Real Estate Gurgaon

Haryana and Uttar Pradesh are set to impose a ‘Metro cess’ to fund the extension of Delhi's Metro rail into Gurgaon and Ghaziabad respectively.

The Haryana government will levy a tax on property developers to raise the Rs 680 crore required for Gurgaon's Metro rail. "We have decided to levy a Metro cess on the developers in Gurgaon," said SS Dhillon, director, town and country planning, in the Haryana government. It will be part of the external development charges to be announced in January, and will apply to builders of all kinds of properties.

"This will inflate the cost of Gurgaon properties as the consumer will have to bear some of the cost," said NK Sehgal, president, Ansal Properties Limited.

The Ghaziabad Development Authority (GDA) board will consider the proposal to impose a Metro tax on Wednesday. The final approval will have to come from the state government. The cost of connecting Ghaziabad by Metro rail with Noida and Delhi will be about Rs 3,300 crore.

The GDA too is planning to impose the cess on all future housing projects in the upcoming 'Hi-Tech City' and 'Integrated City'. But it does not plan to tax residents of Vaishali, Kaushambi and other existing residential colonies. 'These areas have already been developed,” said a GDA official. "Raising funds by taxing already sold properties will be a difficult proposition.'

Source://hindustantimes.com

The Indian real estate sector is set to become one of the biggest wealth creators in the country. Strong GDP growth, the increasing impact of software and IT enabled services, the growth of organised retail, the continued inflows of foreign direct investment and portfolio investment are all spurring its growth.

The market capitalisation of real estate companies in India, currently around $16-18 billion (Rs 72,000 - 81,000 crore), is expected to rise ten-fold in the next ten years, according to Edelweiss Securities, crossing $160 billion. By end 2007 itself, once companies like giant realtors like DLF, Omaxe and others are listed, the market cap may be over $50 billion.

Name Market cap (Rs in cr)
Mar-04 Dec 18, 06
Unitech 324.7 37,784
Anant Raj Ind 40 4,580
Mahindra G 219.2 3,358
Ansal Prop 102.3 5,617
Prajay 19.6 1,509
Peninsula L 365.2 2,827

Edelweiss, in its report, also states that investable real estate gurgaon in the range of $480 to 600 billion will be created in the next 10 years. Assuming about 40 per cent of this is funded though equities, it will create a market cap of $160 to $220 billion. "Real estate in India is in a breakthrough phase and is poised to be an important part of the country's growth trajectory, leading to significant market creation," says the report.

Given the tremendous demand for housing, coupled with an improving regulatory landscape, robust economic growth, modernising urban development methods, the realty sector will become extremely attractive over the next four to five years, says another report prepared by SSKI India.

Residential housing forms an extraordinary 91 per cent of the overall real estate activities in India. "We expect investment in the residential segment to increase at 18 per cent CAGR (compounded annual growth rate) to $107 billion by 2011. Investment grew by 22 per cent in the financial year 2006 to $46.6 billion.This is likely to translate into annual requirements of 2.6 billion sq ft of space in the urban areas in 2011 as against 1.8 million sq ft in financial year 2006," says the Edelweiss report.

Currently residential stocks in India stand at 36 billion sq ft at an average household size of 1,100 sq ft. Conservative estimates claim residential stock will increase by another 11 billion sq ft in the next five years, an annual growth rate of 2.3 billion sq ft. At an average investment of Rs 1,300 per sq ft, it needs an annual investment of 83.2 billion in the residential housing sector.

Source:hindustantimes.com

Gurgaon based Ravi Lodha, 39, vice-president of UK-based telecom company Leadcomp, was looking for an investment opportunity in real estate. He saw numerous advertisements of 'future', ready-for-sale residential projects coming up in Bhiwadi, a suburb of Delhi.

One project caught Lodha's attention. Being in Bhiwadi, it was close to Gurgaon, where he stayed. The 300 sq. yard plot was precisely what he wanted. The price, at Rs 3,700 per sq. yard, was attractive. The total investment, close to Rs 12 lakh, suited his budget. He would have to pay 25 per cent of the price on booking and another 25 per cent within the next four months. The rest he could pay comfortably over the next two years. Everything seemed right.

So, along with a couple of friends, he decided to visit the site and meet the developers of the project as well as a few others. A representative showed them the plot and, on request, ran them through a bunch of legalese-laden papers. Things seemed to be in order. Even so, Lodha and his investor friends decided to probe further. They found that the developer did not have any legal claim on the land. They also found that the plot was actually 3 km away from the place they were shown. Lodha's plan is now in abeyance.

But, unlike Lodha, many others are parking their funds in similar projects. The phenomenon is being seen mainly in North India, in the suburbs of metros and smaller cities like Gurgaon, Faridabad, Ghaziabad, Kundli, Bahadurgarh, Jaipur, Ludhiana, Jalandhar, Mohali, Roorkee, Rudrapur, Haridwar, Dehradun, Sonepat, Panipat, Karnal, Ambala and Rewari, among other places. The minimum cost of such a project in Gurgaon spread over 10 acres, for instance, is Rs 100 crore (Rs 1 billion).

Although state governments have declared that selling 'pre-launch' projects is illegal, thanks to the real estate india boom, the practice has been flourishing for the last two-three years. "It has been banned only to the effect of not being advertised under the 'pre-launch' label," says Delhi-based realtor Shiv Goyal. So, now they are being sold as 'future' projects. "This is happening because of a lack of government legislation," says S.K. Sayal, CEO of Delhi-based real estate company, Alpha G Corp.

The pre-launch game: A pre-launch project is one for which either the entire land has not been acquired (that is, the developer does not have full legal sanction of the title), or clearances (like licences, land conversion and site plan) have not been obtained, or both. Developers are allowed to launch a project only after all clearances, and full ownership of the land have been obtained.

INDIA'S largely untapped and undeveloped real estate market is attracting many offshore talents and creative developers who are eager to inject more vibrant and refreshing ideas and designs into the fledgling industry.

A long list of foreign developers, including those from Malaysia, has made a beeline for this promising land (see chart).

Industry observers said India was still in the early days when it came to meeting the housing and infrastructure needs of its population of 1.2 billion.

“The opportunities are immense. Although the country’s middle-income citizens are multiplying by the day as a result of India’s robust economy and boom in information technology, its housing and infrastructure facilities are far from satisfactory,” a chief executive officer of a multinational company in Hyderabad said.

New satellite cities such as Gurgaon, which is a bustling residential and commercial hub outside New Delhi, are sprouting up with modern high-rise buildings.

Joint ventures with landowners have become an ideal option for foreign developers to gain a foothold in the Indian market.

Foreign developers find the joint venture route less cumbersome as India is not known for keeping good record of land titles.

For tax reasons, the practice of sub-dividing properties, including land into smaller units, is rampant and makes land buying a tedious process.

To cater to the overflowing demand for quality housing in emerging neighbourhoods, many landowners have ventured into property development.

A lot of land in the major Indian cities such as Mumbai and Hyderabad has become available because of the closing down of textile mills. One such company is Starlite Spintech Ltd, a unit of Dijaya’s Indian partner Telangana Spinning & Weaving Mills Ltd.

According to Starlite chief executive officer and president Sanjay Patwari, the company wanted to tap the huge opportunity and venture into property development to add value to its 140 acres of land in Hyderabad.

“We intend to serve the huge middle class and meet their aspirations for a clean and decent place to live in – one with a hygienic and clean atmosphere. Right now, there is no culture of maintenance in the middle-income housing.

“These needs are only available to the affluent group now and we want to bring that to the middle class as well,” Sanjay said.

He said property prices in Hyderabad in particular and India in general had been rising for the past five years.

“Although Indians prefer to stay in bungalows or what is known as independent houses in India, rising land cost has driven rich Indians to opt for luxury apartments.

“The security and facilities of condominium living have also made rich Indians choose condominiums instead, and that is the reason for our company’s venture into this property sub-sector,” he added.

Sanjay said demand for residential and commercial property would continue to grow for at least another five years, as it had become the Indian government’s priority sector with tax breaks offered to first time house buyers.

The availability of housing loans at reasonable rates also acts as a big booster for the common people to fulfill their desires to own a home.

Source://thestar.com