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Industry status to realty sector likely in Punjab
Green house
launch pad
pick of the week
realty bite
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real issue: fdi in retail
Industry mavens are largely upbeat about the step as it will give a solid forward thrust to the retail segment of the realty sector. With a large number of malls having no takers for the retail space, the retail segment has been treading in troubled waters over the past couple of years, especially in the tier II cities and smaller urban centres. Though foreign retailers are likely to adopt a measured approach initially for 18-24 months in what may be termed as an ‘experimentation phase’, where retailers increasingly seek local knowledge and try to evolve a scalable and efficient business model. With a huge balance sheet and deep pockets many of these big international giants may look at not only immediate future, but also look ahead with five-year time horizon and start acquiring property in areas they may like to expand to in future. This would also bring in additional money inflow to the retail and real estate sector. This would also help in the absorption of surplus retail space in shopping malls across the country. The recent clearance to Swedish furniture firm IKEA’s Rs 10,500 crore retail proposal by FIPB has opened doors for others like Louis Vutton, M&B Footwear and Gucci to have full ownership of their operations in India. What better place for them than the huge open spaces available in the existing malls and the new upcoming ones. Gurgaon has quite a few malls, however only a handful of these attract consumers because of the brand name present there. This at times gets frustrating for the other malls as there are quite a few properties gunning for a few big brands and once other internationally known brands also set shop here the attention attracting problem would be solved, they would be
solved, they would be assured of the increase in rental because of all empty spaces being taken up along with that the walk-ins would increase substantially because of the more brands of customer choice. Similar is the scenario in other cities like the Chandigarh tricity area. Only a few malls here have all shops taken, while quite a few have been non-starters like one such mall in the heart of Panchkula and another in Chandigarh which see only cinemagoers’ rush. A number of retailers who had rented out space here have actually winded up their business due to poor footfalls and high rentals.
Change in rental fortunes
The entry of global biggies can change this scenario as rentals will not be a major block for them. However, what would be interesting to see as to how successful these Global Retailers are in a market like India. Traditionally even the big Indian Retailers like “Reliance Fresh “and “Future Group” have been struggling to come out of the red mainly due to steep retail rentals and high commercial property prices. One of the important factors cited for the viability of retail business is the availability of real estate at affordable prices and at suitable locations. Major Indian cities with retail penetration have witnessed a considerable increase in rentals in the past few years. However, a majority of the primary Indian cities are stretched and under extreme pressure to be able to provide quality and quantity of real estate which would suit the requirement of global retailers. Such constraints may lead to joint venture kind of model with developers; some negotiations are already on amongst the major developers and global retail giants. To negate the effect of steep rentals, one option which would likely to emerge would be developing the retail shops of 30,000-50,000 sq ft or even of larger size on the entry /exit of these major townships, something which has already started happening in and around cities like Chandigarh and Delhi .
Beginning of a new chapter
Dakshdeep Singh, Managing Director Parkwood Developers Pvt Ltd, who have residential and commercial projects in Mohali and Gurgaon says, “It is a very good step. This will open a new chapter in the Indian economy. It will create employment and help develop tier II & tier III cities which have adequate supply with lower rentals and lower property prices. It will help create and develop new neighbourhoods.” “Over the medium to long term, the retail sector, real estate industry and the end-consumers will benefit from the move and the economy on the whole as this will create a multiplier momentum” he added Asked about impact on realty sector, Yogesh Bhasin, Head Sales and Marketing, Punjab for Ansals API said “FDI in multi-brand retail would boost employment opportunities, not only for those who would be employed by these retail houses but also in the allied industry like transport, logistics etc and also smaller brands which would mushroom in the vicinity”. He further added that “This step will help in boost the overall retail sector as many global brands are wanting to come to India. As new players enter, we will see lots of new demand coming to the real estate sector for retail spaces. The scenario recently experienced when “Best Buy” and “Metro Cash & Carry “opened ships in Zirakpur and eventually, property may also firm up in future.” Dakshdeep was of the view that “The decision has been noted as a big step in the future growth of mall culture, the government has now unlocked the gateway for foreign funding into the sector thus setting up a path for FDI in multi-brand retail”.
Boost for backend operations
The flow of fresh investment into the retail sector will trigger investment in real estate at the front and back end. In front end, retail store spaces will see investments and in the back end, better quality warehouses could be seen. Builders are of the opinion that “It will help in investment for back-end operations, building up of storage space and more reliable logistics control which will in turn lead to improved efficiency and productivity in retail and also help boost mall development in India, the decision would help in increased demand for the oversupply of retail space in shopping malls across the country, majorly in the metros. Investments in backend infrastructure and local sourcing are expected to create an efficient, effective and high-tech supply chain, something which our retail had been lacking. Additionally, it is likely to generate increased employment opportunities in the suburbs of these million plus cities and the neighbourhood rural belts, where backend infrastructure is likely to be positioned. In urban centres a front-end shopping unit along with support facilities will in all probability generate employment opportunities.
Demand for large malls
The retail real estate sector will undergo a transformation and we can expect large million square foot malls to be more in demand over the coming few years something which Europe experienced a few decades ago. In some cases, foreign retail giants are expected to purchase large retail space as a long- term investment. Some real estate companies are readying up for such deals as well. FDI in multi-brand retail would also create employment opportunities that would create housing demand thus providing sales support to the housing sector. — The writer is former- Vice President Marketing, Centurion Bank of Punjab and Head Marketing (North) HDFC Bank.
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area watch: kurukshetra
The real estate market in this holy city has not remained unaffected from the winds of slowdown that have been lashing the tier II and tier III cities in the region this year.
The state government's ban on sanctioning of building plans and the execution of sale deeds in unapproved colonies is one of the reasons for stagnation in the property market here.
The non-clearance of any policy regarding the unapproved colonies by the government so far has kept investors in a cautious mood. According to property consultants at present there are virtually no buyers for plots in colonies that don't have the required clearances and the resale and secondary market is also stagnant as not many end users are willing to finalise deals at the current prices. Apart from its religious importance, Kurukshetra also has a number of important educational institutions and demand for housing has always been buoyant here. Though the prices in the city have maintained a steady upward trend in the past couple of years, there is very little happening on the sale and purchase front at present. Sushil Aggarwal, President of the Kurukshetra Property Dealers Association, says that the real estate prices during this period have gone up by 25 to 30 per cent. While in residential sectors developed by HUDA the prices had gone up from Rs 10,000-12,000 per sq yd a couple of years back to Rs 15,000 per sq yd at present, in HUDA's commercial sectors the prices has appreciated from Rs 40,000 to Rs 50,000 per sq yd at present. Similarly, in TP Scheme No. 7B covering Laxmi Nagar, Ekta Nagar, Model Town, Gurdev Nagar etc the residential property rates have moved up from approximately Rs 8000 per sq yd to around Rs 9,000 per sq yd. In the fully developed Vishnu Colony, the enhancement has been recorded from Rs 12,000-15,000 per sq yd to Rs 15,000-20,000 per sq yd and in semi-developed Jyoti Nagar from Rs 10,000-12,000 per sq yd to Rs 15,000 per sq yd. Surprisingly, while property consultants mention the appreciation in prices on one hand, they also admit that very little sale and purchase is going on at present. A number of investors had purchased properties here in order to make a quick buck and this had lead to higher prices being demanded in the market but there are actually very few end users who are ready to pay so much
for land so not many deals are being finalized. While the investors with holding power are sitting over their properties, the end users are waiting for the prices to come down a bit to get a good deal. This tussle has resulted in a virtual stalemate in the realty market in Kurukshetra. Another important factor is that the flat or apartment culture is yet to take root in this city. Although, HUDA has floated some schemes offering flats and some sale has been recorded, there is no craze among buyers for investing in flats. A majority of the buyers prefer to invest in plots so that they can construct their homes according to their choice or sell the land at a premium later. The market may be slow here, but a number of new projects are coming up and a new Draft Development Plan-2031 has also been approved by the State Level Committee (SLC) chaired by Chief Minister Bhupender Singh Hooda in June, 2012. In fact, under the earlier Final Development Plan (FDP) - 2025 AD KKR Sector 2 (residential, commercial and industrial), Sector 17 (commercial) and the residential sectors 3, 4, 5, 7, 8, 10 and 13 have already been developed by HUDA. In addition to developing markets in each sector here, the HUDA has developed sector-17 as fully commercial sector. Where the Kessel Mall has been attracting customers mainly due to PVR cinemas and other brands while the Divine Shopping Mall situated on Kurukshetra-Pipli road, is opening shortly with the McDonald, Gulab Sweets and other brands "Besides HUDA, five licensed colonisers are engaged in developing their respective sectors in Kurukshetra. Ansal Properties and Infrastructure Ltd. has approximately 125 acres in Sector 32; Sumitra Builders and Developers Pvt. Ltd. has over 54 acres in Sector 9; Jagran Agents Pvt. Ltd. has over 88 acres in Sector 29; Harman Finance and Properties Pvt. Ltd. has 51 acres in Sectors 31 and 32; and Shree Vardhman Township Pvt. Ltd.has 50-acre area in Sector 30", says Amrik Singh District Town Planner Kurukshetra. The current slowdown notwithstanding, the new growth oriented plans and good connectivity of the city will be the important factors in the revival of real estate sector here, says Amarjeet Singh.
Fact file
The city with its well known link with the epic Mahabharata and the Bhagvadgita, is located on the NH-I and is about 100 km from Chandigarh and 162 km from Delhi. According to the Puranas, Kurukshetra is named after King Kuru, the ancestor of Kauravas and Pandavas. It is an important pilgrimage destination for the Hindus and thousands of pilgrims visit the city each year, especially on the occasion of solar and lunar eclipses and Somwati
Amavasya.
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Industry status to realty sector likely in Punjab
With land resources shrinking and property prices shooting, Punjab is all set to lead India on the path of green growth by subsidising high-rise and energy efficient buildings in the state.
The state government has plans to attract massive skyscrapers in its cities and incentivise high rise and energy-efficient constructions through its new Real Estate Policy to be unveiled by mid-December. “We will incentivise high-rise constructions in our new real estate policy. But Punjab must have the tallest building in the country,” said state Deputy Chief Minister Sukhbir Singh Badal. The new policy for the real estate sector, currently being fine tuned, will incorporate measures to promote the use of green materials to create sustainable buildings and thereby boost the emerging concept of green growth with low carbon emissions. Showcasing its real estate wealth to realtors of the country, Badal has already announced that Punjab government would unveil its new Real Estate Policy by December 15 that would accord industry status to the sector and remove various bottlenecks and simplify procedures. Once accorded the industry status, the real estate sector will get all the benefits available to industries. The state government is also planning to grant industry status to give a fillip to investments in the state in a bid to boost its economy which is facing a crunch due to global economic downturn. The state hopes to attract an additional Rs 50,000 crore investment into the state soon after the new policy is unveiled. Badal said the state was set to simplify procedures and make investment attractive by removing all bottlenecks and making the real estate policy incentive-based. To attract further investment in the real estate market, Badal claimed that Punjab would be “a power-surplus state by next year and would have one of the best air and road connectivity with the starting of three international airports and four-six laning of state and national highways running across the state”. Showcasing real estate opportunities in GMADA region, Badal said city center (80 acre), medicity (200 acre), IT City (1600 acre), Education city (1700 acre) were life-time opportunities in Chandigarh's vicinity.
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Green house
Chrysanthemums brighten the gardens in early winters when other seasonals are yet to bloom. These come in a wide range of varieties and the sizes also range from smallest with less than one inch diameter (popularly known as 'button chrysanthemum') to those more than six inch depending on the way plants are trained.
While the colour pallete includes various shades of purple, pink and bronze, white and yellow are the most striking colours in chrysanthemums. The varieties like “incurring” are favourite of many, while others like, “reflexed” and “spiders” are also liked. Small flowered varieties like “pompon” give a fabulous display with their large number of flowers when grown in pots or in ground.
Large varieties include Snow Ball, Sonar Bangla, Kiku biori. Recently self-pinching chrysanthemum varieties in different colours have also been introduced and can be grown in small-sized pots.
The shelf life of a cut flower is 10-20 days and different varieties can be used in different styles in flower arrangement. ‘Regan White’ and ‘Regan Emperor’, ‘Purnima’ and ‘Starlite’ are most popular long stem cut flower varieties. Loose flower used for garland making varieties are ‘Baggi’ and ‘Ratlam Selection’.
If you have missed the bus of propagating the plants on your own then plants-in-bloom can be purchased from a nursery. Depending on the variety, chrysanthemum flowers remain in bloom for 3-4 weeks. Therefore, the plants should be purchased when the flowers buds just start showing colours. Pick a pot that has a healthy plant with dark green leaves. Chrysanthemum needs to be placed in full sun and watered frequently. A blooming plant requires no fertiliser or manure.
The plant can sustain the cold weather conditions in the region. In the spray or small flower varieties faded flowers may be removed regularly.
A BOUQUET OF CHOICE
Depending on form, chrysanthemums are classified as: Button, Pompon, Anemone, Single Korean, Double Korean, Spider, Reflexed, Incurving and Incurred.
Propagation
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launch pad
FDI-funded real estate developer Alpha G:Corp recently launched Mainland Meerut, a state-of-the-art mixed-use project. To be developed at a cost of Rs 500 crore, the 19-acre project will feature low-rise, ultra-modern group housing, MeerutOne having apartments and villas.
The development will also have a multiplex, a shopping mall, a business hotel and a convenient shopping centre. Located on NH-58 connecting Delhi to Haridwar, this mixed-use development will offer ultra-modern living spaces integrated with world-class shopping, entertainment and recreation facilities. The contemporary group housing, christened MeerutOne, would comprise 30 low rise, G+4 storey with four apartments to each core. The apartments will be available as 2BHK plus study, 3 BHK as well as villas. Each tower will be an earthquake resistant structure provided with stilt parking and open parking along the boundary wall. Mainland Meerut is a part of Alpha G:Corp’s Rs. 5,000 crore expansion plan to develop commercial, residential and mixed-use development projects across India over the next four years. — Based on information provided by
the developer
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pick of the week
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realty bite
The real estate sector will continue to remain an attractive investment destination with the possibility of prices in residential areas appreciating by 91 to 145 per cent in select cities over the next five years, a survey released recently said.
In a first-of-its-kind report prepared by Knight Frank, a real estate advisory firm, high possible return on investments ranging between 18.6 and 29 per cent per annum over the next five years will emerge as a key driver for investors' interest in the sector. The report highlights that despite the slump in the real estate market, Mumbai will continue to be the most promising investment destination followed by Delhi-NCR, Chennai, Pune and Bengaluru, Knight Frank Executive Director (retail, advisory and hospitality) Gulam Zia told reporters recently. The study has identified 13 destinations across these five cities where prices are expected to appreciate in the range of 91-145 per cent over the next five years, he said. “With property options ranging from Rs 3,200-Rs 15,000 per sq ft and price appreciation in the range of 91 to 145 per cent, residential real estate will emerge as a promising asset class for the next five years,” he said.
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TAX TIPS
Co-applicant can’t claim deduction
A. Your understanding with regard to the availability of deduction under Section 24 of the Income-Tax Act 1961 (the Act) to the extent of Rs1.5 lakh towards the interest paid/payable and under Section 80C of the Act with regard to the repayment of principal amount to the extent of Rs1 lakh is absolutely correct. These deductions are available if the amounts have been paid by the assessee. In case the amount has been paid by someone else then it may not be possible for your wife to claim such deductions. Your daughter cannot claim any deduction in respect of Rs 1,90,000 paid towards the home loan as co-applicant. There is no deduction available under long-term capital gain. The long-term capital gain is, however, subject to a lower rate of tax and for financial year 2012-13. It is chargeable @ 20% plus education cess @ 3% thereon. Further, the tax so payable can be saved if the amount of capital gain is invested in purchase or construction of a residential house. The purchase will have to be effected within two years after the date of the sale of flat and the construction within three years after the date of sale of flat. The capital gains tax can also be saved if the capital gain is invested in the acquisition of infrastructure bonds issued by the National Highways Authority or Rural Electrification Corporation Limited within six months of the date of sale of flat. There is no deduction available against the long-term capital gain arising from the sale of property.
Can I construct a house on wife’s plot
Q. I purchased a flat for Rs 4.5 lakh in June 1997 and got the interiors done spending about Rs 2 lakh (I don’t possess any receipts). I sold this flat for Rs 30 lakh in May 2012. What will be the capital gain amount?
A. Your queries are replied hereunder:
Share in tax
A. The house property having been held for more than 50 years will be treated as a long-term capital asset and any capital gain arising on the sale of such a property would be a long-term capital gain. It is not possible to compute the amount of tax payable on capital gain as the cost of acquisition of such house, date of sale, date of death of your father, fair market value of the house as on April 1, 1981 and the sale price thereof are not indicated in the query. I may add that for assessment year 2013-14 (financial year 2012-13) the tax in respect of the long-term capital gain would be leviable @ 20 per cent plus education cess of 3 per cent thereon.
Ownership concerns
Note : The home loan repayment letters for principal and interest is issued by the bank in my name only as I am the primary applicant. —
Vivek
A. The facts in the query indicate that you are the owner of the residential house and your wife is a benami holder of such property. You should disclose this fact in the tax return and declare income from such house property as your income. The procedure as suggested herein above should enable you to claim deduction for the repayment of the principal amount as well as interest paid on loan obtained for constructing the residential house.
When will I get the money?
Q. I had applied for a home loan and my loan amount has been approved by the bank. How long will it take for the amount to be disbursed now? —
Bir Singh A. You can take the disbursement after credit, technical and legal appraisal of the property have been carried out, besides the execution of the relevant documents and deposit of original property documents is required to be completed prior to the disbursement. You should have invested your own contribution amount towards the property before getting the amount from the bank. Own contribution is the difference between the cost of the property and the loan amount.
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LOAN ZONE
No happy news for existing loan borrowers
— shivan lamba A.
Most of the home loan borrowers who were hoping for a reduction in interest rates are clearly disappointed with the Reserve Bank of India, which left the rates unchanged in its recent policy review. They are not enthusiastic about the dovish policy statement, which many bankers say clearly indicates the rates may start coming down gradually. Their main grouse is that even though many banks, especially public sector banks, have already lowered interest on floating rate loans by 0.25% - which translates into a saving of Rs 17 per Rs 1 lakh - these banks have not changed their base rates or the benchmark rate they follow. This means only new borrowers will benefit from the new lower interest rates announced by these banks. As for old home loan borrowers, they still have to pay a higher rate on their home loans. Even today there are some old borrowers who are paying an interest rate of 12.5% on their housing loan. But today a new borrower can get a housing loan even at 10.5-11 %. In monetary terms, the difference between the EMIs paid by an old borrower and a new one would be around Rs 104 per Rs 1 lakh. A banker can claim that the old borrower entered into a loan agreement at a time when cost of funds were much higher. Today customers are benefiting from the lower cost of funds. However, this is just a policy decision by banks there are no technical glitches in passing on the benefits of lower interest rates to new
customers.
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While the FDI debate is on in the corridors of power, the realty sector is keeping its fingers crossed over its tangible outcome. The government has already allowed 100 per cent FDI in single-brand retail and the proposed Draft Bill allows 51 per cent FDI for multi-brand retail chains. The move would signify a strong positive outlook for the retail as well as the real estate sector.
Earmark the best plants for mother stock.
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Q. My wife had taken a home loan of Rs 20 lakh in March, 2012. The loan will be repaid over a period of 15 years. During 2012-13 financial year she would be paying approximately Rs 2 lakh as interest. My daughter, who was a co-applicant for the loan, contributed around Rs 1,90,000. If I am correct, then under IT rules, my wife is eligible for deduction u/s 24(b) Rs 1.5 lakh towards interest paid and u/s 80C Rs 1 lakh towards principal amount. In May 2011, she sold a flat for Rs 15 lakh which she had acquired for Rs 1,22,115 about 20 years back. She paid the amount against a house mortgage loan of Rs 10 lakh which she took from the same bank for development of the said property for which she availed the home loan. Kindly clarify:
Q. I and my five brothers had our parents’ house registered in our names after their death. The house is more than 50 years old. Now all of us have decided to sell off the house and each of us may get approximately Rs 10 lakh. Kindly let me know how much capital gains tax or income tax will be payable by me. —
Raj Kumar
Q. I have availed a home loan in which I am the primary applicant and my wife is a secondary applicant. However, we have registered the property in my wife’s name. She is a housewife and doesn’t have any source of income. In this scenario am I eligible to claim the repayment of Principal (80C) and Interest paid (Section 24) towards the home loan towards my Income Tax exemption? 
Q. Will the RBI's recent policy review have any effect on the loan burden of the existing home loan borrowers?