I-T Denies Capital Gain Tax Exemption On Second Property Purchased
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Indian Realty Boom Gives Parsvnath Stunning Debut Investor enthusiasm to gain exposure to the booming Indian real estate market has seen a leading property developer soar 75 pct on its stock market debut. Parsvnath Developers jumped to Rs 526 from its Rs 300 offer price in an encouraging sign for a host of other Indian and India-related real estate initial public offerings due to list in the next one to two quarters. Price rises in Mumbai and New Delhi of more than 40 pct in the past year have prompted warnings from the central bank and even some developers that parts of the market may be overheating. In recent weeks several of India's biggest developers have moved to list investment groups on London's AIM which will specialise in Indian property. Investors are awaiting what may be the country's biggest listing to date, the $US2-$US2.5 bn listing of DLF, a Delhi-based developer, in the next one or two quarters. Parsvnath plans to use the proceeds to help develop 14 SEZs and 14 five-star hotels in India. Parsvnath made a net! profit of Rs 132.91 mn ($3.75 mn) in the year to March 2006 on revenues of Rs 824 mn. www.theaustralian.news.com December 2 FII To Touch $10-12bn In Next 6 Months Foreign investment inflows in the country are expected to touch $10-12 bn over the next six months, thanks to several big-ticket listings being in the offing at the Alternate Investment Market at the London Stock Exchange. While realty biggies such as Tricona, K Raheja and the Surinder Hiranandani group have already raised close to around $3 bn at the AIM, several other players including Unitech, Ansal API, Omaxe and the Nirendra Hiranandani group are learnt to be in talks for raising another $2-2.5 bn. In addition, home-grown realty funds like the Kishore Biyani promoted Kshitij and the Ashok Piramal Group promoted Peninsula Realty Fund (PRF), are also bringing FDI into the sector which is expected to further increase the total inflows. In fact, Peninsula Realty Fund has recently got a CCEA (Cabinet committee on economic affairs) approval for raising a whopping $350 mn FDI to invest in the real estate and infrastructure projects in the country. Though the AIM market was mea! nt to facilitate fund raising for those companies which were looking at raising $30-50 mn, real estate companies have been using this route to raise large amounts of money. Industry insiders say that with the kind of investment opportunities that the Indian real estate has thrown open, it has already caught the attention of the entire world. Says Mr Pranav Ansal, director, Ansal API, âItâs a healthy trend and sooner or later it was bound to happen as the Indian real estate market has come of the age and has been recognised the world over as an excellent investment opportunity.â The Economic Times New Delhi Edition December 4 I-T Denies Capital Gain Tax Exemption On Second Property Purchased If you are selling a smaller flat at a prime location to buy a bigger flat in the suburbs and using the surplus from the sale of your old flat to buy another property, then better watch out. Chances are that your move may not go down well with the income tax department. The tax officials are denying capital gains tax exemption on the second property purchased on the grounds that a taxpayer is entitled to exemption only for one property. Capital gains set-off is given on the money a taxpayer gets from selling a residential property, if the money is reinvested to buy another residential property. For instance, if a flat is sold for Rs 30 lakh by a person who uses this money to buy a bigger flat for Rs 45 lakh, then no capital gain tax is levied on Rs 30 lakh (the sale price of the old flat). But if the new property is worth Rs 20 lakh only, then the taxpayer is expected to pay capital gains tax on the residual amount, Rs 10 lakh in this case. According to the Reserve Bank, hou! sing loans witnessed an year-on year growth rate of 54pct to Rs 60,495 cr till June-end this year, indicating a boom in the real estate market. The issue crops up when a taxpayer buys two properties and claims exemption on both. The two properties could be adjacent flats, or flats in different places in the same city or a different place. The I-T department is using its interpretation of the phrase a residential house used in sub-section (I) of section 54 and 54F, saying that taxpayers are entitled to capital gains exemption only on the first property they buy. The Times Of India New Delhi Edition December 7 Real Estate Developers & Retailers Must Join Hands Unless real estate developers join hands with retailers, the Indian retail industry will fail. According to Mr B.S. Nagesh, Managing Director, Shopper's Stop, stakeholders in the retail industry- retailers, real estate developers, financiers and the government must work towards customer accountability. Speaking at "Estate South 2006", a real estate industry seminar, he said all stakeholders today worked for their own benefit, fail to channelise their efforts at customer satisfaction. Real estate developers do not position themselves as retail developers, he said. Mr Fazle A. Naqvi, Executive Director, Landmark International, said developers must look at meaningful differentiators to position their malls. There is high commonality among malls, especially with regard to housing premium and international brands. "In the process of housing such brands, malls should not lose their identity," he said. "Developers must choose brands that would make sense to the customer and not bli! ndly rent space to every premium and international brand," he said. The Hindu Business Line New Delhi Edition December 11 Mega Property Show From 12-14th January 2007 At Bengalooru A dedicated real estate exhibition, âMega Property Showâ which will present the top Builders, Developers, Promoters, Financial Institutions and Property Portals - with the largest and most comprehensive range of Property Services, Commercial and Residential Properties will be organised from 12-14th January at Bengalooru. This unique exhibition is being organised to offer a complete range of solutions for all types of properties and finance on one platform. The Property Show is organised in alliance with the Builders Association of India Karnataka (Bengalooru) Centre, Indiaâs Apex association of Builders and 99acres.com - Indiaâs Premium Property Portal as the âOnline Media Partnersâ. For further details click here Company Sources December 11 Indian Property Prices To Rise By 10pct The property market (residential and commercial) in India shows no signs of slowing down, according to a Business Confidence survey conducted by international real estate consultancy firm DTZ Debenham Tie Leung and the Singapore-based IQPC. The report suggests that average residential property prices are set to appreciate by 5-10pct over the next six to twelve months. Mr Ambar Maheshwari, director of DTZ India, said: "As per the survey results, the residential segment is expected to drive the real estate market in coming years. There exists a huge demand in this sector, with nearly 80 mn dwelling units required in next 10 years.â The Economic Times New Delhi Edition December 7 Property & Building Material Expo 2006 From 15-17th Dec At Hyderabad A 3-day premier exhibition on Property, Real Estate and Building Material under the title 3rd Property & Building Material Expo 2006 will be held at Hyderabad on 15 - 17 Decâ06. Companies related to residential and commercial plots, flats, villas, row houses, resorts, building materials, besides Banks, Housing Finance and Insurance companies would display their products and disseminate information in the Expo. The event will also be a platform to discuss the present status of these sectors. The Expo is also a business networking opportunity. The expo is being organised by NRS Forums & Exhibitions, a division of NRS Publications, based at Hyderabad. The venue for the Expo is Peopleâs Plaza, Necklace Road, Hyderabad. So RUSH before you miss the BUS. For details, please contact NRS Forums & Exhibitions, Hyderabad, Tel Nos. 040 - 2330 3989, 6666 7118. Mr M A Nazeer Chief Executive, NRS Forums & Exhibitions For details Company Sources December 11 AV Birla Group To Open Retail Outlets Next Year Even before it has officially announced its retail venture, the Aditya Birla Group has started booking space in different cities. The group plans to sign up an area of up to 1.5 mn sq ft for opening retail outlets next year, and will acquire an additional 1.5 mn sq ft every year. According to sources, the group has drawn up a Rs 15,000 cr retail plan to launch 6,000 outlets over a four-year period. Reliance Industries is setting up India's most ambitious retail chain with an investment of Rs 25,000 crores for nearly 10,000 outlets by 2010. It is looking at a minimum area of 30,000 sq ft per store, going up to one-lakh sq ft. It has signed up around 80,000 sq ft area in 3 malls each at Bengalooru, Pune and Jalandhar for its hypermarket format. The company plans to open the outlets in 20 cities in the first year of operation. The retail arm of the A V Birla group is being headed by the CFO of the group Mr Sumant Sinha. The company will be opening the relatively smaller formats! either in the smaller cities or in places where it isnât going to be able to acquire up to 1 lakh sq ft floor space. According to company sources, Tesco, which is believed to be looking for a partner in the country and is at present understood to be negotiating with the Tata group had also tried negotiating with the Aditya Birla group, but the latter preferred to go ahead by itself. The Financial Express New Delhi Edition December 5 Ghaziabad In The list Of Most Dynamic Cities As Ghaziabad rubs shoulders with Las Vegas in the list of 10 most dynamic cities, one can see that the upcoming Metro, 13 new flyovers and housing boom are just a few pointers to its growth. From being a mofussil town to being catapulted to the list of 10 most dynamic cities in the world in which it joins Las Vegas, Toulouse, Moscow and Munich, Ghaziabad has managed to pull off a true feat. Though the proven growth areas are Gurgaon and Greater Noida, Ghaziabad is catching up fast. Developers attribute the rapid growth to Ghaziabadâs excellent connectivity with Delhi, as well as an established IT destination like Noida. Ghaziabad is very strategically located on the old Grand Trunk Road. The completion of just 3 projects Sun City, Hitech City and Integrated City-will add a population of over 5 lakh to the city in less than 5 years. Private builders are executing all three projects with the Ghaziabad Development Authority (GDA) as the regulating body. The 2010 Commonwealth ! Games is also boosting development in the whole of east Delhi. According to Mr SK Zaman, Chief Architect and Town Planner, GDA, âGhaziabad will see massive growth in time to come. This is because of its inherent advantages like proximity to Delhi and easy land availability. The infrastructure of the city has also improved over time. The entry of good developers has also been good for the city. The difference between earlier development and now is that the development is planned and systematic. The Economic Times New Delhi Edition December 4 Greater Bengalooru By Early 2007 Villages realising that ultimate city dream, panchayats becoming booming zonal offices of Bengalooru, the city itself extending to 741 sq km. That's Greater Bengalooru, a reality that is slated to materialise completely by early 2007. The number of wards in Greater Bengalooru would number 150, from the existing 100, although Governor Mr T N Chaturvedi is questioning this move. Presently, it's only the draft notification for Greater Bengalooru that is ready and is put up for suggestions and public objections. Meanwhile the State Government has constituted an expert committee to suggest strategies to ensure the planned growth of Bengalooru agglomerate. Headed by eminent space scientist and Rajya Sabha MP Mr K Kasturirangan, the committee members include former chief secretary and deputy chairman of state planning board Mr A Ravindra, Public Affairs Centre (PAC) chairman Mr Samuel Paul, founder-director of International Institute for Information Technology-Bengalooru Mr S Sadag! opan and a retired bureaucrat Mr Sivaramakrishnan. The mandate for the committee as specified in the terms of reference reads: 'The committee would work on a new comprehensive legislation that would deal with the development and regulation of the Bengalooru Metropolitan Region (BMR), which is witnessing rapid economic and demographic growthâ. To make recommendations regarding the structure of the new legal frame work for governance in the BMR which would cover all ULBs as also other organisations such as BDA, BMRDA, BWSSB and spell out the coordination mechanisms and accountability of such bodies to the ULB in the BMR'. In addition, the committee will examine and suggest measures necessary to ensure governance within the newly expanded local body and to reorganise the institutional framework, and recommend alternative models for effective governance having regard to the tenets of the 74 Constitutional Amendment Bill. The Economic Times New Delhi Edition December 3 Accor SA To Operate 2 Hotels For HCC French hotels and services firm Accor SA will operate two hotels for Hindustan Construction Co Ltd (HCC) in western India, the two companies said. HCC would develop a 250-room Novotel hotel in its upcoming Lavasa township near Pune in Maharashtra, and also an 80-room Grand Mercure Spa resort, both Accor brands. HCC's real estate unit holds a 60 pct stake in the 15,000 acre Lavasa township venture. "We are committed to the development of our hotels across all price segments and all destinations," Mr David Baffsky, chairman and chief executive officer Accor Asia-Pacific, said in a statement. Accor signed a deal with GMR Infrastructure Ltd. for a business hotel near the upcoming international airport in Hyderabad. It also has a deal to operate and manage five hotels for real estate developer Nirmal Lifestyles Ltd, and said it would develop a $106-mn, 300-room Sofitel premium hotel in Mumbai in a joint venture with Naman Developers Ltd. Accor also has a separate joint venture wi! th Dubai's Emaar Properties to develop 100 budget hotels in India with an investment of $300 mn. The Financial Express New Delhi Edition December 6 Big Builders Entering Chennai For Setting Townships Chennai City is witnessing a change in the concept of development of large-scale projects with the entry of big developers from outside the city planning integrated townships here. With the geographical growth of the city there is a need for integrated developments offering good quality life and neighbourhood with workplaces and shopping etc in the same premises, according to a report released by Trammell Crow Meghraj Property Consultants reveal. In Shollinganallur, along the OMR, rates are approximately Rs 6.25 cr per hectare ($2471/sqm). The current land rate in Guindy ranges within Rs 40-50 lakh a ground ($408-510/sqm), while at Ambattur it is Rs 8-10 lakh per ground ($82-102/sqm). Chennai is the fourth largest metropolitan city in India and is the capital of Tamil Nadu. Starting with the nucleus of the fort, the city gradually grew incorporating old settlements and villages. Chennai has been growing predominantly on the south side. Old Mahabalipuram Road (OMR) has attrac! ted most of the real estate commercial activity in the last 3 years after being declared as the IT Corridor. The presence of IT and ITES sector in the southern part of the city has led to fast development of residential areas like Velachery. Chennai city is changing trends in economy as well as urban growth. Tamil Nadu has started attracting foreign investment and manufacturing bases with policy initiatives. In the last two years the state has more than doubled its IT exports. Other than the regular commercial space, software companies are now looking at sick industrial unit areas such as Guindy, Taramani, Ambattur and Padi, which are being converted into Software Technology Parks (STPs). The reason for this is the impetus given by the government for setting up STPs. Other projects in the offing are the IT park Chennai One by Flextronics in ETL with is 6.5 lakh sft, campus-like facility on 25 acres in Perungudi, declared as a SEZ. Business Standard New Delhi Edition ! December 8 KSL Realty Plans To Invest 25bn In 4 yrs KSL Realty and Infrastructure Ltd. plans to invest around 25 bn rupees to develop 20 mn sq ft of land over the next four years, a top company official said. The company has also identified 53 Indian cities and towns where it plans to develop mini-townships, Chairman Mr Saurabh Kumar Tayal said. "We want to be a national-level real estate player even as we expand our textiles business," he said, adding that the major revenue will come from real estate in the future. The company already has a huge land bank in 4-5 Indian states and is on the lookout for sourcing of land in other states as well. KSL plans to build hotels, IT parks, malls, theatres, residential complexes, banquets, restaurants and warehouses nationwide and subsequently lease them out. It has already tied up with Indian Hotels Co. Ltd. for management of a five-star hotel which KSL is building in Nagpur. India's retail real estate market is expected to top $463 bn by 2010, from $292 bn in 2004, according to the pr! operty services arm of ICICI Bank. www.moneycontrol.com December 4 Property Developers Likely To Furnish Bank Guarantees In a big step to cut back on speculative grabbing of land by property developers, the government is likely to ask them to furnish bank guarantees to municipal authorities to prove they mean business. The guarantee to be furnished will be 25 pct of the estimated cost for developing infrastructural facilities, for a residential colony or block of apartments. And thatâs not all. The licence, granted on the back of a bank guarantee will come with a timeline of three years. âThis license can be renewed, only if the delay in completion of projects was due to unavoidable circumstances,â an official in the Union Urban Development ministry said. The provision of bank guarantee is intended for development of more than 1,000 sqm in case of a colony, or more than 4,000 sq ft in case of apartments. With a bank as guarantor, more credibility may be expected. âThere have been many instances in the past where developers have committed projects, and even got necessary regulatory appr! ovals. But the actual delivery of projects have not happened,â Mr MS Jain, a Gurgaon based consumer rights activist said. The promoter will also have to pay proportionate external development charges to the officiating authority. These charges will be decided by local authority, and the additional revenue generated in the process will be used in the governmentâs external development works, being carried out in that catchment area. The Economic Times New Delhi Edition December 2 Peninsula Land To Invest Rs 2,500 cr In Indian Realty The Ashok Piramal group-promoted Peninsula Land will invest Rs 2,500 cr in the Indian real estate sector over the next two years. The company is looking at prospective investment opportunities in both residential and commercial real estate projects, information technology parks and special economic zones (SEZs). For the purpose of investing in the sector, the group has floated a special purpose company, Peninsula Realty Fund (PRF). PRF has already got the cabinet committee on economic affairs (CCEA) nod for bringing around Rs 1,500 cr as foreign direct investment in real estate. Apart from this, another Rs 500 cr will be raised from domestic investors and the parent company will put in Rs 500 cr. Mr Rajeev Piramal, vice-chairman, Peninsula Land, said, âto start with, we will only be investing in projects in tier-I cities, like New Delhi, Mumbai, Pune, Ahmedabad, Hyderabad, Bengalooru, Chennai and Kolkata. We are bullish about commercial developments, such as office space a! nd malls. We are also looking at infrastructure in a big way.â The Economic Times New Delhi Edition December 5 Marlabs Inc To Invest Rs 100 cr In India US-based technology services and solutions provider Marlabs Inc said it will invest over Rs 100 cr to set up its facilities in India. The company is planning to set up campuses in Bengalooru besides opening a global training and development centre in Mysore, Marlabs India, a wholly-owned subsidiary of Marlabs Inc, Head Global Delivery Mr Sunil Nambiar said. Headcount in India would also be scaled up from the current 400 to over 2,000 in the next three years, he said. Marlabs India is setting up separate practices for Oracle Applications and business intelligence. The professional services arm of Marlabs Inc would be expanded in two phases- growth of its domestic customer base and of its share of the global revenues," he added. www.indiatimes.com December 5 JP Morgan Fund Invests Rs 274cr In Lodha Builders Global financial services firm JP Morgan has invested Rs 2.74 bn (US$61.4 mn) through its real estate investment arm in a realty project being developed by Delhi-based Lodha Builders. The investment, made by Hong Kong-based JP Morgan, would go for the development of Lodha Bellissimo, a premium residential development project at Apollo Mills, Mahalakshmi in one of the mill lands sold by the National Textile Corporation(NTC). The Economic Times New Delhi Edition December 7 Commercial Real Estate In Mumbai, Delhi Among Most Expensive A survey by CB Richard Ellis says occupancy costs for prime commercial space in these two cities are up by 75-100pct in the last one year. Commercial real estate in Mumbai and New Delhi is among the most expensive in the world. London's West End district remains the world's most expensive business location. Mumbai and New Delhi now occupy 7th and 11th place in a global ranking of the most expensive business locations. They were at 15th and 36th position a year ago. Meanwhile, occupancy costs in London's West End tops the chart at US$ 212 per sq ft. Second and third in the prime office occupancy cost list include inner central Tokyo and London's city financial district at about US $145 sq/ft each. Abu Dhabi, Singapore, Manila, and Perth are among the other cities that have seen a sharp jump in prime office rental growth in the last 12 months. The supply quirks were also a factor, notably in New Delhi, where a crackdown on unauthorised use of non-commercial property for office! purposes had helped drive up rents. The most expensive business district in the US is Midtown Manhattan, New York, in 24th place at US $62 sq/ft. www.indiainfoline.com December 2 âIntelligent Buildingsâ To Become A Realty Now Indian real estate is booming and the competition among developers is getting intense as they are attempting to prune down operating expenses without compromising on the quality of customer service. The general manager-projects Claridges Hotels Mr Pankaj Mishra says, âDevelopers now have the opportunity and technology to integrate their services towards refurbishment of modern as well as aging buildings into âintelligent buildingsâ that combine innovation and technology with skillful management to maximise return on investment.â Until recently the concept of an âintelligent buildingâ was considered to be futuristic and fanciful. Now they have become a reality. Their maintenance is simpler, operating costs are lower and management flexibility is limitless. An intelligent building solution can future-proof your building and maximise your long-term capital investment in it. In fact, strategic business relationships with renowned market leaders like Honeywell, Siemen! s, Johnson Controls and Schneider can make an intelligent building one of the most cost-effective total building systems available by cutting down on investment, personnel, and problems. Intelligent building works basically on building automation system which integrate and automate the building management system, energy management system, fire detection & alarm system, CCTV and access control system. The building management system (BMS) enables maintenance of optimum temperature thereby saving energy, reducing operational, maintenance and manpower cost. It also scales down the human error component, apart from providing fire safety and efficient security. The Economic Times New Delhi Edition December 3 Slum Rehabilitation Projects Attracting Developers There was a time when the several developers in Mumbai used to frown at the mention of Slum Rehabilitation Projects. The reason wasnât hard to find. After all most developers would prefer to have a clear title to a land. But Slum Rehabilitation Projects meant clearing the land of all encumbrances, itself a long and tedious process. But a combination of factors, including changes in the policy, access to international venture capital and a paucity of land and skyrocketing realty prices have meant that Slum Rehabilitation projects today attract the biggest of developers. Says Mr Sunny Wadhawan, MD Housing Development and Infrastructure Ltd, " The policy is effective but as far as implementation is concerned, there should be some sort of screening of the developer who takes it up. According to Mr Mahesh Gandhi, Director, Advisory Trikona Capital India, who are planning investment to the tune of $400 to 500 mn in this segment, slums are the biggest problem and their removal wi! ll lead to improved transport and beautification. The idea, says Mr Gandhi, is to invest mns of dollars which would be using capital with social responsibility. The Economic Times New Delhi Edition December 3 No Property Sales In Illegal Areas Property transactions in all unauthorised colonies of the Capital, including posh areas like Anant Ram Dairy and Sainik Farms, are in a limbo. Thanks to directions of Delhi High Court-appointed monitoring committee on unauthorised constructions, most sub-registrars of Delhi government have stopped registering sale of properties in these areas in any form. According to Delhi government sources, most of the 12 sub-registrars in Delhi have stopped transactions in unauthorised colonies. It all started last month after the two-member monitoring committee of Mr B L Vohra and Mr R S Gupta observed that unauthorised colonies were mushrooming on government land because Delhi government was registering properties without checking their status. The committee gave specific directions to the government that registration of properties on gram sabha land (original and vested) and on land that has been notified for acquisition under Sections 4 and 6 of Land Acquisition Act, should be stopped. Simply put, these directions cover almost all unauthorised colonies in Delhi. While passing this order, the committee added that Delhi government should frame a well-thought out policy to check illegal construction and mushrooming of unauthorised colonies. It gave the example of Chandigarh which has a 16-digit unique code for each property. Since land records are computerised in the city, any expansion of a colony or unauthorised construction can easily be tracked. The Times Of India New Delhi Edition December 7 Rate Of Return From Realty Should Be Regulated The growth in the real estate industry and the rate of return should be regulated at `supportable' levels to avoid a bust after the boom, according to Mr K.C. Chakrabarty, CMD, Indian Bank. Addressing a seminar on the real estate industry, Estate South 2006, Mr Chakrabarty said the boom phase that the industry is going through now is in itself not a cause for concern. Increasing expenditure on real estate and retail are signs of a growing economy. But the boom can continue only if investors are responsible and meet the realistic aspirations of the people. Ideally, returns for real estate investors should be higher than that from government bonds and about the level from equity markets. Prices cannot grow for long at higher than 30 pct. Then speculators enter and real developers are affected, he said. Serious players would welcome policy intervention. But the solution for now is not in artificially controlling prices but by increasing supply. Mr V. Ranganathan, Senior Partner! , Ernst & Young, said that despite improvements in taxation laws, indirect taxes continue to be an area of concern. Works contract, under the purview of State Governments, and service taxes, under the Centre, overlap and increase costs. Stamp duty varies from State to State. Industries want clarity on the cost of doing business. The Hindu Business Line New Delhi Edition December 9
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