iNVEZZ Takes a Look at the Prospect of Investing in Indian Real Estate

Clubhouse at Ireo Waterfront, Ludhiana

India – the home to over 1.2 billion people, or 17 per cent of the world’s population, though occupying only 2.4 per cent of the land mass – may strike as a potentially attractive property investment destination. Indeed, urbanisation growth in the past three decades has led to the growth of over 20 cities in the country with a population of over a million people. Continuing, this trend is likely to further increase real estate demand in the near future. Considering this fact, Frank Quin of investors’ portal iNVEZZ has taken a closer look at the state of real estate investment across the sub-continent and especially with reference to three of the largest urban centres – Delhi, Kolkata and Mumbai. In a recently-released analysis he also covers the main points of consideration to anyone interested in investing in Indian real estate.

The introduction of Quin’s new editorial tackles one of the main areas of concern in regards to the Indian property market – the qualification requirements. “From the perspective of property investment, one key fact stands out. By and large, the only people who can buy Indian real estate are Indians.” Quin summarises. The author of the editorial continues his analysis, outlining that “India is by no means the only country in the world which places restrictions on foreigners buying real estate, though it must surely be the largest to effectively limit the category of permitted buyers – foreign or resident – by dint of blood ties with the country.”

Read more: Digital Journal

Real estate sector seeks more time to complete projects for tax benefit

The real estate industry has requested the Government to extend the computation period for availing itself of income tax benefits by one more year. This period is going to end on March 31, 2013.

The industry’s apex body National Real Estate Development Council (Naredco) has written a letter to Prime Minister Manmohan Singh. The real estate industry gets benefit under Section 80-IB (10) of the Income Tax Act 1961. This is a sunset clause where extension was given in 2010-11 keeping global recession in mind.

According to the revised provision, a developer will be eligible for 100 per cent deduction in respect of profit from those housing projects where approval from a local authority has been obtained between April 1 2005 and March 31, 2008.

The developers were given five years to complete the projects. It means that this benefit will be given only if a project is completed on or before March 31, 2013.

However, Naredco President Navin Raheja, in his letter to the Prime Minister, appealed to extend the completion period of projects sanctioned on or after April 2005 from five years to six years. He felt that the deadline of March 31, 2013 specified for completion of projects, to qualify for concessions entitled under said the Act, would be difficult to realise due to reasons beyond their control.

Raheja said that the liquidity crunch, high cost of funds, high mortgage interest rates, followed by further slowdown in economy after 2010 and high inflation have impacted demand as well as supply. Availability of labour has gone down drastically due to MGNREGA, impacting progress of ongoing projects, he said.

Read more: Business Line

Innovative payment schemes for residential buyers by next year

If you are looking at buying residential property next year, you are likely to find many more innovative payment schemes, but also a drastic trimming of frills in projects. Residential real estate developers realized that homes were not selling at the current price points as previously offered freebies also did not help them boost sales.

In order to lure buyers, residential real estate developers will offer buyers attractive pre-launch benefits in a bid to accelerate sales momentum in the initial months following a launch.

“Developers with large-scale projects with a greater share of unsold inventory will be under greater pressure to offer discounts than those with smaller projects and limited inventory,” Jones Lang Lasalle India said in a report.

Read more: Business Standard

Economy

Economic growth stabilizing, says Chief Economic Adviser Raghuram Rajan

Chief Economic Adviser Raghuram Rajan today said economic growth seems to be stabilizing and the efforts should be made to strengthen the recovery process.

“Hopefully, economic growth is stabilizing. Certainly every move that government is trying to make (will) help to strengthen growth,” Rajan told reporters here.

On sudden spurt in industrial growth to 8.2 per cent in October, he said, “we should not be overtly influenced by one number… We should take it as part of pattern”.

The industrial production growth rate bounced back to a 16-month high of 8.2 per cent in October on good performance of the capital goods, manufacturing, indicating sudden recovery in the economy.

Read more: The Economic Times

Investment in economy up 12% to Rs 26 lakh cr in FY12

The investment in the economy increased by 12.1% in terms of gross fixed capital formation in 2011-12 to Rs 26.15 lakh crore, Parliament was informed today.

“As per the revised estimates of Annual National Income released by Central Statistics Office, the investment measured in terms of Gross Fixed Capital Formation at current prices has risen from Rs 2,331,382 crore in 2010-11 to Rs 2,614,634 crore in 2011-12…

“…Thereby indicating an increase by 12.1%,” Minister of State for Parliamentary Affairs and Planning Rajeev Shukla said in a written reply to the Rajya Sabha.

Read more: Business Standard

Policy

Land bill in cabinet today, changes propose retrospective application

Amendments to the contentious land acquisition Bill not only seek to hasten the acquisition process through tight time-schedules but also contain a provision that virtually allows the law to be applied retrospectively to cases that witnessed protests in the past.

The union cabinet is due to discuss the amendments to the Land Acquisition, Rehabilitation and Resettlement Bill on Thursday.

The changes suggest that the new law will be applicable to all ongoing land acquisition proceedings where “no award” has been made under the existing Land Acquisition Act, 1894. It also says the compensation package of the new law will apply even in cases where payments have been announced but possession of the land has not been taken or compensation has not been paid to the owner.

In a provision that could prove controversial, the amendments contain an explanation stressing that all cases where compensation has not been accepted or has been accepted under protest will be “deemed to be unpaid”.

The explanation also says that the compensation will be deemed paid only if it has been credited in the bank account of the land owner.

Read more: Indian Express

DDA working on comprehensive parking policy

The Delhi Development Authority is preparing a comprehensive parking policy based on travel demand management principles to address the parking problem in the capital, the Urban Development ministry said today.

DDA has informed that a comprehensive parking policy based on travel demand management principles as recommended in master Plan for Delhi-2021 (MPD -2021) is presently under preparation to tackle the parking problem, minister of state in the UD Ministry Deepa Dasmunshi said.

In response to a question in Lok Sabha, she said the policy will be finalised by the Special Task Force headed by Chief Secretary, Government of National Capital Territory of Delhi which was appointed by the High Court.

In response to another question, Dasmunshi said DDA had started online booking of its grounds with effect from November 7, 2012.

In response to yet another question, she said there were 14,920 cases pertaining to DDA which were pending in various courts.

Giving more details, she said over Rs 2 crore had been spent as expenditure on court cases during the current financial year.

See article: Indian Express

Infrastructure

L&T bags orders worth Rs 1,002 crore

Infrastructure major Larsen and Toubro (L&T) has bagged orders worth Rs 1,002 crore across business segments from both, domestic and international markets in last one month, the company said today.

“L&T Construction has secured a slew of new orders valued over Rs 1,002 crore across various business segments in November and till date in December 2012,” the company said today in a statement, adding that L&T Construction is one of its brands.

Among the orders, the company secured Rs 742 crore orders in the power transmission and distribution business, including “a major order secured in Qatar for setting up of a 220 kV, 515 MVA cable system and for the construction of a 220/66/11 kV substation,” the company said.

Besides, it won an EPC (Engineering, Procurement and Construction) order from Tamil Nadu Transmission Corporation and a turnkey order from West Bengal State Electricity Transmission Company for construction of seven transmission lines in West Bengal.

Read more: The Economic Times

Punjab govt approves Chandigarh-Mohali metro rail project.

Punjab Cabinet today approved the ambitious Rs 1,427-crore project to link the city with its satellite town Mohali.

The decision to link SAS Nagar Mohali with Chandigarh was taken at a meeting of the Cabinet chaired by Chief Minister Parkash Singh Badal, an official spokesman said here.

The total length of the metro rail covering Chandigarh, Panchkula and Mohali was 37.57 km, to be completed at a cost of Rs 10,900 crore.

First corridor would be developed from Capital Complex Chandigarh to Gurdwara Singh Shaheedan Sector 70 in Mohali having a length of 12.49 km, of which 3.97 Kms in Mohali city.

The second corridor would be from Mullanpur (Punjab portion) to Grain Market Panchkula (Haryana) having a length of 25.07 km, of which 3.87 km would be in Mullanpur.

See article: Business Line

Transportation

Air India Express to recruit 50 pilots, 30 commanders in a year

Aiming to increase the strength of pilots for optimum utilisation of its fleet strength, the Air India Express today decided to recruit 50 pilots, 30 commanders and 30 co-pilots within one year.

Shortage of commanders was the main issue discussed at the board meeting of the budget airlines here, chaired by Rohit Nandan, Chairman and Managing Director of Air India and AIE chairman.

Nandan told reporters that of the AIE’s requirement of 252 pilots, there are presently only 186 pilots and 60 are undergoing training.

Nandan said the AI and AIE will function as separate entities. AIE has to be on its own.

Earlier, pilots were being hired from AI on deputation to the AIE. The deputation period would be reduced and AIE will have to be on its own, he said.

“The umbilical chord between Air India and Air India Express will have to severed,” he said, adding, AIE should have its own pilot force.

Fourteen new aircraft will be added to AIE’s fleet strength in a three-year period. Presently, the airline has 21 aircraft of which 17 are available at any point of time.

Read more: The Economic Times

Banking

Deutsche Bank India gets Rs 1,054 crore capital infusion to fund growth plans

Deutsche Bank on Tuesday increased its capital base in India by Rs1,054 crore to fund the bank’s growth plans. The fresh capital infusion by the parent will increase the total capital of the Bank in India to Rs7,000 crore. The bank’s capital adequacy ratio will go up to 16%. With the slowdown in the global markets global institutions are investing capital in emerging markets like India. Singapore based bank, DBS Bank in April 2012 had infused about Rs500 crore in India operations.

“The capital increases reflect the importance of the India franchise to Deutsche Bank’s global growth plans,” said Ravneet Gill, CEO, Deutsche Bank India. “We will further expand our transaction banking and retail banking businesses,” said Gill.

This is the second capital infusion in 2012. In March 2012, the parent had infused around Rs 455 crore into the Indian operations.

Read more: The Economic Times

Bank credit to commercial sector grows by 7.34% in March-Nov

Bank credit to the commercial sector grew by 7.34 per cent to Rs 53.23 lakh crore in eight months ending November 30, according to the Reserve Bank of India (RBI) data released today.

Bank credit to commercial sector ending March 31 stood at Rs 49.59 lakh crore, it showed.

Banks’ net credit to government sector grew by 10 per cent to Rs 26.06 lakh crore in the eight months ending November 30, according to RBI data.

The banking sector’s net non-monetary liabilities grew by 4 per cent to Rs 15.27 lakh crore in the same period.

Read more: The Hindu Business Line

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