Tag Archives: Indian real estate

Story Behind Jaypee’s Failure

Posted on by
Reply

Shri. Jaiprakash Gaur, the founder of Jaypee Group, had a single-minded focus after graduating from IIT Roorkee with a diploma in civil engineering. He decided to contribute to nation-building by branching off as a civil contractor in 1958 and founded Jaypee Group. The Group’s business interests include engineering and construction, cement, power, real estate, expressways, fertilizer, hospitality, healthcare, sports, and information technology. This article covers the story behind Jaypee’s failure. How did Jaypee start, what all the good things it did, what exactly went wrong, and what is the future now? One thing is for sure, if everything would have gone well, Jaypee would have completely changed the situation in Noida. It could have become the DLF of Noida. But could not. More than 20000 buyers are still struggling to get the homes of their dreams. Let us look at the story behind the making of Jaypee.

Work done by Jaypee:

Jaypee Infratech was founded in 2007 and it is the part of the Jaypee Group. So, let’s look at some of the successful works done by Jaypee Infratech.

1. Yamuna Expressway project:

The Group entered into the construction of expressways with a 165 km access controlled 6 lane super expressway along the Yamuna River connecting Greater Noida and Agra. You would know how well-developed the Yamuna expressway is if you have been to it. It has become a big boon for Noida. Jaypee has also built the Zirakpur-Parwanoo Himalayan Expressway. 

2. Jaypee’s Hotels and Resorts:

In New Delhi, Uttar Pradesh, and Uttarakhand, the hospitality division of the Group owns and manages five hotels. 

3. Jaypee’s Hospital:

The Jaypee Hospital is well-developed and offers excellent health facilities. The hospital is now commissioning 525 beds in the first phase of its intended 1200-bedded tertiary care multi-specialty complex.

4. Jaypee’s F1 Sports:

The Group hosted the inaugural Formula One Grand Prix of India on October 30, 2011. The track is anticipated to hold more top-tier international racing competitions in addition to F1. Though this was unsuccessful as F1 races did not succeed in India. 

5. Jaypee’s Real Estate:

The first real estate project of the group, Jaypee Greens Greater Noida, covers 452 acres. This distinguished municipality includes an 18-hole Greg Norman golf course, upscale homes, shopping centers, etc. 

India’s First Wish Town, a premier township featuring an 18 + 9 Hole golf course, world-class residences, commercial developments, numerous entertainment amenities, and acres of greenery, was Jaypee Greens’ second project when it was unveiled in Noida in November 2007. The group then started construction on Jaypee Greens Sports City and Jaypee Greens Wish Town Agra, two townships along the Yamuna Expressway and Jewar International Airport, which is scheduled to open soon, and is a 20-minute drive from the city center. 

But destiny was against Jaypee’s prosperity, and Jaypee’s fantasy township became a failure. So let’s talk about this township’s swindling and how many house buyers lost their dream homes.

Jaypee’s Failure in Real Estate:

Who doesn’t want to be the owner of their own home? All of us do. Not just any house, either. A perfect home must be spacious, well-connected to the rest of the city, have a room with a view, and have the best amenities. However, it has been more than 12 years since thousands of Jaypee Infratech Limited (JIL) home buyers in Noida were victims of the mother of all real estate failures in India. The long-drawn legal battles are ongoing, leaving more than 20,000 Jaypee home seekers running from pillar to post and many giving up.

Jaypee got the land of the wish town in return for building the Noida expressway for Rs 400 crores. The company launched 32000 flats, still, 70% of apartments are in the under-construction stage. This project did not show any signs of readiness for the completion date. Around 90% of buyers made their payment, but it was still claimed that progress has been made on this project, although there was nothing to show for it.

A total of 18,767 people paid a total of Rs.8,676 crores to the company. 1410 people received possession worth 528 crores with no registrations. 413 people canceled their booking and their refund of Rs 64 crores is still pending.

Reasons for the failure:

 The reason behind the Real estate failure of Jaypee are:

  1. Jaypee group took the money that buyers had paid for homes and invested it in other projects.
  2. The company invested the money in other businesses.
  3. The government changed at that time.

 Future of Jaypee’s Failure:

After a super-lengthy resolution process, Mumbai-based Suraksha realty group got the approval of financial creditors and home buyers to take over the company in June 2021. Furthermore, in its offer, Suraksha promised to deliver all Jaiprakash Associates’ pending housing units within 42 months. It has offered to pay Rs 125 crore upfront and infuse Rs 3,000 crore within 90 days for completing the stalled projects. It will also put Rs 300 crore receivable from Jaiprakash Associates for completing the pending housing unit. Since Jaypee was an extraordinary case, the finalization of the bids is pending before NCLT for more than 17 months for approval. After the approval, the 20,000 home buyers who have been waiting for their units in various housing projects of Jaypee can finally breathe a sigh of relief.

Things you should know about GST in Real Estate

Posted on by
Reply
Centre's FY22 GST compensation amount should be higher than projected Rs 1.58 lakh crore: Opp-ruled states - The Economic Times

OVERVIEW OF GST: 

In 2000, the late Atal Bihari Vajpayee, the then prime minister of India, initiate a committee to draft new indirect tax law and i.e. GST which stands for Goods and Services Tax. It was launched to replace multiple indirect taxes in India. Such as excise duty, value-added tax (VAT), services tax, purchase tax, octroi, entry tax, luxury tax, and so on. Here, propertywala brings every fact and figure that you should know about GST in real estate.

DEFINITION:

The Goods and Service Tax Act was driven in Parliament on 29th March 2017 but it came into effect on 1st July 2017. It is the only tax that applies all over India and imposes on the supply of certain goods and services. However, GST does not replace customs duty, which is still required on imported goods and services. Different categories of products and services attract different tax rates under GST.

Now, we will go ahead with the GST regime which is given by our Honorable Prime Minister Shri Narendra Modi, In his words, the Goods and Services Tax (GST) is “a path-breaking legislation for New India”. Then, GST is not just a tax reform but a milestone in realizing Sardar Vallabhbhai Patel’s dream of building ‘Ek Bharat – Shrestha Bharat’.


GST APPLICABILITY IN REAL ESTATE:

APPLICABLE –
1. It is applicable to under-constructed flats only.
2. It is because the GST does not cover the real estate sector under its range. Therefore, the tax rate applicable on a property is charged under ‘work contracts.

 
NOT APPLICABLE –
1. GST does not apply to ready-to-move-in flats, plots, and lands.
2. Upon completion and receiving the occupancy certificate i.e.(OC), the property is categorized as ready to move in. That is why a developer cannot charge GST on selling ready-to-move-in homes.

GST RATE ON REAL ESTATE 2022:

Everyone has a dream of a house. Well! It is fine if you are planning to buy a property. Because buying the right property is one of the biggest achievements in life. So, home buyers in India have to pay GST on the purchase of under-construction properties such as flats, apartments, and bungalows. Before hurrying on to the process, the foremost thing you must ask yourself is, “what is the GST rate on real estate?”

PROPERTY  TYPEGST RATE FROM APRIL 2019
Affordable housing1% without ITC (Input Tax Credit)
Non-affordable housing5% without ITC
According to the table, if the property is affordable,  the GST rate from April  2019 is only 1% without ITC. Also, for non-affordable housing, the GST rate is 5% without ITC.

WHAT IS ITC?

Input Tax Credit refers to the tax already paid by a person on any purchase of goods and/or services that are used or may use for business. Therefore, it is available as a deduction from tax payable.

AFFORDABLE HOUSING AS PER GST:

According to government norms, housing units worth up to Rs 45 lakhs are referred to as affordable housing in metro cities in which carpet area measures up to 60 sq. meters. The Delhi-National Capital Region, Bengaluru, Chennai, Hyderabad, the Mumbai-Kolkata are categorized as metropolitan regions. A housing unit in non-metro cities barring to be an affordable house, if it costs up to Rs 45 lakhs and has a carpet area of up to 90 square meters as mentioned in the given table.

CITIESPRICECarpet AREA (SQ/M)
METROSup to  Rs. 45 lakhs60 sq./m
NON- METROSbelow Rs.4590 sq./m

SOME FACTS TO BE NOTED WHEN CONSIDERING GST IN REAL ESTATE:

  1. It does not subsume the stamp duty and registration charges, which you still have to pay.
  2. Seller increases the cost of ready-to-move-in properties to factor in the GST cost. So, overall the under-constructed properties are still cheaper than ready-to-move-in properties. 

That’s all you need to know about GST when it comes to real estate.

Best tips to hire a broker in India

Posted on by
Reply

Real estate is one of the largest industries in India. There are several companies of real estate agents who work as intermediaries between buyers and sellers of property. Finding an agent for real estate can be a difficult task. There are so many qualities and attributes to look for that finding someone who has them all is impossible. However, there are some basic qualities and tips to hire a broker in India.

Designated Agency Duties & 4 Good Reasons for an Exclusive Buyer Brokerage Agreement - Illinois REALTORS

Here’s what you should know before hiring a broker in India:

  1. Whenever we hire a broker for our real estate transaction, we must list our requirements clearly. For example, what type of property you want, locality, etc. As brokers don’t specialize in the entire area. So, they might show options that they’re selling. So, make it your job to be clear about what you want to purchase.
  2. If you are looking for a best real estate broker, choose a registered one. This will provide you with another level of trust and credibility. The Real Estate (Regulation and Development) Act, 2016 (RERA) requires real estate brokers to be registered with the state RERA authority.
  3. You should always ask about the latest pricing and gauge the broker’s market knowledge. Excelled brokers always know about their localities’ future developments and capital rates. They should have good interpersonal skills and find out how good they are at conversing with clients.
  4. You need to find out how many years they have been in the real estate business, their record on selling the property, the number of deals they cracked, what their credentials and qualifications are if they have experience, etc. Ask all brokers you are communicating with for details on previous clients and speak to the clients so that they can also give their reviews on that particular broker.
  5. Find an agent who will spend enough time with you until you find a property that suits your desires. A broker should understand the nuances and will advise you accordingly.
  6. Buyers need to find a broker who has good intentions and should be thinking about your benefit. 

Now you know how to choose a good broker, and this is the end of the best tips to hire a broker in India.

How to search brokers in India:

  1. You can also search online on platforms like propertywala.com.
  2. Try to talk to at least two to four brokers before finalizing, and try to discuss all talked-about matters with expectations.
  3. Try to connect on call, see his office, and have a meeting with him for your trust.

THE FUTURE OF INDIAN REAL ESTATE BY 2040

Posted on by
Reply
Why Real Estate Investment in India is the Most Profitable Option?

A short look at the Real Estate Industry:

The word “Real” is the Latin root rex, which means “royal”. Earlier, kings used to own all the land in their kingdoms. Therefore, the most globally acknowledged sector all over the world is the real sector. If we know real estate in terms of business, it means the game of producing, buying, and selling property. According to the economic sector, the construction of industry ranks third among the 14 major sectors. The future of Indian real estate by 2040, the market will grow to Rs. 65,000 crores (US$ 9.30 billion) from Rs. 12,000 crores (US$ 1.72 billion) in 2019.

After the agriculture sector, the real estate sector is the second-highest employment generator in India. Also, this sector will sustain non-resident Indian (NRI) investment for the short and the long term. Bengaluru is the top city and is the most recommended property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun. PropertyWala.com evaluates the future of Indian real estate by 2040.

The Market size of the future of the Indian Real Estate Industry by 2040:

This sector is about to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 in India. It contributes 13% to the country’s GDP (Gross Domestic Product) by 2025. India’s growing infrastructure is much needed to grow as retail, hospitality, and commercial real estate are also growing significantly. Within a year, India’s real estate sector saw over 1,700 acres of land deals in the top 7 cities. In the commercial real estate sector, foreign investment was at US$ 10.3 billion from 2017-21.

Indian firms are estimated to boost >Rs.3.5 trillion (US$ 48 billion), according to the report of ICRA (Investment Information and Credit Rating Agency of India Limited). It is through infrastructure and real estate investment trusts in 2022. The Savills India report said that the real estate demand for data centers is to increase by 15-18 MSF in the year 2025 whereas in 2021 around 40 MSF has been delivered in India. Now, it assumes that the country will have a 40% market share within 2-3 years whereas India is looking to deliver 46 MSF in 2022.

Conclusion:

In India, a total of 55,907 new housing units were sold in the 8 micro markets between July 2021-September 2021, which means there is 59% growth year over year, whereas, in the third quarter of July-September 2021, new housing supply stood at ~65,211 units, an increase by 228% YoY across the top 8 cities when its compared with ~19,865 units which launched in the third quarter of 2020. The commercial space is to record increasing investments in 2021-22 when it comes to commercial space in Gurugram.

 According to the Economic Times Housing Finance Summit report:

Almost, 3 houses are raised per 1,000 people per year as compared to the construction rate of 5 houses per 1,000 people. The current shortage of housing in urban areas is said to be ~10 million units. Hence, 25 million units of housing are vital by 2030. This is to meet the growth in the country’s urban population.

Budget 2013: What it offers to Indian Realty?

Posted on by
Reply
Budget 2013 was expected to be a real estate friendly budget due to many reasons. Crushing the hopes of builders and realty players the Budget 2013 remain tepid to the sector.

Budget 2013 holds nothing special to the realty sector

Budget 2013 holds nothing special to the realty sector

The first time home buyers will be benefitting from this budget as the Budget 2013 has proposed Rs.1 lakh additional deduction to them. As per the proposal of the budget the home buyers will be given Rs.1 Lakh deduction for the loans up to Rs.25 lakh and Rs.1.5 lakh for the loans above Rs.25 lakh.

By raising the tax deduction limit by Rs.1 lakh, finance minister P Chidambaram aims to promote the housing sector.

Anuj Puri, Chairman Jones Lang LaSalle India, said that the Budget 2013 is not realistic as it was expected to be. In the opinion of Mr. Puri though the Budget 2013 as an overall level is a moderate one it was not so useful to the real estate sector.

Continue reading →

South Indian Real Estate Sector footprint

Posted on by
Reply

What a South Mumbai is to Mumbai or a South Delhi is to Delhi could well be South Indian cities to India! The question is – will the southern region become the downtown of India?

Southern India has for long been the silent crusader, building and strengthening its real estate development as one of the most sought after destinations in the country. With improving transparency and visibility of the real estate markets in the South zone, cities such as Bangalore, Chennai and Hyderabad have attained a place on the global real estate map, a status that was limited just to Mumbai and Delhi in the past.

While South Indian cities constitute nearly 45% of the country’s office space, the stock of 140 million sq ft in these cities is projected to grow at a CAGR of 8% for the period 2012 – 2016, lower than the projected national growth of 11%. This implies that the southern cities, particularly Bangalore and Hyderabad, are relatively rationalised in terms of medium term supply of office space, and the cities have chosen a strategy of pursuing selective quality developments over rapid expansion. While this would keep their share in India’s office stock range bound at 37%-40%, the South Zone’s vacancy rate by end-2012 is expected to be 16%, considerably lower than the pan-India vacancy rate of over 20%.

While demand remains healthy for organised retail spaces, it is polarised towards either successful malls or high streets, which have better footfalls and conversion ratio. As the mall stock in the southern cities sum up to breach the 40 million sq ft mark by end-2016, the vacancy by then is expected to witness a notable decline from the peak levels of 2014 to drop below the national average of 20.5%.

South India’s residential market has been an ardent follower of the ‘affordability’ mantra, with more than 80% of the new launches in the past two years being priced under INR 4,000 per sq ft (USD1 812 per sqm). As a result, the residential markets of South Indian cities have remained resilient in the past few quarters, relative to the significant decline recorded in the sales volume of Mumbai and NCR-Delhi.

The focus of Indian real estate is shifting from Tier I to Tier II cities, and the southern region is also embracing the same, with secondary hubs developing in Kochi, Coimbatore, Vishakhapatnam and Mysore, that are persistently striving for higher milestones.

 

Realty PE Deal Volume in Q1 rises but Big Deals are missing.

Posted on by
Reply

Private equity deals are alive and kicking in Indian real estate space even though headline numbers do not reflect the same due to the absence of big ticket investments. The total number of PE deals during the first quarter of CY 2012 has hit a three-year high, according to VCCEdge, the financial research platform of VCCircle.

There were 12 deals worth $279 million in Q1, compared to 9 deals worth $432 million in Q1 CY2011 and 4 deals worth $97 million in the same period in 2010, according to VCCEdge. This is much lower than the peak of 22 deals cumulating to $1.2 billion in the first quarter of 2008, after which stock markets went into a tailspin due to global financial meltdown.

Although the overall value of PE investments has shrunk and investors remain cautious about the sector, it does not necessarily reflect a poor investment scenario in the realty space, according to analysts.

Shobhit Agarwal, joint managing director (capital markets) at property consultant Jones Lang LaSalle India, says, “Most of the funding that is happening now is for last-mile project completion where most of the money has already been spent by the developers and they don’t need large-size funding.” In fact, the projects are 60-70 per cent complete and developers are looking for some more equity to finish them off, he adds.

Last year, the average deal for PE investments was skewed up in the first quarter due to two $100 million-plus investments, including one by Ascendas. This pushed up the average deal size to around $50 million, as against the average size of $20-25 million in Q1 of the previous two years.

But there is another reason for lower quantum of investments by PE firms in the realty sector. According to V Hari Krishna, director of Kotak Realty Fund, “Most of the funds are reaching their shelf life and new fundraising is not happening in the same pace as it happened in the earlier round. Therefore, a lot of funds have either exhausted their capital or are on the verge of it and investments are slowing down.”

Even though the average ticket size of PE investments has shrunk, real estate remains one of the top sectors drawing PE firms. During Q1, real estate accounted for almost 10 per cent of the total PE deal volume and around 15 per cent of total value of PE investments, as per VCCEdge.

NRI Market is less volatile.

Posted on by
Reply

For most top property developers in India, the Non-Resident Indian (NRI) is a crucial part of their business.

They know that the NRI will always want a piece of his/her homeland, no matter the price and no matter the time.

Thus, despite the price rise of 43 per cent to as much as 166 per cent in various cities, the NRI cash is still flowing into the Indian property market.

Developers say sales in that segment are not as variable as the domestic Indian market.

Noida-based property developer Amrapali Group’s chairman and managing Anil Kumar Sharma told tabla!

“NRIs wish to have a second home in the country they belong to. Favourable government policies are also a driving force behind the increased interest of NRIs in investing in Indian real estate. NRI investments are the least volatile of all in our industry. They are assured that they are investing in an asset which they can fall back upon.”

Mr Sharma, who is also the vice-president of the Confederation of Real Estate Developers’ Associations of India, added that prices are rising because of the expanding infrastructure, which in the long run will help the buyer and increase the value of the property even further.

He said: “Upcoming projects like the metro, monorail and the international projects in the big cities in India have contributed to the inflated real estate prices in these cities.”

Amrapali claims that almost 35 per cent of its overseas business comes from Singapore.

No wonder it will be participating in Sumansa Exhibitions’ Indian Property Show to be held in Suntec City on April 14 and 15.

Home Loan Rate Should Be Restructured.

Posted on by
Reply

With speculations about the Union Budget 2012-13 already doing the rounds, city’s real estate industry too has voiced its expectations. Mainly revolving around increased subsidy on interest rate for loans towards affordable housing and industry status for taxation and construction and relaxation of FDI up to 51 per cent into multi-branding, the industry is hopeful of a favourable budget.

Sushil Mantri, president of CREDAI, Bangalore, says that “The Indian real estate industry was riding through highs and lows in 2011. Last year, one per cent interest rate subsidy was offered for loans towards affordable housing. If the subsidy can be broadened, home buyers especially in mid and lower income groups will benefit.”

“Indian real estate, especially housing needs the government’s support for further growth. The government should consider restructuring interest rates on home loans to attract larger base of lower and middle income group to benefit. For loan amounts lesser than Rs 25 lakh, the interest rate should be lower and should scale up as the loan amount goes higher,” said Sankey Prasad, chairman and MD of Synergy Property Developments Services.

Further the Experts demanded that the glaring concerns of the real estate industry be addressed.

“The real estate industry will be looking forward to RBI’s intervention to control inflation which has adversely affected the industry. If FDI is relaxed up to 51 per cent in multi-branding, this will boost the growth path for the Indian retail industry,” Sushil Mantri added.

Prospectus for 513 million dollars filed by Realty Firms

Posted on by
Reply

250 Million Dollars
Last Monday, prospectus was filed according to which the Embassy Property Developers, an Indian real estate firm is planning to raise an amount of 513 million dollars through an IPO (Initial Public Offering) of shares.

As per the prospectus, a pre-IPO placement of around 57.5 million shares for up to 11.75 billion rupees is being considered by Embassy Property. However, it is expected that they will provide a discount of 5% to the retail investors.

The IPO time line is not yet set.

According to the data collected by Thomson Reuters, in 2009, there was a raise of $16 billion from 87 offerings, while in mid June of this year; a total raise of about $11 billion from 56 issues took place.

Indian Realty has Bright Future

Posted on by
Reply

The Future is Bright
The future of Indian Realty market seems to be brighter than ever. Following are the major reasons for the growth of Indian Realty:

  • The policies made by government for the Foreign Direct Investment have brought quite a large number of foreign investors into the Indian real estate market. India now ranks second in the list of most preferred location for real estate investment. In fiscal 2005-06, the FDI turned thrice to that in 2004-05, i.e., it turned from 2.38 billion USD to 7.96 USD.
  • Another reason for the growth of Indian realty sector is the positive reform implemented by the government. The growth of this sector is also evident by the fact that this sector is the largest sector after agriculture providing employment.
  • The education system also has impact on the realty sector. It is estimated that in next 2 or 3 years, there will be around 2 million graduates who would create a demand for 100 million sq ft of industrial space and office.
  • Lastly, the existence of world renowned Fortune 500 companies also other large companies to start operations in India, which in turn would generate huge demand for corporate hubs.

Beary’s Group Bags Prestigious Prize

Posted on by
Reply

A Bangalore based residential project has won the runner up award by the International Real Estate Federation (FIABCI). ‘Bearys Lakeside Habitat’, a twin tower residential project was awarded the prestigious award on May 27 at Bali, Indonesia.

IMG_5472.jpg
Photo by [ecpark]The ceremony was held in the presence of the President and the First lady of the Republic of Indonesia along with many other renowned developers and dignitaries especially flown in from around the world.

The project promoted by the Bearys Group, ‘Lakeside Habitat’ that welcomes you to the city as you drive into it from the airport is the only Indian project to win this award this year. This is not the first time that Lakeside Habitat has won an award; it has been recognized on many previous occasions also.

There were fifty-four projects chosen from across 11 countries to compete for the coveted Prix d’ Excellence award 2010.

The award was received by the Director of Beary’s Group, Mr. Siddique Beary.

Indian Real Estate has once again a reason to rejoice.

Tata Housing Won Cityspace Award

Posted on by
Reply

tatai naplemente
One of the leading real estate companies of India, Tata Housing was honored by the Best developer award in the category of CSR in the recognized award ceremony called Cityscape Awards – Real Estate Asia, 2010.

According to experts, when they analyzed the commitment and positive contribution of the company in the society welfare, it would be fully justified to call it one of the best developers in the Indian real estate market.

The award ceremony was originally organized to honor the real estate companies and industry professionals who have put their heart and soul into the realty and have done significant contributions in the growth of Indian realty. A panel of experts was the judge.

The Managing Director and Chief Executive Officer of Tata Housing, Brotin Banerjee, said that the company has the motive of delivering to the consumer what he wants. They firmly believe in ‘what you see is what you get’. And the Cityscape award is the evident of the contributions the company has made over the years to the society.

Indian real estate trend

Posted on by
Reply

In coming years, India is expected to outperform the global markets with a growth rate in the range of 7 percent to 10 percent. This will benefit the real estate sector, which is closely linked to high growth in the economy.

A decrement in property prices, reduced interest rates and stability in the job market has helped the sector gain momentum once again. Developers now realized that affordability was the key to attract the prospective buyers; they tried out with smaller sized apartment. Projects that were launched in this segment received a good response, which indicated that home-buyers were waiting for a good opportunity.