Latest Property News on 'Real Estate Developers'

DLF envisions 1,000 acres of development in UP by 2015

Realty major DLF Limited has envisioned almost 1,000 acres of land under development in major towns of Uttar Pradesh in the next two to three years. This would be in addition to projects either underway or proposed in the National Capital Region of Noida and adjoining areas.

The company is bullish on Lucknow, Allahabad, Kanpur, Varanasi and some other tier-2 and 3 towns in the state.

Recently, DLF had launched its first residential project ‘Gardencity’ in Lucknow spread over 248 acres on Rae Bareli road. It has collaborated with Shapoorji Pallanji & Co Ltd as construction partners for the project estimated at Rs 450 crore.

“We have received overwhelming response for our Lucknow project,” according to DLF director (sales and marketing) Ananta Singh Raghuvansh. “Almost 85 per cent of it has already been sold out,” she told Business Standard. The company had offered to sell over 1,000 plots of sizes starting from 250 square yards in Gardencity.

Raghuvansh said the company was in talks with landowners at other places in UP, and things would start to take shape in the near future. “Acquiring land is a big challenge for real estate developers, especially in the aftermath of Noida land issue,” she added.

DLF vice president (operations) Rajeev Singh said the commercial market was “rather subdued” currently due to over-supply in both metro and non-metro centres. “We are waiting for the market to improve further. Once that happens, we will launch more projects in the region,” he added.

Commenting on the change of guard in UP, Raghuvanshi said the company hoped the process of industrialisation and economic development would gather pace under the state’s youngest-ever chief minister Akhilesh Yadav. “If the state invites the industry for suggestions regarding new policies, we would be most willing to come to the table,” she added.

Source: http://www.business-standard.com/india/news/dlf-envisions-1000-acresdevelopment-inby-2015/470684/

Ecnon to invest Rs 350 crore on three projects in NCR

NEW DELHI: Real estate company Ecnon today said it will invest Rs 350 crore to develop three projects in national capital region over the next 3-4 years.

“We will invest Rs 350 crore to develop three projects. Out of these, a group housing and an office project will be developed in Noida, while another office complex will be built in South Delhi,” Ecnon CEO Kushal Dev Rathi said here.

The company will construct 850 housing units in the residential complex, proposed to be built in Noida, he added.

Rathi said the company is in talks with Noida Authorities to acquire land for the said two projects in the area.

When asked about the source of funding, Rathi said that “besides internal accruals, we have fundings from many individuals and venture capital firms.”

Ecnon has been formed today through a joint venture between real estate brokerage firms NineONine and Elevations and Creations.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/ecnon-to-invest-rs-350-crore-on-three-projects-in-ncr/articleshow/12599356.cms

Unitech asked to pay allottee 6.6 lakhs

NEW DELHI: A real estate developer has been ordered to pay Rs 6.6 lakh to a resident of Rohini, Amrit Lal Chawla, for “raising illegal demands from time to time and then refusing to refund the booking amount” when Chawla wanted to cancel the booking. The District Consumer Disputes Redressal Forum (northwest district) says the actions of Unitech Ltd-the opposite party, along with Unitech Reliable Projects Ltd and an agency-were “clearly unjustified” and amounted to “unfair trade practices” .

Chawla had booked flat no. 1103, 11th floor, Tower 4, Unitech Verve, plot no. 11 in Greater Noida , for Rs 5.5 lakh in November 2006. The agreement presented by Chawla before the forum says he had bought the flat at the rate of Rs 3,200 per square foot. From January 2007, Chawla started receiving a series of letters , each one increasing the rate. When he made inquiries, he received a letter saying that the unit had been allotted to him at Rs 3,250 per sq ft with an additional charge of Rs 50 per sq ft as “Preferential Location Charges”.

There was a further raise pushing the rate to Rs 3,350 per sq ft. Irritated by the increases , Chawla sought to cancel the booking and demanded refund of the booking amount in May 2008. The company wrote back saying, “The company may at its discretion forfeit the booking amount/registration amount and any amount paid over and above the Earnest Money shall be refunded to the allottee(s). Therefore, in case you seek cancellation of the booking the Earnest Money / Registration Amount paid by you shall stand forfeited by the company in your case.” Chawla took Unitech to consumer court in March 2009.

The district consumer forum , with Rakesh Kapoor as president, directed Unitech to pay Chawla the booking amount-Rs 5.5 lakh-and another Rs 1 lakh for “physical and mental agony suffered by the complainant” and a sum of Rs 10,000 as cost of litigation.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/unitech-asked-to-pay-allottee-6-6-lakhs/articleshow/12604959.cms

Emaar township scam: CBI to file supplementary chargesheet in the case

HYDERABAD: The Central Bureau of Investigation (CBI) will file an additional chargesheet in the Emaar township scam, focusing on the role of the accused who were not covered in the first chargesheet.

Sunil Reddy, said to be an aide of YSR Congress party leader Y.S. Jaganmohan Reddy and Emaar MGF finance head (south) G.V. Vijaya Raghav are likely to figure in the supplementary chargesheet.

After the investigating agency gave indications towards this effect, Sunil Reddy Monday withdrew his bail petition in Andhra Pradesh High Court. His counsel informed the court that a fresh bail petition would be moved after the CBI files a supplementary chargesheet.

The federal agency also submitted to the high court details of the bank transactions made by Sunil Reddy. The CBI counsel, B. Ravindranath informed the court that Rs.63 crore received from the sale of villas in the township were invested into Sunil Reddy’s firm, South End Projects.

Meanwhile, the CBI is set to intensify its probe, focusing not only on the role of Sunil Reddy and Vijay Raghav but also on Emaar MGF Land Ltd Managing Director Shravan Gupta and other accused in the alleged “criminal conspiracy”.

After informing the high court last week that it would complete the probe in the case by April-end, the investigating agency is now looking into the role of Shravan Gupta, Mohamed Ali Alabbar, chairman, Emaar Properties PJSC, Dubai, and businessman Koneru Madhu.

The three accused did not appear before the trial court along with others on March 31. The federal agency is now likely to issue red corner notices.

The CBI has also come under criticism for allegedly showing discrimination towards some of the accused.

The high court while hearing the bail petition of Koneru Prasad, one of the accused, last month asked CBI why it failed to issue red corner notice against Gupta, even though he was shown as an absconder in the case.

The CBI chargesheet filed in February said Emaar MGF Land Ltd under then CEO of Emaar MGF Land Ltd, Srikant Joshi and Managing Director Shravan Gupta did not fix the price of the plots as per the prevailing market rate.

According to chargesheet, 10 different companies (7 at New Delhi and 3 at Ernakulam) were created at the instruction of Gupta to block 18 plots in their names with an intention of selling them at a premium, at a later date.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/emaar-township-scam-cbi-to-file-supplementary-chargesheet-in-the-case/articleshow/12595494.cms

Ecnon to invest Rs 350 crore on three projects in NCR

NEW DELHI: Real estate company Ecnon today said it will invest Rs 350 crore to develop three projects in national capital region over the next 3-4 years.

“We will invest Rs 350 crore to develop three projects. Out of these, a group housing and an office project will be developed in Noida, while another office complex will be built in South Delhi,” Ecnon CEO Kushal Dev Rathi said here.

The company will construct 850 housing units in the residential complex, proposed to be built in Noida, he added.

Rathi said the company is in talks with Noida Authorities to acquire land for the said two projects in the area.

When asked about the source of funding, Rathi said that “besides internal accruals, we have fundings from many individuals and venture capital firms.”

Ecnon has been formed today through a joint venture between real estate brokerage firms NineONine and Elevations and Creations.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/ecnon-to-invest-rs-350-crore-on-three-projects-in-ncr/articleshow/12599356.cms

Real estate development should be given special status on par with industry

The real estate is booming and is a sector, next only to agriculture, which has the maximum growth potential in terms of employment generation and contribution to the GDP (gross domestic product).

This sector, however, is wallowing in neglect and does not even have a status, ‘special’ or ‘industry’. Real estate development should be given special status on a par with industry. Budget 2012-13 has poured cold water on this sector, yet again, and dashed the hopes of developers and builders.

A legion of prominent developers and builders, under the banner of NAREDCO ( National Real Estate Development Council) and CREDAI (Confederation of Real Estate Developers’ Association of India), made several representations to the Union government to accord the sector longstanding demands like special status, infrastructure status to the housing sector, special economic zone (SEZ) incentives for promoting real estate development like housing finance, rental housing, deduction for irrecoverable rent and assessment for bank incremental deposits, etc, but nothing came of it.

In a post-Budget memorandum for 2012-13 , developers have again raised these issues. They believe that an industry status will bring about major transformation in the outlook and nature of the sector. It would encourage investment , attract large companies and, most important, inculcate corporate culture and industry discipline in the sector , which would immensely benefit the overall economy, the consumers in particular .

Industry status would also help the sector get bank loans on average interest rates and at low collaterals, against the existing high-risk rates. Further, it would help the sector get central and state subsidies in case developers move into backward regions or the northeastern regions and raise external commercial borrowings (ECBs).

In the post-Budget memorandum for 2012-13 , of NAREDCO, developers have demanded that the sealing of Rs 1 lakh under Section 80C of the I-T Act be increased to Rs 2 lakh with Rs 1 lakh out of it exclusively reserved for payment of principal borrowed for the purchase of a residential house. This would help boost housing stock. A separate limit for payment towards purchase of a house or repayment of principal on housing loan was earlier available under Section 88.

Navin Raheja, the president of NAREDCO, says: “As an incentive to housing development, infrastructure facilities like roads, toll roads, highways including housing, watersupply projects or other activities, etc, must be added to Section 80-IA of the I-T Act, where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any of the business referred to in sub-Section (4) then a deduction equal to 100% of the profits and gains derived from such business shall be allowed for ten consecutive assessment years. This will meet the outstanding demand of housing to be treated as infrastructure .”

Kamal Taneja, the vicechairman of TDI Group, says: “Housing development companies are engaged in undertaking large-scale urban development projects including purchase of raw land and developing it for the purpose of construction of houses, multistoreyed buildings, creation of infrastructure and social facilities like roads, water supply, water treatment, sanitation and sewerage, solidwaste treatment and also to create educational, medical and recreational facilities as an integral part of development of satellite townships, in accordance with the elaborate rules and regulations and with the specific approval from the governments concerned.

Such projects tend to reduce the pressure on existing cities by providing lowpriced alternatives and value for money to the customers.”

Navin Raheja says: “After purchasing agricultural land, realty firms create and provide most of the infrastructural facilities. It is only by creating these facilities that the raw land gets converted into developed land, fit for construction of houses and highrise buildings for residential and commercial purposes, thus augmenting the housing stock of the nation.

It is presumed that the activities of these companies are already covered by the definition of ‘infrastructure facility’ but the position has become debatable as such activities are not covered by a specific clause.”

The previous Budget has specified that exemption under I-T Act 1961 would be available to only those SEZs, which are approved on or before March 31, 2012, and begin manufacturing or producing or providing services on or before March 31, 2014. The direct tax code ( DTC) does not cater to concessions available under Section 10AA and 80IAB.

It proposes minimum alternate tax (MAT) at the rate of 18.5% on the book profits effective from April 1, 2012 on developers of SEZ and units operating in the SEZ. The SEZ developers are also required to pay dividend distribution tax (DDT) at 15% after June 1, 2011.

Sanjiv Srivastava, national executive committee member of Credai, says: “As development of many SEZs has been delayed due to economic slowdown in view of rising interest rates, lack of investors and global uncertainties, we have suggested , under the banner of Credai, that the cut-off date for completing development of SEZs be reset to March 31, 2013 and for starting manufacturing to March 31, 2015.”

“We have also been demanded the income tax deduction under Section 80-IB (10) available to firms developing housing projects is for projects approved on or before March 31, 2008. As this date has not been extended, provisions of this section will cease to exist after March 31, 2013,” Srivastava says.

Vijay Jindal, the chairman and managing director of SVP Group, says: “Undoubtedly , since the housing industry has not yet overcome the impact of the recession of 2008 and is in the grip of a severe downturn, coupled with a huge demand of housing, especially for poor, yet to be fulfilled, it is suggested that provisions of Section 80-IB (10) be made applicable for projects sanctioned after March 31, 2008, at least till 2015.

If need be, the size of units could be reduced from 1,000-1 ,500 sq ft to up to 1,200 sq ft, in line with the definition of affordable housing prescribed by the government.”

Anil Sharma, the vice-chairman of Credai, NCR, says: “The deduction of capital expenditure incurred wholly and exclusively for developing and building a housing project under a scheme for slum development or rehabilitation or affordable housing framed by the central or state government and notified in accordance with the guidelines prescribed is allowed under Section 35AD sub-Section (5)( ac) & (5)( ad).

The definition of capital expenditure does not include land cost and building construction cost or any other significant investment in the project. As a result, a developer of slum redevelopment , rehabilitation and affordable housing does not get any major advantage , as far as the income tax concession is concerned.

Therefore, we believe that the cost of land and building construction should be made part of capital expenditure to incentivize developers to undertake construction of social housing.”

QUICK MANTRA
Budget 2012-13 has poured cold water on this sector, yet again, and dashed the hopes of developers and builders.

Industry status would also help the sector get bank loans on average interest rates and at low collaterals, against the existing high-risk rates.

Source: http://economictimes.indiatimes.com/features/et-realty/real-estate-development-should-be-given-special-status-on-par-with-industry/articleshow/12554522.cms

Maharashtra developers take RTI route against government

While the government is trying to regulate the developers with provisions of penalty and up to imprisonment, the developers in Maharashtra have decided expose the policy paralysis through RTI route. In what appears to be a head on move, the developers have decided to seek information on various approved plans and earned revenue in the last 10 years, to show that the state government is losing revenue because of its slow approval procedure and various wrong policies.

The Maharashtra Chambers of Housing Industry (MCHI) and Confederation of Real Estate Developers’ Associations of India (CREDAI) have decided to file RTI queries to seek details on approved plans and earned revenue.

However, there seem to be no consensus over the proposed strategy and many developers feel it can be counter-productive to the sectors’ fortunes.

Requesting anonymity a MCHI-CREDAI told Track2Realty, “Taking a stand against the government and its officials will not help us. We should have an amicable and cordial relationship with them. Only then can any business can be done in the city and state. So, after a series of discussions, we may change our policy.”

Another developer admitted that they were equally responsible for the mess in the construction industry. “Our files are kept separately in the power corridors because we have made a habit of getting it cleared by greasing the palms,” he said in a candid observation.

MCHI President Paras Gundecha also played it safe to tone down the strategy, “We want to resolve the deadlock amicably. We will submit a memorandum to Chief Minister Prithviraj Chavan and present our problem. After that, we will take a further course of action.”

The Builders’ Association of India has recently issued a press release stating that the state is losing an opportunity to create nearly 1 lakh housing stock due to the introduction of new redevelopment regulations.

“It would have generated Rs9,882 crore revenue via the sale of additional FSI on a premium basis as per DC regulation 33(5)2-C-(ii),” states the press release.

Source: http://www.track2realty.com/maharashtra-developers-take-rti-route-against-government

Maytas Properties: IL&FS, SRS Orion in talks to resolve issues

NEW DELHI: IL&FS, the financial institution that controls Maytas Properties, is in talks with SRS Orion, an investor in the scam-hit realty company to resolve the differences between them.

Mauritius-based SRS is seeking conversion of its Compulsory Convertible Debentures (CCD) in Maytas Properties (MPL) into shares and appointment of its directors on the board of the real estate company.

SRS Orion has invested around Rs 600 crores in MPL. It had questioned MPL’s revival plan in which 80 per cent of the company’s shares were transferred to IL&FS for just Rs 20 lakh.

Under the revival plan, the government controlled board of MPL transferred the shares to IL&FS.

The matter is pending before the Company Law Board (CLB) where it was adjourned today to April 24 on the request of parties.

Counsel appearing for the parties said that settlement talks among the parties concerned are going on.

If the settlement fails then the board would start its final hearing in the matter, said a counsel associated with one of the parties.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/maytas-properties-ilfs-srs-orion-in-talks-to-resolve-issues/articleshow/12521369.cms

Realtors get by on cash from moneylenders

Hit by an acute cash crunch, some of the top property developers in Mumbai are borrowing funds at four per cent interest a month from private moneylenders and investors to meet their yearly debt repayment and tax obligations, say industry players and property consultants.

Although developers used to borrow funds at 2-2.5 per cent a month at the fag end of the year, the rate has touched a new peak of four per cent a month — cumulatively, 48 per cent per annum.

Moneylenders and investors are demanding higher rates from developers, given the strong demand for short-term funds and tight liquidity conditions. According to property market sources, funds to the tune of Rs 500-600 crore have flown from these informal channels to builders in the past two-three months in Mumbai.

A developer, who operates in South Mumbai and is into redevelopment of projects, borrowed around Rs 70 crore in January to meet debt repayment obligations. Another in the western suburbs of Mumbai and a pan-Maharashtra developer have borrowed funds in large chunks, according to sources.

Money is said to be lent by wealthy diamond and wine merchants, moneylenders, politicians and high net-worth individuals, who ask for two-three times the cover to the amount lent. So, if a developer has five-six apartments valued at Rs 10 crore, he could get a loan of Rs 5 crore.

The tenure is one-three months and brokers are hired to get funds from moneylenders and investors. Even as brokers get hefty commissions, the onus of prompt repayment also lies with them, say sources.

Says Amit Goenka, national director, capital transactions, Knight Frank, “Developers have many obligations to meet and secured or unsecured borrowing is the shortest way to get money in the current circumstances.”

Besides, the current borrowing season has also seen a rise in mortgages by developers with moneylenders and investors. “Mortgages have gone up. Developers are mortgaging their assets and borrowing funds from investors as the latter are not buying properties,” says Sandeep Runwal, director, Runwal Group, a Mumbai-based developer.

According to estimates, developers needed to repay a total of Rs 20,000 crore to banks in March 2011. Although big developers such as DLF and HDIL are selling land parcels and development rights to repay loans, smaller ones have to depend on informal sources of money, say consultants.

Recently, HDIL sold a land parcel in the Andheri suburb of Mumbai to Adani Enterprises for Rs 900 crore. DLF, the country’s largest developer, has been looking to sell a land parcel in Mumbai and Aman Hotels for some time to reduce its Rs 22,000-crore debt. “Both banks and NBFCs (non-banking finance companies) are shying away from lending to over-leveraged developers. PEs are also sceptical, which is why these developers are knocking on the doors of moneylenders,” says a chief financial officer of a Mumbai-based developer. V K Sharma, chief executive of LIC Housing Finance, says, “We have not seen any spurt in lending to developers. We are conservative in lending to real estate. We only lend to developers who meet our terms.”

Besides, some developers are increasingly resorting to bulk sales to get cash flows. “The sale we have done in the month of March 2012 is equivalent to what we did in the last 14 months,” said a developer in South Mumbai. On buying a minimum of three apartments, the buyer gets a discount of 10-20 per cent.

Source: http://www.business-standard.com/india/news/realtors-get-bycashmoneylenders/469791/

Raheja Developers plans Rs 1,000 crore investment on new township

NEW DELHI: Raheja Developers is planning to build an integrated township at Sohna near Gurgaon that could entail an investment of about Rs 1,000 crore over the next three years.

The project, which is yet to get the final regulatory approval, is planned over an area of 108 acres that will be expandable up to 250 acres.

“We have submitted the LoI ( Letter of Intent) to develop the township in 108 acres. We are hopeful of getting the final approval very shortly and will launch the project within next 15 days,” Raheja Developers Chairman and MD Navin M Raheja told PTI.

The company has also applied for approvals to expand the township into a total area of 250 acres, he added.

When asked about investment that may go into the project, Raheja said, “We have not made the final outlay, but any such project of this size will require to put in about Rs 1,000 crore on development.”

The company will invest the amount through internal accruals, he added.

At present, the company is finalising the design plan of the project, Raheja said.

“We are working on the design. We are planning to offer around 800 housing units in the township that will comprise independent flats, group housing, villas and plots. It is likely to be completed in the next three years,” he said.

Last week, Raheja Developers had said it will invest about Rs 300 crore in a group housing project at Dharuhera in Haryana over the next 4-5 years.

The project, Oma, will house 640 apartments and will be one of the tallest buildings in the area with 40 storeys, the company had claimed.

The sizes of the flats will vary between 550 sq ft and 4,500 sq ft. The company will offer the apartments at a price ranging from Rs 17.5 lakh to over Rs 1 crore, he said.

Last year, Raheja Developers had announced plans to build ‘Raheja Phoenix’ that comprises a 54-story tower with a helipad for about Rs 300 crore, which it claimed will be the tallest housing project in the National Capital.

At present, Dr Shyama Prasad Mukherjee Civic Centre is the tallest building in Delhi that has 28 storeys with a height of 112 metres.

The company had also formed a joint venture with Dubai-based Arabtec Construction to build real estate projects in India and awarded contracts worth Rs 1,020 crore to the JV firm for three housing projects.

The JV will develop the housing project ‘Raheja Revanta’ with 56 storeys (195 metre) in Gurgaon comprising 1,200 units. It will later build the ‘Raheja Phoenix’.