Budget 2015 invokes mixed reactions from realtors

After the presentation of the budget 2015 by the finance minister there are mixed reactions from the real estate circle. The real estate sector had high expectations of measures that would pump in some liquidity into the industry. But many critics opined that the budget is fairly positive with many development measures but as far as the real estate industry was concerned the residential sector was not given much of an importance that constitutes the major chunk of the revenue for the industry. The budget according to realtors completely ignored the residential sector of real estate and there is a full lack of any kind of push for the housing sector as the realtors expected a heavy cut on the rates of the interest rates among other factors which would have boosted the home loan procurement rate among the end users pumping in some liquidity to the industry.

The budget however announced the government’s intention of building six crore houses or residential units towards the scheme of “Housing for all by 2022” but failed to detail on it. Neither did the budget detail on the Sardar Vallabhbhai Patel Urban Housing Mission in terms of allocating the funds. The timelines, project locations, the instruments for funding and other factors were also missing.

Few critics however appreciated the measures to reduce black money for which the step was taken by introducing the “Benami Transaction Bill”. The budget proposed to incentivize the use of wired money rather than hard cash transactions which few feel would significantly impact real estate. The budget also states that punitive measures would be taken against concealment of assets including Benami properties.

In talking about the liquidity few others argued that although this would impact on the real estate market on the whole but it might have a negative impact on the investor segment of the country. They go ahead to say that notwithstanding the positive intent of the government the Benami Bill can drive away the investors and exit the market.

Another criticism that came from the realtors was that the budget does not mention about the plans and programmes of constructing 100 smart cities. The budget document according to many lacks to boost the key factors and the sector of the real estate industry. On the first place it does not talk about the promulgation of the REITs and the InvITs. But Mr. Jaitly proposed to rationalize the regime of  capital gains for the sponsors exiting at the time of listing of units of REIT and InvITs and also announced the creation of six crore homes to meet the centre’s mission of “Housing for all by 2022”.

Others opine that although many macro factors were being looked into in the budget for a prosperous economic regime but the real estate sector was highly expecting for some compensatory measures for the lull in the last there years and as the sector was virtually gasping for more liquidity. The realtors were unhappy as the budget has nothing in it to cheer up.

Moreover given the burden of prevailing indirect taxes, stamp duty clearances, the high cost of borrowing for both the developer and the buyer, the real estate sector was hoping for some serious incentives among other measures to give a boost to the sector which the budget was devoid of. But many veterans feel that the government will make some announcements in this regard in the due course of the year.

The measure for the REIT regime is welcomed by many as the indications that tax pass through on REITs will be implemented and the experts feel that this has the potential to stimulate the REIT market in India which can release lower cost capital, increase the flow of liquidity and stimulate the next phase of enhancement of the urban infrastructure of India.

Considering all these factors many opine that the budget is positive and balanced as the proposal to rationalize the capital gains tax regime is a positive step and the simultaneous reduction in the corporate taxes will ensure higher investment in the realty sector.

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Buying a House clearly know your needs and wants

Purchasing a house is indeed a very wearisome task it takes a lot of planning and assessment before jumping to a conclusion. For an individual it is mandatory to take care of all the concerns before buying a house. One should look closely to a wider perspective of needs and wants before making a decision to buy a 2 BHK Apartments or a 3 BHK Apartments strictly depending to the requirement of the family respectively catering the needed edge to all the family members.

Buying a house is probably one of the most important decisions you will make in life. Therefore, it pays to keep a few practical things in mind before you buy the house of your dreams. We spoke to a few home owners to learn from their experience:

Ranking Significances: These days a prevalent trend of ranking is prevailing among the recent buyers they are planning to rank the houses according to their needs. They are also ranking their needs and importance in order to crack the most affordable deal. This discussion about ranking is done by sitting down with the entire family and making a final list of all such requirements.

The thin line between Need and Want: There is a huge difference between the meaning of needs and wants needs are basically a set of things which are a part of the basic necessity and wants are those set of things which are other than those necessary things. In the real estate terms a need can be fulfilled with a 2 BHK also but for instance for a family of 4 a 2 BHK might be absolutely fine the family of four comprises of parents their two children and also two pairs of visiting grandparents who have turns over to take of their grandchildren. The term want in the real estate is 3 BHK for the same combination of family.

These days many of the young home purchasers are lost in the stream of their demands of buying big and spacious houses which are just more than enough for their nuclear family with a set of visiting guest. Now a days the potential investors are looking for much spacious localities with an array of amenities like big swimming pool, gym, ample walking, running space and much more. These days in order to avail so much the consumers are even ready to pay a hefty amount of Rs. 60 Lakhs.

It is an ideal decision to grow with the family: The new generation now believes in growing together with the family and is now a day a new trend in the town many of the new couples are coming up with solutions to fit the needed housing setting in their budget. Conceptualizing and customizing is the new trend in the town. Many of the recent have clubbed the two types of residential property in order to drag their requirements to their budgets. As per some recent cases now the probable buyers have made a shift to approximately a 1250 sq. ft. space from 2000 sq. ft. to fit all their needs and requirements to fall in their well-planned budget.

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A study and vision of Bangalore housing sector in 2014

The rapid growth of Bangalore City in few decades in terms of infrastructure, educational institutes, social infrastructure, and the real estate sector is driven by the flourishing IT industry.

The city is now home to a large number of High Net-worth Individuals (HNIs) and is the third-largest real estate hub for HNIs who park their assets here and one of the topmost cities where NRIs want to settle down in the future.

Due to its multicultural ethos, the city attracts more populace and today the city houses around 10,000 individual dollar millionaires and also home to many NRIs who are professionals and settled down in the city, which drive the demand in the real estate sector especially the housing segment.

Particularly, in sub-markets like Whitefield, North Bangalore, Outer Ring Road, Central Business District (CBD), and Secondary Business District (SBD), the demand for high-end residential apartments in the city has increased.

Right now, the most optimistic and preferable residential micro-markets in the city are the North Bangalore, Whitefield, Sarjapur Road, and Outer Ring Road (ORR).

With many ups and downs in the sector, a study and outlook of different residential categories is given below:

High-end residential category
Property price - Rs.1.5 Crore and above
Residential Type - New villa, villaments, and row houses
Locations - Whitefield, North Bangalore, Sarjapura, and Outer Ring Road (ORR)
Study & Vision - Demand is likely to remain stable in the coming year

Mid-segment residential category
Property price - Rs.75 Lakh to Rs.1.5 Crore
Residential Type - Above 2 and 3 BHK luxurious apartments
Locations - Electronic City, ORR IT Corridor, Whitefield, and some areas in North Bangalore
Study & Vision – Demand driven by IT/ITeS professionals who look for home close to their office and focus on social infrastructures, educational institution, hospitals and many other facilities
 
Affordable residential category
Property price – Rs.50 lakh or below
Residential type – 1, 2, 3, BHK apartments
Locations – Outskirts of the city, Peripheral Ring Road (PRR), South Bangalore, North Bangalore, West Bangalore
Study & vision – The proposes infrastructure projects like Metro Rail drives the demand

Synopsis of reality market
In the fourth quarter of 2013 there was an increase in the absorption of residential sector against the third quarter of the same period. About 30 residential projects were launched in the fourth quarter of 2013 and a slight appreciation in capital value and the sales volume increased as the most of the projects were in completion stage.

Opinion about Bangalore Reality Market
It is likely that in the first half of the 2014 the growth of residential market will remain stable and a modest number of launches in residential projects will be witnessed, while leasing and capital values will remain stable and is expected to rise in second half of 2014.

Factors that drive the leasing and capital value of Bangalore residential segment:
•    Development in IT sector
•    Investment by more HNIs and NRIs in residential segment of the city
•    Proposed infrastructure projects by government like Elevated expressway, Metro Rail, and Peripheral Ring Road (PRR), many others
•    Projected SEZ and IT Parks in North Bangalore such as Devanahalli Business Park, ITIR in Devanahalli, Aerospace SEZ, Airport City and others

Land Loser has the right to make decision in Land Acquisition and Compensation

The new land acquisition law that has been enforced has comforted the landlords who have sold their land for public sector infrastructure projects in Bangalore City.

For example, if an agency requires a land of 2,000 Square Feet. in a location for any proposed public sector infrastructure project then the approaching agency should pay an average compensation cost existing in the area for an instance if land is required in MG Road, then the agency should Rs.27, 000 per Square Feet. as an average compensation keeping in mind the current market value and if it ranges between Rs.25, 000 and Rs.30, 000 per Square Feet.

Based on the new law, the land or property owner should get a compensation of Rs.54, 000 per Square Feet., as it says the land owner should get double the price of the market value. The new law also gives right to the land owner to argue with the approaching agency about the compensation cost if the land owner feels the deal is not fair. And, this dispute can be held at a proper platform solely formed by the government by providing documented substantiation.

The new law is regarded as favorable for farmers as the compensation cost for land owners is four times the market value and will also make sure that the land loser is provided with rehabilitation and resettlement. The provision in the new law also says that the land cannot be acquired without the approval of the land owners.

The idea of Transfer of Development Rights (TDR) under which the land owners can be given land as compensation instead of cost for the loss of land area that is acquired by the government for public purpose like for constructing flyovers, roadways and other infrastructure.

The new law in the foreseeable future may surely cause less conflict to a whole range of infrastructure projects in the row that includes road broadening, construction of flyovers and passageways, and elevated expressways.

Stipulation in the Law

• The new Land Acquisition Act says that in case the acquisition of land is less than 50 acres of area in cities and 100 acres in rural areas then the law will be discretionary.
• The TDR should be more attractive an approachable in such a way that land owners to choose TDR instead of compensation cost.

Adverse for Farm Sector

• Farm land will be gobbled through this new law.
• The compensation cost will attract the farmers to give away their lands.

Many farmers say that they don’t have any complaint to acquisition of land for Metro, rail, roads, and other necessary public sector projects by government. The government should also understand that no compensation can recover the food calamity in the anticipatable future.

Compensation for Land Loser

• Urban Areas - Compensation cost will be twice the market value of the property in addition to this 100 per cent solace on this amount.
• Rural Areas - Compensation cost will be four times the market value of the property
• Market Value - Value of the property registered at the sub-registrar offices, but it is still unclear in the market value whether the exiting market value or the regular market value will be considered.
• Discussions can he be held by the land owners if the deal is not fair and the discussion can be held in a forum formed by the government 

About The New Law

• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 has substituted the 120-year-old Land Acquisition Act of 1894
• The President approved the new Land Acquisition Bill on September 27, 2013
• The Bill was introduced as  the out-of-date 1894 Act underwent several inadequacies, such as the resettlement of the land loser
• Fair compensation and compulsory rehabilitation and resettlement (R&R) for the land loser
• A study should be conducted on the land acquiring agencies about their plan to use the land and how the land owners are rehabilitated and resettled.

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