Track2Realty || India's real estate e-newspaper » Interviews

Element of subjectivity in realty awards: Sachin Sandhir

Track2Realty — Sun, 19 May 2013 11:19:17 +0000

Track2Realty Exclusive: Sachin Sandhir, Managing Director-South Asia of RICS and a vocal spokesperson of the realty reforms agrees there is an element of subjectivity and a fine line, when industry stakeholders organise awards – as it can lead to a conflict of interest. He, however, defends awards that are based on actual performance indicators and tangible evidence. Track2Realty probes for an insight—

Q. Do you think real estate awards add value to the developer’s project?

Ans. An award is a powerful tool which helps developers gain recognition for project performance and excellence. Acquiring a credible award helps aide developers in enhancing their reputation and credibility, generating growth and building their brand. At the same time awards support sales to some extent by acing as a pull mechanism. However, this is also dependent on the credibility of the awards itself.

Q. How far is an award a sales driver and to what extent is it a brand driver?

Ans. An award is more of a brand driver than a sales driver. Though it does help increase sales to some extent, as an award winning brand acts as a pull for consumers. RICS is supportive of real estate awards that are based on actual performance indicators and tangible evidence. Therefore, we believe that even projects even though they might be at the conceptual stage should be awarded on account of being a unique, path breaking or revolutionary idea. However, in order to award a project as ‘best in category’, only completed projects which have been evaluated by a credible jury on stringent parameters through a transparent and open process. Such awards will definitely add value and drive the brand of developers.

Q. How far does it bring confidence in the psyche of the buyers?

Ans. Winning an honour or award is beneficial at many levels. Not only does it boost the motivation of employees, but also generates interest and awareness through an independent acknowledgement of the value of a product or service that a developer is offering and thus provides reassurance to potential customers. A developer who has been felicitated by a credible and noteworthy award will be able to induce consumer confidence not only in the business, but new and upcoming projects as well. Awards help consumers perceive developers and their business/projects as being reliable and trustworthy. This is definitely an added advantage in a market like ours, where there are extremely limited tools and avenues available which help consumers ascertain the background, reputation and credibility of a developer.

Q. Most of the realty awards are organised by industry state holders only. Don’t you feel there is a need for independent awards as well?

Ans. There definitely is an element of subjectivity and a fine line, when industry stakeholders organise awards – as it can lead to a conflict of interest. The Zee Business RICS Real Estate Awards, therefore put together a transparent process, where thorough due diligence was conducted to avoid any conflict of interest. The jury comprised of all experienced members of the property and construction industry, however were carefully selected to ensure that none had an interest in promoting any project/s in particular. Therefore, the Zee RICS Awards stressed on an extremely stringent and transparent evaluation process during the jury rounds, which in turn ensured a neutral and unbiased evaluation, which was achieved through deliberations, debate and discussions amongst jury members, based on their area of expertise and credentials.

Q. Realty awards have often been accused for rigging. Your take on that?

Ans. There are some bad examples that exist, however in the long run such awards cannot remain sustainable and will find few takers. Only those awards that provide an equal opportunity to all competitors and contemporaries, which are based on stringent evaluation criteria and a transparent process and backed by a reputed and respected jury panel, will be able to make a long standing mark on the industry. Only such awards will instil trust, draw the respect of stakeholders and be valued by the industry and consumer alike.

CREDAI hails Rahul Gandhi’s inclusive growth idea

Track2Realty — Thu, 04 Apr 2013 08:27:17 +0000

Track2Realty: Appreciating Congress vice president Rahul Gandhi’s vision of inclusive growth, realtors’ apex body CREDAI on Thursday, April 4, expressed the hope that the idea translates into action in the years to come.

Commenting on Gandhi’s address at CII summit, CREDAI Chairman Lalit Kumar Jain said, “It is interesting to note that he spoke about out the hurdles put by a clogged system that impede growth. This is exactly the point that we the developer community has been making. The existing system of innumerable approvals and unending visits to various officials has been causing delays in implementing projects which in turn breed corruption.”

CREDAI will be more than willing to share its ideas with various political leaders so that the entire system can be changed for the benefit of the society.

The apex body has already written open letters to the Prime Minister and MPs airing its views on covering all stake holders in the real estate regulatory act and making pragmatic changes in the land acquisition act.

CREDAI has also been demanding a single window system of clearances to cut down delays, corruption and improve deliveries.

Jain said it was heartening to note that Gandhi also spoke about giving voice to the millions and promised to listen to them.

“We are sure this kind of paradigm shift in the thinking will result in a positive change for the betterment of the nation as a whole,” he said and reiterated CREDAI’s commitment to work with the governments at Centre, State and local levels to help millions realize their dreams of owning their own homes.

“Our dream is to transform India into a housing surplus nation from the current stage of housing shortage and we can do it,” Jain added.

Learning redevelopment from global experience-I

Track2Realty — Thu, 28 Mar 2013 07:01:04 +0000

By: Babulal Varma, MD, Omkar Realtors & Developers

Track2Realty Exclusive: Urban renewal has led to economic rejuvenation of various countries and we shall have to find our own unique solutions while learning from best global practices. While Singapore and Malaysia’s transformation was led by sagacious leadership, Hong Kong, Shanghai, Chicago, Birmingham and New York effectively used their political process to drastically improve quality of life, economic output and employment opportunities.

In the Indian context, Mumbai city is leading the redevelopment process though the volume is still a fraction of the overall potential. Mumbai’s problems are unique and need solutions which are also unique as socio-political fabric of the society and ethnicity is diverse.

We have been observing the global developments in the sphere of redevelopment and are open to experiment with any innovation and value addition locally. However, any such initiative to value-add can pick up steam in the Indian context only if the government is willing to trust and extend support in cases which impact the immediate society at large.

Redevelopment, particularly in cities which can only grow vertically such as Mumbai, needs to be accorded a macro perspective rather than a micro outlook. Even as we set certain benchmarks for our own states and other nations, our industry should keenly observe the learning curve of redevelopment pattern prevalent abroad.

When Hong Kong initiated redevelopment projects, it had to ensure that the target locations and the priority project areas, upon completion of urban renewal, would be attractive places to reside and work. Accordingly, strategic planning guidelines were charted out to guide their developments.

As a redevelopment module, it shortlisted 200 priority project areas. Upon redevelopment of the 200 priority project areas; there were major improvements to the dilapidated urban areas, which were transformed and brought up to modern city living standards. The major urban decay problem of the city was, hence, largely resolved.

The Urban Renewal Authority’s 4Rs strategy is now well established and gaining recognition in the community. The 4Rs are Redevelopment, Rehabilitation, Reservation and Revitalisation which, when applied together, enables a holistic approach to unlock the full potential of urban renewal.

Under this 4Rs strategy, redevelopment at a project site is used as an anchor around which other complementary modes of urban renewal take place. For instance, this might involve the redevelopment of a cluster of rundown residential buildings. In the nearby areas, efforts will be made to rehabilitate the old but serviceable buildings, conserve buildings of special interest, preserve historic architecture and revitalise the shopping, leisure and local community activities.

…..to be continued

Realty evokes mixed response to budget; by and large optimistic

Track2Realty — Fri, 01 Mar 2013 14:01:33 +0000

Track2Realty Exclusive: The Indian real sector has evoked mixed response to the Union Budget 2013-14, though by and large there is optimism within the sector. Here are some of the responses—

Anshuman Magazine – CMD of CBRE South Asia Pvt Ltd.

Overall the budget was not as bold as was expected. The Finance Minister mentioned all the important things required to stimulate our economy such as economic growth, rationalize expenditure, reduce fiscal deficit, encourage FDI and so on. However the budget did not announce adequate measures to achieve these goals. The following were positive for the real estate industry:

Allocation of INR 15,184 crores under Indira Awas Yojana (the housing programme for the rural poor), INR 6,000 crores to Rural Housing Fund and INR 2,000 crores to Urban Housing Fund
Tax deduction of upto INR 1 lakh for first time property buyers taking up a home loan of up to Rs 25 lakh, compared to INR 10 lakh previously
Allocation of INR 14,873 crores for projects under JNNURM, compared to INR 7,880 crores in the previous budget
Promotion of infrastructure finance with infrastructure debt funds (IDF’s) encouraged
Willingness to provide additional funds to Delhi Mumbai Industrial Corridor to develop 7 new cities
Expected increase of finance to industrial corridors particularly towards developing the Chennai-Bangalore industrial corridor and the Mumbai-Bangalore industrial corridor.
Allocation of INR 5000 crores to NABARD to develop warehouses, cold storage facities, godowns etc
Increased limit of tax free bonds for financing of infrastructure projects to INR 50,000 crores

However the limit of abatement of service tax for housing over INR 1 crore has been reduced by 5% which was not necessary besides the following were not considered:

Infrastructure status to the integrated township developments
Exemption of MAT for SEZ’s
Tax exemption for small houses of under 60 sq mt and a low interest on housing loans for such houses
More liberal ECB policy for affordable housing
To increase the value of the loan from 15 lakhs to 25 lakhs for 1% interest subvention for home buyers

The real estate and infrastructure sector need long term capital at lower cost. This capital can be sourced through FDI, Debt/bonds, insurance companies, pension funds, long term saving instruments etc. and by encouraging private investment. I hope that measures proposed in the budget aimed at promoting infrastructure growth, reforms in the financial sector and industrial development will be implemented effectively, in order to propel India towards a high growth trajectory.

Anuj Puri, Chairman & Country Head, JLLI: We did not expect the Indian Union Budget 2013-14 to be a game-changer. The realities of the Indian economy need to be viewed in context with the factors that drive it, not least-of-all the global economic situation. There is no escaping the fact that the business which comes to India from the European Union and the USA has a trickle-down effect on key economic drivers of the country, and the Finance Minister does not have control over these factors. The Union Budget can only hope to address variables within its control.

This was a moderately encouraging Budget in general, but tepid for the Indian real estate sector.

On the positive side, it provided a boost to affordable housing with an additional interest benefit of Rs. 1 lakh on first-time home loans up to Rs. 25 lakh. However, this provision is only for the first year and with a carry-forward benefit of the unutilized deduction to the second year. This will help boost housing sales in tier 2 and 3 cities, peripheral areas and distant metro suburbs, but not within the metropolitan cities, where housing is more targeted towards the mid and upper income segments.
The setting up of the Urban Housing Fund by the NHB with an allocation of Rs. 2,000 crores will infuse liquidity for urban housing, thereby boosting demand.
The Budget’s focus on education and job creation is doubtlessly commendable. Job creation is a primary driver for real estate in India. Education is now a well-defined real estate segment and will receive a boost over the medium to longer term.
The additional allocation of Rs. 14,873 crores to JNNURM towards public road transport will help make lagging real estate locations more viable over the longer term.
The TDS of 1% to be charged on the transfer of immovable property is an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable property transactions. Considering that the TDS is to be charged on the gross transaction value rather than net gains, sellers will have a cash-flow impact in situations where the sales are at a loss or at zero/negligible gains.
The rate of abatement on homes and flats of above 2,000 square feet or costing Rs. 1 crore and above has been reduced from 75% to 70%. Effectively, this translates into an increase in service tax outflow, which means that luxury housing will now become even more expensive.

There has been no proposal on certain key expectations of the real estate sector. These include implementation of the Real Estate regulator and the Land Acquisition Act. All said and done, Indian real estate will continue to struggle with its larger hurdles. While the affordable housing category has been rightly given due attention, aspects relating to improved transparency and corporate governance within the sector have been largely ignored.

That said, the Budget has shown commitment to improving communication on taxation and regulatory policies. This should give more comfort to offshore real estate investors who have been bogged down by the political inertia and therefore unsure of India as an investment destination in the recent past.

Sunil Dahiya, Sr Vice President, NAREDCO: I welcome the additional tax deduction for home loans and expects it will boost the sentiment among the home buyers. I feel that the move will encourage the first time home buyers. Most of the first time home buyers fall into this given price range and are salaried class. So, it will help the middle level of housing market where the maximum demand is.

Sachin Sandhir, Managing Director, RICS-South Asia: RICS appreciates Finance Minister’s message for improving the ease of doing business in India; following international best practices for FII & FDI and also improving policy communication to remove distrust and fear among investors – all of which are critical if India wants to attract foreign investment. This message has significant implications for the real estate sector given the crying need for introducing standards and professionalism as well as reducing timelines & transaction costs for project approvals, in order to build confidence in international investors.

The budgetary announcements this year translate to a loud and clear message for real estate and construction sector. As in the past few years, the government has recognized the importance of funding infrastructure through sufficient government allocation to schemes and encouraging foreign investment. This is indicated in the bold step of doubling the outlay for JNNURM and Rs. 1 trillion target for infrastructure investment.

We are happy to note that FM has announced an Rs. 2000 crore urban housing fund, in line with our recommendation. FM has also not disappointed home buyers by increasing the home loan exemption limit and providing Rs 1 lakh interest benefit for loans up to Rs. 25 lakh, which will make homes more affordable. The other critical goal of creating better jobs opportunities for youth through emphasis on education spends indeed augurs well for this sector. Built environment sector – a significant and fast growing contributor to economy, also well-funded by government and investors, and does offer immense opportunities for the next generation.

Neeraj Bansal, Director, Risk Consulting, KPMG India: This budget will encourage affordable housing and boost construction. With current interest rates hovering around 10% for home loans, the entire year’s interest (at current rates) will be eligible for deduction within the extended limit of Rs.2.5 lakh. This is likely to bring a dual impact—impetus to the growth of affordable housing segment, and increase in employment opportunities in the construction sector.

Lalit Jain, National Preident, CREDAI: I express disappointment over the Finance Minister missing out on affordable and rental housing and banking reforms. I, however, praise Union Finance Minister P Chidambaram for accepting the suggestion for home loan interest incentives for sub-Rs 25 lakh buyers. But, honestly we were expecting a lot more.

I am happy that the first time home loan borrowers of properties of sub-Rs 25 lakhs will be allowed an additional deduction of Rs one lakh. I also welcomed the interest deduction of an additional Rs one lakh for home loan borrowers, taking the allowance to Rs 2.5 lakhs, for all self-owned properties.

However, the developer community is thoroughly disappointed that the Finance Minister has not given any directions to the RBI on the imperative to support real estate funding.

We have been suggesting to the government for long to help revive the real estate sector to rejuvenate the economy, but it is disappointing that that Finance Minister did not address the sector adequately.

CREDAI has been demanding the infrastructure status for real estate which Union Housing Minister Ajay Maken has supported. But the Union Budget did not make any mention of this.

CREDAI had called for tax exemptions for incomes on affordable housing with tenements of less than 60 mtr carpet area and incentives for rental housing, but the budget failed to address these key issues, Mr Jain said.

We have suggested a 20% reduction in FDI limit in real estate from the current 50,000 sq mtr and 25 acres that could help generate funds, but we are unhappy that the Finance Minister ignored this aspect. The sector would continue to face cash crunch.

The nation urgently needs to scale up the delivery of housing which can be achieved with the help of imported technology. We have been asking for tax reliefs for importing the technology.

We criticize the government for not withdrawing TDS on immovable property transactions. The Finance Minister seems to have gone for revenue generation through the high tax route and not by the growth-oriented economy which is highly disappointing.

Anshul Jain, CEO, DTZ India:

Infrastructure status to low cost housing

Expected: The government to award infrastructure status to low cost housing….This has been a long standing demand of the housing ministry, of the real estate sector. Developers would gain from it. The definition of low cost housing is a house having a size of upto 40 square meters.

Infrastructure status will help the real estate industry to get FDI, external commercial borrowings and domestic bank loans.

Tax exemption on housing loans

Expected: Interest repayment limit on home loan for tax benefits under section 80C to be enhanced to Rs 3 lakh. The said limit was continuing for the last 10 years.

Any relaxation will boost home sales while banks too can get more business on home loans.

FDI flows & ECBs

Expected: The Government should liberalize the FDI guidelines for inflow of foreign capital to real estate sector. Further, extend external commercial borrowings (ECBs) facility to be allowed to all real estate projects along with the lower tax withholding rate.

Stamp duty and registration

Expected: Introduction of uniform stamp duty rates and stamp duty credit will bring down costs for ultimate buyers. Higher registration fees affect buyers the most.

Tax holiday

Expected: Tax holiday available to affordable housing allows 100 per cent deduction of capital expenditure in the first year of business set up. Currently this deduction does not benefit developers, since business of developing housing project does not involve capital expenditure as the construction and land is stock in trade and not a capital asset.

Good news for home loan takers. People taking a home loan in 2013-14 for an amount up to Rs 25 lakh will be allowed an additional deduction of Rs 1 lakh.

Gagan Banga, CEO, Indiabulls: One has to compliment the Finance Minister P Chidambaram for addressing the nation’s priorities in his budget for 2013-14. He has presented a realistic and balanced Budget, which is a good beginning.

The various incentives and initiatives will kick-start investments which is a positive sign. While it has been a difficult year for the economy, both nationally and globally, yet the Finance Minister has been practical across the sectors. This gives room for hope.

Chidambaram has rightly recognised the importance of housing and infrastructure. The Finance Minister’s budget proposal to offer an additional interest deduction of Rs 1 lakh on housing loans of up to Rs 25 lakh for the first time home buyers will not only help housing as such, but will also lead to an increase in demand for steel, glass, cement and several other industries.

I am happy that the Finance Minister has allowed carrying forward of the additional tax deduction to the next year by the first home loan borrowers, in case the limit is not utilised in the current year. The setting up of Rs 2,000 crore, “ urban housing fund and greater impetus to rural housing fund “ will go a long way in giving the much needed support to the housing industry as a whole.

All in all this budget will provide a big relief for affordable home seekers and will be a boon for the housing industry.

Sumit Bharana, Director, Era Landmarks: Finance Minister P Chidambaram presented the Union Budget 2013-14. In his speech he announced a lot of sector specific measures that will have far-reaching consequences on the companies operating within them. While some sectors have reasons to cheer, others may not find respite in the measures that have been initiated.

Here is to particularly look at the impact on the real estate sector. Among the proposed measures he announced interest deduction raised to Rs 2.5 lakh for loan upto 25 lakh. Additionally, a 25% increase in rural housing fund to Rs 6000 crore and the setting up of an urban fund of Rs 2000 crore to mitigate the acute housing shortage in the country.

This is a positive change for housing companies. The NHB (National Housing Bank) has been asked to do the needful. The finance minister has proposed to reduce the abatement in service tax from 75% to 70% for homes that cost Rs.1 crore or above, or are of 2,000 sq. ft or more in size.

I am of a strong opinion that interest deduction will boost demand for houses in tier II and Tier III cities, as cost of such apartments in these regions range usually between Rs 30-70 lakhs. More so, a higher housing fund allocation will boost demand and correspondingly increase home ownership. Major beneficiaries from this however will be the companies active in tier II and tier III towns, peripheral areas and distant suburbs of metros, but not within the metros, where housing is more targeted towards the mid and upper income segments.

This will encourage affordable housing and boost construction. With the prevalent interest rates soaring around 10% mark for home loans, the entire year’s interest (at current rates) will be eligible for deduction within the extended limit of Rs.2.5 lakh. This is likely to bring a dual impetus to the growth of affordable housing segment alongside a significant increase in employment opportunities in the construction sector.

The abatement however effectively calls for a substantial increase in service tax outflow, making the segment of luxury housing a more expensive affair. The segment of affordable homes with a huge demand supply gap in the housing sector on the contrary, will now witness a tremendous upsurge.

Challenges beyond liquidity concerns: Vidya Basarkod, President, Sales and Marketing, Jaypee Greens

Track2Realty — Sun, 03 Feb 2013 13:45:57 +0000

Track2Realty Exclusive: Vidya Basarkod, President, Sales and Marketing, Jaypee Greens believes though the Indian economy has gone through turbulent phase of slowdown, demand for housing has kept the momentum for residential real estate. In an exclusive interview with Track2Realty she asserts though liquidity has been a concern for both the buyers as well as developers, there are more pressing issues hampering the growth of the sector, like delays in approvals, infrastructure bottlenecks and skilled manpower.

However, she believes the year ahead holds promise for the residential segment and lot of movement is expected in tier II and III cities. Of course, the future rests with the integrated townships which are the only viable option for holistic living, she maintains.

Track2Realty: How do you evaluate the residential market in 2012? Has it been disappointing?

Vidya Basarkod: The Indian economy went through a slowdown in the last one year. But still, the real estate sector has been able to generate sufficient cash flow because of the continuous demand in the property market. The larger cities such as Mumbai and Delhi-NCR recorded healthy absorption of residential units during 2012.

The developers are stretching their capabilities to the maximum in order to meet the growing market demand and to attract more potential investors. Several prominent Indian developers have emerged, and more and more international investors and developers are entering into the country and this will surely boost up the demand in this sector. Factors like increase in income levels, stability in the rate of property market and easy availability of credit, all add to the rise in the demand in this sector.

Track2Realty: Pressure seems to be building on both the demand and supply side of residential realty. What according to you would be the next game changer move?

Vidya Basarkod: The Indian real estate sector has witnessed a revolution, driven by the booming economy, favourable demographics and liberalised foreign direct investments regime. Major percentage of real estate development in India has been in the field of residential housing. The remaining percentage of development includes office, shopping malls, entertainment centres, institutions, hotels, multiplexes and hospitals. The shortage in the housing sector will continue to stimulate the growth in the residential market. With the strong population growth, rising incomes, decreasing household sizes, and increasing domestic and foreign investments, the demand for office, retail and residential property has fuelled up and the same is expected to continue in future as well.

Track2Realty: Construction approvals and liquidity issues have been a major concern in the year. Do you expect some positive gains in the year ahead?

Vidya Basarkod: The liquidity issues are just one of the reasons for the delays. For many developers, more pressing has been the issue of getting approvals on time to get on with the construction. The sector is currently faced with challenges including high land cost, delay in approvals, liquidity issues both at the level of buyers’ as well as developers’, lack of infrastructure as well as skilled manpower. But things are getting back on track especially due to some of the improvements in the processes and the system.

Track2Realty: Which segment of residential units (luxury, mid income or affordable) is expected to command the market in near future?

Vidya Basarkod: While the luxury residential market in India is scaling new heights as developers redefine luxury with the rise in the number of HNIs due to rapid pace of urbanisation, the influx of global lifestyle trends and fast-growing service industries which are propelling many middle-income group individuals into the HNIs bracket. But still, the mid and affordable housing segment will be the key driver for residential market.

Track2Realty: Developers in the residential projects are looking to tier-II and III cities for better returns. What is your take on this?

Vidya Basarkod: The congestion of the tier I and metro cities has resulted in the shifting of real estate to the tier II and tier III cities. The tier II and tier III cities are witnessing flocking up with investors because of the number of properties available at the desired prices. The government is also taking special measures to provide smaller cities with infrastructural facilities. These factors are eventually affecting the property prices in these areas.

There are various sectors like the pharmaceuticals, financial institutions, educational institutions, IT and ITeS sectors which are coming up in these areas and thus attracting more number of buyers. The rising property prices in these areas are portraying a promising future to the investors and driving them to invest for the long term returns. Therefore, tier II and tier III cities are also termed as the extension cities of the booming metros.

Track2Realty: How far is high interest rate a dampener for the residential market?

Vidya Basarkod: High interest rates, as a practical matter, discourage borrowing and spending by both, individuals and businesses. High interest rates help to tamp down inflationary pressures, but they also slow the pace of economic growth. But the real estate sector is one of the fastest growing sectors in India and this is one sector where demand is not expected to go down in a long run. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the growing Indian real estate sector. Even with high interest rates, buyers and the potential investors are putting their money to get high returns on their investments.

Track2Realty: Concept of Integrated Township has great potential in the Indian context. Still it is not catching up as expected. What according to you is wrong with townships?

Vidya Basarkod: True that the integrated townships have great potential in the Indian context and the trend is soon catching up amongst buyers and investors. It is a new concept in a country like ours and people are yet to explore this new idea. Still, these townships are becoming the new destination for Indian consumers today.

A township does no good until its planning is efficient and space saving which also ensures privacy and outstanding levels of security. Jaypee Greens (the real estate division of Jaiprakash Associates Limited) make sure the same by using upgraded expertise to deliver exceptional products to its customers.

The market for such gated communities is gaining in strength as more and more people are aspiring for a better lifestyle and they want the combined benefits of residences, play areas, international standard schools, state-of-the-art health care facilities, shopping complexes and entertainment areas, all in close proximity and in a clean, green and safe environment. These mini-cities will soon become one of the most popular areas to reside and invest in.

Track2Realty: Indian townships have by and large failed to replicate international model townships. How far it is the failure of the real estate developers and to what extent policy has been a road block?

Vidya Basarkod: The concept of integrated townships is very nascent in Indian context. However, understanding the inevitability of holistic living experience in today’s world, developers such as Jaypee Greens has come up with mixed use development with different residential, commercial, institutional and recreational facilities. Organizations like ours ensure the best of value additions to its gated-communities which includes the sports facilities, club-houses, medical facilities, institutional offerings etc to shape their land parcels into state-of-art city.

The concept is not a failure at all; it may be an idea slightly ahead of its time and is soon to become a trend amongst buyers. Policies need to be in the interest of customers and environment and to ultimately facilitate the commercially viable and environmentally sustainable developments.

Track2Realty: Do you feel PPP model can be a viable option for establishing townships with walk-to-work culture?

Vidya Basarkod: Public Private Partnership (PPP) model seems to be the viable option as it will not only improve the pace but also the quality of development. Expanding the private sector role allows the public agencies to tap private sector’s technical, management and financial resources in new ways to achieve certain objectives such as managing cost, schedule certainty, supplementing in-house staff, innovative technology applications, specialized expertise or access to private capital. The private partner can expand its business opportunities in return for assuming the new or expanded responsibilities and risks.

The townships are certainly gaining popularity amongst the buyers, for the fact that they offer all the required means, all at one place. These townships will surely become the latest trend in the Indian context. The PPP culture is definitely a feasible option for the same.

Track2Realty: Project launches have been few and far between in 2012. How do you plan the year ahead?

Vidya Basarkod: Real estate sector is able to build the trust in the minds of buyers and investors. With a complete understanding of the customers, Jaypee Greens has made a place in the heart of many home seekers. As a developer, we have not seen any decline in the number of product launches in the year 2012. We have successfully launched products for different customer segments at our various townships, in Noida, Greater Noida, Sports City and Agra.

With the successful second edition of Formula One at Buddh International Circuit, opening of Yamuna Expressway, and a series of product launches, we have retained the confidence which has resulted in positive trends in the property market. The same is expected to continue in the year ahead.

Revival is a strong statement in today’s market: Anshuman Magazine

Track2Realty — Tue, 01 Jan 2013 04:52:52 +0000

Track2Realty Exclusive: Most of the real estate analysts believe the year 2012 has been pretty disappointing and actually a waste. Anshuman Magazine, CMD of CB Richard Ellis (South Asia), however, feels it was better than expected. He asserts when the global economy is down and the Indian GDP continuously nose diving, any movement is a positive indicator. In an Exclusive Interview with Track2Realty Magazine talks about the learning of the year and sounds cautious with the prospects of the year ahead.

Track2Realty: Do you feel the year 2012 has been quite disappointing for the sector?

Anshuman Magazine: In fact, on the contrary, it has been better than expected in my opinion. Yes, the movement has been pretty slow, but at least there has been some movement which many of us were apprehensive at the beginning of the year. 2012 had started as a very tough year for the sector and there were more challenges compared to the previous year. So, it could have been even worse.

Track2Realty: You mean to say no major disappointment in the year?

Anshuman Magazine: Of course, there has been disappointment but what I am saying is that it could have been even worse. And it was expected to be even worse. If we go by the numbers it was much lesser than last year in all the asset class. So, it was a slow market but at least moving market. In residential there were significantly less new launches, though movement in the secondary market was more or less reasonable. In office space also, it was close to 30 million square feet of leasing which was less than the last year.

Track2Realty: How is 2013 expected to shape up for the sector?

Anshuman Magazine: Early part of the year 2013 is expected to be the same. At least, I don’t see any chance of bounce back in the market due to global economic uncertainties. Even the projected GDP growth of India which was earlier around 8.5 per cent has now come down to 5.5-6 per cent. Due to this there has been a slowdown in the overall economy and it will affect the real estate sentiments as well. Then you will have elections ahead and all that has a chain effect on the prospects of the market.

Track2Realty: But don’t you think 2013 promises to change the sector post regulator bill and land acquisition bill?

Anshuman Magazine: These bills are not going to make any major difference as far as revival of the market is concerned. How these new laws are framed is also very critical since if you talk about the land acquisition bill, which in its present form is going to make the acquisition more difficult. And that is not good for the industry and overall infrastructure. With regard to the regulator, I would say it is good in the long term only if it balanced and aimed at regulating all the stake holders, including the buyers. But all these bills have a long term impact, and are not going to have any immediate impact at least in the year ahead.

Track2Realty: Investment is going to be a major challenge and foreign funds are too cautious in a market which is labelled as not up to global standards?

Anshuman Magazine: Funds I believe will continue to trickle but I don’t see the kind of money really coming which can actually revive the market. We are far away from the ground realities of 2006-07 when there was conducive investment climate. Due to global financial conditions, the FDI and other foreign funds are expected to stay away. Some of them may re-invest in the Indian realty, but by and large it won’t be a windfall for the sector. So, going forward, either the government will have to rethink its focus on the realty sector, or banks will have to restructure since interest rates are way too high of global standards. Having said that, lets us be clear that unless the private investment comes into the sector, the existing funding gap will continue.

Track2Realty: What has been the biggest learning of the year 2012?

Anshuman Magazine: Learning depends on which segment you are talking about. Overall from a developers’ perspective, fiscal discipline is the biggest learning where they need to balance debt-equity ratio. Whichever companies have maintained this fiscal discipline are today doing well. Quality and delivery is equally important and even in this slow market companies which have delivered the promised apartments on time have not suffered much. We have been seeing that standing on the index consumer confidence is what ultimately matters.

Track2Realty: Do you see any chance of revival of the market in 2013?

Anshuman Magazine: Revival is too strong a word in the market where any movement is worth noticing keeping in mind the global financial conditions and our own less than projected GDP growth.

Track2Realty: Any particular asset class do you feel would be catalytic to bring normalcy back to the sector?

Anshuman Magazine: We all now bet on the FDI in retail that can add to the existing pace of demand in the retail segment. However, I must add here that residential segment is very important for the real estate market and no major strong indication is coming from that quarter. But yes, looking at the industry and logistics activity, I feel they have the potential to take the sector to the next level. However, a lot depends on the global market for that also.

Track2Realty: Which are the emerging markets in the year ahead?

Anshuman Magazine: I don’t see any significant change in the demand side of market and major markets like Delhi-NCR, Mumbai, Bangalore and Chennai will continue to dominate the property market. A lot of activity is nevertheless expected in emerging markets like Ahemdabad and action is expected in some of the smaller markets like Coimbatore as well.

Track2Realty: 2012 saw very many emerging trends–like partnership model back in business, restructuring of the overleveraged companies, micro market focus, execution and not land bank. What are the emerging trends for the year 2013?

Anshuman Magazine: I feel the developers have already started realising that they need to get out of their non-core business. They would instead focus on completing the projects that will streamline their cash flows and reputation. Delivery will be the key in the year ahead and they will have to cut debt, rope in more partners and smart players will focus on their tried and tested micro markets instead of going pan-India. Of course, some large developers with presence in very many cities can afford that luxury, but by and large developers will focus on their existing markets.

Infrastructure major challenge for redevelopment in western suburbs of Mumbai: Lalit Kumar Jain

Track2Realty — Sun, 16 Dec 2012 08:57:06 +0000

Track2Realty: Western suburbs of Mumbai are set for a facelift through redevelopment post the new Development Control Rule (DCR). Ravi Sinha speaks to Lalit Kumar Jain, CMD, Kumar Urban Development and CREDAI President to understand whether it would add more pressure on the existing crumbling infrastructure of the suburbs. Excerpts of the interview:

Track2Realty: How do you see the challenges of redevelopment in the western suburbs of Mumbai?

Lalit Kumar Jain: Redevelopment activities are taking place on a large scale in the western suburbs of Mumbai such as Andheri, Jogeshwari, Goregaon, etc. With limited land resources, many developers based in the suburbs are opting for redevelopment of existing projects. Both residential and commercial real estate developers are increasingly gearing up towards new redevelopment schemes. Redevelopment is no more about slum development. Redevelopment is a huge market, where a developer has to work with cooperative housing societies that can use higher FSI because of the new development rules. A large number of reputed developers in the western suburbs have already gotten into redevelopment of projects.

Track2Realty: Following the DCR, focus seems to have shifted on redevelopment in Mumbai. The question still stands-will it increase substantial supply or lead to price correction?

Lalit Kumar Jain: Redevelopment of a housing society calls for building a high-storey building that houses more residents than those housed previously. Obviously, there will be more supply of residential real estate. Redevelopment is beneficial to both the home buyers as well as the developer community. Home buyers can expect bigger houses and developers can sell the extra flats that they build in a redeveloped building. Mumbai is a city where the demand for housing will always be more than supply mainly due to the sheer size of the population in the city. So, although the supply of residential real estate will increase, it may not necessarily lead to price corrections.

Track2Realty: What is the best sustainable model of redevelopment in the western suburbs according to you?

Lalit Kumar Jain: The correct assessment of compensation to residents calculating costs due to fungible area and TDR is the key. However government must promote redevelopment for safer and healthy living of Mumbaikars

Track2Realty: Don’t you think redevelopment will add to more pressure on overall infra needs?

Lalit Kumar Jain: To some extent, yes, redevelopment will add more pressure on the existing infrastructure. Mumbai is bursting at its seams, and its infrastructure facilities are outdated. Draining systems built in the times of the British era are still prevalent in the city. There is a dire need to overhaul this system. Also, more spaces for children such as parks, play grounds, etc. are needed. Most redevelopment projects encompass amenities such as parks, play grounds, etc. Having said that, infrastructure definitely needs to be boosted in order to make redevelopment a success.

Track2Realty: Western suburbs need infra push along with the redevelopment. How to balance the two challenges?

Lalit Kumar Jain: Suburban Mumbai has a density of 20,925 persons per sq. km which is twice as many people as that in New York (10,630 persons per sq km). Currently, the infrastructure in the western suburbs is woefully inadequate. For redevelopment to be effective, it is imperative to boost the infrastructure in the region. Better mode of transport, improved sanitary conditions, etc. is the need of the hour. Some prominent infrastructure initiatives have been taken including the World Bank supported Mumbai Urban Transport Project, Mass Rapid Transit systems like Metro Rail Project and Mono rail. However, there is still scope for improvement in this area.

Passage of FDI Bill to boost realty

Track2Realty — Sat, 08 Dec 2012 05:23:06 +0000

Track2Realty: The acceptance of FDI in multi-brand retail is likely to accelerate building of shopping centres in the country, says Cushman & Wakefield.

In a release Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says: “Over the medium- to long-term, the retail sector, real estate industry and end-consumers will benefit from the move and the economy on the whole will gain momentum, depth and size.”

Within the next 12-24 months, international retailers will accelerate their entry strategy. As a result, developers involved in shopping centre development will get a boost and serious players will expand in this space.

“Passage of the FDI Bill reflects the Government’s commitment towards the retail industry. The Bill, when implemented, will help the retail industry take a quantum leap towards the next phase of growth and development,” says Dutt.

More organisations in the industry will mean better structuring and fairer compensation to all stakeholders. “The passing of the Bill will also set up India’s image internationally as a safe and secure retail destination for global brands to enter and expand,” Dutt explains.

The passing of the bill will present India’s image internationally as a safe and secure retail destination for global brands to enter and expand.

Green buildings are not necessarily expensive: Jennifer Layke

Track2Realty — Sun, 25 Nov 2012 13:34:16 +0000

Track2Realty: When you look at the developing market, where the cost of construction is a huge issue and most of the realtors are mid sized developers. What are the suggestions you would like to give them so that they can adopt more and more energy efficient buildings?

Jennifer Layke: I think that one of the things that we have found has actually begun to contradict that there are more expensive buildings as a result of pursuing highly efficient or green buildings. What we actually found is that through integrated design, we can often bring cost out of the building. One of the examples that we speak of is the Empire Estate Building where we were originally asked to come in because the owner believed he wanted to install a new chiller plant. That was going to be a very expensive proposition. But we were able to design out the need for that chiller, thereby creating savings that were invested in energy efficiency measures that paid back. So, I am not sure that I agree with the premise that today green buildings cost more.

Track2Realty: Your study has been only on commercial buildings or across the asset class?

Jennifer Layke: We have about 60% from commercial, about 23% from industrial and 13% from institutional.

Track2Realty: Which are the other markets where you conducted this survey?

Jennifer Layke: Europe, North America, India and China are my four major markets and I do a little bit to keep track of what is going on in Singapore and Australia.

Track2Realty: So, you feel India is a very interesting market as far as adopting some of the best practices are concerned?

Jennifer Layke: I do. I think the indication of an interest and the opportunities that are presented and the kind of costing and the policy initiatives that are underway, means that there is tremendous interest in moving forward with energy efficiency and I think the challenge is overcoming those barriers.

Track2Realty: Finally, I would like to ask if you have any specific suggestion for the Indian real estate?

Jennifer Layke: I think there are a couple of things, but first of all, I do think that targeting policies and incentives to overcome the barriers that came out in this year’s survey is a very good opportunity. So if I were to look at it as a person trying to build the market for energy efficiency, I would look to the opportunity to address those five barriers. And then I think the other thing that was clear from this survey was that many times the technology follows incentives and the countries that had incentives in place for smart buildings, more respondents were pursuing smart buildings; countries that had incentives in place for renewable, more were pursuing renewable.

In Germany, we saw there were a larger number of people who were pursuing building envelope improvement, largely because there is a dialogue about the solution set. And that I think can be true for India as well.

Indian realty has positive outlook but barriers exist across the board: Jennifer Layke

Track2Realty — Wed, 14 Nov 2012 10:08:54 +0000

Posted by Mahie Khan, Child Guest Editor on Children’s Day

Track2Realty: You have specialization over energy efficient buildings. What are some of the best practices adopted globally?

Jennifer Layke: The energy efficiency indicator study, which is the survey we have done globally among 4000 executives and decision makers who represent the commercial sector, industrial sector and institutional sector, identified four key best practices in terms of those organizations that were implementing the most energy management measures in their facility.

First of all, we found more activity among organizations that had set energy or climate targets for their organizations. The organizations were analyzing the data from their buildings more frequently. Organizations were adding more resources and capacity to their building to manageand produce energy savings and that could be in the form of hiring additional staff or could be in form of retaining energy consultants, so we did not differentiate whether they were internal or external resources. And then there were those organizations that were securing external financing, the organizations that went beyond their own capital budget or operating budgets in order to invest in energy efficiency.

Track2Realty: Do you find India lagging behind in adopting some of the best practices?

Jennifer Layke: No, I think it depends on the sector, the segment and the size of the organization, I think there are a lot of variables. One of the thing that was interesting after looking at the survey results, both last year and this year, we saw in India a variety of barriers that came up almost across the board. There were five categories and they range from awareness of opportunities all the way to the ability to find capital to pursue the projects.

In some of the more developed counties, like in US in particular, we saw that almost 38% of the respondents indicated that finding capital was their single biggest barrier. But in India, awareness of opportunities and the ability to assess those opportunity indicated that the market was relatively less mature just because most of the time the North American respondents indicated they had gone through all those challenges and were now at the financing challenge whereas India respondents indicated that they were still looking at how do you identify, evaluate and pursue projects.

Track2Realty: When it comes to real estate investment, most of the global players are looking at two markets – India and China. Since you have also seen the Chinese market, how would you differentiate the two respective market in terms of adopting best practices?

Jennifer Layke: China had implemented more measures among the leadership tier, the four factors that I identified. I think it was 13 measures among the top tier in China versus 10 measures in India. So there was a difference in spread and the number of measures implemented but I don’t have any more specific market to market data.

Track2Realty: When we say energy efficient building & smart buildings, I suppose it also needs smart facility management to take it forward. That brings to focus the business methodology of the developer-sale or lease model.

Jennifer Layke: Well, we don’t ask very in-depth questions about management practices and different ownership structures. So I won’t have a lot of data to share with you. One of the specific measures that we ask about is what are the specific actions that the respondents took in the past 12 months, in terms of the key measures that were implemented in India. One of the measures was increasing the rate of preventative maintenance scheduling. There are couple of other behavioral aspects that highlight for India, setting HVAC set points and controls adjustments as well as commissioning, all came up more highly here. In China, we did not see so many behavior related measures that came to the fore.

…to be continued