Look at smaller cities for housing investments

If you live in a metro city and plan to invest in residential real estate, consider widening the ambit of your search to some of the nearby tier II and III cities as well. In a recent all-India consumer sentiment survey involving 2,797 participants done by real estate consultancy Anarock, 26% of respondents preferred to invest in tier II and III cities. With the real estate markets of many metros getting saturated due to high prices and limited availability of space,
these upcoming destinations could well emerge as the future realty growth hubs. Some of tier II and III destinations that are now figuring on investors’ radar include Ahmedabad, Jaipur, Chandigarh, Nashik, Kochi, and Lucknow. Says Anuj Puri, chairman, Anarock Property Consultants: “While metros like Bengaluru, Hyderabad, Mumbai Metropolitan Region (MMR), Pune and Chennai will continue to attract both end-users and investors, tier II and III cities will be the new growth engines where the bulk of real estate activity is likely to take place in the coming years.” One piece of data from the Reserve Bank of India that attests to rapid realty growth in many of these smaller centers is an outstanding home loan. “Between 2013 and 2018, many of these smaller centers have shown faster growth in home loans,” says Samantak Das,
chief economist and head of research & REIS, JLL India. While Mumbai grew at a compounded annual growth rate of 9%, Thane grew at 22%. The figures for Delhi and Ghaziabad are 9% and 17%, respectively.

Source: Business Standard, Monday 3 June 2019

Thane goes commercial

Thane has seen its commercial real estate investment almost triple since 2015, according to reports. Not only are businesses foraying into Thane, but also it is triggering a much-awaited start-up culture. Indians have always been good at investing in commercial property but gone are the days when the common man would invest in areas near their residence or in typical CBDs. Instead, suburbs have become the new destination for Mumbaikars to invest, and that’s precisely what is happening in Thane. Thane has seen investment in its commercial sector triple since 2015.

Connectivity: Thane is currently connected via the Trans-Harbour line to Navi Mumbai, and the lack of good roads to far-off central suburbs like Badlapur, Ambernath, western suburbs of Andheri and Borivali means people prefer to commute by train. Train travel means lesser travel time compared to road, and the western line has become a mid-point for crowds coming in for jobs at IT hubs located at Thane and even Airoli. Money, money, money: Currently, the leasing rate at Thane has reached an average of Rs 780-1200 per sq ft of the
carpet area. As a result, many see Thane as a viable option in terms of commercial real estate.

Source: Times Property, Saturday 8 June 2019

Builder, a buyer must pay the same interest for delay’

The buyer was promised possession of the flat by December 2015 and had paid around Rs. 83 lakh in installments. As the builder failed to deliver the project even four years after the promised date, the buyer sought a refund of the money with 18% interest per annum, the rate at which he had paid penalty to the builder for delay in payment on his part. The company, however, said it was liable to pay compensation at the rate of Rs 5 per square feet for the delay as
per the agreement. Rejecting its contention, the NCDRC said, “It is also an admitted fact that the opposite party (the company) charged interest at the rate of 18% pa for any delayed payments made by the purchasers and there is no justification in offering a meager Rs 5 per sq ft, which comes to approximately 1.4% pa which is only a paltry percentage of what it was charging for any delayed payments.” “In any case, such a clause… amounts to an unfair trade practice since it gives an unfair advantage to the seller,” the consumer disputes redressal commission said. It directed the company to refund the money with 12% interest taking into account that banks have lowered interest rates in recent years. It also directed the company to pay compensation of Rs 1 lakh to the buyer.

Source: The Times of India, Friday 14 June 2019

Under-construction house cancellation can get a tax benefit 

After three years of booking, it is considered as a long-term capital asset. When a buyer cancels a property in an under-construction project for tax purposes, the transaction is considered similar to selling a house. And, the tax treatment can benefit the buyer if he gives up the property after three years. In a recent case, a Mumbai-based lawyer bought three flats in a project, for which he paid Rs.50 lakh as advance. The construction was delayed owing to regulatory hold-ups, due to which the buyer decided to surrender the flats. Apart from the booking amount, the developer paid the buyer an additional Rs 1.1 crore as compensation.

As the buyer had canceled the booking after three years, he offered the compensation as long-term capital gains under Section 45. The assessing officer denied it and treated the settlement money as the taxpayer’s income under the head “income from other sources”. But when the taxpayer appealed against the order, the tax tribunal upheld his plea. “There have been high court judgments that when a person books a residential property, he acquires the right to it. The right is considered a capital asset. In this case, the tribunal, therefore, ruled in favor of the taxpayer,” said Kuldip Kumar, partner & leader, personal tax, PwC India.

Source: Business Standard, Friday 14 June 2019


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