Overseas Indians face big problems when investing in Indian real estate

New Jersey-based Client is embroiled in a bitter dispute with her own family members over a 10,000 sq ft property in Gurgaon.

"I had invested in the property in 1999 and issued a limited power of attorney to my brother to oversee the construction on the site. My nephew was employed by me with a salary to help with the construction of the house. My investment is a few crores, but since 2006 my brother and his family have taken over illegal possession of my house. And because I don’t live in India they have bribed the local agencies, and I’m not able to get my property back," she says. There’s hardly anything unusual about this episode, except when you learn that Verma is a lawyer herself.

"The local police and courts have not helped me in any way even though I have approached them and since I have a law practice in the US, I can’t spend too much of time here fighting against my own family," says a desperate Verma. While it is ironic that a legal expert finds herself in this situation, many other prominent overseas Indians too encounter similar problems while investing in Indian property.

It could start with a dream to own a modest home in one’s country of origin. Or it could even be an emotional bond that a second generation person of Indian origin feels with her parents’ homeland that makes her seek transfer of title of family property willed to her in a village in Punjab. Or it could turn into a poignant court battle by an aged NRI couple which wishes to return home from the West but find that unscrupulous land-grabbers have taken possession of their apartment in Mumbai.

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.

Commercial property market may revive post-Diwali: Assetventures

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

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

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

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

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

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

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

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

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

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

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

Mumbai builds up its low-cost housing

They say it is easy to find everything in Mumbai except for a house.
For 35-year-old Agnelo Fernandez it could not have been truer.
Fernandez and his wife live in a small one room tenement which is less than 180 square feet.
It is in this cramped room that they cook, bathe, entertain and sleep.
They are not exactly poor but Fernandez's salary of $160 a month as a driver cannot get him anything better.
His neighbours - some of whom work as clerks, others run their own small business establishments - make similar money.
"I'd like to move to a better place but with my salary I won't get anything better," Fernandez says.
"I can't afford to buy anything within the city."
Crowded city
He is not the only one.
There are millions of people who live in houses like this across Mumbai.
Entire families live together, with little or no privacy as husbands, wives, grandparents and children all jostle for space.
And because the houses are crowded, the narrow alleyways serve as makeshift sinks, playgrounds and even bathrooms.
But while the thought of owning a home may seem a million miles away at present, that might be about to change.
Faced with a slowing housing market, several builders in the country are switching from premium homes to focusing on more affordable ones.
Earlier during the boom times of India's real estate market, almost all were building swanky apartments for the rich because of the big returns they generated.
But now the high rises with swimming pools, gyms and Italian marble floors are giving way to plain structures with basic amenities that people from lower and middle-class incomes can afford.
'Comfortable prices'
One construction firm, HDIL, has tied up with the government to build over 100,000 new homes.
"What we did over the last four years from 2004 to 2008 was that we made it highly unaffordable and drove nearly 85% of the market out," says the company's managing director Sarang Wadhawan.
He adds that aspiring homeowners in the lower-priced segment of the market were not buying property because they were saving money.
Today that means they have a good cash flow and, after a 25% to 30% drop in prices, are willing to start spending.
"What we have seen is that prices have come down to 2004 levels. At this price level they are very comfortable," Mr Wadhawan says.
Pluggable gap?
Estimates suggest that India has a shortfall of more than 25 million low-cost or affordable houses.That is why companies like HDIL and rivals such as Tata Housing are entering this market.
However, even if each company builds 100,000 houses every 5 years there will still be a massive shortfall.
And with demand outstripping supply to such an extent, some analysts wonder if the gap can ever be closed.
That is why the government is so keen for the real estate sector to focus on affordable housing.
The construction industry has cottoned on to this fact and is pushing to get tax breaks in the forthcoming budget in return for working on the cheap end of the housing market.
Signs of recovery
Anuj Puri, chairman of property consultancy JLL Meghraj, says there is plenty of demand in the sector.
"Even in the lowest times, I'll call it the dark nights, from October until March when there was a bad period, there was demand for affordable housing," he explains.
But while he is optimistic that builders will keep producing low-cost housing in the midst of the downturn, he is not sure if they will be so keen to carry on when the market picks up again.
Already there are signs of recovery in India and developers may switch back to premium housing because of the big gains involved.

That will not be a welcome development for the millions of people who live next to high rises, in small houses in cramped alleyways.
They have fixed jobs and earn regular salaries.
All of them want to move to a better house. A place that they can call home and live in comfortably.
But that could remain a dream if companies here are not serious about the shift from premium to affordable housing.