Track2Realty:

“We strongly believe that the LBT which the government is trying to introduce is detrimental to both the developer and home buyer community. What it means is that home buyers who are already paying various taxes will need to cough up even more in the form of this new tax. The affordable housing is becoming a distant dream with additional new taxes being introduced from time to time. The primary motive of the government is to provide affordable housing and not to use housing as a source of generating revenue” said Vimal Shah, President of MCHI-CREDAI.

Developers who are already reeling under the pressure of sluggish economy will be forced to pass on this new tax to end-users. This will raise property prices, thereby hurting the prospects of affordable housing, which is the need of the hour” added  Shah.

We request government to reconsider in these taxing issues. The government should come up with policies which will help reduce burden on home buyers.

]]> http://www.track2realty.com/mchi-credai-says-lbt-will-further-burden-home-buyers/feed/ 0 http://www.track2realty.com/credai-chairman-says-lbt-will-lead-to-rise-in-corruption/ http://www.track2realty.com/credai-chairman-says-lbt-will-lead-to-rise-in-corruption/#comments Thu, 16 May 2013 15:19:06 +0000 Track2Realty http://www.track2realty.com/?p=8584 Track2Realty: Opposing the Maharashtra government’s decision to impose local body tax (LBT) in lieu of octroi, developers’ apex body CREDAI Chairman Lalit Kumar Jain said the new levy will result in rise in corruption and  be detrimental to business as well as consumers. There is a potential threat of it becoming breeding ground of corruption.

Jain said the government should instead raise VAT to compensate for octroi. Creation of an additional machinery for LBT collection will only increase burden on the government and it could be avoided through just raising VAT.

He expressed the apprehension that  the new machinery and the new system of search operations that come with LBT will lead opening up another window for corruption.

He also vehemently opposed the flat one per cent LBT on real estate and over and above LBT on all building material. This will only lead to increased burden on end buyers who are forced to cough up heavy amounts for a series of taxes.

“Heavy tax regime will also discourage new businesses and may even lead to a fresh capital flight out of Maharashtra,” Jain said and appealed to Chief Minister Prithviraj Chavan to reconsider LBT and opt for much more practical approach.

He added that Maharashtra was known for trend setting approach in tax rationalisation(Maharashtra was fist to rationalise stamp duty bringing it down to 1% onwards from 10%) and pro development policies but off late we have lost that approach.

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Niranjan Hiranandani, Managing Director, Hiranandani Constructions put the conference into perspective when he said in his keynote address, “Risks are of two types. Those we can anticipate and those which project management people can provide for like shortage of labour, increase in taxes, inflation, increase in cost of raw material, etc. But good infrastructure project management is not about these anticipated exigencies, it is about the risks that you cannot foresee like accidents, riots, epidemic in your labour force etc. How do you take into account something which you have not anticipated? The way you deal with these unforeseen risks determines the success of a project. As a good project manager, you may not anticipate the problem, but you have to attend to it with equal forthrightness as you would attend to an anticipated problem.”

The construction industry contributes 8% of the overall GDP of the nation and accounts for 35 million jobs in the country.

Hiranandani said that pace, speed of construction and timelines cause the biggest problems for Indian infrastructure but it is marching ahead nonetheless. “Project management people have to aspire to do projects that seem impossible because the world is doing the same. You cannot be content with what you have done. You cannot be just better than your competitors but you have to be better than the best in the world. You have to aspire for it and only then will you reach there. And you will have to take pride in what you do. Yes there will be risks, but it is up to you to execute that future for yourself and for your children,” said Hiranandani.

Gurjot Bhatia, Senior Executive Director – Project management Group, CBRE South Asia said, “A good doctor is not one who knows medicine, but the one who diagnoses the problem effectively and timely. A good project manager or company does the same: identify the problem and look at its mitigating factors. When it comes to infrastructure you must consider these four points: firstly be willing to identify risks consistently; then to analyze them comprehensively and in a wholesome manner; thirdly communicate them to your stakeholders so it does not become bigger later and everyone can break their heads solving it and lastly and above all else have accountability.”

Bhatia added that there is huge growth across the region, but it is a growth that is associated with challenges and if we do not look forward to mitigating them, it can lead to impediments to this growth. This is especially true with projects growing more and more complex with long lasting socio-economic impact for the country.

“Being an integral part of project management; risk management determines the success of any project. It helps minimize the impact of project threats, ensures timely delivery and quality of construction. Learning from one’s experiences while executing projects is a key for any organization, which might not happen in some cases as project teams move from project to project very quickly. To ensure efficiencies over time and development of best practices, it is essential to capture lessons learned on your projects,” said  Tushar Kulkarni, Associate Director, Vector Projects.

Krishnanand Mavinkurve, Member, CII SHE Award Jury Panel and Vice President & Dy HSE Head, Essar Projects Limited said, “Construction projects covering the development of commercial, social and public infrastructure have become very complex in delivery yet there is an increasing demand for delivering them risk free. Risk is something that cannot be ignored. It can and has to be managed, minimized, shared, transferred or accepted. In project management, the challenge is not to explore risk for a single project but to predict it consistently and ensure that every project has the same level and depth of risk analysis.”

]]> http://www.track2realty.com/indian-growth-story-dependent-on-effective-infrastructure-risk-management-cii-infrastructure-conference/feed/ 0 http://www.track2realty.com/single-window-plan-for-real-estate-projects-soon-maken/ http://www.track2realty.com/single-window-plan-for-real-estate-projects-soon-maken/#comments Tue, 26 Mar 2013 11:08:26 +0000 Track2Realty http://www.track2realty.com/?p=8236 Track2Realty-Agencies: In a move aimed at providing a major fillip to the construction sector, the Centre is likely to come up with a ‘single window’ system for the country’s real estate sector soon, Union Minister for Housing and Urban Poverty alleviation (HUPA) Ajay Maken said in New Delhi on Sunday, March 24.

Maken’s remarks, made at the National Editors Conference held at the Vigyan Bhavan, are pretty significant since under the existing system it is not uncommon for real estate projects to be held up for up to one year or more before the necessary sanction is accorded.

“The ministry (HUPA) had set up a Committee under the Chairmanship of Dhanendra Kumar for Streamlining Approval Procedures for Real Estate Projects (SAPREP).”

The Committee had since submitted its report and the Ministry was in the process of formulating a ‘single window’ system for the clearance of real estate projects throughout the country, which was expected to bring down the average approval time from 196 days to 45-60 days,” the Minister said.

According to him, the process involved the submission of a single composite application form (CAF), which would ensure simultaneous clearance from the municipal corporations, state governments and the Central agencies.

Maken said that the Ministry would incorporate the recommendations of the SAPREP Committee as one of the mandatory reforms to be carried out by the states, if they wanted to avail the funds provided under the ‘Rajiv Awas Yojana’.

It was also revealed that the HUPA would mobilise a whopping Rs 60,000 crore to finance its ambitious housing scheme for the low income group (LIG) and the economically weak sections (EWS).

And a credit risk guarantee fund trust (CRGFT) partnering the National Housing Bank (NHB), HUDCO and other financial institutions has been set up for the purpose and the steps initiated by the ministry would significantly  help to bridge the gap between shelter and housing, the Minister added.

On the Urban Housing Fund announced by Union Finance Minister P Chidambaram, Maken said that a separate fund of Rs 2,000 crores, to be administered by the National Housing Bank, had been envisaged to support the financing and credit to the affordable housing sector.

It will benefit the LIG and the EWS sections, which were not getting the benefits under the current priority sector lending limit of Rs 25 lakh. HUPA had decided to limit the loan amount to  `8lakh and the cost of the dwelling units to  Rs 12 to Rs 15lakh.

Track2Realty:

“It is high time that we looked at enhancing growth by infusing liquidity and going in for rate cut,” said Lalit Kumar Jain, National President of CREDAI.

CREDAI – the Confederation of Real Estate Developers’ Associations of India – has over 10,000 members across 20 cities pan-India.

Talking about options before the RBI, Jain pointed out that risking inflation for growth is the right economic policy. Inflation could well be curbed by giving a big boost to production and flooding market with supplies. It is not a prudent policy to risk anarchy through a tight monetary policy.

“Judging by the Ministry of Housing’s pragmatic approach towards to the real estate industry, the developer community was hopeful that the RBI too will soften its stand and help the sector revive. But the continued stubborn approach of RBI is shocking,” he said.

Jain said the mid-quarter monetary policy is by and large uneventful since it does not take into consideration of the real estate sector that contributes handsomely to the GDP. “One would have expected RBI to be realistic and appreciate the fact the real estate industry supports hundreds of other industries and hence plays a major role in rejuvenating the economy hit by job losses and dwindling investments,” he said.

RBI should take steps to ease funding for real estate at much lower rates of interest in the interest of millions of home seekers and ease CRR as well, he said.

“We cannot hope to make housing affordable for the masses with such restrictive policies,” Jain added.

Track2Realty:

Flat owners are worried that the property tax amount, as calculated by the new formula, will result in doubling of the dues which are supposed to be paid by this month end.

Over 35,000 housing societies along with 40 NGOs plan a one-day hunger strike and a rally against the new property tax system.

Paras Gundecha, President, MCHI-CREDAI, said the new property tax formula is against the consumer interest.

At a time when the common man is already burdened with the series of taxes like stamp duty and VAT, the increased property tax is bound to deal a cruel blow to flat owners, he said.

As inflation is taking a toll on everyone, the consumer is under tremendous pressure due to job loss, economic slowdown, and taxes at every stage of his life. It is high time the government brings greater clarity in the calculation methods it uses for these taxes and reduce the burden on consumers, Gundecha added.

Track2Realty:

The Ministry is reconsidering a clause requiring builders to use 70% of the money collected for a project for that project to avoid delays, and may lower the limit, said Ajay Maken, hHusing and Urban Poverty Alleviation Minister.

The Ministry had received representations against this requirement from the Confederation of Real Estate Developers’ Associations of India (CREDAI) and the National Real Estate Development Council (NAREDCO).

“We want that money collected from buyers by a builder for a project should not be diverted to other projects so that there are no delays,” Maken told reporters on Wednesday, Feb 20.

The Bill seeks to establish a regulatory body for the real estate sector to ensure transparency in property or real estate transactions and protect consumers. A revised version is likely to be presented before the cabinet shortly.

The regulator will also vet agreements between buyers and builders to ensure the developer fulfils all the conditions mentioned in the agreement, Maken said.

“We have provisions of penalties and stringent punishments in case of delays by the builder as a part of the Bill,” he said. The housing minister said the aim was not to add another layer of clearance and that registrations by builders with the regulator will be voluntary.

“We are telling the builders to disclose the exact area of a flat on their websites, which they can’t change later, and also to provide the maximum limit of their date of completion of the project,” he said, adding that the authority will only ensure that developers stick to their commitments.

In addition, a developer will be allowed to launch a project only after getting all the requisite approvals, including environmental clearance, clearance of the sanction plan, and civil aviation clearance, Maken said.

]]> http://www.track2realty.com/real-estate-regulation-and-development-bill-expected-to-be-revised/feed/ 0 http://www.track2realty.com/ficci-demands-industry-status-for-real-estate-sector-in-budget-2013-14/ http://www.track2realty.com/ficci-demands-industry-status-for-real-estate-sector-in-budget-2013-14/#comments Wed, 13 Feb 2013 14:53:07 +0000 Track2Realty http://www.track2realty.com/?p=7986 Track2Realty-Agencies: The Federation of Indian Chambers of Commerce and Industry (FICCI) has demanded industry status to be granted to real estate sector in the upcoming Budget 2013-14.

In a statement, FICCI said, “it is requested that real estate sector be granted industry status for easier availability of funds for purposes of availing long term and short term finances.”

FICCI also demanded infrastructure status to development of integrated townships.

“An integrated township involves development of residential, institutional, educational, medical, community and commercial buildings, etc. In the process of development of an integrated township, apart from development and construction of above establishments, various facilities such as roads, water supply, sewerage system, sanitation, water treatment, electrification, landscaping, solid waste treatment, horticulture and other civic services are required to be created/provided,” FICCI said.

It added that while according approval, the State Government specifically directs that development projects including all facilities/services created/provided therein will ultimately be handed over to respective State Governments/Local Bodies and shall not remain with the developer and these integrated township projects are therefore in a way at par with the BOT (Built, Operate & Transfer) projects.

“In the light of above facts and in order to motivate the genuine real estate companies to come forward and step into promotion and development of large integrated townships in line with above arrangements to mitigate the huge shortage of housing to all class of society, it is requested that integrated township development projects be brought within the definition of infrastructure,” FICCI added.

Track2Realty-Agencies:

The Minister said the Real Estate Regulation Bill aims to establish a regulatory authority for enforcing fair practice and accountability norms and fast track dispute resolution mechanism in real estate transactions.

“Inter-ministerial consultations are still on. Cabinet clearance will be sought once inter-ministerial consultation is over,” Maken told reporters in New Delhi.

Asked whether the Real Estate (Regulation & Development) Bill would come in the upcoming Budget session, he said, “Let’s hope. It is required.”

The draft legislation, pending since 2009, aims to establish a regulatory authority for the realty sector, ensure sale of immovable properties in an efficient and transparent manner and protect consumer interest.

The most important proposal in the draft Bill include setting up a regulatory authority in every state.

Asked about the raising external commercial borrowing (ECB) limit for affordable housing, the Minister said, “We are in talks with the Finance Ministry.”

At present, RBI has allowed raising USD 1 billion under the ECB route for the affordable housing, he said.

“ECB for USD 1 billion is there for affordable housing. It has just started. I think it is just a beginning,” he said.

On the Budget wish-list, Maken said, the Ministry is preparing recommendations.

“We wish that fiscal incentive should be there for affordable housing for the poor and LIG (low income group),” he added.

CREDAI

Track2Realty: Strongly opposing the country’s first ever SEZ exit policy formulated by the Maharashtra Government, CREDAI has expressed fear that the move will cause urban chaos rather than solving any.

CREDAI National President Lalit Kumar Jain wonders as to how the integrated industrial township policy will be successful where the SEZ concept to promote industries with a plethora of concessions has failed.

“It is for the centre and state together that facilitated SEZ to ponder over the failure of SEZ and take corrective measures to ensure that its aims and objectives are met” says Jain.

He welcomed the Maharashtra Government’s endeavour to create employment through the proposed industrial zones, but was apprehensive of its end results.

“It is heartening to note that state government is trying to give some incentives to generate higher employment. The new Industrial policy is welcome in that sense. However the policy on conversion of SEZ seems to be going nowhere.

Government needs to understand as to why and how SEZs have failed,” he says.

Though there could be many faults at the central government, the state government should on its part try to work out solutions to make SEZ s viable and attractive.

“We have to realize the fact that even the so-called Integrated Industrial Parks will not be successful if SEZ have failed even to take off, despite the concessions granted to them, leave alone achieving desired results,” he adds.

He laments that certain politicians have sought to raise a controversy that the SEZ exit policy would unduly benefit developers.

“It is rather surprising that for petty political gains some people lose wisdom. In SEZ regime, industries enjoy benefits of both direct and indirect taxation, apart from provision for 50% non-processing units, all with just one-rupee-surplus-export formula which is not allowed under the integrated industrial township plan. In such a scenario, why would any developer with any business sense will g in for the township plan? At best the policy will benefit few influential industrialists,” he asserts.

It is necessary that policy makers understand that every industrial or commercial activity needs to be supported by residential infrastructure either within or near the business activity. Globally accepted ball park ration for Industrial activity- to-residential are: Heavy Industry 1:3, Small and medium scale Industry 1:5 and Information Technology 1:9.

Experience in India so far clearly shows that the industry zones will face the danger of mushrooming growth of slums if adequate shelter is not provided.

Internationally, it is a well recognized fact that FAR ort FSI below 5 is just disastrous. Considering the area to be left for infrastructure like roads and open areas, the net FSI will come to around 2 to 2.5 which is quite acceptable as opposed to destruction of green areas, he added.