Chennai – Two key metro rail lines, 4 stations to open on May 25 2018

Two key metro rail lines, 4 stations to open on May 25 2018

Chennai

Two key metro rail lines — from Central to Shenoy Nagar and AG-DMS to Little Mount via Saidapet (beneath Anna Salai) and four stations will be launched on May 25, providing much-needed connectivity to Chennai Central— the city’s largest transit hub. The lines are ready to be opened after a delay of more than two years,

State Industries Minister M C Sampath told TOI that Central Metro, Egmore Metro, Shenoy Nagar and four other stations between AG-DMS and Little Mount on Anna Salai will be inaugurated on May 25. “The chief minister will be present. We have also invited the ministers of state,” said Sampath.

On May 22, Sampath inspected the arrangements made in the stations including Egmore Metro, where the inaugural function will be held. Top Chennai Metro Rail Ltd (CMRL) officials were present during the inspection.

When the 5.62-km line between Shenoy Nagar and Central Metro opens, commuters can board a train every five minutes to Shenoy Nagar, Anna Nagar, CMBT and St Thomas Mount. They will also be able to board a direct service to airport or reach Anna Salai by shifting corridors at Alandur metro. At Central, only the upper track level connecting stations on Poonamallee High Road will be opened. The lower track linking Anna Salai is not yet ready.

The 4.5-km stretch between Little Mount and AG-DMS can take commuters arriving at the busy bus stops in DMS and Saidapet and from surrounding localities up to the airport. Passengers can shift corridors in Alandur station and proceed to CMBT or to Central Metro.

Both the stretches were delayed by nearly two years, as their earlier deadline was December 2015. Work in the Anna Salai line was stalled for a year after a Russian contractor, who was building tunnels and stations between May Day Park and Saidapet, abandoned work citing financial crisis. This forced the government to open bids again and award contracts in small packages to firms to finish the pending work.

Commissioner of metro rail safety KA Manoharan and his team last week conducted inspections of the stations and tunnels. He said authorisation would be given this week subject to certain conditions like completion of passenger amenities in the stations.

“At Central Metro, they have only one entry point ready. They should have one more entrance ready for evacuation of passengers during emergency,” he said after the inspection.

Source: U Tejonmayam, The Times of India, Chennai

Demand for retirement homes in Chennai goes up

Demand for retirement homes in Chennai goes up

Chennai

There has been a sudden spurt in the number of enquiries for senior citizen homes in and around Chennai. The growing realisation that it would be better to relocate to a senior citizen community than living alone has been attributed to this surge in demand. Moreover, the number of developers who focus on retirement homes continues to remain limited. The demand from both residents and NRIs is predominantly from the affluent category. The demand for senior citizens homes has been estimated at 5,000 units in the city alone but only less than 10 developers are currently involved in development in the entire state of Tamil Nadu.

Availability of facilities, specifically food service and nursing care in case of emergency are major determinants. Fool-proof security, social infrastructure, ambience and neighbourhood are also tilting factors that nudge people to shift to retirement homes.

The market is predominantly driven by end users and price appreciation is not a major criterion for investing in a retirement home, said a developer involved in the development of such homes.

The sluggish growth in the sector has been attributed to the social stigma that society and relatives may demean the children if the parents shift to senior citizen homes. Delay in delivery is yet another reason as the time span to use the retirement home is short (around 10-12 years only) when compared to buying a regular home. Continuity of services for life by Retirement Community Management Company is cited as yet another reason for the tepid growth. This is because of unavailability of service provider in a retirement community that makes life difficult to live.

“We have come across buyers from the affluent class in the society in our project above SEC A class,” said Ramesh Kumar KAV, CEO & Director, Harmony Eldercare Pvt Ltd.  The retirement community home industry is evolving and will become one of the SBUs for all major real estate companies in a decade, he added.

According to Kumar, retirement home community is a hybrid product of real estate with essential features like facility management, food service and basic healthcare. Hence this has to be marketed differently from the regular real estate projects with trust and credibility as corner stones.

“Innovation is the key to boost the development as well as marketing,” say developers. Deferred management fee model may be adopted for acquisition of retirement homes wherein some part of the building cost will be paid upfront and remaining in a span of ten years. Banks should be involved by using reverse mortgage scheme to take care of increase in monthly maintenance charges due to spiraling inflation. Involvement of residents’ association and integrating with a larger regular residential gated community would further enhance the demand for retirement homes, according to industry sources.

Limited developers undertaking such projects is yet another reason for the surge in demand as stringent criteria are involved right from site location and neighbourhood amenities. Availability of good health care facility within a 5-km radius, good ground water, commuting facilities to nearby markets/temples, designing the buildings with features like same level flooring, wide doors for toilets, ramp at entrance, more lighting level in rooms, rounded corners for all walls, etc. are major criteria to be taken into consideration by the developers, said Kumar.

On the government front, it is felt that there is a need to encourage development of retirement homes by providing fiscal sops on the lines of affordable housing. One of the deterrents is GST. The rate of GST for construction of senior citizen homes should be at par with EWS housing schemes. Similarly, GST at 18% on services provided is very high, say developers considering the limited income at their disposal.

Source: V Nagarajan, Magicbricks Bureau

Chennai Metro estimates 32 lakh riders in 25 years

Chennai Metro estimates 32 lakh riders by 2045

Chennai

The Tamil Nadu government may be awaiting nod from the Centre for phase 2of Chennai metro rail (CMRL) project but the authorities have worked out how many commuters may use the three-corridors. CMRL has projected that in 25 years, the massive 107.55km phase-2 is expected to cater to more than 32.7 lakh commuters daily.


The second phase of the project will connect northern suburbs of the city with the IT hub along Old Mahabalipuram Road and Porur via major locations like Mylapore, Adyar, Virugambakkam and Koyambedu. The lines will have 116 stations and is estimated to cost Rs 85,047 crore. Nearly 80 new trains are expected to run on this stretch.

To arrive at the expected ridership by 2045, CMRL has estimated that around 23,600 commuters will have to board trains running in one direction in an hour in corridor 3 between Madhavaram and Siruseri SIPCOT. In corridor four between CMBT to Light House, a maximum 17,000 commuters will have to travel per hour, and more than 27,500 passengers will have to take a ride in corridor five between Madhavaram to Sholinganallur. Corridor four is likely to be extended up to Poonamallee to connect more areas.

While CMRL is expecting to achieve these numbers more than two decades later when the entire phase-2 will be operational, they are estimating that more 15,000 commuters will be boarding trains in a single direction in an hour in corridor 3 by 2024. Metro Rail MD Pankaj Kumar Bansal had said earlier that corridor 3 which would be built first is expected to be completed in six years, once the construction begins.

However, in the 45km phase-1, CMRL is yet to achieve its estimated ridership, though half of it is operational. They now have an average of 30,000 passengers daily, which is less than 10% of their projections. Recently, the Centre which was processing the detailed project report for phase-2 raised questions on the poor patronage.

In its letter, the ministry of housing and urban Affairs said, “The projected ridership for 45km line was 7.76 lakh, but the actual ridership is just 30,000. It should have been close to 4.5 lakh” per day. CMRL blames the lack of patronage to the delay in the opening of major stretches in Central and Anna Salai.

When it comes to phase-2, experts believe that CMRL may be able to achieve their projections, as it will provide better connectivity across the city once both the phases are completely operational. “If you link both phase 1 and 2, commuters will get a network that will link many important areas. So, naturally people will begin using metro services,” said professor R Sivanandan, transportation engineering division, IIT Madras. “The footfall will further go up if there is first mile and last mile connectivity. Metro rail together with the MTC can act as a good transportation system.”

Source: U Tejonmayam, The Times of India, Chennai

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Chennai tops in broadband speed

 

Records download speed of over 32.67 Mbps, finds study

At 32.67 Megabits per second (Mbps), Chennai clocks the highest fixed broadband download speed among cities, according to a study titled ‘India’s digital divide: how broadband speed splits the nation’ by Seattle-headquartered firm Ookla. Globally, India is ranked 67th with an average speed of 20.72 Mbps.

“Of the 20 largest cities in India, Chennai’s download speed of over 32.67 Mbps for fixed broadband is 57.7% faster than the average for the rest of the country,” the analysis said. The analysis is based on February 2018 data from real consumer-initiated tests taken using Speedtest.

Speedtest by Ookla provides independent insight into the speed and quality of mobile and fixed broadband connections.

Fixed broadband speeds in metros including Delhi, Bengaluru, Hyderabad and Visakhapatnam were also higher than the country’s average of 20.72 Mbps.

Bengaluru follows Chennai in terms of fixed broadband speed with reported average speeds of 27.2 Mbps, while Delhi ranked fifth with average speeds of 18.16 Mbps. Mumbai was the lowest among the four big metros with an overall ranking of eight and broadband speeds averaging 12.06 Mbps.

The study also revealed that Patna is by far the slowest city compared to the rest of the country, with average speeds 62.4% slower than the country’s average.

Top States

A quick scan of the States shows that residents of Karnataka enjoyed the fastest broadband in India, with a mean download speed of 28.46 Mbps during the month of February, which is 37.4% faster than the rest of the country.

Tamil Nadu is a close second at 27.94 Mbps. Mizoram is the slowest with a mean download speed of 3.62 Mbps.

The Hindu

Chennai records highest percentage of unsold houses

Besides demonetisation and GST, location of the units in places affected by December floods a reason for poor uptake Chennai has 20% completed unsold inventory in real estate, the highest percentage in the country, according to a recent survey by real estate services firm, Jones Lang Lasalle (JLL).

As per a JLL survey, as many as 42,500 units are unsold, of which nearly 8,500 are in ready-to-move-in condition.

The southern suburbs of Chennai including Old Mahabalipuram Road and East Coast Road have approximately unsold 30,000 units, which account for 75% of the total unsold inventory, while western suburbs, including NH 4 and GST road, recorded the second largest volume of unsold inventory of 8,000 units. Both these locations are driven by end-user demand, which has been slow in uptake last year.

A close scrutiny of the data shows that most of the unsold inventory is in locations that were impacted in the deluge of December 2015, which drastically brought down the attractiveness of such projects.

Having said that, Chennai has seen a strong trend in the uptake of commercial office space in the last few quarters. “If the trend continues to remain strong, we should expect to see a simultaneous uptake in residential sector, albeit, the trend usually takes a few quarters to follow,” said, Ramesh Nair, CEO & Country Head, JLL India.

Buyers’ market
“Largely end-user driven, the Chennai residential market has tried to maintain its balance by limiting the unit launches in the last few quarters. Capital values have remained stable, indicating it to be a buyers’ market. The prolonged period of low activity in this asset class is, however, impacting the market, which is not witnessing investments to its true potential,” he said.

Suresh Krishn, President, Credai Chennai,said the unsold inventory would soon find takers. It is just a matter of time. “Currently, the market trend is customers are looking at ready-to-move homes. They want projects which can be delivered soon and occupied immediately.”

He said other real estate firms also felt this trend during FAIRPRO 2018, a real estate expo organised in the city last week. “The expo generated revenues of around ₹176 crore, which indicates the positive sentiments in this sector,” he said.

“Demonetisation, RERA and GST hit the realty sector hard in Chennai in 2017. Also, there was an impact on the inventory because of natural calamities like Cyclone Vardah, flood in the city, and the overall decrease in the number of jobs being created,” said T. Chitty Babu, Chairman and CEO, Akshaya Pvt. Ltd.

“With the advent of new sectors like affordable housing and smart homes, the real estate sector is on a revival mode now. We have seen a steady growth in the demand from homebuyers in the past few months and this is the right time for homebuyers to invest in homes as we expect the prices and home loan interest rates to go up due to the constant rise in input costs and reduced new launches.”

The survey showed that as many as 4,40,000 residential units remain unsold across key cities of India at the end of 2017.

The Hindu

 

GST relief for low-cost homes, First-time buyers

GST relief for low-cost homes, 1st-time buyers

 Now, a first-house buyer with a household income of up to Rs 18 lakh per annum can avail a benefit of up to Rs 2.7 lakh.
  • The tax benefit will also be extended to an affordable housing project, which has been given infrastructure status.

NEW DELHI: The GST rate has been reduced to 8% from the existing 12% on purchase of houses availing of the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojna, and of those houses that are constructed in a project that has got infrastructure status.
Under the CLSS scheme, a first-house buyer with a household income of up to Rs 18 lakh per annum can avail a benefit of up to Rs 2.7 lakh while buying a house or apartment of up to 150 square metres (1,615 sq ft) carpet area.

Those who do not qualify for credit linked subsidy scheme (CLSS) will continue to pay GST at 12% for the same house. The tax benefit will also be extended to an affordable housing project, which has been given infrastructure status, in case the maximum unit size in the project is a carpet area of 646sq ft. The first-house condition on the buyer will not be applied in this case. Whether or not the buyer gets the CLSS benefit under PM Awas Yojna, GST will be levied at 8%.

“The decision will give a push to the real estatesector, particularly affordable housing, as prices will fall by up to 4%,” said Getamber Anand, chairman of the Confederation of Real Estate Developers’ Association of India (Credai).

The cap on the size of housing unit to avail of the benefit under CLSS has been kept at 1,615sqft carpet area, which is equivalent to around 2,200sq ft built-up area. This would cover most three-bedroom apartments and houses in the country and particularly in metro cities, said Anand. The Rs 18 lakh cap on household income is also sufficiently large to cover most first-time house buyers. But those buying their second house, or more, would not be able to avail this benefit. NAREDCO vicechairman Parveen Jain said the decision would prove a boon for the masses and fuel rapid growth and development of the real estate sector, furthering the cause of ‘housing for all by 2022’. Developers pay GST on inputs used for the construction of a project. Under GST, taxes paid on the inputs are taken back as credit from the GST paid by the buyer. Input taxes on construction amount to around Rs 400 to Rs 500 per sq ft.

GST in Real Estate: Is one sector and one tax possible?

Ahead of the GST Council’s meeting on November 9 and 10, subsuming all real estate related taxes under GST is a major talking point. Here is a look at the nitty gritty of the same

NEW DELHI: The real estate sector is expected to feature in the November 9, 2017 GST meet. The government has been hinting that the sector can be considered to be brought under GST. Then all individual taxes would be subsumed into the GST. Or will it?

Practically, can all central, state and local taxes on real estate be subsumed into GST? The finance minister has implied that it can be considered and is expected to one of the major talking points in GST Council’s meeting on November 9 and 10. Real estate is unique because it is an immovable asset and is also bound by state laws.

What is Goods & Services: Under the Central Goods and Services Tax Act, 2017 (CGST Act), goods and services have been defined as:

  • Goods: Section 2(52) of the CGST Act: “Goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of land which are agreed to be severed before supply or under a contract of supply;
  • Services: Defined under section 2 (102) “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged
  • Schedule III of the CGST Act which states the activities or transactions which shall be treated neither as a supply of goods nor a supply of services includes “Sale of land and Sale of building”(except under-construction buildings which are deemed as supply of service) at Sr. no 5 of this Schedule.

Immovable asset

In real estate, since land is an immovable asset, the industry has been given a 33 per cent abatement on the 18 per cent GST. Therefore, the effective charge on the sector is now 12 per cent as against the listed 18 per cent. During the period of construction, when the developer collects money from the consumers, pays different vendors and service providers and gets the asset constructed, the under construction product is considered a service and therefore, comes under the purview of GST. It also gets input credit from many of the 267 allied industries. Once the input credit starts flowing in there would be clarity on how much the prices can drop by.

Anuj Puri, Chairman, Anarock Property Consultants Pvt Ltd, estimates that the quantum of input credit should come to roughly 2-3 per cent. Therefore, the effective GST impact should be 9-10 per cent. As it stands today, ongoing projects are in different stages of completion and the input credit may not all come back to the developer. However, if developers don’t pass on the input credit benefit to customers, it can be construed as profiteering.

GST can’t be applicable to land as it is an immovable asset and that is why there is an abatement of land value provided to developers in the GST on real estate. There is no GST levied on completed projects which are again considered immovable assets.

Sudip Mullick, Partner, Khaitan & Co says, “The Schedule III note implies that sale of land or buildings are neither goods nor services. If the Government decides to include land and building under GST, firstly, they will have to delete the entry from Schedule III and bring it under Schedule II which deals with activities which can be treated as goods or services.”

Other taxes like stamp duty and property taxes are local taxes and there is as yet no means of subsuming them. If the government decides to include real estate in GST then there has to be a way of compensating the states for this loss of revenue. With 12 per cent GST, 6 per cent stamp duty, 1 per cent land under construction, a labour cess and various other taxes, currently, the sector is already burdened with many invisible taxes. If all of them are subsumed into GST then the rate will have to go up.

Inflationary pressure

Niranjan Hiranandani, President Naredco (National Real Estate Development Council), says that GST has put inflationary pressure of 3.5 per cent on affordable and 5.5 per cent on ongoing luxury housing. “The underlying principle of GST was to keep it revenue neutral.” There are 31 or 32 taxes on affordable housing. No country in the world has such high taxation on affordable housing. He suggests that there should be no tax at all on affordable housing till 2022. Let industry get the input credits so that it becomes profitable and there is ample stock in five years to rationalize rates.

Hiranandani maintains that bringing real estate under GST will make the sector more transparent and hidden charges will come to the forefront.

Current tax rates

Getamber Anand, Chairman, Confederation of Real Estate Associations of India (Credai), estimates that taxes account for 10 per cent of the cost of real estate. Hiranandani says “About a third of the cost of housing can be attributed to taxation.” PWC estimates the tax burden @18 per cent. Essentially, the taxes are so many and varied across states, that one figure is difficult to compute today. Naredco has made a comprehensive list of taxes that are applicable to the sector. (see Box)

Stamp duty

Can stamp duties be subsumed in GST? It is a state tax and the total tax amount comes solely to the state. GST is a central tax and needs to be shared with the Centre. If this issue is discussed at the GST council meeting in Kolkata, then there has to be consensus among the states. Past High Court orders on stamp duty also need to be revisited.

Advantages

If GST is applied on land and immovable property, the buyer has to pay one tax at uniform rate across states (eg stamp duty varies state wise).

The industry benefits in the long run, if the timing is right. Prajakta Menezes, Principal Associate, Khaitan & Co says, “In the short term this sector is already grappling due to demonetization (purchases were deferred by buyers), RERA and GST. One more amendment may aggravate the shock in the short term.”

Implemented efficiently and effectively, one GST for real estate across the country is the way to go. How the states will agree to this and what changes have to be made to compensate them for loss of revenue remain subjects of debate. However, both, the industry and the consumer, seem to be beneficiaries of a more transparent way of taxation

GST – The Hindu cartoon

The Hindu