Indians prefer second-hand property: Study

Those who opted for new launches for discounts, are now repenting their decision mainly due to delays in project completion

Mumbai: While buying a house, majority of the Indians prefer a ready-to-move property than new launches, a recent study found out, reports PTI.

"About 74% home buyers across India are negotiating for a ready-to-move property," real estate market news portal Track2Realty's survey titled 'Home Buyer's Satisfaction Index' said.

The survey says out of the remaining 26%, who opted for new launches for price discounts, as many as 82% were now repenting their decision, mainly due to delays in the project completion.

The survey was conducted in Delhi, Mumbai, Kolkata, Bangalore, Kochi, Ahmedabad, Chennai and Patna.

 About 68% of buyers prefer ready-to-move property because they could avail of tax benefits only after getting the possession of the house, it says.

"Saving tax on the EMIs (equated monthly instalments) is one of the big reasons why eight out of 10 plan their house buying," it points out.

Around 92% of the respondents agreed that buying under-construction property makes them suffer double blow of paying rent and EMI and not getting any tax benefit.

Nearly 52% were ready to pay slightly more for a ready-to-move property because they wanted to make sure who their neighbours would be and the overall community profile.

Delay in the delivery was cited as a major reason by almost 92% buyers for reluctance to book a new launch.

Faulty design or construction scares 70% of home buyers, who opted for "you get what you see" projects.

"About 78% say they have not got what was showcased as the sample flat," the survey adds. Around 72% respondents complained about developers passing off cafeterias as "clubs" and under-equipped gyms.

Also, 72% were scared of going to consumer courts and face the legal hassles.

More than 62%, therefore, said they preferred to settle for a flat in the secondary market.


Moody's downgrades LIC to Baa2 due to exposure in ONGC, banks

LIC's increased investment in ONGC and increasing investment in public sector banks are credit negative, feels the ratings agency

Mumbai: The recent investment in the oil and gas giant ONGC and in number of state-run banks has cost the country's largest financial institution Life Insurance Corp (LIC) its higher rating on Monday from the global rating agency Moody's, which downgraded it from Baa3 to Baa2, but with a stable outlook, reports PTI.

"LIC's increased investment in ONGC and increasing investment in public sector banks are credit-negative," Moody's Investors Service analyst and assistant vice-president for financial institutions group Stella Ng said, adding that its overexposure to the state-run banks is also a concern.

Ng, however, added that the agency "sees no change to LIC's rating after sovereign rating action and therefore retain our stable outlook for the company."

The downgrade relates to LIC's foreign currency insurance financial strength rating and concludes the review for possible downgrade initiated on April 30, 2012.

The city-based LIC could not be immediately contacted for their reaction to the downgrade.

This revision comes in the context of an ongoing global review by Moody's, affecting financial institutions, whose ratings are higher than the rating of the government where they are domiciled.

Giving the rationale for the downgrade, Moody's said, "It reflects our assessment that LIC's creditworthiness is highly correlated with that of the government's credit strength, considering (a) the extent to which its business depends on the domestic economy; (b) the limited degree of cross-border diversification within its operation; (c) its significant level of balance-sheet exposure to domestic sovereign debt, relative to its capitalisation; and (d) the absence of strong foreign ownership."

Last month, S&P had warned of a sovereign downgrade while revising downward the country's credit rating close to junk status at BBB-.

Reportedly under the government order, LIC had picked over 90% of the 5% follow-on offer from the state-run ONGC early March for a premium, but since then, the oil major's shares has been trading very low. Every analyst and economist had blamed LIC for its investment.

During the Q4 of last fiscal, LIC was again forced to increase its stakes in state-run banks like Syndicate Bank, Bank of Maharashtra and IOC among others, as the cash-starved government did not have the funds to pick state as part of the fund infusion into banks.

Accordingly, LIC's stake in many banks are above the Irda-mandated 10 per cent but closer to 15 percent.

Moody's said since LIC is 100% owned by the government and generates almost all its premia from the country, it reflects the corporation's concentration in one market and its high reliance on the domestic economy, apart from its exposure to an evolving operating environment.

"Therefore, there is little reason to believe that LIC will be insulated from any government debt crisis, if it were to occur," Moody's said.

"LIC has meaningful and rapidly increasing direct or indirect exposures to the government through its holdings of government securities and its equity investments in government-related entities, including banks and corporations," it said.

As of 31 December 2011, the ratio of government securities to adjusted shareholders' equity in LIC was 764% (excluding unit-linked invested assets), said the agency, adding therefore it considers the lower rating, which is now positioned at the rating of the government, as more appropriate to capture the credit profile of the corporation.

The agency further said these rating actions derive from our updated assessment of the linkage between the credit profiles of sovereigns and other institutions domiciled within the sovereign, which is discussed in the rating implementation guidance.

In addition, the government guarantees all of LIC's policy liabilities, including associated declared bonuses, as prescribed in the LIC Act. Thus, Moody's views that LIC's credit strength is very much closely linked to the sovereign, which justifies the insurer's current rating.


No delay in clearing investment by Aircel-Maxis in 2006 says government

Mukherjee said it was clear that the proposal was processed in the normal course and approval granted in the normal course without any delay

New Delhi: The Indian government on Monday dismissed Opposition charges of delay in clearing investment by Aircel-Maxis in 2006 by then Finance Minister P Chidambaram declaring there was "no scope for misunderstanding and misinformation" on the issue, reports PTI.

"There is no scope for any misunderstanding and misinformation. both cases there was no delay in granting the approvals," Finance Minister Pranab Mukherjee said in a statement in the Lok Sabha seeking to put a lid on the controversy.

Giving dates on which the application for investment was made and the final approval was granted, Mr Mukherjee said it was clear that the proposal was processed in the normal course and approval granted in the normal course without any delay.

His statement came three days after the issue rocked Parliament with the Opposition alleging a big scam and demanding resignation of Chidambaram for his alleged role in the Aircel-Maxis deal.

But the Home Minister had dismissed the charges saying neither he nor any member of his family was involved. Mr Chidambaram had read out a statement issued by his son Karthi "as part of my statement".

"I categorically state that neither I nor any member of my family have acquired or hold any share in any telecom company. In particular, I categorically state that neither I nor any member of my family have acquired or hold any share in either Aircel or Maxis," the Home Minister had then said.

BJP leader Yashwant Sinha had then said "prima facie, what has happened is a big scam and government should not hush it up" as the Rs4,000 crore deal has raised several serious questions, leading to a major controversy.

The Finance Minister said financial investment was made by Global Communication Services Holdings Ltd, Mauritius, to acquire 73.99% equity in Aircel Ltd. Subsequently, another application was received for downstream investment by Global Communications.

Mr Mukherjee said while the application was received on 1 September 2006, it was recommended by the FIPB at a meeting on 3rd October, its minutes drawn up on 6th October, which were approved by the Finance Minister on 12th October. A formal letter of approval was issued ten days later.

As soon as Mr Mukherjee finished his clarification, Mr Sinha stood up to demand a special discussion under Rule 193 on the matter and said he would move a notice.


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