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Trending on our minds: The real estate sector, under attack or under construction?




The move comes as a shock to the nation. The Narendra Modi government is making one bold move after another, this move being the least expected. In hindsight though, the government did take two years to lay down the foundation for the move, for instance, the Jan Dhan Yojna ensured bank accounts were opened across the country and the Income Disclosure Scheme gave every citizen a fair chance to come clean. Nevertheless, as a young Indian I too am perplexed to the core. 2016 started out with great hopes but the ending is somehow looking slightly blurred:

UK is not a part of the EU

Trump is the 45th President of the United States

Brad Pitt and Anjelina Jolie have parted ways

Ratan Tata and Cyrus Mystry are fighting

Cash is no more King

Slighly blurred might be an understatement, however, there is no denying that this is the year of Disruptions! A word we have come to love recently. And of course there is no denying that if anyone could have taken this bold step for India, it is Narendra Modi! At least we finally have someone we can truly call a leader. Yes demonitisation did not succeed when introduced in 1946 and again in 1978, however,  there is a greater reason to believe that the third time could be a charm. Today, the economy is much larger compared to the past, there is a considerable amount of the higher denomination currency in circulation compared to the miniscule amount of Rs 1000, Rs 5000 and Rs 10,000 notes previously, and, finally, the mindset of people is now immensely progressive. CHANGE is another word trending on our minds!

Every media platform is calling the real estate sector among the worst hit as a result of this move. There is no denying of the frenzy around; are developers accepting cash for bookings? will there be a price correction in the market? will this ultimately eradicate black money?


I believe the demonetization is likely to create ripples in the industry for years to come. How? First, it will curb the unaccounted-for cash in the industry. This is likely to impact land transactions throughout the country substantially, especially those adopting direct, non-institutionalized means. Second, it will make real estate prices within the reach of common citizens by making housing loan affordable. Third, there is likely to be a price correction in the market, but whether the correction is deflationary or contrationary remains to be seen. Fourth, we will finally see phrases like ‘strong brand’ making a difference in this sector. Developers with a strong brand and whose sales are driven by investors and the salaried class will have minimal impact, however, smaller developers for whom the cash component is a larger part of transactions are likely to be hit hard. In fact, the elimination of smaller players that we have so far only seen either in the e-commerce industry or in the taxi industry in India is now likely to extend to the real estate industry. Fifth, it will certainly make the industry more transparent and therefore foreign investors will now dare to invest in the Indian real estate sector. And finally, this move will certainly give the industry the credibility it desperately needs.

The government in the interim time needs to support the real estate sector if it actually wants to push the sector for overall GDP growth. The two pressing needs are: a quick access of low cost financing to developers for all running projects, and, allowing developers a repayment moratorium of one year to accommodate the transition period from the existing setup to a transformed system.

So India, especially Gujarat, stop searching ‘how to convert black money into white money’ on Google. Yes, the next few months are likely to be tough and even painful. And yes, Indians are smart and might even find ways to circumvent the demonetization. However, this move is likely to bring down the underground economy susbstantially, forcing it to adopt less liquid means, and finally reflecting the real economic state of India. Put your safety gears on people, the Modi government has begun construction in full force!

Source : Newsroom

Ahmedabad Real Estate News

Under Construction Flat Booking Finds Tax Deduction Under Time Constraints



Tax Deduction

If a buyer makes a transaction to book an under-construction flat and if he acquires it within the three-year period of the sale of his old house, then he is entitled to a tax deduction, says a ruling from the Mumbai bench of the Income-tax Appellate Tribunal (ITAT). If an apartment is booked in an under construction project than it must be viewed as a method of constructing residential tenements, says the December 18 judgment.

That means if the buyer uses the entire gain from the transaction to buy another house within two years or construct another house within three years. The two- and three-year period applies even if the buyer bought another house a year before selling the first one. But the property should have been bought in the name of the seller.

It is mandatory that within a period of two years after or one year before the date of transfer of old house, the taxpayer should construct a residential house or acquire another residential house within a period of three years from the date of transfer of the old house. The date of receipt of compensation will determine the period of acquisition or construction in a case of compulsory acquisition.

This exemption is effective and can only be claimed in respect of one residential house property purchased/constructed in India. In the case of multiple house purchases or constructions, the exemption under section 54 will be available in respect of one house only. Any purchases made outside the country does not fall under any kind of exemption. Section 54 gives relaxation in such cases by providing relief to the taxpayer who sells his residential house and acquires another residential house from the gained capital.

After the sale of an asset, the difference between the buying price and the selling price is a capital gain or a capital loss. These are further classified as long-term or short-term. If a property is held for 24 months or less, with effective from 2017-18, then that asset is treated as Short Term Capital Asset. Then an investor can make

treated as Long Term Capital Asset. Then only a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) can be made on that investment.

ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”, hence following the earlier decisions of the Bombay high court and the tribunal itself. Further ITAT allowed the fact that the construction can began prior to the date of sale of the old asset. Same was stated in the earlier judicial decisions of the Karnataka high court and Ahmedabad ITAT, that the date of commencement is not relevant but it is the completion of construction that comes in relevance to section 54.

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India Real Estate News

HDFC and Quikr Make A Deal



HDFC and Quikr Make A Deal

According to a deal between HDFC and Quikr, a stake of more than 3 percent will be given to the mortgage giant in return to its transfer of offline and online real estate brokerage business to the classified ads platform.

After acquiring Commonfloor in 2016 Quikr already has a major presence in online real estate broking.

“Most of the searches for real estate are moving online. Quikr has a much bigger presence online. Through this deal, we are partnering Quikr in the broking business,” said HDFC MD Renu Sud Karnad. According to her, this deal will strengthen Quirks position with offline support.

The deal suggests that HDFC will transfer to Quikr its entire shareholding in HDFC Realty, a real estate brokerage platform, and HDFC Developers, which runs the HDFC RED online platform.

Karnad added that the deal expects Quikr to generate home loan leads for HDFC. The transaction consists of a co-branded alliance between both parties and the HDFC brand will continue to be used online for a year.

The e-real estate classifieds platform HDFC RED has around 7,000 project listings and generates traffic of over 80,000 unique visitors per month. HDFC Realty has a 300-member, in-house sales team, and 7,000-strong nationwide broker network. Avendus Capital was the exclusive financial adviser to Quikr while Kotak Investment Banking acted as the exclusive financial adviser to HDFC on this.

30 million monthly users make Quikr India’s largest classifieds platform. It runs multiple vertical businesses across real estate, automobiles, jobs, services, and goods. The Quikr Home, its real estate vertical generates 3.5 million monthly unique visitors.

Both companies intend to work closely and conduct analytics and identify potential homebuyers, and therefore home loan customers, early in their home-buying journey. Quikr founder and CEO Pranay Chulet said, “We see great synergies between Quikr and HDFC as we start working together to bring a seamless online-to-offline platform to developers and consumers.”

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India Real Estate News

Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes



GRIHA Launches Star Rating For Urban Homes

Green Rating for Integrated Habitat Assessment (GRIHA), is the National Rating System of India, a Sanskrit word meaning – ‘Abode’. Human architecture has always consumed resources in the form of energy, water and material from the environment. From their construction to operation, these habitats absorb the resources throughout their life cycles, emitting wastes in the end. This emission could be direct in the form of municipal wastes or indirect emission into the atmosphere, such as from electricity generation. Hence GRIHA was formed to reduce an architecture’s resource consumption, waste production and overall environment impact up to certain national acceptable limits.

In attempt to quantify all these aspects, like energy consumption, waste generation etc. GRIHA tries to manage, control and bring down the respective to the best possible limit. Being a rating tool, it helps people to assess the performance of their respective projects against the national benchmarks.

Hence it becomes an evaluation of the environmental performance of an architecture on a holistic level. Covering its entire life cycle, this evaluation provides a specific standard for a ‘green building’. This rating system aims to strike a balance between established institutions and emerging concepts, on a national as well as the international level.

The process starts with an online submission of documents according to the criteria. Then a team of professionals and experts from GRIHA Secretariat takes a site visit for the evaluation of the building.  There are four different sections categorized by 34 criteria in GRIHA rating system. Some of them are site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and innovation. 

Sanjay Seth, CEO, Green Rating for Integrated Habitat Assessment (GRIHA) Council says, “A rating between one and five stars is being provided, helping the costumers to know about the sustainability of the houses”.

According to the Union Minister, Hardeep Singh Puri, the climate resilient and sustainable buildings are the need of the hour. As the government is aiming to construct around 1.2 crore houses for the urban poor under the affordable housing scheme.

In one of his keynote addresses, Andreas Baum, Ambassador of Switzerland to India and Bhutan said that the Indo Swiss collaboration is operating with the Indian Bureau of Energy Efficiency in the development of guidelines for energy efficient housing.

“At present India is witnessing a rapid urbanisation, if each building becomes greener than the last one, then we have a huge opportunity and hope for our country. We need to look beyond the conventional methods of building, in order to provide our citizens with a good quality of life. Hence, GRIHA gains important in meeting our national goals with respect to a sustainable society”, says Dr Ajay Mathur, director general, TERI & president, GRIHA Council.

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