Betting big on the realty boom

Jews are planning to settle down in Israel after selling their property in Andhra Pradesh.

On October 22, when the who’s who of the country descended on Amaravati, the new dream capital of Andhra Pradesh, tensions between Palestinians and Jews reached another flashpoint in the city of Nablus, situated to the north of Jerusalem.

Well aware of both the developments were a group of people from Kothareddypalem of Guntur district, just 40 km from Amaravati. The self-proclaimed Telugu-speaking members of Jewish tribe “Ephraim” have started making grand plans to shift to Israel, thanks to the real estate boom in and around the new A.P. capital.

“Price of land in our locality has shot up 20 times. We are trying to raise money hoping that we will have enough to settle down in Israel,” said 66-year-old Shmuel Yacobi, representative of over 50 families who shot to limelight a decade ago when they claimed their ancestry to a Jewish tribe. “We have formally approached the Israeli government to help us migrate and offer citizenship but the process is taking time. So, we have decided to buy a piece of land with our own money and build guest houses as well as mobile homes on that plot.”

According to Mr. Yacobi, he will be travelling to Israel in December to zero in on the proposed site near Nablus city which is under Palestinian control.

‘Youth keen on relocating’

“Once we set up a centre there, we will take our people in batches of 10. They will be educated on the culture, language and ways of the country. Employment also would not be an issue as I have already been offered a teaching post in an educational institution. Agriculture and technology are other lucrative sectors to find jobs,” said Mr. Yacobi, who has visited Israel more than half a dozen times and has a son who is settled in Tel Aviv.

In the past, security agencies had arrested members of an Islamic terrorist module who allegedly wanted to target the community. Though the tribe members maintained that they have followed Jewish customs and were converted to Christianity after their migration to India, some have expressed doubts.

Source: The Hindu

 

Real estate developers eye tax relief on deemed rental income

Finance minister Arun Jaitley, at a conclave conducted by Confederation of Real Estate Developers' Associations of India (CREDAI), has assured the developers and builders that the government will look into the tax issues.
The developers' concerns over the tax provision wherein they are required to pay tax on deemed rental income on unsold apartments may be addressed in the coming Budget. Finance minister Arun Jaitley, at a conclave conducted by Confederation of Real Estate Developers' Associations of India (CREDAI), has assured the developers and builders that the government will look into the tax issues.

The deemed rental income is the notional income assigned to an apartment at the prevailing market rate even though it's not given on rent.

Getamber Anand, CREDAI president and CMD of ATS Infrastructure, said, "The taxation of deemed rental income is affecting the builders in a big way . Particularly in slowdown, developers are normally left with unsold inventory even after completing the project. They are thus required to hold, though they do not want to, till the time they eventually find buyers for the same."

Vikas Vasal, partner at global consultancy firm KPMG, said that the intent of these provisions is to ensure that unutilised housing capacity in the country is put to effective use to meet the housing demand. Therefore, the tax law provides that only one house property owned by an individual will be treated as self-occupied and hence will not be taxed. Any additional house property owned by an individual which is not actually let out is treated as deemed to be let out and taxed accordingly .

In fact, the provision has become applicable on developers following a Delhi High Court judgment in the case of CIT Vs Ansal Housing Finance and Leasing Co, which upheld the view that the annual letting value (ALV) in respect of unsold flats held by the real estate developers is liable to tax on notional basis under the head -Income from House Property , though no rent is actually earned.

KMP Expressway: A realty catalyst

If the far-flung towns in National Capital Region (NCR) like Khurja, Bulandshahr, or for that matter Palwal or Alwar, failed to emerge as attractive destinations for commercial and residential realty majors of Delhi in the last couple of decades, the single most important reason has been for a lack of fast-track connectivity to the capital. 

While in the past, development of residential zones have been the driving force behind creating road connectivity, now this is changing. The roads development plans and connectivity is deciding the way future cities are emerging, or are likely to come up. The best examples are the twin expressways Kundli-Manesar-Palwal and Kundli-Ghaziabad-Palwal each 135km, coming up around Delhi. 

Though the greenfield expressways were planned to reduce congestion on Delhi roads, now these two road networks are emerging as the biggest contributors to residential and commercial developments around these corridors. 

KMP ExpresswayKundli-Manesar-Palwal expressway is set to prove the single major catalyst of both residential and commercial development in Haryana. Also known as Western Peripheral Expressway (WPE), it is already under construction. With new-theme industrial townships planned along this 135-km stretch, indicators are clear that the corridor will see major residential development in the next few years. 

Already, major developers like TDI, Parsvnath, Ansals, Omaxe have started coming up with mega-residential and commercial projects close to the expressway to cater to future needs. Haryana government officials maintain they have planned a cluster of 13 theme-cities along the expressway, and the number will increase with growth in demand. 

Properties, not just in Delhi but also in its immediate neighbourhood towns, are going out of the reach of middle class. Moreover, with employment opportunities expected to be available in these new industrial cities, people will prefer to shift to these areas. The quality of life and the concept of walk-to-work will play key role in the major shift of urban population to these regions, said a government officials. Haryana government will notify land patches earmarked for these future cities as controlled areas for specific use. These proposed theme cities include a cyber city, a bio-science city, a medical city, fashion cities, entertainment cities and leisure cities. 

The alignment of the expressway takes off from National Highway-1 near Kundli, crosses NH-10 at West Bahadurgarh, crosses NH-8 near Manesar, and finally joins NH-2 near Palwal. It passes through Gurgaon, Mewat, Rohtak, Jhajjar and Faridabad, which are the fastest growing urban centres in NCR. For Gurgaon district, the state has proposed five theme cities a fashion city, entertainment city, world trade centre, a leisure city and a retail merchandiser warehouse centre.

The world trade city will be developed on 260 hectare, fashion city on 220 hectare, entertainment city on 140 hectare, leather city on 280 hectare and the leisure city on 750 hectare. The world trade city will have a financial hub with soft trading facilities and will be networked with IT facilities. Similarly, the fashion city will be equipped with technology and vocational centres, besides having institutions for apparel manufacturing, fabric design, R&D institutions, jewellery and gems workshop. 

The entertainment city would have hotels, motels, restaurants, shopping malls and multiplexes, facilities for concerts and musical programmes and nightclubs. The leather city is proposed to come up near Nuh in Mewat district on the Gurgaon-Alwar road. Similarly, Sonepat district will get specialized facilities like a Rajeev Gandhi Education City and a Sonepat-Kundli multifunctional-urban complex. 

This apart, the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) has started work on an industrial-model township at Kharkhoda on the lines of Manesar. A dry port city is slated to come up at Palwal. State government officials said the development of these theme cities is a part of the plan to develop the area along KMP Expressway as a global corridor. All these towns are expected to come up when the expressway becomes functional. Officials said the spatial plan of the corridor will be developed around a number of specialized economic activities and each activity is envisaged to be the focus of a self-sustaining cluster city. 

Sources said that the threshold population required for sustaining physical and social infrastructure would govern the development of cluster cities. Along the expressway corridor, infrastructure facilities on a par with international standards will be created, officials said. This will not only boost investor confidence but also provide world-class living experience. 

There will be a number of specialised economic activities in this corridor, making it growth centric. Independent townships and cities, with focus on a specialized economic activity like manufacturing, power, etc, have been envisaged. A number of such cluster cities, integrated under one umbrella, will provide the overall spatial form of the global urban corridor. In between these nodes, recreational, forest and green area will be developed, an official said. 

To boost industrial development along the corridor, specialized industrial estates have been planned at strategic locations, including a food park at Kundli in Sonipat, gems and jewellery park at Udyog Vihar in Gurgaon, and two apparel parks, one in Gurgaon and another at Barhi in Sonipat, besides footwear and leather-garments parks at Bahadurgarh. This industrial development will also boost residential demand in the region. 

The 100 metre-wide expressways will have a green belt of 100 metres on both sides. Intersecting four existing national highways and key railway lines, the expressway will ensure better connectivity across NCR. It will provide faster access to the international and domestic airports at Delhi for cities in Haryana, bypassing Delhi roads. Haryana government has now invited local landowners to partner in this major development project. 

Any person having 50 acres or more of land in the amenity zone of KMP global corridor will be permitted to take up recreational projects like amusement parks and golf courses. Two kilometers on both sides of the KMP global corridor will be treated as amenity zone in which some theme cities are proposed to be developed, said Rajendra Kataria, Gurgaons deputy commissioner. 

In order to plan and regulate development along the expressway, a two kilometer belt on either side has been declared as controlled area under the provisions of Punjab Scheduled Roads and Controlled Areas Restrictions of Unregulated Development Act 1963. These controlled areas have been integrated with the existing controlled areas, which were declared around the urban centres of the six districts. 

Country's biggest exhibition-cum-exposition ground 

The KMP Expressway is also likely to get the country's largest exhibition-cum-exposition ground, almost double the size of Pragati Maidan. The complex, planned over 200 acres, will be located at Pachgaon Chowk, close to the industrial township of Manesar in Gurgaon. The proposed site is adjacent to NH-8 and the KMP Expressway interchange. 

This is one of the three early-bird projects proposed by Haryana government as part of the Delhi-Mumbai Industrial Corridor (DMIC) project. The proposed site will not only have huge space in the open for exhibitions along with indoor facilities, but also have hotels and retail, office, wellness and entertainment facilities. According to initial reports, the conference facility to be provided at the complex would accommodate close to 4,000 people. The development will surely bring a huge boost in the nearby regions. 

INFRASTRUCTURE AND CONNECTIVITY: THE BACKBONE OF REALTY

For any real estate region to perform and grow, infrastructure and connectivity serves as the backbone. Every resident and user thrives for a habitat which is able to meet there daily needs and, infrastructure and connectivity plays this role of fulfilling the need. For any resident, a decently developed infrastructure in the neighbourhood allows them to live a peaceful life and those who are not the residents of a region are dependent upon good connectivity to commute hassle free and meet their respective needs, which can be official commutation, recreational travelling and others. Thus, real estate sector can only succeed once there exists sound infrastructure and connectivity for its users.

“History has been a witness to how well-developed infrastructure and connectivity shapes up the real estate prospects of a region. There exist a direct relation between real estate in a region and the region’s development with respect to infrastructure and connectivity. You talk about India and other countries, everyone’s real estate performance bets upon decent infrastructure and connectivity in the region to make sure that target audience is grabbed for short term which can be carried till long term as well”, explains Mr. Vivek Gupta, Director, Vardhman Estate & Developers (P) Ltd.

Integral part for commercial real estate:

Who likes to travel for hours on busy roads with long hauls to reach office or a place for recreation? Thus, a commercial property can never be a hit if the region does not get support of good connectivity. Mr. Ajay Rakheja, Co-Founder & CEO, Creindia.com explains the importance of connectivity and infrastructure for commercial real estate, as he elucidates “Localities with better road connectivity always get picked first in case of buying or developing the property. Efficient road network maximizes the economic and social benefits for the country. On the other hand, once connectivity is attained, infrastructural development is bound to take place. This feat once achieved, allows companies and offices to get setup thereby enhancing employment and economic growth opportunities in a region. We hope that the government takes up Commercial For All parallel to Housing For All”. Agreeing and adding to the fact, Mr. KushagrAnsal, Director, Ansal Housing states “Commercial real estate majorly requires good infrastructural arrangement in vicinity such as metro stations, bus stands, taxi stands, parking lots, etc. so as to aid the daily commuters. Also, it is very important to have a belt of commercial properties in one region to support the residents need and based on this concept, currently many regions are been developed with majority of commercial presence”.

Highlighting the significance of connectivity for the commercial real estate, Mr. Ankit Aggarwal, CMD, Devika Group avers “If the commercial properties are not well connected, it becomes nearly impossible to sell them. It is extremely important to have good connectivity and transportation facilities available nearby so that it becomes easier for users and buyers to buy, lease and use a property. At times it is better to develop commercial property in regions with connecting roads and highways. There we have lot of land parcels available plus it becomes easily accessible for the people and also avoids nuisance in the compact residential areas”. Extending on the same but with a different outlook, Mr. Sushant Muttreja, CMD of Cosmic Group is of the view that commercial real estate has lost its lustre over the time as regions in India are still much short on the connectivity front. He says “It’s very crucial to analyse and access the demand of a commercial property versus a residential property. Once a commercial property sets up in a region, it banks high on external catchment and if the location is well connected with decent infrastructure, it becomes 50 percent easy for the commercial property to meet its supply. This sight has been greatly missing in Indian real estate sector, where the residential real estate has been immensely worked upon and commercial real estate is still to receive its due; something which has recently started to gain importance after the ‘Make In India’ initiative”.

Correct push for Residential front:

Another side of real estate sector is residential, which presently is under a series of governmental pushes especially through Housing For All initiative. But the main question is; what is the point of owning a house which is neither well connected nor is in proximity to vital infrastructural facilities such as schools, hospitals, education institutes and other such civic regional amenities? Therefore, connectivity and infrastructure hold a key place in shaping up residential real estate in a region. Looking into the micro factors which actually make a huge difference in one’s lifestyle, Mr. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group explains “Connectivity and quality of roads reduces the travel time between places hence increasing the approachability between them. Connectivity improves the social meetings with friends and families with low fuel expenses, low travel time and low distance. Travelling to workplaces also gets improved as the amount of time taken for reaching workplaces is reduced. As the time taken to travel to workplaces is reduced; hence people can enjoy their life apart from the office and spend more time with friends and families thus enhancing their lifestyle”. Adding further, Mr. VikasBhasin, MD, Saya Group states “In a country with shortage of housing, the ready and purchased residential units today are either put on rent or end use. In both cases, the property being used requires a good habitat in vicinity without which, residing becomes out of question. Hence, to answer this question, good connectivity and presence of strong infrastructure are two crucial factors to meet this requirement thus highlighting there importance”.

There are two ways of properly connecting a property; one, choosing an already well-connected location and other, developing the property and then waiting for connectivity to improve. But speaking off infrastructure, it will always become crucial to meet the initial and continuous footfall in a region. “Several emerging destinations across the country are unable to make an impression on the potential buyers due to the absence of proper infrastructure. A residential property buyer will always buy once the region where he’s investing has a sound infrastructure in place. This not only allows residents to receive a good habitat but at the same time, receive future capital appreciation which is only possible with developing or developed regions”, enlightens Mr. Ashok Gupta, CMD, Ajnara India Ltd. Explainingfurther, Mr. VikasSahani, CMD, Property Guru adds “Why real estate regions are categorised into various tiers? Different tiers demonstrate the development and acceptability of the region. A buyer planning to reside immediately in tier 4 regions will face problems of poor infrastructure and connectivity, whereas tier 1 region will meet those demands instantly. The reason of differentiation is nothing but the infrastructural development of the regions and hence, even for residential demand infrastructural development is a necessity”.

Commenting upon how these two parameters have always acted as the backbone for the sector and will serve keep on serving in its future to come, Mr. Deepak Kapoor, President CREDAI-Western U.P. & Director, GulshanHomz concludes “For the development of a region, infrastructure and connectivity go hand-in-hand and are of utmost significance. Without either one of them, the region can only witness growth at snail’s pace which in present time, won’t be considered suitable for development and returns. Finally, with government’s ongoing pushes like Smart Cities, AMRUT and Housing For All; it will be most crucial to ready the country with stunning infrastructure and strategic connectivity so as to provide the perfect platform for unstoppable growth of the realty sector”.

No time extension beyond December 15 for Smart City plan

Union Urban Development Ministry on Tuesday asserted that there will be no extension of time beyond December 15, 2015 this year for submission of city level Smart City Plans by respective urban local bodies and states.

This was made clear by the Ministry at a meeting with Principal Secretaries of state Urban Development departments and Municipal Commissioners of some cities included in the Smart City Mission, from nine states.

The states represented at the meeting were - UP, MP, West Bengal, Odisha, Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Nagaland.

In fact, some Municipal Commissioners raised the issue stating that they have been working hard on preparation of Smart City Plans to meet the deadline of December 15 this year, set by the UD Ministry, for submission of plans and if the Ministry would consider extension of time if such requests were received.

The concerned Ministry officials, quoting Urban Development Minister M Venkaiah Naidu emphasized that no such extension beyond December 15 will even be considered and urged all mission cities to adhere to this timeline.

Today's meeting was convened to discuss with officials of states and mission cities the actions being undertaken for preparation of city level smart city plans and particularly, efforts towards ensuring citizen participation in formulating smart city vision for each mission city and action plans besides the criteria for evaluation of smart city plans, to be submitted by December 15.

98 cities from all the states and Union Territories have so far been included in the Smart City Mission, launched by Prime Minister in June this year. This first round of selection of 98 cities was made based on competition among various urban local bodies in each state, based on a set of criteria.

In the second stage of 'City Challenge' competition, 20 top scoring mission cities will be selected from among the 98 city level Smart City Plans to be received by December 15, for financing during the currentFINANCIAL year.

First batch of cities to be selected in the second stage of competition will be provided with central assistance of Rs 200 crore each during this financial year followed by Rs 100 crore per year during the next three years.

UD Ministry had earlier released Rs two crore each to mission cities for preparation of Smart City Plans.

SOURCE: ETRealty.com

Core Industry slowdown to hit Real Estate and Infra

The Modi Government’s big infrastructure push is yet to translate into a pick-up on the ground, data released on Monday show.

Growth of the eight core infrastructure industries slowed to 2.3 per cent in the first six months compared with 5.1 per cent in the corresponding period last year.

The performance does not reflect the more than 60 per cent jump to Rs.82,818 crore in the Government’s capital expenditure during April-September this year.

This year’s Union Budget sought to shift the thrust of government spending to capital expenditure, particularly in infrastructure, to boost growth.

Led by fertilisers and electricity sectors, output of the eight core infrastructure industries improved in September to 3.2 per cent from 2.6 per cent in August.

This growth, however, was not broad-based, with the two main industries, steel and cement, contracting in September. The output of steel shrank 2.5 per cent and that of cement declined 1.5 per cent.

The tepid performance could be a drag on India’s overall industrial growth in the first half of the current year as the core industries comprise almost 38 per cent of the index for industrial production.

India’s industrial production had picked up in August with growth at 6.4 per cent, the fastest pace since October 2012.

The data for industrial output growth in September is scheduled to be released next week.

The data released on Monday showed that the production of fertilizers grew 18.1 per cent in September, ahead of the rabi sowing, which is to have started from October-end and will go on till December. That followed the sector's robust growth of 12.59 per cent in August.

Almost 11 per cent more electricity was generated in September than in the comparable period in 2014. The growth in the sector was 5.6 per cent in August 2015.

Output of natural gas and refinery products increased less than a per cent in September and crude oil production declined marginally, shrinking 0.1 per cent in the period. 

Source: The Hindu

Need leeway to price home loans below benchmark rates: SBI chairman

State Bank of India (SBI) chairman Arundhati Bhattacharya has said that there should be a level-playing field between banks and housing finance companies (HFCs) over pegging interest rates below benchmark rates.

According to RBI guidelines, bank loans are priced above the benchmark rate, which is the 'base rate'. In the case of HFCs, the benchmark is their prime lending rate. However, HFCs face no restrictions on lending below their prime lending rates. As a result when rates change, banks have less freedom to re-price loans selectively compared to HFCs, which can vary the spreads over or below the benchmark to any extent.

"I don't think there should be any regulatory arbitrage (between banks and HFCs). Regulatory arbitrage always makes for an uneven-playing field, and in any area that you are operating it is important to have a level-playing field so that the most efficient of them do the best job," said Bhattacharya.

According to her, the regulator had spoken of the difference between cost ofFUNDS for banks and HFCs as the reason for the discrepancy. "The regulator says that they also have to get their resources at higher cost compared to what the banks pay. So there are pros and cons for everyone and, therefore, how do you create equity so that everyone has a level-playing field? It is difficult to opine on this," she said.

Explaining her earlier demand for more flexibility in home loans, Bhattacharya said that the bank was not seeking introduction of teaser loans. Rather, it was keen on introducing step-up loans where EMIs rise after initial years. "I believe that there is a place for this. When people take a loan, they go right up to the top. But over time, repayment becomes easier as salaries go up and lifestyle changes to adjust to the instalments, and within two or three years the EMI does not hurt as much as it did in the initial years. Therefore, a variable EMI is something that makes repayment easier," she said.

She added that there are also some borrowers who do not immediately shift into the house and have an additional burden of rental in the initial two-three years. "There are difficulties in the first two-three years, which we feel if there is a step-up EMI, then that definitely addresses stretched budgeting for first-time home loan borrowers," she said. On a proposal by the National Housing Bank to reintroduce prepayment charges on floating rate loans if loans are prepaid in the first two years, Bhattacharya said, "In case of floating rate loans, The loans are anyway floating downwards. In that case, is there any case for a prepayment penalty? We have not put our mind to it."

SOURCE: ETRealty.com