Going green makes economic sense too

Going green makes economic sense too
The Hindu Business Line, June 28, 2009, Page 15

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The cost of constructing a green building is around 8 per cent higher than that of a non-green one, but the breakeven period is as low as 2-3 years through savings on energy costs.

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Divya Trivedi

Betting big on the profitability of ‘green buildings’, the promoter of Kensville Golf Club, Savvy Infrastructure Ltd, is investing around Rs 400 crore in developing both commercial and residential projects over the next two years.

“As a philosophy, we have been using green materials for our buildings but now we have committed ourselves to going green in all our constructions. Currently, we are working on a commercial project worth Rs 300 crore — Shapath V — coming up on 20,000 sq.yards. It will be a mix of ownership and lease and will also house the Intercontinental Crowne Plaza Hotel,” Mr Sameer Sinha, Director, told Business Line.

The company is aiming for a LEED certification in Gold by the Indian Green Building Council for Shapath V, which is located in an upcoming business area of Ahmedabad.

The building will meet all the specifications of a ‘green building’ and will have a positive impact on the long-term return on investments for the company, he said.

The cost of constructing a green building is around 8 per cent higher than that of a non-green building, but the breakeven period is as low as 2-3 years through savings on energy costs, etc, said Mr Sinha. The average annual cost of ownership of a green house can be 30-40 per cent lower than a non-green one and it makes more sense economically due to its high marketability and rentals, he added.

“Certain parameters such as operational efficiency and human wellbeing index are taken into consideration, which are visible only when one starts using the building,” he said.

The Rs 600-crore Savvy has just begun construction on Solaris — a 400-apartment residential complex. The total size of the project is Rs 100 crore and it is expected to be ready in two years’ time, according to Mr Sinha. It will be the first ‘green’ residential building complex in the city.

Incentivising

Though developers in other cities have done a lot of work in the environmental-friendly green building space, Gujarat is still lagging behind with just 13 buildings lined up for certification this year.

Stamp duty exemptions and additional FSI are some of the incentives that Maharashtra and Andhra Pradesh provide for green buildings that need to be provided in Gujarat as well, said Mr Jaxay Shah, President, Confederation of Real Estate Developers Association of India, Gujarat.

Housing Ministry bats for mortgage guarantee fund

Housing Ministry bats for mortgage guarantee fund
The Hindu Business Line, June 28, 2009, Page 5

Our Bureau, New Delhi

The Housing and Urban Poverty Alleviation Minister, Ms Kumari Selja, has pitched for creation of a ‘Housing Mortgage Guarantee Fund’, entailing a corpus of about Rs 15,000 crore. The fund could be conceptualised as part of the Rajiv Awas Yojana, sources said. While submitting a proposal in this regard to the Finance Minister for inclusion in the Budget, Ms Selja maintained that an initial allocation of Rs 225 crore could be adequate to set up the fund.

HUDCO restructure

The Minister has also sought restructuring of HUDCO (Housing And Urban Development Corporation Ltd).

The Ministry has urged the Government to restructure HUDCO and permit it to float tax-free bonds to raise funds for housing institutions, sources said.

Unitech to retire a third of its Rs 7,800 cr debt by July

Unitech to retire a third of its Rs 7,800 cr debt by July
Business Standard, June 29, 2009, Page 3

Apex court bench set to replace green tribunal

Apex court bench set to replace green tribunal
The Financial Express, June, 27, 2009

Sandip Das, New Delhi

To avoid a confrontation with the judiciary, the government has decided to replace the proposed National Environment Tribunal with a green bench to be formed by Supreme Court judges.

The national green bench will be the highest judicial body to deal with environment related court cases, especially those where industrial plans are often ranged against civil society concerns. All civil disputes relating to mandatory environmental and forest clearances required for new industrial projects will be settled by this bench.

“The whole idea behind setting up the green bench is to form a specialised tribunal of judges with the ultimate authority resting with the Supreme Court.” Jairam Ramesh (pictured), Union minister for environment and forest, said on Friday.

Setting up the bench means the government has jettisoned the National Environment Tribunal Bill 2007 that would have clipped the authority of the judiciary at several levels to deal with environment issues. The Cabinet note circulated by the ministry of environment & forests notes that the bench would also replace the National Environment Tribunal, which was never notified as well as the National Environment Appellate Authority.

Ramesh said his ministry has moved a Cabinet note to set up this specialised judicial body. He also clarified that the ministry is working out a proposal to reconcile the working of the new green bench with the various committees set up to assist the Supreme Court in various environment-related cases. About 50 disputes relating mostly to mining, hydel and coal-based power projects are lying with the Supreme Court, as they have run into environmental and forest clearance related obstacles.

Applauding ‘judicial activism’, which took the lead in environmental protection, the minister said he is looking forward to work closely with the courts to ensure that environmental laws in the country are adhered to. According to Ritwick Dutta, a Delhi-based lawyer specialising in environmental issues, the government did not notify setting up of the environment tribunal nor the appellate authority despite setting up the latter in 1997. No key officials have been appointed to the authority so far.

“The position of chairman to NEAA is vacant for last nine years and position of vice-chairman is vacant for the last four years,’ Dutta told FE.

More transparent

Making environmental and forest clearances of industrial projects transparent, the environment ministry has changed the Environment (Protection) Rules, 1986. It is now mandatory for project developers to make public the ministry's clearance letter. The compliance status of project promoters also needs to be put in the public domain. The ministry proposes to put the status of all the 250 pending industrial projects for environmental and forest clearances online, for getting response from the public. The mandatory Environmental Impact Assessment norms makes the maximum time for clearances to 210 days for environment and 150 days for forests.

Unitech to raise Rs 1.3k cr via private placement

Unitech to raise Rs 1.3k cr via private placement
The Economic Times, June 27, 2009, Page 6

New Delhi: The country’s second largest realty firm, Unitech Ltd, began the process of raising a little over Rs 1,300 crore through private placement of equity to fund projects and service debt on Friday, sources said. The company, which had raised Rs 1,621 crore in the second half of April at Rs 38.50 per share through the qualified institutional placement (QIP) route, on Friday launched the second round at Rs 81 per share and the process is expected to be completed today itself, sources said. The Unitech spokesperson could not be contacted for comments. Unitech’s shares rose by 0.37% to close at Rs 82.35 on the Bombay Stock Exchange on Friday. After the first round of QIP, the promoters stake had come down to 51% from about 64%. Unitech has also raised Rs 1,000 crore by outright sale of two hotels.

Unitech's debt to come down to Rs 5,000 crore post-QIP

Unitech's debt to come down to Rs 5,000 crore post-QIP
The Economic Times, June 29, 2009, Page 7

PTI NEW DELHI

Realty major Unitech's net debt will come down to Rs 5,000 crore by the first week of July, following an infusion of Rs 2,800 crore into the company last week through a private placement of shares, sources said. At present, the gross debt of Unitech -- the country's second-largest realty firm -- is Rs 7,800 crore, they added.

Sources said that post-QIP, the company's debt-equity ratio would come down to 0.52:1, among the lowest in the industry, and the net worth would be about Rs 9,600 crore. With this equity raising, all the debt-related issues would get addressed and the focus now would be to build on the sales momentum created over the past three months, during which Unitech sold over 3,000 flats comprising 4.5 mil-lion square feet, they added.

Unitech has been raising funds from the beginning of this year to improve the cash flow of the company and reduce its huge debt, which surged to nearly Rs 11,000 crore by the end of 2008.

Since April, the company has raised nearly Rs 4,500 crore through two rounds of qualified institutional placement (QIP).

Soon, a two-bedroom flat for Rs 25 lakh in Delhi

Soon, a two-bedroom flat for Rs 25 lakh in Delhi
Hindustan Times, June 27, 2009, Page 5

Here is some good news for Delhi residents who want to buy their dream home.

The National Building Construction Corporation Limited (NBCC), the largest public sector construction company, will launch its first housing scheme in the Capital early next year.

Up for grabs would be 2,500 flats, priced between Rs 25 lakh and Rs 60 lakh.

The NBCC has built several infrastructure projects across the country. One such project in the Capital is the Pitampura TV Tower.

It entered the real estate sector recently. The first residential housing project that it started was in Rajarhat, Kolkata, known as VIGYOR Towers.

In the Capital, the flats will come up on 30 acres of land adjoining the Ghitorni metro station on the Mehrauli-Gurgaon road. They will be ready by 2012.

Speaking to HT, Arup Roy Choudhury, chairman and managing director of NBCC said, “We have a land in Ghitorni, which we are planning to develop for residential housing. Details are being worked out for the housing project which will be launched early next year.”

This would be the PSU’s first housing project in Delhi.

“There is a huge shortage of housing in urban areas. We ventured into the sector to fill the huge demand-supply gap in the housing sector by providing affordable housing,” said Choudhury.

Earlier this year, the construction company had launched two housing schemes — in the mid and low-end category at Gurgaon in Haryana and Loni in Uttar Pradesh.

It is coming up with 4,000 flats in Gurgaon for employees of the Central government and public sector units.

The flats are priced between Rs 22 lakh and Rs 45 lakh.

Similarly, in Loni 2,000 flats are being developed in the mid segment category.

Fifty per cent of the flats will be reserved for government employees. The rest will be open to the public. These flats are priced between Rs 7 lakh and Rs 15 lakh.

Presently, there is a huge shortage of affordable housing in the Capital with the Delhi Development Authority — the sole development body in the city — failing to meet the housing requirement.

Focus on affordable housing, slums redevelopment: CREDAI

Focus on affordable housing, slums redevelopment: CREDAI
The Financial Express, June 29, 2009

R Ravichandran, Chennai

In a countdown to the forthcoming Union Budget, the Confederation of Real Estate Developers Association of India (CREDAI), the second biggest industry in India and the apex body of the organised real estate developers/builders in India with over 4,000 members, has, in a pre-Budget memorandum, put forth twin themes—affordable housing and slum redevelopment—to fuel the largest common Indian dream of owning a house.

The recommendations put forth by CREDAI are very much aligned to the announced objectives of the Central government on using infrastructure development to revive the economy. The real estate industry believes that it has the potential to play the role of the steam engine basis the fact that real estate sector alone can add to the GDP bottomline by 1-1.5% if efforts are made to reduce the shortage of urban housing while moving towards a slum free urban India.

The expectations are also derived from the prioritisation of affordable housing aforementioned in the Deepak Parekh Task Force Report constituted by the ministry of urban development and poverty alleviation, said Santosh Kumar Rungta, President, CREDAI.

He said the 11th Five-Year Plan has estimated the urban housing shortage of 24.7 million units with 99% of the shortage pertaining to economically weaker sections (EWS) and lower income groups (LIG). Home ownership is critical for this segment not only for economic reasons but also for the health of the nation from a social perspective in terms of stability, law and order and education and employment. In order to meet this target the government should come out with fiscal incentives to encourage affordable mass housing in the range between 300 sqft and 600 sq.ft and up to 1,000 sqft by providing subsidy in interest payable by home buyer

Around 80 million urban poor live in sub-standard or unsafe housing conditions under the abuse and continuous threat of displacement. From the slum dwellers perspective there is an additional tax burdens puts dampners. From a developer’s perspective in the context of slum redevelopment, arrangement for pre-sale financing is difficult because of the perceived risk factors, while from that of the government, land is scarce, and with the migrant population increasing every year, redevelopment is critical to the orderly development of cities. The improper utilisation of land is uneconomical from the government’s perspective.

Work kickoff to set tax for foreign realty

Work kickoff to set tax for foreign realty
The Economic Times, June 29, 2009, Page 9

Souvik Sanyal NEW DELHI

THE Authority of Advance Rulings (AAR) has cleared the air on taxation of a foreign realtor that has a tie-up with an domestic entity by ordering that the duration of work must be calculated from the day the effective work on the project begins rather than from the date of signing the contract.

Calculating of the number of days of work is crucial for a foreign company as it determines the tax liability of its earnings.

Foreign firms are often signed up by Indian infrastructure developers to do a part of the construction work. Examples of such arrangements include the Dahej LNG project where Petronet LNG awarded contracts to a consortium of foreign companies.

The AAR ruling came in the case of Cal Dive Marine Construction (Mauritius) Ltd, which signed an agreement with Hindustan Oil Exploration Company (HOEC) for laying undersea pipelines in the Cauvery basin. The AAR was hearing the calculation of “the period of activity undertaken” by Cal Dive, a bone of contention between the I-T authorities and the company.

Cal Dive inked the pact with HOEC on December 4, 2007 for $59,174,200. As per the double taxation avoidance agreement between India and Mauritius, the construction project undertaken by the foreign company must continue for nine months so as to make its income taxable in India. While the revenue department contended that the duration of operations for Cal Dive should be calculated from the date of signing the contract, the company argued that the period of work was lesser than the ninemonth period. In a relief to Cal Dive, the AAR ruled that the date of calculation should be the date from when the work has begun.

Commenting on the AAR ruling, Ernst & Young tax partner Amitabh Singh said the decision will provide guidance on how to calculate the number of days for taxing foreign companies involved in construction in the country.

Real Estate Intelligence Service, Friday, June 26, 2009