NRIs on property hunt in Chennai and Bangalore

K Ramanathan

Thanks to the record fall of rupee value, non-resident Indians (NRIs) are flocking into real estate market with renewed vigour with Bangalore becoming their favourite hunting ground for property investment followed by Chennai and Mumbai.

According to a survey conducted by associated chamber of commerce and industry of India (ASSOCHAM) across major cities in India, developers have found an escape route from the present cash crunch and see NRIs as their saviors. 

They expect an increase of 35 per cent in business enquiries from the expat-Indians this year, reveals the survey. According to D S Rawat, Secretary General of ASSOCHAM,  since the rupee value is at one of its lowest ebbs and still not possible to predict its retreat, NRIs have found this as an opportunity to make some good investment in real estate market across India.” 

The value of rupee has gone down to about 34 per cent against US dollar since August 2011 and even crossed 65 against USD. 

The leading industry body has conducted a random study involving 1250 real estate developers in Dera Basi, Delhi-NCR, Mumbai, Mohali, Kolkata, Hyderabad, Chennai, Bangalore, Pune, Ahemdabad, Dehradun etc. Most of the developers have revealed that NRIs have been showing renewed interest especially after the rupee hit the record low since they would get good exchange rates for their currency. 

The ASSOCHAM study also found that NRIs prefer Bangalore as the most suitable city to park their funds in real estate properties, which include residential and commercial establishments. After Bangalore, NRIs prefer Chennai, Mumbai, Ahemdabad and Dehradun.

Punjabis settled in UK and Canada are showing more interest in investing in upcoming real estate spots around Chandigarh like Mohali, Dera basi, Zirakhpur and Panchukla. Surprisingly, India’s hottest real estate destinations like Delhi-NCR and Mumbai markets did not figure in their ‘most preferred’ investment destinations list. 

“The depreciation of rupee value which began six months ago has increased the enquiries from NRIs considerably and we are expecting a surge of business up to 35 per cent in this adverse market condition. The decline in rupee, though affected the domestic market due to macro-economic conditions, sales have increased due to NRIs because they want to get value for their money”, said majority of developers.

Though for non-resident Indians, this is the best time to buy properties in India, the time is not good for people back home. As per market estimate, an NRI who buys a home can save up to 30 per cent on his property value and can expect good percentage of return on investment, opines Rawat. 

With rupees continue to slide to new low levels and government finding it difficult to apply brake, experts feel that more and more NRIs will make investment in Indian property market. A new trend may also emerge, wherein developers will make homes especially for expat Indians, as most of them prefer luxury apartments and commercial property in key cities.

According to the survey majority of the NRI traffic is coming from the US, UK, UAE/Gulf region, Singapore, UK, Canada, Australia, South-Africa etc and the demand is more for commercial buildings and high-end properties. 

As per a recent estimate, nearly five million Indian expatriates are living in six Gulf Co-operation Council (GCC) countries of Oman, Saudi Arabia, Qatar, Bahrain, Kuwait and the UAE and they remit close to 30 billion USD to India every year.

The enquiries from NRIs from Europe, the US, Singapore and Middle-East for purchasing property in India have gone up to 20-25% following the rupee's depreciation, the survey further revealed.

(This article can be reproduced, either partly or fully in print form or in websites with the permission of the author)

Key documents required to sell your home

K Ramanathan

Selling home is not as easy task as perceived by many. It also involves astute planning as buying a home. Sellers are of two types, those who want to sell the property to meet urgent domestic need and those who sell home as part of their portfolio requirement. The second ones are basically real estate investors, who wait for capital appreciation to book profit at an appropriate market condition.

Those who want to sell their home for urgent need, can’t see the market condition – whether low or high, but have to sell for a maximum possible price. He has to either depend on its own strategy to reach buyers or engage real estate agents to sell the property. Before going for hunting a buyer, the seller must ensure that he has all documents ready. There are a set of papers one should have before putting up the sale board. 

Parent documents

Parent documents are the sale deeds, which traces the earlier owners of the property on sale. The owner should have got these documents before registering his or her property from the previous owner. The documents should trace owners of the property of few generations and divulge about any property dispute exist at that points in time. The current owner should take a copy of this document to be given along with other necessary papers to the interested parties.

Sale deed 

This the current sale document of the property on sale. The owner should take a copy of this document and keep it ready so that he can give this document to the prospective buyers for legal scrutiny. 

Patta

Patta is a legal document given by local land authority authenticating the ownership of the land occupied by the present owner. There can be ‘group patta’ which can be obtained for a huge piece of land and latter divided into smaller sizes and sold to different people. In that case each owner of the fragmented land pieces should have group patta and individual patta obtained from the land registration authority of the respective area. In the case of apartment, the patta should be for the entire land on which the building stands. The owner should keep a copy of this also.

Encumbrance certificate (EC)

This document is mandatory as it tells about the liabilities such as loan against the property or unpaid loan, if any, between previous owners or ancestral property disputes. Normally, to prove the clarity of the document, the seller should apply for an EC with the local registration authority for a minimum of 30 years. Earlier one has to go the local taluka office and apply for EC personally. Due to technological innovation, one can apply for EC by sitting from office or home in the designated websites of the respective regional registration authorities. The EC will be sent to the applier within a month a minimum amount will be charged, which also can be paid online.

Loan clearance certificate

If the seller has pledged the property with a financial institution, he has to provide loan clearance certificate. This can be exempted if the buyer is ready to pick up the hypothecated property by transferring the loan to his name after paying the difference of amount from the agreed value of the property to the seller.

Apart from the all the above documents, one has to provide residential and ID proof at the time of registration of the property. Residential proofs can be ration card, adhaar card, voter ID etc while for ID proof the sellers can provide PAN card along with two passport sized photographs. Both buyer and seller have to provide above address and ID proof at the time of registration of the property. 

(This article can be reproduced, either partly or fully in print form or in websites with the permission of the author)

Rupee fall triggers NRI rush to Indian realty

K Ramanathan

Dubai is touted as the world-class property investment destination in the Middle East. In 2012, real estate prices witnessed a 10% growth y-o-y, as per the Dubai Land Development (DLD) authority’s data. 

Also, the real estate transactions increased by eight per cent to UAE dirham (AED) 154 million. Interestingly, this recovery is backed by huge investments by expatriates, particularly from India as Non Resident Indians (NRIs) are amongst the top five investors in the Middle East. 

However, with the natural affinity towards home-biasness for India, and against the recent depreciation of the Indian rupee (INR) against the US dollar (USD), could the real estate investment decisions of the NRI community be changed in favour of India?

Indian real estate prices have increased dramatically over the last few years. Immediately following the global financial crisis (GFC), Indian property prices witnessed a significant rise averaging 40–42% across all major markets, as per the database of the leading real estate intelligence services Jones Lang LaSalle. 

Even in cities like Mumbai, where capital values were already high, returns recorded at 66 per cent during the corresponding period. Contrary to this, DLD’s data for Dubai suggests property prices witnessed a 65% slump in the four-year period before 2012, thereby enabling us to suspiciously ask whether a 10% rally in 2012 is all that startling.

More recently, the Rupee has witnessed a significant 12% depreciation against USD since the start of May 2013 until the end of June 2013, thereby forcing its value down against all other currencies that are pegged to USD, including the AED. As a consequence, INR has also depreciated against the AED by 12% during the same period. 

A simple back-of-envelope calculation suggests that for instance, if a Dubai-based NRI invests AED 10 million in the Indian real estate now (INR/AED at 16.4), and assuming only a conservative 15% returns from the Indian real estate in the near term for key markets, he could expect repatriated returns of over 27% (15% of returns from real estate market plus 12% of currency appreciation), assuming that the INR returns to its pre-May price of 14.8/AED.

Merely the incremental return of 12%, owing to exchange rate fluctuation, is comparable to the 10–12% of total returns expected by DLD in the near term from the investment in Dubai realty sector. Similarly, returns can be expected from investments made by NRIs from other parts of the Middle East where the local currency is mostly pegged to USD.

It could be true that NRIs may favour Dubai over their home real estate on the basis of socio-economic and other factors. According to sources, Indian investors were buying properties in Dubai as it offers political stability, tax benefits, world-class infrastructure, geographical proximity and attractive prices.

However, a study conducted by Sumansa Exhibitions, organiser of several India property show in UAE, portrays a different picture. The study reveals that NRIs consider buying property in India is more profitable that owning a house in Dubai or elsewhere. 

Apart from strict visa rules along with regulatory obstacles in buying a property in the Emirates, what is triggering NRI population to invest in India are India’s economic growth, new infrastructure initiatives, rising demand for commercial space, price trends and social infrastructure. 

Putting these things into consideration, the recent fall of Indian currency could act as a trigger amongst the NRIs in the Middle East to switch their focus towards the properties in India.

BKC - from marshland to hot realty hub

K Ramanathan

From an useless marshland a few years ago to the most sought-after residential and commercial hub in Mumbai, Bandra Kurla Complex (BKC) has come a long way. BKC, as it is popularly known, can be seen as a perfect example of a successfully ‘reclaimed urban land’ in the history of Indian real estate.

Having most modern amenities and with strategic location, BKC has become an extremely valuable site, which has gone from strength to strength since the time it was a marshland embedded in Bandra in west, Santacruz in North, Kurla in the East and Bandra in the West.

Over the years, BKC has acquired tactical importance to most prominent companies of Mumbai as the place became an ideal central business district with glittering and ultra modern office complexes, mixed use buildings and residences for high net worth individuals.

After having dragged all the attention from various quarters, BKC has now emerged as the most preferred destination for foreign consulates and trade offices, says Ramesh Nair, Managing Director - West, Jones Lang La Salle India.

Leading countries have opened their Consulates there with the most prominent ones being the US Consulate, Consulates of Australia and New Zealand and the British High Commission and list is getting extended with more and more countries are planning to open their offices here.

According to data available, over the last one year, the Consulates of Sweden, Belgium and France have also opened offices in Mumbai's showcase residential and commercial location. The main idea behind the largesse transfer of offices by these foreign embassies Mumbai’s CBD to BKC is for more breathing space and convenient location.

Nepean Sea Road and Malabar Hill are the places where some of the consulates have chosen to operate and these sites are residential villas. Even though these places are one of the high profile locations on Mumbai’s real estate landscape, they don’t offer the facilities these establishments need to operate.

Consulates have some specific requirements for a flawless operation of their offices. The first and foremost need is that the precinct should have high standard of fire safety and security measures having minimum two exits from the same floor and one of them preferably should have direct access from the unit.

The consulates also require that their premises should be at least 10 metres above from the ground level. Another important need is that buildings should have high visibility with easy access and robust utility prerequisite. To prevent unauthorized access, the shafts within the building should be suitably secured.

What makes the BKC special among the consulates are its excellent infrastructure facilities and well-regulated traffic around the area, which makes travel less cumbersome.

Located strategically closer to international and domestic airports and Eastern and Western Highways, BKC is also closer to high end residential localities such as Bandra and educational institutions such as The American School of Bombay and Dhirubhai Ambani International School.

Apart from having MCA Club and the Trident and Sofitel Hotels, BKC has become a main attraction because of its ample green cover, hygienic surroundings and open spaces.

Most importantly, the newly launched and completed projects here offer ultra-modern amenities and better car parking spaces. Commercial office projects such as Maker Max City, TCG Financial Centre and Capital are among the prominent ones consulates largely prefer because they have smaller sized units, better safety and security features, high building maintenance standards, energy efficiency with high quality finishes.

Govt Plans FDI Boost to Reality Growth

K Ramanathan

To help the cash starved real estate sector to have more funds flow, the Government is planning to make sweeping amendments in the existing foreign direct investment (FDI) norms; which, apart from providing life support to realty sector, will also help bolster the already battered rupee value.

The urban development ministry has reportedly suggested to the Government to exempt those real estate companies, which have less than 50 % foreign ownership, from all current restrictions, including the minimum area requisite for developing a project.

"FDI up to 49% should be allowed without any restriction to attract overseas capital funds, which should not have long-term interest in construction assets. If the restrictions are relaxed, real estate players can raise foreign capital at competitive rates and make them less dependent on domestic financial institutions," a report quoting the ministry’s internal document, said.

The suggestion was also made to attract more foreign investment by relaxing norms for slum redevelopment and urban renewal projects. Those who can take over 50% stakes in such projects can avail this relaxation.

Proposals were also made to reduce the area of operation to bring in more funds from the foreign shore. For example, relaxation of projects having size of five acres instead of 10 acres has been proposed and permission to purchase of farmland for FDI funded firms.

For construction development projects, it has been suggested that the present condition of minimum built-up area of 50,000 square meters should be relaxed to 25,000 sq meters. 

"If these proposals become a reality, it will augment the growth of the sector and also help generate huge employment openings," says Ananda Mahadeva, MD of Ananda Builders in Chennai, adding, “Several small projects can be benefited as fund flows increase the possibility of project completion before due date, which will enhance the credibility of the builders.”

Worli Koliwada, lucky to escape from real estate storm

In a severely land-constrained city like Mumbai, every available piece of land obviously has inherent value that developers will want to capitalize on. In such a scenario, little is really sacrosanct and exempt from future exploitation. 

Fortunately, there are areas in Mumbai that - despite the tempting land availability there - will continue to resist the vagaries of 'progress'. One of these is the Worli Koliwada area, says Ashutosh Limaye, Head - Research & REIS, Jones Lang LaSalle India. 

Worli Koliwada covers approximately 175 acres of land in the very heart of one of Mumbai's most lucrative commercial and residential property zones. Its potential for real estate development seems obvious, but certain immutable market realities have so far saved it from such fate. To begin with, this area is home to Worli Fort, - which is a heritage monument. Secondly, the Worli Koliwada area itself falls in a Coastal Regulation Zone, as it is bound by sea from three sides. 

Thirdly, it is also sensitive from a Defence perspective, as the Indian Coast Guard has active operations abutting it. An additional factor that makes Worli Koliwada sensitive from a security viewpoint is its proximity to the Bandra-Worli Sealink.

Fourthly, this area is a massive, active fishing harbour - densely populated by Mumbai's traditional fishermen families. The unique Koli (fishermen community) ethos that thrives in Worli Koliwada is, in fact, Mumbai's original culture - one which is fast evaporating. The only other comparable area in the financial capital is Versova Koliwada. Most of such areas have been decimated by the hammer of commercialized development over the last few decades. 

This is unfortunate. Redevelopment in Mumbai should happen to ensure the betterment of living standards, and to lay newer infrastructure - but not at cost of the city's heritage, ecology and security. Laying Worli Koliwada open for mercenary development would wipe out one the few remaining bastions of Mumbai’s erstwhile cultural heritage, and would deservedly cause considerable public outcry. 

Even if all restrictions and challenges were somehow overcome by political manipulation, real estate development in this area would not be an easy task. In the first place, the area comprises primarily of a rocky surface that does not lend itself well to the laying of deep foundations. Secondly, this is essentially a narrow strip of land leading into the sea, so the creation of roads and other supportive infrastructure would be a logistical nightmare.

In fact, for all these reasons, using any of the existing standards of attributing a market value to the Worli Koliwada area would be far from easy. That said - with residential property rates in Worli currently ranging from Rs. 30,000-60,000/sq.ft. and commercial property rates from Rs. 18,000-40,000/sq.ft., Worli Koliwada will obviously continue to rank high on every developers' wish list despite all the challenges it presents them with.

New curbs on international investment may affect realty sector

In uncertain times, preservation of capital becomes the key consideration for smart investors. Currency volatility and sustained weakness in the recent times has led the capital controls by the banking regulator in India. Over the last one month, four notifications specifically aimed at curbing the investor sentiment for gold and commodities have been issued. 

Equity markets in India recently witnessed negative FII flows primarily because of the Indian rupee’s lack of stability, slowing economic growth and lack of Government initiatives with regard to reforms and resolving international taxation issues, says Om Ahuja, CEO – Residential Services, Jones Lang LaSalle India. The environment is becoming very complex for investors when it comes to making their investments work and yield good inflation-adjusted returns.

Over the last five years, equities have, on an average, yielded annualized returns of 5% (Aug 16th 2008 to Aug 16th 2013), whereas gold has given annualized returns of 13% (Aug 16th 2008 to Aug 16th 2013). Returns from bank deposits and bonds have been in the range of 9-10% annually. On the other hand, annualized returns on real estate in cities like Mumbai and Delhi have been in the range of 40-55% (pre-tax and not inflation adjusted.)

If we benchmark these returns and make a quick comparison, it clearly reflects that real estate and gold have outperformed equities and bonds / bank deposits. That said, many experts point out that the returns from real estate may not sustain at these growth rates going forward, considering that we are possibly at the mid or higher end of the growth cycle curve for this asset class.

Internationally, real estate displays a very different trend in terms of returns and growth. Rental yield can ranges from 4-7% and annual growth in many parts of the world is approximately 4-5% annually. Many Indians chose to diversify and increase their exposure to international real estate to ensure steady rental revenue streams for their families abroad, and / or provide accommodation for their own use during their foreign sojourn.

This became especially viable with the Liberalized Remittance Scheme (LRS) which was rolled out few years back. Considerable revenue outflows into destinations such as the Middle East, London and Singapore resulted. However, the recent policy change aimed at curbing of international real estate investment marks an abrupt moving away from the LRS scheme. The international property focus of such investors is now going to decrease drastically.

Whenever excessive controls are exercised (as we have already seen in the case of gold and other precious commodities) investors receive confusing market signals that lead to increased uncertainty in terms of investment planning. In such scenarios, the most evident trend that emerges is that of investors looking for alternatives that can help them grow money and protect capital.

The new currency diversification curbs now imposed do not just limit international real estate investments - investors will not find remitting a mere USD 75,000 into any other asset classes on international shores attractive. Such small amounts will attract sizable charges by the banks managing their portfolio, making the entire proposition non-viable and unattractive.

Indian Investors still believe that real estate is the ideal investment asset class when it comes to safety, returns and growth. In an environment where international real estate is no longer an option, we will see more money chasing attractive assets that offer good returns within the country.

There will now be an increased focus on lucrative residential real estate investment options in India. Because of the recent resolution of the political quagmire there, Hyderabad – specifically the IT-centric pockets there - will attract a lot of investor interest. This city is now suddenly in a growth phase, and it presents the ideal investment scenario of relatively low entry points with extremely promising growth potential. Bangalore, Chennai and Pune also provide interesting investment options, as these cities have seen sustained inflows from NRIs.

Akshaya launches 'Republic'

Chennai: Akshaya Homes, a real estate developer and promoter based in Chennai, has launched their new project, this time near Porur, and christened it as ‘Republic’.  

“Republic is built at a strategic location at just 6 kms from the Porur junction. This is a preferred real estate hotspot and comes with a variety of new features along with the Akshaya trademark of green homes,” said Chitty Babu, founder proprietor of Akshaya Homes while speaking at a function here.

The project will be open for booking from the Independence Day. The apartment township which is located in Kovur will feature several new developments including a cycling lane, prominent schools and day care along with a clean and green build, said Chitty Babu. 

“This project has 609 units in total which we are determined will be sold out on the day of the launch. For the first 300 buyers it will come at a price of Rs 4250/ sq feet. The project is a premier residential one and has been given approval under all the norms and conforms to the green regulations,” explained Chitty Babu.

Akshaya have built over 100 properties in and around Chennai and have also presence in cities such as Trichy, Coimbatore and Salem. They also have another project coming up in the city at Sterling Road which will be launched later this year, informed Chitty Babu.

Connectivity factor and realty prices

A major factor that helps in appreciation of property value is road connectivity to important landmarks from the project site. Builders advertise about new project launches which often carries a list of amenities and facilities, and connectivity to major hubs finds a prominent place in the list. 

Property brokers or developers generally take advantage of this good connectivity factor and possible appreciation value of the property in future, to off load their inventory to prospective clients. But is there any relationship actually exists between better roads and real estate values? 

Basically, good roads reduce the time of travelling between the destinations. This has a direct impact on residents on both sides of the road and adjoining areas. We have seen the real estate value appreciation whenever any new major road link was announced. 

“I have a piece of land in Sholinganallur, which I bought in 1998 for Rs 40,000. With the new elevated 400-feet Outer Ring Road connecting Vandalur to Minjur getting ready, the plot value along the corridor has risen phenomenally and I understood from the market that my plot would fetch between Rs 11-12 lakh if I sell now, says S Gopal, who works with Army accounts.

Better road connectivity also helps to improve overall safety of the locality. During emergency situation like fire or natural calamity, services such as fire brigade and ambulances can reach the area faster. On health point of view, residents can reach hospitals or health centres faster if they have better road network.

Such facility would help employees working in the nearby offices or industries to reach and return from their workplaces faster, thereby they can spend some quality time with family. The same principle applies to school-going children also. 

As cities are increasingly affected with vehicular pollution and extreme climate,  exposing one to longer period while travelling between workplace to home would cause various physical ailments. Several health issues such as lung infections and deep vein thrombosis are directly linked to extended automobile travel on a regular basis, according to health experts.

Also, as road connectivity shortens the travel distance between shops and other market places, it can further encourages the residents to use pro-health travel mode such a bicycle or one can even walk down to these places. Another advantage for good road connectivity would be less fuel consumption and hence saving some money for home and country.

So, it is amply clear that good roads have a major impact on real estate prices in the respective areas.

“Simply put, there is a high demand for homes in well-connected areas because they provide easy, safe, healthy and cost-effective life style to residents. In this context, in Pune, the arrival of the PCMC Spine Road has become a game-changer for the region's real estate market, says Anil Pharande, Chairman - Pharande Spaces and Vice President of CREDAI Pune Metro. 

Explaining further he says, Spine Road is a major contribution to the PCMC real estate sector by the Pimpri Chinchwad New Township Development Authority (PCNTDA). The road connects two major highways and also provides an access to key in the PCMC. This is the longest road within the PCNTDA limits and hence plays major role in relieving traffic congestion on link roads. It also features six lanes with separate cycle tracks, service roads at applicable areas provided with parking lots, thereby improving the quality of living for residents living on both sides and adjoining areas.

Rules for NRIs to sell property in India

The recent times have seen an interesting new trend in the whole NRI property debacle - NRIs from North America and Europe coming to India to sell their purchased or inherited real estate after they obtain citizenship in these countries. This is not a trend that has been extensively examined, but it makes perfect sense. Holding on to real estate is not always feasible if one is unable to manage them.

This is especially true if the NRIs in question do not visit India frequently and are not open to renting out their properties. They prefer not to burden relatives and friends with the task of paying property tax, maintenance and society dues and see more sense in encashing the capital value of their inherited properties, says Om Ahuja, CEO – Residential Services, Jones Lang LaSalle India.

Selling such real estate is usually not the biggest challenge. What can create confusion is the viability - and ways and means - of remitting the resulting funds back into the country of residence. There is, in fact, a fairly straightforward process.

The aspects that come into play are:  Taxation:

As in the case of resident Indians, NRIs who sell purchased property after three years from the date of purchase will incur long term capital gains tax of 20%. The gains are calculated as the difference between sale value and indexed cost of purchase. Indexed cost of purchase is nothing but the cost of purchase adjusted to inflation. Calculation of indexed cost of purchase is easy - many websites provide a calculator; else a chartered accountant can assist.

In case of inherited property, the date and cost of purchase for purposes of computing the period of holding as well as cost of purchase is taken to be the date and cost to the original owner. To be more precise, the amount of long term capital gains together with the cost to the previous owner (i.e. the person from whom the property is inherited) would be considered as the cost of purchase. NRIs are subject to a Tax Deducted at Source (TDS) of 20% on the long term capital gains. But there are certain instances when NRI can get a waiver of the TDS. One such case would be if the NRI is planning to re-invest the capital gains of the property in another property or in tax exempt bonds. In such cases, the NRI will be exempt from tax in India, and no TDS will be deducted either.

If the NRI sells the property before three years have elapsed since the date of purchase, short term capital gains tax at his or her tax slab is incurred. Short term capital gain is calculated as the difference between the sale value and the cost of purchase (without the indexation benefit). The NRI will be subject to a TDS of 30% irrespective of his or her tax slab.

NRI selling their properties can apply to the income tax authorities for a tax exemption certificate under section 195 of the Income Tax Act. They must make this application in the same jurisdiction that their PAN belongs to and will be required to show proof of reinvestment of capital gains. If the NRI is planning to buy another house, the allotment letter or payment receipt will need to be produced; if capital gains bonds are chosen instead, an affidavit to this effect will have to be prepared. Usually, buyers withhold the last installment of payment until the NRI produces a certificate of exemption. A NRI has up to two years from the date of sale to invest in another property, or up to six months to invest in bonds.

Tax Exemptions

Section 54 - This section stipulates that if NRI sells a residential property after three years from the date of purchase and reinvest the proceeds into another residential property within two years from the date of sale, the profit generated is exempt to the extent of the cost of new property. To illustrate - if the capital gains is Rs. 10 lakh and the new property costs Rs. 8 lakh, the remaining Rs. 2 lakh are treated as long term capital gains. The sold residential property may be either have been self-occupied property or given on rent. The new property must be held for at least three years.

 NRIs cannot invest the proceeds on the sale of a property in India in a foreign property and still avail the benefit of Section 54. However, some recent hearings with the appellate authorities have held that exemption can be claimed under Section 54 even if the new house is purchased outside India. However, this is not explicitly specified clearly under the law, and it is advisable for an NRI to consult a tax expert before making any investment decisions outside India to avail of tax benefits under Section 54.

Section 54EC - This section of the Income Tax Act states that if an NRI sells a long term asset (in this case, a residential property) after three years from the date of purchase and invests the amount of capital gains in bonds of NHAI and REC within six months of the date of sale, he or she will be exempt from capital gains tax. The bonds will remain locked in for a period of three years. 

Repatriation

General permission is available to NRIs and PIOs to repatriate the sale proceeds of property inherited from an Indian resident, subject to certain conditions. If those conditions are fulfilled, the NRI need not seek the RBI's permission. However, if the NRI has inherited the property from a person residing outside India, he or she must seek specific permission from the RBI.

The conditions for repatriation of such funds are not really complicated - the amount per financial year (April-March) should not exceed USD 1 million, and should be done through authorized dealers. NRIs must provide documentary evidence with regard to their inheritance of the property, and a certificate from a chartered accountant in the specified format.

What NRIs must pay attention to is the income tax implications in their country of residence. Many countries tax their residents on their income regardless of where it originates from, while others provide partial or total exemption on capital gains arising on sale of a residential house if certain conditions are met. The most important point to ponder is the income tax liability in the country of residence on the amount of gain, and whether claiming exemption under Sections 54/54F/54EC is really worth it. The NRI may, in fact, be better off claiming only partial or no tax exemption on the capital gains in India.

JLL promotes Ramesh to COO for business operations

Ramesh Nair

Mumbai: International property consultancy Jones Lang LaSalle has promoted Ramesh Nair, previously Managing Director -West India, to the role of Chief Operating Officer - Business, India.

In a release, the firm said, in addition to his current responsibilities of heading JLL’s western India business and oversight of research and marketing practices, he has been entrusted with stewardship of the Property and Asset Management vertical. Continuing to be based out of Mumbai, Ramesh Nair's enhanced role within the organisation’s country leadership is effective from Aug 1.

Santhosh Kumar, CEO - Operations, Jones Lang LaSalle India says, “Ramesh is highly regarded across India amongst our clients and employees and this elevation is a testament to his contributions to the firm. Ramesh brings a strong background of handling multiple asset classes in various geographies and has consistently delivered exceptional results and has demonstrated principled leadership. Ramesh has been an influential member of the Firm’s leadership in India, playing a major role in shaping our overall strategy over the last few years.

This role advancement further empowers him to bring into play his demonstrated real estate business skills towards fortifying our other critical business verticals in India. The promotion is in line with Jones Lang LaSalle India's organizational philosophy of constantly empowering its leaders to attain their optimum potential".

An acknowledged thought leader within the Indian real estate industry and the Firm, Ramesh Nair is more than prepared to take on the opportunities coming his way in his enhanced role. His extensive experience of nearly 16 years within the IPC sector (14 of which are at Jones Lang LaSalle India), his exemplary track record in building the Firm's business in both the West and South Indian markets and strong relationships with developers, investors and occupiers equip him to surpass all his previous performances.

"I look forward to working more closely with our clients and employees, to enhance our position across markets, drive growth, and produce excellent outcomes for clients and employees. I am confident that we will continue to advance our position as the country’s largest real estate service provider," says Ramesh Nair.

"Real estate services is a highly people oriented business, and our Property and Asset Management vertical has over 10,000 direct and indirect staff in India. The ability to attract, develop, retain and deploy talent has been the single biggest determinant of our competitive success in India," he adds.

VDB Azure, for peaceful living near Gunjar

VDB Azure is an upcoming luxury apartment project in Bangalore promoted by Value Design build. Located near Gunjar and closer to IT hubs of Whitefield and Outer Ring Road, VDB Azure is being made amid beautiful landscaped gardens with lush green open spaces.

The well-designed township comes with a host of convenient amenities including rooftop clubhouse, swimming pool, hotel, hospital and schools among others offering a great urban living experience at affordable prices. 

The project comprises 108 apartments of 2, 3 and 4 BHK in a G+16 tower and is designed to cater modern lifestyle. The regular 2 BHK apartments have a built up area ranging between 1206 and 1490 square feet. 3 BHK apartments in the township will have a built up area between 1586 and 1902 square feet. The high-end 4 BHK apartments will have a built up area ranging between 2420 square feet to 2631 square feet.

The township is situated adjacent to Gunjur near the VIBGYOR high school. The Vydehi Institute of Medical Sciences and Hospital is at a distance of 9.4 kms from VDB Azure while Bellandur railway station is located at a distance of 4.2 km.

The apartments in VDB Azure come equipped with round the clock security and power backup for a hassle-free living. The project offers rainwater harvesting solution, a dedicated community hall, swimming pool and library for a convenient lifestyle.

Housing Loan facilities for the project are available from all leading financial institutions including Axis Bank, Housing Development Finance Corporation (HDFC) and LIC housing Finance Limited.

Investor's Guide to Pune Real Estate

When it comes to investment in Pune real estate, smaller investors do not enjoy the same bouquet of options as their institutional counterparts. While the latter category of investors can afford to handle portfolios consisting of many properties, smaller investors are limited by the fact that lending institutions will usually not anything over and above a second home loan.

The RBI has imposed these restrictions because it is trying to curb speculation - which is the opportunistic purchase and disposal of properties (also known as 'flipping' in markets like the US). This is justifiable, since speculation has, in the past, been the main cause of driving up prices unrealistically in many cities such as Mumbai, Chennai, Bangalore, Delhi NCR and Pune is no exception to this trend.

Of course, smaller investors can still use their personal funds to invest in more than one property. Where this is possible, such investors tend to plug their funds into rent-generating properties which, depending on their choice of location and project, will potentially yield good, regular income, says Kishor Pate, CMD of Amit Enterprises Housing Ltd.

Is this is wiser option that investing limited funds in gold or the stock market? It certainly is. Investment in a well-chosen residential property in Pune is a perfect way to counter inflation. Neither gold nor real estate relinquishes their intrinsic market value. But while gold does nothing but sit in the bank locker or the home safe while it appreciates, a residential property bought for investment will earn the owner rental income even as it appreciates.

If the market dynamics in the chosen location are favourable, the rental come on the property will increase in line with the growing demand for rental properties there.

 Guidelines to real estate investment

• The first factor to be considered while purchasing an investment property in Pune is location. Pune is a diverse market, and it is possible to get confused by the multitude of options available. Depending on one's budget, one can consider luxury housing in established locations and premium or budget housing in upcoming locations. There are two main criteria for making the right decision - the property needs to be either centrally located, or located close to one of Pune's IT or non-IT commercial hubs.

• The second factor to look out for is the legal sanctity of the project. The investor must be sure that there are no litigations or documentation shortfalls involved - either on the project or on the plot on which it has been built.

• The third important factor is the right point at which to invest. Many lay investors prefer to wait indefinitely for prices to fall. However, the fact is that the demand for residential property in the most lucrative locations of Pune is only going to rise. Waiting for the 'magic price point' will invariably mean missing out on very good options which were affordable at one time and will be too expensive to invest in a year or even a few months down the line.

• The fourth factor is how long one intends to stay invested in the property. The minimum period required for avoiding capital gains tax is three years, but certain locations will require a longer time to gain sufficiently in capital value for profitable resale. An investor must know when the right time to sell the property comes around. In Pune, a well-chosen property will continue to gain in intrinsic value as well as rental income generation potential. The temptation to exit and make a tidy profit may be strong at times, but it may make more sense to defer such a decision for yet a while longer.

• The fifth factor is the professionalism and credibility of a developer on Pune's residential real estate market. Even with all the above factors attended to, the fact is that many good investment projects in Pune are still under construction. The developer should have a good record for time-bound project completion. The investor should ensure that he is not dealing with an obscure, unscrupulous and potentially under-funded developer or else the investment could turn into a nightmare situation.