Latest Property News on 'Real Estate India'

Malls make way for offices, residential projects

Mumbai/Bangalore: Burdened by capital investments, lower rentals, delayed returns and overcrowding of shopping malls in an economy in which shoppers are reluctant to loosen purse strings, real estate developers have begun converting such projects into offices or homes.

The trend, which has emerged at a time when the government has been forced to suspend the opening up of multi-brand retail to overseas investment, is more evident in smaller cities, according to the industry and analysts.
Builders there have lost their appetite for malls since they have to wait for 8-10 years to get returns on their investment, and have begun scouting for bigger developers to bail them out.

Pune-based Panchshil Realty, for instance, has shrunk the mall component in one of its projects from 500,000 sq. ft to 200,000 sq. ft in Baner and is building office space instead.

In Indore, Prozone Enterprises Pvt. Ltd, a subsidiary of Provogue (India) Ltd, has converted its mall plan into a residential project because of potential oversupply in the area. The 43-acre project is going to be launched in a month or two.

Companies such as Plaza Centers NV, a subsidiary of Israeli firm Elbit Imaging Ltd that has a retail focus globally, are focusing on developing residential and office projects in India, a senior official said.

In India, it’s developing just one shopping mall in Pune and plans to develop four home projects and two office projects.

From close to 50 builders developing malls before the 2008 financial crisis, no more than six are now building retail projects, said Anuj Puri, chairman and managing director, Jones Lang LaSalle Property Consultants (India) Pvt. Ltd, at a retail forum in January in Mumbai. The permissions required for shopping malls, offices and homes are different, but it is easy to convert a retail project into a residential or commercial one, according to Jones Lang LaSalle.

“We are seeing a lot of interest from smaller property markets such as Ahmedabad, Baroda, Nagpur, Rajkot where developers are keen to switch from their mall projects to office space because the latter is underdeveloped there and stands a chance of earning better, fixed rentals,” said Harminder Sahni, managing director, Wazir Advisors Pvt. Ltd, a management consultancy.

Prozone is following a hybrid model of residential, commercial office space and retail development in cities such as Aurangabad, Coimbatore and Nagpur.

“The strategy will continue to be retail-centric assets”, but it will also focus on peripheral residential and commercial assets to generate quicker cash flows “complementing the retail component in a project, making it profitable”, said Salil Chaturvedi, deputy managing director of Provogue (India).

Most malls are too close to each other. A stretch of Nagar Road in Pune, for instance, had three malls launched close to each other in 2011. In all, there were seven malls launched in the city, all of them in a 6-7km radius. “Not only are there far too many malls in Pune, but the rentals are compressing and it doesn’t make sense to put in too much money in them,” said Atul Chordia, chairman and chief executive of Panchshil. “Inputs costs, too, have gone up by 30-40%.”

Typically, an 800,000 sq. ft mall involves a Rs. 200 crore upfront payment for the land and another Rs. 300 crore for development, apart from interest and other costs. More than 75% of these are holding costs for the developer. For unsuccessful malls, often “the rentals received are not even enough to pay interest costs”, said Kishore Bhatija, managing director of Inorbit Malls (India) Pvt. Ltd, run by K. Raheja Corp. Over the past two years, the gestation period—from land acquisition to the mall going operational—has increased from three years to four.

While it would previously take six-seven years for returns to be generated, it now takes as much as a decade, since input and capital costs, too, have increased by close to 10% year-on-year, according to Bhatija. The deterrents include funding as bankers shy away from retail projects.

“Banks are selective in lending to all kinds of real estate developers, and not only to those engaged in developing malls. The capital requirement is steep for these kind of loans and the real estate sector per se is not doing great, leading to cautiousness from banks,” said United Bank of India chairman and managing director Bhaskar Sen.

“Few understood that building and running malls is a science, and that factors such as catchment viability, location, supply benchmarking and mall management matter in their success,” said Ashutosh Limaye, head (research and real estate intelligence service) at Jones Lang LaSalle. India’s organized retail market is spread across 53 cities that house more than a million people each. In 2011, 13.8 million sq. ft of fresh stock became available, of which 10.7 million sq. ft was absorbed, according to Jones Lang LaSalle.

Source: http://www.livemint.com/2012/02/07211421/Malls-make-way-for-offices-re.html?h=B

Bhora Kalan effect: Villages to soon put up ‘Health Wall’

GURGAON: Encouraged by the appreciation received by Bhora Kalan village for its improved sex ratio, several village panchayats in Gurgaon have decided to put up a ‘Health Wall’ displaying the sex ratio, number of expecting mothers, immunization status and the healthcare facilities available in their villages.

The decision was taken during a Panch Sarpanch Sammelan of Gurgaon district organized on Monday at Kingdom of Dreams. The meeting, presided over by deputy commissioner P C Meena, saw the members of Panchayati Raj Institutions (PRIs) of all the 210 villages of the district taking part.

Source: http://articles.timesofindia.indiatimes.com/2012-02-07/gurgaon/31033580_1_villages-panchayat-land-pris

No decision on Commonwealth Games Village flats FAR

New Delhi: The debate over excess floor area ratio (FAR) of Commonwealth Games Village flats did not reach conclusion during the meeting called by the Urban Development ministry on Tuesday.
Senior officials of Delhi Development Authority and project developer Emaar MGF were part of the meeting, called after the Delhi High Court ordered the authorities concerned should meet and decide over the issue.

The ministry heard both sides and will give its decision through an affidavit in the High Court by February 10. The next date of hearing in the case is February 23.

The court had, in its January 19 order, made it clear that if the logjam over the FAR continues, it would not hesitate in passing an order. The court had sided with the buyers, who are awaiting possession as DDA and Emaar MGF debate the FAR issue. While DDA claims the FAR sanctioned by it is 2,05,000 sqm, Emaar said the FAR is 2,20,000 sqm.

According to sources, Emaar MGF told MoUD it has not constructed any non-compoundable items.”The total plot area of the Village is 11 hectares, as per Master Plan Delhi-2021, FAR of 200 entitles Emaar to construct 2,20,000 sqm after applying 5 per cent compounding as permissible in the MPD. It entitles us to additional construction of 11,000 sqm. Thus the total construction permissible by law tin the complex is 2,31,000 sqm. FAR achieved by the project developer is 2,27,071 sqm,’’ Emaar MGF said.

DDA, on the other hand, suggested either demolishing the non-compoundable construction or an upfront payment by Emaar MGF for the excess FAR.

“The project developer should pay Rs 18,000 per sqm for the excess FAR. This will be beyond the compounding fees charged by DDA’s building department,” said a source in DDA.

But Emaar feels that this charge is too steep and the amount should be calculated as per provisions in the building bylaws, sources said.

Source: http://www.financialexpress.com/news/no-decision-on-commonwealth-games-village-flats-far/909312/0

City centre may get prepaid autos

In a bid to check exorbitant auto fares, the city traffic police may launch a prepaid service from Huda City Centre Metro station. It will soon ask the concerned authorities to constitute a committee and fix fares for various parts of the city. “To prevent auto drivers from fleecing commuters, a prepaid auto service is being proposed by the police. The prepaid service will be launched from the metro station premises as it has vacant space available,” said Bharti Arora, DCP (traffic), Gurgaon.

A major portion of the 29,000-square-metre parking space at the Huda City Centre Metro station is lying unused due to ongoing construction activities for a shopping mall. According to the traffic police, roads are often occupied by private vehicles, taxis and auto-rickshaws in the absence of a dedicated stand.

With a prepaid auto service within the Metro premises, there should be fewer traffic snarls in the area, Arora added.

However, daily commuters have little hope that the plan will see the light of the day.

“It’s a good initiative but I wonder how many auto drivers are going to comply. There is hardly any auto in the city with a meter installed. But I hope this step will reduce chaos near the Metro premises. Plus, we will get to know the legal fares,” said Malik, a daily commuter.

At present, there is not even a single prepaid auto stand in the city. The proposed counters will arrange autos for passengers against a fixed charge. After passengers reach their destination, drivers can collect the fare at the prepaid stand, as it is practiced in Delhi.

Source: http://www.hindustantimes.com/India-news/Haryana/City-centre-may-get-prepaid-autos/Article1-808275.aspx

Industries get shutdown notices in Noida

Sealing of commercial establishments in non-commercial areas has taken a new turn with the Noida Authority issuing shutdown notices to about 1,000 units that supply raw material to at least 6,000 industries across the city. The Noida Entrepreneurs’ Association (NEA), an umbrella body of industries, said it would move the Supreme Court against the authority’s move. “Closure of the 1,000 units will hit all 6,000 industries in Noida. You need them when industries are set up or during overhauling of existing ones,” said Vipin Malhan, president, NEA.

“There are 34 industrial sectors in Noida. But unlike in residential sectors, the authority has not created markets. Industrial sectors have been neglected despite the fact that Noida came into being as an industrial township. Unlike banks and commercial units, there is no relocation plan for these raw material units. Industries can’t survive once these lifelines are shifted far away,” he said.

Most raw material units were in sectors 9 and 10 and once they were shut industrialists would have to go to Delhi or Dadri to procure material, they said.

“Had the authority allowed markets in industrial sectors, like it has done in residential sectors, raw material units would not have been branded illegal,” Malhan said.

The SC has said all 104 banks running from residential premises have to be shifted to commercial areas by the first week of March, or else the authority would seal the premises and cancel plot allotment agreements signed with landlords. Going a step ahead the authority has decided to stop all commercial activities from non-commercial sectors, such as industrial.

Source: http://www.hindustantimes.com/India-news/UttarPradesh/Industries-get-shutdown-notices-in-Noida/Article1-808224.aspx

Suncity residents stop work on Aravali foothills

The alert residents of a private township — Suncity — in Sector 54 on Friday stopped “developers” who had come with bulldozers to clear the rocky terrain of the eco-fragile Aravali foothills for construction of housing units. Later, the residents called the police who asked the developers to call off the work.

There has been a controversy over the land. The Haryana government had allotted plots — each measuring 60 square yards — to 150 persons belonging to economically weaker sections in 2004. The following year, a major portion of this rocky area was cleared making room for 113 plots. At this juncture, the residents protested and stopped the work. So, the rest of the plots could not be prepared.

“On Friday again, all of a sudden a bulldozer was seen removing rocks. The residents stopped the work and called the police. The Aravali range abutting the township is already an eco-fragile area and the mining is banned here. Nobody has the right to destroy the greenery and disturb the ecological balance,” said Abhey Poonia of Suncity RWA.

When contacted, the developers claimed that the bulldozer does not belong to them. According to them, those who came with bulldozers were original plot allottees. “We have nothing to say on this matter. Otherwise also, we have won the case in the SC that has ruled that the land in question is not part of the Aravali Hills,” said Sanjay Jain, the senior official with the developer company.

Anil Kumar the station house officer of the area said that he had called the people to the police station who had sent bulldozers to remove rock. “They are the original allottees of the plots. They wanted to clear the ground for constructing houses,” he added.

Source: http://www.hindustantimes.com/India-news/Haryana/Suncity-residents-stop-work-on-Aravali-foothills/Article1-806957.aspx

Slowdown hits commercial real estate market

BANGALORE: The commercial property market was the only hope for builders already reeling under record low sales in the residential segment has hit a road block.

As per latest RICS India Commercial Property Survey, after a period of strong growth witnessed in occupier and investment demand over the previous few quarters, the market now looks to be cooling down.

In Q4 2011, there has been a marginal drop with respect to global rental expectations, with India now ranked at 24 in comparison to the previous quarter’s 19. Even on the investment side, the market does not seem to be fairing any better, with investment enquiries falling for the third consecutive quarter.

“During Q4, 2011, we witnessed a continuing slowdown in supply of prime office space coupled with a decline in office space take up. The continuing volatility in the global and Indian financial markets, coupled with rising inflation and interest rates, has led corporates and developers to be cautious in their expansion plans,” says Anshuman Magazine, chairman and managing director CBRE South Asia and chairman, RICS South Asia Board.

New projects in Q4, which were rising since past 15 months were being stalled as the demand from tenants dried up in the second half of the year. Available space to occupy also continued to rise,” mentioned RICS.

Further, the investment side of the market also witnessed subdued activity as the demand from investors fell for the third consecutive quarter and capital value expectations sunk to the lowest reading for over two years.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/slowdown-hits-commercial-real-estate-market/articleshow/11793612.cms

HUDA chief Praveen Kumar reassures DLF III residents

GURGAON: The residents of DLF Phase III got a chance to hand in their complaints about the poor security, illegal parking and encroachments in their area directly to the HUDA administrator, Praveen Kumar, who was the chief guest at a function organized by DLF III RWA to launch the directory published by the RWA. The residents also took Praveen Kumar to various trouble spots in their colony and requested him to take necessary action to solve the problems.

The residents of DLF III have been complaining to the authorities about their various problems but this this time around they got a chance to directly show them to the HUDA chief. Praveen Kumar visited a number of locations in DLF III where he saw a lot of encroachments. He also visited the cremation ground in T-Block, which is surrounded by a number of residential houses.

He assured the RWA that necessary action would be taken to improve the living conditions in the colony. R P Singh, president of the RWA, said that the governing body of the RWA undertook an arduous task in compiling this directory with maximum details and telephone numbers not only of the members of the RWA but also of the government of Haryana, district administration of Gurgaon, the DLF management, various public utility services, etc. The function was attended by a number of the RWA members with their spouses, special invitees and advertisers. Releasing the directory, Praveen Kumar appreciated the efforts of the RWA in bringing it out and said it was very informative, educative and well prepared.

Source: http://timesofindia.indiatimes.com/city/gurgaon/HUDA-chief-Praveen-Kumar-reassures-DLF-III-residents/articleshow/11786403.cms

Khandsa to take on admin over underpass

Feeling cheated at the hands of the authorities, people living along the Gurgaon Expressway have threatened to launch an agitation over the issue of constructing an underpass at Khandsa between Rajiv Chwok and Kherki Daula toll plaza. The problem started after National Highway Authority of India (NHAI) dropped a plan to set up an underpass at Khandsa. A detailed project report (DPR) of NHAI has suggested three underpasses and one foot-over bridge on the 7-km stretch between Rajiv Chwok and Kherki Daula toll plaza. The DPR has suggested an underpass each on Hero Honda Chowk, Narsinghpur and Kherki Daula and an over-bridge near Ananj Mandi.

“As per the earlier plan, NHAI was to construct four underpasses, including one near Khandsa village. We have given an ultimatum to the Haryana government as well as to NHAI to include Khandsa also or else we would be forced to stage an agitation,” said Nathu Singh, sarpanch of village Mohammadpur Jharsa.

A number of resident welfare associations (RWAs) and village heads under the aegis of the Joint Action Forum of Resident Welfare Associations (Jafra) have threatened to block the Gurgaon Expressway if talks between NHAI and the state government – over constructing underpasses between Rajiv Chowk and Kherki Daula toll plaza – fail to break the deadlock. The meeting is scheduled to be held in New Delhi on February 17.

Source: http://www.hindustantimes.com/India-news/Haryana/Khandsa-to-take-on-admin-over-underpass/Article1-806961.aspx

HC cancels bail of real estate developer for duping investors

New Delhi: The Delhi High Court has cancelled the bail granted to a real estate developer for “misusing” his bail by continuing to dupe investors and making false claims instead of refunding their money.

A bench of Justice M L Mehta cancelled the bail of S N Sharma, who was facing trial for offences of cheating, criminal breach of trust and criminal conspiracy, saying he did not comply with the trial court’s order to refund the money to investors.

The court pointed out that Sharma sold the land purchased with the investors’ money for personal gains.

“The conduct of the respondent (Sharma) right from inception clearly establishes that his intention was always to dupe innocent investors by making false claims without having legal authority or requirement for development of township.

“Notwithstanding the fact that he was already on bail, he proceeded to dispose of the land purchased with the amount given by investors and used the proceeds of the same for his personal gain and did not repay even a single investor,” Justice Mehta said.

The bench passed the order on a plea by the Delhi Police for cancellation of Sharma’s bail.

Investigations had revealed that Sharma had allegedly received close to Rs 13 crore from more than 600 investors for developing a township project in Dadri, near National Highway-91, called Boutanika City.

However, records of the Housing Commissioner and Chief Town and Country Planner, Lucknow revealed that Boutanika Infrastructure Pvt Ltd was not issued registration for development of a township.

During his trial, Sharma had sought release of the sale deeds of the land he had bought with the investors money so that he can sell them (land) to refund their investment.

On directions of the High Court, the trial court had granted his plea with the direction that the money he gets from selling the land should be deposited with the court within 15 days of sale.

The bench pointed out that Sharma “abused the indulgence that was given to him by this court from time to time” and “diverted the sale proceeds to his other business activities.”

It said Sharma received more than Rs four crore by sale transactions but he did not deposit the same with trial court.

The bench also observed that his conduct during the entire trial was evasive and dishonest as he never disclosed the details regarding his assets completely.

Source: http://www.financialexpress.com/news/hc-cancels-bail-of-real-estate-developer-for-duping-investors/909038/0