‘Opportunity fund’ managers favor urban areas, commercial real estate

The Architectural Team and Stephen Chung

Commercial real estate in large urban areas will be the big winner from the tax scheme aimed at boosting investment in needy areas, according to an analysis released in November.

But who most benefits from commercial real estate deals remains up for debate.

Fund managers raising capital through the Opportunity Zone incentive programs are most focused on commercial real estate and multifamily housing, primarily in the Northeastern U.S., the National Council of State Housing Agencies said.

NCSHA reviewed public information on 34 such “Opportunity Funds,” and found that commercial real estate is the investment focus of 24 of them. Multi-family residential development is the focus of 23.

Ten of the funds focus on the Northeast, and five specifically target New York. Only two funds refer to investment in rural areas.

As previously reported, Opportunity Zones are pitched as a win-win, but some housing observers worry that they may funnel investment dollars to areas that are already in the process of gentrifying, accelerating that process and leaving behind areas that need the most help.

Many sources told MarketWatch that investors will see real estate as a more easily understandable means of putting their money to work than other programs such as education or labor.

[“source=cnbc”]

ESR-Allianz Real Estate JV to invest $1 billion in India

Warburg Pincus-backed ESR is one of Asia’s largest developers and operators in logistics and warehousing. Photo: Bloomberg

Warburg Pincus-backed ESR is one of Asia’s largest developers and operators in logistics and warehousing. Photo: Bloomberg

Bengaluru: Asia Pacific-focused logistics developer e-Shang Redwood (ESR) has entered into a strategic partnership with global asset manager Allianz Real Estate to invest around $1 billion, including debt, into India’s rapidly growing logistics and industrial property market.

The joint venture will focus on developing large-scale logistics and industrial facilities in eight key cities—Mumbai, Pune, Chennai, Delhi, Ahmedabad, Kolkata, Bengaluru and Hyderabad—with an opportunistic approach to investments in other markets in India, the companies announced on Friday.

In addition, the investment programme will also identify opportunities to acquire assets in these cities.

“We are delighted to partner with Allianz, an existing strategic partner of ESR in other geographies. This JV with a leading institutional investor who has deep experience in Asia marks a key milestone in our regional growth plan,” Charles de Portes, co-founder and president of ESR, said in a statement.

The proposed investment programme will start with an immediate equity commitment of $225 million, to be funded on a 50:50 basis by Allianz and ESR. This would subsequently be converted into a $1 billion assets under management platform. The programme’s strategy is to leverage structural trends in tier one and selective tier two cities to build a long term, cash flow-positive logistics portfolio by acquiring a blend of develop-to-core, forward purchases, and stabilized or stabilizing assets.

On Thursday, ESR kicked off its first project in India, an industrial and logistics park in Chakan MIDC (Maharashtra Industrial Development Corporation), Pune.

Warburg Pincus-backed ESR is one of Asia’s largest developers and operators in logistics and warehousing, formed by the merger of e-Shang Cayman Ltd and Redwood Group Asia Pte. Ltd in 2016. Based out of Hong Kong and Singapore, it owns and manages around 7.3 million sq. m of assets in China, Japan, Singapore and South Korea.

Alongside the growth in the e-commerce sector in the country, the increasing internet and smartphone penetration, growing acceptance of online payments and favourable demographics will continue to propel e-commerce growth, spurring demand for modern logistics facilities, ESR said.

“India’s logistics sector is coming of age. The sector is benefitting from a lot of favourable trends, such as stellar consumption patterns, continued infrastructure spending, increasing transparency and the nation-wide implementation of a uniform indirect tax system,” said Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate.

In India, the warehousing and logistics sector attracted investments of more than a billion dollars in 2017 and is witnessing a huge interest in building businesses around steady rental income. Canada’s Brookfield Asset Management Inc. is planning to enter the industrial real estate space, while Sydney’s LOGOS Group and Assetz Property Group from Singapore partnered in 2017 and are scouting for land. Embassy Industrial Parks Pvt. Ltd, Ascendas-Singbridge Group and Mahindra Lifespace Developers Ltd also plan to build industrial parks and clusters.

[“source=cnbc”]

Don’t misuse I-T laws, tax rates already low: CBDT to industry

CBDT Chairman Sushil Chandra addressing a CII interactive session on Union Budget 2017-18 in New Delhi.   | Photo Credit: PTI

Central Board of Direct Taxes (CBDT) Chief Sushil Chandra today asked the industry to refrain from misusing provisions of the law to evade taxes, saying the effective tax rate for big companies is already 26% on account of various exemptions.

He said the industry should act more responsibly than the salaried class in paying taxes and help build a tax compliant society.

“I want to drive home that point very clearly before the industry that you should be more tax compliant, automatically rates will come down. We are ready to move with you for making the society tax compliant. Industry has got much more responsibility than a salaried person,” Chandra said while addressing the CII post-Budget meet.

In 2018-19 Budget, Finance Minister Arun Jaitley proposed to lower corporate tax rate to 25% for businesses with turnover of up to ₹250 crore.

Over the last three years, the government has announced reduction of taxes in a phased manner for various categories of corporates and currently only 7,000 corporate houses are still in the 30 per cent slab.

However, Chandra said that the effective tax rate for large companies works out to be 26 per cent after taking into account various exemptions which they enjoy.

“26 per cent is the tax rate for bigger companies after exemption, because all exemptions cannot go overnight… So we have covered all the companies into low tax regime that is 25 and 26 per cent, so rates are quite good at this moment,” Chandra said at the CII post-Budget meet here.

He further said that had the government cut tax rates for all corporates to 25%, then the cost to the exchequer would have been ₹60,000 crore.

The Chief of Central Board of Direct Taxes (CBDT) said that despite the government coming out with anti-black money measures and picking up lesser number cases for scrutiny, there are people who are misusing the income tax law provision.

“I would urge the industry that you should not yield to the temptation of misuse of sections so that at least our work of adding the anti-abuse provisions should be reduced and one-fourth of the Budget work can go away.

“When the law is so simple, when rates are reasonable, which the industry generally asks from us … Now I’m asking from you (industry) that at least be tax compliant,” Chandra said.

[“Source-thehindu”]

Entering A New Industry? 8 Ways To Break In Successfully

It’s never easy to get your foot in the door of a new industry. Whether you’re looking to start a business venture or simply collaborate with a brand in that market, the process of breaking in is a tricky one that must be handled with care: You can’t expect to be welcomed with open arms without proving yourself to industry veterans.

We asked eight members of Young Entrepreneurs Council about what it takes to successfully enter an unfamiliar industry. From making the right connections to offering a prototype or free services, here’s what they had to say.

All images courtesy of YEC members.

Entrepreneurs share tips for entering a new industry.

1. Talk To Industry Veterans, Potential Customers And Advisors

When it comes to getting a firm grasp on a new industry, one of the best ways is to leverage the experience of the veteran entrepreneurs in your industry. If you meet with them and ask many questions, you can learn quickly what it took them years to learn. If you combine this with reading books, the effect compounds. The next step is to meet with customers in the industry to understand their pain points to determine how you can innovate and differentiate yourself in this new space. Write down notes and reflect on the stories you hear to put the pieces of the puzzle together. The last step is to find a problem to solve and make an assumption you can measurably test to validate your business idea and meet advisors who can guide you before you go fully commit yourself. – Dan San, Meural

2. Partner With An Industry Leader

In my career, I have had many opportunities to enter into a new industry I really knew nothing about. Then I developed a mentality I like to call, “don’t buy it, sell it.” Why purchase a product or service you know you can sell, with just a little more knowledge and understanding? If you partner up with the right person or company, not only do you gain access to an unlimited supply of whatever that product or service is, but you also gain access to knowledge that you cannot read in FAQ or terms and conditions. Sometimes, the best way to break into anything when it comes to “the unknown,” is to admit your own ignorance to yourself, bite the bullet, and ask for help or advice. And, anyone will let you sell their products or services in exchange for more information. – Jason Criddle, Jason Criddle and Associates

3. Offer Free Or Discounted Services At First

One awesome tactic to break into new territory is to offer to do the project for free, or at a reduced rate, in exchange for feedback. This allows you to work with a client who will help you understand the industry. You will be upfront that this is your first project for this industry, but you are applying the same knowledge from other industries so it should work out fine. The client is getting great work, but at a discounted rate. You are getting inside knowledge on how to build a better service or platform. If there are any mistakes, both you and the client know this is a first time and so expectations are not as high. It takes a good client to make this work, but can be a success for both parties. – Peter Boyd, PaperStreet Web Design

4. Network With Anyone You Can

The best strategy for breaking into a new industry is to meet people in that industry. Research industry organizations and get involved. Become a member, join a committee, go to the events. Meet your new peers, learn about their work, care about their work and then show them your struggle. People want to help. Obviously, you don’t want to reach out to a potential competitor. However, you can reach out to just about anyone else. The best referrals that I have ever received came from someone random. Not the “big fish” everyone is always trying to meet at networking events. Especially if you are among other business owners, we’ve all been there, ask for help. – Allyson Case, Integro Rehab LLC

5. Be Continually Curious

Who said curiosity killed the cat? Following your curiosity is the key to learning a new industry. We hold the library of Alexandria at our fingertips with the internet today. It has never been easier to become more intelligent than 99 percent of the population on a given subject. I start by going down the Google rabbit hole. I open 10-15 tabs, watch the top rated YouTube videos, add the expert’s names to an Evernote file and circle the subject like a shark. If the idea is to understand autonomous cars, Google the biggest companies, top YouTube videos, “why autonomous cars will change world,” and on you go. Once you start watching experts and realize you know what they are about to say, you’re an expert. – Codie Sanchez, Www.CodieSanchez.com

6. Create Prototypes To Showcase Your Industry Knowledge

I always believe in creating some prototype software to showcase my knowledge and understanding of an Industry. When I wanted to reach out to a transportation industry, I first talked to a few people and figure out the issues they are having. Then based upon the issues, I created a prototype and showcased to C-level executives. It takes around one month to build a prototype, efforts pay off as I can use it to earn business. Don’t be afraid of barging into new verticals, all that is needed is energy to learn and solve problems. There is always a beginning. – Piyush Jain, SIMpalm

7. Make A List Of Questions You Have, Then Find The Answers

When I want to dive into a new venture, I start going to the bookstore to learn everything and anything on the subject. Then I create a list of what I want to search online and the questions I have pertaining to the venture. Before you know it, I am looking into forums and connecting with people who have already succeeded in the particular venture. I want to be able to learn from them and areas of improvement as well. For example, I was looking to create a new travel app that made it easy for young women to coordinate their travels. I connected with travel agencies, started reading books about travel journeys to get inside the head of a traveler, and reaching out to a network of well-traveled young women. The community of women was how I was able to build traction for the app. – Sweta Patel, Silicon Valley Startup Marketing

8. Connect With Trusted Influencers And Get Their Endorsement

One of the best ways to make your brand or business well-known or respected in any space is to connect with a brand, website, or influencer who is already trusted and has a massive following. This is something we are commonly seeing in the world of social media, and specifically on Instagram, where visual content is king. No matter what it is you have to offer or sell, simple brand association can go a long way when trying to connect with a new audience. The important thing here to remember is that you don’t want to go in too strong and come off as just a paid placement or advertisement. Instead, it should be able to the value provided and blending in with the user experience that is expected from the people or brands they are already following. – Zac Johnson, Blogger

[“Source-forbes”]

UK gambling regulator calls on industry to stamp out sexism

The UK’s gambling regulator will on Monday call on the industry to stamp out sexism, warning that women attending an annual conference taking place this week are “expected to wear nothing more than swimsuits”.

Gambling Commission chief executive Sarah Harrison will warn that the regulator could boycott the ICE Totally Gaming event, the world’s largest gambling industryconference, unless attitudes change. Past guests at the conference have said companies hosting stands frequently use “scantily clad” women to attract people to their product displays.

Harrison’s warning comes amid fierce debate about the treatment of women employed to provide hospitality at events, following revelations about the men-only Presidents Club dinner, where female staff were allegedly groped and sexually harassed.

Formula 1 last week took the decision to stop using “grid girls” – models who display sponsor and driver names at Grand Prix – while darts events have scrapped so-called “walk-on girls” to escort players to the oche.

Harrison will say that last year’s ICE event inspired her to urge senior figures from the world of gambling to follow suit by addressing a “significant stain on the industry’s reputation”. “This is an industry where we have a number of talented, powerful and successful women,” she will tell the International Casino Conference, an event held on the eve of the ICE event.

“Yet from walking around the exhibition you wouldn’t know this. Instead you saw men representing their companies wearing expensive tailored suits whilst their female colleagues were expected to wear nothing more than swimsuits. I say bring this to an end now.”

“And to go further, any future participation by the Gambling Commission in events like this will depend on there being change,” Harrison will add.

Previous guests at the ICE conference, held at the ExCel conference centre in London’s Docklands, told the Guardian that event was renowned for the use of underdressed women, including Playboy models, to advertise gambling products.

“A lot of the promotional activity involves attractive young ladies, often not wearing that much,” said one previous delegate. “It’s not all skin, but there’s quite a lot on show typically. Girls in body paint and not much else. One company had a Playboy-themed slot machine on display and they brought along Playboy centrefolds.

“You had paunchy slot machine buyers going up to get their pictures taken with them. It was a bit pathetic, but I’ve never seen any predatory behaviour like the Presidents Club.”

As the industry prepared for the event, the European Casino Association (ECA) and Clarion Gaming, which organises the ICE conference, urged companies planning to exhibit to be aware of potential allegations of sexism.

“In the spirit of the 21st century, when both women and men play strategic and decision-making roles in businesses, we encourage all exhibitors to mindfully represent support staff promoting their products at the show in a non-offensive and non-stereotyping way,” they said in an open letter.

“For both organisations, it is clear that presenting a modern and diverse gaming industry should be at the heart of the show. For this to be successful and ensure that all participants feel equally welcome, the respectful representation of genders is crucial,” the letter added.

ECA chairman Per Jaldung said: “It is imperative that our industry presents its positive image … Our industry is modern and inclusive, and we call on exhibitors to showcase the great products and services they offer in a respectful manner that does not rely on outdated stereotypes.”

Ewa Bakun, head of content strategy at Clarion Gaming, said: “We have been exerting a soft pressure on our exhibitors and educating the ICE audience on the ways the industry can evolve to create a more inclusive culture and improve gender diversity across all organisational levels.”

In Harrison’s speech on Monday, she will point to the fact that the UK’s highest paid chief executive is Denise Coates of gambling company Bet365, who paid herself £217m last year. And she will say that a push for greater diversity is “not about political correctness” but will help businesses respond better to customers’ needs.

[“Source-theguardian”]

Auto industry braces for impact as India begins shift to electric vehicles

The emergence of electric vehicles means a new ecosystem will have to be built and a lot of component manufacturers who make engine parts, pistons, rubber tubes, etc, will have to shut shop or adapt. Photo: Ramesh Pathania/Mint

The emergence of electric vehicles means a new ecosystem will have to be built and a lot of component manufacturers who make engine parts, pistons, rubber tubes, etc, will have to shut shop or adapt. Photo: Ramesh Pathania/Mint

New Delhi: Abhay Firodia is not perturbed by the possible impact that the advent of electric vehicles may have on the ecosystem for automobiles.

“Bank employees went on strike when they were introduced to computers,” the 73-year-old chairman of Force Motors Ltd, Pune-based light commercial vehicle manufacturer, and president of the Society of Indian Automobile Manufacturers, or Siam, told Mint last year when asked if the industry has assessed the impact of such a gigantic shift towards electric vehicles.

The government plans to switch to electric vehicles by 2030, which has now been described by road transport minister Nitin Gadkari as unofficial.

Firodia may have been unconcerned about the changes that the industry may have to undergo but the Automotive Component Manufacturers Association of India (Acma), the industry lobby that represents companies who do business worth Rs1.45 trillion, rushed to NITI Aayog in December. The idea was to express concern to the government that a sudden move to large-scale adoption of electric vehicles (EVs) could lead to massive job losses.

“Suppliers are underestimating the speed of change, while being 7-8 years behind global peers on tech… leading to a significant impending local threat from global peers,” Acma told NITI Aayog in presentation reviewed by Mint.

“With industry investments and jobs at stake, the country cannot afford to lose the domestic component industry in her quest for EVs,” Acma said, suggesting that millions of jobs could be at stake if there is a sudden moves towards electric vehicles.

It was a desperate plea, especially given the fact that internal combustion engines (ICE), which are used in most cars, have more than 2,000 moving parts, while an electric vehicle has about 20, resulting in fewer breakdowns. Among the parts that will see demand dry up once electric vehicles dominate in India, are engines, transmission, aluminium castings, cylinder blocks and cast iron. These will give way to an electric motor run by batteries.

The Acma presentation said the ICE powertrain contributes to over 60% of the employment generation in the auto component sector, and that a switch to 100% electric could impact up to 5.6 million jobs by 2025-26.

Automobile component manufacturers are known as the bedrock of the industry across the globe.

Siam in concurrence with the NITI Aayog, has proposed that 40% of vehicles in India would be shifted to electric while vehicles used for public transport would be 100% shifted to electric by 2030.

The emergence of electric vehicles means a new ecosystem will have to be built and a lot of component manufacturers who make engine parts, pistons, rubber tubes, etc, will have to shut shop or adapt.

According to Vinnie Mehta, director general, ACMA, the government should come up with a technology-agnostic road map for the development of sustainable mobility solutions for the future.

“As of now there is uncertainty among component manufacturers as to how their business will be impacted with the advent of electric vehicles. A coherent policy framework is the need of the hour,” Mehta said.

The long-term investment in the automobile component industry means a period of five years and some manufacturers of rubber tubes, air filters and pistons are in a quandary over whether to go in for improving their manufacturing capacities or not.

“People in the industry are definitely apprehensive of investing more since there is no clear road map. Though by 2030 the ICE engines would also substantially grow, the focus of the car maker would change to EVs. It will be a game changer in terms of technology, so if you are making an engine or its spare parts now then you’ve got to be feeling threatened for the long-term future,” said a top executive of a major component manufacturing company.

But some are ready for the challenge.

Mahindra Group’s auto component arm Mahindra CIE Automotive Ltd “is prepared for the EV drive and will continue to watch the trend,” according to its chairman Hemant Luthra.

Almost 9% of Mahindra CIE’s components in India go into ICEs, while the global share is 19%.

“There has been an internal realization that these shares must be reduced,” said Luthra, adding that the government’s announcement has alerted the firm to channel research and development (R&D) efforts towards EVs.

The long-term investment in the automobile component industry means a period of five years and some manufacturers of rubber tubes, air filters and pistons are in a quandary over whether to go in for improving their manufacturing capacities or not.

“It has also made us sensitive to the fact that our acquisitions should not be overly dependent on IC Engines,” he added.

The Mumbai-based automobile manufacturer is a “strong supporter of electrification, and has the engineering talent and R&D capability to design EV components,” according to Luthra. “Not much capacity addition is required since existing machining systems can address EV requirements; besides, it doesn’t make sense to put up a production line solely for EVs, given the low volumes,” he added.

Manav Kapur, executive director Steelbird International Ltd, New Delhi-based rubber and filter component manufacturer, thinks that the auto component industry is headed for total disruption with the impending changeover.

“With the reduced complexity, a very limited number of components and low maintenance cost of the EVs, the number of jobs lost could be as high as 80% at the auto components manufacturers and automotive workshops level,” said Kapur.

Analysts say a lot of the apprehensions are unfounded because the demand for IC engine-run vehicles will grow in the next decade-and-a-half despite a shift to electric vehicles. In order to cater to the demand, component manufacturers will have to invest in their existing business and increase capacity.

For example Maruti Suzuki has told its vendors to increase their respective capacities in Gujarat in the near term since the company is looking at a target of selling 2.5 million vehicles by 2025. In that case, the component manufacturers will have to invest more.

Anurag Mehrotra, managing director, Ford India Pvt. Ltd, said that full electrification will not happen in the near future and that IC engines are going to be in the play. Besides, there will be export opportunities for component manufacturers. In the last twelve to eighteen months, there has been some aggressive positioning by Indian automotive companies for exports.

A senior industry executive said the automobile industry, unlike the electronics manufacturing industry, has not re-invented itself in the past two decades, which is why the prospects of disruption is making it jittery.

For some manufacturers, the emergence of electric vehicles as a category will provide new avenues where they can explore new opportunities.

According to Vivek Chaand Sehgal, chairman, Samvardhana Motherson Group, a Noida-based auto component manufacturer, whether it is the core business or readying for technology- driven innovations like connected cars, electrification of vehicles or light weighting, the concentration is on providing solutions that customers need.

“Towards this, there is a three-pronged approach—to do things within the group, to join hands with partners through joint ventures or explore acquisitions, all of them leading back to the philosophy of providing solutions when the customer needs it,” added Sehgal.

Indian component manufacturers have to collaborate with companies who have the requisite technologies and embrace them, or run the risk of losing their turf, especially to Chinese companies, according to the ACMA presentation to NITI Aayog.

[“Source-ndtv”]

Blockchain Set to Change the Face of Commercial Real Estate As We Know It

Blockchain Set to Change the Face of Commercial Real Estate As We Know It

The real estate industry has seen significant growth since the recession. With market prices predicted to increase along with millennial demand in 2019, the industry is as welcoming as ever. Although the market is improving, it is still plagued by issues that make the investment process less convenient than it should be.

Major drawbacks of the real estate industry

Real estate investment has three major drawbacks: the presence of intermediaries, the lack of affordable funding options, and fraud.

Agents take up to six percent of the total payment made on a real estate asset. This means that intermediary fees would account for over $23,000 for a house that costs $400,000. Unfortunately, up to 80 percent of home buyers still use an intermediary and continue to pay these fees according to a report by the National Association of Realtors.

Real estate is also expensive and the prices continue to climb, limiting access for a greater part of the population. According to research by CNBC, an investment of $1 million will most likely buy about 270 square feet of prime property in New York. However, only about 10 percent of US residents can afford such a price tag.

Finally, the commercial real estate industry is rife with fraud, not just in the United States, but globally as well. According to a statement by the FBI, the internet crime complaint center saw a 480 percent increase in real estate fraud complaints filed in 2016. These crimes, including title fraud and online sale scams are aided by the rarity of trusted platforms where real estate documents can be verified.

How exactly can blockchain fix these issues?

A blockchain is an immutable ledger in which transaction data can be recorded. Its benefits include transparency, traceability, accessibility, and enhanced security. When implemented in the real estate industry, these properties can solve its major issues.

Blockchain real estate platforms eliminate the need for intermediaries like lawyers and agents by providing a means of property verification and payment to buyers. Paying for property using cryptocurrencies can also help buyers bypass bank fees. It cuts the fees associated with escrow by offering smart contracts that can be customized according to a users’ needs.

The tokenized nature of cryptocurrencies like Bitcoin and Ethereum makes crowd ownership of real estate possible. Those who cannot afford to purchase the whole property can simply buy a part of it, like buying shares in a company. Such investors would receive transferrable tokens that represent their shares and can be verified easily on a blockchain. This makes real estate investment accessible to more people.

Blockchain can also prevent fraud in the industry by providing a way to easily authenticate property documents. As these properties are transferred, their records are added to the blockchain and a comprehensive history is formed. In the event of a sale, buyers can easily check if property is fraudulent.

Bringing blockchain innovation to real estate

Several companies are working to bring these solutions to the commercial real estate industry. One such company is i-House.com, which implemented a series of ATO (Asset Tokenization Offering) projects in less than a one- year span. These projects allow users to crowdfund real estate development projects using IHT, the company’s cryptocurrency. So far, their reach has extended to the U.S., Japan, Thailand, and the Philippines.

The i-House ATO model provides real estate accessibility and a verifiable platform for related transactions. By Implementing such a concept in the industry, the i-House ATO platform is positioned to disrupt it positively. i-House.com Chairman and Founder, Ricky Ng., said:

“We aim to create a shared economy asset management ecosystem that spans across the globe, i-House ATO provides real estate owners, developers, and end users the means to own and share assets easily”

[“source=forbes]

What Is No EMI Till Possession In Real Estate Purchase?

What Is No EMI Till Possession In Real Estate Purchase?

What Is No EMI Till Possession In Real Estate Purchase? Undoubtedly the scheme is more of a marketing gimmick to attract more and more buyers as real estate builders are in a haste to get away with the inventory as well as new projects. In the scheme, property buyer is not required to pay EMIs until actual possession of the property in question is given to them. In a general case, this scheme comes with a fixed validity of 2-3 years time during which developer or builder of the property is required to give possession to the buyer. And when the possession gets delayed due to some or the other reason, the burden falls on the buyer who then needs to make payment to the buyer. How the No EMI till possession scheme works? This scheme works similar to subvention scheme which banks used to grant until a few years ago before RBI scrapped it. For housing finance companies, RBI has not exercised any ban on such subvention schemes. Under the offer, loan is sanctioned for the property buyer, the builder or developer secures the funds and the lender gets a couple of customers directly from the builder. The buyer in turn gets the payment holiday until possession of the property and during this time builder makes the payment via post-dated cheques on behalf of the buyer. Typically, no EMI till possession offer is based on the 10:70:10:10 model. While making the booking for the flat, buyer is required to pay 10% upfront towards VAT and property registration. Bank finances the property purchase i.e. about 70% in tranches depending upon the stage of project completion and till the project is complete 80% of the funds are disbursed. And as and when the project gets completed, the bank disburses the remaining 10% balance and property buyer funds 10%.

[“source=forbes]

Commercial real estate activity cruising at happy pace

Commercial real estate activity cruising at happy pace

The commercial real estate market is humming right now, with new users, new investors, new construction and lots of redevelopment of existing spaces in multiple places across the Grand Valley.

“People are really seeing the city’s commitment to downtown and the riverside connection,” said Brian Bray with Bray Real Estate, who recently sold a building on S. Seventh Street, between Main Street and Riverside Parkway.

“My wife liked the area down there,” said Allen Akey, who purchased the restaurant building at 811 S. Seventh with his wife, Lena Combs. “She thinks it’s going to be an upcoming, growing area.”

Akey and his wife will do an extensive remodel of the existing building, but hope to open their new breakfast and lunch restaurant, named Sunrise, by the first of the year.

Although there are commercial projects elsewhere, downtown is generating both buzz and dollars, as end users and investors revamp older buildings in hopes of generating more business and opportunities.

“I’ve always wanted to open my own bar, and more than anything, it came down to timing,” said Tim Babbitt, who is opening the Feisty Pint bar at restaurant at 359 Colorado Ave.

“It’s more of a neighborhood pub,” Babbitt said about the soon-to-open business.

Babbitt has already hired key people, who are hiring other staff members. He hopes to have the establishment open by December 1.

The city planning office is currently working with another property owner who hopes to open a brewpub on S. Second Street.

Pitkin Avenue is also seeing redevelopment with an office building at Sixth and Pitkin changing hands and getting attention from new owners, and the office building at Second and Pitkin also getting a makeover.

“It was attractive, it was downtown,” said Tony Englbrecht, one of the partners in the building at 215 Pitkin Ave., “and it was a free-standing building with it’s own parking. Downtown growth is heading south with the new hotel and renovations at the train depot.”

The historic former train depot’s owner, Dustin Anzures, is in discussion with prospective tenants, as well as contractors and tradespeople, to create the best use of the historic Grand Junction Depot building.

“We want to do the very best job we can,” Anzures said, who is looking for a local restaurant tenant to make a commitment on the location prior to finalizing plans on the building.

“We have high hopes of doing something with this building,” Anzures said, “creating something that doesn’t currently exist in the Grand Valley — a historic, landmark building that’s been repurposed. We want ours to be a happy place.”

Anzures also hopes the depot will get a safer and more pedestrian-friendly connection to Main Street and the rest of downtown when CDOT finalizes its plans for the Pitkin curve at First and Pitkin. He believes that a more pedestrian-friendly route would bring train visitors who are passing through on the California Zephyr into the more established parts of downtown. Of course, he’d also like to create great experiences for them should they decide to hang out at the Grand Junction Depot.

[“source=forbes]

After demonetisation, liquidity crunch may inflict more pain on real estate sector: Experts

Two years ago, demonetisation caused upheaval in many sectors and the real estate sector also had to bear the brunt.

The analogy was that the much diabetic sector required insulin (demonetisation) injections after which it was constantly monitored on the treadmill through measures such as amendments to the Benami Transactions (Prohibition) Amendment Act 2016, Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST).

The maximum impact of demonetisation was felt on land and luxury residential segments where prices had corrected by almost 30 per cent as these were the asset classes where maximum investors were seen to park black money. But sales started to pick up on the back of affordable housing launches, especially the government’s impetus on Housing for All by 2022 and the Pradhan Mantri Awas Yojana scheme.

When it seemed that the pain was more or less reduced with these measures being in place and real estate prices getting rationalised, the recent non-banking financial company (NBFC) crisis, triggered by the debt-pile in IL&FS, and the cascading impact on several NBFCs, caused a stir in the residential markets. Instead of ‘insulin injections’, the sector now requires a ‘booster’ dose of liquidity from the government, say experts

Preceding the recent financial turmoil, a wave of structural reforms had swept the real estate landscape. “Just as the market appeared to be gaining some strength, the aforesaid financial shake-up has caused a rewind-like situation amongst the financial community,” said Arvind Nandan, Executive Director – Research, Knight Frank India.

The NBFC cash crunch has had a cascading impact on the somewhat improving residential real sector. “This is primarily because for last few years, developers had been availing term loans from NBFCs and Housing Finance Companies (HFCs) and any turmoil in the latter is bound to impact the Indian realty industry. Further, at a time when the festive season fervour and loan melas are expected to boost residential market sales, the state of financial markets is likely to play a vital role,” he explained.

Post-demonetisation, land prices that were inflated due to black money deployment had come down drastically, corrected by almost 30 to 40 percent. Prices of luxury real estate projects corrected by 30 percent and there was no appreciation for almost three years. “Today, the sector is suffering from a new ailment (liquidity crunch) post the NBFC crisis. Earlier, an insulin injection of demonetisation was required to reduce the deployment of black money in the sector. Now we need a booster dose of liquidity from the government,” said Pankaj Kapoor of Liases Foras, a Mumbai-based real estate rating and research firm.

The next steps should include rationalisation of tax structure and stamp duties and electronic registration of properties. While GST on affordable housing has been reduced to 8 percent, for other properties, including under construction projects, it is still 12 percent. This, say experts, is an impediment for home buyers who are preferring to buy ready-to-move-in properties that do not attract GST.

“The government must look at rationalising GST. Stamp duties and registration should also come under the ambit of GST. The government should consider tax incentives for real estate developers who construct buildings faster and introduce a vacant land/inventory tax,” said Kapoor, adding this will help boost the economy and the real estate sector at large.

Samantak Das, chief economist and head – Research & REIS at JLL India, is of the view that the impact of “demonetisation is behind us. While the sector is still getting used to regulatory framework of RERA and GST, after the NBFC crisis, the problem that the sector is now facing is to do with cash flows. There is pain in terms of cash flows. Private equity funds have also become cautious and their cost of capital has gone up slightly,” he said, adding the problem may plague the sector for a quarter or two.

“Down the line one will also see many global warehousing players investing in the country. There is a perceptible shift from unorganised to global players. This may also help boost the market,” he added.

Finance Minister Arun Jaitley said demonetisation resulted in formalisation of economy and increased tax base, prompting the government to earmark more resources for the poor and infrastructure development.

In a Facebook post on the second anniversary of Demonetisation, Jaitley said in first four years of the National Democratic Alliance (NDA) government, the number of income tax returns filers has gone up to 6.86 crore from 3.8 crore in May 2014.

[“source=forbes]