Mumbai, Delhi NCR and 6 other cities to remain favored real estate investment destination in 2013

‘I want to buy a property this year’ is likely to be one of the key resolutions of many Indians in 2013. And, not necessarily for living in that house, but also for investment purposes. After all, property, along with gold and fixed deposits, continues to maintain its stronghold over the average Indian investor’s psyche. For many investors, the allure of real estate has not dimmed, despite the slump the sector witnessed in 2012.

“With property options ranging from Rs 3,200-15,000 per sq ft and investor returns in the range of 18.6-29% per annum residential real estate will emerge as a promising asset class for the next 5 years.

From the perspective of return, real estate investment especially in India has garnered superior returns in comparison to other asset classes over a long term. But the truth remains that Investment in real estate is burdened with decisions based on gut feeling and tips which result in poor investments,” says Gulam Zia, executive director, retail, advisory and hospitality with property consultancy firm Knight Frank India in its investment advisory report 2012.

Read more: The Economic Times

Ireo Skyon, located in Sector 60, Gurgaon

Ireo Skyon, located in Sector 60, Gurgaon

2013 a fresh beginning, with hopes for policy reform and better sentiment in real estate sector

The year 2013 will be a game changer for the real estate industry, in terms of policies and regulations , with most pending bills expected to be passed in Parliament in the coming quarters, according to Pranab Datta, Chairman – Knight Frank India. Specifically in the case of real estate , these include the passage of two crucial bills, namely Real Estate Regulation Bill and Land Acquisition Bill, which are expected to boost the sentiment of all stakeholders.

Pointing out that the government is serious on introducing reforms in India – as can be seen from the recent approval of FDI in multi-brand retail – Mr Datta believes that the RBI can also be expected to lower interest rates in the coming months, which will benefit developers as well as consumers .

“The change in sentiment on account of the above measures will have a positive impact on all the segments of real estate whether it is retail, office or residential and will certainly make 2013 a much better year in comparison to the last year,” he says.

Looking on the bright side from a home buyer’s point of view, he observes that the year can be considered positive for property buyers as prices have remained stagnant unlike the previous two years where most of the cities witnessed a steep price rise. “This offers a window of opportunity for those buyers who were sitting on the fence till now to start considering their purchase decision,” he explains.

Read more: The Economic Times

How to save capital gains tax on sale of property

Anna Covaco is trying to sell her ancestral property – a piece of land worth nearly Rs 10 crores in today’s market. Being a senior citizen, she has put her son John in-charge to dispose off the asset. To be eligible for tax exemption , John was advised that he needs to invest in another property within a year. Still confused, he has approached a financial advisor to help him out with the nitty-gritties .

Buying property for investment purposes and selling it later at a higher price has become a common habit. There is an aspect of these transactions which deals with the tax on the profits gained, which the seller needs to be aware of. If you sell real estate for a profit, you will need to pay capital gains tax on the money. The tax varies, depending on the time period the property was held on to.

“Capital gains tax is definitely an aspect which every property seller should consider in a cost-sensitive market. The sale of a property involves short-term capital gains tax if it was sold before the completion of three years of purchase” , says Badal Yagnik, Managing Director – Chennai and Coimbatore, Jones Lang LaSalle India. “The tax authorities will consider the profit you generated by the property sale as regular income for that year and apply tax accordingly. If the property was sold after three years of its purchase having elapsed, long-term capital gains tax at the rate of 20 percent after indexation becomes applicable”, he adds.

Read more: The Economic Times

Demand for homes likely to remain stable

Demand for residential realty in the city is likely to be stable during the year, but the slow pace of absorption of stock may bring down the number of new launches and prices may stagnate. This is amid a GDP growth decline from 9.3 percent to 6.5 percent, which has crippled the residential sector across the country, with the number of launches declining 30 percent in 2012 compared to 7 percent in 2011 and banks’ credit exposure to developers falling from 23.21 percent to a mere 3.88 percent, experts have pointed out. Realty advisory Knight Frank has said in a research note that the residential market in 2012 was plagued by high property prices, relatively higher mortgage rates, weak business sentiments and a bleak employment scenario. Knight Frank said the Mumbai residential market has witnessed a phenomenon of rising property prices and declining sales volumes. High prices, coupled with a stagnating job market, have adversely impacted sales momentum, the firm said. It added that going forward, the price growth in Mumbai would be muted on account of the unsold inventory and increasing share of peripheral markets.

Read more:  The Times of India 

Why Canada-based baron Bob Dhillon is betting on Indian real estate

Property tycoon, Bob Dhillon, via The Economic Times

In the West they pronounce my name as Bob Dylan. I tell them I am Bob Dhillon with a stress on the second syllable of my surname. It is the surname of my father, my grandfather and my ancestors who were from India,” says the 48-year-old property tycoon based in Calgary, Canada, and who now wants to do business in India. He has already announced plans to develop a township off Chandigarh and has hired a consultant to look for business opportunities in what he calls B cities of the country – and that includes Ahmedabad, Kochi, Hyderabad, Pune, etc. “I am going to meet the Gujarat chief minister, Narendra Modi, in my next trip. I am looking at opportunities across India, but then the government has to relax its FDI norms further to attract more institutional capital in the real estate sector,” says Dhillon, president and CEO of realty firm Mainstreet Equity Corp, which is listed on the Toronto Stock Exchange. He made his first million when he was just 19 by re-selling homes he had bought and refurbished with money borrowed from loan sharks. “Unlike in India, they don’t break your legs in Canada if you don’t pay up. They just take the homes away. In my case, I never had to look back after that,” says the Indian-origin billionaire, who now owns and manages as many as 10,000 apartments in Canada, islands, casinos and rainforests, along with interests in financial services, among other businesses.

Read more:  The Economic Times 

Online home searches rise despite weak sales

People are conducting millions of online searches for properties in India but few end up buying anything, prompting Internet portals, developers and housing finance companies to step up their efforts and tweak existing business models to convert such explorations into deals in a sluggish real estate market. Data by Google Inc. for the September quarter showed that 40 million online property searches were conducted every month on average during the period. However, home sales have not kept pace with the rise in online searches. Most buyers in Mumbai and Delhi-NCR (National Capital Region) are in the “wait and watch mode”, according to Aditya Verma, chief operating officer and executive vice-president of Makaan.com, owned by People Interactive Pvt. Ltd. He added the average search period—the time taken by a user to convert his or her search into a buy or sell action—increased from 5.4 months in 2011 to 7.2 months in 2012.

Read more:  Mint 

Brick by brick your home to cost more

If you are planning to buy your dream house in the near future, there are lurking fears in the realty circles that it may cost you more. One reason for this is due to the rise in the price of bricks — from Rs 3,600 to Rs 6,200 per thousand bricks. Realty experts say that as bricks are an important component in the construction of any building, any hike in their prices will have an impact on the ultimate pricing of houses. Industry experts say that the rise comes after the brick kilns halted their production due to the new norms in procuring permission from the ministry of environment.

Read more:  The Times of India

Choosing a home loan wisely

While selecting your home loan provider, you should not only focus on the interest rates and the amount that they are willing to fund you but also keep in mind the quality of customer care and personalized service you would be receiving. The rising incomes and spending power of the people have caused a paradigm shift in consumption behavior across product categories, especially in the housing sector. The housing sector has witnessed exponential growth in the last 5 to 10 years and along with this, a change in mindset and consumer profiles. Consumers view a home purchase not only from the need point of view but also from an investment perspective. The entry age for homebuyers has also seen a significant reduction. One of the largest contributing factors to these changes has been the wider availability of finance in the form of home loans. There are a number of things that need to be considered while taking a home loan. Remember that it is always a long-term decision that will affect a part of your life for years to come. Both current and expected future scenarios will have to be considered along with a host of other financial and non-financial factors.

Read more:  The Tribune  

Developers to buy water, realty rates may rise in Noida, Greater Noida

The stay order on extraction of groundwater has left investors and developers alike in a quandary. It is being speculated that not only will projects be delayed due to inadequate water for construction but also push up prices of properties if water is purchased from outside. Thousands of buyers in Noida and Greater Noida foresee their financial prospects jeopardized as they are yet to recover from the jolt over the land acquisition row. The Noida and Greater Noida authorities have, however, assured that the problem will be sorted out by discussions with real estate developers in a meeting soon. “There should not be any major scarcity of water for construction work as over 9 crore litres are daily discharged from water recycling plants. Developers will be required to have NOCs from the Central Groundwater Board to have their project layout plans sanctioned. The Authority will discuss the issue of cost escalation with developers to find a solution,” said Sanjeev Saran, CEO, Noida Authority.

Read more:  The Economic Times | The Times of India 

Economy

Govt approves 14 FDI proposals worth over Rs 1,300 crore

The government today said it has approved 14 FDI proposals worth about Rs 1,311 crore including that of Hindustan Port Ltd. “Based on the recommendations of FIPB in its meeting held on December 21, government has approved 14 proposals of foreign direct investment amounting to Rs 1,310.60 crore approximately,” the Finance Ministry said in a statement. The proposal of Mumbai-based Hindustan Port Ltd to induct foreign funds worth Rs 440 crore for investment in downstream companies was among those cleared by FIPB. The Foreign Investment Promotion Board, headed by Economic Affairs Secretary Arvind Mayaram, has also allowed pharma firm Aanhaneya Lifecare to raise funds worth Rs 405 crore through issue of foreign currency convertible bonds. US-based Gavis Pharma LLC can also invest Rs 73.75 crore in an Indian company engaged in the business of manufacture of injectable products. Other major proposals which were approved by the FIPB include Excedo Reality Fund-I to accept NRI investment worth Rs 210 crore, and that of Punjab-based pharma company Saurav Chemicals Ltd to issue fresh equity shares valued Rs 14.85 crore to foreign company. Other proposals approved include that of Ordain HealthCare Global for acquisition of manufacturing facility for its group pharma company and that of Arshiya International to issue warrants.

Read more:  Financial Chronicle  | The Economic Times | The Hindu Business Line | The Hindu | Deccan Herald | The Indian Express | Business Standard 

Infrastructure

New expressway to link Delhi and Ludhiana

via The Times of India

The Centre is planning to build a brand new expressway between Delhi and Ludhiana on the lines of a similar stretch between the national capital and Jaipur. To formulate the plan and get the consent of all three states, the road transport and highways ministry has called a meeting of chief ministers from Punjab, Haryana and Delhi on January 16.

Sources said the proposal to build a new highway with complete access control came from Punjab government considering the need to have high speed connectivity. “Haryana government has also consented to the proposal.

This is the first meeting on this project. Both states have proposed that a stretch branching out from this expressway can join Chandigarh,” a top ministry official said.

Earlier, the Centre had announced building an expressway between Delhi and Chandigarh.

Though both Punjab and Haryana are pushing the new plan to provide better connectivity to the two cities from the national capital, there are indications that these projects will have a huge impact on escalating property prices along this corridor and also accelerating urban development.

Read more: The Times of India

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