Tag Archives: India Property News

Rate quo status bad news for housing

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News Point: The RBI Governor’s concern with rising crude prices, inflation, bad monsoon and downward inflationary pressure post 7th Pay Commission is bad news for housing market.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2RealtyMohini Ahlawat, a prospective home buyer has been waiting for the last six months in anticipation of interest rate cuts. The media reports that had by and large anticipated the drastic rate cut in the last fiscal of the previous fiscal year did not happen. She was yet again disappointed in the first quarter of this fiscal year but everyone told her that growing GDP, lower crude prices compared to last few years and negative inflation indicate that in the second monetary policy by the Reserve bank of India (RBI) rate cut is on the cards. She is yet again disappointed.

“See, I am not an economist; nor do I understand the financial jargon. But what I fail to understand is that if the GDP is indeed growing, oil prices are low in the global market and over an above that the inflation is low, then why the interest rates are not coming in the range of 7 to 7.5 percent. This is the level at which an average home aspirant can think of buying a house,” Mohini shares her concerns.

However, the concerns of the RBI Governor Raghuram Rajan are more at macro level picture of the Indian economy, ranging from slight rise in retail inflation to anticipated more rise in crude prices, and not so positive monsoon to overall upside risk to inflation after the implementation of 7th pay commission recommendation.

And hence, the RBI Governor kept repo rate unchanged at 6.5 per cent, reverse repo rate stays at 6.00 per cent. Cash Reserve Ratio (CRR) also remains unchanged at 4 per cent. The RBI said April inflation reading makes its future trajectory somewhat more uncertain. The central bank has also retained growth projection at 7.6 per cent for 2016-17 citing corporate profits and surge in consumption. RBI said it will soon review implementation of marginal cost lending rate framework by banks.

Quick bytes

  • The RBI Governor concerned with rising retail inflation, anticipated more rise in crude prices, not so positive monsoon and upside risk to inflation after the implementation of 7th pay commission recommendation   
  • Repo rate unchanged at 6.5 per cent, reverse repo rate stays at 6.00 per cent. Cash Reserve Ratio (CRR) also remains unchanged at 4 per cent
  • The RBI retains growth projection at 7.6 per cent for 2016-17 citing corporate profits and surge in consumption
  • RBI will soon review implementation of marginal cost lending rate framework by banks 

The industry is therefore as disappointed as the home buyers. Shishir Baijal, CMD, Knight Frank India says the sector is disappointed with no change in policy rates and it will take the real estate sector much longer time to come back on the rails. The residential property market has not been doing well and there was expectation that RBI would reduce the policy rates that would have given a boost to the residential property market.

“On a broader note the RBI’s stance of not reducing the policy rates could have emanated from the banking regulator’s move to reduce inflation to below 5 per cent by March 2017. The fact that CPI moving up to 5.39 per cent and wholesale inflation turning positive could be the factors that may have prompted the banking regulator to leave the policy rates unchanged. Crude prices moving up exponentially is expected to further add to inflationary pressures,” says Baijal.

Ashwin Sheth, CMD, Sheth Corp feels the RBI has played it safe and has been more cautious about the monsoon and its impact on inflation. Although, a rate cut at this stage would have helped in lowering the home loan interest rates making home buying a reality for most buyers who have been eagerly waiting for the rates to cut down.

“The Government has taken the lead in trying to implement policies that will boost growth of the real estate sector. In the same vein, RBI too should have looked at the real estate sector with new optimism. The central bank has reduced its policy rate by 150 basis points until now since January 2015. But banks have cut their rates only about 70 bps. In short, economy is yet to get the full benefit of the rate cut. The banks should pass on the benefit to the home buyers as this will encourage the buyers to buy their dream home,” says Sheth.

Vineet Relia, Managing Director of SARE Homes also feels that the RBI Governor Raghuram Rajan’s decision to keep the repo rate unchanged at 6.5 per cent is disappointing, though not unexpected. As the RBI had already announced a 25 basis point repo rate cut in its April policy review, and with retail inflation rising to 5.39 per cent in April from 4.83 per cent in March, expectations of a rate cut were extremely muted.

“Since retail inflation is expected to rise due to the rally in crude oil and other commodities prices and implementation of the 7th Pay Commission recommendations, it is clear the RBI is focussed on lowering retail inflation to 5 per cent by March 2017. Nonetheless, since demand in real estate and allied industries remains sluggish, a rate cut could have improved liquidity and created renewed interest in property purchase. But with the RBI stating its monetary policy stance is ‘accommodative’, one is hopeful a rate cut may be in the offing in the latter half of 2016,” says Relia.

Manju Yagnik, Vice Chairperson, Nahar Group, on the contrary, welcomes the RBI Governor Raghuram Rajan’s announcement to keep the repo rate unchanged at 6.50 per cent. She asserts that the last RBI bi-monthly announcement had reduced interest rate which were not passed on to customers by the banks. Now banks should pass on the benefits to the customers by lowering interest rates which will result in home buyers coming forth and buying property.  This has the potential to spur property sales and inject fresh capital into the market.

“The Indian economy grew by 7.9 per cent in the March quarter and ranked as the world’s fastest growing economy. This move will create jobs and create positive sentiments within the country. Also, keeping rates unchanged will help control inflation which presently is at 5% with an upward bias,” says Yagnik.

The home buyers and the developers have their own reasons to criticize the quo status. The RBI too has its own reasons not to lower the rates this time. However, what can definitely be vouchsafed is the fact that the this is definitely not a good news for the overall health of the housing market; something that contributes substantially to the Indian GDP.

By: Ravi Sinha

CDC partners Tata Value Homes and IFC

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News Point: CDC to invest $25 million in the platform created by Tata Value Homes and IFC to develop affordable housing in India. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTata Value Homes, a 100% subsidiary of Tata Housing Development Company has raised $25 million through CDC, UK’s Development Finance Institution (DFI).

CDC, wholly owned by the UK Government, will join the affordable housing platform created by Tata Value Homes and IFC to develop affordable housing projects across the country.

Founded in 1948, CDC is the UK’s Development Finance Institution (DFI) and is wholly owned by the UK Government.  Its mission is to support the building of businesses throughout Africa and South Asia to create jobs and make a lasting difference to people living in some of the world’s poorest places.

Announcing this development, Brotin Banerjee, MD & CEO, Tata Housing, said, “We are extremely happy to partner with CDC for the affordable housing platform created last year. Investment from CDC will help us further our commitment towards delivering quality living spaces to low and middle income groups in the country.”

Srini Nagarajan from CDC said, “We’ve made this investment because affordable housing in India is highly developmental sector because it creates a high number of construction jobs per dollar invested, and will increase access to housing for India’s emerging middle class.  . We’re delighted to be partnering with Tata Value Homes, because of their prioritisation of quality above all else, and their strong focus on innovation and sustainable development.”

The world’s oldest DFI, it has a long history of making successful investments in businesses that have had a positive impact on the private sector in their country and region and improved the lives of many, many individuals.

NB Group and BridgeStreet Global Hospitality partners with three developers

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News Point: Global hospitality major enters Indian market for serviced residences; developers sense big business. 

Real Estate Fund, Delhi NCR real estate, Bangalore Real Estate, JLLI, Jones Lang LaSalle India, Track2Media, Track2Realty, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, indianrealtynews.com, indianrealestateforum.com, Property, Track2Media, Track2Realty, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, indianrealtynews.com, indianrealestateforum.com, Mumbai Real Estate, India PropertyJNB Group and BridgeStreet Global Hospitality have forged partnerships with three Indian real estate developers; IDI, AIPL and CHD.  This collaboration will provide quality assurance, marketing and global sales benefits for guests, developers and investors.

With these new partnerships, JNB and BridgeStreet will be co-branding 183 units of IDI in Noida, 100 units of AIPL in Sector 66A, Gurgaon and 364 BHK units of CHD in Sector 106,Gurgaon.

BridgeStreet has already signed with developers like Silverglades, V Square, Homestead and Logix for 1600 units in Delhi and the National Capital Region of India and will have 500 functional units by the end of 2016.

“We plan to have 5000 fully operational units within five years in pan India, adding to the 50,000 BridgeStreet units worldwide,” said Sean Worker, president and CEO of BridgeStreet Global Hospitality.

JNB and BridgeStreet have been working together in India since 2012.  “This collaboration is key to BridgeStreet’s development of franchise and management opportunities, “ said Sean. “We are working together with JNB to build further investment and development projects in India.”

Elaborating about BridgeStreet’s brands, Worker explained, “Our family of brands includes six-star Exclusive, five-star Residences, four-star Mode Aparthotels and Living, three-star Places and two-star Studyo—offering the convenience of apartment living with a variety of service packages to match guest needs based on location, price point and individual preferences. We are looking to replicate the same experience here in India.”

“We feel that the Indian real estate market is one of huge promise as there is little in terms of supply of serviced apartments.  Increasing demand from IT, consulting, banking, financial and automobile sectors will only create more opportunities. What is required is the right branding, quality assurance and on-time delivery. This will not only lead to price appreciation, but will also ensure growth,” says TJ Barring, President, JNB Group.

“Pure commercial and residential projects won’t do well in the coming years, a hybrid version which supports serviced apartments would have a much higher demand,” says Taran Kaur, Director JNB Group. “The benefits of JNB Group and BridgeStreet are regular rental income,  high occupancy,  fully-furnished apartments with contemporary décor, well-equipped kitchens to prepare your own meals, personal service  with 24/7 emergency support, convenient monthly invoice that includes utilities and housekeeping, Internet access and concierge service.”

RICS and CREDAI collaborate to train middle managers in real estate

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News Point: Joint skills development initiative aimed at improving knowledge and skills of industry professionals.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Royal Institute of Chartered Surveyors, RICSRICS and CREDAI have announced the second phase of the ‘RICS-CREDAI Skills Development Initiative’ aimed at jointly working towards capacity building and skills development in the Indian real estate sector.

Amongst many challenges in Indian real estate sector, the immense shortage of skilled professionals leads to delay in project deliveries, cost overruns and compromised quality.

RICS has been offering specialized education and training programs – ranging across full time degree programs (through RICS School of Built Environment, Amity University), Executive education, Management development programs, Distance learning certificate courses etc.

CREDAI has taken the lead to ensure that development and construction firms upgrade the knowledge and skills of their staff and has thus partnered with RICS to offer Management Development Programs (MDPs) – i.e. short residential programs in metro cities.

Commenting on the importance of this initiative, A Balakrishna Hegde, Chairman, Training Committee, CREDAI said, “CREDAI and its members are at the forefront of building real estate in India. With this collaboration, we hope to enhance the professional expertise in order to execute complex real estate projects. We are happy to partner with RICS, the leading global professional and standard setting body in built environment. Being the global accrediting body for over 600 built environment university courses; we strongly believe their programs are unmatched in terms of curriculum and learning outcomes. We are sure that the courses offered under this Skills Development Initiative will enhance skills in order for our members and their teams to better deliver projects that are completed on time and at reduced costs.”

Commenting on the partnership, Sachin Sandhir – Global Managing Director, Emerging Business RICS said – “Although the real estate and construction sectors are key contributors to economy, there is a complete vacuum of education and training options available for professionals to up-skill. RICS launched distance learning programs a few years ago and there has been overwhelming participation of professionals from small and big towns. This partnership is a huge stepping stone to ensure that a majority of industry now has easy and economical access to education and training options of the highest standards, which in turn will help the sector become more professional and efficient. In this regard, CREDAI’s forward thinking and focussed effort in making sure all their members give due importance to up skilling their professional teams, is to be applauded.”

To begin with, MDPs will be offered in three priority areas namely – Construction project management, Quantity surveying, Real estate sales & marketing.

The programs are targeted specifically for middle management professionals and will be implemented by delivery partner – RICS School of Built Environment, Amity University.

IKEA will build a 400,000 sq. ft. store in Mumbai

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News Point: IKEA has bought land in Navi Mumbai; one IKEA Store will create over 500 equal job opportunities.

IKEA, the Swedish home furnishings company has announced the purchase of its first land parcel in Mumbai and second one in India after Hyderabad. The 23 acres site is strategically located in Navi Mumbai on Thane Belapur Road.

The IKEA store in Mumbai is planned to be around 400.000 square feet and is expected to have more than 5 million visitors per year. To be easily accessible for many people the store site has good access to public transport and next to an existing sub- urban railway station, “Turbhe”, located on the Thane Belapur road.

This step is yet another confirmation of IKEA’s large expansion plans in India. The company in parallelis evaluating suitable sites in the cities of Bangalore, Mumbai and Delhi & NCR and plans to open 25 stores in India by 2025.

Speaking on the occasion, Principle Secretary Industry Maharashtra, Apurva Chandra, said “We are very happy that we will soon see an IKEA store in Mumbai. IKEA will bring best business practices, many employment opportunities, infrastructure development and contribute to the growth of the retail sector in the state. We believe that IKEA will work as a catalyst in our development plans. The government is committed to provide the necessary support to IKEA forits future expansion plans in the state.” 

Juvencio Maeztu, Chief Executive Officer, IKEA India, said, “Maharashtra is one of the most important market for IKEA. Along with setting up retail stores, we will expand our supplier landscape and grow local sourcing as much as possible. Each IKEA store will employ 500-700 coworkers directly and another 1500 indirectly, engaged in providing services. We are committed to having 50% women in our organization at all levels and giving equal opportunities to all. We will bring a unique shopping experience through our inspiring stores offering affordable home furnishing products for the many people in Mumbai.”

IKEA has been sourcing from India for the last 30 years and it plans to double its sourcing volumes by 2020. Through it 50 suppliers, IKEA today employs 45,000 people directly and about 400,000 in the extended supply chain. It has recently organized three “Make More in India” campaigns, including one in Mumbai to look for new suppliers.

Triple intervention helps homebuyers; hurts developers

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News Point: Consumer activism, media trial & judicial intervention come to the rescue of harassed homebuyers; developers clueless to deal with it.

Unhappy Homebuyers, Consumer activism in real estate, Judicial intervention for homebuyers, Media and real estate, Indian real estate news, Indian realty news, India property news, Track2Realty, Property market of IndiaSnigdha Chauhan has been a dejected homebuyer for long after having invested in a housing project in Gurgaon that could not take off in the last seven years. She knocked every possible door – right from the developer who even refused to meet personally, to the fellow homebuyers who were clueless as to what to do. Media, of course, did not find a story into this as project delays are no news nowadays. And finally, her last resort in judiciary proved to be an ordeal of dates after dates as the developer had more financial clout to afford battery of eminent lawyers.

Snigdha, and many harassed homebuyers like her, are today smiling as the tables have turned and the simultaneous triple intervention of consumer activism, vigilante media and judicial cognisance have changed the outlook of the helpless homebuyers completely. This triple effect is proving to be the boon for the homebuyers and bane for the defaulting developers who took the buyers for a ride too long due to lax regulations and passive institutional responses.

“I was taken aback on that night when I found it in the TV news that after the buyers’ protest and its telecast on the TV news channels, the court has now intervened and ordered that the developer will have to refund the homebuyers’ money with 18 per cent interest. I think the collective power of consumers, media and judiciary saved us from being robbed of our lifetime’s savings,” says Snigdha.

Emerging realities 

  • Consumer activism, media trial & judicial intervention helping the harassed homebuyers
  • Developers are clueless in terms of dealing with the simultaneous spate of consumers, media & judiciary
  • Developers blame it to approval delays but are not open to be transparent with homebuyers
  • Elements of consumer blackmailing also gets legitimacy due to poor perception of the builders

This is not an isolated incident where some of the homebuyers like Snigdha could get the justice; though delayed but not denied. Today, as the consumers increasingly understand the power of collective might & activism and media is supporting the worthy cause leading to judicial interventions & speedy trials, the market dynamics of Indian real estate has suddenly changed a lot.

This also raises a fundamental question as to how long will this triple action continue. More importantly, are the developers at the receiving end of the current spate of consumer activism, vigilante media & judicial intervention ready to change the ways & means of operating recklessly?

Most of the developers admit that today environment is challenging for a real estate developer. They, however, blame it to the external factors than accepting their own fault. A section of developers maintain that there are so many unforeseen reasons and force majeure which are beyond the control of a developer. So, during that period construction is stalled beyond months to years. That period cannot be contracted. Developer faces two losses, one is time, and another is financial loss.

Pratik K. Mehta, Managing Director, Unishire maintains that consumer activism is good but needs to be used constructively to resolving a problem. Similarly, with the vigilante media and judicial intervention, lot of the non-transparent issues could come to light which are not always due to a developer but sanctioning authorities also.

“I understand that there is a valid reason behind the new wave of activism that is taking place and agree that if a developer has not delivered on promises and commitments, they should be penalized but blatant activism without appropriate knowledge of the situation may only worsen the problem,” says Mehta.

A critique of consumer activism, Raj Gala Shah, Partner, Zara Habitats says that such market forces will definitely be the catalyst to better the eco system, provided there is ethical practice followed while fighting for the right cause and for that to happen self governance is crucial. It should definitely be the ultimate aim to weed out unscrupulous elements, not just from the business but also from the consumer activism side wherein certain individuals pursue monetary benefits under the garb of activism.

“Under an united effort the consumer, media and judiciary, the real estate sector can steer the future to a transparent environment, without being dependent on the government. As the adage goes ‘with great power comes greater responsibility’ and it seems apt for the current scenario of consumer activism. With the easy availability of information through RTI, 24×7 media coverage, a judiciary with stern outlook towards the real estate sector, it seems that there are only unscrupulous elements in the business,” opines Shah.

Developers have their reasons to sound like every consumer activism is blackmailing. But the fact remains that it is not consumer activism alone but two pillars of democracy – media and judiciary – that have become part of this ‘operation clean up’.

Of course, certain elements of consumer blackmailing cannot be completely ruled out. But then the developers are guilty of lending credence to every arm-twisting as legitimate activism since they have not taken care of perception management. CREDAI President Geetamber Anand repeatedly talks about perception management but has thus far failed to take any action against the erring developers who have been indicted by various judicial interventions in recent times.

This spate of collective might of consumers, media and judiciary promises to change the market dynamics more than any government appointed regulator. The reason being that it is coming out of spontaneous reaction and calls for fighting against the malpractices in the business where the developers have enjoyed the free reins far too long.

A section of analysts admit that the genuine developers who are not guilty of delaying and denying the buyers should rather welcome this triple intervention. They can also be more open about the issues the developers have to face. Of course, the single most and biggest challenge is the approvals systems for projects. It is the leading cause of worry on part of the developers as reason for many project delays is the system.

There is absolutely no accountability in the approval systems and due to several agencies involved there is lack in coordination and willingness to adhere to timelines. Also, most of the authorities are ill equipped to handle their respective jobs/positions which worsens the situation.

With the onset of consumer activism, a lot of these processes can be monitored, documented and understood by the general public at large to understand the various challenges developers face. This also could pose a huge pressure on the departments to work diligently as now they are answerable to not just a handful of developers but to a larger set of an audience that is not ready to be a silent spectator any longer.

Will the triple force of consumer, media & judiciary weed out unscrupulous elements from the business? There is no second opinion that if channelized properly, this spate of vocal outcry can certainly identify and weed out the unscrupulous elements form the business. Of course, the element of consumer blackmailing threatens to derail all the good work done. But then it is not the consumer activism alone but to monitor and take it to logical conclusion, media and judiciary are also playing an active role. Collectively, this promises a new eco system of housing market in the country.

By: Ravi Sinha

Many catalysts to project delays and trust deficit

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News point: There are many reasons of project delays and both the builders as well as government officials are guilty of spoiling the eco-system of housing market.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Track2Media, Track2RealtyWhen Kanabh Aggrawal shifted from Gurgaon to Mumbai he sold off his property and bought an newly-launched apartment in Mumbai. Five years later, he is yet to get the possession. Fed up with the project delays, a couple of years back he again bought a near completion project on bank loan. The IT professional who had thought that finishing the raised structure of the apartment would not take more than a year’s time is again disappointed. The project is getting delayed every time with an assurance of another six months.

“It is like a triple whammy to my finances. My money got stuck with the first apartment, I sort of over-leveraged myself with bank loan for the next apartment. Over and above this, I am paying very high rent also,” says Aggrawal.

To say that project delays are single largest cause of conflict between the builders and the homebuyers would be stating the obvious. Project delays are the most imprtant reason for trust deficit with the real estate sector. As per the data available with Track2Realty more than half, close to 55 per cent consumer cases against the developers are borne out of project delays. The situation is all the more problematic in a city like Mumbai where most of the homebuyers are expat professionals who are buying the houuse for the first time.

Quick bytes: Major reasons of project delay 

  • Delay in approvals and licenses  
  • Lack of Skilled workforce
  • Shortage in raw material supply
  • Government reforms lacking
  • Deteriorating market sentiments
  • Lack of standard guidelines

Sector accepts with defence

Vipul Shah, Managing Director, Parinee Group agrees that the main problem for trust deficit is the delay in delivery of the project, as most of the buyers are salaried employees and they depend on housing loan while buying a property. The delay in delivery puts extra burden on their finance in the form of extra pre-EMI interest and rent which they continue paying. This increases their landed cost for the house. The delay in project also tarnishes the image of the developers and hits their brand value considerably.

“Timely delivery is considered to be the highest contributor for the reputation of a developer. The core trust factor of real estate industry is delivering on time and if that is delayed everything goes haywire. In most of the cases the delay has been because of the delay in receiving approvals. Various approvals from various departments are required for construction of a building, which takes lot of time. Builders have to run from pillar to post to secure all the approvals and start construction. Also, if one approval is stuck at one department, then it has a cascading effect on all the other approvals,” says Shah.

Manju Yagnik, Vice Chairperson, Nahar Group, however, points out that majority of the delays are non-intentional. No developer wants to be in a situation that impacts his growth due to delay in project delivery. But fly-by-night operators cannot be ruled out. Litigation is one major cause of the delay in the project. Other common factor that delays the project are complications in obtaining necessary permissions which is a very lengthy process, abrupt policy changes that are retrospective, shortage in the supply of raw materials and the likes.

“Unlike yesteryears a consumer is well informed and well aware about the developer’s past performance and the details of the project he intends to invest in. A customer is also well informed about the prevailing market scenario and he does his homework well before taking the final decision of buying a home. If there has been consistency in timely delivery of the past projects by a developer, a single project delay does not contribute to trust deficit factor.  But a constant delay in delivery of multiple projects erodes the brand name and trust of a developer and in the sector,” says Yagnik.

Both buyers and developers suffer

Harjith.D.Bubber, M.D & C.E.O, Rivali Park nevertheless accepts that the delay in project has been detrimental over a period of time. He maintains that in a real estate sector the buyer invests his lifetime savings in buying a property and when everything of his is at stake, delay in delivery on committed date creates doubts in his mind. He also blames the factors beyond the developers control for the same.

“With lot of changes in government regulations and delay in receiving approvals and other unavoidable issues both buyer and developers are suffering due to which the buyers have become pessimistic with their investment in the projects. Suppose homebuyers take loan for their property which if in case is delayed they still have to bear the bank interest, rentals etc. that is an unaccounted loss for them. This way, they have steadily destroyed trust in the real estate sector,” says Buber. 

Sheer Majored Memo, Partner, Zara Habitats says amongst other reasons, endless and indefinite delays in completion and delivery of projects is undoubtedly the most significant factor that harbors trust deficit in the real estate sector specially in a city like Mumbai.

“There are numerous factors that either individually or jointly affect timely delivery or completion of construction projects. Lack or inadequate appropriation of funding for projects, undue and indefinite delays due to pending approvals, permissions and sanctions for projects to move forward, policy paralysis, court litigations, private disputes are some of the most predominant reasons that most often cause delays in construction projects in Mumbai,” says Memo.

Any way out?

Analysts hence suggest that a lot can be done to improve the eco system of project delivery. Old out-dated policies needs to be relooked at and updated as per current market requirements leading towards development. This will take care of abrupt policy changes as and when required and the system will be stream lined.

There should be fast track judicial system to dispose of the litigations that delays the development and delivery of the project. This will create more clarity in the planning of a project and bring in more transparency. It is demanded that the government should introduce single window clearance for granting construction approvals. This will also improve the situation of project delivery to a large extent.

The requirement for obtaining various NOC’s from different Government departments should be done away with and a single authority should be appointed for construction approvals. The Authorities should also implement more digital initiatives to fasten the approval process and increase transparency levels. This will also help in standardization of processes.

A well-conducted and intensive due diligence on part of developers, tenants and other parties involved in a project is a must and thorough legal check should be a serious consideration for all projects. Chalking out a realistic and practical financial feasibility of projects is imperative as often due to uncertain and unforeseen events economics of projects tend to fluctuate, thus developers should be equipped to cope up with such volatility.

Streamlining of permission and approval process is one of the most important factor that could save a lot of time and revenue both for the developers and the authorities as, commitments for completion and delivery of projects would be more realistic, achievable and certain.

Pune commands highest price appreciation

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News Point: At a time when the property markets across the country are either stagnant or marginally correcting the prices, Pune real estate is showing a healthy appreciation.

Pune, Pune property market, Pune real estate market, pune property prices, India real estate news, India property news, Track2Realty, NRI investmentAs per National Housing Bank (NHB) Residex, Pune has been witness to highest appreciation on a pan-India basis. Though the quantum of appreciation has been micro market specific, the data available with the NHB estimates that in 2015 Pune saw an increase of 6-14 per cent in residential property prices.

It is not only the price appreciation that is promising in the city but the transaction rates are also better than many other cities. While appreciation has often led to lesser transactions in other cities, in Pune it is in sync and hence indicates a genuine end user driven demand in the city.

In terms of the unsold inventory while the neighbouring Mumbai is sitting over 48 months of unsold inventory, in Pune the unsold inventory in the market stands at a comfortable 13 months.

It clearly shows that in Pune there is no stress in the residential market. The analysts maintain that keeping in view the nature of the business anything less than 5 quarter of inventory (15 months) is a comfortable situation. And hence, there is scope for new launches of the residential properties as well. The new launches have not been as much as expected due to policy uncertainties.

Parth Mehta, Managing Director, Paradigm Realty finds a method into it when he says that Pune city has been a job creator in areas of financial services and IT over the past decade that is very similar to Bangalore. Given the influx of earning population on the back of growth in business, this city has grown in valuation. Also, the affordability in the city is in tandem with the home loan finance capability of people with ticket size of flats ranging under Rs. 1 crore in a good location for 2 BHK.

“Pune has been lucrative to investors too with people buying it for its rental yields as the rental market too has good traction. Moving forward, given the extensive project launches with major layouts adding to supply and lackluster job scenario the 13 months inventory still looks worrisome,” says Mehta.

Arvind Jain, Managing Director, Pride Group appreciates the fact that Pune’s outstanding performance vouchsafes the unwavering confidence that end users and investors have been exhibiting in Maharashtra’s most dynamic economic powerhouse. The trend of Pune’s real estate market performing against the larger odds and out-distancing other cities in terms of real estate vibrancy will definitely continue.

“With the combined effect of manufacturing, Information Technology, the services sector and hospitality providing impetus to Pune, the city has all the right economic and demand drivers firmly in place. Moreover, its inclusion in the 100 Smart Cities program has served to boost the interest from multinational companies to set up and expand operations here. This will serve to further increase inward migration and fuel greater demand for residential real estate, and provide end users and investors alike an outstanding rationale to place their faith in this market,” says Jain.

Kishor Pate, CMD, Amit Enterprises Housing says Pune is still seeing a very healthy demand for property. While neighbouring Mumbai is now being seen a largely unaffordable, real estate investors are now flocking to Pune in order to participate in the real estate boom in this city. Growth on the Pune property market has been even more noticeable over the last two years.

“The steady momentum has been the key to healthy growth in real estate demand in Pune. In terms of appreciation too, investment in the Pune market is far superior when compared to other cities, most notably the neighbouring Mumbai. Even in 2014, Mumbai saw only 16 per cent appreciation in 2014 while Pune recorded the highest national increase in capital values at 39 per cent,” says Pate.

It is noteworthy that the National Housing Bank’s Residex recently confirmed that up to March 2015, price appreciation for residential properties continued to be the highest in Pune among the 26 cities it monitors. In fact, all other large cities have been showing a decline in property valuations. Since then the Pune market has only strengthened, as the economy is slightly less sluggish in the last 2-3 quarters. More importantly, the inclusion of Pune into smart city list is also going to change the dynamics of real estate market in the city.

The analysts tracking the city economy suggest that over the past two decades, Pune has seen rapid growth of the IT culture, and there is immense demand for homes from people working in the city’s software parks and IT companies. At the same time, the city’s thriving manufacturing industries also feed the demand for homes.

Moreover, Pune offers a plethora of options for both buyers and investors, at prices which are more affordable than in other cities. This is what makes Pune such an attractive investment proposition, and why property prices continue to register good growth.

The next few years would really be era of growth for Pune real estate market as the investors will flock to the future smart city. At the same time the kind of jobs that are expected to be created in the smart city Pune would be magnet for expat work force which has always been critical for the growth of housing market of the city. Pune real estate developers definitely have the reasons to smile their way to the market.

Marginal rate cut & turnaround?

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Bottom Line: It is not about impact of rate cut but the homebuyers’ psychological shift indicates revival.  

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, RBI, Reserve Bank of India, home loan proceduresAt a time when the discussion across the country has been on the decks being cleared for the formation of real estate regulator, Anurodh Agarwal, a homebuyer was wondering whether to jump from the fence sitting to buy a house now. The dilemma was not just about whether this is the right time to buy. He was rather thinking that even though his concerns with the functioning of the sector and the delivery processes were addressed with the regulator, the interest rate was still higher.

He was not alone to be apprehensive with the high interest rates. There have been many fence sitting buyers like Anurodh who think the interest rate was too high and hence it was better to wait for some rate cut before they could buy a house. The announcement of Reserve bank of India (RBI) Governor Raghuram Rajan to cut the repo rate has hence addressed their concerns to a large extent now.

The RBI Governor Raghuram Rajan in his bi-monthly monetary policy review has cut the repo rate by 25 basis points to 6.5 per cent; thus clearing the decks for home and auto loans, among other loans, to become cheaper. The policy interest rate has been now lowered to more than five-year low, while indicating the prospect of another cut later this year if inflation trends stay benign.

It may be argued that a rate cut of 0.25 basis points would not make any significant impact on the EMI burden of the homebuyers. But the fact of the matter is that the sector has been reeling under slow sales mainly due to the subdued sentiments. Most of the home seekers were fence sitting, either concerned with the delivery timelines or with anticipation of rate cut, if not price correction.

The rate cut, therefore, has come at the most appropriate point in terms of the timing. While the sentiments have significantly improved post the clearance to a real estate regulator for the sector, the repo rate cut can have the multiplier effect.

The critics may also argue that this is only a marginal rate cut in terms of the EMI burden of the homebuyers, but the RBI Governor has put the ball in the court of the banks. The onus is now on the banks as to how much interest rate they cut to revive the business and the market. The pressure is definitely mounting on the banks to reduce the interest rates, as they have not passed on the full benefits of previous rate cuts to the consumers.

Both the homebuyers as well as the developers have nevertheless welcomed the rate cut. They feel it will have a multiplier effect along with the real estate regulator. The rate cut may be marginal this time around, yet it has the potential to impact the psychology of the homebuyers.

Welcoming the rate cut, Manju Yagnik, Vice Chairperson, Nahar Group feels this will create positive sentiments and spearhead growth for the realty sector, bringing some respite to customers with home loans during the upcoming festival of Gudi Padwa and Akshaya Tritiya.

“The real estate sector is going through a makeover and we welcome any sops given by government at this stage that will help in propelling the sector. This rate cut is significant in terms of sending out a positive signal to homebuyers and industry alike that government is serious about providing housing to its people,” says Yagnik.

Kishore Bhatija, Managing Director – Real Estate Development, K Raheja Corp calls the repo rate cut as a step in the right direction. “Although there were higher expectations of the cut, this is certainly good news for developers as well as buyers.  It is also encouraging to hear that going forward the Central Bank’s policies will remain accommodative. We hope the banks will pass on the benefit to the industry.”

Ashwin Sheth, CMD, Sheth Corp also feels the accommodative stance and the indication towards further easing of policy rates will renew further interest in the real estate sector. According to him, the reduction in the repo rates will help in bringing down the home loan interest rates which in turn is likely to bring in some amount of relief to the homebuyers. But, the banks will also have to pass down the benefit to the homebuyers to encourage the prospective buyers to move a step closer to purchase their dream home.

“Interest rate is one of the important factors as the Equated Monthly Installments (EMI) is directly linked to it. Therefore, if the banks pass on the benefits and the EMIs fall, we feel the demand for the housing should witness momentum as far as buying new properties are concerned. Faster GDP growth and declining interest rates will help real estate companies generate more sales and propel the growth of the industry,” says Sheth.

There is a general feeling within the built environment of real estate that the rate cut has been announced keeping in mind the thrust of Government of India on ‘Housing for All’. It is hence expected that there will be more rate cut in near future, thus catalyzing the demand in the sector. Most of the analysts believe this kind of sops have critical linkage with the potential of the sector in job creation, improving social infrastructure and give a boost to the Indian economy as a whole.

However, the big question remains: whether the banks will pass on the benefits of the rate cut to the consumers? If only the banks could sense big business ahead if they reduce the rate of interest, then this marginal rate cut will be the beginning of the turnaround of fortunes of the real estate sector in general and housing market in particular.

Rate cut multiplier effect on homebuyers’ psychology

Posted on by Track2Realty
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Bottom Line: After regulator, rate cut is another confidence booster for homebuyers. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinhaIt may have been a very marginal rate cut by the Reserve Bank of India (RBI) and definitely not anywhere close to what the RBI has done in the past, but yet this rate cut promises to have substantive impact than mere symbolic discussion for both the homebuyers as well as the real estate sector. As a matter of fact, this rate cut promises to have multiplier effect on the fortunes of the sector, along with the goodwill generated with the decks being cleared now for a real estate regulator in the sector.

For the records, the RBI Governor Raghuram Rajan in his bi-monthly monetary policy review has cut the repo rate by 25 basis points to 6.5 per cent; thus clearing the decks for home and auto loans, among other loans, to become cheaper. The policy interest rate has been now lowered to more than five-year low, while indicating the prospect of another cut later this year if inflation trends stay benign.

From the standpoint of homebuyers, this definitely has a multiplier effect on the psychology which had been subdued for quite some time due to high interest rates and trust deficit with the sector. The industry has hence given its thumbs up to the RBI’s gesture.

Anshuman Magazine, CMD, CBRE South Asia feels that on the back of moderating inflation levels, controlled fiscal deficit and cautious economic sentiments, the RBI’s decision to pare key interest rates in its latest monetary policy review was largely expected by the industry.

“The rate cut is likely to help lower borrowing costs and support growth further in 2016. For the real estate sector this is particularly critical. It is expected that this benefit will be completely transferred to the borrowers, which will result in lower lending rates, thus helping to revive housing sales,” says Magazine.

Ashish Raheja, MD, Raheja Universal calls it a welcome step. He believes the move will surely have a positive impact on the economy as well as across sectors at large. “More specifically from the real estate sector perspective, we believe that there will be some renewed interest from prospective homebuyers who were hit recently by the ready reckoner rate hike across Maharashtra. While this move is positive it is left to be seen whether banks will pass on these benefits to their customers.”

Deepak Joshi, President and Chief Business Officer, Religare Housing Development Finance Corporation says this coupled with Marginal Cost of funds based Lending Rate – (MCLR) on which SBI has already taken a lead, will further reduce the lending rates in the market and increase credit off take. “Also, EMIs on retail consumer loans will further soften which will increase demand for auto and home loans.”

However, it would be pertinent here to note that though the RBI Governor sounds optimistic with the direction of the economy and signals more rate cuts in near future, the move will only have its affect when the banks pass on the benefits to the consumers. Failing this, it would be another symbolic gesture on part of the policy makers that will have no impact on the fortunes of the sector or the pocket of the homebuyer.

A large section of economic analysts are hence giving a word of caution on this. They are conscious of the fact that now is the right time to revive the fortunes of the sector. While the confidence on the part of the fence sitting homebuyers is somewhat back to the market with seriousness of the policy makers to clean the functioning of the sector and assure the delivery process, this rate cut can have a multiplier effect if the benefits are immediately passed on to the buyers.

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