Big Bang
HC order against shifting of ammo depot in Ludhiana sends property prices crashing
Kanchan Vasdev

THE Punjab and Haryana High Court’s directive on non-shifting of the 17 Field Ammunition Depot (FAD) at Baddowal in Ludhiana has sent thousands of residents and colonisers holding properties in its vicinity in a tizzy. The HC had recently ruled that the depot, being a strategic defence installation, would not be shifted and all buildings raised within 1,000 yards of the outer parapet of the ammo dump after 1983 will have to go. 

So far... UNDER the Works of Defence Act, 1903, any kind of construction within 1,000-metre radius of an ammunition depot is barred. A notification to this effect was issued in 1983 for Baddowal depot even though the area witnessed constant construction activities at the end of terrorism era. Those who purchased land in the area after 1983 had built new structures in place of older ones and maintained that they had incurred losses in crores after the collector demolished them on HC orders. They had pleaded that since the restricted area already had a large number buildings, the notification and demolition orders be quashed.

Soon after the directive — real estate business in the area considered the cynosure of all eyes due to its proximity to Ferozepore Road — nosedived. Property owners in the area have put their land and houses up for distress sales and are ready to accept even prices they bought the land for. Post the ruling, all structures in the area are now illegal and could be razed anytime now.

Not one to give up, real estate agents and colonisers are enticing buyers saying they would move the Supreme Court against the directive. They are offering hope saying that the court would surely listen to thousands of people living in the vicinity of 17 FAD.

“I have a 500 square yard plot that I am ready to sell at any price. It is up to the buyers. Just get me a buyer and I will get up only after striking the deal. You can well imagine how desperate I am,” says Amarjeet Singh of Baba Nand Singh Nagar near the depot. He said that many others like him were frantically looking for buyers. “The HC took so many years to pass this order. We do not know how long the apex court would take after colonisers file an appeal. I just do not want to keep this land now. It is giving me sleepless nights. I would rather suffer loss and buy long-term peace of mind,” he adds.

Real estate agents are also making last ditch efforts to sell property in the area. A number of farmhouses were developed in Green City. The prices were between Rs 3,000 and 4,000 a square yard a week ago. But after the directive people are ready to sell them at throwaway prices.

“A farmhouse has been the dream of every Ludhianvi in the past. Hoping that the HC ruling would favour the people, many bought farmhouses in this area, as it was cheaper. They never imagined their hopes would be dashed to the ground,” says real estate agent Parminder Singh. He confirmed that several landowners had consulted him and that he was he was looking for buyers. “We do not know what the outcome is going to be. There are no enquiries from buyers of farmhouses,” he adds.

A number of colonies including Green City, Canadian Enclave, Baba Nand Singh Nagar, a portion of Avtar Nagar and Raja Gardens falls within the dangerous distance of the depot. These colonies had seen numerous buyers in the past – mostly people who could not afford property elsewhere.

Land prices jump 50-80 times in villages, towns along Mughal Road 
Shariq Majeed

EVEN as the Mughal Road project is yet to be completed, land prices along the road in Jammu region have skyrocketed.

The road is an alternative route to the Jammu-Srinagar National Highway 1A that is often closed due to avalanches and landslides. Work on the project started in 2005 and since then the prices of land have shot up by 50 to 80 times in smaller towns like Behram Gala, Bufliaz and the tiny town of Chandimarh that lie along the road.

Residents said the rate of one kanal land had increased by 50 to 80 times in villages along the road while in less inhabited villages like Poshana and Dugran, it had increased by five to 10 times.

The Mughal Road takes off from Bufliaz in the border district of Poonch and has smaller towns like Chandimarh and Behramgala besides villages like Dugran, Poshana on the Jammu side. It ends at Shopian in Kashmir province.

Muhammad Din, a farmer owning 20 kanals along the road says, “The rate per kanal of land was Rs 20,000 in 2004 but presently I have customers from Srinagar and Jammu who are ready to pay Rs 20 lakh per kanal.” But I won’t sell the land right now, he adds. “Let the Mughal Road open, the rates will register further increase since people will open shops and business establishments. We thank Sheikh Muhammad Abdullah for conceiving such a great project besides, Mufti Muhammad Sayeed for restarting the work on it,” he says. He said the road project once completed would boost trade in this backward region and would elevate the economic status of the people here.

Buyer Tariq Mehmood of neighbouring Rajouri district who bought 10 marlas land in 2002 in Chandimarh area said that few years back, before the road project started, he bought the land for Rs 1.2 lakh but now the same piece of land costs more than Rs 15 lakh!

“Not very long ago, we would eagerly wait for customers to sell our land for a price which is twenty times lesser than the current prices. Now, we get customers who are ready to pay any price for the land,” says Feroz Khan, a local contractor who also deals in property business. “Once the road opens, people will construct shops and other business establishments and will earn huge profits.”

Road map

CONSTRUCTION of the 84 km road from Bufliaz to Shopian costing Rs 639.35 crore (present estimate) is going on since 2005 and is likely to be completed by 2011. Presently 43 km road from Buffliaz to Pir-ki-Gali in this border district has been completed and made fair-weather, of which, 26.20 km has been double-laned.

Even the road construction is complete on a 41-km stretch from Shopian side in Kashmir province. The road is being constructed from Bufliaz (28 km from the district headquarter of Poonch district) through Behramgala, Chandimarh, Dugran, Poshana, Pir Ki Gali and Hirpura to Shopian. The road being an alternative to the Srinagar-Jammu Highway will connect Rajouri, Poonch districts in Jammu province with Kashmir region.

IREO forays into North India
Sanjay Khurana

IREO, the first and the largest global investment fund dedicated to the Indian real estate sector, has announced its foray into real estate development with a portfolio of 13 projects located across the country. 

The fund, which started its operation in India in 2003 with a total corpus of $2 billion, is looking to invest $500 million to acquire more projects. “We have already invested $1.5 billion in these 13 projects and the remaining $500 million will be deployed over the next few years,” IREO chairman Anurag Bhargava said.

IREO will develop over 3,000 acres, with 250-300 million sq ft area available for sale. These projects will be located in Ludhiana, Jalandhar, Mohali, Panchkula, Gurgaon, Ghaziabad, Noida, Pune, Goa, Chennai and Coimbatore and will be priced between Rs 2,200 and Rs 4,500 per sq ft.

Bhargava further said: “Our vision is to be the most respected real estate and infrastructure developer in India by consistently delivering superior value to our customers, investors, business associates and employees in all our endeavours”.

IREO’s vice-chairman and managing director Lalit Goyal said: “We are in strong financial position and ready to invest more. Having already invested $1.5 billion, we still have another $500 million cash reserve for further investments in our projects”. 

Goyal further said, “We have already commenced construction and leasing of a 5 million square feet IT SEZ and the sale and construction on 3 million square feet of housing. We are poised to launch a number of projects that will entail development of more than 8 million square feet of housing in the coming 12 months”. 

Steven Wisch, partner, IREO, informed that “IREO’s investor base consists of blue chip globally renowned financial institutions such as: JPMorgan Chase, TPG - Axon, Citadel Investment Group, sovereign wealth funds, endowments such as Stanford University, University of Notre Dame and University of Rochester, major global real estate developers like Stephen Ross, the Taubman Family and the Reichmann Family and some very high net worth individuals. The blue chip nature of our investor base is proof of the immense faith our investors have in India and also their confidence in IREO’s capabilities to manage the funds and projects at such large levels”.

In the next 12 months, Bhargava said, IREO would launch 8 million sq ft more of housing space. The company is also evaluating possibilities in education and hospitality projects.

“Though the market has seen ups and downs, we are bullish on the long-term potential of India. Due to some policies that are put in place here, residential demand is coming back,” Bhargava said.

Coming of Age
Faridabad is a city whose time has come. It is all set to shed its industrial town tag & be home to swank apartments

OVER the last three years, Faridabad has emerged as a frontrunner in providing affordable and easily accessible homes amongst all competing NCR suburbs, its biggest advantage being its location.

Faridabad is centrally located and has easy accessibility with Delhi, Noida and Gurgaon. It is a 30-minute drive from New Friends Colony and GK-2, where apartment prices have touched an astronomical Rs 20,000 per sqft. In Noida or Gurgaon prevailing prices in existing (comparable) sectors are still around Rs 5,000 per sqft and hover around Rs 3,500 per sqft in Greater Noida.

Faridabad was developed well before Gurgaon and has been an industrial town for the last 25 years. As a result several affluent pockets like sectors 14, 15, 16 and 21 were developed where the quality of houses can be compared with those in posh South Delhi colonies.

These sectors have almost 100 per cent occupancy as opposed to Gurgaon, which has largely been investors driven. Further with the 5-km Badarpur Flyover under construction and the Metro expected to reach Faridabad by 2010, connectivity is all set to improve exponentially. — TNS

The art of living REDEFINING living is what the Pranayam Apartments in Faridabad promise. Spread across 20 acres of landscaped greenery, the three-four bedroom luxury apartments are in sectors 82-85 of Faridabad. They have been structurally designed for Seismic Zone 5 conditions with an emphasis on providing maximum openness, light and ventilation. Each apartment comes with its own plunge-pools in the super sized balcony, a first in Faridabad, fully functional modular kitchens and imported marble flooring. The Pranayam has a community centre whose foundation stone was laid by Sri Sri Ravi Shankar and will be run by The Art of Living Foundation. A school spread over five acres, a two-acre club around the site and several malls, schools and hospitals within a 10-minute drive of this complex are some other highlights of the project. The elegant homes have been designed by internationally acclaimed ARCOP architects and landscaped by M Paul Friedberg and Partners, New York. Friedberg and Partners are one of the world’s pre-eminent landscapists with projects such as The Burj in Dubai. Construction is underway and expected to be completed in 2010. Prices start at Rs 38 lakh.

TREND MILL
Home demand inching up, but recovery not in sight
Demand swaying towards affordable housing, buyers of luxury properties stay away, watch, wait for further drop in prices

HOME demand in India is trickling back in some sections of the market, but industry watchers say a rebound is months away as buyers in the world’s second-most populous country await further price corrections. Builders have begun new projects after a year-long hiatus and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch.

“While the market has turned up, I don’t expect it to be back to 2007 or 2008-beginning levels for another six months or eight months,” said Rajesh Goenka, Chairman, Axiom Estates, real estate agency, servicing overseas Indians mostly in the earning bracket of $100,000-$300,000 a year.

The housing sector, the largest revenue contributor by far for real estate developers in India, has been hit by slumping sales and falling unit prices as the country’s growth began to slow amidst the credit crunch. Real estate developers have spent months battling a severe cash crunch as high interest rates and an economic slowdown kept buyers away and funding from investors dried up.

But, a spate of interest rate cuts and a sentiment revival has encouraged builders to focus on middle-income buyers by launching new projects or re-market older ones as mid-income properties. Unitech, Parsvnath Developers as well as India’s top-listed real estate firm, DLF, redesigned projects and cut costs to appeal to a wider consumer base.

Demand is swaying towards affordable housing and buyers of luxury properties are staying on the sidelines, holding out for a further drop in prices. In the quarter to March, half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Liases Foras.

Realty firms are also using the momentum to tap investors for money. Real estate firms alone have raised $1.7 billion this year so far, Thomson Reuters data showed, to beat a cash crunch. In cue, India’s realty index has almost tripled, outperforming the 82 per cent rise since March 6 in the benchmark 30-share BSE index when it saw its 2009 low.

Despite a cautious revival in demand for homes, the sales taking place now are not spread evenly despite prices falling by 40 per cent from their peak for under-construction houses mainly in southern and northern India, analysts say. Moreover, the revival in demand may not push prices higher but transactions will rise, said Axiom’s Goenka.

And even though builders say new projects are being lapped up, home loans are not picking up as fast, suggesting that the homes were picked up by investors, said Pankaj Kapoor, founder and chief executive, Leases Foras Real Estate Rating & Research.

“It’s skewed demand and it’s all investment driven. The old properties have not shown improvement in terms of sales… I call them the mysterious buyers. You cannot call them the real buyers,” he said.

The renewed demand may not be as high as developers make it out to be or what the realty stock rally suggests, analysts add. “The rate of change is not as high as it is made out to be in the market. There is a certain amount of over-enthusiasm,” said Shobhit Agarwal, joint managing director, capital markets, Jones Lang LaSalle Meghraj said.

“We believe it’s still early to call a recovery and would wait for some signs of improvement in execution and sustainability of volumes before getting positive,” Citi analyst Karishma Solanki said in a June report. — Reuters

GROUND REALTY
Steely Strength
Quality of steel used in RCC work is as important as that of cement. A structurally sound structure with average finishing work is any day better than a weak structure with expensive finishing, writes JAGVIR GOYAL. Here’s how to make the right choice

IN addition to enquiries about cement, house builders often desire to ask about the kind of reinforcement they should use in RCC work. Locally available brands are convenient to choose and the house builder tends to buy them when the dealer quotes a number of examples of other buyers in the area.

Quality of steel used in RCC work is as important as that of cement. These two materials add strength, stability, durability and earthquake resistance to a house and their quality can’t be compromised. Attractive finishing work on a weak structure is of no use. The way a healthy person beams more than an ill person wearing lots of make-up, a structurally sound structure with average finishing work proves better than a weak structure with costly finishing work. That’s why full attention should be given to the quality and type of steel. Equally important is making correct use of it. Here are some guidelines:  

• Types of steel: Many types of steel is produced these days. This includes plain steel called MS Round or High Yield Strength Deformed (HYSD) steel, popularly called Tor steel. Tor steel is, in fact, the trade name of HYSD steel produced by Tata. It became popular as it was the first HYSD steel to arrive in the market. Mild steel bars are manufactured as per IS 432 while HYSD steel is as per IS 1786. Further, Thermo-Mechanically-Treated (TMT) bars should be preferred. TMT bars are HYSD bars only but manufactured in an advanced technological manner. These bars have a soft core but hard outer surface, have same strength as HYSD steel and take better stress before yielding because of the soft core. TMT Bars produced by SAIL or Tata are known as SAIL-TMT or TISCON-TMT. Bars produced by RINL are called REBARS. 
  
  
• The right steel: For beams, columns and slabs, prefer HYSD steel over round steel as the former is much stronger than plain or round bars and helps in economising over the cost of steel. Weight- wise, both are equal. Weight of 12 mm diametre round or Tor steel is same but a 10 mm dia Tor steel bar has almost same strength as 12 mm plain steel bar. Similarly, strength of an 8 mm diametre Tor steel bar is almost equal to that of 10 mm diametre plain steel bar. 
  
  
• Wherever use of 6 mm diametre steel has been shown in the design and drawings, plain or round bars are to be used as 6mm diametre HYSD steel is not produced. Also, for the stirrups to be put in beams, mostly, plain bars are used as these are easy to bend in comparison to Tor steel. 
• 
  Choosing the grade: Steel also has grades. Mild steel has two grades — Grade I (Fe 410-S) and Grade II (Fe 410-O). In earthquake resistant buildings, use Grade I steel. HYSD bars have three grades — Fe 415, Fe 500 and Fe 550. Though Grade 500 and 550 have higher tensile strength, one should use Grade Fe 415 only if the building is located in earthquake-prone zone. Avoid mixing different grades of steel in the same building. One grade should be chosen and used.     
• 
  Brand matters: As the quality of reinforcement steel plays a very important role in determining the life of the building, always try to buy steel produced by a reputed manufacturer. Visually, all steel lots look the same but quality wise these are very different. Presently, there are three top manufacturers of steel in India: Steel Authority of India Ltd (SAIL), Tata Iron & Steel Company (TISCO) and Rashtriya Ispat Nigam Limited (RINL).
• 
  Try to buy steel manufactured by one of these three companies. RINL steel bars are also called Vizag bars as these are produced in Vizag. These companies live on their reputation and have inbuilt laboraTory arrangements to check the quality and strength of the steel produced. Steel lots are sent out for sale only after making stringent quality control checks. The steel manufactured by these companies is costlier in comparison to locally produced steel or that by other manufacturers. 
• 
  Many other brands such as Kamdhenu and Jyoti are available in the market. These brands are cheaper than TISCO, SAIL and RINL steel. Cost difference looks attractive to the buyer but before choosing these brands, the buyer should consult an engineer. The engineer can tender best advice after checking the drawings, the spans of beams and slabs and other facTors whether one can go for steel other than that of Tata, RINL or SAIL. Locally produced steel may not be as strong as standard steel. Sometimes, it is produced from scrap. Therefore, it is better to seek expert advice. If a large quantity of steel is to be purchased, one should draw samples of such steel and get it tested for strength and other facTors before placing order for its supply.  
• 
  Look for test certificate: When a large quantity of steel is to be purchased, the seller should be asked to show the test certificate of the lot being sold. These test certificates are supplied by the firms and are half printed and half embossed to avoid any tampering. These show the lot number being sold to you, the diametre , strength and weight of steel. It is easy to know the standard weight of the steel bars of a particular diametre . One should compare the weight of steel shown in the test certificate with the standard weight to know whether the steel is under weight or over weight. The yield stress of steel should also be checked. Yield stress is given in N/sq. mm. Its minimum values are different for different grades of steel. The tensile strength of steel should be more by 10% to 6% of the yield stress of steel, depending upon the grade of steel.  
• 
  Trademarks are vital: Reputed manufacturers put their trademarks on the steel bars. Look for them or ask the retailer to show them to you to confirm that you are buying genuine steel only. Tata Steel puts embossed marks on its bars. SAIL is yet to start such marking. RINL also puts its insignia on the bars. Reputed companies use color code to identify the grade of their bars. For example, SAIL puts yellow color on Fe 500 TMT bars and green color on Fe 550 TMT bars. Fe 415 bars of SAIL carry no color. It should be noted that colour coding is not standard but differs from company to company. RINL puts blue color on its Fe 415 bars and blue-green color on Fe 500 bars. It doesn’t produce Fe 550 bars.
• 
  Check the weight: While finalising the steel lot, check the weight per metre length of the steel. Steel produced has variation in diametre . Steel categorised as 8 mm diametre may in actual be 7 mm diametre and so on. This problem generally occurs in low diametre s — up to 16 mm. Though lower diametre will not cause a financial loss as steel is sold by weight but it may ask for a review of the structural design. Underweight or overweight steel should be avoided if its weight variation is beyond a maximum tolerance of 7 per cent in small diametre s of steel, say up to 10 mm. For diametre s up to 16 mm, a variation in weight beyond 5 per cent should not be accepted. For still higher diametre s, the tolerance in weight variation should be limited to 3 per cent.
• 
  Check the lot: Always choose a lot that is free of rust. Steel is supplied in straight as well as coiled form. Prefer straight steel bars. Coiled steel requires more labour to straighten up.      

This column appears fortnightly. The writer is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com 

Work out right quantity

CALCULATE the right quantities of steel required for each diametre. To avoid wastage, take the help of an engineer who may bring saving in steel by adopting cut length method and by deciding the lengths of bars to be purchased. He may work out lengths of bars for different portions of the building and combines them to check the most suitable lengths that will generate minimum scrap. For practical purposes, the diametre should also be kept low.

You are entitled to I-T rebate

Q. I am a staff nurse working in Punjab Health System Corporation and living in government accommodation. I have taken a home loan. Can I take income-tax rebate for home loan (principal and interest amount)? Please clarify.

— Pomila

A. Yes, you are entitled to claim a deduction under Section 80C of the Income-tax Act 1961 (the Act) in respect of the repayment made towards the amount of loan raised for the construction/acquisition of the house provided the loan has been raised from either of the following sources:

the Central Government or any State Government

any bank, including co-operative bank

the Life Insurance Corporation

the National Housing Bank

any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of residential houses in India.

any company in which the public are substantially interested or any co-operative society where such company or cooperative society is engaged in the business of financing the construction of houses

employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act

employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society

The above deduction is covered within the limit of Rs. One lakh provided under Section 80C of the Act. The amount of interest payable on such loan would be allowable as deduction under section 24 of the Act while computing income from house property. 

Amount not taxable in hands of legal heirs

Q. My father had sold a house some time back. He had contracted to buy another house that was under construction. In accordance with the requirements of the Act, he deposited the amount of capital gain with a bank under capital gain scheme account. The payments to the builder were being made as per the stipulations in the agreement entered into with the builder. Unfortunately, my father died in May this year. The amount lying in the capital gains scheme is likely to be refunded to me being a nominee named in the records with the bank. Will the unused amount refunded to me be liable to any tax?

— Dinesh Kumar

A. According to Circular no. 743 dated May 6, 1996, issued by the Central Board of Direct Taxes, the amount so received is not taxable in the hands of the legal heirs as the unused portion of the deposit does not partake the character of income in the hands of the legal heirs as the same is a part of the estate devolving upon the legal heirs. In view of the above, you would not be liable to pay tax on the unused amount refunded to you by the bank. 

You can remit balance amount to UK

Q. I had purchased a house about 10 years back in Dehradun for a sum of Rs 5 lakh. I sold the same in June this year for Rs 30 lakh. Will the capital gain earned on such plot be a long-term one and taxable at the reduced rate? Will I be entitled to the indexation of the cost on the basis of the income-tax provisions after the payment of tax? Can I remit the balance amount to my daughter who is settled in UK?

— Alok

A. The capital gain arising on the sale of plot in the case given in the query will be treated as a long-term capital gain and would be taxable @ 20 per cent plus applicable surcharge and education cess. You would be entitled to the benefit of cost inflation index for the year of acquisition and the year of sale, respectively. In accordance with the regulations framed by the Reserve Bank of India, a resident individual is allowed to remit a sum of $ 2,00,000 per year. You can, thus, remit the balance amount to UK without any difficulty. 

There shouldn’t be a tax liability

Q. I owned a building, part of which has been taken by the Municipality for widening the road. The compensation that has been received for the part of the building taken over by the Municipality is not even sufficient to make the building habitable. I have to spend much more than the said amount to make it habitable. What would be the tax treatment of the compensation so received?

— Som Dutt

A. The amount invested to make the house habitable less the amount received as compensation should be taken as additional cost of the building. There should not be any tax liability at this particular point of time. This additional cost should be taken into consideration as and when the building is sold or transferred.

The above treatment is not based on any provisions of the Act but it seems to be the only alternative on the basis of the facts given in the query. 

Legal transfer not essential

Q. I sold a house and invested long term capital gain in the acquisition of another house. I took the possession thereof within a period of three years but the property could not be registered in my name. The assessing officer is denying benefit of section 54 as the registration had not been done in my favour within the period of two years. Is this stand taken by the assessing officer correct?

— S.C. Chawla

A. Section 54 of the Act does not envisage a legal transfer and, therefore, the holding of a legal title within a period of two years is not a condition precedent for allowing the benefit of the provisions of the aforesaid section. You may bring to the attention of the assessing officer a decision of Bombay High Court in the case of CIT vs. Dr. Laxmichand Narpal Nagda (deceased). The decision is reported in Income Tax Reports on page 804. The Bombay High Court has held that a legal transfer is not essential for allowing the benefit under section 54 of the Act.