State Bank of India

According to latest reports, in Odisha SBI, a public sector lender had advanced home loans of worth Rs 400 cr for year 2014 – 2015 and now country’s largest public sector lender SBI (State Bank of India) has set a target to extend Rs 500 cr worth home loans in Odisha for the year 2015 – 2016.

As per the statement of the BVG Reddy, Chief General Manager of State Bank of India, Bhubaneswar circle, “At the end of November 2015, our bank has already extended Rs 280 crore home loans and at this point of time we are expecting the closer with Rs 500 crore advances to the sector. This public sector lender had advanced a home loan of worth Rs 400 crore in the year 2014 – 2015 however; the NPA rate for the same sector was about one to two per cent. State Bank of India has extended its finance portfolio with tune of Rs 3325 crore which comes under home loan portfolio on the current date.

According to reports, SBI is all set to organize its own property expo “Utsav -2015”on date December 11 to 13 at Bhubaneswar. In present, about 40 real estate developers and builders which are affiliated to CREDAI (Confederation of Real Estate Developers Associations of India), NAREDCO (National Real Estate Development Council), Real Estate Developers Association of Odisha and Association For Odisha Real Estate Developers are seems to participate in the property expo “Utsav -2015”.

Last year at the same event people has booked more than 200 housing units and loan of Rs 30-40 crore were sanctioned. Currentl y, SBI is operating in more than 800 branches in the state Odisha and has an NPA of more than 6 percent with maximum slippages in the agriculture sector, education loans, micro, small & medium enterprises (MSME) sector and others.

Niranjan Hiranandani

According to Niranjan Hiranandani, MD of Hiranandani Communities and Founder-First President of NAREDCO (National Real Estate Development Council) Maharashtra that works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India, stated that Infrastructure projects and their timely completion are responsible for the success and growth of Mumbai Metropolitan Regions and Mumbai’s real estate market.

While elucidating these aspects Niranjan Hiranandani explains few projects such as; the Sewree–Nhava Trans-Harbour Bridge has increased the Metro connectivity whereas; Pinjal River project was necessary for real estate development and its growth in Mumbai and MMR. The more he added that these aspects and projects has changed the land use and its development in zones with granting of FSI and its proper usage of reclaimed land. He also pointed out that Mumbai can be the largest flower bed with surrounding Mumbai’s coast but for that it need to have the coastal road for Mumbai; apart from that it has potential to increase the green cover and ecological balance.

While addressing the context of real estate development and its growth in Mumbai city Niranjan Hiranandani stated that Infrastructure and development is necessary for growth of real estate sector”. The more he added that 4000 acre of saltpan land in Mumbai have a potential to create 5 to 5.5 lakh affordable housing units, however; the improvements of slum areas in all over the city is essential and for that we should implement slum policy which can effectively solve the  problem of affordable housing in Mumbai.

However; to bring the development in the MMR, he said that vision of the Project Naina has been shared with Devendra Fadnavis, the Chief Minister of Maharashtra as it is expected that project Naina is able to add around two times the land area of Mumbai to the MMR in form of a city and it has potential to complete the vision of Prime Minister which is the “Housing for All”.

New depreciation formula, the taxes on old properties 

Recently, Maharashtra State Government circulate new circular, which aims to increase the stamp duty revenue with the help of change in method of calculation of depreciation in old residential as well as commercial building  and it has caused a flutter in the real estate industry of Mumbai.

As per the statement of legal experts, The department’s November 4, 2015 circular showed that property value has rise by up to 35 percent. Consequently, it is the combined liability of both seller as well as buyer of the property as it can increase by up to 75 percent when they pay stamp duty¸ capital gains tax and income tax. Apart from that it could also do the negative impact on the real estate market in the Mumbai city as well as in state. A realtors’ body, National Real Estate Development Council (NREDC), recently wrote to the finance minister of state by stating that people will find it hard to sell and buy immovable property in an in an already “depressed and a very slow real estate market”. The more he added that “This circular will change the method of calculation when it comes to the depreciation of property in respect to the old buildings and due to that we increase the value of all kinds of constructed properties”. However; the real estate experts warned that this change in the method of calculating depreciation will also add substantially to the cost of premises and it can make the property even more burdensome for those who want to buy property.

Till now the state government guidelines were specifying that buildings age will be taken into the consideration and due to that the value of the building can be depreciated due to the age of building.  However; in present, land is no longer a consideration for calculation of depreciation. According to Lawyer Anil Harish, a real estate specialist stated that this new method of calculation of the property will increases the ready reckoner value of at least by the 30 percent because the depreciation is not allwed after certain level. And therefore it will increase the stamp duty directly amount.  The more he added that the circular now allows that depreciation to a lower extent and due to that the value of premises will be higher for any property and it would increase the quantum of the stamp duty without any confusion”.
According to Ashok Narang, the property consultant “This circular will have a negative impact on the real estate market and the volume of business in real estate in the city Mumbai as well as in state because it will create little more complications for valuation of property for computation of capital gain tax as well”. It will draw a impact on property buyer as they have to pay the excess stamp duty while the seller has to pay additional amount for the capital gains tax. However; government will receive additional revenue by increasing the stamp duty in long run, it will dampen the number of transactions.

How new rule will hit the real estate market?

According to the circular of November 4, 2015;

If you have a 150-square-metre office, which is equal to the 1,614 square feet and it is located at the 4^th floor of a 30-year-old building in the area of Veer Nariman Road, Zone 2/16 of Fort division.

So the value of land will be;

1. As per old method of calculation:

For commercial building the rate per square metre * Area of office * Depreciation factor for age of building

Rs 5, 01,300 * 150 * 0.6 = Rs 4, 51, 17,000

Total value of the property = Rs. 4, 51, 17,000 (Rs 4.5 crore)

2. As per new method of calculation:

Rate per square metre of open land * Area of office

Rs 2, 19,400 * 150 = Rs 3, 29, 10,000

Rate per square metre of commercial building Less Open land rate * Area of office * Depreciation factor for age of building

Rs 2, 81,900 * 150 * 0.6 = Rs 2, 53, 71,000

Total value of the property = Rs 5, 82, 81,000 (Rs 5.8 crore)

Niranjan Hiranandani

If you are the one who is seeking for affordable housing unit in Maharashtra, so here is good news for you as recently NARDECO or the National Real Estate Development Council has come up with news in festive season that it is going to build more than one lakhs affordable housing units with no profit and no loss.

NARDECO is the umbrella developer body which works under the Ministry of Housing and Urban Poverty Alleviation, Government of India has recently announced that they are going to construct affordable housing unit. Niranjan Hiranandani, Founder and First President of NAREDCO, Maharashtra stated that this is possible, and we can do it. The more he added that high cost of the land is big hurdle in the construction of affordable housing units, but this issue could be easily resolved if the state government can provide salt pan land for those projects which are affordable and with no profit and no loss objective. Niranjan Hiranandani stated that “We are planning to put forward this proposal in front of Devendra Fadnavis, Chief Minister of Maharashtra. We will meet him with all the details of affordable housing project and our main objective will be to make sure that one lakh low-cost and affordable houses get built every year for next five years in MMR (Mumbai Metropolitan Region) with the co-operation and support of state government”.

According to Niranjan Hiranandani, Game plan is very simple; At NAREDCO, Maharashtra we will deploy all the best possible technologies and equipments to make sure that cost of these project get within the budget. In Maharashtra there are several region where land for these kinds of projects are available, if state government will allow us to use land for these projects, so real estate developers who are the member of NAREDCO will build such housing units not in juts MMR region, but in all over Mumbai. The more he added that at this point of time we want to earn good name for entire industry and on the same time we want to help people to own dream homes in affordable price. Through this initiative it will be easy and clear to help people to get dream homes in reasonable price.

This is positive idea and there are many real estate developers who are ready to construct and help in these kinds of projects for a specific number of houses. There is no pressure in this project because we have seen real estate developers are voluntarily coming up with numbers of homes which they want to build.

Affordable homes in next one year

NARDECO (the National Real Estate Development Council), the umbrella developer body was formed under the ruling of Ministry of Housing and Urban Poverty with an objective to alleviate the work of central government. Niranjan Hiranandani, MD of Hiranandani Constructions Pvt. Ltd is now act as the president of Maharashtra NARDECO unit.

The National Real Estate Development Council has decided to construct one lakh affordable homes on the basis of no-loss no-profit. However; with this condition government has to provide land for the construction of homes. Niranjan Hiranandani, President of Maharashtra NARDECO unit stated that soon we will meet Chief Minister Devendra Fadnavis with detailed plan of action for the construction of affordable homes. Apart from that he also ensured that over one lakh affordable and low-cost houses to be built each and every years for the next five years in MMR (Mumbai Metropolitan Region) in sync with the government of Maharashtra. The more he added that “It will ensure the delivery of best possible technology at lowest possible cost. However; the allotment of the housing units will be based on the certain criteria and lottery system.

“If state government will provide land for such developments, so we will be able to construct home in Mumbai too. We want to earn good name and reputation in all over country. We want to show that this initiative aim to complete the dream of people, which is to own home in Mumbai. After throwing this idea now many real estate developers are coming forward and taking their responsibility to build certain number of houses” said Hiranandani.

Few Builders have different strategy:

According to Pankaj Kapoor, MD, Liases Foras, the real estate research firm, “In Mumbai real estate developers will never construct affordable home, no matter you provide them land or not. Because; first thing; Why we need real estate developers to construct affordable homes at government land? Government needs contractors to construct homes rather than the developers, apart from that urban bodies such as; CIDCO and MHADA should stop their habit to sell land in the open market rather use them for the construction of houses only”.

Housing Projects in Mumbai

The state Finance and Planning Minister, Sudhir Mungantiwar has announced that the government will provide all the required assistance to ensure real estate developments are executed in a time-bound manner.

Urging developers to take up affordable housing projects at a real estate summit organised by National Real Estate Development Council (NAREDCO) Mungantiwar said that realtors have been demanding single window clearance for undertaking housing projects. We are conscious about their demand and therefore have taken it as a priority.

The minister added that once developers start receiving faster clearances, project delivery will be quicker and at a much lesser cost. “While people must confidently invest in real estate, the developer community should ensure timely project delivery with sincerity,” Mungantiwar said.

Hurt Real estate sector

The decision of New CM, Devendra Fadnavis to review all major property development projects can hurt the real estate sector, as all the projects which was cleared in last four to six months of the previous government has put the sector in a fix. Big real estate projects are involving the huge cost and the sector itself will be in a state of suspense for four or six months now according to market experts.

What it is needed to review these projects?
The newly appointed BJP government is taking the cognizance of the charge leveled by the former irrigation minister Mr. Ajit Pawar because few projects of worth Rs12,000 crore were cleared in hurry during in last few months in the tenure of ex- Chief Minister Prithviraj Chavan. CM, Devendra Fadnavis wants to see if procedures were followed.

What does Prithviraj Chavan have to say?
Prithviraj Chavan told to DNA that new government has every right to review any kind of decision taken by his government. And the more he added “I have no problem if they will review the decisions taken be me. I haven’t done anything wrong in my tenure. If the cost of the projects increases by this move, then the incumbent government has to think over it”.

What is a cluster development project?
Any developer with minimum of 4,000 sq meters of land can represent the plan for cluster development, which will include all amenities. And after that government will allot the a Floor Space Index of four and it means means four times the land area can be build as towers or sky scrapers.

What did the previous government do?
The actual value of projects cleared is unknown and a slew of major cluster development projects, which are for Mumbai, were cleared during the last few months. Ajit Pawar was hinting the corruption blame when he made the allegation against his own Chief Minister Prithviraj Chavan.

Why are real estate developers upset?
All the real estate developers who have raised debt to continue the projects already cleared this review will means the huge loss interns of money and as well as reputation. Kailash Agarwal, Chairman of Avighna Developers, doing a cluster project in South Mumbai stated that “Cluster development policy will be affected by this review decisions. The review will result in three to four months escalate the cost many fold. There are only couples of cluster developments projects in Mumbai which have been successfully executed since the inceptions of the scheme in 2009. The more he added that all the developers now again have to pay the bribe for same project and its nothing else then chance to collect the black money.
President of National Real Estate Development Council, Sunil Mantri, said “ The new Chief Minister can review the previous government decisions because they have all rights to do this but it should be done “speedily and with good intention”.

The Ministry of Housing and Urban Poverty Alleviation will hold consultations with stakeholders on the Real Estate (Regulation and Development) Bill on September 19.

The consultations will be held with representatives of the Ministries of Environment and Forests and Climate Change, Consumer Affairs, Civil Aviation, and Culture, a statement from the Ministry said.

Before seeking to move this Bill for consideration in the Rajya Sabha in the winter session of Parliament, the Ministry will deliberate on issues such as protection of consumer interests, single window system for approval of real estate projects, perspectives of developers on delays in approvals and corrective measures required, the statement added. A meeting of all stakeholders has been convened in the national capital on Friday to seek their views on a key bill that seeks to pave the way for construction of a large number of affordable houses.

The Real Estate (Regulation and Development) Bill, 2013 is likely to be taken up for consideration in the Winter Session of the Parliament.

“We have convened a meeting of all stakeholders to seek their views and suggestions on the bill,” a senior official of the Housing and Urban Poverty Alleviation Ministry said. Housing and Urban Poverty Alleviation Minister  on Wednesday discussed various aspects of the bill with his officials. The Narendra Modi government has promised houses for all by 2022.

Naidu emphasised that the bill, while seeking to promote housing activities, should aim at harmonising the concerns of consumers and real estate developers, rather than introducing strangulation in the name of regulation.

The minister said the bill should promote transparency in disclosures by developers with regard to all relevant information about real estate projects by registering them with the proposed regulator.

Besides Naidu and ministry officials, representatives of the Ministries of Environment and Forests and Climate Change, Consumer Affairs, Civil Aviation and Culture would attend the meeting.

Issues like protection of consumers’ interests and single window system for approval of real estate projects will also come up for discussion. Officials of Consumer Welfare Association, Federation of Apartment Owners Associations, Professional Associations like legal firms and management consultants, National Real Estate Development Council, and Council of Real Estate Developers Associations of India will also attend.

After this exercise, Naidu will hold a meeting with ministers concerned before firming up the official amendments to be moved, if required. There is a suggestion from the real estate sector to rename the Bill as Real Estate (Regulation and Promotion) Bill.