Real Estate Bill offers a glimmer of hope for builders but it's indeed a buyers' market

The real estate stalemate that has been going on for long will perhaps clear off quickly much to the relief of the industry people as the Union Cabinet has given its green signal to the Real Estate (Regulation and Development) Bill, 2015.

A key stipulation of the Bill, to ensure timely execution of projects, will go a long way in safeguarding the interest of consumers, and in the long run, keep the real estate markets brimming with active demand.

Mumbai real estate gains in momentum. AFPAFP

Of late, the market has been dull, lacking velocity in sales and an umpteen number of projects failing to meet deadlines. The developers have been crying about procedural delays as the major factor affecting the project execution timings.

To put it bluntly, the real estate market has been stagnant. The National Capital Region (NCR) alone has a number of stalled projects because of slow demand and certain economic factors. A Knight Frank report states there are more than 6 lakh unsold units in the country, and at the current absorption rate, it will take more than 2 years to clear even if no projects are launched.

There are reports, however, of some progress. For example, residential sales in Mumbai have climbed up. Ramesh Nair, COO & International Director, JLL India says, “The aggregate of residential unit sale in Mumbai in previous four quarters has jumped up 28% when compared to the corresponding period one year ago.”

In other regions however, sales have been sluggish across the country. According to Surajit Chanda, regional head, Sobha Ltd. (Pune), sales velocity has slowed down in the city. “The market is going through stress. And buyers are taking more time to buy. Primary demand is between 30-70 lakh segment all across the country. In the premium segment, say 1 cr and above, there is certain movement, but not as is expected,” lamented Chanda.

Pinning down one of the causes of the real estate distress, Chanda remarked, “Developers have over leveraged themselves. They picked up more than they can chew.”

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Cleaning up the worst industry for scams and ripoffs - real estate

Back in 2012, Tanya Cheng’s finances weren’t doing great. Despite having the better part of a decade’s experience in investment banking and derivatives, she lost a good deal in the stock market – “I bought all the right things, but didn’t sell when I should,” she says. To recoup her losses, Tanya decided to get into real estate.

What she found was a world of shady deals, ripoffs, scams, and outright lies. Nobody trusted anyone – and for good reason. She visited 12 countries within one year to take a look at properties and became more convinced that the entire international real estate industry was in need of a drastic clean up.

“I was shocked to find out that international realtors would provide misleading info or overcharge expats in Hong Kong, and how Chinese agents do the same to Chinese buyers,” she says. “It’s not just buyers that don’t trust real estate agents: the agents don’t even trust each other.”

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Real estate shares in focus; Sobha up over 5%

Shares of real estate companies are trading higher on the bourses in an otherwise subdued market after Godrej Properties announced that it has received a good response for the Mumbai project.

Sobha, Godrej Properties, Prestige Estates Projects, DB Realty, Housing Development and Infrastructure (HDIL), National Buildings Construction Corporation (NBCC) and Indiabulls Real Estate are up 1-6% on the Bombay Stock Exchange (BSE).

At 12:15 PM, the S&P BSE Realty index was up 0.79% as compared to 0.13% decline in the S&P BSE Sensex.

Godrej Properties has rallied 5% to Rs 352 on the BSE in intra-day trade after the company announced that it has sold 300 apartments within one week at The Trees, its flagship project in Vikhroli, Mumbai.

“This represents more than 80% of the 374 apartments it opened for sale in the first phase of this project. The value of apartments sold is in excess of Rs 700 crore, making this Godrej Properties' most successful ever launch in terms of value of real estate sold. This is also one of the country's most successful recent launches,” Godrej Properties said in a statement.

Sobha, the largest gainer among real estate pack, was up 6% at Rs 319 on back of heavy volumes. A combined 157,359 shares have already changed hands against an average sub 80,000 shares that were traded daily in past two weeks on the BSE and NSE.

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Government to push for passage of GST, real estate bills next week

With repeated disruptions in second week of the winter session putting its legislative agenda on the back burner, the government has proposed heavy business in both Houses of Parliament next week, listing key legislation like GST and Real Estate bills for consideration and passage. 

It plans to pass six bills in the Lok Sabha and seven in the Rajya Sabha next week. Of these, two bills are already listed in the Lower House and three in the Upper House. 

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D-Company still has a strong grip on Mumbai real estate

Gangster Dawood Ibrahim’s involvement in several redevelopment projects across Mumbai has come to light following a detailed investigation by The Hindu into the city’s underworld.

Officials who have kept a close watch on his gang say the syndicate has a highly organised system of controlling, extorting money from or taking part in many of the redevelopment projects. Technical surveillance done by Indian agencies gives credence to the statement. On rare occasions, when Indian agencies have been able to zero in on Dawood Ibrahim’s activities, there have been strong hints of his interests in the construction business — in both Mumbai and the UAE. One of Dawood’s associates told him in May 2013 that he had given 2 million (it is not clear if it is rupees or dollars) to someone after completing the documentation. The associate talks about one Abbas Bhai who has opened a real estate business in Mumbai. In turn, Dawood tells him that he has ceased his previous partnership and has now tied up with one Abid Bhai.

In a series of phone calls in early 2013, the Pakistan-based Dawood carried out detailed discussions on property purchases in Mumbai. India’s most wanted criminal told one of his UAE associates not to buy property in a particular locality.

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Should you buy real estate overseas?

The first edition of the International Real Estate Expo (IREX) 2015 is scheduled to be held on 4-6 December in New Delhi. Real estate investment opportunities in India and abroad will be showcased. Earlier this year, the outward remittance limit under the Liberalised Remittance Scheme for Indian individuals was raised from $125,000 to $250,000 by the Reserve Bank of India. This brought more properties abroad within the reach of Indian investors, and many are making the most of this opportunity. Also, with remittance limit applicable individually, buying properties jointly with family member widens the net of options available to Indian investors.

According to various reports, Indians are among the top foreign investors. Dubai Land Department’s statistics show that Indian investors topped among nationalities investing there with 4,089 transactions of a total value of 13 billion dirhams in 2015 (about Rs.23,500 crore at Rs.18.15 to 1 dirham). In October last year, the US National Association of Realtors published a report which stated that buyers from India bought residential properties worth an estimated $5.8 billion during the one-year period ending March 2014. This was about 6% more than in 2013. The report also stated that the average spend was $459,028 (about Rs.2.81 crore then.

Given the poor sales in the sector in India, some affluent investors are looking to diversify their portfolio and get better returns by investing globally. While this may work from investment point of view, one must also consider the tax implication before deciding to invest abroad.

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Weak construction, real estate demand hurt Cera Sanitaryware

Cera Sanitaryware Ltd shares have slipped around 22% since mid-April over concerns of a slowing real estate and housing market. They had, however, touched an all-time high in April on expectations of upbeat revenue growth buoyed by the government’s cleanliness campaign—Swachh Bharat Abhiyan for building toilets.

It is the unorganized companies that have benefited from the programme so far, because of lower costs. “Only when the capacity of unorganized players reaches 100%, the organized players will get the benefit,” said Abneesh Roy, associate director, institutional equities, at Edelweiss Securities Ltd.

A few analysts have scaled down Cera Sanitaryware’s revenue growth forecast. They estimate around 16-17% revenue growth in the second half of FY16 compared with 18-20% guidance given by the management.

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Regalia Colors Housing - 2 BHK, 3BHK, 4BHK FLAT

Housing a Group Housing Society Launched a project in the upcoming FIRST SMART CITY OF INDIA located in L Zone (Next to Dwarka), Delhi. The City will be a showcase to the world with state of the art transport and infrastructure, Commercial, Financial and Educational Hubs, 24x7 electricity and water. Also, enclosing a link to a clip which can showcase you how its been planned. This is first of its kind development in the National Capital - Delhi. Thus a BIG TIME OPPORTUNITY for Consumers to"OWN A LUXURIOUS DELHI ADDRESS PROPERTY".

Availability Of Membership
Memberships shall be approved and allotted purely on a first come first serve basis.

Payment Schedule

1. The payment shall comprise of two parts : Land Cost and construction cost.
2. The Land cost amount shall be deposited at the time of booking along with application forms duly filled and accompanying documents. payment plan (CLPP)which will be designed and shared with all members prior to the commencement of construction.
3. All members will be required to strictly adhere to the CLPP.

Cost Escalation

1. The land Cost amount shall be fixed on date.
2. There will no escalation with regards to the Land cost. The Construction Cost amount has been derived based on the estimated price of Construction materials in 2015.
3. This estimate also takes into consideration the expert advice from the architects.
4. However, if in case there is any major escalation in the cost of the materials, this will be incorporated into the costing which shall shared proportionately among members. The same shall apply in the case of any additional charge being levied by any competent authority.

Possession Time Frame

1. Based on the current indications and actions by DDA it is estimated that construction will begin in 2015.
2. The pace of construction is expected to progress swiftly and completion time frame shall be 36‐48 months from the start of construction but the same may vary depending upon the clearances and approvals mandated by law and the actions of DDA.

A member has the option to surrender his/her membership by writien application and the procedure of submission of respective documents will begin along with original share certificate.

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