Interest rates likely to fall in coming weeks

NEW DELHI: Interest rates are expected to fall over the next few weeks after finance minister P Chidambaram on Friday expressed his "wish" that lending and deposit rates be cut by 50 basis points.

He also issued an "advisory" to chiefs of PSU banks to focus on lending to the consumer goods sector — both durables and non-durables — in a bid to prop up consumption and production, which have been dropping for the last few months.

"It is important to focus on both investment and consumption... There has been some sluggishness and that is why this advisory," Chidambaram said after meeting chiefs of public sector banks.

While the advisory is expected to make car loans and financing for purchase of consumer goods cheaper, what happens to home loan rates was unclear. Though the minister indicated that the need to moderate home loan flows was no longer required, he was not as candid on the issue. But the overall message was clear: interest rates need to dip.

"If monetary policy is also supportive, it is possible to look forward to stable, and perhaps some moderation, in interest rates," he said ahead of RBI's quarterly policy review.

With public sector banks, which account for nearly 7% of the market, cutting rates, private players would have little option but to follow suit.

Rents hit the roof in Hyderabad

HYDERABAD: House rents have seen a steep hike in the surrounding areas of Hi-Tec City. This is most visible in Madhapur, which has seen an almost 100 per cent rise in just one year.

Till last year rents in this part of the city were comparable to other residential areas in the city. But the last quarter of the year saw the rent graph heading north at a furious pace.

This phenomenon is not limited only to Hi-Tec City but also in most residential colonies in the Serilingampally circle of GHMC where rents have doubled in the last two to three months. In areas like Maszid Banda, which is three kilometres away from the Kothaguda-Gachibowli road, house rents have doubled in the last one year.

"In January 2006, a two-room house was rented out for Rs 1,800 per month. By August 2007, the rent had gone up to Rs 2,500. Just four months later, in January, 2008, the rent of two-room houses have skyrocketed to Rs 3,500," said Anand Bhattacharya, associate analyst at Datamonitor Plc.

Most of the tenants in these areas are software company employees who see no other option but to accept the hike. "In all the surrounding areas of Hi-Tec City the situation is the same. We don't feel the pinch as the rent is usually shared by roommates and corporate salaries are also reasonably high," Anand said.

He does not want to move out of this area as it is only a 15-minute drive to his work place. "The roads are wider and there are no traffic jams here."

At Guttala Begumpet in Madhapur, one has to shell out Rs 12,500 for a two-bedroom flat. "In February, 2006, a similar flat was available for Rs 6,500," said Prasheel Bhanpur, who works as a corporate communications specialist in Maytas Infra Limited.

"It costs Rs 6,500 for even a single room with attached bathroom. The rent for such a room would not have been more than Rs 3,000 only a year back," Prasheel said.

Residents link the increase in rents to the opening of two new restaurants and supermarket in the locality. "Two new restaurants and a supermarket have come up at the Kothaguda junction. Two petrol pumps have been opened at Gulmohar Park and Lingampally railway station," says S Bhaskar Yadav, who owns two houses in Kondapur. Earlier, not many people were keen on living in areas like Maszid Banda, Sudarshan Colony and Alind Colony. But now there is no need to even put up a 'to let' board, as software employees are willing to pay as much as Rs 12,000 for a two-bedroom flat in a new building with three months rent in advance, Yadav said.

GHMC collects Rs 10 per square metre as property tax at Madhapur and Kondapur and surrounding colonies. "If the house owner himself occupies the house, 30 per cent of the total tax will be waived. If the house is rented out there will be no exemption," said deputy commissioner, Serilingampally-I GHMC, P Nagamani. There is no rent control mechanism under GHMC's purview, Nagamani added.

2007: Real estate growth moderate in Chennai

Hindu reporting

Many potential buyers adopted a “wait and watch” approach in 2007 preferring to stay in rental accommodation than buy, writes Ramesh Nair

Photo : N. Sridharan

Uncertain phase: The real estate prices went up and the buyers remained lukewarm about going in for purchase.

After a record 50% plus price increase per annum in 2005 and 2006, the Chennai residential real estate market witnessed moderate growth in 2007 with prices increasing 8-12% across various micro markets. However most of this price increase was seen in the first quarter of the year after which the prices and sales volume stagnated. Although the office market saw a record 7 million sft absorption in 2007 indicating new job creation and a strong economy, this did not translate to direct increase in prices and volumes in the residential market as witnessed over the last three years. Many potential buyers adopted a “wait and watch” approach in 2007 preferring to continue staying in rented accommodation than buy. The number of apartments being sold in 4Q 2007 was also lower than 4Q 2006. Also, the home loan market, which was growing at 30 % plus in 2005 and 2006, saw a growth of only 10-15%.

The key reason behind this slowdown has been higher prices and interest rates, impacting affordability, and to a lesser extent excess supply in a few micro markets, rather than slow down of economy. Developers, who were selling their entire projects in a few days, are now taking months to sell their unsold stock. Although, no major drop in prices are expected immediately as the vacancy rate of unsold completed residential real estate stock is still negligible. Developers have started offering a variety of offers such as free car parks and flexible financing options such as interest waiver during construction period so that they do not have to bring down the prices.
Negotiability

The year 2007 saw Chennai’s residential market returning to more normal levels of activity. Properties with deficiencies in location or overly optimistic asking prices were slow to move. The hardest hit was the Rs. 60 lakh plus apartment market. The past year saw return of negotiability in asking prices after a relatively long absence from the marketplace.

The city’s economy remains strong, and is creating jobs at a fast pace. Interest rates, which have been rising steadily, have begun to stabilise as inflation remains under control. These factors should continue to maintain reasonable demand, and prices from falling drastically.

. Contrary to what was seen in 2005 and 2006, the number of investors and speculators who entered the market in 2007 was lesser. Real estate private equity investors such as J P Morgan, Citigroup, Red Fort Capital and HDFC Realty invested in the Chennai real estate market. The difference in the launch price and sale price at the time of completion has reduced drastically in the last one year. The yields from residential property remained steady at 4.25 % to 5%. Home buyers have become more quality conscious and have started demanding better amenities and features.
Media savvy

Developers have become more media savvy and aggressively started spending on advertising and marketing. The home buyer’s exposure to real estate related advertising has increased drastically in the last one year. Developers also realised that they need to identify specific target markets to market their products. Many developers have started investing in setting up strong marketing teams.

After 3 years, the market started moving from a sellers’ market to a buyers’ market. Many landlords, who were quoting exorbitant land prices in corridors such as OMR, are now willing to negotiate at more realistic levels.
Outlook for 2008

With IT and BPO companies facing the brunt of the appreciating rupee and many investors and speculators preferring to invest in other avenues, residential demand is further expected to be under pressure in 2008.

Unlike the last 3 years where the Chennai real estate market saw only winners, 2008 will witness winners and losers. It is also expected that developers will construct smaller units without compromising on the amenities to make it more affordable.

With more than half the time spent in automobiles today representing time spent in severe traffic and soaring of fuel prices over the last few years, access to public transportation and road infrastructure will become key drivers for taking housing decisions in the future. Developers need to understand their consumers better and figure out a way to reach them the way they want to be reached. Developers need to realise that over the last few years the consumers have been exposed to new areas of real estate and become more knowledgeable.

As the market becomes tougher and the home buyer more choosy and price sensitive, developers will need to use many more innovative lead generation and touch point creation methods of marketing to successfully market their residential units.

The year 2008 will also see a number of large Pan India developers such as DLF, Hirco and Unitech announce their large residential townships projects in Chennai thereby increasing the supply, and keeping the prices under control.

s0The market is adjusting after a period of unprecedented expansion. It’s reasonable to expect that price appreciation will flatten or decline in some areas.

The length and depth of the adjustment remains to be seen. Even today, there have been instances where entire projects, which have been priced right, being sold within a few weeks of launch.

Although the Chennai real estate story is real, large in size and will pay in the long run, developers need to realise that volumes are inversely related to price and lower the price higher the opportunity.

Housing boom fades in Hyderabad

Real estate boom fizzles out fast
Deccan Chronicle Hyderabad,
Dec 25: The real estate boom which held sway in 2006 petered out in 2007. The poor response to auction of Kokapet lands in the third week of December was only the latest instance in the downswing. Except for a few projects catering to high end consumers in up-market areas such as Madhapur and Gachibowli, the construction scenario was dismal in the capital and surrounding areas.
The number of real estate transactions in Hyderabad and Ranga Reddy districts declined by 40 per cent when compared to the previous year. Fall in NRI investments because of the increased rupee value and the real estate industry reaching saturation levels were cited as the main reasons. The slowdown in the IT industry also contributed to the downturn. However, the prices of apartments remained high in the city after construction came to a halt in the wake of stringent building norms introduced through GO 86.
"The growth rate from April to December this year is 13 per cent while it was 38 per cent in the previous year," said a senior official of the Stamps and Registration Department. Real estate transactions almost came to halt this year in areas such as Maheshwaram, Shamshabad, Nizampet and Ibrahimpatnam, which saw tremendous growth in 2006.
Interestingly, the revenue increased from Rs 752 crore (between April-December 2006) to Rs 762 crore for the corresponding period this year in Ranga Reddy because of revision of market values of lands. "But the number of transactions declined from 1.72 lakh to 1.03 lakh in Ranga Reddy and 33,000 to 28,000 in Hyderabad," said the official.
In Hyderabad, the revenue also dipped from Rs 312 crore to Rs 299 crore. Top builders admitted that the situation had drastically changed when compared to last year. "Though the price did not fall, there is no rush to buy property," said Indu managing director, Mr Shyamprasad Reddy. However, the year also saw the launching of the first ever public private partnership township at Srinagar where owners of plots became equity holders.
Other positive developments in the real estate front were the mega venture of Lanco Hills at Manikonda and payment of Rs 444 crore by American real estate giant Tishman Speyer for the 500-acre township at Tellapur. Township projects of Indu Aranya, Palm Meadows and Aparna also started off in 2007. The year also witnessed the implementation of GO 86 which stipulated mortgage of a portion of the constructed area to the civic authorities. Builders would have to forfeit the area if they violate building norms.
"We made it compulsory for builders to register themselves with civic authorities," said Greater Hyderabad Municipal Commissioner, Mr C.V.S.K. Sarma. "We also introduced tatkal scheme for independent buildings whose permissions will be sanctioned in 48 hours."

Economic Times on the Real Estate Slowdown

Economic times acknowledges the housing bubble though it is still afraid to displease the builders. A simple reality check is all you need. Goto to the hundreds of housing complexes which have sprung up all over the city of mumbai and check the occupancy. The people living there are either the buyers who got in cheap or the apartments are rented out. Technically in Mumbai, every apartment if priced right will be picked up in seconds. If the price is not right, I think the bubble will grow bigger and the crash will be steeper. So a 30-40% drop is not too big considering pricess have jumped 3times in the past 3 years

ET article follows.

HIGH interest rates and rapid escalation that land prices witnessed this year may be one indicator of an impending real estate bubble of sorts. Softening of prices in select pockets such as Gurgaon, Noida & Ghaziabad in Delhi NCR and certain areas in Mumbai over the last 6-8 months has already been witnessed. But what does all this signify for the Indian real estate sector? Will the bubble burst or are these mere speculations? SundayET gets to the root of the matter.
There are several indicators that could suggest a bubble. Unreasonably inflated real estate prices across the board, higher vacancy rates in residential and commercial projects with unwarranted project delays by developers and a steady withdrawal of both domestic and international investors are some of the signs that imply a real estate bubble in the market. Experts suggest that a 10-15% correction in prices does not imply that the sector will slow down. The real estate sector is currently on a high due to high economic growth, shortage of residential spaces, growth in IT/ITes, retail etc. The focus though will now have to shift more towards Tier II and Tier III cities since the metros are getting saturated.
Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM) says that there are no indications that investor activity has overtaken genuine buyer activity. “The residential sector is led by end-users and it is they who dictate the state of the market. There is no evidence of a ‘bubble.’ Neither is there a significant correlation between the state of the stock market and that of the property market. There are instances of overheating but these are localized.”
Developers are quick to brush off the idea that any signs of a bubble may even exist. Dr B P Dhaka, COO(MP), Parsvnath Developers feels that it will be completely wrong to think that the current real estate boom is a bubble waiting to burst. “The growth in realty has evolved back-to-back with all round economic development witnessed by the economy over the last decade. The boom in real estate might have looked like a bubble about to burst, but the fact remains that the burst has been converted into further opportunities because of transformation of the real estate sector into an organized sector and its penetration into the Tier II and Tier III cities.”
Agrees Avneesh Sood, director, Eros Group, who feels that the 10-20% correction in property prices augurs well for the industry because there are various unorganised developers who create unrealistic
price mechanisms, hence making it unaffordable for genuine home buyers. “The picture is really not as bleak as it is made out to be. Demand is not exactly non-existent. There will be a decent growth at an average of 5% between 2008 to 2010. Developers for their part are still very optimistic, as buyers’ continue
to pick up property for end-use. Developers’ should now target the affordable quality housing segment for the middle class and offer decent value for money dwelling units.”
When a bubble develops in any market, it is essentially because prices for that particular commodity or asset have gone through the roof and beyond affordability levels. Hence, real estate bubbles are invariably followed by severe price decreases. So what exactly can be done to avoid the house price cash from finding its way into the Indian market?
Ganesh Raj, Partner & National Leader, Real Estate Practice, Ernst & Young, feels that the government has to play an active role to keep the situation in control. “Severe price decreases happen if there is a demand-supply mismatch. We currently face a shortage of about 24 million households. In order to control any severe fall, the government has to take certain measures. Steps like repealing of ULCRA are a positive move. Similarly, checking that speculators are not entering the market, appointing of regulator in order to check that real estate developers are not involving themselves in unfair practices, increasing the FSI especially for residential sectors would help in controlling the prices.”
Raj’s cautious approach is only natural as he remembers the last time when the burst in the mid 90s wrecked havoc in the property market in India. At that time the reason for the crash was mainly due to there being more investors than end users. “The real estate markets closely tracked the stock-market fall at that point of time. Housing prices that had zoomed during the bull run of 1993-94, started showing a downward slide in 1995. The burst in real estate market lasted far longer than the burst in the stock-market. Between 1995 and 2000, the property bubble that was built on speculations burst, and prices declined by almost 30–40 per cent across India. Artificial demand was created and there was no supply to meet that demand which led to a crash in prices. The bubble burst in 1996 as speculators were desperately liquidating their holdings,” he adds.
With land always being a scarce resource, property prices would invariably follow basic economics of demand-supply and pricing. Once asset prices start escalating, the initial interpretation always suggests a bubble. However, an in-depth analysis of price appreciation in real estate and understanding the reasons could help in comprehending these fears. Moreover, the available landbank and technology together with innovations in the realty sector is likely to avoid a real estate bubble burst and sustain the current scenario.

REALTY CHECK

Unreasonably inflated prices, higher vacancy rates, steady withdrawal of domestic and foreign investors are signs implying a real estate bubble

Govt measures such as appointing of regulators to check against unfair practices and increasing the FSI for residential sectors can help in controlling prices

Landbank and technology with innovations in the realty sector are likely to avoid a bubble burst and sustain the current scenario.

Bangalore prices dropping

Of all the papers, the times of india, one which is known to hype real estate is reporting this news. The news seems to be factually incorrect. Sarjapur ring road has been quoting from 3.3k to 4k. It never went to 5k+ . I wonder where these guys get the data.

Good time to buy a house in Bangalore
11 Dec 2007, 0114 hrs IST,Sujit John & Anshul Dhamija,TNN

BANGALORE: If you are planning to buy a house, perhaps now is the time to do so. After three years of unprecedented growth between 2003 and 2006, property prices across much of Bangalore are now falling. And falling sharply in many areas.

A survey by real estate consultancy Asipac finds that residential prices in south east Bangalore (around Sarjapur Road) have dropped 10-20% in the past one year — with prices now in the range of Rs 3,600-4,600 per sqft against Rs 4,000-5,300 a year ago.

South Bangalore including Jayanagar and J P Nagar (except Koramangala) prices are seen to have dropped 8-15%. East Bangalore, which was the first to see corrections, as TOI reported earlier, is estimated by Asipac to have witnessed a further price drop of 6-12% in 2007.

The city centre and parts of North Bangalore (especially between Hebbal and Yelahanka) are the only areas seen to be still holding up, the former because of lack of fresh supply of property, and the latter because of the proximity to the upcoming airport.
"In many cases, the quoted prices may be higher, but developers are throwing in a lot of freebies that effectively bring the price down," says Asipac chairman Amit Bagaria.

The price drop is the result of the enormous gap between demand and supply. Average sale volumes are seen to be down 10-40%.

"Developers who were selling 60 flats in a quarter a year ago are today selling barely 6," says Mayank Saksena, VP in property consultancy Jones Lang LaSalle Meghraj.

Asipac estimates that against a total sale of about 33,500 homes by the entire organized sector in 2006, this year will end with a sale of no more than 26,000 homes. At the same time, the number of properties under construction has increased manifold.

Irfan Razack, CMD of the Prestige Group, admits property prices in the city’s peripheral areas are at an "all-time unrealistic high".

Geetha Naresh, a property consultant, says investors who had blocked their money on prime properties in Whitefield and Marathahalli two years ago paying between Rs 1,600 and Rs 2,000 per sqft are today willing to sell at the same price.

"There are instances where investors are even willing to sell below their purchase price, at rates like Rs 1,500 per sqft," she says.

Many speculators and investors had entered the market in 2005 and 2006, booking multiple flats, thinking they would be able to dispose them of once prices reached a certain higher level.

"They only paid the initial amounts and they did not have the capacity to pay the full amount. But now they are all stuck. Neither can they pay the instalments nor can they sell the flat because of poor demand. And since they have to pay off bank loans, there is large-scale distress sales happening," says an analyst.

Low occupancy in palm beach road in Navi Mumbai

I was driving on palm beach road few days ago in the night and I noticed very few lights in the numerous apartments which dot the road. The location is good but I guess Navi Mumbai residents seem to be priced out of it. There was another mention of a Cidco flat which was priced at 45L and still not selling

NAVI MUMBAI: While builders have claimed that 18,000 to 20,000 houses have been sold in Navi Mumbai this year, statistics show that barely 10,000 house transactions have been formalised at sub-registrar offices here to date. The boom, if any, appears one-sided—favouring only the affluent.

Secretary of the Navi Mumbai Chamber of Housing, Manohar Shroff, insisted that the market has picked up after a slump earlier this year. However, no one is denying that only a fractional affluent class is interested in the highly priced realty of Navi Mumbai, a city that, ironically, was created in the early 1970s only to decongest Mumbai.

For example, a 2-BHK flat in Kharghar can cost Rs 35 lakh to Rs 42 lakh. At Palm Beach Road, it comes for Rs 90 lakh to Rs 1.5 crore. Little wonder that barely 10% of flats on Palm Beach Road are occupied.

Rahul Thakur, a lawyer who has lived in Vashi all his life, said, “It's true that a handful of malls and many towers have come up in areas like Vashi, Kharghar and Palm Beach Road, but that is not an indication of house sales, because working professionals like me cannot afford these very high prices.''

Developer Nalin Shah said that at the ongoing property exhibition of the Builders' Association of Navi Mumbai (BANM), a Mumbai visitor who owns a bungalow in Juhu was interested in a Rs 5 crore villa at Khargha

ULCA ulcer will cause dip in prices

Except for the rich no one can afford to buy in the mumbai suburbs upto Malad which has now touched over 6000 per sq ft. Now with ULCA most the new buyers will be in the areas mentioned in the article below. With less demand, the western suburbs will drop too in sympathy. Housing as its evident is a function of demand, supply and affordability. It seems the sweet spot is here for the "peripheral areas". The big winners as are the likes of DLF, Hiranandani and Raheja which will see enormous growth over the next few years. Size does matter when it comes to projects and these guys are best positioned to deliver a quality product over a long period of time.

Mumbai, December 1 Anshumali Ruparel

THE state legislature’s decision to repeal the Urban Land Ceiling (Regulation) Act (ULCRA), 1976 has a silver lining for thousands of genuine home-seekers across Maharashtra and several short- and long-term benefits for Mumbaiites. While the impact of the decision will become evident only after a few years, but the realty sector can foresee gains.

Considering about 1,200 acres is available immediately, the “possibility of price reduction” is on everyone’s mind. According to Niranjan Hiranandani, MD of Hiranandani Group, “The repeal will not have any impact on the real estate rates in South Mumbai but we can expect some correction in peripheral areas. But price structure of tier-II and tier-III cities would change. The impact will be evident in a couple of years.”

In Mumbai, most of the land going to be freed is in the central suburbs—Kanjur Marg, Vikhroli, Chembur and Bhandup—and satellite towns like Thane and Kalyan. The availability of massive plots will translate into huge supply of flats, which is expected to suppress the property prices or at least stabilise it.

Mohan Deshmukh, president of Maharashtra Chamber of Housing Industry (MCHI), explains: “The city needs about 1 lakh housing units a year and the present supply is only 50,000 units per annum. The freed land may contribute about 20,000 more units a year. But how to meet the backlog of 15 lakh units which is fuelling the prices? One can’t say that the prices in Mumbai will reduce but 25 to 30 per cent reduction can be expected in towns like Pune, Sangli, Kolhapur, etc. For prices to fall in Mumbai, greater housing reforms are needed. This is just a beginning.”

Another area of benefit is infrastructure. Despite apprehensions of additional burden on the already-stressed infrastructure, a ray of hope has emerged in the form of Central funding likely to come the state’s way. Repealing ULCRA was one of the conditions of the Centre to release about Rs 11,000 crore to start, speed up and complete several projects under Jawaharlal Nehru National Urban Renewal Mission (JNNURM)—including projects like Mithi River Beautification, Mumbai Metro Rail, Eastern Freeway, Middle Vaitarna Water Supply, Elevated Sahar Road, Underground tunnels, Bandra-Worli Sea Link, etc.

“On completion, these projects will turn the city into a global metro. It will attract huge FDI which will again contribute to the overall development,” says Anand Gupta, Chairman, Builders Association of India (BAI).

“The fund will also create enormous opportunities of employment as widespread construction activity will be witnessed in suburban Mumbai besides other cities,” adds Gupta.

The big boys of the real estate fraternity will now compete for the freed land. Two-room-kitchen and 1 BHK flats will reappear. And being a part of the volume production process and that too in not-so-expensive suburbs, these flats are expected to be affordable to many middle class Mumbaiites. Besides, home buyers will get a space in reputed townships built by a known developer.

“For example, Thane would get around 180 acres of land now. Assuming development of only 1 crore square feet takes place in the next couple of years, the number of 1 BHK flats available at the end would be around 15,000, which will surely be consumed by three types of people—locals, people shifting from island city and those coming from outside,” says Ajay Vora, a property consultant. “The rates will surely duck due to this supply. However, the supply would be spread over couple of years,” he said.

Shifting of slums and relieving the urban areas from encroachments to make land available for further development and decongestion may seem far-fetched, but these are other possibilities Mumbai should look forward to.

Land prices set to crash ??

Is this the pin which deflates the bubble ???

A total of 22,000 hectares (approximately 54,363 acres) will be released in the city with the State Legislative Assembly on Thursday passing a resolution to repeal the Urban Land Ceiling and Regulation Act of 1976. Of the 22,000 hectares, 9,500 hectares (23,475 acres) will be used for construction activity.

However, many city builders are still nurturing hopes that the cooling of heated up land rates will take up to two years to become a reality. President of the Promoters and Builders Association of Pune (PBAP) Lalitkumar Jain, while welcoming the decision said, "Mere repeal of the Act will not bring down the prices. The government has to address the demand and supply issue and a master plan will have to readied for the same. Infrastructure should be made available to support the desire to provide affordable housing," he said.

Municipal commissioner Praveensinh Pardeshi too welcomed the decision, but said that land prices will definitely come down in the "near future." This will help low cost housing for the poor and will also put a full stop to burgeoning slums, he said.

Another builder, Rohite Gera, vicepresident of PBAP, said the repeal of the Act and the ensuing price slump that could happen over 15 months would affect the "fly-by-night operators and not the regular real estate developers." Also, the government decision to levy a tax on vacant land will have to assessed to see how much it would benefit the end user, he said.

With the Act being repealed by the state, it will also throw open the blocked funds under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a pre-condition put by the Centre.

Schemes for poor under the Development Control rules and the JNNURM will get more land for development, Pardeshi said.

Advantage New Developers As Mumbai Land Prices Seen Falling

"They will also benefit from the local govt picking up the tab for developing roads, water supply, electricity lines"

The repeal of the Urban Land Ceiling Act (Ulca) by the Maharashtra assembly on Thursday will benefit new township developers in a big way. But the profits of developers who had invested in townships on the basis of the old law might take a hit.

Existing developers will have to compete with new realtors who will not only benefit from buying land at softer prices following more land being available in the market but also have the benefit of the local government taking on the cost of infrastructure such as roads, water supply, sewage lines and electricity distribution lines within townships, said Kumar Gera, chairman of Confederation of Real Estate Developers Associations of India, a lobby representing real estate developers. The cost of new infrastructure could make a difference of up to 20% of the project cost, he said.

According to a recent report on integrated townships by real estate consultant firm DTZ, 12 townships are being planned in Mumbai and Pune on a total of 8,053 acres. Typically in Mumbai, land costs are between 50-80% of total project cost depending on the area, with the interest costs an additional 12-13%.

Across the state, about 17,000 acres of land is expected to be released into the market on account of the repeal of the Act. While upmarket locales in Mumbai such as south Mumbai, tony suburbs such as Bandra, Khar and Santa Cruz have little vacant land, the repeal is expected to trigger development in surburbs, such as Kandivali and Malad in the west where land lies vacant, and Thane and beyond among the central suburbs. It would also release land in tier II cities such as Pune, Nagpur and Nashik.

Medha Patkar condemns ULCA

With the repeal of ULCA 3000 + acres will be freed in Mumbai and more in Pune. There shouldn't be any doubt in anyone's mind that this was done to fill the coffers of the builders. The builder politician nexus is well known anyway and the builders will compensate the politicians. Why should be poor benefit anyway ?? What are they doing for the politicians ? Its never been any government's priority to create housing for the poor. Why should the case be different this time.

Condemning the state government's decision to repeal the Urban Land Ceiling (Regulation) Act (ULCRA), Narmada Bachao Andolan leader Medha Patkar said the move was meant only to authorise large land holdings of individuals, which, till now, were held by them illegally.

Addressing a news conference here on Friday, Patkar expressed the view that the repeal will lead to unequal distribution of land, increase in the number of homeless, and most importantly, it will increase the gap between the rich and the poor. She charged that in Mumbai alone, about 30,000 hectares of land will go in the hands of big companies and builders. According to her, Pune too will not remain unaffected.

"Moreover, we are of a strong belief that the state government's assurance of providing free housing to the homeless will also not come through," Patkar said.

The ULCRA was repealed on Thursday by the state government, which restricted individual land holding to 500 square metre.

"The government had the power to acquire and develop vacant plots for common good under ULCRA, but it failed to do so. It is utterly farcical to assure that the poor will benefit. The Act has been repealed only for the benefit of the builder lobby, who will have a free hand now," Patkar said.

Patkar added that the National Alliance of People's Movement was left with no option but to stage agitation and protests against `land grabbing'.

Costliest Indian land deal: 3,000 cr for 3 plots

A record property deal has been made at Mumbai's Bandra-Kurla complex. It's the highest in the country.

The price tag for the first plot was Rs 5,04,000 a square metre or Rs 831 crore and the 16,500 square metre plot was bought by Mumbai's Wadhwa Builders.

Wadhwa Builders have paid 229 per cent higher than the reserve price.

Reliance Industries bought the second plot — a car park-cum-commercial complex — for Rs 918 crore, valued at Rs 27,917 per square foot. The bid by Reliance was the highest and winning bid.

Reliance paid Rs 3,00,500 a square metre, for the 30,550 square metre plot. They bid 96 per cent higher than the reserve price set for the particular plot.

Meanwhile, the TCG and Hiranandani joint venture have bagged the third plot, for a commercial complex at Rs 1,041 crore.

Mumbai Metropolitan Development Authority (MMRDA) has raked in Rs 2,790 crore with the sale of these three commercial plots.
Prices were expected to touch such dizzying heights, because of the lack of supply existing at the Bandra-Kurla complex on Monday. The MMRDA has positioned it as an international financial business hub and demand kept increasing so far.

Consultants said there will be no respite for the next one year. Commercial property prices are expected to touch as high as Rs 60,000 a square foot.

But the MMRDA has reacted and said that Rs 2,790 crore is precious little compared to the Rs 260,000 crore that they require in terms of funding to develop and improve the Mumbai Metropolitan region.

It is 230 per cent higher than the reserve price. The reserve price was set at Rs 163,000 a square metre, which was the highest the last time MMRDA sold plots at the BKC. Prices have more than doubled between last year’s auction and this year’s auction.

Guidance values skyrocket in Bangalore

DH News Service, Bangalore:
Just over four months ahead of the opening of the international airport in Devanahalli, the airport is spinning a land price boom.

This time, not on speculation and hearsay but with the official State stamp.

Devanahalli Taluk has clocked an impressive rise in residential land prices, as the Department of Registration and Stamps notified revised property guidance values in Ramanagaram and Bangalore Rural Districts on Tuesday. The revision of values in the Bangalore Rural District covered Devanahalli, Doddaballapur, Hoskote and Nelamangala taluks.

In terms of percentage-wise rise in guidance values, Hire Amanikere in Devanahalli Town registered the biggest, touching Rs seven crore per acre, a whopping 180 per cent more than the prevailing guidance value. Residential land values in Doddaballapur Cross and B B Road in Devanahalli Town have touched Rs 15 crore, with both areas registering a 50 per cent increase. Parvathapura is also among the Town’s top draws, registering a solid 166.67 per cent increase in value. While the existing guidance value in the area (residential) is Rs three crore per acre, the new value is Rs eight crore.

Doddaballapur Cross has registered a 66.67 per cent rise in commercial land price as well.

OBJECTIONS INVITED
The Department has invited public objection to the revised values within 15 days from Tuesday. Suggestions and objections could be sent to the Secretary, Central Valuation Committee, Office of the Inspector General of Registration and Commissioner of Stamps, 7th Floor, BWSSB Wing, Cauvery Bhavan, K G Road, Bangalore - 560 009. The copies of the draft notification are available at the respective Deputy Commissioner, Sub-Registrar, panchayat and CMC offices.

Devanhalli airport - Nightmare waiting to happen

I wonder what the devenhalli plot investors are thinking when they see such articles. Its quicker to get to Chennai then devanhalli by road.

Think about the poor employees, pilots and in-flight stewards. I hope fatigue doesn't affect the pilots after such a long drive to reach work

BANGALORE: It’s killing. There’s no other way to describe it. It took us nearly three hours through numerous congested traffic junctions and suffocating pollution to get from Electronic City to the upcoming international airport in Devanahalli, a distance of 68 km. It was only a little better, about two hours, for those of us who started from J P Nagar and Rajarajeshwari Nagar.

With the new airport scheduled to open in just over four months, The Times of India undertook an exercise on November 5 to check out the exact nature of the travails one would have to go through to reach the airport. The distance and the poor accessibility to the airport has had everybody worried, and our exercise at evening peak hours proved it will probably be worse than what many imagined. By about the 25th kilometre from Electronic City, we were beginning to feel exhausted, and cab driver Paramesh was complaining about his legs paining from the constant clutching-braking. At times he would look and sound as if he regretted agreeing to make the trip.

From our experience, here’s what you need to be prepared for: if you are taking an international flight out of Bangalore which requires you be at the airport three hours prior to departure, then leave home at least five to six hours before the flight time. We say ‘at least’ because there’s a good chance your cab will scrape or hit somebody in the bumper-to-bumper traffic, which might lead to a hold-up.

Take along plenty of water and snacks. If you have to stretch a little, take an AC cab. It may cost you about Rs 1,000 or more (the rates are not yet clear) for a one-way trip to the airport, but it will probably be worth it.
Finally, a plea to the state government and the Bangalore International Airport Ltd: Don’t put Bangalore’s citizens through this. We deserve better. For frequent travellers, it will be sheer nightmare. Find a quick solution.

Subprime -101 tutorial

Comic relief on a serious topic

Times of India recognizes the bubble

Mumbai: If you are not a slum dweller entitled to a free flat or a mill worker promised a subsidised tenement by the state government, chances are your dream house will remain a dream.
Despite sluggish sales, the city’s builders are holding on to their astronomical prices. Going by the rates that are being quoted by most developers, a salaried person looking out for accommodation in the suburbs could find the options very limited.
Inquiries by this newspaper show that apartments which are less than 1,000 sq ft in size are being priced at about Rs 1 crore in faraway suburbs like Chandivali and Jogeshwari.
Take, for instance, K Raheja Corp’s Maple Leaf project comprising seven wings of 20 storeys each in Andheri (east) opposite Chandivali studio. A twobedroom flat with a carpet area of 873 sq ft is being quoted at close to Rs 1 crore with stamp duty. The project will be ready for occupation only in mid-2009.
In Goregaon (east), a two-and-a-half bedroom apartment with a built-up area of 997 sq ft is going for Rs 1.15 crore in Oberoi Woods, a residential project comprising three 35-storey buildings which are being set up by Oberoi Constructions. The rate works out to about Rs 10,400 a sq ft. Goregaon (east) commanded a price of barely Rs 3,500 a sq ft about three years ago.
In Mulund (west), Nirmal Lifestyle is pitching duplex apartments in its Amethyst World Home for close to Rs 2 crore each. Each duplex has a builtup area of 3,200 sq ft (carpet is 28% less) and the asking rate per square foot here is Rs 6,000. In another Nirmal project called Polaris in Mulund (west), a two-bedroom home costs Rs 70 lakh with stamp duty.
Hiranandani Gardens in Powai is now a residential area for top corporate honchos, doctors and businesspersons. Under-construction buildings like Hiranandani’s upcoming 30-storey Sierra are already quoting Rs 3 crore and above for a three-bedroom flat. This works out to a whopping Rs 15,750 per sq ft up to the 20th floor and an additional Rs 200 per sq ft for each floor above that.
Even in neighbouring Thane, twobedroom flats have an asking rate of Rs 60 lakh in Siddhachal, a Kalapataru residential enclave on Pokhran Road No 2.
HOME TRUTHS
Despite slow sales, builders are refusing to lower prices
Two-bedroom flats cost close to Rs 1 crore in the suburbs
Middle class edged out to the fringes of the city
Experts blame govt for failing to create mass public housing Experts slam Maha govt
Mumbai: Rising realty prices are threatening to ruin the dream of the middle-class Mumbaikar of owning a house.
“With the kind of property prices being quoted today, a Mumbaikar has to earn a minimum of Rs 35 lakh per annum to afford the EMI for a two-bedroom house in the suburbs,’’ said Gopal Sharma, general manager (marketing) of Gundecha, a city-based builder.
“Today there are only two classes of people in Mumbai—the super-rich and the poor. There is nothing left for those in the middle,’’ said a veteran south Mumbai developer. Housing experts and activists have time and again blamed the state government for completely abdicating its role in providing affordable public housing and “leaving the field open to developers’’.
Another source in the industry told TOI, “Real estate prices have reached a level which is beyond the reach of the common man and even the business community. At these prices, a person can buy property only if he has made a bumper profit from any other business or the stock market.’’
According to the source, if the person takes a home loan, as much as 50% of his salary could go towards repaying the instalment. “At the end of the day he is just surviving to clear his debts. If anything goes wrong with him or if he loses his job or falls sick he will plunge . straight into a debt trap,’’ he said.
Rajiv Sabharwal, senior general manager, ICICI Bank, said that home loans are sanctioned based on the “fixed obligation to income ratio’’. It means the person’s capacity to pay the fixed monthly instalment vis-a-vis his salary. “It is generally in the range of between 35% to 50% of the person’s salary. For instance, if he is earning Rs 12 lakh a year, the EMI could be Rs 6 lakh,’’ he said.

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