Realty regulator will keep builders on a tight leash

A new law to give home buyers a better deal aims to ensure builders sell residential property on the basis of carpet area instead of ambiguous terms like “super area” while a regulator will ensure housing projects declare the status of important civic clearances.

The Real Estate (Regulation and Development) Bill, which the government plans to bring to Parliament in the budget session, has been framed under provisions dealing with property transactions in the concurrent list of the Constitution that applies to states, making the proposed legislation more than a model law.

In a bid to try and make sure developers stick to timelines, the proposed law states that realty players will have to park 70% of funds in a particular bank account so that resources are not diverted and buyers are not left in the lurch.

A real estate regulator in every state will make it mandatory for private developers to register all projects before sale of property and only after getting all necessary clearances, addressing a major concern of buyers about incomplete or fraudulent land acquisition.

According to the bill’s provisions, failure to declare status of clearances will invite up to a maximum three years imprisonment or fine that can amount to 10% of project cost.

Realty players will have to disclose project details and contractual obligations to ensure transparent, fair and ethical business practices. There can be a model agreement which is expected to reduce ambiguities in real estate transactions that not many buyers are familiar with.

Private builders are not comfortable with some of the bill’s provisions and voiced their objections at a meeting chaired by housing minister Ajay Maken and urban development minister Kamal Nath. Those who attended the deliberations included representatives of developers’ associations — CREDAI, NAREDCO and industry chambers CII and FICCI.

Builders maintain there is no need for a regulator as they are already subjected to clearances from multiple agencies. They felt the penal provisions hurt their interests, but the government might want to increase the odds in favour of consumers.

The meeting was called after the intervention of the Prime Minister’s Office which asked the ministries of housing and urban development to resolve differences and quickly finalize the long pending bill.

The government hopes that the move for a strong legislative protection for buyers, which will also rein in unscrupulous players, will help in gaining the appreciation of middle class voters who have drifted from Congress in the wake of a series of corruption scams.

Although realty developers have been asked to submit their views at the earliest, the government seems determined not to dilute consumer friendly provisions. “We are not going to compromise on any aspect of the bill that hurts the interest of common home buyers,” Maken said.

Real estate agents will also be asked to register with the regulator. “The agents, an important link between the promoter and buyer, have been unregulated. Once they are registered, it will be help in curbing money laundering,” an official said.

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HC tells NHAI to maintain Delhi-Gurgaon Expressway

Punjab and Haryana high court on Thursday asked the concessionaire, Delhi Gurgaon Super Connectivity Limited ( DGSCL), the Gurgaon police and all others concerned to put their heads together to resolve all outstanding issues to smoothen the vehicular traffic at the toll plaza on the Delhi-Gurgaon Expressway.

The high court directed the National Highway Authority of India (NHAI) to improve the condition of the Delhi-Gurgaon Expressway and service lanes near the Sirhol toll plaza in Gurgaon at the earliest for the smooth flow of traffic.

The division bench comprising justice S K Mittal and justice Amol Rattan Singh, hearing the petition filed by the concessionaire, Delhi-Gurgaon Super Connectivity Limited (DGSCL), also directed all the parties concerned in the case to convene a meeting before the next date of hearing and inform the developments to the court.

During the arguments of the case, the Haryana government’s counsel informed the court that the NHAI was not taking the case seriously and there was a need for the maintenance of road and service lanes near the toll plaza.

The Gurgaon police informed the court that authorities were conducting meetings at regular intervals to ponder over the issue and to make the toll plaza less congested for smooth flow of vehicles. Justice S K Mittal said that he would himself be making a visit to the Sirhol toll plaza in a day or two to get a first-hand account of the ground situation. He also cited an example where a serious patient could not reach the hospital in time due to the traffic jam at the toll plaza.

However, justice Amol Rattan Singh asked the Haryana government to also look at the condition of traffic snarls at Karnal toll plaza where sometimes the traffic comes to a halt for almost on a distance of one kilometre.

13 insights for India real estate in 2013

The year 2012 closed with a few notes of positivity as the inflation was below the Reserve Bank of India’s (RBI’s) projected levels and the Index of Industrial Production (IIP) growth increased in the last two months of the year, giving new hopes for 2013.

Overall, 2012 remained inactive, affecting all the major sectors in real estate. Office space absorption remained lower compared with 2011. Meanwhile, retail faced challenges of quality supply, affecting the overall absorption. The residential demand improved; however, developers continued to struggle with unsold inventories. With the expected moderation in inflation and strengthening policies, we have gathered few interesting insights for 2013 from real estate experts.

1. Economy – As per RBI, the policies will focus towards growth in 2013, although risks of inflation will continue to remain. Interest rates are expected to witness a downward correction of 100 to 150 bps in 2013. The softening of interest rates is expected to reduce the home loan rates, in turn increasing the buying of real estate assets. Increasing urbanisation and consumption despite the slowdown in GDP growth will be the key drivers of the economy in 2013.

2. Policies – The recent policy initiatives are expected to improve the investment climate and business environment, and they are likely to benefit the real estate sector in 2013. Few policies to look at in 2013 are: the Real Estate Regulation Bill, likely to be tabled in the upcoming winter session of the parliament; the real estate investment trusts (REITs) or real estate mutual funds (REMFs), expected to get launched in 2013; and the Land Acquisition and Rehabilitation and Resettlement Bill, likely to be tabled in the upcoming budget session in 2013.

3. Infrastructure – The infrastructure sector achieved a substantial FDI of USD 2.8 billion, accounting for a notable 7.7% of the total FDI inflow in FY 2012. In the year 2013, the relaxation of FDI policies in multi-brand retail is expected to surge the investment in back-end infrastructure development such as logistics. Moreover, an FDI of up to 100% is also permitted under the automatic route in built-up infrastructure and is likely to surge the development of the city and the regional level infrastructure in 2013.

4. Office Real Estate – Office space absorption in 2013 is likely to remain equal to that in 2012. Supply correction will lead to fewer options for occupiers, and steady absorption will decrease vacancy levels. Competition for space in prime buildings in prime locations is expected to increase in 2013, and these spaces will start earning a premium. Rents are expected to increase from 2H13 onwards as fewer new projects are being launched, and vacant spaces are steadily filling up. Decisions on occupying special economic zone (SEZ) spaces will be taken by occupiers who are sure of taking a position in India as they have to go live by March 2014 to avail the benefits.

5. Retail Real Estate – The relaxation in FDI policies in multi-brand retail interestingly has surged aggressive growth amongst Indian retailers to take the first-mover advantage. This is expected to drive the demand in 2013. However, as supply of retail malls remains a challenge, retailers are likely to opt for built-to-suit (BTS) options or high-street properties. As most developers are focusing on residential developments, the supply of malls will reduce in the major cities over the year. In 2013, retailers will be cautious and take more time to execute agreements as they will do a detailed analysis before closing transactions. Retailers will commit to space only if they see approvals in place and the construction of the space in progress.

6. Residential Real Estate – REITs in India allowing investments in rental housing is a new trend worth watching. The framework and details of REITs, once formulated, are likely to drive the investor demand across the prime cities in India in 2013. Another interesting trend observed in the last two years was that the stock in the range of INR 2,000-3,000 per sq ft was fast sold out. In 2013, this range is likely to shift to INR 3,000-5,000 per sq ft with the increase in inflation and construction costs.

7. Industrial Real Estate – Sale-cum-leaseback of exiting industrial assets by existing companies is likely to increase in 2013. MNCs testing the waters in India are likely to focus on BTS industrial properties. Warehousing companies are now preparing for the goods and services taxes (GST) and are slowly moving from godowns to distribution centres. The growing trend in e-retailing and FDI in multi-brand retail is expected to surge the demand for warehousing spaces in 2013.

8. Education and Health Care – There are aggressive growth plans in K-12 and skill-space educational institutions in 2013, particularly in the non-metro cities of India, where there are large opportunities. In the health care segment, hospital chains, along with day care centres, are expected to expand aggressively in 2013. Both these segments are expected to attract private equity investment in 2013.

9. Investment Sentiments – Debt capital is likely to increase in 2013. Banks are expected to be more flexible in lending. Most of the realty funds are close to their exit periods as they were invested around 2006-2007. Therefore, the exit of real estate funds is expected to increase in 2013. Meanwhile, interest on income-producing assets by institutional investors is likely to increase over the year. However, the availability of such assets will continue to remain a challenge. Assets will witness a softening of yield rates amidst increased liquidity.

10. Delhi – Most of the absorption in Delhi NCR is likely to focus around Gurgaon and Noida, with the exception of Delhi International Airport Limited (DIAL) and few select stand-alone Grade A projects of Delhi. As the demand supply gap of quality office space is expected to increase because of the supply constraints in select precincts of Delhi NCR, rents are expected to increase in certain micro-markets by 2H13. Developers will focus on delivery of the products.

11. Mumbai – Office absorption and residential demand will continue to increase in Mumbai. The trend of completion of highquality new office projects pushing up Grade A office vacancy levels and providing tenants with greater bargaining power will reduce in 2013. With banks drastically reducing lending activities over the last two years, resulting in debt remaining a constraint, not much of new  commercial supply (except spill over from 2012) is expected to be completed in 2013 and 2014. Residential launches are expected to increase; however, price drop is unlikely to happen over the year. Amidst constrained supply of quality retail malls, rental gap between Grade A malls and Grade B malls will further widen in the year.

12. Bangalore – In terms of office space, Outer Ring Road will continue to be the sought-after destination in 2013. For residential real estate, North Bangalore is expected to continue to remain as the best performing region in the city with strong infrastructure development, increased demand and price appreciation in 2013. Meanwhile, Whitefield will continue to retain its sheen for both office and residential real estate because of affordability, proximity to key work places and good social infrastructure.

13. Other Cities – Chennai, which witnessed a historical high number of residential launches in 2012, is likely to slow down in 2013. This trend is also expected in Pune. Meanwhile, Kolkata and Hyderabad are likely to witness increased launches. Prices of residential units are likely to increase in all the cities because of the increased construction costs. Ahmedabad, Bhubaneswar Kochi and Coimbatore are other cities in India that are likely to witness immense development activities in 2013.

Realtors defer launches, shift focus from luxury

Property developers who have been holding onto high prices despite falling demand, especially in the luxury segment, are finally changing course. They are not dropping prices yet, but are holding back new launches and focusing on relatively affordable homes, industry researchers said.

New project launches came down by 16% in 2012 compared to 2011 levels, and high-end and luxury segments saw a drop of 24% and 23%, respectively, says a report by real estate consultants Cushman and Wakefield (C&W). “Of the number of units launched, a majority were launched in the middle segment comprising 83% of total launches,” the C&W report said.

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Developers consider one and two-bedroom flats in Mumbai and upto three-bedroom flats in Delhi to be middle income. Those above this are considered luxury property.

Industry experts say that real estate companies are also facing liquidity issues as bankers have become cautious about lending to the sector. While private equity deals were visible till the first half of 2012, it has come down sharply in the second half.

“Banks’ credit exposure to developers has fallen from its peak growth rate of 23.21% in June 2011 to 3.88% as per the latest reported data on September 2012,” a separate report by Knight Frank India said.

“The demand of residential apartments has come down substantially but prices have remained high and in some cases developers have increased prices, especially in the National Capital Region (NCR) and Mumbai. Now a correction is taking place and prices are not likely to increase for next 18-months,” said Pankaj Kapoor, managing director at realty research firm Liases Foras.

Increasing share of peripheral markets are likely to keep prices under check, especially in Mumbai and the NCR, the Knight Frank report said.

The analysts say controlled new supply of apartments in the NCR, primarily in new sectors in the Gurgaon area, will likely keep a check on the quantum of unsold stock.

NPR delay leaves realtors, homebuyers worried

The delay in the completion of the Northern Peripheral Road (NPR) is causing financial loss to thousands of homebuyers and real estate developers who have invested their money in projects along the multi-crore project.

The investors will have to wait at least three years to reap the benefit of the much-hyped corridor. Scores of projects are coming up here. “The buyers and builders are worried as overall value of the land and flats along NPR has gone down in the past two years,” said a member of the National Real Estate Developers’ Council (NAREDCO). The decline of land value has burnt a hole in the pockets of real estate players.
The 18-km road, also known as the Dwarka Expressway, is likely to be completed by April 2015. According to the latest project status report submitted to the state government by the Haryana Urban Development Authority (Huda), the completion of the stretch in 2015 will be subject to vacation of stay order on some portion and allotment of alternative plots to the people likely to be displaced from its 4-km stretch in New Palam Vihar and elsewhere.

The NPR is being built under the public-private partnership (PPP) model and will provide connectivity between Dwarka and NH-8 at Kherki Daula. About 200 residential and commercial projects are coming up along the stretch.

At present, out of the total length of 18 km, work is underway on 14-km stretch. The project report says the construction work on the 14-km stretch is slow as only 8-km portion is ready with bituminous work. The project has already missed its earlier deadline. The stretch was supposed to be completed by March last year and the total 18-km road by end of 2012. Huda, later on, extended the deadline to December 31, 2012 and end of 2013, respectively.

Investors are now worried about the project. Amit Bhatia, a resident of Sushant Lok who has invested in a housing project in Sector 85 along NPR, said, “I have been closely following the development related to the construction of NPR ever since I invested in the project in early 2012. The developer is ready to deliver the apartment by the end of this year. But I’m worried about the completion of NPR which looks far from completion.”

The Huda report does not mention, unfortunately, about penalty on the contractors responsible for the delay on the 14-km stretch.

JSR Construction Private Limited and India Bulls Construction Ltd are jointly constructing the 14-km stretch.
A sum of about R28 crore has been spent till date out of total estimated cost of R57 crore. Pankaj Kumar, chief engineer, Huda refused to comment on the delay when contacted by the Hindustan Times.The construction work is hampered by several reasons including legal cases against the land acquired by Huda for the project. Several cases are pending in the court.

Real estate in fix: New home launches decline 16% in top 8 cities

About 1.62 lakh housing units were launched last year in India’s eight major cities — a drop of 16 per cent from 2011, global property consultant Cushman & Wakefield said today.

The cities tracked by the consultant are NCR, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata and Ahmedabad.

“Residential market across major cities in India witnessed a drop in total number of units launched by approximately 16 per cent over previous year. 2012 recorded launch of about 1,62,000 new units of residential properties across the eight major cities,” the report said.

A majority the units were launched in the mid-segment comprising about 83 per cent of total launches, it added.

NCR, Chennai, Bengaluru, Hyderabad and Ahmedabad witnessed decline in home launches compared with 2011, but Mumbai, Pune and Kolkata reversed the trend with higher launches.

NCR saw maximum launches of new homes at nearly 54,500 units in 2012, followed by Pune (24,000 new units), Mumbai (22,500 units) and Chennai (20,800 units).

“In 2012, the residential market saw proactive and innovative marketing and new launches of specialist projects on one side but restrained activities in terms of large scale development as most developers were cautious not to overestimate the end user demand market,” C&W Executive Managing Director (South Asia) Sanjay Dutt said.

High inflation as well as home loan interest rates and slow economic growth had a strong impact on the end users making them more price sensitive than previously experienced, he said.

Dutt noted that cash-strapped developers were not willing to take up projects that could fall short in interest from end users, keeping their risk exposure to the minimum.

“Investor activities however have been strong in the residential market, with many viewing this as the right time to enter the market with the much needed capital for developers. This has been the primary reason why most markets across categories experienced a rise in values,” he said.

 

Michael Schumacher Tower – MSCWT, Sector 109 – Gurgaon

Michael Schumacher Tower By Homestead.

 Michael Schumacher Tower - MSCWT

Inspired by the concept of unique “Human Architecture”, planned by Michael Schumacher “The legend” himself and this project MSWCT (Michael Schumacher World Champion Tower) is been presented by Homestead.

Take a look of the previous delivered building.
MSWCT 090211 –

YouTube

Some of the fantastic specifications’ are as under —

Ø Project land – 5 Acres (approx)

Ø Project location – sector-109

(Best residential sector in Gurgaon with the neighborhood like Shoba, ATS, Chintel etc)

Ø Total flats- 125

Ø Single tower and rest open green area with hi-tech club and swimming pool.

Ø High rise floors- 34.

Right now launching only 25 flats on 24th July with BSP 10,500/-sq.ft.

Ø Michael Schumacher himself will inaugurate the launching function and the construction will be started on the same day as 24thJuly 2012

Ø Completion of project within 3 Years.

Ø There is a Helipad on the top floor of the Tower.

Ø In this whole world there are only 7 such towers

Ø Club and swimming pool is free for the persons booking the flats during this launch.

Ø There is a swimming pool and gym in each flat of this project.

Ø Air conditioning VRV system and highly luxurious flats with imported wardrobes in the entire bedroom.

Area BHK BSP
3700 4 9000
5500 5 9000

1000 rs/sq.ft Inagural discount for first 25 units (27/6/2012). One can also bargain some broker discount.

Booking Amount- 20 lakh rupees only

Payment Plan-

30 days – 20% including booking amount

60 days – 10%

After this CLP < Construction Linked Plan > will be considered .

Ø Next revision of rates on 24th August 2012 = BSP 12000 rs/sq.ft.

Ø Possession keys will be distributed by Michael Schumacher during a grand celebration.

Ø The world is full of magical things waiting for our wits to grow sharper .

Location Map

 

Michael Schumacher Tower - MSCWT, Sector 109