Indian real estate can give 91 to 145 percent returns over the next 5 years

Ireo Skyon, Gurgaon

The real estate sector in India will continue to remain an attractive investment area with the prospect of prices in residential areas appreciating by 91 to 145 per cent in select cities over the coming five years, according to a recently released survey. Knight Frank, a real estate advisory firm, reported a high possible return on investments ranging between 18.6 percent and 29 percent per annum over the next five years will come out as a major cause for investors’ interest in the sector.

The report underlines that despite the decline in the property market, Mumbai is expected to stay as the most promising investment destination after Delhi-NCR, Chennai, Pune and Bengaluru, Knight Frank Executive Director (retail, advisory and hospitality) Gulam Zia told media.

In the U.S. stock market, Annaly Capital Management, Inc. (NYSE:NLY)’s price extended fall in the last trading session with a previous 52-week high of $17.75. The stock was trading on below-average volume. The stock traded at a volume of 13.01 million shares at a price fall of -0.95%. The share price is now down -12.00% for the past three months. Latest closing price was -9.45% below its 50-day moving average and -7.55% below its 200-day moving average.

Read more: Property Mentor Group

No immediate impact of hike in circle rate on Delhi realty prices

Developers and realty consultants today said there will be no immediate impact on property prices due to Delhi government’s move to hike circle rates and felt the move will help to reduce black money transactions.

“The current circle rates are far lesser than the market prices… I do not think there will be any immediate impact due to this increase of circle rates. Property prices are always determined by the market forces. It is dependent on demand supply scenario,” Jones Lang LaSalle (India) Chief Executive Officer (Operations) Santosh Kumar told.

He, however, said there may be some price hike in the long run due to this step.

“The best thing about raising the circle rates is that it will reduce the black money transactions. Now, the government will get more money and transparency in property dealings will increase,” Kumar said.

Commenting on the development, National Real Estate Development Council (NARECO) President Navin M Raheja said the Delhi government has increased the circle rates to meet its revenue targets.

Asked about the impact on builders, he said: “We will not be affected as there is hardly any project in the primary market… The government is trying to bring the circle rate closer to the market price.”

Read more: The Economic Times


India, China to step up infrastructure cooperation

Chinese officials said on Tuesday that next week’s Strategic Economic Dialogue (SED) in New Delhi would help both countries deepen cooperation on investment and infrastructure projects, with one of the largest-ever delegations of Chinese officials set to travel to India for the November 26 talks.

Chinese Foreign Ministry spokesperson Hua Chunying told reporters that representatives from Chinese “government agencies, enterprises and financial and research institutions” will travel to New Delhi, with a view to “stepping up communication and coordination of macro-economic policies, and deepening and expanding mutually beneficial cooperation in investment, infrastructure, high technology, energy conservation and environmental protection”.

The delegation will be led by Zhang Ping, who heads the National Development and Reform Commission (NDRC), the top planning body. He will chair the talks along with Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission. Officials said close to 200 Chinese officials will travel to India, including representatives from the NDRC, Ministry of Commerce, the Foreign Ministry, Ministry of Railways and State-run companies.

Read more: The Hindu

RBI redefines infrastructure lending

The Reserve Bank of India has come up with a new definition of infrastructure for the purpose of banks’ lending.

With this move, the central bank has harmonised its definition of infrastructure with that of the master list of infrastructure sector/sub-sectors notified by the Central Government in March this year.

RBI Governor D. Subbarao had in the second quarter review of monetary policy announced that the definition of infrastructure lending would be harmonised with the Centre’s definition.

Accordingly, RBI has come up with a revised definition of infrastructure to be effective from Tuesday.

For projects coming under sub-sectors which were included under RBI’s previous definition of infrastructure, but not included under the revised definition, banks’ will continue to get the benefits under ‘infrastructure lending’ for such exposures till the completion of the projects.

However, any fresh lending to those sub-sectors from November 20 will not qualify as ‘infrastructure lending’, RBI has said.

Banking industry sources said that the RBI has now made it amply clear that certain kinds of infrastructure like diagnostic centres and medical colleges would be considered as part of definition of ‘Hospitals’ and hence eligible for bank funding.

Also, three star or higher category hotels located outside cities with population of more than 1 million will be eligible for bank funding under this window.

See article: Business Line

Rs 2 cr sanctioned for development works in Gurgaon

Gurgaon has been sanctioned over Rs 2 crore for assorted development works in the district under the State Financial Commission Plan Scheme. Announcing this on Tuesday, a state government representative said that the grant money is to be utilized by the district’s municipal body for various projects that have been lined up here and are awaiting implementation.

“We have released a grant-in-aid of over Rs 35.7 crore for all the districts in the state. The money will be used for development works to be undertaken in municipal areas throughout the state,” said an official. In total, monetary grants have been issued to around 76 municipal corporations, councils and committees all over Haryana.

Faridabad, at more than Rs 5 crore, has received the lion’s share of the development grant. According to officials of the Urban Local Bodies Department, around Rs 1.8 crore of the grant money has been sent to Hisar, and Rs 1.7 crore to Ambala district.

Read more: The Times of India


Inflation needs to dip further for interest rates to ease: RBI

RBI Deputy Governor K. C. Chakrabarty, flanked by Assocham President Rajkumar Dhoot (left) and Indian Overseas Bank CMD M. Narendra, at the 8th Banking Summit in the Capital on Wednesday. — Ramesh Sharma

High interest rate is not the only reason for economic slowdown, the Reserve Bank of India Deputy Governor K. C. Chakrabarty has said. He also reiterated that inflation would have to fall further for interest rates to be eased.

Addressing a banking seminar, organised by industry chamber Assocham, he said, “Low interest rates will not come automatically, unless the inflation is (also) low.” Trade deficit, he said, can be tackled only if core inflation is brought down to 1 per cent.” Core inflation is currently running at 5 per cent.

His remarks assume significance in the backdrop of the widening rift between the Finance Ministry and the RBI over the issue of reducing lending rates.

There’s a feeling within the Government and industry circles that RBI’s refusal to cut rates has been one of the reasons for slower growth. Since a 50 basis point repo rate cut in April, the central bank has stayed put on interest rates, citing inflationary concerns. However, in its October 30 policy, the central bank had hinted at monetary easing in the January-March quarter. “Agriculture is contributing only 15 per cent of GDP, but employs 70 per cent of the people. Banks must help SMEs and also in mechanising the agriculture sector. More resources will then be available for commercial purposes,” Chakrabarty remarked.

Talking about growth, the Deputy Governor said, “What are the problems to growth? One is inflation, two is the fiscal deficit, and three is the current account deficit.” For tackling these, a major role has to be played by the manufacturing sector, he said. A smooth macroeconomic environment is also required to push up growth, he added.

Read more: Business Line

Govt lines up set of reform Bills for stormy session

inancial sector reform is back on the agenda for the winter session of Parliament that starts on November 22 and ends December 20.

The Government has listed 25 Bills for consideration and passage for what promises to be a stormy session, with Trinamool Congress planning a no-confidence motion against the Government over the retail FDI issue.

The Bills the Government hopes to get passed include those on banking, insurance, pension and companies. The Bills were listed for the monsoon session, but could not be cleared as various scams dominated the session.

However, the Government is hopeful of getting the Bills passed this time around. “The Finance Ministry is consulting other political parties (to get required numbers),” Parliamentary Affairs Minister Kamal Nath told reporters.

The Government needs the support of the Bharatiya Janata Party (BJP) to get these key pieces of legislation through Parliament. Interestingly, the list does not include other politically sensitive Bills such as those on Land Reforms and Food Security.

Kamal Nath said these Bills had not been finalised. “The list is an indicative one and not exhaustive. As soon as these Bills are finalised, they will be brought before Parliament,” Nath added.

Read more: Business Line


Realty check: New twist to the tax tale

A subsequent cancellation of an agreement for sale of immovable property results in reversal of the income offered to tax on an accrual basis.

It is known that income chargeable to tax in India is the one that is received or deemed received in India or accrues, arises or deemed to accrue or arise in the country. Such income is computed in accordance with the accounting method regularly employed by the taxpayer. If the accounts are maintained under the mercantile system, it should be seen whether the income has really accrued to the taxpayer in a given tax year. There is a host of jurisprudence over when an income can be said to have really accrued to the taxpayer.

In what seems a welcome move by revenue authorities, the Mumbai Income-tax Appellate Tribunal’s decision in the Lok Housing and Construction Ltd case comes as a breath of fresh air.

At issue was a subsequent cancellation of an agreement for sale of immovable property. Would such a subsequent cancellation result in reversal of the income offered to tax on an accrual basis?

Read more: Business Line


Power Ministry for changes to fuel supply pacts again

The row between Coal India and the power companies on signing fuel supply agreements (FSAs) seems never-ending.

Once again, the Power Ministry wants changes in the latest (September 26) FSA readied by Coal India.

Power Secretary P. Uma Shankar in a recent communication to his counterpart in Coal Ministry S.K. Srivastava has flagged 10 issues that need to be modified in the FSAs.

According to Uma Shankar, the new FSA still contains a few clauses, which are against the interests of power developers.

He wants Srivastava to instruct Coal India to resolve the concerns of power producers and change the supply pact.

The issues raised by the Power Secretary include annual contracted quantity, end use of coal, source of supply, schedules, collection of samples, termination of contract and force majeure.

Read more: Business Line


Indians top immigrant tech entrepreneurship in US

Indian entrepreneurs are the faces behind a growing number of US tech startups. A study by the US based Kauffman Foundation shows that 33.2% of the cofounders of engineering and technology firms founded by immigrants in the US since 2006 were Indians. The next came the Chinese, at 8.1%.

Another study done in 2007 for the period 1995 to 2005 had found that Indians accounted for 26% of the co-founders during that period. So there’s been a 7 percentage point increase in the Indian contribution in the post-2005 period. In fact, the Indian immigrant contribution was the only one that increased; most other immigrant communities saw a decline in their contributions, leading to a general stagnation in immigrant entrepreneurship in the US.

The Kauffman study examined a random sample of 1,882 companies out of a total of 107,819 engineering and technology companies founded in the last six years. Of those companies, 458 had at least one foreign-born founder.

Read more: The Times of India

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