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Villa on sale at thripunithura, Ernakulam . 8.6 cents, cost 2.5cr

5 cents square land on sale at pallikkara, Ernakulam . cost 500000/- per cent

Real Estate Bill, 2013

The Bill proposes to regulate transactions in the real estate sector and is in pursuance of the powers under Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. The draft Bill has been prepared after detailed deliberations with the State Governments and concerned Central Government Ministries, and after having suitably incorporated the suggestions received from them.

The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. This clause has been added on the recommendations of the Department of Revenue, Ministry of Finance.
The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities hereby protecting buyer investments.
The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
The Bill makes it mandatory upon the promoters to deposit 70% or such lesser per cent as notified by the Appropriate Government to cover the construction cost of the project of funds received by the Promoter in a separate bank account, for purposes of ensuring timely completion of projects to be used only for that project, which shall help in timely completion of projects, and prevent fund diversion.
The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.

India’s realty sector may not see any real growth this year

by Arlene Chang Jun 29, 2012, in FIRST POST

New Delhi: India’s real estate sector, which began as being dominated by just a few players over 20 years ago, has now expanded to embrace an ever-increasing base of developers who have been given a fillip by investors— both domestic and foreign — who want to stick a finger into India’s realty pie.

But while 2010 witnessed strong sectoral growth and 2011 saw a slight correction in the area, the present year’s outlook does not look as positive as 2010′s strong show.

While urbanisation, which will bring demand for real estate, is inevitable in the long run, present economic conditions pose a serious challenge for the sector in the short term.

The dominating sentiment among speakers at the 8th International Conference on Real Estate held by the Confederation of Indian Industry along with Grant Thornton was that of low investor confidence and economic uncertainty leading to what could be a year of status quo for the sector.

Even as India saw a sluggish start to its economy this year with the country’s GDP expanding by just 5.3 percent in the January-March quarter, the global scenario hasn’t been any better. Both of these factors, in addition to escalation in input costs and controversies over land acquisition, have weakened demand for real estate and made it more challenging for developers to operate within.

“Realty will fare well, though not very well. It looks like there will be a status quo,” said Sanjay Dutt, Executive Managing Director, South Asia, Cushman and Wakefield, when asked about the sector’s outlook for the year.

Difficult times. Reuters

Chairman and Managing Director of international real estate consultancy firm CBRE, Anshuman Magazine, doesn’t see a huge surge of money coming into the sector immediately.

Even as India saw a sluggish start to its economy this year with the country’s GDP expanding by just 5.3 percent in March, the global scenario hasn’t been any better. Both of these factors in addition to escalation in input costs and controversies over land acquisition have weakened demand for real estate and made it more challenging for developers to operate within.

“The money will come, but it will take time for people to invest. It’s natural – when markets slow down, people are reluctant to invest,” he said, pointing out that despite that India has seen a sustained flow of private equity to the tune of an average of $1 billion in the past two years.

However, Magazine said the current tight-fisted attitude of private equity investors is not just for India. It’s a trend that is seen across all emerging markets.

“This is true of real estate globally. Immediately, for private equity firms, emerging markets are not on the top of their priority list,” said Magazine. While an overall slowdown in the global economy has led to a decrease in the amount of funds available, Magazine also says that the emerging markets’ higher risk factors, longer gestation periods for investments, regulatory issues and high valuations deter private equity infusion.

Finance has been one of the biggest challenges for the real estate sector in India, with hardening of interest rates having a major impact on the borrowing costs of developers.

Others players in the sector, like RK Raheja, VP (Finance), SARE Homes, said that if the government wants to improve investment sentiment for real estate in the country, it also has to act on supporting structures like infrastructure. “The government should act fast and well on building infrastructure to make the sector more attractive to investors,” he said.

Rohit Modi, former Deputy Managing Director, Gammon India, believes that tackling the problem of black money in the sector and resolving labour shortage is the way to encourage more investors. “Taking off black money from the sector will do a lot of good. Today if a developer and owner wants to sell a flat, they may be getting the price they want, but people want to pay almost 50 percent of it in black money. Developers are also facing an acute labour shortage which leads to various problems like delayed projects, increased costs and all. If these are fixed it will solve half the problems,” Modi said.

But despite all the gloom, Magazine said that while real estate may not be selling like hot cakes at the moment, things were not as bad as they seemed. “The real estate market is definitely slow. But the perception is more negative than it really is,” he said.

Investment Policy Updates

The Government has proposed one per cent TDS (tax deduction at source) on transfer of immovable property if the sale value exceeds Rs 50 lakh in urban centres and Rs 20 lakh in other areas in the Union Budget 2012-13.

The Reserve Bank of India (RBI) has granted permission to foreign citizens of Indian origin to purchase property in India for residential or commercial purposes. The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with a bank in India.

According to the latest reforms,

FDI up to 100 per cent under the automatic route in townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) is allowed subject to the following guidelines (also for investment by NRIs)
The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/ Municipal/ Local Body concerned
The investor/ investee company shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/ bye-laws/ regulations of the State Government/ Municipal/ Local Body concerned
The State Government/ Municipal/ Local Body concerned, which approves the building/ development plans, would monitor compliance of the above conditions by the developer

Sources: Consolidated FDI Policy Department of Industrial Policy and Promotion (DIPP), CII Real Estate Whitepaper and Ministry of Housing & Urban Poverty Alleviation

SECTOR FACTS

FDI flows into construction development (including townships, housing, built-up infrastructure) in April-June 2012-13 stood at US$ 348 million, according to the Department of Industrial Policy and Promotion (DIPP)
Construction development sector attracted a cumulative FDI worth US$ 21.1 billion from April 2000 to June 2012

REAL ESTATE IN INDIA

As per a report released by the McKinsey Global Institute (MGI)–India's urban awakening: Building inclusive cities, sustaining economic growth–on April 2010, the country's urban population will soar to 590 million by 2030, from 340 million in 2008. India's cities could generate 70 percent of the net new jobs created by 2030, produce more than 70 percent of the country's gross domestic product (GDP), and stimulate a near four-fold increase in per capita income. It also says that India needs to invest US$ 1.2 trillion over next 20 years to modernise urban infrastructure and keep pace with the growing urbanisation.

Further, growth prospects and price stability of smaller cities are attracting large real-estate developers in such cities in the recent past, according to a report titled 'Real(i)ty Next: Beyond the Top 10 Cities of India', released by Crisil Research. The report estimates that the sale of new residential apartments in 10 such smaller cities at around US$ 4 billion in 2012.

The Government of India’s recent decision to allow 51 per cent FDI in multi-brand retail is also expected to benefit the real estate business in the country, in terms of boosting development of new shopping malls. In fact, India is named among top 20 destinations in the world with the strongest retail real estate momentum, according to international property consultant Jones Lang LaSalle.....OIFC

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