Horizons Feb - Mar 2013

Horizons Volume 2

ANDHRA PRADESH REAL ESTATE DEVELOPERS ASSOCIATION www.apreda.org

A P ’s

Issue 9

mo s t

Rs.50

c r e d ib le

February 2013-March 2013

r e a l

e s t a t e

ma g a z i n e

property show 2012

super hit!

All about Panchayat Layouts Page 24

Improvement in office space Page 40

Property on offer Page 56

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APREDA touching new horizons

Andhra Pradesh Real Estate Developers’ Association, popularly known as APREDA was established in the year 1995. APREDA today has a majority of leading builders and developers as a part of its over 400 strong membership. It has branches Vizag and Guntur. Over the years, APREDA has emerged as an effective, self regulatory promoter body of the real estate industry in Andhra Pradesh.

APREDA has been effectively working with the Govt. and other institutions and taking an active role in shaping the Real Estate policies, development control rules, rationalising the taxes and fees like VAT, Service tax, stamp duty other registration charges, Impact fee and other develoment charges etc. benefiting all the stake holders.

APREDA has been organising conferences and property shows to make the public aware of the products, numerous offerings and various options from the real estate industry in AP. APREDA also organised a conference on “Real Estate –Accelerating the Growth Story” with Jones Lang LaSalle (JLL) as the Knowledge Partner. The Conference was held at the National Academy of Construction Auditorium on 10 November 2012.

The conference was sponsored by the State Bank of India.

NAREDCO (A.P) Chapter was inaugurated on 10 November 2012 by the Hon’ble Chief Minister of A.P, Sri N Kiran Kumar Reddy, Sri Navin M Raheja, President, NAREDCO and Chairman, Raheja Corporation was also present. Ln H Bhawarlal Jain, Executive Vice President, APREDA is the ChiefConvener of NAREDCO (A.P).

The Third APREDA Property show 2012 was conducted on 10-11 November 2012 at HITEX and was a huge success. Thousands of home seekers attended the event. The property show was inaugurated by Sri N Kiran Kumar Reddy, Hon’ble Chief Minister of Andhra Pradesh. There were over 350 properties on display and over fifteen Banks/Financial Institutes participated too. The property show was sponsored by LICHFL. Several product suppliers and service providers also participated in the property show. This two day event is undoubtedly the biggest property event in any year. It was for the third year in succession that the property show was organised by APREDA. We take this opportunity to wish all the readers of APREDA HORIZONS and their families a Very Happy, Prosperous and Joyous New Year 2013.

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HORIZONS AP’s most credible real estate magazine

Hyderabad emerges affordable realty market among metros

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APREDA does a hat-trick

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Ecofriendly Permeable Surface in Landscaping

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n t e n t s

Vignettes From Property Show

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Charting a course for boosting realty

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Give a vibrant touch to your home

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Printed, published by P. Prem Kumar on behalf of AP Real Estate Developers Association, owned by AP Real Estate Developers Association, printed at Paper Craft Center, 2-3-514/4, Umanagar, Ameerpet, Hyderabad, A.P. Published from AP Real Estate Developers Association, # 102, Tirumala Shah Apartments, Yellareddyguda, Ameerpet ‘X’ Road, Hyderabad, A.P.- 500 073. Tel: 65572184, 9989844467 email: editor@apreda.org www.apreda.org Editor: Chalapathi Rao Raidu, RNI. No. APENG 03278/01/1/2011-TC Sole distributor: Shams News Agencies.

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From the news pages & sites...

Hyderabad emerges affordable realty market among metros

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P’s capital city has emerged as the most affordable realty market among Indian metros, thanks to several affordable housing projects that mushroomed in the city in the aftermath of the 2008 global meltdown and the T-turmoil, according to a study done by global realty consultancy firm Knight & Frank. What’s more, enablers like the new GO 245 (relaxation of mandatory EWS/LIG housing norms) and upcoming projects like Hyderabad metro rail will continue to speed up the demand for realty projects in the city. “The market sentiment looks bullish for the forthcoming quarters. There has been an increase in demand in the last few months. The fact that the residential property in Hyderabad is relatively undervalued presents a vast opportunity for end-users and investors alike,” said the Knight & Frank report. According to the report, the affordable housing segment in Hyderabad got a push after 2008 when the industry saw a significant price correction due to slowdown in the IT industry coupled with political uncertainty over Telangana. “As a result, the weighted average capital value of the residential properties in Hyderabad is estimated to be the lowest among the metro cities,” the report said.

Though the residential market in the city had become stagnant in the last two quarters of 2011-12, the city has bounced back due to affordable housing and various promotional offers. The April-December 2012 period saw a number of launches by reputed developers totalling about 8,500

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HORIZONS AP’s most credible real estate magazine

units and as of December 2012, around 65,000 residential units were under construction in various micro-markets of Hyderabad like Kukatpally, Madhapur, Kondapur, Gachibowli and Raidurgam. “Nearly 56 percent of the absorption till December 2012 has been within the Rs 5 million (Rs 50 lakh) category, followed by Rs 5-7.5 million with 32 percent. The clubbing together of these categories essentially denotes that the affordable and mid-end segment has been responsible for the absorption of a total 88 percent of the residential units booked or sold.” On the pricing front too, nearly 51 percent of the total residential units underway fall under the Rs 5 million category, which signifies that the customers in the mid-segment are the prime demand drivers of the residential market in the city, the report states. According to Knight Frank, a major trend in Hyderabad’s residential realty market is that small is now beautiful for buyers with a majority of them opting for smaller residential unit sizes as the global economic uncertainty has taken much sheen off the IT/ITeS sector. Acknowledging this trend, Chalapathi Rao, vice-president, Andhra Pradesh Real Estate Developers Association (APREDA) said that the residential realty sales had gone up in 2012. “There has been a 15 percent rise in sales and we expect another 5-10 percent rise in 2013 as well.”

India Ratings revises realty sector outlook

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evising its outlook on the Indian realty sector to negativeto-stable for 2013 from negative last year, India Ratings & Research, a Fitch group company, said signs of stability were emerging amid persistent weak demand drivers and weak credit metrics of the dominant players.

“The trend of deterioration in EBITDA (earnings before inter-

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est, tax, depreciation and amortisation) has ended and free cash flow has turned positive,” senior executives of the rating agency told presspersons here while announcing the details of its 2013 outlook report.

The improved free cash flow translates into a situation where the companies would be better off in terms of adhering to the delivery schedules of the projects and with regard to servicing the debt. A correction in property prices, widely expected at least in some markets, was unlikely as better cash flow means that the companies would be under no pressure to sell at reduced prices.

“Correction may not happen… [but] the free cash flow will make a difference to project completion,” said Sreenivasa Prasanna, Senior Director, India Ratings & Research Pvt. Ltd. The report, on which Mr. Prasanna and Subhasree Banerjee, Associate Director in the Fitch group company, made a presentation, said that the “EBITDA margins, which steadily declined to 30 per cent in 2011-12 from about 55 per cent in 2007-08, remained at around that level during 2012.

That this was possible despite increases in construction costs, signals a potential return of stability.” The report is based on a dozen real estate companies.

Consumers set to benefit through realty regulator

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new law to give home buyers a better deal aims to ensure that builders sell residential property on the basis of carpet area instead of ambiguous terms like “super area” while a regulator will ensure housing projects declare the status of important civic clearances. The Real Estate (Regulation and Development) Bill, which the government plans to bring in Parliament in the budget session, has been framed under the provisions dealing with property transactions in the concurrent list of the Constitution that applies to States, making the proposed legislation more than a model law. In a bid to try and make sure that developers stick to timelines, the proposed law states that realty players will have to park 70 per cent of funds in a particular bank account so that resources are not diverted and buyers are not left in the lurch.

A real estate regulator in every State will make it mandatory for private developers to register all projects before the sale of property and only after getting all necessary clearances, addressing a major concern of buyers about incomplete or fraudulent land acquisition.

According to the bill’s provisions, failure to declare status of clearances will invite up to a maximum three years imprisonment or fine that can amount to 10 per cent of project cost. Realty players will have to disclose project details and contractual obligations to ensure transparent, fair and ethical business practices. There can be a model agreement, which is expected to reduce ambiguities in real estate transactions that not many buyers are familiar with. Private builders are not comfortable with some of the bill’s provisions and voiced

their objections at a meeting chaired by Housing Minister Ajay Maken and Urban Development Minister Kamal Nath.

Those who attended the deliberations included representatives of developers’ associations -- CREDAI, NAREDCO and industry chambers CII and FICCI. Builders maintain there is no need for a regulator as they are already subjected to clearances from multiple agencies. They felt that the penal provisions hurt their interests, but the government is likely to increase the odds in favour of consumers.

Magma Fincorp to focus on housing loans

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agma Fincorp Ltd., the bulk of whose seven lakh customers live in small towns and rural areas without access to the banking system, sees considerable synergies to be achieved between many of its existing lines of activities and the forays made recently in general insurance and housing finance space.

The general insurance products were expected to be a default choice for those seeking car, utility vehicles, construction equipment and tractor finance from the Kolkata-based non-banking finance company (NBFC) that has branches in 20 States and a Union Territory. “It would be part of the package we offer them,” according to Dhrubashish Bhattacharya, Vice-President, Magma Fincorp. When the policies came up for renewal, they were expected to translate into new business, he told presspersons here recently.

The company also hopes customers in Tier-II and Tier-III cities to be major demand drivers for its home loans. “Our focus will be on affordable housing loans of less than Rs.20 lakh,” he said. The team was in place for the home loan business and the company was “waiting for final approval of National Housing Bank.” The NBFC had last month announced its decision to acquire GE Money Housing Finance and the entire home equity loans portfolio of GE Money Financial Services Pvt. Ltd., in a Rs.1,600-crore deal.

Mr. Bhattacharya said Magma was targeting to increase its retail loan disbursements in Tamil Nadu by 40 per cent. Last year, it had disbursed Rs.246 crore in the State.

ECBs up to $1 bn for low-cost housing projects allowed

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he Reserve Bank of India (RBI) has decided to allow developers/builders raise funds through external commercial borrowings (ECBs) for low-cost affordable housing projects with immediate effect.

“ECB can be availed of by developers/builders for low-cost affordable housing projects. Housing finance companies (HFCs)/National Housing Bank (NHB) can also avail themselves of ECB for financing prospective owners of low-cost affordable housing units,” the RBI said in a notification.

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other option left except to adopt reverse innovation.

Maruti Suzuki and Narayana Hrudayalaya are perfect examples of reverse innovation. These two are the proven experiments, successful models of pushing the price performance paradigm in India. We still remember the Ambassdor and Fiat days. We know our friends and relatives who have undergone heart surgery and are leading very normal life.

The cost of this unique medical procedure is said to be US$ 2,000, compared to US $ 50,000 for the same procedure in the United States. The quality is better than the US, the A low-cost affordable housing scheme for availing ECB would be a project in which at least 60 per cent of the permissible FSI (floor space index) would be for units having a maximum carpet area up to 60 square meters, the RBI said.

For 2012-13, an aggregate limit of $1 billion has been fixed for ECB under the low-cost affordable housing scheme.

Slum rehabilitation projects will also come under the low-cost affordable housing scheme. The eligibility of these projects for raising ECB will be based on the parameters to be set by the Central Sanctioning and Monitoring Committee of the Affordable Housing in Partnership Scheme (AHP) constituted under the chairmanship of Secretary, Housing & Urban Poverty Alleviation (HUPA), which administers the slum rehabilitation projects.

The RBI said that the proceeds from ECB should be utilised only for low-cost affordable housing projects and not for acquisition of land.

Builders/developers meeting the eligibility criteria can apply to the National Housing Bank (NHB), which will act as the nodal agency for deciding a project’s eligibility as a low-cost affordable housing project.

Reverse innovation is the new mantra

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he entire world is gaining through science, technology and innovation. Innovation is the new mantra in all businesses. Consumers across the world require their products to be of high quality and simultaneously look for something new and fresh. The changes taking place are a welcome sign for global economies exchanging ideas on a single platform.

Youtube and Facebook are the best examples of technology and innovation. Across the globe the needs of the rich and poor are gradually becoming one. According to the World Bank, the average GDP of all the countries draws a line between the rich and poor. The countries lagging in the average GDP rate are mentioned as poor ones or rather it is prudent to refer to them as developing nations.

India is one such developing nation on the path to become one of the superpowers in the world. In this process India seeks innovation as the tool to grow, build and share with other countries as well.

As the developing nations are now more attuned for reversing the global recession and economic meltdown there is no

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HORIZONS AP’s most credible real estate magazine

success rate is higher than the world’s best hospital in the US. Thus India has arrived in the field of heart surgery and medical tourism as one of the much sought after destinations for reverse innovation.

Similarly, Maruti 800 has changed the way Indians are buying family cars. Maruti 800 has revolutionized the car growth story and paved the way for global giants stepping onto our soil - making cars, SUVs from rock bottom prices to super luxury cars.

Land Authority for India soon

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he government is pushing a plan to set up a Land Authority of India that will take over all under-utilised and unused government land and monetise them, leading to a windfall of an estimated Rs 1 lakh crore that can give succour to the country’s burgeoning fiscal deficit.

The ambitious proposal for a national body, which has to pass muster with a lot of government bodies that have occupied prime land but have put them to little use was put forth by the Union Urban Development Minister Kamal Nath last month, and has been discussed among other key Ministries that include the Finance Ministry as well as the PMO. “Surplus land across the country with bodies such as CPWD, DDA, Railways, Defence, public sector undertakings and other government agencies can be put in the sale basket,” Mr Nath told ET. “All the land will vest, by a notification, in the Land Authority of India. Let them sell it,” Mr Nath said.

“This can help us raise over Rs 1 lakh crore in six months and help us rein in the fiscal deficit,” he said. The policy, the Minister said, “should be to either to utilise the land or sell it”. Scarcity of land has led to the price of land shooting up across the country.

In March last year, the government had budgeted a fiscal

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deficit of Rs 5.14 lakh crore, or 5.1% of the gross domestic product (GDP), for the fiscal year 2012-2013.

Mr Nath has proposed that the authority should be chaired by the finance secretary, and the last three CVOs and CAGs should act as its members.

According to official estimates, close to 60 sick PSUs in the country together hold about 20,000 hectares of vacant land.

The national flag carrier Air India, for instance, is in need of money and have land worth over Rs 700 crore in Delhi that was given to them for their housing colony that was never used.

The Indian Railways owns about 4.59 lakh hectares of land of which 0.38 lakh hectares is lying vacant and the Rail Land Development Authority develops vacant land for commercial use to generate revenue.

GO Watch

G.O.Ms.No.455 Municipal Administration & Urban Development Department, vide the above mentioned GO, has laid down the minimum size of plot intended for residential use as 120 sq mtr with a minimum width of 10 mtrs in all areas of towns. This classification is for municipalities. This does not apply to hut, slum, special areas developed by the govt and in housing for industrial workers. This is an increase from the earler size of 100 sq mtrs minimum size and 6 mtrs width laid down in GO.Ms.No.62 dated 28.01.1970.

G.O.Ms.No.33 Municipal Administration & Urban Development Department has approved Metropolitan Development Plan-2031 for Hyderabad Metropolitan Region vide the GO. No. 33. The salient aspects of this Plan were covered in the Dec 12-Jan 13 issue of APREDA Horizons. The Metropolitan Develop-

ment Plan – 2031 for Hyderabad Metropolitan Region covers an area of around 5965 Sq.Kms. The Stipulations have been divided in to 4 Sections, viz.

• Section A - Zoning and Activities Regulations • Section B - Land Development related stipulations • Section C - Development schemes and circulation

network pattern • Section D - Building and site development stipulations The details of the Metropolitan Development Plan will be covered in the forth coming (Apr-May) issue of APREDA Horizons.

Memo.No.22897/M1/2011 Municipal Administration & Urban Development Department vide their memo quoted above has rationalised the fee structure in CDA areas and refixed the CDA Value Addition Charges to be paid to Rs.100/- per sq mtr of build up area which will be in addition to all other charges levied by GHMC.

Now, a house in 20 hours flat!

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aving remained in news for accomplishing a rare feat of constructing a 10-storey building in 48 hours, entrepreneur Harpal Singh has set another target of constructing a house in just 20 hours. Harpal Singh, who was at Punjab Technical University to attend its 17th Foundation Day function, said the house would be made of all concrete in a 25 sq m area with a room, a kitchen, a toilet and a bathroom.

“It will be in a walk-in condition with even vitrified tiles laid out at a cost of Rs 1,000 per sq. metre. “The idea of improving efficiency in construction came to my mind when I got sick of constructing my own house for two long years,” he said, adding that Punjab Deputy Chief Minister Sukhbir Badal will inaugurate his new venture at Mohali.

CNBC Awaaz award for Trendset Builders

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he CNBC Awaaz award for the best project in the mid-segment category for the Hyderabad (city) sector for 2012 was presented to Trendset Builders headed

by Dr. K.L. Narayana by Maharashtra CM Prithviraj Chauhan. The award was

presented to their project Trendset Winz at Nanakramguda for being completed in record time, quality, ambience, affordability in that segment and community living.

Dr Narayana says Trendset’s dictum is stress on quality rather than on quantity and sticking to the budget. Trendset has drawn up plans to build a 6-screen multiplex mall in Benz Circle, Vijayawada. Aside from this, they also

have charted plans for two residential projects in Banjara Hills and one in Kondapur and an office project near Gowlidoddi in Gopanpally.

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APREDA does a hat For the third year in a row, APREDA holds a spectacular property show and conference which drew a stupendous response 12

HORIZONS AP’s most credible real estate magazine

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he APREDA Property Show 2012, which was held at HITEX exhibition grounds, Hyderabad, on the 10th and 11th of November 2012, turned out to be the largest real estate exposition in the State. Featuring over 350 properties with over 150 real estate companies participating, this mega event was sponsored by LICHFL. This is the third year in succession that APREDA is organising the property show.

The property event was inaugurated by the Chief Minister of Andhra Pradesh, Mr N Kiran Kumar Reddy. Also present during the occasion were Mr. K Chiranjeevi, Union Minister for Tourism (Independent Charge), Govt of India, Mr N Uttam Kumar Reddy, Minister for Housing, Govt of A.P, Mr M Maheedhar Reddy, Minister for MA&UD, Govt of A.P. Spread across 70,000 sft of covered space, the exhibition comprised 188 stalls of varying sizes ranging from 9 sq. metres to 48 sq metres. The show fea-

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tured developers from across the North, East, South and West of the twin cities and had participants from Visakhapatnam and Guntur as well. The properties on display were of various sizes and prices.

Unique feature Another unique feature of the exhibition was that many new developers showcased their properties along with established developers ranging from 1 to 5 BHK and studio apartments, duplex houses, penthouses, row houses, villas, plots and bungalows. The expo also offered plots, shops, commercial spaces and office premises.

The exhibition was preceded by a blitzkrieg of an advertisement campaign carried out by APREDA using social media marketing, newspaper ads, television, emailing, SMS, helium balloons, hoardings, FM radio, cine ads, posters, handbills, etc. It was in fact the largest ad campaign of this nature carried out in Hyderabad.

The exhibition offered investment opportunities not only to domestic buyers but also to NRIs looking to invest back

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at home. As many as 15 home finance companies set up their stalls to offer spot loans. The two-day event registered over 30,000 visitors with more than 50,000 walk-ins. Visitors to the Expo this time were treated to facilities like registration, stall locator, kids zone and refreshment stalls. An attractive feature was the distribution of prizes to the visitors by a lucky draw. The prizes included a Honda car, JBL Home Theatre, Hero Honda motorcycle, TV, refrigerator besides gold and silver coins given every two hours.

Dignitaries galore Apart from homebuyers and investors the event was graced by the presence of many well-known dignitaries like Mr. Neerabh K Prasad, IAS, Commissioner HMDA, Mr. Krishna Babu, IAS, Commissioner, GHMC, Mr.NVS Reddy, IRAS, MD, HMRL and others.

A major attraction was the active participation from government agencies like the Hyderabad Metro Rail & Registration Department. Many philanthropic organisations and NGOs like Akshayapatra Foundation (an organisation involved in providing mid-day meals to children),

HORIZONS AP’s most credible real estate magazine

Sparsh Hospice (which provides care to the terminally ill), LV Eye Hospital participated. The Chiranjeevi Blood Bank put up six beds and saw many visitors donating blood.

Speaking on the occasion, Mr P Prem Kumar, President, APREDA said, “There is an increasing awareness of the important role played by the real estate industry in the economy of the country contributing about 8% to the GDP and creating employment for about 33 million people. The real estate sector has the capability to kickstart the economy with forward and backward linkages to more than 280 allied industries.” He emphasized the need for the real estate industry to be granted infrastructure status. Thanking the Government for giving an innovative solution to the G.O.Ms.No.45 dt 28.01.2012 matter, without diluting the spirit behind it, he requested the government to reduce the NALA tax to 1 or 2 % or bring it on a par with the neighbouring States.

Conference To enrich the members’ knowledge on

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the latest trends and technologies, APREDA has been conducting conferences every year since 2010. A conference on “Real Estate –Accelerating the Growth Story” with Jones Lang LaSalle (JLL) as the Knowledge Partner was organised by APREDA on the 10th of November 2012 at the NAC auditorium. The conference was also inaugurated by the Chief Minister N Kiran Kumar Reddy, Mr Navin M Raheja, President, NAREDCO and Chairman, Raheja Developers, DG. NAREDCO, besides other dignitaries.

The conference, which was well received both by the delegates and the invitees, had four sessions; Indian Realty – Role of Hyderabad, Innovative Construction Technologies, Funding and Finance – The Silver Lining and Innovative Marketing. Over 25 leading speakers from India and abroad, representing the private sector, government agencies and financial institutions participated in the conference.

The participants expressed their satisfaction on the quality of knowledge gained during the conference.

Presenting the vote of thanks, Mr M Sridhar Rao said that the day was special for Hyderabad as the conference held along with Jones Lang LaSalle as the knowledge partner was a tremendous success as it had enriched the members’ and participants’ knowledge and provided them a healthy exchange of ideas. He thanked everyone associated with the event for making it a great success.

NAREDCO A.P. inaugurated The formal inauguration of NAREDCO, (A.P) chapter, was done on 10 November 2012. The State branch was inaugurated by the Chief Minister, Mr N. Kiran Kumar Reddy, Mr. Navin M Raheja, President NAREDCO and Chairman, Raheja Corporation graced the occasion. Mr H. Bhawarlal Jain was the chief convener of NAREDCO (A.P).

The new issue of APREDA Horizons (December 12-January 13) was released by the Chief Minister at the inauguration of the conference.

Speaking at the event, Chief Minister N Kiran Kumar Reddy said that he was happy to see the property show and the conference being organised by APREDA. He said that such events would be beneficial both to the home seekers and builders. He appreciated Horizons magazine and spoke about the Bio-Diversity Pylon featured in the Dec-Jan Issue. He said that the pylon was unique in the world and the site had saplings planted by delegates from over 100 nations and every time a biodiversity conference is held anywhere in the world, a reference will be made to this pylon. He was happy to know that some members of APREDA were instrumental in the design of the pylon.

He said that the Government of A.P. had constructed 50 lakh houses for the poor since 2004, Another 19 lakh houses were in progress and he said that as planned, if another 10 lakh houses were constructed in the next few years, AP would attain the objective of becoming a “hutless State”.

He said that the development in any State can be gauged from how well the real estate industry is doing. Hyderabad had the best infrastructure with a 154 km Ring Road and Metro Rail coming up. He said 50,000 acres, compared to a few hundred acres in other States, had been notified for IT in A.P which is a big opportunity for builders. He said that this would increase the income from software exports to over Rs 2 lakh crore from the current Rs 50,000 crore.

On the importance of giving clear titles to prospective home buyers, he said APREDA must evolve a methodology to certify that properties being sold by the builders are clear. This, he felt, would be beneficial to property buyers.

Hyderabad had become an attractive conference destination in the world he said, adding that efforts were on to improve conference facilities in other cities of the State such as Vizag. The government he said was doing its best to improve infrastructure.

He concluded on a colourful note, saying “You will do much better next year and much better in Hyderabad than anywhere in the country.”

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what the ministers said...

Dr K CHIRANJEEVI, UNION MINISTER OF STATE FOR TOURISM, GOVT OF INDIA

“

Real estate belongs to people with foresight and vision. The real estate industry contributes 8% of the GDP and provides employment to 33 million people, which is laudable. Hyderabad has been chosen in the list of first 3 cities to visit in the world, along with San Francisco and Amsterdam, during the recently concluded World Travel Market. I invite you all to partner with the government to make Andhra Pradesh a tourist hub in the country.

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Mr M MAHEEDHAR REDDY, MINISTER FOR MA & UD, GOVT OF A.P. The Government of Andhra Pradesh in the recent past has come out with a number of innovative GOs and memos which have been appreciated all over the country. Some problems are there but APREDA is there to solve the problems. Hyderabad has vast potential; the Metro Rail Project will be completed soon. The government is here to facilitate the prosperity of the common man and the industry. It is not a check-post, but a bridge between the common man and the industry. The government will support the industry and I am certain that the industry will support the government.

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Mr N UTTAM KUMAR REDDY, MINISTER FOR HOUSING, GOVT. OF A.P Andhra Pradesh has the largest housing project in the history of independent India. We are working towards shelter for all by 2014. We need to focus on sustainability and conserve resources. The government treats the real estate sector as a partner in progress. We will do all we can to encourage and support the sector in Andhra Pradesh.

HORIZONS AP’s most credible real estate magazine

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NAREDCO A.P. inaugurated

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he formal inauguration of NAREDCO (A.P) Chapter was done on 10 November 2012. The State branch was inaugurated by the Chief Minister of A.P, Mr N. Kiran Kumar Reddy, Mr. Navin M Raheja, President NAREDCO and Chairman, Raheja Corporation graced the historic occasion.

Also present during the occasion were Dr. K Chiranjeevi, Union Minister for Tourism (Independent Charge), Govt of India, Mr N. Uttam Kumar Reddy, Minister for Housing, Govt of A.P, Mr M. Maheedhar Reddy, Minister for MA & UD, Govt of A.P, Sri. Mr P Prem Kumar, President, APREDA, Brig. RR Singh, DG. NAREDCO, Mr H. Bhawarlal Jain, Chief Convener, NAREDCO (A.P), besides other dignitaries.

Speaking during the inaugural session, Mr. Rahaja said that he was visiting A.P after many years and was happy to see the rapid development in the State. He said that NAREDCO was an apex body in the country and was happy that the State branch of NAREDCO was being formed. He said that APREDA in association with NAREDCO (A.P) could help, coordinate and have more say at the national level on matters pertaining to the realty sector.

NAREDCO, he said, was finalising the National Policy Guidelines on Affordable Housing which would be sent to the States too. He also mentioned that the Real Estate Regulatory Bill was also in an advanced stage of finalisation and would benefit all stake-holders in the industry.

He requested the Chief Minister to be the Chief Patron of NAREDCO and the Ministers of MA&UD and Housing to be the patrons. He invited active cooperation between the State Government and NAREDCO (A.P) to make shelter for the masses a reality.

Addressing the audience, Mr Bhawarlal Jain said that he had great pleasure in accepting the challenge of being the first convenor of NAREDCO A.P. He thanked everyone for reposing faith in him. He said that NAREDCO A.P. was already registered and many associations like Andhra Pradesh Realtors Association (APRA), Greater Hyderabad Builders

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Association (GHBA), Stone Crusher Association (SCA), A.P. Sub-Registrars Association, Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) had joined NAREDCO A.P. he requested the Chief Minister to be the

Chief Patron of NAREDCO A.P. and the Ministers to be the patrons. He requested active participation by the Government officials in the functioning of NAREDCO to create a ‘win-win’ situation for realty.

ABOUT NAREDCO

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he National Real Estate Development Council (NAREDCO) was established as an autonomous self-regulatory body in 1998 under the aegis of the Ministry of Housing and Urban Poverty Alleviation, Government of India.

It is in this year that the Government of India redrafted the National Housing & Habitat Policy, giving due importance to housing and real estate sector, thereby declaring housing as an essential component for all citizens by the year 2010. The Indian housing and real estate sectors and the allied industries hailed the establishment of NAREDCO, as the apex national body for the real estate industry and visualized it as a single platform where the government, industry and public would discuss various problems and opportunities face to face which would result in speedy resolution of issues. It was formed with the mandate to induce transparency and ethics in real estate business and transform the unorganized Indian real estate sector into a mature and globally competitive business sector.

The National Real Estate Development Council strives to be the collective force influencing and shaping the real estate industry. It seeks to be the leading advocate of developing standards for efficient, effective, and ethical real estate business practices, valued by all stakeholders of real estate sector and viewed by them as crucial to their success. NAREDCO works to create and sustain an environment conducive to the growth of real estate industry in India, partnering industry and government alike through advisory and consultative processes

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February 2013 - March 2013

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APREDA Future scenario

s o m e v ignettes f r o m

A bird’s eyeview of the Property Event

Sri N Kiran Kumar Reddy, Hon’ble Chief Minister, lighting the lamp at APREDA property event

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pr o perty sh o w

Dignitaries at the APREDA conference

Mr Kiran Kumar Reddy at the property show.

Rachna Gupta

February 2013 - March 2013

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APREDA Future scenario

s o m e v ignettes f r o m

Organising committee members of APREDA at the Property Show.

Inauguration of NAREDCO A.P. by Mr Kiran Kumar Reddy

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pr o perty sh o w Former APREDA President Mr Murali Mohan presenting keys to the winner of first prize (Honda Brio car) at the show.

APREDA members presenting an LCD TV to the winner at the event

APREDA members presenting keys to the winner of the third prize (Hero Passion) at the property show.

A view of the people gathered for the conference. lerial View of APREDA Conference

February 2013 - March 2013

23

Lead story

Time to remove ambiguity on panchayat layouts

I

n the backdrop of the ever-expanding contours of cities across the country, the increasing shift of people from villages to medium and large cities in search of livelihood, and the onward march of urbanisation, there is unceasing activity in the real estate/construction field in the urban and semi-urban areas and even in Gram Panchayats.

Across the country “plotted land” has been in demand and has become a source of aspiration for the lower and middle class category of people to fulfil their hope of having their own house. For many it doubles as an important investment/business oppourtunity.

Many developers take this oppourtunity to come up with lay-outs approved by the respective competetant authorities depending upon the location of the venture/ project.

The challenge to the authorities is to facilitate planned/regulated development of these lay-outs by putting in place plans for development of land and related infrastructure facilities like roads, electricity, drinking water, sanitation, etc.

The minimum requirement is to prepare the land use/zonal plans in the hope that other facilities will come up later. However, these authorities fail to meet even this minimum requirement in time. Further they do not have sufficient mechanism to oversee that these lay-out are done and maintained permanently as per the stipulated mandatory technical parameters like road width, open spaces for parks, playgrounds, common facilities, etc. As a result, many layouts are done a) based on the approval of the Revenue Department for conversion of agricultural land for “non-agricultural use”. b) Without minimum road width and mandatory open spaces for parks and other facilities. In such a scenario, when the borders of villages lying on the fringes of large and tier II cities gradually merge into the entity called the Big City, there is pressure on all types of facilities, particularly on land and housing, sanitation, roads, medical facilities, education, entertainment, commercial space, etc.

LAY-OUT Rules, Regulations and Restricions Panchayat Raj and Rural Development Department of Govt.of AP vide G.O.Ms.No.67 dated 26.02.2002 have re-framed and issued comprehensive rules relating to regulations or restrictions of the use of sites and for buildings. It is further amended vide

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G.O.Ms.No.274 dated 12.06.2007.

To quote from the G.O.s: “Executive Authority” means the executive authority of the Gram Panchayat which sanctions and releases the permissions and undertakes to ensure that the constructions activity/layout development activity is carried out in accordance with the sanctioned plans etc..(page 3) “The Gram Panchayats of villages with less than 10,000 population are empowered to accord sanction for the layouts in their respective villages, wherever the Indicative Land Use Plan (ILUP) is prepared for the village by the Town and Country Planning Department (DTCP) the layouts sanctioned will be in conformity with them”(Point 11, 1(b), page 5).

Further the DTCP Officer has to prepare/get prepared by engaging the qualified personal the ILUP and keep them available with the respective Gram Panchayats.

Under point 11(2) it is mentioned that the Executive Authority (Gram Panchayat) shall forward the lay-out proposals to the DTCP officer “wherever necessary”. It is also indicated that this necessisity is in respect of Gram Panchayats falling under point 11 (1) (a), i.e GPs with more than 10,000 population, urban centres to be notified by DTCP and all Mandal headquarters.

The Lay-out Regularisation Scheme (LRS) and certain media reports have made the validity of the Lay-out permissions issued by Gram Panchayats (of villages with population of less than 10,000) a contentious issue. Moreso in the absence of ILUP or technical approval of DTCP. Stand of developers Some developers cite provision of above G.O.s and say that panchayats are the competent or proper authority to accord sanctions to layouts. They believe that the GO is amply clear on this count. An interesting observation with regard to panchayat layouts comes from Mr

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Haribabu, MD of Lahari Infrasturctures, who asserts that gram panchayats have absolute right of approval to lay-out/building plans if the gram sabha has approved such a layout and says that this is the stamp of finality.

Without mincing words, Mr Haribabu says that all panchayat layouts are valid layouts as they come with the seal of approval in the form of Land use certification from the RDO. Furthering his argument he says that after all the gram panchayats are elected bodies. He cites the recent Supreme Court directive to the State Government of Goa in this crucial issue.

Views of DTCP However, explaining the functions of the DTCP, Director of Town Planning, Mr B.Purushottam Reddy, says that overseeing implementation of proper layouts in GPs is their main task and makes it clear GPs cannot act on their own and do not have the statutory backing.

In fact the DTCP is a guiding body for GPs and they are required to abide by the provisions of GO 67 and GO 274.

But he complains that the DTCP has no control over the panchyat secretaries and gives examples of complaints being made to Collectors against them in several districts. Admitting the lack of clarity and the presence of a grey area, he says that layout rules, including the municipal rules, are being worked out in a comprehensive way.

It is unfortunate that there is scope for ambiguity in such an important priority sector as Housing and Real Estate that is affecting the masses.

Whether DTCP has prepared Indicative Land Use Plan or given Technical Approval or not are certainly not issues that can be verified by the common plot/home buyers, legal experts and financial institutions. They can at best verify if a competent authority has issued a lay-out permission or not. That is why the lay-outs are developed and marketed.

The Government will do well by recognising the developed lay-outs that are approved by the Executive Authority and in conformity with the mandatory technical provisions and exclude them from any penalty be it in the name of LRS fee or some other fee.

The media should help remove the fear that is ingrained in the public that all “Panchayat lay-outs” are illegal.

Wherever there is no notified Master Plan or ILUP the conversion to non-agricultural use issued by the Revenue Dept./RDO should be deemed as residential land to be used by respective UDAs/DTCP. This should do well to apply to GPs as well.

February 2013 - March 2013

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Budget wish list

Charting a course

for boosting realty

In line with its annual exercise, the National Real Estate Developmental Council (NAREDCO), in a memorandum, has made a series of suggestions to the Central Government to consider before it passes the annual budget for 2013-2014. We present here the various suggestions covering a wide gamut of issues A1. INCENTIVE FOR HOUSING DEVELOPMENT 1. Section 80-IA (Infrastructure Status to Housing Sector) Section 80-IA of the Income-tax Act provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any of the business referred to in sub-section (4) then a deduction equal to 100% of the profits and gains derived from such business shall be allowed for ten consecutive assessment years.

Sub-section (4) covers the business of either (i) developing or (ii) maintaining and operating or (iii) developing, maintaining and operating any infrastructure facility which fulfills all the conditions laid down in the said section. The Explanation in the said Sub-section defines “infrastructure facility” as under: (a) a road including toll road, a bridge or a rail system; (b)a highway project including housing or other activities being an integral part of the highway project; (c)a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway or inland port.

Housing Development companies are engaged in undertaking large scale urban development projects including purchasing raw land and developing it for the purpose of construction of houses, multi-storeyed buildings, creation of infrastructure and social facilities such as laying of roads, in accordance with the elaborate rules and regulations and with the specific approval from the State Governments.

While according the approval, the State Governments specifically direct that these infrastructure facilities shall ultimately be handed over and shall not remain with the developer.

After purchasing agricultural land, these companies provide and create most of the infrastructure facilities mentioned in the Explanation.

It is only by creating all these infrastructure facilities that the

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raw land gets converted into developed land, fit for construction of houses and multistoried buildings for residential and commercial purposes, thus augmenting the housing stock of the nation.

It is presumed that the activities of these companies are already covered by the definition of ‘infrastructure facility’ but the position has become debatable as such activities are not covered by a specific clause.

Suggestion We, therefore, suggest that in the definition of ‘infrastructure facility’ the following clause may be added: (e) “An integrated township and group housing development on area more than 10 acres involving provision of residential, educational, medical, community, commercial or institutional buildings and creation of required facilities including roads, water supply, water treatment, sanitation and sewerage systems and solid waste treatment and management systems”.

This will meet the long outstanding demand of housing to be treated as infrastructure.

2. Section 80 IB (10) Income tax deduction u/s 80IB(10) available to undertakings developing housing projects is for projects approved on or before 31st day of March, 2008. As this date has not been extended, provisions of this section will cease to exist after 31st day of March 2013.

Suggestion Since the housing industry has not yet overcome the impact of the 2008 recession and is in the grip of severe downturn as also a huge demand of housing, especially for poor pending to be fulfilled, it is suggested that provisions of section 80IB(10) be made applicable for projects sanctioned after 31st March 2008, at least till 2015. If need be, size of units could be reduced from 1000/ 1500 sqft to upto 1200 sqft, in line with the definition of affordable housing prescribed by the Govt.

It is also suggested that the completion period of projects

Budget wish list

sanctioned on or after 1st April 2005 be extended by one year from 5 years to 6 years – as the deadline of 31st March 2013 for projects sanctioned in 2008 is difficult to meet in view of economic downturn and liquidity crunch faced by the developers.

3. Section 35AD Deduction of capital expenditure incurred wholly and exclusively for developing and building a housing project under a scheme for slum development or rehabilitation or affordable housing framed by Central or State Govt. and notified in accordance with the guidelines prescribed is allowed u/s 35AD sub-section (5)(ac) & (5)(ad).

Definition of capital expenditure does not include land cost and building construction cost or any other significant investment in the project. As a result, developer of slum redevelopment/rehabilitation and affordable housing does not get any major advantage as far as the income tax concession is concerned.

Suggestion It is suggested that cost of land and building construction cost should be made part of capital expenditure to incentivize developer to undertake construction of social housing.

4. Section 80C Section 80 C allows a deduction of up to Rs. 1 lakh from annual income on consolidated payments or deposits specified in sub section (2) which interalia includes payments on purchase or construction of a residential house property through instalment or part payments or repayment of amount borrowed from Govt. / Banks and stamp duty, registration fee

and other expenses for the purpose of transfer.

As sub section (2) caters for payments on account of numerous essential savings such as Pension, Provident Fund, Insurance etc, there is no or very little scope left under this section to accommodate payments of principal amount borrowed for purchase or construction of a residential house.

Suggestion It is, therefore, suggested that the ceiling of Rs. 1 lakh u/s 80C be increased to Rs. 2 lakh and Rs. 1 lakh out of it be exclusively reserved for payment of principal borrowed for the purchase of a residential house. This will help in boosting housing stock.

5. Section 80 CCF Section 80CCF allows deduction upto Rs. 20,000 paid ordeposited as subscription to long term infrastructure bonds.

Suggestion Deduction u/s 80 CCF be increased to Rs. 1 lakh. This will help infrastructure development.

6. Section 24 Under Sec. 24, deduction on account of interest payment on housing loans is permissible to owners of rented dwelling units to the fullest extent. In case of owner occupied houses the limit is set at Rs. 1.5 lakh.

Suggestion The deduction on account of interest payment available under section 24 should be made applicable from the year in which capital was borrowed as for principal u/s 80C and should be to the extent of full interest paid at least in respect of one house. In case this is not agreed, at least the limit of Rs. 1.5 lakh should be raised to Rs. 3 lakh for owner occupied houses.

7. Section 54

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Budget wish list

At present, capital gain arising from transfer of any capital asset is exempt from tax in cases where the sale proceeds are invested in acquiring one residential house. Such a restriction is a deterrent to the object of boosting the housing sector, and hence needs to be removed.

It is proposed that this restriction should be removed and the scope be broadened by allowing the exemption as long as the entire capital gain is invested, whether in one or more houses.

INCENTIVES FOR PROMOTING RENTAL HOUSING A2 1. Tax on Rental Income In view of the housing shortage in the country and in view of the fact that not all can afford ownership housing, we need to give a big boost to ‘Rental Housing’.

The following incentives are suggested (for companies / partnership / HUF / Individuals):- a) Income from renting of properties be taxed at a flat rate of 10% b) In order to make property management a viable activity, income of firms which are wholly engaged in maintenance/repair and other specified management services for rental housing blocks may be brought within the ambit of Section 80 IB (10) and Section 10 (23G). c) To improve the effective rate of return (ROR) from renting, it is suggested that the deduction from rental income under Section 24(a) be increased from 30% to 50%. This will promote rental housing. For women and senior citizens, the deduction could be 100%, keeping social requirements and empowerment of women in view.

2.TDS on rental income TDS at source from rental income is deducted @ 15% in the case of individual and HUFs and 20% in other cases out of the gross rental income. The tax deduction at source as above is exorbitantly high because of the reasons that out of the gross rental receipts followings outgoings are deducted resulting in the excess payment of tax in many cases which is claimed as refund from the Department. a) House tax ranging from 20 to 30% of rateable value is levied by the Municipal Authorities in most of the metros and towns. b)An amount equivalent to 30% is allowed as deduction u/s 24(a) for repairs/maintenance, collection charges, insurance etc. c) Interest payment on the borrowed capital.

Due to above outgoings, the remnant taxable rental income works around 40% to 50% of the gross rental income where there is no claim of interest on borrowed funds.

Suggestion Deduction @ 15% in case of individual and HUFs and @ 20% in other cases out of gross rental income is very high and should be reduced to 7.5% in case of individuals and HUFs and 10% in other cases. Deduction for irrecoverable

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rent.

3.In computing the house property income, certain important deductions are not allowable. Such deductions in no way can be said to have been included in statutory deductions of 30% for repairs etc. Such deductions are as under: a) Ground rent being approx. 2 ½ % of the value of land. Land value in metros is very high and as such ground rent is very high. a)Annual value under Income-tax Act is determined by excluding the rent which the owner cannot realize. No provision u/s 24 has been made to allow deduction of irrecoverable rent which the owner has included in the annual value as rent receivable but due to circumstances beyond his control the same could not be realized.

Tax having been paid on such income in earlier years, the deduction u/s 24 should have been provided for irrecoverable rent. It may be mentioned that special provision has been made u/s 25AA and 25B to tax the unrealizable in earlier years. b) Therefore, in all fairness, deduction for irrecoverable rent accounted for in earlier years should be made u/s 24 of I.T. Act. A3. INCENTIVE FOR HOUSING FINANCE 1.Section 36 (1) (viii) The section allows deduction of amount not exceeding 20 per cent of the profits derived from the business of providing long term finance (computed before making any deduction under this clause) for residential houses and carried to Special Reserve. This deduction used to be 40 per cent before 2007.

This provision enables HFCs to re-capitalise themselves as they have small capital base. Reduction in benefit will result in higher tax outgo and make the capital costly.

Suggestion It is suggested that deduction of 40% of profit derived from business of providing long term housing finance, as applicable before 2007 budget, should be reintroduced. Section 36 (1) (viia) 2.Provisions for bad and doubtful debts: The present section

Wish list

February 2013 - March 2013

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Budget wish list

allows deduction to only banks equivalent to 10% of the value of the assets that too for doubtful and loss assets.

Housing Finance Companies as per the directions of NHB and banks as per the directions of RBI are required to make provision for bad debts ranging from 10% to 100% besides derecognition of interest. The section is only applicable to banks and not to HFCs although both are making provisions and derecognising interest as per the directions of the Regulators. Secondly, the deduction is not applicable for sub-standard assets where bulk of the provision is made and interest derecognised.

The provision for bad debts and interest derecognition is done as per international norms of presenting the balance sheet in the most transparent manner.

The disallowance of deduction and considering interest on bad debts on accrual basis for the purpose of tax does not take into account the accounting concept of a Going Concern.

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Suggestion The provision of this section should be extended to HFCs as in the case of banks and all the bad debts should be considered for deduction on provisions made and interest derecognised as per the Regulators’ directions.

3.Extension of Sec.10 (23G) to Housing Finance: Sec.10 (23G) which exempted income from investments made by a financing company in enterprises wholly engaged in the business of developing/ Operating/ Maintaining specified infrastructure facility (the definition of infrastructure facility includes housing projects) has been omitted by Finance Act 2006 wef 01-04-2007.

Suggestion Section 10 (23G) be reintroduced to help HFCs working on thin margin.

A4. FUNDS FOR HOUSING 1.Dedicated Affordable Housing Fund Govt. should consider a Dedicated Af-

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fordable Housing Fund in line with infrastructure Fund exclusively for construction of EWS / LIG housing and lend it to developers at low rate of interest. 2.Access to Pension, Insurance and PF Funds Housing finance is a long-term investment and asset liability mis-match is a major problem for housing finance companies. Access to long-term funds such as Provident, Insurance and Pension funds will ease the situation.

Investment in HFIs should be an eligible investment for pension funds, Insurance funds and Provident Funds.

Access to Bank Incremental Deposits. 3.In order to improve affordable housing finance for the lower and iddle-income groups, housing finance companies get low cost funds. Banks may increase their allocation for housing from the present 3% to 5% of their incremental deposit. The additional 2% incremental allocation may be earmarked strictly for canalizing it through housing finance companies registered with NHB. 4.Real Estate Mutual Fund (REMF)

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Budget wish list

/ Real Estate Investment Trust (REIT).

REMF approved by SEBI should be encouraged. In addition, REITs should also be encouraged and necessary guidelines finalized at the earliest. These together will boost supply of fund to housing and real estate sector and enable equity participants reap the fruits of high yielding real estate sector.

External Commercial Borrowing (ECB).

4.ECBs in housing and real estate sector except affordable housing projects (started in December 2012) is totally prohibited and sector placed on negative list of RBI for bank debt, thus, leaving the sector mainly to private debts.

This has led to increase in cost of fund for private developers and together with increase in land cost has made properties unaffordable to average Indians.

It is, therefore, suggested that ECBs be allowed in all spheres of housing and real estate development, as also in SEZ projects.

A5. SERVICE TAX ON RESIDENTIAL CONSTRUCTION TO BE TAKEN OUT OF SERVICE TAX NET. ‘Construction of Residential Complex service’ came into effect from 16th June 2005. The taxable service was defined as “any service provided or to be provided to any person, by any other person, in relation to construction of complex”.

Construction of complex” means — a) construction of a new residential complex or part thereof; or b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex; “Residential complex” means any complex

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4.Completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (2) or (3) above or 5. Turnkey projects including engineering, procurement and construction or commissioning (EPC) projects.

comprising — a building or buildings, having more than twelve residential units; ii. a common area; and iii. any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly Explanation — For the removal of doubts, it is hereby declared that for the purposes of this clause, — (a) “Personal use” includes permitting the complex for use as residence by another person on rent or without consideration; (b) “Residential unit” means a single house or a single apartment intended for use as a place of residence; i.“Works contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out – 1.Erection, commissioning or installation of plant, machinery, equipment or structures (whether prefabricated or otherwise), installation of electrical and electronic devices, plumbing, drain laying or other installations 2. Construction of a new building or a civil structure or apart thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry or 3.Construction of a new residential complex or a part thereof or

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The services provided by any person, to any other person in relation to execution of a works contract excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams would be taxable under this head as per section 65(105)(zzzza).

Thus, the service tax provisions relating to construction services cover two types of services – (a) Commercial or industrial construction which is taxable w.e.f. 10-9-2004 (b) Construction of complex (residential complex of more than 12 residential units) which is taxable w.e.f. 166-2005. This category of services was included in the definition of works contracts wef 1.6.2007 by amendment to Section 65(105) of Finance Act, 1994.

Composition Scheme Works contract (Composition Scheme for Payment of Service Tax) Rules 2007 has been notified vide notification 32/2007 ST dated 22.05.2007 by the Government for the purpose of specifying the scheme for composition. The person executing works contract has the option to pay tax under the composition scheme at the rate of two percent on the gross amount charged for the works contract. Gross amount shall not include the VAT or sales tax paid on the goods transferred during the execution of such works contract.

Comments 12% Service Tax on residential construction, when Govt. is providing all incentives to boost housing, is like a deterrent.

This combined with rise in excise duty on cement and steel would raise the unit cost by about 4 to 5 percent. Residential construction, therefore, should be taken out of service tax net in the first place.

The exemption should cover the builders and developers who are registered

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Budget wish list

subsidy and loan in such a way that lowest strata of poor get maximum subsidy and Economically Weaker Sections and Low Income Groups get a combination of subsidy and affordable loan.

3. Bank Finance Currently the RBI discourages Banking System from making construction finance available to the developers. They have to depend on private sources of funding which pushes up the cost to the detriment of ultimate buyers. It is, therefore, suggested that construction finance should be made available by the Banking System to the developers.

4. Farmhouse land and agriculture land proposed for non agricultural purposes in Master Plan should be brought under the SARF AESI Act 2002 to enable Banks and HFCs to consider them as securities.

5. Housing Finance Companies may be allowed to open Saving/ Current Accounts.

To reduce cost of funds, the HFCs may be permitted to open low cost deposits (Saving / Current Accounts) for their clients. and paying service tax under the head ‘works contract service’ u/s 65(105(zzzza) of Finance Act, 1994.

If the above is not possible, at least, the rate of service tax in case of ‘works contract service’ should be brought down from 4% to 2% under the Composition scheme. This is necessary because many of the real estate companies/ builders/ developers who have registered themselves under works contract service after 1.6.2007 and opted for composition as permitted under law, from June 2007 did not get the benefit of reduction in service tax rate from 12% to 10%, announced by the Government as a part of stimulus package w e f 24.2.2009. In fact, they continue to pay service tax at the rate of 4% from March 2008 to date. Such a reduction of rate under Works contract (Composition Scheme for Payment of Service Tax) Rules 2007, will reduce the final price of

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the product by almost 2% to customers and is necessary in order to have a level playing field with the builders following normal scheme.

A6. OTHER FISCAL AND REGULATORY ISSUES 1. Measures to down market housing finance to poorer sections of society.

Housing finance today addresses the need of only middle class population.

The banking industry and the HFCs should work out mechanism which can address the needs of poor sections as well as the rural households by subsidising interest rates, pooling funds and relaxing mortgage requirements 2. Graded scale of Grant/subsidy/loan for Social Housing There should be graded scale of grant,

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5. Risk Weightage on Housing Loans.

LTV ratio in case of housing loans should not exceed 80% as per RBI guidelines.

Risk Weightage on housing loan, as applicable now, is 50% for loans up to Rs. 30 lakh and 75% for loans above Rs. 30 lakh with LTV less than 75%. For loans above Rs. 75 lakh, risk weightage is 125%. For loans on commercial real estate, it is 150%. It is suggested that risk weightage on housing and commercial real estate be brought down to 50% and 100% respectively, as earlier.

6. Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill.

The enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, passed by Parliament in December 2004, arms HFIs and Banks in recovering dues from defaulting borrowers. The Doors of Debt Recovery Tribunal

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Budget wish list

(DRT) should be opened for HFCs also to enable them to file suits with DRT. 7.Industry Status to Realty Sector Real Estate Development should be given special status on a par with industry.

“Industry Status” will bring about major transformation in the outlook and nature of the sector. It will enthuse investments, attract large companies and most importantly inculcate corporate culture and industry discipline, which will immensely benefit the economy.

“Industry Status” will also help the sector access bank lending at average interest rates at low collateral as against high risk rates prevailing at present. Further, it will help sector access central / state subsidies in case developers are building in backward regions / north eastern regions and raise ECBs. 8. Setting up of Mortgage Insurance Companies.

Setting up of Mortgage Insurance Companies under Mortgage Credit Guarantee Scheme should be speeded up to encourage secondary mortgage market.

9.Time bound incentives for first time home buyers.

Principal cost of the house up to Rs. 15 lakh may be exempted from tax over a 5 year period. This will incentivise low income group and middle income group people and help them in acquiring houses 10. Sale of property to NRIs to be given status of deemed export.

Sale of property to NRIs should be given the status of deemed export and 100% Income Tax exemption be available to builders on income earned by sale of property to NRIs and money earned in foreign exchange.

11. Stamp Duty In order to reduce transaction cost of housing and to discourage black money deals in housing it is important that stamp duties are reduced to 2-5 per-

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cent. Reduction in stamp duty will generate more revenue to State Govts. by increasing transactions and help in reducing cost of securitisation of housing loans.

12. Voluntary Disclosure of Unaccounted Money To promote social housing, amnesty for deployment of unaccounted money as one time measure for a limited period could be considered.

13. Introduction of title insurance in respect of newly built properties Title insurance is an insured statement of the conditions of title or ownership of an immovable property. This insurance can protect owner and lender against defects in title and title documents. In the event of a defect discovered in the title of the property, insurance company will compensate the owner. This insurance will offer following benefits: i) Title insurance would be a step in curbing black money in the economy ii)Intending owner can be confident of the title of the property as the insurance company will carry out an extensive title search of the property. iii) In the event of defect in title of property, the owner can be compensated by the insurance company iv) Title insurance will encourage several NRIs and international investors in investing in Indian real estate market v) Insurance would reduce the risk of the banker, which in- turn would lead to reduced interest rates and push in the real estate sector.

14. Foreign Exchange Management (Acquisition and transfer of immovable property in India) 2000. a)Amendment in Section 6 (b)(ii). b)The current rules permit repatriation of foreign exchange, from the sale of an immovable property subject to amount received in foreign exchange for the purposes of acquisition. It is proposed that the repatriation should not be limited to amount invested in foreign exchange but should also include profits

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earned in the transaction of sale of the immovable property.

Amendment in Section 6 (b)(iii) The current rule permits repatriation of sale proceeds subject to maximum of two such houses.

It is proposed that the restriction of two houses should be removed and investor should be permitted to repatriate in respect of any number of residential units.

A7. Special Economic Zones Section 10AA of Income Tax Act 1961 exempts, from Income Tax, 100 per cent of profits or gains of an entrepreneur, derived from export of articles or things or services from a Special Economic Zone (SEZ) established under SEZ Act 2005, for a period of five consecutive assessment years beginning from assessment year relevant to previous year in which the unit begins operation, and 50 per cent of such profits or gains for further five assessment years and, thereafter, for the next five consecutive years, so much of the profit as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account (to be called Special Economic Zone Reinvestment Reserve Account) and to be utilized for the purpose of the business of the assessee as specified in the Act. Section 80IAB of Income Tax Act 1961 exempts, from income tax, 100 percent of profits or gains of a developer derived from the business of developing SEZs notified under special Economic Zone Act 2005, for ten consecutive assessment years in a block of 15 years beginning from the year in which the SEZ was notified by the Central Govt.

Budget 2011 has specified that exemption under IT Act 1961 would be available to only those SEZs which are approved on or before 31st March 2012 and begin manufacturing or producing or providing services on or before 31st March 2014. Direct Tax Code (DTC) does not cater for concessions available u/s 10AA and 80IAB. It proposes Minimum

February 2013 - March 2013

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Budget wish list

Alternate Tax (MAT) at the rate of 18.5 percent on the book profits wef 01st April 2012 on developers of SEZ and units operating from the SEZ. The SEZ developers are also required to pay Dividend Distribution Tax (DDT) at 15% post 01st June 2011.

Suggestion As development of many SEZs has been delayed due to conomic slowdown in view of rising interest rates, lack of investors and global uncertainties, it is suggested that the cutoff date for completing development of SEZs be reset to 31st March 2013 and for starting manufacturing, etc to 31st March 2015.

A8. MISCELLANEOUS ISSUES 1.Incentive for Certified Green Building Incentive in terms of 50% reduction in Property Tax for certified Green Buildings from recognised institutes should be provided. This will encourage End User to go for Green Buildings and will in turn also encourage construction of more environmentally friendly buildings.

The incentive program should also allow a developer to apply for additional FSI of 5% if the project achieves a Green Building Certification or Rating. This should apply to all types of building projects, residential or commercial.

2.Urban Land held as stock in trade [Section 2 (ea)] In a major change effected during April 1993, most of theassets were taken out from the levy of wealth tax except for a few items like jewellery and bullion, motor cars, boats, yachts which were excluded from such levy so long as they were held as stock in trade have been exempted from the purview of wealth tax, there is no reason for taxing urban land held by a developer as its stock in trade.

Suggestion: Hence, we recommend that a similar exemption be granted to urban land held

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by an assessee as stock in trade by inclusion of the following proviso under Section 2(ea) (i) (v) after the word ‘urban land’: Provided that where such urban land is held by an assessee as stock in trade, who is engaged in the development of vacant urban land in pursuance of permission granted by a competent authority of the state/ central government, such land shall be deemed to be excluded from the assets specified in this sub clause.

3.The land should be made available by the Govt. agencies in different States of India for the development of residential housing projects at concessional rate.

This will help in reducing cost of housing units which has shot up 50 – 100 percent in last two years.

4. The entire set up of District Town Planning (DTP) organisations should be re

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organized to make it simple, transparent and accountable. Archaic municipal byelaws should be redrafted to suit present day requirements and plan approvals made single window.

5.Environment clearance for housing projects All housing projects exceeding certain parameters require environmental clearance. This is a major irritant for the industry. Therefore, if the master plan of a city / town, whenever prepared by the concerned Town Planning Department, involves environment authority at approval stage itself and clearance from them is obtained then it would be very helpful to the industry.

6.External Development by Govt. Agencies Govt. collects external development charges from the developers but external

Budget wish list

development does not keep pace with the project as a result project completion and occupation gets delayed and developers besides loosing huge amount due to delay has to cough up substantial amount on extension of licenses etc.

External development should, therefore, be made time bound and completed before the completion of project by the developers.

A9. Corporate, Distribution Tax 1.Corporate and Minimum Alternate Tax Corporate income tax rate in the case of domestic company has been at a level of 30% plus surcharge and education cess (effectively working out to 33.99%) for over five years now. All domestic companies are required to pay corporate tax at the rate of 33.99% on their taxable income. Apart from this,corporates are also required to pay corporate dividend tax at the rate of 15% plus surcharge and education cess, on the amount of dividend distributed by the company.

Further, under the existing provisions of section 115JB of the Income Tax Act, a company is required to pay a Minimum Alternate Tax (MAT) on its book profit.

The amount of tax paid under section 115JB is allowed to be carried forward and set off against tax payable up to the tenth assessment year immediately succeeding the assessment year in which tax credit becomes allowable under the provisions of section 115JAA. Sub-section (1) of section 115JB was amended from assessment year 201112 to increase the MAT rate to 18 per cent from the existing 15 per cent. In fact, the rate of tax was ten per cent for assessment year 2009-10 and was increased Comments Effective Tax rates have to come down for ensuring better compliance and greater revenue to the exchequer. In line with this philosophy, Direct Tax code in its original draft had proposed the effective tax rate to be about 25%.

It is suggested that the corporate tax

rates be brought down to 25% inclusive of surcharge and education cess in the coming budget itself.

If it is not possible to reduce the corporate tax rates for any reasons, the surcharge and education cess be removed in the above tax rate, thereby reducing effective tax rate by about 4%. i.e Tax rate should remain at a maximum of 30% including surcharge and education cess.

Similarly, the Minimum Alternate Tax rate u/s 115 JB of Income Tax Act has increased more than double since its introduction and this rate has been subjected to changes very often at the cost of industry and tax payers. Frequent tinkering with tax rate works against the cannons of taxation. It should be restored to 15% (maximum). This reduction in rate will increase the productive investments and capital formation by corporates 2.Tax on distributed profits of domestic companies.

Presently, the provisions of dividend distribution tax u/s 115 O of Income Tax Act are as under: (1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the incometax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of June, 1997, but on or before the 31st day of March, 2002, whether out of current or accumulated profits shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) at the rate of ten per cent . This rate was increased to 15% with effect from aseessment year 2007-08. The effective tax rate works out to much higher now at almost 17%. (15% plus 7.5% surcharge and 3% education ess) (2) Notwithstanding that no income-tax is payable a domestic company on its

total income computed accordance with the provisions of this Act, the tax distributed profits under subsection (1) shall be payable such company.

(3) The principal officer of the domestic company and the company shall be liable to pay the tax on distributed profits to the credit of the Central Government within fourteen days from the date of -(a) declaration of dividend; or (b) distribution of any dividend; or (c) payment of any dividend, whichever is earliest.

(4) The tax on distributed profits so paid by the company shall be treated as the final payment of tax in respect of the amount declared, distributed or paid as dividends and no further credit therefore shall be claimed by the company or by any other person in respect of the amount of tax so paid.

(5) No deduction under any other provision of this Act shall be allowed to the company or a shareholder in respect of the amount which has been charged to tax under sub-section (1) Comments: Dividend distribution tax leads to double taxation. Dividend is nothing but distribution of profits of the company. It is after paying income tax on the profits earned by the company that the profit is to be distributed among the shareholders. Dividend distribution tax is levied at this stage. The corporates are already paying tax at a very high rate of 34% and are further asked to pay the corporate dividend tax @ 16.6% on behalf of shareholders. This, in fact not only amounts to double taxation but also deprives the shareholders the usual concession in tax rate that he would otherwise enjoy for being an investor in long term capital asset(more than one year). In other words the dividend distribution tax should be totally be done away with and it should not be taxed both in the hands of company as well as in the hands of shareholders.

February 2013 - March 2013

39

Pulse

Improvement in office space

(Compiled by Trivita Roy)

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February 2013 - March 2013

41

Landscaping

Ecofriendly Permeable Surface in Landscaping

T

he hydrologic cycle is the movement of water from the atmosphere to the earth’s surface. Water moves through one or more components of the cycle, including evaporation, transpiration, runoff, precipitation, infiltration, percolation and its eventual return to the atmosphere. Urbanization dramatically affects the hydrologic cycle by altering the relative percentage of precipitation that contributes to groundwater, evapotranspiration, and runoff relative to the natural ground cover. Specifically, urbanization increases runoff by decreasing the amount of water that infiltrates into the ground and is taken up and transpired by plants. This causes climate change and frequent flooding during short peak rainfall which causes a lot of inconvenience to city dwellers.

It is now being accepted that it will not be possible to solve these problems using traditional drainage methods, and that stormwater needs to be managed on and above the ground surface and that this will require the participation of different groups of stakeholders which have been involved in the past. Developers and realtors have an important role to play in the management of runoff water by maintaining a balance between predevelopment runoff and post development runoff.

Reducing impermeable surface is the simplest solution to this problem. As developers consider choosing a permeable surface whereever possible, permeable pavement is attractive, low maintenance, environmentally friendly and relatively inexpensive. It not only reduces stormwater runoff but also reduces the heat island effect and improves the health of nearby plants. Although permeable pavement technology is not yet durable enough to withstand high traffic areas like busy roads, it works well for residential areas and other low-tomoderate traffic surfaces like internal roads, pavements and parking lots. Busy roads should have permeable surface pavements at a lower level with breaks in the kerbing to let the rainwater flow off the roads into these surfaces.

This will drastically reduce peak rainfall floods.

Permeable surface of any kind should not be installed on soils with low permeability themselves, nor should they be installed in areas with a high probability of toxic spills.

GEETHA PRASAD BFA (Murals) J.J School of Fine Arts PGD in Landscape and Horticulture (JNTU) M/s Callos Hortus Landscape Designers Mobile: 9246191992

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Types of Permeable Surfaces 1. Porous Asphalt. Porous asphalt looks very similar to traditional nonpervious asphalt, and uses the same equipment to mix and install. The permeability is created by reducing the amount of tar and removing the smallest particles from the asphalt mix, allowing water to pass freely through small air ways and passages in the asphalt.

2. Porous Concrete. Porous concrete also uses the same mixing and installation equipment as traditional concrete, although it looks noticeably rougher.

3. Plastic Grid Systems. Plastic grids provide structural support and prevent erosion, and are filled with gravel or soil, usually planted with grass. Also known as geocells and reinforced turf, this type of surface is best suited for low traffic areas. Most companies’ use 100% recycled plastic material in the production of the grids.

4. Block Paving. Bricks, concrete blocks, and other interlocking pavers, generally set into a layer of small aggregate are an attractive semi-permeable option, especially well-suited to low or moderate traffic areas such as walkways, residential driveways, and small parking lots.

5. Other Materials. Easy, inexpensive do-it-yourself permeable pavement can be created in areas with the use of gravel, mulch, dirt, or similar materials. However, these typically suffer from compaction that reduces the permeability over time, and hence requires regular maintenance.

February 2013 - March 2013

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APREDA Advertorial Pulse Accolade

diary

Advertorial

Mementoes being presented as token of appreciation to the Property Show Organising Committee

Mr C Uttam Kumar Sharma, advocate and tax consultant, speaking at the APREDA Monthly Meeting

Mr H Bhawarlal Jain, Executive Vice President, APREDA, presenting a bouquet to Mr P Seetharam Reddy, Member of APREDA

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Mr P Prem Kumar, President of APREDA, welcoming Mr K Sitapathi Raju, to the APREDA Monthly Meeting

Mr M Murali Mohan, Chief Mentor of APREDA, and Mr Prem Kumar presenting a memento to Dr B Purushotham Reddy, Director, DTCP

Dr B Purushotham Reddy, Director, Director Town and Country Planning speaking at the APREDA Governing Council Meeting

February 2013 - March 2013

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Interiors

Give a vibrant touch to your home

W

ith the advent of technology, doing up the interiors and exteriors of your house is no more limited to staple whitewashing or staid colours like cream and white. Not only are there several other choices of shades, tints and tones but also a combination of colours to lend a vibrant touch to your house.

As a Hyderabad-based interior designer says, painting is in fact the most inexpensive option nowadays. Other than that, one can pick from a wide range of choices such as designer boards, wall panelling, rock finish or brick finish. Alternately, one can also opt for murals, an option that is increasingly gaining popularity in the corporate world.

Another trend is contrasts, i.e., to paint one wall a light shade and the other, a darker one. Popular brands in the market are experimenting with all kinds of products. For instance, Asian Paints

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has a variety of paints and wallpapers for doing up children’s rooms. With the introduction of glow themes and ceiling themes, their aim is to expand the market by catering to children as well while at the same time ensuring that the ceiling is not left looking bare. They also provide samples of paints for customers to try first so that they can finalise what they want only after deciding what looks good on the wall.

A look at the websites of paint manufacturing companies is a good idea.

Their websites can help you calculate the cost and quantity of paint you will be required for your house, choose colours, patters or textures for your walls and find out where you can buy paint. In other words, it is possible to take a virtual tour of your new home through the templates of houses that the website offers.

Shilpi Chatterjee, a working professional, says, “I chose to paint my walls pink

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and purple because I wanted a different colour combination. Bright colours enhance the beauty of the room.” Environmentally-conscious persons swear

by Nerolac’s eco-friendly range called ‘eco-clean’.

Similarly, some others vouch for Berger Paints’ ‘Breathe Easy’ range that promises to leave no smell after painting. In addition, there are also paints that are dust-proof, heat-proof and water- proof.

Some of these leading names also offer a basic theory on colours which can help people buy a shade they relate to.

As most interior designers in the city say, “Market trends show that even with so many options available in the market, painting still remains the popular choice.” The big names in the business are all striving to come up with paints that will last longer and are also not too expensive.

- By Ashu Tiwari

February 2013 - March 2013

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Hall of fame

CII-ITC Sustainability Award for Mantri Developers

M

antri Developers Pvt. Ltd., South India’s leading real estate developer and a member of APREDA, has been conferred with the CII-ITC Sustainability Award for 2012. The award came in recognition of Mantri’s commitment to excellence on the journey towards sustainable development. This is for the first time that real estate developers have been selected by CII for this prestigious award.

The President of India, Mr Pranab Mukherjee, presented the prestigious award to Mr. Sushil Mantri, Chairman and Managing Director, Mantri Developers Pvt Ltd., at a special event oraganised by CII in New Delhi recently.

Speaking on achieving this distinction, Mr. Sushil Mantri said: “I would like to thank CII for bestowing this honour on us. I am extremely honoured and elated. It is a matter of great pride to see that our commitment and efforts to drive sustainability within and outside the organisation has been recognised and we feel more encouraged to work harder towards driving the ‘Triple Bottom Line’ approach.”

‘Triple Bottom Line’ approach signifies corporate strategy and imbues its execution with a larger sense of purpose, encompassing economic, social and environmental dimensions. The award evaluation was based on an array of parameters like social performance, community development initiatives,

Mr. Sushil Mantri, Chairman and MD of Mantri Developers receiving the CII-ITC Sustainability Award from President of India Shri Pranab Mukherjee at Vigyan Bhavan, Delhi economic growth, quality management, environmental practices, product innovation, customer and vendor satisfaction and human resource practices.

“I feel elated that we have won this citation in the first attempt and the credit for this goes to all of our employees, customers, investors and well wishers. I would like to thank all of them,” added Mr. Mantri.

The CII-ITC Sustainability Awards are an industry benchmark to recognise the contribution of notable thought leaders, promoters and institutions which have helped translate the vision of creating a sustainable world into reality and have successfully instituted sustainability in some element of their business.

Udyogshree Award for P Harinath Babu Managing Director of Surya International, Mr Pendyala Harinath Babu, received the 36th CITD National Navaratna Quality Udyogshree Award for promoting and distributing products of international standard at affordable prices.

He is currently distributing many well-known brands of products and has a rich experience in this area.

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Mr. Sushil Mantri was recently declared founding member of the CII-Indian Green Building Council at the ‘Green Building Congress 2012’.

About Mantri Developers Mantri Developers Pvt. Ltd. is a leading developer of world-class homes, IT parks, retail spaces and educational institutions. Mr. Sushil Mantri founded Mantri Developers in Bangalore in 1999 and in just 12 years, the company has built over 24 projects. Today, Mantri Developers has to its credit over 10 million square feet of constructed area, over 30,000 satisfied residents and 8 million square feet under various stages of construction. For more information, log on to http://www.mantri.in

February 2013 - March 2013

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Regulations

Layouts –

the road

ahead

lation. It organises and coordinates the complex relationships between urban land use and charts a course for growth and change and serves as a basic framework for guiding future developments.

By Sista Vishwanath Former Member (Urban Planner), HMDA & Director(Planning), HMDA The former Director (Planning) HMDA discusses here the whole gamut of layouts in the realm of planned development.

There are four basic stages for ensuring the same, viz. (a) Master Plan or statutory Development Plan; (b) Zoning regulations (c ) Land development rules and (d) building rules Master Plan The Master Plan is a guide to orderly city development to promote health, safety, welfare, and convenience of the popu-

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The Master Plan is the guide to the city and design of public utility services like water supply, sewerage, electricity distribution, street lighting, garbage disposal, etc. It thus addresses problems and guides growth at the city scale.

Zoning regulations Zoning regulations specify what activities are permissible in a land use zone or in a given site or plot. It also specifies the degree and scale of activities that are permissible. It basically segregates compatible uses and activities from the noncompatible ones/nuisance activities.

Land development regulations Assemblage of land requirements: (i) Land development in HUDA area would be promoted and facilitated in any of the following manner: (a) Land Pooling or Township Development Scheme (b) Layout Development Schemes

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(c) Group Housing Schemes/Cluster Housing (d) Individual plot sub-division /amalgamation (ii) Excepting in cases of 1.0 (d) above, no Assemblage of land for development shall be permitted unless such a Scheme or layout development is undertaken 2 through a licensed developer, i.e., (iii)Land Pooling Scheme or township development should be a self-contained township planned and developed through a licensed developer/firm/development company together with work place and places of residence with all attendant facilities and amenities in such township and in accordance with the approved township policy of the Government. (iv) layout development scheme may be permitted for residential, commercial, industrial, institutional, recreational and truck terminal/traffic node and other activities like Corporate Townships, etc. subject to the compliance of these regulations and development specifications of HUDA. Individual plot sub-division/amalgamation would be allowed only in case of plots forming part of approved Land Pooling schemes or layouts approved by the Competent Authority.

Layout regulations In our State as well as in other States in the country, excepting Gujarat, land development is popularly done through layouts.

Layout regulations -- the philosophy Layout regulation is an important tool for regulating land development. It is based on the principle that the use and development of land constitutes a right bestowed by the community upon the individual, and this right may be withdrawn or withheld if and when the individual violates the conditions upon which it is vested in him. The power of eminent domain, the police power, the power to tax property, and the power to regulate the use of land are expressions of this principle, and it provides the structure upon which the devel-

Regulations

opment of urban land is built.

Layout regulations by which sub-division of land are effected is the method of transforming a city Master Plan into reality. Many elements in the Master Plan are realised at the time when the land is developed. Major roads are delineated, street and access roads are paved, civic amenities are installed, Transportation and other networks and services are extended and expanded.

The Master Plan is either realised or lost in the sub-division of land. Thus, the control a community retains over land subdivision is the means by which the elements of the Master Plan are enforced. In effect, the community reserves an equity in the land and vests in the individual the right to own and use the land subject to the requirements for the general welfare of the community. The Urban Development Authority or the Competent Authority aids the layout developer in planning his land, suggests improved methods of site planning, while integrating it with the overall Master Plan. A layout developer is required to install, at his expense and prior to disposing the plots, all the required improvements like road network, street lighting, dedicating public open spaces, community amenities, etc.

Apart from layout regulations and Master Plan provisions, it is the land revenue laws which affect and influence the sub-division of land. Deficiency in administration and implementation of revenue laws has resulted mainly in premature and sub-standard layouts.

The activities of the developer shape the future of the community. Where such activities are uncontrolled or inadequately controlled, they do irreparable damage to the area resulting in depriving the inhabitants of facilities and amenities and excessive cost of public services.

Gap between Master Plan and Layout Plans In Andhra Pradesh and in UDA areas in particular, there is a gap between the Master Plan and the layout plans.

Layout plans essentially cater to local level or at best the neighbourhood level. The intermediate level, viz. sector level or area level planning is missing.

This would essentially mean a detail plan or framework of network for about 250 acres. The above gap is resulting in having proper arterial and sub-arterial roads since the framework at Sector level is missing. We have situations where good planned layouts with 60 feet and 100 feet roads ending up nowhere.

In places like Maharashtra and Gujarat, the above problem is addressed through Town Planning Schemes. However, these have a long gestation period of average 10 to 12 years and in dynamic real estate situations cannot cope with the demand and supply for housing. Further, for Town Planning to succeed, the land records have to be upto date and proper; the arbitration aspects have to be clear, etc.

Given the above shortcomings vis-a vis Andhra Pradesh, Town Planning mechanism of ensuring area development is not suited to A.P. Gap in Area level Infrastructure Facilities Another gap is that of area level facilities and infrastructure. The developer confines his infrastructure and amenities to the layout or colony, i.e. at the neighbourhood level. The problem of trunk infrastructure and off-site infrastructure is not being addressed. This results in approved colonies or neighbourhoods that are like islands of good infrastructure in the midst of a sea of sub-standard area level facilities.

Thus an alternative could be incorporating provisions for Area Development Plans in the AP Urban Areas (Development Act, 1975 – which would essentially consist of planning secondary level Circulation Network and other infrastructure facilities at Sector level after detail physical survey; working out mechanism of implementing and charging for the said secondary level infrastructure facilities.

An Area or Sector level could comprise an area ranging from 300 to 500 acres.

It is only when the Area level planning and dedication is done that layout developments should be encouraged within this framework – i.e. the area is ripe for systematic colonies development.

Minimum site area for layout development The other lacuna is that there is no minimum site area for undertaking approving a layout development. Presently, layouts are approved in areas ranging from half-an acre to even 100 acres.

This results in haphazard development of infrastructure of circulation network and infrastructure facilities. Smaller layout means more area under the circulation network and less flexibility in the pattern. An optimum size for assemblage of land for layout should therefore be insisted. This may be 20 Ha or about 50 acres for layout development so as to facilitate more optimum use of land, better layout pattern, and ensuring better scale of infrastructure facilities and amenities.

Institutionalising the layout development process Area or Sector development can be successful when proper assemblage of land is ensured. Presently there is no process for regulating this. On one side are the land revenue laws that inhibit amalgamation of parcels of lands, while on the other, we have unclear laws for ensuring planned and better standards of neighbourhood and area developments.

Making layout development process institutionalised can bridge the gap.

This could essentially consist of the following:-(a) Privatizing the Area or Sector level planning: At present the UDAs are preoccupied with City level Master Plan preparation or Revisions and many a time not in a position to bestow attention to Area level Planning that requires detail inputs like detailed physical survey, addressing local problems of land assemblage and amalgamation, dedication of infrastructure facilities and amentites that require a high level of coordinated effort.

February 2013 - March 2013

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Regulations

The process therefore should be decentralised with the involvement of private sector in area planning.

Privatization of Area level or Sector level planning would imply that for an area or sector identified for implementation of the services are undertaken by private developers. This would have to be ensured through consultants. Public process is to be replaced. Rather, it would be supplemented with private efforts. However, this does not mean that the due statutory process can be overlooked. Thus, like layout regulations there have to be regulations, terms and conditions for facilitation of privatization of Area level planning and development, levying user charges, etc. (b) Registration of developers All Area level development and individual colonies or neighbourhood development should be done only through registered developers to ensure quality and accountability. The registration of developers may be a two tier system, viz., registered primary developers for area level infrastructure facilities and amenities; and secondary developers for colony level facilities and amenities.

Credit rating system should be introduced so that quality and accountability is ensured. Ways and means should be worked out so that the system is operational and viable. Here it may be emphasised that the investments made by the primary developer have to be protected and recouped from the secondary or individual developer who has to only develop the local infrastructure integrating with the primary or trunk facilities. (c) Primary and secondary assemblage of land There is lack of integration between land laws and Master Plan and area level planning for ensuring planned urban development. The key factor in ensuring orderly area development and individual colony development is assemblage of land and the application of various land revenue laws presently are hampering this. As pointed out earlier, it is the defi-

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ciency in administration and application of land revenue laws that is resulting haphazard developments and sub-standard layouts. Thus the land laws need to be modified and dovetailed with the urban development laws, viz., promoting and facilitating growth in the identified areas and severely restricting in conservation or non-developable areas identified in the Master Plan.

The assemblage of lands should be facilitated through the housing cooperative societies as well as through accredited developers. There could be a small number of primary housing cooperatives for land assemblage, which can have a number of individual cooperative societies/registered developers under them, whose activities and housing allotments could be regulated by the primary housing societies, etc.

The primary housing cooperatives should be preferably on work place/sector basis, viz., public sector institutions, private factories, private offices, shop keepers, educational institutions, etc. so that the group is well identified for greater accountability in the development process.

Besides the above, the plot sizes, type of development, viz., detached housing, semi-detached/row type housing, group housing could be properly planned and

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regulated through them by the competent authority.

Make a single authority responsible for area level and layout (d) Development: At present, while planning powers are vested with the UDAs, the local bodies as well as UDAs concurrently exercise the layout development powers.

In this duplicity, the implementation of area level development facilities as well as individual facilities are getting hampered.

Therefore, there is a need for making a single authority responsible for layout development. This will also give rise and scope for (e) Utilizing the Area Development and layout process as an effective tool for creating community facilities: Besides the norm for hierarchy of secondary and local circulation network, the area level regulations should have specific provisions of say 2% area for reserving sites for community facilities that could be used as leverage for developing these community facilities as well as parks/ playgrounds by the UDA. (To be concluded)

Reglations

February 2013 - March 2013

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Auspicious days

February 2013 Date Day Time (IST) A.M. P.M. 1 Friday From 06:38 - 07:14 pm 4 Monday After 04:48 pm 5 Tuesday From 06:38 am - 03:19 pm 6 Wednesday After 07:03 pm 7 Thursday From 06:37 am - 11:34 am 8 Friday From 09:30 am - 06:02 pm 13 Wednesday From 06:35 am - 08:14 pm 14 Thursday From 08:19 am - 09:51 pm

March 2013

Auspicious days

A.M. P.M. 7 Tuesday From 05:49 am - 09:46 pm 12 Sunday After 11:52 am 13 Monday From 05:47 am - 04:53 pm 18 Saturday From 10:04 am - 03:55 pm 20 Monday After 05:49 am 21 Tuesday From 05:45 am - 09:45 pm 23 Thursday After 06:52 am 24 Friday After 12:40 pm 25 Saturday From 05:45 - 20:23 26 Sunday After 10:49 pm 27 Monday From 05:45 am - 12:47 pm 28 Tuesday After 12:09 am 29 Wednesday From 05:45 am - 09:58 pm

Humour corner

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Trend

Hyderabad is still preferred destination

Market rates

(Residex, which has been set up by the National Housing Bank (NHB), tracks the movement of prices in the residential housing segment. The movement for the July-September period of 2012 indicates a stable performance for Hyderabad compared to other metros).

Locality Price(Rs/Sq.Ft.)

Hi-Tech City/Madhapur

3500-5000

Attapur

2200-3000

Habshiguda

3500-3700

A S Rao Nagar

2000-3000

Hyderguda

3000-3500

Barkatpura

4000-4800

Hasmathpet

2200-2500

Bachupally

1800-4000

Hydernagar

2500-2800

Bandlaguda

2200-3000

Jeedimetla

1800-2000

Banjara Hills

5000-7500

Jubilee Hills

6000-7500

Bollaram

1800-2800

JNTU Road/Kukatpally

4500-5500

Chintal

1800-2000

Kondapur

2500-3800

East Marredpally

4200-5000

L B Nagar

2500-2800

Erragadda

3000-3800

Marredpally (Secunderabad)

3400-4300

Gachibowli

2800-4200

Mehdipatnam

3000-4200

February 2013 - March 2013

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Projects

real e s t a t e RESIDENTIAL

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Projects

o n o ffer

February 2013 - March 2013

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Projects

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Projects

commercial

February 2013 - March 2013

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Projects

PLOTS

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Projects

villas

February 2013 - March 2013

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Projects

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February 2013 - March 2013

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