The Investments in the Real Estate will be facilitated by the REIT establishment: 2014 Budget

REIT is a Real Estate Investment Trust which offers units to public. They are the ones responsible to gather reserves from the investors; they are also equally responsible to acquire rentals relating to the real estate and also dispense the income among the investors. These bodies majorly own govern and manage the income generating properties which are required to allot around 90% of the profits gathered as dividend among the unit holders.

The REIT’s were firstly introduced in India by the Securities and Exchange Board known as the SEBI. The REIT regulation was drafted in the year 2007. These set of regulations in the draft were never finalized and executed as the structure inherited a major limitation. Further in 2013 September, the SEBI has unconfined a draft and a sketch of the REIT regulations and rules for public comments. These regulations are hoped to fulfill the purpose when they come into force these set of rules thus are in accordance with the global regulations. The SEBI and the REIT has received many relevant comments and these regulations are to be expected to come into force soon.

The REIT has an immense ability to attract and effectively manage the investments within the real estate industry. Below a few reasons are discussed which could incentivize these investments in the real estate.

The most importantly the REIT’s prevent the creation of any kind of black money. The creation of such black money could take place through any normal banking channel.


It is equally essential to make this investment striking and feasible as well as there is a requirement to lighten the burden on Indian Banking functionality and also promote channelization of these savings into real estate as a valuable asset.

In the recent times a fixed income instrument is lacking which is an active tool to supply for the inflation hedged capital or return appreciation. This as an outcome has diverted savings into investments in gold whereas the savings in housing has remained unproductive for a longer period of time. The effectiveness of the REIT coming in force will change these unproductive savings into an asset which is productive in a manner reducing the shortage in monetary terms.

It is also important to craft the REIT as a smart tool both for the corporate as well as the individuals. This essentially requires a very tax efficient model to be added to the REIT regulations. Thus it is the need of an hour to modify and make certain essential changes in the tax law and the foreign exchange policies to make sure the REIT’s practicalities are kept unchanged and the regulation have a smooth take off in a planned manner.

It has been a known fact that the real estate contributes mainly to the GDP of the Indian economy on one hand and on the other hand it is mainly unorganized. Thus, the taster of the REIT regime will definitely render the needed support and help to make the real estate a much smoother an operative sector also helping it to overcome the tag of an unorganized sector.

The REIT will nevertheless facilitate the investments and but also provide a productive assets to the real estate industry. Thus, to conclude, the REIT enforcement is that it is essential to promote such investments in the realty sector for the betterment of the real estate industry.

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Betterment Fee to be charged by BBMP for lands in illegitimate plans

Property owners who acquire sites or land that has not obtained necessary land use conversion clearance from the civic agencies and those lands for which several government agencies have issued DE-notification will be charged with betterment fee by the BBMP. This betterment fee will be divided into different slots by the Bruhut Bangalore Mahanagara Palike (BBMP) based on the size of the land.

The BBMP council also said that the land owners who pay betterment fee, there land will be categorized as A Khata. Presently, owners with B Khata properties are not qualified for bank loans, as B Khata properties don’t have authorizations from civic agencies like BMRDA and BDA.

Dreamz-GK-BBMP-NewsThe civic body, which is in need of money very much, has planned for an addition in flow of income up to Rs.200 crore, through this betterment fees.

Under the betterment fees, BBMP has developed two different slots; one slot for properties that measure up to 1,000 sq. mt. will have a betterment fee of Rs.350 per sq. mt. and the other slot being for lands measuring more than 1,000 sq. mt. would be charged with a betterment fee of Rs.300 per sq. mt. In regard to this, most of the lands to profit are sited in the peripheries of the city and have been incorporated in areas that come under the authority of BBMP.

The betterment fee fixed by the BBMP also gives malleable option of four installments to the property owners and for those property owners who want to pay the betterment fee in more than four installments should pay an interest of 1.5 per cent per month.

But, this decision of BBMP should be sanctioned by the Karnataka High Court, which has suppressed the previous two notifications of the BBMP regarding the same matter.

In regard to the betterment fee, the BBMP official said that the betterment fees are fixed depending on the amount spent in the development of the infrastructure and to be spent for the same in the major and newly added areas of Bangalore City. The officials also added that the plots that required the land use conversion clearance or denotified by the government agencies like KIADB, KHB, BDA, and other government agencies should be separated from the lands.

About Rs.200 crore revenue will be generated through the better fee that will make the building houses and selling lands easy for people, says one of the BBMP officials. The official also stated that the betterment fee scheme will benefit most of the sites situated in the peripheries of the city.

Another official also stated that the betterment fee is not applicable for revenue sites and is pertinent to only those sites in which land use conversion clearances are necessary. Previously, the BBMP had fixed an even betterment fee of Rs.550 that was disregarded in the High Court and now the reviewed betterment fee will be presented in the court within a week and will follow its instruction.

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Metros Are Ideal Investment Options, Says a Recent Study

In what could be much-awaited news for prospective investors, Cushman & Wakefield has come up with a revelation that the present time is ideal for investing in real estate. Also, the report by the firm has guidelines as to when to invest, a good deal during the initial months of 2014 is recommended.

It is also a wise move to invest after the upcoming general elections as the prices are in for a change. Last year, things were moving slowly due to a decrease in property buyer interest. And, many were convinced that better times are imminent and postponed investment plans.

Time-to-Invest-Metros-dreamzgkblogThis new development is a respite for them. And, it is also mentioned in the report that metros, despite the high prices are the best investment. The reason mentioned is that irrespective of any developments, prices are always in for a big leap. A metro means more educational and employment opportunities, more housing options, improved infrastructure and a lifestyle that could be matched with international standards.

If you are able to select a location that is easily accessible from other important areas and provides all basic amenities, your chances of returns are manifold.

There is city-wise information as well on the prominent locations. In Bangalore, the following places were recommended. Hebbal and KR Puram, with the expected percentage of appreciation being well above 90 percent within a few years.

When it comes to Pune, the following are recommended: Ravet, Wakad, Hinjewadi and Tathawade. When considering Mumbai, preference is for these regions; Ulwe, Wadala, Chembur, Kurla and Lower Parel.

The areas in the vicinity of National Capital region have the potential to receive double the initial price in a matter of few years.

In the case of Chennai city, rates in Medavakkam as well as Pallikaranai might double in about five to six years of time.

Hyderabad also has several prominent areas with exceptional possibilities for returns on investment which might go up the ladder with issues on the Telengana matter settles forever. The city of Hyderabad, despite its historical importance and good opportunities, could not see major real estate activities taking place due to the political uncertainty, and things are likely to undergo a change at earliest.

Realty Bubble Likely to Burst

The slowdown in the economy is believed to be affecting the country. According to realtors it is forecasted that the days of remarkable returns are over. While developers are finding it hard to sell their units, home buyers are staring at meagre yields on their investments. According to a report by a global realty consultancy organization, it has stated that investments in the residential real estate market in India in 2013-14, is slated to bring in about 10 to 20 per cent. This will be down from 30-40 per cent in 2012-13.

People’s interest in realty investment has come down according to developers. According to the chairman of a renowned developer, it has been noticed that today, people are careful about investing in assets such as a house which requires huge investment. This is considered to be one of the reasons as to why the off take of homes across the industry is not at the desired level.


It has also been noticed that generally, people are not coming showing interest to buy inventories. It is believed that the sector is facing the fear of slowdown. Moreover, heaping up of unsold inventories has put pressure on returns. This trend is likely to continue throughout this financial year. According to executive managing director, of a renowned realty, he stated that they expected some change in the realty sector. In some projects in NCR areas, this could be up to 20 per cent.

Many people keen in investing in the sector are waiting and watching. With regard to this, developers are trying out various methods to attract the attention of the buyers. According to the market experts, the continuing liquidity crisis along with political instability will keep the property market in NCR restrained this year.