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

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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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