It seems that the rapid decline in sales of residential properties has finally come to a halt. Over the last few quarters, sales numbers have either remained stagnant or improved marginally, but did not fall, according to various real estate reports. One of the major reasons that is likely driving the slight revival in sales is the increasing demand for affordable and low-cost housing. Other contributing factors are — confidence generated by the Real Estate (Regulation and Development) Act, 2016 among homebuyers when it comes to buying apartments in new launched projects, and relaxation in goods and services tax (GST) on under-construction property.

Increase in sales

“Sales across Tier I cities have grown by 5% during FY2019 as compared to FY2018. MMR (Mumbai Metropolitan Region) has posted highest sales of 70,794 units (25.5% of total sales in Tier I cities), followed by NCR (National Capital Region) with 54,174 units contributing 19.5% of total sales," according to the Residential Market Report for the quarter ending March 2019 by Liases Foras, a Mumbai-based real estate research and advisory firm.

Among the eight cities covered by the report—MMR, NCR, Pune, Bengaluru, Ahmedabad, Hyderabad, Kolkata and Chennai—seven cities witnessed sales growth between 6% and 20%. While Hyderabad and Kolkata witnessed maximum growth of 20% each, followed by Bengaluru with 14% increase in sales numbers, NCR witnessed a 13% decline in sales when compared to last year.

While revival in sales will bring some respite to developers, home buyers warming up to newly launched projects is a big plus for them. However, the latter trend is just picking up and most homebuyers still prefer ready-to-move-in houses.

According to a recent report, Consumer Sentiment Survey H1 2019, by Anarock Property Consultants Pvt. Ltd, “While ready-to-move-in homes remained the preferred choice for several homebuyers, new launches (which drew the least consumer interest in the previous survey) saw a decent revival. Over 18% of respondents now prefer newly launched properties as against a mere 5% in the previous survey."

The reasons behind the increase in preference for newly launched projects are “implementation of RERA and lower GST rates", said the Anarock report.

Meanwhile, affordable housing witnessed higher demand compared with other segments, thanks to government incentives. “Like last quarter, close to 54% of the sales of this quarter were contributed by sub- ₹50 lakh segment. Growth in this segment is supported by government initiatives," said the Liases Foras report. About “70% of prospective buyers prefer properties under ₹80 lakh," added the Anarock report.

Taking cues from the trends, developers have been focusing on affordable and mid-range segments. “Over the past five years, developers have been actively focusing on the affordable and mid-range housing segments. The share of new supply in the affordable and mid-segment combined (within ₹80 lakh) stood at 77% between 2017 and 2018—39% in affordable housing and 37% in the mid-range segment," according to the Anarock report.

High Inventories

An increase in sales notwithstanding, inventory of unsold units continues to remain high. “Unsold stock in Tier I cities increased by 4% on year-on-year basis, while the number of unsold units currently across top eight cities is 9,66,591 units," according to the Liases Foras report. Hyderabad witnessed a 16% increase, the highest, followed by Chennai, Kolkata and Pune, showing a rise of 15%, 12% and 10%, respectively. Single-digit growth was observed in MMR (7%), Bengaluru (5%) and Ahmedabad (1%). NCR witnessed a decline of 8%.

High inventory at developers’ end has kept a lid on property prices. According to the Liases Foras report, “Prices have remained unchanged largely across the top cities with some upward movement being recorded only in Hyderabad."

Prices are expected to remain stagnant till there is a significant increase in sales. So if you are planning to buy a house, take your time to mull options.

After cricketer MS Dhoni moved the SC, seeking protection of his ownership over a penthouse in Amrapali Group’s project, the court has asked the company to explain its monetary transactions and agreements with the cricketer.

The Supreme Court, on April 30, 2019, directed the embattled Amrapali Group to explain its monetary transactions and agreements with Indian cricketer Mahendra Singh Dhoni, who was the realty firm’s brand ambassador between 2009 and 2015. The top court said it wants the entire picture to be placed before it and also sought an explanation of each and every transaction and dealings with Dhoni. It said the Group might have ‘cheated’ Dhoni, as well and that is the reason some media houses have reported about his case.

A bench of justices Arun Mishra and UU Lalit, asked the firm to submit the details, as to how much money was transacted between Amrapali Group and Dhoni. “We want entire picture before us. How much money was transacted between you and Dhoni and what were your agreements with him. How much money you have paid for the advertisements (branding). We want entire details. You might have cheated him also, that’s why media houses have recently reported about his case,” the bench said.

At the outset, the court-appointed forensic auditors, Pawan Agrawal and Ravi Bhatia, told the bench that they had detected 24 transactions between Amrapali Group and M/s Rhiti Sports Management Pvt Ltd, which manages the endorsement and advertisement rights of Dhoni. Agrawal told the bench that in one of the transactions, around Rs 25 crores was given by Dhoni to Amrapali and there were several transactions between different group companies.

Rhiti Sports told the court that it was an operational creditor of Amrapali Group and had entered into various agreements, for endorsement and promotion of brand ‘Amrapali’, between the year 2009 and 2015. It had said that the endorsements’ agreements and various MOUs were executed between Amrapali Group CMD for and on behalf of all the companies, partnership firms, joint ventures doing their business under the brand umbrella of Amrapali Group and M/s Rhiti Sports Management Pvt Ltd. “That the respondent builder Amrapali Group owes an amount in excess of Rs 38.95 crores, out of which Rs 22.53 crores is towards the principal amount and Rs 16.42 crores towards the interest calculated at 18% simple interest per annum,” Rhiti Sports said in its affidavit. The sports management company had told the court that two agreements were entered between Amrapali Group and Dhoni in 2009 and 2012, for three years each, for the brand endorsements of the real estate firm and it was agreed that all the amount payable to Dhoni was to be done through it only.

The bench asked senior advocates Geeta Luthra and Gaurav Bhatia, appearing for Amrapali, to furnish all the details by May 1, 2019. Dhoni, in an earlier affidavit filed in the apex court, had said that he was a creditor of Amrapali Homes Projects Pvt Ltd and had entered into a joint venture agreement with it, on June 14, 2011. Under the agreement they were to create a joint venture company to develop a residential complex in Ranchi and adjoining areas in Jharkhand, he said. Dhoni said that for creating the JV an MOU was executed between Amrapali Group CMD Anil Kumar Sharma and him and had contributed Rs 25 crores, as initial capital. He said he was guaranteed and assured payment of a minimum sum of Rs 75 crores to him, by Amrapali. In another affidavit, Dhoni had sought protection of his ownership rights over a 5,800-sq ft penthouse he had booked 10 years ago, in an Amrapali Group project.

Residents of the Trans Hindan area in Ghaziabad staged a protest following a 29-hour-long power outage, which has been blamed on damage to the underground cables, caused by the Water Works Department.

Residents of 17 colonies in the Trans Hindan area, protested against the Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) in Ghaziabad, on April 29, 2019, for a near 29-hour-long power outage in their neigbourhood. The protestors alleged negligence on the part of the Water Works Department of Ghaziabad Nagar Nigam. The power outage lasted from 9.00 pm on Saturday (April 27, 2019) to 2.00 am on Monday (April 29, 2019).

The PVVNL said that it would will lodge a FIR against the Water Works Department, for allegedly damaging underground cable while laying water pipes, officials said. Chief engineer Rakesh Kumar Rana said the case will be lodged under the Prevention of Damage to Public Property Act.

NEW DELHI: Property brokerage firm 360 Realtors will hire 1,000 employees this fiscal year and is actively looking for acquisition in the US market to grow its business in India and overseas, a top company official said.

Gurugram-based 360 realtors currently has over 50 offices across India and overseas with a sales force of more than 1,000 people. Its revenue grew by 46 per cent to ₹152 crore during the last fiscal. The company sold 6,000 units worth ₹4,100 crore during 2018-19.

"We have set a target to sell 12,000 units this fiscal. To achieve this, we need people. We will be hiring about 1,000 people this financial year," the company's founder and MD Ankit Kansal told PTI.

With 30 per cent of sales in value terms coming from non-resident Indians (NRIs), he said, the company is actively looking to acquire a brokerage firm in the US to market Indian properties.

The discussions are underway with some of the US-based brokerage houses that are marketing Indian properties in America.

360 Realtors competes with the likes of PropTiger.com, ANAROCK, Square Yards, Investor Clinic and Wealth Clinic in the organised property brokerage business, which has now come under the ambit of new realty law RERA (Real Estate Regulatory Authority).

On the overall real estate market, Kansal said, it has once again started turning bullish on the back of regulatory reforms and healthy economic growth.

"Developers are also coming up with numerous attractive schemes such as developer subvention, attractive prices and freebies, thereby giving a buying boost," he added.

Kansal said, housing prices are likely to remain stable for at least another 6-8 months. Over the last year, the company has incubated verticals such as a unique broker aggregation platform, strategic advisory services for developers and a media house to achieve higher growth, he said.

The Bombay HC has struck down the powers of the BMC commissioner to frame rules for laying down guidelines for determining the capital value of a property, saying that such rules are ultra vires to the Maharashtra Municipal Corporation Act

The Bombay High Court has said that there was no provision for Mumbai’s civic chief, to frame rules for laying down guidelines for determining the capital value of a property, based on which tax could be levied on it. The high court made the observation, while striking down certain rules enacted by the Brihanmumbai Municipal Corporation (BMC), for assessment of capital value of a property based on which tax could be levied on it.

A division bench of justices AS Oka and Riyaz Chagla had, on April 24, 2019, struck down Rules 20, 21 and 22 of the Capital Value Rules of 2010 and 2015, saying they are ultra vires to the Maharashtra Municipal Corporation Act (MMC Act). The high court said all the assessments and bills issued under these rules stand quashed. “There is no provision which enables the civic body commissioner to frame rules for laying down guidelines for determining capital value,” the bench said in its order made available on April 25.

The order noted that the Corporation, while assessing capital value of a property, will have to consider factors like nature of land, type of land or structure, area, user category (residential or commercial) and its age. “In fact, framing rules for laying down the method of calculating the capital value is itself ultra vires, beyond one’s legal authority,” the bench noted. The court said the civic body will have to give a fresh hearing to the complaints filed before it.

The bench, however, upheld the constitutional validity of the 2009 amendment to the MMC Act that had changed the levying of property tax basis in Mumbai, from rateable value on standard rent to capital value. Rateable value of a property is derived from its rent, while capital value is based on a host of factors, such as the property’s market value, its location and use, among others. “By adopting capital value as the basis for levy of property tax, only the measure of computing of property tax has undergone a change,” the court said in its order. “Only the basis of charging the property tax has changed. Instead of calculating hypothetical rent, now, the hypothetical market value of the property will have to be worked out,” the court said.

The bench had stayed the striking down of the rules part of the judgement till August 31, to enable the BMC to approach the Supreme Court in an appeal. The bench was hearing a bunch of petitions filed by an association of property owners, builders’ associations and charitable institutions, including religious bodies, against the BMC and the Maharashtra government, challenging the levy of property tax on the basis of capital value. In 2009, the MMC Act was amended and a concept of levying property tax on capital value system, was brought into force.

The petitioners challenged the constitutional validity of the amended property tax based on capital value of land, as opposed to the earlier rateable value based on standard rents. There were a series of constitutional challenges raised by the Property Owners Association and developers, to an amendment to the MMC Act and rules framed in 2010 and 2015, for fixation of capital value of lands and buildings. The rules are void and unconstitutional, the developers had argued.

Following the Congress’ allegations that the Shiv Sena-BJP government had ‘fooled the people of Mumbai’, by waiving only 0.110 per cent of the property tax for houses up to 500 sq ft, the BJP clarified that all components of the levy would be waived

After the Congress accused the Shiv Sena-BJP alliance of misleading Mumbaikars on the property tax waiver, the BJP has clarified that all components of the levy would be waived in future bills. The process to change the rules, to facilitate the waiver is on, Mumbai BJP chief Ashish Shelar said, on April 18, 2019.

“In case of the Brihanmumbai Municipal Corporation, civic rules have been changed to waive general component of property tax for houses up to 500 sq ft. However, to waive other components of property tax, you need to change the state rules. The process of issuing an ordinance in this regard is on,” said Shelar.

The Shiv Sena-ruled Brihanmumbai Municipal Corporation (BMC) had earlier announced that the property tax for houses up to 500 sq ft will be waived. However, Mumbai Congress chief Milind Deora, on April 17, said that the Maharashtra government’s waiver of the tax was a joke.

The Maharashtra ordinance number 11 of 2019 is a ‘farce’ as it waives only 0.110 per cent of the property tax. Therefore, all Mumbai residents who live in houses not bigger than 500 sq ft ‘should NOT pay their property tax for the year 2017-18’, Deora tweeted.

“The Sena-BJP alliance has fooled the people of Mumbai and failed to fulfil its promise. The financial position of the BMC is robust and it can easily afford to waive property tax for owners of properties up to 500 sq ft carpet area,” he said.

The Mumbai Congress chief said that following the Sena’s promise to waive property tax, the BMC asked the state government to implement it and the latter issued an ordinance last month. However, the government resolution of March 8, 2019, only amended section 140 (C) of the Mumbai Municipal Corporation Act and only the general tax component – which varies from 10-30% of total tax slab – was exempted, he alleged. Further, the GR said the exemption would come into effect from January 1, 2019, but the BMC issued bills for up to March 31 (without exemption), Deora alleged.

Bengaluru: Birla Estates Pvt. Ltd, part of BK Birla Group, has ventured into residential property development with its first project launch in Kalyan, in suburban Mumbai. With a focus on premium housing projects, the firm also plans to build homes in Pune, Bengaluru and the National Capital Region (NCR), said a top company executive.

The Kalyan project, Birla Vanya, which has one-, two- and three-bedroom apartments priced between ₹43 lakh and ₹1.2 crore, was launched in April. It has sold over 400 of the 530 units in Phase I within three days of its launch. It will start its next project in Bengaluru spread across eight acres in the IT suburb of Whitefield.

Birla Estates started operations as an independent company from January, and is a subsidiary of Century Textiles and Industries Ltd (CTIL). It has also developed a couple of commercial office spaces in Mumbai, as a real estate division of CTIL.

“The main focus of the company will be on the residential segment. The ‘Birla’ brand resonates in the consumers’ mind and our aim now is to build a strong real estate brand and develop residential spaces," said K.T. Jithendran, chief executive officer, Birla Estates.

The customer plays a critical role today, Jithendran said, and “how well we are focused as a company in serving the customer will be a challenge". “Product design and execution of a project are important, just as the pricing of a product is."

Corporate real estate developers, many of them new entrants, have embarked upon expansion plans to take advantage of the changing regulatory environment amid rising distressed assets in the property market. Large corporate houses clearly see an opportunity in the stressed realty market and are out to acquire land and explore development opportunities.

Birla Estates is actively looking at several joint development deals with partners in Bengaluru and Pune, and plans to sign new projects. It already has around 200 acres, mostly industrial land, in Mumbai Metropolitan Region (MMR), which it intends to develop.

In the last few years, land acquisition has slowed down in India and, as a result, many real estate companies have signed joint development agreements with land owners or other developers, in a bid to either monetize their own land parcels, or in some cases, to take over the development rights themselves.

MUMBAI | BANGALORE: Hyderabad property market has overtaken Bangalore for the first time to be the dominant office market driving quarterly space take-up, on the back of culmination of several pre-commitments. In the first quarter of 2019, gross leasing touched 12.8 million sq. ft., recording a growth of 3% on a quarterly basis with Hyderabad, Bangalore, Mumbai and Delhi-NCR accounting for more than 75% of the leasing activity, showed data from CBRE South Asia. 

In the first quarter, Hyderabad witnessed leasing of 3.5 million sq ft against 1.1 millon sq ft a year ago, while leasing in Bangalore declined to 2.5 million sq ft from 5.5 million sq ft. 

Small sized deals with less than 10,000 sq ft and medium-sized transactions ranging between 10,000 sq ft and 50,000 sq ft dominated space take up accounted for 33% and 48% of the transaction activity respectively. The share of large-sized deals greater than 1 lakh sq ft increased from 7% in fourth quarter of 2018 to 10% during this quarter. Hyderabad followed by Bangalore, dominated large-sized deal closures in the first quarter of 2019, while a few such deals were also reported in Mumbai, Noida and Chennai. 

Tech corporates and flexible space operators mainly dominated large-scale deal closures. A few large-sized deals were also closed by e-commerce, BFSI, engineering & manufacturing and research, consulting & analysis companies. 

“Office leasing activity is expected to remain stable in the short term, backed by corporates looking to expand or consolidate their operations. While interest from American corporates is expected to sustain, we anticipate that India’s position as a preferred outsourcing destination would continue to attract corporates from other geographies such as EMEA and APAC,” said Anshuman Magazine, Chairman & CEO, South East Asia, Middle East and Africa, CBRE. 

Magazine believes policy initiatives such as Make in India, Digital India etc., along with the emphasis on smart cities and industrial corridors, will likely boost operations of both Indian and multinational corporates. 

Tech corporates continued to drive office space take-up in the country, with their share in total leasing rising to 33% during the quarter from 22% a year ago. The share of key flexible space operators rose from 5% to 16% during the same time period. Other sectors such as engineering & manufacturing (10%), BFSI (9%) and research, consulting & analytics (7%) also contributed to the leasing activity during the quarter. 

“Bolstered by several policy initiatives to ease out liquidity pressures and promote construction activity and the listing of India’s first Real Estate Investment Trust (REIT), the real estate services (along with financial and professional services) grew at 7.3% during the review period,” said Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia. 

Driven by tech, BFSI and e-commerce firms, quarterly pre-leasing activity rose marginally on an annual basis, largely led by Pune, Bangalore, Chennai and Hyderabad. 

Supply addition in during the quarter rose by 23% sequentially to touch 13.4 million sq. ft. Hyderabad, Bangalore, Delhi-NCR and Mumbai accounted for about 80% of the quarterly supply addition. Ahmedabad, Chennai, Hyderabad and Bangalore reported a rise in development completions on a quarterly basis. Special Economic Zones (SEZs) continued to account for a third of the quarter’s supply, rising by almost 40% as compared to a year ago period. Almost the entire SEZ supply in Hyderabad, in particular, was pre-committed as developers refrained from investing in speculative development in this segment. 

Singapore-based investors are betting big on India’s commercial realty and other sunshine sectors, including logistics and warehousing, real estate consulting firm ANAROCK said in a report.

Top Singapore-based private equity (PE) firms such as GIC, Ascendas-Singbridge and Xander are funnelling billions of dollars into India’s realty sector, particularly in South Indian cities, according to the report.

About one-third of the total $14.01 billion PE investment in India’s realty sector between 2015 and 2018 was made by Singaporean firms, the highest among both domestic and foreign investors, according to ANAROCK’s report Private Equity in Indian Real Estate.

“With funding from banks and non-banking financial companies drying up, Indian developers are being forced to explore debt and equity funding from various PE firms. Singapore investors were on top of the list, followed by PE players from US and Canada. After establishing a strong base in China, India was their next destination of preference," said Shobhit Agarwal, managing director and chief executive officer at ANAROCK Capital.

Singapore-based investors and developers have gained a substantial foothold in India’s property market over the last four years, with their more patient and long-term outlook, he said. They pumped $1.15 billion into Indian real estate in 2015 and 2016, and nearly $3.5 billion in 2017 and 2018. In recent years, they have also started diversifying their portfolios and eyeing sunshine sectors such as logistics and warehousing. In the past four years, GIC has invested close to $2.5 billion, mainly in cities such as Mumbai, Chennai, Bangalore, Hyderabad and NCR.

For Ascendas, the preferred regions have been Hyderabad, Chennai and Mumbai Metropolitan Region.

Meanwhile, US-based investors such as Blackstone, Goldman Sachs, Hines, Warburg Pincus and Proprium Capital have invested nearly $4 billion in India in the last four years. Blackstone infused $2.9 billion in this period. PE firms from Canada, led by Brookefield and CPPIB were the third largest investors with capital infusion of close to $2.3 billion in four years.

Top seven property markets of India have a total stock of 5.6 lakh delayed housing units worth Rs 451,750 crore, showed data from ANAROCK Property Consultants.

MUMBAI: Homebuyers across top property markets, including the Delhi-National Capital Region and Mumbai, continue to await delivery of their apartments which has made buyers wary of under-construction properties. 

Top seven property markets of India have a total stock of 5.6 lakh delayed housing units worth Rs 451,750 crore, showed data from ANAROCK Property Consultants. These units were launched either in 2013 or before that. 

Top cities such as the NCR and Mumbai Metropolitan Region (MMR) collectively account for 72% of the total stuck housing units across the top 7 cities worth Rs 349,010 crore, nearly 77% of the total worth of the stuck projects. In comparison, the main southern cities -- Bengaluru, Chennai and Hyderabad -- together account for a mere 10% of the overall stuck housing units of a total worth of Rs 41,770 crore. 

Interestingly, among the two major IT destinations, Bengaluru is far better off than Pune in terms of the total number of delayed or stuck projects. Chennai has the least project delays during this period, with around 8,650 units worth Rs 5,620 crore, the data showed. 

“Besides some developers' lack of real will to complete their projects and preference for funds diversion, the tightening credit crunch has been one major factor contributing to this mounting problem. It has become a 'chicken and egg' situation -- buyers have understandably stopped releasing funds to builders, and builders claim they have no funds to complete construction,” said Anuj Puri, chairman – ANAROCK Property Consultant. 

Also, every delayed project results in cost overruns that compound the funding crunch even further. Lack of project clearances for whatever reason also contributes to the piling up of housing stock. In the pre-RERA era, many builders launched green field projects without the requisite approvals in place, resulting in their projects getting stuck.

By amending the Insolvency and Bankruptcy Code and treating buyers at par with banks and other creditors, the government has further protected the interests of the affected buyers. With this provision, even when builders opt for bankruptcy, the state authorities will intervene to safeguard homebuyers' investments. 

Besides monitoring cash inflows of the concerned entity, the government will try and ensure that the project is completed either by the developer himself or by outsourcing its completion to a third party. However, buyers are still waiting for the final outcome of these interventions.