Real estate in india

The real estate industry is not enthused by the cut in duty on bulk cement from 10% to 8%. However, the cut in service tax rate from 12% to 10% will benefit those who have taken large commercial properties on rent.

Gera Developments CMD Kumar Gera said the reduction of 2% will have no impact at all. “It will make a difference of just Re 1 per square foot on the cost of construction. It is irrelevant and means nothing for the industry,’’ Gera said.

Real estate consultant Ashok Narang too felt that the reduction on bulk cement duty would make no difference on eal estate. “The market will kick start only when banks bring down interest rates to about 7% for a longer period. This cut in duty is just an eyewash. There need to be more incentives for the housing sector.’’

The head of a large real estate company said the cut in service tax will benefit those who are on rent in large commercial complexes. “For example, someone paying Rs 1 crore as rent annually for an office space. Earlier, he would have paid Rs 12 lakh as service tax. Now he would save Rs 2 lakh annually since under the new rate his service tax outgo will be Rs 10 lakh,’’ said the official.

However, industry players feel the government decision could have a positive impact on people’s sentiment. Property redeveloper Pujit Agarwal said that at a time when market sentiments are low, any kind of incentive is helpful, however small. “The duty city will bring down the cost of construction by just 1.5%. It is not much, but nevertheless a breather for the industry. The government wants to show it is being proactive,’’ he said.

South Mumbai developer R C Chaturvedi said a cement bag currently costs Rs 260. “With this reduction the saving per bag will be just 1.2%. This will not make much difference on the cost of construction,’’ he added. Developer Sunil Mantri of Mantri Realty said a cement bag will now be cheaper by Rs 5 to Rs 7. “Its a good step by the government, although a small one,’’ he observed.

Developer Pravin Doshi, who is also the president of the Maharashtra Chamber of Housing Industry, however, observed that this will make a difference on big projects. “It will help a lot. The cost of construction will reduce by at least 7% to 8%. It is a good decision.’’

Courtesy:- TOI dtd:- 25-02-09

The Indian economy has been growing at an average rate of 8.8% in the last four fiscal years, with the 2006-07 growth rates clocking an impressive 9.6%. The financial reforms of 1991 have been complemented by favorable policy changes and significant increase in investment on physical infrastructure. The country has also emerged as the fourth largest economy (in Purchasing Power Parity ‘PPP’ terms) in the world, led by economic liberalization and broad-based growth across various sectors. This stellar growth, augmented by unmatched fundamentals that the country enjoys, had given strong impetus to the real estate sector in Indian which registered an annual growth rate or about 25% between 2003 and 2007.
Information technology revolution and MNCs-led demand for quality office space resulted in modern buildings springing up in new suburban locations of key Indian cities. Salaries in India have been rising at the rate of 10-15% per annum and the per capita disposable income that increased several fold in the past decade is expected to further grow by 8-13% in the next five years.

The current phase of real estate
sector will separate ‘short-term’
players from the ‘long-term’ players
and despite momentary slowdown,
the long-term outlook for
the sector is positive and encouraging ,

Thus improved affordability in conjugation with increased penetration of housing mortgage finance led to an unprecedented housing acquisition drive by end users as well as investors. This, together with the fact that the average household size in India is fast decreasing, has fostered residential demand in recent times. Moreover, the change in attitude and spending habits of the consumers has led to an increase in consumption and demand for retail malls and has transformed Indian from a ‘saving’ to a ‘consuming’ economy.
Over the last 2-3 years, the capital markets have seen an increased presence of the real estate sector. In a bid to raise their capital base and fund future projects, real estate companies have approached domestic stock markets and close to 20-25 real estate and construction companies opted for IPOs and stock exchange listing between 2007 and 2008. Another trend that found favor with Indian real estate developers was listing on the offshore exchanges like AIM, Singapore listed REIT, Singapore Stock Exchange and Dubai International financial Exchange in order to raise overseas capital.
Post partial relaxation of FDI in the real estate markets in the country reinforces the fact the real estate sector is a cyclical sector influenced by several variables. In the long term, current churn and shakeout in the sector is expected to lead to market consolidation and make it more attractive for investment as the valuations will be more realistic. The current phase of the industry will separate ‘short-term’ players and despite the momentary slowdown, the long term outlook for the sector is positive and encouraging.
With strong economic and demographic fundamentals that the country has, real estate will remain a long-term attractive proposition. Though revival to the sector will depend on recovery of the domestic economy, it is likely to be earlier than in many other countries across the globe.

Courtesy dtd times property 14-02-09:

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Provision of affordable housing is one of the most formidable challenges that India currently faces. The 11th Five Year Plan estimates the urban housing shortage at the commencement of Plan period at 24.7 million units, with 99% of this shortage pertaining to the Economically Weaker Sections (EWS) and Lower Income Groups (LIG). Taking these into account, Ministry on Housing & Urban Poverty Alleviation had set up a High Level Task Force to look into the various aspects of providing Affordable Housing for All under the Chairmanship of Deepak Parekh, Chairman – HDFC Ltd. The Task Force has strongly recommended the need for Affordable Housing’ and mentioned that delay in addressing the affordable housing problem would seriously affect India’s economic growth and poverty reduction strategies. The Task Force estimates that alleviating the urban housing shortage could potentially raise the rate of growth of GDP by at least 1-1.5 percent and have a decisive impact on improving the basic quality of life.

Courtesy Et dtd. 14th jan 2009

Govt offers additional 5 p.c interest subsidy on loans up to Rs 1 Lakh
THE POOR can soon avail of house loans at low interest rates. Close on the heels of public sector banks announcing a lowering of interest rates on house loans up to Rs 5 lakh to 8,5 per cent, the government has decided to provide an additional 5 per cent interest subsidy on loans up to Rs 1 Lakh.
A poor person taking a loan of up to Rs 1lakh from a public sector bank or HUDCO at 8.5 percent interest, as has been announced by public sector banks as part of a new interest regime, will get additional 5 per cent government subsidy. “One has to to pay only 3.5 per cent interest on the loan taken,” said a senior official of the Ministry for Housing and Urban Poverty Alleviation.
The idea behind the rebate is to help those already having a small plot of land from 200 to 300 square feet for economically weaker sections (EWS) and up to 400 square feet for lower income groups (LIG)- to construct a house on it. This landowning requirement will be crucial in getting the loan.
Out of the funds to be used to finance this interest subsidy, the government plans to earmark 70 per cent for EWS and 30 per cent for LIG.
The economically weaker sections (EWS) are technically those with an income of less than Rs 33,00 a month, and lower income groups those with monthly incomes below Rs 7,300 a month. Here individual rather than family incomes are taken into account.
These populist announcements make sense in an election year, when the vote of the Aam Aadmi is crucial. Moreover, it is believed that the construction sector has an important sector in boosting growth. Construction sector growth has multiplier effect on GDP growth, as many manufacturing industries are related to the sector.
Courtesy:- HT dtd:-06-01-09.