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Budget hotels catch investors’ fancy
As
one drives down the national highway across the country, one witnesses hectic construction activity. It is not restricted to metros but has spilled over to tier II and III cities as well. With increasing disposable income, a large number of Indians want to explore their own country, which is even enigmatic for them in many respects. It is a mosaic of global culture, which varies after every 50 km.
However, little attention has been paid so far to these domestic tourists. The problem is that of perception, not of plenty. India attracted nearly 2.4 million foreign tourists till June 2007 this year, who generated nearly $3,590 million. It is on this creamy layer where the focus of Indian hoteliers rests, rather than the sea of domestic tourists that dwarfs the former in numbers. In India, there is confusion about the word ‘tourist.’ Our statistics, unfortunately, includes even the business visitors. Importance is given to destinations that foreign tourists visit, while domestic tourism takes a backseat. Of the total number of inbound travellers visiting the country, less than 25 per cent are on leisure and the rest on business trips. Coupled with availability of low-cost medical facilities and the introduction of low-cost airlines, an increased demand for hotel rooms across many cities is likely to be generated. Research reports from KPMG have brought to light the potential that exists for the hotel business in India, where just 40,000 rooms presently cater to an average of 430 million tourists a year. While large hoteliers like Marriott, ITC and the Indian Hotels Company have announced their plans to augment room capacity through luxury projects in metros and Tier II cities, it is the budget hotel segment which has really caught the attention of investors. Revenues of Hotel and Restaurant (H&R) industry in India during the financial year 2006-07 was Rs 604.32 billion, a growth of 21.27 per cent over the previous year, primarily driven by foreign tourist arrivals, which increased by 14.17 per cent. Currently there are some 1,980 hotels approved and classified by the Ministry of Tourism, with a total capacity of about 1,10,000 rooms. The hospitality industry is poised to grow at a faster rate and reach Rs 826.76 billion by 2010. It is estimated that over the next two years 70,000-80,000 rooms will be added across different categories throughout the country. Reaching out to the masses may require a strategy that will bring forth the value proposition as well as the cost-effectiveness, as well as leveraging alliances in the future. Ginger Hotels plans to construct 100 hotels within the next five years with a large chunk coming up in religious destinations. Leading hotel chain Bharat Hotels Ltd said it would open up to 25 budget hotels in the country in next 2-3 years while also opening one luxury hotel in Dubai. “In the next 24-36 months, we will open 20-25 budget hotels in different cities,” chairperson Bharat Hotels Ltd Jyotsna Suri had said. She said the group would come up with the budget hotels also in Tier-2 cities like Jalandar, Surat, and Ludhiana. Ginger’s not alone. Companies like Accor, Sarovar, Choice, Pantaloons and even the Indian Railways have launched or are planning to launch budget hotels across the country. Hotels charge anywhere between Rs 1,500 and Rs 5,000 a night (including taxes), all in second rung cities like Pune and Hardwar that are close to big metros to attract the budget traveller. With the incentives announced in the Union Budget by Finance Minister P. Chidambaram, the National Capital Region is expected to see many new hotels, service apartments and mixed-use developments over the next three to four years. A five-year tax holiday announced in the budget for two, three and four-star hotels and convention centres specifically catering to the Commonwealth Games in Delhi, Gurgaon, Ghaziabad and Faridabad is expected to initiate more hotel groups to venture into this real estate segment. Close to 25 new hotels are coming up in Gurgaon alone. Tie-ups with international players like Emaar with Accor and DLF with Hilton is expected to give a fillip to the hotel industry in NCR. With the upcoming Commonwealth Games to be held in New Delhi in 2010, NCR is expected to witness the inflow of around 0.8 million international tourists and nearly 3.6 million domestic tourists. To accommodate these visitors approximately 30,000 rooms will be required in 2010. Around 6-8 hotels have been additionally planned for athletes in the Games Village, in the vicinity of the Commonwealth Games site in East Delhi. Due to the availability of larger land parcels and proximity to expressways and ring roads, new hotels are coming up in the peripheral locations of the city. Majority of the new supply is coming up in the business hubs of Gurgaon and Noida.. Noida will have additional 24 hotel projects over the next couple of years. Once the upcoming medicity at Gurgaon is operational, the location will become a global healthcare destination and this will further give a boost to the demand for hotel rooms. Knight Frank Research indicates that over the next few years, the supply of hotel rooms in NCR will cross 17,500. Out of this, around 5,100 rooms are currently under construction and the rest in planning stages at various locations around the region.
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Dehra Dun awaits master plan
Inexplicable
delay in the approval and subsequent implementation of the master plan draft is making Dehra Dun witness unplanned residential and commercial development.
As a result, land mafia is having its way, distorting the face of the city, which has come under tremendous population pressure due to influx of people ever-since it became the capital of Uttarakhand in 2000. Since then many residential areas and commercial buildings have sprung up without any official plan or sanction. Besides other areas, much of the illegal construction activity is taking place on Shastradhara and General Mahadev Singh roads. Such large-scale unplanned and unauthorised constructions may adversely impact the environment in the long run. Though the BJP government, led by BC Khanduri, promised to check the trend yet the situation is not expected to change for better in the absence of a new master, observes Jatinder Kumar of Tass Infrabuild, a real estate company. The haphazard growth is also attributed to indiscriminate change of land use (CLU) allowed by the administration and Dehra Dun-Mussoorie Development Authority (MDDA). This ad hoc arrangement is likely to necessitate further amendment of the draft plan and delay in implementation if and when it is finally approved. Since becoming a separate state, nearly 500 land use change cases have been allowed. Most of these related to the change of land use from agricultural to residential and commerical. Sanction was given in the case of forestland also. Officials of urban and rural planning department are of the view that such changes on the basis of old plan that expired in 2001paved the way for unplanned growth. The process of a new plan was started in 1999 when the state urban and rural planning department recommended a survey to assess the growth needs of the city over the next 25 years. Interestingly, no decision could be taken as to what should be the basis of the survey till 2001. It finally got under way in 2002. The draft plan was made in 2005 and submitted to MDDA, which started the process of hearing objections from public and this went on till February 2007. This followed further delay in tabling the matter at the MDDA board meeting. Finally, the MDDA forwarded it to the urban and rural planning department after its meeting in June 2007 for amendments, if any, within two months. “We expect the draft approval within a month. The plan will come into force after the government notification, says a senior official of the planning department. Given the lackadaisical approach, one cannot help but keep fingers crossed.
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Chandigarh emerges as growth centre
Chandigarh
is fast emerging as a preferred destination for the IT companies as per the recent report by the country’s largest real estate services firm, Jones Lang Lasalle on world’s emerging cities.
Chandigarh, Ahmedabad, Kolkata, Indore and Nagpur were taken up for the study as tier III cities under the subject series about “India -the next IT offshoring location”. Country Head, Jones Lang Lasalle, India, Vincent Lottefier, said: “This report identifies five leading tier III cities at the present time. Of these, Chandigarh and Kolkata are best positioned to mature into major centres over the next five years.” Chandigarh has also been rated the best city in North India for providing all hygiene factors. City Beautiful is gaining popularity because of the availability of ready-build Grade A space and land for built-to-suit options. With good quality of life, IT boom is having a ripple effect on the real estate business. Housing needs for IT professionals is becoming a staple growth factor for private builders, like DLF and Parvasnath. The IT-related boom in the real estate is not urban-centric alone. In the peripheral areas of Chandigarh, Mohali and Panchkula, a number of private builders are eyeing the requirement of housing, which is going to shoot up with the influx of IT professionals.
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Frame the door
Jagvir Goyal explains a few woodwork basics Woodwork is the most time-consuming activity during the construction of a house. Often, house-builders complain that carpenters take a long time in completion of work and therefore, all other activities get delayed. In India, people prefer to use wood and not byproducts. It is difficult to work on wood than on byproducts. That’s why we often find foreigners doing woodwork very easily as use of wood products is more common there. Here are some woodwork basics, which, if followed, will help in taking decisions quickly thus saving on a lot of time and money. Shutter basics
Before beginning work on frames and shutters, decide the size and type of shutters. Though large-sized shutters prove costly as woodwork costs more in comparison to masonry work, don’t choose too small sizes of doors and windows. No door should be less than 3’ wide and 6’9” high. Only the bathroom doors may be little less wide but should not less than 2’9”. Choose the type of panels to be used on doors. Variety of them are available. Flush doors are another choice. The choice depends on individual’s taste. Consult an architect to decide whether the doors are to open inwards or outwards, rightwards or leftwards. These decisions need to be taken as per the site situation to allow smooth movement inside the house. Further, decide whether the doors need to be single leaf or double-leaf. Also decide whether these need to be polished or painted.
Frame sections
Choose a minimum of 60 x 80 mm size frame for single rebate shutter and a minimum of 60 x 120 mm size frame for double rebate shutters. These days, 60 x 150-sized frames are being preferred though technically, such large width is not required even for double rebate shutters and extra wood comes under use. Choose 60 x 150-sized chowkhat if cost is not a consideration. Keep the rebate depth, as 15 mm while its width will be as per the thickness of the shutter.
Notations
Wooden frames that carry one set of shutters for doors, windows and ventilators are noted as D, W, V on the drawings. Wooden frames carrying two sets of shutters are noted as DD, WW and VV on drawings. If a frame has to carry a double leaf shutter, it is noted as DT on the drawing. The joints between the top horizontal member of frame and the two side verticals are called dovetail joints. There is no horizontal member at the bottom in the frames for doors. Keep these simple things in mind. These will help you in studying architectural drawings better.
Frame sizes
Work out the sizes of door, window and ventilator frames very carefully. This will help in smooth fitting of frames in position. No chiseling of masonry or smoothening (randa) of frame should be allowed. Keep overall width of doorframe 10 mm lesser than the un-plastered opening for it. Thus leave a margin of 5 mm on each side. As the frame is to be erected over masonry without DPC, overall height of frame will be the height of opening plus thickness of DPC minus 5 mm margin at top. Suppose DPC is 40 mm thick and opening height above floor level is 6’9” i.e. 2,060 mm then depth of door frame will be 2,095 mm. In windows and ventilators, leave an all-round margin of 5 mm. If opening size in masonry is 1,800 x 1,200 mm, outer size of frame will be 1,790 x 1,190 mm.
Precautions
See that no wedges are inserted by the carpenter in the door joints to tighten them. The joints should themselves be tightly fit without any visible gaps. Keep care of the locations where holdfasts are to be attached to the frames. When providing three holdfasts on each side, keep one at the centre and the others two at one-foot distance from top and bottom edges of frames. Use 1.5-inch screws to fix holdfasts to the frames. Always give two coats of hot coal tar creosote oil to the surface of frames or chowkhats coming in contact with masonry. For door and window frames, use creosote oil conforming to IS 218 as IS-marked creosote oil undergoes many tests such as specific gravity, water content and matter insoluble in toluene and better protects the wood from moisture and insect attack.
Corner straps
Provide corner straps at all corners of frames (chowkhats). Corner straps should be made of GI sheet of 16 gauge or lesser. To be exact, these should be 1/16 inch thick. Choose 2.5-inch wide straps. Fix corner straps on wooden door and window frames after the application of coal tar creosote oil and not before. Use 1.5-inch screws to fix corner straps.
Termite shields
In doorframes, provide termite shields to cup the feet of the two verticals. Earlier brass shields used to be available but these days, plastic termite shields are used. These too are not easily available as these are hardly in demand due to lack of knowledge and therefore, hardware stores don’t keep them in stock. If not available, get these made of brass or GI sheet and cup the feet of frames. Provide a temporary horizontal wooden strip at the bottom of each doorframe and nail it well to the two verticals. This strip is to be removed later.
Tab on holes
Holes made in frames (chowkhats) and shutters must be of correct size. Oversized holes make the shutter hang loose and it becomes impossible to tighten screws in them. Prefer making holes with a drill. Keep diameter of holes as 80 per cent of the screw size. Unqualified carpenters try to hammer the screws into the holes. Never allow that. Hammering is totally prohibited. Always dip the screws in oil before screwing them into holes. Tighten the screws fully and see that their heads are flush with the top surface of hinges or fittings. The head of screws should not project out but should seat itself in the space made for it in the hinge or fitting.
Key to plaster
At the back edges of all door and window frames (chowkhats), prefer to provide 10 mm wide and 10 mm deep cuts. These cuts serve as keys to plaster. The plaster enters these cuts and a smooth finish is obtained. See that the chowkhats are fixed in true plumb and at the right face. An effective way to keep chowkhats in position is to support them in position by inclined pipes or wooden ballis.
Happy building!
The writer is SE (civil), PSEB. He can be reached through www.jagvirgoyal.com
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Low-cost housing prominent on MVL’s agenda
S. Satyanarayanan talks to the MD of the recently-demerged company At a time when all big-time real estate developers are more or less focusing on the development of high-end commercial or housing projects, Managing Director of Media Video Limited (MVL) Prem Adip Rishi says his company sees an immense opportunity in the “affordable housing” segment. “There is lot of potential and depth in the affordable housing segment, especially in the tier II and III cities. Therefore, our company, besides developing properties for the high-end consumers would focus a great deal on the affordable housing segment,” Rishi, who announced the demerger of MVL’s real estate arm into a new company called MVL Ltd earlier this week, told The Tribune. Pointing that the newly demerged company MVL Ltd shall now hold projects worth Rs 4,000 crore and will be completing projects worth Rs 8,000 crore by 2012, Rishi asserts the company’s decision to have a mix of premium residential projects, townships and low-cost housing projects will result in a win-win situation for both the company as well as the end-users. “While in the tier I cities like Delhi, there are immense potential for IT parks and commercial spaces, there is a lot of scope for low-cost housing segment in the National Capital Region (NCR) like Ghaziabad and towns like Mohali near Chandigarh,” he says. Rishi says that the company has already identified various locations in Bawal, Mohali, Ghaziabad, Baddi, Bhubaneshwar, Hyderabad and Chennai for offering projects in various segments and is working towards the launch of the same over the next six to eight months. “In housing alone, we will develop 24-million square feet area over the next five years, a majority of it being towards the low-cost housing. By way of the restructuring, the group reiterates its promise to enable real estate business to capitalise opportunities specific to this high-potential business,” he says. The real estate division of the parent company, Media Video Ltd, had recently announced development of a township project in Yamunanagar, Haryana, for which the real estate consultants JLL Meghraj had projected a revenue of Rs 606 crore. The township will include both, commercial as well as residential premises. The company had also announced the development of two IT parks in Gurgaon of which one has already obtained the licence and the same is expected soon for the other. Also, the company has two housing projects in Bhiwadi with total area of 2.5 million square ft, which are already under
construction. Rishi says once the MVL Ltd is listed on the stock exchange, which is expected in the next two months, the company would look for strategic alliance as well as FDI to capitalise on the opportunity available in the booming real estate sector.
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REC bonds have lock-in period
By S.C. Vasudeva Q. I and my brother jointly bought 8 kanal (1 acre) of land (Battha Kalan), Ghar Mumkin Khadan in 1991-92 for Rs 1,60,000 within municipal committee and on this land eucalyptus plantation was done 10 years ago. Out of this, 8 kanal in record of patwari Gardori, only 5 kanal mentions eucalyptus plantation and the remaining 3 kanal mentions Ghar Mumkin Khadan. On August 2007, HUDA, Haryana, acquired my land and paid compensation at the rate of Rs 30 lakh (per acre) i.e. Rs 15 lakh to me and Rs 15 lakh to my brother and we also sold eucalyptus plantation after acquisition. 1. Under above circumstances will my land will be treated as agriculture land and long-term capital gain on this land will be tax free as per Section 10(37) of the Income Tax Act (for compulsory acquisition of urban land by HUDA). Please guide me whether this interpretation is correct or not. As I do not want to buy agriculture land from this money. What are the best options available to me to save capital gain tax? 2. Please also guide me whether REC - 54EC bond can be gifted to my son (purchased out of this long term capital gain). — Aadhar Goel A. One of the requirements for claiming exemption under Section 10(37) of the Act is that the agricultural land was being used for agricultural purposes during the period of two years immediately preceding the date of transfer. In view of the fact that only 8 kanals was being used for agricultural purposes as per the records maintained by the patwari, it may be difficult to claim the exemption in respect of the compensation received for the entire one acre of land. The best option for you to save the capital gains tax in respect of the money received towards the acquisition of 5 kanals would be to utilise the same for the acquisition of bonds issued by Rural Electrification Corporation Limited within six months from the date of acquisition. The bonds issued under Section 54EC of the Act have a lock-in period of three years and cannot be transferred even by way of gift to anyone within the said period. The gift within the said period of three years would result into the taxability of capital gains @ 20 per cent plus applicable surcharge and education cess in the year of making the gift. Loan repayment
Q. I purchased a plot for Rs 3 lakh in March 1997. The estimated cost of the same at present is Rs 16 lakh. The house is in the name of my wife and housing loan of Rs 7.25 lakh is pending. I plan to pay the housing loan (Rs 7.25 lakh) and purchase a plot from the rest of the money out of Rs 16 lakh. Please suggest the tax liability of the above statements and measures to save the tax as individually both of us are paying tax in 30 per cent slab having salary of Rs 4.5 lakh each. I shall be thankful for the assessment — D. Sharma, Ludhiana A. The plot acquired in 1997 for Rs 3 lakh will have an indexed cost of Rs 4,99,396 (Rs.3 lakh x 551/331). This is on the presumption that you acquired the plot after March 1997. The capital gain on the intended sale of plot at Rs 16,00,000 would thus be Rs.11,00,604. The tax payable thereon would be @ 20 per cent plus applicable surcharge and education cess. You have stated that you would be repaying the housing loan of Rs 7.25 lakh in respect of house in the name of your wife and would like to purchase a plot with the balance amount. You can save the capital gains tax provided you construct a residential house within a period of three years of the date of sale of the plot, which you intend to sell. For the compliance of this requirement, the capital gain of Rs 11,00,604 will have to be deposited in a designated bank account under capital gain scheme and the amount will have to be spent for the acquisition of the plot and the construction of the house by withdrawal from the said account. If you adopt this course it will not be possible for you to withdraw the amount of Rs.7.25 lakh towards the repayment of the loan raised by your wife. The other method of saving capital gains tax is the investment of capital gain of Rs.11,00,604 in acquiring infrastructure bonds issued by the Rural Electrification Corporation Limited. These bonds have a lock-in period of three years and cannot be sold or transferred for the said period. Such bonds cannot even be used for obtaining the loan from bank by pledging the same as a security. This would also not be of any help to you. Therefore, in case you want to repay the loan, the best course would be to pay the capital gains tax @ 20 per cent plus applicable surcharge and education cess which will enable you to use the entire sale proceeds less taxes for any purpose.
Legal heirs
Q. My husband bought a plot on which we constructed a house in 1994-95 by taking loan from his department. He died in 2000 and me and my daughter (major) are legal heirs of the property but now I am remarried. We have sold the house in 14 lakh (white money). My questions are: 1) Is it necessary to buy a residential property in exchange of our sold house? Can we buy a plot in exchange of a house? 2) Me and my daughter should have a joint account to get DD from the buyer or shall we take separate DDs in separate accounts? Is it necessary to buy new property jointly or can I buy it solely on my daughter’s name? 3) If we don’t spend all the money what are the tax liabilities of remaining money? — Veni Garg A. The answers to your queries are: (a) The capital gains tax would be exempt from tax only if you construct a residential house within the period of three years from the date of sale of the old house or buy a residential house within one year before or two years after the date of sale of the old residential house. If you have intentions to construct a new house, buying of the plot can be a process towards the same purpose. However, plot of land must be purchased before the date of filing of the income-tax return or in the alternative the capital gain arising on the sale will have to be deposited in a designated bank account under capital gains scheme. You will have to withdraw the money from the said account for acquisition of the plot and for constructing the residential house thereon. (b) It will be advisable to take a separate demand draft in your name as well as in the name of your daughter because the capital gain will be assessable in your hands as well as in your daughter’s hand separately. Each one of you can invest the capital gain so earned separately in the acquisition of a new house or buying of infrastructure bonds for the purposes of saving capital gains tax. (c) The capital gains would be taxable in your hands as well as in your daughter’s hand @ 20 per cent thereof plus applicable surcharge and the education cess thereon.
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