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NRIs Take ‘Note’ of India Realty



India Realty

Indian Prime Minister Narendra Modi’s demonetization policy has brought a great amount of much-needed clarity to India’s real estate sector, which has led to an increase in interest among non-resident Indians (NRIs) in the UAE.

Speaking to Khaleej Times on the sidelines of the Indian Property Investment Expo, Shekhar Bhardwaj, Director, Brand Managers Media, described the demonetization policy as a “super hit” among residents and NRIs, and which has rekindled an interest to invest in India among expats. The expo, presented by, has been organized by Brand Managers.

“The demonetization proved to be a confidence building measure among NRIs, and which has ultimately ended up offering a lot of clarity in the investment cycle. The equation in Indian real estate is very good right now,” he said.

Bhardwaj also revealed that the type of investment that the Indian real estate segment is seeing in the past two to three years is “humongous”. The sector, he pointed out, has definitely bounced back to its peak 2007 and 2008 investment levels; and interest, especially from NRIs, has grown.

“The key drivers of the growth in the segment are the increase in purchasing power from the middle class, spurred by the policies of the Indian government, and the boom in infrastructure in the country. The pro-business environment coupled with the policies of Modi has given a huge impetus to Indian real estate,” he noted.

“NRI’s in the UAE also understand the wealth creating capabilities of the Indian real estate segment,” he added. “They know that there are a number of opportunities for them to get attractive returns on their investment.”

Bhardwaj explained that Modi’s stable leadership has helped the country beat China in terms of growth. “Our GDP is growing at a rate of seven per cent year on year. Over 15km of roads are being built each day, in addition to new airports and other basic amenities such as hospitals and schools. The business sentiments are very positive in the country right now.”

NRIs have emerged as a significant source of investment for the Indian real estate sector. Before, they used to invest in the sector largely for personal use. However, they are now also buying real estate for investment purposes.

India is currently ranked fourth in Asia for FDI inflows as per the World Investment Report 2016 by the United Nations Conference for Trade and Development. Indian real estate has attracted $32 billion in private equity so far. The global capital flow into Indian real estate in 2016 stood at $5.7 billion. Around 47,000 residential units were sold across the top nine cities of India in the financial year 2016 and these accounted for 17 percent of total sales.

In addition to the demonetization policy, the real estate sector received a significant boost with the amendments made by the government in the budget. The 2017 budget had a high focus on infrastructure and job creation, all of which aided development and created a demand for housing by putting money in the hands of middle-class.

In addition, the subvention scheme offered by Modi on housing loans for the affordable segment is also making the cost of borrowing cheaper. Another key announcement was that the income tax exemption offered to these projects was changed from three years to five years. Lastly, the Real Estate Regulation & Development Act (RERA) will enforce greater transparency and accountability requirements for developers into the system, and do a lot to increase consumer confidence.

All this, Bhardwaj says, has sent out a clear message that now is the time for people to invest in India.

KPMG estimates nearly 110 million houses would be required by 2022 alone in urban as well as rural India to provide housing to all the citizens. Neeraj Bansal, partner and head, Building and Construction and Real Estate Sector, KPMG, said: “India’s urban population is forecasted to almost double from 410 million in 2014 to over 583 million by 230. To accommodate such a vast population base, the government has launched several large programmes along with the policy support.”

The real estate and construction sector in India is expected to be the third largest globally by 2030. The joint research paper by KPMG (India) and the National Real Estate Development Council, or Naredco, reveals that the sector is expected to contribute over 15 per cent to the Indian GDP and emerge as the largest employer in India; providing employment opportunities to over 75 million people.

The real estate sector in India is on an upward trend. In the April-June 2016 quarter, homes sales in India’s top nine cities rose by eight per cent. There has been a surge of sales, especially in Pune, Bengaluru and Mumbai, together accounting for 61 per cent of the total sales in Q1 FY17. Moreover, the government announcement for the development of affordable homes seems to have given a boost to a slew of new launches in the last quarter. Rajeev Talwar, chairman, Naredco, said: “The real estate and infrastructure sector is the third largest contributor to the Indian GDP as also the largest contributor to the state exchequer. It has significant backward and forward linkages with more than 250 ancillary industries. The real estate and infrastructure sector is expected to provide huge employment opportunities to the expanding youth population.”

Source: Khaleej Times

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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