Posted on June 30, 2016 by adminLast updatedJune 30, 2016

Real estate stocks gain as Cabinet set clear pay panel award

With the implementation of the 7th Pay Commission, voices are becoming louder that the real estate sector could gain from rise in salaries and pensions of the central government employees. The news may further boost real estate stocks which are already outperforming benchmark indices since the beginning of the ongoing financial year 2016-17.

The committee of secretaries tasked with reviewing the recommendations has given its report and the total outgo if the award, to be implemented from January 1, 2016, is pegged at Rs 1.02 lakh crore, which can work like a stimulus package for the economy, boosting consumer demand.

Reports of good progress of monsoon, which has already covered half of the country with normal rainfall, also raised hope of a drop in inflation, which can lead the central bank to cut interest rates further. Realty demand tends to rise in a low interest rate environment.

The sentiment were also perked up due to new draft rules unveiled by the government that showed developers may have to pay 11.2 per cent interest to buyers for delay in handing over apartments and homes.

Realtors’ two apex associations CREDAI and NAREDCO said the sector would also benefit from approval to a model law that allows shops, malls and cinema halls, among other establishments, to run 24×7 throughout the year. “It’s a very good decision. Hopefully it will lead to wise investment by the government staff for buying homes,” NAREDCO Chairman Rajeev Talwar said, commenting on approval for 7th Pay Commission recommendations.

JLL India Chairman and Country Head Anuj Puri said the retail sector accounts for about 15 per cent of the country’s GDP and this is expected to increase further with round-the- clock operations.

Shares of UnitechBSE 1.42 % closed 7.38 per cent higher, that of HDILBSE 3.12 % 3.01 per cent, Sobha DevelopersBSE 2.41 % 3.17 per cent and Oberoi RealtyBSE 0.59 % 1.03 per cent.

Industry leader DLF closed 7.86 per cent after reports that promoters KP Singh and family have decided to make the real estate company debt free by purchasing shares through a Rs 10,000 crore preferential issue. All the constituents of the BSE Realty index were trading in the green, with the index itself surging 4.30 per cent.

“This Act will have to be implemented by states. Once they have implemented it, offline retailers operating in those states will stand to benefit hugely as the Act brings them on a level-playing field with online retailers.”

 

 

 

Posted on June 29, 2016 by adminLast updatedJune 29, 2016

15% Cut In Circle Rate To Boost Gurgaon Real Estate

Circle rates have been slashed by 15% in Gurgaon effective Tuesday, a move that is expected to provide much needed boost to the sluggish real estate market.

This is the first time that circle rates have been slashed in the corporate hub. In the previous two financial years, circle rates were left unchanged but it failed to lift buyer sentiment. The district administration had mooted the proposal to cut rates and had sent it to the state government for approval.

A committee headed by deputy commissioner T L Satyaprakash proposed the cut to bring circle rates in line with prevailing market rates. Higher circle rates were hurting the market badly because all taxes have to be paid on the basis of circle rates. So, even if someone sells his flat at a rate lower than the circle rate, he will have to pay capital gains tax at the prevailing circle rate. The same applies to buyers who have to fork out more for stamp duty even when the actual sale price is lower than the circle rate. As a result, many chose not to buy or sell. Monday’s Haryana government notification is aimed to pull the market out of this inertia.

Satyaprakash said market rates had gone down over a period but the collector rates were still high in most areas, thus causing a dip in the number of registries. The new rate list is now available on the official Gurgaon administration website, he added.

Post the cut, circle rates for some prime residential areas like DLF Phase 1 and Sushant Lok will come down from Rs 77,000 per sq yard to Rs 65,450. Similarly, for DLF Phases 2, 4 and 5, it will drop from Rs 72,000 a sq yard to Rs 61,200.

“A drop in circle rates is directly proportional to decrease in property prices, and as property prices fall, the demand for the property plays an inverse relation. Falling property prices help in attracting end users more than investors, and it is crucial for Gurgaon’s realty sector to revive. The infrastructure is very sound and now with prices lowered, we’ll witness the comeback of buyers”, says Kushagr Ansal, Director, Ansal Housing.

The rate, however, will be different for land which has seen change of land use (CLU). For a residential plotted colony, three times the agriculture collector rate will apply. For residential group housing, it will be four times the agriculture collector rate, and, for commercial, five times the agriculture collector rate. Similarly, land less than 1,000 square yards will be treated as residential for stamp duty collection and areas less than 25 square – 225 sq ft or just big enough for a shop will be treated as commercial.

Developers are confident investor sentiment will significantly improve with the rate cut. “This will reduce the overall cost as these rates are the basis for tax calculations,” said Navin Raheja of Raheja Developers and added that this is a good move as property prices have dropped over the past couple of years, creating a gap between the transaction value and circle rates.

 

 

 

Posted on June 28, 2016 by adminLast updatedJune 28, 2016

Is FDI relaxation aimed at attracting investment in smart cities?

Narendra Modi’s pet project of creating ‘smart cities’, is likely to benefit from the government’s relaxation of FDI regulations and attract a major share of the FDI inflow

 

Posted on June 27, 2016 by adminLast updatedJune 27, 2016

Will the warranty clause in the Real Estate Act bring relief to home buyers?

The Real Estate Act provides a defect liability (warranty) clause of five years. The moot question for home buyers now is: Will this mean better quality of construction or merely result in higher prices?

Developers welcome the provision

Under the Real Estate Bill’s Clause 14 (3), the defect liability period has been set at five years. Consequently, home buyers are asking whether this clause actually translates into a warranty. Developers are also not complaining about the clause. They feel that this provisions will be a market differentiator, in a business where the non-serious players outnumber the branded developers.

A five-year defect liability period, is a positive step. Customers are extremely happy to have a warranty, as it assures them of the product’s quality. More importantly, in the event of any problem, there is an assurance that the developer will fix the problem.

Safeguarding home buyers’ interests

When the real estate sector was largely unorganised, the defect liability period varied between developers as well as states and was usually two years. The Real Estate (Regulation and Development) Bill, 2016, now eliminates this anomaly and offers a fixed liability period of five years, with Clause 14(3) acting as a warranty.

“Warranties will make buyers and investors feel secure, as it makes it mandatory for developers to rectify any construction defects that may be noticed, even after possession has been handed over”.

In international markets, such warranties have served to boost developers’ reputation for transparency and adherence to best practices. Such warranties are bound to be equally successful in India over the long term, because they will institutionalize accountability and boost transparency in the realty sector.

Impact on real estate prices

In the international context, the defect liability period varies from country to country. It is as high as 10 years, in countries where the contractor liability and legal dispute redressals are efficient and robust. In India, with warranties in place, developers are likely to improve their construction quality, to avoid higher cost overruns that additional repairs at a later stage would entail.

This also raises a question, as to whether buyers will be willing to pay a premium on properties that come with stronger warranties. Analysts believe that once systems and processes that boost home buyers’ trust are put in place, then, buyers will not mind paying a premium for properties with warranties. In the absence of warranties, buyers have been the victims so far, forced to undertake repairs at their own cost in case of any defect in construction.

Posted on June 22, 2016 by adminLast updatedJune 27, 2016

Finance Act 2016: Tax advantages for home buy and lease paid

The finance bill, was presented in the parliament on February, 29, 2016. It became a law, after receiving the president’s assent, from May 14, 2016. This Finance Act 2016, has certain provisions, which will benefit individual tax payers, with regard to home loan interest and rent paid.

 

Extension of time for completion of construction

Until now, a tax payer, who borrowed money for an under-construction property for his own residence, was eligible to claim Rs two lakhs, beginning from the year in which construction was completed and possession taken. However, to claim this tax benefit on interest u/s 24(b), construction of the house was required to be completed within three years, from the end of the financial year in which the money was borrowed, failing which, the entitlement for interest for booking an under-construction property used for self-occupation was reduced to Rs 30,000.

Owing to rampant delays in construction and handing over possession by developers, beyond the three years, many tax payers were unable to avail of the full benefits. To mitigate such hardship to tax payers, the period for completion of construction, has been extended to five years, from three years.

 

Additional benefit for interest on home loan taken by a first-time home buyer

Under section 80EE, an individual who borrows money for the purpose of buying a house, will get an additional deduction of Rs 50,000 from his income, if certain conditions are satisfied.

The first condition for claiming this benefit, is that the individual tax payer should not own any house on the date on which the home loan is sanctioned. Secondly, the amount of home loan should not exceed Rs 35 lakhs, for a house which does not cost more than Rs 50 lakhs. Moreover, the loan should be sanctioned between April 1, 2016 and March 31, 2017.

This additional deduction of Rs 50,000 is available in respect of an under-construction property, even during its construction period, because the provision does not require that the construction of the house for which the loan is taken should be completed, unlike section 24(b) where you can start claiming the interest deduction, only from the year in which the construction is completed.

This will be useful, for people who are buying a property for self-use and where the maximum allowable interest is restricted to Rs 2 lakhs, including the pre-EMI interest which you can claim in five equal annual installments, beginning from the year of completion of construction.

 

Enhanced tax benefits for rent paid

Section 80GG provides for tax relief to individuals who are salaried and are not in receipt of any house rent allowance (HRA) from their employers, or are self-employed, with respect to the rent paid for any accommodation occupied by them. The deduction is allowed, only if the tax payer, or the spouse, or minor child, do not own any residential accommodation in the place where he ordinarily resides. Moreover, the tax payer should not own a residential house at any other place, which is treated as self-occupied for tax purposes.

The amount of deduction available, is the excess of rent paid over 10% of total income, subject to 25% of the total income. Earlier, the deduction was restricted to Rs 2,000 per month. This low limit failed to provide any major benefit for the tax payers, who were paying huge amounts as rent. The Finance Act 2016, has raised the ceiling from Rs 2,000 per month to Rs 5,000 per month.

 

Posted on June 21, 2016 by adminLast updatedJune 22, 2016

Real Estate Trends to Watch Out For in 2016 – An Overview by Rxprt

TREND 1: Women’s Influence Is Growing In Real Estate Ownership

Another very interesting fact in the 2015 real estate scene has been the growing influence of the woman buyer, both as an individual and as the active participant in joint ownership. With success in her profession and exposure to various knowledge and informative mediums, more women are interested in calling the shots while buying property too.  As more single working women are moving out of their family home to lead an independent life, to learn the tricks of management at a personal level. The married woman, whether working or not, is an equally resolute partner in choosing and finalizing the dream home. A very positive development indeed.

TREND 2: Vastu and Feng Shui is making a Comeback

With time, many things change like fashion, lifestyle, music, and then certain things make a comeback too like some customs. Right now it’s the comeback of Vastu. Real estate developers are promoting their projects as Vastu compliant, not just residential but commercial ones too. And the buyers are also actively scouting for Vastu compliant properties. Whether this is based on true faith or simply a fad, only time can tell. But one thing is true that these principles based on mathematics, physics and astronomy do hold true. After all, there is nothing wrong in following good things to welcome positive energy and wellness in one’s home and life!

TREND 3: NRI interest in Indian property is rising 

The much sought after NRI is also a darling of the Indian real estate sector. Every NRI worth his dollar/ pound/ dirham wants to own a property in ‘Mera Bharat Mahan’. And this is the perfect time to do it. With up to 20% lower property rates even in top metropolitan cities like Mumbai and Delhi according to recent estimates, an average NRI has tried and succeeded in buying a lucrative property.

The Top 5 Global cities from where maximum NRI interest in Indian property were:

1) Dubai
2) Muscat
3) London
4) Singapore
5) Riyadh

The Top 5 Indian cities eliciting maximum project interest from NRIs were:

1) Mumbai
2) Pune
3) Bengaluru
4) Hyderabad
5) Chennai

With the demand for both commercial and residential space heading north, smart NRIs should take this opportunity to invest in either or both kinds of spaces to reap a good return.

TREND 4: Government Support Is Increasing For Real Estate Reforms

Last but definitely not the least, the kind of push the Reserve Bank of India and Government has given to the real estate sector in 2015, is almost heaven sent. Lowering of basis points, the ease in FDI policy, and the introduction of smart cities are just some of the decisive factors that will give a boost in the arm to real estate sector. Buyers are being enticed with all kinds of freebies to make them invest. But please don’t invest blindly. Check, check and again check on the builder, the properties and the location. Do check on the legal papers before putting your hard earned money at stake.

We hope these trends have made you more up to date on the market scenario and  role in helping you find your home in 2016. Happy Home Buying!

 

Posted on June 18, 2016 by adminLast updatedJune 18, 2016

Trends and Scope of Private equity funding in real estate

Private Equity Funding, known as PE, has created a big opportunity for real estate builders and fascinating investors in real estate market. Big amounts of funds are geared up for investment opportunities in real estate market in expectation of a positive outlook and fresh funds to be allocated to this asset class. Indian Real estate has faced major transformations in last one decade and Private equity funds have contributed majorly on this part. PE is the source of capital to rejuvenate failing business and certainly real state market is a huge growth factor for job growth rate in the country. Moreover, Political stability along with continuous and focused efforts by the government strengthens economic revival and growth oriented interest by the global investor community towards India. Adding to it, relaxation in FDI norms, policy announcements and reforms to revive the real estate, establishment of Real Estate Investment Trust ( REITs) sparked the positive outlook for the project finance and real estate investment market.

“Best Investment on Earth is on Earth”

Since the sector have been going through a downfall and but now emerging gradually from its slowdown, it is creating a Big-Bang Universal opportunity for PE investors; no doubt opportunity for Project finance in real estate market is humongous.

Real estate market is a big contribution to the India GDP, and so investors are keen to avail the opportunity. It was one of the major reasons, in year 2015 many joint ventures being created between large investors and established developers.

Venture Intelligence studies shown many examples in the league of big investors and builders, example Standard Chartered invested Rs2,000 crore in Tata Realty. Another reason for gearing up is Land pooling, a provision introduced under Delhi Development Act 1957, where small chunks of land can combined together to build bigger infrastructure and a part of land is deducted as cost of building the infrastructure to reform bigger colonies.
Though the biggest issue yet to be resolved in the real estate capital markets is lack of liquidity in the debt markets. Certainly the positive outlook of Investors is much larger than current slowdown in real estate, which is of course coming out gradually.

Another point to be considered is FDI, for adding the ease for investment in real estate market; government has declared eased rules for Indian construction and built-up Infrastructure. It majorly covers building townships, built-up infrastructure, housing and construction development projects because these areas or sectors have huge and vast potential for increasing and improving employment in the country. These sectors directly influence ancillary industries such as steel and cement. The cabinet has approved Department of Industrial Policy and Promotion to relax the norms relating to FDI. It includes norms like minimum capitalization has been reduced from USD 10 million to USD 5 million. Another ease is the three year post completion lock-in period, where an investor can now exit on completion of the project and also even after the development of trunk infrastructure, such as construction of roads, water supply and drainage and so on.

Posted on June 16, 2016 by adminLast updatedJune 16, 2016

Affordable Housing: The pros and cons

While the price of an affordable housing unit may be alluring, there are challenges associated with these projects that prospective buyers should examine closely

In a recent newspaper advertisement, the developer of an under-construction housing project in Gurgaon, offered a two-bedroom flat at a price of Rs 22 lakhs. Property prices in the region, where the project is situated, are already high and speculative. A two-bedroom apartment in Gurgaon, in a regular housing project, is generally priced between Rs 60 lakhs and Rs 80 lakhs, depending on its location and the colony. In the recent past, a number of developers, like the builder in Gurgaon, have announced affordable housing projects across the country.

These projects offer units having one to four bedrooms, in the price range of Rs 15 lakhs to Rs 60 lakhs, which varies according to the micro-market and the city. A unit in an affordable housing project in Mumbai, is likely to cost more than one in Noida or Greater Noida. For example, a two-bedroom affordable house in Gurgaon may be priced below Rs 30 lakh, while a similar unit in the upmarket central suburbs of Mumbai, may be priced between Rs 40 lakhs and Rs 60 lakhs.

While some houses may be available through outright sale, others may be sold through a lottery system, under the government’s affordable housing schemes. Gurgaon has several projects, where the allotment is done through a lottery system by the Haryana Urban Development Authority (HUDA).

Advantages

The demand for affordable housing in the country is huge. Moreover, the interest shown by a number of large corporate groups in this segment, is likely to facilitate timely delivery of projects, which remains a nagging issue in the realty sector. Consequently, buyers in this segment may not have to wait indefinitely, like their counterparts in other segments.

Disadvantages

A closer look at the upcoming projects, indicates several challenges, in spite of their price advantage. “Most of these projects are located on the outskirts of cities and in far off areas. So, the absorption in these projects could remain low, despite the demand for affordable housing,” feels Prabhat Ranjan, chairman and MD of the Mumbai-based Olympeo Infrastructure Pvt Ltd. Buyers still prefer central areas, even though they may have to compromise on the size of the flat.

The present slowdown in the market, could affect the sales in these projects. Thus, even if the developer completes the project, subsequent occupancy may remain a challenge. Owing to the dearth of buyers, the formation of the society or the residents’ welfare association may be delayed. Consequently, the maintenance of the projects’ premises will be affected and buyers may have to depend on the developer, for the same.

While the units in an affordable housing project are cheaper, than those in the mid-income and premium housing segment, most upcoming affordable projects may not provide the basic amenities on account of their location. “A majority of these projects are being launched in remote areas, where the development firms get land at cheaper rates. Most of these areas still lack basic social infrastructure.”

What should buyers do?

The prevalent situation indicates that it is a buyer’s market. Prospective buyers should bargain for greater discounts on the quoted price, advises Manju Yagnik, vice-chairperson of the Nahar Group, a Mumbai-based real estate firm. “Negotiating with developers may be easier, under the current circumstances,” suggests Yagnik, referring to the trend, where markets across India are witnessing poor sales and high inventory pile-up. Buyers can also expect some rationalization in property prices.

 

Posted on June 14, 2016 by adminLast updatedJune 14, 2016

Coming soon: Clause in real estate bill to check bias against religion, sexual orientation, diet

The anti-discrimination clause will provide recourse to buyers who are denied a house by builders owing to their caste, ethnic origin, gender, sexual orientation, dietary choices or any such factors.

The Centre is set to introduce an anti-discriminatory clause in rules under the real estate Act to curb the practice of builders refusing to sell their apartments based on a buyer’s religion, marital status or dietary preferences.

The Real Estate (Regulation and Development) Act, 2016 (RERA), passed earlier this year, has paved the way for setting up a regulatory authority and tribunal to regulate all transactions between buyers and sellers, with specified punitive measures in case of violations. The Ministry of Housing and Urban Poverty Alleviation (MHUPA) is expected to notify the rules under the Act by October 31.

“Since the Constitution itself provides for non-discrimination, we will insert such a clause in the rules. However, it will desist from specifying the exact nature of discrimination as we don’t want to risk excluding any kind of discrimination by way of omission,” said a ministry official.

The anti-discrimination clause will provide recourse to buyers who are denied a house by builders owing to their caste, ethnic origin, gender, sexual orientation, dietary choices or any such factors. Once the rules are notified, those affected can approach the state-level regulatory authority, followed by the appellate tribunal.

Under the RERA, builders failing to adhere to the tribunal’s orders are liable to face imprisonment of up to three years and/or a monetary fine, according to the legislation.

“There have been several reported instances of access to housing being denied based on prejudices arising out of a person’s religion, caste, etc. Ideally, such an anti-discrimination provision should have been part of the Act for it to be more effective but I am glad at least it is being included in the rules,” said Selja, a former MHUPA minister under the UPA government.

However, with RERA only covering transactions between builders and home-buyers and not between landlords and tenants, the protection against discrimination would not extend to those looking to rent homes.

Ministry officials said they were deliberating on including a similar anti-discriminatory clause in the draft model Rental Housing policy which will be notified soon. The model policy doesn’t have the same enforceability as RERA.

“Moreover, we may not be able to impose such a rule when it comes to privately-held property,” said an official.

This would be the first time that India is bringing into force such an anti-discriminatory provision in its housing sector. The US has had the federal Fair Housing Act for the last 50 years that outlaws refusal to sell or rent a house to any person based on his religion, race, colour, sex or national origin. Most of the member states in the European Union have a similar anti-discrimination legislation, too.

Some countries such as Denmark, Ireland and Norway make an exception only for those who let or sublet a room within a home that they live in.

Housing apartheid, especially in cities such as Mumbai and Delhi, has manifested itself in various forms, including denial to sell or rent homes to Muslims, singles or even non-vegetarians.

A study released by the UN University World Institute for Development Economics Research in May 2016 documented how Muslims face serious disadvantages when it comes to finding a rental accommodation in Delhi, Gurgaon and Noida.

It showed how Muslims have to apply to 60 per cent more houses than upper-caste Hindus so as to elicit any response from landlords. The study also noted a bias, though not statistically significant, against those from Scheduled Castes or other backward classes.

JAIL, FINE FOR BUILDERS

* Those affected can approach state-level regulator, then appellate tribunal.
* Builders flouting tribunal’s orders may face jail of up to three years and/or fine.
* New clause pertains to buyers; officials consider separate clause to cover those renting homes.

Posted on June 13, 2016 by adminLast updatedJune 13, 2016

This is how building materials demands will rise due to Real Estate Act

The Real Estate (Regulation and Development) Act, 2016 is set to change the Indian real estate face. The Act which for the mostly protect the right of home purchasers will support the interest for Affordable housing, which prompts the interest of concrete  utilized for building construction.

The Act will cover both housing and commercial real estate projects and should be enrolled with the Regulatory Authority.

The Act plans to improve timely project completion and increase transparency in real estate. According to the Real Estate Act 2016, Real Estate Regulatory Authorities (RERAs) will be framed and it will minutely screen every stage and approvals of the building construction.

Typically real estate ventures slowed down because of budgetary crunch and it prompts delay in conveyance. To guarantee the time execution, RERAs will ensure developer’s deposit 70 percent of collections in a dedicated bank account towards the cost of construction.

This buyers friendly Act will bring the certainty among home purchasers and urge them to purchase Affordable housing.

India Ratings and Research said in its ‘FY17 Credit Outlook’ report that ‘The effective usage of the bill (Act) will lay out the landscape to enhance buyers, moneylenders and investors confidence, which is critical for long term growth capital for developers. The bill may affect the trade streams of developers in the short term; in any case it will bring about a more dependable industry.”

As all the more housing interest will ascend the nation over after the usage of the Act, the interest of development construction materials will jump.

According to the PropTiger report, Affordable housing (scope of Rs 25-50 lakh) request has hopped 38 percent in January-March quarter in 9 noteworthy urban communities, which is prone to bounce further after the usage of Real Estate Bill (Act).

Heavy construction equipment market is to restore which was limping because of slowed down base tasks over the division for most recent couple of years. Presently the government  is contributing intensely and doing policy revival to meet the housing, roads, highways, railroads, ports, aviation, power and other infra projects to take care of the rising demand.

Both new and utilized concrete equipment interest will grow because of rising affordable housing. The expansion in development tasks will drive the matter of concrete equipment manufacturing companies in India.