Suburbs aid Delhi-NCR’s growth

It is important to observe how the Delhi National Capital Region (Delhi-NCR) real estate markets have performed over the past year or so. All three sectors - office, retail and residential - are witnessing growth because of the suburban towns surrounding the prime city. The reasons for this are the large untapped development potential in the suburbs and the substantial financial viability and affordability that are available to both developers and end-users in these locations.

There was a period of stagnation in 2012, followed by office space occupiers adopting consolidation measures. The global economic signals were sluggish and the impact was most visible on Delhi NCR office market that is driven primarily by the IT sector.

As Europe and US are in the throes of a slowdown, office demand has dipped and, as a result, 2012 recorded the lowest absorption volumes in eight years at 3.8 million sq ft.

Occupiers of office space were looking at portfolio rationalisation and cost control measures such as relocation and/or consolidation and space inquiries were the dominant aspect of demand in the office markets.

 It is pertinent to note that since 2009, the annual new supply of commercial office space has caused the total stock to rise by 70% (from end-2009) to nearly 70 million sq ft at end-2012, says JLL India in its latest report. Previously, from 2006 to 2009, stock had more than doubled to more than 40 million sq ft by end-2009. This points towards new supply also showing a slight correction, as demand levels remained steady.

Demand levels started showing an improvement over the first half of 2013, with fresh absorption already at 62% of 2012 levels. Gross transaction volumes also showed an increase and were nearly 1.8 million sq ft during 2Q13, compared to 0.98 million sq ft in 1Q13, a substantial 84% q-o-q improvement. The prime office sub-markets are still the suburbs of Gurgaon and Noida, says the report.

Within these sub-markets, DLF Cyber City and Sohna Road in Gurgaon and the Noida-Greater Noida Expressway in Noida are the most sought after office destinations. The office markets of Delhi (CBD and SBD) remain marginal players in terms of fresh supply and absorption volumes.

The Delhi NCR retail sector has a unique character - the market, with its combined per capita incomes being one of the highest in the country provides every retailer with a healthy consumer base.

For analysis, the JLL has segregated organised retail in this market into the Prime South (South Delhi retail mall developments), Prime Others (mall developments in the north, west, east and the rest of Delhi) and Suburbs (Greater Noida, Noida, Ghaziabad, Faridabad and Gurgaon) sub-markets.

Retailers have over recent quarters been aligning their growth strategy with a focus on their business margins and expanding in previously untapped markets. The focus was to grow selectively in existing prime retail assets or select new and under-construction projects that offered the optimum advantages of location, brand visibility and a pure leasehold ownership model. This led to slow absorption volumes that were the norm across most quarters during the past 18 months.

Only first quarter and fourth quarter of 2012 saw moderate absorption, primarily because of new project completions in the suburbs that became operational with moderate pre-commitment levels. The period under consideration was marked by two major trends. One, retailers were downsizing the number of stores, closing those that were recording low business volumes. Large format retailers were also looking at reducing their typical store sizes.

Mall management teams, on the other hand, became active in tenant management, undertaking periodic tenant performance reviews and letting go low-performing tenants for better prospects.

New Land Acquisition Act is pro people: Jairam Ramesh

Jairam Ramesh

MUMBAI: The Union Minister for Rural Development Jairam Ramesh today allayed the fears expressed by the Indian industry that the new Land Acquisition Act would make projects 'economically unviable'.

Addressing a press conference here the minister said that, "The new act applies only to the land acquired by 'Central and State authorities' for any public purpose, while there is no bar whatsoever, on purchase of private land. He said “industry must look beyond land acquisition by Government and explore land purchase opportunities. In fact, in 20 years from now, there should only be land purchases and no land acquisition”.

Reiterating his stand that land acquisition should become an act of last resort, Ramesh said that his Ministry has been working towards improving land records management in the country and promoting transparency in land sales. He informed that Rs 1000 crore National Land Record Modernization Programme is being implemented with focus on computerization of land records, digitization of maps and resurvey. He also said that Maharashtra has progressed well but is yet to catch up with Haryana, Gujarat, Karnataka and Tripura.

On sale and registration of land, the minister said that a bill seeking amendment to the Registration Act of 1908 has been introduced in Parliament, which when passed, wold put all land sales and registration records in public domain. “When transparency increases, it will become easier for corporate to purchase land” he observed.

Speaking about the SEZs, the Rural Development Minister said all land acquisition for future SEZs would be in accordance with the new Act. He however admitted that the Act presently has no provision to deal with denotified SEZs. Ramesh termed that the new act, which replaces 119 year old act as ‘historic’. 

Turmed the 1894 Act on land acquisition as 'undemocratic' which provided discretionary powers to District Collectors, the minister said, the new Act is humane as it provides rehabilitation and resettlement.” He said to represent this spirit, the new act has been re-christened as the “Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act.”

"I believe that the old law was 'anti-democratic' as governments used to buy land from people at lower price and sell it to business houses at a premium rate. The collector decided the urgency, the amount of compensation and resettlement provisions if any. Hence the old act created public anger nationwide and was the reason behind mass movements on land issues in Uttar Pradesh, Madhya Pradesh, and Gujarat along with Odisha,” said the Minister.

He elaborated that under the new act the powers of the Collectors, who often acted under the instructions of state governments have been 'considerably curtailed'. The purpose of land acquisition has been clearly spelt out and major emphasis has been laid on rehabilitation and resettlement. He said that consent of Gram Sabha in Schedule V areas – mostly tribal dominated areas, and consultation with Gram Sabha in other areas, has been made mandatory.

The Minister further added, that if the Government failed to utilize the land so acquired for public purpose within five years, it will be required to return the land to its owners.

The Minister also said that the new Act promises fair compensation for the farmers and those who lose their lands. “Land is still considered the biggest social security in India. Since they will be dispossessed of their assets, they are entitled for a fair and just compensation” he said. 

The new act stipulates that compensation will be paid at twice the rate of three year average of highest selling price in urban areas and up to four times the average highest sale price in rural areas. In addition, there is also a provision of leasing the land instead of selling it, thereby opting to receive a regular income over a longer period of time.

The Minister said the new law has been made under the concurrent list of the Constitution and States could only improve upon the quantum of compensation as well as other provisions in favour of the land owners and farmers. 

He said it would be notified either on January 1, 2014 or April 1, 2014 and appealed to all state governments to implement it in right spirit.

NRIs go for property investments for maximum return

Om Ahuja

The global capital and currency markets have been volatile for last the few months, also triggering serious turbulence in the rupee. Current account deficit and the fact that foreign institutional investors are selling heavily on the Indian bond market have been the key triggers for the rupee's repeated depreciation. Factors such as negative export and industrial growth have triggered even more uncertainty, specifically in the currency trend pattern. 

Will The Rupee Depreciate Further?

The Central Government has passed the Food Security Bill, which effectively increases subsidy for the nation. The fact that the Lok Shabha elections will be held in in 2014 may be cause for more of such populist measures - nevertheless, the country’s overall financial status does not look very exciting right now. We may continue to see volatility over the mid-term. Moves such as importing of fuel would further hurt the economy.

NRIs And Real Estate

When it comes to Indian real estate, NRIs take centre-stage when the rupee depreciates. The foreign exchange that they tend to funnel into the sector increases significantly when the rupee slides. In times of rupee volatility, banks institutions and developers tend to announce various schemes aimed at attracting NRIs. At the same time, NRIs are also attracted to the higher interest rates on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) deposits, as the standalone rupee returns look quite lucrative to them. 

Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India, says, "Paradoxically, data covering the last two decades indicates that NRIs have, in fact, been losing out when they funneled their foreign exchange into such accounts during such volatile times. They have erroneously assumed that they are capitalizing the rupee's volatility by locking into high yielding deposits. However, this route has caused NRIs to miss out on overall capital returns, because the perceived benefits of high interest rates are actually eroded by the depreciating rupee."

It is therefore wrong for NRIs to assume that they can garner good returns by locking their foreign exchange into high-yielding deposit. The reason why more and more NRIs are choosing to invest in Indian real estate instead is because they are now aware that this is the only route that assures them of optimal benefits. As long as they maintain a broad investment horizon and have chosen their properties well, the capital appreciation on real estate translates into multi-fold that put all other asset classes in the shade.

Traps On The Path For NRIs

NRIs have always been soft targets for hyped-up real estate marketing by developers. The objective of such marketing is to make NRIs believe that the projects being offered have been specially created for them - that are not standard offerings on the market. Projects being marketed directly to NRIs are trumped up as the best options that money can buy in India.

The fact is that most of these projects are not professionally managed, which has extremely negative implications for someone who is not physically present in India. Lack of proper project and facilities management results in accelerated dilapidation of neglected units, and security also becomes an issue. There are often no provisions for paying society dues from abroad. Likewise, NRIs who have made a sentiment-driven property purchase in their own Indian hometowns often overlook that paying dues such as property tax online may not be an option in these locations. The end result is that the property turns out to be a depreciating and legally compromised money trap.

For these and many other reasons, NRIs should not give in to sentiments or manipulative marketing while making a decision on buying property in India. Such decisions need to be based on sound advice from professionals, with the objective of reaping good returns on investment.

For NRIs, the Indian real estate market definitely holds the highest possible investment potential. However, no such investment should be done on impulse, and it is at all times advisable to maintain a healthy long-term investment horizon of between 7-10 years.

India can build sustainable cities: World Bank

Rural areas adjoining India’s major metropolitan cities are witnessing faster growth in terms of economic development and higher employment generation than the mega-cities, says a new World Bank report. 

Examining the phenomenon of rapid “suburbanization” that India is undergoing, the report offers options to city planners and policymakers to ensure that the movement of economic activity away from city cores does not affect their potential to emerge as powerhouses of growth.

The report, 'India’s Urbanization Beyond Municipal Boundaries,' analyses the patterns of India’s urbanisation derived from geo-referencing and linking the population and economic census, to examine whether or not “suburbanization” is enhancing productivity by tapping agglomeration economies. 

Existing data suggests that the seven largest metropolitan cities in the country did not increase their overall shares in national employment between 1993 and 2006. While the largest metropolitan centers (Mumbai, Delhi, Bangalore, Kolkata, Chennai, Hyderabad, and Ahmedabad) saw a 16% loss in manufacturing jobs between 1998 and 2005, job growth in suburban and secondary towns and villages, (close to the metropolitan areas), was 12% and 45% respectively.

The report looks at this striking feature of India’s spatial transformation at a time when 90 million people joined its urban ranks in the last decade, and its cities are projected to be home to another 250 million people by 2030.

Such “suburbanization”, beyond the municipal boundaries of metropolitan cities, is leading to stagnation in the heart of metropolitan centers where land management policies are limiting the extent and intensity at which land can be used by industry, commerce and housing, the report says. The economic push away from city cores is also imposing a burden on businesses and people. Transport costs for freight are among the highest nationally between the metropolitan core and its periphery. In addition, infrastructure access and quality -- for water, electricity, and sanitation -- is much worse at the urban periphery compared with at the core. These challenges hurt productivity, mobility, and livability in the major cities.

 “With the right policies in place, the faster a country like India urbanizes, the faster it could reduce poverty and increase shared prosperity,” says Onno Ruhl, World Bank country director for India. 

“Experience the world over has shown a crucial link between urbanization and economic growth. This is why the World Bank Group under its new Country Partnership Strategy for India (FY2013-17), will deepen its support—at the national, state and municipal levels—to increase the impact of India’s urban transition to inclusive growth and service delivery, and help improve the livability of the cities,” he added.

The report suggests the need for better coordination between planning for land use and planning for infrastructure, so that densification of metropolitan areas can go hand-in-hand with improvements in infrastructure. It recommends the need to institutional reforms that would help service providers recover costs for services and reach out to poorer neighborhoods and peripheral areas. In Colombia, for example, tariff reforms in the water sector helped in recovering costs. With almost 90% of households in Colombia having metered connections, price increases nearly halved demand, and that, in turn, allowed expanding service coverage without requiring major new infrastructure.

 “Coordinating land use transformation with infrastructure improvement is one of the key challenges for Indian cities. Redeveloping existing cities and accommodating demand for urban expansion is equally important,” said Tara Vishwanath, lead economist and co-author of the report.

The report also suggests that the physical connectivity between metropolitan hubs and their peripheries should be strengthened to attract more people and businesses and make it economically viable. “Better land policy, improvement in infrastructure services and faster connectivity are the three critical areas that can help India reap dividends from improved spatial equity and greater economic efficiency that come with urbanization,” Vishwanath sums up.

For The Lack Of A Road…

Pune has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decrease the pressure on the central city and encouraged an outward growth pattern, writes Anil Pharande, Chairman – Pharande Spaces & Vice President – CREDAI (Pune Metro).

There are often comparisons made between the infrastructure of Mumbai and Pune. The popular consensus seems to be that both cities are equally challenged as far as supportive infrastructure is concerned. This is inappropriate for two reasons – one, Mumbai’s growth pattern has been very different from Pune’s. 

The city has evolved into the country’s financial capital, and the pressures on it are enormous and overwhelming, considering the fact that a significant part of it is an island that cannot grow horizontally to accommodate the growing real estate demands.

Pune, on the other hand, has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decreased pressure on the central city and encouraged an outward growth pattern. 

The challenges on Pune’s infrastructure – particularly its road network - have more to do with the speed of this growth. While there are various proposals for roads and road widening, these have to be translated into real time to be effective.

The pockets of infrastructural under-development are the result of both developers and the Government concentrating on existing growth areas and sidelining those with high future potential. It is a known fact that no area can grow in terms of residential, commercial and retail real estate unless the necessary infrastructure is first put in place.

This is quite a common phenomenon that is the result of the principle of fastest returns almost instinctually followed by both developers and the Government. Bangalore, for instance, was initially not well planned for radial expansion. The approach in this city was simple – where Information Technology projects went, residential projects followed. IT and ITeS, as business lines, are not dependent on a city’s CBD areas and can workably exist in areas where property prices are low.

Once such a project is established, residential, commercial and retail establishments follow. Since this kind of growth in no way follows a master plan, the result is haphazard pockets of growth. This naturally leads to the neglect of areas that have not been so favoured. The syndrome is also evident in the case of other industries such as manufacturing.

To identity another factor that has compromised Pune’s holistic growth in terms of real estate viability - the first masterplan for the city designated a much more progressive ‘roadmap’ for the city’s road network. However, even today, key roads leading to new growth areas are not being put in place with the speed necessary to ensure that these new areas have the requisite connectivity.

In comparison, the Pimpri Chinchwad Municipal Corporation (PCMC) has been proactive in terms of a proper road network. This explains why there have been such spurts in growth and corresponding real estate values in this region. Even within Pune, there were earlier precedents wherein languishing areas were given fast-paced infrastructure upgrades because of an new market catalyst. For instance, the Youth Commonwealth Games brought with them the fast-tracked enhancement of Baner Road and Pashan Road.

Land Acquisition Bill not against industry: Minister

New Delhi: Allaying fears of domestic industry on the Land Acquisition legislation, the government
said that the law is not against Indian industry and that the corporates should involve local people in the development process.

Minister of State for Commerce and Industry E M Sudarsana Natchiappan said the industry should reach out to people of those areas where they propose to set up projects and explain about the advantages locals can have in terms of employment and development, a PTI report said.

He said corporates are raising concerns over the law, saying it would impact them but "it is not the case".

"You have to bring (local) people on board (while acquiring any land for a project)," Natchiappan said here at a CII function.

India Inc termed the Land Acquisition legislation as a retrograde step and said this could have an adverse impact on the country's industrial and infrastructural development.

The domestic industry has also said the provisions of the Bill may push up cost of acquiring land by up to 3.5 times, making industrial projects unviable.

The Bill, which was passed by the Lok Sabha and Rajya Sabha last month, will replace the British era's act of 1894. "Involve the society. Have conversation with them. You have to work with them. Tell them about the benefits of the projects," the Minister said.

He asked the industry to undertake a specialised study of the area and focus on issues like bringing people under the projects. "How you can make them a facilitator rather than a barriers. Human Resource managers should trained to deal with them".

The Minister also said that the industry view on the food security law that it would put huge burden on the exchequer was not correct.

He said the law would benefit companies in sectors like fertiliser, seed and pesticides. "You should not have the feeling that we are wasting the money," he added.

The plan is seen as the biggest in the world with the government expected to spend about Rs 1,25,000 crore annually on supply of 62 million tonnes of rice, wheat and coarse cereals to 67 per cent of the population.

Infrastructure trust fund to become a reality soon

The Government is working on new Infrastructure Trust Fund (ITF) and structure will be finalized in next two months which is in the nature of Real Estate Investment Trusts (REIT), said Dr Arvind Mayaram, Secretary, Department of Economic Affairs, Ministry of Finance at an ASSOCHAM event held in New Delhi. 

While addressing the ASSOCHAM 3rd International Summit on Infrastructure Finance Dr. Mayaram said that under the new structure of Infrastructure Trust Fund, the underlying revenue of project will be transferred to a trust and the trust will issue units to investors, including private and foreign investors. The new structure is mainly popular in countries like Singapore, Hongkong and USA.

Dr. Mayaram also highlighted the innovative ways to finance infra projects like public private partnership (PPPs) that offer a number of advantages in terms of leveraging public capital to attract private capital and undertake a larger number of infrastructure projects, introducing private sector expertise and cost reducing technologies to bring in efficiencies in operation and maintenance.

Therefore, the governments in various economies are promoting PPPs an effective tool for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services, added Dr. Mayaram.

“Infrastructure Debt Funds (IDFs) through innovative means of credit enhancement is expected to provide long-term low-cost debt for infrastructure projects. The cost and tariff of infrastructure services are likely to go down as a result of low cost long term debt provides by IDFs. Potential investors in IDF may include off-shore institutional investors, off-shore High Net worth Individuals, & other institutional investors (insurance funds, pension funds, sovereign wealth funds, etc.). The income of infrastructure debt funds has been exempted from income tax. The reduction in withholding tax has also been allowed on interest payment on borrowings of IDFs from existing 20% to 5%”, said Secretary, Department of Economic Affairs here today.

He also emphasized on the tax free bonds, he said that the government has attempted to broaden the corporate bond market by according tax free status to infrastructure bonds. Government has proposed to allow tax free bonds amounting to Rs. 50,000 crore during the financial year 2013. These bonds are issued with a minimum tenure of 10 years and maximum of 20 years. These bonds, however, do not offer any benefit of tax-savings at the times of investment.

Apart from devising innovative ways to of financing infra projects, Dr. Mayaram said, it’s equally important to provide an enabling environment to the investors. The government has also taken several initiatives by setting up of Cabinet Committee on Investment to fast track project clearances. The external commercial borrowing (ECBs) has been made accessible to all infrastructure players under automatic route. He also mentioned that the harmonization of master list of infra projects, regulators in road, port and railway sectors and review of the PPP approach in the road sector.
   
Speaking at an ASSOCHAM event, Dr. Mayaram said, “in India, the twelfth five year plan lays special emphasis on development of the infrastructure sector for sustaining high growth and ensuring inclusive growth. The total investment in the core infrastructure sector during the 12th five year plan is estimated at approximately USD 1 trillion, USD 500 billion of which is expected to come from the private sector”.

The greater share from the private sector has been encapsulated considering the fact that the share of private participation in infrastructure investment has increased from 22 percent in the tenth five year plan to 38% in the eleventh plan and is expected to be about 48% during the twelfth five year plan.

Mr. Mayaram said, the deficit in infrastructure sector is not peculiar to only the developing economies; the advanced economies are also facing the challenge of maintaining and upgrading the extensive infrastructure networks that have been created. It is estimated that the US alone would require at least USD 2 trillion to meet its infrastructure needs and the forecast investment needs for infrastructure improvements total upward of 2 trillion Euros across the continent.

Others who spoke during the ASSOCHAM conference were Mr B.K. Chaturvedi, Member, Planning Commission, Mr Rajkumar Dhoot and Mr. Anil K Agarwal, Past Presidents of ASSOCHAM, Mr S.C. Aggarwal, Chairman, ASSOCHAM Micro Finance Committee & CMD SMC Group and Mr D.S. Rawat, Secretary General, ASSOCHAM.

Rohan Builders and AVREF to develop residential project in Bangalore

Pune: Rohan Builders, one of Pune's leading residential developers with existing presence in Bangalore, has partnered with Avenue Venture Real Estate Fund for development of a residential project in East Bangalore.

As per the transaction, AVREF, a Mumbai-based domestic real estate fund, has invested about Rs 55 crore in Rohan’s project. The Pune division of Jones Lang LaSalle India Capital Markets, acting as transaction advisor, was instrumental in closing the deal, a release said.

One of the most established developers in Pune and Bangalore, Rohan has projects such as 'Rohan Mithila' and 'Rohan Madhuban' in Pune and the award-winning 'Rohan Ashima' and 'Rohan Jharoka' in Bangalore, among others, to its credit. This is the first time Rohan has adopted the private equity route for its portfolio expansion. 

 AVREF, which primarily invests in residential projects in Pune, Bangalore and Chennai, identifies developers on a growth trajectory and partners with them right from the initial stage of land acquisition, found the transaction is well within its strategy and investment guidelines.

Suhas Lunkad, CMD - Rohan Builders, said, "The size of the project is approximately 7 lakh square feet of saleable area and is located in Boganahalli, one of the fast-developing corridors of Bangalore city. We found the investment objectives and philosophy of AVREF aligned with our own. Along with our expansion plans in Pune, this acquisition gives us a welcome opportunity to expand our existing footprint in Bangalore. These two cities represent the highest potential for developers catering to residential demand from India's thriving IT sector." 

 Anuj Puri, Chairman & Country Head  - Jones Lang LaSalle India said, "This deal once again proves that, even in times of curtailed liquidity for real estate, there is quality capital available for quality projects by established and credible developers. Jones Lang LaSalle India is currently working on a number of similar deals on behalf of our clients."

Boganahalli, situated along the Marathahalli-Sarajapur stretch in East Bangalore, is strategically located in the midst of the IT Corridor on Outer Ring Road. The site is located on the optimally performing stretch of the ORR (Outer Ring Road) with residential destination for IT/ITeS knowledge professionals.

Alu-Form technology for stronger homes in less price

The Alu-Form system is a revolutionary innovation in construction technology that allows for the speedy, accurate and highly consistent casting of all internal and external walls, columns, beams, floor slabs, stairs and other parts of a concrete building. It is an integrated system which merges the wall and slab panels into a seamless unit. With a drastic reduction of form-jointed sections, the end products have superior resilience to wear, tear and degradation.

"At Amit Enterprises Housing Ltd, we are engaged in a constant quest for innovative methods of delivering quality homes to our customers. One aspect of this quest is finding and implementing new methods of cost-effective, eco-friendly, high-grade construction. We see no reason why homebuyers should compromise on quality when they approach us for homes that fit their budgets. These factors, along with our continuing commitment to the principles and practice of sustainable development, have logically led to our adoption of Alu-Form construction technology in our projects. This extremely progressive technology is now being used in two of our projects in Pune and also one project in Nasik," says Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The Alu-Form Construction Method

Using the building’s architectural blueprint as a guideline, highly resilient aluminium panels are pre-designed for all concrete elements of the building’s superstructure. Alu-Form technology allows internal electrical fittings and plumbing to be incorporated with a high degree of design efficiency, and as part of the overall building plan. This factor reduces the probability of electrical and plumbing failures. On the rare occasions when they do occur, such problems can be quickly isolated and fixed.

This contributes to the overall cost-effectiveness of owning a home constructed with Alu-Form technology. Moreover, the use of this construction technology vastly reduces the chance of on-site mishaps, making it one of the safest systems for building construction currently available.

Construction Site

Alu-Form construction technology involves extremely efficient, light-weight and flexible materials and cuts down on the need for messy brickwork, concrete leakage and the use of conventional, polluting construction equipment. It is therefore one of the most environmentally friendly construction techniques on the market

Significantly, Alu-Form technology puts an end to the problems of construction irregularities and asymmetrical aesthetics which plague even the best of projects. The finished units are flawlessly balanced and streamlined, providing a finished and sophisticated look and feel.

A Giant Step Towards Affordable Housing

The basic equipment used in Alu-Form construction technology can be reused over upto 300 times, which means that there is significantly reduced wastage. The implied savings during the construction process can then be passed on to buyers into the finished product, making Alu-Form construction technology one of the most viable means of delivering budget housing in cities like Pune.

Since it involves less skilled labour and conventional construction materials, it is ideally suited for the speedy completion of affordably priced homes. The adoption of this revolutionary construction technology is a vital step forward in making budget housing available within market-viable timelines. It will play an extremely important role in bringing India a step closer towards meeting its massive shortfall of affordable housing.

JLL India gets Sanjay Chugh as Residential Head for Chennai and Bangalore

Sanjay Chugh

CHENNAI: Jones Lang LaSalle India, the leading real estate research and consultancy firm, has appointment Sanjay Chugh, a veteran South India real estate professional, as Head - Residential Services, Chennai and Bangalore. He will assume his duties from September 18, 2013, a release said.

Sanjay has over 20 years of experience in the real estate business, and is a well-known residential property specialist and thought leader in South India's key markets. Interestingly, he was associated with the Firm from 2005–2009 and was instrumental in building and establishing its residential services vertical. He was also responsible for developing an exclusive residential sales model in Chennai, which eventually became the Firm's key differentiator in the marketplace.

Immediately prior to his current appointment at Jones Lang LaSalle India, Sanjay spearheaded a successful Chennai-based real estate venture called Skylines Property Consultants. This venture distinguished itself by the consistent execution of large-ticket residential sales transactions and multiple joint venture deals in the South Indian markets. 

Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India says, "Sanjay's return to Jones Lang LaSalle India is nothing less than a landmark event for our residential services business in Bangalore and Chennai. Thanks to his admirable track-record in identifying and successfully servicing key opportunities in this highly competitive space, he certainly needs no introduction. Sanjay's experience in managing a variety of complex and coveted assignments and his vast expertise in the residential space will be distinct assets to the Firm." 

In addition to this key appointment, Jones Lang LaSalle India has also recruited a number of core team members from Sanjay Chugh's previous venture to magnify the Firm's capability in the market.

Sanjay Chugh says, "I am more than delighted to return to Jones Lang LaSalle India, which had provided me with a firm and extremely valuable foundation for my ensuing successes. In my new role, I have been perfectly positioned to play an impactful role in ramping up the Firm's stature as the leading residential services provider in the key South Indian markets."

TN farmers demand price as per new Land Acquisition Bill

Kancheepuram: Even before the Land Acquisition Bill receives Presidential Assent and became an act, farmers in Cheyyur in Tamil Nadu have demanded compensation as per rates fixed in the legislation for their farm lands sought to be acquired by a subsidiary of Power Finance Corporation for a power plant, PTI reported.
 

The farmers accused the Coastal Tamilnadu Power Limited (CTPL), floated by public sector PFC for implementing the 4000 MW Cheyyur Ultra Mega Power Project, of attempting to rush through the land acquisition process to avoid paying higher rate that would come into being once the act was notified.

The CTPL is acquiring land in Cheyyur and surrounding hamlets of Chitharkadu, Vedal and Gangadevan Kuppam in the district for the project.  The farmers of these villages in a petition presented o the District Collector said the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013 passed by Parliament provided for
higher compensation for farm lands acquired.

They said the CTPL was acting in "great haste" and served notice on farmers to acquire their lands for a price of 6.5 lakh per acre, the old guideline value.

The new guideline value would be four times that of the existing rate and would enable the farmers to buy alternative land to continue their occupation, representatives of the farmers said, adding they would not cede their lands till the demands were met.

Sriperumbudur landowners condemn meager compensation

Landowners in and around the villages of Sriperumbudur near Chennai are hopeful after the passing of the Land Acquisition, Rehabilitation and Resettlement Bill (LARR) in both the houses of Parliament recently that they will get adequate compensation for their land being acquired by the State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) for industry and other purposes. 

 

 Several villages across the satellite town of Sriperumbudur, an upcoming industry hub near Chennai, are under SIPCOT’s acquisition and millions of acres of land have been identified and notified in the government gazette for acquisition. 

Many landowners said that they had received a letter from the SIPCOT’s special tehsildar saying that their land has been under acquisition but are disappointed to see the meager compensation amount mentioned, which, they said, was too low compared to the prevailing market rate.

Govindan, who owns a three-acre land in Vallam village, is all in tears. He has to forgo his land for a meager Rs 200 per sq ft compensation (as announced for his land) whereas the prevailing land value there goes up to Rs 800 per sq ft. He is pinning on the hope that the Land Acquisition, Rehabilitation and Resettlement Bill will enhance the compensation. He has two daughters and kept this land for their education and marriage expenses. 

The Bill, which is aimed at protecting the interests of the landowners by providing four times the market value of the land acquired, has been passed by both the houses of Parliament on September 4.  The last hurdle for the bill to become a law is the President’s consent. Once the President signs the bill, it will become a law.

The office bearers of the newly formed ‘Sriperumbudur Manai Kappor Sangam’ have expressed hope that the bill will help their 150-odd members to get a fair compensation. “Most of our members who have lands in villages like Vallam, Vadagal, Palanaloor, Mathur, etc are being offered a meager compensation running from Rs 120-Rs 250 per sq ft, depending upon the proximity from the main road and nature of approvals (whether it is Panchayat or DTCP).  

A few members of the Sangam have recently met the Kanchipuram District Collector and gave a representation requesting him to enhance the compensation amount.

Expressing the compensation is very low compared to the market value of the area, Gopal Sharma, who owns a piece of land measuring 4800 sq ft in Vadagal, said he is hopeful that the state government under the aegis of Chief Minister J Jayalalithaa would do justice to the landowners in Sriperumbudur by enhance the compensation as per the current market value. 

“We are very upset that nearby plots are selling like hotcakes and several frontline builders have already launched residential projects on the Sriperumbudur-Oragadam stretch. The flats are being sold from Rs 3000 to Rs 4000 per sq ft,’ rues Ravikanth, who owns a land at VGP Vinoth Town in Vadagal, very close to the six-lane highway behind Rajiv Gandhi memorial. He has been offered Rs 160 per sq ft for his DTCP approved land whereas the current market price for land at nearby areas goes up to Rs 850-900 per sq ft. 

To up the ante, some of the landowners have filed cases in various courts against land acquisition. It is reliably learnt that SIPCOT has not sent letters to these litigants.

“We don’t want to contest against the land acquisition as the government wants it for industry or public purposes. But we are aggrieved about the compensation part. To make the matter worse, the SIPCOT is hurrying up in settling the compensation to those who are surrendering the documents. 

Most of the landowners are staying away from Chennai and they have no time and energy to fight against the compensation. Also, we have no one to pursue the state government. I hope the LARR bill would make the state government to enhance the compensation to the landowners of the Sriperumbudur,’ says S Ramamurthy, who owns four grounds in Vallam village.

All the members of the Sriperumbudur Manai Kapor Sangam had individually written to the Kanchipuram collector and SIPCOT Special Tehsildar expressing their inability to accept the compensation amount. 

When contacted the SIPCOT, the writer was informed that the special tehsildar has been transferred and new tehsildar will take charge soon. 

It is either the collector or the tesildar who keep changing frequently but the status of the ‘gullible’ landowners of Sriperumbudur remains the same, who neither could build a house nor sell the land.

New-look land acquisition bill will lessen grievances

Through all these provisions, the new Bill attempts to address the conventionally prime reasons for litigation and grievances. Hence, litigation and related costs can be expected to decline, says, Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India.

The Land Acquisition Bill, which the new Bill now supersedes, is a century-old law with many archaic elements and loopholes. The new Land Acquisition Bill essentially champions the cause of the marginalised section and puts in place many safeguards and checks. The Parliament has now passed the new Bill with amendments such as exclusion of irrigation projects from the compulsory Social Impact Assessment study within a period of six months from the date of acquisition, and tweaks in Clause 25 of the Act pertaining to the determination of compensation.

In India, a majority of land acquisition-related disputes / litigations have erupted from the unfair and highly subdued compensation to land owners, and lack of thorough and clearly-defined rehabilitation and resettlement policy for those displaced due to acquisition and acquisition of land in regions / areas inhabited by scheduled castes and other tribal people.

The new Bill addresses all of these concerns. It has aggressively ramped up the valuation to twice the guidance values in urban areas and four times the Guidance value in rural areas. The law clearly states that no one shall be dispossessed until and unless all payments are made and alternate site for resettlement and rehabilitation have been prepared. Also, it prohibits the acquisition of land in scheduled areas without the consent of the rural authorities, or ‘gram sabhas’.

In case of land acquisition for PPP projects or for a private player, the Bill requires consent of no less than 70% and 80% of those whose land is sought. It also stipulates the provision of 40% profit sharing with original owner in case of sale of land to the third party for a price higher than compensation paid.

Taking a holistic view of the Bill and its potential implications on the Indian real estate and infrastructure industry, there seem to be two opposing forces at work here. On one hand, legal complications and grievances related to land acquisition are expected to subside, thus streamlining the acquisition process. On the other, a sharp increase in land-related costs will lead to hugely enhanced financial burdens to developers, since the Bill add to add to the cost of projects, that too substantially in some cases.

In a developing economy like India, where infrastructure-related projects and urbanization are of paramount importance, enhanced project costs resulting from the new Bill might be a severe setback for infrastructure development and urbanization attempts.  The enhanced compensation clause and the R&R clause will have a direct cost implication. The consent clause holds the potential to delay the start of such project.

In fact, many infrastructure projects might eventually be rendered unviable and the private sector - already not too interested in partnering with the Government in wake of delays and regulatory complications - might be even further discouraged from considering any potential partnership with the Government in PPP projects.

Given the fact that the provisions of the Bill will be applicable in cases of land acquisition of 50 acres in urban areas or 100 acres in rural areas, most residential, commercial and retail projects will be immune from these clauses as they occupy an area smaller than stipulated in the Bill. Also, most of these projects were initiated after adequate compensation to landowners and with their 100% consent. Nevertheless, an important trend in the real estate industry that will further pick up is joint development. Many developers looking to safeguard profit margins and share the risk will now follow the joint development route.

Thus, in a nutshell, the infrastructure industry - and its players - will be more severely impacted than real estate industry. As far as institutional capacity to implement the key reforms of Bill is concerned, it does not seem that we have the infrastructure and systems in place to effectively make all the reforms work on the ground. The law and order machinery will need to be augmented. Also, many regulatory mechanisms will need to be initiated or made robust for continuous monitoring.

Adjudication mechanism of Real Estate Bill 2013

The Real Estate (Regulation and Development) Bill, 2013, introduced in the Rajya Sabha on14 August 2013 provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.

The Bill provides for adjudication of disputes by an adjudicating officer, to be appointed by the Authority not below the rank of Joint Secretary to the State Government, to adjudge the compensation to be paid under sections 12 (Obligations of promoter regarding veracity of advertisement or prospectus), 14 (Adherence to approved plans and project specifications by promoter) and 16 (Return of amount and compensation) of the Bill, a PIB report said.

Also the Bill provides that in case any person whose complaint in respect of matters covered under sections 12, 14 and section 16 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under section 9 of the Consumer Protection Act, 1986, on or before the commencement of this Act, he may, with the permission of such Forum or Commission, withdraw the complaint pending before it and file an application before the adjudicating officer under this Bill.

The adjudicating officer while adjudging the quantum of compensation or interest is required to have due regard to (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused as a result of the default; (c) the repetitive nature of the default.

For disputes under any other provision of the Bill, the matter is to be referred to the Regulatory Authority for determination, which has powers to impose penalty or interest for contraventions.

The Bill specifies the penalties to be paid, for contravention of the provisions of the Act and the penalties to be paid for non-compliance of the directions of Regulatory Authority or the Appellate Tribunal, by the promoter or the real estate agent or the allottee as the case may be.

Contravention by the Promoter:

Punishment for non-registration under section 3:

Sec 51. (1) If any promoter contravenes the provisions of section 3, he shall be liable to a penalty, which may extend up to ten percent of the estimated cost of the real estate project, as determined by the Authority.

(2) If any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend to a further ten percent of the estimated cost of the real estate project, or with both.

Penalty for contravention of section 4:

Sec 52. If any promoter knowingly provides false information or contravenes the provisions of section 4, he shall be liable to a penalty, which may extend up to five percent of the estimated cost of the real estate project, as determined by the Authority.

Penalty for contravention of other provisions of this Act:

Sec 53. If any promoter contravenes any other provisions of this Act, other than that provided under section 3 or section 4, or the rules or the regulations made there under, he shall be liable to a penalty which may extend up to five percent of the estimated cost of the real estate project as determined by the Authority.

Penalty for willful failure to comply with orders of Authority by promoter:

Sec 55. If any promoter, who willfully fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five percent of the estimated cost of the real estate project as determined by the Authority.

Penalty for willful failure to comply with orders of Appellate Tribunal by promoter:

Sec 56. If any promoter, who willfully fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to ten percent of the estimated cost of the real estate project as determined by the Appellate Tribunal.

 Contravention by the Real Estate Agent:

Penalty for non-registration and contravention under sections 9 and 10:

Sec 54. If any real estate agent willfully fails to comply with or contravenes the provisions’ of section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five percent of the cost of plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority.

Contravention by the Allottee:

Penalty for willful failure to comply with orders of Authority by allottee:

Sec 57. If any allottee, who willfully fails to comply with, or contravenes any of the orders, decisions or directions of the Authority he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to five percent of the plot, apartment or building cost, as the case may be, as determined by the Authority.

Penalty for willful failure to comply with orders of Appellate Tribunal by allottee:

Sec 58. If any allottee, who willfully fails to comply with, or contravenes any of the orders or directions of the Appellate Tribunal, as the case may be, he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to ten percent of the plot, apartment or building cost, as the case may be, as determined by the Appellate Tribunal.