Softening in credit policy useful for realty investors

The recent move by the Reserve Bank of India (RBI) in its annual Credit Policy has given some hope for investors within the reasonable housing phase. this can be being seen as a positive development for the property market. whereas investors stay cautious and watch for banks to announce the lowering of interest rates, realtors are optimistic of the state of affairs, however, hoping that inflation remains underneath check.

“While the speed cut of fifty basis points is unquestionably a ray of hope, it doesn't dispel the shadows nearly the maximum amount as is also initially supposed. It ought to be borne in mind that the Reserve Bank of India (RBI) has hiked interest rates thirteen times between March 2010 and October 2011,” says Om Ahuja, CEO – Residential Services, Jones Lang LaSalle India.

“While this can be understandable, given the continuing issues over inflation and liquidity within the market, the spate of rate hikes has created a compounded drawback for the residential land sector. The series of hikes within the past have conjointly affected the worth that builders placed on their properties, since their own prices of borrowing have increased. it's unlikely that property costs can return down thanks to this rate cut. In fact, it's terribly doubtless that there'll be an upward bias on property rates thanks to the anticipated improvement in sentiments of consumers who have thus far been sitting on the fence, looking forward to some signals of relief,” adds Ahuja.

Shrinivas Rao, CEO, Vestian world Workplace Solutions says the reduction in repo rate can boost economic growth and improve business sentiments that in flip can strengthen shopping for activity. However, the impact can vary across sectors looking on implementation of the cut by leading banks. “Leading lenders are doubtless to chop interest rates on deposits and loans. Home loans are doubtless to show cheaper. as an example, a twenty five basis purpose cut may lower home loan EMIs by Rs sixteen per Rs one lakh. A cut within the repo rate {will also|also can|will} cut back the interest on industrial loans that in flip will favour developers to avail cheaper loans, thereby providing traction to land activity. Cheaper loan rates are expected to draw in additional end-users, impacting the residential sales absolutely,” he says.

With banks giving loans at cheaper rates, developers are doubtless to like the bank loans as against non-public equity funds. However, a rise in market demand within the short term can drive capital values, thereby benefitting retail investors, adds Rao.

Work to resume at Noida Extension

Encouraged by positive indications from the NCR designing Board to travel ahead with the Master arrange 2021, the bigger Noida authority is going to re-schedule developmental work in and around Noida Extension.

There is additionally a transparent indication from the Allahabad high court on a review petition filed by the bigger Noida authority. So, you will currently breathe simple this dream house of yours. The uncertainty over completion of comes launched in Noida Extension seems to be lifting.

If the trend of those positive developments continues, developers and builders will restart construction work this month itself. they need been watching for this moment since the Allahabad high court verdict over the land row. Sources say that the Master arrange 2021 of bigger Noida has virtually been cleared and is awaiting a proper announcement of the sub-regional cell, Uttar Pradesh.

Anil Sharma, the vice chairman of Credai and therefore the chairman and managing director of Amrapali cluster, says: “This may be a relief for builders and developers whose comes are delayed since the dispute erupted over land acquisitions. when the Supreme Court verdict, that quashed the land acquisition of Shahberi, variety of comes were in limbo.”

In a writ petition range, Ramesh Kumar Bhagchandka versus UP and others, it's been said that the Master arrange 2021 doesn't have any approval of the NCR designing Board, that may be a statutory body constituted below the an act of 1985. in line with the act, a thought should 1st be ready and if necessary land acquisition would be done.

In the gift case of Noida Extension, the acquisition proceedings are undertaken and thereafter the land was sought to be utilised by allotment to builders for raising construction that go contrary to the arrange. below these circumstances, the petition says the proposed acquisition is against the law be put aside. during this context, the Allahabad high court has directed the bigger Noida authority to get clearance from the NCR designing Board for its master arrange, and then go ahead with the event method.

Experts say there's no provision for approval of the master arrange ready by the event authority from the NCR designing Board. the availability is barely for sub-regional plan; the Master arrange of 2021 was sent to the NCR designing Board for approval in 2006 and 2009, though.

According to the principles, the NCR designing Board will raise objections to the arrange at intervals sixty days from the time the arrange was submitted to them by the event authority. when the expiry of this era, it can not be challenged. it had been so that the bigger Noida authority urged the Allahabad high court for review of the choice over the master arrange.

The bigger Noida authority has currently clubbed its Master arrange 2021 with the newly written Master arrange 2031 and sent it to the Housing and concrete designing Department, Lucknow, for approval, to avoid the same scenario in future.

The Housing and concrete designing Department is getting ready sub-regional plans for development authorities like Yamuna, Noida-Greater Noida and Ghaziabad Authority. The sub-regional plans of Noida and bigger Noida have virtually been cleared.

 Impact of court’s verdict

After the court verdict that awarded sixty four.7% further quantity and 100% of the developed plot as compensation to farmers, Noida and bigger Noida authorities are issuing notices to any or all the developers and builders whose comes return below the disputed areas.

In line with the court verdict, the Noida authority has got to disburse Rs one,100 crore additional to the farmers, as compensation. The Noida authority has determined to depart this world five hundredth of this burden to the builders. Besides, facing serious money crunch, an additional burden of Rs nine,500 crore together with price of developed plots, the bigger Noida authority is already within the method of collecting cash at the speed of Rs two,015 per sq metre from builders and Rs one,465 per sq metre from individual residential plot allottees of Noida Extension. an additional Rs 550 per sq metre also will be charged from instructional and institutional allottees.

Noida Extension, over 3,000 hectares, contains Sectors one, 2, three and Ecotech thirteen. The bigger Noida authority allotted land to over 3 dozen builders like Amrapali, Supertech, Nirala, Eros, Antriksh, Earth, Ajnara, Gaursons, etc, at rates that ranged between Rs ten,000 and Rs eleven,600 per sq metre through open tenders. additionally, a complete of four,250 residential plots were allotted through lucky draw at the speed of Rs ten,500 per sq metre.

Builders are going to increase costs during this space at the speed of Rs five hundred per sq ft, to soak up the increased burden. Chetena Sharma, a buyer at Noida Extension, says: “The call to levy an additional charge can hit the property market. it'll not be cheap for middle-class salaried folks. For the common middle category, a house can stay a dream.”

Rakesh Yadav, the managing director of Antriksh cluster, says: “Undoubtedly, property in Noida Extension, that was earlier known for its cheap rates, can currently be costlier. we have a tendency to are absolute to revise costs as a result of this further burden including increasing value of raw materials.”

RBI interest rate cut positive for housing sector

For the first time in three years, Reserve Bank of India (RBI) has slashed interest rates by 50 basis points to 8%. This move will reduce the home, auto and corporate loan rates. A fall in interest rates of home loans spells relief for the common man who up till now had been postponing the decision to buy property due to increased prices and high inflation.

Anuj Goel, Executive Director of KDP Infrastructure believes that this is a good move from the RBI’s side as this will improve cash flow. “As the housing loan interest rate reduces, it facilitates home seekers to buy house and ultimately it will be beneficial for real estate industry. However, the move will only benefit new borrowers while the existing borrowers will have to grapple with the old rates,” he added.

Banks should allow existing home loan customers to reduce their interest burden by allowing them to re-price their existing loans at lower rates so that borrowers can switch to prevailing floating rates that are at a discount to the prime lending rate, Goel pointed out.

Navin Raheja, President, NAREDCO & CMD, Raheja Developers is happy with the move, saying that home loan EMIs will come down resulting in a boost to residential real estate. “But, the banker’s reaction to maintain the interest rates irrespective of cut in repo rates is a cause of concern because we feel that banks should pass the rate cut to the borrowers enabling them to invest in real estate,” he said.

Sailesh Kumar, Chief Operating Officer, Lotus Infra Projects Pvt. Ltd agreed with the view, saying that keeping in view the upside risk of inflation, the RBI could not afford to cut repo rate for the last couple of years.

“It seems that growth is likely to improve supported by pick up in consumption demand. The RBI has cut the repo rate which is a welcome step for real estate sector as high interest was impacting the demand on one hand and increasing the cost of construction on the other hand increasing the cost of construction,” Kumar added.

Gaurav Mittal, Managing Director, CHD Developers Ltd said that this step is slated to be beneficial for both the buyers as well as the developers who have been struggling with cash crunch in recent times. This significant move would reduce the cost of funds to home buyers as well as developers as it will allow the banks to lower down the interest rates. “This will ensure heightened property demand in the coming times. Removal of the pre-payment penalty clause will spread cheer amongst developers and would ensure fresh loans and hence boosting the market,” he added.

Now that rates are cut, consumer demand is expected to revive and overall sentiment will also improve. It is expected that banks will reduce the home loan interest by 50 basis points which will ultimately perk up the demand and will help developers to dispose off their unsold stock, Kumar added.

Rajesh Goyal, Managing Director (MD), RG Group said that the announcement in the new credit policy to cut interest rate by 50 basis points is a move towards the right direction. It will provide much-needed boost to the sector and a relief to home buyers.

However, Om Ahuja, CEO – Residential Services, JLL India does not consider this cut to be a positive move for the housing sector. It should be borne in mind that the RBI has hiked interest rates a total of 13 times between March 2010 and October 2011. “Given the ongoing concerns over inflation and excessive liquidity on the market, this spate of rate hikes as created a compounded problem for the residential real estate sector whose effects are not easily dispelled. The series of hikes in the past have also affected the price that builders put on their properties, since their own cost of borrowing has increased. It is unlikely that property prices will come down because of this rate cut, and it is the price of properties that is the decisive factor in residential real estate sales,” he said.

Bangalore residential rentals stabilise

With the inventory levels going up across all micro markets, residential rentals are stable except in CBD and select other areas where high-end housing demand is predominantly driven by expatriates in the city. There are others who feel that rental market saw a hike by 20-30 per cent in the last one year before stabilising now.

In CBD areas, rentals are up by 8-10 per cent due to demand exceeding supply. There are realtors who say that the appreciation would be as high as 10-15 per cent due to the growing demand in central areas and the spurt in the influx of expatriates from Europe and US to the city.

The demand for leasing from expatriates is particularly for gated community development projects in proximity to international schools, says Farook Mahmood, CMD of Silverline Realty Pvt Ltd. The location varies depending on the work spot and availability of international schools for children. High end apartments in CBD areas and villas in areas like Whitefield drive demand where the rentals range from Rs 1 lakh to Rs 5 lakh per month.

Apartments in CBD areas command a higher price than other areas. Rentals range from Rs 20,000 to Rs 2 lakh per month for 2 BHK units depending on the location, proximity to landmark areas and amenities offered in the project. Similarly rentals for 3 BHK units range from Rs 45,000 to Rs 2 lakh per month, according to realtors.

A significant development is the expansion of commercial property market which in turn has boosted the demand for housing in the city. Even some of the call centre trainers are coming from abroad, according to realtors. Unlike earlier, the demand from expatriates for housing has gone up in and around the city.

For apartments, rentals are more or less stable except in a few areas where demand exceeds supply levels, says A Siddique Beary, director, Bearys group. Bangalore continued to top the charts with the highest office space absorption last year in the country with 11.53 million sq.ft. along with additional pre commitments of 5 million sq. ft for 2012. The influx of expatriates and the resultant demand for high end housing need not be overstressed further. The impact on high end housing especially from expatriates has resulted in rentals surging by 15-20 per cent in select areas, he adds.

According to Jones Lang LaSalle’s quarterly update, Bangalore market saw the absorption of 4,182 units in 1Q12 against 3,370 units in 4Q11, pushing the absorption rate up from 10.0% in 4Q11 to 11.0% in 1Q12. Unsold stock in the quarter totaled 32,978 units compared to 31,369 units in 4Q11, reflecting a vacancy rate of 51.1% down from 52.4% in 4Q11. This increase in demand was due to buyer sentiment shifting towards purchasing a property rather than paying high rents, as well as the entry of primarily investment buyers from other tier I and II cities.  XZ4UCQYVE5Y2

A total of 25 residential projects were launched across the city’s submarkets in 1Q12, offering 5,791 units in 1Q12 against 3,515 units in 4Q11. Meanwhile, eight residential projects comprising 1,009 units across different sub-markets were withdrawn from active stock as they were completely sold out.

Residential rents rose in 1Q12 due to the influx of people, mainly IT/ITES employees, into the city and are likely to increase further over the remainder of 2012 due to the expected improvement in IT/ITES employment.

Chennai retail mart buoyant

Chennai’s retail sector is gaining momentum with vacancy levels declining from 14.0% in Oct-Dec 2011 quarter to 13.5% in Jan-Mar 2012 quarter. The largest deal was by French Home furnishing retail chain Ebony Gautier, which took around 10,000 sq ft space in Express Avenue mall.

According to Jones Lang LaSalle’s quarterly survey, mall format stores in the CBD were in demand during the latest quarter. Canon Image studio, Gem palace, Lasya, Kryolan, Timex, Eye T world were some of the brands which occupied vacant spaces in Ramee mall during 1Q12.

Ground floor of office buildings continued to attract retailers, during 1Q12, Spectrum Shopper’s leased out around 1,900 sq ft of space in Ambit IT Park, Ambattur industrial estate.

Lack of new mall space helped high streets to gain healthy leasing during the quarter. LG opened two stores, one in Nungambakkam high road and another in Chrompet. Louis Philippe, Van Heusen and Zimson opened shops in Adyar, while Harley Davidson and Apple opened there stores in Nungambakkam. Roshan Lal women’s ethnic wear and Helios opened shops in Shanti colony, Anna Nagar, whereas Reliance Trendz opened its shop in Chrompet.

Supply

No new supply was added in the city during 1Q12. Ten’s square mall coming up in Koyembedu, is ready for fit-outs and expected to come up during 2Q12. This will add around 150,000 sq ft of mall space taking the total supply of mall space close to 3 million sq ft.

No sales transactions have been recorded in the retail malls sector over the past few quarters as new malls in Chennai operate in the lease model.

Due to limited size of the market, Chennai retail segment including high streets deliver high returns on investments, which forces the investors to hold on to their investments.

Outlook

With the Union budget putting more money into the hands of avid shoppers, retailers are bullish about the surge in sales in the coming months.

JLL expects vacancy levels to rise in the next 12 months amidst the supply of more than 2 million sq ft. of mall space. Though vacancy rates are expected to surge, absorption in the new malls are also expected to improve amid flourishing residential and commercial activity in the suburbs.

Rental and capital values are likely to improve in select pockets of suburbs and in prime locations, while they will remain stable in the peripheral areas.

Old TNHB flats to make way for high rises in Chennai

The Tamil Nadu Housing Board is gearing up for a massive redevelopment plan in which 2,238 old rental apartments will be razed at 17 different locations in Chennai. Most of these apartments are located at Nandanam, Saidapet, Foreshore Estate and Kilpauk.

The board will develop 4,691 highrise apartment complexes at these locations at a cost of 680 crore, said housing and urban development minister R Vaithilingam in the assembly on Tuesday. They will be rented out to government servants and public as per TNHB guidelines.

TNHB will also construct 400 rental apartments at Anna Nagar West Extension and Thiruvanmiyur at 60 crore for government servants and general public. The board will also carry out repairs of its old rental apartments at 10 crore.

The minister announced a list of projects to be taken up by the board this year. The board will construct 3,662 multistoreyed residential units in two phases at 812 crore at Sholinganallur. Similar projects will be taken up at Kancheepuram, Thanjavur, Trichy, Madurai and Tirunelveli districts at 43 crore during the current financial year.

The Slum Clearance Board will construct 2,882 tenements at 145 crore at Srirangam, Trichy, Vandavasi, Tuticorin, Ramanathapuram, Orathanadu and Chennai. Under the Rajiv Awas Yojana, 1,404 tenements will be constructed at Athipattu and Ambattur at 108 crore.

BMC to get a year to implement new property tax model

An ordinance to grant the Brihanmumbai Municipal Corporation (BMC) a year to implement the capital value-based property tax regime was introduced in the state legislative council for approval on Tuesday.

The ordinance was approved by the state legislative assembly on Monday evening and is expected to gain a smooth passage in the council as well.

Minister of state for urban development Bhaskar Jadhav sought the ordinance’s approval in the council on Tuesday itself, but a discussion on it was deferred as some members from the Opposition benches,who wanted to participate in the discussion, were not present.

While proposing to grant the BMC a year’s time, the state urban development department made it clear that “there will not be any further extension”.

The government has permitted the BMC to issue provisional bills on the basis of rateable value fixed in 2009-10. The government has also proposed exemptions for offices of all diplomatic and foreign missions in Mumbai for payment of water benefit tax, sewerage benefit tax and tree cess.

Implications of guideline value revisions in Tamil Nadu

The government of Tamil Nadu has revised the rates of guideline value of land in all zones, including residential, commercial and agricultural land across the state with effect from April 1, 2012. This revision comes after five years with the last set of values having come into effect in August 2007.

The revenue policy note, presented in July last year, reflected that this change was due to be ushered in and speculations were rife over the last eight months as to when the revision wouldcome into effect. In November 2011, the proposed revision of values for each region was put up for public opinion in all the Tahsildar offices and reviews were taken into consideration, before the current set of rates were introduced in the state.

The new values affect all types of land including agricultural, residential, industrial and commercial property in urban and rural areas equally. With a rise of almost 300% in many areas, the reaction to this revision has been mixed. There are three main aspects that this change brings in, the first being the prevention of black money and the loss of revenue to the state and country.

“The revision is a welcome move and is set to usher in a cleansing of the real estate industry and land transactions across the state,” states A S Shivaramakrishnan, Head, Residential Services, Jones Lang LaSalle India, Chennai, a premier international real estate consultancy firm. “The revision of the guideline values equaling the market value of land in most part across the state will greatly enhance the transparency index of real estate transactions in the city and promote investment and growth in a big way.”

A major concern in India is cash transactions in real estate deals, which is encouraged by the divergence of guideline value and market value. People often register the transaction at guideline value (sometimes as low as 20% of the transaction value itself), pay the registration and stamp duties based on the guideline value alone (affecting the buyer of property) and reflects the accounted portion equivalent to the guideline value alone for capital gains and tax purposes (affecting the seller of the property). With such high degree transactions happening in cash in most deals, it had become rare to find buyers or sellers insisting on a fully transparent deal. This led to huge revenue losses for the state exchequer. This is not only illegal, but also creates a vicious cycle of investment of black money in the real estate sector.

“Major legal reforms are still required with respect to property valuation and land acquisitions,” says RS Nambi, a Tax and Legal expert and advisor to the World Bank. “An ombudsman and valuation officer in every registering office to examine and evaluate the transactions, disputes and divergences between published values and the market can go a long way in ushering greater fluidity to real estate transactions. This revision of guideline values is the first step towards preventing the loss of revenue for the state and unearthing black money. We have to wait to see how the latest measures of the budget with respect to bringing in TDS on amounts greater than 2 lakhs will apply to property sales this year. The capital gains tax that the seller has to pay is calculated on transaction value or guideline value, whichever is higher according to law. “

The previous year saw close to `3,200 crores worth of stamp duties and registration fees being paid for property transactions between October 2011 and March 2012. The revision is expected to boost the revenue in the state this year to a figure greater than `8,500 crores in 2012-2013. Targets for revenue collections for the month of March were set for all the sub-registrar offices across the state by the Inspector-General of Registrations.

With expectations of a hike in the values, there has been a rush of registrations and many people who might have otherwise waited to conclude their transactions, were pushed to finish them before March 31. “With a high number of transactions having happened in March, the target of 21 crores set for the Neelankarai SRO was successfully achieved by the middle of the month itself,” states Vimala Jayakumar who runs a document services outfit in Neelankarai.

“Usually, there are around 40 registrations per day and in March it rises to about 60-70 per day. But this year, there was a heavy rush in the last two weeks of March, with more than 200 registrations happening per day.” This clearly shows that the revision of guideline values will not only promote transparency and usher in more revenue to the state, but it will also act as a mechanism to force people to complete delayed transactions all at once and bring in a combined revenue to the state, which has been starved of funds. It is estimated that the combined revenue of 1000 crores has been collected by the state for the month of March 2012 through these transactions alone.

The Inspector-General of registrations chairs the committee formed by different sub-collectors across the state to determine the guideline values. The proposed values were published in November 2011 and public opinion was invited. Accordingly, they were modified before coming into effect in April of this year. Says Vimala, “Overall, the new values reflect the market rates. Wherever people disagreed with the rates, appeals were submitted and they were taken into consideration. The older and newer guideline values have been listed by survey number, street and category on the official website of the Registration Department of Tamil Nadu (www.tnreginet.net) and the website itself mentions that values relating to 1.1 lakh streets and over 29 million survey numbers.

While it is a great move to bring in transparency in the state’s real estate industry, there are some concerns as to how this revision will affect the public and developers. With steep revisions of up to 270% in most cases, the question on how this re-evaluation of property will affect the common folk remains. The hardest hit areas are the centers of urban development and the heart of Chennai city. “In the peripheral areas, it is business as usual even with the hike in values. Similarly, for multi-storeyed buildings, the direct impact is not as high, since the undivided share values come up only to 20-30% of overall values. The significant impact is within city areas where the values have jumped up to unaffordable levels,” says AS Shivaramakrishnan.

“While the cost of land is already high in the city, the steep increase in guideline values will make it impossible for developers to be able to afford to get premium FSI for redevelopment projects. What this means is that, on old buildings that can come up for redevelopment with joint-development agreements between the owners and developers due to revision of the FSIs over the last two decades can be rendered unfeasible if the developer has to pay the kind of fees based on the new guideline values for the premium FSI that would be his profit centre. Any move to provide some incentives for redevelopment projects on 25-30 year old buildings are necessary to avoid bringing redevelopment to a grinding halt. The concern is that the move makes it all that more expensive and unfeasible for urban projects.”

“Similarly, peripheral development needs the social infrastructure to expand accordingly. In a city like Bangalore, this has happened in concentric circles and not in an unbalanced way like we are seeing in Chennai. With the city at a crucial stage of its metamorphosis, with major infrastructure projects like the metro in progress, a significant aspect that affects its citizens and growth itself is redevelopment of existing structures and buildings. New infrastructure is being built to raise a brand new city from the ashes of the former metropolis. This has been the story in cities all across the world, right from New York to Mumbai, where redevelopment has been key to boosting its growth ahead. Hence, while it is a positive move by the government to bring in equity in the values of transactions, it is important that the city and state authorities remember that the redevelopment of its buildings is necessary for growth. “

Pune property options offer value for money

India’s IT, educational and automobile hub is developing at a speedy rate, with improved infrastructure and a variety of housing projects, especially affordable ones. For home buyers, Pune serves as the next best destination for investment, say experts.

Looking at the eastern side of Pune, Kharadi, Wagholi and Hadapsar are the areas that are most preferred as residential destinations, offering a range of options for buyers.

Wagholi in the East, Undri, Pisoli and Mohammedwadi in the Southeast and Dhanori, Charholi in the Northeast are the upcoming locations in Pune, says Shantanu Mazumder, Branch Head, Pune, Knight Frank (India). He adds that Wagholi and Undri are the destinations to watch out for the highest return on investment and maximum buying of residential property is happening in Wagholi and Undri.

Prathamesh Dubhashi, who recently purchased a flat around Kharadi, better known as Kalyani Nagar Annexe, says, “Since the rate in Koregaon Park is skyrocketing these are the areas that one can look into if one wants to purchase a flat in this part of the city. The flat that I bought was within my budget with all the amenities.”

Prathamesh explains, “Kharadi and Hadapsar were a few of the areas that I looked at while buying the flat. They have come up very well in the last two or three years with good residential as well as commercial projects emerging. One can expect a lot more development in the next few years. From numerous malls and excellent hotels that provide good eating options on Nagar Road to entertainment options in Koregaon Park, everything is in the vicinity. It’s close to the railway station as well as the airport.”

“For investment purposes Kharadi is the best option with a lot of upcoming projects that suits the budgets of all. Now is the time to invest in these areas as the prices are expected to escalate greatly in the coming few years.”

For Kharadi, the proximity factor plays an important role. “The upcoming locations are Kharadi and Wagholi,” says Sanjay Bajaj, Managing Director – Pune, Jones Lang LaSalle India.

Citing the reasons for these areas, Bajaj says, “Kharadi has come up because of its proximity to EON, Magarpatta, Commerzone, Gigaspace and Espace IT parks as well as its good connectivity to the airport, railway station and other places. It also has the best of Pune’s malls like Phoenix Market City, Inorbit, Jewel Square and Amanora in its neighbourhood.”

“Wagholi presents buyers with a clear affordability and value-for-money factor and also has extremely high investment potential.”

Pune west has also seen great improvement as the east and the areas responsible for this are Wakad, Kondhwa, Baner, Hinjewadi, Pirangut, Balewadi and Tathawade.

“The upcoming locations in the west are Wakad, Balewadi and Tathawade, and Wakad is one of the destinations to watch out for investment. Maximum buying is happening in Wakad and Hinjewadi,” says Mazumder.

Abhishek Rajagolkar purchased two flats in the last few years, both in the western corridor of the city, Hinjewadi and Pirangut. He says, “I needed a spacious place and the price ratio worked better in the flats available in these areas. It is the fastest developing part of the city. The IT and automobile boom has led to some very good projects in this area. Purchasing property here has been a good return on investment for me. It’s also closer to Mumbai. The upcoming industries and the proposed airport at Chakan will also foster the growth in this region. One big investment and this region will come up extremely well. Maximum buying happening in Pune as of now is Hadapsar and Kharadi in the eastern side and Baner, Wakad, Hinjewadi, Pirangut on the western side.”

Bajaj says, “Hinjewadi has two market drivers – its proximity to Mumbai and the employment opportunities that IT giants like Wipro, Infosys, Cognizant and Tech Mahindra have created in this belt.”

Shruti Sengupta purchased a flat in Kondhwa. She says, “We wanted a flat in this part of the city as its closer to my office. The rates in this area were lower than most of the surrounding regions. It is also very peaceful and full of greenery which attracted us a lot. It also offers easy accessibility to M.G Road, Koregaon Park. Also, it’s a self-sufficient area with malls and eating joints near-by and railway station and airport at vicinity.”

Ravet has also come up and has benefitted tremendously. Stating the reasons for the improvement, Shveta Jain- Director, Residential Services, Cushman & Wakefield – India, says, “The development in the area is in a much planned manner. Located in close proximity to Mumbai-Pune Expressway, it is considered to be an entry point of Pune. This area is being looked forward by the information technology (IT) professionals, as well as by the industrial work force, as it has easy accessibility to the Hinjewadi IT Hub, as well as Pimpri-Chinchwad industrial belt. The construction work on the 45-metre, grade separated, and non-signaled four lane Bus Rapid Transit System (BRTS) route joining Ravet to the up market Aundh is in full swing. This road will bring down the travel time to Aundh to less than 10 minutes. The industrial belts at Pimpri, Chinchwad, Chakan and Talegaon are now within easy reach from Ravet. With quality electric supply, as well as water supply, the precinct of Ravet holds an edge with respect to the other locations.”

Mazumder concludes saying, “With the growth of the economy in Pune, residential property rates in Wagholi, Undri, Wakad and Hinjewadi will only head northward.”

Construction industry moves from traditional to innovative building concepts

New eco-friendly engineered homes, building systems and technology are being introduced. We are moving away from the traditional method of construction towards the innovative concept of engineered residential homes. Noida-based Interior Craft has launched the unique concept of assembling partially constructed components manufacturing inside a factory. So, what’s different about this home?

Called Interior Craft Engineered (I.C.E) Homes, a sample building with this technology uses iron columns as supporting pillars, covered by shera board (fiber-cement composite) as substitute for cement, grade A steel beams, GI sheets, bison board for roof and membrane for water proofing, CFL and LED lighting etc. Propagating the need for green technology in all buildings, Interior Craft said that this building is ready within 3 months.

Eliminating the need of a large workforce and large turn over time, components such as supporting pillars, door head and roof structure, are built in a climate-controlled factory, away from the construction site and transported to the actual site for assembly. A structure built following this methodology is stronger, faster and economical as compared to buildings constructed conventionally.

Talking about the uniqueness of Engineered Homes, Anis Ahmed, Managing Director, Interior Craft said, “This home is durable and technically superior and has all the certifications of clearance as per the safety and environmental norms issued by the concerned authorities. Available at about Rs 2,600 per sq ft, the company has so far taken orders only for farm houses.”

G D Goenka’s farmhouse in Sultanpur, Delhi is the company’s next project. DC Architects are the design partners and Raj Nandini Estates Pvt. Ltd is the marketing partner.

Developers like M3M Ltd, Ambience Group, Eros Group have used Interior Crafts’ services like railing, gates, canopy, staircase etc. However, this is the first time when the concept of assembling a house at the construction site has been witnessed.

Occupancy Certificate not mandatory for small builders in Hyderabad

Occupancy certificate will not be mandatory for buildings which come up on plots up to 100 square metres with height up to seven metres. The exemption is given to small builders as occupancy certificate (OC) is directly linked to electricity and water connections.

The amendments were incorporated in the new GO on Building Rules issued by the Municipal Administration and Urban Development (MA&UD) department on Saturday.

Also, civic bodies like Greater Hyderabad Municipal Corporation (GHMC), which releases building permissions, should communicate the approval or refusal of occupancy certificate within 15 days. If any officer fails to communicate, the civic body could initiate action against the officer. The GO said occupancy certificate might be issued to owners after collecting compounding fees, if there are any minor violations and deviations from the sanctioned plan.

For high-rise buildings, the OC should be released by the civic body after inspection and getting fire ‘No Objection Certificate’ from the AP State Disaster Response and Fire Services department. Until now, the town planning wing used to give OC without fire NOC. Two buildings where fire accidents were reported recently found to be having OC sans fire NOC.

The MA&UD department has also prepared a pro forma for commencement notice, completion notice and occupancy certificate by giving more clarity. The pro forma have been prepared so that a civic body could also receive them online.

Environmental impact assessment provisions have also been incorporated in the new buildings rules. As per the GO, buildings and construction projects that come up in 20,000 sq metres area and 1,50,000 sq metres of built up area and township areas development projects covering an area of 50 hectares and or building up areas of above 1,50,000 sq metres should get environmental impact assessment.

Director of Town and Country Planning (DTCP) B Purushottam Reddy said awareness programmes and meetings would be conducted across the state soon for licenced architects, town planning staff on changes in the buildings rules, especially on setbacks and road widths.

Ghodbunder Road witnesses rapid development

Ghodbunder Road is a state highway (State Highway 42) road that runs through the Thane district. This 20 km long road, which connects the Eastern Express Highway and the Western Express Highway, is witnessing rapid pace of development.

More than 5 million sq ft is under construction, most of which is residential; besides the road is dotted by retail, commercial, institutional projects, in the pipeline. Schools, colleges, hospitals, banks are coming while some restaurants and entertainment hubs are about to start in malls.

Cosmos Group, Everest Group, Hiranandani Group of Companies, Kalpataru Group, Raheja Developers, Prescon Developers, among others are some of the reputed developers having presence in this location. These projects are not integrated townships but residential projects built on 5-10 acres. These projects are gated communities that offer amenities such as swimming pool, sports complex, children‘s play area, clubhouses and gymnasiums. Proximity to Sanjay Gandhi National Park is touted as a positive with adverts reading ‘enjoy an unrestricted view of the Wild Life Sanctuary from your apartment.’

According to market sources, the average unit capital values at Ghodbunder road is about Rs 5400 per sq ft. The values have gone up by 20% in the last one year from Rs 4,400 per sq ft in June 2011 to Rs 5,400 per sq ft. However, currently there is little investor-driven activity and the prices are stabilising.

Looking at the commercial side, Hyper City mall and R Mall are operational on Ghodbunder road. According to local broker Rakesh S. Shelke, “Retail is concentrated at Waghbil and it basically comprises of clothes, jewellers, kirana stores, sweet shops etc. Typically a 250 sq ft shop is available for Rs 30 lakh. There are some offices such as banks, call centres and the office value ranging from Rs 110-120 per sq ft, amongst these most of the offices are small in size for about 500 sq ft. Other important commercial buildings include Regalia and Hirnandani.”

Infrastructure development is also taking place at a rapid pace. This road being a state highway (which connects eastern and western corridor) has over 5000 trucks plying everyday during early morning and late evening hours. To ease the traffic considerably, flyovers which are coming up at Majiwada, Manpada, Kapurbawdi, and Waghbil. In fact, the Waghbil flyover has just been commissioned. There are buses plying every ten minutes to Borivali, Kalyan, Navi Mumbai.

Anatomy of Urban Investments in Mumbai

India’s growth story has many facets; one of the integral parts of growth – and arguably the most important one – is urbanization. In fast-growing economies, cities are significant investment and employment generators, which in turn carry the growth momentum forward. The sustainability and livability of any city depends largely on the quality of its infrastructure and real estate stocks. Needless to say, cities also require large sums of money to create urban asset stocks, including buildings and infrastructure.

Over last decade, India’s population grew by 18% while its urban population grew at almost double that rate (at 32%). Currently, about 31.2% of India’s population lives in urban areas. The country’s share of urban population has increased by almost 3.5% over the last decade. What is even more astounding is the increase in the built-up real estate stock in its cities and towns.

Data from the 2001 census shows that about 110 million ‘Census Houses’ exist in the urban areas, which indicates an increase of 39 million over the last 10 years. In other words, real estate stock shows a compounding growth of 4.5 % per annum as against the growth rate of 2.8% in urban population. Obviously, such massive growth needs adequate support from infrastructure.

However, the state of affairs with infrastructure in Indian cities is not very encouraging. Most of the cities still have to deal with issues in terms of roads, public transportation, sanitation, storm water drainage, solid waste management systems, etc. on a regular basis. With the volume of real estate stock increasing inexorably in the cities, there is an acute problem with the basic needs like energy and water in the store for urban India.

The private sector contributes most of the development of real estate stock; however, the responsibility of infrastructure development lies squarely with public sector entities such as ULBs and other utility companies – most of which are Government agencies. The investment pattern in our cities shows a similar trend – the private sector invests in the development of real estate stocks, while the public sector invests largely into infrastructure development.

The quantum of investments in most infrastructure projects is huge, and the agencies responsible for its development are seriously under-financed. They depend either on domestic grants like JNNURM or on intercalation financing involving bilateral and multilateral agencies.

In some instances, funds are mobilized from private sources in the form of Public Private Partnership. The private sector generally tends to shy away from investments into city-level infrastructure projects, as most of these projects are considered non-remunerative. They prefer to focus on investing into the development of real estate stock.

Mumbai – A Case Study

Mumbai, India’s financial capital, attracts massive investments – largely in the real estate sector. The city being the nation’s epitome of high real estate prices and land scarcity, huge sum of money keep chasing land in the city – while infrastructure augmentation lags behind. Way behind.

The opening up of FDI in real estate in 2005 opened the floodgate for investors vying for a share in the juicy pie that Mumbai real estate represents:

Prime Land Deals in Mumbai City Since 2005

Since 2005, there have been many record-breaking land transactions in Greater Mumbai – mostly from NTC mill lands and by MMRDA at Bandra Kurla Complex (BKC). Some of the aggressive land purchasers were IndiaBulls, Lodha Developers, Piramal Sunteck, Wadhwa and Peninsula Land Limited, among others.

A whopping Rs. 276 billion have been invested in land in Mumbai since 2005 – and this does not even include the confidential transactions and investments made into Slum Rehabilitation projects (SRA) and other redevelopment projects. The sum of the unaccounted transactions could possibly be another Rs. 100 billion in the same time period.

Patterns of Investment in Land Over Time

In terms of investment sizes and the total quantum of investment, South Mumbai leads the pack, followed by the Western zone – primarily because of land auctions at BKC. The East zone attracted the least investments – most of them into defunct industries along LBS Marg. Interestingly, CIDCO at Navi Mumbai has also been able to mobilize massive funds through the auction of plots at different nodes. The level of infrastructure, social amenities and economic activities has pushed up the real estate prices of Navi Mumbai – and they are still rising.

From a city-level perspective, it is important to understand whether the large volumes of investments in land have actually delivered a proportionate development of real estate stocks in the city:

Prime Residential Unit Launches

The data indicates that about 2.5 lakh dwelling units have been launched in Mumbai over the last five years. Some of this stock has been constructed and delivered, while part of it is still under construction or at the approvals stage. If, for the sake of an argument, we consider the entire stock of dwelling units and the average investment for the land component per dwelling unit, it works out to over a million rupees.

In other words, the direct beneficiaries of these real estate investments are, at best, about 2.5 lakh households (considering one family occupying one dwelling unit) or less than 10% of the city’s population.

On the other hand, if we look at the investments made in the city’s infrastructure (which aims to cater to 100% of the population) the situation is very different:

Prime Infra Projects in Mumbai since 2005

Total investment (crores)

Monorail

 2,716

36 Skywalks

 735

MUTP Phase II

 5,300

MUIP

 2,648

Extended MUIP

 1,550

Mumbai Metro – Versova-Andheri-Ghatkopar Corridor

 2,356

Total

 15,305

The data indicates that the quantum of investments in mega infrastructure projects amounts to only 60% of the investments made in prime land in the city, approximately in the same period. If we look at the present status of these infra projects, most of them are stuck in various bottlenecks and running abysmally behind schedule. One of the main reasons for this is inadequate funds arriving far too sporadically.

On a hypothetical note – had the authorities had the kind of money that the private sector invested in prime land, the city of Mumbai would have been transformed much faster.

Going forward, the funds requirement for infrastructure projects will increase further. Many mega projects which are extremely critical in terms of enhancing mobility, clearing up traffic congestion and thereby improving the overall quality of life in the city have been planned:

To be added

Total investment (crores)

MTHL

 8,800

Worli Haji Ali Sea Link

 1,120

Mumbai Metro – Charkop-Bandra-Mankhurd

 8,250

Mumbai Metro – Colaba-Bandra Corridor

 9,400

Total

 27,570

The city of Mumbai needs additional investments of about Rs. 275 billion in the infrastructure sector over the next five years if these projects are to be completed on schedule. This is equal to the amount that the city has buried in its land. The paradox of the situation is that, despite sitting on such massive money resources, Mumbai is unable to generate to fund its most essential requirements.

Much of the investments in land, particularly in South Mumbai, have actually remained non-yielding. The complexities of the Development Control rules, the approval process and policy flip-flops have virtually kept the supply side down for several months. Investors have not been able to fully monetize their investments, and the end users have faced spiraling price rises despite economic slowdowns.

This would be an apt time for the authorities and policy makers to focus on breaking this deadlock. The need of the hour is to view real estate and infrastructure development in Mumbai cohesively, not as isolated phenomena. There are enough ingredients for solutions available within the system.

IT corridors ideal for property investment in Hyderabad

Property market in Hyderabad is concentrated along IT corridors like Hi-Tech City, Kondapur and Gachibowli. All categories of housing have been active in the city – multi-storey apartments, houses and villas. According to market sources, despite Telangana issue, demand has remained constant for both domestic and international property buyers. In some areas like Gachibowli and Hi-Tech City, demand for villas matches multi-storey apartments demand.

Infrastructure development like the International Airport, completion of the Outer Ring Road (ORR), about 30 radial roads, MMTS, metro, procurement of water from Krishna and Godavari rivers, etc are all attracting global MNCs and investors to start their operations in Hyderabad.

According to G Yoganand, CMD, Manjeera Group, “The city has witnessed second highest occupancy of IT spaces in India during last one year. Hence, this is the best time for property buyers because Hyderabad may witness property boom in the mid-term. IT Corridor is the best place for investment. The mode depends on the budget. A plot in a good location is always the best but you will not get loan.”

IT corridor areas like Gachibowli, Kondapur, Madhapur, Nallagandla, Nanakram Guda, Kokapet, APPA junction, Hi-Tech City are ideal for investment.

According to MagicBricks.com, Hi-Tech City has seen an increase of 17% in values of multi-storey apartments in the Jan-Mar quarter this year compared to Oct-Dec quarter in 2011.

When talking about where the maximum demand is coming from, Yoganand added that Hyderabad has investors from across the country. “Even now, many people from Andhra region are buying and they are not worried about Telengana. Whether Telangana or no Telengana, Hyderabad is the best place in India to invest for better appreciation. Hyderabad has the best infrastructure, cosmopolitan culture, no language barrier, less pollution, better weather conditions, and better connectivity by road, rail and airways to all important cities of India. Prices are also reasonable,” he added.

Infrastructure is a key reason for the increase in demand in Hyderabad as well as for the rise in property values. A major infrastructure development has been the commencement of the Phase I of Metro covering Nagole and Gachibowli, market sources say. Rakesh Sudam of Earthwide Properties pointed out that infrastructure like the Phase I of Metro will affect localities like Nagole, Uppal and Gachibowli. “Values are already rising here and are expected to rise by 5 to 10% in the next 3 to 6 months,” Sudam said.

Buildings may get taller as Panel seeks higher FSI

The skyline of Indian cities could soar as the government considers permitting vertical growth with the aim of checking runaway realty prices and generating resources to upgrade urban infrastructure for future growth.

A Planning Commission steering committee, in its draft report, has recommended providing additional FSI (floor space index; the ratio between built-up area and plot size) as development rights, but said it should not come free of cost.

The panel said the charges for additional FSI and land-use conversions should be at least 50% of the circle rate in the area and should be determined professionally. It added that additional FSI should be permitted selectively.

The commission’s steering group on urbanization said the revenue from grant of additional FSI should be “suitably ringfenced for funding infrastructure projects to sustain higher FSI”.“The proposals, if accepted, would substantially increase availability of housing stock and moderate realty prices,” said an urban development ministry official.

Calling the present density regulations in Indian cities “archaic”, the report noted that Indian cities had the lowest FSI in the world. “This (densification) should be part of a balanced strategy for expanding the effective supply of prime land and, in the process, raising funds to finance urban infrastructure improvements,” the panel noted.

HDFC may reduce home loan rates soon

India’s biggest mortgage lender HDFC says home loan seekers can expect a 0.5-0.75% reduction in interest rates ahead of the festival season if the Reserve Bank of India reduces rates later this month.

“If market rates come down, it normally takes us two-to-three months to pass it on because our liabilities get re-priced,” HDFC’s managing director Renu Sud Karnad said. She said she was hoping that the central bank would reduce rates at its annual monetary policy review on April 17.

The RBI has raised interest rates 13 times since March 2010, by a cumulative 375 basis points in its efforts to tame inflation.

Costlier loans have forced potential home buyers to postpone their purchase decisions and have, in turn, impacted the real estate market. Homes sales in Mumbai have dipped by over 40% in the last one year while other cities have seen a 20% drop.

Karnad, however, said high interest rates have not had much impact on home sales falling in the Rs 20-50 lakh bracket, whether in big cities or Tier II cities, because the need and demand for homes in this price range continues to remain high. She said HDFC’s home loan portfolio has increased in the last one year, but did not share the numbers.

“There is no concern or worry among young, middle-income Indians wanting to buy a house except in Mumbai, which is expensive,” Karnad said.

While most cities across the country have seen steady home sales in the last few months, Mumbai has been a concern for developers as well as lenders. Karnad, however, said even in Mumbai sales are happening in the suburbs, where price points are still affordable.

Home loan growth in smaller cities too has been phenomenal. Cities like Baroda, Lucknow, Chandigarh and Salem have seen 30-40% 0growth in home loans. “These markets might be small and this growth might be on a smaller base, but the fact is that there is demand. What they need is better supply of homes,” Karnad said. She said that the market expects a 10-15% cut in home prices, which seems to be high. Karnad also pointed out that builders are faced with rising cost of construction. Prices of cement, steel and labour have grown in the last two months, she added.

Commercial properties in Delhi witness stable values

Commercial properties in areas such as Paharganj, Jhandewalan, Motia Bagh and Daryaganj have witnessed stable values owing to numerous factors. Realtors believe that these are traditional areas and have old and dilapidated commercial buildings.

Secondly, since they are located in Central Business District (CBD) areas, roadblocks like traffic jams, uneven roads and poor connectivity are deterrents to growth here. That’s why these areas are seeing stable value trends with no major escalation or increase in the number of transactions, realtors said.

Praveen Sethi of City Properties said that capital and rental values in these areas are showing a stable trend. Another city-based realtor, Gaurav Bhatia from Properties & Properties said, “There are more queries than actual number of transactions. Availability of better commercial office space options in National Capital Region (NCR) such as Noida and Gurgaon is diverting buyer’s mindset.”

Balbir Singh, Chairman of Vardhaman Plaza reiterated that, “Once the problems like connectivity and traffic jams are addressed, the commercial values will take an upward trend.” However, there are some renovation projects also going on and old buildings are getting designed as per new standards to meet the demand but this will take some time.

To address these issues, there is a proposed plan of monorail in these areas within next 2-3 years. The plan is already approved and the basic work has also started, Singh said. This will speed up the travelling time to these areas and also resolve traffic issues.

Enhanced connectivity will definitely uplift these areas and improve the demand and number of transactions. Further renovated buildings with proper parking space, good infrastructure, security and other facilities will push the commercial property market, Sethi added.

The current capital values of commercial shop and office space at Pahar Ganj, Jhandewalan and Motia Khan is in the range of 9,000-30,000 per sq ft. With the proposed monorail plan combined with infrastructure facilities is likely to bring back buyers to CBD areas.

Delhi Master Plan 2021

The Master Plan of Delhi 2021 has been in force since 2007. Once this is reimplemented with the new land development policy, Delhi will also offer options to thousands of home buyers. The capital city has still 27,628.9 hectares of land to fulfil the dreams of thousand of home buyers.

The DDA (Delhi Development Authority) has earmarked land at Zone J, K1, K2, M, N, L, O, P1 and P2 for raising residential projects. According to the projections in the master plan, nearly 24 lakh residential units are required for an estimated 23 million people by 2021.

According to the master plan, Delhi will be slum-free in the next 10 years by providing rehabilitation packages (built-up houses with all civic facilities) to slum dwellers. For this DDA has identified 23 sites (slum areas) for rehabilitation. The master plan of Delhi includes chapters like regional and sub-regional frame, population and employment, Delhi urban area 2021, social and physical infrastructure, mixed land-use regulations, development code and plan review and monitoring.

The master plan 2021 has allocated 277 sq km for future urbanization by 2021. In the last fifty years, DDA has acquired 75,609.84 hectares and developed it for residential, recreational, commercial and institutional purposes.

Now, with better and holistic planning, DDA intends to set new records and provide more amenities to people. Delhi is spread over 1,483 sq km and divided into 17 planning zones: 1,159 hectare in Zone-A (Old City); 2,304 hectare in Zone-B (City Extension and Karol Bagh); 3,959 hectare in Planning Zone-C (Civil Lines); 6,855 hectares in Zone D (New Delhi); 8,797 hectares in Planning Zone-E (East Delhi); 11,958 hectares in Zone-F (South Delhi I); 11,865 hectares in Planning Zone-G (West Delhi I); 5,677 hectares in Zone-H (North-West Delhi I); 15,178 hectares in Zone-J (South Delhi II); 5,782 hectares in Zone K-I (West Delhi II) and 6,408 hectares in Zone K-II Dwarka; 22,840 hectares in Zone-L (West Delhi III); 5,073 hectares in Zone-M (North West Delhi II); 13,975 hectares in Zone-N (North West Delhi III); 80,70 hectares in Zone-O (River Yamuna-River Front); 9,866 hectares in Zone P-I (Narela) and 8,534 hectares in Zone P-II (North Delhi).

Ram Gopal Gupta, a policy maker and city planner, says: “In the last 40 years, DDA constructed only 3.5 lakh flats. However, these did not suffice even for 1% of Delhi’s population. Due to lack of housing facilities in Delhi, 10 lakh people are dependent on nearby sates and metro cities in the NCR belt. According to records, DDA was constructing 10,000 flats every year 15 years ago, while in the last 10 years it managed to build 54,000 flats. Today, DDA is not in a position to construct even 5,000 flats a year. The dramatic growth in Delhi’s population has led to congestions and shortages of civic amenities. One of the main causes for this spurt in population is the migration of people into the city from Bihar, UP, Punjab, J&K, West Bengal, Orissa, etc.”

Solution

Today, the NCR cities are best suited to take the burden of housing from the national capital. The NCR has a total area of 33,578 sq km and includes parts of three states, Haryana, Rajasthan, and Uttar Pradesh, with Delhi as a full state.

The NCR is also characterized by the presence of ecologically sensitive areas like the extension of the Aravali ridge, forests, wild life and bird sanctuaries; the river systems of Yamuna and Hindon, and is a dynamic rural urban admixture.

Sub-regions of NCR

The Haryana sub-region comprises nine districts: Faridabad, Gurgaon, Mewat, Rohtak, Sonipat, Rewari, Jhajjar, Panipat and Palwal, together constituting about 40% of the region.

The Uttar Pradesh sub-region comprises five districts: Meerut, Ghaziabad, Gautam Budh Nagar, Bulandshahr, and Baghpat, together constituting about 32% (10,853 sq km) of the region.

The Rajasthan sub-region comprises Alwar district and constitutes about 23% (7,829 sq km) of the region. The NCT (National Capital Territory) of Delhi constitutes about 5% (1,483 sq km) of the region.

Development

In recent times, there has been a tremendous growth of Delhi and the NCR in terms of infrastructural developments and with the advent of major realty players like DLF, Ansal API, Ansal Housing, Unitech, BPTP,Amrapali, Supertech, Gaursons, Assotech, Parsvnath, Ashiana, TDI, Anantraj Group, Omaxe, JP, Antriksh, etc, the areas have been much in news.

Areas like Gurgaon, Noida, Greater Noida, Manesar, Faridabad, East Delhi Extension, etc, have been the areas fulfilling the housing needs of millions of people who live in and around Delhi. With the pressure of increasing population, unavailability of land, and lowering of water table, etc, developers are migrating to new places in the NCR to raise residential and commercial projects.

Rehabilitation scheme for slumdwellers

A novel project proposed by DDA, the “in situ” rehabilitation scheme, moves away from the agency’s previous model of shifting slumdwellers to the city’s fringes as part of rehabilitation package. For this, DDA has indentified 23 sites (slum areas). Consultants have already been appointed for 13 sites.

The Kathputli colony near Shadipur Depot of North Delhi has been taken up in first phase. Tenders will also be floated for the other 22 identified sites. Raheja Developers has been awarded the first of its kind, in situ slum re-development project over 5.22 hectares at Kathputli colony by DDA.

The project envisages construction of 2,800 EWS units (with built-up area 30 sq metres per unit) with community facilities like a multi-purpose hall, Basti Vikas Kendra, a health centre, a Sishu Vatika, etc. Arabtec, the firm which built Burj Khalifa in Dubai, will construct these 2,800 EWS houses and also the commercial complex under the slum redevelopment public-private partnership project between Raheja Developers and DDA, in a time-bound contract of two years.

Demand for office space drops in metros

Office space demand slowed down in the first quarter of 2012, with around 4.1 million sq ft getting absorbed across the leading cities in the country.

In the previous quarter (Oct-Dec 2011), almost 6.5 million sq ft was absorbed, according to the India Office report released by CBRE on Thursday. NCR (National Capital Region), Mumbai, Chennai and Bangalore were the leading cities accounting for more than 70% of the entire space getting absorbed in the country.

Supply continued to overtake demand in the first quarter of 2012, almost 5.9 million sq ft of office space was added in leading cities. The new supply was largely concentrated in NCR, Bangalore, Mumbai and Chennai, comprising almost 90% of the entire quantum of the present quarter.

The report said Mumbai witnessed decline in rental values at Nariman Point and Lower Parel, mainly due to sluggish demand levels. Average rentals in Grade A buildings in Nariman Point dropped from Rs 300 a sqft a month in December last to Rs 290 in March.In Lower Parel, it reduced from Rs 155 to Rs 150 in the period. “It is anticipated that supply dynamics will continue to dictate rental movement in coming quarters, with values in the CBD being stable and those in suburbs slipping,” it said.

Nariman Point has limited transactions with only a marginal absorption of around 10,000 sq ft. “It did not witness the addition of any fresh supply in the present quarter and vacancy remained stable. In coming few quarters, vacancy in this micro-market is slated for rise from the current estimated 6-7%,” said the report.

A marginal decline was seen in rental values during the quarter. Around 2 lakh sq ft of Grade-A office space became available in the Extended Business District (EBD) of Lower Parel. Worli and Prabhadevi saw a marginal correction of 1-3% in rental values. “The decline was largely due to low levels of transactions…,” it said.

BKC continued to remain a preferred location for corporate occupiers looking for expansion. The CBRE report also observed limited leasing activity in the Secondary Business District (SBD) of Andheri, Vile Parle and Jogeshwari.

Noida realty scores on the back of strong infrastructure

Infrastructure like roads, sewerage, power and water supply, etc, which has been developed in Noida, is far better than those in most new cities and urban agglomerations that have come up in the country.

Excellent connectivity to New Delhi, Gurgaon and Faridabad has also made Noida a destination for business travellers and investors.

Noida is also safe from any land disputes and is good for buyers, investors, developers and even farmers. Noida Authority is close to solving the abadi disputes and disbursing additional compensation of 64.7% in cash and 5% of the developed land as directed by the Allahabad high court.

S K Dwivedi, the chief executive officer of Noida Authority, says: “We have almost solved the abadi issues in all the disputed lands of 34 villages under the new law, Abadi Niyamawali of June 30, 2011. Farmers can use the land according to their wish. To solve the disputes, the authority has allotted 1,000 plots (totalling 70,000 sq metres). Since the agitation over land acquisition began, farmers have been making several demands and have threatened to stop developmental work. After this, we are on the way to disburse an additional compensation to all the farmers belonging to 15 villages, who went court over the land row. The latest verdict of Allahabad high court has given direction to give an additional compensation. The authority has taken it seriously and is on the job, treating it as top priority.”

“In line with the court verdict, the Noida Authority has to disburse Rs 1,100 crore as an extra amount to farmers. We have already disbursed Rs 255 crore. The relevant files are being readied for giving out the rest of the money. To allot 5% extra developed land on the court direction, the authority needs nearly 200 hectares of land. Keeping the shortage of land in mind, this is really a challenge to us.”

Dwivedi says: “Undoubtedly, Noida has emerged as a preferred destination for thousands of families who look for the advantages of a metropolitan framework, but without all the attendant evils of pollution and cramped living normally associated with a major metropolis. This city has advantages like international-quality infrastructure, uninterrupted power and water supply, and a proposed international airport (at Jewar). With these facilities, Noida is one of the fastest developing residential and commercial hubs in the country. IT, insurance, institutional and residential sectors in the region are the main engines of growth around which the entire township is being developed. Noida authority is ensuring that the place has world-class infrastructure where every sectoral player would like to come and invest.”

“The NCR Planning Board has already approved Master Plan 2031 of Noida, which was drafted in 2009. In the plan, there is a lot of scope for infrastructural, residential and commercial development like widening of roads with underpasses and flyovers, highrise projects, hotels, major Metro and road linkages to ease the traffic,” Dwivedi says.

“Under the Abadi Niyamawali (law) of June 30, 2011, Noida authority is regularizing abadi of all disputed villages. In addition, demands of special quota for farmers’ children in educational institutions have also been accepted. Most of the demands like increased compensation and plotted development have also been made. This will greately facilitate in the resumption of construction work,” Dwivedi says.

Dwivedi says “The authority is working to decongest various bottlenecks that are

 coming in the way of smooth traffic. The roads along Sector 18, Rajni Gandha Chowk, Sector 37 and Choura Mor, among others, have been widened to meet the increasing traffic. Many elevated roads, underpasses bridges have been proposed. The DPR (detail project report) of Metro lines on six different routes is also under preparation.” Noida is very popular for institutional, residential, industrial and IT developments. Many MNCs and domestic companies have set shop.

The authority has earmarked a lot of space for developmental works to encourage more MNCs into the place. On the requisition of the BCCI (Board of Control for Cricket in India), the Noida Authority has allocated 40 acres land for an international cricket ground in Sector 101, 102, 103 in the 300 acre sports complex near the expressway, Dwivedi says.

New Income Tax amendments related to property transactions

As per the Finance Act, 2012 a new section 54GB has been added in the Income Tax Act which provides relief from re-investment of sale consideration in the equity of a new start-up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant and machinery.  Some of the important conditions to avail this benefit are as under:-

i)    The amount of net consideration is used by the individual or HUF before the due date of furnishing of return of income under sub-section (1) of section 139, for subscription in equity shares in the SME company in which he holds more than 50% share capital or more  than 50% voting rights.

ii)    The amount of subscription as share capital is to be utilized by the SME company for the purchase of new plant and machinery within a period of one year from the date of subscription in the equity shares.

iii)    If the  amount of net consideration subscribed as equity  shares in the SME company is not utilized by the SME Company for the purchase  of plant and machinery before the due date of filing of return by the individual or HUF, the unutilized  amount shall be deposited under a deposit scheme to be prescribed in this behalf.

iv)    Suitable safeguards so as to restrict the transfer of the shares of the company, and of the plant and machinery for a period of 5 years are proposed to be provided to prevent diversion of these funds. Further, capital gains would be subject to taxation in case any of the conditions are violated.

v)    The relief would be available in case of any transfer of residential property made on or before 31st March, 2017.

The above mentioned tax benefit is applicable only in respect of long-term Capital Gains arising on sale of a residential property, namely a house or a plot of land.

Taxation of unexplained investments

In case unexplained investment in house property is made on or after 1st April 2012, then as per the new provision contained in section 115BBE income-tax will be chargeable at the rate of 30%.  All tax payers are therefore advised to carefully enter into property transactions in particular and not to make any unexplained investment in the Real Estate Sector, otherwise there will be heavy dose of income-tax.

Tax Deducted at Source on transfer of certain immovable property

As per the Finance Act, 2012 it is provided that every transferee at the time of making payment or crediting any sum by way of consideration of immovable property (other than agricultural land), shall deduct tax at the rate of 1% of such sum if the consideration paid or payable for the transfer of such property exceeds:-

(a)    50 lakh rupees in case such property is situated in the specified urban agglomeration or

(b)    20 lakh rupees in case such property is situated in any other area.

 The specified area for which the limit of Rs. 50 lakh and above is applicable will mean the following areas :-

(i)   Greater Mumbai urban agglomeration

 (ii)  Delhi urban agglomeration

 (iii) Kolkata urban agglomeration

 (iv) Chennai urban agglomeration

 (v)   Hyderabad urban agglomeration

 (vi)  Bangaluru urban agglomeration

 (vii) Ahmedabad urban agglomeration

 (viii) District of Faridabad

 (ix)    District of Gurgaon

 (x)    District of Gautam Budh Nagar

 (xi)    District of Ghaziabad

 (xii)    District of Gandhinagar

 (xiii)    City of Secunderabad

Thus, other than the above areas the new provision relating to tax deduction at source will be where the property value exceeds Rs 20 lakh.  It is also provided that where the consideration paid or payable for the transfer of such property is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty, the value so adopted or assessed or assessable shall be deemed as consideration paid or payable for the transfer of such immovable property.

Luxury Homes in Noida

Each person has a definition of ‘luxury’, depending on his or her social status and lifestyle. Thus, developers cater to a wide variety of demands, even within the ‘luxury homes’ segment.

In recent times, Noida-Greater Noida and Ghaziabad have seen an upsurge in the demand for luxury homes. With higher disposable incomes, the confidence is visible not just among buyers, but also among sellers.

Taking a cue, several builders in the NCR have begun developing better and larger ‘luxurious homes’. Gardenia Group has launched Golf City and Gardenia Gateway in Sector 75; Gardenia Glory in Sector 46 and Gardenia Grace in Sector 61 in Noida. The Gardenia Group has committed to deliver over 4,000 dwelling units in next two-three years.

The Antriksh Group has launched Antriksh Forest in Sector 77, Antriksh Golf View 1 and Golf View 2 in Sector 78, Antriksh Nature in Sector 52 and Antriksh Green in Sector 50, in Noida. Antriksh Nature and Antriksh Green are nearly complete, while Antriksh Forest and Golf View are under construction.

Amrapali Sapphire in Sector 45, a premium project of Amrapali Group has been launched in two phases; phase one is being built at a cost of Rs 275 crore and is over 10 acres. Amrapali Group is poised to deliver over 1,100 houses in these two phases.

Supertech Group has launched a unique circularshaped residential project, ORB, in Sector 76, Noida. The project has been masterminded by Bollywood star Twinkle Khanna. Prateek Group has launched a luxurious residential project, Prateek Stylome, in Sector 45, Noida. JM Housing Ltd’s JM Orchid in Sector 76 and Grand Ajnara Heritage in Sector 74 are some of the other luxury developments in Noida. It is on a 130-metre-wide road near the 6-lane FNG expressway and is over 104 acres.

Anil Sharma, the chairman and managing director of Amrapali Group, says: “Today, Noida is the hub of development with most of the developers in the Delhi NCR active here. The development is the result of a robust demand and the availability of houses in various categories and price ranges. Luxury is surely the new buzzword in Noida.”

Rakesh Yadav, the managing director of Antriksh Group, says: “Antriksh Golf View in Sector 78 presents dream apartments for buyers, which include 2- and 3BHK, at reasonable prices. There has been an increase in investments in Noida, Greater Noida and Ghaziabad owing to the increased urbanization of these areas.”

Manoj Rai, the chairman of Gardenia Group, says: “Once again, the real estate sector is on a boom and builders are not lagging in luring customers with attractive announcements. Since the time the Noida Expressway become operational, the real estate around the stretch has seen a tremendous response.” R K Arora, the chairman and managing director of Supertech Group, says: “ORB is a part of our 50 acre integrated township project, which will comprise 3- and 4BHK apartments. Units are in the range of 2,215 sq ft to 4,270 sq ft. The project has been innovatively designed for maximum interior space and 180 degree view.”

“Our project, Kaamna Greens, will not only elevate the lifestyle but will protect life by being a state-of-the-art earthquake- resistant residential project complying with earthquake Zone 4 regulations,” Gurinder Singh Sikka, chairman and managing director of Sikka Group, says. Prashant Tiwari, the managing director of Prateek Group, says: “Previously, people who wanted to purchase luxurious homes used to move towards Gurgaon but with the development of luxurious projects in Noida, people are making a beeline for Noida.”

Ashwani Prakash, the executive director of Paramount Group, says: “Golfforeste is one of our prestigious projects. It is on a 130-metrewide road near the 6-lane FNG expressway and is over 104 acres.”

Real Estate Growth in Meerut

Meerut has rapidly come up as a strategic real estate destination owing to its close proximity to the Delhi NCR. It is connected to Delhi by NH-58.

Today, as the mid- and the lower-middle class end users find property in the NCR out of their reach with real estate prices hitting the roof here, Meerut has shaped up as an ideal destination catering to the increasing housing demands on one hand, while maintaining the prices within affordable limits on the other.

Forthcoming real estate projects

Real estate in Meerut is riding on the crest of increasing demand, boosted by large availability of land at low prices. The market is demonstrating buoyancy with the presence of prominent builders like Ansal API, Supertech Ltd, MSX Developers, Era Group, Majestic Properties, DLF, and Omaxe.

Meerut is also seeing an upswing in prices owing to the presence of leading construction companies, which are eager to buy land for their projects. Market watcher say property prices in Meerut have trebled in the past two years.

Residential property

Excellent infrastructure facilities, sound planning and top-grade security of some of the housing projects on the outskirts of Meerut has increased demand in this area. The most sought-after location is along the Meerut Bypass.

Also, the Hapur Road and the Cantonment Road are gaining prominence as ideal destinations for property investments and are attracting large-scale developments. Of late, commercial and residential complexes are coming up on Mawana Road and Modipuram on the Muzaffarnagar Highway.

Prominent builders are coming up with new projects like Ansal Housing, a residential township by Ansal API; Sports City, Shopprix and Palm Greens by the Supertech Group, and a two residential projects and a mall by the Era Group. Other builders like Saamag Group have residential projects like Saga Habitat, Ark City and Coral Springs, while the Gayatri Group is building many residential projects here.

Commercial property

High-end commercial development is also taking place in Meerut, in a limited way though. Rates of agricultural land here are growing mainly in the areas adjacent the main roads; they hover between Rs 26 lakh and Rs 34 lakh per hectare, whereas for other purposes, the prices have increased from Rs 43 lakh to Rs 54 lakh per hectare. Prices of agricultural lands along the city roads are also appreciating by the day, with the rates ranging from Rs 21 lakh per hectare to Rs 24 lakh per hectare. For the other purposes, the rates are over Rs 26 lakh per hectare.

Why Meerut?

Pranav Ansal, the vice-chairman of Ansal API, says: “With an increase in the number of domestic and foreign players across industries shifting base to Tier II cities, demand for such townships is on a high. With this mission, we have planned to develop a Signature Township, Sushant City, over 300 acres. It would offer an array of options like built-up houses, independent floors, bungalows and villas. The township will cater to housing requirements of more than 5,000 families.”

R K Arora, the chairman and managing director of Supertech Group, says: “Here

 price of residential property varies from Rs 2,350 per sq metre to Rs 16,500 per sq metre, depending on the location. Earlier, property prices in Gurgaon and Noida were considered to be going through the roof, which drove property buyers to the other parts of the NCR. Price of land in Meerut is not so high but the property market is certainly showing phenomenal potential for growth. For the people who cannot afford an apartment in Delhi and yet want to remain near the city, Meerut offers a cost effective option.”

Manoj Gaur, the managing director of Gaursons Ltd, says: “Meerut is a fast developing city and is giving a tough competition to other NCR cities like Noida, Gurgaon, Ghaziabad, which have become very costly for the middle class. As land is still freely available here, builders are making a beeline for Meerut. The city is only around 70km from Delhi.”

Connectivity

Thousands of people commute daily to the Delhi NCR for work from Meerut. Keeping this in mind, various development authorities in the NCR, in concert with the Meerut Development Authority, have planned for an expressway between Delhi and Meerut, as well as for the extension of the Metro line from Delhi border to Meerut.

This is expected to bring down the commuting time between Delhi and Meerut to just 45 minutes. This will boost the overall real estate development in the city and, in the long run, return impressive returns on investment on property here.

Now, it will be easy to move from Delhi (Anand Vihar) to Meerut as the authority is all set to start the work on Rapid Rail Transit System and Delhi-Meerut Expressway.

An elevated railway track will be aligned to the expressway route. The length of this proposed track is 67km, with an estimated cost of Rs 1,040 crore. The 64km long expressway itself is estimated to cost Rs 4,500 crore and is likely to be completed by 2015. The first 8km of the expressway from Nizamuddin Bridge to Ghaziabad border will have 16 lanes.

The expressway will cover 28km of NH-24 between Ghaziabad border and Dasna and this stretch will be widened to 14 lanes, from six lanes, according to the final plan. Also, a 36km stretch between Dasna and Meerut will be constructed as a fourlane highway. The tender of this project has been given to the Delhi Integrated Multimodal Transport System (DIMTS) by the NCR planning board. Under this project, stations are likely to be constructed at a gap of 4-5km.

Anand Vihar, Vaishali, Mohan Nagar, Meerut Road (Airtel Cut) Morta, Duhai, Murad Nagar, Gang Nahar, Modi Nagar, Mohiuddinpur, Meerut Bypass Cut and Pallavpuram are the proposed halts of this Rapid Rail Transit System (RRTS). An underground track will be set up from Anand Vihar to Dabur, due to the Metro project.

However, there is a consensus among the officers concerned that the Metro Rail will not come in the way of the high speed train. The consultant company has designed the entire project in a manner that there is no need to acquire or demolish any existing property. The track will be underground from Anand Vihar to Dabur and then run on elevated track up to Meerut.

The average speed of the Metro rail in Delhi is approximately 30-40km per hour but the speed of this rapid train will be 150km per hour. It is hoped that one can reach Meerut from Delhi within 50 minutes, which was not possible earlier. The services of two passenger and express trains could be available on the two proposed track.