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.

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.

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.

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.

Expected Regulation Would Encourage Foreign Investment In India

A three year lock in period for developers and foreign investors in the real estate market in India is expected to be scrapped.

The Department of Industrial Policy and Promotion and the Ministry of Commerce and Industry have put forward proposals to get rid of the statutory condition.

Developers and investors have long been critical of the policy saying that it is stifling investment.

Currently foreign investment in housing is subject to certain rules covering capitalization norms and the minimum area to be developed. But it is the fact that the original investment cannot be repatriated for three years from completion that is stifling investment, critics claim.

The government has indicated that it is keen to liberalize the Foreign Direct Investment regime in India.

‘The original restrictions on repatriation were a cautionary measure intended to prevent speculative investments in the real estate sector,’ one official said.

‘However, this sector has been feeling the pressures of the global economic crisis and has desperately been in need of greater capital and liquidity to fund its existing projects and growth,’ he added.

It is considered that a change will boost the real estate sector in India but also create jobs and greater domestic economic activity.

But there are some concerns that the proposed relaxation will result in a fluctuation of realty stocks and thus lead to market volatility.

But supporters say that less restrictions on foreign investments will help the economy overall.

Meanwhile developers in India are relieved that they do not have a lot of links with debt hit Dubai.

DLF, India’s largest real estate company, said plans to enter the Dubai market have now been postponed. ‘Luckily for us the one deal for which we were negotiating fell through,’ said DLF executive director Rajeev Talwar.

DLF was close to finalizing a joint venture with the now troubled Nakheel whose parent company Dubai World is trying to postpone debt payments while it restructures its finances.

Developer Omaxe, which has paid the first installment for buying land for two residential projects in Dubai, is considering pulling out.

‘There has been a slowdown in the Dubai real estate market.

Looking at the current situation, we are considering exiting the two projects,’ said chairman and managing director Rohtas Goel.

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.