MCD property tax amnesty scheme has few takers

Assetventures
The property tax amnesty scheme launched by the Municipal Corporation of Delhi (MCD) to encourage tax defaulters to pay up their dues

failed to people. Only 27,000 property owners came forward to pay their dues even as the civic agency was expecting at least 20 lakh people to turn up.

Meanwhile, looking at the dismal response, the civic agency decided to extend the date for the amnesty scheme to December 31 the last date before this was October 31. According to MCD officials, all those who fail to pay their property tax by December 31 will be issued showcause notices. Defaulters will have to face harsh penalties like sealing of bank accounts, attachment or auctioning of property and even prison terms, the officials said.

"We were expecting more people to file their property tax as there are approximately 30 lakh properties in the city while only 7.5-9 lakh people pay their tax. We have data on property owners and will issue showcause notices to them. Their properties can be auctioned if they failed to pay up by December 31,'' said MCD commissioner K S Mehra.

The amnesty scheme was launched to get such owners in the tax-net. "We have received Rs 70 crore as property tax from 27,000 people. The Survey of India is also conducting a survey to determine all those property owners who are not in the tax net of the civic agency,'' said an MCD official. The survey was completed in northeast district recently and around 3.5 lakh properties for which tax was not paid were identified in the area, the official said.

"We received a large number of representations from resident welfare associations (RWAs) who said they could not avail of the scheme due to the festive season. They had requested us to extend the last date for paying the tax,'' said Ram Kishan Singhal, chairman of the standing committee.

The civic agency had said that all those who remained defaulters after December 31 would have to pay a penalty of 30%. In addition to this, 1% interest will be levied every month till the amount is finally paid.

DLF to develop affordable housing in India Assetventures

India’s leading real estate company DLF is said to be working on plans to build around 1 lakh houses that would cater to middle class in the country.

These houses would be build in all the major cities of the country and would be priced at around Rs. 20 lakhs.

These new housing solutions could be offered under a different brand name in the coming years.

DLF rival Unitech has already announced similar plans to build affordable houses around the country.

The company has officially declined to comment on these reports.

Rentals rose even as capital values of real estate dipped Assetventures

Software engineer Ravi Kumar took a loan from a leading private sector bank and invested in the property market in 2008, at the height of the
realty boom. Today with values lower than what he purchased the property for, selling-out and exiting the sale is not an option for him.

With a stiff EMI to be paid out, renting out the apartment seemed a good idea. Kumar did not complain when he found rental values rising as the property neared completion. Today with high occupancy, the rental values are almost 15-20% higher than in March 2009.

Many people are facing this situation across cities in India. A Brix Research survey over 30 Indian cities showed that while capital values, which fell during the Jan-Mar 2009 quarter, rose from Apr-Sept 2009 but remained either lower than the previous values or at the same level.

However, rental values have registered a sustained rally from April 2009 onwards. Today it is between 15% and 50% higher than the September 2008 levels. A fact that buyers like Ravi Kumar should be happy about.

Says Chintan Patel, senior professional, real estate practice, Ernst & Young, "Rental values in mid-segment properties across prominent cities have witnessed an upward trend. Mid segment properties in key residential micro-markets of Mumbai (western and central suburbs) and NCR (East and North Delhi, Gurgaon) have witnessed sustained rise in rental values, in the range of 15-20%, over the last 5-6 months. Constricted supply of apartments for rent, coupled with strategic location offering good connectivity to prominent business districts of the city, have been instrumental in rising rental trends of some key micro-markets in these cities."

So, what other factors have really triggered this change? Take textile entrepreneur, Sumit Bansal, who was planning to buy a house for himself. The fluctuation in the real estate market since September 2008 has left him confused and he decided to take a house on rent till the markets stabilised.

According to RV Verma, executive director, National Housing Bank, "The real estate market today has shifted from being demand-based to need-based." According to the market researchers and brokers, rental housing has become a popular choice of housing owing to high and unstable capital values.

The Brix Research Quarterly Real Estate Value Analysis Reports have shown that rental values rose since April 2009 across almost all Indian cities. During the Apr-Jun 2009 period, rental values stabilised in most of the cities and recorded an appreciation in values during the Jul-Sep 2009 period.

Rental values for a 2BHK apartment have registered an average growth of 10-15% in most localities in the Jul-Sep 2009 period compared to the previous quarter.

Explains property investment adviser, Ashok Narayan, "Property values dropped 15-35% during the slowdown. Large developers such as DLF and Unitech started by completing existing projects rather than launching new ones. This trend continued across the country and projects which had been sold off drawing-boards saw the light of day. As projects neared completion, values rose by 15-20%. In established city areas property values dropped 10-25% during the slowdown but rose back to the same level when the sentiment improved. In newly-developed properties, rental values are today at least 15-25% higher due to projects being completed and occupied. In the established city areas rental values have risen by about 10-20% over the peak values before September 2008."

The Brix Research report shows that Gurgaon real estate market saw an annual appreciation of 10-15% in rental values in most localities during the Apr-Sep 2009 period as compared to the Jan-Mar 2009 period. According to city broker RB Singh, "This reflects end user demand for rental housing."

Other areas of the National Capital Region (NCR) such as Ghaziabad and Faridabad also registered an increase in apartment rental values. In Ghaziabad, during the Jul-Sep 2009 period, rental values stabilised and increased by around 13% as compared to the Apr-Jun 2009 period. This was due to the increased demand for 2 and 3BHK ready-to-move-in apartments in the city.

In Mumbai, rental values of apartments have risen by around 2-20% during the Jul-Sep 2009 period as compared to the Apr-Jun 2009 period. There has been a corresponding drop in apartment capital values during the same period. In Chennai, the rental values were more or less stable and saw a 5-10% appreciation during the Jul-Sep 2009 period.

The positive trend in apartment rental values has been reflected in smaller cities as well. Chandigarh witnessed a significant fall in capital values of apartments and plots during the Apr-Sep 2009 period but registered a growth in apartment rental values.

In the Jul-Sep 2009 period, rental values increased by around 10-15% as compared to the Apr-Jun 2009 period. Brijesh Bhabsar, a Rajkot-based realtor, said, "The rental segment is showing positive trends and is a preferred housing option among end users."

In the southern region, Kochi registered an increase of 5-37% in rental values post March 2009, as most buyers restrained from making large investments in the property market. Coimbatore and Visakhapatnam experienced a similar trend of 10-20% rise in the rental values of the end user dominated 2BHK segment.

Local broker such as David Bose of Coimbatore maintained that this increased demand for rental homes reflects the end user expectation that capital values will fall further. This is corroborated by retired bank manager RC Gaur, who lives in rented accommodation in Faridabad, wishes to buy an apartment in Delhi, but prefers to wait for the right time to make his investment.

So is it a good time to take up rented property right now? Is there a demand being seen? "Demand for rental space has risen over the last few months. The improvement since April is between 12-15%, depending on the economic drivers of each city. This is generally a good time to rent homes, depending on location-based dynamics," feels Raminder Grover, CEO-Homebay Residential, Jones Lang LaSalle Meghraj (JLLM).

Today the market is driven by the need of end users who are still unsure about capital investment in real estate and are taking the rental option in an unstable market.

Real Estate finding a new track in Indian economy Assetventures

A big impact of recession is seen in the worldwide market, where many big companies posted big losses, asked for a bailout and even filed for the bankruptcy. The recession had such an impact on the world over economy that even a core business of a particular country went in loss with many citizens pulling their hands off from investment part.

Same happened with the Indian real estate market, the most bullish sector where not many hesitated before putting their money forward for an investment related to some plot, flat, office, shop etc.

In the month of September 2008, when recession captured the world with a full grip, the real estate of India suffered a big loss session. All the major real estate players like Jaypee Group, Unitech and DLF came up with the schemes and rebates on flats to attract as many buyers as they can and sell off the reserve as soon as possible.

The cities like Mumbai, Delhi, Bangalore, Kolkata and National Capital Region accounts for big real estate business of the country with many property owners earning big money from the rental income from homes and offices.

One can analyse the downfall of rental income in these cities as many fully constructed buildings are standing with a very less space occupied with them and that too on a small amount of rent in comparison with the rentals of 2007.

This downfall was not limited to the rental part of real estate industry but the pure buying and selling of properties also came to a halt after financial crises reached the Indian economy.

With the global economic crises on one side, leading players of real estate India like DLF and Unitech are focusing more on the repayment of debts as soon as possible.

This has resulted in big real estate players selling their personal office properties, shifting their focus from core property business to some other businesses like insurance and hospitality and selling off some part of the company by getting listed on the capital market.

However, according to the recent study conducted by several industry watchers, the real estate of India is coming back on profitable track with the demand for offices is increasing in major cities like Bangalore and Mumbai, however Delhi and NCR are still far from witnessing growth in demand as many are expecting further fall in rentals here.

Besides the growth factor in office and shop rentals, a slight growth is also seen in the buying and selling transactions of properties.

With the Indian economy coming on track again, the demand for flats are seen rising in past one month. The real estate developers like Amrapali, Parsvanath and Unitech are nor registering some potential bookings on their order books.

The recent festive season has also added some profits to the real estate industry when many were keen on buying a new home.

During the last festive season, a very low rush was seen for the real estate buying but this year, the banks came up with some attractive home loan schemes with the help of rebate provided by Reserve Bank of India.

Anshuman is a professional real estate property consultant in India and investing in Indian real estate from years. To know more about real estate india, reality projects as sheth heights chembur, neelkanth greens thane, please visit: www.paisawaisa.com

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Guj builders plan permanent property show

Gujarat based builders are planning to replicate the Japanese model of permanent property show to display large number of real estate

projects at a single venue near Ahmedabad.
The idea of developing a facility for displaying built sample houses along with layouts has come from a recent study tour of Gujarat chapter of Confederation of Real Estate Developers’ Association of India (CREDAI) to Japan and South Korea. Around 120 real estate developers from across Gujarat visited the two countries earlier this month.

The permanent property show near Osaka drew attention of the entire delegation. “Most of us believe it would make sense to replicate the model somewhere near Ahmedabad instead of holding property shows periodically,” said Jaxay Shah, president CREDAI (Gujarat). Prospective buyers also don’t have to waste time by visiting different construction sites.

Mehsana-based builder Sandeep Sheth, who coordinated the study tour, said, “Under one roof, customers would get an idea about overall realty development across the state and developers will have the advantage of a large platform which would attract a broad base of prospective buyers.”

The Osaka model has excellent landscaping, gardens, restaurants and an entertainment zone for children where families spend considerable time before taking the crucial decision on which residential or commercial space to buy.

Suresh Patel, vice-president of Gujarat Institute of Housing and Estate Developers (GIHED), said if the state government supports the idea, it could generate good revenue out of rentals from developers who book space in the project.

There were other unique schemes which impressed the local realtors. Ahmedabad-based realtor Dushyant Pandya said he was eager to replicate a solar bungalow project. The one he saw had 120 dwelling units running only on solar energy. “Cost-wise, these would be expensive initially but they would be cheaper in the long run,” he said.

Among other projects they visited was one especially developed for artists like painters, sculptors, designers and creative people. The homes offer an ambience which helps creativity blossom

City realtors aim high Assetventures

mpressed by the infrastructure development and synergy between town planning and bylaws in Japan and South Korea, real estate players in the city now believe vertical growth is the solution to the crunch of land in Ahmedabad. Recently, a team of around 120 real estate developers of Gujarat had been on a 10-day tour to Japan and South Korea. The tour was organised by Gujarat chapter of Confederation of Real Estate Developers Association of India (Credai).

The developers were very much impressed by the city development projects undertaken by the governments of the two countries. Unlike the US, Japan and Korea feel severe crunch of land, so they prefer vertical development, said Dushyant Pandya of Vishwanath Group. He also said horizontal development would mean higher prices of land.

"At present, the land prices in the city are no longer affordable for citizens. Though, many say the prices here are still lower than that in Pune or Bangalore, one should not overlook the fact that even the average earning of people here is lower," he said. Suresh Patel, vice president of Gujarat Institute of Housing and Estate Developers (Gihed), said though Japan is under higher risk of earthquake, the government allows 100-storey buildings. "It makes us wonder why we are not allowed to build 20-25 storey residential complexes in the city," Patel said.

Almost half of the representatives of the delegations were from Ahmedabad. The delegation visited Osaka, Tokyo and Kyoto in Japan and Seoul in South Korea during the 10-day tour. It had business to business meeting along with having a look at various infrastructure projects there.

"Town planning is not only about building houses, it is also about traffic, law and order and civic amenities," said Jaxay Shah, president of Credai, Gujarat Chapter. He said there must be a perfect blending of development and services. He felt that since the government was about to prepare a plan of Ahmedabad's development for 10 years, the officials concerned should also visit these countries.

Shah said there was a need to create skilled human resource pool that for providing quality works. He said Credai is planning to set up centres for training of all levels of people involved in real estate sectors. However, the government should help the association with providing adequate land for setting up such centres, he said.

"We want to set up such training centres first in four major cities of the state - Ahmedabad, Vadodara, Surat and Rajkot, and then take it further to small towns," he said.

Shah also stressed the need to develop knowledge back up. "Though the government-run ITIs are running some courses, for real development public-private partnership is a must," he said.

Pay less upfront to get a home loan Assetventures

Mr X (name changed), who works in the chemical industry, can now afford to buy his dream home, thanks to banks lowering down-payment for home loans.
When he first inquired with his bank, he learnt that to avail of a loan for a house worth Rs53-55 lakh, he needed to shell out Rs10.6 lakh (roughly 20% of the value of the house); the loan amount would be the remaining Rs42.4-44.4 lakh.

A week back, he visited his bank again and found that the down-payment requirement had come down to Rs7.95 lakh, or 15% of the value of the house.

Till sometime ago, banks were cautious about home loans as property prices had been falling. They wanted a higher cushion by way of higher down payment. The cushion is called margin in banking terms. On a property worth Rs20 lakh, a bank would extend a loan 15-30% lower than the value to ensure that in case the borrower defaulted, and the price of the property fell, the bank could sell the property and recover the dues.

"The situation is better now as property prices are reasonably stable. At most other places, except Mumbai, prices have not gone up beyond 10%. Because of the reasonable prices, LTV (loan to value, or the percentage of property value financed by a bank) has started slightly moving upward," said Kamlesh Rao, executive vice president and business head, personal finance, Kotak Mahindra Bank.

home loan down-payment requirements were increasing, sometimes as high as 30% of a property's value, as realty prices were coming down. But Rao said that down payment is decreasing only in cases of ready property or where a flat will be under possession in six-nine months. In a survey of 11 banks, nine banks would provide 80% of a property's value as loan and one 85% to first-time borrowers.

An agent from a leading private sector bank told that the bank would provide 85% of a property's value as loan. "But I can get it for you with stamp duty and registration cost. If you consider that, the amount will almost be 100% of your property value," he said.

It is learnt that public sector banks such as the State Bank of India, Indian Bank, Bank of India and the Punjab National Bank have lowered down-payment levels to 15-20% from up to 30% till recently.

This was not the case a few months ago, when nobody was sure when the fall in property prices would stall.

RR Nair, director and chief executive, LIC Housing Finance, said: "We are having it (down payment) at 15%. When property prices were down, we had not officially reduced the margin (the percentage to be paid by the borrower). But we were cautious about appraising the property. Depending upon the quality of the property and the project, there was a call taken (on the margin). So, right now we don't have to officially change the margin."

Some banks and non-banking finance companies are adopting a wait-and-watch strategy. Sanjay Shukla, business head (mortgage), Tata Capital Housing Finance, said: "Real estate firms were holding up the price and hence sales were not happening. After Dussehra, there have been some sales. The loan to value from the customer's point of view is 80-85%, depending on his or her credit profile."

But some bankers want to avoid a situation where home buyers overreach. CS Jain, executive director (head of personal banking), IDBI Bank, said: "We have retained the down payment at 20% (from 15% earlier). We haven't rolled it back and are not planning to reduce it yet."

The Housing Development Finance Corporation is one of the financers that did not change down payment amounts during the tough phase and so haven't changed now. Keki Mistry, vice president and managing director, HDFC, said: "Nothing was changed last year and nothing has been changed now."

British firm to host India property show Assetventures

With the global economy looking up, a London-based firm plans to host a property show to showcase residential projects in India to British investors.

The event, organised by real estate agent Hamptons International, will be held Oct 30-Nov 1 at the firm's head office in London.

"India has always been a major market for Hamptons International, given the UK's long and close ties with this country," said company international sales manager Dean Foley.

"We have certainly seen, over the last few months, an upturn in the amount of transactions completing by our UK NRI (non-resident Indian) clients due in part to long term growth plans and affordable real estate," Foley said.

The event has been organised in partnership with leading developers including Emaar MGF, Spire Edge, Ansal, ANR Infrastructure, Santa Fe Realty and Godrej.

Man can claim house bought in wife's name: HC Assetventures

More than 20 years after a Ratnagiri couple got divorced, the Bombay high court has given the man the right to claim the property he had bought for his former wife in happier times.

"The husband had purchased the property in the name of his wife with his own money and, therefore, she was only [the] benamidar, or the ostensible owner, while the husband is the real owner," justice JH Bhatia observed in his order last week. Since the husband bought the house in 1981, the transaction was not barred by the Benami Transactions (Prohibition) Act, which came into existence in 1988.

Family court advocate Kranti Sathe said the ruling would affect many couples who buy property jointly. "The court has tried to strike a balance -- the wife is entitled to maintenance after divorce, but even the husband has not been denied the property that he purchased with his hard-earned money," Sathe said.

This means if a spouse cannot prove to have bought the property with his or her own money, he or she may lose the right to claim it, Sathe said.

In this case, Jayant and Sonali (names changed) were married in 1979. In January 1981, Jayant said he bought the property worth Rs5,000 in Ratnagiri in Sonali's name out of "love and affection". He said he had paid for it after securing a bank loan of Rs1,500 and using savings from his salary, which was Rs350 per month at the time.

In 1984, after their relationship soured, Sonali moved out of Jayant's home and started living separately with her parents in Kolhapur. In 1993, the trial court held that Jayant had paid for the property and it was not bought for the benefit of his wife.

Sonali challenged the decision before the high court, claiming she had paid for the property from the money her "rich" father had given her and the scholarship she earned as a student of biochemistry.

Justice Bhatia, however, observed that there is "no material to show" that Sonali had received "any funds, either from her father or any scholarship", to purchase the property.
The court said it was "logical and reasonable" for Jayant to buy the property in Sonali's name when they were married and living cordially. But after their separation, when Jayant's first claim was allowed by the court in 1989, Sonali made no attempt to claim the property.

The court dismissed Sonali's appeal and permitted Jayant to claim the property that was rightfully his.

Neelofar Akhtar, member of the family court bar association, said the ruling assumes importance as there are not enough provisions in law to deal with property disputes arising out of divorces.

"The woman has the right to alimony after divorce but if she claims property also, what remains with the man?"

Family court lawyer said sometimes men may buy property in the wife's name for tax benefits and sometimes women may end marriages too soon to get a "back-door claim" to the man's property.

Sathe said the length of marriage is also crucial while deciding such cases.

But divorce cases are very delicate and tricky as they differ from couple to couple and it is difficult to apply anything as a blanket rule, Sathe added.

NRIs to get immediate property possession in Chandigarh Assetventures

Non Resident Indians (NRIs) having property in the union territory of Chandigarh can now gain immediate possession of both resedentian and non-residential property, officials said here Monday.

"We have received a notification from the union government regarding the extension of the East Punjab Urban Rent Restriction (Amendment) Act 2001 in the city. Now NRIs can have immediate possession of their property by just applying to the relevant authority," said the official spokesperson of the union territory here Monday.

He added: "Chandigarh administration had been for long urging the centre to make provisions or to devise a mechanism for safeguarding the properties of the NRIs having roots in Chandigarh."

Chandigarh already has an NRI cell, which was established Aug 15, to deal expeditiously with various representations and complaints received from NRIs.

Real estate payment plans Assetventures

Do you understand the nuances of your payment plan to your developer? When you buy property and pay by installments, soon after the initial payment you make at the time of booking, you will be expected to make recurring payments to the developer.

Here we explain the process of how this works and what you stand to gain or lose under each option.

Time-Linked Payment Plan

Time-linked plans require you to pay installments to the developer based on a pre-determined time schedule, independent of the rate at which the project’s construction progresses. This is a contractual commitment you are signing up for, and is non-negotiable.

If your payments are late or if you miss an installment, you can be liable for penalty interest or anything that you might have contractually agreed to as a penalty.

A typical time-linked plan conceptually looks like the following:

- 10% of basic selling price (BSP) at time of booking

- 10% of BSP every quarter thereafter for next 8 quarters

- 10% BSP at time of possession + other dues (such as club membership, development charges if any, parking fees)

The disadvantage with time-linked plans is that you are at the mercy of the developer - even if the project is delayed you are contractually bound to pay your installments.

So, effectively you are funding the developer for no noticeable progress, which clearly is not a fair deal to you. The question to ask is what the developer is doing with your money if it is not going towards the construction or related activities.

Construction-Linked Payment Plan

Construction-linked plans require you to pay installments to the developer based on a pre-determined rate of progress of the project, usually related to construction related milestones.

The advantage of such a payment plan is that you pay only when the milestones are being achieved – you can see visible signs of progress, and there is a noticeable correlation between what you are paying for and the development of the project.

Like in time-linked plans, if your payments are late or if you miss an installment, you can be liable for penalty interest or anything that you might have contractually agreed to as a penalty.

A typical construction-linked plan conceptually looks like the following:

- 10% of BSP at time of booking

- 10% of BSP at time of excavation

- 10% of BSP at casting of the ground floor slab….and so on

- Final installment at completion of the roof + other dues (such as club membership, development charges if any, parking fees)

The advantage of a construction-linked plan, as you might have guessed, is that you pay for progress, and are not uselessly funding the developer to do what it pleases with your money.

What if you choose the Down Payment Plan?

The Down Payment Plan requires you to pay the entire price of the property at the time of booking. One possible advantage of this is that you can expect to get a 10%-12% discount on the property by paying the entire amount in full.

However, depending upon the project and the builder, you might be able to negotiate a higher discount.

The disadvantage of these plans is that once you have paid the entire money, you are at the mercy of the developer if the project is delayed or postponed.

What happens if you cancel your booking?

Irrespective of which payment plan you choose, the outcome depends upon how helpful the developer wants to be in dealing with your cancellation request. You will likely have to put in your request in writing and then just wait for the developer to respond.

However, don’t expect the developer to act quickly. It is not in their interest to do so, because now they have to find a new buyer for the unit that you are exiting.

As far as getting a refund is concerned, you must understand what contractual penalties you might be obligated to pay.

In any case, don’t expect the developer to pay the pending amount back to you immediately. Chances are you will be made to run around a lot to get anything back from the developer, and the process can take up to a few months.

Festive real estate and loan offers Assetventures

Festive real estate and loan offers

Diwali is a time for festive offers. But, real estate and housing loans aren’t consumer goods and the advertised festive offers are usually just a marketing gimmick.

There is very little similarity between buying a domestic items like a kettle, on which one can get genuine deals, and getting a big ticket item like a house or a housing loan. Here we tell you why you should not fall into the trap of a so-called festive offers on real estate and related loans.

Why the marketing spin?

Marketers recognize that during festive seasons, whether its Diwali in India or Christmas in the western world, consumers are looking for good deals.

In India, Diwali is also seen as an auspicious time to make financial decisions. So, marketers play on this pre-existing momentum in the minds of consumers looking to make a house purchase decision during the festive season.

However, the deals are usually no different than what you would get before Diwali, or just after the festival season.

Don’t rush the big decisions!

Buying a house and getting a housing loan against it are the probably the biggest financial decision that any family will make. We aren't talking of a toaster oven here, that costs just a few thousand rupees at most. We are talking of at least Rs 20-40 lakhs, and a loan that will likely keep you indebted for up to a decade.

Such decisions cannot be rushed, because you will have to live with its consequences for a long time. And, the risk of getting it wrong is very high if you rush through your decision.

What drives real estate and housing loans? The economic cycle

Real estate companies and housing lenders are at the mercy of the financial markets. The prevailing interest rates, that are set by the market or policy makers, are one of the key drivers of real estate and housing loan prices.

To stimulate demand, a company might offer what appears to be a discount, but realistically speaking the pricing criteria for these products is no different around Diwali from the weeks just before or after the festive season. If the economic situation is good or bad that has a bigger influence on the pricing of real estate and housing loans.

So what deals are genuine?

At best, you might be in position where the developer reduces a modest fee to stimulate demand, or a housing lender reduces their processing fee.

However, its unlikely that the monetary benefit of these reductions will be any more than say Rs 10,000 – Rs 20,000 maximum, and if you tried hard enough you could get these reductions at other times of the year as well.

For instance, some developers in North India were offering a Navratra discount of up to Rs 100 on the booking amount. However, this was no different from the inaugural discounts usually offered. Similarly, some lenders might waive the loan processing fee during the festive season. But such waivers are no different from what you can get during the rest of the year if you negotiate with your lender.

NRIs seek Tharoor's help to protect property in India

Seeking to protect their properties and investments back home, non residents Indians have asked minister of state for external affairs Shashi Tharoor to sponsor a new bill that will safeguard their interest.

Supporters of the proposal voiced their grievances at the gathering on how their properties were allegedly taken over by government, mafia and illegal occupants.

However, at the meeting organised by the Keralite community in New York, Tharoor expressed his inability to sponsor the proposal as the matter is not under the jurisdiction of his ministry.

"The truth of the matter is that when it comes to this issue, I cannot sponsor a bill because in our parliamentary system it is not permitted," Tharoor told the members of the Malayali community, at his first public appearance during his visit to New York.

Tharoor underlined that while he could not sponsor the proposal, he would take up the matter with the relevant authorities in India. "I will be very happy to speak to the overseas affairs minister and law minister because if the government takes on this bill and recommends it then the chances of passage are much greater," he noted.

They pointed out that the 25 million strong Indian Diaspora contributes $52 billion as remittances annually, which is four per cent of India's gross domestic product.

Commenting on the proposal to grant voting rights for NRIs, Tharoor said a bill to this effect may not get support back home.

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Last updated: 2009, October 12

/ 37 pages Real Estate India Property News Prices Trends Assetventures.in Real Estate India Property News Prices Trends Assetventures.in: 10/10/09 Real Estate India Property News Prices Trends Assetventures.in: 09/24/09 Real Estate India Property News Prices Trends Assetventures.in: 09/23/09 Real Estate India Property News Prices Trends Assetventures.in: 09/19/09 Real Estate India Property News Prices Trends Assetventures.in: 09/09/09 Real Estate India Property News Prices Trends Assetventures.in: 09/03/09 Real Estate India Property News Prices Trends Assetventures.in: 08/27/09 Real Estate India Property News Prices Trends Assetventures.in: 08/11/09 Real Estate India Property News Prices Trends Assetventures.in: 07/30/09 Real Estate India Property News Prices Trends Assetventures.in: 07/24/09 Real Estate India Property News Prices Trends Assetventures.in: 07/17/09 Real Estate India Property News Prices Trends Assetventures.in: 07/15/09 Real Estate India Property News Prices Trends Assetventures.in: 07/14/09 Real Estate India Property News Prices Trends Assetventures.in: 07/10/09 Real Estate India Property News Prices Trends Assetventures.in: 07/08/09 Real Estate India Property News Prices Trends Assetventures.in: 07/06/09 Real Estate India Property News Prices Trends Assetventures.in: 06/30/09 Real Estate India Property News Prices Trends Assetventures.in: 06/26/09 Real Estate India Property News Prices Trends Assetventures.in: 06/24/09 Real Estate India Property News Prices Trends Assetventures.in: 06/23/09 Real Estate India Property News Prices Trends Assetventures.in: 06/19/09 Real Estate India Property News Prices Trends Assetventures.in: 06/18/09 Real Estate India Property News Prices Trends Assetventures.in: 06/17/09 Real Estate India Property News Prices Trends Assetventures.in: 06/15/09 Real Estate India Property News Prices Trends Assetventures.in: 06/13/09 Real Estate India Property News Prices Trends Assetventures.in: 06/11/09 Real Estate India Property News Prices Trends Assetventures.in: 06/09/09 Real Estate India Property News Prices Trends Assetventures.in: 06/06/09 Real Estate India Property News Prices Trends Assetventures.in: 06/05/09 Real Estate India Property News Prices Trends Assetventures.in: 06/01/09 Real Estate India Property News Prices Trends Assetventures.in: 05/28/09 Real Estate India Property News Prices Trends Assetventures.in: 05/22/09 Real Estate India Property News Prices Trends Assetventures.in: 05/21/09 Real Estate India Property News Prices Trends Assetventures.in: 05/19/09 Real Estate India Property News Prices Trends Assetventures.in: 05/12/09 Real Estate India Property News Prices Trends Assetventures.in: 05/09/09
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		10/ 3 pages Real Estate India Property News Prices Trends Assetventures.in: MCHI announces Property 2009, India's Largest Official Property Exhibition Real Estate India Property News Prices Trends Assetventures.in Real Estate India Property News Prices Trends Assetventures.in: Hosing sector demand to go up by 30 percent: FICCI Asetventures

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MCHI announces Property 2009, India's Largest Official Property Exhibition

At MMRDA grounds BKC during October 1-4, 2009

Maharashtra Chamber of Housing Industry (MCHI), the most prominent body of real estate builders and developers in the country, today announced ‘Property 2009’ their 15th Real Estate and Housing Finance Exhibition to be held at MMRDA grounds, Bandra Kurla Complex, scheduled to be held during October 1-4, 2009 from 11am to 8pm.

Property 2009, India’s only official and largest real estate and housing finance exhibition organized bi-annually by the MCHI from last ten years, is a one-stop destination for the potential property buyers in Mumbai. It offers home buyers a wide range of properties both Budget, High End and Commercial Properties along with a wide choice of Home Loan options.

As many as 75 real estate developers would be showcasing the properties located in Mumbai and the suburban areas, Thane, Navi Mumbai, Pune and other parts of India during the exhibition. The exhibition is organized by MCHI and co-organized by the State Bank of India, Platinum Partners – ICICI Home Finance Company Ltd., Axis Bank, and LIC Housing Finance Ltd. IDBI Bank is the Gold Partner and HDFC Ltd is the Silver Partner.

Prominent housing finance companies such as Citibank N A, Dewan Housing Finance Corporation Ltd., GIC Housing Finance Ltd, IDBI Home Finance Ltd and Kotak Mahindra Bank Ltd will also be participating in the exhibition, offering their best deals.

Mr. Pravin Doshi, President MCHI said, “As the festive season begins, we would like to offer an opportunity to the thousands of prospective home buyers to buy the house that suits their requirements from the properties being displayed at the exhibition.”

Mr. Harish Patel, Convenor Exhibitions adds, “Riding on the revival in the overall economy, real estate has recently seen demand is picking up in all the segments. We are very much confident that forthcoming mega real estate exhibition would serve the cause of bridging the gap between the potential buyers and the real estate developers by bringing them at the one platform”.

Mr. Deepak Goradia, Co-convenor Exhibitions, said, “MCHI’s property exhibitions have always reflected the market’s true sentiment. Be it the mega shows or the budget shows, these exhibitions have become a convergence point for property seekers. This time too, we foresee a great potential as thousands of prospective home buyers are awakening to the prospect of investing in property to get the best returns”.

About MCHI:

Maharashtra Chamber of Housing Industry (MCHI), formed in 1982 is the most prominent body of real estate builders and developers bringing together members dealing in real estate and construction industry on one common platform to address issues facing the industry. Members of MCHI account for providing 80 % - 90% of residential accommodation in Mumbai and its vicinity. MCHI helps both the Central and State governments in meeting their objectives of providing shelter. MCHI works towards raising awareness among the general public, real estate and construction industry while providing them with exhaustive information on projects and new developments in and around Mumbai. With over 400 well-recognized and reputed member builders, developers MCHI is affiliated with leading industry associations like Ficci, IMC and Credai.

The IndiaHome Property Exhibition, which helps the Indian diaspora get information on a range of residential real estate opportunities in
India, will be held in Dubai from October 9-11.

The exhibition invites prominent builders from across India to showcase their projects under construction and will feature Emaar MGF, ETA Star, Hiranandani Constructions and K Raheja Corp, among others. The cost of the properties showcased is likely to be in the range of Rs 40 lakh to Rs 10 crore.

"Owning a home in India is a long-cherished desire of all NRIs worldwide. Our endeavour with the IndiaHome Property Exhibition is to create a convenient interface for NRIs with India's reputed real estate developers and help make the purchase process seamless," Citibank India Head Consumer Assets Ashish Mehrotra said.

NRI customers can avail loans ranging from Rs 20 lakh-Rs 5 crore for ready-to-move and under-construction properties which can be obtained under flexible repayment plans and periodic payments can be conveniently routed through the Citibank NRE/NRO Account, Mehrotra added.

Other companies participating in the event include Brigade Enterprises, Chaithanya Projects, Fairy Land Foundations, Gera Developments, Goel Ganga Group, Jaiprakash Associates, Kumar Properties, Lancor Holdings, Paranjape Schemes (Constructions), Sobha Developers and Three C Universal Developers.

Hosing sector demand to go up by 30 percent: FICCI Asetventures

The residential sector will lead the revival of India's reality industry as it will see a surge in demand by 30 percent by 2009-end, according to an industry lobby survey.

'Although the real estate sector has started showing some signs of revival, a majority of the industry experts expect the residential segment to recover by the end of 2009 with a 25-30 percent renewal in demand,' said the survey report by the Federation of Indian Chambers of Commerce and Industry (FICCI).

However, the commercial and retail segments will take some more time to recover.

The commercial and retail segments are expected to pick up after the third quarter of 2010, the report said.

'Affordable housing seems to be the flavour of the day as more than 34 percent of the demand in the residential segment is in the price bracket of Rs.5-Rs.15 lakh,' the survey said.

Demand for houses in the range of Rs.15-Rs.25 lakh will go up by 26 percent, while those in the bracket of Rs.25-Rs.40 lakh will see demand rising 22 percent, the chamber said.

Properties priced between Rs.35 lakh and Rs.50 lakh will see 12 percent increase in demand, while the houses priced above Rs.50 lakh will see a mere 6 percent rise.

However, banks are still cautious in lending, and prefer lending to credible developers, the survey said.

The real estate mutual funds have not taken off well in the Indian market due to 'lack of awareness and ambiguous policy framework'.

The taxation and exit-related issues need to be resolved and the guidelines need to be comprehensive and transparent for them to do well, it added.

'Lack of standardised policies is the most serious issue. Multiple state laws hinder and delay the execution of projects. Absence of single window clearance emerged as the second most critical issue,' FICCI said.

Unclear land titles pose a major challenge in the development of real estate sector, it added.

Real Estate Asbestos Prevention Tips for Healthier, Sustainable Homes Assetventures

Owning a home is regarded as one of the great moments of your life. It is a time that will bring many joyous memories for you and your family, but is also one that can create additional responsibilities. With many older buildings, there is the potential for hazardous materials that may be present.

Newly bought homes are often remodeled and repairs are always needed. This is often the case with older homes, which still run with old, corrosive methods that were once used to build structures. If you believe that your home contains asbestos, a home inspection could be extremely important for safety, health and investment reasons.

Many real estate agents have begun to understand the many risks and responsibilities involved in the home buying process. Real estate experts make sure potential home buyers receive all the information they need before making the all important step.

Asbestos

Asbestos is a fibrous mineral that gained popularity throughout the 20th century. Its qualities as flame and heat resistant made it perfect for use in construction and building applications. Asbestos that is disturbed or damaged due to age is known as “friable” asbestos. This is a serious concern because its toxic fibers can easily circulate and become inhaled.

Homes and buildings constructed prior to 1980 still hold the potential of containing asbestos materials. In most situations, asbestos appears in roof shingles, dry wall, attic insulation, popcorn ceilings, joint compounds and electrical wires. It is not always an easy process to determine whether or not a particular insulation contains asbestos. Anyone who is unsure about the insulation in their home should have the materials in question inspected and tested.

If exposed to airborne asbestos fibers for a prolonged period of time, it can lead to the development of related lung ailments such as asbestosis and mesothelioma. Treatment has varied effects on victims. The age of diagnosis and latency period typically have a direct impact on patients.

Healthy Tips

If asbestos materials are present, most contractors will advise home owners to leave it alone. A home inspector can determine the toxicity levels present. Sometimes the best action is no action at all. A general contractor will usually be responsible for providing materials, equipment and labor for a remodeling project. Consultants will identify material defects in structures and components of the home, in adherence to or exceeding national, state, and industry regulations and standards.

Asbestos insulation should be left undisturbed in your attic. Limit the amount of accessories and items stored. Do not allow children’s access. If you plan to remodel or conduct renovations, hire professionals to handle asbestos to safely remove the material. Removing asbestos by yourself can potentially spread fibers throughout your home and your family will be at risk of inhaling asbestos dust.

If an inspector deems the substance harmful, the removal of asbestos in public facilities, workplaces and homes must be performed by licensed abatement contractors who are trained in handling toxic substances. Depending on the condition of the asbestos, many experts feel it is better to seal it off than remove it.

Green insulation alternatives to asbestos include the use of cotton fiber, lcynene foam and cellulose. Cotton fiber is quickly becoming a favorite for home builders and renovators. Made from recycled batted material, it is also treated to be fireproof.

Best time for a value deal in real estate Assetventures

It's perhaps the best time to look around for a value buy in real estate. With lower price points in locations which were not earlier within your wallet’s reach, buyers are scouting for good ‘value’ bargains at this time.

And with developers going big on affordable home launches, the timing may just be one of the best for buyers seeking a steal deal.

Anshuman Magazine, CMD of global real estate consultancy CB Richard Ellis (CBRE) says that value buying is happening mostly in suburban locations as that is where the current supply is.

“Certain pockets in Gurgaon and Noida, where the price earlier used to be Rs 65 lakh-Rs 1.5 cr, today have deals to offer anywhere between Rs 35 lakh to Rs 50 lakh! Developers have reduced the total ticket sizes, adjusted area, price and given amenities. This has got people back and is making them hunt for value deals right now.”

Locations such as Gurgaon, Faridabad, Noida in Delhi NCR and Navi Mumbai and Thane in Mumbai are some of the good locations for value buying, feels Navin M Raheja, chairman and managing director of Raheja Developers.

“Anything which is available between Rs 2,500 to Rs 3,500 per sq ft is the right price depending, of course, upon the location and infrastructural facilities available in the vicinity with specifications offered .”

The developer is soon going to launch a housing project, ‘Raheja Shilas’ near IGI airport wherein the price would range between Rs 2,575 to Rs 2,875 per sq ft.

Raheja further adds that there are three kinds of value buying that are taking place in the real estate market right now.

Ready to move in residential property in and around metros and their suburbs, ready to move in commercial property which is already leased or generating income and low income and middle-income housing ranging from Rs 15 lakh to Rs 40 lakh are the primary types of value purchases in his opinion.

Many of those who were holding out have also decided to make a purchase now as prices have bottomed out. Plus with many affordable housing launches by developers , the view is that prices are more pocket friendly at this time.

“Prices have reached the bottom and in these prices you are bound to get good appreciation in future . So if you are buying a particular property now, one is definitely going to feel later that they grabbed a good deal,” says Vijay Jindal , CMD, SVP Group.

Jindal’s view is shared by many others in the market as well. Smaller investment opportunities with a starting price bracket of Rs 35 lakh-Rs 40 lakh have fuelled the demand .

“Earlier the prime focus was on high-end purchases, but today, the conversions are happening mostly for smaller properties. At least 50-60 % conversions are there in the market today for properties priced between Rs 30 lakh - Rs 80 lakh, 20-25 % are for the expensive ones priced between Rs 90 lakh - Rs 2.5 cr and a miniscule number is for the ones above Rs 5 cr,” says Pankaj Jain, executive director of Realistic Realtors, a North Indian real estate consulting firm.

But are people also looking at Tier II and Tier III cities right now, which were prime investment hubs in the good times? “People are not primarily seeing these locations for investment at this time. Value buys here are mostly end-user driven,” adds Magazine.

However it’s best not to overlook the pros and cons before deciding on such value buys. Though the pricing and the product may both look highly appealing, it’s best to read the fineprint carefully.

This will hold in good stead for the future. Rajeev Rai, vice president, corporate, Assotech, advises about key strategies that should be followed.

“One shouldn’t get carried away by sops or discounts offered and one must also not ignore the sold stock status of such a project. As far as the dos are concerned, one must set their priority of the price, location , size etc. A due diligence about the supply and demand of such projects is necessary .

Lastly, one must check the developer’s profile, delivery schedule and legality of the project.” Assotech has projects such as The Nest in Crossings Republik at Rs 2,300 per sq ft and Metropolis in Rudrapur at Rs 1,850 per sq ft.

So if you have been thinking of investing your money in a home, it’s the right time to go deal hunting. Negotiate a bargain, go for value and close the deal.

Tips to buy real estate this festive season Assetventures

Dussehra and Diwali aren’t just the season for Durga pooja, laddoos, and Ram Lila. Its also the time when the maximum number of new real estate projects get launched.

Developers use this season to their advantage because they know that you will be most keen to make a real estate investment during these auspicious days.

But don’t rush in blindly just because you want to buy something before this holy time period finishes. Here are 5 tips that you must keep in mind before you buy property this festive season.

But first, here is a preface to the current environment in real estate. Many developers are still in a financially weak condition. The situation in the market is still a little fragile.

Just because the stock market is going up does not mean that normal conditions have returned to the real estate sector as well. So, please keep this background in mind as you think about the following 5 tips.

1) Choose your builder wisely: The real estate sector, globally and in India, is notorious for developers who take investors’ money and then run away. Make sure that you go with a reputed builder who has been developing properties for a while and has had an operating history.

Don’t just go with any builder, it might be worth paying a premium to go with someone who has built their reputation over a few decades.

If you have not heard of your developer, always ask your developer what properties they have developed, and if possible speak to customers who bought properties at these developments to learn from their experience.

2) Ask for a construction-linked payment plan: As discussed, the financial conditions of various developers are still not totally safe. So, rather than give them money at their will, ask for a construction-linked payment plan.

This way you know that your installments are actually going towards financing the development, rather than being used for other unknown purposes. Beware of time-linked payment plans, and if you have the option stay away from such plans.

3) Penalties for delays: As it happens, many if not most of the projects launched last Diwali have not even seen construction begin. Yet, many customers have paid their installments on time with nothing to show for.

Understand what rights you have in case of delays. Ask for a definitive date for when construction should begin.

If you are dealing with a small builder, that does not have a long operating history, make sure that the contract gives you adequate protection against the builder just sitting on your money and delaying the project’s completion.

4) Location: Don’t be in a rush to buy property just because the price looks tempting, and its an auspicious time to buy property during the festive season. Recognize that the single most important factor in buying real estate is usually the location of the property.

Can you see yourself living there, or someone renting this property? Is it close to civic amenities and is the planned connectivity convenient?

5) Don’t buy to flip: Don’t assume that you will easily be able to flip your property to another buyer for a premium just on the back of paying your booking amount and some installments.

In the near-term, there could be an over supply of apartments. Also, keep in mind that there are 1000s of other people who are already sitting on apartments where they want to sell them.

Buy a property if it makes economic sense for you as an investment, or as a residential home. Don’t gamble.

Real estate firms back in hiring mode Assetventures

NEW DELHI: Some of the country’s largest real estate developers such as DLF, Unitech and HDIL have started hiring again, as they look to launch new projects and speed up execution of existing ones to cash in on a pickup in home demand.

“We are launching new projects and plan to hire in large numbers,” said a spokesman for DLF, India’s largest real estate firm that fired more than 300 people during the downturn.

He said the company hired people with specific skills such as mall management even during the crisis. DLF on Tuesday launched a project in Delhi and sold the entire stock of 1,250 apartments in two hours, he said.

The companies expect high demand in the coming fiscal quarters with the economy showing clear signs of a revival in the fiscal year started April 2009. The financial year ended March 2009 recorded 6.7% growth after two bad quarters pulled down annual growth rate from 9% plus levels seen in the previous three years.

Unitech, India’s second-largest property firm that struggled for months to avoid bankruptcy, is back in action with two rounds of share sale and a revamped business model.

The company, which has 1,200 people on its rolls, has added 300 employees at different levels in the past few months. Its project sites, where construction had stopped for lack of funds last year, are again humming with activity, a company spokesman said. Unitech had raised $900 million through two rounds of stake sale to qualified institutional buyers to bring down its debt level, which was hovering around Rs 10,000 crore last year. The company also changed its business model and launched homes in the ‘affordable’ category and hired more people to sell directly to customers.

A revival in demand has prompted more firms such as Omaxe, Lodha, Ansal and Gera Developers to launch new projects, while some others like Parsvnath Developers and Prestige group are still playing it safe. Rohtas Goel, chairman of Delhi-based Omaxe, said he hired around 70 people, almost the same number the company had fired last year.

“Much of the hiring will happen at mid-level and in sales and project management. These are the categories where maximum jobs were lost,” said Vivek Gandhi, senior vice-president with Delhi-based Ansal Properties and Infrastructure (API), which plans to hire at least 200 people in three months. He expects salaries to remain at levels marginally lower than those during the peak of boom in 2007.

The years between 2004 and 2007 saw Indian property market booming with hundreds of new projects being launched and property prices going up several fold. The boom and the resultant scramble for talent saw salaries in the sector shooting up.

But a property slump, which started as a result of extremely high property prices and high interest rates early last year, deepened due to the impact of the global recession. This saw companies shelving several projects resulting in mass job losses at several property firms.

“We offered an average 10% salary hike to our staff. The new people too are joining us on a scale similar to our old staff,” said Abhisheck Lodha, director with Lodha group that has hired 80 employees since August. The company, which has a 1300-strong workforce, plans to add 350 more in a year.

Another leading Mumbai-based developer HDIL is also hiring. “We require additional manpower as we are speeding up on execution of existing projects and planning to launch more,” said Sarang Wadhawan, managing director of the company. However, a few other players such as Delhi-based Parsvnath Developers and Bangalore-based Prestige group are still cautious. “We didn’t fire people in the first place and so don’t immediately need to hire new people,” said Prestige group director Uzma Irfan.

Realtors must tell buyers about banks' claim on property: RBI

MUMBAI: Prospective home buyers will now know if the land on which their building stands is free of outside claims after a recent Reserve Bank of Greatest ceilings

India (RBI) circular mandating builders mortgaging the land to raise money to disclose it in all advertisements and brochures.

RBI has asked lenders to ensure that all publicity material relating to the sale of real estate make a mention of the bank’s lien on the property so that home buyers are not kept in the dark about this legal claim or ‘hold’.

RBI aims to prevent prospective buyers from being lulled into the belief that the flats they own are on ‘free-hold’ land through this move.

Says Anuj Puri, country head of real estate consultant Jones Lang LaSalle Meghraj, “The RBI circular will bring transparency and accountability on the part of developers. It would also give a chance to buyers to see the viability of projects especially when the loan amount is very high.”

In cities such as Mumbai, a flatowner gets rights over his house through membership of a cooperative housing society, which owns the building. The land is not owned by the society unless it is transferred through a conveyance.

According to senior advocate R N Shetty, who specialises in real estate matters, property where a bank has a charge does not have a clear title and therefore cannot be transferred to the society through a conveyance. He added that the bank could also attach and auction the property in the event of a default by the builder.

RBI has said banks should as a pre-condition to lending insist that builders disclose complete details of the charge on the property. This should include the name of the bank that has a lien on the property which a builder is seeking to develop and for which it has sought a loan from the lender.

The builder or developer will have to add as an appendix information relating to the mortgage while advertising a particular scheme. Besides this, it will have to provide a No Objection Certificate of the mortgagee bank for sale of flats/property, if required.

Indian real estate sector to witness recovery from end-2009

The Indian real estate is expected to enter the recovery phase by end-this year and macro-economic and sector-specific factors will act as catalysts in this recovery, a leading real estate consultancy said

Economic recovery during CY 2010-11 is likely to reinvigorate the interest of foreign investors in India's real estate market. We expect enhanced capital inflow in the real estate sector in the medium-to-long-term," Jones Lang LaSalle said in its report.

Initial yield is expected to show compression during CY 2010-11 and capital values are likely to decline during 2010 before recovering in 2011, the company said in the report.

"Initial yield has already started to show a declining trend during 2009 which is likely to be the case in the near-term. Yield on 10-year Indian Government Bonds is likely to harden due to higher fiscal deficit," it said.

The report said although the high fiscal deficit is likely to harden interest rates in the economy, all other macro-economic variables are expected to improve during CY 2010-11 which is likely to induce real estate market recovery after the slowdown of CY 2008-09.

According to the World Economic Outlook Report by IMF, the world economy is likely to contract by 1.4 per cent during 2009.

While advanced economies are expected to contract by 3.8 per cent by the end of this year, emerging and developing economies are likely to grow by 1.5 per cent. India and China are expected to grow by 5.4 per cent.

"India and China are expected to witness a robust recovery with increase in real GDP growth from CY 2008-09 levels and Indian economy is expected to grow at 5.4 per cent during 2009 (the second highest in the world after China, which is likely to grow at 7.5 per cent)," the report said.

Fiscal deficit in India leaped from 3.1 per cent in 2007 to 6.1 per cent in 2008 and is further expected to inch up to 6.4 per cent during 2009, it said.

Govt plans regulatory reform for housing sector Assetventures

The central government is working on a model real estate regulation bill to provide guidelines to facilitate growth and promotion of healthy and transparent efficient and competitive real estate sector in the country, said the housing and urban poverty alleviation minister Kumari Selja.

This is a welcome move and will help the sector in becoming efficient and competitive. However, developers feel the government should form a separate regulator on the lines of Securities and Exchange Board of India (SEBI) to regulate the sector.

Addressing a conference on real estate, the minister said Indian real estate market is unorganised and fragmented and that most of property transactions are based on certain perceptions and not necessarily on sound business principles. In this, customer satisfaction is low and redressal procedure is long and cumbersome. This has created problems for both buyers and developers. As end users are not sure of delivery of a house by builders on time, they dont want to risk a purchase by taking a loan from the bank.

Apart from this, many buyers are not even sure of the specifications, which developers promise while selling them the houses/flats. Worse still, when developers do not deliver on time or stick to the promised specifications while selling, buyers do not know where to for redressal.

Going to a court is not only time consuming but also expensive. This has forced buyers to either defer their purchase or to go for completed projects. But, this apprehension of end users has affected genuine developers as well, which have a plan and required finances to complete a project. However, in the last couple of months, end users have started showing interest in buying new projects. But, they want to buy in the projects of reputed developers alone. This has created problem for the new but good developers.

A senior developer says if the sector is well regulated, the role of brokers and investors can be reduced. In most of the cases, investors, who have better understanding of the sector and who can invest time and money to know about developers, invest at the early stage of implementation of a project and make easy money by selling them to end users at high prices when the project comes to a close. The end users, on the other hand, are comfortable in buying a house when projects are close to completion, hence making the sector over dependent on investors.

Consequently, in the last one year of market downturn, the entire real estate sector came to a screeching halt as investors disappeared from the market. But, had the sector been well regulated, end users would have been bold enough to buy at the early stage of project implementation. This would have helped developers also.

However, another problem in regulating the sector is that it comes under the state subject as well. Thus, a senior official says nothing much can be done unless state governments show interest. Haryana Government has already passed an act to regulate the sector. But, the results are not encouraging, thus far. It was assured all the stakeholders that the government will accord full cooperation and support to encourage affordable housing.

She said the housing sector in India holds tremendous potential and has positive impact on the social and economic development of the country. In
2006-07 the sector was about 4.5% of country's Gross Domestic Product and comprised approximately 7% of the total urban workforce. Housing is the largest component of the construction sector and central to economic growth.

However, provision of affordable housing for all is a complex problem with challenges emerging from many facets of urban sector. The minister said there are many impediments to the growth of affordable housing land and capital being the two key constraints.

To increase the stock for affordable housing the focus has to be on augmenting land supplies. Kumari Selja said the issue is a critical one and requires a number of measures such as alternative methods of land assembly, development and disposal to be pursued, check on prices of urban land, encouraging public-private partnership, promoting intense use of land-higher densities, revision in Floor Area Ratio or Floor Space Index and change of norms to suit local situations, discouraging speculation in land development, and allotment or disposal process to check rising prices of land.

Housing sector is shining again Assetventures

Last August, Gurgaon real-estate broker S Karan was planning to move out of his tiny basement office in a small building to a fancy new one in one of the tall steel-and-glass buildings that have become the signature of this booming Delhi suburb.

Then, Lehman Brothers, one of the Big Four investment banks in the US, collapsed on September 15, sparking off a global recession, an Indian economic slowdown, and a slump in the once booming real-estate sector.

Karan (34) then thought his dreams would remain still-born — till the first signs of a recovery in the first quarter of 2009-10. “Usually, we seal 70 per cent of our deals around Diwali. Last year, that figure dropped to 30 per cent.”
There were many reasons for the death of his dream.

The global recession took the Indian stock markets down with it. The BSE Sensex fell from 14,001 on September 12, the last trading day before the Lehman collapse, to a low of 8,198 on March 5, this year.

So, the supply of speculative money that had mainly fuelled the 2005-08 real estate boom, in which house prices doubled and rentals soared more than 75 per cent, stopped.

Rising inflation also forced the Reserve Bank of India to hike interest rates. Result: interest rates on housing loans rose from 7-8 per cent levels at the end of 2007 to 12 per cent a year later.

Housing was no longer attractive for speculators, and out of reach of the middle class.

The bubble had burst.

Between October last year and March this year, housing sales dropped from 10,000-12,000 units per month in the National Capital Region to less than a third of that number.

“Earlier (prior to the Lehman collapse), I used to conduct two to three transactions in the resale category and three to four original bookings every month. After October, that number fell by half,” says Karan.

Transaction values also fell as realtors, who had got used to net profit margins of more than 50 per cent, cut prices to lure buyers back.

But the double whammy of lower prices and plunging sales took its toll. DLF, India’s largest real estate company, saw its January-March 2009 sales and profits plunge 96.6 per cent and 95.3 per cent, respectively, to Rs 55.5 crore and Rs 29.8 crore.

Unitech, India’s second-largest real estate developer, and a host of other biggies like Omaxe, Parasvnath, Prestige, Puravankara, etc., also suffered similar setbacks.

Then the tide began to turn in the first quarter of 2009-10. The global recession brought down crude oil and commodity prices worldwide.

The wholesale price-based inflation rate began to ease – and even entered negative territory for a while. Interest rates started falling once again.

Realtors cut prices, by up to 30 per cent, and launched a slew of affordable housing projects (priced at Rs 15-50 lakh per apartment).

And the release of arrears to government employees, following the Sixth Pay Commission Report, thus, putting massive sums of money in the hands of government employees, provided the icing on the cake.

Buyers returned to the market.

Unitech Managing Director Sanjay Chandra says the company booked nearly 4,000 housing units in the first two-and-a-half months of 2009-10.

The number of registration agreements signed has also seen a healthy improvement. In Mumbai and Pune, registrations increased 24 per cent and 21 per cent month on month, respectively, said a June 2009 report, On the road to recovery, by Religare, Hitchens Harrison.

“The residential property market has been driving this recovery,” says Aditi Vijayakar, director, residential services, Cushman & Wakefield India, a large real estate consultant. The commercial and retail segments, though, have not yet picked up.

“The worst is over,” says Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India, the apex body of realtors in India.

So, Karan can probably breathe easier now, even though his dream office may still be out of reach.

Festive season, low loan rates... real estate sector scales north in tricity assetventures

Chandigarh As global economy shows signs of recovery, reasonable investment has been registered in the sector
With the festive season approaching and signs of global economic recovery visible, real estate business has picked up in the tricity.

Though it will take a few months to revive the sentiment, experts say, reasonable investment has recently been registered in the sector.

While the developers are offering festive discounts and schemes to clear the inventory, banks are also offering discounts on home loans.

“I was keeping a tab on projects in the tricity for over a year. Considering this the opportune time to invest in property, I have invested around Rs 50 lakh for a three-bedroom flat in Mohali,”Ankit Saini, a resident of Chandigarh, who works in Merchant Navy.

“I could also negotiate a discount of Rs 4 lakh on the apartment,” he added.

While banks are attracting the customers with lowered interest rates and no procession fee for a limited period on home loans, buyers are eager to cash in as rates are expected to increase by January-March.

To make the most of changing sentiments of buyers, developers are offering extra amenities in flats, lucky draw prizes and discounts to the early birds.

“Free parking and cupboards that amount to Rs 50,000 are offered to buyers who make purchase during navrataras. A lucky draw will also be conducted to offer full furnishing for flats,” said R S Bhullar, Vice president ATS Infrastructure Limited.

He claimed that the residential project in Dera Bassi had marked a sale of 30 units in three months. Real estate consultants said once the buyer started making the transactions, the investors responded.

“The real estate sector is recovering in the region. With the festive season starting from Saturday, the trend is expected to go up,” said Rajesh Kalra, a property consultant.

Hospitality giant on land hunt for city address

Zuri Hotels & Resorts
a multinational conglomerate promoted by a consortium of investors from West Asia is scouting for
opportunities in Kolkata. The company is open to contract management opportunities as well as setting up its own hotel in the city. The Zuri Group is into real estate, floriculture and hospitality with resorts and hotels in Kenya, the UK and India.

"The Zuri group sees tremendous potential in Kolkata and rest of the east. We are keen to be present in the hospitality sector here at the earliest. We are in talks with a couple of hotels on a possible management contract and use of the Zuri brand. If something does not work out within six months, we will look at a 1.5-2 acre plot in Kolkata proper to set up a 140-170 room business hotel. The investment will be around Rs 200-225 crore," said Aditya Mata, general manager of the Zuri group's flagship property in Kumarakom, Kerala. The group owns two other hotels in Goa and one in Bangalore.

The team currently camping in Kolkata to negotiate with potential partners is looking for a property with large banqueting facility to tap the marriage market. "Since marriages in Kolkata are elaborate, we want to get into the business. It's a good money-spinner as well," said Mata.

Incidentally, the company was looking for land in New Town and Rajarhat but developed cold feet after the Vedic land scam. "Land has become a hot potato. The thing that happened in Rajarhat was an eye-opener. We are now looking for a property in the central business district," company spokesperson Priti Chand said.

Apart from Kolkata, the group is eyeing properties in Ahmedabad, Pune, Chennai, Nagpur, Visakhapatnam and Mysore. While three of the four hotels that the group has in India are resorts, the company is now looking at business hotels that have a shorter return on investment.

Meanwhile, city-based Gama Hospitality (GHPL) on Tuesday signed a master franchisee agreement with Global Franchise Architects (GFA) to launch four international brands Coffee World, Pizza Corner, The Cream & Fudge Factory and The Donut Baker in the eastern region. With an investment of Rs 52 crore, GHPL will focus on Kolkata in the initial phase this year.

"We intend to open 35 outlets in this part of the country in the next 18 to 24 months using up a cumulative floor-space of about 42,000 square feet. All the four brands should be in Kolkata by the end of this year," Gama's director Gaurav Agarwala said.

India's biggest land deals

DLF, India’s largest real estate developer, has emerged as the sole bidder for the 350.71-acre land parcel in Gurgaon put up for auction by HSIIDC. With a reserve price of Rs 1,700 crore, it’s said to be one of the largest land deals in India in terms of value.

Mega land deals, however, are not new to the Indian real estate industry which has already witnessed many such deals in the past few years, particularly during the property boom of recent years. We take a look at some of them:
In March 2008, BPTP outbid DLF for a tract of land in Noida near Delhi with a Rs 5,000-crore offer.

BPTP quoted the highest sum for the site -- Sector 94 running along the Noida and Greater Noida Expressway -- bidding at Rs 1,30,207 per square metre, followed by the country’s largest realty company DLF which quoted Rs 1,17,000 per square metre and Omaxe at Rs 80,100 per square metre.

BPTP’s winning bid was nearly 70 per cent more than the reserve price of Rs 2960 crore for the land parcel. But the deal was called off after BPTP failed to arrange funds to complete the deal.
Unitech in 2007 acquired 1,750 acres of land in Visakhapatnam from APIIC at over Rs 3,300 crore. At Rs 52 lakh per acre, it was among the largest deals in the country in terms of the acreage from a single source in a single deal.

The Andhra Pradesh Industrial Infrastructure Corporation (APIIC) had invited bids to develop the land for the Integrated Vizag Knowledge City.

Dubai-based Al Hamra Real Estate Development LLC had also qualified for the bid, but dropped out in the final stage.
The Ahmedabad-based Adani Group in May 2006 finalised India’s one of the largest lands deal with Housing Development and Infrastructure (HDIL) for Rs 2,250 crore to develop a commercial and retail hub in Mumbai’s landmark commercial business district, the Bandra-Kurla Complex (BKC).

The deal involved the sale and development of over 2.1m sq ft of land (around 48 acres) at BKC.
DLF has emerged as the sole bidder for the 350.71-acre land parcel in Gurgaon put up for auction by a Haryana state corporation. With a reserve price of Rs 1,700 crore, it’s the fourth-largest land deal in India in terms of value.

The Haryana State Industrial and Infrastructure development Corporation (HSIIDC) had first invited bids in January for this project, which will have a golf course, sports, commercial and residential development. DLF, which was the sole bidder then, had sought changes in bid conditions seeking easier payment plan.

HSIIDC re-invited bids in July, giving bidders the facility of a staggered payment plan over seven years and an additional 20% FAR (Floor area ratio or the developable floor space over a piece of land). The reserve price for the site was Rs 11,978 per square meter or Rs 1700 crore.

Unitech had a couple of years back outbid rival DLF Universal to bag the 340-acre city development contract on Noida Expressway with an offer of Rs 1,583 crore.

For the project where 50 per cent land was to be used for open area development and greenery and the rest for residential accommodation, Unitech had bid at the rate of Rs 11,529 per square metre.

DLF had put up a bid of Rs 1,401.46 crore at the rate of Rs 10,200 per square metre, according to media reports.

Reliance Industries in 2006 bid for and won a 7.5-hectare plot at Bandra Kurla Complex, a prime location in Mumbai, for Rs 1,104 crore.

According to media reports, Reliance paid Rs 61 cr per acre to grab the crucial Bandra Kurla convention center deal.

The bid was 130-per cent higher than the reserve price of Rs 480 cr.

Real estate market is improving: Time to buy

The figures in US from the National Association of Realtors show that pending home sales for July increased by a 3.2 percent margin, bringing the organization's Pending Home Sales Index to 97.6. This is a 12 percent improvement over last July's figures, and the highest level for the index since June 2007.

There is strong new reports that the global real estate market is hitting the bottom and some impressive positive news is coming from real estate markets around the world.

In the U.S., the real estate market has yet to hit the bottom, but at least it is very close.
There are 2 factors that would determine recovering the real estate market: one is when job losses stop and new jobs are created and secondly when the real estate prices are realistic reflections of what people can afford to buy.

The news that the real estate market is recovering based on recent sales doesn't really reflect real recovery.
What is happening is that people are buying houses at bargain prices. The value of sales is up and this is a good sign but still the real estate market would probably start recovering by next spring.

Around the world there is positive news in India where there is a huge demand of the population for real estate that is the main factor for the real estate boom--and also in the Middle East where the population growth in 15-20 years is estimated to triple.

The European real estate market mirrors what is happening in the U.S. There are some signs of improvement in Africa and Latin America but not as strong as in Canada, India and China. The Canadian Real Estate Association reported that realtors sold 50,270 units sold via the multiple listing service last month. That's an 18.2 per cent jump from a year ago. It also marked the first time sales had topped 50,000 in July. Sales of existing single-family homes jumped 55 percent in the 2009 second quarter compared to the 2009 first quarter. Realtors sold 18,141 homes in the second quarter.

In China the strength of the property sector has been another big surprise. Property sales were up 53% in the first six months from a year earlier, according to a survey commissioned by the statistics bureau and published in the China Information News, while nationwide prices averaged across 70 cities climbed year on year in June. This masks the fact that in second and third cities prices have been strengthening much more. Property normally accounts for about 25% of fixed asset investment in China and is a key form of wealth holding for most Chinese. Optimism about housing prices will translate into greater consumer confidence.

Chinese commercial real estate sales have increased in the first half of the year, recording more sales that the US and UK markets combined. Global commercial real estate sales are expected to continue growing in the second half of the year, which analysts believe will be the first step to global economic recovery.

All about taking loan against property Assetventures

Want money for your child's marriage? Or to fund your business expansion? Well the money is already in your house! Read further...

Loans generally can be classified as secured or unsecured. Personal loans and credit cards come under the un-secured loans category because we are not pledging any of our assets (collateral) to get the loan. Housing loans, loan against property, loan against shares, and car loans come under the secured loan category as there are collaterals involved.

LAP

Loan against property can be taken against a self-occupied residence or a commercial building. The main requirement on the bank's (lender's) part is that there should not be any other encumbrance.

Lap is the most secure of loans hence the lending rate is generally very low compared to other loans. However, because of the structure of lending by banks, they tend to be slightly higher than housing loans.

The eligibility criteria for getting LAP is also liberal, as the property is available as collateral. The repayment term can also be long from 5 to 15 years.

When to look at LAP?

For anyone who has a house or commercial property and is looking for a loan, LAP should be the first option. The only loan with better features could be the gold loan. But there could be a lot of sentiments attached to pledging gold, so it generally gets done as the last alternative. That leaves the LAP as the better choice.

Though a housing loan and the LAP are secured against the property, LAP is on the existing property and the value of the property is released for productive activity. For a businessman looking to expand business, a LAP comes in handy. As they do not have to look for costly sources and the processing is also much faster. A few banks may even give an overdraft facility against the property; this will help the business as interest will need to be paid only for the amount withdrawn.

Funding children's education can also be done using LAP; also their marriages. But as a general rule, one has to be a cautious when taking loans for expenses.

Advantages of LAP

* Value of the asset owned is released for productive use.
* Processing is faster than a housing loan as the property is already in our possession.
* Partial pre-closure is allowed without any penalties. This is an advantage as the overall interest burden or the tenure of the loan can be reduced by paying small additional amount (some banks permit a minimum part payment of Rs 5,000 most start at Rs 10,000).
* If the value of the property has risen over a period of time, a re-financing option can be used to increase the loan amount. This feature again is very useful for businessmen, who are on an expansion spree. They can use the same property to continuously build the business.
* The property continues to be in the ownership of the borrower. In case the borrowers are not able to pay the loan, they can sell the property and then settle the loan. This may leave surplus cash for the borrowers to restart their financial life.

Some disadvantages of LAP

* Banks generally do not give loans beyond 60 per cent of the value of a house property and 50 percent of a commercial property.
* New businesses generally cannot have access to LAP. They should have been in existence for at least 3 years. Salaried persons of course can get it if they are employed for over 1 year itself.
* There will be some processing charges usually in the range of 0.5 percent to 1 percent depending on the support given by the bank. Some banks may ask us to do the running around to get the encumbrance certificate and legal opinion ourselves and charge us lesser.

Points to be cautious about

Loan against property by itself is a very benign loan. So there is not much to be afraid about. However, there are a few points to be cautious about:

* Fixed vs floating loan conundrum:As in a housing loan, in LAP too a decision has to be taken related to this. In a low interest rate regime it is always better to take up a fixed interest rate. However clauses related to jacking the slabs up even in a fixed interest rate loan needs to be verified. For floating rates, the increase and decrease bands have to be checked.

* Inadvertent shift from overdraft to EMI: Some smart (unethical!!!) salesman may sell off a LAP in EMI format to businessmen seeking an overdraft. This causes unexpected high cash flows for the business.

* Assessment of property value: Support from the owners to give the deeds of recent sales in the neighborhood will help the underwriters of the bank in assessing the value of the property better. Generally they tread on the cautious side.

* Partnership business: In a partnership, LAP can raise some issues among the partners on - Whose property is to be pledged? This is particularly a problem if at a latter point in time one or some of the partners wish to leave the business.

NRI meet to seek changes in Indian property laws

NEW YORK: The Global Organization of People of Indian Origin (GOPIO) will pressure the Indian government to amend property laws to protect the
interests of NRIs at its annual conference here this week.

The biggest and oldest body of the Indian diaspora will hold its two-day conference at the Crown Plaza Hotel near LaGuardia airport Aug 21-22.

It will be opened by Oversees Indian Affairs Minister Vayalar Ravi. The 20th annual conference will also be attended by Frank Wisner, former US ambassador to India.

"Though our main theme is 'People of Indian Origin: Strengthening Global Connections', our thrust this year is to put fresh pressure on the Indian government to change property ownership laws for NRIs," outgoing GOPIO president Inder Singh said.

"How can we wholeheartedly involve ourselves in India's development if someone steals our investments and properties in our absence? The current Indian laws are so outmoded that they are not even fit for Indians, let alone the diaspora," Singh said.

"We are 25 million in strength and pumping billions into India. And don't forget that it was the NRIs who ushered in the IT revolution in India to set it on the path to greatness.

"India should realise that we matter a lot in its aspirations to become a superpower," he said.

Apart from Vayalar Ravi and Frank Wisner, the conference will also be attended by Basdeo Pandey, former prime minister of Trinidad and Tobago, Logie Naidoo, mayor of Durban in South Africa, and Lord Daljit Rana from Britain.

GOPIO counts the institution of the Pravasi Bharatiya Divas and People of Indian Origin (PIO) and Overseas Citizenship of Indian (OCI) cards as its biggest achievements in its two-decade history.

"We mooted these proposals to the Indian government at our very first conference in 1989. Finally, when the Vajpayee government set up the L.M. Singhvi panel to discuss the issue, we worked with it. We also proposed that prominent Indians abroad be recognized each year for their services to India,'' said Singh.

He said GOPIO also worked with other Indian bodies in the US to put pressure on Congressmen and Senators to vote in favour of the nuclear deal bill last year.

Singh said their future agenda is to turn GOPIO into "the Rotary Club of the Indian diaspora at the local level in their adopted countries".

Real estate buffeted by strong currents

Real estate in India has always been the playing field for entrepreneurs. This industry has witnessed unprecedented highs and frightening lows
over the years. One is often left dyspnoeic with the continuous shifts in this sector.

Market Dynamics

Due to rise in demand in the IT/ITeS sector and significant increase in FDI, the commercial and retail real estate markets experienced tremendous growth in the first quarter of 2008. Land deals accrued around Rs 23,000 crore with additional deals worth Rs 10,000-crore in the pipeline. The highest recorded land deal was Mumbai's Bandra-Kurla Complex.

However, it has not been an easy journey for all in the property market. Last year, the global property collapse exacerbated by the credit bubble burst resulted in reduced finance and business activity. Equity markets also remained lacklustre and raising money through IPOs proved to be difficult. Both real estate giants, Unitech and DLF, delayed the plans to raise money through REIT issues after witnessing unfavourable initial response.

Consequently, lack of funds forced developers into high interest loans. High credit amounts proved to be detrimental for property companies. Most companies borrowed a large portion of their land-development outlays up front and relied on advance sales to repay these loans. However, poor sales led to delays and massive cost overruns. According to industry estimates, around Rs 8,000 crore worth of projects had faced considerable delay by June 2008.

The Ripple Effect

The collapse of Lehman Brothers, in September 2008, was perhaps the most significant event that spiflicated an already floundering property market in India. It triggered a shockwave that rippled through the liquidity centric commercial and retail real estate markets leaving a trail of defaults, delays, and losses. Even though property prices have corrected by 22-42% in major cities over the last few months, 10-15% downside is further expected. Commercial real estate demand has languished as corporate firms deferred expansion plans to deal with the
credit situation.

Negative absorption rate aggravated by falling rentals led to decreasing margins. Companies like DLF, with 40% of its portfolio in the commercial and retail space, reported 29% y-o-y decline in 2009 revenues while its net profit plummeted by 43%. Similarly, the top line was also distorted for companies like Ansal (-26%), Parsvanath (-60%), etc.

Timely Measures

Timely and synchronised measures taken by central banks and governments around the world restored balance and prevented a total collapse of the financial system. Thus, markets saw a mild recovery. According to Rajeev Rai, vice-president of Corporate Assotech Ltd, “To counter decreasing demand and to gain confidence of all stakeholders of Indian real estate, associations like NAREDCO and CREDAI decided to bring down prices of various properties by reducing overheads and marketing costs. In some cases, ticket size of the property was reduced with reduction in size of apartment to make it more affordable for the masses.”

As per a report by Grant Thornton, the total number of PE deals announced during the first half of 2009 stood at 93 with a total announced value
of $2.89 billion with the highest proportion invested in real estate and infrastructure management worth $1.61 billion. Bhim Yadav, CEO, Falcon Realty Services Pvt Ltd, reckons, “A higher FAR not only brings in more supply to the market, it is also vital for creating room for more affordable housing and control the steep rise in prices, ultimately benefiting the common man.”

The Mumbai real estate saw a sharp price correction. Average peak rentals fell 40–60%. While there was a slight mismatch with excess supply, (supply of over 30mn sq ft over 2008–10E vs expected demand of 22mn sq ft), the demand in Mumbai has been healthy.

Comparative Analysis

UnlikeMumbai, commercial and retail space in NCR is expected to languish due to weaker absorption rate. As per Centrum, the average vacancy rate in malls across India was about 9% in Q408 and NCR had the highest vacancy rate of around 25%. According a study by Knight Frank India, average rentals in Gurgaon was down from Rs 120/sq ft to the Rs 51/sq ft while rents in Noida dropped from Rs 90/sq ft to Rs 44/sq ft.

In conclusion, as market conditions stabilise, the financial markets will slowly pick up resulting in an improved liquidity scenario, stable government, and affordable prices. This may well serve to bring back the shine to this lacklustre sector.

Sukhbir orders checking of under valued registration of properties in Punjab

CHANDIGARH: Sukhbir Singh Badal, Deputy Chief Minister Punjab on Tuesday took a serious note of under valuation of properties being done by revenue authorities in the field for the purpose of paying stamp duty.

Badal flanked by Harsimrat Kaur Badal, Member Parliament from Bathinda , while reviewing the development programmes of four districts here today asked the Financial Commissioner Revenue Mrs. Romila Dubey to issue instructions to the Deputy Commissioners to ensure that the data with regard to the entire land/urban property along with the collector rates was fed in the software within one month so as to check the exercise of discretion in application of collector rates and the type of land/property. He instructed that all registries from October 1, 2009 onward be done only as per computers fed rates.

He said that due to non-feeding of collector's rates and property details in the computer, the exercise of discretion leads to under valuation and corruption. Badal said that some times registering authorities impound the properties leading to harassment to the concerned parties and also leaving scope for leakages of government revenue.

Dubey informed the Deputy Chief Minister that revenue department has created a new software PRISAM-4 to make provision for entry of every parcel of land (Khasra Numbers) or urban properties in the software. She informed that would take care before the registration of the documents that the value of the property being registered was at par with the collector rates already fed in the computers. She said that instructions have been issued that in respect of Urban properties, the Registering Officers would not register documents unless the same was accompanied by relevant revenue record if applicable, a map of the property and a valuation certificate issued by a registered architect.

Badal said that instructions should be issued to all Deputy Commissioners to ensure that registries were done by the Registering Officers in accordance with the collector rates and in the case of any doubt, the documents should be impounded and referred to the collector for determination of value of the property concerned.

Taking seriously the feedback regarding under valuation of some properties by registering authorities for a consideration causing loss to revenue of the state, Badal asked Deputy Commissioners to conduct cross audit of suspected registries and in the case of under valuation, take strict departmental as well as criminal action against the erring officials.

The Commissioners of the Divisions have been instructed to review the progress of data feeding in the computers and send a report to the government.

NRI cell goes beyond property issues Assetventures

CHANDIGARH: The NRI cell, a landmark initiative of UT administration to redress property disputes, will have to expand its ambit to take care of
many other concerns of those who may have left the country for greener pastures but still look back with hope for solutions to their problems. Ever since its doors were thrown open on August 15, the makeshift centre in the Estate Office has received over 35 complaints ranging from issues of land, finance and matrimony.

“The cell was primarily constituted to deal with property dispute cases but now, going by the complaints, it seems that NRIs want to seek help for all their problems, including financial and matrimonial ones,” said home secretary Ram Niwas

The brainchild of UT administrator Gen (retd) SF Rodrigues, the cell was set up after an NRI from Chandigarh alleged that his shop-cum-flat was sold out on a fake power of attorney. “Since it’s difficult to settle things by sitting far away in a different country, disputes linger on for years. The fact that the cell is overseen by top UT officials has assured NRIs that their matter will be pursued seriously. However, one key trigger for marriage-related problems is the delay in visa for brides as well as grooms,” said Niwas.

With all issues to be handled by a committee headed by retired justice Amar Dutt and consisting of the SSP, UT senior standing counsel, a representative of NRIs and a legal luminary to be co-opted by the committee, for the time being, the administration plans to hear out complaints at UT guest house.

“The objective of the cell is to protect rights of NRIs. The process of lodging a complaint with the cell is also simple as they can either send an email at nricell@chd.nic.in or call on 0172-2700218,” said an official.

MCD launches amnesty scheme for tax defaulters

NEW DELHI: Not paying your property tax can land you behind bars for a period of seven years now. The Municipal Corporation of Delhi (MCD) has
launched am amnesty scheme under which tax defaulters can clear their dues without having to pay a penalty or the interest amount. But those who fail to pay the tax by October will not only face penalties like sealing of bank accounts and attachment of property but may also be jailed for a period of seven years.

Said mayor Kanwar Sain: "The 30% penalty will be waived off for those paying property tax dues before October 31. In addition to this, 1% interest levied every month on unpaid amount will not be charged from them. The amnesty scheme will be open from Tuesday to October 31.'' For the scheme, the civic agency has constituted special teams in all the 12 zones and the property tax headquarter at Lajpat Nagar.

"Under the scheme, all the property tax payers in the city will get a special identification number similar to Permanent Account Number from the civic agency. In future, the facility will be extended to other property owners too,'' added Sain.

The agency said that in future, property owners who submit pay the tax will get benefit in getting the building plan sanctioned. The mayor said the MCD will collect tax from property owners in unauthorized colonies, about whose status there was some confusion till now.

Survey of India is currently determining the number of property owners who are not in the tax net of the civic agency. According to MCD, only nine lakh people pay property tax, while according to its estimate, there are more than 30 lakh properties in the city.

New property tax rule put on hold Assetventures

MUMBAI: With an eye on the upcoming assembly elections, public representatives in the BMC held back an important proposal to implement new
capital value-based system to calculate property tax.

The capital value-based system, which is fairer and easier to understand, will now be introduced in phases across the city only after the election code of conduct, which came into force from Monday, gets over. The proposal was held back by the civic standing committee after the corporators called it a `mystery'.

"The civic administration has still not clarified how this system will benefit the middle and lower-middle class. There is still very little understanding on the calculations and why it can be so skewed for different properties," said Yogesh Sagar, member, standing committee.

The new system, starting from April 1, 2010, will be will be based on the actual property value. The figure will be mostly based on the stamp duty ready reckoner, which the government brings out every year. Older buildings will get a concession for depreciation.

As of now, Mumbai follows the rateable value-based system, which was introduced in 1888 by the BMC Act. According to this system, property tax is calculated on the basis of the rent a property is likely to earn. Going by the book, residential properties are charged at 83.5% of the rent they are likely to earn and commercial properties at an even more absurd 112.5%. With rents frozen for buildings built before 1940, and the BMC levying increased tax rates for newer buildings, the existing system has led to lot of disparities.

Additional civic commissioner, Anil Diggikar, said doubts of committee members will be cleared. "We have assured them that explanations will be soon given," he said.

Commercial property market may revive post-Diwali: Assetventures

"We have seen a strong demand in the residential property market from December-January and now we may see buying activity in the commercial property market
post-Diwali," Religare Securities' Associate Vice-President, Suman Memani, told reporters here today.

Banks and financial services would be seen buying office spaces, but IT and ITeS sectors are yet to enter realty market as they are still passing through degrowth.

"We still remain negative on retail segments and expect sentiments to improve only 15-18 months from now as the economy gradually gets back on track," Memani said.

"We believe that there has been a significant rental correction happening in the commercial segment in Tier I and Tier II cities. However, there has not been any erosion of capital value of commercial properties," Memani said.

Lower home loan rates, property price cuts, apartment downsizing, and a recovery in the job market are translating to a pick-up in demand for residential projects as evidenced by an increase in property registration in major cities.

With the improvement in macro-economic conditions as well as buyer affordability, developers witnessed a stronger response to new launches across cities over the past quarter.

Now that property prices have climbed down and the risk of job lay-offs has diminished, the service class is likely to participate actively in property absorption, leading to a strong recovery in residential demand in Q2 FY 10, he said.

Commenting on realty prices, Memani said, "after going into a severe tailspin from January 08 onwards on account of weakening economic dynamics, we believe realty prices have started to bottom out and have already troughed in a few locations. With the return of liquidity to the sector in the form of FDI, QIPs and bank loans in recent months, the balance-sheet position of realty players has started to improve, in turn changing the risk dynamics of the business."

Listed real estate stocks were in the danger zone, a key risk measure for bankruptcy-but with equity infusion, the chances of bankruptcy have diminished, he added.

Most developers are looking to enhance their execution capabilities in this space. If 60 per cent of the planned development is executed, it will improve the balance-sheet of realty players and also enhance buyer affordability, he said.

Realty stock prices corrected 85-95 per cent over January 08-March 09, but have bounced back significantly thereafter. Still, they remain 25-30 per cent of their peaks. With positives like liquidity infusion, stronger balance-sheet positions, a stable reform-oriented Government and an improved employment outlook, "we expect the sectors' fundamentals to improve," he said.

North East's biggest real estate project

Shillong , Aug 24 Emaar MGF Land, one of the largest real estate developers in the country, would set up a residential complex here at an initial investment of Rs 400 crore.
The 84-acre Windermere Estate at Umpling, Shillong , once completed, would have villas, community retail centre, clubhouse and a hotel, a company statement said today.

It added that the development of Windermere Estate would have a multiplier effect on the local economy and provide employment, which will directly and indirectly benefit over 1,000 people.

" With Emaar MGF&aposs expertise in developing Commonwealth Games Village in New Delhi, the company would bring in similar expertise to develop Windermere Estate," Meghalaya Assembly Speaker and a partner of the project Charles Pyngrope said.

Emaar MGF CEO (East) Sanjay Choudhary said, Shillong offered value-proposition as well-travelled tourist destination. PTI RTJ AMD

Bandra-Worli Sea Link to drive prices of real estate

It’s a classic case of infrastructural development boosting real estate prices.The Bandra-Worli Sea Link seems to be doing more than just easing the traffic flow from north and south Mumbai. Experts in the country's financial capital say that there could be an increase of 10-15 per cent in property rates in surrounding areas. “The Bandra-Worli Sea Link will not only provide relief from the agonising traffic, but will also trigger a major crowd influx, which will affect real estate prices. South Mumbai will have high demand .There are indications of a 10-15 per cent hike in property prices and this may effect connecting areas. Builders who are already selling flats in the area would go for a price correction immediately, says Rajesh Vardhan, managing director, Vardh­aman Group, a Mumbai-based real estate development company. In the same breath, he says it is time for a Nariman Point-Worli sea link as well.
Bandra-Worli Sea Link is a Maharashtra state road development corporation project, constr­ucted by HCC, India's largest engineering contracting company. The road hangs in between cable-stayed bridges on the two ends namely, the Bandra and Worli Cable-stayed bridges of 500 and 150-metre spans, respectively – with the highest towers soaring to a height of 126 metres, equivalent to the height of a 43-storeyed building. The sea link was opened for general public on June 29.
Not everyone, however, shares the same optimism. Shreegopal Maheshwari, broker attached to Mumbai-based Maheshwari & Maheshwari, feels that it is too early to see an impact on property prices. “It is just over a month since the link was inaugurated. We may see the real impact in six months. Worli Sea face has, however, seen a drop of 10 per cent property prices due to increased traffic in the area,” he said. While the office properties in Mumbai generally continued to fall.
“Mumbai continued to remain volatile in terms of rental values. Bandra–Kurla Complex (BKC) corrected by another 20 per cent over the previous quarter to settle at Rs 225 per sq ft/month. The location has also witnessed over 40 per cent correction over June, 2008. This has triggered increased interest in the location from corporate occupiers and approximately 1.41 million sq.ft was leased within this location. With the growing demand for this location, the rentals are expected to remain stable in short to medium term,” said a recent report by Cush­man & Wakefield.

Commercial real estate rentals seem to be bottoming out

Mumbai continues to be the second costliest city in Asia Pacific in terms of prime rental rates. With rent of about USD 800 per sq metre per
annum, Mumbai is ahead of the likes of Tokyo (USD 750 per sq metre p.a.) and Singapore (USD 625 per sq metre p.a.) as per the latest report of real estate
consultancy firm Jones Lang LaSalle. This is despite a 40% drop in rentals from its peak values. Delhi comes fourth in the ranking with USD 725 per sq metre per annum.

With GDP growth expected to bounce back in 2010, India and China would outperform the global markets with a 7-10% growth rate. The early signs of recovery are visible in Delhi and Mumbai markets. Having dropped by 24% in March’09 quarter over the preceding quarter, Mumbai’s decline in June’09 was well below 10%. Delhi followed with an 8% decline, which was half of what it was in the quarter before.

The average decline for India in June’09 was 8.3% as against 19% in the quarter prior to that. This showed that the rate of decline in rentals has also slowed down in the June’09 quarter as compared to March’09 quarter. It is believed that rents in these cities have bottomed out. Pune outperformed with just about a 4% decline.

This trend is likely to improve by 2011 when the absorption rate would overcome the supply. With 57 million sq feet of office space expected to be operational by the end of 2009, vacancy rate would continue to be high at 27% in 2010 till it comes down to a little above 20% in 2011.

Talking city wise position, Bangalore is expected to relatively outperform other cities with a low vacancy rate as it has received good response for pre leasing properties.

Companies form telecom and pharma sector seem to be fast taking advantage of the low rentals and expanding their geographic reach. For example recently Aircel and Telenor Unitech wireless signed more than 50000 sq feet of real estate space. As rents become more affordable, we could see more companies scaling up their expansion plans.

Rich, powerful flouting laws for real estate construction

New Delhi: The Supreme Court today came down heavily on economically affluent people, bureaucrary and civic body officials for mushrooming illegal real estate construction in the country and ruled file notings by ministers or officials do not have any legal validity.

"Economically affluent people and those having support of the political and executive apparatus of the state have constructed buildings, commercial complexes, multiplexes, malls etc. in blatant violation of the municipal and town planning laws, master plans, zonal development plans and even sanctioned building plans", said a bench of Justices B N Aggarwal and G S Singhvi in a judgement.

"In most of the cases of illegal or unauthorized constructions, the officers of the municipal and other regulatory bodies turn blind eye either due to the influence of higher functionaries of the State or other extraneous reasons, the bench observed.

"In most of the cases of illegal or unauthorized constructions, the officers of the municipal and other regulatory bodies turn a blind eye either due to the influence of higher functionaries of the state or other extraneous reasons, it said.

The apex court also said file notings ministers or officials do not have any legal validity.

Its ruling came while dismissing an appeal filed by Sathish Khosla, President of Shanti Sports Club of India which claimed to run a cricket academy at a village in Delhi.

One of the pleas of the club was that its illegally constructed sports club should not be demolished as the then Minister for Urban Development in 1999 had noted in his file that the construction be regularised.

Real estate looking up, people start buying once again

Real estate looking up, people start buying once again


"Today flats are being sold, but the pace could be better. Generally things have reversed. In Mumbai also, rightly priced projects have been sold. The major contributor to this is the government policy to generate demand. It brought in stimulus packages, ensured availability of liquidity to the home buyers, interest rates softened," he said.

Another real estate player Indrajit De, chairman of Eden, also said housing loan lending rates cut may attract a few more buyers into the market.

"If the lending rate falls further by 50 basis points, the sales figure will climb up," he said, adding, "Certainly the market is looking up now. Sales have also improved.

"We are selling around 25-30 units (flats) per month. But it was much higher in the range of 55-60 units per month before the recession actually hit India."

Harshavardhan Neotia, chairman, Ambuja Realty Group, told IANS: "Sales have picked up in the last two-three months. There is more offtake now than what it was six months back. But now the buyers are genuine users and not just investors. These are the people who really need housing. They are lot more quality conscious and they look for the right products."

He said there was a drop of 10-15 per cent in the price during the recession period. In the last two-three months the company has sold around 200 flats, he said.

Reacting to the recent announcement by union Finance Minister Pranab Mukherjee on interest subsidy on new home loans and extension of deadline in tax holidays on projects approved by March 2008 if they are completed by March 2012, Rungta said: "One must understand that extending the tax holiday under 80 I B (10) for a mere one year to projects approved by March 2008 will fail to create a significant positive impact on the real estate market. It will only benefit a few micro markets with a handful of projects."

CREDAI has suggested the centre consider extending the dateline to March 2012 for providing tax holidays to projects irrespective of the date of approval. "This will be of greater benefit to the sector and encourage developers to take up new projects and expedite ongoing projects as well."

Rungta further said: "Even the proposed interest subsidy of one per cent to home loan borrowers for loan taken for houses costing up to Rs 20 lakh is also not justified."

CREDAI has proposed that the centre increase the subsidy to home loan interest rates by another one per cent to two per cent and extend the scheme for houses costing upto Rs 30 lakh from the currently proposed valuation of Rs 20 lakh.

DLF revives commercial plans

DLF revives commercial plans


DLF, India's biggest real estate company, seems to have forgotten its recent troubles. With some funding available to it, it has now decided to stay in some of the business that it had considered peripheral -- hospitality included.
DLF is gearing up for a second innings in the commercial space, thanks to an eased liquidity situation that has pumped some confidence in the real estate sector.
The company has now revived its commercial projects, which were on hold for the last one year or so.

NDTV learnt from sources that DLF's commercial expansion will be mainly centered around hospitality and retail, with an investment
of Rs 4,000 crore to be funded through long term debt. Stake sale, if any, would be at project specific only.
The company will initially focus on Delhi and plans to launch about 3 hotels and 7 malls in Delhi over the next couple of quarters.
An office project is in the offing in West Delhi, adjacent to its proposed housing complex at Swatantra Bharat Mills.

Anshuman Magazine, chairman of CBRE India, said, “The rental market has shown some recovery in the last few months. Things have somewhat started to look up. The country's largest realtor earmarking expansion plans in the commercial space will further help boost sentiment.”
Experts opine that DLF's approach seems to be much more subdued this time on. So, instead of the mega plans of 25,000 keys by 2010, it is now talking about a mere 350 keys across 3 properties in Delhi.

D K Agarwal, MD of SMC Global, said, “We will still be more cautious on our outlook for commercial and hospitality. The past experience has not been very positive.”

Although DLF has decided to revisit commercial projects, the company insiders say that residential projects, mainly affordable housing will continue to be the key growth driver, at least for the next few quarters.

QIPs save the day for real estate players

QIPs save the day for real estate players
year has seen just one private equity deal in the real estate sector. In May, Sun Apollo India Real Estate fund made an investment of Rs 300 crore in Mumbai-based Keystone Realtors. According to Kamal Khetan, MD of Sunteck Realty, another Mumbai-based realty company, it makes better sense to go to the capital market than looking for a PE investor. “It is difficult to get in the right kind of investor. We are looking at a Rs 500-crore QIP to expand our operations.”

Understandably, the large number of companies in the real estate sector, which have taken the QIP route, are the trigger for others in the sector. Said Amber Maheshwari, director, investments, DTZ, an international property consultant: “In the present situation, companies in the sector have had a good experience with QIPs and will now look at the capital markets as well. With PE money not easily available, options are limited.”

Industry trackers point out that stringent rules for investments have been the reason for a lack of common ground between PE investors and the real estate companies. “Now, most of the PE funds demand that the investment in an SPV be made in tranches and be directly proportional to the developers’ capacity to finish projects in time,” said Biren Parekh, partner, (Real Estate), Ernst & Young.

It is gathered that in some instances, the option of bringing in PE investors as well as going public is also being considered. According to a senior official at Bangalore-based Nitesh Estates, which is looking to raise Rs 1,200 crore, half of the amount will come through IPO, while the rest through potential PE investors.

Investors may have lost one-third investment in real estate

Investors may have lost one-third investment in real estate

"We are seeing some variations of teaser type housing loans being offered. The lure of low interest rate at the start of taking a housing loan is enticing. But are customers being made aware of future implications," he asked.

Parekh noted that the genesis of the US housing crisis lay in loans that offered artificially low interest rates in the initial years but once the rate normalised, many found themselves unable to service the loan. These are the lessons one should learn from, he said.

However, the HDFC Chairman pointed out the same disturbing trend being seen in India where some variation of teaser type housing loans are being offered in the market. "Are these lending institutions providing "what if" scenarios to their customers, he asked.

DDA given clean chit in housing scam

DDA given clean chit in housing scam
NEW DELHI: The Delhi Police, which is probing the multi-million-rupee housing scam, has given the Delhi Development Authority (DDA) a clean
chit.

"We have received a report from the forensic lab in Hyderabad that the software used by the DDA during the allotment of over 5000 flats was not rigged. The DDA conduct of allotment was fair and no discrepancy was found in it," a senior Crime Branch official told IANS.

"We have not found any wrongdoing by the DDA," the official said.

Over 500,000 people applied for 5,238 flats under the DDA's housing scheme 2008. But the housing scheme got mired in controversies amid allegations of fake applications.

The scam came to light earlier this year after a man who was allotted a flat in the draw of lots told the police that he had not even applied for it.

The Economic Offences Wing (EOW) of Delhi Police started investigations, which revealed a group of people conspired to buy several flats in the names of those from reserved categories like the Scheduled Castes and the Scheduled Tribes who were eligible for the flats but could not afford them. The conspirators meant to sell off these flats later for huge profits.

So far, the EOW has arrested Deepak Kumar, who allegedly blew the lid off the scam after he fell out with some fellow real estate agents, retired DDA employee M.L. Gautam, and real estate agents Raju Ram, Laxmi Narayan Meena and Vijay Pal.

Satbir Singh and Dinesh Dral were arrested for forging the documents to open bank accounts in fictitious names. Suresh Kumar Meena, a Delhi-based real estate agent, was arrested March 19 and the last one to be arrested was Jeet Ram - one of the key financiers - April 27.

MCD for survey to track property tax evaders

Suggesting ways for increasing collections, leader of the House Subhash Arya proposed that commercial properties like malls, five star hotels, guesthouses etc should be levied higher rates of taxes by bringing them under a separate category.

According to MCD's own estimates, it is losing out on property tax from almost two-third of property owners in the capital. There are 25 lakh properties in the city but only 8.5 lakh are paying property tax. Municipal councillors also said in most cases, the executive agency has failed to maintain and update the records of property tax collected.

Moreover, according to leader of opposition J K Sharma, some Rs 800 crore in tax was due from government and other agencies including PWD, DMRC and DJB. Sharma said: "The Municipal Taxation Tribunal was set up by the civic body last year to take up property tax cases and hear appeals on dispute in this regard. But that has not been of any help and instead turned out to be a financial burden for the civic body.''

Court asks neighbour to pay for property damage

If you are aggrieved at the damage to your property by your neighbour’s reckless constructions, then a recent court ruling holds out hope.

“It pays to be a good neighbour,” Additional District Judge (ADJ) Kamini Lau ruled some days ago, before awarding a compensation of Rs 2 lakh to complainant H N Kukreja. Kukreja had hauled to court his neighbour at Lajpat Nagar’s B-block, Uma Dhawan, and her builder Vishal Chopra, arguing that the renovation carried out at Dhawan’s home had spoilt the walls and woodwork in his basement.

The order stated: “It pays to be a good neighbour and conversely a person oblivious and unconcerned about the life and property of his immediate neighbour can be made to compensate.”

The judgment also sounded a note of caution on the irresponsible and break-neck manner in which constructions march on these days, and said a neighbour cannot escape duty towards adjoining houses.

Kukreja claimed the slipshod work next door had severely damaged his basement floor. The walls were damp, the plaster was peeling at places, the floor had developed cracks, and the doors and windows were damaged, Kukreja said in his petition.

Challenging it, Dhawan and Chopra denied the remodelling had harmed the neighbour’s property.

In their defence, they also argued that Kukreja had illegally constructed certain structures in the basement. However, a report by an executive engineer on Kukreja’s property disproved Dhawan’s claims, prompting the court to dismiss the argument.

ADJ Lau said: “In civilised society, every person owes a duty of exercising due care and caution towards the life and property of his neighbour. He is under an obligation to ensure that his individual right to enjoy his own property does not come into conflict with a similar right of his neighbour to enjoy his property as well.”

The court then asked Dhawan and Chopra to equally share the monetary penalty of Rs 2 lakh and pay it as damages to Kukreja so that he could repair his house.

NRI property: Vigilance to issue notices

As UT vigilance department has failed to arrest any of the four persons accused in the case pertaining to a fake deal with regard to
NRI Tara Singh’s property, the investigating agency has now decided to issue notices to all of them, asking them to join the probe.

Preliminary investigation suggested that England-based advocate JB Singh, who is running a firm named Chess International abroad, is the mastermind of the plot as the name of culprit Harnek Singh, who had forged the original general power of attorney of the NRI, was referred to complainant Tara Singh by JB Singh.

A VB official said Chess International had claimed it solved property disputes of NRIs in India and Tara Singh had approached JB Singh through an advertisement in England. A branch of the company is in Jalandhar and staff there was also questioned. Accused Harnek Singh was a munshi with a city-based lawyer and JB Singh, also an NRI, had advised the complainant that he appoint Harnek Singh as the holder of his general power of attorney (GPA).

However, the investigation has also established the negligence of the superintendent Sant Parkash and dealing assistant Virender Verma of the estate office and assistant estate officer (AEO) Ashwani Kumar. A senior vigilance official said Verma and superintendent Sant Parkash had overlooked the copy of original GPA stating Harnek Singh was entitled to sale and purchase of the property when assistant estate officer (AEO) Ashwani Kumar had passed a no-objection certificate (NOC) to Harnek Singh.

Questionable records

The official website of UT administration still shows accused Harnek Singh as 50% shareholder of Tara Singh’s property in Sector 20. A visit to estate office revealed that half of the share of the NRI’s property is registered in the name of Harnek, who is absconding.

Rs 1 crore looted from Noida property dealer

Armed car-borne miscreants shot at and looted Rs 1 crore from a property dealer in Noida on Tuesday afternoon in supposedly the biggest
on-road loot from an individual in the state. The victim has been admitted to Kailash Hospital in Noida where his condition is stated to be stable.

Till now all the robberies of over Rs 1 crore had either taken place within a premises like that of a bank or an office or the money was collected from a number of people. This is the first time that the money belonged to an individual moving on the road.
The police, however, suspected that the victim was infact carrying Rs 1 crore and even questioned him and the six persons accompanying him. Later, the victim showed them documents of the bank from where the money was withdrawn on Monday to buttress his claim.

The incident took place around 1 pm on Tuesday when a property dealer, Chatar Singh, of Vilaspur locality in Noida was on way to the office of the district registrar with six others for a land deal. Those accompanying him included the party whose property was to be purchased by Chatar.

Chatar’s Scorpio had barely reached Usmanpur village when an Esteem intercepted his SUV and even before he could understand what was happening, a group of armed men jumped out of the car. While two of them covered the occupants of the SUV from two sides, two others walked up to the seat where Chatar was sitting and tried to snatch the bag containing the money. When Chatar resisted, one of them opened fire at point blank range.

Chatar took the bullet on his hand and loosened the grip on the bag. The miscreants then took the bag and sped away in their car. The whole operation lasted barely a minute.

Chatar later told the police that those accompanying him in the SUV included his brother and some distant relatives who had offered to sell their property to him.

Tonic to builders and buyers Assetventures

Middle and lower-income subscribers to new home loans stand to save as much as Rs 1.5 lakh on interest payment under concessions announced by the Centre today while wrapping up discussions on the budget.

Finance minister Pranab Mukherjee, replying to the debate on the Finance Bill that was later passed in the Lok Sabha, also offered some concessions aimed at easing the burden of the downturn-hit industry. (See chart)

The measure that will help middle-income earners most is the 1 per cent interest subsidy on home loans up to Rs 10 lakh to buy houses worth up to Rs 20 lakh. The subsidy will translate into a total saving of Rs 28,920 on interest payment during the tenure of a 5-year loan and Rs 1.51 lakh over a 20-year period.

As many as 70 per cent of home loan borrowers fall in the Rs 10-lakh bracket, industry sources said. The government’s offer to underwrite 1 per cent of interest is expected to cost it about Rs 1,000 crore, according to the finance ministry.

“It (the subsidy) is a welcome step as it will improve affordability. Any such step tends to improve activity in the real estate and construction sectors, which are among the largest employment generators,” said Renu Sud Karnad, joint managing director of HDFC.

The subsidy announcement came a day ahead of the RBI’s credit policy which analysts do not expect to offer interest rate cuts.

Mukherjee did not confine the incentives to real estate to the subsidy alone. He also offered a tax holiday to projects that more or less got off the ground at the start of the downturn if they finish construction by March 2012.

Builders of projects that got approval between April 1, 2007, and March 31, 2008, need not pay tax on profits if they are completed on or before March 31, 2012. Given the euphoria of 2007, builders had rushed to launch a slew of projects that ran into rough weather when the tide turned in the latter half of 2008. Realtors have been pleading for relief after housing prices fell by as much as 15 to 25 per cent in many cities.

“The incentive is expected to help more big developers who are stuck with high leverage and low sales but the impact could be felt by all,” Pradip Chopra, director of Calcutta-based developer PS Group, said.

Rajiv Talwar, the executive director of developer DLF, agreed: “These measures will help to a large extent to sell stocks of affordable housing and boost overall demand.”

However, all real estate players were not enthused. Arun Puri, chairman of property consultant firm Jones Lang La-Salle Meghraj, said: “Such tokenism may not really perk up the market… larger gestures like reduction in interest rates and incentives for developers are needed to rescue the market.”

Mukherjee also addressed an accounting concern of industry, clarifying that changes in service tax would be implemented only from September 1. Industry associations had requested the government for time to make changes in their tax software.

Industrial growth had shrunk in December and January, but Mukherjee asserted today that the measures already announced in the budget and earlier as part of two stimulus packages could push the growth in gross domestic product to 8 to 9 per cent by end-2010.

Mukherjee said he would stick to his promise of placing a draft direct tax code within 45 days of taking over as finance minister and it would be tabled in the winter session of Parliament. “We will make some major changes in the tax administration and related laws in the country,” he said.

The minister promised to push through a nationwide goods and services tax by April 1, 2010, “with cooperation from states….”

The measure is expected to reduce taxes on goods and services and make taxation uniform throughout the country.

Mukherjee had a message for those disappointed by the lack of reforms in the budget. “Reforms will be very much on our agenda. It is a continuing process... it will not be a mantra to be chanted occasionally,” he said.

Govt to provide 1% home loan subsidy Assetventures

Finance Minister Pranab Mukherjee today announced an interest subsidy of 1 per cent for one year on housing loans of up to Rs 10 lakh for properties worth less than Rs 20 lakh, a move that has been widely welcomed by realtors and home loan companies. The measure is expected to cost the exchequer Rs 1,000 crore.
Pranab MukherjeeMukherjee also allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between April 1, 2007 and March 31, 2008, provided the projects are completed on or before March 31, 2012. Mukherjee asked developers to pass on the benefits of this tax break to consumers.

Mukherjee made these announcements in the Lok Sabha today as part of his reply to the discussion on the Finance Bill. Both houses of Parliament passed the Finance Bill 2009-10, which included a raft other concessions.

Assuming a monthly saving of Rs 60 per lakh, today’s announcement implies that a borrower saves about Rs 7,200 on a 15-year loan of Rs 10 lakh. The interest rate subvention will be routed through the scheduled commercial banks and the housing finance companies registered with the National Housing Bank.

Banks to offer subsidy on home loans, says FM. Assetventures

Finance
minister Pranab Mukherjee said that the interest rate subsidy for mid-segment housing would be routed to customers through
commercial banks and housing companies registered with the National Housing Bank. He said to further provide stimulus to the housing sector, it will be allowed a tax holiday in respect of profits derived from projects approved between April 1, 2007 and March 31, 2008, if such projects are completed on or before March 31, 2012.

‘‘I expect the developers to pass on the benefit of tax holiday to home buyers by appropriately reducing their prices. I am sure that both the expenditure and tax-foregone initiatives would provide relief to a large segment of prospective home owners and help revive the real estate sector,’’ he added.

The interest subsidy is aimed at mid-segment housing loan borrowers from the lower middle to middle-income groups. Even on Monday, Congress MP from Mumbai (North) Sanjay Nirupam, while speaking on the finance bill, said 42.4% of Maharashtra’s population was urbanized and trends pointed to increasing migration to cities. With home loan rates climbing steeply, there was a case for providing relief to borrowers. Providing an interest subsidy and a targeted tax break also answers in part the demand that the becalmed real estate sector needs a leg up.

The government’s message to the real estate developers is to lower prices and make housing more affordable for the aam aadmi.

The housing loan subsidy came with a slew of other concessions such as exempting road repairs and maintenance from the ambit of service tax while extending the sunset clause for tax holidays for industrial parks by a further two years up to March 2011 to boost growth in infrastructure. The FM clarified that service tax on new services and any alteration in the existing services as announced in the Budget would be effective from September 1, 2009.

‘‘It’s a welcome step from the government. The decision is sure to improve loan eligibility and affordability of a large section of the Indian middle class. It will also lead to increased activity with regard to real estate in the affordable housing segment which in turn will create employment,’’ said Renu Sud Karnad, Joint MD, HDFC Ltd.

Fresh real estate sops to spur revival . Assetventures

Eyeing fresh signs of a revival in the economy, which should nudge growth back to 9% level by end-2010, finance minister Pranab Mukherjee announced fresh tax giveaways for housing and renewed the government’s commitment to more economic reforms and introduction of a single goods and services tax (GST) by 1 April.

The move, expected to further boost housing demand in the economy especially in tier II cities, also seeks to quell growing criticism that the Congress-led United Progressive Alliance (UPA) is averse to second-generation reforms.

Replying to the debate on the Finance Bill, which was approved by a voice vote by the Lok Sabha, Mukherjee renewed his efforts to strike political consensus on key areas of tax reform, including the introduction of a direct tax code.

The reply also calibrated a few of his 6 July Budget tax proposals, which are not expected to result in big revenue giveaways, thereby precluding the possibility of a marked increase in the Rs4 trillion fiscal deficit forecast for 2009-10.

The stand out feature of Mukherjee’s calibration of tax proposals in the Finance Bill was the emphasis on boosting real estate through both budgetary support and tax changes. The budgetary support in the form of a 1% subsidy on the interest rates paid by people with a home loan of up to Rs10 lakh would cost the exchequer Rs1,000 crore in the current fiscal year, Mukherjee said.

Under Section 80 IB (10), income-tax deduction was given to real estate developers for housing projects approved before 31 March 2007. This has now been extended to projects approved between 1 April 2007 and 31 March 2008, provided these projects are completed on or before 31 March 2012.

“We have been asking for an extension for a long time and I am happy that this step has been taken,” said Kumar Gera, chairman of the Confederation of Real Estate Developers’ Association of India. “The extension will benefit only those projects that were approved during this period, so it may not have an impact on all housing projects in all markets. It could have an impact on certain micromarkets.”

Among other key tax changes were the removal of service tax charged by contractors repairing and maintaining roads, and extending tax benefits given in the Budget to firms producing natural gas under the new exploration licensing policy to those producing natural gas from coal-bed methane blocks.

The finance minister admitted he had to ignore many other post-Budget representations, which came his way, as the tax proposals had to mesh with the broad strategy of providing fiscal stimulus. “We must generate internal demand,” he said.

The spillover of the fiscal stimulus provided last fiscal year and proposals introduced in the 6 July Budget have cost the exchequer Rs2.4 trillion, Mukherjee said. The fiscal deficit (extent of borrowings needed to bridge the gap between expenditure and revenue) is estimated to touch 6.8% of the gross domestic product in 2009-10.

The Budget estimates of the Centre’s net tax revenue in 2009-10 is Rs4.74 trillion, an increase of 0.19% over the previous year’s revised estimate.

Economic growth, which received top priority in the Budget’s overall strategy, is showing signs of recovery, Mukherjee said, though he remained cautious about signals provided by an improvement in economic indicators such as May’s factory output. “I would not say we are out of it. Situation is still difficult.”

Mukherjee assured the House that the government would continue putting in place reforms, including tax reforms, to facilitate growth.

In the area of tax reforms, Mukherjee said he was confident India’s indirect tax system could stick to the 1 April deadline for transition to GST, even though some states such as Madhya Pradesh and Tamil Nadu have said the deadline might be premature.

“On broad national interest, there is no discordant view,” Mukherjee said, explaining why he remained upbeat about meeting the deadline.

GST is India’s most ambitious indirect tax reform, which seeks to dismantle tax barriers that fragment India’s market according to state boundaries. The transition requires cooperation between Centre and individual states.

The country’s tax reforms could, however, be negatively affected by the Opposition’s displeasure with the way the UPA has directed policy in areas such as international affairs.

“A mere call for consensus is not enough. To have consensus on issues, the government should pre-consult the Opposition on issues of national importance. Unfortunately, the (government’s) conduct in the last two months does not reflect this,” said Prakash Javadekar, spokesperson of the Bharatiya Janata Party.

Real estate, infrastructure loans show strong growth

Which sectors have banks been lending to in recent months?

The Reserve Bank of India’s macroeconomic and monetary developments review has data up to 22 May on lending to various sectors.

Consider housing first. Year-on-year growth in housing loans slumped to 5% on 22 May, compared with a year-on-year growth rate of 7.5% on 27 February.

Loans to the real estate sector, or loans to the commercial housing sector, grew by a strong 52% year-on-year, albeit on a much lower base.

On 27 February, loans to the real estate sector grew by 61.4% year-on-year.

Between 28 February and 22 May, housing loans increased by Rs3,138 crore, while bank loans to real estate companies went up by Rs3,734 crore.

In short, loans to real estate companies were more than loans for individual housing.

After a rise in bad loans in the credit card business, banks have started to cut back on lending to this segment.

Between 28 February and 22 May, credit card outstandings went down by Rs1,949 crore. Year-on-year growth in credit card outstandings was a mere 1.4% on 22 May.

The data bears out the fact that most of the slowdown in lending has happened in personal loans.

On 22 May, year-on-year growth in personal loans was 5.5%. Lending to industry grew at a year-on-year rate of 21.2%, while loans to the services sector increased by 20.5% year-on-year.

In the services sector, apart from real estate loans, loans to professionals (up 39.8% year-on-year) and to non-banking financial companies (up 31.5% year-on-year) also showed robust growth.

In the industrial sector, the highest rate of growth was notched up by the construction sector which grew by 44.7% year-on-year on 22 May. But that’s decelerated from a growth rate of 58.8% as on 27 February. Loans to infrastructure were up 35.1% year-on-year on 22 May, the same rate of growth on 27 February. Other industrial sectors showed a deceleration in credit growth.

The oil sector, of course, showed a substantial fall in credit growth as crude oil prices fell and as oil bonds were issued.

Is it good time to buy or sell in real estate mkt now? Assetventures

Is it a good time to buy or sell in the real estate market right now? Chances are that as a prospective buyer or a property owner, you may be facing a serious dilemma.
Industry players feel that while it may be a good decision to buy in certain locations, a sell off needs to be given a few more months till the market picks up completely.

So which are the best places to buy in right now? According to global real estate consultancy Cushman & Wakefield (C&W), in Delhi NCR, it is Noida, Greater Noida Expressway and areas in Gurgaon along the Golf Course Extension Road. In Mumbai, central Mumbai and western suburbs such as Bandra, Kalina and JVLR are good bets. New emerging destinations in Bangalore such as Sarjapur Road, North and central Bangalore, apart from a few projects within the city can be considered.

Aditi Vijayakar, executive director, residential services India, C&W, says that this is a good time to buy a property for self use as prices have corrected considerably over their peak in 2007-08. “Buyers at this time can take advantage of lucrative interest rates on home loans. However, for investors entering the market, this time should be evaluated keeping the various arbitrage options that they can take advantage of in the current scenario. As far as selling is concerned, this is not a sellers market. The decision should be taken when the owner is confident of achieving the expected appreciation of the capital value of that property.”

While developers such as Vipul, Realtech, Raheja Developers and SVP Group say the market is picking up and one should look at buying, they don’t sound equally enthusiastic about selling off one’s property at this time.

Mumbai most preferred for investing in properties: Assetventures

Mumbai most preferred for investing in properties:

The country's financial capital Mumbai ranked as the most preferred destination for investing in properties, while Chennai has displaced Bangalore in the South, a survey conducted by an online portal said here on Tuesday.
The survey, "Trend in residential space across top cities in the current scenario" ranked Mumbai as the most preferred destination to invest in property while in south, Chennai was the first place for property investments, overtaking Bangalore.
Cities like Patna, Nashik, Tiruchirapalli and Madurai have also become favourite destinations for property investments, the survey said.
It said 60 per cent of respondents felt interest rates for home loan would come down further in the coming months, while 40 per cent evinced interests on properties with an area between 500 to 1,000 square feet.
Over 3,000 people from the metros and other cities, including Pune, Thane, Coimbatore, Ahmedabad and Vadodara participated in the survey.
"Market sentiments are reviving and people are willing to invest. Based on our survey, more than 60 per cent of customers are looking at buying residential properties in the next six months. They also are expecting a lowering of interest rates on home loans", Consim Info Founder and CEO Murugavel Janakiraman said.

Seizure notices yield Rs 1.33 cr property tax dues in Pune : Assetventures

Property tax defaulters in the Pimpri-Chinchwad Municipal Corporation (PCMC) areas coughed up Rs 1.33 crore after the corporation's property tax department sent seizure notices to 109 defaulters.
Speaking to TOI, Shahaji Pawar, assistant commissioner, PCMC said that the 109 property tax defaulters owed Rs 2.16 crore as dues.
"The property tax department has intensified its drive to recover the dues from defaulters. Seizure notices are being issued to defaulters who owed large sums. Each divisional office was given the target to send 15 seizure notices to recover the dues. The defaulters have partly paid their dues after receiving the notices. If they do not clear their dues, their properties will be auctioned to recover the balance."
He said that property tax bills are being sent to the property holders for 2009-10. The department has collected Rs 10.36 crore as property tax till now, while it had collected Rs 6.56 crore till end of June in 2008-09.
The property tax department has announced a special scheme of Free Singapore trip' to 15 property tax-payers who have cleared their property tax dues and also paid the tax for the current year. as per the scheme, two members of the taxpayer's family or his two nominees will get a free trip to Singapore.
Pawar said, "Property tax bills for 2009-10 are being sent to the taxpayers. There are a total of 2.71 lakh properties in the municipal limits and we have still to distribute around 60,000 bills. Property taxpayers have to pay their pending dues if any and this year's tax before August 30 to be eligible for the Singapore trip."
He added that a list of such eligible taxpayers will be compiled after August 31. "We will select 15 property holders through a lottery system for the Singapore trip," he stated.
The property tax department has collected a record tax revenue of Rs 88.88 crore in 2008-09. Pawar said, "The department hopes to collect property tax of around Rs 30 crore till the end of August this year. We will start a drive to create awareness among the people to pay tax on time. The department will use loudspeakers mounted on vehicles to make an appeal to the people to pay tax on time and be eligible for the Singapore trip."

A cell for NRIs' property issues in Chandigarh Assetventures

This happened after a incident in Chandigarh.

A day after an NRI alleged connivance of estate office employees in the sale of his shop-cum-flat (SCF) in Sector-20 Chandigarh without power of attorney, UT administration has decided to set up a grievance redressal cell for NRIs, which would deal with property disputes.
The instance of cheating and fraudulent sale of property of a London-based NRI Tara Singh is being probed by vigilance department, home secretary Ram Niwas said.
Complainant Tara Singh had alleged that the SCF was in his father’s name and to transfer it to his name, he got in touch with a company that provides services to NRIs in matters relating to property.
Administrator Gen (retd) SF Rodrigues has reportedly taken a serious view of this and has directed that a special cell headed by additional deputy commissioner, having prominent citizens.

Return of NRI interest in Indian real estate

"The right sized product, at the right price will surely be a sell-out," says Sukhraj Nahar, chairman of the Nahar Group. At the MCHI's India Realty Expo, 2009, in Dubai, the Nahar Group offered NRIs homes in a new segment - a two BHK flat that cost INR 55 lakh onwards, which received good response. "The NRI customer needs the security of being able to walk up to the chairman of the company and ask just about any question related to the project," says Nahar, on the product's success.
MCHI CEO, Zubin Mehta, substantiates the return of NRIs' interest in Indian realty with figures from the exhibition: a turnout of 1,096 NRI families; 106 flats worth Rs 65.33 crore ($13 million) booked and around 86 flats worth Rs 80.18 crore ($16 million) in the pipeline; site visits fixed for July-August, when the NRIs come to India on their annual vacation.
"We tweaked the format and offered products that were nearing completion, with a budget limit of INR 75 lakh, mostly in the suburban areas and these were perceived by the NRIs as having scope for further value appreciation," he says. "The softening of real estate prices and home loan interest rates in India, were the key factors for attracting a large number of NRIs," says Mehta.
HDFC's branch manager (Dubai), Vikram Goel, reveals that innovative schemes, like the '20:80' home finance scheme offered by HDFC and the Nahar Group, play a big part when it comes to garnering bookings. "The average NRI is worried about the economic challenges, across the next year or so. Hence, they find schemes like these, which provide for 20 per cent payment at the time of booking and the remaining 80 per cent at possession, attractive," he added.
"NRIs are facing a unique situation," says JS Augustine of Everest Developers. "There is a certain amount of job uncertainty, due to the global economic situation. At the same time, Indian real estate offers lower entry-level prices, with potential for good returns on investment (ROI). So, NRIs who are sure of their job for the next few years, are buying Indian real estate. The INR/USD rate differential also makes it more attractive for NRIs to buy now," he says, adding that it is necessary for Indian developers to meet NRIs more often, to create confidence and give them more comfort.
What works for the NRI buyer? It has to be innovation and a different product, from what has been on offer so far and at a price level that seems attractive to the NRI buyer who has the global property market to choose from, concludes Rajnish Oswal, MD of Dubai-based real estate firm, Home Back Home.

Commercial realty picks up steam Assetventures

After months of stagnation in the commercial real estate market in Mumbai, there is finally some revival. First off the block was the
10.3-acre Finlay Mill property for which there have been bids from Lodha Developers and Indiabulls Real Estate. On July 31, NTC will put the 16-acre Kohinoor Mill-1 property also on the block, for which the base price will be Rs 1,200 crore. Both these properties are located in central Mumbai.

In the case of Finlay Mill property, the last day for the submission of bids was Thursday. Lodha Developers and Indiabulls Real Estate have put in their bids. The base price for this property, which has a buildable area of 4.20 lakh square feet, is Rs 708 crore with Lodha’s bid at Rs 657.9 crore and Indiabulls’ at Rs 520 crore. The property was put on block twice earlier, and according to senior officials at NTC, the sale will go through this time around. When contacted, NTC Mill CMD K Ramchandran Pillai said: “The asset sale committee would review the bids on July 22, after which a decision will be taken.”

It is now learnt that property consultant Jones Lang LaSalle Meghraj has been mandated for the sale of the Kohinoor Mill-1 land. A senior NTC official told ET: “The bidding process will commence in less than two weeks.” This is the first time that this land is being put on the block. The Kohinoor Mill-1 property is different from that of Kohinoor Mill-3, which was bought by Manohar Joshi and Raj Thackeray for Rs 421 crore in 2005.

In all, NTC has the go-ahead to put 25 mills in Mumbai on the block. The last deal struck was for a land parcel in Parel in central Mumbai for Rs 702 crore. Last month, the Hindoostan Mill land in the same area, which was owned by the Thackersey family and later sold to a special purpose vehicle (SPV) company of Ackruti City and DLF, was put on the block, ET had reported on May 14 that C Sivasankaran, the NRI maverick investor, had acquired DLF’s stake of 66% for Rs 310 crore.

The revival in the commercial real estate segment has been a welcome development and has been viewed positively by those tracking the industry.

“Though the Finlay property has received bids below the base price, the price on a per acre basis indicates a recovery,” said a property consultant.

Real estate giant IREO to invest $500 mn in India

NEW DELHI: Global real estate giant IREO will pump in $500 million in various infrastructure projects in India over a period of seven years, the company said Thursday.

IREO, which has invested $1.5 billion in India, is already one of the largest investors in the country's real estate sector.

"Having already invested $1.5 billion, we still have another $500 million available in cash for further investments in our projects," Lalit Goyal, vice-chairman and managing director IREO, told reporters here.

The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune.

"We have already commenced construction of a five million square feet IT SEZ (Pune) and a three-million-square-feet housing project," Goyal said.

Added Anurag Bhargava, chairman IREO: "The Pune SEZ should be completed by next year."

The company has projects in many states including Haryana, Punjab, Tamil Nadu, Maharashtra and Delhi.

The company said it would develop an eight-million-square-feet housing project in the next 12 months.

Real estate survey shows silver lining for market

Presently facing a downward trend, the real estate market is likely to recover by 2010 with increase in demand for residential
segment driven by improving affordability, steady economic growth and greater liquidity. These are the findings of a survey carried out in 10 cities, including Chandigarh, by the Crisil Real Estate Research Group.

The report says, “Demand in the residential market is expected to turn positive in 2010 due to these factors, however, a decline in the currently over-priced capital values of all the three real estate segments - residential, commercial and retail would persist through 2009.” “The commercial and retail markets would continue to witness erosion in lease rentals through the next two years,” it states.

The report provided information and analysis of more than 400 acres of land across 88 micre markets in 10 cities - Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai and Pune.

The report indicated that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March this year, due to slowdown in both the domestic and global economies. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities, the report revealed.

However, Crisil believes that demand for houses would improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy.

Expressing confidence in the report, a leading real estate agent of the city, Sunil Kumar, said, “Apart from the low interest rates on housing, another important factor for the rising demand in 2010 would be the upcoming international airport in Chandigarh. The direct Dubai flight from Chandigarh would also add to arrival of many big business houses here.”

Kumar insisted that these factors would compell more and more tricity tenants to go for owning a property of their budget and choice. “The demand for residential properties would be more in the neighbouring areas like Mohali, Panchkula, Zirakpur, villages across the city and even far-off areas like Derabassi, Kharar and Kurali,” said Kumar.

Cheap housing offers lifeline to Indian developers

"No frills, Simple homes" reads the banner hanging in the Delhi headquarters of Unitech, India's leading property developer.

It's a mantra that has been taken up by realtors across the country with a new-found passion for affordable housing that owes little to their social conscience and everything to their bottom line.

The global economic downturn ended a four-year property boom in India that had largely been driven by the luxury housing segment and saw a near three-fold increase in residential prices in major cities.

Now developers are turning their attention to middle and lower income buyers and low-cost housing that offers lower profit margins but enjoys much greater demand.

"We made a mistake by only focusing on the top two-three percent of India's population," acknowledged Unitech vice president Vikram Datta.

"Now we have to reach the masses by entering into budget and affordable houses," he said.

According to a May 2009 survey by the Associated Chambers of Commerce and Industry of India, there is a nationwide housing shortage among lower and mid-income families of around 20 million units.

With luxury housing projects struggling to find buyers, that kind of demand suddenly seems more attractive.

Unitech has committed to constructing 20,000 affordable houses at a cost of 17 billion rupees (340 million dollars) by 2011 across the country, and others are following suit.

"India desperately needs budget houses. Constructing and selling them is the only way for real estate companies to survive," Rajiv Dash, a senior official at Tata Housing Development Co., told AFP.

In May, Tata launched a low-cost housing project on the outskirts of India's financial capital Mumbai, constructing 1,000 studio apartments which sell for as little as 7,800 dollars.

The targetted buyers are primarily factory workers and small shopkeepers.

By building on cheaper, suburban land and bulk-buying raw material, developers can turn a per-unit profit of around 15 percent which is half the return on luxury houses.

"But less profit is better than no profits," said Sanjay Verma, managing director for real estate consultancy Cushman & Wakefield.

In the last five months more than 65 property developers across the country have announced new projects in the affordable housing segment.

For 32-year-old Amar Singh, a commodity trader living in rented accommodation in New Delhi for over a decade, the new trend has enabled him to realise his dream of buying a home.

"I am now the proud owner of a small, two-bedroom apartment," said Singh, who hopes to move in to his still under-construction home by 2010.

Singh managed to procure a loan from a private bank and arranged the down payment by selling some of his wife's gold ornaments to seal the house deal.

Situated on the outskirts of New Delhi, his affordable housing project with 120 apartments will provide parking space to all residents, a play area for children, a power back-up and a small cafeteria.

Such amenities do not feature in the low-cost sector, where the developer's priority is to maximise the number of units.

"The low-cost houses are just like boxes with a door and few windows, there are no value additions," said Verma.

But while they may be spartan in the extreme, they do provide basic amenities such as water, sewerage, drainage and street lighting which is a major step up for low income settlers living in shanty towns.

The newly-elected Indian government announced a housing scheme in its recent budget as part of a plan to promote a slum-free India in five years.

Such an ambitious target, analysts say, can only be realised with massive private sector involvement.

"Indian property developers should consider themselves fortunate," argued Verma. "They have a new market to do business. The faster they make small houses, the more money they earn."

Houses most affordable since 2005

Buying your own home is more affordable now than it has ever been in the last four years. The average price of a house is around 4.5 times of the buyers average income, against 4.6 times in 2005.

In 2007, the affordability factor had widened to 5.1% due to a sharp increase in real estate prices. However, with the prices of new houses dropping by around 30%, the number of years’ income required to buy a house has come down to 4.5 years.

Developers have realized the need to introduce affordable housing and are reducing dwelling size and omitting amenities which drive up cost in a bid to cater to the untapped demand.

HDFC, India’s largest housing finance company, calculates the ‘‘affordability factor’’ based on data of its home loan borrowers. At 4.5 times of annual income, the average EMI would be about 50% of a house buyer’s income on a 15-year loan. In the home loan market, this is considered affordable.

Joint property hope for wife Assetventures

The time has come for a “holistic” policy that will allow women joint rights over matrimonial property, law minister M. Veerappa Moily told Parliament today.

Matrimonial property is property acquired by either spouse or both together during the period of marriage.

The question had, of course, been raised by a woman — Brinda Karat of the CPM.

In reply, Moily said it was time to “modernise our thinking”.

“The husband can always claim that this is my property, this is acquired by me, this is exclusive to me. They think that the wife does not inherit that or the wife does not contribute to that,” the minister said.

“I think the day has come when we have to modernise our thinking, our mindset. There cannot be exclusiveness when they (husband and wife) are in a family, when she belongs to that family.”

Karat had asked Moily: “Would you kindly set up a small committee to look into the concrete recommendations… by the Status of the Women Committee Report in 1975 and by the Gujarat government in its Gaurav Nari Niti which was passed in 2006?”

Under the Gaurav Nari Niti, the Narendra Modi government has exempted transfer fees and stamp duty for land or property that is solely in the name of a woman.

Upper House members, dissatisfied with Moily’s reply that women’s property rights were governed by personal laws, began a debate that ended with Moily’s words on the issue. The minister promised the issue would be referred to the Law Commission and the National Commission for Women to chalk out a “holistic” policy.

Karat said no personal law in the country recognised the concept of joint rights over matrimonial property. “Even 62 years after Independence, Indian women are denied this right under the community property regime,” she said.

DLF sells Ackruti City JV stake Assetventures

NEW DELHI: India’s largest real estate developer DLF has sold its stake in a 50:50 joint venture with Mumbai-based Ackruti City for developing a project in Mumbai to a US-based real estate fund for over Rs 200 crore, two senior executives at DLF said, asking not to be named.

The JV firm is developing two office buildings spread over nine million sq ft at Andheri, Mumbai. These two buildings are part of a larger slum rehabilitation project being developed by Ackruti City. DLF had picked up stake in the project over two years ago with the strategy to spread its footprint across the country. DLF exited the project as part of its asset sale programme to raise Rs 5,500 crore by the end of this fiscal.

Centre to bring in law to regulate real estate in Delhi

NEW DELHI: The Central Government on Thursday said that it is considering a model legislation on regulating real estate in

Delhi.
In reply to a written question in the Rajya Sabha, Minister of State for Urban Development Saugata Roy said that 'the Delhi Real Estate Management (Regulation and Control) Bill' can also serve as a reference for other states.

The minister, however, ruled out the constitution of a regulator for real estate sector for the entire country, saying matters pertaining to local governance and land falls in the list of state subject as per the Constitution.

Real estate giant IREO to invest $500 mn in India

NEW DELHI: Global real estate giant IREO will pump in $500 million in various infrastructure projects in India over a period of seven years, the company said Thursday.

IREO, which has invested $1.5 billion in India, is already one of the largest investors in the country's real estate sector.

"Having already invested $1.5 billion, we still have another $500 million available in cash for further investments in our projects," Lalit Goyal, vice-chairman and managing director IREO, told reporters here.

The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune.

"We have already commenced construction of a five million square feet IT SEZ (Pune) and a three-million-square-feet housing project," Goyal said.

Added Anurag Bhargava, chairman IREO: "The Pune SEZ should be completed by next year."

The company has projects in many states including Haryana, Punjab, Tamil Nadu, Maharashtra and Delhi.

The company said it would develop an eight-million-square-feet housing project in the next 12 months.

RBI issues revised draft norms on commercial real estate exposures

CHENNAI: The Reserve Bank of India (RBI) has come out with revised draft guidelines on commercial real estate (CRE) exposures. The revision comes in the wake of doubts raised in certain quarters on treatment of specified exposures. The new draft is also necessitated by the need to align with the rules with the Basel-II framework.

The Basel-II framework has clearly spelt out the definition of income-producing real estate (IPRE) in para 226 of its framework. According to the Basel-II framework, IPRE “has a strong positive correlation between the prospects for repayment of the exposure and the prospects for recovery in the event of default, with both depending primarily on the cash flows generated by a property.” The apex bank has chosen to align the definition of commercial real estate (CRE) exposure with the Basel II prescription. Going by this, the RBI has clarified in its revised draft guidelines that “if the repayment primarily depends on other factors such as operating profit from business operations, quality of goods and services and tourists arrivals, the exposure would not be counted as commercial real estate.”

Source of cash flow

Any exposure would be classified as IPRE/CRE exposure if the “funding results in the creation/acquisition of real estate (such as office buildings to let, retail space, multi-family residential buildings, industrial or warehouse space and hotels) where the prospects for repayment would depend primarily on the cash flows generated by the asset.”

In any case, the apex bank goes on to clarify, “the prospect of recovery in the event of default would also depend primarily on the cash flows generated from such funded asset, which is taken as security.” For an exposure to be classified as IPRE/CRE exposure, the primary source of cash flow (that is, more than 50 per cent of cash flows) for repayment and recovery would have to be lease or rental payments or sale of assets.

The revised draft has also sought to clarify confusion vis-a-vis exposure arising out of ‘infrastructure lending’ to special economic zones. Certain types of exposures in respect of SEZs would have the characteristics of CRE exposure if the Basel-II approach is followed.

Lending to SEZs

In such cases, the RBI says, they would be simultaneously classified as both ‘CRE exposure’ and ‘infrastructure lending’. In such instances, the applicable risk weight would be that of CRE exposure (even if the borrower is Triple A rated).

The exposure, however, would be eligible for all the regulatory concessions available to `infrastructure lending,” the RBI clarifies.

An investment in the equity of a real estate company or a mutual fund/venture capital fund/private equity fund which invests in the equity of real estate companies would be sensitive to the movement in prices of real estate.

Further, they have correlation with the general equity market. Therefore, these would be reckoned both as capital market exposure (for the purpose of compliance with the regulatory ceiling fixed by the RBI) and the internal ceiling for real estate exposure fixed by the bank itself as required by the RBI norms.

Such exposures would attract a risk weight of 125 per cent (as applicable to equity exposures) or 150 per cent (as applicable to exposure to VCFs) as the case may be since these risk weights are higher than that applicable to CRE at 100 per cent.

“The exposure should be reported to the RBI under both the classifications with an appropriate footnote to avoid double counting,” says the revised draft.

Real estate promoters not enthused Assetventures

While the Union Budget revolves around the aam aadmi' the real estate promoters feel that the finance minister has overlooked housing
requirements. None of their expectations have been met, like tax exemptions on housing loans to infrastructure status for integrated townships (Sec 80-1A) and reduction in housing loan interest rates, said the head of aninternational real estate consultancy firm in the state.

But on the positive side, the budget focuses on infrastructure and providing more funding especially for highways and railways. Increase of fund allocation for the JNNURM scheme (Jawaharlal Nehru National Urban Renewal Mission), an excellent scheme, with 87% encouragement respectfully. These outlays will turn outcome if the government implement the infrastructure projects on time,he felt.

Another industrial leader was optimistic that, "The hike in infrastructure spending will be a huge boost for the real estate industry. Any increase in the spending on infrastructure results in an increase in value of real estate development.