‘Housing Project Launches Across Top 8 Cities Drop 31% since Dec 2010’

The widening gap between demand and supply of apartments has put the brakes on the launch of new housing projects across the country — home project launches across top eight cities have dropped 31% since the September-December 2010 quarter, says real estate research firm, PropEquity. Across cities, the overall number of housing projects being launched has dropped significantly. In the September-December 2010 quarter, 128,405 units were launched while in the April-June 2011 quarter this figure was down to 75,239 units. New launches were also impacted by problems over land acquisitions in the Noida-Greater Noida areas, near Delhi, as well as an increase in loan rates by the Reserve Bank of India (RBI). 
"Also developers have already sold more than they can execute, so now they are controlling new launches," says Samir Jasuja, chief executive officer of PropEquity. In the last three quarters, the share of plotted developments in the overall number of project launches has gone up from 4% to 12%. 
In its analyst presentation in May, India's largest real estate firm DLF had said that it would focus on selling plots to reduce execution risks that come with developing group housing projects. In June this year, the company launched a 101-acre integrated township Garden City in Gurgaon where it sold 400 plots, raising . 700 crore in just one day. 
"A number of developers today do not want to invest money at this point of time but want quick returns that plotted developments offer," says Jasuja. In the last few months, companies like DLF, Omaxe, BPTP, Logix, Supertech and others have launched new projects selling plots. 
At the moment, over 50% of projects for Omaxe are plotted developments. "Of the 2.6 million sq ft that we sold in the last quarter, about 1.7 million sq ft was in plots," says Sumit Arora, vice president, investor & strategic relations at Omaxe. Developers say that sales of plots are still robust in the country, especially in the north as investors 
feel this is a safer bet in today's environment. "We develop townships and selling plots gives a good velocity to sales in the overall project. It also gives us good and quick cash flows as compared to doing high rises," says Dinesh C Gupta, assistant vice president, investor relations at Ansal API. Such a plotted development also protects these companies from inflationary pressures as buying large quantities of cement and steel, that are required for group housing projects, can be avoided. A typical group housing project takes between 24 and 36 months to be completed compared with a period of 12 to 18 months for projects selling plots.

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EXTRA FSI ISSUE 8K flats to hit market after BMC changes OC rules

Mumbai:Municipal commissioner Subodh Kumar has directed the building proposals department to issue Occupation Certificates (OCs) to buildings which have been constructed by purchasing additional 0.33 floor space index (FSI) in the suburbs.     There is a rider though; OCs will only be issued to those buildings which are ready and have fulfilled the mandatory building conditions stipulated by the civic body. 
    The directive will be a major relief for prospective flat buyers and developers. Almost 6,000 to 8,000 apartments will hit the market, with 166 projects getting an OC after languishing for the past two years. Paras Gundecha, president of the Maharashtra Chamber of Housing Industry (MCHI), said, "We hope that the chief minister issues a notification amending Regulation 32 of the development 
control rules to grant additional FSI on payment of a premium for all buildings. It will make us less dependent on the transfer of development rights (TDR)," said Gundecha. Nayan Shah of Mayfair Housing said that they will now be able to give possession to their buyers. "No OC means that the civic body will not supply water. How could anyone have stayed," said Shah. His two projects at Andheri and Borivli will now get OCs. 
    With a view to curb high TDR prices, the state government in 2008 decided to charge a premium for utilizing 33% additional FSI above the base FSI in the suburbs. A writ petition was filed in the Bombay HC, raising the issue of infrastructural inadequacy and change of character of the development plan if the state granted additional FSI to developers. The HC declared the notification null and void and restricted granting of commencement certificate to applications received after May 23, 2008. The government then issued an ordinance in September 2010, allowing the BMC to charge premium under the new rule

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Developer would’ve made huge gains from Crawford Mkt: BMC

Civic Body Rejects 6-Yr-Old Plan In The 'Public Interest'. New Options On Cards    The six-year-old plan to redevelop the iconic Mahatma Jyotiba Phule Market, or Crawford Market, is back to square one after civic chief Subodh Kumar rejected the proposal. An exercise conducted by the markets' department had projected that, based on the proposal submitted, the unearned income of the private developer would have been Rs 348.26 crore. Unearned income includes profits after subtracting all expenses. Officials said the amount is unreasonably high. 

    The BMC is now exploring all options, including doing the redevelopment itself. Letters informing the developer, East and West Developers, and the local market association of the cancellation will be issued in a few days, officials said. 
    The controversial plan to redevelop the centrally located market had attracted the ire of heritage lovers and activists, with questions also being raised about why private development was being allowed on the prime municipal plot. 
    The developers had been appointed by the local market association. The developer had originally proposed to build two high-rises – one of eight storeys and another of nine storeys – alongside the famous clock tower. Allegations were levied that heritage guidelines had been circumvented to favour the developer. 
    In September 2007, the civic improvements committee approved the plan amidst a public outcry. The civic general body approved the plan six months later. The final approval was stalled, however, following objections raised by members of the heritage committee. Approval from the heritage committee is mandatory since the market is a heritage structure. Objections persisted even as the developer agreed to modify the proposal to include just a single high-rise. 
    Built in 1871, the market is spread across 2.42 lakh square feet. The developer had proposed to redevelop the market portion, excluding the clock tower and three fountains, which are listed as Grade I heritage structures. The incentive FSI was as high as 4. After rehabilitating the 727 shopkeepers, the developer was to retain 2.72 lakh square feet of built-up area, whereas the BMC would have got 4.52 lakh square feet. 
    The BMC has now cancelled the proposal, claiming that the policy under which it was formed is not "beneficial to the corporation" and needs amendment. Kumar objected to the policy not taking into account the market value of a plot. Officials said a civic study showed that such a policy leads to developers making unjustified profits out of markets. 
ON REVAMP ROAD 
The redevelopment of these 18 markets won't be affected because final approvals had already been given 
Gopi Tank Market, Dadar J M G Kela Mandai, Byculla M G M Market, Byculla G L Patil Mandai, Sewri M H M Mandai, Sion Koliwada Pali Market, Bandra B R Gavde Mandai, Worli Naka Vakola Mandai, Santa Cruz Kalina Mandai, Santa Cruz Kherwadi Market, Bandra Dr Babasaheb Ambedkar Market, Kandivali Pant Nagar Market, Ghatkopar Hirachand Desai Market, Ghatkopar B H Chemburkar Market, Chembur Tilak Nagar Mandai, Chembur St Jalaram Bappa Market, Mulund Mulund (East) Municipal Market Park Site Mandai, VikhroliSource: BMC 
ESTIMATED RETURNS | The developers of the Crawford, Veer Savarkar, K N Patil and A A Bhau Lad markets would have made an unearned income of more than Rs 100 crore each, according to BMC estimates. An FSI of 4 is permitted for markets built before 1940 in the island city. It is 2.5 for those built between 1940 and 1950; 2 for those built between 1950 and 1960; and 1.33 for those built later. The FSI for markets in the suburbs is 1, but there an extra FSI of 1 can be loaded through TDR. Existing businesses are to be re-housed free. After that, the built-up area created through FSI is shared between the BMC and developer in the ratio of 1:0.6 (BMC gets 62.5% share) in the island city and 1:1 in the suburbs (BMC gets 50%) 
AUGUST DEADLINE 
Civic officials said cancellation letters were first issued to 12 of the 25 rejected projects because those 12 developers had filed a writ petition in the Bombay High Court against the BMC for delays in approving the plans. The court asked the BMC to decide the matter by August 24. The 12 letters were issued on August 20. 
THE PATH AHEAD 
In the future, markets could be placed in different categories 
The new formula could reduce the developer's share when market value of the plot rises 
BMC will consider doing its own redevelopment if any developer of the 25 rejected projects doesn't submit a new plan 
    BMC will take up redevelopment of 49 other markets by appointing subcontractors. These markets will be redeveloped using FSI of 4; sub-contractors will be allowed TDR in the suburbs 
    Bids to be called for six vacant plots marked for markets

CRAWFORD MARKET

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Rent rates soar by 10-15% in suburbs

MORE DEMAND, FEWER FLATS

Mumbai: With no meaningful correction in property prices expected before Diwali, the residential rental business has been receiving a fillip in the suburbs that have witnessed an almost 10-15% increase in rates in the past 10 to 14 months. 
    However, rents in south Mumbai have either dipped by 10% or they have been stable due to oversupply of flats, say real estate brokers. 
    Experts have attributed the rise of rents in the suburbs to the fact that more 
number of people are willing to stay on rent rather than shell out a huge amount to buy a flat. 
    Industry experts said a two-bedroom-hall-kitchen flat in a building located almost 7 km from Goregaon at Dindoshi is earning a monthly rent of Rs 37,000 to Rs 38,000, while the same apartment earned Rs 17,000 to Rs 20,000 in 2010. Due to its location and proximity to an international school, a 2.5-BHK apartment in Goregaon is demanding a rent of Rs 65,000 to almost Rs 80,000 a month. In Juhu, the amount for a 2-BHK is now Rs 90,000 a month, but in 2009-10, the same flat was rented out for Rs 60,000 only. 
    A study carried out by real estate portal 99acres.com showed that rentals are appreciating in localities like Kamothe, Seawoods and Sanpada. "The rates in those places have increased by 22%, 16% and 14% in a year. Nerul, Vashi and Kharghar have witnessed a rise by 6%," the study said. 
    "In many cases, corporates' house allowances have been slashed following the poor economic condition. So, many extend their leases as they have a clause of raising rent by 10%," said Ram Prasad Padhi of Mumbai Properties. 
    Two developers in eastern suburbs have asked brokers and owners to pay them a month's rent once they leased out their flats. "One developer could make such a demand as he has not yet conveyed the land to the society," said a broker. "The other builder plans to rent out the entire building of about 30 flats on rent. He apparently wants to sell the flats but not offering a discount of more than 10%."

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New DC rules not for redevpt chawls: BMC

Populist Measure Will Help Lakhs

Mumbai: In a populist measure that could benefit lakhs living in cessed, non-cessed old buildings, Mhada layouts, chawls and slums undergoing redevelopment, the Brihanmumbai Municipal Corporation (BMC) on Wednesday agreed to not apply the new development control (DC) rules to these structures. 

    It means a waiver of premium for buildings meant for rehabilitation of tenants residing in structures which are being or will be redeveloped under sections 33(7), 33(5), 33 (9), 33 (10) and 33 (6) of the DC rules. The compensatory floor space index (FSI) for the saleable component of these structures will, however, be governed by the new rules. 
    Municipal commissioner Subodh Kumar said, "Considering the general concern, we are alright if premium is not charged on the rehab component of these properties." 
    The new DC rules—to allow developers to build 25% over the permissible FSI in return for a 100% premium to be paid to the BMC—were passed unanimously by the civic body on Wednesday, the last day for filing objections and suggestions on the DC rulesnotified by the state government. Twentyfive suggestions and objections were packed in a day when many elected representatives allayed fears that the redevelopment of old structures, mostly those with smaller plot sizes, could be hampered if the premium is not condoned for them. Smaller plot-sized buildings would then become unviable for redevelopment. 
    "Of the 14,883 cessed buildings, 52.6% have a plot size of less than 300 square metres, and if this policy is applied to them, it will be impossible to undertake redevelopment," said Bharatiya Janata Party corporator Ashish Shelar. 
    Citing blatant misuse of concessionary FSI benefits by builders, the BMC had last month brought areas such as lifts, flower beds, pocket terraces, ducts, upper-level car parking and voids under chargeable FSI and allowing 25% additional construction for residential buildings and 15% for commercial buildings. But concerns were raised over redevelopment of old buildings and structures on smaller plots. 
    The new rules insists on leaving aside open space of 6m to 9m in the redevelopment of old buildings, as opposed to the earlier limit of 1.5m. This, some had said, will make narrow plots unviable for redevelopment. Kumar, while giving his seal of approval, said a notification would soon take care of that. He said relaxing norms would not cut into a revenue of Rs 3,000 cr the civic body hopes to earn once the changes are implemented.

Those living in cessed, non-cessed old buildings, Mhada layouts, chawls and slums undergoing redevelopment will benefit

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‘New bldg norms won’t affect redevpt projects’

Mumbai: The BMC said its new building guidelines, which seek to prevent developers from misusing concessions granted to them, will not affect redevelopment projects. 

    Several MLAs complained that these projects, especially in the island city, will come to a halt if concessions are withdrawn and a 100% premium is levied on areas like flowerbeds, voids and terraces. 
    So far, such areas were not counted in the building's floor space index (FSI). However, most developers sold these free spaces to flat buyers and encouraged them to illegally amalgamate them into their homes. The BMC has proposed that builders can avail 25% additional FSI to build such areas on which a 100% premium will be charged. This 25% extra FSI can now be used for any purpose—either for elevational features or living areas, or a combination of both. 
    Civic chief Subodh Kumar said redevelopment projects will not be hit because developers who provide free 300 sq ft houses to existing tenants, do not build free-of-FSI features such as balconies, flower beds in rehab buildings. These incentives available in a rehab building are instead used up by the developer in his free sale building, thereby increasing his profits. The commissioner said the BMC will not charge premium if the developer provides extra living space to tenants in the rehab building. 
    "The builder liberally seeks free-of-FSI features in the free sale building so as to maximize his total built-up area. This in fact distorts the ratio of built-up area for sale visà-vis built-up area for rehab," he said. 
    Under the redevelopment scheme, for every 100 sq ft that the builder constructs free of cost to the existing tenant, he receives 50 sq ft or 50% incentive FSI which he can sell at market rate. 
    Debunking claims made by builders that 100% premium for the additional 25% extra FSI will push up property prices, Kumar said, "Land prices will moderate once people who were receiving very high freeof-FSI areas cease to get undue benefits. Builders are already charging customers for the entire area (super built-up area)." He added, "Property prices are more a function of supply and demand. There is strong evidence to suggest that there is hardly any relation between cost and sale price at present." 
    Kumar said under the new guidelines, if a developer decides not to build flower beds or balconies, he could construct more rooms or larger rooms utilizing the compensatory FSI. "Even if such flower beds and cantilever balconies are later turned into living area/bedroom/kitchen, it will not be considered a violation," he said. "The idea is to simplify things and insulate the flat owner from legal action and harassment later," Kumar added.

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Dissenting members of the Society can be thrown out if stopping redeevelopment

Cooperative court to decide fate of Khar bldg's redevelopment

Swati Deshpande TNN 

Mumbai: A cooperative court will now decide the fate of the redevelopment of abuilding in Khar and also if the housing society's few dissenting members are to be evicted. 
    A Bombay high court bench of Justice D K Deshmukh and Justice R G Ketkar has asked the dissenting members of Fardoon Apartment Cooperative Housing Society to take their battle to the cooperative court.

 The judges also held that if the dissenting members "fail to get any interim or final orders" in their favour "within six months", they will be thrown out of the building. 
    The society, comprising about 12 members, had by a majority resolution in 2008 approved of a redevelopment scheme and appointed Acknur Constructions to carry out the work. But four members objected to the "improper" resolution. The society said it had passed a resolution by a majority and had decided to evict those opposed to the plan. 
    The matter landed in the high court which, in 2009, ruled that a builder could not evict even a single dissenting member of a cooperative housing society on the basis of a development agreement with a majority of flat owners. The developer appealed against the order. During the hearing of the appeal, two dissenting members consented and the bench set aside the high court's order. The developer, Deepak Rao, was seeking the eviction of owners of two shops and one residential flat as they were "stalling the redevelopment work". 
    However, in the turn of events, the issue raised by flat owners whether a developer can directly move the high court against dissenting members has not been decided.

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