely to
infrastructure development and improved connectivity
Ashish
Jindal
During
the last few years, the residential segment in Delhi has witnessed substantial growth
in terms of property prices and the rise of locations like Dwarka and Rohini,
where most of the new housing stock has been added. Infrastructure development
and improved connectivity have been the focus areas of the civic authorities,
riding on which, most of the locations across Delhi are witnessing price
escalation.
South Delhi South Delhi continues to hold its position as the most coveted
location for residential settlement within Delhi, even though high property
prices have made
it unaffordable for a large number of home buyers. Most of the prime
residential pockets like Jor Bagh, Chanakyapuri, Golf Links, Defence Colony,
Friends Colony, Greater Colony I and II etc, are located in this zone. The
South Delhi Metro link to Gurgaon is due to be completed in six months.
An important factor that has led to an increase in prices in the areas is the
absence of any new residential stock. The recent Supreme Court verdict on acquiring
of 12,000 acres of land in Chattarpur, for development of a sub- city in South
Delhi almost the size of Dwarka, can be one of the most important factors that
may lead to prices stabilising in the area.
East Delhi Locations like Mayur Vihar, Anand Vihar, I.P.
Extension, Patpargunj, Preet Vihar are few locations, where demand
for residential settlement
is observed to be improving on account of infrastructure initiatives been taken
by the Central and state governments. The completion of the East Delhi Metro
link and the Delhi-Noida Metro link in the month of January have been the key
reasons driving residential demand in this region. East Delhi, like south, has
also not witnessed much fresh supply of housing units, which has led to rise in
property prices. The Commonwealth Games Village located near Mayur Vihar is
another factor which may lead to property prices commanding a premium in the
area. North Delhi North Delhi is one of the first locations that witnessed
improved connectivity to CBD through a Metro link. This has also led to an
upward trend in property prices. Further, once the Jahangirpuri-Central
secretariat-Qutab Minar -Gurgaon Metro link is operational in another six
months, it will allow easy access to various South Delhi locations and improve
connectivity to Gurgaon. This development will make North Delhi a key
residential zone and drive up property prices. West Delhi Punjabi Bagh, Paschim
Vihar, Naraina , Rajouri Garden, Janakpuri and Patel Nagar are the few prime
residential locations in West Delhi. Improved
connectivity to CBD by the Delhi Metro
and the presence of Netaji Subhash Place, a key SBD office location, have been
the key reasons for increase in property prices in the region. With the
Mundka-Inderlok Metro Extension to be completed in another couple of months,
this development will improve West Delhi's connectivity to CBD and East Delhi
locations. The author is Regional Head
(North), Knight Frank India
Tarun is planning to buy a
second house worth Rs 45 lakh with a home loan
of Rs 36 lakh. He already has a flat that is worth Rs 40 lakh for which he has
taken a loan of Rs 32 lakh three years ago. His income is Rs 1.2 lakh a month.
He is now scouting for another home loan. He is also not clear about the tax
implication of the two home loans.
Analysis First home loan - Rs 32 lakh Current year - Third Interest rate - 8.25
per cent Interest amount to be paid in the current year - Rs. 2.50 lakh
Principal amount to be paid in the current year - Rs. 77, 000 Second home loan
- Rs 36 lakh Current year - First Interest rate - 8.25 per cent Interest amount
to be paid in the current year - Rs 2.94 lakh Principal amount to be paid in
the current year - Rs 73,800 With regard to his first home loan for Rs 32 lakh,
he is entitled to Rs 1.
1.5 lakh of maximum tax deduction on the interest paid under Section 24 (b),
and Rs 2. 1 lakh of maximum tax deduction on the principal paid under Section
80 (c).
So,
he can avail of deduction of Rs. 1.50 lakh against the interest amount of Rs.
2.50 lakh to be paid and Rs 77,000 against the principal amount of Rs 77,000.
But
since he is planning to take a second home loan for his second house, the
calculation of his tax deduction will be something as described below. Tax
deduction for principal paid Under section 80 C, one gets maxi- mum deduction
of Rs. 1 lakh for principal amount paid against a home loan, and this is valid
in case of multi- ple property too. So, in Tarun's case it will work out as
follows: Principal paid against the first home loan
- Rs 77,000 Principal paid against the second home loan - Rs 73,800 Total
principal paid - Rs 150,800 Tax deduction under 80 C - Rs. 1 lakh. Tax
deduction on Interest paid For the sake of calculation, one is allowed to
consider one of the two houses as self-occupied and the other as rented, even
if an individual is using both of them for his own use. First home If treated
as self occupied: Interest paid in third year - Rs 2.50 lakh Tax deduction on
interest paid - Rs 1.50 lakh If treated as notionally rented out : Net Income
from rent Annual Rent - 1.80 lakh (assuming a
rent of 1.5 lakh pm) Less: Standard Deduction at 30 per cent of rent - Rs
54,000 Less: Interest paid - Rs 2.50 lakh Net Outflow = (Rs 1.24 lakh) Loss of
Income Second home If treated as self occupied: Interest paid in first year -
Rs 2.94 lakh Tax deduction as per 80 C - Rs. 1.50 lakh If treated as notionally
rented out: Net Income from rent Annual Rent - Rs 1.44 lakh Less: Standard
Deduction at 30 per cent of rent - Rs 43,200 Less: Interest paid - Rs 2.94 lakh
Net Outflow = (Rs 193,200) Loss of Income Net outflow is calculated by deduct-
ing the standard deduction from the annual rent and then further deduct- ing
the remainder from the interest paid Option 1 House one for self - Rs 1.50 lakh
House two on rent - Rs 1,93,200 Total Outflow - Rs 3,43,200 Option 2 House one
on rent - Rs 1.24 lakh House two for self - Rs 1.50 lakh Total Outflow - Rs
2.74 lakh Therefore, option 1 is the better option as he will get tax deduction
of around Rs. 3,43,200 from his income.
Summary Tax deduction on Principle paid - Rs. 1 lakh Tax deduction on interest
paid - Rs.
3,43,200 He gets a total of Rs 4,43,200 as deduction Name: TARUN Working in:
Private company Salary per month: Rs 1.2 lakh
Industry and real
estate players feel any withdrawal in stimulus packages coupled with a hike
in interest rate will be counterproductive and affect revival of economy,
particularly real estate sector. Prabhakar Sinha writes
Real estate sector
is at crossroads. On a revival path after it went through tough times owing to
economic slowdown in the country, the revival, though, is mainly on account of
stimulus packages given by government to the economy. The easy-money policy
adopted by the RBI, which led to softening in interest rate, also helped the
process of revival in the sector.
However, as the country faces a problem of rising prices,
government is weighing the option of withdrawing the stimulus packages. Some
economists are also in favour of tightening credit market that will lead to
rise in interest rates, which would contain demand and dampen inflationary
tendencies.
Industry and real
estate players, though, feel any withdrawal in the stimulus packages and
hike in interest rate will be counterproductive and will affect revival of
economy, particularly real estate sector.
Sachin Sandhir, MD and country head of RICS India, says
timing and magnitude of an exit from policy stimulus measures are crucial for
sustainability of recovery in property and land markets. With further
tightening of monetary policy expected during the course of 2010, policy
reforms and measures expected from the budget are crucial to success of realty
markets. RICS is a UK-based self-regulatory global professional body, which set
up and now regulates qualifications and standards in property market, including
construction and associated environment issues in real estate sector. Anshuman
Magazine, CMD of global realty consultancy firm CB Richard Ellis, South Asia,
says real estate sector is very hopeful that government will continue to
provide stability to the industry, which has gone through extreme turmoil this
past year. Magazine says government should take measures to improve
affordability of end users. To this end, he says government should raise
existing slab of Rs 1,50,000 to Rs 3,00,000 against the payment of home loan.
This amount is deducted from the assessee's income to compute income tax. He
also suggests that real estate sector, including residential township projects, should
be granted infrastructure status.
Sandhir, on the other hand, feels that budget should extend
tax concessions to residential sector by allowing exemption of income tax on
the profit made by developers in constructing small houses of less than 1000 sq
ft in Delhi and Mumbai and 1,500 sq ft in other cities. The provision was
earlier allowed under Section 80-IB (10), which lapsed on March 31, 2007.
This will be a huge incentive to developers to build
affordable houses in the country. In fact, it will help contain prices in real
estate sector in the country. Sandhir says housing sector is suffering as a
result of global recession and incentives are needed to help stimulate activity
and provide the much needed new homes. If government is unwilling to
reintroduce a wideranging tax break it could be used in a more targeted way, he
says. "A time-bound tax holiday has proved successful in stimulating
activity in real estate sector in other countries; for instance, the holiday
from Stamp Duty Land Tax in the UK, which expired at the end of 2009. It may also
be more effective to target the tax break at specific types of housing. This
could be affordable housing units or homes meeting specific environmental
standards," he says.
To this end, tax incentives should also be provided to
developers undertaking slum and dilapidated housing redevelopment projects. In
its report, RICS also pointed out that development of rental property market is essential in
addressing housing problems in the country. "This provides an alternative
to people who are unwilling or unable to buy a house. Rental property can also
help develop a flexible labour force by allowing people to move easily to parts
of the country where jobs are available," the report says.
Tax treatment of rental property needs to be considered to
help encourage the sector, RICS adds. Taxes should be levied at such a level
that a reasonable rate of return may be achieved by those looking to invest in
the sector. Under present scenario, house owners are eligible for exemptions of
30% under Section 24 of the I-T act. Taxes are also not levied on house tax
levies and interest payments on borrowed capital to buy a house. As a
consequence of these outgoings, taxable rental income in most cases is
calculated to be very small, and at times a negative portion of the gross
rental income. RICS suggest that tax rate of 30% on rental income from residential property be lowered to
20%. Additionally, only 50% of rental income should be taxed as compared to
current 70%. A downward revision in TDS rate will ensure that excess tax is not
paid and will reduce burden of filing for and processing refund applications.
"This will improve the rate of return from rental housing and boost rental
market," RICS says.
Experts feel that the budget should pronounce policies that
help consolidate the revival of economy and, in particular, the real estate
sector as it is the second largest employer in the country, after the
agricultural sector. A unit increase in construction expenditure, according to
one study, leads to generation of income by five units because of multiplier
effect. Due to backward and forward linkages to over 250 ancillary industries,
positive effect of growth in real estate sector spreads far and wide and helps
the entire economy grow.
Courtesy:- TOI dt:- 13-02-2010
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The recent monetary policy review is aimed at curbing the
rising inflation rate. There is some good news for
homebuyers as this credit policy has left the key rates untouched, and the
CRR hike will not push home loan rates up, says Ashish Gupta
The Reserve Bank of India (RBI) hiked the cash reserve ratio
(CRR) in the monetary policy review last week. Despite a more-than-expected
hike in the CRR, banks have, in general, ruled out any immediate hike in
lending rates. According to bankers, there is abundant liquidity in the system
and they can absorb the increased cash reserve requirement.
In order to tackle the rising inflation rate, the RBI hiked
the CRR (the amount banks have to park with the central bank) by 0.75 percent
to 5.75 percent, but left the key rates untouched. The 75 basis points increase
in the CRR to 5.75 percent is expected to draw out at least Rs 36,000 crores
from the system. This move is mainly to check the food price inflation from
spreading to other sectors. The RBI said the CRR will be increased by 50 basis
points from February 13, and a further 25 basis points to 5.75 percent from
February 27. The bank rate, used by banks to price long-term loans,
remains unchanged at six percent.
According to a RBI estimate, the inflation rate is likely to
touch 8.5 percent by this fiscal end from over seven percent in December last
year. Earlier, in October last year, the RBI had projected the rate of price
rise to be around 6.5 percent by March 2010 end. According to analysts, there
won't be any immediate pressure on interest rates. While a 0.75 percent hike in
the CRR can put some upward pressure on short-term rates, long-term rates are
unlikely to be affected in the near future. The RBI is unlikely to revise rates
before April if the inflation rate remains at around 8.5 percent. The RBI has
already factored this into its inflation projection till March and is not
likely to take any mid-term action. In the January review of the monetary
policy, the RBI increased the inflation forecast from the earlier projection of
6.5 percent. The present RBI actions are targeting the abnormal rise in the
inflation rate. However, given the credit off take level in the system, banks
are unlikely to effect any increase in their loan rates in the near future. The
fact that interest rates have not been increased will continue to spur demand.
As of today, banks are flush with funds. As a result, home loan interest
rates are expected to remain steady in the coming months.
Courtesy:- TOI dt:- 13-02-2010
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Surajkund has good real estate projects and low values.
But government apathy and lack of speed in delivering infrastructure projects
is a problem here, finds
Brix Research
Surajkund was majorly a forest area
with rural settlements with the annual Surajkund fair as its major draw for
business and other commercial activities. Its development started around 10
years ago, but due to government apathy it was unable to flourish. With Faridabad's real
estate booming in last few years, developers realised its immense potential
and a number of residential and commercial projects were launched.
Surajkund village is one of the areas where real estate is undergoing an
overhaul with a number of residential and commercial projects being developed.
Spread over 30 acres, it is most famous for its Surajkund Crafts Mela.
Organized with the support of Suraj Kund Mela Authority, it is an annual event
held during February 1-15. Launched in 1981 by Haryana Tourism, the mela (fair)
is a platform for artisans and craftsmen from all over India to
showcase their finest wares in a rural setting and is a major tourist attraction
in Haryana. Well-known developers with projects in Surajkund include Omaxe, Eros Group, Parvsnath and Ansals.
Charmwood Village by the Eros Group was the first
township project on the Surajkund
Road. Spread over 65 acres, it consists of a
multistorey apartment complex, Brentwood Tower and Charmwood Plaza, an
integrated complex of shops, showrooms and office space under one roof. The
apartments are valued at Rs 60 lakh to Rs 1.5 crore. Rental values of the
apartments are approximately Rs 20,000 for a 2BHK unit. Almost 85% of
apartments in Charmwood village are occupied while the rest will be given for
possession by 2011.
The Omaxe Group's residential project, The Forest, is
located near Suraj Kund Complex and is a mere 3km from Delhi. It is spread over an area of 14.5
acres and consists of 5BHK ultra-luxury
apartments. Launched in 2006, the project is likely to be completed by
2011. Surrounded by 5,000 acres of green forest zone and Aravali hills, the
complex is equipped with state-of-the-art facilities with each flat valued at
Rs 1.5 to Rs 3 crore.
Located on the Surajkund Road, Omaxe Hills is another
residential project being developed by Omaxe Ltd. It has 2 and 3BHK apartments
along with 3BHK luxury apartments with servant quarter. The project was
launched in 2007 and is likely to be completed in 2011. The apartments, with an
area of 3,000-5,000 sq ft are valued at Rs 45 lakh to Rs 2.5 crore. The project
comes with various modern recreational and entertainment facilities, and also
houses a local shopping complex with about 40 to 50 units of 400-800 sq ft, at
a price tag of Rs 30 to Rs 50 lakh. Other residential projects in Surajkund
include the Greenfield
colony, an integrated township with multistorey apartments and a local shopping complex.
A 2BHK apartment in the Greenfield
colony is available for Rs 20 to Rs 25 lakh while a 200 sq ft shop is available
on rent at Rs 40,000 to Rs 60,000 per month. Diverse range of property like
apartments, bungalows and villas are available in the residential category. Commercial Projects A number of commercial projects are also being
developed for comprehensive development of the area. Saffron Plaza
is one such project. Mainly comprising office space, it has been developed by a
private developer and is ready to move in. MNCs and banks like Citibank, HDFC
Bank, SBI and ICICI have already started operations here. Rental space in the
plaza is valued at Rs 7,000 per sq ft and the minimum unit size is 1,000 sq ft.
Developers like Crown Group, Piyush Group, and SRS Group are developing a number of IT parks in
the area. Most of these IT parks are likely to be completed within two years.
Areas surrounding Surajkund like Sector 37, Ashoka
Enclave I and II, are dotted with local shopping
complexes, 80% of which are occupied and others are ready for possession.
Shops with an area of 1,000 sq ft are up for rent for Rs 60,000 to Rs 70,000
per month.
Many schools and educational institutions are also
located in Surajkund, like MVN
Public School, Aravali
International and Manav
Rachana College.
Local transport around these areas is also improving with a bus stand at 1km
from Surajkund, while other transport like auto-rickshaws and taxis are also
easily available. Surajkund Road
will soon be six-laned and the forthcoming Metro link and Badarpur flyover will
further enhance its connectivity. Being a tourist spot, the area also has a
number of 5-star hotels like Rajhans and Claridges,which cater to tourists.
"Surajkund is an important tourist destination in Haryana. Its excellent
connectivity to South Delhi, Gurgaon and
Noida, and its affordable price range make it an investment hotspot," says
Pawan Kumar of Arrangement Real Estate.
Though connectivity is very good and transport
facilities are improving, Surajkund lacks infrastructural facilities. While
most projects have been provided with 24-hour power backup, power and water
supply are still a drawback. Moreover, the slow pace of work by civic agencies
is further adding to the woes of residents and developers alike. Once these
aspects are taken care of, Surajkund will be an excellent location for investors.
According to Pawan Kumar: "Surajkund is Faridabad's prime
locality and has a bright future in the realty sector. Property rates have
doubled since last year and demand has increased by 50%. With a little
attention from the government, in the next five years Surajkund will be the
preferred real estate destination leaving Gurgaon and Noida behind."