Build India: Government Initiates GST Rate Cut and Redefines Af...

Build India: Government Initiates GST Rate Cut and Redefines Af...: The slash in GST rates to 5% without ITC from the previous 12% with ITC for premium homes, and to 1% minus ITC for affordable homes from...

Government Initiates GST Rate Cut and Redefines Affordable Housing Slab

The slash in GST rates to 5% without ITC from the previous 12% with ITC for premium homes, and to 1% minus ITC for affordable homes from the earlier 8%, gives the beleaguered realty sector the much-needed breathing room and will certainly help it maintain some forward momentum in 2019, feels Anuj Puri, Chairman – ANAROCK Property Consultants adding, another booster shot given by the government is changing the very definition of the budget-range of affordable housing.

Extending the definition to housing priced within INR 45 lakh is credible. It will make more properties from the premium budget fall in to the affordable segment category, and thus benefit buyers in cities like MMR where property prices are exorbitant.

Yet again, affordable segment has got a major push today and buyers of this segment will benefit immensely. This will certainly cause sales of housing units within this segment to rise to a significant extent. Most players currently have considerable unsold stock within this segment.

ANAROCK data confirms that there are as many as 5.88 lakh under-construction homes lying unsold in the top 7 cities. Of these, 34% are priced below INR 40 lakh alone. With affordable housing now being defined within INR 45 lakh budget, more properties qualify for this ‘sweet spot category. The GST cut, coupled with this critical change in definition, will induce more sales in homes falling in this budget range – a win-win for both builder and buyers.

Cash-strapped builders have been hoping for all and any Government interventions which can help boost their sales volumes. This GST cut will provide such a boost, at least in the short-term as more fence-sitters who had been postponing their purchase decisions now have an additional incentive to take the plunge.

For the premium segment, this move may not be a game-changer leading to vastly improved housing sales, but we will see sales rise to an extent. More importantly, this move sets the stage for a stronger revival for the real estate sector in the future. The reduced rate, though nominal, will alleviate developers’ liquidity issues to some extent. Along with the other positives that the recent interim budget provided, it will create a more positive environment for all real estate stakeholders.

An important factor in this rate cut is its timing. With the general elections closing in, builders have been worried on account of the lower sales which were invariably a by-product of the period preceding elections. Investors generally refrain from market plays in this time, and buyers also go into wait-and-watch mode as they await sops from a newly-elected government or stronger market sentiments resulting from continuity of the incumbent government. For this reason, builders also generally refrain from launching new projects in this period.

It would have been ideal of GST had been entirely removed for all residential property categories. This would have provided some serious acceleration for the market. That said, this GST cut is very welcome, and the industry now looks forward to proactive solution to the underlying issues that the sector faces. Until then, even small booster shots in sufficient numbers can help incite positive sentiment and developers can now look forward to some improvement in their balance sheets.

GST on RTM Projects Without Completion Certificate will Affect Home Sales

Anuj Puri,
Chairman – ANAROCK
Property Consultants

The applicability of GST in the Indian taxation system was a move aimed towards ‘one nation, one tax’. Post land abetment, the applicable GST for under-construction properties was 12% while ready-to-move-in flats were kept out of the GST ambit. 

Even for under-construction properties, there was a ruling of Input Tax Credit (ITC) pass-over to the buyer to ensure that it becomes a tax neutral proposition.

While calculations and ITC pass-over still remain a challenge after 1.5 years of GST regime, a recent announcement stated that there is no GST applicable only on ready-to-move-in flats wherein sales took place after the issue of completion certificate. This is likely to add woes to buyers as well as developers.

Impact on Buyers

 Until now, all properties that were treated as ready-to-move-in were out of GST ambit, so buyers had significant choices. As per ANAROCK data, more than 90,000 units out of total unsold inventory of 6.87 lakh units (as of Q3 2018) across the top 7 cities were ready-to-move-in - a massive 14% of the overall unsold stock.

However, after this announcement, projects which are ready-to-move-in but do not have completion certificates will attract GST. For buyers, this means that either their purchase cost will increase if they decide to purchase such a property, or the overall spread of options will reduce. After all, not all unsold ready-to-move-in properties may possess a completion certificate.

Impact on Developers

Developers were already struggling with huge unsold inventory and were leaving no stone unturned to make sales and generate cash flows. The sudden NBFC crisis jolted the sector and fund-raising became a major concern. Amidst all this, developers were cashing in on the buyers’ preference for ready-to-move-in units since these were not liable for GST.

With this announcement, developers are now left with no choice but to absorb the GST charges in ready-to-move projects that have not been given completion certificates. If they attempt to pass this additional burden on to their buyer, their ready-to-move-in units without completion certificates will be at par with under-construction projects in terms of cost to buyers.

Boost for Secondary Sales Market

This announcement may be a blessing in disguise for the secondary market. The secondary real estate segment does not attract GST as such properties are by definition complete. Buyers eyeing ready-to-move-in units will now certainly evaluate this option rather than paying 12% GST on first purchase units.

Impact on Unsold Inventory

The burden of unsold inventory in the primary market is likely to increase as more home buyers may now consider buying resale units which are exempt from GST. The additional GST levy on ready-to-move-in units without completion certificates is an extra cost which developers simply cannot afford to pass on to their customers. Given their existing woes with regards to unsold inventory, developers have little choice but to absorb this additional cost either partially or completely if they want to keep sales going.

Demand to rise for RTM with completion certificates

Another obvious trend that will emerge is that ready-to-move-in projects with completion certificates will draw significant demand. Developers with such stock will not miss the opportunity to cash in on it.

We will also see developers step up their efforts to obtain completion certificates so that they can declare their projects as free of GST. This would be a notable change from the previous times when developers with ready-to-move-in units were in no real hurry to obtain completion certificates.

Affordable housing will also see a massive boost because such projects attract only 8% GST as compared to the other segments which attract 12%. More than ever before, affordable housing - already the king of the current market, will become the strongest contender in the rapidly-changing regulatory regime.

Piramal Capital and Housing Finance Receives Global Recognition

Piramal Capital & Housing Finance Limited (PCHFL), the wholly owned subsidiary of Piramal Enterprises Limited, has been recognized as the 'Best Overall Investment Manager' for Asia and India at the 14th Annual Global Real Estate Survey conducted by Euromoney. 

Piramal Capital and Housing Finance has won this award in India for four consecutive years for setting new benchmarks and outstanding performance in the industry.

In addition, it also marks its victory in one of the largest market - Asia this year for the first time by demonstrating its commitment & remarkable performance in the global real estate market. 

Khushru Jijina, Managing Director, Piramal Capital & Housing Finance, said, "PCHFL has been consistently recognized by the industry and its peers for its quality, performance and professionalism. 

We believe that awards are a validation of our Group values of Knowledge, Action, Care and Impact and a testament of our employees' efforts who strive to be the best, as well as our developer partners who motivate us to do better. We are delighted to win this award and are thankful to our stakeholders for their steadfast support."

This prestigious award has been voted and nominated by industry peers such as advisors, developers, investment managers, banks and corporate end users. Euromoney Real Estate Survey is one of the most prestigious and widely recognized global surveys that canvasses the opinions of the leading firms in the real estate sector, across the globe.

Company Awards:

Best Domestic Fund House by CNBC Awaaz in 2014

Best Overall Investment Manager (India) by Euromoney's Real Estate Awards for 3 years in a row - 2015, 2016 and 2017

Firm of the Year (India) by the PEI Global Private Equity Real Estate (PERE) awards in 2014 and 2016

Great Places to Work in Financial Services: 2016, 2017

MCHI CREDAI Golden Pillar Awards: Piramal Housing Finance - Emerging Home Loan Provider of the Year and Piramal Finance for Leading Real Estate Project Finance Company of the Year

Assetz Group launches premium properties in Bangalore

BENGALURU: Assetz Property Group, a reputed builder in residential, commercial and warehousing space, has launched three alfresco row houses, Soul & Soil, Earth & Essence and Leaves & Lives, along with 38 & Banyan, an architectural masterpiece in the heart of Bangalore.

The properties are located in prime areas for investments in Bangalore and the true essence of these homes is the integration between the architecture and the environment.

Established in India in 2006, Assetz Property Group has been in the forefront in developing four business verticals - Residential, Commercial, Fund Management & Warehousing. Despite the continuous gloom in real estate market in India, the company has launched four projects in the last two months.

Projects launched by Assetz:

Earth & Essence  - Starting at 2.37 Cr are 3, 4 & 5 BHK row houses, off Bangalore International Airport.

Leaves & Lives - Starting at 2.29 Cr are 3 & 4 BHK row houses, off Sarjapur Road.

Soul & Soil - Starting at 1.93 Cr are 3 & 4 BHK row houses, off Hennur Road.

38 & Banyan - Starting at 3.5 Cr are 3 & 4 BHK homes, off Indiranagar.

Furthermore, Marq, the integrated township, phase 1, which was launched about 4 years back, has been almost sold out with just few units remaining for grab. The company is set to launch their phase 2 of Marq 2.0 in the beginning of October this year.

Alfresco architecture and contemporary design

The new launches by Assetz Property Group address the problems of living in an urban city like the block out of crisp breeze and lush greenery. Mixing old-world charm with luxury, the company has launched  golf villa plots at 18 & Oak, Sarjapur-Attibele Road, East Bangalore which will give occupants a chance to live with nature while having a view of an 18-hole golf course at a mere stone throw away. 

The property will spell out homes designed by nature and will be known as one of the most luxurious addresses in Bangalore.

Homes in prime residential locations

Assetz Property Group puts careful thought into providing their customers with a home that caters to their every need, for which the location of the home is just as important. Each of their projects is located in some of the best neighbourhoods in Bangalore. Marq Phase-2, for instance, is one of the upcoming launches located in the burgeoning locality of Whitefield. This 22-acre enclave will be a home ahead of its time with a unique design approach and kid-centric amenities and facilities.

Global amenities at home

Every property developed by Assetz goes hand-in-hand with impeccable construction and world-class facilities. 38 & Banyan, a property situated off Indiranagar, is the leading example of this fact. From a state-of-the-art amphitheatre to an infinity pool, class and sophistication are ways of life here. Find the dream home in the thoughtfully designed property of 38 boutique apartments, around a 150-year-old banyan tree.

Variety of world-class projects

Magnificent apartments have always been one of the striking landmarks in the bustling city of Bangalore. However, the variety of residential projects launched by the Assetz Property Group will alter the landscape of the city.

The residential portfolio of Assetz Property Group includes:

18 & Oak- Golf villa plots located off Sarjapur-Attibele Road.

Marq (phase 1) - Luxury homes located off Whitefield-Hoskote Road.

63° East - Luxury Eco homes located off Sarjapur Road.

Here & Now - Uber modern apartments Located behind Manyata Tech Park.

38 & Banyan - Boutique apartments located near Indiranagar.

Earth & Essence - Row houses located off Bangalore International Airport Road.

Soul & Soil - Row houses located off Hennur Main Road.

Leaves & Lives - Row houses located off Sarjapur Road.

Kumari Builders Embarks Rs 300 Crore Villa Project in Bangalore

Bangalore: Kumari Builders and Developers is investing Rs. 300 crore in a 46-acre villa project in the city. Through this investment in Kumari Hamlets, the Bengaluru-based residential real estate developer is expanding its property portfolio by 1.8 million sq. ft.

Established in 2012, Kumari Builders and Developers was founded with the foremost objective of fulfilling the housing needs of working professionals. Its aim is to help young professionals take their first step into affordable independent living.

Ashok Naidu, Director, Kumari Builders and Developers, says, "We are investing Rs. 300 crore in Kumari Hamlets as it is one of our most promising projects. We have built a space where you can be with nature. Here you get to relax, refresh and rejuvenate, making the imprint of coming home the best feeling ever. Seeing the vast potential for connectivity and infrastructure development, Malur has emerged as the most feasible location for this project. The affordability factor has enabled us to transfer the benefit to our customers."

Located just 40 to 50 minutes from the Hope Farm, Whitefield and well connected to major business hubs, Kumari Hamlets is the ideal destination for people who prefer to experience a relaxed lifestyle. Spread across 46 acres with about 750 units, the project aims to connect its residents with Mother Nature. With more than 4,000 trees and 8 acres of parks, the setting is perfect to de-stress from busy life.

With the intention of making villas affordable for people in the mid-income group, the best of architectural minds have designed Kumari Hamlets, with prices starting at just Rs. 60 lakh.

"Superior-quality villa projects situated in and around business hubs are priced at the higher end. We want to enable professionals working around these prime locations to own their dream villa at rates that are accessible to them," explains Ashok. He further adds that the project is within 40-45 minutes of drive time from some of the major IT hubs.

After demonetisation and a year-and-a-half of struggle, the Indian real estate market is on a recovery mode. With the implementation of RERA and GST, there was much confusion in the market. However, the industry is limping back to growth and has seen a significant rise in residential property launches over the past few months. As per the Knight Frank India Real Estate Report, Mumbai and Bengaluru were the largest markets in the country in terms of residential space and accounted for 56 percent of the total supply during H1 2018.

"With real estate market back on track, what better time than now to announce a project that caters to the needs of the mid income group. The project offers a home that lets them be one with Nature while living in a burgeoning city," adds Ashok.

About Kumari Builders and Developers: 

Kumari Builders and Developers is one of the fastest-growing real estate companies in Bengaluru. With eight projects to its credit, the company currently has ongoing projects adding up to 2,54,610 square feet of built-up area. It was founded in 2012 with the foremost objective of fulfilling the housing needs of young working professionals in the city.

Surbana Jurong and Mitsubishi to Jointly Develop Developmental Projects in Asean Countries

SINGAPORE:  Surbana Jurong Capital, the newly established financial services arm of Surbana Jurong, and Mitsubishi Corporation has signed an agreement to set up a fund management company (FMC). The FMC will be a 50:50 joint venture between the two companies and will be jointly managed by both partners.

The FMC will set up an Investment Fund (Fund) to invest in urban development projects in emerging Asia, primarily in Myanmar, Vietnam, Philippines, Indonesia, India and Sri Lanka. Such projects may include transit-oriented developments (TOD) such as aviation or rail-related developments, affordable housing, as well as other urban-related infrastructure.

The partners will each contribute up to US$250 million to seed the Fund, and the FMC will also raise and manage funds from other accredited or institutional third-party investors.

According to Asian Development Bank's (ADB) estimates, developing Asia will need to invest at least US$1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum. However, there remains a huge gap between the demand for such infrastructure and the region's access to financing.

The FMC will seek out commercially-viable urban infrastructure projects which are in an advanced feasibility stage or in the early phases of construction, and provide equity investment to support such projects.

Qualifying projects will need to meet sustainable environmental, social and corporate governance metrics. Institutional investors seeking to participate in the sustainable growth of the region can therefore do so through the Fund.

The FMC will leverage both partners' unique strengths to deliver optimum long-term risk-adjusted returns for the Fund. Surbana Jurong, as one of the largest Asia-based urban and infrastructure consultancies, has direct exposure to project opportunities in the region. It has over 70 years of successful project deliveries and technical teams in over 40 countries to provide insights on the risks of such projects.

Mitsubishi Corporation, a global integrated business enterprise with diverse business operations, has experience in investments and financial products, and has been investing in real estate projects in ASEAN countries since 2013 totalling JPY250 billion.

Wong Heang Fine, Group Chief Executive Officer of Surbana Jurong, said, "Emerging countries in Asia continue to see rapid economic and population growth, which drives the demand for urban infrastructure projects including transit-oriented developments and affordable housing. For project owners looking for funding, and investors looking for long-term sustainable returns, Surbana Jurong and Mitsubishi Corporation's new FMC will provide that capital bridge. Our JV will tap both partners' know-how across financing and investing, as well as technical and risk analysis to deliver sustainable returns. This JV is also timely, as Singapore positions itself as the regional infrastructure hub."

Surbana Jurong Capital

Surbana Jurong Capital, as the financial services arm of Surbana Jurong, will source, invest, plan, develop and manage infrastructure and real estate projects, generating long-term sustainable returns for its stakeholders. It will draw on its ability to plan and manage the risks of development stage projects, seeking to bring together existing market liquidity with appropriate opportunities, providing risk-adjusted returns for investors.

Wong commented, "Surbana Jurong Capital will augment Surbana Jurong Group's complete value-chain of solutions. Through Surbana Jurong Capital, we are now able to provide equity investment and long-term financing solutions to our global clientele, further enhancing the value-add we bring to our partners."

About Surbana Jurong

Surbana Jurong is one of the largest Asia-based urban and infrastructure consulting firms. Leveraging technology and creativity, Surbana Jurong provides best-in-class consultancy solutions across the entire value chain of the urbanisation, industrialisation and infrastructure domains.

Headquartered in Singapore, the Surbana Jurong Group has a global workforce of over 14,000 employees in more than 120 offices across over 40 countries in Asia, Australia, UK, the Middle East, Africa and the Americas, and an annual turnover of around S$1.5 billion.

Surbana Jurong has a track record of close to 70 years, and has built more than a million homes in Singapore, crafted master plans for more than 30 countries and developed over 100 industrial parks globally.

Surbana Jurong's motto 'Building Cities, Shaping Lives' reflects its belief that development is more than just steel and concrete. Surbana Jurong creates spaces and designs infrastructure where people live, work and play, shaping cities into homes with sustainable jobs where communities and businesses can flourish.

About Mitsubishi Corporation

Mitsubishi Corporation is a global integrated business enterprise that develops and operates business across virtually every industry including industrial finance, energy, metals, machinery, chemicals, foods, and environmental business.

Mitsubishi Corporation's current activities are expanding far beyond its traditional trading operations as its diverse business ranges from natural resources development to investment in retail business, infrastructure, financial products and manufacturing of industrial goods.