Realtors want govt to continue with reforms

Devesh Chandra Srivastava

FEB14,2010

Real estate players have called upon the government to continue with its reform agenda in Budget 2010. Cash-starved realtors are also looking for more sops to be able to roll out new affordable housing projects and integrated townships. Developers under the aegis of the Confederation of Real Estate Developers Association of India (CREDAI) have already met finance minister Pranab Mukherjee and put forward their demands. Pradeep Jain, chairman of Parsvnath Ltd, and president of CREDAI- NCR, said, "In order to support developers' efforts to promote LIG/ MIG housing projects, there is an immediate need for a tax holiday under section 80- IB (10)." Realtors also feel that easing the burden on buyers' pockets will help increase the sales in the upcoming affordable projects. As Rajeev Talwar, group executive director, DLF Ltd, said, "My demand would be to empower the buyers through more sops on housing loans. Lowering of home loan rates could be one of the measures. The government should continue the reforms." Apart from LIG/MIG housing projects, developers have been demanding tax holiday for industrial parks under Section 80-IA (4) (iii). Growth in the commercial space during 2007 and 2008 was primarily driven by IT and ITeS sectors. But because of the slump over the past two years, IT spending, particularly in the banking, financial services and insurance (BFSI) sector has been hit. This resulted in reduced offtake of space and increased vacancy. The tax holiday would give the much- needed support to the commercial sector. Some others believe that funding options for the real estate sector should be opened to beyond institutional investors. Anuj Puri, chairman and country head, Jones Lang LaSalle-Meghraj, said, "With the investment climate once again turning favourable in India, the Budget will also have to address the long-pending issue of real estate mutual funds (REMFs). Also we'll welcome a budget that finally and decisively enables the entry of foreign direct investments ( FDIs) into the real estate sector." According to the existing rules, FDI in real estate sector has a three- year lock- in period. Recently, the finance ministry rejected a proposal by the department of industrial policy and promotion (DIPP) to drop the three- year lock- in. Responding to a draft Cabinet note circulated by DIPP in November, 2009, the ministry said the lock- in acted as a deterrent, checking speculation and shielding the sector from sudden flight of capital during times of crises, such as the global meltdown in 2008 when foreign institutional investors pulled out $ 5 billion from equity investments between September and October. REMFs could prove beneficial for the commercial real estate sector. Indirect property owners, who own small shares of buildings through structured investment products or real estate investment trusts (REITs) can be direct beneficiaries. Abhishek Lodha, MD, Lodha Developers Ltd, said, "We look forward to flexibility in FDI norms as well as forward momentum for REMFs/REITs as good alternatives to address the issue of capital funding requirements for high- end projects."

MUDA urged to reduce fine for illegal plots

 12 February 2010, 10:13pm IST


 Mangalore Urban Development Authority (MUDA)
   

MANGALORE: The Karavali Karnataka Civil Rights Protection Trust
 has urged the urban development minister to reduce the
fine amount for legalizing
illegal layouts from 15% to 5%.

Protesting against various shortcomings
in the Mangalore Urban Development Authority
 (MUDA) and city corporation in front of the
deputy commissioner's office here on Thursday,
Mariamma Thomas, president of the trust, said
DK and Udupi had a different topography than
the others parts of the state and the MCC and
MUDA were framing rules which were inconveniencing
 the people.

She pointed out that the MUDA officials take months
 to grant a zone or a no objection certificate (NOC)
and demanded the minister to direct officials to give
 zone certificate in a week, NOC within a fortnight
and layout certificate in a month.

The other members pointed out that while getting
permission for a residential building, the MCC officers
demand for a single site approval from MUDA.

They argued that when MUDA takes months for a
zone certificate; this will take more than a couple
of months, urging minister to simplify licensing norms
 and give door numbers to houses which have been constructed by poor.

They have demanded a change in master plan, claiming
that officials carried out the exercise without taking
people into confidence and appoint a special officer
 for public contact meet at least once in six months.

Stalin transcends deep divide, invites Jaya for govt function

M Gunasekaran,  13 February 2010, 04:47am

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CHENNAI: In a rare political gesture, Tamil Nadu
deputy chief minister MK Stalin has invited his political rival,
AIADMK chief J Jayalalithaa,for the launch of the DMK government’s ambitious
 Kalaignar Housing Scheme to construct 21 lakh concrete
 houses for the poor.

“It’s not an unusual thing. We always adhere to democratic
principles and don’t ignore the Opposition parties.

Since she holds the post of the Leader of the Opposition,
I have written to her inviting her for the inauguration of
the Kalaignar Housing Scheme, which is one of the major schemes
implemented by our government,” Stalin told The Times of India.

In a state where rival leaders seldom even greet each other,
such gestures are rare. But in the past, Stalin is known to have
extended similar courtesy. In 2001, he, along with DMK general
secretary K Anbazhagan, attended the swearing-in ceremony of
 Jayalalithaa when her party returned to power. When the tsunami
 struck the state in 2004, Stalin, who was an opposition MLA,
met Jayalalithaa, who was then chief minister,
at Fort St George to hand over a cheque on his party’s
behalf for the relief fund.

Stalin, who holds the rural development portfolio and
 is entrusted with the job of executing the mega project,
has written letters to all parties represented in the Assembly.

“From Jayalalithaa to Jagan Moorthy (Arakkonam MLA, heading a
fringe dalit outfit), I have written letters to all of them
inviting them for the function,” he said, recalling his earlier
invitation to them for the launch of the Anaithu Grama
Anna Marumalarchi Thittam (Anna infrastructure scheme for all villages).

Low rate home loans will disappear soon

12 Feb 2010 03:42 AM

Mumbai: Ultra-cheap housing loans are soon going to be a thing
of the past. Banks are winding down their fixed-cum-floating
rate home loan schemes, where rates were in the 8-8.5% plus
range for the initial year, with the provision that rates may be raised later.

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Axis Bank has already withdrawn its fixed-cum-floating
rate loan and Union Bank of India told DNA that it was
withdrawing its teaser loan scheme starting February 15.
“We will be offering floating rates of interest starting February 15,” said a bank official.

Housing Development Finance Corporation (HDFC)
has said that its scheme is available till February 13.
Will the scheme, where the interest rate is 8.25% initially
(and then converted to floating) be extended? Keki Mistry,
chief executive officer of HDFC, said no decision had been
made as yet. “Basically the product is a function of how we
are able to raise (cheap) money.
It will be decided closer to the date,” Mistry said.

Other teaser home loan schemes,
including that of the State Bank of India,
are expected to be reviewed shortly.
State Bank chairman OP Bhatt has already
gone on record to say that he expects rates
to rise after April.

Industry experts feel there is a need to put a brake
on these fixed-cum-floating rate schemes due to
the changing interest rate scenario. RR Nair,
chairman of LIC Housing Finance, says:
“These schemes need to be stopped now.
It is not a right business tactic. Any discount
of more than 50 basis points (0.5%) on a
promotional basis is not good. This means your
existing customers are paying much more then
the new customers. You are creating a different class of customers.”

He also voiced concerns over the period of current teaser loans,
where the fixed rate ends and the floating rate starts after the initial
year of the home loan. “After the one-year period, will the
customer be able to afford the loan if the EMI goes up by 35%.
It is a concern for both customers and the institution (home loan provider).
Bad loans too can rise,” Nair said.

Signalling that interest rates on loans would rise,
IDBI Bank on Wednesday announced a rise in fixed
deposit rates by 0.25% for varying periods between
six months and 1,100 days. The bank now offers 6.75% on
a one year-500 day deposit, rather than 6.50% earlier.

On 500-day deposits, one can get 7%.

Unitech to launch 13 new projects in 2-3 months

12 Feb 2010 03:40 AM

Real estate major Unitech today said it plans to
launch 12-13 new projects, most of them residential,
in the next few months.

“We will be launching 12-13 new projects,
predominantly in the residential side, in next 2-3 months
across the country,”
Unitech Managing Director Sanjay Chandra told here.

The total space of these new projects would be
7-8 million square feet, Chandra said.

The company is also focussing on reducing debt.
The realty firm has already brought down its debt
from Rs 10,000 crore to below Rs 6,000 crore.

“In FY11, we plan to reduce our debt by another
Rs 1,000 crore,” Chandra said.

Going forward, Unitech focus would be on affordable housing,
except in Mumbai where it would concentrate on premium
segment due to high land prices, he said.