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Realty funds’ bull run on Divali
Despite a bullish Sensex and realty funds touching a new high, experts warn it is time to sell, discovers
Manoj Kumar
Undeterred by the hike in home loan interest rates with Sensex touching 13000 points, the boom time in the real estate market continues. Customers are spending huge money in the sector, especially as part of their Divali buying. So, the builders, property dealers, real estate funds and other related players are working overtime to grab a substantial share of the realty boom, especially during the festival season. For instance, Radio City, India’s premier FM music channel and Gaursons India Ltd, Delhi’s leading real estate developers, have joined hands to announce a contest for its listeners which offers a chance to win a Divali gift of two-bedroom luxury apartment. All they have to do is to answer one simple question through SMS, which is being announced everyday. The contest is likely to bring good money to the telecom operators, FM channel, as well as free publicity of real estate project besides satisfaction and entertainment to the listeners. Similarly, over one lakh people have applied for around 3,500 flats offered by the Delhi Development Authority (DDA) in the national capital almost at the market rate. Large queues were seen at bank counters, who were offering the earnest money of around Rs 1.5 lakh by charging Rs 4,000 to Rs 5,100 in lump sum. “Our family usually spends Rs 20,000 to Rs 50,000 during Divali every year, but this time we preferred to book three flats considering it as lottery tickets which could give us a chance to have a home in the national capital and earn money as well,” said Raman Sharma, a chartered accountant. In fact, the market watchers said, “ With income levels growing, a large number of urban households are trying their luck to buy a house. The developers and bankers are also offering festival discounts to the borrowers on home loans.” Besides, buying gold on Dhanteras, it seems, making some investment in real estate during the festival season is also a new trend among the urban class.
Time to book profit
Stock market experts, however, caution the investors that besides investing in certain realty stocks, it is right time to book profit in the stock market by selling such stocks. For instance, Unitech - a leading real estate player, is currently trading at its 52-week high price, and its market capitalisation is Rs 22,475 crore. Whatever the valuation of the land bank, time taken for construction to be completed and sales and profits to be realised could be a long one and the current market price (Rs 344) makes the stock a very high-risk investment. Though it makes sense to sell the stock for those who already own it. For stocks of say, Jyoti Structures (Rs 114.45), the market watchers are recommending to book profit while expecting appreciation of around 7 per cent. Similarly, for the Hotel Leela (Rs 64.90) stock, they feel that though things are upbeat in the hotel industry, but its story is not optimistic. Its main properties and income are Bangalore, Goa and Mumbai.
Investment in realty stocks
During the festival season, most investors are ready to take a risk to invest in the realty stocks, mutual funds, equating it to gambling on Divali. Consequently, some builders have launched pre-Divali booking offers and are preparing to launch their IPOs to fund their projects. Some banks like HDFC have also introduced specialised real estate funds that would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securitised assets. Customers are showing keen interest in them.
Caution is the key word
Equating the investment in realty stocks to pre-Divali sales bonanza in the market, experts warn the investors against misleading advertising campaigns of festival discounts. Pramod Gupta of Promoter and Partner of RPS Group: says “When a couple with a growing double income compares the increasing rent with the EMI for an apartment, they hardly pay attention to the rate of interest but are only concerned about the facilities and the possession of the apartment.” However, in some cases, it is better to stay on rent than buying a two-bed room flat for say Rs 30 lakh to Rs 40 lakh. “ For a Rs 30 lakh loan, you would be tied up with EMI of around Rs 30,000 for next over 15 years, besides paying Rs 1,000 to Rs 2,000 as society charges.” Cautioning against some dubious builders he said, “ During the festival season, some builders are selling flats by offering heavy discounts on bookings during pre-launch period, by paying an advance registration of Rs 2 lakh to Rs 3 lakh. However, many times, they do not have even licences and show simple sign boards on lands purchased from farmers at a cheap rate.” In case, the municipal authorities have not passed the master plans of their projects, all construction may be later declared as illegal leading to harassment and financial losses to the buyers. During the pre-launch on Divali, generally an investor may be asked to deposit almost full amount in a short span. The customers should not be allured by any verbal commitments, instead, should seek at least written confirmation of the commitment.
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A rainbow on your walls
With the ‘change and new look’ bug giving tough competition to the dengue virus hectic painting activity has been witnessed all around during these pre-Divali days. For those opting to paint their houses and commercial establishments it is a cost-effective and easy way to lend a new ambience to the interiors.
Going by the trends high-end exotic finishes and textured wall finishes seem to be the latest preferences this Divali.
‘’Plain is passé, while double-tone effects and contrasts are hot. With the market teeming with choices getting a haute makeover for your walls is a cakewalk these days,’’ says Mr Sanjay Goyal, a Ludhiana-based architect firm Designex Architects. Choice of colour and finish are the major decisions required to be made by those opting for the paint. ‘’As colour and type of wall finish add character to a room or home, so personalised and exclusive is what most clients look for these days,’’ says Mr Bachitter Singh of Bachitter Singh Associates, a Chandigarh-based architecture and interior designing firm.
Colour also has to be chosen according to the space available. While pale colors accentuate a sense of space and darker ones make a room appear smaller, says Mr Goyal. ‘’Warm tones like orange rust and shades of maroon are the colours that are in demand this season as these colours exude energy’’, says Mr Aggarwal.
Continuity is another factor in the choice of colours as the overall holistic effect is what is aimed at. Even though each room can be dealt with on an individual basis, the overall continuity has to be maintained. TEXTURE/FINISH AND EFFECTS: Paint effects add an individualistic touch to the interiors plus these also offer easy solution to the difficult or problem areas like niches, pillars, corners etc. ‘’Texture paints are actually not paints these are aesthetic treatments which not only lend a character to the walls but also cloak the inherent defects of different walls and surfaces. As these do not form a flat surface so reflection of light is less. These thus provide quick fix solutions to imperfect surfaces skirting the need to get replastering done,’’ says Mr Bachitter Singh. As shine determines the brightness and reflection of light so high gloss flat finishes are ideal for areas like kitchens, bathrooms and kids room as these not only brighten up these areas but also are hardy and more durable. ‘’More and more people now want to use effects that go much beyond the paints available in market and thus they opt for paint effects like rough stone, marbling, colourwashing, stipling, sponging etc,’’ says Mr Aggarwal whose tinting machine can yield upto one lakh shades. Apart from these horizontal and vertical stripes, different types of stencils too have broadened the scope to paint your imagination on to the walls, he adds. Accent walls can be created to highlight certain areas. These walls can be treated with special effects to brighten the effect like one wall in a room can be accented while the rest three will be silent, says Mr Goyal. Basic colours that are being used for different textures and effects are mud, beige, cream, pastel, he adds. Decorative finishes used during European Renaissance period are also scoring high this year with imported exotic finishes giving the effect of rich draperies once used in villas or stately homes with subtle play of contrasts. Stucco décor offers mother-of-pearl finish. The subtle hints of gold and green in the topcoat lend haute designer look to the decor. The duette colour range uses two-tone pattern to add soft broken colour effect. Sky pattern, crinkles, swirls, floral and tulips etc are available in this range.
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A beginner’s guide to real-estate market
Vibha Sharma talks to realty experts, seeking guidance for first-time buyers
For any first-time investor venturing into the real estate market for the first time the basic guidelines are to have knowledge, knowledge and more knowledge about the subject. The Tribune talked to some experts in the market to understand dynamics of the current high in the real estate and guide those entering the field for the first time. In real estate it is the no-pain-no-gain formula that works. But it is also a certainty that a small amount of risk element, if coupled with adequate awareness and knowledge will ensure that a first-time investor never fails.
Explore
While looking for property to buy, get to the very bottom and other nitty-gritty like how long it will it take to sell it again, says director of the R.P.S. Group Pramod Gupta. Examine properties that sell fast to take the cue. Caution and awareness are the second most-important key words if you are venturing into real-estate investment on your own with no reliable or expert hand guiding you. A serious mistake in the beginning can prove disastrous and burn your fingers forever. Property as in investment is a very dynamic proposition where anything can happen. The best way to begin is know what you are doing. Don’t just jump to the first property that comes your way on the basis of information by friends or the friendly neighbourhood property dealer or what you have garnered through media. There are lots of ifs and buts involved so do your homework. As a first-time investor try not to go in with just any developer or agent unless you know him well or he has been recommended by someone who has dealt with him in the past. Ascertain his reputation as well as the genuineness of the product he is selling.
Will the bubble burst?
There is a growing feeling that the current feel-good bubble might burst as there are appears to be an excessive inventory of unsold property in the market. And that there are only speculators and no real-end users in the market. But the fact is that the national real estate market comprises thousands of micro-markets, so there is no generalised situation as it varies from area to area and city to city. Also it cannot be said that today’s market is a buyer’s or a seller’s market. While there are a large number of properties in the market, experts term it a balanced market that will only grow in 2007. India right now is on the upswing and likely to remain that way. “Good infrastructure, good roads, more buildings and malls and more employment opportunities are generating more money. The consumer confidence is on rise and the market is safe. The rule of the thumb is that any property on which you can get a loan is safe,” Gupta adds.
Be realistic
But there are no quick get-rich schemes. So if someone is telling you that your money will double or triple in a year’s time in an unproven and unexplored market, based on some old-age theories, it is time to do a reality check. Whether going in for high-end apartments or a piece of land offered by a developer, the first-time investors should remember that investing in property is very different from investing in shares, bonds or gold. Also don’t try to over-reach or over-buy if you cannot afford to sustain your investment. Since huge amounts of money are involved so do not fall for the line that easy instalments will enable you to pay back that loan. It is not so easy to payback instalments as has been portrayed by lenders. Understand that a loan of Rs 20 lakh would mean that you should have at least Rs 20,000 in hand every month. So don’t get carried away and determine your personal financial goals.
Determine your aims
What is your aim and what is the difference between your income and investment property? Are you a small-term investor hoping to make quick money, a middle-term investor who wants to hold on for three to five years or a long-term investor looking for having a nice nest egg for your retirement? Once you have determined your financial goals - fast cash, income or investment - you can work out your investment strategy. You should have a certain amount of risk appetite so as to be able to pay the entire amount if as a speculator you have bought a property for short-term gain and are not able to sell it when you want to. Also always calculate the profit on your own investment whether it is 10 per cent or 25 per cent. Never confuse the total value with the investment you have made and your life will be simpler. Actually it is all about reputations and connections. A good and reputed businessman will have a policy that will ensure that the person coming to him as an investor does make money whether he is offering a pre-launch or a developed property. Going by another rule of the thumb, barring a few, big developers nowadays do not go in for pre-launch offers. In case you have identified a reputed developer offering a pre-launch it is good, otherwise it makes sense to visit the site and check out the details like who the land really belongs to. Also if going in with a not-so-well-known developer check relevant documents and ensure he has a proper licence. “Property offers maximum money and also maximum fraud, so check out the builder’s commitment to deliver, based on his track record. In case of a property that already exists consult a good lawyer. Also try to invest in places where you can visits or keep track of on a regular basis,” says Gupta.
Where to invest
Right now Faridabad is the best bet as far as the NCR region is concerned. Here people with a monthly salary between Rs 15,000 and 20,000 can also think of investing. “The approach is good and more infrastructure development is on the anvil, making Faridabad an extremely attractive investment. Delhi is out of reach of the common man and so are Noida and Gurgaon. So after Faridabad, Kundali, Greater Noida and tier-II cities like Sonepat and Gaziabad also make sense. But I would not recommend Gaziabad to first timers as there is a law and order problem in the area,” says Gupta.
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Luxury living redefined in Bangalore
Builders are ‘choosing’ clients for their super premium apartments, which may cost anything between Rs 2 crore to Rs 9 crore, discovers
Jangveer Singh
The Mantri group has reinvented luxury for the jet set through its Altius project, which is nearing completion with apartments slated to be handed over to soon. Mantri Altius is a seventeen-storey property situated in the central part of the city. Each apartment is 5,500 sq feet. Apartments in the small exclusive property were sold at an average price of Rs 6 crore per flat with the last flat on offer selling for Rs 9 crore. The property has been special since inception for Mantri Developers Managing Director Sushil Mantri. Deciding that he would occupy the top floor penthouse at the site, he set out to “choose” the fifteen families who would occupy the remaining flats. The final fifteen were chosen from a list of 40 prospective buyers who were told about the property discretely. The property was never advertised. All owners are from non-competing fields and have signed agreements stating that they will further sell or rent out their properties only after getting the go ahead of at least 67 per cent of the other owners. The building has been constructed by Singapore-based RSP architects. It has a bar lounge with a seven-star lobby on the ground floor. It also has billiards and carom room, squash court, a library and a party hall. Security has been given importance with there being no main door and personalised elevators automatically opening into the apartment. To get into the elevator one needs biometric identification and swipe cards with positioning of security guards being at the minimum. Guests will go through video screening. Even small details have been taken care of. Mr Mantri claimed even the dimensions of a Mercedes S class car were measured to ensure it could be easily navigated into the underground parking as well as comfortably fit into the slot marked for it. He says his company is in the process of repeating their exclusive model in South Bangalore and in other metros, including Hyderabad, Pune and Chennai. Other builders, including Nitesh, Sobha and Prestige have also got into the race for building premium apartments and villas. Nitesh is promoting its Key Biscayne villas near the upcoming international airport for around Rs 2 crore per villa. This price is phenomenal if one sees that the land value on the outskirts of the city is much less than the central district. Sobha properties are offering apartments on St Johns Road for Rs 2 crore each. Premium apartments are also being offered on the outskirts of the city. One such is Beary’s Lakeside Habitat near Hebbal Lake in North Bangalore. The property, which is built on a three-acre plot, has two 24-storey twin towers making it the tallest residential building in Bangalore. The towers, which are connected through a walk across bridge on the fifteenth floor, are built on only 17 per cent of the available space. Unique offerings at the twin towers include a winding mirror pool, visitors’ lounge, clubhouse, squash and badminton courts, multi-gym and health spa, community centre and party hall and a large swimming pool, and an adjacent private pool only for women. Flats in this property come above the Rs 1 crore price depending on the floor area. Beary’s and other premium flats are offering designer kitchens and toilets, Italian marble flooring, wooden flooring in kitchens and special features like garbage chutes for garbage disposal and piped gas supply through in-house gas banks. Most developers are also offering super markets and pharmacies in the compound itself besides serviced apartments to ensure visiting guests and relatives too can be made comfortable.
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With land at premium, flats are in vogue now
With land at a premium and prices sky rocketing gone are the days when an average Indian citizen could afford a decent house of his own even after the retirement. Old-timers recall that in the late 60s and early 70s, land in Chandigarh, then still an infant city, was available for less than Rs 500 a marla. Not any more. A one-kanal independent house in Chandigarh now costs at least Rs 1.5 crore. The case is the same in almost all big cities and towns of Punjab and Haryana, with independent houses now out of reach of the average man. Flats, therefore, have come to occupy the void created due to paucity of land and exorbitant land prices. Owning a flat in any one of the numerous multi-storied, group-housing societies that dot the region is now turning out to be a privilege that very few let go off, that is if they have the means as even flats due to the rising demand and limited supply, too, cost a bomb. Earlier, house buyers, especially in smaller cities and towns, did not prefer to buy flats as these were thought of as match boxes having no open space, which includes balconies and terraces. For long, flat-owners used to dread the feeling of loss of privacy due to clustered environment in flats. But this is changing fast. Smart, modern-day architectural techniques ensure that some open space is created, be it by cutting corners or utilising the hitherto unused space, or even having many small balconies and terraces in each flat. Privacy, once associated only with huge, palatial houses, is now available even in three-room flats. “Earlier, one of the major negatives in buying a flat was that there was no privacy. Also, open spaces were not present. But the new-age apartments and flats have managed to tackle these two problems successfully. Even in small flats open spaces for evening sit-outs are being made available. Smart designing have helped solve this problem,” says Mr P.K. Garg of Chandigarh-based Vaastu Group, which has designed many such group housing societies in the region. Innovative use of latest gadgetry and planned use of every inch of available space is ensuring that each flat gets it own terrace and, in some cases on the ground floor, even a lawn. By making the main entrance to the flats through the terrace, each flat becomes independent of the other. “Basically, what people want is more at less cost. With a little extra planning, we were able to offer that,” says a leading builder, whose first project, a flat complex, in Zirakpur, was a complete sell-off. Experts say the current mantra as far as flats are concerned is ‘ privacy; adequate natural light and ventilation; ultra-modern; and spacious and secure. Use of latest stones and tiles for flooring and walls is another option that makes flats desirable. Another benefit that a flat offers, at a much cheaper price as compared to an independent house, is renovation. “Renovating a big independent house can be quite costly. Compared to that, renovating a flat cost nothing. A new colour shade here, a new flooring there, it is all very cost effective. With very few changes at a very little cost, you can give a totally new look to your old flat,” says Mr Garg. He also points out how technology is turning dwelling units into smart homes. Doors opening at the touch of the owner without any key being inserted, windows and curtains opening up by a simple command, lights switching on and off by mere clapping of hands, all this and much more is visible in many of the new-age flats, all at a little extra cost. Life was never so comfortable!
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Sara International to develop Orissa’s first private port
Sara International Ltd, a Rs 350-crore company, part of the Sara Group of companies, is all set to develop the first private port in Orissa. It has bagged a contract for development of the Rs 1,700 crore Gopalpur Port project.
The project, which is a first-of-its-kind initiative by the Government of Orissa, aims to turn the existing Gopalpur port into a multi berth, all weather, and sate-of-the-art facility. Sara International is the part of a three-member consortium, which has been awarded the development project on BOOST (Build Own Operate Share and Transfer) basis by the state government. The consortium aims to invest Rs 1700 crore on the project, over the next 5 years, including inputs worth Rs 400 crore from their own equity. This would be the biggest investment in the port sector in eastern India. The company is already in touch with infrastructure developers, port owners, operators and equipment manufacturers and has long-term plans of making container terminals, oil jetties by 2012-13, informed Mr D P Singh, Managing Director, Sara International Ltd and official spokesperson of the consortium. Mr D P Singh said that the port had been lying closed for the past three years. The first phase of the development of port would begin by January 2007, and during the next year (October 2007- January 2008), it would be completed. “The development of the port will not just provide employment to hundreds of natives in the area, but it would be a big boost to the industry - especially the alumina and steel industry. As of now, the industry has to send its consignments via Vizag or Paradip ports, which means higher economics for the companies,” he added. Mr D P Singh said that the once the port was ready, Sara
International would be operating it on a revenue-sharing basis with the Orissa Government for 45 years. He said that while some amount of the project cost would be raised through self-accruals, a majority of the cost would be met through raising funds from various infrastructure development and lending agencies.
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Manaser industrial model for Rohtak, Faridabad
An enthusiastic Haryana Government has decided to go ahead with the setting up of new Industrial Model Township (IMT) at Faridabad and Rohtak. These townships will be built on the pattern of Manesar near Gurgaon. Based on the global model for an industrial hub, these townships will integrate industrial, commercial, residential and institutional sites for operational convenience and promoting walk-to-work-culture.
Though the state government had announced the proposal during the last Assembly session, the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) has given the project a formal shape that will help the state showcase its industrial infrastructure, at least on paper for the moment, to foreign investors wooed by state Chief Minister Bhuinder Singh Hooda during his just-concluded foreign tour. An HSIDC official said that the government had already issued a notification for acquiring 878 acres of land near Rohtak town near the National Capital region on National Highway No 10. The notified land falls under Kherisadh and Balyana villages. Another 1200 acres, already identified, will also be acquired soon. The township will be provided linkages with the Kundli-Manesar-Palwal (KMP) Expressway, area of Special Economic Zone in Jhajjar district and the upcoming industrial centres like Kharkhoda. The industrial township at Faridabad will be developed in Sectors 66, 67, 68 and 69 of the Final Development Plan of Faridabad. Here land measuring 1832 acres has been notified for acquisition under Section 4 of Land Acquisition Act. It may be recalled that the Regional Plan, prepared and published by the NCR Planning Board, had identified Faridabad as one of the most important Delhi Metropolitan area towns that needs to the planned and developed to check the inflow of migrants to the National Capital. In the Final Development Plan of Faridabad -Ballabhgarh Complex Sectors 68 and 69 have been designated as the industrial sectors and Sectors 66 and 67 had been marked for warehousing, transport and communications.
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Realty market goes static after draft of proposed Master Plan
With the plan for Gurgaon city yet to get governmental approval, investors are waiting, observes
Ravi S.Singh
Publication of a draft of the proposed “Master Plan-2021” for Gurgaon city, about a month back, has brought about a status quo in the price line in real estate market here. The purchasers appeared to have done a sudden vanishing act from the market the day the draft was made public. The general impression is that though the price line has been static following publication of the draft, it could be the proverbial “lull before the storm”. The wide-ranging apprehension is that market could get bearish and the price line would start falling, though it may not be a crash down. The draft Master Plan, to which the government has invited possible objections from the public, has provisions for 58 more new HUDA sectors in the category of residential and institutional structures to be set up in the extended Gurgaon city. Also, there is a provision for licensed areas, which would be used by prospective private builders and developers to set up colonies. In fact, areas of villages contiguous to present Gurgaon city have been converted in “Residential Zone (R-Zone)” as per the proposed new plan. The proposed HUDA sectors and licensed areas will be located in this very R-Zone. Land of villages Ghata, Barempur, Ulawas, Medawas, Badshapur, Khedki Daula, Sikopur, Naurangpur, Badha, Sihi Sikanderpur, Nawada, Naharpur, Wazirpur, Hyatpur, Dorka, Bajghera, Khedki, Basai, Dhankot, Dhanwapur etc have been earmarked for the R-Zone. The catch is that the proposed Master Plan is yet to have final seal of approval from the government. It would be done after the government processes the objections from the public. In such a situation of uncertainty the investors, including big ones or genuine purchasers, are holding their bets. The reason being that the price line could be defined and be predictable only when the final Master Plan is out. Obviously, the price of land in the R-Zone would be comparatively high. Hence, making any new purchase of land was fraught with risks. Outside the R-Zone the price of land would show declension and taper down depending upon distance from the centre of gravity (the R-Zone). Some builders and developers, including DLF, MGF, Unitech, Vatika, Uppal and Ram Prasad builders, had gone on a binge buying of bulk agriculture land in the six months’ run up to the publication of the proposed Master Plan. Also, some private individuals, too, got sucked up in the vortex and went on purchasing spree. By a strange coincidence bulk of the land purchased in the past six months by the above named developers and some individuals have fallen in the R-Zone. As a result, the moment the land found place in this zone, the land value zoomed manifold and, from business point of view, these investors made profits several times over in one fell stroke. The large-scale purchase of land in the past six months before the publication of the Master Plan had put pressure on the price of agriculture land. There was competition among the purchasers. According to the general opinion, across-the-board the land value appreciated at an average of Rs 10 lakh to Rs 20 lakh per acre, each month in the entire six months’ stretch prior the publication of the Master Plan. The drama unfolding in the villages with regard to bulk purchasing of agriculture land had cast its shadows on the price line of land property in the present planned city area as well. There was appreciation of land cost in HUDA sectors and licensed areas in the city in the same six months. Now the builders and developers and individual investors have suddenly stopped purchasing the agriculture land after the publication of the proposed Master Plan. There is also a lack of purchasers in the already existing planned city area of Gurgaon. Consequently, the price line of land stays where it was at the time of publication of the Master Plan. While the developers and big tickets investors would want to see how the market in real estate behaves after the final Master Plan is out, the genuine investors now do not want to hurry as 57 new sectors and more licensed areas are coming up in the approved Master Plan. Their calculation is that with the glut in supply chain of residential and other quarters in the offing on account of expansion of Gurgaon city vide the new Plan, price line will have to come down. Obviously, they are waiting for that day. Provided the land sharks, developers and vested interests in the government does not cheat on their simple business logic.
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Skyrocketing realty prices hit small-time financiers
With a large number of small-time financiers from the unorganised sector jumping into the real estate market, the sector has become stagnant due to the sudden price rise. The number of sale and purchase deals has dipped due to ‘excessively’ high prices and according to sources the real estate market might crash up to 30 per cent in the days to come. According to observers the high prices of residential and commercial properties had adversely affected the small time financiers who had invested huge sums money in the hope of earning profit. A leading real estate agent said in Karnal only 10 per cent genuine buyers invested money in the total sale and purchase deals while the ‘’marginal’’ financiers pumped in the rest of the money in the sector and this has led to a sudden rise in the prices of property. Sources said the residential areas that were available for about Rs 5,000 per sq yard earlier were now priced between Rs 10,000 and Rs 15,0000 per sq yard depending upon the location. Similarly, the price of commercial areas varied from location to location and is in the range of Rs 4 lakh per sq foot. A realtor said both small-time and big financiers were purchasing property at a higher price to affect the overall market. But now, he said, when the genuine buyers were hesitant to invest in an expensive property, the market had come to a standstill. Commenting on the stagnation in the sale and purchase deals, real estate agents admitted that the prices had climbed up due to a glut of financiers in the local market. Insiders said most of these small-time financiers were working in unorganised groups comprising four or more persons. Since these investors were keen to earn maximum profits, they were on a buying spree. But now with the prices skyrocketing, the genuine buyers were obviously hesitant to purchase property at much higher prices. This factor, feel the experts, would lead to a price crash in the local market. They said the small-time financiers were the worst hit in all this as following in the footsteps of big players they had pumped in huge sums of money in the market and now their chances of reaping rich rewards were dwindling as genuine buyers have developed cold feet due to exorbitant prices.
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TAX tips by S.C. Vasudeva Q. Please clarify the following 1. Is the special increment received for adopting family planning operation exempt from income tax? 2. Is it true that an employee getting up to Rs 3,000 month as house rent allowance need not show any receipt? If so, under what section? — Dr Ninderjit Singh, Nawanshahr A. The answers to your queries are as under: 1. Section 10 of the Act, which provides for the exclusion from total income i.e. income which are wholly exempted from income tax, to my knowledge does not contain any provision with regard to the exemption of the special increment received for adopting family planning measures. Accordingly in my opinion the amount so received is taxable. 2. In accordance with the circular no. 9 dated 18.11.2003, the exemption of producing the house rent receipt is applicable if the house rent allowance drawn by the assessee is up to Rs 3,000. This facility is limited for the purposes of deduction of tax at source. However, during the course of regular assessment the assessing officer has the right to ask for evidence in support of the payment of rent. Tax liability for senior citizens
Q. I am a senior citizen. Kindly work out my tax liability for financial year 2005-06 (Assessment Year 2006-07) from the following data. 1. Rental income of Rs 8,000 per month. 2.
a) Interest accrued on NSC Rs 8,520. b) Interest income Rs 15,480. c) Tuition Income Rs 60,000. — N.S. Bedi, Mohali A. You have not indicated the figures of house tax paid by you in respect of the premises that has been given on rent. The same will have to be deducted from the annual rental of Rs 96,000. The figure so arrived at would be reduced by 30 per cent of such an amount. The net income would be the income from house property, which would be taxable in accordance with the provisions of Section 22 of the Act. Basic Rs 8,750
You would be entitled to deduction of Rs 8,520 under Section 80C of the Act from the total income. The total taxable income without the deduction of house tax but after allowing the statutory deduction of 30 per cent works out at Rs 1,42680. The same is less than Rs 1,85,000, the maximum amount up to which tax is not payable by a senior citizen. Accordingly, there will be no tax liability in your case on the basis of figures provided by you.
HRA rebate
Q. I am getting monthly salary as under: In order to avail HRA rebate in income tax how much monthly receipt of house rent, I am required to submit to the D.D.O. — Amit Arya,
Panchkula A. According to the provisions of Section 10(13A) of the Income-tax Act 1961 (the Act), the least of the following amounts is exempt from tax in case the assessee is in receipt of a house rent allowance: (i) The actual amount of such allowance received by the assessee in respect of the relevant period or (ii) The amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds 1/10 of the amount of salary due to the assessee in respect of the relevant period or
(iii) Where such accommodation is situated at places other than Mumbai, Calcutta, Delhi or Madras, 2/5 of the amount of salary due to the assessee in respect of the relevant period. On the basis of the provisions as stated above, the calculation in your case would work out as under: Since, you have not given the amount actually paid towards your house rent, the figure at (b) above has not been computed. The salary for the purpose of computing the above exemption is to be calculated by including dearness allowance if the terms of employment so provide. It has been presumed that your terms of employment so provide. You are not required to submit any receipt to D.D.O. in view of the HRA being less than Rs 3,000. This is because as an administrative measure, the salaried employees drawing house rent allowance up to Rs 3,000 per month are exempted from production of rent receipt for the purposes of deduction of tax at source. However, the Assessing Officer during the course of regular assessment has the right to make such enquiry as he deems fit for the purpose of satisfying that the employee has incurred actual expenditure on payment of rent (refer circular no 9/2003 dated 18.11.03).
No HRA rebate on office flat
Q. You are requested to arrange to clarify the following points as under: 1. I am a permanent employee of LIC of India. My gross salary is Rs 2,55,000 for the financial year 2005-06. 2. I am living in a house provided by LIC of India, in Chandigarh. No house rent is payable to me. The LIC of India is deducting Rs 123 p.m. from my salary in lieu of rent/licence fee. 3. The house was constructed about 40 years ago. 4. The perquisites added in my salary @ 208 (excluded D.A.) on basic pay and all allowances about Rs 33,000. The HRA payable to employee is not excluded from the 208 perquisites. 5. My wife is also in government service. She is also loosing her house rent allowance. No HRA is paid to her from her employer. Now my question is whether the above-mentioned perquisites may be added to my salary or not for income-tax calculation purpose. On the other side, an employee is allowed to exempt the HRA as per Income-tax Rule under Section 10(13A) and there is no need to show the receipts up to Rs 3,000. Therefore, you are requested to advise in this matter as per Income-tax Rules on perquisites @ 20 per cent should be added to our salary or not and how much Income-tax should be charged from our salary on this said addition, if added. It is also a considerable point that we both, or in a couple case are loosing the HRA. In the case, how can we say is it a rent-free accommodation? Please clarify in both conditions as single earning case and double earning case. —
Satish Kumar, Chandigarh A. It is presumed that the house provided by LIC of India is owned by the said corporation. The answer to your query is being given on the basis of the said presumption. For the purposes of computing the perquisites for the accommodation provided by the owner employer 20 per cent of salary as reduced by the rent if any, actually paid by the employee, in cities having population exceeding 4 lakh, is to be added to the salary income. The salary for this purpose, the following are not to be included in the salary. (a) Dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned; (b) Employer’s contribution to the provident fund account of the employee; (c) Allowances which are exempted from payment of tax; (d) The value of perquisites specified in sub-section (2) of Section 17 of the Income-tax Act; (e) Any payment of expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of Section 17. It may be added that house rent allowance is not exempt from tax where an accommodation has been provided by the employer. Accordingly in case your wife is receiving HRA, then the same would be eligible to tax. You have not given the break up of your salary. It is therefore not possible to compute the amount of tax on your income. In view thereof the answer to your query has been given on the basis of the legal position as contained in the Act read with Income-tax Rules 1962.
Sale of land long-term capital asset
Q. I purchased land in 1998 and constructed a building thereon in 2005. I intend to transfer the land and building in November-December 2006. Will the capital gains on such a sale be long-term capital gain? —
Ram Kumar, Amritsar A. If the land is purchased in 1998 and the building is constructed in 2005, the land would be a long-term capital asset and the super structure would be a short-term capital asset. The profit earned on sale of land in 2006 would thus be a long-term capital gain and the gain on sale of super structure in 2006 would be a short-term capital gain. This position stands accepted by the Madras High Court in the case of GT v Dr. B.D.L. Ramachandra Rao (1999) (236ITR51).
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UAE property giants target India
Leading UAE-based firms, especially in the real estate sector, have joined the list of global companies, targeting investments in India in hotels, malls, healthcare, housing, IT Parks and integrated townships.
A booming economy and the huge middle class segment in India offers a lucrative destination for investors and several leading UAE real estate companies such as Emaar Properties, Al Ghurair Group’s ETA Star, Al Rostamani Enterprises’ KM Properties, Nakheel, and Dubai Properties have announced major plans in the country. They are investing in hotels, malls, healthcare, housing, IT parks and integrated townships all over the country from Mumbai, Delhi, Chennai, to Hyderabad. Emaar, the largest property developer in the Middle East, has announced a joint venture in India between Emaar and MGF Developments- Emaar MGF Land Private Ltd. In December 2005, Emaar MGF announced India’s largest foreign direct investment in real estate, for projects with a capital outlay of $ 4 billion (US). Developments are planned in Delhi, Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. ETA Star is developing a mall in the heart of Chennai and a one million-square foot tech park in the city’s IT corridor, Abid A. Junaid, ETA Star’s executive director told the Gulf News. The company has launched a 10-tower residential project in Bangalore, and in Mumbai’s Juhu district, it has a joint venture with the Supra Group for developing service apartments, residential buildings and a mall. “The company is also spreading its operation in cities, including Kolkata and Hyderabad, where land acquisitions are in progress and projects will be announced early next year,” Junaid said. Better Homes, the UAE’s biggest real estate agency, this month opened offices in Mumbai, which will sell Dubai and Mumbai property to Indian residents and NRIs. Ryan Mahoney, managing director of Better Homes, said the company will set up six offices in Mumbai that offer brokerage services for residential property. “This is a turning point in the Indian economy as FDI restrictions have been relaxed and real estate sector now offers tremendous potential,” he said. Sudir Kumar, executive director for property at Dubai-based Morison Consulting, said the opportunities in India were too good to miss, a fact demonstrated by visits to India by global business leaders, including Bill Gates. KM Properties, another Mideast real estate major, has set up a huge real estate development fund for hotel and real estate development across Middle East and Asia. “We presently have property in Saudi Arabia and are exploring opportunities in India as well,” Mohit Gupta of KM properties said.
PTI
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Eros to set up Rs 400 crore corporate park at Manesar
Real estate and construction major Eros Group will spend Rs 400 crore on setting up a new corporate tower at IMT Manesar.
The project expected to be completed by the end of 2008, will have all the utilities to cater to the requirements of shops, offices, businesses and visitors. It will be modern and sophisticated with all the amenities and infrastructure essential to a business complex. “Manesar-Gurgaon is soon going to be one of the most strategic location for corporate offices and trade towers and will witness emergence of the state-of-art industries in the region as the greenest industrial estates in the country,’’ company’s Director Avneesh Sood said. The corporate tower will be spread over an area of 5,832 sq meters and will have huge floor plates of 60,000 sq ft. Being a part of Gurgaon, the national capital region, Manesar would become hub of industry specific infrastructure, service ancillaries, commercial services and other essential services within a span of five years, due to its proximity to the airport, upcoming SEZs by Reliance and manufacturing units like Honda, Maruti, ACME Tele
Power in its vicinity, Mr Sood added.
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Bright & cheerful paints are a cost-effective way to change your
COLOUR:
Colour has its own lingo and the choice of a particular colour scheme speaks volumes about the person who chooses it. It is best to choose colour to suit the type of person who is going to use the room, says Mr Sudarshan Aggarwal, a Ludhiana-based colour consultant. ‘’A coat of pink in the room of elderly people will be out of place,” he adds. 
Colours have the capacity to change or affect our moods and lend a particular period look. So if you want to court the Mediterranean sun then go for warm ochre, dazzling blues and soft pinks, the bluish-grey palette represents the traditional Scandinavian interior, while the sober vanilla, off white bouquet is more American in nature. 
How much can you pay for a premium address and how much can today’s super premium apartments cost? This is a question whose answer has been redefined in Bangalore in the last one year or so. Before that anything above the Rs 1 crore bar was thought to be the height of luxury. Now the bar has been raised to the Rs 2 crore to Rs 9 crore in the region. 
