Monday, 16 October 2017

Including consultancy under Construction PE to impact realty

Inclusion of consultancy services under Construction PEs, foreign firms engaged in construction activities in the country, is likely to impact the real estate sector, says a PwC report.


PE (Permanent Establishment) is a fixed place of business which generally gives rise to income or value-added tax liability in a particular jurisdiction.

As per the report, tax-related issues pertaining to Construction PEs are on the rise in relation to attribution of profits from offshore supply and splitting of consolidated contracts.

The report mentions that though offshore supply is not taxable in India, revenue authorities may raise a question about whether offshore and onshore (PE-related) contract values have been split correctly.

India’s tax treaties provide for the constitution of a Construction PE if a foreign company undertakes activities in relation to a building or construction site, installation, assembly and connected supervisory activities, in India for a specified duration, it said.

In November 2015, the Organisation of Economic Cooperation and Development (OECD) issued its Action Plans (APs) on Base Erosion and Profit Shifting (BEPS).

In cognisance with one of the APs, the ‘Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting’ (MLI) was signed in Paris, France, on June7, 2017. India was one of the signatories.

The report said that according to the provisional list of India’s reservations, submitted on the MLI, it has agreed to implement the suggestions of the MLI in relation to Construction PEs.

“Inclusion of consultancy services under Construction PE and the PPT (Principal Purpose Test) is likely to affect the real estate, construction and EPC sectors in India adversely.

“Foreign companies may need to revisit their arrangements in order to ascertain the impact of these changes,” said the report.


Friday, 13 October 2017

Greater Noida nod to 10% initial payment for housing land

According to experts, the land allotment policy, which was revised by the Mayawati-led BSP government in 2009, is the cause of the builder-homebuyer impasse at present


GREATER NOIDA: After Noida and Yamuna Expressway Industrial Development Authorities revised their land allotment policy in June this year, Greater Noida Industrial Development Authority(GNIDA)has also changed its norms for allotting land in its area for group housing plots.

The proposal was approved in GNIDA’s 109th board meeting held on Friday.

From now, allottees of new group housing land will have to pay 10% of the land cost at time of registration of property and another 20% after allotment of land. The remaining 70% will be collected in 14 instalments in seven years. Currently, developers have to pay a mere 5% at the time of registration of property and 5% after allotment, while the balance amount is collected in 12 years, including a 2-year moratorium.

According to experts, the land allotment policy, which was revised by the Mayawati-led BSP government in 2009, is the cause of the builder-homebuyer impasse at present. Before the revision, those allotted land in Noida, Greater Noida and YEIDA areas had to deposit 30% of the land cost with the authorities. However, after 2009, builders allotted land had to pay only 10%, and were even offered a two-year moratorium, during which they did not pay anything.

“Our decision has been taken in order to help buyers,” said Debashish Panda, CEO, GNIDA. “This will ensure that only serious builders come forward to develop group societies,” he added.

Another decision taken by the Mayawati government in 2009 was revoked by the GNIDA board on Friday. “In 2009, due to economic slowdown, one-time lease rent on commercial property was reduced from 27.5% to 11%, and yearly rent from 2% to 1%. We have restored it to the original format,” Panda said.





Tuesday, 10 October 2017

Ease of doing business : Haryana to start joint inspection of single site

Urban Local Bodies Department Minister Kavita Jain said on Tuesday that it has been decided to have a single joint inspection by various government agencies


CHANDIGARH: Haryanagovernment has decided that a single, joint site inspection will be carried out by all concerned authorities such as fire, sewerage, electricity, labour (factory license), water department and internal departments responsible for granting construction permits in urban areas and Internal Development Charges regarding Ease of Doing Business (EoDB).


Urban Local Bodies Department Minister Kavita Jain said on Tuesday that it has been decided to have a single joint inspection by various government agencies, authorities or development authorities as by integrating the multiple site inspections into single joint inspection on one day of the week that is Tuesday in pre-construction, during construction and post construction phase.


She said that while the Pre-construction phase include site inspection for obtaining building plan approval by Urban Local Bodies, Town and Country Planning Department, Haryana Urban Development Authority (HUDA) and Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), during construction phase include inspection for temporary water connection by HUDA, ULB and Public Health Engineering Department and inspection for temporary electricity connection by Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN).


A department official said that the post construction phase include inspection for obtaining Occupancy Certificate by HUDA, HSIIDC, TCP and ULB, inspection for obtaining fire NOC by ULB, inspection (feasibility check) for obtaining water connection by PHED, HUDA, ULB in case of Municipal Corporation Faridabad and Gurugram, inspection for obtaining permanent electricity connection by UHBVN and DHBVN, inspection for obtaining certification of electrical installation by Chief Electrical Inspector and inspection for obtaining factory licence by Department of Labour.


He said that all the agencies and development authorities would conduct due site inspections and submit or upload online final site inspection report withing 24 hours to the concerned departments. All agencies and development authorities would ensure that the same inspector would not inspect the same establishment twice consecutively, he added.






Friday, 6 October 2017

Kerala set to get its first 'energy-efficient' buildings

Public works department (PWD) will construct the headquarters of registration department in Nemom and bungalow-cum-camp office of district collector in Pathanamthitta, in compliance with the ECBC rules.



KOCHI: Months after the Energy Conservation Building Code (ECBC) for efficient use and conservation of energy in building complexes was notified by the Centre, the state is all set to get its first two buildings complying with the norms. The buildings will come up in Thiruvananthapuram and Pathanamthitta.

Public works department (PWD) will construct the headquarters of registration department in Nemom and bungalow-cum-camp office of district collector in Pathanamthitta, in compliance with the ECBC rules. “The department decided to construct these buildings as a pilot project. We will look into whether the new concept is cost effective or not after the construction,” said chief architect of PWD Rajeev P S.

Energy Management Centre (EMC) is implementing the ECBC code in the state under department of power. The central government launched the code in 2007 as a first step towards promoting energy efficiency in the building sector.

“The code is currently applicable to only commercial buildings. The building should be designed in such a way that the energy consumption is minimum. Discussions are going on with local self-government department to bring the buildings, for which they give permission, to adhere to the Code. We need to include the Code in the Kerala Municipal Building Rules to implement it in LSGD level,” said an official in ECBC Cell.

The Code is applicable to new buildings which have a connected load of more than 100KW or greater than 120 kVA and to buildings having air conditioned area more than 500 sqm.



Tuesday, 3 October 2017

We expect a 15% growth this year: Anshuman Magazine, CBRE India

We are strongly focussing on residential market, working with developers by assisting them in marketing their projects smartly.



NEW DELHI: Anshuman Magazine, Chairman, CBRE India & South East Asia, CBRE India said that even with the slowdown in the real estate sector, they are expecting 15% growth this year. In conversation with ETRealty, Magazine talked about the impact of labour reforms on overall industry, current status of commercial sector and company’s future plan.

What is the growth plan of CBRE this year? Any particular segment that the company is focussing on?
Our core competency is real estate and within real estate we want to be in every segment. We are strongly focussing on residential market, working with developers by assisting them in marketing their projects smartly. Another segment we are focussing on is capital market. Last year, we raised funds worth more than Rs 7000 crore for developers. This year by June 2017, we have already raised around Rs 9000 crore and hope to raise more in coming months.

Labour laws have recently been revised, how has been its impact on the industry?
Labour cost has certainly gone up. If we compare it from America the cost are low, but we are in competition with South East Asian countries where the labour costs are competitive and this will take business away and hence, India will have to look at how it will be competitive at global market especially when it comes to services.

Also, some of the labour protection laws in the current form have become counterproductive. Because of these laws companies are not hiring more people. So instead of increasing employment, it is restraining employment.

But labour reforms are one of the key drivers for the future growth of India. The beginning has been made and going forward hopefully extensive labour reforms will increase employment in the country.

Do you see a demand-supply mismatch in commercial market in coming months? Where is the demand for office space moving towards?
Commercial market has done well in the last few years. In 2015, 43 million sq ft of office space was taken up in India while in 2016, 38 million sq ft of commercial space was taken up. In 2017, 38-40 million sq ft is expected to be taken up by the year-end. So, in the last three years, over 100 million sq ft of office space has been taken up in India which is unparalleled in the world.

As far as the supply is concerned, on an average 35-40 million sq ft has been added every year in the last three years. But much of this supply has not come in the locations where corporate would have liked. This year, new supply is also restricted because of the overall sluggishness in the real estate sector. Because of this the rentals have gone up for office spaces.

In Bengaluru, Mumbai and NCR, because of the limited supply and high rentals, companies are currently looking at more cost-efficient locations, hence are moving to secondary business districts (SBDs). Cities like Chennai, Hyderabad and Pune where rentals are comparatively lower are expected to benefit the most.

Which sector is expected to drive the office space take up?
In the last 10 years, IT/ITeS have been the largest occupier of office spaces taking up almost 85% of the total share. Though they will continue to hold the largest share, the percentage has dropped significantly to about 65%. This has been taken up by other segments such as BFSI, electronics and others. This year, Pharma sector is expected to take good amount of office space.

Also, we are witnessing that domestic companies have also started taking more spaces in order to expand.

Indian companies traditionally have bought office spaces rather than leasing? Do you think, with currently slowdown, especially in the IT/ITeS sector, these companies might have to rethink their strategy?
Yes, Indian companies used to invest in the office spaces because of the traditional mindset but slowly they are realising that owning a real estate makes their balance sheet asset heavy, hence it’s better to rent. Eventually companies which have unutilised office spaces are going to monetise it by sub leasing it or selling it.


Monday, 25 September 2017

Lending rate cuts key to economic recovery: Report

The report said that structural reforms take long time of 5-10 years to reflect in growth rate or reviving the stranded projects



NEW DELHI: Lending rate cutsare the only viable way to economic recovery as they would perk up demand and push investments, a report has said.

The report said that structural reforms take long time of 5-10 years to reflect in growth rate or reviving the stranded projects.

In a research note, BofAMLsaid, "Lending rate cuts hold the key to recovery. They would push up demand, put idle factories to work, and spark off investment when capacity is exhausted, in our view."

The report further said that with 2017-18 likely to see sufficient USD 35 billion of reserve money, lending rates should come off 25 bps (0.25 percentage point) before the October-March busy season sets in (and 50 bps by September 2018).

Lending rate cuts are the only viable route to recovery rather than structural reforms which can take a long time of around 5-10 years to reflect in growth numbers, it adds.

"We never shared the market enthusiasm for reforms (as it can take 5-10 years to show up in growth) or clearing 'stalled' projects (given idle capacity)," the report said.

According to BofAML, growth is stuck at an "anaemic 5 per cent (in old GDP series), well below our estimated 7 per cent potential", as high real lending rates are constricting domestic demand in a long global recession.

Regarding the Reserve Bank's monetary policy stance, the report said that the central bank is expected to key policy rates by 25 bps December 6 policy review meet as inflationis expected to normalise and stay well within the RBI's 2-6 per cent range.

The next policy review meet is scheduled on October 3-4.

RBI reduced the repo rate by 0.25 per cent to 6 per cent in August, citing reduction in inflation risks. The rate cut was the first in 10 months and brought policy rates to a near 7-year low.


Tuesday, 19 September 2017

CREDAI Maharashtra organizes study tour for realtors

The study tour helped the members in learning new way of planning which begins from the root level, duties of supervisors at the construction site



PUNE: In order to study new technology, mass conceptual housing and affordable housing projects, 161 delegates from 19 Cities of Maharashtra visited NCR Delhi recently, informed Shantilal Kataria, President- CREDAIMaharashtra.


The visit was planned at the construction sites of Ashiyana Group known for their project designed especially for senior citizens called Comfort Homes which not only takes care of physical comforts of the senior citizens but their emotional needs as well, Bharat City known for its conceptual housing, Bharat PreFab factorywhich is ideal for mass conceptual housing and thus making it most cost effective, and the high end projects of ATS and Affordable housing projects of Signature Global of Agarwal brothers.


“The study tours helps our members to know more about happenings in real estate sector, new inventions & technology, trending projects, creative executions etc Such tours further help them to refurbish their knowledge and apply the same in their own business”, said Kataria.


The study tour helped the members in learning new way of planning which begins from the root level, duties of supervisors at the construction site, the innovative way of store management, arrangement of training at site etc. The members, esp from Tier II and Tier III cities, also learned how the use of Mivan technology in mass affordable housing segment that can control the cost of the project.


It was also observed that the developers at Delhi do not only sale the apartments but also maintain them for year through the contract with Residential Welfare Societies. It is seen that these welfare societies maintain the buildings more professionally due to which the buildings which are 25 to 30 years old are still fresh.


Vishal Gupta-Owner of Asiyana Group,GetamberAnand- Owner of ATS, S.P.SING-owner of Bharat Prefeb factory, Pradeep Agarwal from Signature Global offered full support to the members in explaining and introducing to new technologies.