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.