The proposed Direct Tax Code contains many provisions that
aim to change the mode of taxation of 'income from house property'.
In order to
simplify the
determination of taxable income and eliminate any scope for litigation, the
code will have a new scheme for computation of 'income from house property'.
According to the code, 'income from house property' will be
computed in the hands of the owner. Even if the property is let out for
business etc, it will be taxable only under the same head. Under the present
provisions of the Income Tax Act, letting out an inseparable building along
with plant and machinery is taxable under 'business income' or 'other sources'.
However, according to the new code, it will be taxable under
the head 'income from house property' In case the property is owned by more than
one owner and if the share of each company owner is definite and ascertainable,
it will be computed separately for each co-owner. The property will not be
taxable under this head of income if it is used for own business or profession,
or if it is not ready for use.
The gross rent minus deductions specified in Section 26 will
be the 'income from house
property'. The computation of gross rent is outlined in Section 25 of the
code. Gross rent is the higher of contractual rent and presumptive rent. If the
property is acquired during the financial year, the presumptive rent will be
also calculated on a proportionate basis.
Either contractual rent or presumptive rent for the
financial year, whichever is higher, will represent the gross rent. The concept
of 'annual letting value' under the Income Tax Act has been given up.
Contractual rent is the rent receivable under a contract. It can even be an
oral contract. Presumptive rent will be six percent of the rateable value fixed
by the municipality or the cost of construction/acquisition of the property, if
the municipality does not fix the rateable value.
Section 26 provides for deduction from the gross rent. These
include property taxes paid during the previous year, service tax on rent paid
during the previous year, 20% of gross rent towards repair and maintenance,
interest on capital borrowed for purchase /construction /repairs. In case of a
self-occupied property, the gross rent will be taken as nil. The aggregate of
deductions specified in Section 26 will be nil for such houses.
The deduction of interest on capital borrowed which is
currently available for a self-occupied
property will not be available under the new code. In case an assessee has
more than one house for self-occupation , the benefit of nil gross rent will
apply only for one self-occupied house at the option of the assessee. The
computation of remaining houses will be made as if the properties are let out.
Courtesy:- ET Realty dt:- 02-April-2010
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While a service tax on commercial
property seeks to introduce greater
transparency in the transactions involved, the immediate downside is also quite
apparent, says Sanjay Dutt
Budget 2010 intends to bring all
lease agreements pertaining to commercial property, including offices,
business centers, shop and malls,
cold storage facilities and warehouses as well as all other premises used for
business purposes under the purview of service tax. The benefits of the stay
that the Delhi High Court had placed on service tax collections with regards to
the renting out of commercial premises herewith stands revoked. While this is
certainly a step towards introducing greater transparency into the transactions
involved, the immediate downside is also quite apparent. Tenants calculate
effective rent per month per square foot on carpet area.
Landlords calculate their net earnings after paying all taxes and other
payables.
Any additional layer of cost, such as service tax, will have an impact. In a
buyer's market, landlords will end up taking the hit -in a seller's market, it
is the tenant who is impacted. The commercial real
estate market is definitely a buyer's market.
Either way, it becomes one of the items of negotiation of rent. In short, this
is definitely going to increase cost for owners as well as tenants.
Secondly, it is in overall terms not
good for the industry as there are already very unpredictable items of cost
such property tax, which continues to increase, and any increase of cost will
affect owners' net earnings.
Investors will now be more careful of investing in commercial
assets, especially income generating assets,
since purchasing such properties on a fixed return basis will now yield
significantly lower returns. Where an agreement already exists between tenants
and landlord and no provision are made for such tax-related escalations, it
will lead to increased litigation and need for arbitration.
With the immediate impact on
tenants, landlords and investors beyond dispute, there will be no serious long term
repercussions. Tenants have, by now, factored in the service tax components
into their expected capital outlay.
With the business climate once again turning positive, they will tend to look
beyond this additional expense and towards the benefits of doing business from
suitable located and enabled office premises.
We are once again witnessing a
steady increase in demand for quality office spaces by financial institutions
and even IT/ITES. The short-term discomfort brought about by the more
broad-based enforcement of service tax will be offset by the strong growth
fundamentals in Indian commercial
real estate sector, which will soon absorb this
relatively minor setback.
The author is CEO business, Jones Lang LaSalle Meghraj (JLLM)
Courtesy:HT Estates
dt:06-March-2010
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After many months in the dumps,
the housing sector was finally
sniffing at a recovery as buyers returned gradually, lured by sharp price cuts
and teaser loans.
But a Budget proposal to levy
service tax on houses under construction is threatening to crimp the sector’s
fragile recovery as the resultant price hike is certain to dissuade fresh
buyers. The proposal, a bolt from the blue, purported to spur builders into
completing projects faster after rampant complaints of long delays.
Though that remains to be seen,
an immediate effect will be the prices of incomplete houses rising by 3% after
a service tax of 10.3%, including surcharge, is imposed. The levy is based on
an earlier Income Tax Department circular, held up due to resistance from developers, which set
33% of the house price as services.
Housing project comprises land, raw
material, labor and services. Though services include branding and selling of a
project, there is an unwritten understanding that no ‘service’ was being
provided till a developer passed a property title to a buyer.
Back-of the- envelope
calculations show that an Rs 30-lakh housing
property will see a price hike of at least Rs 1 lakh after the service tax
is affected.
“Affordable housing will be
impacted the worst,” said Niranjan Hiranandani, chairman of Mumbai-based developer
Hiranandani Constructions, adding that everyone in that category must now pay
developers in installments.
The Budget proposal, coming after
the Reserve Bank of India’s incessant frowning on teaser loans, will wane
demand further, say realty watchers.
Most houses are typically sold
during construction with buyers paying in phases. The Budget proposal means
that even buyers who have to pay, say, the remaining 5% of the overall cost
during possession, will have to cough up more.
The proposal could also pose
problems in calculating remaining payments though it will ratchet up demand for
ready-to-move properties, say realty watchers.
As for developers, the market’s
response to the proposal will determine their long-term plans. “Affordable housing will now become
unaffordable,” said Rajeev Talwar, managing director of DLF, the country’s
largest developer.
“Housing is a state subject and
the move is impinging.”
Real estate was among the worst
hit sectors in the global downturn as buyers kept away and banks became wary of
lending. But teaser loans, some even as low as 8.25% much below their prime
lending rate (PLR), last year stalled the decline.
But builders fear that the
introduction of a service tax and absence of teaser loans will compound the
problem of oversupply of residential
and commercial properties in several parts of the country.
Courtesy:- ET dt:- 04-Mar-2010
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Indore: The strong commercial base
and manufacturing hub with several large format industrial parks, is attracting
the attention of major corporate and foreign investors in the country.
Developments such as the Special Economic Zone (SEZ) and Auto Testing Track in
Pithampur, and IT Park at Khandwa Road are expected to provide further impetus
to the growth of the city.
The city also has several industrial clusters such as
pharmaceuticals, textile, food, IT and auto components clusters. Key infrastructure
developments include the upcoming AB Indore Bypass road that is expected to
improve access to other major commercial cities (for example Mumbai) of the
country, thus providing tremendous potential for real estate and industrial
investments. The upcoming Delhi-Mumbai Industrial Corridor (DMIC) is expected
to enhance industrial activity around the satellite towns of Pitampura and
Dewas region. The Airports Authority of India (AAI) is undertaking the
upgrading of the existing domestic airport to an international airport.
The methodology
The city analysis by Ernst & Young has been designed to
evaluate cities holistically, considering an array of factors that make up a
city. The exercise ranks cities based on quantifiable factors, backed by data
as opposed to a qualitative assessment based on perception. The methodology to
devise city ranking was undertaken in four modules. The data collection focused
on the five indices defined by Ernst & Young, namely: City prosperity index, urban governance
index, business environment index, infrastructure index and Quality of life
index.
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and http://www.propertycafeteria.com
JNNURM
projects will enable Faridabad achieve global standards of living and improve
quality of life of its residents as infrastructural problems will be smoothened
out. Developers and investors will also be tempted to put money here, says
Brix Research
Infrastructure
is the backbone of any city for its efficient functioning and the full
utilization of its potential as a city. Faridabad is one of the oldest
industrial townships in National Capital Region (NCR).
With 300 large and 10,000 small-scale industries, it is an emerging real estate
hub. Renowned developers like Omaxe,
BPTP, SRS, and Parsvnath have launched their projects in the city. Projects
based on international standards with state-of-the-art facilities are being
developed both in residential and commercial category.
A city's economic activities are heavily dependent on infrastructural
facilities like power, telecom, roads, water supply and mass transportation,
coupled with civic infrastructure. But in Faridabad, as in most other urban
areas in India, infrastructure assets were created years ago and have been
languishing due to inadequate organization and management by state governments
and local urban bodies.
Realizing the importance of infrastructure upgradation, the government launched
an ambitious programme, Jawaharlal Nehru National Urban Renewal Mission
(JNNURM). Its main objective is to encourage reforms and fast-track planned
development in select cities. The focus is on efficiency in urban
infrastructure and service delivery mechanisms, community participation, and
accountability of urban local bodies to citizens.
Like any other urban area in the country, Faridabad's
infrastructure was also suffering from crippling defects and inadequate
attention from sate government and local bodies. Old municipal towns of Old
Faridabad, Ballabgarh and New Industrial Town (NIT), along with 38 revenue
villages, make Faridabad the biggest urban agglomerate in Haryana. Faridabad
has the maximum number of sectors for any development plan in Haryana and is
the only municipal corporation in the state. Yet, the city's infrastructure is
in a deplorable state. "Though developers
of projects are providing basic amenities like 24-hour power backup and are
even purchasing water to provide to townships, unless basic services are taken
care of by government, Faridabad will be unable to realize its dream of
becoming a world-class real estate destination," says Pawan Kumar, a
city-based realtor.
But JNNURM has brought hope for citizens of the city,
who have for long borne the brunt of bad infrastructure. National Buildings
Construction Corporation Limited is the implementing agency of JNNURM in
Faridabad and has sanction for six projects. Out of these, two are housing
projects while the rest are urban infrastructural development projects. One of
the housing projects is in Dabua Colony in NIT while the other is at Bapu Nagar
in Ballabgarh. Dabua Colony project has 1,968 units while the Bapu Nagar
project has 1,280 units.
Both these projects were launched to facilitate
rehabilitation of urban poor. Being an industrial urban area, Faridabad sees a
massive influx of migrants from adjoining states, which leads to uncontrolled
slums and unauthorized colonies, and now, this has posed a challenge to the
city and its administration. But JNNURM projects have come to the city's rescue
- launched on July 6, 2007, they are likely to be completed by March 2009.
The Dabua Colony project has a sanctioned amount of
around Rs 38.12 crores while the Bapu Nagar project has been awarded around Rs
25 crores under JNNURM. Out of this amount, the government of India has pitch
in with 50%, the state 20% and the remaining 30% has to be provided by
Municipal Corporation of Faridabad (MCF). The houses are in the category of builder-floor apartments, each three
storeys high, in addition to a ground floor. Though 2,500 houses are ready and
200 have already been allotted, the projects have overshot their deadline for
completion in March 2009. The delay in completion is due to lack of funds as
the central government is yet to pay the final installment of its share of the
sanctioned amount.
The other four projects have targeted infrastructure of
the city in terms of sewerage, drainage and waste management. These projects
aim not only to create new infrastructural assets but also improve and renew
existing ones. Revamping/Laying of Sewerage System was launched around the same
time as the housing projects and is
likely to be completed by March 2010. The project targets Old Faridabad. It is
an area that includes the city's current retail hubs like Sector 15. The total
sanctioned amount for the project is around Rs 103 crores. The project work is
going on in full swing with almost 80% of it completed.
Another JNNURM project that covers Old Faridabad is
Improvement of Drainage System, which was sanctioned in April 2007, and work on
it started in November 2007. Work on any JNNURM project begins 5-6 months after
its sanction. The expected completion date has been set as April 2010 and Rs 30
crore has been allocated for the project. Almost 50% of the work on the project
has been completed.
Two projects, Integrated Solid Waste Management and
Augmentation of Water Supply, cover the entire city in their ambit. The waste
management project was sanctioned in July 2007 while the other one in January
2009. Work on these projects started around November 2007 and July 2009
respectively. Around Rs 76 crore has been allocated to the waste management
project while Rs 493 crore has been sanctioned for the water supply project.
Expected date of completion of the water supply project is March 2012, while
the waste management project is slated for completion in March 2010. Nearly 20%
and 40% work has been completed on both the respective projects.
Aimed at betterment of the city, the projects will
enable Faridabad achieve global
standards of living and improve quality of life of its residents. With
infrastructural problems taken care of, more and more developers and investors
will be attracted towards the city.
Prices of government property will be lower than those
of private developers as these housing projects are being constructed under
planned expenditure of the Union and state governments. Property rates are
otherwise expected to rise across the city. According to Pawan Kumar, a city
based realtor, "With completion of these projects, the city will be armed
with excellent infrastructural facilities in comparison to Gurgaon and Noida,
and help Faridabad shine on Indian real estate map."
Enhanced
connectivity to NCR cities, a slew
of retail and office projects combined with affordable rates are pushing
Faridabad's commercial profile, which is expected to take off in next couple of
years, finds
Brix Research
Bound
by Delhi to its
North, Faridabad
has been a major industrial township of the NCR.
However, its growth has not been as rapid as that of other NCR hubs such as Delhi, Gurgaon and Noida, and its full
potential has yet to be explored. Today, Faridabad
has opened up new areas like Neharpar and Greater Faridabad for development,
along with a proposed Metro rail link. This has led to an enhanced interest in
the real estate of the city.
In recent times, Faridabad's
real estate has seen a steep escalation in property values, enhancing its
appeal as a serious real estate market. Earlier, ignored by investors and
developers alike, the city has suddenly witnessed a surge in real estate
activity, both in commercial and residential
property. The biggest draw is that property is still available at
affordable rates and there is ample land that can be developed.
Areas like Neharpar and Greater Faridabad are being
developed as residential hubs. But with the upcoming Metro rail link and the
construction of Badarpur flyover, developers have woken up to Faridabad's immense potential in being
developed as a fully-fledged commercial area. Due to these reasons the
commercial property sector is now bustling with activity.
One of the most conspicuous developments in this sector
is multiplicity of malls that have sprung up. CrownePlaza
in Sector 15A and SRS mall in
Sector 12, the oldest malls in Faridabad,
have been around for a long time as the only shopping centres for residents of
the city. But now, citizens can brace themselves to a huge surge in the number
of malls here. Around 22-24 malls are coming up within a radius of 10-15km of
the Metro link-route, between Badarpur and Mathura Road.
Malls like Crown Interiors, Manhattan, and Sewa have already opened while
Nirula's Mega Mart will be ready for occupation this year. Malls like BPTP's
Next Shopping Arcade, Vardhman's Star
Mall, MB Mall and
Gardenia Sky Mall are at different stages of construction and are expected to
be ready by end-2010. Each unit of 200-1,200 sq ft are available in the price
range of Rs 10,000 to Rs 15,000 per sq ft. "Malls are a fairly new concept
for Faridabad and have sprung up in the last five years. But their potential
will be realized in the next 4-5 years, impacting the business of local
shopping complexes," says Manoj Rastogi of Agarwal Properties. Faridabad
does not have a clearly defined commercial area consisting of office or retail
space. Each locality has its own local market, catering to the daily needs of
residents. These markets are a mix of individual
shops, office space, local shopping complexes, all rolled into one.
Areas like NewIndustrialTown,
Old Faridabad and Sector 15 have been the hub of retail activity in Faridabad. These areas
have a clutter of individual shops in local shopping complexes. Each shop of
200 sq ft has been valued in the range of Rs 35 to Rs 40 lakh. In townships
like Greenfields, a 100 sq ft single shop is valued in the range of Rs 9 to Rs
35 lakh. But the old hubs have hardly seen any improvement, either in terms of
infrastructural facilities or any new projects.
Today, a large number of business and IT parks are
coming up in the city. Many big developers like Piyush Group, BPTP, SRS
Group are setting up their projects within 5-6km of Mathura Road, Faridabad's
connecting point to the rest of Delhi.
These projects are being built according to international standards with
stateof-the-art facilities.
As a result, there is a new breed of buyers who have
entered market as investors. On the one hand, there are projects like Piyush
Group's IT park, Global I, which is set to provide office space with
world-class facilities by 2011. Spread across an area of approximately 3.9 lakh
sq ft, Global I will provide exclusive office space in an environment-friendly
green building. Strategically located on NH-2, it offers office space with a
minimum area of 400 sq ft, valued in the range of Rs 7,000 to Rs 11,000 per sq
ft and will have facilities compatible with global standards.
Then there is BPTP's The Next Door, a modern-day
shopping complex that will offer both office and retail space. With an area of
approximately 1.72 acres, the complex will house 270 units, out of which 160
are shops and 106 units are for office space. Located in Sector 76, it is
reasonably valued in the range of Rs 3,000 to Rs 6,500 per sq ft.
Another project by BPTP is Park Square, which is a
commercial complex with a heady mix of retail shops, office space, multiplex
and a food court. It is located in BPTP's Parkland,
an integrated township, in the fast developing area of Neharpar and is aimed at
providing a world-class shopping and working environment. The demand for
commercial space has already increased by nearly 60% and is expected to rise
further as most of these projects will be ready for possession by mid-2010.
With demand being matched by supply, the city has
turned into a suitable destination for new business endeavours. With
world-class office and commercial space
coming up, the city is an attractive option for various MNCs. The major reasons
for this surge in real estate activity can be attributed to the city's
increasing connectivity and its reasonable price range, compared to other NCR cities. The upcoming Metro link, the Badrpur
flyover and the proposed Noida Expressway will not just solve commuting
problems of the city but will also be its USP, which will attract developers,
buyers and investors, equally. Moreover, its affordable price range gives it an
edge over other cities.
According to Manoj Rastogi, "In the next 7-8
years, with better infrastructural facilities, improved connectivity and
affordability Faridabad will be an ideal destination for investment and
purchase of property and preferred by the next generation professionals."
JNNURM
projects will enable Faridabad achieve global standards of living and improve
quality of life of its residents as infrastructural problems will be smoothened
out. Developers and investors will also be tempted to put money here, says
Brix Research
Infrastructure
is the backbone of any city for its efficient functioning and the full
utilization of its potential as a city. Faridabad is one of the oldest
industrial townships in National Capital Region (NCR).
With 300 large and 10,000 small-scale industries, it is an emerging real estate
hub. Renowned developers like Omaxe,
BPTP, SRS, and Parsvnath have launched their projects in the city. Projects
based on international standards with state-of-the-art facilities are being
developed both in residential and commercial category.
A city's economic activities are heavily dependent on infrastructural
facilities like power, telecom, roads, water supply and mass transportation,
coupled with civic infrastructure. But in Faridabad, as in most other urban
areas in India, infrastructure assets were created years ago and have been
languishing due to inadequate organization and management by state governments
and local urban bodies.
Realizing the importance of infrastructure upgradation, the government launched
an ambitious programme, Jawaharlal Nehru National Urban Renewal Mission
(JNNURM). Its main objective is to encourage reforms and fast-track planned
development in select cities. The focus is on efficiency in urban
infrastructure and service delivery mechanisms, community participation, and
accountability of urban local bodies to citizens.
Like any other urban area in the country, Faridabad's
infrastructure was also suffering from crippling defects and inadequate
attention from sate government and local bodies. Old municipal towns of Old
Faridabad, Ballabgarh and New Industrial Town (NIT), along with 38 revenue
villages, make Faridabad the biggest urban agglomerate in Haryana. Faridabad
has the maximum number of sectors for any development plan in Haryana and is
the only municipal corporation in the state. Yet, the city's infrastructure is
in a deplorable state. "Though developers
of projects are providing basic amenities like 24-hour power backup and are
even purchasing water to provide to townships, unless basic services are taken
care of by government, Faridabad will be unable to realize its dream of
becoming a world-class real estate destination," says Pawan Kumar, a
city-based realtor.
But JNNURM has brought hope for citizens of the city,
who have for long borne the brunt of bad infrastructure. National Buildings
Construction Corporation Limited is the implementing agency of JNNURM in
Faridabad and has sanction for six projects. Out of these, two are housing
projects while the rest are urban infrastructural development projects. One of
the housing projects is in Dabua Colony in NIT while the other is at Bapu Nagar
in Ballabgarh. Dabua Colony project has 1,968 units while the Bapu Nagar
project has 1,280 units.
Both these projects were launched to facilitate
rehabilitation of urban poor. Being an industrial urban area, Faridabad sees a
massive influx of migrants from adjoining states, which leads to uncontrolled
slums and unauthorized colonies, and now, this has posed a challenge to the
city and its administration. But JNNURM projects have come to the city's rescue
- launched on July 6, 2007, they are likely to be completed by March 2009.
The Dabua Colony project has a sanctioned amount of
around Rs 38.12 crores while the Bapu Nagar project has been awarded around Rs
25 crores under JNNURM. Out of this amount, the government of India has pitch
in with 50%, the state 20% and the remaining 30% has to be provided by
Municipal Corporation of Faridabad (MCF). The houses are in the category of builder-floor apartments, each three
storeys high, in addition to a ground floor. Though 2,500 houses are ready and
200 have already been allotted, the projects have overshot their deadline for
completion in March 2009. The delay in completion is due to lack of funds as
the central government is yet to pay the final installment of its share of the
sanctioned amount.
The other four projects have targeted infrastructure of
the city in terms of sewerage, drainage and waste management. These projects
aim not only to create new infrastructural assets but also improve and renew
existing ones. Revamping/Laying of Sewerage System was launched around the same
time as the housing projects and is
likely to be completed by March 2010. The project targets Old Faridabad. It is
an area that includes the city's current retail hubs like Sector 15. The total
sanctioned amount for the project is around Rs 103 crores. The project work is
going on in full swing with almost 80% of it completed.
Another JNNURM project that covers Old Faridabad is
Improvement of Drainage System, which was sanctioned in April 2007, and work on
it started in November 2007. Work on any JNNURM project begins 5-6 months after
its sanction. The expected completion date has been set as April 2010 and Rs 30
crore has been allocated for the project. Almost 50% of the work on the project
has been completed.
Two projects, Integrated Solid Waste Management and
Augmentation of Water Supply, cover the entire city in their ambit. The waste
management project was sanctioned in July 2007 while the other one in January
2009. Work on these projects started around November 2007 and July 2009
respectively. Around Rs 76 crore has been allocated to the waste management
project while Rs 493 crore has been sanctioned for the water supply project.
Expected date of completion of the water supply project is March 2012, while
the waste management project is slated for completion in March 2010. Nearly 20%
and 40% work has been completed on both the respective projects.
Aimed at betterment of the city, the projects will
enable Faridabad achieve global
standards of living and improve quality of life of its residents. With
infrastructural problems taken care of, more and more developers and investors
will be attracted towards the city.
Prices of government property will be lower than those
of private developers as these housing projects are being constructed under
planned expenditure of the Union and state governments. Property rates are
otherwise expected to rise across the city. According to Pawan Kumar, a city
based realtor, "With completion of these projects, the city will be armed
with excellent infrastructural facilities in comparison to Gurgaon and Noida,
and help Faridabad shine on Indian real estate map."
Over the past quarter, the office real estate market has
seen a rise in the level of enquiries, which has also resulted in enhanced deal
velocity.
While the IT/ ITeS sector has been slow to get onto the
recovery path, corporate office space takeup has been quite encouraging. FIs,
FMCG and telecom sectors have all contributed to this. The volumes are not yet
large, but at least the market is showing signs of life.
As supply has overtaken demand, leading to tougher
competition, prospective tenants can choose from better quality developments.
This is encouraging for the real estate sector as a whole, with commitment to
quality finally getting its due, says a report by CB Richard Ellis entitled
`India Office Market View - Q4, 2009'.
In all the seven cities presented in this review, the level
of activity in the
office space sector has risen noticeably. Rentals in the central business
districts (CBDs) of Delhi NCR, Bangalore, Hyderabad and Kolkata remained
constant; in Mumbai and Chennai, the rentals dropped by 3 per cent; and in
Pune, the drop was 5 per cent owing to limited leasing activity. The year 2010
brings hope of a fresh start.
Commenting on the findings of the report, Anshuman Magazine,
chairman and MD, CB Richard Ellis, South Asia, says, "Since the third
quarter of 2009, the office segment has seen some movement, with corporates
slowly returning to the market. During 2010, demand is expected to improve,
although the rentals are expected to remain flat in the medium term, due to the
forecast of large supply."
As
for the Delhi NCR market, 2009 ended on a fairly buoyant note, thanks to
the largest leasing transaction recorded in the central business district (by a
non-PSU/state entity), involving the take-up of approximately 60,000 sq. ft.
Rationalised rental values led to high levels of leasing interest, vacancy
levels were around 13-14 per cent and rental values remained constant.
Due to poor leasing activity, the vacancy rate in the secondary
business district of Nehru Place rose from 12 per cent in Q3 2009 to 21 per
cent in Q4 2009. The lack of demand, coupled with a large quantum of supply, is
expected to keep rentals low in this micro market.
Activity also remained subdued at Saket District Centre,
where rentals and vacancy levels were more or less stagnant. Jasola District
Centre witnessed a revival of interest from prospective tenants, while
absorption was recorded at approximately 83,000 sq. ft. This is attributed to
attractive values, improved infrastructure and upcoming Metro connectivity.
However, though rental values here remained stable in the last quarter, the
surplus supply led to a drop of 29 per cent year-on-year.
Gurgaon yet again observed increased levels of leasing activity
across the existing as well as upcoming hubs, namely DLF Cybercity, MG Road,
Golf Course Road, Sohna Road and Old Gurgaon Highway. The IT/ITES sector
finally seems to be on recovery mode. Rental values remained at the same level
as in the third quarter, and are expected to remain stable or appreciate
marginally in the short to medium term.
Barring a few small transactions, no sizeable deals were
reported in the Noida micro market.
Market outlook
Office space market in the NCR indicates a positive trend.
Demand and take-up levels have gone up over the past two quarters and values
across most major micro markets seem to have stabilised.
Unitech,
the country’s second-largest developer, sold over 13 million sq ft in the
April-December period. This is more than a four-fold increase over the 3
million sq ft it sold in the whole of 2008-09.
The value of sales booked during the nine-month period is
about Rs 5,550 crore, the company said in a corporate presentation. Over 80 per
cent of the sales are in the residential category.
“The financial year 2009 was one of the slowest periods for
property sales and we booked very limited number of properties. But property
sales have certainly picked up (since then), and this is reflected in our
numbers,”’ a Unitech spokesperson said.
The company’s average realisation per square foot was Rs
4,225. In the case of
residential properties, the realisation was Rs 3,733, while it was Rs 6,401
in the case of commercial. Last year, the average realisation was Rs 4,000 per
sq ft, which yielded sales of Rs 1,200 crore for the company. In the December
quarter alone, the company said it had booked properties of around 3 million
square feet. An executive said Unitech would now easily reach its annual sales
target of Rs 6,000 crore.
Unitech’s net profit had halved during September quarter of
the current financial year at Rs 177.6 crore, compared with Rs 358.92 crore in
the corresponding quarter of the previous financial year.
Developers such as Unitech, DLF and others faced slower
sales since the second half of 2008, as buyers deferred home buys
to save cash during the economic slowdown. However, developers are seeing a
revival in the property sales as the economy picks up
An executive from the country’s largest developer.DLF said the company had booked properties
worth Rs 1,000 cr in the month of December alone, which was a record in its
history.
Unitech, which sold such assets as hotel properties and
offices to reduce mounting debt, said it was working to complete past projects
by Mar 2011 and was adding 5,000 workers every quarter to complete
construction. The company currently has 22 million sq.ft in various
stages of construction across 31 projects, it said in the presentation.
The stock of Unitech gained 4.39 percent at Rs. 90.40 a
share by close of Monday’s trade on the Bombay Stock Exchange.
Real estate in India is
subject to a multitude of taxes at both Central and state levels. This includes
the Central service tax (levied on construction) and state value added tax (on
works contract for construction and the building material used). At the state
level, buying a home means paying a hefty stamp duty and registration fee.
It is the common man who bears the
brunt of these taxes, which are passed on to the buyer by the real estate
developer, because the current system suffers from credit deficient mechanism.
The first discussion paper
apparently kept realty out of the purview of GST. This defeated the primary
purpose of introducing a seamless credit mechanism and lowering mass housing
costs. However, the tax model suggested by the 13th Finance Commission comes as
a breather as it recommends the following:
1. Levy GST on all newly constructed
property for the first sale and allow credit to the developer for input tax
(incurred on construction material and such like) paid at the time of
construction.
As a result, the cascading effect
under the existing regime shall be eliminated, leading to a possible reduction
in costs.
Under the proposed GST regime, the
tax paid on building materials and construction services i.e. the sum of Rs 1
lakh, would be reduced (by way of credit) from the builder's total cost of Rs
11 lakh, thus keeping down the final cost for the homebuyer.
2. Include stamp duty under GST to
facilitate input credit. Currently, stamp duty is not available as credit. In
the above example, assuming GST (in lieu of stamp duty) is applicable at 5 per
cent of Rs 10 lakh, a homebuyer shall have to pay GST of Rs 50,000 on the
purchase. This sum shall be available as credit to the buyer against GST
collected on a later sale.
3 All secondary market
transactions involving immovable properties should be liable to GST, and
the tax paid at the time of purchase should be available as credit. In the
aforesaid example, when first buyer `Y' sells the property to second buyer `Z',
the sale is again subject to GST. Now the tax paid by the first buyer, a sum of
Rs 50,000, is adjusted with that paid by the second buyer.
So, from a second-sale GST of, say,
Rs 75,000, the first buyer takes his Rs 50,000 and the rest goes to the
government.
If the Finance Commission's
suggestion is accepted, these steps are likely to bring about a reduction in
property prices and, in turn, may bring a dream house within reach.
With inputs from
Pratik Shah The author is tax partner with Ernst & Young, India
An apartment, admeasuring approximately 1,780 sq ft, was
leased out at Planet Godrej in Mahalaxmi
at a monthly rental of Rs 1.5 lakh. This flat is located in Central Mumbai and
the rental values of mid-ranged apartments in this location fall in the range
of Rs 1.25–2.75 lakh per month. The aforementioned property, therefore, is
within the expected range. Central Mumbai, much like other locations in the
city, had seen a drop in demand, resulting in correction in values in the first
half of 2009. However, over the past quarter, stability has been witnessed in
both rental and capital values. The location is expected to remain stable in
the short to medium term, as demand seems to be inching back for rental
apartments.
CHENNAI
An independent house in Besant Nagar, admeasuring 3,800 sq
ft, was leased out at an approximate rental value
of Rs 75,000 per month. This is a high-end residential unit, which is located
in South Chennai, including R.A. Puram, Boat Club Adyar and so on. Another
apartment, admeasuring 2,285 sq ft, was leased out at Santhome in South Chennai
at a monthly rental value of Rs 85,000. The average rental values in this
location are between Rs 75,000 and Rs 2,25,000 per month. Thus, the rental
values of both the residential units fall within the expected range. The
location has seen steady rental values over the last quarter and has witnessed
a rise of approximately 25% in values over the previous years, largely due to
existing as well as new demand. The rental values in this location are expected
to remain steady in the short term on account of restricted supply and buoyant
demand.
HYDERABAD
Sale transaction of a villa,
admeasuring 2,200 sq ft, was recorded in Kapra, Hyderabad. The villa is
situated in a high-end gated community (villa project) called Saket Mithila. The cost of the villa was around Rs 70 lakh (approximately
Rs 3,182 per sq ft). The project was launched in 2006 with a total of 100
villas in a land parcel of 11 acres. The capital values in this location would
range between Rs 2,500-3,000 per sq ft and this sale, therefore, is within the
prevalent range. Kapra is located in the North Eastern part of Hyderabad and is
a new location being explored by residential developers. The demand that is
being seen is largely for villas from the indigenous business community,
retirement homes or second homes end users.
RESIDENTIAL MARKET
The pan-India residential demand is estimated to be over 7.5
million units by 2013 across all categories,
including the economically weaker sections; affordable; mid and luxury
segments. The demand for top seven cities is estimated to be 4.5 million units
by 2013. Of the total expected demand across India, 43% is likely to be generated
in tier-I cities, i.e., Bangalore, Mumbai and NCR. Mumbai is likely to witness
the highest cumulative demand of 1.6 million units by 2013 due to various
development projects and increasing urbanisation. Hyderabad and Bangalore are
likely to have the highest CAGR of 14% in the next five years. The affordable
and mid-segment category, likely to constitute 85% of the total residential
demand, will be the primary focus of most developers.
Source: Cushman & Wakefield, a
real estate consultancy firm, offers research and advisory services in
property-related matters
Religious places are showing the way
to go... and building quality real
estate in studio, one- and two bedroom categories Namrata Kohli gives a
lowdown on small units done up in the most creative manner at Vrindavan and
Mathura
Creative designs of smaller units
abound in religious places. So, whether it is Vrindavan or Mathura, Haridwar or Rishikesh, there are
innumerable examples of good quality studio apartments in each of these places.
The reason clearly is a growing segment of religious and wealthy who desire a
second/holiday home at these religious places with a manageable size house,
which caters to their frequent but short visits, and becomes their retirement
home in later years. Builders have understood this need and are offering the
religious and wealthy group very easy-to-manage, semi- to fully-furnished small
units in lovely gated communities.
A case in point is a complex with
85% greenery and only 15% constructed area with 248 5-star fully furnished
cottages, complete with designer furnishings and fittings, and each cottage
equipped with microwave, refrigerator, LCD TV and airconditioned rooms. The
campus has landscaped gardens and water features, amenities like club house and
hi-tech gym, yoga and meditation centre, indoor swimming pool, spa and sauna
and battery operated golf carts for internal commute.
This is not a cut from the real estate of a developed country in
the west but a boutique development in our own countryside, in Mathura, by a group called Shri Group. This
creative project called Shri Radha Brij Vasundhara is at the feet of Govardhan
Parvat and enroute the famous Parikrama of Govardhan Parvat. The project has
onebedroom, two-bedroom and duplex cottages, each of which is fully furnished
and “one has to just arrive with bag and baggage”, says Sapna Aurora, manager
of Shri Group.
A one-bedroom, fully furnished
cottage of 760 sq ft costs Rs 25 lakhs, a twobedroom cottage of 960 sq ft costs
Rs 30 lakhs and a duplex costs Rs 35 lakhs. Sapna adds that there is a
tremendous interest shown in these cottages by a specific group of people - the
Iskon devotees - Lord Krishna bhakts, both from India and abroad, and NRIs belonging
to Rajasthan and Gujarat. The concept is one
of lifestyle living providing for a perfect ambience in the vicinity of the
Lord; it has also been done up to attract nature lovers. “We have queries
pouring in from Iskon followers from Ahmedabad to New Zealand and 70% of the project
is sold out,” says the group’s spokesperson. Some of the other interesting
works of Shri Group in Mathura
include projects like Shri Jamuna Dham, Shri Radha Orchid, Shri Radha Puram,
Shri Radha Puram estate.
Omaxe group has launched
Omaxe Eternity, a project of on nearly 74 acres. The size of the built-up area
is 425 sq ft, 840 q ft, 1100 sq ft and the rate is Rs 1,600 per sq ft +
additional charges. The maximum demand in a place like Vrindavan is for studio
units and as per Rohtaz Goel, religious tourism is the key driver of Vrindavan
real estate and for that matter for any religious place, though actual
residents too buy apartments, but preferring bigger units. These units are
available in a price band of Rs 7 lakhs to Rs 17 lakhs and is high on features
like a yoga and meditation centre, central park with musical fountain, large
open green spaces, local shopping area, wide roads with ample parking spaces,
provision for schools within the complex, gated entry-exit and security
arrangements, kids park and play area, recreational centre, restaurant
facility.
NRI Greens by Shri Group has semito
fully-furnished units available in the Rs 9 lakh to Rs 19 lakh price band with
sizes varying from 460 sq ft (studio) to 850 sq ft (one bedroom) and 1,058 sq
ft for a two-bedroom unit. The project will provide facilities like pool,
billiards, gymnasium, sauna bath, clubhouse, Jacuzzi, spa, and separate kids
area.
On an average, land cost at Mathura
is Rs 8,000/sq yard while at Vrindavan it is Rs 12,000/sq yard and the unit
cost of apartments at Mathura is Rs 1,200/sq ft and at Vrindavan Rs 1,700/sq
ft.
Juxtapose these quality developments
with say what is available in the metros in smaller units category and you only
have one option - the Janta flats and the LIG - sample Dwarka Sector 16 B flats,
which have approximately 1,600 units, in an affordable range of Rs 10 lakhs to
Rs 15 lakhs. Though there are any number of people who would want to stay in
such affordable accommodations, why is it that these flats have less than 40%
occupancy?
Not that there is no demand in
metros for smaller units — infact, it is a much sought-after category and there
is a huge pent up demand for good studio apartments. According to broker Ranvir
Singh, “We have many enquiries from single working professionals, especially
engineers and call centre executives, and even students, who need only a
single-room set. Their requirement is for one kitchen, one bathroom and one
room and these flats fit into the category. But takers are few as the design,
civil and structural and interior fittings, are wanting in every aspect.”
No wonder then, these flats are less
used for housing and these are more of a hub for commercial activities housing property dealer offices,
beauty parlours, maid agencies, doctor clinics, pet clinics, and small shops -
in fact, everything but residential accommodation. The vast investor
communities, who indulge in bulk buying, have tapped the rest of the Janta
flats and as soon as they make a fast buck, they sell it off to others. A
broker says that an investor had bought a Janta flat for Rs 9 lakh in November
2007, and currently the value of the same flat is Rs 13 lakhs.
So what is wrong with these flats?
These flats, which anyways are small - comprising one room, kitchen and toilet,
which tot up to a total of 250 sq ft -call for better optimization of space.
They could do with a better design, as well as civil, electrical and interior
fit-outs.
Pointers to better design abound in
neighbouring religious centers which may be expensive but given the amenities
and quality of construction, no one will mind paying extra. It may be
worthwhile to take a cue from them.
Isn’t it time that the state
customized to the new-age requirement and created accommodation that is usable
and useful for the end user? Moreover, there could be some policy initiatives
which could ensure that these flats are used by the end user rather than ending
up in the hands of shortterm real estate traders.
Vivek Dahiya, a real estate consultant points out that
in mature real estate markets like the US, there is a “concept of shared
equity between the developer and the government. The flats are passed onto end
users at subsidized rates but thereafter if there is appreciation in values, it
is not passed on to the buyer - it remains with the developer and the
government, who have taken the risk and a cut in the profits by passing on the
subsidy at the initial stage. Any appreciation five years hence is developers’
gain and this kind of regulatory technique is one way of controlling mindless
investment activity in real estate.”
Attractive price
points and a revival in the fortunes of the Real Estate sectorhave helped India’s largest realty player lure
buyers for its residential properties. The company is likely ot maintain its
mid-income housing focus which has yielded good results in delhi where it was
able to sell 1,400 units (2 mnsqft) and 1,250 units (1.8 mbsqft) at the Delhi Capital
Greens project (phase I and II, respectively) and 0.5 mnsqft in Bangalore
over the last six months. Including the above, the company has launched about a
third of the proposed 15-16 mnsqft residential projects for the fiscal. The
story is not as rosy on the commercial and leasing segments. While the company
sold over a 1 mnsqft of commercial
and office space in the first quarter and demand seems to be improving, the
fortunes of this space is likely to see a significant upswing only next year.
Its leasing business, too, is going through a similar business cycle.
While things are looking up, the slow and gradual pick up in
volumes will continue to be a drag on its revenues. Analysts estimate that its
September quarter revenues will be down by half y-o-y. Ebidta margines are
likely to shrink 900-1,000 bps to about 50 per cent as the company realigns its
focus towards affordable
housing segment (below Rs 30 lakh per unit). The company plans to exit
non-core business (wind power, SEZs) and land bank to raise Rs 5,500 crore in
2009-10. This will help it to improve its cash position, manage debt repayments
of Rs 1,165 crore and increase pace of execution. Though the stock trades at a
discount to its, NAV,a fall of 10-15
per cent in its share price would make it attractive from a long term
perspective.
Extend
Discounted Home Loans, But Cut Rates on FDs
State Bank
of India and other public
sector lenders have extended their special schemes offering home loans at
discounted rates even as they slashed returns on fixed deposits. Private sector
banks have, however, raised interest rates on auto loans, ending their festive
offers.
SBI, which
controls a fifth of bank loans and deposits, has extended its special 8% home
loan scheme until March 31, 2010. Among others lenders, Bank of India and
Punjab National Bank have decided to extend their special home loan schemes
till December 31, while Union Bank of India has decided to extend it till
January 15. Officials from these banks told ET that the objective was to grab
market share in mortgages.
Bank of
Baroda has, however, discontinued its special home loan scheme
from October 31. “We feel the interest rate cycle is set to change,” said an
official explaining the bank’s interest rate view.
SBI
officials said a huge response to the special scheme and slack demand for corporate loans had
prompted the bank to extend the scheme. However, the processing fee on loans,
which was waived for three months, has been reintroduced.
Unlike
mortgages, where interest rates on most loans move up along with market rates,
auto loans are offered on fixed rates. Private banks like HDFC Bank and Kotak
Mahindra, which dominate the car loan business after SBI, have therefore taken
pre-emptive action against an anticipated rise in interest rates. HDFC Bank has
rolled back its festive offer discounts of 50-75 basis points from November 1.
“There is
good demand but interest rates are likely to move up. As such, there is no
point in continuing with the discounts,” said Ashok Khanna, EVP, HDFC Bank. Interest rates on
auto loans of the bank now range 10.25-11.5%. HDFC Bank is the second largest
in auto loans after SBI and disburses around Rs 1,000 crore every month. Kotak
Mahindra, another large player, has increased interest rates by 25 bps from
October 25 and will raise them by another 25 bps from November 9. “Our
two-month festive season offer saw strong volumes. The rates have to reflect
the reality on the lending side,” said Sumit Bali, CEO, Kotak Mahindra Prime.
Meanwhile,
SBI and Punjab National Bank have decided to lower interest rates
on deposits by 25-50 basis points with effect from November 9. As per the
revised rates, SBI will offer marginally lower rates on deposits as compared to
its rival PNB. For 1-2 years, SBI will offer 6% while PNB will offer 6.5%. For
2-5 years, SBI will offer 6.5%. PNB is offering 6.75% for 2-3 years and 7% for
3-5 years.
SBI is
discouraging deposits growth by lowering rates as it faces a huge liquidity
overhang.
Courtesy:-
ET dt:- 07-11-09
Frens Builders & Developers Ltd. Launches Residetial Flats in Bangalore
Located on National Highway 207 – Sarjapur
Road , Confident Atria is a veritable paradise
with some of the best club class features and international quality residential
infrastructure.
Confident Atria Phase-I offers a choice of plots varying from
1200 sft to 3600 sft. This eco-friendly residential landmark will
be completed with unique maintenance free Concreted Roads, Underground Cabling
for electricity and network needs of today and also the future, Sewage Lines
with a Sewage Treatment Plant, Concrete Drainage System, Rain Water Harvesting
facility, water connections, 24 hours security along with a high compound wall
on the periphery and provisions to lay any pipe lines or cabling in future.
Confident Atria Phase-I, designed by Confident Design Studio
of Bangalore , has over 45% open spaces which are put to good use to create
greenery which includes marvelous, spacious
landscaped gardens.
Aminities
Confident Atria comes with an attached club house,that offers
world-class amenities. Where else would you get to enjoy these fun activities
right at your doorstep - making Confident Atria a unique residential landmark:
INFLATION UP RBI MAY
ALLOW HOME INTEREST RATES TO BE RAISED LATER
If you are planning to buy a house, now is
the time. Do it now, because a rise in interest rates might not be too far
away.
Ending a 13-week streak
of contraction, the wholesale prices based inflation rate returned to the
positive zone in figures relating to the week ending September 5, triggering
speculation about when the Reserve Bank of India (RBI) would announce a rise in
lending rates.
Inflation measured by
the wholesale price index (WPI) rose by 0.12 per cent for the week.
It had fallen by 0.12
per cent in the previous week.
The RBI faces the
dilemma of containing prices without making loans costlier for individuals and
corporations in an uncertain economy.
One way to contain
inflation is to reduce the amount of money circulating in the economy.
The RBI usually does this
either by sucking out liquidity from banks by raising the cash reserve ratio
(CRR, or the percentage of deposits commercial banks have
to park with the RBI) or by raising interest rates and reducing demand for
money.
A rise in interest rates
could upset plans of realty firms as people defer plans to buy homes.
"Borrowing rates
may go up in three months' time and that may result in a rise in lending rates,"
said R.R. Nair, CEO, and LIC Housing Finance.
The government said the
rise in inflation rate was not unexpected. "This is a trend we were
expecting," finance minister Pranab Mukherjee told reporters.
AlphaTower, a commercial
project, is being developed by SG Estate Ltd in Vasundhara Ghaziabad. AlphaTower is ideally located in Delhi
NCR at a distance from Connaught Place 16 km, New Delhi Railway Station 15 km,
Ashram Chowk 11 km, Anand Vihar Metro Station 6 km, Indirapuram 2 km and Noida
4 km. in proximity of residential
complexes. AlphaTower
is a meticulously plotted ensemble of Vaastu-friendly corporate spaces with
well laid out landscapes and affluent surroundings. Apart from the pleasing
waiting lobby for visitors and attendants, there are special entry and exit
points and fast moving elevators for quick access. Simultaneously complimented
by well-matched support systems like ATM counters, logistic backups, fright and
courier.In a nutshell, Alpha Tower
Vasundhara Ghaziabad is set to cater to the multidimensional needs of today’s
multifarious professionals by enhancing the aggregates to build up a great
business centre. It is a lucrative opportunity for both the investors and the
end users.
SG Estates Ltd was incorporated
in the year 1986 under the aegis of its Managing Director Mr. Subhash Gupta.
The company is in the construction business for the last 23 years and has been
providing space solutions to people in different segments. Over a period of
time the company has matured to handle various diverse projects in various
parts ofNorthern India.
In the year 2003-04, the company ventured into the construction of commercial
complex and constructed various DDA approved commercial buildings in
different parts of Delhi. Currently
SG Estates Ltd is executing a number of Group Housing Projects under the brand
name SG Impressions. Commercial projects of the company are coming up in
Vasundhara, Ghaziabad. The company
has always worked towards maximizing customers’ satisfaction and ensured that
customers get the return on every penny of money invested. SG Estates Ltd has
become a good real estate company. Their completed projects are – SG Residency
New Delhi, SG Centuary Plazaa New Delhi, Maa Shakti Apartments, Haridwar. Current projects
are – SG Impressions 58, SG Impressions Plus Ghaziabad, SG Imressions
Vasundhara, SG Impressions Dehradun, SG Beta Tower, SG Alpha Tower.
We, Shri Aditya Estate, are one
of the leading real estate consultants, established in Delhi
and working successfully for more than a decade. We have developed
well-embellished websites viz. www.zameen-zaidad.com,
www.propertycafeteria.com with
a clear concept to showcase all kinds of properties of our patrons for wider
publicity of their products for sale/purchase, leasing and renting purposes.
Our website – www.zameen-zaidad.com - is displaying the details of project
ofAlpha Tower Vasundhara Ghaziabad.
Spaces for sale are available in AlphaTower. For best and transparent
deals for spaces in AlphaTower,
our experienced marketing executives canbe contactedatmob no 91-9650398924, 9810445860, 9911158601,
011-42470622or email at : info@zameen-zaidad.com.
Our company is on the approved
list of leading banks/financial institutions for grant ofloans for purchase of commercial properites.
We have got an experienced team to processloan applications. For hassle-free loans for spaces in AlphaTower, our executives can be
contacted at mobile no 91-9990217028, 9810445860, 011-47082736 or email at : info@zameen-zaidad.com.
Chennai-Based Zylog Systems is believed to be in talks with three companies in the US and Europe for acquisitions. According to people familiar with the development, the deal is in the range of $20-40 million and likely to be concluded over the next three months. It was learnt that Zylog, which provides technology solutions to Wi-Fi businesses, had formed an mergers & acquisition team, which has identified these companies. The company’s MD & COO, Ram Sesharathnam, confirmed that Zylog is looking at the possibility of acquiring companies, but declined to divulge further details citing non-disclosure agreements with these prospective targets. On Wednesday, Zylog shares ended 0.5% higher at Rs 196.10.
Demand for houses in small towns have witnessed a spur in economic activities leading to hike in the rental incomes, examines Vivek Shukla
For three years, Sunil Negi, a banker, has been trying to fulfill his long cherished dream of purchasing a house of his own, either in Delhi or in Bhopal, the city of where his in-laws reside. But his budget of Rs 25 lakh was not enough for his dream to take shape in reality.
But he looked beyond these two cities to make his dream come true. Negi finally zeroed in on a property in Rudrapur, a small town in Uttarakhand. In the process, he has become one of the many buyers who are purchasing houses in smaller cities.
Rudrapur is among a host of towns like Almora, Bhiwadi, Neemrana, Ghaziabad, Haldwani, Meerut, Moradabad and Karnal that have started attracting new home buyers. Such small cities are closer to all the big cities. These cities are responsible for revival in the realty market, albeit slowly. “My budget was very small to buy a house in Delhi or Bhopal. Even a one bedroom apartment was not available in a decent colony. Now, I will own a decent house and also manage to save some money for other investments,” Negi said.
According to Sanjeev Shrivastava, director of Assotech group, their projects in Gwalior, Rudrapur and Bhubaneswar are getting huge response. Developers who are building projects in smaller cities are getting positive response. After the great success of these projects, they are thinking of launching more such projects in other small cities. Talking about Rudarpur, Shrivastava said that as it is closer to Delhi and Nainital, many large companies have set up their units in this town. In these circumstances, it would continue to witness flurry of activities in realty field.
“In places like Meerut, Rudrapur and Haldwani, a two bedroom apartment costs Rs 15 lakh to Rs 18 Lakh. It is within reach for working people,” said Sanjay Shrivastava, a Delhi based journalist, who has recently booked a flat in Meerut. “The main reason for realty development at these places is that metro cities and many big cities have reached the saturation point,” said Devinder Gupta, CMD, global realty consultancy Century 21 India .
“Property prices in larger cities have gone beyond the reach of the middle class. So people are looking at new destinations. Prices are reasonable, where the pace of development is fast and it is also good future investments,” said Gupta.
Experts say that in smaller places, land is still available at reasonable rates. Industries are coming up. There is overall development. Hence, one should not think twice to book flats in small towns. Those fetch good returns.
Sunil Jindal, CEO of SVP builders says, “It is high time that those who only search for their houses in metro cities should think of smaller towns. Even in Ghaziabad, where we have some housing projects, one can buy good house at the cost of less than Rs 25 lakh. The very same flat you would not get less than Rs 50 lakh in Delhi.” Interestingly, rather than the big players, the smaller developers are the ones that are benefiting from the realty boom in smaller cities and towns, which have shown no sign of being affected by the slowdown that has otherwise gripped the country’s realty sector.
“The slowdown is helping us. The big developers are staying away from these cities. They are selling land to smaller players so that they can raise cash for bigger projects in large cities,” said Pankaj Tyagi, director, Bhanu Infrastructures.
According to one such survey by Ficci, next few years would see massive investments in smaller cities than metros and other big towns. Realty companies also know very well that selling their apartments or flats in big cities would be very tough task due to rising cost. That is why they are changing their strategy and moving towards small towns to make it big.
