Thursday, July 30, 2009

Court asks neighbour to pay for property damage

If you are aggrieved at the damage to your property by your neighbour’s reckless constructions, then a recent court ruling holds out hope.

“It pays to be a good neighbour,” Additional District Judge (ADJ) Kamini Lau ruled some days ago, before awarding a compensation of Rs 2 lakh to complainant H N Kukreja. Kukreja had hauled to court his neighbour at Lajpat Nagar’s B-block, Uma Dhawan, and her builder Vishal Chopra, arguing that the renovation carried out at Dhawan’s home had spoilt the walls and woodwork in his basement.

The order stated: “It pays to be a good neighbour and conversely a person oblivious and unconcerned about the life and property of his immediate neighbour can be made to compensate.”

The judgment also sounded a note of caution on the irresponsible and break-neck manner in which constructions march on these days, and said a neighbour cannot escape duty towards adjoining houses.

Kukreja claimed the slipshod work next door had severely damaged his basement floor. The walls were damp, the plaster was peeling at places, the floor had developed cracks, and the doors and windows were damaged, Kukreja said in his petition.

Challenging it, Dhawan and Chopra denied the remodelling had harmed the neighbour’s property.

In their defence, they also argued that Kukreja had illegally constructed certain structures in the basement. However, a report by an executive engineer on Kukreja’s property disproved Dhawan’s claims, prompting the court to dismiss the argument.

ADJ Lau said: “In civilised society, every person owes a duty of exercising due care and caution towards the life and property of his neighbour. He is under an obligation to ensure that his individual right to enjoy his own property does not come into conflict with a similar right of his neighbour to enjoy his property as well.”

The court then asked Dhawan and Chopra to equally share the monetary penalty of Rs 2 lakh and pay it as damages to Kukreja so that he could repair his house.

NRI property: Vigilance to issue notices

As UT vigilance department has failed to arrest any of the four persons accused in the case pertaining to a fake deal with regard to
NRI Tara Singh’s property, the investigating agency has now decided to issue notices to all of them, asking them to join the probe.

Preliminary investigation suggested that England-based advocate JB Singh, who is running a firm named Chess International abroad, is the mastermind of the plot as the name of culprit Harnek Singh, who had forged the original general power of attorney of the NRI, was referred to complainant Tara Singh by JB Singh.

A VB official said Chess International had claimed it solved property disputes of NRIs in India and Tara Singh had approached JB Singh through an advertisement in England. A branch of the company is in Jalandhar and staff there was also questioned. Accused Harnek Singh was a munshi with a city-based lawyer and JB Singh, also an NRI, had advised the complainant that he appoint Harnek Singh as the holder of his general power of attorney (GPA).

However, the investigation has also established the negligence of the superintendent Sant Parkash and dealing assistant Virender Verma of the estate office and assistant estate officer (AEO) Ashwani Kumar. A senior vigilance official said Verma and superintendent Sant Parkash had overlooked the copy of original GPA stating Harnek Singh was entitled to sale and purchase of the property when assistant estate officer (AEO) Ashwani Kumar had passed a no-objection certificate (NOC) to Harnek Singh.

Questionable records

The official website of UT administration still shows accused Harnek Singh as 50% shareholder of Tara Singh’s property in Sector 20. A visit to estate office revealed that half of the share of the NRI’s property is registered in the name of Harnek, who is absconding.

Rs 1 crore looted from Noida property dealer

Armed car-borne miscreants shot at and looted Rs 1 crore from a property dealer in Noida on Tuesday afternoon in supposedly the biggest
on-road loot from an individual in the state. The victim has been admitted to Kailash Hospital in Noida where his condition is stated to be stable.

Till now all the robberies of over Rs 1 crore had either taken place within a premises like that of a bank or an office or the money was collected from a number of people. This is the first time that the money belonged to an individual moving on the road.
The police, however, suspected that the victim was infact carrying Rs 1 crore and even questioned him and the six persons accompanying him. Later, the victim showed them documents of the bank from where the money was withdrawn on Monday to buttress his claim.

The incident took place around 1 pm on Tuesday when a property dealer, Chatar Singh, of Vilaspur locality in Noida was on way to the office of the district registrar with six others for a land deal. Those accompanying him included the party whose property was to be purchased by Chatar.

Chatar’s Scorpio had barely reached Usmanpur village when an Esteem intercepted his SUV and even before he could understand what was happening, a group of armed men jumped out of the car. While two of them covered the occupants of the SUV from two sides, two others walked up to the seat where Chatar was sitting and tried to snatch the bag containing the money. When Chatar resisted, one of them opened fire at point blank range.

Chatar took the bullet on his hand and loosened the grip on the bag. The miscreants then took the bag and sped away in their car. The whole operation lasted barely a minute.

Chatar later told the police that those accompanying him in the SUV included his brother and some distant relatives who had offered to sell their property to him.

Tonic to builders and buyers Assetventures

Middle and lower-income subscribers to new home loans stand to save as much as Rs 1.5 lakh on interest payment under concessions announced by the Centre today while wrapping up discussions on the budget.

Finance minister Pranab Mukherjee, replying to the debate on the Finance Bill that was later passed in the Lok Sabha, also offered some concessions aimed at easing the burden of the downturn-hit industry. (See chart)

The measure that will help middle-income earners most is the 1 per cent interest subsidy on home loans up to Rs 10 lakh to buy houses worth up to Rs 20 lakh. The subsidy will translate into a total saving of Rs 28,920 on interest payment during the tenure of a 5-year loan and Rs 1.51 lakh over a 20-year period.

As many as 70 per cent of home loan borrowers fall in the Rs 10-lakh bracket, industry sources said. The government’s offer to underwrite 1 per cent of interest is expected to cost it about Rs 1,000 crore, according to the finance ministry.

“It (the subsidy) is a welcome step as it will improve affordability. Any such step tends to improve activity in the real estate and construction sectors, which are among the largest employment generators,” said Renu Sud Karnad, joint managing director of HDFC.

The subsidy announcement came a day ahead of the RBI’s credit policy which analysts do not expect to offer interest rate cuts.

Mukherjee did not confine the incentives to real estate to the subsidy alone. He also offered a tax holiday to projects that more or less got off the ground at the start of the downturn if they finish construction by March 2012.

Builders of projects that got approval between April 1, 2007, and March 31, 2008, need not pay tax on profits if they are completed on or before March 31, 2012. Given the euphoria of 2007, builders had rushed to launch a slew of projects that ran into rough weather when the tide turned in the latter half of 2008. Realtors have been pleading for relief after housing prices fell by as much as 15 to 25 per cent in many cities.

“The incentive is expected to help more big developers who are stuck with high leverage and low sales but the impact could be felt by all,” Pradip Chopra, director of Calcutta-based developer PS Group, said.

Rajiv Talwar, the executive director of developer DLF, agreed: “These measures will help to a large extent to sell stocks of affordable housing and boost overall demand.”

However, all real estate players were not enthused. Arun Puri, chairman of property consultant firm Jones Lang La-Salle Meghraj, said: “Such tokenism may not really perk up the market… larger gestures like reduction in interest rates and incentives for developers are needed to rescue the market.”

Mukherjee also addressed an accounting concern of industry, clarifying that changes in service tax would be implemented only from September 1. Industry associations had requested the government for time to make changes in their tax software.

Industrial growth had shrunk in December and January, but Mukherjee asserted today that the measures already announced in the budget and earlier as part of two stimulus packages could push the growth in gross domestic product to 8 to 9 per cent by end-2010.

Mukherjee said he would stick to his promise of placing a draft direct tax code within 45 days of taking over as finance minister and it would be tabled in the winter session of Parliament. “We will make some major changes in the tax administration and related laws in the country,” he said.

The minister promised to push through a nationwide goods and services tax by April 1, 2010, “with cooperation from states….”

The measure is expected to reduce taxes on goods and services and make taxation uniform throughout the country.

Mukherjee had a message for those disappointed by the lack of reforms in the budget. “Reforms will be very much on our agenda. It is a continuing process... it will not be a mantra to be chanted occasionally,” he said.

Govt to provide 1% home loan subsidy Assetventures

Finance Minister Pranab Mukherjee today announced an interest subsidy of 1 per cent for one year on housing loans of up to Rs 10 lakh for properties worth less than Rs 20 lakh, a move that has been widely welcomed by realtors and home loan companies. The measure is expected to cost the exchequer Rs 1,000 crore.
Pranab MukherjeeMukherjee also allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between April 1, 2007 and March 31, 2008, provided the projects are completed on or before March 31, 2012. Mukherjee asked developers to pass on the benefits of this tax break to consumers.

Mukherjee made these announcements in the Lok Sabha today as part of his reply to the discussion on the Finance Bill. Both houses of Parliament passed the Finance Bill 2009-10, which included a raft other concessions.

Assuming a monthly saving of Rs 60 per lakh, today’s announcement implies that a borrower saves about Rs 7,200 on a 15-year loan of Rs 10 lakh. The interest rate subvention will be routed through the scheduled commercial banks and the housing finance companies registered with the National Housing Bank.

Pranab Mukherjee

Banks to offer subsidy on home loans, says FM. Assetventures

minister Pranab Mukherjee said that the interest rate subsidy for mid-segment housing would be routed to customers through
commercial banks and housing companies registered with the National Housing Bank. He said to further provide stimulus to the housing sector, it will be allowed a tax holiday in respect of profits derived from projects approved between April 1, 2007 and March 31, 2008, if such projects are completed on or before March 31, 2012.

‘‘I expect the developers to pass on the benefit of tax holiday to home buyers by appropriately reducing their prices. I am sure that both the expenditure and tax-foregone initiatives would provide relief to a large segment of prospective home owners and help revive the real estate sector,’’ he added.

The interest subsidy is aimed at mid-segment housing loan borrowers from the lower middle to middle-income groups. Even on Monday, Congress MP from Mumbai (North) Sanjay Nirupam, while speaking on the finance bill, said 42.4% of Maharashtra’s population was urbanized and trends pointed to increasing migration to cities. With home loan rates climbing steeply, there was a case for providing relief to borrowers. Providing an interest subsidy and a targeted tax break also answers in part the demand that the becalmed real estate sector needs a leg up.

The government’s message to the real estate developers is to lower prices and make housing more affordable for the aam aadmi.

The housing loan subsidy came with a slew of other concessions such as exempting road repairs and maintenance from the ambit of service tax while extending the sunset clause for tax holidays for industrial parks by a further two years up to March 2011 to boost growth in infrastructure. The FM clarified that service tax on new services and any alteration in the existing services as announced in the Budget would be effective from September 1, 2009.

‘‘It’s a welcome step from the government. The decision is sure to improve loan eligibility and affordability of a large section of the Indian middle class. It will also lead to increased activity with regard to real estate in the affordable housing segment which in turn will create employment,’’ said Renu Sud Karnad, Joint MD, HDFC Ltd.

Fresh real estate sops to spur revival . Assetventures

Eyeing fresh signs of a revival in the economy, which should nudge growth back to 9% level by end-2010, finance minister Pranab Mukherjee announced fresh tax giveaways for housing and renewed the government’s commitment to more economic reforms and introduction of a single goods and services tax (GST) by 1 April.

The move, expected to further boost housing demand in the economy especially in tier II cities, also seeks to quell growing criticism that the Congress-led United Progressive Alliance (UPA) is averse to second-generation reforms.

Replying to the debate on the Finance Bill, which was approved by a voice vote by the Lok Sabha, Mukherjee renewed his efforts to strike political consensus on key areas of tax reform, including the introduction of a direct tax code.

The reply also calibrated a few of his 6 July Budget tax proposals, which are not expected to result in big revenue giveaways, thereby precluding the possibility of a marked increase in the Rs4 trillion fiscal deficit forecast for 2009-10.

The stand out feature of Mukherjee’s calibration of tax proposals in the Finance Bill was the emphasis on boosting real estate through both budgetary support and tax changes. The budgetary support in the form of a 1% subsidy on the interest rates paid by people with a home loan of up to Rs10 lakh would cost the exchequer Rs1,000 crore in the current fiscal year, Mukherjee said.

Under Section 80 IB (10), income-tax deduction was given to real estate developers for housing projects approved before 31 March 2007. This has now been extended to projects approved between 1 April 2007 and 31 March 2008, provided these projects are completed on or before 31 March 2012.

“We have been asking for an extension for a long time and I am happy that this step has been taken,” said Kumar Gera, chairman of the Confederation of Real Estate Developers’ Association of India. “The extension will benefit only those projects that were approved during this period, so it may not have an impact on all housing projects in all markets. It could have an impact on certain micromarkets.”

Among other key tax changes were the removal of service tax charged by contractors repairing and maintaining roads, and extending tax benefits given in the Budget to firms producing natural gas under the new exploration licensing policy to those producing natural gas from coal-bed methane blocks.

The finance minister admitted he had to ignore many other post-Budget representations, which came his way, as the tax proposals had to mesh with the broad strategy of providing fiscal stimulus. “We must generate internal demand,” he said.

The spillover of the fiscal stimulus provided last fiscal year and proposals introduced in the 6 July Budget have cost the exchequer Rs2.4 trillion, Mukherjee said. The fiscal deficit (extent of borrowings needed to bridge the gap between expenditure and revenue) is estimated to touch 6.8% of the gross domestic product in 2009-10.

The Budget estimates of the Centre’s net tax revenue in 2009-10 is Rs4.74 trillion, an increase of 0.19% over the previous year’s revised estimate.

Economic growth, which received top priority in the Budget’s overall strategy, is showing signs of recovery, Mukherjee said, though he remained cautious about signals provided by an improvement in economic indicators such as May’s factory output. “I would not say we are out of it. Situation is still difficult.”

Mukherjee assured the House that the government would continue putting in place reforms, including tax reforms, to facilitate growth.

In the area of tax reforms, Mukherjee said he was confident India’s indirect tax system could stick to the 1 April deadline for transition to GST, even though some states such as Madhya Pradesh and Tamil Nadu have said the deadline might be premature.

“On broad national interest, there is no discordant view,” Mukherjee said, explaining why he remained upbeat about meeting the deadline.

GST is India’s most ambitious indirect tax reform, which seeks to dismantle tax barriers that fragment India’s market according to state boundaries. The transition requires cooperation between Centre and individual states.

The country’s tax reforms could, however, be negatively affected by the Opposition’s displeasure with the way the UPA has directed policy in areas such as international affairs.

“A mere call for consensus is not enough. To have consensus on issues, the government should pre-consult the Opposition on issues of national importance. Unfortunately, the (government’s) conduct in the last two months does not reflect this,” said Prakash Javadekar, spokesperson of the Bharatiya Janata Party.

Real estate, infrastructure loans show strong growth

Which sectors have banks been lending to in recent months?

The Reserve Bank of India’s macroeconomic and monetary developments review has data up to 22 May on lending to various sectors.

Consider housing first. Year-on-year growth in housing loans slumped to 5% on 22 May, compared with a year-on-year growth rate of 7.5% on 27 February.

Loans to the real estate sector, or loans to the commercial housing sector, grew by a strong 52% year-on-year, albeit on a much lower base.

On 27 February, loans to the real estate sector grew by 61.4% year-on-year.

Between 28 February and 22 May, housing loans increased by Rs3,138 crore, while bank loans to real estate companies went up by Rs3,734 crore.

In short, loans to real estate companies were more than loans for individual housing.

After a rise in bad loans in the credit card business, banks have started to cut back on lending to this segment.

Between 28 February and 22 May, credit card outstandings went down by Rs1,949 crore. Year-on-year growth in credit card outstandings was a mere 1.4% on 22 May.

The data bears out the fact that most of the slowdown in lending has happened in personal loans.

On 22 May, year-on-year growth in personal loans was 5.5%. Lending to industry grew at a year-on-year rate of 21.2%, while loans to the services sector increased by 20.5% year-on-year.

In the services sector, apart from real estate loans, loans to professionals (up 39.8% year-on-year) and to non-banking financial companies (up 31.5% year-on-year) also showed robust growth.

In the industrial sector, the highest rate of growth was notched up by the construction sector which grew by 44.7% year-on-year on 22 May. But that’s decelerated from a growth rate of 58.8% as on 27 February. Loans to infrastructure were up 35.1% year-on-year on 22 May, the same rate of growth on 27 February. Other industrial sectors showed a deceleration in credit growth.

The oil sector, of course, showed a substantial fall in credit growth as crude oil prices fell and as oil bonds were issued.

Is it good time to buy or sell in real estate mkt now? Assetventures

Is it a good time to buy or sell in the real estate market right now? Chances are that as a prospective buyer or a property owner, you may be
facing a serious dilemma.
Industry players feel that while it may be a good decision to buy in certain locations, a sell off needs to be given a few more months till the market picks up completely.

So which are the best places to buy in right now? According to global real estate consultancy Cushman & Wakefield (C&W), in Delhi NCR, it is Noida, Greater Noida Expressway and areas in Gurgaon along the Golf Course Extension Road. In Mumbai, central Mumbai and western suburbs such as Bandra, Kalina and JVLR are good bets. New emerging destinations in Bangalore such as Sarjapur Road, North and central Bangalore, apart from a few projects within the city can be considered.

Aditi Vijayakar, executive director, residential services India, C&W, says that this is a good time to buy a property for self use as prices have corrected considerably over their peak in 2007-08. “Buyers at this time can take advantage of lucrative interest rates on home loans. However, for investors entering the market, this time should be evaluated keeping the various arbitrage options that they can take advantage of in the current scenario. As far as selling is concerned, this is not a sellers market. The decision should be taken when the owner is confident of achieving the expected appreciation of the capital value of that property.”

While developers such as Vipul, Realtech, Raheja Developers and SVP Group say the market is picking up and one should look at buying, they don’t sound equally enthusiastic about selling off one’s property at this time.

Friday, July 24, 2009

Mumbai most preferred for investing in properties: Assetventures

Mumbai most preferred for investing in properties:

The country's financial capital Mumbai ranked as the most preferred destination for investing in properties, while Chennai has displaced Bangalore in the South, a survey conducted by an online portal said here on Tuesday.
The survey, "Trend in residential space across top cities in the current scenario" ranked Mumbai as the most preferred destination to invest in property while in south, Chennai was the first place for property investments, overtaking Bangalore.
Cities like Patna, Nashik, Tiruchirapalli and Madurai have also become favourite destinations for property investments, the survey said.
It said 60 per cent of respondents felt interest rates for home loan would come down further in the coming months, while 40 per cent evinced interests on properties with an area between 500 to 1,000 square feet.
Over 3,000 people from the metros and other cities, including Pune, Thane, Coimbatore, Ahmedabad and Vadodara participated in the survey.
"Market sentiments are reviving and people are willing to invest. Based on our survey, more than 60 per cent of customers are looking at buying residential properties in the next six months. They also are expecting a lowering of interest rates on home loans", Consim Info Founder and CEO Murugavel Janakiraman said.

Seizure notices yield Rs 1.33 cr property tax dues in Pune : Assetventures

Property tax defaulters in the Pimpri-Chinchwad Municipal Corporation (PCMC) areas coughed up Rs 1.33 crore after the corporation's property tax department sent seizure notices to 109 defaulters.
Speaking to TOI, Shahaji Pawar, assistant commissioner, PCMC said that the 109 property tax defaulters owed Rs 2.16 crore as dues.
"The property tax department has intensified its drive to recover the dues from defaulters. Seizure notices are being issued to defaulters who owed large sums. Each divisional office was given the target to send 15 seizure notices to recover the dues. The defaulters have partly paid their dues after receiving the notices. If they do not clear their dues, their properties will be auctioned to recover the balance."
He said that property tax bills are being sent to the property holders for 2009-10. The department has collected Rs 10.36 crore as property tax till now, while it had collected Rs 6.56 crore till end of June in 2008-09.
The property tax department has announced a special scheme of Free Singapore trip' to 15 property tax-payers who have cleared their property tax dues and also paid the tax for the current year. as per the scheme, two members of the taxpayer's family or his two nominees will get a free trip to Singapore.
Pawar said, "Property tax bills for 2009-10 are being sent to the taxpayers. There are a total of 2.71 lakh properties in the municipal limits and we have still to distribute around 60,000 bills. Property taxpayers have to pay their pending dues if any and this year's tax before August 30 to be eligible for the Singapore trip."
He added that a list of such eligible taxpayers will be compiled after August 31. "We will select 15 property holders through a lottery system for the Singapore trip," he stated.
The property tax department has collected a record tax revenue of Rs 88.88 crore in 2008-09. Pawar said, "The department hopes to collect property tax of around Rs 30 crore till the end of August this year. We will start a drive to create awareness among the people to pay tax on time. The department will use loudspeakers mounted on vehicles to make an appeal to the people to pay tax on time and be eligible for the Singapore trip."

A cell for NRIs' property issues in Chandigarh Assetventures

This happened after a incident in Chandigarh.

A day after an NRI alleged connivance of estate office employees in the sale of his shop-cum-flat (SCF) in Sector-20 Chandigarh without power of attorney, UT administration has decided to set up a grievance redressal cell for NRIs, which would deal with property disputes.
The instance of cheating and fraudulent sale of property of a London-based NRI Tara Singh is being probed by vigilance department, home secretary Ram Niwas said.
Complainant Tara Singh had alleged that the SCF was in his father’s name and to transfer it to his name, he got in touch with a company that provides services to NRIs in matters relating to property.
Administrator Gen (retd) SF Rodrigues has reportedly taken a serious view of this and has directed that a special cell headed by additional deputy commissioner, having prominent citizens.

Return of NRI interest in Indian real estate

"The right sized product, at the right price will surely be a sell-out," says Sukhraj Nahar, chairman of the Nahar Group. At the MCHI's India Realty Expo, 2009, in Dubai, the Nahar Group offered NRIs homes in a new segment - a two BHK flat that cost INR 55 lakh onwards, which received good response. "The NRI customer needs the security of being able to walk up to the chairman of the company and ask just about any question related to the project," says Nahar, on the product's success.
MCHI CEO, Zubin Mehta, substantiates the return of NRIs' interest in Indian realty with figures from the exhibition: a turnout of 1,096 NRI families; 106 flats worth Rs 65.33 crore ($13 million) booked and around 86 flats worth Rs 80.18 crore ($16 million) in the pipeline; site visits fixed for July-August, when the NRIs come to India on their annual vacation.
"We tweaked the format and offered products that were nearing completion, with a budget limit of INR 75 lakh, mostly in the suburban areas and these were perceived by the NRIs as having scope for further value appreciation," he says. "The softening of real estate prices and home loan interest rates in India, were the key factors for attracting a large number of NRIs," says Mehta.
HDFC's branch manager (Dubai), Vikram Goel, reveals that innovative schemes, like the '20:80' home finance scheme offered by HDFC and the Nahar Group, play a big part when it comes to garnering bookings. "The average NRI is worried about the economic challenges, across the next year or so. Hence, they find schemes like these, which provide for 20 per cent payment at the time of booking and the remaining 80 per cent at possession, attractive," he added.
"NRIs are facing a unique situation," says JS Augustine of Everest Developers. "There is a certain amount of job uncertainty, due to the global economic situation. At the same time, Indian real estate offers lower entry-level prices, with potential for good returns on investment (ROI). So, NRIs who are sure of their job for the next few years, are buying Indian real estate. The INR/USD rate differential also makes it more attractive for NRIs to buy now," he says, adding that it is necessary for Indian developers to meet NRIs more often, to create confidence and give them more comfort.
What works for the NRI buyer? It has to be innovation and a different product, from what has been on offer so far and at a price level that seems attractive to the NRI buyer who has the global property market to choose from, concludes Rajnish Oswal, MD of Dubai-based real estate firm, Home Back Home.

Friday, July 17, 2009

Commercial realty picks up steam Assetventures

After months of stagnation in the commercial real estate market in Mumbai, there is finally some revival. First off the block was the
10.3-acre Finlay Mill property for which there have been bids from Lodha Developers and Indiabulls Real Estate. On July 31, NTC will put the 16-acre Kohinoor Mill-1 property also on the block, for which the base price will be Rs 1,200 crore. Both these properties are located in central Mumbai.

In the case of Finlay Mill property, the last day for the submission of bids was Thursday. Lodha Developers and Indiabulls Real Estate have put in their bids. The base price for this property, which has a buildable area of 4.20 lakh square feet, is Rs 708 crore with Lodha’s bid at Rs 657.9 crore and Indiabulls’ at Rs 520 crore. The property was put on block twice earlier, and according to senior officials at NTC, the sale will go through this time around. When contacted, NTC Mill CMD K Ramchandran Pillai said: “The asset sale committee would review the bids on July 22, after which a decision will be taken.”

It is now learnt that property consultant Jones Lang LaSalle Meghraj has been mandated for the sale of the Kohinoor Mill-1 land. A senior NTC official told ET: “The bidding process will commence in less than two weeks.” This is the first time that this land is being put on the block. The Kohinoor Mill-1 property is different from that of Kohinoor Mill-3, which was bought by Manohar Joshi and Raj Thackeray for Rs 421 crore in 2005.

In all, NTC has the go-ahead to put 25 mills in Mumbai on the block. The last deal struck was for a land parcel in Parel in central Mumbai for Rs 702 crore. Last month, the Hindoostan Mill land in the same area, which was owned by the Thackersey family and later sold to a special purpose vehicle (SPV) company of Ackruti City and DLF, was put on the block, ET had reported on May 14 that C Sivasankaran, the NRI maverick investor, had acquired DLF’s stake of 66% for Rs 310 crore.

The revival in the commercial real estate segment has been a welcome development and has been viewed positively by those tracking the industry.

“Though the Finlay property has received bids below the base price, the price on a per acre basis indicates a recovery,” said a property consultant.

Wednesday, July 15, 2009

Real estate giant IREO to invest $500 mn in India

NEW DELHI: Global real estate giant IREO will pump in $500 million in various infrastructure projects in India over a period of seven years, the company said Thursday.

IREO, which has invested $1.5 billion in India, is already one of the largest investors in the country's real estate sector.

"Having already invested $1.5 billion, we still have another $500 million available in cash for further investments in our projects," Lalit Goyal, vice-chairman and managing director IREO, told reporters here.

The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune.

"We have already commenced construction of a five million square feet IT SEZ (Pune) and a three-million-square-feet housing project," Goyal said.

Added Anurag Bhargava, chairman IREO: "The Pune SEZ should be completed by next year."

The company has projects in many states including Haryana, Punjab, Tamil Nadu, Maharashtra and Delhi.

The company said it would develop an eight-million-square-feet housing project in the next 12 months.

Real estate survey shows silver lining for market

Presently facing a downward trend, the real estate market is likely to recover by 2010 with increase in demand for residential
segment driven by improving affordability, steady economic growth and greater liquidity. These are the findings of a survey carried out in 10 cities, including Chandigarh, by the Crisil Real Estate Research Group.

The report says, “Demand in the residential market is expected to turn positive in 2010 due to these factors, however, a decline in the currently over-priced capital values of all the three real estate segments - residential, commercial and retail would persist through 2009.” “The commercial and retail markets would continue to witness erosion in lease rentals through the next two years,” it states.

The report provided information and analysis of more than 400 acres of land across 88 micre markets in 10 cities - Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai and Pune.

The report indicated that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March this year, due to slowdown in both the domestic and global economies. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities, the report revealed.

However, Crisil believes that demand for houses would improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy.

Expressing confidence in the report, a leading real estate agent of the city, Sunil Kumar, said, “Apart from the low interest rates on housing, another important factor for the rising demand in 2010 would be the upcoming international airport in Chandigarh. The direct Dubai flight from Chandigarh would also add to arrival of many big business houses here.”

Kumar insisted that these factors would compell more and more tricity tenants to go for owning a property of their budget and choice. “The demand for residential properties would be more in the neighbouring areas like Mohali, Panchkula, Zirakpur, villages across the city and even far-off areas like Derabassi, Kharar and Kurali,” said Kumar.

Cheap housing offers lifeline to Indian developers

"No frills, Simple homes" reads the banner hanging in the Delhi headquarters of Unitech, India's leading property developer.

It's a mantra that has been taken up by realtors across the country with a new-found passion for affordable housing that owes little to their social conscience and everything to their bottom line.

The global economic downturn ended a four-year property boom in India that had largely been driven by the luxury housing segment and saw a near three-fold increase in residential prices in major cities.

Now developers are turning their attention to middle and lower income buyers and low-cost housing that offers lower profit margins but enjoys much greater demand.

"We made a mistake by only focusing on the top two-three percent of India's population," acknowledged Unitech vice president Vikram Datta.

"Now we have to reach the masses by entering into budget and affordable houses," he said.

According to a May 2009 survey by the Associated Chambers of Commerce and Industry of India, there is a nationwide housing shortage among lower and mid-income families of around 20 million units.

With luxury housing projects struggling to find buyers, that kind of demand suddenly seems more attractive.

Unitech has committed to constructing 20,000 affordable houses at a cost of 17 billion rupees (340 million dollars) by 2011 across the country, and others are following suit.

"India desperately needs budget houses. Constructing and selling them is the only way for real estate companies to survive," Rajiv Dash, a senior official at Tata Housing Development Co., told AFP.

In May, Tata launched a low-cost housing project on the outskirts of India's financial capital Mumbai, constructing 1,000 studio apartments which sell for as little as 7,800 dollars.

The targetted buyers are primarily factory workers and small shopkeepers.

By building on cheaper, suburban land and bulk-buying raw material, developers can turn a per-unit profit of around 15 percent which is half the return on luxury houses.

"But less profit is better than no profits," said Sanjay Verma, managing director for real estate consultancy Cushman & Wakefield.

In the last five months more than 65 property developers across the country have announced new projects in the affordable housing segment.

For 32-year-old Amar Singh, a commodity trader living in rented accommodation in New Delhi for over a decade, the new trend has enabled him to realise his dream of buying a home.

"I am now the proud owner of a small, two-bedroom apartment," said Singh, who hopes to move in to his still under-construction home by 2010.

Singh managed to procure a loan from a private bank and arranged the down payment by selling some of his wife's gold ornaments to seal the house deal.

Situated on the outskirts of New Delhi, his affordable housing project with 120 apartments will provide parking space to all residents, a play area for children, a power back-up and a small cafeteria.

Such amenities do not feature in the low-cost sector, where the developer's priority is to maximise the number of units.

"The low-cost houses are just like boxes with a door and few windows, there are no value additions," said Verma.

But while they may be spartan in the extreme, they do provide basic amenities such as water, sewerage, drainage and street lighting which is a major step up for low income settlers living in shanty towns.

The newly-elected Indian government announced a housing scheme in its recent budget as part of a plan to promote a slum-free India in five years.

Such an ambitious target, analysts say, can only be realised with massive private sector involvement.

"Indian property developers should consider themselves fortunate," argued Verma. "They have a new market to do business. The faster they make small houses, the more money they earn."

Tuesday, July 14, 2009

Houses most affordable since 2005

Buying your own home is more affordable now than it has ever been in the last four years. The average price of a house is around 4.5 times of the buyers average income, against 4.6 times in 2005.

In 2007, the affordability factor had widened to 5.1% due to a sharp increase in real estate prices. However, with the prices of new houses dropping by around 30%, the number of years’ income required to buy a house has come down to 4.5 years.

Developers have realized the need to introduce affordable housing and are reducing dwelling size and omitting amenities which drive up cost in a bid to cater to the untapped demand.

HDFC, India’s largest housing finance company, calculates the ‘‘affordability factor’’ based on data of its home loan borrowers. At 4.5 times of annual income, the average EMI would be about 50% of a house buyer’s income on a 15-year loan. In the home loan market, this is considered affordable.

Joint property hope for wife Assetventures

The time has come for a “holistic” policy that will allow women joint rights over matrimonial property, law minister M. Veerappa Moily told Parliament today.

Matrimonial property is property acquired by either spouse or both together during the period of marriage.

The question had, of course, been raised by a woman — Brinda Karat of the CPM.

In reply, Moily said it was time to “modernise our thinking”.

“The husband can always claim that this is my property, this is acquired by me, this is exclusive to me. They think that the wife does not inherit that or the wife does not contribute to that,” the minister said.

“I think the day has come when we have to modernise our thinking, our mindset. There cannot be exclusiveness when they (husband and wife) are in a family, when she belongs to that family.”

Karat had asked Moily: “Would you kindly set up a small committee to look into the concrete recommendations… by the Status of the Women Committee Report in 1975 and by the Gujarat government in its Gaurav Nari Niti which was passed in 2006?”

Under the Gaurav Nari Niti, the Narendra Modi government has exempted transfer fees and stamp duty for land or property that is solely in the name of a woman.

Upper House members, dissatisfied with Moily’s reply that women’s property rights were governed by personal laws, began a debate that ended with Moily’s words on the issue. The minister promised the issue would be referred to the Law Commission and the National Commission for Women to chalk out a “holistic” policy.

Karat said no personal law in the country recognised the concept of joint rights over matrimonial property. “Even 62 years after Independence, Indian women are denied this right under the community property regime,” she said.

Friday, July 10, 2009

DLF sells Ackruti City JV stake Assetventures

NEW DELHI: India’s largest real estate developer DLF has sold its stake in a 50:50 joint venture with Mumbai-based Ackruti City for developing a project in Mumbai to a US-based real estate fund for over Rs 200 crore, two senior executives at DLF said, asking not to be named.

The JV firm is developing two office buildings spread over nine million sq ft at Andheri, Mumbai. These two buildings are part of a larger slum rehabilitation project being developed by Ackruti City. DLF had picked up stake in the project over two years ago with the strategy to spread its footprint across the country. DLF exited the project as part of its asset sale programme to raise Rs 5,500 crore by the end of this fiscal.

Centre to bring in law to regulate real estate in Delhi

NEW DELHI: The Central Government on Thursday said that it is considering a model legislation on regulating real estate in

In reply to a written question in the Rajya Sabha, Minister of State for Urban Development Saugata Roy said that 'the Delhi Real Estate Management (Regulation and Control) Bill' can also serve as a reference for other states.

The minister, however, ruled out the constitution of a regulator for real estate sector for the entire country, saying matters pertaining to local governance and land falls in the list of state subject as per the Constitution.

Real estate giant IREO to invest $500 mn in India

NEW DELHI: Global real estate giant IREO will pump in $500 million in various infrastructure projects in India over a period of seven years, the company said Thursday.

IREO, which has invested $1.5 billion in India, is already one of the largest investors in the country's real estate sector.

"Having already invested $1.5 billion, we still have another $500 million available in cash for further investments in our projects," Lalit Goyal, vice-chairman and managing director IREO, told reporters here.

The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune.

"We have already commenced construction of a five million square feet IT SEZ (Pune) and a three-million-square-feet housing project," Goyal said.

Added Anurag Bhargava, chairman IREO: "The Pune SEZ should be completed by next year."

The company has projects in many states including Haryana, Punjab, Tamil Nadu, Maharashtra and Delhi.

The company said it would develop an eight-million-square-feet housing project in the next 12 months.

RBI issues revised draft norms on commercial real estate exposures

CHENNAI: The Reserve Bank of India (RBI) has come out with revised draft guidelines on commercial real estate (CRE) exposures. The revision comes in the wake of doubts raised in certain quarters on treatment of specified exposures. The new draft is also necessitated by the need to align with the rules with the Basel-II framework.

The Basel-II framework has clearly spelt out the definition of income-producing real estate (IPRE) in para 226 of its framework. According to the Basel-II framework, IPRE “has a strong positive correlation between the prospects for repayment of the exposure and the prospects for recovery in the event of default, with both depending primarily on the cash flows generated by a property.” The apex bank has chosen to align the definition of commercial real estate (CRE) exposure with the Basel II prescription. Going by this, the RBI has clarified in its revised draft guidelines that “if the repayment primarily depends on other factors such as operating profit from business operations, quality of goods and services and tourists arrivals, the exposure would not be counted as commercial real estate.”

Source of cash flow

Any exposure would be classified as IPRE/CRE exposure if the “funding results in the creation/acquisition of real estate (such as office buildings to let, retail space, multi-family residential buildings, industrial or warehouse space and hotels) where the prospects for repayment would depend primarily on the cash flows generated by the asset.”

In any case, the apex bank goes on to clarify, “the prospect of recovery in the event of default would also depend primarily on the cash flows generated from such funded asset, which is taken as security.” For an exposure to be classified as IPRE/CRE exposure, the primary source of cash flow (that is, more than 50 per cent of cash flows) for repayment and recovery would have to be lease or rental payments or sale of assets.

The revised draft has also sought to clarify confusion vis-a-vis exposure arising out of ‘infrastructure lending’ to special economic zones. Certain types of exposures in respect of SEZs would have the characteristics of CRE exposure if the Basel-II approach is followed.

Lending to SEZs

In such cases, the RBI says, they would be simultaneously classified as both ‘CRE exposure’ and ‘infrastructure lending’. In such instances, the applicable risk weight would be that of CRE exposure (even if the borrower is Triple A rated).

The exposure, however, would be eligible for all the regulatory concessions available to `infrastructure lending,” the RBI clarifies.

An investment in the equity of a real estate company or a mutual fund/venture capital fund/private equity fund which invests in the equity of real estate companies would be sensitive to the movement in prices of real estate.

Further, they have correlation with the general equity market. Therefore, these would be reckoned both as capital market exposure (for the purpose of compliance with the regulatory ceiling fixed by the RBI) and the internal ceiling for real estate exposure fixed by the bank itself as required by the RBI norms.

Such exposures would attract a risk weight of 125 per cent (as applicable to equity exposures) or 150 per cent (as applicable to exposure to VCFs) as the case may be since these risk weights are higher than that applicable to CRE at 100 per cent.

“The exposure should be reported to the RBI under both the classifications with an appropriate footnote to avoid double counting,” says the revised draft.

Wednesday, July 8, 2009

Real estate promoters not enthused Assetventures

While the Union Budget revolves around the aam aadmi' the real estate promoters feel that the finance minister has overlooked housing
requirements. None of their expectations have been met, like tax exemptions on housing loans to infrastructure status for integrated townships (Sec 80-1A) and reduction in housing loan interest rates, said the head of aninternational real estate consultancy firm in the state.

But on the positive side, the budget focuses on infrastructure and providing more funding especially for highways and railways. Increase of fund allocation for the JNNURM scheme (Jawaharlal Nehru National Urban Renewal Mission), an excellent scheme, with 87% encouragement respectfully. These outlays will turn outcome if the government implement the infrastructure projects on time,he felt.

Another industrial leader was optimistic that, "The hike in infrastructure spending will be a huge boost for the real estate industry. Any increase in the spending on infrastructure results in an increase in value of real estate development.

No immediate impact on real estate Assetventures

Real estate players in the city are a disappointed lot as they feel the finance minister's proposals for the sector have ignored the
aspirations of the Indian middle class.

The Pune branch of the Confederation of Real Estate Associations of India (Credai) said the industry's expectations to boost affordable housing and higher tax deduction
for interest paid for home purchases were not met. "While the FM talks of a slum-free India in five years, he seems to have completely missed the opportunity to offer relief and incentive to middle-class home buyers," Credai Pune president Satish Magar said in a statement.

"It is well established that housing/construction is an engine that can propel growth in the economy the linkages to hundreds of industries as well as employment to millions of workers seems to have not found any priority in the FM's budget. Overall, the budget doesn't address the needs of the housing industry at all," the statement read.

Anurag Mathur, managing director of real estate research company Cushman & Wakefield India, said, "Though there is no immediate impact on the real estate industry in the Budget, the finance minister has incorporated measures that have a mid- to long-term impact on urbanisation and hence on the real estate industry."

"While the budget is good under the circumstances, what has been left out is a policy level pronouncement for the sector. These announcements could have gone a long way not merely in standardisation, but also in bringing transparency for the real estate sector," he felt.

Anuj Puri, chairman and country head for real estate management company Jones Lang LaSalle Meghraj, said the fact that India Infrastructure Finance Company will be given more flexibility and has been authorised to raise Rs 1,00,000 crore for the development of the infrastructure sector is an indirect boon to the real estate industry.

"Of late, an increasing number of infrastructure projects have a real estate component by virtue of a cross-subsidisation principle. Therefore, boosting infrastructure projects gives an impetus to real estate as well," he said.

The fact that allocation for highway construction has been increased will mean improved and accelerated connectivity, raising the value of existing real estate along these routes and also opening up new areas for development, Puri said. According to him, the allocation increase to the Rajiv Awaas Yojna will help urban slum-dwellers get better houses.

Real estate developers in India pushing up prices

Developers in India have stopped offering discounts on properties and in some cases are even increasing prices as demand rises.

Rising sales are also prompting some developers to return to the luxury end of the real estate market which had stalled in the economic downturn.

'Prices are likely to inch upwards in the coming months in some markets,' said Kumar Gera, chairman of the Confederation of Real Estate Developer's Association of India.

But he added that even an increase in prices will still leave many developments cheaper than they were at the peak of the market a year ago. He estimated that the property crash saw prices fall 25 to 30% but proposed increases in coming months would be around 10 to 15%.

The prices increases vary. Unitech has increased prices marginally, by some 2% in its Gurgaon projects but Mumbai based developer Lodha Group has upped prices by 10 to 15%. A Lodha spokesman confirmed that prices had gone up in luxury projects launched in March. 'We have marginally increased prices every month for these projects since their launch. But the market is in a good spot and the response is still good,' said director Abhisheck Lodha.

Bangalore-based firm Brigade Enterprises cut its prices by 15% in April but has now increased them by 3 to 5% and said that it plans to continue doing so at regular intervals. 'We are hoping that in one year's time, prices will be back to the peak levels of 2007 to 2008,' said chairman and managing director M.R. Jaishanker.

However, discounts through brokers have not yet disappeared from the market. Developers have increased the commission offered to brokers from 3% maximum to 5 to 6%. Brokers in turn are offering a discount of 1.5 to 2% on the price of property to buyers.

'These are the same measures developers and brokers adopted to create a price bubble during the boom years. Demand has not risen to an extent that it can fuel a price increase,' said S.G. Maheshwari, a Mumbai-based property consultant.

Aditi Vijayakar, residential executive director at property consultants Cushman and Wakefield is not convinced the market will carry the price increases. 'Right now it is a fairly confused market. Rates have more or less bottomed out but there needs to be substantial amount of sales before buyers are convinced price increases are justified. I think the real estate market will be flat for some time,' she said.

Union budget ignores real estate development: CREDAI

Reacting to the union budget 2009 -10, Kumar Gera, chairman, Confederation of Real Estate Developers Association of India `s (CREDAI) said, ``CREDAI having more than 4,000 members involved in Real Estate Development across India is utterly disappointed particularly because the Budget has completely ignored the substantial contribution of housing and real estate sector to GDP and Employment of 10 million workers which is second only to the agriculture industry. ``

We are also upset on the fact that the industry which has an impact of over 200 services and industries with forward and backward linkages has been let down.

Since the Government has set a target of achieving 9% growth, we were expecting Housing and Real Estate sector to substantially contribute towards achieving the target, he added.

He mentioned that budget has failed to provide any incentive even to the purchasers of affordable homes. It was widely expected that the exemption of interest on self occupied residential house property presently restricted to Rs 1.50 lakhs per annum would be increased to Rs. 3 lakhs, but nothing has been done in this respect too.

He added that as far as increase of allocation for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme by 87% to Rs 128.87 billion in the current budget and enhancement of allocation for housing and provision of basic amenities to urban poor to 37.93 billion is concerned, it would provide some relief through government authorities only without much participation by the private sector.

Rajiv Awas Yojana to aim at slum-free India Assetventures

The Rajiv Awas Yojana, announced in the budget, aims at promoting a slum-free India in five years and would focus on according property rights to slum dwellers, Union Minister for Housing and Poverty Alleviation, Kumari Selja, said here today.

"The government has announced a new scheme Rajiv Awas Yojana for the slum dwellers and the urban poor in an effort to promote a slum-free India in five years," Selja said in her inaugural address at the Habitat Business Forum meet on urban challenges and solutions.

Twelve countries are taking part in the conclave which is co-sponsored by UN Habitat and China Real Estate Chamber of Commerce.

The union minister said the scheme will focus on according property rights to slum dwellers and the urban poor by the states and union territories.

"It would provide basic amenities such as water supply, sewerage, drainage, internal and approach roads, street lighting and social infrastructure facilities in slums and low income settlements adopting a 'whole city' approach," she said, adding, it would also provide subsidized credit.

Describing urbanisation as "a great historical opportunity", Selja said the energy of urban growth can be harnessed as a "positive force for human development to create sustainable, equitable, and peaceful cities".

India property sales up Assetventures

India property sales levels have risen by as much as 25-30% since April, following 10-15% growth in Q1 2009, in light of lower interest rates and residential property prices, as well as the construction sector’s greater focus of affordable housing.

This information was obtained by the Economic Times, who spoke to a number of banks, property developers and real estate consultancies.

Much of India’s property sector has struggled for the past year or so due to the global financial crisis, which left several house builders struggling to adapt to deteriorating market conditions.

Residential developers were left with high-end apartments which had no buyers. Consequently, they have been forced to slash prices by up to 45% since the peak of 2007.

The fall in property prices has increased affordability levels across much of India, which has led to increased demand for property in India.

Jones Lang LaSalle Meghraj says that sales across the mid-to-high income segments have conservatively risen by around 25%.

Delhi-based Omaxe reports that sales levels are up by 30% since 2009.

India's largest property developer DLF says it has sold almost 1,500 flats in various cities since April.

Rival Unitech has sold over 4,000 residential units in the last two and a half months.

Hiranandani Developers report that they have sold around 7,000 apartments across the industry, mainly in Mumbai suburbs, over the last two months.

Monday, July 6, 2009

Real estate sector sees focus on affordable housing

Real Estate sector sees focus on affordable housing. The new scheme that the President announced was the Rajiv Awaaz Yojna. Sources said, this will be very big scheme, will require a corpus of over Rs 50,000 crore as the minimum. CNBC-TV18’s Nayantara Rai reports.

Here is a verbatim transcript of Nayantara Rai’s comments on CNBC-TV18. Also watch the accompanying video.

Let’s not forget in the Presidential address the UPA government did promise a slum free India in five years that’s a very ambitious target. Therefore we are expecting that in this budget affordable housing will be given a big focus.

The new scheme that the President announced was the Rajiv Awaaz Yojna . We are hearing from sources that this will be very big scheme, will require a corpus of over Rs 50,000 crore as the minimum. But in this budget we could see an allocation of anything between Rs 5,000-10,000 crore. This allocation will be for implementation of the project as well as interest subsidy.

What we need to understand how this model will work and it is for illegal colonies as well as for slum areas in urban areas. The state should transfer land to woman beneficiary, so women will be given priority and part of the vacated slum as well as illegal colony can be used for commercial developments. So that will help cross subsidising the entire scheme and this also means that we could see public-private partnership. But lets not forget that real estate is a state subject, so it will be up to every state on how it will want to take this up.

We also need to understand that this scheme will cause between Rs 5-7 lakh and the minimum carpet area will be 250 sq. ft. So a lot of these principals are already there in the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). We need to understand from our sources in the Urban Development Ministry that the Ministry has asked for a second phase of JNNURM again over a period of seven years, so that could be the second phase of JNNURM that we might see. The real estate developers have of course asked for an industry status, so we will have to wait and see. The other one is tax breaks under section 80 IB that real estate developers were expecting to be expanded when Mr. Chidambaram presented his last budget and this did not happen, so they will of course be watching for that one.

Scenarios: What to look for in Budget Assetventures

The new government will present the 2009/10 federal budget on July 6 and is expected to expand both the budget deficit and its market borrowing requirement to support growth.

Following are some scenarios on what Finance Minister Pranab Mukherjee may announce and its impact on financial markets. The current fiscal year of 2009/10 runs until the end of next March.

Budget Deficit

The government is almost certain to expand the 2009/10 budget deficit beyond the 5.5 per cent set in an interim and pre-election budget in February.

Bonds have priced in expectations that the deficit will swell to between 6.25 per cent and 6.5 per cent of GDP. So it is unlikely to be rattled so long as the deficit is around these levels.

But any sign that the government is bowing to pressure for populist spending measures to make good on promises made in the April and May general election would spark a bond sell off.
If it also fails to present a plan to bring the deficit back under control in subsequent years, the country’s credit rating could come under pressure.

Government borrowing target

The government will raise its borrowing target for 2009/10 to help pay for its increased budget deficit.

A Reuters poll suggests it will rise to 3.95 trillion rupees, a level already factored into bond prices, from 3.62 trillion rupees set in the interim budget in February.

Bond yields have jumped to factor in a massive increase in government borrowing. Ten-year bond yields, for example, are up 170 basis points since the start of the year.

The forecast borrowing would be 29 per cent above 2008/09 borrowing of 3.06 trillion rupees.

Asset sales

Mukherjee is likely to announce plans to sell shares in some state run firms to help fund rural and social programmes, a central part of the government’s election platform.

Asset sales would relieve pressure on the bond market and help keep the budget deficit in check.

Analysts say the stock market could absorb 100 billion rupees ($2.1 billion) in share sales. A higher amount would be difficult to swallow and would weigh on market sentiment.

Analysts suggest Coal India Ltd and hydro-power generator NHPC would be among the easiest IPOs to complete.

Shares in railways consulting firm RITES, power equipment maker Bharat Heavy Electricals Ltd, Rural Electrification Corp and power transmission firm Power Grid Corp could also be sold off smoothly, they say.

However, potential sales of telecoms firm Bharat Sanchar Nigam Ltd and Air India may be problematic. Unions have opposed IPOs of the telecoms firm and loss-making Air India would need to be restructured to make it attractive to investors.


Mukherjee is expected to announce more plans to repair India’s shoddy infrastructure, considered by many foreign investors as the Achilles’ heel of the economy that prevents the sort of double-digit growth seen in China.

Infrastructure investment is currently around 6 per cent of GDP, so that figure could rise, although the budget deficit limits spending for now.

Measure would cover both urban and rural projects and include improving the rural roads network and building more low-cost homes to deal with massive demand. It will also announce plans to revamp public transport across the country including building metro rail networks in other cities.

These moves will be positive for infrastructure firms and could benefit India’s largest infrastructure firm Larsen & Toubro and others such as GMR, GVK and HCC among others.

Indeed, the real estate sub-index on the Bombay stocks market has more than doubled in the past three months, compared with a 50 per cent rise in the main index.


The government is unlikely to unveil any significant economic reform plans in the budget even though its decisive election victory has put pressure on it to deliver new initiatives.

Parliament is already chewing over plans to raise the foreign investment ceiling in insurers to 49 per cent from 26 per cent and reforms in the pension fund management sector -- a process likely to take 6-8 months before approval is reached.

Govt plans real estate model bill to be firmed up by Aug-Sept

Govt plans real estate model bill to be firmed up by Aug-Sept
The minister for housing and urban poverty alleviation, Kumari Selja has announced a model bill for regulating the real estate sector by August-September timeframe.
Talking about the 100 day agenda for her ministry, Selja said that the Model Bill would propose a regulator and aim to address the concerns of consumers as well as the real estate industry. The finer details of the Model Bill could not be ascertained.

She said, “We have initiated a dialogue with all key stakeholders including private sector, NGOs, and various States to prepare the model Bill for regulating the real estate sector.”

Ozonegroup to develop a township in Chennai
Bangalore-based realtor Ozonegroup has announced the launch of its maiden township project — ‘The Metrozone’ — in Chennai.

The project will be a joint venture between Ozonegroup, HDFC India Real Estate Fund and Urban Infrastructure Opportunities Fund and would involve an overall investment of Rs 2,500 crore and is likely to be completed in about 52 months. Spread over an area of 42.5 acres, the township offers apartments, penthouses and commercial space for hospitality, retail and offices.

Sudarshan KS, COO of Ozonegroup said that the first phase of the township is scheduled to be delivered by November 2010.

Lords Inn to open 10 new hotels
Hospitality player Lords Inn has planned to invest over Rs 100 crore over the next three years to expand its business. The company, which operates in three and four star categories, is also looking at joint ventures and acquisitions. PR Bansal, chairman and managing director of Lords Inn, announced, “We will invest over Rs 100 crore in hospitality across India to open 10 new hotels in three years. Currently, we are eyeing on cities like Bangalore, Jaipur and Delhi.”

The group provides management services to hotels in three and four star categories in tier II and III cities.

Kumar Builders earmarks Rs 450 crore to develop residential tower
Pune-based Kumar Builders has earmarked Rs 450 crore to launch a 30-storey project, 45 Nirvana Hills, spread over 79 acres, in Pune.

According to Lalit Kumar Jain, chairman and managing director, Kumar Builders, construction for the first building of the project has already begun. There would be five to six residential projects that will also be 30 storeyed.

The entire project is estimated to cost Rs 450 crore. It is a self-funded project, finances for which are being raised through internal accruals.

For decades, Pune’s buildings were limited to a maximum of 36 metres. It was only last year that construction of residential projects up to 100 metres high was permitted.

Infrastructure, real estate sectors expect a big boost Assetventures

NEW DELHI: The infrastructure sector and the recession-hit real estate sector are looking forward to the Union budget with great expectations. Both the sectors, which require huge investments, are expecting a big boost to revive growth and put them on the path of recovery.

The President’s address to Parliament has sought to give a big boost to the infrastructure sector, plagued by bottlenecks with slow movement in the development of ports, roads and airports. However, it is expected that apart from granting industry status to infrastructure, the budget will give impetus to investments in the sector.

Global consultant Goldman Sachs expects a leap in infrastructure spending, particularly on roads and ports. It is estimated that India will require $500 billion over the next five years in the sector to sustain the growth momentum. The budget is expected to give a big push to Public-Private Partnership (PPP) projects. Greater flexibility could be given to the India Infrastructure Finance Company Limited (IIFCL), which has been set up as a refinancing facility for infrastructure projects, to deploy funds.

Double the capacity

According to the Planning Commission, India may need to nearly double its capacity of ports, roads, power, telecom and airports to keep pace with its growth. Companies engaged in infrastructure development are expecting some relief for lenders to enable them to achieve financial closure of much delayed projects.

There is an expectation that the proposal to restore tax exemption under Section 10 (23G) could be introduced in the budget to be presented by Finance Minister Pranab Mukherjee on July 6. This Section allows tax exemption for investments in infrastructure, both via equity and debt.

The real estate sector is looking forward to relief for the housing sector, which has been reeling under the recessionary trend for the last few months. Real estate developers want interest rates lowered to make cheap loans available, which will give a boost to the housing sector and generate demand.


According to Rohtas Goel, CMD, Omaxe Limited, developers are facing acute liquidity crunch and facing difficulties in servicing debts. Restructuring allowed up to June 2009 has provided immense relief. As the recovery is likely to take more time, further restructuring should be allowed, wherever required.

Group housing and integrated township development should be brought within the definition of infrastructure and incorporated in the explanation under sub-section 4.

“The housing sector should be granted the status of industry for all concessions, rebates and easy finances,” Mr. Goel said.

Saviour Builders director Sanjay Rastogi says the budget should lower interest rates and recognise real estate as an industry. He feels strict norms should be introduced to control the prices of steel and cement to stabilise the industry.


The Royal Institution of Chartered Surveyors (RICS) said the government should increase the housing loan interest deduction limit to Rs. 2.5 lakh or Rs. 3 lakh per annum and lower interest rates to 7.5 per cent for loans in the range of Rs. 5 lakh to Rs. 30 lakh.

The RICS expected re-introduction of concessions under Section 80IB (10) of the Income Tax Act, encouraging construction of small units at affordable prices.

It expected waiver or reduction in stamp duty, value-added taxes and other government taxes for economically weaker sections and lower income group housing; restoration of tax holidays for low-cost housing projects; further relaxation of the external commercial borrowing and Foreign Direct Investment norms; and rationalisation of stamp duty and registration charges.

Will Budget unveil a window of hope for retail? Assetventures

Chennai: Though the past year brought economic hardship with significant implications for the retail sector, there seems to be a silver lining for India. In the Annual AT Kearney Global Retail Development Index (GRDI), which ranks 30 emerging countries on a 100-point scale (where the higher the ranking, the greater are the opportunities offered by the country), India reclaims the top spot, which was last held in 2007, informs Amarpal S. Chadha, a senior tax professional with Ernst & Young.

Given the above potential provided by the Indian economy, the industry is all geared to look at what the Finance Minister has to offer to the different industry segments in this year’s Budget, he adds, during a recent email interaction with Business Line.

“Before chalking down any demands for the retail sector, it is important to have a look at the areas where retail is benefiting the economy. There are some big business houses that have ventured into organised retailing, and have the potential to generate large-scale employment in India.”

Organised retail accounts for approximately 5 per cent of the total retail business in India, Chadha reminds. “Thus, there is a tremendous scope for the retail sector to contribute to the Government in terms of taxes and serving the economy by generating employment opportunities, improving supply chain management, reducing wastage, and offering goods to consumers at discounted prices.”

At some point or the other, most of the sectors have been provided some tax benefits or concessions, be it the hotel industry, shipping, banking or manufacturing, he notes. “All these sectors have reaped the benefits of tax concessions and have also witnessed growth in terms of the number of players, giving a boost to the overall economy. If the Government can look at extending some tax benefits to the retail sector, it will go a long way in providing the necessary boost to the industry. The Government should acknowledge the growth potential, which this sector has, and give it an industry status.”

Excerpts from the interview.


It is of common knowledge that retail works on paper-thin margins. If the Government can cut down the corporate tax rates and give some concessions in the fringe benefit tax (FBT) rates, it will help retail in improving its cash flows and funding its operations.

Sales promotion forms a major chunk of expenses for retail. Though the legislation exempts several means of advertisement from the scope of sales promotion, it would be beneficial if the Government provides an exemption of sales promotion expenses from the FBT levy.

On consolidation.

Benefits of Section 72A of the I-T Act, which deals with carry forward and set off of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation or demerger, should be extended to consolidations in the retail sector.


Foreign Direct Investment (FDI) in retail has been the most-talked about area in the last few months. FDI in multi-brand retail is disallowed. However, the Government recently came up with Press Notes 2, 3 and 4 of 2009, which prima facie gave an indication that foreign investment in multi-brand retail is allowable, if multi-brand retail is carried out by a subsidiary of an investing company, which is owned and controlled in India.

As the prima facie reading of the above Press Notes seems to create misgivings in the industry, it is of utmost importance for the Government to clear its viewpoint in relation to FDI in multi-brand retail by issuing a specific clarification.

On service tax.

The economic downturn has reduced the price of real estate, and this has benefited the retail sector. However, the cost which is causing inefficiency in retail is the levy of service tax on the renting of immovable property, which should be abolished as there is no service element involved when an immovable property is let out.

Recently, the Delhi High Court ruled that service tax is not intended to be levied on the renting of immovable property. However, the Revenue has filed a Special Leave Petition before the Supreme Court against this ruling. Accordingly, the aforesaid issue remains open till the constitutional validity of such a levy is finally decided upon by the Supreme Court.

On refund.

The process of refund of Special Additional Duty (SAD) of customs allowed to importers on goods meant for resale in India poses a lot of administrative difficulty for the taxpayers. The Government should either totally exempt SAD or simplify the procedure associated with the refund of claim. This would help taxpayers reap the benefit as envisaged by the Government.

On related measures.

Reduction in the individual personal tax rates will help in increasing the purchasing power of consumers, boost consumption, and thereby help the retail sector in improving its profitability. It will also have an indirect impact on improving the manufacturing sector.

Sea link hits Worli property prices Assetventures

With the Bandra-Worli Sea Link now open to the public, real-estate prices in the once tony residential area of Worli Sea Face are set to change.

According to real-estate experts, increasing traffic and the consequent noise and air pollution are bound to have a negative impact on property prices along the promenade.

"Individuals who may have wanted to shift to Worli Sea Face will be put off," said Anuj Puri, managing director, Jones Lang LaSalle Meghraj, a real-estate consultancy firm. "There are many issues like pollution, easy access to buildings, and security of children due to the increase in vehicular traffic."

Residents are already complaining that noise levels and air pollution have gone up. Moreover, the exit of the sea link has created a bottleneck, ruining the peace of the locality. The press of the National School for the Blind is on this road which, interestingly, is designated a silence zone.

While Puri did not think that prices would crash, he said they would stabilise, "they won't appreciate. The impact will be such that if anyone wishes to sell their property, they won't get a good price."

Even the hitherto quiet hillock of Pochkhanwala Road will now suffer heavy vehicular traffic. In fact, some residents anticipated this problem some months ago and moved into the western suburbs, selling off their properties when prices were still good.

"A CEO of a top information technology firm sold his property a few months ago as he anticipated noise and traffic problems," said Pranay Vakil, chairman of Knight Frank India. "The fact is that the value of properties along the Sea Face has now gone down."

On the other hand, experts say the sea link has brightened real-estate prospects in the western suburbs. "The key word is infrastructure," said Vakil. "It increases connectivity and with better spread comes better prices."

N Raghunathan, a former chief secretary of Maharashtra and resident of Priya building on Worli Sea Face, is now spearheading a campaign against the exit of the sea link. Raghunathan and other residents have written to the state government and even the prime minister about the problems.

Their claims are not unfounded. Town-planning expert Chandrashekhar Prabhu said he had read the note prepared by Raghunathan and agreed that the area, once an open space, is now a hub of pollution.

"They are cent per cent correct in the assessment of the aftermath of the sea link," Prabhu said. "Worli Sea Face is surely becoming the most polluted area for no fault of the residents."