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19-Sept-2019

CREDAI Bengal Daily News Update | 19.09.19

PE investments in real estate expected to be at $6.5 billion in 2019

The new supply projection of 160-180 million sq ft over 2019-2021 is further expected to

support investors’ appetite.

Investments into real estate is expected to be about $ 6.5 billion, with office investments

garnering the highest share.

Investors, both foreign and Indian, are buoyed by the commercial office sector, which is

witnessing robust office demand, said a recent report by RICS-Colliers.

Investors are looking to bundle up assets and list them as REITs, capitalising on the solid

demand.

“The next decade will usher in new formats of workplaces, with landlords emerging as wellness

creators, where occupiers amalgamate workplaces and technology to increase productivity at

workplaces”, says Ritesh Sachdev MRICS, Head of Occupier Services, India and Managing

Director, South India at Colliers International.

Additionally, office sector has been on a strong footing as compared to residential. Between

2019-2023, average annual gross absorption of 50.3 million sq ft is expected across top cities,

outpacing the annual average gross absorption of the preceding five-year period by about 18%,

mentioned the report.

“The Indian market is in the midst of a slowdown, with the residential sector most impacted.

While we don‟t have a full-blown recession currently, as we did back in 2008, the impact on the

CRE market though not currently felt, will only be determined on how deep the slowdown

spreads”, says Nimish Gupta FRICS, Managing Director, South Asia, RICS.

The new supply projection of 160-180 million sq ft over 2019-2021 is further expected to

support investors‟ appetite, who are faced with a lack of investible assets in cities like

Bengaluru and Hyderabad, mentioned the joint report.

Since 2008, private-equity (PE) players have pumped nearly $56 billion into real estate, with

domestic investors accounting for 57% of the inflows. Over the last five years, foreign investors

have been focused on commercial office assets. Between 2014-H1 2019, Colliers notes that

foreign investors accounted for 70.0% of total office investments.

_____________________________________________________________________________

Newspaper/Online ET Realty (online)

Date September 18, 2019

Link https://realty.economictimes.indiatimes.com/news/industry/pe-investments-in-real-estate-expected-to-be-at-6-5-billion-in-2019/71184145

________________________________________________

CREDAI Nashik demands introduction of unified development

control rules

The association said the unified DCPR will get delayed by another six months if it is not

introduced right before the state assembly elections are announced.

The Confederation of Real Estate Developers Association of India (CREDAI) Nashik on

Tuesday asked the state government to introduce unified DCPR (Development Control and

Promotion Regulation) before the code of conduct of the state assembly elections come into

effect.

The association said the unified DCPR will get delayed by another six months if it is not

introduced right before the state assembly elections are announced.

It also added that the delay in introducing the unified DCPR may affect the growth of real estate

sector particularly of Nashik.

The demand from CREDAI comes ahead of chief minister Devendra Fadnavis‟s Mahajanadesh

Yatra.

According to CREDAI Nashik, city‟s real estate sector has already been affected and is in

trouble. Hence, it wants the state government to introduce the new unified DCPR for the state at

the earliest.

“The state government approved city‟s DCPR in February 2017, but the developers were

disappointed as it was incomplete. It did not even include solutions over cupboard issue. There

were several defect in the DCPR and it took around one-and-a-half years to make necessary

corrections in the DCPR,” Umesh Wankhede, CREDAI Nashik chairman, said.

Now, the state government has planned uniform DCPR for across all municipal corporations

excluding Mumbai.

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/industry/credai-nashik-demands-introduction-of-unified-development-control-rules/71179800

Colliers International acquires Synergy Property Development

Services

The senior leadership of Synergy will remain significant shareholders of the combined

business under Colliers’ partnership model, the latter said in a release.

Global commercial real estate services and investment management firm, Colliers

International has acquired a controlling interest in project management firm, Synergy Property

Development Services and has merged the operations.

The senior leadership of Synergy will remain significant shareholders of the combined business

under Colliers‟ partnership model, the latter said in a release.

The combined operations in India now have more than 1,400 professionals operating from 16

offices, providing investment sales, lease brokerage, valuations, workplace consultancy, design

services and property and project management to domestic and international investors,

occupiers and developers of real estate. Terms of the transaction, however, were not disclosed.

Established in 2003, Synergy is a project management firm that has delivered over 120 million

sq ft of projects for investors, developers and occupiers of real estate.

Synergy‟s founder and chairman, Sankey Prasad will assume the role of Managing Director and

Chairman for Colliers in India.

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/commercial/colliers-international-acquires-synergy-property-development-services/71185842

SC's order ensures 'certainty of succession' of Goan-owned

properties

Dealing with this crucial aspect, the Supreme Court observed that if they were to uphold

Article 24, “the consequences could be disastrous, to say the least. There would be no

certainty of succession”.

The Supreme Court on Friday gave primacy to constitutional freedom guaranteed to Goans to

buy properties anywhere in India and ended the post liberation legal tangle of inheritance of

properties of Goans purchased outside State ensuring “certainty of succession” for legal heirs

A provision in Article 24 of the Portuguese Civil Code (PCC) — called uniform civil code —

provided that family law was applicable to properties purchased in Goa (an erstwhile

Portuguese colony). This norm gave scope for the interpretation that the PCC, giving equal

rights to spouse and thereafter to legal heirs, was not applicable to properties purchased by a

Goan outside Goa.

Dealing with this crucial aspect, the Supreme Court observed that if they were to uphold Article

24, “the consequences could be disastrous, to say the least. There would be no certainty of

succession”.

“The rights of the spouses to have 50% of the property could easily be defeated by buying

properties outside the state of Goa. In the case of a Hindu Goan domicile, it would lead to

further complications because for properties in Goa, the Civil Code would apply but for the

properties outside the territory of Goa, the Hindu Succession Act will apply,” the top court said.

Similarly, for Muslims within the state of Goa, the civil code would apply, and outside Goa,

the Muslim Personal Law (Shariat) Application Act, 1937, would apply, the Supreme Court

said.

“This would lead to many uncalled-for disputes and total uncertainty with regard to succession.

There must be unity in succession. The Portuguese law is based on the Roman law concept of

inheritance to the entire legal position of a deceased man,” the court noted.

The SC read Article 24 in the context of the annexation of the territories of Goa by conquest

and their becoming an inherent part of India. “There are no Goan citizens; there can be

domiciles of Goa but all are citizens of India. As Indian citizens, under Article 19 of the

Constitution, they are free to move to any part of the country, reside there and buy property



Link https://realty.economictimes.indiatimes.com/news/regulatory/scs-order-ensures-certainty-of-succession-of-goan-owned-properties/71179936

subject to local laws and limitations.”

Therefore, a domicile of Goa, who starts living in Mumbai or in any other part of India, cannot

be said to be Portuguese by any stretch of the imagination. This person is only a Goan domicile

living outside Goa in India, which is his country. Therefore, Article 24, in our opinion, has no

applicability, the Supreme Court said.

If Article 24 of the PCC was upheld by the Supreme Court, there would have been problems for

Goan families having properties outside Goa. There is a conflict between the Indian Succession

Act, the Hindu Succession Act, the Muslim Personal Law (Shariat) Application Act, 1937, and

the Portuguese Civil Code with regard to laws of inheritance.

________________________________________________________________

Lucknow civic body proposes steep hike in house tax

Incidentally, the financial crunch is mainly because of poor house tax collection over the

past three years.

Reeling under acute financial crisis, Lucknow Municipal Corporation (LMC) has proposed

steep hike of house tax from the financial year 2020-21 to increase its revenue.

Incidentally, the financial crunch is mainly because of poor house tax collection over the past

three years. However, instead of improving collection, LMC has chosen to raise taxes, inviting

angry reactions from the people.

The last time house tax was increased was in 2010-11. According to rules, house tax can be

revised every 10 years. The limit can be longer if financial condition of the municipal body is

healthy.



Link https://realty.economictimes.indiatimes.com/news/regulatory/lucknow-civic-body-proposes-steep-hike-in-house-tax/71183040

LMC, however, has used the opportunity to propose a tax hike to meet the cash crunch and meet

the requirement of development in the city. The proposal has been approved by its executive

committee and the mayor and sent to the urban development department for approval.

Rather than increasing house tax to generate more revenue,

LMC should first work on improving tax collection. Tax hike

will burden those who have been honestly paying their dues

on time. Losses to the civic body are mainly because of

defaulters who should be fined or face legal action.TimesView

“We need to improve our revenue to meet the demand of development in the city, hence tax

hike proposal has been approved and sent to government for its stamp,” said LMC chief tax in

charge Ashok Singh.

LMC has not been able to achieve its target of collecting Rs 260 crore as house tax from 5.48

lakh houses in the city for the past three years. In 2017-18, it collected Rs 178 crore, in 2018-19

Rs 174 crore and 2019-20 around Rs 134 crore so far.

When asked why LMC was not working to improve tax collection, Singh said that the civic

body had tried several things from simplifying tax payment and online assessment to one-time

settlement schemes, but still has not been able to achieve the target.

________________________________________________________________

Thiruvananthapuram: Building permit adalats dispose off only

12% pending files

The low percentage of disposal of complaints in minister’s adalat has strengthened the

contention of former LSGD officials who had questioned the right of the minister to hold

an adalat.

The building permit adalats held in five urban local bodies in the district chaired by LSG

minister A C Moideen could dispose off only 12% pending files, according to the compiled

report. That means only one out of 10 files received a solution after the adalat.

Many of the files had to be put off owing to court cases and some were returned to respective

sections for want of no objection certificate from other departments concerned.

The low percentage of disposal of complaints in minister‟s adalat has strengthened the

contention of former LSGD officials who had questioned the right of the minister to hold an

adalat.

As many as 663 files had come up in the adalat in five urban local bodies in the district, of

which only 81 files could be disposed of and over 500 files were categorised as „to be finalised‟.

Former officials with LSGD had termed holding of minister‟s adalats illegal and arbitrary.

Even in case of denial of occupancy for want of airport NoC, senior LSGD officials had

withheld information on previous orders being passed on the same matter, almost forcing the

minister to commit an error.

Thiruvananthapuram corporation, which had 473 files in total, could record disposal of only 68

applications.

Even some of the applications which were disposed of by the minister are learned to have

triggered trouble for the civic body with the corporation recently receiving legal objection on a

decision made in the adalat. The civic body officials have been cautious about files pending

owing to ongoing legal cases.

Even T K Jose, ACS (LSGD) had to personally appear in the court after he was summoned by

the high court to explain the comments he had made on the court proceedings at the building

adalat held in Kochi pertaining to unauthorized commercial establishments in the residential

areas of Panampilly Nagar.



Link https://realty.economictimes.indiatimes.com/news/regulatory/thiruvananthapuram-building-permit-adalats-dispose-off-only-12-pending-files/71182122

Jose had to submit an affidavit in which he had said that he had not interfered with the

administration of justice.

The zoning regulations had also gone for a toss during the adalat held at city corporation.

Nearly 10 applications that had surfaced in the adalat pertained to violation of zoning

regulations or demand for compromising on provisions laid down either in master plan or town

planning schemes.

In majority of the cases, the corporation was asked to go by the demand in a way rendering

zonal regulations and development plans earmarked in master plan and town planning schemes

useless.

Some of the files were directly sent to the office of the LSG minister for a final decision

following the adalat.

_______________________________________________________________

Small builders to protest over Rajasthan's plan to bring them

under RERA

To create a healthy competition in the market, the RERA has proposed to lower the

threshold limit for registration of projects from 500 square metre to 250 square metre and

from eight units (flats) to four units.

The decision to bring small real estate developers under the ambit of the Rajasthan Real Estate

(Regulation and Development) 2016 has evoked sharp reaction.

To create a healthy competition in the market, the RERA has proposed to lower the threshold

limit for registration of projects from 500 square metre to 250 square metre and from eight units

(flats) to four units.

Opposing the decision and demanding other relaxations in the building bylaws, the small

developers association has decided to stage a massive protest against the government at Civil

Lines on Wednesday.

The association alleged that government is systematically planning to wipe out the small

builders from the market due to pressure of big developers lobby.

As all the small real estate projects in the city continue to remain out of the (RERA) radar, in a

recent meeting held on August 9, the RERA decided to tighten the noose on their owners. It was

decided that developers constructing more than 4 units (flats) in a building, should also

registered themselves with RERA.

Minutes of the meeting reads, a major hurdle in the promotion of real estate sector was felt to be

the fact that there is a large section of projects, which being on a land measuring less than 500

square metre or of less than eight units do not require to be registered under the RERA Act.

“To avoid unhealthy competition between the projects that are governed by the act and those

that are not governed by the Act, a proposal should be sent to lower the threshold limits for the

registration of projects under RERA. If either of the two conditions, of 250 square metre or four

units is met, registration under RERA would be compulsory.”

However, the idea has not gone well with the developers and decided to hit roads against the

decision. “The RERA should cancel the minutes of the meeting. Our target customer is middle

income group and if so many fees are imposed on us, it would affect the buyers and demand

would decrease, resulting in loss of business,” said Rajesh Dukiya, spokesperson, Jaipur Awas

Nirman Builders Mahasangh.



Link https://realty.economictimes.indiatimes.com/news/industry/small-builders-to-protest-over-rajasthans-plan-to-bring-them-under-rera/71177030

A members further alleged , in many other states, on a 162 square metre plot, the developers are

constructing G+4 apartment, including stilt parking on 30 feet road. The state government

should amend rules after considering the feasibility.

________________________________________________________________

RBI explores loan rate pricing for housing finance companies

While an external benchmark might not be mandated for housing finance companies

(HFCs), banking regulator wants to bring more transparency in their pricing.

After forcing banks to link retail loans to an external benchmark, the RBI is looking at the way

non-banking finance companies (NBFCs) and mortgage companies price their products.

While an external benchmark might not be mandated for housing finance companies (HFCs),

banking regulator wants to bring more transparency in their pricing.

Meanwhile, the RBI is also not in favour of a combined fixed and floating home loan product,

which SBI chairman Rajnish Kumar had recently spoken about.

According to sources, after taking over the regulation of HFCs earlier this year, the central bank

is trying to bring uniformity in the regulation for banks and HFCs.

“Currently, HFCs are not even following the marginal cost of lending rate (MCLR) and are still

linking loans to the prime lending rate. The RBI is currently studying how they are pricing

interest rates,” a source said.

The central bank is unlikely to prescribe an external benchmark for HFCs because they fund

most of their loans from wholesale borrowings where the price does not vary in line with RBI‟s

rate changes.

Sources said that while competition ensures that HFCs offer rates that are close to what the

banks are offering, the RBI wants more transparency in the prices.

On the SBI chairman‟s recent announcement that the lender will seek clarification from the RBI

on offering fixed-floating rates, the central bank is understood to have expressed concern as it

pushes risks to a future date.

Kumar had earlier said that the bank was willing to offer long-term floating rate loans but did

not have the wherewithal to offer long-term fixed rate loans. In order to give choice to the

borrower, the lender had said that it will seek permission from the RBI to offer loans that are

fixed in the initial years but start floating in subsequent years.

The banking regulator is nudging lenders to ensure that they have their retail lending rates

linked to an external benchmark like the repo from October 1, 2019. Though many banks are

now linking their home loans to the repo, Citibank was the first to use an external benchmark by

linking interest rate on mortgages to yield on treasury bills.



Link https://realty.economictimes.indiatimes.com/news/allied-industries/rbi-explores-loan-rate-pricing-for-housing-finance-companies/71193929

________________________________________________________________

Over 80 CWG flats to be sold by DDA to PSUs at lower rates

DDA has been unable to sell these flats in earlier auctions held in 2012 and 2015 due to

high reserve price.

With Delhi Development Authority (DDA) unable to sell 84 flats at Commonwealth Games

Village, government bodies and PSUs will now be able to purchase them at concessional rates.

In a meeting chaired by lieutenant governor Anil Baijal, the authority on Tuesday approved

20% concession on the current rate of Rs 2.8 lakh per square metre for disposal of 84 CWG

flats to government bodies, PSUs and central/state corporations.

"The revised rate for the flats is Rs 2.2 lakh per square metre for 2019-20. In addition to this

reserved price, the conversion charges of Rs 1,130 per square metre and cost of two car parking

lots of Rs 7 lakh per car parking are also chargeable," he said.

DDA has been unable to sell these flats in earlier auctions held in 2012 and 2015 due to high

reserve price. The flats were originally built to accommodate foreign athletes arriving in Delhi

for 2010 Commonwealth Games.

A proposal to auction plots for socio-cultural and religious purposes instead of direct allotment

was also made.

The maximum size of the plot will be 1,000 square metres for the socio-cultural category, while

it is 400 square metre for the religious category.

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/industry/over-80-cwg-flats-to-be-sold-by-dda-to-psus-at-lower-rates/71185077

Economic slowdown hits real estate in Tamil Nadu

Registration department, which is one of the largest revenue generators for the

government, has recorded a fall in revenue by nearly 2% in the past five months when

compared to the corresponding period in 2018.

After automobile industry, the economic slowdown has struck state‟s real estate sector as

revenue earned through property registrations has dropped this year.

Registration department, which is one of the largest revenue generators for the government, has

recorded a fall in revenue by nearly 2% in the past five months when compared to the

corresponding period in 2018.

Data accessed by TOI showed land registrations generated revenue to the tune of Rs 4,410 crore

between April and August this year, while it was nearly ?4,500 crore during the corresponding

period of 2018.

The Chennai zone comprising the city, Kancheepuram and Tiruvallur districts, which alone

accounts for 45% of the total property transactions, has also suffered the impact of the

prevailing slowdown. As per data, revenue through land registrations has dipped by 1.13%

since April this year.

The number of document registration also slumped by 22,000 witnessing a 2% drop in the two

years. Also, some properties could not be registered as they have been entangled in land

acquisition issues.



Link https://realty.economictimes.indiatimes.com/news/industry/economic-slowdown-hits-real-estate-in-tamil-nadu/71184488

“The economic slowdown appears to be the reason for the drop. We hoped that the sudden drop

in property registrations earlier this year would revive post the general elections in May but it

still continues,” a senior registration official said.

Registration revenue has been fluctuating between positive and negative growth with three out

of five months, April, June and August, witnessing a drop of 13.12% , 5.02% and 4.98%

respectively, when compared to the same period last year.

Confederation of Real Estate Developers‟ Association of India (CREDAI) said the economic

slowdown was visible. “”Economic slowdown is real and it is being felt. Sales have come

down,” said it‟s Chennai chapter president W S Habib.

The recent multilocation property fair of CREDAI evoked fewer footfalls than last year‟s event.

While the annual event that was organised in six different locations in the city last year attracted

about 5,000 people, this year‟s event conducted at four places, a fortnight ago, saw only about

2,000 visitors.

Revenue from the registration department was on a steady rise from 2016-17 till 2018-2019. It

jumped from ?7,007 crore to ?11,071 crore between the financial years. Meanwhile, the

government has set a revenue target of ?13,000 crore for the current fiscal of 2019-2020.

City-based developer C Chandran said the number of visitors and inquiries at his construction

site have dropped in the last five months. “Last year, I was able to market two to three units

every month. Now, selling even one unit has become a challenge,” he said.

“Even those who showed interest in the property in the past are postponing their decision to

invest. In the wake of the current market situation, people are hesitant to invest as they are

expecting property prices to dip further,” he said.

________________________________________________________________

Air India may lower prices of its properties to draw more buyers

Two years ago, the national carrier had put on the block as many as 111 properties with a

cumulative price tag of Rs 9,500 crore, hoping to monetise assets to reduce its mounting

debt.

Air India could slash by as much as a quarter the base price of real estate assets including plots,

apartments and a commercial tower it plans to auction, officials at the staterun airline said.

Two years ago, the national carrier had put on the block as many as 111 properties with a

cumulative price tag of Rs 9,500 crore, hoping to monetise assets to reduce its mounting debt. It

has so far managed to sell only 32 of those, raising about Rs 1,000 crore, the officials said.

In fact, several properties have been put on sale multiple times since, but failed to attract

bidders even at the base price. For instance, it recently cut the price of a 2,000-square-metre plot

in Mumbai‟s Pali Hill, after trying to auction it six times for Rs 200 crore. The base price of a

bungalow in Nairobi will also be reduced as it could not fetch any buyer so far.

“Because of the slowdown, we have noticed that even prime properties are not finding buyers at

the rate we are bidding,” said an Air India official. “The Mumbai‟s property is at a prime

location, and despite reducing the price by 25%, it could not find a buyer. We will have to see

what to do next … a property in Amritsar was sold at the sixth attempt.”

It has found success overseas though, with the sale of properties in Tokyo, Hong Kong, London

and Mauritius. An office space in London was sold at Rs 45 crore, while flats in Tokyo and

Hong Kong were sold to India‟s Ministry of External Affairs. A group of ministers is scheduled

to meet on Thursday to discuss the disinvestment.

Prime infrastructure such as Air India‟s Mumbai's Nariman Point building and a 30-acre

housing society in Delhi will be given to the government and the proceeds will be used to

reduce debt.

“The land of the Vasant Vihar housing complex has been handed over to the Ministry of Urban

Development and, similarly, all the major transactions will happen within the government,” said

the official. “We don‟t want any controversy later and that is why we keep the base price higher

than market price to avoid allegations of selling it at lower rate,” he said, suggesting that the

price would still be above market rates.



Link https://realty.economictimes.indiatimes.com/news/industry/air-india-may-lower-prices-of-its-properties-to-draw-more-buyers/71194073

“There is a committee which decides on lowering the rate in case the property is not finding any

buyer,” said Air India spokesperson Dhananjay Kumar. “Based on the recommendation, the call

is taken whether to reduce it by 10% or more. In some cases, the property is sold when the rate

is reduced by 10%.”

In 2011-12, the government prepared a turnaround plan for Air India and had tasked it to sell

properties worth Rs 500 crore every year. Most of the transactions have happened in last two

years and before the start of the process to sell its own stake, the airline wants to get rid of most

of the properties.

Air India had debt of Rs 59,000 crore on its books, of which the government transferred Rs

29,400 crore last year to Air India Asset Holdings, a special purpose vehicle (SPV) that houses

the debt and assets of the national carrier. The government is repaying the debt through

government-guaranteed bond issues in three batches. It is also looking at an option to further

reduce the remaining debt of Rs 30,000 crore by half. The money generated from property sale

will also go to the SPV.

The airline had posted a net loss of Rs 8,400 crore in 2018-19.

Air India has been issuing auction notices relating to properties it owns across the country,

including the iconic 23-story building located in Nariman Point in Mumbai.

In June, it sold 23 properties in 14 cities in India, including a holiday home at Lonavala and

flats is Delhi‟s Asiad Village. Last year, properties in Mumbai, Bengaluru and Ahmedabad, and

land in Kolkata, Pune, Bhuj, Goa, Gwalior, Thiruvananthapuram and Nashik were sold.

________________________________________________________________

Times Group, others invests $20 million into Square Yards

Tanuj Shori of Square Yards said, “Having Times Group as one of our strategic investors

will help us establish our brand as the first port of call for the real estate-related needs of

every Indian household.

Square Yards, India‟s largest tech-led real estate brokerage platform, has raised $20-million

equity capital from a clutch of investors including Times Group, Genkai

Capital, PropertyGuru founders Steve Melhuish & Jani Rautiainen, and former chairman of

Singtel & DBS — Koh Boon Hwee. Some of the existing investors also participated in the

round.

Tanuj Shori of Square Yards said, “Having Times Group as one of our strategic investors will

help us establish our brand as the first port of call for the real estate-related needs of every

Indian household.”

Sam Subramaniam of The Times of India Group said, “Square Yards is a unique company

helping people buy their dream homes and, at the same time, help developers find buyers for

their flats. We are proud to be a shareholder and look forward to supporting the company grow

and succeed.”

Founded in 2014 by Shori and Kanika Gupta, IIM and Wharton alumnus respectively, Square

Yards is the largest proptech (technology-led real estate brokerage) and mortgage marketplace

in India. Square Yards has so far raised $50 million in equity and over $25 million in debt

financing since inception.

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/industry/times-group-others-invests-20-million-into-square-yards/71194063

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