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Mumbai Real Estate News
May 11 2013 , 05:53 PM   #671
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Linking Road rents dip by 12% in six months as retailers exit

Mumbai: Overall rentals at Linking Road in Bandra, one of the most expensive high street retail destinations in India, have seen a sharp decline of 12%. The decline is a fallout of the increased availability of rental space in the area due to the exit by a couple of retailers in the past three months, says a report by Cushman and Wakefield (C&W), global property consultants.

In its latest retail report, C&W said that Linking Road witnessed a drop in rentals as several retailers did not value their presence in the location. “Additionally, the location has always grappled with infrastructure issues like road bottlenecks and parking issues. It makes the area less attractive for shoppers, who increasingly prefer malls over Linking Road,” said Jaideep Wahi, director, retail agency, C&W.

Linking Road’s loss was compensated with a 6%-7% increase in rents in Vashi and Ghatkopar in malls during the same period. These two areas have limited quality space. The report said malls in Lower Parel, Malad, Goregaon, Mulund and Thane continue to operate at low vacancies with rentals remaining stable due to low transaction activity. “These locations could witness additional appreciation in the near future due to low vacancy levels. A new mall in Thane is expected during the second quarter,” said the C&W report said.

Overall vacancy levels in malls remained stable in the city even though they dipped to 15.8% in main streets and malls across the country.
May 11 2013 , 06:25 PM   #672
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Salt pans: Builders want to use it commercially, politicians want to rehabilitate slum-dwellers

MUMBAI: In the corridors of power, not many would have heard of the salt department, which functions under the Union ministry of commerce and industry. Yet, in the Mumbai Metropolitan Region, where real estate is worth its weight in gold, the department assumes significance. It controls large tracts of salt pans — in Greater Mumbai alone these lands are spread over 5,500 acres. In a land starved city where even a pocket-sized plot fetches crores, salt pans are seen as a potential land development opportunity for the powerful builders' lobby.

In Pen, about 80-kms from Mumbai, the salt department has been warning the state government about an attempted land grab by a developer, who has plans to set up a township. It alleged that the developer was illegally negotiating with salt cultivators and paying them off. Historically, salt pan lands were leased out to salt manufacturers by the government, who in turn, sub leased them to cultivators. The department says cultivators have no right over the land and cannot negotiate with any third party.

The development of salt pans is a touchy issue. Builders want them to be opened up for commercial exploitation while politicians want these tracts to rehabilitate project-affected persons and slum dwellers. However, the eco-sensitive salt pans fall under the stringent coastal regulation zone (1), which restricts any kind of development. Salt pans are essential for the well-being of the city as they act like sponge pockets to soak in rainwater. The government should let these stretches remain untouched as they are among the last green spaces in Mumbai.

Source:Salt pans: Builders want to use it commercially, politicians want to rehabilitate slum-dwellers - The Times of India
May 13 2013 , 08:28 AM   #673
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Brand Mumbai encompasses city spirit

Inspired by cities such as New York and Melbourne, BMC has undertaken a branding exercise for Mumbai. It has come up with the official theme, 'Majhi Mumbai' (My Mumbai), and a logo to go with it.

"Mumbai is a combination of Mumba Devi, a popular local goddess, and aai, which is the Marathi word for mother. 'Majhi Mumbai' denotes the feeling of motherhood that the city has towards those who live here," said Bhupal Ramnathkar, founder and president of Umbrella Design, the firm that was appointed for the branding exercise.

The logo, which is a combination of black, orange and blue, has an enclosed oval motif denoting a mother's arm carrying a child. "The city has always nurtured everyone with motherly love," said Rahul Shewale, standing committee chairman and Shiv Sena corporator.

This logo, along with the current one, will be used in every official and unofficial work of BMC. The new logo will be used at various places, ranging from letterheads, communication, installations such as flags, pillars, signboards, dustbins, awareness campaigns and major tourist spots.

The logo also encloses orange leaves that denote unity, friendship, happiness, beauty and progress, said Ramnathkar. They have also used blue, which symbolizes the vastness and depth of the sky and sea, a characteristic that the city has, he added.

"The colours represent passion and zeal of this city. Blue symbolises the plethora of opportunities that Mumbai offers. It also conveys the richness of relationships and togetherness. Orange also signifies the rising sun and the victory over odds," says a presentation of the BMC.

"The design personifies Mumbai's culture, heritage, ideology, industrial strength and achievements in business," said Shewale.

Interestingly, each of the 24 wards spread will get a fresh identity by way of separate colour codes. "This colour will be the highlight of that ward. With the extensive use of a specific colour, people will be able to identify each ward. This also gives a feeling of oneness and at the same time, imparts individual identity to a ward and its people," said Shewale.

While Sena strongholds of Dadar and Worli have been assigned saffron, the posh Bandra west ward has been assigned a vibrant pink.

Brand Mumbai encompasses city spirit - Indian Express
May 14 2013 , 10:02 AM   #674
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Public parking area next to 56-storey building 'Palais Royale' not illegal: Bombay HC

MUMBAI: Observing that the public parking space coming up along with a 56-storey building in central Mumbai was not illegal, the Bombay High Court on Monday asked the municipal commissioner to reconsider grant of Floor Space Index (FSI) and other issues pertaining to the building.

A division bench of Chief Justice Mohit Shah and Justice N M Jamdar was hearing a PIL filed by city-based NGO Janhit Manch alleging illegalities in sanctions given for the construction of 'Palais Royale' building and the adjacent public parking lot in Worli.

The 56-storey residential building, supposed to be the tallest building in Mumbai, is being constructed by Shree Ram Urban Infrastructure Ltd (SRBIL).

The court, however, held that there was no illegality in the permissions granted to the public parking lot.

"The public parking lot cannot be held illegal as contended by the petitioner and the Respondent No 5 (SRBIL) cannot be deprived from claiming incentive FSI accrued therefrom for the residential building," the bench said.

It, however, held that the Brihanmumbai Municipal Corporation (BMC) will have to reconsider and rework the entire issue of FSI to be granted to SRBIL.

"We cannot sit with a magnifying glass and scrutinise every inch of the planning permission granted. In the circumstances, instead of we adjudicating the issue regarding the exact calculation of FSI and the area, an exercise which entails specialised knowledge of planning requirements, it will be appropriate if the commissioner is directed to reconsider the issue," the court said.

The bench held that the FSI granted in respect of the refuge area was excessive. "We direct the commissioner to reexamine the said issue and rework the FSI accordingly," the court said.

"As far as the issue of passages, entrance, swimming pool, area over deck and refuge area at the entrance level is concerned, since the corporation has accepted that the FSI under these heads were erroneously granted, the said aspect will be reconsidered by the commissioner," the court said.

Public parking area next to 56-storey building 'Palais Royale' not illegal: Bombay HC - The Economic Times
May 14 2013 , 10:47 AM   #675
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HC upholds govt right to acquire slum land

Bombay High Court last week turned down petitions questioning the constitutional validity of sections of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (the Slum Act) that refer to the government's power to acquire land housing and/or adjoining a slum for redevelopment and compensation for land owners.

"Acquisition of lands under the provisions of the Slum Act is not merely for the benefit of a large number of persons residing in sub-human conditions in slums, but also to ensure that improvement of their living conditions will lead to improvement of the urban economy, which is very much dependent upon the labour force being supplied by the occupants of hutments in slums," Chief Justice Mohit Shah and Justice Anoop Mohta said in their 57-page order.

A group of petitions was filed by persons aggrieved by the state government's notices to acquire their land after terming the plots "slums" under section 14 of the Act. They had been served with notices between 1977 and 1998. They contended that the section grants "unfettered" power to the state government as there is no provision to hear them, pass a reasoned order or file an appeal before a judicial or quasi-judicial authority.

The petitioners also contested section 17 that allegedly awards an "illusory" compensation to land owners. They submitted a table the court, citing cases in which the government acquired 1,575 sq m of land in Bandra and paid Rs 2.16 lakh as compensation to owner Sara D'Mello and 6,438 sq m of land in Parel, for which the owner Nensi Monji received a compensation of Rs 34,992.

Arguing for the state government, senior counsel E P Bharucha, however, told the court that the payment of land's market value to the owners who allowed a slum to thrive on it would defeat the purpose of the Act.

According to section 17 (3) of the Act, the owner of slum land receives compensation at 60 times the net average monthly income derived from the land over five consecutive years immediately preceding the date of the notice for acquisition issued under section 14 of the Act.

The Slum Rehabilitation Authority told the court that "the valuation showed in the ready reckoner of the lands in question is only of the open land on which there is no encumbrance. Hence, the valuation in ready reckoner cannot be treated as valuation of land which is already encroached upon."

The court said if the land owner is aggrieved by the compensation amount, there is the alternative to file an appeal in the Slum tribunal.

HC upholds govt right to acquire slum land - Indian Express
May 15 2013 , 09:10 AM   #676

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Lodha group hopes customers will bite at top end of market

Mumbai: Lodha Developers Ltd, which specializes in upscale apartments for the super rich, is busy promoting a tower in Worli in Mumbai that it claims will be the tallest residential building in the world, ensuring that residents are situated far above the urban snarl after having paid around Rs.12.5 crore for the privilege.

The breathless tone of the advertising for World Crest may not necessarily convince those who can afford such accommodations.

“Many companies resort to marketing gimmicks as the number of luxury projects have gone up,” said Sridhar Ramanujam, chief executive of brand consulting firm Brand Comm Pvt Ltd.

The real estate sector has been going through a weak phase, because of approval delays, rising costs and high interest rates.

A 15 April report by Edelweiss Securities Ltd said the Mumbai property market will remain subdued in the first half of fiscal 2014. There may be an uptick in the second half supported by pent up demand, lower interest rates and economic recovery.
There’s a glut in the market, said Rohan Dsilva, national director, residential agency, at real estate consultant Knight Frank India. “About 15-16 million sq. ft of property is in pre-launch and underdevelopment stage in central Mumbai, of which 8-9 million sq. ft is in the luxury segment (higher than Rs.10 crore). There is a lot of supply but sales are down by 30-40% compared to last year.”

According to a 15 March report by Knight Frank, Mumbai ranks seventh out of 30 cities worldwide with 2,105 high net-worth individuals, or HNIs, people with a net wealth of $30 million and above. It said Mumbai’s HNIs will rise 37% to 4,988 by 2022.

The Lodha Group spokesperson said nearly 60% of the World Towers project has been sold.

Lodha is developing in excess of 30 million sq. ft of prime real estate, with at least 27 projects in and around Mumbai. It has the potential to develop up to 50-60 million sq. ft of land, said Sanjay Dutt, executive managing director, South Asia, at real estate consultant firm Cushman and Wakefield. “Lodha has come up over the last 10 years,” Dutt said. “No other developer in the country is developing so many projects at one time.”

In comparison, India’s largest real estate developer DLF Ltd has 332 million sq. ft of planned projects with 62 million sq. ft of projects under construction, according to data available on the firm’s website.

Unitech Ltd website says it has a total deliverable area of 52.5 million sq. ft and has sold 4.4 million sq. ft of residential property by December 2012.

Lodha group is not a listed entity and doesn’t release financial data. But according to the information filed with the registrar of companies, Lodha is still fairly low down on the pecking order. It posted a profit of Rs.30 crore in fiscal 2012 compared withRs.14.6 crore in fiscal 2010. (Data for fiscal 2011 is not available.) Total income rose to Rs.332 crore in 2011-12 from Rs.235.6 crore in 2009-10, while total expenditure increased to Rs.72 crore from Rs.21.5 crore. A real estate consultant, who did not want to be named, attributed the rise in expenses to multiple projects being underdevelopment.

In contrast, DLF`s revenue for fiscal 2012 stood at Rs.9,629 crore while net profit was Rs.1,200 crore. Revenue in the March quarter was Rs.1,310 crore while net profit was Rs.285 crore. Unitech`s revenue for fiscal 2012 was Rs.2,421 crore and net profit was Rs.237 crore. Revenue for the March quarter stood at Rs.644 crore and profit at Rs.84 crore.

Among Lodha’s other projects is the Blue Moon residential project on a 17.5-acre parcel in central Mumbai that it acquired from DLF at Rs.23,000-25,000 per sq. ft in January. Apartments here were sold using what Lodha calls an initial public method. This means that the price band is known only to potential customers and an automated algorithm system is used to allot apartments to buyers.

“In January, Lodha sold two buildings in its Blue Moon project for Rs.4,000 crore. The total number of flats sold (was) 800,” the company said.

Lodha group, which is known for its aggressive sales strategy, will have to raise cash for its multiple projects but has been deferring plans to go public since 2009 due to unfavourable equity markets. A 1 February 2010 PTI report had said Lodha plans to dilute a 15% stake for Rs.2,790 crore.

Source :LIve Mint
May 15 2013 , 09:15 AM   #677

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Oberoi Splendour residents move court against builder

Trouble's brewing at Andheri's Oberoi Splendour towers, considered one of the plushest addresses in the western suburbs, after an association representing about 500 flat owners moved court against the builder alleging construction deficiencies and financial irregularities amounting to more than Rs 600 crore.

The civil suit filed by the flat owners' representative, Mohit Chandra Bhardwaj, also mentions alleged violations of the development control rules under the Maharashtra Ownership of Flats Act.

Oberoi Splendour in Andheri (E), off Western Express Highway, comprises 1,296 apartments in six 27-storey wings. The complex boasts of amenities such as clubhouse, swimming pool, sauna facilities, squash courts and a jogging track. According to the builder, Oberoi Realty, a twoand-a-half BHK apartment in the complex demands a price of Rs 2.75 crore.

The residents and Oberoi Realty are at loggerheads over a 27-storey tower that has come up adjacent Oberoi Splendour. The tower, named Oberoi Grande, has 156 apartments which are all up for sale, and the builder has promised the buyers access to the amenities at Oberoi Splendour.

"Just imagine what will happen when an additional 700 people start using the amenities meant exclusively for us," said Bhardwaj, adding that the jogging track, the clubhouse and the parking area were not large enough to accommodate so many people. The residents have further alleged that the new tower has come up on the plot that was supposed to be their recreational space.

According to Bhardwaj, the developer is constructing two additional buildings with no compound walls to separate them from Oberoi Splendour. "We are really worried as the facilities are limited, and the new structures don't comply with the initial plan," he said.

The residents used the Right to Information (RTI) Act and accessed the plans the builder had submitted to the BMC, and the civic body approvals, following which they hired an architect, Shrikant Hadke, to inspect the complex and point out discrepancies in construction.

The architect's report says the residents have been given flats smaller than promised, a charge the builder denies. According to the residents, the BMC documents say each flat has a built-up area of 893 sq ft, while the purchase agreements mention the builtup area as 987 sq ft.

The residents further allege that the size of the bedroom, according to their agreements with the builder, was supposed to be 96.84 sq ft as opposed to the actual size (88.77 sq ft).

The developer, however, said the residents' allegations were baseless. "We can only deliver what was promised, and not according to what they expect. Anyone is welcome to come and measure the apartments to ensure that everything is according to the plan," an Oberoi Realty spokesperson said.

Demanding that the occupation certificate to Oberoi Grande be withheld, the residents alleged that the builder forced them to pay for the parking slots, in complete violation of the Maharashtra Ownership of Flats Act. "The builder cannot sell the parking space unless it is utilised under the floor space index (FSI)," a resident said, adding that the basement parkings are free of FSI, and therefore cannot be sold. They also alleged that they haven't been provided with office space, freight lift or refuge area on each floor, all of which was promised.

To this, the Oberoi Realty spokesperson said, "As per the flat purchase agreements, a builder charges a lumpsum amount which includes exclusive rights to parking slots and other shared facilities."

Regarding the promised amenities that haven't been provided, the spokesperson said, "The plot housing Oberoi Splendour is spread across 18 acres, and there were a lot of development projects planned. It is common knowledge that builders are granted Intimation of Disapproval (IOD), which is necessary to develop the plot, in phases. As and when we got the plans approved, we went ahead with the construction of the buildings on the premises."

The residents, however, said there were large-scale financial irregularities while executing the flat transfer agreements, and the sale of parking spaces after getting the occupation certificate. They further alleged that the developer made money out of lease agreements allowing ATM kiosks on the complex premises, installing phone towers, and renting out the premises for film shoots. "Money earned from such deals should have been deposited in the society accounts," a resident said.

The builder's spokesperson, however, said the phone towers were installed following requests from the residents, and Oberoi Realty didn't get any money from the telecom companies.

During the hearing on Friday, the Dindoshi city civil court asked the residents' association to file a fresh complaint or amend the names of the complainants, after the builder's advocate Behru Choudhary pointed out that the association was not a registered body. The matter has been scheduled for May 8.
May 15 2013 , 10:27 AM   #678
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BMC proposal for LBT on builders raises hackles

PROPERTY prices in the city could go up further, with BMC considering a proposal to bring construction activity under the purview of local body tax (LBT). BMC proposes to charge LBT from builders on per square metre basis.

As per the proposal, for every floor up to four storeys, LBT will be Rs 100 per sq m. For a building without an elevator, it will be Rs 150 per sq m up to seven floors. Beyond seven floors, LBT will be Rs 200 per sq m. "The proposal is at a nascent stage. We will call for suggestions from organisations, including the construction industry. There is no specific mandate to tax builders as of now, but there is an option to amend LBT rules," a senior BMC official said.

Santosh Dalvi, partner at KPMG and indirect tax expert, said levying LBT on constructions could be a mechanism to simplify tax calculation.

"Builders anyway import raw material such as cement and sand. So, instead of taxing every individual consignment, BMC is looking at taxing the end product," said Dalvi. BMC will, however, have to iron out the concept to avoid double taxation in case developers are purchasing raw material locally from a company importing them.

Construction companies are yet to hear from BMC on the proposal, but builders have started opposing the move. They contend that multiple taxes have pushed up property prices. "We pay for fungible FSI and development charges. This new tax will put more burden on the real estate industry. It will ultimately be passed on to the consumer," said Mayur Shah, managing director, Marathon Group, a developer.

Vimal Shah, managing director, Hubtown (earlier known as Ackruti Developers), agreed that the government should draw a line beyond which it should not tax the real estate industry. "This is a crucial concern if the government wants affordable housing for the common man," said Shah.

Pankaj Kapoor, founder and managing director of Liases Foras, a real estate rating and research firm, said, "If the government taxes the construction industry further, it is killing whatever little incentive the sector has to remain in business."

Traders have been protesting LBT for almost a week now.

Property prices up 66% in 4 years: Report

A report by real estate consultancy Jones Lang LaSalle says Mumbai has seen a sharp rise in property prices in the past four years. "Over the past four years, property valuations in the financial capital have increased by an average of 66 per cent," said Ramesh Nair, managing director, West, JLL (India). The rise was 52 per cent in Gurgaon and 46 per cent in Bangalore.

The Malad-Borivali belt has seen the highest increase of 85 per cent, while in south Mumbai, it has been the lowest at 42 per cent. "The primary reasons for Mumbai's 'unreal' price movements is the limited supply of 'clear' land," said Nair. Yet another reason is the reduction in new launches during this period, says the report. The price rise is also attributed to the civic body changing construction norms through new Development Control Rules (DCR), hints the report. "The new DCR rules caused many projects to come to a grinding halt as developers and architects struggled to adapt projects to a new set of mandatory norms," it said.

BMC proposal for LBT on builders raises hackles - Indian Express
May 15 2013 , 02:32 PM   #679
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Mumbai housing prices appreciate by 66% in 4 yrs

Housing prices have increased by an average 66 per cent in Mumbai over the last four years on account of steady demand and rising input cost, according to property consultant Jones Lang LaSalle (JLL).

The increase has been even higher at 70 per cent in Thane and 74 per cent in Navi Mumbai.

"The cumulative price escalation figures for Mumbai, Thane and Navi Mumbai represent the highest among all cities in India," JLL India Managing Director (West) Ramesh Nair said in a statement.

Gurgaon and Bangalore saw price appreciation of 52 per cent and 46 per cent, respectively, during this period.

"Residential property prices in Mumbai have increased steadily after the correction seen post the Lehman debacle. In the period from the second quarter of 2009 to the same quarter in 2013, residential real estate prices in Mumbai have increased by 66 per cent," Nair said.

On reasons for price rise, Nair noted that the demand for investment residential properties and end-user homes in the country's financial capital has remained stable.

That apart, the consultant attributed the prices movement to limited supply of clear land, reduction in new launches between 2011 and 2012 middle and high interest rate scenario.

"In the Indian city which has for years carried the unwholesome reputation of being the most over-priced in terms of residential real estate valuations, there is no relief in sight for aspiring home buyers.

"Over the last four years, property valuations in the financial capital have increased by an average of 66 per cent.

All 'expert' predictions over the last 3 years, of an imminent correction have proved to be wrong," Nair observed.

Mumbai housing prices appreciate by 66% in 4 yrs
May 16 2013 , 02:46 PM   #680
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Forget gold, real estate is a bigger time-bomb for all

Even though the Finance Minister and the Reserve Bank of India (RBI) have in the last couple of months repeatedly warned about the repercussions of Indians hoarding too much gold, the role of real estate as a traditional investment avenue has largely been ignored.

Gold may be a time-bomb for the government, given its high current account deficit, but real estate is a bigger time-bomb for investors and even the government – since a lot of bank collateral and government revenues is pegged to inflated property prices.

Just last week, RBI governor D Subbarao dismissed concerns about rising property prices and said: “There is no bubble. The housing price index is showing an increase and we have reported that in our document that came out on Thursday. The monetary and macroeconomic development document shows the housing price index…in 9 cities of the country, and there is no bubble building up there.”

And it is due to assurances like these that many people in India believe that one can never go wrong with real estate as it will always guarantee returns. However, columnist Dhirendra Kumar explains how so-called promised and assured rates of return come from very different models of real estate which can be classified into five stages.

1. The change in usage from agricultural or simple barren land to residential or commercial.

2. Coming up of physical infrastructure

3 Improvement in livability or commercial viability

4. Periodic boom and busts

5. General inflation

According to Kumar, historically, those who invested in barren land gained the maximum since there was neither any habitation or physical infrastructure in place at the time. Add to that the general inflation, and you definitely have a solid investment. But things are different now. If you invest in property today, all gains accruing during the initial stages will only benefit the developer.

The situation is similar to corporates paying high premiums for acquisition targets with the hope that the price you pay today will more than compensate with a higher future value. In other words, paying a premium now for future returns without evaluating risks and market dynamics.

This situation is abetted by the artificial scarcity of urban land created by the politician-builder nexus and speculation money being poured into real estate by the parallel economy.

What else can otherwise explain the high real estate prices in Mumbai and Delhi, which are way beyond the actual intrinsic value of properties?

Urban Mumbai and Delhi are priced beyond reach because of artificial scarcities created by the bottling up of land and low floor space indices. Reuters

Urban Mumbai and Delhi are priced beyond reach because of artificial scarcities created by the bottling up of land and low floor space indices. Little wonder, few people are buying.

Current statistics show that transactions are not occurring in metros and so builders are constructing buildings in far-flung suburbs. In fact, the RBI’s House Price Index shows that prices in Delhi have risen 47 percent in the last year but property transactions are down 35 percent in the last quarter. Yet the finance ministry has pressured the RBI to give infrastructure status to the housing sector, and relax provisioning norms for it so that banks can extend attractive loans to buyer.

Already several real estate firms are highly leveraged with many of them being downgraded to junk. Recent reports on global real estate suggest that prime commercial real estate in India is one of the most expensive in the world, which makes India economically unviable to do business in. A report in The Economic Times today pointed out that vacancy levels in malls across the country are growing at an alarming rate, especially in smaller towns where over a third of the space is unoccupied, as against just 7 percent in 2007.

“Many developers overestimated the appetite for retail in these small towns. They did not realise that the consumption threshold here was low,” the report quotes Ashutosh Limaye, head of research at Jones Lang LaSalle, as saying.

Is the bursting of the housing bubble in the West, vacant commercial spaces and empty flats not reason enough for Indians to re-evaluate their attitudes to real estate? The endless belief in real estate as a surefire bet needs to end.

Forget gold, real estate is a bigger time-bomb for all - Firstpost
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