Latest Property News on 'Real Estate India'

Khaitan IAS man to Head Delhi Real Estate Practice

Khaitan & Co has hired ex-bureaucrat and lawyer Dr PK Agrawal as partner to head its real estate practice in Delhi. This is Agrawal’s first assignment at a law firm, which he has now taken up after retirement.

Agrawal said: “As an IAS officer, I was dealing with a lot of court cases, especially in revenue matters and land laws - there were lakhs of cases since it’s a big litigation area. In fact, I was already doing a half-lawyer’s job and I am happy that [in Khaitan] I’ll be doing a full lawyer’s job. Read More »

DLF Signals Rise in Property Prices

Following the interest rate hike by a few leading banks and the government proposal to slap service tax on the realty sector, the country’s largest real estate developer DLF on Monday said properties would turn dearer as developers would have to pass on the service tax burden to end-users. “If the signal from the bank and government is to raise the price, then why prices will not go up? That means the economy is to ready take a price hike. It will be wrong to assume that developers should not raise prices. How can you have two contradictory signals?” DLF group executive director Rajeev Talwar said on the sidelines of a seminar in New Delhi.

While a few private sector lenders, including ICICI Bank and HDFC Bank, recently increased home loan rates by up to 100 basis points, the Budget proposed to impose service tax on the realty sector both on commercial rentals as well as on sale of under-construction housing units. The service tax would come to be about 3.5 per cent of the cost of the apartment that includes the value of the land and also the cost of construction, realty body Credai said. Read More »

Finance Ministry Rules Out Rolling Back of Service Tax on Real Estate Sector

The Finance Ministry on Thursday ruled out rolling back of service tax on real estate developers at the time of construction, a move which the industry says will jack up housing and commercial property prices.

“Construction is a service. As a service, there is no reason why it should not be taxed,” revenue secretary Sunil Mitra said at a CII seminar here on Thursday, adding however, it is only 3 or 3.5 per cent that gets added up for the buyer. Central Board of Excise and Customs chairman V Sridhar has also said the realty sector would not attract 10 per cent service tax in effect. Read More »

India in Hiring Mode- Hiring on for Real Estate Sector

India continued to be the most optimistic nation in terms of hiring plans for the next three months, driven by strong job opportunities across all sectors including finance and realty sectors, global staffing services firm Manpower said.

According to the quarterly ‘Employment Outlook Survey’, India Inc’s hiring outlook improved by four percentage points for the April-June period compared to the previous quarter. Read More »

India Infoline Advises to Buy Indiabulls Real Estate for target of Rs 185

India Infoline has advised high-risk traders to buy Indiabulls Real Estate for target of Rs 185. “Indiabulls Real Estate is pointing to continued strength in the weeks to come as it has broken a downward-sloping trend line since early-January 2010. A detailed study of the daily chart shows that the stock has corrected from the high of Rs 236 in January 2010 to touch a low of Rs 151 last week.

On Thursday, the stock staged a smart breakout past the downward sloping trendline. This bullish breakout signals the end of the intermediate downtrend. We recommend high risk traders to buy the stock in the range between Rs 171-175 for a target of Rs 185 with stoploss of Rs 166,” the report said.

Realty Companies Joining Hands with Land Owners to cut Expenses

Sky high land prices, unclear titles and a clear need to conserve cash are forcing some real estate companies to do joint development deals with landowners rather than splurge money in buying and holding land at expensive rates. Bangalore-based developers, such as Nitesh Estates, Prestige, Puravankara, Brigade and Mumbai-based Godrej Properties are adopting this route to develop properties, aware of the keen need to save cash in a market that is becoming increasingly tight-fisted for real estate firms.

“Developers no longer want put cash upfront and invest inland. The JV works both for developers as well as landlords,” said Amit Mookim, director, transaction advisory service (real estate), KPMG. Under the arrangement being discussed by some firms, landowners team up with developers through a special purpose vehicle (SPV). The owner comes on board as an equity partner in lieu of the land he puts on the table. When the project gives returns, the landowner gets a fixed percentage of the revenue in proportion to his equity holding. Read More »

Foreign funds sneak into property business

Foreign debt, banned in real estate, is finding its way into property firms, as bankers and lawyers help builders cobble together new deals to raise money. Even though foreign loans, better known as external commercial borrowings (ECBs), are not permitted in construction, property firms have spotted a mechanism where the debt can be provided by foreign institutional investors (FIIs) registered with Sebi. No rules are broken and the deals, involving a three-way transaction, come across as normal private placements in the corporate bond market. It begins with a real estate company placing non-convertible debentures (NCDs) with a local entity like a non-banking finance company (NBFC) to borrow.

The next step involves listing the debt security, soon after which an FII steps in. Once the NCD is listed in the stock exchange, the NBFC offloads the paper to a foreign fund. Since FIIs cannot invest in unlisted debt, the NBFC warehouses the NCD till the paper is listed and then recovers the money by selling the debentures to a foreign fund. The two transactions are parts of a back-to-back deal struck among the NCD-issuing firm, the local NBFC and an FII. At least four developers, three from Mumbai and one from Bangalore, have raised over Rs 1,000 crore in the past few months through this route. Read More »

Mumbai’s Fails to Lure Bidders in Govt Land Sale

Mumbai’s failure to lure any bidders in the first government land sale in at least 1 1/2 years may cause rates in that area to fall as India’s financial hub seeks to develop the reclaimed marshland into a key business district. “It’s a once-in-10 years kind of situation,” Vivek Dahiya, chief executive officer of New Delhi-based GenReal Property Advisors, said by phone from New Delhi. “The Mumbai real estate market is going through a rare situation, where several micro- markets are going to witness over-supply because lots of projects coming up in some areas and demand drying up in some.”

The five likely bidders who attended a preliminary meeting last month for the sale of the site in the city’s Bandra-Kurla Complex didn’t submit offers yesterday, said Dilip Kawathkar, joint project director and spokesman for the Mumbai Metropolitan Region Development Authority. The land was valued at a minimum 4.35 billion rupees ($95 million) by the agency. Read More »

Ansal sees Rs 730 cr from two townships

Ansal API, the New Delhi-based real estate player, is looking at garnering sales of at least Rs 730 crore from two townships in the next two fiscals, even as it ramps up its plans for the affordable housing segment, a source familiar with the development said. The developer is currently working on 19 townships focusing on the residential sector, which includes two mega townships of 1,765 acre Sushant Golf City, Lucknow and 2,504 acre Megapolis Dadri, Greater Noida. The realtor has received Rs 410 crore as advances from sales in its Sushant City project and has bought land for the first phase in Megapolis. These two townships would provide sales of Rs 330 crore in fiscal 2011 and Rs 400 crore in fiscal 2012 as the developer increases its marketing and sales initiatives in these two townships.

Ansal would now acquire 2,121 acres for the Dadri township and 530 acres for the Lucknow township to launch other phases. The Sushant Golf City Township is being developed in three phases with total of 60 million square feet of saleable area, comprising 23 million sq ft of residential and 27 million sq ft of non-residential development such as retail, commercial and industrial, etc. Ansal has already sold 10 million sq ft of residential units, including villas, plots and vertical apartments in the Lucknow township. The company is now looking to generate sales of Rs 330 crore from the sale of plots with an average price of Rs 1,333 per sq ft and additional Rs 489 crore from the sale of villas, group housing and apartments. Read More »

No taxing time for real estate: Govt

The government today said the net impact of the service tax on real estate construction would be only 3.3 per cent, since construction attracts service tax only on 33 per cent of the value. The government had last week clarified through the Budget that transactions such as leasing vacant land and commercial spaces, payment made to developers before the grant of completion certificate and imposing preferred location charges, among others, would come under the service tax net.

Developers said the proposal could push home prices up by 10 per cent in Tier-II and Tier-III towns and 0.5-4 per cent in big cities such as Mumbai and Delhi which have higher land prices. However, a senior finance ministry official here said the net impact of the service tax would be only 3.3 per cent, since there is an abatement of 67 per cent. “There is a false impression being created that prices will go up by 10 per cent but the fact is that 10 per cent service tax is levied only on 33 per cent of the value,” said the official. Read More »