The budget to be presented by Pranab Mukerjee in july will be highly analysed. I still remember the budget which Chidambaram presented in July 2004 immediately after earlier UPA victory, in which he announced a small amendment to FDI norms in land investment.....which later had an impact in the RE boom in subsequent years. So these budgets are important and need to be closely analyzed.

At present there is speculation that income tax limit to home loan borrowers should be raised to 3L from 1.5L. Will this again attract salaried people to borrow home loans....

]http://economictimes.indiatimes.com/Features/Home-Loans/Budget-Rs-3-lakh-I-T-relief-on-home-loan/articleshow/4665627.cms
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  • It would be really interesting to see what the budget announces for RE industry and how the market reacts to it.

    Increasing the IT exemption ceiling for interest repayment is just one of the expectations

    There are lots more to the wish list.Some of them are as follows

    1. Stimulus package to revive RE industry.
    2. Reduction of interest rates for loans upto 20-30 lakhs.
    3. Announcement of tax holiday for special residential zones and townships.
    4. Increase in deduction under for loan repayment(principal and interest) for self occupied house, coupled with increased tax slabs extending limit for exemption of income tax for salaried indivuduals.
    5. Clarification on service tax applicability for residential, commercial and rented properties.
    6. Reduction of excise/customs duty for construction materials.
    7. Clarification on Real estate mutual fund classification.
    8. Relaxation of FII/NRI restrictions for participating in RE industry.
    and so many more.

    All the above are the demands by the RE fraternity even before the interim budget.One thing is for sure, heavy lobbying must be going on now to try and get some sops and sustain RE at current levels.

    So?what can we expect in coming months?

    I request all members to come forward and share their views regularly and make the forum interactive.The general mood is getting exceedingly monotonous and repetitive.
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  • Originally Posted by nabishek
    It would be really interesting to see what the budget announces for RE industry and how the market reacts to it.

    Increasing the IT exemption ceiling for interest repayment is just one of the expectations

    There are lots more to the wish list.Some of them are as follows

    1. Stimulus package to revive RE industry.
    2. Reduction of interest rates for loans upto 20-30 lakhs.
    3. Announcement of tax holiday for special residential zones and townships.
    4. Increase in deduction under for loan repayment(principal and interest) for self occupied house, coupled with increased tax slabs extending limit for exemption of income tax for salaried indivuduals.
    5. Clarification on service tax applicability for residential, commercial and rented properties.
    6. Reduction of excise/customs duty for construction materials.
    7. Clarification on Real estate mutual fund classification.
    8. Relaxation of FII/NRI restrictions for participating in RE industry.
    and so many more.

    All the above are the demands by the RE fraternity even before the interim budget.One thing is for sure, heavy lobbying must be going on now to try and get some sops and sustain RE at current levels.

    So?what can we expect in coming months?

    I request all members to come forward and share their views regularly and make the forum interactive.The general mood is getting exceedingly monotonous and repetitive.



    Excellant information as usual.

    Any idea on real estate ETFs....decision on this is eagerly awaited in the budget, as this medium could provide ample opportunity for small investors to participate in real estate story. There was news that companies like HDFC were keen on starting Real estate ETFs.
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  • Feed back

    Originally Posted by nabishek
    It would be really interesting to see what the budget announces for RE industry and how the market reacts to it.

    Increasing the IT exemption ceiling for interest repayment is just one of the expectations

    There are lots more to the wish list.Some of them are as follows

    1. Stimulus package to revive RE industry.
    2. Reduction of interest rates for loans upto 20-30 lakhs.
    3. Announcement of tax holiday for special residential zones and townships.
    4. Increase in deduction under for loan repayment(principal and interest) for self occupied house, coupled with increased tax slabs extending limit for exemption of income tax for salaried indivuduals.
    5. Clarification on service tax applicability for residential, commercial and rented properties.
    6. Reduction of excise/customs duty for construction materials.
    7. Clarification on Real estate mutual fund classification.
    8. Relaxation of FII/NRI restrictions for participating in RE industry.
    and so many more.

    All the above are the demands by the RE fraternity even before the interim budget.One thing is for sure, heavy lobbying must be going on now to try and get some sops and sustain RE at current levels.

    So?what can we expect in coming months?

    I request all members to come forward and share their views regularly and make the forum interactive.The general mood is getting exceedingly monotonous and repetitive.


    Here is the load,

    1. Benefit the bldrs only, remember repel of ULCA in state, did it bring down prices even by a single rupee, inspite of release of thousands of acres of land. Man all land sharks had a field day with the relaxed provisions, no need for underhand deals,POA etc.

    2. Benefit the buyers, but remember bldrs will tailor maid the plan layout as per the Govt rules. Now adays, bldrs r blding with a specification of getting a total amt i.e package of abt 23- 27 lakh. So with a min individual contribution perfectly matches the loan amt of max 20 lakh, thus coming inside the priority sector lending for Banks. If it is increased to 30 Lakhs, its a JACKPOT for all bldrs,as majority of houses r in the bracket 35-45 lakh. So these will in priority sector lending for Banks.

    3. Will give impetus to suburban development out side city limits. Will also reduce budget of flats, as bldr s will pass some benefits of lower land price +octroi + tax holiday to buyers keeping their profit margins intact.

    4. Will benefit ind.

    5. Will benefit ind.

    6. Will benefit bldr only.

    7. & 8. Will benefit Good and large bldrs.Will get much needed liquidity fm the fund infusion.

    Wish list i will give in a short time as per me.
    CommentQuote
  • Originally Posted by contra
    Excellant information as usual.

    Any idea on real estate ETFs....decision on this is eagerly awaited in the budget, as this medium could provide ample opportunity for small investors to participate in real estate story. There was news that companies like HDFC were keen on starting Real estate ETFs.


    We will get more clarity on that only after the budget.

    Here's an interesting article



    I read somewhere else that SEBI has suggested that investment in Real estate mutual fund be exempted from tax and also to reduce/remove securities transaction tax.

    These moves will surely attract lots of individual and institutional investors.

    Having said that, I am still skeptical whether it will result in a RE boom in places where properties are already over-valued.The returns for RE fund is mainly from the rental income and interest repayments against bought mortgage loans.The rents are abysmally low compared to the property prices and even with all the tax exemptions, RE investment taking loans is still highly unattractive unless the purchase is for self use.

    With the liquidity position of builders improving, I feel it only means completion of all the stalled ongoing projects and announcement of better deals to attract people to buy properties at a better price and better interest rates.

    It would be better, the sooner the market looks up.The lull period isn't helping the sellers or the buyers.Continuation of Wait and watch and stagnation period without price correction or demand revival would kill RE and its ancillary industries, pushing India into terrible mortgage crisis.

    Will have to wait and see how much confidence the fund manager(s) show in investing and holding RE at current price.Their coming into the market might even instigate market correction and saner prices in Tier I cities and boom for Tier II and Tier III cities.
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  • No sops from the budget can revive the RE industry. In their greed the RE players have bitten off more than they can chew.They must swallow and digest what they have already bitten off before they hope for a revival of fortunes.Any relief from the govt will only prolong the pain.
    regards
    unlikely
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  • Originally Posted by nabishek
    We will get more clarity on that only after the budget.

    Here's an interesting article



    I read somewhere else that SEBI has suggested that investment in Real estate mutual fund be exempted from tax and also to reduce/remove securities transaction tax.

    These moves will surely attract lots of individual and institutional investors.

    Having said that, I am still skeptical whether it will result in a RE boom in places where properties are already over-valued.The returns for RE fund is mainly from the rental income and interest repayments against bought mortgage loans.The rents are abysmally low compared to the property prices and even with all the tax exemptions, RE investment taking loans is still highly unattractive unless the purchase is for self use.

    With the liquidity position of builders improving, I feel it only means completion of all the stalled ongoing projects and announcement of better deals to attract people to buy properties at a better price and better interest rates.

    It would be better, the sooner the market looks up.The lull period isn't helping the sellers or the buyers.Continuation of Wait and watch and stagnation period without price correction or demand revival would kill RE and its ancillary industries, pushing India into terrible mortgage crisis.

    Will have to wait and see how much confidence the fund manager(s) show in investing and holding RE at current price.Their coming into the market might even instigate market correction and saner prices in Tier I cities and boom for Tier II and Tier III cities.

    Simple question to Nabhishek and other bears. What is the meaning of RE is overvalued? Can you tell me a place in Chennai and tell me what is the current value of RE there and what is its VALUE for it to be OVERVALUED. Thanks in advance.
    CommentQuote
  • Originally Posted by Sansei
    Here is the load,

    1. Benefit the bldrs only, remember repel of ULCA in state, did it bring down prices even by a single rupee, inspite of release of thousands of acres of land. Man all land sharks had a field day with the relaxed provisions, no need for underhand deals,POA etc.

    2. Benefit the buyers, but remember bldrs will tailor maid the plan layout as per the Govt rules. Now adays, bldrs r blding with a specification of getting a total amt i.e package of abt 23- 27 lakh. So with a min individual contribution perfectly matches the loan amt of max 20 lakh, thus coming inside the priority sector lending for Banks. If it is increased to 30 Lakhs, its a JACKPOT for all bldrs,as majority of houses r in the bracket 35-45 lakh. So these will in priority sector lending for Banks.

    3. Will give impetus to suburban development out side city limits. Will also reduce budget of flats, as bldr s will pass some benefits of lower land price +octroi + tax holiday to buyers keeping their profit margins intact.

    4. Will benefit ind.

    5. Will benefit ind.

    6. Will benefit bldr only.

    7. & 8. Will benefit Good and large bldrs.Will get much needed liquidity fm the fund infusion.

    Wish list i will give in a short time as per me.

    Sansei you have bought land in East Pune as per your own admission (in Pune forum). So you are looking at buying land in Chennai. So do you expect prices to go up in Chennai?
    CommentQuote
  • Originally Posted by Natarajg007
    Simple question to Nabhishek and other bears. What is the meaning of RE is overvalued? Can you tell me a place in Chennai and tell me what is the current value of RE there and what is its VALUE for it to be OVERVALUED. Thanks in advance.


    I shall surely attempt to answer you.

    The price at which a property would interest buyers and eventually get sold in todays market is the right price.

    Overvaluation is when, prices are inflated based on speculation and factoring in of the future developments and previous sales in the locality even when actual demand and sale is not viable at quoted price.

    To elaborate

    When a land quoted 50 Lakhs/grnd last year gets sold only when quoted 30 Lakhs/grnd today.The right price according to me is 30 Lakhs/grnd only and anything above it is overvalued.

    It is of no relevance, whether the worth of the land was actually 50 lakhs when the seller bought last year or if the asset value is going to become 1C or 2C in the future.

    also, If flat price is not consistent with the land price or other similar projects in the locality then it is overvalued.

    In my opinon, Banks starting to show reluctance to sanction loans greater than 30 lakhs for property in Chennai and demanding 20-30% downpayment for new loans and pledging of additional collateral for existing loans where they feel the valuation was wrong is a clear indication and acceptance that properties are over valued.
    CommentQuote
  • Originally Posted by nabishek
    I shall surely attempt to answer you.

    The price at which a property would interest buyers and eventually get sold in todays market is the right price.

    Overvaluation is when, prices are inflated based on speculation and factoring in of the future developments and previous sales in the locality even when actual demand and sale is not viable at quoted price.

    To elaborate

    When a land quoted 50 Lakhs/grnd last year gets sold only when quoted 30 Lakhs/grnd today.The right price according to me is 30 Lakhs/grnd only and anything above it is overvalued.

    It is of no relevance, whether the worth of the land was actually 50 lakhs when the seller bought last year or if the asset value is going to become 1C or 2C in the future.

    also, If flat price is not consistent with the land price or other similar projects in the locality then it is overvalued.

    In my opinon, Banks starting to show reluctance to sanction loans greater than 30 lakhs for property in Chennai and demanding 20-30% downpayment for new loans and pledging of additional collateral for existing loans where they feel the valuation was wrong is a clear indication and acceptance that properties are over valued.

    Nabhishek, If a land was priced at 50L last year and then 30L this year as per your example, then can we say it was Undervalued this year. Same way if it costs 30L today and 50L after 2 months can it be over valued? In other words the forces of demand and supply decide prices. So I think your definition though in sync with what a typical LOCAL MADRASI tells does not sound Scientific.
    To make it scientific you need to have a base line which can move with other static parameters. In other words, though I enjoy your explanation it seems extremely Subjective and with zero Objectivity.
    I hope there will be more Objective Scientific means to measure VALUATION.
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  • Originally Posted by Natarajg007
    Nabhishek, If a land was priced at 50L last year and then 30L this year as per your example, then can we say it was Undervalued this year. Same way if it costs 30L today and 50L after 2 months can it be over valued? In other words the forces of demand and supply decide prices. So I think your definition though in sync with what a typical LOCAL MADRASI tells does not sound Scientific.
    To make it scientific you need to have a base line which can move with other static parameters. In other words, though I enjoy your explanation it seems extremely Subjective and with zero Objectivity.
    I hope there will be more Objective Scientific means to measure VALUATION.

    Going by Nabhishek's explanation. Infact very often people say SPECULATIVE when prices rise. Why cant they say SPECULATIVE when it falls? In other words ORDINARY people can only think as a BULL and not as a BEAR. So when prices fall they think it is bad omen, not realising that there are ways to make money either ways. In RE as a Bear the way is a bit difficult since as Wiseman would love there are no Calls to sell in RE.
    However a coterie can sell off most of its owning at a higher price and then have a vested interest in price lowering. I dont know if they can sell in advance and then procure properties as Futures and Options would allow in Stock market but they almost reach that in their own ways. This I meant in case of big hands.
    Now when I accuse Wiseman, I feel he has vested interest in a fall in RE since he is trying to buy at lower levels and he personally does not dispose off his own properties in RK Salai or in Koramangala.
    In other words Bearish thought among ordinary folks is based on feeling and not on logic or scientific reasoning.
    Well let me complete it with a story which got me to write here now. I talked to a fellow who was selling 7grounds for 7crores in Lake View road West mambalam. I said if you can sell me half a ground for 50L it will be great as Anandxx wants it!
    He tells me, that price in WestMambalam is 2.5Crores. Then I asked why is he selling this at 1cr and he gives me some explanation that got lost in the din. Something like some documentation issue and one man owns everything (how can that matter?) and so on.
    In other words those of you who are clamouring for cheap property prices are just imagining falling prices. Those who sell you such cheap properties are actually disposing off SHIT to you and whether you pay 50L or 5L to shit, it is only shit. Sorry for using such a phrase but the truth is so!
    Now if I quote 2.5Cr for a property in Saligramam, I have DTCP approval, clean documentation and a place just across Big bazaar and Avichi school. Now I can get you a property around Saligramam for even 1cr per ground. These properties will be 2.5Km from Arcot road, in a messy cheri, and with dubious land records. If you buy that or put your money into the ocean they both mean the same. Infact you might as well give away that money to an orphanage and get some blessings.
    Now Wiseman being unable to get a price in RK Salai could also mean such dubious stuff, though I cant prove that as I dont have his documents.
    In Chennai dont be deceived by price. For the same locality you can have multiple prices as 1.Documentation 2. Villangam or Encumberance 3. Proximity to facilities and 4. Accessibility of the property matter a lot. Very often 1 and 2 are not easily understood by most of the so called Ordinary folks. So they can go by Nabhishek's logic of Last year vs This year. However last year the junk property might not have had any value and the good property might be 50L. This year since there are lesser buyers, the good property guy does not sell but bides time, while the dirty property guy comes and sells at 30L. Can this be a measure?
    I will love the folks reading this to evaluate it.
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  • Contra, This thread might be for something you might have suggested as you started it. However please remember that prices of land have not fallen and when we talk about Overvalued price it should be explainable. Remember I am talking about something written in this thread and nothing personal about my land in Saligramam. Hope sanity prevails with you.
    PS. What is trivial? Can you explain. Is RE buying or selling a trivial issue to you contra?
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  • Friends,

    The Budget 2009 is out, please post your interpretations.

    Going by the News, I couldnt find anything concrete for reviving the real estate industry.

    The realty stocks are already seeing sharp erosion in prices.
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  • Yes no help to RE or home loans in the budget

    RE revival is difficult now.
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  • Originally Posted by PosterXYZ
    If a land was priced at 50L last year and then 30L this year as per your example, then can we say it was Undervalued this year. Same way if it costs 30L today and 50L after 2 months can it be over valued ?


    Yes .When a property value sees a 66.67% increase in 2 months ,its over/ultravalued and even a layman understands.But...
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  • No incentives to boost Real estate

    The budget has provided no incentives to boost real estate sector.

      There is no increase in income tax exemption on home loan repayments from existing 1.5L p.a.
      Even the income tax savings limit under section 80CC remains same.

      One good news for IT/ITES sector is that Fringe Benefit Tax has been completly removed, needs to be seen how this benefit will be passed on to employees of IT companies.
      One good news for IT/ITES sector is that Fringe Benefit Tax has been completly removed, needs to be seen how this benefit will be passed on to employees of IT companies.
      One good news for IT/ITES sector is that Fringe Benefit Tax has been completly removed, needs to be seen how this benefit will be passed on to employees of IT companies.
      One good news for IT/ITES sector is that Fringe Benefit Tax has been completly removed, needs to be seen how this benefit will be passed on to employees of IT companies.
      One good news for IT/ITES sector is that Fringe Benefit Tax has been completly removed, needs to be seen how this benefit will be passed on to employees of IT companies.
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