Real estate to witness turnaround after next 2 quarters: Kotak

AHMEDABAD: The real estate sector could witness a turnaround in the next two quarters and would see fund flow after that, Kotak Realty Fund CEO S Srinivasan has said.

"It will take at least two quarters before the fund flow to estate developer community begins, and the sector can witness a turnaround," he said yesterday at a seminar organised by the Gujarat Chamber of Commerce and Industries here.

Amongst the league of big ticket realty funds, Kotak realty fund currently has corpus of Rs 3,500 crore, which it would invest in the next one to two years.

"Kotak as a leading realty fund has corpus of Rs 3,500 crore to invest in real estate deals even at the land acquisition stage, out of which so far we have invested Rs 1,200 crore," Srinivasan said adding that they intend to invest the balance in the next one to two years.

In last three years, we have witnessed excesses across all sectors, including real estate and it will take sometime before the sanity is restored, Srinivasan said.

Highlighting the opportunities and challenges in finance, banking for the real estate sector, Srinivasan said "as developers we should work in coordination with planners to regulate the frenzy in construction of shopping centres."

According to Srinivasan, the planners (government) should impose restriction on construction of malls within a specified catchment area.

He suggested that developers should build up balance sheets despite all odds such as zoning regulations, tax saving measures, so as to show that its a sustainable business model.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/Realty_Trends/Rich_households_to_outnumber_poor_homes_in_2009-10/articleshow/4031618.cms

Warrants against DDA scam financiers

NEW DELHI: A Delhi court has issued non-bailable warrant against Suresh Kumar Meena and Vijay Kumar, associates of Deepak Kumar who is the whistleblower of DDA scam.

Suresh Kumar Meena and Vijay Kumar are the major financiers of the scam and had been absconding since the scam came to notice.

Interestingly, Suresh Kumar Meena had sold its flat in Rohini for Rs 30 lakh to finance the scam.

Meanwhile, CFSL Hyderabad, from where forensic report on software used in DDA housing draw is awaited, has asked for the server along with the original copy of the software used in the process.

The Delhi police are scanning call details of 18 people, who were named by master mind M L Gautam, former DDA official.

Currently, the total number of persons who have been in custody for their alleged involvement in the forgery and cheating in the flat allotment scam has gone upto six.

The draw of lots for 5,238 DDA flats took place December 16, 2008. Delhi Police started investigations after a man, who was allotted a flat in the draw, told the police that he had neither applied for a flat nor had a Permanent Account Number (PAN) card.

Deepak Kumar, who allegedly blew the lid off the scam after he fell out with some fellow real estate agents, and three others - retired DDA employee ML Gautam, real estate agent Raju Ram and Laxmi Narayan Meena - have already been arrested.

Source: http://timesofindia.indiatimes.com/Cities/Delhi/Warrants_against_DDA_scam_financiers/articleshow/4041055.cms

Chennai realtors in race for Rattha Group's 9-ground property

CHENNAI: The buzz in Chennai realty market is about the trend favouring joint development of projects by those having small and big land parcels. They prefer strategic partnerships to tide over cash crunch.

One such deal that seems to be taking final shape is a 9-ground property of Rattha, a diversified group with interests in exports, infrastructure, SEZ and hospitality.

A bevy of realtors are in the fray to jointly develop the Rattha north-east facing property, at Velachery, near MPL Motors showroom. Given the current market dynamics, the valuation per ground is pegged between Rs 1.80 crore and Rs 2 crore. Though the last big sale that happened in this area fetched Rs 2.5 crore per ground, the company is expecting to realise Rs 27 crore from the deal, according to realty sources.

Ceebros, KGEYes, Akshaya and Vishranthi are among those who are in the race, while some of them are still being approached through real estate consulting firms.

Two of the metro's well-known builders — Vishranti and Akshaya — confirmed that they were among the contenders, while a senior TrueValue Homes official said they too had been approached by Jones Lang LaSalle-Meghraj (JLL-M) last week with a proposal to jointly develop it. The official also said TVH wanted to see the site before taking any decision.

Banking on its expertise of developing properties jointly, Akshaya Homes chairman Chitty Babu said "we are in the race," when contacted by ET on Friday. About 80% of the 142-residential, commercial and IT projects executed by Akshaya have been through the joint-development route. Akshaya has 1.6 million sq ft of ongoing projects.

Rattha promoter Gurmeet Singh, contacted by ET today, said it has decided to drop the idea of sale. A JLL-M official too feigned ignorance about being mandated to do the transaction.

Incidentally, the Rattha group had announced its intention to develop an IT SEZ in Porur on 26 acres for Rs 1,750 crore. In May last, Mr Rajeev Misra global head of Deutsche Bank's credit card business, in his individual capacity had acquired 30% stake in the SEZ for Rs 262 crore.

However, sources in the know said the Rattha group has denotified the SEZ due to downturn and instead looking at a residential project.


Ratthas also forayed into hospitality through a tie-up with Ascott group of Mauritius when the latter upped its stake to 89% from 49% in Rattha Citadines Hitec City Aparthotel.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Chennai_realtors_in_race_for_Rattha_Groups_9-ground_property/articleshow/4025860.cms

NBO to launch housing index by March '09

NEW DELHI: The Reserve Bank of India (RBI) has asked a government agency that collects statistics on the country’s housing construction activities to launch a housing start-up index by March 2009, to help it assess the impact of fiscal and monetary stimulus offered to revive the sector.

The index, to be launched by the National Building Organisation (NBO) under the ministry of housing & urban poverty alleviation, will offer reliable data to RBI and other government agencies, facilitating speedy decision making.

A senior NBO official, who asked not to be named, said the index would be released on a quarterly basis. It will be made available on a monthly basis later. The base year of the index is 2003-04.

All major economies use similar indices to assess economic activity using demand and supply data on the housing sector. As housing is a sector with high forward and backward linkages, the proposed index will be useful in assessing demand and supply situations in other sectors, such as cement and steel.

An advisory committee constituted by the central bank will meet by the year-end to review the implementation of its directive, said the NBO official.

DR Dogra, deputy managing director with credit rating agency CARE, said that lack of a reliable database on housing hampered decision making in the country. The data for the proposed index would be collected on the basis of building permits issued by local authorities.

Soruce; http://economictimes.indiatimes.com/Markets/Real_Estate/Policy_/NBO_to_launch_housing_index_by_March_09/articleshow/3848509.cms

Rich households to outnumber poor homes in 2009-10

NEW DELHI: The wheel of fortune continues to spin in India, with each level of household income set to move a notch higher next year. For the first Investment Tips

time, the number of high-income households is set to exceed the number of poor households in 2009-10, while more than five million mid-income households will hit the high-income bracket.

According to an exclusive analysis done for ET by the National Council of Applied Economic Research’s (NCAER) senior fellow Rajesh Shukla, next year will see the size of high-income homes - with an annual household income (AHI) of more than Rs 2.85 lakh - rise to 46.7 million, overtaking the number of poor households at 41 million. The NCAER study pegged AHI for poor homes at less than Rs 71,000.

The study assumes a GDP growth rate of 6.7% for 2008-09 and 5.7% for 2009-10 based on average forecasts by nine Indian and global firms such as Goldman Sachs, Nomura Securities and Kotak Mahindra Bank.

For 2008-09, NCAER has estimated 42 million high-income households and 43.3 million poor households. Medium-income households with AHI between Rs 71,000 and Rs 2.85 lakh are forecast to rise to 140.7 million in 2009-10, up from 138.4 million in 2008-09.

Thus, over a million poor households will move into the mid-income bracket and nearly 5 million mid-income ones will hit the high-income category.

The growth estimates used for calculating the income demographics this fiscal year and next are more conservative than the government’s forecasts. The Prime Minister’s Economic Advisory Council expects India’s GDP to grow by 7.1% this fiscal and by 7-7.5% in 2009-10.

The period between 2004-05 and 2007-08, when GDP growth averaged 9.4%, witnessed the sharpest reduction in the number of poor households - down 19.3 million to 46.3 million in 2007-08.

During that period, the number of high-income households jumped 17 million to 37 million, while the number of mid-income households rose by around 16 million to 136 million.

The economic slowdown of the past one year is sure to come in the way of poverty reduction. Between 2005 and 2008, the number of poor households in India dropped 11% year-on-year.

But the current slump will bring that reduction rate down to 6.6% in 2008-09 and still lower, at 5.2%, in 2009-10, underscoring the need to return to what Prime Minister Manmohan Singh terms as “superior” economic growth.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/Rich_households_to_outnumber_poor_homes_in_2009-10/articleshow/4031618.cms

Govt to DDA: Build 40,000 houses every year

NEW DELHI: The controversy over the genuineness of the recent allotment of DDA flats has had a positive fallout.

Wiser by the mad scramble for the scarce flats which helped scamsters to set up bogus applicants, the Centre has asked DDA to use the tonnes of cash at its disposal to build 40,000 flats every year.

In a stern directive to the agency, which has been derelict in carrying out its mandate to provide affordable housing to the ever-increasing population of Delhi, Centre has asked DDA to come out with specific provisions to construct 40,000 houses a year, beginning next year itself.

The target of 40,000 may appear ambitious given the lethargic ways of the DDA. The agency, which has amassed a huge fortune by selling large tracts of land it controls, has been routinely criticised for not carrying out its charter.

The letter from urban development secretary M Ramachandran to DDA vice-chairman Ashok Kumar Nigam stands out for the sense of urgency it displays.

Ramachandran told TOI, "An estimated 40,000 people migrate to Delhi every year, so DDA needs to build the same number of houses which is compulsory mandate of the agency."

He said if DDA, which has monopoly over land resources, focussed on its primary mandate of providing shelter to people, there would be plentiful supply and such scams could be averted.

"We have asked DDA to come out with budgetary provisions to meet the shortage. The agency has no problem of resources, hence taking up this initiative should come easy," Ramachandran said.

"DDA should give special focus on housing and the ministry is ready for any support if needed," he added.

The DDA first built houses in 1967 and in the 40 years since, has sold just around 4 lakh flats, miserably failing to cater to the spiralling housing need in the Capital. To make matters worse, houses offered by private builders are beyond the reach of most middle-class families, leave aside the poorer sections.

The Centre's advice has come after DDA resisted the UD ministry's policy on encouraging public-private partnership in housing sector. It had also sought to restrict the agency's role in land acquisition and construction.

DDA failed to come out with its PPP policy on housing even three years after the ministry moved the proposal, an official said.

DDA is vested with complete authority for land acquisition, development and allocation, besides the responsibility of providing affordable housing to all.

The ministry is disturbed by the fact that over 5 lakh people applied for 5,000 flats in the recent DDA housing scheme. In its last offer in 2006, DDA had received over 2 lakh applications for 3,500 flats. To top it, the allotment has come under cloud with charges of rigging flying around.

The last official estimate of the Capital's housing need was done by the 2001 Census. It had put housing shortage at one lakh units which did not take into account the 40 lakh people who live in illegal colonies.

According to Delhi's Master Plan 2021, the city's population is expected to be 2.3 crore by then. An additional 24 lakh houses would be needed ― 4 lakh to clear the backlog and the rest to account for increase in population. The Master Plan has pointed out that only 53% of the housing need is met by institutions, with the rest in the unorganised sector.

Despite the huge deficit, DDA has neglected the housing part and concentrated more on land sale and purchase.

Source; http://timesofindia.indiatimes.com/Cities/Govt_to_DDA_Build_40000_housesyear/articleshow/4034318.cms

Developers focusing on affordable housing projects

MUMBAI: The escalating cost of housing coupled with the current economic slowdown has forced developers to turn their attention from the affluent segment to the mass segment. This is the story that is slowly spreading across the country.

Be it the distant suburbs of Mumbai or for Greater Noida or Faridabad or even tier-II cities like Indore one is seeing a flurry of housing projects with a price tag of less than Rs 20 lakhs – this segment is typically referred to the affordable segment.

“During the past three years, there were not enough apartments that were available in this affordable segment which has now led to this huge pent up demand,” said Haware Builders executive director Sanjay Haware. This is what has led to the one room kitchen apartments, apart from the slighter larger 1 bedroom, hall, kitchen (BHK), making their way back into the market.

Haware Builders, for instance, has launched a project with 525 apartments situated in Navi Mumbai’s Kalamboli with 325 sq ft each. These come at a price of 5.25 lakh. The builder claims that all the apartments were sold in just three days. Its more recent project in Thane, which is located just outside Mumbai, will have 750 flats. That, too, seems to have taken off well. “Some applications will spill over to the next phase,” said Mr Haware.

Others in the business admit to the trend. “Ever since interest rates and property prices have fallen, there have been enquiries for affordable houses,” said Nirmal Lifestyles managing director Dharmesh Jain. His company plans to offer apartments in the range of Rs 10-50 lakh which will be located outside Mumbai in places such as Kalyan, Dombivli and Thane.

In addition to Nirmal, others like Marathon, Sheth Developers, Evershine Developers have plans to offer affordable houses in Mumbai and the adjoining areas.

In Faridabad, which is close to Delhi, builders like BPTP and Triveni have offered housing at Rs 20 lakh. Delhi-based Omaxe is taking that concept forward. Its project priced at Rs 10 lakh located in Pithampur near Indore will target the government employees who draw salaries in the range of Rs 15,000-20,000. It has bought 120-acres each in Indore, Raipur and Bhopal for its affordable housing projects.

“These employees have secure jobs and they will be able to pay the monthly installment of Rs 5,000. We expect a huge demand for houses that will cost Rs 10 lakh,” says Omaxe director DP Srivastav. He added that individuals today want to own a house when they are 30-year-old compared with a time when the age to buy housing at 50.

In Ghaziabad, builders such as Ajnara and Supertech Builder are in the affordable housing space. The deterrent in the construction of economical housing has been the land prices in areas around Mumbai and Delhi.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Developers_focusing_on_affordable_housing_projects/articleshow/4014247.cms

Year 2010 to be declared as Year of 'affordable housing'

NEW DELHI: As recommended in the national conference of housing ministers, the year 2010 is likely to be declared as the year for "affordable housing."

The housing ministers' conference held here yesterday was inaugurated by Minister of state for Housing and Urban Poverty Alleviation Kumar Salja and attended by ministers from 15 states and Union Territories.

The meet also recommended the states to draw up the road map and a vision for slum-free city.

As per other recommendations, banks were asked to make reservation of atleast one per cent of their priority sector lending funds for economic weaker section (EWS) housing.

The National Urban Housing and Habitat Policy 2007 adopts the goal of affordable housing for all and seeks to promote multiple schemes and private-public partnerships in order to achieve it.

Selja asked the state governments to supplement the efforts of the Centre in creation of additional stocks by increasing supply of serviced land and new houses by direct intervention through state housing boards, development authorities and cooperative sector.

Selja also suggested providing one time incentive in the form of relaxation of floor area ratio norms as appropriative incentives which is likely to lead to softening of land prices and induce downward trend in house prices.

The meet recommended review of existing legal and regulatory framework for acquiring additional lands into the market and vertical construction for redevelopment of slums.

Soruce: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Year_2010_to_be_declared_as_Year_of_affordable_housing/articleshow/4013664.cms

Unitech seeks govt’s okay to raise $1 b through GDR issue

NEW DELHI: India's second-largest listed realty company Unitech has sought the government’s approval to float global depository receipts (GDRs) to raise up to Rs 5,000 crore ($1 bn). The GDR issue will reduce the promoter stake to 36.71% from 67.45% on December 31, 2008.

The promoter stake had already come down by 7% to 67.4% in the three months ended December 08. A Mumbai-based real estate analyst, who did not wished to be named, attribute this decline to the sale of pledged shares by the financial institutions. The company did not comment on the stake decline or shares pledged with lenders. The shares of Unitech fell 3.4% to Rs 28.30 on Thursday.

On December 22, the Unitech board had approved plans to raise Rs 5,000 crore through fresh issuance of securities, including equity shares, convertible preference shares, debentures, GDRs and ADRs.

GDRs are shares issued to non-resident Indians in the overseas market. Unitech has stated in its application to foreign investment promotion board (FIPB), the nodal body for clearing foreign investments, that it will issue 40 crore GDRs at a price of Rs 36.78, calculated as per the GDR scheme. Post-investment, the GDRs will comprise 45.57% of the total shareholding.

Analysts are skeptical about Unitech’s ability to attract enough GDR subscribers, given the state of global markets. Moreover, Unitech’s portfolio of assets, one-tenth of which comprise non-FDI compliant projects, might hinder speedy approval from the government.

The company has given an undertaking that GDR proceeds will be used only in the FDI-compliant projects, but the government may not allow Unitech to induct FDI without asking it to hive off non-FDI compliant projects.

Recently, the government rejected the Gurgaon-based Vatika group’s proposal to retain non-FDI compliant assets after FDI infusion. Real estate developers seek to retain such assets in a bid to ensure higher valuations. Unitech has reduced its debt obligation due by March to Rs 600 crore from Rs 2,500 crore through repayments and roll-over of dues.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Unitech_seeks_govts_okay_to_raise_1_b_through_GDR_issue/articleshow/4019336.cms

DDA scam: Deepak's custody till Jan 31

NEW DELHI: A trial court on Tuesday sent Deepak Kumar, alleged whistle blower in the DDA flat allotment scam, to judicial custody till January 31.

The court has also allowed the police a 10-minute interrogation of Deepak in connection with another FIR.

Additional Chief Metropolitan Magistrate Digvinay Singh sent Deepak to 11-day judicial remand in the first FIR lodged against him.

The Economic Offences Wing told the court that they had lodged two new FIRs against Deepak in connection with the case. The police said, during investigation, five PAN cards were recovered from Deepak, three of which carried his name. The other two were in Deepak's company and sister’s name.

In the second FIR, the police said two cheques received from Raju Ram another accused, currently in judicial custody, were given by Deepak Kumar and the account from which these cheques were issued belonged to one Rajiv Kumar.

A direct selling agent, Dinesh, has also been arrested in connection with the second FIR. The police said it was Dinesh whose photograph was on the account form of Rajiv Kumar.

Source: http://timesofindia.indiatimes.com/Cities/DDA_Deepaks_custody_till_Jan_31/articleshow/4007267.cms

Defensive DDA points to rules

NEW DELHI: A day after TOI reported about DDA allotting a flat in Mayur Vihar in the 2008 housing scheme when it was not even in the list of flats on sale, the agency claimed the flat was allotted as per existing rules. While it was learnt that several other flats that had been built earlier were also allotted in the present scheme, police said investigations were on.

Speaking to Times City, DDA spokesperson Nemo Dhar said: "For housing scheme 2008, 5,010 flats were ready for occupation. On allotment day though, 5,238 flats were allotted, which included cancelled or surrendered flats from previous schemes.'' Citing the DDA brochure which states in clause 24-B that the agency could increase or decrease the number of flats on offer in the scheme at any time, Dhar maintained that the Mayur Vihar flat was allotted under that rule.

Meanwhile, the Delhi Police, which received the complaint on Monday, said a probe was on. "We are investigating the matter and have sought details from DDA. The application and loan form of the allottee are also being examined," said additional CP (EOW) SBK Singh.

The allottee lives in Gazipur and said she had applied under the MIG category. The flat was earlier allotted to one Samir Bali in 2004, but he surrendered it. Similarly, flats situated in Jhilmil, East of Loni Road, Nand Nagri and Kondli Gharoli were grouped for offer under category code 28, which initially comprised 12 flats. The number was increased to 35 later, with the one at Mayur Vihar being included in it. Sources in DDA claimed that it was a practice that had been followed earlier as well. "Whenever there are a small number of houses within a certain diameter, the flats are bundled into a single group, so as to make it easier for the computerised draw,'' said a senior DDA official.

As part of the group, several two-bedroom flats in Mayur Vihar surrendered or cancelled from previous schemes were thus made part of the allotment process. DDA officials claimed that the grouping under Kondli Gharoli was presumed to be Mayur Vihar as the earlier scheme treated it similarly. Said an official, "Applicants knew that the flats under the Kondli group also included flats from Mayur Vihar, though the brochure didn't specifically say so. There was, however, a list of areas which were part of this group, so there could be no miscommunication.''

The agency now claims that the allotment was not made with any malafide intentions, as the practice of including flats from earlier schemes was well-known.

Soruce:http://timesofindia.indiatimes.com/Cities/Defensive_DDA_points_to_rules/articleshow/4003755.cms

Scam in DDA draw widens to general list

NEW DELHI: The alleged scam in allotment of DDA flats may go just beyond the 1,400 flats in the reserved category — EOW officials have stumbled upon the fact that one applicant was allotted a flat that was not even part of the draw. Senior police sources say they may now press for cancellation of the entire draw.

According to the list of successful applicants put out on the DDA website, Geeta Verma (name changed) was allotted an MIG flat in Mayur Vihar. Mayur Vihar was not on the list of locations that DDA published in its application brochure for the 2008 draw. TOI is in possession of documents which prove this mysterious allotment.

Police have found that the flat was featured in the 2004 draw but when TOI visited the flat on Sunday, it was locked and neighbours said it had never been occupied. At present market rates, the flat would be worth about Rs 45 lakh. Top police sources say, in their preliminary report to the government, they may now press for cancellation of the entire draw.

Police officers who have made preliminary inquiries about the allottee of flat number 92 — which went to application number 609219 —say she is related to a serving DDA official who is now under the scanner. "The Mayur Vihar allotment also means that at least one of the flats constructed under the 2008 scheme was not allotted. So, where did that flat go? That's a question DDA will have to answer now," said a police officer.

There was no response from DDA. "I cannot comment without checking the information with the department concerned," said director (public relations) Nemo Dhar, seeking time till Monday. Despite repeated attempts, DDA vice chairman A K Nigam was not available for comment.

Geeta, the Mayur Vihar flat allottee, had applied through a bank so her contact details were not available on the DDA website. "We are examining the matter. We have traced her address and other antecedents but are yet to speak to her. We are also in touch with the authorities and have sought clarification from them," said a senior EOW officer.

The revelation comes days after the arrest of former DDA staffer M L Gautam, who cops now believe could be the mastermind of the scam. Gautam had cornered 38 flats in the draw — a finding that raises serious doubts about the draw process itself. The final word, whoever, can come only when the software examination is completed in Hyderabad.

DDA sources claimed in big schemes when flats go unallotted - because allottees fail to make payments - these are often transferred in the name of DDA officials who then sell the flats in the next scheme. There are also rumblings that the number of flats constructed is more than that for which lots are drawn. The present draw of lots held on December 16 had 5,238 flats — 3600 flats were under the general category while others were given to reserved category.

Source: http://timesofindia.indiatimes.com/Cities/DDA_draw_scam_widens_to_general_list/articleshow/3998782.cms

Buying a home? Some things to remember

MUMBAI: With property prices and interest rates on a downward spiral, the real estate sector could witness some buying activities in the coming months. Though property consultants recommend ‘waiting’ for a few months to get better deals, some home-seekers may be tempted to kick off their house-hunting expedition soon.

While it’s better to avoid rushing into a decision, you can start looking out for a house right away. “Once the market bottoms out, home-seekers will start making a beeline for properties and loans. If you have identified your ideal home beforehand, you will be a step ahead of others. You can jump at the earliest opportunity available — in terms of price as well as interest rates,” says Ashish Shah, director, KPMG. Lack of buying activity means that it is a buyer’s market at the moment, and is likely to strengthen from hereon. “You can start quoting the price that seems reasonable to you.

Try quoting a price that is 50% less than the highest price a property in the locality commanded in the past,” suggests financial planner Kartik Jhaveri. Yet, another method of determining a property’s worth is to ascertain if it would continue to be in demand five years later. If the answer is in the affirmative, you can consider sealing the deal. Approaching a real estate agent posing as a seller could be a good idea to determine the real price of the property — chances are that the selling price would be considerably different from the purchase price.

Your heart may be set on a plush residential complex replete with state-of-the-art facilities, but that should not make you lose sight of your basic needs. For instance, if a well-equipped complex is not close to any railway station/bus stop, and you do not own a private vehicle, commuting could turn out to be a nightmare.

Hence, when you commence your house-hunting mission, it is advisable to keep a list of ‘must-have’ attributes ready. Keep an eye on time taken to commute to school and workplace. In addition to quality of construction, evaluate the existing infrastructure — roads, water and power supply, play grounds, shops catering to day-to-day needs and so on. Finding the perfect house is nearly impossible, but comparing shortlisted properties will help you zero in on the one that meets most of your requirements.

“This apart, present and future market drivers, financial ability and personal investment objectives should be borne in mind,” adds Raminder Grover, CEO, Homebay Residential, a subsidiary of property consultancy firm Jones Lang LaSalle Meghraj. A ruthless assessment of your financial situation — current as well as future — is essential; factor in possible pay cuts and job loss.

In case you are planning to sell your old flat and buy a new one, it is advisable to do so only after securing sales proceeds. While bridge loans
meant for such funding gaps are available, in the current scenario, it is better to steer clear of avoidable liabilities.

Consider old flats
If you are not fixated on ‘ultra-modern’ amenities, you can consider buying an old flat. If you locate a well-maintained house in the desired locality that boasts of robust ancillary infrastructure, there is no reason why it should not be considered. After all, the strain on your budget will be minimal. “The difference in prices of new and resale properties would depend on various factors, but would usually be a third less than that of a new property,” says Mr Grover. However, a comparison between new and old houses should also cover renovation costs the latter would necessitate. Besides, if you intend to sell it in future, the resale value would have dwindled significantly.

Check if the property is already mortgaged
Many times, builders start developing properties after mortgaging the same to institutions that extend finance to the project. “If it is mortgaged, you must insist on getting a no objection certificate (NOC) from the lender or satisfy yourself that your rights under the purchase contract are not subservient to lenders,” says Rajesh Narain Gupta, managing partner of law firm SN Gupta & Co. Moreover, you must insist on an occupation certificate, sanctioned building plan and the building completion certificate.

Get clarity on refund
While signing the contract, the buyer should enquire about the time frame within which the project will be completed and the penalty the builder would be liable to pay in the event of a delay. “The builder would be legally liable to render a refund if it can be proved that he has not met his part of the contract. Such circumstances would include unreasonable delays in completing the construction, flawed construction, flawed title or evidence of previous claims on the property or the land on which it stands,” says Mr Grover. Adds Mr Gupta: “Buyers should also enquire about the portion of advance paid that will be forfeited and the time frame within which the balance will be refunded, in case they choose to cancel the booking.”

Soruce: http://economictimes.indiatimes.com/Markets/Real_Estate/Realty_Trends/Buying_a_home_Some_things_to_remember/articleshow/msid-3980864,curpg-2.cms

Ex-officer arrested in DDA scam

NEW DELHI: A retired officer of Delhi Development Authority was on Thursday arrested after evidence cropped up against him in the DDA flat allotment fraud, while a property dealer is understood to have been detained for questioning.

M L Gautam, who retired from DDA's telephone department in 2004, was taken into custody yesterday for questioning and later was formally arrested after his involvement was established, police said.

"Gautam has been placed under arrest after evidence cropped up against him during interrogation," Joint Commissioner of Police (Crime) Amulya Patnaik said.

This is the third arrest by Economic Offences Wing (EOW) of Delhi Police's crime branch, which is investigation into a complaint that a cartel of property dealers and DDA officials conspired to rig the draw of allotment and cornered flats reserved for SC/STs.

Laxmi Narayan Meena, a sacked bank employee, and Deepak Kumar, a law graduate, were earlier arrested for allegedly collecting details of SC/ST people and submitting applications for the flats earmarked for them without their knowledge.

Suresh Kumar Meena, a property dealer, who is absconding, is understood to have been detained by investigators but there was no official confirmation on it. When asked, Patnaik refused to confirm the detention saying investigations were progressing and it was not appropriate time to comment on it.

Soruce: http://timesofindia.indiatimes.com/Cities/Ex-officer_arrested_in_DDA_scam/articleshow/3981724.cms

Unitech banks on Rs 800-cr loan rejig

NEW DELHI: Unitech, India’s second largest listed real estate company, is looking at restructuring a Rs 800-crore loan from public sector banks, as it attempts to save itself from sinking under the huge debt burden. The company is pinning its hopes on debt restructuring, asset and stake sales to private equity (PE) funds to pay a debt of Rs 2,500 crore, which is due by March ’09.

“We are in discussions with public sector banks for rescheduling our loans,” Unitech head of strategy and planning, R Nagraju told ET. Another company executive, requesting anonymity, said Unitech was seeking to restructure a loan of over Rs 800 crore.

The Reserve Bank of India (RBI) recently allowed banks to restructure loans taken for commercial real estate without turning them into non-performing assets (NPAs). The RBI directive had come following intense lobbying by realty firms, which were finding it difficult to service debt, as sales had dried up and fresh debt was not available.

Most developers are hopeful that banks will reschedule their loans. “It makes sense for banks to reschedule loans, as it will help them show lower NPAs on their books. If banks were to re-possess land, given as collateral by developers, they may get in trouble,” says a Delhi-based mid-sized developer, who didn’t want to be named.

“Land in most cases was over-valued, and prices have been falling since the loans were disbursed. Moreover, in a market, where you have no buyer for land, banks are unlikely to recover even half their cost,” the developer added. Unitech is also expected to pay Rs 200 crore by March for the land it purchased earlier. Mr Nagraju says the company need not pay land dues immediately, as it is yet to get possession of the land.

Unitech is also banking on the sale of its assets, including hotels, office building and land parcels to raise cash. While any deal on its hotel in Gurgaon or office building in New Delhi is yet to be finalised, the company has reportedly sold off a few land parcels meant for institutional use. The company recently sold one school plot for around Rs 30 crore.

Unitech is also looking at raising funds through private equity infusion at company and project levels. Unitech is holding an extraordinary general meeting (EGM) on January 19 to seek shareholder approval to raise Rs 5,000 crore by issuing fresh equity or convertible instruments. The RBI had raised the ceiling for FII holdings in Unitech to up to 100% in November 2007.

The company has been holding negotiations with multiple PE players to raise between $300-$500 million by issuing convertible debentures at the company level and around $200 million by selling stakes in mid-income housing projects.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Unitech_banks_on_Rs_800-cr_loan_rejig/articleshow/3965573.cms

Builders under pressure as buyers press for refund

NEW DELHI: Some of India’s largest real estate firms such as DLF, Unitech, Omaxe and Parsvnath that launched multiple projects at the peak of the Tallest buildings in India
real estate boom are now under pressure from buyers and investors who look to exit these projects.

Already in a spot due to unavailability of bank loans and a fall in sales, the developers are less inclined to oblige the buyers who are coming together to mount pressure for refunds in projects that are yet to take off.

Several buyers and investors, angered by the developers’ inability to start work on projects, have stopped payment of installments on their purchases, adding to the companies’ cash problems.

Investors in DLF’s commercial projects in Delhi and Kolkata have come together with the help of brokers to put pressure on DLF to start construction or refund initial deposits. “DLF is way behind schedule in their projects. It should either start work on the project immediately and deliver in time or return our investment with 15% interest,” says Amit Jain (name changed), a senior executive with an MNC who invested Rs 1 crore each in DLF’s projects in Okhla in Delhi and Kolkata.

Mr Jain says since DLF follows a time-linked payment plan, it has been demanding payments from buyers even without starting construction.

The broker, who facilitated Mr Jain’s purchase, says DLF has not even paid the government to convert the industrial plots at Shivaji Marg and Okhla in Delhi into commercial plots. However, a DLF spokesman denied this saying, “We go by the agreement with the buyers signed at the time of booking. The allegations over the status of our projects are not true. We will deliver as per schedule.”

Several projects of Omaxe, Unitech and Parsvnath are also facing similar problems. Akash Verma, a Noida-based garment exporter, had booked an apartment each in projects of Omaxe and Unitech in Noida. He booked an apartment at the ‘soft launch’ of Omaxe’s Noida project in May 2007. Omaxe had promised to launch the project formally a few months later at a higher rate. The formal launch never happened and investors like Mr Verma are stuck. Omaxe has turned down requests for a refund. An Omaxe spokesman, however, said the company has ‘considered and taken care’ of all such requests.

Mr Verma has also been unsuccessfully seeking a refund of his investment in Unitech’s Grande project. “I am paying Rs 4.5 lakh as EMI. Unitech executives say the project will be delivered on schedule, but there is no worker at the site,” he says. A Unitech spokesman said, “We generally discourage cancellations. But if the buyers insist, we refund the money after deducting 10-15% of the total value of the apartment.”

Most realty firms do not encourage refund requests. Till the end of 2007, investors could easily sell their property in open market as the prices were going up. But with buyers disappearing from the market, investors are forced to approach developers for refunds.

Some property buyers are seeking refunds due to their weakened financial positions, while several others do so as they are not sure of the developers’ ability to complete the project. There are a few others who seek refunds as they feel that they can strike a better deal now with prices undergoing a major correction.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Builders_under_pressure_as_buyers_press_for_refund/articleshow/3970375.cms

NBO to launch housing index by March '09

NEW DELHI: The Reserve Bank of India (RBI) has asked a government agency that collects statistics on the country’s housing construction activities to launch a housing start-up index by March 2009, to help it assess the impact of fiscal and monetary stimulus offered to revive the sector.

The index, to be launched by the National Building Organisation (NBO) under the ministry of housing & urban poverty alleviation, will offer reliable data to RBI and other government agencies, facilitating speedy decision making.

A senior NBO official, who asked not to be named, said the index would be released on a quarterly basis. It will be made available on a monthly basis later. The base year of the index is 2003-04.

All major economies use similar indices to assess economic activity using demand and supply data on the housing sector. As housing is a sector with high forward and backward linkages, the proposed index will be useful in assessing demand and supply situations in other sectors, such as cement and steel.
An advisory committee constituted by the central bank will meet by the year-end to review the implementation of its directive, said the NBO official.

DR Dogra, deputy managing director with credit rating agency CARE, said that lack of a reliable database on housing hampered decision making in the country. The data for the proposed index would be collected on the basis of building permits issued by local authorities.

Soruce: http://economictimes.indiatimes.com/Markets/Real_Estate/Policy_/NBO_to_launch_housing_index_by_March_09/articleshow/3848509.cms