Three realty firms file DRHP; may raise Rs 10,000 cr

Developers spurred into market by bull run in stocks, series of successful QIPs.

Three real estate companies — Lodha Developers, Subrata Roy’s Sahara Prime City and Delhi-based Emaar MGF — each filed a draft red herring prospectus (DRHP) today with the capital markets regulator, Securities and Exchange Board of India (Sebi), to raise in all as much as Rs 10,000 crore from the primary markets, sources said.

While Lodha is expected to raise anywhere between Rs 2,500-3,000 crore from the initial public offer (IPO) of shares in the next three-four months, Sahara Prime City plans to raise up to Rs 3,450 crore in the next few months. Emaar MGF, which aborted its plans to raise Rs 7,000 crore early last year, plans to raise Rs 3,850 crore in the IPO by selling 11.50 million shares, sources said.

Last Friday, Delhi-based developer Ambience Ltd filed a DRHP with Sebi to raise as much as Rs 1,125 crore through an IPO, with a green shoe (over-allotment) option of Rs 168.75 crore. Godrej Properties, which earlier postponed its plans, is also planning to launch its Rs 500 crore IPO in the next three months, where it plans to sell 9.4 million shares to investors.

While Sahara will utilise what is raised from the IPO to develop townships in 99 cities, Lodha and Emaar are expected to use the proceeds towards their upcoming projects.

According to analysts, the recent bull run in stock markets and the series of qualified institutional placement (QIP) of shares by property developers has given confidence to private unlisted developers to enter the markets. The benchmark Sensex has risen 33.8 per cent in the past year and nearly 4 per cent in the past month, while the BSE Realty index, which tracks property stocks, has risen over 30 per cent in the past year and nearly 4 per cent in the past month.

A number of developers such as Unitech, DLF, HDIL and Indiabulls have raised Rs 10,000 crore through QIPs since the beginning of the year. According to estimates, IPOs worth Rs 40,000 crore are expected to hit the markets in the next six months. At least 14 real estate companies are waiting to tap markets with IPOs and QIPs in the next six months.

"The way QIPs have been sold, I do not have doubts about investor interest in IPOs. If companies are good and projects are bankable, they can easily raise funds from investors,'' said Ambar Maheshwari, director of investments at DTZ, an international property consultant.

http://www.business-standard.com/india/news/three-realty-firms-file-drhp-may-raise-rs-10000-cr/371703/

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Omaxe to invest Rs 15 billion on new projects; decides on price rise

New Delhi:Real estate developer Omaxe Ltd. is set to launch its four new projects over the next two months and may also raise the prices this fiscal year.

The demand of the real estate is on rise but omaxe is hell bent on price hike. The company will invest Rs 15 billion on the new projects. The revenues expected from the project hovers somewhere around Rs 23 billion over 30 months. India's real estate market has registered a sharp from earlier this year.

Much of the demand is hoped to come from middle-income and affordable housing.

http://www.samaylive.com/news/omaxe-to-invest-rs-15-billion-on-new-projects-decides-on-price-rise/659463.html

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Loans to real estate players set to get costlier

NEW DELHI: THE Reserve Bank of India (RBI) may step up its efforts to pre-empt another bubble in the local property market by increasing the cost

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of funds for the commercial real estate sector by up to 200 basis points.
“We are looking at a hike in the risk weight to the commercial real estate (CRE) segment to 125% as a measure to ward off another bubble in the real estate segment and to ensure high credit quality,” said an RBI official who asked not to be named. ( Watch )

Currently, interest rates on most of the loans is between 7.5% and 12.5%, depending on the credit rating of the borrowing company. The current move will make loans to this segment costlier by 75-200 basis points.

Bank finance for land development is classified as CRE if the source of repayment would be lease rentals. The segment has started showing signs of revival after an earlier-than-expected recovery of the country’s economy from a demand slump.

The measure could affect the financial health of some of the largest real estate firms of the country, which were forced to sell land banks and projects to meet their cash requirements. A similar move by the RBI in 2007 had resulted in a crash in property prices. Though the central bank was criticised for the measure, the global financial crisis in 2008 proved that it was a step in the right direction.

Till mid-November last year, the risk weight to loans secured by commercial real estate was 150%, which was brought down to 100% by the banking regulator to facilitate credit flow to the sector that was reeling under a demand slump.

High exposure of some banks in the segment may have prompted RBI to consider such a measure, said the chairman of a government-run bank. “A major chunk of the non-food credit offtake in the recent months went to the real estate segment,” he said, requesting anonymity. However, an increase in risk weight by 25 percentage points will have only limited impact, he added.

The current move, which closely follows an RBI communique to banks cautioning them over their exposure to realty firms, suggests that the regulator is concerned about a possible asset bubble and the quality of credit extended towards construction of residential projects, shopping malls and office blocks.

“Some of the companies operating in the real estate sector have significant exposure in the form of advances, investments etc to their subsidiaries and other group or related entities,” the RBI had written to the heads of banks, advising them to be more careful while lending to the sector.

Banks are required to set aside capital for loans advanced depending on the risk weight. Under current norms, banks’ capital-adequacy ra-tio, a measure of financial strength expressed as the ratio of capital to risk-weighed assets, is 9%. Higher capital requirement increases the cost of funds for banks and makes loans more expensive for borrowers.

For loans carrying 100% risk weight, banks need to set aside Rs 9 worth of capital for every Rs 100 they lend, while a risk weight of 125% means

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the banks will have to keep Rs 11.25 against the same amount.

Loans for construction of hotels, hospitals and educational institutions as well as a certain kind of special economic zone have recently been moved out of the CRE segment.

The years between 2004 and 2007 saw the Indian property market booming with hundreds of new projects being launched and property prices going up several fold. But a property slump, which started as a result of extremely high property prices and high interest ratesearly last year and deepened due to the impact of the global recession, pushed a large number of firms to the brink of bankruptcy early this year.

http://economictimes.indiatimes.com/Loans-to-real-estate-players-set-to-get-costlier/articleshow/5063742.cms

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DLF garners Rs 100 cr from bookings of Delhi flats

NEW DELHI: The country's largest realty firm, DLF, has mopped up about Rs 100 crore as booking amount for flats it had offered in the second phase of its housing project in the heart of the National Capital.

The company had launched 1,250 apartments in the second phase of its housing project -- Capital Greens -- at Shivaji Marg, near Moti Nagar in New Delhi. It sold all the apartments within just two hours of opening the bookings last week.

The selling prices of the housing units were increased by up to 26 per cent compared to that in the first phase and were offered at Rs 1.86 crore.

According to sources, DLF raised about Rs 100 crore from booking amount of the 2-, 3- and 4-BHK apartments.

The company had kept the booking amount at Rs 7.5 lakh for 2- and 3-BHK units and Rs 10 lakh for the 4-BHK flats.

When contacted, DLF Managing Director T C Goyal said: "If you have quality product, right pricing, good location and credibility of the builder, then there is no dearth of buyers in the market."

To keep away the speculators, against one PAN card the company allowed booking for only a single flat.

The second phase of Capital Greens was launched at Rs 6,750, Rs 7,500 and Rs 8,000 per sq ft depending upon the location of the dwelling units within the complex.

However, the effective rate would come down to Rs 5,677, Rs 6,363 and Rs 6,820 per sq ft respectively as DLF would offer a discount of Rs 500 a sq ft for timely payment and 8.5 per cent rebate on down payments. The company plans to deliver the project within next three years.

The sizes of the apartments would be from 1,210 sq ft 2,720 sq ft and would carry effective price tags between Rs 68.69 lakh and Rs 1.86 crore.

The price announced by DLF was higher than the rates at which the company had sold its flats in the first phase. It had launched about 1,400 units in Phase-I at a price of Rs 4,500 (2-BHK) and Rs 5,500 (3-BHK).

The 38-acre project site at Shivaji Marg, near Moti Nagar, was acquired by DLF in 2007 from DCM Shriram and Lohia Group for Rs 1,675 crore.

Another realty player Parsvnath has two residential projects in Delhi. The selling price of Subhash Nagar project is Rs 7,500 per sq ft and that of Civil Lines project is Rs 10,000 a sq ft.

Emaar MGF is selling apartments at Rs 12,700 per sq ft in its Commonwealth Games project.

http://economictimes.indiatimes.com/Markets/Real-Estate/DLF-garners-Rs-100-cr-from-bookings-of-Delhi-flats-/articleshow/5064497.cms

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Global realty mkts: US, UK, UAE, Singapore a lucrative bet for Indian buyers

Manoj and Sindhu — a young couple who moved to the Silicon Valley with IT jobs — had been living in the same house for over a decade. But when the Land as investment economic downturn hit, they were the lucky few whose jobs were not at stake. With property values dipping across the US, it was time to seek the new house of their choice closer to their workplace. Today they are proud owners of a two-storied house on the edge of a forest in Oakland at walking distance from Sindhu’s workplace.

This is a trend that is seen even among resident Indians in the global markets. Take the CEO of a leading IT company who was another person who did not have to fear about a job cut. With business interest already in the US, he used the surplus income to purchase a home in the Bay Area in California.

But it’s just not destinations in the US that are drawing Indians by the dozen. Singapore, the UK, Hong Kong and Dubai are some of the other places that are likely to draw interest among Indian buyers, according to Ajit Krishnan, partner, real estate practice, Ernst & Young.

http://economictimes.indiatimes.com/articleshowpics/5061820.cms

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Correction in global realty markets drawing Indian buyers

Manoj and Sindhu — a young couple who moved to the Silicon Valley with IT jobs — had been living in the same house for over a decade. But when

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the economic downturn hit, they were the lucky few whose jobs were not at stake. With property values dipping across the US, it was time to seek the new house of their choice closer to their workplace. Today they are proud owners of a two-storied house on the edge of a forest in Oakland at walking distance from Sindhu’s workplace.

This is a trend that is seen even among resident Indians in the global markets. Take the CEO of a leading IT company who was another person who did not have to fear about a job cut. With business interest already in the US, he used the surplus income to purchase a home in the Bay Area in California.

But it’s just not destinations in the US that are drawing Indians by the dozen. Singapore, the UK, Hong Kong and Dubai are some of the other places that are likely to draw interest among Indian buyers, according to Ajit Krishnan, partner, real estate practice, Ernst & Young.

“These are also markets which have seen a fair degree of correction in prices over the last 12 months. Markets such as Singapore and Hong Kong are mature and have a vibrant leasing possibility and hence tend to offer good return on investment, apart from the fact that usually they have limited stock available, owing to their limitation for expansion,” he says.

Currently, individuals are allowed to remit up to $200,000 per annum towards investments, including immovable properties. Individuals thus mostly prefer to buy towards the end of the financial year around March/April so that they can remit a larger amount and also invest in joint owned properties.

Explains Ashok Kumar, principal & managing director of CresaPartners, an international corporate real estate firm, “There are two reasons for the spurt in Indians buying property abroad. Firstly the global markets witnessed a far greater downturn that any Indian market. If our fall was about 15-20%, global markets fell by about 60-70% in value. Then the recent government norm of allowing Indians to spend up to $200,000 to purchase a property abroad helped. If the husband and wife both hold senior management positions they are able to purchase a good property for $200,000-400,000. Prime spots such as the Miami beaches in Florida and areas in Phoenix have been investment hotspots.” Kumar also finds suburban London and Manchester hotspots for Indians in the downturn.

Banks such as Citibank and Standard Chartered have been facilitating the deals. However, says Arun Goel, CEO of DHFL Venture Capital, “I don’t really see a rush for properties abroad. That was largely during the peak times in Dubai. Today the buyers are those who have business interests abroad and are seeking a buy into the markets when they are at their lowest levels. They are not speculators and intend to stay invested for a long time, say for at least 3-5 years when the markets are expected to rise again.”

Developers, however, have a different take. Rajeev Rai, vice-president, corporate, Assotech says the tremors of US sub-prime crisis were felt

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across the European and Mid-East Asian realty markets, where property prices fell by 25% to 50%.

“The crash in the US, the UK, UAE, Singapore as well as Mauritius real estate markets offered affluent Indians an opportunity to own a second or subsequent home abroad. Dubai and Singapore are seen as business hubs, whereas UK and the US are favoured as education centres. Generally, only small apartments are preferred. Apartments are available in the range of $1,00,000 to $1 million in these countries, which is more or less equivalent to prices in India,” says Rai.

Agrees Vijay Jindal, CMD, SVP Group who says that buying property abroad is suddenly making sense to affluent Indians. “Countries such as Singapore, Mauritius, Thailand and Malaysia — where prices have dropped up to 30-40% in recent months — are attracting Indian investors. Prices have also crashed considerably in the US, the UK and in the Middle East, mainly in Dubai. Many Indians are seeing this as an opportunity to buy property in Dubai as buying property here attracts no government tax and even if your property is put on rent, the income is completely tax-free.”

But it is best to study all aspects before you decide on buying a property in these markets. This includes studying currency fluctuations of international markets together with the home market. Adds Krishnan of E&Y, “It is necessary to balance the risk profile of investing in immovable properties in international jurisdictions with potential foreign currency fluctuations, as the returns in rupee terms are likely to be impacted significantly, depending on how the rupee or the jurisdictional currency moves against the dollar. This becomes a greater risk given that the investment in immovable properties would usually be of long-term nature. Therefore, if the investment is a pure play investment and has no advantages for either personal or business use, the return in the functional currency would need to be greater than the risk adjusted returns in India for such investment to make financial sense. While such opportunities may be hard to find, the last 12 months of global economic meltdown has probably resulted in such opportunities becoming more available.”

http://economictimes.indiatimes.com/features/the-sunday-et/property/Correction-in-global-realty-markets-drawing-Indian-buyers/articleshow/5061028.cms

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Delhi-Noida metro will be operational by December (Lead)

New Delhi, Sep 25 (IANS) The Delhi Metro Rail Corporation (DMRC) Friday said its Delhi-Noida section will be operational by the end of 2009. The remaining sections of the second phase would be completed by next year with the airport line slated for a September opening ahead of the 2010 Commonwealth Games.

“The metro on Yamuna Bank to Noida section is likely to start by the first week of December this year. The opening of the section depends on the delivery of trains, which are likely to come by November,” E. Sreedharan, DMRC managing director, told reporters here.

The 13.1 km elevated Yamuna Bank-Noida stretch, with 10 stations, will be an extension of the existing Dwarka Sector 9 to Yamuna Bank section. The stretch was scheduled to be opened June 2009.

Seven trains will be required to open the section which will be made available to the DMRC by the end of November 2009. In the meantime, the DMRC is strengthening 11 cantilever pillars in Noida, on which cracks were observed during safety audits, Sreedharan said.

The DMRC chief was speaking on the occasion of commissioning its new broad gauge train on the Central Secretariat-Jahangirpuri line. Two more new trains by German company Bombardier will be commissioned for the same line in two weeks to ease congestion.

Sreedharan said DMRC’s next priority would be to open the Yamuna Bank-Anand Vihar section by December or January 2010.

Asked about the reason for the delay, Sreedharan said: “Trains were being double checked before delivery so that safety could be ensured.”

This, he said, could be the reason behind some of the delays in opening.

“Bombardier has gathered a team of foreign experts to see that the trains are attended and delivered as soon as possible. Of the 83 metro trains procured from the company, 14 have already arrived and the rest will come from the company’s factory near Baroda, Gujarat,” he said.

The much-awaited Noida corridor will be the first metro rail project connecting the NCR. Once operational, it will be the longest line (58 km) of the Delhi metro, directly connecting Dwarka Sector 9 to Noida City Centre in Sector 32.

Adding that the DMRC was “getting ready to open new sections”, Sreedharan said the other line connecting NCR to the Qutub Minar-Gurgaon section would be opened by March 2010.

In addition, work on the Inderlok-Mundka section would be completed by November 2009 and the standard gauge line would be opened by January end or early February 2010.

On the Central Secretariat to Qutub Minar section, station finishing work and fitments were underway and the section would be opened in July 2010, Sreedharan said.

Meanwhile, the Central Secretariat-Badarpur line which was five months behind schedule and suffered a major setback after the July 12 construction site accident would open in August 2010.

Sreedharan also said the last section in phase II – the Airport Express Line – would open in September 2010 and concessionaire Reliance Energy had started installing systems.

The Delhi Metro presently operates three popular lines connecting the northern, central, eastern and southwestern parts of Delhi. Around 950,000 commuters daily use the network, covering a total of 190 km.

http://www.sindhtoday.net/news/1/54012.htm

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Real estate sector to witness a prolonged & robust demand

Real estate sector in the country will witness a prolonged and robust demand. According to a report by global realty consultation firm Cushman

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& Wakefield, the pan-India residential demand for 2009-2013 could be around 7.5 million units and that for office space at 196 million sq ft.

The Cushman & Wakefield India Real Estate Investment report 2009 Survival to Revival Indian realty sector on the path to recovery estimates demand for retail space at around 43 million sq ft while the hospitality sector is expected to see a demand of approximately 6,90,000 room-nights in the same period.

According to Anurag Mathur, MD of C&W , India, Though the highgrowth trajectory of the previous years saw a setback during the global economic slowdown, the inherent strong economic fundamentals, low exposure to debt and state intervention , would help the sector gradually return to the path of recovery and witness robust demand for real estate across sectors.

The pan-India residential demand is estimated to be over 7.5 million units by 2013, across all housing categories , of which 85% is expected in the mid-segment and aff o r d a b l e housing segment , the report says. Of the total demand exp e c t e d across India, 60%, equivalent to 45 lakh units, would be generated in top 7 cities (see chart). Mumbai is expected to witness the highest cumulative demand of 16 lakh units by 2013, followed by the National Capital Region, which is expected to see a demand of 10.20 lakh units in the same period. That means, on an average, every year there will be a demand of two lakh units. This is far more than the expected supply in the area.

According to the report, the demand for housing units will keep on rising year after year. The total demand for the housing units in all the seven cities will rise from 11.96 lakh units in 2009 to 13.32 lakh units in 2010, and to 14.86 lakh units in 2011. The figure will further rise to 16.63 lakh units in 2012 and to 18.64 lakh in 2013. Bangalore and Hyderabad are expected to see the highest compounded annual growth rate of 14%.

Total office space demand is expected to be 196 million sq ft during 2009-13 , of which approximately 42% is expected to be generated in the seven cities.

According to the C&W report, though office market is expected to witness a fall in demand in 2009 with an expected absorption of 27 million sq ft, the period from 2010 onwards will see the markets experience a healthier demand with a compounded annual growth of 19% from 2009-2013 . The commercial office market in India is likely to head towards a more balanced demand and supply situation in the next few years. The highest demand in the next five years is expected to be in Bangalore at 34 million sq ft followed by Chennai at 27 million sq ft. This increase in demand is largely due to improving economic conditions, positive market sentiments and growing corporate confidence.

Retail sector is expected to see a demand of approximately 43 million sq ft, mostly concentrated in the seven cities. Bangalore would see the highest demand of approximately 6.8 million sq ft however, Pune is expected to record the highest compounded annual growth of 51% for the next five years. The demand for the hospitality sector is expected to see a surge and is expected to be approximately 6,90,000 room-nights between 2009-2013 .

NCR and Mumbai are expected to see the highest demand due to the higher volume of business travellers to these cities. Approximately 35% or 2,42,000 room-nights of the pan-India demand for hospitality is expected to be generated in the top three cities owing to various initiatives taken by the Indian government to promote commercial and tourism activity in these locations.

Mathur says, While the upcoming 2010 Commonwealth Games have been the key demand driver for hospitality segment in NCR, the significant expected rise in office demand in the peripheral locations is also likely to play a role is boosting room-night demand . Factors like increase in urbanization, income growth, relatively high disposable incomes are likely to positively impact retail as well as residential demand in the city.

NCR is expected to see the highest demand in the hospitality sector, owing to its growing importance as commercial and political centre. The maximum surge for demand in hospitality is expected to be witnessed in 2010 during the Commonwealth Games. The retail demand is expected to be 66.6 million sq ft by 2013 and the residential demand in the same period is expected to be approximately 10.20 lakh units. The office space demand on the other hand is expected to be approximately 25 million sq ft.

http://economictimes.indiatimes.com/Real-estate-sector-to-witness-a-prolonged-robust-demand/articleshow/5058711.cms

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Buying home to get safer, new real estate bill mooted

NEW DELHI: The aam aadmi looking to own a piece of real estate might be able to breathe easier. The possibility of being hoodwinked by a smooth-talking builder or salesman might be reduced sharply as developers will soon be required to post project details, including civic clearances, on the website of the real estate regulator.

This should also reduce the chances of honest property buyers being duped by developers hiding behind terms like "super area" and fine print about various "charges" to conceal actual floor area and the final costs.

The model Real Estate (Regulation of Development) Bill has been long awaited and states are expected to legislate in keeping with the detailed provisions of the proposed law. They will also set up regulators to give effect to the bill which even recommends a three-year jail term or penalty which may amount to a percentage of project cost for failure to register.

The law to regulate real estate developers will call on builders to provide details of the number and size of plots, layout plan, carpet area and plinth area of flats, apartments or any other housing complexes.

Importantly, it will prevent builders from changing the plans or inserting charges as the sale agreement will be considered binding. They will also post authorised brokers and dealers.

The legislation will prevent advance payments being extracted from buyers without a written sale agreement containing project timeline, payment details and possession date. The promoter will not be able to cancel the sale deed unilaterally. If there is sufficient reason to do so, a notice will have to be given and the money paid will be returned with interest fixed to bank rate. The promoters would furnish a bank guarantee equal to 5% of estimated cost of projects.

The proposed bill mooted by housing ministry, a draft of which has been circulated to all stakeholders, has asked promoters to submit the details of approval and sanctions from civic agencies and bank guarantee furnished.

The draft bill has maintained the power of civic agencies to approve the project. It will be the responsibility of the developer to give information to buyers relating to nature of the title to land, layout plan sanctioned by local authority and plan of development works. The big advantage of the law would be that civic agency details will be given to the regulator.

The developers also cannot hide the "actual living space" they are offering to buyers as they have to distinguish the carpet area, super area and common area along with the plan and specifications of
apartments.

The consumer can ask promoters to spell out the details of common services like supply of electricity, water, sewage and drainage, lift, light in passages and staircases, sanitary services and fire-fighting instruments in the project. And if developers fail to provide these services, consumers can approach the regulator, which can also take suo-moto cognizance and inquire into the matter and pass order as it may find necessary.

If there is any deviation from the advertisement, the promoter has to compensate buyers for any loss due to false information. In case of pulling out of a project, the builder has to return the money with interest at a rate not more than current rate.

The buyer can also directly apply to local body for occupation certificate if the developer is delaying even after completion of the project and the cost incurred by the allottee will be recovered from the promoter. After a sale agreement is concluded, the builder will not be able to mortgage or create a charge on plot or apartment without written consent of the buyer.

http://economictimes.indiatimes.com/Buying-home-to-get-safer-new-real-estate-bill-mooted/articleshow/5058639.cms

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Buying home to get safer, new real estate bill mooted

NEW DELHI: A draft bill on the much-awaited real estate regulator that will protect the interest of home buyers by ensuring a transparent and

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healthy real estate sector has drawn the ire of developers.

“The government is trying to play nanny to the home purchaser,” said Kumar Gera, chief of the Confederation of Real Estate Developers’ Associations of India (CREDAI).

According to the draft, a builder will have to register a project with the regulator before he can market the properties. For this, the builder will have to submit a documentary proof of land ownership and the mandatory licences to the regulator for registration.

Once verified, the entire information about the project will be available on the regulator’s Website that will be accessible to everybody. The regulator will also scrutinise the advertisements and names of brokers.

This process will ensure the legitimacy and the viability of the project, ending the current practice of realty firms launching projects without land ownership or mandatory approvals that leads to buyers getting stuck with inappropriate or illegal projects. “The proposed law will protect home buyers from fraudulent builders,” said Ajit Krishnan, partner for real estate at Ernst & Young.

However, developers don’t agree. “This draft has been prepared by people with good intent but with no knowledge of the nuances of the business,” said Mr Gera, who is also the chairman of Pune-based Gera Developers.

If the proposed regulator gets all the proposed powers, a property buyer would know exactly what he is buying. Importantly, the draft bill prohibits a builder from accepting an advance from a home buyer before the sale agreement is signed. At present , builders force buyers to pay 20-30 % of the cost of the property before making a sale agreement.

Many times, a flat allotted by this process is completely different from what the buyer had initially understood from the developer or his broker. “It’s a good idea to have a sale agreement in place at the time of the first instalment, which will help both parties know what is on the table,” Mr Gera said.

To make the builder accountable, the draft suggests that he will have to submit a bankguarantee of 5% of the
total cost of the project, which will be encashed by the regulator if the builder does not complete the project on time or violate a condition that has been agreed upon in the agreement.

In case a builder is unable complete a project on time, the allottee can ask for a full refund of the amount he has paid along with an interest. The regulator will then take over the incomplete project and appoint another agency to complete the project by encashing bank guarantee and recovering the balance amount from the builder and/or allottees.

The bank guarantee will push up the cost of the project and the provision of taking over incomplete project is ‘completely impractical’ , Mr Gera said.

The draft bill also addresses the concern of the home buyer on the cancellation of an allotment. If a builder unilaterally cancels the allotment, he will have to refund the entire amount along with interest . At present, developers generally forfeit a disproportionately-large percentage of the total amount paid by the buyer if the sale deed is cancelled on the buyer failing to make timely payment.

Significantly, the draft bill also mandates the builder to keep a separate bank accountfor each project. “This will prevent promoters from speculating with the cash collected from customers. However , at the same time, it will also not allow a promoter to take away part of his profit till the project is completed ,” Mr Krishnan said.

http://economictimes.indiatimes.com/articleshow/5058623.cms

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Housing industry: The new magic figure is '2'

Did you know that smaller apartments are selling big? The maximum demand currently is for 2BHK residential apartments and finally supply is

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following demand. Such has been the response that there are developers who claim as much as 55% of their inventories comprise two bedroom units.

According to Atma Sharan, GM (Marketing), Ashiana Housing Ltd, "About 55% to 60% inventory would be 2BHK. This definitely is the fastest moving segment, particularly among first home buyers who are at the beginning of their careers and married life."

The 2BHK end user is attracted by the price tag, affordability factor, and lower EMIs. His is likely to be a nuclear family with small kids where a third bedroom is not a necessity and hence not worth additional cost.

According to Harinder Dhillon, GM Marketing from Raheja Developers Pvt Ltd, "The maximum demand for two bedroom unit is from middle-income group nuclear families. A two bedroom home buyer is typically a middle class salaried employee hailing across sectors of government employees, school teachers, or BPO, IT,banking and service sectors, as well as middle-level self-employed professionals." He adds that at least 30% of their inventory now is 2BHK. Actually it is the affordability factor that is attracting most of the buyers.

Several developers who were primarily focusing on plush housing earlier are including smaller units in a big way in their projects. They are coming up with new initiatives in this line which is expected to attract the young service class people in a big way. So, be it DLF, Unitech, or Jaypee, they all have at least 30% inventories as two bedroom units in their projects and plan to increase the percentage with time.

Jaypee Greens recently launched reasonably priced housing projects - Jaypee Kosmos and Jaypee Aman. The latter, claims Manu Goswamy, head business development, was sold out within 24 hours and smaller units of two bedrooms were a big hit. Says Goswamy, "Our 2BHKs are doing particularly well as they tend to attract the first-time buyer who is young in age and has just begun his married life or professional life. Our parents' generation retired in their own home while our generation starts out in their own homes." Investors are also found interested in this segment. A 2 bedroom unit is eliciting interest from a lot of second home buyers. Says Atma Sharan," A typical investor would also find a 2 BHK more appropriate as it would be easier to liquidate and may also give higher rental returns per sq ft or initial cost to rental ratio. Besides, in the rental market too there is a higher demand for 2BHK apartments, and getting tenants is easier and faster." Some developers are specifically keeping the price tag lower than Rs 20 lakh, so that the investor can partake the benefit of lowering of interest rates on home loans below Rs 20 lakh.

However, many more such units are required to enter the market to really bridge the demand-supply gap in smaller units category. According to Devinder Gupta, CEO of Century 21, a real estate consultancy, "Bulk buyers fall in the 2BHK segments as it fits their requirement, given its financial implication.

Moreover, government is also giving fiscal incentives to the buyers who are going for 2BHK. As it constitute a bulk of buyers, mainly service

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class, builders should devote more inventory on this segment as there is still a shortage in this category."

Size of a 2BHK unit available in the market: While the size ranges from 750 sq ft to 1,400 sq ft, their price varies between Rs 16 lakh and Rs 30 lakh. For instance a 2BHK unit at Ashiana Aangan at Bhiwadi of 1,200 sq ft will cost anywhere between Rs 22 lakh and Rs 28 lakh, depending on the floor and the payment terms (instalment or down payment).

The size of this unit at Raheja Builders varies from 1,200 to 1,400 sq ft, and available in the price band of Rs 2,475 to Rs 2,875 per sq ft, depending upon location, specifications and facilities. At Alpha G Corp in their Karnal township, the size of a two bedroom unit would be between 1,100 and 1,200 sq ft, with the price being approximately Rs 20 lakh, depending upon the parameters at the time of booking, launch and facilities. At Jaypee price ranges from Rs 22 lakh and Rs 30 lakh. So, as one can see, there is so much variation in the market. A two-bedroom unit is now becoming available at different sizes as well as price points.

However Alpha G Corp's Prodipta Sen cautions that end users buying 2BHK must beware of some developers who are "only looking at encashing on the big bubble called 'affordable housing' as they find their premium residential projects not selling. However, those who are keen and believe that providing housing of 2BHKs will be the fastest moving product provided it is value-for-money."

FOCAL POINT

The maximum demand currently is for 2BHK residential apartments and finally supply is following demand. Such has been the response that there are developers who claim as much as 55% of their inventories comprise two bedroom units. The 2BHK end user is attracted by the price tag, affordability factor, and lower EMIs.

http://economictimes.indiatimes.com/et-realty/Housing-industry-The-new-magic-figure-is-2-/articleshow/5053523.cms

Ashish Arya: 09990056660
www.RealIndiaProperty.co.in
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