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Affordable housing to boost demand in cement sector, excise duty still a pain

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Cement Industry

The increased allocation to rural low-cost housing under Pradhan Mantri Awaas Yojana- Gramin scheme to Rs 23,000 crore from Rs 16,000 crore in FY17 is likely to drive a 2 % increase in cement demand, Ambit Capital said in a report.

NEW DELHI: Due to the looming implementation of GST bill, the Union Budget made little changes to the tax structure. There were neither too many sector-specific announcements. For sector watchers, cement was no exception. Yet, announcements aimed at boosting rural income, infrastructure and making housing affordable have been taken as neutral to positive by the Street, as the sector was seeking huge sops to beat cash ban blues.

The increased allocation to rural low-cost housing under Pradhan Mantri Awaas Yojana- Gramin scheme to Rs 23,000 crore from Rs 16,000 crore in FY17 is likely to drive a 2 % increase in cement demand, Ambit Capital said in a report.

On the flip side, allocations to urban housing were increased by merely Rs 1,000 crore, significantly disappointing expectations of a big push to urban affordable housing.

The limitation of tax deductible loss from let out housing property to Rs 2,00,000 could negatively impact demand for on real estate demand, and thus cement demand,, especially in large cities.

Experts noted that infrastructure status for affordable housing projects would give the companies higher access to the capital markets, since housing limits won’t be applicable. This could boost housing projects and cement demand.

“It will drive housing higher demand. That said, this will be mostly institutional demand, which favours efficient players over premium ones,” noted HDFC Securities in a note.

Meanwhile, FM said that the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in 2017-18. The FM proposed to complete 1 crore houses by 2019. All these developments are expected to boost cement demand.

WHAT IT DIDN’T DO
There was no mention of reduction in excise duties. Cement sector attracts higher excise duty at around 12.5 per cent compared with about 6 per cent attracted by other core industries. Experts said that relaxation in tax levies would have boosted the sentiment a lot.

The present excise rate is 12 per cent ad valorem and an additional Rs 125/tonne, with 30 per cent abatement. Simplification and reduction in the excise duty structure and an increase in the abatement limit would be a strong positive for the sector.

There was also no clarity on GST slabs.

There was though a relief on clean energy cess front as the government did not introduce Rs 400/tonne cess on petcoke, which could have increased cement prices by Rs 30 per tones.

The government in Budget FY17 increased clean energy cess on coal to Rs 400/tonne from Rs 200 per tonne, but had not levied cess on petcoke.

With the Prime Minister Narendra Modi declaring a war against black money, real estate sector – notoriously known for black money investments – was seeing demand blues. This had made the outlook of an associate sector, cement, looks all gloomy.

Average cement price rose 1.9 per cent YoY, but declined 1.1 per cent sequentially in the December quarter. There has been Rs 1,500-2,000/tonne spike in domestic petcoke prices in last six months.

Cement indu stry grows roughly at 1-1.5 times of GDP growth, but the recent demonetisation move has slowed down the sector.

HOW STOCKS PERFORMED
Cement stocks performed mixed on the Budget day. On Thursday, while some of BSE-listed cement stocks surged up to 16 per cent, others notably large players such as UltraTech Cement, ACC, Ambuja Cements, The Ramco Cements, India Cements and Shree Cement ended up to 2 per cent lower.

Source: Economic times

 

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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