Latest Property News on 'Chennai'

Decision on FDI in Multi Brand Retail Next Week

The Government’s long awaited ‘big ticket’ reform — of allowing foreign direct investment (FDI) in multi brand retail — is likely to see the light of day soon, with the Union Cabinet likely to take up the issue next week. The case for increasing the current 51 per cent cap on FDI in single-brand retail is also likely to be considered at the same time, Business Line reported, citing sources. Allowing FDI in multi-brand retail would open the door for giant multinational retail chains such as Walmart to enter the Indian retail sector. Currently, Walmart has a joint venture with Bharti for wholesale ‘cash-and-carry’ stores.

The move had been delayed by strong political opposition from some quarters, which feared that the entry of foreign retail chains would kill the small Indian retailer. According to sources, the plan is to issue the necessary orders within a month of the approval by the Cabinet. “So now you can expect a New Year gift for the foreign investors”, a person familiar with the development said. But the “gift” is likely to come with several strings attached. Sources confirmed that the Cabinet nod was likely to come with several modifications to the recommendations made by the Committee of Secretaries (CoS) on the subject.

For example, the final guidelines for the FDI may ask for 30 per cent mandatory sourcing from small and medium enterprises (SMEs). The definition of the SMEs may include domestic and global firms. It may be recalled that the CoS, in its meeting on July 22, said, “The condition that 30 per cent of value of manufactured items may be procured from the domestic SME sector, was not agreed to.” The Government is also likely to stipulate that in the case of agricultural produce, 60 per cent of the sourcing should be from low-income, resource-poor farmers.

Such farmers will be defined as those who are having less than 10 hectares of land. The final guidelines may retain the recommendation of the COS regarding self-certification by the company in regard to 50 per cent of the total FDI proposed by an investor in back-end infrastructure, but with a condition that the Government may go for surprise checks.
The final proposal is also likely to give some detail about the definition of ‘back-end infrastructure.’ It may say that cost of land and the building for a retail store will not be taken as investment in the back end infrastructure. Earlier, it was not clear what could be considered as back-end infrastructure.

To soothe the concerns of the electronics sector, the final guidelines may impose a condition such as, “for the purpose of investment in the back end infrastructure, any investment made in the processing, manufacturing or distribution would be counted.”
A senior Government official said that an increased FDI limit in single-brand retail may come with some riders. One of these could be mandatory 30 per cent sourcing from small and medium enterprises, as soon as the FDI limit exceeds 51 per cent. The Government allowed FDI in single-brand retail in February 2006. Till May this year, a total of $92.1 million was approved, but actual inflow has been just $69.26 million.

Ozonegroup Announces Rs 3,000 cr Integrated Township Project in Bangalore

Real estate developer Ozonegroup has announced a Rs 3,000-crore integrated township project in Bangalore, near the Bangalore International Airport. The project, Ozone Urbana, would be spread across 150 acres, and “there is a potential to grow this to 167 acres,” said K S Sudarshan, chief operations officer, Ozonegroup, at the launch. The overall project cost would be around Rs 3,000 crore, said S Vasudevan, chairman and managing director, Ozonegroup, which includes land acquisition and infrastructure development costs of Rs 1,000 crore.

“We acquired the land over 3-4 years,” he added. The project would be funded through equity and investor funds. “We have also tied up with banks for project funding,” he said.
Urban Infrastructure Opportunities Fund, promoted by Anand Jain, in which Reliance Industries is the largest shareholder, has invested over Rs 1,000 crore in the Ozonegroup both at SPV level and entity level. At the entity level, the fund has 50 per cent stake in the company. The company also partners with HDFC Venture Fund.

Govt to Make Draft Real Estate Regulation Bill Public

The government will make public the draft Real Estate Regulation and Development Bill, 2011 for comments from stakeholders this week and may subsequently introduce it in the forthcoming winter session of Parliament. Aimed at protecting customers from fly-by-night developers, the draft Bill will seek to bring more transparency in the realty sector.

“We will upload the draft Bill on the Ministry’s website on November 11 for suggestions by public. After considering those suggestions, we are hopeful of introducing the bill during the winter session of Parliament,” Union Housing and Urban Poverty Alleviation Minister Kumari Selja said. While unveiling the new logo and brand identity of Confederation of Real Estate Developers’ Associations of India (CREDAI), she said the draft Bill has taken into account of the concerns raised by the builder community.

“The bill will be under the public domain for few days… We are also prepared to look into the suggestion of single window clearance system for realty projects wherever we can,” Selja said. Last week, she had said the Bill would protect the interest of consumers without hurting the real estate sector. “It will be a balanced kind of Bill, as on one hand we do not want consumers should be put into any difficulty (in real estate buying) and on the other hand, we definitely do not want to throttle the real estate industry. So it will be a balanced (one),” the minister had said.

Real estate developers led by CREDAI has been opposing the constitution of a regulatory body to supervise sector and said that it would become a “breeding ground for corruption” when implemented. They apprehended that the objective of the draft Bill was limited to just consumer protection, leaving other important issues such as long delay in approval and rising cost of material.
According to the draft, developers will need to make public disclosures related to land title, project completion date and other relevant scheme details on the website of the proposed regulatory authority. The disclosures must be made before launching a project, so that consumers are not taken for a ride at a later stage and the promoters will also have to register themselves with the regulatory authority.

NCC Urban Plans Residential & Commercial Projects in South India

NCC Urban Infrastructure Limited, a subsidiary of Hyderabad-based construction major NCC Ltd, is lining up over 10 residential and commercial projects, together with a built-up area of 2.5 million square feet, in Bangalore, Chennai, Hyderabad and Kochi. “While we recently launched six projects in Bangalore, both apartments and villas, which are expected to generate a turnover of Rs 250 crore per year, ventures in Hyderabad, Kochi and Chennai are to be launched in the next two to three months,” said Narayana Raju Alluri, managing director of NCC Urban.

The company had received Rs 150 crore as equity and the remaining as loan from the parent, NCC Limited, to fund acquisition of land for these projects, he added. NCC Urban, which has so far developed over 2 million sq ft of residential and commercial space, currently has a land bank of over 400 acre. The company is in the process of launching a 100-acre integrated township, enveloped with commercial space, in Visakhapatnam, besides a 150-unit apartment venture in Guntur city shortly.

On the company’s maiden overseas project, NCC Harmony, a twin-tower project of 2.3-million sq ft coming up at the Dubai Biotechnology and Research Park, Alluri said the project was going slow because of the Dubai financial crisis. The company had invested around Rs 150 crore in the project and raised the rest through sales. “With the Dubai market collapsing, the high-rise (35-floor) apartment project has not sold much. Construction work is still going on and it will take another two years to be completed,” Alluri said, adding the company garnered revenues of Rs 175 crore last year and was expecting it to touch Rs 200 crore this year.

AR Group launches high-end villa project in Chennai

The Chennai-based AR Group, which had earlier promoted the premium IT park, Acropolis in Chennai’s upmarket Dr Radhakrishnan Road, has announced the launch of premium high-end villas on the scenic East Coast Road (ECR). The project, Amara Ananta, coming up at Palavakkam on ECR and located close to the city, will offer a total of 25 high-end premium villas. Each villa will come up on a two and half ground land (one ground = 2,400 square feet) and around 5,500 square feet built-up area. Each villa will have a private swimming pool and facility to park two to three cars. Being developed as a gated community, the common facilities will include a large club house with a swimming pool, a 1,500 sq ft multi-purpose party hall and a 1,000 sq ft gym, besides service areas and terrace BBQ facility.

“Amara Ananta will be one of the best gated communities in the city. It will be a contemprory design executed with the best quality materials available in the market,” says Amarnath Reddy, managing director of AR Group. “The construction, which has already started, is in full swing and the villas will be handed over in about 18 months from now,” Reddy added. The gated community will also have four boutique showrooms to match the lifestyle of the villa owners and six different elevations, besides being centrally air-conditioned and furnished (except for furniture). Located just a few minutes’ away from the beach, the villas are modern, idyllic homes with the finest amenities, coupled with expansive estate, with spectacular green landscapes, Reddy observed.

Given the amenities and the large land area that comes to be owned by the buyers, the price per villa ranges between Rs 5.5 crore and Rs 7 crore, depending on amenities and fixtures chosen by the buyers. AR Group is targeting business people, HNIs and top-level executives for the villas in Amara Ananta, since it is not only coming up on ECR, but also located close to the city as well as easily accessible to OMR, the city’s IT Corridor.

Less Fireworks for Builders This Festive Season

The period around Diwali is usually the best time in the building trade, but this festive season a triple cocktail of volatile markets, double-digit interest rates and poor consumer confidence in a slowing economy has hit sales volumes, portending hard times for India’s real estate sector. Some brokers and market experts are bracing themselves for a 25-30% drop in transaction volumes in the country’s top six property markets during the October-December busy season, which, if it happens, could trigger a competitive spiral of discounting to get rid of mounting inventories and restore depleted cash levels.

But builders are holding on to price levels while buyers, reluctant to book flats at current price levels and interest rates firmly in double digits, remain convinced that it’s only a matter of time before the penny drops. Which side will blink first is still not certain, even though some builders concede all is not hunky dory. “There may not be much of a light for developers during this Diwali,” said Niranjan Hiranandani, chief of Mumbai-based builder Hiranandani Group. “It may not turn out to be a good one in terms of sales activity.”

Property developers are trying their best to woo buyers with festive offers, although these have failed to have much of an impact so far. With high inflation eating away at their earnings and financing costs high, buyers are looking for a significant correction in property prices rather than some festive season freebies. “Builders need to accept reality. This acceptance will lead to price correction and revival in volume,” said Pankaj Kapoor, managing director of Liases Foras Real Estate Rating & Research. Kapoor attributes the drop in sales volumes to steep property prices, rising interest rates and poor supply of socalled ‘affordable housing’ projects.

“Usually, during the festive season, prices firm up and there are new launches as well. But this season, both the inventory and prices of residential properties have remained static,” said Samarjit Singh of Agni Property, a property brokerage. The National Capital Region (NCR) comprising the satellite towns of Noida, Gurgaon and Faridabad bordering Delhi, which turned in good sales numbers in the past two years, is facing supply constraints.

This is particularly true for Noida, which has seen a slew of regulatory actions prompted by farmers’ agitation over land acquisition. Singh says a lot of developers are repackaging their previously unsold inventory with special discounts to push sales. Lodha Developers in Mumbai and Ansal API in Delhi are among the builders who are repackaging their older inventories with newer discounts. “As far as sale of plotted land and mid-income housing is concerned, demand is intact in NCR and good sales traction is expected during this season,” said Anil Kumar, CEO of Ansal API. “However, sales may take a hit wherever there are issues of land title.”

Akshaya Developer Plans to Strengthen its Presence in South India

Real estate developer Akshaya has chartered out plans for the next five to 10 years with an aim to strengthen its presence in South India. The expansion plan is also part of the city-based firm’s foray into new verticals like developing commercial properties, Information Technology parks, health care and schools. “Next five years to 10 years we will be in these businesses — healthcare, commercial property, retail, schools.. it may be through township projects..” Akshaya Chairman and CEO T Chitty Babu told reporters here.

The company was engaged in developing various real estate projects for the last 16 years and predominantly focused on residential units. “We want to be in commercial projects, retail, healthcare and schools.. Last year, we touched Rs 200 crore this year we expect to reach Rs 350 crore.. We are aiming to reach Rs 1,000 crore by 2015..”, he said after unveiling the company’s new logo. Elaborating about the “rebranding exercise” for which the company has spent around Rs 10 crore, he said, “we have taken a conscious decision. Our earlier name (Akshaya Homes) was saying only about our residential properties, but with the new logo we will be doing other businesses also”.

The company’s future projects would be based on green building concepts, Babu said and added that CRISIL would rate their projects regularly. “Every six months they (CRISIL) will monitor the operations of Akshaya.”, he said. On their expansion plans, he said, “right now we are having projects across Tamil Nadu. In next three years you can definitely see us in other three States ie., Andhra Pradesh, Karnataka and Kerala”.

Shriram Properties Announces Residential Projects in Rajahmundry, Vijayawada

Shriram Properties is planning to take up housing projects in Rajahmundry and Vijayawada, according to M Murali, managing director.
He was addressing the press in Visakhapatnam on Thursday after participating in the “bhoomi puja” for the block two in the housing project of the group — Shriram Panorama Hills — at Endada. He said the projects in Rajahmundry and Vijayawada were still in the preliminary stage, and sites had to be acquired for them. “We are keen on taking up housing ventures in the two coastal towns and later in other towns of Andhra Pradesh as well,” he said.

He said the group was focussing on middle-class and upper middle-class housing ventures, but not on luxury housing for the affluent sections. “There is a huge housing scarcity and unmet demand in the country. It is estimated that there is a deficit of 20 million homes right now and it is bound to increase. Therefore, there is room for any number of developers,” he said.
Murali said Panorama Hills in Visakhapatnam was a mega housing project, taken up at a total cost of Rs 1,800 crore, to build 2,000 apartments and 220 villas. “We are completing it in phases and the whole project may be completed by 2014-15. We have already sold 430 units and 120 villas,” he said.

Asokan, executive director, Shriram Properties said the construction of block-4 was in the advanced stage and most of the apartments and villas were sold out. “We have performed bhoomi puja today for block-2 with four towers consisting of 680 apartments. They are affordably priced at Rs 2,350 per sq ft. The block has 17 floors, we have already sold 160 units in the block,” he said.
He added that a “unique, eco-sensitive design” had been developed for the block. It would be completed in roughly two years’ time.

Govt Ready with Final Draft of Real Estate Bill

The Centre is ready with the final draft of a real estate bill that makes it compulsory for developers to disclose key aspects like carpet area and layout and promises a safety net for prospective home buyers. If the Real Estate (regulation and development) Bill, 2011 is cleared, developers can even be jailed for up to three years for making false promises to customers, many of whom invest their life’s savings for a place they can call their own. The jail term could be in addition to a penalty of 10 per cent of the total project cost.

The proposed law envisages a real estate authority to regulate all developers and real estate agents. All developers will have to register with the authority, the first such body in the sector. The draft, which The Telegraph has accessed, has been sent to the law ministry. Once cleared by the ministry, it will be presented to the cabinet before it is tabled in Parliament. The proposed act says developers have to disclose the carpet area, layout plan of the proposed apartments, structural design and plans for other on-site development. Builders cannot change plans or insert charges after the sale agreement is in place.

The draft says developers will have to upload on the proposed authority’s website all certificates and details that can be accessed by any future customer. “The act will bring a sea change in access to information that buyers have at present. The regulatory authority’s website will act as an interface between buyers and developers,” said an official with the ministry of housing and urban poverty alleviation, the nodal ministry.
Developers cannot float fancy advertisements to attract buyers. If there is any deviation from the ad, the promoter has to compensate the buyers for any loss because of the false information. If a builder pulls out of a project, the money has to be returned with interest at not more than the prevailing market rate.

The bill also addresses the problem of disputed property. Since there have been cases where developers have used such property to build multi-storeyed apartments at attractive rates, the bill stipulates “full and true disclosure” of the nature of the title of the land to be developed. If the land is owned by any other party, the developer has to upload the agreement with that party. Under the draft law, developers cannot publish advertisements till projects are registered with the regulatory authority or force buyers to pay an advance without the sale agreement. If there are any “structural defects or deficiencies” in a building within “a year of allotment”, they will have to be “rectified by the promoter”.
The bill envisages an appellate tribunal, to be headed by a retired Supreme Court judge or a retired high court chief justice. The tribunal can start investigations on its own if it receives a complaint of violation.

Omaxe Shelves Plan to Develop 10 Lakh Affordable Houses at an Investment of Rs 80,000cr

Realty firm Omaxe has shelved its Rs 80,000 crore investment plan aimed at developing 10 lakh affordable houses across the country over a period of five years. “The project could not take off after the slowdown impacted all the developers in 2008. We tried to develop some houses at some locations… The project is shelved now,” said Rohtas Goel, chairman and MD, Omaxe. In May, 2008, the company had announced an elaborate plan to build 10 lakh affordable houses for low-income consumers across tier II and III cities, at a price ranging between Rs 3 lakh and Rs 15 lakh, over a period of five years. The National Capital-based developer had tied-up with farmers in Gujarat and Maharashtra to acquire land for developing the affordable houses, he added.

“However, it did not finally materialise,” Goel said. He, however, declined to divulge if the company had put in any money in initiating the project. The 2008-09 global financial crisis had hit the realty sector hard and the same is expected again under the current economic environment. Omaxe had formed a subsidiary, National Affordable Housing and Infrastructure Ltd (NAFHIL), for the low-cost housing project and had also initiated an international design competition, besides publishing advertisements. Later, the company divested 51 per cent stake in NAFHIL to a promoter group firm. The company had initiated dialogues with the state governments in Uttar Pradesh and Madhya Pradesh in February 2008, to implement the affordable housing project. It had also placed a concept plan for consideration before the Union State Minister for Urban Housing at that time.

Goel had said Omaxe would construct 800 million sq ft to develop 10 lakh housing units of size starting from 300 sq ft to up to 1,500 sq ft. About 20,000 acre of land would be required to develop the project. The company had planned to develop 5,000-10,000 housing units at every location over an area of about 100-200 acre. It had said it would sell these units through lottery system and would charge only Rs 100-150 per sq ft as profit. It had identified Indore as the first location for the proposed project with plans to develop 10,000 low-cost homes at a 200-acre township at an investment of about Rs 1,000 crore. It planned to offer the flats, sizes of which would have started from 350 sq ft, for Rs 4-10 lakh. Similar projects were also planned in other locations such as Raipur, Bhopal, Bareilly and Allahabad.