REAL ESTATE |
|
TALE OF TWO CITIES
REAL TALK
Energy-efficient elevators
Indians take chunk of
property sales
|
TALE OF TWO CITIES
As far as geographical features are concerned, Jammu and Jaipur are two vastly different cities. While one nestles in the lap of the mighty Himalyas, the other is a virtual oasis in the midst of the Thar desert. But there are some common factors, too. While one is the winter capital of Jammu and Kashmir, the other is the state capital of Rajasthan. Both the cities blink radiantly on the radar of tourists — one for its temples and as a stopover for Vaishno Devi shrine, and the other for its royal grandeur in the form of magnificent palaces and colourful bazaars. Interestingly, the realty sector, too, is witnessing a similar sentiment in these two cities, as these are the perfect landing grounds for those willing to invest and wait for hefty profits. Mega City Jaipur is being projected as an alternative to Gurgaon and as one of the 10 mega cities of future. As it is strategically located (four-five hours’ drive from New Delhi) on Delhi-Mumbai highway, Jaipur can be to Delhi what Pune is to
Mumbai. While the city’s population is set to cross the 40 lakh mark by 2011, the availability of educated and skilled manpower adds to its potential. Direct air connectivity to a number of countries, the presence of reputed Indian corporates and MNCs, ring road, and proposed Metro project have also contributed to the enormous growth that the city has seen in the past few
years. COST FACTOR Meanwhile, with the Urban Development and Housing Department (UDH) ready with new bylaws to regulate the construction of buildings in the city, buying a house or booking a commercial space is all set to get costlier in the coming days. According to experts, if the proposed rules are approved by the government, builders will have to “pay more to construct more” in the Jaipur Development Authority (JDA) region. “It would trigger an escalation in construction costs, and this hike will ultimately be passed on to the customers.” Also the township projects will have to bear the cost of massive water recycling plants that have been made mandatory under the proposed bylaws. Among other key features of the proposal are: revised floor area ratio (FAR) for residential, commercial and institutional buildings; ceiling on the construction of upper story in residential plots; commercial activities allowed on both sides of Metro route. The UDH department has decided to increase the upper limit of FAR, a standard measurement denoting construction area, in residential, commercial and institutional buildings. It will slap a heavy fee on the builders who would like to use the additional construction space as per the revised limits, which will certainly trigger escalation in construction costs.
Development of the New Jaipur City on Agra road, Metro project, Mono Rail, BRTS world class city, all this and more is happening in Jaipur, largely known for its historical heritage. The Pink City has witnessed enormous development over the past few years and with it the realty sector, too, has seen unprecedented growth. With a number of new projects lined up and escalation expected after the implementation of new bylaws (see box) this is the right time to invest for those wanting to strike gold in the desert.
Ajmer Road, Jagatpura, Narayana Vihar, Tonk Road, Sirsi Road, and south Jaipur are among the hot destinations for residential property, and a number of housing projects have come up here in the past few years.
On Ajmer Road, the Vatika Group blazed the trail for real estate development in Jaipur with its 800-acre Infotech City project. It is a self-contained integrated township with shopping complexes, a five-star hotel, recreational centre, health club, medical facilities and schools.
Similarly, Omaxe Limited, Sun City Builders, Panchsheel Colonisers, Era Group, and Melange are offering integrated townships of international standards with residential plots, apartments, expandable villas, hospitals, commercial complexes and schools.
At present, a three bedroom-hall-kitchen (BHK) apartment at Jagatpura, Ajmer Road, Sirsi Road and Sikar Road is being sold at Rs 2,300 per sq ft.
With improved market sentiment, the Jaipur Development Authority (JDA), too, is back in the reckoning as the investors are back to bid for the land available with the authority. The JDA has put its reserve price of land auction at Rs 12,000 per sq m for Narayana Vihar and Rs 10,000 per sq m for
Jagatpura.
The real estate market has recently hit the road to recovery after a spell of recession. Experts attribute the rise in property prices to the shortage of ready flats, rebound in stock market, and buyers pressing panic button as developers jacked up prices. The zooming trend in the market has forced the “desperate middle class” to buy property in residential areas like Mahindra SEZ, Nindad, Phulera and
Chaksu.
Metro factor
The Metro rail project has also spurred realty prices in the Pink City. Property prices along the route of the proposed Metro project have already gone up by 10 per cent, while experts say an increase of around 25 per cent is expected in land prices in these areas once the project gets started. For instance, a residential plot in Siddhartha Nagar is priced for Rs 20,000 to Rs 50,000 per sq m while the same is available in Malviya Nagar for Rs 35,000 to Rs 40,000 per sq m. The prices in Mansarovar have also shot up from Rs 20,000 per sq m to Rs 25,000 per sq m. All these places fall in the vicinity of the proposed Metro track. Apart from these areas, New Aatish Market, Vivek Vihar, Shyam Nagar and Sodala stations, too, are expected to emerge as major business hubs due to better connectivity and parking facilities that will be developed in view of the Metro project. The government has opened up another front for real estate market with the announcement of New Jaipur City that would come up on an area of 105 sq km on the other side of Jhalana Hills on the Jaipur-Agra road. A section of realtors has already started looking for prospective sellers, though the proceedings under 90-B and change of land use have been stopped. The JDA has banned five activities in the earmarked area for the new city project, but there is no ban on the sale and purchase of land. Leading real estate groups, however, feel that the state government should take immediate steps to make the plan materialize, so that the area doesn’t witness haphazard construction activity.
Hotel industry set for boom
With the Commonwealth Games round the corner, and Jaipur, being part of the “Golden Triangle”, is all set to witness tourist rush this year. As many as 2,000 more rooms are being added to the inventory in the three-star to five-star category. Foreign players like Amanda, Satinwoods, Banana Tree, Hampton Inns, Hilton and Mandarin Oriental are considering the city for setting up new hotel projects. The Lemon Tree has already started work on its budget hotel and it is likely to be launched this year. Hyatt, too, has Jaipur on its priority list for setting up its resort. A local builder is also coming up with a 450-room hotel on Ajmer Road. Also in the pipeline are hotel projects of Red Fox with 183 rooms, Fairmont with 248 rooms, The Lalit with 200 rooms, Bird Group with 120 rooms, Inter-continental with 250 rooms, Fern Ecotel and Royal Orchid.
Eco-friendly
projects
With groundwater level receding at an alarming rate, the city builders are planning eco-friendly residential and self-sustainable buildings that would focus on water recycling. A majority of the upcoming residential projects are being equipped with devices that not only recycle water but also treat sewer water. The treated water could be used for gardening and other purposes. These residential buildings will have rainwater storage capacity for a year. Nishant Arora, a builder, said, “We are taking all measures to preserve rain water and are also installing water recycling devices in the buildings. We don’t want even the bathroom water to be wasted and will treat it so that it can be used for gardening.”
|
Buy it, Shut it and Forget it
This winter capital of Jammu and Kashmir, also known as the ‘City of Temples’, attracts lakhs of visitors every year. The city has population of about 12 lakh, and many more people come to the city from remote areas to work. With property prices remaining unaffected by recession, an investment in property in Jammu is considered to be the best option. But at the same time, most of the investors seem to be having long-term goals in mind, and are willing to wait to make a kill at the right time, when the prices rise considerably. That is the reason why most investors in the area are following the policy of “buy it, shut it and forget it”. ‘Buy it’ means the investors or real estate agents have bought the property, which includes showrooms, commercial booths and flats in huge numbers because of recession or availability of land at low prices over the past few
years. ‘Shut it’ means after purchasing the land, no one is ready to open it for any commercial purpose because of the effects of
slowdown. ‘Forget it’ means though a huge amount has been invested in the property, they have forgotten their investment. Most of them believe in selling it at the right time, whenever it comes. The only commercial complex in the city is a telling example of this policy. The Jammu Development Authority (JDA) developed a commercial complex — Bahu Plaza — in 1999, and most of those owning shops in the plaza have kept these vacant in the hope of getting a good price. The lone commercial complex of its kind in city, it contains the main stores of international brands like Spykar, Nike, Mobile stores, bookstores, cafés, banks and insurance firms. Still the occupancy is less than 50 per cent here. The five-storey commercial complex with a basement has a huge number of shops with the facility of elevators. The then Chief Minister, Dr Farooq Abdullah, had inaugurated this commercial complex in 1999, and presented it as a gift to Jammu
residents. The commercial complex is situated in the heart of the city on Kargil Shaheed Road, adjacent to the railway station, University of Jammu, Jammu and Kashmir police headquarters, and is at a distance of 2 km from the bus stand. All other important offices, including those of the BSNL, the Reserve Bank of India, and the CBI, are also close to it, making it centrally located. But still the occupancy rate in the complex is low because most of the showrooms had been bought for investment purpose and the owners are not utilising these for commercial purpose.
Gurnam Singh Oberoi, one of the the first commercial-booth holders in the complex in 1999, said, “I pay just Rs 910 to the JDA as monthly rent and have deposited Rs 5 lakh against the lease of 40 years in instalments.” He agreed that the complex had ample space for car parking and all other facilities, but many owners, who had got the showrooms and booths on lease, were not ready to give these on rent. “Actually they are waiting for the prices to shoot up and are hoping to get a good price in the years to come”.
“If the price of land is rising during recession, then you can well imagine the extent of profit after recession,” said, Deepak Sharma, who has a showroom in the complex, while giving the reason for not selling his showroom.
High rentals are another factor behind poor occupancy in the complex. “The rents have shot up. These are almost 150 times more than the previous years and this has proved to be a major reason for many showrooms and booths remaining vacant in this commercial complex,” said, Harjit Singh, an established businessman. But no one seems to be too troubled by the fact as the hope of realty boom and good profit is making the investors sit tightly over their investment here.
|
|
Tuscan City
New Delhi:
TDI Developers has announced the launch of a thematic Rs 1,200 crore Tuscan City project in Kundli at a distance of 2.5 km from the national Capital. The project, spread over an area of 53 acres, is expected to be ready for possession by 2012. The project is inspired from the scenic grand Italian Tuscan theme, which is known for its green lush landscape and artistic infrastructure. With this unique concept, the arena connects style to life, and is the first-of-its-kind venture in the themed habitats sphere of India. The city will have all the modern amenities spread over more than 53 acres and will be nestled in TDI city Kundli; the 1600-acre model integrated city with all civic amenities like recreational clubs, hospitals, and schools. Kundli is coming up as the next destination for quality living at affordable rates for people in and around NCR region, being on the national highway and having close proximity to national capital is witnessing strong demand in real estate sector owing to its proximity to the capital in the form of increased opportunities for economic and infrastructural developments. Speaking on the launch of the TDI Tuscan City, Mr Kamal.Taneja, MD, TDI Group, said, “Kundli being connected to the proposed KMP (Kundli, Manesar and Palwal Expressway) and KGP (Kundli, Ghaziabad Palwal expressway) will give a boost to its economical worth and similarly. The social sphere will also be strengthened by several industrial parks and the 5000 acres Rajiv Gandhi Educational City in vicinity” The first phase of Tuscan City will comprise of independent floors with 3 BHK, 3BHK+ study, 4th Floor with exclusive terrace. The starting prices for independent floor is Rs 21.5 lakh. — TNS
3C to develop housing project
New Delhi: Real estate developer The 3C Company will develop an affordable housing project over 41 acres of land in Noida with an outlay of Rs 2,400 crore. Located in Sector 110 of Noida, Lotus Panache, the “green” project, would be jointly funded by realty-focused private equity fund Red Fort Capital, company’s Director Vidur Bharadwaj told reporters here. “Our recently-launched green residential Project – Lotus Boulevard, is a huge success, where we sold over 2,200 units in less than six months. Our latest offering, Lotus Panache, provides a new opportunity to meet this burgeoning market demand,” Bharadwaj said. Lotus Panache would be earthquake-resistant. The company has already applied for a green certification from the Indian Green Building Council. The project will house facilities for sports, education, healthcare and
recreation. — PTI Ansal project in Yamunanagar
New Delhi: Real estate developer Ansal Housing said it has launched a township project, Ansal Town, in Yamunanagar spread over 60 acres of land. “Ansal Town is spread over approximately 60 acres and has been planned to be a self-sufficient township to provide a quality living experience,” the company said in a filing to the Bombay Stock Exchange. The project is expected to have a turnover of approximately Rs 125 crore and will be completed over the next three to four years, it said. It would have in-house amenities like a shopping mall, school, swimming pool, gym, badminton court and children play area among others. “The company will now undertake all the development and marketing work for the project,” it said.
— PTI
Eco-Mughal Garden
New Delhi: Real estate developer Eco- terrain Projects Pvt. Ltd and ANS Apartment Pvt. Ltd have launched of an eco-centric development project “Eco-Mughal Garden” in Sector Pi- I & II at Greater Noida. The project is a joint venture of ANS Apartment Pvt. Ltd and Eco- terrain Projects Pvt. Ltd. The main idea behind launching this project is to build a zero carbon emission and eco-centric development project by using special generators, machinery and ecological sanitation. Spread over 4.2 lakh sq. feet, this residential project township is located in front of Expressway pass and close to Burari Railway Station. The total worth of this joint venture is around Rs 200 crore. Total number of units is 500. All flats have Intercom facility, which is connected to the security room and administration office. Eco Mughal Garden offers four sides open Studio, 2BHK, 3BHK + Study Room flats in 656 sq. ft, 1125 sq. ft and 2,250 sq. ft area, respectively. Price of the flats is 2,490 per sq. ft and company is giving an inaugural discount of Rs 100 per sq. ft. The project will be completed by March 2012. Speaking on the newly launched project Mr S.K. Jain, CMD of Eco-Terrain Projects Pvt Ltd said, “ Our core approach is based on the idea that all the ecologically responsible aspects of the building are ‘made visible’ and that as part of its role as an eco-habitat. The residential project will be a complete self sustaining eco-system with world class amenities and infrastructure”. — TNS
Lifestyle Prime
kaRnal: CHD Developers Ltd, one of the leading real estate developers in North India has announced the launch of Lifestyle Prime, premium independent floors at CHD City, Karnal, Haryana. Lifestyle Prime is the successor to the extremely successful CHD Lifestyle, and Lifestyle Grand, projects. The construction for both CHD Lifestyle and Lifestyle Grand has already been commenced ahead of schedule and the same is expected for CHD Lifestyle Prime, which offers luxuriant and spacious independent floors available in two different floor area options of 1042 sq. ft. and 1145 sq. ft. priced at Rs 14.55 lakh. CHD Lifestyle Prime is an integral part of CHD Developers’ Rs 500 crore mega project, CHD City at Karnal, Haryana, where the total land area under development is over 225 acres. CHD City will also feature facilities at its clubhouse, which will include swimming pool, lawn tennis courts, badminton courts, pool and billiards, health club, steam, sauna and coffee shop.
— TNS
|
GREEN HOUSE
We had given you some tips about participation in gardening competitions. One such competition was held in Chandigarh recently. Almost all the entries were awesome and the competitors showed skill and maturity. Judging such contests is an onerous task as there is very little difference in the skill and creativity used in all the enteries, and every gardener, is a winner in his own right, but there are a few small observations that make all the difference between getting a prize and getting just verbal appreciation. Let me explain some of the gardens 9without naming the competitor) to help all those planning to participate in such contests in future. This is for all those from this region who have done it or may do so in near future as nearly 30 to 40 gardening competitions and shows are held in this region each year. The best garden is the one that looks inviting and you ‘have to’ go till the last point to experience the glory of nature. One such garden that participated in the “small gardens category” was the one that we visited on the PGI campus. The small garden had all the features. The good quality lawn was dotted with excellent quality winter annuals planted with extreme care and precision so much so that not even a single leaf from one bed drifted into the other. The winter annuals had been planted in a way that the taller ones were planted in real beds. The small garden had almost all the elements — the statue, lighting, creepers, shrubs, water feature etc. The small water pond had various aquatic plants and fish, too. There were cacti and succulent beds, too, having small specimens fitting well in the garden. The inclusion of all these factors had been done so deftly that nothing seemed out of place or imposed. The garden rightly deserved the first prize that it got. Fortnightly Alert Do not try to embed plants or grass patches in lawns at the last minute. It gets revealed and you lose marks. One of the institutes we visited in the middle of the city, a bed of petunia was ‘embedded’ with two patches of petunias removed from pots. There was a distinct difference as the profusely flowering patches of those two potted plants were the only flowering plants in the bed and these, too, were sagging. They attracted all the attention. Roundabout glory
Chandigarh is dotted with roundabouts and rotaries that are the city’s “green islands”. These are maintained with great effort as the plants here are reared under great pollution stress. One of the known and once glorious roundabouts in one of the northern sectors was, however, disappointing. The edge plants grown to make features were unevenly trimmed and there were also telling gaps. The temporarily winter annuals planted for the occasion were sagging and the quality of the plants was also not good. Another roundabout, in a southern sector that receives visitors from Delhi side was well maintained, but the edge with hard bricks all around was disturbing, giving a hard look to the whole place. In contrast, the one that won the prize had colourful lowly cut edge of various plants or dwarf winter annuals that added to the colour and beauty of the area. The features created with annuals and perennials were also very attractive.
Institutional grandeur
Various institutions in the city have learnt to raise excellent and vast expanses of lawns that they manage to keep green all through the year as is evident from their appearance even after an excruciating winter. Any weeds and you lose marks. One of the institutes that we visited had a poor quality lawn and the explanation offered was that there was a dharna and the employees did not let the lawn to be watered for quite a few days. The lawn also had plenty of weeds. Another institute in a southern sector had river stones, tastefully made dustbins, pebbles, stones and institute name very well inscribed with well manicured edge plants. There were good quality winter annuals, at their prime and features in the corners of lawns. A prize-winning entry indeed. This column appears fortnightly. The author is the Senior PAU Horticulturist in Chandigarh and can be reached at
satishnarula@yahoo.co.in
|
REAL TALK
Harish Gupta, promoter of the Trishla Plus Homes at Peer Mushalla (Zirakpur) is making big strides in the real estate sector in Chandigarh’s periphery. Besides successfully executing a housing project at Peer Mushalla, the realtor is in the process of launching several other projects, including a shopping mall on the Zirakpur-Shimla highway, a hotel project on the Zirakpur-Patiala road and a housing project in Zirakpur. In an interview Gupta hinted at major real estate boom in 2010 while warning that the end users, not the investors, would be the ultimate gainers. Q What has been the impact of recession on this sector? A The impact of the worldwide recession was not as pronounced in India as it was in other parts of the world. Though short-term investors did not mint money, as was the case in the pre-2005, the end users and long-term investors were able to garner substantial profits on the property investments. Q With worst seemingly over for the realty sector what is do you foresee for the sector? A With the sector passing through correctional phase in the past five years, the real estate boom is round the corner. In fact, past experience has shown that the market witnesses boom every five years. The last boom lasted till mid-2005 and the next is about to begin bringing cheer to the property buyers. It is best time to buy property. Q What are your views on the property scenario in Chandigarh’s periphery? A
With people-friendly bylaws and architectural controls, Chandigarh’s periphery is the area of immense potential. Strategic locations, state-of-the-art amenities and pocket-friendly prices as compared to the tricity of Chandigarh, Mohali and Panchkula are already making Chandigarh’s vicinity the new destination for the realtors, investors and end users. Q
How do you gauge the housing scenario in India? A The housing sector is growing by leaps and bounds in India. Besides shelter, the property gives assured income making it an all-time investment preference. In fact, realty sector would continue to be recession-proof in India given stringent mortgage laws and the ever-increasing demand. Income tax sops and investment opportunities in this sector would draw many more investors. Q How can we make real estate sector transparent and hassle-free? A
In the backdrop of archaic laws governing the realty sector in India, the bureaucracy wields unbridled power. There is an urgent need to introduce a single-window system on the pattern of the industry for various clearances related to this sector.
The writer can be contacted at psharma@tribunemail.com
|
real view
A lot of concern has been expressed of late about the revenue “draught” in the real estate sector in Punjab, and a number of reasons have been mentioned for this. A look at the realty scene reveals that the government itself has a major role in plugging the inflow of revenue from the sector due to some of its arbitrary and ill-conceived policies. There is a need to relook certain policy measures if revenue earnings from this sector have to be increased. The government should promote smaller townships so that the projects are completed in lesser time. This will benefit not only promoters/developers but also the government, as this will generate much more revenue for the government. On an average, the government gets around Rs 10 lakh per acre as revenue in the form of licence and other fees in a land transaction. But with the successive governments, especially in Punjab, putting a ban on small colonies measuring up to 20 acres, revenue worth hundreds of crores has been lost as hundreds of projects are lying pending with the Urban Development Authorities all over the state for the past three years. The number of small projects is much more than that of the bigger projects. Thus by banning smaller projects, the government actually loses considerable revenue. At the same time many of the mega projects that are being developed as “townships” have failed to do justice to the investors. A majority of such projects have failed to develop even to their 30 per cent capacity. The developers have booked lands up to 600 to 700 acres but none of them has got 100 per cent approval for the area said to be in their possession. Thus the government stands to lose revenue worth crores. The fate of projects launched by “real estate giants” of the country like the ones coming up on the Banur-Landran road in the Mohali Extension plan, is a good example of this fact. These projects were launched with much fanfare eight years back, but till date nothing good has come up, and these might take another three to five years to develop to make the place habitable. The hope of having good roads connecting these sectors to the main Mohali sectors like 67 to 69, too, seems to be dim due to the reluctance on the part of farmers, who do not want to part with their land that is required to be acquired by the government authorities to lay these roads. So the only road available to reach these sites is the one via Sohana to Landran, which is very narrow and congested. It also means that one has to cover a distance of 10-13 km to reach the townships rather than the 5 km distance mentioned in the project brochures. On the other hand, the concept of township means the promoter/developer has to fulfil several community-living obligations. They need to have basic services like a community centre, school, college, hospital, commercial markets etc but few of the mentioned projects have provided these, thus defeating the very concept of township projects. Another major factor for low yield of revenue from real estate sector is the wrong auction policy of the Punjab Urban Development Authority (PUDA). A recent auction held by PUDA was a failure as there were no takers because of the high reserve price of residential properties (we have already discussed in our previous article dated Feb 6). Even the commercial properties got low bids. As such PUDA had to withdraw the said sites put on auction. PUDA could earn just Rs 25.82 crore as against the total reserve price of Rs 23.87 crore in their first auction in 2010 which is far less then last year’s auctions. Mindless hike of the Registry fee is also a factor which is holding back purchasers to go in for mutation deeds. In 2008 the Registry fee for flats was Rs 508 per sq ft, which has been increased to Rs 2,250 per sq ft and has been enhanced by another 10 per cent once again without any justification. Similarly, the discrimination of rates between original allottees, re-allottees and second allottees in name of Collectorate rate, Original allotment rate and First allottee revenues is also discouraging purchasers to get the registry done. Most of them prefer to go for Agreement to Buy leading to substantial loses to the government. The government needs to look into this once again if it wants to keep the flow of revenue from the real estate sector intact and healthy.
|
Energy-efficient elevators
Otis India announced the launch of its environmentally friendly, space-saving GeN2 elevator system for India’s residential and commercial markets. The GeN2 Comfort system with its compact, machine-roomless design enables architects greater design flexibility while increasing rentable space. In addition, the highly efficient system greatly reduces energy consumption thereby allowing building developers and owners the ability to manage their properties more economically. Pierre Dejoux, president, Otis South Asia Pacific and Gulf Area, said, “This innovative green elevator system will be produced at our world-class manufacturing facility in Bangalore, enabling us to efficiently meet the growing needs of the Indian market.” The new GeN2 Comfort elevator is best suited for buildings that are up to 45 meters in height. The elevator operates at 1 meter-per-second and is available to meet a wide range of passenger capacities from five passengers (340 kgs) to up to 15 passengers (1020 kgs). The GeN2 system replaces conventional steel ropes with smooth, polyurethane-coated steel belts, which are up to 20 percent lighter. Since the belts are highly flexible, they have a much smaller bending radius, enabling Otis to incorporate a compact machine that is up to 70 percent smaller than a conventional machine. By incorporating ReGen™ technology, the GeN2 elevator reduces energy consumption by up to 75 percent compared to conventional systems without regenerative drives. ReGen drives feed energy usually lost during braking back into the building's internal electrical grid, where it can be used by other loads or users connected to the same network such as lighting. The GeN2 system is also cleaner for the environment as the flat belts and machine do not require any additional lubrication. In addition, the GeN2 system delivers outstanding reliability. Its long-lasting coated steel belts, smooth crowned sheaves and reduction of moving parts in the machine have dramatically reduced wear, increased durability and considerably minimized operational noise.
— TNS
|
Indians take chunk of property sales
Dubai:
Indian investors were responsible for the biggest chunk of real estate sales in Dubai in 2009, a new study has revealed.
The figures, included in FutureBrand’s Gulf Real Estate Study, showed that nearly a
quarter or 24 per cent of sales by value in the city involved Indian investors. The data, supplied by DUBAIFocus in association with Dubai Land Department, also reveal that UK property buyers finished second with their 21 per cent share. Investors from Pakistan and Iran grabbed the third and fourth spot with their 12 per cent and 10 per cent contribution, respectively. Reasons for investing in Dubai was dominated by buyer’s search for high quality construction and nearly 19 per cent of the respondents stated this as their highest priority. Innovation (15.6 per cent), building great places to live (6.8 per cent) and the ease to work with developers (6.7 per cent) were also seen as important factors by prospective buyers, according to the research. However, the need to deliver projects on time just got a 0.2 per cent rating from respondents. In November, research firm Proleads said some 1,845 projects worth a combined $ 657 billion were still active in the UAE despite the impact of the global slowdown. The study of the civil construction industry in the country showed 69 per cent of the total projects were ongoing (not cancelled or delayed).
— PTI
|
|
TAX TIPS
Loan from relative
Q. I plan to purchase property and have a few queries and seek your advice on the same: I want to take loan from relatives to purchase property. What process should I follow? And would this count for my home loan interest subsidy? Can such a loan be taken for property, which I purchase on General Power of Attorney {as Administration has currently stopped transfer of property in our city}? The seller wants a portion of premium to be paid in cash. As my source of money would be clean, is there any implication for the buyer in such a case? — Savita Sharma A. Your queries are replied hereunder: A loan from a near relative should be taken through an account payee cheque. A letter confirming the grant of loan indicating his Permanent Account Number should be obtained. If the loan is interest bearing, the letter should specify the rate of interest and terms of interest payment. The interest paid/payable on such a loan would be allowable as a deduction against the income from house property provided evidence in this regard is available and if so required can be provided to the tax department. The interest on loan taken for purchasing a property on Power of Attorney basis should be admissible as deduction under Section 24 of the Income-tax Act 1961, (the Act) against the income from house property provided the possession of the property has been taken by paying part consideration towards the purchase of the property. It would be advisable to make the entire payment by an account payee cheque for the purchase of the property. Even if the payment has to be made in cash by you, it should be recorded in the documents executed for the purchase of the property so as to form part of the total consideration payable for the purchase of the property.
Ownership issues
Q. 1. As per HUDA (Haryana Urban Development Authority) application forms, minors are not eligible to apply for a plot. 2. Does it mean that minors cannot purchase immovable property or parents and grandparents cannot purchase immovable property, say a house or agricultural land, in the name of minor sons or grandsons? 3. Does it mean that property (immovable) cannot be inherited and mutated in the name of minor son or daughter under the Hindu Succession Act 1956 and as amended thereafter? I think it is not so as per the Hindu Succession Act. What is the legal opinion? 4. Kindly refer to a judgement of Hon’ble High Court of Mumbai, which means that immovable property purchased by husband in the name of wife or sons and daughters (a natural corollary who have no income of their own (wife, son or daughter) is a Benami purchase category and in the eyes of law, it is the property of the husband or father as the case may be. If it is so then the property should be treated as property of husband or father as the case be and should be inherited by legal heirs of husband or father. Kindly enlighten by your considered opinion and legal positions in such cases. I know that the Income-Tax Department considers such property (house or agricultural land) as property of the husband or father — as the case be and income from house property is included in husband’s or fathers income (income from agricultural land is not taxable) as husband or father is treated as the virtual owner of the property and as such the same way should be treated as property of husband or father and be inherited by legal heirs under the Hindu Succession Act 1956, and as amended thereafter. There can’t be two different positions in two different laws/Acts dealing with the same property. What is your considered opinion and legal position? In my opinion property can be inherited by minor sons and daughters as per the Hindu Succession Act but property purchased by parents and grandparents in the name of minor sons and daughters (who have no income of their own) should be treated as property of parents and grandparents and should be inherited by the legal heirs of parents or grand-parents. — Jai Kishan Sharma A.
Your queries are replied hereunder: The ownership of a property purchased by the husband/father in the name of his wife/sons and daughters will depend on the source of money that has been utilized for the purposes of acquisition/purchase of such property. The Hon’ble Bombay High Court has rightly held that the source of funds having emanated from the husband/father, the purchase of property in the name of wife/minor son/minor daughter would be a case of Benami category. The provisions of the Income-Tax Act 1961, conform to the above principle in view of the deeming provisions of the Act for the purposes of taxability of income from such a property. The succession to such a property under the provisions of Hindu Succession Act 1956, should ordinarily follow the principal as contained in the Income-Tax Act 1961, and Wealth-Tax Act 1957, as such properties are deemed to be the properties of the persons from whom the consideration for purchase/acquisition has originated. However, there can be a different dimension where the amount required for the purchase/acquisition of the property has been gifted to wife and thereafter the property is purchased by utilising the gifted amount for the purchase/acquisition of the property. In such cases the inheritance provisions contained in the Hindu Succession Act 1956, should prevail as the provisions of the Act are deeming provisions which would apply for the purposes of the taxability of the income.
Investing capital gains abroad
Q. I have sold a residential property in India. As per the Income Tax Act, 1961, I am liable to pay tax on long-term capital gains. I get the exemption from this tax in case I purchase another property within a period of three years. I do not have any other residential property in India. Please clarify whether this exemption from long-term capital gains tax will be available in case I buy a residential property outside India, say in Dubai. If so, under which Section of the said Act? — Neera Dewan A. The capital gain arising on the sale of a residential house can be utilised for the purchase of another residential house within a period of one year before or two years after the date of such sale. The relevant section also requires that in case residential house is not purchased before the due date of filing the return, the amount of capital gain shall be deposited in a bank under the capital gains scheme account. The amount so deposited can thereafter be utilised for the purchase of the residential house within the period as stated above. The question with regard to the purchase of property outside India is not free from doubt as there are conflicting decisions on this issue. Mumbai Bench of ITAT in Mrs. Prema P. Shaw vs. ITO (100 ITD 60) has held in favour of this proposition on the basis of provisions of Section 54 of the Act. However, Ahmedabad Bench in case of Leena J. Shah vs. ACIT Baroda (6 SOT 721) has held that the benefit under Section 54F of the Act would be allowable only if the property is purchased in India. Section 54F of the Act applies to the utilisation of net consideration arising on the sale of capital asset other than the residential house towards the purchase/construction of a residential house. In Leena J. Shah’s case the Hon’ble Tribunal relied on the circular of CBDT issued at the time of introduction of the Section 54F of the Act which stated that the Section is being introduced to encourage construction of houses. No such circular exists in case of Section 54 of the Act. In view of these two conflicting decisions, the purchase of house in Dubai may involve litigation.
Conversion from residential to commercial
Q. My father had purchased a plot in 1962 in a residential colony in Jaipur. He constructed a residential building there in 1963. This continued to be used for residential purposes till 2006. In 2006 the concerned Development Authority decided to change the area, where this house was located, from residential to commercial. In view of the above we, the owners, decided to demolish the residential building and construct a commercial complex on the plot. Accordingly, a commercial complex was got constructed under an agreement with a builder. As per the agreement, the building of commercial complex was to be financed by the builder and the total space was to be divided in the 55: 45 ratio between the owners and builder, respectively. The construction of the complex was completed in May 2009. Two portions out of the owners’ share were sold in September and December 2009. My query is as to what will be the type of tax liability for the owners in respect of the consideration received towards the sale of the portions as above and how is it to be calculated. — Krishna Behari A.
The query raised by you does not have complete facts regarding the terms and conditions contained in the agreement on the basis of which the commercial complex was to be constructed by the builder. Assuming that the possession of the land was given to the builder at the time of entering into an agreement with him, the capital gain on the portion of land vested in him by virtue of the said agreement would be taxable in the year in which the possession is handed over to the builder. The profit from the sale of commercial space in September and December 2009 out of the owners’ share is likely to be treated by the Department as the business profit arising by treating the arrangement with the builder as an adventure in the nature of trade and taxable under the head ‘business income’. The long-term capital gain arising on the land having been assessed to tax at the time of entering into an agreement, proceeds from sale in respect of the owner’s share would be treated as profit because the cost of construction would have been born by the builder. It may be added that this scenario is based on the assumption stated herein above. The computation may differ if the term and conditions contained in the agreement entered into with the builder are on different lines.
Income from house
Q. I am a retired Punjab Government employee and 69 ½ years of age and getting pension. I have a house in Punjab and am living in a portion in that house with my wife. The
remaining portion of the same house has been rented out. The house has been financed by a bank loan. The total interest paid on this loan of this house is about Rs 1,70,000 per year. Can I show the deduction in my tax return 2009-10: a). of full amount of interest i.e. 1.70 lakh from the house property. b). of full amount of principal paid to the bank alongwith interest as EMI from my pension amount. Also please let me know how much amount of income exempted from tax for me during 2009-10 — Amarjit Singh A. Your queries are replied hereunder: Section 24 of the Act provides that where property has been acquired/constructed with borrowed capital, the amount of any interest payable on such capital would be allowed as deduction while computing the income from house property. Presently the deduction for a self-occupied house is limited to a sum of Rs 1,50,000. However, as the property constructed by you has been partly let out, you should be entitled to claim the deduction for the entire amount of Rs 1,70,000 which will be bifurcated on the basis of the portion occupied by you for your own residence and the portion which has been let out. It may be added that you are also entitled to the deduction interest, if any, payable on borrowed capital for the period prior to the previous year in which the property has been acquired or constructed. Such deduction is admissible in five equal installments. The first installment would be allowable in the year in which the property has been acquired or constructed. The deduction for the amount paid towards the repayment of the principal amount would be allowable within the limit of Rs 1 lakh specified under Section 80C of the Act. A senior citizen would be chargeable to tax in respect of the previous year ended March 2010 in case his total income exceeds Rs 2,40,000.
Sale of plot
Q. PUDA had issued to me intent letter of a plot in March 2001, but the matter remained in dispute and finally the higher judiciary gave its decision in favour of PUDA. The PUDA Authorities had issued allotment letters in January 2008. I have paid total amount — Rs 7,60000 — to PUDA in installments. Now I have sold the plot for Rs 15 lakh in September 2009. For the time being I have kept the said amount in SB account. At present two options are before me: That I purchase a flat in Chandigarh. Or a plot around Mohali. Kindly advise me regarding my tax liability towards capital gain/Income-tax. I am filing my Income Tax return regularly for the past 25 years. — Gurdev Singh Azad A.
The allotment of plot having been made in January 2008, its sale in September 2009 would give rise to a short-term capital gain. The amount of such short-term capital gain i.e. Rs 7,40,000 (15,00,000 – 7,60,000) would be included in your total income and the tax will have to be paid on the basis of the slab rate applicable to such total income.
Investing LTCG
Q. I was allotted a flat from co-operative society in Chandigarh in 2002. I paid its first installment of Rs 8 lakh from the year 1998 to 2001 and then spent a sum of Rs 2,50,000 on woodwork etc. in 2004. Then I sold the flat in 2008 for Rs 22 lakh. Now I had purchased a plot for Rs 8.25 lakh in joint name with my son, but full payment was made by me through cheque. I want to know is any type of capital gains tax applicable on me or my capital gain will be adjusted in the value of plot purchased by me? — Munish A.
You would be liable to pay tax on the capital gain arising on the sale of flat. The capital gain arising on such a sale would a long-term capital gain and taxable at the rate of 20 per cent plus education cess of three per cent thereon. Such a long-term capital gain would be exempt from tax only in case the long-term capital gain arising on the sale of a residential house is utilised for the purchase/construction of a residential house within the specified period.
The writer can be contacted at sc@scvasudeva.com
|