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| REAL ESTATE |
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Mountains get a plain look
Stretch of road catches realtors fancy
Expressway makes Faridabad a goldmine
TAX
tips
Slew of malls for Punjab
Buzz on
Bourses
Aerens Jai City in Yamunanagar
DLF celebrates Freedom Week
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Buyer’s profile gets younger
Easy financing by banks aid in-their-thirties working couples to buy property, finds out
Ruchika M. Khanna
Mudit Mahajan, 32, a business executive in Jalandhar, bought his dream house a year ago. With no monetary support from his family, he had thought that it would take him years to realise his dream. He was advised to explore the option of availing a home loan and within a few months was able to buy an apartment in Model Town. “I have to pay an equated monthly instalment (EMI) of Rs 7,000, which is just a little higher than the rent I was paying earlier,” he says. Gone are the days when one would work hard all his life, and only at the fag end of his career purchase a house. In the process, he would exhaust his life’s savings, as taking a loan was akin to baring financial position to the world. It was also because of the stringent loan rules followed by nationalised banks. “Convenience has taken over other considerations and most people are now availing loans to buy property, which is not just a need but also an investment,” says Sanjeev Sharma of Ludhiana, who has availed a loan of Rs 7.50 lakh to buy an industrial shed. Today’s double income couples are obviously smarter. With a plethora of options now available on home loans, more and more people are purchasing property at a very young age. A senior official in the Centurion Bank of Punjab says a sizeable percentage of their clientele, who have availed home loans are between 27 and 35 years of age. With both partners earning, they do not shy away from taking loans, thinking that one salary can be used for loan repayment and while the other can be used to meet routine expenses. Take the case of Amit Trehan, 33, a businessman of Ludhiana, who has taken a housing loan from ICICI Bank. “We wanted to buy a house in Basant Avenue, and with the money we had in hand, it would not have been possible. We studied all options for taking a loan and decided on taking it on a floating rate of interest, which does not cut into monthly expenses,” he says. Rajeev Sardana, General Manager, Housing Development Financial Corporation (HDFC), Punjab, Haryana and Himachal Pradesh agrees. “With disposable incomes and easy and variety of loan options available, more and more youth are now availing these loans. Banks, too, prefer extending loans to young professionals/ businessmen as compared to elders as these are long-term loans. Young clients also have the advantage that their incomes rises as they grow in the profession,” he said. Though private sector banks have a major chunk of the customers opting for loans, public sector banks, too, are gearing up to meet competition by offering better services and quicker processing of loans. Keeping up with the private banks, many of these public sector banks have formed marketing teams and are luring customers aggressively. However, the escalating interest rates on home loans have become a major cause of concern for those availing these. While the Reserve Bank of India has hiked its short-term lending and borrowing rate, putting additional burden on the banks, who in turn are passing this on to the customers. Harmeet Pal Singh, a media professional in Chandigarh, says the shooting rate of interest has upset his monthly budget. However, Sardana says that the increase in home loan rates over the past six months has not affected home loan rates. “Over 90 per cent of those availing the loans are taking it on a floating rate of interest. The advantage is that the variable rate of interest (between 9 per cent and 10 per cent) is still lower than the fixed rate of interest (11 per cent). Also, because many banks do not have pre payment charges in variable rate of interest, many customers prefer this over taking loans with a fixed interest rate,” he says. He also adds that even if the interest rates were to go up, these would not affect those opting for home loans.
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IT and ITeS sectors act as catalyst
The median age of housing loan borrowers in India now stands between 28 and 30 years from the late 30s to early 40s, which was the status few years ago. The trend is primarily being driven by the employees working in the IT (Information Technology) and ITeS (IT enabled services) sectors, for which India holds a lot of potential.
This is the research finding of DTZ (Debenham Tie Leung), a London Stock Exchange listed company. DTZ is one of the leading global real estate advisory and consultancy firm, which began operations in India two years ago. “Residential demand is always a derived one and this shift in median age can be attributed to certain factors,” explains Ankur Srivastava, Managing Director of the firm. “To begin with, the demand for commercial office space is a major factor. The commercial (office) market is dominated by the IT and ITeS sectors that accounts for approximately 80 per cent of the total commercial space absorption in India. For every 100 sq. ft of commercial (office) space, approximately at least 600 sq ft. of residential is required. The median age of people working in the IT and ITeS companies is relatively younger and consequently, the average age of buyers has also declined,” he says. Add to that, an increase in the number of nuclear families and young working couples, especially IT professionals, who have both the purchasing power and the willingness to make the long-term investments in housing. This means more housing demand from such younger section of the population. “With the interest rates rising and falling yield in residential property we will have to see how this market will go as there is lots of speculation in this sector,” says Srivastava. The DTZ Managing Director opines that besides India, China is another country in the Asia Pacific region, which is attracting significant investments across all real estate segments. “China is known for prowess in manufacturing and India for its ability to service offshore clients. Together, these two countries make up a large chunk of the real estate pie in Asia Pac and the world,” he says. In the study conducted by DTZ Research, Bangalore ranked third after London and Tokyo for commercial office space absorption in 2005, putting India on the global map with regard to real estate activity.
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Mountains get a plain look
Hill architecture goes missing from Dharamsala houses, notes Vibhor Mohan
The distinctive features of hill architecture are slowly disappearing from Dharamsala and adjoining areas, with more and more people going in for a cost-effective, universal look for their houses. Similar is the case with the commercial complexes that have come up on the lines of metropolitan designs. Wooden floorings, low ceilings, slates on the outer walls...have become a thing of the past and the upcoming houses in the area are being made on architecture lifted straight from the plains. Due to climatic changes in the region during the last decade, the ceiling heights are now being raised from the earlier 8 feet to 12 feet and the plinth level is also being raised to avoid water logging. Most new houses and commercial complexes have provisions for mechanical ventilation using air-conditioners, something that was unheard of till few years ago. With the installation of such temperature-control gadgets, wooden flooring, which was considered ideal for cold climates, has disappeared from the region and marbles and tiles are in. Similarly, chimneys, which can still be seen popping out of most old-fashioned houses, are now being added only on demand, merely to give an aesthetic touch to the architecture. Slate roofs are being replaced by cost-effective corrugated galvanised iron (CGI) sheets and small traces of slate are being used only for decorative value. The wear and tear and high maintenance cost of slates are a key reason for their disappearance. “It is sad that traditional features of hill architecture are being shunned in the new constructions. What we need is a planned merger of architecture from the hills and plains so that region-specific features are retained,” says architect Amardeep of Design Forum in Dharamsala. He adds that most new houses and commercial complexes coming up in Dharamsala and adjoining areas could well be imagined in any city of Punjab. Lack of street façade has led to haphazard growth in most areas. Considering the high rainfall in the region, it is important to retain features like sloppy roofs and other tried-and-tested dampness control measures in the architecture, he says. Chief Minister Virbhadra Singh said earlier this month that the government was planning to make amendments in the existing Town and Country Planning Act or enact a separate law banning constructions on the valley side. “People owning land on the valley side would be allowed house construction with 45 degrees slanted roofs which would not obstruct the view from the road,” he said.
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Stretch of road catches realtors fancy
After the advent of Amritsar International Airport, the Ajnala road, also known as the Airport road, has been emerging as mini Gurgaon. Touted as the international lifestyle destination in close proximity of the airport, large five-star hotels, a couple of resorts, multiplexes, residential colonies and commercial complexes have been lined up to recreate the magic of mini-metro township.
The land on this stretch has become scarce and become as expensive as Gurgaon. The airport has given impetus to this desolate stretch. This strategically located road has caught the attention of real estate developers, hoteliers and the owners of the commercial complexes few years ago. This has transformed it into high activity expensive zone of the city. Two five-star hotels of international repute, besides two exclusive resorts, lounges, clubs, farmhouses and a major multiplex by Omaxe Limited, a Delhi based group, are in the pipeline. A shopping mall, a hotel, three screen multiplex, besides special waiting lounge for the international air traffic passengers, is also in the offing. All this would be surrounded by a thriving township with over 150 acres of PUDA -approved colonies providing more than 1,500 residential plots and commercial complexes.
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Expressway makes Faridabad a goldmine
Property, worth hundreds of crores, has changed hands during a short period and construction, especially in the multi-storeyed structures, has been in full swing thus offering vast opportunities for both housing and investment sectors. The decision of the Haryana government to set up a Special Economic Zone (SEZ) in the NCR and the development of Western Peripheral Expressway, connecting Palwal and Sonepat, have provided a major boost to property business and investment. The scenario in the property sector has undergone a vast and unexpected change over the past 24 months and land rates have jumped six to 10 times. Giants and construction companies, including the BPTP, Omaxe, Triveni, and Eros, have already invested heavily in the town and the district, and have either set up or are in process of setting up their own housing colonies and residential sectors on the pattern of Gurgaon. According to some of the property agents involved in booking of flats and plots in such colonies, the rates at which the plots are being offered range between Rs 10,000 and 15,000 per sq. feet, depending upon the location, while the builders are still to lay the basic infrastructure, including the roads, sewage lines and water supply network in the colonies, lying across the Agra canal. Three-laning of Faridabad-Gurgaon road, launch of the expressway connecting Palwal and Sonepat, widening of the Surajkund road and repairs of all main and internal roads in the sectors has also provided impetus to the realty growth.
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Cost inflation index for 2006-07 not announced
by S.C. Vasudeva Q My daughter purchased a plot for Rs 15,000 in September 1993 and has sold the same in April, 2006 for Rs 4 lakh. She is not an income tax assessee and has not obtained PAN. Kindly advice in respect of following points: 1 Profit tax on long-term gain after keeping in view price indexation. 2 Whether there exemption of income of Rs 1,35,000 is to be adjusted against the long-term gain. 3 Whether she is required to obtain PAN. 4 The requisite challan number for depositing the tax and the period up to which the tax is to be paid. — Avtar Singh, Chandigarh A. The answers to your queries are as under: 1. The cost inflation index for 2006-07 has not so far been announced by the Government of India. It is, therefore, not possible to compute the figure of capital gain on the sale of the plot. 2. The tax on the amount of capital gain would be computed after giving the benefit of maximum amount up to tax is not payable by her. 3. She will have to obtain the Permanent Account Number. 4. The advance tax on capital gain earned will be payable on 15th September 15, 2006, December 15, 2006 and March 15, 2006. The requisite challan number for her case would be ITNS 280. Sale and purchase
Q. I am a retired government employee. A. I built my house in 2002 for Rs 16.50 lakh. Source of income (i) Sale of old house Rs 4.50 lakh (ii) Sale of plot Rs 2 lakh (iii) Advance from G.P. Fund Rs 5 lakh (iv) HBA from bank Rs 5 lakh Total: Rs.16.5 lakh B. Now I sold that house in April 2006 for Rs 35 lakh, out of which I returned Rs 3 lakh HBA and cleared the loan balance (ii) Purchased house at the cost of Rs 25 lakh (iii) Saved Rs 7 lakh Now my question is what is my tax liability on Rs 7 lakh to avoid tax. Can I purchase home plot of Rs 7 lakh and if free from tax, can I invest this money in NSC or mutual funds? Any other suggestion to save tax.? — Ashok Kumar, Sangrur A. It is not clear from the facts given by you in the query whether the residential house was completed in 2002 or the construction was started in 2002. For the purposes of giving reply to your query I have presumed that the construction of the residential house was completed in 2002. The sale of said house in April 2006 would be beyond the period of three years from the date of completion of your house. In that event the capital gain earned on the sale of old house costing Rs 16.5 lakh would be a long-term capital gain. According to the provisions of the Income Tax Act, 1961, (The Act) the cost of 16.5 lakh will have to be indexed on the basis of Cost Inflation Index prescribed by the government. For 2002-03, the cost inflation index was 447. The same will have to be increased by index for 2006-07 to arrive at the indexed cost as on the date of sale i.e. April 2006. However cost inflation index for 2006-07 is yet to be announced by the Government. It would be better to wait for the cost inflation index for 2006-07 to be announced. The capital gain can be worked out after the same is announced. It may be pointed out that cost inflation index for the 2005-06 is 497. The amount of capital gain can be invested in the capital gains tax saving bonds to obviate the necessity of making payment of capital gains tax. Such investment has to be made within six months of the date of transfer of the property. These bonds have a lock-in period of three years. The investment in mutual fund etc., can be made but would not give you tax relief. Mere purchase of plot also would not give you tax relief.
Selling farmland
Q. I have three acres of rural agricultural land worth Rs 40 lakh. I want to sell it off and send the money to my two NRI sons in equal proportion. What are the tax and legal implications of doing the same? — Dilbagh Singh, Ludhiana A. The facts given in your query are not complete because the query does not indicate the place where the agricultural land is situated and further whether the same would be covered within the definition of a capital asset. In the absence of such details, it is not possible to explain whether any capital gains tax would be chargeable on the sale of such agricultural land. I may add that you can send $ 1 lakh per year for the maintenance of your close relatives without any restriction.
IT website
Q. This is with respect to your answer to a question in the December 19 edition regarding IT on Capital Gains on farmland. You have given reference to the Notification
number 9447, dated January 6, 1994, issued by the Central Govt. specifying the details of the areas falling outside the local limits of municipality of cantonment board. I shall be highly thankful if you please arrange to a get this notification published, as the same is not available. If it is not possible to publish the same, please let us know from where to get the same. We have some land at Sarai Khwaja village, Ballabgarh tehsil, Faridabad district. Please let us know if the same is falling outside the limits of municipality for determining whether the agricultural land is to be treated as a capital asset or not within the provisions of Section 2(14) of the IT Act. — R.K. Gupta, Rohini, Delhi A. The correct no. of notification is No. SO 10(E), dated January 6, 1994, as amended by Notification No. SO 1320, dated 28.12.1999. It seems there was a misprint in the columns of the newspaper dated December 19. It is not possible to publish the notification in these columns, in view of the paucity of space. The above notification should be available on the website of the Income-tax department. The details of the website are www.incometaxindia.gov.in If it is not so available you will have to get a copy of the same from any of the recent publications of Taxmann containing Direct Taxes Circulars. As per the notification, all areas up to a distance of 8 km from the municipal limits of Faridabad in all directions would be outside the purview of the definition of the word ‘capital asset’. No tax liability would arise on the sale of such agricultural land. However, to claim such exemption you should obtain a certificate from an official, duly authorised for the purpose that Sarai Khwaja village is beyond the limit specified above for the purposes of claiming that the agricultural land situated in the said village is outside the purview of the definition of the term ‘capital asset’.
AWHO flat
Q. I bought a plot (financed by me) in 1989 on my wife’s name. She is the owner of that plot now. I have now been allotted a flat on my name by the Army Welfare Housing Organisation (AWHO). Can my wife sell that plot and give the full amount to me to make up for the less amount for payment of AWHO flat without or by becoming the co-registrant for flat? — Col K.S. Attal, Mukerian A. At the outset I have to point out that the facts given in your query are not complete. It is not clear as to how your wife can be an owner of plot if the same was financed by you. It is also not explained in the query as to how the declaration in respect of the plot was made in your tax return. In absence of these details, it is not possible to give an answer to your query, which would be legally tenable.
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Slew of malls for Punjab
These malls, propounded as “wholesome entertainment centres,” by the developers, Spirit Global, are expected to be complete by 2010. “Each mall would have a different theme and reflect the needs of the local population and project the cultural tradition of the area,” J.K. Malhan, Managing Director, Spirit Global Constructions, told The Tribune. The theme at these malls would be changed every three months to lend an air of freshness, which would venture beyond shopping. Another interesting feature of these malls would be the digital theatres. Such a visual treat is being established for the first time outside southern India. Pyramid Saimira Theatres would supply content and maintain theatres in all these malls across Punjab. “Each mall would have three screens, at least, and some would have more,” P.S. Saminathan, MD of Pyramid Saimira Theatre, said. “These theatres, besides screening movies, would be sublet for family get-togethers, kitty parties and watching live matches,” he said. On the financial part, Malhan said the company plans to invest Rs 2,000 crore for constructing nearly 60 malls and multiplexes to be set up within three years. “We will raise 60 per cent of the investment through FDI and others through internal accrual and debt market,” he said. Malhan said the malls would be spread over 2,00,000 sq feet to one million sq feet, varying according to locational factors. The first phase of malls, to be completed by December 2007, will have two in Ludhiana, one each in Zirakpur, Hoshiarpur, Khanna, Jalandhar and Amritsar. Other locations where the constructions would take place include Patiala, Gurdaspur, Kapurthala, Nawanshahr, Ferozepore, Ropar, Faridkot, Muktsar, Moga, Bathinda, Mansa and
Sangrur.
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Unitech to invest Rs 1,800 crore
New Delhi: Real estate developer Unitech Ltd will invest Rs 1,800 crores in the next 4 to 5 years to develop a residential township at Greater Noida, which would have around 4,500 apartments. Unitech has bagged 100 acre of land at Rs 556.44 crore from Greater Noida Authority last week to develop group housing project. “We are planning to develop 4,500 apartments at Greater Noida that would involve an investment of Rs 1,800 crore, including the land cost of Rs 556.44 crore,” Unitech Managing Director Sanjay Chandra said. — PTI Madhucon plans toll roads
Mumbai: Infrastructure builder Madhucon Projects Ltd. plans to develop 1,000 km of toll roads in two years, in a shift from building roads to operating them in search of better profitability, an executive said. With National Highway Authority of India (NHAI), which promotes most inter-city road projects, encouraging private players to fund them, Madhucon’s road-building expertise would come in handy, Finance Director S. Vaikuntanathan
said. — Reuters
3i to park $40 million
New Delhi: Private equity investor 3i has said it would invest $40 million (about Rs 180 crore) in the Indian real estate market. The investment would be made through real estate focussed venture capital fund Indiareit, 3i said in a press note. The fund is promoted by Ajay Piramal and is focussed on the Indian real estate sector, which invests in projects governed by Foreign Direct Investment guidelines, the note said.
— PTI
Lemon Tree plans expansion
New Delhi: US-based equity investment firm Warburg Pincus has picked up stake worth Rs 280 crore in the hospitality chain Lemon Tree Group, which has embarked on a Rs-500-crore expansion to set up nine new hotels over the next two years. “We will be setting up nine new hotels in major towns of the country in the next two years and would invest Rs 500 crore in the expansion,” Lemon Tree Hotels Chairman and Managing Director Patu Keswani said. He said the expansion would be funded partly through equity investment from private partners.
— PTI
Pantaloon pact with Blue Foods
Mumbai: Looking to set up food courts and specialty restaurants across the country, leading retailer Pantaloon Retail India Ltd has decided to form a joint venture company with Blue Foods Pvt Ltd. The company has entered into a Memorandum of Understanding with Blue Foods, which runs various restaurants across the country, to forge the 50:50 joint venture company, Pantaloon Retail informed the BSE.
— PTI
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Aerens Jai City in Yamunanagar
In the twin townships of Yamunanagar and Jagadhri there are hardly any proper shopping places, cinema halls or hangouts for youths. Now there is some good news for the residents. A residential township has been launched and a multiplex with three cinema theatres and 50 exclusive showrooms is under construction at Jagadhri. Aerens Jai House and Aerens ABL recently launched ‘Aerens Jai City’ which is to come up on 54 acres with 50 per cent open areas for parks. Kailash Gupta, Managing Director, Aerens Jai House at the launch claimed: “The city would be equipped with modern amenities and facilities for luxurious living. The Aerens have planned a fully air-conditioned shopping mall, round-the-clock security, wider roads, electricity sub-station, underground cabling, swimming pool and primary schools. The MD informed that in Jai City one could opt for freehold plots or buy a built-up residential villa. “Aerens Jai City would be described as patches of concrete amidst wide open greens. There will also be a multiplex, health club and ample space for children to play,” he said. Meanwhile, town-based Dimple Cinema has been demolished in order to build Daffodil, a multiplex with three cinema halls, a food court and a string of exclusive showrooms.
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DLF celebrates Freedom Week
New Delhi: As part of its contribution towards celebrating Independence Day, realty major DLF is organising Freedom Week to showcase products and handicrafts made by the women inmates from prison who are part of an NGO run by IPS officer Kiran Bedi. The company has invited India Vision Foundation (IVF), an NGO that rehabilitates women inmates from prison across the country, to take part in the freedom week, DLF said in a statement. The freedom week was inaugurated this week by Kiran Bedi, the founder President of IVF at Gurgaon.
— PTI
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Faridabad, which had been seen as a poor cousin of modern urban conglomerates like Gurgaon and Noida, till a few years back in the National Capital Region (NCR), has bounced up in the matter of property escalation and the demand for more houses over the last two years.
When it rains, it just pours. And this is not just about the rains that is lashing Mumbai, but malls that will soon cover the vast expanse of Punjab, almost one in every town. As many as 60 more malls are expected to come up in various cities.
