Tamanna Farms

Tall is beautiful for realty players in Mumbai

The latest to join the growing list of skyscraper builders in Mumbai is a local land owner, R M Batthad, which has tied up with IL&FS. It has firm plans to construct seven to eight towers, each with 90 floors, over a 19-acre plot in Sewri that was part of the erstwhile mill district in central Mumbai.

IL&FS, which also manages a real estate fund, has already invested Rs 100 crore in the project and will scale up its investment in the coming days, a person involved with the project said. A senior IL&FS executive confirmed the development. Though the exact cost of the project is not known, it is likely to generate Rs 15,000 crore in revenues, the person added. Real estate brokers said the project is set to be launched within two-three weeks.


BSE NSE
Price



Also Read

Related Stories
News Now



- Realty players bet big on homes for the aged
- Realtors seek rationalisation of FSI, tax sops
- Realty players' hospitality projects hit by downturn: JLLM
- Realty players cheer incentives on home loans
- Pedal power
- India presses US to grant access to Headley


Also Read

Related Stories
News Now




- Markets: Momentum continues
- Manohar lashes out at Modi, says Amin was not part of bid
- After a struggle, G20 agrees on need for deficit cuts
- Linseed oil rises on good demand
- Govt carefully assessing Naxal situation: Antony
More




Just yesterday, the Lodha group, which made news last week by winning the bid to buy a six-acre plot in the country’s largest-ever land deal, announced its intent to build the world’s tallest residential tower. The 115-storied apartment block on a 17.5-acre plot of the defunct Shrinivas Mill is planned in Lower Parel, a few kilometres away from Sewri.

Lodha is also planning to start work on a tall residential project in a six-acre plot in Wadala, for which it submitted a winning bid of over Rs 4,000 crore. The developer will hold a preview for the 115-storied Lower Parel apartment block on June 8.

A few metres down the road, DLF is ready to launch what is being billed as ‘Mumbai’s largest luxury residential project’. The project will have 1,000 apartments in three buildings, with 80-90 floors each. Each apartment in the complex will cost Rs 5-10 crore, real estate brokers said.

In central Mumbai, DB Realty is also developing an 80-storied residential complex, Orchid Heights. The developer is planning another project in Charni Road, south Mumbai, which will have around the same number of floors.

Towers in the air?
While there is a race to announce the launch of the city’s tallest structure, market players warn that many of the projects might not materialise. “It is more to do with creation of hype when sales are down and prices are stagnant,” says Pankaj Kapoor, chief executive of realty research firm Liases Foras.

The Mumbai Metropolitan Region Development Authority (MMRDA), which had announced plans to build a 101-storied building in Wadala, shelved it due to a poor response from developers. Instead of the proposed commercial complex, MMRDA then bid out the land, for which Lodha emerged the top bidder.

The Imperial, the 60-storied twin towers developed by Shapoorji Pallonji and Dilip Thacker at Tardeo, is at present touted as the country’s tallest residential building. Even this project took nearly a decade for completion, due to litigation and a lengthy approval process.

A necessity, not race
“In a city like Mumbai where land is scarce, the only way to build a project is to go up,” says Anand Narayanan, national director, residential agency at Knight Frank, a property consultancy.

Though the floor space index (FSI), the permissible construction on a plot of land, is capped at 1.33 in Mumbai as compared to 6-9 in Hong Kong and Singapore, an FSI of up to four is permitted in redevelopment projects. So, developers are attracted to build up to four square feet on every square foot of land on which a textile mill, an old building or a slum once existed.

“It is more of a necessity than a competition. You can also develop better infrastructure around it,” says Suleman Budhwani, vice-president (business development) at Shapoorji Pallonji, which developed The Imperial towers.

However, analysts see the so-called race as just a fad. Kapoor says, by going taller, developers plan to sell more area to home buyers, which they generate by building balconies and terraces that are free from FSI restrictions.

“Though it is good for a city like Mumbai, there is a big gap between claims and implementation,” he says.

However, the slowdown in Dubai property has come as a blessing for Indian developers, who are planning to build large developments. According to Narayanan of Knight Frank, all of Dubai’s technical and construction teams are available to work in India at nominal costs.

“Four years ago, they were not even willing to look at India,” he says. For the moment, the developers are trying to reach for the sky.

Property titling has to extend to everything

New Delhi: Peruvian economistHernando De Soto has pioneered the concept of empowering the poor with the use of market principles of property titling. This single action managed to blunt the extremist threat in his own country. De Soto was in India recently to participate in a day-long session on inclusiveness, hosted by the Federation of Indian Chambers of Commerce and Industry (Ficci). Alongside, he met Prime Minister Manmohan Singh, senior government officials and politicians such as Congress general secretary Rahul Gandhi. The government will be consulting him to fine-tune its strategy to make the economy more inclusive. The economist spoke to Mint on a range of issues, including his conversations with officials and impressions of Gandhi. Edited excerpts:

What brings you to India this time?

I was invited by Ficci to give a few conferences and to meet a few people in government that had an interest in the sort of things I was talking about. I just met your Prime Minister (on Saturday). We talked about his projects of inclusion. And he felt that I could be of assistance to them during our discussion and if some of the things that we had learnt that worked and didn’t work in the world could be of benefit. So we have agreed that I would write up something to that effect and we will meet very shortly again.

I’ve also had a very good, frank talk with Rahul Gandhi. And I will also be meeting three or four of your ministers, explaining what it is we do, because India very much wants to get into the inclusion programme, and we know inclusion. This time I’ve toured a lot of slums and in Mumbai I was accompanied by the press and they say: “What do you find particular about India?” Well, apart from the fact that I saw much of the scenes I’d envisioned in Slumdog Millionaire, which was of course thrilling to see, the reply is not much. It’s pretty much the same reality.

What gives you the impression that this government is serious about inclusion?

The first thing is it’s an important government. I mean, this is not a government of a Central American country with a population of five million. This is the Central government of a country with nearly 1.2 billion. So the government, I suppose, doesn’t get into a subject unless it is a crucial subject. To me, it is quite clear in my discussions with them that they have identified the problems. Everything I have seen in my talks with your Prime Minister and with all the government officials I’ve talked to or members of Parliament, they’ve got a clear idea where the problems are and I got the feeling that we can contribute.

What are these problems?

They are of various sorts. One of them is how you tackle the issue (of poverty). There are some people who believe that what you should do is give away property titles. That is not the way it works. That’s a Western way of looking at it; the Western world in the 21st century. To make it really simple, if you go to somebody that I have seen in Dharavi and you say I am going to give you security over your home, he will say thank you, but he won’t say much. He’ll take that piece of paper and he will slip it in the desk and not recirculate it again.

Why? Because from what I have seen in Dharavi, he not only has a home, he has an industry. So his question will be, you are telling me that it’s okay to have my home, but you’re not telling me if my industry is okay and you’re not telling me what you’re going to do with taxes. So, you cannot title homes in developing countries. You got to title everything.

Today, in the West you can say that, because you live in one place and you work in the other. But in the 19th century, Americans had industries in their home too. And they didn’t go around just titling homes. They did the whole thing. The first thing, no titling process of homes is going to work unless you include all other aspects of life—commercial, business, identity, credit and you wrap it up. We learnt that the hard way. It doesn’t work.

So what is the solution you will offer?

The discussion we had in Mumbai was how were you able to defeat terrorists in Peru, (for) which I designed a policy. For example, I found out that the Shining Path, the Maoists, were protecting the assets of the poor. How can a group that is murderous get the allegiance of poor people unless it is doing them a service? You have to look for a reason. So I said, if I were Indian, what were the services that they were giving. And you will find out that it is exactly the formalization of everything.

Because the government can’t give it, doesn’t know how to give it—it wants to, but hasn’t yet found out—well, the terrorist groups will give it to them at gun point. And so, anything that you are looking at that you don’t like in India—you want education, you want clean water, you want all sorts of things. The issue is, can you do any of the things that creates the wealth to get that without one way or the other getting property to people and my reply is still—no.

This holistic vision runs contrary to what the government does in practice, which is direct cash transfers that helps it politically. How does this contradiction play out?

Well, you know, I have a good case, because I have thought it out and because I dedicate a lot of time to it. But I still don’t pretend to have a silver bullet. So I’m not saying that what we do is the only thing you have to do. And a lot of the solutions I propose are rather medium- to long-term simply because to identify the assets of everybody is a major issue that requires all sorts of information and incentives in place.

And governments have to, in the mean time, do something to keep the short-term alive. You remember the Keynesian thought that in the long term, we’re all dead. So you have to do something. So, I cannot talk about the Indian government about what it does. All I can tell you is for the medium-long-term, I think from all the people I talk to, I see eye to eye.

What is your impression of Rahul Gandhi?

Oh, I liked him. I felt sincerity, a real concern. All of his questions were, “How do I, how can I, how can the government help assist the poor in ways that we do not know.” Now, that to me is already pretty good because the tendency of anybody who is a politician in such a large country—you’re not just any politician. And especially if you come from a smaller country like I do.

It’s happened to me with Brazilians. When you talk to the highest level, well, I can assure you that (Brazilian President Luiz Inacio) Lula is going to say, “What do I have to learn from somebody who comes from a smaller country.” And so, when you come to a country that is seven times bigger than Brazil, and the person says you may have seen something that we didn’t, I come out well impressed.

You are aware that India has launched a huge programme to give an ID to every citizen.

Absolutely. The general idea behind this is that when you look at developed countries, even say Germany, 130 years ago, it was 50 or 60 little countries. But since then, it has become a country of 80 million and the world’s become a country of seven billion, and there’s just no way we can get to know each other if it is not through documentation. And documentation means identity.

The property system is one of many ways in which you are able to identify. It doesn’t tell you as much about the biometric distance between your eyes and ears, but it essentially tries to tell you a little bit about what you own, what risks you run. It gives you a history of the asset; and because the asset changes hands, it also gives you a history of the transactions and the enterprise. So when you are talking about identity, of course what you want to know is where are the one billion and 100 million Indians and how can I find where they are to help them better... I would consider, as I said before, anything that relates to property formalization or business formalization is a close cousin of identification, because it is essentially about knowing how things relate to each other.

Since your visit to India in 2007, the world has undergone a dramatic reality check on market economics. Do you still believe in the power of the markets?

I asked my friend Chris Cox, over in 2009, who was chairman of the Securities and Exchange Commission, how much there was, of these derivatives. And he brought out a reply in an article saying his estimate is that there were $600 trillion (Rs27,840 trillion today) of them. Now to get an idea what this means, the whole production of the United States—the GDP (gross domestic product)—is $13 trillion. The whole production of the world altogether is $55 trillion. So $600 trillion is nearly equivalent to 12 times the production of the world. That’s a lot of money..., but it’s not written.


But now, we are going to find that truth will be established. I figure, the next two-three years, as all of a sudden everybody starts beginning to understand that the recession we’re facing, is basically an epistemological crisis. It’s the lack of knowledge of how much paper there is representing wealth that could be either very deflationary or very inflationary... So I maintain my faith in markets that are ruled by law. When markets are not ruled by law, they become shadow economies. And what is surprising since the time you and I last met, is that I would have expected a developing country to produce the biggest shadow economy. It is the West that has produced the largest shadow economy.

What happens to your thesis of empowering the poor through the power of the markets, when the market itself is undermined in this manner?

It works better than ever. Because what I’m telling you is, look what happens to countries where they don’t have property rights. They get into a crisis. All I’m telling you is, the poor are in a permanent crisis. If the poor had their assets identified, over time, they would become a lot more interesting than even these derivatives. So my argument is that everything that is secure and identified is a lot better than anything that is insecure and unidentified.

Do you believe that market economics are a natural corollary to democracy?

Yes. Very much so. In one case you are accepting political vote, an independent vote; and in the other case, you are thinking of an economic vote, which is, do I buy this or do I buy that? So, I do think that they are complementary. I don’t think that market economics means that there’s one model. There are many models. So you’ve got the Norwegians, who believe in lots of government, lots of government services, generally high taxation, the Nordics generally do it. And you’ve got others like the Americans, who don’t even want a national identification system, they want to be so independent from government.

So within the market economy, you’ve got all sorts of variants. You also have a lot of political variants. The Swiss have seven presidents at the same time. The Americans have a president, the British have a prime minister, but not at all like the Swedish prime minister. So, they all come in different variants. Yet, in each of them there is a degree of freedom of choice.

Real estate players line up demands from Budget ‘10

Real estate players line up demands from Budget ‘10

Developers are re-calculating the upwards swing in the real estate industry, especially housing, provided Government pays special attention the
sector. Various developers voice their expectations from Budget 2010.

AVNISH AGRAWAL, DIRECTOR, MERITON GROUP

Talking from common man's perspective, the bank interest rates should be stabilised. Most importantly, stamp duty should be reduced as it puts financial burden on the buyers; it would be a real relief for the common man who has to bear the burden. Besides, for the new projects many clearances are required; if they can be done through a single window, it will be a major breakthrough.

VIJAY JINDAL, CMD, SVP GROUP

Expectations from the budget are very high. We need something that will help the real estate sector to grow leaps and bounds. Government should take steps to bring more transparency and simplicity to the processes involved in the real estate. Affordable housing must get maximum support from the government. The authorities must understand that the demand is for affordable housing and we need to bridge gap between demand and supply.

ABHISHECK LODHA, MANAGING DIRECTOR, LODHA DEVELOPERS LIMITED

We expect the finance minister to provide specific tax incentive and rationalise stamp duty registration charges, which will lead to further investment in affordable housing projects, which would in turn drive urban development. The budget should make high-priority provisions for the laying down of the necessary infrastructure so that new areas can be opened up. This should result in creating and linking up satellite settlements to main cities that will help tackle the demand-supply mismatch.

Further, we look forward to flexibility in FDI norms. Additionally, the budget should offer clarity on the introduction of a real estate regulator, which may not necessarily decide on rates, but should put down firm principles in terms of property dealings and also quality parameters in terms of rating of constructions.

RAJIV SINGLA, MANAGING DIRECTOR, MAPSKO GROUP

Indian real estate sector is passing through a transition phase, where every eye is lying on budget 2010 as the tool to heal the loss. The finance minister needs to focus on offering easy interest rates with more flexible EMIs so that middle class people can come forward to buy their dream house. We should also target foreign investors or NRIs to invest their money in India.

Ashwini Prakash, executive director, Paramount Builders

I expect a lot from the budget 2010-11 as it can be used as an important step by our government to bring real estate market back on the track. I strongly feel that finance minister would certainly work on promoting real estate investment through various fiscal tools like, continuing income tax rebate on home loans.

And at the same time interest rate on home loans should be made more affordable to bring it up to the reach of a common man. In the last two years IT sector and the real estate sector have been the most affected areas and in order to reconcile the earning capacity and to build a sense of security for citizens the government should offer some aid packages to these sectors in Budget 2010 like the US government did.

J K JAIN, CHAIRMAN, DESIGNARCH

The budget must think seriously on decreasing the excise duty to decrease the costs of infrastructural projects. The current economic situation requires the sector to be revived so that the demand for the housing industry increases. To achieve this, the government must look at reducing the property and related taxes along with the taxes on cement and steel, which together contribute to the growing infrastructure needs.


Besides, the realty sector would definitely expect some cuts and provisions in the license fee and the service tax being levied in order to
revive this ailing industry, apart from measures by the Government to reduce the interest rates on loans to the housing sector. Also, amount of rebate must be increased by Income Tax department for housing sector.

ANIL KUMAR SHARMA, CHAIRMAN, AMRAPALI GROUP

As real-estate sector in India contributes five to six per cent of our GDP growth, the sector needs special attention. Our expectations are not very high but are rational. Government must think seriously about low cost housing. Since the stimulus package, bailed out the Nation from recession, we expect that same should continue for at least two more fiscal years.

GAURAV GUPTA, DIRECTOR, S G ESTATES LTD

While developing the housing for low strata income category, for example, economically weaker section (EWS) and lower income group (LIG) housing, the developer is not able to utilise entire floor space index (FSI) since the height is kept at ground plus three to keep the costing low. So amendment should be made for the balanced FSI usage. In the same lines, some cross subsidisation can be called for, such as refunding the stamp duty to developer once the project is complete.

If sec 80 (IB) is restored, nothing like it. Under Section 80 IB (10), in the case of construction of housing projects, 100% of the profits derived in the previous year from a housing project can be deducted if the total commercial space in the project did not exceed 5% of the total built-up area or 200 sq ft, whichever is less.

ASHOK GUPTA, MD, AJNARA INDIA LTD.

The finance ministry has allowed external commercial borrowing (ECB) in realty projects, which includes integrated townships of 25 acres or 50,000 sq m. However, the Reserve Bank of India has not yet notified it. ECBs should be permitted for funding construction costs of at least those real estate projects which qualify for 100% FDI.

I would expect that limit of Rs 1 lakh specified for deduction for repayment of principal amount of a home loan for self occupied residential property should be extended to Rs 2 lakh.

I also wish that extension of tax holiday for housing projects under Section 80 IB (10) should be allowed for conceptualising of new projects while also encouraging more projects to come up in view of the incentive that would be coming.

Budget hopes of the real estate and infrastructure sectors

Budget hopes of the real estate and infrastructure sectors

The global economic meltdown radically impacted the infrastructure and real-estate sectors, reminisces K. T. Chandy, Senior tax professional, Ernst & Young. The decline in demand, the supply excesses, and the high debt position of most Indian developers were some of the factors that contributed to the decline of the real-estate sector over the last two years, he adds, during a recent pre-Budget email interaction with Business Line.

The Budget should come up with measures that can offer the much-needed stimulus to the real estate and infrastructure sectors for sustaining broad-based and inclusive growth, Chandy argues.

Excerpts from the interview.

On the impact of stimulus packages

The fiscal stimulus packages introduced by the Government did help the sectors achieve greater liquidity level, but did little to improve retail demand. It is important that the sectors continue to receive Government support through tax policy, which will help the sectors move firmly towards the path of economic recovery.

Budget 2009 surprisingly had very few proposals that directly benefited the sector despite the fact that the global crisis was at its peak and the real estate and infrastructure sectors were more badly affected than most other sectors. The sectors are hopeful that this time around, the Finance Minister will be more responsive to the needs of the sector.

The re-introduction of direct and indirect tax incentives would go a long way in meeting the current challenges faced by these sectors.

On affordable housing

The resurgence of the affordable housing segment has resulted in a win-win situation for developers in terms of improving demand, for consumers in terms of affordable real-estate, and for the Government in terms of meeting its objectives of providing quality housing to the population at large.

Given that the margins derived from the affordable housing segment are lower than the mid to luxury segments, the Government would do well to re-introduce the tax holiday available for low-cost housing that had lapsed on March 31, 2008.

On sops for infrastructure projects

On the infrastructure front, presently, a tax holiday is available for profits from infrastructure projects such as roads, highways, water supply projects, ports, airports and so on. Budget 2010 should extend the scope of the tax holiday to include projects involving development of integrated townships, which we believe will certainly provide a fillip to such large developments.

Further, while several infrastructure projects are eligible for tax holidays, the same projects are liable to tax under the Minimum Alternate Tax (MAT) provisions. This besides being inequitable has an adverse impact on cash-flows.

It would be a welcome relief, therefore, if such infrastructure projects were exempted both from normal corporate tax provisions and the MAT provisions in accordance with the spirit of the policy to exempt projects with long gestation periods.

On service tax woes

The abolition of service tax on commercial real estate would also be welcome relief to the real-estate sector and for consumers of such real estate. Currently there exists quite some uncertainty on whether the levy is applicable given judicial precedent on this issue. While the tax office seems to be enforcing the collection of such service tax on rentals, a legislative amendment doing away with the levy would help significantly reduce litigation on this matter.

On other policy measures

To improve liquidity and as a matter of policy, the Government may consider broad-basing the external commercial borrowing (ECB) regulations to include other eligible real estate borrowers to tap overseas debt opportunities besides integrated townships, which is currently permitted. This would help the infrastructure/ real estate community invest into new projects and would give the sector sufficient time to repay the loans.

Also on the policy front, it would help if Press Note 2 of 2005 is suitably relaxed to factor in the economic circumstances that have been faced by the real estate sector over the last few years. For example, a clear process could be formulated for a foreign investor to exit investments, which do not appear to have current economic potential.

NCR, Mumbai record strongest demand despiteNCR, Mumbai record strongest demand despite hike in prices hike in prices

The real estate sector has underperformed the Sensex by 16% in the past one month on concerns of the Reserve Bank of India’s (RBI) hawkish stance towards the sector and likely increases in mortgage rates. Our analysis of Mumbai’s apartment registrations data reveals that demand remains strong despite 5-30% rise in prices in the past five months. Thus, while prices in many pockets in the city are at their lifetime highs, registrations in October were the highest in almost two years. This leads us to believe that residential demand in metros has strong tailwinds and is unlikely to be affected materially by a small increase in mortgage rates. Our top picks are DLF Ltd and Housing Development and Infrastructure Ltd.

RBI increased the risk weightage on commercial real estate lending by 100 basis points (bps), which is likely to result in a 50-100bps increase in borrowing costs. Mortgage rates could also come under pressure, owing to inflation-related concerns. Headwinds of higher prices and mortgage rates are likely to weigh on real estate demand.

However, October was the strongest month in almost two years: Apartment registrations turned in strong numbers for the fourth straight month in October. Registrations during July-October were the highest since January-April 2007.

We believe a 50bps increase in mortgage rates will have marginal impact on affordability. This, in our opinion, is unlikely to have a meaningful impact on demand. We prefer developers with city-centre-oriented projects in Mumbai and the National Capital Region—the two metros that have recorded the strongest revival in demand.

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.

Godrej to build India's first green township in city

Godrej Properties Limited (GPL), a real-estate arm of conglomerate Godrej Group, will launch indias largest green township in january.
The eco-friendly project is coming up near Nirma University on Sarkhej-Gandhinagar road.

Adi Godrej, chairman Godrej Group, said that GPL has inked MOU with Clinton Climate Initiative (CCI) programme for the Ahmedabad township project to be developed in a joint venture with local partner Siddhi Group on about 225 acres of land.

Godrej was in town for the company's forthcoming IPO. Interestingly, Godrej Garden City' (GGC) is one of the 16 real-estate projects in the world selected by CCI, for climate positive development. Godrej group is also founder member of Indian Green Building Council (IGBC). The company will avail green building ratings for GGC from leading agencies.

The project will completed in a phase manner over next ten years, ending with 20,000 dwellings in the price ranging from Rs 20 to 35 lakh during the initial phases. However, the company also plans to build smaller flats worth Rs 10 lakh in the later stages, he said. The work for the first phase is expected to finish in the next two years with 500 dwelling units, mostly two and three BHK.

Apart from the use of solar power, water recycling and harvesting, GPL would use fly-ash bricks and develop many gardens, including a 10-acres park, said Milind Korde GPL, managing director. Amenities like sports complex, club house, schools, hospitals and high street shopping areas are also planned, he added.

Hyderabad based MP Rao, a green building expert and member of IGBC steering committee, said that as of now there is not a single green-integrated township in the country. In fact, IGBC is working on a draft for Green Neighbourhood Rating System to give ratings to upcoming townships, said Rao.

Dubai crisis to hit 200,000 Indians

About 200,000 Indians will be affected due to the Dubai crisis wherein real estate and construction sectors have taken a major hit, according to Associated Chambers of Commerce and Industry of India (Assocham) past president Anil K Agarwal.
Releasing a paper on 'Indo-Gulf business opportunities' here on Tuesday, he said the crisis in Dubai was a temporary phenomenon and will wane away with support from the government and others sectors.

The Gulf Cooperation Council (GCC) countries - Bharain, Kuwait, Oman, Qatar, Saudi Arabia and UAE - present a lot of trade opportunities for India, he said. The Assocham has been promoting India as an investment destination for infrastructure, biotechnology, power, roads, IT and allied sectors. It has also created an Andhra Pradesh Investment Cell to attract investments to the state.

Dubai: 6 months too short to restructure Dubai World

"Investors in the GCC countries are not willing to invest in the US. They are looking at Asia, particularly India, for utilising their monies," Agarwal said.

India was negotiating for a comprehensive economic cooperation agreement with the GCC members. The free trade agreement for goods that India and GCC is likely to be finalised will give a boost to trade, according to Assocham secretary general DS Rawat.

The Arab countries account for 20 per cent of India's total trade and are a source for two-thirds of its energy requirements. Currently, over 5 million Indians are working in the GCC countries.

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.

Dubai debt crisis will have limited impact

Dubai's debt crisis has rattled markets across the world as the problem revived worries about the health of the global financial system. Although the exposure of Indian companies and banks to the Emirate is negligible, concerns linger about the fallout on the broader economy.

Dubai World, the investment conglomerate of the sheikhdom at the centre of the crisis, has a debt of $59 billion — a major component of Dubai's total debt of $80 billion.

Authorities from Dubai to New Delhi have tried to play down concerns, but there is fear a sovereign debt default - should it happen – could have a cascading effect on the global financial markets.

Broking firm Geojit BNP Paribas has a large presence in the United Arab Emirates. Its West Asian joint venture Barjeel Geojit Securities LLC is headquartered in Dubai. Mr C.J. George, CEO of the firm, spoke to Business Line on the likely impact of Dubai World's current debt trouble on Indian markets, NRI inflows and on his own business in the Emirates. Excerpts:

Dubai World's debt crisis impacted the Indian markets on Friday. Will it continue to haunt the Indian markets?

The panic reaction we saw during the opening of the market on Friday was on account of the absence of any firm indication from Gulf markets due to Eid holidays. International investors do not perhaps worry too much about the impact on Indian markets. India has never been bracketed with GCC countries in the past and, hence, there will be more mature reaction in equity markets in the days to come.

Do you expect major selling by FIIs in the Indian market?

One of the most significant outcomes of crisis-ridden global financial markets during the last two years has been a growing recognition of India's uniqueness. FIIs have a more balanced and knowledgeable view of India today than in 2008. Hence, there is unlikely to be major FII selling. If that happens, there are others waiting to buy.

Will the crisis impact the NRI inflows?

There will be increase in inflows in the short-term since NRIs may consider India as a safe haven than domestic bank deposits in UAE and perhaps GCC. However, any protracted crisis can lead to job losses and business closures with impact in the medium term. In the long term, Dubai will continue to attract talent from India apart from unskilled workers, as the city will continue to be the centre of a booming GCC as long as oil is a precious commodity and Dubai is a tax haven with modern infrastructure.

What will be the impact on Kerala given the number of people from the State employed in Dubai and other Gulf countries?

During the last one year we have seen some amount of job losses leading to the return of many NRIs from Kerala. However, as Abu Dhabi started massive construction projects, a large number of them have shifted base from Dubai to Abu Dhabi. Today construction workers are shifting to Saudi Arabia as well where there is a real estate boom driven by real residential demand.

I am of the view that the worst is over for Kerala, as the current crisis is likely to be managed between Dubai and the federal government. The UAE and GCC cannot afford to leave this debt restructuring unsuccessful particularly with ample resources in federal hands.

Is Dubai World's trouble just a trigger? Do you think it could lead to a major crisis? Will it escalate to other Emirates?

Fortunately, the real estate bubble was limited to the Emirate of Dubai only and, hence, I am of the view that this will be the end of crisis for Dubai. The other Emirates are relatively stronger in terms of debt obligations. GCC countries are in better shape today after the recovery in oil prices and, hence, Dubai will continue to retain the position as a global centre in the region leveraging the proximity of Indian sub- continent.

India will be to Dubai what China is to Singapore, unless “one day” Mumbai claims that position. In short, this debt crisis will have only sentimental impact on other GCC countries and limited impact on other Emirates. This observation is on the strong circumstantial evidence that the federal government of UAE will have to support Dubai as the domestic banks have a state guarantee.

How do you see it impacting your business in West Asia?

Barjeel Geojit has been operating in the UAE for the last eight years and the customer segment is predominantly Indian expatriates. We see Abu Dhabi booming, while Dubai slowing down with a neutralising effect. After the global financial crisis we are seeing more Indian investors putting money in Indian assets than before. Hence, if there is any panic there will only be improvement in our business in the short-term. However, in the unlikely event of this development leading to a protracted crisis and job losses at higher levels there will be an impact on our business too.

Will it lead to a liquidity crunch in the global economy, given the fact many central banks are planning to exit from accommodative monetary policy?

If this had happened a year ago it would have been perhaps disastrous than today as the amount involved can now be managed within GCC itself with the bounceback of oil. Moreover, the real estate bubble in Dubai was recognised by global financiers sufficiently long ago when the global real estate market started to crack. There is unlikely to be a second leg of liquidity crunch emanating from this event.

What do you make out of Dubai World's move?

Dubai World's move to restructure the debt should be seen as a genuine effort to restructure both debt and business since the announcement talked about just six month's “standstill” whereas the $60 billion consists of different maturities up to even 2014.

Currently, while the media around the world and international investors are showing panic there is relative calm and confidence internally, perhaps originating from the trust that finally it is a problem of the whole country and not of Dubai alone. Dubai has been growing on the strength of its capability to attract capital and talent globally and they know for sure that Dubai has to continue attracting these scarce resources to remain a vibrant non-oil economy surrounded by oil-rich countries.

Nevertheless, when the stock exchanges open for trading on Monday in Dubai, there will be selling pressure from global investors.

What in your view led to the current crisis?

On the strength of the oil boom in the region, Dubai one among seven emirates of UAE, has been positioning itself as a global centre for finance, trade and tourism due to negligible oil resources at home. During the early years of the current decade seeing growing demand for real estate, the Government started marketing housing projects offering 99 years of residence permit. Such a residence offer for investors in housing projects was neither denied by the Government nor approved. This led to an unprecedented boom in real estate, attracting rich investors from India, Russia, Europe and other places.

Both accounted and unaccounted global money started chasing real estate leading to even “day trading” in real estate.

There were even cases of buying in the morning and selling in the evening! Finally, when the global financial system cracked, the Dubai real estate bubble also crashed. The construction-driven economy was slowing down with highly leveraged projects. Dubai World, the real estate and infrastructure arm of the ruler of Dubai, was excessively leveraged during the boom years and when the demand disappeared had to catch up with debt repayments without positive internal cash flows.

While the boom in real estate collapsed, the federal government finally came out with a clarification that the buyers of real estate can only have six months renewable VISA in place of the highly publicised perception of 99 year's VISA. This was a bolt from the blue which was the last nail.

However, while Dubai was declining, Abu Dhabi, the cash-rich Capital city Emirate started booming on investment-driven by own capital. Abu Dhabi has been a lender of last resort for Dubai with vast oil resources and global financial investments of more than a trillion dollars. Abu Dhabi came out with a landmark announcement a year ago by declaring State guarantee on all bank deposits which led to calm in banking sector.

If Dubai announces any investor-friendly revision of VISA period, it can dramatically change the fortunes of domestic real estate market.

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.

Commercial, residential realty picks up momentum in city

The price of real estate in the city, which was on a low for most of last year, has stabilised and in fact posted a bit of a rise in select
locations, if recent research by real estate advisory firms are any indication.

Importantly, commercial real estate including retail spaces which took a bigger hit in the wake of the economic slowdown, is also showing an upward trend as demonstrated by the plans of some major world bands to enter the city, the reports said.

The trend is in keeping with developments witnessed nationally. The realty scene in major cities in the country has seen higher levels of activity after the early signs of an economic recovery both in India and internationally, said the quarterly report of realty research and advisory firm Cushman & Wakefield (C&W).

The report for the third quarter of the year (July-September) observed that the market was characterised by a positive sentiment and increased activity was witnessed. "The city witnessed the launch of various residential projects in the third quarter across many micro markets in both mid- and high-end segments. Capital and rental values appreciated across the city in the third quarter," the report observed. However, values are still below their all-time highs by about 10-30 per cent in Pune, the report said.

Aditi Vijayakar, executive director of residential services at C&W said, "The price and the buyer's sentiment are critical in the current market as key parameters influencing sales. Capital values in select locations in Pune are likely to see growth in the coming months. However, if prices increase too much too soon, there is a likelihood of them correcting again shortly after; the ideal graph representing recovery should be gradual and in line with the demand that calls for a period of considerable stabilisation before the hike."

According to Vijaykar, the Pune residential market has started to regain momentum in the past quarter with all locations witnessing marginal increase in rental and capital values by September 2009. Demand has started to move upward largely driven by end users. Pune is highly price sensitive and the current upward trend is largely a result of the correction in values that was witnessed in the last few quarters which have made the values more affordable. Also noticeable is that the large part of the transactions are happening in the newly-launched projects which offer more competitive values.

According to the C&W report, high end areas such as Koregaon park or Bund Garden have shown an 8 per cent rise in prices while elsewhere the rise is 2-6 per cent.

Satish Magar, President of Credai Pune (Confederation of Real Estate Developers' Associations of India) and chairman and managing director of Magarpatta city Development Corporation, told TOI that the rise in residential prices is not very remarkable and in most cases it restricted to Rs 100 per sq ft. Commercial segment on the other hand, has been active again as enquiries from IT firms have gone up.

"IT firms are back in expansion mode and have started hiring, which has triggered the activity in this segment," Magar said, adding that the retail segment too is warming up again as consumer confidence returns and a new kind of leasee-lessor relationship evolves. "From a flat rental agreement, we are now on a fixed plus floating rental basis where a leasee pays a minimum guaranteed rental and shares revenues with the developer. This has reduced the initial burden on the retailers easing their liquidity problems."

"From a near flat level till June this year, we have leased over 4 lakh sq ft space in Magarpatta City till now," Magar said.

Anand Dutta, head (retail) Pune for real estate consultancy Jones Lang LaSalle Meghraj, said retail transactions have picked up noticeably, following a marked upsurge in shopper sentiments and a generalised correction in retail real estate rentals. "An increasing number of retail landlords in Pune's malls and on key high street locations have opened up to the minimum guarantee and revenue-sharing models. The general stance now is that if a retailer is making money, landlords are willing to offer reductions on rentals if the retailer is willing to share his topline.

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.

Rentals rose even as capital values of real estate dipped Assetventures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Real Estate finding a new track in Indian economy Assetventures

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Guj builders plan permanent property show

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

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

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

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

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

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

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

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

City realtors aim high Assetventures

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

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

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

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

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

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

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

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

Pay less upfront to get a home loan Assetventures

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

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

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

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

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

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

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

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

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

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

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

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

British firm to host India property show Assetventures

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

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

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

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

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