Tag Archives: New property launch

RERA realities & concerns of homebuyers

Posted on by Track2Realty
Track2Realty Exclusive

News Point: As the Real Estate Regulatory Authority (RERA) kick starts across the major property markets of India the homebuyers have many queries & concerns.

Homebuyer Confusion, Confused homebuyer, Homebuyers grievances, Homebuyers' legal options, India real estate news, Indian property market news, Track2Realty“Equal penalty for the delayed project to homebuyers to the extent of what builders charge in the wake of delay in payment is the most welcome beginning with RERA. I believe it creates an equitable justice in the property market and also forces the developers to finish projects on time,” says a jubilant Jayant Shah in Mumbai.

However, Shah is still not clear about many of the RERA compliances, including whether the delayed penalty is applicable to the existing under construction projects or not. And he is not alone to not have full information about the various clauses of RERA. But they are all happy that a welcome beginning has been made.

Rukshana Khan, another homebuyer, is confused to find many ongoing projects without the Occupation Certificate (OC) and the Completion Certificate (CC) still being advertised. She believes the market is still not clear as to what precisely to expect with the new set of rules.

“I was clarified by my property agent that my under construction project need not wait for registration to advertise. They can continue all their activities as usual. However, those projects for which application for registration is not made even by July 31 to the regulatory authority cannot market their projects,” says Rukshana.

Sumer Singh, a trader in Mumbai, has another query. He wants to know whether the regulator can send the homebuyers to jail if he defaults on payment. He feels such reports would deter a homebuyer like him to ever approach the regulator.

“I have read the newspaper reports that the regulator has the powers to penalize the homebuyers also in case of delay in payment. My worry is that such provisions can be grossly interpreted in favour of the developer, even if the consumer defies the regulator’s order due to financial duress,” worries Singh.

Concerned buyers

Whether there would be equal penalty on delays in current under construction projects

Till when the under construction advertisements without OC & CC will continue

Whether the homebuyers can be sent to jail for delay in payment

Whether regulator can force the government agencies to grant approval on time

Industry is nevertheless clear that such apprehensions are just teething problems. Jaxay Shah, President, CREDAI maintains that even though most states have not been able to implement it immediately and are in the process of doing so, yet both consumers and developers need to look at it optimistically. There will be teething problems initially, but as the regulatory mechanism sets in place, we will see a smoother transition into the new administration. For the moment, avoid any hasty conclusions and false assumptions for they will only serve as a hindrance. Engaging and diligently moving towards the common goal of building a professional, accountable, transparent and innovative sector should be the objective of all stakeholders.

“There has been a long standing call for a regulation like RERA, both from the industry as well as the consumers. The purpose of such a regulation would be to build equity amongst the stakeholders, create accountability, promote delivery driven project execution and facilitate financial and administrative transparency. The present RERA requirements fulfill all these needs. Though the compliance burden is heavy, the Act has provided the right impetus on ensuring that all due diligence which any and all consumers may require are fulfilled. This will go a long way in restoring consumer faith in the real estate sector,” says Shah.

That said, the discerning homebuyers in the city are convinced that the RERA will lead to a weak start for Mumbai’s property market. The property registration data ahead of RERA seem to support these apprehensions. Facts speak for themselves. In January-March period this year, there were 14,239 registrations recorded, according to data sourced from Director General of Registrations, Mumbai. This is over 21% fall compared to January-March period of 2016, and again the lowest in six years.

The registrations touched a six-year low for two months in a row in November and December last year. January and February numbers were lower than the levels seen in November and December. Due to year end rush to register properties and also to avoid paying long term capital gains tax, March numbers are traditionally higher. Industry experts say that the weakness in residential real estate market is there because the consumer confidence is yet to be restored. Once RERA restores that confidence the market will bounce back. 

Moving forward, the moot point is whether the builders would decide to postpone their new launches keeping RERA in mind to avoid mid way issues. Within the built environment of real estate it is increasingly being questioned as to whether penalising builders for delays in the projects is justified given they rely on so many external factors. At one point government is coming up with consumer friendly RERA 2017 on the other hand government does not have any system or mechanism to give time bound permission to real estate sector developer, then how government will be successful in implementing the real estate.

Of course, RERA protects the interests of homebuyers and would drive out unscrupulous builders from the realty market. RERA is a landmark legislation that is about to change real estate into a more customer centric industry. It focuses on increasing accountability of the builders and their agents and on boosting buyer confidence. But till the time there is more clarity every stakeholder has own set of apprehensions.  

By: Ravi Sinha

Is location only driver in real estate?

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: In its fixation for ‘location, location & location’ the Indian developers have ignored the basic need of research in launching new projects.

Peninsula Land Celestia Space, Mumbai real estate, India real estate news, Record sale in Indian property, Track2Realty‘Location, Location & Location’ has been the tried and tested format of success in the Indian real estate. It has been the best calling card for the developers. Many even assumed that if the developer has got a piece of land in any of the highly desirable locations, that itself is enough to sell the project.

However, this market optimism led to the downfall of many of the developers. The slowdown just forced them to introspect as to why some other developer in the same market is selling successfully at higher price point while their project is heading nowhere.

The answer to this lies in the single word – research, or rather lack of it. Take the case of a builder who has abandoned housing project in one of the most desirable locations of South Delhi. The said developer had borrowed heavily to buy an 800-sq yard park-facing corner plot in West End for Rs 90 crore three years ago. He was forced to abandon the apartment project and put the plot on the block after failing to find takers.

Analysts point out say the same builder would have sold the apartments even at the drawing board stage had he read the pulse of the market right.

Anish Shah, Director, Amal Realtors, however, believes that in certain locations it is true that land competence itself is enough to sell. He cites the example of Mumbai where the biggest difficulty is to how to get the land. He therefore asserts that anyone claiming to have defined the demand and then launching a project in such locations won’t be true.

“On the outskirts that may sound good but otherwise in Mumbai any developer is ready to pick up any land. With that land then the project is planned keeping in mind what kind of demand will come, whether it will be residential or commercial or IT. But on the outskirts, MMR region or Thane or on the western side beyond Virar, you will have to see what sort of demand will come,” Shah.

Sandeep Ahuja, CEO, Richa Realty is candid on this to admit that the developers have been carried away with land competence. According to him, it has been happening like this for several decades and because of this the developers have landed to this kind of a situation. The developers have not focused much on the research. However, he believes here onwards this is not going to work.

“It may sound fine that in Mumbai you just buy land and make whatever, it will work but it is not going to work. In the same micro market of Mumbai one developer with better product is able to sell out more and reach out to far number of people than a developer who has not focused on the research. The developers have been ignoring it but I think now they won’t be able to ignore it,” says Ahuja.

Many of the developers continue to think that research on what kind of product you should offer is something that is different. But they feel in a developed city what comes first is to identify the land that is the key determinant.

Citing the case of Noida an analyst points out that demand and supply mismatch today is largely because the greed sets in to make the best of location advantage. He points out that  the sizes which are made available in Noida are really large. The buyer in that market is coming because he is not been able to afford anywhere else. In the new areas buyers don’t go out of choice and this is a global phenomenon. Someone goes to Noida because he is not being able to buy it in Gurgaon or Delhi.

The analyst maintains that had the developers in Noida been sizing it right with the help of research on buyers’ needs they would have been able to sell it far more. There is no denying that the developers’ view on land competence added with the perceived demand have got them carried away to launch thirty to forty storied apartments worth crore and that has added to the problem of demand & supply mismatch and inventory overhang.

By: Ravi Sinha