Seeking to tap this large asset base to help make it a more commercially viable and reliable service provider, he has embarked on a mission to re-develop railway stations, brand them with corporate participation and also tap the advertising potential of the available space.

According to him, Railways has attempted redevelopment of stations, without much success so far. While the process for development of the already selected stations would continue, for the rest of the stations, the minister proposes to revamp the station redevelopment policy completely and simplify processes for faster redevelopment by inviting open bids from interested parties.

The present stations will be available for development on “as is where is” basis, to exploit the space and air rights on concession basis. Land will not be sold.

Most railway terminals located in big cities are located amidst congested areas. According to railway plans, ten select stations will be taken up in 2015-16 for this purpose. “The move will not only help them create value, but also give a boost to the economy and higher revenues for the railways. It is an old theme but the railways have not been really pro-active in doing that and there was a general lack of transparency in the past,” says Lalit Kumar Jain, chairman, Credai.

Anuj Puri, chairman & country head, JLL India, feels the decision to go in for “station redevelopment” and “logistic parks” in this railway budget will have a deep and positive impact on the commercial real estate front. Transit-oriented development is the new global watchword when it comes to infrastructure and commercial real estate development.

Says Tanaji Chakravorty, urban economist, “It is significant that the railway budget has highlighted the aspect of station redevelopment policy and looked at it in the context of using station redevelopment as means to encourage inner city re-generation.

“While there are several examples of such models globally (for instance London saw Liverpool Street Station and King Cross regeneration among many others), such projects are fairly long term and multi-stakeholder partnership initiatives, allowing for re-energising inner city dynamics. Even though in India, examples of such comprehensive station linked regeneration has been limited, the potential understandably is vast.’’

States Harshavardhan Neotia, chairman, Ambuja Realty, “It has been the right and timely strategy for leveraging partnership with states, local civic bodies like municipalities and private sector and other stakeholders towards gaining access to long-term financing and technology and building railway infrastructure and modernising station development. Private sector would lap it up.”


- by D Govardan (With inputs from Ritwik Mukherjee, Jharna Mazumdar and B Krishna Mohan)

Source :- Financial Chronicle

Piramal Fund Management Pvt. Ltd, part of the Piramal Group, has flagged off its new construction finance business by approving Rs.1,100 crore of loans to real estate projects across cities, a top executive said.

Lending for project construction is the newest line of business for Piramal Fund Management, which offers finance in the form of private equity lending and debt finance.

“Project approvals have started getting quicker and there is a healthy demand for developers for construction finance. We are expecting to sanction around Rs.5,000 crore by March 2016,” said Khushru Jijina, managing director, Piramal Fund Management. “With construction lending taking off, we have completed the last element in our product offerings that will now let us further engage with our partners and fund the entire project life.”

The company is looking at many more profitable, de-risked projects where the developers are experienced and its funds are ring-fenced, he said.

After an extended lull in the real estate market, developers are again trying to launch new projects or ramp up construction of existing ones, counting on faster government approvals. Interest rate cuts and a softening of prices in some pockets may encourage homebuyers.

Piramal Fund Management has approved nine construction finance proposals.

The projects are a combination of late-stage, mid-market residential developments in both city-centric and suburban locations and an existing office development.

The projects are based in Delhi-National Capital Region, Mumbai, Pune, Bengaluru and Chennai.

The loan tenures range from three to five years each, with a sufficient principal moratorium period to allow the project cash flows to stabilize, according to the company.

While commercial banks offer construction finance at around 11.5-12.5%, loans from firms such as Piramal Fund Management would be a little costlier and are comparable to other big non-banking finance companies (NBFC).

“Construction finance is extremely important in this market when commercial banks may not be too keen to lend, and will be of help to some developers with overloaded balance sheets, who have found it tough to finish projects. In some cases it will also revive projects that have been going slow,” said Rajeev Bairathi, executive director-capital transactions group and north India at property advisory Knight Frank India.

Most homebuyers are keen to buy homes in projects that are nearing completion or are ready to occupy and if projects gain pace, it will boost their confidence, he said.

“Companies also need to be careful who they are lending to and that the developer is not too stretched and doesn’t use it for any other purpose,” Bairathi added.

As equity transactions are gradually making a comeback this year, with a higher risk-higher return kind of model, Piramal Fund Management is also witnessing a rise in its private equity lending.

Out of the approximate Rs.1,000 crore of lending it does per month, structured debt lending would have accounted for around 90% last year.

However, in the last quarter, private equity lending has risen to almost 30% with developers seeking capital to buy land, said Jijina.

“By next year, we expect private equity and structured debt lending to occupy a 50:50 position in our portfolio,” he said.


- by Madhurima Nandy

Source :- LiveMint

Aman Verma (name changed) is looking for a decent home in the National Capital Region (NCR) for the past few months but is nowhere close to finding a property that suits his budget. High home loan, interest rates are another hurdle. This explains the Indian realty market: Enquiries have gone up substantially in the past six months but home sales have hardly seen an uptake.

According to experts, a revival in the sector is still 12-18 months away. Developers are expecting major announcements in the coming Budget, which will push up the pent demand in the sector, especially in the affordable segment.

In 2014, the residential property market across top cities, including Delhi NCR, Mumbai, Pune, Bengaluru, Chennai, saw a 28 per cent decline in new launches and 17 per cent in sales volume compared to 2013, according to a report by real estate consultancy firm Knight Frank.

A total of 234,930 units were sold in 2014, compared to 284,550 units in 2013. Similarly, 268,950 units were launched in 2014, against 372,160 units in 2013.

According to CBRE South Asia chairman and managing director Anshuman Magazine, there is no major uptake in sales. "Sales at the right location with right pricing are still happening. But overall, there has been no improvement. The market is not picking up. Moreover, the turnaround period is large in the realty sector, unlike share markets."

He added the government should announce incentives to stimulate demand, including lowering of interest rates or a low cut-off for affordable housing in terms of ticket size or a low down-payment required for purchasing a house.

"It is worse than the post-global financial crisis. Sales are not happening. So, this is a good opportunity to buy. We are at the bottom; it can only go up from here," said Magazine.

Ashutosh Limaye, head of research and Real Estate Intelligence Service at JLL India, also said demand had not picked up in the manner expected after increased enquiries and inspection visits.

"There are a few takers if developers come out with limited period offers and other deals. But there is only a minimal increase in sales in the overall sector," he said, adding the sector was keenly awaiting announcements in the Budget to push the sector back to revival mode.

Developers expect big announcements in the Budget that might push up demand in the sector. According to Getamber Anand, president-elect, Confederation of Real Estate Developers' Associations of India, the government should provide some fiscal incentives to developers for affordable housing.


- by Mansi Taneja

Source :- Business Standard

  
After making headlines with their fundraising, deals and valuations through last year, and increasing prime office space absorption across big cities like Delhi-NCR, Bengaluru and Hyderabad, e-commerce majors are set to be in news in 2015 for picking up big real estate.

To push their ambitious growth plans, leading companies like Flipkart, Snapdeal, Jabong and Amazon had fired the office-leasing real estate market in 2014. And, if their current plans are any indication, this year could see an even greater uptake by them, say experts.

Flipkart's yet-to-be-signed campus in Bengaluru, likely to be spread over three million square feet, could be the biggest office space deal for an e-commerce firm in 2015. Amazon, Jabong and Snapdeal - and others - are likely to join the race to access big real estate.

Flipkart had last year topped the list among e-commerce players by taking up three office properties, totalling 411,000 sq ft, on Bengaluru's Outer Ring Road, according to data available with Cushman & Wakefield, a leading international consultancy. The e-tailer refused to reveal its real estate plans but it is learnt that Flipkart - which has 10 offices in Bengaluru, where it is headquartered, and 13 warehouses across the country - is in the final stage of signing a deal for its proposed campus, where all its employees will be accommodated.

The company had identified Embassy Tech Village on Bengaluru's Outer Ring Road for its campus, and entered a "pre-commitment" with the Embassy group in October 2014. This campus will be spread over 1.2 million sq ft, with an option for an additional 1.8 million sq ft. The current rental rate for the property is pegged at around Rs 48 per sq ft per month - that translates into a rent of Rs 14.4 crore a month, or over Rs 170 crore a year, according to consultants. On-site construction could take up to three years, and the campus might be in place by 2017, when Flipkart turns 10.

Chief Executive Sachin Bansal had recently told Business Standard that Flipkart was planning to double its tech team over 12 to 18 months from the current 1,000. The total employee strength, 33,000 at present, will grow with business expansion.

In 2014, Jabong and Snapdeal made large office space transactions, too. They are expected to continue to do so this year. While Jabong picked up 120,000 sq ft in Gurgaon, Snapdeal absorbed 115,000 sq ft in Delhi last year. CEO Praveen Sinha confirmed Jabong was this year taking a new and larger rented office. But he did not disclose the details. The company, with more than seven warehouses, also has campus plans but those are not immediate.

Snapdeal CEO Kunal Bahl had earlier said his company did not have ambitious real estate plans. But the company already has several offices in New Delhi's Okhla commercial locality.

Though American e-commerce major Amazon refused to discuss the specifics of its office expansion plans, it is believed to be looking at a large office space of more than one million sq ft in Bengaluru this year. A spokesperson for Amazon pointed out that the company already had campuses in Bengaluru, Chennai and Hyderabad, besides offices in 15 Indian cities. "We also have eight fulfilment centres, covering seven Indian states, that offer a total storage capacity of over half a million square feet to retailers and small and medium businesses." Fulfilment centres are equivalent to warehouses for storage of products. "We are growing at a fast pace and you can expect our real estate footprint to grow this year," the Amazon spokesperson said.

Estimates suggest the total warehouse space uptake could more than double in 2015 to four million square feet. Also, besides the likes of Amazon, Flipkart, Jabong and Snapdeal, those like UrbanLadder, PepperFry, Quikr and FabFurnish are also looking at taking up more office space as their businesses grow.

In 2014, the Grade-A office space taken on lease by online or internet firms in Delhi-NCR touched 567,499 sq ft, against 84,000 sq ft the previous year, according to Cushman & Wakefield data. In Bengaluru, the absorption by e-commerce firms rose to 622,811 sq ft from 453,495 sq ft a year earlier. Hyderabad more than doubled the take-up to 8,542 sq ft from 4,100 sq ft the previous year. Mumbai grew from no absorption in 2013 to 27,000 sq ft in 2014. Similarly, Kolkata showed signs of an e-commerce buzz, with an absorption of 4,600 sq ft in 2014, against nothing a year before.

In spite of growth shown in many cities, e-commerce companies' total absorption across eight cities in Grade-A localities went up marginally to 1.26 million sq ft in 2014 (from 1.24 million sq ft in 2013), primarily because of the Chennai office space take-up declining. From 690,800 sq ft in 2013, the absorption by e-commerce companies in Chennai dropped to 31,150 sq ft last year. The e-commerce real estate take-up is still a small portion of the overall office pie - in 2014, the total Grade-A office space absorption across eight major cities grew to 29.5 million sq ft from 22.2 million sq ft the previous year. The projection is 36.8 million sq ft for 2015 and 40.1 million sq ft for 2016, data show.


- by Nivedita Mookerji

Source :- Business Standard

Realty players have welcomed the the Brihan Mumbai Municipal Corporation's proposal to increase floor space index (FSI) up to 8 in the Development Control Rules to be applicable till 2034. Currently, there is 1.33 FSI for island city and 1 FSI for suburbs.

The permissible FSI will eventually increase as per the locations with better infrastructure connectivity, accessibility, area’s future potential, its proximity to transit stations and the existing levels of FSI consumed. 

Mumbai has been divided into five zones and 58.12% of city's land would come under 3.5 FSI.  Further, an FSI of 5 to 6.5 is being provided for areas that are well connected by public transport and quite close to railway stations and existing and upcoming metro stations.

However, the realty players and town planners press for stepping up efforts simultaneously to upgrade city's infrastructure to take up the burden following proposed rise in FSI and the subsequent vertical development.

FSI is the ratio of the permissible built-up area to the plot area. BMC official, who did not want to be identified, explained that more FSI has been proposed near railway stations and other transport junctions and thereby develop infrastructure.

National Real Estate Development Council President Sunil Mantri told Business Standard, ''So far Mumbai was unexplored in terms of reforms of FSI compared to Dubai, Singapore, Hong Kong. Historically, hundreds of buildings are constructed in Mumbai with 4 and above FSI in the old days. However, the government later reduced FSI to 1.33 for island city and 1 for suburbs. This was done to control the development but it actually created chaos and brought the development to substantial lower phase resulting in the huge housing shortage in the limited land availability.''

Mantri said BMC's proposal is step in the right direction especially when there have been restrictions due to Coastal Regulation Zone notification, limited land availability, higher cost of land.

''The relaxation in the FSI will increase supply drastically and also ease out the pricing pressure in the coming months. At the same  time the civic body and the state government  need to enhance the infrastructure in a massive way,'' he noted.

ACME Group managing director Munish Doshi said increase in FSI will lead to transparency and promote affordable housing. ''However, the government should facilitate that the time taken for various approvals is reduced.

There will be lesser dependency on transfer of development right (TDR). Realty players will pay the premium to BMC instead of buying it from TDR market. This will result in reduction in residential prices,'' he hoped.

Further, Nahar Group's vice chairperson Manju Yagnik said it will impact only a few crowded areas of the city especially in places where infrastructure projects are coming up and there is no space to grow vertically.

''Otherwise, it is an overall good decision in Mumbai where land is scarce and old dilapidated buildings need immediate attention. Infrastructure development is already on way of being developed to meet the increasing demand. Once these major infrastructure projects are completed and old ones are upgraded the burden will be taken care of,'' she  noted.


- by Sanjay Jog

Source :- Business Standard

In the budget, the real estate sector hopes for greater clarity on smart cities and better financing avenues Come budget time and expectations soar. For most sectors, that is the standard annual routine and real estate is no exception to this rule. As the country inches closer to Union budget 2015–16, India’s realty sector, under considerable strain over the last couple of years, is hoping certain key expectations are implemented for the ripe hanging fruit to fall straight into their collective laps.

Following the government’s announcement of `smart cities’ in the half-budget last year, the industry now seeks more clarity on the exact definition of a smart city in the Indian context. Not unnatural to want greater clarity on – for example – how these cities are going to be funded and greenfield locations identified for such development.

The implementation of such ambitious plans would ultimately result in national wealth creation—to help India’s cities become sustainable and livable urban centres. Although it has received a lot of attention, the smart city concept is still in its nascent stage in India. Nonetheless, it has evoked positive responses and some urban centres have begun implementing their plans in bits and pieces. Some measures should be considered fairly wide ranging. In recent months, Chennai, Hyderabad, Coimbatore, Bangalore, Mangalore, Jamshedpur, Kanpur, Delhi and Mumbai, have begun deploying smart technologies to efficiently provide civic services. These efforts include advanced communications systems, metro rail systems, traffic management systems, smart metres, GPRS for solid waste management, GIS to manage property tax, online water quality monitoring, and online building plan approval schemes, among others. Good going.

In addition, certain new cities—such as the Kochi Smart City, the Gujarat International Finance Tec-City, and Lavasa—are currently being developed as model cities through private sector participation.

Says Anshuman Magazine, chairman and managing director, CBRE South Asia, “Direction is sought from the upcoming union budget on funding such massive infrastructure, which is a major issue requiring urban planning overhaul. India needs up to Rs 40 lakh crore to develop urban infrastructure and another Rs 20 lakh crore to maintain such urban clusters in forthcoming decades. Apart from the Centre and state government resources, therefore, the initiative would also require private sector participation and international funding.”

He adds: “A high-powered investment committee has estimated that at least Rs 7 lakh crore would be required for creating basic infrastructure over a period of two decades. Building public private partnerships (PPP) projects for creating `smart cities’ is also important in the Indian context. The central government has been mulling invitations to private players for this national initiative. For building smart cities through the PPP model, the government is expected to provide viability gap funding, while facilitating all necessary support mechanisms. Announcements to this effect are anticipated in the next union budget.”

Significantly, the Centre had allocated Rs 7,060 crore for initiating `smart city’ development in the last union budget and options like infrastructure bonds, PPP and the municipal bond market are already being considered for funding avenues. The opportunity of private sector participation is also on the cards, along with a special purpose vehicle (SPV) to execute the project. A first concept note prepared by the Union ministry of urban development (MoUD) has estimated the project development cost over 20 years to be around Rs 6.86 lakh crore, of which it proposes to earn Rs 39,000 crore from a slew of ‘green’ taxes.

With hopes rising, other leading developers echo Magazine’s sentiments. Points out Mohit Goel, CEO, Omaxe, “The Centre has been moving steadily on smart cities and the budget will have a lot of announcements on this front, including the broader contours. With several countries, including the US and Singapore pledging support, smart cities offers opportunities for private developers. The Centre must further liberalise and allow FDI in other segments, after allowing it in construction and affordable housing. The NDA government must re-introduce tax benefits under section 80 IB (10) of the Income Tax Act in order to overcome the supply gap and fulfill the vision of Housing for All by 2022. This benefit should also be extended to smart cities, affordable housing and re-development. The real estate sector is expecting its long-pending demand for grant of infrastructure status to be met this time. It will help access to easy finance.”

Goel – like many others in the industry – hopes for the day when clearances under a single roof becomes a reality. “A single-window clearance mechanism is the need of the hour. Goods and services tax (GST) is an important tax regime and will benefit the economy. Inclusion of real estate in GST is something that needs a holistic view but we believe its inclusion will bring about a lot of transparency. Taxes comprise a major portion in a property purchase and must be rationalized. While a cut in interest rate by RBI isn’t alone enough, buyers, too, have to be incentives through rebate in personal income tax and more money be put into their hands in order to drive demand,” he says, from a broader perspective.

Promoters and developers also believe it is time realty was accorded industry status – among other steps. Says Anubhav Jain, group director, Silverglades Group, “The long-pending demand to announce real estate sector as an industry is our foremost concern. The Centre should also ensure quick passage of GST, which will replace numerous taxes and help consumers. The deduction of interest on housing loans needs to increase from the current limit. Removal of numerous taxes can encourage real estate sector on a large scale.”

While Union budgets are all about expectations, financing of smart cities remains top of the mind, so that burden from the traditional metros and old cities are taken away, if possible.

Prof Jagan Shah, director, National Institute of Urban Affairs, throws vital light on the subject. “Today, it is evident that other than the six existing metros – Chennai, New Delhi, Kolkata, Mumbai, Hyderabad and Bengaluru – new economic centres of growth are also emerging. It is equally evident that we need to shift focus to these smaller cities, to plan carefully before growth overruns them. We will have a better chance to integrate the city within its regional context, both in terms of space and economy. Mind you, smaller cities also allow for greater public interface and participation, the cornerstones of sustainable urbanisation.’’

However, there are more challenges than one can possibly conjure. A key impediment to developing such large scale urban built environments is the issue of land acquisition, wherein private participation has been discouraged owing to stringent conditions concerning social impact assessment (SIA) and mandatory approval from majority land owners. Recent initiatives by the Central government in relaxing land acquisition procedures have been welcomed.

The ordinance with the latest amendments to the Land Acquisition Act, 2013, however, is yet to be finally passed in parliament. Dev­elopers would be hoping that the new Act would be implemented soon, together with more incentives for the low cost/affordable housing segment in the budget announcements.

“State-level initiatives, such as land pooling in Delhi and Andhra Pradesh, can be a major factor for developing smart cities. More importantly, clarity is sought on the government’s initiative in terms of monetary allocation, specific timelines, finalized locations and the broad plan of action, going forward. Effective urban planning holds the key and inclusive growth of local municipal communities—and by extension, the federal states and the nation,” explains CBRE’s Magazine. He has a point. 

The BJP-led government is expected to soon overhaul the state housing policy to ensure speedier clearances and to cut project costs for the real-estate sector in Maharashtra by at least 15 per cent.

Chief Minister Devendra Fadnavis will chair a two-day conference, to be attended by heads of all urban planning departments and builders’ associations, in Nagpur next week.

The meeting will be the first of the many consultations which will then culminate in a revision of the state housing policy that was drafted by the previous Congress-NCP government. Satish Gavai, principal secretary for Housing, confirmed the review of the existing policy and said that it is aimed at bringing about lesser points of control and fewer levels of approvals for private firms in the real estate sector so that they can build more affordable housing units.

“So far the role of generating affordable housing has remained confined to the state. The private sector needs to be involved in it. The cost of a real estate project increases by 15 per cent due to delays in clearances. Therefore we need to evolve a mechanism for less cumbersome procedures and create a climate that will attract investment in realty,” said Gavai. He said that the proposed changes are also aimed at ensuring that there is a synergy between the housing policy and the Development Control Rules (DCR) which has seen several incremental changes since the policy came into force.

The 2007 State Housing policy was the first to stress on the need for a housing sector regulator and the state is yet to act on it. It also spelled out the marked shift in state’s approach towards provision of shelter.

The original policy stated its intent as, “the need for reforms and liberalization in the housing sector” where “ instead of the role as provider, the state government will increasingly play the role as facilitator and enabler.”

Officials said that the current policy review exercise will address issues such as easing restrictions on redevelopment and leveraging government to encourage skill development and capacity building for the realty sector.

The policy framework will be designed in consultation with heads of various municipal corporations and concerned state government departments as well as NGOs and industry bodies such as Maharashtra Chamber of Housing Industry (MCHI) and Confederation of Real Estate Developers’ Associationsof India (CREDAI).

Senior state government officials, however, said that it remains to be seen how much of the benefit of project cost reduction is passed on by developers to the actual home-buyers since affordability and not lack of supply is the real issue impacting buyers. “The only way residential real estate prices can be brought down is by way of government intervention through subsidies or controls. Since neither of it is possible, the only alternative is for the Maharashtra Housing and Area Development Authority to construct as many houses as it can so as to force developers to slash their rates in order to remain competitive. However with the housing board’s land bank constantly shrinking, there is a need to implement policies that will help maximize public housing stock creation,” said the official.

Developer Sunil Mantri, President MCHI-CREDAI, said that the Chief minister is expected to kick off reforms in the housing sector by introducing measures for ease of doing realty business and reducing table-to-table transfer of files. “Currently in Mumbai itself, all real estate projects are required to get 60 no objection certificates before they are issued a commencement certificate for the project. We are looking at both reducing the number of NOCs and allowing its submission any time before completion of the project,” said Mantri. He added that the present time frame of six to 24 months that is required to issue clearances to real estate projects is also proposed to be brought down to one month.


- by Shalini Nair

Source :- The Indian Express

The living room is quite spacious

A. Since luxury is aspirational, economics plays an important role. What was once considered as super-luxurious is now termed as functional. We feel features like state-of-the-art amenities, hi-tech gadgets and creative spaces add meaning to the term luxury.

BUILDING BLOCKS

The concept of built-up area was introduced in the early 70s Government started charging stamp duty and registration on the built-up area Loading on the carpet area has been increasing since then While built-up has 30 per cent loading, in jumbo area it can be as high as 70 per cent There are now seven different ways to measure area including super built-up, jumbo, 37I measurement, and sub-carpet area

Fast-forward to now. People are buying properties even in their 20s. In fact, some start by buying small properties in remote areas, and move their way into the city over time.

This change is reflected in the rising figures of physical savings. According to data from the Reserve Bank of India, in the 1970s the rate of physical savings as a percentage of the gross domestic product stood at 6.9 per cent. This number improved to an average of 12.7 per cent in the period between 2003-04 and 2006-07. As RBI Deputy Governor Rakesh Mohan pointed out in a 2008 lecture, the household sector's investment rate (physical savings) has increased because of the availability of housing finance.

Today, people are happily raising 80-85 per cent through home loans, and if they still don't have enough, the rest is raised through a personal loan. No wonder, banks and housing finance companies are tapping youth aggressively. And, of course, being leak-proof isn't enough any more for the attractiveness of a property - gymnasiums, clubhouses and small parks have become a norm.

The single biggest reason for the change in aspiration is the availability of housing finance. The entry of Housing Development Finance Corporation in 1978, brainchild of H T Parekh, former ICICI chairman and paternal uncle of Deepak Parekh, made home buying much easier. Over the years, institutions like ICICI Bank, State Bank of India and others have emerged as strong players.

One big problem with real estate transactions was the black money component. So much so that HDFC did not lend more than Rs 70,000 for many years. Explains a senior official: "The agreement value would be much lower than the actual transaction amount. So, we introduced a system whereby our technical people would go to the site and come up with what we called appraised value. In effect, in early days, we funded most of the agreement value."

The undervaluation was so high that people would report property 50-60 per cent lower than the actual deal price.

Interestingly, the black money component gave birth to new income tax sections 37E and 37I. "Once you made a deal to buy a property, you had to register it with the income tax department. Within a month, the department either gave you a no-objection certificate or they acquired the property based on the built-up area price," says Pranay Vakil. The minimum value in metros and non-metros were revised upwards several times. Due to this law, the department ended up having a portfolio of properties, which it auctioned from time-to-time. The sections were repealed in 2002.

To counter black money and under-reporting, the government is bringing rates in ready reckoner at par with the market value. Ready reckoner is a state's reference rate for properties, based on stamp duty collection. If the deal happens below these published prices, buyers and sellers need to pay taxes.

To make property transactions easier for buyers, the government has also done away with the Urban Land Ceiling Act (ULCA), introduced in 1976. The Act said if a person held property of more than 5,000 sq metres (53,820 sqft) in metros, he needs to declare it. The excess land could be taken by the government for various social causes like low-cost housing. If the permission was granted for construction, the developer was not allowed to construct more than an 80 square metres (around 862 sqft) flat in tier-1 cities.

Builders found a way around this, by splitting flats on paper. Many did two or three agreements with buyers for the same house. The document showed the person bought more than one unit. The Act was finally abolished by many states over the past decade.

The need to scrap ULCA became necessary as buyers' profile evolved with time. Economic growth saw the average age of a person purchasing a house come down from the early 50s to the mid-30s. In cases where both partners are working, they went for bigger houses at an early stage of their careers.

While most developments of the past four decades have been in favour of buyers, the period also saw changing definitions of saleable area. Classically, houses were sold on carpet area alone. In the 1970s realty players started selling houses on built-up area. "With time, newer concepts evolved such as super built-up area and the recent one is jumbo area," said Vakil. In the latter, the loading is 70 per cent or more.

Buyers are also at the losing end when it comes to dealing with builders. Unless consumers go for a known brand, they can never be sure of what could next hit them. There have been numerous cases of indefinite project delays, consumers getting a smaller area than the mentioned in the agreement, and builders asking buyers to pay more money if prices see a steep rise while a property is under construction.


by Joydeep Ghosh & Tinesh Bhasin

Source :- Business Standard