Aggressive Demands Of The Private Equity Investors
BEES SAAL BAAD: NEW, SHARPER TEETH LIKELY TO HELP ACTIVATE BENAMI ACT
Aiming to clamp down on benami transactions, the government is set to give more teeth to the Benami Transactions (Prohibition) Act, 1988. The proposed amendments to the Act, which are being given finishing touches, seek to redefine a benami property as one belonging to a non-existent person without known sources of income.
A confiscating authority will be set up as per the provisions of the Act. The authority will be empowered to deem (or, hold) a property benami and confiscate it if the owner does not have a proven source of earning.
As per the present Act, a benami transaction means a deal in which a property is transferred to a person for a consideration paid or provided by another person. In other words, the property is not transferred in the name of the person who pays the purchase price.
A benami property could be of any kind, movable or immovable, tangible or intangible, and includes any right or interest in such property. The deeming provision will make it easier for the confiscating authority to prove a benami transaction.
Importantly, powers of the confiscating authority as well as the rules would now be a part of the Act itself, sources told ET. This is an important variation from the Act, which does not lay down detailed rules. Instead, the Act gives power to the government to make rules that would provide for a competent authority to acquire such properties, and the manner in which they have to be acquired. The Central Board of Direct Taxes, the implementing authority for the Act, was to frame the rules.
This was largely the reason why the 20-year-old Benami Act is still to come into effect, as rules to operationally it could not be framed. It was felt that the powers, which were to be derived from rules, should flow from the Act itself to make it more effective, they said.
The proposed amendments to the Act will be vetted by the law ministry before they go to the Cabinet for approval. If the suggested changes are approved, they would go a long way in curbing such transactions that are rampant in real estate.
CRUNCH TIME
Govt. set to strengthen Benami Transactions (Prohibition) Act
Changes to redefine a benami property as one belonging to a non-existent person without known sources of income
A confiscating authority will be set up as per the provisions of the Benami Act
Authority will be empowered to confiscate a benami property if the owner does not have a proven source of earning
Courtesy:- ET dtd:- 25th August 2008
COSTLY MANESAR WILL BE A ATTACTIVE
Manesar, ranks fifth amongst the costliest industrial areas of the world. After having carved its niche on the world map, this place has come to lime light within last few months. Now, the efforts of state government are that it should be constructed with a world-class standard.
With the arrival of property market to the adjoining areas of Delhi, it brought a good fortune to all those areas which were ever untouched. These may particularly include Ghaziabad in U.P. and several cities of Haryana. During last few years, the construction activities have increased to such an extent that these are visible today on international map.
Around one and half year back, the News Week after having included Ghaziabad in top ten dynamic cities of the world, had declared it the hottest city of India and now Manesar’s name has shone in the study off American Real Estate Company – Cushman and Wakefield. According to it, with the point of view of world-wide increase in industrial properties rental, IMT Industrial Area, Manesar is at fifth place where rents have increased upto 50% within a year.
Sparkle of Manesar has increased on property map since the last around one year when the work on Kundli-Manesar-Palwal (KMP) express way was started. It is a very important project. The responsibility to complete it has been assigned to Haryana State Industrial & Infrastructure Corporation. The distance between Kundli and International Airport shall be hardly 30 minutes drive via this 135 k.m. long KMP express way. There is a proposal to construct a business corridor alongwith express way. It is presumed that this will be the biggest and costliest express way in India. In addition, Haryana Government, in its master plan, has presented Manesar area combining with Gurgaon, in other words after combining Gurgaon and Manesr, it is sure to become a big developed area. It is evident that all these expectations have affected the property prices in Manesar. During the past one year the prices of property have jumped by 35% to 60% here.
If we talk only about industrial area, after arriving all multinational companies here, the scenario has been changed completely. As a result of which a one time small village Manesar has today become a big industrial and commercial hub. Its credit can be given to IMT Industrial Area. It may perhaps sound queer, but it is a hard fact that Haryana Government is earning more than Rs.1500 crore annually from this area alone.
Land rates in Manesar have increased from Rs.20-25 lac to Rs.1.5 crore per acre. During this period the rates of commercial properties have increased 35% to 60% whereas the prices of residential properties have increased upto 35% Today average rates of residential properties in Manesr are Rs.1800/- to Rs.2200/- per sq. ft.
Connectivity is plus point
Inhabited on Delhi – Jaipur highway, easy connectivity from Manesar to Delhi is its biggest plus point. You can cove a distance of 45 k.m. between Manesar and Connaught Place with in one and half hour only whereas it takes only one hour to cover a distance of 32 km from International Airport to Manesr. After completion of the Express way, it will take only half of the time to cover this distance from Airport. On the other side, state government is trying to bring metro upto Sushant Lok.
Stars will shine more
Efforts are being accelerated to make this area an economical hub. Here the work on several big project is going on consistently. Government’s idea is to develop Manesar on the basis of an Industrial Model Township. Therefore, it is being constructed keeping in view the world-class standards. Several projects of reputed Indian and foreign companies are today going on here. The Director of Haryana State Industrial & Infrastructure Corporation informed on the condition of not printing the name that after acquiring 3000 acre land , the work is going on it. Keeping in view the world-class standard in this area, the whole development shall be done by the corporation itself. The corporation has taken over Sector-2 for commercial development and commercial township is being constructed in 12 sectors. He told, “Our aim is to attract more and more industries here. For this we have prepared our own standards”. Private developers have been allowed to work hare conditionally in sectors under which sector’s 50% development work will be done by private developer. Under the master plan, 500 cusecs water plant and 400 KV capacity power plants are being constructed here for a population of 37 lacs. In addition to these, several big builders have started their own projects in Manesar.
Residential Business
As per an estimate, as compared to Gurgaon, the per acre average habitation in Manesar is higher by 20%. For example, if there are 80 person in an acre in Gurgaon, than there are 100 persons in an acre in Manesar. In such an eventuality, there are full possibilities of expansion of residential projects here. Alongwith development of industrial projects, residential projects will also be required. As such, Haryana State Industrial and Infrastructure Corporation has acquired 250 acre land near national highway for construction of residential projects. Staff quarters are being constructed on it. 14930acre land for residential and 1404 acre land for commercial complexes has been reserved in Manesar. There is no provision of mixed land use here and every thing has been projected well in advance.
sector will seem temporary and the sector will perk up.
LIGHT AT THE END OF THE TUNNEL
As soon as inflation is controlled and the interest rates come down, the current slowdown in the real estate
The persistence of inflationary pressure in the market will further affect the recovery in the real estate sector. As the government measures to improve supplies of essential commodities, so far, have had limited impact on controlling prices, RBI is likely to further take harsh measures to push the interest rates up on July 29 when it review its credit policy.Because of the central bank’s monetary measures taken so far to contain inflation, the interest rates on home loan have gone up by 2 percentage points - to over 12% in the last one year. Prior to this, the central bank, in order to contain the rise in the prices of real estate, had curtailed the flow of money to the sector. This has resulted in the rise in interest rates by over three percentage points between 2005 and 2007.
As the land cost and cost of construction increased substantially, builders find it difficult to cut the prices on the finished products to absorb the rise in EMI due to increase in the interest rates. Assotech MD Sanjiv Srivastava said that in the last one year, developers and builders have not increased the prices of their products while the input cost has increased by almost 30% to 50%. Therefore, he said, his profit margin has already been squeezed. And, any further cut on the prices of built up apartments and plotted houses will turn his business into a loss-making proposition.
Even in big city like National Capital Region of Delhi, builders have slowed down construction activities. A senior consultant said that the construction activities at present are concentrated in commercial real estate only, where demand is still there. In the residential real estate, he said, as demand has dwindled, developers are going slow in launching new projects.
As inflation is rising to touch 12%, bankers feel that RBI is likely to take measures that will push interest rate further up. If that happens, a banker said, the affordability factor will be affected very badly. This will have a direct bearing on demand for residential real estate. This will also impact the construction activities in the country.
Any slowdown in the construction activities will affect the future supply of the residential units. However, as demand for the commercial real estate continues to be good, the requirement for residential units will also be felt soon.
The consultant said that if the interest rate goes further up from here, the investors will feel the pinch. As their EMI goes further up, they would like to exit from their investments in real estate sector. This will increase the supply of the residential units, putting downward pressure on their prices.
Therefore, a consultant feels that this could be a good time for the end users to buy their sweet home. He said that it is unlikely that developers will bring down the prices of their products as this would result in a loss making proposition. He said that developers would be forced to bring down their prices only if the authorities, which own most of the land, cut land prices. He said that this would be possible if the downturn in the sector continues for a long period. But at present, it is felt that the present downturn is a temporary blip and the sector will revive as soon as inflation is brought down and interest rates come down. But, that will see the sudden jump in the real estate prices also. Therefore, the end users, consultants and bankers feel, should take advantage of current downturn in the property prices. At present, if you borrow at floating interest rate, you will have to pay high EMI as the rates are high. But, if the interest rate falls, your EMI will also come down.
Courtesy:- ET dtd:- July 25, 2008
