The Maharashtra government, on July 30, 2019, accorded ‘infrastructure status’ to the Mumbai-Pune ultra-fast Hyperloop transport project that seeks to reduce the travel time between the two cities to just 23 minutes. The state cabinet approved a proposal to give infrastructure status to the project, at a meeting in Mumbai. The cabinet also approved the formation of a consortium of DP World FZE and Hyperloop Technologies, as proponents of the original project, according to a statement from the chief minister’s office.

Hyperloop is an ultra-modern, superfast transport project, which is being implemented to link Mumbai and Pune, which are located around 200 kms apart. It will run from BKC in Mumbai to Wakad in Pune, covering a distance of 117.5 kms. The Hyperloop train will run at a speed of 496 kms per hour and cover the distance between the two cities in just 23 minutes, the statement said. At present, the travel time taken by trains between the two cities is three-and-a-half to four hours.

The FDI in the entire project, which will take seven years for completion, is to the tune of Rs 70,000 crores, the statement said. In the first phase, the project will be run on a pilot basis for 11.8 kms in the Pune Metropolitan region, at a cost of Rs 5,000 crores, it added.

Traders' body CAIT on July 25 wrote to Union Consumer Affairs Minister Ram Vilas Paswan seeking action against cricketer M S Dhoni for his endorsement and advertisements promoting realtor Amrapali Group, whose registration has been cancelled by the Supreme Court.

Court-appointed forensic auditors have told the Supreme Court that Amrapali Group had entered into "sham agreements" with Rhiti Sports Management Pvt Ltd (RSMPL), which promotes brand of Indian cricketer Mahendra Singh Dhoni, to "illegally divert" home buyers money.

The forensic audit report accepted by the top court on Tuesday said that Amrapali Sapphire Developers Pvt Ltd had paid Rs 6.52 crore, out of the total amount of Rs 42.22 crore, to RSMPL during 2009-2015.

In a release, the Confederation of All India Traders (CAIT) said that in a communication sent to Paswan it has demanded action against former Indian cricket team captain Dhoni for his endorsement and advertisements promoting Amrapali Group which has been found guilty by the Supreme Court in a decision made a day before.

The CAIT has said that endorsements by Dhoni have "greatly influenced" people to buy flats in Amrapali projects and since the builder is found guilty an accountability also falls on Dhoni.

Asking for a stern action against Dhoni, CAIT Secretary General Praveen Khandelwal also urged Paswan to ensure passage of the Consumer Protection Bill in the current session of Parliament so that people could be saved from misleading and deceptive endorsements and advertisements by celebrities without verifying the facts whether the goods or services they are endorsing are worth of it or not.

On Tuesday, cracking its whip on errant builders for breaching the trust reposed by home buyers, the top court cancelled registration of Amrapali under the real estate law RERA, and ousted it from its prime properties in NCR by nixing the land leases.

The SC, which directed a probe by the ED into alleged money laundering by realtors, provided relief to over 42,000 home buyers of Amrapali Group with the verdict. It directed the state-run National Buildings Construction Corporation to complete stalled projects of the realtor, whose directors Anil Kumar Sharma, Shiv Priya and Ajay Kumar are behind the bars on top court's order.

Amancio Ortega, Europe's richest man and founder of retailer Inditex, had commercial property assets worth nearly 10 billion euros ($11 billion) at the end of 2018, up 11.5% from the previous year according to his investment firm on Wednesday.

Using the huge dividend payouts from Inditex, octogenarian Ortega has made largely debt-free purchases of buildings ranging from prime shopping real estate in London and New York to office buildings in central Madrid.

Most of Ortega's commercial holdings have been consolidated into a company called Pontegadea Inversiones which owns a 50.01 percent stake in Inditex alongside billions of euros in real estate investments.

Pontegadea's annual results showed real estate assets of 9.767 billion euros at the end of 2018.

Earlier this year, Pontegadea completed the purchase of two Seattle office blocks, currently leased to Amazon, in the Spanish fund's biggest ever deal in the United States.

Pontegadea carried out real estate investments to the tune of 416 million euros during 2018 in addition to the purchase of 9.99 percent of Spanish telecommunications infrastructure company Telxius for 378 million euros, Pontegadea said.

Stripping out the Inditex shareholding, Pontegadea's revenues, mostly related to real estate activity, increased 5.2 percent on year in 2018 to 405 million euros.

Inditex announced a 17 percent dividend increase in March.

We look at how infrastructure developments are paving the way for new affordable and luxury real estate developments in north Mumbai.

North Mumbai has seen rapid development in recent years. Infrastructure has played a crucial role, in driving the growth of the real estate sector. The required push from the state government, towards infrastructure development, has resulted in making north Mumbai a hotspot for real estate activities. Enhanced connectivity to different parts of Mumbai, is one of the prime reasons that has led to increased housing demand in locations such as Kandivali, Kurla, Tilak Nagar, Virar and Dahisar in north Mumbai. According to JLL, north Mumbai has about 15 million sq ft of Grade A office space and more companies are choosing to move to this area, which will further strengthen demand in this region. Moreover, planned infrastructure developments, like the Coastal Road connecting Kandivali to Nariman Point, will also boost connectivity to Mumbai, to a great extent and ease traffic, especially on the Western Express Highway.

Improving connectivity and its impact on real estate in north Mumbai

Furthermore, infra projects to improve the connectivity between the eastern and western suburbs, such as the Mumbai Trans-Harbour Link, elevated roads, Dahisar to DN Nagar and Dahisar east to Andheri metro, Mulund-Goregaon Link Road and Colaba-Seepz connectivity, will strengthen the demand for housing in north Mumbai, owing to its location and land price.

It is a proven fact that improvement in transportation infrastructure, has a positive impact on real estate. There is immense optimism in Mumbai’s northern micro-markets that the development of the metro rail, will bring about a transformation and boost the real estate sector. Real estate developers are showing greater interest in projects near the metro routes. Owing to the space crunch in south Mumbai and unavailability of smaller ticket size apartments with sufficient space, home buyers now prefer homes towards north Mumbai.

This region is witnessing an emergence of affordable homes. We may also witness greater interest towards the peripheral micro-markets of the city, from home buyers in the near future.

Regions that are likely to emerge as hotspots for real estate

The proposed sea link between Versova and Virar, implementation of the Metro Line 2 and Mumbai Coastal Road, are making Kandivali an attractive destination for home buyers. It has undergone enormous transformation and development in the last two decades. Being well-connected to Mumbai and with commercial projects coming up, the area assures good returns in the long term. Additionally, Kurla has become a very suitable neighbourhood, for businesses. Considering the ease of living and growing job opportunities, there has been a growing demand for housing in the area. Also, Tilak Nagar and Chembur are witnessing immense growth in demand for housing, owing to improved connectivity to the business hubs through the Santacruz-Chembur Link Road (SCLR) and the Eastern Freeway. The demand is coming from working professionals, who are looking for residential investments.

At a time when most residential firms are shrinking their markets of operations, top office developers in Bengaluru, mostly backed by large global investors, are doing just the opposite. They are pulling out all the stops to build a multi-city portfolio of projects.

These developers, which are well-funded and have a strong multinational client or tenant base, are eyeing new places such as Mumbai, National Capital Region (NCR) and Pune - outside their core markets in southern India.

The Embassy Group, backed by Blackstone Group LP, is set to buy around 39 percent stake of promoters in Mumbai’s Indiabulls Real Estate Ltd (IBREL) for Rs 2,700 crore. One of the largest deals of 2019, it gives Embassy control of IBREL’s assets in Mumbai and NCR and an entry into these markets where it also plans to acquire more assets.

Similarly, Embassy Office Parks - a partnership between Embassy and Blackstone - launched India’s first real estate investment trust (REIT), housing 33 million sq ft of office and hospitality assets. The REIT issue was launched in March and raised Rs 4,750 crore.

“Leading corporate occupiers are often present in multiple cities across India. The top tier developers/owners have been responding to this customer-driven demand and planning a pan-India presence,” said Mike Holland, CEO of Embassy Office Parks REIT. “The real estate market has also been maturing, resulting in fewer, larger developers, many of whom have access to international investment capital. Such global investors will always have an eye on any perceived concentration risk, preferring diversity, and prefer to see large-scale investment potential in order to justify investment returns.” Embassy REIT has the capability to acquire new office assets worth $1.5-2 billion without diluting more equity.

Prestige Group, present in many southern cities, is set to launch its first residential project in Mumbai. But it plans to predominantly build an office portfolio in both Mumbai and NCR. “There is good demand for office space in these markets and the number of developers is limited. We are in discussions to sign up projects in Gurgaon and Mumbai,” said CEO Venkat K. Narayana. “The plan is to enter one location and do multiple projects, and be a developer who can cater to local needs.”

Many of these developers don’t plan to buy expensive land. Instead, they are exploring the joint development route by tying up with landowners and developers that are seeking partners.

Juggy Marwaha, executive managing director at property advisory JLL India, said Bengaluru-based developers have proved their execution capability over the years and know how to deal with multinational tenants. “These developers have displayed financial discipline in building large office portfolios and most of them are backed by strong investors, who want them to de-risk and expand beyond their core geographies. This is the right time to do that,” added Marwaha.

Knight Frank India’s half-yearly report, India Real Estate, in July said the office space market experienced a decade-high volume in supply and transactions between January and June.

Office supply increased by 31 percent year-on-year to 23.9 million sq ft during the period, the highest this decade.

DivyaSree Developers, along with Kotak Realty Fund, has launched the $400 million India Office Assets Fund I, anchored by a unit of sovereign wealth fund Abu Dhabi Investment Authority, to develop and acquire commercial office assets across India.

DivyaSree managing director Bhaskar Raju said that after gathering 15 years of experience in building an office portfolio in the south, they decided to venture into other cities. “We aim to serve 15 percent of the annual (office space) absorption capacity in cities like Mumbai, Pune and NCR and if we are building a portfolio, which will ultimately go for a REIT, then there needs to be across geographies,” Raju said.

In June, Bengaluru’s RMZ Corp. signed an agreement with DB Realty to redevelop Kamalistan Studio in suburban Mumbai into a large office park and is in talks to acquire more projects in the financial capital. It is also close to signing a large deal in Gurugram for another office project.

RMZ co-chairman Raj Menda said the firm is entering Pune, apart from actively building projects in Hyderabad and other southern cities.

The Delhi Metro has commenced trial runs on the Dwarka-Najafgarh corridor, which is scheduled to be opened to passengers by September 2019.

Trial runs on the over 4.2-km-long Dwarka-Najafgarh corridor of the Delhi Metro have started, officials said, on July 16, 2019. “Trial runs have been started on the 4.295-km Dwarka-Najafgarh Metro corridor. The line is targeted for completion by September 2019,” the DMRC said.

Of the three stations in this corridor, Dwarka and Nangli are elevated ones, while Najafgarh station is underground. The DMRC also said that the corridor is being extended by another 1.18 kms till Dhansa Stand and is slated for completion by December 2020. “During the trial runs, the interaction of the metro train with physical infringements (civil structure) will be checked, to ensure that there is no physical blockage during the movement of the train on the track. Signalling trials are expected to begin in the days to come,” the DMRC said.

The Delhi Metro’s total operational network at present stands at over 343 kms, with multiple corridors, and 250 stations, with its footprints in various cities neighbouring Delhi. An average of about 28 lakh commuters use the Delhi Metro every day.

The much-awaited Delhi Development Authority's Housing Scheme 2019 draw is expected to take place on July 23, sources said.

The scheme has received 47,000 applications, with Vasant Kunj being the top choice for a majority and Narela coming in second, sources added.

Launched on March 25, the DDA Housing Scheme was to close on May 10, 2019. The Authority later decided to extend the closing date for registration by a month.

Of the 17,922 flats, Vasant Kunj has 1,286, including 336 three-bedroom ones. Most of the flats on offer are located in Narela, maximum of them being one-bedroom ones (8,164).

The three-bedroom flats are being offered in the range of Rs 1.4 crore to Rs 1.7 crore; two-bedroom flats will cost between Rs 66 lakh and Rs 1.4 crore, and one-bedroom flats are priced between Rs 22.5 lakh to Rs 56.3 lakh.

"The housing draw will be held on July 23. We generally invite a retired judge to oversee the draw and the date depends on his availability," DDA Vice-Chairman Tarun Kapoor told Moneycontrol.

"We have received 47,000 applications so far, across categories. The idea is to be able to sell all the flats and the response has not been bad. Earlier we thought we would only receive applications for Vasant Kunj. While applications for Vasant Kunj have certainly been oversubscribed, people have opted for HIG (high-income group) houses in Narela as a second choice," he said.

"People from LIG (low-income group) category have also selected Narela as their second choice. The number of applications may appear to be small but that is because people have filled choices for various locations. Other than EWS (economically weaker sections), we are hopeful that we will be able to sell all the flats in other categories," he added.

For first-time homebuyers, the Pradhan Mantri Awas Yojana (PMAY) benefit was also available under the Scheme.

The application process this year was done online, with no offline form. This included payment of the fee, uploading of scanned photograph and scanned signature.

The Delhi housing body had empanelled about 13 banks. The registration fee, too, was higher this time, with the maximum being Rs 2 lakh for two and three-bedroom flats. Those applying for one-bedroom LIG and EWS category flats had to shell out Rs 1 lakh and Rs 25,000, respectively.

The registration fee will be refunded to unsuccessful applicants after the draw. "It should not take more than five to 10 days after the draw to refund the amount, but we are targeting five days," Kapoor said.

There is a subprime market in India and it is not retail. It is formed of risky realtors with dodgy credit who got loans from lenders greedy enough to take risks they were not meant to take.

The first possible casualty is Dewan Housing Finance Ltd (DHFL), a large mortgage lender that happened to have lent unwisely to developers.

DHFL now feels it may not be able to survive because no one wants to give it funds. “These developments may raise a significant doubt on the ability of the Company to continue as a going concern," the company said citing financial stress, downgrades besides lack of funding as factors behind its fear. DHFL shares were trading 31% lower at 11:20 am at ₹47.4 a piece. The reason funding has dried up for the housing finance company is that investors are no longer confident of its risk management and lending practices.

There are valuable lessons to learn from this debacle:

Risk is risk

Risk cannot be substituted by anything. Risky loans are in any other form still risky. DHFL’s book was largely loans to developers and the prolonged slowdown in real estate should have made the lender more cautious. But DHFL doesn’t seem to have priced this rising risk appropriately. Hence, its gross bad loans have surged to 2.74% although stressed assets would ideally be as high as 21%.

Pooled risk is still risk

Investors are now realising that the pooled loans DHFL has sold to raise money from banks may not be kosher. DHFL in its results said that there is no documentation in the case of₹20,750 crore worth of loans. It is not clear whether part of these loans were sold or are still on the lender’s books. Brickwork Ratings had downgraded a pooled loan transaction of DHFL to C from BBB last month.

Equity is as equity does

DHFL’s March quarter loss is ₹2223 crore, greater than its market capitalisation that stood at ₹2149.53 crore on Friday. That is now down more as the stock plummeted 10% today. There is worry that the company has not stated the full extent of stress on its books. Then there is the case of missing documentation on its loans. All in all, equity investors are perhaps the hardest hit.

The big short

Non-bank lenders especially those like DHFL believed that they would be able to roll over their short term borrowings endlessly. This emboldened them to get into a risky asset liability mismatches. Now they know better that this condition hinges on trust which is fragile in a slowing economy.

Speed is of essence

There is still a chance for DHFL to survive. The biggest lesson for lenders now seeking to keep DHFL alive through a resolution plan is that they need to move quickly. This is hard given that the company’s lenders comprise of thousands of bond holders apart from banks and mutual fund houses. Building consensus around a resolution plan is a tall ask but DHFL’s survival may depend on it.

Finally, the regulator needs to pull up its socks and begin to examine non-bank lenders more closely. National Housing Bank (NHB) noted that DHFL’s capital adequacy ratio was below regulatory minimum in FY18. Why the regulator did not take any action is bizarre.

The Central government’s The Model Tenancy Act, 2019, the draft of which has been put out for public consultations, is an important piece of legislation that promises to ease the burden on civil courts, unlock rental properties stuck in legal disputes, and prevent future tangles by balancing the interests of tenants and landlords. Young, educated job seekers migrating to large metropolises such as Mumbai, Bengaluru, Delhi and Mumbai often complain of onerous tenancy conditions and obscene sums of money as security deposits that they are asked to fork out to lease accommodation. In some cities, tenants are asked to pay security deposits amounting to 11 months of rent. Also, some house owners routinely breach tenants’ right to privacy by visiting the premises unannounced for sundry repair works. Whimsical rent raises are another problem for tenants, many of whom complain of being squeezed as “captive customers".

It’s not as if landlords have nothing to groan about. Tenants are often accused of “squatting" on the rented premises, or trying to grab the property. “Occupancy is two-thirds ownership," cynics have long said, given the difficulty in ejecting errant tenants who either quit paying rent or cite old rent-freezing rules in refusing to allow even inflation-attuned hikes. It’s little wonder that property has been a matter of much dispute across the country. This has resulted in a distorted market for rental property in many cities, with low supply of earlier-built spaces.

The proposed legislation is a “model law", as land is a state subject and states may or may not adopt these rules. This new law proposes to cap security deposits at two months of rent for residential properties. It also provides for the setting up of a rent authority to be headed by an officer of deputy collector rank. The authority will have a website to host the details of rent agreements. The landlord will be required to give a three-month notice to the tenant before raising the rent. If adopted by Indian states, the law would have them set up rent courts and tribunals, as civil courts will no longer hear lessor-lessee disputes. Further, it intends to impose hefty penalties on squatters. If the law is able to bridge a trust deficit between owners and tenants, it would help turn the tenancy market dynamic. That would be a good thing.

The Narendra Modi government has come out with the much-awaited draft model tenancy law that proposes to establish an independent authority in every state and Union Territory for registration of tenancy agreements and even a separate court to take up all tenancy-related disputes.

The draft model tenancy law has proposed limiting the advance security deposits to two months’ rent and has also suggested heavy penalties for tenants who decide to overstay. Those who do may have to shell out double the rent for two months and even four times.

It must be noted that this is only a model act because since land is a state subject, states have the right to either adopt it or reject it. Also, the laws to be notified by the states will not have a retrospective effect.

The Housing and Urban Affairs Ministry has put the draft law in public domain for stakeholder consultation and will seek Cabinet approval on it later.

These provisions, once implemented by states, could reduce reluctance to rent and enhance the supply of rental homes, making productive use of vacant houses.

Why was a need felt to bring this on

The document notes that the need to introduce the model tenancy law was felt because the existing rent control laws are restricting the growth of rental housing segment and discouraging the landowners from renting out their vacant premises.

Its aim is to balance the interests of landowner and tenant and to create an accountable and transparent environment for renting the premises in disciplined and efficient manner to promote inclusive and sustainable ecosystem to various segments of society including migrants, formal and informal sector workers, professionals, students and urban poor, says the document.

Its intention is also to notify the rules for residential and non-residential premises and further to develop the policies to promote balanced rental housing by developing different options of rental housing like individual units, dormitories, hostels, co-living, co-housing, paying guest and employee housing and outline the roles of various stakeholders in order to ensure housing for all.

It excludes premises owned or promoted by the Centre, state, Union Territory, local authority, government undertaking, enterprise, statutory body or cantonment board. It also excludes premises owned by a company, university or organisation given on rent to its employees as part of service contract or those owned by religious or charitable institutions, any trust registered under the Public Trust Act of the state and those owned by Wakfs registered under the Wakf Act, 1995.

The work cut out for the rent authority

The rent authority after receiving information about tenancy agreement will provide a unique identification number to the parties and upload the details of tenancy agreement on its website compulsorily in local vernacular or state language in the format that has been prescribed in the model law within seven days from date of receipt of tenancy agreement along with the documents.

The rent payable for the unit to be let out will be the amount agreed between the landowner and the tenant as per the terms of the tenancy agreement.

Appointment of the rent authority: The district collector with the approval of the State/UT government can appoint an officer, not below the rank of Deputy Collector, to be the rent authority for the area within his jurisdiction to which this Act applies. The state/UT government may, by notification, constitute such number of Rent Tribunals at such places as may be deemed necessary by it and notify a Rent Tribunal as Principal Rent Tribunal, where more than one Tribunal is constituted.

Only the rent court and no civil court will have the jurisdiction to hear and decide the applications relating to disputes between landowner and tenant and matters connected with it.

The rent court or the rent tribunal will have to try and dispose of the case within 60 days from the date of receipt of the application or appeal. If there is a delay, then the rent court will have to record its reasons in writing for not disposing of the application or appeal within that period.

Rights and duties of landlords and tenants

In case the landowner decides to revise the rent, he would have to give a notice in writing three months before the revised rent becomes due.

Even the security deposit to be paid by the tenant in advance shall be as determined by the agreement and as agreed mutually between ‘the landowner and the tenant’ subject to a maximum of two months’ rent in case of residential property and, minimum of one month’s rent in case of non-residential property. The security deposit shall be refunded to the tenant at the time of taking over vacant possession of the premises, after making due deduction of any liability of the tenant.

The draft rules also state that if the landowner does not accept the rent and other charges payable or refuses to give a receipt, the rent and other charges shall be sent to the landowner by postal money order or any other method as prescribed under the rules consecutively for two months. If the landowner does not accept the rent and other charges within this period, then the tenant may deposit the same with the rent authority. Once the rent has been deposited with the Authority, it can investigate the case and pass an order.

Even in case where the landowner refuses to carry out repairs, the tenant can get the work done and deduct the same from the rent provided that the deduction by tenant from the monthly rent on account of repair of the premises exceeds fifty percent of agreed monthly rent.

Also, if the premises become uninhabitable in the absence of repairs and the landowner refuses to carry out the repairs even after being called upon to do so in writing by the tenant, the tenant can have the right to vacate the premises and handover the possession to landowner after sending him a 15 days’ notice in writing or with the permission of the rent authority.

A landowner or the property manager may enter a premise in accordance with written notice or notice through electronic medium.

No landowner or property manager or tenant either by himself or through any person shall cut-off or withhold any essential supply or service in the premises occupied by the tenant or the landowner. Essential services include supply of water, electricity, piped cooking gas supply, lights in passages, lifts and on staircase, conservancy, parking, communication links and sanitary services etc.

If this is done then on the application from the tenant or the landowner, the rent authority after examining the matter may pass an interim order directing the restoration of supply of essential services immediately pending the inquiry.

This inquiry would have to be completed within one month of filing such an application.

The rent authority may even direct that a penalty be paid to the landowner or tenant if it finds that the application was made frivolously or vexatiously, says the draft.

Repossession of the premises by the landowner

The rent court may, on an application made to it, order for the recovery of possession of the premises on the grounds that the landowner and tenant have failed to agree to the rent payable, that the tenant has not paid the arrears in full of rent payable and other charges for two months, including interest for delayed payment as decided in the tenancy agreement.

No order for eviction of the tenant on account of default of payment of rent shall be passed, if the tenant makes payment to the landowner or deposits with the rent court all arrears of rent including interest within one month of notice being served on him: But this relief will not be available again to the tenant if he defaults in payments of rent consecutively for two months in any one year subsequent to getting relief.

Finance Minister Nirmala Sitharaman on July 5 while presenting Budget 2019 had proposed that several reforms will be taken up for rental housing. A modern tenancy reform will be floated among the states. The FM called out the old rental laws archaic and stated that the government will soon formalise a modern tenancy policy and share it with all states.

Real estate experts say that clear-cut incentives to boost rental housing via a sound policy will positively help the government to further strengthen its Housing for All initiative. “Steps like revising tenancy laws would add more confidence in the housing sector. As per Census 2011, there were 11 million vacant houses that were found locked up. They too can be explored on this front,” said Pankaj Kapoor of Liases Foras.

"The new model tenancy is expected to balance the rights and responsibilities of both landlords and tenants that will make the rental market more efficient and streamlined across the country,” says Megha Maan, Senior Associate Director, Research at Colliers International India.

A national urban rental housing policy had been in the pipeline ever since the Modi government assumed charge in 2014. The first draft was put out in public domain in October 2015 and sought to promote various types of public-private partnerships for promotion of rental housing in the country and making good the growing housing shortage as a result of increasing urbanisation.

The aim of the policy was to bring 11 million vacant unsold houses onto the rental market, to further encourage demand and reduce housing shortage. According to a KPMG report, the rental market in India is currently dominated by two major segments – increased demand from the migrated working class and rising demand-supply gaps in student housing.