Land is the single most important ingredient for any development anywhere in the world. Unfortunately in India, land management system is in the state of gross mismanagement. Countries extensive agricultural land management system has collapsed. In India, we have 264 million hectares of land is fit for vegetation. Out of this, 142 million hectares is cultivated and managed by private land owners. The balance, 122 million hectares is uncultivated public lands, comprising of 67 million hectares under the forest department and 55 million hectares under various other public authorities, which include state revenue department, panchayats and other local bodies. The publicly held lands are the most valuable source for forest products like timber, pulp, fuel wood, fodder etc., which are life line to the rural as well as urban population. In addition, these are the lands which are maintaining ecological balance in various geographical locations. The pathetic state of affairs in land management and utter confusion due to the out-dated laws and regulations are doing maximum damage to our national wealth. Courts are full of litigations over the lands and property. Even after centuries, the laws governing various aspects of land holding and use have not changed or modified to cope up with present day needs. In fact no coherent land management system exists at any level. Land consolidation schemes decades back failed due to defective implementation. On August 8, 1994, the Union Urban Development ministry unveiled National Housing Policy, envisaging a major shift in its role that of builder to facilitator. The policy was aimed at reaching out to homeless and vulnerable sections of society. But in the absence of proper land management system and implementing agencies, hour the government can thunk of providing land is a moot question. The out dated system and corrupt officials are the biggest hurdle in the way of development of rural and far flung areas. The developers of farm houses, who are going yeoman services in this sector, by bringing urban money for the development of rural areas, are not in a position to do so, because of the out-dated laws. For example even for hall acre farm plots the purchase has to be farmer. The farm house are mostly being developed in hilly areas or on wasteland. State forest department, which owns well over 67 million hectares of land, are totally incapable of managing the forest land resulting massive corruption and dwindling forest wealth. Government must wake up at least now and create better land management system.

By Murari Chaturvedi

By Accommodation Times (www.accommodationtimes.com)

Finance in the backbone of every business, and real estate is no exception, Real Estate is capital intensive industry where huge funds are required. There are many segments which require financing e.g. For acquiring property, construction, reconstruction, renovation or repairing your property. Housing Finance has emerged as a big segment, where a number of housing finance companies are working. In 1977 the first housing finance company namely ‘ Housing Development Finance Company’ (HDFC) was established in Mumbai in housing finance segment. Right from the start HDFC defined lending norms for individuals for purchasing a house with repayment in monthly installments over a period of upto 20 years. In 1987 National Housing Bank (NHB) was established by the Government of India to regulate the housing finance sector in the Country. NHB was to refinance the various housing finance companies against the housing loans they have given to individuals. To-day there is well documented process to give loans to individuals which is followed by all the housing finance companies. There is hardly any market for such a long liability so by compulsion HFC’s borrow for short period for meeting its long term needs and thereby unwittingly gets into the mis-match trap. But the housing finance market in India has recorded robust growth right from the beginning. The increasing loan tenures, increasing loan-to-value ratio and rise in the installment to income ratio, are precipitating high growth rates in the housing finance sector. Financing a building construction project, though accutely needed, was given lukewarm treatment in the beginning, but is accelerating gradually. The government has not yet recognised construction as an industry, hence it is difficult to get project finance from banks and other financial institutions. Project financing is basically financing real estate projects in residential, commercial and long term infrastructure is based upon a complex financial structure, where project and equity used to finance the project rather than the general assets or creditworthiness of the owner. The finance is typically secured by the project assets producing contracts. Presently the real estate financing is growing steadily and creating valued finished property. Fortunately the shadow of sub-prime rate model of financing the housing sector have not fallen on the real estate financing in India, as has happened in USA and Europe.

By Dr Sanjay Chaturvedi

By Accommodation Times (www.accommodationtimes.com)

short term borrowing for project and advances from customers are in invested in land and long term investments. This practice was seen in atleast three real estate cycles. Players keep fotgetting basics and becomes bulish on markets.
In boom, funds pore in are invested in fututre stocks. And at the times of delivery, fund starved industry left nothing with but to slow down or stop work on under construction projects. Making creditor run pillar to post to get his dues even after eight months is usual practice. Hence material suppliers, especially, cement companies never give a single hour credit to builders and developers. They deliver only after DD is encashed in their bank accounts.
Marketing department is vanished and there is total darkness in that part of the office. A single seasoned person is seating on front desk with a long list of payments and as usual give reasons like ” Accountant is on leave”, “Director is out of country”, “Payment will be made after some international trade show is over”, “Madam’s signature required on cheque but she is coming only once in the office”, and all such stupid reasons to buy time.
The key position held by these people in the economy and where as 200 industries are dependent on them, the entire economy is at risk of such practices. Short term borrowing and long term investment. Is what the practice least required. Advances from customers are used to buy land and FSI presuming that rest of the stock will take care of construction. It is like this, eat the profit before it occurs.
Fly-by-night-operators having presence in the boom time will certainly give bed name to the industry by duping people or not constructing at all. Or the famous practice is just delay the project, make some negative statement so that people who have booked flats at Rs.3000/- take back their money and then sell the same stock for Rs.8300/-. since the rates have increased. These type of opportunists really spoils the name and since there is no ethics, real industry becomes bogus industry.
The first cut is staff salary, strength of staff, employing juniors in place of senior and asking senior to move on. Seniors are hunting for new bakaras who can offer them one crore and more package and when asked about unemployment, they say ” you see I am worth more than what was being offered so now I am on my own.” Then comes advertisement and advertisement bills from the agency. In the past, many big names have settled ad agency bills by offering them real estate units. The same is the scenario now. Majority of them have done barter directly with media and by passing the agency.
There is no standard of real estate development process nor we have transaction process rationalised in our country.

By Murari Chaturvedi

For domestic and foreign investors in real estate the year 2012 brings good returns. A through the super inflated property market in Mumbai is still to cool down the property markets throughout India, opens doors for investors and end users. In the past five years, first there was frenzied activity in real estate market during 2005-2007. This was followed by the recession in the property market in 2008-2009. Soon after there was gradual recovery during 2009-2011. Construction of new townships in far flung places have gained momentum. The market dynamics has offered ample opportunities for developers and investors in real estate sector in India. The rising income of the masses coupled with the increasing demand for shelter has given a steady foothold for the construction of residential premises throughout the country. The rising clout of housing finance companies has helped the residential housing construction sector. According to JLL-REIS estimates, real estate development has increased from USD 69.4 billion in 2006 to USD 160.1 billion by end of 2011. The massive development in real estate sector now needs much needed regulations. The Ministry of Housing and Urban Poverty Alleviation has woken up to this need and produced the draft of the new Real Estate (Regulation and Development) bill to addressed the malpractice in the real estate development and bring transparency in the sector, for the healthy growth of the fast developing real estate sector. The Real Estate bill is badly needed for the systematic and healthy growth of the industry. There are many issues to be addressed in the real estate development. The time frame to complete the construction of residential units in most important for which plan passing authorities as well as the willful delay by the developers are often responsible. The bill needs to look into this aspect. The undue price escalation is another important factor which affects the residence purchasers directly. The industry leaders must realize that inflated prices of residential units badly affect the end users who have booked them. The syndrome of super built up area, which is not defined and is not measurable, must be checked. For healthy growth of housing industry speculators in this field must be discouraged and kept out of this industry. Housing is the basic industry and the growing population depends on it and hence the industry leaders and the government must sit together and make it grow. Real Estate bill can do it, as it is the need of the hour.

By Dr Sanjay Chaturvedi

In boom time everything sells. But in recession and hard times only skills and brand make sale happen in real estate. Most unfortunate happening happened in real estate when an ordinary sales executive who knows how to talk big got annual package worth more than his seven lives would have earned. A package of Rs.1.5 crore per annum is what is got for just making just nothing but production of doing something. The develop thought, I am having 40 flats to be sold at Rs.25 crore each and if I pay commission of 2% on such inventory, I would still save lot of money even if its 1.5 crore package. Just for coordination of sale process and giving report of aggregated reports sent from site or arranging a cabrey dance or mushayra for brokers, the annual package was a lottery or a jack pot he successfully negotiated with the developer.
Now is the time of showing skills. When International economies are in doll drum and National exchequers are finding it difficult to cope up with rise dollar cost and cost of inflation, it is beyond his capacity to understand the situation. He was never trained for such situation. It was like a hindi saying, “Allah mehrban to Gadha pehlwan”. The global melt down and liquidating markets, observed as D-Coupling theory, have severely affected the real estate market too. Those who started their career after 2001, had never seen a slump in the market. Its pay back time for Rado watch and Gucchi perfumes.
The honeymoon is over. Its time to pay the bills. Many of them now thinking that they are really that much worth and wants to leave the job and start their own company for brokering business. Some of the fly-by-night operator who managed to take some slum projects, matured it till LOC and wants to sell the project along with LOC. They never sure to act like a middleman and margin hunters.
The most unprofessional and bad administrators got crown on their head since developers never had opportunities to hunt for a better talent. The conventional way of doing business will now cost them dearer. The Gadha Prasad, who is use to Rado watch and Gucchi Perfumes will be an liability on the organisation and will severely damage the brand he represents. Talking good English and having computer operational knowledge now needs some thing more and that is negotiation skills. It comes only when you are well informed and know how to negotiate a better deal for the organisation. Pappus like these are there in every big builder’s organisation and looting them for crores of rupees by just doing eye wash. In return, builder’s are passing on these ransoms to poor flat purchasers. Pappu just can’t sell, it is the brand or product it self which is selling.

Polls on the horizon and Brihan Mumbai Mahanagar Palika (BMC) is on the alert mode.
Every political party is having its official office at BMC headquarter. The BMC headquarter building looks like stock exchange for political parties. So called Workers are sitting in the offices which normally should have been admin areas for the corporation.
On the public money and taxes paid to the local self government, political parties enjoy the office to run their business. After five years, thank God Baba Saheb given us the chance to vote and elect our representatives, its chance to clear the Dirty Picture.
Memories of people is very short and we forget things which should haunt our mind forever. 38 people lost their lives in the water clogging in Kalina when Mithi River was choked by encroachers. Funds came in and there was a production of work happening. Then Johnny Joshep tried best to save BMC’s skin.
Local MLA, Corporators and Mps came in only after fives days and were greeted by shoes. That time Bose D K song was not popular hence citizen of Kalina managed with that only. Just like this, elected representatives seen only on posters of Ganpati, Navratri and ID on roads. BMC gives them permission to put 100 and they put 10,000 posters. The authority is itself is the party since authority is managed by people availing such permissions. People who gives and people who takes permissions are the same.
Indian Army is having 10 lakh soldiers and BMC is having One Lakh worker to manage 433 sq. kms. Percentage of public health, education and social awareness have decreased since first budget and now salaries is enhancing every day. Workers are enrolled as staff to fulfill the obligation of political propaganda during polls. Locals are electing the “very Own” candidates. How many of our elected representatives are post graduates and skilled?

Down swing in property market is once again giving sleepless nights to the developers and property investors. The feverish pitch for land buyng is staggering property market investors have made the property market volatile which may soon go out of hand. This may, in all probability, trigger the stagnation and ultimately crash. The biggest casualty is actual users in such a unreasonably hyped property market. It is the basic fundamental factor that consumer cannot be replaced in real estate development. Unfortunately property market does not have any regulatory mechanism to face such situation. And if the cash in property market happens, the investors, banks, and other financial institutions will lose havity. The hype created by by such high priced properties, does not augur well for the industry. In Mumbai already the rates have gone through the roof for properties. A small flat of around 500 sq. ft. area is being quoted Rs. 1.20 crores and above in western suburbs. It is time for the government, industry leaders and market forces to understand the enormity of the situation, and find way out to hold price line within reasonable limit. The high prices of flats may not sustain for long and hence needs correction by rationalization. There is much talk about foreign direct investment (FDI) in real estate in India. Mumbai could be the prime choice of such investors, but not if the property rates are prevailing to such high levels. Another factor which could adversely affect the property market in and around Mumbai, and other metropolitan cities, is that many commercial and industrial organisations do not find it viable to set their shops at such high property rates. A number of small and big industries have already moved out of Mumbai to Gujarat and other adjoining states. There are number of instances where commercial and industrial organisations have opted out of Mumbai and ultimately out of Maharashtra. These organisation are the ultimate purchasers of properties, so if they move out of Mumbai, the resultant situation may not be rosy in near future.

For redevelopment of South Mumbai, The Maharashtra Govt. has issued notice M/S 37 (IA) of MRTP Act 30.8.2008, proposing amendments to Development Control Regulation 1997, to encourage cluster type redevelopment of age old buildings in island city (South Mumbai). The government has given guidelines and amendments in this notification Congested South Mumbai actually needs to be redeveloped, giving way to proper infrastructure in the area is present day needs. Cluster development, if planned properly, can provide the needed infrastructure and brand new buildings to live. The government has proposed the norms for such redevelopment. The minimum plot area for cluster development is fixed minimum area of not less than 4000 sq. mts while the FSI 4 which is permissible under DCR 1991 is now proposed to be removed. However for utilization of FSI beyond 4, prior permission of the state government is mandatory. To fulfill the condition of minimum area of 4000 sq. mts., many buildings will have to merge, which is difficult, if not impossible, task for the developers and/or developmental authorities to solve. Than there are other requirement to observe. The minimum size of dwelling unit is kept at 300 sq. ft. carpet area. These provisions shall be applicable for cluster type redevelopment for privately owned buildings, cessed buildings and buildings belonged to state government and Municipal Corporation of Greater Mumbai. So as per these provisions, many parties and agencies are involved to make them all agree for merger of their buildings is a long drawn task. Besides this, for redevelopment of the buildings, it is necessary to have registered deed of conveyance, transfer, assignment or the lease as the case may be for documentary evidence of the property. The titles of the properties should be clear and marketable. It is advisable that all the building societies in the cluster development should have their own architect to advice the members about the various rules and permissions for redevelopment of the society buildings. The society should also assertain about the permissible built up area by using T.D.R., The other things include transit accommodation during the construction period, the corpus money the builder is giving and the additional area over and above the present area of present tenements to be given by the developers. There are well defined procedures for finalisation of the redevelopment of buildings, which your architect will be able to guide you. This whole exercise has to be undertaken for cluster development.

It seems that the government is hell sent on milking the cash-cow, that is real estate. This is contrary to the spirit of the constitution, which enjoins upon the government to provide a home, among other basic necessities as clean drinking water, sanitation and electricity to every citizen. It goes on increasing the burden on some pretax or the other. Recently the Delhi government has increased property rates for tax purposes, manifold. At the most, the government has created just a miniscule fraction of shoddy and uninhabitable housing structures that hardly meet the requirement. Housing is one sector where no government skills is required, and yet the biggest failure is to allow housing to grow. In addition, by introducing various distortions in the laws of the land and by imposing strictures on landholding, the government created road blocks to faster growth. Some 75 million new jobs would be created outside agriculture, enough to absorb not only the rapidly growing workforce but also most of the workers displaced by productivity improvements. It was in 1978 the Reserve Bank appointed R.C. Shah committee, had reported “Nearly 25-35 per cent of the urban population lives in slums. No precise information is available regarding the numbers of households that are homeless. The backlog of housing shortage is increasing every year as the constitution has not kept pace with population growth….”. The present condition is worst. Nearly 60 per cent population live in slums in Mumbai the urbs prima of the country. The proliferation of slums in all our cities is a failure of state planning. The host of services that city dwellers takes for granted, from maids and menials to peons and drivers are drawn mainly from the slums. Town planners are aware of this fact, but have utterly failed to make provisions for some from of cheap housing. From time to time suggestions have been made to construct low-cost houses in satellite townships around cities from where workers could be transported to their work and back home. This is the condition every where that housing is pipe dream for the people. Is it not the time that the state governments make definite plan to construct low-cost housing only, with definite time frame?