Income Tax raids 20 premises of Indiabulls

The searches were carried out under the supervision of the Directorate of Income Tax , Investigation Unit in Mumbai.

Suspecting tax evasion by real estate giant Indiabulls, the Income Tax Department Wednesday carried out raids at 20 premises of the company in Mumbai and New Delhi, in an operation involving nearly 1,000 I-T officers.

According to sources, the raids — one of the biggest conducted in recent times by the central agency — commenced at 8 am on Wednesday and continued through the day.

The raids were carried out at the offices of Indiabulls Housing Finance, Indiabulls Ventures and Indiabulls Real Estate.

The searches were carried out under the supervision of the Directorate of Income Tax , Investigation Unit in Mumbai. The raids were carried out at the offices of Indiabulls Housing Finance, Indiabulls Ventures and Indiabulls Real Estate.

“Maximum officers were roped in to conduct searches at the company’s Mumbai office at Indiabulls Finance Centre in Elphinstone. Documents and hard discs have been seized,” a senior official told The Indian Express. “The seized documents would be studied for unaccounted money as we suspect that they are not making the rightful declaration. These papers could help unearth unaccounted cash,” the official said.

Shares of the Indiabulls group companies fell in the range of 8 to 10 per cent after the news of the raids broke.

In a statement, Indiabulls said, “This morning, officials of the I-T department came to some of our offices to check our books, in the normal course. We are extending all assistance to the team of officials. We are confident that the officials will find our corporate practices and books satisfactory.”

“At Indiabulls group, we follow the ethical and legal standards of the highest order in all our businesses and have robust institutional measures to monitor as well as implement corporate governance of the highest standards. We are confident that these on the spot checks, in the normal course, will vindicate the same. We further state that there is no information which has not been announced to the Exchanges under Regulation 30 of SEBI (LODR) Regulations, 2015,” it added.

Last time, Indiabulls ran into controversy when the Maharashtra Anti-Corruption Bureau (ACB) probed the sponsorship by one of its group companies, Indiabulls Realtech Ltd, to arrested NCP leader Chhagan Bhujbal’s Public Welfare Foundation Trust for organising the Nashik Festival.

Credit : http://indianexpress.com/

‎AREA Group‬ rocked Lonavala this Monsoon

‎AREA Group‬ rocked Lonavala this Monsoon

Kotak Mahindra's PE fund to raise fund of $300-350 million from global institution investors

A soft launch is an exercise where the fund managers reach out to prospective investors to gauge the investment sentiment before sending a formal offer.

MUMBAI: Kotak Mahindra's private equity fund is all set to raise its new fund of $300-350 million. The fund manager has hired placement consultant Guy Eugene to raise the money from global institutional investors, said three people with direct knowledge of the matter.

Kotak PE, led by Nitin Deshmukh, has been investing in Indian mid-market companies that are looking to raise growth capital.

"The fund's soft launch has already happened and a formal process will begin soon," said a person with knowledge of Kotak's fund raising plans.

A soft launch is an exercise where the fund managers reach out to prospective investors to gauge the investment sentiment before sending a formal fund raising offer.

"The $300-350 million fund will follow the hypothesis that was adopted by the initial funds," said another person privy to the group's plans.

Kotak Mahindra Group launched its alternative assets business in 2005 with different vehicles made to invest in pure play private equity, real estate and infrastructure, special situations and an equities fund. Till now, the group has invested a total of $2.5 billion across these asset classes.

Although Kotak PE has a strong track record and a good mix of portfolio, raising money in a tough environment, where global institutional investors are shying away from investing in Indian market, is going to be challenging.

"The fund has hired global placement consultant Guy Eugene to help it raise funds," said the third person with knowledge of the fund raising.

Such placement agents or firms help a fund manager connect with prospective global institutional investors and raise a fund faster. Besides, these agents help fund managers with structuring the fund and access the global investors who are looking at investing in these asset classes.

The spokesperson for Kotak Mahindra Group did not respond to an emailed query. Nitin Deshmukh, managing director of the PE fund, did not reply to calls and text messages sent on his phone.

The fund is reaching out to European family offices, Japanese and US-based institutional investors, sovereign wealth funds and global pension funds to invest in the new fund, said sources.

Global investors are now backing only fund managers with a track record and hence the funds that are on the road to raise funds have to show returns by making successful exits.

Kotak PE has so far invested in companies such as Manipal Hospitals, Intas, NATCO, Rubicon, Metahelix, Mahindra Aerospace, NSE, MCX, BVG, Bharat Serums & Vaccines, Muthoot Finance, Godrej Consumer, ING Vysysa, Novalead, Home Town and Sabare among others.

Data shows that though the total number of funds investing in India today has gone down, the total assets under management has risen steadily.

Credit : http://realty.economictimes.indiatimes.com/

Power shifts from builders to buyers

Recently, courts have ignored agreements between developers and purchasers, and awarded compensation to the latter

The buyer-builder relationship has always been in favour of the latter. From booking of property to possession, builders had an upper hand because of one-sided agreements. For example, before giving possession, developers make buyers sign a document that states flat owners have inspected everything and the house is delivered according to the agreed specifications. This leaves little scope for buyers to challenge discrepancies in the court.

This seems to be changing. The judiciary has started going beyond the technicalities of the agreements and awarding compensation to buyers. "Courts realise the buyer is made to sign such documents. In some cases judges have rejected one-sided agreements, these citing them as unfair trade practices," says Hitesh Jain, senior partner at ALMT Legal.

In a recent case, the National Consumer Disputes Redressal Commission (NCDRC) asked a real estate major to pay buyers compensation at the rate of 12 per cent a year for delay in delivery of flats, overruling the builder-buyer agreement that had set the rate at a mere 1.8 per cent a year. NCDRC said any unfair trade practice can be challenged by it, even if there is a prior agreement between the parties. "The best part is that if the apex consumer court, NCDRC, passes such an order, it's binding on the lower courts," says Shirish Deshpande, chairman of Mumbai Grahak Panchayat.

"Earlier, whatever was written in the builder-buyer agreement was held sacrosanct. Courts generally did not intervene in these agreements, since they were signed by two consenting adults. But, since buyers dragged DLF to the Competition Commission of India (CCI), things changed," says Sanjay Sharma, managing director, Qubrex Realty. CCI found DLF the dominant party in the agreement. So, the terms and conditions of the agreement were not held as sacrosanct. Consumer courts started using this line of thought and applied it more widely in builder-buyer cases.

Litigation on the rise

Such orders are increasingly motivating property buyers to approach the courts. Swapnil Vaghambre another flat buyer, Amul Gurav, led 54 others to file a consumer case against Saaga Infra Projects. "We went to the police, too. But, it was cumbersome, so we resorted to the judiciary," says Vaghambre. These buyers had booked a flat at Saaga Infra's Malad East project, paying 30 per cent (between Rs 13 lakh and Rs 20 lakh) as the token amount in 2013. For two years, work didn't commence. The developer kept saying he was waiting for approvals. When these buyers cancelled their bookings in 2015, the developer didn't return the money.

The number of housing-related cases is on the rise in consumer courts. "It's not only because consumer awareness is on the rise but also as cases of delays, defaults and cheating by developers are increasing," says Deshpande.

In past six months, since January, 2,041 cases have been filed for housing-related issues with NCDRC. This is close to the number of complaints it received in 2015. There were 2,495 housing-related cases in the past calendar year, 1,063 in 2014 and a mere 104 in 2013, according to government data.

Insurance-related complaints always topped the charts at NCDRC. Since last year, housing-related complaints have jumped exponentially, displacing insurance from the top spot.

Problem areas

Developer-buyer issues could only get worse if one looks at the number of unsold units. According to data from property research firm Liases Foras, unsold stock grew 22 per cent in India's eight big cities compared to last year. "With the growth in unsold stock outpacing growth in sales, inventory across eight major cities stands at a whopping 42 months, a rise of 13 per cent in one year," according to a recent Liases Foras report on the residential real estate market. An efficient market maintains eight to 12 months of inventory.

Developers have been grappling with slow sales and rising inventory since 2008, after the global financial crisis. Things are getting worse every year, as buyers stay away and regulations become stringent. Construction delay is most common grouse that buyers have. In courts, developers usually put the blame on the myriad approvals they to obtain from state and central agencies and ministries. Anuj Puri, chairman and country head, JLL India, says while all this is true there's another side to the picture. "Many developers have in the past intentionally undertaken a slower pace of construction if sales in their project were sluggish or a larger part of the project remained unsold. They might have diverted a sizeable chunk of the revenue generated from pre-launch sales to another project, or utilised it to pay off a pressing bank debt," says Puri.

Other cases that are filed are for poor-quality construction and deviations. "A change in the apartment area after buying from the developer can occur if a change in project plan is necessitated due to a design or approval issue. A deviation of up to 10 per cent is usually acceptable - for a higher deviation, a customer must definitely seek legal recourse," says Puri. He also points that there are times when deviations can also happen due to abrupt changes in regulations.

Then, there are cases where developers promise the moon to the buyer but on delivery, the consumer realises the builder has cut corners. "When a developer is in a hurry to sell, mis-selling is bound to happen," says Sunil Rohokale, Managing Director, ASK Group.

Real estate regulator

Experts believe once the states implement the Real Estate (Regulation and Development) or Act, things will change further in favour of the consumer. "This Act addresses most of the issues consumers face today. Once implemented, only those developers who can play by the rules will survive," says Rohokale. It becomes mandatory for developers to register their projects and they must disclose accurate information it - about the status of land acquisition and statutory approvals, layout plan, etc. The buyer will get what is promised. It also mandates that 70 per cent of the money raised from sales in a project will have to be put in an escrow account, so that the money is not diverted. This could stop delays and if these still happen, the penalties are not lopsided. It will also reduce the one-sided agreements developers opt for. "The Act maintains a balance between buyers' as well as developers' requirements, to create a level-playing field," says Rohokale.

With a sensitive judiciary and the years of malpractices that prevailed in the property market could finally diminish but experts say this will happen only gradually.

RECENT JUDGMENTS GIVE HOPE

Our association members had booked flats in a Gurgaon project that was launched in 2010. Even before getting a licence from the local authority to operate, the developer advertised the project and took bookings, which is illegal.

In 2013, the developer asked buyers to pay extra, as he was increasing the flat size. Five of us told him to give us possession first and we will pay more if his claims turn out to be true. He cancelled our allotments. Of the Rs 50 lakh paid to him, he offered to return only half. We refused.

Finally, some buyers got together and formed Universal Aura Welfare Association. More individual joined us and there are around 100 members now.

In 2014, we went to the National Consumer Disputes Redressal Commission. Since then, there has been no construction activity at the site.

We have spent more than Rs 10 lakh fighting the case, in addition to paying EMIs on home loan. Our next court date is in January 2017, almost three years after we filed the case. Until now we were fighting in the court to get our case admitted. The recent judgements have given us hope, although our court experience has not been good until now.

Naveen Arora
General Secretary, Universal Aura Welfare Association

Credit : http://www.business-standard.com/

10 Ways Your Real Estate Agent Is Like Your Mother

1. She makes you clean your room.

When selling your home, the overall first impression is most important to prospective buyers. Don’t be surprised if your agent reminds you to tidy up before showings, make your bed, and not stuff your dirty laundry in the closet like you did when you were a teenager.

2. She takes your calls late at night.

No matter your age, clients are like agents’ babies and their nurturing instincts kick in when she sees a call come in late at night. She will most likely ask you if everything is OK before you even have a chance to speak.

3. She worries about you when you don’t respond to her many calls, texts, and emails.

You can’t hide from your Mom OR your real estate agent! Remember when you went away to college or worked a late night job, and your mom always wanted you to check in with a quick phone call from time to time? Remember how she’d think the worst when a day would pass after you didn’t return her call and she was seconds away from calling hospitals to make sure you weren’t there? Your agent is wired the same way, so just communicate to prevent any possible panic attacks, ok?

4. She teaches you how to save your money, set a budget, and help you stick to it.

Your mom taught you the value of a dollar when she paid you allowance, and an extra fifty cents to take out the garbage was an exciting bonus! She probably also helped you budget and explained taxes and savings when you started working a real job. You’re an adult now, so your mom probably doesn’t want to be seen as a nuisance meddling with your personal finances… but your agent doesn’t mind!

Your agent wants you to know all the costs associated with any home sale or purchase, and has your best interests in mind. When you want to see homes $50K out of your budget, she’ll reel you back into reality and coach you along the way to find a home you will love—and that you can afford.

5. She makes you do your homework.

Yes, you have homework when you’re buying a home. You’ll want to drive by any homes that interest you. You’ll want to survey the neighborhood, the convenience to schools, shopping and your workplace, and the overall curb appeal. Just like your mom reminded you to study before an exam, your agent will remind you that online photos don’t show everything and you should really check out the area first.

6. She’s a good listener.

Your mom always has time for you and will listen to you whine, complain, and share fears and excitement; she’s always there for you when you need an ear. Your agent is too, and the more you share with her, the better she will understand what you want and need, whether it’s selling or buying a home. Both mom and agent always want the best for you.

7. You drive her to drink.

Why do you think your mom always had her favorite coffee mug that wasn’t full of coffee, and a nice wine collection on display with no dust on the bottles? Or why she brought a thermos to all of your Little League games in the heat of summer? Your agent has the same mug, same wine collection, and same thermos with your name written all over ‘em. Although both have your best interests at heart, there are times that you can be quite a challenge.

8. She drives you around and not ask for gas money.

Mothers log hundreds of miles on their cars driving to and from baseball practice, dance lessons and competitions, after-school functions, summer camp, and to and from the doctor every time you had an ear infection or strep throat. Agents log even more miles, and they enjoy it because it allows quality time to discuss your home-buying wants and needs, hopes and dreams, and occasionally a chance to rock out together when a good jam comes on the radio.

9. She gives you tough love.

Mom kissed your boo-boos, and it broke her heart if you got hurt. But she didn’t hesitate to smack the back of your head if you did something stupid. She would hug you tight and smother you with kisses one minute, and the next be chasing you with a fly-swatter threatening to spank you when you acted up. Agents are the same way (minus the fly swatters), because they will tell you what you need to hear, and not always what you want to hear.

They’ll break bad news and console you when you didn’t get the house. They’ll also give you the figurative head-smack when you need to focus and stop making stupid decisions like buying a new car a week after getting pre-approved for a loan. Or putting off seeing a home that would’ve been perfect for you (and finding out the next day it had sold). Or not doing your homework and wasting an hour of time driving to a house that backs up to a power plant with the county jail next door. Just listen and do everything your agent advises, and all should be hunky dory.

10. She’s both happy and sad when you move on, but ultimately is proud to see you pursue your dreams and to have been part of the journey.

Moms go through “empty nest syndrome” when you leave home, and they cry and cry and miss you more than you can imagine when you’re gone. They know they’ll see you again, and they beam with pride when you leave for college. Or buy your first home. Or get married and move out. But they’re also so sad inside because they know you’re all grown up now and don’t need them as much anymore.

Real estate agents go through this too. After spending weeks or months with a client, bonding with them, creating memories, and sharing in their joy of buying or selling a home, all the phone calls and meetings end when the home closes and they’re no longer needed.

The best thing you can do to make each of them feel better is this:

Call your mom and remind her you love her, and send your agent referrals to remind her she was awesome!

Credit : http://lightersideofrealestate.com/

Real Estate Investment Trusts

Real Estate Investment Trusts (REITs) could become a reality now and the first listing is expected in the next 12 months as markets regulator SEBI has eased norms to attract realtors and investors. The relaxation is aimed at allowing these Trusts to invest more in under-construction assets and have a larger number of sponsors.

Introduction of REITs in Indian real estate market is likely to be a game-changer. A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. Created by the U.S. Congress in 1960,REITs were designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

As of August 2014, India approved creation of real estate investment trusts in the country. The government and Securities and Exchange Board of India through various notifications is in the process of making it easier to invest in real estate in India directly and indirectly through foreign direct investment, through listed real estate companies and mutual funds. In the budget of 2014, Union Finance Minister Arun Jaitley has introduced a law for setting up of REITs. 

REIT is a trust that holds real estate assets like buildings, office premises, land banks, among others. The units or securities of REIT are required to be listed on a recognised stock exchange and it provides retail investors an opportunity to indirectly hold stake in real estate assets. India is yet to see a substantial interest with regard to REITs being set-up by real estate companies. One of the key reasons for this is the current income tax mechanism which provides for levy of Dividend Distribution Tax at SPV level on distribution of dividend to REIT.

Credit : http://www.thehansindia.com/

HOW CAN INFRASTRUCTURE GROWTH DECIDE YOUR NEXT PROPERTY PURCHASE

In real estate lexicon, market drivers are developments in an area that increase the value of living there. It is a well-established fact that infrastructure is by far, the most important driver for real estate demand and property appreciation.

Guidelines for home buyers and investors

1) A location’s infrastructure is a major focus area for property investors. They want to attract end-users, either as rental or purchase clients. They know that an area without sufficient infrastructure, will be unattractive to their clients because the quality of living quotient is low

2) Properties in areas without good infrastructure, tend to go for a cheaper rate. Developers with such projects know that the area has little or nothing to show in terms of quality of life. They can try to sell their projects by offering very attractive rates

3) Buyers should place infrastructure availability prominently on their checklist while scouting for suitable homes. Road and rail connectivity, water supply, proximity of schools, hospitals and shopping outlets, are of paramount importance

4) Infrastructure can be of secondary importance if one is buying a property purely as a long-term investment and primarily for capital appreciation. After all, it’s not intended for self-use and one does not expect quick appreciation. As long as there is a reasonable assurance that it will arrive in the foreseeable future, it makes sense to invest in a property located in an emerging area where infrastructure is in its nascent stages

5) However, if one is buying the property in order to generate rental income, existing infrastructure is far more important than upcoming infrastructure. People looking for rental options are also looking for a certain standard of life

6) When choosing a township, ensure that the project is located in areas supported by good infrastructure. Most large Indian cities now have township projects coming up

7) In Pune, the Pimpri-Chinchwad Municipal Corporation is attracting buyers and investors. In other parts of the country, Navi Mumbai and the Kalyan-Dombivli and Vasai-Virar beltsin Mumbai, are becoming important township hubs

8) In Delhi-NCR, the township areas to look at are Ghaziabad, Faridabad and Greater Noida

9) In Bengaluru, the growth hubs for townships are Yelahanka and Devanhalli, and in Chennai they include Sriperumbadur, Perambur, the OMR belt and Anna Nagar

Credit : http://therealestatespecialist.blogspot.com/

Encroached property cannot be considered a capital asset

The tribunal lambasted Fatnani over sale of illegally acquired school land and compared whether the Red Fort and the Gateway of India can be sold on paper.

MUMBAI: Tax needs to be paid even on property encroached upon illegally as it would be considered as 'income from other sources', though it would not be considered as 'capital asset', as per a tribunal ruling.

A Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that property illegally encroached by an assessee cannot be considered 'capital asset' under section 2 (14) of Income Tax Act, and consequently gains arising from transfer of such property cannot be assessed as capital gains, but as income from other sources.

In the case, the assessee, one Bhagwan T Fatnani, was not having any legal right over the contested property in Ulhasnagar near the megapolis, and the land was illegally encroached upon by the assessee for the assessment year 2008-09.

The tribunal, comprising judicial member Joginder Singh and accountant member D Karunakara Rao, held in a recent judgement that since the assessee was not having any legal right or title over the property, there was no question of owning any capital asset and accordingly there was no question of any sale or transfer of capital asset to claim the capital gains.

The income tax department was represented by its commissioner Vijay Kumar Bora into the case.

The assessee was neither the legal owner of the property nor was having any document showing any right or the title over the illegally encroached land which was meant for a primary school in the city.

The assessee took the plea that the word used is property of any kind. The bench negated the proposition of the assessee and held that the intention of the legislation is any property which is legally acquired, otherwise, anybody could become the owner of the Gateway of India in Mumbai or the Red Fort in New Delhi by showing these properties in their balancesheet and will claim capital gains.

The tribunal lambasted Fatnani over sale of illegally acquired school land and compared whether the Red Fort and the Gateway of India can be sold on paper.

Credit : http://realty.economictimes.indiatimes.com/

Hrithik Roshan’s ex-wife Sussanne Khan booked for cheating

According to a report, the real estate company had asked Sussanne Khan to furnish details about her registration number with the Council of Architecture but she failed to do so.

Sussanne Khan had reportedly been paid a sum of Rs 1.87 crore by a real estate firm.

Interior designer Sussanne Khan, an ex-wife of Bollywood star Hrithik Roshan, was on Saturday booked by the Goa Police in an alleged case of cheating, news agency ANI reported.

Real estate firm Emgee Properties accused Khan of projecting herself as an architect in order to win a contract with the company. The company claims that they made a payment of Rs 1.87 crore to her in 2013 but her work wasn’t up to the mark.

According to a report in The Times of India, the company had asked Khan to furnish details about her registration number with the Council of Architecture but she failed to do so. Upon checking with the council, they were informed that she wasn’t registered. The Indian Express could not independently verify the claims.

Police sub-inspector Rashmi Bhaidkar has registered the case under Section 420 (cheating) of the Indian Penal Code. More details are awaited.

Credit : http://indianexpress.com/

Watch out for tax implications when you sell a house

Selling your property would result in a large cash inflow. Here is how to ensure that you don't end up with a huge tax liability in the process

Keep an eye on the calendar when you sell your house. If you don't time it right, you could end up paying a hefty tax. If a property is sold within 3 years of buying it, any profit from the transaction is treated as short-term capital gain. This is added to the total income of the owner and taxed according to the slab rate applicable to him.For those earning over `10 lakh a year, this shaves off 30% of profits from sale.

Also, if a house is sold within 5 years of the end of the financial year in which it was purchased, tax benefits claimed go out of the window. The tax deduction claimed for the principal repayment, stamp duty and registration under Section 80C are reversed and the amount becomes taxable in the year of sale. Only the deduction of the interest payment under Section 24B is left untouched.

This is why it is advisable to hold a property for at least three years. If you sell after three years, the profit is treated as long-term capital gains and taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and adjusts the purchase price accordingly, thereby slashing the tax burden for the seller (see graphic). There are other benefits too.The owner can claim exemptions in the case of long-term capital gains, but no such benefit is provided for short-term gains. “Expenses incurred on repairs and renovation can be added to the cost of acquisition while computing longterm capital gains. The interest paid during the pre-construction period can also be added to the cost, if not already claimed as a deduction earlier,“ says Vaibhav Sankla, Director, H&R Block India.

How to avoid tax

There are several ways to avoid paying tax when you sell a house. There is no tax to be paid if you use the entire gain from the transaction to buy another house within two years or construct one within three years. The twoand three year period applies even if you bought another house a year before selling the first one. But the property should have been bought in the name of the seller.In case the entire capital gains are not invested, the balance amount is charged to long-term capital gains tax. However, the entire tax exemption will be reversed if the new property is sold within three years of purchase or construc tion. In such a case, the entire capital gains from the sale of the previous house will be considered as short-term gains and taxed at the normal slab rates.

If you are not keen to lock-in your gains from the sale of a house in another property , there is another way out.You can claim exemption under Section 54 (EC) by investing the long-term capital gains for 3 years in bonds of NHAI and Rural Electrification Corporation Limited within six months of selling the house. However, one can invest only up to `50 lakh in these bonds in a fiscal.From the current financial year, sellers also have the option of investing the entire long-term capital gain in a technology driven start-up (certified by the Inter-Ministerial Board of Certification) to get relief from tax. The investment in computers and software for your startup will be eligible for exemption from tax on the sale of house held for at least three years. Apart from this, sellers also have the option set off long-term capital gains from sale of the house against any long-term loss from sale of other assets.These can be losses carried forward over the past 8 years or even those incurred in the same year. However, the only way to avoid tax on short-term capital gains is to set it off against any short-term loss from the sale of other assets.

Dealing with TDS

To plug tax leaks, the government has now made it mandatory for buyers to deduct TDS when they buy a house worth over `50 lakh. TDS of 1% of the value of the property has to be deducted before making the payment to the seller.Till last month, this amount was required to be deposited within seven days from the end of the month in which the sale transaction was carried out, but from 1 June, the period has been extended to 30 days. Since this payment is made on behalf of the seller and linked to his PAN, it is reflected on the seller's Form 26AS. The seller must also obtain a TDS certificate in Form 16B from the buyer. The seller can claim a refund of TDS if he is incurring a loss on the sale of the house or if he is claiming exemption from long-term capital gains. To claim the refund, he should provide details of investment of the capital gains in his tax return. Alternatively , he can obtain a certificate from the assessing officer specifying that no TDS must be deducted on payments made to him, and present this certificate to the buyer.

Credit : http://epaperbeta.timesofindia.com/

Commercial office market a bright spot for real estate sector

Unlike the fragmented residential market, some leading developers are building Grade A office space in key cities

Steady lease rentals, high absorption levels, inadequate supply and global investor interest have breathed life into India’s commercial real estate sector, even as the country’s residential property market continues to be in a slump.

Unlike the fragmented market for residential properties, a few leading developers, backed by large investors, are building Grade A (top quality) office space in key cities.

Around 38.4 million sq. ft of Grade A space is expected to be built in 2016, of which around 33 million sq. ft is likely to be taken up on lease. Around 36.2 million sq. ft was absorbed last year, while the highest office space absorption was 37 million sq. ft in 2011. In 2017, around 40.9 million sq. ft is expected to be constructed, according to property advisory JLL India.

“While demand for good quality office space remains high, absorption will be lower this year because there isn’t adequate supply in the market. Also, demand is high but relevant supply, which depends on location and other advantages, is restricted. We expect the sector to continue to do well,” said Ramesh Nair, chief operating officer of JLL India.

According to property advisory CBRE, Bengaluru has good demand and supply of office space and its office buildings have the lowest vacancy levels. In Pune, due to lack of good supply, there are many takers for Grade B buildings as well. The National Capital Region, the worst-impacted market in residential sales, grabbed 37% of the total 5 million sq. ft of corporate office space take-up or leasing during January-March.

After the economic slowdown in 2008, developers gave up capital-intensive office projects and shifted focus to the residential market, which seemed a safe bet at the time. A number of large apartment projects came up in the next few years, resulting in a glut in the market and another slowdown in 2012-13.

Among top developers building office projects are Embassy Group, RMZ Corp., Panchshil Realty and DLF Ltd, many of them backed by global investors. More than 80% of commercial office space absorption or supply is from information technology (IT) and IT-enabled services (ITES) clients, while the rest would be for banking and financial services and of course, e-commerce firms.

Backed by Blackstone Group Lp, Panchshil Realty is adding 5 million sq. ft of new space in Pune across three projects. Nearly Rs.2,500 crore will be invested in the project, including both equity and debt. “We lease around 1.5 million sq. ft. office space every year, so we just have to keep building because the demand is high,” said Panchshil Realty chairman Atul Chordia.

DLF may not have any residential launch planned this year, but the country’s largest developer by market value plans to add two-three million sq. ft of office space every year to its rental portfolio as it seeks to replicate its success in building a nearly 30 million sq. ft commercial office portfolio over the last decade.

This year, DLF has started work on a two million sq. ft office project in Gurgaon and will add one million sq. ft to its IT park in Chennai. Lease rates at DLF Cybercity in Gurgaon have risen to Rs.100-105 per sq. foot from Rs.60-65 per sq. foot three years ago.

“While residential prices are seeing a downward pressure due to the oversupply situation, rentals are steadily moving up. Good supply is limited and there is tremendous interest from institutional investors to buy space and from corporates, many of whom are in consolidation mode and looking to lease or buy space for their own use,” said Rajeev Bairathi, executive director (capital transaction group and north India), at property advisory Knight Frank India.

Mumbai-based K. Raheja Corp. is planning to invest aroundRs.2,000 crore in acquiring land and building six million sq. ft of commercial space in Navi Mumbai.

“Growth and consolidation, particularly in the IT and ITES sectors, are driving the demand for big commercial office spaces. Demand for commercial real estate is growing at 20-22% on a year-on-year basis,” said Vinod Rohira, managing director and chief executive, commercial real estate and Reit, K. Raheja Corp.

2016 is likely to witness two of the biggest private equity investments in the commercial office sector. DLF is in the process of selling a 40% stake in its rental assets arm to raise about $2 billion and Brookfield Asset Management Inc. is close to investing $1 billion to buy out the office and retail assets of Hiranandani Developers Pvt. Ltd in suburban Mumbai.

With top quality assets becoming fewer, investors such as Blackstone have moved from buying out completed, lease-generating assets to brownfield, under-construction developments to more greenfield, early-stage projects today.

“From a rental stream perspective, the investor community always got into fully developed projects in the initial years, but now after building a relationship with the developer partner, they are now willing to go ahead and invest in a new project,” said Ram Chandnani, managing director, advisory and transaction services, CBRE.

Just like developers shifted focus to the residential market after the 2008 financial crisis, commercial office is regaining favour, with some realigning their portfolios to build more commercial space.

Bengaluru-based Salarpuria Sattva Group, which started as an office developer and then built its residential portfolio, is planning to focus a little more on the office space again. It will start three new projects in Bengaluru, a total of 3.5 million sq. ft. Earlier this year, Salarpuria raised Rs.470 crore from Blackstone to fund a 6.6 million sq ft under-construction and partly leased project in Hyderabad, in what also marked the fund’s first investment in the city.

“While entry barriers are low in residential and there are too many developers, office development is not easy and as a result, we have a few serious developers building good projects,” said Bijay Agarwal, managing director of Salarpuria Sattva Group.

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