Sunday, August 30, 2009

In realty, customer is looking at value buy: ASK Advisors

The developer has to either keep prices low or tie up with funding agencies such as private equity and complete the projects to get a delta premium for the built property:

Real estate markets are unlikely to witness a ‘V’-shaped recovery, argues Mr Amit Bhagat, CEO and Managing Partner, ASK Property Investment Advisors. The group, which currently has a real estate fund open for investment, will deploy money in a staggered manner, in line with the slow recovery anticipated. In an interview with Business Line, Mr Bhagat explains the current price situation in key realty markets and the fund 217;s investment strategy.

Excerpts from the interview:

If you believe this is the right time to invest, then why have you chosen to invest in a staggered manner?

I am very clear that it is not going to be a V-shaped recovery from here.

For one, real state markets do not have V-shaped recoveries anywhere; 1996 to 2002 was flat, then came the boom. In fact in 1997, there were commercial complexes left midway in construction and completed only in 2001-02.

Two, interest rate cycles vary. In the earlier cycle, it took eight years for interest rates to decline — interest rate in 1996 was 16 per cent, in 2004, it became 7 per cent. Cycles are much shorter today. There has been a 25 per cent reduction from 12 per cent to 9 per cent in 10 months.

But when is the buyer stepping in today? Look at the market over the last six months. In 2008, people did not buy. In the first quarter of 2009, too, they did not buy, when the prices fell by as much as 35 per cent.

Now they have stepped in because it is a value buy, despite the construction risk involved. So, today, the customer is looking at a value buy. Therefore, the developer has to either keep prices low or has to tie-up with funding agencies such as private equity and complete the projects to get a delta premium for the built property.

To read more, please, visit The Hindu Business Line

Friday, August 21, 2009

How SBI scores over peers in home loans

Rate cut, increase in limit, withdrawal of processing charges are some of the pluses, writes Tinesh Bhasin.

Last Friday, the country's largest bank, the State Bank of India, created a flutter in the home loan market when it slashed rates by another 0.5 per cent in second and third years under the Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh) schemes.

It also raised the limit from Rs 30 lakh to Rs 50 lakh for the Easy Home Loan segment, the first bank to do so.

No wonder, market experts are quite enthused. "This scheme becomes unbeatable compared to all other as interest rates are fixed for the first three years," said Harsh Roongta, CEO, www.apnapaisa.com.

He said that in a floating rate scheme, banks have the option to revise the rate upwards as and when interest rates go higher. In SBI's case, they will realign with market rates only after three years, giving the scheme an edge. Only Canara Bank has a five-year fixed rate, though pegged higher at 9.25 per cent (between second and fifth year).

In the last few months, many banks have resorted to this part-fixed, part-floating rate structure in which they are offering a fixed rate for a limited tenure. After that, the rate is based on the existing benchmark.

For instance, SBI has set the floating rate at 2.75 per cent below the State Bank Advance Rate or a fixed rate 1.25 per below SBAR. Also, it is not charging any processing fee, no prepayment penalty if the loan is paid from one's own resources and offering a free personal accident insurance.

For potential home buyers, these rates look very attractive. However, while deciding a lender, there are a number of things that one needs to look at.

There are a number of players offering this part-fixed, part-floating rate. Besides, SBI LIC Housing Finance has a Fix-o-floaty and Canara Bank has a five-year fixed rate.

Perhaps the simplest way to compare rates is the average rate per year. However, one has to take existing conditions and benchmark rates into account.

For someone, who is looking for a 20-year, Rs 30-lakh loan, SBI's average rate is 8.76 per cent a year. Only, Axis Bank's floating rate and Indian Overseas Bank offer a competing rate of 8.75 per cent.

HDFC and LIC Housing Finance's special scheme (Fix-o-floaty) are offering annual rates of 9 per cent (EMI = Rs 26,911 a month) and 9.1 per cent (EMI at Rs 27,185).

In case of the administrative and processing fees, SBI schemes score because there are no charges. Lenders such as Axis Bank and HDFC, charge 1 per cent as processing fee. ICICI Bank and Canara Bank charge 0.5 per cent.

As far as prepayment penalty goes, SBI is not charging anything if the loan is paid from one's own pocket. Most banks such as LIC Housing Finance, ICICI Bank and HDFC charge 2 per cent as prepayment penalty.

The only area, where SBI seems to lose out a little is the loan-to-value (LTV) ratio. This ratio refers to the amount borrowers need to contribute to the overall cost of the property.

SBI's LTV ratio is 80 per cent. HDFC, LIC Housing Finance and Axis Bank give up to 85 per cent of the total property value as loan.
Rediff

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How the new tax code will affect you

The biggest point of discussion has been the rise in the income slabs. While retaining the basic exemption limits at Rs 1.6 lakh (for individuals), Rs 1.9 lakh (for women) and Rs 2.4 lakh (for the retired), the slabs have been hiked substantially.

Along with this, the limit of Section 80-C, which has been renamed Section 66, has been hiked from Rs 1 lakh to Rs 3 lakh. For someone earning say, Rs 14.5 lakh per year, the new numbers could look something like this: Rs 1.6 lakh (basic exemption) Rs 3 lakh (savings under Section 80C/ Section 66) Rs 9.90 lakh taxable income Tax rate for Rs 10 lakh = 10 per cent Tax liability = Rs 99,000.

Looks fantastic? But it's not that simple. For a salaried person, who gets house rent allowance, medical and other perks, he/she will not get tax benefits anymore. In fact, the value of rent free or concessional, leave travel allowance, earned leave and medical reimbursement, etc will now be included as a part of the salary.

Vikas Vasal, executive director, KPMG, says, There were certain prerequisites that an employee enjoyed in his salary. All the perks in the direct tax code are brought under the tax net. This means the taxable income will now be higher.


To read more, please, visit Rediff

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Thursday, August 20, 2009

Interest rates to rise - ICICI Bank CEO and managing director Chanda Kochhar

The country's largest private sector lender ICICI Bank on Thursday said lending rates will start going up any time now, quite contrary to the SBI chairman's projection that borrowers can breathe easy till Diwali.

"I really believe that interest rates are not going to go down from here. Gradually they would go up. When?...would really depend on how fast the credit growth takes place," ICICI Bank CEO and managing director Chanda Kochhar told PTI.

Her statement comes a day after SBI Chairman O P Bhatt said that rates would not rise till Diwali and may even soften by 25-50 basis points before the busy season in October.
To read more, please, visit Rediff

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Sahara plans to tap market with $1-bn IPO for realty arm

Lucknow-based Sahara Group is planning to take its realty arm public and raise up to $1 billion, which, if successful, would make the company the second valuable player in the segment after DLF

Sahara Group wants to offload 10% of its stake in the wholly-owned company, valuing itself at $10 billion (Rs 49,000 crore) behind DLF, which has a market cap of Rs 63,000 crore as on August 19, 2009.

Currently, the second valuable firm in the Indian realty firmament is Unitech with a market cap of Rs 17,000 crore. The draft red herring prospectus for the offering will be submitted in a week, the person said.

Refurbishing real estate business!:

According to a real estate expert, the proposed IPO indicates that the group is refurbishing its real estate business after the Reserve Bank of India (RBI) asked it to pull out of its mainstay parabanking activities over a period of time. RBI has asked Sahara India Financial Corporation not to accept any new deposit which matures beyond June 30, 2011.

It has also been asked to stop accepting instalments of existing deposit accounts with effect from that date.

217 townships:

It plans to set up 217 townships, spreading over 100 acres each, in various parts of the country. Of this, the first phase is expected to set up 102 townships, while the remaining in the second phase. The first phase is expected to be over in the next five to seven years while it will kick-off the second phase from 2015.

Trend in the realty industry:

Sahara’s plans aligns with the larger trend in the realty industry, which is crawling out of a market slump. A clutch of real estate companies are in the process of launching IPOs this year in order to cash in on the slow reversal of fortunes in the sector.
To read more, please, visit - The Economic Times

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Simple tips for making a will

"Making a will is one of the most important and integral part of personal financial planning."
A will enables each one of us to distribute our property and assets in the manner we wish to distribute it. A will may also reduce the risks of undue litigation, delays, misunderstandings and disputes amongst family members.

A will can be hand-written, or typed, on a piece of paper. It requires no stamp duty or registration, although experts advise that a will must be registered so that it is in safe custody. The will must be attested by two witnesses, one preferably a doctor.

Consider some simple guidelines while creating a will:

A will can be hand written in ink but preferably should be typed.

It does not require any stamp paper & and it need not be registered.

It should preferably be drafted by a lawyer, and checked by an accountant.

It is advisable to name in your will, more than one executor/executrix to administer the estate and distribute the property, as per your desire.

The will must be signed by you in the presence of at least two witnesses who must also sign the will at the same time. Their full names and addresses should be given. (Note: Witnesses need not know the contents of the will)

The executor or beneficiary cannot attest the will as a witness.

The executor of the will can also be named as a beneficiary and vice versa. Sign each page of the will, so that nobody can substitute a page later on, nor can anybody argue about fraudulent insertion of a page subsequently.

Keep your will in a safe place e.g. in a bank locker. Inform the executor and beneficiaries where the Will is kept. Also give a signed copy to your lawyer.

Review your will regularly, say once a year. It may need amending to take care of changes in your financial or family circumstances.

On the demise of a spouse, the surviving spouse needs to revise his/her will.

To read more, please, visit rediff.com

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Wednesday, August 19, 2009

Now, pay tax via ATMs

"We are offering a service for payment of income tax for Corporation Bank debit card holders through our network of 1,000-plus ATMs in the country from August 18," Corporation Bank's Chairman and Managing Director J M Garg said.
Finance secretary Ashok Chawla on Tuesday launched the first of its kind banking service, where a customer can pay his income tax using an ATM.

The facility has been started by Corporation Bank. The bank's debit card holders would also be able to pay education cess, surcharges and advance tax through ATMs. Initially, at least 10-20 lakh people who have an account in the bank will benefit.

Gradually, in the next one or two years the facility will be provided by all other banks, said S S N Moorthy, chairman of the Central Board of Direct Taxes.
To read more, please, visit The Economic Times

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For sensible capital gains taxation- Swaminathan S A Aiyar

The government’s proposed direct taxes code has been widely welcomed. It seeks, rightly, to bring corporate tax rates closer to the Chinese and ASEAN levels, and combine lower rates with fewer exemptions. The proposed income-tax changes will give substantial relief to the middle class, but may cause excessive revenue losses.

Experts have already analysed most proposed changes threadbare. But virtually none have focused on one area where the proposed code goes seriously wrong — capital gains tax. Indeed, the underlying issues are fundamentally misunderstood globally.
To read more, please, visit - The Economic Times

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Tuesday, August 18, 2009

New Tax Code: proposed 2 % tax on the land bank - Impact on realty sector

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Is the realty sector looking up?

Rajeev Talwar, group ED at DLF, speaks on the demand for housing, competitive property pricing, new tax code and it's impact on real estate market:

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New tax code to dent housing, fear bankers & realty firms

The banks and real estate companies are apprehending that the removal of tax benefits on the interest portion up to Rs 1.5 lakh of any housing loan as proposed in the draft tax code will hamper the growth of housing finance and real estate business.

Niranjan Hiranandani, managing director, Hiranandani Constructions, “This is a very wrong decision as world over tax exemption on housing loan is encouraged to provide boost to the real estate sector. Government will have to restore the tax reforms as demand in real estate business will be badly impacted.”
To read more, please, visit - financialexpress.com

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Bangalore-based realty companies plan to invest in Mumbai and Pune

With the real estate sector picking up in large parts of the country, Bangalore-based realty companies such as Puravankara Developers, Sobha Developers and Nitesh Estates are now exploring options to enter new markets.

It is learnt that these players are drawing up plans to invest in cities such as Mumbai and Pune.

The consensus is that money will not be easy to raise at a time like this. “It will be interesting to see how these companies arrange for the funds for these projects. While PE money is hard to come by, it will not be easy to take the capital markets route,” said a consultant at an international real estate firm.

To read more, please, visit The Economic Times

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Monday, August 17, 2009

Black money falling flat

Good news for property buyers. The obnoxious black money, or the unaccounted cash component, for buying a flat is slowly fading out with buyers calling the shots in a market still being rebuilt after crumbling in last year’s financial storm.

Across Indian metros, more and more properties can now be purchased through the accounted money or white, thanks to the changed profile of the buyers and the government’s base price policy.

“According to Section 50 (C) of the Income Tax Act, one had to pay tax according to ready reckoner prices. If anyone pays below the current market price, he still has to pay tax as per the market rate,” says Vinod Sampat, a tax lawyer and consultant. An individual reinvesting the net proceeds from the sale of a house in another residential house is exempted from capital gains tax. This has given a big relief to many sellers who reinvest in real estate.
To read more, please, visit - The Economic Times

Do you mind paying "other charges" in cash?

OK. There are no more 60 - 40 terms of payments for the property in Pune real estate market. But we can't say that "cash component" has completely gone!

You know that there is one builder on Pashan Baner link road who demands Rs. 3 lakhs as "other charges in cash" for his ready possession flats. Do you mind paying your hard earned and tax paid money to the builder because those are his standard terms of business? Or would you happy to pay roughly 10 lakhs cash to the real estate investor for his unused flat in Kharadi. Which the investor is selling for less property price then the builder is asking for in the same project? Please, share your views in the comments.

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Sunday, August 16, 2009

In Delhi and National Capital Region, dealing directly with developers to buy a property may not get you the best deals - P D Dwivedi

ROHIT Gandhi decided to purchase a home and avail himself of the new segment of quality affordable housing that was being launched in the current wave of development , post the economic downturn. The falling home loan interest rates in the affordable category were an added incentive.

To get the best lot, Gandhi decided to put in his money on the day of the launch. With all his documents ready, when he reached the developers office he found to his dismay that he was pitted against a large number of agents who had come with up to 50 cheques to book the apartments. The developers sales staff too, was attending more seriously to those with multiple cheques rather than to individuals like himself.

At a distinct disadvantage, Gandhi was not sure whether he had done the right thing purchasing the property at the time of launch as an individual, instead of going through a broker.
To read more, please, visit - blogs.siliconindia.com

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Saturday, August 15, 2009

Property pricing information for real estate buyers and sellers across India

Zamanzar.com releases city and locality level average price data for properties:



Zamanzar.com has just created a wealth of property pricing information for real estate buyers and sellers across India. You can now view city level and locality level average property price data at Zamanzar.com.

For example, http://www.zamanzar.com/Bangalore/Residential-Property-Prices.html gives you average prices and price per sqft values for apartments, houses and residential plots for sale in Bangalore, whereas http://www.zamanzar.com/Bangalore/Commercial-Property-Prices.html shows you average prices for shops, offices and commercial plots for sale in Bangalore.

This information is automatically refreshed based on property listings available on Zamanzar.com and is available for several major cities in India including Delhi NCR, Mumbai, Ahmedabad, Pune, Jaipur, Lucknow, Bangalore, Hyderabad, Chennai and Kolkata.

You can also get an idea of locality level property prices for popular areas within a city. For example, http://www.zamanzar.com/Bangalore/Koramangala/Residential-Property-Prices.html gives you residential prices for Koramangala whereas http://www.zamanzar.com/Bangalore/Koramangala/Commercial-Property-Prices.html gives you commercial prices for Koramangala. The page also shows you a map of that locality along with schools & colleges, hospitals, hotels and malls in that locality so that you can make a better informed property buying decision. Links to nearby areas are also available so that you can view and compare property prices across areas.

"Our goal is to provide Indian and NRI real estate consumers with market information that allows them to make a better real estate decision. These information pages allow consumers to get a real estate market snapshot at a city and locality level based on current pricing data available on Zamanzar.com. Stay tuned for more features that will make these pages even more useful for consumers", said Nisheeth Ranjan, Founder/CEO of Zamanzar.com.

Zamanzar.com is currently ranked within the TOP 10 real estate portals in India according to Alexa traffic rank.

The company was started in 2007 by Nisheeth Ranjan, a graduate of Cornell University and Stanford University, after having worked in Silicon Valley, California for more than 10 years.

Zamanzar.com provides an end to end solution for buying/renting/selling residential or commercial real estate across India. The real estate portal has more than 250,000 property listings and offers online and offline services for buyers, renters, owners, agents, and builders. These services include online marketing, property tours, property appraisals, title checks, financing, negotiation, legal paperwork, property registration etc.
To read more, please, visit - Free Press Releases

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Friday, August 14, 2009

HDFC reduces interest rates to 9% per annum for Rs 30-50 lakh home loans

Home loan major Housing Development Finance Corp (HDFC) has cut interest rates by 50 basis points (100 basis points = 1%) for the Rs 30 lakh-Rs 50 lakh slab. The new rate for this bracket will be 9% per annum, down from 9.5% earlier, a senior HDFC official said.

Earlier, HDFC had three slabs for home buyers. It charged 8.75% per annum for loans up to Rs 15 lakh, 9% for loans between Rs 15 lakh and Rs 30 lakh and 9.5% for loans of over Rs 30 lakh. Now the mortgage finance major has introduced a new slab of loans at 9% for Rs 15 lakh and Rs 50 lakh.

After this rejig, only home buyers opting for loans of over Rs 50 lakh will pay an interest rate of 9.5%.
To read more, please, visit - The Times of India

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Due to drastic slowdown in property markets across the world, Knight Frank puts off plan for India-focused property fund

Private Equity Real Estate Funds:

According to a report by global research firm Preqin, private equity real estate funds are still struggling to raise capital in the current economic environment. In the April-June quarter, 21 real estate funds made aggregate commitments of $10.3 billion, down 72.16 per cent from the $37 billion in the year-ago period.

The interest from private equity funds has waned due to slowdown in the sector in the past nine months. Only three PE deals, worth Rs 600 crore (Rs 6 billion), have taken place in the realty sector in the past nine months, as against Rs 40,000 crore (Rs 400 billion) worth of deals during the same period in 2008, according to Venture Intelligence, which tracks venture capital and PE investments.

Knight Frank India chairman Pranay Vakil confirmed the development. The offshore fund was supposed to raise investments from high net worth individuals and other investors from the UK.
To read more, please, visit - Rediff Business News

Related Story:

Affordable housing for Rs. 8-10 lakh income category!

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Thursday, August 13, 2009

New tax code: Easy on your pocket

ET Bureau:
The government on Wednesday unveiled the draft of a brand new direct tax law that would represent a radical review of the Income-Tax Act, 1961.

The tax code makes radical changes in all areas of taxation: it lowers the incidence of tax on corporate and individual incomes but reintroduces wealth tax on all assets and tax on long-term capital gains, albeit at lower levels.

It also proposes to bring a uniform pattern of taxation to bear on all long-term savings: EET, which is exempt at the stage of contribution, exempt during accumulation and taxed during withdrawal.

Check out how new tax code would impact individuals.


Individuals:

Women:

Seniors Citizens:


Deductions:

Tax liability and you:

The direct tax code is a bit of a mixed bag for individuals, particularly the salaried class. Prima facie, the tax liability will reduce significantly as the draft code proposes to tax incomes up to Rs 10 lakh at 10%, that between Rs 10 lakh and Rs 25 lakh at 20% and sum in excess of that at 30%.

Thus, an individual with taxable gross income of Rs 10 lakh will pay tax of Rs 84,000 as opposed to about Rs 2.11 lakh he pays this fiscal year.

Check out the impact of proposed code on tax liability..

If your annual Income is Rs 4,00,000:

If your annual Income is Rs 8,00,000:


If your annual Income is Rs 15,00,000:


Measure and impact of proposed tax slabs:

The government, in its new Direct Tax Code, has sought to introduce provisions to prevent the misuse of double-taxation avoidance treaty that India has with a few countries.

While the code will empower the government to enter into an agreement with any foreign country for relief on double taxation, it will also extend to enabling the purpose of exchanging information from the partnering country to prevent evasion or avoidance of income tax.

Individuals:

Code for income from business to be rationalised, every business will be a separate source and taxed accordingly.

Wealth to include all assets including shares, amount in excess of Rs 50 crore to be taxed at 0.25%.

New simpler scheme for computing income from house property.


Savings:

Any sum from life insurance policy, including bonus, exempt from income tax.

EET regime to apply from 1 April 2011. Withdrawal of accumulation before that not to be taxed.

Shift from one eligible saving scheme to another not to be treated as withdrawal.

Capital gains:

The base year for calculation of capital gains shifted from 1.4.1981 to 1.4.2000. As a result, all capital gains before April 2000 will be exempt.

Capital loss will not be allowed to be set off against any other income.

Inflation indexation of cost of acquisition/improvement to continue.

Transfer of asset as gift will not attract capital gains provisions.

Gains not taxed (rollover benefit) if invested in approved capital gains savings scheme, first residential house, farm land.

Cost of acquisition to be nil if it cannot be determined or ascertained for any reason.

All withdrawals from any capital gains savings scheme will be included in residual income.

The main purpose:

The new code will completely overhaul and simplify the existing tax proposals for not only individual tax payers, but also corporate houses and foreign residents.

How will it help:

The idea is to keep the provisions simple so that even an average taxpayer can understand the language, than having to go to chartered accountants and income tax practitioners. It will also introduce the concept of tax calculators.

What can the public do:

The finance ministry has uploaded on its website - www.finmin.nic.in - the draft direct tax code, a discussion paper, a comment on the code and what rating people would like to give to it.

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