Noida RWAs want properties to be freehold, will approach HC

NOIDA: The Federation of Noida Residents Welfare Association (FONRWA) is all set to challenge the Noida Authority’s leasehold policy of allotting land in the Allahabad high court. Federation office-bearers told TOI that the method of land allotment would be challeged in the court once it opens after the winter break.

“In the leasehold system, one will have to keep on buying his own property again and again. It is not logical that an entire city shall be on a leasehold model. So we are taking it up for residential allotments, commercial and industrial allotments. Our paperwork and documentation is ready. We demand that land already allotted and sold in Noida, be made freehold,” N P Singh, president, Fonrwa, said.

The objectives of the authority were to acquire land in the notified area through government of UP under Land Acquisition Act, 1894 or by way of agreement to allot plot or properties as per regulations, to regulate the construction of buildings and setting up industries and to provide infrastructure and amenities. However, all allotments for the past 40 years in Noida have been via leaseholds. Typically, the leasehold in Noida is for 90 years.

“We challenge the allotments on the basis of lease. Going by it, most property owners would have to renew their lease in 50 years time from now. So it means that our children will have to buy their own inherited property once again,” Singh said. Though FONRWA has added the city’s industrial land allotment in its draft petition, the city industrialists did not seem to be one with them.

“We do not think going freehold will work for the industries because Noida being primarily an industrial body, we get various facilities and maintenance support from them. We do sympathise for the residential and housing sectors when it comes to demanding freehold ownership, but for industrialists, leasehold works better,” Vipin Malhan, president, Noida Entrepreneurs Association, said.

Source : ET Realty 

Realty to take a sales hit after cash ban: Report

NEW DELHI: Demonetisation is likely to affect realty space with a 10-30 per cent drop in sales volumes over the next 12 months, even as no major price correction is expected in the metros, says a report.

According to Kotak Institutional Equities, trying times are expected to continue. "While in the long run all can go well, it's the near to medium-term cash flows that will make developers grow/survive".

"We expect lower sales volumes over the next 6-9 months," the report said, adding that low volumes in turn would impact collections, construction expenditure and servicing liabilities.

However, little correction in pricing is expected in metros, while land prices in the small towns may witness high price cuts post a lull in sales.

Moreover, unorganised developers with little access to capital, may offer additional 7-12 per cent discounts from what is offered today.

"We expect launches to drop further as developers look to sell from ongoing projects," the report said, adding that "focus will remain on completion of projects and shifting business models to become Real Estate Regulation Act (RERA) compliant".

According to the report, no major correction in prices is expected in the western and southern metros as prices have remained stagnant for the past three years and affordability has been improving in certain markets.

Sales volumes are expected to drop between 10-30 per cent over the next 12 months, until prices stabilise.

"Salaried people, although largely unaffected by the demonetisation event, are likely to remain fence sitters for a view on property prices to correct. While for those into businesses, house buying/investment decisions could be postponed depending on the impact on their businesses due to demonetisation," the report said.

For listed developers too, sales volumes will be impacted in the near term, it added.

Source - ET Realty 

RBI extends loan repayment window to 90 days

MUMBAI: In further relief to people hit by demonetisation, the Reserve Bank on Wednesday gave borrowers another 30 days over and above 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore.

"On a review, it has been decided to provide 30 days, in addition to the 60 days provided (on November 21)," the RBI said in a notification.

So, borrowers together get 90 days breather from getting the account classified under non-performing asset (NPA) category.

The above dispensation will apply to dues payable between November 1, and December 31, 2016, it said.

Following the surprise announcement made by Prime Minister Narendra Modi on November 8 to scrap Rs 500/1,000 notes resulted in cash crunch in the market leading to slowdown in the business.

As a result, the repayment capacity of the borrowers were impacted and there was fear of loan default rising.

The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 per week, limiting their options to repay their dues.

According to the RBI notification, running working capital accounts or crop loans with the sanctioned limit of Rs 1 crore or less would be eligible for this benefit.

Besides, it said, "Term loans for business purposes, secured or otherwise, the original sanctioned amount whereof is Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This shall include agriculture loans."

The apex bank further said that all regulated entities are permitted to defer the downgrade of an account that was standard as on November 1, but would have become NPA for any reason between November and December by 90 days from the date of such downgrade.

The additional time of 90 days will only apply to defer the classification of an existing standard asset as sub-standard and not for delaying the migration of an account across sub-categories of NPA.

Dues payable after January 1, 2017 will be covered by the instructions for the respective entities.

Last month, the RBI had provided additional 60 days for repayment of loans worth up to Rs 1 crore. Separately, the central bank came out this special dispensation for farm loan earlier this week.

Source - ET Realty

 NewsletterA A

Home buyers to reap dividends of rate cut war

MUMBAI: Home loan seekers may be in for a windfall with mortgage companies set to embark on an interest rate war amid a slump in the cost of funds as a consequence of demonetisation, in the process acting as a tonic for the moribund real estate sector.

Mortgage companies like Housing Development Finance Corp (HDFC), Indiabulls Housing Finance and DHFL may slash rates by 25-50 basis points in a few weeks as they are under pressure to push growth amid sluggish demand, said industry executives familiar with the matter. A basis point is one-hundredth of a percentage point.

“Demonetisation has inadvertently helped cut funding costs for us as we raised cheap money from bond market,” said Indiabulls Housing MD Gagan Banga. “We should be able to pass on benefits of lower borrowing costs to customers as we expect higher home loan demand in coming quarters.” He didn’t say what the new rates would be. Demand for homes and home loans slumped after the Centre announced on November 8 that Rs 500 and Rs 1,000 notes would cease to be legal tender. 

Source : ET Realty

Affordable Housing: A fad or the new reality?

Affordable segment is the catchphrase in the market now, with developers directing their attention on this rather under-penetrated segment. The share of sub Rs 50 lakh-segment is at its highest since 2008 now and consistently rising over the last few years with share during January-September 2016 at 30%.

Over the last few years as the residential market witnessed a slowdown, developers directed focus on the affordable segment, as they anticipated greater traction in this segment. At this point it is important to contemplate if the impetus on the affordable segment by developers will continue, even once the overall market improves, or is it just a passing fad.

My belief is that the market will continue to see momentum in the affordable segment even after the overall realty market’s revival. Firstly, the inherent demand in this segment is too high to ignore. The lower income group and Middle income group housing account for the maximum demand for housing units, led by the sheer size of these income groups.

The highest demand for housing is seen among the MIG in particular, while the steepest gap between demand and supply exists for housing for the LIG. The demand for units under the sub INR 50 lakh-segment will give developers a huge opportunity, and not just in tier I cities. It is expected that demand by the LIG and MIG is likely to account for 76% of total demand for housing units between 2016 and 2020 in tier II and tier III cities. This demand would be led by greater migration into such cities led by increasing employment opportunities, presenting a huge opportunity to developers.

Secondly, the Real Estate Regulatory Authority (RERA) will bring in higher professionalism in the highly fragmented real estate market, with fly-by-night and part-time developers being ousted. This would give rise to standard business practices and reputed developers, who would do well to have a presence across segments.

It is also important to realize that high-end and luxury segments cannot be the staple for developers in the longer run, which is why it is essential balance the portfolio. Investors such as World Bank’s private arm- International Finance Corporation, Brick Eagle Capital are keenly watching the affordable segment, which would give some confidence to developers to foray into this segment. Moreover, the government is incentivizing developers by doling out tax cuts for affordable projects, as announced in the recent budget.

The thrust on affordable housing shows that developers are keen to be involved in this high-demand segment, where margins can be as low as one-fifth of those of high-end and luxury projects. The speed of construction and the costs involved are important parameters as they dictate the ultimate affordability of homes, as well as the financial viability of the project. Standardization of designs would further help developers keep a lid on costs, making such projects financially viable.

As the government looks to introduce single-window clearances across cities and as ease of doing business improves across states, developers would benefit from lower approval time. Currently in 2016, Andhra Pradesh and Telangana lead the rankings, toppling Gujarat. The healthy competition among states is a sign that governments are pro-actively seeking private investments into their respective states. S
uch reforms would not only enable faster development of projects, but also minimize cost escalation arising from delays.

Developers with a long-term vision would upgrade technological skills and incorporate assembly line techniques that would help their projects to be lucrative. If we are able to create the right kind of environment with government policies backed by a more rational approach from developers towards Affordable Housing, we would be able to achieve the goal of Housing for All 2022. In essence, the development of the affordable segment is likely to garner higher importance in the coming years.

Source: ET Realty

INDIAN REALTY IN SEARCH FOR EARTHQUAKE WARNING SYSTEM

  For us all, real estate is a term synonymous with structures and buildings. These buildings can be broadly categorised into industrial, commercial and residential setups. Being a developing nation, we usually observe realty development in clusters; where industries, commercial and residential spaces, all get their separate land parcels for construction. As a result, a city is usually filled up with offices, shopping complexes and houses built on tall skyscrapers. In the meanwhile though, since industries and plant & machineries get land banks around the outskirts, these units end up surrounding a fully developed city, which in case of a natural calamity can multiply the damage.

For any form of development, real estate sector is the backbone. Since privatisation, more and more domestic players have emerged and entered into the realty sector which is allowing our country to meet the much needed supply of housing, retail spaces and offices. This in turn shifts our focus towards the importance of having a system that can keep us safe and alarmed in case of a natural calamity.

Now, calamities can be classified in two ways, where earthquakes, tsunamis, cyclones and others arise from natural causes and won’t knock your doors before coming. On the other hand, floods, landslides and others may or may not be due to natural reasons. Having improper drainage systems and irresponsible ways of construction on hilltops can cause floods and landslides, where nature cannot be regarded as a reason. Tsunamis and cyclones are likely to hit the coastal regions more and usually give us some time to prepare and evacuate; but Earthquakes do not give us time to even react. With modern day technologies and equipments, developers are working very hard towards structural stability and soundness. But all can still go in vain when you’re sitting right above the seismic zones 4 and 5, where Earthquakes can hit at magnitudes of over 7 and 8. Developers in India have access to RCC framed structures and ball bearings installed under the base of structures that allow the buildings to become resistant. “Modern day construction techniques and equipments can allow the structures to become resistant to some extent only. It does not mean that the structure won’t shake during an earthquake or there won’t be any damage to the property. It simply means that structures will hold there ground but doesn't guarantee safety of life or property. Indian structures located especially under seismic zones 4 and 5 require systems that can alarm the inhabitants in case of an earthquake”, shares Bijender Goel, MD, Terra Techcom Pvt. Ltd.

“In last two decades, about a million people have died due to Earthquakes and the loss to asset is simply untold. Developers in India, especially in NCR regions are working diligently towards providing Earthquake resistance by developing RCC framed structures and even increasing the depth of excavation to provide more strength to the towers. It is true though, that in case of a mega quake, our cities require a system that can help in allowing some time for people to evacuate the buildings before the quake takes full shape”, believes Vikas Bhasin, MD, Saya Group. 

To answer such queries and alarm people before the secondary waves i.e. the waves that can cause damage, arrives; Terra Techcom Pvt. Ltd. has entered India and other countries of South Asia, where there are higher seismic zones and number of earthquake occurrences are more. In collaboration with a German based company, Secty Electronics GmBH, it brings ‘On site early earthquake warning and security system (On site EWS)’. “In India, before On site EWS, we had the Regional earthquake warning system (REWS) which had been installed at Uttrakhand and was put under a series of tests. This product had been giving false alarms and thus, lost its credibility and effectiveness. Whereas, the On site EWS has been tested and approved by Chennai-based Structural Engineering Research Centre (CSIR-SERC), a pioneer advanced seismic testing and research laboratory under the Council of Scientific & Industrial Research (CSIR); that has allowed us to install the On site EWS device at HIPA office in Gurgaon and New Secretariat Building Haryana in Chandigarh”, adds Goel.

Earthquake emits two sets of waves, first primary waves (P) which are harmless, followed by damaging waves ‘secondary waves (S)’ and ‘surface waves (R)’. By detecting these primary (P) waves, we can warn the people that ‘an earthquake is on its way’. Earthquakes have become an issue before this world and there is a severe need of any such earthquake warning system that can warn people at least few seconds before the damaging secondary (S) waves strike. On site EWS developed by Secty Electronics senses the primary waves of an earthquake and its eight threshold values are programmed in such a manner that it calculates the intensity of 5 at the threshold value  01 and triggers alarm at the intensity of 6 (threshold value 02). Threshold values 03, 04,  05, 06 and 07 are programmed in such a manner to shut off the running applications, like parking of elevators to nearest floors, shutting off gas/power/water supply, and open/exit gates. Threshold value 08 tells that earthquake is in the building. Thus, it is very useful for IT sectors, Educational Institutions, Shopping Malls, Public Buildings, Industries, Apartments, Multi-story buildings, Hotels, Cinemas, Shopping Malls, Bridges, Tunnels, Metro/ Railways/Airports, Nuclear/ Power Stations, Oil refineries and almost everywhere. “This product at present is the most ideal precautionary measure against Earthquakes, where people can get some time to react to the situation and evacuate the premises. The On site EWS if reaches out to the country, will allow countless lives to get saved and in some cases, even assets”, avers Rakesh Yadav, Chairman, Antriksh India.

“In case of a calamity like an Earthquake, every second counts. In a country like India where real estate sector is on a boom and developing lakhs of units every year, imagine the number of people who will be living in the coming years. Multiple researches and reports are suggesting that there is a big earthquake due, which will hit India anywhere, and it is like a time bomb ticking. In such a scenario, On site EWS is the only technology available to mankind today which can help reduce the losses of life in future”, shares and further explains Goel. Speaking about the seismic zones 4 and 5, almost entire NCR and northern parts of India are a part of it. Every year we witness several earthquakes with varied magnitudes whose epicentres are usually in Nepal or Afghanistan, and still its ripple effects are so strong that we can feel it hundreds and thousands of kilometres away. India has been a witness to many major earthquakes in the past, and one just cannot forget India’s 52nd Republic Day in 2001 when an earthquake that lasted 2 minutes had struck Gujarat with its epicentre being in Bhuj with a depth of only 16 Kms. As many as 20,000 people died and over 1,50,000 people were injured with almost 4,00,000 homes and other properties destroyed. “Every major earthquake in India has resulted with a loss of thousands of lives. With the land being limited and put to use for development, there is tremendous pressure on the ground below and with people residing on these lands, they are under the risk of getting exposed to such unforeseen damages. Thus, it becomes imperative to have devices that can alarm before the secondary waves of an earthquake strike. And with the availability of On site EWS now in India, damage to life and property can be significantly reduced”, says Dhiraj Jain, Director, Mahagun Group.

“Indian real estate sector is on a development spree with numerous residential and commercial projects mushrooming in Tier 1 and 2 cities of the country. As these cities develop, migrations will increase, due to high job opportunities and thus, these will become densely populated over the years. As more and more people reside in one city, the risk of loosing higher number of lives increase as Earthquakes won’t tell the time and place before they strike. With the presence of such a technology that can grant even a single second to save lives, it is highly welcomed by the realty sector and very soon we will see this system becoming operational in several townships and other commercial projects in India”, concludes Kushagr Ansal, Director, Ansal Housing.

SBI, other banks may cut lending rates in New Year

MUMBAI: State Bank of India, the country’s largest lender, and a few other banks are expected to announce a cut in lending rates effective early January, said people with knowledge of the matter.

That could give consumption a much-needed boost, having slumped in the wake of demonetisation as people are unwilling to spend on non-essential items amid a currency shortage. People considering home and car purchases can look forward to cheaper rates due to the liquidity that’s flooded the banking system with the deposit of old notes, especially since corporate loan demand remains weak. SBI couldn’t be reached for comment.

Cash withdrawal limits are, however, expected to stay in place even after the December 30 deadline by which the demonetised Rs 500 and Rs 1,000 notes have to be deposited. At an Indian Banks’ Association meeting last week, chief executives of some large banks explored the possibility of a cut in interest rates on loans following discussions with the finance ministry, said banking sources.

Some bankers believe such a move could revive sentiment amid the dip in consumption due to the currency shortage induced by demonetisation. SBI has pegged its lending rate at 8.90% for a year, among the lowest in the industry.

The flip side to this is a possible reduction in the savings bank rate. Although there is no regulatory curb on the savings account rate, all state-run banks and large private banks have currently set it at 4%. “Post demonetisation, a number of customers have repaid their loans; many are refraining from borrowing,” said a bank chief.
“So demand for loans has disappeared but at the same time banks are flush with funds,” the bank chief said.

RBI data show bank credit rose 1.2% to Rs 73 lakh crore in the year to date (April 1to December 9) against a rise of 6.2% to Rs 69.6 lakh crore in the same period a year ago. Deposits rose 13.6% to Rs 105.9 lakh crore compared with a 7.% increase to Rs 91.8 lakh crore in the year earlier. “The ministry is in dialogue with banks on measures that can be taken to boost investment,” said the bank chief cited above.

At the ET Awards on December 17, ministers Piyush Goyal and Nitin Gadkari sought the views of SBI chief Arundhati Bhattacharya on measures to boost market sentiment and encourage investment.

Bankers expect withdrawal curbs to continue, perhaps with a relaxation in the limit.While it will take a few months before the entire stock of old notes is replaced, this could also be a strategy to encourage customers to switch to digital transactions by keeping a limit on currency in circulation. This seems to be having the desired effect. While queues at bank counters and cash dispensers haven’t abated, electronic transactions are said to have doubled.

Source: ET Realty

Centre, states clear bulk of laws for GST

NEW DELHI: The Centre and states covered significant distance on the path towards rollout of goods and services tax (GST) when they cleared the bulk of laws for central and state GST. But the April 1, 2017, deadline for implementation of the country's biggest indirect tax reform is almost ruled out as there was no headway on the contentious issue of division of administration.

The issue of so-called dual control and the related integrated GST (I-GST) law that deals with interstate sales will now be taken up at the next meeting of GST Council on January 3-4.

“I am trying my best to do that...left to myself I would like to do that,“ Finance Minister Arun Jaitley said when asked if the April 1 deadline can be met. He, however, pointed out that “reasonable headway“ had been made.

GST has to be rolled out by September 16 as the current tax regime will lapse by then. Briefing reporters on Friday at the end of the two-day GST Council meeting, Jaitley said draft Central GST (CGST) and State GST (SGST) laws, which are mirror images of each other, were cleared along with legislation for compensating states.

The laws will now be legally vet ted after which the drafts will be sent to states for final views before they are passed by the council, the highest decision-making body for this tax regime.

“If you ask me what are the principle residuary items left, the main item of course is the I-GST and dual empowerment issue. The second is the legally vetted language which will be placed in the next meeting on January 3-4,“ Jaitley said.

Once these laws are passed by the council, the central GST law will go to Parliament for approval while state assemblies will need to clear the state GST law.

The GST Council will take up items in each tax bracket after the laws are cleared. On industry needing time after legislation is passed, Jaitley said, “That we will decide once we cross all bridges. I am not going to bind myself... our effort is to clear it as quickly as possible. I think we are making a reasonable headway .“

Experts felt the delay may even help.

“The GST Council seems to have made some good progress in terms of approving the CGST and compensation laws... However, now April 1, 2017, as the date of GST implementation is virtually ruled out, which I think is good news for both industry as well as the government,“ said Pratik Jain, partner and leader-indirect tax, PwC India.

COMPENSATION ISSUE

The settled issue of compensation to states for any loss of revenue due to the rollout of GST seems to have hit a bump with some members raising concern that more states may need to be compensated after demonetisation.

States were to be compensated from a Rs 55,000-crore fund set up from revenues raised through a cess on luxury and sin goods, such as tobacco. States have now sought a bigger pool for compensation citing potentially higher losses due to demonetisation.

West Bengal Finance Minister Amit Mitra said states may suffer revenue losses of 2030% in the third and fourth quarter of the fi scal and the number of states needing compensation may go up due to demonetisation.

Andhra Pradesh has demanded that the com pensation be given out from Consolidated Fund of India and not through a cess-funded pool.

As a compromise, the reworded formula may provide that the corpus for compensation may be funded through the proposed cess and “any other taxes as the GST Council decides“.The council also changed the frequency of compensation payout to bimonthly from quarterly , as had been agreed upon earlier.

DUAL CONTROL

The issue of dual control is expected to be taken up at the next meeting. While states are keen on exclusive rights on all assessees up to a turnover of Rs 1.5 crore, the Centre is insisting on a vertical division minus any threshold. The issue is important to avoid dual control of an assessee by the Centre and a state government.

There is only one law and two bureaucracies, so the question is how the jurisdiction will be divided for audit management, Jaitley said when queried.

Source: ET Realty

Sebi cautions PACL investors against false promises

NEW DELHI: Cautioning investors against "inducements and false promises" in the PACL case, Sebi on Thursday advised them to seek their claims only in a prescribed format rather than making submissions through associations.

Providing more clarity, the watchdog said claims in the case could be filed only in the "prescribed format upon specific notification" by the R M Lodha committee -- which is overseeing disposal of PACL assets in order to refund the affected investors.

Till such notification, investors were requested to retain their documents with themselves and not to part with them for any reason whatsoever.

PACL, which had raised money from the public in the name of agriculture and real estate businesses, was found by Sebi to have collected more than Rs 60,000 crore through illegal collective investment schemes over a period of 18 years.

The cautions come after Sebi found that claims are being filed by individuals or through associations enclosing documents therewith.

"Therefore, investors are again advised to retain the documents with themselves and submit in the prescribed format only upon specific notification inviting submission of claim. Investors are also requested not to be misguided or fall in trap of any inducements and false promises," Sebi said in a statement.

Last December, Sebi ordered attachment of all assets of PACL and its nine promoters and directors for their failure to refund more than Rs 60,000 crore due to investors -- the biggest amount for any such case.

PACL had raised Rs 49,100 crore from nearly 5 crore investors that it needs to refund along with promised returns, interest payout and other charges, which took the total amount due to over Rs 55,000 crore, as per the Sebi order.

Besides, PACL's group firm PGFL "illegally mobilised more than Rs 5,000 crore and failed to refund the same in spite of directions of Sebi and SAT", the regulator had said while initiating the recovery proceedings.

The proceedings were initiated against PACL Ltd, as also its promoters and directors -- Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Nirmal Singh Bhangoo, Tyger Joginder, Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar.

Sebi had asked them to refund the money in an order dated August 22, 2014. The defaulters were directed to wind up the schemes, and refund money to the investors within a period of three months from the date of the order.

Source: ET Realty

Centre approves another 52,319 houses under PMAY

NEW DELHI: The Central government has approved construction of another 52,319 houses for urban poor, including 11,286 houses in poll-bound Uttar Pradesh, under the Pradhan Mantri Awas Yojana (PMAY-Urban). 

"The Ministry of Housing and Urban Poverty yesterday approved construction of 52,319 houses for urban poor under PMAY (Urban) involving an investment of Rs 2,946 crore and the Central assistance of Rs 778 crore," an official release said today. 

Besides Uttar Pradesh, 25,097 houses will be constructed in Madhya Pradesh, 8,941 in Chattisgarh, 3,805 in Maharashtra, 2,422 in Nagaland, 720 in Puducherry and 48 in Daman, it said. 

With this, the Ministry has so far approved construction of a total of 13,43,805 houses for urban poor with an investment of Rs 72,781 crore and central assistance of Rs 19,633 crore. 

It also gave nod to Uttar Pradesh's proposal for construction of 11,286 houses for urban poor in 34 towns involving investment of Rs 384 crore. The Centre will provide assistance of Rs 160 crore for these houses. 

Uttar Pradesh was the 29th state to send proposals for construction of affordable houses under Pradhan Mantri Awas Yojana-Urban (PMAY-Urban). 

It had proposed construction of these houses under Beneficiary-Led Construction component of the scheme under which beneficiaries are given Central assistance of Rs 1.50 lakh each for construction of new houses on their land or for improvement of existing houses. 


Source: Economic Times 

REALTY LOOKBACK AT 2016 AND OUTLOOK 2017

The year 2016 will go down in the history books of the Indian real estate sector as one of the most transforming years for the country’s real estate division where there were big announcements along with a bit of bumpy rides here and there. Being one of the prime contributors towards our country’s Gross Domestic Product(GDP) and employment generation, a lot is always expected out of this sector for the economic growth. This sector alone is responsible for being a user for over 30 other allied industries and sectors; and as we bid goodbye to 2016 and gear up for 2017, a lot has changed since the beginning of this year, where several major announcements were made and infrastructural developments came out as the highlight. Much was delivered during the course and a lot still remains in pipeline, where real estate sector will once again be an important contributor in 2017 as well.

Year of Key Decisions

2016 turned out to be a year where major policy decisions and implementations came into being. Major bills such as RERA(Real Estate Regulatory Authority) and GST(Goods and Services Tax) were passed during the year, allowing the sector to become more transparent and systematic. “The passage of GST and RERA has been one of the biggest highlights of the year that is sure to benefit the sector in the long run. Monitoring and supervision of transactions, clarity of tax structure while buying property and transparency in the sector, were the desires of every buyer that has been finally answered by the passage of these two bills especially. By the end of second and third quarters next year, we will have various states implementing RERA with a regulator on board. Even GST, which has been postponed, will become operational by the end of third quarter next year”, states Avneesh Sood, Director, Eros Group.

Apart from the passage of GST and RERA, Union Budget 2016-17 saw major reliefs for the affordable and rental housing segments in the country. Even the Reserve Bank Of India(RBI) slashed the Repo Rate by a total of 50 basis points during this calendar year, thereby pushing the banks to reduce its lending rates for the potential buyers and helping the demand to move forward. Work on the infrastructure front saw a major momentum gain as several cities across the country witnessed Airport upgradations, Metro becoming operational, several expressways and roadways opened for the public and so much more. Out of the 98 Smart Cities declared, 60 cities have been already finalised and they have begun the groundwork for the same. Thus, decisions for the infrastructural development in the country will allow the untapped real estate regions to grow vertically in 2017. “For the realty sector to grow and contribute, it is imperative that the government supports it directly and indirectly. Through the passage of RERA and GST, we saw a direct support that will be immensely beneficial in the long run. And while analysing the indirect contributions; Union Budget was very crucial. Announcements such as raising the HRA deduction by Rs. 36,000, increasing the ceiling on tax rebate by Rs. 3,000 for people earning less than Rs. 5 lakh annually, DDT removed from REITs, a total of Rs. 97,000 crores announced for the development of minor and major roadways, developers not to attract any taxes on profits arising out of affordable housing developments and many other decisions. These decisions are sure to benefit the sector indirectly and will promote the government’s plan of Housing for All; where private developers have already begun to contribute heavily. Also, we are projecting the upcoming RBI’s policy review and Union Budget to be populist, and this will allow this sector to function more smoothly in 2017”, explains Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

Speaking about 2016 being a year of key decisions, one just cannot skip the date 8th November from the picture. Demonetisation came down as a surprise for the country and real estate sector was no exception. Stakeholders of the sector have been jittery since the news came out first. Few things have become certain, secondary market has completely dried and primary market now looks more secure, thus making this sector move towards refinement. “There are a few misconceptions pertaining in the market due to demonetisation such as prices to fall, demand to shatter and project delays to become prominent. As a matter of fact, real estate stakeholders and buyers should understand that in the current scenario, demand for good quality development by reputed developers with a strong delivery and finance history is bound to increase. It was anticipated that the investors’ market will come to a halt, due to which people are perceiving the market as gloomy. In reality though, market is performing absolutely normal, as primary sales are taking place at usual pace, which in the long run will appreciate property prices. Projects shouldn’t get delayed as not all the work requires labour force, but machinery, and hence smart developers are tackling the situation of cash crunch by changing the type of work till liquidity stabilises in the market. Finally, with RERA to become operational in most states by next year and effect of demonetisation making transactions digital, we will automatically observe a much transparent realty sector in 2017”, avers Kushagr Ansal, Director, Ansal Housing.

A Look at the Performance

Performance of the realty sector in 2016 was a mixed bag, where project launches saw a dip by almost 6 percent year-on-year with NCR realty market witnessing the biggest fall; but possessions offered increased drastically by a staggering 15 percent. With the domestic demand not being up to the mark due to prices still being relatively higher, unsold inventory piling up and EMIs not coming down proportionately, developers shifted their focus towards delivery of units and clearing off the remaining stock rather than launching fresh units. “Over the last few years, especially from years 2008-2012, massive project launches happened across the country, the possession of which was due by this year or the next. This coupled with the sales not performing up to the mark, developers were provoked to focus on the delivery part. With RERA also passed, it was crucial that developers stood up to take the responsibility of delivering on time. This can be regarded as a boom for the sector, as more possessions mean better performance and stability in the sector which further attracts potential buyers. As the inventories get cleared and possessions take place, sales will pick up pace and we are projecting 2017 to break the three year sales dip jinx and outperform several good years this sector has observed in the past”, says Rakesh Yadav, Chairman, Antriksh India.

A major sales chunk in 2016 came from the affordable housing segment, where developers across the country are focusing towards the government’s decision of Housing for all. NCR realty market was the top performer in offering affordable housing units, where for instance, Gurugram(Gurgaon) is ready with almost 50,000 units in pipeline to be delivered by 2021. Adding to this Pradeep Aggarwal, Chairman, Signature Global says, “The central government has been very actively working on the mission of Har Parivar Ek Ghar and with huge number of units are in pipeline, the year ahead surely seems progressive. The ripple effect of Gurugram’s affordable housing scheme will soon be observed in the adjacent regions too, boosting the scheme further and delivering homes to large number of people in the coming year. The recently passed GST & RERA will also act as a catalyst in the real estate sector and turn up to bring more transparency and credibility to the sector. The possible reduction in lending rates along with the attached benefits of PMAY wherein a certain portion of the loan is disbursed at an even lower rate is sure to boost the hopes of achieving the mission of Housing For All by 2022”.Moving slightly up the ladder, even the mid-housing segment performed well in terms of sales and possessions both, where regions like Noida, Ghaziabad and Greater Noida scored above others in NCR real estate market. Citing a few examples and to begin with; realty major, Eros Group achieved a revenue of INR 700 crores and managed to bag sales of 1,700 units in 2016. NCR realty major Mahagun Group scored high in terms of both, sales and possessions. The company offered possession of 4,587 units and bagged 9,462 bookings during the calendar year. “2016 has been a stable year in terms of realty sector’s performance as possessions and sales happened silently and uniformly throughout. With banks reducing lending rates, property prices coming down to its lowest and developers focusing upon building and delivering budget houses, the demand for sales was well met, considering the slowdown pertaining in the sector for past few years. Possessions on the other hand saw a major thrust on account of RERA being passed and delivery becoming the prime motive of every developer. Next year might turn out to be even better for the sector as the upcoming Union Budget is expected to offer major relief for the buyers. Even interest rates might come down to as low as 7 percent that will allow the sales to multiply. With numerous projects across the country reaching into the advanced stages of construction today, possessions will yet again be a highlight for 2017”, elucidates Dhiraj Jain, Director, Mahagun Group. On the other hand, Ajnara India Ltd. offered possession to about 2,000 units with a splendid sales number of 10,950 units during 2016 and a turnover of over INR 353 crores. “Getting homes delivered on time is the best sight for any buyer and this allows a company to generate credibility which is most helpful during slowdowns like now days. In 2016, developers had very thoughtfully shifted their gears from project launches to deliveries. The kind of policy level decisions and implementations that took place this year has reshaped the Indian realty sector and assisted the developers to focus on delivering. 2017 looks all set to offer wonders to the stakeholders of this sector as more domestic and international demand is ready to come up by the middle of next year, with all eyes on the Budget announcements, where chances are high of a common man’s budget”, shares Ashok Gupta, CMD, Ajnara India Ltd.

Amongst other strong runners in 2016 were NCR realty majors Gulshan Homz and RG Group. Gulshan Homz managed to offer possession of 373 units this year along with 493 units sold. With a turnover of INR 300 crores approx. and 764 units sold, RG Group had a good 2016 and is forecasting an even better 2017 for the Indian realty sector in general. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group comments, “With all the unnecessary negative hype about the slowdown in the sector; at a macro level, 2016 was actually much better than many years before it. This year we saw a realty sector favoured Union Budget which was later well complimented by the passage of RERA and GST. RBI played its part seemingly well by reducing the repo rate by 50 basis points this year. Banks also gave some cushion this year by reducing the interest rates by a fraction margin twice this year. All the gains from this year will be carried forward to 2017 that will allow the sector to perform even better.”

What’s in store for 2017

2016 was indeed a year of happenings especially for the realty sector. The focus now moves to 2017 where again a lot is expected out of the government to offer some relief for the sector and its stakeholders. “2017 will be the year of implementation and digitisation for the realty sector. RERA and GST only saw their passage in 2016 with just a handful of states drafting the rules for the same. But in 2017, we will definitely witness regulators in states and RERA will be fully functional. GST will come to a conclusion by third quarter of the calendar year and chances are that this sector might fall in the third slab, i.e. 18 percent. GST becoming operational will allow the realty sector to become much refined and transparent. Finally, with the country planning to become cashless, realty sector and the government will definitely plan to digitise the entire mechanism, from furnishing details to sales to payments to registrations. We might even witness government subsidies or benefits if real estate sales and registrations go digital”, believes Vikas Bhasin, MD, Saya Group. Adding further, Ashwani Prakash, Executive Director, Paramount Group says, “Unlike previous several years where realty sector used to get completely ignored, 2016 got pretty much the best out of everything. From infrastructure to key policy decisions to so much more. Although, clarity over acquisition of land and a long pending desire of entitling this sector with the industry status is still pending. 2017 looks like the year where these demands of the sector might be met and few income tax exemptions or incentives for the people might get introduced in the upcoming Budget session. This, if coupled with reduced interest rates, will allow the realty sector to function fluently and perform even better than 2016.”

Looking into the core angles of Indian real estate sector and analysing how this year went and what’s in store for the next year, Kaushal Nagpal, Co-Founder, BookingKAR concludes, “If we say 2016 was a subdued year for Indian realty, most among us would agree. We could hardly see any traction during Navratra & Diwali, which is considered to be the most peak time for transactions. Whatever transactions in group housing segment were seen, were from the end users looking for their dream homes. Majority of them were from consumer durables, PSU & IT sectors. With the existing sentiments, 2017 looks no different. Indian real estate market is going through a rough patch and the only respite can come from a sharp decline in interest rates. RERA would gradually build confidence among buyers. We strongly feel, post interest rate cut there would be a substantial demand for residential group housing. This would actually be a good time for end users to choose from several ready to move in projects, as they will save on the money spent towards service tax. As per the demand analysis by next year post Budget session, even the broker and consultancy services will move in the vertical direction.”

Sebi notifies norms for public issue of REITs

NEW DELHI: Markets regulator Sebi on Monday put in place detailed guidelines for public issuance of Real Estate Investment Trusts (REITs) including allocation of units to institutional investors.

The trusts, its promoters and directors, which have been barred from accessing the securities markets, or those who are in the 'wilful defaulter' list, would not make any public issue, Securities and Exchange Board of India (Sebi) said in a circular.

In an issue made through the book building process, up to 75% would be allocated to institutional investors and 25% to other investors.

To facilitate growth of REITs, Sebi last month notified revised and easier regulations for raising capital through this instrument.

Sebi had notified the REIT Regulations in 2014, allowing setting up of and listing of such trusts, which are very popular in some advanced markets. However, not a single trust has been set up in India as of now as investors await further measures, including tax breaks, to make these instruments more attractive.

Spelling out norms for REIT's public issue, Sebi said that such trusts can allocate up to 60 per cent of the portion available for allocation to institutional investors to anchor investors.

The anchor investor would make an application of a value of at least Rs 10 crore in the public issue. Allocation to such investors would be on a discretionary basis and subject to the minimum of two investors for allocation up to Rs 250 crore and minimum of 5 investors for allocation of over Rs 250 crore.

The merchant banker would make arrangements for distribution of the application form along with a copy of the abridged version of the offer document.

An issue would be opened after at least five working days from the date of filing the offer document with Sebi. The issue would be kept open for at least three working days but not more than 30 days.

However, in case the price band in a public issue made through the book building process is revised, the bidding period disclosed in the final offer document would be extended for a minimum period of one working day, provided that the total bidding period would not exceed 30 days.

"The manager on behalf of the REIT shall make prompt, true and fair disclosure of all developments taking place between the date of filing offer document with the board and the date of allotment of units which may have a material effect on the REIT, by issuing public notices," Sebi said.

"No REIT shall alter the terms of units which may adversely affect the interests of the holders of that units unless a resolution to that effect is passed at a meeting of the unit holders in accordance with ...REIT Regulations," it added.

Source : ET Realty 

1,613 acres of land slip out of Delhi Development Authority's hand

NEW DELHI: Delhi Development Authority (DDA) has lost 1,613 acres of land, which is three times the size of President's Estate, even after acquiring them as it failed to take physical possession of these land parcels. DDA has admitted this to the Comptroller and Auditor General (CAG) citing how the land acquisition law enacted during UPA benefited original land owners.

CAG in its latest report on management of land by DDA has highlighted how the lack of coordination between the authority and Delhi government resulted in failure to procure the land parcels for development. The central auditor has referred to 1,566 acres of land in its report, which fall in Bakkarwala, Tikri Kalan, Malikpur Kohi/ Rangpuri, Bamnoli, Nasirpur, Kirari Suleman Nagar and Madanpur Dabas.

"It was noticed in respect of seven cases of acquisition, although the awards for acquisition of 2,052 acres of land were announced before January 1, 2009, physical possession of only 486 acres of land was received up to October 2016. As such, land measuring 1,566 acres has not been received up to October 2016. The acquisition of this may lapse in view of the enactment of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This, the purpose of acquisition of land would get defeated, delaying the benefit of development to citizens , " the report said.

TOI in April 2015 had first reported how the land acquisition Act of 2014 had benefited a section of landowners in Delhi. In a series of judgements, the Delhi high court even scrapped acquisition of several acres of land in Delhi by government agencies, some of them dating back to 1986. DDA officials had admitted that about 150 such judgements had come and that they had written to the Delhi government and urban development ministry to probe whether there was a collusion between farmers and land acquisition collectors.

Source : Et Realty