Equities, Markets, Real Estate - January 15, 2025

Indian Land Deals Surge 47% in 2024, Residential Sector Leads

The number of land deals in the top eight cities increased by around 47% year over year in CY 2024, totaling over 2000 acres. Compared to over 90 land deals in CY 2023, roughly 135 were closed in CY 2024, mostly in large cities like Delhi-NCR, Bengaluru, Mumbai, Chennai, and Pune. The demand was highest in the residential segment.

With almost 40 land transactions, Delhi-NCR was the clear leader. More over 60% of the share went to Gurugram, with Noida/Greater Noida coming in second at about 25%. According to a CBRE South Asia report titled “Market Monitor Q4 2024—Investments,” this increase highlights the region’s appeal for residential and warehousing expansions.

Nearly 30 land transactions were registered in Bengaluru, with Mumbai and Chennai contributing roughly 25 and 15, respectively. Strong economic growth, supportive policy initiatives, and rising demand for residential projects are all responsible for this increase in activity across regions.

Asset-wise distribution of the total volume of deals
Over 60% of the overall volume, or about 1,190 acres, came from deals in residential assets, which also represented a 70% increase over 2023. Bolstering investor sentiment was seen in the data centers’ 10% transaction volume share (about 200 acres). Over 5% of land deal volume (approximately 580 acres) was made up of industrial and logistics assets, which showed steady expansion as a result of the growing need for manufacturing and storage space.

Diverse asset preferences were demonstrated by the other categories, which made up about 15% of the overall volume and included hospitals and mixed-use properties. Due to changing market dynamics and the rising demand for contemporary workspaces, the office and retail industries each contributed about 5% of the total.

Strong investor confidence in India’s real estate market is demonstrated by the notable increase in land deals across a variety of asset classes. According to Anshuman Magazine, Chairman & CEO-India, South-East Asia, Middle East & Africa, CBRE, the residential market is flourishing as a result of growing urbanization, advantageous regulations, and improved affordability.

At the same time, the expansion of office buildings and data centers highlights India’s position as a center for corporate and digital infrastructure. According to Magazine, this momentum places India as a top real estate investment market in 2024.

India’s potential as a strategic investment destination is demonstrated by the interest shown by investors in both established and rising sectors, such as logistics and data centers. Strong local and foreign investments are nevertheless drawn in by robust demand, creative advancements, and policy assistance. Further, Gaurav Kumar from CBRE India stated that this trend will continue to solidify, solidifying India’s standing as a robust and expansion-oriented real estate market.

Vestian Report on Real Estate Investment Surge
Global uncertainty may make it difficult to attract capital in 2025, according to Vestian, although institutional investments in Indian real estate increased 61% to USD 6.8 billion last year.

In 2023, institutional investments totaled USD 4.3 billion, according to a statement from real estate consultant Vestian. Despite a sluggish start, the real estate industry saw large institutional investments in 2024, exceeding pre-pandemic levels, according to Vestian CEO Shrinivas Rao. However, Rao stated that rising inflation, a slowdown in the global economy, and growing geopolitical tensions are all predicted to make 2025 difficult. 30% of institutional investments were in the residential sector, which recorded USD 2 billion in investments.

In 2024, investments in the housing market increased by 171% over the year before.
Of the overall institutional investments, 35% went to commercial assets, which include office, retail, co-working, and hospitality developments, while 28% went to industrial and warehousing parks. Of the overall investments, 54% came from foreign investors, 30% came from domestic funds, and the remaining 16% came via co-investment. Vestian added that in 2024, co-investments became more popular as foreign investors turned to domestic investors’ local knowledge in the face of ongoing macroeconomic uncertainties. Rao stated that if the RBI lowers the repo rate in 2025, institutional investment in Indian real estate may increase.

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Railway Sector’s Budget Allocation and Stock Performance: Insights for Investors

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Affordable housing to take a hit in the upcoming Budget

Business, Equities, Market News, Markets, Real Estate, Real Estate News - January 13, 2025

Upcoming Budget: Real estate Industry seeks Stamp duty cuts and revised home loan limits

The Indian Real Estate Industry is seeking stamp duty cuts, revised home loan limits and improved affordable housing norms in the upcoming Union Budget 2025-2026. The realtors are seeking these changes through Pradhan Mantri Awas Yojana (PMAY), eco-friendly policies, single-window clearance, and more.

Some of the industry leaders and consultancy firms in India such as Raheja, Gaurs, Kanodia, Anarock, Justo, Reach, Urban Space and Eros have put forth their expectations for changes to real estate sector norms in the upcoming budget.

Affordable housing
President of CREDAI-NCR and Chairman and Managing Director of Gaurs Group, Manoj Gaur stated that one of the crucial demands of the real estate sector is adjustment of stamp duty. The reason for this is that the stamp duty rate has increased significantly in recent years. It is adversely affecting home buyers giving them financial pressures. He also emphasised on considering changing the current tax deduction limit of Rs. 1.5 lakh under Sector 80(c) to Rs. 5 lakh as it will help in easing home ownership.

He recommends changing the affordable housing criteria of price limit of Rs. 45 lakh to carpet area-wise criteria. In this, the focus should be on the carpet area of 60 square metres in metro areas and 90 square metres in non-metro areas. He also advocates reintroduction of the 100 percent tax holiday for affordable housing projects before 31st March 2022. This will promote both affordable housing and also India’s mission of ‘Housing for all’.

Commercial Real-estate Sector
The vice-president (Sales) of Raheja, Mohit Kalia stated that the needs for reforms in the commercial real-estate sector. The government’s actions to encourage entrepreneurship promotes the start and growth of business. It not only helps in boosting economic growth and creation of job opportunities but also aids in thriving the business of commerical real-estate sector. Along with this, the sector requires policies that will support in sustaining the growth and success of the sector. He also states that the adjustment in interest rates in a way that makes advances affordable will help in increasing demand in the sector. Also, the implementation of the single-window clearance system can make approval processes faster and easier. These steps will help in strengthening the overall real estate ecosystem.

Tax Relief on Construction Materials
The Kanodia of Delhi-NCR advocates tax relief and GST reduction on construction materials in order to achieve lower project costs and also encourage developers to initiate new ventures with better efficiency.

The Kanodia Group’s founder Gautam Kanodia stated that the upcoming Budget 2026 has a strong prospect to strengthen the real estate industry and also to play a more crucial role in the development of the country’s economic framework.

Revision of Home Loan Limits
The founder and Chairman of Reach, Harinder Singh Hora advocated raising the deduction limit in home loans to Rs 5 lakh from the current Rs. 2 lakh in order to encourage investment opportunities and to attract more investors.

Changes in PMAY
The chairman of Anarock Group, Anuj Puri recommends reintroduction of Credit-linked subsidy Scheme (CLSS) under the PMAY scheme for economically-weaker section (EWS) households, which has ended in the year 2022. This would give financial incentives to first-time homebuyers to purchase affordable homes by providing subsidies on loans for construction of new houses or essential addition to existing properties.

As per the eligibility criterias of PMAY for rural regions provide subsidies to convert ‘kaccha’ into ‘pucca’ homes. The real estate industry players believe that there is a need to update the definition of affordable housing needs, particularly in high-cost cities such as Mumbai. They also advocate raising of current price caps reflecting the higher cost of living and property prices prevailing in these areas.

Given data from Anarock, the sales share of affordable housing decreased to 18 percent in 2024 compared to 38 percent in 2019. This significant decline indicates the pressing need for government intervention. He further stated that there is a need to be more focused on affordable housing and targeted benefits, which was not given much attention for the past two years.

The reason for slowdown in the Indian real estate sector in the year 2024 is the general elections and state elections conducted in the year. The top seven cities in India observed a fall in housing sales by 4 percent which accounts to around 446,000. While, the new launches of properties declined by 7 percent which accounts to around 413,000 units. Despite this, implementation of appropriate steps taken for affordable housing in the year 2025 could lead to revival of growth and also promote the residential segment to regain the high sales and launches achieved in the year 2023.

Rental housing and infrastructure growth
In the year 2024, institutional funding in real estate registered a record of 6.5 billion dollars. It indicates strong investor confidence. The introduction of increasing liquidity measures will help to ensure that real estate projects are completed on time. This is crucial to maintain the growth momentum in the sector. The Director of Eros states that while entering in the year 2025, the policies pertaining to expansion of rental housing and infrastructural growth should be taken for driving urbanisation.

The founder and director of real estate fintech firm Justo, Pushpamitra Das advocates the adjustments in GST on under-construction residential and commercial properties, tax benefits for REITs, extension of SEZ benefits. He also stated that India’s real estate sector plays a significant role in driving economic growth by boosting GDP and employment levels.

Home decor Industry
The co-founder of Urban space, Radhika Koolwal stated that the home decor industry is positive about the measures undertaken to boost growth and innovation. The industry expects the policies undertaken will focus on encouraging domestic manufacturing such as subsidies on raw materials and machinery, tax benefits for MSMEs and startups, reduction in GST rates on home furnishings and decor items in order to achieve more accessibility to quality products to the middle class.

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Copper holds near five months low as weak demand outlook dominates

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India- EU to work together on major industries

Business, Equities, Market News, Markets - September 12, 2024

Supreme Court Approves NBCC Rs 15,000 Cr Fundraising for Amrapali Project

The state-run NBCC (India) has been granted permission by the Supreme Court of India to generate an extra ₹15,000 crore through the development of additional apartments within the Amrapali housing projects. This decision aims to address the long-pending issue of delivering homes to around 16,000 homebuyers who have been waiting for years. This move is a part of a larger strategy to revive the stalled Amrapali projects and ensure that the homebuyers finally get possession of their homes.

Funding Strategy and Payments to Authorities : As part of the funding strategy, NBCC plans to make significant payments to local authorities To be clear, NBCC is going to Assign ₹258.24 crore to the Noida Authority and ₹484.92 crore to the Greater Noida Authority. These payments include an 18% Goods and Services Tax (GST) for the purchasable Floor Area Ratio (FAR), which allows the company to develop additional flats. These payments are scheduled to be made in two equal instalments, with the first payment due by January 2025 and the second by March 2025.

Using Funds to Finish Unfinished Projects: KP Mahadeva swamy, Chairman of NBCC (India) Limited, stated that the majority of the proceeds from the sale of these extra apartments will go in the direction of finishing the remaining Amrapali projects .This involves paying off existing debts to banks, which have posed a major obstacle to these projects’ completion. Any extra money, according to Mahadeva Swamy, will be utilised to pay off debts to the Greater Noida and Noida administrations. In less than a month, the required development plans should be approved by the local government, at which point NBCC will formally begin construction on the extra apartments.

Expansion Plan: New Housing on Extra Land: The Supreme Court approved the inclusion of an additional 75 acres of land in addition to the FAR. This will greatly broaden the project’s scope by enabling NBCC to build some 13,250 additional homes. NBCC faces substantial financial challenges, including an additional ₹3,000 crore from the Greater Noida Authority and ₹1,550 crore in outstanding bank debt. As the project moves forward, NBCC will need to be cautious in how it handles these responsibilities.

Advancements in the Housing Delivery of Multiple Projects: NBCC is in charge of finishing the delivery of over 46,000 housing units in 20 different Amrapali projects. 5,000 of these remain unsold out of the 41,000 units that have already been sold. NBCC was initially tasked with finishing 38,000 homes, of which it has successfully delivered 22,000 to date. The remaining houses are being built, and work is already underway in a number of them.

The Court Receiver Committee was created specifically to manage the Amrapali projects, managing all transactions and advancements. This committee is in charge of overseeing the entire procedure, making sure that NBCC and its construction partners are adhering to the court’s orders and making good progress on the projects.

Challenges and Future Although rooftop solar is expanding in India, the paper points out certain possible obstacles that can hinder its expansion. Given the rising demand for these modules, the supply of high-quality solar modules is a concern. Furthermore, shortages of components and growing costs may make rooftop solar systems more expensive for consumers and companies to purchase. The momentum of the industry may be slowed down if these problems are not resolved. The future of India’s rooftop solar sector seems promising despite these obstacles. The sector is expected to continue to grow as a result of continuous government initiatives, rising consumer awareness, and industrial demand. According to the survey, rooftop solar installations in India may increase even more significantly in the upcoming years with the correct legislation and assistance.

The Supreme Court’s decision to allow NBCC to raise additional funds and develop more flats is a crucial step toward resolving the long-standing issues surrounding the Amrapali housing projects. With these new funds, NBCC aims to complete the stalled projects, deliver homes to thousands of waiting buyers, and settle its financial obligations. While significant challenges remain, this move brings renewed hope to the many homebuyers who have been waiting for years to move into their homes. NBCC’s commitment to completing these projects, combined with the support of the Court Receiver Committee, is expected to bring much-needed relief to the affected homebuyers.

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Maruti Suzuki’s new facility faces short delay; 2025-26 production kick-off

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Indian Real Estate Sees $748M Equity Surge

Research, Research Reports, Result Updates - August 20, 2024

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance's Q1 FY25

Robust Profitability and Asset Quality Improvements Highlight Repco Home Finance’s Q1 FY25

Repco Home Finance’s Q1 FY25 performance shows robust growth and improved financial metrics across various segments.

The company’s credit book grew by 8.3% year-over-year to Rs. 13,701 crores, with AUM reaching Rs. 13,513 crores as of March 31, 2024. Credit sanctions increased slightly by 0.2% to Rs. 727 crores, while disbursements slightly decreased to Rs. 680 crores.

Total income surged by 13.6% to Rs. 416 crores, with NII growing by 8% to Rs. 175 crores. Net profits showed significant advancement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%.

KEY INDICATORS FOR Q1 FY25: (Figures in Rs. million)

METRICS	Q1 FY25	Q1 FY24	GROWTH %
Sanctions	7,272	7,258	0.2%
Disbursements	6,804	6,843	-0.6%
Net Interest Income	1,749	1,619	8.0%
Operating Revenue	4,078	3,645	11.9%
PBT	1,366	1,198	14.0%
PAT	1,054	891	18.3%

RELATIVE PERFORMANCE – Q O Q:

Particulars	Units	Q4 FY24	Q1 FY25
Sanctions	Rs. Mn	9,777	7,272
Disbursements	Rs. Mn	8,946	6,804
Net Interest Income	Rs. Mn	1,723	1,749
PAT	Rs. Mn	1,081	1,054
NIM	%	5.1	5.1
Yield on Assets	%	11.7	12.0
Cost of Funds	%	8.3	8.6
Spread	%	3.4	3.4
Return on Assets	%	3.2	3.1
Return on Equity	%	16.5	16.3

Profitability metrics improved, with return on assets increasing to 3.1% from 2.8% and return on equity rising to 16.3% from 15.8%. The credit portfolio remained diversified, with non-salaried segments accounting for 51.6% and salaried segments for 48.4%. Housing loans comprised 74.3% of the outstanding loan book, while home equity products made up 25.7%.

Income & Earning Growth QoQ: (Amt in Rs. Mn)

Metrics	Q1 FY24	Q4 FY24	Q1 FY25
Income from Operations	3,645	3,926	4,078
NII	1,619	1,723	1,749
Net Profit	891	1,081	1,054
Net Worth	24,050	26,771	27,709

Asset quality showed improvement, with GNPA decreasing to Rs. 583 crores from Rs. 695 crores year-over-year, although slightly up from Rs. 552 crores in the previous quarter. The GNPA ratio improved to 4.25% from 5.5% year-over-year, while the NNPA ratio decreased to 1.7% from 2.8%. The company maintained strong provision coverage, with expected credit loss provisions at Rs. 519 crores or 3.8% of total loan assets.

Asset Book: (Amt in Rs. Mn)

Type	Q1 FY24	Q4 FY24	Q1 FY25
Sanction	7258	9777	7272
Disbursements	6843	8946	6804
Loan Book 1. Salaried 2. Non salaried	126554	135134	137011
	51.8	51.4	51.6
	48.2	48.6	48.4
Mix of Loan Portfolio 1. Home Loan 2. Home Equity
	76.9	74.7	74.3
	23.1	25.3	25.7

ECL PROVISION (Amt in Rs Mn):

Particulars	Jun 23	Mar 24	Jun 24
Gross Stage 3	6947	5516	5826
% portfolio Stage 3	5.5%	4.1%	4.3%
ECL Provision Stage 3	3571	33597	3600
Net Stage 3	3376	1918	2226
Coverage ratio Stage 3	51.4%	65.2%	61.8%

Gross Stage 1 & 2	119607	129618	131185
% portfolio in Stage 1 & 2	94.5%	95.9%	95.7%
Total ECL Provision	5240	5179	5193

Repco Finance maintained a robust capital position with a capital adequacy ratio of 34%, well above the regulatory requirement of 15%. The company’s distribution network expanded to 181 branches and 42 satellite centers across 13 states and union territories.

Profitability Ratios: (Amt in Rs. Mn)

Metric	Q1 FY24	Q4 FY24	Q1 FY25
Net Interest Margin	5.1%	5.1%	5.1%
Spread	3.3%	3.3%	3.4%
Return on Equity	15.1%	16.5%	16.3%
Return on Assets	2.8%	3.2%	3.1%

This comprehensive improvement in growth, asset quality, and profitability metrics positions Repco Home Finance well for sustained performance in FY25, despite potential market challenges such as elections and heatwaves. The company’s focus on retail lending in both housing and home equity segments, coupled with a strong capital base, provides a solid foundation for navigating the evolving financial landscape.

Quarterly Performance Analysis:

Repco demonstrated strong execution in Q1 FY25. The company’s credit book grew by 8.3% year over year to Rs. 13,701 crores, while total income surged by 13.6% to Rs. 416 crores. Net interest income increased by 8% to Rs. 175 crores, and net profit showed significant improvement, rising by 18% to Rs. 105 crores. The company maintained a solid loan spread of 3.4%. Asset quality improved, with the GNPA ratio decreasing to 4.25% from 5.5% year over year, despite a slight increase in the GNPA amount due to factors like elections and heatwaves. Profitability metrics also improved, with return on assets increasing to 3.1% and return on equity rising to 16.3%. The loan portfolio remained diversified between non-salaried (51.6%) and salaried (48.4%) segments, with housing loans comprising 74.3% of the outstanding loan book. Repco Home Finance maintained a strong capital position with a capital adequacy ratio of 34%, well above the regulatory requirement. These results indicate robust growth and improved financial metrics across various segments, positioning the company well for the financial year despite potential market challenges.

In the transition from Q4 FY24 to Q1 FY25, Repco Home Finance experienced some changes in its financial metrics. Loan sanctions decreased from Rs. 9,777 million to Rs. 7,272 million, while disbursements also declined from Rs. 8,946 million to Rs. 6,804 million. However, the company’s Net Interest Income slightly increased from Rs. 1,723 million to Rs. 1,749 million. Profit After Tax (PAT) saw a notable decline from Rs. 1,081 million to Rs. 1,054 million. The Net Interest Margin (NIM) remained stable at 5.1%. The Yield on Assets improved from 11.7% to 12.0%, while the Cost of Funds increased from 8.3% to 8.6%. Despite these changes, the company maintained its spread at 3.4%. Profitability measures showed a slight decrease, with Return on Assets dipping from 3.2% to 3.1% and Return on Equity declining from 16.5% to 16.3%. These figures suggest that while Repco Home Finance faced some challenges in loan growth, it managed to maintain relatively stable performance in terms of interest income and overall profitability.

Net Sales increased by 11.89% from Rs. 364.48 crore in June 2023 to Rs. 407.83 crore in June 2024. Quarterly Net Profit increased by 17.91% from Rs. 95.44 crore in June 2023 to Rs. 112.53 crore in June 2024. EBITDA increased by 14.38% from Rs. 326.38 crore in June 2023 to Rs. 373.32 crore in June 2024. Repco Home’s EPS grew from Rs. 15.26 in June 2023 to Rs. 17.99 in June 2024.

Industry Overview:

The global economy remains strong, with steady growth and inflation gradually returning to targeted levels. Although risks persist, such as potential price surges due to geopolitical tensions in regions like Ukraine and Gaza, and ongoing core inflation driven by tight labor markets, the overall global outlook remains relatively balanced. Global GDP is projected to grow by 3.1% in FY24 and 3.2% in FY25, while global headline inflation is expected to decrease from 6.9% in FY23 to 5% in FY24, and further to 3.4% in FY25. However, differences in disinflation rates across major economies may lead to currency fluctuations, affecting financial sectors. Additionally, high interest rates may have a more pronounced cooling effect than anticipated, potentially leading to financial stress as fixed-rate mortgages reset and households struggle with high debt levels.

India continues to be one of the fastest-growing economies globally, with an estimated GDP growth of 8.2% for FY24, up from 7% in the previous year. The IMF projects a growth rate of 6.8% for FY25, driven by public investment and strong domestic demand. Contributing factors include high capacity utilization in manufacturing, government capital expenditure, FDI inflows, and strong financial and corporate sector balance sheets, which are expected to support a positive economic cycle. Digitalization initiatives are expected to enhance formalization, financial inclusion, and economic opportunities, contributing to India’s sustained rapid growth. India’s large and young population offers opportunities for growth, employment, and consumption-driven expansion, with investments in education and skill development being crucial for inclusive progress. However, challenges persist, such as geopolitical tensions, volatility in global financial markets, geo-economic fragmentation, and extreme weather events, all of which pose risks to the economic outlook. To mitigate these risks, ensuring resilience through the diversification of trade partners and strengthening domestic capabilities will be critical. Contributing factors include a decline in rural consumption due to an uneven monsoon and crop yield in FY24, as well as a potential slowdown in government capital expenditure early in FY25 ahead of the general elections. Geopolitical tensions and financial market volatility continue to pose risks to the inflation outlook, with the Reserve Bank of India projecting CPI inflation at 4.5% for FY25.

Asset Quality:

The asset quality of Repco Home Finance has shown a mixed trend over the past year, as reflected in both the graph and the provided data. The Gross Non-Performing Assets (GNPA) ratio has generally improved, decreasing from 5.5% in June 2023 to 4.3% in June 2024, despite a slight uptick from the March 2024 low of 4.1%. In absolute terms, GNPA amounted to Rs. 583 crores as of June 30, 2024, down from Rs. 695 crores a year earlier, but up from Rs. 552 crores at the end of March 2024. This marginal increase was attributed to the impact of national elections and prevailing heatwaves during the quarter.

ECL PROVISION (Amt in Rs Mn):

Particulars	Jun 23	Mar 24	Jun 24
Gross Stage 3	6947	5516	5826
% portfolio Stage 3	5.5%	4.1%	4.3%
ECL Provision Stage 3	3571	33597	3600
Net Stage 3	3376	1918	2226
Coverage ratio Stage 3	51.4%	65.2%	61.8%

Gross Stage 1 & 2	119607	129618	131185
% portfolio in Stage 1 & 2	94.5%	95.9%	95.7%
Total ECL Provision	5240	5179	5193

SECTOR WISE MOVEMENT (Amt in Rs. Mn):

Particulars	Jun 24		Jun 23
	AUM	%	AUM	%
Stage 1	1,15,222	84.0%	1,01,622	80.3%
Stage 2	15,963	11.7%	17,985	14.2%
Stage 3	5,826	4.3%	6,947	5.5%
Grand Total	1,37,011	100.0%	1,26,554	100.0%

Similarly, the Net Non-Performing Assets (NNPA) ratio has shown improvement, declining from 2.8% in June 2023 to 1.7% in June 2024, with a slight increase from the 1.5% recorded in March 2024. In monetary terms, NNPA stood at Rs. 223 crores as of June 30, 2024, a significant reduction from Rs. 338 crores a year ago, though up from Rs. 192 crores at the end of the previous quarter.

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Strategic Partnerships Fuel One97’s Financial Turnaround

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Real Estate, Real Estate News - July 21, 2022

How to minimize taxes when selling real estate.

How to minimize taxes when selling real estate.

On the off chance that you sell your home at a cost more noteworthy than the purchasing value, at that point you will be eligible to pay tax on the income that you make by selling your home. Whether you sell a rental estate or land after owning it for more than 2 years, you become eligible to pay 20% LTCG tax upon indexing. However, if you’re making a Rs 50 lakh income, you will probably pay Rs 10 lakh as taxes. An assessee can re-invest the sum of LTCG in residential estate and assert an exemption under sections 54 And 54F of the Income Tax Act.

Short-term capital gain:

STCG ‘s property is seen to be a profit by the selling of property possessed by you for less than two years. As an investor, you are eligible to pay tax on STCG on properties as per the relevant marginal tax levy.

Long-term capital gain:

If you sell the property that has been held by you for more than three years, the benefit resulting from this sale will be called an LTCG. LTCG is measured as the gap between net sales and adjusted property costs. The advantage of indexation is to reduce the effect of inflation on the profits generated by selling land in such a manner that the real earnings on the land are taxable. It is focused on the premise that the valuation of capital is gradually decreasing as a consequence of inflation and thus, it is unjust to charge the long-term owner of the land on the cumulative profits that have accumulated to him purely as a result of inflation.

Exemption:

1. Section 54, where interest is rendered in the acquisition of a new property:

Under section 54, you can claim an exception from capital gain when you contribute a few or the entirety of the benefits by selling a home in India into another real estate.

Rules:

HUFs and individuals are exempted and are available for one residential real estate. The capital income from property selling will be balanced against purchasing a new residential building. The property which has been sold and bought will be in India. The current residential property should be purchased either one year before selling the existing property, or within 2 years after the sale date of the old real estate. If you intend to build a house, the development of the house should be done within 3 years from the selling date of the preceding home. When you purchase or build a new home, you may not be willing to sell it in less than 3 years. When you sell it within 3 years, you won’t receive the capital gain depreciation advantage and the sales profits will be taxable. Those 3 years are measured from either the day the new house acquires or finishes its function. The value of exemption claimed is smaller than the sum of capital income or the expense of purchasing a new home.

2. Section 54F, in which the transaction will be made on the acquisition of new land or another house:

Rules:

Exemption for HUFs and individuals. The new property will be acquired either one year before the selling of the existing property or within 2 years from the date of selling of the previous home. The exemption is valid only if the taxpayer does not possess more than one property on the day of sale of that estate, rather than the one the homeowner purchased to obtain the exemption under Section 54 F. When the whole selling concern is not invested but only a part selling concern is spent on the acquisition of new estate, the sum of the exemption must be correspondingly given.

Investment after selling property:

The new property will be the perfect place to spend your capital after selling your property. This could be your new property, or you could lease it to produce income. In the event of re-investment, there is still some uncertainty as to how to use the whole. Thus, you just need to spend the sum of capital gains to avoid the tax on LTCG. The most elevated estimation of capital benefits which you can put resources again is into some other property to make sure about a full exclusion is Rs 2 crore. When your capital gain is large, you will be forced to pay tax on surpassing Rs 2 crore. Note that you can use this right just once in your lifetime. Therefore, you should be cautious to make sure you don’t use this choice in the future.

Two properties:

Already, the assessment reasoning was just appropriate when you spent your capital gains in a single house. Nevertheless, it has now enabled citizens to spend their capital gains on two real estate properties, either by acquisition or development. In any case, this reinvestment decision will likewise need to remain under the complete top of Rs 2 crore.

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Editorials, Expert Opinions - July 20, 2022

Real estate equity waterfall : How they work and what to look for.

Real estate equity waterfall : How they work and what to look for.

Equity Waterfall:

When we buy a property, we choose a combination of equity and debt to fund it. In exchange for their equity investment, our buyers are entitled to the profit and revenue of the real estate. The waterfall determines how earnings and profits are split between you and our investors.

The layout of the waterfall may vary from one contract to another, and it is necessary to look at the specifics of each agreement to evaluate if the separation is equal and fair for all the parties concerned. All information is presented in a contract called an operating agreement, that will be thoroughly and carefully reviewed in anticipation of the allocation of capital to the real estate deal. A waterfall, also known as a waterfall model, is a legal term included in an operating agreement which specifies how money is paid out, where it is paid out, and to when it is paid out during real estate equity transactions.

Waterfall Features:

1. Preferred Returns:

Preferred returns are described as the first claim benefit of the project before the target return is achieved. Preferred return simply generates another cash fund stream, and after the cash flow has been allocated to preferred owners, the remaining stream capital transfers to the next stage and divides as decided.

2. Lookback Provisions:

Lookback clauses are used as cash flow is distributed before the asset is disposed of. If the Limited Partners do not get a guaranteed rate of return decided upon settlement, the General Partner is forced to offer up a percentage of the cash income that was allocated to them before the transaction.

3. Catchup Provisions:

A catch-up clause ensures the Joint Partner 100 percent of the profits of the agreement before the negotiated rate of return is reached. If the specific rate of return has been met, all the residual earnings should go to the General Partner before the defined rate of return has been reached.

Operating agreement:

1. Members:

The partners of the agreement are those who are eligible to benefit from the successful transaction of the real estate. In certain instances, there seems to be a variety of limited partners and general partner. The GP is liable for identifying the opportunity, reviewing it, acquiring it, completing it, and handling the asset until the sale is complete. Usually, the GP will invest a limited portion of the total equity used to fund the deal. The LP’s are purely individual investors. They put their money with the GP and hope to obtain it back, plus a profit, from the cash flow produced by the real estate. The LPs offer the remaining of the capital required to finance the transaction.

2. Capital:

If the cash flow generated by the estate fails to reach the necessary return threshold in a specified period, the cash flow shortfall can or can not be carried forward to the next year. If the investor ‘s financial flows are accumulated, the deficit will continue over the following cycle before the cash flow is adequate to clear it. Cumulative cash holdings are beneficial to the LPs as it ensures that the GP does not obtain any funds before the deficit is erased. When the capital investments are not combined, they are more beneficial to the GP.

3. The Return Hurdles:

Return hurdle is the rates of return at which the capital investment divides between the LP and GP varies. These are designed to enable the GP to manage properties as profitably as practical. The better the profit that the property makes, the more income the GP gets to earn compared to their original investment.

4. Calculating Returns:

The return hurdle can be evaluated using several different approaches, although the two most popular are the multiple of equity and the internal rate of return. The internal cost of the return is the average discount rate, which determines the net present value of the potential cash flows, equal to zero, negative, and positive. The capital multiple is measured as the ratio of the capital received to the money invested and represented as a sum out of the second decimal point.

5. Simple Split:

The final way of deciding the configuration of a waterfall is a straightforward break and might have no desired return to investors. For example, 50 percent of all capital investment and profit is paid to LP and 50 percent of all capital investment is paid to the GP. This is popular in purchases where there might not be a high degree of complexity or a lot of costs, so the goal is to make distributions very easy.

The profitability of an investment from the investor’s point of view of return can rely on well-defined allocations that are properly distributed to the appropriate entities also during the investment holding period.

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Business, Real Estate - July 19, 2022

Why does a home buyer need a real estate agent?

Why does a home buyer need a real estate agent?

When it comes to house selling, sellers and buyers remain on opposite sides of the table. Both sides may profit greatly by employing an estate agent to support both. However, their motives may be specific. Besides, the cycle of home purchasing can get difficult. Although you are not an expert, you want to ensure that you are doing things right. The representative of a real estate investor will help to ease the operation.

Buyer agent:

In the property market, the buyer’s agent helps prospective homeowners in all facets of the cycle of purchasing a property. They will compose deals for properties you will like to purchase, help with approvals and agreements, and direct you through the selling phase until you have found your perfect house.

Benefits:

1. Arrangements:

An essential part of the role of a buyer’s agent is to assist you with access to residences that attract you. The agent will consider your main purchasing desires and needs into consideration. And then consult so that you can filter the homes that suit your preference criteria. When you have located the property you are interested in, they can serve as a representative for you. And also the broker or seller’s representative to schedule appointments for all of you to take a first glance at certain homes.

2. Negotiating Skills:

Know that the agent has a legal responsibility to clients. It is the responsibility of your dealer to offer you the best deal for the house. They understand how it works naturally and what does not. As a result, they have little personal investment which can confuse their thought. If you already have an agent that stops you from making an unexpected financial dive, that is only more money saved.

3. Knows your need:

Buyers normally have a fairly clear understanding of what they need in a home. You will be better looking at residences with the checklist hidden in your head. However, the agent should be alert to concerns that you have in your mind, such as insect problems, roofing issues boiler concerns, and cracks. You can only say for sure whether you can find similar prices that can prove you are in the same category or not. An agent passes on studied, existing, and reliable data about the demographics, crime levels, colleges, and many valuable factors of a community.

4. Paperwork:

If you have purchased a home, you undoubtedly devoted a complete shelf just to the paperwork related to the sale. These will also include the written bid, the counteroffer signed and stamped, and the minor specifics of what precisely had been and is not included in the deal. When it comes to reading and interpreting the various papers involved with a real estate transaction, you may be way out of your depth. So, you will have a detailed understanding of what you are walking into irrespective of what you are purchasing or selling. Fortunately, all of this information should be much more common to your agent than you are.

5. Helps you:

Note, this is probably the first time you’ve been through this place and there may be a variety of nerve-wracking aspects in the cycle of home purchasing. One of the most commonly mentioned is that a customer may have to hold difficult talks with the seller over changes that you plan to make to the home until the sale is complete. However, this is where it helps a lot to have a buyer’s representative operating on your side. Because they are accustomed to these interactions and can treat them with aplomb.

6. Confidentiality:

If you’re a seller or a buyer, your agent does have your back. Legally, they have been obliged to bring the best interests of their customers first. The obligation imparts a rather strict secrecy level. The own agent will realize if the details that the other agent demands of you are fair. If you are the customer and the seller’s representative lied to you, deceived you, or leaked sensitive details, you have redressed. You should disclose this to the professional organization of the company, such as the National Realtors Association.

7. They are Expert:

Being an accomplished specialist, the buyer’s representative should have unique skills that can offer a degree of professionalism that can make the entire process of purchasing the home run easier. They will then enable you to make a decent bid on comparable homes, provided costs. You may rely on them to provide you with the details you need to make you feel comfortable about your purchase.

8. Long-Term relation:

You will be capable of building a clear understanding of what kind of house will be suitable for you by developing an established partnership with your buyer’s agent and steering you towards listings that best match your desires the next time you decide to search for a home.

How to invest in Insurance sector with tax planning.

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India's Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability

Real Estate, Real Estate News - June 28, 2022

Investing in Real estate.

Ways to Invest in Real estate.

The very first thing that immediately springs to mind as you talk of investing in real estate is your house. However, when it comes to property, real estate owners have plenty of other choices because they are not just tangible assets. Property investment can improve an investor’s overall portfolio investment-and-return profile, providing better risk-adjusted returns. The real estate sector typically has low volatility, particularly as contrasted with equities and bonds. Real estate is therefore valuable in contrast with more conventional income streams. Investing in real estate provides diversification, passive income, and tax benefits. Following are the ways to invest in real estate.

1. Ownership:

Ownership of property is one of the most famous ways to invest in real estate. People with expertise in decorating and construction, have the experience to handle residents. It takes substantial resources to fund initial operating expenses and to support empty months.
Pros: Rental properties generates regular income. There is a good appreciation of real estate.
Cons: Managing tenants can be tedious. The tenants can also damage the property.

2. Real Estate Investment Groups:

Individuals that already own rental immovable property without wanting to run it invest in real estate investment groups. It necessitates capital and funding. A business owns or builds a series of apartment blocks or condos in a traditional real estate investment scheme. It also enables buyers to acquire them through the firm, thereby completing the market. The business takes a proportion of the monthly rent in return for fulfilling certain administrative activities. A typical investment community lease for the property market is in the interest of the owner. All units share a part of the lease to protect against rare vacancies.
Pros: It is a much more realistic alternative to property that also generates revenue and respect.
Cons: For real estate investment companies, there is a vacancy chance, whether it is distributed through the company or if it is unique to the investor.

3. House Flipping:

House flipping is for individuals with extensive real estate research and marketing knowledge. It requires resources and the capacity and the ability to do, or oversee, repairs as needed. Real Estate traders frequently look for under-priced properties. And later sell them at profit in less than 6 months. Pure real estate flippers sometimes do not engage in property development. Hence, the investment will either have the inherent interest required to make a profit with no changes, or they will remove the properties from consideration. Yet another type of flipper helps make money by purchasing affordable properties and creating wealth through renovation.
Pros: Flipping has a smaller period in which money and energy are bound together in a house. Yet, there will be large gains, sometimes over shorter periods, depending on the business conditions.
Cons: Trading in real estate needs a greater understanding of the business combined with a chance. Uncertainty in the market can leave traders with short-term losses.

4. Real Estate Investment Trusts (REITs):

Investors may like access to real estate assets without a conventional land sale. It requires Investment capital. A REIT is generated when a company utilizes capital from creditors to purchase and manage rental assets. REITs are purchased and sold at big exchanges. Like traditional dividend-paying securities, REITs are a good commitment to buyers on the capital exchange who want monthly income. Taxes such as the capital gains tax are not favourable to gaining significant amounts of creditors. This is one of the indirect ways of investing in real estate without actually buying a property.
Pros: REITs are dividend-paying securities. Its main assets comprise commercial real estate property with long-term, cash-generating contracts.
Cons: REITs are simply reserves, which ensures that the risk correlated with conventional rental assets does not occur.

5. Real Estate Limited Partnerships:

It is an organization formed to purchase and hold a diversified portfolio, or even sometimes only one. RELPs only operate for a limited number of years. An accomplished real estate consultant or construction company serves as the general contractor. International buyers are then found to provide funding for the real estate scheme, in return for an equity stake as limited partners. The partners will obtain annual dividends from the income produced by the property of the RELP. But the real payout arrives when the assets are sold.

6. ETFs:

An exchange-traded fund is a portfolio of securities or bonds of mutual investment. ETFs are comparable to mutual funds and index funds that offer with same large diversification and small total costs. When you are gearing up to invest in property but also want to widen, it may be a wise decision to participate in a real estate ETF.

7. Real Estate Mutual Funds:

Real estate mutual funds invest mainly in REITs and property development companies. Firstly, they provide the opportunity to achieve diversified access to comparatively low sums of capital. Secondly, depending on their approach and diversifying goals, they provide creditors with a far larger range of assets that can be accomplished when purchasing individual REITs. These funds are liquid. Moreover, the institutional investors get the strategic and analysis knowledge offered by the company. This can provide specifics on the properties obtained and the management viewpoint on the feasibility and success of particular real estate transactions as well as on the type of assets.

What RERA timeline extension means for developers, homebuyers?

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Real Estate - November 10, 2020

What RERA timeline extension means for developers, homebuyers?

What RERA timeline extension means for developers, homebuyers?

The Finance Minister, Nirmala Sitharaman announced that due to the effect of COVID-19 pandemic, the time limit for the completion of real estate projects will be extended by up to six months. The Center is advising both states and union territories to treat the Pandemic as an ‘act of God’ and increase the project completion dates. Although, this will offer help for real estate developers in the execution of projects because no lawsuits may be filed against them, nor will they be liable to pay any fines. Homebuyers are not likely to receive any specific relief in the form of interest / EMI exemptions to buyers. The law safeguards their confidence in seeing their homes completed within a few months. With that directive, if and when provided by the particular states, all projects in those states will be extended.

Effect on sector:

The lock down, placed on 25 March to curb the spread of corona virus, has a significant effect on the real real estate and building firms. Huge number of employees coming from villages in other states have relocated back when the lockout started. It will provide some extra space to ventures when they slowly resume activities after the lock down constraints have been relaxed.

What are the penalties:

In real estate regulations, investors are subject to a penalty if they refuse to follow the building completion deadlines. They will have to pay a fee equivalent to 10% of the expense of the project if they do not report their current projects with the Real Estate Regulatory Authority (RERA). Likewise, homebuyers are often liable for not paying any payments owed to the builder. Regulators may be asked to extend the deadline given by real estate developers to complete the project so that they will not default on incurring fines. Likewise, homebuyers may even be given an option to compensate whatever balance is owed to the builder.

Extension:

According to Sitharaman, these steps would de-stress real estate developers and enable the execution of ventures such that homebuyers can receive booked houses with new deadlines. Developers asked for an extension of the RERA time limits and for Covid-19 to be included in the force majeure provision. The housing authority in Maharashtra has already given an extension of three months. The Government has declared liquidity support to non-bank borrowers by offering partial or absolute guarantees value of Rs 75.000 crore on investment in debt securities issued by these companies to enable them to generate capital. Non-banking finance companies, the major borrowers in the real estate market, have seen bad loans grow and are unable to collect money. Regulatory bodies in states including Maharashtra, Gujarat, Tamil Nadu, and Uttar Pradesh have provided both builders and customers an extension. Madhya Pradesh also extended the deadline by six months for the completion of listed projects to be finished after March 15.

Benefits to builders:

These benefits will allow six months for the project registration and execution of projects. Due to lack of immediate regulatory corrective action under the RERA Act 2016, there is also a risk that certain real estate developments may be delayed leading to litigation, etc. This growth eventually contributes to the delays in the delivery of apartments to homebuyers who have spent their entire savings in their new home. A notable change is the acceptance by the developer community of expanding project execution targets and other regulatory compliances under RERA by six months. They will be able to deliver homes to the home buyers within the new time frame.

Benefits to buyers:

The Government has declared that the extension of deadlines will safeguard the interest of customers when they get the house. Although, delayed by six months. Delay of only a few months is better than not having the home at all. Homebuyers will have to face further six months delay in delivery of the property. The consumer will have to face the extra burden of charging the rent for six months. Construction is related to the payment package for most customers. If there is no on-site construction activity for 3 months, there will be no claim for payment from the developer to the customer for that duration. Indirectly, the customer will get relaxation. Furthermore, the support given to the builders is just for the timetables of the project and not on the financial side. They will have to start meeting their borrowers financial commitments.

Weekly market update (11th May – 15th May)

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Business, Expert Opinions, Health, Health Experts, Real Estate, Real Estate News - July 5, 2020

How co-working spaces can restart post lock down

How co-working spaces can restart post lock down.

Most co-working spaces are now outlining radical steps to reopen their company post lock down, maintaining participants’ health and sanitation at the maximum standard of premises. The risk and uncertainty of COVID-19 pandemic is increasing each day. Although, policy measures are in full swing to stem the dramatic effects of this pandemic, which is quickly tolling human lives. There is also little clarification as to when regular business resumes. This is well known that the lock down cannot stay in effect permanently.

Measures to implement:

When the lock down is ended and firms can function out of their office buildings, several innovative initiatives and procedures will need to be enforced in all working settings to take care of the possibility of contracting the infection. The organizations will have to introduce improved protection procedures higher than a conventional workplace to maintain business-as-usual and guarantee strong organizational interest into co-working work spaces.

Work from home:

Indian IT industry allowed workers to Work From Home according to policy order during the lock down. As a result, nearly 90 percent of workers operated from home, with 65 percent from urban areas and 35 percent from small-town areas. The IT industry moved to the Work from the home system during the lock down very smoothly offering operational continuity to consumers without reducing efficiency or profitability, shocking both major companies and customers. So several workers operating from home amid reports that a substantial portion of them will continue even once the condition returns to normal life. Companies will now need to reconsider their approach particularly in office, interior and architecture real estate, to make the segment more appealing to customers.

Post COVID:

When the job continues after the lock down, optimizing the use of workspace is a concern. The workplace will entail large-scale behavioural and physical room changes. Organizations would now take advantage to revaluate their working course of action to give more adaptability to their staff, particularly thinking about the advantages of profitability and commitment, This will push up the demand for co-working space.

Opportunities:

Risk reduction must now be an essential part of organizational decision-making, particularly as businesses follow their business continuity plans. Organizations will intend to make decent variety in the geography, expanding the opportunities for adaptable workspaces in Tier 2 and Tier 3. They may likewise observe a piece of organizations moving to Tier2 and 3 urban areas to keep away from a shutdown during emergency. Expanding activities through geographies is intended to work well with the co-working group.

Co-working space:

Co-working facilities have often provided an advantage in terms of cost-efficiency. The world hopes to see the quickest post-lockdown recovery. At the point when the pandemic hazard facilitates, more organizations look to continue their business. Co-working spaces is the main decision for some organizations since they are more flexible in the time of the rent agreement. Businesses cannot afford to operate from home for so long, because many of them have tasks needing a high degree of direct control that are only possible in a structured office environment. These enterprises are heavily reliant on the office facilities to work efficiently.

Looking on, co working spaces will continue to restructure their work environments, such as relying mostly on activity-based workplace and collaborative zones. The co-working space team will have to focus on other things, such as ramping up hygiene procedures with daily sanitization of premises, beginning shift-based jobs, simulated meetings, even sanitizing the hands of each participant entering the property, and sitting in offices in compliance with social distance norms. It may include the supply of hand sanitizers and the substitution of bio-metrics with card access.

Workspace administrators will have to enable participants to make the most possible use of their collective senses when allowing the use of community resources in co-working spaces since sanitation is the highest priority. They will also have to make sure that members comply with shift-based systems to eliminate the possibility of congestion. They will also be expected to establish a new regulatory structure or regulations. People should maintain social distancing and carry face masks for good effect. Co-working spaces will be required to re-plan their work areas and make sure their encounters do not lead to infection.

Drawbacks:

For all the undoubted upsides of co-working spaces that are primarily funded by companies, freelancers, small to medium-sized organizations and start-ups. They also have drawbacks and constraints. Besides most of them missing independent canteens they often prevent businesses from holding activities in local places. Trying to maintain these services is another problem. While several major businesses utilize co-working spaces, these drawbacks have usually driven some others away from the possibility of adopting them due to lower rentals.

How to Plan Invest In Insurance Sector and Tax Planning.

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