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Indian Real Estate Sector

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Theo_Fidel
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Re: Indian Real Estate Sector

Postby Theo_Fidel » 26 Jan 2014 23:50

^^^

RM. It appears you misunderstand property tax. It is based on property not people occupying it. Now you can classify differently based on use, residential, religious, commercial, industry, etc but no where is it affect by number of occupants! By your proposal every single area will turn into a slum as people cram in 10-15 per residence to avoid tax.

Everyone must pay property tax, just as everyone uses all the services, there can be no exemptions, otherwise there is no point.

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Re: Indian Real Estate Sector

Postby Bade » 27 Jan 2014 13:14

People in India, do not want to pay property taxes as per current market value, but would want the current market value when they sell their real estate. No wonder the densely populated parts look like slums. No one to blame but the middle class and lower classes who make up majority (> 90%) of the population.

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Re: Indian Real Estate Sector

Postby rohitvats » 27 Jan 2014 16:57

^^^IIRC, then property tax is linked to the circle rate of the property. Which is governed by the state government. So, it does not matter what people want. What matters is how the government perceives the situation and fixes the circle rate. I many south Indian states, the circle rate is very near to the market rates. Hence, the component of cash in a transaction has very little play.

However, the circle rates don't keep pace with market scenario - and this happens both for up and down cycle. I remember in 2009, when this Abdul was valuing the land assets of a major Indian corporate, the market value of land asset was LOWER than the circle rate creating a peculiar situation. The reason being while the government had revised circle rates upwards when RE markets were in upswing, it did not correct the same during 2009 downturn - at least no in syn with market. So, while the corporate would have sold its asset at X price, it would have paid stamp duty at Y price where Y>X. Generally, reverse us the case.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 30 Jan 2014 16:13

Theo_Fidel wrote: RM. It appears you misunderstand property tax. It is based on property not people occupying it. Now you can classify differently based on use, residential, religious, commercial, industry, etc but no where is it affect by number of occupants! By your proposal every single area will turn into a slum as people cram in 10-15 per residence to avoid tax.

Everyone must pay property tax, just as everyone uses all the services, there can be no exemptions, otherwise there is no point.


In my proposal, if person has below 250 sqft of land, a very basic rate applies i.e. he will be excempt from 1% of wealth value. The rate is only to cover municipal services minus expenses on water and expenses roads. The expenses on roads will come from excise on vehicles ONLY and tolls, and water charges will come from water meters. And those taxes anyway go to municipalities.

In the proposal I am giving , the land above 250sqft per person will be taxed by Central\State Govt to fund Military, Police Courts etc. Now I dont see Mukesh Ambani going to slum to evade the tax above 250 sqft. Nor would I or you go into apartment smaller than 250 sqft to avoid tax of 1% on land we are occupying. And a family of husband , wife, 2 kids and one senior citizen parent will get 1500 sqft land and 3000 sqft construction exempt. So they too would NOT need to move to any slums. The only persons who will be effected will be people like Sharad Pawar who have 20000 vacant flats in Pune alone !!! They will have to cough up tax equal to value of 200 flats every year and so they will have to rent\sell their flats\lands. And so land price in cities would reduce. This will increase industry.

rohitvats wrote:^^^IIRC, then property tax is linked to the circle rate of the property. Which is governed by the state government. So, it does not matter what people want. What matters is how the government perceives the situation and fixes the circle rate. I many south Indian states, the circle rate is very near to the market rates. Hence, the component of cash in a transaction has very little play.

However, the circle rates don't keep pace with market scenario - and this happens both for up and down cycle. I remember in 2009, when this Abdul was valuing the land assets of a major Indian corporate, the market value of land asset was LOWER than the circle rate creating a peculiar situation. The reason being while the government had revised circle rates upwards when RE markets were in upswing, it did not correct the same during 2009 downturn - at least no in syn with market. So, while the corporate would have sold its asset at X price, it would have paid stamp duty at Y price where Y>X. Generally, reverse us the case.



As of now, property tax collected by Municipality is very lowly linked with property prices i.e. it increases by twice when property prices go up by 10 times. The wealth tax collected by central govt is farce --- only Rs 250 crore a year is collected from whole country !!! Thats because there are too many exemptions.

The problem of black money can be reduced by Estonia style law that Govt can acquire property within 30 days after sale by offering 5% extra, and the offer is made NOT as per discretion of officer but when third party makes offer of 10% extra. This will keep black money value low.

====

Is there any thread on proposed tax laws? I would discuss this issue there. This thread seems to be more about existing real estate sceanrio not on how it can be fixed

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Re: Indian Real Estate Sector

Postby SRoy » 30 Jan 2014 18:11

RMji,

Your idea is good in theory (thanks for clarifying the per person area rule that you are suggesting), the only glitch that I see is the fact that 250 sq. ft. per person is way too low.
What you are suggesting will benefit large families, but it will hit small nuclear families. You have to consider the fact that there is certain lower limit for a comfortable living space.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 30 Jan 2014 19:24

SRoy wrote:RMji,

Your idea is good in theory (thanks for clarifying the per person area rule that you are suggesting), the only glitch that I see is the fact that 250 sq. ft. per person is way too low. What you are suggesting will benefit large families, but it will hit small nuclear families. You have to consider the fact that there is certain lower limit for a comfortable living space.


Errr ... if it is per person, then how will small family or large family matter?

And it is 250 sqft per person land and 500 sqft per person construction. The construction will be built-up and not super built up (built = carpet area + wall area, super built up = carpet area + wall area + staircase + lift + covered parking area). 500 sqft built up will mean about 600 sqft super built . So family of four will have 2400 sqft super built exempt. This is a 5BHK flat. What % of Indian urban families have spaces above this? In most cities, 50% live in slums. The put another 20% lower middle class who have 3 generations in one small flat. Then next 20% middle class which has just one just enough flat per family, where kids share room. So only 10% have excess flats\plots. And if they can afford to pay for such a flat as big as 5BHK or bigger, they better also pay taxes. And if one can afford to have empty flat or plot, then can also afford to pay taxes.

The wealth tax has following logic --- we need Military to ensure that Americans, Chinese, Pakistanies, Bangladeshi, Saudies, British etc dont seize your land, flat and other wealth. And we also need police/courts to ensure that naxals, thieves and dacoits dont steal land, flat and wealth. And so each wealth owner has to cough up tax to support payments to police, courts and Military to protect his wealth. And payment must be pro-rated with value of wealth as there is no better = less bad measure. The 250 sqft per person exemption is only because each person himself is one protector against enemies. But above this he needs others.

Also, the wealth tax proposal is NOT "tax rich and distribute in poor" type robin hood proposals. The wealth tax proposal is to fund Military , Police and Courts only. Now should wealth tax be 1% or 0.5% or 2% depends on how much Military etc is needed. If we fear war, the tax may be higher, If we dont fear war, then tax may be lower.

=======

My other proposals wrt real estate are

1. Govt should make law that staircases must be no higher than 5 inches and must be at least 5 feet wide. This will reduce lift usage and also improve health. And stair case area with incline would will not be counted in FSI, with some upper limit . But the horizontal space before entrance flat will be counted in FSI.

2. Water meters must be compulsory in all flats. And there should be separate electricity meter for water pumps. And society must divide water bills as per water meter readings.

3. The low cost housing should have water pump in each flat going into tank. This will happen when (2) is met

4. We need coin\card operated lifts in India !! Because many low cost housing cant afford lift charges and so lift gets shut down, and society members end up having brawls on maintenance issue. If someone can make coin\card operated lifts, then whole lift maintenance and paying its electricity bill can be outsourced to a company. This way, friction between society members will reduce.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 31 Jan 2014 07:13

SaiK wrote:I challenge the BJP party to put in their manifesto to reduce the property tax to a flat 4% on actual transaction. no black, and if found of any cash transaction not on papers, shall be confiscated. no transaction is without a bank involvement, and no property can be purchased on cash, except for gov fees and stamp papers.


SaiK,

Today, if unaccounted cash is found i.e. if cash not on papers is found, then it is confiscated. It is presumed as income of last year. So 30% tax will apply and 18% interest on tax and 100% to 300% penalty. So if say Rs 1 crore of cash is found unaccounted , then it is presumed as income of previous year. So Rs 30 lakhs tax, plus Rs 4.8 lakhs interest , plus penatlty of Rs 30 lakhs to rs 90 lakhs will apply. IOW, minimum of Rs 64 lakhs to max of Rs 124 lakhs are confiscated !!!

The problem is in finding cash not on paper. One can digitize 100% of currency, But then , one can use gold, silver or dollars for off the book transactions.

The solution to reduce black money transactions in real estate sale is to have Estonia type law where Govt doesnt transfer the property for 30 days after sale, and during those 30 days, if Govt finds a new buyer who is offering more, then first buyer gets cash and second buyer gets the land. France too had this law in 1950s to curb black money that WW2 had generated. IRS in USA too has such provision, but it rarely uses as USA doesnt have much black money problem.

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Re: Indian Real Estate Sector

Postby Bade » 04 Feb 2014 21:03

What if a third buyer comes up with a better offer. Repeat this process and you have a never ending cycle. Property changing hands with no registration, while black money rolls. It was the case in Kerala till the previous CM put an end to this by enforcing registration within a stipulated period. Each new law can be gamed it seems.

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Re: Indian Real Estate Sector

Postby Sachin » 04 Feb 2014 21:39

Bade wrote: It was the case in Kerala till the previous CM put an end to this by enforcing registration within a stipulated period. Each new law can be gamed it seems.

This was one brilliant move by Com. VS Achu Mama. Each land based transaction had to be registered and all the dues to govt. paid. It did bring down speculation a bit.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 08 Feb 2014 06:58

Rahul Mehta wrote:The solution to reduce black money transactions in real estate sale is to have Estonia type law where Govt doesnt transfer the property for 30 days after sale, and during those 30 days, if Govt finds a new buyer who is offering more, then first buyer gets cash and second buyer gets the land. France too had this law in 1950s to curb black money that WW2 had generated. IRS in USA too has such provision, but it rarely uses as USA doesnt have much black money problem.


Bade wrote:What if a third buyer comes up with a better offer. Repeat this process and you have a never ending cycle. Property changing hands with no registration, while black money rolls. It was the case in Kerala till the previous CM put an end to this by enforcing registration within a stipulated period. Each new law can be gamed it seems.


Bade,

The complete list of conditions I proposed are

1. Say A sells land to B for say Rs 1 crore
2. Say C offers 25% more than price B had put i.e. Rs 1.25 crore within 30 days
3. Then Govt will give Rs 1.20 crore to B, keep Rs 5 lakhs and give land to C

So now if D wants that land, and comes after 30 days after A has sold land to B, then he will need to offer 25% over Rs 1.25 crore . Now property prices cant increase by 25% every month. So process wont go on forever. Also , when this law, people will stop taking unregistered cash.

====

http://dolr.nic.in/dolr/downloads/PDFs/ ... 013%29.pdf

The above link is land use document published by GoI. On page-6 it says

the net sown areas in the country have increased from 41.8% to 46.1%. the forest areas have increased from 14.2% to 22.8%, and the areas under non - agriculture uses, which include industrial complexes, transport network, mining, heritage sites, water bodies and urban and rural settlements has increased from 3.3% to 8.5% ....... fallow lands have drastically decreased by nearly half from 40.7% to
22.6% .... mining areas are about 0.17% of total land of India, the urban areas are about 2.35% and the industrial areas are much less than 1%."


So real estate prices in Indian cities are high because of artificially created scarcity. May be it is same case across world. Now in India, if all urban cities' area is doubled by including land around city and giving permission of construction on that agricultural or fallow land around cities , then the prices of land across Indian cities would crash royally. Cities are mere 3% of existing and and agricultural land is 46% . So even all land added is agricultural land, then also loss of agricultural land will be at most = 3/46 = at most 6.6%. This is NOT a significant loss of agricultural land. Further, the resultant development will increase irrigation and add more land to agricultural land. So IMO, thats what we should do to promote development of housing, industry, trade, commerce etc.

Pls google on "uk land use". I get following link

http://www.google.co.in/url?sa=t&rct=j& ... mk&cad=rja

page-5 says that UK has urban land = 2748,000 hectares = 27,480 sqkm , which is 11.7% to total UK land

Where as India has only 3% of its land i.e. about 98,000 sqkm of land as urban land !!!

India has population almost 20-25 times UK. And India has urban land only thrice of UK !! No wonder housing is so poor in India.

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Re: Indian Real Estate Sector

Postby Sachin » 10 Feb 2014 10:45

matrimc wrote:Are housing loans repayments (interest part) tax-deductible in India?

Yes, very much. Home loan interests upto INR 1,50,000 p.a are tax exempt. Principal for INR 1,00,000 is also tax exempt (using another Section in IT Act). Many folks I have seen take up home loans and it pretty much ensures that all possible avenues for tax exemptions are taken care :).

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Re: Indian Real Estate Sector

Postby Yogi_G » 10 Feb 2014 10:57

Sachin wrote:
matrimc wrote:Are housing loans repayments (interest part) tax-deductible in India?

Yes, very much. Home loan interests upto INR 1,50,000 p.a are tax exempt. Principal for INR 1,00,000 is also tax exempt (using another Section in IT Act). Many folks I have seen take up home loans and it pretty much ensures that all possible avenues for tax exemptions are taken care :).


IIRC, 1.5 lakhs is max limit for interest deduction from taxable income if the property is self occupied. If let out for rent then it is unlimited. Principal deduction is to a max of 1 lakh (under section 80c) but in reality it will not be possible to claim entire 1 lakh as PF and life insurance payment come under 80c which eat up a chunk.

If you own more than one property then you can claim principal deduction only for one property but can enjoy interest deduction for all properties put together.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 10 Feb 2014 12:36

Marten wrote:Yogi_G, wealth tax applies for the second + properties, right?


wealth tax doesnt apply if property is rented , be second or third or 10th. The income tax on rent will apply.

Also, person can take property in name of wife, kids, parents or HUF. One property is exempt per person.

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Re: Indian Real Estate Sector

Postby RamaY » 14 May 2014 21:07

vnmshyam ji,

what can I expect (Rs/SqYd) for a plot next to highway (2nd/3rd bit from Highway) in Muttangi?

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Re: Indian Real Estate Sector

Postby shyamoo » 14 May 2014 22:11

RamaY wrote:vnmshyam ji,

what can I expect (Rs/SqYd) for a plot next to highway (2nd/3rd bit from Highway) in Muttangi?

RamaY gaaru, I'm not sure. I can find out and let you know. Problem is I'm in massa and when you ask for a quote, US premium kicks in. Will get in touch with my bro and let you know. This weekend ok?

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Re: Indian Real Estate Sector

Postby RamaY » 14 May 2014 22:23

Thx saar. Appreciate the help.

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Re: Indian Real Estate Sector

Postby krishnan » 23 May 2014 13:39

RamaY wrote:vnmshyam ji,

what can I expect (Rs/SqYd) for a plot next to highway (2nd/3rd bit from Highway) in Muttangi?


between 3500 to 4800

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Re: Indian Real Estate Sector

Postby Nirantar » 29 Jun 2014 13:29

A pooch to bangaluru maulanas who have done house hunting off late. Currently in videsh and thinking of RTIing in next 1 yr or so and totally blank on BLR prop scene.

Whats the possibility of getting an apartment with below conditons. If good chances then can pls recommend few good societies.

1. Sub 90L
2. In and around whitefield or upto 30 mins driving distance.
3. 3bhk+ or 1800+sqft
4. Full security and 24hrs pani, bijli, gas line.
5. Relatively newly built of repute builder.
6. School, hospital,groceries nearby.

hazaar salaam in advance

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Re: Indian Real Estate Sector

Postby SaiK » 29 Jun 2014 18:15

#bade, sachin and rm: the solution is agreements are done on actual transaction value with no-nonsense-non-banking fund flow. agreements have validity period, so even if A, B or Z comes over, the agreement is valid for the price agreed on the document. The ABCs will get an oppty. on the RE only when the agreement terminates. An agreement can terminate on expiration or on the sale deed.

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Re: Indian Real Estate Sector

Postby Theo_Fidel » 29 Jun 2014 18:16

http://indianexpress.com/article/india/ ... s-to-nine/

Image

Chennai building collapse. Many still trapped. Condolences to the lost.

It would be fascinating to see the cause of collapse. These look relatively well engineered. Undoubtedly a chain of errors. One suspects illegal addition of floors.

Many reports say that it collapsed during high winds. Lightning won't have any effect. It is possible that as the interior walls were not yet built, which act as shear partitions after full build out. No lateral bracing is evident in the images so collapse maybe due to inadequate construction practices.

The other building is also vulnerable and should be braced right away to prevent even more deaths.

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Re: Indian Real Estate Sector

Postby SaiK » 29 Jun 2014 19:04

what do you mean by "relatively well engineered"?

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Re: Indian Real Estate Sector

Postby bhavani » 29 Jun 2014 23:35

Ladagapati's lanco hills is being targeted by KCR.

It seems Telangana government is going to pull a petition from the supreme court which was filed by the last government claiming ownership. This would give back around 1600 acres of land back to wakf board. This land includes Lanco hills Project, The microsoft Development center, wipro offices, and various other offices.

Will they really destroy all these IT offices and Lanco hills buildings and handover to Wakf board.

The Hyderabad office one is the biggest MSFT office after Seattle at around 1600 strength. Wipro houses around 15000 engineers in Hyderabad.

http://deccan-journal.com/content/kcr-l ... -manikonda

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Re: Indian Real Estate Sector

Postby SaiK » 08 Jul 2014 17:31

does anyone know http://www.bdabangalore.org/ link works. it is blocked by my anti-virus security system.

I am looking for online tax payment URL

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Re: Indian Real Estate Sector

Postby SaiK » 08 Jul 2014 17:58

http://bbmp.gov.in/online-property-tax-payment
now I think I got the right link.. but heck.. it does not return my requests given new and old pid. I tried pure numbers with and without hyphens.

it does not list the owner after hitting the find button.

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Re: Indian Real Estate Sector

Postby SaiK » 11 Jul 2014 06:58

well, BDA promptly replied to my question.. I believe this does not work in IE and only in chrome or Firefox.
FYI folks. I was successful in getting it done. good job bda.

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Re: Indian Real Estate Sector

Postby Vikas » 26 Jul 2014 12:21

Expert log, What is your opinion on buying Property in Sahakar Nagar, Bangalore which is in the shadows of Hebbal. This 3 BHK Property rate is being quoted at about 70L and built up area is 1875 sqft ? Expected date of possession is December this year and is a direct buy from builder ?
Any advice ?

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Re: Indian Real Estate Sector

Postby Prem » 19 Aug 2014 23:21

Donald Trump Descends On India
http://www.forbes.com/sites/naazneenkar ... -on-india/

On a recent evening, the great and the good (and the rich) of Pune, a fast rising city close to Mumbai, gathered at the JW Marriott Hotel to get acquainted with the world according to Donald Trump. The 500 guests were dressed as though for the Oscars. And indeed The Donald, who knows the art of both property and showbiz only too well, didn’t disappoint.Seated on a stage bedecked with a chandelier, the property mogul and his son Donald Trump Jr were interviewed by starlet Lara Dutta, one-time winner of the Miss Universe title. “ I know what you’re going to ask so let me tell you: yes, it’s my own hair, ” he declared as the audience tittered. “ You could say that I’ve brought theatrics into real estate, “ acknowledged Trump at one point.The Trump show has descended on India with two ongoing projects under construction. One is a 75-story condo with a gold façade that is being built in mid-town Mumbai by the Lodha Group owned by billionaire Mangal Prabhat Lodha and run by his marketing-savvy sons Abhishek and Abhinandan.
In Pune, Trump has linked up with Panchshil Realty, founded and run by the dynamic siblings Atul and Sagar Chordia who have featured among India’s 100 richest. The Chordias who own the Pune Marriott and have another luxury project with Phillipe Starck among much else, are building two, adjacent 23-story Trump Towers, due to be completed by 2015.Earlier at a sit-down in the Presidential Suite, Trump had told me that India, after the installation of a new government, has become a “top place” in the international rollout of his property empire. This is despite the fact that Trump’s first foray into the country with another developer had fallen apart. “ Three years ago this was a tough place to do business, “ he admitted. But today, Trump said, he has the “gut feel” that it’s the right time. And he’s ready even to invest “if the rules allow” though he wouldn’t elaborate on the quantum.For now the projects with Chordia and Lodha are under a licensing pact. Trump was all praise for the quality of Chordias’ construction –“it’s the highest”- and spent a few minutes explaining to me how the marble has been laid out with such finesse that the joints aren’t visible. This level of workmanship would be hard to find in Manhattan, he noted. The Trump Tower apartments in Pune cover 6,000 square feet and are priced at $2.5 million each. (A couple of Bollywood stars, I’m told later, are among the buyers. )Though he was sounding relentlessly upbeat, Trump’s recent passage to India wasn’t entirely smooth as he had to navigate some red tape before hitting the Marriott’s red carpet; his private jet ‘s landing in Pune was delayed until he’d got prior clearance from the federal defense ministry. India’s bureaucrats don’t seem to be as yet aware of what Trump calls “the hottest property brand in the world.”
Elsewhere in Asia, Trump has six condos in South Korea and a Trump Tower in Makati, in the Philippines. China could be next: “ People want us. We’ve turned down so many offers. “ How much does he plan to invest, I ventured to ask again. Trump deflected my question with:“ We have a lot of cash. But when you’re so far from New York, you need partners.”That was my cue to question Trump as to why he’s so negative on his home market when its recovery has added to his riches. “ I see a lot of potential in the US but we’re flat-lining because leadership is lacking, “ he insisted before going on to lambast President Obama:“ It’s not appropriate that the president is playing golf while we’re bombing and the world is a tinderbox. He should be in the White House.” Pausing for a moment he delivered a typical zinger: “ If I ever got to the White House I’d never want to leave!”An unflattering Buzzfeed profile in February, had concluded that Trump’s political ambitions are a case of crying wolf. I pressed on with asking: will he or won’t he? Trump grinned: “ I may surprise a lot of people.”

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Re: Indian Real Estate Sector

Postby kmkraoind » 23 Aug 2014 15:01



Its presented by our Rahul Mehtaji. Nonetheless an excellent calculation and beautiful presentation.

I have a question for him. Why cannot govt levy "idle land" charges at 2-3% of market value, i.e., a person brought this land for house/factory/other purposes, but have not used that land for intended purposes, but has kept the land idle, means, its not in market, so its creating scarcity of land. Idle Land charges will applicable after 3 years of purchase of land.
Last edited by kmkraoind on 24 Aug 2014 09:17, edited 1 time in total.

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Re: Indian Real Estate Sector

Postby Rishirishi » 24 Aug 2014 03:31

The whole problem with affordable housing is becase the prices are being driven by investments of black money. In particular black money. So if you want to solve the issue.

1 Make it mandatory to auction any property put on the market.
2 Tax any incrase in value by 35%
3 Put a 5% development duty. this can be used to build infrastructure in the nearby area (metro etc)
4 Try to curbe black money.

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Re: Indian Real Estate Sector

Postby Rishirishi » 24 Aug 2014 03:41

kmkraoind wrote:

Its presented by our Rahul Mehtaji. Nonetheless an excellent calculation and beautiful presentation.

I have a question for him. Why cannot govt levy "ideal land" charges at 2-3% of market value, i.e., a person brought this land for house/factory/other purposes, but have not used that land for intended purposes, but has kept the land ideal, means, its not in market, so its creating scarcity of land. Idea Land charges will applicable after 3 years of purchase of land.



This is oversimplification. Building castles in the sky.

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Re: Indian Real Estate Sector

Postby Rahul Mehta » 24 Aug 2014 05:57

kmkraoind wrote:

Its presented by our Rahul Mehtaji. Nonetheless an excellent calculation and beautiful presentation.

I have a question for him. Why cannot govt levy "ideal land" charges at 2-3% of market value, i.e., a person brought this land for house/factory/other purposes, but have not used that land for intended purposes, but has kept the land ideal, means, its not in market, so its creating scarcity of land. Idea Land charges will applicable after 3 years of purchase of land.


I discuss mostly on my SM page only. I will be brief. You know, there are too many anti-RM-elements prowling to accuse me of spamming etc.

Tons and tons of Govt land is ideal across cities , towns, villages and even in prime urban areas. One can look at google map of cities. There are 3 main reasons why persons in govt dont lease them on ASAP basis.

1. Such leasing would bring down land prices, and so existing big land owners would lose. And the big land owners influence decision makers in many nefarious ways

2. Once leased, eviction on a later date for different use, is impossible due to corrupt courts. Even rent hike is difficult. And so Govt authorities are skeptical of leasing.

3. "Mera kya, mujhe kya" syndrome in Govt authorities. Say if GoI is plot is leased for 3 years, then leaser taker can put temporary movable home units and rent them out to students, singles etc , and thus charge rent from them, pay rent to govt and earn profits. So short lease of even 3 years is viable. But given that lease is just three years, value of whole contract is so low that he wont be willing to give too much bribes to decision makers. So decision makers are not keen on spending time in drafting rents contracts etc for such short term rentals

For details, please post questions on my SM site.

=====

The homes can be made affordable by impose wealth tax on land above 250 sqft per person. The land market will crash, construction business will boom, jobs will increase, offices/factories/homes will become cheaper, rent will become less, so offices/trade/industry will grow and so would economy. Only persons who will lose will be those who are hoarding VACANT plots for later appreciation.

====

Rishirishi wrote:The whole problem with affordable housing is becase the prices are being driven by investments of black money. In particular black money. So if you want to solve the issue.

1 Make it mandatory to auction any property put on the market.
2 Tax any incrase in value by 35%
3 Put a 5% development duty. this can be used to build infrastructure in the nearby area (metro etc)
4 Try to curbe black money.


Please give details of each.

1. Say A wants to sell flat to B for Rs X. Are you saying that A must conduct auction? What will be the procedure for auction? Who has to bear the cost of notice and conducting the auction?

2. Say I bout a flat for say Rs 1 crore on say 1-jan-2010. Say today is 1-jan-2014. Say "market" value is now Rs 1.25 crore. Then should 35% tax be applied on increase in the price i.e. Rs 25 lakhs? Even thoiugh I am not selling it? As per "35% increase in value", there is already capital gains tax of 20% and 30% which applies on sale

3. 5% of what? Construction price? Land price? Market value of land? What is the plot is vacant?

4. Please explain how? Using SITs?

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Re: Indian Real Estate Sector

Postby kmkraoind » 24 Aug 2014 09:18

Marten wrote:Good concept. BTW, the right word would be idle.


Thanks for pointing out the mistake.

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Re: Indian Real Estate Sector

Postby Rishirishi » 25 Aug 2014 09:28

Please give details of each.

1. Say A wants to sell flat to B for Rs X. Are you saying that A must conduct auction? What will be the procedure for auction? Who has to bear the cost of notice and conducting the auction?

2. Say I bout a flat for say Rs 1 crore on say 1-jan-2010. Say today is 1-jan-2014. Say "market" value is now Rs 1.25 crore. Then should 35% tax be applied on increase in the price i.e. Rs 25 lakhs? Even thoiugh I am not selling it? As per "35% increase in value", there is already capital gains tax of 20% and 30% which applies on sale

3. 5% of what? Construction price? Land price? Market value of land? What is the plot is vacant?

4. Please explain how? Using SITs?



1
There are 2 ways. Either th property must be advertised on a particular site and anyone interested can bid. The highest bidder gets the property. other way is to quarentine the property for 30 days and allow anyone to purchase it for a higher price then declared. In both cases the concept of partial black payment will dissapear.

2 The tax can only be applied when you sell.

3 The stamp duty is levied on the sale value.

4 Black money flows onto the economy from corrupt gov. officials . That flow has to stop.

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Re: Indian Real Estate Sector

Postby negi » 12 Nov 2014 19:09

Ye sab bakwaas hai, people take the profit component on their flats in cash so in theory they are not making a capital gain; also as per rules if you invest the money from selling a flat into another flat within 2 years of a selling a property capital gain tax is not applicable.

Basically laws in India aid artificial demand and in garb of promoting investment in real estate make buying a home a distant dream for the middle class.

It does not end here chootiy@s in government make it easier for people to take a second home loan; I mean here we have people struggling to buy their first home and government and banks lend easily to second home buyers because they know they are a safer bet .

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Re: Indian Real Estate Sector

Postby Theo_Fidel » 12 Nov 2014 19:24

negi wrote:Basically laws in India aid artificial demand and in garb of promoting investment in real estate make buying a home a distant dream for the middle class.


Property, esp flats is an odd duck. Once the upfront investment is made, it is only worth what someone is willing to pay for it. Technically buying a flat from some one is actually counted as consumption not investment.

There are plenty of flats available in Chennai & Bangalore out in the deep suburbs. In Kundrathur I saw some well built units 2bhk-3bhk 1,500 sqft+/- with even a small park attached going for Rs 25-40 lakh. But Middle class are not clamoring for these units. In 20 years time when these units cost 1 Crore + the same cry will go out that apartments are again unaffordable due to those pestilential NRI types....

Middle class needs to move out of the cities and build its own infrastructure out in the suburbs... ..not everyone can live in Koramangala/Nungambakkam....
In fact I would say, Chennai inboard of 100 feet road/maybe even IRR, is so crowded it can not support any more people.

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Re: Indian Real Estate Sector

Postby SaiK » 12 Nov 2014 19:35

kalam ji said, PURA! i stand by that 100%.

but it does not mean, urbanize villages.

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Re: Indian Real Estate Sector

Postby Aditya_V » 15 Nov 2014 10:55

Theo_Fidel wrote:
negi wrote:Basically laws in India aid artificial demand and in garb of promoting investment in real estate make buying a home a distant dream for the middle class.


Property, esp flats is an odd duck. Once the upfront investment is made, it is only worth what someone is willing to pay for it. Technically buying a flat from some one is actually counted as consumption not investment.

There are plenty of flats available in Chennai & Bangalore out in the deep suburbs. In Kundrathur I saw some well built units 2bhk-3bhk 1,500 sqft+/- with even a small park attached going for Rs 25-40 lakh. But Middle class are not clamoring for these units. In 20 years time when these units cost 1 Crore + the same cry will go out that apartments are again unaffordable due to those pestilential NRI types....

Middle class needs to move out of the cities and build its own infrastructure out in the suburbs... ..not everyone can live in Koramangala/Nungambakkam....
In fact I would say, Chennai inboard of 100 feet road/maybe even IRR, is so crowded it can not support any more people.


A former colleague of mine has had a flat in Kovur near Kundrathur since 2009, the lack of infrastructure, the roads he has to travel through means his flat od INR 23 lacs has not appreciated in 4 years, all other flat owners have bought for investment purpose and do not stay.

Based on his advise, unless a place has infrastructure like train stations/ highway connectivity or better still some large offices coming up, it is not good to venture to these suburbs considering the suffering your family has to endure. Truth is even in central Chennai land rates are artifically inflated. Nowhere other than India we have such a huge differential between land values and income. The real estate mafia make sure that your disposable income is sucked dry unlike places like the states where there is good connectivity with the suburbs.

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Re: Indian Real Estate Sector

Postby negi » 15 Nov 2014 11:16

Indian real estate is all about location and please in India location does not mean less crowd ; location means proximity to work . A 10 year old apartment on a standard two way 8 meter wide road might be over a crore as against a more spacious unit on a 4 lane highway far away from city center . The demand in India is not artificial it's just that it is only the creamy layer which is buying property and reason why empty apartments are high in number is investors are not buying homes they are buying property which they flip when it nears completion. Current trend is builder launches a project at a pre launch price now beautiful thing is prices of ready to move in apartments are jacked up so high that a pre launch price looks like a good deal , so investors put in the 20% of the cost and when the price increases by >20% in next 2 or more years they sell the unit and buy another one and chain continues .

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Re: Indian Real Estate Sector

Postby krishnan » 15 Nov 2014 15:23

forget connectivity , some new places dont even have sewage system and you have to depend on those cleaners

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Re: Indian Real Estate Sector

Postby Theo_Fidel » 15 Nov 2014 21:30

Aditya_V wrote:the roads he has to travel through means his flat od INR 23 lacs has not appreciated in 4 years...


Wow! Expecting appreciation in 4 years! Its a little unrealistic.

Saars, it is hard to believe but my dads house in anna nagar had no sewer connection for 20 years. We had septic tank all through my child hood. Finally world bank funds was taken to lay the lines, then we had no road for 3 years till another world bank funds was taken for tar road. There were no streetlights, no schools, no hospital, yet people lived there and paid for the infrastructure to be built around them. 2nd main road was not even fully asphalted. There was a rutted 8 foot wide strip in the middle. No median or anything. I very much remember people refusing to visit him because he lived in the 'kaddu'...

I only mentioned kundrathur because it is very affordable and construction was relatively OK for the couple of units I saw. People are complaining things are not affordable in Nungambakkam type areas. With IRR now complete, good ground water, close to airport, metro coming, it has bright future, many such areas outside Chennai proper have a bright future, in 20 years these will be the heart of town.

Keep in mind folks Chennai will become a 30 million person city. In our lifetime. Can you imagine how big it will be geographically at that point.....
----------------------

We have been around this many times before. The reason for property hoarding in India is almost zero property tax. It is laughably cheap to hold on to property in India. In the rest of the world property tax is ~1% of property value. In India it is often less than 0.01%. If you raise property tax property cost spiral will reduce but you will also bankrupt many existing folks at this point. Maybe raise the tax for all new property deals?


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