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Demonetization:The Tremendous Unlocking opportunity for Real Estate Sector

12/20/2016 5:06:00 PM

"Views of Noted Economists, Chartered Accountants, Investment Gurus and Finance experts on Effect of Demonetization and other recent developments on Real Estate. Last few days there has been a surge of messages from ""Whatsapp Economists"" with the simple theme that real estate prices will fall drastically due to Demonetization ie ban on Rs 500/Rs 1000 notes. Here's a 10 Point Summary of what actual experts with business and economic logic say: Demonetization will flood the Banking system with funds driving down both interest rates on Deposits and Loans If Interest rate on FD is just 5-6 % interest on Home Loans will come down to 7-8 % (since Banks keep an 2-3 per cent margin). (Banks already indicated the same) Historically at such Low interest rates Real Estate industry gets a massive boost as property becomes attractive to everyone: Buyers, Investors and even that invisible category called Businessmen/Professionals. Even when prices are same, Apartments come within reach of Buyers due to lower EMI on Loans due to lower interest rate Investors find Investing in property more attractive than earning a paltry 5-6 % on Bank Deposit as simply buying and renting out gives them more return. PLUS they create an asset and earn appreciation over a period of time PLUS they get income tax deductions Shopkeepers, Retail Malls, Corporate Houses and even professionals like Doctors, Consultants, CAs jump in to buy property as they want preferred location and once that's gone they may never get that chance again. So, they buy at the first available opportunity instead of waiting for prices to fall. Demonetization will see the most money flowing in banking system from people in the unorganized / small scale sector: Farmers, Traders, Tailors, Hoteliers, Beauty shop owners, Tuition classes, small contractors, House Maids, Drivers, Security Guards etc. Crores of new people entering Banking system means that they will also be eligible to get bank loans and fulfill their dream of owning a house Government will have money to invest in infrastructure as Banks will deploy lakhs of crores in Government Securities. With a few lakh crore at its disposal, Government can only boost funding to infrastructure schemes such as Smart City Mission, Swacch Bharat Mission, Housing for All etc. New Airport in town, better connectivity to National/State Highway, Up gradation in City Transport all lead to increase in demand and prices of properties in the city It is interesting to note that real estate prices show slower rise in countries which have a fully ready infrastructure like USA, UK, Japan etc. Whereas in a developing countries like India, there is a vast difference in prices in a City before and after creation of Infrastructure   Conclusion: In the final analysis, recent developments such as passing of Real Estate Regulation Act, Demonetization, Goods and Service Tax etc combined with Government focus on infrastructure will only serve as positive factors for growth of Real Estate industry Factors of Real Estate Industry which get missed due to one-sided picture created by social media:  Real Estate Industry contributed 7 % to India's GDP. Second Highest employer after Agriculture. Real Estate Industry supports more than 140 allied industries from large ones such as Steel, Cement and Transport to cottage ones such as bamboo and rope making. Real Estate Industry caters to the basic need of Shelter for every citizen. As per Government of India, more than 90 per cent of demand for Real Estate Is in affordable and mid range category. In era of mechanization and automation, Real Estate is the only Industry which still continues to provide regular employment to millions of daily wage earners. One of the only Industries which contributes large share of taxes at all levels of Government: Local Government ie Municipal Corporations etc (Building permission charges), State Government (VAT and Stamp Duty), Central Government (Service Tax and Income Tax). Investments such as equity shares, Commodities like Gold, Silver, Mutual Fund etc have seen large ups and downs. Real Estate is the only asset class which has given stable and constant one way growth over last several decades. Real Estate has both value in use and value as investment. Real Estate investment is the best investment from a very long term angle as taxation happens only on sale and in case of reinvestment 100 pc tax can be saved. With Indian economy becoming increasingly urbanized, it is expected that more than 50 pc of India's population will live in cities by next decade. This massive change in demographic and economic profile of the country will give big boost to real estate over the 5-10 year horizon. Demonetisation good for growth, present problem to be over soon: Adi Godrej, Chairman, Godrej Group  http://economictimes.indiatimes.com/markets/expert-view/demonetisation-good-for-growth-present-problem-to-be-over-soon-adi-godrej-chairman-godrej-group/articleshow/55432068.cms " Chandigarh

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Chandigarh real estate stretching boundaries Zirakpur Mohali New Chandigarh real estate stretching boundaries Zirakpur Mohali New Chandigarh

5/25/2020 5:06:00 PM

"Being lived in small town, I always dreamt to live in the place which could be beautiful, clean, endowed with opportunities & more importantly development oriented.Chandigarh, Which is elegant, spotlessly clean, Job oriented and it seems like finally i found out the beautiful smart city . 'Chandigarh' the neighbour of Himachal Pradesh, Jammu & Kashmir, Punjab, Haryana,Delhi & Uttarakhand.Chandigarh itself is a big city, but Interestingly, Now, In contemporary phase Chandigarh stretched its boundaries, New chandigarh, Mohali & Zirakpur are being developed as Chandigarh.High Rise Residential, Commercial & Industrial Development have been established in these TRI-CITY. In the developing phase of streached Chandigarh, I feel so blessed to being the spectator of the developing phase of the fore sure prominent Cities and for me this is a historic phase so indeed I would definitely narrate the developing stories of chandigarh  to next generation. NEW CHANDIGARH, MOHALI, ZIRAKPUR are cities of  stretched chandigarh. Schools, Education institutes, Entertainment points and Medical Facilities all are found in these cities so that no need to go chandigarh for particular reason. Govt and Private players are creating infrastructure &  provide Facilities to deep end.High rise commercial and residential are giant proof of developing cities . India's Top hospitals presence gives big relief sigh to medical related concern. Construction is the core element of infrastructure and Real Estate.Developing Industrial hubs are capable to provide job opportunities and at the same time Real Estate players has been staring in high rise infrastructure for long ago to provide best and amenities enabled. However, Spending time in our town always boosting energy and drawn out positive energy aura behind us as it keeps us away from hustle bustle life to simple living.We all would be definitely attached to our small towns as our family, ancestors, belongings are here.More importantly we spend our precious childhood moments in our birth place, but i dont know why chandigarh seems like my place." Chandigarh

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NRI real estate investment FAQ

5/26/2020 6:08:00 PM

"1.       Who is a NRI? NRI is a citizen of india, who is holding an indian passport and temporarily residing abroad for employment residence, education or any other purpose or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs). 2.       Who is a PIO? A Person of indian origin who is a citizen of another country, holds passport of another country  and is not being a citizen of Pakistan,Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan. (a)   He/She at any time, held a Indian passport, or (b)   Self or either parents, grandparents, great grandparents or spouse was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). 3.Who is an OCI? (a) Any person of full age and capacity: (i) Who is a citizen of another country and holds passport of another country but was a citizen of India at the time of, or at any time after, the commencement of the constitution, or (ii) Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution, or                                                                                                                                   (iii) Who is a citizen of another country,and holds passport of another country but belongs to a territory that became part of India after the 15th Day of August, 1947. (iv) Who is a child of such a citizen, or                                                                                                                                    (b) A person, who is minor child of a person mentioned in clause (a) Provided that no person, who is or had been a citizen of Pakistan, Bangladesh shall be eligible for registration as an Overseas Citizen of India. 4.General Documents required for buying property Pan card  OCI/PIO card (In case of OCI/PIO) Passport (In case of NRI) Passport size photographs Address proof 5.Which categories can purchase immovable property in India?   Under the general permission of RBI, the following categories can purchase immovable property in India:                                                                                                                                                                                                a) Non-Resident Indian                                                                                                                                                               b)Person of indian origin                                                                                                                                                             c)Overseas citizenship of india The general permission, however, covers only purchase of residential and commercial property, and not for purchase agricultural land/plantation property/farm house in India, such proposals will require specific approval. 5)Can a NRI/PIO acquire agricultural land/plantation property/farm house in India? Since general permission is not giving permission to NRI/PIO to acquire agricultural land/plantation property/farm house in India, such kind of proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India. 6)What is the Tax treatment for income generated from property selling or renting in india for NRI/ PIO/OCI? The acquisition of property does not attract income tax. However, any income accruing from the ownership of it, in the form of rent (if it is let out)/annual value of the house (if is not let out and it is not the only residential property owned by that person in India) and/or capital gains (short term or long term) arising on the sale of this house or part thereof is taxable in the hands of the owner. 7). Do NRI/PIO/OCI have to file return in India for rental income from property in india and Capital Gains Tax? The Government of India has granted general permission to NRI/PIO/OCI to buy property in India.These categories do not have to pay tax on mere acquiring property in india, but if they are selling this property, the profit on sale will be subject to capital gains.The gain can be short term capital gain or long term capital gain.If the property held for less than or equal to 3 years after taking actual possession then the gains would be short term capital gains, which are to be included in their total income as tax as per the normal slab rates shall be payable and if the property held for more then 3 years then the resultant gain would be long term capital gains subject to 20% tax plus applicable cess.Property Rental income is taxable in India, and they will have to obtain a PAN and file return of income if they rented this property. 8)How does the Double Taxation Avoidance Agreement work in the context of tax on income and Capital Gains tax paid in India by NRI? India has DTAA’s with several countries which give a favorable tax treatment in respect of certain heads of income. However, in case of sale of immovable property, the DTAA with most countries provide that the capital gains will be taxed in the country where the immovable property is situated. Hence, the non-resident will be subject to tax in India on the capital gains which arise on the sale of immovable property in India. Letting of immovable property in India would be taxed in India under most tax treaties in view of the fact that the property is situated in India. 9)How does Double Taxation Avoidance Agreement work in the context of CGT paid in India on the foreign tax treatment? In case the non-resident pays any tax on capital gains arising in India, he would normally be able to obtain a tax credit in respect of the taxes paid in India in the home country, because the income in India would also be included in the country of tax residence. The amount of the tax credit as also the basis of computing the tax credit that can be claimed are specified in the respective country’s DTAA and is also dependent on the laws of the home country where the tax payer is a tax resident. 10)What are the rules governing the repatriation of the proceeds of sale of immovable properties by NRI/PIO as prescribed by the Reserve Bank of India? (a)  If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR(B) account, the amount to be repatriated should not exceed the amount paid for the property: (i) In foreign exchange received through normal banking channel or (ii) By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR(B) account. Repatriation of sale proceeds of residential property purchased by NRI’s/PIO’s out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI’s/PIO’s may repatriate an amount up to USD one million, per financial year, as discussed below. (b)  If the property was acquired out of Rupee sources, NRI/PIO may remit an amount up to USD one million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance. The NRI/PIO may use this facility to remit capital gains, where the acquisition of the subject property was made by funds sourced by remittance through normal banking channels/by debit to NRE/FCNR(B) account. 11) Is the rental income from acquired property in india is repatriable and what are the RBI rules? Being a current account transaction,a rental income,  is repatriable, subject to the appropriate deduction of tax and the certification thereof by a Chartered Accountant in practice. Repatriation of sale proceeds is subject to certain conditions. The amount of repatriation cannot exceed the amount paid for acquisition of the immovable property in foreign exchange. BrickAcres Real Estate Services Chandigarh ( UT) www.brickacres.in https://www.facebook.com/brickacres.in https://www.twitter.com/brickacresin " Chandigarh

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Residential realty sees early signs of green shoots

2/13/2020 6:39:00 PM

The country’s residential real estate market is beginning to look up. India's top 35 property markets, including tier I and II, recorded 3% year-on-year and 5% sequential growth in sales during the quarter ended December, data from Liases Foras Real Estate Ratings & Research shows. Of these, 27 cities saw an upward momentum in sales in the quarter ended December, while new launchesan indicator of confidence among builders to start marketing their projects—climbed 38% from a year ago. The dominance of affordable housing continued on both the counts, driven by government incentives which have not only made housing projects attractive but also bolstered the confidence of end users. Apartments priced below Rs 50 lakh accounted for over 58% of the sales in the December quarter. This cost segment saw 66% new launches, according to Liases Foras Real Estate Ratings & Research. “The year 2018-19 had seen marginal decline in both sales and launches. The downward slide has now been arrested and the trend is reflecting an upward movement,” said Pankaj Kapoor, managing director, Liases Foras Real Estate Ratings & Research. “Time correction has improved home buyers’ affordability, and with inquiry levels going up, builders have garnered confidence to launch more projects.” Apart from government incentives, home loan rates have also been on a decline. Over the last one year, the Reserve Bank of India has reduced the repo rate by 135 basis points. In December, State Bank of India (SBI), the country’s largest lender, reduced its external benchmark rate by 25 basis points. The revised effective benchmark lending rate of 7.8% came into effect from January 1, 2020 and new home buyers have been getting loans at an interest rate starting from 7.9%. "Gradually, the sentiment among the industry stakeholdersbe it developers with new launches, fence sitters turning into the actual home buyers, or investors returning back to the sectorshows signs of resuming confidence with cascading effect of a slew of positive economic measures by the government," said Niranjan Hiranandani, national president of National Real Estate Development Council (NAREDCO). Project launches are increasing as response from homebuyers has been improving. For instance, property developer Sunteck Realty sold 125 apartments worth over Rs 200 crore at its project in Mumbai’s Goregaon suburb in December. The company recently launched another project in Naigaon near Mumbai. On Monday, Piramal Realty also announced it is selling over 300 apartments, with sales value of Rs 200 crore, at its Thane project that offers apartments starting at Rs 57 lakh. The highest supply in the affordable housing segment during the quarter was in Pune, followed by MMR and NCR, where the segment accounted for 75%, 49% and 82% of the total new supply, respectively. During the quarter, unsold stock in 35 cities increased by 4% from a year ago to 1,315,000 units. This increase can be attributed to the high number of new launches this year. Weighted average price across these markets showed a marginal of 1%, both on sequential and annual basis. Prices declined marginally in 16 cities and increased in seven cities, data shows. The government recently extended by a year the tax holiday for new affordable housing projects, a move which is expected to increase supply in this segment. Source: The Economic Times Chandigarh

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USD 5 Trillion Economy – Indian Real Estate as Key Contributor

2/17/2020 6:46:00 PM

Union Budget 2020-21’s almost pointed negligence of the real estate sector was most puzzling – especially since the previous budget had envisaged an ambitious blueprint for the country’s economic future. For realizing the vision of making India a USD 5 trillion economy by FY 2024-25, the development and growth of its real estate sector is imperative. Across developing and developed economies, real estate and economic growth are inseparable concepts. Real estate is a key driver of economic growth, and by laying the groundwork of making it more organised and transparent, the government has already made it a more secure and attractive investment environment. The fact that the latest budget gave no more than a cursory glance at real estate is a missed opportunity to build further on this groundwork. To propel the Indian economy into the top league of global economies, the growth engine of real estate cannot be ignored. Realty’s Contribution to GDP to Double Despite global headwinds and slow economic growth in the country, the India Brand Equity Foundation expects India’s real estate sector to grow to a market size of USD 1 trillion by 2030. It is also likely to contribute 14% of the country’s GDP by 2025 – almost double its current contribution of 7-8%. Over the years, real estate growth – particularly in housing – has been crucial in driving the Indian economy. Regulatory reforms such as RERA, GST and IBC and relaxation in foreign direct investment have already made the industry more transparent and credible, leading to increased end-user demand. It was expected that Union Budget 2020-21 would aim to keep this momentum going and thereby emphasise economic growth. To achieve this, radical changes in the taxation system and as well as regulatory policies are of paramount importance. Infrastructure Creation – Driving Growth While the latest Union Budget did not provide any real boosts to real estate other than in terms of affordable housing, it did continue to focus on infrastructure. Real estate development goes hand-in-hand with infrastructure as the latter opens up peripheral areas and creates new avenues of growth. Earlier, the government had already allocated INR 100 lakh crores for infrastructure investments to improve transport efficiency over the next five years. Multi-modal infrastructure development such as roads, rail and metro improves living conditions and spurs demand for residential, commercial, retail and warehousing real estate. Supporting Job Creation Union Budget 2020-21 failed to give clarity on the deployment of the previously-announced INR 25000 Cr alternate investment fund. Completing and handing over these stuck projects will increase buyer and investor confidence and help usher in a strong revival for the housing sector. Improved sales will lead to a strengthened housing supply pipeline and create jobs across the entire white-to-blue-collar segments of real estate development. This factor cannot be ignored. After agriculture and manufacturing, the real estate sector has the most potential for large-scale job creation. Associated with over 200 allied industries including cement, steel and sand, housing development has a multiplier effect on several allied sectors. According to the National Skill Development Council, there is a requirement of 109.73 million skilled manpower by 2022 in 24 key sectors. The building, construction and real estate sector alone is expected to generate 76.55 million jobs by 2022. The government’s mega initiative of ‘Housing for All by 2022’ itself promises to be a major employment generator – and, by direct implication, an overall economic growth dynamo. In the second phase of PMAY-G, during 2019-20 to 2021-22, 1.95 crore houses are expected to be provided to eligible beneficiaries. This effort alone can and will create large-scale employment for skilled and unskilled labourers. The Need for Investor Participation Major reforms such as GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act have had a lasting impact on the real estate sector. Despite the initial churn and pain, they have increased financial discipline and a healthier ecosystem. By instilling renewed confidence in home buyers and domestic investors, these landmark reforms have improved the perception for India as a global hub for investments. As per ANAROCK data, private equity investments in India’s real estate sector clocked in at over USD 5 billion in 2019, of which commercial segment comprised the lion’s share at over USD 3.3 bn, followed by retail sector with USD 970 mn and residential of USD 395 mn. A large chunk of these investments came from foreign private equity funds like Blackstone, Hines, Ascendas and Brookefield. However, housing remains an unpalatable investment category for smaller domestic investors. The Union Budget was an ideal platform from which to announce initiatives to boost private investor participation. Currently, India’s housing sector is riding almost exclusively on end-user sales, which are not enough to revive residential real estate and its related benefits of furthering the Housing for All by 2022 goal and generating increased employment. As the second-largest employer and a major contributor to the country’s GDP, the real estate industry is one of the Indian economy’s strongest pillars. It cannot remain a neglected stepchild – it must become the apple of the government’s eye. A convincing revival of the Indian real estate sector is essential for the economy to move out of its current slow phase and achieve the mammoth targets – Housing for All by 2022 and making India a $5 trillion economy by FY 2024-25. Source: APN News Chandigarh

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US, UAE and Singapore firms top investors in Indian real estate sector

2/17/2020 6:04:00 PM

While Indian real estate attracted more than $5 billion in private equity inflows in 2019, firms from US, UAE and Singapore remain bullish on the sector even as Japanese and South Korean investors are evaluating options in 2020. As per data made available by Anarock Capital, US-based Blackstone remains bullish on Indian real estate and pumped in over $1.8 billion in 2019 over $1.1 billion in 2018. Others included US-based Hines, UAE-based ADIA and Lakeshore and Singapore-based Xander Group. A few Japanese investors or corporates have been evaluating the Indian real estate investment options and we can expect them to get into gear in 2020, along with pension and insurance funds, it said. The interest of the Japanese firms is not limited to Mumbai alone but is also in other top cities such as Delhi-NCR. Bengaluru, Hyderabad, Pune and Chennai. Interestingly, South Korean companies may also be evaluating the Indian commercial market. South-Korea-based Mirae Asset Financial Group is showing interest in Indian commercial market but it’s still too early to say when and where, experts said. As per data from Anarock Capital, the momentum of equity investments from foreign investors into real estate restarted from 2014 onward. Since then, Indian real estate sector has received $16.6 billion worth of foreign investments. "In this period, investors’ focus has remained largely on big-ticket income-yielding commercial and retail assets &ndash 72 percent in aggregate. This period also saw the entry of significant Canadian pension funds into Indian real estate, either directly or through platform deals with Indian counterpart. While Singapore-based funds led by GIC remained very active in this period, US-based funds led by Blackstone continued their love affair with India real estate and invested more than 5.7 bn dollars in the same period," said Shobhit Agarwal, MD & CEO &ndash ANAROCK Capital. In 2020, funding focus is expected to remain on Grade A income-generating assets along with last-mile funding opportunities in residential projects. "A few Japanese investors/corporates have been evaluating Indian real estate investment options and we can expect them to get into gear in 2020, along with pension and insurance funds. These funds are inherently patient and come with longer investment tenures. As such, they will play a significant role in providing the long-term solutions Indian developers now need. In fact, 2020 promises to be an action-packed year for Indian real estate funding," he said. MMR and NCR were the top favourites for private equity investors in 2019 together, the two regions received close to $2.7 billion worth of PE funds, comprising a whopping 53 percent overall share. Previously in 2018, rather than NCR, it was Hyderabad that was on top in the radar of private equity investors, Anarock Capital said. The commercial segment continued to lure investors in 2019, with total PE inflows crossing $3.3 billion - though reducing by 13% on yearly basis. Meanwhile, both the retail and residential segments saw an uptick in investments in 2019 against the preceding year, it said. The residential sector received PE inflows of 395 mn dollars in 2019 against 265 mn dollars in 2018, the report said. The high potential of logistics and warehousing notwithstanding, this segment attracted about 200 mn dollars PE funds - a of nearly 50 percent against the previous year. Mixed-use developments saw inflows of approximately 155 mn dollars in 2019, as against 310 mn dollars in 2018, it said. "Total PE inflows in Indian real estate remained more or less the same in 2019 against 2018. However, NCR once again emerged as a major hotbed for private equity activity in 2019. Besides office real estate, the retail sector helped NCR gain traction from both foreign and domestic funds," Agarwal added. Source: Moneycontrol.com Chandigarh