Qatar Holdings to Pump US$ 250 mn in Arthveda's Affordable Housing Fund

In a significant foreign investment in the affordable housing sector, Arthveda Fund Management Pvt. Ltd has said that Qatar Holding Llc has committed to invest $250 million in its affordable housing fund.

Bikram Sen, chief executive of Arthveda Fund, said that the subscription of the entire corpus of its foreign direct investment-compliant affordable housing fund by Qatar Holdings is the first significant foreign inward investment into India’s affordable housing segment after the recent Union budget.

The Union Budget on 1 February gave a big push to affordable housing projects and announced many incentives to realize the government’s housing-for-all initiative.

India needs to build 19 million urban housing units in the low- and mid-income category by 2022 across tier I, II and III cities which require a capital of $1 trillion, according to estimates by Arthveda.

Arthveda is an associate firm of Dewan Housing Finance Corp. Ltd (DHFL).

“Arthveda’s affordable housing fund leverages our entire group’s leadership in the low and mid-income lending segment and applies that to investments in affordable housing,” said Kapil Wadhawan, chairman and managing director of DHFL and Arthveda.

Apart from the affordable housing fund, which is Arthveda’s first offshore fund raising, the firm has raised domestic real estate funds earlier.

According to Arthveda, affordable housing is the main focus area in the country’s growth agenda and will trigger more foreign investments into this sector. The positive FDI policy changes that happened in this segment will also continue to give a boost to inward investments. 

The government of India has gradually removed minimum project and investment ticket size restrictions in this segment, which should significantly catalyze development and investment, Arthveda said in a statement.

Omkar Realtors Unveils Higher Floor Balance Inventory at Ananta Project in Mumbai

"For the first time Omkar has offered home loan at just 4% interest rate for customers along with a very lucrative static floor price rise," said Amit Parsuramka, Chief Marketing Officer, Omkar Realtors & Developers Pvt. Ltd.

Mumbai-based Omkar Realtors and Developers Pvt Ltd, one of the leading premium housing brands, has unveiled limited inventory of ready-to-move-in apartments for its higher floors in its project Ananta by Omkar located at Goregaon East, Mumbai. The project offering 2BHK apartments have a base pricing of Rs 12,750 sq.ft. and static floor rise from 15th -31st floors. 

The mid-ticket sized project offering a panaromic view of Sanjay Gandhi National Park with ready-to-move-in apartments are elegantly designed; offering the best of amenities ranging from Italian marble flooring in the living room, modular kitchens and wooden flooring in AC bedrooms along with a host of other amenities.

Omkar has also introduced flexible payment plan with a booking amount of only Rs 2 lakh for this project which is strategically located at 5 minutes distance from the western express highway and enjoys good access from the Aarey colony, Mohan Gokhale & Film city road.

The 2BHK apartments in the size-range of 1064 sq. ft. to 1242 sq. ft. saleable area has been constructed in just 1.5 years using the innovative fastest construction technology called Tunnel Form, making it the fastest construction of any development in Mumbai.

Ananta offers a wide range of amenities which includes a double height lobby; children play area, swimming pool, jogging track, gymnasium, landscaped garden, acupressure walkway and multi-gaming facility. In addition, the sheer value homes include invaluable specifications with zero compromise on all fixtures and amenities.

JLL India Makes Strategic Investment in Cloud1 Enterprises

International property consultancy JLL India‘s proprietary Real Estate Technology Investment vertical has announced an investment in NCR-based Cloud1 Enterprises, an end-to-end cloud-based platform that enables corporates to deploy telematics technologies to bring efficiency to employee transportation.

JLL India’s recently established structured vertical makes proprietary investments into early-stage technology companies with the potential to disrupt the real estate business.

Anuj Nangpal, Head – India Real Estate Technology Ventures, JLL India says, “Estimated at US$ 2 bn in India alone, the employee transportation sector is currently highly fragmented, inefficient and opaque. The potential for further optimization of company transportation costs via data analytics and telematics is phenomenal. Functionalities like mapping and routing have become basic features throughout the globe in this industry. Cloud1 will focus on data integration with traditional fleet management systems to convert telematics insights into fleet productivity.”

Cloud1’s business model is not predicated on a high customer acquisition cost and corresponding burn rates as a result of deep discounting. Proprietary algorithms allow intelligent utilization of vehicles and real-time trip monitoring, which enables Cloud1 to squeeze ultimate efficiency out of the value chain and offer employers a dedicated trip based model.

Sumir Anand, Co-founder – Cloud1 says, “Adhering to global standards of compliance and transparency, Cloud1 – unlike other technology providers – has made up-front investments to tech-enable vehicles which are supported by a 24 x 7 Command Center. Our platform and solution completely de-risks our clients from having to invest in technology. The grey area of employee transportation is one of the Indian industry’s biggest pain points; with Cloud1, we envisage a paradigm shift in this daily necessity – and the substantial operating expense it usually involves. We have invested over 18 months in developing and perfecting the platform.”

The current daily transportation cost per employee ranges between INR. 6000 to 13000 per month, and Cloud1 is confident that this figure can be reduced by at least 15%. In addition, up to 60% reduction can be realized in direct manpower deployed to service the organization’s transportation needs.

Cloud1’s services can imply an overall saving of up to 20% towards this expense – while adding substantial safety and security for employees. At current estimates, this could reflect an overall reduction in operational costs for the industry to the tune of INR 1200 –1500 crores per year.

“Cloud1 offers a managed services model to its clients via a telematics-enabled employee transport platform seamlessly integrated into the vehicle,” says Anuj Nangpal.

“With an entrepreneurial team of seasoned ITeS professionals with combined domain experience of over 70 years, Cloud1 has developed an accountable service delivery solution with practical and real-time tools to solve the transportation problem for BPM and InfoTech companies who currently rely on an unstructured vendor base for the daily commute of several lakh employees. Cloud1 seeks to offer the safest, most reliable and cheapest technology-enabled solution to corporate transportation teams. Thus, this investment is perfectly aligned with JLL’s commitment to offer technology-based services to the industry,” he says.

As opposed to current pure software platforms, Cloud1’s solution directly integrates vehicles with Cloud 1’s 24 x 7 Command Center, which actively monitors exception alerts on each trip and captures all critical data points – including driver authentication, vehicle compliance, safety and security alerts and route deviation.

Thus, the solution creates a completely secure, transparent and efficient employee transportation service offering and eliminates the need for clients to have ‘dedicated in-house’ call centers. Cloud1 will partner with its clients to offer analytics about data generated on its telematics platform to drive further efficiencies. 

Budget 2017: Govt Sets Sight on Affordable Housing and Rural Vikas

It’s Budget time yet again, and hosts of expectations and aspirations for ‘relief’ from the stressed real estate sector as usual. The Union Budget 2017 presented by Finance Minister Arun Jaitely indeed has something to cheer about for the realtors but lack of futuristic approach to revive the sagging sector has disappointed many.

Infrastructure Status to Affordable Housing

The Modi government has surely appeased the middle class and neo middle class by announcing infrastructure status to affordable housing segment and providing income tax benefits to the lower income earners as the tax rate for income between Rs 2.5 lakh to 5 lakh has been reduced to 5% and taxpayers in other categories can also save upto Rs 12,500 per annum.

The move will create more disposable income for home buyers of the respective salary brackets, who can look for suitable real estate investments in the coming months.

The infrastructure status to affordable housing will infuse fresh impetus into developmental projects as developers can now look for cheaper loans to start low-cost housing projects in tier II and Tier III cities and also in rural areas. The Government’s proposal to build ten million homes by 2019 in rural areas under Pradhan Mantri Awas Yojana (PMAY) will open more options for home buyers and real estate investors to park their funds in good housing projects.

Buy and sell in two years!

The bringing down of capital gain time limits for properties to two years from three years will benefit both investors and second hand home buyers as the later will have more options to choose the best available property in lowest price. For investors, they can offload properties after two years of holding and go for more profitable realty investment.

Major Misses

Though the Budget has several micro proposals to boost realty sector, lack of big-ticket announcements will have direct bearings on its growth. The Budget missed out on giving any additional income tax benefit to first-time home buyers, increasing tax savings on housing loans and raising the house rent deduction limits, a long time desire for middle-class home buyers.

Taxing the wealthy

On the other hand, the government has proposed to tax for those getting rental income above Rs 50,000 per month. Tenants can henceforth deduct 5% TDS from the rent they pay and deposit it in owners’ tax account. The proposal will benefit the government to unearth more unaccounted rental incomes as home owners will be compelled to show the rent received as income in their corresponding IT return. However, the proposal may increase the rentals across cities as owners may pass on their TDS loss to occupants by jacking up the rent, a big negative for rental real estate.

No second home please!

To curb wealthy investing multiple homes and getting away with interest subsidies and tax benefits, the government has proposed to cap the benefits for second home buyers. Tax benefit on loan repayment of second home will be extended up to Rs 2 lakh per annum only. The move will not only discourage second time home buyers but also impact tax-planning of existing investors. The clause in the Finance Bill 2017 proposes that both the interest as well as the rental income will be taxable, hence increasing the financial burden of the owners.

Low interest rate may trigger housing demand

With demonetisation bringing more liquidity to banking sector, the lending rate is expected to go down further in the coming months if other metrics remain stable. This will trigger demand on various housing categories. Though the government has reduced the interest rates up to 4% for neo middle income group home buyers for low budget homes, unless the overall lending rate comes down further, demand for new homes will not see a significant rise in the near future.

Overall, the Budget proposals for 2017-18 can be seen as a positive move to revitalize real estate sector and bring new hope to buyers to have their own home this year. With rural housing and infrastructure and low income groups getting prominence, the government has surely set its sight on making homes affordable for everyone by 2020. 

PCMC Townships Offer Great Value for Money for Pune Home Buyers

Townships are a new property mantra in India, and for the bigger cities they're without any doubt the sole remaining hope for good quality living standards. Slowly but surely, residential quality of life in cities like Pune are on the decrease, and township properties are rightfully getting increasing importance as the most logical response to the increasing need for quality-based living.

Anil Pharande

In cities such as the Pimpri-Chinchwad Municipal Corporation, the ‘Infrastructure First’ strategy being employed by the governing authorities since several decades has served to provide highly adequate living conditions for PCMC residents. On the other hand, the Pune Municipal Corporation (PMC) has not been able to keep up to speed on its own infrastructure scenario. The heedless way with which real estate development has been taking place in Pune has not only resulted in a veritable concrete jungle but also made problems like traffic congestion, air and noise pollution and also water depletion much worse over the past several years.

PCMC - The New Townships Capital

In this depressing scenario, the massive integrated townships being developed in the booming city of PCMC has offered Pune's citizens a new and invigorating lifestyle standard. In the PCMC, the integrated township revolution started in areas like Ravet and Moshi, and today the city's leading developers have also established high-end townships in Punavale and on Spine Road.

Though negligence and greed are definitely operative factors in the illogical way the Pune Municipal Corporation has been developing, it also has certain limitations. In the first place, integrated township projects require substantial acreage, and large plots have essentially been completely used up in the central regions of the PMC. As consequence, the focus has now shifted to the Pimpri-Chinchwad Municipal Corporation, where superlative support infrastructure, affordable property rates and a scientific approach to real estate development still make townships a very workable proposal.

In integrated townships, the issues are infrastructure shortfall and deteriorating living conditions are totally negated. These projects provide an extremely high grade of living standards, set to the backdrop of tasteful natural surroundings and adequate open spaces.

Providing township-level facilities in smaller residential projects would entail prohibitive prices for the developers – and the cost escalations would have to be passed on to the property buyers. Such facilities would immediately boost a smaller residential project into the luxury category, with consummate price implications to buyers. However, as a result of the economies of scale, township developers in the PCMC are giving the township lifestyle option to buyers at prices that reasonable and attractive. 

High-quality infrastructure, open spaces and instant accessibility to every requirement of day-to-day living in these townships result in a first-class lifestyle equation since all residents in a township gain from one big integrated and centrally managed system.

Township Properties - Higher Price but Ultimate Value

As already mentioned, when a builder offers township-level facilities in smaller housing projects, the prices to consumers are comparable to those of high-end luxury residences. In townships, the vast variety of facilities, fully-integrated infrastructure as well as the availability of schools, hospitals and shopping complexes within the premises obviously means that township properties come at a price that is somewhat higher than standard multi-storey flats. On the other hand, the added expense is vindicated by the reality that people who buy into township properties are guaranteed a greatly superior living standard – not to mention vastly higher yields on investment.

For property buyers who just don't desire to compromise on their lifestyle choices, the township properties of PCMC are the most logical and intelligent options. The direct benefits include a healthier life thanks to open spaces and greenery, complete security, the guarantee of high-grade infrastructure and facilities within the premises, and instant accessibility to recreational facilities and retail outlets. This results in a very high measure of convenience and comfort within an entirely cosmopolitan ethos.

By Anil Pharande, 

Chairman, 

Pharande Spaces.

Budget Impact On India’s Residential Real Estate Market

Ashwinder
Raj Singh

It is the most important financial exercise to set the course of India's economy for an entire year. Union Budget 2017 has been declared - and it has impacted the real estate sector in a big way.

It is no secret that the sector has been going through challenging times for the past couple of years. It was in dire need of proactive policy changes to take it out of the red zone. The sector's importance cannot be over-emphasized - it is the second-biggest employment generator after agriculture, and contributes between 5-6% to the country’s Gross Domestic Product (GDP).

Without a doubt, the Indian realty sector deserves attention, for its health has a direct impact India's economic health. The recent budget announcements have created a lot of excitement in the sector, largely for the right reasons. Let us examine the major policy decision before understanding their impact on the market:

• Obviously, the most important announcement was the fact that affordable housing - the mainstay and backbone of the Indian real estate sector -  has finally been given infrastructure status
• The Government has affirmed its intention of constructing 1 crore rural houses by 2019
•  Allocation to Pradhan Mantri Awas Yojana increased from Rs. 15,000 crore to Rs. 23,000 crore
• For affordable housing, the carpet area of 30 and 60 sq meters will be applicable instead of built-up area of 30 and 60 sq meters
• Developers will get tax relief on unsold stock, as they will need to pay capital gains only in the year when the project is completed
• Also, the holding period for capital gains tax for immovable property has been reduced from 3 years to 2 years
• Developers can avail tax break of 1 year after the receipt of completion certificate for the unsold stock
• A new FDI policy, which is under consideration, will help the sector get access to a considerably larger pool of funds than it had so far
• The National Housing Bank (NHB) will refinance Rs. 20,000 crore loans
• Fund allocation for development under AMRUT and Smart Cities projects has also been increased to Rs. 9,000 crore

Now, to examine the role of and impact on various stakeholders of the real estate sector:

Government:

The Government’s intention is to spur the real estate sector - and even if it has not exactly gone all the way on this, the steps taken are commendable. To accord the housing sector industry status has been a long-standing demand. Though only the affordable housing has been given this much-coveted and all-important status, it is definitely a shot in the arm for the sector. Suddenly, the Government’s objective of providing Housing for All by 2022 looks very much achievable.

Also, increased activity in the sector will lead to additional employment generation, which is good for the economy. Tax breaks and other sops will help builders cut their cost, improve their bottom-lines and get additional liquidity to improve efficiency. These steps, along with other impending regulatory breakthroughs such as RERA and GST will not only fuel demand, but make the sector more efficient and organized.

Even though the Government’s move to demonetize high-value currency affected the secondary housing market, the primary market with genuine players did not see much of a negative impact and is, in fact, now showing clear evidence of revival.

Developers:

Builders of budget housing now have access to cheaper sources of funds, thanks to the newly-granted infrastructure status. As per statistics, the shortage of housing currently stands at around 1.87 crore homes, and nearly 95% of the shortage is in the affordable segment. Now, developers can and will focus more on launching projects in this segment, where most of the demand lies.

The refinancing by NHB will also help the sector, and the tax incentives coupled with these other benefits, will result in additional supply being pumped in the market. All in all, developers - who were just a couple of months ago severely affected by demonetisation - can now look forward to healthy growth and improved balance sheets. This will have a snowball effect on related industries, and on the overall economy.

Consumers:

The end-user is the biggest beneficiary out of this budget. While individuals falling in the lower income slab of up to Rs. 5 lakh have been given tax benefits, the massive push to affordable housing also ensures that the dream of owning a home will soon become a reality for many more.

After demonetisation, there have been talks of interest rates reducing, and some downward action has already been recorded. With banks flushed with funds, the rate of interests might fall further, making home loans more attractive. Coupled with the push towards affordable housing, the consumers will get homes at lower cost as builders will be able to pass on the savings accrued due to long-term finance at lower rates of interest.

The NHB refinancing, especially if it comes in the form of subsidy, can push home loan rates down by a significant 200 to 300 basis points. This would have a positively dramatic impact on consumer demand. This will provide the final missing link to revive the real estate sector decisively across segments.

The budget missed out on giving industry status to entire sector, gave no clarity on single-window clearances for housing projects, and provided no additional tax incentives to first-time house owners. Nevertheless, it has visibly more positives and negatives. From here onward, momentum in the realty sector can only rev up - benefiting everyone directly or indirectly related to it.

By Ashwinder Raj Singh, 

CEO, 

Residential Services, 

JLL India

What REITs Mean For Indian Real Estate

The real estate sector in India has been lucrative for savvy investors over the last decade, but it has not been without accompanying uncertainties. The introduction of REITs  (Real Estate Investment Trusts) will open up a platform that will allow all kinds of investors – even those with smaller budgets - to make safe and rewarding investments into the Indian real estate market. 

Kishor Pate

The best thing about REIT is that investors can start with as small a sum as Rs. 2 lakh to secure units in exchange.

The REIT platform has already been approved by the Securities and Exchange Board of India (SEBI) and like mutual funds, it will pool the money from all investors across the country. The money collected from the REIT funds will subsequently be invested in commercial properties to generate income.

A REIT will need to be registered via an IPO or initial public offering. REIT units, as such, will have to get listed with exchanges and consequently traded as securities. The SEBI board has kept the minimum asset sizes to be invested in at Rs. 500 crore. However, the minimum issue size would have to be less than Rs. 250 crore. As with stocks, the investors here would be able to buy the units from either primary and/or the secondary markets.

How does a REIT work?

REIT is a process to generate funds from a lot of investors to directly invest in profitable real estate properties like offices, residential units, hotels, shopping centers, warehouses and more. All trusts with REIT will be listed with stock exchanges as they would be structured like trusts. Consequently, REIT assets will be held with independent trustees for unit holders / investors.

Role of the trustees

Trustees with REIT have defined duties which typically involve ensuring compliance and adherence to all applicable laws that protect the rights of the investors.

The objective of REITs

A REIT’s objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of the commercial assets. The trust distributes 90% of the income among its investors via dividends. Apart from minimum entry level, a REIT is supposed to provide diversified and safe investment opportunities with reduced risks, and under a professional management to ensure the maximum return on investments.

The advantages with REITs include:

·   Income dividends: 90% of distributable cash at least twice in a year

·   Transparency: REIT will showcase the full valuation on a yearly basis and will also update it on a half-yearly basis

·   Diversification: According to the guidelines, REITs will have to invest in a minimum of two projects with 60% asset value in a single project

·   Lower risk: At least 80% of the assets will have to be invested into revenue-generating and completed projects. The remaining 20% of the properties that include properties like under construction projects, equity shares of the listed properties, mortgage- based securities, equity shares that derive a minimum of 75% of income from Government securities or G-secs, money market instruments, cash equivalents and real estate activities.

The REIT concept has been in the news for some time now. However, the real estate regulations rolled out so far have not quite helped bring them to Ground Zero in India as yet. REITs’ exemption from tax on the distribution of dividends would make it much more attractive for investors. According to a recent report by Cushman & Wakefield, commercial properties in India that are ‘REITable’ investment opportunities are between $43 billion and $54 billion across the top cities.

Are REITs more attractive than actual property purchase?

Investing in REIT can be compared to investing in Gold Bonds. Indians are partial to buying physical gold rather than in Gold Bonds, implying that having one’s own investment in property will always provide Indians greater satisfaction than mere paper investments. The Indian property market is now almost stabilized and it is the right time to buy self-owned homes. While it is human tendency to wait and watch, the bottom of the market cannot be fathomed accurately at the best of times.

At the end of the day, REITs are investment instruments and not a means to acquire actual property – which is always high on every Indian’s wish-list. A budget that clearly favours purchase decisions for first- time home buyers and is a step closer to the Prime Minister’s mission to provide Housing for all by 2022 is in place. 2017 is certainly the year to make home ownership a reality.

By Kishor Pate, 

CMD,

Amit Enterprises Housing Ltd.