Competition Commission of India Pulls Up DLF

The Competition Commission of India (CCI) has pulled up real estate major DLF Ltd in a recent order for cancelling the allotment of an apartment of a member of DLF’s Park Place RWA, stating that it was in “direct contravention” of its stay order of September 2010.

The order was passed by the commission to prevent the opposite party from abusing its dominant position to the detriment of allottees during pendency of the proceedings. The CCI also severely admonished the builder for discriminatory behaviour towards members of the owners’ association and other allottees/owners.

The cancellation letter for one Vipin Mahajan was issued on January 28 last year when the interim order was in force. According to Mahajan, despite the directions being in force to date, the opposite party issued a letter in January last year, cancelling the booking of his apartment and forfeited a sum of Rs 23,06,778 out of the total amount of Rs 44,89,503.

While the CCI accepted this restoration of status quo and therefore felt that no further direction needs to be passed as far as restitution of Mahajan’s apartment was concerned which had been a great relief for the allottee concerned, the CCI as prescribed by the Competition Act 2002 “is obliged to impose penalty because of the deliberate non-compliance”? This, the order stated, was a violation of Section 42 of the Act.

Also, Section 48 of the Act makes it a liability of every person for penalty, who at the time of contravention was in charge of or was responsible to the company for conducting its business. DLF will now have to disclose the name of the errant persons who were responsible for the misconduct and also give a show cause notice as to why the penalty should not be imposed. The case on the same is up for hearing on May 17.

Meanwhile, a spokesperson of DLF Ltd clarified that the company had “restored the ownership of the apartment which was %cancelled due to non-payment of dues by the %allottee”.

Report: DLF in talks to sell Mumbai land

DLF, India’s top-listed realtor, is in talks with three Mumbai-based real estate companies — Lodha Developers, Runwal Group and Sheth Creators, to sell a piece of land in central Mumbai, according to a report on Friday.

While DLF is seeking a valuation of 30 billion rupees ($571 million) for the 6.8 hectare property, the potential buyers are negotiating at between 20 billion and 22 billion rupees, the newspaper said, citing an unnamed person.

“Even as all the parties had talks with DLF, the developer is yet to make up its mind, as it is expecting higher valuations,” it quoted the person as saying.

DLF bought the land for 7.02 billion rupees in 2005 from state-owned National Textile Corporation.

Abhisheck Lodha, managing director of Lodha Developers, said the company was not in talks with DLF while an executive at Runwal group also responded in the negative, the paper said.

DLF does not comment on market speculation, the company’s spokesman told.

Realtors expect rise in property demand post RBI’s rate cut

Realty firms on Tuesday hailed the RBI’s decision to cut short-term lending rate saying the move would reduce the cost of funds to home buyers as well as developers and boost property demand.

“Reserve Bank’s decision to cut the repo rate by 50 basis points and abolish pre-payment penalties is a good move for home buyers,” Confederation of Real Estate Developers Association of India (CREDAI) Chairman Pradeep Jain said. In its annual credit policy, RBI has asked banks not to levy foreclosure charges or pre-payment penalties on home loans extended on a floating interest rate.

The country’s largest realty firm DLF also welcomed the decision, saying it would significantly improve the cash flows of developers. “It is positive news although very-very delayed. This will benefit home buyers besides the industry. It will improve cash flows tremendously,” DLF Group Executive Director Rajeev Talwar said.

Jain too said that liquidity for developers would improve and cost of funds would be cheaper. On demand, Credai Chairman said the move would definitely boost housing demand. However, property consultant DTZ India CEO Anshul Jain felt more measures need to be taken to have a positive impact on housing demand.

“It is a step in right direction although lot more measures need to be taken before we see any effect of the rate cut on the real estate sector,” said Jain of DTZ. The housing demand, which is very subdued currently, would only rise if the interest rates on home loans come down to below 10 percent, he added.

CCI again caught DLF for imposing unfair conditions on flat owners.

CCI has again accused DLF of imposing unfair conditions on home buyers on its high-end residential project Magnolia in Gurgaon. For this, Magnolia Flat Owners’ Association had filed a complaint against DLF Universal, Haryana Urban Development Authority and the Director Town and Country Planning, Haryana, with the Competition Commission of India (CCI).

In the report, the CCI director general found that DLF has issued allotment letters, and apartment buyers’ agreements were signed even before it got approvals from the town planner. Also, the builder has revised the building plans and applied for increasing the height of the towers after collecting 90% of the money from the buyers, and two months after the original date of delivery promised by the company.

CCI had also found DLF guilty of abusing its position at the Park Place Project in Gurgaon, where they asked the company to cease and desist from imposing unfair conditions on buyers. The order had also directed DLF to suitably modify the unfair conditions imposed on existing buyers within three months.

Drish Paul, the president of the Magnolia Flat Owners’ Association, said that “Many people are living on rent, waiting for apartments to be handed over. We would eventually like to get compensated for the loss due to the delay in completion of the project.”

In a similar order in August 2011,CCI had slapped a fine of 630 crore on DLF for unfair practices, abuse of market dominance and disregard for consumer rights in its Belaire residential project in Gurgaon.

Realty Big Players Attracted Towards Small Cities for Expansion

NEW DELHI: Growing demand for homes in smaller cities of the country is attracting real estate biggies. Cities like Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow , Nagpur, Surat , Vadodara and Visakhapatnam are estimated to add 354 million sq ft of residential development in the coming 03 years. According to a research, large builders like DLF , Unitech , Parsvnath , Omaxe , Ansals and Emaar MGF have already diversified into these cities. These cities today show huge potential for growth. These cities are attracting the big developers because of their considerable price stability and growth prospects. With economic activity picking up in these cities, there is a growing migration from smaller areas, which has created a shift towards an apartment culture. This shift will foster volumes for larger developers in the future.

Looking at this new demand, banks and financial institutions are also looking towards these cities to bridge the financial saturation gap.The growth prospects in the smaller cities are fascinating huge developers with multi-city existance.

DLF’s Net Profit Dropped by 4.8%

India’s biggest real estate company, DLF Ltd, accounted a bordering drop of 4.8% in its net profit for the year ending 31 March 2011. Company’s combined net profit stood at Rupees1,640 crore in comparison to Rs1,720 crore in fiscal 2010. The earnings per share for the year stood at Rupees9.66 versus Rupees10.13 in fiscal 2010.

However, for the quarter ending 31 March, organisation’s net profit stood at Rupees 344.54 crore, a drop of 19% in comparison to Rupees 426.38 crore in the subsequent period in the previous financial year. It reported combined revenue of Rupees10,145 crore for the year ending 31 March 2011 and an increase of 29 per cent from Rupees7,851 crore in the subsequent period in the previous fiscal.

EBIDTA stood at Rupees 4,337 crore, after adjusting for a one-time cost reset due to input price high of Rupees 475 crore.

DLF to set up Infopark projects

DLF is India’s biggest real estate developer which has decides to develop Infopark
project worth of Rupees 1000-crore which would be spreaded over 54 acres in all
the phases. Firstly, they intend to develop one-tenth of the plot (5.4 acres) in
first phase, for which they had made the building plan and had forwarded for
the approval of the Bhubaneswar Development Authority (BDA). In this context,” DLF has submitted a revised building plan for the Infopark project which is under
scrutiny of BDA”.

After following the de-notification of the Special Economic Zone (SEZ), DLF had
thought to develop the Infopark project under the STPI (Software Technology
Parks of India) scheme.

DLF had made certain changes in its Infopark project which is to be built over 54 acres in the Infocity region of the city. DLF – real estate masters are interested on setting aside a greater area for non-processing facilities like shopping malls and multiplexes. This project which had to come up in three phases, comprises of an IT area, a luxury hotel, a chain of retails, service apartments and recreational facilities with a total built-up space of about 5.5 million sq ft. For  the luxury hotel, DLF had tied up with Hilton which is a famous international hotel chain. For the first phase, DLF had committed an investment of Rupees 300 crores for developing an IT workspace of international standards which would be a built-up area of 5.7 lakh sq ft. This phase is scheduled to be operational within 18 months to 02 years after commencement of construction of work. The Infopark project may generate direct and indirect job opportunities for over 40,000 people in sectors like IT and ITes (IT enabled services), retail and hospitality.