Generally irregularities are done by developer with complete blessings of concerned Govt. officer

Mr. Anand J Gupta General Secretary of Builders Association of India as well as Chairman & Managing Director at Choudhury & Choudhury (India) Ltd, (Civil Engineers, Builders, Real Estates Company) and having completed 35 years in the real estate industry and have visited and studied various advance part of the world. Sharing his experience and views with Nawaz Sayyed, Editor, Indian Realty Voice.

Will RBI's rate cut policy curb the negativity of realty sector?

RBI's rate cut policy as regards to CRR can help the sentiments of common man. As it will reduce the cost of interest & in term EMI. It will also reduce the cost of construction. RBI rate cut policy is definitely being a good instrument to curb the negativity.

What steps government should have to take to deter for rising irregularities in realty sector?

Government has to make a comprehensive reforms/ administrative reforms and create a good deter to curb rising irregularities in real estate sector.

(1)They must have some kind of prequalification and/or registration system for developer. Catogarising what size of realty project each company /organisation is capable of taking up the project. As it is happening in all infra structure project awarded by State government, Center Government bodies & their undertaking. People who are not qualified to execute particular size of work and not having a credential to organise a fund and required technical knowhow cannot be allowed to continue in the industry and play with the people.

(2)In most of the case generally irregularities are done by developer with complete blessings of concerned government officer / approving authority and in collusion with end user. As by these irregularities, all these three people are beneficiary. Govt. should have a heavy punishing policy to the officer under whose supervision and knowledge such an irregularity was committed by developer and/or user, once we set some good example of punishing one in 1000, another 999 officers, developers and user will never dare to use such an irregularities. Punishment can also be in form of putting heavy financial burden on concerned people to put a deterrent on such an irregularities.  Presently in the name of punishment we only transfer the person or suspend him for few days /month. As compared to the monetary gains he makes this so called punishment is very negligible. Developer & user is also required to be heavily and financially fined & punished for collusion in irregularity.  Govt. should also come heavily on punishing to all those patronising slum / illegal construction.

BMC has introduced "New Capital Value Based Property Tax System" is it in favour of common man?

Yes, in my opinion it is very right decision but taken very late. Everywhere property tax has to be design on a capital value base and I personally feel it will rationalise the capital property tax system and ultimately in favour of a common man.

What steps or plans Builders Association of India has drafted to curb rising prices of property or to make houses affordable?

Builders of India has suggested to government in past following suggestions:

(1)There is a continuous flow of public from rural to urban area but we have failed to increase the boundaries of corporation, township.  We have to add the area for town, commensurate with increase in population. So that demand and supply do not mismatch.

(2)Government is wrongly have drafted N. A. Rule unnecessarily became hurdle to make agriculture land into non agricultural land for housing in urban area. We have to understand that presently from Bombay to whole Konkan belt there are 35% of Agricultural area remains uncultivated and neither it is being use for agriculture nor is being use for urban or any other purpose.

(3)Builders Association of India has suggested that government as government is coming out with "Nava Seva" bridge, on other side of Bombay i.e. "Nava Seva" (Raigadh district) is having more than 7200 sq.km. area. and having only 22 Lac population.

(4)We have requested government of Maharashtra to make a second new Mumbai in phase manner in Raigad district by designing the infrastructure of Road, footpath, sewerage lane, strong water drainage line, water line to take the load of 10 FSI.  They can appoint Cidco, MMRDA as the nodal agency. As once the bridge is made these area will very near to south and Central Mumbai, people will find convenient and will prefer these as compared to Virar, Palghar in Western Railway and Badlapur, Kalyan, Dombivali in Central Railway area. As increase in area will be more than 5 times of present area of Bombay, Thane a huge housing stock may be 10 times of present Mumbai can be created, this mere announcement can drastically reduce the prices in Mumbai.

(5) Secondly BAI has suggested government a time bound implementation of 14 Lac slum rehabilitation and reconstruction of all the 15 to 16 Thousand dilapidated building available in south Mumbai can create 9 Lac houses of 400 sq.ft. for self, these houses will be over and above houses given to present slum dweller and present resident of these 15000 buildings. If government uses an administrative skill and bind tenant, owner and officials in time bound system and makes an announcement that after 5 years all incentive FSI will be removed if they fail to make to use these incentive FSI policy.

Realtors bodies such as MCHI, Credai are conducting several property expo, will it helpful to increase absorption rate?

I don't think so. Realtors body such as MCHI, Credai, BAI conducting several property export to help their members to market their  product, it also helps to them to create a platform for customer, bank for home loan, but no way it can help them it increase absorption of rate.

In today's scenario several builders are not fulfilling their promises what

they are mentioning in brochure and advertisements or at the time of booking flats, what you will suggest punishment for such builders ?

First of all as compared to 70's & 80's today builders have improved themselves quite lot. At various occasion they have been penalised by consumer courts and various courts on their misrepresentation in brochure and irrational advertisement. Presently all developers are very careful in preparing their broacher and making commitment to their customers.  According to me after 2000 most of the unprofessional builders packed up or got finished and other few who have remained are likely to be got finished for continuing their work in unprofessional way.  District and State Consumer courts have done their good job in punishing all the builders.  More over competition commission of India is also have created some good example in punishing few builders and there are sufficient provision under the both the judicial authority to punish builder heavily.  Customers are advised that they should be alert in choosing the credit worthy builders and make full use of consumer courts and competition commissioner of India for any irregularities committed or misrepresentation done by any of the developer.

Being a Secretary of Builders Association of India, as well as you have served to this industry for long time what are your suggestions to builders lobby to come out from this crisis period?

Presently being Hon'ble General Secretary of Builders Association of India and having completed 35 years in the industry and have visited and studied various advance part of the world and after comparing their Real Estate setup with ours, I don't think there is any crisis for builders in this country.  Few builders are in money crisis mainly because of their irrational over trading and putting Bank and customers money to create more land bank and not putting the money to complete the project.  Presently we are having only 31% population in urban area and advance part of world like Europe, America is having more than 70% population living in urban area and in general India country as whole wanting /struggling to match with this advance part of the world.  To reach this 31% population in urban area to 70% population in urban area, it will take minimum 50 years and hence having housing shortage in all part of country in urban area will continue to remain in short supply and this will make continuous good and flourishing business for another 50 years in this country for all the real estate developers.

RBI rate cut by 0.25bps a robust move

The Reserve Bank of India has brought new year's goody pack for realty sector in the form of cut in Repo Rate and CRR by 25 bps. With this robust move realty sector took sigh of relief at some extent.  Whereas, from last couple of years property market is not doing well and homebuyers are losing their hopes to buy their dream homes.

Here are some important points of Rate cut policy

• 25 bps reduction in repo rate from 8% to 7.75% (consequent adjustment to reverse repo rate to 6.75%)

• Reduction of bank rate to 8.75%

• Reduction of CRR by further 25 bps to 4%

The apex bank has committed to improving liquidity in a cash-strapped economy by reducing the CRR further in this policy coupled with reduction in repo and bank rates.

Liquidity is expected significantly improve in the economy on the back of the reduced repo rate, CRR and bank rate. Consequently, there should be a revival in investment and growth – including in the real estate space. Industrial activity, which has been sluggish last year, should bounce back in the medium term.

However, there are some contra views over the apex bank's decision, the Credai national president Lalit Kumar Jain hails the rate cut policy but wants special focus on realty “Though RBI has made a good beginning, the repo rate cut by 25 basis points is just not enough. What we need is creation of a robust supply to curb inflation for which RBI needs to continue to ease fund supply position, month-on-month and quarter-on-quarter for realty sector,” he said. Contrary to this MCHI-Credai president Paras Gundecha says, RBI rate cut is small step. Similarly there are some realty pundits have hailed the RBI's move says, move will help to curb to some extent the negative sentiments of Realty Sector.

According to some market research reports the reduction of 0.25percent shall generate approx Rs. 18,000cr in the banking system.  Additionally the move may lead to a smooth lending rates in the property industry. . In turn, this shall help the industry access cheaper funds and improve operating margins.

On the other hand the cut in rate will also brought some hopes for home seekers as it will surely reduce the cost of borrowings and this will directly lead to the huge demand across the country. After RBI's huge step now realty industry is expecting from central government to come out and take some robust move to aid realty sector such as in the forthcoming budget allowing External Commercial Borrowing for high-segment housing, increasing tax rebate on housing loans and reducing import duty on capital goods for construction and infrastructure.

Developers have to introduce attractive schemes to lure homebuyers

In an exclusive talk with Mr. Yashwant Dalal, President Estate Agent Association of India. He is serving in real estate sector from last 26 years. In this session he has raised the some very crucial issues and guided to the homebuyers with his experience.

Regulatory bill appears to be incomplete even one-sided, Realtors say do you agree with this?

Dalal: “ No , I do not agree because of most of the builders are guilty for many irregularity 
and committed breach of trust against flat purchasers , Govt. and other appropriate 
authorities. And due to strict regulatory bill 7 (Seven) out of 10 (Ten) will shut down 
their business. Or they should be punished heavily or they have to improve themselves.
Whereas, I have some suggestions:

a. I suggest steel more restrictions required, emphasize on introduction of world class 
real estate development and marketing education to entire Accommodation Industry and allied 
industry , particularly Builders ,Infrastructure developers, Real Estate Agents( marketing 
Agency) must require perfect education and knowledge as per international standard. 

b. It should be made obligatory to bring licensing to developers, contractor, raw material suppliers, estate agents, housing finance company & Agencies.

c. The regulatory board should also keep check on Advertising Agency, Media and Newspaper agency too who is connected or involved with construction industry.

d. Fast track court should be formed for fast judgment i.e within 3 months for any suit filed by consumer or others, against builder , estate agent or housing finance agency , media , newspaper agency etc. 

“The bill will beneficial to consumers and also builders too because of fly by night builders 
will vanished and good reputed builders will gain more for their efficient services to 
purchaser with integrity such builder will built goodwill.” 

What about RBI’s Credit Policy, is it in favor of realty sector?

Dalal: The credit policy of the Reserve Bank of India (RBI) was "arbitrary and anti-growth", as it had 

kept interest rates on loans at a high level hence home seekers may wait and watch for further 
change ( reduce interest rate ) or looking for further correction ( down side) in property market 

due to world’s recession and slump in Indian economy. 

What are your opinions for 2012 and predictions for 2013 realty market?

Dalal: Accommodation industry should face more challenges and have to claimed tuff leaders to survive. I think 30 % to 40 % correction might happen in real estate market due to shortage of liquidity in market , lac of ready stock , due to incomplete project , O.C. , B.C.C not granted and due to many other defects in project , home buyers are reluctant to buy property .

Again home seekers feel that prices are unrealistic and not affordable. 

Housing finance rate might remain on higher side because of risk factor remain very high in construction industry and other industry due to that property price may tumble upto 2007 level .

Developers introduce new attractive schemes to home buyers to collect more fund and try to reduce losses and they might be success to survive. 

What are the initiatives Govt. should to take to deter irregularities in realty market?

Dalal: a. Introduce license to realtors and Estate Agents , it will bring high confidence of home seekers & FDI.

b. Introduce Fast track court for real estate industry 

c. Reduce housing finance rate 

d. Introduce housing policy for at least 15 years 

e. Reduce rate of stamp duty from 5% to 1 % and registration charges bring down from 
R.30,000 to Rs. 5000/- 

f. Hence for property tax should paid only at the time of first sale ( Builder to 1st 
Purchaser ) all future transection should free from stamp duty only registration charges 
payable income tax payable ( Property gain tax )only on profit ( Difference between purchase 
price and sell price if higher )one time taxation.

 
g. Realization of Stock exchange profit should count as movable property fund transaction 
and realization profit from Real Estate transaction should treated as Immovable property 
transaction profit both should treat as separate entity . [ it mining that in future if one 
having profit in stock exchange it can’t be reinvested in real estate for saving of it’s ‘gain 
tax’ because of it will count as profit from movable property transaction vice versa.
Under such Govt. can collect more taxes and regulate the price of real estate market.]bogus 
transaction will be stop.

h. Company tack over by other company with property should pay heavy property gain tax ( 
investment on material , finished goods , technology , machine etc. should separate from 
immovable property ) 

i. FDI should be stopped immediately or money invested in immovable property should not 
be tack bake before 10 years and further subject to payment of 40% income tax. 

Being president of, the Estate Agents Association of India, what are your 
tips for investing in properties?

Dalal: For fruitful and sound property investment my tips are as follows: 

1. Buy a property only through reliable real estate consultant agents.

2. Avoid buying property from property exhibition like window shopping without taking search of all the relevant documents and location benefit 

3. Before purchasing any new property please grad the builder by his credential , title 
of property , its total legal documentation , permission granted from local authorities , 
terms and condition of I.O.D & C.C. , builders promises for possession in writing , penalty 
close for delay in possession , see who is contractors , engineer , architect , bankers / 
financial institution , real estate agent/s ,legal representatives , advocate , solicitors 
etc. make one file and compare it with others builders profile , see all the aspect and 
compare it with your need if it suite you then proceed further for purchase. Always ask many 
persons about developers reputation and his credentials , do not bank on words of Builders , 
Estate agents and advertisement. Visit builders previous project and ask credential and trust 
worthiness of builder quality of building /s or project which was already delivered , list 
material used and amenities supplied , if any problems faces by occupants of previous project 
which was completed.

4. Before purchasing any immovable property always publish public notice in any 3 
prominent newspapers through well-known advocate . 

5. Do not buy any property without taking NOC from Society and insist to obtain no due 
certificate and ratable value from society from vendor of premises for ascertain area and 
maintenance charges of flat . 

6. Before buying any flat visit the flat several time , meet other occupants , take the 
note of locational advantages and disadvantages , water supply , electric break down , other 
basic services to the building , credential of Managing Committee , maintenance of building , 
know about defaulters members , quality of residents in building and surrounded area and keep 
check on weather reports of entire year , dose the property you willing to buy is situated at 
or nearby water logging area ? public places , crematoria , public garden , school , college , 
heavy traffic zone and no stopping zone etc. dose it is near to market , public transport , 
hospital , school , colleges and other facilities are available as per your basic need . 
Always see who is your neighbor and ask other about nature of said neighbors , ask credential 
of vendor of flat / property before make any payment towards purchase of flat. Try to meet 
several time to owner of the flat and keep good relation till flat will be transfer in your 
name. 
7. Cautious about chain type of dealing ( purchase of new flat b selling present flat and 
again your vendor is also purchase other flat by selling his present flat to you and so on , 
it is very difficult task if any one deal break then entire chain will fail under such make 
provision in your agreement that deposited amount of token money or earnest money should be 
refunded immediately if deal should not go through. Avoid litigation. 

What steps The Estate Agents Association of India (EAAI) are taking to pamper realty market?

Dalal: For betterment of Realty market we would like to take some robust actions, such as we would like to organize several seminar for guideline to property purchase and seller. Public awareness program through public meetings.  We always maintain Cordial relation with property purchaser ,sellers and developers , financial institutions , other associations , societies , local authorities like BMC, Police , Newspaper agencies and media etc. 

Apart from this  EAAI has already been started process of obtaining ‘Real Estate Agent License’ from Govt. of Maharashtra and also would like to start real estate education courses of international standard. And we would also like to open more and more branches in and around Mumbai and other part of Maharashtra and Gujarat state. As far as awareness is concern would like to publish monthly newspaper , website on Activities of real estate agents in Mumbai City and other part of India and world to make people aware with the right realty information.

Last but not least we would like to increase membership of EAAI and also like to improve quality of services of our EAAI members and their standard of living. 

Nightmare of 2012 and expectations from 2013

Year 2012 was a nightmare for realty market and may 2013 will bring some good news.  Throughout the year realty market has suffered a lot due to severe rules introduced by government and more than 10times changes in RBI’s credit policy realtors are setback.

Similarly, entire housing driven economy has taken a setback resulting in loss of revenue to government (central and state, LUBs). This particularly affected local Urban Bodies (LUBs) in carrying out developmental works in respective cities. The governments are trying to recover revenue through higher taxes and   premiums which will be counterproductive and is resulting in the price escalations. The governments including bureaucracy has preferred to avoid taking decisions in Real Estate Sector due to avoid controversies which further resulted in slow down and price increase due to shortages. The business mathematics has gone wrong for most developers and this ultimately affects consumer as well as governments. Adding to fuel to fire Govt has reserved the 20% quota for Economically Weaker Section in every luxury projects introduced by the developers.

According to the several research reports have reported huge plunges in Indian housing prices, less demand and more supply brings the realty economy down and down. Even though Mumbai, Delhi, Bangalore and Pune biggest realty market suffering through the same crisis, reports said.

Contrary to 2012 realtors as well as market players are expecting more absorption in current fiscal year comparatively previous one. In this crisis only new DCR regulation have brought some hope for realtors, further 2013 will see more projects launch on schedule, with an implied assurance that developers will focus on meeting the committed timelines. Given the increased demand, the high prices of land and the significant increase in construction costs, 2013 will not bring any major correction. Though the question of what the State Government will do in terms of providing the infrastructure required to support the increasing population, the inherent demand for residential space in Mumbai will remain strong in 2013.

As far as absorption concern in commercial properties in 2013 will be at the lowest. On the other hand whereas govt has given severe injuries to realty sector also has good news by introducing 51% in Foreign Direct Investment (FDI). Realtors’ body has hailed the 51% FDI as it will bring several foreign realty investors are all set to implement their expansion plans in the metros.  FDI in retail will open fresh avenues. High street will continue to grow and give a tough competition to malls. Vacancy levels in malls will depend on the amenities and infrastructure that the mall offers. Superior malls will have lower vacancy than the inferior ones. Rentals will get a push in superior malls.

Despite all this Realtors’ body also lined up number of property expos in Mumbai and in suburban areas to heal the realty wounds.           

Will this Dusshera bring some good news for Realty Sector?

In Indian society festive seasons are considered as an auspicious occasions to buy new products. Similarly Dusshera is also an auspicious occasion, on this event homebuyers prefer to book their dream home. Whereas, from last couple of years realty market in not doing well due to the constant rise in home loan interest rates which is causing to low demand and supply in housing sector. On the other hand government tightening its grip over realtors by making amendments in property norms such as FSI and the latest blow for property sector is Revised Lease Land Policy which is directly affecting to common man.

However realtors are trying their best to lure homebuyers they are offering special offers and additional discounts, add-on benefits and surprise “spot gifts” such as gold coins or even a foreign junket to make the customer sign the dotted line. In Mumbai, for example, there was a case in which one lucky winner buying into a project is offered another flat as a prize!

On this auspicious season realtors bodies are organizing several property expos in the different parts of Mumbai to increase sales.

When asked to the one of the luxury realty company Rustomjee Group’s director Mr. Percy Chowdhry said, “festive season is considered to be the most auspicious occasion to take important decisions like investing in stock market, buying gold or a house. The belief of seeking God’s blessings before investing in property or moving into a new house has come down through ages in our Indian culture and still continues, leading to booking of a dream abode by the house hunters. The festive season especially Dussehra and Diwali is not only considered to be an auspicious period for home buying, but also with the various incentives and discounts offered by developers makes it lucrative for buyers too. 

Developers all across the country launch new projects that offer innovative amenities in newfound & flourishing destinations that promise to provide the comforts of modern living. Developers are involved in detailed consumer behaviour study which helps them create new projects to suit the prerequisites of its diverse buyers. Furthermore, the pricing of such projects are arrived at after due consideration given to its buyer’s purchasing capacity. Year-on-year we receive an overwhelming response for our projects, during the festive season.