Real estate developers lean on technology to cut construction costs
NEW DELHI: Builders across the country are increasingly turning to technology to offset the sharp rise in the cost of construction amid a slowdown in sales.
Some real estate developers are investing in plants to manufacture pre-fabricated walls and ceilings while others are bringing in methods that not only double the pace of construction but also reduce the requirement of precious steel. The innovations follow the sharp slide in margins of developers over the past few quarters.
Developers are finding various ways to reduce cost, says Sanjay Dutt, executive managing director, south Asia at property advisory firm Cushman & Wakefield. The cost of inputs such as cement and steel has risen by 35-40 per cent over the past two years and labour rates have more than doubled.
"Margins are down by 50 per cent for us because of higher commodity prices and slower home sales," says RK Arora, managing director of Noida-based builder Supertech, which has invested Rs 200 crore to set up a plant in neighbouring Greater Noida to produce standardised pre-fabricated walls and slabs.
"Pre-fabrication is done in a controlled environment, so quality and finishing are better," says Harleen Oberoi, executive director, project and construction management at construction services firm AECOM, "It also reduces the need for labour considerably." Pre-fabrication allows developers to save 15-20 per cent of construction cost and as much as 40 per cent of time.
"If we can manage to finish on time, we will be able to maintain our margins," says Shaishav Dharia, head of strategy at the Mumbai-based Lodha group. The company is focusing on setting up a more reliable supply chain that would minimise delays. In its township project in the Mumbai suburb of Dombivali, the company has started using lightweight blocks, which are 15-20 per cent lighter and reduce the use of steel and cement by 10-20 per cent. "This is a straight 2-4 per cent addition to our margins," says Dharia.
Lightweight blocks require 5 kg steel per sq ft compared with 6 kg in the case of regular bricks. This translates to a saving of about Rs 50 per sq ft coupled with the reduction in labour costs. Moreover, the supply of regular bricks is not reliable, especially in Maharashtra. Labour costs account for 35-40 per cent of a project today, as daily wages for an unskilled labourer have gone up to Rs 200 from about Rs 100 two years ago and Rs 500 for a skilled labourer, up from Rs 250.
Lodha and Supertech are building high-rises in Mumbai and Noida, respectively, where conventional building techniques would result in time and cost overruns.
To speed up construction, the two builders have invested in new shuttering technology that helps them complete a slab in a building in seven-eight days, compared with almost a month required in the conventional method.
Shuttering is the mould used to set concrete in a building and this new variety is lighter and can be moved automatically from one floor to another, requiring 70 per cent less labour.
Billionaires cool on London property as rich-bashing grows
London: The love affair between the global super-rich and London property is souring as UK politicians tap into a mood of public resentment of the wealthy, with tax increases and rhetoric playing up their own humble origins.
Prices of homes costing more than 10 million pounds ($16 million) have risen 56 percent since 2007 as overseas investors park money in the relative safety of London bricks and mortar, with foreign buyers accounting for about a two thirds of deals, a report by property consultant Knight Frank shows.
Prices in top neighbourhoods, such as Mayfair and Kensington, will be flat next year after a slowdown that began in March with a coalition government budget that included a proposed mansion tax, Knight Frank said on Friday.
Alex Michelin, founding partner of luxury developer Finchatton, said: A 3.5 million pound house in Chelsea was put on sale in March, but interest cooled rapidly after the budget. It was like the buyers disappeared into quicksand.
Last month's sale of a property called Gordon House to developers the Candy Brothers was a key test of appetite because of the high asking price of 75 million pounds. It was bought for closer to 65 million, three sources told Reuters.
Personal wealth is a divisive issue in British politics, with Conservative Prime Minister David Cameron frequently under attack for his privileged upbringing, while many in the country suffer under austerity measures. Cameron is the latest in a long line of British prime ministers to have attended Eton, one of the UK's top fee-paying schools.
Ed Miliband, leader of the opposition Labour Party, featured in a political broadcast on Tuesday that emphasised his state-school background, despite subsequent reports that his Primrose Hill home is worth 1.6 million pounds.
Last year's opening of the luxury One Hyde Park development n ear Harrods department store, with accompanying tales of stamp duty avoidance and opulent second homes sitting empty, helped to spark the government scrutiny, two sources told Reuters.
The March budget introduced a 15 percent rate of stamp duty for purchases of more than 2 million pounds through a company - a method commonly used by wealthy buyers to avoid paying stamp duty and remain anonymous.
It also launched a consultation process on plans to levy an annual charge on properties worth more than 2 million pounds and extend capital gains tax to include overseas individuals who buy property through companies. The government hopes to impose the charge from April next year.
The consultation period ends on Tuesday, but uncertainty has put a brake on the market, particularly for homes costing between 2 million pounds and 5 million pounds. Buyers of properties in this range tend to be less able to pay the extra taxes, Knight Frank said.
Opponents of the tax increases say that the influx of the super-rich, many of whom come from Russia, Eastern Europe and the Middle East, benefits the economy because they spend money in local businesses.
For Nick Clegg (Lib Dem leader and deputy prime minister) to stamp on successful people buying property in London is a short-sighted mistake, said Michelin, who will expand into New York and the south of France because of the uncertainty.
Many buyers are sitting on the fence until the picture clears, said Damian Bloom, a London-based partner at law firm Berwin Leighton Paisner, who specialises in the tax affairs of the super wealthy.
George Osborne (the Chancellor of the Exchequer) would have to make an awful lot of speeches about how wonderful London is to counteract the fact that when clients pick up the phone to say 'I want to buy a house', the first thing they do is hit a whole load of problems, Bloom said.
A slowdown in the market, however, would be welcomed by those who argue that the chasm in living standards is morally repugnant and exacerbates a housing shortage in London.
The Smith Institute, a left-leaning think tank, found in July that many areas of inner London have become prohibitively expensive for local residents and too many luxury flats remain empty and treated as lucrative investments.
Much of London's continuing appeal lies in the fact that wealthy foreigners are not taxed on their overseas wealth if they are not domiciled in the UK, though recent policies impose a levy of up to 50,000 pounds on longer-term residents.
Buyers are also still attracted to London because it is outside the euro zone and alternatives such as France have become even more unwelcoming to the rich after the election of left-wing Prime Minister Francois Hollande.
The London slowdown could be temporary as buyers wait for the outcome of the consultation and seek loopholes in the new laws, said Sophie Dworetzsky, a partner at law firm Withers.
What might be happening is everyone's taking a bit of a break while they figure out what they can do in terms of (ownership) structures. It might just be a lull before it kicks off again.
Court stay on construction in Noida sectors makes investors wary
Noida: A day after the Allahabad High Court stayed construction in sectors 75 and 120 of Noida, flat buyers and builders are worried that investor confidence, which had been restored after a NCRPB clearance signalled the resumption of work in neighbouring Noida Extension, will now nosedive again.
The High Court on Wednesday stayed work and ask the Noida Authority to file its response as to how it allotted land to builders in these two sectors without completing the process of acquiring the land from the farmers concerned.
The stay covers 120 hectares of land in Sarfabad village and has put on hold the work of six builders.
Representatives of the Amrapali Group, one of the six builders affected, said, “On our part, there is no wrongdoing. The land was given to us after we completed due processes. However, since the court has posed some questions to the Noida Authority, we will now have to wait and see. The stay will definitely hurt investor confidence. Even though the area is not in Noida Extension, where work was stopped for a year-and-a-half, buyers have started looking at this entire area with suspicion.”
Rajeev Agarwal, who has a plot in Gardenia Estate, another affected site, said, “So far, I was relieved that the land acquisition issue was mainly confined to Noida Extension. In Noida, the problems were sorted out pretty quickly and farmers got their compensation. But this stay has raised doubts again. I do not know if the Noida Authority will come up with an answer in court. If they don’t, and the court quashes the acquisition, I don’t know what I will do.”
While officials in the Noida Authority refused to divulge details of what will form their reply to court, they said they “respected the opinion of the court”.
“The court has said this is “matter of law”. Hence, it is not right to comment on the issue. However, a reply will be given to the court in the allotted two weeks and we are hopeful of a positive verdict,” an official of Noida Authority said.
Meanwhile, farmers of Sarfabad village welcomed the court’s directions. Ramesh Yadav, a farmer said, “We had planned a protest on Thursday in front of the offices of the builders, but called that off after the High Court gave the stay.”
Notwithstanding the fact that the pitrapaksha (annual ceremony for the dead) is on, a large number of prospective homebuyers were thronging the camp offices of several realty firms last Sunday.
The mood was very positive. Piyush Prakash, a banker, was also visiting various camp offices of realty firms with his wife to select a flat at Greater Noida. "Of course, these are the days of pitrapaksh and I am not going to clinch a deal during this period . But, I will finalize the deal soon," Prakash says.
While it is true that the prices of real estate have gone up, the number of genuine buyers is slowly returning to the market, even in this period, which used to be considered rather ominous for any kind of new transaction.
There are several investors and buyers in the market desperately looking to home in on a property despite the high cost of flats. So, what could be the likely scene of realty market in Delhi and the NCR in the coming months? Analysts say that after an extended downturn , demand is slowly picking up. Devinder Gupta, the managing director of Century 21 DGS, says: "Even with the price increase, buyers are coming out and purchasing flats. Maybe, not to the extent seen 18 months ago, but transactions are certainly more than what obtained six months ago when prices were about 10-12 % cheaper than what they are today."
The profile of the buyers has undergone a change in the last few months, Ajay Singhal, the director of NCR-based Avalon, says: "The number of non-resident Indians (NRIs), who formed a major section of the investors, has come down, while domestic buyers like doctors, lawyers and other professionals, and businessmen, are coming into the market."
The demand is more for ready-to-occupy flats, Sanjay Khanna, the director of Kailash Nath Projects Pvt Ltd, says. Some people may be OK waiting for a few months to occupy their flats, but some want it immediately, within weeks, Khanna says. Among them are people who have to settle here because of their jobs.
The number of such people will go up in the coming months. Before bookings in projects that are under construction, customers look for surety of delivery. This is where, perhaps, the track record of the builders comes into play. Devinder Gupta says that while the demand is growing, it is still weak and is only likely to recover in the coming weeks once the festive season kicks in.
On an aggregate, the demand in India's six main markets has declined by around 40% in the past one year. New project launches have seen a drop of nearly 50%. After the strong momentum that residential market attained in 2011, residential property sales declined during the first half of 2012 in all the major cities, particularly in the NCR, Mumbai and Bangalore, as buyers postponed purchases in anticipation of a cut in interest rates.
Wasim Khan, a media professional, seems to be annoyed with realty firms — he says that the builders focus on luxury constructions.
"Their focus has been on big flats. Due to this, the cost of flats has gone beyond the reach of common working people like me. They should also focus on all those who have a budget of not more than Rs 40 lakh. Builders are duty-bound to take care of the interests of those who don't have deep pockets," Khan says.
Realty experts say that while there is no dearth of potential buyers in the market, people are still expecting the prices to go down. This is because the prices had gone up by about 50% or so in the past couple of years. Singhal says: "While it is true that the prices of flats have gone up over the years, buyers must not forget that the cost of construction has been steadily increasing over the last two or three years and the flats that had come up over this period have a high price. Also, land is a major component pushing up the prices while labour costs are also increasing by the day."
In the last few years, property prices have risen mainly due to speculation . A senior official of a realty company says they have had a few cancellations in some of his company's projects as buyers were expecting a discount. But that does not affect the business here.
Are banks also playing spoilt sport in the realty market? Experts say that at times, even after they promise to give housing loans, banks hesitate in releasing the final instalments for even completed projects. This creates a financial crisis for customers and the negative feedback keeps away other genuine buyers.
Realty players in Delhi are now trying every trick in the book to lure commercial real estate buyers. Due to the astronomical prices, commercial properties are facing a tough time in attracting investments across the country. But, all the stakeholders are pinning their hopes on the forthcoming festive season to lift sales and bring cheer to the realty sector.
Sarfabad farmers stop work on housing projects in Noida
NOIDA: Over a hundred farmers disrupted construction work on residential project sites of several developers in Sectors 75 and 120 of Noida on Sunday. The protests by farmers was a result of a stay order granted by the Allahabad high court on projects in the area after petitions alleged that builders were allotted land even though the acquisition process has not been completed.
The Noida Authority had said last week that it would halt construction work after conducting a survey to find out which projects have been affected by the court order. However, as work continued as usual, farmers from Sarfabad village, who had filed the petition in the court seeking the land back, disrupted construction of the projects.
"Construction work should halt immediately since the high court has issued a stay order on projects over land whose ownership is still legally with us," said Dharampal Yadav, a farmer from Sarfabad. "We have demanded our land back and do not want to give it to the Authority," he added.
Farmers alleged that the manner in which lease deeds for land in these sectors were executed, even as the land acquisition process is not fully complete, is a clear case of connivance between Authority officials and builders.
The agitation came to and end after police intervention. Cops from Sector 49 police station reached the spot and dissuaded the farmers from their protests. Police advised the managers at the construction sites to meet Noida Authority officials on Monday and decide on the course of action to be adopted as per the court orders.
NOIDA: With no signs of electricity outages abating in Ghaziabad and Gautam Budh Nagar districts and tired of empty promises given by the power corporation, residents of Greater Noida have threatened that they will stop paying bills if the situation fails to improve.
After facing repeated power cuts on Sunday, patience seems to have run out of Greater Noida residents. "We have been braving regular load-shedding schedules for several years irrespective of change in electricity generation," said Col (Retd) Y C Mishra, president of the Jal Vayu Vihar RWA in Greater Noida. "Our repeated requests to the discom have fallen on deaf ears. If adequate supply is not ensured, we will stop paying bills," said KP Singh Tomar of the Federation of Greater Noida RWAs.
In Ghaziabad, where several residents of housing societies and highrises are engaged in professional activities and need computers and internet, erratic power supply has been an obstacle to meet the demands of their jobs. "We have been pushed to the dark ages. People working out of their homes have been severely affected," said Dr Salil Gupta, a PhD-holder in Physics working in the content development industry, resident of Vaishali. "Research and review work, which I generally undertake at home, has been severely curtailed because I can't use the internet," he said.
"My family keeps complaining about the poor power situation, but I can hardly do anything as I am posted out of town," said Lt Col Samar Singh, a resident of Indirapuram. "The power corporation, in any case, has multiple excuses at its disposal and the situation never improves despite promises," added Singh.
The RWA Federation of Ghaziabad held a meeting of all its members on Sunday and decided that they would take some major action regarding the power crisis from October 15. "Even as bill amounts have risen by around 30%, supply has gone from bad to worse," said Col (Retd) Tejander Pal Tyagi, president of Ghaziabad RWAs. "We will ask the discom to leave the city if it fails to improve the situation," he added.
Noida residents have threatened of a dharna against the power corporation next week. Residents allege that the announcement of the state government about plans for three new power generation projects last week is nothing but a farce. "These are, at best, long-time projects which will take several years to complete. The government should not expect us to live in darkness until then," said N P Singh, president of Federation of Noida RWAs. "If there is no respite from outages, we will take to protests on the streets," he added.
Published on 08 Oct-2012
जब्ती की प्रक्रिया के दौरान संपत्ति बेचना अवैध
सुप्रीम कोर्ट ने एक अहम फैसले में कहा कि सरकारी एजेंसी द्वारा किसी संपत्ति की जब्ती प्रक्रिया के दौरान उसे बेचना अवैध है। नए मालिक का यह कहकर भी उस पर दावा नहीं बनता है कि उसने विश्वास में आकर संपत्ति खरीदी। जस्टिस आरएम लोढ़ा और एआर दवे की बेंच ने कहा कि सरकारी एजेंसी की ओर से संपत्ति की जब्ती के लिए नोटिस जारी होने के बाद संपत्ति मालिक उसे किसी को बेच नहीं सकता।
बेंच ने कहा, 'इस तरह की बिक्री अमान्य है। कानून के तहत, खरीदार के पास उस संपत्ति पर दावा करने का कोई अधिकार नहीं है।' यह फैसला विंस्टन टैन की एक याचिका पर आया है। उन्होंने कोर्ट से अनुरोध किया था कि वह प्रवर्तन निदेशालय को बेंगलुरू के फ्लैट का पजेशन उसे देने के निर्देश दे। दरअसल, यह फ्लैट इस्माईल शाबंडारी का है। उसे 92 लाख रुपए के साथ दुबई में पकड़ा गया था।
विदेशी मुद्रा एवं तस्करी निरोध एक्ट के तहत कार्रवाई करते हुए ईडी ने फ्लैट की जब्ती का नोटिस जारी किया था। नोटिस की जानकारी छिपाते हुए शाबंडारी ने फ्लैट विंस्टन को बेच दिया। विंस्टन जब पजेशन लेने गए तो उन्हें नोटिस का पता चला।
बेंच ने कहा, 'यह सच है कि विंस्टन ने सब-रजिस्ट्रार से फ्लैट खरीदने से पहले सर्टिफिकेट हासिल किए। विजया बैंक से लोन लिया। लेकिन दुर्भाग्य से यह तथ्य उनकी कोई मदद नहीं कर सकते। क्योंकि यह फ्लैट ईडी की ओर से नोटिस जारी होने के बाद खरीदा गया।'
Source: Dainik Bhaskar