Investing in tricity
Wait to make the right move
Sandeep Goel

Sudden upheaval in the prices of residential properties in the tricity - Chandigarh, Mohali and Panchkula - has turned the realty market into a seller's market from being a buyer's market. According to industry watchers investing, in residential property at this time is not a very wise option. But for all those itching to invest, the simple rule in this is to look around and wait.

Currently, property transactions in Chandigarh, Mohali and Panchkula are being carried out at unrealistic rates. "Such rates were not even prevalent in pre-slowdown (before 2009) days when the options in the residential segment were far less than the ones available now”, maintain realty watchers in the area. At present there are a number of new areas that are being developed either by the state government agencies or by private colonisers

Unrealistic increase

After the prices dipped by about 30-40 per cent from November 2008 onwards, the market was back on track in the second quarter of 2010. The price of a one kanal plot in Panchkula and Mohali that had gone down to around Rs 1.50 crore and below, became around Rs 2 crore in June 2010. What is actually surprising for keen observers of the realty market is the way in which this price suddenly shot up to between Rs 3.5 crore and Rs 4 crore in the month of July. There was no perceptible variance in the demand and supply ratio, too, to bring about this substantial hike.

However, a sort of correction has already set in with prices in Mohali and Panchkula coming down. "A one-kanal plot which was being offered for between Rs 3.5 crore and Rs 4 crore in July-August 2010, is now available in the price range of Rs 2.5 crore to Rs 3.6 crore, depending upon the location", says a local real estate agent, Ranjit Malhotra. According to Malhotra, a one-kanal six-bedroom bungalow with lavish construction in one of the posh areas in Mohali is available at around Rs 4 crore. The construction cost of the said house is around Rs 80 lakh, as estimated by some architects.

Prices increase with the rising demand, and if there are few deals being finalised, then the inflated prices seem artificial and shady, say experts.

The sudden rise in prices in the tricity defies market logic as there has not been a concurrent rise in the demand for residential properties here. As per trade experts some kind of a cartel seems to working behind the scenes. Sources in the market revealed on the condition of anonymity that a bulk of plots (around 60) have been booked in different locations by one buyer, and these have been put for sale with a hefty profit margin for the seller as well as the agent (5 per cent brokerage in place of 0.5 to 1 per cent). This artificial price hike, however, will not sustain for a long time, and the prices are bound to see a major downward correction in the next few months. So the investors engaging in this trade should trade cautiously and are advised to wait for some more time as the prices are bound decline further by 15-20 per cent and the festive season, too, is not likely to give an upward thrust to property prices.

— The writer is Mohali-based Subject Matter Expert on Real Estate

Colony culture
Residents of small towns of Punjab like Dirba and Sunam now prefer to live in well-planned colonies, writes Shariq Majeed

The winds of change are sweeping through the hinterlands of Punjab, if one goes by the lifestyle in these areas. In several small towns of Punjab, the days of dusty, narrow streets with haphazard growth of residential units are things of the past as more and more residents are preferring to move to planned and "fully equipped" residential clusters as their counterparts in bigger cities do.

"Colony culture", thus, is spreading its wings in this agrarian state. If Sangrur and Barnala cities have seen the emergence of a number of approved and unapproved colonies in the recent past, the sub-centres of Dirba and Sunam in Sangrur district, too, are following suit. The planned ambience, pollution-free atmosphere, wide roads, proper sewerage, water supply, electricity and amusement facilities have found willing takers in the residents of these smaller towns revealing a change in their mindset.

One would expect the rates of plots in Sunam and Dirba to be quite less than those in Sangrur (since it is the district headquarters), but that is not completely true as property prices here are almost the same as those in Sangrur city.

In Sunam, there are two PUDA approved colonies, Sun City (located along Bighar Wall Road) and Happy Home (located along the Mansa Road), where the rates are Rs 9,000-10,000 and Rs 8,000-9,000 per sq yd, respectively. These rates are almost at par with those in any good colony in Sangrur city.

The rates of land for residential purpose in the four major areas of Sunam like the Jakhal Road area, Old city, Mansa Road area and Patiala Road, too, are quite high. The price in the Jakhal Road area is Rs 9,000 to Rs 10,000 per sq yd, whereas in the old city area it is Rs 7,000 to Rs 8,000 per sq yd. One sq yd of land would fetch Rs 5,000 to Rs 6,000 in the Mansa Road area and Rs 8,000 to Rs 10,000 in the Patiala Road area.

Paramjeet Singh, a buyer, who has bought a plot in Sun City colony says, "the cost of construction is almost the same be it in Chandigarh or Bathinda or Sunam. So if one has to spend more on land by buying it in approved colonies it is a wise step. In case of unapproved colonies, there is always a risk of demolition of houses". Ravinder Verma, of Somsons Colonisers Ltd., who has conceived Sun City Colony, says, "People in Punjab spend more on houses and marriages. Because of increased awareness about the benefits of having a house in approved colonies, more and more people are buying houses in such colonies". "We are having good response for our colony in Sunam".

In Dirba, the increased awareness about the approved colonies has prompted people to buy houses there. There are three colonies in Dirba, Shiva Enclave, Golden City and Victoria enclave (all along the Patran road) where the rate per sq yd ranges between Rs 5,000 and Rs 6,500, the rate being highest for Victoria Enclave and stands at Rs 5,500-6,500.

Sanjeev Bansal, authorised signatory of Shyam Sons Colonisers, who conceived Golden City colony in 2002, says, "The response for approved colonies is so good in Dirba that we sold all of our 87 plots in just two years".

The rate per sq yd of land in unapproved colonies in two major residential areas of Dirba - Sangrur Road and Patran Road — ranges from between Rs 5,000 and Rs 10,000 per sq yard.

GROUND REALTY
The magic of two
Jagvir Goyal

While planning one’s house, people often get stuck over the decision about the number of floors they should build. Any decision in this regard depends on a number of factors:

The number of people who will be living permanently in a house is, no doubt, a major factor apart from the availability of funds. However, practically speaking ‘two’ is the right number of storeys in individual houses. Basements, if built, are either used sparingly or are rented out for commercial purposes. The commercial use of basement often brings nuisance to the house builder. Home theatres or gyms when developed in the basement are used only for a few initial months. Third storey, if built, is hardly used. It is either sold out as a floor or rented out. Thus the ideal number of storeys for self-living and for maintaining complete privacy thus remains ‘two’ only.

Design points

While planning a double-storey house, one should stick to certain rules for best, safe and economical construction. Here, the architect should act as the ‘guide’ for the house builder. When the house builder tells his requirements, certain of them may demand additional beams, columns, walls, extra slab reinforcement and other provisions. The architect should bring out these additional items and the expenditure involved clearly before the house builder and should tender his advice by suggesting alternatives.

Walls over walls

It is always better to have walls in second storey over the walls in the first storey. Such a design will always prove safe and stronger. The load transfer from the roof slab and second storey to the ground is smooth in this case. Sometimes, the house owner wants to have a totally different layout for second storey than that for ground floor. In such a case, many beams will have to be added to the ground floor slab as these beams will be required to bear the load of walls of second storey. Here, the architect should try to meet the requirements of the house owner to maximum possible extent by keeping most of the first storey walls over ground storey walls and by adding minimum number of beams. The architect should convince the house owner that having first floor layout totally different from ground floor will unnecessarily increase the number of beams and expenditure on them.

Inverted beams

The addition of extra beams to ground floor slab invites another problem. The house owner doesn’t want that these beams should be visible from the ground floor as these look ugly and affect the design of POP on the ceiling. To avoid this problem, most of the beams in ground floor slab are kept inverted. Inverted beams are designed as rectangular beams only and are not visible from the ground. However, there remains a restriction on the depth of inverted beams. These are not to be visible from first floor also. In order to do that the depth of beams has to be kept lesser so that these get embedded in the slab and flooring work. Less depth of beams invites more steel in beams.

Relation between beam depth and steel

The more the depth of a beam, the less is the quantity of steel to be put into it and vice-versa. Therefore, the quantity of steel required for a house can be reduced significantly by increasing the depth of beams. Steel is more expensive than concrete and should be saved by increasing the depth of beams. It has been seen that at a location, if an 8-inch deep beam requires 8 bars of 16 mm diameter steel, a 12-inch deep beam will require only 5 bars of 16 mm diameter. The area of steel bar sections in a beam is always inversely proportional to the depth of a beam. When the first floor walls are not kept over ground floor walls in double-storey houses, the extra beams below first-storey walls are not allowed to project above the floor as these look ugly and create obstruction and less depth of beams requires more steel in them.

Staircases

In large sized, double-storey houses in India, the roof slab of lobby or living room is almost unanimously kept at double-storey height and the stairs are taken up in the lobby. Railing is provided around the opening at first floor level for safety and easy interaction between the people at two levels. However, this floor-connection sometimes holds the house owner from renting out the first floor, if ever he desires to do that. Therefore, in double-storey houses of 300 sq. yard or more, house plan should be so evolved that another independent stairs are taken up from the front or side courtyard of the house and some portion of the first floor including a kitchen and toilet could be isolated for rental purposes.

Cantilevers

It is obvious that the first floor rooms have attached balconies or mini terraces some of which may be of cantilever type. Full precaution should be taken in the design of beams and slab for such cantilevers. The steel in them should be curtailed carefully towards the free end. Steel shall be more near the support and least near the free end. Design of cantilever beams and slabs and the steel in them should be doubly checked to be safe as we often notice many cantilevers failing and falling. During construction also, the position of steel should be carefully examined as it has to be near top of slab and not near its bottom.

Structural safety

Normally, double-storey houses are built in brickwork and don’t have a framed structure. In such houses, when the ground floor and first-floor plans do not match and extra beams are added to support first floor walls, columns should be raised from the ground to receive the load from these beams. Resting of these beams on ground floor walls may not be safe. The position of columns should be decided carefully. A little change in the position of a column may make it eccentrically located with respect to the beam it is supposed to support and proper transfer of load may not take place, thereby risking the safety of the structural framework. Provision of cupboards in bedrooms should also be kept in mind while locating the columns as often this aspect gets overlooked and later it becomes difficult to provide cupboards as columns interfere with them.

(This column appears fortnightly)

REALTY BYTES
Acoustic advantage

As a step in building better workspaces, warehouses, factories etc the Everest Industries Limited has announced the availability of their “Acoustic Ceilings” for commercial segment. The acoustic ceilings offer a number of advantages over the conventional false ceilings or other similar products. These are made of high quality mineral wool and composite fibres that are highly resistant to humidity, fire hazard. and are excellent for heat insulation, too. The tiles are acrylic coated to offer outstanding light reflectance and are complemented with a variety of grids for a complete acoustic experience that brightens up the interiors. One of the unique features it offers is resistance to sagging/deformation even under higher moisture exposure. Aesthetics and design are a major part of any modern workspace. These come in three different designs — MS-01 Harmony, MA- 04 Rhythm, and MP-03 Symphony.

“We have been in the construction business for very long and understand the needs of customers with changing times. Everest Acoustic Ceilings are technologically superior as we use new techniques to offer better sound absorption and sagging resistance etc. We have also laid special focus on the design aspect this time as most of the employees in an organisation are young and like novelty in their offices.” says Manish Sanghi, Director and COO, Everest Industries.

These can be used in a number of spaces like sound recording studios, conference rooms, lobbies, work bays, departmental stores, auditoriums etc. It also makes sense ecologically as these ceilings contain zero asbestos content.

These are available with leading hardware and construction material vendors at a price point of Rs 85 per tile.

Commercial complex launch

Orris Infrastructure Pvt. Ltd. has announced the launch of Floreal Towers-Retail in Sector 83, New Gurgaon. The project is a premium commercial-cum-retail complex spread over a total area of 5 lakh sq. ft area with a dedicated 1.5 lakh sq. ft of retail area, which consists of ground plus 2 (i.e., shopping area is on ground & first floor and dining and food court is on second floor). The project is a part of the very first commercial-cum-retail complex on National Highway-8 in New Gurgaon. The construction of the project is in full swing and is expected to be completed by March 2012.

On the new initiative, Vijay Gupta, CMD, Orris said, “Retail is another big industry in Gurgaon, where there are about 43 malls giving Gurgaon the third highest number of malls in an Indian city. After the shift-out of Gurgaon into Manesar and ahead making it the ‘New Gurgaon’, a lot of infrastructural development is taking place here; and a good quality office-cum-retail complex is the need of the hour.” — TNS

Tax tips
Can’t gift to daughter
S.C. Vasudeva

Q. I am a retired senior citizen (88 years old). I have seven adult children. Our family owns a plot measuring 1,100 sq yd, half of which is under construction. The plot was registered in my wife’s name even though the entire purchase amount and the cost of construction was borne by me during my service. My wife expired a few years back without leaving a Will. I now want to gift the vacant portion to my youngest daughter who is not doing so well financially. All other children are well settled. Would you be kind enough to let me know the legal implications and advise me as to how I should go about it. The plot still stands registered in my wife’s name. — KSK

A. In accordance with the provisions of the Hindu Succession Act 1956, the plot in the name of your wife, who died without making a Will, shall devolve upon the sons and daughters, including the children of any pre-deceased son or daughter and yourself. It may, therefore, not be possible for you to make a gift in the name of your daughter in respect of the entire plot which is vacant. You can however gift your share of the plot to her.

Tax rebate on joint loan

Q. I have purchased a flat in my and my wife’s name jointly, and availed a housing loan from a bank in joint name. The EMI will also be deducted from the salary of both of us. I want to enquire that interest of Rs 1,50,000 per annum and repayment of Rs 1,00,000 per annum under Section 80C can be availed by both of us or not.

— Ramesh Chug

A. In case the flat has been purchased from the funds contributed by both you and your wife, it should be possible to claim the deduction in respect of the repayment of principal amount by both of you under Section 80C of the Income-tax Act 1961, (the Act). It would be advisable to make payment of monthly installments towards the principal and interest separately from the bank account of each one of you. The deduction for the amount of interest paid is allowable against the income from house property. As and when the construction of the house is completed, you should be able to claim the deduction in respect of the interest paid on the loan raised for the construction of the house. You would also be entitled to claim the deduction of the interest paid in respect of the period prior to the previous year in which the property is constructed in five equal installments.

Will matters

Q. I am 75 years of age and have one son and two married daughters. My wife had expired a few years back. I have prepared a Will and the same has been duly registered with the Sub-Registrar’s Office. As per the Will both movable and immovable properties held by me have to be inherited by my son as I have already paid sufficient sums to my daughters. Will the provisions of amended Hindu Succession Act have any effect on such a Will?

— R.L. Taneja

A. Section 6 of the Hindu Succession Act 1956 as amended deals with the devolution of interest in co-parcenery property i.e. in respect of the joint family property. It has no relation with the right of a person to make a Will in respect of his self acquired property. I presume that the property and assets referred to in your query are in the nature of self acquired property and have not been inherited as a joint family property.

You have not indicated in the query as to whether the Will executed by you is intended to be changed or it is only because of the amendment section 6 of the Hindu Succession Act 1956 that you have raised this query. In case you intend changing your earlier Will, it will be better to incorporate a clause in the new Will that all earlier wills/codicils will have no effect after the execution of the latest Will.

DTC: Capital gain on sale of house

Q. I read your answer in Real Estate about the long-term capital gain as per the new tax code. I’m confused about LTCG with regard to sale of house after April, 2012. I understand that cost index is changed to 2000. Reinvestment of LTCG will be permitted on buying or constructing house with LTCG money. Is it necessary to open LTCG account in bank? I own two houses. Will I get exemption on long-term capital gain by selling one of the houses?

— B.S. Saklani

A. Your queries are replied hereunder:

Under the Direct Taxes Code 2010 (the Code), the deduction in respect of rollover of any original investment asset in the nature of residential house from the capital gain arising from the transfer of the asset shall be allowed by computing the same in accordance with the formula given hereunder:

Where A= the amount of capital gains arising from the transfer of the original investment asset;

B= the amount invested for purchase or construction of the new asset (i.e. new residential house) by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later;

D= the amount deposited in an account in any bank by the end of the financial year in which the transfer of original investment asset is effected for six months from the date of transfer, whichever is later, in accordance with the Capital Gains Deposit Scheme framed by the Central Government in this behalf;

E= the net consideration received as a result of the transfer of the original investment asset.

The rollover would be allowed in case the following conditions are satisfied:

The new residential house shall not be transferred within one year from the end of the financial year in which the new residential house is acquired.

The assessee does not own more than one residential house other than the new investment asset on the date of the transfer of the original investment asset.

The original investment asset was acquired at least one year before the beginning of the financial year in which the transfer of the asset took place. It would thus be noticed from the provisions given above, that the deposit under capital gain deposit scheme is required to be made under the Code. It would also be clear from the above that in case you own more than one house, other than the newly acquired house, the benefit of the aforesaid rollover would not be allowed.