BPS: Court order awaited

Property owners who have submitted applications under the Building Penalisation Scheme will have to wait for some time for their buildings to be regularised. The Greater Hyderabad Municipal Corporation (GHMC) will not "clear" any application until a final order from the Andhra Pradesh High Court.

However, the officials will sort out the applications keeping everything in place for speedy disposal once the court delivers its judgment. Applications will be categorised into individual residential houses, flats in Hyderabad. Residential apartments,and multi-storeyed complexes commercial buildings in Hydearabad.

Officials propose to dispose off, on priority, the applications pertaining to individual residential houses and flats followed by those in commercial category. The BPS applications will be cleared circle-wise and not by the head office alone.

"We have decentralised the process of disposing applications. There are 18 circle offices and each would clear applications from their respective jurisdictions," said GHMC Additional Commissioner (Planning) Mr K. Dhanunjaya Reddy.

Depending upon the directions of the High Court, the civic body plans to post the details of applications processed per day on its web site. It also plans to intimate the specified number of applicants who should go to municipal offices with documents and penalisation charges on each day. The corporation has also set the process in motion to form special teams and demolition squads to identify and demolish all such buildings, which are either unauthorised, illegal or deviated from sanctioned plan.

Realty firms gain from mid-income group housing

Aided by revenues from mid-income houses, net profit of property developers, such as Unitech and Puravankara Projects, rose in the first quarter of FY09, beating analyst expectations.Unitech, the country's largest listed developer, posted a 15.7 per cent growth in net profit during the quarter, mainly due to higher realisations the company made in the mid-income segment housing, in the range of Rs 40-45 lakh apartments.The company posted a net profit of Rs 423.31 crore in the first quarter of financial year 2009 as compared to Rs 365.67 crore in the corresponding quarter last year. Total income went up by 17.19 per cent to Rs 1,054.37 in the first quarter of FY09 as compared with Rs 899.67 crore in the corresponding quarter last year.DLF, which is scheduled to announce its results on Thursday, also entered into affordable segment in cities such as Chennai, and Kolkata.Bangalore-based Puravankara Projects posted 40.62 per cent growth in year-on-year profit during the quarter due to higher realisations from the sale of apartments and income tax exemptions on its residential projects under section 80 IB.

The company sold 1,000 apartments during the quarter.The company posted a net profit of Rs 61.89 crore as compared to Rs 44.01 crore recorded in the corresponding quarter last year. The company's revenues went up by 30.88 per cent at Rs 157.58 crore as compared with Rs 120.40 crore in the last financial year.Pune-based property company Kolte Patil's net fell nearly 7 per cent mainly due to lifting of tax exemption on IT parks under section 80 IA. The company posted a net profit of Rs 31.46 crore in the first quarter of FY09 as compared with Rs 33.87 crore in the comparable period last year. However, the company's revenues rose 17 per cent at Rs 104 crore from Rs 89 crore due to higher realisation from housing projects.Hyderabad-based IVRCL Infrastructure posted a 15 per cent rise during Q1 due to higher realisation from infrastructure projects, on a year-onyear basis. Net profit increased to Rs 43.50 crore from Rs 37.87 crore in the comparable period. Total sales increased by 38 per cent at Rs 948.34 crore (Rs 688 crore).IVR Prime Urban Developers, the group's real estate firm, posted a 263 per cent increase in net profit at Rs 5.44 crore during the Q1 period as against Rs 1.5 crore, while the turnover went up by 55 per cent at Rs Rs 32.25 crore.

Real estate transactions reel under inflation

The pace of registration of lands and buildings, which reflects the market sentiment of real estate, has been stagnant in Hyderabad and other major cities in the State. This projection of a slowdown in real estate transactions has come straight from the horse’s mouth. The Registration and Stamps Department has recorded just a 2.25 per cent increase in sales this year till May 2008 in the State.

The verdict is clear. Among others, rising inflation coupled with hike in interest rates by banks to control the price spiral has hit hard where it matters most. These developments have kept a large chunk of the middle class, the prospective buyers who make up for large numbers, away from pushing further with real estate transactions.

Officials privy to Registration and Stamps Department point out that this trend of market slowdown is more visible in all the urban areas like Hyderabad and its surrounding areas, Visakhapatnam, Guntur and Vijayawada. In fact, the coastal cities have registered a decline in percentage of sales this year till May 2008.

This all-pervading crisis is due to several other factors as well. “The speculative business and subsequent huge investments in real estate has come down.

There is a definite lack of urgency and excitement in the sector and sales are just about stagnant at this moment,” says Commissioner and Inspector General of Registration and Stamps B. Aravinda Reddy.The number of documents received by the department for registrations from Hyderabad and neighbouring Ranga Reddy District has gradually come down. “Prices of real estate and input costs in the city have increased tremendously in the last few years. Inflation and home loan rates hike has added to the woes. The middle class apparently seems to have decided to wait and watch,” says G. Q. Haqqani, Hyderabad District Registrar. Latest figures from the Department of Registration and Stamps point to a growth of just 0.12 per cent in Hyderabad, Ranga Reddy and other nearby districts. Last year, till May-2007, number of sales was at 63,672 and this year till May, the sales are just 63,747.The situation is even worse in coastal cities like Visakhapatnam, where the real estate is clearly on the decline. Till May 2007, at Visakhapatnam and surrounding districts, the sales were 24,066 and this year till May 08 the sales have come down to 20, 802, a decline by 13.56 per cent.

Those familiar with the sector also inform of having come across a few cases wherein the small builders are desperate to sell off their half-completed ventures to bigger ventures.

“The input costs have increased by 25 per cent to 30 per cent and suddenly small builders are finding it tough to complete projects,” they aver.

“The home loan rate hike by banks has hit the middle class hard. Buyers who previously had plans to go for loans now have second thoughts about it. Apart from this, inflation and rise in prices of cement and steel has hit us builders hard. We are just waiting for the year end when things, hopefully, would improve,” Y. Rajendra Prasad of Ramya Constructions in Visakhapatnam.

Commissioner of Registrations and Stamps feels that the hype and hoopla of 2005-06 in the real estate sector has come to an end. “We had record collections in the last two years. Generally, people go for registrations during year end and hopefully things would improve by Durga Puja. Presently, all the coastal cities are showing a decline in sales while in Hyderabad, the sector is stagnant,” Mr. Reddy said.

Property prices may come down: HDFC

The Housing Development Finance Corporation (HDFC) has targeted a 25-30 per cent growth this financial year on account of prevailing robust demand from its retail customers, HDFC Chairman Deepak Parekh says.

The lender has seen a cooling down in property prices in some pockets and expects prices to come down in the near future, Mr. Parekh says.

“There is a growing demand in the housing segment ... as long as the demand exists, there is a huge business opportunity ... we hope to maintain a 25-30 per cent growth in our housing loan business this fiscal.”

Also, the lender has seen property prices softening in certain pockets in the suburban areas of tier-1 and -2 cities by 15-20 per cent in recent months. “They (property prices) will come down in the near future. We have already seen prices softening by 15-20 per cent in certain pockets such as Delhi, Mumbai and Bangalore,” he says. High lending rates have clearly hurt the interests of borrowers.

Market value of land to rise

The basic market value of land in the urban areas, including those falling in Greater Hyderabad Municipal Corporation limits, is likely to be increased by 8 to 10 per cent from August 1. With the real estate market gradually stabilising and revenue flow improving, the state government has decided to effect a low rate of increase.

Besides the GHMC limits, the revision of market value will take place in Visakhapatnam, Vijayawada and Guntur municipal corporation areas. Official sources said a final decision on the exact percentage of increase would be taken at a meeting which will be attended by the Chief Minister, Dr Y.S. Rajasekhar Reddy, on Wednesday. "The increase will not be more than 10 per cent in Hyderabad and its surroundings," a senior revenue department official said.

Sources said there would not be any revision of the value in the upmarket Gachibowli and Madhapur areas. The rates are likely to be retained in Banjara Hills and Jubilee Hills. The district stamps and registration officials have reportedly recommended an 8 per cent hike in areas like Narayanaguda, Himayatnagar, Srinagar and parts of Secunderabad. Sources said the basic value for structures will not see any major change. The government had earlier revised the value from Rs 550 per sq ft to Rs 580 per sq ft.

Meanwhile, the revenues went up in the first quarter when compared to the corresponding period in the previous financial year. Against a target of Rs 1,313 crore for the first quarter, the department achieved Rs 1,003 crore which is 75 per cent. While Hyderabad achieved 72 per cent of the target, Hyderabad (south) 81 per cent, North 63 per cent, Ranga Reddy (east) 72 per cent and Ranga Reddy achieved 72 per cent of the target.

Research on residential real estate in Hyderabad

Research and Markets has announced the addition of the "Residential Real Estate in Hyderabad" report to their offering.

Introduction

The Indian economy has registered growth of 8.7% for FY08 and is expected to grow at the same level in next decade. Hyderabad contributes 15% to the State's GDP and 78% of its revenue is generated through services sector. Services include IT, hospitality and tourism, public and private transportation and banking and financial services.

Key Highlights of Report

-Younger population with higher income improves the affordability of property
- Greater connectivity to major destinations
- Efficient infrastructure in place
- Real Estate flourishes in all corners in Hyderabad
- Hyderabad offers value for investments
- Invest in gated community of 5 acres with long term investment horizon

Reasons to Buy

- Spot Investment opportunities
- Understand the factors which influence investments in real estate
- Reveals major competitors and their strategies
- Assess the various segments in Hyderabad Real estate market
- Analyses the factors influenced in making Hyderabad as fastest growing IT destination
The report covers the current status of Gross State Domestic Product and projected GSDP. It also talks about city economic information containing the contribution of the city in GSDP, prominent businesses and industries in the city, professional, educational institutes and expected employment levels, and affordability of residents of the city in terms of purchasing new assets. The report also states the infrastructure of the city and development of the same. The report analyses zone-wise development and growth prospects of the same. The report analyses the competitive scenario of Hyderabad to other growing cities both in commercial and residential space. It also talks about the regulatory requirement for investment in the Hyderabad residential real estate. At the end it talks about major players (builders) in the Hyderabad residential real estate industry.

Targeted Audience

Analysts, Consultants, Real estate companies, Infrastructure companies, Banks and financial, institutions, Investors, Students

Key Topics Covered:

1 Gross State Domestic Product Of Andhra Pradesh
2 Hyderabad - The Fastest Growing IT Destination.
3 Hyderabad Real Estate Market
4 Major Competitors Of Hyderabad
5 Major Players
6 Conclusions and Recommendations
7 References

Micro credit – boost for housing

Loans up to Rs.1 lakh will be given to members of Self Help Groups for building houses under a new scheme formulated by the National Housing Bank in a tie up with Repco Foundation, which was launched by the Finance Minister Chidambaram in Karaikudi, Tamil Nadu, recently which will be extended to Karnataka and Andhra Pradesh in the immediate future.

What has been the main hindrance to the construction of low cost housing in India these days? This is a very important question which remained unanswered for years. Let us, in this background, look at a new scheme implemented by the National Housing Bank in the Finance Minister’s constituency.

If housing development business has to be chosen as the activity, the following parameters are to be clear to the promoter:

Target group

Location of the project

Size of individual houses

Cost of the house

Competition
Role of the State

If one goes through budget after budget – both Central and States -, the accent is on housing for the poor and low income groups, though tax sops are extended to all types of home buyers. Indira Awaz Yojana is per haps the single flagship programme budgeted everywhere, apart from the schemes for the SCs/ STs and O.B.Cs.

The salient features of the scheme are:

The finance for this scheme flows from the National Housing Bank (NHB) which is a wholly owned subsidiary of the Reserve Bank of India.

The Repco Bank founded in the year 1969 for rehabilitating the repatriates from Sri Lanka and Myanmar is the implementing agency.
Loans

The loans are to be taken by the Self Help Groups (SHGs), and guaranteed by them, who in turn, will provide individual loans to their members.

Loanees should have a piece of land.

The individual loan amount is between Rs.50,000 - to 1 lakh.

No down payment is necessary.

Instalment will start once the house is occupied.

Labour will have to be that of the borrower.

For those who are engaged in any occupation, separate areas for dwelling and work can be put up.

The SHGs should have at least two years standing.

The SHGs have to confine its banking transactions with the Bank solely

Loan amount will be 10 times that of the saving corpus of the SHGs

Processing charges not to exceed Rs 200/-.

Group guarantee will be the collateral.

Interest rate will be 3% to individual borrowers.

A target of 15 lakh houses per year in rural areas is planned for the present. This will be in addition to the I.A.Y target provided in the annual budgets.
Critical factors

Considering the terms and conditions, cost factor and selection of the SHGs/ primary borrowers will be the most critical factors for the success of the programme. Implementation of the scheme proposed in Karnataka and Andhra Pradesh need to be carefully executed as, SHGs are not very strong there yet. However, it is a novel scheme for the poor and marginalised.

The state government will charge high impact fee from developers

The state government will charge high impact fee from developers in a radius of about 300 sq km from the growth corridor. It will come into effect from Wednesday. The growth corridor, which is coming up on either side of the Outer Ring Road, will be divided into three zones. Real Estate developers, however, said the move will boomerang and growth would take place outside the corridor which will be just one kilometre from the road.

Official sources said the impact fee in A zone from Pattancheru to Nagarjunasagar highway via Narsing and Shamshabad would be 50 per cent more than that of Greater Hyderabad Municipal Corporation. The area between Nagarjunasagar highway and Shamirpet via Pedda Amberpet and Ghatkesar will be declared as B zone and the left out portion from Shamirpet to Pattancheru will be C zone. Sources said 30 per cent excess impact fee will be collected from B zone while it will be 10 per cent in C zone.

The Municipal Administration and Urban Development will issue orders notifying the ORR growth corridor on Wednesday. The government decided to declare the corridor as a multi-purpose-use zone where non-polluting industries could be built. The restrictions stipulated in GO 111 in the catchment of Osman and Himayat Sagars will however remain. The government also fixed the minimum plot size at 1,000 sq mt. The rule will, however, be applied only.