www.arundevelopers.com

2017/03/07

affordable housing: Stamp duty on affordable homes may be abolished - The Times of India on Mobile

affordable housing: Stamp duty on affordable homes may be abolished - The Times of India on Mobile

Stamp duty on affordable homes may be abolished

Affordable houses may soon be exempt from stamp duty, which varies between 4% and 8% of the transaction value.

Union minister for urban development and housing M Venkaiah Naidu said that his ministry has written to state governments to exempt affordable houses from stamp duty. Stamp duty is a state subject, with the state government fixing the rate and collecting the duty.

Addressing Credai, the Confederation of Real Estate Developers' Associations of India, the minister said that the Centre would ensure that there was no net tax escalation in the housing sector, particularly the affordable housing segment, following the implementation of the goods and services tax (GST).

He said that the inclusion of the real estate sector in the GST framework would help the industry.

Affordable housing is exempt from service tax, which is around 5.35% of a property's selling price. He said his ministry had already taken up with the finance ministry the need to continue the exemption under GST. He added that his ministry had also recommended to the finance ministry that the sector be taxed at a rate which is revenue neutral, and not a higher one.

The minister expressed his helplessness vis-a-vis the exclusion of stamp duty from GST, saying, "States have, in their wisdom, not adhered to the inclusion of stamp duty under GST." "Thus, we need to move forward from this debate," he said.


Arun Gupta

2017/03/06

Central scheme to help govt boost affordable housing - The Times of India on Mobile

Central scheme to help govt boost affordable housing - The Times of India on Mobile

Central scheme to help govt boost affordable housing

PUNE: Maharashtra may soon join the list of states that have been promoting the Public Private Partnership (PPP) model to boost affordable housing under the Pradhan Mantri Awas Yojana (PMAY). This model will involve private builders entering into a partnership with the government to construct affordable housing.

With guidelines expected from the Union government next week, the state may be set to boost the affordable housing segment through the model.

States such as Rajasthan, Madhya Pradesh, Gujarat, Orissa and others already have the model in place. Senior officials from the housing department told TOI that this will definitely give the necessary impetus to the sector which will see many private players making their entry into this segment.

Officials from the housing department said that the guidelines were to establish clarity of roles of the government and private players. "If it is a PPP model, there should be specific guidelines under the PMAY project. If it is spelt out clearly then private builders will come forward to participate in the projects. They would be clear on the benefits and the government would be clear about the title post completion of the project,'' said a senior official from the state housing department.

The 'housing for all' initiative, formulated under the PMAY is to be implemented in 51 cities in the state. As part of the initiative, the government has charted out four approaches to provide low-cost housing - slum redevelopment on the existing plot, an interest subsidy scheme, creation of housing stock on a public-private participation model and beneficiary-led individual houses.

Recently, minister for housing and urban poverty alleviation Venkaiah Naidu had stated that there was poor response from private builders for the affordable housing schemes in almost all states. The government had granted infrastructure status to the segment in the Union budget 2017.

Builder Sachin Kulkarni, who is into affordable housing, said that the model is not yet applicable in the state. "Since the state is yet to declare a dedicated affordable housing policy, the statement does not hold in the state. On the other hand the state has now started allocating land and funds for affordable housing in cities. These projects will be executed through MHADA or local governing bodies,'' he said.

He said that they have been observing the PPP models of other states and as members of CREDAI they have been participating in some projects and have made presentations. "I have also been a part of the drafting of the state policy for affordable housing where we stressed on the PPP model. It's in the ambit of the state and local government to implement the policy as well as the PPP model,'' shared Kulkarni.

Officials from the housing department said that the project was delayed due to the election code of conduct. "The rules should come through next week and it would spell out the guidelines,'' stated the official.

Another industry expert said that the market is down and if some announcements are made it can help the consumer as well as the developer. "Private builders will get into such projects if they are suitably compensated. In cases were the land is provided by the government, the model will be more successful,'' said the expert.


Arun Gupta

2017/02/27

Should you reverse mortgage your home in wake of fall in interest rates? Find out, Real Estate News, ET RealEstate

Should you reverse mortgage your home in wake of fall in interest rates? Find out, Real Estate News, ET RealEstate

Should you reverse mortgage your home in wake of fall in interest rates? Find out

Reverse mortgage is in a way a mirror image of home loans, where you take a lump sum loan and repay it through instalments.

Should you reverse mortgage your home in wake of fall in interest rates? Find outThere was a lot of expectation when reverse mortgage, a scheme that allows people aged 60 and above to mortgage their self-occupied home in return for a loan—paid in instalments or lump sum— was introduced in 2007.

But user interest in this product has remained low, primarily because of the high interest rates on reverse mortgage products. "Reverse mortgage makes more sense in economies with low interest rates," says Sriram Kalyanaraman, MD and CEO, National Housing Bank (NHB).

Reverse mortgage is in a way a mirror image of home loans, where you take a lump sum loan and repay it through instalments.

The 'cheapest' plans
The interest rates on reverse mortgage plans are still higher than home loan rates.

IOB : 9.40%
United Bank : 10.70%
IDBI Bank : 10.85%
PNB : 11.05%
SBI : 11.90%
Source: BankBazaar

In reverse mortgage, you take loans in instalments and repay the lump sum later. But interest rates for reverse mortgage are much higher than those for home loans, though not without reason. For instance, banks have to pay tax on the accrued interest, even though they receive the payments from the borrowers much later, which increases their costs. "In reverse mortgage, banks have to take over the house and sell it, which is a costly and time-consuming process," says Adhil Shetty, CEO, BankBazaar.

The bank can recover the loan only upon the death of the borrower, and there is always the possibility of the borrower outliving the loan tenure, which can postpone the bank's recovery of the loan. Because of this added risk, banks also offer a lesser loan to value (LTV) in the case of reverse mortgages. "For reverse mortgage, banks usually cap the LTV value at 40% of the value of the house," says Dipak Samanta, Founder and CEO, iServeFinancial.

Despite these drawbacks, the fall in interest rates, has made the product more appealing. "At current rates, it is a viable option for retired persons to go for reverse mortgage products," says Samanta. The fall in interest rates, especially bank fixed deposit (FD) rates, has brought the annual income of several senior citizens under stress. If one had invested Rs 50 lakh in bank FDs and was getting Rs 4.5 lakh annually (9% interest), it is likely to be down to around Rs 3.5 lakh now (at 7%). Reverse mortgage can help manage this income shortfall. Also, the NHB in the process of making the product more user-friendly, says Kalyanaraman.

Who should go for it?
"Reverse mortgage works well for families where kids are well settled and don't need the parents' house," says Brijesh Parnami, ED and CEO, Essel Finance Wealth Zone. Similarly, it is also a good option for retirees facing regular shortfall in their annual income and expenditures.

However, experts say that if the short fall is small, it is better to manage it using alternative routes than opting for reverse mortgage. "If the short fall is small, increased tax efficiency—for instance, moving from bank FDs to short-term debt funds—may serve the purpose," says Shetty. "Small shortfalls can be mitigated by increasing the portfolio risk a bit and going for balanced funds. Anyway, you are putting the house on risk with reverse mortgage," says Parnami.

The suitable plan
Reverse mortgage can be of two types: Either the bank can pay you money at regular intervals— monthly, quarterly or annually—or, it can pay you a lump sum, which you can use to buy a pension plan from life insurance companies. It is better to avoid the second option, say experts.

Pension from insurance companies is fixed forever, while banks usually review the annuity amount every five years and there is a probability of the annuity going up after five years. Also, regular payouts received from banks are treated as loans and, therefore, will be tax-free in your hands. Pension from life insurance companies, however, is treated as income and you will have to pay tax at marginal rates.

Things to know about reverse mortgage
* Only citizens aged 60 or more are eligible. For married couples, jointly taking the loan, one of them should be above 60. Some banks may have additional conditions —joint applicant to be above 55, etc.

* Reverse mortgage is allowed only against self-occupied residential property. The title of the property should be clear—there should not be legal, ownership issues with the property.

* The tenure for which the loan is granted varies across banks, but the maximum period for which is its allowed is 20 years. The loan tenure usually is the same as the residual life of the property.

* Banks can recover the loan only on the death of both the borrowers. For example, the loan tenure is 20 years and the borrowers live for 25 years, the lender can only recover the loan after 25 years.

* The heirs have the right to settle the loan—principal and interest. If they decide not to settle it, the house is sold and any proceeds in excess of the sum due to the bank, is returned to the legal heirs.

* The documentation is similar to that of a housing loan. Just like other loans, the processing fee needs to be borne by the borrower. The borrower also has to cover all the home insurance premiums.


Arun Gupta

2017/02/22

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu, Real Estate News, ET RealEstate

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu, Real Estate News, ET RealEstate

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu

Private builders should take up affordable housing in a big way; no proposals under PMAY yet: Venkaiah Naidu NEW DELHI:Union minister for housing Venkaiah Naidu on Tuesday said not a single proposal has come from private builders under Pradhan Mantri Awas Yojana (Urban) and urged developers to rise to the occasion and take up affordable housing in a big way.

Expressing his disappointment, Naidu said, "Not a single proposal has come from private builders so far even though PMAY(Urban) has been designed envisaging a big role for private sector."

The minister of Housing and Urban Poverty Alleviation (HUPA) also directed the ministry to convene a round table with all the developers bodies, banks and housing finance companies and others concerned to deliberate in detail why there has been no private sector participation under PMAY(Urban) so far.

"I would expect this round table to come out with appropriate business models so that the goal of ensuing Housing for All by 2022 is met," Naidu said.

Private sector can participate in PMAY(Urban) mission under in-situ slum redevelopment (ISSR) and affordable housing in partnership (AHP) models.

ISSR, constituting a major portion of the housing mission in urban areas, is entirely to be taken up by the private sector, using land as a resource.

"For each slum unit to be rebuilt, central assistance of up to Rs 1 lakh has been committed by the government to make the projects viable. But you have not come forward so far," the minister said refering to private developers.

The government has announced a slew of supporting measures to revive real estate sector over the last two years, including announcing the long-awaited infrastructure status for affordable housing in the latest Union Budget.

To boost rural and urban housing post demonetisation, prime minister Narendra Modi on December 31, 2016 announced interest subsidy of up to 4% on loans taken in the new year under PMAY.

The government also created two additional categories under PMAY(Urban) for interest subvention. Under this, home loans up to Rs 9 lakh will receive interest subvention of 4% and home loans up to Rs 12 lakh will receive interest subvention of 3%.

It announced new scheme for people in rural areas which provides an interest subvention of 3% on loans up to Rs 2 lakh, for construction of new houses, or extension of old houses.

Over 15 million affordable houses need to be built for economically weaker sections and low income groups alone in urban areas, as per government estimate.

The government has so far approved construction of over 16 lakh affordable houses under PMAY(Urban), with an investment of about Rs 90,000 crore, with a central assistance of about Rs 25,000 crore.


Arun Gupta

2017/02/18

Office Space: Bengaluru sees highest office space absorption in 2016 after five years, Real Estate News, ET RealEstate

Office Space: Bengaluru sees highest office space absorption in 2016 after five years, Real Estate News, ET RealEstate

Bengaluru sees highest office space absorption in 2016 after five years

Large part of the activity stemmed from the last quarter of the year when projects spanning a whopping 7 msf came into supply

Bengaluru sees highest office space absorption in 2016 after five yearsBENGALURU: Bengaluru's net office space absorption rose 28% to 12.7 million square feet (msf) during 2016, cementing the city's numero uno position. The new high in 2016 is roughly 5% higher than the last net absorption peak that Bengaluru witnessed in 2011.

Large part of the activity stemmed from the last quarter of the year when projects spanning a whopping 7 msf came into supply, with majority of them previously pre-committed to by occupiers. The spurt in supply in the last quarter of the year was driven by a substantial number of projects receiving their occupancy certificates. The Outer Ring Road submarket accounted for 54% of the net absorption during the year, distantly followed by the Peripheral East submarket comprising of Whitefield.

"The demand for office space, though similar to that seen in 2015 was better than market expectations, especially in the second half of the year. Despite many changes globally, that could change the course of business, India remained one of the most optimistic markets in the recent times. We expect this positive outlook to continue into 2017," said Anshul Jain, Managing Director, India Cushman & Wakefield.

The total leasing activities that took place in 2016 across the top eight cities amounted to 42.3 msf which was lower by 22% over the previous year. The top sector leading the total leasing table were IT- BPM at 52% of total space uptake in 2016. Bengaluru remained the preferred IT-BPM destination constituting 37% of the total leasing activity followed by Hyderabad at 26%. These were followed by Chennai and Delhi at 11% and 10% share respectively. Consulting services took up approximately 6% of the total office space leased while BFSI amounted for abnout 4% of the total leasing in 2016.

Pharma & Healthcare constituted about 3.2% while E- commerce formed about 1.5% of the volume of office space leasing transactions in 2016. While all major sectors saw a slowdown in the total volume of transaction, Energy & Chemicals was one the only sector that recorded a rise in total leasing activities at approximately 53% growth y- o- y over the previous year.

Total supply of approximately 36.6 msf was infused during the year, with the last quarter accounting for 30% of the completions as developers, especially in Bengaluru received completion/occupancy certificates for their projects from local authorities. Developers scrambled to get their projects operational during the fourth quarter encouraged by the strong demand pipeline from occupiers.


Arun Gupta

2017/02/16

tax benefit to first-time home buyers to be a game changer: nandita chatterjee, Real Estate News, ET RealEstate

tax benefit to first-time home buyers to be a game changer: nandita chatterjee, Real Estate News, ET RealEstate

Tax benefit to first-time home buyers to be a game changer: Nandita Chatterjee

The secretary said the scheme is expected to be notified shortly and will be effective from January 1, 2017.

Tax benefit to first-time home buyers to be a game changer: Nandita ChatterjeeNEW DELHI: The government will give a benefit of `. 2.4 lakh to first-time home buyers with taxable income below Rs 18 lakh a year, which would be a game changer for the sector, Housing and Urban Poverty Alleviation Secretary Nandita Chatterjee said.

The amount is equivalent to the total interest subsidy over a 20-year loan and will be given upfront to the housing financing company, through nodal agencies such as National Housing Bank and Hudco to reduce the outstanding loan.For a 15-year loan, the value of the benefit would be Rs 2.2 lakh.

The secretary said the scheme is expected to be notified shortly and will be effective from January 1, 2017. "This is the first time we are talking about the middle-income group. We were hoping that this scheme would be a game changer," Chatterjee told a gathering of real estate developers and housing finance executives at the ET Roundtable on Housing for All.

Industry executives agreed. PNB Housing Managing Director Sanjaya Gupta said this would make projects affordable as EMI fall.Amit Bhagat, CEO of ASK Property Investment Advisors said: "The move will increase the affordability and eligibility of more than 90% home buyers as taxable income of . 18 lakh is significantly on the hig` her side."

The Pradhan Mantri Awas Yojana announced by Prime Minister Narendra Modi on December 31 gives homebuyers subsidy at different rates depending on their income.

For annual income below Rs 6 lakh, the subsidy is 6.5 percentage points on a principal component of Rs 6 lakh, regardless of their total loan. For income up to Rs 12 lakh, the subsidy is 4 percentage points on a principal component of Rs 9 lakh, and the highest income category, up to Rs 18 lakh, its 3 percentage points on a principal component of Rs 12 lakh. "For the last two years, the government has been trying to make an environment where affordable housing can be pushed ahead. Affordable housing has become an important sector," Chatterjee said.

Industry leaders said infrastructure status for affordable housing would ensure easy access to capital for such projects. "The infrastructure status makes life easier for us. The interest rate subvention will kickstart the demand," said Manoj Gaur, MD of Gaursons.

Getambar Anand, chairman, ATS Infrastructure, said there was a lot of ambiguity in defining affordable housing and said a uni form definition was needed.

HDFC's Sanjay Joshi said home loans should also cover stamp duties which are10% of the cost. "It will make it very easy for homebuyers to acquire property since there will have easy access to funds," he said.

SD Gupta of International Finance Corporation said housing finance firms needed more long-term funds from banks to meet the huge requirement of affordable housing.

Developers such as Stellar Group's Akshay Sethi said the government must define `carpet area' that qualifies for affordable housing in various metros. Eldeco MD Pankaj Bajaj echoed the view and added: "Developers should not be forced to use 90% of the Floor Area Ratio (FAR) if he is willing to give it up."

Emaar Group's CEO Sanjay Malhotra sought harmonising of centre's and states' regulations. "There exists a lot of dichotomy between the Centre's directions and the way states act. Developmental restrictions like size of the housing project in a lot of states create anomaly in the market," he said.

Shrikant Paranjape, chairman, Paranjape Schemes (Construction), said the government should help reduce construction costs and suggested SEZ-like structures for affordable housing. "When it comes to real estate developers, cost of land is insignificant for affordable housing. We want to reduce the cost of construction," he said.

Mahendra Singhi, group CEO, cement, Dalmia Bharat Cement, and Sanjay Kumar Gupta, chief marketing officer, Ambuja Cements, proposed the Mexican model of setting up an SPV with private players, states, developers and other stakeholders for affordable housing.

Gourav Bhutani of Shapoorjii Pallonjii said the approvals process are lengthy and costly, which would obstruct the goal of housing for all by 2022.



Arun Gupta

2017/02/15

Move Over China: India's the Best Place to Invest Right Now - NASDAQ.com

Move Over China: India's the Best Place to Invest Right Now - NASDAQ.com

Move Over China: India's the Best Place to Invest Right Now

Featured Image
  • (1: 30 ) - Apple to begin iPhone manufacturing in India
  • (6: 15 ) - Tesla speculates opening the doors into India's Market
  • (9: 15 ) - Internet Expansion in India       
  • (13: 35 ) - Amazon's Big Investment into India
  • (21: 30 ) - India's influencing infrastructure
  • (25: 25 ) - Stock Re-cap

Welcome to Episode #70 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Neena Mishra, Zacks Director of ETF Research and also the editor of Zacks Income Investor .

But she's not on the show this week to talk about ETFs or income stocks. No, she's joining Tracey to discuss a far more important topic: the investing opportunities in India.

Neena just returned from a trip to India where she noticed that there was a lot more optimism about the economy.

Prime Minister Modi has been trying to institute economic reforms to open up India's economy, which has been notoriously closed off to foreign investment. Given the developments over the last few years, it looks like he is succeeding.

While many American technology and social media companies are shut out of China for various reasons, India has seemingly opened its doors. With 1.2 billion people, and growing, many companies would love to tap that consumer base.

With one of the largest populations of Millennials in the world, and a growing middle class, 2017 could be the year of India.

Tracey and Neena discuss 5 ways in which investors can invest in India's rising economic power, without even leaving the shores of the United States.

5 Stocks to Play the Indian Growth Story

1.     AppleAAPL only has 2% of India's smartphone market. Estimated at 300 million, and growing, that's just a small sliver of the market. But until 2017, it hasn't been able to open Apple retail stores in the country. Thanks to a deal to manufacture the phones in India, which will bring costs of the phones down for consumers, Apple could soon be tapping India's growing elite.

2.    TeslaTSLA appears to be poised to enter the India market after CEO Elon Musk tweeted out in February 2017 that it is looking to enter India in mid-2017. There are also rumors that a long-awaited Tesla Asia manufacturing plant may get the green light in India, instead of China. Stay tuned.

3.    FacebookFB has long been shut out of the massive Chinese market, but that's not the case in India. One problem in India, however, has been the poor Internet infrastructure. There are just 250 million data subscribers, although that number is growing quickly. In 2016, Facebook tried to give away the Internet in India but was shot down by the government. However, data companies have been quickly expanding which is helping Facebook's reach. In the fourth quarter of last year, India was Facebook's fastest growing market.

4.    AmazonAMZN has put the most on the line in India as it has already spent about $5 billion to expand its fulfillment centers and delivery service in the country. Amazon Prime has launched in 100 cities. 10% of India's population speaks English, which makes it the second largest English speaking country, after the United States, in the world. It's facing competition, however, from Alibaba and homegrown FlipKart and Snapdeal. But it has launched Amazon Video and a recent 3-day Great Indian Sale saw sales growth surge over 200% compared to a regular shopping day.

5.    NetflixNFLX has an aggressive international expansion plan, and it includes India. In December 2016, just as Amazon Video launched, Netflix announced a partnership with Bollywood movie star and producer, Shah Rukh Khan. Right now, Neena says Netflix is charging around $10 a month for its streaming service. That is high for India. But, again, companies are looking at the growth potential.

What else should you know about India and investing in its hot growth story in 2017?

Find out the answers to this and more on this week's podcast.

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