Realty Bounty
Bathinda is on the fast track of growth, mainly due to its robust property market, reports Sushil Goyal

Already completed residential units in Omaxe City. Tribune photos Pawan Sharma

The robust growth of the realty sector in Bathinda has kept it among the top few cities of Punjab where the real estate prices have maintained an upward march in the past few years. The fast growth of the real estate business in and around Bathinda has had a huge effect on the socio-economic profile of the area as now modern residential habitats, upscale shopping malls and commercial areas dot the city skyline.

The business of sale and purchase of land has remained brisk and hugely profitable proposition for realtors and investors. As per an estimate about 5,000 small, medium or big property dealers, consultants and agents are dealing in real estate in the Bathinda area at present. According to secretary-cum-PRO of Bathinda Property Agents Association Sunil Singla, "With the rise in the price of land, not only the owners of small land holdings but those involved in the real estate business had also earned lakhs, and in some cases, crores of rupees. This affluence reflects in their lifestyle as their children are studying in prestigious and expensive institutes and they own luxury houses and cars et all. So as a result the city now also has an increased appetite for branded goods and luxury items which, in turn lead to further growth of the commercial and retail segments making Bathinda a city of 'golden' potential."

This upcoming area has caught the attention of several big league developers as well as of the local players and as a result a number of residential colonies, enclaves and townships are coming up here to cater to the increasing demand for housing units. These include Omaxe Township (near Goniana), Pearls Township (near Gillpatti), Ganpati Enclave (Bathinda), Sheesh Mehal Township (Bathinda), Sushant City-1 (Kotshameer), Sushant City-2 (Jassi Bagh Wali), HBN Colony (Jassi village), DD Mittal Towers (Bathinda), Homeland Enclave (Bathinda), Virat Greens (Bathinda), City Home (Bathinda) and Royal Enclave (near Bhucho). The Omaxe Township is a project of the Omaxe Group while the Pearls Township is of Pearls Group. The Ganpati Enclave, DD Mittal Towers, Sushant City are the projects of the Mittal Group. Out of these residential colonies some are nearing completion.

It is not only the private developers who are making the most of growth in the region, PUDA, too, has contributed to the realty upsurge by developing Model Town Phase-1, Phase-2 and Phase-3 in Bathinda city. The draw of lots for plots in Model Town Phase-4 and Phase-5 were held recently.

Another property consultant K.K. Aggarwal from Bathinda said besides a big increase in the prices of residential plots in the city, the prices of the commercial sites had also increased manifold during the past one decade though there was a slump in the market for the past three years. He said it was difficult for a small shopkeeper now to purchase even a small shop in the city. As a fast growing city, Bathinda has also witnessed the completion and opening of two malls, the Mittal Mall (near Rose Garden) and the City Centre (near main Post Office). Besides these two, two other - HBN's Mall (The Peninsula Mall, opposite thermal plant lake) and the Pearls City Walk (near Railway Station) - are under construction nowadays.

The rental market is also buoyant, says Singla while informing that rent for a 100 to 125 sq yd house is around Rs 5,000 per month, while that of a kothi in a posh colony is around Rs 15,000. 

Real ISSUES
Wallet Woes
Constant rate hikes have further burdened the realty sector, writes Vinod Behl

It is a matter of concern that credit growth, both for home loans and on the exposure to real estate developers, has hit a speed breaker due to repeated interest rate hikes. Industry statistics show the growth rate of loans to developers came down from 43 per cent in January to just 11 per cent in May this year.

Similarly, home loan growth has also dropped significantly during the same period. And the Reserve Bank of India's latest directive to banks to adopt strict lending norms, especially with regard to loan documents, may well further tighten the liquidity environment.

What is further adding to the woes of real estate companies is the overhanging debt. In 2010-11, the cumulative debt of leading listed companies like DLF, Unitech, HDIL, Sobha and Godrej topped Rs 34,000 crore. And despite availing corporate debt restructuring, many real estate companies are not able to reduce their debt significantly.

Apart from scarce bank credit, sluggish stock market has further restricted the real estate developers' options to raise funds. About a dozen developers' plan to raise money through initial public offerings has got stuck as they do not want to incur the risk of low valuations and lukewarm response. The investors' appetite for public issues is simply not there.

At the same time, now that the stock market is not doing well, people are wary of investing money in real estate. Even the profit-hungry high net worth individuals are turning to specialised options such as offshore funds, which do well in terms of returns even when there is a market slowdown.

In this backdrop, fund-starved real estate companies - finding customer advances insufficient to carry out their construction activity - are now increasingly depending on private equity players and non-banking finance companies, even if the funding is sourced through receivable financing route. Their desperation level can also be judged from the fact that a few smaller real estate companies are borrowing money from the market at a rate as high as 24 per cent.

With customer advances shrinking in view of slow home sales due to the high property prices and increasing loan rates, debt-ridden developers are resorting to selling their land assets for raising money to complete their projects. An industry study indicates that in view of increased project delivery commitments and cost escalation in construction, 480,000 residential units are likely to face delays in execution during the period of 2011-13.

A number of developers, especially in the National Capital Region and Mumbai, are resorting to unhealthy practice of underwriting. They are selling a substantial part of their inventory to financiers and speculators on assured return basis, at the pre-launch stage. Later, the launch price is hiked to give investors their promised margin. It is to safeguard the interest of these investors that developers do not offer price cuts and instead hold on to properties despite slowdown in sales, thereby inviting the risk of speculative bubble.

It is not just the working capital crunch that is unnerving the real estate developers. The construction-cost inflation, coupled with rising interest costs has badly impacted the profit margins of real estate firms. The cost of debt from banks has gone up by 2-2.5 per cent and from non-banking sources by about 6 per cent in a year.

As business sentiment dips amid worsening macro-economic scenario, coupled with persistent inflation and mounting finance costs, cautious optimism is giving way to concern. It is now really a worrying fact that consumption growth has moderated due to constantly rising inflation and high interest rates.

The government's policy of taming inflation by increasing rates at regular intervals has not worked. In fact, this has resulted in choking real estate supply and curbing demand. There is a need for a pragmatic policy that desists from continuous increase in interest rates and instead works towards boosting supply and consumption.—IANS

tax tips
Selling HUDA plot
S. C. Vasudeva

Q. I was allotted a residential plot by HUDA in May 2007 through a draw or lots. The offer of possession of plot was made in July, 2008 (physical possession of plot still not taken). 25 per cent cost of the plot was paid in 2007 (10 per cent amount as application money plus 15 per cent amount to be paid to HUDA with interest in six annual installments between 2008-2013). The title of the plot is transferred by HUDA to the buyer on an allottee's request. The conveyance deed/registry of the plot is made after total dues of the plot are cleared. As such only the original amount paid to HUDA is made available by DD or cheque to the seller and profit is paid in cash. Now I want to sell this plot and invest the total amount paid plus profit received in cash in another plot for construction of a house or to buy a built house for personal use. Now my queries are as under:

l When should I go for both deals so as the total money (paid to HUDA plus profit received from the buyer in cash) is considered long-term capital gain?

l How the amount received in cash as profit in deal can be shown in buying the new plot for construction or to own a built residential house?

— O.P. Vij

A. I presume that the cash profit on the sale of your right in the HUDA residential plot would be reflected in the documents to be executed for the sale of such a right. The reply to your queries given hereunder is based on this presumption.

l You can sell such right in the property after three years of the date of allotment but before the date of possession.

l The profit arising on sale would not be taxable if you purchase a built up house within two years after the sale of such right in the property. The amount which is not utilised for the purchase of built up house on or before the due date of filing your tax return, should be deposited in a bank account under capital gains scheme so as to claim the exemption from the taxability. The amount so deposited can be utilised for purchasing a built up house within the period specified hereinabove. 

Benami owner not to pay tax

Q. Kindly guide me on the following points:

l I, along with my son had purchased an under-construction built up house in Greater Noida by paying a lump sum amount in February, 2008. We had made the payment after taking loan from a bank. The possession will be given before March 31, 2012. My son has been paying the monthly installments, including principal and interest since March 2008. I want to know whether my son can get the benefit of rebate on repayment of the principal amount under Section 80-C for the financial year 2007-08 onwards. Conflicting views have been expressed in newspapers in this regard. In reply to a query by B.N. Rohal, it was clarified in The Tribune (dated 25.09.2010) that one "can claim deduction in respect of the amount of installment of the principal amount" in respect of the house the construction of which "is not yet complete".

l My wife has purchased a flat in New Delhi through Power of Attorney "with consideration" which is duly registered with the competent authority. The sale agreement is also in her name. But I have paid the entire amount. The flat has been given on rent since April 1, 2010. My question is a whether the rent amount received by my wife, who is also an Income Tax assessee, will be considered as part of her income or mine as I had paid for the house.

l Who should pay income tax — my wife or myself.

l Who will be considered the owner of the property?

Please quote the relevant sections.

— Ranjit Singh Kathpal

A. Your queries are replied hereunder:

l A strict interpretation of the provisions of Section 80C of the Income-Tax Act, 1961, gives an indication that deduction for the repayment of principal amount should be allowed after the completion of the construction of a house. However, as installments paid towards self-financing schemes are allowed as deduction, you may make a claim and contest the disallowance in case the assessing officer does not agree with your contention.

l The income from house property bought in the name of your wife would be taxable in your hands as you will be considered the owner of the property and your wife as your benami. 

Short on saving tax

Q. I had applied for a flat in a housing society in July, 2006 and paid Rs 50,000. I was allotted a flat in September, 2007 in a building which was under construction and paid the installments as follows: 2007-08 —Rs 7 lakh; 2008-09 — Rs 3 lakh; July, 2009 — Rs 4,15,000; and May, 2010 — Rs 4 lakh. The possession of the flat was handed over to me in May, 2010. With indexed cost for this year being 785, the indexed cost of the flat works out to be roughly Rs 24.35 lakh and assuming the next year's index to be approximately 920, it would be Rs 28.52 lakh roughly. I am in the 30 per cent tax bracket already. What would be my tax liability on capital gains if I sell the flat this year for Rs 26 lakh or the next year for Rs 30 lakh. I am 75 years old and would not like to invest in any tax saving schemes.

— K.S. Masuta

A. The amount of capital gain arising on the sale of the house would be treated as a short-term capital gain in case the house property is sold within a period of three years after the date of its possession. In such a case benefit of indexation would not be available. Such capital gain should be taxable at the slab rate of 30 per cent applicable to you. The amount of tax payable would work out as under:

l Assessment Year 2012-13 (Financial Year 2011-12) Capital gain Rs 7.35 lakh (Sale Price Rs 26 lakh less Cost Price of Rs 18.65 lakh) Income-tax @30% plus education cess of 3% thereon

Tax payable @30.6% = Rs 2.25 lakh

l Assessment Year 2013-14 (Financial Year 2012-13) Capital gain Rs 11.35 lakh (Sale Price Rs 30 lakh less Cost Price of Rs 18.65 lakh) Income-tax @30% plus education cess of 3% thereon

Tax payable @30.6% = Rs 3.47 lakh.

realty bytes
Unitech sells 450 floors in Gurgaon project

Realty major Unitech has sold 450 independent floors for about Rs 350 crore under a township project in Gurgaon. "Unitech sold more than 450 units of its newly launched project, Anthea Floors, and garnered a sale of about Rs 350 crore from these," the country's second largest realty firm said in a statement.

The project, which was launched a week back, is part of a 100-acre township that the company is developing in Gurgaon. The independent floors were launched at a starting price of Rs 55 lakh, a company official said.

The construction cost for these 450 independent floors would be about Rs 100 crore, he added.The township will comprise of villas, apartments, floors, plots and retail developments, the statement said.

"Unitech expects to generate revenues of over Rs 1,500 crore over the next three-four years from this township," it added. The company said it has launched 7 million square feet of area in the last seven months.

Unitech is currently developing about 80 projects across the country, spanning 40 million square feet of area. The company has a presence in the national capital region, Chennai and Kolkata. In 2010-11, Unitech launched projects covering 10.44 million sq ft area. It booked 9.16 million square feet for Rs 4,323 crore and delivered 4.25 million sq ft of completed area. - PTI

Parsvnath registers with Bharat Oil Company

Parsvnath Developers Limited (PDL) has been registered as a member of Bharat Oil Company, an agency authorised by Ministry of Environment and Forests and Central Pollution Control Board, GOI, for disposal and transportation of hazardous waste from their construction sites. The membership was awarded keeping in mind the sincere effort by the company’s strategic planning team. Parsvnath Developers Ltd is now In line with the norms and guidelines of Management and Handling Rules; 1989 for safe disposal and transportation of hazardous waste generated from various construction projects. 

Ground Realty
Powerfull saving
Jagvir Goyal

Electricity consumption bills are often received with an apprehension by most of us. The first figure checked by one and all is that of 'amount payable' followed by the number of units consumed during the billing period. And that number often leaves us confounded. Have I really consumed that much electricity? Isn't the bill inflated? In order to overcome this uncertainty, one can work in a scientific manner and get an estimate of the electricity consumption in his house. Here are some guidelines:

The appliances: First of all, check the electrical appliances in your house. These appliances can be divided into four categories as under:

l Lighting appliances.

l Heating appliances.

l Cooling appliances.

l Other appliances.

All the bulbs, tubelights, CFLs and chandeliers fall under lighting appliances category. Geysers, microwaves, immersion rods, electric irons, toasters and hot plates fall under the heating category. Air conditioners, coolers, fans, exhaust fans, refrigerators etc are counted under cooling appliances category. The other appliances cover washing machines, TV, LCD, music systems, computers, mixer cum grinders, pump motors, vacuum cleaners and any other appliances.

Note the numbers and wattage: Check the wattage of each appliance you are using along with numbers of each kind of appliances. Verify it from the appliance itself by checking the imprint on it or on its plate.

Note the usage: Now, carefully think of the usage hours of each appliance. It may be difficult to imagine or determine the same but an estimate can be made. Otherwise, observe the usage of appliances, lights and fans for a week, make notes and draw the hours of usage of each appliance per day.

Note the number of days: Next, note the number of days, you remain in-station and use all your appliances. Your job may involve extensive touring when only a few appliances like the refrigerator and one or two lights remain on. Note the wattage of appliances that remain in 'on' position when you are out of station.

Work out the consumption: Now, multiply the wattage of each appliance with the number of hours it is put to use everyday. Find the sum of all the figures so arrived. Divide the figure by 1,000 and multiply it by the number of days you remain in station. Next, note the wattage per day of the appliances in use when you were out. Add the same, multiply the number of days you were not in and divide by 1000. Add the two figures and you get a fair estimate of your electricity consumption for the month.

Tips to reduce consumption

If you are shocked by the figure you arrive at, try saving electricity and cutting your electricity bills by following the practical tips given below:

l Replace all the GSL bulbs in the house with CFLs.

l Provide electronic chokes on the tubes.

l Switch off the major appliances like TV, LCD, AC, music system from the socket and not with remote control.

l Clean tubes and lamps regularly. Dirty tubelights and bulbs reflect less light and absorb up to 50 per cent of the light.

l While reading or working on desk, use task lighting. It focuses on the object rather than lighting the whole room and a less wattage appliance can serve the purpose.

l Switch off the lights, fans and other appliances when not in use.

l Use an AC as sparingly as possible. Set its thermostat at 25 degree C. It will bring best comfort to you at least cost and you avoid exposure also when you suddenly leave the AC room to go out in the open.

l Clean the air-conditioner filter bi-monthly. A dirty air filter reduces airflow and may damage the unit. Clean filters enable the AC unit to cool down quickly and use less energy.

l Keep the doors and windows of AC rooms closed.

l Keep enough space around your refrigerator to allow continuous airflow around the compressor which generates heat.

l Put a lit flashlight or torch inside a refrigerator and shut its door. Can you see any light coming out? If yes, the door seals of the refrigerator need replacement as these allow the cooling of the refrigerator to escape, causing more load on its compressor.

l Prefer to use a microwave oven than a regular oven. It saves up to 50% of your electricity consumed by the regular oven.

l If you are using electric kettle, use the one with automatic shut off button.

l Set your computer and monitor in sleep mode. Prefer turning it off when not in use. Computers often remain idle and in 'on' position throughout the day, consuming considerable electricity. At least, turn the monitor off when not working on a computer. Avoid using screen savers.

l Don't leave a mobile charger plugged in after charging your mobile battery.

Happy computing and saving power!

(This column appears fortnightly)

DEVELOPER SPEAK
Alpha G:Corp spreads wings outside NCR

A view of Gurgaon One residential facility in Sector 22 Gurgaon Tribune photo: Sayeed Ahmed

Alpha G:Corp, an NCR-based FDI-funded real-estate developer and a partner of Morgan Stanley, plans to deliver projects worth Rs 5,000 crore over the next five years across the country.

The company claims to have projects spread across the country covering an area of more than 30 million sq ft. These include integrated townships, besides various other commercial as well as residential projects. Currently focusing on the tier-II and tier-III cities/states, including Meerut, Amritsar, Ludhiana, Karnal, Hisar, Fatehabad, Jaipur, Ahmedabad and Goa, the company plans to extend its developments to other cities in Haryana, Punjab, Rajasthan, Madhya Pradesh, Gujarat and Uttarakhand in near future.

"Our business model entails undertaking of projects through acquisition, joint-venture development and Real Estate Asset Management (REAM), a practice we pioneered in the country," maintains S.K Sayal, director-cum-CEO of the company.

He points out that as per this model, the responsibilities of the company span from sourcing of the land to its final sale/lease and the benefits of compensation thereof.

The developments to be shortly undertaken by the company include integrated townships in Amritsar, Ludhiana and Hisar, in addition to expanding the existing developments in Karnal and Fatehabad.

The company has recently launched phase II of its integrated township at Karnal.

The group is developing Alpha International City at Fatehabad, AlphaOne, a retail and entertainment city centre project, besides an integrated township and an industrial park in Amritsar, a retail-cum-multiplex in Ahmedabad, an ecological resort in Goa. The group will be setting up another retail and entertainment city centre project with fellow companies at Meerut and a residential township in Jaipur. — TNS