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Monday, September 29, 2014

Will increasing property circle rates in Delhi stop black money transactions? We believe….No

Delhi Government has increased the property circle rates across all categories of colonies. The change in circle rates has been effected from 23rd September 2014. The increase in circle rates has been a whopping 20%. What are circle rates? Circle rate is the minimum property price set up by the local government to calculate stamp duty and registration charges for any property transaction within the city.

Here are the new circle rates for Delhi:

New Circle Rate for Land (in  Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Old Circle Rate for Land (in Rs/Sq.Mt.) Stamp Duty @5% for Joint Holding (in Rs) Differential (in Rs) Increase in stamp duty 100 Sq Mt  plot (in Rs) Increase in stamp duty 300 Sq Mt plot (in Rs) Increase in stamp duty 500 Sq Mt plot (in Rs) Increase in stamp duty 1000 Sq Mt plot (in Rs)
Category A 774000 38700 645000 32250 6450 645000 1935000 3225000 6450000
Category B 245520 12276 204600 10230 2046 204600 613800 1023000 2046000
Category C 159840 7992 133224 6661.2 1330.8 133080 399240 665400 1330800
Category D 127680 6384 106384 5319.2 1064.8 106480 319440 532400 1064800
Category E 70080 3504 58365 2918.25 585.75 58575 175725 292875 585750
Category F 56640 2832 47140 2357 475 47500 142500 237500 475000
Category G 46200 2310 38442 1922.1 387.9 38790 116370 193950 387900
Category H 23280 1164 19361 968.05 195.95 19595 58785 97975 195950

The stamp duty charges in Delhi are as follows:
Male - 6%, Female - 4%, Joint - 5%, Senior Citizen - 6%, Company - 6%

The idea behind increasing the circle rates in Delhi is to curb black money component which is rampant in property transactions across the country. Really, will increasing the circle rates curb black money transactions? We are doubtful; on the contrary, it may further push up the property prices and slow down the already subdued demand.

In our opinion, it is a lazy way of looking at the issue of black money in property transactions. So, what could the government do to curb black money component in property transactions?

  • Equalize circle rates and prevailing market rates, i.e. there is no circle rate, in fact, stamp duty and registration charges should be calculated on the prevailing market rates. But this will increase the stamp duty burden on buyers. And hence, property transactions will slow down considerably and therefore loss of revenue for the government and adverse impact on the economy. To overcome this issue, government must reduce the stamp duty charges.

  • Reduce stamp duty charges to 1% of property value.

  • Reducing stamp duty charges and equalizing circle rates with market rates will encourage the buyer and seller to report the correct property value. And hence, it will help in curbing the black money transactions.

  • At the same time, people will transact more frequently which will have a positive impact on revenue generation for the government.

  • Therefore, need of the hour is to reduce stamp duty charges and equalize market rates with circle rates. Increasing circle rates at the current stamp duty levels will in fact encourage more cash transactions.

Is the revenue generation department of local government listening??

Friday, September 26, 2014

Which are the happening micro markets in Chennai??


Madipakkam is a micro market located in the southern part of Chennai. It is surrounded by areas such as Velachery, Pallikaranai, Pallavaram and Medavakkam. It lies in close proximity to the IT corridor of Chennai, the Old Mahabalipuram Road (also known as OMR) and is well connected to it. It is also well connected to the East Coast Road. Since the Madipakkam area is well connected and is affordable, it is attracting end users as well as investors’ attention. If you are looking to purchase an apartment in Chennai, Madipakkam is one of the places to look out for.

The average going rate for apartments in Madipakkam stands at INR 4800 per square feet. In the third quarter of 2013, the prices here were hovering at INR 5300 per square feet on average which was an appreciation of about 27% when compared to the previous quarter. In the last quarter of the year 2013, the prices climbed up by 3% and stood at INR 5400 per square feet on average. The price then came down in the first quarter of 2014 by 11% to be at INR 4800 per square feet. Since then the prices have remained stable.

There is a massive demand for 2 BHK apartments in Madipakkam. This is followed by 3 BHKs. Small to medium sized apartments are in demand in this micro market. The most sought after unit size for apartments here falls between 751 to 1000 square feet category, which is then followed by 1001 to 1250 square feet range and the 501 and 750 square feet range. The most preferred budget range for properties here falls between INR 20 and 30 lakhs, which is followed by INR 30 to 40 lakhs range. Buyers are willing to spend anywhere between INR 4001 to INR 4500 per square feet on apartments here, that is followed by the INR 3501 to 4000 per square feet range.


Perambur is a north Chennai locality which is very much in demand. It is located in close proximity to Anna Nagar and is well connected to the central parts of the city. Buyers are willing to spend anywhere between INR 4501 to 5000 per square feet on properties in this locality, which is followed by the INR 4001 to 4500 per square feet range. Buyers are willing to spend anywhere between INR 30 to 40 lakhs on apartments in Chennai at Perambur locality. Thereafter, the preference is for INR 20 to 30 lakhs range. 2 BHKs are the most sought after choice in this locality followed by both 1 and 3 BHKs. The most sought after apartments are smaller units. There is a huge demand for apartments which fall between 501 and 750 square feet range, which is followed by the 751 to 100 square feet range.

The average going rate for properties here stands at INR 5400 per square feet. In the third quarter of 2013 the going rate was INR 6700 per square feet, which was an appreciation of 11% from the previous quarter. The prices dipped by 12% in the next quarter and stood at INR 5900 per square feet only to recover by 2% in the first quarter of 2014.

This is a guest post by Sulabha Kulkarni

Monday, September 22, 2014

Planning to borrow home loan? Pay attention to your CIBIL Score.

Ok, you have identified the residential property you wish to buy. Now comes the financing part of it. A residential property may cost you 50 Lacs or more. You may have arranged for the down payment cost of approximately 10 Lacs and are now looking to borrow the home loan for remainder of the property cost.

Borrowing home loan means you will be paying EMIs for several years. Therefore, one must be responsible and confident to service the debt over a period of time. Before sanctioning such a huge amount to an individual borrower, the banks carry out comprehensive due diligence that includes checking your credit history, bank statements, income statements, job or business continuity.

CIBIL score is one such parameter that banks and financial institutions look into before sanctioning loan. What is CIBIL score? Credit Information Bureau (India) Limited (CIBIL) is India’s first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and credit institutions, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to credit institutions in order to help evaluate and approve loan applications. (Definition Source: Wikipedia)

One can check the CIBIL score here

How can you maintain good CIBIL score?

Well, in order to maintain good CIBIL score, you must pay attention to the following factors:

  • Repayment:
First thing first, what is your repayment track record? In other words, are you paying your installments on previous loans or credit cards regularly within the stipulated timeline? If yes, then your CIBIL score is going to be good. Your ability to repay previous debt has 35% weight-age in calculation of the CIBIL Score. Therefore, make sure that you stick to due dates of servicing your EMIs.

  • Credit Utilization:
Credit utilization is the ratio of the
Balance amount that you owe to your lenders / Total of your credit card limits

Therefore, if your balance amount that you owe to lenders is high then it signals riskiness. The increase in balance amount indicates increase in repayment burden and may negatively impact your CIBIL score. Credit utilization has 30% weight-age in calculation your CIBIL score. Therefore to score high CIBIL score, keep your outstanding balance to banks and financial institutions as low as possible.

  • History of Debt servicing capacity:
Are you paying EMIs and credit installments successfully for several years? If yes, then this will have a positive impact on your CIBIL scores. Banks and financial institutions prefer applicants who have taken loans earlier and have serviced the debt regularly. It sends the signal that the individual has a long history of securing debt and has been responsible in his/her repayments. This has a weight-age of 15% in calculation of CIBIL score.

  • New Credit
If you have applied for too many loans or credit cards in recent times, then it has a negative impact on your CIBIL score. Banks and financial institutions will see this increased activity of loan applications as risky because your debt burden has increased and it may affect your repayment capacity. Therefore, be prudent with your loan applications. Unless, your income has increased substantially, do not apply for too many loans or credit cards at the same time or within a short interval of time. In other words, space out your loan applications prudently. This has a weight-age of 10% in calculation of CIBIL score.

  • Credit mix
Many a times, we have noticed that people have a great propensity to apply for unsecured loans. As the name suggests, unsecured loans are not secured by any mortgage or guarantee. If you have mostly availed unsecured loans (such as personal loans) or credit cards, then it will bring down your CIBIL score. Always have a mix of both secured loans and unsecured loans. Secured loans are car loan, home loan, etc. This has a weight-age of 10% in calculation of CIBIL score.

Now that, you have a thorough understanding of CIBIL scores and its impact on your loan availing ability, we hope that you will be disciplined in your finances.

Friday, September 19, 2014

Ajit Singh eviction from 12 tughlak road in Lutyens Delhi – A Question of 100s of Crores of Rupees.

According to an article published in Economic Times dated April, 2013, Property prices in Delhi's leafy Lutyens Bungalow Zone have increased 8-folds in the past decade on the back of rising demand for the area where homes are always in short supply.

While the value of the private portion of the Lutyens Bungalow Zone - around 254.5 acres, where industrialists Sunil Mittal, KP Singh, Naveen Jindal, LN Mittal and others stay - has gone up from around Rs 6,100 crore to Rs 49,000 crore in the past 10 years, the value of the 995 acres occupied by government bungalows has grown from Rs 24,000 crore to Rs 1,92,000 crore, albeit notionally, based on current market rates derived from recent transactions in the area.

Witnessing the rise in property prices, a number of old families that have been living in the area for over four decades are now ready to sell these British colonial bungalows. Some are even asking for astronomical sums of money - the owner of an 8,000-sq yards plot on Tughlaq Road is asking for Rs 700 crore. A similar-sized plot on Prithvi Raj Road has a tag of over Rs 600 crore while another 1 acre property on the same road could be bought for Rs 480 crore.

Some of the recent transactions at Lutyens Delhi:

And the asking rates are:

In this backdrop, it is fairly easy to understand why Ajit Singh of some political party in western UP has resisted vacating the bungalow ’12, Tughlak Road’. His party suffered a massive rout in the Lok Sabha election 2014 in western UP. This humiliation had probably infuriated Ajit Singh who defied the law and continued living in the residence which is specifically meant for the elected members of the Parliament. He should have vacated the house by June 26, 2014.

He and his minuscule supporters claim that the house should be converted into a memorial for Charan Singh as he stayed there for 36 years. Oh my gosh….this is similar to a situation when a tenant would rent a property and after staying there for 4-5 years, the tenant would take control of the property with the help of his goons and not vacate the property. Ajit Singh and his supporters are in the same mood.

"It is the wish of the people that 12 Tuglak Road be converted into a memorial. After all, Chaudhury sahib lived here for 36 years," he said.

At least 18 persons were injured as police fired rubber bullets and tear gas shells and resorted to lathicharge to disperse activists of Bhartiya Kisan Union and Rashtriya Lok Dal supporters, who turned violent as the cops thwarted their attempt to cut-off water supply to Delhi from Gangnahar Muradnagar regulator.

So what if number of people are injured, so what if they bring the traffic to halt on major highways, so what if they cut down the water supply to 10 million residents of Delhi, after all, it’s a question of 100s of Crores. How can Ajit Singh who had the control over the bungalow for so many years let it go so easily? Some lives here and there, some disturbances here and there. It happens. It is part of the democracy.

Tuesday, September 16, 2014

Why Home insurance is extremely important in India?

Jammu and Kashmir floods have been devastating to say the least. Many people have lost their lives. Businesses including restaurants, Shikaras, tourism, small workshops have been razed. Agricultural land has been eroded. Houses including the contents of a household have been damaged. The floods in Jammu and Kashmir have been the worst in over half a century.

Well, there could be man-made reasons such as aggressive construction, & lax regulations for this great disaster, however, one cannot take away the fact that it was a horrendous natural disaster partly assisted by man-made actions.

The focus of the state and central government is to rescue the people and then focus on relief work. We must congratulate Armed forces for their stupendous work for saving Thousands of lives. Food is being provided to the flood victims, Medicare facilities have been augmented.

However, to bring back the normalcy would take months, maybe year or two. The government has announced relief packages including financial assistance. However, one wonders, what will happen to the damaged houses and the contents of the houses? Will these be recovered? In such a scenario, home insurance would have been of great help. We are not sure, if home insurance was a common practice in Jammu and Kashmir.

Home insurance is extremely useful for people living in areas that are prone to the risks of floods, earthquakes or burglaries?

Home insurance can cover losses to the structure and contents of one’s home from any natural or man-made calamity. The disasters that can be insured against are fire, earthquakes, storms, cyclones, tempests, tornadoes, hurricanes, floods or inundation, lightning strike, explosion, landslides, impact by vehicles or aircraft, and bursting or overflowing of water tanks and pipes. However, care needs to be taken that only the cost of structure is insured and not the cost of land.

Mainly two types of home insurance policies are available in India:

  • Buildings Insurance

Insuring the building or building structure is important since it protects the policy holder against inevitable losses in case the insured building is destroyed or debilitated in any natural or man-made calamities.

  • Content Insurance

Contents insurance under home insurance plans includes protection to movable goods, possessions or contents in the house; anything that is not a fixed part of the home, for example appliances, electronic goods, furniture and clothing etc.

Find below the detailed info about Home insurance in India including the claim process, benefits of home insurance, and companies that offer home insurance in India.

Friday, September 12, 2014

What are the Real Estate and Property market Terms and Definitions in India?

Looking to buy an apartment in a builder project or a piece of land, Or for that matter, looking to buy/lease office space property? We are sure you will come across many terms and definitions which are new to you and therefore comprehending them is essential to make sure that you are not overpaying.

Take for example, the distinction between carpet area, built-up area, and super area. Most of the builders in India will charge you on the basis of super area. However, in some locations, they may charge you on the basis on carpet area. But the prices will be adjusted accordingly. For example, some builders in Mumbai charges on the basis of carpet area of the property and therefore their base selling price is higher as compared to the builder who is charging you on the basis of super area. Super area is the entire area of the building which includes carpet area, lobbies and corridors, walls, lifts, staircases basements, and other atrium and utility areas. Carpet area is the actual usable area within the walls of the floor. Since, you will using the lobbies, corridors, lifts, and other common areas, therefore, a builder will take all of these into consideration before rolling out the final base price. Whether you pay by carpet area method or by super area, all the charges will be included in the final price.

Similarly, when you go to the local registrar office to register your property, there will be terms like circle rates or market value that will be used to arrive at stamp duty and registration charges. In the below document, one can find all the terms and definitions that are used in Indian real estate and property market.

Monday, September 8, 2014

Trends to watch out for in India’s real estate in 2014

India is a land of many states and within those states are multiple cities and villages. These areas give ample opportunity for developing both residential and commercial infrastructures. The real estate industry in India has grown massively and continues to do so with every passing Year, however, with the induction of a new promising government, realty sector in 2014 is expected to revive and the smaller cities like Mathura, Varanasi are no exception to this revival.

The concepts which have received maximum popularity in 2014 are:

1. Studio or 1 BHK Apartments

The saying ‘Home Sweet Home’ fits Indian realty’s current demand perfectly. Studio or 1 BHK apartments have emerged as the latest and most promising developments in the current residential trend of the country. Studios or 1 BHK are mostly made on small Square feet of area and are generally more cost effective than the 2 or 3 BHK apartments.

According to Kapoor of Liases Foras, “around 15,600 studio apartments, accounting for 8.6 million sq ft, are being built in the top six cities-Mumbai, National Capital Region (NCR), Bangalore, Pune, Hyderabad and Chennai”.  Among these cities, NCR currently ranks on top with around 7 million sq ft, mainly on report of tentative activity and development regulations.

2. The Second Home concept

A study done by a Bangalore-based e Business consulting firm shows the purchase of second-home has increased by 50% from 2002 to 2007 in India. The movement declined a bit in 2008, mostly because of the bad economic conditions in the U.S., Amar Sodhi, proprietor of Avatar International, a U.K.-based property brokerage said.

According to Sodhi the boom has been highest in the upper class of the market. But now, as another 10 million people join the ranks of the middle classes, more affordable housing is popping up”. 

It’s not just the Indian investors; Non-resident Indians (NRIs) have also shown interest in these mid-levels housing. The benefits that NRIs get are that they can not only invest in India’s real estate because they were born here, but also for their parents or grandparents who still lives in India.

According to Sodhi, NRIs who belong to Delhi, the nearby cities like Gurgaon and Noida are the ideal spots to live in. The reason for this is their proximity to the capital city, but also because they’re very near to an international airport”.

Presently, Gurgaon holds over 1 million residents and the city is repidly expanding. The biggest attraction for the second home residents is the plethora of shopping malls in the locality. 

Noida, is known as an IT hub. But quite recently, it has been getting attention from the second-home investors with lavish real estate expansions and the 222 acre golf course. 

With increasing income on one hand and the growing need for relaxed weekends on the other, the concept of second homes appears to be gaining popularity. The National Council of Applied Economic Re¬search analyzed that the number of households that can be termed as rich is expected to become 11 million by 2013 from 3 million in 2003. While the population of mid¬dle class buyers is expected to grow even more drastically, from 46 mil¬lion in 2003 to 124 million in 2013. The number of High Net worth Individuals in India has grown at the rate of 20% YoY, second to Singapore.

Second Home locations:
  • Delhi
National Capital Region suburbs have farm house layout. These layouts are made in groups around Chattarpur, Rajokri, Mehrauli and Bijwasan; the hill stations of Uttarakhand, the religious grounds of Mathura and Vrindavan and also Haridwar.

  • Chennai
Chennai has the second home hub in the Pondicherry area and the Yercaud region near Salem, a hill station in the Shevaroys range.

  • Bangalore
People in Bangalore can live and buy a home in Bangalore, but as far as second home is concerned, Mysore always receives maximum eyeballs. The town is known for its cleanliness and hygiene. Moreover, it is known as the second cleanest city in India and was rated as the cleanest city in Karnataka in 2010. Ootacamund (or Ooty) is one of the most primary choices among people looking to buy a second home.

  • Hyderabad
Hyderabad's populace believe that Vizag is an ideal location for investment as a second home in the state.  The specialties of real estate in this land include affordable property rates, potential for good returns, pleasant climate and the point that it’s located on coast also adds value.

3. Smart Cities

Indian economy is 2/3 rural in 2014; but by 2040 it is predicted to be a completely urbanized country. Delhi and Mumbai are part of the league that includes largest cities in the world (giving rise to the demand for more development in the nearby regions).

Smart cities are all about incorporating the old India with the new. Hence creating a new prototype for Commercial real estate and housing, one example of a smart city is Singapore. The current government of India has budgeted Rupees 7060 crore for the development of smart cities all over the country. 

Delhi, Mumbai, 40% Rajasthan, Chennai, Bangalore, Amritsar and Kolkata are the cities chosen to be converted into the smart cities of India. The government of India has planned to collaborate with Singapore for providing its expertise in the development of smart cities. 

Gujarat’s GIFT City

The project, Gujarat International Finance and Tec City (GIFT City) will be designed and developed by the Gujarat International Finance Tec City Company Ltd, a JV of the state-owned Gujarat Urban Development Company Ltd and Infrastructure Leasing & Financial Services (IL&FS), reported The Economic Times.

The city is projected to provide a state of art design and will be home to finance and technological companies from states like, Mumbai, Gurgaon and Bangalore.

The proposed city will be established on 986 acres of land and is expected to have: special economic zone (SEZ), international education zone, integrated townships, an entertainment zone, hotels, a convention center, an international techno park, Software Technology Parks of India, STP units, shopping malls, stock exchanges and service units.

The city will be linked all the way through an Internet Gateway, supreme next generation IP-based network and International Fiber Landing System.

The city will open up many unique transportation systems-
  • A blend of Transport systems (MRTS/LRTS/BRTS, etc.) connecting both inter and (Ahmedabad, Airport, Gandhinagar and the City) and intra-city.
  • A concept of Walk-to-work with a nodal ratio of 10:90 between private and public transport.
The city will establish many landmarks including, GIFT Gateway Towers, GIFT Crystal Towers, GIFT Convention Center, a structure of salt crystals, inspired by Mahatma Gandhi's Dandi March.

This is a blog post by Tripti. She is a professional writer and avid reader who has been in the writing industry for 2 years now. Her work ranges from articles on property to education and employment. 

Friday, September 5, 2014

Housing Shortage and Housing Finance Facts in India

'Roti, Kapda, aur Makaan' was a famous movie that highlighted the 3 basic requirements of life. And yet, a closer look at the 'Makaan' or housing statistics in India, we notice that there is still a long way to go before we fulfill these basic requirements in the lives of millions of people in India.

The new government in the center promises to provide 'Housing for All' by 2022. However, in order to achieve such results, the housing finance sector has to evolve at a greater pace. Currently, Mortgage to GDP ratio in India stands at 9%, which is much below the average of advanced economies.

Find below the detailed info-graphics showing the housing shortage and housing finance facts in India. The task of 'Housing for All' may seem daunting, however, it also presents an opportunity unprecedented in human history.

Monday, September 1, 2014

Filth, noise and air pollution in Indian cities…a ticking bomb waiting to explode

While we build new townships, luxury real estate projects, branded homes, shopping malls, highways and what not….People are getting wealthier, buying luxury cars..Dining in star restaurants...wearing branded clothes, watches…but walk past the streets in cities and all we see is stockpile of garbage and filth. Open sewers, high level of noise pollution, air pollution and what we have is a ticking bomb waiting to explode and take away all our wealth and growth in just a matter of few years. Yes, few years. You read it right…

Consider air pollution…Half of the top 20 cities in the world with the highest levels of PM2.5 were in India, according to the pollution data released by the WHO in May 2014, which included 1,600 cities. PM2.5 refers to the diameter measured in microns of particulates such as ammonia, carbon, nitrates and sulfate -- which are small enough to pass into the bloodstream and cause diseases such as emphysema and cancer.

Noise pollution in the cities and towns is at record high and adversely affects people’s health: hearing complaints, sleep disturbance, cardiovascular issues, deteriorating work and school performance are some of the more serious effects of this deafening sociological epidemic, which is adding layer upon layer to the nationwide milieu of stress and environmental degradation. In a recent survey of the world’s noisiest cities, the capital New Delhi comes in first, with seven million plus vehicles on its streets every day (more than in India’s three other major cities combined), followed closely by India’s richest and most populous city (with 21 million people) Mumbai and then Kolkata.

As far as solid waste is concerned, we are not far behind. The cities alone generate over 100 million tons of solid waste annually, a large percentage of which is plastic (America by comparison in 2010 generated 31 million tons of plastic waste according to ‘Plastic is Rubbish’), and it is estimated that (if urban populations increase at the current rate) by 2045 they will be churning out nearly 300 million tons a year. New Delhi (population around 17 million) produces almost 700 tons of daily waste, much of which is plastic.

So, this is the enormity of situation we find ourselves in. Although, the focus on growth is justifiable in order to lift millions out of abject poverty, but surely, environment can’t be neglected. The polluted air we breathe, the noise around us, the filth around us needs to be controlled.

On his Independence Day speech, Prime Minister Narendra Modi talked about the ‘Swacch Bharat’ or ‘Clean India’ campaign that will be launched on 2nd October 2014. The whole campaign is dedicated to Mahatma Gandhi’s 150th birth anniversary in 2019.

But let us ask ourselves, do we really need a campaign for ‘clean India’? Much of the pollution that we are accustomed to in our daily lives is nothing but the making of our bad habits. In last 3-4 decades we have developed bad and lazy habits and that has destroyed our cities and our flora & fauna.

While government bodies, municipalities, NGOs, and activists may or may not come up with clean India initiatives. The citizens can do their bit by getting rid of the ‘bad and lazy’ habits.

What are these ‘bad and lazy’ habits? We all have read about these habits in our school text books, or watched a documentary or on social media…but let’s repeat them here.

Ok, we can’t move without the car….but can we stop the engine at traffic signal? Can we use the clean fuel? Can we pool the car for going to office? Can we not honk, yes its possible mate? Can we use the metro rail whenever feasible? Can we not throw the chips wrapper outside or any plastic bag outside on the road? Can we stop spitting on the road? Yes, it can be done.

Ok, as a growing company, we will produce waste including solid and liquid….but can we not purify the liquid waste? Can’t we dump the solid waste in accordance with the government or municipalities guidelines? Can’t we show the same kind of exuberance that we exhibit in production?

Ok, as a household, we will continue to buy stuff and produce waste….but can we not use homemade bag for carrying vegetables, fruits, groceries? Can’t we minimize the use of plastic bags? Can’t we dump the waste as per the procedure laid down by the local municipal body?

What the heck government got to do with all of this? Certainly, it’s our duty. Just like we like to live in a clean home….can’t we extrapolate this thinking to whole environment around us? The road outside our house belongs to us, the road on which we drive our car belongs to us, the air we breathe belongs to us, the water we drink belongs to us, then, why this apathy towards the environment around us? Let’s not point fingers at the government or municipalities for all of it.


Friday, August 29, 2014

Growth of Housing Finance in India

In order to provide housing for all by 2022, the government needs to develop the housing finance sector. In its current avatar, the housing finance sector is able to provide loans to borrowers working in the formal sector with proof of income and banking transactions. However, about 99% of the total shortage of housing in urban areas belongs to the Economic Weaker Section and Low Income Groups of the society.  (Overall housing shortage in urban areas - 18.78 million units till 2012).

Over a period of time, housing finance has evolved considerably. In the initial days, people either self funded their housing needs or participated in schemes launched by government owned institutions in the real estate sector like state housing boards and development authorities. Launch of HUDCO in 1970 represented a paradigm shift and for the first time housing finance was formalized. However, private sector participation in housing finance took shape only when HDFC was setup in 1977. In the late 1990s, commercial banks also got involved in housing finance.

On August 28, 2014, Prime minister launched the ‘Pradhan Mantri Jan Dhan Yojna’. The objective of the program is financial inclusion for all. Can this program cater to the housing finance needs of the BPL or marginalized Population in future? There is possibility of directly transferring interest subsidies on housing loans to the EWS and LIG categories.

In this section, we highlight the various steps taken by the successive governments to facilitate the need for housing and housing finance in India.

Monday, August 25, 2014

Chai pe Charcha on Car Parking Issues in India

Ever since congress wallah [some people call ‘wallah’ as minister J] Mani Shankar Aiyar took jibe on now Prime Minister of India Narendra Modi about his Chai wallah background, the ‘Chai pe Charcha’ has almost attained a godly status. During the election campaign, Mr. Modi used ‘Chai pe Charcha’ as one of the most effective tool to reach out to people of India.

So, how can we, mere mortals, lag behind in this race to have our own ‘Chai pe Charcha’?

Last Saturday, our team members were having a ‘Chai pe Charcha’ on the most heated topic or shall we say most trending topic in Urban India. Actually the ‘chai pe charcha’ started with one member asking “what are the 2 most pressing issues facing cities in India??” Some of them gave serious answers and some who were in Saturday mood…came out with 2 ‘P’s…yes 2 ‘P’s….One is Parking and one is Paani (water).

So, after using the power of elimination (PoE), we centered our ‘Chai pe Charcha’ on the most pressing issue facing Indian cities…and that is ‘Parking’.

India, I mean, about 40% of it (is it the right number for Urban India??)….is constantly fighting every day with neighbors, family members, traffic cops, Municipalities, Housing society head, builder, security guard, Local Chai wallah, street vendor (another wallah…thele wallah…sabji wallah, etc.). But why? Did monsoon not arrive on time? Was electricity available for only 6 hours in a day? Water issues? Garbage on the road? Or what? Well, the answer to this BIG question is “Parking”…yes sir, Parking with Capital P.

If parking issues were not frightening enough in commercial centers…then…face the new situation in residential centers now. On a visit to a residential colony in one of the metro city, one can notice a tree line of cars in front of the houses. If you are a visitor and visiting one of the residents in the colony, you will find it hard to park your car. And if you do find some space…you will find a “No Parking” board with a tag line “parking is not allowed, Tyres will be”.

Well…situation is under control until one abides by these ‘No Parking’ boards…however, just try flouting this rule and a heated altercation is bound to follow.

And if the resident is gracious enough to not use “No Parking” board in front of his house….then the people in and around the locality start misusing the open space. The open space will be used by the neighbor to park his 16 year old son’s new car…..or by Tina Aunty’s maid (yea…she comes in a retrofitted 800).

People in group housing societies with large number of families living together often struggle for car parking space. At most they are provided with 2 car parking spaces when they book a flat. And in most cases, the car parking space is sold by the builder. Open car parking costs less than the covered car parking.

There’s been huge debate going on in the realty market in India about the legality of paid car parking space…is it legal or illegal??

In 2010, India's Supreme Court ruled that developers cannot sell parking spaces as independent real-estate units. The court ruled that parking areas are 'common areas and facilities'. This upholds an earlier Bombay High Court ruling.

So, why are builders still charging for car parking spaces? There are some benefits of charging for car parking spaces and there are some negatives of charging for car parking spaces…

Benefits of selling car parking spaces with a pinch of salt

  1. With the number of cars in Indian cities growing with each passing day, paying for parking space ought to become the general norm. This is also the only way to prod people towards public transport. Counter-Point: But, where is the public transport? We do not even have high quality buses? Then...How the hell…will I travel in this 45 degree heat from my home to office??
  2. Builders of new housing societies receive little or no help from municipal authorities. In fact, many of these residential complexes are self-sustained units with independent provisions for water, power and parking spaces. In such a scenario, it is only fair that developers are allowed to sell designated parking spots. Counter-Point: That’s all been the making of builder-babu nexus. Why should we residents pay extra for the car parking spaces when the space has already been covered in the sale-able area?

Negatives of selling car parking spaces:

  1. Open areas are already included in the sale-able area. Therefore, if one were to pay for car parking space, then, he/she is paying twice for the same space.
  2. Allowing builders to price parking slots separately is also bad economics especially at a time when demand for parking slots either doubles or even trebles in a very short span. This is because the developer, who has a natural monopoly over supply of parking slots, has absolutely no incentive to maximize supply. The developer too will hold down supply of parking slots so that he can charge maximum prices for each parking slot.
  3. Housing societies belong to the people who have bought the flats. The management of the housing society can come up with innovative ideas for parking space. Selling car parking spaces discourage management to manage their own affairs and instead one is dependent on the builder.

But, will Parking issues be ever resolved in India? The poor government has been doing what it can do…it raised the price of fuel to discourage car ownership…but no success…they are thinking of building high quality public transport system…but that will take time mate…so...What else? What can be done to resolve technical and non-technical issues of PARKING??

Comments are welcome, the ‘Chai pe Charcha’ must carry on J


Friday, August 22, 2014

Cyclical nature of commercial real estate

This post deals with commercial real estate in India. For the last 2 years, one would have noticed that most real estate developers and private equity funds have focused their energies on development of residential real estate across India.

Why did this happen? Why did real estate developers in last 2 years solely focus on residential real estate? Well, the answer lies in global economic slowdown. Due to global economic slowdown, companies started to lay off employees and there was freeze on investment in new projects. And all of this resulted in lack of demand for commercial office space by companies. Due to lack of demand of office space, developers ignored the commercial real estate and that has resulted in tight supply of office space.

And now that, economy is starting to show signs of recovery, there is again demand for office space and therefore it is pushing up the prices of commercial real estate. So, the situation now is – demand is increasing but supply is tight. And in this condition, rentals are bound to go up.

Why does this happen? Why do we sometimes see oversupply of commercial real estate and sometimes tight supply? It is because of the cyclical nature of the real estate industry. Some underlying facts regarding the commercial real estate are:

  1. It is a very large market and it is highly competitive
  2. Ownership of commercial real estate is highly fragmented across the country

Why does commercial real estate development follow a cyclical pattern? During the boom time, when local real estate developers and investors sense that vacancy rates are declining and rents are rising, they believe more development may be feasible. Consequently, developers begin to analyze markets to determine if additional space, if developed, can be leased profitably. Because many competing developers may sense this opportunity simultaneously, they may all begin to develop at once in order to satisfy the demand. Even though there may be a definite need for additional space, the potential for over-development will exist as each developer rushes to deliver additional space to the market before competitors. There is no way to determine exactly how much space should be developed because the depth and extent of demand are difficult to predict. As a result, commercial real estate is sometimes said to be prone to periodic cycles of over-development.

One would have seen during the 2004-2008 boom time in India, when plethora of shopping malls came up in Mumbai, Delhi NCR, Bangalore, Chennai, and other economic centers in India. Because there was demand for retail space, developers jumped up and created an oversupply of malls across India. The important point to notice is that it is very difficult to predict the exact demand and therefore oversupply will happen in commercial real estate.

On the other hand, when economy is going down and growth is shrinking, developers may ignore the development of commercial real estate because of lack of demand from companies. However, as soon as, economy picks up, the tight supply of commercial real estate again pushes up the rentals and vacancy rates starts to fall.

And the cycle continues like this. There will be periods of oversupply and there will be periods of tight supply.

Let’s analyze this diagram above.

  1. When economy is in recovery phase, the demand for commercial real estate increases which reduces the vacancy rates and rentals go up. 
  2. Seeing the fall in vacancy rates and improving rentals, developers start developing the additional space. Rentals start to cool off because there is supply of additional space. 
  3. However, because it is difficult to predict the actual demand, the oversupply of space is seen in the market. Rentals fall.
  4. Increasing vacancy rates and falling rentals drive away the developers from developing the commercial real estate and supply is tightened.

One full cycle takes 5-6 years and all the 4 steps mentioned above repeat themselves.

With this in mind, can you time the market as far as investment is concerned??

Monday, August 18, 2014

Shall I invest in commercial properties with 12% assured returns scheme in India?

Recently in the month of May 2014, the managing director of Vigneshwara Group and two of his family members were arrested for multi crore alleged fraud. What was the fraud? Well, the group is in the business of real estate. Ohhh…real estate…yea, most of the frauds happen in this sector only. In this case, the group had received money from investors (around 700 of them) for commercial office space properties in Gurgaon and Manesar. What was the selling point of this group? This group isn't a household name like DLF, or Unitech. So, what was the selling point which brought in these many investors? Well, the selling point was ‘12% assured return on investment, till the possession of the property’. So, if an investor invested about 1 crore rupees for 1000-1200 square feet of office space, then he/she will continue to get 12 Lacs rupees per year as investment returns till the property is handed over. And the builders normally in India claim to handover the property in 3 years.

However, Vigneshwara Group despite taking money from around 700 investors for properties in and around Gurgaon in 2006-07, and promising assured returns till possession, the group allegedly didn't begin construction of some projects and defaulted on payments to investors. And that was the reason "The three members were booked under sections 420 (cheating), 406 (breach of trust), 120B (criminal conspiracy) and 34 (common intent) of the IPC".

On the surface, the 12% assured return is not a bad deal. For an investment of Rupees 1 crore, one would get 36 lacs rupees back in 3 years as assured returns. And at the end of 3 year period, the property is handed over which can be leased to earn decent income. And of course, there will be capital appreciation gains as well. So, on the surface, it looks a good deal.

However, as is the case in life, one needs to scratch the surface to fully comprehend the deal. Let’s do it here:

Why do real estate developers come up with such fancy schemes?

  1. Bank money is not available or is very expensive: What do you think? The builder did not try to raise money for the project through banks or formal channels? Yes, of course, he did…but the money was expensive, i.e. @ 17 or 18%. And he found the easy goats in form of unsuspecting investors who have plenty of cash with them.
  2. These schemes ensure project is sold off at early stage: Real Estate is a risky business, but a builder is always carrying out financial engineering calculations to make sure his interests are safe. When a developer launches a new project especially in commercial category, he wants to play it safe and sell the project to investors along with the incentives of schemes like 12% assured returns. Selling a residential project is rather easy because of demand in India; however, selling a commercial project takes financial engineering skills.
  3. Lack of other funding options: Why can’t builders raise money from other sources such as Private Equity funds or other institutional funds? Well, all these funds carry out comprehensive due-diligence before investing in any project. And the due-diligence process also involves supply-demand analysis for the commercial property along with builder’s track record, etc. And based on their analysis they decide not to invest in such projects if supply of such kind of property is high or demand is low. Because at the end of the day, the commercial property will be valued on the basis of monthly income it can generate once leased.

Why do builders fail to deliver?

Well, all is not lost for investors who invest in such projects provided builder delivers on his promises. But a real estate developer seldom delivers on his promises and that’s why these issues of fraud and money laundering keep on sprouting every now and then.

Why do builders fail to deliver? ‘Greed’ is word that best describes the failure of the builder to deliver on time. Having successfully launched and sold the commercial project on the back of 12% assured returns scheme to fallible goats, he begins to start acquiring land parcels for new projects with similar schemes.  If one project can be successful, why can’t other projects be successful? And in doing so, he diverts funds received from first project to acquire land parcels. The construction progress of first project is delayed, and there is no money left to pay the assured returns as well.

If the builder has remained disciplined, the 12% assured return scheme would have worked. But that is a Utopian scenario.

Are schemes like 12% assured returns good for investors?

  1. Stay away from such schemes if you are a first time investor.
  2. If you have propensity to invest in real estate and can carry out due-diligence, then one can consider such schemes. Due diligence involves carrying out supply-demand analysis, builder’s track record, income levels of the people in the city, etc. It is a challenging task and one should look at if banks or institutional funds have invested money in the project or not? These banks or institutional funds will not invest money in any project without carrying out the due-diligence.

Good Luck with Real Estate Investment!

Friday, August 15, 2014

Happy Independence Day India

Happy Independence Day India!

NirrtiGo wishes each and everyone good times ahead.

May Real Estate sector continue to shine and flourish!

Tuesday, August 12, 2014

Why Dwarka is one of Delhi NCR’s sought after localities?

Dwarka is a micro market which is located in the Delhi National Capital Region. It is located in south western part of Delhi in Delhi NCR and is considered to be one of the most sought after real estate destinations in Delhi NCR. There are many factors going in Dwarka’s favor which have earned it this sought after title. The area is not very pricey, has good social and civic infrastructure and is well connected to all parts of Delhi.

Dwarka lies in close proximity to both Delhi and Gurgaon. It is also well connected to Noida. It is one of those areas which is preferred by those who are working out of these cities. It is also well connected through the Blue Line of the Delhi Metro. Any area which is well connected through a metro line is constantly in demand. Metro connectivity acts as a catalyst for real estate growth for both residential and commercial properties. The Blue line of Delhi Metro Rail begins from Noida City Center and ends at Dwarka Sector 21. Almost all the major sectors in Dwarka have a metro station with a total of ten stations being present in Dwarka. The locality is also well connected to the Indira Gandhi International Airport. It is located at a distance of 10 kms from the airport. Dwarka is also well connected to the airport through the Delhi Airport Express Line. Any property which is located within a 2 kms radius from metro station witnesses a price appreciation of about 20 to 30 percent over time. Hence this is true of properties such as 3 BHK apartments in Dwarka which are located near the metro station.

The affordable rates have also made Dwarka a destination for rentals. Those who are working out of the major commercial hubs in Gurgaon and Delhi prefer flats for rent in Dwarka as they are more affordable than those in their locations. A 2BHK flat for rent in Dwarka can fetch a rental income between INR 15000 to INR 18000.

The most preferred budget range in Dwarka falls between INR 1 and 2 crores followed by the INR 20 to 30 lakhs range. The most preferred unit size for properties here is between 751 to 1000 square feet followed by the 1001 to 1250 square feet range. The most sought after apartment configuration here are 2 BHKs followed by 3 BHK apartments in Dwarka. The area is considered to be an end user’s market and falls under the middle income category.

Since Dwarka falls under the planned development category, the roads and other civic amenities are well laid out and planned here. The area also possesses educational institutions of good repute. Most of the housing units here have been developed by the Delhi Development Authority (DDA).

Whether you are looking to purchase 3 BHK apartments in Dwarka or just looking for flats for rent in Dwarka, the area will be a good fit for anyone as the property rates are not very expensive here.

This is a guest post by Sulabha Kulkarni who is a freelance writer and an avid blogger. Her areas of expertise are flats for sale in Noida.

Monday, August 11, 2014

Furnished Office Space 15000 Square Feet on Golf Course Road Gurgaon for Lease

E-Commerce, IT/ITES, Consulting, Banking & Insurance, Other financial services, or Companies looking to set up their Head Office in Gurgaon have an opportunity to lease 15000 Square Feet of A-Grade Office Space at highly attractive rental and terms. The Office space is fully furnished & ready to move and offers following amenities:

  • 170 workstations
  • 15 cabins
  • 1 Cafeteria for 35 persons
  • Separate toilets for Ladies/Gents/Directors
  • 15   reserved car parking space
  • 100% Power back up
  • Conference hall for 50 persons

This fully furnished office space on 3rd floor with a super area of 15000 sq ft is located on one of the most prime location at Golf Course Road, Sector 53 in Gurgaon.

Office Space Details:

FLOOR : 3rd Floor
COVERED AREA : 15007 square feet
POWER BACK UP :  Available with DG
CABINS :  15 
TOILETS :  3 Gents, 3 Ladies
CAFETERIA :  1 (35 People)


For more details:

or Write to us at

Thursday, August 7, 2014

Pune Real Estate Trend 2014

Gera Pune Realty Report January 2014 to June 2014 revises price increase expectations of the Pune realty market for 2014 to be in the region of 10% to 14%

  1. The half yearly price increase has been at the lowest in years at 2.2% 
  2. Pune realty market has expanded by only 22% in the calendar year June 2013 – 2014 as compared to 31.9% in the corresponding period of June 2012 - 2013
  3. The average price across the city is pegged at Rs. 4910/- per square foot 
  4. Inventory has reached an all-time high of 66,279 units which translated into 29% increase over the past year

Pune, August 6, 2014 - Gera Developments, one of the pioneers of the real estate business in Pune and the creators of premium residential and commercial projects in Pune, Goa and Bangalore released the Gera Pune Realty Report for the period January – June 2014. The consolidated report which is now an industry benchmark presents a detailed update and analysis of the Pune real estate residential market. The current report reflects that the impact of the overall economic slowdown has finally started showing on the Pune real estate numbers over the last 6 months and clearly indicates that the same has had a bearing on the demand in the market place. The assessment of the overall gross stock (defined as projects under construction and ready projects with more than 5% unsold stock and more than 10 units) reveals that the rate of market expansion has come down in the last 12 months i.e. June’ 13 to June’ 14. This period saw the gross stock rise from 200,944 units to 245,674 units, an increase of 22% as compared to the preceding 12 months from June ’12 to June ’13 which saw stock rising from 152,311 units to 200,944 units, an increase of 31.9%.

The half yearly price increase has been at the lowest in the years at 2.2% for the period January’ 14 to June’ 14. There is however a counter effect of increased loading and extra charges that has, to an extent added to the price rise but does not show up in the normal analysis. The average price across the city is now just shy of Rs. 5000 psf and stands at Rs. 4910 psf. The average basket of homes has delivered a 41.29% increase in rates over the last 3 years where average prices in June 2011 were at Rs. 3475 psf.  The 3 year compounded annual growth rate has been 12.25%. Investors who have purchased homes 3 years ago with mortgage rates at 10.5% and loan to value of 80% would have seen an equity returns of 18.75% per annum, making real estate still an attractive investment especially when factoring in tax benefits and deducting entry load costs.

Commenting on the key findings of the Gera Pune realty report, Mr. Rohit Gera, Managing Director, Gera Developments said, “We have studied and evaluated the Pune realty market to realize that on the surface there seems to be a slowdown in the rate of increase of realty prices. However the quantum of slow down needs to be viewed with total cost of purchase rather than the traditional rate per sq. ft. model that has been used to value property. The loading of the common areas onto the carpet area is in the region of 33% to 35% for the common areas.  This has had an impact of 8% - 10% on the carpet area or 5% - 7% on the saleable areas. The increase in the extra costs like club house charges, infrastructure etc. has risen more than the rates themselves thereby having a positive impact on the overall cost that the consumer pays for the home.”

Mr. Gera further added “We have gauged the market in terms of supply and unsold stock based on the category of housing. The categories we have created are Budget, Value, Premium, PremiumPlus & Luxury. These parameters have helped us to understand that the maximum stress is on the luxury segment (where current quoted prices are in excess of Rs. 7500 psf) which has seen a 61% rise in unsold stock in the last 12 months. This segment is most exposed to the vagaries of the economy which has resulted in to a deferment of purchase. Also customers seem to have found greater value in the prices between Rs. 6000 and 7000 psf.”

For today’s buyer there may appear to be a slowdown in the increases in rates over the past years, however it is interesting to note that the rate of increase in luxury specifications and amenities has only increased. Locations where Italian marble or home automation would have been considered extravagant a year ago, now have a number of projects offering higher better specifications and amenities.  All these amenities end up costing the developer but are provided in a hyper competitive market. The boost to infrastructure and civic amenities  have provided customers with a better bargain since homes are actually getting cheaper in real terms with lower rates of appreciation, adjusted for infrastructure, better specifications and amenities. Though the additional loading and extra costs have impacted the overall prices, customers continue to look at the cost per sq. ft. and as such, feels satisfied that the rates have not risen. In reality, the overall cost of ownership has increased over the last few years.

While commenting on the price outlook, Mr. Gera explained that, “Our previous price outlook had indicated an increase of 13% to 18% for the year 2014. The first half of the year has shown a mere 2.2% increase.  Keeping this in mind, we would like to revise our outlook for the future and would recast price increase expectations for the upcoming 12 months to be in the region of 10% to 14%.”

The increase in inventories has also continued with unsold inventories at an all-time high – the unsold inventory that was at 39238 units 24 months ago increased by 30.9% to 51363 units 12 months ago and currently stands at 66279 units, an increase of 29% over the past year. On a macro level, areas like Chakan and Kondhwa saw the most infusion in terms of new supply, followed by Wagholi and Pradhikaran region of PCMC. City center, Vimannagar, Erandwane, Kothrud & Karve Nagar witnessed the maximum price appreciation in the last 24 months while Sopan Baugh, Khed, Aundh and Koregaon Park witnessed the lowest price appreciation owing to the saturation in those micro markets.

Years of the economy slowly grinding to a halt has finally seen the impact on the real estate sector.  While there is a renewed sense of optimism in the air, the same has not translated into demand into the market place as yet.  This enhanced demand when triggered has the potential to create an upward pressure on prices as seen in the earlier years.

The counter effect to increasing prices is the hope that that simplified procedures with reduced red tape will improve the supply into the markets thereby keeping prices in check. The question of the timing of these two significant developments will determine the impact on prices.  The more likely outcome seems to be that the optimism will turn to demand sooner than the simplification of processes and reduction of red tape.

About Gera Developments
Gera Developments, one of the pioneers of the real estate business in Pune are recognized as the creators of premium residential and commercial projects in Pune, Goa & now Bangalore. Gera Developments has recently unveiled ChildCentricTM Homes, a new way to live for today’s young home buyer. It is a revolutionary concept and an innovative solution that is set to create a new category in the residential real estate industry and establish a benchmark in the product + services model.

Find the detailed Pune Real Estate Report below:

Pune residential realty report for the period January to June 2014 from Green Realtech Projects Pvt. Ltd


Demographic Projections for Pune Municipal Corporation, 2001-2027

Pune's Population Projections:

Year Population
2001 1855476
2007 2138243
2012 2371663
2017 2650482
2022 2975720
2027 3356121

Monday, August 4, 2014

What are the Key Stages in Construction of a House?

There are 2 ways in which one can own a house. One, by buying it from the real estate developer in a group housing project, and the second option is by buying a plot of land and constructing it in your own way by adhering to building guidelines.

There are pros and cons of both the options.

When you buy the house directly from builder, you do not have to worry about land acquisition, approvals, construction, architects, contractors, etc. However, builder of the housing project may take upward of 4-5 years to hand over the housing unit to you. There is all the likelihood that you may not like the final product and therefore you might end up spending decent amount of money on renovation of your house. There could be other issues such as not finding the apartment on your desired floor, or an apartment with good view and access to sunlight, etc. As far as payment is concerned, you will be making it as per the construction linked plan and that is a big positive.

On the other hand, if you decide to build your own house, then, you take charge of all the things such as buying the plot, obtaining necessary approvals, dealing with architects & contractors, construction, and finishing. The whole process of building your own house may take about 1 year or more depending on the size of the house you wish to build. However, there will not be any compromise on quality. One important point you should take into consideration is that building your own house will be costly than buying it from the developer. Moreover, you should be prepared to shell out significant portion of the value of the property in 2-3 months time period. Also, you may not get benefits of group housing project such as gym, club, pool, playground, etc.

Having assessed the pros and cons of both the options and then deciding to develop your own house, you should stick to following construction stages in the development of your house.

Saturday, August 2, 2014

Bloomberg TV India to launch “Tracking the Recovery – Real Estate”

Press Release:

~ First of its kind show that is all set to be the final world on India’s Real Estate story ~

Mumbai, 1st August, 2014: Bloomberg TV India, the nation’s leading English business news channel, is launching the first of its kind show - Tracking the Recovery - Real Estate.  The on-air series will put the spotlight on the road to recovery and analyse the triggers of the industry’s growth by engaging industry stalwarts in a series of exclusive round table discussions. The show will also rank India’s most successful real estate firms.

The realty sector in India is upbeat about Finance Minister Arun Jaitley’s Budget promise to provide incentives for the establishment of Real Estate Investment Trusts (REIT). This has sent, the stocks of real estate developers soaring high, continued improvement in the overall macro-economic scenario; both telltale signs of the real estate sector coming back on track.

The Indian real estate sector has enormous potential at churning out huge revenue and contributing to the country’s economy. Yet, the sector has to overcome a lot of challenges in order to move ahead and be stable. Tracking the Recovery – Real Estate, will help one understand the challenges faced by the real estate industry as well as the means to clear the roadblocks in its path.

Mr. Lavneesh Gupta, COO, Bloomberg TV India said, “Tracking the Recovery – Real Estate, promises to serve as a reality check for the Indian real estate market. Our efforts will be to focus on the larger issues around the real estate industry and its future growth, as the country’s best thought leaders highlight the growth triggers and map the sector’s road to recovery. Taking into consideration our position, as a responsible business news channel, we will present an up to date analysis on an industry that contributes to the development of the economy.”

Tracking the Recovery – Real Estate, will be a five-part series comprising of panel discussions with the best minds in the sector, on a single platform, to be held in Mumbai and New Delhi. These discussions will involve industry chiefs and thought leaders from the real estate sector, telling it as it is, to help you get real with realty. The panels will be moderated by Ms. Mini Menon, Executive Editor – Bloomberg TV India.

“Tracking the Recovery - Real Estate” will air exclusively on Bloomberg TV India, in the month of August, 2014.

About Bloomberg TV India:

Bloomberg TV India, nation’s leading English business news channel with unique access to newsmakers and research-based data, illuminates stories that affect companies and industries. Bloomberg TV India provides immediate perspective on critical business news as it happens, from where it happens. Backed by an enviable squad of Indian journalists, global network of 150 bureaus and 2500 professionals, we deliver the most credible insights to our viewers. 

Bloomberg TV India’s focus on delivering breaking news and key insights aligns with Bloomberg's overall goal of being the world's most influential news organization. The core of the channel’s viewership is formed by influential leaders, business executives, and affluent professionals.

Friday, August 1, 2014

Service Tax on Under Construction Property in India

Whenever a builder sells an apartment in an under construction project to a home buyer, the builder is said to be rendering the construction service to home buyer and therefore, service tax is levied.

The service tax is levied only on under-construction property and not on completed property. An under-construction property is one which is still not complete and the completion certificate of such a property has not been received from relevant authority (Local Municipal body or development authority).

Therefore, it becomes mandatory for the builder to collect service tax from the buyer and deposit it with the service tax department.

Budget 2010 brought Abatement Scheme, under Notification No. 1/2006 dated March 1, 2006, which provides that the contractor is entitled to claim abatement to the extent of 67 per cent of the value of services rendered by him. Hence, the net effect of the tax could be lesser than the 3.4 per cent, since construction attracts service tax only on 33 per cent of the value. In the 2010-11 budget, the Finance Minister rolled back service tax to 25 per cent of the value.

So, essentially, the service tax is levied on 25% of the gross value of the property. In other words, 3.09 % will be the effective rate of service tax on under construction properties in India.

Service Tax – 12.36 %
Abatement – 75%
Service Tax applicable on under-construction property – 25% x 12.36% = 3.09%

One can also find out the Total Property Buying Costs in India.

For more on Service tax on under construction property, read the below document: