Monday, September 29, 2014

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

Author: Sachin Gupta | Find me on Twitter

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??

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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

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.

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

Author: Sachin Gupta | Find me on Twitter

'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.

Have any Questions?

Monday, September 1, 2014

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

Author: Sachin Gupta | Find me on Twitter

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.


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