The Government has offered tax holiday for Real Estate Developers. We checked with the management of these companies and the following projects are likely to qualify under the same.
Company, Project, City and Number of Apartments
DLF Garden City Chennai ~3000
DLF New Town Heights Kolkata ~780
DLF Riverside Kochi ~176
DLF New Town Heights Gurgaon ~3000
Unitech Gateway Kolkata na
Unitech Harmony Kolkata na
Unitech Uniworld City Mohali na
Unitech Uniworld City Gr Noida na
Parsvnath PrideAsia Chandigarh ~359
Parsvnath Parsvnath City Dharuhera ~1000
Parsvnath Parsvnath Royale Panchkula 440
Parsvnath Parsvnath Palacia Gr Noida 382
Parsvnath Parsvnath Castle Rajpura 196
Parsvnath Parsvnath Exotica Ghaziabad 858
Parsvnath Parsvnath City Indore na
Parsvnath Parsvnath Preston Sonepat ~1200
Omaxe The Forest Spa Noida ~176
Omaxe Royal Residency Ludhiana na
Puravankara Swanlake Chennai ~700
Puravankara Elita Garden Vista Kolkata 1278
Puravankara Hallmark Bangalore na
Puravankara Oceania Kochi na
Puravankara Jade Chennai na
Puravankara Moonreach Kochi na
Wednesday, July 29, 2009
Tuesday, July 28, 2009
New Incentives from the Govt - Complete Analysis
The Indian government has announced new incentives for the property sector, which should, at the margin, be beneficial for the developers (2-4% EPS upside for F10-12, plus better demand) and the home buyers (5-7% savings for certain affordable housing). More importantly, the incentives highlight the government's pro-consumer and pro-developer policy stance. Two key announcements are detailed below.
Section 80IB (10) has been amended to extend (income) the tax holiday by one year to those housing projects approved in F08 (Apr 07-Mar 08) and get completed before Mar’12. Under this section, only housing units measuring up to 1000sf in Mumbai and Delhi and up to 1500sf elsewhere qualify. Developers can not avail this benefit for larger housing units.
In general, most property developers should directly benefit from this, depending on the extent of projects qualifying for the above. Even though not all the information is available, we estimate that DLF could benefit for its projects totaling 6-7 msf (Kolkata, Kochi, Chennai and New Gurgaon) and UT for 2-3 msf (Kolkata and Greater Noida). Assuming Rs400 psf tax benefit (to be realized over 3 years), we estimate this incentive could lift our earnings estimates by 2-4% for F10-12.
Interest subvention of 1% on all housing loans up to Rs1 mln to individuals, provided the cost of the house does not exceed Rs2 mln. This interest subsidy will be routed through the scheduled commercial banks and would be available for one year. The government has provided Rs10 bln for this incentive.
This incentive should, at the margin, facilitate demand for affordable housing (ASP Rs2000-2400 psf, 1000-800sf unit size). We estimate 5-7% lower outgo for the customer on the total mortgage outlay for 1% interest cost subvention. We believe developers that focus on affordable housing including UT, DLF, should benefit from this.
Section 80IB (10) has been amended to extend (income) the tax holiday by one year to those housing projects approved in F08 (Apr 07-Mar 08) and get completed before Mar’12. Under this section, only housing units measuring up to 1000sf in Mumbai and Delhi and up to 1500sf elsewhere qualify. Developers can not avail this benefit for larger housing units.
In general, most property developers should directly benefit from this, depending on the extent of projects qualifying for the above. Even though not all the information is available, we estimate that DLF could benefit for its projects totaling 6-7 msf (Kolkata, Kochi, Chennai and New Gurgaon) and UT for 2-3 msf (Kolkata and Greater Noida). Assuming Rs400 psf tax benefit (to be realized over 3 years), we estimate this incentive could lift our earnings estimates by 2-4% for F10-12.
Interest subvention of 1% on all housing loans up to Rs1 mln to individuals, provided the cost of the house does not exceed Rs2 mln. This interest subsidy will be routed through the scheduled commercial banks and would be available for one year. The government has provided Rs10 bln for this incentive.
This incentive should, at the margin, facilitate demand for affordable housing (ASP Rs2000-2400 psf, 1000-800sf unit size). We estimate 5-7% lower outgo for the customer on the total mortgage outlay for 1% interest cost subvention. We believe developers that focus on affordable housing including UT, DLF, should benefit from this.
Monday, July 06, 2009
Chronology of Events - No Recovery Yet
Excerpts from Morgan Stanley Indian Realty Research list the chronology of events in the Indian Real Estate space.
- Bad to Worse Market Conditions 20-Oct-08
- Sobha Blinks - First Official Price Cut in the Sector 23-Nov-08
- Price Softening Becomes More Widespread 7-Dec-08
- Price Cuts Accelerating, Land Bank Contraction Begins 19-Feb-09
- Price Cut Party Getting Bigger; New Launch Pickup 6-Mar-09
- Behold, Oversupply Coming In Mumbai, Gurgaon 8-Apr-09
- Price Correction Sets In Central Mumbai, Volumes Modest 10-May-09
- Vol Trends In New Launch look up 15-Jun-09
- Commercial/Retail Demand Remains Subdued 2-Jul-09
Tags: India Real Esate, Commercial Realty, Retail Mall, Office Spaces
Wednesday, July 01, 2009
Expectations for upcoming budget from Industry
Here is the wish list of Indian Real Estate Developers from the Finance Minister, Mr. Pranab Mukherjee for the forthcoming budget.
1.Reintroduce tax holiday for mass housing under Sec 80 (IB)
2. Tax holiday available to hotels under section 80ID to be extended 10 years from existing 5 yrs. Gestation period in hotel industry, itself, stretches from 4 to 5 yrs.
3. Re-introduce 'tax pass through' status for domestic venture capital funds that invest in the Indian real estate sector
4. Clarity on regulations/taxation on real estate mutual funds (REMFs)
5. Extend the external commercial borrowing scheme to the entire Indian real estate sector
6. Encourage states to reduce stamp duty to 5% and to provide a system of credit for each stage of sale i.e. levy on value addition.
7. Increase the tax break on home loan interest under section 24(b) to Rs 300,000 from the existing limit of Rs 150,000 for self occupied houses.
8. Service tax on renting immovable property should be abolished
9. Reduction/ rationalization of customs duty (exemption from special additional duty) and excise duty (8% to 4%)
10. Extension of STPI clause. Current deadline expires by Mar-10.
11. Introduction of a real estate regulator
1.Reintroduce tax holiday for mass housing under Sec 80 (IB)
2. Tax holiday available to hotels under section 80ID to be extended 10 years from existing 5 yrs. Gestation period in hotel industry, itself, stretches from 4 to 5 yrs.
3. Re-introduce 'tax pass through' status for domestic venture capital funds that invest in the Indian real estate sector
4. Clarity on regulations/taxation on real estate mutual funds (REMFs)
5. Extend the external commercial borrowing scheme to the entire Indian real estate sector
6. Encourage states to reduce stamp duty to 5% and to provide a system of credit for each stage of sale i.e. levy on value addition.
7. Increase the tax break on home loan interest under section 24(b) to Rs 300,000 from the existing limit of Rs 150,000 for self occupied houses.
8. Service tax on renting immovable property should be abolished
9. Reduction/ rationalization of customs duty (exemption from special additional duty) and excise duty (8% to 4%)
10. Extension of STPI clause. Current deadline expires by Mar-10.
11. Introduction of a real estate regulator
Friday, June 26, 2009
Residential + Apartment Prices to Fall by 10%
Crisil in a report released yesterday has said that Residential real estate: Capital values to fall further by 8-10 per cent in 2009 before stabilising in 2010.
End users also have had to put their purchasing plans on hold due to fall in affordability levels and job-related uncertainties. Average residential capital values declined by 18-20 per cent in March 2009 from the highs witnessed during the first half of 2008.
The following Bar Chart shows the Real Estate absorption between - Real End Users and Investors /Speculators in the Indian Residential / Apartment sector.
It is evident from Graph that Realty speculators are active in Kochi and Chandigarh / Tricity [50% + Consumption]. Pune and Delhi NCR offer the second opportunity [30-35%] for Investors while Bangalore Kolkata and Hyderabad offer the third [20%].
Between now and 2011, Developers will add 700 mn sft of saleable area while absorption is expected to be around 500mn sft. The highest and lowest fall in Realty is as expected as shown in the table below.
End users also have had to put their purchasing plans on hold due to fall in affordability levels and job-related uncertainties. Average residential capital values declined by 18-20 per cent in March 2009 from the highs witnessed during the first half of 2008.
The following Bar Chart shows the Real Estate absorption between - Real End Users and Investors /Speculators in the Indian Residential / Apartment sector.
It is evident from Graph that Realty speculators are active in Kochi and Chandigarh / Tricity [50% + Consumption]. Pune and Delhi NCR offer the second opportunity [30-35%] for Investors while Bangalore Kolkata and Hyderabad offer the third [20%].Between now and 2011, Developers will add 700 mn sft of saleable area while absorption is expected to be around 500mn sft. The highest and lowest fall in Realty is as expected as shown in the table below.
Saturday, June 20, 2009
Historical Prices of New Launches
We have obtained data from Crisil about historical new launch prices in the hot pockets of Bangalore, Delhi NCR and Kolkata between 2005 and 2009 YTD.
Bangalore:
Kolkata:
Delhi / NCR:
Bangalore:
Kolkata:
Delhi / NCR:
Friday, June 19, 2009
Producers + Consumers - Spectrum
The following Triangle shows how Consumers of Indian Real Estate are stacked. It also shows how Realtors are producing the inventory and where the demand is.
Courtesy: Crisil
Courtesy: Crisil
Wednesday, June 17, 2009
Opto Circuits to set up SEZ at Hassan
The manufacturer of medical diagnostics and interventional products, Opto Circuits India (OCIL), is looking to develop a single-product special economic zone (SEZ) at Hassan in Karnataka while shelling out around Rs 150 crore. The company has already acquired 250 acres of land from Karnataka Industrial Area Development Board (KIADB) for Rs 40 crore.
The greenfield manufacturing facility to be developed at the industrial growth centre in Hassan will require investment of Rs 100 crore for building up the new plant and machinery.
The Bangalore-based company is now waiting for clear indications on the SEZ guidelines from the government as the incentives provided for the export oriented units (EoU) are expiring in March 2010 and the proposal for extending the same is currently under consideration.
The company will start working on the proposed SEZ without more ado if the EoU incentives are not extended by the government and will shift its entire new product manufacturing work to this SEZ.
OCIL has lined up for around 4-5 products for exports market which will be unveiled once they get requisite approvals from the respective regulators, apart from this the company is also expected to launch its five new products in invasive and non-invasive products range under the regulated markets in next 8-12 weeks time.
It will be launching some of its new product in domestic market as well in the last quarter of this year for which the approval is due from the Drugs Controller General of India (DCGI).
The company has already planned for an qualified institutional placement (QIP) of up to Rs 400 crore and the funds raised in the process will be utilized for setting up of the SEZ and executing other expansion plans along with reducing its debt burden which currently stands at Rs 300 crore.
The greenfield manufacturing facility to be developed at the industrial growth centre in Hassan will require investment of Rs 100 crore for building up the new plant and machinery.
The Bangalore-based company is now waiting for clear indications on the SEZ guidelines from the government as the incentives provided for the export oriented units (EoU) are expiring in March 2010 and the proposal for extending the same is currently under consideration.
The company will start working on the proposed SEZ without more ado if the EoU incentives are not extended by the government and will shift its entire new product manufacturing work to this SEZ.
OCIL has lined up for around 4-5 products for exports market which will be unveiled once they get requisite approvals from the respective regulators, apart from this the company is also expected to launch its five new products in invasive and non-invasive products range under the regulated markets in next 8-12 weeks time.
It will be launching some of its new product in domestic market as well in the last quarter of this year for which the approval is due from the Drugs Controller General of India (DCGI).
The company has already planned for an qualified institutional placement (QIP) of up to Rs 400 crore and the funds raised in the process will be utilized for setting up of the SEZ and executing other expansion plans along with reducing its debt burden which currently stands at Rs 300 crore.
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