Lillie Walsh Dudley and Andy Dudley wanted to be homeowners. The couple, who have a 5-year-old son, had been renting in the South Slope neighborhood in the New York City borough of Brooklyn since 2014. They began looking for something to buy about three years ago.

“Even though we’re not rolling in money, we had a little bit of savings,” said Lillie Walsh Dudley, 41, who works in book publishing, as does Andy Dudley, 45. Still, not enough to buy in Brooklyn. “Anything we could possibly afford would be a stretch and a downgrade from our rental.”

Then the pandemic hit, and their apartment suddenly felt small and the city itself felt claustrophobic. The couple decided to try another house hunt.

This time, instead of looking in Brooklyn, they looked farther out — much farther. Their plan: Keep their rental and buy a second home about three hours away in the Catskills. In August 2020, they paid $221,000 for a move-in ready, 100-year-old house in Roxbury, New York.

A growing number of first-time buyers are doing what the Dudleys did — purchasing a second home while renting their main residence. Though there isn’t data to track this trend, real estate agents and industry observers say a combination of rapidly rising home prices and pandemic work-from-home flexibility has prompted some hopeful homeowners to skip the first step — owning a primary home — and go straight to buying a second home in a more affordable location.

Vacation home purchases in general boomed during the pandemic. In 2020, loan applications for vacation homes were up 30% from 2019, according to the most recently available data from the Home Mortgage Disclosure Act. Zillow, a real estate website, looked at homes for sale in vacation and weekend destinations, and in January 2019 one-quarter of those markets had more page views per home than typical markets. By January 2022, half of them did.

Historically low interest rates and an unpredictable stock market have made real estate an appealing investment category during the past few years, said Richard K. Green, the director of the University of Southern California Lusk Center for Real Estate. But rapid price appreciation has put homeownership out of reach for buyers who don’t already have equity in the market or very high income, particularly in already-pricey metro areas like New York and Los Angeles.

Indeed first-time homeownership nationwide has been falling dramatically. In 2009, first-timers made up 45% of the homebuying market, but by January 2022 they represented just 27%, according to the National Association of Realtors. And with median home prices up 13.7% from a year ago, the challenges are mounting.

“Even if you’re being paid really well, accumulating a down payment for a million-dollar house is really hard,” Green said. “But you want to own somewhere, you want to get into the market.”

Which is why some first-timers are getting creative. Virginia Alber-Glanstaetten, 51, and Becky Goodman, 35, who are renters in the Dumbo neighborhood in Brooklyn, said COVID-era lifestyle changes, including remote work, prompted them to buy their first home together near Provincetown, Massachusetts, where they have vacationed for years. Their budget of $800,000 for a primary home wouldn’t have gotten them much more space than they already had in Brooklyn, they said. But on Cape Cod, where they bought, there were more options within their budget, which was about $600,000 after setting aside enough to keep paying rent in Brooklyn.

In March 2021, they paid $605,000 for a 220-year-old fixer-upper on 1.3 acres in North Truro, Massachusetts. “Everyone in my family thought I was insane and that it was the backward way of doing things,” said Goodman.

The home they bought had long ago been converted from a single family into three separate units, which was part of the appeal. The couple plans to stay in one of the units while renting out the others as investment income. With their jobs still partially remote, they have been spending weeks at a time in Cape Cod, while keeping their rental as a home base closer to friends and work. (Goodman works in human resources and Alber-Glanstaetten works in health care advertising strategy.)

The appeal of living in multiple places has grown in recent years with an increase in “nomadic” living, says Austin Allison, CEO and co-founder of Pacaso, a company that sells a fractional ownership model for second homes, allowing buyers to purchase a share of a home to use occasionally. “We see a growing cohort of people who might buy four shares of four homes around the world,” he said.

Some say it’s like having the best of both worlds. “The Cape Cod house has become this really beautiful escape,” said Goodman. “And we like having our resident footprint here in the city and doing the things we love here.”

Dylan Beaumont, 33, who owns a house in the Catskills and rents in Manhattan, put it this way: “If I’m up here for a week or a week and a half, it’s like, ‘I want to go to the city and get Thai food and see some friends,’” he said. “Then you get sick of the city, and you come up here and go hiking.” He and his fiancee, Susanah Zeffiro, 32, purchased in Margaretville, New York, in August 2020, pivoting from their original, pre-pandemic plan to buy a place in the city.

They paid $565,000 for the Catskills home and have spent more time there than they initially thought they would, with the prolonged nature of the pandemic. Beaumont and Zeffiro’s jobs in advertising are still partially remote, but they often have to meet with clients in the city or travel for work. “I love the balance,” Beaumont said.

But first-time buyers can face unique challenges when it comes to owning a home in a rural location, especially those more used to apartment living. Beaumont’s house is on about 20 acres and, at one point, he and Zeffiro discovered there was an underground oil tank on the property, which they had to have removed — a problem that would not have come up had they bought a condo in Manhattan.

They’ve also had smaller headaches to deal with, like replacing the hot water heater, dishwasher and the washer and dryer. “We’re learning lots of first-time homebuyer lessons here,” Beaumont said.

Alber-Glanstaetten and Goodman described their Cape Cod house as “ramshackle with a vision.” Renovations are ongoing, which means they often have to travel last-minute for contractor meetings and troubleshooting. “As first-time buyers we had no idea what we were getting into,” said Alber-Glanstaetten.

Although the cost of buying in a rural area can be significantly lower than in the city, the pandemic buying spree has meant competition has been fierce. Last year, first-time buyers Anna Lewkowska and Alex McKean bought a second home in Yucca Valley, California, near Joshua Tree National Park. They put in offers on three different houses before landing the winning bid on a two-bedroom, 1 1/2 bathroom house with about 2,000 square feet and panoramic views. They paid $517,000 — more than $120,000 over the list price.

That’s still a fraction of what it would have cost them to own a home in Santa Monica, California, where the median price today is $1.9 million, according to Realtor.com. Lewkowska, 31, who owns a talent management business, and McKean, 32, who works in product management for a pipe manufacturing company, said they love where they live near the beach in Santa Monica, but they knew homeownership was not affordable there. “We know that real estate is a great investment,” said Lewkowska. “But here in Los Angeles, it’s extremely expensive.”

They’ve spent the past year going back and forth between the two places while renovating the Yucca Valley property, doing some of the work themselves. They’ve dubbed the house the Mandarin Escape and describe the design style as “modern retro” with gold fixtures and a sunset, ‘70s color theme. The plan is to rent it out on Airbnb, starting later this spring. Lewkowska said they think they can charge between $250 and $1,000 a night, depending on the season. “It was the basic economics of it, for us,” McKean said.

Other first-timers are buying second homes now with the idea of moving into them later on. Jackie Puerta, a 48-year-old ultrasound technician who lives in North Bergen, New Jersey, said she became enamored with Miami in the ’80s watching “Miami Vice,” the TV show. Earlier this year, she bought a 16th-floor condo in Miami’s Edgewater neighborhood for $310,000. She spent the first few weeks staying at the condo on an air mattress. “Just to wake up to that view, it was all worth it,” she said.

Though her job is in New York, she plans to move to Florida within the next two years. Until then, she’s renting the place to long-term tenants to cover her mortgage and other monthly expenses. “I’m very surprised that I pulled this off,” she said. “I always wanted to do it.”

One unexpected benefit of such arrangements? First-time second-home buyers say it can reaffirm how convenient rental life can be. “It’s opened my eyes to what a luxury renting is,” said Beaumont. “It’s like, hey, my washing machine is broken. And a person just comes and fixes it.”

Dudley, the Park Slope renter who owns a Catskills house, said one of the things they like about their arrangement is that they didn’t have to leave her landlady, who Dudley described as a “gem of a human” who takes great care of their apartment and has never raised the rent.

Though there’s no guarantee, some have used the equity they’ve built in their second home to purchase a primary home. Abbey Londer, 36, and Ahmed Bharoocha, 38, recently took out a home equity line of credit on a house they own in Big Bear, California, to buy a primary home in Monrovia, California, just outside of Los Angeles. “I never really imagined I’d ever be able to own anything in LA proper,” said Londer. In 2019, the longtime renters paid $425,000 for a three-bedroom, two-bathroom house in Big Bear, about two hours away. The house rents for between $350 and $950 a night, depending on the season, according to Londer. That income came in handy during the beginning of the pandemic, when her job in live events and her husband’s work as an actor and stand-up comedian dried up for several months.

Last year, the couple, who have a 4-year-old and an 8-month-old, paid $1.36 million for a 2,000-square-foot circa-1911 Craftsman home. “I didn’t even know this was achievable,” Londer said. “Buying that house in Big Bear was a life-changing thing for us.”

Lillie Walsh Dudley and Andy Dudley wanted to be homeowners. The couple, who have a 5-year-old son, had been renting in the South Slope neighborhood in the New York City borough of Brooklyn since 2014.

Lillie Walsh Dudley and Andy Dudley wanted to be homeowners. The couple, who have a 5-year-old son, had been renting in the South Slope neighborhood in the New York City borough of Brooklyn since 2014. They began looking for something to buy about three years ago. “Even though we’re not rolling in money, we had a little bit of savings,” said Lillie Walsh Dudley, 41, who works in book publishing, as does Andy Dudley, 45. Still, not enough to buy in Brooklyn. “Anything we could possibly afford would be a stretch and a downgrade from our rental.” Then the pandemic hit, and their apartment suddenly felt small and the city itself felt claustrophobic. The couple decided to try another house hunt. This time, instead of looking in Brooklyn, they looked farther out — much farther. Their plan: Keep their rental and buy a second home about three hours away in the Catskills. In August 2020, they paid $221,000 for a move-in ready, 100-year-old house in Roxbury, New York. A growing number of first-time buyers are doing what the Dudleys did — purchasing a second home while renting their main residence. Though there isn’t data to track this trend, real estate agents and industry observers say a combination of rapidly rising home prices and pandemic work-from-home flexibility has prompted some hopeful homeowners to skip the first step — owning a primary home — and go straight to buying a second home in a more affordable location. Vacation home purchases in general boomed during the pandemic. In 2020, loan applications for vacation homes were up 30% from 2019, according to the most recently available data from the Home Mortgage Disclosure Act. Zillow, a real estate website, looked at homes for sale in vacation and weekend destinations, and in January 2019 one-quarter of those markets had more page views per home than typical markets. By January 2022, half of them did. Historically low interest rates and an unpredictable stock market have made real estate an appealing investment category during the past few years, said Richard K. Green, the director of the University of Southern California Lusk Center for Real Estate. But rapid price appreciation has put homeownership out of reach for buyers who don’t already have equity in the market or very high income, particularly in already-pricey metro areas like New York and Los Angeles. Indeed first-time homeownership nationwide has been falling dramatically. In 2009, first-timers made up 45% of the homebuying market, but by January 2022 they represented just 27%, according to the National Association of Realtors. And with median home prices up 13.7% from a year ago, the challenges are mounting. “Even if you’re being paid really well, accumulating a down payment for a million-dollar house is really hard,” Green said. “But you want to own somewhere, you want to get into the market.” Which is why some first-timers are getting creative. Virginia Alber-Glanstaetten, 51, and Becky Goodman, 35, who are renters in the Dumbo neighborhood in Brooklyn, said COVID-era lifestyle changes, including remote work, prompted them to buy their first home together near Provincetown, Massachusetts, where they have vacationed for years. Their budget of $800,000 for a primary home wouldn’t have gotten them much more space than they already had in Brooklyn, they said. But on Cape Cod, where they bought, there were more options within their budget, which was about $600,000 after setting aside enough to keep paying rent in Brooklyn. In March 2021, they paid $605,000 for a 220-year-old fixer-upper on 1.3 acres in North Truro, Massachusetts. “Everyone in my family thought I was insane and that it was the backward way of doing things,” said Goodman. The home they bought had long ago been converted from a single family into three separate units, which was part of the appeal. The couple plans to stay in one of the units while renting out the others as investment income. With their jobs still partially remote, they have been spending weeks at a time in Cape Cod, while keeping their rental as a home base closer to friends and work. (Goodman works in human resources and Alber-Glanstaetten works in health care advertising strategy.) The appeal of living in multiple places has grown in recent years with an increase in “nomadic” living, says Austin Allison, CEO and co-founder of Pacaso, a company that sells a fractional ownership model for second homes, allowing buyers to purchase a share of a home to use occasionally. “We see a growing cohort of people who might buy four shares of four homes around the world,” he said. Some say it’s like having the best of both worlds. “The Cape Cod house has become this really beautiful escape,” said Goodman. “And we like having our resident footprint here in the city and doing the things we love here.” Dylan Beaumont, 33, who owns a house in the Catskills and rents in Manhattan, put it this way: “If I’m up here for a week or a week and a half, it’s like, ‘I want to go to the city and get Thai food and see some friends,’” he said. “Then you get sick of the city, and you come up here and go hiking.” He and his fiancee, Susanah Zeffiro, 32, purchased in Margaretville, New York, in August 2020, pivoting from their original, pre-pandemic plan to buy a place in the city. They paid $565,000 for the Catskills home and have spent more time there than they initially thought they would, with the prolonged nature of the pandemic. Beaumont and Zeffiro’s jobs in advertising are still partially remote, but they often have to meet with clients in the city or travel for work. “I love the balance,” Beaumont said. But first-time buyers can face unique challenges when it comes to owning a home in a rural location, especially those more used to apartment living. Beaumont’s house is on about 20 acres and, at one point, he and Zeffiro discovered there was an underground oil tank on the property, which they had to have removed — a problem that would not have come up had they bought a condo in Manhattan. They’ve also had smaller headaches to deal with, like replacing the hot water heater, dishwasher and the washer and dryer. “We’re learning lots of first-time homebuyer lessons here,” Beaumont said. Alber-Glanstaetten and Goodman described their Cape Cod house as “ramshackle with a vision.” Renovations are ongoing, which means they often have to travel last-minute for contractor meetings and troubleshooting. “As first-time buyers we had no idea what we were getting into,” said Alber-Glanstaetten. Although the cost of buying in a rural area can be significantly lower than in the city, the pandemic buying spree has meant competition has been fierce. Last year, first-time buyers Anna Lewkowska and Alex McKean bought a second home in Yucca Valley, California, near Joshua Tree National Park. They put in offers on three different houses before landing the winning bid on a two-bedroom, 1 1/2 bathroom house with about 2,000 square feet and panoramic views. They paid $517,000 — more than $120,000 over the list price. That’s still a fraction of what it would have cost them to own a home in Santa Monica, California, where the median price today is $1.9 million, according to Realtor.com. Lewkowska, 31, who owns a talent management business, and McKean, 32, who works in product management for a pipe manufacturing company, said they love where they live near the beach in Santa Monica, but they knew homeownership was not affordable there. “We know that real estate is a great investment,” said Lewkowska. “But here in Los Angeles, it’s extremely expensive.” They’ve spent the past year going back and forth between the two places while renovating the Yucca Valley property, doing some of the work themselves. They’ve dubbed the house the Mandarin Escape and describe the design style as “modern retro” with gold fixtures and a sunset, ‘70s color theme. The plan is to rent it out on Airbnb, starting later this spring. Lewkowska said they think they can charge between $250 and $1,000 a night, depending on the season. “It was the basic economics of it, for us,” McKean said. Other first-timers are buying second homes now with the idea of moving into them later on. Jackie Puerta, a 48-year-old ultrasound technician who lives in North Bergen, New Jersey, said she became enamored with Miami in the ’80s watching “Miami Vice,” the TV show. Earlier this year, she bought a 16th-floor condo in Miami’s Edgewater neighborhood for $310,000. She spent the first few weeks staying at the condo on an air mattress. “Just to wake up to that view, it was all worth it,” she said. Though her job is in New York, she plans to move to Florida within the next two years. Until then, she’s renting the place to long-term tenants to cover her mortgage and other monthly expenses. “I’m very surprised that I pulled this off,” she said. “I always wanted to do it.” One unexpected benefit of such arrangements? First-time second-home buyers say it can reaffirm how convenient rental life can be. “It’s opened my eyes to what a luxury renting is,” said Beaumont. “It’s like, hey, my washing machine is broken. And a person just comes and fixes it.” Dudley, the Park Slope renter who owns a Catskills house, said one of the things they like about their arrangement is that they didn’t have to leave her landlady, who Dudley described as a “gem of a human” who takes great care of their apartment and has never raised the rent. Though there’s no guarantee, some have used the equity they’ve built in their second home to purchase a primary home. Abbey Londer, 36, and Ahmed Bharoocha, 38, recently took out a home equity line of credit on a house they own in Big Bear, California, to buy a primary home in Monrovia, California, just outside of Los Angeles. “I never really imagined I’d ever be able to own anything in LA proper,” said Londer. In 2019, the longtime renters paid $425,000 for a three-bedroom, two-bathroom house in Big Bear, about two hours away. The house rents for between $350 and $950 a night, depending on the season, according to Londer. That income came in handy during the beginning of the pandemic, when her job in live events and her husband’s work as an actor and stand-up comedian dried up for several months. Last year, the couple, who have a 4-year-old and an 8-month-old, paid $1.36 million for a 2,000-square-foot circa-1911 Craftsman home. “I didn’t even know this was achievable,” Londer said. “Buying that house in Big Bear was a life-changing thing for us.”

When your second home is the first one you buy

A real estate property will be put for sale soon in Lithuania. What is unique&nbsp;about it that it earlier used to be a ‘black site’. &nbsp;

At this notorious site, terror suspects used to be kept in solitary confinement by the spy agency of the US, Central Intelligence Agency (CIA).

According to the terminology, a black site means a place, where an unacknowledged black operation is conducted.&nbsp;&nbsp;

Also Read:&nbsp;<a href="https://www.wionews.com/world/war-may-loom-but-are-there-off-ramps-447405" hreflang="en">War may loom, but are there off-ramps?</a>

The menacing steel barn, which is also known as Project No 2 or Detention Site Violet, is located outside Lithuanian capital of Vilnius. &nbsp; &nbsp;

On Monday, the government’s real estate fund said that it was preparing to sell the former “black site” for an unknown price. This fund handles assets that are no longer needed by the state. &nbsp;&nbsp;

It was a part of Washington’s secret 'extraordinary rendition' programme, where suspected Islamist militants from conflicts in Afghanistan and Iraq were captured and held in jails outside the US. &nbsp;

Also Read:&nbsp;<a href="https://www.wionews.com/world/watch-us-president-joe-biden-calls-reporter-stupid-son-of-a-b-on-hot-mic-find-out-why-447299" hreflang="en">Watch: US President Joe Biden calls reporter 'stupid son of a b****' on hot mic. Find out why</a>

The 10-room building served as a detention centre in 2005 and 2006 for the US. It was closed in 2006. It has windowless and soundproofed rooms. This facility has its own power generator and water supply. &nbsp;

The now-empty rooms in this facility are dominated by fluorescent lighting and the hum of air conditioning. &nbsp;&nbsp;

(With inputs from agencies)&nbsp;

A real estate property will be put for sale soon in Lithuania. What is unique about it that it earlier used to be a ‘black site’. At this notorious site, terror suspects used to be kept in solitary confinement by the spy agency of the US, Central Intelligence Agency (CIA).

A real estate property will be put for sale soon in Lithuania. What is unique about it that it earlier used to be a ‘black site’. At this notorious site, terror suspects used to be kept in solitary confinement by the spy agency of the US, Central Intelligence Agency (CIA). According to the terminology, a black site means a place, where an unacknowledged black operation is conducted. Also Read: War may loom, but are there off-ramps? The menacing steel barn, which is also known as Project No 2 or Detention Site Violet, is located outside Lithuanian capital of Vilnius. On Monday, the government’s real estate fund said that it was preparing to sell the former “black site” for an unknown price. This fund handles assets that are no longer needed by the state. It was a part of Washington’s secret 'extraordinary rendition' programme, where suspected Islamist militants from conflicts in Afghanistan and Iraq were captured and held in jails outside the US. Also Read: Watch: US President Joe Biden calls reporter 'stupid son of a b****' on hot mic. Find out why The 10-room building served as a detention centre in 2005 and 2006 for the US. It was closed in 2006. It has windowless and soundproofed rooms. This facility has its own power generator and water supply. The now-empty rooms in this facility are dominated by fluorescent lighting and the hum of air conditioning. (With inputs from agencies)

A ‘black site’ to go up for sale in Lithuania. Find out what is it

American billionaire Daniel Och recently sold his four-bedroom penthouse apartment overlooking Central Park for $190 million. This is being termed as one of the most expensive sales in New York real estate history.&nbsp;

According to reports by the Wall Street Journal, Och purchased the house two years ago for half the price at $93 million. When he purchased the penthouse in 2019, he had changed his state of residence to Florida. This was done for tax reasons.

However, he planned to use the New York apartment as his "pied-a-terre."

According to WSJ, he still owns another luxury apartment around the corner, which he listed for $57.5 million in 2019. However, it was removed from the listing five months ago.&nbsp;

<a href="https://www.wionews.com/world/single-page-of-1984-spider-man-comic-sells-for-record-336-million-at-auction-444822">Also read |&nbsp;Single page of 1984 Spider-Man comic sells for record $3.36 million at auction</a>

WSJ states that the recent purchase has been made by an anonymous buyer.&nbsp;

Och has a net worth of around $4.1 billion. He is the founder of New York-based investment firm Och-Ziff Capital Management. The firm changed its name in September 2019 to Sculptor.

According to the US Securities and Exchange Commission, Och has been involved in bribery scandals that authorised two corrupt transactions in the Democratic Republic of the Congo.

(With inputs from agencies)

American billionaire Daniel Och recently sold his four-bedroom penthouse apartment overlooking Central Park for $190 million. This is being termed as one of the most expensive sales in New York real estate history.

American billionaire Daniel Och recently sold his four-bedroom penthouse apartment overlooking Central Park for $190 million. This is being termed as one of the most expensive sales in New York real estate history. According to reports by the Wall Street Journal, Och purchased the house two years ago for half the price at $93 million. When he purchased the penthouse in 2019, he had changed his state of residence to Florida. This was done for tax reasons. However, he planned to use the New York apartment as his "pied-a-terre." According to WSJ, he still owns another luxury apartment around the corner, which he listed for $57.5 million in 2019. However, it was removed from the listing five months ago. Also read | Single page of 1984 Spider-Man comic sells for record $3.36 million at auction WSJ states that the recent purchase has been made by an anonymous buyer. Och has a net worth of around $4.1 billion. He is the founder of New York-based investment firm Och-Ziff Capital Management. The firm changed its name in September 2019 to Sculptor. According to the US Securities and Exchange Commission, Och has been involved in bribery scandals that authorised two corrupt transactions in the Democratic Republic of the Congo. (With inputs from agencies)

In one of the priciest real estate sales, New York apartment sells for $190 million

China's second-largest property developer by sales, Evergrande, slides into more financial trouble as it racks over $300 Billion worth of debt. Fitch, a major credit rating agency declares the firm a defaulter.

China's real estate firm Evergrande racks up debt of over $300 Billion

China-listed companies are increasingly divesting real estate businesses amid stricter regulatory scrutiny of the industry, according to filings and state media, in a year dominated by headlines of financial woe at China Evergrande Group.

China-listed firms rush to divest property businesses amid real-estate crackdown

Jammu and Kashmir administration has signed a Memorandum of Understanding (MoU) with the Dubai government for the development of real estate, industrial parks, super specialty hospital, and more.

J&K govt signs MoU with Dubai to develop real estate

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China.

It has all taken a toll on China’s economy, an essential engine for global growth.

The National Bureau of Statistics announced Monday that China’s economy increased by 4.9% in the third quarter, compared to the same period last year; the period was markedly slower than the 7.9% increase the country notched in the previous quarter. Industrial output, the mainstay of China’s growth, since the early days of the pandemic.

Two bright spots prevented the economy from stalling. Exports remained strong. And families, particularly prosperous ones, resumed spending money on restaurant meals and other services in September, as China succeeded once again in quelling small outbreaks of the coronavirus. Retail sales were up 4.4% in September from a year ago.

Chinese officials are showing signs of concern, although they have refrained from unleashing a big economic stimulus. Their own efforts, though, are part of the current economic challenges.

“Though the government’s economic policies during the past months have some social benefits, they have also somewhat trimmed economic growth lately,” said George Yu, an economist at Renmin University in Beijing.

In recent months, the government has unleashed a raft of measures to address income inequality and tame businesses, in part with the goal of protecting the health of the economy. But those efforts, including penalizing tech companies and discouraging real estate speculation, have also weighed on growth in the current quarter.

The government had also imposed limits on energy use as a part of a broader response to climate change concerns. Now, the power shortages are hurting industry, and the country is rushing to burn more coal.

“The economy is sluggish,” said Yang Qingjun, the owner of a corner grocery store in an aging industrial neighborhood of shoe factories in Dongguan, near Hong Kong. Power cuts have prompted nearby factories to reduce operations and eliminate overtime pay. Local workers are living more frugally.

“Money is hard to earn,” Yang said.

<h2>Trying to Solve the Real Estate Question</h2>

Urbanization was once a great engine of growth for China. The country built spacious apartments in modern high-rises for hundreds of millions of people, with China producing as much steel and cement as the rest of the world output combined, if not more.

Now, real estate — in particular, the debt that developers and homebuyers amassed — is a major threat to growth. The country’s biggest developer, China Evergrande Group, faces a serious cash shortage that is already rippling through the economy.

Construction has ground to a halt at some of the company’s 800 projects as suppliers wait to be paid. Several smaller developers have had to scramble to meet bond payments.

This could create a vicious cycle for the housing market. The worry is that developers may dump large numbers of unsold apartments on the market, keeping homebuyers away as they watch to see how far prices may fall.

“Some developers have encountered certain difficulties, which may further affect the mood and confidence of buyers, causing everyone to postpone buying a house,” said Ning Zhang, a senior economist at UBS.

The fate of Evergrande has broader import for the long-term health of the economy.

Officials want to send a message that bond buyers and other investors should be more wary about lending money to debt-laden companies like Evergrande and that they should not assume that the government will always be there to bail them out. But the authorities also need to make sure that suppliers, builders, homebuyers and other groups are not badly burned financially.

These groups “will get made more whole than the bondholders, that’s for sure,” predicted David Yu, a finance professor at the Shanghai campus of New York University.

<h2>Addressing Difficulties in Heavy Industry</h2>

As electricity shortages have spread across eastern China in recent weeks, regulators have cut power to energy-intensive operations like chemical factories and steel mills to avoid leaving households in the dark. It has been a double whammy for industrial production, which has also been whacked by weakness in construction.

Industrial production in September was up only 3.1% from a year earlier, the lowest since March of last year, when the city of Wuhan was still under lockdown because of the pandemic.

“The power cuts are more concerning to some extent than the Evergrande crisis,” said Sara Hsu, a visiting fellow at Fudan University in Shanghai.

The Energy Bureau in Zhejiang province, a heavily industrialized region of coastal China, reduced power this autumn for eight energy-intensive industries that process raw materials into industrial materials like steel, cement and chemicals. Together, they consume nearly half the province’s electricity but account for only an eighth of its economic output.

Turning down the power to these industries risks creating shortages in industrial materials, which could ripple through supply chains.

Assembly plants in industries that use less electricity, like car manufacturing, have not faced the same demands for power cuts. But they face other challenges.

Ongoing coronavirus outbreaks in Southeast Asia have interrupted supplies of some auto parts. There is also a global shortfall of semiconductors, a critical component in cars.

Volkswagen, the market leader in China, said on Friday that its production and sales were falling in the country because of an ever worsening chip shortage and problems in Southeast Asia.

<h2>Finding Strength in Exports</h2>

For months, economists have made the same prediction: the fast growth of China’s exports cannot last.

The economists were wrong.

China’s exports kept surging through the third quarter and finished strong, up 28.1% in September compared with the same month last year. China posted its third-highest monthly trade surplus ever last month.

China has essentially maintained its strength in exports ever since its economy emerged from the pandemic in the spring of last year. As much of the world hunkered down at home, families splurged on consumer electronics, furniture, clothing and other goods that China manufactures in abundance.

The export boom, though, is creating another source of tension between the United States and China.

Katherine Tai, the U.S. trade representative, suggested in a speech two weeks ago that China’s export prowess was partly the result of subsidies and other unfair practices. “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said.

But Chinese officials and experts contend that the country’s success is the result of a strong work ethic and consistent, large investments in manufacturing. They are quick to point out that by bringing the pandemic firmly under control within several weeks early last year, China was able to reopen its factories and offices quickly.

“We have very strong supply, but weak demand,” said Tu Xinquan, the executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Technology in Beijing. “So companies have to export.”

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China.

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China. It has all taken a toll on China’s economy, an essential engine for global growth. The National Bureau of Statistics announced Monday that China’s economy increased by 4.9% in the third quarter, compared to the same period last year; the period was markedly slower than the 7.9% increase the country notched in the previous quarter. Industrial output, the mainstay of China’s growth, since the early days of the pandemic. Two bright spots prevented the economy from stalling. Exports remained strong. And families, particularly prosperous ones, resumed spending money on restaurant meals and other services in September, as China succeeded once again in quelling small outbreaks of the coronavirus. Retail sales were up 4.4% in September from a year ago. Chinese officials are showing signs of concern, although they have refrained from unleashing a big economic stimulus. Their own efforts, though, are part of the current economic challenges. “Though the government’s economic policies during the past months have some social benefits, they have also somewhat trimmed economic growth lately,” said George Yu, an economist at Renmin University in Beijing. In recent months, the government has unleashed a raft of measures to address income inequality and tame businesses, in part with the goal of protecting the health of the economy. But those efforts, including penalizing tech companies and discouraging real estate speculation, have also weighed on growth in the current quarter. The government had also imposed limits on energy use as a part of a broader response to climate change concerns. Now, the power shortages are hurting industry, and the country is rushing to burn more coal. “The economy is sluggish,” said Yang Qingjun, the owner of a corner grocery store in an aging industrial neighborhood of shoe factories in Dongguan, near Hong Kong. Power cuts have prompted nearby factories to reduce operations and eliminate overtime pay. Local workers are living more frugally. “Money is hard to earn,” Yang said. Trying to Solve the Real Estate Question Urbanization was once a great engine of growth for China. The country built spacious apartments in modern high-rises for hundreds of millions of people, with China producing as much steel and cement as the rest of the world output combined, if not more. Now, real estate — in particular, the debt that developers and homebuyers amassed — is a major threat to growth. The country’s biggest developer, China Evergrande Group, faces a serious cash shortage that is already rippling through the economy. Construction has ground to a halt at some of the company’s 800 projects as suppliers wait to be paid. Several smaller developers have had to scramble to meet bond payments. This could create a vicious cycle for the housing market. The worry is that developers may dump large numbers of unsold apartments on the market, keeping homebuyers away as they watch to see how far prices may fall. “Some developers have encountered certain difficulties, which may further affect the mood and confidence of buyers, causing everyone to postpone buying a house,” said Ning Zhang, a senior economist at UBS. The fate of Evergrande has broader import for the long-term health of the economy. Officials want to send a message that bond buyers and other investors should be more wary about lending money to debt-laden companies like Evergrande and that they should not assume that the government will always be there to bail them out. But the authorities also need to make sure that suppliers, builders, homebuyers and other groups are not badly burned financially. These groups “will get made more whole than the bondholders, that’s for sure,” predicted David Yu, a finance professor at the Shanghai campus of New York University. Addressing Difficulties in Heavy Industry As electricity shortages have spread across eastern China in recent weeks, regulators have cut power to energy-intensive operations like chemical factories and steel mills to avoid leaving households in the dark. It has been a double whammy for industrial production, which has also been whacked by weakness in construction. Industrial production in September was up only 3.1% from a year earlier, the lowest since March of last year, when the city of Wuhan was still under lockdown because of the pandemic. “The power cuts are more concerning to some extent than the Evergrande crisis,” said Sara Hsu, a visiting fellow at Fudan University in Shanghai. The Energy Bureau in Zhejiang province, a heavily industrialized region of coastal China, reduced power this autumn for eight energy-intensive industries that process raw materials into industrial materials like steel, cement and chemicals. Together, they consume nearly half the province’s electricity but account for only an eighth of its economic output. Turning down the power to these industries risks creating shortages in industrial materials, which could ripple through supply chains. Assembly plants in industries that use less electricity, like car manufacturing, have not faced the same demands for power cuts. But they face other challenges. Ongoing coronavirus outbreaks in Southeast Asia have interrupted supplies of some auto parts. There is also a global shortfall of semiconductors, a critical component in cars. Volkswagen, the market leader in China, said on Friday that its production and sales were falling in the country because of an ever worsening chip shortage and problems in Southeast Asia. Finding Strength in Exports For months, economists have made the same prediction: the fast growth of China’s exports cannot last. The economists were wrong. China’s exports kept surging through the third quarter and finished strong, up 28.1% in September compared with the same month last year. China posted its third-highest monthly trade surplus ever last month. China has essentially maintained its strength in exports ever since its economy emerged from the pandemic in the spring of last year. As much of the world hunkered down at home, families splurged on consumer electronics, furniture, clothing and other goods that China manufactures in abundance. The export boom, though, is creating another source of tension between the United States and China. Katherine Tai, the U.S. trade representative, suggested in a speech two weeks ago that China’s export prowess was partly the result of subsidies and other unfair practices. “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said. But Chinese officials and experts contend that the country’s success is the result of a strong work ethic and consistent, large investments in manufacturing. They are quick to point out that by bringing the pandemic firmly under control within several weeks early last year, China was able to reopen its factories and offices quickly. “We have very strong supply, but weak demand,” said Tu Xinquan, the executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Technology in Beijing. “So companies have to export.”

China’s economy continues to slow, rattled by real estate and energy

China's housing boom was built on a great wall of debt. Senseless lending and construction have straddled the real estate sector with millions of empty apartments and billions of dollars in debt. Molly Gambhir gets you a report.

Gravitas: China's housing bubble set to pop?

Dubai's house prices are expected to fall at a slower pace this year and next than previously thought as hopes for a successful vaccine rollout and an economic recovery boost confidence in the sector, a Reuters poll showed.

Dubai house prices to drop at slower pace

Negative real rates in India and recovering growth alongside high inflation suggest its central bank has little room for more monetary stimulus, but policy is likely to stay accommodative, economists and analysts said.

Industrial production in September grew for the first time in six months while green shoots are also visible in rising goods and services tax collections, higher energy consumption, and an uptick in the purchasing managers` index among other gauges.

With inflation staying above 7% in October for a second straight month, well above the RBI`s medium term target of 4%, views that India is near the end of the current rate cutting cycle have become more pronounced.

"The inflation rate has been consistently ahead of not only your target rate but the upper end of your target range as well. Ideally, you should be looking at rate hikes right now," said Sameer Narang, chief economist at Bank of Baroda.

Though the central bank is unable to hike rates due to the impact of the COVID-19 pandemic on economic activity, it would still be mindful of the long-term impact of negative real interest rates on the economy, economists believe.

High inflation is a risk the RBI cannot afford to ignore, Nomura economists wrote in a note.

JOKER IN THE PACK

The RBI said on Wednesday that prospects for economic recovery have brightened, a comment interpreted by some analysts that the bank may not need to do much more to boost growth.

If the upturn is sustained over the next few months, the RBI said it expects the economy to break out of the contraction seen in the first two quarters and return to positive growth in the December quarter.

Rating agency Moody`s on Thursday revised its 2020/21 growth forecast to a 8.9% contraction from its earlier forecast of 9.6%, citing the steady decline in new and active COVID-19 cases since September.

But COVID-19 is widely seen as the joker in the pack by most analysts.

They said the central bank would help banks and corporates through lower borrowing costs unless a second wave of infections forces it to provide more direct support through rate cuts.

India`s daily coronavirus infections are less than half their peak hit in September, but the economy is still recovering from sweeping lockdowns to check the pandemic`s spread.

Since March, the RBI has slashed the repo rate by 115 basis points to cushion the shock from the crisis.

"Given the fragile state of the economy, the RBI is likely to continue with its accommodative stance for a prolonged period," Sujan Hajra, chief economist at Anand Rathi Securities said.

Negative real rates in India and recovering growth alongside high inflation suggest its central bank has little room for more monetary stimulus, but policy is likely to stay accommodative, economists and analysts said.

Negative real rates in India and recovering growth alongside high inflation suggest its central bank has little room for more monetary stimulus, but policy is likely to stay accommodative, economists and analysts said. Industrial production in September grew for the first time in six months while green shoots are also visible in rising goods and services tax collections, higher energy consumption, and an uptick in the purchasing managers` index among other gauges. With inflation staying above 7% in October for a second straight month, well above the RBI`s medium term target of 4%, views that India is near the end of the current rate cutting cycle have become more pronounced. "The inflation rate has been consistently ahead of not only your target rate but the upper end of your target range as well. Ideally, you should be looking at rate hikes right now," said Sameer Narang, chief economist at Bank of Baroda. Though the central bank is unable to hike rates due to the impact of the COVID-19 pandemic on economic activity, it would still be mindful of the long-term impact of negative real interest rates on the economy, economists believe. High inflation is a risk the RBI cannot afford to ignore, Nomura economists wrote in a note. JOKER IN THE PACK The RBI said on Wednesday that prospects for economic recovery have brightened, a comment interpreted by some analysts that the bank may not need to do much more to boost growth. If the upturn is sustained over the next few months, the RBI said it expects the economy to break out of the contraction seen in the first two quarters and return to positive growth in the December quarter. Rating agency Moody`s on Thursday revised its 2020/21 growth forecast to a 8.9% contraction from its earlier forecast of 9.6%, citing the steady decline in new and active COVID-19 cases since September. But COVID-19 is widely seen as the joker in the pack by most analysts. They said the central bank would help banks and corporates through lower borrowing costs unless a second wave of infections forces it to provide more direct support through rate cuts. India`s daily coronavirus infections are less than half their peak hit in September, but the economy is still recovering from sweeping lockdowns to check the pandemic`s spread. Since March, the RBI has slashed the repo rate by 115 basis points to cushion the shock from the crisis. "Given the fragile state of the economy, the RBI is likely to continue with its accommodative stance for a prolonged period," Sujan Hajra, chief economist at Anand Rathi Securities said.

India rate cuts bets fall as recovery gains hold, inflation stays high

Amid the downturn in UAE's real estate sector and weak equity market conditions. A Dubai based real estate investment trust said that it was considering delisting. Watch report.

Emirates REIT investment trust: Dubai real estate fund

India's housing and real estate sector is one of the most affected sectors in the COVID-19 lockdown. January-June sales were at a decade low. Watch report.

India housing sales plunge: COVID-19 lockdown affected demand badly

Investors in Venezuela Real Estate. Low cost project due to low-prices, low costs. Watch this video to know more.

WION Wallet: Economically hit Venezuela getting real estate investors

National Real Estate Development Council lauded the Goods and Services Tax <a href="http://www.wionews.com/business-economy/relief-for-homebuyers-gst-on-under-construction-flats-slashed-to-5-affordable-housing-to-attract-1-199371">rate cut on real estate announced on Sunday</a>.

The council's national president Niranjan Hiranandani said, "Industry lauds the GST rate cut on real estate to 5 per cent on non-affordable and 1 per cent on affordable housing without the input tax credit. This will bring big relief to the home buyers."

However, he added that the rate on cement was expected to get reduced but that did not happen.

Hiranandani added, "The GST rate on cement has not been reduced as was expected, at 28 per cent it remains among the highest taxed inputs for construction."

In an attempt to give a boost to the real estate sector, the GST Council on Sunday decided to reduce the tax on affordable housing properties without input tax credit to one per cent.

The effective GST of 5 per cent shall be applicable without ITC on residential properties outside the affordable segment, which was also decided by the GST Council at its 33rd meeting.

According to a press statement issued after the GST Council meeting, the definition of affordable housing shall be "a residential house/flat of carpet area up to 90 sqm (square meter) in non-metropolitan cities and towns and 60 sqm in metropolitan cities having value up to Rs 45 lakh, both for metropolitan and non-metropolitan cities."

"Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, and Faridabad), Hyderabad, Kolkata, and Mumbai (whole of MMR or Mumbai Metropolitan Region,"&nbsp;said the statement.

"Intermediate tax on development right such as TDR (transfer of development rights), JDA (joint development agreements), (lease premium), FSI (floor space index) shall be exempted only for such residential property on which the GST is payable,"&nbsp;further stated the statement.

National Real Estate Development Council lauded the Goods and Services Tax rate cut on real estate announced on Sunday. The council's national president Niranjan Hiranandani said, "Industry lauds the GST rate cut on real estate to 5 per cent on non-affordable and 1 per cent on affordable housing without the input tax credit.

National Real Estate Development Council lauded the Goods and Services Tax rate cut on real estate announced on Sunday. The council's national president Niranjan Hiranandani said, "Industry lauds the GST rate cut on real estate to 5 per cent on non-affordable and 1 per cent on affordable housing without the input tax credit. This will bring big relief to the home buyers." However, he added that the rate on cement was expected to get reduced but that did not happen. Hiranandani added, "The GST rate on cement has not been reduced as was expected, at 28 per cent it remains among the highest taxed inputs for construction." In an attempt to give a boost to the real estate sector, the GST Council on Sunday decided to reduce the tax on affordable housing properties without input tax credit to one per cent. The effective GST of 5 per cent shall be applicable without ITC on residential properties outside the affordable segment, which was also decided by the GST Council at its 33rd meeting. According to a press statement issued after the GST Council meeting, the definition of affordable housing shall be "a residential house/flat of carpet area up to 90 sqm (square meter) in non-metropolitan cities and towns and 60 sqm in metropolitan cities having value up to Rs 45 lakh, both for metropolitan and non-metropolitan cities." "Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, and Faridabad), Hyderabad, Kolkata, and Mumbai (whole of MMR or Mumbai Metropolitan Region," said the statement. "Intermediate tax on development right such as TDR (transfer of development rights), JDA (joint development agreements), (lease premium), FSI (floor space index) shall be exempted only for such residential property on which the GST is payable," further stated the statement.

National Real Estate Development Council lauds GST rate cut

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge. &nbsp;

Initiatives by the government, including ‘Housing for All by 2022’ offer&nbsp;major growth potential not just for the sector, but also for economic development and GDP growth.

Indian real estate is the engine which will power the Indian economy into the ‘big league’. From the ancillary industries that it supports to job creation – easily the next in line after agriculture and manufacturing – Indian real estate has the potential to reach the magic figure of ‘trillion dollars’.

Let us look at the route map to achieve this. A KPMG Report released at NAREDCO and APREA’s Real Estate &amp; Infrastructure Investors’ Summit in Mumbai last year stated that the Indian real estate will be a $1 trillion industry by 2030.

This will propel it to being the third largest economy globally – and this growth will be driven by not just the huge demand for homes, but also new and emerging asset classes within real estate, such as affordable housing, co-working spaces, warehousing and logistics, among others.

The ‘grease’, which will ensure this happens easily, is the post-RERA transparent regulatory environment powered by the economic and taxation reforms.

Estimates suggest that from $120 billion in 2017, the sector should grow to $650 billion by 2025. During this period, its contribution to GDP is estimated to go up from the present 7 per cent to 13 per cent. &nbsp;

Even as the new paradigm in post-RERA scenario ensures this does happen, we also need to factor in ground realities that will play a major role.

Infrastructure growth is opening up peripheral areas, as also creating satellite cities, the new growth centres of real estate. &nbsp;

Figures speak for themselves - from an average highways road construction pace of 3 km per day in May 2014, the figure now stands at 27 km per day. &nbsp;

The National Highways, earlier a stretch of 96,000 km, are now in the process of being doubled. &nbsp;

Creating jobs is another aspect where real estate powers the economy, and will help achieve the ‘trillion dollar’ target. The third largest employer, it employs over 50 million at present. &nbsp;

While the initial days of the new regulatory environment saw Indian real estate going through a phase of transition, now the story is largely about enhanced growth potential. &nbsp;

Over the past year, we have seen real estate post higher numbers, while also evolving and adopting global best practices. &nbsp;

From being an unorganised sector traditionally, Indian real estate has become more organised, transparent and now offers a safe and secure environment – ideal for investment that drives growth.

It has witnessed implementation of landmark reforms, which impacted it directly as also indirectly, be it GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act, among others. &nbsp;

While the initial pain did exist, these reforms have taken the housing sector towards a healthier ecosystem and make the trillion dollar economy target sound feasible.

The biggest impact of these steps is financial discipline in the sector, which has also created a better perception for India as a global hub for investments. &nbsp;

Private equity investments in Indian real estate have improved 15 per cent year-on-year in January-March 2018, reaching $3 billion. &nbsp;

Overall, strong economic ground rules, proactive reforms and the use of technology will continue to boost the sector. &nbsp;

A number of new asset classes—such as co-working spaces, affordable housing, rental housing, and warehousing realty—have mushroomed in the country, and are fast gaining traction.

Backed by regulatory changes, the growth story of Indian real estate has been co-scripted by rapid urbanisation, increasing levels of income and growth in foreign and domestic investment, entry of international real estate players, investors and Indian corporate houses and the recent appreciation in EODB rankings.

(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-indian-real-estate-can-evolve-into-trillion-dollar-economy-2721515">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.) 
&nbsp;

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge.

Globally, real estate development is an important parameter to measure economic growth. If one just looks at the demand for homes in India, the growth potential is huge. Initiatives by the government, including ‘Housing for All by 2022’ offer major growth potential not just for the sector, but also for economic development and GDP growth. Indian real estate is the engine which will power the Indian economy into the ‘big league’. From the ancillary industries that it supports to job creation – easily the next in line after agriculture and manufacturing – Indian real estate has the potential to reach the magic figure of ‘trillion dollars’. Let us look at the route map to achieve this. A KPMG Report released at NAREDCO and APREA’s Real Estate & Infrastructure Investors’ Summit in Mumbai last year stated that the Indian real estate will be a $1 trillion industry by 2030. This will propel it to being the third largest economy globally – and this growth will be driven by not just the huge demand for homes, but also new and emerging asset classes within real estate, such as affordable housing, co-working spaces, warehousing and logistics, among others. The ‘grease’, which will ensure this happens easily, is the post-RERA transparent regulatory environment powered by the economic and taxation reforms. Estimates suggest that from $120 billion in 2017, the sector should grow to $650 billion by 2025. During this period, its contribution to GDP is estimated to go up from the present 7 per cent to 13 per cent. Even as the new paradigm in post-RERA scenario ensures this does happen, we also need to factor in ground realities that will play a major role. Infrastructure growth is opening up peripheral areas, as also creating satellite cities, the new growth centres of real estate. Figures speak for themselves - from an average highways road construction pace of 3 km per day in May 2014, the figure now stands at 27 km per day. The National Highways, earlier a stretch of 96,000 km, are now in the process of being doubled. Creating jobs is another aspect where real estate powers the economy, and will help achieve the ‘trillion dollar’ target. The third largest employer, it employs over 50 million at present. While the initial days of the new regulatory environment saw Indian real estate going through a phase of transition, now the story is largely about enhanced growth potential. Over the past year, we have seen real estate post higher numbers, while also evolving and adopting global best practices. From being an unorganised sector traditionally, Indian real estate has become more organised, transparent and now offers a safe and secure environment – ideal for investment that drives growth. It has witnessed implementation of landmark reforms, which impacted it directly as also indirectly, be it GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act, among others. While the initial pain did exist, these reforms have taken the housing sector towards a healthier ecosystem and make the trillion dollar economy target sound feasible. The biggest impact of these steps is financial discipline in the sector, which has also created a better perception for India as a global hub for investments. Private equity investments in Indian real estate have improved 15 per cent year-on-year in January-March 2018, reaching $3 billion. Overall, strong economic ground rules, proactive reforms and the use of technology will continue to boost the sector. A number of new asset classes—such as co-working spaces, affordable housing, rental housing, and warehousing realty—have mushroomed in the country, and are fast gaining traction. Backed by regulatory changes, the growth story of Indian real estate has been co-scripted by rapid urbanisation, increasing levels of income and growth in foreign and domestic investment, entry of international real estate players, investors and Indian corporate houses and the recent appreciation in EODB rankings. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Indian real estate will power Indian economy into the ‘big league’

Urban local bodies and state development authorities should be made responsible for any delay in giving approvals to real estate projects, just as developers are held accountable for not completing houses on time under the new reaity law RERA, Vice President M Venkaiah Naidu said Thursday.

Addressing a real estate conference organised by CREDAI here, he asked developers to evolve an internal self-regulation mechanism and improve their image that has taken a hit due to wrongdoings of certain players. &nbsp; &nbsp; 
&nbsp; 
"Delivery of project on time is important. Approval by the government and the municipal agency is equally important. They also have responsibility. When you want to make real estate companies accountable for the delay, you also make local bodies responsible for the delays," Naidu said.

Stressing on the need for ease of doing business, he said the central and state authorities should facilitate steady growth of the real estate sector.

 
Naidu also favoured online approvals for realty projects and asked builders to go for digital transactions.&nbsp;

Real estate developers have been demanding for a long time that development authorities should also be brought under the Real Estate (Regulation and Development) Act (RERA), which is being implemented from May 2017. &nbsp; &nbsp;

Naidu said the real estate sector is showing signs of revival with the implementation of the RERA and GST. However, he expressed concern over high land prices that make projects unviable.

Highlighting the importance of the property market, he said: "Real estate sector is an important sector of our economy that contributes 7.9 per cent to the GDP of the country. Being the second largest job provider in the economy after agriculture, the entire country has a stake in the real estate sector."

Around 50 million people are employed in the construction sector, which is likely to reach 67 million by 2022, the Vice President said, adding that developers should focus on skilling their workforce.

"In recent times, the sector has come under severe scrutiny from apex court and consumer right bodies due to some unethical practices followed by certain players," he noted.

The growth of NPA in the real estate industry has only not affected banks but also dried up credit to this sector, he added.

He also termed as "very disturbing" a recent CAG report which said that 95 per cent of developers does not have mandatory PAN.&nbsp;

Asking developers to take corrective action, he said industry bodies like CREDAI should institutionalise internal self-regulation.

"Unless you take internal correctives unless you evolve a code of conduct and unless you do your business on ethics, the sector and country cannot prosper. The country cannot suffer because of the wrongdoings of some people. Few black sheep are spoiling the atmosphere," Naidu said.

The Vice President favoured a code of conduct in every sector, including for politicians, parliamentarians and media. "Media is becoming sensational, which means senseless," he quipped.

Urban local bodies and state development authorities should be made responsible for any delay in giving approvals to real estate projects, just as developers are held accountable for not completing houses on time under the new reaity law RERA, Vice President M Venkaiah Naidu said Thursday.

Urban local bodies and state development authorities should be made responsible for any delay in giving approvals to real estate projects, just as developers are held accountable for not completing houses on time under the new reaity law RERA, Vice President M Venkaiah Naidu said Thursday. Addressing a real estate conference organised by CREDAI here, he asked developers to evolve an internal self-regulation mechanism and improve their image that has taken a hit due to wrongdoings of certain players. "Delivery of project on time is important. Approval by the government and the municipal agency is equally important. They also have responsibility. When you want to make real estate companies accountable for the delay, you also make local bodies responsible for the delays," Naidu said. Stressing on the need for ease of doing business, he said the central and state authorities should facilitate steady growth of the real estate sector. Naidu also favoured online approvals for realty projects and asked builders to go for digital transactions. Real estate developers have been demanding for a long time that development authorities should also be brought under the Real Estate (Regulation and Development) Act (RERA), which is being implemented from May 2017. Naidu said the real estate sector is showing signs of revival with the implementation of the RERA and GST. However, he expressed concern over high land prices that make projects unviable. Highlighting the importance of the property market, he said: "Real estate sector is an important sector of our economy that contributes 7.9 per cent to the GDP of the country. Being the second largest job provider in the economy after agriculture, the entire country has a stake in the real estate sector." Around 50 million people are employed in the construction sector, which is likely to reach 67 million by 2022, the Vice President said, adding that developers should focus on skilling their workforce. "In recent times, the sector has come under severe scrutiny from apex court and consumer right bodies due to some unethical practices followed by certain players," he noted. The growth of NPA in the real estate industry has only not affected banks but also dried up credit to this sector, he added. He also termed as "very disturbing" a recent CAG report which said that 95 per cent of developers does not have mandatory PAN. Asking developers to take corrective action, he said industry bodies like CREDAI should institutionalise internal self-regulation. "Unless you take internal correctives unless you evolve a code of conduct and unless you do your business on ethics, the sector and country cannot prosper. The country cannot suffer because of the wrongdoings of some people. Few black sheep are spoiling the atmosphere," Naidu said. The Vice President favoured a code of conduct in every sector, including for politicians, parliamentarians and media. "Media is becoming sensational, which means senseless," he quipped.

State agencies should be held responsible for delaying approvals to realty projects, says Naidu

Even while India continues to make its mark globally and seeks to improve its living conditions, access to quality affordable housing is still a far-fetched dream for most of its citizenry. The deficit of affordable homes is only widening with numbers predicted to reach 30 million by 2022.&nbsp;

There is no denying that the current government understands that quality, quantity, availability and affordability of housing are the key drivers for a country’s economic competitiveness. That’s precisely why ‘affordable housing’ has gained such currency over the last few years.

But a pertinent question is this: why are all affordable homes in India limited to the peripheries of cities? Simply put, the exorbitant cost of land within city-limits – especially across metros – has compelled affordable housing makers to move beyond the boundaries.&nbsp;

In a land-starved city like Mumbai, for instance, housing is out of common man’s reach. High land cost for developers is ultimately passed on to consumers. Even if we consider re-development of old and shanty buildings within city limits at higher floor space index (FSI) as a probable solution, it can only bring respite to a limited few.&nbsp;

Not to miss, the shoddy implementation of policies - be it due to improper property ownerships or builder incompetency to complete re-development projects - are major roadblocks that make it difficult for even the old buildings to be replaced by the new.

There is also the view that India lacks sufficient policies supporting the housing needs for the poor, as against its western counterparts. This is not entirely true. Policies pertaining to regional urban planning exist in this country as well, but what it essentially lacks is the rigorous implementation of these, be it for vote-bank politics, selfish and greedy needs or other intangible factors.&nbsp;

On the contrary, Singapore fares much better than India because affordable housing was always an integral part of their prudent land-use planning way back in 1990s and policies were strictly adhered to. &nbsp;

It led to strong economic growth and social cohesion, ensuring that sufficient land is fortified supporting future development of housing. The very fact that around 88 per cent public housing is built by the Housing and Development Board or HDB (the major housing provider) and 90 per cent of the population own their own homes, speaks volumes of how policies are implemented. HDB sells units to first-time home buyers at a concession to encourage home ownership.&nbsp;

The demand-supply mismatch leading to high unsold stock is another factor that leads to affordable housing being developed outside the city.&nbsp;

ANAROCK data indicates that way back in 2016, the inventory overhang was as high as 40 months – it should ideally never be more than 24 months at any given time. The fact is that costlier homes at a central location fetched in better returns to both investors and builders alike. They were being rampantly built even if 'real' demand was tilted towards other segments.&nbsp;

Just when sales started plummeting considerably, there arose a realisation to bridge the gap between the actual demand and supply. Currently, most stakeholders are doing their research before launching a specific project, thereby trying to actively follow demand.&nbsp;

This has helped reduce the inventory overhang period to 35 months, as on 2018. What’s more, those trying to fit their projects within the ‘affordability’ bracket and yet be centrally located, favour smaller size homes.

Furthermore, the vacancy rate of homes in most urban cities in India is significantly high at 12 per cent, which if not for sale, can actually be opened up for rental housing.&nbsp;

This may eventually help ease pressure marginally and also aid many to live within the city limits and in close proximity to their workplace or other social infra facilities. This might also help in keeping prices under check.

The proposal to open more government unutilised land pockets within city limits for building affordable homes under the Pradhan Mantri Awas Yojana or PMAY is being considered, but nothing concrete appears to be happening.&nbsp;

If these land parcels are released for affordable housing development, there will be less compulsions to head outside the city. As for unused private land, more incentives like density bonuses can be given — increasing FSI on a plot of land and, thereby its value, while in exchange, the developer can build some affordable units. This will limit affordable housing to be only present on the city outskirts.

That said, the day developers realise that building affordable homes is not just the prerogative of the government in power, but must form an integral part of their business and duty, India will be a far more progressive country that will efficiently provide ‘housing for all.’ 
 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-for-quality-affordable-housing-follow-the-pmay-model-2699938">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

&nbsp;

Even while India continues to make its mark globally and seeks to improve its living conditions, access to quality affordable housing is still a far-fetched dream for most of its citizenry.

Even while India continues to make its mark globally and seeks to improve its living conditions, access to quality affordable housing is still a far-fetched dream for most of its citizenry. The deficit of affordable homes is only widening with numbers predicted to reach 30 million by 2022. There is no denying that the current government understands that quality, quantity, availability and affordability of housing are the key drivers for a country’s economic competitiveness. That’s precisely why ‘affordable housing’ has gained such currency over the last few years. But a pertinent question is this: why are all affordable homes in India limited to the peripheries of cities? Simply put, the exorbitant cost of land within city-limits – especially across metros – has compelled affordable housing makers to move beyond the boundaries. In a land-starved city like Mumbai, for instance, housing is out of common man’s reach. High land cost for developers is ultimately passed on to consumers. Even if we consider re-development of old and shanty buildings within city limits at higher floor space index (FSI) as a probable solution, it can only bring respite to a limited few. Not to miss, the shoddy implementation of policies - be it due to improper property ownerships or builder incompetency to complete re-development projects - are major roadblocks that make it difficult for even the old buildings to be replaced by the new. There is also the view that India lacks sufficient policies supporting the housing needs for the poor, as against its western counterparts. This is not entirely true. Policies pertaining to regional urban planning exist in this country as well, but what it essentially lacks is the rigorous implementation of these, be it for vote-bank politics, selfish and greedy needs or other intangible factors. On the contrary, Singapore fares much better than India because affordable housing was always an integral part of their prudent land-use planning way back in 1990s and policies were strictly adhered to. It led to strong economic growth and social cohesion, ensuring that sufficient land is fortified supporting future development of housing. The very fact that around 88 per cent public housing is built by the Housing and Development Board or HDB (the major housing provider) and 90 per cent of the population own their own homes, speaks volumes of how policies are implemented. HDB sells units to first-time home buyers at a concession to encourage home ownership. The demand-supply mismatch leading to high unsold stock is another factor that leads to affordable housing being developed outside the city. ANAROCK data indicates that way back in 2016, the inventory overhang was as high as 40 months – it should ideally never be more than 24 months at any given time. The fact is that costlier homes at a central location fetched in better returns to both investors and builders alike. They were being rampantly built even if 'real' demand was tilted towards other segments. Just when sales started plummeting considerably, there arose a realisation to bridge the gap between the actual demand and supply. Currently, most stakeholders are doing their research before launching a specific project, thereby trying to actively follow demand. This has helped reduce the inventory overhang period to 35 months, as on 2018. What’s more, those trying to fit their projects within the ‘affordability’ bracket and yet be centrally located, favour smaller size homes. Furthermore, the vacancy rate of homes in most urban cities in India is significantly high at 12 per cent, which if not for sale, can actually be opened up for rental housing. This may eventually help ease pressure marginally and also aid many to live within the city limits and in close proximity to their workplace or other social infra facilities. This might also help in keeping prices under check. The proposal to open more government unutilised land pockets within city limits for building affordable homes under the Pradhan Mantri Awas Yojana or PMAY is being considered, but nothing concrete appears to be happening. If these land parcels are released for affordable housing development, there will be less compulsions to head outside the city. As for unused private land, more incentives like density bonuses can be given — increasing FSI on a plot of land and, thereby its value, while in exchange, the developer can build some affordable units. This will limit affordable housing to be only present on the city outskirts. That said, the day developers realise that building affordable homes is not just the prerogative of the government in power, but must form an integral part of their business and duty, India will be a far more progressive country that will efficiently provide ‘housing for all.’ (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

For quality affordable housing, follow the PMAY model

Out of the unregulated sectors in India, real estate had, lately, garnered the maximum notoriety, given their misuse of power and resorting to patently unethical market practices. For the uninitiated, an unregulated sector is the one which does not have a dedicated legislation to govern its functioning and is, primarily, governed by the market practices.

Being unregulated, many builders misused the lack of negotiating power of the customers and resort to practices like fixed unilateral contracts which had conditions that clearly lacked fairness. Lately, the builders have also been missing the deadlines for possession of the property which is forming the major share of real estate litigation in consumer courts. The primary reason for the same was the diverting of the funds collected for one project to start another project simultaneously which adversely affected the progress of both.

The judicial and quasi-judicial forums were conscious about it and a series of judgments against the builders is a testimony to the fact. The Supreme Court, particularly, is coming down heavily on the leading builders who approached the top court citing their inability to refund the sums paid to them by the customers. Even the consumer courts have, time and again, chosen to sever the terms of builder-buyer agreements which are devoid of fairness. We are not to miss out on the order of the Competition Commission of India against DLF, whereby, a staggering penalty of Rs. 630 Crores was levied on the builder for the abuse of dominance in the form of unfair and arbitrary terms in the agreements.

From the perspective of the real estate sector also, the lack of fairness and transparency in transactions has adversely affected the investment in the sector and faith of customers. In sum and substance, this attitude had affected every stakeholder in the sector, be it the customers or the sector itself.

In order to rein in the menace, the government enacted the Real Estate (Regulation and Development) Act, 2016 which, among others, will provide a dedicated and expert sectoral regulator to adjudicate upon the disputes arising out of the real estate transactions. At the same time, it would also reduce the workload of the other judicial and quasi-judicial authorities which were facing an ever-increasing rise in litigations pertaining to default by builders.

The primary objective of the enactment is to streamline the functioning of the sector while providing sets of guidelines for the parties to adhere to in order to minimise the arbitrariness and restore the faith of customers and builders. Some of the aspects which were, hitherto, the subject of the whims and fancies of the builders have been incorporated in the Act as necessary compliances on their part. For example, informing the allottee about any minor addition or alteration and seeking the consent of 2/3rd of allottees about the major ones. Further, the builders are also liable to share the necessary information like the project plan, layout, government approvals and title status etc.

As stated above, till now, there was no dedicated regulatory authority to deal with the disputes pertaining to real estate but, after this Act, the Government has decided to set up a Real Estate Regulatory Authority in every state and Union Territory along with a Real Estate Appellate Tribunal. To prevent the disputes from lingering on, the Government has also set a time limit for them to be adjudicated upon at the earliest.

Further, all new projects are necessarily required to be registered with Real Estate Regulatory Authority if the project size exceeds 500 sq.m. or more than 8 apartments. Even the existing projects are required to be registered if they have not been granted the Occupancy Certificate or Completion Certificate. At the time of registration, the promoters are required to submit all the necessary information pertaining to the project, for example, land status, completion schedule etc. Only after the registration is granted, will the project be allowed to be marketed.&nbsp;

In order to secure the problem of delay in projects, the builders are now required to deposit 70 per cent of the total project cost in a dedicated bank account. Should the project be delayed despite the precautions, the builder would be liable to pay the same interest as the EMI being paid by the customer to the bank.

The systematic workflow would lead to the timely execution of projects along with an increased flow of foreign investment and private participation. In addition, thereto, the builders also stand to benefit from the same as this would lead the unscrupulous elements to exit the market leaving behind only the strong market players having the requisite competence. From the point of view of customers, this would prevent them to be subjected to whims and fancies of the builders and would bring homogeneity in the real estate ecosystem.&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

The lack of fairness and transparency in transactions has adversely affected the investment in the sector and faith of customers. The latest Real Estate Act is set to change the scenario.

Out of the unregulated sectors in India, real estate had, lately, garnered the maximum notoriety, given their misuse of power and resorting to patently unethical market practices. For the uninitiated, an unregulated sector is the one which does not have a dedicated legislation to govern its functioning and is, primarily, governed by the market practices. Being unregulated, many builders misused the lack of negotiating power of the customers and resort to practices like fixed unilateral contracts which had conditions that clearly lacked fairness. Lately, the builders have also been missing the deadlines for possession of the property which is forming the major share of real estate litigation in consumer courts. The primary reason for the same was the diverting of the funds collected for one project to start another project simultaneously which adversely affected the progress of both. The judicial and quasi-judicial forums were conscious about it and a series of judgments against the builders is a testimony to the fact. The Supreme Court, particularly, is coming down heavily on the leading builders who approached the top court citing their inability to refund the sums paid to them by the customers. Even the consumer courts have, time and again, chosen to sever the terms of builder-buyer agreements which are devoid of fairness. We are not to miss out on the order of the Competition Commission of India against DLF, whereby, a staggering penalty of Rs. 630 Crores was levied on the builder for the abuse of dominance in the form of unfair and arbitrary terms in the agreements. From the perspective of the real estate sector also, the lack of fairness and transparency in transactions has adversely affected the investment in the sector and faith of customers. In sum and substance, this attitude had affected every stakeholder in the sector, be it the customers or the sector itself. In order to rein in the menace, the government enacted the Real Estate (Regulation and Development) Act, 2016 which, among others, will provide a dedicated and expert sectoral regulator to adjudicate upon the disputes arising out of the real estate transactions. At the same time, it would also reduce the workload of the other judicial and quasi-judicial authorities which were facing an ever-increasing rise in litigations pertaining to default by builders. The primary objective of the enactment is to streamline the functioning of the sector while providing sets of guidelines for the parties to adhere to in order to minimise the arbitrariness and restore the faith of customers and builders. Some of the aspects which were, hitherto, the subject of the whims and fancies of the builders have been incorporated in the Act as necessary compliances on their part. For example, informing the allottee about any minor addition or alteration and seeking the consent of 2/3rd of allottees about the major ones. Further, the builders are also liable to share the necessary information like the project plan, layout, government approvals and title status etc. As stated above, till now, there was no dedicated regulatory authority to deal with the disputes pertaining to real estate but, after this Act, the Government has decided to set up a Real Estate Regulatory Authority in every state and Union Territory along with a Real Estate Appellate Tribunal. To prevent the disputes from lingering on, the Government has also set a time limit for them to be adjudicated upon at the earliest. Further, all new projects are necessarily required to be registered with Real Estate Regulatory Authority if the project size exceeds 500 sq.m. or more than 8 apartments. Even the existing projects are required to be registered if they have not been granted the Occupancy Certificate or Completion Certificate. At the time of registration, the promoters are required to submit all the necessary information pertaining to the project, for example, land status, completion schedule etc. Only after the registration is granted, will the project be allowed to be marketed. In order to secure the problem of delay in projects, the builders are now required to deposit 70 per cent of the total project cost in a dedicated bank account. Should the project be delayed despite the precautions, the builder would be liable to pay the same interest as the EMI being paid by the customer to the bank. The systematic workflow would lead to the timely execution of projects along with an increased flow of foreign investment and private participation. In addition, thereto, the builders also stand to benefit from the same as this would lead the unscrupulous elements to exit the market leaving behind only the strong market players having the requisite competence. From the point of view of customers, this would prevent them to be subjected to whims and fancies of the builders and would bring homogeneity in the real estate ecosystem. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Will India's notorious real estate sector change with new regulations?

With the Centre planning to bring real estate under Goods and Services Tax (GST) ambit, the Congress Party on Friday said that the decision would prove to be a disaster.

Union Finance Minister Arun Jaitley on Thursday said that the issue of bringing real estate under the GST&#39;s ambit will be discussed in the next GST Council meeting to be held on November 9 in Guwahati.

Talking to ANI, Congress leader Raju Waghmare said, &quot;BJP and Arun Jaitley have decided to take this country in a pothole. There is already chaos in the real estate market, so bringing real estate under GST ambit will be a disaster.&quot;

Another party leader Tom Vadakkan said that the government should take stakeholder and the Opposition into confidence before taking this decision.

&quot;We do hope they have discussed this with the stakeholders and it does not create a situation where have had problem with GST in other state. If discussion is held and stakeholder and Opposition are taken into confidence then that it will be very useful,&quot; he told ANI.

While delivering the &#39;Annual Mahindra Lecture&#39; on India&#39;s tax reforms at the prestigious Harvard University in Washington, Jaitley said, &quot;The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I personally believe that there is a strong case to bring real estate into the GST.&quot;

The GST, which brings the economy under a uniform tax regime, was implemented from July 1 this year.(ANI)

Congress leader Raju Waghmare said bringing real estate under the purview of the Goods and Services Tax would take the country into a 'pothole'

With the Centre planning to bring real estate under Goods and Services Tax (GST) ambit, the Congress Party on Friday said that the decision would prove to be a disaster. Union Finance Minister Arun Jaitley on Thursday said that the issue of bringing real estate under the GST's ambit will be discussed in the next GST Council meeting to be held on November 9 in Guwahati. Talking to ANI, Congress leader Raju Waghmare said, "BJP and Arun Jaitley have decided to take this country in a pothole. There is already chaos in the real estate market, so bringing real estate under GST ambit will be a disaster." Another party leader Tom Vadakkan said that the government should take stakeholder and the Opposition into confidence before taking this decision. "We do hope they have discussed this with the stakeholders and it does not create a situation where have had problem with GST in other state. If discussion is held and stakeholder and Opposition are taken into confidence then that it will be very useful," he told ANI. While delivering the 'Annual Mahindra Lecture' on India's tax reforms at the prestigious Harvard University in Washington, Jaitley said, "The one sector in India where maximum amount of tax evasion and cash generation takes place and which is still outside the GST is real estate. Some of the states have been pressing for it. I personally believe that there is a strong case to bring real estate into the GST." The GST, which brings the economy under a uniform tax regime, was implemented from July 1 this year.(ANI)

Bringing real estate under GST will be a 'disaster': Congress

By Saurabh Goenka

It&rsquo;s been 30 days since an unscheduled&nbsp;address to the nation by Prime Minister Narendra Modi turned 86 per cent&nbsp;of India&rsquo;s currency to scrap.&nbsp;

Since then, everyone of us has been caught up in discussions around demonetisation. From tea stalls to board rooms, from coffee tables to bank branches, everyone seems to be updated.&nbsp;

Fourteen lakh crore (money in circulation in now-old notes as on March 2016) has become a number which almost everyone has become familiar with. Economics rather than polity has become the favourite subject of country. But sometimes it gets difficult to remain updated with things changing so fast and where there&rsquo;s so much to take in. So here is a &lsquo;cheat sheet&rsquo; that will make you talk like an economist in front of your awestruck friends.&nbsp;

Enjoy the read!

1) Deposits and money supply: Around Rs. 11,500 billion ($172.5 billion) has been deposited into several banks till date, which 74.48 per cent of the Rs. 15,440 billion ($231.6 billion) that was in circulation before the government decided to flush out mid- to high-value banknotes. On the other hand, 19 billion new notes have been issued by the Reserve Bank of India -- the country&#39;s central banking institution. That amounts to around Rs&nbsp;4,000 billion ($60 billion).

2) Jan Dhan Accounts: More than 2.7 million new Jan Dhan Accounts were opened between November 10 and November 30. Deposits in Jan Dhan Accounts grew by 63 per cent -- that means&nbsp;around Rs. 290 billion ($4.35 billion) was deposited in them between November 10 and November 30.

3) Income tax: More than 400 cases are being investigated by the Income Tax department and around 30 cases have been referred to the Central Bureau of Investigation and Enforcement Directorate (ED). Around Rs. 1.3 billion ($19.5 million) in cash and jewellery have been seized and roughly Rs&nbsp;20 billion ($300 million) of unaccounted wealth has been disclosed.

4) Municipal corporations: Forty seven&nbsp;municipal corporations have seen an overall increase of 268 per cent&nbsp;in revenues till November 19 as compared to the previous month of October. Hyderabad registered the highest growth -- a whopping 2,500% -- followed by Delhi Municipal Corporation (equally staggering rise of 2,434 per cent). Rajkot and&nbsp;Surat, two cities in west India, were not too far behind.

5) Banking: Around 27 bank officials have been suspended and two transferred across various government-controlled banks in India due to suspected financial malfeasance. Around 50 branches of 10 banks were raided by the ED to probe alleged money laundering and other irregularities.

6) Cashless economy: There was a triplefold increase in RuPay card transactions. There were around 1 million transactions per day on such cards.

Transactions at SBI Point of Sale (PoS) swipe machines&nbsp;increased from 0.35 million daily to 1-1.2 million. As per data released by the RBI, use of debit cards and credit cards at PoS of four&nbsp;major banks stood at 205.5 million transactions, amounting to Rs. 352.4 billion ($5.29 billion) in November.

7) Toll plazas: All national toll roads were made free between November 9 and December 2. NHAI had to suffer a loss of around Rs 12 billion ($180 million).&nbsp;

8) Industry: The FMCG (fast moving consumer goods) industry slumped by 20-30 per cent.&nbsp;

The telecom industry also felt the pressure of liquidity crunch where mobile phone shipment from abroad fell down by 26 per cent&nbsp;in November as compared to October.

The auto industry has been hit harder.&nbsp;Tata Motors posted a 17 per cent&nbsp;decline in commercial vehicle sales in November.&nbsp;&nbsp;

For the online retail market, sales fell by 40-50 per cent&nbsp;in first few weeks after demonetisation. It was particularly bad because the retail sector was&nbsp;in the middle of their biggest quarter for sales.

The real estate sector has also experienced&nbsp;a slowdown, with property rates in some areas falling by as much as 50 per cent.

9) GDP: The GDP growth rate estimates are expected to slide due to demonetisation. As per a Bloomberg survey of various economists, the growth rate in the coming quarter could be around 6.5 per cent&nbsp;while Goldman Sachs further reduced the projection from 6.8 per cent to 6.3 per cent. However, the slowdown is not expected to continue for more than the next 2 quarters (6 months).

10) E-wallets: E-wallet or digital payment company Paytm&nbsp;experienced a great boost in its business post-demonetisation. Where average number of transactions before demonetisation was between 2.5 to 3 million, it rose to 7 million per day amounting to Rs 1.2 billion ($18 million). As per Paytm, more than 45 million people used Paytm and there have been 5 million new users who have used the service in first 10 days post demonetisation.

FreeCharge said it has registered a ninefold jump in merchant transactions on its platform and MobiKwik reported an overall 18-times increase in its transaction volume. Oxigen Services, which also has a digital wallet, said transactions increased to Rs 6 billion ($90 million) in November from an average of Rs 4.5 billion ($67.5 million) a month earlier.&nbsp;As per RBI data, in the first four days of December, the volume of transactions done daily through eight leading mobile wallets and prepaid payment instruments (PPI) was about 2.5 million, amounting to Rs 0.6 billion ($9 million).

11) Stock market: Yields of the benchmark 10-year bonds have fallen by nearly 56 basis points to 6.24 per cent&nbsp;on December 2 from 6.79 per cent on November 8. However, the rates have seen a jump after RBI kept the policy rates unchanged and was around 6.5% on December 8. BSE Sensex which was around 27,500 on November 8 has fallen to 26,600 post demonetisation.

Nifty also fell by around 3% from 8486.65 on November 8. Reality and FMCG index fell by 16 per cent&nbsp;and 4 per cent&nbsp;respectively while PSU Banks index rose by 2.5 per cent. Gold which has seen a jump for a couple of days post demonetisation is trading at around 6.5 per cent&nbsp;below the November 8 figures. &nbsp;

12) Farm sector: Govt has allowed farmers to purchase seeds from state-run outlets with old 500 rupee notes till Dec 15 th . In the wake of demonetisation and resulting cash crunch NABARD sanctioned Rs 210 billion ($3.15 billion) to district central cooperative banks in order to grant loans to farmers for the rabi season. However as per media reports, of the targeted Rs. 180 billion ($2.7 billion) of crop loan for rabi season, banks have disbursed only over Rs 15 billion ($0.23 billion) in October while no significant amount was released as crop loans after November 8. It is estimated that raw jute supplies to the market are tapering, with only 40-45 per cent of the stock reaching for trade.&nbsp;In value terms, Rs 40 billion ($0.6 billion) of raw jute is held up in the rural and secondary markets due to shortage of cash for payments.

13) Service Sector: The Nikkei India Services Business Activity index, which measures activity in the services sector, fell to 46.7 in November from 54.5 in October. New business inflows and output at services firms contracted for first time in 17 months. A reading below 50 signifies contraction from the previous month, while one above 50 indicates expansion.

14) Vegetable Prices:&nbsp;Where the model wholesale price of Potato in Delhi stood at Rs. 1400 ($21) per qtl on 9th Nov, it reduced to Rs. 570 ($8.55) per qtl on 8th December which is a 59.29% fall. Similarly the prices of Onion have reduced from Rs 1062 ($15.9) per qtl to Rs 812 ($12.18) per qtl depicting a 23.54% fall in prices. Although the retail prices have not changed accordingly the prices of vegetables and fruits has witnessed a fall.

15) Transporters: The All India Motor Transport Congress a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs recently claimed that 70% of their members are off the road post demonetisation. It is interesting to note that this industry adds Rs 14.92 billion ($223.8 million) to the GDP of the country daily and since 80% of the transactions are in cash, around Rs 11.94 billion ($179.1 million) of cash is needed on a daily basis to sustain operations.

(WION)

A look at how demonetisation has affected the Indian economy as a whole

By Saurabh Goenka It’s been 30 days since an unscheduled address to the nation by Prime Minister Narendra Modi turned 86 per cent of India’s currency to scrap. Since then, everyone of us has been caught up in discussions around demonetisation. From tea stalls to board rooms, from coffee tables to bank branches, everyone seems to be updated. Fourteen lakh crore (money in circulation in now-old notes as on March 2016) has become a number which almost everyone has become familiar with. Economics rather than polity has become the favourite subject of country. But sometimes it gets difficult to remain updated with things changing so fast and where there’s so much to take in. So here is a ‘cheat sheet’ that will make you talk like an economist in front of your awestruck friends. Enjoy the read! 1) Deposits and money supply: Around Rs. 11,500 billion ($172.5 billion) has been deposited into several banks till date, which 74.48 per cent of the Rs. 15,440 billion ($231.6 billion) that was in circulation before the government decided to flush out mid- to high-value banknotes. On the other hand, 19 billion new notes have been issued by the Reserve Bank of India -- the country's central banking institution. That amounts to around Rs 4,000 billion ($60 billion). 2) Jan Dhan Accounts: More than 2.7 million new Jan Dhan Accounts were opened between November 10 and November 30. Deposits in Jan Dhan Accounts grew by 63 per cent -- that means around Rs. 290 billion ($4.35 billion) was deposited in them between November 10 and November 30. 3) Income tax: More than 400 cases are being investigated by the Income Tax department and around 30 cases have been referred to the Central Bureau of Investigation and Enforcement Directorate (ED). Around Rs. 1.3 billion ($19.5 million) in cash and jewellery have been seized and roughly Rs 20 billion ($300 million) of unaccounted wealth has been disclosed. 4) Municipal corporations: Forty seven municipal corporations have seen an overall increase of 268 per cent in revenues till November 19 as compared to the previous month of October. Hyderabad registered the highest growth -- a whopping 2,500% -- followed by Delhi Municipal Corporation (equally staggering rise of 2,434 per cent). Rajkot and Surat, two cities in west India, were not too far behind. 5) Banking: Around 27 bank officials have been suspended and two transferred across various government-controlled banks in India due to suspected financial malfeasance. Around 50 branches of 10 banks were raided by the ED to probe alleged money laundering and other irregularities. 6) Cashless economy: There was a triplefold increase in RuPay card transactions. There were around 1 million transactions per day on such cards. Transactions at SBI Point of Sale (PoS) swipe machines increased from 0.35 million daily to 1-1.2 million. As per data released by the RBI, use of debit cards and credit cards at PoS of four major banks stood at 205.5 million transactions, amounting to Rs. 352.4 billion ($5.29 billion) in November. 7) Toll plazas: All national toll roads were made free between November 9 and December 2. NHAI had to suffer a loss of around Rs 12 billion ($180 million). 8) Industry: The FMCG (fast moving consumer goods) industry slumped by 20-30 per cent. The telecom industry also felt the pressure of liquidity crunch where mobile phone shipment from abroad fell down by 26 per cent in November as compared to October. The auto industry has been hit harder. Tata Motors posted a 17 per cent decline in commercial vehicle sales in November. For the online retail market, sales fell by 40-50 per cent in first few weeks after demonetisation. It was particularly bad because the retail sector was in the middle of their biggest quarter for sales. The real estate sector has also experienced a slowdown, with property rates in some areas falling by as much as 50 per cent. 9) GDP: The GDP growth rate estimates are expected to slide due to demonetisation. As per a Bloomberg survey of various economists, the growth rate in the coming quarter could be around 6.5 per cent while Goldman Sachs further reduced the projection from 6.8 per cent to 6.3 per cent. However, the slowdown is not expected to continue for more than the next 2 quarters (6 months). 10) E-wallets: E-wallet or digital payment company Paytm experienced a great boost in its business post-demonetisation. Where average number of transactions before demonetisation was between 2.5 to 3 million, it rose to 7 million per day amounting to Rs 1.2 billion ($18 million). As per Paytm, more than 45 million people used Paytm and there have been 5 million new users who have used the service in first 10 days post demonetisation. FreeCharge said it has registered a ninefold jump in merchant transactions on its platform and MobiKwik reported an overall 18-times increase in its transaction volume. Oxigen Services, which also has a digital wallet, said transactions increased to Rs 6 billion ($90 million) in November from an average of Rs 4.5 billion ($67.5 million) a month earlier. As per RBI data, in the first four days of December, the volume of transactions done daily through eight leading mobile wallets and prepaid payment instruments (PPI) was about 2.5 million, amounting to Rs 0.6 billion ($9 million). 11) Stock market: Yields of the benchmark 10-year bonds have fallen by nearly 56 basis points to 6.24 per cent on December 2 from 6.79 per cent on November 8. However, the rates have seen a jump after RBI kept the policy rates unchanged and was around 6.5% on December 8. BSE Sensex which was around 27,500 on November 8 has fallen to 26,600 post demonetisation. Nifty also fell by around 3% from 8486.65 on November 8. Reality and FMCG index fell by 16 per cent and 4 per cent respectively while PSU Banks index rose by 2.5 per cent. Gold which has seen a jump for a couple of days post demonetisation is trading at around 6.5 per cent below the November 8 figures. 12) Farm sector: Govt has allowed farmers to purchase seeds from state-run outlets with old 500 rupee notes till Dec 15 th . In the wake of demonetisation and resulting cash crunch NABARD sanctioned Rs 210 billion ($3.15 billion) to district central cooperative banks in order to grant loans to farmers for the rabi season. However as per media reports, of the targeted Rs. 180 billion ($2.7 billion) of crop loan for rabi season, banks have disbursed only over Rs 15 billion ($0.23 billion) in October while no significant amount was released as crop loans after November 8. It is estimated that raw jute supplies to the market are tapering, with only 40-45 per cent of the stock reaching for trade. In value terms, Rs 40 billion ($0.6 billion) of raw jute is held up in the rural and secondary markets due to shortage of cash for payments. 13) Service Sector: The Nikkei India Services Business Activity index, which measures activity in the services sector, fell to 46.7 in November from 54.5 in October. New business inflows and output at services firms contracted for first time in 17 months. A reading below 50 signifies contraction from the previous month, while one above 50 indicates expansion. 14) Vegetable Prices: Where the model wholesale price of Potato in Delhi stood at Rs. 1400 ($21) per qtl on 9th Nov, it reduced to Rs. 570 ($8.55) per qtl on 8th December which is a 59.29% fall. Similarly the prices of Onion have reduced from Rs 1062 ($15.9) per qtl to Rs 812 ($12.18) per qtl depicting a 23.54% fall in prices. Although the retail prices have not changed accordingly the prices of vegetables and fruits has witnessed a fall. 15) Transporters: The All India Motor Transport Congress a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs recently claimed that 70% of their members are off the road post demonetisation. It is interesting to note that this industry adds Rs 14.92 billion ($223.8 million) to the GDP of the country daily and since 80% of the transactions are in cash, around Rs 11.94 billion ($179.1 million) of cash is needed on a daily basis to sustain operations. (WION)

Demonetisation: 15 key points

Indian stocks cut losses and the rupee turned positive on Wednesday as the country&rsquo;s move to withdraw larger banknotes from circulation was seen as a positive for the economy, ushering transparency and leading to easing inflation.

The recovery offset an initial bout of uncertainty about the banking measures, which had been compounded as Republican candidate Donald Trump shocked investors by winning the US presidential election.

The broader NSE Nifty ended down 1.3 per cent after earlier falling as much as 6.3 per cent, while the rupee strengthened to a one-month high after earlier falls had prompted the central bank to intervene in currency markets. Bonds held on to gains from earlier in the session.

Indian Prime Minister Narendra Modi&rsquo;s unexpected announcement on Tuesday to remove from circulation 500 and 1,000 rupee notes was seen as likely to hit consumer demand in the short-term.

But any pain will turn to longer-term gains, as it will help usher in transparency, boost taxes and lower inflation, economists said.

Rupee

The domestic currency opened lower at 66.70 as against yesterday&#39;s closing level of 66.62 per dollar at the Interbank Foreign Exchange (Forex) market.

Later, it spiralled downward and languished between 66.90 and 66.70 during morning deals, it was still quoting 66.90 at 1045 hrs.

Meanwhile, the dollar Index was dropped by 2.06 per cent at 95.91 against a basket of six currencies in the early trade.

In overseas market, the US dollar sank more than three per cent versus yen and turned tail against other major peers in early Asian trade amid extremely volatile trade in global market.

The move hit consumer demand, as well as sectors long suspected to have been fuelled by illicit funds, such as gold and property, where many transactions are cash-based.

Real estate hit

Real estate shares were among the biggest decliners, reflecting a belief that large amounts of black money are steered towards property transactions. The Nifty Reality index ended down 1.6 per cent, with DLF Ltd, India&rsquo;s biggest property developer, down 17.3 per cent.

But banking shares recovered from earlier falls with the Nifty Bank sub-index ending flat after earlier falling as much as 7 per cent as coffers are expected to swell when people start tendering their cash.

Sectors with exposure to the US economy were among the biggest decliners due to uncertainty about Trump&rsquo;s presidency. The Nifty IT index, which exports heavily to the United States, ended down 3.25 per cent.

Investors lose Rs 1.75 lakh cr in market crash

Stock market investors became poorer by Rs 1.75 lakh crore today amid sharp sell-off in key indices after Donald Trump&#39;s victory in the US election and the government&#39;s decision to withdraw high-value currency notes.

The overall investor wealth measured in terms of valuation of all listed stocks on BSE fell Rs 1,75,192 crore to Rs 1,09,68,808 crore at the end of trade.

During the morning session, the total investor wealth was down by nearly Rs 6 lakh crore.

Market sentiment took a hit also on the government&#39;s sudden action to ban Rs 500 and Rs 1,000 currency notes in order to curb black money.

&quot;The double-whammy of US electoral prospects and Prime Minister&#39;s demonetisation steps announcement overnight had sunk Indian equities earlier in the day. The disruptive nature of the overnight announcement caught markets by surprise and deflated sentiment which were already on a low following global cues. The clampdown effect was more seen in realty sector where cash is still king,&quot; said Anand James, chief market strategist, Geojit BNP Paribas to PTI.

&quot;However, markets soon appreciated the long-term positives of the drive, which was followed by value buying across the board, staging a vertical recovery from the day&#39;s lows,&quot; he added.

Gold at 3-year high

Gold prices in India today shot up to three-year high of Rs 31,750 per ten gram,&nbsp;gaining a whopping Rs 900, following the government&#39;s scrapping high-denomination notes to curb black money and a firming trend overseas in view of Donald Trump&#39;s victory in US presidential election.

It was gold&#39;s highest closing level of Rs 31,820 after November 19, 2013 in the bullion&nbsp;market here.

India imports huge quantities of gold to meet domestic demand.

Sentiment also got a boost after gold jumped nearly 5 per cent in global market to its&nbsp;strongest in more than five weeks as investors sought safe havens in view of Trump&#39;s victory over Democrat Hillary Clinton in the US election.

Gold in Singapore, which normally sets the price trend in the market here, soared as much as 4.8 per cent, the biggest intra-day surge since June to USD 1,337.38 an ounce.

Silver also reclaimed Rs 45,000 per kg mark by registering a steep rise of Rs 1,150, largely in tandem with global trend as money flew to safe-haven investments following melting global equities.

Bullion traders said a significant rise of 3.43 per cent gold prices on the Multi Commodity Exchange further supported the uptrend, indicating more demand for the precious metals in coming sessions.

Some now expect the RBI to make deeper cuts to the repo rate than expected&nbsp;after it&nbsp;lowered it by a quarter percentage point last month.

For the government, increased transparency could yield more revenues. UBS estimated the government could reap an additional $30 billion in taxes, a vital support for a country that has long struggled to contain its fiscal deficits.

The decision is designed to bring billions of dollars in unaccounted wealth into the&nbsp;mainstream economy and to tackle India&rsquo;s rampant corruption and counterfeit currency&nbsp;problems.

Only around three percent of Indians pay any income tax at all and they face the prospect of serious scrutiny if they cannot account for a sudden increase in their bank balance.&nbsp;

Religious institutions

Temples and ashrams, where lavish donations can be a front for money-laundering, will be figuring out what to do next, as will those running illegal cricket betting rings and property dealers who often deal in black money.

(WION with agencies)

The decision to remove from circulation 500 and 1,000 rupee notes was seen as likely to hit consumer demand in the short-term

Indian stocks cut losses and the rupee turned positive on Wednesday as the country’s move to withdraw larger banknotes from circulation was seen as a positive for the economy, ushering transparency and leading to easing inflation. The recovery offset an initial bout of uncertainty about the banking measures, which had been compounded as Republican candidate Donald Trump shocked investors by winning the US presidential election. The broader NSE Nifty ended down 1.3 per cent after earlier falling as much as 6.3 per cent, while the rupee strengthened to a one-month high after earlier falls had prompted the central bank to intervene in currency markets. Bonds held on to gains from earlier in the session. Indian Prime Minister Narendra Modi’s unexpected announcement on Tuesday to remove from circulation 500 and 1,000 rupee notes was seen as likely to hit consumer demand in the short-term. But any pain will turn to longer-term gains, as it will help usher in transparency, boost taxes and lower inflation, economists said. Rupee The domestic currency opened lower at 66.70 as against yesterday's closing level of 66.62 per dollar at the Interbank Foreign Exchange (Forex) market. Later, it spiralled downward and languished between 66.90 and 66.70 during morning deals, it was still quoting 66.90 at 1045 hrs. Meanwhile, the dollar Index was dropped by 2.06 per cent at 95.91 against a basket of six currencies in the early trade. In overseas market, the US dollar sank more than three per cent versus yen and turned tail against other major peers in early Asian trade amid extremely volatile trade in global market. The move hit consumer demand, as well as sectors long suspected to have been fuelled by illicit funds, such as gold and property, where many transactions are cash-based. Real estate hit Real estate shares were among the biggest decliners, reflecting a belief that large amounts of black money are steered towards property transactions. The Nifty Reality index ended down 1.6 per cent, with DLF Ltd, India’s biggest property developer, down 17.3 per cent. But banking shares recovered from earlier falls with the Nifty Bank sub-index ending flat after earlier falling as much as 7 per cent as coffers are expected to swell when people start tendering their cash. Sectors with exposure to the US economy were among the biggest decliners due to uncertainty about Trump’s presidency. The Nifty IT index, which exports heavily to the United States, ended down 3.25 per cent. Investors lose Rs 1.75 lakh cr in market crash Stock market investors became poorer by Rs 1.75 lakh crore today amid sharp sell-off in key indices after Donald Trump's victory in the US election and the government's decision to withdraw high-value currency notes. The overall investor wealth measured in terms of valuation of all listed stocks on BSE fell Rs 1,75,192 crore to Rs 1,09,68,808 crore at the end of trade. During the morning session, the total investor wealth was down by nearly Rs 6 lakh crore. Market sentiment took a hit also on the government's sudden action to ban Rs 500 and Rs 1,000 currency notes in order to curb black money. "The double-whammy of US electoral prospects and Prime Minister's demonetisation steps announcement overnight had sunk Indian equities earlier in the day. The disruptive nature of the overnight announcement caught markets by surprise and deflated sentiment which were already on a low following global cues. The clampdown effect was more seen in realty sector where cash is still king," said Anand James, chief market strategist, Geojit BNP Paribas to PTI. "However, markets soon appreciated the long-term positives of the drive, which was followed by value buying across the board, staging a vertical recovery from the day's lows," he added. Gold at 3-year high Gold prices in India today shot up to three-year high of Rs 31,750 per ten gram, gaining a whopping Rs 900, following the government's scrapping high-denomination notes to curb black money and a firming trend overseas in view of Donald Trump's victory in US presidential election. It was gold's highest closing level of Rs 31,820 after November 19, 2013 in the bullion market here. India imports huge quantities of gold to meet domestic demand. Sentiment also got a boost after gold jumped nearly 5 per cent in global market to its strongest in more than five weeks as investors sought safe havens in view of Trump's victory over Democrat Hillary Clinton in the US election. Gold in Singapore, which normally sets the price trend in the market here, soared as much as 4.8 per cent, the biggest intra-day surge since June to USD 1,337.38 an ounce. Silver also reclaimed Rs 45,000 per kg mark by registering a steep rise of Rs 1,150, largely in tandem with global trend as money flew to safe-haven investments following melting global equities. Bullion traders said a significant rise of 3.43 per cent gold prices on the Multi Commodity Exchange further supported the uptrend, indicating more demand for the precious metals in coming sessions. Some now expect the RBI to make deeper cuts to the repo rate than expected after it lowered it by a quarter percentage point last month. For the government, increased transparency could yield more revenues. UBS estimated the government could reap an additional $30 billion in taxes, a vital support for a country that has long struggled to contain its fiscal deficits. The decision is designed to bring billions of dollars in unaccounted wealth into the mainstream economy and to tackle India’s rampant corruption and counterfeit currency problems. Only around three percent of Indians pay any income tax at all and they face the prospect of serious scrutiny if they cannot account for a sudden increase in their bank balance. Religious institutions Temples and ashrams, where lavish donations can be a front for money-laundering, will be figuring out what to do next, as will those running illegal cricket betting rings and property dealers who often deal in black money. (WION with agencies)

Indian currency withdrawal, Trump win: What it means for rupee, gold, real estate

Commercial real estate has hit the headlines this week, a victim of the recent Brexit vote which has left over $20 billion trapped in funds that not long ago promised investors a slice of London&#39;s red-hot property market 
 
Money placed in real estate vehicles managed by big asset management firms such as Standard Life and Henderson may have yielded strong returns during the boom years, but with the Pound in freefall and Britain headed towards economic recession, the flip side of such investments is fast becoming evident. 
 
The ins and outs of commercial property investments remain a mystery to many. But put very simply, this week&#39;s seize-up - the biggest since the 2008 crisis - has unfolded as punters lined up to demand their cash back from the asset managers. 
 
The reason behind the outflow wave? Fears that economic uncertainty after Britons&#39; decision to exit the EU will hit demand from companies to rent and buy commercial property. 
 
In normal times, most funds allow investors to pull out their money daily. But when redemption requests balloon, as they did this week, funds may run out of cash and must then sell the buildings they own. That process can take months. 
 
&quot;Property is an illiquid asset and this week shows what can happen to illiquid assets when the fundamentals/facts change,&quot; Deutsche Bank reminded clients. 
 
Many property investors will also remember the 2008 crisis when funds hit by huge redemptions were forced into a fire sale of commercial buildings, eventually bringing central London property prices down by as much as 40 per cent. 
 
Fund suspensions aim to avert this scenario by giving the asset managers more time to sell property. 
 
Some managers such as Legal &amp; General and F&amp;C have resorted to less extreme measures such as reassessing the value of the fund to account for likely changes in market pricing even if sales data has yet to justify the figure. 
 
That means anyone who wants money back must accept a lower price than was established the last time the property portfolio was formally valued - essentially an incentive to leave cash in the fund. 
 
One thing has changed since the last crisis - the amount of money involved is far higher, exacerbated by shifts in the global investment landscape. 
 
British property markets along with other business hotspots such as New York and Singapore have seen a huge influx of cash from investors - domestic and foreign - seeking to escape crushingly low or even negative yields on bond markets. 
 
An investment in real estate on the other hand offered deep-pocketed money managers, such as sovereign wealth funds (SWF) or insurance firms, the promise of an asset that would hopefully appreciate in value while also providing handsome rental income. 
 
Average SWF exposure to real estate rose to 6.5 per cent in 2015 from 3 per cent in 2012, according to a recent survey by Invesco, while a Reuters poll found in June that global funds held an average 2.9 per cent of portfolios in property - the highest in at least five years. 
 
In absolute terms, the value of investment in commercial property worldwide topped $650 billion at the end of 2015, more than four times 2009 levels, data portal Statista estimates. 
 
This week&#39;s turmoil is likely to raise questions about how best to invest in property in future. Many are calling Britain&#39;s Financial Ombudsman Service to complain about the fund suspensions and the potential hit to their savings. 
 
&quot;Time and again investors are faced with making the difficult choice between withstanding the woes that strike when fear overshadows the property market, and paying a high price tag to liquidate their investments,&quot; Morningstar investment research analyst Muna Abu-Habsa. 
 
She reckons property investors may be better served by real estate investment trusts (REITs) - closed funds with a set number of shares that pay dividends to shareholders. At REITs investors who want money back just sell their shares and trusts don&#39;t have to sell assets to meet redemptions. 
 
However, shares in UK REITs, too, have slumped since the vote, with those from F&amp;C and Schroders, for instance, down as much as 20 per cent in the past two weeks. 
 
What&#39;s the outlook? 
 
Some deep-pocketed funds such as SWFs will be able to wait out some volatility. Longer-term, much depends on how Brexit is negotiated and whether foreign firms and banks exit London. 
 
Many reckon that even with the suspensions, large numbers of properties will be sold cheaply, leading to price corrections that will ripple out from London across the country. 
 
UBS Asset Management said it already expected price declines of 4-10 per cent on City properties in 2017-2018 due to large volumes of construction. Now weaker demand due to Brexit could cause bigger falls, it added. 
 
(Reuters)

Money placed in real estate vehicles hits downfall with the Pound in freefall and Britain heading towards economic recession

Commercial real estate has hit the headlines this week, a victim of the recent Brexit vote which has left over $20 billion trapped in funds that not long ago promised investors a slice of London's red-hot property market Money placed in real estate vehicles managed by big asset management firms such as Standard Life and Henderson may have yielded strong returns during the boom years, but with the Pound in freefall and Britain headed towards economic recession, the flip side of such investments is fast becoming evident. The ins and outs of commercial property investments remain a mystery to many. But put very simply, this week's seize-up - the biggest since the 2008 crisis - has unfolded as punters lined up to demand their cash back from the asset managers. The reason behind the outflow wave? Fears that economic uncertainty after Britons' decision to exit the EU will hit demand from companies to rent and buy commercial property. In normal times, most funds allow investors to pull out their money daily. But when redemption requests balloon, as they did this week, funds may run out of cash and must then sell the buildings they own. That process can take months. "Property is an illiquid asset and this week shows what can happen to illiquid assets when the fundamentals/facts change," Deutsche Bank reminded clients. Many property investors will also remember the 2008 crisis when funds hit by huge redemptions were forced into a fire sale of commercial buildings, eventually bringing central London property prices down by as much as 40 per cent. Fund suspensions aim to avert this scenario by giving the asset managers more time to sell property. Some managers such as Legal & General and F&C have resorted to less extreme measures such as reassessing the value of the fund to account for likely changes in market pricing even if sales data has yet to justify the figure. That means anyone who wants money back must accept a lower price than was established the last time the property portfolio was formally valued - essentially an incentive to leave cash in the fund. One thing has changed since the last crisis - the amount of money involved is far higher, exacerbated by shifts in the global investment landscape. British property markets along with other business hotspots such as New York and Singapore have seen a huge influx of cash from investors - domestic and foreign - seeking to escape crushingly low or even negative yields on bond markets. An investment in real estate on the other hand offered deep-pocketed money managers, such as sovereign wealth funds (SWF) or insurance firms, the promise of an asset that would hopefully appreciate in value while also providing handsome rental income. Average SWF exposure to real estate rose to 6.5 per cent in 2015 from 3 per cent in 2012, according to a recent survey by Invesco, while a Reuters poll found in June that global funds held an average 2.9 per cent of portfolios in property - the highest in at least five years. In absolute terms, the value of investment in commercial property worldwide topped $650 billion at the end of 2015, more than four times 2009 levels, data portal Statista estimates. This week's turmoil is likely to raise questions about how best to invest in property in future. Many are calling Britain's Financial Ombudsman Service to complain about the fund suspensions and the potential hit to their savings. "Time and again investors are faced with making the difficult choice between withstanding the woes that strike when fear overshadows the property market, and paying a high price tag to liquidate their investments," Morningstar investment research analyst Muna Abu-Habsa. She reckons property investors may be better served by real estate investment trusts (REITs) - closed funds with a set number of shares that pay dividends to shareholders. At REITs investors who want money back just sell their shares and trusts don't have to sell assets to meet redemptions. However, shares in UK REITs, too, have slumped since the vote, with those from F&C and Schroders, for instance, down as much as 20 per cent in the past two weeks. What's the outlook? Some deep-pocketed funds such as SWFs will be able to wait out some volatility. Longer-term, much depends on how Brexit is negotiated and whether foreign firms and banks exit London. Many reckon that even with the suspensions, large numbers of properties will be sold cheaply, leading to price corrections that will ripple out from London across the country. UBS Asset Management said it already expected price declines of 4-10 per cent on City properties in 2017-2018 due to large volumes of construction. Now weaker demand due to Brexit could cause bigger falls, it added. (Reuters)

UK real estate investments run into trouble post Brexit

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