Redevelopment deals fall through in Mumbai

Several deals to rebuild old housing complexes have fallen through. DNA reports

MUMBAI: With the property market showing bearish tendencies and liquidity crisis plaguing developers, redevelopment projects in the city are being dropped like hot potatoes.

The once headline-grabbing deals, including Vivek society, the Kalina complex where 550 sq ft flat owners were offered upwards of Rs2 crore per flat, have fallen through with developers backing out of MoUs with housing complexes.

The schemes involved pulling down old housing complexes and rebuilding them, with the enhanced FSI, so that the existing flat owners get bigger houses and the builder benefits by selling the excess houses. A seemingly win-win situation till a few months back, there are no takers for it now.

Wadhwa Builders is learnt to have cancelled plans to redevelop Vishal Nagar in Borivili (east). A MoU signed by Pune-based Kumar Builders to redevelop Khira Nagar on SV road at Santa Cruz (west) has fallen apart. Revoking his earlier offer of Rs300 crore, a developer is now willing to pay barely Rs220 crore to a cooperative housing society on a 7,000-sq yard plot at Vile Parle (east).

A well-known developer is learnt to be now renegotiating the redevelopment deal with two societies: Flying Carpet and Tirupati located near Khar Gymkhana. Turn to p12

Instead of his earlier offer of providing an additional space of 35% to every flat owner, the developer now does not want to part with anything over 25%. Similar is the case with Navyug Nagar Cooperative Housing Society on SV Road at Dahisar. Five reputed builders have now offered to provide additional 25% space to the 200-odd residents occupying flats admeasuring a little over 500 sq ft.

“Developers do not have the money power,’’ said a Santa Cruz-based broker-turned-developer, adding, ``With the result, they are unable to pay the exorbitant rate they offered earlier.’’

There is another reason, says Harendra Pandya, vice-president of Real Estate Agents Association of India. ``Redevelopment of societies has not taken off as developers are finding it unfeasible to pay the current stamp duty rate to convey (transfer) ownership of land from a society constructed in the 1980s to its name,’’ Pandya said.

“The already dipping sales are affecting their cash flow and if they have to pay high stamp duty for redevelopment, it would make a big dent in the developers’ calculations. No wonder redevelopment deals are going slow,’’ he said.

On 11th Road, Khar, a society of 14 members have grudgingly accepted a developer’s bid to give only 20% additional space to its existing 1,000 sq ft flats. ``Negotiations had broken down between us as a well-known developer had offered to give them a huge corpus. Six months later, they came back to me as the developer had started making excuses,’’ said a suburban developer.

Said Kalina-based estate broker Umesh Lad, “Redevelopment deals of societies like New Vinay, Shanti Niketan are learnt to have not materialised as a developer backed out from his earlier promise of purchasing the flats at an outright rate of around Rs35,000 a sq ft. The societies had earlier got an offer from reputed developers including Kalapatru.’’

Other redevelopment deals that fell through include Vivek Society near Mumbai Unversity, Kalina, with Sterling Biotech backing out from its offer of over Rs40,000 a sq ft, Parkbay Society and Kirti Society where residents have been offered roughly Rs35,000 a sq ft.

Though Boman Irani of Keystone Developers was unavailable for comment, brokers say there are problems in the redevelopment scheme at DN Nagar police station, Andheri (west). Keystone is developing nine ground-plus-four buildings jointly with Vaidehi Akash, a small-time builder, who reportedly raised funds by pre-booking at rates that were roughly 35% less than the market rate

Vijay Mallay's skyscraper to rival Ambani's

The ego battles seem to soar with each billionaire trying to outdo the other. Having a rich dad does seems to help when building empires and castles. 25000 per sq/ft on Vittal Mallya road. Now this is some price to pay to be in the league of the rich and famous

Econonmic times reports
BANGALORE: Is Vijay Mallya doing a Mukesh Ambani in Bangalore? The word is that the ‘King of Good Times’ is set to build a massive multi-storeyed complex for himself in Bangalore on his ancestral property on Vittal Mallya Road, adjacent to UB City.
Sources say the plan is to have a designer skyscraper apartment with possibly even a helipad on the fouracre property.
Real estate sources said that the UB Group chief has roped in global consultancy firm DTZ to do the ground survey and planning. DTZ’s professional advisory services include the management of real estate portfolios, building consultancy and valuation.

Mallya’s plan sounds similar to what Mukesh Ambani is doing: building a $1 billion 60-storey place in Mumbai that sports a helipad, health club and six floors of car parking.

Named Antilla, after a mythical island , the complex will be Ambani’s new home.

For Mallya’s project, several leading Indian developers are said to have approached the UB Group chief to be part of his home-development plan. However , sources said Mallya is keen to hire an overseas developer. It is believed that a Singapore-based developer will undertake the construction.
However, it’s not clear what the height of the apartment would be. While one source said it would be 16 floors, another said it could be closer to 30, while yet another said Mallya was thinking of a 37-storey building. When TOI contacted Mallya on the matter through the UB Group’s media relations officer, the response was that Mallya wasn’t planning to build a 37-storey apartment.
But he didn’t deny or confirm the plans for a makeover of his ancestral home. Real estate developers say that with the FSI (floor space index) in the area having increased in the recent past, Mallya could go well beyond 30 floors. At present one can get anywhere between 2.5 and 3.25 FSI on Vittal Mallya Road. In terms of value, the land prices on Vittal Mallya Road range between Rs 20,000 and Rs 25,000 per sqft.

Indian Real Estate May Witness Weeding Out, Fitch Ratings Says

Bloomberg.com article on slowdown. Now the SBI chariman and the HDFC Vice-chairman are calling for lower prices. Will the dodo bulls go extinct ??

By Sumit Sharma

July 10 (Bloomberg) -- India's real estate industry may witness the exit of weaker developers as a rise in interest rates and property prices deter buyers and crimp sales, Fitch Ratings said in a report.

Mumbai recorded a 16 percent drop in registrations in the year to March 31, and sales may fall further across India's major markets if developers hold on to prices, Fitch said. Fitch has rated its short-term outlook on the industry as negative.

``The slowdown will also aid the process of weeding out some of the weaker entities within the sector, and increasing the relative strength of some of the larger, more established developers,'' Sandeep Mulik and Roopa Raman, analysts at Fitch Ratings, said in the report in Mumbai today.

Some developers face fund shortages and may tap buyout firms as investors sell real estate stocks on falling sales. Still, a prolonged slowdown may damp the appetite of private equity funds, forcing smaller developers to either borrow at higher rates or default on their obligations, Fitch said.

The central bank on June 24 raised interest rates to the highest in six years to contain inflation that accelerated to 11.63 percent in the week ended June 21, the fastest in 13 years.

Bankers including Om Prakash Bhatt, chairman of State Bank of India, the nation's biggest, and Keki Mistry, vice-chairman of Housing Development Finance Corp., predict an end to the five-year rise in property prices.

Shares Drop

Real estate shares have led a drop in Indian stocks this year. The 14-stock Realty Index has fallen 62 percent since Jan. 1, compared with a 31 percent drop in the benchmark Sensitive Index. A dozen of the 14 property index stocks including DLF Ltd., Unitech Ltd. and Indiabulls Real Estate Ltd. have more than halved this year.

A decline in demand prompted DLF and Unitech, the largest developers, to delay selling shares in investment trusts in Singapore. Indiabulls Properties Investment Trust, which raised $258 million in Singapore last month, traded 22 percent lower at S$0.82 a share.

``The sharp increase in construction costs, driven by increased steel and cement costs, could also impact margins and hence liquidity,'' the Fitch analysts said. ``The risk would be higher for real estate companies with a limited track record and limited cushion for debt financing.''

Fitch also expressed concern at the high prices paid by some developers for acquiring land.

Prices correcting in Hyderabad - Maytas

Here is something I received in the mail.The slowdown is coming. The combined offer translates to over 15% drop in the cost of the house. Not bad for a start. Last year this property was quoted at 3200 which means there is no appreciation over the past year, Actually people who have bought have lost 10% of the down payment. Also such big projects get delayed by atleast 1 year.

For the long term resident, 2800 seems a good entry price. still 15% lower then what is quoted.

Fabulous offer for top tier corporates employeesMaytas Properties has developed 400 acres of land at Bachupally, which is located just 10 km from Hi-tech city. The name of the venture is Maytas Hill County. In this spectacular venture we have a world-class township spread over 85 acres which has a decent mix of Villas, Independent Bungalows & Semi-furnished Apartments. Government has approved to develop an IT Special Economic Zone in 75 acres adjacent to the Residential Township, this helps the residents can ‘Walk to Work’ in the IT SEZ. As the bookings are going berserk we have come up with a COMBO offer for top tier corporates.

Here is COMBO offer which comes in with:
PRE-EMI offer & Corporate offer

PRE-EMIis a fantastic mode of payment where the EMI need not be paid till the property possession is taken ovev, the Interest to the banker during this period will be borne by Maytas. Infact the interest component will be paid on behalf of the customer. (This is applicable for applicants who avail Bank Loan for purchasing the property with us).

Corporate offercomes with Rs.200/- less than the regular price (per square feet). This is offered to the Employees of Corporate companies which have been listed by us.

Regular Price : Rs. 3699 per sft

Corporate offer : Rs. 3499 per sft

Springfields apt owners face eviction

the builder in collusion with Corrupt BDA officials along has violated all building norms. Now BDA officials are expressing surprise. They should be sacked for their incompetence. Seven towers don't spring up overnight. I hope the residents bring the builder to book. Add IDEB builders to the list of builders to be avoided. Deccan Chronicle article here. As per the latest news the builder has to pay 25 rs sq/ft to BDA as a penalty to get the commencement certificate and then apply for the occupancy certificate. With 697 apts in the complex and 7 wings illegal (A,B.C are legal and D-J are illegal) the builder needs to cough up roughly 697 * 7/10 * 1500 (avg flat size) * 25 which is 18,296, 250 (1.8 crores)

1,300 residents left in lurch

BENGALURU

More than 1,300 residents including software engineers, bank officials, doctors and expats who have invested crores of rupees for a flat in Springfields Apartments will soon be homeless if the builder does not sort out the issue of occupancy certificates within seven days.

Springfields Apartments on Sarjapur Road which is said to be one of the few residential projects in the city with 82 percent lung space and just 18 percent of built up areas has built seven wings which includes nearly 50 flats in each wing without the commencement and occupancy certificates.

The residents who went to BDA authorities with complaints of the discrepancies are now facing a tough time running after the builders, advocates and the BDA authorities.

“The officers at BDA who promised to deliver justice to us have now sent an order asking us to vacate immediately. The builder in turn has been given seven days time but what about our woes? Who will listen to us,” said a techie on condition of anonymity.

Meanwhile, the residents told Deccan Chronicle that everyone had relied upon the BDA’s sanction plan and had together paid several crores of rupees to the developers towards acquisition of their respective apartments.

The directors Mr H.S.

Bedi, Mrs Avneet Bedi, Mr Pradeep Kumar Tewani and Mr P K Gajra have not only violated the statutory provisions but have also conducted criminal breach of trust, the residents of the apartment allege.

“The builder also said that BDA had issued occupancy certificates to all these buildings and only then hundreds of families occupied these apartments. Now, we learn that BDA has not issued occupancy certificates to many of these blocks,” said another resident, an expat.

The residents who actually started this protest to show a violation have now been rendered homeless.

“Where do we go? And why should we go? It was not our mistake. Why are we being targeted for no mistake of ours,” cried a doctor, who is residing in one of the wings and has been asked to vacate. The residents have now planned to approach advocates to make sure there is some way out of this situation.

Who is to blame?

It is surprising to know that IDEB and Parkway Venture could manage to construct seven wings, each consisting of about 13 floors without even obtaining the commencement certificate.

The BDA officials, interestingly have not even inspected the area to find out the discrepancies of the builders.

The builders who have been constructing the building from the past three years, as per the orders, have not only violated the BDA rules but have also separated about 1,710 sq m of area on the North West Corner from the main premises by constructing a compound wall.

The order also states that the entry to the premises from the north west side is blocked and the Set Back Line of 13 m is not maintained on the western side by changing the orientation and location of the basket ball court/tennis court. This modification has resulted in reduction of surface parking.

This is not all, while BDA had claimed ignorance all this while, even some of the major nationalised and private banks have sanctioned loans to almost 80 percent of the owners who have bought the flats.

“The banks have given loans to all of us without even checking? It’s ridiculous. For all these days we were only fighting for that land which has been taken to construct a hotel but now we have to fight for our own homes,” said a resident.