Gurgaon, Mumbai property prices likely to fall

Gurgaon and Mumbai - two of India's largest real estatemarkets - are set to witness a correction in property prices, say analysts.

With the Bharatiya Janata Party (BJP) emerging as the single-largest party in Haryana and Maharashtra, experts say the new governments led by the BJP are likely to push land reforms and expedite various approval processes, bringing down the cost for developers and, ultimately, the users.

Gurgaon and Mumbai, the richest cities in Haryana and Maharashtra, respectively, have always been the preferred markets for investors. Most parts of these cities are beyond the reach for those looking for affordable homes.

"We are expecting correction in prices as monopoly of certain developers, especially in Gurgaon, is bound to end," says the top executive with a real estate firm. Single-window clearance, a demand for long, is likely and so are land reforms, he adds.

'House for all by 2022' has been a top agenda for the BJP government at the Centre. While there are many developers across the two states, DLF in Gurgaon and the Lodhas and Oberois in Mumbai are among the biggest names.

Most affordable projects are located on the boundaries or suburbs of these cities. Sanjay Dutt, managing director of Cushman & Wakefield, a realty consultant, says: "Mumbai suffered a lot in terms of approvals and costs added up. If a developer bought land for Rs 1,000 crore and paid 30 per cent interest, he had to shell out Rs 300 crore, which was included in the apartment prices."

When more supply gets released in the market, prices will stabilise and correct eventually, Dutt adds.

Sunil Rohokale, managing director of Mumbai-based ASK group, says: "With a stable government in place, I think the speed with which decisions are taken will increase and if the real estate regulatory Bill, a pragmatic land Bill and fast approvals are introduced, the state (Maharashtra) does not need anything else."

According to Om Ahuja, CEO (residential services) at JLL (Jones Lang LaSalle), a global property consultancy, if the new government focuses on reducing land costs by increasing floor space index and transferable development rights (TDR), and launching a housing regulator, property prices will become affordable for the common man.

Floor space index means permissible construction allowed on a given piece of land. TDRs are the rights that are granted by the government for undertaking socially-relevant schemes such as slum redevelopment and which can be traded in the market.

"The development control rules of the previous government did not help the common man. They just plugged the revenue losses for the government and local municipality," says Ahuja.

Proposed Panvel-Karjat track will help new city NAINA residents

Navi Mumbai: The Navi Mumbai Airport Influence Notified Area (Naina) project got an extra boost with the state government's in-principle nod for double-laning the track between Panvel and Karjat. The elevated corridor between Kalwa and Airoli is also on the cards.

The project, based on the people's participation model of sharing land to develop a mega city of 600 sq km, is close to the new airport in Panvel taluka. Around five of the 23 villages which will be rehabilitated as part of the airport project, are part of the interim development plan in Raigad district. The villagers will also benefit, along with other commuters, from the Rs 1,473-crore double-laning railway project, which will connect the fast growing Panvel area with Thane, Kalyan, Karjat and the satellite city.

The urban development department (UDD) in June intimated the railway board that the state government would share the 50% of the cost that will be further split equally between MMRDA and City and Industrial Development Corporation (Cidco). Mumbai Rail Vikas Corporation (MRVC), a public sector undertaking of the Union ministry of railways, will pay the remaining expenses.

This project is part of the MUTP-III and will be implemented by MRVC for the railway ministry. Cidco sources said, "We are yet to receive a formal letter from the state government, but written communications by the state government to the Centre have been marked to us as well. Once we get direct communication, the board will take up the case for approving the project cost.''

This apart, the city commuters will also get two new suburban stations at Bonkode and Dighe on the Trans Harbour track, as MRVC has agreed to include Bonkode station in its 2-km-elevated corridor project from Airoli to Kalwa.

Cidco will not have to spend any money in this project, estimated at Rs 336 crore, as the cost will be shared between MRVC and MMRDA.

The station at Bonkode will enable commuters to board the Thane-bound train along the current route. "The alignment for the elevated corridor along with the location of Dighe station needs to be worked out," said a Cidco official.

Former NCP MP, Sanjeev Naik said, " I am happy that my demand for the two stations on the Trans Harbour route was sanctioned by the state government. I will meet the Union railway minister to expedite the project."

Two new bridges to ease connectivity on cards

Mumbai Metropolitan Region Development Authority (MMRDA) is planning to construct two bridges—Ghatkopar-Kopar Khairane via Ghansoli, and Rewas-Karanja. A study of the soil in the regions and the financial feasibility of the projects are to be conducted later this year. These bridges are good news for commuters as they will certainly cut down on the travelling time on these two stretches.

How long are these bridges?
Ghatkopar-Kopar Khairane via Ghansoli bridge is 6.50-km long. And the Rewas-Karanja Sea Link is 8-km in length.

What is the plan?
As per the plan, Ghatkopar-Kopar Khairane bridge with 2.23-km over Thane Creek will become the third link between Mumbai and Navi Mumbai. At present the two places are connected by Vashi and Airoli Creek bridges. It's essential to construct the bridge for better connectivity—entering and exiting—between Mumbai and Navi Mumbai. The Maharashtra State Road Development Corporation (MSRDC) has been planning to construct additional Vashi Creek bridge on the Sion-Panvel Highway, but is unable to generate funds. The Vashi bridge on the recently widened Sion-Panvel Highway (from 6 lanes to 10 lanes) is a bottleneck.

Why is soil inspection necessary?
"As the bridge is to be built over the creek, pillars would have to be constructed in the creek. This would require geo-technical investigation of the composition of the soil. And for laying the foundation, the depth where rocks are present will have to be ascertained, said an official.

Has the design of this bridge been finalised?
No. its design and the number of lanes are yet to be finalised.

How much would the two bridges cost?
The Ghatkopar-Kopar Khairane via Ghansoli connector is estimated to cost anywhere above Rs 550 crore. And the construction cost of Rewas-Karanja Sea Link is estimated at Rs 403.31 crore.

When will MMRDA get the reports?
The Mumbai Metropolitan Region Development Authority expects to get the feasibility reports on the two bridges most likely by March 2015.

How do people traverse Rewas-Karanja stretch now?
Presently, people moving between Rewas and Karanja have two options: travel either by road via Khopoli-Pen-Poinad, which is around 70 km, or cross the creek on a passenger boat in 10-15 minutes. However, Rewas is accessible by ferry only during high tides. The jetties of Mora and Rewas need dredging in order to make them operational during even low tides.

Project: Ghatkopar–Kopar Khairane via Ghansoli.
Distance: 6.5km.
Estimated cost: Rs 550cr.
Project: Rewas–Karanja Sea Link.
Distance: 8km.
Estimated cost: Rs 403.31cr.

Licencing to revamp the face of Indian real estate industry

New Delhi: Real estate sector is sought after its high investment return but its tarnished image has been portraying a shadowed reputation for ages now. Several customers have been duped by brokers on numerous occasions like value of a credit note, inflated discount rates, interest rates etc. The unprofessional environment and unorganized style of work make this sector one of the most challenging and a lot more difficult to get promoted to higher levels of management.

Crores of rupees go down the drain due to the lack of consistency in the services provided by brokers. Thousands of cases with regards to misrepresentation of facts, financial duping, misuse of trust and false or misleading advertisements have been going on for ages in the civil/ high courts. 

With the ever growing demand of residential or commercial properties, the rise in the number of brokers has been phenomenal catering to their need and requirements, however, in majority, not more than 50 per cent of the total number of brokers are genuine. Due to the numerous loopholes in the laws laid for this industry, several frauds have occurred over the years. There has been a huge sigh of relief with the new Real Estate Regulatory Bill which has set the ball rolling; yet, it still is in the phase of being passed as an act.

Seeing the growing potential of the real estate sector, the government sprung into action and took major steps to bring out a customer-centric bill, which has become a nightmare for most developers which in turn will also affect the brokers. The bill clearly states that it is mandatory for all brokers to register themselves with the proposed RERA (Real Estate Regulatory Authority).

Crores of rupees go down the drain due to the lack of consistency in the services provided by brokers.

The air has been cleared with regards to the unfair practices which brokers need to restrain themselves from i.e. any statement which falsely represents services of any particular standard, statements representing that they have all the due approvals and any misleading statements regarding services provided.

One of the major changes in the bill have been regarding the penalties and sentence for non-abidance of the laws laid in the bill. For developers deliberately providing false information will be liable to pay a penalty. Those who will have an incomplete registration may end up serving a 3 year jail term period as well as pay any penalty if levied.

Such major paradigm shifts in the laws for real estate industry have brought a major relief for genuine brokers and agents as well as majorly for customers. As a purely customer - centric bill, it has been ensured that customers should get the maximum benefit out of the proposed bill. This bill has been a severe pain for most of the development authorities as it can completely alter their work process and unfair benefits.

The government has ensured through this bill to keep in mind the safety of consumers who are always at the receiving end. Getting all the details of various housing projects in itself is a blessing in disguise for them, in order to keep all important information available as and when ever required. The provision of giving a uniform regulatory environment to customer interests will help in efficient judgments and provide a complete protection of the interest of the customers. Extensive provisions have been made to bring the much awaited transparency in functioning at the brokers' level as well as at the developers' level too. The policy of imposing stringent penalties will also help in bringing the customers' faith back in the industry. Such penalties have been introduced to reduce the number of duping cases which can been seen growing every year. The due negligence by brokers and developers lead to the loss for customers who invest their hard earned money in various housing projects. Seeing the rise of the sector, the bill has been introduced with the sole purpose of giving customers the leverage of law which can be a huge help to them whenever they will face any legal situations in the coming years.

From customers' view, the bill has been made customer proof to protect their interest. Though for the developers this will be a tough situation to face, yet getting the industry on its feet can only be done through the enactment of the proposed bill. One of the major positive outcomes through this bill is the revival of lost faith of customers in the industry. This will help in getting potential clients who can give a boost to the growth of the sector in the coming times. As one of the most booming sectors of India, the potential to have explosive growth has been seen by many players and through the proposed bill, this dream can become a reality in the coming times.

The proposed bill is intended to bring in professionalism, standardization and growth which can lead to the increased potential of the industry. Major steps have been taken to ensure accountability towards customers, reduction in frauds and duping which have been some of the vital reasons for the tarnished image of the industry. The positive steps taken by the government and complete awareness of customers can ensure that unlicensed brokers are completely wiped out of the industry Fortunately, with the passing of the bill several issues faced by the customers will be solved which will be a favourable point for the growth of the real estate sector. The hopes and dreams of customers are at stake which can be saved through the passing of this bill, let's hope for the best.

Why Real Estate Investment Trust's (REITs) aren’t right for investors

They may be a godsend for the realty sector, but it isn’t clear how REITs will deliver lucrative returns to the retail investor

August, 2014:  

To me, it is an ominous sign that stock prices of cash-strapped realty companies should jump for joy when Securities Exchange Board of India (SEBI) notified its regulations for Real Estate Investment Trusts (REITs) last week.

Yes, developers and the analysts who track them are pleased that realty companies such as DLF, which have found few buyers for their malls in recent times, can now offload these assets to the brand-new REITs and pare down debt. Property consultants are hoping that REITs will pump anywhere between ₹60,000 and ₹1 lakh crore into the beleaguered sector, ‘unlocking’ cash from illiquid assets for players to carry on with business as usual.

But what about the investors in REITs? Isn’t all this a little err… worrying for them? If realty companies are so cash-strapped and debt-burdened, how lucrative are these assets in reality? Plus, if a flood of new money really chases these commercial assets, would REITs end up buying them at bloated valuations?

If returns from such assets neither provide high yield nor easy liquidity, how would they turn out to be lucrative for retail investors?

The truth is that while REITs may be a good idea to open up new sources of funding and resolve myriad problems of the Indian real estate sector, they’re not yet a great proposition for Indian investors.

Where’s my capital gain?

To start with, unlike in Singapore, Hong Kong or other developed nations, Indian investors do not invest in real estate so that they can earn modest regular income.

These investors have plenty of other options to earn that — bank deposits that deliver 9 per cent, small savings schemes that offer 8-9 per cent, and debt mutual funds that offer similar returns with any-time liquidity. So, when an Indian investor buys property, he’s looking for an investment that delivers hefty capital gains and soundly trounces inflation over the long term.

This is quite evident from the segments of the property market which retail buyers flock to — affordable homes for first-time buyers, roomy apartments at good locations for home owners who are keen to upgrade, independent villas and bungalows at the outskirts for high net worth investors.

Commercial property, if it is in the reckoning at all, comes last on this list. And there is good reason for this. Given large unfulfilled demand for residential homes in India, residential property has traditionally delivered far better price appreciation and proved more resilient to economic downturns than commercial property.

Even today, while the residential property market has picked up, the commercial market is yet to revive. It carries a heavy burden of over-supply, precisely why developers such as DLF or Unitech have found it difficult to sell commercial assets.

But REITs, the world over, are designed to earn most of their returns from rental income and that too on commercial property. Indian REITs too are set to faithfully replicate this model. SEBI’s recent regulations make it mandatory for the upcoming REITs to invest at least 80 per cent of their funds in completed income-generating commercial properties and to distribute 90 per cent of their income to investors as dividends, at half yearly intervals.

Clearly, while policymakers are looking at REITs as a fixed-income option that will invest in commercial property, retail investors would prefer to bet on residential property for capital gains. To make retail investors change their mindset, REITs will have to generate returns that are far higher than the fixed income options that are already available to the Indian investor.

Can you beat my bank deposit?

This may prove quite a tall order. The rental yields on good commercial properties in India tend to be in the range of 8-10 per cent. Assuming that the managers of REITs charge a modest fee of 2 per cent, the net returns to the investor by way of dividends will be 6-8 per cent — certainly not what he is used to from his other, less risky, fixed income investments.

Then there’s the tax angle to consider. As per SEBI regulations, REITs are to be listed entities that will hold majority equity stakes either directly in commercial properties or through Special Purpose Vehicles (SPVs). Their income will be earned through dividends distributed by these SPVs or rents from projects. While the REIT itself has been granted pass-through status and will pay no tax on its income, the SPVs may have to pay dividend distribution tax. Similarly, investors who earn returns from REITs too currently have to bear both dividend distribution tax and capital gains tax.

Unless REITs manage to win further tax concessions for investee companies and investors, they will find it quite hard to compete with even traditional fixed income options on returns.

Is the NAV real?

This brings us to the final issue. If Indian investors are to be attracted to REITs, the units must earn not just the above dividends but also see their prices appreciate on the stock exchanges. That will depend on how the REIT’s net asset value (NAV) behaves. SEBI regulations require all REITs to get their portfolios valued twice a year and the NAV to be disclosed to investors.

Now, given the nature of the property market in India where prices can vary wildly even between neighbouring localities, arriving at a true mark-to-market ‘value’ for a REIT portfolio is likely to prove a difficult task. If this is done, fairly sharp swings in the ‘valuation’ every six months cannot be ruled out.

A textbook valuation based on future cash flows will involve several groping-in-the-dark assumptions about the economic cycle, property values and interest rates.

Overall, the NAV may turn out to be just a ballpark figure around which market prices of the REITs swing quite significantly. This may make it difficult for the listed REITs to give an impression of stability to investors.

Shades of grey

Of course, all this does not even take into account the structural grey areas in the Indian real estate market. Most property deals in India today involve a ‘black’ component, which a listed and tightly regulated REIT simply cannot factor in.

Given the many regulatory approvals needed both for building and dealing in properties, corruption is a fact of life in the sector and players in the sector aren’t known for a pristine governance record.

Policymakers, regulators and the developer community are now hoping that REITs will usher in much-needed transparency, best practices and good governance into the sector. But this is putting the cart before the horse. If I were a REIT investor, I wouldn’t invest in REITs until good governance is a given

Smart City Dream 2020, By Sudhir Chowdhary, Country Leader, MobileFirst, IBM India/South Asia

India has been talking about the dream of being a developed country by 2020. Few are, however, aware that 

everyday close to 30 people leave rural India to build their future in urban cities. 

Thus there is demanding need to develop India from the grass root level. With the amount of people migrating to the cities, India would have to have more than 100 cities in the coming years to occupy such an outburst. At this point, city and urban development boards will need to use inventive technologies and solutions to accomplish the growing demands on city infrastructures that deliver vital services.

While smart cities are the way forward, mobility is a huge factor for smarter city to become successful as mobility would mean better service and well informed citizens, says Prashant Sharma, country leader, MobileFirst, IBM India/South Asia. “Mobility will help improve connectivity even in emergency situations. Imagine being sent an SMS when there is a Tsunami or an earthquake in or around your area; it would work as an alert system.” In a recent interaction, he discusses with Sudhir Chowdhary how mobile technology will drive the move to smarter cities. Excerpts:

Give us an overview of how mobile technology plays a vital role in smart city?

Modern technology lets us track and observe almost anything in a major urban environment—noise, light, traffic, weather and so on—and use this data to improve people’s living and working conditions. For example, in a country like India, traffic and parking availability is one area of smart city challenges that is leveraging new technology to initiate real change. New technology is emerging all the time that lets us manipulate networks more finely, taking advantage of more sensors, more cameras and more real-time data to improve road traffic.

Mobility will be the key driver of the digital universe. Faster mobile networks are at the core of smart cities and are allowing people to do more on the move. As networks offer more cloud-based services and storage, this in turn leads to more personalised content and apps being accessible to users, which both updates and is updated by ever-smarter mobile devices. Smarter devices, faster networks and the cloud becoming pervasive all combine to power greater intake of digital content—in short, users want more data all the time and want it now.

The Internet of Things (IoT) will also play a crucial role in smart city development. The pure weight of Big Data created by the IoT will have a bearing everywhere, particularly on things like traffic flow—town architects will be able to gather the data, analyse it and use it to adapt future policy and projects.

Let us say, if you have to get a patient in emergency situation from point of accident to the hospital, you may transfer signals to the route of ambulance to turn all lights green and save lives. There are hundreds of used cases where mobility can transform our lives.

How will citizens benefit from a mobile implementation in a smart city?

To improve the quality of life, cities have to realise that smart technologies need to work both ways: not just for citizens but with citizens. A smart city collects and integrates knowledge from the Internet of Things (IoT), the Internet of Services (IoS) and the Internet of People. Citizens are more liberated, more conscious of the surrounding opportunities, and benefit from the integrated services that the city offers. The smart infrastructure is the intelligence of the city, governs its body and reacts to the situations intelligently. A smart city allows new ideas to thrive and new, more effective approaches to be developed in economy, politics, governance, mobility, environment and all the other facets of city life.

Let us imagine a person visiting a city for the first time. She has no idea of what the city has to offer, but she is interested in finding out about museums. With a mobile device on her (phone or tablet) and an Internet connection, she can use this application to retrieve in a few seconds all the surrounding museums. For each of them, she can than request additional details like the entrance cost, opening hours and so on. But the application is not limited to touristic information. Instead, it can display a large variety of objects, to best satisfy the user’s needs in every context.

What other technologies come together to make a smart city?

The purpose of smarter cities is to ensure a more convenient life for citizens by generating various information types from all human behaviours and situations, such as the number of people waiting for the bus at the bus stop, bus numbers they wait for, road traffic conditions that affect the bus arrival time, music they listen to, and many others.

To manage massive amounts of various data types generated rapidly every day, big data technology is essential for the smarter cities environment. Whereas smart sensors and equipment, detecting huge volumes of data, are the sensory organs of the smarter cities environment, big data technology is the brain of smarter cities. Because the sensory organs and brain are closely related, and they function coherently, the combination of smarter cities environment and big data is required to meet the needs of each.

Which are the sectors you see, where there is a high uptake for mobility?

The most common used cases is in the area of retail banking, customer self service app from B2C perspective and relationship management , wealth management, account opening from B2E perspective. In Insurance, most of the companies have launched apps to manage their agency sales force by providing the capability of customer on boarding, illustration, product selection, proposal etc.

What about the healthcare and government verticals?

The health industry can completely transform and using mobility, we can help improve living standards and save life that gets compromised due to mistakes by support staff in hospitals. The app to capture patient complete records and examinations while patients remains in hospital, send alerts to doctors if key parameters like BP, heart beats exceed normal range.

Any client examples highlighting the role of mobile technology?

In the retail segment, we have collaborated with DLF to provide an innovative mobile-phone based solution— BlueZen that channels data insights from customers visiting DLF Promenade, a high end shopping mall serving the metropolitan New Delhi area. In the banking sector, we are working with ING Vysya Bank that has developed a mobile banking app on IBM Worklight. It is a cost effective, secure and scalable mobile banking app.

Central Railway meets Cidco for DFC project

The Dedicated Freight Corridor (DFC) on the Western region, which is to increase Mumbai’s rail export capacity four times, has reached its final alignment stages after the Central Railway (CR) met City Industrial Development Corporation (Cidco) to discuss Panvel’s role last week.

Officials say that Phase I of the project from Rewari to Vadodra has already seen physical work and Cidco has shown positive signs for Phase II from Vaitarna to Nhava Sheva, which passes through Panvel. The DFC requires bits and pieces of land in and around Panvel, which amounts to almost 36 hectares.

“Cidco has given an in-principle nod for 36 hectares of land in total. The alignment will require a little manoeuvring, as there are lot of plans with regard to suburban Panvel and they will require space for those plans as well,” said an official from DFC which is the execution department from the CR.

These suburban plans are to build of four platforms, including one that will be elevated for the CST to Panvel fast corridor and the rest for the proposed Panvel to Virar and Panvel to Karjat corridors.

This will also include land towards old Panvel where the proposed coaching complex is to come up with space for keeping trains when not operational.

The push has been seen days before the railway budget on July 8, when officials hope that an announcement of its completion will give another push for the work to be completed.

Officials want to make sure that sufficient land is left for the suburban project with apprehensions that the DFC will eat into their future plans for making Panvel the next CST.

“We have already got the permissions for one km of land from the SC for the Sanjay Gandhi National Park, there we required only one km, that too only at the tip of the park, which runs along the existing Vasai to Diva lines,” added the official.

Goverment to revise Real Estate Regulatory Bill: Naidu

The government plans to revise the Real Estate Regulatory Bill, 2013, aiming to have increased participation from the private sector.

 

Minister for Urban Development and Housing and Poverty Alleviation Venkaiah Naidu today said the earlier Bill has lapsed and the government is looking to revise the Bill by incorporating suggestions from the various states and the industry.

 

"We have heard views of various states and already had a meeting with CREDAI (real estate industry association) on this and will be meeting industry chambers FICCI and Assocham soon. Private participation of private sector is important," Naidu said.

 

We also need to have an accountability mechanism wherein private developers would be responsible for creating basic infrastructure around the project area, the minister added.

 

He, however, did not give any timeframe for the formulation of the revised Bill.

 

The Real Estate Bill, 2013 was introduced in Rajya Sabha in August last year during the regime of UPA II and was referred to Standing Committee on Urban Development.

 

Earlier, the draft Bill has been revised various times since 2009, when it was first formulated.

 

The industry has been opposing the introduction of the Bill. They have raised concerns over strict penalties/punishment to be imposed on developer if they fail to comply with certain provisions. It also makes it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.

 

The Bill is aimed at providing regulation in the sector, besides protecting buyers from erring developers and usher in an era of transparency. The real estate sector has been away from any sort of regulation till now. It has also proposed stricter penalties and even jail term for a maximum of three years for developers.

 

The development assumes significance in the wake of rising consumer complaints against developers for delaying projects by over 4-5 years, with no mechanism to curb the delays. On the contrary, if a buyer defaults on payment, he has to pay high interests while developers escape through loopholes in the sale agreements.

 

The Bill, which has been in the making for about five years now, also mandates developers to keep aside about 70% of the collected amount from buyers in a separate account. Besides, it has certain tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of actual site. Failure to do so for the first time would attract a penalty which may be up to 10% of the project cost and a repeat offence could land the developer in jail for a maximum of three years. It provides for a clear definition of the 'carpet area' and would prohibit private developers from selling houses or flats on the basis of ambiguous 'super area'.

CREDAI announces youth wing for 2nd generation developers

Karnataka chapter of the Confederation of Real Estate Developers' Association of India (CREDAI) has announced its Youth Wing for the second generation of developers.

The Wing will focus on three main areas - technology, research and CSR activities, CREDAI said in a release.

It said Pratik Mantri, Director Mantri Developers, has been named as the President of CREDAI Karnataka Youth Wing and Bimal Hegde, Director of Chartered Housing, is the President of Bangalore Chapter of CREDAI youth wing.

Maharashtra plans more FSI for green building projects

Mumbai, June 27 (IANS) The Maharashtra government may grant additional FSI to realtors who adopt green building projects, Minister of State for Housing Sachin Ahir said here Friday.

Expressing concerns over the water scarcity faced by Mumbai, the minister said the policy of green building proposals would help resolve this problem.

"It is encouraging to see many new townships have adopted green building proposals...Extra FSI (floor space index) would be made available to developers going green," Ahir said.

He was speaking at The Real Estate Conclave, organised by the Confederation of Indian Industry (CII) Friday.

Ahir said the state government has raised the difficulties arising out of the Land Acquisition, Rehabilitation and Resettlement Bill, 2013 with the centre as both public and private sector organisations are affected by it.

He said the state government will shortly announce the much anticipated Cluster Development Policy pertaining to redevelopment of old buildings and complexes in Mumbai.

Ahir said the upcoming Real Estate Investment Trust (REIT) will be very beneficial to realtors for raising funds at reasonable costs and aid the growth of the construction industry.

Calling upon realtors to match supply with demand, the minister said the time was appropriate for the realty industry to voice its opinions to facilitate development.

Conference chairman Anuj Puri, also Chairman and Country Head, Jones Lang LaSalle said the construction industry has seen huge turbulence since the global financial crisis of 2009. 

He expressed hope the new government in India will help bolster the industry's confidence.

He said the office sector in India was spread over 35 crore square feet in five metros, of which five crore square feet lies vacant, especially in suburban areas and peripheral cities.

"This has resulted in a dichotomy where on the one hand, rentals in CBDs (central business districts) are rising sharply while those in suburban and peripheral cities are not... The rentals have not yet touched the peak levels of 2008," Puri said.

In the residential space, while affordable housing is flourishing, big ticket projects are witnessing unsold inventories, especially in Mumbai and Delhi's National Capital Region.

"Similarly, in retail space, while good malls are doing well, bad malls are going empty and run the risk of not being leased at all as they are "custom built" and cannot be used for any other purpose than malls," Puri added.

Former CII Western Region Chairman R. Mukundan said there is huge interest evinced by foreign investors in the Indian realty sector which now accounts for 11 percent of the country's total foreign direct investment inflows.

The CII also released a research report "Rowing The New Wave: Game-Changing Rules For Indian Real Estate" which analyses forthcoming changes in the industry through various initiatives.

The report said about 34.30 million square feet of office space will be supplied in 2014, the absorption will be four percent higher than last year while six million square feet mall space will be available this year.

'Mumbai metropolitan region emerging growth centre for realty'

Mumbai: With the government planning major infrastructure projects in the Mumbai Metropolitan Region, the area is emerging as a growth centre for real estate sector, CBRE said in a report.

According to the property consultancy firm, there has been a significant increase in demand for commercial and residential properties in areas where major infrastructure projects are planned.

"There has been a significant development in real estate along the Eastern Freeway. Housing prices in locations such as Chembur and Ghatkopar increased by around 28-30 per cent over the last two years," CBRE South Asia Co-head Capital Markets India & Head West India--Nikhil Bhatia said in a statement.

The Mumbai Metropolitan Region (MMR) is a metropolitan area consisting of the metropolis of Mumbai and its satellite towns.

The Eastern Express Highway, which connects south Mumbai to eastern suburbs and stretches all the way to Thane, has benefited areas like Mulund, Bhandup, Kanjurmarg and Vikhroli due to improved connectivity, he said.

Mumbai Metro's Phase I has enhanced east-west connectivity and also improved the real estate profile of locations like Ghatpokar, Vidyavihar and Vikhroli. The Chembur-Wadala-Jacob Circle monorail has also improved real estate activities in these areas.

In addition, the Vikhroli Jogeshwari Link Road has accelerated real estate activity, especially in the commercial segment, in the markets of Powai, Vikhroli and Kanjurmarg.

Besides the current projects, the government has planned various other infrastructure including international airport and metro rail for Navi Mumbai, the Mumbai Trans Harbour Link, Elevated Eastern Freeway, Virar Alibaug Multimodal Corridor, Churchgate Virar Elevated Rail Corridor and the Western Dedicated Freight Corridor, among others.

However, Bhatia said that though infrastructure projects are improving Mumbai's real estate market, it will be necessary to ensure their timely implementation.

"Infrastructure projects have provided a perfect backdrop for realty growth in the MMR, but to emerge as a truly world-class city it will have to rise to the challenge of augmenting its infrastructure development with accelerated implementation of these policies within a clear timeline," he added

Maharashtra government approves Rs 4,240.78-crore budget for MMRDA

In the run-up to the Maharashtra Assembly elections, Chief Minister Prithviraj Chavan today approved Rs 4,240.78 crore budget for MMRDA that thrusts on improving infrastructure in the Mumbai Metropolitan Region.

Maharashtra government approves Rs 4,240.78-crore budget for MMRDA

In the run-up to the Maharashtra Assembly elections, Chief Minister Prithviraj Chavan today approved Rs 4,240.78 crore budget for MMRDA that thrusts on improving infrastructure in the Mumbai Metropolitan Region.

The Budget has given priority to crucial infrastructure projects to be implemented in the Mumbai Metropolitan Region (MMR) along with metro rail, mono rail, flyovers, development of road network, an official release issued here said. The state is likely to go for polls in October, by when the Chavan-led government is expecting to complete or start construction on most of these projects.

"We are continuously making huge provision of funds for more crucial infrastructure projects for the city and MMR. We are already witnessing the response from commuters travelling in the city, outside the city and abroad after a few critical infrastructure facilities," Chavan said.

The government recently launched various projects, including metro rail, monorail, Santacruz-Chembur Link Road, Amar Mahal Junction flyover, Eastern Freeway, Milan Rail Over Bridge Kherwadi flyover and Sahar elevated road.

To ensure speedy implementation of the next phase of metro and monorail projects in the city, Mumbai Metropolitan Region Development Authority (MMRDA) has alloted Rs 634 crore and Rs 400 crore, respectively. Out of the Rs 634 crore, Rs 500 crore has been allocated for the Colaba-Bandra-Seepz corridor, while Rs 4 crore has been set aside for conducting various studies for the Charkop- Bandra-Mankhurd metro, which is likely to be underground.

The Authority has taken up the second phase of the monorail project from Wadala to Sant Gadge Maharaj Chowk, work on which is in full swing and is expected to be completed next year, MMRDA said.

MMRDA has made a provision of Rs 215 crore for flyovers, improvement of road network, among others under the Mumbai Urban Infrastructure Project and Rs 1,000 crore for MUTP-2 as the Mumbai Rail Vikas Corporation is expected to purchase new trains during FY'15.

It has made a provision of Rs 128.88 crore for the water resources development in MMR, Rs 65 crore for providing civic amenities in Bandra Kurla Complex, Rs 50 crore for Sewri-Worli connector and Rs 25 crore each for Mumbai Trans Harbour Link, Wadala Truck Terminus and Virar-Alibaug Multi-Modal corridor

Deepak Parekh asks RBI to raise priority sector housing loan limit

Calling affordable housing the need of the hour, Deepak Parekh, chairman, Housing Development Finance Corporation Ltd (HDFC), has asked the Reserve Bank of India to increase the limit of priority sector housing loans from the current cap of Rs 25 lakh to at least Rs 40 lakh.
“RBI would do well to recognise that priority sector housing loans up to Rs 25 lakh in metropolitan cities and Rs 15 lakh in other centres is unrealistic when inflationary and other cost escalation factors are considered. Priority sector housing loans should be increased to at least Rs 40 lakh per unit,” said Parekh in his Annual Report address to HDFC shareholders. The AGM is scheduled for July 21.
Sensitive to the concerns of the real estate industry and the problems they face, Parekh not only called for an online single window clearance mechanism for affordable housing projects, but also proposed to ease the source of funding for purchase of land by developers. While the regulation does not allow bank’s and HFC’s to fund developer’s for acquiring land, Parekh said that this leads them to resort to high cost funding (18-22 per cent) from NBFC’s, private equity or even the informal sector.
“If regulators feel there is excessive speculation in real estate, it is prudent to prohibit banks and HFCs from lending for land transactions. However, when there is no real estate bubble, as is currently the case, then banks and HFCs should be allowed to fund land transactions,” he said, adding that land cost comprises almost 70 to 80 per cent of total cost.

Industry experts feel that the proposals are very important for the sector. “The definition of affordability in most of the cities has changed and it will help if RBI revises its limit. Also allowing banks and HFC’s to fund for land purchase will bring down the cost of the project and the unit cost,” said Anshuman Magazine, CMD, CB Richard Ellis.

Parekh also urged the developers to stop focussing on high-end luxury segment and focus on developing houses in the price range of Rs 15 to Rs 40 lakh. He took note of the tough environment India Inc faced over the last year as he termed FY’14 as ‘Perhaps one of the most difficult years in recent times’. He, however, enthused optimism and said the ‘worst is behind us’ as he
laid down key issues that the new government needs to focus upon.

Gagan Banga, MD & CEO Indiabulls Housing Finance, said, “To curb real estate prices it is essential to increase supply. If organised players can supply more capital to the sector, it will help add supply rather than creating real estate bubble. I fully endorse the proposals.”

What Advik Realty learn from Mr Narendra Modi

What Advik Realty learn from Mr Narendra Modi
1. Start early end late.
2. No substitute for hardwork.

3. Plan plan plan.
4. Have no sympathy for opponents.
5. Don't give undue importance to those who don't deserve (Kejriwal)
6. Use technology optimally
7. Think and start preparation before opponents
8. Focus
9. Respect all religions but follow and be proud of your own religion.
10. Don't bother even whole world is against you. Keep yourself calm and maintain composure. Take the bull by horn.
11. What world think and believe about you is not important. What you believe is the only important thing -pursue it.
Thank You Mr Modi

Narendra Modi's top 10 to-do list as PM of India

1) GOODS AND SERVICES TAX (GST): India's most ambitious indirect tax reform would replace existing state and federal levies with a uniform tax, boosting revenue collection while cutting business transaction costs. GST, which could boost India's economy by up to two percentage points, has so far faced resistance from various states, including those governed by the BJP who fear a loss of their fiscal powers. The BJP aims to address state concerns and implement GST in an "appropriate timeframe". The Congress party would back the reform in opposition, a senior party member told Reuters earlier this month. The reform needs broad backing because it requires a change in the constitution.

 

2) RESERVE BANK OF INDIA-  A Reserve Bank of India panel in January proposed key changes including targeting consumer price inflation and making a committee responsible for monetary policy, and not the RBI governor alone. This would require changes to the RBI Act. The BJP top brass has not spoken widely on the issue, but it will likely be a tough sell for RBI Governor Raghuram Rajan. He has the backing of some global agencies like the International Monetary Fund. Modi's government may also look to eventually separate the debt management function from the RBI, on the gounds that debt management sometimes conflicts with the central bank's monetary policy stance.

 

3) PRIVATISATION The new government is likely to focus on selling its holdings in state-run firms that could raise much-needed revenues to trim India's ballooning fiscal deficit and boost economic growth. The rising stock market helped New Delhi raise more than $3 billion via stake sales in the fiscal year to March 31 - but that was only a third of the government's original target. The outgoing government announced plans to raise 569 billion rupees ($9.62 billion) through asset sales in 2014/15. This could help achieve a lower fiscal deficit target of 4.1 percent of GDP. These estimates may be revised by the next government.

 

4) SUBSIDIES Modi's government needs to examine how it subsidises basic commodities if it is to contain the fiscal deficit and avoid a ratings downgrade. Subsidies cost an estimated 2.2 percent of India's GDP in 2013-14. The BJP in its manifesto said it will seek greater fiscal discipline without compromising on the availability of funds for development.

 

5) LABOUR The BJP wants to reform labour laws to boost job-intensive manufacturing and create as many as 10 million jobs a year for young Indians entering the workforce. Changing the law would be politically tricky, though, and Modi may seek to encourage competition between India's states to boost job creation.

 

6) DEFENCE More foreign investment in defence would help India reduce imports, modernise weapons systems and speed up deliveries of hardware it needs for operations and training. India, the world's biggest arms importer, now allows 26 percent foreign ownership in defence, and proposals to exceed that limit are considered only for state-of-the-art technology. The BJP has said it would allow some greater foreign investment in defence industries.

 

7) INSURANCE Attempts to raise the cap on foreign investment in India's $45 billion insurance sector, to 49 percent from 26 percent, have met resistance from employees at state-controlled insurers and their political backers. A BJP leader said in March the party had held talks with Congress to break the deadlock.

 

8) BANKING The next government will need to help state-run lenders battling rising bad loans caused by the slowing economy, rising interest rates and project delays. Stressed loans in India - either bad and restructured - total $100 billion, or about 10 percent of all loans. Fitch Ratings expects that ratio to reach 14 percent by March 2015. Rising bad loans threaten to choke the gradual recovery in Asia's third-largest economy, according to the OECD. The interim budget in February set aside 112 billion rupees ($1.89 billion) to help the sector meet key capital ratios, but analysts say more money is needed.

 

9) POWER A BJP-led government may implement the so-called Gujarat model of distributing electricity that has been widely praised for delivering reliable 24-hour power supplies in the state. Modi provided different power feeds to farmers, households, and companies instead of a uniform feed in his home state.

 

10) GAS PRICING In January India notified the new gas pricing formula that could double the prices of locally produced gas from April 1, but the poll regulator stopped the government from raising the prices until the elections are over.Reliance Industries and its partners BP and Niko Resources last week issued a notice of arbitration to the government seeking implementation of higher gas prices. The BJP-led government may review the formula on the lines suggested by a senior party leader last year and announce the date of implementation of new prices.

Property Market Revival Expected After Modi's Win

New Delhi: Hailing clear majority for Narendra Modi-led BJP in the polls, real estate experts today said a stable government at the Centre will help revive the property market.

Investor sentiment will improve in the realty market leading to rise in housing and office space demand, they said.

"The formation of a stable government not dependent on coalition partners will hopefully mean faster decision making and economic reforms. If GDP growth picks up, one of the early beneficiaries would be the real estate industry," CBRE South Asia Chairman & MD Anshuman Magazine said.

Knight Frank India Chairman & Managing Director Shishir Baijal said the economic and political stability would act as a catalyst for revival of the real estate sector in India.

Hailing the election outcome, realtors apex body CREDAI Chairman Lalit Jain said: "We have a huge expectation from the new government as Modiji has demonstrated good governance in Gujarat".

Mr Jain said the sentiments would immediately improve and that will drive the property market. "We expect efficiency in approval process and easier bank funding which are the two major concerns for the industry."

The realty sector has been facing a huge slowdown in demand over last few years due to high interest rates on home loans and lower economic growth.

Parsvnath Chairman Pradeep Jain said: "We are optimistic about the reform and changes this government will bring in to boost the economy. For the real estate in particular, we firmly believe that the sector will be given industry status this time which will ease all fund inflow."

Mr Magazine said, meanwhile, that "economic fundamentals have to be tackled, infrastructure projects implemented with a sense of urgency and housing mortgage interest rates have to decline before we would see any significant impact on the real estate market".

Global property consultant JLL India Chairman & Country Head Anuj Puri said that in order to boost affordable housing, the new government may look at helping on quicker land acquisition, faster approvals, easy and low cost funding availability and better infrastructure.

Cushman & Wakefield Executive Managing Director (South Asia) Sanjay Dutt said: "A stable government will lift the sentiments of the investor community who form a dominant role which will impact housing and office sales. Hence, both end-users and investors are also expected to increase their investments in the sector and contribute to its growth."

Consultant DTZ Chief Executive Anshul Jain said the demand is expected to pick up in the latter half of this year.

"Next 5-6 quarters are expected to be the game changers. Availability of funds will ease and interest rates are expected to come down as inflation cools. This will have a direct impact on the supply side of the real estate," he added.

Maharashtra government to establish realty regulator by mid-July

The state government has decided to implement the Maharashtra Housing (Regulation and Development) Act (HRA) from mid-July. The housing regulatory bill received the President's nod in January this year.

The law was passed by the legislature last year despite resistance from builders who felt that under the guise of regulating the real estate industry, the government was trying to control it. Maharashtra is the first state in the country to usher in a law to deal with the real estate business.

Shrikant Pulkunder, joint secretary of the housing department, told dna on Wednesday that the government was currently in the process of framing rules and regulations under the new law.
"Once the rules are framed, we will invite suggestions and objections from the public. This process will take at least a month. After that, we will announce the date on which the law will come into force," Anand Gupta, secretary of the Builders' Association of India, said.

He said the government should first improve the civic infrastructure, expedite the procedure for approval of building plans and curb corruption in the building proposals department and not seek to control the builders.

Another official from the housing department said the implementation of the law got delayed as the election code of conduct was in force. "We are planning to implement the law by June-end. But, now it will come into force in mid-July," he added.

"The regulatory authority to be set up under this Act will address different issues relating to the real estate sector.

It will now be mandatory for developers to register themselves in the HRA's website.
Besides, developers have to upload the building plans which have been approved by the municipal body concerned and also details of the flats sold.
There will be transparency since potential buyers will come to know if there have been any problem with a particular project.
The scope to dupe buyers will be reduced considerably," a senior official stated, adding that "buyers will be able to see which flat is sold out or not. It will bring transparency."
Another official said the main objective of the regulatory body is to regulate and promote the construction, sale, management and transfer of flats on ownership basis.

"Once the Act comes into force, flat-buyers will be empowered. A buyer can complain to the HRA against the builder concerned and the authority take action against him expeditiously. Presently, there is no control over the developers. Many of them exploit gullible buyers by using technical terms like build up area, super build up area, floor rise etc. It is a game changer of an Act in the housing sector. It will help in curbing speculative activities and keep prices under check," said Atul Nemade, a real estate expert.

HOUSE THAT!
The housing regulatory authority will be headed by a retired bureaucrat. The condition is that s/he must have worked with the state's housing and urban development departments or should have the knowledge of development planning and development control rules. In Mumbai, the office of the housing regulator will be located at Bandra in Mhada's office building.

Global PE funds double investments in Indian realty

BANGALORE: Global private equity funds more than doubled their investment in India’s real estate sector in the quarter to March as they foresee an improvement in economy leading to stable long-term yields, according to a report by brokerage Cushman & Wakefield.

PE funds invested Rs 2,800 crore in the country’s commercial and residential real estate during the period, a 145% jump over the year-ago quarter, the report said. “This is the highest quarterly private equity investment since Q2 of 2009 by private equity funds in the realty sector, driven by huge investment in commercial real estate and steady fund raising by developers in the residential asset class,” it said.

Sanjay Dutt, executive managing director for South Asia at Cushman &Wakefield, said investor interest is expected to grow in office as well as residential property this year. “Improving economic conditions and stable long-term yields are expected to result in increased investor interest for commercial office assets in 2014,” Dutt said.

“Considering the attractive returns in the residential sector, along with the high funding needs of developers, steady investments in the residential sector are anticipated.”

The report said average deal size increased 35% to Rs 156 crore per transaction during the quarter. The construction development sector saw foreign direct investment (FDI) inflows worth Rs 1,430 crore in the quarter, which is the highest level of investment since the third quarter of 2009. The report said global fund houses such as Xander Group, Peninsula Brookfield, Stan-Chart RE and Blackstone committed big bucks to the Indian real estate sector.

While Blackstone and Standard Chartered together invested in Rs 1,150 crore in Vrindavan Tech Village, a special economic zone being developed by Embassy Group on the outskirts of Bangalore, Mantri Developers raised Rs 250 crore from Peninsula Brookfield for a residential project in Bangalore and Oberoi Realty bought a land parcel in Mumbai from Tata Steel for Rs 1,155 crore. “Most investors, especially those who are growth investors, don’t see this sector as a very attractive investment destination currently.

This may be a great opportunity for those who can price the fundamentals, work the real estate, have a longer-term view, a stomach for volatility and patient capital,” said Siddharth Yog, founder and managing partner at Xander Group Inc. Jasmeet Chhabra, principal at Red Fort Capital, said the last three years did not see much FDI in the real estate sector, but things are improving now.
“It has become more lucrative in terms of valuation, demand-supply mismatch continues to hold. Once we see a stable government, the deal momentum will pick up,” he said.

While the commercial office sector saw investments worth Rs 1,440 crore during the quarter, the residential sector got Rs 1,070 crore of inflows, contributing about 51% and 38%, respectively, to overall investments mentioned in the report.

“The capital would help fund much needed real estate investment to create and hold facilities to house the economic activities,” said Jonathan Yap, assistant group CEO for overseas funds and India at Ascendas.

Real estate industry awaits policy action from next government

Like most other business sectors, the Indian real estate market holds its breath for a stronger and more determined government. The perception which is currently driving market sentiments is that market momentum can either accelerate, remain unchanged or decelerate depending on which party is voted into power. Speaking purely from the viewpoint of market sentiment, there is some validity to this perception. However, the fact is that the true benefits of political stability and proactive reforms — if these indeed ensue — will not be visible or tangible for quite a while after the new government takes over.

Even if the next government proves to be ‘real estate friendly’, it has its work cut out.

There are vital regulations and initiatives related to real estate that have been gathering dust on bureaucratic tables which need to be fast-tracked and implemented. Though these regulations and initiatives are crucial for the real estate sector’s growth, there are various complexities that must first be sorted out
One of the challenges is impartially attending to the interests of all industry stakeholders. The other challenge is to shore up all loopholes that could remain and be exploited if not identified prior to a regulation’s implementation.

This is especially true of the pending Real Estate Regulatory Bill, which has been hotly contested at every stage. There is no doubt that it must be enacted sooner rather than later so as to make the Indian real estate sector more attractive for foreign investors. However, it does appear that no version of this Bill that emerges after the various objections and arguments from the industry’s stakeholders have been considered will be accepted across the board. If this is the case, it will require a strong and determined government to push it through. This also applies to the regulations pertaining to FDI in multi-brand retail — a subject that has drawn an incredible amount of political flak — which would have a major impact on India’s attractiveness as a destination for foreign retail heavyweights.

Developers have been campaigning for a faster project approval process, and this is justified but by no means easy to do. Again, the government faces the challenge of ensuring that any fast-tracked approval process does not result in misuse and exploitation. While faster approvals would boost the supply pipeline and help bring prices down, the government must also ensure that construction quality norms are not compromised in the process. Also, faster approvals could result in the provision of support infrastructure falling several more laps behind while newer precincts are being developed.
That said, swifter and more determined decision-making than what we have seen so far is definitely of the essence. Many overseas investment funds have so far abstained from the Indian real estate market because of the lack of regulation, political instability and bureaucratic quagmire. The new government will have the opportunity of making Indian real estate more investment-friendly and attractive, and this would go a long way in meeting its considerable capital requirements. Investor-friendly, streamlined policies from the new government can be a game-changer for Indian real estate.

Expectation of Anuj Puri chairman & country head, JLL India

* The industry expects the new ruling government to be less dependent on smaller coalition parties for support.
* A clear electoral mandate will help real estate investors obtain clarity on future policies, which is critical while making future business plans.
* The industry expects real estate investment trusts (REITs) to become operational in India so as to increase liquidity.
* The industry expects the approval and implementation of the pending Real Estate Regulatory Bill