Housing Sales Dip in 2014; Realtors Eye Turnaround in New Year

Mumbai/New Delhi: After a sluggish 2014 marked with falling housing sales and high costs, developers are betting on lower borrowing costs and a turnaround in the real estate market in the new year.

Developers were hopeful that property market, which has been witnessing demand slowdown since last few years, would be back on track in second half of 2014 on improved sentiments after the new government came to power but that did not happen and rather housing sales were slow even during festive season.

In commercial real estate, leasing of office space was higher although the activities were subdued in retail segment. Rentals remained stable during the entire year.

Like 2013, cash-starved developers faced the problems of huge unsold housing stocks and buyers' protest against delay of up to 6-7 years in delivering projects, forcing them to focus on completion of projects instead of launching new ones.

Effort by developers to boost demand by offering discounts and relaxing payments schedules did not help as home buyers kept waiting for correction in prices and interest rates.

Amid these negativities, some positive announcements came from the new government in form of approval for Real Estate Investment Trusts (REITs), relaxation in rules for foreign direct investment (FDI) and setting up of 100 Smart Cities.

These did not have an immediate impact on the market, but realty firms and property experts believe that the interest of global investors would revive in the sluggish property market with these two measures.

The year also witnessed some big-ticket property deals and increased investor interest in realty portals.

While in the beginning of the year realty major DLF sold luxury hospitality chain Amanresorts for Rs 2,200 crore, the Sahara group sold 185 acre land in Gurgaon to M3M India for over Rs 1,200 crore this month.

Private equity (PE) investment in the realty jumped more than two-fold to Rs 8,900 crore in January-September period and the figure is likely to cross Rs 12,000 crore by year-end.

"This year was challenging. It was worst in five years in terms of sales," CREDAI, the apex realtors' body, chairman Lalit Kumar Jain said.

He noted that the realty market would be better next year in terms of sales, if interest rates go down and the government brings reforms like single-window clearance, online approvals for projects, lower taxes and permission for building more area on a land parcel.

Property consultant JLL India chairman and country head Anuj Puri also said, "2015 will definitely be a good year for the real estate sector...as borrowing rates are sure to go down from the current levels".

"...with property prices staying stable and good deals being offered by developers in order to clear their inventory, fence-sitting buyers be further encouraged to press the 'buy' button," he observed.

According to JLL, housing sales are estimated to have declined to 1.75 lakh units this year in primary markets of top seven cities from nearly 2 lakh units.

Developers are sitting on close to 30 months of unsold inventory in the mid-to-high-end segment.

Net absorption of office space is estimated to cross 30 million sq ft in 2014 as compared with 23 million sq ft last year, according to Cushman & Wakefield.

Along with poor housing sales, realty sector this year witnessed adverse court judgments and regulatory orders against some developers including DLF, the country's largest realty firm.

In April, Allahabad High Court had ordered to demolish realty firm Supertech's two 40-storey towers in a Noida housing project. The two towers, Apex and Ceyane have a combined 857 apartments, of which about 600 flats were sold.

Next month, the Competition Appellate Tribunal (COMPAT) upheld Rs 630 crore penalty imposed on realty major DLF by the Competition Commission of India (CCI) for unfair business practises.

To Know More Visit  Housing Sales Dip in 2014; Realtors Eye Turnaround in New Year

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.

Does Maharashtra govt’s decision to grade developers give power to buyers?

Looking for homes? Here are your options!

In November 2014, the Maharashtra Government announced their intention of introducing a rating system for developers in the state. Till date several private agencies such as CRISIL and ICRA, grade developers and provide ratings to them. By and large this entire exercise was for the developers’ benefit. While it gave buyers some parameters to check the credibility of the developers, it hardly gave any solutions to the buyers’ issues.

Now, the rating system proposed by the Maharashtra Government would require the developers to divulge the source of their funding and the rate of completion of each of their projects. While the developer community is firmly opposing this move, buyers and even real estate agents seem to be happy.

“Any system that makes matters more transparent for the buyer would be encouraged as it will give them more information. I do not see any reason why developers should not share information with the buyer that should ideally be available on the public domain,” says Indrani Malkani, founder trustee and secretary, Malabar Hill Resident’s Association.

So, what are the issues that Malkani feels should get addressed with this Act? “To begin with, delayed projects are a major issue in real estate today. Ensuring timely possession is something every buyer would look forward to. Other than that, there are several issues such as the maintenance of flats post delivery, availability of parking/garage space, etc that buyers would like addressed. Delaying of re-developed projects is also a major concern,” adds Malkani.

Know More About  Does Maharashtra govt’s decision to grade developers give power to buyers?

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.

Google's Online Shopping Fest: Rs 130 Cr Bookings for Tata Housing

Mumbai: Realty player Tata Housing received booking orders worth Rs 130 crore against 200 units in the three-day Google Online Shopping Festival (GOSF) held earlier this month.

The number of units booked this time during the GOSF event saw a four-time jump over the previous year's sale, the company said.

"For both luxury and affordable segments, the total booking order is around Rs 130 crore," it said.

A host of other developers like Purvankara, Mahindra Lifespaces and HDFC Realty, among others, had participated in the GOSF, wherein a buyer books a property by paying an initial booking amount.

The participating developers had also launched exclusive offers as part of the GOSF, like Tata offering units in an affordable housing project in a distant suburb of the financial capital.

The 200 units sold as part of the GOSF 2014 include both affordable as well as premium ones, the statement said, adding that the list of bookings also includes apartments worth more than Rs 3 crore.

During the GOSF's 2013 edition, 40 per cent of apartments were bought by people from Tier-II cities while NRIs or non-resident Indians accounted for more than 30 per cent of the 50 units sold.

Know More About  MCHITHANE

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.

Easier Land Acquisition to Boost Affordable Housing: Industry

Mumbai: The real estate industry has welcomed the Cabinet's decision to amend the Land Acquisition Act, saying it will boost construction of affordable housing.

The Ordinance makes significant changes in the Land Acquisition Act including removal of the consent clause for acquiring land for affordable housing and four other areas.

"The amendments will have a positive impact.... We are hopeful of the new norms easing off the inordinate delays seen so far in the land acquisition process for large-scale infrastructure and affordable housing projects," CBRE South Asia chairman and managing director Anshuman Magazine said.

"Acquisition of land is a major hurdle for developers.... projects can be executed faster and cost escalation can be controlled (with the amendments)," Tata Housing managing director and CEO Brotin Banerjee said.

Hiranandani Constructions managing director Niranjan Hiranandani said this will allow "fast track process" for various sectors including housing for poor.

Mr Magazine said the amendments can also bring in more segments of organised real estate within the ambit of such faster processing norms, which would be beneficial for construction activity across the country.

"The step will remove roadblocks and will help developers get faster approvals....farmers will get better deal for their land as the new rules will apply even to land acquired under 13 other acts like railway act, national highway act... provisions will now be uniform on the compensation aspect," Chintels India managing director Prashant Solomon said.

Parsvnath Developers chairman Pradeep Jain said, "Exempting industrial corridors from the consent clause would boost the commercial as well as other realty segments along such corridors. This is a welcome move."

 Know More About  MCHITHANE

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.

Developers fear January ready reckoner hike

Expect more stamp duty and registration charges for property transactions in 2015. Developers expect ready reckoner rates to go up from 5% to 40% in January, though an official announcement will come only in the first week of 2015. They feel the hike may prove a dampener for the industry as they are already paying up to 33% income tax on a difference between the agreement value and the ready reckoner (RR) value.

The RR is the base rate of property which determines stamp duty and registration charge collected by the government. 

Devang Trivedi of the Progressive group said the state was planning to increase the RR in areas, between 5% to 40%. "Builders are not opposed to stamp duty . But they as well as their buyers or investors have to pay income tax of 33% each on the difference between actual agreement and RR rate. For a Rs 1-crore property ,a tax of about Rs 7 lakh each has to be paid by the developer and buyer, besides stamp duty ," he said. Developers said such transactions mostly affect schemes in Navi Mumbai, Thane, Kalyan-Dombivli etc. 

Vinod Sampat, president of the Registration Fee and Stamp Duty Payers' Association expected the RR hike to be between 20% and 25%. "Whatever the situation in the real estate sector, I don't think the government will consider a major reduction, rollback or postponement as it is the second biggest source of revenue," he said. 

The state government had increased RR rates by up to 20% in municipal corporation areas of Pune, Thane, Navi Mumbai and Mumbai from January 1. But it was withdrawn partially following pressure from the builders' lobby . Developers fear this year the government might reintroduce the partial rollback. "If this happens, RR for schemes with swimming pools and other luxurious facilities will go up. This will make the deal costlier for buyers," said developers.

To Know More About  MCHITHANE

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.

Housing sector could turnaround in 2015 with boost of FDI

The year 2015 may well turn out to be that of turnaround for the sagging real estate sector with global investors showing renewed interest. Industry sources as well as bankers believe that the spike in foreign direct investment (FDI) in the real estate after the government relaxed regulations in October this year could change the overall scenario and help companies with huge debt.

The easing of interest rates expected next year is also likely to spur demand and help reduce the soaring inventories, both in residential as well as commercial segments. What's more, new rules for Real Estate Investment Trusts (REITs) are also expected to improve liquidity for developers by offloading their income yielding assets.

Deepak Parekh, chairman, HDFC Ltd, told dna, "The glut in the commercial property segment will continue but the residential property market may see an encouraging growth with the flat of Rs 45 to Rs 1 crore getting sold faster than they did this year with the economy expected to pick up. FDI in the sector will also bring in more capital."

The change in the FDI rules has already begun rewriting the script. For instance, the Singapore-based wealth fund GIC with over $100 billion of assets under management recently announced its plans to buy a controlling stake in Mumbai-based real estate firm Nirlon for around $200 million. Earlier this month, GIC had entered into a joint venture with Indian firm Vatika Group to develop two residential projects in Delhi's suburbs.

"GIC is confident of India's growth potential over the long term,"Loh Wai Keon, co-head Asia at GIC Real Estate, had said in a statement.

Under the new rules, the minimum built-up area for projects in which foreign investment is allowed will be reduced to 20,000 square metres from the earlier 50,000. For serviced plots, there is no minimum land requirement now compared to 10 hectares earlier, while the minimum capital investment by foreign companies has been cut from $5 million to $10 million. Under the earlier rules, the government allowed 100% FDI in real estate development but with strict riders, including a lock-in period of three years during which the investment cannot be repatriated.

Inventory build-up in the sector has been a major concern. According to Liases Foras Data, home sales in the top six cities saw a 25% fall in September 2014 quarter compared to the preceding quarter recording the lowest sales since 2009. The inventory level which has been a major concern also rose to 8,15,000 apartments from 7,65,000 apartments in the first quarter ended June 30 2014. Chennai and Bengaluru witnessed the maximum hit on home sales.

Know More About   Housing sector could turnaround in 2015 with boost of FDI

About Us

MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.

Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.