This is the best time to invest in India: G V Krishna Reddy

Ireo Skyon, Gurgaon

It was 20 years ago that former Andhra Pradesh chief minister Marri Chenna Reddy and World Bank top executive Moeen Qureshi persuaded G V Krishna Reddy, or simply GVK, to reconnect with a liberalizing India. GVK, who fitted the role of a b

uilder, was told private entrepreneurs would be crucial to India’s economic surge. He returned from the United States, where he had a laminate particle manufacturing plant, to play ‘Andhrapreneur’ in India’s big push to build infrastructure.

“I have been part of the infrastructure economy not from the first year, but from the first day,” GVK tells us sitting in Paigah House, his sprawling corporate office at Begumpet, which was once the residence of the Nizam’s deputies. The Paigah family built the most fabled palaces in Hyderabad, including Falaknuma, during the reign of the Nizams. In two decades, GVK has built a conglomerate straddling airports, hotels, highways and power assets worth more than Rs 20,000 crore.

Read more: The Times of India

Government sets up 21-member panel to improve business climate

The government today set up a 21-member panel, including representatives from the government and regulatory authorities as also industry leaders like Anand Mahindra and Kumar Mangalam Birla, to suggest ways for reforming regulatory environment for doing business in India.

The panel has been set up at a time when concerns are being raised by the industry and investors, from India and abroad, about perception of policy paralysis and lack of required economic reforms.

The committee, headed by former Securities and Exchange Board of India (Sebi) chairman M Damodaran, would prepare a detailed report within six months and submit the same to the government, the Ministry of Corporate Affairs (MCA) said in a press release.

Read more: The Economic Times

Plan panel may peg 12th Plan average growth rate at 8.2-9%

Unlike in the previous Five Year Plans, the Planning Commission will refrain from proposing a fixed growth target for the 12th Plan (2012-17) and instead suggest a range of 8.2-9% in view of fragile global recovery.

“The Commission is of the view that annual growth target should range between 8.2 to 9% in the 12th Plan as it will be difficult to achieve 9%,” a source privy to the development said.

However, the final call on the issue would be taken at the in-house meeting of the Commission scheduled on Wednesday, the source said.

The source further said the majority of its members are in favour of suggesting a range instead of an economic growth number at the meeting of the full Planning Commission scheduled on 15 September.

The meeting would be presided over by Prime Minister Manmohan Singh.

Read more: Mint

Real Estate

Developers look to leverage projects through rating

A stamp of assurance of quality and ability to deliver can come in handy for marketing, particularly in a slow environment – a reason developers are looking at getting their projects graded by independent rating agencies.

While the trend is yet to catch on as a norm, developers are getting there, say rating agencies.

Crisil Rating has over three dozen projects in the pipeline, in addition to the few dozen projects it has rated across cities. ICRA is also handling project ratings and is seeing developers opting to get their projects rated. This holds multiple benefits for the developers and their buyers – whether in accessing funds for projects or instilling confidence in their buyers.

Those who have opted for rating have seen the benefits and are coming back to get more of their project rated. Others encouraged by this trend are also keen.

Crisil has rated nearly 20 projects in Chennai and a dozen more are waiting, according to Akash Deep Jyoti, Director – Real Estate Rating at the agency. There are nearly three dozen projects in various stages of rating. Nearly a third of these projects are in Chennai and Bangalore.

Since the launch of the rating system a few years back the numbers opting for rating may not be huge but there is a definite value for developers and buyers which is driving the demand for rating. An important factor is the confidence an independent rating agency can instil in a buyer.

Read more: Business Line

New realty hubs hold promise

In the last couple of years, Gurgaon emerged as a premium residential and commercial destination in the National Capital Region (NCR).

A number of Fortune 500 companies have opened their offices in Gurgaon owing to its proximity to the airport and availability of a large amount of quality commercial space. Of course, DLF has played an important role in developing the township as a major commercial centre in the country.

Industrial and commercial development, in turn, led to a rise in the demand for residential space. In the last two decades of development, most of the space in old Gurgaon has almost been exhausted. This prompted developers to go further down along National Highway 8 to construct residential and commercial buildings.

The demand for residential units in these areas is so strong from end users and investors that the prices have appreciated by almost 50% in the last one year.

Read more: The Times of India

Real estate valuation

Property valuation has been a requirement of the rulers from times immemorial. In recent history, the first tangible notions of value and valuation in India appeared and appraisal work came in vogue as a result of compulsory acquisition of land by the government of the time for promoting public welfare.

For compulsory acquisition of land, the earliest legislation was Regulation I of the Bengal Code 1824, which was primarily intended for enabling the officers of the government to obtain a fair valuation of the properties for public purpose and pay the landowners a just and fair compensation. Thereafter, the first enactment — the General Land Acquisition Act was passed in the year 1857. This Act provided for payment of compensation to be settled by arbitration. Invariably, the lack of a competent body of valuers to fill in as arbitrators led to the courts deciding on matters related to valuation.

Read more: The Indian Express

Commercial realty demand dips 30%, rentals down 15%

The demand for commercial real estate has dropped around 30 per cent in the past year, prompted by the economic slowdown, according to industry analysts. This, in turn, has resulted in at least a 15 per cent decline in rentals across many locations. In some areas, office rentals have come down by as much as 50 per cent.

In fact, credit to the commercial real estate (CRE) sector grew by just four per cent during June, down from 23.2 per cent in June 2011, suggesting a subdued activity in the office space or retail segment.

In the first quarter of 2012-13, industrial production contracted 0.1 per cent, while exports and imports contracted 1.7 per cent and 6.1 per cent, respectively. The slowdown in economic activity has affected the number of office space deals, as companies are cutting on real estate costs and moving from prime locations to suburbs in many cases. Some are even taking up smaller offices.

A report by brokerage firm Kim Eng Securities suggested that across major cities, demand for office units is at a five-year low and office rentals are down by up to 50 per cent in some locations. The focus of real estate firms has also shifted from commercial to residential.

For instance, Amit Sarin, chief executive officer of Anant Raj Industries, which is mainly focussed on commercial earlier, said: “In the past two years, we have changed our strategy and will focus on residential for some time.”

Even DLF Ltd, the country’s largest real estate developer, has said its focus is only on high-end residential projects and plots as it did not make sense to do commercial in times of an economic slowdown.

Read more: Business Standard

Should you book a soft launch property?

The best word when scouting around for a dream property has got to be ‘discount’ . When that discount is to the tune of 20-30 % over the prevailing market rate, only a fool would let go of the golden opportunity, right? So what if it is for a real estate project that is yet to begin construction? Actually , you need to be wary if the sales pitch contains the term ‘soft launch’ because such projects come with a plethora of risks that may not be worth the discount being dangled.

What is a soft launch?

At the time of the ceremony inaugurating the construction site, many property developers face a liquidity crunch. To tide over the problem, they come out with a soft launch, where they offer the yet-to-be constructed commercial and residential project at a huge discount to a select few customers. For instance, a couple of years ago, a leading developer was offering a prelaunch rate of just 25,000 per sq ft for a property in central Mumbai, where the prevailing market rate back then was around 60,000 per sq ft. Sources say that 80-85 % of the property got snapped up even before construction began. Such soft launches are rarely advertised in a big way. Customers are lured in by brokers known to the developer in exchange for a fee. While customers are baited by higher than average discounts, the developers get ready cash. This is because while some developers will ask buyers to shell out 20-30 % of the property value upfront, others ask for the entire amount.

Read more: The Times of India

Ground realty

A project requires approvals, certification and no-objection clearance from at least 48 government departments, and this number reaches 90 in some states and cities, according to CREDAI. Some approvals are contradictory, which creates a lot of hurdles and leaves room for corruption, says the report. The other key factors that add to the high cost of realty are the ever-increasing local municipal taxes, ready-reckoner rates for deciding stamp duty, cess and even VAT. For instance, in Mumbai, the financial and real estate capital, burden on developers has risen on account of fungible area. Cost of labour has gone up by as high as 60 percent over the past two years. Credai has appealed to the finance minister to look at ways to bring down the cost of construction while taking steps to encourage buyers to have houses of their own.

Read more: The Times of India

Housing Prices Bullish Across Cities

According to the residential real estate index prepared by the National Housing Bank (NHB), the housing prices in 16 cities including Delhi, Mumbai, Chennai, Bangalore, Pune, and Kolkata improved in the quarter ending June 2012, compared to the previous quarter ending March 2012.

In fact, in most of these cities, prices improved quarter after quarter since January-June 2009 quarters barring in a few exceptions like Bangalore, Hyderabad, Jaipur, and Indore, where prices have corrected in some quarters.

But when compared to prices in January-June 2009, when the index was first announced, the prices in the latest quarter have shown a significant jump.

It is also because January-March 2009 was the first quarter when the impact of global bank crisis of 2008 was fully realized. In fact, the index of property prices in Delhi continued to fall till January – March 2010, when the index touched 106, from 121 in January-June 2009.

Read more: The Times of India

It’s About Execution

There is a clear link between construction progress and sales velocities of residential projects, say sales analyses in the top seven Indian cities of India. After the economic recession, buyers became cautious as many projects were put on hold during the recession. Either a cash-crunch among developers or low sales volumes discouraged developers from continuing with construction of their projects. In some cases projects were shelved and the buyers were compensated. Such instances have made buyers prioritise factors such as developer reputation, ability to deliver on time and project approvals as important criteria for making a decision to buy.

A buyer’s market is one where there is a need for completion of construction before a project is fully sold. In contrast, a market where the projects are fully sold before completion is a developer’s market.The analysis reveals that Hyderabad is a buyers’ market as residential projects witness the bulk of sales activity during the construction process as opposed to the proposed stage.

Read more: The Times of India

Luxury Redefined

Tower B at Ireo Skyon, Gurgaon.

Aluxurious home is classified as one which offers the best of both the worlds. On the one hand, residents can soak in a luxurious ambience of a five-star hotel or a resort where every member of the family enjoys the comforts of life, while on the other hand, they have their own private spaces not just for a brief vacation but forever.

The concept of luxury homes has changed considerably. By making homes smaller in size and providing all the amenities in the common space without compromising on quality, developers are doing their best to make luxurious homes economically viable for the buyers.

Read more: The Times of India

How can you tax Gurgaon without basics in place, SC asks Haryana

Describing the lack of facilities to the residents of Gurgaon as “shocking,” the Supreme Court on Friday said the Haryana government or the Municipal Corporation of Gurgaon (MCG) had no business to collect property taxes from them when they had failed to provide basic amenities like sewer and drain in the “so-called most posh colonies in the National Capital Region (NCR).”

“Do you have sewer lines or fresh water or even drainage system? How can you levy a tax for maintaining a service that you don’t even have?,” a bench of Justices D K Jain and Madan B Lokur said.

“No property there is worth less than Rs 1 crore. However, they don’t even have basic facilities. What have you done regarding providing external services, particularly drains and water? You tell us in an affidavit what external and internal services you provided for these township colonies,” said the Bench.

The court was also anguished by the absence of a counsel for the Haryana government and decided to call its Principal Secretary (Law) to explain lapses in their representation and to clarify their stand on providing basic facilities to Gurgaon residents.

Read more: The Indian Express

Pilot project to digitalise land records launched

Delhi government today launched a pilot project under which land records of Kharkhari Nahar area in South West Delhi will be digitised.

The government has initiated digitization of land records to stop tampering of land records and to make the process of mutation of land more transparent and efficient.

The project, which is likely to be extended to more areas in coming months, was launched by Chief Secretary P K Tripathi.

The software for digitisation of the land records has been developed by National Informatics Centre.

“The digitization of land records has been taken up on a pilot basis for Kharkhari Nahar area of Najafgarh,” said a senior official of the Revenue department.

He said residents can get details of their land records from the office of the tehsilder of the area.

“Mutation process of land will take place electronically in Kharkhari Nahar area. However, the existing procedure of manual file movement for the process of mutation will continue simultaneously,” the official said.

The manual mutation process for the area will be continued in parallel till an amendment in Delhi Land Revenue Rules, 1962 is notified.

Read article: The Economic Times

Infrastructure

First Rapid Metro train lands in India, trial in Oct

In a good news for harried commuters of Gurgaon, the first train set for the intra-city Rapid Metro has arrived in India. The coaches are likely to reach the Millennium City in September for the trial run scheduled to begin by October 2.

Rapid MetroRail Gurgaon (RMG), a six-km

Metro rail system connecting Sikanderpur Metro station of Delhi Metro to Cyber City and NH-8 in Gurgaon, is India’s first privately promoted intra-city project.

The project is worth R1,000 crore. The three coaches of Rapid Metro arrived from German firm Siemens’ facility situated at Guangzhou in China at Mumbai port on August 20.

The coaches are already on their way to Gurgaon by road.

As per schedule, the train was supposed to reach the city by August 15.

Read more: Hindustan Times

Infrastructure must grow with population rise

As the former chief town planner with HUDA, HSIIDC, and the chief coordinator planner, NCR of Delhi (Hr), Raj V Singh has over 33 years of experience in formulation of detailed development plans of towns.

His job involved several policy decisions relating to zoning/building bye-laws/controls, specially those relating to residential, shopping malls and multiplexes. Specialization in identification of sites for residential, commercial, industrial and other such projects, their viability and processing of various permissions required under the various state and Central Acts applicable in Haryana.

Singh talks to Tanushree Roy Chowdhury about what goes into making a master plan and the last three master plans of Gurgaon.

Read more: The Times of India