Private Equity Investments In Real Estate To Cross $4 Billion

Mumbai: Private equity inflows into the realty space may set a new milestone and exceed  $4 billion this year, says a report. Most of this investments are into pre-leased office and retail assets, a major shift from residential sector, showing the low risk appetite of investors, says a Knight Frank report, adding over 80 per cent of PE capital so far this year are from long-term sovereign and pension funds.

The share of PE investments into residential projects nearly halved from 50 per cent in 2011 to 28 per cent in 2016 and further dropped to a meagre 4 per cent in 2017. Against this, the share of office market accounted for 29 per cent in 2011 now it stands at 66 per cent of the investments into in the real estate while that of retail climbed to 19 per cent in 2016 from almost nil in 2011 and is at 14 per cent till September this year.

Share of warehousing in total investments nearly doubled from 9 per cent in 2011 to 16 per cent in 2017. “Private equity investment is estimated to exceed $4 billion this year, well past the 2015 mark which was the highest since 2010,” says the report and noted that this is a welcome change as PE investments into the realty was stagnant between 2011 and 2014.

From an average investment of $2.1 billion in 2011 -14, capital flows rose by 57 per cent to an average of $3.3 billion between 2015 and mid-September this year. In 2017 so far, number of deals dwindled to 13, just over one-fourth of the tally in 2010. However, the average investments per deal increased 10-folds to $246 million per deal, thanks a major deal alone accounted for $1.8 billion.

Though most PE investors are domestic investors followed by investors from the US and Canada so far this year, Singapore had the highest investment per deal on account of a single big ticket GIC-DLF deal of $1,800 million this year.

In terms of inflows into major realty markets, Gurgaon tops with 56.4 per cent, thanks to the $1.8 billion DLF-GIC deal, followed by Mumbai with 39.8 per cent.

Rentals Give Impetus to Real Estate, Surge by 5% in 8 Major Cities

Mumbai: Housing prices rose by up to 2 per cent while rentals increased by up to 5 per cent in the country’s eight major cities during the July-September quarter, year-on-year, according to realty portal 99acres. Hyderabad’s housing market witnessed 2 per cent rise in capital values while rental moved up by 5 per cent. 99acres.com released its quarterly report ‘Insite’ focusing on capital value and rental price trends in the residential market across eight metro cities of India.

Real estate market is facing a multi-year slowdown leading to poor sales and significant delays in completion of housing projects. Prices have also fallen or remained stable.

As per the report, housing price fell by 1 per cent in Bengaluru but rentals grew by 3 per cent during July-September quarter as against the year-ago period. Housing prices and rentals in the Delhi-NCR market remained stable during the review period.

In Mumbai, housing prices were stable but rentals rose by 2 per cent. Housing prices in Chennai rose by one per cent and rentals inched up 2 per cent. Pune witnessed no increase in housing prices while rentals advanced by 2 per cent. In Kolkata, housing prices and rentals rose by 1 per cent and 2 per cent respectively.

The capital values declined by one per cent in Ahmedabad but rentals appreciated by 3 per cent during July-September 2017 compared with the corresponding period of last year.

“The Indian Metros are braving the policy changes, and there are some green shoots of optimism in consumer sentiment. Chances are that the sale/purchase market should pick up with this festive season. Moreover, the interest rates are in  favour of consumer like never before. This should hail well for the real estate market,” said Narasimha Jayakumar, Chief Business Officer, 99acres.com.
Over 9 million people visit the website every month looking for real estate solutions as 99acres.com has over 8 lakh residential and commercial property listings.

Developers and UP govt disagree over implementation of RERA

LUCKNOW: The state government and the real estate developers engaged in a fresh bout of disagreement on Sunday with UP chief minister Yogi Adityanath asking the developers to get themselves registered under Real Estate Regulatory Authority (RERA) act through a web portal scheduled to be launched on July 26, while the latter claiming of the facility being provided too late. The deadline for developers to get registered under the RERA act comes to an end on July 31.

Speaking at a seminar organised by Confederation of Real Estate Developers Association of India, Yogi said that the state government was trying to remove red-tapism by providing an online registration facility for registration of developers by the deadline of July 31. “The developers need to abide by the trust of the people and the state government and ensure transparency in executing their housing projects,” he said.

CREDAI president, Jaxay Shah, however, said the coming of any such facility like a web portal was too late. “Any such facility could have come up at least an year ago when RERA act was announced. The former urban development minister Venkaiah Naidu has been calling upon the state government to set up the RERA authority. But his call did not evoked any response. Even the present state government in UP has been there for around four months but it too did not take any such step,” he said, while speaking to reporters on the sideline of the seminar.

Yogi said that the state government adopted RERA to stop exploitation of home buyers who could not get possession of their house timely.

“What has been happening in Noida is an eye opener. Scores of home buyers have been up in arms against the developers who did not complete the projects timely. Such things needs to be addressed,” the CM said. Shah, however, said that it was the state bureaucracy which at times produced hindrance which eventually delayed the projects. “It is highly unfortunate that RERA holds only developers accountable for the delay in a housing project. The role of state government and the bureaucracy should also be taken into account,” he said. Shah said that CREDAI already has a consumer grievance redressal unit to address the complaints of the home buyers.

How will RERA impact home buyers

The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament. The RERA seeks to protect the interests of home buyers and also boost investments in the real estate sector.

Some of the important compliances are:

  • Informing allottees about any minor addition or alteration.
  • Consent of 2/3rd allottees about any other addition or alteration.
  • No launch or advertisement before registration with RERA
  • Consent of 2/3rd allottees for transferring majority rights to 3rd party.
  • Sharing information project plan, layout, government approvals, land title status, sub-contractors.
  • Increased assertion on the timely completion of projects and delivery to the consumer.
  • An increase in the quality of construction due to a defect liability period of five years.
  • Formation of RWA within specified time or 3 months after majority of units have been sold.

The most positive aspect of this Act is that it provides a unified legal regime for the purchase of flats; apartments, etc., and seeks to standardise the practice across the country. Below are certain key highlights of the Act:

Establishment of the regulatory authority: The absence of a proper regulator (like the Securities Exchange Board of India for the capital markets) in the real estate sector, was long felt. The Act establishes Real Estate Regulatory Authority in each state and union territory. Its functions include protection of the interests of the stakeholders, accumulating data at a designated repository and creating a robust grievance redressal system. To prevent time lags, the authority has been mandated to dispose applications within a maximum period of 60 days; and the same may be extended only if a reason is recorded for the delay. Further, the Real Estate Appellate Authority (REAT) shall be the appropriate forum for appeals.

Compulsory registration: According to the central act, every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA. Existing projects where the completion certificate (CC) or occupancy certificate (OC) has not been issued, are also required to comply with the registration requirements under the Act. While applying for registration, promoters are required to provide detailed information on the project e.g. land status, details of the promoter, approvals, schedule of completion, etc. Only when registration is completed and other approvals (construction related) are in place, can the project be marketed.

This Delhi-Based Developer Is the Richest Real Estate Tycoon in India

New Delhi: DLF Chairman K P Singh is the richest real estate tycoon in the country with a fortune of Rs. 23,460 crore, followed by Lodha Group Chairman M P Lodha, according to a report. Hurun Report today released its ‘GROHE Hurun India Real Estate Rich List 2017’.

“Kushal Pal Singh, 87, the wealthiest real estate baron in India, tops the list with a fortune of Rs. 23,460 crore,” Hurun Report said in a statement. As per the list, Lodha, who is also a BJP MLA from Maharashtra, is at the second position with wealth of Rs. 18,610 crore.

Jitendra Virwani of Embassy Group ranks third with wealth of Rs. 16,700 crore, followed by Abu Dhabi-based Yusuffali MA of Line investment and Property (Rs. 12,180 crore) and Vikas Oberoi of Oberoi Realty (Rs. 11,040 crore). K Raheja Corp’s Chandru Lachmandas Raheja is at sixth position at Rs. 10,440 crore, followed by Atul Ruia of Phoenix Mills (Rs. 5,160 crore), Sameer Gehlaut and family of Indiabulls Real Estate (Rs. 5,050 crore) and Ajay Piramal of Piramal Realty (Rs. 3,640 crore).

Surendra Hiranandani and Niranjan Hiranandani of Hiranandani Group were jointly at the tenth position with a fortune of Rs. 3,350 crore each. By state, Maharashtra tops the list with 38 real estate entrepreneurs, followed by Delhi (19) and Karnataka (17).

“The top 5 cities account for 86 per cent of top 100 real estate rich list entrants in India. A majority of estate developers are discreet, so for every entrepreneur who we have found, we may have missed 2. “Real estate holdings are rather scattered in India and there is a good chance that we may have missed associated companies/subsidiaries in certain cases,” said Anas Rahman Junaid, MD and Chief Researcher, Hurun Report India.

Smart City Mission

New Delhi: The Narendra Modi government’s flagship smart city mission is running at a very slow pace with only 5.2 percent of the total identified projects being completed in the last two years, a newspaper report has said.

Under the Smart City Mission, 90 cities have so far been identified through three rounds of competition for implementing various projects. A total investment of Rs 1.91 lakh crore has been proposed by these 90 cities.

The Times of India report said that the identified projects have been completed with just 1.4 percent of the total envisaged investment. As per the mission statement and guidelines, he duration of the mission is five years, from 2015-16 to 2019-20 and each city will get Rs 500 crore as central assistance for implementing various projects.

About 72 percent of the identified projects are still at the stage of preparation of detailed project report. The New Delhi Municipal Council (NDMC) has completed maximum number of smart city projects. NDMC leads the chart with 23 completed projects, Varanasi has completed 16 projects and Raipur has finished 10 project. Twenty-seven cities have not issued a single tender for works to be carried out under the mission, TOI said.

Last week, Congress chief Rahul Gandhi had targeted the Centre for “under-utilisation” of Smart City Mission funds.

However, according to an official Housing and Urban Affairs Ministry statement, Union Minister Hardeep Singh Puri has recently informed a Parliamentary consultative committee that projects worth Rs 1,35,459 crore are in various stages of implementation.

147 projects worth Rs 1,872 crore have been completed, it added.

Puri said the implementation of the mission is done by a Special Purpose Vehicle (SPV) to be set up at city-level in the form of a limited company and are promoted by the State/UT and the Urban Local Body (ULB) jointly both having 50:50 equity shareholding.

So far 77 smart cities have established their SPVs, he informed.

Puri said the tendering process has started for 283 projects with a cost of Rs 16,549 crore and detailed project reports are being prepared for 2,029 projects worth Rs 1,02,366 crore.

 

SC asks Jaypee to file list of ongoing housing projects in the country

New Delhi: The Supreme Court on Wednesday asked Jaiprakash Associates Ltd (JAL) to file list of its ongoing housing projects in the country.

The apex court has also ordered creation of a portal for registering grievances of homebuyers of JAL.

Reiterating its direction restraining JAL directors from alienating their personal properties, the top court said that it would later deal with RBI’s plea seeking its nod to move NCLT to initiate insolvency proceedings against JAL.

Jaypee group is facing huge protest from home buyers due to significant delays in delivery of real estate projects.

Jaypee Infratech has been taken over by a NCLT-appointed Insolvency Resolution Professional (IRP) for recovery of bad loans.

A few months ago, the NCLT had admitted the application by an IDBI Bank-led consortium seeking resolution for Jaypee Infratech under the Insolvency and Bankruptcy Code.

a senior official said that the company is targeting to complete the construction of pending 24,000 flats in Noida by 2020 at a cost of about Rs 8,000 crore and deliver it to home buyers.

In 2007, Jaypee group started the development of 32,000 flats and plots in its township Wish Town at Noida, of which nearly 8,000 units have been delivered so far.

Of the total flats/plots, Jaypee Infratech, which has already gone into insolvency, began work on 28,000 units while the remaining 4,000 units were with Jaypee groups flagship firm Jaiprakash Associates.

GST Council meet on 18th jan

 Inclusion of real estate, cut in tax rates may bring cheer before Budget for public

Just two weeks before the Budget, GST Council is expected to consider a reduction in tax rates for some items, about 80 going by some reports, and the inclusion of real estate in its 24th meeting6.

The meeting comes amid continuous dip in GST revenue collection in the last two months. The collection registered a sharp dip to Rs 80,808 crore in November, from Rs 94,063 crore in the launch month in July last year.

Change in tax rates

The Council is expected to announce tax concessions and reduction of tax rates on common man items and services, including household goods, agriculture products, housing sector inputs such as cement and steel but still no reduction in luxury items.

Real estate in GST Real:

The Council is likely to discuss inclusion of real estate under GST and announce the rollout date for the same. According to some reports, Council may set a 12 per cent rate for the real estate sector and may also decide to subsume stamp duty and registration charges in GST. The likely date for inclusion of real estate under GST could be the start of new financial year, April 1.

Discussion on real estate inclusion in GST is the key agenda of GST council

Rollout of e-way bills 

At the last GST council meeting in December, roll out of e-way bill was decided for February 1. So the council may iron out issues in e-way bill mechanism for smooth implementation of e-way bills from next month.