More rental homes the next big thing in housing?

June 11, 2013

To facilitate those who can’t afford to buy a house, a government appointed panel has recommended a separate law for regulating residential rental housing in India and tax benefits to encourage private developers to set up rental housing projects.

India does not have a rental housing policy as of now though some states like Himachal Pradesh have enacted their own legislation to address rent related disputes. Delhi, on the other hand is yet to notify its Rent Control Act. Globally, however, it is a popular concept.

According to published reports, between 40% to 80% of residents in cities such as Bangkok, Berlin and New York live in rental housing.

But in India, of the 18.78 million new houses built between 2007-12 for renting, a whopping 11.09 million houses are still lying vacant or locked up, indicating how opaque laws deter owners to rent out their house.

The 19-member panel headed by JaithirthRao, chairman, Value and Budget Housing Corporation Private Limited was set up by Housing and Urban Poverty Alleviation ministry last year to analyse the causes of non-availability of sufficient housing for rental purpose and recommend policy interventions for creation of rental housing stocks.

In its report, it has not only recommended setting up of a Residential Rental Housing Act specifically for the rental housing sector on the lines of the Model Residential Tenancy Act 2011 but also separate law for residential and commercial rental properties.

The panel also wants that instead of standard prices that are presently regulated by a rent controller or court, the rent price -- reflecting the present market rates -- should be based on contractual agreement between the landlord and the renter. Arbitrary increase in rent prices should be discouraged.

It has also called for setting up of a special fast track rental housing tribunal for speedy resolution of all rent related disputes and according "infrastructure" status for large rental housing projects. Tax benefits can also be given to rental management companies to help them operate smoothly.

Source:  http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23624&cat_id=1

Unsustainable housing price rise....

June 04, 2013

According to the Reserve Bank of India’s House Price Index, residential property prices in India have grown at a compounded annual growth rate (CAGR) of 21.4% between the first quarter of 2009 and fourth quarter of 2012.

Further, there has been a large divergence between growth in metro1 cities (CAGR: 24%) and non-metro2 cities (CAGR: 15%).

Nomura points out that the growing divergence between metro and non-metro prices cannot be solely due to supply factors. It also appears to reflect growing investment demand, which is typically concentrated in large metro cities due to higher liquidity. In contrast, the economic slowdown over the last few years has likely affected real demand in non-metro cities.

Given the elevated house prices, subdued job markets and lower household incomes, real demand should remain subdued.

Consequently, in the absence of real demand, investment demand alone may not be able to sustain the excess return in metro cities. 

Ref : http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=23583&cat_id=1

State drew most realty investments - Gujarat

AHMEDABAD: Gujarat had the maximum share - about 41% - of new investments in the real estate sector across India during the last fiscal, a survey by Associated Chambers of Commerce and Industry of India (Assocham) said on Monday.
Overall, realty in India attracted new investments worth over Rs 42,000 crore as on March 2013, which slipped from over Rs 92,600 crore a year ago, according to a real estate-specific analysis carried out the industry body.

"While most states have seen a decline in new investments in realty, Gujarat has seen a surge of over 700%, as the state attracted investments worth over Rs 17,000 crore as of March 2013, from just over Rs 2,000 crore a year ago," said D S Rawat, national secretary general of Assocham.
Kerala is another state which has seen massive growth of over 550% in attracting new investments in real estate, followed by Uttarakhand at 400% and Rajasthan at 175%. Most other states have seen a 50% dip in investments, according to the survey.
Apart from Gujarat, states like Maharashtra (over 17%), Karnataka (10%), Tamil Nadu (8%) and Uttar Pradesh (over 6%) are among the top five states with the maximum share of new investments in real estate across India.
With a share of about 15%, Gujarat is second only to Maharashtra which has the maximum share of about 20% of the total outstanding investments worth over Rs 14 lakh crore attracted by the real estate sector across India as of March 2013.
"The real estate sector in India has, of late, been plagued by serious problems like falling sales, rising construction costs, dampened market sentiment overall, sluggish economic growth, high interest rates, high inflation and poor industrial production ( IIP) due to which leading players had to sell off land to reduce debt, private equity players trimmed exposure to the realty sector and a general slowdown in various industries hit commercial real estate," Rawat said.

CREDAI-NCR plans to regulate property brokers

April 15, 2013

Realtors' body CREDAI-NCR today said it will direct developers to disclose both saleable and carpet area in their brochure and is considering measures to regulate brokers who are engaged in mis-selling projects.

The NCR Chapter of the Confederation of Real Estate Developers Association of India (CREDAI) also plans to boost end-user demand in housing by imposing lock-in-period for re-sale and higher transfer charges.

Announcing the new team for 2013-15, CREDAI-NCR said Anil Sharma, the Chairman and Managing Director of Amrapali Group, has been elected as its new President.

"A new team has been formed. We will focus on consumer awareness and consumer redressal," Sharma told reporters while listing out his priorities for the next two years.

CREDAI-NCR has already formed a consumer redressal forum last year and has so far received about 700 complaints and out of that 90 per cent cases have been resolved.

Asked about non-disclosure of carpet area by developers in their brochure and application form, he said: "We will ask our members to disclose saleable as well as carpet area and also method used for calculation of such areas". The saleable area is built-up area plus common area, he added.

On property brokersmis-selling products, Sharma said: "We have come across situation where some of the brokers are not providing full information to buyers. The governing council will take up the matter how to regulate them."

Asked about rates being lower in the secondary market compared with developers price-list, Sharma said this is because of investors selling their units with some premium.

In order to curb investor demand and encourage end-user demand, he said the association would consider steps like lock-in-period for re-sale and higher charges for transferring the property on some other name. 

Now smaller cities can also pitch in for a Metro..

The Union Urban Development Ministry, which has been urging cities with two million plus population to pitch in for a Metro system, is now considering extending the efficient mass transit system to cities with lesser populace.

The proposal stems from the need to decongest cities, enhance the ease of commuting on public transport and to improve the link between the suburbs and the main city centres. If the proposal gets approved, more than 50 cities with a million plus population in States like Tamil Nadu, Madhya Pradesh, West Bengal, Maharashtra, Gujarat and Jammu and Kashmir among many others will benefit.

As on date, the two million plus population cities are being encouraged to send proposals for a Metro system, but with smaller cities showing interest in the Metro, the Ministry is contemplating relaxing the norms and drafting a common set of rules for all Metro projects. The cities with less than two million will, however, have to fulfil the requirements of finance and footfalls.

Indore for example has recently invited tender for drafting a detailed project report on the feasibility of a Metro.

“Why should a Metro system be planned only on the basis of the population within the city? We need to look at bridging the gap between the suburbs and the city, bringing people from far to within the city centre. The idea of a Metro was to offer the lower and the middle classes who stay outside the city limit an efficient transport system,” said an official of the Ministry.

The proposal also complements the requirement of another scheme – transit-oriented development which is being implemented in several cities, including New Delhi, with the aim to decongest cities and develop suburbs and satellite towns.

Cities with under two million population will have to prepare a detailed project report and show adequate means of funding and prove that the passenger traffic of at least 4,000 persons per hour per direction will be met.

“They will have to follow the prevalent pattern where the Centre pitches in with 20 per cent of the funds, 50 per cent will have to come from them and the remaining will have to be raised through loans. We encourage public private partnership mode of operation and they will have to prove the project is viable,” the official said.

The Centre will also reimburse 50 per cent of the money spent on preparing the DPR. “But the initiative to have a Metro has to come from the city and the State, the Ministry can only help with funds and other provisions,” the official said.

Among the cities that have submitted a DPR and are awaiting the Centre’s nod are Ludhiana, Chandigarh, Ahmedabad and Pune.

Source :  http://www.thehindu.com/news/national/now-smaller-cities-can-also-pitch-in-for-a-metro/article4597840.ece