Unsold stocks increase by 17%

The property market is going through a tough phase and as a result, the unsold apartments inventory has increased by 17% this year, says Liases Foras, Mumbai-based property research firm.

Liases Foras released its annual property research report on Monday. According to the annual property research report released by Liases Foras, in Mumbai and Delhi together, there are five lakh unsold houses.

"While in comparison to previous year, sales have increased this year by 9%. The sentiment is still muted across the eight tier I cities . Ahmedabad, Hyderabad and Kolkata showed improvement in sales, with growth more than 20%, while Pune, Chennai, and Bangalore witnessed decline in sales by 8%, 4% and 3%, respectively. Due to the prevailing uncertainty in the market, buyers chose to exercise caution for this quarter as well," said Pankaj Kapoor, managing director at Liases Foras.

Kapoor added that, this quarter witnessed a shift in preference of buyers towards units priced above Rs50 lacs. "All the eight major metro cities cumulatively sold highest number of units costing in the range of Rs50 lakh to Rs1 crore, with sales of 26.4mn sq.ft. (33%). Whereas, the affordable segment saw a decline in their market share from 10% in the previous quarter to 8% in first quarter of 2016-17. There was, however, a rise of 17% in unsold stocks across tier I cities. Although, on a quarterly basis, the growth in unsold stock was only 2%. The increase is attributable to existing stock as this quarter's new launches have dropped significantly," remarked Kapoor.

The survey further stated the the climb in weighted average price by 4% year over year (YoY) to Rs6,660 per sq.ft with major increase reported in Ahmedabad, Chennai and Hyderabad. While, weighted average price level in Mumbai metropolitan region was stagnant, annual decline of 3% to 4% was reported in Delhi and Pune.

While, new launches during the quarter dropped by 35% to 54.0 mn sqft, 34% and 33% of new launches were observed in the price brackets of Rs50 Lakh to Rs1 Cr and Rs25 Lakh to Rs50 Lakh, respectively.

Hyderabad saw maximum launches in the the luxury segment from Rs1 crore to Rs2 crore, as compared with Rs50 Lakh to Rs1 Cr cost bracket from last year. On the other hand, Pune saw most launches in the affordable segment (less than Rs25 lacs) as against Rs50 Lakh to Rs1 Cr cost bracket from last year.

This suggests that developers were now focusing on offloading the existing units rather than adding more supply, due to massive volume of unsold stocks. Also, it can be said that, due to uncertainty revolving around the applicability of Real Estate Regulatory Act (RERA), developers have adopted a wait-and-watch strategy," said Kapoor.

The housing industry observer said, besides the housing regulatory, the local corporation in mumbai was undergoing approval process of the proposed development plan (DP). "There are major changes in the reservations that will massively impact the housing sector. A large tract of no-development zones are going to open for residential and commercial development. Moreover, there will be addition and deletion of the imposed reservation. Therefore, developers had taken the stand to wait till the new DP is approved," said the observer.

Anand Gupta, president of the Builders Association of India (BAI) said it was true that the market is slow but sales were steady in affordable segments. "A lot of policy changes are being undertaken at the government front, so we move further when there is clarity on it, after which, umpteen projects will be undertaken," added Gupta. While, talking on the increase in unsold stocks, he said the number was high because under-construction units were also added while counting.

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NGT slaps Rs 10 lakh fine on NBCC

The green panel slammed NBCC and its officers for release of pollutants into ambient air while carrying out construction work.

NEW DELHI: The National Green Tribunal on Tuesday cracked the whip on state-run National Buildings Construction Corporation (NBCC) for causing air pollution and environmental degradation while carrying out redevelopment of East Kidwai Nagar in southwest Delhi.

The green panel slammed NBCC and its officers for release of pollutants into ambient air while carrying out construction work and causing "nuisance" on the roads in the sensitive area where two biggest hospitals -- All India Institute of Medical Sciences and Safdarjung hospital are located.

"It is evident that NBCC and its officers have failed to take appropriate precautionary measures and steps, thus, violating the 'Precautionary Principle'. Further, they have committed repeated violation and defaults of the orders of the Tribunal, thus, rendering themselves liable for payment of environmental compensation in terms of Section 15 and 16 of the National Green Tribunal Act, 2010 on the principle of 'Polluter Pays'.

"NBCC is held liable to pay environmental compensation of Rs 10 lakhs for the persistent defaults and violations of the rules and directions issued by the Tribunal," a bench headed by NGT Chairperson Justice Swatanter Kumar said while directing the company to deposit the amount within two weeks.

The tribunal made it clear that the amount would be paid to the Delhi Pollution Control Committee which shall use it for restoration of environment in the adjoining areas.

"It is expected of such a company to maintain higher standards of social corporate responsibility rather than be instrumental in causing air pollution and health hazards

"NBCC is hereby warned that in the event of any default in future, the Tribunal would be compelled to direct penal action against the company and its officers responsible for its business in terms of the provisions of the NGT Act, 2010, besides other actions in accordance with law," the bench said.

The directions came while hearing a plea by South Delhi resident K S Gahunia who has alleged that NBCC, the project proponent, in the garb of redevelopment is destroying roads and "illegally" erecting barricades on the roads.

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Three Navi Mumbai corporators disqualified over illegal constructions

The action against—Navin Gavate, Aparna Gavate and Deepa Rajesh Gavate—was taken under Section 10(1 D A) of Maharashtra Municipal Corporations Act.

NAVI MUMBAI: In a first, three corporators from the Navi Mumbai civic corporation were disqualified by the civic chief on Tuesday for "engaging and promoting unauthorized constructions" in Digha.

The action against—Navin Gavate, Aparna Gavate and Deepa Rajesh Gavate—was taken under Section 10(1 D A) of Maharashtra Municipal Corporations Act.

All the three corporators were found to have played an "active role" in carrying out illegal constructions in Digha, said an official.

RTI activist Rajiv Mishra, who had sought the disqualification of corporators on September 3, 2015, said that as many as five buildings had been illegally constructed by the trio.

"I had furnished proof for two buildings constructed by Gavates. But after a survey undertaken on the Bombay high court's direction, illegalities in three more buildings were discovered. The three were associated with developers MK Gavate and Sons, a private company. They had forged documents like the commencement certificate from the Navi Mumbai civic corporation as well as the 7/12 extract," said Mishra.

The decision by the civic chief, Tukaram Mundhe, is said to be a warning to public representatives against engaging in illegal activities, said an activist. "It is commendable that the commissioner has acted. This will ensure that no one considers them to be above the law. This will also put an end to illegal constructions," said Shiv Sena leader and former civic chief Vijay Nahata.

Aparna Gavate said, "We will pursue the matter in the high court and seek a stay on the order and defend ourselves." The disqualification may not affect the NCP's overall strength in the corporation.

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Real estate firms stare at dull June quarter results

Limited launches and a slow pick-up in demand, despite a marginal price correction in a few markets, may result in muted sales for real estate companies

Analysts are hopeful that the property market may recover in the second half of this fiscal year on the back of lower home loan rates. Photo: Pradeep Gaur/Mint

Mumbai: India’s largest real estate companies are likely to see muted sales and profit growth in the quarter ended 30 June owing to limited new launches and a slow pickup in demand, despite a marginal price correction in a few markets.

Analysts are hopeful that the property market may recover in the second half of this fiscal year on the back of lower home loan rates and other measures introduced by the government such as implementing the Real Estate (Regulation and Development) Act and amending real estate investment trust norms. So far this year, the BSE Realty Index has gained 21% compared with a 7.5% rise for the Sensex.

“Historically, it is a slow quarter. NCR (National Capital Region) market is not doing well at all. Hence, this will reflect in the sales of DLF as well,” said Samar Sarda, lead analyst (real estate), Kotak Institutional Equities, a brokerage firm.

Home sales in NCR, the country’s largest property market, continued to decline while sales in Mumbai picked up in a few areas. While demand for mid-income houses continued to grow, sales of homes priced above Rs.1 crore are yet to pick up even in markets like Bengaluru and Pune.

“Enquiries are … not being translated into actual purchases. However, commercial continues to do well,” said Adhidev Chattopadhyay, real estate analyst, Elara Capital Ltd.

Despite weak performance in the residential segment, commercial real estate continued to be the bright spot as leasing activity for offices, particularly in Bengaluru, grew year-on-year. But that is not enough to salvage the June quarter financials.

According to a report by brokerage firm HDFC Securities Ltd, aggregate sales of the top six listed companies, including DLF Ltd, Oberoi Realty Ltd, Bengaluru-based companies Prestige Estates Projects Ltd, Sobha Ltd and Brigade Enterprises Ltd, and Pune-based Kolte-Patil Developers Ltd, is likely to decline by 3.2% in the June quarter compared with a year ago. Aggregate profit is expected to fall by 9.1%.

“New launches have come down significantly as developers are focusing on monetizing existing unsold inventory. Inventory (has) come down to 42 months (six-quarter low). Prices are muted with 10-15% discount offers which have helped in a volume uptick,” the report said.

DLF may see a marginal increase of 0.3% from a year ago in its June quarter net sales to Rs.2,240.7 crore, a Mint poll of five brokerage firms said. Net profit is estimated to rise 14.7% to Rs.139 crore mainly owing to a rise in rental income, particularly from its newly launched Mall of India at Noida.

The company is currently in the process of selling 40% stake in its commercial property arm, DLF Cyber City Developers Ltd, to institutional investors to raise aboutRs.12,000 crore. This is expected to help reduce its net debt, which currently stands at around Rs.22,202 crore.

Mumbai-based Oberoi Realty is expected to fare better because of a pickup in its Esquire project, launched late last year. Analysts forecast a 40% jump in its net sales to Rs.296 crore while its net profit is expected to increase by 19.7% toRs.94 crore.

“Last year, Oberoi Realty saw two big launches after a gap of two years. Sales from Esquire made a big difference in the first quarter as the project started contributing only by the fourth quarter last financial year,” said an analyst with a brokerage firm on condition of anonymity.

Bengaluru-based companies such as Prestige Estates Projects, Sobha and Brigade Enterprises are expected to report marginal decline in volume on yearly basis, mainly due to lack of new launches, even as they have robust annuity portfolio coupled with a strong residential launch pipeline in Bengaluru, according to analysts.

Similarly, sales momentum for Godrej Properties Ltd is likely to remain slow due to limited new launches in the first quarter. During the period, the company launched three towers at its 43 acre township project Godrej Infinity at Pune. The project is jointly developed by Godrej Properties and local builders Oxford Group and Ekta World.

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Psst! don’t look- Mumbai Suburbs are changing….names!

"Take away my good name & Take away my life" - Anonymous

Though clichéd, I cannot resist quoting Shakespeare from Romeo & Juliet here “A rose by any other name would smell as sweet” due to the apt context. But apparently Mumbai builders seem to disagree with the Bard and have launched into a renaming spree while selling properties. Obviously they firmly believe that the so-called “lesser” known locations will benefit from them being herded along with their more “popular” cousins. Yeah! As if calling Dahisar as Upper Borivili will change the property value of a housing project overnight and give it the sheen and polish it was missing till now.

Zero effort “relocation”

Maybe the builder communities can pressurize the respective municipal corporations to change the geographical boundaries of their jurisdictions and probably coerce the local, jurisdiction-bound police stations too to stretch their precincts. Imagine how Borivili’s “poor cousins” Dahisar & Mira Road benefits immensely after this renaming is done with. The Sanjay Gandhi National Park, in all its splendour and glory, not to mention the wildlife, will suddenly come closer to Mira Road. I mean who wouldn’t want their address to read as XYZ Heights, opposite SGNP, Mira Road? That too without any of them gravitating an inch towards each other. 

If the readers are confused about moving to Upper Worli from plain old Lower Parel as the result of a single full page advertisement in the leading newspapers, without any legal agreement, you have the builder fraternity to thank, for this overnight miracle. They have researched extensively and found out that Wadala residents were extremely distraught about their location on the map and decided to move them a little bit to the south of Mumbai. Not literally but at least on the first page full-page ad. And suddenly, New Cuffe Parade was born.

 Developers - Taking buyer’s for granted

Every suburb in Mumbai, Thane & Navi Mumbai has its own share of history and I am sure its residents would be proud of it, without ever feeling the need to “borrow” some from its next-door neighbour. Today’s property buyer is an informed one and certainly has enough “vision” to see the signboards that proclaim the suburb’s name. But the property developers have a single aim while doing so -S ELL PROPERTY and the present lot will “move mountains” in their quest.

Cases of blurring boundaries are on the rise by the day and developers are trying make hay by shifting locations, as seen in #UpperWorli & #UpperBorivli, and in certain cases, making them jump over long distances too, as seen with New Cuffe Parade. At this rate, I am sure Virar will soon become “Super Upper Borivili” and Kalyan/Dombivili will be known as “New Thane”. This senseless renaming has to stop and fortunately we buyers are legally fortified through the Consumer Protection Act, 1986 which takes a strong stand against misrepresentation of facts. If a section of property developers feel that their prospective buyers will buy their bluff, they sure need to reconsider their strategy, if not rename it!

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Motilal Oswal real estate raises Rs 800 crore through third fund

The money, as part of its third real estate fund, has been raised from high networth individuals and family offices.

MUMBAI: Motilal Oswal Real Estate, the private equity real estate fund of Motilal Oswal Group, has raised over Rs 800 crore to invest in residential projects of developers in Mumbai Metropolitan Region, Delhi-National Capital Region, Bengaluru, Pune, Hyderabad and Chennai. 

The money, as part of its third real estate fund, has been raised from high networth individuals and family offices. The fund set up as an alternative investment fund, or AIF category II, will target a gross internal rate of return of 23-25% from its investments. The funds will have a tenure of five years from final close and two extensions of one year each. 

"We achieved first closure of Rs 600 crore for the fund in four months of the launch that was done in November. Given the performance of our second fund, we are witnessing repeat commitments from many existing investors. We are on our way to conclude entire targeted fund raising of Rs 1,000 crore over the next three months," said Sharad Mittal, head, real estate fund, Motilal Oswal Real Estate. 

In March 2015, Motilal Oswal Real Estate had raised Rs 500 crore through its second real estate fund. This fund is fully committed across eight transactions in residential projects in top five markets including MMR, NCR, Pune, Bengaluru and Chennai. The second fund has already returned nearly 30% money to its investors. 

Motilal Oswal's strategy is an extension of its experience with its earlier two funds wherein it invested capital, typically under mezzanine structure, in top five property markets with developers such as ATS, Kolte Patil Developers, Shriram Properties, Rajesh Lifespaces, Skylark and Casa Grande. The new fund will also focus on top six property markets in the country. 

"Over the past few years, real estate investing has become one of our key verticals under the private equity business. We are committed to grow this vertical further. We now manages a total AUM of Rs 2,000 crore under real estate private equity," said Vishal Tulsyan, CEO of Motilal Oswal Private Equity Investment Advisors. 

The first fund worth Rs 200 crore, which Motilal Oswal Real Estate had raised in 2009, has also been fully deployed and is currently in exit mode. The fund has exited its four out of total seven investments from this fund and has returned about 86% of the capital. 

Recently, Motilal Oswal Real Estate exited from its investments in Bengaluru-based Mahaveer Developers' two projects with 30% gross internal rate of return. The fund is in the process of exiting another investment made in a residential project of a Chennai-based developer Casa Grande. 

"We have seen the entire real estate cycle, and have acquired expertise across all investment structures including structured equity, mezzanine and debt funding," said Mittal. The third fund will look at transactions ranging between Rs 50 crore and Rs 150 crore across six property markets in the country. 

Several private equity funds are in the process of raising capital to invest in residential real estate sector given the ongoing consolidation phase. Many of these funds expect prices to remain stagnant for some time, and are offering an opportunity to invest in these projects.

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Mumbai civic body admits to mistakes in revised DP

The civic body has termed them ‘drafting errors’ and decided to correct them and present the draft DP directly the planning committee to be formed to hear suggestions and objections.

MUMBAI: Just a few days before the deadline for citizens to send suggestions/objections to the revised draft Development Plan (DP) 2034, the BMC on Tuesday admitted there were numerous errors — pointing at errors, citizens and activists have been demanding extended extension of the deadline to study the DP further closely.

However, the civic body has termed them 'drafting errors' and decided to correct them and present the draft DP directly the planning committee to be formed to hear suggestions and objections.

An official from BMC's DP department said, "At some places, buffer zones have not been marked along nullahs and rivers. Also there's spillover in the marking of different zones like industrial zones at some places [zones shown larger or smaller]. They are all being corrected now. The other errors include inaccuracies in the width of roads and and their names being missed out. We have suo motu decided to make these corrections and present them before the planning committee." The planning committee would consist of four urban planning experts and three standing committee members.

The BMC will also present before the committee a list of drafting errors in the plan it is finding.

DP department officials said they were cartographic issues and they are yet to know the exact number of errors.

Activist Shyama Kulkarni of AGNI Trustee said it's too late in the day for the civic body to undertake such a corrections. "Are they trying to hoodwink citizens by correcting the errors and calling them drafting errors? On one hand they are not giving extension for citizens to send suggestions/objections, but on the other they themselves are correcting errors," said Kulkarni.

Advocate Godfrey Pimenta of the NGO Watchdog Foundation said, "If the BMC itself is correcting the plan then it should give Mumbaikars more time to give suggestions/objections."

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HC dismisses plea on Ambani's Antilia land deal, fines activist

Bombay High Court on Tuesday dismissed a public interest litigation by a builder cum activist which alleged irregularity in the sale of Wakf land for industrialist Mukesh Ambani’s skyscraper residence Antilia on Altamount Road.

MUMBAI: The Bombay High Court on Tuesday dismissed a public interest litigation by a builder-cum-activist, which alleged irregularity in the sale of Wakf land for industrialist Mukesh Ambani's skyscraper residence on Altamount Road.

A bench of Justice Vidyasagar Kanade and Justice Mahesh Sonak imposed a cost of Rs 50,000 on Shadaab Patel and also Rs 25,000 on advocate Firoz Ansari who filed an intervention plea supporting the PIL. Both have to pay the money to Tata Memorial Hospital towards cancer patients.

Patel's petition said the land was meant for an orphanage but sold by a trust to Ambani in 2002 for barely Rs 21 crore when the actual value was much higher. Ansari contended that Wakf land cannot be sold to anyone except people from the community.

The judges questioned the delay in filing the PIL 14 years after the land was sold. "Why are you challenging it now?'' asked Justice Kanade. Patel's advocate Khan Javed said the Sheikh Committee report came in 2011. The bench said if Patel was a bona fide petitioner, he would have not come to court after such a long time. Asked what the Patel does, his advocate replied, "He is a social activist."

The judges said it has become a trend to file PILs. "Time has come to dismiss such frivolous PILs with heavy cost," said Justice Kanade. The bench initially said it would impose cost of Rs 5 lakh on Patel but reduced it to Rs 50,000.

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Raheja’s plea to contest brother’s Will dismissed

A bench of Justices Abhay Oka and Amjad Sayed dismissed an appeal filed by Purshottam Raheja and upheld a ruling of Justice Roshan Dalvi passed in 2011.

MUMBAI: The Bombay high court appeal bench on Tuesday confirmed that a person who claims to have an interest in the title of a bequeathed property need not be heard by court when it is certifying the genuineness of the will.

A bench of Justices Abhay Oka and Amjad Sayed dismissed an appeal filed by Purshottam Raheja and upheld a ruling of Justice Roshan Dalvi passed in 2011, which had barred his plea to be a caveator and challenge a will left by his brother.

The HC said a claim based on title interest in the property cannot be tested in a probate petition—a petition filed in court to have a will certified as valid and genuine. Purshottam's brother Shrichand Raheja, who was in real estate and other businesses, had died in 2010 and left a will. Purshottam moved the HC with a caveat that he must be heard as a family arrangement had left him a share in the property. The land in Byculla is worth a long legal fight that the brother launched against his sister-in-law Asha Raheja and her children. He also claimed an interest, as a creditor.

Ravi Kadam, counsel for Purshottam, had argued that any slight interest gives rise to a caveatble interest, and to challenge the execution of a Will.

Counsel Pravin Samdani and Sharan Jagtiani, who appeared for the widow and her children, argued that a title claim doesn't give him caveatable interest, besides he was not even a class I heir and other heirs did not object to the Will. "If his claim is accepted, every probate plea will be converted to a suit by a creditor." A suit necessitates a trial, which means further delay in will being declared valid or invalid. Besides, Jagtiani argued that on facts, there was no evidence to back his claim of being a creditor.

The HC said he cannot file a Caveat but must proceed in a separate civil suit.

The HC however, stayed its order for 12 weeks, to enable Purshottam to go in appeal, further to the apex court.

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FIR on Lodha Group for not handing over society to shop-owners

The case has been registered under the Maharashtra Ownership Flat Act (MOFA).

MUMBAI: The Vanrai police in Goregaon on Tuesday registered a case against builder Lodha and four others for illegal use of one lakh square foot area to construct a residential tower, Lodha Fiorenza, in Goregaon (east)

The case has been registered under the Maharashtra Ownership Flat Act (MOFA). The residential tower was constructed next to Hub mall. The builder had used the mall's FSI for constructing the residential tower, the police said. For the last two years, shop owners in the mall have been fighting the builder for formation of society and getting the conveyance deed.

"The case was registered based on an application filed two months ago by the mall occupants. After carrying out an inquiry, the FIR was filed against Lodha, Deshbandu Gupta, Khushiram Gupta and Nilesh Gupta. The builder failed to form the society, did not issue the conveyance deed and extra FSI meant for the mall was used illegally for constructing the residential tower," said Mumbai police spokesperson, DCP Ashok Dudhe.

An official spokesperson of Lodha Group said, "We have been informed that an FIR has been lodged in Goregaon police station against the Guptas of Lupin Pharma ('erstwhile promoters) and the fourth name is mentioned as 'Lodha' without specifying the company name. We would like to clarify that Lodha group has nothing to do with Hub mall and the mall was developed/sold prior to our taking over of the firm which owns the land."

Mall secretary Prashant Agrawal told TOI that they have been fighting the case since 2005.

But the Lodha spokesperson denied this. "Lodha has never had any commercial dealing/sale with PK Agarwal and hence, is not connected with the matter in any manner. PK Agarwal, who owns Hub mall, has been engaged in litigation for last four years and the Bombay High Court has refused to grant any orders in his favour. Having failed before the Bombay High Court, he has used this money power to lodge a frivolous FIR and create sensationalism. PK Agarwal is not a home buyer but a big businessman who owns a large mall and hence, this is a dispute between two large businesses and Lodha is not concerned with the same. We believe that the filing of this FIR is a gross abuse of the process of law."

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Greens see red as realty lobbies for removal of environment clearance

Activists say that implementing the model building bylaws would mean self-regulation

Realty rules:The State is now framing rules for the Real Estate Regulatory Authority Act, which the realty sector argues, will ensure enforcement of building bylaws.— FILE PHOTo

A possible move to exempt large realty projects from scrutiny for environment clearance by the State-level Environment Impact Assessment Authority (SEIAA) has incensed green activists, who claim that this would virtually mean “self-regulation.”

The realty sector in the city is intensely lobbying with the State government to adopt the model building bylaws recently approved by the Union Cabinet that incorporate green norms in the bylaws. If the State does so, large realty projects will be exempted from scrutiny by SEIAA.

The move has run into virulent opposition from environmentalists, who say self-regulation has never worked in the city. “The biggest violation in the city has been of building bylaws…there is a complete absence of enforcement. The violations are so huge that the government wants to regularise them through Akrama-Sakrama. So if these large projects violate green norms, damaging the fragile ecosystem, will they also be regularised at a later date?” asked water activist Kshitij Urs.

Sridhar Pabbisetty, CEO of Namma Bengaluru Foundation, one of the petitioners in the Agara-Bellandur wetland case, said in that case, even with SEIAA presence, the wetlands were under threat. He opined that a carte blanche would only harm the environment further.

“Decentralisation of such clearances is welcome. But our agencies have been woefully inefficient in enforcement and we cannot risk our environment with them,” he said.

‘Under consideration’

Sources in the Urban Development Department confirmed that adoption of the model building bylaws was being actively being considered. However, sources said that relaxation of environment clearance has to be seen in the context of the Real Estate Regulatory Authority (RERA) Act.

The State government is in the process of framing rules for the Act and setting up the RERA authority that will oversee large projects. This, the realty sector argues, will ensure enforcement of building bylaws.

Meanwhile, R. Nagaraj, president of the Confederation of Real Estate Developers’ Associations of India (CREDAI), Karnataka, said this has been a long-standing demand of CREDAI. He said projects are often stuck for three months or so over environmental clearance and such a move would cut down the red tape.

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