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.

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.

Infrastructure

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.

Reforms

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.

Restructuring

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.

Concessions

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.

On FBT.

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.

On FDI.

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."

BSES can collect arrears from present property owners: HC

BSES can collect arrears from present property owners: HC
In an important ruling, the Delhi High Court has said that power distribution companies in the capital can collect electricity dues of the previous owner of a property from its present owner or occupant.

In its judgment, the high court allowed BSES Rajdhani Power Ltd to collect from the present owner of a plot the arrears against its previous owner.

The court clarified that on the ground of non-payment of the arrears, the BSES can stop supply of electricity to the present owner.

"If there are electricity dues against the previous owner or occupant, the present owner applying for fresh electricity connection can be compelled by the distribution company to pay the electricity dues of the previous owner," said a bench comprising Chief Justice A P Shah and Justices S N Aggarwal and S Muralidhar.

The court order came while allowing a petition filed by the BSES challenging the single judge's order that rejected the plea of the power discom saying that it (BSES) has no right to collect from the new occupant the dues of previous owner.

Slowdown-hit real estate bets big on Budget

Having been hit the hardest by the economic downturn, embattled realty majors are betting big on the forthcoming Budget, to be presented on July 6, in a bid to revive the sector’s fortunes. Experts say the sector needs government support as well as further stimulus to get out of the current slump.

While the government with a clear mandate has provided the requisite stability to the economy, it now needs to focus on retrieving the sluggish real estate which is now facing a severe financial crunch. This is important in view of the fact that real estate in India is the second largest employer next only to agriculture, and growth in the sector has a direct impact on ancillary industries such as steel and cement.

“In the backdrop of its importance to the growth of the Indian economy, it is vital for the government to nudge growth in the sector, through fiscal stimulus, to newer heights which would also help make affordable housing a reality and within the reach of the proverbial ‘aam aadmi’,” says Nandita Tripathi, associate director, KPMG.

As a first step, the government should accord ‘infrastructure status’ to the housing sector and appoint a regulator to act as a single window for overseeing and monitoring the affordable housing agenda. “After being hit by the global financial meltdown, real estate developers have now recognized the growing demand for affordable housing. To provide further impetus to this direction of development, the government should consider reinstatement of the tax holiday benefits under Section 80IB-(10) for affordable housing projects,” says Tripathi.

Brotin Banerjee, MD & CEO, Tata Housing, is also of the same view. “We seriously believe that the housing sector should be delinked from real estate and be accorded infrastructure status. This will enable easier access to low-cost institutional funds as also allow the sector to tap long-term funds,” he says.

Further, for affordable and low-cost housing, “we at TATA Housing believe that loans for such projects should be made available at lower rates and also qualify for stamp duty and fee waiver. Development and approval charges should similarly be done away with or at least subsidized,” says Banerjee.

Moreover, increase in the limit of interest on housing loan from the existing Rs 1.5 lakh to Rs 3 lakh and a corresponding increase in the tax deduction limit for the principal loan amount would also go a long way to enhance the common man’s appetite for home loans by lowering their tax outflows and, hence, making their dream home a reality. Besides, “tax benefit should be given from the year the loan is taken from banks, rather than after taking the possession of the house. This will help in providing stimulus to new launches,” suggests Neeraj Bansal, associate director - advisory services, KPMG.

In the current economic slowdown, real estate mutual funds (REMFs) could provide the necessary financial support to the cash-starved housing sector. However, since their introduction a year back, REMFs have not found any takers due to unclear regulations and absence of guidelines for their tax treatment. “Recognizing the need for REMFs as an important capital contributor for the sector, the government should consider aligning the regulations to global best practices, including providing a tax pass through status for registered REMFs,” says Tripathi.

'Property brokers expect prices to increase assetventures'

'Property brokers expect prices to increase'

Residential property builders have something to cheer if the result of a poll of property brokers conducted by Edelweiss Capital is any indication. The pan-India poll shows that property brokers expect prices of residential property, especially i n the Mumbai and NCR region, to increase around the Budget, Edelweiss said in a press release issued here.

"Throughout India, property brokers have turned positive on the Indian residential realty market, in the last three months," the poll said. There has already been an increase in the number of transactions in the past one month against nil in the preceding five months, it said.

The poll was conducted amongst 100 odd property brokers in the first-half of June in the four cities of Mumbai, NCR, Bengaluru and Chennai and 20 micro-markets. A significant change in sentiment post-elections and preceded by strong stimulus measures have contributed to a strong recovery in volumes and prices, the release said.

According to the poll, nearly 87 per cent of the brokers surveyed endorsed that transactions had indeed increased in the last one month.

Huge rush to avail property tax rebate

NEW DELHI: With the deadline for filing property tax returns (PTR) only a day away, property owners eager to avail the early payment rebate of

15% queued up from 9am at various MCD tax collection centres in the city. Despite the option of filing returns online, many still opted to submit the PTR forms manually. Some said they found the online procedure slow.

At the Lajpat Nagar centre, the queue was particularly long. Said Kavita Sharma, a resident of Sarita Vihar, " I don't have much faith on online transactions. We get a receipt immediately this way.''

Another taxpayer, K P Singh, added,"The online servers are not working properly and filing online is more expensive since we have to pay an additional Rs 50. I'm paying my taxes now because I did not find the time earlier.'' Some also said that despite filing their returns last year, the payment hadn't been updated online and still showed as arrears."I filed my returns by going to the centre. But this year, when I tried to pay it online, it showed as arrears. Why should I pay the tax twice?'' asked a tax payer who did not want to be named.

However, MCD officials said arrears were showing only in those cases where the cheques had not been realised before the due date or there had been a refund. The officials admitted that the online system may have been slow over the last three days because of the massive rush of people who waited till the last day to file returns.

"For the last three days the online system is slow because it's being hit 3500 times per minute, peak time being 10am to 4pm,'' said a senior official.

Meanwhile, MCD made provisions for property tax collection at all its 12 zonal offices and the headquarter in Lajpat Nagar. The centres will be open from 9am to 9pm on Tuesday to help tax payers get their 15% rebate on the last day. And taxpayers can pay online till midnight for the same rebate.

MCD's director press information, Deep Mathur said, "In order to facilitate property owners and tax payers we have kept all our property tax collection centres open from from 9am to 9pm on Tuesday so that they can avail the 15% rebate even on the last day.''

NRIs and gifting property Rules Assetventures.in

Mr Sharma is a Non-Resident Indian with relatives in India. Owing to a flourishing business, he is interested in gifting a house in India to his nephew. However, he is not sure about the taxation on such a transaction owing to his NRI status.

Let's take this as an example to learn more about taxes associated with such a transaction with regard to NRIs.

No special permission is required for an Indian citizen residing outside India to acquire (by purchase or gift) any immovable property in India other than agricultural land, plantation property or a farmhouse.

Therefore, Sharma can buy a house in India as easily as any resident Indian.

Also, for an NRI, there is no permission required to transfer (whether by sale or gift) immovable property in India. One important factor to keep an eye out for is the gift tax and income tax.

Under the Gift Tax Act, 1958, gift tax was payable by the donor up to September 30, 1998. The Gift Tax Act has been repealed with effect from October 1, 1998 and therefore the Gift Tax is not chargeable for the gifts made on or after 1st October, 1998. However, a new provision was inserted in the Income Tax Act 1961 under section 56 (2) which provides that if the gift is received by an Individual or Hindu Undivided Family (HUF) from any relatives or blood relatives or at the time of marriage or as inheritance or in contemplation of death and the aggregate of gifts received exceeds Rs 50,000 in a year, the gift will be taxable as 'income from other source'.

The Explanation to Section 56(2)(vi) provides that the expression "relative" means:

* Spouse of the individual;
* Brother or sister of the individual;
* Brother or sister of the spouse of the individual;
* Brother or sister of either of the parents of the individual;
* Any lineal ascendant or descendant of the individual;
* Any lineal ascendant or descendant of the spouse of the individual; and
* Spouse of the person referred to in clauses (ii) to (vi)

There is no restriction on gifts by NRIs to resident Indians in foreign exchange or Indian Rupees or in the form of assets -- in this example, the house. All sorts of gifts from relatives (as defines under Income Tax Act) are tax free.

All that is required is an offer by the donor and acceptance thereof by the receiver in black and white. To safeguard against any hassles, the receiver should request the donor for a gift and then the donor should remit the amount to the receiver.

Alternatively, the donor can offer the gift. In either case, it is necessary for the receiver to accept the gift in writing (maybe through a thank you note).

Also, the provisions relating to taxation of gifts from non-relatives and non-specified persons in excess of Rs 50,000 would be liable to income tax only when the gift is a sum of money, whether in cash, by way of cheque or a bank draft.

Thus, gifts in kind such as a gift of shares, gift of land, gift of house, gift of units or mutual funds, jewellery, etc. would not be liable to any income tax at all.

Therefore, Mr. Sharma or his nephew would not pay any 'gift tax' or income tax for such a transaction.

Residential property poised to lead India rebound Assetventures

MUMBAI, India -- Residential real estate will lead the recovery of India's wounded property market in 2010 thanks to accelerating economic growth, lower interest rates and improved liquidity, Indian ratings and research agency CRISIL said Wednesday.


Prices for commercial and retail space will likely remain weak through 2010 because of oversupply and slack demand, CRISIL said in a new study of 10 cities across India.
"Residential real estate is where we think by 2010 we can look for some kind of recovery," head of research Sudhir Nair said in a conference call with reporters. "There is a significant overhang of supply in commercial projects. ... You can't see a lease rental increase for a couple of years in this market."

India's property market, like many around the globe, boomed from 2005 to mid-2008. Average prices of both commercial and residential space more than doubled during that period, according to CRISIL.

In some high-demand places, like Mumbai, the nation's financial capital, commercial prices went up 231 percent, while residential prices rose 121 percent.

Since July, prices have softened. CRISIL predicts commercial lease and rental rates will fall by 38 percent from early 2008 peaks. Residential prices have already fallen by an average of about 20 percent, and will likely correct another 10 percent, CRISIL said.

India increases labour rates assetventures

Indian property developers in the city of Mumbai have announced that they are going to increase their labour rates, following a recent recovery in the stock market, and signs that property investors are starting to return to the market...

However, the industry move has received criticism, as existing demand for property in India remains weak, compared to this time last year, despite the fact that residential prices have fallen by up to 30 per cent since their peak last year.

Many experts project that many developers need to cut their rates by a further 15 per cent rather than raise them.

"It is understandable that Indian developers want to make up for lost revenue during the economic downturn, by hiking up their rates, especially as more global investors are seeking to invest in BRIC (China, India, Russia, and Brazil) nations.

"But many experts project that developers should cut their rates by a further 15 per cent, rather than raise them. Consequently, new-build property prices in the city will also have to be raised inline with construction rates, making property less affordable. This could slowdown any potential cyclical upturn in Mumbai's housing market."

Residential property prices to fall 8-10% more in 2009

Despite popular belief, residential property prices are expected to fall by another 8-10% in 2009 till they stabilise in 2010.
Residential property rates declined by 18-20 per cent in March this year, from the highs in the first half of 2008. Despite this drop, homebuyers adopted a 'wait and watch' policy, and this trend is likely to continue through 2009, as per the latest report by CRISIL Research.



Owing to improved affordability, steady economic growth and greater liquidity, the residential segment will witness a speedier recovery compared to the retail and commercial segments. Lease rentals are not expected to stabilise till another two years. Mr. Sudhir Nair, Head, CRISIL Research says, “Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak off take.”

Amongst the 10 cities covered by CRISIL Research, Pune, Bengaluru and Mumbai have witnessed the steepest correction in capital values compared to the highs seen in the first half of 2008. Capital values in NCR had already started stabilising during the first half of 2008 even as the upward trend continued in other cities. Hence, capital values in NCR declined by only 18 per cent, which is relatively low compared to other cities. The report covers more than 400 areas across 88 micro markets in 10 cities--Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai-MMR, NCR and Pune.

It is believed that lower home loan interest rates as well as better job security would help to revive demand in the residential segment. Hence, capital values are likely to stabilise in the first half of 2010, and increase during the second half of the year.

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Real estate sector seeks lower loan rates, higher exemptions

PUNE: Lower interest rates for home loans, higher tax exemptions for repayments and restoration of Section 80-IB of the Income Tax (I-T) Act top the real estate sector's budget wish list this year. Appropriate action on these counts will help improve the fortunes of this sector be devilled by a lack of demand for quite some time the players said. As the entire thrust of the ongoing debate in the sector is on reducing the prices of homes, an instrument such as the budget can be used to reduce the burden of both taxes and costs on the home buyer, Rohit Gera, executive director, Gera Developments Private Limited, said. "An income tax deduction up to Rs 1.50 lakh, currently available against interest paid on home loans, should be raised and so should the deduction for the principal amount repaid, currently restricted to Rs 1 lakh," Gera said. He added that the finance minister should also allow higher standard deduction (the amount deducted from rental income earned from a property) from rental income so that more rental stock can be available in the market. Gera said Section 80-IB of the I-T Act, which exempted profits earned by developers from housing units less than 1,500 sq ft in size, should be restored so that the overall cost of a house for a buyer will be reduced. Satish Magar, president of the Confederation of Real Estate Developers' Associations (Credai), Pune, said the key issues pertain to lower costs of housing and availability of funding to the sector. Magar said the deadlock over funding of housing projects by financial institutions will be broken if the construction industry is accorded priority sector status. "Banks and other lenders can ensure that developers are not using the money for land acquisitions and fund projects where construction has begun," Magar said. According to R Vasudevan, chairman and managing director, Vascon Engineers Limited, the definition of long-term capital gains in respect of the real estate sector should be modified to mean gains earned by sale of a unit after one year of acquiring it. At present, the term refers to gains earned by sale of a unit after three years. Vasudevan also demanded infrastructure status for the construction industry and asked for an increase in the deduction available on interest paid on home loans. Vasudevan said the upper limit for stamp duty on realty deals should be fixed at Rs 1 crore. Vinay Phadnis, chairman of the Sahil group of companies, said a reduction in service tax along with modification of the entire income tax structure for the real estate industry is the need of the hour. The government should prevail upon the banking sector to lend at 6 to 6.5 per cent for houses costing up to Rs 30 lakh, he stressed. "We expect the finance minister to create an environment of refinancing real estate projects and enabling the secondary market to finance the assets," Phadnis said. Aniruddha Deshpande, managing director, City Corporation Limited, said the budget should encourage affordable housing through further home loan support and housing policy reforms. According to Vishwajeet Jhavar, CEO, Marvel Realtors, "The real estate industry is one of the key drivers of growth for the country. We hope that this budget will bring some good news that will steer and cheer real estate developers and at the same time create a conducive buying environment for the consumer. We also expect some positive steps towards relaxing the norms for external commercial borrowings and on the foreign direct investment front, which will serve as an impetus to the industry." Atul Goel, director, Goel Ganga group, said the government must make an attempt to reduce the tax burden on real estate so that people get homes at affordable prices. "For every Rs 100 a buyer pays, there is a tax burden of Rs 45. If this is brought down, homes will become cheaper," he pointed out. Hemant Naiknavare of Naiknavare Developers suggested that there should be appropriate I-T exemption for slum redevelopment projects and financial institutions should fund such projects. He also said the JNNURM subsidy should be available to residents of slums that have come up after 1995 who are otherwise ineligible under the Slum Rehabilitation Authority norms.

Is it the right time to expand biz in property market?

The good news is that the commercial segment in real estate is upbeat and demand is picking up. While initially, the first quarter of the calendar year saw a major decline in rental values in commercial spaces, the process of stabilisation has now begun over the last few weeks. Companies, which were earlier hesitant to set up shop or expand are also looking at viable locations to close deals. A study by global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) shows commercial rentals across all major cities reaching stability after an overall downward movement in the second quarter. According to the consultancy, an absorption between 4-5 million square feet of commercial space was witnessed in the first quarter of 2009, which was higher than 4th quarter of 2008.

Property prices shoot up thanks to our PM Mumbai Assetventures

Thanks to Prime Minister Manmohan Singh and his stable government in power, property prices in the city have shot up notably. In the past month, builders, who had earlier slashed rates by about 35 per cent, have increased their rates by 10-15 per cent. And the buyers don't seem to be complaining. The Lodha group registered 1,000 bookings, while the Nahar group sold 620 flats in the last month. Experts say people are investing in property because they foresee a steady economy because of our government.
DEAR ESTATE: After a long slump, builders have hiked rates by 15 per cent, as they foresee a good future in our stable government.R Karthik, senior vice-president, Lodha builders, said, "Transactions have increased due to economic stability." S Rao, a resident of Andheri, said, "The financial future of our country seems stable. I don't mind investing, but the builders should not increase the rates too much."Double effectSandeep Sadh, a realtor from the western suburbs, believes a combination of the Manmohan Singh government and the recent golden run of the stock market has led to the improvement in the real estate market. "It is ideally wrong on the part of the builders to increase rates since we are still burdened under the economic slowdown. But the morale of builders has risen because of improved sales," said Sadh. But Mihir Dhruva, CEO of Siddharth builders, said, "If the rates become unrealistically high, sales will drop again." However, some builders are unrelenting. Early this year, a Bandra broker had struck a deal for a four BHK flat in Khar for Rs 15,500 per sq ft. But now the builder is demanding Rs 18,000 per sq ft. "Rates in the Bandra-Khar area have risen to Rs 20,000 per sq ft from Rs 18,000 per sq ft. And buyers are still striking deals," said Vibhoo Mehra of Mumbai Properties, a real-estate brokerage firm.Experts warnMost of the bookings take place in the under-construction projects. Thus, buyers should check details, including date of possession, before investing. It is advisable to buy from credible builders. "Builders may demand unrealistic prices and try to extract money for excise on the cement from buyers," said a realty expert.

Four Seasons to add six more properties Assetventures

After hitting quite a few roadblocks early on in India, the Canada-headquartered luxury hotel chain operator Four Seasons has finally prepared a roadmap for its expansion in India, which involves the setting up of at least six more hotels and resorts.


The premium hotel brand plans to come up with properties in New Delhi, Gurgaon, Hyderabad, Bangalore, Kerala and Goa. All of the said properties will have management contracts handed to Four Seasons and will not entail any significant equity contribution from the company.
In a management contract, hotel companies sign a pact with the property’s owners, who can be real estate developers or financiers. Four Seasons, like most other international hotel players — including Marriott, Hyatt and Intercontinental, among many others — is a management operating company.
Currently, Four Seasons has only one property in India — a 33-storied tower with 202 guest rooms and suites located at Worli in Mumbai, which was thrown open in May last year, although it was supposed to come up in December 2007. The company has been able to seal a deal with a partner for its second property, which will come up in Bangalore in the next 2-3 years.
“We are in talks with our partners for hotels in the north as well as for the ones coming up in the south of the country. Since we operate in the premium category, our primary focus will be on major cities before we graduate to other centres,” said Uday Rao, hotel manager, Four Seasons Hotel Mumbai.
Plans are also underway to add service apartments and a ballroom to the Mumbai property, owned by the Jatia family, in its second phase of expansion. The Mumbai property was established at a cost of $90 million (about Rs 300-350 crore).
The company will shift its focus to resorts scheduled to come up in markets like Kerala and Goa once its hotels projects are finalised. In fact, the company is in advanced stages of inking a deal for the Goa property with the Jatia group.
As the company has maintained a low-key affair in India, Four Seasons will have to depend a lot on foreign tourists for revenue generation as the brand is relatively subdued in India when it comes to advertising and marketing. Furthermore, the company has decided against giving advertisements, while solely banking on word-of-mouth publicity.
“We cannot let the brand value of Four Seasons go down through advertisements. We would rather work with sales managers in various cities, identify top-level customers, sign up local companies from across the country and tie up with airline companies. It will be a long drawn process and will be difficult, but that’s how we will operate,” added Rao.
With India’s economy on the rebound, many hotel operators are eagerly waiting to have a slice of the Rs 2.88-lakh crore market. About Rs 52,000 crore worth of investments are expected to flow into the domestic market for setting up new hotels in the next two years by various international and domestic hoteliers.