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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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Non-metro cities are becoming the new realty hotspots

2/23/2020 6:36:00 PM

Lower prices, bigger homes and better returns on investment — paired with government incentives for affordable housing — have seen markets outside the prime metro cities pick up considerably over the past five years. According to a survey by property consultancy Anarock, 26% of property seekers looking to invest in real estate in 2019 listed cities like Ahmedabad, Lucknow and Chandigarh as their top preferences. Kochi and Bhubaneshwar in the east have seen steady growth over the last five years too. For a city like Ahmedabad, a growing realty investment hub, rapid infrastructure growth and industrialisation have been big factors driving this interest, says Santhosh Kumar, vice-chairman at Anarock. “Good connectivity and hubs like the Gujarat International Finance Tech-City have helped considerably.” The key impetus for markets in non-metro and non-prime metro cities has come from the government’s push for affordable housing. “Since 2015, more than half of all units launched nationally have been in the segment priced at less than Rs 40 lakh,” Kumar says. The incentives announced in 2014 included tax rebates that work better, in fact, in non-metro cities, says Pankaj Kapoor, managing director at realty research firm Liases Foras. “Tier 1 cities have registered 28% growth since 2015, whereas in Tier 2 cities the growth has been around 42%, according to our research. In the latter — cities like Jaipur, Bhopal or Lucknow — affordable housing projects get way more potential buyers as they can be built in prime locations because land prices and construction costs are lower. In cities like Mumbai, such projects are difficult to conceive of anywhere close to the central districts. They are always in far-flung areas,” Kapoor says. Another factor that has worked for the smaller cities is that, as the gaps in infrastructure and lifestyle have narrowed, businesses have moved in, drawing migrant professionals, creating a melting pot culture that is more cosmopolitan and urban, and eventually drawing people back home to those cities from prime metros. “People who had been working in metros are coming back for a similar lifestyle, at a lower cost, and the chance of a home of their own that they couldn’t dream of in the cities they had migrated to,” Kapoor says. UPS AND DOWNS The growth remains erratic, though, as demand and supply grow in spurts rather than a smooth upward graph. Office projects in Mohali have large vacant spaces, while in cities like Indore and Jaipur, rental rates are growing unusually fast as supply falls short of current demand, says Rohan Sharma, research head for India at the realty services firm, Cushman and Wakefield. A large potential area for growth is in the east, adds Neha Naidu, senior manager for retail at realty consultancy, Knight Frank India. “Thus far, eastern India has been considered one of the most conservative realty zones in the country. However, this is changing. The region is in the midst of being transformed from a traditional customer demographic to a product-aware, brand-savvy market,” Naidu says. An indicator is the entry of retail brands like Inox, Westside, Pantaloons and Spencers in cities like Bhubaneswar in Odisha and Dhanbad in Jharkhand. “With airports, IT hubs and multiple institutes of higher education in the region, it has a lot of factors working for it,” Sharma says. Source: Hindustan Times Chandigarh

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

2/24/2020 6:39:00 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 – 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 – 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 drop 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: Money Control Chandigarh

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PGs: A thriving business option in Zirakpur

2/26/2020 5:55:00 PM

In Zirakpur, a hub of affordable housing with several real estate housing projects, turning a house or a floor as a PG accommodation seems to be a lucrative business option here. PGs here provide an economical, safe and easy option of residence to thousands of young professionals. However, a majority of these accommodations don’t follow norms. Those residing as paying guests, students, especially boys, don’t mind sharing the rooms with others to reduce their share of rent. Scores of owners in the town have not registered their PG’s with any authority to avoid charges at commercial rates. In the absence of any check, most of the house owners charge as per their wish. According to sources, illegal PG accommodation business is flourishing in the city as over 50 per cent of the owners of such accommodation have failed to register themselves with the nearest police station. Every other house seems to be rented out to students, fully or partially, in certain pockets of the town, including Baltana, Dhakoli and other areas in Dera Bassi. As per norms, it is mandatory for PG house owners to get their houses registered at the concerned police station. Police verification of tenants is also necessary, but PG house owners are giving this norm a miss, too. Employees at Sewa Kendra said about 50 per cent of the applications they received get rejected due to wrongly attached proofs. They alleged that suppose one is residing in Zirakpur for six months and then he shifts to other PGs they attached the old proof with them and its get difficult to trace them. Though the city police hold drives against illegal PGs but after a few days, it again business as usual. Aashika Jain, holding additional charge of the Mohali DC, said, “We will be conducting inspection drives in the entire district to ensure guidelines and regulations are complied with.” She added that orders have been passed under section 144 under which the owners are supposed to report to the nearest police station if they are keeping any paying guest. Source: The Tribune Chandigarh