To boost demand in the affordable housing category and provide more tax benefits to home buyers, the government proposed an additional deduction of Rs 50,000 on interest component of home loan EMI for first-time buyers in cases where the property is valued up to Rs 50 lakh and the sanctioned loan does not cross Rs 35 lakh.

While home buyers already are allowed to claim tax deduction of up to Rs 2 lakh on the interest component of the loan, the move will take the overall deduction benefit to Rs 2.5 lakh. Individuals who qualify for this benefit and fall in the highest tax bracket will witness an additional tax saving of Rs 15,450 on account of the increase in the deduction limit by Rs 50,000 for the year.

“In furtherance of the goal of the government of providing ‘housing for all’, it is proposed to incentivise first-home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000,” the budget proposed.

Opportunity for homebuyers

A slow market is a boon for end-users, if you make sensible use of developers' predicament and price trends

For some time, home loan rates have been inching downwards but property buyers haven't still warmed up to a plunge. Experts say fence-sitters are waiting for more rate cuts and even a fall in property prices. Lack of confidence in servicing of loans because of a slowing economy has also resulted in slow sales.

Yet, such times also throw up good opportunities. A quick survey of five top cities - Delhi/National Capital Region, Mumbai Metropolitan Region, Chennai, Bengaluru and Pune - present different pictures. While NCR and Chennai have been hit hard, the markets of Mumbai and Bengaluru show marginal growth. Pune has just begun to slow down.

One reason for the stagnation in demand is high prices or, as Pankaj Kapoor, managing director at Liases Foras, a real estate research agency, says, speculative prices. "Though a country of housing shortages, the current price levels are so speculative that there is low demand and rising inventory in several cities," he says.

Product mismatch is a second key cause. Apart from Bengaluru and Pune, in the others, developers came up with high-end apartments. "Ticket sizes were beyond what the market could absorb," says Ashutosh Limaye, head-research, JLL India.

Oversupply is a third factor. In areas where land and infrastructure were both available, such as the NCR, many new developers entered, due to which supply far exceeded demand.

In such circumstances, there is a good chance of getting bargains. "Developers are today willing to negotiate with you and offer price discounts, which they wouldn't if market conditions were better," says A S Sivaramakrishnan, head of residential services-India, CBRE South Asia. Depending on the severity of slump in your market and size of the project, you could come away with a discount of seven to 15 per cent.

Changing strategies

Developers are now coming up with more compact-sized apartments that younger buyers can afford. They are also launching smaller-sized projects with only about 100 units, instead of large township-type developments, to ensure timely completion.

The distress in real estate markets has forced developers to come up with payment plans that are favourable to buyers. These subvention schemes allow you to pay only 20-30 per cent of the cost at the time of booking and the rest on delivery. Make the most of these. "These payment plans translate into a discount of eight to 10 per cent for the buyer," says Sivaramakrishnan.

It is safer to opt for completed projects or those that will be completed soon. Project delays constitute the biggest risk in a slow market. If you decide to buy in a newly launched project, opt for a reputed developer, even if you have to pay a premium, as the likelihood of delays is lower.

Checks

Buyers should also carry out all the checks, such as ensuring the title is clear and all the needed permissions have been had. Pay heed to the project's fundamentals. The location should be attractive and the price reasonable. The developer should have a sound record in delivering projects on time and offering all that was promised at booking. "Make sure over a 15-day or one-month period that the project is making sound progress," advises Sivaramakrishnan.

NCR, CHENNAI SLUMP, BENGALURU AND MUMBAI FARE BETTER

- by Sanjay Kumar Singh

Source:- Business Standard

Budget 2016: Will it Bring Relief to Home Loan Borrowers?

There are certain income tax benefits associated with money borrowed for the purchase or construction of a house. At present, the income tax laws provide benefits on interest payments and repayment of the principal amount on home loans. However, there are some provisions that can be deemed unfair, vis-à-vis interest allowance, which the finance minister should try and correct during this budget.

Step-Motherly Treatment to Borrowers of Self-Occupied Property

When it comes to allowing interest benefit on money borrowed for the purchase or construction of a house, the law treats a property which is occupied by the owner differently from a property which is let-out or is deemed to have been let-out.

For a self-occupied property, the taxpayer can claim interest benefits of up to Rs 2 lakhs in a year, including interest that he is entitled to avail when the property is under construction. Against this, a person who borrows money for reaping profits from the appreciation in the property’s price, is allowed deduction for full interest payment. Ideally, this should be reversed and a person who borrows money for reaping profits, should not be allowed to take the benefit of interest arbitrage, while genuine borrowers should be allowed full deduction on interest payment.

Moreover, the limit of Rs 2 lakhs is extremely low, considering the prevalent rates of properties. For example, even a small house in Mumbai may cost Rs 1 crore. If the buyer takes a loan for Rs 80 lakhs, the annual interest liability comes to Rs 7.6 lakhs, at the prevailing average home loan rate of 9.50%. If the government does not wish to reverse the existing policy, it should at least remove the limit of Rs 2 lakhs with respect to one self-occupied house property and bring it on par with let-out property.

Restriction on Deduction of Interest for Delayed Completion

The present law also makes a distinction between properties to calculate the amount of interest deduction, based on whether its construction has been completed within three years from the end of the year in which the money was borrowed.

If the construction of the house is not completed within three years, the allowance on interest is only Rs 30,000 per year. However, if the construction of the house is completed within three years, the amount of deduction available is Rs 2 lakhs.

Nowadays, a majority of home buyers, take home loans to buy under-construction houses from developers, where delays in completion of the project are possible. So, it is unreasonable on the part of the government, to penalise a person who is already paying interest on the home loan and rent for the accommodation occupied by him.

Moreover, the stipulated period of three years for completion of construction, does not match ground realities. According to a report by PropEquity in May 2015, the average delay in giving possession in the National Capital Region (NCR) is more than 23 months, while the same is 18-24 months in the Mumbai Metropolitan Region (MMR). These numbers pertain to the delay in completion of construction and are not the actual time taken to complete the construction. Consequently, very few home loan borrowers who book under-construction houses, can claim the full benefit of Rs 2 lakhs.

- by Balwant Jain 
(The author is a taxation and home finance expert, with 30 years’ experience.)

Source :- Housing.com

Budget 2016: Top 10 Demands of the Real Estate Sector

Industry experts as well as players in the real estate sector are optimistic that there will be positive announcements in this year’s budget, especially in terms of support to promote the affordable housing segment.

There is a strong sentiment in the real estate market that this year’s budget will be crucial for the growth of the sector, especially after the announcement of the ‘Smart City’ and ‘Housing For All’ schemes last year. Consequently, the realty sector is expecting some big announcements from the government during Budget 2016. According to experts, the top 10 demands of the realty sector are:

1. Granting of ‘industry status’ to the real estate sector
2. Increase the interest exemption limit and tax savings on housing loans
3. Additional allocation of funds for infrastructure development
4. Quick implementation of the GST (Goods & Services Tax Bill)
5. Reforms in the process of granting approvals, to facilitate speedy execution of projects
6. To pass the Real Estate Regulatory Bill and its quick implementation
7. Reduce the interest on home loans for first-time home buyers
8. Initiatives to promote skill development in the realty sector
9. Special incentives for the affordable housing segment
10.Urgent steps to promote REITs (Real Estate Investment Trusts) and FDI in the real estate sector

Elaborating on the demands, Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, says that the granting of industry status has been a long pending demand of the real estate sector. “It will help developers to avail of finance at cheaper rates from financial institutions. This will spur economic growth. The government must allocate an amount, exclusively for developing infrastructure and improving connectivity in the peripheral areas of cities, especially the metros,” opines Hiranandani.

Taxes

We expect the Finance Minister to liberalise the sector by incentivising or relaxing interest rates, as this will boost the home buyers’ sentiments, adds Dhaval Ajmera, Director of Ajmera Realty. “The government needs to provide incentives on income tax, and benefits on VAT and service tax. Further, the government needs to effectively implement section 80 IA. Keeping in mind the current rate and taxation, this will aid in lowering costs, which in turn, will result in benefits trickling down to the consumers,” he suggests. Moreover, with the real estate sector supporting over 200-odd industries, it is important to have these kinds of benefits, he points out.

His comments are echoed by the real estate fraternity, which is optimistic that there will be positive announcements in the budget, especially in terms of supportive steps to promote the affordable housing segment. Apart from tax incentives, there should be a special focus on lowering the interest rates for first-time home buyers and buyers in the affordable housing segment, they say. With the budget getting closer, expectations are likely to further soar. For home buyers, in the meantime, it is important to remain realistic and stay away from the hype created by some property sellers.

Affordable housing, infrastructure development and granting of industry status to the realty sector are the buzzwords doing the rounds prior to this year’s union budget. Most are hopeful that these demands will be met.

Source :- Housing.com

NRIs can purchase any house in India, rules NCDRC

A key announcement in Reliance Industries results which largely went unnoticed was its plans for the ecommerce business. In its presentation, the company has said: “The curated fashion and lifestyle e-commerce initiative is transitioning from project phase to operational phase through beta testing and has been launched on an invitation only basis.” The curated fashion website will house a private label while 60% of its products will be sourced from imported and national brands.

Reliance Retail, the country’s largest retailer, by revenue and number of stores wants to now leverage on the ecommerce space by building a differentiated ecommerce model. The e-commerce business being launched is currently conducting customer tests to obtain feedback on the website’s performance.

When a major deep pocket player like Reliance enters the market, other players will naturally feel threatened. A shakeout in the sector with changes in business model is inevitable and has already begun.

In a report on the e-tail sector, Kotak Securities says that the market is innovating in a bid to combat competition and forge a possible path to profitability. Flipkart is moving towards an Alibaba-type revenue model of charging nil commissions from sellers and instead earning revenues from advertising. All players are rapidly expanding their seller base in order to add more products to the bouquet of product range. New product categories (the likes of automobiles, real estate, and exam preparation) have also been launched.

Alibaba, the Chinese e-tail giant does not charge commissions from its sellers but encourages them to advertise on its platform. Reports say that Flipkart which used to charge anywhere between 2.5-22.5% from the seller is evaluating to charge a maximum of 2.5 per cent or Rs 20, whichever is higher, as commission.

Reliance Retail is believed to be launching with nearly 30,000 sellers that is nearly 15 per cent of the 2 lakh sellers in the country, says that Kotak report. Existing players are now trying to woo sellers into their marketplace. Among the various incentives that are being offered are provisions for working capital loans, easy cataloguing services and standardised shipping rates.

However, Kotak Securities says there is little scope to increase the number of sellers in the marketplace. Of the estimated 50 million small businesses in India, there are only 0.2 million unique sellers across the three platforms. This limits the size of the market. Kotak has compared Indian players with Alibaba and says that the latter has nine times more buying customers compared to Indian marketplaces but it has 43 times more sellers on its platforms, which partially explains its 49 times higher GMV (Gross Merchandise Volume).

Companies are thus focussing on increasing the base by adding new product offerings. Snapdeal and Flipkart both sell bikes and accessories. Snapdeal has added apartments and financial products.  Amazon has set up an Exam Central that provides information, books and software to help students prepare for competitive exams. Kotak’s report points out that attempt are on to build hyper-local businesses, which, if successful, can lead to higher number of recurring transactions and hence higher GMV.

Only time will tell how the initiatives will pan out, but what is clear is that Reliance Retail has timed its entry when losses of other players are near their highest levels. With its deep pocket and its cash cow petroleum business to support it, Reliance can last longer than the other players. Other companies will continue to need more funding from their private equity investors in order to withstand the intense competition going forward.

But Reliance seems to be winning the psychological battle if not the war. A change in business plan so late in the day suggests that the initial one was flawed as many commentators pointed out. Also, trying a new business plan just when a big player is entering the market can be a risky preposition; especially reverting back to the old one in case the new one does not work out, will send a bad message to sellers.

Realising the dangers of a change in business model, Amazon, the oldest player in the arena with international experience, is continuing with its old commission-based model (they have in fact increased commission on apparels from 8% to 15%) despite increased competition.

2016 may be the most interesting year for e-tail observers as the fight for eyeballs and market share gets fierce. The only assured outcome is more blood on the street.

- by Shishir Asthana

Source :- Business Standard

Mumbai Metropolitan Region (MMR) has the highest potential for modern retail in the country, pegged at Rs 1,05,000 crore, followed by National Capital Region (NCR) and Bengaluru, a study said.

Mumbai region offers big opportunity for retailers across various sectors like apparel, food and beverages, entertainment and daily needs, a joint report by global property consultancy Knight Frank and Retailers Association of India (RAI) said.

"Even though the pace of modernisation of retail formats in the country is slow, Bengaluru and NCR are likely to experience a 50 per cent modern retail penetration by 2026 and 2028, respectively," said Samantak Das, Chief Economist and Director of Research, Knight Frank.

The 'Think India, Think Retail, 2016' report pegged the modern retail penetration in India at 19 per cent in the top seven urban centers, which is extremely low.

In US, Singapore and China, modern retail penetration stands at 84 per cent, 71 per cent and 63 per cent, respectively, it said.

The modern retail segment in NCR, MMR and Bengaluru has a potential of more than Rs 130,000 crore in the hypermarkets and supermarkets category, it said.

Apparel and food and beverages have a combined potential of more than Rs 30,000 crore, it said.

"In order to support the potential of these two categories, the three cities together would require approximately 20 million sq ft of modern retail space," the report said.

It said the huge potential can be explored by the retail sector, provided a befitting policy framework for the modernisation of the segment is implemented by the authorities.

"While there is a potential for overall growth in the brick and mortar retailing methods, proper infrastructure and implementation of FDI retail policies and state-level policies is a must," said Aditya Sachdeva, Director of Retail, Knight Frank.

This, in turn, will help in retaining the interest of developers to invest in these formats, he added.


- PTI

Source :- Business Standard

Waiting Too Long For A Price Correction?

There are times – and cities – when it makes sense to wait for a correction, but it is always a calculated risk. Also, buyer indecisiveness is usually the result of confusion, not certainty. In today’s scenario, potential home buyers receive conflicting information from a variety of sources. They hear or read of predictions that that residential real estate prices are bound to come down soon, and obviously do not want to risk incurring a loss by making a purchase decision at this point in time.

On the other hand, prices may not come down as predicted, and may even rise. If this happens, the intending home buyer will have missed the opportunity to buy at a lower price, and/or the properties that he or she had their eyes on all along may be sold to other buyers. This is not what they had hoped for while sitting on the fence, but it is often what happens.

Should an end-user – a person who intends to buy a home for personal use and not as an investor looking to sell it soon at a higher price and maybe rent it out till then – time the market? Investors can afford to wait and watch to see if prices reduce in an identified location. If they were wrong, there are always other opportunities. But an end-user buys a home because it is seen as ideal in terms of location, size, configuration and quality of neighbourhood. Such properties are often identified after a long and grueling search. If one finds such a home which meets all one’s requirements and waits for prices to correct, one risks losing a lot more than just some money.

Of course, every end-user is also an investor at heart these days, in the sense that home buyers are very well-versed about the phenomenon of appreciation, look at their homes as hedges against the possibility of hard financial times in the future, and want to be able to bequeath a valuable asset to their offspring. This is absolutely logical. However, it should be remembered that real estate always gains in value over a sufficient number of years. The only exception would be if one has bought a home in a completely ‘dead’ area where no support infrastructure will ever come in, or from an unscrupulous builder whose project turns out to be illegal.

Prices may indeed come down to some extent in a certain market, but these are usually not price corrections but the kind of occasional fluctuations which are typical of every market. Waiting for such course corrections makes no sense if one is looking for a property that has a lot more work to do than merely gain in value – namely, a home in which one wishes to live in, raise a family and grow old in, and which allows the family to become part of a good neighbourhood and social fabric.

Also, one does not have to wait for a correction to get a better deal on an identified property. Unless it is the equivalent of a rare jewel of which only one exists and people are falling over each other to bid for it, the developer will be open to discussing better terms with a genuine buyer. In today’s market scenario, this willingness to negotiate is, in fact, a given, and something that buyers can benefit from right away without waiting for anything.

In short, it does not make sense for home buyers to wait for a correction, and especially not in cities where properties are selling slowly but still well enough without developers having to resort to bringing down prices. In such cities, it is more likely that prices will remain flat for a while longer and then start rising again. The best plan for home buyers in such cities is to identify the properties that interest them the most and then negotiate a good deal with the developer.

When we talk about home buyers sitting on the fence, we are basically talking about buyers who want to buy a home but are indecisive. Implied therein is that such buyers have the capital to buy now if they choose to – they point is they are not choosing to. There may be many reasons for this. They may simply not have found the kind of home they are looking for as yet. Or, they have found it, but are waiting for home loan interest rates to come down. Or – and this is the most common reason for fence-sitting today – they are waiting for a price correction.

There are times – and cities – when it makes sense to wait for a correction, but it is always a calculated risk. Also, buyer indecisiveness is usually the result of confusion, not certainty. In today’s scenario, potential home buyers receive conflicting information from a variety of sources. They hear or read of predictions that that residential real estate prices are bound to come down soon, and obviously do not want to risk incurring a loss by making a purchase decision at this point in time.

On the other hand, prices may not come down as predicted, and may even rise. If this happens, the intending home buyer will have missed the opportunity to buy at a lower price, and/or the properties that he or she had their eyes on all along may be sold to other buyers. This is not what they had hoped for while sitting on the fence, but it is often what happens.

Should an end-user – a person who intends to buy a home for personal use and not as an investor looking to sell it soon at a higher price and maybe rent it out till then – time the market? Investors can afford to wait and watch to see if prices reduce in an identified location. If they were wrong, there are always other opportunities. But an end-user buys a home because it is seen as ideal in terms of location, size, configuration and quality of neighbourhood. Such properties are often identified after a long and grueling search. If one finds such a home which meets all one’s requirements and waits for prices to correct, one risks losing a lot more than just some money.

Of course, every end-user is also an investor at heart these days, in the sense that home buyers are very well-versed about the phenomenon of appreciation, look at their homes as hedges against the possibility of hard financial times in the future, and want to be able to bequeath a valuable asset to their offspring. This is absolutely logical. However, it should be remembered that real estate always gains in value over a sufficient number of years. The only exception would be if one has bought a home in a completely ‘dead’ area where no support infrastructure will ever come in, or from an unscrupulous builder whose project turns out to be illegal.

Prices may indeed come down to some extent in a certain market, but these are usually not price corrections but the kind of occasional fluctuations which are typical of every market. Waiting for such course corrections makes no sense if one is looking for a property that has a lot more work to do than merely gain in value – namely, a home in which one wishes to live in, raise a family and grow old in, and which allows the family to become part of a good neighbourhood and social fabric.

Also, one does not have to wait for a correction to get a better deal on an identified property. Unless it is the equivalent of a rare jewel of which only one exists and people are falling over each other to bid for it, the developer will be open to discussing better terms with a genuine buyer. In today’s market scenario, this willingness to negotiate is, in fact, a given, and something that buyers can benefit from right away without waiting for anything.

In short, it does not make sense for home buyers to wait for a correction, and especially not in cities where properties are selling slowly but still well enough without developers having to resort to bringing down prices. In such cities, it is more likely that prices will remain flat for a while longer and then start rising again. The best plan for home buyers in such cities is to identify the properties that interest them the most and then negotiate a good deal with the developer.


- by Arvind Jain, Managing Director, Pride Group

Source :- Accommodation Times

Adani Realty to launch three commercial projects soon

The company is launching three projects- two in Mumbai and one in Ahmedabad. 

In the megapolis, Adani Realty is developing eight lakh sqft office and commercial project in suburban Bandra Kurla Complex (BKC), one at its Shantigram township in Ahmedabad of six lakh sqft 'Inspire Park' and another 1.25 lakh sqft at its mixed-use project in suburban Andheri 'Western Heights'. 

"We have not seen any significant addition in the commercial space in the last 2-3 years in the BKC after the two projects 'Godrej BKC' by Godrej Properties and 'One BKC' by Wadhwa," company's Chief Executive Ajay Munot told reporters here today. 

"We feel we have entered the office space market at the right time when MNCs as well as domestic firms across sectors are looking for large space," he added. 

According to Munot, these three projects have the potential of generating over Rs 3,000 crore revenue. 

"Taking into consideration the rentals of Rs 250 per sqft and sale value of up to Rs 30,000 per sqft feet in BKC, the BKC project alone is likely to earn up to Rs 2,400 crore revenues," he added. 

Munot said the BKC project is already completed and launched and hopes to give the posession by June. 

The company is developing a six lakh sqft of business park 'Inspire Park' in its township 'Shantigram' in Ahmedabad. 

"The construction of 'Inspire Park' will be completed soon. Similarly, the third 1.2 lakh sqft space, which is a part of our residential project in Andheri will also be completed over the next few months. In the next six months all these projects will be launched," he added.

- PTI

More launches expected in this segment as India now accounts for 3% of the world’s multi-millionaires

Realty developer ABIL Group recently entered into a partnership with global fashion design house Versace to design interiors of its luxury residential project on Hughes Road in south Mumbai. While the project details will be revealed in early 2016, this is not the first time a foreign brand has partnered with an Indian developer to offer state-of-the-art facilities.

As urban consumers seek fashionable amenities in their residences, ‘branded homes’ are quickly gaining prominence in India. Typically, these are luxurious apartments combined with hospitality services provided by the likes of Hyatt, Four Seasons, Le Meridian and JW Marriott, renowned globally for their superior hospitality services. Some other apartments are joint-ventures with well-known fashion houses such as Armani and Swarovski, which lend their names while designing the interiors.

From the table, it can be seen that Indian developers have started to tie-up with international brand names from early 2010 and the trend of partnership with such brand names is increasing by the year. Typically, projects in this category, to maintain exclusivity, resort to less number of units.

Such developers prefer to choose prime residential locations, preferably in tier-I cities. Also, such projects have a tendency to command 25-30% higher prices than the average for the sub-market, depending upon the branding and facilities.

The increase in India’s economic prosperity has increased the number of ‘super-rich’ people in the country, a number that has grown by more than 200% in the past 10 years, and now accounts for 3% of the world’s multi-millionaires. As a result, luxury consumerism has continued to increase. Very often, exclusivity is expressed through luxury spending, which is shown through the wearing of premium apparel, fine dining at expensive restaurants, buying of expensive cars and also owning a luxurious home.

Timeline: First Branded Project Launches In Different Cities

Status and demonstration of success are the decisive factors for the rich, especially the nouveau riche, when buying these properties. Investment-driven purchases are very few in this segment. Luxury space with commensurate amenities in top locations and targeted at the right class of people ensures that demand in this niche segment market is met with the right product.

More developers are now working on this segment and more launches are expected in the coming months. While the top developers are roping in international designers to build luxury residences in tier-I cities, lesser known developers are employing well-known domestic designers to do the same in tier-II cities.

SBI launches new home loan plan for executives 

LOAN RANGER

The country's largest lender, State Bank of India, on Monday launched a FlexiPay Home Loan scheme for young professionals   Borrowers can pay only interest during a three-five-year moratorium.   The customer, thereafter, will pay moderated EMIs (equated monthly instalments)   The EMIs will be stepped up during the subsequent years, capturing payment of the principal component