Sunday, December 20, 2009

Pune real estate market to go the Dubai way? What say you?

India isn't another Dubai, and thus our property market will escape the kind of collapse that has impacted the Gulf nation.
This is what Mr. Keki Mistry believes. Coming straight from the chief of HDFC, India's largest housing finance company, these words carry a lot of weight.

As Mr. Mistry says, "Dubai was very different from India. In India, the property market is largely end-user based; in Dubai, the property market is largely investor based."

While we are in agreement with Mr. Mistry about his views on the nature of the Indian realty market, we believe certain pockets in the country like Mumbai and Pune do give a sense of a building bubble. And they seem like strong contenders for being the 'next Dubai'!

We believe homes are still out of reach of average buyers in these cities.

And if greedy real estate companies, instead of getting punished for their misdemeanors, continue to get rescued by banks, they will not change their stripes in a hurry and will continue to bid up home prices.

So, while the Indian realty market might not crash like the one in Dubai, realty buyers' dreams of owning their own homes will continue to crash if property prices continue to surge.

Equitymaster.com

Budget homes turn costlier

The prices of a majority of the realty projects in the affordable segment, which is the sub Rs 30 lakh category, witnessed a steady or an upward movement during the last six months.
According to a joint analysis by SundayET and PropEquity, a real estate data analytics and research firm, out of 822 projects across 13 major cities around 41% or 333 projects witnessed a price hike during the last six months.

The analysis compares city-wise change in project pricing over the period March-April 2009 and September-October 2009 for affordable housing projects.

Industry experts feel that the price increase in the affordable segment may move the focus soon to the mid segment. “The Rs 30-60 lakh segment will see huge demand. However, going forward the focus on the sub 20 lakh category may get diluted to some extent,” said Navin Raheja, MD, Raheja Developers.

To read more, please, visit The Economic Times

Friday, December 18, 2009

Infinite India to invest $60 million-$80 million in realty projects

Looking at investing mainly in the residential segment, and residential-led mixed used developments
JM Financial Ltd’s real-estate investment unit, Infinite India Investment Management Pvt Ltd, is planning to invest an additional $60 million to $80 million in a few projects over the next 9 to 12 months.

Infinite India is also identifying such projects, where work can be started immediately and which are located in city-centric locations.

“We are mostly looking at investing in projects where the land acquisition has been completed, and the project is just about to start,” said RK Narayan, director, Infinite India, adding that the company is also planning to invest in large projects where it has the opportunity to invest in the subsequent phases of the project.

To read more, please, visit Moneylife

Tuesday, December 15, 2009

Godrej Properties fixes IPO price at Rs.490

Godrej Properties has set up the issue price of its initial public offering (IPO) at Rs.490 per share. Following the comment of analysts that IPO was expensive, the company received maximum bids at lower end of the price band.
The Edelweiss report had said on the IPO, "We believe the stock is fully priced in at the lower end of the price band of Rs.490-530/share. Also, we have assumed company's township project at Ahmedabad and IT SEZ at Hyderabad to be fully developed and sold by financial year (FY)20 and FY16, respectively. However, being large scale development, these projects run execution risk and any delays in these projects could hamper valuation considerably.

To read more, please, visit SiliconIndia

Monday, December 14, 2009

ICICI Bank to focus on home-loans as real estate picks up

The country's largest private bank, ICICI Bank, today said it is focusing on the home-loan segment as the real estate segment is witnessing a comeback after the economic slowdown.

The bank had recently launched a home-loan scheme under which 8.25 per cent interest rate will be fixed for the first two-years for loans sanctioned from December 1, 2009 to January 31, 2010, irrespective of the loan amount. The first disbursement of the loan should be availed before March 31, 2010.

From the third-year onwards, the lender would charge a floating interest rate depending upon the then prevailing floating reference rate.

To read more, please, visit mydigitalfc.com

Birla Sun Life realty funds targeting distressed assets

Birla Sun Life Asset Management, a part of the Aditya Birla Financial Services Group, is launching two seven-year real estate funds. These funds will invest in distressed real estate assets in western and southern parts of India.

Birla Sun Life Asset Management expects to invest in projects where the developers are stuck for want of liquidity. Several real estate developers in cities such as Bangalore, Hyderabad and Chennai have overstretched themselves by undertaking a greater number of projects than their financial position permitted.

To read more, please, visit mydigitalfc.com,

Banker with an interest in real estate

Property makes up a substantial portion of Mr Sumit Aggarwal's investments. His confidence in it was bolstered by a series of good experiences from his real estate investments in India, London and Singapore.

The 40-year-old is head of transaction banking at Standard Chartered Bank Singapore.

He does not speculate in properties but picks them up using a methodical approach.

'I believe in investing only in asset classes I understand. I go into properties with a medium-term view based on location, saleability, rental appeal and the ability to service mortgage up to six months vacancy,' he said.

'I tend to research the property properly and it takes me about three months to decide before I am ready to buy.'

To read more, please, visit Asia One

Related Stories:

1) Sunday, December 13, 2009
Megapolis Hinjewadi Phase 3, Pune - Are you investing in a 1 BHK for Rs. 16.87 lakh or a 2 BHK for Rs. 25.34 lakh Smart Home?

Pre-launch offer of Avinash Bhosale and Kumar Properties' joint venture Megapolis creates buzz in IT companies in Rajiv Gandhi Infotech Park, Hinjewadi!

2) Wednesday, December 9, 2009
Celestial City Ravet - facts and prospects - according to the builders Mr. Moti Panjabi, CEO, Rama Group and Mr. Anil Pharande, CEO, Pharande Spaces

Where is Ravet?

Realty IPOs: Bubbles that make little sense for serious investors

Of all the bubbles that were floating around back in the heady days of 2007 and 2008, the one that was the biggest is still hanging around, being maintained by a determined (or perhaps desperate) set of people.
At that time, it was clear to most of us that India’s real estate sector was a massive bubble. The froth was equally visible in the prices of real estate itself as well as the way real estate scrips were doing on the stock markets. And then came the crash and everything collapsed around the world. This is a crash that is still continuing — Dubai’s real estate disaster is still said to be only half done. And without a doubt, there are many more zombie developers around the world who are still staggering around in the hope that one day things will turn around.

In India, we now seem to have entered a phase where many of these zombies are now planning to try and revive themselves with IPOs. The coming months will see a spate of issues from real estate developers.

To read more, please, visit The Economic Times

Thursday, December 10, 2009

Brokers`view on Godrej Properties IPO

Real estate player, Godrej Properties enters capital markets today with an initial public offering (IPO) of 9.40 million shares at a price of Rs 10 each. Its price band is at Rs 490-530 a share. The issue will end on Dec. 11, 2009.
1) Angel Broking:

The brokerage house has maintained a `Neutral` view on the IPO and feels the IPO is fairly priced.

2) KRChoksey:

The brokerage house feels the IPO is good bet for long term investors.

3) S P Tulsian:

Issue is steeply priced and much better plays are available in the secondary market and our advice is to give a skip to the issue.

4) Bonanza Portfolio:

The brokerage house feels that the IPO is asking too much for `Godrej` Brand. However, it feels that the IPO can be opted for listing gains.

5) KC Securities:

The brokerage house has recommended an `AVOID` to the issue. The justifications given are as under:

To read more, pleae, visit Myiris news

Related Story:

Godrej Properties' IPO - En-cashing Brand Equity

Monday, December 7, 2009

Godrej Properties' IPO - En-cashing Brand Equity

Godrej Properties proposes an initial public offer of 94 lakh shares of face value of Rs 10 each to raise around Rs 500 crore.
1) Godrej Properties intends to use Rs 278 crore of the issue proceeds for land acquisition and construction activity. Around Rs 172 crore have been allocated towards payment of loans and the balance to be used for meeting issue expenses and other corporate purposes.

2) Godrej Properties' subscribes to current trend:
Going ahead the company is planning to increase its presence in high volume affordable housing segment.

3) Godrej Properties enjoy large equity participation from private equity investors:
The company has large equity participation from private equity investors (upto 49%) in most of its large projects that are being executed through special purpose vehicles. While it spreads the risk, it also caps gains besides necessitating the need to seek partner's consent for every major decision.

4) Godrej Properties' - a dividend paying company :
The company's operating and net profit margins stand at 60% and 41% respectively due its presence in the premium segment.

5) Concerns - project execution, obviously!
The company has been in operations since the last 18 years but has developed just over 5 mn sq feet. This is less than one tenth of the area the company is looking at developing in near future.

6) Arguments, difficult to buy:
1) Considering the company's financials, the issue is priced on the higher side to its existing listed player like Peninsula Land (12x), which works on a similar asset light model.
Can you compare Peninsula Land and Godrej Properties? I can't!
2) Being a new entrant, the company must come at a discount to its peers to provide some upside to investors.
IPO for the benefit of investors, good idea!

To read more, please, visit IPO watch: Avoid Godrej Properties' for long term

Tuesday, December 1, 2009

Buying real estate? Read this first!

Traditionally real estate in the form of the house that we live in has been the single largest investment for most of us. This is seen not only in India [ Images ] but across the world. Let us now apply the metrics that we attribute to investments in general to real estate and see the answers that come up.

Current income

If the investment is on the house that we live in ourselves, there is no current income. This is one of the main negatives about the house that we live in. In a financial cash flow perspective given by Robert Kiyosaki, it is not an asset. Because the house is cash flow negative owing to the maintenance activities and tax that we have to pay for it.

Rent from a house or commercial property is a good source of current income. Although at current bank rates the rent from a house is generally only about ½ of the loan EMI, the catching up happens only after the loan is closed. A 1000 square feet house will cost conservatively about Rs 2500/- per square feet (in B class cities like Coimbatore, Kolhapur, Guntur, etc) leading to the house value of Rs 25 lakhs. A loan for 80 per cent of the value (Rs 20lakhs) at current interest rates (9 per cent) and 15 years term will require an EMI of about Rs 20,300. The rent for the same house in the mentioned cities may not top even Rs 10,000.

If we had 5 per cent yearly increment on the rent as part of the agreement with the tenant, the rent will be equal to the EMI in the 14th year.

Another aspect of the real estate property which requires attention is that the cost of maintenance also keeps growing. For example, Akash had to spend Rs 35,000 for a sump rework in a house build by his grandfather. The original cost for the construction of the house itself was only Rs 30,000 including the compound wall, and a fountain in 1967.

So a fully paid up rental property is an asset with good current income otherwise financially it is a liability.

Capital appreciation

Real estate appreciates in capital - particularly the land. The building generally depreciates. Recently the National Housing Bank launched the Residex, an index which will track the capital appreciation of real estate house properties. The data is updated for 3 years now. Over a period of time, the index can be used as a good measure for the capital appreciation of housing properties.

A key aspect of the capital appreciation is that, it can be realised only when it is sold. And generally the house that we live in is the last of the assets that we sell. This has to be factored in before we make the house the largest investment in our lives.

The capital appreciation of the house can favorably be used in the form of a mortgage loan for business purpose or in the form of a reverse mortgage post retirement. The land that cost Akash's grandpa Rs 100/- per cent, is today worth Rs 600,000/- per cent. This is at a compounded annual growth rate of 23 per cent. Other property locations (grandsons) may or may not be so fortunate.

Risk

The risk with real estate is that it can go down sharply. The current worldwide economic turmoil is because of real estate prices dropping more than the expectation. The other risk is related to its liquidity itself.

Real estate prices in India do not have a formal/scientific basis for quoting. Brokers are the key pins holding the structure together. The same property may be quoted at different prices by the same broker for selling and for buying. The difference in amount goes to the broker – this, apart from their consulting fees. The pity is that often the difference is more than the profit for the owner of the property itself.

The other risk is that only a portion of the sale price may be registered, the rest is paid as 'grey or black money'. Accepting such deals are counter-productive when we go for the selling as we have to bear the brunt of extraordinary capital gains.

The situation is changing but very slowly for comfort.

Liquidity

Real estate is probably the most illiquid of all common investment avenues. If there is an urgency to sell a property the value could drop drastically. Selling at 'market price' is counted in number of months not days.

Tax treatment

Real estate attracts capital gains tax. The advantage is that we can use indexation benefits to our advantage. The indexation index is announced every year by the Income tax department. This is a number which links the inflation to property values. By using indexation, we can estimate the true appreciation of the real estate after adjusting for inflation.

The tax on the sale of the only house or agricultural property can be brought down to zero by reinvesting the sale proceeds in a new house or agricultural property. The capital gains can also be invested in low interest yielding capital gains bonds.

Convenience

Real estate has a low level of convenience. It requires a large corpus for investment leading most of us to take up loans. Here are a few smart marketing companies that sell land in installments. However the overall cost for such deals is very high compared to one time payments.

The decision after buying a property cannot be reversed quickly or economically. The cost for registration, brokerage charges and taxes prevent us from getting rid of a wrong purchase quickly.

Summary

Traditionally, real estate has been the major investment avenue across the world. The trend is not due for a change as the capital appreciation is good. However the points to be thought about are that:

Capital appreciation can be enjoyed only when the property is sold or when the value is unlocked through a mortgage loan or reverse mortgage.

The house that we live in is not a financial asset as it has negative cash flow.

Rent proves to be a stable and reliable source of income. This however is only applicable to properties that are free from loans.

Overall convenience is low for real estates.

Rediff.com Business

Saturday, November 28, 2009

Dubai World crisis will certainly impact the Indian realty sector which has not even fully recovered from the Lehman Brothers crisis

Parry Singh, managing director of real estate equity fund Red Fort Capital, the debt crisis many again drive banks to tighten their credit policy, a move that could jeopardise the credit flow into the realty sector.

“It will also adversely affect the sentiments of investors. Indian developers get lots of funds from Dubai that will be severely affected,” Singh said.

Singh said a large number of buyers of high-end projects are from Dubai. If they become reluctant to buy properties following the crisis, the realty companies will be hit, he added.

“However, the severity of the damage is yet to be calculated.”

Added Anuj Puri, chairman of real estate service provider Jones Lang LaSalle Meghraj (JLLM): “There will be certain impact of this crisis in terms of business sentiments even when the indian realty sector seems robust.”

If the default in Dubai turns into a sovereign default, there would be “real economic issues”, which may hit several countries, he added.

According to engineering and construction major Larson and Toubro, the Dubai debt crisis is “worse” than the financial crisis that followed the collapse of Lehman Brothers in September 2008.

Faced with funding crisis, the Dubai government Wednesday asked the creditors of state-owned Dubai World and property group Nakheel for a six-month standstill on interest payment.


To read more, please, visit Indian realtors unfazed by Dubai crisis

Friday, November 27, 2009

Indian real estate companies are collectively looking to raise $US4.5 billion of equity

Hot picks for investors, say analysts, are companies that have land banks located within city limits in India's seven biggest cities: Mumbai, New Delhi, Kolkata, Bangalore, Chennai, Hyderabad and Pune.
Some examples are unlisted Godrej Properties and Oberoi Constructions, which have assets in India's financial capital and the country's most expensive real estate market, Mumbai.

During the IPO boom of 2007, the larger the land bank, the more successful the IPO, said bankers. Now, it's more about cash flow.

Land banks in prime locations and a focused building strategy, where projects can be developed in the next five years, will also be better valued.

“Having a large land bank will go against you this time as it shows that the builder has no focus,” said Shobhit Agarwal, joint managing director at the capital markets division of Jones Lang LaSalle Meghraj.

To read more, please, visit Sceptical market greets $5bn in Indian public offerings | The Australian

Thursday, November 26, 2009

Liases Foras launches RESSEX

Realty research firm Liases Foras launched its Real Estate Sensitivity Index – RESSEX,( www.ressex.com ) that will provide structured data and property analysis on the country's real estate market.

RESSEX is a product of detailed micro research, which covers every new real estate development excluding secondary supply and enables the user to view the market potential in both micro and market perspectives in the form of an index.

Besides prices, the index comprises sales, inventory, business turnover and an efficiency index, HDFC Joint Manging Director, Renu Sud Karnad, said while launching the index here.

REESEX has been developed to be a source of immense data to developers investors, banks, housing finance companies, FIIs, private equities, analysts and others in their decision-making process, Karnad said.

"RESSEX will enable easier understanding of the finer aspects of the dynamics of real estate trends," Liases Foras's MD, Pankaj Kapoor, said.

The index covers almost every single primary real estate supply across six major Indian cities – Mumbai Metropolitan Region, Pune, NCR, Bengaluru, Chennai and Hyderabad, he said.

The Economic Times

After registration, basic quarterly data for each of the cities covered is available for free on the website www.ressex.com

The Liases Foras measure, the second such index in the country, tracks the sector by region and product type (1 bedroom-hall-kitchen (BHK), 2BHK, etc.). It includes a price index, a sales index (showing demand) and an inventory index (indicating supply) for new houses in a city or area.

“We have 30 people who collect data from builders and brokers on a first-hand basis,” Kapoor said. “We have data from Mumbai, the NCR (National Capital Region), Hyderabad, Pune, Bangalore and Chennai now, and are planning to add Ahmedabad, Kochi and Kolkata next year.”

Around 10,000 projects are covered by the research, he said. The data collected by Liases Foras is validated by HDFC.

Data for the Mumbai region is available since 2004, and from 2007 for the rest, Kapoor said. The company has covered 95% of the new projects in the Mumbai metropolitan region extending up to the suburb of Panvel.

Basic quarterly data for each of the cities covered is available for free after registration on the company’s website ( www.ressex.com ). The company charges a fee of Rs25,000 per quarter for more detailed data, which includes area-wise information on prices, sales and demand in a particular city.
NHB Residex:

The first real estate index in the country was launched by Reserve Bank of India-owned National Housing Bank (NHB) in 2007.

The NHB Residex covers 15 cities and is restricted to prices, data for which is collected from home loan companies and processed by the New Delhi-based National Council of Applied Economic Research. NHB data is updated once in six months.
Kapoor is confident that he will get enough customers willing to pay for the data and is targeting foreign and local investors, builders and financial institutions as clients.

The company has already undertaken research for at least 100 clients in the last nine years, including HDFC, US-based University of Miami, Mumbai-based Hiranandani Constructions Pvt. Ltd and the Maharashtra Chamber of Housing Industry.

Niranjan Hiranandani, chairman of Hiranandani Constructions, said lack of data is the main reason for lack of transparency in the sector.

“We didn’t have adequate data, whatever was there was fragmented and inauthentic,” he said. “This data is going to help financiers, developers and consumers, particularly when I expect volumes in this industry to grow by 30-35% in the next five years.” livemint

Wednesday, November 25, 2009

Government may scrap 3-year lock-in for Foreign Direct Investment' in real estate

Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investors
To boost foreign direct investment (FDI) in real estate, the government may remove the mandatory three-year lock-in period for overseas investments in the sector.

The department of industrial policy and promotion (DIPP) has proposed this move, with a draft cabinet note on the proposal being circulated for inter-ministerial consultations. Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investors.

The government had permitted 100% FDI in the sector in 2005. However, this was subject to certain conditions such as a minimum capitalization of $5 million by the foreign investor and non-repatriation of the original investment for a minimum period of three years.

The liberalization of the real estate sector led to FDI inflows increasing from $151 million in 2005-06 to $2.03 billion in 2008-09. DIPP now argues that no sector, except defense, has a lock-in period. “Based on experience, this condition no longer seems necessary,” a DIPP official said on condition of anonymity.
livemint.com

Move to remove FDI lock-in in realty a positive: Experts

In an interview with CNBC-TV18, Suman Memani, Associate Vice President of Religare Capital Markets and Sanjay Dutt, CEO of Business at Jones Lang Lasalle Meghraj spoke about the possible relaxation of FDI norms in the real estate sector and the implications the move might have on the sector.

Q: It is good news for investors and for stocks. Would you say that immediately we are going to probably see real estate prices rising even further since the holding power of real estate companies could rise?

Dutt: There could be some movement on that. But clearly looking at from the project side, three years, most residential projects, for example if you really look at townships or indeed such large projects in Mumbai or Delhi, there the approval process, the construction process and a stage phased manner exit from that project, generally takes about 4-5 years.

So, will it really impact those projects? My answer is no. However, there would be some projects which under FDI norms- if you have a 50,000 sq meter built up and indeed the minimum level of investment where they may actually see that opportunity happening. But some of the investors who are not in good shape because of situations back home because of loss of appetite in the investors who want to exit may actually see a situation where they would exit today to align their business objectives.

But at the same time I will see this opportunity and regulatory change will bring other investors who instead of going into a Greenfield project, which are very time consuming and riskier would welcome a portfolio of assets from these investors because the comfort would be that the legal due diligence has already taken place. Everything has been sanitised and therefore it is an easier buy and less riskier proposition.

So I feel while there could be a short term hit, long term benefits will more than outdo the negative impact.
Read More

Peninsula Land seen on growth track

Mumbai-based real estate developer Peninsula Land, (part of the diversified Ashok Piramal Group,) has revised the development plans for its Pune and Hyderabad projects from commercial to residential projects. This will help speed up the cash-flow turnaround, as residential properties have lower-gestation period than commercial projects.

The company’s cautious approach and an asset light model helped it beat the realty slowdown. Going ahead, the company is also looking at acquiring land in western and southern parts of the country. With average cost of land being low at Rs 175 per sq ft, its decision to sell upfront part of its commercial projects has kept it assets light.

Peninsula, which has debt on its books aggregating Rs 400 crore and a cash pile of Rs 175 crore, has also received approvals for its Rs 750 crore QIP. At 0.3 times debt-equity ratio, it is one of the least leveraged real estate companies. The company is currently valued at 13 times its trailing twelve months earnings. This makes it one of the few low P/E companies in this sector.

To read more, please, visit The Economic Times

"Completion funding" catches Private Equity Funds' fancy

Completion financing, or last-mile funding, where developers get funds to complete projects stuck midway, is catching on among private equity (PE) funds.
Realty developers are facing problem on several fronts. While banks are still shying away from lending to developers, raising money through initial public offerings (IPOs) remains a distant dream for them. In this situation, PE funds are eying completion financing deals as these deals carry lower risk and attractive valuations.

A host of property funds managed by PE players such as Red Fort Capital, Saffron Asset Advisors, ASK Investment Holdings, Kotak Realty Funds Group are in talks with developers in metros such as Mumbai, Delhi, Chennai and Bangalore to for such deals.

Funds say completion financing deals take a lot of work from funds compared to normal financing deals, though return expectations are similar. Normally, funds expect returns of 20-30 per cent in realty projects.

“These kind of deals are not marketed actively, but are done subtly. Hence, these opportunities depend on relations and how prudently and intelligently you pursue them,” says Ajoy Veer Kapoor, managing director of Saffron Asset Advisors.

To read more, please, visit Business Standard

Monday, November 9, 2009

It is expected that gold price will double in the next 10 years

The only yield from gold is its appreciation. In recent years, gold has been a favoured asset even among individual investors because of greater uncertainly in the real estate and stock markets. The international price of gold has been consistently rising since 2003. From $400 an ounce in 2004 it jumped to $700 in September 2007 and to $1000 in September 2009.

Gold as a reserve asset can be, up to a point, a better alternative to government securities in foreign exchange reserves. The price of gold is likely to rise further in future for a variety of reasons.

To read more, please, visit Smart gold deal by RBI | Economy | Reuters

Lodha’s ‘Strongest Year’ May See Home Sales Triple by March

"There is no (real estate) bubble, but the risk is if (property) prices rise faster than average income growth of say 15 percent, it could decelerate demand for homes," said Lodha. "(Real Estate) Bubbles occur when buyers too willingly keep paying higher prices; consumers today want value for their hard-earned money."
Lodha Developers Ltd., an Indian property company that’s planning an initial share sale, expects its home sales in India will climb about threefold as a record low benchmark interest rate encourages buyers to take loans.

The Mumbai-based developer expects sales to rise to 9 million square feet by March 31, Managing Director Abhisheck Lodha, 30, said in an interview. The company, which sold 3 million to 3.5 million square feet in the previous fiscal year, has sold 4.2 million square feet in the seven months to October.

To read more, please, visit Bloomberg.com

A little bit of Manhattan’s by India’s side

Indians now account for close to 20% of all realty sales in Manhattan, and 30% of all enquiries made, says Raphael De Niro, ( son of Hollywood star Robert De Niro ) MD of New York’s biggest property broking firm Prudential Douglas Elliman.
Prices of residential apartments in Manhattan have slipped 20-25% off their peak in end-2007. Mr De Niro says he is currently negotiating with several Indian buyers who are public figures in India. Sales pitch for a typical Manhattan condo begins at Rs 3 crore-Rs 4 crore, less than what a South Mumbai apartment or a Mehrauli farm house comes for. Average price per square feet for a Manhattan East side condo is $1,249 while that for a South Central Mumbai apartment is $1,319. To read more, please, visit The Economic Times

Sunday, November 8, 2009

High-tech townships of Omaxe, 3C Company and Chadha Group in Uttar Pradesh

Hi-tech township policy of Uttar Pradesh Government:

A lot of high-tech townships are coming up in Uttar Pradesh after the state government’s policy in 2003 to promote development of high-tech townships with better quality of living, work and entertainment facilities.

Considering the acute shortage of housing and infrastructure services, the state government announced an open-ended hi-tech township policy in May 2006 to promote private investment through development of varying sizes of such townships.

Difference between High-tech Township and an Integrated Township:

The first real proposals for high-tech townships started rolling in around 2005. “At first, they were in direct response to the evolving housing requirements of IT professionals in India.

During the height of the IT boom, a home in a high-tech township was considered de rigueur by the upper echelons of the software industry. The concept has evolved since then and has simply come to stand for technologically-enabled lifestyle homes in a more generic sense. These are considered powerful demand generators that have the potential to attract foreign and domestic investment and boost the general profile of a locality.

Success of High-tech Township depends upon employment opportunities:

“These townships will attract buyers provided employment opportunities are available, otherwise they will become part of real estate speculation and people will not prefer to stay in them. Hence, to make these viable, the government of respective states and private developers have to ensure that employment is not a constraint,” feels Manoj Goyal, vice-president, strategic planning and group company secretary, Raheja Developers.

Differentiation will be the key to success:

Dutt of JLLM who says that it’s definitely not a sellers market for these right now and they will have to differentiate themselves to succeed. “High-tech residential projects will have to differentiate themselves convincingly to cash in on the mid-to-high market. In the current times, buyers are extremely budget conscious. That said, there is still a class of aspirational buyers with sufficient funds, but they have a lot of options to choose from. Differentiation will be the key.” To read more, please, visit Neha Dewan, The Economic Times

Related Links:

1) Omaxe Ltd to develop Hi-Tech Township in Allahabad over an area of 1535.12acres

2) Omaxe to develop approx. 3601 acres of Hi-Tech Township in NCR adjoining Greater Noida at Bulandshahar, Uttar Pradesh

3) Omaxe Ltd.

4) 3c Lotus Boulevard Noida, 2 and 3 Luxury Apartments Noida sec 100

5) Website of Lotus Boulevard: India’s Largest Green Residential project

6) Website of Uppal Chadha Hi-Tech Developers Pvt. Ltd.

High Net Worth Indians and NRIs are, again, eying foreign shores for real estate investments

With real estate prices going down by a whopping 25-30% and
hitting rock bottom in some geographies and
distress asset sales becoming the order of the day,
there could be no better time than this to pick up a dream home abroad.
And experts confirm that the decision to buy property overseas is driven strongly by an end-use perspective.

Some of the places which now offer good investment opportunities for HNIs include the Middle East, especially Dubai. In USA it's particularly New York City, Virginia and San Francisco.
The others include Singapore and UK,
To read more, please, visit Rich & NRIs eye foreign properties

Saturday, November 7, 2009

Axis Bank introduces special home loan rate of 8 per cent till December 10, 2009

Home loan takers can avail of 'Power Plus Home Loans' at an interest rate of 8 per cent for the first year.

From the second year onwards these loans will carry a floating rate of interest based on the bank's Mortgage Reference Rate.

Currently, Axis Bank offer home loan under the floating option at 8.75 per cent for up to Rs 30 lakh and fixed loan at 14 per cent irrespective of tenure.

The bank also extended the repayment period of a standard home loan to the maximum of 25 years, she said.

In another variant of the home loan product called the step down product, the customer will pay a higher EMI when the combined family income is higher and a lower EMI when the family income has reduced over a period of time.

Moreover the customer can close the loan before its maturity with no prepayment penalty being charged by the bank.

The Economic Times

Interview of Anita Arjundas, managing director & chief executive officer, Mahindra Lifespace Developers Ltd

Mahindra Lifespace Developers Ltd (MLDL), formed as a result of a merger between the realty arms of Mahindra and GE Shipping in 2001, has outlined a vision to develop area of 4 million sq ft in the residential real estate space to be launched in the near-to-medium term in Mumbai, NCR, Chennai, and Nagpur.

What are your key real estate projects in the commercial, residential and retail segment?

MLDL has till date completed approximately 6 million sq ft of real estate development, in the residential (spanning 5 million sq ft) and commercial (1 million sq ft) sectors. These have been in Mumbai, Delhi, Gurgaon, Chennai and Pune.

We can also take credit for being the pioneers of SEZ development in the country, with our Mahindra World City Chennai, the first, and as yet, only successful private sector integrated business city including SEZs in the country, spread over 1,550 acres.

Our ongoing projects in the residential segment of 3.5 million sq ft are located in Mumbai, Pune, NCR and Chennai.

Through our Mahindra World City brand of integrated large-scale development, we are currently developing the 3,000 acre Mahindra World City in Jaipur.

This is a large-format project, comprising industrial land, ready built IT space, residential and commercial developments. The Grade A IT-office space, called Evolve, involves a development of around 1.5 million sq ft of which the first 2 lakh sq ft is already developed and allotted to Deutsche Bank.

Our customers at the World Cities include marquee names like BMW, B Braun, Deutsche Bank, Cap Gemini, ICICI Bank, Infosys, QH Talbros, Timken, TVS Group and Wipro among others.
To read more, please, visit
With feel-good factor returning, buyer confidence has picked up in realty

Friday, November 6, 2009

Do you think that property buyers will stop booking flats if builders keep on increasing the property rates at this point of time?

In normal times,
possibility of property price rise
works as a stimulus for the property buyer
who is taking too much time to book a flat.

In good times,
property price hike creates a mass hysteria of
booking without thinking.

Today,
when most of us are not sure about the end of recession and
are worried about the inflation,
if builders start increasing property rates,
only because bookings are happening,
do you think that property buyers will stop booking flats,
just like they did in the second half of 2008?

Do you agree with Kamlesh Pandya, that builders should hold property rates, at least this point of time?
Do you think that Nanded City Pune should not increase the property rate to Rs. 2,850 per sq.ft.?
Do you think that Barbara should give you some more time to think?
Please, share your views in the comments.

Good news for those who have booked a flat in Paranjape Schemes' Blue Ridge Hinjewadi

Looks like that 3i and Indiareit, investors in Blue Ridge Hinjewadi are doing well!

As per the news in The Financial Express, Indiareit Fund Advisors Pvt Ltd, a real estate fund manager promoted by the $1.8-billion Piramal Enterprises, is preparing to raise a $500-million offshore fund.

To raise this new offshore fund, Indiareit is wooing London-based private equity and venture capital firm 3i, which manages 11.7 billion euros worth of assets globally.

It means that, foreign investors withdrawing from the project was only one of the many rumors circulating in the times of world financial crises.

IRB aims to become debt-free, paving way for acquisitions

Virendra D. Mhaiskar, chairman and managing director of IRB Infrastructure Developers Ltd, says the future could be big road projects such as expressways and allied infrastructure
IRB can execute projects worth around Rs6,000 crore from internal accruals and has around Rs1,500 crore to Rs2,000 crore of head room to bid for projects.

What next? Mhaiskar says the future could be big road projects such as expressways and allied infrastructure.

IRB had already entered into real estate and airport development after winning the mandate to develop a new airport in Maharashtra’s Sindhudurg, 90km from Goa, at an estimated cost of Rs150 crore. It has also proposed an integrated township of 1,400 acres along the Mumbai-Pune Expressway.

To read more, please, visit livemint.com

Thursday, November 5, 2009

8% home loan scheme to stay: SBI

The country’s largest lender, State Bank of India (SBI), today said it has no plans to revise its most popular home loan scheme which charges 8 per cent interest for the first year.

The clarification comes amid media reports that SBI may withdraw the scheme from November 7.

When SBI launched the home loan scheme in February, it was applicable till April-end. However, the lender later extended the deadline to September, which was further extended with no deadline set for its closure.

Business Standard

Investment in a second home

According to a study conducted by Kapston.com, a Bangalore based e-business consulting firm, the sales of 'second homes' in India increased by 50 per cent from 2002 to 2007, before the slump in the market brought the figures down to negligible.

"Although the concept of second homes was accepted by the Indian audience, as the figures show, everything crashed during the downturn . In the last one year, there have hardly been any takers for this segment .

The market is stagnant as of now," says Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj.

There are two types of buyers, in the second home market, explains Grover.

The first category consists of the affluent buyers who purely look at luxury and the second category is the middle and upper class, which looks at second homes as an investment option.

"The first category has started showing interest, in the last coupe of months, but the second category of buyers is still playing the waiting game," he adds.

Things to consider, while buying a second home:

>> Location of the project (accessibility to medical care and market)

>> Local economy strength

>> Current resale value

>> Residence tax rate

>> Environmental clearances

>> Security

>> Maintenance assurance

To read more, please, visit The Economic Times

Hero group in real estate with an integrated township in the pilgrim town of Haridwar

The Munjal family-controled Hero group, better known for its motorcycles, is entering the real estate business, with nearly Rs. 200 crore already invested
The cash-rich Munjals are turning the current slump in real estate into an opportunity as they had no previous exposure in the business historically marked by aggressively priced land deals.

The Ludhiana-based group plans to launch over the next two weeks an integrated township in the pilgrim town of Haridwar.

“The integrated township at Haridwar will be developed over an area of 50 acres and will have close to 2,000 residential units,” Sunil Kant Munjal, chairman, Hero Corporate Services Ltd told Hindustan Times.

To read more, please, visitHindustan Times

Realty funds prepare for action as interest in sector revives

After hitting a five-year low in fund-raising globally, real estate funds are back on track. A number of new and existing real estate funds are planning to tap domestic and offshore markets to raise funds.
The revival of sentiment globally and in the real estate sector has led to funds chasing high net worth individuals (HNIs) and ultra HNIs flush with liquidity. Domestic real estate funds are using this opportunity to expand their existing funds or do a fresh round of fund-raising.

The Piramal group-promoted Indiareit Fund Adviors is planning to raise a Rs 500-crore real estate fund.
ASK Investment Advisors, which raised a domestic real estate fund recently, is planning to raise a $250-million offshore real estate fund.
Dewan Housing, a player in the housing finance segment, is planning to raise a $250-million real estate fund.
Sources said ICICI Ventures was also looking at launching a real estate fund by the fourth quarter of this year.
Morgan Stanley, which has a global real estate fund in India, might also look at raising an India-focused real estate fund by the end of this year, sources said.

To read more, please, visit Business Standard

Wednesday, November 4, 2009

Realty funds explore new investment areas

With demand in the sector reviving, PE funds look beyond affordable, low-cost housing projects
After investing in four mid-income and low-cost housing projects in the past one year, Indiareit Fund Advisors Pvt. Ltd, (investor in Paranjape Schemes' Blue Ridge Hinjewadi) promoted by the Ajay Piramal group, wants to refocus its strategy on projects with potential for higher returns.

Indiareit will now look at deploying most of its new Rs500 crore domestic fund announced in October in redevelopment and defunct textile mills projects.

“There are some 25 mills coming up for development and we want to either bid independently or through a special purpose vehicle,” managing director and chief executive Ramesh Jogani said.

“Redevelopment projects, particularly in Mumbai, also have great potential from an investment perspective,” Jogani added.

Indiareit’s revised strategy echoes the sentiments of many private equity (PE) funds with a focus on real estate in India. Funds that had zeroed in on the emerging, affordable housing segment as a demand driver during the economic slowdown believe that with the sector reviving, they should look at other growth areas.

Among such funds are Kotak Realty Fund and Saffron Advisors, (investor in Kolate Patil) which have lined up about $400 million (Rs1,880 crore) and $140 million, respectively, for investments.

Saffron Advisors’ founder and managing director Ajoy Veer Kapoor said his company will seek value in two sectors—warehousing chains and niche, city-centric developments in Mumbai or New Delhi.

“We are not really looking at low-cost real estate projects because it’s still at a very new stage in India and not many developers have the bandwidth to pull it off,” said Kapoor.

The affordable housing story is a recycled version of the integrated township story in India, which never really took off, said V. Hari Krishna, chief investment officer at Kotak Realty Fund.

To read more, please, visit livemint.com

Monday, November 2, 2009

Banks may soon stop tempting you with attractive home loans

If you are looking to finance the purchase of your dream house with a cheap bank loan, time is running out, with large public sector banks such as State Bank of India (SBI) and Punjab National Bank (PNB) planning to withdraw the special schemes that offer rates as low as 8% for the initial years.

With the Reserve Bank of India (RBI) sending out hawkish signals in its second-quarter review, these banks may have to raise their home loan rates by January to align them with the expected hike in key policy rates. The special schemes offered by public sector banks have resulted in the cost of home loans crashing to the lowest levels in five years.

To read more, please, visit The Economic Times

'Godrej Properties will soon become our fastest-growing business' - Adi Godrej

The slowdown is behind us and the country will grow at around 9-10 per cent, believes Adi Godrej, chairman of the Godrej Group.
This, he adds, spells good news for his fast moving consumer goods (FMCG) business and properties venture, as well as for Godrej Agrovet.
In a chat with Business Standard, he says Godrej Properties will now be a focus area for the group, with an emphasis on affordable housing. Edited excerpts:
Could you expand on your plans for Godrej Properties?

We have filed a draft red herring prospectus (DRHP) with Sebi to divest 13.5 per cent stake. The pre-IPO stake sale (of 4 per cent) and IPO should happen by the year end. Money from the IPO will be used for the expansion of Godrej Properties, in which we will continue investing, since we see a strong revival in residential property. Our focus will be on residential -- especially affordable housing -- and commercial properties. Godrej Properties will soon become our fastest-growing business.

To read more, please, visit business-standard

Saturday, October 31, 2009

Base rates will help make credit pricing transparent

The base rate system is definitely more transparent than the BPLR system. But there are some non-transparent aspects to the fixation of the base rate, which need to be highlighted.

In simple words the 'base rate' system recommends that the one year retail fixed deposit rate of a bank (after making certain adjustments) be the base rate for that bank and that floating rate loans be pegged with reference to such a base rate. The one year retail FD rate for each bank is easily and publicly available and to that much extent, it adds considerably to transparency.
To read more, please, visit dnaindia.com

Friday, October 30, 2009

Credit policy may not impact home loans, say experts

The realty sector, especially in the home segment, has already witnessed some price rise and an interest rate revision, which in any case will be small, may actually help slowdown the spiraling price rise,' says a senior banker
The credit policy announced by Reserve Bank of India (RBI) governor Subba Rao on Tuesday may have hints of a tighter credit regime, but it may not have an impact on the interest rate structure for home loans, say experts.

Experts say that their opinion is based on two facts.

First, the demand for homes and home loans, in turn has gone up in the wake of the soft rate regime put in place by the finance minister early this year as part of his anti-recession measures.

Second, the Centre has already expressed concerns about the bankers' unwillingness to pass on the benefits of the revival package announced by the finance minister.

To read more, please, visit The Times of India

Due to sluggish real estate demand, DLF registers a 77 per cent drop in the net profit

The country’s top real estate player, DLF Ltd, registered a 77 per cent drop in its net profit during the quarter ended September, as demand for real estate continued to be sluggish compared to last year.

The company registered a profit of Rs 439.7 crore during the quarter, compared with Rs 1,934.1 crore during the comparable quarter last year, shows the consolidated results announced by the company today. Sales (and other receipts) during the quarter also dipped 53 per cent to Rs 1,751 crore.

Other real estate companies also saw similar dips in sales and profits. Housing Development & Infrastructure Ltd (HDIL) posted a 44 per cent dip in net profit to Rs 148.6 crore, while Sobha Developers’ net profit was down 38.2 per cent to Rs 27.5 crore during the quarter.

To read more, please, visit DLF net drops substantially on sluggish real estate demand

Saturday, October 24, 2009

NRIs, investing in Indian real estate market is simple!

A number of overseas representative offices set up by banks enable NRIs to seek home loans for investments in real estate in India. Even select foreign banks in the private sector provide home and mortgage loans to NRIs. Repayment should be made by way of inward remittance through normal banking channels or by debit to the NRE, FCNR (B) or NRO account, or out of rental income derived from renting out such property. In fact, repayment is treated as equivalent to foreign exchange received for purchase of residential property.

The rules governing NRI investments are provided in the Foreign Exchange Management Act (FEMA). The prohibited areas for investments continue to be agricultural land, plantation property or a farmhouse. An NRI can acquire any immovable property in India other than agricultural land, plantation property or a farmhouse. He can transfer any property in India to a person resident in India or an NRI resident outside India other than prohibited properties. For a person of Indian origin (PIO) the same regulations would apply.

There are no restrictions on the number of residential /commercial properties purchased in India but repatriation is restricted to two residential units after a lockin period of three years. Rental income is repatriable. Thus, a number of NRIs have shown interest in leased properties across the country.

Similarly, NRIs may transfer by way of gift, residential /commercial property in India to a person resident in India or to an NRI/PIO. The sale proceeds of residential /commercial property received by way of gift should be credited to a NRO account only. As regards repatriation, an amount not exceeding $1 million per calendar year is allowed subject to production of documentary evidence in support of inheritance and tax clearance certificate/no objection certificate from the income tax authority to authorised dealer for remittances.

The CBDT has recently notified that any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs 50,000 will become taxable in the hands of the donee, being an individual or a HUF, as income from other sources.

Tax benefits

Like residents, NRIs are allowed a deduction upto Rs 1.5 lakhs per annum in respect of interest payable besides deduction on the principal repayment within the overall ceiling of Rs 1 lakh. If there is loss under the head 'income from house property' which cannot be set-off against any income of the same year, it can be carried forward for the next eight assessment years to be set-off against any income from the house.

A house leased for a minimum period of 300 days in a calendar year is exempt from wealth tax. Investments in commercial property will enable the investor for exemption from wealth tax. Purchase through an agreement to sell with a power of attorney duly executed by the seller has been made possible. It need not be registered and no stamp duty is payable. The benefit of cost inflation index at 631 for the year 2009-10 for saving tax on long-term capital gains is available to NRIs as well.
The Economic Times

Thursday, October 1, 2009

Ireo launches Grand Arch in Gurgaon

"The Grand Arch marks the launch of the Ireo City -- the beginning of a new era in the Indian real estate sector with a planned launch of 10 million square feet area of its 3000 acres owned land in next twelve months across NCR, Haryana, Punjab, Tamil Nadu and Maharashtra," Lalit Goyal, vice chairman & managing director, Ireo.
Ireo, the leading FDI from a private equity fund dedicated to the Indian real estate sector and a fully integrated real estate development company, has announced the commencement of its first signature property - The Grand Arch -- in the Ireo City, Gurgaon. Ireo City is the first mega project of the company in North India, and the planned capital outlay for the development is Rs 10,000 crore.

Spread over 500 acres, Ireo City, the integrated township, will offer a unique mix of features such as an elevated walk way connecting the entire township, art centers, theatres etc. Ireo City development will also include schools, hospital, parks, luxury hotels, shopping malls, service apartments and office complexes.

The Grand Arch, spread over 20 acres, is designed to be Gurgaon’s new landmark residential complex.
To read more, please, visit The Economic Times

Sunday, August 30, 2009

In realty, customer is looking at value buy: ASK Advisors

The developer has to either keep prices low or tie up with funding agencies such as private equity and complete the projects to get a delta premium for the built property:

Real estate markets are unlikely to witness a ‘V’-shaped recovery, argues Mr Amit Bhagat, CEO and Managing Partner, ASK Property Investment Advisors. The group, which currently has a real estate fund open for investment, will deploy money in a staggered manner, in line with the slow recovery anticipated. In an interview with Business Line, Mr Bhagat explains the current price situation in key realty markets and the fund 217;s investment strategy.

Excerpts from the interview:

If you believe this is the right time to invest, then why have you chosen to invest in a staggered manner?

I am very clear that it is not going to be a V-shaped recovery from here.

For one, real state markets do not have V-shaped recoveries anywhere; 1996 to 2002 was flat, then came the boom. In fact in 1997, there were commercial complexes left midway in construction and completed only in 2001-02.

Two, interest rate cycles vary. In the earlier cycle, it took eight years for interest rates to decline — interest rate in 1996 was 16 per cent, in 2004, it became 7 per cent. Cycles are much shorter today. There has been a 25 per cent reduction from 12 per cent to 9 per cent in 10 months.

But when is the buyer stepping in today? Look at the market over the last six months. In 2008, people did not buy. In the first quarter of 2009, too, they did not buy, when the prices fell by as much as 35 per cent.

Now they have stepped in because it is a value buy, despite the construction risk involved. So, today, the customer is looking at a value buy. Therefore, the developer has to either keep prices low or has to tie-up with funding agencies such as private equity and complete the projects to get a delta premium for the built property.

To read more, please, visit The Hindu Business Line

Friday, August 21, 2009

How SBI scores over peers in home loans

Rate cut, increase in limit, withdrawal of processing charges are some of the pluses, writes Tinesh Bhasin.

Last Friday, the country's largest bank, the State Bank of India, created a flutter in the home loan market when it slashed rates by another 0.5 per cent in second and third years under the Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh) schemes.

It also raised the limit from Rs 30 lakh to Rs 50 lakh for the Easy Home Loan segment, the first bank to do so.

No wonder, market experts are quite enthused. "This scheme becomes unbeatable compared to all other as interest rates are fixed for the first three years," said Harsh Roongta, CEO, www.apnapaisa.com.

He said that in a floating rate scheme, banks have the option to revise the rate upwards as and when interest rates go higher. In SBI's case, they will realign with market rates only after three years, giving the scheme an edge. Only Canara Bank has a five-year fixed rate, though pegged higher at 9.25 per cent (between second and fifth year).

In the last few months, many banks have resorted to this part-fixed, part-floating rate structure in which they are offering a fixed rate for a limited tenure. After that, the rate is based on the existing benchmark.

For instance, SBI has set the floating rate at 2.75 per cent below the State Bank Advance Rate or a fixed rate 1.25 per below SBAR. Also, it is not charging any processing fee, no prepayment penalty if the loan is paid from one's own resources and offering a free personal accident insurance.

For potential home buyers, these rates look very attractive. However, while deciding a lender, there are a number of things that one needs to look at.

There are a number of players offering this part-fixed, part-floating rate. Besides, SBI LIC Housing Finance has a Fix-o-floaty and Canara Bank has a five-year fixed rate.

Perhaps the simplest way to compare rates is the average rate per year. However, one has to take existing conditions and benchmark rates into account.

For someone, who is looking for a 20-year, Rs 30-lakh loan, SBI's average rate is 8.76 per cent a year. Only, Axis Bank's floating rate and Indian Overseas Bank offer a competing rate of 8.75 per cent.

HDFC and LIC Housing Finance's special scheme (Fix-o-floaty) are offering annual rates of 9 per cent (EMI = Rs 26,911 a month) and 9.1 per cent (EMI at Rs 27,185).

In case of the administrative and processing fees, SBI schemes score because there are no charges. Lenders such as Axis Bank and HDFC, charge 1 per cent as processing fee. ICICI Bank and Canara Bank charge 0.5 per cent.

As far as prepayment penalty goes, SBI is not charging anything if the loan is paid from one's own pocket. Most banks such as LIC Housing Finance, ICICI Bank and HDFC charge 2 per cent as prepayment penalty.

The only area, where SBI seems to lose out a little is the loan-to-value (LTV) ratio. This ratio refers to the amount borrowers need to contribute to the overall cost of the property.

SBI's LTV ratio is 80 per cent. HDFC, LIC Housing Finance and Axis Bank give up to 85 per cent of the total property value as loan.
Rediff

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How the new tax code will affect you

The biggest point of discussion has been the rise in the income slabs. While retaining the basic exemption limits at Rs 1.6 lakh (for individuals), Rs 1.9 lakh (for women) and Rs 2.4 lakh (for the retired), the slabs have been hiked substantially.

Along with this, the limit of Section 80-C, which has been renamed Section 66, has been hiked from Rs 1 lakh to Rs 3 lakh. For someone earning say, Rs 14.5 lakh per year, the new numbers could look something like this: Rs 1.6 lakh (basic exemption) Rs 3 lakh (savings under Section 80C/ Section 66) Rs 9.90 lakh taxable income Tax rate for Rs 10 lakh = 10 per cent Tax liability = Rs 99,000.

Looks fantastic? But it's not that simple. For a salaried person, who gets house rent allowance, medical and other perks, he/she will not get tax benefits anymore. In fact, the value of rent free or concessional, leave travel allowance, earned leave and medical reimbursement, etc will now be included as a part of the salary.

Vikas Vasal, executive director, KPMG, says, There were certain prerequisites that an employee enjoyed in his salary. All the perks in the direct tax code are brought under the tax net. This means the taxable income will now be higher.


To read more, please, visit Rediff

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Thursday, August 20, 2009

Interest rates to rise - ICICI Bank CEO and managing director Chanda Kochhar

The country's largest private sector lender ICICI Bank on Thursday said lending rates will start going up any time now, quite contrary to the SBI chairman's projection that borrowers can breathe easy till Diwali.

"I really believe that interest rates are not going to go down from here. Gradually they would go up. When?...would really depend on how fast the credit growth takes place," ICICI Bank CEO and managing director Chanda Kochhar told PTI.

Her statement comes a day after SBI Chairman O P Bhatt said that rates would not rise till Diwali and may even soften by 25-50 basis points before the busy season in October.
To read more, please, visit Rediff

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Sahara plans to tap market with $1-bn IPO for realty arm

Lucknow-based Sahara Group is planning to take its realty arm public and raise up to $1 billion, which, if successful, would make the company the second valuable player in the segment after DLF

Sahara Group wants to offload 10% of its stake in the wholly-owned company, valuing itself at $10 billion (Rs 49,000 crore) behind DLF, which has a market cap of Rs 63,000 crore as on August 19, 2009.

Currently, the second valuable firm in the Indian realty firmament is Unitech with a market cap of Rs 17,000 crore. The draft red herring prospectus for the offering will be submitted in a week, the person said.

Refurbishing real estate business!:

According to a real estate expert, the proposed IPO indicates that the group is refurbishing its real estate business after the Reserve Bank of India (RBI) asked it to pull out of its mainstay parabanking activities over a period of time. RBI has asked Sahara India Financial Corporation not to accept any new deposit which matures beyond June 30, 2011.

It has also been asked to stop accepting instalments of existing deposit accounts with effect from that date.

217 townships:

It plans to set up 217 townships, spreading over 100 acres each, in various parts of the country. Of this, the first phase is expected to set up 102 townships, while the remaining in the second phase. The first phase is expected to be over in the next five to seven years while it will kick-off the second phase from 2015.

Trend in the realty industry:

Sahara’s plans aligns with the larger trend in the realty industry, which is crawling out of a market slump. A clutch of real estate companies are in the process of launching IPOs this year in order to cash in on the slow reversal of fortunes in the sector.
To read more, please, visit - The Economic Times

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Simple tips for making a will

"Making a will is one of the most important and integral part of personal financial planning."
A will enables each one of us to distribute our property and assets in the manner we wish to distribute it. A will may also reduce the risks of undue litigation, delays, misunderstandings and disputes amongst family members.

A will can be hand-written, or typed, on a piece of paper. It requires no stamp duty or registration, although experts advise that a will must be registered so that it is in safe custody. The will must be attested by two witnesses, one preferably a doctor.

Consider some simple guidelines while creating a will:

A will can be hand written in ink but preferably should be typed.

It does not require any stamp paper & and it need not be registered.

It should preferably be drafted by a lawyer, and checked by an accountant.

It is advisable to name in your will, more than one executor/executrix to administer the estate and distribute the property, as per your desire.

The will must be signed by you in the presence of at least two witnesses who must also sign the will at the same time. Their full names and addresses should be given. (Note: Witnesses need not know the contents of the will)

The executor or beneficiary cannot attest the will as a witness.

The executor of the will can also be named as a beneficiary and vice versa. Sign each page of the will, so that nobody can substitute a page later on, nor can anybody argue about fraudulent insertion of a page subsequently.

Keep your will in a safe place e.g. in a bank locker. Inform the executor and beneficiaries where the Will is kept. Also give a signed copy to your lawyer.

Review your will regularly, say once a year. It may need amending to take care of changes in your financial or family circumstances.

On the demise of a spouse, the surviving spouse needs to revise his/her will.

To read more, please, visit rediff.com

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Wednesday, August 19, 2009

Now, pay tax via ATMs

"We are offering a service for payment of income tax for Corporation Bank debit card holders through our network of 1,000-plus ATMs in the country from August 18," Corporation Bank's Chairman and Managing Director J M Garg said.
Finance secretary Ashok Chawla on Tuesday launched the first of its kind banking service, where a customer can pay his income tax using an ATM.

The facility has been started by Corporation Bank. The bank's debit card holders would also be able to pay education cess, surcharges and advance tax through ATMs. Initially, at least 10-20 lakh people who have an account in the bank will benefit.

Gradually, in the next one or two years the facility will be provided by all other banks, said S S N Moorthy, chairman of the Central Board of Direct Taxes.
To read more, please, visit The Economic Times

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For sensible capital gains taxation- Swaminathan S A Aiyar

The government’s proposed direct taxes code has been widely welcomed. It seeks, rightly, to bring corporate tax rates closer to the Chinese and ASEAN levels, and combine lower rates with fewer exemptions. The proposed income-tax changes will give substantial relief to the middle class, but may cause excessive revenue losses.

Experts have already analysed most proposed changes threadbare. But virtually none have focused on one area where the proposed code goes seriously wrong — capital gains tax. Indeed, the underlying issues are fundamentally misunderstood globally.
To read more, please, visit - The Economic Times

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Tuesday, August 18, 2009

New Tax Code: proposed 2 % tax on the land bank - Impact on realty sector

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Is the realty sector looking up?

Rajeev Talwar, group ED at DLF, speaks on the demand for housing, competitive property pricing, new tax code and it's impact on real estate market:

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New tax code to dent housing, fear bankers & realty firms

The banks and real estate companies are apprehending that the removal of tax benefits on the interest portion up to Rs 1.5 lakh of any housing loan as proposed in the draft tax code will hamper the growth of housing finance and real estate business.

Niranjan Hiranandani, managing director, Hiranandani Constructions, “This is a very wrong decision as world over tax exemption on housing loan is encouraged to provide boost to the real estate sector. Government will have to restore the tax reforms as demand in real estate business will be badly impacted.”
To read more, please, visit - financialexpress.com

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Bangalore-based realty companies plan to invest in Mumbai and Pune

With the real estate sector picking up in large parts of the country, Bangalore-based realty companies such as Puravankara Developers, Sobha Developers and Nitesh Estates are now exploring options to enter new markets.

It is learnt that these players are drawing up plans to invest in cities such as Mumbai and Pune.

The consensus is that money will not be easy to raise at a time like this. “It will be interesting to see how these companies arrange for the funds for these projects. While PE money is hard to come by, it will not be easy to take the capital markets route,” said a consultant at an international real estate firm.

To read more, please, visit The Economic Times

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Monday, August 17, 2009

Black money falling flat

Good news for property buyers. The obnoxious black money, or the unaccounted cash component, for buying a flat is slowly fading out with buyers calling the shots in a market still being rebuilt after crumbling in last year’s financial storm.

Across Indian metros, more and more properties can now be purchased through the accounted money or white, thanks to the changed profile of the buyers and the government’s base price policy.

“According to Section 50 (C) of the Income Tax Act, one had to pay tax according to ready reckoner prices. If anyone pays below the current market price, he still has to pay tax as per the market rate,” says Vinod Sampat, a tax lawyer and consultant. An individual reinvesting the net proceeds from the sale of a house in another residential house is exempted from capital gains tax. This has given a big relief to many sellers who reinvest in real estate.
To read more, please, visit - The Economic Times

Do you mind paying "other charges" in cash?

OK. There are no more 60 - 40 terms of payments for the property in Pune real estate market. But we can't say that "cash component" has completely gone!

You know that there is one builder on Pashan Baner link road who demands Rs. 3 lakhs as "other charges in cash" for his ready possession flats. Do you mind paying your hard earned and tax paid money to the builder because those are his standard terms of business? Or would you happy to pay roughly 10 lakhs cash to the real estate investor for his unused flat in Kharadi. Which the investor is selling for less property price then the builder is asking for in the same project? Please, share your views in the comments.

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Sunday, August 16, 2009

In Delhi and National Capital Region, dealing directly with developers to buy a property may not get you the best deals - P D Dwivedi

ROHIT Gandhi decided to purchase a home and avail himself of the new segment of quality affordable housing that was being launched in the current wave of development , post the economic downturn. The falling home loan interest rates in the affordable category were an added incentive.

To get the best lot, Gandhi decided to put in his money on the day of the launch. With all his documents ready, when he reached the developers office he found to his dismay that he was pitted against a large number of agents who had come with up to 50 cheques to book the apartments. The developers sales staff too, was attending more seriously to those with multiple cheques rather than to individuals like himself.

At a distinct disadvantage, Gandhi was not sure whether he had done the right thing purchasing the property at the time of launch as an individual, instead of going through a broker.
To read more, please, visit - blogs.siliconindia.com

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Saturday, August 15, 2009

Property pricing information for real estate buyers and sellers across India

Zamanzar.com releases city and locality level average price data for properties:



Zamanzar.com has just created a wealth of property pricing information for real estate buyers and sellers across India. You can now view city level and locality level average property price data at Zamanzar.com.

For example, http://www.zamanzar.com/Bangalore/Residential-Property-Prices.html gives you average prices and price per sqft values for apartments, houses and residential plots for sale in Bangalore, whereas http://www.zamanzar.com/Bangalore/Commercial-Property-Prices.html shows you average prices for shops, offices and commercial plots for sale in Bangalore.

This information is automatically refreshed based on property listings available on Zamanzar.com and is available for several major cities in India including Delhi NCR, Mumbai, Ahmedabad, Pune, Jaipur, Lucknow, Bangalore, Hyderabad, Chennai and Kolkata.

You can also get an idea of locality level property prices for popular areas within a city. For example, http://www.zamanzar.com/Bangalore/Koramangala/Residential-Property-Prices.html gives you residential prices for Koramangala whereas http://www.zamanzar.com/Bangalore/Koramangala/Commercial-Property-Prices.html gives you commercial prices for Koramangala. The page also shows you a map of that locality along with schools & colleges, hospitals, hotels and malls in that locality so that you can make a better informed property buying decision. Links to nearby areas are also available so that you can view and compare property prices across areas.

"Our goal is to provide Indian and NRI real estate consumers with market information that allows them to make a better real estate decision. These information pages allow consumers to get a real estate market snapshot at a city and locality level based on current pricing data available on Zamanzar.com. Stay tuned for more features that will make these pages even more useful for consumers", said Nisheeth Ranjan, Founder/CEO of Zamanzar.com.

Zamanzar.com is currently ranked within the TOP 10 real estate portals in India according to Alexa traffic rank.

The company was started in 2007 by Nisheeth Ranjan, a graduate of Cornell University and Stanford University, after having worked in Silicon Valley, California for more than 10 years.

Zamanzar.com provides an end to end solution for buying/renting/selling residential or commercial real estate across India. The real estate portal has more than 250,000 property listings and offers online and offline services for buyers, renters, owners, agents, and builders. These services include online marketing, property tours, property appraisals, title checks, financing, negotiation, legal paperwork, property registration etc.
To read more, please, visit - Free Press Releases

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Friday, August 14, 2009

HDFC reduces interest rates to 9% per annum for Rs 30-50 lakh home loans

Home loan major Housing Development Finance Corp (HDFC) has cut interest rates by 50 basis points (100 basis points = 1%) for the Rs 30 lakh-Rs 50 lakh slab. The new rate for this bracket will be 9% per annum, down from 9.5% earlier, a senior HDFC official said.

Earlier, HDFC had three slabs for home buyers. It charged 8.75% per annum for loans up to Rs 15 lakh, 9% for loans between Rs 15 lakh and Rs 30 lakh and 9.5% for loans of over Rs 30 lakh. Now the mortgage finance major has introduced a new slab of loans at 9% for Rs 15 lakh and Rs 50 lakh.

After this rejig, only home buyers opting for loans of over Rs 50 lakh will pay an interest rate of 9.5%.
To read more, please, visit - The Times of India

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Due to drastic slowdown in property markets across the world, Knight Frank puts off plan for India-focused property fund

Private Equity Real Estate Funds:

According to a report by global research firm Preqin, private equity real estate funds are still struggling to raise capital in the current economic environment. In the April-June quarter, 21 real estate funds made aggregate commitments of $10.3 billion, down 72.16 per cent from the $37 billion in the year-ago period.

The interest from private equity funds has waned due to slowdown in the sector in the past nine months. Only three PE deals, worth Rs 600 crore (Rs 6 billion), have taken place in the realty sector in the past nine months, as against Rs 40,000 crore (Rs 400 billion) worth of deals during the same period in 2008, according to Venture Intelligence, which tracks venture capital and PE investments.

Knight Frank India chairman Pranay Vakil confirmed the development. The offshore fund was supposed to raise investments from high net worth individuals and other investors from the UK.
To read more, please, visit - Rediff Business News

Related Story:

Affordable housing for Rs. 8-10 lakh income category!

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Thursday, August 13, 2009

New tax code: Easy on your pocket

ET Bureau:
The government on Wednesday unveiled the draft of a brand new direct tax law that would represent a radical review of the Income-Tax Act, 1961.

The tax code makes radical changes in all areas of taxation: it lowers the incidence of tax on corporate and individual incomes but reintroduces wealth tax on all assets and tax on long-term capital gains, albeit at lower levels.

It also proposes to bring a uniform pattern of taxation to bear on all long-term savings: EET, which is exempt at the stage of contribution, exempt during accumulation and taxed during withdrawal.

Check out how new tax code would impact individuals.


Individuals:

Women:

Seniors Citizens:


Deductions:

Tax liability and you:

The direct tax code is a bit of a mixed bag for individuals, particularly the salaried class. Prima facie, the tax liability will reduce significantly as the draft code proposes to tax incomes up to Rs 10 lakh at 10%, that between Rs 10 lakh and Rs 25 lakh at 20% and sum in excess of that at 30%.

Thus, an individual with taxable gross income of Rs 10 lakh will pay tax of Rs 84,000 as opposed to about Rs 2.11 lakh he pays this fiscal year.

Check out the impact of proposed code on tax liability..

If your annual Income is Rs 4,00,000:

If your annual Income is Rs 8,00,000:


If your annual Income is Rs 15,00,000:


Measure and impact of proposed tax slabs:

The government, in its new Direct Tax Code, has sought to introduce provisions to prevent the misuse of double-taxation avoidance treaty that India has with a few countries.

While the code will empower the government to enter into an agreement with any foreign country for relief on double taxation, it will also extend to enabling the purpose of exchanging information from the partnering country to prevent evasion or avoidance of income tax.

Individuals:

Code for income from business to be rationalised, every business will be a separate source and taxed accordingly.

Wealth to include all assets including shares, amount in excess of Rs 50 crore to be taxed at 0.25%.

New simpler scheme for computing income from house property.


Savings:

Any sum from life insurance policy, including bonus, exempt from income tax.

EET regime to apply from 1 April 2011. Withdrawal of accumulation before that not to be taxed.

Shift from one eligible saving scheme to another not to be treated as withdrawal.

Capital gains:

The base year for calculation of capital gains shifted from 1.4.1981 to 1.4.2000. As a result, all capital gains before April 2000 will be exempt.

Capital loss will not be allowed to be set off against any other income.

Inflation indexation of cost of acquisition/improvement to continue.

Transfer of asset as gift will not attract capital gains provisions.

Gains not taxed (rollover benefit) if invested in approved capital gains savings scheme, first residential house, farm land.

Cost of acquisition to be nil if it cannot be determined or ascertained for any reason.

All withdrawals from any capital gains savings scheme will be included in residual income.

The main purpose:

The new code will completely overhaul and simplify the existing tax proposals for not only individual tax payers, but also corporate houses and foreign residents.

How will it help:

The idea is to keep the provisions simple so that even an average taxpayer can understand the language, than having to go to chartered accountants and income tax practitioners. It will also introduce the concept of tax calculators.

What can the public do:

The finance ministry has uploaded on its website - www.finmin.nic.in - the draft direct tax code, a discussion paper, a comment on the code and what rating people would like to give to it.

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