Real Estate Update - Latest News! - Page 85 - Indian Real Estate Forum

fritolay_ps · 26-12-11

How slums can get a facelift

Most slum redevelopment schemes although started with noble intentions, remain stalled despite the availability of funds. The usual reasons are disputes involving ownership, and resistance by the slum dwellers to land acquisition — ironic, for they are the supposed beneficiaries of the project.

A slum rehabilitation project in Pune, however, has tided over these hindrances and is on course to achieving its goal. The project, financed under the Jawaharlal Nehru National Urban Renewal Scheme (JNNURM), is redeveloping the slums in-situ with the involvement multiple stakeholders: Central and state governments, local civic body, local political leadership, NGOs and most important, the slum dwellers themselves. The Pune Municipal Corporation (PMC) has undertaken the project under the Central government’s scheme of Basic Services for the Urban Poor (BSUP) under the JNNURM, to upgrade seven high-density slum areas in Yerwada, a slum-dominated locality.

A key aim of this project is to allow slum dwellers to maintain and nurture their emotional bonds with the land they live on, while raising their standard of housing.

The project commenced in April 2009. PMC received funds for slum upgradation for 4,000 households. The cost of building each tenement was fixed at Rs 3 lakh. Out of this amount the Central government provided 50 per cent, state government 20 per cent, the PMC 20 per cent while the beneficiary had to contribute remaining 10 per cent of the cost. Seven slums in Yerwada were selected for the upgradation. These slums are multicultural, housing people of different socio-economic backgrounds that has translated into the varying house types. Some are permanent structures, others have kutcha houses made of wood and tin sheets, while a third type is dilapidated with poor lighting, ventilation and sanitation. Out of these, only kutcha houses were selected as beneficiaries.

Community Involvement

Community-based NGOs working with slum dwellers have played a pivotal role in project implementation. Mahila Milan, an NGO working among the women residents for socio-economic upliftment, the National Slum Dwellers’ Federation (NSDF) along with the Society for the Promotion of Area Resource Centres (SPARC) undertook the responsibility for appointing architects, consultants, monitoring quality, estimating costs and keeping a tab on finances.

They identified the beneficiaries and got the designs approved by the civic authorities. In addition, they have performed one novel task: got the beneficiaries to approve the design for their home, thereby giving them a say in their future.

They also helped the beneficiaries in finding transit accommodation and resolved disputes involving land. “The carpet area for each home was 270 sq ft. However, some owned larger plots and some smaller. It took months of dialogue, but we were clear that construction would not start without reaching a consensus,” said Savita Sonawane of Mahila Milan.

NGOs carried out a socio-economic and biometric survey of all the residents living in the slum. For instance, a carpenter or daily wage worker living in the slum could be employed by the contractor for this project, creating a source of income for the person and further enhancing the sense of involvement with the project. Several community meetings were organised in which the local corporator introduced the project. The architectural team explained the designs after which beneficiaries satisfied with the design, financial aspects and other issues signed the consent form.

“To enable beneficiaries in understanding the design, a 1:1 scale model of bamboo and cloth was built. The suggestions of the individual house owners were discussed and incorporated,” said Prasanna Desai, a Pune-based architect who designed the houses.

Design Challenges

For Desai, the challenge was to design feasible building types that merged with the existing fabric of the slums, with an aim to provide better living conditions by improving sanitation, lighting and ventilation.

“Rather than imposing a design, the beneficiaries were given new houses on the existing own footprint, with a ‘tailor made design’, within the framework of BSUP, JNNURM and PMC norms,” said Desai.

The attempt was to retain the overall fabric of the slum in terms of existing street patterns and footprints. As far as possible, the design was contained within the existing footprint of the kutcha houses. Owners of larger plots were urged to surrender a part in the larger interest of the community, making it possible to widen the existing streets for better accessibility and create community interaction spaces.

“As the design task was intertwined with various layers of public participation and negotiations, no two houses have the same design. Hence the task involved understanding the needs, problems, psyche and on ground site conditions of the beneficiaries and discussing the designs of the individual house and cluster houses with them,” said Desai.

Currently, 225 houses have been built and about 140 families have moved in. The project is scheduled to be completed in March 2012.

Suresh Ashok Sharma,is a beneficiary of the scheme who has moved from his tin sheet dwelling. “The meetings that took place over several months allayed all fears and cleared all doubts. In the new house we have proper sanitation facilities. We are happy.”'
-Financial express

fritolay_ps · 26-12-11

Home loans can buy more

Your existing home loan provider can be your best friend in times of your future financial needs. As they offered you a mortgage against your house, they can also help you with a quick loan against your house called a ‘top-up loan’ where you don’t have to provide any additional collateral or paper work.

The Concept

Once you prove your bank that you can repay the home loan, you can ask them to get it topped up. It can be used as a personal loan to finance anything from your interior decoration or child’s education to daughter’s marriage. The top-up is treated as a second loan and is charged a slightly higher interest than the existing home loan (usually 1-1.5 per cent), and you need to pay a separate processing fee (same as that of the home loan).

Let us suppose you need a loan of Rs 4 lakh to buy a car. Interest rates on car loans start at around 12 per cent. If you approach your home loan provider for a top-up loan, you can get one at a floating rate of 9.5 per cent, thereby saving 2.5 per cent

The tenure of a top up loan can be as long as the outstanding tenure of the home loan. This will help you to reduce your overall cash outflow.

The terms

Banks and housing finance companies extend top-up loans to existing borrowers, on completion of at least six repayments. It is considered as an extension of your existing home loan, but they are not particular about how you spend that money.

What they look for is whether you have been prompt in repaying the EMIs of the existing home loan. If there are backlogs in the repayment track, then the lender may not be willing to offer you a top-up.

Another factor that determines the amount of top-up is the existing market value of your property. The more the property value has gone up, the more you can avail as a top up. The current repayment capacity of the applicant and the amount of loan that is already repaid will also be considered. This is done to ensure that you are capable of servicing the top-up loan.

Apart from these, the bank’s lending policy also determines the amount you get as a top-up. Some banks have a cap on top ups based on the original loan taken, while some others extend loans on current market values, outstanding balances and repayment capacity. For instance, an HDFC customer can avail a top-up loan subject to a maximum 70 per cent LTV, considering the repayment capacity of the borrower as per their policy. Let’s assume your outstanding loan is Rs 5 lakh and the current market value of your property is Rs 10 lakh. In this case, HDFC will offer you a top-up of Rs 2 lakh, if you are eligible for a loan of Rs 7 lakh as per your income statements. ICICI Bank, has a cap of 20 per cent of the original amount borrowed. That is, if you have availed a loan of Rs 10 lakh, you will be eligible for a top-up of Rs 2 lakh, regardless of the value of the property or outstanding balance in your loan account.

The Other Side

The top-up loans are treated as separate loans, and are not eligible for any tax rebates. Housing loan tax rebates can be enjoyed only for the first loan.

A top-up loan is best when you have a longer-term financial requirement, and not in times of urgent short-term funding which you can tide over by borrowing from friends, or by taking a gold loan. If you need a short-term infusion of cash, an overdraft facility with your bank will also make more sense. However, if in times of an inevitable big ticket expense, top-up loans give you the best combination of a flexible tenure and a lower interest rate.

-Financial express

fritolay_ps · 26-12-11

Greater Noida: Great value for low costs

Located in Uttar Pradesh, barely 40 kilometres from New Delhi and 20 kilometres from Noida, the area of Greater Noida is slowly but surely on the path to becoming one of the largest industrial and education centres of the country. Real estate in this area is amplifying at a good pace in wake of its growing importance as a realty destination around Delhi.

Like other areas of the NCR, Greater Noida too is home to a number of Indian and foreign companies, which is an advantage for the area. It is on its way to becoming a commercial hub. Real estate in this city has huge potential for development.

The proximity to Delhi and Noida and good connectivity with both cities has been a major catalyst for the growth of the city. The relatively pollution-free environment ranks it higher on the preference list of both developers and investors.

The modern infrastructure in keeping with the demands of high quality living and improved living standards has made Greater Noida a destination of choice. In addition, a large number of construction projects offer quality housing and office space equipped with modern amenities, making real estate in the city all the more desirable.

To start with, the unaffordable property rates in Delhi had shifted the attention of developers to Noida, as it offered vast land at reasonable prices. Property in Noida flourished eventually to the extent that the property prices in the city have now skyrocketed. The builders are again in a fix and looking for other feasible options that may extend long term benefits and help cater to the phenomenal influx of population into the region. Thus, property in Greater Noida has come across as the next best option given its location advantage, good connectivity, green environs and the enormous potential fordevelopment.

Greater Noida is a centre for many activities-besides being an educational hub; it is also a destination for tourism entertainment. Very soon, with the setting up of a night zoological park, the Greater Noida Night Safari will be a major source of revenue for the Greater Noida Authority. The park will be fourth largest in the world after Singapore, China and Thailand, and the visitors will enjoy seeing the nocturnal animals in the zoological park via a silent train running across. Thus, Greater Noida will witness massive infrastructural growth in the years to come, which will in turn promote tourism there.

Universities like Noida International University, Gautam Buddha University, etc have already set up their campus in Greater Noida.

The city offers refuge from the bustle of city life and yet, the national capital is close and reachable. It combines city comforts with serenity of rural areas; urbanity with traditions and contemporary with old. Quite clearly, Greater Noida is being designed to be a great place to work and live in which is why the demand for property should be good in this area in the long run. The planned infrastructural developments such as an international airport promise a further increase in property prices.

Realty in Greater Noida assures decent returns in the coming years for properties purchased at reasonable rates, as growth in the sector is dependent on the growth as a business hub as well as the other tourist attractions going live. The current connectivity to Delhi is also a challenge and a very good rapid transport system is needed to bring in the next spurt in prices and helping make Greater Noida a destination for premium property.

The increased supply in Noida Extension and Yamuna Expressway should also keep the price of this area in check for some time to come. We need to understand that there is tremendous supply of land in this area so paying a premium price unless for a very specific project is not advisable. Greater Noida is a good destination for bargain buys and affordable housing.

-Financial express

fritolay_ps · 26-12-11

Punjab realty sector to be sluggish till polls over: experts

Chandigarh: The real estate sector in Punjab is likely to witness sluggishness in the run up to Assembly elections in the state next month, with investors expected to adopt a wait-and-watch policy with regard to new investments till the next state government comes to power, say experts.

The maximum impact of the upcoming elections is expected to be visible in new and upcoming residential projects, which still require statutory approvals from various government authorities to take off, as investors and financiers will be reluctant to infuse money into these projects in the wake of the Code of Conduct coming into force, real estate experts said.

The Election Commission of India yesterday announced that elections for the 117-member State Assembly in Punjab would be held on January 30.

Spiralling interest rates, coupled with slackening demand for property, has already made a significant dent on the property market in Punjab, with sales prices of real estate products dipping by 10-15 per cent in the past six months, they said.

"Investors do stop or become reluctant in investing in new projects during state elections as they wait for formation of a new state government, which may go for changes in policies for the real estate sector," CREDAI (Punjab) President Kulwant Singh said.

However, he said the elections will have no impact on ongoing projects.

The country's leading real estate developer, DLF, had also recently opined that the real estate industry faced a "little bit" of a slowdown during elections.

"There could be an impact... People become a little wary of investing in the real estate market during elections... They want to watch stability (till the next state government is formed)," DLF India Executive Director (North) Rahul Mehta had said.

Apart from this, financial institutions have already seen an up to 20 per cent drop in credit offtake by real estate developers, especially in Chandigarh, Mohali and Panchkula, in the past four months.

"Investors are switching over to a wait-and-watch policy concerning real estate buying," HDFC Joint General Manager (Punjab, Haryana, Himachal Pradesh) P C Srivastava said.

Non-Resident Indians (NRIs), who are among the key players in the real estate sector, also stay away from the property market till the next government comes in.

"NRIs will refrain from buying new properties in Punjab until the new state government is formed," NRI Sabha (P njab) President Kamaljit Hayer said.

Nevertheless, the real estate experts avowed that whichever political party forms the next government, it will continue to support the property market through its policies.

-Financial express

fritolay_ps · 26-12-11

The grand SEZ dream on deathbed

Calculations seem to have gone offtrack along the way; the initiators blame policy confusion and lack of comprehension in coordination.

The Special Economic Zone (SEZ) policy was launched with considerable hype in India in 2006, when the economy was booming and investors around the world were looking at the country as a credible investment destination. It was launched with the promise of lucrative tax incentives, to substantially boost export.

However, five years later, with the change in the global economic scenario, coupled with unstable policy, the SEZ story is dying a slow death.

In the past couple of years, a wide gap has emerged in the number of new proposals getting approvals and that of SEZs becoming operational. Today, the ministry that conceived the idea and implemented the scheme is busy shifting gear backwards and, instead, promoting the concept of national investment and manufacturing zones (NIMZs) under the recently introduced National Manufacturing Policy. According to experts, NIMZs are just another re-branding attempt in the backdrop of SEZ activities increasingly becoming tepid, though SEZs are meant exclusively for exports and NIMZs are aimed to boost domestic manufacturing.

“We are seeing a slowdown in getting clients for our SEZs,” said Arun Nanda, chairman, Mahindra Lifespace Developers. “The government should realize that SEZs have become an issue of credibility. Companies were attracted to the scheme due to tax incentives. The government cannot go back on its promise. Rolling back the policy would become a huge issue. While the concept of NIMZs is laudable, unless there is a concerted effort between the central and state government to make it a success, the scheme would remain on paper.”

Mahindra World City SEZs in Chennai and Jaipur are regarded as success stories that boast of a clientele of BMW, CapGemini, Infosys Technologies, Renault-Nissan, TVS Group and Wipro, among others.

The SEZ Act was enacted in June 2005 and made operational from February 2006. The scheme made phenomenal progress in terms of exports, employment and investment, based on the government’s promise to investors of long-term continuity. It was launched primarily because all other efforts made by successive governments had failed. The idea was first mooted in 2000-2001 under the then commerce and industry minister, Murasoli Maran.

Hindsight

“In some sectors, we did achieve considerable success against China, like the SEZ and others,” said former commerce secretary G K Pillai, who was instrumental in implementing the policy in 2006. “The government has to make the policy stable to bring in foreign and other investors. Investors today look at cash flows. If we do not offer them a stable policy, they would rather go to other countries. Amidst widespread public misconception about the policy, we forgot the various unintended benefits these SEZs brought. There is bound to be some problem while doing big things, but the government has to stick to the rules. Somewhere over the years, the commerce ministry abdicated responsibility.”

Pillai also highlighted the aspect of job creation in SEZs. Jobs created within SEZs as on September are given as 7,32,839. “If a tax concession creates millions of jobs, then why not?” asked Pillai, arguing that the revenue forgone due to the concession would come back to the state coffers when a person working in the SEZ pays taxes.

The ministry of commerce and industry recently floated a discussion paper to ascertain ‘shortcomings in the conception and implementation of the SEZ policy framework’. While 583 SEZs had been formally approved as on October 31, only 381 have been notified, of which 143 are exporting. Ministry data admits to a skewed export pattern, inadequate progress of manufacturing activity, uneven sectoral dispersion, limited number of operational SEZs and the fact that the hinterland has been untouched.

India was the first country in Asia to set up an Export Processing Zone (EPZ), in 1965 at Kandla in Gujarat’s Kutch district, called the Kandla Free Trade Zone. After this, six more EPZs were set up, at Santa Cruz (Mumbai), Falta (West Bengal), Chennai (Tamil Nadu), Noida (Uttar Pradesh), Cochin (Kerala) and Visakhapatnam (Andhra Pradesh).

“Frankly, the government did not have the resources then to create infrastructure that would propel exports,” says N L Lakhanpal, former director general of foreign trade (1997-2002) under Maran. “Schemes like Export-Oriented Units (EOUs) and Technology Parks of India (STPI) failed to live up to their objectives of creating world-class infrastructure and, moreover, these were under heavy regulations. So, we wanted to create earmarked zones, where all regulations would be suspended and, to attract developers, we had to incentivise by offering income tax relief. The NIMZs would meet the same fate as the SEZs.”

Pillai agrees the NIMZs would be a non-starter, since each requires a minimum of 5,000 hectares, which is going to pose a challenge in a world where land acquisition has become a huge problem.

Today

The size of incentive package stipulated under the SEZ Act and Rules were reduced by the government with the withdrawal of exemption from Minimum Alternate Tax (MAT), levy of Dividend Distribution Tax (DDT) on SEZ Developers and grandfathering of the benefits to SEZ Developers (notified on or before March 31, 2012) and SEZ units (commencing on or before March 31, 2014). These withdrawals have all been challenged in court, so investors are unsure what to expect.

“We had the potential to compete with China but we did not achieve the objectives,” says Ravindra Sannareddy, managing director, SriCity SEZ, southern India’s largest private sector one. “Investors are still interested in the SEZ story of India but they are not very comfortable. They are confused, they don’t know how to read the policy. Moreover, the 2008 meltdown also dampened the SEZ story.”

Dipak Chatterjee, former commerce secretary, who oversaw preparation of the draft SEZ Act during his 2002-04 tenure, believes the SEZ concept got clobbered due to clearances given to a large number of projects and not to a selected few. “Unfortunately from the very beginning, the revenue department was determined to make it difficult on the ground of revenue lost. It was very difficult to convince them that duties and taxes are never exported, so instead of a regime of duty refunds post export, it is much simpler to have tax and duty-free export. The idea was to start with a handful of SEZs and if these proved a success, to replicate on a large scale. However, this was not done,” he said.

Recently, the Board of Approval of the ministry of commerce and industry, under commerce secretary Rahul Khullar, provided much-needed relief to cash-starved developers by allowing them to dilute their stake partly or fully to other promoters, including foreign companies, since more and more were finding it difficult to carry on with their SEZ projects.

According to CUTS Inter-national, an advocacy group, a National Coordination Comm-ittee on SEZs should be formed under the Prime Minister’s Office, with direct involvement of all states.

SEZ units are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent of the ploughed-back export profit for the next five years under section 10 AA of the Income Tax Act. Under section 115JB of the IT Act they are also exempted from Minimum Alternate Tax (though, as mentioned, this is under litigation). Besides these, the units are also exempted from central sales tax, service tax, state taxes and levies.

The draft Direct Taxes Code bill has suggested continuation of the 15-year tax holiday for units operational by March 31, 2014. In other words, the units have to start exporting before this date to avail of the I-T concessions available for SEZ units, even if they have got all the necessary approvals.

-Business standard

fritolay_ps · 26-12-11

Reforms, better town planning, quicker approval needed in real estate sector for betterment of economy

The Indian economy is now facing the reality of a significant moderation in growth partly due to the prolonged weakness in the global economy coupled with structural imbalances in the Indian economy. One sector, in particular, that continues to be buffeted by bad news and has few sympathisers is the real estate industry.

Of the many charges made against the industry, 'exorbitant' or 'unrealistic' pricing leading to profiteering is often the main complaint. But is that true? In a fragmented industry such as this, how can developers dictate pricing?

Led by a chorus of influential voices and supported by the ridiculous levels of prices in Mumbai, it was easy for policymakers, regulators and financiers to clamp down on the industry. Monetary policy on the industry has been tight since 2007 with periodic further tightening thereafter.

However, given the slowdown in the macro economy, it is essential to consider some important facts about this industry and the critical role it plays in the economy. The real estate and construction industry accounts for 19.5% of GDP and 20.6% of gross capital formation in the economy. The industry arguably provides employment to the largest number of skilled and unskilled workers. By various estimates, 33 million people are employed in the industry. This sector also drives core industries like cement and steel.

In this writer's view, high real estate prices will remain a reality for some time in India due to three key factors:

Huge pent-up demand with the supply side artificially constrained by a set of archaic state and central laws.
Opaque functioning of the planning and approving authorities who are vested with a disproportionate level of discretionary powers.
Weak machinery for enforcement of consumer rights due to an overburdened judiciary.

On the first point, consider a simple statistic. India accounts for ~17.8% of the world's population (behind only China, ~19.5%), but accounts for a relatively smaller share (2.4%) of the world's surface area. This disproportionate share of the world's population makes India one of the more densely-populated countries in the world. India's population density at 373 per sq km is 7.4x of the world's and 2.7x of China's population density.

Under the circumstances, we have no choice but to go in for more dense developments - which means higher FSI. However, this cannot be achieved without significant planning of supporting infrastructure and overhaulingof existing rules for development. Supporters of the affordable housing theme may baulk at the suggestion as it seems to enrich developers. But India does have amicro-level successful experiment in Noida.

Several things are notable about the explosion of housing in Noida. First, the government built fantastic road infrastructure. Second, the density norms and FSI of residential development is the highest in the national capital region (NCR). Third, on an average, a developer can get plan sanctions and approvals in a single window in 6-8 weeks.

These steps have led to a flood of supply backed by top-class infrastructure. The resulting numbers are breathtaking. During the two-year period 2009-11, Noida (including Greater Noida) witnessed sales of around 283 million sq ft of residential space: 2.83 lakh units at an average price of 2,800 per sq ft and an average home price of 28 lakh.

In terms of area sold, Noida accounted for nearly 54% of NCR home sales and 18% of cumulative home sales in NCR, Mumbai, Pune, Hyderabad, Chennai and Bangalore combined. High density norms enabled smaller apartments, bringing down ticket sizes to the 25 lakh and below range. During the four-year period 2007-11, the weighted average selling price in Noida rose at a CAGR of just 1%. Adjusted for inflation, prices actually declined over this period!

There will be instances of developers not delivering on promises in Noida too, and naysayers will question the land acquisition policy. While the policy needs to be transparent and equitable for all, let us not disregard the lessons to be learnt from Noida. Planned infrastructure investment ahead of time, uniform FSI and building plan norms (limited discretion), higher density and quick approvals kept prices in check and the supply kept building.

The government must realise that enabling adequate supply at affordable prices needs reforms at the town-planning stage and quicker approvals as well. Tightening the screws on developers and squeezing capital flows are not having the desired impact. At a time when the economy is staring at a slowdown, the real estate industry can give an impetus to growth.

I would, therefore, argue that while developers need to get their act together, reforms are also sorely required at the municipality and town-planning level if the aam aadmi is to have a quality makaan in addition to his roti and kapda.

_ET

fritolay_ps · 26-12-11

NCR's 2012 realty scene promising
After being confronted with flagging sales, successive rounds of interest rate hikes and land acquisition issues in pockets such as Greater Noida this year, will the tide turn for the Delhi NCR residential market in 2012?

Most industry experts concede that the deteriorating macro indicators will continue to be an overhang on the housing sales in coming months. Liquidity continues to be tight for builders. To top it, the full impact of the global crisis on the job market is yet to unfold, they say, emphasising that factors like these will continue to put pressure on the real estate purchases.

INTEREST RATES

“No one knows yet how the services and job market will pan out. For the developers, funds are coming in at an exorbitant rate of interest,” says Mr Shobhit Agarwal, Director at Protiviti Consulting India.

However, builders are unlikely to be overtly aggressive in launching new projects, Mr Agarwal says, adding that it would help keep prices stable, as less supply will flow into the market.

And yet there those who remain hopeful that the consumer confidence in locations like Noida and Greater Noida will take a turn for the better in the second half of 2012 after the electoral dust settles in the political battleground of Uttar Pradesh.

A weaker Rupee and lower residential prices have rekindled NRI interest in the Indian housing market, while RBI has finally halted its rate action after 13 successive rounds of hikes since March 2010 — thus influencing the demand equation favourably, they say.

Mr Getamber Anand, managing director, ATS Group, and vice-president of real estate association CREDAI, is among those who believe that the apex bank's recent decision to press the pause button on rate hikes signifies a turning point from where home loan rates will now start to slide.

Mr Samarjit Singh, Managing Director of property broking firm Agni Property, says that if the RBI were to announce even a slight reduction in interest rates in future, it by itself, will give a big sentimental boost to the market. “Even a small dose of interest rate reduction will be enough to turn sentiments, as it will tell buyers the direction in which the interest rates are likely to then move. It will bring fence-sitters once again to the property market,” he feels.

RESIDENTIAL SALES

Mr Sachin Sandhir, Managing Director for Royal Institution of Chartered Surveyors (RICS) in India, too, ascribes the slowdown in the residential sales to “sentiments”. Like many in the real estate industry, Mr Sandhir rejects the notion that housing demand, per se, has taken a knock. Sales, he says, slowed down because prices reached a level, which was beyond the customers' wallet.

“Developers will be smart enough to feel the pulse of the market and launch more affordable projects than premium or luxury projects. Even today, if a project is launched in Gurgaon at, say, Rs 4000-4500 per square foot, or in the new Gurgaon area for Rs 3000-3100 per square foot, it is bound to generate a good response,” says Mr Sandhir.

CREDAI's Mr Anand feels demand for homes in the range of Rs 3500-5500 per square foot is, and will continue to be, “decent”. “Rising interest rate has been a big dampener this year, as cost of money is an important factor in purchase decisions,” he says. Mr Anand believes if home loan rates had stayed around the nine per cent mark, the sale volumes would have been almost 50 per cent higher. Everyone agrees that challenges for developers in 2012 will be at multiple levels.

PRESSURE FACTORS

“Liquidity pressure will be the big one for developers to deal with,” says Mr Anuj Puri, chairman and country head of Jones Lang LaSalle, India. That may cast a cloud on launch of new projects and delivery of existing ones. Meanwhile, construction costs (including inputs items such as steel and cement) have spiked and so have the labour charges.

“A lot of labour is flowing into UP and Bihar again due to the success of the NREGA scheme, as well as new development opportunities that are coming to the fore,” says Mr Agarwal of Protiviti.

Cost of labour has gone up 30-40 per cent in the last 18-20 months, he adds. People in the industry also say that land acquisition is set to become more complex and expensive in the light of the new land acquisition Bill.

“The upcoming Real Estate Bill will make builders more accountable than ever. On a hopeful note, it will strengthen the hands of the consumer and create new confidence in real estate purchases,” says Mr Singh of Agni Group. Global market, of course, may throw-up the biggest poser yet.
-ET

fritolay_ps · 26-12-11

Green buildings not an in-thing

BHUBANESWAR: Despite government incentives, concept of green buildings has failed to catch the fancy of real estate developers here. This is much in contrast to booming real estate markets like Gurgaon (Haryana), Mumbai, Bangalore and Hyderabad where "green" is the in-thing.

Section 33 (7) of the Bhubaneswar Development Authority (Planning and Standards) Regulation 2008 gives concession to platinum or gold certified green buildings. The BDA may refund fee proportionate to 0.10 premium floor area ratio to the developer of such buildings as per the regulation. "I don't think any developer has sought approval for a green building in city so far though there is an incentive. It is yet to catch their attention here," said Deoranjan Kumar Singh, vice-chairman of BDA.

Indian Green Building Council (IGBC) and The Green Rating for Integrated Habitat Assessment (GRIHA) of The Energy and Resource Institute (TERI) certify buildings on green quotient. The buildings are certified platinum, gold and silver for leadership in energy and environmental design.

IGBC, which started green building movement in the country in 2001, defines green building is one which uses less water, optimises energy efficiency, conserves natural resources, generates less wastes and provides healthier spaces for occupants as compared to a conventional building.

Green buildings use non-conventional sources of energy such as wind, water, solar heat against non-renewable fuels like coal and crude oil. Besides, designs are made for minimum energy consumption by way of natural lighting and ventilation.

Builders say it is a comparatively new concept and will take time to break ground. "It is relatively a new concept. But we have already started exploring the possibility of going green," said D S Tripathy, president of Confederation of Real Estate Developers Association of India (Credai), Odisha chapter.

Credai in association with TERI at the national level has taken up an initiative to create awareness among its members about the concept, Tripathy said.

The developers said more incentives should be given to developers for constructing green buildings. The small percentage of fee refund is too less compared to the input cost for a green structure. "The government should work out lucrative incentives to encourage green building concept," said Pradipta Kumar Biswasray, president of Real Estate Developers Association of Orissa (Reda). Biswasray said alluring government sops for green projects in Haryana may be a reason why scores of such constructions have come up in Gurgaon. ITC, Wipro technologies and HSBC House in Gurgaon have platinum rating.

The only green initiative so far in Odisha is that new government buildings and institutions have to adhere to energy conservation building code (ECBC) of the energy department. "In public private partnership projects, BDA is also asking its partners to adhere to ECBC," said Prashant Patnaik, planning member of BDA. However, more incentives should be given for eco-friendly sustainable projects, which do minimum harm to the nature and consume less energy, emits less waste, Patnaik said.

According to UNEP figures, the buildings sector accounts for one-third of energy related carbon dioxide emissions worldwide. Nearly 60 per cent of world's electricity is consumed in residential and commercial buildings.

-TOI

fritolay_ps · 26-12-11

Delhi-NCR tops list for unsold homes

Real estate developers maintain price levels even as demand slows and interest rates rise.

This year, the unsold inventory in residential real estate was the highest in Delhi-NCR at 102,758 units, followed by the Mumbai metropolitan region at 90,512. Bangalore came next with 46,596 units, and Pune followed with 40,734 units, according to PropEquity, a real estate intelligence platform.

The inventory pile-up is due to a combination of factors like slowing demand, a rise in interest rates and developers maintaining price levels. The figures considered for the study were till September.

Limited access to funds, increasing cost of debt and high construction costs remained a concern for developers this year, said Samir Jasuja, founder and chief executive, PropEquity. Developers were also affected by regulatory bottlenecks like delays in project approvals and land acquisition-related uncertainties. Affordability was the biggest concern for buyers.

The Reserve Bank of India (RBI) raised its key policy rates 12 times, aggregating 375 basis points, since March 2010. Banks responded with similar rises in lending rates. Though buyers were expecting a price correction in real estate prices, it hasn’t happened yet, Jasuja said.

Even as developers have slowed fresh launches, prices are mostly headed north. Gurgaon has seen the maximum price appreciation at 21.4 per cent, followed by Mumbai at 13.2 per cent, and Pune 12.5 per cent, compared with the previous year, the report shows.

International consulting firm, DTZ, has said the residential sector is likely to remain under downward pressure in 2012, owing to high interest rates. “As increasing inflation levels continue to remain a concern for RBI, the residential sector may witness further increase in home loan interest rates. This would further impact demand for the residential segment, particularly among the mid-range and low-end segment,” said Anshul Jain, chief executive, DTZ India.

New project launches are likely to remain restrained in 2012, too, said Jain, adding the “rise in capital values would be low and specific across micro markets, particularly for ready and near-completion projects.”

Ajit Krishnan, partner and national real estate leader, Ernst & Young, said the initial quarters of 2012 were likely to witness a wait-and-watch approach by investors. “The focus of most developers is likely to be on execution of existing projects in their portfolios and improvement in sales,” he said.

On the residential sector, Krishnan said developers were likely to continue to face a liquidity crunch, owing to the soaring interest rates and a slowdown in sales. “This may lead to a slowdown of construction activity. Rising home loan interest rates shall keep buyers at bay in the short term. The rise in capital values would be marginally on account of the anticipated slowdown in sales,” he added.

PropEquity’s Jasuja said the near-term outlook for the residential real estate market in 2012 was likely to be cautious, owing to “the likelihood of low market sentiments”. Key market indicators, including absorption and new launches, were likely to remain low, given execution concerns, he said. “Developers may focus on execution and delivering the committed projects in 2012, rather than launching a slew of new projects to avoid an insurmountable inventory overhang,” said Jasuja. On prices, the appreciation may be marginal because of low sales volume and decline, he added.

-Business standard

fritolay_ps · 26-12-11

The Real Estate Promise

The Real Estate Promise

The Indian economy is now facing the reality of a significant moderation in growth partly due to the prolonged weakness in the global economy coupled with structural imbalances in the Indian economy. One sector, in particular, that continues to be buffeted by bad news and has few sympathisers is the real estate industry. Of the many charges made against the industry, ‘exorbitant’ or ‘unrealistic’ pricing leading to profiteering is often the main complaint. But is that true? In a fragmented industry such as this, how can developers dictate pricing? Led by a chorus of influential voices and supported by the ridiculous levels of prices in Mumbai, it was easy for policymakers, regulators and financiers to clamp down on the industry. Monetary policy on the industry has been tight since 2007 with periodic further tightening thereafter.

However, given the slowdown in the macro economy, it is essential to consider some important facts about this industry and the critical role it plays in the economy. The real estate and construction industry accounts for 19.5% of GDP and 20.6% of gross capital formation in the economy. The industry arguably provides employment to the largest number of skilled and unskilled workers. By various estimates, 33 million people are employed in the industry. This sector also drives core industries like cement and steel.

In this writer’s view, high real estate prices will remain a reality for some time in India due to three key factors:

Huge pent-up demand with the supply side artificially constrained by a set of archaic state and central laws.
Opaque functioning of the planning and approving authorities who are vested with a disproportionate level of discretionary powers.
Weak machinery for enforcement of consumer rights due to an overburdened judiciary.

On the first point, consider a simple statistic. India accounts for ~17.8% of the world’s population (behind only China, ~19.5%), but accounts for a relatively smaller share (2.4%) of the world’s surface area. This disproportionate share of the world’s population makes India one of the more densely-populated countries in the world. India’s population density at 373 per sq km is 7.4x of the world’s and 2.7x of China’s population density.

Under the circumstances, we have no choice but to go in for more dense developments — which means higher FSI. However, this cannot be achieved without significant planning of supporting infrastructure and overhauling of existing rules for development. Supporters of the affordable housing theme may baulk at the suggestion as it seems to enrich developers. But India does have a micro-level successful experiment in Noida.

Several things are notable about the explosion of housing in Noida. First, the government built fantastic road infrastructure. Second, the density norms and FSI of residential development is the highest in the national capital region (NCR). Third, on an average, a developer can get plan sanctions and approvals in a single window in 6-8 weeks.

These steps have led to a flood of supply backed by topclass infrastructure. The resulting numbers are breathtaking. During the two-year period 2009-11, Noida (including Greater Noida) witnessed sales of around 283 million sq ft of residential space: 2.83 lakh units at an average price of . 2,800 per sq ft and an average home price of . 28 lakh. In terms of area sold, Noida accounted for nearly 54% of NCR home sales and 18% of cumulative home sales in NCR, Mumbai, Pune, Hyderabad, Chennai and Bangalore combined. High density norms enabled smaller apartments, bringing down ticket sizes to the . 25 lakh and below range. During the four-year period 2007-11, the weighted average selling price in Noida rose at a CAGR of just 1%. Adjusted for inflation, prices actually declined over this period!

There will be instances of developers not delivering on promises in Noida too, and naysayers will question the land acquisition policy. While the policy needs to be transparent and equitable for all, let us not disregard the lessons to be learnt from Noida. Planned infrastructure investment ahead of time, uniform FSI and building plan norms (limited discretion), higher density and quick approvals kept prices in check and the supply kept building. The government must realise that enabling adequate supply at affordable prices needs reforms at the townplanning stage and quicker approvals as well. Tightening the screws on developers and squeezing capital flows are not having the desired impact. At a time when the economy is staring at a slowdown, the real estate industry can give an impetus to growth.

I would, therefore, argue that while developers need to get their act together, reforms are also sorely required at the municipality and town-planning level if the aam aadmi is to have a quality makaan in addition to his rotiand kapda. It is not really true that developers push prices; other factors make prices climb

We need more housing; the key is supporting infrastructure and reforms on rules
As we stare at a slowdown, the real estate industry can give an impetus to growth

-ET

26-12-11	#846
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Reforms, better town planning, quicker approval needed in real estate sector for betterment of economy The Indian economy is now facing the reality of a significant moderation in growth partly due to the prolonged weakness in the global economy coupled with structural imbalances in the Indian economy. One sector, in particular, that continues to be buffeted by bad news and has few sympathisers is the real estate industry. Of the many charges made against the industry, 'exorbitant' or 'unrealistic' pricing leading to profiteering is often the main complaint. But is that true? In a fragmented industry such as this, how can developers dictate pricing? Led by a chorus of influential voices and supported by the ridiculous levels of prices in Mumbai, it was easy for policymakers, regulators and financiers to clamp down on the industry. Monetary policy on the industry has been tight since 2007 with periodic further tightening thereafter. However, given the slowdown in the macro economy, it is essential to consider some important facts about this industry and the critical role it plays in the economy. The real estate and construction industry accounts for 19.5% of GDP and 20.6% of gross capital formation in the economy. The industry arguably provides employment to the largest number of skilled and unskilled workers. By various estimates, 33 million people are employed in the industry. This sector also drives core industries like cement and steel. In this writer's view, high real estate prices will remain a reality for some time in India due to three key factors: Huge pent-up demand with the supply side artificially constrained by a set of archaic state and central laws. Opaque functioning of the planning and approving authorities who are vested with a disproportionate level of discretionary powers. Weak machinery for enforcement of consumer rights due to an overburdened judiciary. On the first point, consider a simple statistic. India accounts for ~17.8% of the world's population (behind only China, ~19.5%), but accounts for a relatively smaller share (2.4%) of the world's surface area. This disproportionate share of the world's population makes India one of the more densely-populated countries in the world. India's population density at 373 per sq km is 7.4x of the world's and 2.7x of China's population density. Under the circumstances, we have no choice but to go in for more dense developments - which means higher FSI. However, this cannot be achieved without significant planning of supporting infrastructure and overhaulingof existing rules for development. Supporters of the affordable housing theme may baulk at the suggestion as it seems to enrich developers. But India does have amicro-level successful experiment in Noida. Several things are notable about the explosion of housing in Noida. First, the government built fantastic road infrastructure. Second, the density norms and FSI of residential development is the highest in the national capital region (NCR). Third, on an average, a developer can get plan sanctions and approvals in a single window in 6-8 weeks. These steps have led to a flood of supply backed by top-class infrastructure. The resulting numbers are breathtaking. During the two-year period 2009-11, Noida (including Greater Noida) witnessed sales of around 283 million sq ft of residential space: 2.83 lakh units at an average price of 2,800 per sq ft and an average home price of 28 lakh. In terms of area sold, Noida accounted for nearly 54% of NCR home sales and 18% of cumulative home sales in NCR, Mumbai, Pune, Hyderabad, Chennai and Bangalore combined. High density norms enabled smaller apartments, bringing down ticket sizes to the 25 lakh and below range. During the four-year period 2007-11, the weighted average selling price in Noida rose at a CAGR of just 1%. Adjusted for inflation, prices actually declined over this period! There will be instances of developers not delivering on promises in Noida too, and naysayers will question the land acquisition policy. While the policy needs to be transparent and equitable for all, let us not disregard the lessons to be learnt from Noida. Planned infrastructure investment ahead of time, uniform FSI and building plan norms (limited discretion), higher density and quick approvals kept prices in check and the supply kept building. The government must realise that enabling adequate supply at affordable prices needs reforms at the town-planning stage and quicker approvals as well. Tightening the screws on developers and squeezing capital flows are not having the desired impact. At a time when the economy is staring at a slowdown, the real estate industry can give an impetus to growth. I would, therefore, argue that while developers need to get their act together, reforms are also sorely required at the municipality and town-planning level if the aam aadmi is to have a quality makaan in addition to his roti and kapda. _ET

26-12-11	#850
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	The Real Estate Promise The Real Estate Promise The Indian economy is now facing the reality of a significant moderation in growth partly due to the prolonged weakness in the global economy coupled with structural imbalances in the Indian economy. One sector, in particular, that continues to be buffeted by bad news and has few sympathisers is the real estate industry. Of the many charges made against the industry, ‘exorbitant’ or ‘unrealistic’ pricing leading to profiteering is often the main complaint. But is that true? In a fragmented industry such as this, how can developers dictate pricing? Led by a chorus of influential voices and supported by the ridiculous levels of prices in Mumbai, it was easy for policymakers, regulators and financiers to clamp down on the industry. Monetary policy on the industry has been tight since 2007 with periodic further tightening thereafter. However, given the slowdown in the macro economy, it is essential to consider some important facts about this industry and the critical role it plays in the economy. The real estate and construction industry accounts for 19.5% of GDP and 20.6% of gross capital formation in the economy. The industry arguably provides employment to the largest number of skilled and unskilled workers. By various estimates, 33 million people are employed in the industry. This sector also drives core industries like cement and steel. In this writer’s view, high real estate prices will remain a reality for some time in India due to three key factors: Huge pent-up demand with the supply side artificially constrained by a set of archaic state and central laws. Opaque functioning of the planning and approving authorities who are vested with a disproportionate level of discretionary powers. Weak machinery for enforcement of consumer rights due to an overburdened judiciary. On the first point, consider a simple statistic. India accounts for ~17.8% of the world’s population (behind only China, ~19.5%), but accounts for a relatively smaller share (2.4%) of the world’s surface area. This disproportionate share of the world’s population makes India one of the more densely-populated countries in the world. India’s population density at 373 per sq km is 7.4x of the world’s and 2.7x of China’s population density. Under the circumstances, we have no choice but to go in for more dense developments — which means higher FSI. However, this cannot be achieved without significant planning of supporting infrastructure and overhauling of existing rules for development. Supporters of the affordable housing theme may baulk at the suggestion as it seems to enrich developers. But India does have a micro-level successful experiment in Noida. Several things are notable about the explosion of housing in Noida. First, the government built fantastic road infrastructure. Second, the density norms and FSI of residential development is the highest in the national capital region (NCR). Third, on an average, a developer can get plan sanctions and approvals in a single window in 6-8 weeks. These steps have led to a flood of supply backed by topclass infrastructure. The resulting numbers are breathtaking. During the two-year period 2009-11, Noida (including Greater Noida) witnessed sales of around 283 million sq ft of residential space: 2.83 lakh units at an average price of . 2,800 per sq ft and an average home price of . 28 lakh. In terms of area sold, Noida accounted for nearly 54% of NCR home sales and 18% of cumulative home sales in NCR, Mumbai, Pune, Hyderabad, Chennai and Bangalore combined. High density norms enabled smaller apartments, bringing down ticket sizes to the . 25 lakh and below range. During the four-year period 2007-11, the weighted average selling price in Noida rose at a CAGR of just 1%. Adjusted for inflation, prices actually declined over this period! There will be instances of developers not delivering on promises in Noida too, and naysayers will question the land acquisition policy. While the policy needs to be transparent and equitable for all, let us not disregard the lessons to be learnt from Noida. Planned infrastructure investment ahead of time, uniform FSI and building plan norms (limited discretion), higher density and quick approvals kept prices in check and the supply kept building. The government must realise that enabling adequate supply at affordable prices needs reforms at the townplanning stage and quicker approvals as well. Tightening the screws on developers and squeezing capital flows are not having the desired impact. At a time when the economy is staring at a slowdown, the real estate industry can give an impetus to growth. I would, therefore, argue that while developers need to get their act together, reforms are also sorely required at the municipality and town-planning level if the aam aadmi is to have a quality makaan in addition to his rotiand kapda. It is not really true that developers push prices; other factors make prices climb We need more housing; the key is supporting infrastructure and reforms on rules As we stare at a slowdown, the real estate industry can give an impetus to growth -ET

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26-12-11	#841
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	How slums can get a facelift Most slum redevelopment schemes although started with noble intentions, remain stalled despite the availability of funds. The usual reasons are disputes involving ownership, and resistance by the slum dwellers to land acquisition — ironic, for they are the supposed beneficiaries of the project. A slum rehabilitation project in Pune, however, has tided over these hindrances and is on course to achieving its goal. The project, financed under the Jawaharlal Nehru National Urban Renewal Scheme (JNNURM), is redeveloping the slums in-situ with the involvement multiple stakeholders: Central and state governments, local civic body, local political leadership, NGOs and most important, the slum dwellers themselves. The Pune Municipal Corporation (PMC) has undertaken the project under the Central government’s scheme of Basic Services for the Urban Poor (BSUP) under the JNNURM, to upgrade seven high-density slum areas in Yerwada, a slum-dominated locality. A key aim of this project is to allow slum dwellers to maintain and nurture their emotional bonds with the land they live on, while raising their standard of housing. The project commenced in April 2009. PMC received funds for slum upgradation for 4,000 households. The cost of building each tenement was fixed at Rs 3 lakh. Out of this amount the Central government provided 50 per cent, state government 20 per cent, the PMC 20 per cent while the beneficiary had to contribute remaining 10 per cent of the cost. Seven slums in Yerwada were selected for the upgradation. These slums are multicultural, housing people of different socio-economic backgrounds that has translated into the varying house types. Some are permanent structures, others have kutcha houses made of wood and tin sheets, while a third type is dilapidated with poor lighting, ventilation and sanitation. Out of these, only kutcha houses were selected as beneficiaries. Community Involvement Community-based NGOs working with slum dwellers have played a pivotal role in project implementation. Mahila Milan, an NGO working among the women residents for socio-economic upliftment, the National Slum Dwellers’ Federation (NSDF) along with the Society for the Promotion of Area Resource Centres (SPARC) undertook the responsibility for appointing architects, consultants, monitoring quality, estimating costs and keeping a tab on finances. They identified the beneficiaries and got the designs approved by the civic authorities. In addition, they have performed one novel task: got the beneficiaries to approve the design for their home, thereby giving them a say in their future. They also helped the beneficiaries in finding transit accommodation and resolved disputes involving land. “The carpet area for each home was 270 sq ft. However, some owned larger plots and some smaller. It took months of dialogue, but we were clear that construction would not start without reaching a consensus,” said Savita Sonawane of Mahila Milan. NGOs carried out a socio-economic and biometric survey of all the residents living in the slum. For instance, a carpenter or daily wage worker living in the slum could be employed by the contractor for this project, creating a source of income for the person and further enhancing the sense of involvement with the project. Several community meetings were organised in which the local corporator introduced the project. The architectural team explained the designs after which beneficiaries satisfied with the design, financial aspects and other issues signed the consent form. “To enable beneficiaries in understanding the design, a 1:1 scale model of bamboo and cloth was built. The suggestions of the individual house owners were discussed and incorporated,” said Prasanna Desai, a Pune-based architect who designed the houses. Design Challenges For Desai, the challenge was to design feasible building types that merged with the existing fabric of the slums, with an aim to provide better living conditions by improving sanitation, lighting and ventilation. “Rather than imposing a design, the beneficiaries were given new houses on the existing own footprint, with a ‘tailor made design’, within the framework of BSUP, JNNURM and PMC norms,” said Desai. The attempt was to retain the overall fabric of the slum in terms of existing street patterns and footprints. As far as possible, the design was contained within the existing footprint of the kutcha houses. Owners of larger plots were urged to surrender a part in the larger interest of the community, making it possible to widen the existing streets for better accessibility and create community interaction spaces. “As the design task was intertwined with various layers of public participation and negotiations, no two houses have the same design. Hence the task involved understanding the needs, problems, psyche and on ground site conditions of the beneficiaries and discussing the designs of the individual house and cluster houses with them,” said Desai. Currently, 225 houses have been built and about 140 families have moved in. The project is scheduled to be completed in March 2012. Suresh Ashok Sharma,is a beneficiary of the scheme who has moved from his tin sheet dwelling. “The meetings that took place over several months allayed all fears and cleared all doubts. In the new house we have proper sanitation facilities. We are happy.”' -Financial express

26-12-11	#842
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Home loans can buy more Your existing home loan provider can be your best friend in times of your future financial needs. As they offered you a mortgage against your house, they can also help you with a quick loan against your house called a ‘top-up loan’ where you don’t have to provide any additional collateral or paper work. The Concept Once you prove your bank that you can repay the home loan, you can ask them to get it topped up. It can be used as a personal loan to finance anything from your interior decoration or child’s education to daughter’s marriage. The top-up is treated as a second loan and is charged a slightly higher interest than the existing home loan (usually 1-1.5 per cent), and you need to pay a separate processing fee (same as that of the home loan). Let us suppose you need a loan of Rs 4 lakh to buy a car. Interest rates on car loans start at around 12 per cent. If you approach your home loan provider for a top-up loan, you can get one at a floating rate of 9.5 per cent, thereby saving 2.5 per cent The tenure of a top up loan can be as long as the outstanding tenure of the home loan. This will help you to reduce your overall cash outflow. The terms Banks and housing finance companies extend top-up loans to existing borrowers, on completion of at least six repayments. It is considered as an extension of your existing home loan, but they are not particular about how you spend that money. What they look for is whether you have been prompt in repaying the EMIs of the existing home loan. If there are backlogs in the repayment track, then the lender may not be willing to offer you a top-up. Another factor that determines the amount of top-up is the existing market value of your property. The more the property value has gone up, the more you can avail as a top up. The current repayment capacity of the applicant and the amount of loan that is already repaid will also be considered. This is done to ensure that you are capable of servicing the top-up loan. Apart from these, the bank’s lending policy also determines the amount you get as a top-up. Some banks have a cap on top ups based on the original loan taken, while some others extend loans on current market values, outstanding balances and repayment capacity. For instance, an HDFC customer can avail a top-up loan subject to a maximum 70 per cent LTV, considering the repayment capacity of the borrower as per their policy. Let’s assume your outstanding loan is Rs 5 lakh and the current market value of your property is Rs 10 lakh. In this case, HDFC will offer you a top-up of Rs 2 lakh, if you are eligible for a loan of Rs 7 lakh as per your income statements. ICICI Bank, has a cap of 20 per cent of the original amount borrowed. That is, if you have availed a loan of Rs 10 lakh, you will be eligible for a top-up of Rs 2 lakh, regardless of the value of the property or outstanding balance in your loan account. The Other Side The top-up loans are treated as separate loans, and are not eligible for any tax rebates. Housing loan tax rebates can be enjoyed only for the first loan. A top-up loan is best when you have a longer-term financial requirement, and not in times of urgent short-term funding which you can tide over by borrowing from friends, or by taking a gold loan. If you need a short-term infusion of cash, an overdraft facility with your bank will also make more sense. However, if in times of an inevitable big ticket expense, top-up loans give you the best combination of a flexible tenure and a lower interest rate. -Financial express

26-12-11	#843
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Greater Noida: Great value for low costs Located in Uttar Pradesh, barely 40 kilometres from New Delhi and 20 kilometres from Noida, the area of Greater Noida is slowly but surely on the path to becoming one of the largest industrial and education centres of the country. Real estate in this area is amplifying at a good pace in wake of its growing importance as a realty destination around Delhi. Like other areas of the NCR, Greater Noida too is home to a number of Indian and foreign companies, which is an advantage for the area. It is on its way to becoming a commercial hub. Real estate in this city has huge potential for development. The proximity to Delhi and Noida and good connectivity with both cities has been a major catalyst for the growth of the city. The relatively pollution-free environment ranks it higher on the preference list of both developers and investors. The modern infrastructure in keeping with the demands of high quality living and improved living standards has made Greater Noida a destination of choice. In addition, a large number of construction projects offer quality housing and office space equipped with modern amenities, making real estate in the city all the more desirable. To start with, the unaffordable property rates in Delhi had shifted the attention of developers to Noida, as it offered vast land at reasonable prices. Property in Noida flourished eventually to the extent that the property prices in the city have now skyrocketed. The builders are again in a fix and looking for other feasible options that may extend long term benefits and help cater to the phenomenal influx of population into the region. Thus, property in Greater Noida has come across as the next best option given its location advantage, good connectivity, green environs and the enormous potential fordevelopment. Greater Noida is a centre for many activities-besides being an educational hub; it is also a destination for tourism entertainment. Very soon, with the setting up of a night zoological park, the Greater Noida Night Safari will be a major source of revenue for the Greater Noida Authority. The park will be fourth largest in the world after Singapore, China and Thailand, and the visitors will enjoy seeing the nocturnal animals in the zoological park via a silent train running across. Thus, Greater Noida will witness massive infrastructural growth in the years to come, which will in turn promote tourism there. Universities like Noida International University, Gautam Buddha University, etc have already set up their campus in Greater Noida. The city offers refuge from the bustle of city life and yet, the national capital is close and reachable. It combines city comforts with serenity of rural areas; urbanity with traditions and contemporary with old. Quite clearly, Greater Noida is being designed to be a great place to work and live in which is why the demand for property should be good in this area in the long run. The planned infrastructural developments such as an international airport promise a further increase in property prices. Realty in Greater Noida assures decent returns in the coming years for properties purchased at reasonable rates, as growth in the sector is dependent on the growth as a business hub as well as the other tourist attractions going live. The current connectivity to Delhi is also a challenge and a very good rapid transport system is needed to bring in the next spurt in prices and helping make Greater Noida a destination for premium property. The increased supply in Noida Extension and Yamuna Expressway should also keep the price of this area in check for some time to come. We need to understand that there is tremendous supply of land in this area so paying a premium price unless for a very specific project is not advisable. Greater Noida is a good destination for bargain buys and affordable housing. -Financial express

26-12-11	#844
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Punjab realty sector to be sluggish till polls over: experts Chandigarh: The real estate sector in Punjab is likely to witness sluggishness in the run up to Assembly elections in the state next month, with investors expected to adopt a wait-and-watch policy with regard to new investments till the next state government comes to power, say experts. The maximum impact of the upcoming elections is expected to be visible in new and upcoming residential projects, which still require statutory approvals from various government authorities to take off, as investors and financiers will be reluctant to infuse money into these projects in the wake of the Code of Conduct coming into force, real estate experts said. The Election Commission of India yesterday announced that elections for the 117-member State Assembly in Punjab would be held on January 30. Spiralling interest rates, coupled with slackening demand for property, has already made a significant dent on the property market in Punjab, with sales prices of real estate products dipping by 10-15 per cent in the past six months, they said. "Investors do stop or become reluctant in investing in new projects during state elections as they wait for formation of a new state government, which may go for changes in policies for the real estate sector," CREDAI (Punjab) President Kulwant Singh said. However, he said the elections will have no impact on ongoing projects. The country's leading real estate developer, DLF, had also recently opined that the real estate industry faced a "little bit" of a slowdown during elections. "There could be an impact... People become a little wary of investing in the real estate market during elections... They want to watch stability (till the next state government is formed)," DLF India Executive Director (North) Rahul Mehta had said. Apart from this, financial institutions have already seen an up to 20 per cent drop in credit offtake by real estate developers, especially in Chandigarh, Mohali and Panchkula, in the past four months. "Investors are switching over to a wait-and-watch policy concerning real estate buying," HDFC Joint General Manager (Punjab, Haryana, Himachal Pradesh) P C Srivastava said. Non-Resident Indians (NRIs), who are among the key players in the real estate sector, also stay away from the property market till the next government comes in. "NRIs will refrain from buying new properties in Punjab until the new state government is formed," NRI Sabha (P njab) President Kamaljit Hayer said. Nevertheless, the real estate experts avowed that whichever political party forms the next government, it will continue to support the property market through its policies. -Financial express

26-12-11	#845
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	The grand SEZ dream on deathbed Calculations seem to have gone offtrack along the way; the initiators blame policy confusion and lack of comprehension in coordination. The Special Economic Zone (SEZ) policy was launched with considerable hype in India in 2006, when the economy was booming and investors around the world were looking at the country as a credible investment destination. It was launched with the promise of lucrative tax incentives, to substantially boost export. However, five years later, with the change in the global economic scenario, coupled with unstable policy, the SEZ story is dying a slow death. In the past couple of years, a wide gap has emerged in the number of new proposals getting approvals and that of SEZs becoming operational. Today, the ministry that conceived the idea and implemented the scheme is busy shifting gear backwards and, instead, promoting the concept of national investment and manufacturing zones (NIMZs) under the recently introduced National Manufacturing Policy. According to experts, NIMZs are just another re-branding attempt in the backdrop of SEZ activities increasingly becoming tepid, though SEZs are meant exclusively for exports and NIMZs are aimed to boost domestic manufacturing. “We are seeing a slowdown in getting clients for our SEZs,” said Arun Nanda, chairman, Mahindra Lifespace Developers. “The government should realize that SEZs have become an issue of credibility. Companies were attracted to the scheme due to tax incentives. The government cannot go back on its promise. Rolling back the policy would become a huge issue. While the concept of NIMZs is laudable, unless there is a concerted effort between the central and state government to make it a success, the scheme would remain on paper.” Mahindra World City SEZs in Chennai and Jaipur are regarded as success stories that boast of a clientele of BMW, CapGemini, Infosys Technologies, Renault-Nissan, TVS Group and Wipro, among others. The SEZ Act was enacted in June 2005 and made operational from February 2006. The scheme made phenomenal progress in terms of exports, employment and investment, based on the government’s promise to investors of long-term continuity. It was launched primarily because all other efforts made by successive governments had failed. The idea was first mooted in 2000-2001 under the then commerce and industry minister, Murasoli Maran. Hindsight “In some sectors, we did achieve considerable success against China, like the SEZ and others,” said former commerce secretary G K Pillai, who was instrumental in implementing the policy in 2006. “The government has to make the policy stable to bring in foreign and other investors. Investors today look at cash flows. If we do not offer them a stable policy, they would rather go to other countries. Amidst widespread public misconception about the policy, we forgot the various unintended benefits these SEZs brought. There is bound to be some problem while doing big things, but the government has to stick to the rules. Somewhere over the years, the commerce ministry abdicated responsibility.” Pillai also highlighted the aspect of job creation in SEZs. Jobs created within SEZs as on September are given as 7,32,839. “If a tax concession creates millions of jobs, then why not?” asked Pillai, arguing that the revenue forgone due to the concession would come back to the state coffers when a person working in the SEZ pays taxes. The ministry of commerce and industry recently floated a discussion paper to ascertain ‘shortcomings in the conception and implementation of the SEZ policy framework’. While 583 SEZs had been formally approved as on October 31, only 381 have been notified, of which 143 are exporting. Ministry data admits to a skewed export pattern, inadequate progress of manufacturing activity, uneven sectoral dispersion, limited number of operational SEZs and the fact that the hinterland has been untouched. India was the first country in Asia to set up an Export Processing Zone (EPZ), in 1965 at Kandla in Gujarat’s Kutch district, called the Kandla Free Trade Zone. After this, six more EPZs were set up, at Santa Cruz (Mumbai), Falta (West Bengal), Chennai (Tamil Nadu), Noida (Uttar Pradesh), Cochin (Kerala) and Visakhapatnam (Andhra Pradesh). “Frankly, the government did not have the resources then to create infrastructure that would propel exports,” says N L Lakhanpal, former director general of foreign trade (1997-2002) under Maran. “Schemes like Export-Oriented Units (EOUs) and Technology Parks of India (STPI) failed to live up to their objectives of creating world-class infrastructure and, moreover, these were under heavy regulations. So, we wanted to create earmarked zones, where all regulations would be suspended and, to attract developers, we had to incentivise by offering income tax relief. The NIMZs would meet the same fate as the SEZs.” Pillai agrees the NIMZs would be a non-starter, since each requires a minimum of 5,000 hectares, which is going to pose a challenge in a world where land acquisition has become a huge problem. Today The size of incentive package stipulated under the SEZ Act and Rules were reduced by the government with the withdrawal of exemption from Minimum Alternate Tax (MAT), levy of Dividend Distribution Tax (DDT) on SEZ Developers and grandfathering of the benefits to SEZ Developers (notified on or before March 31, 2012) and SEZ units (commencing on or before March 31, 2014). These withdrawals have all been challenged in court, so investors are unsure what to expect. “We had the potential to compete with China but we did not achieve the objectives,” says Ravindra Sannareddy, managing director, SriCity SEZ, southern India’s largest private sector one. “Investors are still interested in the SEZ story of India but they are not very comfortable. They are confused, they don’t know how to read the policy. Moreover, the 2008 meltdown also dampened the SEZ story.” Dipak Chatterjee, former commerce secretary, who oversaw preparation of the draft SEZ Act during his 2002-04 tenure, believes the SEZ concept got clobbered due to clearances given to a large number of projects and not to a selected few. “Unfortunately from the very beginning, the revenue department was determined to make it difficult on the ground of revenue lost. It was very difficult to convince them that duties and taxes are never exported, so instead of a regime of duty refunds post export, it is much simpler to have tax and duty-free export. The idea was to start with a handful of SEZs and if these proved a success, to replicate on a large scale. However, this was not done,” he said. Recently, the Board of Approval of the ministry of commerce and industry, under commerce secretary Rahul Khullar, provided much-needed relief to cash-starved developers by allowing them to dilute their stake partly or fully to other promoters, including foreign companies, since more and more were finding it difficult to carry on with their SEZ projects. According to CUTS Inter-national, an advocacy group, a National Coordination Comm-ittee on SEZs should be formed under the Prime Minister’s Office, with direct involvement of all states. SEZ units are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent of the ploughed-back export profit for the next five years under section 10 AA of the Income Tax Act. Under section 115JB of the IT Act they are also exempted from Minimum Alternate Tax (though, as mentioned, this is under litigation). Besides these, the units are also exempted from central sales tax, service tax, state taxes and levies. The draft Direct Taxes Code bill has suggested continuation of the 15-year tax holiday for units operational by March 31, 2014. In other words, the units have to start exporting before this date to avail of the I-T concessions available for SEZ units, even if they have got all the necessary approvals. -Business standard

26-12-11	#847
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	NCR's 2012 realty scene promising After being confronted with flagging sales, successive rounds of interest rate hikes and land acquisition issues in pockets such as Greater Noida this year, will the tide turn for the Delhi NCR residential market in 2012? Most industry experts concede that the deteriorating macro indicators will continue to be an overhang on the housing sales in coming months. Liquidity continues to be tight for builders. To top it, the full impact of the global crisis on the job market is yet to unfold, they say, emphasising that factors like these will continue to put pressure on the real estate purchases. INTEREST RATES “No one knows yet how the services and job market will pan out. For the developers, funds are coming in at an exorbitant rate of interest,” says Mr Shobhit Agarwal, Director at Protiviti Consulting India. However, builders are unlikely to be overtly aggressive in launching new projects, Mr Agarwal says, adding that it would help keep prices stable, as less supply will flow into the market. And yet there those who remain hopeful that the consumer confidence in locations like Noida and Greater Noida will take a turn for the better in the second half of 2012 after the electoral dust settles in the political battleground of Uttar Pradesh. A weaker Rupee and lower residential prices have rekindled NRI interest in the Indian housing market, while RBI has finally halted its rate action after 13 successive rounds of hikes since March 2010 — thus influencing the demand equation favourably, they say. Mr Getamber Anand, managing director, ATS Group, and vice-president of real estate association CREDAI, is among those who believe that the apex bank's recent decision to press the pause button on rate hikes signifies a turning point from where home loan rates will now start to slide. Mr Samarjit Singh, Managing Director of property broking firm Agni Property, says that if the RBI were to announce even a slight reduction in interest rates in future, it by itself, will give a big sentimental boost to the market. “Even a small dose of interest rate reduction will be enough to turn sentiments, as it will tell buyers the direction in which the interest rates are likely to then move. It will bring fence-sitters once again to the property market,” he feels. RESIDENTIAL SALES Mr Sachin Sandhir, Managing Director for Royal Institution of Chartered Surveyors (RICS) in India, too, ascribes the slowdown in the residential sales to “sentiments”. Like many in the real estate industry, Mr Sandhir rejects the notion that housing demand, per se, has taken a knock. Sales, he says, slowed down because prices reached a level, which was beyond the customers' wallet. “Developers will be smart enough to feel the pulse of the market and launch more affordable projects than premium or luxury projects. Even today, if a project is launched in Gurgaon at, say, Rs 4000-4500 per square foot, or in the new Gurgaon area for Rs 3000-3100 per square foot, it is bound to generate a good response,” says Mr Sandhir. CREDAI's Mr Anand feels demand for homes in the range of Rs 3500-5500 per square foot is, and will continue to be, “decent”. “Rising interest rate has been a big dampener this year, as cost of money is an important factor in purchase decisions,” he says. Mr Anand believes if home loan rates had stayed around the nine per cent mark, the sale volumes would have been almost 50 per cent higher. Everyone agrees that challenges for developers in 2012 will be at multiple levels. PRESSURE FACTORS “Liquidity pressure will be the big one for developers to deal with,” says Mr Anuj Puri, chairman and country head of Jones Lang LaSalle, India. That may cast a cloud on launch of new projects and delivery of existing ones. Meanwhile, construction costs (including inputs items such as steel and cement) have spiked and so have the labour charges. “A lot of labour is flowing into UP and Bihar again due to the success of the NREGA scheme, as well as new development opportunities that are coming to the fore,” says Mr Agarwal of Protiviti. Cost of labour has gone up 30-40 per cent in the last 18-20 months, he adds. People in the industry also say that land acquisition is set to become more complex and expensive in the light of the new land acquisition Bill. “The upcoming Real Estate Bill will make builders more accountable than ever. On a hopeful note, it will strengthen the hands of the consumer and create new confidence in real estate purchases,” says Mr Singh of Agni Group. Global market, of course, may throw-up the biggest poser yet. -ET

26-12-11	#848
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Green buildings not an in-thing BHUBANESWAR: Despite government incentives, concept of green buildings has failed to catch the fancy of real estate developers here. This is much in contrast to booming real estate markets like Gurgaon (Haryana), Mumbai, Bangalore and Hyderabad where "green" is the in-thing. Section 33 (7) of the Bhubaneswar Development Authority (Planning and Standards) Regulation 2008 gives concession to platinum or gold certified green buildings. The BDA may refund fee proportionate to 0.10 premium floor area ratio to the developer of such buildings as per the regulation. "I don't think any developer has sought approval for a green building in city so far though there is an incentive. It is yet to catch their attention here," said Deoranjan Kumar Singh, vice-chairman of BDA. Indian Green Building Council (IGBC) and The Green Rating for Integrated Habitat Assessment (GRIHA) of The Energy and Resource Institute (TERI) certify buildings on green quotient. The buildings are certified platinum, gold and silver for leadership in energy and environmental design. IGBC, which started green building movement in the country in 2001, defines green building is one which uses less water, optimises energy efficiency, conserves natural resources, generates less wastes and provides healthier spaces for occupants as compared to a conventional building. Green buildings use non-conventional sources of energy such as wind, water, solar heat against non-renewable fuels like coal and crude oil. Besides, designs are made for minimum energy consumption by way of natural lighting and ventilation. Builders say it is a comparatively new concept and will take time to break ground. "It is relatively a new concept. But we have already started exploring the possibility of going green," said D S Tripathy, president of Confederation of Real Estate Developers Association of India (Credai), Odisha chapter. Credai in association with TERI at the national level has taken up an initiative to create awareness among its members about the concept, Tripathy said. The developers said more incentives should be given to developers for constructing green buildings. The small percentage of fee refund is too less compared to the input cost for a green structure. "The government should work out lucrative incentives to encourage green building concept," said Pradipta Kumar Biswasray, president of Real Estate Developers Association of Orissa (Reda). Biswasray said alluring government sops for green projects in Haryana may be a reason why scores of such constructions have come up in Gurgaon. ITC, Wipro technologies and HSBC House in Gurgaon have platinum rating. The only green initiative so far in Odisha is that new government buildings and institutions have to adhere to energy conservation building code (ECBC) of the energy department. "In public private partnership projects, BDA is also asking its partners to adhere to ECBC," said Prashant Patnaik, planning member of BDA. However, more incentives should be given for eco-friendly sustainable projects, which do minimum harm to the nature and consume less energy, emits less waste, Patnaik said. According to UNEP figures, the buildings sector accounts for one-third of energy related carbon dioxide emissions worldwide. Nearly 60 per cent of world's electricity is consumed in residential and commercial buildings. -TOI

26-12-11	#849
fritolay_ps Super Moderator Join Date: Mar 2010 Location: Latitude 28.587, Longitude 77.394 Posts: 8,545 My Mood: Thanks: 197 Thanked 671 Times in 487 Posts	Delhi-NCR tops list for unsold homes Real estate developers maintain price levels even as demand slows and interest rates rise. This year, the unsold inventory in residential real estate was the highest in Delhi-NCR at 102,758 units, followed by the Mumbai metropolitan region at 90,512. Bangalore came next with 46,596 units, and Pune followed with 40,734 units, according to PropEquity, a real estate intelligence platform. The inventory pile-up is due to a combination of factors like slowing demand, a rise in interest rates and developers maintaining price levels. The figures considered for the study were till September. Limited access to funds, increasing cost of debt and high construction costs remained a concern for developers this year, said Samir Jasuja, founder and chief executive, PropEquity. Developers were also affected by regulatory bottlenecks like delays in project approvals and land acquisition-related uncertainties. Affordability was the biggest concern for buyers. The Reserve Bank of India (RBI) raised its key policy rates 12 times, aggregating 375 basis points, since March 2010. Banks responded with similar rises in lending rates. Though buyers were expecting a price correction in real estate prices, it hasn’t happened yet, Jasuja said. Even as developers have slowed fresh launches, prices are mostly headed north. Gurgaon has seen the maximum price appreciation at 21.4 per cent, followed by Mumbai at 13.2 per cent, and Pune 12.5 per cent, compared with the previous year, the report shows. International consulting firm, DTZ, has said the residential sector is likely to remain under downward pressure in 2012, owing to high interest rates. “As increasing inflation levels continue to remain a concern for RBI, the residential sector may witness further increase in home loan interest rates. This would further impact demand for the residential segment, particularly among the mid-range and low-end segment,” said Anshul Jain, chief executive, DTZ India. New project launches are likely to remain restrained in 2012, too, said Jain, adding the “rise in capital values would be low and specific across micro markets, particularly for ready and near-completion projects.” Ajit Krishnan, partner and national real estate leader, Ernst & Young, said the initial quarters of 2012 were likely to witness a wait-and-watch approach by investors. “The focus of most developers is likely to be on execution of existing projects in their portfolios and improvement in sales,” he said. On the residential sector, Krishnan said developers were likely to continue to face a liquidity crunch, owing to the soaring interest rates and a slowdown in sales. “This may lead to a slowdown of construction activity. Rising home loan interest rates shall keep buyers at bay in the short term. The rise in capital values would be marginally on account of the anticipated slowdown in sales,” he added. PropEquity’s Jasuja said the near-term outlook for the residential real estate market in 2012 was likely to be cautious, owing to “the likelihood of low market sentiments”. Key market indicators, including absorption and new launches, were likely to remain low, given execution concerns, he said. “Developers may focus on execution and delivering the committed projects in 2012, rather than launching a slew of new projects to avoid an insurmountable inventory overhang,” said Jasuja. On prices, the appreciation may be marginal because of low sales volume and decline, he added. -Business standard