Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Originally Posted by realacres
    Correct, but this is not true in case of RE for the simple reason that the RE prices increased more than the savings & increments of the people. Also, the interest rates going up was a dampener on RE.

    Hi realacres,
    I am in agreement with this point of yours. I think, just like you, that real estate prices have overheated and we will see a period of price stagnation or slight correction for some time to come due to this overheating. But expecting a 50% correction is unreasonable given that there is sufficient demand at a lot of price points above the 50% correction range.

    Even if there is a 25-30% correction, it will be for a short duration only, like we saw in 2008/9. A 30% correction will make Real estate in Indian cities like Mumbai, Pune, Bangalore etc undervalued IMO, and a lot of buyers will step in and stabilize the prices. Again, just demand supply behaviour.

    Interest rates will cool off once buying activity reduces and subsequent drop in spending in the economy eases the inflation rate. (bookings are already quite low at the moment)

    Originally Posted by realacres

    Man, due to lack of sales, Honda Jazz prices have been cut from 7.17 L (base model) to now 5.5 L. Honda City (EX) has been made cheaper by 66,000. Now, what Honda understands is not understood by the builders, hence you see drastic drop in sales in RE in past year which has increased in last 2 quarters.

    * Btw, if one applies same logic to cars, due to increase in incomes, the price of Wagon-R should have been equal to Kizashi, right ??

    1. Honda Jazz prices have been cut due to a lot of competition in the B+ segment which have similar offerings at much cheaper prices.

    2. You cannot apply "same logic" to different parts of an economy. The price of Real Estate and cars are hardly analogous. Real estate prices are dependent primarily on the availability of land which is in limited supply, especially in cities. Consider Pune, there are a lot of buyers chasing limited properties in some areas in the cities which leads to price rise. On the other hand, the number of cars an automaker or its competitors can produce is more than enough to satiate existing demand in the market. There is elasticity of supply in autos or any manufactured product for that matter, but not in real estate.

    Moreover, if one carmaker increases its prices beyond reach, there are 10 others who will offer similar products at the earlier price which will ensure that the carmakers keep their prices low. This is not present in Real estate, again going back to my earlier point, because there are limited resources being chased by many.
    CommentQuote
  • Government nod for Pune development plan by month-end

    Another reason to increase price by at least 500/- .

    Government nod for Pune development plan by month-end - Mumbai - DNA

    Chief minister Prithviraj Chavan and his deputy, Ajit Pawar, on Sunday announced that the development plan (DP) of Pune would be approved by the state government by the end of August.
    Both leaders were in the city to inaugurate the Rajiv Gandhi Academy of e-Learning at Shiv Darshan.
    Chavan said the deadlock on whether to allow constructions on hills would be resolved to facilitate the development of Pune. However, he did not spell out whether or not the state government would permit such construction.
    The DP of 2007 of the Pune Municipal Corporation is under uncertainty for several years as the state government has not taken any decision on it. The fate of the hills surrounding Pune is the bone of contention between environmentalists and political parties.
    While the environmentalists want the hills to be reserved as bio-diversity parks, the politicians want permission for partial construction on the hills. Chavan said the state government is looking at a viable alternative to octroi collected by municipal corporations.
    Pawar said sanction of the DP will speed up the development of Pune. Urging Chavan to approve the DP as soon as possible, he hoped that many development projects will get a boost.
    CommentQuote
  • Originally Posted by badanalyst
    Hi realacres,
    I am in agreement with this point of yours. I think, just like you, that real estate prices have overheated and we will see a period of price stagnation or slight correction for some time to come due to this overheating. But expecting a 50% correction is unreasonable given that there is sufficient demand at a lot of price points above the 50% correction range.

    Even if there is a 25-30% correction, it will be for a short duration only, like we saw in 2008/9. A 30% correction will make Real estate in Indian cities like Mumbai, Pune, Bangalore etc undervalued IMO, and a lot of buyers will step in and stabilize the prices. Again, just demand supply behaviour.

    Interest rates will cool off once buying activity reduces and subsequent drop in spending in the economy eases the inflation rate. (bookings are already quite low at the moment)


    1. Honda Jazz prices have been cut due to a lot of competition in the B+ segment which have similar offerings at much cheaper prices.

    2. You cannot apply "same logic" to different parts of an economy. The price of Real Estate and cars are hardly analogous. Real estate prices are dependent primarily on the availability of land which is in limited supply, especially in cities. Consider Pune, there are a lot of buyers chasing limited properties in some areas in the cities which leads to price rise. On the other hand, the number of cars an automaker or its competitors can produce is more than enough to satiate existing demand in the market. There is elasticity of supply in autos or any manufactured product for that matter, but not in real estate.

    Moreover, if one carmaker increases its prices beyond reach, there are 10 others who will offer similar products at the earlier price which will ensure that the carmakers keep their prices low. This is not present in Real estate, again going back to my earlier point, because there are limited resources being chased by many.


    I don't agree on one thing you said. You said, if prices go down by 30% then many people will step into RE sector and buy the flats. Though it happened it past but I don't think so it will keep on happening, because now a days investors don't think RE sector as profitable as it was in last decade and from end user point of view, even 30% corrected property is very costly. I agree, there are few people who have enough cash and already having more than 2-3 properties, but they won't be keen to buy more properties if prices go down because there is no guarantee of return on RE sector. This decade will not be very exciting for RE sector, and if you ask this thing to any market analyst or any one who have studied economics then you may get to know the same thing. Its not purely demand and supply, there is one more factor which is called affordability of end users.
    CommentQuote
  • Originally Posted by BlotJab
    I don't agree on one thing you said. You said, if prices go down by 30% then many people will step into RE sector and buy the flats. Though it happened it past but I don't think so it will keep on happening, because now a days investors don't think RE sector as profitable as it was in last decade and from end user point of view, even 30% corrected property is very costly. I agree, there are few people who have enough cash and already having more than 2-3 properties, but they won't be keen to buy more properties if prices go down because there is no guarantee of return on RE sector. This decade will not be very exciting for RE sector, and if you ask this thing to any market analyst or any one who have studied economics then you may get to know the same thing. Its not purely demand and supply, there is one more factor which is called affordability of end users.

    Hi Blotjab,
    You have made some good points here. I should just firstly clarify that I am no expert on the RE market or even stocks for that matter, but I do have an interest in economics: This is the ideal combination for a bad analyst. My views are fraught with more risks than most others :D

    As regards to people not buying real estate for investment, perhaps you are right. But there is quite a healthy demand from first time home owners as well. Plus, you might be pretty sure that RE is no longer going to give 300-500% returns that we got in 2001-2011, but there are still many out there who will not beleive you, and who do have money.

    I too dont think the RE market can generate those kind of returns anymore, but they should generate approximately 15% appreciation per annum in a fast growing city like Pune - After a correction of about 20-30% ofcourse. I am highly pessimistic on us returning to 2005/06/07 levels unless there is a major recession in the country which seems unlikely for the next decade. Affordability in the economy changes and improves with each year, as more and more people enter the city with decent incomes, and these people may start buying properties in the periphery of Pune, which directly leads to appreciation as you go closer to the city.
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  • There are many people sitting on the fence including first time buyers and I can still see lot of people who have extra cash trying to buy second/third homes(These are the guys who dont care about location , basic amenities etc. as they think that few years down the line these things will get better.)
    Lot of people who dont read forums still think that RE will give manyfold return . Even on this forum u see new threads where ppl are ready to put extravagant amounts for an apartment .
    CommentQuote
  • Originally Posted by suryawork
    There are many people sitting on the fence including first time buyers and I can still see lot of people who have extra cash trying to buy second/third homes(These are the guys who dont care about location , basic amenities etc. as they think that few years down the line these things will get better.)
    Lot of people who dont read forums still think that RE will give manyfold return . Even on this forum u see new threads where ppl are ready to put extravagant amounts for an apartment .


    Yes it is true, but my feeling is that it won't last like this any more. Ultimately we will lead to the situation where group of rich people will have majority of the properties and the cash. And once cash/properties are blocked with some people only, then recession begins. Now what is different in today's world that the cycle time of happening this is reduced. I mean, as soon money flows in the market, investors start investing and making the bubble big but soon they realize that large amount money is still circulating with limited number of people and which again leads to recession and short of money in the market. The only way out of this scenario is one very long recession/depression period, just to make the things uniform. I think, nature also works like this. Whether it is economics rules, or physics rules, if you look around you can see them everywhere.
    CommentQuote
  • Why looking for another recession so desperately? .... thats naive...
    ofcourse it may reduce property prices by 10-15 % (again in dreams, may be).... but other then this small benefit it would have vast side effects...

    even though most of us didnt loose our job in 2008 (excluding few), no one will disagree that the salary hike for 2 years had been just 5% or less or even -ve......that was a hard time indeed....no pramotions, set back in career growth....

    atleast hope for prices to remain stable for a long time, or appreciate at below nominal rate....which will happen, forget about reduction....

    Invitation to recession is like Inviting others to bomb India with 3-4 nukes to reduce Population growth....
    CommentQuote
  • Sorry for delay ...

    Originally Posted by billybob2
    Hey Wise:
    Given the market meltdown...I was expecting a "Told y'all so" from someone who had correctly predicted it.

    Kudos to you for taking the high-road..and also for the correct predictions. (that this will be interesting after QE2).
    Care to share your insights on:
    a. How long do you think this flush is going to last?
    b. Does and if so, when does the 'main-street' India get impacted by this flush
    c. Whats holding the Dollar up. Is it just it is the dwarf amongst midgets (euro and company and yuan-pegging)?

    cheers

    -bb2


    Hey Billybob,

    Long time no see! Hope you are using this time off IREF in making money for the difficult future we are getting into!:D

    Here is what I gather from all around ... and I've held this view for a couple of years now ...

    1. This flush will last maybe a few years more. By this I do not mean it will keep going down only one way. But just as you feel that the last 2-3 years have not really been a roaring bull market (and most people are feeling more uncomfortable now than in 2008), situation will make people feel more and more uncomfortable.

    2. The EU, US are right on the edge of another recession. With the next adjustment we should see retrospective announcement of recession in some of the countries.

    As far as I can see, there is no catalyst for re-starting the boom in these economies UNTIL the bad stuff has been taken care of (huge debts, misallocation of resources, etc). This will take many years and will start accelerating from now on. Main street should get affected as early as 6 months from now to around 12 months. I already know a lot of senior people earning big salaries being told subtly to look out - and their problem is, the market for high-paying jobs is crashing silently!

    As usual, the hit will come silently and in a flash everything will turn from boom to gloom. One should not be surprised when then happens and make plans right away for staying out of trouble. This time, unlike 2008, I expect it to be deep and prolonged, hurting people much more (coupled with high food and fuel inflation)

    3. Yes, the $$$ will ride the weakness of other currencies and remain aloft. But the real fall is seen in the rapid rise in Gold prices Vs the $$$. This shows the REAL declining power of the $$$. It is expected that, eventually, Gold and the DOW will attain parity or 1:1 ratio sometime in the next 5 years or so.


    cheers
    CommentQuote
  • Originally Posted by rajtjrll
    Why looking for another recession so desperately? .... thats naive...
    ofcourse it may reduce property prices by 10-15 % (again in dreams, may be).... but other then this small benefit it would have vast side effects...

    even though most of us didnt loose our job in 2008 (excluding few), no one will disagree that the salary hike for 2 years had been just 5% or less or even -ve......that was a hard time indeed....no pramotions, set back in career growth....

    atleast hope for prices to remain stable for a long time, or appreciate at below nominal rate....which will happen, forget about reduction....

    Invitation to recession is like Inviting others to bomb India with 3-4 nukes to reduce Population growth....


    1) Don't be misunderstood that I am interested in RE sector. I don't invest in RE sector.
    2) Recession and succession period is normal thing in economy, it is not like this that if people think recession is coming and it will come. It depends upon so many factors. Go get some basic economics books and read, you will get to know.
    3) I don't know what do you show others about your current status, but by looking at your words I can say that you are afraid of recession. But my friend, economy works like this, had it not been the case then you would have never got job in India, no IT companies would have been started, America would have been untouched by global economy conditions, no outsourcing would have been happened. But it is not possible.

    5) What I said earlier that if majority of the money gets blocked with some few people then market gets short of money and this situation leads to recession. And this situations is bound to happen after every few years, that will not change whether people predict recession or not.
    CommentQuote
  • Originally Posted by badanalyst
    Hi realacres,

    1. Honda Jazz prices have been cut due to a lot of competition in the B+ segment which have similar offerings at much cheaper prices.

    2. You cannot apply "same logic" to different parts of an economy. The price of Real Estate and cars are hardly analogous. Real estate prices are dependent primarily on the availability of land which is in limited supply, especially in cities. Consider Pune, there are a lot of buyers chasing limited properties in some areas in the cities which leads to price rise. On the other hand, the number of cars an automaker or its competitors can produce is more than enough to satiate existing demand in the market. There is elasticity of supply in autos or any manufactured product for that matter, but not in real estate.

    Moreover, if one carmaker increases its prices beyond reach, there are 10 others who will offer similar products at the earlier price which will ensure that the carmakers keep their prices low. This is not present in Real estate, again going back to my earlier point, because there are limited resources being chased by many.

    Honda Jazz prices have been cut not only due to competition but also due to poor sales. Same goes with Honda City which was the market leader till 2010, now as the sales dropped, the base model prices slashed by 66,000/- !!

    This is just to show that poor demand forces well liquidated company like Honda to cut prices & this is how the company should perform, if value addition in existing line of products doesn't do the job.

    In case of auto too, we can say that there is limited amount of steel, limited petrol/diesel, so why cut prices ?? Man, fact is RE functions more on cartel mechanism rather than logical. Remember Runwal Builders....the one who has project Runwal Seagul, Hadapsar ?? He refused to give land to Amanora which was near the entrance gate of Amanora. Then Supriya Sule...daughter of bobada Pawar filed false cases against the builder using some farmers as proxy & defamed him.

    Problem is excessive hold of NCP in Mah & Congress in NCR which has helped crook builders survive for long. One of the major investors in DLF is Robert Vadra, S-I-L of Sonia Maino. These people run after greed than profit & builders therefore sell at reduced rate only when they sink & bank issues notices for defaults.

    See the RE getting hammered in coming quarter. Man, RE & banking sector is the best to keep distance from in stock markets too. The SBI NPAs in RE has crossed INR 13,500 Cr !!
    CommentQuote
  • Delay Hit Home Buyers to Take Legal Action against DLF after CCI Order

    August 22, 2011
    IRN

    At a time when the Anna wave has enthralled the entire nation, capturing imagination and consciousness of millions of Indians to protest against corruption and injustice, real estate - one of the sectors perhaps most vulnerable to fraudulent practices - is facing the wrath of aggrieved buyers. Encouraged by an order of the Competition Commission of India (CCI) against DLF, the largest realty developer, home buyers hit by project delays and sudden change in building plans are considering legal action either through courts or the CCI.

    Lawyers in Delhi, Mumbai, Bangalore and Kolkata have been approached by people whose dream homes remain a distant dream as real estate developers keep postponing projects and missing delivery deadlines. The CCI order has come as a huge boost to those looking for relief as some have decided to move the courts or the CCI, while some others are weighing the options, said lawyers. Law firms have started receiving queries from consumers on how they could seek intervention of the CCI against developers.

    The competition watchdog on Tuesday slapped a penalty of 630 crore on DLF for taking undue advantage of its dominant position in the market. :) The commission found DLF guilty of commencement of residential project The Belaire in Haryana’s Gurgaon without approvals, increasing the number of floors mid-way through the project, delay in project completion, and forfeiture of booking amount of some buyers.

    Customers at Kolkata West International City, an integrated township project spread over 400 acres in the capital of West Bengal, are thinking of approaching the CCI, as the project is far behind its delivery timeline. Even the first phase of the project, scheduled to be delivered in 2008, is yet to be completed.

    “We did not move court till now because we did not want to get into legal complications. Not even consumer court because the flats are not yet ready. Some of us who have been given possession letter have approached consumer court but a verdict is yet to be out. On the contrary, we have approached West Bengal government seeking their intervention in the subject. Now, we and our lawyers plan and take a call on approaching CCI in a week’s time,” said KWIC Buyer’s Welfare Association president Abhay Upadhyay. The project, which is a mix of housing and commercial establishments, is being developed by the Salim Group of Indonesia and the Universal Success Group of Singapore, with support from the Kolkata Metropolitan Development Authority.

    In a similar such instance, a home buyer Shahnawaz Deriya, along with a group of customers at residential project Sagar City in Andheri suburb of Mumbai, has been fighting for over a year against the builder Cordcon Constructions for delay in delivery for four years. The group has already filed a case in the State Consumer Court, but is now seeking legal opinion to get the intervention of the CCI against the developer. “Yes, we are handling few inquiries that have come after the CCI’s order on DLF,” said H Jayesh, Founder & Partner at law firm Juris Corp.
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  • After DLF, CCI Likely to Probe Unitech, Parsvnath & Omaxe

    August 20, 2011
    IRN

    Unitech, Parsvnath Developers and Omaxe are likely to face the Director General (DG) investigation in the next one week. The Competition Commission of India (CCI) is likely to order probe on Unitech, Parsvnath and Omaxe based on preliminary investigations which suggest abuse of dominant power by the developers. Several complaints from residents on late delivery of projects and non compliance of agreement by the developers prompted CCI to order the probe, reports ET Now.

    “We have received some complaints from the residents, but these are mainly for delay of the projects and are not the kinds that come under the CCI purview,” said Rohtas Goel, CMD Omaxe. Earlier, CCI had imposed a hefty penalty of Rs 630 crore on DLF Ltd for abusing its dominant market position on a complaint by ‘The Belaire’ association in Gurgaon. The Competition Commission of India (CCI) on Tuesday said the Centre as well as state governments should come out with regulatory frameworks for the realty sector to protect consumers from unfair trade practices.
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  • IT Raids Gurgaon Based Developers M3M’s Offices

    August 20, 2011
    IRN

    A recent raid by income tax sleuths on the offices of a prominent Gurgaon-based realty firm M3M India Ltd yielded Rs 314 crore unaccounted income. Searches, conducted this month, led to the seizure of which revealed many unaccounted transactions for purchase of land and other business activities by the company. This is one of the highest seizures in the region, according to I-T officials. M3M India Holdings, a sister company of the M3M Group, sold 8 lakh shares of another firm of the same group RS Infrastructure Pvt Ltd for Rs 526 crore to Lowe Realty Pvt Ltd, a group concern of Religare, Mumbai, Hindustan Times reported, citing I-T sources.

    M3M India Holding has Basant Bansal, Roop Bansal, Abha Bansal and Punkaj Bansal as partners. The company had 8 lakh shares of RS Infrastructure Pvt Ltd, which also had about 18 acres of land in Golf Course Extension Road, Gurgaon with commercial CLU (change in land use) certificate. The documents showed that M3M India Holdings had already handed over 4,88,000 shares to Lowe Realty Pvt Ltd at Rs 6,575 per share and had received part payment of Rs 240 crore in the current fiscal. The amount was a part of the total transaction of Rs 320 crore and, therefore, was liable to capital gains tax in financial year 2011-12.

    During the search it was found out that the assessee, M3M India Holdings, had manipulated its accounts such that the amount was not shown as income in the current fiscal. While Rs 314 crore had been surrendered, more unaccounted income was likely to be detected on the completion of the case in a fortnight’s time, said YR Saini, director, Directorate of Income Tax (investigation). Apart from the revenue intelligence gathering, a lavish function organised on an island in Turkey by one of the company officials for her daughter’s wedding proved to be a major lead for the I-T sleuths. A huge expenditure was incurred on the marriage, the report added :D.
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  • Complaints Against Pride Purple Group

    FYI,

    New complaints:-

    Pride Purple Real Estate Group Complaints - Dream Home Turns Out To Be a Nightmare

    Older one:-

    http://www.punescoop.com/story/2005/11/23/195922/58


    >> This shows that the builder has not made any improvement in terms of quality & customer care in past 5-6 years .
    CommentQuote
  • http://www.firstpost.com/business/after-dlf-whos-next-cci-targets-delhi-builders-first-67942.html


    The other violations and abuse of consumer rights, according to the CCI, are:

    • They (builders) issue advertisements for launching projects without the land being actually purchased, registered in their names and possession taken and without taking prior approval of competent authorities.

    • Builders don’t specify the total area of the plot/flat/house, indicating clearly the carpet area and utility area.

    • They don’t specify the date of delivery and consequential remedies available to the consumer in case of delay.

    • They don’t deposit the amounts collected from allottees against a particular project in a designated escrow account that will be utilised only for the construction of the concerned building.

    • They don’t inform buyers about the progress of works and status of account of each allottee in a transparent manner.

    • They don’t inform buyers of built-in hidden costs other than the initial set price.

    • They don’t post all the relevant information on the internet and make them available in the public domain. There is no transparent and participatory mechanism put in place to deal with price escalations, if any.

    • In cases of inordinate delays, there is no provision for the payment of pre-determined penalties to buyers.

    • There is no fair, participatory and transparent mechanism to tackle any substantive and major changes in the project mid-way, before taking approval of the authorities for the revised scheme and commencing construction thereon.

    • The agreements don’t include ‘changes’ in FAR, or density per acre, or some common facilities in the category of ‘substantive’ or major changes.
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