Thursday, September 24, 2009

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 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.

Wednesday, September 23, 2009

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.

Saturday, September 19, 2009

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.

Wednesday, September 9, 2009

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.

Thursday, September 3, 2009

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.


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 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.