Realty axis

The year 2010 can be a game changer, for the housing shortage in New Delhi is all set to be bridged, to a certain extent, with new supply coming in. There are approximately 15,000 flats being readied in Vasant Kunj, Jasola, Narela and Dwarka to meet the housing demand that will arise during the Commonwealth Games to be held in October. Of these 15,000 apartments, 8,000 are going to be ready by June.

The DDA is expected to start auctioning a bulk of these apartments from the 2Q onwards. The previous auc- tion of 5,238 apartments was held in September 2008, which attracted approxi- mately six lakh applications, although due to some irregu- larities the physical posses- sion is yet to take place.

In addition to this, there are 3,500 apartments that are being built for the Commonwealth Games, tak- ing the number of apart- ments up to 18,500. These units are expected to be ready by the end of the year.

If the complete 18,500 stock is offered during the year this would probably be the largest number of apartments/hous- ing scheme that the DDA would have brought out dur- ing any given year. Over the next four years DDA plans to construct and deliver 42,000 apartments, thus easing the housing pressure that the city is currently experiencing.

If the DDA is successful in auctioning these apartments and offering physical posses- sion in a short span of time, the housing problems of the city would be eased to a large extent. This may even lead to capital and especially rental values stabilising if not correcting in certain locations where the supply is concen- trated.

There is also the recent 12,000 acres in Chhattarpur that has been allowed for acquisition by the Supreme Court. The acquisition is not going to be easy as this area has farmhouses, and various illegal/unauthorised con- structions. The DDA can expect dispute, opposition and more litigation as it tries to acquire the land in this area. If DDA does manage to acquire the land parcel in a short span of time, this area could see unparalleled growth especially if PPP model is followed as this would allow for faster imple- mentation/execution of work.

This model was seen at work in case of the Commonwealth Games village being devel- oped by a private developer Emaar MGF thus allowing for successful PPP models to exist and to be structured in the future. On the private front, there are several Cooperative Group Housing Scheme (CGHS) in Dwarka that are under litigation and the regu- larisation of these will fur- ther add to the supply. Most of the development was restricted to builder floors by contractors and smaller local developers and thus most of the current stock is in the form of smaller develop- ments such as floors, villas, and bungalows. In the recent past various private develop- ers such as DLF, Raheja, Indiabulls, Parsvanath, etc.

have also started large scale developments across Delhi. DLF received an overwhelm- ing response for its Capital Court I and II which shows that the underlying demand in Delhi is strong for a rightly priced housing product, although certain locations, especially in central and south Delhi, allow for only luxury projects to be constructed due to high land rates. Again, concessions in the form of higher FSI or sops for developers by the government bodies will allow for private developments to be more economical. The author is head, residential, Cushman & Wakefield

Source: Hindustan Times

From demand stimulants and some relief for the beleaguered industry, to overlooked asset classes and higher indirect taxes, the Budget presents a mixed bag for real estate. Some of the key highlights of the budget are:

• Service-tax could significantly increase the transaction cost for specified asset classes. Service-tax @ 10.3% is now proposed to be levied on value of (i) additional services provided by the builder such as offering preferential location, etc (ii) lease of vacant land, if construction is undertaken thereon. For developers, there may also be a trade-off between the realizing pre-sales, and reducing transaction costs, as service-tax would now be levied on sale of property, unless the entire consideration is paid after completion of construction.

• On the other hand, extension of the interest subvention of 1% for low cost housing to March 31, 2011, along with increase in the slab rates for individuals should provide the necessary demand boost for low-cost housing.

• In what should provide much-needed succor to residential developments staring at project delays, the time-limit for completion of projects eligible for deduction under section 80-IB has been extended to 5 years. Liberalizing the limit of commercial space that could be created in such projects will also help. On the flip side, however, companies executing such projects would now need to pay a higher minimum alternate tax of 19.93%.

• Hospitality would receive a much-needed boost by the investment-linked tax holiday being made applicable for all new hotels in the 2-star plus categories.

As can be seen, commercial real estate seems to have been shortchanged, in spite of the severe liquidity crunch and demand slowdown being faced by the sector.

On the positive side, however, the Finance Minister did acknowledge the contribution of SEZs to India’s export-growth, and expressed the government’s commitment to the continued growth of SEZs. One could, therefore, expect that the revised Direct Tax Code, which the government intends introducing by April 1, 2011, may not hopefully tamper with the fiscal incentives being offered under the SEZ regime.

Source – Economictimes.com

Over 4,500 people had submitted the forms for 3,600 flats by Sunday evening.

The number of applicants could cross even 9,000 by this evening. But deputy CEO P.C. Gupta said that the actual figure would be available only by Wednesday.

According to sources, the total number of applicants could be between 8000 and 10000. The GNIDA had announced the scheme on January 15 which is Uttar Pradesh Chief Minister Mayawati’s birthday.

The scheme comprises four-storeyed flats to be allotted to applicants within two years.

Source: The Tribune