Tag Archives: Project

L&T Construction wins orders valued Rs. 2416 Crores

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News Point: The construction arm of has won orders worth Rs. 2416 crores across various business segments in the month of June 2016.

L&T, Track2Realty, India real estate news, Indian realty news, Property news, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Larsen & Turbo, Investment in Indian real estateBuilding & factories business:

The Business has won orders worth Rs. 1165 crores.

A prestigious high rise has been secured from a leading developer in Mumbai. The scope of work involves civil and structural works for the construction of two residential towers, each having 3 basements, 7 podiums, 66 floors and other ancillary buildings.

Another order has been bagged for the construction of a mixed use development (MUD) from a renowned customer in Kolkata. The scope involves civil and structural works for the construction of two towers of G+15 and G+7 floors respectively with 2 levels of common basement.

The business also secured add-on orders from various ongoing jobs.

Power transmission & distribution business:

The Business has bagged orders worth Rs. 1120 crores in the domestic and international markets.

In the international market, a major engineering, procurement and construction order has been bagged from a reputed customer in the Middle East. The scope includes construction of a medium voltage overhead line which will enhance the reliability of the existing network.

On the domestic front, orders have been received from Paschimanchal Vidyut Vitaran Nigam Limited (PVVNL) in Uttar Pradesh.

The first order involves the construction of 33kV substations and associated lines in Ghaziabad, which falls under the Integrated Power Development Scheme (IPDS) while the second order involves rural electrification including feeder separation works in Meerut under the Deen Dayal Upadhyaya Gram Jyoti Yojana scheme (DDUGJY).

Additional orders have been also received as part of the contract variances. 

Smart world & communication business:

The Business has won orders worth Rs. 131 crores which includes a new order from RajCOMP Info Services Limited, a government of Rajasthan undertaking, for establishing and commissioning command & control centres at Bikaner, Bharatpur and Jodhpur cities under the Surveillance and Incident Response Project. 

Price correction on Gudi Padwa?

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Track2Realty Exclusive

Bottom Line: Reports of price correction on eve of festivals like Gudi Padwa are often misleading.

Gudi Padwa, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyBacked by the media reports on inevitable price correction in the Mumbai market, Meenaxi Rohtagi, a textile engineer waited for long to buy an apartment in and around Andheri East. Though the prices have moderated in the last three quarters, the media reports, backed by the property consultants’ analysis, suggest some more significant price correction is on the cards. She now has made up her mind that she will book the flat on the day of auspicious Gudi Padwa.

“I have waited for long anticipating the substantial price cut in the housing market. Of course, there have been marginal price cut in the housing market but that is nowhere close to my expectations. It would not make any difference to my EMIs burden. I am actually expecting a good correction but going by the brokers’ feedback I am rather disappointed and even more confused,” confesses Meenaxi.

She is not the only one in the Mumbai housing market to feel confused about the housing trend and disappointed with the kind of price cut that the market has to offer. Everyone in the housing market across the city, whether the novices or the seasoned investors, have the same dilemma today. Whether there will be more price cut? Will the price cut be symbolic or substantive? Should I buy on the day of Gudi Padwa when more price correction is expected ahead?

Will I get the discounted price, as being reported? Will the festival be the beginning of the price correction this time around? Will the housing market of Mumbai ever be buyers’ market? There are many questions and hardly any answer that could convince, and not confuse, the prospective homebuyers across the length and breadth of Mumbai.

The fact of the matter is that the answer to these questions is not straight and simple and it can be answered as both yes and no. Analysts point out that it all depends upon which market one is talking about as within Mumbai market there rests many sub markets, each having its own distinct character. Then comes the question of segmentation, as all the housing segments in the city are not showing the same trend, whether in pricing or demand & supply cycle.

Quick bytes

  • Price trend has many variable across the MMR; no consistent price trend across the city
  • Price correction more in the luxury segment, less in mid segment and no correction in the affordable segment
  • South Mumbai prices correcting, Western Suburbs softening, and locations of Eastern Suburbs firm
  • Attractive deals available this Gudi Padwa with new launches

Prashant Nambiar, a broker operating out of Mahalaxmi area says there are various pockets of property in Mumbai and price correction depends upon the kind of inventory that is available in the market. According to him, it is much easier to say that Mumbai is sitting over a record number of inventory and with nearly four years of inventory the only way to move forward is to cut the prices. But the reality is that there is real scarcity of properties in certain price brackets.

“If you are talking about affordable housing, then I feel Gudi Padwa onwards the prices will rather firm up as there is hardly any inventory and the demand is huge. Added to this, the market sentiments are improving and the economy shows the signs of revival. In mid segment, some sort of correction in the form of discounts and freebies will be available during the festivals and even beyond. But in luxury not just correction but some sort of crash can also not be ruled out,” says the broker.

Geeta Shukla, another homebuyer is on the property hunt, having been shifted to Mumbai recently from Bangalore. Being new to Mumbai tradition, but a spiritual person at heart, she decided to book the apartment on the festival spirit of Gudi Padwa as well. Her property search led her to an altogether new finding; something that in a way confirms the assessment of the property broker Rajesh.

“Across South Mumbai I am finding that substantial price correction has happened and some attractive properties are available at very attractive price points. What is a reality in Colaba, Cuffe Parade or Fort is not a Mumbai reality though. In Western Suburbs locations like Bandra, Khar or Santacruz the prices might have corrected in the last one year but not as much as in South Mumbai. However, as I move to Eastern Suburbs locations like Kurla, Chmbur or Ghatkopar, I did not find any signs of price correction. It is like travelling rom one different city to an altogether different city in Mumbai,” says Geeta.

In a nutshell, the Mumbai Metropolitan Region (MMR) is not a linear property market where the price trends would be consistent. Each pockets of growth have their own price trend and demand & supply dynamics. It also depends upon the segment of housing and the price correction has mostly happened in the upper segment of housing. On Gudi Padwa too the expected price correction would be more in the upper end of property pyramid.

Does it mean that the affordable homebuyers have no hope of getting reasonable property on this Gudi Padwa? Not really! Analysts suggest that the affordable homebuyers too have their options and they need to keep a close reality check on the market. With a number of new launches expected on the festive occasion there are chances of some attractive deals being offered. It is just a question of finding the right property at the right time and at the right price point.

Many developers are strategizing their marketing channels to make the best of festive spirit. This sounds good for the prospective homebuyers who wish to book their dream home on the day of festivals. Call it due to price correction or strategy or the emerging market reality, but this Gudi Padwa promises to offer everyone a decent deal in the housing market.

 

 

Gudi Padwa spirit may not land you in fancy trap

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Track2Realty Exclusive

Bottom Line: Discounts & freebies on Gudi Padwa are often fancy trap by the developers.

Gudi Padwa-1, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyWhen Navneet Khandelwal bought her first apartment five years back on the day of Gudi Padwa, she thought she had made a killing deal. After all, the kind of freebies that she got with the apartment was something that tempted her to book it on the day of the festival known for the acquisition of new properties. She got an air conditioner and a discount coupon that rewarded her further with some furniture. Isn’t it a grand prize when buying an apartment on the auspicious festive day? It sounds so!

Why then is Navneet apprehensive today when she wants to buy her next house in Vashi? It is true that she religiously believes in the Gudi Padwa and is sure to book the apartment on the day of the festivals only. But then this second time is more matured to understand the value of house hunt and at the same time not get tempted by the freebies. More importantly, she understands the difference between wants and needs; something that can save her from fancy trap in the housing market.

“Though I was happy with the kind of freebies that I got. But it was a few months later that I came to know that some other properties in the same market were offering a better deal with the cash discount as well. My temptation to grab the freebies immediately on offer was something that completely misled me. The value of the stuff that I got in freebies was much lesser than the high price that I paid for the apartment,” says Navneet.

Prabhu Parekh is another homebuyer who was tempted with the marketing offer has a very basic question to ask today. The builder has offered him freebies over and above subvention offer. He nevertheless questions that if the developer can offer him so much of discount and freebies, why can’t the same developer straightaway reduce the Basic Sale Price (BSP) of the project. “These dicey discounts and unwanted freebies clearly suggest there is scope for price deduction,” he points out.

In Parekh’s question is hidden the stark reality of the marketing gimmick of real estate. The developer will continue to bombard with the offers of discounts; giving amenities that a new homebuyer might already be in possession of and even holiday tours but will never reduce his BSP.

Reasons: it hurts his brand reputation (read ego) to have scaled down on pricing due to failure to sell and, equally importantly if not more, is his sales channel of brokers and under-writers who force the developers to do so as they do not want to lose on their commission that is calculated on the BSP.

Added to this market reality lies the fact that the real estate is today groping in dark as far as the new ideas and marketing strategies are concerned. They are hence often going off track to lure the homebuyers with discounts and freebies.

Quick bytes

  • There is nothing free in discounts & freebies and the homebuyer has to pay the hidden charges
  • Always ask for direct price cut than discount on car parking or club etc
  • Evaluate whether the freebies on offer is what you actually need
  • Discounts should be cash discounts in flat cost and not add on amenities being discounted

Developers on their part maintain that discounts & freebies are offered to add to the festive spirit. It has been a tried & tested marketing methodology since ages. However, the fact remains that the homebuyers today are more informed and aware about the cost & benefit of the discounts & freebies.

Home ownership has long been a valued tradition across most societies and cultures. Indians traditionally aspire to possess their own homes. The festive occasion like the Gudi Padwa adds zing to the aspiration since it is considered to be auspicious and lucky. And it is here that the gullible homebuyers are prone to make emotional mistakes.

Considering the overall health of an economy is largely influenced by the functioning of its housing market, there is definitely a need to reform the property buying and selling process which allows consumers to be more involved. This is all the more relevant in the present market conditions where, the cost of capital and loans are high and not expected to decrease in the near future – affecting the affordability and availability of homes. Resultantly, the decision to purchase a house is taking place in a highly constrained environment.

Therefore, analysts suggest that as prospective consumers knowing the right questions to ask and engaging expert advice can definitely help one make a sound investment for your future. Whether you are buying a home to live in with family or for investment purposes, understanding your wants and needs is the way to avoid emotional mistakes.

There is no point in getting lured by the discounted freebies like refrigerator or air conditioner. These consumer durables should not be a criterion when you already have it. A gold coin or home furnishing may not be a sound advice when the price of the apartment is too high against the competing projects in the neighbourhood.

Sachin Sandhir, Global Managing Director of RICS says ‘buyer beware’ may sound like a cliché, but it is absolutely essential that homebuyers protect their interests. Therefore, knowing the right questions to ask can definitely help you make a sound investment for your future. It is critical to understand that the decision to buy any property requires a long term financial commitment.

“For all properties, regardless of age and design, basic checks should include the structural condition of the property; electrical wiring; plumbing; insulation; alterations which have been made to the original floor plan and if the same have been approved and assessed by the local development authority. It is also advisable to consider what the immediate and future maintenance requirements of a house might be,” says Sandhir.

The ‘urgency’ factor of moving into one’s home will largely depend on one’s disposable income and the decision to invest either in an under construction or resale property. However, prior to making any such decision, it is always wise for the buyer to consider the associated risks that are involved in buying property and evaluate the same, before making a financial commitment.

Today, when the inventory level is high in Mumbai market, it is advisable to go for a ready to move property than book an under-construction or new launch project in exchange of discount. In the final cost & benefit such discounts & freebies are often more costly.

Growth slow but steady revival of Mumbai realty in 2016

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Track2Realty Exclusive

Brotin Banerjee, MD & CEO at Tata Housing, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyBrotin Banerjee, MD & CEO of Tata Housing believes more optimistic environment for homebuyers is likely in Mumbai. According to him, there is inherent demand for housing in city and the market is also getting realistic. In an exclusive interview with Ravi Sinha he accepts that the growth may be slow but the mid segment and affordable housing in the fast developing locations will be the major demand drivers.    

RS: Do you think Mumbai real estate has become more realistic for homebuyers due to slow down? 

BB: Pricing of housing will continue to increase over a long period of time because there is an inherent scarcity of housing in the city coupled with high demand. The challenge over the longer term will continue to be creation of capacity. In spite of slow absorption rates in the market, new project launches across segments coupled with innovative marketing initiatives has helped spur demand in Mumbai.

This, along with focused efforts by both, the government and developers alike, for steady growth is likely to create a more optimistic environment for end users in Mumbai, especially first-time buyers. The proposed decongestion will also aid in better rearrangement helping Mumbaikars to meet their housing needs.

RS: How would you define affordability in context to Mumbai housing market?

BB: With rapid urbanization and rising incomes, Mumbai has witnessed a thrust in the demand for middle income housing over the last few years. While affordability is categorized by income groups and ticket prices, livability in terms of amenities, comfort and functionality is also a crucial parameter while defining affordability in the Mumbai housing market.

I believe that suburban Mumbai like Thane, Kalyan, etc. and its regions supported by rapidly developing civil and social infrastructure will emerge as the new hubs for affordable housing.

RS: To what extent less launches and focus on inventory sale has brought fence-sitting buyers into the market?

BB: With the Indian economy getting back on track, real estate sector is expected to stabilize in the next two to three quarters. We would anticipate this sector to grow, albeit at a slightly lower pace, as the demand for housing still appears to exceed supply, and the weakening rupee makes India an attractive real estate investment destination for non-resident Indians.

Today, the emerging affluent classes are aware of the different cultures and lifestyles being adopted abroad and are ready to spend on homes that reflect their lifestyle and status.

RS: When do you see the revival of city real estate market?

BB: The real estate market is headed for a steady revival in 2016. Stability in property prices across major locations including Mumbai, along with reduced interest rates has led to an increase in consumer confidence and I strongly believe markets will only improve henceforth. 

RS: Historically Mumbai property market has been known to recover ahead of other cities. Do you see this trend to continue? 

BB: The city of Mumbai is growing at an exponential pace due to the constant influx of working population. Currently, major developing suburbs in Mumbai are witnessing projects that not only fit the budget of end consumers but are well connect in terms of both social and physical infrastructure. These locations basically offer better infrastructure, good connectivity, and accessibility to healthcare facilities, educational institutes and entertainment facilities which makes these locations apt for residential housing.

As these locations are developing at a rapid pace owning to which there is a possibility of higher return on investment. Simply put, the outskirt you choose to invest today is likely to become a prime location within a few years. In addition to this, the price range of properties in the outskirts of Mumbai would be lesser as compared to the main city and the consumer also gets ample green spaces. 

RS: Which are the pockets of growth for Mumbai in the year 2016?

BB: Thane has emerged as an attractive location for residential purchase/investment owing to rapid infrastructural and residential development on par with global standards. The region shows potential for tremendous growth, with several projects in the pipeline like the metro, monorail project and underpass that connects Thane to Borivali. Thane enjoys a central location along good railway connectivity and is steadily moving towards a self-sufficiency model which makes it a place of choice for all buyer segments. Moreover, the region offers quality housing options across the spectrum for an increasing urban population.

Similarly, Kalyan-Dombivli’s has recently witnessed growth, primarily due to increasing connectivity to Mumbai and also the growing demand for affordable housing in Mumbai. A proposal for extending the Navi Mumbai metro rail to Kalyan too has fueled growth for housing in Kalyan-Dombivli. The improving road connectivity and upcoming infrastructure in and around Kalyan, is making the region a preferred location for people looking at affordable housing options. As the region grows and commercial activity increases owing to the nearby Badlapur industrial region, property prices are sure to appreciate. 

RS: Do you expect Mumbai real estate to attract more investment this year? 

BB: Mumbai has seen immense growth in the real estate segment in the past few decades. However, in recent years the island city is witnessing land crunch, which has caused the city to grow far into the mainland in the north and east.

Besides inward migration there is a refurbishment of old housing and infrastructure which is resulting in huge demand for residential properties, which has given birth to areas like Thane, Kalyan-Dombivali belt making them the new real estate destinations of the city.  Additionally, with rapid urbanization, a large section of population being in the working age group, high savings rate and increasing purchasing power at the hands of the consumer, this segment is bound to get a major fillip and see strong growth in the coming years.

With improving connectivity, expanding cities and rising property prices, more and more homebuyers are looking at places close to metro cities, but Mumbai will always remain to be the most favorable real estate destinations. In fact, the outskirts of the city are the best locales with abundance of open and green spaces. The area boasts of good connectivity and transportation facilities as well as amenities like malls, schools, hospitals, and residential houses.

RS: How do you see the future of Mumbai once the other Smart Cities surface and economic activity shifting to many of these places?  

BB: Mumbai is the largest metropolis as well as the financial hub of the country. Currently, the city has reached its expansion limit and hence, it is important that new areas are developed that can act as satellite to the financial hub. The upcoming Smart Cities will help take off the load from Mumbai bringing in better infrastructure and facilities. However, Mumbai is expected to continue to rule as the major financial hub.

Supertech to invest Rs. 5,706 crore in Haryana

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Signed a MOU with Government of Haryana at ‘Happening Haryana Global Summit 2016.

Supertech-Disney, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtySupertech signed a Memorandum of Understanding (MoU) with Government of Haryana that promises to generate 5,000 employment opportunities in the state. Under the Government’s initiative of Housing For All by 2022’, Supertech is developing affordable housing and township projects in Gurgaon and will be investing Rs. 5706 crores in the State.

Under the terms of the agreement, Supertech will develop affordable housing and township projects, encouraged by the Government of India’s objective of ‘Housing for All by 2022’ which will further help improving the infrastructure of the State.

The Scheme while ensuring fast development will benefit land owners, developers and buyers as well and would provide over 5000 employment opportunities in addition to huge revenue generation to the Government to execute welfare programmes in the State.

R.K. Arora, Chairman of Supertech Limited said, “We are extremely happy to be a part of this development programme of the state of Haryana. The state has a lot of potential in terms of infrastructure and industrial development and has become a hub for affordable housing and infrastructural facility after the launch of Affordable Housing Scheme by the Govt. of Haryana. Following the vision of Government Of India of Housing For All by 2022, we are developing projects worth Rs. 5706 crores which will further boost the economy of the state resulting in overall development.”

Budget impact on real estate sector

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The Union Budget for 2016-17 has overall been a good one for the real estate and construction sector.

Anshuman magazine, CB Richard Ellis, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Track2Media, Track2RealtyThe Union Budget has attempted to encourage private sector investments into the Indian realty sector, while aiming to introduce banking reforms. The most encouraging announcement, however, has been the exemption of Real Estate Investment Trusts (REITs) from Direct Distribution Tax (DDT).

It is hoped that having cleared this hurdle, companies will now come forward to set up REITs, which is expected to be a game changer for the industry in India.

The corporate real estate space will also benefit from the announcement made by the Finance Minister on the sunset clause for Special Economic Zones (SEZs). According to the Budget 2016-17, the sunset date for exemption of fiscal incentives to SEZs has now been pushed forward to March 2020.

Although more could have been done to revive housing demand in the country, the Government has extended incentives on various fronts, especially for the Affordable Housing segment.

It has announced 100% tax exemptions for private players constructing affordable housing of 30 sq.m in the four metros and 60 sq.m in other cities, approved during the June 2016 to March 2019 period, and completed within three years of construction approval.

The Finance Minister has also announced 100% excise duty exemption for Ready Mix Concrete, which is expected to bring down environmental pollution at construction sites.

An additional rebate of INR 50,000 per annum on housing loan interest for first time home buyers in the affordable segment for loans not exceeding INR 35 lakh, and for properties not exceeding INR 50 lakh, was also announced. This move is likely to fuel affordable housing demand, especially in the tier II and III cities of the country.

The Finance Minister also provided a boost to the rental housing market with an increase in House Rent Allowance (HRA) deductions. Those not owning a house and not receiving any HRA from their employers can now avail a standard deduction of INR 24,000; while for those availing HRA, the limit has been raised to INR 60,000 per annum towards rent paid for their accommodation.

The infrastructure sector was particularly in focus in the recent Budget announcements, with a record allocation of
Rs. 2,21,246 crore for overall infrastructure development, including railways. There was also increased focus on Greenfield ports as well as on the upgradation of underutilized / unused airports and airstrips.

In addition, various schemes were announced by the Finance Minister to rejuvenate private sector interest in infrastructure investments, through Public–Private Partnership (PPP) models.

The ease of doing business was in focus too. Changes in the Companies Act, and early registration of new companies and start-ups are expected to facilitate the business environment in the country.

By: Anshuman Magazine, CMD, CBRE South Asia

Realty budget wish list cuts no ice with homebuyers

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Homebuyers are not impressed with developers’ budget wish list that ignores the buyers’ concerns.

Union Budget, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2Realty“I am reading these newspaper reports about the real estate sector demanding so many things with the Union Budget. Most of these demands are for their financial health than understanding the market from common homebuyers’ perspective like us. Do we matter at all in this eco system where neither the government nor the developers understand what keeps us away from the property market,” says Shweta Sanyal, an advertising professional in Mumbai.

It seems most of the demands of the Indian real estate on the eve of Union Budget every year are so self-centered that it fails to impress either the Finance Minister or the homebuyers. Even though there are customary voices to cut down the interest rates and increase the income tax rebate slab, yet the major focus has always been on the financial package for the sector, infrastructure status and industry status for them.

Rikki Sahni, a tax consultant points out, “There is no denying that the infrastructure status and priority lending for housing projects will do a world of good for the financial health of the sector. Similarly, the industry status might prove to be handy as far as ease of doing business is concerned. But will these benefits pass on to the end users? I have my doubts.”

In the absence of earning the trust of the end users as far as the demands are concerned, the sector has failed to get the homebuyers on board. The focus is so much on demanding the financial package for the sector that even if there are a few rational suggestions, it is seen as another means to extract for the sector.

For example, the industry body NAREDCO has suggested that the government land, wherever available, should be used as equity and government agencies encouraged to assemble additional land as much as possible.

India is short of 18.78 million housing units and 96 per cent of it is in EWS and LIG categories. Government is targeting to build 2 crore housing units by 2022. All this will be possible if land and bank financing is made easy.

However, along with this suggestion what is more important for the industry body is its demand for the industry status. Anuj Puri, Chairman & Country Head of JLL India seems to understand this when he says the Union Budget should pay specific heed to this pressing need to offer financial protection from project delays to home buyers. According to him, on purchase into an under-construction property, buyers can only claim tax benefits of Rs. 2 lakh after possession if construction is completed within three years. The benefits reduce to Rs. 30,000 if the builder delays construction beyond this – and they pay higher interest. First-time homebuyers purchasing properties for self-use additionally pay rent.

“Instead of allowing homebuyers tax benefits post-possession, the Union Budget should make a provision that allows these from the time they start paying interest on housing loans. This will ease their monetary burden considerably and make increase the velocity of home loan disbursements,” says Puri.

There are some other suggestions which could have gone down well in the collective consciousness of homebuyers. For example, if an under-construction property is purchased from capital gains, its construction must be completed within three years of its sale to avail exemption. There can be delays by developer in such cases too. These deductions should be brought at par and the construction timeline should be extended from the current three years to five years. 

Pro-consumer suggestions that could have helped to revive the sector would have also found a chord with the homebuyers. More importantly, when the builder and buyer is on the same page with the budget wish list then it could not have ben be ignored by the Finance Minister as well. However, there has been so much focus on the repeated demands for the sector that the larger picture was missed in the process.

By: Ravi Sinha

Track2Realty Exclusive

Expectations on way forward for GST Bill from Budget Session

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Passage of Bill likely to fuel consumption in economy and facilitate growth of industrial/warehousing space.

Anshuman magazine, CB Richard Ellis, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Track2Media, Track2RealtyFor achieving 10% growth, India’s domestic economy needs to attract added investor interest, including that of overseas funds. Increased levels of foreign investments would be welcome for the Government’s recently launched “Make in India” initiative as well.

To this end, the passage of the pending Goods and Service Tax (GST) Bill is of critical importance. More direction is sought from the Government on the GST Bill in the upcoming Budget session. In this connection, the Hon’ble Finance Minister has been optimistic of the Bill being passed in the next session of Parliament.

The Bill aims to create a single tax regime by doing away with multiple central and state level taxes such as the Central Excise Duty, Value Added Tax (VAT), Octroi, luxury tax, etc. Once implemented with a single taxation structure, GST will have positive effects on individual as well as industry taxation levels.

On the individual front, it will make products and services cheaper, because the cascading effect of multiple taxes from the levels of manufacturers and wholesalers that is ultimately borne by end-consumers will be avoided. This move may incentivize more consumption in the market from consumers, injecting overall economic growth including in the retail and logistics sectors.

From the point of view of the industrial and logistics real estate segment, a unified GST would allow industry players to surmount regulatory restrictions and focus on consolidation of industrial/warehousing space for maximum operational efficiencies.

Under the current regime wherein indirect taxes are levied by the Central as well as State Governments for the storage and transportation of goods, logistics and warehousing firms are forced to locate their facilities in regions to best accommodate multiple tax structures.

Players often end up paying higher rentals because industrial/warehousing locations with lower rental rates also pose various regulatory hindrances.

Once the Bill is implemented on ground, such industry players are likely to move towards consolidating their facilities according to their specific business needs, instead of being driven by regulatory concerns.

Along with the recently relaxed guidelines on Foreign Direct Investments (FDI), the likely passage of the GST Bill may prompt large scale foreign investments and sustainable growth of the country’s built environment, including warehousing and industrial space. The Government’s “Make in India” initiative also would receive a significant boost from this move.

By: Anshuman Magazine, CMD, CBRE South Asia

Despite slowdown, Mumbai remains the most lucrative investment destination in India: Knight Frank Report

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Trans Harbour Link Mumbai, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyDespite slowdown, Mumbai remains the most lucrative investment destination in India, says the second edition of Knight Frank India Residential Investment Advisory Report 2016.

In the report the top residential destinations across five major cities are evaluated and a comprehensive recommendation addressed towards the needs of the discerning homebuyer from an investment point of view over the next five years (2015–2020). The report also reviews the previously recommended destinations three years ago (in 2012).

Key takeaways:

  • In Mumbai, Madh–Marve is identified as the top destination, with an expected price appreciation of 94 per cent, thereby emerging as a promising asset class for the next five years.
  • Ulwe, the top destination of the MMR in the first edition of the report in 2012, scores second this time, with a 70 per cent price appreciation by 2020, while Majiwada–Kasarvadavali will experience a price appreciation of 59 per cent by then.
  • New Airport Road, in Viman Nagar, is identified as a potential location, with an expected price appreciation of 63 per cent, thus moving Pune’s ranking up by securing third place, while Vishrantwadi is to witness a 55 per cent growth appreciation.
  • Thanisandra and Panathur–Varthur emerge as potential residential investment destinations in Bengaluru, with estimated price growths of 61 per cent and 55 per cent, respectively, thereby securing positions in the top five ranking.
  • Golf Course Extension Road and New Gurgaon emerge as potential destinations for residential investment in NCR, although NCR’s ranking has come down drastically compared to 2012 due to the overall real estate scenario bottoming out.
  • Hyderabad makes its entry in the second edition of the report, with the Puppalaguda– Narsingi cluster emerging as one of the potential destinations for residential investment.

 Mumbai (MMR):

  • Madh–Marve emerges as the most lucrative potential destination, with an estimated price appreciation of 94 per cent in the next five years.
  • Ulwe, still in the list of potential destinations as featured in the first edition of the report, continues to be the other top destination, with a 70 per cent price appreciation in 2020.
  • Majiwada–Kasarvadavali, the next investment destination, is expected to see an appreciation of 59 per cent by 2020.
  • The key drivers for the MMR will be employment; physical and social infrastructure; an arterial road network and the proposed suburban railway networks (metro and monorail), the Costal Freeway and the trans-harbour link.

Delhi (NCR):

  • New Gurgaon has emerged as another potential destination, with the expectation of a price appreciation of 47 per cent.
  • Golf Course Extension Road is expected to witness a price appreciation of 42 per cent by 2020.
  • Delhi will continue to be a favourite among office occupiers; however, with limited scope for new supply, prices in the area will remain unaffordable.
  • Gurgaon, which accounts for 53 per cent of the total office stock in NCR, will witness approximately 13 million sq ft of incremental office space by 2018, which will translate into more than 100,000 jobs, giving it an edge over Noida.

Pune:

  • New Airport Road, in Viman Nagar, is to witness a price appreciation of 63 per cent by 2020.
  • Visharantwadi, in the east, is expected to see a price appreciation of 56 per cent by 2020.
  • Locations such as Hinjewadi, Wakad, Tathawade and Ravet failed to perform as per the estimated price appreciation three years ago, mainly due to the ample availability of vacant land in the vicinity. Nevertheless, it has performed better than the other established locations of Pune.

Bengaluru:

  • East Bengaluru emerges as the top residential market, with Panathur–Varthur expecting a price appreciation of 61 per cent by 2020.
  • Thanisandra, in the north, emerges as the top destination, with an expected price appreciation of 55 per cent in the next five years.
  • Despite the presence of IT/ITeS companies, South Bengaluru witnessed a slackened price growth due to severe traffic congestion, a lack of substantial incremental employment opportunities and lack of infrastructure development.
  • The industrial tag in the past and the launch of relatively higher-priced residential projects in select micro-markets presently are impacting the price momentum in West Bengaluru.
  • The previously recommended locations of Hebbal and K.R. Puram witnessed mixed outcomes, with Hebbal showing a positive growth trajectory and K.R. Puram demonstrating slow growth.

Hyderabad:

  • The Puppalaguda–Narsingi cluster is to witness a 41 per cent growth appreciation by 2020 owing to strong demand and restricted supply. Besides the existing 50 million sq ft of commercial office space in the adjoining areas, the additional 10 million sq ft that is expected to be added in next five years would potentially add another 125,000 employees to the demand base, further supporting price growth in this location.
  • Uppal and L.B. Nagar in the east and Falaknuma in the south are also expected to see significant improvements in terms of connectivity through the metro; however, locations with comparable prices in the west will prove to be strong competition, as they are in closer proximity to the western employment hubs.
  • The premium Banjara Hills and Jubilee Hills markets will see price appreciation as well; however, investment returns will lag as compared to their more affordable counterparts.

Dr Samantak Das, Chief Economist & National Director, Research says,  “The residential sector in India is reeling under tremendous pressure since the last couple of years, with price appreciation in most cities not even able to exceed the inflation rate in the economy. In the next five years, we anticipate the residential price growth to remain muted on the back of delayed economic reforms, subdued demand and a lack of consumer confidence in the completion and delivery of projects. However, at Knight Frank, we strongly believe that any investment in real estate based on sound research can seldom go wrong, and there are ample opportunities to earn healthy returns even today.”

“We have identified 11 locations spread across Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad that will provide the maximum price appreciation in the range of 41% to 94% in the coming five years. While Madh–Marve in Mumbai has been identified as the top investment destination, Ulwe in Mumbai and New A’irport Road in Pune have emerged as the second and third potential destinations respectively,” adds Das.

Mudassir Zaidi, National Director, Residential Agency says, “Real estate industry is cyclical in nature and we anticipate that we are at the end of the cycle of slow down. The wave of positive sentiments is quite evident and the recovery is getting stronger. With the real estate regulatory amendments, credibility and positivity is building up confidence in the minds of the investors who will sooner or later get drawn back into the market. The locations we have identified will benefit from the overall positive sentiments provided the recovery sustains and gets stronger in the near term.”

“The residential market demand in each of the selected destinations will be driven primarily by two factors – employment generation and infrastructure development. Madh-Marve (Mumbai), Ulwe (Mumbai) and New Airport Road in Viman Nagar (Pune) have emerged as the top, second and third amongst the 11 destinations identified, due to the factors cited above,” adds Zaidi.

Brand realty takes a beating in slowdown

Posted on by Track2Realty

Realty Branding, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyA few may have succeeded but most of the developers have failed to position themselves right during the slowdown. In the process Track2Realty finds that the brand realty has taken a severe beating, losing the trust of both the end-users and the investors. The brand positioning that differentiates between the two different realty companies is today negligible with developers’ focus to sell. That, unfortunately, is not working for them and commanding premium over the brand reputation today is a far cry. Our team speaks to a cross section of developers, analysts and brand experts who may differ with each other but nearly all agree that sector has to come out of the Catch 22 situation. 

A Mumbai-based developer launches a skyscraper super luxury apartment with obvious sky high ambitions. After much fanfare and bombardment of advertising campaign followed by road shows in foreign countries and inviting the NRIs, HNIs and other big ticket investors suddenly the company goes into a silent mode. Repetitive attempt by the media to reach to the developer does not meet with any success, thus lending credence to the speculation and conspiracy theory of project not taking off as expected.

Some critics even call it the company’s ploy to raise capital through high pitch campaign and then go silent once the objective of generating the interest level of investors is achieved.

However, this is not the only case study that is symptomatic of the emerging market reality of the Indian real estate during the slowdown. Another developer in the Delhi-NCR launches a number of sky high super luxury apartment one after the other, making too much media noise with big ticket ad spend. On ground none of the projects promises to take off the way it is being projected in the media space. Critics even question the rationale behind creating destination address with luxury apartments with more than one offering in the same micro market.

It seems the desperation level of the developers in the Indian property market is an all time high. Since some of the leading companies have weathered the slowdown challenges with shift of focus on the recession proof buyers in the luxury segment, the rest of the lot with no experience and expertise are also trying to replicate the same format. However, most of these companies fail to differentiate between successful companies in the luxury segment and their novice attempts to emerge one-the brand value that the large players with a proven track record of delivering on the luxury front.

Facts speak for themselves. What is selling more in the slowdown, luxury, is also over-supplied, over-used and abused segment with an inventory that is way beyond their capacity to hold when exposed to slow moving market. In this process of trial and error, the brand real estate has taken a severe beating in the last over a year’s time. A sector with a baggage of perception issues has of late invite poor projection as well, thanks to the collective failure within the built environment in terms of its strategic shift.

The larger players in the sector may not have been dented the way the mid size players with less brand recall value have suffered, but the sector in the collective consciousness has definitely taken a severe beating. Though the sector seems to be unanimous in dismissing any such setback, the denial mode of the developers have not helped in changing the crisis of confidence towards the business of real estate in this part of the world. Not only the investors are apprehensive towards the Indian market, even the buyers are not impressed. And hence, this confusion is rather eroding the brand competitiveness of the sector and to make the matters even worse the developers are too focussed in positioning their advertising campaign to sell the inventory than improve the brand quotient.

Requesting anonymity a Mumbai-based developer agrees that the strategic mistake and the wrong brand positioning have brought the sector to a level where the developers are being forced to repeat their past mistakes. According to him, with inventory rising and liquidity squeezing in the sector there is hardly any room for experiment and innovation but to focus on the sells figure. And when all efforts to dispose off the inventory fails, the developer gets confused whether to rebrand/reposition the project or simply wait for the tide to be over.

“This fiscal has been really challenging but the focus of the developers is still not in the right direction. I do understand that in such a slow moving market there is hardly any room for spending on the brand, nor do all the developers carry a legacy, but what I find objectionable within our community is the desperation of the developers to be seen different through fluff and not substance. If the companies who enjoy a legacy of successful delivery are still having a decent business, so can new comers if the developers focus on delivery and meeting commitment to the buyers than spending on new innovations to get noticed,” says this developer.

There is a school of analysts who believe the developers’ rigidity to hold on the prices is doing them no favour and actually eroding the brand competitiveness as well as the future projects. However, most of the developers disagree with this. Though on the face value they maintain that the prices have bottomed out and there is hardly any scope to cut the price, fact of the matter is that many of these developers have been discounting heavily through the sells channel.

Some of them have increased the brokerage up to 6-15 per cent, depending on the market and the project, there are others who are giving a free run to the under writers, often the full page advertisement being shared equally with the marketing agency, and in some cases even restructuring the market offer as per the directions of the under writer. This is a suicidal trend for the brand value of the developer as it often is translated as developer hiking the price for no rhyme or reason while the under writer sells it on the lesser price that is on offer by the developer. An analyst keeping a track on the sells channel of projects maintain that while all the marketing tricks are being played to sell, the developer does not want to straightaway offer a price cut to the market as it would be seen as the distress sell affecting his future projects as well.

The realty major DLF does not agree with the premise that the brand realty has taken a beating in the slowdown. DLF spokesperson maintains that like any other business weathering a market slowdown the real estate too is showing the similar pattern of negative growth for some while others are having a better sales figure. According to him, replicating the successful model of leading companies with years of proven trust, credibility and reputation can not be the way forward for new comers who have to build the brand in challenging times.

“Real estate is a micro market business with each market having its own pockets of influential players. Many of them a doing a decent business even during the slowdown as they have created a niche in their own pockets of influence. Then there are national players who have years of successful, timely and quality delivery in multiple cities who command a broader trust and goodwill of their brand. The slow moving market may affect their bottom lines a bit due to buyers’ negative sentiments but it definitely does not affect their brand competitiveness,” says the spokesperson.

Does it mean the new comers in the ring have to wait and watch for the market conditions to improve? More importantly, have they weathered a setback beyond repairable hurt? The analysts maintain that some of the companies with better finance, cash management, delivery and years of brand legacy may not have been hurt like the rest of the developers, but by and large there is a serious crisis of credibility as far as brand realty is concerned.

With economy not picking up, investors losing confidence & patience, policy makers suspecting the sector, financial institutions having burnt the fingers and buyers expecting a crash, things can not go even worse for the brand real estate in India.

It is not that the brand realty going for a toss necessarily means the developers with less brand recall value resigning to their fate. As a matter of fact, and many analysts tracking the sector agree to it, slowdown has also given an opportunity for some of the late movers in the business to learn from the mistake of others and do something differently to lay the foundation as a developer with a different mindset and approach to the business of real estate.

Brys Group has launched a super luxury project Brys Buzz in the Noida market, know more for affordable segment of housing vis-à-vis its rich peer in Gurgaon which has been the land of luxury and ultra luxury projects. The company believes in the philosophy of creating a destination address is possible only when the developer has the extra courage and thorough research in hand to develop a destination than merely replication same kind of luxury projects in the same market.

Navneet Gaur, Director of Brys Group says the perception of the real estate sector losing its competitive edge and brand realty taking a beating has its genesis in the way the projects are being conceptualised. According to her, in a bullish market projects sell on its own as housing is a demand driven asset class but in slowdown the developer must do his due diligence in terms of thorough research on the market, the product and the buyer if one does not want to damage his project’s prospect and brand reputation.

“Slowdown is also the time when the right buyers are looking for right projects in the right market where appreciation is on the cards ahead, instead of getting into the saturated markets. For us slowdown proved to be a good launching pad since we customised a unique loyalty programme for the buyers. We are also conscious of the fact that advertising alone does not work in a market where deals are few and far between, and it has to be supplemented with PR, word-of-mouth publicity and overall creating an experience centre than pushing for the sells. More importantly, good brand management is not possible without good project and equally good financial management of the company,” says Gaur.

There are other developers who assert that slowdown affects the economy in general and all the industries feel the pinch, and hence the real estate alone should not be blamed for not weathering the slowdown blues successfully. Rohit Gera, MD, Gera Developments asserts that during times when sales are slow, it is essential to deliver projects even more aggressively with adequate cash flows in place to ensure that construction speed is maintained so that customers confidence is built and maintained. Also, faster construction with adequate funds being available leads to better purchasing power and better deals for the developers. Ultimately, it is the product that builds the brand.  During the difficult times, customers look more closely at the product.

“Strong financials are essential to a company’s brand equity.  Having funds to tide over periods of slow sales, to ensure that one does not have to resort to cutting corners to complete the projects, to deliver the project as promised to the customer are key to brand reputation. Ultimately, the customer is the strongest source of building a brand.  Ensuring that funds are available for the developer to complete the project as promised is always critical.  In fact this is the best way for customers today to assess the capability of a developer–check the progress on the site, progressing of the work each month, checking project’s timelines whether ahead of schedule or behind,” says Gera.

There are others who convince that there are already a number of very well established brands in the real estate space.  One of the big challenges in creating a super brand is the nature of the product.  Real estate is not in the consumer goods space.  Repeat purchases are very low amongst our customer and even if they do happen, the gap between the purchases is very large. Real estate is also a more localized business and as such, synergies of advertising on national television etc are not available.  All these things make it difficult for real estate to produce super brands.

However, this school of developers who vehemently defend the sector with the nature of localised business often fail to convince when reminded of the global brands in the real estate spaces. What is even more important is that many of them are looking forward to have a global partner like say Donald Trump to tie-up. The question is whether there is any learning for better brand positioning in times of crisis.

Arvind Jain, Managing Director, Pride Group says in most Indian cities, reputed developers have maintained consistency in these aspects and are even raising the bar on best practices in construction design, quality and business transparency. According to him, it is often assumed that Indian property buyers are more focused on budget than brand value. This is a glaring miscomprehension of the ground realities.  In fact, few consumer classes are as attuned to the value of a brand than Indian homebuyers. Moreover, developers have been responding to this trend by making best practices in their offerings as well as business operations as an integral part of their manifesto.

“This focus is a natural consequence of the need to remain relevant in a highly competitive market. This explains why certain brands command a greater degree of trust among consumers than others. The fact is that real estate as a business, from construction to marketing of the end product, is one of the strongest contributors to the country’s GDP. Brand loyalty is certainly not missing in Indian realty. This is amply evidenced by the fact that certain brands command instant attention while others do not even register on buyers’ radars unless questionable marketing ploys such as marked-down rates in exchange for inferior quality and location come into play. In India, home buyers are very aware of the fact that some developers can be expected to deliver on their promises, while others represent a potentially costly gamble,” says Jain. 

Many within the built environment maintain that it is all due to the image makeover of the sector why the more reputed developers have no problems with obtaining domestic as well as international institutional financing for their projects. They crib that the image that has been created about the real estate sector in general is a media business to portray the entire real estate domain in a negative and mercenary light. This is at a time when the Indian real estate is becoming a force that even global players are beginning to take very seriously.

A section of the analysts maintain that the sector is already witness to a process of consolidation wherein smaller players are merging with or selling their stakes to bigger brands, since these banners of repute are able to sustain their businesses as a result of their larger market share, higher credibility quotients and their superior funding options.

However, not many would agree with this at a time when despite of being a better pay master the Indian real estate fails to attract the best of talent and the sector suffers from a perception issue when it comes to the youngsters making a career choice out of it. Moreover, realty market continues to get worse in the slowdown not just in terms of pessimistic mood but generally in terms of overall realty sentiment index. All parameters including economy, residential launches, sales, price appreciation, new office supply, leasing volume, office rental appreciation and funding indicate pessimism for the brand realty.

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