Affordable housing to play a key role in 2010, says CREDAI

Affordable housing to play a key role in 2010, says CREDAI




Affordable housing segment is set to play a key role in India's real estate sector in 2010 on the back of a significant pick up in
demand, a top industry body has said.

"Affordable housing will be a key factor in driving the sector and we have already started working on progressive solutions in this area for effective and customized implementation of such projects," Confederation of Real Estate Developers' Associations of India (CREDAI) Chairman Kumar Gera said.

An upturn in the economy and the Government's ongoing efforts to push growth in the infrastructure are expected to help the sector regain the growth trajectory, CREDAI said.

"This year will be crucial for the housing industry given the Government's concern over the massive housing needs of the people, especially in urban areas," Gera said.

Noting that the economic recovery would help India's real estate sector to return to the 2007-08 level, Gera said 2010 is expected to be a positive year for the segment.

The revival is expected to be driven by infrastructure growth, which, in turn, can accelerate real estate activities both in the residential as well as commercial spaces, he said.

Facilities management is the next big thing in real estate space

Mumbai/Bangalore: When Jasmer Puri started his company 16 years ago, he used to shy away from telling his friends about his business. Having built Dusters Hospitality Services Pvt. Ltd into a Rs100 crore facilities management services firm, Puri no longer has reason to be embarrassed.

Facilities management refers to the maintenance and care of commercial or institutional buildings such as hotels, resorts, schools, hospitals or office complexes. The services include maintenance of electric fittings such as air conditioners and lighting systems, plumbing, cleaning, housekeeping and security.

With overseas companies increasing their presence in India, the real estate sector undergoing a revival and a growing emphasis on urban development and modernization of office spaces, the business is set for rapid growth, making it attractive for investors.

India’s facilities management market is valued at an annual $3.3 billion (Rs15,411 crore) and is expected to grow at a yearly rate of 25-30% over the next three-four years, according to consulting firm Netscribes (India) Pvt. Ltd.

“It is the biggest growth business in real estate spectrum in years to come,” says Anurag Mathur, managing director of Cushman and Wakefield India Pvt. Ltd, a commercial real estate services firm.

Dusters Hospitality Services counts the Taj and Marriott hotel chains, Four Seasons Hotel and JPMorganChase and Co. among its clients and has a presence in 15 Indian cities. Last month, the firm received Rs35 crore in funding from private equity firm TVS Capital Funds Ltd.

Other investments in this space include India Equity Partners and Beacon India Private Equity Fund’s investment of $33 million in A2Z Maintenance and Engineering Services Pvt. Ltd in October.

“As the property market grows, it will be difficult for the in-house management to handle FMS (facilities management services),” says Naushad Panjwani, executive director, facilities management, and project management, Knight Frank India Pvt. Ltd.

Such activities as housekeeping and maintenance services would be increasingly outsourced to service providers that are able to offer economies of scale and a cost advantage. FMS firms also deploy their own machines and equipment, ruling out the need for a client to buy anything, says Hanmant R. Gaikwad, founder of BVG India Ltd, an FMS firm.

“The advantage of outsourcing the FMS to these organizations is that they can service my needs all the time and I don’t need to worry about replacing people when they are on annual leave or they quit,” says Ranjit Deval, manager of administration at the Pfizer India Ltd office in Mumbai, which outsources its FMS to Knight Frank.

BVG, which received Rs40 crore from the Kotak Private Equity Group (KPEG) in February 2008, handles the facilities management for Rashtrapati Bhavan, Tarapore nuclear power plant and Hindustan Unilever Ltd.

“We were looking at infrastructure-services-related firms as a play and we clearly saw an opportunity in who was going to maintain all these places. We started looking at all the players in the FMS space and zeroed in on BVG,” says Nitin Deshmukh, chief executive, KPEG.

To be sure, FMS firms have no shortage of competition in a sector where entry barriers are low. Around 1,000 firms are competing for a share of the market in India, according to Netscribes. Local service providers often do not comply with statutory regulations, giving them a cost advantage over the organized sector, according to the consulting firm.

Meanwhile, realty firms are beginning to see FMS as a part of their main business. Anuradha Gandhi, business head, Property Solutions India Pvt. Ltd, the FMS business division of real estate firm Kalpataru Group, says, FMS is a natural extension of the core business of property development.

“It adds value and brings great edge to a company. If a property is not maintained well, its value goes down on its own,” says Gandhi.

Govt meet to help NRIs resolve real estate woes with developers

The ministry of overseas Indian affairs is bringing together real estate developers, government officials, both from the Centre and the states, and Indians living abroad in a first-of-its-kind seminar aimed at resolving property disputes in Delhi on Monday.

“The seminar would cover the role of different government and private agencies, measures to prevent disputes…and speedy way of disposal,” said a posting on the website of the Indian consulate in New York.

Indians living abroad are a “major source of foreign exchange remittances that has led to the present state of comfortable foreign exchange reserve in the country”, the posting adds, and a substantial amount of money earned by non-resident Indians (NRIs) is spent on buying property back home.

The ministry has been receiving a lot of complaints from Indians living abroad, mostly in the US, the UK and Canada, about properties not being delivered on time or usurped by local people, said Vayalar Ravi, minister for overseas Indian affairs. “This is an attempt to help NRIs and PIOs (persons of Indian origin) resolve disputes with property developers and state bodies in India,” he added.

The ministry is trying to start a “constructive dialogue” between NRIs and real estate developers, and include in it lawyers and government officials, according to an official responsible for holding the seminar.

“We need cooperation of the state governments as well,” said this official who did not want to be named because he isn’t authorized to speak to the media. “Only Punjab and Kerala have special cells to address problems faced by NRIs… We have been pressuring other states to start similar cells, launch fast-track courts and so on,” he added.

The meet could benefit thousands of NRIs, who on their own, can do little to pressure property developers to finish construction on time. Some have formed online groups to start collective bargaining but because they live abroad, haven’t had much success in securing their rights.

“It’s hard-earned money that we have invested back home,” said Asim Debnath, a US-based Indian who had bought a flat in a condominium in Rajarhat on the outskirts of Kolkata, which was sold only to NRIs. The property isn’t ready yet, and the developer is blaming the lack of civic infrastructure in Rajarhat township for the delay in completion.

“There isn’t much we can do,” said Debnath. “Local authorities and politicians do not seem to appreciate our concern.”

The attempt to bring together NRI home buyers and real estate developers should benefit “all stakeholders”, according to Pradeep Sureka, president of the West Bengal chapter of Confederation of Real Estate Developers’ Associations of India (Credai)—an industry lobby.

“But involvement of local government officials is crucial because real estate developers face a lot of problems with civic infrastructure, which slows construction,” he said. “While we are ready to be governed by regulations, we expect such regulations to be binding on agencies responsible for creating infrastructure.”

The seminar will give NRIs an opportunity to voice their problems, said Kaustuv Roy, executive director of property consultant, Cushman and Wakefield. However, such initiatives should be backed by strong legislation. “The biggest problem that overseas investors face is discrepancy between what is sold to them and what they receive in the end,” he added.

All about affordable housing

The city will host the annual MyBuild, an exhibition of construction industry, from December
The Builders Association of India, Mysore centre, has teamed with the Confederation of Real Estate Developers Association of India for the expo. The exhibition at the Chamundi Vihar stadium will be on till December 14 and is bringing builders, consultants and other key players of the construction sector on a common platform.

The aim is to showcase the recent trends in the construction sector, BAI Mysore centre chief S R Swamy said on Tuesday. "Since Mysore has emerged as one of the fastest growing metropolitan cities in the country with various developmental works underway, we are seeking to showcase them," he told reporters.

NICE MD Ashok Kheny will inaugurate the exhibition. Former minister Tanveer Sait and BAI state chief M S Nandakumar will attend, the organizing secretary N Subramanya stated.

The BAI will also hold a seminar BuildTech focusing on affordable housing. Urban development minister S Suresh Kumar will inaugurate the seminar, which will be on from December 11 to 13. Topics like architectural design, electrical design, latest materials and finance for affordable housing will be discussed. The meet will also focus on mistakes in the construction leading to wastage and look at the case studies, BuildTech chairman M S Ramprasad.

India's first private metro rail project is down, but not out

The Rapid Metro Rail Gurgaon (RMRG) Ltd -- India's first totally private metro rail project -- failed to get financial closure by November 30, 2009.
It is a Rs 900 crore project owned by IL&FS (74%) and DLF (26%) linking the DLF township in Gurgaon to Noida, covering a stretch of 5km involving six stations.

It was a disappointment for many who wanted this to be the precursor for clearing many other privately funded infrastructure projects in the country.Some view this failure to achieve financial closure with alarm, but there are others who see this only as a temporary setback.

After all, there are many who desperately want to see this project sail through. For instance, those who want Indiaâ's Commonwealth Games in Delhi to be an impressive show want this project to roll on.

It will complement the existing Delhi Metro Rail Corporation's network. Haryana's government too wants it, and has already given its go-ahead. IL&FS -- which has become one of the largest players in the real-estate sector both directly and indirectly (though several affiliates) -- lobbied hard to meet the deadline, as this project allow its investments in real estate to gain value.

It would pave way for IL&FS to become one of the biggest bidders for several other metro-rail projects proposed in India's cities. It would be a desperately needed morale-booster for IL&FS -- after it had burnt its fingers badly in the real estate and other development projects linked to Maytas in Hyderabad (IL&FS is now the majority shareholder of this beleaguered company).

DLF, India's largest real-estate player, also wants the RMRG because it would allow its landbanks and proposed townships in Haryana to get a significantly larger valuation.

So why could RMRG not achieve financial closure?

Not because funds were not available, says one analyst.

IL&FS has access to funds, and even now expects the financial closure to be achieved by March 2010.

The stumbling block was the non-clearance of permissions from the central government where its files have got stuck.

After all, once this project gets cleared, it establishes a precedent for other similar projects coming up all over the country.

It also paves the way towards ending the railways monopoly over the railway network.Today, the only semi private railway lines are those which are port linkages (thanks to the Adani group's Mundra Port).

Then there is the Mumbai Metro. Significant parts of this network are currently being constructed by the Anil-Ambani-Reliance group.

But Mumbai Metro is still owned by the state government, unlike the proposed RMRG.The land over which RMRG's rail lines are to be built is owned by DLF.Hence even the stations that come up will be managed by IL&FS-DLF.

In the absence of any clear policy of how to permit this, the financial closure could not be achieved. But many believe that such a policy should get cleared by the end of this financial year.

Significantly, such a policy is already being discussed in Delhi.It will allow for privatisation of airports, of major stretches of roads linked to real-estate-development-rights, and to the building of more metro rail projects.

This, say economy watchers, is an inevitable outcome of coping with India's infrastructure needs which could require money in excess of over$7 trillion (Rs 350,15,000 crore), several times India's annual GDP of $1 trillion.

The government does not have the money. The private sector can get it, provided it can actually own and run the project. It may be recalled that even the RMRG was to be originally developed by the Haryana government, but it went to the private sector because the state government did not have the funds. Ditto for several power projects across India.And ditto for several first class ports as well.

Backing such a policy are the ministries of roads and aviation. The Planning Commission
too is in favour of clearing such projects. Kamal Nath, Union minister for roads and highways has gone on record stating his preference to award large stretches of roads and highways to parties who can fund it themselves by earning money from real estate and development on either side of the roads.

This would effectively make the private sector mini-municipalities for some years, allowing them to introduce well-planned urban infrastructure, with suitable linkages. Praful Patel too has been lobbying for such a policy for allowing at least 200 private airports to come up across India.

Obviously such a policy, mooted by both ministries will require provisions permitting both land acquisition and protection from abuse of pricing (because all public utilities are essentially monopolies).

At the same time, fearful that they might lose clout, many elected representatives would
be reluctant to favour such amendments. But given India's desperate need for funds to finance both infrastructure and the creation of new jobs, the passing of such policies is likely to be just a matter of time.

Returning NRIs boost demand for residential property

An estimated 25 million NRIs living in 130 countries in remittance have remitted US$52 billion so far this year. In fact India topped the list of countries flow followed by China and Mexico, according to World Bank report on Migration and Development Brief.

Migrant remittance flow to developing countries will be around $317 billion this year. It was $338 billion in 2008, higher than the previous estimate of $328 billion. A substantial portion of the NRI/PIO investment was directed towards Indian real estate.

The impact of global slowdown, job losses and unviable job offers has necessitated a section of NRIs to return to Indian shores. Time was when Gulf NRIs were bristling with confidence on noticing certain Gulf countries like Dubai in the UAE, Qatar and Kuwait changing local land laws to permit expatriates to invest in local real estate.

While a few HNIs had invested, others could not afford the high cost of local real estate and felt that they were left out in the race. But times have changed now.

Murphy's law is at work in the global financial and realty markets. If something can go wrong, it will. No one who is familiar with the facts of Dubai's boom and its global dimension ought to have been surprised by the debt crisis that has hit Dubai World.


For the last one year, there have been far too many stories coming out of the region on real and potential bankruptcies, plans being shelved, excess capacity and inadequate demand.

The global financial crisis and the rollback in oil prices in 2008 were largely responsible for this. However, for the same reason, the moderation of the global slowdown and the recent rise in oil prices have helped improve sentiment in the region.

Lack of transparency, poor management of a financial problem and the long weekend seem to have done more to spook the markets than the real size of the problem itself.

Nevertheless, it is better to be forewarned and to hedge one's bets about hot spots like Dubai till the global economy is back on an even keel.

The government of Abu Dhabi has already stepped in with some reassuring remarks, even if these do not fully ease the situation for Dubai.

Informed analysts suggest that Dubai World has the capability to handle a large part of the problem it faces, given the better economics of its other subsidiaries like Dubai Port World.

It is the property subsidiary, Nakheel, that has taken the hit from the near 50 per cent fall in property prices in Dubai. State-controlled economies like China can absorb the shock of excess capacity in real estate better than a more market-dependent economy like Dubai.

As for India , the central bank and the finance ministry have made reassuring statements and it is possible that direct exposure of the banking system to Dubai World is limited.

However, there is a larger problem of stability and future of Gulf economies that India must think about. The growth engines of the region have fuelled the Indian economy for more than two decades now.

The slow pace of urban modernisation in India, especially in a city like Mumbai , has made city states like Dubai and Singapore attractive havens for an increasingly wealthy and globalised elite.

States like Kerala have become far too dependent on financial inflows from the Gulf. All those with this kind of exposure to the region must hedge their bets.

While it is true that the global financial crisis and the slowdown did not result in a decline in inward remittances from Indians abroad, it is possible that the so-called "flight to safety" factor may have been partly responsible for this.

Even now, Indians in the Gulf may step up homeward remittances as an escape to safety. In the medium- to long-term, however, India must find newer sources of foreign exchange inflow and not remain too dependent on workers' remittances.

Action on illegal PG properties Chandigarh.

CHANDIGARH: After conducting a detailed survey of unauthorized and illegally paying guest (PG) accommodations in the area, cops at the Sector-19 police station are ready to book and arrest owners of properties who are still not adhering to set norms.

SHO Ram Gopal said the operation would be launched within a day or two in sectors 18, 19, 20 and in Sector 21. He said raids and special checking would also be conducted in the early hours of scheduled days.

Notably, as many as 144 illegal and unauthorized PG accommodations were found during an earlier survey carried out by the Sector-19 police personnel along with members of resident welfare associations.

A senior police official said detailed report of unauthorized PGs was sent to the estate office for further action but nothing was done. Sources said fresh raids would be conducted by four different teams and this time criminal cases would be registered against owners. Action would be taken under Section 188 (disobedience of order promulgated by public servant) of the IPC.

Notably, UT administration has made several guidelines for PG accommodation owners and it is mandatory for property owners to follow these.

According to sources, around 300 PG properties are being run under the jurisdiction of Sector-19 police station comprising sectors 19, 18, 20 and Sector 21.

Majority of these paying guests are college/university students. Inspector Ram Gopal said the earlier survey was a warning to these owners but apparently some of them have not yet started following the norms.

IT majors worried about cascading effect of Dubai crisis

MUMBAI/BANGALORE: As World, the emirate’s investment firm seeks more time to repay almost $60-billion debt, India’s top tech firms fear that the once lucrative West Asia market for outsourcing can enter a prolonged recession and customers in other top export markets of the US and Europe may exercise more caution while making outsourcing decisions.

Tata Consultancy Services (TCS), Infosys Technologies, Wipro, HCL and Patni Computer Systems are among Indian tech firms serving telecom, banking and other customers in the West Asia region. Dubai, the biggest commercial hub in the region saw home prices plunge by nearly half from 2008 levels, reflecting the worst real estate slump during the global recession, according to Deutsche AG.

“Global confidence is coming back. We were hoping for more spends. But now the confidence of our customers is shaking. I expect they are going to be a bit more cautious about spends and will not open up so much. Budgets were getting firmed up in December—clients will now relook at the whole thing,” said a senior software executive with one of the firms that was looking at the West Asia and Africa as a growth markets. Publicly, though, few firms are willing to admit to these worries.

While Wipro counts Qatar Petroleum and Road and Transport Authority of Dubai among its top customers, TCS serves Saudi Telecom. Domestic rivals Mahindra Satyam also counts Dubai Municipality and National Bank of Dubai among its key customers in the region.

Real estate sales picking up in India with warning against price hikes

Low interest rates, a resurgent stock market and growing confidence in the economy is boosting the real estate market in India but analysts are warning that a sharp increase in prices could put investors off.

‘The residential market, including the premium segment, has rebounded quicker than expected.

We are seeing 2007 level prices again and a robust demand for houses in the $1 million range,’ said Anuj Puri, chairman of Jones Lang LaSalle Meghraj.

According to property consultant Ashok Narang the demand is coming from both investors who want to let out their properties and people who want them as homes.

‘Projects in the suburbs are doing very well and buyers have started flocking to even under-construction projects where bookings are taking place. Earlier, banks were reluctant to lend to buyers for incomplete projects,’ he said.

However, he warned that if prices spurted too fast, the market would slow down once again.

Aditi Vijayakar, executive director of Residential Services at Cushman & Wakefield, agreed.

‘The ideal graph should be gradual,’ she said.

Many major developers have already put up their prices this year and the rest of the industry is concerned.

‘If residential realty rates rise at this juncture it will take the market back to a scenario of stalled sales, similar to what was prevalent during the end of 2008,’ warned Pankaj Kapoor, CEO of real estate research firm, Liases Foras.

And realtor Ramprasad Padhi feels that there is not yet a significant revival in the market that could warrant price increases.

‘The marginal improvement in sales has been mistaken by some builders as signs of the next wave.

In reality, it has been a combination of pent-up demand and accumulated stock being disposed off at lower prices,’ he said.

Potential buyers, he says, will and do find the new increased prices unjustified.

’ But developers seem determined to test the market.

‘At present price increases seem to be limited to certain mid to high end projects, in preferred locations.

If the trend percolates down to a wider spectrum of market segments and locations, we may see prospective buyers once again display circumspection and hesitation to buy,’ said Pawan Swamy, MD (west India) at consultants Jones Lang LaSalle Meghraj.

India is at least a year away from the next real estate upswing, according to Chaitanya Parekh of the Soham Group.

‘In the second half of 2008, several developers started reducing the sizes of the units they offered, aiming for a different customer profile.

Now, if there is any increase in the price, the whole objective will be lost,’ he said.

DLF owners to buy out DE Shaw in arm Assetventures

The founding family of India’s largest real estate company has reached a deal with DE Shaw to buy out the hedge fund’s stake in DLF
Asset (DAL), an important step presaging transactions that could lead to a Singapore listing for the DLF affiliate in the first quarter of 2010.

DE Shaw will get a little less than $500 million from KP Singh and his family and privately-held DAL will most likely become a majority-owned subsidiary of listed property developer DLF, two persons directly involved in the transaction said.

DAL, which buys completed commercial assets from DLF, was set up as a Real Estate Investment Trust (REIT) controlled by the Singh family. A Singapore listing for DAL, which was to have happened in 2008, was shelved following the crash in the global equity markets.

The integration of DAL with DLF, which is expected to be completed by December, is being done to give the property developer access to the former’s revenue stream.

KP Singh and his family have bought DE Shaw’s minority stake for around Rs 2,300 crore ($500 million). The hedge fund had invested $400 million, equivalent to Rs 1,600 crore, in early 2006.

Cash-strapped DLF, whose sales fell by over 50% to Rs 1,810 crore during the quarter ended September, has set itself a target of nearly halving debt to Rs 6,500 crore this fiscal year. Revenue from DAL, which at one time accounted for over a third of DLF's sales, has dried up.

DLF expects to get Rs 4,500 crore through the sale of non-core assets and has already raised Rs 1,064 crore in the first half of the current fiscal.

DLF has been working on the integration of DAL with itself for some time, a person with knowledge of the development said, adding the valuation will depend on the report of a panel of independent directors.

A DLF spokesman said the company "does not comment on market speculations."

Since 2006, DAL had acquired commercial assets valued at over Rs 11,000 crore from DLF. It has raised some Rs 5,000 crore ($1.05 billion) from hedge funds and owes DLF around Rs 2,000 crore.

In May, the Singh family mopped up Rs 3,800 crore by divesting a 9.9% stake in DLF to buy out the investment by DE Shaw. But the deal got
delayed due to a tax hitch: since DAL was not a listed entity, the hedge fund was required to pay capital gain tax on the profit. This issue has now been resolved.

After the exit of DE Shaw, a DLF subsidiary will finalise the purchase of the promoters' entire holding in DAL through a complex share swap deal. The deal is being routed through a subsidiary as the promoter holding in DLF is above 75% and any issue of fresh shares to promoters is not allowed under listing norms. This effectively means that DLF will issue fresh shares of its subsidiary to the Singh family, said one of the officials.

A source said that the value of DAL would be around Rs 9,000 crore. After adjusting for DAL's liability to DLF, loans from banks and the investment by Symphony Capital in the form of preference shares, the net value would be around Rs 2500 crore against which the shares of a subsidiary company will be issued to the Singh family.

London-based hedge fund Symphony Capital has invested $650 million in DAL through convertible preference share in two phases.

The company has started discussions with overseas investment banks for DAL's Singapore listing, a banker said.

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.

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.

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.

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".