No Hope of Revival for Struggling Real Estate Sector this Diwali

Buried under high debt and inability of the developers to complete and hand over the pending projects well beyond the commitments to the hard-pressed consumers, the troubled Indian housing sector is not witnessing any festive activity this year despite the latest cut in the policy interest rate by the Reserve Bank of India (RBI), an ASSOCHAM survey has said.  

  

Based on the data and information collected from 250 builders in the Delhi-NCR, Mumbai, Bengaluru, Chennai, Kolkata, Ahmedabad, Hyderabad, Pune, Chandigarh and Dehradun, the survey found that the demand for new projects is hard to come while new launches have come to a trickle, marked by lack of consumer confidence and cash deficit of the builders.

Under such a scenario, the demand for new launches, if at all there are, has come down by over 50-60 per cent in Delhi-NCR and Mumbai while it is lesser by about 40-45 per cent in Hyderabad and Chennai. In Bengaluru, the activity has come to a total standstill, first by the demolition drive and then by Cauvery dispute agitation, adds the recent survey. 

“Whatever market is there, it is mainly for the end-users and not for investors, sale has been increased for the smaller units (2 BHK & 3 BHK)”, reveals the survey. 

“Customers are preferably looking for ready to move in property rather than going for under construction property. But not many properties fall in this category”, adds the Secretary General D S Rawat.

The resale or secondary market is also dull this festival season, marked by drop of at least 20-25 in prices this festive season. There is very little resale happening especially in the NCR and surrounding areas. Supply is in excess with private small time builders in the unorganised sector flooding the market with units.

The unsold inventory pressure in NCR region is the highest among all other cities. The NCR residential market still has an estimated 1,70,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey. As per the survey, there are nearly 8-10 million workers engaged in building and other construction activities who face uncertain future if the sector does not revive.

The ticket price 3-bedroom, 2 BHK and single room flats has seen correction by 30% in Noida, 25% in Gurgaon and 15% in some key areas of Delhi, yet the demand stays subdued

All approvals of real estate projects must be accorded in a time bound, accountable and simplifies manner, the ASSOCHAM said suggesting that the process and status of all approvals be made on line so as to bring transparency.

The property analysts have predicted that till March next year the demand for plots, houses and flats may drop by at least 15 to 20%. The housing inventory in the NCR area is huge as a large number of projects are coming up in the peripheral areas, said Rawat. 

Five key Indian cities share 95 per cent of PE funds for Real Estate In 2015

The year gone by was proved to be good as for as capital market activities in real estate is concerned as key Indian metros had witnessed record inflow of private equity (PE) funds, says  Shobhit Agarwal,  Managing Director - Capital Markets, JLL India, who further adds, the total investment that the sector received in 1995 was approximately INR 19,500 crore.

Mumbai Metropolitan Region (MMR) received the maximum investment of 34% followed by Delhi-NCR at 29% and Chennai at 14%. Bangalore and Pune got 11% and 5%, respectively. Hyderabad witnessed 3% while all the remaining cities put together got 4% in PE investment.

The preference for these cities reflects learnings from past experience. While investors remain cautious about which cities to invest in, what is interesting to observe is that the ratio of structured equity and debt was more than half of the total investments received.

Even for plain equity investments, core commercial assets are preferred over other asset classes. This reflects how investors are cautiously optimistic about the potential for major gains in the Indian real estate. Equally important for them is to invest only in projects of credible developers having a good track record.

While the PE focus continued to remain high on residential and office projects, entity level investments and platform level deals came into the limelight indicating increase in investor confidence. A total of INR 6,048 crore worth of entity-level deals were witnessed but were limited to good developers / corporates only as investors relied on previous track record before putting their money to work.

In terms of asset focus, residential projects attracted considerable share of funding; however, equity investment in this space is still insignificant. On the contrary, income-yielding office projects attracted a majority of equity investments. While residential and office will continue to attract a majority of investments, retail is expected to start seeing better traction.

Going forward, investors are expected to remain focused on the top seven cities only. In the past few months, Chinese and Japanese investors have shown interest in bringing their long-term money into India. Overall, the stage is set for a superlative show this year. We won’t be surprised if 2016 shows a glimpse of investment activities that were seen in 2007, which was the previous peak and saw an investment of more than USD 8 billion.

Union Budget 2016: Developers look up to FM for revival

It’s Budget time again, and Indian real estate sector is yet again pinning on the hope of a slew of measures from the government which will see the revival of the struggling sector. 

While most of builders and realty experts believe that measures to improve consumer sentiments through income tax rebates and reduction in borrowing rates can put the life back into the system, others want the government to take long term measures by implementing the much-talked about REITs, Special Residential Zones and Real Estate Mutual Funds (REMFs) to make the real estate more vibrant. Here are the excerpts.

N. Nandakumar, Former President, CREDAI Tamil Nadu & MD,Devinarayan Housing and Property Developments Pvt Ltd.

As the Real Estate Sector has undergone considerable stress over the past couple of years, it is inevitable to announce substantial credible measures in the Union Budget 2016 with a long term view of reviving the Industry.  If the Central Government’s vision “Housing for All” is to be accomplished, the primary factors those influence the affordability needs to be definitely considered.

Few of the key areas that the FM should look into are:

·         - Raising the limit on interest payment towards exemption from tax purview.

·         - Announcing current threshold for principal repayment as part of Income tax deduction.

·         - Debt restructuring for all project loans given to developers without levy of penal interest and additional charges.

·        -  Initiatives that would lead RBI to consider special rate of interest for the category of affordable loans for different cities and metros as against the present uniform home loan policy.

·        -  Review the service tax component and other taxes for affordable home projects together with permitting creation of special residential zones which would cater exclusively to the lower middle income group and middle income group and EWS sectors.

·         - Abolishing import duties on construction equipment which would lead to more automation thereby reducing the project times and cost.

·         - Provide tax incentives for import of technology for rapid construction / cost optimisation.

·         - Reduce the implications of environmental clearances by increasing the threshold from 20,000 sq.m to 150,000 sq.m which would save considerable time and also provide the mandate to the local approving authorities by suitably incorporating norms to be adopted and development regulations of each state’s urban bodies.

Anuj Puri, Chairman & Country Head, JLL India

The real estate sector, which is emerging from a painful and prolonged slowdown, is expecting favourable and growth-stimulating announcements from the government in its forthcoming Union Budget. One of the major issues, property investors and home buyers face, is delay in completion of projects by builders across the country.

The government should offer buyers financial protection from construction delays. The existing provision allows buyers to claim tax benefit upto Rs 2 lakh for under construction property which should be completed within three years. If the completion date extends, the benefits reduce to Rs 30000 and the burden of buyers multiplies as they have to pay EMIs along with the rent for their current accommodation.

Instead of offering them full tax benefits only from post-possession, home buyers should also enjoy the benefits right from the time they start paying interest on their home loan. This will ease their monetary burden considerably and help more home loan disbursements. Similarly, as per the present provision, if a buyer purchases an under-construction property from capital gains, he can avail exemption only if the construction is completed within three years. Since there can be delays due to various reasons, the construction timeline should be extended to five years.

Provide more tax saving on home loan and house insurance premiums. The current limit of Rs 2 lakh should be enhanced to Rs 3 lakh to benefit more. Also, tax concessions on house insurance premiums should be introduced to encourage users to insure their homes from various natural calamities.

Rise house rent deduction limit for self employed, who draw pays without an HRA component, from the current maximum deduction limit of Rs 2,000 a month under 80GG.

As construction industry takes lion’s share in environment pollution, the Budget should provide more incentives to boost green buildings for sustainable development. Since the cost-factor plays a major role, the government should absorb the extra cost and introduce incentives to encourage buyers/builders to go green.

Make additional allocation to develop infrastructure in fringe areas of cities and metros to promote affordable housing. Also, developers of affordable housing projects should be provided with cheaper finance options to complete the projects in time.

Remove the Dividend Distribution Tax (DDT) to encourage REITs.  There has not been a single REIT listing ever since the announcement last year. The presence of DDT deters people to venture into it. The government should do away with it in the Budget.

Provide clarity on GST implementation. For the revival of commercial real estate, implementation of GST is vital. The government should indicate specific date for its implementation. The retail and ecommerce sectors also seek earlier implementation of GST.

Arvind Jain, Managing Director - Pride Group

Every Indian plans to buy a home as and when it becomes financially viable for him or her to do so, and every year brings a new section of young Indians who enter the stream of employed and harbor this aspiration. For potential home buyers, favourable budget is one of the major decision-makers.

Positive changes in indirect and direct taxation policy for salaried class, as well as incentives on property purchase, can boost their financial confidence. Raising the income tax exemption limit will have positive impact on long-term saving and spending patterns. As property is the most favoured investment option for every Indian, the available of more disposable income can satisfy their aspiration. Similarly, tax sops on home loans will trigger more demand for homes and hence help revive the industry.

Parveen Jain, national president, NAREDCO

The top real estate body National Real Estate Development Council (NAREDCO) too has lined-up a set of proposals to be included in the budget for the revival of sagging realty sector.

NAREDCO President Parveen Jain emphasized the need of industry status to the real estate sector and infrastructure status to the housing sector to enable them to attract more investments from large companies and inculcate a sense of “corporate culture and discipline” which will benefit the economy in general and customers in particular.

There should be Special Residential Zones (SRZs) for low cost or affordable housing similar to Special Economic Zones (SEZs) in PPP model where incentives and concessions should be provided through a single window. This will increase the supply of affordable homes in the country.

Land parcel should be adequately increased to meet the demand of 18.78 million housing units for EWS and LIG categories. To achieve the target of 20 million dwellings by 2022, the land and bank financing should be made easy.

Similar to other developing countries, the Housing Finance Companies (HFCs) should get an access to long-term funds like Provident Fund, Pension funds and Insurance for infrastructure and housing development.

Also banks should hike their allocation for housing from the current 3 per cent to 5 per cent of their incremental deposits. This additional fund should be channelized through HFCs registered under National Housing Bank.

To lessen the burden on home buyers, the government should increase the tax limit to Rs 3 lakh from the present Rs 2 lakh of the interest paid on home loans on a self-occupied house.

The three years period for completion from the year of borrowing should be abolished as this will provide the much-needed impetus to housing sector.

The priority sector lending should be extended for home loans – up to Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metros and Rs 50 lakh for mega cities.

Rental income should be taxed at a flat 10% rate. This will bring down the rentals.

The government should give top priority to Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs) and make them free from income tax for at least for 10 years, both for non-residents and residents.

External commercial borrowing should be allowed in all spheres of housing and realty development, including SEZ projects, and FDI is allowed in all housing projects including the under construction ones.

The real estate experts believe that given the required impetus, the real estate sector has the ability to turn around the Indian economy because of its forward and backward linkages with other key sectors and huge employment potential. Will the Union Budget 2016 meet their expectations and revive the sector or disappoint them again with a lacklustre show? We have to wait and watch!

This article also published in Merinews.com

Riveria Group Launches Real Estate Portal 3villaz.com for Dubai and Indian Investors

DUBAI, UAE: Riveria Global Group has launched a new website to provide search and comparison for home buyers, and also offers full service marketing for sellers in two ultra-lucrative markets Dubai and India.

3villaz.com, a comprehensive new property portal, has been launched by Dubai-based Riveria Global Group to assist big ticket real estate buyers wanting to invest in the lucrative Dubai and India property markets to find the perfect deal.

The site is created for investors and proposes various options currently available in Dubai and India - two markets that offer attractive options for good return on investment (RoI).

Since the last decade, the Riveria Group has been actively involved in the real estate business in Dubai and Mumbai, and the directors have a clear view of the direction of the real estate industry in both these cities. Currently, there are many good investment options available in both destinations, in various sizes, starting from 100,000 US dollars.

On 3villaz.com buyers can post their requirement and the best options will be suggested to them - rather than them having to do a time consuming search and comparison through hundreds of properties. On the flipside, property owners can post their properties for sale or rent and the team behind 3villaz.com will do all the needed professional marketing.

Dinesh Gurnani, Director of Riveria Global Group

"If you are looking for fantastic investment options in Dubai or India, 3villaz.com can bring you the best investment options with the return on investment ranging between 5 to 15 per cent per annum," said Dinesh Ramchand, Managing Director of Riveria Global Group, Dubai.

"Our company specializes in leasehold and freehold properties. We have a range of investment options including for residential, commercial buildings, hotels and hotel apartments, with ready rental income for sale and lease. We also have open land for residential, commercial, mix-use and industrial use, villa complexes, staff and labour accommodation, and warehousing. Landlords, developers, and real estate brokerage companies can also list their real estate inventory for sale or lease and benefit from the extensive reach of the portal across the world," Dinesh added.

Apart from real estate, Riveria Global has a well-established ATL and BTL advertising division offering a wide range of marketing services to help businesses establish their brand in the market. These include branding, email marketing, online marketing, outdoor advertising, printing, SEO, SMO, web development, and more.

The Group also has an exclusive interior design arm, offering top quality services to residential and commercial clients in Dubai.

NAREDCO suggests slew of measures to put real estate sector back on track

(From L to R): R R Singh, DG, NAREDCO , Shakuntala Iyer, Director, Shander Properties , Navin Raheja, Governing Council Member, NAREDCO , Parveen Jain, President, NAREDCO , Gourav Jain, MD & CEO, Jindal Reality Ltd. and  Vijay Gupta,Orris Infrastructure Pvt. Ltd.

As preparations for the 2016 Union Budget are underway, the top real estate body National Real Estate Development Council (NAREDCO) has lined-up a set of proposals and requested the Finance Minister to include them to bring back the sagging realty sector on growth trail.

NAREDCO President Parveen Jain in a pre-budget Memorandum to the Government, wanted industry status to the real estate sector which he said will enable it to recover from severe slowdown. 

“Industry status will attract large companies and most importantly inculcate “corporate culture” and “industry discipline” which will immensely benefit the economy in general and consumers in particular,” he said.

According to him, most industry rules and regulations are applicable to real estate sector also and denial of industry status for funding purposes to the sector will further worsen the existing financial crunch and slowdown in demand because of erosion of capital and loss of confidence of investors and buyers.

Navin M Raheja, GC member and Patron along with Parveen Jain, president Naredco

NAREDCO has also demanded “infrastructure status” to the Housing sector, a long standing demand of the real estate developers, by adding a clause to the definition of “infrastructure facility” under u/s 80IA of IT Act 1961.

Explaining further about the clause to be added he said: The clause should read: “An integrated township and group housing development on area more than 10 acres involving provision of residential, educational, medical, community, commercial or institutional buildings and creation of required facilities including roads, water supply, water treatment, sanitation and sewerage systems and solid waste treatment and management systems”.

Jain also demanded creation of Special Residential Zones (SRZs) for affordable housing on the lines of Special Economic Zones (SEZs) where special concessions and incentives are built together with single window clearances. This will help increase supply of affordable housing on a large scale.

Central and State Governments, in the past, have attempted to address large number of issues detrimental to housing growth and provided fiscal concessions to builders and home buyers and tried to build strong public-private partnership to boost housing growth. In many ways it has paid dividends, but still there is lot to be done to provide shelter to all.

Jain said that the government land, wherever available, should be used as equity and government agencies encouraged to assemble additional land as much as possible. India is short of 18.78 million housing units and 96% of it is in EWS and LIG categories. Government is targeting to build 2 crore housing units by 2022. All this will be possible if land and bank financing is made easy.

He said that Housing Finance Companies (HFCs) should be allowed access to long-term funds such as Provident Fund, Insurance and Pension funds as all developing countries have access to such long term funds for housing and infrastructure development.

NAREDCO has suggested that banks should increase their allocation for housing from the present 3% to 5% of their incremental deposit. The additional 2% incremental allocation may be earmarked exclusively for canalizing it through housing finance companies registered with National Housing Bank.

President NAREDCO has requested government to give push to the real estate sector by increasing tax limit to Rs 3 lakh from Rs 2 lakh of interest paid on home loans on a self-occupied house.

Also, three years period for acquisition or completion from the year of borrowing should be dispensed with, said NAREDCO President, Parveen Jain, adding that this will provide much needed impetus to housing sector which is reeling under huge housing shortage in the country.

He said that priority sector lending need to be extended for home loans upto Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metropolitan cities and Rs 50 lakh for mega cities. Also, income from renting of properties should be taxed at a flat rate of 10%, he said, adding that high cost of houses and high property taxes lead to low rate of return (ROR) from rental housing, making renting out an un-remunerative proposition.

Jain said that the residential construction be taken out of 14.5% service tax net in the first place and this exemption should cover the builders and developers who are registered. Rise in excise duty on cement and steel would raise the unit cost by about 4 to 5%.

Jain asked the government to make real estate mutual funds (REMFs) and real estate investment funds (REITs) free from income tax for at least for 10 years both for residents and non-residents. The world over, REITs have been very effective instrument and source for funding housing projects because of various fiscal concessions and incentives provided by various governments to REIT units and the shareholders.

Demanding external commercial borrowing in all spheres of housing and real estate development, including SEZ projects, Jain said funding to real estate be allowed through FDI, particularly in under construction projects.

The size of Indian real estate market in 2013 was estimated to be USD 78.5 billion which is likely to grow to USD 140 billion by 2017. Between 2009-11, FDI investment grew at 8% but witnessed deceleration during 2012-13 to around 6.5% primarily due to sluggish growth of Indian economy, rising input cost and overall global economic sentiments. Now there is need to give push to this through fiscal incentives.

Jain emphasized that, given the impetus required, real estate sector has the potential to turn around the Indian economy and contribute to the growth of the country because of its backward and forward linkages with other sectors of economy and huge job potential.

Despite rate cut, real estate sentiments remain lukewarm: ASSOCHAM

Despite the recent rate cut of 50 bps by Reserve Bank of India (RBI) and great offers made by developers on the festive season, the investment in the property have remained lukewarm in and around the NCR region due to lack of confidence in state of economy, delay in project execution, lack of fresh employment generation and overall slowdown, reveals the ASSOCHAM recent study. 

"The sentiment in the housing market is really at a low key. The prices have almost crashed but they are still un-affordable. Be it Rohini, Dwarka, South Delhi, Noida, Gurgaon, the prices of property are down by 25-30% as compared to the last two years.”, said D S Rawat, Secretary General ASSOCHAM while releasing the survey.

The ASSOCHAM conducted a random survey of nearly 125 real estate developers in Delhi-NCR. The survey reveals that demand for buying property have decreased by over 30% over the last year.

As per the ASSOCHAM paper, inordinate delays in getting necessary approvals from multiple regulations and authorities result in cost and times overruns. The resale or secondary market is also dull this festival season as there is very little resale going especially in the NCR and surrounding areas, adds the survey.

According to survey, the residential market has witnessed a steep decline by 25-30% in new launches as well as demand resulting a significant shrinkage. The unsold inventory pressure in NCR region is the highest among all other cities.

According to the majority of real estate developers in NCR regions said, about 62% of the unsold real estate in NCR is in areas which are currently uninhabitable. The problem has been confounded by delays in regulatory clearances and litigations, points out the survey.

The NCR residential market still has an estimated 1,70,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey. As per the survey, there are nearly 8.5 million workers engaged in building and other construction activities in India. 

The ticket price 3-bedroom, 2 BHK  and single room flats has seen correction by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi but still, the demand stays subdued, adds the survey.

Modular kitchen, LED televisions and air conditioners are among the most common freebies on offer this Diwali. Some developers offered hefty discounts to the basic sale price for early investors. Many others warned of sharp revision in property rates post Diwali. However, the lure of freebies failed to charm home buyers, the survey noted.

Majority of the developers have complained that inordinate delays in getting necessary approvals from multiple regulations and authorities resulted in cost and time overruns.

To counter the slump in sales, developers have been offering some discounts and incentives. But even these steps have failed to attract buyers. The sales continued to remain low despite developers offering attractive pricing schemes and discounts to attract buyers.

Festive season considered to be auspicious for home buying and offering bargains, contributes over 30 percent of annual realty sales. But with the prevailing depressed market sentiment, the sector has been witnessing muted sales since the festive season of 2015, recording 30-35 percent lower sales compared to the healthy period of 2010-11.

Besides offering standard freebies like parking and club facilities, modular kitchens, air-conditioners, developers are taking just 5-10 percent of the house price as booking amount and that too in installments, with the balance payment on possession.

What are the 5 common types of roommate problems?

Guest Post by Avantika Laxman

There are very few lucky individuals who get to share houses for rent in Bangalore with their friends. In fact there are some that find good roommates who eventually become friends for lifetime. But majority of the times we hear about the problems faced while sharing an apartment with a stranger or a bad roommate.

Housing price has gone high

Since the price rates of the housing property has gone so high in the past few years that it is becoming a compulsion for the young employees as well as the students to share their expenses with a flat mate. But unfortunately there are many who are struggling with roommate problems each and every day. Let us get into the brief of some of the common types of such issues.

What are the 5 common issues?

1.      Variable sleeping schedule

Often it is found that two individuals sharing the same flat or house have different sleeping schedules. This often leads to problems and arguments among the roommates. If one is an early riser and the other a late sleeper, there is bound to be differences in their way of living. This is a very small issue that can be dealt with easily if both the individuals respect each other’s life styles. But arguments and quarrels pop up.

2.      He or she makes use of your things without your permission

It is absolutely not advisable to use things of your roommates without his/her permission. Such an act will definitely bring up arguments and quarrels and might get ugly as well. Don’t you think it is always better for asking permission before you use the items belonged to your roommate? Why to bring up problems when there is a way to avoid it?

3.      Poor personal hygiene maintenance

A roommate with poor personal hygiene is perhaps one of the unfortunate things that can happen to anyone. It is true that sharing the apartment becomes a challenging and a tough job. On one hand you don’t want to offend him/her and at the same time it becomes impossible for you stay with your roommate in an unhygienic environment. How about gifting her basket of shower gels and also bringing up a casual conversation regarding the stale odor of the room?

4.      Your roommate is too noisy

When your roommate hears the music loudly, watches television on loud volume levels or talking over the phone at high pitch, it can create problems for you. You will be disturbed while studying, reading or sleeping or even if engaged in a very important work that needs you to focus. Don’t get into fights for it but ask your flat mate to be less noisy in a soft tone.

5.      Too frequent visitors

Often you find that your roommate is bringing over her/his group of friends or boyfriend/girlfriend. This can be even more challenging if they are visiting at odd hours of the day and night. You can have a conversation with your flat mate regarding it and say him/her clearly about your discomfort about the frequent visitors.

By being polite, you can sort out many issues without spoiling the situation. If nothing works, it’s better for you to look for alternate house with understanding roommate/s.

DHFL Cuts Home Loan Rates

DHFL, one of India’s leading housing finance companies, today announced a reduction in its Retail Prime lending rate by 20 bps. DHFL has also reduced rates for its new customers and the rate will now start from 9.65%.

 Additionally DHFL has also announced a festive season offer whereby it will be providing a promotional rate of 9.55% (further 10 bps reduction from its new rate) to its new customers for loans upto Rs. 25 lakhs. This offer is valid upto December 31, 2015.

The company largely caters to the low and middle income segment in the Tier II, Tier III towns, with an average loan ticket size of below Rs. 15 lakhs. The Low and Middle income segment customers, which comprises majority of the total home loan book size, would stand to benefit the most, with the fresh rate cut and the festive season offer.

Commenting on the interest rate,  Kapil Wadhawan, Chairman and Managing Director, DHFL said, ” Over the last three decades, DHFL has been committed towards ensuring affordable housing finance to the Low and Middle income consumers. We believe that owning a home especially in this season is a deep desire within our customer segment. Our festive season offer reflects our commitment towards enabling home ownership in tier 2 and 3 towns for each and every Indian especially in the LMI segment.”

 DHFL has emerged as a one-stop-shop for its customers’ financial needs, extending beyond home loans. The company offers a range of home loan products including home loan, home extension loan, home improvement loan, plot loans, mortgage loan, SME Loan and non-residential property loan to all customer segments across India, retaining its concerted focus on the low and middle income segment.

DHFL also offers an array of Fixed Deposit Products for public including individual and trust investors that ensure high yield, safety and liquidity. DHFL Fixed Deposit Products for individual investors also offer an accidental insurance cover of Rs. 1 Lakh free of cost to customers. DHFL Fixed Deposit Products are rated CARE AAA and BWR (FAAA) ensuring high safety. Further, DHFL offers value-added and customized insurance solutions, along with its home loan products. Additionally, DHFL also offers project loans essentially for development of low and middle income housing projects.

 The company registered strong performance in the 1st quarter of the fiscal year – the loan book portfolio increased by 26% to Rs. 538 Bn as against Rs. 428 Bn for the corresponding quarter in the previous year. Priority sector lending to the low and middle-income segments in Tier-II and Tier-III cities has been the major growth driver for DHFL. As of June 30, 2015, DHFL’s Assets Under Management stood at Rs. 600 Bn.

Indian real estate showing signs of recovery: CBRE

MUMBAI: Several large real estate deals have helped to push the investment volume to 40 per cent in the Asia Pacific region for the third quarter ending September 2014 with Indian real estate showing the signs of recovery, according to CBRE APAC Capital Marketview Q3 2014 report.

Quoting the latest estimate of Oxford Economics that the year-on-year economic growth of Asia Pacific region in 2014 stood approximately at 4.4%, slightly up from its June forecast of 4.3%, the report indicates improvement in the real estate investment for India, due to government stimulus efforts. 

Capital market transactions and institutional investments in the realty market in India during the first nine months of this fiscal stood at approximately $4.5 billion, with land and development stage deals attracting the highest quantum of investments (nearly 60%) from foreign as well as domestic entities during the period.  

This indicates a significant investment in green field as well as brown field development, the report noted.

The report also found that commercial office segment has attracted more than 20% of the total investment amount during the quarter.

In terms of locations for property investment, Mumbai has attracted the highest investment followed by Delhi and Bangalore. Of the total real estate investments made in Delhi and Mumbai during the period of consideration, land and development deals went nearly 60% and 70% of the total realty investments in the cities, respectively. In the case of Bangalore, more than 50% of total investments were attracted by commercial segment. 

In the first nine months period ending September office space transactions increased by about 20% year-on-year, with more large-scale space leases and higher lease volumes reported over the previous year across leading cities in India.

The period also saw significant investor interest in completed and well-leased core commercial office assets and IT parks across major cities. Investment highlights during the nine months of the current year included GIC’s joint venture with Bangalore-based development firm Brigade Enterprises, where the two plan to invest approximately $250 million in residential and mixed-use development in cities across southern India, said the CBRE report. 

Indian real estate: Sobha on expansion mode

Bangalore-based real estate developer Sobha Limited is planning to double its size by adding 7 million sq feet of salable areas. Using its unique backward integration model, the developer is poised to strengthen its position in material suppliers market.

Sobha’s vice chairman and managing director J C Sharma told Business Standard that, "We have seen a positive market sentiment after the formation of new government headed by Narendra Modi. However, the real estate in India is yet to see any growth even though we have a positive economic condition. Seeing the current scenario, we feel that the recovery is not far away for the sector."

The realty firm is presently developing 50 projects across India covering 24 million sq ft of saleable area. The company has its presence in 24 cities across 13 states.

Sharma said, "We have planned about 15 million square feet of new project launches in the coming quarters to extend our existing geographies. Apart from this, we have about 50 residential projects in the developing state aggregating to 31.14 million square feet of developing area and 23.96 million square feet of saleable area. We have 31 ongoing projects covering 9.35 million square feet under various stages of construction on the contractual front. We are hopeful that we will continue to cater to the emerging needs of the realty sector."

Sobha is expanding in Pune by developing new projects and has tied up with smaller developers. The company sources said it has targeted to develop over one million square feet of residential space in Pune. The company has recently announced Rs 250 crore project in Pune which will have a commercial lifestyle club, duplex and three and four BHK apartments.

Sobha Developers is the only real estate company in India which has been following backward integration model which enables the company to manufacture all the key components used in construction in house - from concrete blocks to aluminum windows.

Not In My Backyard - NIMBYism In Indian Real Estate

Kishor Pate

NIMBY is not a term we often hear in India, though it is quite a popular word (and a dynamic concept) in the West. That said, NIMBY - an acronym for 'Not In My Back Yard - is definitely an unspoken mind-set when it comes to residential real estate in India.

Basically, 'Nimbys' are residents of a locality of project who are opposed to the implementation of a certain initiative by the Government, industries or private developers in their neighbourhood. Classic examples in the Indian context are flyovers, chemical factories, power plants and in fact any kind of development that could conceivably obstruct the view, disrupt the peace or pollute the air.

 

‘Nimbyism’ does exist in the Indian real estate space, but the choices of opponents to certain developments within their neighbourhoods is generally quite restricted. The Indian real estate space is still largely unorganized, and problems such as encroachment, unauthorized structures and lack of scientific town planning are still the order of the day in most of our cities.

 

The concepts of regulated real estate development and macro-level town planning are beginning to take hold and are, in fact, already operational in cities like Chandigarh, Navi Mumbai and even in Pune. While this evolution is happening against a large backdrop of damage that already been done and is difficult to undo, this does not mean that 'Nimbyism' is a futile and impotent concept in India.

 

In Indian residential real estate, middle-class housing societies – administrative bodies comprised of residents within a registered housing complex – have the right to refuse unscheduled construction within the complex premises. That said, they have little or no control over what happens beyond the compound walls. In cities like Mumbai and Delhi, upscale housing complexes continue to co-exist cheek-to-jowl with slums and slapdash tenements. This is more or less accepted as a reality of life, since slums are often under the political protection.

 

The ultra-luxury segment presents a rather different picture. Indian cities do have their elite pockets, such as Lutyens Zone in Delhi, Nariman Point in Mumbai, Sahakar Nagar in Pune, Jubilee Hills in Hyderabad, and so on. In these areas, residents have a stronger voice over what happens in their immediate neighbourhoods – and they do raise them. This level of influence derives from a combination of factors - including the financial clout of the residents, the fact that the zones themselves are under the purview of stricter-than-usual zoning guidelines.

 

As such, Nimbyism is definitely not a negative concept - in fact, cities like Pune need a larger dose of it. Residents should have a say in what happens in their neighbourhoods. This is especially true if the developments they are opposing are taking place outside of the existing zoning laws and are serious threats to the health, harmony and safety. What is needed is more exacting city planning, which should ideally be part of the overall development plan for the city. Likewise, developers also have a responsibility towards ensuring the sanctity of the residential projects they create.

Article by Kishor Pate, CMD - Amit Enterprises Housing Ltd.

 

About The Author:

 

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Limited, is the driving force behind one of the country's most successful real estate development firms in Pune and beyond. AEHL's many projects in Pune include its signature luxury homes towers and premium gated townships in Sahakarnagar and Ambegaon

SEBI to notify final draft guidelines for REITs shortly

The Securities Exchange Board of India (SEBI), the nation's top  market regulator, is preparing the final draft guidelines for real estate investment trusts (REITs) and it will be notified shortly, a top SEBI official said at an ASSOCHAM event held in New Delhi.

"We will soon notify guidelines for REITs," said Ananta Barua, Executive Director, Investment Management Department of SEBI, while inaugurating a national conference on 'REITs-Opportunities & the way forward,' organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), recently.

“SEBI has set up two committees that are looking into specifying guidelines for issues and similarly for listing of those units a separate committee has been set up,” said Barua.

"We are trying to deepen the market and also bringing more investment products so that investment can be channelized to meet the needs of the economy," he added.

He also informed that REITs to be introduced mainly for commercial assets - office premises, industrial parks, IT parks, warehouses, apartments which are rental and not for residential properties.

The top SEBI official also said that REITs which is being compared with mutual funds but its a totally different product and is more similar to the IPO i.e. the equity shares as the asset would be there throughout their life.

He also informed that assets which can be put in should be completed assets i.e. investments which can be made should be in completed assets and not normally in under construction assets.

“This whole regime is based on disclosures and not on merits and as the SEBI we'll not go into whether this asset is good for REIT or not, here the parties will take the transactions as a lot of transparency has been given at all the levels, disclosure will be there,” said Barua.

He further said that before making these regulations SEBI had consulted the investors, not only in India but all over the world even the pension funds, sovereign wealth funds from many countries like SA, Qatar and others.

Earlier, in his address at the ASSOCHAM conference, managing director and chief executive officer of the Bombay Stock Exchange (BSE) said, “REITs gives us another asset class, its not a derivative for us derivatives are a good thing to do but investment is the only thing to do and REITs are basically in that category like SMEs.”

On the small and medium enterprises (SME) sector being allowed by the Government to be brought on to the BSE platform, Chauhan said, “Basically we’ve got a very good response on SME as in 2 years time we've now got 66 companies listed and in next two months 20-25 more companies will get listed so effectively we'll have 100 companies listed by this year end on the BSE SME platform itself.”

He informed that many good companies from areas like manufacturing, metals, information technology and others are coming to list on the BSE’s SME platform.

On the sidelines of the ASSOCHAM conference, Chauhan told the media that BSE would take appropriate action on the SEBI order to engage one or more independent consultants to review the entire sequence of events in conducting Rs 6,000 crore share sale of PSU firm NMDC.

“Currently our team is studying the order, we’ll take appropriate action,” Chauhan said.