Will the Real Estate Bill see a rise in property prices?

Ireo Victory Valley, Gurgaon

Ireo Victory Valley, Gurgaon

With the Real Estate Regulatory Bill awaiting the final nod in the monsoon session of Parliament, speculation has begun on its impact on the realty prices. Amit Shanbaug talked to some of the leading experts in the real estate space and here’s what they had to say on the subject…

Niranjan Hiranandani, Managing Director of Hiranandani Group of Companies:  Yes

Once implemented, the Bill will bring a lot of transparency in the sector, and all the developers support and appreciate it. However, one needs to understand that there are certain sticky points. Take the deposit of 70% of the cost of the project, which includes the land and construction cost, in an escrow account, which would suck up the liquidity from the market. The land cost is the highest one has to bear today, and currently, most developers are facing liquidity crises, which will be heightened due to the bill.

The developers would have to approach the banks to fund the construction cost. It is virtually impossible for banks to fund hundreds of crores of rupees as there is an RBI cap on lending. So, they would have to consider expensive sources of credit like private money lenders, and the cost of these high interest rates would have to be passed on to the customer.

Read more: The Economic Times

Relief in EDC payment for realty sector

Coming to the rescue of the recession-hit realty market, the Hooda Government has offered several sops to builders.

At a recent high-level meeting chaired by Chief Minister Bhupinder Singh Hooda, it was decided to extend the period for depositing the enhanced external development charges (EDC) from two years to three years. The enhanced EDC can now be deposited in six half-yearly instalments instead of four, official sources told The Tribune here today.

Now, the period for depositing the outstanding EDC under the April 12, 2012, policy has also been extended from one year to two years.

Adopting a carrot-and-stick policy, the government has decided to develop on priority areas and sectors where colonisers/licencees have already paid 100 per cent EDC . However, the colonisers will have to move a collective application to HUDA for carrying out external development works in the areas concerned. Similarly, the cases for the grant of licences for additional area adjoining the already-licensed projects and approval of building plans shall be processed on merit depending upon the payment of outstanding dues.

Read more: Tribune India

Realty projects get big boost, MoEF to now ease control

In a major boost to realty sector, the Centre has granted power to states to decide on new townships and construction and development projects, restricting the ministry of environment and forests to environmental sustainability aspects.

This would apparently speed up the approval process and reduce duplication of work. On the flip side, the decision would clip the wings of state environment bodies as they would not be able to examine projects holistically.

The environment ministry had after much resistance got the power to examine all aspects of a project, including a township plan, but had to step down after protests by state governments like Kerala and Maharashtra.

The environment ministry had then issued an order, asking state environment impact assessment authorities not to assess projects on the basis of township plans, master plan or structural safety norms.

This decision was based on the recommendations of a panel on high-rise buildings headed by member planning commission K Kasturirangan.

The panel said environment bodies should consider only environmental aspects for construction projects. “Otherwise, it leads to unnecessary duplication and undue delay,” a senior ministry official said.

Read more: Hindustan Times

Economy

Plan panel to make report on ease of doing business in India

The World Bank’s controversial annual report comparing the ease of doing business across countries will soon have a local equivalent, with the Centre initiating an annual exercise to assess the investment climate and business regulations in different states.

But taking a cue from the severe criticism of the Bank’s methods to rank countries, India has decided to skip the idea of ranking states on different factors. Instead, these annual assessments would focus on benchmarking states’ regulations vis-a-vis their peers and enable states to frame their own reform agendas by sharing best practices.

The Planning Commission is developing the tools to evaluate the business environment in states as part of the implementation strategy for the National Manufacturing Plan (NMP), which aims to raise the sector’s contribution to the economy from 16% to 26% by 2024 and create 100 million jobs in the process.

“Many of the key areas, where the shoe pinches businesses the most, such as labour and environmental regulations and getting a space to operate from, are in state governments’ domains,” said a senior official in the Commission.

Read more:  The Economic Times

Infrastructure

India’s growing construction market receiving global attention

Spurred on by the boom in the real estate segment which accounts for nearly 43% of the construction spend, India’s growing construction industry is attracting a large number of global players.

According to a PwC report prepared for by the organizers of The Big 5 Construct India, the real estate sector is forecast to grow at a CAGR of 3.6% during 2012 to 2016, with a total market for this segment during this period estimated to be US$ 380 billion (approx. Rs.22,800 crore)

To provide a platform to the large number of international manufacturers keen on entering the Indian construction market, FICCI (Federation of Indian Chambers of Commerce and Industry), the Ministry of Urban Development, Government of India (MUD), and dmg events are organizing a mega building & construction show in Mumbai from 2nd to 4th September this year at the Bombay Exhibition Centre

The show has evoked overwhelming response and has received confirmations from 10 international country pavilions including Germany, Italy, Spain, Turkey, UK, Iran, Greece, Taiwan, Korea & China. In addition, leading companies from countries like India, Thailand, Japan, UAE, Oman, Vietnam, Singapore, France, Australia, etc have confirmed their participation.

Read more: India Education Diary

NRIs

NRI’s get 10 per cent remittance bonus with June salary

Non-resident Indians (NRIs) bee-lined in overseas exchange houses last week after getting their June salary to sent most of their savings back home. Thanks to the 10% remittance bonus that they received with June salary as Indian rupee had fallen by over 10% to over 60 against the US dollar in June alone.

To put things in perspective, NRIs got 10% more for every dollar they sent back home and that’s driving the Indian remittance story at a point of time when the foreign direct investment ( FDI) rate into India is falling as the government has failed to regain institutional investors’ faith in India’s groth story due to its flip-flop policies.

India, the world’s largest receiver of remittances with record $69.35 billion of remittances in 2012 is set to keep its position intact. Thanks to the falling Indian rupee against the US dollar, which breached 61 mark on Monday, making it lucrative for the Non-Resident Indians (NRIs), especially the Non Resident Gujaratis (NRGs) and the Non Resident Mallyalis (NRMs), to remit money back home.

Read more: The Economic Times

Education

India leads in education, says Cornell University President

A top American academician has described the drop in number of Indian students joining US universities as brain circulation.

A top American academician has described the drop in number of Indian students joining US universities as brain circulation rather than as reverse brain drain.

“I call it as a brain circulation and in the past it was going in one direction. We see discoveries are coming in the field of medicine, agriculture, technology from places that we did not think of in the past.

“India has some of the finest and world class institutions such as IITs and Indian Institute of Science and there is no dearth of world-class quality education there,” President of Cornell University, David J Skorton, told PTI here on the sidelines of a meeting in Cornell Club in Manhattan.

Skorton said India is leading the world in cutting edge outsourcing technology and technological revolution of sorts is happening there.

“Look at some of the inventions in medicine and agriculture. Infosys has done whole new concept of outsourcing to make India feel proud. It had mastered the technology,” he said.

Cornell University is the most educationally diverse member of the Ivy League.

Read more: The Economic Times

Retail

Retail rush at the malls: Sales zoom about 40% y-o-y

On Sunday there was a long queue of cars waiting on the driveway of the Phoenix Mills mall in Mumbai’s Lower Parel where there was no space left for parking as shoppers thronged the mall to splurge on end-of-season sales that started in the weekend.

Sales in the first three days rose 20-40% from last year’s discount season for most brands as deep discounts and pent-up demand brought consumers out in full force, while top retailers such as Zara, Pantaloon and Westside clocked anywhere between 60% and 200% jump in sales.

“This is unprecedented…I have never seen anything like this during any sale season,” says Rajendra Kelkar, senior centre director for west at High Street Phoenix that operates three malls in Mumbai and Pune.

He says two lakh people descended on the firm’s Pune mall on Sunday, double that of usual holidays and weekends. “This is happening in a city like Pune that has 60 lakh population and 40% of that is below poverty line,” he adds. Kelkar says sales rose 40-50% year-onyear in all its three malls.

Coming at a time when the country is battling economic woes on many fronts including rising inflation and a sharply sliding rupee, the sudden surge in demand has come as a surprise.

Read more: The Economic Times

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