Real Estate Property

The company has received a Letter of Acceptance from Buddha Smriti Udhyaan Development Co (BSUDCL) to develop a park at Patna in Bihar, Parsvanath said in a filing to the Bombay Stock Exchange.    

The project, scheduled to be completed in nine months, is being implemented jointly by the Government of Bihar and India PPP capacity Building Trust. For this, a special purpose firm BSUDCL has been rolled out to develop the park, Buddha Smriti Udhyaan, the filing added.    

"With this Parsvanath has embarked upon its first offering in the emerging markets of Bihar thereby strengthening our pan-India presence," Parsvnath Chairman Pradeep Jain said.    

Shares of Parsvnath closed at Rs 131.70, down 3.59 per cent on the BSE.

"A proposal to bring a new bill in the monsoon session of the state legislature is under active consideration. We want to prohibit sale of khas mahal land," state land reforms and revenue department sources told PTI.

An expert panel, headed by the department's principal secretary, would prepare the draft for the proposed legislation for approval of the state cabinet, sources said.

Growing urbanisation of Patna and other townships had sparked off a 'systematic' transfer and re-transfer of khas mahal land by the original lessees without even the knowledge of the government.

This has set off a profiteering trend which is in violation of the khas mahal agreements with the state. In Patna it is a common practice to sell off vast tracts of khas mahal land at huge market prices, whereas the government gets a pittance in rent and salami from the new buyer or lessee, they said.

Giving legal safegyards to 'bataidars', toning up revenue administration, identification and taking over of ceiling surplus land possessed illegally by landed class and estates, besides addressing the discerpencies in contract farming were among other prescriptions suggested by the B Bandopadhyay Commission to the Bihar government.

Manish Kothari is an investment banker, and his wife, Varsha, a financial analyst. Together, they own a house in Mumbai's Mulund area. Recently, the Kotharis bought another property in Ghatkopar, "for the purpose of investment," says Varsha. "We made the basic down payment and took a loan for the rest. We plan to put the place up for rent and are treating it like a longterm investment," explains Manish.

UP NORTH

"In the NCR, couples are lapping up houses anywhere in the range of Rs 35-80 lakh," says Raminder Grover, CEO (residential property) Jones Lang Lasalle Meghraj. "With home loan rates going down, it's definitely a good time to buy that second house. But if you're looking at another property as an investment, you must remember that the returns will only start coming after a period of 48 months. If someone is willing to factor in that gestation period, they should go ahead and buy." Grover says sectors of Gurgaon (Rs 2,300-12,000/ sq ft), Noida (Rs 3,000-7,500/sq ft), Ghaziabad (Rs 1,800-3,500/sq ft), Faridabad (Rs 1,800-3,000/sq ft), Manesar (Rs 2,400-2,600/sq ft) are prime areas to buy property in the NCR.

Doctors Sanjay and Anuradha Chugh bought a three-bedroom villa in the Candolim area of Goa last year. "When it comes to real estate, Goa is the hottest investment destination in India today. We take off to Goa at the first given chance. The villa has appreciated considerably since we bought it a year ago and things can only get better," says Sanjay Chugh.

HOMEWARD BOUND

Planning to buy a second home as an investment? Here's a checklist:

• Track the suburbs. Keep an eye out for articles on highways being built, houses are bound to follow

• Make a field trip to the property. Invest in a property that is coming up; it will have appreciated by the time of completion

• If you're planning to rent the place out, it is better to buy a smaller, highend apartment rather than a larger middle-income level place

• It's safest to rent your house out as a company guest house on an 11-month lease with an escalation clause that factors in a 10-15% annual hike in rent. Providing basic furnishing and white goods make the rent shoot up

• Take 10 months advance rent

• Commercial properties give a better rate of return (10-15%) as opposed to residential property (5% if you're lucky)

WESTSIDE STORY

Mumbai-based Chetan D Narain, president of the India Institute Of Real Estate, feels rates in mid-town Mumbai areas such as Prabhadevi, Worli and Bandra are already at a high and will continue to rise further. "Investing in these regions will not fetch a good rate on rental returns. Areas such as Malad, Borivali, Ghatkopar, Vikhroli and Mulund have the most feasibility in growth as of now," says Narain. If you're looking to buy a place in any of these areas, you may have to shell out anywhere from Rs 4,000-6,000/sq ft in Ghatkopar, Vikhroli and Mulund and Rs 5,500-7,500/sq ft in Borivali and Malad.

Narain is also clear that the `gestation period' must be kept in mind when looking at a house as an investment. "The purpose of investment has to be well defined. If it is long-term investment with a seven to 10-year horizon then, yes." Narain predicts that a correction for over-priced properties is round the corner. "Prices will stabilize and flatten out between Juhu and Borivali," he says. The story in South Mumbai, though, is slightly different. "It's a stalemate there with every seller starting their prices around Rs 60,000/sq ft. People latch on to the `top end' price for their mid-range properties, making the problem worse. I strongly feel that people must look at correcting their prices and that brokers must guide their clients/ sellers about the right valuation based on logic, plus a reasonable premium," he advises.

GO SOUTH
EASTWARD HO!

Omaxe is one of the India's largest real estate and construction firms with operations in 31 cities. It has developed residential and commercial real estate projects ranging from integrated townships, group housing, office/commercial spaces, shopping malls, hotels, IT and bio-tech parks to special economic zones.

It has already developed nearly 5.59 million sq ft of residential and commercial space. Currently, Omaxe is working on 55 residential and commercial projects comprising 24 group housing projects, 16 integrated townships, 14 shopping malls, commercial complexes and hotels.

Omaxe won the project in an auction. It consists of an 18-hole Golf course, a hi-end golf resort, golf villas and apartments and other residential and commercial buildings.

Work on the township will commence shortly. Company chairman Rohtas Goel said it will mark the beginning of company's initiative in Chhattisgarh. Being the first premier township in Raipur, it will be a landmark project in the area.

Real estate developers enter into agreements to sell the real estate before they have completed or, at times, even begun construction. Each buyer enters into an agreement to acquire a specified unit when it is ready for occupation.

Typically, the buyer pays a deposit and makes progressive payments as the real estate is being constructed. Real estate sale may take various forms. For example, they may relate to commercial/industrial development, a flat in a building, or a villa that is being exclusive constructed to the specification of the buyer.

The accounting of real estate sales is a contentious issue not only in India but also globally.

AS-7 or AS-9

The question often faced by developers is whether the development is a construction contract and hence percentage of completion method under AS-7 should be applied or whether the sale of the real estate is a product sale to which the requirements of AS-9 relating to sale of product should be applied.

If AS-9 is applied then the sale is recognised on delivery of the product at which time the risk and rewards are also transferred to the buyer.

This question has been addressed in the "Guidance Note on Recognition of Revenue by Real Estate Developers", issued by the ICAI. It may be noted that the interpretation contained in the Guidance Note is different from a recently issued proposed interpretation under IFRS.

Different interpretation

As per the Guidance Note, in the case of real estate sales, all significant risks and rewards of ownership are normally transferred when legal title passes to the buyer (for example, at the time of the registration in the name of the buyer) or if there is a legally enforceable agreement for sale and (a) the significant risks (price risk, for instance) have been transferred to the buyer (b) the buyer has a legal right to sell or transfer his interest in the property, without any material impediment.

Once the seller has transferred all the significant risks and rewards of ownership to the buyer, any further acts on the real estate performed by the seller are, in substance, performed on behalf of the buyer in the manner similar to a contractor.

Accordingly, in case the seller is obliged to perform any substantial acts after the transfer of all significant risks and rewards of ownership, revenue is recognised by applying the percentage of completion method in the manner explained in AS 7, Construction Contracts.

Sale of goods
Stage of completion
Clarity to interpretation

With the law for old persons passed by Parliament saying that a transfer of property would be considered "fraud or coercion" if it was made on such a quid pro quo and the promise not fulfilled, the Union government is pinning its hopes on district magistrates to turn the tide in favour of the elderly by making popular the concept of "conditional inheritance".

Social justice and empowerment minister Meira Kumar said DMs, being registrars in districts, oversee property transfer and they should advise people on property changing hands. "They would know the law that is coming up better than common people," Kumar told TOI.

While DMs are the registrars in
districts, sub-registrars carry out the actual registration of property.

Importantly, the DMs hold centrestage in the operation of the "Maintenance and Welfare of Parents and Senior Citizens Bill" as the tribunals to be set to arbitrate the petitions from elderly to enforce care from children would be set up at sub-division level, which would fall under their jurisdiction. The DMs have also been designated as the "appellate authority" if the elderly want to appeal against a tribunal order. Kumar said, "I will write to chief ministers, asking them to take special care of provisions of the new law which are important to make it a success."

At an average of barely Rs 3.4 lakh per housing loan, the residents of the Sikkimese capital may not be able to match the residents of the metros when it comes to the size of the loan, but in terms of the sheer proportion of families that are borrowing to have a nest they can call their own, smalltown India is on the march.

However, in terms of the value of housing loans, Mumbai tops the list with a little under Rs 24,000 crore in 2005-06, the latest year for which detailed data is available. Delhi was next with over Rs 16,000 crore, followed by Bangalore with over Rs 14,000 crore, Chennai (a little more than Rs 10,000 crore) and Hyderabad (over Rs 7,000 crore). The metros dominate this list, even without including suburban districts like Thane and Thiruvallur.

How you rank the cities in terms of their propensity for housing loans depends on which parameter you choose -- the volume of loans, the value of each loan, the proportion of households that borrowed or the average borrowing per household.

Look at the average value of each loan account opened in 2005-06 and the list changes. Noida now tops the list with Rs 10.5 lakh followed by Gurgaon with Rs 10.2 lakh and Delhi with Rs 9.8 lakh. Mumbai, with an average housing loan of Rs 7 lakh, is now in eighth place. It is a list that has the big metros and their immediate neighbours crowding the top of the chart.

Look at it in terms of the average housing loan per household and the list changes. Noida and Gurgaon remain on top with Rs 1.49 lakh and Rs 1.29 lakh respectively, but Chandigarh and Chennai, with an average of just over Rs 1 lakh, are now joint third while Delhi slips to No 17 with Rs 0.49 lakh.

India's biggest real estate developer, DLF, plans to bring 20,000 Indian labourers from the Middle East back home to work for its projects. This follows the move made by Reliance Industries, which hired nearly 4,000 Chinese workers to lay a gas pipeline in the country.

DLF Laing-O'Rourke, a joint venture between DLF and UK-based real estate company which undertakes construction work for DLF in India, wants to hire skilled labourers such as carpenters, bar benders and electricians from China, Indonesia and Philippines. "Chinese labour comes at a low cost and is more productive. Plus, they can be used as captive resource," says a DLF official who didn't want to be named.

The startup index is to be developed by National Building Organisation (NBO) under Kumari Selja-headed housing ministry, will project details of construction activity and its impact on prices of construction related items like cement and steel. HSU Index will be measured at national, state and city levels. NBO has set up a technical advisory group to evolve a methodology to institutionalise the process of bringing out HSUI on a regular basis. Pilot surveys in Chennai and Mumbai have been started.

Housing ministry officials said a rise in the index would indicate economic growth, potential rise in real estate prices and potential pressure on interest rates. Conversely, a fall in the housing index would mean a fall in real estate prices and interest rates would follow suit. It would also mean that GDP growth is slowing.

A division bench comprising acting Chief Justice Narayan Roy and Justice Madhvendra Saran issued the directive while hearing a PIL of the Patna Citizens Forum. The court directed the state to give the status report in four weeks' time.
BSEB matter: A single bench presided by Justice Ramesh Kumar Datta on Tuesday directed the state government to submit a reply stating reasons behind the dearth of staff in the state vigilance bureau which had caused much delay in investigating the irregularities in purchases in the Bihar State Electricity Board in the mid-nineties.

The order was passed during hearing of a writ petition which raised the issue of illegal purchases in the BSEB to the tune of crores of rupees.

On Tuesday, the state vigilance bureau counsel submitted that the investigation into irregularities in purchases in BSEB was started in 1998 and the FIR was registered in 2004. But further investigation was delayed due to the dearth of staff in the vigilance bureau, the counsel added. The court directed the state government to reply in three weeks' time.

Criminal appeal: A division bench comprising Justice Ghanshyam Prasad and Justice Shyam Kishore Sharma on Tuesday adjourned the hearing of the criminal appeal and bail plea of Harendra Prasad Sahi, who challenged the order of a sessions court of Patna for sentencing him life imprisonment in the case of murder of the Gopalganj district magistrate, G Krishnaiyya.

The court directed the high court registry to put up the case of the appellant, Harendra Prasad Sahi, for hearing by placing the records of the criminal appeals of the former Vaishali MP, Lovely Anand, and the Lalganj MLA, Munna Shukla, who were earlier granted bail in the same case and their criminal appeals against the sentence were admitted by the high court.

It may be recalled that Lovely Anand and Munna Shukla were sentenced life imprisonment by a sessions court of Patna against which they had moved the criminal appeals with their bail plea before the high court.

The figures of the survey, done by the National Building Organisation and the Housing and Urban Poverty Alleviation Ministry, raise doubts on the government's claim of meeting residential needs of the poor by launching housing schemes.

A memorandum of understanding to this effect has been signed between Jaiveer Srivastavaa, Chairman and Managing Director of Hindustan Prefab, and S. Jalaja, Principal Secretary, Department of Urban Development, Bihar.

With the new contract, the company's order book has crossed Rs 1,000 crore, a company release said here.

In response to a question in the Lok Sabha, finance minister P Chidambaram said there was no indication of entry of terrorist outfits in the stock and real estate markets. ``The government has consulted SEBI and RBI which do not indicate any surreptitious entry into the stock market or real estate markets,'' the minister said.

Chidambaram's comments assume significance since such suspicions were raised by national security advisor M K Narayanan, the man who has access to all the intelligence reports including forewarning coming from foreign agencies.

The boom in the real estate sector seems to have prompted the taxman to launch special combing operations in the current financial year to close in on evaders. Under the scanner, especially, will be those buying property way beyond their annual income.

The income tax department will also watch closely commodity brokers and those escaping the tax net despite high levels of agricultural income.

The latest scrutiny norms, discussed with chief commissioners of income tax last week, have laid special emphasis on property deals. While all deals worth more than five times an assessee's gross income face scrutiny, those showing losses from a transaction or trying to get away without paying capital gains tax will also be under the lens.

The gross income will include the gross total income, which can come by way of salary and perks, agricultural income and income that is claimed to be exempt from tax. So, anyone purchasing an apartment worth Rs 1 crore could face the tax department's scrutiny if his gross income during the year is less than Rs 20 lakh.

Sources said in a booming real estate market, a few individuals could be selling official or residential spaces at a loss or avoiding paying capital gains tax since property value had appreciated many times over since they were acquired. As a result, anyone who sells a house worth more than Rs 30 lakh but has no capital gains liability could see his tax returns being scrutinised.

IN TAXMAN'S CROSSHAIRS

• Returns showing loss in transaction, capital gains of over Rs 25 lakh through sale of shares within year of purchase
  
• Buyers who are also active players in stock markets or borrowed heavily to fund house purchase under watch
  
• Hotels, tour operators with turnover more than Rs 5 cr & profit less than Rs 25 lakh

1. Realty Firms Put Off Alternative Investment Market (AIM) Listings.

2. Real Estate Bad Loans Begin To Stink

3. Wachovia Takes Stake In Vipul For Rs 234 Crores

4. DLF Fined For Delayed Possession By National Consumer Court

5. Builders To Pay 1% Cess For Labour Welfare In Haryana

6. Three Acres Hotel Land At Vinay Marg Delhi Sold For Record Rs 611 Crore In Delhi

7. Hundred Farmhouses Threatened By Kapashera Plan

8. Metro Effect On Real Estate Prices In NCR

9. No Deadline On Regularization Of Colonies In Delhi

10. Eighteen Road Under Bridges To Come Up Before Games In Delhi

11. Major Builders Prefer To Pay Govt. For BOT Toll Projects

12. Kundli-Manesar-Palwal Expressway Gets Land

13. Haryana Towns Will Get Direct Link To Rajasthan With Ambala-rohtak-bawal Expressway

15. Spa Planned At Bhondsi

Interest rates on loans are set to shoot up further with the Reserve Bank of India on Friday deciding to make money costlier by hiking the interbank short-term lending rate by 0.25% and the mandatory deposits banks are required to make with the RBI by 0.5%.

These measures are likely to hit economic growth. But, in a significant policy-turnaround statement, RBI said growth had now become a secondary concern. Controlling inflation is the central bank's top priority.

This would leave banks with no choice but to increase home loan rates by half a percentage point to 11.50%. The measure, besides affecting prospective loan seekers, will also hit those already paying home loan EMIs at floating rates. Interest rates on personal and commercial loans are also set to increase by the same amount.

In the last two years or so, banks have increased home loan rates from 6.5% to 11%, resulting in equated monthly instalments rising by 43%.

Surprisingly, RBI announced these measures around four weeks ahead of its annual credit policy. It increased the statutory requirement for banks to keep deposits with RBI (credit reserve ratio) by half a percentage point to 6.50%. This squeezes money out of the banking system by forcing banks to deposit an extra Rs 15,500 crore with RBI.

Besides this, the central bank has also increased the overnight inter-bank lending rate (repo) against government bonds by a quarter of a percentage point to 7.75% raising the benchmark interest rate.

The Budget mentioned that the reverse mortgage scheme would focus primarily on urban areas, especially where high realty prices will be a major incentive for banks. The Finance Minister had asked the National Housing Bank to enter the reverse mortgage market for senior citizens. The NHB will offer guarantees to senior citizens availing reverse mortgage facility from lenders to provide protection against any defaults by banks and housing finance companies.

However, the government now proposes to extend the scheme to rural areas as well. Considering the fact that rural areas too have a large number of elderly persons, abandoned by their children, the Ministry of Social Justice and Empowerment is now pressing for its extension in rural areas as well.

The government is contemplating on forming a joint committee of ministers concerned to coordinate with banks and village panchayats to form a scheme for extending reverse mortgage scheme in rural areas. The scheme for rural areas, with its focus on social security of elderly, will be first initiated in the realty boom villages of Punjab, Haryana and Uttar Pradesh.

Prakash Singh Gill, a 68-year-old resident of Model Town, Jalandhar, says: "This scheme has brought a lot of hope to elderly like us. My children are settled in Canada and I don't want to ask them to support me and my wife, Kiran. "

The government guarantees are being considered for two pilot projects, one in Belgaum, Karnataka, that has been underway since 2005, and the second one in Jaipur that has just begun.

A McKinsey estimate suggests that government guarantees on ownership of private land could increase property prices by 1.3% of the country's national income or Rs 36,000 crore based on 2006-07 figures.

"Land reform and specifically guaranteed titles are a very important milestone under the Jawaharlal Nehru National Urban Renewal Mission," said M. Rajamani, joint secretary at the Union urban development ministry and project director of the mission. "We are hoping to install guaranteed titling for Indian conditions, based on the Australian Torrens titling system."

Torrens title is a system where a register of land holdings, maintained by the state, guarantees title to those included in it. In India, title deeds only prove that a transaction involving the property had taken place and the government has derived land revenue from it.

Also, they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the Reserve Bank of India (RBI) from time to time, the apex bank said.Notably, the NRIs and PIO can acquire immovable property in India other than agricultural property, plantation or a farmhouse.

Accordingly, such payment cannot be made either by traveller's cheque or by foreign currency notes or by other mode other than those specifically mentioned, RBI stated.
The apex bank has asked the Category I banks to bring the contents of the circular to the notice of their constituents and customers concerned.

Source The Tribune

Fresh on the block are a 1.49-acre (6,040-sq. metre) property in Nagpur and another 12.06 acres in Belur, Howrah. It has already offloaded about 41 such properties. NTC has decided to initially revive 22 mills through these mill land sales.

The Model Mills property in Nagpur, defunct for some time, has five bungalows. The plot abuts the Main Umrer Road in Nagpur and is a freehold land. The total built-up area of the bungalows is 1,558 sq. metres.