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February 2019

Chennai’s OMR Makes it to Top 10 Office Micromarkets

Latest research report from Colliers shows increased leasing activity, coupled with a decreased supply led to rental value appreciation of 7.1%-16.3% in select micromarkets across cities. One of those top 10 markets is Chennai’s Old Mahabalipuram Road.

OMR Chennai

 

According to the report, OMR Post Toll in Chennai witnessed a YoY rental increase of approximately 10% in Q4 2018. Rajiv Gandhi Salai (OMR), the designated IT corridor of Chennai, has been witnessing significant demand in the pre-toll OMR corridor. This has resulted in a significant escalation in quoted rents in pre-toll OMR region coupled with limited vacancy. Companies that are looking at OMR as a destination for office space are moving to OMR –Post Toll region resulting in a healthy demand, constituting 19% of the total office leasing in 2018.

Other micromarkets that made the list are (Micromarket — Year-over-Year Rental Increase in Q4’18):

  1. Bengaluru EPIP Zone/Whitefield — 16.3%
  2. Hyderabad CBD — 15.8%
  3. Bengaluru Bannerghatta Road — 13.8%
  4. Kolkata CBD — 10.5%
  5. Chennai OMR Post Toll — 10%
  6. Hyderabad PBD — 9.1%
  7. Hyderabad SBD — 8.3%
  8. Bengaluru Hosur Road — 8.1%
  9. Bengaluru Electronic City — 7.5%
  10. Bengaluru Outer Ring Road — 7.1%

Check this article on Financial Express for details.

India Budget 2019: Impact on Real Estate. All You Need to Know.

The big headline of Budget 2019 is the Affordable Housing segment is the single biggest beneficiary in Indian Real Estate. The BSE’s real estate index climbed as the government reiterated its push for affordable housing and announced new measures that could boost home buying. Let’s look at all the announcements that impact Real Estate Market in India.

#1 Raise in tax rebate limit = More disposable income for the middle class

Tax Rebate limit has been doubled up to 5L. That means anyone making up to 5L in annual income (6.5L including rebates for investing in tax saving schemes) will pay zero income tax. That also means more disposable income for the middle class. As most of the middle class aspires to own a home, there is a high probability of that disposable income going towards owning a home.

#2 Tax Incentives for Affordable Housing Builders extended by one more year

Exemption on 100% profits for developers of affordable housing projects (Section 80-IAB) has been extended by one year, covering projects approved up to March 31, 2020. Tax incentives combined with the existing demand for affordable housing, there is going to be more supply of affordable homes in the market for the next few years.

Budget 2019: Big Win For Affordable Housing in India
Budget 2019: Big Win For Affordable Housing in India

#3 Tax exemption on notional rent on unsold homes increased to 2 years

Real-estate developers are relieved over 2-year tax exemption on notional rent on unsold homes. Till now, unsold inventory over one-year-old was considered stock-in-trade and the builder had to pay notional rent on those units. As the demand slowed down, this helps bridge the gap.

#4 TDS deduction limit on rent increased to 2.4L per year

Tenants were required to withhold TDS on rents that were more than 1.8L per annum. With this new change, the TDS withholding limit has been increased 2.4L per year. It’s a relief for real estate investors although the increase could have been bigger.

#5 Capital Gains Relief by investing in new property

Capital gains of up to Rs 2 crore, generated after selling a property, can now be invested in more than one property. Earlier it was required to be invested only in one property. It’s somewhat a relief but we do not believe whole of people benefit from this.

#6 Tax exempted on notional rent on a second self-occupied house

A notional rent is applicable to the second house if someone has more than one house, has been waived off, considering the needs of citizens who migrate to for job opportunities, as well as those who have to maintain two houses for family reasons. Again, we do not believe that a whole of people benefit from this because it only applies when both first and second homes are self-occupied.

#7 Setting up Panel of Ministers to look at GST for Real Estate

Budget 2019 has promised to set up a panel of ministers to look at GST on Real Estate – with intent to check the possibility of reducing GST. This ‘looking into it’ has been happening for a while and we do not believe this announcement has any significance.