Highlights of India's Union Budget for 2008/09 - What it means for Real Estate?

THE ECONOMY

• Total plan spending in 2008/09 seen at 2.4 trillion rupees ($60.3 billion). Non-plan spending seen at 5.07 trillion rupees.
• Government to waive debts of small farmers. The total cost of the farm debt waiver scheme will be 600 billion rupees.
• Fiscal deficit in 2008/09 seen at 2.5 percent of GDP compared to 3.1 percent of GDP in the previous year.
• Revenue deficit seen at 1 percent of GDP in 2008/09 compared to 1.4 percent of GDP the previous year.
  

• Government confident of GDP growth of 8.8 percent in 2007/08.
  
  

INVESTMENT, INFRASTRUCTURE, INDUSTRY AND TRADE

• Saving rate and investment rate estimated to be 35.6 per cent and 36.3 per cent,
  respectively, by the end of 2007-08; between April- December 2007-2008. FDI
  amounted to US$ 12.7 billion and FII to US$ 18 billion
  

RURAL INFRASTRUCTURE DEVELOPMENT FUND

• Corpus of RIDF-XIV to be raised in 2008-09 to Rs.14,000 crore, with a separate
  window for rural roads.
  
  

ROADS

• National Highway Development Programme (NHDP): Allocation for NHDP enhanced to Rs.12,966 crore in 2008-09 from Rs.10,867 crore in 2007-08; Completion rate in the Golden Quadrilateral is 96.48 per cent and in the North South, East West Corridor project is 23.36 per cent; Special attention being paid to SARDP-NE; programme devised for the North Eastern region; 180 kms of roads completed in 2007-08 and 300 kms. of road targetted for completion in 2008-09.
  
  

HOUSING FOR THE POOR

• Subsidy per unit in respect of new houses sanctioned after April 1, 2008 to be enhanced from Rs.25,000 to Rs.35,000 in plain areas and from Rs.27,500 to Rs.38,500 in hill/difficult areas to reflect the higher cost of construction;
  

• Subsidy for upgradation of houses to be increased from Rs.12,500 per unit to Rs.15,000;
  

• Public sector banks to be advised to include IAY(Indira Vikas Yojna) houses under the differential rate of interest (DRI) scheme and lend up to Rs.20,000 per unit at an interest rate of 4 per cent.
  

BUDGET ESTIMATES

• Plan Expenditure estimated at Rs.243,386 crore.
  

• Non-Plan Expenditure estimated at Rs.507,499 crore.
  

• Urban infrastructure spending to rise to 68.7 billion rupees.
  

• Rural infrastructure spending will be 140 billion rupees.
  

• Government spending on national highways will be 130 billion rupees.
  
  

TAX PERSPECTIVE

• Income tax threshold raised to 150,000 rupees.

• Tax to GDP ratio in 2007/08 seen at 12.5
  

• Government proposes increasing short-term capital gains tax to 15 percent and a commodity transaction tax for futures.

• Government proposes to withdraw banking transaction tax from April 2009.

• No change to corporate tax rates.
  

• Service Tax - Four services brought under service tax net namely, asset management service provided under ULIP, services provided by stock/commodity exchanges and clearing houses; right to use goods, in cases where VAT is not payable; and customised
  software, to bring it on par with packaged software and other IT services.
  

• Five year holiday from income tax being granted to two, three or four star hotels
  established in specified districts having UNESCO-declared 'World Heritage Sites';
  the hotel should be constructed and start functioning during the period
  April 1, 2008 to March 31, 2013.
  

• Five-year tax holiday for hospitals.
  

• Excise duty rates on bulk cement and packaged cement brought on par.
  
  

SOURCE : http://indiabudget.nic.in

For further insights, discussions, reactions and opinions on the budget 2008/09, please logon to http://www.propertymixer.com/

Contributed By : Minal Arora

Bangalore & Delhi have seen highest price rise in property from 2000-2005 – Economic Survey 2007-08 Suggests

With the growth of economy and rapid urbanization, property prices in almost all Tier 1 & many Tier II cities have seen an upward trend. The National Housing Bank (NHB) had earlier set up a Technical Advisory Group (TAG) to explore the possibility of constructing a real estate price index.

Source: Economic Survey 2007-08

According to TAG’s pilot report submitted for select cities in India, some cities like Bangalore have seen a price rise of 28.8 % year on year and Delhi according to the report has seen a price rise of 19.1 % year on year. These numbers are significant and although an index which would be able to give the overall picture for the country is being planned and will take sometime to come, this index atleast gives some indicators as to what is the Real Estate trend.

One important thing is that these figures are only till 2005. NHB, however, is setting up an institutional mechanism for releasing an economy-wide housing price index on a regular basis.

Contributed By : Rahul Gandhi

UNDERSTANDING VASTU & FENGSHUI AND THEIR RELAVANCE IN THE REAL ESTATE MARKET

VASTU SHASTRA:

Vastu is a Sanskrit word which means Vaas: Live Tu: you, a place where you live or dwell. Shastra means a text which contains knowledge or instructions. Simply put Vastu Shastra means instructions laid down for building a structure.

HISTORY:

Historically Vastu dates back to the Vedic times. Although there is reference of Vastu in several ancient books, Mayamata and Manasara are the most important ones. Being a technical subject it was confined to the Sthapathis or architects. They laid down several principles for constructing a building taking into account the five elements of nature.

BASIC FUNDAMENTALS:

Vastu Shastra is based on the importance of the 5 elements of nature (wind, water, earth, fire, space) and the 4 directions (East, West, North, South). Any structure which is not built in accordance with these elements or aligned with the 4 directions will sooner or later pose problems for its inmates. The interplay of nature acting through these elements and directions therefore forms the basis of Vastu.

VASTU AND REAL ESTATE

Vastu touches every aspect of our lives. Vastu homes provide us with a healthy and secure life. Offices built on Vastu principles enhance sales and productivity. Vastu compliant factories can promote the efficiency of the workers and minimize breakdown of machines or other equipments. Malls and retail outlets can see the boost in sales. In short modern societies can benefit from Vastu in a lot of ways. Today we have so much moved away from nature. Either we are confined to the four walls of our home or office. A walk on the city roads is far from relaxing. In such a scenario the principles of Vastu need to be correctly applied to our buildings and we shall ourselves experience excellent results.

FENG SHUI

Feng shui means the Law of Heaven and Earth. Feng means wind and Shui means Water. It believes in the balance of yin and yang (the two opposites) and a balance between Heaven and Earth.Chinese saw wind and water as the intermediaries between heaven and earth.

HISTORY

The earliest records of Feng shui can be established during the Han Dynasty (200B.C – 200 A.D). There is evidence that the Chinese wrote on bones about the logical assumptions of natural cause and effect. The observation of Nature’s cycle and it’s relationship with the well being of humans. However, it is also believed that the Buddhist monks travelled to Tibet to teach and preach Lord Buddha’s teachings.Along with the Buddhist philosophies they also carried with them other systems which were practised and perfected in India. Vastu was one amongst them. The beliefs slowly altered to suit the local customs and culture.

BASIC FUNDAMENTALS

Feng shui too takes into account the importance of the 5 elements and the 4 directions. But it also lays a lot of emphasis on flow of “chi” or the cosmic energy. It is the invisible life energy force which operates within a human body as well as the buildings we live in. A building without proper flow of chi is nothing but an ailing or dead concrete structure. The philosophy behind Fengshui is to create environments where the chi flows smoothly to achieve physical and mental health.

FENGSHUI AND REAL ESTATE:

Not only South East Asia but the Western world too in-corporate Fengshui principles and considers it as an effective tool. In Taiwan whenever a new skyscraper goes up the owners hire a Fengshui consultant to plan and build their buildings. Fengshui is thousands of years old philosophy but its principles are as much relevant today. Example: The Form School of Fengshui proposes that the best site for a home is on a south-facing slope - preferably between two hills of unequal size (the Green Dragon and the White Tiger). Ideally, a river will be running along one side of the structure. The river should then turn in front of the building and then disappear.
Looked at another way, such a home on the south slope gets the maximum hours of sunlight, is shielded from the chilly, health-sapping north wind and has a good supply of water for drinking and cleaning. By then conveniently disappearing under the ground and gravel, the river carries away effluents and other "dirty" water.
Therefore with a little foresight and a good knowledge of Fengshui we can select the best place for ourselves.

In the coming weeks we shall investigate about the different aspects of both Vastu and Fengshui and how both can be a very powerful tool for increased effectiveness. The meaning purpose and role attached to every direction. How an alignment of the house, with the four directions can bring a healthy and positive change and lots more.

Contributed By : Sabina Vanjani

Luxury living catching on in India

Rising income levels in India is creating more billionaires every year and this has a direct impact on consumption patterns as well. A survey suggests that there are 1.6 million luxury households in India and each of these luxury household earns about Rs 45 lakh per year and they spend about Rs 4 lakh per year on luxury and 'very premium' goods and services. This development has created a spur in the housing demand as well.

Many developers are targeting High Net-worth Individuals (HNIs) to sell their premium properties. Magicbricks.com is organizing one such fair to bring developers of luxury properties together. Big developers like Emaar MGF, Unitech, Ambience, Parsvnath, Supertech and Assotech will display their property worth rupees one crore and upwards. The fair is being held in Hotel Shangri-la, New Delhi on Match 1 and March 2, 2008.

The response to this fair will determine how many of these luxe-living projects find spot takers among HNIs.

Contributed By : Yojana Sharma

Singapore-based Cinnovation Group acquires Nova Island in "The World"

Singapore-based Cinnovation Group on Monday said it has acquired the Nova Island in Nakheel's The World islands project.

The company also revealed plans to build a luxury hospitality haven on this 400,000 square foot island - a project valued at $200 million (Dh730 million). Cinnovation's acquisition of the island and its development is in partnership with Dubai-based Global Realty Partners (GRP) Group.
The hospitality arm of Cinnovation Group owns resorts in Maldives, Sri Lanka and Malaysia. Other projects include management and development of boutique resorts in the Middle East, South East Asia, India and China, business hotels in the Middle East and India, and eco-tourism resorts in Africa.

On Nova Island, Cinnovation plans to create an island paradise reflecting the best aspects of its flagship property Taj Exotica Resort & Spa (Maldives), a Leading Hotel of the World.

Contributed By : Shivang Prabhakar

Mumbai’s Aspiration to be the New Global Financial Centre

Authored by Sangeet H Kumar
CEO, ACBD Global Asset Corp

Mumbai city, known as the “Financial Capital” of India, has a new aspiration…..
to become a “Global Financial Centre” (GFC).

It’s not that we the Mumbai-ites want this to happen. It’s the combined initiative of the India government, the Indian Industry & Trade Organizations and the world market forces that are driving this dream into reality. Even recently on his visit to Mumbai, Ken Livingstone, the Mayor of London, believes that Mumbai has the potential of becoming a big financial centre, just like London. Let’s analyze as to what are the driving factors for making Mumbai a GFC -

(1) Rapid growth of Indian Economy and the continuous flow of foreign Direct Investment and Foreign Initiative Investment (FII) have created a need of an International Financial Centre.

(2) Mumbai has one of the most talented & educated and English literate human resources, in form of IT, finance & banking professionals.

(3) Mumbai also has a geographical & location advantage, as it serves Europe, Middle East and Asia market, through a single business day.

(4) India is increasingly becoming a favorite destination for global investments in Indian stock market & Real Estate Industry.


To realize the dream of becoming a GFC, there are a number of Private and Government Initiated Projects that are being undertaken or being planned.

Modernisation and development of Chhatrapati Shivaji International
Airport (CSIA) at Mumbai.Project cost is pegged at Rs 5700 crore.
Phase-I will completed by 2010.

Development of an International Airport at Navi Mumbai, part of Mumbai Metropolitan Region.

The Airport will be developed as a Greenfield Airport through Public Private Partnership (PPP)..Project cost will be Rs 9970 core with a targeted completion by year 2013.

Development of Mill land paving way for real estate development in the form of Shopping Malls, Multiplexes, Residential and Commercial spaces.

Bandra-Worli Sea Link Project expected to be ready by Mid 2008 will reduce
con­gestion at Mahim causeway and the western corridor.
Project is currently esti­mated to cost Rs 1,104 crore and will lead to fuel saving.

Nhava Sheva - Sewri Sea Link project envisages a six lane expressway connecting Sewri in South Mumbai to Nhava in Navi Mumbai. Project is expected to be com­pleted by year 2018.

Mumbai Metro Rail Project envisages rail link between Versova-Andheri­Ghatkopar in Phase-I at a cost of Rs 2356 core. Phase-I will be operational by 2011.

Dharavi Slum Redevelopment Project envisages development of integrated township with world class amenities and infrastructure.Project will be executed at a cost of $2.3 billion.

Brihanmumbai Storm Water Drain proj­ect envisaging the complete overhaul of the 100-year old drainage system in the city initiated by BMC.

Middle Vaitarna Dam Water Supply Project under JNNURM ensuring sufficient and smooth water supply to Mumbai res­idents. Govt. of India has approved 35% funding of the project.

Mumbai Sewerage Disposal Project Phase II

Mumbai Urban Transport Project Phase­II implementation.
Project has so far received an in principal approval from the Ministry of Railways.

So as the world enters into the New Year of 2008, Mumbai is getting ready to join New York, Chicago, London, Frankfurt, Geneva, Zurich, Hong Kong, Singapore, Tokyo and Sydney as the New Champion City of the financial world.

Contributed By : Sangeet H Kumar