Hope of a revival

Though the dark clouds of a depressing realty scene are yet to lift, the sector is hopeful of a brighter prospects in the New Year

New Year is the time for new beginnings and new hope, and the realty sector in India seems to be all set to prove this right in 2014. While there are no two views about the fact that 2013 was, at best, a forgettable year for the stakeholders, but the hope of a revival in the New Year is what market watchers are predicting at this time. “2014 would be year of revival. Revival has started, the visible change would be seen from second half”, says Lalit Kumar Jain, Chairman of realtors’ body CREDAI. While the economy has shown some signs of a recovery, most of the experts’ hopes are hinged on the post-election scenario in the second half of this year. “The General Elections is the speculated game changer, and might boost confidence in long term investments”, says Advitiya Sharma, Co-founder and Marketing Head, Housing.com, a real estate portal.

“Consumer confidence will remain subdued during the first two quarters of 2014 owing to uncertainties surrounding the general elections and macroeconomic condition (both global and domestic). However, post the election, fence-sitting investors are likely to become active,” JLL India Chairman and Country Head Anuj Puri said.

Cautious mood to continue

For homebuyers, the residential segment is likely to remain tepid over the next four months and there is not much price appreciation expected especially in the Tier II and Tier III markets. So the buyers who have been sitting on the fence waiting for the right time, the first half of this year can be the right time to finalise their deals as the market is likely to see some improvement in the latter half of the year. “We expect the market to start an upward momentum by end of 2014 and end users and investors to utilise this opportunity to book their dream homes as these offers would vanish once the economy starts showing signs of recovery”, says Brotin Banerjee, CEO and MD, Tata Housing .

“The second half of the year is likely to witness gradual revival in absorption. Residential real estate capital values will increase in a subdued range of 10-12 per cent year-on-year pan-India for the whole year”, says Puri.

At present the residential segment is facing a shortage of over 19 million homes and over 90 per cent of this demand is in the EWS and low income segment, so it is this segment that is going to see fresh supply to a large extent in 2014.

Game changers

Apart from the Lok Sabha elections, certain other factors like expansion of the banking sector with release of 12 new banking licences by the central bank during early 2014, introduction of REITs that will attract large pool of investment in the sector, are going to have positive effect on the realty market on the whole in 2014.

“Since REITs are adept at searching for income-generating properties, it could result in extracting new growth opportunities through rental housing projects, affordable housing projects and senior citizen housing projects which will increase the depth of the industry. These factors can help the Indian real estate sector sustain its attractiveness”, says Puri.

As policy paralysis remained the major cause of slowdown in the sector reforms hold the key to a revival now. Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd. says, “From the standpoint of both the economy and the commercial real estate sector, reforms are required in terms of speedier clearance of stalled projects, liberalisation of supply chain management, opening of key sectors to foreign direct investment and public-private partnership projects”.

During the next six months, reforms are expected to be approved for opening up the banking sector to foreign competition and deepening corporate debt markets, which will promote investment and raise efficiency in the financial sector. These are going to have a ripple effect on the property market, adds Magazine.

Office and retail space

The growth in commercial and retail segments is also projected to be healthy in the latter half of 2014 experts. The commercial office segment of top cities is expected to see fresh supply addition of about 140-150 million sqft by the end of 2017. “During 2H-2014, businesses are likely to show greater confidence in terms of investing in their expansion plans. This would result in increased office space absorption.

Overall, it is reasonable to expect better growth in rental and capital values in 2014 as against the last year. However, yields are likely to compress further as capital growth may continue to rise a bit faster than rentals. Also, the current vacancy levels would rise marginally on the back of new stock completions,” says Puri of JLL.

On the retail front around 9,00,000 sq m of additional retail space supply is going to hit the pipeline in 2014, as against the 5,90,000 sq m in 2013. Delhi, Hyderabad and Bangalore are likely to see a healthy supply of retail space, especially in the suburbs. In 2014 India’s retail sector has the potential to reach around Rs 25 trillion. The size of retail market is around Rs 19.2 trillion (as of 2012), accounting for 22 per cent of India’s GDP. With the main stakeholders adopting an optimistic attitude, it remains to be seen what the New Year has to offer to buyers and developers.

— Inputs by Geetu Vaid

Area watch: faridabad
In the grip of slowdown
Bijendra Ahlawat

Delay in delivery of projects and hike in Collector Rates have dealt a severe blow to the real estate prices in this district of Haryana

Faridabad may have been considered a promising realty destination in the National Capital Region (NCR) but the property market here has taken a severe beating over the past 12 months. This district of Haryana that shares its northern boundary with Delhi and western one with Gurgaon, has attracted a host of developers over the past few years and has a large number of residential projects are coming up here.

Areas like Greater Faridabad and Neharpar etc have been vigorously projected as lucrative investment as well as living destinations by the property consultants as well as developers. But in 2013 the investors as well as buyers showed very less interest in this city. With the overall slowdown in market the property rates have slipped by at least 20 per cent in this period much to the dismay of the investors as well as the developers.

“There is hardly any buyer in the market at present and the chances of revival of the market in near future are also quite bleak”, says Vishnu Gupta, a property consultanat based in Sector 7 here.

He blamed government policies as well as the delay tactics of builders for the current situation in Faridabad. He said the market, which was booming a year ago, had caused massive losses to the investors and developers in 2013 as sale-purchase activity came to a virtual standstill in the past year. This he attributed mainly to the sharp hike in Collector Rate of the property and the delay on the part of the builders in completing the projects.

Price correction

The floor rate of the flats in majority of the projects coming in the Naharpar area popularly known as Greater Faridabad had come down by 10 to 15 percent. The flats which were fetching a price of Rs 3000 to Rs 4000 per sq. ft a year ago are now not getting buyers even at rates between Rs 2500 and Rs 3500 per sq ft.

According to market watchers the prices of residential plots in all the sectors have also gone down by up to 20 per cent.

Collector rate shocker

Blaming the state government mainly for the sluggishness, another property dealer based in Sector 9 said that the hike in Collector Rate from Rs 6,000 to Rs 8,000 earlier to Rs 8,000 to Rs 22,000 per sq. ft had made the buyers vanish from the market. “As Faridabad has always been primarily a market for affordable segment, most of the buyers in this segment are unable to bear the huge cost of registration due to the massive hike in Collector Rates”, he added.

The actual rate of a 500 sq. yd plot in new sectors like 62,64 and 65 here is around Rs 19,000 per sq. yard against the Collector Rate of around Rs 22,000 per sq.yd, “It is perhaps for the first time in history that Collector Rate in an area is more than the actual rate of property”, said Gupta.

According to Parmod Gupta of Modern Builtech, a real estate advisor, the market which was supposed to go up or maintain a stable level due to some of the projects coming up in the city had actually gone down in 2013.

He said Faridabad was the worst hit market in the NCR because of the lack of proper coordination between the government agencies and builders. While the government agencies delayed the construction of main roads and civic amenities in the new projects area, none of the builder had been able to give possession of the flats on time so far.

Lack of proper civic amenities has played a major role in driving many prospective buyers who are scared to invest in Faridabad. The area also suffers from water woes as the Central Ground Water Board (CGWB) has included it in its 31 “dark zones” (over exploited areas).

Timely completion of projects and proper infrastructure are the only hopes that can give a boost to the real estate prices in this area.

Expert take
Land acquisition: The right Act?

With the Land Acquisition, Rehabilitation and Resettlement (LARR) Act coming into effect from January 1, 2014, the lack of transparency in the land acquisition process in India will now hopefully get addressed. Foreign investors have historically been wary of investing here, since they do not get land title assurances as in other mature markets. The provisions in the LARR Act are likely to result in increased transparency and clearer land titles. On the downside, large industrial and infrastructure projects are likely to be significantly impacted by it, and may face hurdles in execution. For the real estate industry, the addition of rehabilitation and resettlement component will be a major financial strain. With implementation of the Act, cost of land acquisition will now increase and real estate developers will pass on this cost to end-users.

Since developers will look to hedge risks, it is expected that the market will witness an increase in joint development projects. The trend, which is already prevalent in many tier-I cities, is likely to spread across the country.

Apprehensions remain

It is already a complicated and lengthy process to acquire land in India, and the Act might make it even more complex — which will act as a deterrent for investments in large township projects as well as in the manufacturing and industrial sector. As per industry bodies, such as Federation of Indian Chambers of Commerce and Industry (FICCI), this does not augur well for India’s manufacturing sector.

It has been on the government’s agenda to increase the share of the manufacturing sector to 25% of GDP by 2025 from the current 16%. However, with the LARR in operation, ambitious industrial projects, such as the Delhi Mumbai Industrial Corridor (DMIC) project, may face hurdles in execution.

For the real estate industry, the addition of rehabilitation and resettlement component will be a major financial strain. With implementation of the Bill, cost of land acquisition will increase and real estate developers will pass on this cost to end users.

Since developers will look at protecting their margins and hedge risks, it is expected that the market will witness an increase in joint development projects. The trend that is already prevalent in many Tier I cities is likely to spread across the country.

Complicated procedures

The LARR has some very complicated procedures and provisions for land acquisition by the government or for infrastructure projects to be undertaken via the PPP route.

These procedures include:

• A social impact analysis for any land acquisition;
• Identifying the parties being impacted by the acquisition and providing adequate compensation. There are also restrictions on land acquisition beyond 5% in districts with multi-crop agriculture, and beyond 10% in all single-crop districts.

Voices: outlook for 2014

The Indian economy is recovering and real estate sector is expected to stabilise in the next two to three quarters. We would anticipate this sector to grow, albeit at a slightly lower pace, as the demand for housing still appears to exceed supply, and the weakening rupee makes India an attractive real estate investment destination for non-resident Indians.

Stability in property prices during 2014 will give the required confidence to consumers who have been delaying their decision to book their dream homes in 2013. Affordable and low-housing segment is likely to see the highest growth but other segments will also grow as people aspire for better homes, better quality of life and hence invest more in buying their own homes. On the other hand, the demand for luxury housing in India will continue to growing due to influx of global lifestyle trends along with changing lifestyle and aspirations seen amongst young India. Going forward the key to real estate growth would be to get infrastructure status with relevant subsidy for affordable housing, subsidy on technology enhancement so that less dependent on manual labour, curb on raw material cost as that will impact the quality and timeline. Finally the interest rate to be reduced so as to make it attractive enough for buyers. — Brotin Banerjee, CEO and MD, Tata Housing

2014 is definitely going to see a robust growth. The slow down so far has been because of the liquidity crunch in the market for various reasons and the period of correction in the market has also crossed 75 per cent of its impact. Definitely from July 2014 everybody will see a tremendous impact on the positivity of the sector and there will be a boom in the real estate sector. — Vikas Raj Sharma, Director Cosmic Group

It will be interesting to see how market reacts post general elections. Though, I am confident that with the kind of reforms proposed by Union Government over FDI and Retail, real estate sector is going to witness fairly transparent and shiny days in the year 2014 with many new launches in affordable and mid premium segments in areas like Greater Noida, Sohna Road New Faridabad and Manesar / Dharuhera. Commercial space will also witness a boom with the expansion of Delhi Metro in NCR. Overall the market is expected to see an uptrend in terms of demand and supply. — Pradeep Jain, Chairman, Parsvnath Developers Ltd. 

The real estate market is going to respond much better in 2014 as there will be Lok Sabha Elections and people will get the stable govt. and Stability matters a lot in decision making sentiments of the buyers. This is evident from the jump in the Sensex and the commodity market on the prediction day of the assembly elections held recently in four states. — Alok Tyagi, Chairman ATN Group

With economy showing no signs of revival at least in Q1 of 2014, real estate will continue to show signs of weakness in line with other sectors and asset classes. Investors and end users will continue to be cautious as hurdles to growth will prevail until the first quarter. Market may look up post the general elections. Stable government, sustainable policies, conducive RBI Policy, better industrial growth & focus on industrialisation, improved infrastructure and timely delivery of infrastructure will lead to positive market sentiments. A new investor will not come in unless the rupee stabilises. Market will largely be end-user driven.

Q2 looks promising not just for the sector but economy in general will benefit from the changed political scenario. Demand in the affordable housing sector will continue to drive growth.

As for the emerging areas for 2014 Dwarka Expressway and Sohna hold good potential as attractive destinations for stand-alone developments, group housing and commercial complexes. And the areas that are likely to report significant growth going forward are Rewari and Dharuhera. — Ravi Saund, COO , CHD Developers Ltd

Every developer and buyer is hopeful for a better economy in 2014. It is expected that Ghaziabad will have a robust infrastructure by 2014 as the UP Government has already announced the investment and plans for highways, peripheral roads, schools and colleges. By 2014 we expect these to be accomplished and operational. We expect the real estate market will be stable in the first quarter and then an increase in the sentiments of the buyers propelling to the investment in residential and commercial projects. — Gaurav Gupta, General Secretary, Raj Nagar Extension and MD, S G Estates

2014 may be considered as the year of real estate maturity. Real estate is a game of market sentiments and those sentiments can be revived within a few months on the back of sound economic fundamentals and market demand. In the New Year, for the first six to eight month, growth momentum may not be the same as it used to be during the boom period between 2006 and 2008. — Vinay Jain, Chairman & Managing Director, AVJ Group

Even though we expect prices to go up in the coming year, however, the demand for both these segments will be on a rise in 2014 as well. M3M deal with straddling ultra-luxury and premium residential complexes and have commercial and hospitality projects. We have launched many projects namely- Golfestate, Merlin, Polo Suites, Escala, Cosmopolitan, Urbana and Woodshire. M3M continues to have the projects on full swing construction setting new trends in the realty sector. — Pankaj Bansal, Director of M3M India

From April 2014 onwards it should improve considerably, as by that time the political uncertainty would be reasonably clear in the country. As such there is no shortage of demand but customer is slightly conscious before committing. — Manu Garg, Director LandCraft Developers Pvt. Ltd

“Real estate is one of the sectors which are completely driven by market sentiments. Economic market situation will decide the course of the real estate sector in 2014. The sector’s future path will be aligned with the market conditions. In the first half of the year, the situation is not expected to improve much on account of consumers remaining cautious ahead of the Lok Sabha elections due mid-2014. There might be a turnaround in the later half. Revival of the sector will also depend on the RBI’s stand on the repo rate and CRR. If inflation will subside, the central bank will have the room to cut rates which in turn will bring down the housing loan rates. Such a step will drive the consumer confidence and help revive the sector. Pricing in 2014 is expected to be stable. — Manish Agarwal, MD, SATYA DEVELOPERS

The demand is expected to increase in the coming 4-5 months. Delhi-NCR will see an upsurge in the queries getting converted into actual sales. Demand for affordable and mid-income housing segment will increase and places like Greater Noida and Sohna Road will witness robust development activities. I think the upcoming general elections will also play a key role in the realty market with buyers expected to wait for the new government and price corrections to happen as the market is sentiment driven. But overall, the year promises to be a good one for the developers and buyers as well with demand expected to overcome the supply in the NCR. — Aman Agarwal, Director, K.V. Developers

2014 looks to be the year of HOPE after the dull and average year (2013) for the real estate industry. We hope to get the stable government by the mid of year and inflation is also expected to ease by March 2014. Rate of Interest are at peak and from here onward rate of interest are expected to fall only. Positive feeler and necessary breather was given by RBI by keeping the rates unchanged. SBI and HDFC further reciprocated by reducing the home loan rate of interest. These factors will create the positive sentiment and growth story may start again. It is expected that policy will be clear on REITs and inflows may start in 2014. This will ease liquidity pressure especially in commercial Real Estate. I expect the demand to pick up and prices to firm up from Q2 of 2014. — Gaurav Gupta, Director, SG Estates

}The overall economic scenario in the country will improve in 2014. As per Asian Development Bank country’s GDP is expected increase to 5.7% from present 4.7%. With inflation and CAD in control, the interest rates are expected to come down in 2014, spurring real estate demand. Delhi NCR will continue to be the largest real estate market in India with almost 40% share in new residential launches. Infrastructure initiative like extension of Delhi metro in Noida- Greater Noida and completion of Dwarka Expressway will further fuel real estate growth in the region. — P. Sahel, Vice-Chairman, Lotus Greens Developer

Market pulse
Surge in mall space likely in 2014

Supply of retail space in shopping malls is expected to more than double in 2014 to 11.7 million sq ft in the top seven cities of the country compared to last year, according to a report by property consultant JLL.

During 2013, these 7 cities — Bangalore, Chennai, Delhi-NCR, Kolkata, Hyderabad, Mumbai and Pune —logged an estimated supply of around 5.2 million sq ft, taking the total shopping mall stock to 76 million square feet (sq ft).

According to Jones Lang LaSalle (JLL) India report on “Retail Real Estate”', the total shopping mall stock is likely to reach 87.7 million sq ft by 2014, representing an addition of 11.7 million sq ft of new supply this year.

“In 2013, an estimated supply of around 5.2 million sq ft was registered — a 22 per cent increase over last year’s supply of shopping mall space.

“Chennai led with 1.95 million sq ft of supply in 2013, followed by Mumbai and Pune. In 2014, Delhi-NCR is expected to hold the dominant position in terms of expected net addition of shopping malls,” JLL India Managing Director – Retail Services Pankaj Renjhen said.

Among the seven cities, Delhi-NCR and Mumbai have been leading in terms having the highest concentration of shopping malls, accounting for 62 per cent of the total stock.

Renjhen said 2014 would witness increased supply of mall space as most of the retail projects were launched in 2009-10 and it takes 4-5 years to complete them.

That apart, Renjhen said that DLF’s large shopping mall of about 2 million sq ft in Noida would be operational next year.

Highlighting an emerging trend in retail real estate, he said the average size of malls is likely to increase in the coming years, as developers are focusing on project sizes that allow for a critical mass in terms of offering various formats and categories under one roof.

“In 2014, the average size of malls is estimated to be around 3,80,000 sq ft, which is expected to increase to 4,70,000 sq ft in 2015 and further increase to 6,60,000 sq ft in 2017,” he added.

Renjhen also mentioned about an increasing trend among upcoming malls to adopt a structured approach in planning, execution and launch.

“The importance of formulating an optimal tenant mix to ensure the maximum utilisation of retail space is now recognised and accepted by almost all major mall developers,” he said.

Consultant said that retailers are showing the highest interest in upcoming retail projects that offer not only a good location, but have been optimised in terms of design and trade and tenant mix. — PTI

Fast facts

2014 would witness increased supply of mall space as most of the retail projects were launched in 2009-10 and it takes 4-5 years to complete them.

In 2014 the average size of malls is estimated to be around 3,80,000 sq ft, which is expected to increase to 4,70,000 sq ft in 2015 and further increase to 6,60,000 sq ft in 2017

real trends
Viva villa
Vivek Shukla

When Shishir Patra, an IT professional returned to India after spending almost a decade in the US his obvious choice for a home in the Capital was a villa rather than an apartment. “I was keen to live in a villa as I had enjoyed villa living in US greatly. A little search and I found that NCR has a huge range of villas on offer so I booked one and will get the possession in 2015.”

So if you have deep pockets and desire to live in a villa, then you have ample options in NCR to choose from. Lifestyle villas are being built with the highest specifications and quality, which set a benchmark for luxury living. Villas provide an option to buyers looking for a spacious lifestyle and those who are looking at a certain value for money. Most of the villas are available either in integrated townships in which they co-exist with multi-storey apartments or are stand alone, limited and private editions.

According to a recent survey, around 3,419 more villas units are expected to be on offer by 2014 with nearly 1,800 units coming up in Noida and Greater Noida alone. Going forward, one will see better growth as far as this asset class is concerned. A 32 to 35 per cent growth is envisaged for this segment in the short-term according to experts.

It goes without saying that rapidly growing high net-worth individuals (HNIs), increased aspirations and changing lifestyle are the factors behind luxury living being redefined in India. Premium villas boast of increasing demand due to rising income level and affluent lifestyle desired by young professionals.

"Wide global exposure and changing lifestyle of people residing in NCR has set a trend in this region wherein the customers are looking for the luxury villas equipped with all modern facilities and gadgets to have a comfortable and time saving lifestyle," feels Ajay Singhal,director of Avalon group.

Mahesh Pawar, CMD, Mahavir Hanuman Group, " Designer villas are an epitome of the finest luxury and an example of the best amenities one will ever experience. These private villas will provide the best in class and are targeted to cater to the real connoisseur who wants to have ultimate luxurious experience of life time."

Ashok Gupta, the managing director of Ajnara India Ltd, says, “A villa has the benefit of space and comfortable living, where you can enjoy a beautiful evening in your own garden with family and friends. The house too gets larger space with a backyard and a garden in the front. Villas are quite good for people with joint families or for those who want to have lavish housing.”

Ample choice

Many developers in the NCR after launching different residential formats are now looking seriously at the plotted-asset class.

Villas became an in thing in Delhi-NCR around 15 years ago, when Sushant Lok, Palam Vihar, Uppal South End, came up and grabbed the headlines. Now, you have many options if you love to live in a villa. You can book your villa at Greater Noida. Paramount Group, Amrapali and Ansal API are coming up with villas there. As far as Gurgaon is concerned, Emaar MGF is constructing villas there, while Unitech is coming up with villas on Sohna Road.

There are also some options on the Dwarka-Gurgaon Link Express. And on National Highway 58, SVP group is building Villa Anandam. These villas are equipped with all the modern facilities, including an exclusive club. All these villas would be available for Rs 2 crore to Rs 5 crore and more.

Equipped with luxury

The villas of NCR are equipped with features like high-end home automation, imported Italian flooring kitchen featuring latest designs. And to make it a complete private affair, these even offer personal glass elevators, CCTV camera, ample car parking space, personal library, master bedroom fitted with shower, bathtub and his/her vanity sink.

“More often than not villas are developed in premium gated housing complexes with spacious interiors, parking space, health club amenities like spa, swimming pool, Jacuzzi, a sports complex, a golf course. Such dwellings are connected to the city and yet secluded from the din. The idea provides residents the luxury of entertainment options at walking distance instead of driving distance,” says Devinder Gupta, managing director of realty advisory Century 21 DGS.

Realty experts say preference for villas by certain people in some parts of the country is also a cultural issue. Mumbai is a city that is used to high-rises but people in Delhi, Chandigarh, Chennai and even Bangalore prefer individual living units. Mumbai, on the other hand, does not have an appetite for villas but there are some developers who are creating villa-type products in high-rises. These projects are now also available in Delhi.

Ground Realty
The edge effect
Jagvir Goyal

Be it granite, marble or wood, whenever any of these is provided over usable surfaces, the exposed edges of the slabs should be given a special finish. This edge-making is a specialised job that is carried out by highly skilled and experienced workmen. The level of skill of a floor laying mason is judged from the fineness and finish that he generates in edge making. Let us have a look at various aspects related to the edge making.

Edge locations: All the treads of staircase steps have edges protruding beyond the corresponding risers. These edges need to be finished and are called 'Nosing'. If the side of the treads is exposed on railing side or on both sides, these edges also need finishing. In addition to this kitchen countertop edges are required to be given a suitable shape and finish. These, thus, are the two major locations requiring edge-making skill. Whenever washbasin counters in the toilets are provided in granite or marble, their edges also require finishing to suitable shape.

Edge profiles: The edges can be finished to different profiles as per the liking of the house owner. Among the edge profiles, full bull nose edge, beveled edge and radius edge are the most popular. In addition, ogee edge, flat edge, reverse bevel edge, cove edges are also chosen by people to add a unique and different look to the staircase and countertops. Bull nose edge was almost universally adopted earlier. These days, beveled edge is becoming more popular. In common language, edge profile is referred to as ‘gola’ by the workers.

Preparation: To prepare the edges, the flooring gang draws thin strips of 1.5 to 2 inch width from the granite or marble being used in the steps and countertops. These strips are pasted on the outer edges of the tread slabs and countertop slabs. Strong adhesive like araldite is used in jointing the strips to the slab edges. The edges are then loaded carefully by stacking bricks or other material on them so that the bond of slab edges with strips develops full strength under load. The joints are kept loaded for a day or so. The slabs are now fixed in position in the treads or countertops. After the slabs are fixed in position, edge grinding is taken in hand.

Edge grinding: After the staircase treads are fixed in position, edge grinding work starts. An angle grinder is used to carry out edge grinding. The sharp edges are rounded off to produce a bull nose or beveled edge or any other shape. Care has to be taken to ensure that there is no change in shape along the full length of the tread or the countertop.

Time factor: As edge preparation is a highly skilled job, it demands immense patience as it takes time. Therefore, whenever the work is being got done on daily wage basis instead of contract, the house owner too should keep patience and shouldn’t doubt the workers consuming extra time on the job.

Under counter washbasins: Granite or marble slabs fixed in toilets to accommodate under counter washbasins need cutting of slabs along the periphery of washbasins, followed by edge preparation. Here, the thickness of slab is fully visible along the washbasin periphery. That’s why special care should be taken while choosing marble and granite slabs for under- counter washbasins and it should be ensured that the thickness of slabs is uniform and doesn’t look varying along the washbasin perimeter. The slab edge should now be rounded off by using a grinder.

Cost factor: Edge making is a costly job. Its rate per foot length is double the rate of marble and granite laying per square foot. To understand the cost of edge making, take an example. Suppose you have assigned the job of floor laying to a gang at a rate of Rs 15 per sq ft for marble laying and Rs 30 per sq ft for granite laying. The rate of edge making shall be double than that of the rate of slab laying. So in case of granite, the rate of edge making shall be Rs 60 per feet length of granite edge.

Measurement method: Not only is the rate of edge preparation is double than that of slab laying, the measurement is also taken as double the measurement of edges. Suppose, marble is used in the stair treads of 4 ft width. The length of edge measured for edge payment shall be taken as 8 ft by the gang. This is done because the gang has to cut the strips and fix the same on the slabs. Thus the actual rate payable becomes Rs 60 per ft of length for marble edge and Rs 120 per ft length for granite edge.

Grinding & polishing: After the laying of marble and granite in floors, the gang for grinding and polishing steps in, equipped with grinding machines, hand grinders and grinding blocks of various numbers. The edge grinding and polishing is done by using hand grinders or manually. It also requires skill and effort like floor grinding as its appearance has to be matched in shade and polish with the main floor. Therefore, edge grinding and polishing is as costly as the edge preparation. If the granite grinding and polishing has been paid at Rs 20 per sq ft, the rate of granite edge grinding and polishing shall be Rs 40 per ft length.

Provision in sills and parapet tops: Some people prefer to provide marble or granite in the window sills and parapet tops. It is a good idea. Such window sills and parapet tops are easy to clean and maintain. In such cases, the edge shouldn’t be doubled in thickness but simply tapered to a smooth finish and the rate for this edge making should be decided as much lesser than the normal rate of edge making.

Making the edges anti-slip: Edges of staircase steps can now be made anti-slip as many companies now exist that provide anti slip solutions for the staircase step edges. The edges are provided with anti-slip coatings having low organic volatile content or with epoxy abrasives. The coatings are available in different colours to choose one matching the shade of stone in steps or in contrast as per the liking of the user. Extruded aluminium nosing is often provided on edges of the steps.

Readymade edges: In case a house builder wants to save time consumed in edge making, grinding and polishing, he can choose readymade staircase treads, vanities and kitchen countertops with their edges finished to bull nose or tapered shape. Teak wood or hardwood when used in treads also has the front edge finished to shape.

Luminescent edges: To avoid taking a false step in the dark while descending staircase steps, the edges can be coated with photo luminescent pigments also that glow in the dark. Many Indian and Chinese companies are now marketing these products in India.

— This column is published fortnightly

Tax tips
Do I have to deduct TDS?
S. C. Vasudeva

Q. I entered into an agreement with a builder to buy a flat in a project (under construction) in Bangalore for Rs 55,93,800. I paid an initial amount of Rs 11,18,760 in December 2012, and the balance sum was to be paid in the form of 15 post-dated cheques of Rs 2,90,878 each, payable bi-monthly starting from March 15, 2013, and the last cheque was dated 15-07-2015. Now, I find that the Finance Act 2013 introduced a new Section 194-IA which requires that “Any person being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property costing above Rs 50 lakh, shall deduct an amount equal to 1 per cent of such sum as Income Tax thereon, and credit the same to government.

• Kindly advise whether this Section applies in my case also, since I paid the balance amount, in the form of post-dated cheques, before this Section came into force. If yes, then please suggest remedy, since the cheques are with the builder, who is withdrawing payment at the bi-monthly interval. Also, what to do with the tax on amount the builder has withdrawn from April 2013 till date?

My NRI son has also purchased a flat under similar situation and issued cheques from his NRO account. Do let me know if the same rule applies to him as well, and how should he deduct tax and credit to government account. — Vinod Kumar

A. Your queries are replied hereunder:

• Section 194-IA of the Income Tax Act, 1961 (The Act) does not carve out any exception in respect of the transactions entered into before April 1, 2013 for the purchase of an immoveable property costing above Rs 50 lakh. In view thereof, the said Section would be applicable to you.
• The only alternative available with you is to issue fresh post-dated cheques in lieu of the earlier ones. Such cheques should be prepared taking into account the deductible amount of tax in respect of the installments payable after April 1, 2013. You can approach the builder for the substitution of the post-dated cheques. Alternatively, the post-dated cheques which have not been encashed by the builder be stopped from payment by giving due instructions to your banker. The builder can be informed in this regard and fresh cheques for net amount after deduction of tax at source be given to him in lieu of the cheques in respect of which stop payment instructions have been issued to the banker. The old cheques should be received back from the builder after new cheques are handed over to him.
• Consolidated amount of tax due in respect of the instalments for which cheques have been encashed by the builder be deducted from one of the fresh cheques to be issued to the builder. The amount of tax deducted in accordance with the provisions of the aforesaid section has to be deposited in Form 26QB which is a challan-cum-statement. Form 16B is the tax deduction certificate which is required to be issued to the builder to enable him to claim tax credit in respect of the tax deducted at source. Both these Forms have to be downloaded from the Website ‘Traces’.
• The position as explained above will equally apply to your NRI son who has purchased property on the similar lines. He will also have to adopt the same procedure as indicated hereinabove.

Can I claim exemption on house in wife’s name?

Q. I have availed a home loan in which I am the primary applicant and my wife is a secondary applicant. For auspicious reasons we have registered the property in my wife's name. My wife, however, is a housewife and does not 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? — Harish Agarwal

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

Can I buy commercial plot to save tax?

Q. Kindly let me know if I can buy a commercial plot from the sale proceeds of a residential plot to avoid any kind of tax liability. Will I have to pay tax from the long term capital gain by such a sale of land? — Rajan

A. The provisions of the Income Tax Act 1961 (the Act) do not provide for the exemption from the taxability of capital gain in case sale proceeds of a residential plot are invested in the acquisition of a commercial plot. You will be liable to pay tax on the capital gain arising on the sale of such residential plot. It would be a long-term capital gain in case the plot has been held by you for a period of more than three years. In such a case the amount of capital gain would be computed after giving due relief on the basis of cost inflation index applicable for financial year in which the sale takes place.

Does transfer of power of attorney attract capital gain for seller?

Q. Kindly advise:

nSuppose a person is given the power of attorney for Rs 10 lakh in favour of the buyer without registering it in his name. Does a transfer of power of attorney attract capital gains in the hands of seller?

nIf yes, then what are the exemptions available for the seller to plan his capital gains? — Neeraj

A. Your queries are replied hereunder:

• It is presumed that the power of attorney is to be executed in respect of the sale of an immovable property. In such a case the capital gain would arise if the possession of the immovable property is handed over in part performance of the contract with regard to transfer of the property in accordance with the provisions of Section 53A of the Transfer of Property Act 1882.
• The amount of capital gain arising on the sale of an immovable property that has been held for a period of more than three years can be saved in the following manner:
• In case the immovable property is in the nature of a residential house and the capital gain arises on the sale thereof, the amount of capital gain is utilised for the purchase/construction of a residential house property. The purchase will have to be effected within a period one year before or two years and the construction within a period of three years after the date of the sale.
• In case the immovable property is in the nature of a land and the capital gain arises on the sale of such land, net consideration arising on the sale is utilised for the purchase/construction of a residential house within the period specified in (i) above. Net consideration for this purpose means the amount of consideration received or accruing on sale of a property less expenditure incurred wholly and exclusively for the purpose of the sale.
• The amount of capital gain arising on the sale of a capital asset being an immovable property (land or a residential house) is utilised for investing the same in the acquisition of specified bonds of the Rural Electrification Corporation Ltd. or National Highways Authority of India. Such acquisition has to be made within six months of the date of sale of immovable property. Such bonds have a lock in period of three years and presently carry interest @6 per cent p.a.

Do I need to pay capital gain tax on less than Rs 30 lakh?

Q. I have some doubt about capital gain. Basically, I am from Chennai, we owned a flat and sold it due to some personal reasons. We had lived there for 12 years. Will we have to pay capital gain tax as this money is the only source of income to us? Also tell me what will be the actual amount of sale proceeds taken for calculating capital gain as I have heard that one has to pay tax only if a property is registered for Rs 30 lakh. — Nand Gopal

A. The tax on capital gain is payable even if the sale price is less than Rs 30 lakh. The figure of Rs 30 lakh or more was relevant for the purposes of reporting any transaction relating to immovable property in the Income Tax return for the assessment year in which the transaction took place. This information is not required to be given in the return form prescribed presently. This amount has no relevance for the purposes of computing the tax on the capital gain arising on the sale of a capital asset.

Selling terrace rights

Q. I own a residential house property in West Delhi. Three floors have been constructed on this property (ground + two). Now I want to sell terrace rights for Rs 25 lakh. I want to know how will the cost of acquisition be calculated for the purposes of Income tax. Do I have to divide cost of acquisition by four, since the buyer can construct only one floor, and how can I save the capital gains tax? — K. K. Agarwal

A. The capital gain in such a case would be computed on the basis of the proportionate undivided right in the land attached to such terrace rights. The capital gain would be computed after taking into account the indexed cost of such proportionate undivided right in the land. You can save tax on capital gain by investing the amount of capital gain in the acquisition of tax saving bonds issued by the National Highway Authority of India or Rural Electrification Corporation Limited. Such bonds have to be purchased within six months of the date of sale of a capital asset. Imagelibrary/Corbis

Email your queries to realestate@tribunemail.com

Vaastu wisdom
Madan Gupta Spatu

Q. My bedroom has two huge windows one on the eastern side and another one on the southern side. From the south windows one can see a swimming pool. I have read somewhere that it is not good to have a water body in the southern direction. Can you suggest some remedy to cancel the ill effects of this? — Sakshi Juneja

A. Your information is not correct. A view of lake, river, swimming pool, sea or water bodies is a feast for eyes specially in the morning or at the sunset. No change is required in your case so enjoy the view from your bedroom window.

Q. We’re enclosing an area at the rear of our home and adding a master bathroom there. I am also planning to add a walk-in closet to this bedroom. Are there any Vaastu points that I should keep in mind before adding this new room? — K. N. Singh

A. Yes. Please ensure sure that the new addition creates an “extension,” and not a “missing corner!” An extension is a Plus (an addition of good energy), where as a missing corner robs energy from your Ba-gua blueprint and can cause disturbance. You can get the rough sketch of the plan checked by some expert to get a more accurate advice.

— The writer is a Chandigarh-based Vaastu Consultant and Astrologer. Mail your queries at vaastu@tribunemail.com

Loan zone
Banks have stricter norms for funding resale property
S. C. Dhall

Q. I am planning to buy a resale property. I will be taking a home loan for it. What are the key requirements, including loan eligibility and the requisite documents that banks have for disbursing loan for a resale property? — Chander Mohan

A. As a first step, you will need the chain of titles of the existing owner. This means that if the existing owner has also brought the property on resale, the documents relating to that sale and so on till the first purchase will be needed in the original. Another complication is that, sometimes, if any of the documents in the chain of titles is not adequately stamped as regulated, then the bank may not be willing to provide the loan for this purpose. Also if the building is more than 10 years old, then some banks may have a problem with providing a loan for such property.

The cost of the property that you are planning to buy has a direct impact on your loan eligibility. The bank which finances your house purchase naturally wants you to put in a contribution towards the cost of the house so that you have a stake in its continued maintenance.

This also ensures that if the value of the house goes down in the future, the bank’s outstanding loan amount is lower than the market value of the property. Hence, if a house costs Rs 10 lakh, the bank may require you to fund at least Rs 2 lakh from your own sources, while the remaining ~8 lakh is provided as loan subject to your eligibility. The amount that you are expected to put in is called margin money or down payment.

The valuation done by the technical experts of the bank may be lower than the price that you are actually paying for the property. You will be eligible for a lower loan amount as the bank caps the loan amount around 80 per cent of the valuation arrived at by its technical consultant. It maybe useful in this case to pay a small fee and get the flat valued beforehand and approach bank later. Even if your income is enough to justify a higher loan, the bank will give a maximum loan based on its margin requirements.

For instance, if your income justifies a loan amount of Rs 8 lakh, and you are buying a house that costs ~10 lakh, the bank may restrict the loan to Rs 8 lakh, being 80 per cent of the property value. The down payment can also vary depending on the age of the property. If the property is older, the down payment requirement may be higher. Moreover, most banks have a cap on the maximum age of the building at the end of the loan tenure. This would normally be 50 years. So, if you are buying a property on resale and the current age of the building is 38 years, the probability of getting a tenure higher than 12 years is very low, despite the fact that you may otherwise be eligible for a 20-year loan. This reduction of tenure would reduce the loan eligibility.

But before zeroing on a resale flat, it is important to check on the points like if the property is already mortgaged. Though it is not a bad idea to buy a resale flat, it is important to check all these factors before hand and then initiate the procedure of home loan with the lender.