Pay property tax to be eligible for contest to poll in the election

Now Maharashtra property department has reason to joy as more than 1,800 people, including poll contestants are now queuing up to pay property tax before the upcoming NMMC election (Navi Mumbai Municipal Corporation). Now it will be mandatory for aspiring candidates to clear all their pending dues with the corporations to be eligible for contest to poll in the election and acquire NOC (No Objection Certificate) from the department.

Even those who propose or second the proposal of a civic candidate, they all have to pay up all arrears and dues. According to assessor and collector P B Kulkarni, “such large turnout to pay property tax or if they are seeking for NOC so it’s rare. But before elections, all the aspirants and other members who are involved in proposing or supporting candidates they need to certificate. In simple words we can say that the major part of payments is primarily due to the coming elections”.

In other words we can say that the majority of payments are primarily due in the coming elections, stated by collector and assessor P B Kulkarni. In last 15 years, the property department has managed to recover a sum of Rs 3 crore from 1,700-odd individuals, as till Friday, the department has issued NOCs to 1,762 individuals. As per the pending applications, officials are expecting that more than 2,500 individuals to make payments. As per the statement of officials, “at this point of time we are expecting more payments before the deadline for filling nominations lapses, as department should be able to recover taxes of around Rs 6.5 crore”.

Now property department of Maharashtra is conducting recovery drives to meet its annual target of Rs 425 crore, however notice has been issued for more than 23,628people who are defaulters and punitive action such as disconnecting water supply of 48 individuals are being initiated. The more Mr. Kulkarni added that a list of attach bank accounts of 163 defaulters has been prepared however till now action has been taken against 89 people.

Sahara Group have 90 days time to raise Rs 1,200 crore

On Monday, the Supreme Court gave a time period of 90 days to Sahara group to finalize the deal of its three hotels which includes abroad and domestic properties to raise the Rs 5,000 crore cash component of the bail condition for release of its owner Subrata Roy and its other two group directors. As per the statement of a bench of Justices A K Sikri and T S Thakur, we have given you the last and final opportunity and this time if you will fail so we will appoint the receiver for auction of your assets.

Why money is essential for Sahara Group:

Last year on March 4, Roy was sent to jail for the violation of the order of apex court on dated August 31, 2012, directing two group companies to return Rs 24,000 crore to investors. Sahara has deposited Rs 5,120 crore by claiming that it had a liability of just a little more than Rs 2,000 crore. However, it is well know thing that on March 26, 2014, the court was granted an interim bail to Roy and its two directors by stating that they would be released only after the deposit of Rs 5,000 crore in cash and furnished bank guarantee for another Rs 5,000 crore. Till now the group has deposited approx. Rs 3,800 crore and is short by Rs 1,200 crore. Appearing for Sahara, its senior advocate Kapil Sibal told the bench that one of the Hong Kong-based financial reconstruction companies is facilitating a 900 million euro deal with Dubai based firm known as Trinity that would take over Bank of China’s (BoC) charge on the three hotels, Dream Downtown and the Plaza in New York and Grosvenor House in London.

The more he added that the buyers Spanish Bank BBVA has confirmed the buyer’s financial capability that had certified that the buyer had more than 900 million euros in its account and it represents that they had earned and through non-criminal activities.He said the buyer’s financial capability was confirmed by Spanish Bank BBVA, which had certified that the buyer had more than 900 million euros in its account which was legitimately earned and through non-criminal activity. Sibal said that after paying off BoC, Sahara would get Rs 650 crore, which would be deposited towards meeting the bail bond conditions.

An effort to raise Money:

However, when SC asked that how Sahara group will arrange the remain money for bail, so Sibal replied that Sahara Group was planning to sell more than 10 properties including residential and commercial properties and in addition to nine already identified for the purpose. Out of nine, the group has already sold five and it will provide another Rs 700 crore, the Sibal added. The bench of SC said it was prima facie satisfied with the group’s extended conference room facility and proposal in Tihar jail for Sahara Chief and two directors to negotiate and finalize the deals. On the competent of bank guarantee, Sibal added that the group plans to pledge 800 acres of its Aamby Valley project, so that an Argentine bank can get a bank guarantee through HSBC and Panama is one of the names of Aamby Ventures, Mauritius.

According to bank, Aamby Ventures is nominating the Rs 5,000 crore bank guarantee in of SEBI-Sahara account, but court said that as you are struggling to raise Rs. 1,200 crore for your release, so a very next day after your release from jail we can ask for the rest Rs 30,000 crore as you were directed to pay. So do you have any plan to arrange that money or how you are going to arrange that money in future? In reply Sibal added that “we don’t agree that we have the liability to pay Rs 30,000 crore as we are not arguing that today, just allow us space to cross the first hurdle in the fight, on that issue we will argue on another day. After knowing a soft corner Justice Thakur has for poetry Sibal stated that “Roj ki yeh jang hai, kaheen kati patang hai! Mauka mila fir bhi, laga raasta to tang hai” to highlight the difficult period the Sahara group through which Sahara group is going through in these days to carry on negotiation process to sale the property.

In the reply of the “shayari” of Justice Thakur, on Monday Justice Sikri return the favor by saying that, “Dard ki yoon aadat ho gayi hai! Jis din dard na mile to bhi dard sa hota hai” to drive home that such financial difficulties have become a way of life for the Sahara group.

SBI to buy property of Air India

India’s leading public sector bank, State Bank of India has received all necessary approvals from government opportunities to buy residential properties of cash-starved national carrier, AI (Air India) in south Mumbai for Rs. 90 crore.

As per the sources of PTI, “State Bank of India has got all the required approvals as it has conveyed its willingness to buy residential and commercial properties from Air India. Now State Bank of India is waiting for the approvals to complete the procedure from their side. Now this state owned bank is planning to allocate these flats or apartments to its top executives of the rank of general managers and deputy managing directors.

Now Air India had been looking for buyers who can buy their properties which contain their four flats at up-market in Peddar road at south Mumbai since last two years. In August 2013, the Air India has floated e-auctioning bids for four flats. However these 3-BHK flats measures 2,033 sq ft in carpet area. On proposed real estate deal while confirming the communication from the bank, an Air India official stated that Indian airline has sent the proposal to the Civil Aviation Ministry for its approval. The more they added that the proposal is now in the side of Ministry for its approval. Air India has some of the working capital which they have borrowed from SBI, besides long terms loan. it is expected that the funds raised from the sale would help them to reduce their working capital loan besides reducing the interest outgo.

The decision to sell these flats or property is the part of national carrier’s plan to unlock the value in its land assets. Under the land monetization plan, now Air India is planning to mop up Rs. 5,000 crore in the period of 10-year to match the balance between its revenue and expenditure.

residential property owners will have to pay the 11.74 per cent more residential property tax

If new proposed formula of the municipal administration to calculate property tax in the city is approved by the standing committee of the BMC on Wednesday so all the residential property owners will have to pay the 11.74 per cent more residential property tax than what is paid now and it will come in effect from April 1 2015.

As per the previous proposed property taxes system of BMC was based on the calculation of built-up area rather than carpet area. It is expected that the average of the increase in property tax across all categories will be 14.52 per cent with the new formula. While the earlier proposal would have taken the revenue from property tax to Rs 5077.62 crore, the revised proposal will mean a tax collection of Rs 4,563.33 crore. As per the statement of Senior BMC officials, we are confident on the new formula as it will get approval in the standing committee meeting to be held on Wednesday. It is expected that if new formula will not get approval, then property tax will increase by 27.43 per cent.

The new formula of property tax calculation is based on the carpet area and it will be presented to the group leader of political parties on Monday. The BMC has a target of collecting Rs 6,000 crore in property tax every year. As per the statement of senior official, “We are expecting to get Rs 90 crore on average from new properties in an addition to Rs 4,563.33 crore and due to that we are meeting our target and not even burdening Mumbaikars”.

Now with the new proposed formula we will get Rs 1,475.22 crore from residents, whereas; earlier we would have got Rs 1,320.21 crore. Now with the new proposed formula is it expected that we will get Rs 595.98 crore from open land whereas; earlier we would have got Rs 460.32 crore. On residents the increased burden would be only 11.74 per cent.”

Small properties will be excluded from new tax system

In a positive move to bring relief to around 8 lakh households in the city, BMC has decided to exclude structures below 500 sq ft from the capital value based property tax system once again. They will now continue to pay property tax based on the old system of ready reackoner rates.

This fresh proposal was tabled before the civic general body meeting by leader of the house Trishna Vishwasrao (Shiv Sena) as the made a suggestion that structures under 500 sq ft should be excluded from the capital value based property tax system as many of these were Maharashtrian households. According to new property tax proposal the BMC had decided to charge properties below 500 sq ft as per the new system, at the standing committee meeting on Thursday. This BMC proposal passed unanimously in the civic general body meeting however, now proposal will be sent to the state government for its final nod. If BMC proposal will get the nod from state government, so it will continue for five years.

As per the Civic officials, with new changes in property tax system BMC would lose additional revenues of Rs 55 crore by excluding below 500 sq ft structures from the system, as civic body was earning Rs 148 crore from these structures under the old ready reckoner system.

As per the Congress corporator Pravin Chheda, “It was the proposal of earlier Congress government which had given exemption to people to live in structures of 500 sq ft from the capital value based property tax system. So we demanded adding this to the new proposal.” As we all know that with effect from April 1, 2010, the BMC was adopted capital value based property tax system, and according to it the tax was about calculated on the basis of capital value of the property. And after that state government had decided to exempt structures below 500 sq ft from it for the five-year period of 2010-15.

SBI sells 130 properties

Country’s largest lender, State Bank of India could sell only about 130 properties in its e-auction of 300 assets to release just about Rs 100 crore.

As per the senior official of SBI, “we sold around 130 properties, largely residential through the e-auction process to release just Rs 100 crore: The more he added that SBI may sell all of the 100 residential properties it had put on the block. According to data, SBI had put on block around 300 properties with the worth Rs 1,200 crore including shops, factory buildings, offices and residential apartments which are spread across 25 cities including four major metro cities through an e-auction last Saturday, as they had put out a public notice on Thursday.

Due to heavy traffic one of the real estate portal which was assigned to carry out the auction, SBI had extended the time for auctions by an hour. This was one of the best innovative ways by any lender that has been fighting a long battle to contain bad loans, to dispose of distressed properties through an e-auction.

According to statement of PK Malhotra, who is Deputy Managing Director of SBI, “Due to heavy traffic on assigned real state portal for e-auction, the site has become slow and we don’t want anyone to miss the chance. Earlier, the bidding time was till 5 pm and we are now going to extend it by an hour” The process was conducted by e-procurement solutions providers C1 India and Auction Tiger.

RBI eased norms for Home Loans

Harshil Mehta from DHFL believes that new guidelines of RBI may also get extended for middle income group (MIG) which costs around Rs 12 to 15 lacs in tier-2 and tier-3 cities. To provide a boost for affordable housing, the Reserve Bank of India (RBI) eased norms last week for home loans of up to Rs 10 lacs.

While speaking with CNBC-TV18, Harshil Mehta, CEO, DHFL stated that this is very much positive sign for his company and real estate industry. He believes that these guidelines may also get extended for Middle Income Group (MIG) that costs around Rs 12 to 15 lacs in tier-2 and tier-3 cities. As per the statement of Mehta, the new RBI guideline will largely benefit the Economically Weaker Sections (EWS) or the Low Income Group (LIG) segment where the stamp duty registration is anywhere between 12 -16 percent of the cost of unit which was earlier excluded from calculating the loan eligibility. Below is verbatim transcript of the interview:

• Could you take us through the positive side of this announcement? How it will be good announcement for your company as well as the real estate industry?
  This new RBI guideline will largely benefit the Economically Weaker Sections (EWS) or the Low Income Group (LIG) segment where the stamp duty registration typically goes up to anywhere from 12 per cent to 16 per cent of the cost of unit, earlier it was excluded from calculating the loan eligibility.
  Now, with this it for sure that it will help the borrowers to be a part of the loan so in that segment this is definitely good.

• What is your view on the other guidelines which passed with respect to disbursal of loan upfront for the government owned and backed real estate builder bodies’ such as; Maharashtra Housing and Development Authority (MHADA)?
  This is definitely good sign and has been a constant feedback to all the regulators especially for those who came to statutory housing projects either by government or by statutory housing boards as they work in a different way than the private sector so this is surely a welcome sign because when it comes from the regulator it makes things a lot simpler from process perspective when you have borrowers who apply for a loan and are looking at disbursals. So, this is a pretty good sign.

• In present, how much of your loan portfolio is sub Rs 10 lacs?
  If we look at our company’s portfolio, than more than 60 per cent of our home loans get sanctioned for loans up to the size of Rs 10 lacs and on the disbursement side we would be at 51 per cent of the loans to Rs 10 lacs.

• How do you see this benefiting your top line and subsequently the earnings for your company?
  This announcement leads to an enhancement in our disbursements because now you are including that in your loans. So, for sure it will helps us to increase your disbursements while the traction continues on the tier-2 and tier-3 cities so, this means that from a sanction perspective because you will now have more borrowers coming to you for loans and this will lead to higher sanctions. So overall, on the portfolio you can see a marginal increase on account of this.

• Do you see an extension to the ticket size of Rs. 10 lacs going forward to include the Middle Income Group (MIG) as well?
  While this new guideline of RBI is for loans up to Rs 10 lacs, we also need to keep in mind that in tier-2 and tier-3 cities even Middle Income Group (MIG) unit cost is in the range of Rs 12 to 15 lacs. So, this limit of 10 lacs may get extended to cover for the Middle Income Group (MIG) segment also which is up to Rs 15 lacs as it would surely benefit as all this falls under affordable housing but this is definitely a good move towards that.

• Can you quantify that?
  We would suspect that this would be in the range of anywhere from 2 to 6 per cent.

SBI is planning to include Kingfisher House on its next e-auction block

After getting unexpected response from its mega auction of Rs 1,200 crore worth properties belonging to defaulters, now SBI is planning to include Kingfisher House on its next e-auction block for the next round. On last Friday, State Bank of India put the block 300 pieces of residential, commercial and industrial properties across the countries which it had attached from defaulters in a bid to recover bad debts.

Till now SBI was selling its assets of defaulters in a piecemeal basis, but the problem was that most of the response was coming from localized and specific group of people who specialized in purchasing stressed assets at a discount price. In present economy is turning around and due to that now banks are hoping that investors from all over the country will be drawn to mega auction there will be a genuine price discovery based on demand and supply. According to Deputy Managing Director of SBI, PK Malhotra, “It was too early for us to include and put the Kingfisher House in the e- auction and now we are planning to include this during the next auction. Like other we are also looking for good business house to buy it rather than have a reseller come in. Our valuation of this was quite dated and now we are doing a fresh valuation which is expected to be through in a couple of days.

The latest e-auction included residential units as well as industrial plots from all over the country. While there was a good response to the residential properties, now SBI expecting some work on the larger industrial plots. According to Malhotra, “We are expecting to get over 10 to 14 per cent (over the asking price). Few of the industrial properties are very good with the entire infrastructure available. It is like a `plug and play’ asset for any entrepreneur.”

It is expected that these e-auctions and valuation of assets will add few hundred crores to SBI’s bottom-line for the third quarter as successful bidders have to make full payment by March 29 2015. As per the statement of Malhotra, there was good interest in the bank’s auction because the properties have clear title and buyers see value in them. The extent of profits would depend on the level of provisions made by the bank. If the asset has been fully written off the entire realizations would add to the banks bottom-line.

Property prices in Mumbai

According to few reports, property prices will remain high in certain market conditions, but they will not increase any more. The value of under construction property which is unsold in real estate inventory in Mumbai can be anything as its R 53,400 crore for a clutch of listed firms and it presents that consumer confidence isn’t exactly soaring. What can be worse with an additional R36,800 crore of launches in the area of 20.4 million sq ft, which is more than half of south central part of the city and it can put the prices of real estate industry under pressure.

According to Niranjan Hiranandani, co-founder of Hiranandani Developers, in real estate market pricing strategy is now crucial since only relatively affordable projects are able to find takers whereas; high end properties in the central and southern parts of the city aren’t seeing any specific interest. Ghulam Zia Executive Director of  Knight Frank India, stated that first-time home buyers continued to sit on the fence however in recent budget there are no incentives for home buyers the market will get revitalized only once the RBI (Reserve Bank of India) begins to cut interest rates.

Analysis of Kotak Institutional Equities (KIE):

According to analysis of Kotak Institutional Equities (KIE) the numbers are clearly indicating that says land buying has dropped and prices are not going so up as only there are four or five developers have the capacity to buy land worth more than $200 million. The analysis showed that Oberoi Realty, Peninsula Land, Sunteck Realty, Godrej Properties, HDIL, DB Realty and Indiabulls real estate are among those property developers who are sitting on high inventories and major part of those inventories belongs from Lower Parel, Worli, south and central pockets of Mumbai and Prabhadevi.

Ambar Maheshwari, CEO of Indiabulls Group also believes that there is a glut at the premium and high ends of the real estate market. The more he added that a recovery is unlikely in areas like Lower Parel and Prabhadevi unless developers build smaller apartments that result in some kind of rationalization in prices. In present Oberoi Realty is targeting on the sales of unsold inventory and they are expecting to sale it in next 12 months, but KIE expects the company will only be able to sell R8,500 crore worth of residences in the next 30 months. As per the data issued by the Director General of Mumbai, in the first 11 months of 2014, property registrations fell 2.4 per cent.

As per few reports developers are planning to offer discount after definitive interest from buyers and channel checks suggest that large number of units are being sold in the 20:80 schemes which will be without a bank debt burden to and trip abroad for designing apartments however discounts are becoming more evident as real estate developers are also offering absolute discounts to investors and as well as end buyers now. These measures are clearly failing to impress and attract new buyers. In certain real estate market, in certain markets developers are selling 20-30 units in a month while in others they could be selling in 2 to 6 a month. Amit Bhagat, who is CEO & MD, ASK Property, stated that the demand was tepid in the luxury space so any developer who was leveraged might be under pressure.

Selling real estate property online

In the era of internet when things are just click away; there are many traditional businesses which are facing tough competitions from those who have strong presence on internet. In present, real estate websites firms are making a daunting leap into e-commerce business. Snapdeal and Housing.com, both are backed by Japan’s Softbank, and now they are building technology and teams to sell real estate properties online to tap India’s billion-dollar real estate market.

To instill customer trust in high-risk environment, the companies are banking on wealth of data, brand recognition and offline partners. It is just because the lack of a focused realty technology product, which is selling real estate online hadn’t picked up. One of the Mumbai based company has sold 115 apartments online for Tata Value Homes and had generated the gross merchandise value of at Rs 50 crore over five days of period. One of the least website also launched a technology known as ‘Slice View’, which allows users to go through each floor of a building project; hovering over a particular flat shows availability and built-up area.

Business plan of Housing.com and Snapdeal to sale apartments online:

For current year, Housing.com already has 500 builder campaigns in the pipeline. According to Advitiya Sharma, who is co-founder of Housing.com, “Selling houses online isn’t an easy problem to solve”. Snapdeal, also have aggressive plan to sell new real estate projects on its website. The marketplace was the first to sell Tata Value Home projects online, in September. According to Amit Maheshwari, Vice-president at Snapdeal, “We are going very deep into the real estate category after capturing major market share in mobile phones to clothes and jewellery market”.

According to some of the experts, selling real estate property online is a different ball game, whereas; real estate transactions should be handled by the growing number of online real estate sites. The nature and function of consumer products and real estate is different and it is not in the match with Snapdeal’s core competence, said Sunil Wattal, who teaches management information systems at Temple University in the US. However; Amit Maheshwari, said that the differentiator for Snapdeal is its scale. “We will bring much more visibility and customer footfall to real estate developers. That translates into economies of scale and we pass over benefits to our customers.”

As per the Co-founder of Helion Venture Partners and a member on Housing.com’s board, Mr. Ashish Gupta, “Housing takes on some of a broker’s or agent’s responsibility, which is good because most people do not trust brokers or agents and technology can help to break these things.” However, not all realty websites are rushing to sell real estate properties online.”We will empower the customers with expert locality insights and exhaustive listings of properties,” said CommonFloor.com co-founder Sumit Jain.