Modi govt's next push against benami properties may settle down the real estate sector

“Ek teer se do shikaar”. It looks like our PM will be hooking up several shikaars as the current demonetisation drive is just the beginning of anti-corruption stir and will spur on a number of measures to rid India of its corrupt image.
After this period of 50 days of punitive action against owners of black money, folks, be prepared as the next whacking axe is set to fall against ‘benami’ property owners: a warning has been issued by our PM Narendra Modi, who has said clearly in Goa, “I am not going to stop at this. I will expose the history of corruption of 70 years since Independence.”

Who are these benami property owners? Well, the government wants to find out exactly that and unmask such people and punish the offenders. Already the institutional framework has been strengthened by amending the original Benami Transactions Act 1988 to make the existing law more stringent. Under the Benami Transactions (Prohibition) Amendment Act 2016 that recently came into force on 1 November, a transaction is named ‘benami’ if property is held by one person, but has been provided or paid for by another person. The Act prohibits recovery of the property held benami from benamidar by the real owner. Also, Benami properties are liable for confiscation by the government.
Many among us have often casually side-stepped the law, and officials too are habituated to accepting bribes, so we have built an environment where corruption, greed and all the vices thrive. Thus, the corruption do-away move necessitates equally supportive laws and strict organisational framework backed by active regulatory authorities to stamp out benami transactions.
People with surplus black money had been keeping it safely hidden from the government by buying property in fictitious names, thus on paper they were not the owners but enjoyed all the benefits. It is assumed some corrupt political leaders, government officials and developers are the ones indulging most in benami transactions.
A senior real estate consultant is of the view that benami property transactions see a boom during various scams which our country has been witnessing from time to time. So right from chara ghotala of Lalu Prasad Yadav that came out in the open in 92-93 involving Rs 950 crore to Sukhram’s telecom scam and subsequently their holding of unaccounted assets and such other notorious scams where big amounts of money where quickly invested in properties far and away. Black money has always found a safe haven in properties in Delhi, NCR regions and Tier II, Tier III towns, albeit in unknown names to escape the law.
Now, under the amended law, all those benamdars and the real owners, who have been indulging in bogus transactions since the period the original Benami Act was formulated, will find that there is no escape route if they are identified, for not only will they will have to forego property but their property will also be impounded by the government and, moreover, they will be liable to face imprisonment or penalty as the case may be.
The amendment to the Act states a change in the earlier penalty from 1 to 3 years and from 1 year rigorous imprisonment up to 7 years, and a fine which may extend to 25 percent of the fair market value of the benami property. The district registrars and land record departments will dig out the names of benami property holders. “What this essentially means is that a lot of responsibility lies on the initiating officer for tracking a benamidar. Secondly, a network of players, the initiating officer, the approving authority, the administrator and the adjudicating authority, all have to work in tandem to establish a property as benami,” points out Anuj Puri, Chairman & Country Head, JLL India.

The real estate sector has lately been witnessing a series of corrective measures. First, the Real Estate (Regulation and Development) Act, then the Land Acquisition Rehabilitation and Resettlement (Amendment) Bill 2015, now the Benami Transactions Act that are all aimed at making the sector more transparent and a professionalised one.
Through the crackdown on benami property, title risks, which hitherto undermined the buyers’ confidence, will be done away with. Also, the amendment will have a greater impact on benami transactions happening on a larger scale in agriculture land.
Moreover, exits by funds participating in transactions will be quicker. Our PM’s exhortation: “If you haven’t realised what I am made of, then do now”...clearly foretells his firm intent as he is out to expose the benamdars and with that the mystery of the real owners.
The government strategy now comes across clear; it is fortifying the banks with cash and aims at solving the problem of scarcity of land by taking strong action against benami property as soon as the monetisation drive gets over. And the good thing that may happen post the benami investigations, said to begin in January 2017, is that a lot of land inventory may become available to the government which the Union Minister of Urban Development, Housing and Urban Poverty Venkaiah Naidu may open up to use in fast-tracking the affordable housing plans for the poor, for only 3 years would remain to execute that goal.

Black is the new white: Secondary real estate transactions to become transparent

The much-awaited trigger for making homes affordable for end users is here. The government’s decision to ban Rs 500 and Rs 1,000 currency notes is expected to hit the real estate sector hardest. As a sector that’s known for menace of black money, real estate is now likely to move towards improved transparency.


The move is expected push property prices, including land prices, down as investors will not be able to deploy their cash in real estate and thereby forcing builders to sell at lower prices. Of the property markets, Delhi-National Capital Region is likely to witness a hard landing as the market is known for highest involvement of cash component.

“Property markets will see around 30% correction in prices. Even builders who claim that they accept only cheques will also be forced to reduce prices given the market conditions around them. Apart from big property markets, tier II and III cities will be worst affected,” said Yashwant Dalal, president of the Estate Agents Association of India. “Land prices will also move downward as these deals used to see at least 30% cash component.”

The practice of investing unaccounted wealth is widely prevalent in real estate and the government’s latest decision is expected to make things difficult for developers. There can be a rise in projects getting stuck as developers may go slow on construction given the liquidity stress for them.

“There is bound to be a downward pressure on prices of everything including real estate. This can be a good opportunity for end users to buy their dream homes. Sale of plotted developments will be worst hit. The move will lead to making the sector more transparent,” said Rajeev Talwar, CEO, DLF and chairman of realtors’ body NAREDCO.

While the panic is widespread among property brokers, developers and other market participants, few are happy that the move along with implementation of Real Estate Regulatory Act will cleanse the sector.

“This is the most positive and amazing decision that would lead to cleaning up of the system, it will help in improving the country’s image and attract more foreign investments. Unfair advantage that certain developers dealing in cash enjoyed hitherto has now disappeared, it’s a level playing field for us and we will do much better,” said Vikas Oberoi, CMD, Oberoi Realty.

Given the existing inventory across the prime property markets, the impact will be huge in several markets where payment of cash is mandatory and the major form of profit taking for developers as well as investors. These markets will see a major crash making an already difficult situation even more challenging.

In the quarter ended September, unsold stock across tier-I cities climbed 12% and was attributed to new launches with maximum increase seen in Kolkata, followed by Ahmedabad and Mumbai Metropolitan Region.

Read more at:
http://economictimes.indiatimes.com/






Level:- currency denomination effect on real estate, how real estate will effect currency denomination, note ban in real estate, real estate news, latest real estate news, currency ban effects in real estate, govt currency denomination, Indian currency Rs. 500 and Rs. 1000 note ban, real estate transactions to become transparent because of currency denomination, currency denomination effect in india

Real estate investments in Gurgaon double to over $1 billion

Investors across real estate segments - residential, commercial and land – are rushing into Gurgaon which saw large sales across financing and land acquisitions in excess of $1 billion, double that of 2015.

Last year, Gurgaon market attracted around $500 million in investments as investor were in a wait-and- watch mode towards outlook and an expected recovery.

While land accounted for 42.55 of the total investment pie, followed by refinancing of residential assets at 42.1% and core assets (rented office property) at 15.3% respectively, estimates CBRE South Asia.

“Owing to its cosmopolitan status and conducive environment, Gurgaon continues to evince active interest from real estate funds, local and international developers as well as corporates. It has always been the investment gateway to NCR due to its critical mass in real estate development and existing social infrastructure,” said Gaurav Kumar, managing director of capital markets at CBRE South Asia.

Gurgaon commands a lion’s share of office leasing in the NCR region driving significant institutional interest as well as investment commitments to capture the growth wave of increasing lease rents and high sale prices.


Some of the large transaction in Gurgaon includes M3M acquiring 180 acres of land from Sahara Group for $180 mn for a residential project. Tata Realty and Infrastructure acquired a 25-acre IT SEZ zoned land parcel from M3M abutting Sector 58 near Golf Course Extension for $60mn. Additionally RMZ/QIA purchased a 730,000 sq ft IT Park from BPTP located along the Delhi-Gurgaon expressway in Udyog Vihar for $180mn.

“Gurgaon is the potential market for office spaces in north India and assumes a prominent position in RMZ acquisition strategy. We have already acquired a marquee asset from BPTP which we have christened RMZ Infinity, Gurgaon. We are exploring both greenfield and brownfield developments as a way of expanding our presence in north India, which we hope to take up to at least 5 mn sq ft over the next three years in this Gurgaon micro market of NCR.,” said Arshdeep Sethi, MD -Development of RMZ Corp ..

“We foresee constraints on new office supply side in the future, opening up tremendous opportunities to capture significant market share. Even valuations in the recent couple of years, especially in residential, have been depressed. This, combined with the limited number of office players in the market, provides growth opportunities in terms of returns and market share,” he said.

Prominent funds like Piramal Fund Advisors, Xander, JP Morgan, Altico Cpaital, GIC and Blackstone have either invested or are evaluating opportunities in Gurgaon. “We will look at last mile financing for projects in advanced stages of construction and sales. We will also evaluate and fund projects wherein credible corporate houses such as Godrej have tied up, under joint development arrangements, with existing land owners and developers to market and construct projects under their corporate bran brands,” said Sanjay Grewal, CEO for Altico Capital.


The fund recently invested Rs 50 Cr transaction with Noida based Lotus Greens group for a residential project. It had earlier invested Rs 450 crore for a Sports City project with the builder.

The city also has couple of million dollars transactions in the pipeline with DLF’s rental portfolio of office assets alone estimated to attract over $1-1.3 billion for a 40% stake sale. Ascendas-Singbridge, a leading sustainable urban and business space solutions provider, has also recently announced an investment of $ 400 mn to develop an IT office SEZ in Gurgaon.

“Gurgaon is the focal point of economic growth in NCR and the second largest office market in India with significant investments made by large multinational corporations. With over two decades of experience in India, we will bring our best practices to ITPG and provide best-in-class business space and asset management services in Gurgaon,” said Sanjay Dutt, CEO, India Operations, Ascendas-Singbridge.

Renewed interest from institutional investors has also prompted builders such as Vatika, Tata Realty, Hines and M3M to join hands with strong institutional investors to actively acquire strategic land positions within emerging areas of Gurgaon; a clear indicator of long term dividends from such investments.


“The past few years have been challenging for residential markets with stagnant off-take levels. In such a scenario, renewed interest by institutional investors is explained by several factors including current pricing for housing being at replacement cost levels, thereby providing limited downside risks for investments. Interest rates are at their lowest in the past five years,” said CBRE’s Kumar.

Multiple Chinese developers are evaluating Gurgaon as their first market for investment. Wanda, a prominent Chinese developer acquired 500 acres from the Haryana government for a green field industrial township.

In addition to the healthy investment activity over 12-18 months, the pipeline of future investments is even stronger. Institutional investors are bullish on the long term outlook with commercial office markets in overdrive and emerging areas of Gurgaon offering excellent residential development opportunities.

Read more at:
http://economictimes.indiatimes.com
Investors across real estate segments - residential, commercial and land – are rushing into Gurgaon which saw large sales across financing and land acquisitions in excess of $1 billion, double that of 2015.

Last year, Gurgaon market attracted around $500 million in investments as investor were in a wait-and- watch mode towards outlook and an expected recovery.

While land accounted for 42.55 of the total investment pie, followed by refinancing of residential assets at 42.1% and core assets (rented office property) at 15.3% respectively, estimates CBRE South Asia.

Read More..
http://www.gurgaonproject.in/2016/11/real-estate-investments-in-gurgaon.html

Now, The Real Estate Ball is in Customer's Court

Not long ago, real estate in India was a seller’s market. Developers, even the ones with a terrible reputation owing to delays and quality of construction, were never short of eager beaver buyers. Indians embody the ‘roof over our heads’ aspiration like few others.


That meant developers decided what the market wanted. They set the size of apartments, the price and the designs. The customer’s choice was smothered by a demand frenzy.


Not anymore. Developers are right-sizing, right-pricing, re-designing, even delivering apartments on time. Besides discounts of 8-10%, developers have taken to offering freebies such as gold coins, cars, furniture and even free foreign tours to attract homebuyers. They are also offering easy or deferred payment plans. In some cases, booking amounts have been slashed to as low as Rs 1.


In other words, developers are giving unprecedented attention to customer care. Homebuyers in India never had it so good. Parth Mehta, MD, Paradigm Realty, says demand exists. But customers end up buying only when they are assured of correct pricing, product, payment plan, performance and most importantly, permissions from authorities, he says.

King Customer

Building smaller homes without changing the per sq ft prices is another strategy that is gaining popularity. By reducing the size of houses, builders are trying to make the pricing attractive for buyers, according to Shishir Baijal, chairman, Knight Frank India, a real estate consultant.

What happened? Rising consumer activism has played a critical part in the new business paradigm. The Indian property market has always had plenty of buyers taken for a ride by unscrupulous developers. But they never had an appropriate forum to seek redress.

The onset of Real Estate Regulatory Act or RERA has changed that. While a regulator under RERA is yet to be set up, the Act has already managed to usher in some form of transparency and discipline in the sector.


Buyers also decided to bunch up and take on developers. Individually, they realised they could do little against the clout of developers and the battery of lawyers at their disposal. They have been approaching Competition Commission of India, the National Consumer Dispute Redressal Commission (NCDRC) and even the Supreme Court to seek recourse.

Courts expectedly have sided with the buyers. In July, the Supreme Court asked Unitech to deposit Rs 5 crore by August 5, 2016 for delaying the completion of a high-end residential project Burgundy it had launched on the Noida-Greater Noida Expressway near New Delhi. In a separate case, the court asked Supertech to return money to investors. Courts and various consumer forums have also ruled against developers such as DLF, Unitech, Jaypee Group, Supertech and Parsvnath Developers in recent times

Empowered buyers could not have happened at a more terrible time for developers. The sector is gasping for breath. Developers in India’s key property markets — Mumbai, Bengaluru, Chennai and the National Capital Region (NCR centred on Delhi) — are struggling with sluggish demand, an avalanche of unsold inventory and delayed or stalled projects.


Even easy payment plans, freebies and deep discounts have failed to improve the sentiment of buyers. “Homebuyers’ confidence in real estate developers is at the bottom right now,” says Mehta.


Given that the property market is inherently cyclic, developers could have dug in and waited for the slump to pass. Not this time. Declining sales have piled on the debt of developers, mainly in Delhi-NCR.

The net debt of the top 13 listed developers tracked by Kotak Institutional Equities stood at Rs 55,100 crore at the end of March 2016 compared with Rs 50,800 crore a year ago and Rs 41,400 crore at the end of March 2014. Two companies — DLF and Unitech — account for 56% of the total debt.

The challenges developers face now are unprecedented, according to developer Niranjan Hiranandani.


The bad news doesn’t stop here. According to credit ratings agency Crisil, India’s top 25 real estate companies have as much as Rs 30,000 crore in borrowings maturing in the immediate future. Rating agency India-Ratings Research has revised its outlook on the real estate sector to negative for FY17 from stable.

Developers cannot even hope for a demand resurgence soon. A report Knight Frank India shows new launches in the country’s top 8 cities fell 9% year-on-year during the six months to June 30 to less than 107,120 units. This is the lowest in three years. Given the changed dynamics, builders are having to adjust to the ‘new normal’.

Apart from focusing on customers, builders are also doing away with unnecessary clauses that hindered the sales process earlier.


Ashok Chhajer, chairman, Arihant Superstructures offers an example. The company launched a project at Kharghar in Maharashtra at Rs 6,555 per sq ft while the rate for other under-construction projects in the vicinity was over Rs 8,100 per sq ft. But the company did not put any cost escalation or lock-in clause in the agreement with buyers. Chhajer says the company managed to sell 210 apartments in May.

Some builders are collaborating with each other to bring projects back to life. They have begun to share land, labour and other resources.

Benga luru-based Corner s tone Properties, one of the large land owners in the city, has been developing residential and commercial assets by partnering builders such as Sobha, Embassy Group, Brigade Enterprises and Mantri Developers. “The joint development model helps builders concentrate on construction funding which is cheaper than the funding for land acquisition,” says BP Kumar Babu, chairman, Cornerstone.

Some developers that have worked on redevelopment and have requisite permissions are finding that better value can be realised if they partner builders with credible brands. In Delhi, Tata Housing has signed a development management agreement with NCR-based developer Lotus Greens to build a housing project in Noida, marking its entry into the region. Mumbai-based Radius Developers recently tied up with Deserve Builders to develop an integrated township spread over 40 acres in Chembur suburb of M ..

These events have happened at a time when investors are changing tack. Funds are increasingly investing at the project level in the form of structured debt, which is tailored to suit borrower’s needs, with less equity, but gives lenders more control as they are unwilling to take major risks on projects.

“Investors now prefer to enjoy lower return but higher capital safety,” says Shobhit Agarwal, Managing Director, Capital Markets and International Director, JLL India.

Developers are also opting for pre-fabrication technology to control costs, maintain quality and speed up construction. Under this method, parts of the building like the walls are built in a factory nearby and then transported to the site and assembled. The technology allows a building to be completed in 12-15 months compared with 30-36 months using traditional methods.

Some builders, especially in NCR-Delhi, which is the worst effected market, have been trying to get rid of the flab by selling their non-core assets. DLF, the largest Indian real estate firm, also has the highest level of debt — Rs 23,800 crore as on FY16-end. Over the last three to four years, it has sold a 17-acre land parcel in Mumbai’s prime Lower Parel area, wind energy business, insurance business, cinema business and the luxury hotel chain Aman Resorts. Its promoters are now about to sell their 40% stake in a unit named DLF Cyber City Developers and the money raised will be put back into the company, making the development side of its business debt free. Similarly, Unitech and Jaypee group have been exiting noncore businesses.

Even so, wooing the buyer is the cornerstone of the revival strategy of builders. Developers have turned to social media to reach out to their potential customers. Digital marketing is gaining acceptance with developers who have realised that homebuyers are finding it convenient to explore various options virtually before physically checking out the short-listed properties. The real estate customer is having the last laugh, it seems.

Referance:
http://economictimes.indiatimes.com