Sessions Court hires Knight Frank as consultant

In order To facilitate realization of maximum amount of the properties of defaulters in National Spot Exchange Ltd. (NSEL) scam subject to liquidation, D P Surana, special judge of MPID (Maharashtra Protection of Interest of Depositors) Act Court and additional sessions judge of City Civil & Sessions Court, Mumbai has appointed Knight Frank India to serve as property consultants. Knight Frank India as a global private broker will bring in buyers to speeden up the liquidation process.

This order by the Sessions Court is significant as it would not only expedite liquidation of NSEL defaulters’ properties but also pay dues of the trading clients (investors). Due to its global reach, Knight Frank is expected to rope in individual and corporate clients with high bid amounts.

NSEL had made an attempt in 2014 and finalised two global consultants — Knight Frank and Colliers International — to identify competent buyers for disposal of immovable properties of Mohan India, the largest borrower defaulter. Mohan India had then agreed to empower the ‘competent authority’ to liquidate their immovable assets to recover their dues. Ajit Sakhare, deputy collector, government of Maharashtra, is the competent authority appointed by the Bombay High Court for the NSEL case.

In the meanwhile, the court has ordered the ‘competent authority’ to pay brokerages along with applicable taxes to Knight Frank within 30 days if its bids are approved with the highest quotes.

RBI cut key interest rate

With the recent news that RBI has decided to cut the key interest rate, it is expected that this move of RBI will boost the affordable as well as premium housing demand and it also improve sentiments in the sluggish property market. Property consultants and real estate developers have demanded that interest rates should be further reduced. According to one of the realty Magazine, “This move is hope for the reduction in mortgage rates, which would improve residential sales in all over the country that have been suffering from general slackness in recent times. As per the recent research of JLL India, “Housing sales drop by 1.75 lakh units in the primary markets of 7 major cities in 2014 against nearly 2 lakh units in the previous year due to less demand. Happy with softening inflation, RBI decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth.

Positive views of leading realty developer:

According to Rajeev Talwar, Group executive director of DLF, “It’s an awesome New Year gift and it seems that the finance ministry has putting his effort to convince RBI governor. Given the background of RBI governor, even the small beginning will be marked as big signs of hopes for the Indian economy”. The more he added that, this move would definitely encourage buyers now to invest in new homes or second homes.

Anuj Puri, Global property consultant JLL India Chairman & Country Head stated that “I expect this cut in interest rate to be the first of several to come and these will cumulatively make a big difference for home loan borrowers, as in present, the current interest rate cut will help revive market sentiment, which is very timely”.

Parsvnath Developers Chairman Pradeep Jain, appreciated the RBI decision and stated that realty sector has been struggling from the last 3 quarters with lower demand and more inventories. This decision would help reduction in EMIs and thereby encouraging fence sitters to conclude deals. Developers would also get funds at comparatively lower rates.

This move will instill hope as well as confidence in the real estate industry which is recovering from housing sales is around the corner, stated the Sanjay Dutt, Cushman & Wakefield Executive Managing Director, South Asia. Whereas; David Walker, MD of SARE Homes, said, “This step of RBI will cheer up the markets and hoped that financial institutions will pass on this reduction to customers, which in turn would boost housing demand”.

As per the Lalit Kumar Jain, Chairman of CREDAI, the apex organization of real estate developers, RBI’s decision is as a good beginning but said this is not enough as a reeducation of 200 basis point within short span is needed. Whereas; the Consultant Knight Frank India CMD Shishir Baijal, stated that This decision of RBI is positive approach that would benefit the debt burdened developers and stretched households alike and to comment on this RBI decision Anshuman Magazine, Chairman & MD of property consultant CBRE South Asia, said that this decision is good and in current market situation this reduction in the base rate is an important step in improving home buying sentiments.

According to CREDAI (NCR) President Rohit Raj Modi, “The rate cut will help the real estate developers to expedite projects that were otherwise facing tight fund crunch”. The more he added that home buyers are dreaming to own a home that would also get a boost as we expect an accelerated purchase cycle. Mohit Goel, CEO of Omaxe stated, that this move clearly shows RBI’s shift in stance in favor of positive growth and it is also correct time to usher in a slew of out-of-policy measures such as; to allow the banks to lend more to real estate, easy funding norms and more. Now real estate sector will play role of a catalyst in driving the overall economy.”

Amit Modi the ABA Corp Director said, “This was the most awaited change and development in policy and now easing interest rate will help to revive the health of businesses such as; Real-Estate which are highly sensitive to interest rate movements.” According to Ansal API Vice Chairman Pranav Ansal, “This is so positive step from RBI, which will boost housing sales and improve overall sentiments in the real estate market. The more he added it is a good sign and now real estate sector will look forward to RBI take the drastic steps in its forth coming monetary policy”.

Indian real estate

In the absence of due diligence the Indian real estate market can loss basic fundamentals and get drive by the positive news stories. However there are no analytical techniques are available to support those stories. The market intelligence of the prospective buyers is only reflective in macro level market which often goes off track. Most of the buyers are agree that due diligence is the way for to manage the risk and returns in terms of property evolution. More than that, it can give the much needed facelift to real estate sector. Due diligence is probably the most important aspect of a transaction involving real estate immediately following a broad understanding of the commercials.

According to Bilateral business body of India and America and economics experts “when market is fulfill with potential of growth and debt price is higher than equity so it demands for a greater common sense”.  In the eco-system of Indian real estate market there is financial disorder, as investors are getting the higher interest rate in market, which is giving the best ROI. The problems with these investments are that, high returns are available in market with high risk with the absence of reliable data. The answer to the dilemma of the investors and funding of the serious developers lies in creating a plain and simple mechanism of due diligence.

A section of the analysts mention that due diligence has always been done in the Indian real estate, but the Bull Run made some of the developers a bit over ambitious to ignore the fundamental in order to get the higher profits with far higher risk. However the slowdown has taught  everyone a lesson and now developers are over cautious at the each level, but the fact remains that in the absence of scientific and industry accepted mechanism of due diligence the challenges and risk exposure are as much for the realtors as for the investors. According analysts the developers and independent property consultants should focus more on micro markets than general trends which could be misleading. Whenever there are many grey areas where in the absence of proper research and search and reliable data even assessment of ground realties is not feasible.

According to Rohit Gera, MD of Gera properties, agrees over the need of proper due diligence across the real-estate sector of country. Unfortunately the home buyers still do not undertake the requisite amount of due diligence especially when buying the homes from fly by night operations. The cost of reliable due diligence often is less than one month’s EMI and this offers peace of mind through 240 months of loan payment. Sometimes customers blindly believe that they will not be the victims and they can go forth without proper due diligence. There are number of reasons for the absence of due diligence in real estate sector.  The growth of real estate transaction combined with the growing participation of the organized sector in real estate, which resulted in heightened awareness of the risks involved and, consequently, the need for ensuring that the risks are identified and minimized in such transactions

Real estate infrastructure at Ghodbunder

Real estate market along the stretch from Thane to the Central Business District of Belapur is on the boil. Price appreciation is the order of the day and hence those who had prudence to invest in the nick of time have every reason to cheer.

Development of physical infrastructure in Ghodbunder Road, Kolshet Road, Airoli, Majiwada, Ghansoli, Vasant Vihar or Vashi to an expanding job market, and from the metro rail to better connectivity to the upcoming commercial markets, the real estate market expects a positive impact in times to come.

This impact is clearly visible in the capital values of the residential areas of Thane, Kalyan, Badlapur, Vashi and other suburbs, indicates data over the last two years, all these areas have reported a rise in capital values in the range of Rs 650-3500 per sq ft, depending upon the location.

Investors have been banking on the numerous upcoming infrastructure projects, one of them being the metro rail network. Deepak M, consultant at Shri Sai Property Consultants, says, “Of late, Thane has been a fast-moving market. Buyers have the benefit of sound living standards and almost half the price it would take to live in Mumbai. Most buyers also foresee property prices going up.” Initially, while it would have taken close to 50 minutes to commute to Mumbai, with the metro, the time taken would be down to 20 minutes. This positively impacts the property markets of Vasant Vihar, Majiwada, Pokhran Road 1 and 2 as well as Ghodbunder Road and Hiranandani Estate.

Shiva Patil, a local realtor in Thane, informs, “Majiwada Junction Flyover cuts across the busiest routes of Thane. Strategically planned, commuters from Mumbai would have easy access to Kalyan. This flyover, already half operational, facilitates to and fro connectivity to Mumbai, Nashik and other areas where most of the economic drivers are.” So, whether you are working in Borivali, Malad or Mulund, the three flyovers planned here, are getting developed in phases and will facilitate travel. By easing connectivity, Majiwada also opens investment options in the region. With capital values slowly picking up, most residential pockets in Thane would see more number of takers.