Court sets aside BMC order on JVPD plot TDR

Mumbai: The Bombay high court on Friday set aside a two-year-old BMC order which prevented use of transfer of development rights (TDR) on two plots in the Juhu-Vile Parle development (JVPD) scheme. The entire JVPD layout spans across 52 acres and there are several big residential projects worth over Rs 200 crore which have been stuck for the last two years ever since the BMC refused permission based on a state notification. The notification of 2010 had barred the BMC from allowing construction on plots in the Juhu area which the government said were amenity plots meant for public use. The HC order will now open the doors to Juhu-Vile Parle developers and give rise to a surge of development in the area. 

    A bench of the HC directed the plot owners were entitled to use TDR up to the normal permissible FSI of one as allowed under the development control rules on their plots. The order with which the HC disposed of two petitions filed last year by V J Mehta and Hasmukh Mehta would act as a precedent for other plot owners similarly placed and whose development applications were rejected by the BMC on the apparent ground their plots were situated in the JVPD scheme. These two plots were not amenity plots either argued Mehta's counsel. The BMC had in 2010 refused permissions to the Mehtas to use any TDR on their plots. In one order dated June 28, 2010, the BMC said the reasons for denial of permission was that since the plots were in the JVPD scheme more than the normal one FSI was being consumed. The judges held the BMC's reasons are entirely misconceived since at no point of time had the petitioners claimed a right to use more than one FSI which is normally permitted when TDR is to be loaded." The BMC had also expressed apprehension that if permitted to load TDR, it could lead to people "benefiting from the enhanced 2.5 FSI". The HC found no merit in this fear. 
    E P Bharucha, counsel for the BMC, said the civic body has made a representation to the state to clarify its position on utilization of TDRs on public amenity plots. That was another reason why the BMC had placed the Mehtas' request on hold. But given that the plot was not meant for public amenities, Justice Bobde while dictating the final order said they were entitled to the TDR to the extent of one FSI.

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SMART THINGS TO KNOW: Real estate terms

1 Carpet area is the area within the walls of an apartment that is for the exclusive use of the buyer. While computing the carpet area, the terrace and balconies are usually considered as half the actual area. 2 Built-up area includes the carpet area and thickness of external walls, internal walls and columns. It is typically 10-20% more than the carpet area and is also sometimes known as the plinth area. 3 The super built-up area includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flats. The common usable areas, such as a swimming pool, garden and clubhouse, may also be included in it. 4 The per square foot rate quoted by the developer is typically applied on the super built-up area to determine the value of the flat. This is the reason super built-up area is also sometimes referred to as the saleable area. 5 Floor Space Index (FSI) is the ratio between the total built-up area and plot area available allowed by the government for a particular locality. Premium FSI refers to permission obtained to build extra floor space by paying a premium. The content on this page is courtesy Centre for Investment Education and Learning (CIEL).

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State May Soon Offer Higher FSI to Builders: CM

The Maharashtra government is likely to soon give higher floor space index (FSI) to real estate promoters in order to encourage the concept of integrated townships around major cities in the state which will help decongest metros like Mumbai and Pune. State chief minister Prithviraj Chavan said that this is being undertaken to encourage high-end housing projects.  Speaking with reporters on Friday, the chief minister said: "The FSI offered for townships outside the municipal limit is now 1, but by offering higher FSIs and putting the onus of developing infrastructure — road connectivity, schools and colleges — on the promoter, we can reduce congestion in cities like Mumbai, where we can promote ideas like walk to school or work andoffer better quality of life to citizens."  The government has not decided any timeline for the policy to allow higherFSI for township schemes. CM Chavan said, "We will come out with a higherFSI scheme soon, which will be a major step in promoting affordable housing." Chavan added that there will be a review of the definition and concept of      high-rise buildings. Currently, there is no consensus on the definition of a high-rise building. We have appointed an expert committee to decide the threshold height for a building to qualify as high rise and to also set the terms of reference for the high rise committee so that there is no overlap between the roles of the high rise committee and the panel which gives environmental clearance, said Chavan.  The high-rise committee which mainly consists of experts and bureaucrats examines building proposals for issues like structural safety, fire safety norms, impact of such building on traffic in the area among others.  CM Chavan also said that one more panel will be formed to grant faster environmental clearances for real estate projects. There are already two panels including State Expert Appraisal Committee and State Environment Impact Assessment Authority (SEIAA) to give environment clearance.

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Prices of office spaces in BKC dip by 10%

Mumbai: The uncertain economic climate and excess supply seem to be putting pressure on the commercial office space market in the international banking and finance district of the Bandra-Kurla Complex (BKC). 
    Capital values and rentals quoted for underconstruction office space have dipped by almost 10% to touch 2009 levels. Wadhwa Group is quoting roughly Rs 27,000 a sq ft for its recently launched One BKC building it is constructing on C66, the plot it bought from Reliance Industries two years ago. Of a developable space of about 15 lakh sq ft, the developer has already sold 2-3 lakh sq ft at Rs 26,000 a sq ft. Managing director of Wadhwa Group Sanjay Chhabaria said they were quoting Rs 28,000 a sq ft for One BKC. Property consultants say Godrej Properties Ltd, that is expected to launch its project in the next few months, is also quoting a similar rate of Rs 27,000 a sq ft. The office building is coming up on C68, a 12 lakh sq ft plot, for which Godrej signed a joint venture agreement with Jet Airways three years ago.Till 2011, developers quoted roughly Rs 30,000 a sq ft for under-construction property. Ready office space currently is quoted at Rs 32,000 a sq ft. 
    Both these projects are expected to add roughly 20 lakh sq ft supply in the BKC office market in the next three years. Consultants say this supply will put pressure on the prices at a time when roughly six to eight lakh sq ft of ready to nearly completed office space is still lying vacant. Majority of this space is concentrated in FIFC Tower and The Capital at BKC. 
    Said Anshuman Magazine, managing director of CBRE, global property consultants, "With so much of supply coming in the BKC, I expect the office space prices to drop by about 10% in the short run of about one to two years. The reason for this is the slowdown in demand for space from corporates and multinational corporations in light of sluggish economic conditions.''

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COMMON SPACES SHOULD BE CONVERTED INTO BEAUTIFICATION SPOTS

    My opinion about Vashi node is that, being a cosmopolitan hub of Navi Mumbai, it is the coolest and the best place to reside in. In Vashi node, one can witness, ethnic values been preserved by various sociocultural organizations belonging to various communities. 

    Here, joint family culture still prevails amongst all type like LIG, MIG and HIG. Even business tycoons, CEOs, Managing Directors reside in Vashi, apart from celebrities from film and television industry. 
    From religion point of view, Vashi node has a lane stretching from Vashi bus depot till Sector-8, which is specially allocated for temples, gurudwara, masjid and a church. However, the need of the hour, pertaining to further development of Vashi node is the sanction of 2.5 FSI, for which NMMC has completed the mandatory paper work and the citizens are eagerly awaiting the CM's green signal by endorsing the 2.5 FSI approval. 
    Once, approved, the 2.5 FSI shall enable in creating wider roads, open space and more community centres, public gardens etc. There are a lot of gardens in Vashi but the need to deploy security guards for vigilance to keep a tab on anti-social elements and young couples, especially outsiders, indulging in indecent behaviour, that too in the presence of elders and children visiting the gardens. 
    As a corporator, I am trying to provide the facility of an air-conditioned hall with catering facility for the LIG and MIG families residing in the city who can carry out functions such as marriages, anniversaries, get-together etc. 
    I feel a hawkers' zone is required for proper management of the license hawkers and get rid of illegal hawkers mushrooming in Vashi node, especially the stretch beyond Vashi bus depot towards sector-10, who have encroached upon the footpaths thus inconveniencing the pedestrians. I am of the opinion that mini-buses with ring route should be allowed for private bus contractor and the rate chart should be fixed by the RTO authorities. 
    I feel citizens are being careless when it comes to keeping the city clean. As a moral responsibility every individual should contribute his/her share in maintaining their neighbourhood, spick and span, which can be done by not littering on the streets and using public dustbins for throwing household garbage, which has been provided by the civic body. 
    For ensuring cleanliness, NMMC needs to implement an on-the-spot fine system which shall deter miscreants. Compared to other nodes, Vashi has road side greenery and the water fountains at Shivaji chowk adds to the beautification of the node's sector-17 area. 
    Hence, more common space should be converted into beautification spots. I feel that each citizen in this Vashi node should plant one sapling in the tree belt, thus making the node greener. 
    Yet another important basic amenity is the health care facility, despite NMMC's First Referral Unit in sector-10, Vashi, still there is a need for more medical college-cum hospital with ultra-modern medical facilities similar to the JJ, KEM and Sion hospital. To sum up, whenever I return to Vashi node after a vacation, I really find solace here.

> Rahul Khilnani

>>Vaibhav Gaikwad, Corporator Vashi ward no. 53

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More FSI to boost real estate growth in Rajkot, Jamnagar

Rajkot:Rajkot and Jamnagar skylines will soon get taller. This would become a possibility in the wake of CM Narendra Modi announcing an increase in the floor space index (FSI) on Tuesday.      "The state government has decided to approve a 25% increase in theFSI for the benefit of common people," said Modi while making the announcement.      Chairman of the Rajkot Municipal Corporation's standing committee Jayman Upadhyay said FSI in the area that is technically termed as Rajkot city area will go up from 2.0 to 2.5. In 'other' areas it will go up from 1.5 to 1.87.      Real estate developers are also happy with the decision. "This is good for both the common people and the builders as the latter will get more space for construction which will result in less spending on construction costs. This will help buyers as well,'' a real estate developer said.      A similar announcement was also made by Modi for Jamnagar.

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Rental registration to go online

Mumbai: From the beginning of the next year, renting a new placewillbecome a simpler and cheaper task with the state government planning to rolloutits online registration process. Withtheimplementation of the newsystem,the paper workcan becompletedwithout a visitto a registration office, and at the same time, the amount often paid to agents for the process can alsobesaved. 

    The proposed launch of the online registration will be part of a reform to make revenue collection efficient as well as customer friendly and the state will first introduce it for leaveand-licence(L&L) agreements. 
    S Chockalingam, IG of registration and controller of stamps, said the plan would be implement within three months and the government hadstartedthe processof developing a secure portal for the transaction. "Arrangements are also being made so that stamp payments could be made simultaneously," he added. Besides being customer friendly, revenue minister Balasaheb Thorat said, the move would also help decongest registration offices; L&L documents accounted for over 32% of the papers (69,000 out of 2,10,000) being registered in Mumbai in 2011-12. If the registration offices is no longer required to deal with the L&L documents, sale agreement registration process will getexpedited. 
    Flatowners andtenantswill havetwooptionsto go aboutthe procedure. They can either download the form from the Internet and fill the details themselvesor seekhelp at a state-run call centre. Those downloading the forms will require high-resolution web cams and biometric devices to take pictures and thumb imprints. It will also necessitate digital signatures of thetwo parties. "An onlinecopy of the registered document could be downloaded after the processiscompleted," Chockalingam added. 
    For thosewhowillseekhelp from a call centre, an authorized person, along with the gadgets required,willbesentto the tenants and landlords on a dayfixedby them. "An e-receipt will be issued as proof of transaction," Chockalingam said. The registered document could bedownloadedjustlikethefirst option. Withlimited manpower, the government will outsource the visit service. "Its tender process will begin next week when request for proposals is floated," Chockalingam said. While citizens would have to pay for the service, the government could lower the overall registration feefor onlinetransactions, an officialsuggested. AT THE CLICK OF A MOUSE 
    32% of all registered documents in 2011-12 in Mumbai were leave-and-licence agreements 
    In 2011-12, Mumbai saw 69,000 rental registrations, Pune 43,000 and Thane 12,500 How will the new system help? 
    The registration process for L&L agreements will go online, allowing people to apply from anywhere 
    With the need for visiting registration offices removed, the cost of registering the document will drop. The money paid to agents at registration offices will be saved 
    The process of registration will be expedited 
    Consequently, registration of sale deals at the offices will be faster 
Some points to ponder 
    It may take citizens a while before they are convinced that the e-system will work 
    The state will have to carefully choose the agency to which it will outsource the data gathering process

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Redevpt nod for 290 structures on draft heritage list

They May Not Be On Final Inventory Mumbai: While a debate rages over the proposed draft heritage list, 290 structures on the inventory are found to be in different stages of redevelopment. A five-year delay in the finalization of the list has resulted in those old buildings being given the nod to be torn down to make way for towers. The same fate awaits more such tagged structures as it will take almost till August next year before the heritage index is finalized.      TOI has earlier reported about how several structures, proposedtodon a heritagetag,  weredemolished and replaced by highrises. Experts say further loss could be averted if the process for finalization is expedited.      According to the civic rules, a structure—however old it might be or with historical values—is not immune to redevelopment as long as it is on a proposed and not a finalized heritage list. Permission for its revamp can be granted under the building proposal rules. The data accessed from the BMC shows that redevelopment permissions have been grantedto290structures, of which 212 are in the western suburbs, 55 in the eastern suburbs and 23 in the island city. "As the list is in the draft stage, redevelopment permissions to the 290 structures were granted according to the building proposal norms. Such go-aheads arelikely tobe given to other structures till the inventory is finalized," said municipal commissioner Sitaram Kunte. The compilation of the draft list started in 2005 and the process ended in 2007.      After taking into account all the old buildings that would be torn down to be replaced with new structures, the final list is not likely to have all the old names on it.      The list proposes to include 947 new structures and 47 precincts, in addition to the existing 586 structures and 15 precincts. Currently, suggestions and objections are being invited for the inclusion of the structures on the heritage list and it will take another eight to nine months before the names are finalized. So far, the BMC has received around 800 suggestions and objections that will be forwarded to the state government, which will then appoint a reviewing committee to study them. The review committee members will visit the sites and even call the people involved for hearings whileconsidering thesuggestions and objections before finalizing the heritage list.      "We will inform the reviewing committee about the buildings that have gone in for redevelopment. It will be up to the committee to decide whether those structures should be part of the final list or not," said Kunte.

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500 & counting: Flurry of reactions to heritage list

Mumbai: Residents of Mumbai are making themselves heard over the new draft heritage list, and how.      Already, the civic body has received more than 500 suggestions and objections from Mumbaikars concerned over the proposed grant of heritage status to their properties.      The figure is expected to rise considerably as citizens have time till September 30 to send their suggestions/objections to the draft list.      In comparison, the citizens' response to the call for suggestions on the civic body's open space policy received a lukewarm response. The BMC got only around 100 responses from Mumbaikars in this regard.      Explaining the trend, a senior civic official said: "Inclusion on the heritage list affects citizens directly. Hence, we have seen such a reaction."      Meanwhile, there seems to be a lot of political interest in the matter as a number of politicians have also participated in the process of providing feedback.      The draft proposes to include 947 structures and 47 precincts to the new heritage list. However, several discrepancies have been pointed out as there has been a delay of five years for the list to be published. It was compiled in 2005 and completed in 2007. In the process, several structures have been knocked out or been replaced by high-rises.      "The idea behind having suggestions and objections is to address the anomalies. The list, which will come out after all the citizen responses are studied, will be final," said V Ranganathan, chairman of the Mumbai Heritage Conservation Committee (MHCC).      While some citizens have said they do not want the heritage status, many have asked for incentives and funds to maintain their structures. Some others have agreed to the grade being proposed for their properties.      A number of structures that have been included in the draft are from the suburbs, which were left out iof the existing list. "We want the MHCC to also tell us what incentives we will be entitled to if our building is included on the new list,"said Harish Mehta, trustee of a 120-yearold temple in Ghatkopar that features on the list.  CITIZEN VOICE  The new draft list has a total of 947 structures and 47 precincts  The existing list has 633 listed structures with 15 precincts  The BMC has received over 500 suggestions/objections  The last day for sending suggestions/objections is  September 30

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Society to builder: Give 5% VAT breakup

Mumbai: Seeking clarity on their tax liability, members of a Belapur cooperative housing society (CHS) on Thursday shot off a letter to their developer, demanding a detailed breakup of the 5% value added tax (VAT) levied on the total agreement value of their flats. Lakhani's Suncoast CHS has also asked Lakhani Builders, the developer, to explain which payment option under the Maharashtra Value Added Tax (MVAT) Act they have chosen to calculate the VAT as well as the reason. 

    The society sent the letter following an interaction with consumer activists and service tax officials. The members were told their VAT liability worked out to just a few thousands, even as many of them had already paid lakhs to the developer, albeit in the form of bank guarantees. (See: 'An Illustration', an unrelated example cited by consumer activists). 
    "We have no objection to paying the tax, but we want to know the components such as land, interest and the profit margins the developer may have included to compute it,'' said a resident. 
    The residents have further asked the builder for the government order authorizing developers to collect the amount from buyers in cheques issued in the developer's name. 
    Residents have alleged that VAT was collected from those who bought flats after the building got an occupation certificate in 2010. "I purchased a resale flat in 2011, six months after the building got an OC. Government rules say VAT has to be recovered from the first buyer. Why then is the developer not returning my bank guarantee of Rs 1.75 lakh, which is 5% of my flat agreement value of Rs 35 lakh," asked Arun Gandotra, a resident of Suncoast.
    Sunny Lakhani, director of Lakhani Builders, said the company has no problems providing a detailed breakup of the tax computation. "If the buyer wants to see our records on how we computed the liability, we will ask him to talk to our chartered accountants and see our returns.'' 
    Lakhani said he has returned bank guarantees of 10 members who purchased flats after the building was completed. "We did not return the money for three and half years as the state had not clarified how VAT would be charged. As we had taken only bank guarantees, the money remained with the buyer, who got interest from the bank,'' said Lakhani. 
    On Suncoast, the developer said they took over the partially completed building from another developer. "Computing the tax liability will be tedious as many residents have booked and paid the flat value at various stages of construction. We are getting different numbers from chartered accountants,'' said Lakhani. 
    "We plan to meet the residents during the weekend and answer their queries. One thing is clear. We would not be collecting the levy till we get a clarity on VAT calculations." 
PROPERTY HASSLE HOW TO SEEK YOUR TAX DETAILS 
Ask the developer for a breakup of how the 5% VAT amount was arrived at Ask to see the developer's records or returns filed with the sales tax department Use the Right to Information (RTI) Act to find out whether a developer—who as per rules is deemed a dealer—has registered with the sales tax department 
    Use RTI to access records of the VAT computed and paid by the developer against your building and flat 
    Consumers can seek redressal on any VATrelated dispute with the Council for Fair Business Practices (CFBP) and/or approach a consumer forum CFPB web site | http://www.cfbp.org Register complaints at | http://ccrc.in/ Phone nos | 22885249, 22842590 
AN ILLUSTRATION 
Composition Scheme | 
Section 42(3) of MVAT (preferred option of city builders) 
VAT payable where a builder subcontracts construction of a building of 20 flats Sale price | 25L each paid by 20 flat owners 
Total | 5Cr Less land value | 3Cr 
Less amount paid to subcontractor | 1.5Cr 
Less 30% on balance 50L owing to services such as labour, profit &architects fee | 15L 
Balance liable to tax | 35 lakh 
Total tax payable on goods purchased at 12.5% | 3.8L 
For each flat, the tax payable at 5% of Rs 3.8 lakh | 19,444 Times View: Remove the smokescreen T he government cannot leave home buyers at the mercy of developers. Both buyers and developers are justified in expecting much greater clarity on the amount of value-added tax they will have to pay. The government should release simple calculations as soon as possible that both home buyers and developers can apply to each transaction and know the exact payable amount. We are talking about lakhs of rupees here; no one should lose out on money because of the smokescreen that is still there.

TOI reported about the 5% VAT issue on September 13

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Mhada plans rehab for slumdwellers on its land to create hsg

SUBJECT TO GOVT NOD

Mumbai: Aiming to tide over the shortage of land to build affordable houses, the Maharashtra Housing and Area Development Authority (Mhada) has decided to undertake Slum Rehabilitation Authority (SRA) schemes on its own land instead of handing it over to developers as is the ongoing practice. 
    Mhada's decision comes at a time when the authority has only about five acres of land available in the city. The decision will see over 1,470 acres of land encroached upon by 65 slum societies becoming available for affordable housing. However, the decision is yet to be ratified by the sevenmember Mhada Authority headed by the chief minister. Notwithstanding the government nod, Mhada has proposed to redevelop slums spread over 20 acres in Bandra, Malad, Malwani, Kurla, Ghatkopar and Kandivli. 
    The FSI for slum scheme ranges between 2.5 and 4. A 2010 report by Anand Rathi Associates said the total land available for such slum projects in Mumbai is 8,600 acres, against 4,500 acres potential of Mhada colonies and 200 acres available under mill and factory lands. This explains why developers look at slums as potential goldmines. Said Satish Gavai, Mhada's vice-president, "This is the best option for Mhada to create housing stock in the city. We can't buy land as it is very expensive. We will appoint contractors to build 269 sq ft homes for the eligible slumdwellers. Since the government is directly involved, there is no question of 70% consent of slumdwellers or giving the free sale component post rehabilitation to anyone else.'' 
    However, some urban planners are skeptical of Mhada's move. They said Mhada had taken a similar policy decision (to redevelop slums on its land) in 2007, but the then CM Vilasrao Deshmukh shot down the proposal as Mhada Act allows only houses to be constructed on vacant land and further not undertake slum schemes as there is a separate Slum Rehabilitation Authority for the purpose. 
    "Mhada, which is redeveloping Sector 5 of Dharavi, is yet to appoint a 
project consultant or construct transit camps. It is yet to identify eligible slumdwellers. If this is the progress of the only slum scheme a year after it got exclusive mandate from the state government, how will Mhada manage other slum schemes?'' questioned a Congress legislator. 
    Niranjan K Sudhanshu, chief officer of Mhada's Mumbai board, said, "It would be wrong to compare slum schemes on Mhada land with Dharavi where over 5,000 slumdwellers have to be rehabilitated compared to 100-200 slumdwellers who have encroached upon Mhada land. Also, why shouldn't we use the incentive FSI to construct affordable housing than give it to builders? From the free sale, we can construct 2 lakh homes.''

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Harbour line to take elevated route at Kurla

Existing Tracks Will Become Part Of CR's Main Line

    More than a century after operations began on the Harbour line, one of the most important stations on the route—Kurla—is set for a major change. 
    The Central Railway (CR) authorities have decided to build a 1.5-km elevated stretch, which will include new platforms, at Kurla for Harbour line services. This, in turn, will allow them to use the existing Harbour line tracks (platforms 7 and 8) as the fifth and sixth tracks between Parel and Kurla on the Main line. 
    Explaining the project, a senior CR official said: "We have decided to take the Harbour line tracks to an elevated level at Kurla due to lack of space for the fifth and sixth lines on the Main line. Once the elevated platforms are built, the existing Harbour line tracks at the ground level will be connected to the fifth and sixth lines going towards Chhatrapati Shivaji Terminus." 
    The elevated stretch would extend from Swadeshi Mills in the south (towards Chunabhatti) and close to Tilak Nagar station in the north. Officials said the work would start by April-May 2013 if things went according to plan. The project would take three years to be completed, they added. 
    As of now, there are eight platforms at Kurla station, of which numbers 7 and 8 are used for Harbour services. "The design will be similar to the one used for the elevated Sandhurst Road station. RITES will decide if the elevated platforms will be built of concrete, steel or a mix of both. The cost of building the elevated stretch is estimated to be Rs 70 crore," the official said. 
    The work, said sources, would be carried out in such a manner that Harbour line services would not be affected. Mumbai Rail Vikas Corporation (MRVC) will fund the project involving the fifth and sixth tracks, include the elevated Harbour line section. 
    Laying the fifth and sixth lines between Kurla and CST will cost around Rs 800-900 crore, excluding the expenditure to be incurred on the rehabilitation of those occupying the structures that would be affected. However, there are problems on the ground as CR will have to acquire 6,500 sq m of land for the tracks between Currey Road and CST alone. As a large number of buildings have to be removed on this stretch, the process can be a long-drawn one. 
    So, MRVC and CR have decided to take the fifth and sixth lines up to Parel, where a terminus is proposed in Phase I, to begin with. Around 8,000 sq m will have to acquired between Sion and Matunga on this stretch. 
    The fifth-sixth corridor already exists between Kurla & Thane and Diva & Kalyan; work has also begun on laying tracks between Thane & Diva. Once the project is completed, long-distance and goods trains will stop using the Fast corridor. This will allow the authorities to provide faster and more suburban services from Kalyan to CST. 
    The Harbour line was officially opened on December 12, 1910, between Kurla and Reay Road. 
    In 1925, the elevated stretch between Dockyard Road and Sandhurst Road was opened to provide connectivity to Victoria Terminus, as it was known in those days.

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Mhada revokes redevpt nod to 22 developers

Mumbai: Mhada on Friday cancelled the letters of intent (LoI) (permissions) granted to 22 developers to redevelop cessed buildings acquired by Mhada in the island city. As the developers had failed to redevelop the buildings in the ten years since permissions were granted, Mhada will now do so itself. 

    Senior officials from the Mumbai building repair and reconstruction board (MBRRB) said they had to cancel the LoIs as the developers were repeatedly seeking extensions to implement the projects on various pretexts. The officials added that in some cases, the developers had stopped work after constructing the building up to the plinth level as they wanted higher incentive developable space under amended rules. "Such delays were causing hardship to existing tenants, who for years either had to reside in the dilapidated buildings or in transit camps," said a senior official. "Mhada has therefore decided to redevelop the plots, measuring roughly 15,000 sq m, and provide affordable housing stock in south Mumbai. Details will be worked out in some time," the official added. 
    The housing authority has also decided to amend the Mhada Act so that it can take possession of those flats in redeveloped buildings that tenants have refused to occupy even after sufficient time has passed. "We had received complaints that some tenants had refused to occupy flats in redeveloped buildings. Taking advantage of the refusals, the developer in turn had sold these flats in the open market. Though such cases are rare, we want to prevent these incidents in future," said a senior MBRRB official.

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Int’l body to study if BKC bldg heights can be raised

ALTERING FLIGHT PATH TO UP REVENUE Mumbai: To ensure full utilization of 4 FSI for its landbuyersin businesshubs atthe Bandra-Kurla Complex and Wadala and thus earn more revenue for the government, the MMRDA has requested the Canada-based International Civil Aviation Organisation to study the scope of raising the height of buildings beyond 89 metres and 110 metresin BKC and Wadala.      The request follows the initial restrictions imposed by the Union civil aviation ministry over the height of buildings after the MMRDA allowed 4FSI in these two business zones, with Wadala  being at planning stage. "We want to know if any changes in the navigational paths of flights atthe airportcan allow us to raise the height of buildings so as to utilize the full built-up area. At present, in the absenceof permission,we are bearing losses by selling the remaining built-up area to existing occupants in these zones," said MMRDA commissioner RahulAsthana.      ICAO's reply isexpectedin a few weeks. It had approved the selection of Navi Mumbai airport site after studying the scope of landing and take-off funnels. "Permission from ICAO is positively considered by the civil aviation ministry andiscrucial," saidAsthana.

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Rentals & Value of Offices at BKC, Lower Parel may Rise by up to 20%

Rentals and capital value of prime office buildings at Bandra-Kurla Complex (BKC) and Lower Parel in Mumbai could rise 8-20% over the next year and a half, according to property consultant Jones Lang LaSalle India. Although the office space vacancy level in the city is high at 19% — a sign of a slowdown in the real estate market —rentals in Bandra-Kurla Complex and Lower Parel areas continue to rise for want of good property in prime locations, a press release issued by the property consultant said. 

According to the consultancy, corporate tenants, who need to relocate, expand, consolidate or downsize, are still scouting for good-quality offices in Mumbai's central and secondary business district areas. 
Property owners in other areas and those with lower quality buildings are using incentives such as rent-free periods, lower deposits and investment in property improvement as tools to retain buyer interest, the consultancy added.
"Landlords are extremely keen to protect their base headline rents, and freebies allow them to sustain tenant demand and to prevent vacuums within their portfolios even if the effective rentals are down," said Ramesh Nair, managing director, west, Jones Lang LaSalle India

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Seven Lessons Realty Players Picked Up from the Slowdown

THE LEARNING CURVE As reality bites, companies make significant changes to their business models to tackle high debt burden & demand slump  Therecent economic slowdown has hurt the real estate sector, with the five largest firms seeing a 75% erosion in their combined market capitalisation. Burdened with debt and struggling with poor growth, companies have made significant changes in their business models and strategy. Here are seven lessons they have learnt.  FORGET NATIONAL, STAY LOCAL  Pan-India expansion plans of developers like DLF, Unitech and Indiabull Real Estate have been undermined by highlyleveraged balance sheets, high borrowing costs and slower execution. DLF still earns almost 30% of its revenues from Gurgaon despite its presence in over 20 cities. It recently sold prime land in Mumbai to cut down debt. Godrej Properties, despite the pedigree of a large business group, earns 60-70% of its revenues from Mumbai and Ahmedabad, even though it has projects in 12 cities.  THE SMALLER, THE BETTER  Small regional players like Thakker Developers, Kolte Patil Developers, Puravankara Projects, Sobha Developers and Oberoi Realty have better balance sheets than larger peers. Their stocks have also fared better.  FROM RAISING FUNDS FOR GROWTH TO  SURVIVAL  Before the slowdown, realty firms had plenty of easy money. And they used it to grow. Not any more. In the peak of real estate boom in 2008, PE funds invested $6.8 billion in real estate which dried up to $0.85 billion in 2011, as per a report by Jones Lang Lasalle on decoding private equity real estate exits in India. Attempts by Raheja Universal and Lodha Developers to go public were upset by poor stock market response, making PE funds unsure of exit opportunities.  DLF is raising funds by selling noncore assets, Godrej Properties raised funds through a QIP and HDIL is generating funds by selling transfer of development rights (TDR) and floor space index (FSI) — all to lighten the debt burden. Earlier, companies were building land banks and were rewarded for it in the stock market. Now, they are conserving cash to payback creditors.  SOUTHERN MARKETS FARE BETTER  Led by Bangalore and Chennai, realty prices in south Indian cities have remained relatively stable compared to Delhi and Mumbai. The prices in these markets had not soared as much as markets like Delhi and Mumbai. Consequently, south India-based developers like Sobha Developers, Prestige Estates, Puravankara Projects performed better in the last 2-3 quarters compared to other companies such as DLF, HDIL and Godrej Properties. While the BSE Realty Index shed 14.5% in the past six months, the Bangalore-based Sobha Developers and Prestige Estates, the only gainers in the index, logged gains of 22% each.  RE-EMERGENCE OF PARTNERSHIP MODEL  Realty developers are going back to the partnership model — developing property jointly with the landowner. This, according to Anshuman Magazine, chairman and managing director (South Asia), CB Richard Ellis, was always around. However, during the boom period, ambitious developers started buying land and developing projects on their own.  Now, partnerships are back. Godrej Properties, for example, trades at a premium valuation compared to other large multi-city developers due to its asset-light partnership model.  COMMERCIAL PROJECTS TURNED INTO  RESIDENTIAL  Commercial property market has been hit more than residential property due to slowdown in industrial growth. Surplus commercial realty space has also put pressure on lease rentals.  In an earnings conference after its June quarter results, the management of Godrej Properties admitted that commercial projects in Tier-II cities have been negatively impacted by escalation in construction cost and weak demand for commercial real estate. The company is now keen to sell these projects at the earliest and has decided to avoid new commercial developments. Some developers like Sunil Mantri Realty have scrapped plans to develop commercial projects. The company is instead proposing to develop a residential project at its site at Parel. "Excess supply scenario in the commercial segment and possibility of better liquidity in a residential project has prompted us to change our decision," Sunil Mantri, CMD, Sunil Mantri Realty, had told ET in November last year.  FORGET RETAIL, STICK TO REALTY  Wadhawan Group, that owns HDIL, ventured into retailing through food & grocery store chain Spinach. But it has shut down its stores by 2010. Similarly, in 2009 Indiabulls Real Estate wrote off its entire investment in its retail arm, which it took over from the Piramals during the retail boom in December 2007. Some realty firms are building malls, but staying out running retail businesses.  kiran.somvanshi@timesgroup.com

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Housing body meet may clear air on VAT refund

Mumbai: With the sales tax department insisting that the payable value added tax (VAT) is much less than 3%, buyers who purchased flats between 2006 and 2010 and had paid money (in the form of guarantees and deposits) to builders are now a confused lot over the refund mechanism. 

    Vilas S, an executive with a leading corporate firm, said, "I do not know which authority to approach. I had given a bank guarantee of Rs 3.5 lakh, which is 5% of the agreement value, to my developer when I booked a flat in Vashi five years ago. After the recent fiasco, 14 flat buyers from my building and I asked a sales tax official to explain VAT to us. We were surprised by what he told us. According to rough estimates, the VAT works out to approximately Rs 25,000. I showed this to the developer, but he is refusing to accept our calculation. He is also not willing to show us how he had arrived at the figure of Rs 3.5 lakh," Vilas said. 
    Borivli resident Rajat Purohit, who paid Rs 1.5 lakh as VAT, echoed similar views. "I do not understand why there is no clarity on the amount payable as VAT. I purchased this flat from my hardearned savings. Which consumer has the time and the energy to fight a legal battle to verify whether or not the developer has taken the correct amount," he asked. 
    The Maharashtra Chamber of Housing Industry (MCHI) will meet on Tuesday and is likely to discuss the refund issue. 
    Pujit Aggarwal, managing director of Orbit Corporation and MCHI member, said buyers need not worry. "The balance VAT amount will definitely be refunded to the buyers. VAT is paid against each flat agreementand not as a lump sum. A receipt is made with details of the transaction. No developer will keep the amount with himself," said Aggarwal. "The sales tax department may interpret the VAT payable as 5%. Had we refunded the amount to buyers earlier, it would have been difficult for us to search for the. So the refund, if any, will take time as the sales tax department is yet to clarify to developers the exact amount payable as VAT,'' Aggarwal added. 
DO THE MATH 
The Bombay Chartered Accountants Society has given two examples to show how VAT is calculated 1 Tax payable where builder sub-contracts construction and finishing of a building of 20 flats to a contractor 
Sale price @ 25L each paid by 20 flat owners | 5cr 
Less value of land | 3cr 
Less amount paid to subcontractor | 1.5cr 
Less 30% on the balance Rs 50 lakh on account other services like labour, architects fee, profit | 15L 
Balance liable to tax | 35L 
Total tax payable on goods purchased @ 12.5 % | 3.88L 
For each flat, the tax payable | 19,444 2 In case the builder uses his own material 
Total Sale Value @ 25L each paid by 20 flat owners | 5cr 
Less Value of land | 3cr 
Less 30% on the balance 2cr on account of other services like labour, services, architects fee, profits | 60L 
Balance liable to tax | 
1.4cr 
Total tax payable after deducting set-off on goods purchased @12.5 % and 4 % | 3.12L 
For each flat, the tax payable works out to 
15,630

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