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Room for manoeuvre
The Punjab Infrastructure Development Board (PIDB) and the Punjab Urban Planning and Development Authority (PUDA) have tried to lure investors to construct five-star and three-star hotels on the public-private-partnership (PPP) model by presenting a rosy picture about the development of the holy city of Amritsar.
The hotels would be built on a design-build-operate-transfer (DBOT) basis. Describing Amritsar as the “most vibrant tourist centre,” both the departments have stated that Amritsar has witnessed massive development activity. “It has a host of SEZs, malls, clubs and parks that are vying to make it a world-class tourist destination.” However, the fact remains that despite the announcement made by the Prime Minister, Special Economic Zones ( SEZs) have not come up in Amritsar so far. Rather, the existing industry in Amritsar is also moving out. Many industrialists in the city have already shifted their units to other states, like Himachal Pradesh, owing to the concessions being given by the adjoining hill state. However, BJP MP Navjot Singh Sidhu sticks to the claim that the holy city will be of world-class standard within a couple of years. He has also taken the initiative to privatise garbage lifting by engaging a world-renowned firm which would set up the state’s first solid waste management plant. The government has not sanctioned any new technology / IT parks for the city. Instead, the old Mall Road has been converted into the maul road with the construction of a number of multiplexes. However, the state government claims that Amritsar has already seen massive development activity, with a large number of real estate developers going all out to take up hotels and commercial ventures. The true picture is that there is a great slump in the real estate business after the formation of the SAD-BJP government because investors from outside Both the PIDB and PUDA have also claimed that 90 flights, including 70 international ones, take off from Rajasansi International Airport per week even as Arun Talwar, director of the airport, has said that at present, only 62 weekly flights operate from there. The proposed hotels, however, would be in the New City Centre and linked with the monorail to be plied between the airport and the Golden Temple. The state government also proposes to construct an access -controlled Ring Road around Amritsar which may give a boost to real estate in the time to come. Meanwhile, the ambitious Novelty Omaxe, near Maharaja Ranjit Singh’s Summer Palace, has been held up due to legal wrangles. It would house three cinemas, shopping mall and food plaza. The Archaeological Survey of India has already served a notice to a couple of buildings in the precincts of the National Heritage.
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Slow take-off
Two months after Punjab chief minister Parkash Singh Badal announced the setting up of a domestic airport at Sahnewal, investors are still adopting a wait-and-watch policy for bringing in big bucks.
The investors got taken for a ride when they invested in land at three different places in the district where airports were announced earlier.
They bought huge chunks of land at Halwara, Laddowal and Sahnewal, where the international airports were proposed. But the proposals were dropped, first at Laddowal and then at Halwara. The Sahnewal project too almost got shelved. But when the SAD-BJP combine came into power, they floated the proposal of an international airport. Finally, the international airport went to Mohali and Sahnewal was left with the proposed domestic airport. Property dealers and land owners say that investors show an interest in the project off and on. They come, enquire about the rates and take a look at the airport. But with no major development being witnessed at the site and learning from experience, they shy away. "The airport project has effected an increase in land rates by only 8-10 per cent. That too in areas on GT Road or at a distance of 4-5 km. Investors do not want to buy land here fearing acquisition for the airport," says J.S. Dhillon, a real estate dealer at Sahnewal. Kartar Singh of Ramgarh village says that earlier an acre of land in the area was available for Rs 60-65 lakh. Now, the price is pegged at Rs 80-85 lakh. "The increase, however, cannot be attributed to the airport. Such a hike is routine. Considering the setting up of an airport in the area, the prices should have doubled." The condition of the airport and its location has perhaps not been able to attract many. A major negative factor is the poor condition of the roads leading to the airport. Puddles of rain water dot the route. This gives an impression that the government is still not serious about setting up the airport, say the landowners.
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Lush Living
Driven by the changing dynamics, the Indian realty market will undergo a transformation and adopt "green building practices," a new way by which buildings use natural resources such as water and energy and reduce the adverse impact on the environment.
"This transformation will be driven by various combinations of regulation, government incentives and changing market dynamics," according to r.e.design, Asia's first green real estate guide released in Bangalore. Besides, tenants would also help drive the green real estate growth through their corporate social responsibility programmes, desire to attract and retain quality employees and aspiration to improve productivity, states the guide. The adaptation of "green building practices" would not only happen in the country but all across Asia, the guide points out. "Green buildings are set to become a standard practice and we need to quickly understand them, including how they deliver value to us," says Simon Carter, author of the guide and regional head, Sustainability Asia Pacific for Collier International, a leading property consulting company. "The uptake of green building practices in India is now quick and real estate practices are changing accordingly," he adds. India has about 26 built green buildings covering close to 11 million sq ft. Out of these, five buildings have secured platinum or gold Leed ratings. Currently, 218 buildings have registered themselves to obtain a green certificate, with Mumbai leading the pack with 51, followed by Chennai at 35. Bangalore has close to 12 buildings registered for receiving the certification. "The green market in India started with the developed world shifting some of its back offices to India. Unlike other markets, the growth in green buildings is largely driven by occupiers," says Joe Varghese, MD, Collier International India, while making out a case for green estates. On the cost factor in investing in green buildings, Carter says: "Over-focusing on costs can be very misleading. When markets transform, it is the cost of not having a green building to lease or sell that will be a matter of concern". While some of the green buildings may have an initial cost or premium attached towards its construction as compared to conventional buildings, in the long run, these buildings could save up to 40 -80 per cent of energy cost. The energy requirements of some well-designed green buildings around the world was as low as 15 per cent than that of a conventional building, says Carter. "In the changing climatic situation, we need to redesign our buildings and also redesign the way in which we transact, develop, value and manage real estate," he says, and adds that 9.9 per cent of the residential and 5.4 per cent of the commercial buildings account for world green gas emission. Blindly aping the West may not be the solution to the problem, says Joe, underlining the need for coming out with a local green solution to address the problem in India.
— PTI
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Flooroscent
Jagvir Goyal A few years back, marble flooring was the unanimous choice for housing units. Before that, terrazzo flooring was considered a luxury. Simple, plain cement concrete flooring was used in bedrooms, while terrazzo was laid in the drawing room and the bathrooms only. Multicoloured designs were added to the terrazzo flooring to make it look attractive. The past few years have seen a sea change in the market trends. So many types of floorings are available now that a house builder finds himself spoilt for choice. Different types of flooring can be used for different rooms. Though the individual choice varies, here are the right flooring options: Living room & dining area: To keep in tune with the present trend, choose imported marble for the living room, dining room and lobby. This is the best but costliest flooring option. Otherwise, choose vitrified tiles. The third option is the Makrana marble. Choose one of these three floorings to suit your budget. Note that marble flooring may prove much costlier than vitrified tile flooring. Skirting has to be of the same material. You may also choose wooden skirting as it makes a beautiful combination with marble and vitrified tiles. Bedrooms: Provide 9-mm to 12-mm thick laminated wooden flooring in the bedrooms. If you can’t afford to provide it in all bedrooms, use it for the master bedroom at least. In the others, provide vitrified tile flooring. If you don’t prefer wooden laminates, choose vitrified tile flooring for all bedrooms. The last option again is of Makrana marble. Provide wooden skirting with laminates and matching skirting with tiles or marble. Many queries are received about which is the better choice: marble or vitrified tiles. Between the two, vitrified tiles have an edge. These have zero-water absorption property, need no grinding and polishing, give a uniform look, are mechanically stronger, take much lesser time than marble flooring and, above all, prove cheaper than it. The only factor against them is that these look artificial, while marble gives a natural look. Nowadays, such a great variety of vitrified tiles is available in the market that any shade and colour, with a natural look, can be chosen. Bathrooms: For the toilets, use anti-skid ceramic tiles. Today, these make for a unanimous choice. Though many people like to choose marble flooring, it should be avoided because it is much more porous than tiles. Tiles other than the anti-skid ones turn very slippery if the soap solution falls on them. So, choose no other tiles. Whatever be the flooring, tell all family members to spare a minute and use the wiper to wipe the water towards the floor trap after a bath. Dry bathrooms are safe and look good. Don’t choose white coloured flooring tiles. Footmarks are easily visible on them and the bathrooms look dirty. On the walls, provide imported or Indian glazed ceramic tiles. Kitchen: In the kitchen also, provide anti-skid ceramic tile flooring. Here also, many people choose marble, but it’s better to avoid it as it absorbs water. It also invites stains. An anti-skid ceramic tile flooring in the kitchen may prove much cheaper than marble. The latter begins to demand re-polishing after a short period. Whichever flooring you choose, provide a matching skirting. Counter-top for kitchen: Provide a polished granite counter-top in the kitchen. Don’t use marble, for chilly powder and turmeric powder will soon leave stains on it. Americans use synthetic counters like artificial acrylic or polyester-based solid materials for counter-tops because granite is not easily available there and is very expensive. In India, granite is easily available. So, don’t follow Americans here. Synthetic counters have arrived in India and many people are adopting them. However, Indian cooking methods don’t support their use. Spices, hot food and oil have their effect on synthetic counters. Hot pots too leave marks on them. Besides, their cost is very high in India. Use polished granite for counters and provide glazed ceramic tiles up to 700 mm above the counter-top. Balconies & servant quarter: In balconies also, provide anti-skid ceramic tile flooring. The second choice is of vitrified tiles. Provide a matching skirting. In the servant quarters, provide ceramic tile flooring. If you have left any open-to-sky areas in your house, provide Kota stone or Jaisalmer stone flooring in them. In the paved area around the house, you may provide pre-polished Kota stone with marble strips, Baroda Green stone or porcelain tile flooring instead of the usual and rough-looking concrete paving. Floor junctions: Always use an aluminium strip at the junction of the floor of the house with that of kitchen, bathrooms and the verandahs. Use a 16-gauge or thicker strip. A glass strip if provided at these junctions may soon get broken and hurt naked feet. Keep the floor levels of the kitchen, all bathrooms and all verandahs half an inch below the level of other room floors. This will avoid flow of water into the rooms. See that the doors to the kitchen and bathrooms are so provided that these strike against the strip when closed. Terrazzo flooring: Terrazzo is fast disappearing from Indian houses as everyone is now opting for marble or vitrified flooring. However, terrazzo flooring, if laid well, has its own advantages. It is highly durable, non-slippery, cheaper than marble and gives a strikingly uniform appearance. Consider it as an option before making a final decision. When laid out perfectly in level, it gives excellent results. White terrazzo flooring: To have white terrazzo flooring in your living room, choose white cement and white Makrana or Dehra Dun white chips of 4 to 7-mm size or of grade 0 and 1. Use 1 part of cement with 1.5 part chips. Your mason may suggest a 1:1 ratio. Ignore that. Use white coloured, 2-mm thick plastic strips of Finolex or similar make instead of glass strips. Lay a 9-mm thick final layer over the usual concrete layer. Apply cement slurry to lower layer before laying the final one. Engage skilled masons to lay the flooring. Don’t use any pigment. Tell your masons that you are looking for a pure white terrazzo flooring and no pigments or additives are to be used at any cost. Otherwise, he will add a pigment to the cement before you come to know of it and your purpose will be defeated. Be extra careful about levelling and uniformity during the laying of flooring. Later, provide a granite polish to this flooring. You will find that it is not only cheaper but has put all marble floorings to shade. Go ahead. Happy building! The writer is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com
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DLF, Unitech & Omaxe scrips go for a toss
The real estate stocks were battered heavily early this week. They suffered one of the largest sectoral losses in recent times. The fall in the sector was mainly led by DLF, which hit the 52-week low on the back of interest rate sensitivity and slowdown concerns in the sector.
Among the major losers were Unitech Ltd, which was down 9.3 per cent. Housing Development and Infrastructure Ltd was down by 8.81 per cent, while Ansal Infrastructure fell by 8.10 per cent. The scrips of Parsvanth and Omaxe too fell heavily since January, 2008. The uncertainty in the capital market has hit realty stocks the hardest and they have been the worst performers this year, having shed over 50 per cent of the 50-week peak reached in January. According to experts, realty stocks may see a further dip in value because of rising costs and little chances of the interest rate softening. These scrips saw a rally in 2007 and that is why when they started falling, the plunge looked more pronounced, says Mangat Rai, a real estate dealer of the tricity. According to reports, there was also a pile-up of inventory with builders and developers and a liquidity crunch, forcing them to postpone new launches. In addition, the cost of construction projects is also rising. Companies which are sitting on huge land banks will have to suffer if the demand and supply mismatch continues. Further, analysts are of the view that the spiralling crude prices and a high inflation rate will lead to hardening of the interest rates by the apex bank, which will add to the woes of the already ailing realty scrips. In certain pockets, supply overreaching demand has made things tougher for developers and there are concerns of a slowdown also, adds Rai. A real estate consultant for the last over 40 years, Rai recently toured various cities across the country. He observed that the real estate sector is seeing a major slowdown in sales volume in most domestic markets. It may be seeing a correction on the back of a possible slowdown in the sector. There is a softening of real estate prices in both the commercial and residential sectors, and the correction is expected to happen across the country. The uncertainty looming in the real estate market is leading to profit booking in the relevant stocks. There is some shedding of realty stocks from investors’ portfolios as there is a fear of over-owning them. They are being perceived to be more risky in case of a possible correction in realty prices. The mad rush to invest in realty businesses due to the the rapid appreciation of real estate prices witnessed across the board was a mixed blessing for both the real estate developers and investors. Real estate players found an opportunity to raise money to fund their businesses and investors made a quick buck from the steep appreciation in stocks. The stock rally over the past two years was mainly driven by the skyrocketing real estate prices owing to a high demand, which, in turn, was fuelled by the easily availability of home loans. Since the real estate industry is at a nascent stage of getting itself organised, there is hardly any credible historical information available in terms of the demand-supply scenario and prices. Further, with the vast geographic expanse over which a number of developers have their operations, analysts find it difficult to ascertain a precise valuation on their own and are compelled to go by the claims made by the companies. Realty stocks have seen a fluctuation over the past few months. This was due to a number of a reasons such as an increase and decline in housing loan interest rates, curbs on external commercial borrowings, a high demand in Tier-II and Tier-III cities, rising cement and steel prices, variations from execution promises and the like. For investors, the real question is what to keep in min while picking stocks. Analysts and fund managers say there is not just one standard tool to analyse the realty business. Each company is a unique mix of a myriad projects, such as apartments, group housing, integrated townships, commercial complexes, technology parks, special economic zones etc Among the Indian realty players, many companies have a unique proposition that makes them interesting investments. Now, all that one has to do is scan through the numbers, estimate one's own risk appetite and take a pick. Whenever such a crisis happens in the capital market, people start thinking of an alternate mode of investment that could give them better results and if the money flows away from the stock market, then a part of that definitely comes into real estate. When the share market does not perform well, then, theoretically, investors turn to realty funds. Real estate consultants feel it is unlikely that people will immediately start putting money into the property market. The Union Budget 2008-09 failed to extend major benefits to the real estate sector. There were many expectations from the Budget like a liberal policy on REITs and REMFs, introduction of value added stamp duty, some benefits for rental income and some reforms on FDI provisions. But, there were no such announcements and the sector felt ignored, adds Rai. All this has added to the present uncertainty.
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Tax tips
Q. I purchased a plot in Chandigarh in the name of my wife without her Power of Attorney in 1975. Afterwards, we both constructed a house on the plot with joint efforts, with her raising a loan from the Punjab Government.
The said property stands in her name in the records of the Estate Office, Chandigarh. My wife expired in December, 1996, and the property is still under mortgage with the state government. She left three legal heirs: (a) myself i.e. her husband (b) our only son and (c) our only daughter. Later, I remarried a widow under Hindu laws in 2001 and she then had a minor son, who became a major in November, 2007. I have not legally adopted the widow’s son. Kindly advise me about who the legal heirs are to the said property. Can I make a Will for it?
— Surinder Kumar Jain A. The Hindu Succession Act, 1956, provides a general rule of succession in case of a female Hindu dying intestate. According to these provisions, the property in such a case devolves upon the sons, daughters and the husband. The distribution of the property amongst these legal heirs takes place simultaneously. On a plain reading of these provisions, yourself, your son and your daughter are thus the co-owners of the property inherited from your first wife who died without making a Will. In case you want to exclude your second wife from your share of the aforesaid property, you can make a Will in respect thereof in favour of your son and daughter.
Land of confusion
— Surinder S. Dhillon A. Section 2 (14) of the Income Tax Act-1961 deals with the definition of the term “capital asset”. Section 2(14)(iii) of the Act includes agricultural land as one of the items under the said definition. However, the said clause also provides that the agricultural land would be covered within the term capital land only if it is situated within the municipal areas or within a certain distance from there. As against this, Section 54 B of the Act provides that in the circumstances specified therein, the capital gains tax would not be chargeable. The exemption granted by Section 54B of the Act is from the taxability of capital gain arising on the transfer of agricultural land. The distinction between the two sections is thus obvious. Section 54 B of the Act does not deal with the agricultural land owned by an HUF. Therefore, even if such a land is sold by an HUF and a new plot is purchased within two years of the date of sale, no exemption is provided on capital gain arising on the sale. Further, Section 54B of the Act does not negate the provisions of Section 2(14).
Staying within limits
Q. We need advice on the following: 1. Is there any supporting law for your view that the distance of X km from the municipal limit should be measured with reference to the road. 2. Whether the limit of X distance from municipal limits is with reference to the municipal limit that existed on the notification date of January 6, 1994, or the extended municipal limit on the date of the sale of agricultural land. This information is required for knowing the capital gain liability, if any, for the sale of our HUF agricultural land.
— S. Praveen A. The answers to your queries are as under: (i) I have not come across any decision on the issue raised by you. (ii) The municipal limits for the purpose of Section 2(14) of the Act would be those that exist as on the date of the sale of agricultural land.
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Q. Thank you for replying to my query. I am not clear about the applicability of Section 54 B from the reply. Does it negate Section 2 (14) and consider HUF-owned agricultural land, including rural farms, outside the notified areas to be capital assets for taxation?