Mumbai builder arrested for land-grab

MUMBAI: The crime branch on Saturday arrested well-known builder Alpesh Ajmera (40) and Ram Narayan Singh alias Bacchi Singh, a henchman of underworld don Chhota Shakeel, in a land-grabbing case.

The anti-extortion cell is now looking for Alpesh’s brothers, Jiten and Rajesh. This is the third time Singh has been arrested in the past one month. He was earlier arrested in the Malad land-grabbing case and an extortion case.

Ajmera and Singh were produced before the Esplanade Metropolitan Magistrate and were remanded to police custody only till Sunday despite a plea for a 14-day custody. Both have been booked under charges of cheating, breach of trust, threatening and house breaking and theft.

Though the case dates back to 2005, it came to the crime branch only recently. The complainant, Shrishant Kalbag, who runs a supermarket in the western suburbs, had bought a plot measuring 2,000 sq ft near Bhavan’s College from Ajmera Builders for Rs 2.25 crore.

Deputy commissioner of police (crime) Deven Bharti said that Kalbag paid Rs 1.25 crore as down payment and applied for a loan for the rest. "Kalbag took legal possession of the plot from Ajmera and started work. But within a few months as prices shot up, Ajmera called Kalbag to his office in the presence of Singh and asked him to cancel the deal and surrender the keys of the shop," said inspector Vijay Salaskar.

When Kalbag refused, Jiten Ajmera whipped out his licensed revolver and threatened him with dire consequences stating that he was a relative of Lalit Dholakia, who is with the Dawood Ibrahim gang. When the threats did not work, on July 19 last year, Singh barged into Kalbag’s residence in Bandra along with five to six goons and forced him to open the door. Singh threatened Kalbag and his wife Heena with dire consequences if he did not sign the cancellation of deed. Kalbag approached the D N Nagar police who sat on his complaint after which he was forced to sign the cancellation deed, said Salaskar.

Later, when Kalbag went to his shop, he was shocked to see that goods worth Rs 30 lakh were missing. According to the complaint, Kalbag rushed to D N Nagar police station again but was shocked to see Ajmera chatting with the senior inspector and an encounter specialist. Singh, who was with Ajmera, told Kalbag, "Hamara koi kuch nahi bigad sakta"(Nobody can harm us). Kalbag approached the crime branch only recently after he read about Singh’s arrest.

Builder trick-o-treats

Just more pain to avoid..

Buying a house? Beware of builders' tricks

I. When do I get my house?

Most agreements do not clearly specify the date of delivery. For
instance, one says: "Completion of the building is expected to be
delivered by the date mentioned in the covering letter of this
allotment. The delivery of the possession is subject to force
majeure." What this means is that you cannot hold the developer
responsible if he does not stick to the promised delivery date.

There have been cases when the delivery has been delayed by 12 months
or more. Typically, the buyer would have paid 95 per cent of the
price by the time he reaches the expected delivery date. If he is
living in a rented house, delays will drive his calculations awry as
he would not have factored in this additional rent (see Double Bite).
Mumbai stockbroker Bhupendra M. Pitroda, 58, fought a legal battle
against Megha Property Developers for five years. Reason: delayed
possession.

Pitroda was promised delivery of the flat he booked in 1998 in Navi
Mumbai's Madhuri Cooperative Society Housing Project within 18
months. The builder later said that delivery would take another six
months. When Pitroda visited the site six months later, he felt that
the delivery would not happen soon. So, he instructed his bank to
stop payment of the balance 37.5 per cent of the apartment's cost to
Megha Developers.

The developer promptly sold off the flat. An aggrieved Pitroda then
moved the State Commission in July 2000. Three years later, the
commission asked Megha Developers to refund Pitroda the money he had
paid with 15 per cent interest. Pitroda was also awarded a
compensation of Rs 15,000 for the mental agony caused and Rs 5,000
for legal costs.

The developer appealed in the National Commission, which upheld the
State Commission order but cut the interest to 9 per cent. The
developer then moved the Supreme Court. "The Supreme Court judge
flung the papers in the face of the builder's lawyer and asked the
builder to compensate me immediately. The judgment was over in a
minute," says Pitroda. Through the legal battle, Pitroda made 25
appearances in the State Commission, three in the National Commission
and one in the Supreme Court.

Many agreements have penalty clauses for delayed delivery, but they
are without bite. For example: "If the company fails to complete the
construction of the said building/apartment within the period as
aforesaid, then the company shall pay to the allottee compensation at
the rate of Rs 5 per sq. ft of the super area per month for the
period of such delay." What this means is that for a 1,000-sq. ft
flat, you would get a compensation of Rs 5,000 per month�a pittance
(see Double Bite).

In most cases, buyers put up with the delay quietly rather
than 'antagonise' the builder. Most fear retribution, harassment and
further delays in delivery. This is not entirely baseless. For one,
agreement papers are designed to protect the builder. Two, your
intention to fight the builder may look like a joke given your
handicap in terms of financial prowess and influence. Three, there is
no industry regulator you can turn to for redressal. Suresh Virmani
of National Consumer Helpline says: "We generally encourage a
dialogue between buyers and sellers to settle disputes. If that
fails, the matter is taken to the regulatory body. But we can't even
suggest this in real estate because there is no regulatory body."

What to do. Don't just take the builder's word on the progress of
construction. Check it out from time to time, as Pitroda did. If you
feel a delay is likely, start building up pressure on the developer.
The best way to do this is to form a society, says Virmani. Usually,
builders have many projects running at the same time and they push
the ones where the pressure is higher. "The more the number of
buyers, the greater is the pressure," says Bharath Jairaj of Consumer
Action Group, Chennai.

II. Where are my papers?

A lot of builders are evasive about giving the completion certificate
at the time of handing over the flat. A completion certificate is
issued by municipal authorities and establishes that the building
complies with the approved plan. A developer would not get the
certificate if he deviates from the plan.

You cannot prove ownership over your house if you don't have the
certificate as you would not be able to get the house registered.
Also, you may not be able to get utility connections. You will have
problems selling, mortgaging or reverse mortgaging the house as it
will not be in your name. In the worst case, the unapproved parts of
your house would be demolished by the municipal authorities. Not a
happy state of affairs.

Businessman Mohammed Haroon, 45, got his flat in Tulip Garden,
Gurgaon, six years ago, but he has not got the completion certificate
yet. The same goes for the other 59-odd flat owners there. Together,
they took Sarvapriya Developers, which built Tulip Garden, to the
consumer court. "After four years, in mid-August this year, the court
directed the builder to hand over the completion certificates within
a month, or pay Rs 5,000 each as compensation to all the flat
owners," says Haroon. "But we know that none of the two will come our
way and are prepared to approach the Delhi High Court in this
matter."

What to do. Sale agreements often don't mention the completion
certificate. If yours doesn't and you notice it before signing the
papers, insist on the inclusion of a clause that you will be given
the completion certificate when the flat is handed over to you. Ask
the builder for it as soon as he announces that the house is ready
for possession. If, like Haroon, you move into the house without it,
the court will probably be your last resort.

III. What's the guarantee of quality?

Within a month of moving into his apartment in Mahagun Manor, Noida,
Rajiv Raghunath, 41, got trapped inside the house as the door lock
failed. In six months, the plaster started peeling off and the fans
stopped working. In another few months, water started seeping in as
the pipes had corroded. "I felt cheated. This wasn't worth my money,"
says Raghunath.

As of now, there is no way for a buyer to check the building
materials used or the quality of construction. Says advocate Anupam
Srivastava, who is with law firm Chambers of Law: "Quality is a
subjective matter. Buyers should enter into an agreement on the kind
of material that the builder will use."

In October 2005, Pune's Gera Developments started a trend by
providing a 5-year warranty on its buildings. The warranty, however,
is subject to the conditions that no structural changes be made to
the house and that there be no misuse.

What to do. Don't fall for the builder's glib talk. Insist on
including the sanctioned plan of the building and the specifications
of the raw materials to be used for construction in the purchase
agreement. If you are already facing quality problems, you can go to
the consumer court. Says Anand Patwardhan, a consumer activist and
lawyer: "If you want to approach the consumer court, move it within
two years from the day you take possession." Alternatively, flat
owners can form a Residents' Welfare Association (RWA) and get the
builder to fix the problems, as Raghunath, an RWA member, did.

IV. What is the price really?

Nishit Babyloni, 38, mech-anical engineer in BHEL, Bhopal, had booked
bungalow No. 105 with Ansal Housing and Constructions (AHC) in
Pradhan Enclave, Bhopal, in 2004. On a visit to the site five months
later, he found that his bungalow was not being built. He asked AHC
to give him bungalow No. 120 instead, as construction was in full
swing on that. AHC formally changed the allotment in February 2005,
but sent him a letter eight months later asking for Rs 3.15 lakh more.

Atit Arora, general manager (marketing) and project head, Ansals
Pradhan Enclave, Bhopal, says: "The bungalow's specifications were
changed. Babyloni was required to deposit the amount if he wanted the
new specifications. " Babyloni retorts that AHC did not tell him about
the additional work and the changes in specifications. "We were not
told that we would have to pay 25 per cent more for the new bungalow
till 18 October 2005." He is thinking of moving the consumer court.
But, it is not unusual for an agreement to say that a builder can ask
for additional payments if specifications are changed or there are
cost overruns.

There are legal loopholes as well. The Maharashtra Ownership of Flats
Act, 1963, protects buyers against malpractices in the sale and
transfer of flats. It gives homebuyers the right to inspect the
builder's documents such as the specifications that he has obtained
from the authorities. The Delhi Apartment Ownership Act, 1986,
however, is a different story. Although it was published in the
Gazette of India over a decade ago, brought on the statute book by
Parliament and given the President's assent, it is yet to be
notified.

What to do. The last stop is the consumer court. Says Srikumar, "Many
malpractices are offences under the Indian Penal Code, for which the
responsible party can be prosecuted." Keep checking with the builder
if any changes are being made to the specifications mentioned in the
agreement and the allotment letter. Also, try to get it mentioned in
the contract that if a sum higher than the original price has to be
paid by you, the builder would give you additional time for that. You
must also ask for a copy of the sanctions that the builder has taken
from the authorities to carry out the alterations.

V. What else do i pay for?

To make your house liveable, you will need electricity, water and
sewage connections. You will also need electrical wiring, appliances
like fans, lights and a water pump, which are unlikely to be part of
the package and generally won't be mentioned in the agreement. These
will be additional costs that you will have to bear. You might also
have to keep some speed money aside for registration so that it gets
done in a decent timeframe. In some cases, the builder may make a
verbal promise to get it done for you.

What to do. Builders generally have a take-it-or-leave- it attitude
with conscientious buyers while striking a deal. Even so, it pays to
be scrupulous and to read the agreement and its fine print. "Get a
lawyer, an architect or an evaluator to determine the correctness of
the purchase," says Srivastava. Finally, do some quick math and keep
aside some funds to get your house up and running.

VI. How big is house?

A typical home purchase agreement states: "The plans, designs, and
specifications are tentative and the developer reserves the right to
make variations and modifications. .." Simply put, in most cases, you
won't know the final area of
the house till you get it. The agreement will further state, "In case
of change in area, the difference in cost of area shall be adjusted
at the time of making final payment."

Shikhar Saxena, partner, Ace Equity Solutions, a leading housing
finance franchisee of ICICI Bank [ Get Quote], had booked a fully-
furnished, air-conditioned service apartment measuring 650 sq. ft
(super area) in Cabana Service Apartments in Indirapuram, Ghaziabad,
which was being built by Assotech Realty. He got an allotment letter
mentioning this area. However, when the builder offered possession,
the super area of the flat had increased to 671 sq. ft. "Once the
authorities approve of the floor space index, how can the builder
change it?" he asks. After holding out for over 18 months, the choice
before him now is to either accept all the terms of the builder or
seek cancellation of his allotment. Further, he was informed that the
maintenance charge, which was to be Rs 1.50 per sq. ft per month, has
been increased to Rs 7 per sq. ft per month. The agreement shields
the builder. It says "the monthly maintenance charges will be subject
to revision from time to time".

Assotech's Elegante project, also in Indi-rapuram, was to have
terrace gardens on the seventh and thirteenth floors. "There is only
a patch of green; the developer has built units on these floors too,"
says a buyer. Srikumar says there is nothing one can do unless the
size of the garden is specified in the agreement.

What to do. Builders usually follow the same practices through all
their projects. So, before buying, check out the builder's earlier
projects to see if he plays fair. Start a blog or join one to share
your experiences with others, though this doesn't guarantee
redressal. You can read about the mistakes and experiences of other
people on websites like mouthshut.com.

VII. What's the carpet area?

Most residential units in India are sold on the basis of the super
built-up area, which includes open spaces like space for lifts,
staircases and parking, among other things. But, what you really get
is the carpet area, which literally means the area that you can
carpet. This can be 15-35 per cent less than the super built-up area.
In 2005, HDFC [ Get Quote] chairman Deepak Parekh had said the
company would provide loans at cheaper rates to developers who sell
their flats on the basis of carpet area. But, there has been little
headway on this front. Some developers, especially in Bangalore, sell
on the basis of carpet area. In Pune, too, the builders' association
has decided to increase the carpet area by 25 per cent to arrive at
the saleable built-up area charged to the buyer. In both these cases,
buyers are aware of the area they will get. Though there is still a
long way to go, experts believe that soon properties all over India
would be sold on the basis of carpet area.

What to do. Buy property on the basis of carpet area, although the
builder will not like the idea. Argue with him that if the super
built-up area is mentioned on the basis of the approvals and
sanctions, the carpet area can be quantified. Says Srikumar: "There
should be a provision for termination of the contract and resumption
of the property so that builders don't have an upper hand. However,
in the absence of rules, buyers should be vigilant."

VIII. Will I get a well-managed property?

The developer may promise to maintain the building or complex in the
initial years. The service, however, may not be satisfactory.
Residents of Mahagun Manor in Noida have taken over its
maintenance. "The homebuyers cannot even use the Right to Information
Act, 2005, to their advantage because it doesn't apply to private
builders or even group cooperative housing societies," says
Srivastava.

What to do. You are unlikely to get relief through correspondence and
phone calls. You can go the e-way to attract the builder's attention.
For months, Delhi-based developer Unitech ignored the complaints of
the residents of one of their premier offerings, Uniworld City. Then,
a resident shot a nine-minute video that captured the visible flaws
of the project, and posted it on YouTube.com, a broadcast site. Their
grievances were soon attended to. You can use websites like
www.consumerhelplin e.in and www.cgsiindia. org to seek further
guidance.

Though the dice is clearly in favour of the builder, the buyers can
still fight back and many of them are doing so. Now, the government
urgently needs to put a regulator in place to ensure proper
disclosures and protect the buyers.
What we need

Mostly, a home is the biggest investment of one's life. And yet, most
people buy it in a hurry. In this hurry, they sign all the papers
without even reading it, let alone questioning its clauses. It may
all seem illogical later, but it doesn't when it actually should.

The Indian real estate market does not have a regulator. The need of
the hour is to take lessons from streamlined markets abroad and
introduce comprehensive disclosure norms. For instance, US homebuyers
are entitled to receive a number of disclosures during the course of
the house purchase. These disclosures give a homebuyer a somewhat
transparent and fair picture of what he is getting into. On the other
hand, Indian homebuyers sign agreements that are not clear. What's
more, they even get surprises in terms of extra costs. Take a look at
what a buyer in the US state of California is entitled to know from
the builder.

Real Property Disclosure Statement. This document details the
condition of the property and potential hazards, or defects that may
be associated with it. While the seller is principally responsible
for the disclosures presented in this document, the agent is also
supposed to inspect the property and disclose any observable defects
detected in the process. The document also lays down any special
taxes that may affect the property's value.

Financing Disclosures. Various financing disclosures are made during
real estate transactions. They give important details about the loan
the owner may have taken for the property.

Truth in Lending Statement Disclosure. This has details about the
terms and conditions of credit, including the amount financed, the
finance charge, and the annual percentage rate.

Real Estate Settlement Procedures . This contains detailed estimates,
by the broker and the lender, of settlement and closing costs to be
provided within three days after you apply for a loan. It also
provides detailed accounting of actual disbursements and closing
costs once the loan transaction is completed.
'Check builder's credibility'

Vincent Lottefier, Chief Executive Officer, India
Jones Lang La Salle Meghraj, a real estate consultancy firm

Cause of the malady. Generally, reputed builders deliver on time and
as per promised specifications. Small developers, however, default by
stretching their projects beyond the promised delivery date. Often,
this is caused by funding issues. They may also skimp on construction
costs, banking on the buyer's ignorance about quality parameters.
Sometimes, they submit incomplete drawings to the municipal
authorities. There are also fly-by-night operators, who pocket their
clients' initial payment and then disappear altogether. In bigger
cities, most developers are established and experienced players with
a reputation to protect. Here, the incidence of gross defaulting is
less than 10 per cent. This can, however, be as high as15-20 per cent
in emerging suburban areas, where there are a lot of small
developers. Many developers who respond to sudden property booms in
suburban are as have no experience or technical knowledge and often
do not have banksbacking them. Most emerging suburbs are also defined
by unclear land titles. Navi Mumbai is a case in point.

What buyers should do. A buyer should check the developer's
credibility, past projects, performance and delivery record. He
should also ensure that the project is funded by a known bank and has
all the approvals. A buyer is entitled to ask for a copy of the
project's drawings, duly stamped by the municipal authorities.

Legal recourse. Buyers in Maharashtra can take recourse to Section 8
of the Maharashtra Ownership Flats Act, 1963, which makes a developer
liable to refund the money obtained from a customer with 9 per cent
interest if he is unable to justify non-completion of his project.
Most states have similar regulations.
Reputed developers do undertake remedial action if aclient is not
satisfied with the final product. This is unlikely in the case of
unknown one-time operators. Buyers should keep in mind that a
developer is supposed to make improvements, repairs and alterations
until a society is formed.

Pune builder Runwa caught in Land fraud

How many Runwal's are still roaming the streets of Pune ??

The Runwal Group is one of Pune's biggest builders and developers of townships, multiplexes and malls in one of the country's fastest growing cities.

But on Friday night, the facade cracked.

Big fish, Pradeep Runwal was arrested by the Pune police on serious charges of forging the power of attorney of over 270 farmers, both dead and alive, to allegedly secure a bank loan worth a staggering 450 crore rupees.

And Pradeep Runwal wasn't alone, along with him, two of his secretaries were also arrested by the Pune police.

With 300 crore of the loan already sanctioned, Runwal thought it was business as usual, till a former employee began to blackmail him. Runwal would have to cough up Rupees 50 lakhs or be exposed.

When Runwal refused, these men upped the ante. Approached by Runwal's ex-employee, they began to blackmail the developer. When matters threatened to spin out of control Pradeep Runwal himself approached the police and was himself arrested.

It's a curious cast of characters in the custody of the Pune police. And in the midst of that, a poignant irony is visible in the form of the Runwal Group's vision that 'building structures does not take long, building integrity does'.

Apparently Pradip Runwal was just a little too impatient.

BMRDA Master Plan may hit realty prices

Bangalore: The Bangalore Metropolitan Region Development Authority (BMRDA) will invite bids for consultancy services to prepare the final Master Plan for five planning areas of Bangalore. This could temporarily stall land conversion and construction activities.
The Interim Master Plan (IMP), which was notified in June, will be effective for only a year. The planning authorities of the BMR region — covering over 2,600 km across Anekal, Hoskote, Kanakapura, Nelamangala and Magadi — will have to prepare a master plan by June 2008.
BMRDA officials said orders have been issued to the planning authorities to invite global tenders for preparation of the master plan.
“We need to have a master plan in place for all the five local planning areas within one year of the interim plan coming into being. Once the plan is prepared we will evaluate it and send it for approval,’’ the officials said.
The Master Plan has to be proposed up to 2021. Currently, the region has a population of 8 lakh and by 2021, it is expected to grow to 30 lakh. This will have to be taken into consideration. The BMRDA will act only as a monitoring authority and not involve itself in planning and development for these planning areas.
“There are many cases where certain real estate projects have come up, which is not in tune with the IMP itself. The infrastructure there is inadequate so it is inevitable to revert to its designated zonal usage. All these changes have to be now made in the Master Plan,’’ officials explained.
During the preparation of the IMP, the government had banned land conversion in the region. The realty sector was badly hit, leading to wide spread protests. The BMRDA office was often flooded with developers, associations and individuals as land conversion and layout approvals were banned for over a year. The authority had stopped land conversion and layout plan approvals from July 2006 till June 2007.
If that was the scenario for the IMP, will the realty sector be hit for the second time with the BMRDA preparing to put the final master plan in place? That is the question worrying all those concerned

No home slowdown in India

This article by WSJ lacks indepth research. The Sigrun project in Mumbai is Virar, the northernmost tip of Mumbai stretching 60 km from Churchgate. Sigrun is building second homes for the uber rich rather then building low and middle income housing. Virar is adjacent to the Arabian sea and a very beautiful place along the coast. Recent developments have trashed the area due to rampant haphazard construction. Neverthless I have fond childhood memories of the place.
Bidadi is another beast which is home to H.D. Kumaraswamy's constituency. All these developers are targetting the upper middle class segment which has easy access to loans due to their high salaries. The real housing need will not be satified by these developments. Ofcourse the rich will get richer as these prices will rise once everyone decides that a second home is a good investment.

Urban migration triggers slew of residential projects; suburbs in chunks
THe Wall Street Journal

T he housing markets in the U.S. and the United Kingdom have been slowing, but in India, largescale residential projects are only getting bigger.

India's massive urban migration-it is estimated that 220 million people there will migrate to cities in the next decade-has triggered a slew of large-scale residential developments. The rural exodus is largely being driven by workers leaving India's agricultural sector to take up more-lucrative employment in the rapidly expanding service and manufacturing industries.

Forecasters estimate that India has a shortage of about 20 million housing units-and counting-intensifying the need for more dwellings.

The government has created a number of initiatives to address the shortage, includ ing the creation of "townships," or satellite towns located close to big cities such as Bangalore, where overcrowding is most severe.

Township projects are taking shape in various parts of India, but one of the biggest undertakings-the first phase of which is expected to provide homes for around 750,000 people when completed-has been drawn up by the Banga lore Metropolitan Region Development Authority, formed by the state government of Karnataka to oversee planning and development in the Bangalore area. The ambitious development will create five integrated townships, which will be developed through a partnership with private developers over a roughly 60,000-acre site.

This month, Indian develop er DLF Group & Limitless, a development subsidiary of Dubai World, the business and investment-holding arm of the Dubai government, were tapped by the authority to develop the first of the five townships, Bidadi.

Together, the two companies will invest $12 billion in the project, a 9,884-acre development located 22 miles southwest of Bangalore.

"Satellite towns are essential as the services and manufacturing sectors grow and more people move from the countryside to cities," says Anurag Mathur, deputy managing director of real-estate advisory firm Cushman & Wakefield Inc. in India. "The infrastructure is under enormous pressure in towns such as Bangalore, so the aim of projects such as Bidadi is to decongest city centers."

Bangalore is on course to follow the example of some other major Indian cities to build entire suburbs in huge chunks to meet the hunger for quality housing and office space for one of the world's fastest-growing middle classes. Thanks to changes in the law that encourages foreign investments in Indian development, many of those townships are joint partnerships between established Indian developers and Western realestate investors, including U.S.-based Tishman Speyer Properties LP, Marathon Asset ManagEment and Walton Street Capital LLC.

In addition to dwellings, Bidadi Township will have a retail, office and recreational component, according to Imad Benharouga, head of corporate strategy at Limitless in Dubai.

Construction is expected to start in the first half of next year and take five years to complete.

Plans for Bidadi also include the largest technology hub in the country and one of the largest in the world, says Karun Varma, head of transaction services in Bangalore at real-estate advisory firm Jones Lang LaSalle Inc. The aim: for workers to both work and live in the vicinity, cutting down on commuting time.

Schools, parks and medical facilities are also going to be developed.

"It is a challenge to build a large township like this in such a short time, which is why I think the government chose a big developer to do it. However, you need aggressive and challenging timelines to make projects like this happen," says Mr. Varma, who isn't advising on the project.

This month, Indian conglomerate Sigrun Group started construction on a 200-acre township on the northern outskirts of Mumbai. Sigrun Kingdom, as it is known, will consist of around 7,000 homes, as well as shops, offices, medical facilities and schools, according to Sheetel Chantel Halai, head of South Asia at real-estate advisory firm Savills in London, who is advising on the project.

Banks reduce loan interest rates

IDBI Bank today reduced its floating rates on housing loans by 50 basis points to 10.50 per cent, following in the footsteps of the State Bank of India (SBI) and ICICI Bank, the two largest lenders in the country.

An IDBI Bank release said the new rates were for loans taken between October 12 and December 31.

The bank has launched a “buy now, pay later” scheme, under which loans for properties under construction can be paid in equated monthly instalments after a moratorium of 18 months.

While the SBI has cut interest rates on home, auto and personal loans by 50-100 basis points, ICICI Bank has reduced its rates by 0.25-0.50 per cent.

Bank of Baroda, Axis Bank and HDFC have also reduced rates.

In September, HDFC had cut its rates on floating home loans by 0.5 per cent.

The cuts are a consequence of a fall in the rate of growth of credit to 24 per cent in the first half of the fiscal from 31 per cent a year ago.

This is the result of the Reserve Bank of India (RBI) adopting a tighter monetary policy, to check liquidity and curb inflation.

Banks have been clamouring for a softer interest regime ahead of the RBI’s half-yearly monetary review on October 30.

Recently, finance minister P. Chidambaram had asked banks to cut interest rates to boost sagging demand in sectors such as auto, paper

Tendulkar turns builders - for himself

After Ambani its the turn of Tendulkar to build a few floors for himself.

Mumbai: Even as master-blaster Sachin Tendulkar prepares for his 400th ODI in Vadodara on Thursday, Mumbai’s premium suburb of Bandra (west), the real estate market is abuzz with speculation that the cricketer is buying a prime bungalow property near Carter Road, not far from the sea.
Although there is a veil of secrecy and even denials, market sources say Tendulkar is keen on buying a property located at 29, Perry Cross Road. The transaction could be in the region of Rs 38 crore-Rs 40 crore and is believed to have been brokered through a Bandra-based property broker, Bihari Khandari.
Local political contacts, who generally have their ears to the ground as far as building activity in this area is concerned, confirmed Tendulkar’s interest in the property.
The bungalow’s current owner Kishore Bajaj denied that his property had been sold. “It is up for sale, but no deal has been concluded with anyone so far,’’ he told this newspaper on Wednesday. Tendulkar’s wife Anjali too denied any deal had been struck.
Last month, a public notice was issued regarding this property on behalf of an unknown client, asking for any person having any claim, right, title or interest to come forward within ten days. “So far we have not received any objections,’’ said advocate Sanjay Udeshi who issued the notice. Udeshi said his client was a developer called Satra Properties and not Tendulkar.
The property is situated just one lane before the landmark Joggers’ Park and a couple of hundred metres from the sea. The ground-plus-one storey bungalow, constructed in the 1920s, is more popularly known as Dorab Villa in the area. Till recently it belonged to a Parsi joint family—the Wardens. One part of the Warden family had sold their share to Bajaj in 1987 for Rs 41 lakh. Another part of this family finally sold their part a few years ago, reportedly for a couple of crores.
The bungalow, which is currently in a run-down state, is situated on land measuring about 9,000 sq ft. The floor area of the bungalow (2 floors) is close to 10,000 sq ft.
Sources said the property falls under the coastal regulation zone (CRZ). Hence, it can be redeveloped with only a limited floor space index (FSI) of 1 instead of FSI 2, which is available to other properties not falling under the CRZ. “With the limited FSI, Sachin will be able to set up not more than ten floors. The first two or three floors may be used for parking,’’ a source familiar with the deal said. That will be enough to give him a view of the sea, something Tendulkar is said to be keen on.
Sachin at present lives at La Mer in Mount Mary, Bandra —- the same building where Aishwariya Rai lived till she married Abhishek Bachchan. He grew up in Sahitya Sahavas in Bandra (east).
In 2003, Tendulkar had reportedly met the then chief minister Sushilkumar Shinde to seek his help for buying a plot at Shirley Rajan village in Bandra (west).

Who will Blink first ?? Its the builders stupid !!!

TOI has a 2nd page article on the realty slump in Mumbai. The question is not whether who will blink, but rather "Is it affordable ?" With expensive loans and speculators having left town, there is no hope for any sales at these prices. Times says they are writing about the realty slump, since May. This blog was started almost 2 years ago when the irrational exhuberance was overcoming buyers aided by low interest rates. I expect US style foreclosures to become rampant in Mumbai/Delhi where people have over-leveraged themselves. Rather then wait for builder incentives, end-users/bargain hunters should look for second sales for distressed propeties. I'm certain a 40% reduction in them is possible. As always time is the best teacher.


Mumbai: It may seem like an eyeballto-eyeball confrontation between builders and buyers. And who will blink first in coming weeks is the question on everyone’s mind amid an unprecedented slump in Mumbai’s residential real estate market.
According to property experts, the next three months, starting from the Navratri festival, will be extremely crucial for builders, who have seen sales of apartments dropping by up to 50% in 2007 as compared to last year. In fact, some leading developers have confessed in private that some of their projects registered “zero sales’’ between February and June this year.
Despite the slowdown, which is mainly due to the unaffordability factor and high interest rates on home loans, builders are holding on to their prices. Potential flat buyers, on the other hand, are deferring their decision as they expect the rates to drop. Some experts are of the view that a further 10-20% dip in flat prices cannot be ruled out.
HDFC chairman Deepak Parekh agreed with the contention that it is all about who blinks first. “The fact that they are holding on to their prices despite the drop in sales of between 30% to 40% is an indication that builders are showing signs of cracking up,’’ he said.
Parekh added that the developers are in a position to hold on mainly because of the phenomenal profits they have made in the past. “If the sales do not increase in the next few months, one expects a correction of about 10-15%, but definitely not a crash as many predict,’’ he said.
Last May, TOI was the first to report about how several builders, dealing on a one-to-one basis with home buyers, had already started offering freebies like throwing in free parking, not charging a premium for a floor rise and, in some cases, even offering to pay for the stamp duty.
Rajiv Sabharwal, senior general manager, ICICI Bank, too, admitted that the next three months are crucial for builders if volumes do not pick up. “The market is down in terms of unit sales, but the number of inquiries from flat buyers is increasing. This could lead to a positive trend in the next two months,’’ he said.
Sabharwal, however, added, that the market is slightly better than what it was in the first quarter of this year, which witnessed very low transactions. “There has been a slow improvement since then, but it will be difficult to quantify,’’ he said.
A property expert, not wishing to be identified, told TOI that if the market does not revive or sales fail to pick up in next three months, there could be a correction to the extent of 20% to 30% by next year.
“Ninety per cent of investors as well as end-users have already bought their first and second homes. Now at these high levels, both the speculator as well as the end-user do not find real estate lucrative to invest with high risk. In fact, speculators have started lending money to developers at 15% to 18% interest rather than investing in real estate,’’ he said.
Knight Frank India chairman Pranay Vakil observed that despite the booming stock market, investors are no longer booking profits and investing in real estate. He said the coming months would be keenly tracked to see how the residential market shapes up.
Suburban property developer Mukesh Mehta said the residential market is saturated in areas like Chembur, Santa Cruz, Khar and Bandra. “Prices have become unaffordable. Builders who have the financial muscle power can hold on, but the smaller developers will be thrown out in the next two years,’’ he claimed.
But Mafatraj Munot of Kalpataru Group put up a brave front. According to him, sales of apartments have picked up since June after the initial dull period during the beginning of the year. “In fact, there has been an increase of 10% in our prices since last year,’’ he said. “Today there are only actual buyers. The investors have all disappeared,’’ Munot added.
Arun Nanda of Mahindra Gesco said actual sales are still happening despite the slowdown. “At our projects in Goregaon and Kanjurmarg, prices have appreciated by as much as 15-20% since last year,’’ he claimed.
In fact, TOI has learnt from market sources that some big developers in the city have taken a gamble and hiked their prices in residential projects by up to 15% since the past two months despite few sales taking place.
In Powai, a developer has jacked up prices for his high end apartments from Rs 14,000 a sq ft to Rs 16,000 a sq ft. Similarly, another has increased the price in his Malad project from Rs 6,300 to Rs 6,700 a sq ft. A developer setting up a project near the Jogeshwari-Vikhroli link road recently hiked the price from Rs 6,800 a sq ft to Rs 7,100 a sq ft.
“These developers are trying to send a warning to flat buyers: buy now or expect the prices to rise even further,’’ said a market source. Whether the purchaser bites the bullet or not will be seen only in the next few months.
GROUND REALITY
In the last three years, the property market has gone up by almost two to three times across the country. According to experts, the prices have reached a level where it looks difficult for further appreciation and there is now resistance from buyers. Reasons for the high prices are:
l FDI funding to developers l Mutual funds have entered real estate l Big developers from north moving towards south and west regions l Boom in shopping malls l Cash transactions
There is a lot of resistance for buying real estate because: l Real estate prices are at its peak. l High interest rates which make investment in property not worthwhile.
There is clear indication of slowdown as few people are taking housing loans as compared to last year. l Oversupply to hit the market in residential and commercial sector. l New townships likely to come up on the outskirts of the city, which will be well planned.

Exercise caution before redevelopment

This article from TOI applies to all major cities in Maharashtra.

Pune is on the brink of major redevelopment projects in several housing societies facing arterial roads. A recent Bombay High Court judgement has allowed the use of force as a last recourse against dissenting members of a cooperative society refusing to vacate.
The verdict makes the decision of the majority binding on the minority, in the belief that a miniscule minority should not hold the majority to ransom and stall redevelopment plans.
Even as the verdict seeks to facilitate faster redevelopment, the fact remains that many housing societies are ignorant of proper procedures to be adopted while going in for redevelopment and it is time societies get their act together and follow a systematic plan towards this.
Hemant Naiknavre, Director, Naiknavre & Associates, says the government should frame model guidelines to be followed by housing societies which will help bring in transparency.
He further explains, "The decision of the majority is binding on the minority as per the cooperative law, until and unless it is proved that the resolution on redevelopment or selection of the developer was unreasonable and unfair. The facts and circumstances of each case may differ, and there may be cases where a minority may be fighting for genuine reasons due to non-transparency in the whole procedure."
Legal experts say the first and the foremost step before going in for redevelopment would be a structural audit of the building. The structural audit report will determine whether the building should go in for redevelopment or for major repairs. In the absence of the technical report it would not be legally permissible to pass a resolution in the general body meeting. However, it is a fact that many co-operative societies suddenly call for General Body meetings, and decide to go in for redevelopment in the absence of a structural audit report. There are also instances of redevelopment being undertaken without proper negotiations with the builder.
Advocate Chandan Parwani elaborates that in any scheme of redevelopment, the primary objective is to ensure guarantee of performance. Performance is principally in the area of timely construction, quality control and adherence to rules, and regulations. A bank guarantee ensuring timely performance, besides necessary funds being available so that a project would not be left midway are essential requisities. A promoter and builder should be entrusted with the cost and expense of the temporary rehousing of members of the society during redevelopment so as to ensure that the members are not bearing the brunt of any delays on the part of the builder. A substantial contribution to the Corpus Fund by the builder will take care that the society can meet its cost of maintenance and upkeep after redevelopment. Experts also advise the formation of a reconstruction committee (consisting of knowledgeable members in the society), who can directly report to the managing committee. Such a committee can cross-check the builder's credibility before appointment as also report any discrepancies in the reconstruction work, they say. "A feasibility report of the society architect is a must before negotiating with the builder," maintains advocate P Narayan. The report will reflect the potential floor space index including the TDR of the housing society. The best way to select the builder is to invite tenders through a public notice and such tenders should have the basic eligibility criteria mentioned. This will bring in more transparency in selecting the developer. The society architect can help zero in on the best tenders in terms of price, quality and lucrative offers.
"The fact that most societies do not appoint professionals like architects, structural engineers and competent advocates is the reason that proper negotiations do not happen," feels V S Kulkarni, resident of Bhandarkar Road, Deccan. The appointment of a competent advocate is crucial as he can act as an ombudsman and prevent unnecessary litigations.
It is also a fact that ignorance of members is taken advantage of by committee members with vested interests, who take hasty decisions ignoring genuine objections of a small section. The minority is not always in the wrong, maintains advocate P Narayan.
"In Pune, for instance, there are row houses and flats in cooperative housing societies that have different carpet areas. If the majority holds a smaller area then they successfully bargain for a bigger area from the developer and sign on the dotted lines. However, in the same society, members having larger area, and not getting a proper offer in terms of area or monetary compensation, will quite naturally fight against the majority and challenge the resolution," says Narayan.
Enumerating the benefits of redevelopment, Rajesh Choudhari, Director, Prestige Developments, says your new flat is twice the resale value of the old house. This valuation could help you leverage a better loan for business purposes while also becoming a stepping stone for a much bigger asset later. Hence, any co-operative housing society should plan for redevelopment in a systematic and precise manner. If some members fight for trivial reasons then the overall objective gets defeated.
"Needless to say, if the dissenting members obstruct the redevelopment work, then not only will the builder suffer irreparable loss but the entire society, which involves a majority, would not be able to get a new premise easily," Choudhari says.

Unfinished realty - Builder delays, customer pays

Business Standard reports
What do developers do when apartments aren’t finished on time? Some pay back their clients as part of a penalty clause.

It is a tussle between builders and home buyers that never seems to end — delivering projects on time. There are umpteen cases where builders have taken extra time to finish projects while leaving home buyers to suffer fiscal setbacks.

Imagine a situation where you’ve booked a house in an apartment complex while paying hefty EMIs, and also the rent for the place that you currently occupy. Any delay in getting into your own house obviously means a financial loss.

The only change today is that builders now have a penalty clause in their agreements with buyers. But that is not mandatory yet.

There have been cases earlier where people have contested builders in courts but in most cases that is a long protracted battle which not many are willing to go through.

S K Virmani, manager, National Consumer Helpline, tells us that there are cases where people have complained about delayed possession of apartments but these are not highlighted because there is no effective redressal available.

DLF’s group executive director, Rajeev Talwar, explains that larger developers have an image to protect and to show their commitment they include a penalty clause in agreements. Omaxe too, for instance, provides a penalty clause in its agreements.

Take GurgaonOne, a residential project by Alpha G:Corp, that has been delayed because it hasn’t yet received a completion certificate. The company, however, is paying a penalty according to the agreement — Rs 5 per sq ft per month.

Going by the developers’ side of the story, there are numerous causes for delays — “government approvals, getting the completion certificate, raw material delays, cement and steel procurement, manpower delay”, reasons Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj.

Getting local approvals is a harrowing task and the new Environmental Impact Assessment clearance that is now mandatory can even take up to nine months .

“At any point in time, there is a 50-60 per cent shortfall in unskilled manpower in the market,” says a source in a large development. Civil contractors executing projects have so much on their plate that managing different projects is becoming difficult.

According to industry watchers, most developers face project delays. “About 85-90 per cent projects are delayed in some way or the other,” they say.

Talk to the spokesperson of Sahara Infrastructure and Housing, Suryavir Singh, and he will tell you that a lot of the delays are not in the developers’ control.

For a developer any delay means rising interest and construction cost. One of the company’s projects in Gurgaon, Sahara Grace, has been delayed by 4-5 months because it hasn’t got a completion certificate from the authorities in Gurgaon. The agreement does include a penalty clause.

“We have given the buyers a leverage to pay us late,” he says. But Sahara, he says, will not take the blame for the delay by the authorities and so will not pay any penalty.

Singh also says that in smaller cities the authorities themselves do not have a clear idea about what to sanction and what not to. That process takes time because in many cases they themselves have to educate the authorities.

But this is not only in the residential sector. According to Srinivas Anikipatti, regional director, Colliers International, in the office and retail space segment, delays might effect the budget of a developer, increase the construction and storage cost and hit the brand image of the company.

Of course, it has a direct impact on end-users as well. “Retailers follow a cycle of business and a lot of them start a new venture around these cycles that usually start around Diwali or Pongal when they can create a hype. The launch period is very critical,” he adds.

For international retail trying to enter the market, delays could mean plans, manpower projections and design lines going awry.

Anikipatti explains that in a project in which the client has given a minimal advance, the pressure on the developer is far less compared to a heavy advance situation. “The clients’ capital is stuck and they can’t go anywhere,” he says.

In such a situation, strict penalty clauses are imposed. In a built-to-suit project in Pune, a Bangalore-based developer had to waive off six months’ rent for the occupier for delivering late. “If there is an agreement, they have to honour it,” says Puri.

This is one reason why clients rely on bigger developers who are sure of their deliveries. “There are a lot of externalities in the process today. A developer might be forced into a delay, but you have to plan for it and that is where experience and brand name matters,” says Talwar of DLF.

“In the last few years, developers have taken up 10 times more projects compared to what they have done in their total lifetime,” says Anikipatti.

Where is the labour, brick and steel, cement? How will they manage all this? But there are construction companies who are trying to get more advanced technology for construction to match deliveries. However, the cost of adopting such technologies in India are still very high and not many developers are able to benefit from it.

The solution, it seems, lies in the urban development ministry’s plans to create a regulator for the real estate sector. The regulator would promote best practices and consumer interest.

“Where there is a delay, the regulator will ensure that penalty is paid by the developer. It will also be an ombudsman between the buyers and developers,” says Puri.

GE introducing home loans at lowest rates 9.99%

New Delhi: Loan market could be in for a serious price war. GE money has launched a home loan product with a floating rate of 9.99 per cent, much cheaper than the 11 per cent being charged by market leaders.

Wizard Home Loans a joint venture between GE money and Australia's mortgage major -Wizard, hopes to bag 30 per cent of the Indian home loan market in the next 3 years by offering the cheapest rate.

The company has launched it first floating rate product at 9.99% for a minimum of 20 years for a min loan Rs 10 lakh. GE claims its current cost of funds are much lower than the 9.5% being projected by competition and hence the competitive rate

“One of the things India has enjoyed over the last few months is a lower cost of funds. I think it is not necessarily being passed on a retail rate. This not an introductory price this is a rate we and our partners have worked out keeping in mind our margins,” says Mark Bouris Chairman, Wizard.

Besides this, Wizard Home Loan branch offices will be run by owner-operators, like franchises- bringing down the total operating costs. Nevertheless, since NBFC’s are not allowed to take deposits maintaining the current cost funds will be a challenge.

India's subprime crisis

Business Standard reports on the drop in the disbursement of housing/consumer loans

interesting snippet here. The banks have lent just 15% of last year's bookings with a loan/deposit ratio of 8%. If this continues the banks will go in the red soon and start posting losses. How else can they afford to pay out 8% deposit rates on 92% of deposits, when they are only loaning out 8% of loans at 12.5%. A simple shopkeeper will tell you this scheme doesn't work.

This shows that the Indian loan consumer is either
1. price sensitive to high interest rates
2. priced out of the housing market due to sentiment of overinflated prices
3. priced out due to lack of ability to pay EMI
4. All the above.

The only way the consumer will come back to the loan and housing market is the drop in prices, given that loans rates will not go back to previous levels. There is no other way.

With interest rates jumping frm 7.5% to 12.5%, its not a 5% rise in EMI, it is a 66% rise in EMI. so a 20k monthly payment for 20year, 20Lakh loan suddenly becomes 32k. Thanks to the magic of compounding, consumer pays 76.8L for a 20L loan instead of 48L, leading to a loss of 28L. This is the magic of adjustable rate mortages (ARM) also called floating rate loans in India. I think many buyers of expensive properties over 40L(now 1.5crore payment) will not be able to make these payments. This is India's subprime.

>>>>
Since April, banks have lent only Rs 9,132 crore (Rs 91.32 billion) compared with Rs 66,950 crore (Rs 669.50 billion) over the same period last year. On the other hand, banks had raised Rs 1,34,828 crore (Rs 1,348.28 billion) of deposits till August 17, 2007.


SBI may lower home, retail loan rates

BS Reporter in Mumbai | September 05, 2007 07:41 IST

State Bank of India [Get Quote] (SBI), the country's largest lender, is likely to reduce interest rates on home loans and other retail loans by next week, to coincide with the start of the festive season. The bank's Maharashtra and Goa circle is already offering home and auto loans at 50 basis points lower than the effective rates for new borrowers.

"We would look at reviewing lending rates when the festive season begins. A decision would be made in the next one week," said a senior SBI official.

SBI offers floating rate home loans at an interest rate of 10.75-11.25 per cent. For a fixed rate home loan for up to 10 years, the bank charges an interest rate of 12.75 per cent. The floating rate for auto loans is at 12-12.5 per cent. As part of the promotional offer in Maharashtra, the bank has waived half of the processing charge and is also offering a higher loan to value ratio for new borrowers, which means borrowers could get loans higher than the normal 80-85 per cent of the property cost.

Last week, Bank of Baroda [Get Quote], lowered home loan rates for new borrowers in the hope that it would generate some demand. BoB reduced interest rates on home loans by up to 50 basis points to 10-11.50 per cent.

A BoB official had said "The bank has to survive in a market which is highly competitive as the home loan demand is elastic. After a series of hikes in 2006-07, the home loan demand has shown moderation. The rate cut may help to get better response."

A slump in demand for loans, much sharper for retail loans, has made bankers worried as the impact of subdued interest income on year-end profits is staring at them. Banks had raised their prime lending rates (PLRs) by 250-300 basis points during the last one year. The PLRs of the five largest banks have increased to 12.75-15.75 per cent from 10.25-12.75 per cent a year earlier.

"Banks will have to look at reducing lending rates (for new borrowers) if credit does not pick up till the end of August. We are already five months into the year and advances are more or less flat, while banks have mobilised huge deposits," said another SBI official.

ICICI Bank [Get Quote] has already factored in a sharply lower growth in retail loans. Managing Director & CEO K V Kamath recently said the bank would now be talking of a low double-digit growth of 10-15 per cent in retail loans in 2007-08, down from earlier estimates of 25-30 per cent. The bank had seen over 40 per cent growth in retail loans in the past few years.

A senior official from Punjab National Bank [Get Quote] said, "Our rates are already competitive but nothing (lowering of lending rates) can be ruled out. We expect the demand to pick up towards the end of September and early October."

Since April, banks have lent only Rs 9,132 crore (Rs 91.32 billion) compared with Rs 66,950 crore (Rs 669.50 billion) over the same period last year. On the other hand, banks had raised Rs 1,34,828 crore (Rs 1,348.28 billion) of deposits till August 17, 2007.

In the first quarter of 2007-08, SBI added Rs 2,012 crore (Rs 20.12 billion) of advances. The bank's lending portfolio stood at Rs 3,44,087 crore (Rs 3,440.87 billion) at the end of the June. "While, domestic advances fell by around Rs 2,000 crore (Rs 20 billion), the international loan book of SBI grew by close to Rs 4000 crore (Rs 40 billion). The bank's housing advances stood at Rs 39,241 crore (Rs 392.41 billion), constituting 52.22 per cent of its retail advances.

The case for Dharavi redevelopment

It will be interesting to see what would be the pricing in this area. I'm guessing 7k-10k a sq/ft seems to be about right. These guys will construct small apartments and consumers will lap it up. Connectivity to Dharavi is extremely good from all sides and its proximity to Bandra Kurla complex will be a big plus.

The Hindu businessline reports

Sobha-Puravankara consortium bids for Dharavi project

Maharashtra Govt receives EoIs from 26 consortia

Anjana Chandramouly

Bangalore, Sept. 5 The Bangalore-based Sobha Developers and Puravankara Projects have, as a consortium, bid for the Rs 9,250-crore Dharavi Redevelopment Project in Mumbai.

Confirming this Mr J.C. Sharma, Managing Director, Sobha Developers, said that the consortium (a special purpose vehicle) “will qualify on financial and net worth parameters for all the five sectors. It’s an opportunity we would like to explore.”
EoIs

Mr Mukesh Mehta, architect and adviser to the Government of Maharashtra, said the Government has received expressions of interest from 26 consortia — with three partners each. Of the 78 companies that have shown interest, 25 are international ones; only one consortium is completely Indian, he added. The project is expected to take 5-7 years for completion.

According to the Government’s plan, Dharavi will be divided into five sectors, which will be developed by private developers. The Government will award only one sector per developer.

Each sector will have infrastructure for health, income generation, and knowledge, environment and socio-cultural development, Mr Mehta said.

The project will earn the Government a premium of over Rs 3,000 crore-4,000 crore, besides infrastructure such as roads, water supply, hospitals, schools, etc. that will be developed by the private developers.

The Government is likely to share 70 per cent of the premium for the redevelopment, Mr Mehta said. This will be the first eco-housing criteria suburb of India, he said. He added that they were closely working with the USAID for the project.

Currently, the slum is spread across 535 acres. Of this, 20 per cent of land is private, out of which six per cent is encroached space. “We will take over the encroached land only,” Mr Mehta said.

Realty developers now zero in on the masses

Finally somebody is taking sense. We are tired of hearing about apartments costing crores of rupees and the lifestyles of Ambani's and Wadia's who are building palatial buildings for themselves. Now is the time to get to reality. The developers will now build tiny apartments but those too will not find buyers. For any reasonable transaction to take place for the middle-class, prices have to drop 25%.

Economic times reports.

After a two-year surge, home prices in the country have dropped as much as 20% because even the most upwardly mobile tech graduates can no longer afford to buy, forcing developers to consider building for the poorer masses.

“We’re at a point where growth in salaries has not kept pace with property price increases,” said Hari Krishna, of Kotak Realty Funds, a unit of Kotak Mahindra Bank that has been raising $350 million for property joint ventures in India. “Many developers are rationalising prices across the country, and certain sets of people are saying there’s a need to focus more on either the luxury or the mass market.”

Since India eased rules on inward property investment in early ’05, the country has swept into a dusty frenzy of construction, causing land prices to double in major cities. Drawn by a thriving, 1.1 billion-person economy, where a new batch of graduates swarm out of technology parks eager to shop and go home to modern apartments, global property investors such as Citigroup and Morgan Stanley have rushed in.

Developers such as DLF and Parsvnath Developers have listed on the stock exchange to raise funds for expansion drives. Annual property investment is projected to double to $90 billion by ’10.

But a drop of around 20% in residential transactions since January — as rising interest rates and soaring prices put India’s new rich off buying — has persuaded many developers to take a second look at their business models. Prices have fallen 15-20 % in New Delhi and Punjab, and have paused in Mumbai after sharp rises.

Most developers have been targeting the roughly one million families bringing in $25,000-50 ,000 a year — for example , middle level accountants or software programmers. Another million families are expected to join their ranks over the next three years, according to an economic think-tank , while the number of ‘super-rich’ families with an annual income of more than $250,000 is set to nearly triple to 141,000.

But with fierce competition to build high-margin apartments for the rich, some investors are starting to target the 53 million families earning $2,500-5 ,000 a year — where the much-vaunted figure of a 20 million home shortfall originates. An estimated 22 million families should be lifted out of poverty and into this segment of society by ’10.
Gross margins for the mass market are around 20%, rather than the 30% for high-end housing.

But developers can forge healthy businesses by building huge townships on non-prime land that is more easily acquired. “Our view is that building residential units for the lower middle class in that part of the world is pretty recessionproof ,” said Alastair King, chief executive of Eredene Capital, which is listed on London’s Alternative Investment Market (AIM). “These are people taking out mortgages for the first time,” he said, citing bank clerks, junior civil servants and hotel chambermaids as examples.

Massive housing in Bangalore

Hindu reports on the mass housing plan by HDK

Bangalore: A month before it is scheduled to hand over power to its coalition partner, the H.D. Kumaraswamy-led coalition government is launching a massive housing project through five mega housing residential layouts spread over 15,000 acres of land around Bangalore.

A meeting of the Bangalore Development Authority board held here on Monday approved the formation of five new layouts, which will envelop about 1.76 lakh house sites of various dimensions.

Chief Minister H.D. Kumaraswamy said that the five layouts would be developed simultaneously and the sites would be ready for allotment in about six months.

“The Government estimates the requirement of house sites in Bangalore at around 2.1 lakh and I am confident that the demand of the people will be met substantially,” Mr. Kumaraswamy told The Hindu.

Mr. Kumaraswamy said: “In line with the assurances held out by me over the past 19 months to provide housing for people in the lower strata of society, the BDA will set apart around 100 acres of land in each of these new layouts for vertical housing. About 75,000 flats, largely comprising one-bedroom apartments, will be constructed for allotment.” The price of the flats would be decided later, he said.

With elections to the municipal bodies notified earlier on Tuesday, the Government has decided to make a low-key pronouncement on the mega housing programme. The opening up of the green-belt area around Bangalore following the approval of the new Comprehensive Development Plan (CDP) has paved the way for the BDA to obtain the requisite land for the housing scheme.

BDA Chairman Shankaralinge Gowda told The Hindu that the developed layouts would be owned by the BDA and land owners in the ratio of 60:40. For every acre of land acquired, the owners would be provided four sites each of 2,400 squar e feet. The cost of land would be Rs. 500 a square foot.

A BDA press release said that Nadaprabhu Kempe Gowda Layout, between Magadi Road and Mysore Road (4,814 acres and 60,879 sites) will be developed at a cost of Rs. 2,639 crore; Shivaram Karanth Layout between Doddaballapur Road and Hesaraghatta Road (3,546 acres and 18,975 sites) at a cost of Rs. 1,847 crore; D. Devaraj Urs Layout between Airport Road and Varthur village (1,976 acres and 24,904 sites) at a cost of Rs. 1,108 crore; S. Nijalingappa layout between Varthur village and Sarjapur Road (35,451 sites in 2,806 acres) at a cost of Rs. 1,550 crore; and Kyasambahalli Changalaraya Reddy Layout between Hosur Road and Sarjapur Road (2,134 acres and 26,734 sites) at a cost of Rs. 1,170 crore.

Rentals at 450 Rs per sq ft in Mumbai

Mumbai: Mumbai's property market has set a new record! A commercial property was sold at a whopping Rs 450 per sq foot in the financial hub of Bandra Kurla complex.

Forget residential buildings, which are already above a crore for a standard 2-bedroom flat, the office spaces in Mumbai are now costing something next to one in Manhattan.

Corporates are literally struggling to find a reasonable deal. Over the past 9-months, rentals have shot by 40 per cent in the posh Bandra Kurla complex area in Mumbai.

Limitless Group, a sister company of Dubai based developer Nakheel has recently signed a $ 10 billion joint venture with real estate major DLF, to develop townships in Mumbai.

The Dubai based group has already snapped up 12,000 sq feet in the famous IL&FS building in Mumbai, which is now renting out space in the building at Rs 450 per square foot.

The Limitless Group will pay Rs 54 lakh a month for its own office space.

Rents in Bandra Kurla Complex have now crossed the rentals at Nariman Point and Lower Parel areas where they are at Rs 290 - 350 per sq foot.

Sources say this recent deal at IL&FS already has led the builders quoting sky high prices for mediocre properties. Anuj Puri, Chairman & Country Head, JLLM said, “It’s purely because demand is outstripping supply. 12 months ago the prices were at Rs 250 a sq foot, which though seemed high at that point have gone much higher now.”

Recently, the British High Commission pre-leased a space in the under-construction Naman Chambers for Rs 350 per sq foot.

The Fortune 2,000 building and Windsor Plaza are now quoting Rs 330 a sq foot compared to Rs 250 six-months back.

The Bandra Kurla complex has only 3 lakh sq feet of commercial space to offer at the moment. And that is a far cry from the current requirement.

Industry watchers say approximately 2 million sq feet of office space will enter this market in the next 2 years, and that's when corporates could find some respite from the soaring rentals.

Purvankara - Panaroma project delays

It seems no builder is immune to the age old problems of timely construction and litigation. Here is a posting from a mailing list. There was a posting on craigslist which has a 3 bed flat at 72L. Seems like a lot of misery already when you are parting with 72L. The litigation is a bonus

>>>

After a long delay, Purva Panorama complex on BG road seems to be almost complete, but the trouble for the owners/residents seem to be just starting??

The entrance to the complex has signboards that the area is disputed in the Karnataka high court. There are some painted graffitti on the walls of Purva panorama by SC/ST activists who are claiming the land. Till the time this is decided by the court, Purva Panorama residents have to undergo further misery.

Legal hurdles block new Bangalore airport

Business Standard reports. With this delay the airport will not function till atleast mid -2009. After which there could be some development of infrastructure. IMO Devanhalli real estate is the biggest con-job ever conceived. Should take another five years before anything useful happens in that area

Govt fighting 40 cases on six-lane approach road.

The new Bangalore international airport will probably be ready before time (scheduled for completion in April next year), but the modern access road to it will not, recreating the image of a journey done partly by bullock cart and partly by jet aircraft.

As things stand, travellers will take around two hours to reach the airport, which is 35 km away from the city centre, for at least a year after it starts functioning.

This is because of legal hurdles the government is facing in acquiring land for a 21-km dedicated expressway to the airport.

The government is fighting at least 40 different cases related to land acquisition.

To cut the journey time and derive full benefit from the state-of-the-art airport, the government decided to build six-lane toll expressway. The optimum alignment was worked out with the help of satellite imagery and a preliminary notification was issued on March 3 for land acquisition.

Residents of Bagalur, Bhairathi, Chikka Gubbi, Dodda Gubbi, private residential township developers and farmers filed cases in various courts seeking a change in the expressway alignment or denotification of their lands from acquisition.

Government sources said many powerful politicians also owned land along the alignment of the road and wanted it changed.

“We changed the alignment five times unofficially before freezing it. But they are still not satisfied. If the land acquisition process is completed by July, the expressway will be ready by March 2009 but that appears improbable. As things stand, the expressway will not be ready even by 2009-end,” a source said.

The road alignment has been marked physically. No real estate development will be allowed along the expressway till the project is completed. Of the 750 acres needed, just over 110 acres are in the government’s possession.

Recently, Deputy Chief Minister B S Yediyurappa, who is also in charge of infrastructure development in the state, acknowledged that there were “stumbling blocks” in the way of the project . “We are committed to resolving them to implement the project,” he said.

At present, the upcoming Bangalore international airport at Devanahalli can be reached by travelling 28 km on the Bangalore-Hyderabad National Highway 7 from the city and then 4 km along an access road.

In view of the heavy traffic on the national highway and the resultant journey time required, the state government conceived the expressway.

The project is estimated to cost Rs 482 crore and 26 companies have submitted application for qualification. At present, the Bangalore Metropolitan Region Development Authority (BMRDA) and the Karnataka Road Development Corporation Ltd (KRDCL) are jointly handling the project.

The BMRDA intends to invite tenders to develop the road on a build-own-operate-transfer basis. Once completed, a high-speed rail link will also be set up along the expressway.

The Bangalore International Airport Ltd (BIAL) represents the first greenfield private sector-owned and operated airport in India. Private promoters hold a 74 per cent stake in BIAL and the remaining 26 per cent is held by the state.

SMR builder problems

Email threads keep pouring in on unscruplous builders. This time in Hyderabad. Be forewarned

SMR claims to be a reputed builder in South India. The experience of those who have bought flat in SMR Technopolis, Madhapur, Hyderabad is pathetic and people wanting to buy a flat in SMR are warned. The residents of the apartment were forced to unite together to fight against the atrocities of this builder. SMR promises a lot of facilities and attracts buyers but after they have managed to con the prospective buyer, then you just have to run behind them. All the owners have spent numerous numbers of hours just waiting on their office. Facilities such as play area, club house, sports court were promised. The flats were supposed to be ready more than 6 months back, but they are just not bothered to complete the flat. The commercial complex (in front of the apartment) corporates who have leased the office are being wooed and pampered since they pay exorbitant rent. The parking area supposed to be for visits of the residential area complex has been handed over the commercial. The decisions by the builder are taken without any consultation with the residents.

The area is a complete mess with workers all over the place and showing no signs of completion of the project. Most of the facilities promised in the brochure have not been provided. No wonder, the builder is finding it extremely difficult to sell some of his flats now. Recently, the builder had the audacity to ask for the monthly maintenance charges without even having completed the facilities and handed over the apartment. All complaints to the builder are falling on deaf ears.

If you are looking at purchasing an SMR property, PLEASE DO IT AT YOUR OWN RISK!

FRUSTRATED SMR RESIDENTS

50% crash in Florida

I think India will soon experience the worst in the days to come. Speculators and flippers will be the first to go bust