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Real estate update: The changing face of property landscape !!
Source - JLL Blog

While studying the real estate market in Delhi, it is pertinent to note that the country’s capital was – according to legend – destroyed seven times; each time, it came back to life like the proverbial phoenix. Of course, no such cataclysm has happened in recent times, nor is any expected to happen. Nevertheless, this fact goes some way into explaining why the Delhi real estate landscape has always been in a state of steady metamorphosis.

Over the last 15 years, the face of Delhi real estate has changed visibly. Standalone houses have gradually been giving way to cooperative housing societies, private developer apartments and independent designer floors. In commercial real estate, sprawling business hubs have developed at a fair distance from the traditional city centre, Connaught Place.

The property market across the compass

Central Delhi has retained its character. In most aspects, it still epitomizes Lutyens’ Delhi with its Government accommodation, row houses around the CBD and the time-honored shopping and office hub of Connaught Place. However, even the corridors of power now feature more contemporary commercial buildings, and swanky, modern houses have been built on plots for residential development. This happened when older landowners saw the advantages of monetizing their land assets, either via sale or agreements, to enhance the value of their real estate.

North Delhi has transformed from a low-income cluster to a region that edifies the aspirations of Delhi’s middle-income group. Plotted row houses predominate, but the relatively lower land values have recently led to the launch of the first handful of apartment projects in this precinct. The result is a perceptibly taller skyline. Changing FSI norms have also led to a more rational development spread, resulting in bigger, better residential units and projects.

With land at a premium across most parts of the city and demand for quality spaces on the rise, joint development agreements have become a norm. This has led to the popularization of independent floors on residential plots, and also denser inhabitation per square kilometre. North and West Delhi are home to the city’s traditional business class, which migrated there from the Old Delhi region. This fact reflects in the sprawling bungalows and designer floors which are driving residential demand there.

With a large component of the middle-income group gravitating to these residential clusters, office developments have also sprung up there over the last 8-10 years. The highest concentrations of these are in Pitampura, Janakpuri and Rajendra Place, with a gradual progress towards Rohini.

East and North East Delhi present a melange of well-planned plotted colonies and narrow-laned, unplanned residential clusters. Cooperatives and DDA-promoted apartment projects in Mayur Vihar and IP Extension stand juxtaposed to plotted row house colonies. A notable phase in the evolution of this region’s real estate development have been the Commonwealth Games Village and the host of infrastructure improvements it brought with it. These have added significantly to the lifestyle quotient of this residential corridor, which has one of the highest population densities in Delhi.

The relatively recent development of the residential cluster of Dwarka actually began around 15 years ago, when it was promoted as an upcoming residential destination. The cooperative housing societies planned there were expected to address, at least partially, the exploding demand for housing in the city. Over the last decade, Dwarka has been added to the Delhi real estate map as a thriving residential cluster that offers the advantages of proximity to the airport as well as the established office corridor of Gurgaon. These factors have added to Dwarka’s attractiveness to home buyers.

South Delhi has its own distinct identity, with big, lavish houses sharing walls and boundaries with urban villages. It continues to be the address of choice for the swish set, to whom an address there represents a signal of having arrived in life. Limited plots have fueled real estate prices in South Delhi, and independent designer floors are the configuration of choice by both developers and buyers to yield maximum monetary benefit.

The district centers of Jasola and Saket have added more office space inventory to the traditional office hub of Nehru Place and office space uptake in the Okhla and Mathura Road industrial clusters. This has led to a spurt in commercial real estate demand and also established business destination addresses for corporates who were averse to operating out of the suburbs.

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Gurgaon and Noida


The suburbs of Gurgaon and Noida emerged as alternative office and residential destinations to the prime city, owing largely to their relative affordability. Residential real estate growth in these clusters was a by-product of the commercial office development, which catalyzed the residential property boom in these markets. Today, they together account for almost 90% to the new residential units that are added to the NCR residential market.

With the massive white-collar workforce employed in Gurgaon and to a lesser extent in Noida, commuting time to work is a vital factor in real estate decisions. This is the primary driver for the demand for accommodation in these clusters. The considerable availability of land banks has boosted the creation of these urban agglomerations on Delhi’s periphery. A mix of office and residential projects has brought the skyline closer, while the prime city maintains its inherent structure – albeit cosmetically enhanced in response to the need of changing times and trends.

Today, Delhi’s landscape has also been transformed by the Metro which spans the entire city. This major infrastructure enhancement has once again vitalized property development – and, in turn, added value to real estate assets in the city. Continuing land availability limitations and stringent FSI norms mean that the future commercial office space development will be increasingly restricted.

Residential demand will continue to grow exponentially, and the results can be seen in the various residential apartment projects being launched by the DDA. Also, the fact that a host of Government agencies such as the Railways and the Transport Authority are monetizing their land holdings will yield a lot of mixed-use real estate around the city, as the demand for office and residential accommodation shows no signs of abating.

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Office and Residential Values !!

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Residential rentals moved up 11% in Q2-11 in Delhi and NCR



Rentals for the Delhi and NCR region have seen an appreciation if we compare rents of a 3BHK residential apartment in Q2-11(Apr-May-Jun 2011) over Q2-10(Apr-May-June 2010). Though the rate of appreciation differs according to localities, there are enough localities which have witnessed double digit growths.

Commenting on the same Vineet Singh, Business Head, 99acres.com said “As far as rental trends for Delhi are concerned, the market will continue to see an upward movement. Although the Indian economy is still growing at a healthy pace, the jittery global markets may see some slowdown effect on the Indian market as well. Coupled with the already slow new project market and delayed construction of ongoing projects means that rentals will continue to escalate.”

A look at the rental prices of a 3BHK house in key localities of South Delhi and Dwarka shows that the residential areas of Kalkaji and Sector 6 Dwarka witnessed maximum appreciation. Both these areas have respectively witnessed 13% rise in rentals in Q2-11 over Q2-10. Other important localities of South Delhi like Greater Kailash, Saket and Malviya Nagar saw rentals appreciate by 9%, 7% and 6% respectively. The rentals in the Dwarka region have appreciated by 9% over a period of one year with Sector 12, 18 and 4 witnessing a 10% rise in rentals in Q2-11 over Q2-10.
Other important residential localities of Delhi like Rohini in the North and Mayur Vihar in the East also saw escalations in rentals by 26% and 13% respectively in Q2-11 over Q2-10. IP extension in East Delhi saw steady rentals while Janakpuri saw 4% appreciation in rentals in Q2-11 over Q2-10.


Most of the localities of the Noida and Ghaziabad region have seen double digit appreciation in rentals. Key areas of Noida like Sector 62, Sector 61, Sector 93, and Sector 82 have seen rentals escalating within the range of 14% to 26% over a period of one year. In Ghaziabad area, Vaishali saw maximum appreciation with 19% rise in rentals in Q2-11 over Q2-10.



All important localities of Gurgaon saw double digit rental growth. Important residential localities like Sector 56, Nirvana Country and Sohna Road saw 19%, 15% and 13% rise in their rentals in Q2-11 as compared to Q2-10. Both Sector 52 and Sushant Lok witnessed 14% rise in rentals over the same time period.

Therefore, while Delhi has witnessed a substantial appreciation in rentals, the NCR region (Gurgaon and Noida) has seen far higher growth. On a national level, when we look at rentals across the other important cities of the country, then residential rentals in Mumbai moved up by 9%, Delhi by 11 %, and Pune saw flat residential rental rates.


- IIFT

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वर्षो बाद भी छह सेक्टरों में बाजार नहीं


ग्रेटर नोएडा : शहर के विकास के लिए प्राधिकरण नए सेक्टरों का निर्माण तो करा रहा है, लेकिन वर्षो पूर्व बसाए गए सेक्टरों में बाजार का निर्माण कराने को उदासीन रवैया अपनाए हुए हैं। प्राधिकरण की उदासीनता से छह सेक्टर बाजार की सुविधा से अछूते हैं। बाजार की सुविधा न होने से लोगों को छोटा-छोटा सामान खरीदने के लिए कई किलोमीटर जाना होता है।

प्राधिकरण ने सिग्मा, सेक्टर 36, 37, स्वर्ण नगरी, जीटा, ईटा, पाई, आदि सेक्टरों का निर्माण कराया गया है। सेक्टर में बड़ी संख्या में लोगों ने रहना शुरू कर दिया है। सालों बाद भी मूलभूत सुविधा बाजार के निर्माण पर ध्यान नहीं दिया जा रहा है। इन सेक्टरों के विकास पर ध्यान नही देने से सेक्टर के लोगों में प्राधिकरण के प्रति भारी नाराजगी है। स्वर्ण नगरी के राजीव का कहना है प्राधिकरण ने सेक्टर में जल्द ही बाजार की सुविधा देने का वादा किया था। बाजार तो बना दिया, लेकिन उनमें दुकानें नहीं खुल रही हैं। दुकान न खोलने वालों के खिलाफ प्राधिकरण कोई कार्रवाई नहीं कर रहा है। छोटा छोटा सामान लेने के लिए भी चार से पांच किलोमीटर दूर जाना पड़ता है। प्राथमिक सुविधाएं नहीं होने से सेक्टर में नए लोग नहीं आ रहे हैं। सेक्टर में रहने वाले पुराने लोग भी मकानों में ताला बंद कर या किराए पर देकर जा रहे हैं। सेक्टर-36 के महेश भाटी व सुमन का कहना है परिवहन के साधनों की सुविधा नहीं होने से यह दिक्कत और बढ़ जाती है। सब्जी लेने तक के लिए दूर जाना पड़ता है। बाजार अधिक दूर होने के कारण हर बार बाजार जाने पर पैसों का काफी नुकसान होता है। इस लिए एक बार में ही हफ्ते भर का सामान लाना पड़ता है। घर पर अगर कोई मेहमान आ जाए तो सामान लेने के लिए भागना पड़ता है। दिन के वक्त तो किसी तरह काम चल जाता है लेकिन रात होने पर दिक्कत बढ़ जाती है। कई वर्ष बाद भी प्राधिकरण द्वारा सेक्टरों में बाजार की सुविधा पर कोई ध्यान नहीं दिया जा रहा है। जिस कारण सेक्टर के लोगों में प्राधिकरण के प्रति भारी नाराजगी है।

-Dainik Jagran

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Real Estate Financing and Investments – Market Predictions For The Next 12 Months - JLL

The only constant is change. This has been an axiomatic truth for the Indian real estate market over the last 24 months, with volatility having become a byword to describe it. There has been little or no respite from this state of flux.

The US and European debt worries have added to the uncertainty. Over the last two months, the Indian real estate market has been beset by reduced growth expectations a potential tightening of the liquidity squeeze. This is an unsettling time for the market, and obviously for real estate investors as well. Are we looking at 2008 all over again?

With the escalating global liquidity issues, these are challenging times. Over the next 12 months, we definitely expect these sentiments to reflect in the financial profile of the Indian real estate sector. Banks will enforce selective lending with stricter verifications. Interest rates will stabilize, but liquidity will continue to be tight and the disbursal rate of home loans is bound to reduce.

Developers will be under pressure to reduce their debt-to-equity ratios. Fundraising through the QIP route will reduce, and we are going to see a decrease in real estate IPOs. Considering the current liquidity crunch, the proceeds from existing IPOs will be fully utilized for the completion of projects and repayment of debt.

These dynamics are going to lead to a very clear segregation of the sheep from the goats. In other words, listed developers with better disclosure standards, good corporate governance, better speed of project delivery and records of consistent dividend payments will see better share price performance. Simultaneously, the distressed projects of smaller developers will be acquired by medium-to-large players at prices that will be significantly lower than their original valuations.

With banks and institutional lenders becoming more cautious about lending to the real estate sector, demand for capital from private equity funds and NBFCs will increase. Meanwhile, the risk appetite of private equity investors will reduce further. Those that will continue to invest will display a preference for core and core-plus type investments, and smaller residential projects within and in close proximity to the city limits of our metros. Realty funds are expected to focus more on HNIs and family offices in domestic markets for fund raising.

The high interest rates, increase in vacancy and demand slowdown will impact the earnings of developers. A natural consequence will be a slowdown of construction activity, leading to fewer new launches, and also delayed project delivery. Once again, we are going to see developers resorting to the a volume-led strategy rather than focusing on margins. )In this respect, at least, the scenario that is strongly reminiscent of 2008-2009.)

Margins will in any case be squeezed by the increased construction costs brought on by inflation. This means that a number of developers will miss their pre-launch targets. We are likely to see pre-launch projects coming with at 10% to 15% discount over the pricing of other projects in the same areas.

Nevertheless, unsold residential stock will increase further. Many developers will sell their non-core land and divest their stakes in non-core businesses such as hospitality and retail. Given the proposed land acquisition bill and impacted funding scenario, developers will go slow on land banking and focus on the joint development route.

Significantly, SEBI is expected to come out with a separate set of guidelines to regulate real estate private equity and FDI into the real estate market. The objective of this increased scrutiny is obviously to reduce the incidences of real estate being used as a tax haven. The RBI is also expected to review its standpoint on standard provisioning and risk weightages for loans to the real estate sector, and lay out tougher due diligence standards for banks with regards to sanctioning loans to the sector.

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Real estate project delays: Some of the options available to buyers to sort problems
-realtyverticals

Over 50,000 flat buyers in the National Capital Region's Noida Extension area are spending sleepless nights after the recent court rulings, which have put their life's investments in jeopardy. While such a situation can be considered a rarity, there are many other smaller, but damaging, issues that can crop up between the time you book a house and move into it.

The most common problem facing property buyers today isproject delays that can stretch to several years. While most builders have a penalty clause for delays, it is only a fraction of the EMI you pay for your home loan-about Rs 5 per sq ft per month. Then there are issues like building plans being changed midway through the construction, or common facilities falling short of expectations.

At times, banks refuse to disburse loans after buyers have made the initial down payment. So, what are the options available to a buyer in such situations? While legal recourse may seem to be the only viable option, there are other alternatives that can be explored. Even if you have to go to court, being prepared to present your case and deal with the builder's legal team will help in getting a favourable judgement.

Getting your money back is not easy

Ideally, freeing your money from one project and investing it in another would be the best choice, but it is not as simple in reality. None of the developers approached byET Wealth was willing to talk on record about their policy on refunds. "We have a standard policy on refunds, which compares with the best in the industry," is all a spokesperson for one of the builders said.

Most builders discourage cancellations, but if buyers insist, they refund the money after deducting 10-15% of the total value of the property. While some may deduct 10% of the booking amount, others quote the same figure on the 'cost of property'. Smaller developers may even forfeit the entire booking amount.

There is no standard guideline for refunds and most developers insist that once you have signed the sale agreement, you are legally bound to follow it. Little surprise then that these agreements always favour the builders when it comes to cancellations. Consider the sale agreement of a recently launched project in the NCR: "A request for cancellation can be made at any time after allotment. It may, however, be noted that the earnest money (10% of the total consideration) will be forfeited, as the same is non-refundable."

In case of a change in layout plans too, there are no clear guidelines. Generally, the pacts mention that the floor plan cannot change by more than 10% of the super area, but they are mute on the project layout plan. So the customers are at the builders' mercy on changes in the site layout.
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How to approach the builder for a refund

Start early. Do your homework before booking a flat. As the cancellation fee varies, shop around before signing the cheque. Avoid paying the booking amount in cash as some developers delay providing the receipt till you pay the full booking amount. If the rest of the amount is in the form of a cheque or demand draft, the builder may issue a receipt for this amount alone, claiming to adjust the cash in the balance payment. Insist on a receipt for the full amount. When you get the sale deed, ask the builder to specify the deduction if you decide to cancel the booking at a later date.

What if you want to cancel after the booking? Approach the builder with a 'genuine' reason for cancellation. A developer is more open to concessions on humanitarian grounds like an unapproved home loan or job loss rather than ones that highlight his shortcomings. Also, remember to check the fine print in your sale agreement before going to the developer. While many builders are shrewd enough to introduce a forfeiture clause, allowing a refund for cancellation only after a deduction from the booking amount, many have realised it now and talk about a 'new company policy'. In such cases, original documents will prove handy and sometimes all it takes is a legal notice to get the refund.

If you don't get the refund

If, despite your best efforts, the developer refuses to pay the refund, what do you do? Explore the option of shifting to a complete or nearly complete project by the same developer. Usually, such transfers don't involve any deduction by the builder.

The other option is to use the power of numbers. Finding other aggrieved buyers in the project will not be difficult and negotiating as a group can force the developer to speed up construction or offer discounts. DLF, for instance, was forced to offer discounts to its existing buyers at its Chennai project after a buyer group threatened to cancel bookings.

If the group of buyers is large enough, you can involve a high-ranking government official or political representative to push your case. Early this year, the Resident Welfare Association of a Gurgaon-based project approached the deputy commissioner in the region complaining about the poor quality of amenities provided by their builder. The latter gave in to the residents' demands eventually.

Dealing with the bank

Even after a loan is sanctioned, banks may refuse to disburse the balance amount to the builder. In such situations, the first option should be to speak to the bank and the developer to resolve the issue. In case of a specific bank-related complaint, one can approach the banking ombudsman (BO) of the area where the bank's branch is situated. The list of ombudsmen can be obtained from the RBI's website (Reserve Bank of India - India's Central Bank). However, before lodging your complaint against any bank, you are required to file the complaint with the bank in writing and wait for at least 30 days. If your request is rejected by the bank or you do not get a satisfactory reply, you can file the complaint before 30 days.
Make sure that you file your complaint with the BO within one year of the receipt of any response from the bank against your complaint. The complaint can be filed either through e-mail or can be sent through regular post. No fee is payable for filing the complaint. After receiving the award from the BO, the complainant and the bank both have two choices. Either you can accept the award in full or file an appeal against the order before the appellate authority within 30 days from the receipt of the order. You can also approach any other legal forum like a consumer forum or a court of law.

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How to avoid getting into trouble

To start with, do not stretch yourself to take a loan. This will help you avoid getting into a financial mess if your project is delayed or cancelled. "Project delays of 6-12 months are fairly common. Even if one takes the legal recourse against the builder, there is no other way to force him to speed up construction. So a buyer must plan according to some delay," says Kartik Varma, co-founder, PropTiger.

Check the builder's record. Property brokers in the locality can help you in this case. Projects approved by reputed banks are usually on a better footing as far as due diligence for the property is concerned. Also, looking at ratings offered by agencies like Crisil can be an option, but not the only one. Avoid booking properties at pre-launch or at an early stage when all approvals are not in place. While one can stand to make good gains if the project goes well, they carry a higher risk.

Also, do not ignore the buyer agreement. "Reading it should be made mandatory for buyers before booking a property, and like the MRP on a product, builders should be asked to display these at each point of sale," says Manoj Misra, MD, AUGTICS Systems and Services, which conducts consumer-focusedreal estate studies. Finally, don't go by the glossy brochures or the promises of a salesperson or broker (see Before signing a contract with the developer...).

How project delays can hurt taxpayers

The cancelled projects in Noida highlight the risks in real estate, but even delayed projects can lead to losses for taxpayers.

When Rajeev Bansal sold a house four years ago, he made huge capital gains of over Rs 40 lakh. However, the 38-year-old Pune-based manager in an MNC claimed tax exemption under Section 54F by booking an apartment in a newly launched project on the outskirts of Pune. Under this Section of the Income Tax Act, there is no tax liability if the entire proceeds from the sale of a house are used to buy another residential property. The new property can be bought up to one year before or two years after the sale of the house. In case the house is being constructed, there is a three-year window. The taxman is lenient because real estate is not something you can purchase over the counter. It takes time to identify a suitable property, arrange the funds and get the paperwork done. In Bansal's case, the property was to be handed over to him in June 2009, a year-and-a-half after the sale. "I thought it was a comfortable margin of close to six months," he says. He was wrong. Buffetted by the slowdown of 2008 and the severe cash crunch that followed, the builder was not able to complete the project on schedule. The possession was handed over only this year.

The delay has landed Bansal in a quandary. He got a notice from the Income Tax Department, demanding a tax of Rs 8.25 lakh for the Rs 41.25 lakh capital gains he had made on the sale of the house. The department contends that merely booking a flat has not made Bansal 100% owner of the property and, therefore, he cannot claim exemption under Section 54F. "I have been slapped with a huge tax liability because the builder was not able to finish the construction on time," he says.

There have been several such cases in the past where delays have led to tax notices. However, in most cases, the taxpayer has been allowed the exemption. "If substantial construction work has been done and the entire proceeds from the sale have been invested in the new property, the assessee is deemed to have complied with the provisions of Section 54F," says Minal Agarwal, partner in Delhi-based firm Mahesh K Agarwal and Co. She points out that the taxpayer cannot be denied the exemption merely because the builder failed to hand over possession within the stipulated period.

Bansal has appealed against the tax demand and hopes that the tribunal will rule in his favour. However, he could have avoided this mess by investing in a ready-to-move-in property. "If you are looking for the Section 54F exemption, buy a property that is ready for possession. Don't buy in a project that has just been launched and could take more than the window of 36 months to complete," advises Sudhir Kaushik, co-founder and CFO of Taxspanner.com. It is always best to buy property from a reputed builder. If you buy in a project that gets scrapped after a legal row, you can be in serious tax trouble. At least Bansal can argue his case that the capital gains have been reinvested in residential property.

The other option is to invest in the capital gains bonds issued by government agencies. You can invest a minimum of Rs 10,000 and a maximum of `50 lakh in these bonds in a financial year to save the capital gains tax under Section 54EC. However, this has to be done within six months of selling the property.

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