Tag Archives: Indian property market news

Property market yet not transparent

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Some reports suggest India has improved in global rankings in terms of transparency in real estate sector in Asia Pacific. The homebuyers on the ground maintain that their experience has been no better. Track2Realty takes a look at the paradox.

Transparency in real estate, Disclosures in real estate, Best practices in property market, Cheating in property market, Frauds in real estate, Builder Buyer Agreements in real estate, Transparent deals in property market, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2RealtyA study titled ‘Global Real Estate Transparency Index (GRETI) 2016’, by property consultant Jones Lang LaSalle suggests India has improved in overall transparency scores across all markets and has achieved higher ranks for its Tier-I and Tier-II cities. Tier-I cities in India ranked 36th, vis-à-vis transparency levels, followed by Tier-II and Tier-III cities at 39th and 52nd positions, respectively. The index measures transparency by looking at factors including data availability, governance, transaction processes and the regulatory and legal environment.

According to JLL, the country’s rankings is likely to improve further in the GRETI 2018 index, owing to the implementation of the Real Estate (Regulation and Development) Act, 2016, which is likely to be fully functional in all states by then.

However, this overt optimism does not go well with the homebuyers on the ground. The buyers in the market maintain that it is the developer’s obligation to disclose all relevant issues, approvals etc, which they more often than not deny.

Transparency challenges in Indian real estate 

Reports suggest Indian realty catching up on transparency index; ground realities challenge

Disclosure norms missing in the property market and builders even don’t show Builder-Buyers Agreements before booking amount is paid

Courts have questioned the legality of Builder-Buyer Agreements, calling it not sacrosanct

Majority of developers don’t carry Builder-Buyer Agreements on their website

Developers continue to use misleading terms in marketing brochures

Subvention scheme invites speculators; buyers caught in lurch if the project is delayed

Selling on carpet area has the potential to reduce litigations to a greater extent

Buyers expect straight marketing discounts and not discounts & freebies

Disclosure missing

Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property and the builder’s experience, approvals & risk factors in it. Potential seller disclosures range from knowledge of not only the property but also infrastructure issues in the vicinity. Not only do disclosure documents serve to inform buyers, they can protect the sellers from future legal action. It is the developer’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property. 

It is the lack of proper disclosure that often results in litigations. Across the world, disclosure laws vary from state to state, even down to the city and local governance level. Though disclosure norms are very poor in India, the developers who conceal relevant information about the housing project can still be taken to courts for failure to disclose.

In some other matured markets the seller (both developer as well as reseller) can be sentenced for for up to ten years. In India the BBAs (Builder Buyer Agreements) are so one-sided in favour of the builders that, forget disclosure statements, even the legal validity of the BBAs have been challenged by the buyers and the developers could not defend their documents.

Some common disclosures that should ideally be there include the legal titles, approvals, delivery timelines, risk elements, financial liability of the developer with regard to the property, whether property already mortgaged, neighborhood nuisances, carpet area, loading percentage, any history of property line disputes, and amenities that would be part of the housing project.

A disclosure is something given to the buyer by the seller documenting their knowledge of the property. In most of the global markets, disclosure documents are provided to buyers once the developer has accepted their offer. In addition to their inspections or loan contingency, the buyer has an opportunity to review the seller’s disclosures.

If the buyer discovers something negative about the property through disclosure, he can usually back out of the offer without losing his deposit. In some matured markets, developers provide these disclosures to the buyers even before they receive an offer. Buyers are then required to sign off on disclosure documents and reports.

In some ways, providing full disclosure is not just a step towards best practices but also can actually help the developer. It shows that the developer is thoroughly transparent and upfront.

Even the National Consumer Disputes Redressal Commission (NCDRC) has rejected the arguments of a real estate company that provisions mutually agreed upon in a BBA are sacrosanct.

Developers continue to mislead

The developers continue to mislead the buyers with fancy jargons like project to be strategically located with 10 minutes distance to airport or 20 minutes distance to railway station. However, what the brochure does not tell you is that this distance is subject to your over-speeding drive with no traffic at all on the road. In the absence of this luxury, the distance of 20 minutes can also be one hour and 20 minutes.

Social infra is another area where the gullible buyers are duped with the promise of having very many good quality schools, hospitals and restaurants coming up near the project.

Façade of area that promises green zone around the project, that looks so very beautiful in the brochure, can also be drainage area with green bushes around. The artistically create project elevation or the sample flat pictures on the brochure are more often than not misleading to the homebuyers.

80 per cent green area with landscaping is what is an ideal answer to urban living. However, even with the permissible FAR of 2 that is allowed in most of the cities, this seems highly improbable. Moreover, the marketing brochure simultaneously also says that the developer will apply for more structures subject to permission. There have been cases of the developer later converting the green zone to raise another tower.

State-of-the-art amenities are probably the most over-used and abused claim in the marketing brochure of respective developers. Yes, there would be a gym, a swimming pool and a tennis court etc. But the question that is not answered is that will it be sufficient to serve the entire housing project. In most cases it is not.

Amidst all the misleading claims and marketing exaggerations, location mapping is the most glaring one. Generally maps are not to scale and give the wrong perception of the location of the project. For example, the brochure will say 10 minutes from the airport or commercial district; it does not state distance in kilometers.

Straight marketing package needed

When Archana Dalmiya bought her first apartment in the year 2011 she was quite tempted with the various marketing offers that were available in the market. She had then booked her apartment that was packaged with loads of discounts & freebies, though the developer had refused to give any straight discount. A novice in the housing market she was also rather looking for the maximum freebies. As a matter of fact, the freebies became one of the major differentiator in making her a final decision between the identical projects.

Not anymore! This year when she is planning to buy her second apartment it seems she has matured a lot. She understands the dynamics of housing market and difference between freebies and straight discounts. As a result, her negotiation is more on the lines of price point and straight jacket marketing offers that could lower the price burden.

“I think I have learnt some valuable lessons with my first home purchase. There is absolutely no gain in getting tempted for free air conditioners or free holidays. What I am interested in is the price point and to what extent the developer can offer me the price discount. It works much better for a home buyer than fancy symbolic offerings,” says Archana.

Requesting anonymity, the marketing head of a leading Mumbai-based developer admits that their research has made them understand that today’s buyer is very value conscious across the segment. Moreover, he can evaluate the cost & benefit of any marketing offer. He is not the one who would be tempted with the freebies anymore.

“It is no more home furnishing, holidays or gold coins that can translate a prospective client to book the deal. It used to be popular marketing tool for good number of years. Today, most of the developers also understand this change in buyers’ outlook and hence housing market is now very realistic in terms of its marketing offerings. Price cut is what seals the deal in most of the cases,” says the person above mentioned.

The housing market of major Indian cities have also changed over the years. No one is interested in offers like free air conditioner, holidays or other fancy attractions. Price point and usable carpet area is the focus of all the buyers today.

The game in the housing market has turned out to be on the price point and hence most of the developers and home buyers are evaluating what could be termed as substantive negotiation on price point than symbolic gesture of freebies.

Who cares to care in real estate?

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Bottom Line: Care for customers, employees, other stakeholders and environment is something that is not just symbolic best practices. Indian real estate nevertheless fails to acknowledge it as a sound business strategy that could reap the benefits in the l0ng run. 

3C CSR, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyOne of the most critical aspects of in business is ‘Caring Factor’. Every business on the face value tells its customers and stakeholders, including the employees, that it cares. It cares about them; it cares for them. It wants to make them feel loved and appreciated.

But if it is the Indian real estate the counter argument has always been: why to do that? The phenomenal growth of the sector has imbibed the inherent arrogance that they have the advertising clout to look & feel good and project it to the larger audience the same way.

But then advertising has serious limitations when it comes to conveying empathy and the harder one tries the more alienated the audience becomes. There is, of course, another way and it has to do with cash engines. Moreover, the slowdown has exposed to the reality that a developer cannot always escape with the lack of inter-personal relationship when the business is down.

The importance of care in the business environment cannot be under-estimated when one recognises that business organisations are ‘complex systems’, rather than ‘machines’. The realisation empowers to a different view of the business: it is the strength of connections between people that makes an organisation resilient, adaptable, robust, and successful in traditional bottom-line terms. Caring about others is a connection strengthener, and is therefore good for business.

Care is not usually thought of as a power word, but it is a power action. When our interactions are filled with genuine care, not only are our connections strengthened, but also our relationships are enriched. We all look for and long for security in our lives. Security at all levels, from personal to global, resides in the strength of our positive connection to others. Our power and control in life is in our ability to ‘care-nect’.

In the context of Indian real estate ‘care’ is a foreign concept in most of the organisations, but in matured industries it is part of what defines them. Care is a soft skill that Indian developers need to usefully develop. And it starts with each and everyone of the value chain.

So why are Indian develoers still not getting the balance right? Several larger organisations will point to the fact that what they do is never communicated properly. Howsoever debatable that stand may be, it still raises more questions than settling the answer. Why has that not been communicated well? Whose responsibility is it to ensure care connect is communicated well, and regularly to the stakeholders?

Corporate Social Responsibility (CSR) is a new concept in the Indian real estate and companies are yet going through the learning curve. For most of the developers it is an emerging trend to explore with ‘why not’ mindset.

There are not many smart realty companies to have found out the benefits of CSR both in terms of engaging their stakeholders as well as brand enhancer. The developers need to shift their focus to broader and deeper issues surrounding sustainability, accountability and governance concerns.

A real estate company organises painting competition, another one takes a clean the city sweeping drive for a day. Some other companies organise school for the children of construction workers. Someone organises a blood donation camp for a day as the CSR effort. That is what is the understanding about Corporate Social Responsibility (CSR) in the Indian real estate. 

Realty companies are definitely moving ahead of getting into CSR for fulfilling mandatory provisions, though CSR as of now means different things to different realty companies. Hence, Indian realty has not completely been able to link CSR strategy with their overall brand image. 

It is in general believed that while a local brand can take a selective and partial approach in the formulation of CSR strategy, a global brand strategy should be defined from a multidimensional and multi-stakeholder perspective.

This brand strategy, however, is yet to take off in the Indian real estate that is predominantly a local business but is increasingly striving to be seen in global markets. The realty companies have by trial & error method trying to formulate CSR strategy that enhances brand image from a local perspective and glocal (global & local) objective of fund raising. Many of these companies also maintain that CSR cannot be a brand driver, and there is no scientific metric to calculate ROI the way other branding efforts are being evaluated.

Diipesh Bhagtani, Executive Director, Jaycee Homes, says that CSR alone cannot be the catalyst for brand building; there is no case study as such. CSR is seen more as a responsibility towards the society rather than a business promotion activity.

“CSR brings a company to limelight as a socially responsible company. It also goes to say that a company understands the need of the day towards the entire society, may it be towards green revolution or towards special ability children or even patients with terminal illness who cannot afford treatment. This forms a very different kind of branding for a company and has a rub off effect on the company,” says Bhagtani.

However, there are others who believe CSR must be linked to brand positioning in the overall scheme of things. Jackbastian K Nazareth, Hiranandani Communities advocates that brands must operate responsibly in the communities they serve. “This is particularly true of real estate brands, as the category has historically been mired with perception issues.  CSR activities are a credible brand building tool and must be leveraged,” says Nazareth.

Kamal Khetan, CMD, Sunteck Realty also claims that being a responsible corporate entity, CSR forms a very important aspect of their day to day functioning. The company has formed Sunteck Foundation that is a dedicated entity which under its umbrella supports various initiatives that lead to social betterment.

“This includes a wide spectrum of activities like green initiatives, education support, empowerment of the underprivileged and many more. The Sunteck Foundation under its umbrella supports initiatives like Tree plantation, medical checks up, notebook distribution, food distribution and many other such initiatives,” says Khetan. 

Devang Varma, Director, Omkar Realtors & Developers puts it in slightly different perspective when he says the CSR perspective is inter-woven in their business model as any form of redevelopment impacts the society at large and stakeholders in specific.

“At different levels of our brand communication, the essence of upliftment of economically weaker segment and direct/indirect benefits accrued by quality and responsible redevelopment gets communicated to our audiences,” says Varma. 

While there have been very few successful case studies in effective CSR strategy by the Indian real estate, some endeavours, of late, indicate the shift towards wilful CSR. For example, in Kolkata a real estate consortium stepped into fund the clean-up of Bank Plot jheel, a water body that was under threat of land sharks in Saheednagar area off the Prince Anwar Shah connector to the Bypass. The development by the consortium is significant as it points to a change in the mindset of realty players vis-à-vis their connecting to the public.

“When the Centre has mandated that we spend a portion of the profits on activities that reflect corporate social responsibility, it makes sense to invest in improving the environment of neighbourhoods because that will make the place more livable, and hence, more amenable to development,” says Sushil Mohta, South City Projects Director.

While the value of a comprehensive CSR program can not be understated, the Indian real estate has by and large been slow to adopt. It seems the developers were initially unaware of the implications and costs of such a program, and its critical linkage to ROI and brand enhancement. Some more matured property markets globally have successfully defined the CSR programmes for the right reasons.

Their Indian counterparts are scaling up gradually but in order to remain authentic, it is critical that all levels of management are committed to a comprehensive CSR program for the right reasons — and not simply for financial gains and some media visibility.

Demand-supply mismatch in luxury housing?

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Bottom Line: It may sound like a strange paradox but it is true that luxury housing may seem to be over supplied in the country yet it is the segment that is actually not enough in supply vis-à-vis the demand.

Lodha Belmondo, Lodha Group, Holiday Homes, Weekend Homes, Luxury Developer of India, Mumbai Real Estate, India Real Estate News, India Property Market News, Track2RealtyWhether the market is obsessed with luxury or there are inherent reasons for this appetite. A ground zero study suggests this is purely a demand supply situation. It has nothing to do with subjectivity or obsession.

Demand for luxury features in real estate products arises from the ever changing needs and aspirations of the growing of the middle and upper income strata of Indian society.

As home buyers rise up the economic ladder and get more exposed to the lifestyles of the rich in other countries, they demand similar services here in India as well. This phenomenon then becomes a ‘brand driver’ for developers who possess the skills and resources to cater to this segment.

Analysts also maintain developers are offering luxury housing options because people are looking out for more choice apart from basic necessities. The rise in disposable income, increased aspirations, lifestyle changes etc are the factors behind increasing luxury living.

The term ‘luxury’ is being used very liberally nowadays, but the buyers in this segment are so discerning and demanding that a seasoned developer can not afford to fool around.

You can not have some décor around a low cost project and call it affordable luxury. This segment of housing is more competitive than any other segment. Moreover, since luxury is about overall ambience and not just a costly & fancy apartment, it has to have connection with the location.

A location with no thriving economic activity and prosperous habitation can not afford to have luxury living. And it is here that Gurgaon scores over certain other markets as Gurgaon is not just aspirational destination, but catering to those aspirations with a holistic live, work & play ambience that is the basic ingredient of luxury living.

The segment is based on high margin concept and is therefore being preferred by the real estate developers. Neeraj Bansal, Partner, Real Estate & Construction believes with the recent price increase in urban cities normal projects are also now been classified as luxury projects. Every developer has their definition of luxury depending on the city & micro market they are operating in.

“If we take example of Noida Extension a 3-4 BHK flat with air-conditioning & society having swimming pool & club is being projected as luxury. In contrast to micro market of Golf Course Road in Gurgaon where a custom fitted apartment with centrally air-conditioned and proximity to golf course is projected as luxury apartment. In absence of any clear cut definition of luxury apartments, any project having additional features over nearby projects in a micro market are projected as luxury project,” says Neeraj.

Moreover, affordable luxury in real estate is similar to price positioning in many other product categories e.g. cars in the INR 10 to 14 lakh bracket are considered as the start or the ‘affordable’ end of the luxury segment.

These are products that offer customers many performances, safety and comfort features normally associated with more expensive vehicles or brands. Many Japanese and Korean cars offer features similar to European brands but at a much lower price band. Same is the case with real estate. Here, a developer may offer some luxury features in project as a product differentiator.

The question still stands — is Indian realty luxury obsessed? The answer partly lies in the question itself. Are businesses run on obsession or strategy philosophy? Secondly, for a person living on a street a slum is a luxury and someone who is living in a three bedroom apartment a penthouse is a luxury. Luxury is a feeling we sense but everyone has his or her view on it though the meaning remains the same. Luxury could be a matter of location, quality of product or type of product.

The verdict is that luxury living is in demand these days in India. They are considered indulgences, but are nonetheless affordable to the class of consumers who buy it.

People are looking for luxury housing without compromising on quality/amenities. Spurred by greater influx of end-user demand and an increasing upwardly-mobile segment, luxury and ultra luxury housing projects, with prices ranging between INR 1 crore and INR 27 crores are coming up more and more.


Why are Indian homebuyers dissatisfied?

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Track2Realty Survey: To say that a vast majority of homebuyers in India are sulking would be stating the obvious. A pan-India survey tried to figure out the extent of dissatisfaction and the reasons behind the unhappy homebuyers.

Homebuyer Confusion, Confused homebuyer, Homebuyers grievances, Homebuyers' legal options, India real estate news, Indian property market news, Track2RealtyDissatisfaction among the homebuyers was noticed at every level, and every set of buyers had their own set of grievances. Of course, the level & extent of dissatisfaction is different in different phases of house purchase and ownership.

Only 22% of the buyers in the survey said they received a defect-free home and timely possession. A large 78% of the house buyers repent investing their lifetime savings on the house. 72% of the homebuyers say the property has neither appreciated, compared to other investment instruments, nor did they get a house worth living.

The survey could identify three levels of dissatisfaction of homebuyers – pre-purchase Possession & post purchase. The dissatisfaction is at all the three levels and the reasons of consumer grievances change with the stage of construction.

In the pre-purchase stage delayed possession is something that bothers all the homebuyers. No less than 78% homebuyers complain of delayed possession. Rest 12% of the respondents has other issues ranging from non-responsive developers to poor customer interface.

“I don’t think it is anyway justified that the developer defends the project delay with the excuse that it is not only this project that is delayed. I mean they have made it a habit in their collective consciousness and then say all the projects are delayed, as if many wrongs make a valid right,” says Sujata Mehta in Mumbai.

What homebuyers say? 

Only 22% buyers have received a defect-free home and timely possession

A large 78% of the home buyers repent investing their lifetime savings on the house

72% homebuyers say the property has neither appreciated compared to other investment instruments nor did they get a house worth living

78% homebuyers complain of delayed possession

12% of the homebuyers have other issues ranging from non-responsive developers to poor customer interface

58% homebuyers have faced the unreasonable demands of the developers and this hidden cost of the developer is what leads to buyer dissatisfaction

42% have other reasons of dissatisfaction ranging from lesser carpet area than being promised to mismatch in house specifications

55% homebuyers across the cities have complains with the poor constructions quality

45% are dissatisfied with a number of other customer interface issues, including poor facility management or the high cost of maintenance  

During the possession stage there are multiple of issues and this is the time when instead of the conflict settling down, new issues crop up that spoils the taste of occupying the house. 58% of the homebuyers have faced the unreasonable demands of the developers and this hidden cost of the developer is what leads to buyer dissatisfaction. Rest 42% have other reasons of dissatisfaction ranging from lesser carpet area than being promised to mismatch in house specifications.

“If you resist the unreasonable demand of the builder then your possession is refused. They will ask you to settle the due as per their calculations. An average salaried class with both the rent and the EMI burden over the head can not drag it for a longer period. Ultimately, you are being forced to succumb,” says a dejected Shivam Khurana in Gurgaon.

The buyer dissatisfaction does not end after the possession. Once the home occupier settles down one is confronted with the reality of poor construction quality and customer service problems. 55% of the homebuyers across the cities have complains with the poor constructions quality, while the rest 45% are dissatisfied with a number of other customer interface issues, including poor facility management or the high cost of maintenance.

“As a homebuyer you feel helpless after having made all the payments. The builder is not ready to address any of the legitimate concerns. There are, of course, legal options available but then every homebuyer can not afford the time and high cost of litigations. For the builders, it is a routine affair and a dedicated team is there is handle legal disputes,” says Roshan Mallick, a homebuyer in Bangalore.

There is another set of buyers who complain about the competitive investment failure with the project. As a Noida homebuyer sums up, “I was told that this is the prime plot of the location and with the kind of project the builder is making this project will command the maximum premium. But then the other neighbourhood properties have appreciated more and I feel like being cheated.”

Sadly, this consumer grievance can never be addressed even if the developers’ intention is right and the laws are there to protect the buyers. But the developers can definitely address the other legitimate consumer grievances during the construction cycle, possession and after delivery issues.

Long term growth story optimistic: Bijay Agarwal

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View Point: Bijay Agarwal, Managing Director, Salarpuria Sattva Group is optimistic that the market will soon adapt to the regulatory changes like RERA, GST and demonetisation.

Bijay Agarwal, Salarpuria Sattva, Bangalore real estate, Bengaluru real estate, Best builder of Bangalore, India real estate news, Indianrealty news, Real estate news India, Indian property market news, Track2Realty, Salarpuria Sattva propertyCalling it maturing of the real estate sector, Bijay Agarwal has neverhteless reservations with foraying into non-descript Tier II and III markets as a desperate measure. In an exclusive interview with Ravi Sinha, he says there is no doubt about the long term growth story of the business. Excerpts of the interview:

Ravi Sinha: Did you predict the market slowdown to this extent?

Bijay Agarwal: The slowdown was predicted much ahead to the introduction of GST and RERA and we were prepared for it. Whenever there is a new law or regulation, changes are bound to impact any market and we must cautiously tread the transition phase. At the same time, the impact usually does not last long as people adapt to changes quickly. We continue to see good traction in our business despite these market challenges. Our business is based on certain core values, which we amplify to face tough challenges.

Ravi Sinha: To what extent the market uncertainties has affected your topline and bottomline?

Bijay Agarwal: Fortunately the Bangalore market has not been affected on a large scale. There has not been any major change with the topline. However, due to the pressure for sales, the bottomline has been affected by 10%.

Ravi Sinha: What has been the learning of the last 5 years of market uncertainties?

Bijay Agarwal: Every sector matures over a period of time and real estate is no exception. Every developing country has gone through this phase as laws are promulgated when a particular sector grows at a good pace. In fact, real estate sector came into prominence only in the last two decades following the liberalisation of Indian economy. Reforms were introduced in the sector only recently and the much-awaited RERA was implemented just this year.

There are many more reforms that must be introduced in the real estate sector and they are definitely in the pipeline. Real estate is still an evolving sector and uncertainties are part and parcel of such business. Every sector faces such uncertainty, but organisations with strong fundamentals and superior business values survive and thrive. We have been studying the real estate sector very closely and realigning our strategies to meet the organisation’s business goals.

Ravi Sinha: Has the after effects of demonetization been a real challenge for the sector?

Bijay Agarwal: Only a negligible number of people dealt with cash in the real estate sector involving established players. Established brands like ours have not been witnessing any major fallout. In fact, we are of the view that buyers are now a bit cautious before selecting the home of their choice because of the changing dynamics in the financial market.

Ravi Sinha: How about RERA and GST affecting the business cycle?

Bijay Agarwal: RERA has actually empowered homebuyers by bringing in more transparency and accountability in the process. Now, buyers are benefiting from the provisions of RERA and we expect them to take advantage of it. RERA will motivate those who were not planning to invest in a home to rethink. The impact of GST rollout is temporary till there is a smooth transition and those involved get accustomed. Generally, people have a predictable perception whenever there are major changes to law and taxation. We are currently in that phase and expect normalcy to set in gradually.

Ravi Sinha: Has the consumer confidence index gone up or down?

Bijay Agarwal: With the availability of abundant data on the web, the consumer today is well educated about the industry, the developer and project that they are considering. Implementation of RERA and GST has definitely increased the transparency. Consumers can now easily evaluate and differentiate the performance of developers. Bangalore being one of the most disciplined markets, consumer confidence on established players has been always good. Going forward, there should be an overall boost and positivity.

Ravi Sinha: Since you operate into different markets, which are the cities that you feel is best and worst positioned today?

Bijay Agarwal: We operate in limited number of markets and in our experience the south market is performing well. Bengaluru has been performing well while Hyderabad and Chennai markets are stable. The Mumbai region has also seen lots of new launches.

Ravi Sinha: To what extent the slow moving market in the metro cities tempting you to go for Tier II and III cities? Is this time for experimenting with destination development?

 Bijay Agarwal: In my opinion, multicity has not been fruitful for the developers who are established in metro cities, especially Tier III cities. However, Tier II cities can be considered depending on the velocity of the project.

Ravi Sinha: Which are the segments that you find safe bet today – residential, commercial or any other specialized segment?

Bijay Agarwal: The demand for residential assets continue to grow in all the major centres. Similarly, commercial space, especially office space, is in demand in Bengaluru and Hyderabad. Many a time, these are cyclical in nature, and therefore it is difficult to say whether investing in a particular segment is a safe bet.

Ravi Sinha: Moving forward, what is your outlook of the business in the medium to long term perspective?

Bijay Agarwal: We are very bullish particularly after RERA & GST, there is lot of transparency in industry as a whole. In my opinion, short-term, it may be similar. But in the long term, after 12-15 months from now, there will be 20-25% appreciation in the market and demand will be substantial. This is long due as well.

Embassy wins British Safety Council’s Sword of Honour

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News Point: Three of Embassy’s Office Parks receive this prestigious honour in 2017 for the highest award for excellence in Health and Safety management standards

Embassy Sword of Honour Award, British Safety Council, Best practices in real estate, Best practices in health & safety, Embassy Group, Jitu Virwani, India real estate news, Indian realty news, Real estate news India, Indian property market, Investment in real estate, Track2RealtyEmbassy Group has been conferred the prestigious ‘Sword of Honour’ by the British Safety Council for three of its business parks – Embassy Manyata Business Park, Embassy TechVillage in Bangalore and Embassy TechZone in Pune.

Embassy is the only Real estate developer in India to receive this prestigious honour this year.  The award was presented to the company at the Drapers’ Hall, London on 24th November 2017.

The ‘Sword of Honour Award’ is widely recognized as the pinnacle of achievement in safety across the world, and is instituted to reward best practices in this field.

To achieve the Sword of Honour Award, organizations should be fully committed to both excellent standards and continuous improvement. Earlier this year, the above-mentioned Embassy Office Parks received the 5-star rating from the British Safety Council for Occupational Health and Safety, which was a prerequisite for receiving the Sword of Honour accolade.

An external adjudication panel of chartered professionals awarded 57 Swords, to commendable organizations from across the globe. Among the other companies from India that received this prestigious award were Mumbai International Airport Pvt Ltd, Reliance Industries Ltd, Larsen & Tubro Ltd, raising the bar for Health & Safety management standards in the country.

On receiving the Sword of Honour Award at the Awards ceremony in London, Jitu Virwani, Chairman and Managing Director, Embassy expressed “It was a wonderful experience participating in the Awards ceremony and receiving this prestigious Award. The certifications are a validation of our unwavering commitment to our clients, ensuring that our workplaces are not only the most efficient, but also the greenest and safest anywhere in the country. Embassy is committed towards creating world class Grade A real estate projects, for the rising India. We are honored that our dedication and commitment across all our spheres of operation is being recognized”

Mike Robinson, Chief Executive of the British Safety Council, said: “On behalf of the trustees and staff of the British Safety Council, I would like to congratulate Embassy Office Parks for their huge commitment to keeping their workplaces safe and healthy and minimising risks to the environment from their organisations’ day-to-day activities. All of the Sword winning organisations share a commitment and resolve to achieve the highest standards of health and safety management. We are delighted that they are partners in helping achieve our vision that no one should be injured or made ill at work.”

The 2017 awards mark the 38th consecutive year that the British Safety Council has awarded the Sword of Honour for health and safety management excellence and the seventh year of awarding the Gobe of Honour for excellence in environmental management. The winners achieved the maximum five stars in the British Safety Council’s independent Five Star helth and safety and/or environmental management audits in the period 1 August 2016 – 31 July 2017.

They also demonstrated to an independent adjudication panel that they had a proven track record and culture of best practice for excellence in health and safety or environmental management that runs throughout the business, from the shopfloor to the boardroom.

Is luxury housing more realistic in India?

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Bottom Line: Contrary to the general perception that slowdown in the economy will give momentum to more affordable housing and dent the luxury housing market, the experience with luxury housing has been better than expected.  

Nahar Excalibur, Mumbai real estate, Malad Property, Luxury real estate, Indian real estate news, India property market, Track2RealtyRaj Mehta bought a 2BHK apartment in Pali Hills around 10 years back when he shifted to Mumbai from Ahmedabad. He recalls the mismatch between promise and delivery of the product was something that he hated the most after having his money invested. Now that he is buying a super luxury apartment in Worli he should have reasons to be more concerned since the stakes are much higher.

He, however, is more relaxed after his search of the dream luxe living is over. Reason: this garment exporter has realised that the property market is more realistic in luxury segment than even in affordable housing that he bought earlier.

An outside view on the Indian real estate market may get confused with the fact that mismatch in delivery and performance is lesser in luxury projects than even affordable housing. Isn’t it a fact that buyers in low income housing are more price conscious and more concerned to check & cross check than those nouveau riche who have enough money to splurge?

Well, that may be a fact but in reality the property market across the country is witness to the fact that when it comes to luxury property the realism is at each and every level, right from the launch to the project completion.

While inventory overhang is an issue with most of other segment of housing, in luxury there is no sharp demand and supply mismatch. As a result, even in the gloomy real estate market luxury projects are doing well, lending credence to the perception that market is more conducive for luxury projects.

Even in the wake of worst economic cycle, as per rough estimates luxury projects worth nearly $2 billion (over Rs 10,000 crore) were launched during the year 2012 and nearly as much in the year 2013 as well.

Sales of luxury homes across big cities such as Mumbai, Bangalore, Gurgaon, Chennai and Pune have been moving up along with 6-20% year-on-year price rise in this segment, reaffirming the upward movement.

Property analysts are not surprised. They believe since the stakes are so high in this segment of projects that there is of course more research before the project launch.

Moreover, most of the buyers in this segment are like Raj Mehta who are not buying a super luxury apartment or villa as their first property and hence are very much aware of the fine line that separates their early days’ need from today’s want of aspiration and affluence. Added to this, such projects are not meant for anybody and everybody, so the project has to be as per their taste.

A leading property consultant says, “Luxury real estate usually does well during recession or sluggish environment as we are seeing even now. In a highly uncertain environment, the super-rich clientele prefers to put their money into these hard assets than any intangible service or instruments.”

What makes luxury projects even more attractive is the fact that this segment of projects to an extent are much more recession proof compared to mid-income or low-income housing. This is due to the fact that luxury housing is purchased by highly paid executives of corporate world, successful entrepreneurs, business tycoons etc.

Their financial appetite is not affected much by economic slowdown like in case of middle-class home buyers. Of course, the project differentiator has to be distinct enough to attract the prospective buyers.

For instance, when the Omkar Realtors & Developers launched their super luxury project, Omkar 1973 in Worli they decided not to oversell it and instead go for a sales pavilion that encourages experiential marketing.

The CMD of the company, Babulal Varma categorically says that it is better to invest in product packaging than marketing packaging to make the luxury projects more realistic. According to him, the changing demographics of Mumbai and rising aspirations has made it necessary for the developers to create a ‘wow’ factor without overusing the marketing jargons to push off the customers.

“We are realistic to the extent that we are not overselling the project. In any case, buyers in this segment are so taste conscious and affluence driven that you can not over promise to them. And hence, even our sales team here is very informal with no dress code. After all, we want the customers to come and experience where the sales person is more of a friend and relationship manager than a hardcore sales person in a mad rush to push buyers to close the deal,” says Varma.

The reason for this demand in luxury is changing demographics and rising aspirations. Luxury homes are similar to plush hotels and are exclusive as they have special features based on their location, structure and functionality. The main aspect of a luxury home is its location as most of them are built away from the hustle and bustle of the city. The ideal location more often is a secluded area within the heart of the city.

Apparently, most cities are witnessing the growth of super luxury homes, which have additional facilities and extravagances compared to luxury homes. Also most realtors are developing high-end shopping malls that cater to luxury brand retailers. A large number of home buyers are today demanding luxury housing with an array of amenities.

The demand for luxury housing can also be attributed to the increasing rate of High Networth individuals (HNI) and the rapid pace of urbanisation. India tops the list in the growth rate of the number of HNIs. The realty sector of India accounts for about 40 per cent of their investment portfolio.

NRIs are also looking at luxury homes as an option. Basically these homes cater to high-end investors and consumers. And there are the villas by the beach, on the river front, and in hill stations, all of which are big draws for the ultra-rich.

Next: Demand-supply mismatch in luxury housing?

Who has stolen Bangalore lakes?

Posted on by Track2Realty
Track2Realty Investigation

Bottom Line: It is the story of Great Lake Theft in India’s Garden City, Bangalore, known for its beautiful lakes. Irony is that the policy makers are shrugging off their accountability while fixing blame on the builders alone.

Bangalore Lake, Lake in Bangalore, Property frauds in Bangalore, Lake encroachment in Bangalore, Bangalore lakes encroached,  Real estate frauds in Bangalore, Sobha Limited, Prestige Group, Brigade Group, NICE, Bagmane, Oasis Apartment, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in Bangalore, Track2Realty It is a travesty of the law of natural justice that the policy makers in Karnataka State are today crying hoarse for what precisely has been the fault of the government agencies in the first place. It is not an ordinary story of theft but a sort of broad day robbery where the vested interests have stolen the lake in the city of Bangalore known for its beautiful lakes and water bodies.

A committee headed by Karnataka Assembly Speaker KB Koliward has presented an extensive report in the Karnataka Legislative Assembly that revealed that over 10,000 acres of lake area has been encroached in and around Bangalore.

The report states that 10,785 acres or around 18% of lake area has been encroached in 1,547 lakes in the two districts and also names over 75 companies in a list of offenders. The report blames almost all the prominent developers in the city. This includes developers like Prestige Group, Sobha Limited, Bagmane Group, NICE (Nandi Infrastructure Corridor Enterprises Limited) and Oasis Apartments, among others.

Interestingly, the Government Ashraya Scheme that provides temporary homes for children before safe houses are found for adoption has also been accused to encroach upon 79 acres 32 guntas land in Begur, Bengaluru South Taluk.

As a prima facie finding, the report suggests that the builders in connivance with the Bengaluru Development Authority (BDA), Land Records Office and Revenue Department have stolen lakes in the city.

However, on a closer look the report raises more questions than it could answer how the natural water bodies like the lakes could be stolen in broad daylight. What were the government agencies doing while the developers could raise buildings over the years where there should have been lakes? Should not all the government approval agencies and the concerned officials be held accountable for this?

More importantly, even after the report has been tabled in the Legislative Assembly why criminal cases have not been filed yet? Is it just an arm-twisting or the report aims to correct the wrong doing of the builders?

Many of these developers did not respond to the query sent by Track2Realty. A spokesperson of Brigade Group says, “We don’t want to react at present without going through the report.”

Sobha Limited has been upfront in refuting the charges even when the alleged encroachment on lake is just 0.025 Guntas or quarter Gunta (approx. 272 sq feet). This encroachment is shown in Begur Hobli, Ibblur Village in sy. No. 36.

“This was contested by us before the Assistant Commissioner, Bangalore South, and the Assistant Commissioner has passed an order clearly stating that the property wherein Sobha has constructed apartments does not fall under the lake area and also held that there is no encroachment by Sobha. Probably, this order of the Assistant Commissioner has been overlooked by them at the time of preparing the report,” says a Sobha spokesperson. 

The report suggests demolition or takeover of properties like apartments that were built by private companies and allotting the properties to the same companies on a lease agreement. It is not clear how this will restore the lakes on the given piece of land. 

Requesting anonymity, a prominent builder in Bangalore says the issue has been raked six months ahead of the State Elections for obvious reason. No developer is worried since they know why the issue has been raked up at this time. “Once the election is over, there will be either collective conspiracy of silence or some committee will be formed and report will gather dust. By that time the issue will be erased from the public memory and in all probability no one would ever get to know who are the vested interests having stolen the lake in the city famous for lakes,” says the builder.    

Track2Realty investigation finds that the report itself raises more questions than it could answer as to why the city of Bangalore has been robbed with the natural water bodies. There are some obvious questions about the authenticity of the report, its timing, and intent. What has been the technical qualification of the team that has prepared the report? Why the builders were not asked for representation before finalizing the report? For instance, why the report omits the fact that the Sobha had refuted the charges earlier and the Assistant Commissioner, Bangalore South who passed an order to the effect, accepted their plea.

In another classic instance, Nandi Infrastructure Corridor Enterprises Limited (NICE) is alleged to have encroached upon 7 acres 6 guntas of lake area in Kengeri. Interestingly, this alleged encroachment is part of the government project under the Bangalore-Mysore Infrastructure Corridor Project (BMICP). This raises a fundamental question as to whether a builder will encroach upon the lake area to construct an infrastructure project.   

Responding to the allegations, Nandi Infrastructure Corridor Enterprises Limited said in a media statement that the land in question had not been encroached but had been handed over by the State Government. “The land has been handed over on lease via a government order and the possession was handed over to us in 2000. The land has been utilized for the construction of the peripheral road as per the alignment and approval of the Public Works Department (PWD).” 

Track2Realty has following questions to ask which no one from the power corridors or the BDA is ready to speak on record: 

Q. If the builders have encroached upon the lake area, has this lake theft happened overnight?

Q. Why did not the government agencies raise an objection when the builders were encroaching upon?

Q. If BDA is also hand-in-glove with the builders, why did other government agencies give the permission to construct projects over there?

Q. If all the government agencies have colluded with the builders, then why have they not been blamed in the report?

Q. Why there has been no action when the lake area was encroached upon even after the report is tabled in the Assembly?

Q. Why this report has been tabled just before six months ahead of the assembly elections? 

The report neither touches upon any of these questions, nor fixes the accountability. No government spokesperson (including the government agencies) is ready to speak on the subject as well. The story of stolen lakes in Bangalore would also be buried over a period of time.  However, the question that will always be unanswered is that who has actually stolen the lakes in the city of Bangalore. 

By: Ravi Sinha

Elan Group lodges two FIRs against PVR Cinemas for cheating, forgery

Posted on by Track2Realty

News Point: Multiple FIRs registered against PVR Cinemas and its promoters Ajay Bijli, Sanjeev Kumar Bijli, Niharika Bijli and other Directors for cheating and forgery U/s 420, 406 and 120B IPC.

PVR Cinema, Multiplex, Indian real estate news, India property market, Track2media Research, Track2Realty, Akshaya Homes, South Indian property marketThe Gurugram Police has registered FIR under section 420, 406, 120B of IPC and other sections against Ajay Bijli, his brother Sanjeev Kumar Bijli, daughter Niharika Bijli along with PVR Limited and Eight persons including Renuka Ramnath, Amit Burman, Vikram Bakshi and others.

The FIR got registered for their alleged involvements in fraudulently inflating the share prices and selling the same for an exorbitant price of INR 820 crores.

The case came to light when the complainant Elan Group lodged a complaint in the court, which then directed the local police on 17.11.2017 to register an FIR agains Ajay Bijli, (Chairman and Managing Director, PVR Ltd.)  and directors of PVR namely Niharika Bijli, Sanjeev Kumar Bijli, Renuka Ramnath, (Founder, MD and CEO Multiples Alternate Asset Management) Amit Burman (CEO, Dabar Foods), Vishal Kashyap, (Managing Director and Co-head Warbug Pricus LLC) Sanjay Vohra, Sanjay Khanna, Vikram Bakshi ( Managing Director, Connaught Plaza Restaurants Pvt. Ltd. McDonald’s India (North & East) and Chairman, Ascot Hotels and Resort Pvt Limited), PVR CEO Kamal Gyanchandani, and PVR CFO Nitin Sood.

PVR Limited, which was approximately operating with 400 screens started showcasing that they were going to have 1000 screens by the Year 2018. PVR entered into MOUs with builders of commercial space and Ajay Bijli made sensational statements to the press that PVR was in the process of achieving its target of 1000 cinema screens by the year 2018, thereby inflating the share prices of PVR based on false statements.

Projections of anticipated business and profits had been made by PVR on the basis of Contracts/Memorandum Of Understandings (MoU) by contending that the real estate projects relating to which the agreements had been entered into work in the offing and all these contracts would translate into actual business for PVR.

Once PVR sold its 14 % stakes (by overpricing) to Warbur Pincus (a U.S. based fund), PVR fraudulently/malafidely tried to  terminate the MOU. Upon investigations made by the complainant, the complainant found that the accused PVR never had any intention of taking on lease the multiplex proposed to be developed in terms of the aforesaid MOU.

The complainant found that the accused had hatched a well-planned conspiracy with the malafide intent to allure investors so as to increase the share value & worth of the accused PVR in Global Market. Once the shares of PVR were sold, they dumped the Contracts/Memorandum Of Understandings (MoU) and fraudulently tried to terminate it.

Two FIR’s (FIR No 630 and 631 both dated 22.11.2017) which was lodged at the Sushant Lok I Police Station, Gurgaon alleges that the above named accused in connivance with each other had fraudulently planned and sold stocks at high price and duped lots of builders.

The complainant alleges that he then approached Ajay Bijli and other Directors, who openly proclaimed and boasted that they were extremely well-connected. It was openly stated by them that no one would dare to initiate any action against them.

The complainant then filed complaints with various departments and police, but no action was taken against them. The complainant then, filed petition in court which in turn directed the police station to register FIR against the accused persons.

Now that the FIR has been lodged, the police are on lookout for the accused for arrest. The Complainants stated that the accused right from the beginning had dishonest intent and in order to cause wrongful gain to themselves and wrongful loss to us.

Elan Group alleges that the accused has illegally terminated the MOU on vague and baseless reasons. The entire game plan of PVR and its promoters was to earn illicit profits at their cost. The complainants are also moving to SEBI (Security Exchange Board of India) for highlighting the alleged frauds of accused.

Homebuyers must know budget & needs

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: If a homebuyer is conscious of budget and knows the needs, one would never fall into the trap of builder’s marketing gimmicks.

Homebuyers, Happy Homebuyers, Buyers as brand ambassadors, Happy home owners, NRIs, Family in new house, India real estate news, Indian property market, Best news magazine on real estateThe builder offered her everything, right from swimming pool to club and gym to free Wi-Fi; amenities that could have been dream for a school teacher like Anuradha Sengupta. The sales guys then persuaded her to stretch the budget far more to get the quality of life that only a few privileged ones can afford. And she landed up in the fancy trap that was so beautifully laid out. One year down the line she feels in the absence of any homebuyer education in India, even a school teacher fell prey to temptations.

“I am like paying for a fancy trap. To meet the expenses of EMIs is unbearable and don’t know when the apartment will be ready. I made the mistake of not differentiating between wants & needs. Paying so high EMI for the kind of facilities that I will hardly get time to avail makes no sense. But while making the deal with the builder the audio-visual presentation was too tempting to resist,” says Anuradha.

Analysts therefore recommend that the average homebuyers must know their budget and needs to avoid the builders’ fancy traps. What you may want does not necessarily fit into your budget segment and the quest to have something more is endless. The smart builders do understand this temptation of gullible homebuyers and in the absence of homebuyers’ education in this part of the world their temptation is what sells the fancy marketing offerings of the developers.

With the reasonable expectation of a roof over the head not very long ago, the real estate boom in this part of the world has scaled up the liberty of choice for the average homebuyers. While the aspirations of even the middle and lower middle income with moderate budget have gone up, there are very many residential projects launched in recent times that seem to fill the gap with the promise of hi-tech amenities, luxurious lifestyle, lush green surroundings within the range of Rs. 30-70 lakhs.

However, amidst this problem of plenty one also goes through all those anxiety pangs that normally come while mulling over the decision of buying a home. In the euphoria of buying a house most of the first-time buyers overlook their wants and needs and make mistakes. This is where a house hunting checklist comes into the picture. If you create a checklist of the things you need in a home as well as other things worth looking at along the way, you will have a much easier time with the house hunting process. The first step, however, is to keep in mind the budget and then look for what best is available in the given budget.

Legal experts point out that the legal and practical checklist remains the same whether one is opting for a house worth Rs. 30 lakhs, 50 lakhs or 70 lakhs. However, the value addition that is on offer goes up with more budget in hand. Location, size, construction, amenities and outdoors are some of the parameters to consider when the buyer shells out 50 lakhs or 70 lakhs for the house.

Developers nevertheless have their own version of defining the demand. Nikhil Hawelia, Managing Director of Hawelia Group says there is nothing wrong for a low-ticket buyer to expect the quality experience. According to him, instead of compromising on the quality of amenities that the modern homebuyers want (and often also need) the budget segment should be determined by the distance from the main city and the work place. If one is ready to travel an hour or so for getting a luxurious feel at home, the market should be ready to respond to this set of buyers as well.

“I believe in today’s market place where most of the young buyers are aspirational, even when they have budget constraints, their budget should be a criterion only for location and the size of the apartment. They should not be devoid of modern amenities and that is how a new emerging segment of affordable luxury can meet the market expectations as well during the slowdown. This is how urbanization has evolved the across the world,” says Hawelia.

The final choice nevertheless rests with the homebuyers that what are their expectations within the budget that they have. More importantly, they should know the difference between the wants and needs. They should also be conscious of the fact that whether they want to go for a modern living on the periphery of the city or would prefer to live close to the city with less fancy offerings. Whatever be the choice, they must get their checklist in place before house hunt begins.

The catchword here is not to get lured by fancy international picture and remain realistic with the expectations. Expecting luxuries like the golf course is fraught with danger keeping in mind the ground realities where affordable housing project is always a challenge for the developer too. Developers should also be conscious of their offerings. There is no point offering free Wi-Fi zone with a Rs. 30 lakh apartment, as majority of the homebuyers may not be having a laptop at home.

If the budget is Rs 30 lakhs and one is moving from a rented flat to his own, one should look at the location and distance from the work place. Since most of such projects are on the periphery of the city, one must also look for the infrastructure within the project. A buyer can be a bit fancy if he has a budget of Rs. 50 lakhs expecting the size of the bedroom & drawing room to be a bit bigger and facilities like car parking being provided. A difference of 10-15 per cent can be expected if the buyer is looking for a project nearer to the city. With the budget of Rs. 70 lakhs, however, one can expect to elevate the level of living with far better architecture and amenities, like garden & play area, swimming pools, club, modular kitchen and full power back-up.

Liberty of choice might be scaling up across the budget segment of housing today due to cut-throat competition in the housing, but the unrealistic expectations might land up the homebuyer into financial trap as well. Homebuyers should be conscious of the budget and the wish list to evaluate what they want and what they need.

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