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Real Estate: The year that went by and Outlook for 2017

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The first half of 2016 saw the clearing of inventories and sales started picking-up slowly and steadily. However, there were hardly any launches but the developers offering deals during the festivals like Gudi Padwa & Akshaya Tritiya set the home buyers in motion. We have already seen a slow momentum this monsoon and festive period and expect the sales to pick-up as we enter the new year.

The major takeaway for residential Realty in 2016 was the passing of the Real Estate Bill. The bill has boosted the entire industry and is definitely proving to be a game changer for the real estate market. The impact of this bill is profitable to both consumers as well as builders as it will bring transparency in the industry and confidence amongst buyers.

Another important highlight of the year 2016 was the recent demonetisation of INR 500 & INR 1000 by the Government. This will help curb many inconsistencies and unfair trade practices bringing professionalism in the sector. Reputed builders would not feel the pinch as they have been making use of bank channels for transactions.

The first half of 2016 saw the clearing of inventories and sales started picking-up slowly and steadily. However there were hardly any launches but the developers offering deals during the festivals like Gudi Padwa & Akshaya Tritiya set the home buyers in motion. We have already seen a slow momentum this monsoon and festive period and expect the sales to pick-up as we enter the new year.

The recent launch of Smart Cities speaks of the ambitious vision of our Prime Minister Narendra Modi. Just the announcement of it had created this huge buzz amongst the cities, all eagerly vying to know more details about this initiative, and wanting to get for themselves the tag of ‘a smart city.’ Such is the brag value being attached to it. Clearly, like all other initiatives taken up by our Prime Minister, this too is a well thought out one. This project will boost the realty sector, as well as improve the economy of India. During the budget, the Finance Ministry had proposed 100% deduction to undertakings for construction of affordable housing. These initiatives will boost the affordable housing segment and will help in Government’s mission of “Housing for All”.

The rate cut by RBI brought a ray of hope amongst the buyers but the banks will also have to pass down the benefit to the homebuyers to encourage the prospective buyers to move a step closer to purchase their dream home. Interest rate is one of the important factors as the equated monthly installments (EMI) is directly linked to it. Therefore, if the banks pass on the benefits and the EMIs fall, we feel the demand for the housing should witness momentum as far as buying new properties are concerned.

The increase in Ready Reckoner rates could have been avoided considering the current market sentiments in the Mumbai realty market. This increase will have a huge impact on the property prices across segments. With this hike, the homebuyers would be facing an additional burden of stamp duty and registration charges along with recurring property taxes, which will result in buyers being more watchful. On the other hand, developers too would be facing the load as stamp duty during the purchase of land and TDR are dogged by ready reckoner rates.

Outlook for 2017
With the new government policies that real estate sector has witnessed in last year or so, there has been a significant hope for the growth in residential as well as commercial segments. The significant steps that Government has taken in amendment of the policies have given a bloom to Real Estate industry.

With the RERA Act and the demonetization of the 500 and 1000 currency notes, we can expect to witness positive reforms and sales growth in the residential segment. This is a win-win situation for developers and home buyers. The home buyers can now bet on reputed developers for their property investments and can feel safe with their investments. The sector was earlier known to be unorganized and this Act will definitely bring in more transparency and professionalism into the sector.

FDI in real estate is expected to provide a significant boost to the sector in terms of greater foreign capital inflows. The Government’s ambitious projects like ‘Housing For All By 2022’ and ‘Construction of 100 Smart Cities’ will now get a boost by the substantial participation by the foreign investors. This is an extremely positive step taken by the government and we are happy that it meets most of the industry demands. We now look forward to seeing FDI flow into the sector, thus creating more job opportunities and revitalizing the growth of the realty sector.

The Government should try to put in place the single window clearance for building permissions. Faster clearance procedures and quick approvals would largely reduce the handover time and increase customer satisfaction level. These when implemented will propel growth of the sector, the results of which will be seen in the year 2017.

The Government can exempt Income tax for affordable homes built for economy weaker sections and low income groups. Also the reduction of service tax will take off huge load off the shoulders of home buyers as they are already loaded with several other taxes.

If these expectations are met, then it would be greatly restorative of the industry’s faith in the Government and the customer’s faith in the builders in turn.

Source : Indiainfoline

Ahmedabad Real Estate News

Under Construction Flat Booking Finds Tax Deduction Under Time Constraints

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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

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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

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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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