360 degrees Real Estate Services: April 2015

For developers in city, getting approvals now easier and faster

1:15 PM

For developers in city, getting approvals now easier and faster

mumbai developers, mumbai builders, BMC, NOC, World Bank, mumbai news, city news, local news, maharashtra news,

The orders were issued by former BMC commissioner Sitaram Kunte a week ago, but will be implemented by his successor Ajoy Mehta, beginning May 15.

The BMC has issued orders to halve the number of procedures involved in construction permits and also the time required to grant them, which could be a 60 per cent reduction.

This move will make it easier for real estate developers to get the necessary permissions and help deliver projects faster, while also bringing in substantial cost savings. Currently, it takes up to three years for a developer to get all the necessary permissions for commencing construction.

The orders were issued by former BMC commissioner Sitaram Kunte a week ago, but will be implemented by his successor Ajoy Mehta, beginning May 15.

Deadlines have also been set for sanctions during various stages of construction, from intimation of disapproval (IOD) which is the first stage of permissions to the grant of Occupation Certificate.The 20-page circular details six major changes relating to building permissions. These include a list of processes that have to be eliminated, re-engineered or transformed and simpler procedures for site visit, use of technology and deemed clearances. It has also defined time-lines for grant of No Objection Certificates (NOCs) by various agencies as also for forwarding of files from one department to another.

The measures taken are an outcome of a report by BMC-appointed consultants Pricewaterhouse Coopers and a series of meetings held up to the level of the Cabinet Secretary, Government of India between November 2014 and April 2015.

BMC appointed PwC after the Central government directed local bodies to work towards improving India’s ranking on the World Bank’s Ease of Doing Business 2014 where it ranked 142 amongst 189 countries.

Of the 10 parameters that decide the index, India’s score is amongst the worst on the ‘Dealing with Construction Permits’ count where it ranks 184 out of 189 countries, which was one of the factors responsible for pulling down the country’s ranking on the index.
While India’s ranking on this parameter, is based on the collective score of Mumbai and Delhi, the report showed how the cost of construction permits in Mumbai accounts for half the actual construction cost. Moreover, it noted that it takes 27 steps and 162s days to obtain such permit in Mumbai.

Another major change under the new system is room for greater self-certification and third party certification for traffic, drains, sewerage, internal road layout, among others. Additional municipal commissioner SVR Srinivas said the change will break the monopoly of engineers within civic departments. “Empanelled private consultants will be allowed to issue remarks and NOCs. Faster permissions will eliminate uncertainty, ease liquidity issues and will bring down construction costs,” said Srinivas.

- by Shalini Nair

Source :- The Indian Express

Home Insurance

Why it’s important to have home insurance

1:05 PM

Why it’s important to have home insurance

A lost life cannot be regained, but a destroyed house can be rebuilt. And it doesn't cost that much

Home is a name, a word, it is a strong one; stronger than magician ever spoke, or spirit ever answered to, in the strongest conjuration.” These lines belong to Charles Dickens, but are apt for all of us. Those who have suffered in the earthquake in Nepal and parts of India stand testimony to how easily houses can get destroyed and how difficult it is to rebuild. Memories of land slides in Uttarakhand and floods in Jammu and Kashmir are still fresh. While there is little we can do against natural disasters, we can reduce some of the consequent hardships by having home insurance, which protects against any damage to the house and valuables in it.

A basic home insurance policy covers fire and allied perils, including lightening, storm and flood. You may have to pay extra to cover earthquake so check before buying. A comprehensive householder’s package policy also insures the contents of a house against burglary, damage, and mechanical or electrical breakdown.

Despite its importance, home insurance is not a popular choice. Sanjay Datta, chief underwriting and claims, ICICI Lombard General Insurance Co. Ltd, said, “Home insurance is poorly sold in India; it counts for less than 1% of industry premium in terms of sales. People are either not aware of home insurance or are reluctant to buy it. They don’t see the risk to their property—be it fire or an act of terrorism. The unfortunate part is that even the insurance industry is not pushing the product.”

Chosen with care, a home insurance policy can provide comprehensive coverage. It typically has two parts—one covers the structure of the house, and the other covers the contents such as valuables, furniture and electronic appliances. “One can opt for both structural and content cover, or for either one. There are also different riders that can be added,” said Chetan Joshi, group director, Mondial MMX Financial Consultants Pvt. Ltd, a Mumbai-based investment advisory firm.

Cover for structure
Structural cover for a house comes in three ways. First is based on the reinstatement value where the insurer gives the construction cost of the house excluding the value of the land. Second is based on the agreed value of the property and includes the value of the land and the construction cost. Third is based on the indemnity value, which takes into consideration the cost of construction and the depreciated value according to the age of the building.

It is important to understand the inclusions and the exclusions. “A lot of mis-selling takes place in home insurance policies. People are fooled into believing that they will get a cover of a crore or two if they buy an expensive policy. Often, the structure cover formula, which is based on the area of the house and the approximate construction cost in the city, is not explained properly,” said Rohit Shah, founder and chief executive officer, Getting You Rich, a financial advisory firm.

Let’s take an example. Suppose an individual wants to insure her 10-year old house with an area of 1,000 sq. ft. The cost of the house, based on parametres such as locality, is&nbsp Rs.5,000 per sq. ft or&nbsp Rs.50 lakh. Its cost of construction is&nbsp Rs.2,000 per sq. ft or&nbsp Rs.20 lakh. If the home insurance policy is bought on reinstatement basis, the sum insured will be the area of the house multiplied by the construction cost per sq. ft (1,000 x 2,000)—Rs.20 lakh. If home insurance is bought for the same house on agreed value basis, the sum insured will be the area of the house multiplied by the cost per sq. ft (1,000 x 5,000)—Rs.50 lakh. On the basis of market value or indemnity, the sum insured will be the total cost of construction minus depreciation (Rs.20 lakh minus&nbsp Rs.5 lakh considering depreciation of 25%), which makes it&nbsp Rs.15 lakh.

While the market value or the reinstatement value are common ways to decide cover, the agreed value formula is not frequently used. Bajaj Allianz General Insurance Co. Ltd is one insurer that gives home insurance on agreed value basis. “The sum insured in this is the area of the house multiplied by ready reckoner cost. This cost is declared by local authorities and the insured can also engage a government approved valuer to value the house. The cost would depend on several factors such as the locality, city and quality of construction,” said Sasikumar Adidamu, chief technical officer, Bajaj Allianz.

Cover for content
While the structure of a house is the most expensive to rebuild, the value of the contents of a house, too, can add up to a large amount. There are two basic ways to insure contents: buying a cover that factors in depreciation, and buying on a reinstatement or new for old basis.

One has to remember that in content cover, the valuation of all insured items should be disclosed to the insurer, through bills and invoices. “People often make a mistake in understanding the overall content cover. One can get cover even for gadgets. Of course, the insured will have to pay premium for that particular gadget separately,” said K.K. Mishra, managing director and chief executive officer, Tata AIG General Insurance Co. Ltd.

Under the reinstatement cover for contents that is offered by Bajaj Allianz, for example, you get the same amount of money for the insured items as if they were new, without any allowance for wear and tear or depreciation. But there are conditions attached, such as the minimum amount of cover beingRs.5 lakh or not lesser than 10% of the coverage for the house, and others.

Additional covers
One can further strengthen home coverage by taking additional covers. Burglary or theft of jewellery and ornaments is one such, but the value of jewellery differs across insurers. Rent cover is another option. This can be used if one needs to stay at a temporary location, but the amount of coverage and the time period are specified. “A rent cover is helpful as it takes care of your rent on an alternate accommodation in case your home is under repair,” said Kapil Mehta, executive director, SecureNow Insurance Broker Pvt. Ltd. Insurance against terrorism for a house and its contents is also a possible addition. “There are no discounts on additional covers. An add-on cover can increase your sum insured each year. There is also a provision that accommodates items you forgot to mention in the proposal form,” added Mehta.

Details to note:
Take care of a few things while buying home insurance so that the policy can be effective.

Time period:
Home insurance can be bought for a minimum of one year to a maximum of five years. Do remember to renew.

Suitability: A bank may encourage you to buy its home insurance product along with the home loan. Choose only a policy that suits your needs.

Apartments:
While an individual apartment may be covered, this won’t help if the rest of the building is not. “In the event of a loss, if the property is insured on an agreed value basis, the insured gets back the agreed value and the ownership of your house is transferred to the insurer. This helps because if your house is in a multistorey building you will need to wait for others to reconstruct their house first. But if you are insured, you simply take the agreed value and you can buy a house elsewhere,” said Adidamu.

Fine print:
Home insurance policies are worded differently. For example, structure insurance may only be for building and not land, or only jewellery kept in the locker may be covered.

Tenants:
If you are living in a rented house, you can insure only the contents and not the structure as you don’t own it.

These are only some of the specifications. As with any kind of insurance policy, with a home insurance policy, too, the best results come through when the initial details are taken care of.

- by Mitra Joshi

Source :- LiveMint

Agreement for Sale

Stamp Duty on Agreement for Sale prior to 10-12-1985 is Rs 5 only

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Stamp Duty on Agreement for Sale prior to 10-12-1985 is Rs 5 only

After the announcement of the Stamp Duty Amnesty 2008, there are some consultants and self designated specialists who are misguiding the people b strongly advising that full stamp duty will be charged on agreement for sale even prior to 10-12-1985. Not only that they are stressing that even the registered document will also attract stamp duty. Failing which 10 times the stamp duty amount will be levied as penalty at the time of conveyance. Most of the people are very much confused because at Stamp duty office they are not accepting documents prior to 10-12-1985 contrary to advise given by the consultants. Please note there is no denying the benefit of amnesty, because all such documents are duly stamped, hence they do not need further stamping, as such the benefit of amnesty does not arise.

Our office has been receiving several telephonic clarifications, since we are the publishers of the Ready Reckoner’s for all earlier years. To clarify this doubt GLOBUS spoke to Santosh Kumar, senior estate valuer and co-author of the Stamp Duty Ready Reckoner and Market Value of Flats in Mumbai / Thane, who clarifies the doubt as under.

The stamp duty on agreement for sale prior to 10-12-1985 is Rs. 5 only and no more stamp duty will be charged on all such documents. This point was also clarified by Dr Nitin Kareer, I.G.R.

Maharashtra, during a public meeting held on 11-4-2004 at K.C. College, Mumbai. In this connection Law and Judiciary Department of the Government of Maharashtra, has also issued a clarification on 24-1-1995, the same is reproduced on backside, which is self explanatory. In view of this clarification all such documents can be annexed with the deed of confirmation on Rs. 100 stamp paper only and the deed of confirmation will be registered annexed with agreement for sale on Rs. 5 Stamp paper. There are several such documents already registered by the sub-registrar of assurance Mumbai, that can be inspected under the Right to Information Act. In case of difficulty one should not hesitate to contact I.G.R. Maharashtra, Pune.

The agreements for sale prior to 10-12-1985 are classified in two groups. One that is registered and another one not registered. As such these agreements will be treated differently at the time of conveyance in favor of the society. Here it is necessary to clarify that stamp duty was applicable even prior to 10-12-1985, but there was an option for payment at the time conveyance. However, for conveyance executed up-to 16-3-1988, residential flat up-to 650 sq ft carpet area was fully exempted from stamp duty and area up-to 1000 Sq ft was exempted up-to 60% of the stamp duty. Because of this provision there is a general notion that there was no stamp duty prior to 10-12-1985.

Now at the time of conveyance, stamp duty liability of all the present members must be cleared. For the liability of registered agreement on Rs. 5 Stamp paper, prior to 10-12-85, the market value (not agreement value) as on the date of agreement will be considered, as purchase price agreement value only, because market value concept was not there at that time. The document which is not registered will be valued as per present market value, subject to depreciation, and stamp duty will be charged, in all the cases, as applicable today.

Regarding Stamp Duty on documents executed on 10-12-1985 and there after, all such documents must be registered after paying the stamp duty, failing which penalty at the rate of two times (not 10 times) of the deficit stamp duty will be charged. During amnesty this penalty is maximum Rs. 1000 only. At the time of conveyance they will not be required to pay any duty again, against their respective flats.

Comparative chart of stamp duty liability on agreement dated 1981 is as per Table-B.
From this example it is clear that if the document is registered, stamp duty will be Rs. 2,200 only against Rs. 1,29,000 for non registered document.

The Amnesty has come primarily to facilitate deemed conveyance of the Co-operative Housing Society, for which it is necessary that all the members of the society must clear the Stamp Duty liability of their respective agreements. Since there are many members who have not paid their share of Stamp Duty, this is an opportunity to clear the same at a normal penalty for everlasting peace.

- by Santosh Kumar & Sunit Gupta

Courtesy : Globus

Source :- Accomodation Times

Budget 2015

Tax implications of owning more than one house

7:30 AM

Tax implications of owning more than one house

housing for all by 2022, housing for all, housing for all scheme, Real Estate Investment Trusts, REITs, real estate, tax implications, tax, tax law, notional rent, house tax, income tax, property tax, Bharatiya Janata Party, BJP government, BJP

The Bharatiya Janata Party (BJP) government, in its first full-year Budget,had announced houses for all by 2022.

The Bharatiya Janata Party (BJP) government, in its first full-year Budget, had announced houses for all by 2022. The government had also announced a tax-efficient structure for Real Estate Investment Trusts (REITs) to give the sector a boost. Now, more and more people are looking at real estate as an attractive investment option.

However, one should be aware of tax implications of owning more than one house.

As per the domestic tax law, if a person owns more than one house and both/all are vacant, only one property can be considered as self- occupied. The other property will have to be considered as ‘deemed to be let out’. This means a ‘notional rent’ of all properties other than the property that is self-occupied will have to be considered as income and be subject to taxation.

The individual has an option to choose the property he/she would like to consider as self-occupied for which the annual value will be considered as nil. The other properties have to be considered as deemed to be let out, if they are vacant.

To arrive at the taxable income, certain deductions are allowed:

a) Municipal taxes paid to the local/municipal authority during the fiscal. Irrespective of the year for which the tax is paid, it will be allowed as a deduction;
b) A flat deduction of 30% of the net amount after deduction of municipal taxes; and
c) Interest taken for purchase/construction of property, depending on whether the property is self-occupied or let out.

There is nothing provided in the law as to what should be considered as notional rent. Typically, the fair rent/ market rent expected in the same locality can be considered as the notional rent. The tax officer may ask for evidence for the notional rent considered for taxing the income from the house.

The deduction for interest paid on purchase of a self-occupied property is restricted to Rs 2,00,000. However, for let-out or deemed-to-be-let-out property, the entire interest paid for purchase of the property is allowed as a deduction without any limit. The loss, if any, can be set off against salary or other income during the same year. Further, the loss remaining, if any, can be carried forward for next eight years to be available for set-off against income from house.

An employee can also disclose the income from house to his/her employer and it would be considered while computing taxes. If the individual suffers a loss from the house property, it will be adjusted against salary income and the employer needs to deduct tax only on the net income.

Hence, a refund situation may be avoided by disclosing the loss on house property to employer for withholding purpose.

So, while investing in real estate seems an attractive proposition, one must also consider the tax cost associated. Accordingly, based on the cost-benefit analysis, one may choose to invest in real estate or make other investments.

- by Homi Mistry (the author is partner with Deloitte Haskins & Sells LLP)

Source :- The Financial Express

Capital Appreciation

Do you want better value appreciation?

7:30 AM

Do you want better value appreciation?

Aspects like the quality and facilities of a project as well as the developer’s brand image dictate the type of return on investment it will provide in the future

They used to say that the three most important things in real estate are location, location and location. Now, a bit wiser than before, analysts are grudgingly accepting the ground reality that the three most important things in real estate are location, quality and the brand.

If you find it hard to believe, just go to any prominent location across the Mumbai Metropolitan region. Be it Powai, Thane or Mulund, you will find that certain projects command a premium over the others at every stage. From the initial pre-launch or 'soft' launch to the stages of construction and at the time of handing over possession, the difference tends to be at least 20-25%.

There are those who try to save money at this stage, reasoning that the location is everything when it comes to determining future pricing. They learn the hard way, that contrary to expectations, all projects in the same 'prime' area do not command an equal pricing five years down the line.

It is the aspects like the quality and facilities of a project as well as the developer's brand image that dictate the type of return on investment it will provide in the future.

Basic parameters

Did you know that something as basic as washing the sand used in construction can make a difference to how your building will look in future? These are the 'simple' yet time-consuming steps that a reputed developer will ensure and a fly-by-night operator mostly tends to skip. The difference between the two structures becomes evident when plaster starts peeling off and signs of leakage begin to show in the inferior quality structure. It is not as if washing the sand entails a lot of money. Just that it adds to the time required.

Attitude matters

A reputed developer cares about those who will inhabit the flats and create homes that will last them for years. A 'shortcut' developer wants to build quickly, sell quickly and leave before you realise how much he has compromised on the quality. Whatever you save initially by purchasing in a 'cheaper' project will soon have to be shelled out towards repairs and restoration costs. In fact, it becomes a recurring account as every three-to four years, some problem or the other keeps cropping up again and again.

Resale proposition

If you were visiting a prospective new home in a ready-possession building, which would you prefer? One with a building interior that looks nice and fresh even after so many years or one with damp patches and huge gaps where the plaster has fallen off in chunks? A project where one can see a steady demand for the resale flats or where you find the residents of neighbouring flats offering a lower rate in their desperation to move on?

Space management

The question is not always about how much space the builder provides for the amount paid as it is about how well it has been designed. Reputed developers interact with the best architects from India and often abroad as well. This ensures maximum utilisation of space and also enables you to do more with the available area as there are no 'wasted' spaces. Concepts like open plan kitchens, niche areas for entertaining, study, suddenly become possible and enhance the quality of life that you and your family will enjoy.

Redevelopment mantra

The developer who redevelops your existing building also makes a big difference to the valuation it will have in the new avatar. A reputed brand will ensure that the new building will be high profile and a landmark of sorts. That ensures a 'premium' tag and if in future, you decide to move to a different city, the price your home in the redeveloped building will be considerably higher than if it would have been rebuilt by a low-profile builder or a contractor.

- by Vijay Pandya

Source :- DNA Property

Akshaya Tritiya

What makes Akshaya Tritiya special?

6:24 PM

Do occasions like Akshaya Tritiya have a substantial impact on the property market even in urban areas like Mumbai? Will this trend be witnessed in 2015 as well?

This year, the financial year began with various announcements that seem to be in favour of the property market in the country. It is a known fact that, most home buyers look at loans to support their home buying decision. Now, with multiple financial institutions reducing interest rates, the consumer base is likely to expand and bring about a positive trend in the real estate market, feels Tanuj Shori, CEO and Co-founder of Square Yards Consulting.

“To add to this, auspicious days, like Akshaya Tritiya, certainly impact the decisions made by first-time buyers (young buyers). In India, it has been a tradition to buy something new on this day and as property-buying is a big investment for most of us; we tend to wait for propitious days like such to make the deal.”

“Talking about numbers, according to the National Housing Bank (NHB) Residex Index, residential property prices presented an upward trend in the later part of 2014. Although, the start of last year saw a dip in the property market thanks to the weak rupee and high inflation, 2015 seems like a year of recovery for the market. Hopefully, we will see interest rates cut from the RBI that will help in creating more spending power amongst the consumers of the residential sector. The Ministry of Statistics Program and Implementation and PwC Analysis predict a growth of 8 to 9 per cent in the real estate market this year. Simultaneously, with the introduction of REITs, improved market sentiment, the Regulatory Real Estate Bill, Smart City initiative and the ‘Housing for All’ scheme, 2015 seems like a favorable year for this sector,” Tanuj opines.

Ganesh Vasudevan, CEO, IndiaProperty.com, points out that Akshaya Tritiya is believed to be an auspicious time for the creation of wealth and good fortune. Being an auspicious occasion, it motivates property seekers who are in the process of finalizing their property to take plunge.

“In 2015 the residential real estate market in India will continue to recover at a slow rate. The drastic increase in the number of enquiries over the past three quarters indicates positive market sentiments amongst buyers. In the past one year the government has introduced many buyer centric policies with the Real Estate Bill being the highlight. Also, the falling home loan interest rate is a positive indicator for buyers to return to the market.

Demand for mid segment homes with basic amenities will continue to rise in 2015. Project pricing will be the most critical aspect to attract home buyers this coming year,” Ganesh emphasises.

Commenting on Akshaya Tritiya property buying trends over the years, Ravi Ahuja, Executive Director, Cushman & Wakefield, concurs that Akshay Tritiya is considered an auspicious day for making new investments/starting new ventures and hence several people prefer booking a house on that day. “However, it must be remembered that these occasions are only relevant so far as formalizing a purchase is concerned; a buyer’s decision to purchase a house depends on his affordability, which is governed by confidence, interest rates and inflation,” he underlines.

- by Ganesh Vasudevan, Ravi Ahuja & Tanuj Shori

Source :- DNA

Akshaya Tritiya

Is Akshaya Tritiya, The Right Time To Buy A New Property?

7:30 AM

Is Akshaya Tritiya, The Right Time To Buy A New Property?

With the Akshaya Tritiya nearing, the builders and realty experts in the country expects a boom in the property sales, especially in the housing sector.

As festival season induces the buying sentiment, there are offers and sale offered by real estate developers and promoters.

In general, the property sector witnesses increased purchase during the festive seasons like Akshaya Tritiya which is believed to bring good fortune and wealth to the buyers. The properties are sold at special discounts and offers which will attract the potential buyers who would not buy otherwise. Industry experts advise the buyers to check the genuine value of the property and weigh with the offers if they are really worth your money. Offers such as 80:20 scheme, deduction in stamp duty, VAT and registration fee etc., are good offers that can be considered seriously only if the property fits your expectation and worth your investment. Buying a property, such as an apartment or a plot is an important investment and it should not be decided based on freebies offered by real estate promoters.

Experts’ View

The industry experts shared their insights on Akshaya Tritiya property investments for the potential home buyers in the country. The MD of Cresa India mentioned that the residential market offers some of the excellent and cost effective options for home buyers and this festive season is the best time for buyers to book their selected property, if it passes all the legal scrutiny related to real estate sales. Shrinivas Rao, CEO- Asia Pacific, Vestian said that this time is perfect for first time home buyers who are waiting for the right opportunity as Akshaya Tritiya brings good fortune and sales discounts. Ravi Ahuja of Cushman & Wakefield mentioned that this auspicious festival has not lost it sheen among the end users and anticipated to bring up residential sales by 10-12% in prime locations of Mumbai. Sources say that the developers are planning to offer discounts on booking prices for premium projects. However, Knight Frank India mentioned that the festive season will not bring a dramatic shift in the market sentiments; hence not much change can be expected in the buying pattern for the Akshaya Tritiya.

There is a mixed view among the experts about the buyer sentiments in real estate market. Although the market remains stagnant, festive season such as Akshaya Tritiya and the special offers will influence the fence-sitting buyers to purchase a property instead of procrastinating it any further. According to a wide number of realty experts, if you are planning on buying any property, Akshaya Tritiya is an auspicious day to do so.

Source :- Sulekha.Com

Buy Property in Mumbai

Optimal Time To Buy Home In Mumbai?

7:00 AM

Optimal Time To Buy Home In Mumbai?

The concerns about soaring rentals and unaffordable housing in Mumbai notwithstanding, the surprising fact is that residential property prices across Mumbai city and its suburbs increased only by 7% in 2014, and by a negligible 0.3% in 2013.

Home prices in the financial capital are evidently not submitting to the inflation that is affecting the cost of living in most other respects. Of course, given the sluggish demand for homes owing to the already crippling prices, there is not much scope for appreciation.

In fact, the meagre increase in average property prices in the city stands in stark contrast to the general inflation rate of 6% in 2014 and 9% in 2013 (as per the CPI data). These figures definitely put paid to the popular perception that Mumbai’s developers keep increasing prices despite the fact that inventory has been building up and housing demand slowing down over the last couple of years.

Even the average hike of 7% was primarily due to the new development control (DC) rules that came into effect from 2013. Developers had to start paying for additional (fungible) FSI towards construction of lifts, lobbies, flower beds, balconies, etc., which had been FSI-free areas earlier. Other reasons behind the marginal increase in per-square-foot prices include the rise in ready reckoner rates and escalations in the cost of labour and raw materials.

The eastern suburbs from Kurla to Mulund saw an increase of 6% in 2014 over 2013 and 5% in 2013 over 2012 prices, as land was still available to launch new projects there. South Mumbai and western suburbs between Malad and Borivali recorded a similar price increase as their eastern neighbours.

Bandra, Khar, Santacruz and Juhu also saw average growth in prices, as these areas lack a good supply of high-rises. Rates in areas like Thane and Navi Mumbai did not grow much either, and the uncertainty surrounding Navi Mumbai’s new international airport did not work in favour of the satellite city.

That said, Chembur and Wadala stood apart from this lacklustre trend in residential price growth. The two suburbs saw a tremendous price increase of 58% and 50% respectively in 2014 over 2013, thanks to completion of infrastructure projects like Eastern Freeway, which connects Chembur to South Mumbai, and the monorail, which was in the news recently for all the wrong reasons.

Other Highlights:

It is an optimal time to buy residential property and negotiate a favourable deal
In 2015, prices in Mumbai are expected to grow by 6%

Residential sales in Mumbai during the year 2014 stood at to 26,407 units, a drop of 4.6% from levels seen in 2013. Areas like Panvel, Mulund, Ulwe and Andheri saw the highest demand for housing units in 2014.

As against the sales, new launches increased by 8% in 2014 over 2013. Areas such as Panvel, Kharghar, Thane and Mulund saw the highest supply of housing units in 2014.

by Ramesh Nair is COO – Business & International Director, JLL India

Source :- Afternoon Dc

FSI

‘Housing For All’ Can Change Real Estate Sector Trends

7:30 AM

‘Housing For All’ Can Change Real Estate Sector Trends

The ‘New’ development Plan:

For the 75th Anniversary of India’s independence, the new government has come up with the ‘Housing for All’ 2022 Scheme which aims at providing affordable homes for every Indian while creating better connectivity through developed infrastructure. The Union Budget 2015-16 has allocated Rs. 14,000 Crore for the ‘Housing for All’ programme which includes Rs. 10,000 Crore for ‘Indira Awas Yojana’.

The Central Government together with the State Governments and according to the plan, will build close to 4 Crore homes in rural India and 6 Crore homes in the urban area to meet the housing demands of the increasing population. For this, the government has also announced the increase in FSI from current 2.5 to 8 which will help in decongesting the cities, though even with the increase; one may see it as low when compared with other urban cities like Manhattan and New York, both of which have an FSI of 15, while Singapore has FSI of 13.

The ‘Focus’ on Mumbai:

In the city of Mumbai, the government plans to renovate Bandra Kurla Complex into a smart city with International Finance Center while also drawing projects to improve connectivity to the region by 2022. The metropolis area of Thane is too under inspection for developing it into a smart city on the lines of BKC.

As per the government plans of providing homes under the scheme of ‘Housing for All’, there is a demand of 16 Lakh homes in Mumbai which may even go up after demand assessment through baseline survey for housing and identify resource requirements. Therefore, the periphery of Mumbai will now witness further expansion and development to create affordable housing given the extremely high land rates in the city. This is expected to be augmented by developing satellite cities by 2022.

Connectivity in terms of railways and roadways or Mass Rapid Transport will also be focused on considering Mumbai being the financial and commercial capital of India; most of the jobs generating activities are based here in the main Mumbai Island. Therefore a seamless inflow and outflow of human resource will be focused on which is essentially, a need of the hour.

The ‘Hopes’ of every Indian:

A large part of the Indian population, today, is residing in slums or on streets even though housing is the most important need for any individual. While the ‘Housing for All’ scheme has definitely raised hopes of every Indian with its special focus on the EWS (Economically Weaker Section), homes for everyone is still a distant dream.

The ‘Hurdles’ in the roadway:

The Government’s scheme of ‘Housing for All’ has brought the focus on low income groups; there is still a long way to successfully complete this grand task. While planning and allocation of funds is imperative, there are a large number of hurdles in this venture as well. Prima facie, it is important for the Central Government to work in co-ordination with all state governments, government departments and ministries to ensure a strict implementation and proper execution of this initiative. Other shortcomings like insufficient land in Mumbai, clear title, building homes with connectivity to sanitation and 24/7 water and electricity supply cannot be ignored. For the state of Maharashtra, there is a requirement of 50 lakh new housing units by 2022 to meet the rapid rate of urbanization. The ‘Housing for All’ is a big step towards development but there are many a slip between a cup and a lip.

The ‘Hopeful’ India by 2022:

‘Housing for All’ program by the government is aimed not just at providing affordable homes to one and all, under this policy, the government will also largely contribute in providing the basic infrastructure in rural and under developed areas. With the much needed support from the state governments, the realty and infrastructure industry will now expect to have ease of approval process, enhance transportation and other infrastructural advancement by creating developed satellite and smart cities.

Working hand in hand with the real estate private players through PPP model should be encouraged by the government as it will largely benefit and accelerate the course of action. Private companies’ participation will stimulate entrepreneurs to expand business in other geographical regions by virtue of which there will be higher employment opportunities in rural areas and an increase in disposable income for the population at large. This will reduce urban migration while increasing demand for rural housing units and affordable homes.

The ‘If possible’ Aspect:

While focusing on infrastructural development, the government should also make possible the streamlining of policies for faster land acquisition to avoid project delays and tax benefits to real estate sector which can be passed down to the end users. The Ready Reckoner Rates that have been increased recently from 15-20%, the highest being 40% should also be streamlined with the market rates so that the end users do not feel the pinch, as it defeats the purpose of this policy completely. The government can also offer incentives to involve private players in developing affordable housing units or should undertake projects jointly with them.

The humungous project of ‘Housing for All’ should be monitored by government agencies to avoid any misuse of funding. Funds should be made available to the lower strata of the society through banks to ensure equitable distribution. While government is making sturdy efforts to settle the BPL Indian population through affordable houses and proper connectivity, an equal amount of focus should also be given to support facilities like water, sewage, gas lines, energy, communication etc.

The Government should give an industry status to the Real Estate sector to enable players to get better deals from other industries like cement and steel thus improving the cost control on over two major cost components of this industry.

Source :- Afternoon DC

HDFC Property Fund

HDFC Property Fund invests in new deals, to raise another fund

8:00 AM

HDFC Property Fund invests in new deals, to raise another fund

The fund has closed three transactions with developers in Mumbai, Pune and Chennai

The company is now looking forward to raise a larger $500-550 million fund, primarily from investors in Asia and the Middle East.

HDFC Property Fund, which is currently deploying a $350 million (aroundRs.2,185 crore) offshore fund, has closed three transactions with developers in Mumbai, Pune and Chennai, even as it prepares to raise a new fund later this year, said people familiar with the development.

The fund, with investor partners New Vernon Capital Llc and Old Lane Partners Lp, has entered into an arrangement with Pune-based Kumar Properties Pvt. Ltd where it has got the latter on board as a developer partner for a 140 acre land parcel in Hadapsar, Pune. The Hadapsar land is valued at around Rs.920 crore.

“We have given up our rights in a few special economic zones (SEZs) and IT parks that we had invested in, with Shapoorji Pallonji, and in lieu of that, we have got 100% control of this land,” said an executive at the fund, who didn’t want to be named.

HDFC Property Fund and partners had invested in at least five such SEZs with Shapoorji Pallonji and Co. Ltd in 2007-08. The investors later gave up their stakes in these assets, and entered into an arrangement to acquire the Pune land.

“The plan is to develop a township on this land over a period of 12-15 years,” said Manish Jain, managing director of Kumar Properties. The company, backed by Singapore’s sovereign wealth fund GIC, is a prominent developer with projects in Pune, Mumbai and Bengaluru.

Shapoorji Pallonji didn’t respond to an email query.

In another early-stage investment, HDFC Property has backed Mumbai-based Runwal Group’s acquisition of 24 acres of Crompton Greaves land in suburban Mumbai by subscribing to a Rs.200 crore non-convertible debenture (NCD) issue. Runwal has already acquired eight acres and HDFC Property is funding part of the purchase of the rest. The Rs.1,020 crore land acquisition was announced in 2014.

Subodh Runwal, director of Runwal Group didn’t respond to queries.

HDFC Property’s third transaction, which is yet to be completed, involves aRs.310 crore loan to Bengaluru-based Shriram Properties’ project in Chennai. The project has a 2 million sq. ft leased IT park and a 4 million sq. ft residential component. HDFC Property is investing in the latter.

Shriram Properties managing director M. Murli did not respond to a request for comment.
Most private equity funds are entering into debt-centric structured deals through the NCD route. There is a lot of demand for capital from developers, who need money to make payments for purchasing land, refinance expensive debt or for construction.

With these three deals, HDFC Property would have completed around eight transactions from the current fund, deploying around $310 million.

The company is now looking forward to raise a larger $500-550 million fund, primarily from investors in Asia and the Middle East.

The new fund, unlike the current one, will have an equity and equity-linked component apart from debt, to bolster returns for the fund, said the executive.

While the overall private equity market is engaged in more debt-like transactions, equity deals typically entail a high-risk, high-reward structure for funds.

“Fund-raising sentiment has improved now. While there is a lot of competition to raise domestic capital, with at least 8-10 funds looking to raise money, there aren’t too many people raising offshore capital,” said Rajeev Bairathi, executive director (capital transaction group and north India) at property advisory Knight Frank India.

- by Madhurima Nandy

Source :- LiveMint

Maharashtra Government

Proposed real estate regulator bill will bring transparency, reduce delays

12:34 PM

Proposed real estate regulator bill will bring transparency, reduce delays

More compliance could mean higher prices in the medium term but buyers will face fewer problems

Property buyers will soon be able to check details about a project online. They can also monitor progress of construction and lodge a complaint if it is not completed on to schedule. These are some measures outlined in the proposed Real Estate Regulatory Bill, cleared by the Union Cabinet last week.

The Bill will facilitate setting up real estate regulators at the state level. Only projects registered with the regulator can be sold, both residential and commercial.

The Bill will apply to projects where the plot size is 1,000 sq mt or if it has at least 30 units. This, according to experts, will cover most projects.

Ganesh Vasudevan, chief executive officer of IndiaProperty.com, says the Bill might push up property prices in the medium term because it calls for a lot of compliance. However, in the long term, the measures will help buyers.

According to the Bill, builders should deposit 50 per cent of the amount received from bookings for a particular project in an escrow account within 15 days of receiving the money. This will ensure the money is used only for that project and cannot be diverted to any other, says Ashutosh Limaye, head of research and real estate intelligence services at Jones Lang Lasalle.

“This will ensure no delays due to lack of funds. Though the amount has been reduced from 70 per cent to 50 per cent, even this is good as earlier there was no such provision at all,” says Limaye.

Another proposal is that a developer will not be able to launch or market any project unless all approvals are in place. Today, developers sell units, saying some approvals are awaited. If these don’t come through, it is the buyer who suffers.

Developers will have to mandatorily disclose all details on the regulator’s website, such as layout, design, approvals from various authorities, details about brokers, etc. This will bring transparency, as only registered properties can be marketed or sold.

Any change in the design or structure of a building will have to be approved by two-thirds of buyers. “Cases of buyers being promised property of a particular area or design and being sold something different will come down,” he says.

Even online marketing players such as IndiaProperty.com might not be allowed to showcase projects not registered with the regulator. “We’re awaiting the final document to understand how players like us will be impacted,” says Vasudevan.

While the judicial route was always available to buyers, it used to take long time. The Bill calls for setting up of a Tribunal, which will have to decide a case within 60 days. The Bill also prescribes punitive action in the form of penalty or fine and/or imprisonment for builders who fail to meet the norms. A standard format for the agreement is another proposal which will make life easier for buyers.

Anil Harish, partner with law firm D M Harish and Company, points out that the Centre’s Bill is not binding on all states. For instance, the Maharashtra government had proposed a similar Bill earlier, which is still to take effect. It had some proposals which were better than the Centre’s.

“For instance, the condition of the 50 per cent of funds being locked in an escrow account, may work in places where land cost is not very high. But in a place like Mumbai where land cost is very high, holding 50 per cent of funds might not work. Instead, the Maharashtra government had proposed that 10 per cent of the units cannot be sold until the Occupation Certificate is received. This is a better option to ensure that the project is completed,” he says.

- by Priya Nair

Source :- Business Standard

New Real Estate Bill

Real Estate Bill is Good, But Concerns Remain...

3:26 PM

Real Estate Regulation Bill is Good, But Concerns Remain...

Real Estate Regulation Bill

The newly passed Real Estate Regulation Bill may have been welcomed by all, but there are concerned voices raising anxiety over the inclusivity of all parties concerned.

Developers and experts feel that though the bill may bring in the much valued transparency in the sector, it may breed corruption owing to some clauses in the regulation. The question then being asked is: who will regulate the regulators?

“A regulator is surely required, but we need a comprehensive one with transparent systems, says Lalit Kumar Jain, CMD, Kumar Urban Development Ltd. (KUL). “Though many issues have been pointed out since ages, the bill is a retrograde step and breeds ground for corruption,” he says.

According to him major concerns like; online registration processes without human interface to avoid corruption, all the stake holders to be governed by the regulator to avoid further delays in approvals and NOCs have been ignored by the government. “The government seems to have ignored the suggestions and instead come up with a ridiculous concept of revocation of registration, as it will do more harm, promote more corruption and developers will have to tackle such knee jerk situations,” Jain says.

The bill allows huge opportunity of exploitation as it has provided a15 day period for deemed approval, while regulators can scrutinize the proposal. “Instead an online automated process could be a better solution,” adds Jain.

Further, builders are required to deposit 50% of the amount realized towards bookings on a project in a commercial bank account within 15 days of receipt, and deploy the funds for construction of the project. Jain feels the escrow account between the buyer and developer should have been on a pro-rata basis, linked to the construction cost and not on fixed slabs of 50% or 70%.

“The government has obviously not factored the increase in cost of construction. The regulator will force developers to give full disclosures which will make fewer of them survive. This will mean that the supply will be hit in a market where the demand-supply mismatch is a perennial problem. In turn, this will push the cost of housing which many feel is already high even as of now, due to various factors like delays in clearances, high cost of inputs like land, finance, steel and cement,” he adds.

However, “one is happy to note that the RERA remains the lone authority to handle real estate related grievances. This will help avoid a plethora of court cases. Also the data on supply of housing will be available due to a regulator,” Jain says on a positive note.

According to Ganesh Vasudevan, CEO, IndiaProperty.com on the one hand the bill is a positive move for the buyers, on the other hand it has put builders in a fix as now they will require more funds for construction. “The bill gives more power to the sanctioning authorities as they are still not put under the scrutiny of a regulator. The ongoing projects have been brought under the purview of the Bill and might result in further project delays. Also as the cost for the builder will now increase, it is likely that the property rates will also increase,” he says.

Mohit Goel, CEO, Omaxe feels that certain provisions that the sector had asked for amendment remains unattended. “We would have preferred escrow limit to be fixed on city basis (metro/tier II) or project basis (luxury/affordable); instead of a blanket 50%. Also, bringing ongoing projects under its ambit at this moment would further delay delivery of a vast number of projects (at various stages of construction) in the country,' says Goel.

Goel believes that developers should be allowed to change design and structure post approval of 50% of consumers since a lot of difficulty arise when a developer begins construction. “Lastly, and most importantly, the bill doesn’t fix accountablity equally on all stakeholders. While builders face the brunt for project delays; accountability has not been fixed for delays due to regulatory approvals and customers default on payments etc,” he says.

The Real Estate Regulation Bill

The Bill in its current form applies to both residential and commercial real estate, and is far more comprehensive and holistic in approach, addressing both the regulatory and development oriented aspects of the industry. The following features are notable-

1.   Creation of state wise regulatory authorities for the sector

2.   Mandatory registration of real estate projects and agents

3.   Mandatory public disclosure of all project details- will go a long way in ensuring easier scrutiny on compliance to approved plans, progress on statutory approvals etc.

4.   Functions and duties of a promoter are clearly defined- will bring in greater accountability on the part of builders and give room for a clear locus standi for buyers to pursue legal proceedings if any against errant builders

5.   Builders are required to deposit 50% of the amount realized towards bookings on a project in a commercial bank account within 15 days of receipt, and deploy the funds for construction of the project. This will ensure better adherence to delivery timelines and will also minimise cost overruns due to delays on account of inadequate capital.

6.   Functioning of real estate agents will be better monitored as they are required to register themselves with the Regulator. However the Bill does not propose any mandatory training program or certification required to operate as an agent. Also agents are required to sell only registered projects. This will help control price rise to a great extent particularly in investor dominated markets.

7.   Punitive measures outlined for transgressions by builders

8.   Responsibilities of the allottees are also defined making the bill a lot more enabling and development oriented.

by Mayura Shanbaug

Source :- Afternoon DC

Buying Property

Buying, renting property to become expensive in city

7:30 AM

Buying, renting property to become expensive in Mumbai

Buying or renting a property in Mumbai, the country’s financial capital, is already an expensive proposition. It is now a notch higher. In a bid to mop up additional revenue, the cash-starved government on Thursday hiked stamp duty rates for most property transactions.

Stamp duty payable on transactions including transfer of lease, transfer of tenancy, mortgage deeds, and hypothecation deeds were hiked. The duty payable on power of attorney executed for property transactions was already raised four fold — from Rs 250 to Rs 1,000.

While the state government had not increased taxation on property in its first budget presented last month, it moved the amendment in stamp duties through a bill, which was cleared by the state legislative assembly on Thursday.

Revenue Minister Eknath Khadse said that the government plans to mop up an additional Rs 300 crore through the revised tax proposals.

As anticipated, the government announced relief in stamp payments on gift deeds involving transfer of residential and agricultural property by a person to his wife, husband, son, daughter-in-law, grandson and grand daughter. The new Act also recognizes the right of daughter-in-law over a person’s ancestral property.

Besides property transactions, the stamp duties for telecasting rights, advertisement rights, articles of associations and memorandum of association of a company, money orders, and partnership deeds among other instruments was also revised. The government also brought Limited Liability Partnership within the ambit of stamp payment and hiked the upper limit for work contracts documents.

Realtors said that hike will make property transactions costlier throughout the state. The impact would be the most in the Mumbai Metropolitan Region, where property prices have already soared skywards.

On Thursday, which was the penultimate day of the budget session, the assembly cleared another bill that would facilities ease of business. It provides for deemed approval for conversion of agricultural land for non agriculture use if the government authorities fail to provide the permission within the prescribed time limit.

Source :- The Indian Express

Home Buyers

Real Estate Regulatory Bill brings the much-needed Protection for home buyers

11:00 AM

Real Estate Regulatory Bill brings the much-needed Protection for home buyers

The long-pending Real Estate Regulatory Bill was amended and approved by the cabinet. The Bill offers much-needed protection for home buyers and would help increase disclosures in the real estate market.

For instance, the Bill makes it mandatory for all under-construction projects to be registered. The developer has to disclose project details including layout plan, approvals, names of promoters and contractors during registration. Giving all these detailed information will help improve transparency.

The Bill also limits the changes a developer can make to the original plan. Any changes require getting the consent of 2/3rd's of the customers. This is a great plus, as in the past home-buyers were usually left in the dark about size, floor plan and design changes. Now, they have to be informed about the changes and have the right to withhold consent if they are unhappy.

The developers must also maintain half of the amount collected for a project in an escrow account. While the share to be held was reduced from 70 per cent in the original proposal to a lower share now, the chances of developer diverting funds collected from one project to buy land or cover costs of other developments will be minimized now. Maintaining funds for each project individually will also help increase developer accountability.

Besides the developers, the Bill also covers brokers and agents who sell property. They are also required to register with the real estate regulatory authority - a new agency to be set up by the States to oversee compliance. Buyers can take up their issues to the authority along with using existing options such as consumer courts. The welcome aspect for many home buyers who are facing long delays in the legal system is that dispute resolution by the regulatory authority is expected to be fast tracked. The regulator will also have rights to punish the offenders.

One notable change in the revised Bill is that it covers commercial projects in addition to residential segment. However, what is still not addressed are the issues faced due to approval delays from government departments – a reason commonly cited by developers for not meeting their commitments to customers.

- by Meera Siva

Source :- The Hindu Business Line

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Real Estate Bill is Good, But Concerns Remain...

Buying, renting property to become expensive in city

Real Estate Regulatory Bill brings the much-needed Protection for home buyers

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