Powered by the transition to work-from-home arrangements during the COVID-19 lockdown, the country’s data centre industry became the backbone of the digital economy and ensured a level of business continuity. In such a scenario, Mumbai is expected to see the highest capacity addition as it continues to be the preferred choice for large cloud players because of its infrastructure advantage, a new report has said.

The city accounts for 62 percent of India’s total cloud capacity, followed by Pune and Chennai. Additionally, due to its infrastructural benefits, it continues to command a premium for enterprise demand, followed by Hyderabad and Chennai. Further, the city is expected to witness the highest capacity addition of around 360 MW during 2020-2025, followed by Chennai with a capacity addition of 134 MW, the report said.

India’s data centre capacity is expected to grow from 375 MW in H1 2020 to 1,078 MW by 2025, presenting a 4.9 billion dollars investment opportunity, it said.

According to JLL’s H1 2020 ‘(re) Imagine Data Centres Running India’s Digital Economy’ report, the impact of data protection laws, increased shift from captive to colocation (colo) data cantres and implementation of new technologies like 5G, edge computing and the internet of things (IoT) will drive sustained investor demand for this asset class over the next five years.

India’s data centre industry has provided immense boost to the digital economy during H1 2020. Daily data consumption rose from an average of 270 petabytes (PB) during pre-lockdown period to an average of 308 PB post lockdown period, registering a 14 percent rise.

There was a 12 percent rise in data consumption in Andhra Pradesh and Bihar, while there was a 7 percent increase in data consumption in Maharashtra which is the highest data consumer.

In terms of total capacity addition, there has been an increase of 8 percent in H1 2020, taking India’s total colocation capacity to 375 MW. H1 2020 witnessed a supply addition of 27 MW, which is 56 percent of the total addition seen in 2019 (48 MW). Mumbai continued its lead with addition of 19 MW, followed by Bengaluru at 5 MW and Delhi NCR at 3 MW.

“Mumbai is expected to see the highest capacity addition as it continues to be the preferred choice for large cloud players because of its infrastructure advantage. Chennai is also proving to be an attractive destination due to its advantages of submarine cable landing stations and low development cost,” says Samantak Das, Chief Economist and Head of Research and REIS, JLL India.

In the midst of COVID-19, the Rail Land Development Authority (RLDA) has invited bids from private players to redevelop an area of five lakh square metres at the New Delhi station and another 2.6 lakh square metres surrounding it for commercial purposes. The estimated cost of the entire project is Rs 6,500 crore.

RLDA, an organisation under the Ministry of Railways, said that the project was likely to be completed in around four years.

The objective of the project is to position the New Delhi Railway Station as a multi-model hub through upgradation of the infrastructure and provision of state-of-the-art amenities such as elevated concourse, multi-level car parking and much more to passengers, RLDA said.

The project would be developed on a Design-Build Finance Operate Transfer (DBFOT) model for a concession period of 60 years. The estimated capital expenditure for the project is approximately Rs 6,500 crore and is slated to be completed in around four years, it said.

A Request For Qualification (RFQ) floated by the RLDA pegs the estimated cost of the redevelopment of the station at Rs 4,925 crore. It involves redeveloping the iconic station, road connections through flyovers, relocation of railway offices and buildings and creating social infrastructure.

“New Delhi is the national capital and a nerve centre of political, economic and social activities. New Delhi Railway Station will be transformed into a world-class, one-stop destination for retail, commercial and hospitality business. The development will boost the tourism potential and accentuate real estate as well as investment prospects in New Delhi and surrounding regions,” said Ved Parkash Dudeja, Vice Chairman, RLDA.

The phased redevelopment would involve station redevelopment, development of associated infrastructure, upgradation of social infrastructure as well as refurbishment of railway offices and railway quarters.

The redeveloped station would have separate arrival and departure sections. It would also feature a large concourse along with passenger facilities such as lounges, food courts, retail and rest rooms.

The RFQ, approved by the PPP Appraisal Committee (PPPAC), is slated to open on November 6 which will be followed by a RFP next year.

Indian Railways had entrusted New Delhi railway station to RLDA to redevelop it with state of the art architecture, facilities and public amenities.

This project is to be executed with private sector partnership by leveraging the real estate development potential in the airspace above the station and on land around the station. Key objective of this project is to provide modern passenger services for railway passengers following the PPP model.

The RLDA is currently working on 62 stations in a phased manner, while its subsidiary, the IRSDC, has taken up another 61 stations. In the first phase, the RLDA has prioritised prominent stations like New Delhi, Tirupati, Dehradun, Nellore, and Puducherry for redevelopment. The railway stations across India will be redeveloped on a PPP Model as a part of Smart City Projects launched by the government.

The New Delhi station, the largest and busiest railway station with 4.5 lakh daily footfalls, handled around 400 trains per day before the pandemic struck.

In a bid to boost rental housing, the government will be approving the model tenancy law in the next one month, housing and urban affairs secretary Durga Shanker Mishra said on August 26.

He hoped that the states would pass the legislation over the next one year.

He was speaking at an Assocham webinar on "Housing for All- Affordable and Rental Housing: The Way Forward".

“We are changing the tenancy law… The model tenancy law will be approved in a month by the competent authority. My ministry would ensure that within one year every state passes legislation to implement this model law,” Mishra said.

The secretary said the current tenancy laws in various states were skewed towards safeguarding the interest of tenants.

"We hope that 60-80 per cent of the vacant flats will come into rental market once this law is implemented," he said, adding that the real estate developers could also convert their unsold inventories into rental housing.

The ministry had floated the draft model tenancy law in July 2019. It 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.

On the Affordable Rental Housing Complexes (ARHC) scheme, Mishra said the programme aims to convert lakhs of vacant flats owned by the Centre and states into rental housing for migrant workers at a very cheap rent.

"We want to bring vacant homes owned by the central, state and urban local bodies into this scheme and provide affordable rental housing to migrants/urban poor," he said.

The secretary said the scheme would generate a return of 13 per cent to make it financially viable.

“With the COVID-19 pandemic, we saw an unprecedented reverse migration of labourers, students and industrial workers.  There is a large segment of population who needs a house but perhaps not in the ownership model. A model that allows a worker to live in a reasonable accommodation close to his workplace whether through private sector housing or government sector housing such as JNNURM is the need of the hour,” said Amrit Abhijat, joint secretary, the Ministry of Housing And Urban Affairs.

To make ARHC scheme tax efficient and boost investment in rental housing, Naredco President Niranjan Hiranandani demanded accelerated depreciation and increase in rate of standard deduction and that private players as well as financial institutions be enabled to earn decent return.

Property consultant Anarock's chairman, Anuj Puri, said rental housing offers great opportunity, but to encash that tenancy laws need to be reformed.

Anthony de Sa, chairman, Madhya Pradesh RERA, opined that the RERA structure could be used under another kind of legislation to manage the rental housing sector.

In Mumbai Metropolitan Region (MMR), there was an ambiguity regarding the payment of stamp duty on the past documents of the property. This is in relation with the arbitrary practice followed by the stamp authorities to levy the stamp duty on past documents of any property at the time of registration of its subsequent sale document. However, there was no clear cut provision in law as regards levy of stamp duty retrospectively.

Finally, this age-old practice of collecting stamp duty retrospectively (on resale properties) has been put to rest in a landmark judgment which came as a great sigh of relief to the resale home buyers. The court also wriggled out hefty penalties for anterior instruments that used to be treated as insufficiently stamped or not registered.

The Hon’ble High Court in its recent verdict in Lajwanti G. Godhwani & Anr Vs. Vijay Jindal (Notice of motion (L) No. 1918 of 2018 in the Suit No. 3394 of 2008) held that the antecedent document is merely an accompaniment to trace history of the title of the property and not to effectuate a transfer. While deciding the dispute, Justice Gautam Patel, took an apt stand and held that the stamp duty is attracted by the instrument, not the underlying transaction, and not by the historical narrative in the instrument.

The aforesaid ruling was passed by the court during hearing of a petition involving resale of a posh 3,300 sq. ft. apartment in Tahnee Heights Cooperative Housing Society at Napean Sea Road. A lady named Lajwanti Randhawa had inherited the flat which was originally bought in 1979 and an unregistered agreement was executed on a stamp paper of Rupees 10 back then. The flat was auctioned in the year 2018 which was purchased by Vijay Jindal who approached the sub-registrar office for registration of his sale deed.

The court also observed that even if the instrument was subject to stamp duty, the same has to be at the rate applicable at the time of execution of the instrument and in no case can the same be required to be stamped at the rate applicable at the time of its subsequent sale or current stamp duty rates.

So, effectively, the stamp duty authorities cannot refuse to register the agreement for properties being purchased now under resale, even in cases where the earlier instrument/agreement was unregistered or not properly or insufficiently stamped as per the prevailing rate at the relevant time. It is important to mention that the stamp duty on agreement for sale prior to 10-12-1985 is rupees five only which was further clarified by the Law and Judiciary Department of the Government of Maharashtra in its clarification on 24^th January, 1995.

This is a much awaited and a welcome judgment especially in a time when the real estate industry is at its rock bottom with Mumbai being no exception. This judgment will certainly uplift the sentiments of the buyers and might be a game changer for resale property located especially in South Mumbai where most of the flats/apartments are old with agreement stamped with Rs.5 or Rs.10.

The merger between Indiabulls Real Estate Ltd (IBREL) and Embassy Group, the country’s largest commercial developers, reinforces the consolidation story of the real estate sector that has been panning out over the last few years, real estate experts said.

Bengaluru-based realty firm Embassy Group on August 18 signed an agreement to merge its various housing and commercial projects with IBREL and take control of the merged entity. Embassy Group already has around 14 percent stake in Mumbai-based IBREL and the same will increase to 45 percent after the merger.  The merged entity will have about 30 projects.

“IBREL as well as Embassy group's arm NAM Estates (NAM) and Embassy One Commercial Property Developments (NAM Opco) have entered into definitive merger documentation to amalgamate ongoing, completed and planned residential and commercial projects of these two subsidiaries,” according to a regulatory filing.

"The combined IBREL entity shall become one of India's leading real estate development platforms, with 80.8 million square feet of launched and planned development potential," the filing had said.

Anurag Mathur, CEO, Savills India, told Moneycontrol that the merger of real estate assets between two of India’s largest commercial developers “reinforces the consolidation story that has been panning out over the last few years.”

The amalgamation will lead to expanding India’s office markets and such trend indicates a sign of maturity in the industry. For Blackstone, which is a key investor in Embassy, the merger would further boost its presence in the Indian office market, as it would end up adding a massive chunk of office assets to their already existing portfolio, he added.

Other experts said the merger was on expected lines.

“Intending to focus solely on their financial services, Indiabulls had sought to exit their real estate business in 2019 itself, so this merger was expected,” said Shobhit Agarwal, MD and CEO - ANAROCK Capital.

The Indian real estate sector has been consolidating over the last few years since RERA implementation and the onset of the liquidity crunch. The merger between IBREL and Embassy Group, which is part of this wave, will go on to further strengthen Embassy Group’s real estate portfolio, particularly on the commercial office side, after it launched the country’s first REITs last year, he said.

Will we see more such mergers taking place going forward?

Consolidation is a reality, but mergers between strong players will be very selective and based solely on the value proposition, say experts.

Consolidation of the real estate sector is inevitable.

“One of the by-products of this consolidation-led evolution would be the emergence of well-governed, adequately capitalised, corporate developers. These players will have a multi-city/pan-India footprint and their growth capital will come via public capital markets and investment alliances with opportunistic global investors,” he added.

Mumbai-based Indiabulls Real Estate and Bengaluru-based developer Embassy Property Developments are expected to meet on August 18 to finalise the valuation and swap ratio for their proposed merger, sources told Moneycontrol.

According to the plan, Embassy Group’s real estate assets are to be amalgamated with Indiabulls Real Estate’s 31 million sq ft of assets that are currently under development.

Embassy Group is merging real estate assets spread over 61.9 million sq ft with IBREL.

After the merger, Embassy Group and its chairman Jitu Virwani will be the new promoters of the combined company. Indiabulls Group will finally exit its real estate business and its current promoter Sameer Gehlaut will become a passive shareholder.

In June last year, the promoters of IBREL sold 14 per cent stake through open market transactions to Embassy Group for Rs 950 crore, as part of their strategy to focus on financial services and exit from realty business.

IBREL had in January this year announced its proposal of the merger of certain ongoing, completed and planned residential and commercial projects of Embassy Property Developments with itself.

In a regulatory filing in July this year, IBREL had said it had received the proposal from Embassy detailing their various assets for the merger of Embassy with itself.

"To give effect to the amalgamation, the board-constituted committee of the company is taking required steps including the appointment of merchant bankers, lawyers and valuers to arrive at the swap ratio and definitive agreements, to be placed before the Board for their approval in four weeks from today," the filing had said.

Blackstone Group Lp is a key investor in many of Embassy’s projects. The two operate the country’s first real estate investment trust or Embassy REIT.

The Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has ordered development authorities in the state to furnish property details of all defaulting developers in their jurisdictions within 15 days. These will be passed onto the concerned district magistrates who can then auction the properties to recover homebuyers’ money from defaulting builders against whom recovery certificates have been issued, officials said.

In a virtual meeting held with the chief executive officers and vice-chairpersons of 15 development authorities on Friday, UP-Rera chairman Rajive Kumar asked the authorities to provide a list of all unsold inventories, vacant land, among others details of both completedand under-construction projects of the defaulters.

According to Rera chairman Rajive Kumar, the authority has till date issued nearly 2,000 recovery certificates, and the total amount to be recovered from defaulters is around Rs 600 crore. About 15 percent of the amount against these recovery certificates has been realised and transferred to homebuyers, he added. A recovery certificate is issued after an individual or firm refuses to pay the default amount as ordered by either a court or a quasi-judicial body. The recovery amount is collected the district administration.

UP-Rera has also identified 25 top defaulters in the state and asked them to provide these details by August 17.

“Rera has requested the development authorities under whose jurisdiction the projects or the properties of the defaulting promoters are located to make available the list of unsold inventories, vacant land, unsold FAR (floor area ratio) in all projects of these defaulting promoters,” Kumar said on Saturday.

“The concerned collectors/district magistrates have been requesting us (Rera) to help them in the recovery of the dues by providing them details of the defaulters’ properties that can be auctioned. Paying heed to their request, Rera has proceeded to take further measures in this regard,” he added.

Officials from development authorities including that of Noida, Greater Noida , Yamuna expressway, Lucknow, Ghaziabad, Meerut, Moradabad, Agra, Bareilly, Kanpur, Varanasi, Prayagraj, Gorakhpur, Jhansi and Hapur were present in Friday’s meeting.

These projects include those owned by both the government authorities and private promoters. The authority has sent the names of the promoters and their projects to the concerned development authorities/industrial development authorities and asked them to give details on their current status so that further action can be initiated by Rera.

UP-Rera has also prepared a list of top 10 defaulting promoters on the basis of their non-compliance with the authority’s orders. A total 3,850 orders, including 1,448 refund orders and 2,402 possession orders, and 667 recovery certificates have been issued against these promoters, said the authority.

“We have also issued directions to the 25 top defaulting promoters, including these 10 promoters, to make available all information available to us by August 17, 2020,”said Kumar

From the dawn of independence to today, the Indian real estate sector has come a long way. Yet, the goal of a roof over every Indian's head has never been a more urgent compulsion. As we usher in our 74th year of independence, there is still a long way to go. COVID-19 has highlighted the urgent need for affordable housing – rental or buy – across the country's cities where most migrant workers come to seek a living.

The incumbent government's ‘Housing for All by 2022’ initiative is inching closer to reality. RERA too has made considerable progress.

However, the coronavirus pandemic savagely underscored the absence of affordable rental housing in major cities, resulting in a mass exodus of migrants with no income during the lockdown. The government shifted gears on its flagship scheme and included affordable rental housing in it.

A home for every migrant?

Getting the Cabinet's nod recently, Affordable Rental Housing Complexes (ARHCs) under PMAY (U) is clearly an attempt to bridge the shortfall of affordable homes across Indian cities. A unique initiative, this scheme aims to give the urban poor access to proper affordable rental housing close to their workplaces and reduce dependence on slums, informal settlements and remote peri-urban areas.

All states will be asked to develop such products and encourage private partnerships. The move will not just regularise the rental housing market across the country but also add another asset class for developers to consider.

The ARHC scheme is to be implemented via two models:
- By utilising existing Government-funded vacant homes by converting them into ARHCs under Public-Private Partnership.

- Construction, operation and maintenance of ARHCs by private/ public entities on their own vacant land.

To begin with, the government plans to use about one lakh unused housing units built under the JNNURM and the Rajiv Awas Yojana (RAY) – the previous government’s urban upgrade and housing programmes - to provide rental housing. The monthly rentals for homes under ARHCs are likely to be fixed between Rs 1,000 to Rs 3,000.

To attract private participation, the government has also rolled out special incentives such as use permission, 50% additional FAR/FSI, concessional loans at priority sector lending rates and tax reliefs at par with affordable housing to develop ARHCs on their own available vacant land for 25 years.

However, low yields may be a major deterrent for private participation. While funding for such projects would be at concessional rates, many developers who have bought land at steep prices in the cities earlier on may find the proposition unattractive. Will the government unleash further incentives?

Draft Model Tenancy Act, 2019 – still in limbo

To replace India's archaic 70-years-old rental laws, the government initiated the Draft Model Tenancy Act 2019 last year. The housing and urban affairs ministry is now looking to approach the Cabinet for its approval.

RERA – gaining traction

In more than three years since its implementation, RERA is shaping up into the consumer-empowering force it was envisioned to be. As of July 31, 2020, more than 54,153 real estate projects and 41,583 real estate agents have been registered under RERA across the country. 50,322 complaints have been disposed of by the authorities across various states/UTs, according to data by the Ministry of Housing and Urban Affairs. Out of this, nearly 60 percent of cases were resolved in the last year alone.

According to the latest readings on the Ministry of Housing and Urban Affairs (MoUHA) website:

- About 33 states/Union Territories have notified rules under RERA; One North Eastern State (Nagaland) is under process to notify the rules. Rules in UTs of Ladakh will be notified soon. West Bengal has enacted its own legislation, which has been challenged before Supreme Court and MoHUA has filed its affidavit to annul it.

- Around 30 states/UTs have set up the Real Estate Regulatory Authority (Regular - 25, Interim - 05). Jammu & Kashmir, Meghalaya and Sikkim have notified the rules but yet to establish Authority.

- About 24 states/UTs have set up Real Estate Appellate Tribunal (Regular -16, Interim – 08). (Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Kerala, Lakshadweep, Meghalaya, Mizoram and Sikkim are under process to establish).

- Regulatory authorities of 26 States/UTs have operationalised their websites under the provisions of RERA. (Arunachal Pradesh, Assam, Manipur, Puducherry are under process to operationalise).

The Supreme Court ruling that daughters have equal coparcenary rights in a Hindu Undivided Family (HUF) property even if the father died before the Hindu Succession (Amendment) Act, 2005, came into force is a ‘progressive step’, and settles the ambiguity surrounding the nature and extent of a daughter’s rights to inherit the property, legal experts told Moneycontrol.

The apex court's verdict came on the issue whether the amendment to the Hindu Succession Act, 1956, granting equal rights to daughters to inherit ancestral property would have retrospective effect.

What this means is that whether with the passing of the Hindu Succession (Amendment) Act, 2005, a daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son, or if she could be denied her share on the ground that she were born prior to the enactment of the Act on September 9, 2005, and, therefore, cannot be treated as coparcener.

A coparcener refers to a person who assumes a legal right in parental property by birth only.

“The Hon'ble Supreme Court has taken a progressive step towards equal rights as provided for under the Constitution,” said advocate Yudhist N. Singh, senior partner, YNS & Associates.

Date of daughter’s birth, death of father not relevant

The apex court has clearly settled the issue on the effective date of the 2005 amendment, by laying no relevance on the date of birth of the daughter or alternatively the date of death of the father, whether prior to the 2005 amendment or post. So long as the daughter is alive post 2005, she has an equal right as a son in the coparcenary property.

The matter of Vineeta Sharma  v.  Rakesh Sharma, decided by a three-judge bench of Justices Arun Mishra, S. Nazeer and M.R. Shah “is a truly progressive judgment on women’s rights”, said Payal Chawla, founder, JusContractus.

The reference to the three-judge bench was made in view of two conflicting judgments of the Supreme Court in the matter of Prakash v. Phulavati (2016) and Danamma @Suman Surpur v. Amar  (2018). The Court in Vineeta Sharma has overruled Prakash v. Phulavati and partially upheld the Danamma judgment, she explained.

The judgment says if a daughter is born before September 9, 2005, she would become a coparcener, in her own right, in the same manner as sons i.e. with same with same rights and liabilities, provided there has been no parting/partition/or devolution before December 20, 2004.

“The reason is that a daughter is a coparcener, with effect from the date of amendment and she can claim partition in her own right by birth and ‘not by dint of inheritance’,” added Chawla.

Next challenge

An amendment to Section 15 of the Hindu Succession Act, 1956, is the need of the hour, say experts.

“I strongly believe that the time has come to make an amendment to Section 15 of the Hindu Succession Act, 1956, for changing the present scheme of succession to the effect in case a female dies intestate leaving her self-acquired property with no heirs then an equal right is given to her parental heirs along with her husband heirs to inherit her property,” said Tyagi.

One issue which is still open and is a matter of legal debate is “whether the lineal descendants of a daughter partake the same rights as the lineal descendants of a son”, added Ajinkya.

The Supreme Court order eliminates all challenges to the equal rights of women as coparceners in HUF assets except where the assets have been divided on or before the cut off date of December 20, 2004.

"Many ancestors who did not believe in this equality and never imagined that law will change to this effect may turn in their grave. This is a good development for gender equality, but will certainly open a Pandora box and unimaginable contentious issues, more so as this is now retrospective as well as retroactive," said Rajesh Narain Gupta, managing partner, SNG & Partners.

The Bombay high court last week stayed an order passed by a deputy registrar of co-operative societies in the city, directing a co-operative housing society at Dindoshi to issue no-objection certificates to one of its members for improvement and change of user of his premises.

“In my prima-facie opinion the Deputy Registrar of Cooperative Societies ex-facie did not have any jurisdiction and authority to issue such a direction to the petitioner society to issue a NOC as contained in the order,” said justice Girish Kulkarni while staying order issued by the deputy registrar, P ward.

Acting on a complaint lodged by the member, the deputy registrar had on July 9, 2019 directed Shree Raghunandan co-operative housing society to issue necessary NOCs to the member for joining four tenements and converting user of the premises from residential to commercial.

The housing society then moved HC, through advocate Mohit Jadhav, challenging the order on various grounds.

The order was purportedly passed under Section 79(2)(a) of the Maharashtra C o-operative Societies (MCS) Act, 1960, but justice Kulkarni opined that the deputy registrar had no power to issue such a direction.

In my prima facie opinion, it is clearly a dispute between a member and the society, which would require adjudication before some other forum, said the judge.

The judge said section 79(2)(a) deals with compliances to be made by co-operative societies and confers power on the deputy registrar to issue necessary orders to ensure the statutory compliances like filing of returns etc.

“It is difficult to conceive that the nature of the complaint as made by respondent no. 3 (member) before the Deputy Registrar invoking Section 79(2)(a) for issuance of inter-alia fire NOC and a NOC for improvements can at all fall within the purview of this provision,” said justice Kulkarni.

The judge added that to read such wide powers to issue such directions as contained in the impugned order under Section 79(2)(a) would amount to reading something into the provision which the legislature has not provided for and in fact if so construed would amount to something contrary to the statutory scheme of the MCS Act 1960.