HOME buyers have reasons to cheer. The new direct taxes code (DTC) is expected to bolster the demand for homes for both residential and investment purposes as it has proposed to retain the existing tax exemption norms. Unlike the original discussion paper on DTC, the revised paper has proposed to continue with the existing system of deducting interest payment up to Rs 1.5 lakh against home loan from the total taxable income.

Besides the discussion paper has also proposed to go ahead with tax deduction calculated on the presumptive rent which is currently calculated at 6% of the total value of the property.

DTC, which is likely to be introduced next fiscal had originally proposed to withdraw these exemptions.

Had the government withdrawn the proposal, there would have been an adverse impact on the industry, said Anil Kumar, CEO & Deputy MD at Ansal API, a Delhi-based real estate firm. “One of the main resons why end-users buy houses is to save tax,” he said.

Most end-users, especially those in the middle income group, avail loans to buy houses on which they get a tax benefit. As per the existing norm, home buyers are allowed to deduct interest payment of up to Rs 1.5 lakh from total taxable income.

Since home loan is a long-term contract, any such change adversely impacts the decision of borrowers, said an official of a home finance company.

“The move is especially good for people falling in the middle income group as they often buy houses for investment purposes,” said Allen Pereira, CMD at Bank of Maharashtra.

The government’s move has come as relief to home buyers at a time when the sector started showing early the sector started showing early signs of recovery. Real estate was one of the biggest casualties of the global slowdown when buyers turned away from the market. The situation has now improved with buyers gradually returning to the market.

The government in 2009 had argued the taxpayers would not be affected if benefit on interest payment against home loan was withdrawn as tax slab was also proposed to be changed comprehensively and net of tax income would increase would increase significantly. However, the withdrawal attracted a lot of criticism following which the government decided to go ahead with the existing norms.

Courtesy by BS    dtd:  June 17, 2010

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Deal Wont Include Delhi Property; Will Help DLF Shed Part Of Rs 14,000 – Cr Debt Pile

MALAYSIAN sovereign wealth fund Khazanah Nasional Berhad is close to buying a controlling stake in Aman Resorts from debt – laden DLF for $300-350 million, people familiar with the matter said.

A person privy to the details of the negotiations said the deal may not include Aman’s New Delhi property. If conducted, the deal will help India’s largest real estate company cut its Rs 14,000-crore debt pile.

DLF is being advised by Goldman Sachs while JPMorgan is advising Khazanah.

“As per company policy, we do not comment on market speculation,” a spokesperson for DLF said in response to queries form ET NOW. Khazanah could not be reached for comment.

DLF bought its 97% stake in Aman in 2007 for $400 million. Aman’s founder Adrian Zecha owns the remaining 3% stake.

Founded in 1988, Aman has, over the years, built up a loyal base of wealthy patrons, commonly known as ‘Amanjunkies’. Aman properties are characterized by a small number of rooms, minimalist architecture and a high staff-to-guest ratio. The group’s hotels are typically devoid of reception desks or lobbies and are aimed at conveying a feeling of a private residence to guest.

Aman operaters 23 luxury hotels across Thailand, Bhutan, Combodia, Loas, Montenegro, Morocco, Phillipines, Sri Lanka, the Turks and Caicos Islands, and the US.

Khazanah, which is currently locked in a battle with India’s Fortis Healthcare for control of Singapore-based Parkway Holdings, manages a portfolio of companies worth over $20 billion, according to details available on its website. They include Telekom Malaysia, Axiata and CIMB Group, Malyasia’s second-largest financial services company. Khazanah also owns a stake in India’s Apollo Hospitals.

A banker close to Khazanah said the fund has a mandate to make investments in new sectors and diversify its investment portfolio to include companies outside Malaysia.

It is learnt that DLF will use the proceeds from the sale of Aman Resorts to reduce the debt currently stands at Rs 14,821 crore following the consolidation of liabilities of DLF Assets Limited.

DLF confirmed May that it is looking to sell Aman Resorts and cut its debt by Rs 5,000 crore through the sale of non-core assets and refunds from various government authorities. The company’s management had also told analysts in a conference fall that it aims to become a zero-debt company by 2014.

Courtesy by:  The Economic Times      Dtd:  June 17, 2010

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In this case, you can bank on a fund manager to do the needful for you. A lot of real estate funds have been launched in India by reputed names likes HDFC, Birla, IL&FS, Milestone, Kotak and others. Based on the theme that you are comfortable with, like residential or commercial or two or three tier, you can invest accordingly. The important thing is such funds are transparent in nature and you can expect a quarterly statement on the status of your investment in the fund. Also, the entire sum is not taken at one go; the fund manager raises money over a time frame of three years.

Courtesy ET Dtd: 16/06/2010

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Unlike buying land or residential property, which are more long term in nature, realty stocks are fairly more liquid. Many a time, real estate stocks will not necessarily move with realty prices. Other factors like interest rates and overall market sentiment also impact the these stock prices. “In the short term, realty stocks cannot be the best representatives of realty sector, but in the long term, there may be a correlation between the two,” said Apurva Shah, head (research), Prabhudas Liladhar. Before buying realty stocks, one should look at factors like management quality, growth plans, the region in which the real estate company operates and the valuations.
One should go ahead only when one is comfortable with all the factors.

Courtesy ET Dtd: 16/06/2010

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summary

Unlike buying land or residential propertry “In the short term, realty stocks cannot be the best representatives of realty sector, but in the long term, there may be a correlation between the two,” said Apurva Shah, head (research), Prabhudas Liladhar. Before buying realty stocks, one should look at factors like management quality, growth plans, the region in which the real estate company operates

The Sikka Group recently announced its upcoming residential project “Sikka Karmic Greens“ at Sector- 78, Noida.

The project offers a choice of one, two and three bedroom apartments, ranging from 560 sq ft to 1440  sq ft area in size.

Prices start at Rs 15 lakh.

Courtesy Ht estate Dtd: 12/06/2010

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The markets took a breather for a couple of years, though the corporate growth was on track. BRIC report by Goldman Sachs broke the silence in Indian equity markets. From 2003 onwards, Indian stock markets primarily moved around infrastructure theme. Global investors on the back of low interest rates got into the carry trades. Borrowing in a weak currency such as the yen with very low interest rates and investing in a country such as India with a strong currency with potential to earn superior return turned out to be the most important strategy for foreign money.

Within the theme, capital goods were one of the most preferred destinations for many. The companies saw phenomenal growth in both business performance and stock prices. Rally till 2007, along with bull market in equities, encompassed many other sectors such as financials and real estate. Real estate stocks could fetch dizzy valuations on Indian bourses. Analysts found solace in businesses with land bank stories. There are instances where stocks of companies with almost no operating businesses saw multifold price rise on the back of land banks.

Along with real estate, energy played a key role. As crude neared $150 mark per barrel, the power starving economy searched for all power generation stories. Power turned out to be one of the sought-after sectors. Reliance Power hit new records in terms of valuations.

Courtesy ET Dtd: 14/06/2010

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Mapsko Group has launched Mapsko Casa Bella, a Group Housing Project spread on an area of around 18 acres at Sector 82, Gurgaon. The group housing has 3, 3(+1), 4(+1) bedrooms of 1690 sq. ft, 1960 sq. ft., 2535 sq.
ft. respectively. The price ranges between Rs. 2,500-2,600 per sq. ft.

Courtesy:- HT Estates  dt:- 03-April-2010

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It may become difficult for builders to construct green buildings as they are 25-35 per cent more expensive than normal housing structures, reveal findings of Grant Thornton and ASSOCHAM.

Releasing the findings of the White Paper, ASSOCHAM presi- dent, Dr Swati Piramal pointed out that despite the benefits, construct- ing a green building remained a challenge when it came to the initial capital outlay and immediate returns on investment.

The Paper also points out that considering the changes in global climate, rising population, pollution, related regulations and also com- mercial concerns vis-à-vis power crisis, running cost and pressure on urban infrastructure, green practice will become a necessity rather than a matter of choice in the next 10 years.

Along with environmental con- cerns, the most obvious objective of constructing green buildings will be to bring in energy efficient practices, thus reducing consumption of power and water. However, in the short term, real estate developers find the s initial cost of deploying energy effi- cient systems a major hindrance.

This is inspite of the fact that real estate and its ancillary industries account for more than half of the world's energy consumption.

Courtesy:- HT Estates  dt:- 03-April-2010

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Our Personal Finance Expert Will Guide You on Saving, Spending and Investing In This Weekly Column

Retirement is the time when you hang up your boots from the hustle-bustle of daily life, relax, do your own thing. As we say, it’s time to say: “Goodbye tension, hello pension!” Suddenly, from the risk of dying too young, you have transformed yourself to the category where the risk of living too long exists. The last thing you want to do is to have your money run out before you do. Risks have to be taken in a controlled manner, and post-retirement returns are thus assumed at 1% or maximum 2% p.a. over inflation. During one’s retirement days, the key requirement is safety, liquidity and tax-free returns. It is important to analyse the pros and cons of some of the avenues available to generate cash flow.

RENTAL INCOME

Apart from a self-occupied property, all other real estate investments are made with the objective of either capital appreciation — like the purchase of land — or to generate return on investment, as in the case of rental property. 2008 has been a rude awakening, and we must prepare for the time when rentals may drop, and the property may remain vacant for a few months. Depending on rental income for 100% of one’s needs may be a risk that needs to be mitigated before heading into the retirement days.

DIVIDEND INCOME

A few weeks ago, a client approached me to plan some additional investments for his mother who was a retired senior citizen. He did not want to take risks with the investment and during the course of our conversation, we realised that nearly a third of her income was being received by way of dividends. So, while she was averse to risk investing, she was equally reluctant to reduce her shareholding because she was thrilled with the quantum of dividend that she would receive year on year. In this case, there is a need to reduce the risks that this client carries in her portfolio.

ANNUITIES

In all our retirement planning calculations, we assume a life expectancy of 85 years for males and 90 years for females. However, no one can say today whether that is an underestimation or overkill. To do away with this risk, one can consider purchasing of annuities which are paid for your lifetime, and on your expiry, to your spouse. Obviously, if one was to use this as the only source of retirement income, the quantum required to be invested would be large, so it’s best that about a third of one’s retirement requirement is met through this route.

FIXED INCOME INVESTMENTS

Returns on fixed income investments are normally taxable. For the purpose of planning, it may be best to consider these — like senior citizen bonds, post office schemes, fixed deposits — first so that the income is within tax exempt limit for senior citizens — Rs 2.40 lakh per year as per the latest Budget proposals. Practical examples abound which ensure income that is tax-free and carries minimalistic risk for the senior citizen.

The author is the Managing Director and Chief Financial Planner of International Money Matters Pvt Ltd

Courtesy:- ET dt:- 19-03-2010

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Unlike in the past, the New Age Indians are not confined to investing in residential properties. They are now setting their sights on commercial property as well. Read on to know what attracts them to commercial properties

If you imagine that commercial properties are only purchased by companies to expand their business prospects, think again! Now high net worth individuals (HNI) too invests in commercial properties. As recently as a few years ago, commercial property was an investment option for select individuals. Apart from the issue of a large investment, it required a different mindset from the investment point of view as well. But, over the years, a large number of Indians have begun to earn huge salaries while many others are also making a lot of money through freelance jobs, which they are investing in commercial properties.

Unlike in the past, the New Age Indians are not confined to investing in residential properties. This trend is picking up fast. "If banks do not show reluctance to give loans to individuals in order to buy commercial properties, more and more HNI will come forward to buy commercial properties. It is now no secret that banks hardly show any positive attitude to sanction loans to individuals in order to buy commercial properties. This happens all over the world. That is why you cannot blame only our banks," says Samir Jasuja, CMD of PropEquity.

An official of PNB Housing Finance Ltd also admitted that while banks happily give loans for residential properties, they are not that forthcoming when it comes to loans for the purchase of commercial properties. Reason? He said that compared to residential properties, the rate of default is very high in this segment. That is precisely the reason banks avoid disbursing loans to individuals in buying commercial properties.

"As far as Ansal API is concerned, we have got bookings from a sizable number of such individuals (HNI) in our malls (Ansal Plaza in various locations), as also in small to medium office spaces in our commercial projects in Delhi NCR, Punjab, Lucknow, Kundli (near Sonipat in Haryana), among other projects," says the company's official spokesman.

Anu Gupta, director of Century 21 India, says that HNIs should make investments in commercial properties as these investments could maximize their return. The reason being, while they could go for bank loans up to 75-80% for such investments, the repayment of such loans could be set off against the rental incomes from such commercial properties. Thus, by investing a portion of the total price (say 25%), an investor can acquire a high-value asset, which will not only give maximum return (thanks to the set off provision in IT against rentals), but could see a significant appreciation over a period as the retail/commercial industry grows.

Giving his own example as to how he is earning less because he has invested in residential property while his friend is earning far more than him for investing in commercial property, a Delhi based financial professional, Narinder Gambhir, says that both he and his friend invested in residential and commercial properties in 2004 in East Delhi. Both invested close to Rs 30 lakh each. "While I am getting a rent of Rs 15,000 per month, my friend is earning Rs 25,000 from his property. This is a huge difference," Gambhir rues.

Discussing about the factors which are crucial for HNI to look buy commercial properties, a realty expert says that they should not invest where there is a deluge of supply. In that case before, the investment would not fetch good returns. HNI also invest in commercial property, as they are not restricted to a dingy market area. Today, swanky malls enable an individual to look at commercial property as a viable investment option. Moreover, the emergence of semi-commercial property in residential locations has made the investment financially viable.

RK Arora, CMD of Supertech group, says that there is nothing wrong if you invest in commercial property, but one must invest after taking all the pros and cons into consideration. "I feel that if you invest in some commercial space in NCR, then you have to wait for a long period before earning anything as there is a massive supply of such commercial property in NCR, unlike in Delhi. If you can invest in Delhi, then it is great."

However, Alimuddin Rafi Ahmed, CMD of ILD realty group, feels that as our economy is improving after tiding over a really tough time during the market slum of 2008-09, corporates are looking for commercial spaces on lease, hence it is a perfect time to invest in commercial properties. "This is just the right time to invest as the property is available at rockbottom prices. The crash in property prices led to downward revision of prices by developers. The reduction was to the tune of 30% or so. Hope things go better in the times to come and everyone benefits from the property," Ahmed concludes.

Courtesy:- ET Realty dt:- 19-03-2010

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