Face-saving option
With no buyers ready to invest, buiders in BBN area are renting out the flats, writes Ambika Sharma 

With little inclination among corporate executives to own a property in the Himachal Pradesh’s industrial hub of Baddi-Barotiwala-Nalagarh (BBN), the trend of renting flats seems to be saving the day for builders here.

Although developers of several major residential projects, including Amaravati, Monal, Hill View, Suncity, and Rishi Apartments, had embarked on these projects to sell flats to end users, but with very few buyers in sight, they are now on the lookout for tenants.

“Out of the 650 flats in Amaravati Apartments in Baddi, about 400 were sold out initially. But later the rest of the flats had to be offered for rent as neither the senior company executives nor the middle-rung employees were willing to invest in real estate in the area,” said Kulbhushan Aggrawal, MD of Amarnath Agarwal Builders Pvt Ltd. that has constructed Amaravati Apartments.

With almost six to seven per cent return, which is at par with fixed deposit accounts in banks, the renting out option seems to have caught the fancy of other builders as well.

As per the prevailing rates, a two-room flat is being offered for a monthly rental of Rs 3,500, while a two-bedroom flat with drawing and dining room is fetching a monthly rental of Rs 9,000. A 1,500 sq ft area three-bedroom flat can fetch a rental of Rs 25,000, making this a profitable venture for builders who have their hands full with vacant flats.

The inclination to invest in the BBN area had dwindled due to uncertainty about the development of the area as well as about the availability of jobs among company executives. They, therefore, hesitated from buying property here even though a three-bedroom flat is available for almost one-third of the price in the neighbouring Panchkula.

This uncertainty became more pronounced after the Central industrial package for the area expired in March this year. With several units already up for sale, and others having shifted the production of their value-based products to other incentive states, the company executives saw little job security here, and, thus all plans of investing in property were shelved by them.

“A three-bedroom flat was available for Rs 24 lakh in BBN, while this cost almost doubled when one went looking for a similar flat on the NH-22 in Amaravati Enclave, and its price almost tripled in Panchkula, where it was available for Rs 75 lakh”, confided Aggrawal. But this, too, failed to enthuse the reluctant investors.

The precarious property scenario had even forced those executives who had initially bought flats to either sell these at lesser prices or give these out on lease. Even diversification by some builders from offering flats to villas did not find … with top rung company executives who seemed averse to the very idea of settling down here.

Lalit Jindal, who had constructed Hill View apartments, while describing the new trend as the need of the hour, said, “Out of the total 240 flats here, almost 80 per cent flats had been sold. At least 30 to 40 of these have either been rented out or leased out.”

“Though the demand has seen a slight increase in the past few months, the abject lack of recreational facilities has played a spoilsport for the realty sector here. With neither schools nor entertainment zones, the BBN lacks the facilities to enable a company executive to make this his home,” added Jindal.

Though a couple of malls did come up here, with one of the projects hitting a disastrous end and the location of the other failing to find preference with the target segment, the BBN offers little to an outsider.

As another investor sums up, “A shopping mall could succeed if it receives a daily footfall of at least 5,000, but with the area failing to have that high percentage of that target group, its success appeares to be bleak.

With even commercial projects like City Square and Motia Plaza failing to sell office space, the idea of flats finding buyers seems very bleak.

Not only this, the bitter experience of the builders who have already sought of burnt their fingers in the projects in the area, has led many others to abandon their projects at places like Peer Stan and Khera. Many of the prospective buyers now prefer quality flats that have come up in areas like Zirakpur, Ropar, Kharar, Pinjore and even along the Baddi-Siswan Road. 

Welcome change
Rajmeet Singh

The much awaited need-based changes in the building bylaws by the Greater Mohali Area Development Authority (GMADA) have not only brought an upswing in the property prices, but also relief for hundreds of property owners who have had the Damocles' sword of resumption of their properties due to violations of the building bylaws hanging over their heads for quite sometime now.

Notified with effect from August 31, the need-based changes would enable the residents to meet their growing needs for more accommodation. The relaxations in the archaic laws have been allowed on the pattern of changes allowed by the Chandigarh Administration.

Vivek Partap Singh, the Chief Administrator of GMADA, said in the notification that the issue had been discussed in terms of living conditions, quality of space, air, light and ventilation based on the recommendations of the committee and representations from different quarters.

Explaining the implications of the need-based changes, Amit Marwaha, a real estate consultant said, "Need-based changes mean better living conditions and better price for property. Due to the violations, getting an NOC from the estate office was often a headache for owners. Moreover, most of the need-based changes allowed have already been incorporated in the houses. Now, it has been officially allowed".

As per the relaxations, an allottee can extend the front and rear balconies by 3 ft; the verandah on first floor of HE houses can be converted into a room; a 2.25 m-mumty (to cover the stairs) excluded from the height of a building above the second floor can be constructed; the kitchen in HIG houses can be extended or a 150 sq ft store/servant quarter can be constructed in the rear courtyard of houses.

One of the crucial decisions to increase the floor area ratio (FAR) for different sizes of houses would, however, require approval from the Secretary of the Housing Department. More FAR would mean that the allottee would have more covered area on the second floor, thus increasing the value of the property, said Shalinder Anand, another real estate consultant. For other need-based changes, the Chief Administrator is the competent authority to relax or compound the constructions under the Punjab Regional and Town Planning Development Act, 1995.

Relaxations allowed Where no intimation or approval is required from GMADA Residential plots: The height of mumty (required to approach the third floor through stairs) not exceeding 2.25 m is excluded from the height of building. Earlier, the mumty was included in the height of the building. Flats and independent houses constructed by PUDA: n The verandah on first floor of HE houses in Phase V, already constructed on pillars is allowed to be converted into a room. n The temporary sheds having roof of fiber/ polycarbonate on steel structure within the front courtyard is permitted for parking of vehicles for ground floor aloottees only. n Kitchen in the HIG houses in Sector 71 can be extended with the prior consent of the upper floor owners. n The 3'-0" roof projection through out the façade of the house in front and rear is permitted by extending end walls within the courtyard limits on all floors and with the prior consent of the upper and lower floor owners. Where prior approval is required from GMADA 150 sq ft or 40 per cent of the rear courtyard (whichever is less) can now be used to construct storeroom with toilet with RCC roof at nine feet height subject to condition that light and ventilation of the adjoining room would not be affected. The construction would have to be done with the back boundary wall in such a block system that four adjoining plot owners could carry out such construction in the same manner. This has been allowed for residential plots, flats and independent houses, H, HL, HM, MIG and HIG categories have been allowed. No construction above the storeroom with toilet is allowed. The plans for the purpose are to be submitted to GMADA for approval prior to construction along with structural stability certificate from qualified structural engineer.

REALTY BYTES
DLF projects in Shimla, Kasauli

The country’s largest realty firm, DLF, will invest about Rs 500 crore to develop three ultra-luxury housing projects in Shimla, Kasauli and Goa. According to sources, DLF will develop about 170 villas and 100 flats at these locations under a new brand, Sama. The company will also build two hotels at Kasauli and Goa.

The total investment on these three projects would be about Rs 500 crore, they said, adding that the luxury villas in Shimla would be launched first. They said the company would sell the 24 villas being constructed at Shimla only to the elite at a price of about Rs 3 crore.

When contacted, DLF India Vice-Chairman Mohit Gujral confirmed that the company would be launching a new series of luxury housing projects under the brand Sama, but did not give other details.

“Sama, that literally means tranquility, will offer exquisite living spaces where the only neighbours will be nature,” he said. Samatara-Shimla, Samavana-Kasauli and Samaraya-Goa will be a part of the Sama series and will be designed by Gujral.

According to sources, the hotel and villas at Kasauli would be managed by global hospitality chain Hilton, while the company is in talks with some Asian hotel chains for managing the villas and hotels at Goa.

DLF currently has a total developable area of 413 million sq ft, of which 55 million sq ft area will be under construction by the end of the first quarter of the next fiscal. — PTI

Rajiv Gandhi Realty Excellence Awards

SVP Builder (I) Ltd. has won the “Best Regional Developer in Rajiv Gandhi Realty Excellence Award 2010”. The award was presented to Sunil Jindal, CEO, SVP Group, by Praveen Singh Aron, MP from Bareilly and Member, standing committee on Urban Development in Parliament recently.

Commenting on the company’s latest achievement in a challenging though successful year, Jindal commented, “We feel gratified at receiving these honours for our team’s reputation for professionalism and innovation in Indian real estate. Our collective management skills of the past 20 years are best shown in our diligent customer relations management that has been the cornerstone of our growth. Behind our success are well designed systems and processes that incorporate global best practices, transparency, a value-driven approach, customer centric values and reliability in line with contemporary best global practices. We will continue to follow the path of perfection”.

Other awards like Best Property Consultant of the Year was given to Investors Clinic, NOIDA; Best Online Real Estate Portal is Magic Bricks.com; Developer of the year is Delhi Apartments Pvt. Ltd; Environment Friendly Project of the Year is Supertech India Limited; Best Upcoming Integrated Township of the Year is Jaypee Greens; Life Time Achievement Award is given to Raheja Developers Limited and Developer of the Year – NCR /Noida is Amrapali Group

The Rajiv Gandhi Realty Excellence awards were instituted in 2002 by Pehchan- nurturing the girl child, an NGO working towards the education of Girl Child. These awards honour builders and construction companies who are providing affordable houses to people. — TNS

Green ParC launched

The SARE(South Asian Real Estate) group has announced the launch of ‘Green ParC’, phase 3 of its acclaimed 65-acre self- contained integrated residential development ‘Crescent ParC’ located in Sector 92, Gurgaon. ‘Green ParC’ will have lifestyle apartments endowed with world-class amenities at affordable prices. On offer are three and four BHK lifestyle apartments ranging from 1180 sqft–1900 sqft. The inaugural rates being offered are Rs 1997 per sqft (basic sale price) and price starting from Rs 23.56 lakh onwards (basic sale price).

Tuscan experience

TDI Infrastructure Ltd., has launched an up market apartment complex Tuscan Heights as a part of its Tuscan City project. The complex is designed around the theme of Italy. leave you cash-strapped. Located in A-I Block in TDI City, Kundli, (Sonepat), the apartment complex has been designed by internationally renowned architects, Ho Partner, Hong Kong and is based on the concept of beautiful region of Tuscany in Italy. According to Kamal Taneja, Managing Director, TDI Infrastructure Ltd., “Seeing the growing aspirations of the people and in an effort to offer something new and unique to our customers, we decided to create the look and feel of Italy in India. Our effort would be to create a slice of Tuscany (home to beautiful cities like Florence, Pisa and Siena) in Kundli. However, all this will come at an incredibly budget friendly price. The biggest USP of Tuscan Heights, however, is luxury within your budget apart from the unique and distinct design element.”

The price of the apartments is fixed at Rs 2,175 per sq. ft. On offer are 2 BHK Approx. (1080 sq. ft.), 3 BHK (1390 sq. ft.) and 3 BHK with study (1520 sq. ft.) spacious and luxurious apartments.

Tuscan City is spread over 53 acres situated next to NH-1. The township offers built up option of both Independent Floor ranging between 1164 sq. ft. to 1546 sq. ft. and luxury apartments, row houses and villas. The township will be – true to Tuscan style – have classic fountains, water bodies, cobbled pavements and central piazzas. There is extensive use of arches and the township will sport international amenities and world-class professional maintenance facilities.

Tax tips
Utilising capital gain
S.C. Vasudeva

Q. I owned SCFs measuring 200 sq. yd, and a residential house. Out of which I have sold SCFs for Rs 30.4 lakh in August, 2010. For the SCFs I had purchased a 200 sq yd plot worth Rs 20,000 in 1977-78 and had constructed three SCFs on it by spending another Rs 35,000. So the total investment made was Rs 55,000 in 1977-78. The stamp papers worth Rs 2,21,400 have been purchased in my name for getting the sale proceed of the SCFs registered. I want to purchase one built up flat at a cost of Rs 22 lakh and a plot measuring 275 sq. yd for Rs 6 lakh. I intend to construct a one-room set on this plot by spending the balance amount and some more money from my personal savings. Please let me know, if I will be eligible to avail benefit under the Income Tax Act by acquiring the above said properties. In case no relief is admissible, then what are my tax liabilities taking into consideration long-term capital gain or indexed cost of acquisition / purchase.

— Asha Bansal

A. Reply to your queries are based on the presumption that sale consideration of Rs 30.4 lakh is equal to or more than the value assessable by stamp valuation authority and that the stamp duty of Rs 2,21,400 has been paid by the purchaser:

You have the option of adopting a fair market value as on 01.04.1981 in respect of SCFs on which a total sum of Rs 55,000 had been spent. As the fair market value is not indicated in the query, taking into account the cost of Rs 55,000 the indexed cost would work out at Rs 3,91,050, and on the basis of such indexed cost the amount of capital gain would work out at Rs 26,48,950. In case you purchase a residential house for Rs 22 lakh you would be liable to pay tax on an amount of Rs 7,31,947 at the rate of 20 per cent plus 3 per cent education cess thereon. This is because you would be entitled to a proportionate exemption computed in accordance with the provisions of Section 54F of the Act.

You may not be able to get the benefit in respect of construction of one- room set as you would be having two residential houses after purchasing the built up flat for Rs 22 lakh. Section 54F of the Act allows exemption with regard to the taxability of capital gain arising on the sale of a capital asset if an assessee utilises the net consideration within the specified period for the purchase of a residential house other than a residential house which he already owns.

Can’t withdraw money

Q. My mother sold agricultural land in October 2009, situated within 8 km of the municipal limits. The sale proceeds were parked in a capital gains account in February, 2010, to be invested in agricultural land or a residential house. However, my mother now wants to withdraw some money from this account and use it for personal purposes / medical expenses. In case she withdraws money, what is the date from which the tax liability will become due? Is it the date of withdrawal of money? Or the date of sale of land (October, 2009), in which case, advance tax and the arrears thereon also become due?

— Sameer

A. The deposit under the capital gain scheme has to be made under a specified section of the Income-Tax Act 1961 (the Act). The reply to your query is based on the presumption that the deposit was made under Section 54B i.e. for buying agricultural land. The amount deposited under capital gains scheme can be withdrawn for the purposes of buying agricultural land within a period of two years from the date of transfer of the original asset (i.e. agricultural land which was sold in October, 2009). If the amount so deposited is not utilised fully for the purchase of new agricultural land within a period of two years after the sale of the original asset, then the amount not so utilised shall be treated as a capital gain of the previous year in which the period of two years from the date of transfer of original assets expires. It will be taxable as long term or short term capital gain depending upon the period of holding of the original capital asset.

It may, however, be added that the withdrawal of the unutilised amount would be permitted after the expiry of two years from the date of transfer of the asset in accordance with the scheme. In this connection I may invite your kind attention to clause 10 of the Capital Gains Accounts Scheme, 1988, which provides that a depositor withdrawing any amount out of the deposit made in pursuance of various sections under the Act shall utilise the whole or any part of the amount so withdrawn for the purpose for which the deposit had been made. It is also provided in the said clause that the amount so withdrawn shall be utilised within 60 days from the date of such withdrawal for the purpose for which deposit had been made, and the amount or any part thereof which has not been so utilised shall be re-deposited in the account immediately thereafter. In view of the above clause, it may not be possible for your mother to withdraw money from this account before the expiry of the period of two years for being used for personal purposes. 

LTCG assesment

Q. How would the long term capital gain be assessed under the new Direct Taxes Code? — Priyanka

A. In case of a capital asset which would be called as an investment asset under the Direct Tax Code, if an assessee transfers such asset at any time after one year from the end of the financial year in which the asset is acquired by the assessee, the deduction for the purpose of computation of income from transfer of such asset shall be the following:

the indexed cost of acquisition, if any, of the asset;

the indexed cost of improvement, if any, of the asset;

the amount of any relief on account of approved reinvestment of capital gain.

The base year for the purpose of giving benefit of cost index is being changed to April 1, 2000, and therefore any unrealised gain on such an asset between April 1981 to April 2000 would not be taxed. The capital gain so worked out, in case the benefit of reinvestment of capital gain is not considered, shall be added to the total income and taxed at the marginal rate applicable to the assessee. For example in case the assessee is in 30 per cent tax bracket such gain would be taxed at the rate of 30 per cent. It may be added that the Code has retained the provisions of non-taxability of capital gain arising on the sale of equity shares and units of equity oriented funds held for a period of more than one year in case the transaction has been subjected to securities transaction tax. 

GROUND REALTY
A perfect Tile Tale
Jagvir Goyal

With the communication and IT revolutions making the world busier than ever, the ‘ready to use’ culture has spread fast. People just want everything, including houses, to be ready in an instant. Not only builders, but those constructing houses themselves, too, prefer the ‘quick solutions’. That’s why the use of tiles, that don’t require long and tedious polishing, has gained momentum in the past few years.

Marble flooring had been reining supreme when vitrified tiles were invented. But soon these became the favourite flooring material. The trend is quite visible in metros and big cities. A majority of builders and commercial building contractors have completely switched over to vitrified tiles to save the time consumed in polishing marble flooring.

Cost competitiveness

Initially, the cost of vitrified tiles was very high. But with increased demand and more competition the cost has come down to almost 50 per cent of the initial rates. In comparison to good quality marble, vitrified tiles prove to be a much cheaper option. Not only that, the cost of polishing of floor is also saved.

Vitrified tiles

Vitrified tiles are produced from a white imported clay that is quite a suitable material for vitrification process. Silica, Kaolin, Feldspars are the ingredients that are added to the clay. A very heavy weight of 3,500 to 4,800 tonnes is applied on the clay tiles to press them to maximum density. That’s why these tiles have no porosity. The pressed tile cakes are first dried in dryers and heated at 250 degree C to remove moisture. Then these are burnt at extremely high temperature of 1220 degree Centigrade and then polished.

Porcelain tiles

Porcelain tiles, too, are becoming quite popular. These are, in fact, giving a tough competition to vitrified tiles. Though porcelain tiles fall in the category of ceramic tiles, these possess certain properties which even vitrified tiles lack. While vitrified tiles are harder, porcelain tiles possess the property of non-staining and remaining scratch free. These don’t show any scratches even if a nail is rubbed hard on them.

Common features

Vitrified as well as porcelain tiles have very high dimensional accuracy. For the common size of 2 ft x 2 ft or 605 mm x 605 mm, both porcelain and vitrified tiles are 10 mm thick. Both possess high abrasion resistance. Vitrified tiles have almost zero water absorption property. For porcelain tiles, maximum water absorption is 3.5 per cent. Scratch hardness of porcelain tiles is more. These have a minimum value of 7 on Moh’s scale while vitrified tiles have a minimum value of 6 on this scale.

ISI Mark

There is no ISI mark for vitrified tiles. Porcelain tiles may have IS 15622 mark. Vitrified tiles are, therefore, also checked for accuracy in dimensions, thickness, straightness of sides, surface quality as per IS 15622 only. Other tests for water absorption, scratch resistance, hardness, abrasion resistance, resistance to staining are done as per procedure given in IS 13630.

Size availability

Vitrified tiles are available in larger sizes. These can be of size s equal to marble slabs i.e. as large as 8 ft x 4 ft. Bigger sizes of tiles give feeling of vastness but these are costlier and less stronger than the smaller ones. Most popular size of vitrified tiles is 2 ft x 2 ft. Smallest size is 1 ft x 1 ft. Porcelain tiles are produced in 496 mm x 496 mm, 605 mm x 605 mm and 610 mm x 610 mm sizes.

First quality

Tiles are produced in first and second qualities. Second quality tiles are inferior in glazing, hardness and dimensional accuracy. Second quality tiles are also termed as commercial quality tiles. These are cheaper than first quality but the defects surface after a few months’ usage. Therefore, one should always choose first quality tiles. Manufacturers term the first quality tiles as ‘Premium’ tiles and second quality tiles as ‘standard’ tiles. The tile boxes normally carry these stamps. The buyer should carefully check the ‘premium’ stamps.

Innovations

The design, colour and finish range is unlimited both in vitrified and porcelain tiles. The manufacturers are looking for innovations to score over competition. New glazing shields are being invented and abrasion resistance is being increased to many times that required as per codal instructions. For example, ceramic tiles are classified as Group II, III, IV and V. Group V tiles are hardest and most resistant to abrasion. These are supposed to pass 5,000 revolutions when tested as per laid PEI (Porcelain Enamel Institute) technology. Group IV tiles should stand 4,000 revolutions, group III tiles 3000 revolutions and so on. A manufacturer has now produced tiles which can withstand 25,000 revolutions.

Cost factor

Due to stiff competition among manufacturers, the cost of vitrified and porcelain tiles has come down significantly. First quality, fully vitrified tiles were costing around Rs 85 per sq.ft a few years back. These are now costing Rs 55 per sq. ft. Light coloured, first quality vitrified tiles can be purchased even at Rs 35 per sq. ft. Porcelain tiles are not much costlier. Ivory based porcelain tiles cost around Rs 30 per sq.ft. Heavy colour porcelain tiles of best quality don’t exceed Rs 70 per sq.ft. In comparison to Italian marble or good quality marble, these are really a bargain. Saving on account of cost of polishing is additional.

The choice

Porcelain tiles have the advantage of no stains and no scratches while vitrified tiles may retain some of them. Vitrified tiles are harder, but porcelain tiles pose no problem if the base provided to them carries no air gaps. Earlier, vitrified tiles were scoring better on account of finish and glazing. Now, porcelain tiles provided with special glaze shields are at par with them. Cost wise also, both type of tiles have no marked difference. Therefore, if the design and style liked by you is from vitrified range, see that the tiles are dry glazed, double charged or ultra charged tiles as these are most durable among vitrified range and if your choice falls in porcelain range, look for specially treated with glaze shield in addition to features given above.

This column appears fortnightly

REAL talk
Western concepts becoming popular
Geetu Vaid

Aditya Bansal, the Managing Director of the ABW group is the company’s young face who is reshaping the contours of the company. Armed with a master’s degree in Real Estate Economics & Finance from the London School of Economics, he has enhanced the brand image of the company with new marketing strategies. He talks about his company’s future course as well as the current realty scenario in the country. Excerpts from an interview:

What are the major projects being undertaken by your group in the northern region?

We have undertaken two major residential projects in the North. Integrated township ABW Aditya Niketan located in Manesar on NH 8. Spread over an area of approximately 105 acres, this government-approved township caters to demand for state-of-the-art homes in the mid-segment category.

Catering to the premium housing segment is our housing project La Lagune at Golf Course Road, Gurgaon. Apart from these, we also have many commercial projects like Rectangle 1 & Square 1 at Saket, Elegance Tower in Jasola and ABW Tower, Delta Square and Corporate suites at IFFCO Chowk, Gurgaon. At present, large commercial, group housing, IT Park, township and motel projects worth Rs 2,500 crore, are in various stages of development.

What are the growth prospects of the realty sector in the northern region?

Many areas in the northern region have become hot property destinations. Being a hub of development and growth, Delhi-NCR region is one of the most sought after real estate destinations. The forthcoming Commonwealth Games, infrastructural development and growing connectivity with metro, have only raised the demand in these areas. Apart from the already existing strong markets in places like NCR, many other regions have become popular destinations for developers. Investors and developers are seeking for alternative cities thus increasing the demand for Tier II and Tier III cities, Regions like Manesar, Agra, Ludhiana, Jalandhar, Chandigarh, Lucknow, Meerut etc. have seen a surge in real estate development as there is a huge market to be tapped here.

In the residential segment what new trends do you see after the slowdown?

With the economy bouncing back after the global recession, real estate has also witnessed many emerging trends in the recent past. There has been a considerable shift towards affordable housing schemes. Apart from this, catching up with the West, developers are providing modern and contemporary features and amenities in their projects to attract more consumers. International architectural design and landscaping, home theatres, exclusive clubs are some of the new trends. The trend for luxury villas and homes is also gaining ground.

As your group has a number of commercial projects, what are the growth prospects in the commercial sector and what are the major factors that are driving this sector?

With rapid urbanisation in major metros like Delhi, commercial projects have shown a good growth trajectory. With the economy coming out of recession and the increasing GDP, major international corporate are setting up or are in line to set up their business here. For instance, an international giant like Walmart foraying into India is a testimony of the booming economic growth. This has been one of the major factors responsible for giving a major push to commercial projects.

What role does marketing play in today’s context in establishing a company’s name?

Marketing and branding are one of the most important aspects of any business, large or small. We strongly believe that an effective marketing strategy can give us a major edge over our competitors. Real estate branding helps us in putting the ABW Group to our target customer and tells them what they can expect from us and our projects while it also differentiates our offering from those of our competitors.