However, this news did give me a strong feeling of deja vu. When I googled the phrase ‘India real estate regulatory bill’, I came across a newspaper article from 2006 saying that a real estate regulatory bill was expected to be passed in the 2006 winter session of Parliament.

I also came across another article from 2008 that said a real estate regulatory bill was expected to be passed in the 2008 winter session of Parliament. Not just that, I also also came across a draft of a model bill dated September 2009 with a covering letter from a government official attached.

The letter said that the bill should be put up on the web by November 9, 2009, and comments invited from the public. So, I wouldn’t keep my fingers crossed too hard.

Nonetheless, if and when this bill does become a law, it will be a huge improvement for house-buyers in India. Many, if not most, of the problems associated with buying a house at every step could be solved substantially.

For example, right at the beginning of the process, buyers face the problem of getting trustworthy information about the identity of the promoter and basic facts regarding the legal and approval status of the land and the project concerned.

The new law will mandate that each project be registered with and approved by the Real Estate Regulatory Authority and that all information filed with the authority be made available on its website.

No project can be announced or advertised before this registration. This alone will be a huge impediment to so many unhealthy practices.

The draft bill also mandates that the developer stick to the announced specifications and plan, and it lays down penalties if they don’t. Currently, these things are just part of a one-sided agreement that developers typically present to buyers as fait accompli.

Around the country, buyers’ biggest troubles arise from long delays and from developers transferring money from one project to another. The new law tackles this. Registration of a project is for three years and is then extendable for specific reasons twice for one year each. After that, the law allows for what appears to be a handover of the project to some other entity like an association of the buyers.

As far as fund diversion is concerned, the draft law is less than satisfactory. It mandates that 70% of the funds taken from buyers be kept in a separate audited account and paid out only for project expenditure. This is strange, because the 2009 model law said that 100% of the funds should be thus isolated.

Real estate developers in Noida, such as ATS Infrastructure, The 3C Company and Earth Infrastructures, which have about 11 residential projects between them in the city and its surroundings, have either bought land or signed joint development agreements in Gurgaon over the last six to eight months.

The development underscores the problems the real estate sector has been facing in Noida since May this year when farmers’ protests over low prices for their land snowballed into a political issue, leaving projects and buyers stranded.

“Noida Authority now has no land left in its bank to sell to developers,” said Shiv Priya, executive director at Amrapali Developers, a real estate firm scouting for land in Gurgaon. According to property research firm PropEquity, Gurgaon registered a rise in sales of residential units at a time when the market was down in most parts of the country.

Home sales in Gurgaon in the July-September quarter rose 34% from the year-ago period while that in Noida dipped 36%. “The sentiment of buyers has been affected in Noida because of which sales have fallen,” said Anshuman Magazine, managing director of CB Richard Ellis, a commercial real estate services firm.

Developer ATS recently bought a 14-acre plot of licensed land in Gurgaon’s sector 109 forRs 150 crore and signed a joint development agreement with the Chintels group for another 10-acre plot in sector 106. Similarly, 3C Company has signed an agreement with Orris Infrastructure to jointly develop a 47-acre plot in Gurgaon’s sector 89. 3C, which was active only in Noida until now, is planning a group housing project there.

Gurgaon, which is on the southwest of the national capital, had wooed the information technology industry with its gleaming buildings and swanky malls in the late 90s. “We also got a good feedback from many of our existing customers about setting up a project in Gurgaon, which is why we have signed a joint development agreement,” said Brijesh Bhanote, director, sales and marketing, at 3C Company.

There is no new prime land available in Noida, he added. Anckur Srivasttava, chairman of property consultancy Gen-Real Property Advisers, said developers are waiting for the political uncertainty to reduce post state elections next year. Sales of residential apartments in Noida plunged after angry farmers started blocking housing projects.

The agitation, which started in a certain area of Greater Noida, became a larger movement with farmers across the city seeking higher compensation. The issue was settled after a high court ordered the city development authority to pay higher compensation to farmers.

The authority was also asked to return 5% of the farmland it had acquired after March 1997. Property firm Earth Infrastructures, which operated mainly in Noida, has started a residential project on a 10.5-acre plot it bought in Gurgaon’s sector 112 earlier this year.

Bombay Dyeing, which has seen fortunes dwindle from its textiles division, expects realty to generate over half of its revenues this financial year and three quarters in five years. “We will essentially become a real estate firm in the years to come,” managing director Jeh Wadia said. Jeh took charge of Bombay Dyeing in a management reshuffle earlier this year.

The Wadia Group and Bombay Realty, the group’s real estate arm, have a land bank of about 10,000 acres spread across the country. This includes 700 acres of prime land in the financial capital, Mumbai, acquired at rock bottom prices in the 1800s and 1900s by group firms Bombay Burmah, Bombay Dyeing, Britannia and the current and erstwhile promoters. The transformation of the 132-year-old company into a property firm could mean a windfall for its shareholders.

Its real estate division commenced partial property development at Spring Mills at Dadar, in central Mumbai in 2005-06, but the big thrust is expected from this fiscal year. Last financial year, only a quarter of its Rs 1,950 crore revenue came from real estate. “We are launching four projects spread over 180 acres by the March end. This includes projects at Dadar and Worli, spread over 70 acres in the island city of Mumbai and 100 acres in mainland Mumbai,” Wadia said. While Bombay Realty will act as a developer, the title of the land will continue to be with group companies. Subsequently, all other group companies will develop the land along with Bombay Realty through development pacts.

Shares of real estate companies are witnessing some intense selling pressure at the bourses with the BSE Realty index slipping almost 4% compared to 2% fall in the benchmark index Sensex on concerns of weak earnings growth during the recently-concluded quarter and liquidity concerns. At 01:50 p.m., shares of Sobha Developers Ltd, DLF Ltd and Indiabulls Real Estate had slipped more than 4% each. Unitech, Prestige Mills, Oberoi Realty were trading lower by 2 – 3% each on the BSE.

According to a report by Motilal Oswal, the brokerage firm has downgraded target prices for many companies under its coverage by 2-29% and FY12/13 estimates by 2-18%, on the back of (1) moderating sales assumption of next 5 years, along with certain increase in construction cost by 10-15%, and (2) assigning higher discount factor to NAV. Besides liquidity, the revision factors in multiple concerns for real estate companies, including delay in new launches due to regulatory hurdles, escalating commodity prices dampening margins, sluggish demand across markets, slower revival of commercial vertical, and several company-level issues such as CCI probe, 2G spectrum issue, farmers’ protest on land acquisition, etc.

The brokerage advices investors to prefer stocks with prudent balance sheets and strong business models such as Oberoi Realty, Prestige, Phoenix and Mahindra Lifespaces, or stocks with near-term triggers like DLF, which offers play on de-leveraging theme with valuation comfort. Most banks have adopted a more vigilant approach towards the real estate sector for new loan disbursement or refinancing. The banks are selectively biased towards projects with lower uncertainty and/or lease income support, and developers with long-term relation and goodwill. Costlier home loan rate coupled with plummeting customer sentiment is affecting residential sales volume, another major source of fund to developers

DB Realty, the Mumbai-based property developer, is in talks with major real estate companies for joint developments in two of its prime properties in the city which are valued around Rs 3,000 crore, DNA reported, citing two persons with knowledge of these talks. The first property is located in the tony Bandra Kurla Complex, which has a development potential of a million sq ft. The second one at Kala Nagar in Bandra has a potential of 500,000 sq ft. Residential apartments sell for around Rs 20,000 a sq ft in these two areas.

According to the sources, DB’s bankers are in talks with Mumbai-based Rustomjee, which is looking at the deal seriously. When asked, a DB Realty spokesperson did not offer any comments. A Rustomjee spokesperson said: “We have received the proposal and like any other proposal, we are looking into it.” DB was earlier in the news for the arrest of its key promoters, Shahid Balwa and Vinod Goenka, in connection with the telecom spectrum scam. DB has 25 projects in various stages of construction. Recently, it acquired a 50 per cent stake in DB Hospitality, an unlisted firm where Shahid Balwa and Vinod Goenka held 80 per cent stake.

National Real Estate Development Council (NAREDCO) has named its new panel of members in its 13th annual general meeting, held in New Delhi. Navin M Raheja, chairman and MD, Raheja Developers Ltd was elected as its president. The unanimously elected office bearers will serve for a period of two years. Sunil Dahiya, MD, Vigneshwara Developers Pvt Ltd was elected as senior vice president, while Sunil Mantri, chairman, Sunil Mantri Realty Ltd was named as vice president. Rajesh Arora, MD, Arora & Associates Infradevelopers Pvt Ltd was appointed as member finance.

Addressing members, Navin M Raheja the president elected, said, “My vision is to open Real Estate Development Councils in all states of India and enroll new members in large numbers. I will work relentlessly to transform the Housing and Real Estate Industry and make it responsive to the needs of millions houseless, especially poor. I will also take support of Central and State governments in removing various obstacles in the smooth functioning of the sector.” NAREDCO, the apex regulatory body of Real Estate Sector established under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India, is working for the promotion of the Housing and real estate sector in India.

It encompasses all stakeholders of the Real Estate Industry such as developers, financers, real estate agents and material manufacturers, etc. Kumari Selja, the Union minister of housing & urban poverty alleviation and minister of culture, is its chief patron. KP Singh, chairman, DLF Ltd, Ramesh Chandra, executive chairman Unitech Ltd, Sushil Ansal, chairman Ansal API, G L Raheja, chairman, K Raheja Constructions and K Raheja Hospitality Housing and Urban Development Corporation Ltd (HUDCO), and National Housing Bank (NHB) are amongst the founders and torchbearers of the Council. Self regulation and transparency in business are the main objectives of NAREDCO.

The country’s largest real estate firm DLF has sold 10.8 acres in Gurgaon to a Dubai-based Indian investor for Rs 280 crore, as part of efforts to reduce its debt burden by a third this fiscal. The company is also in talks with other NRI investors to sell another 20 acres in Gurgaon, which is expected to fetch around Rs 400 crore, reports Financial Express. DLF’s debt stood at Rs 21,524 crore as on June 30. The company plans to reduce this by Rs 7,000 crore this fiscal.

Earlier this month, DLF had sold a plot to M3M India for Rs 400 crore. The company is also in the process of selling two IT parks to Blackstone and IDFC. The deal could fetch another Rs 1,500 crore, the report said, citing sources. In a first, DLF is selling land with the floor space index (FSI), which means the buyer will need no more sanctions and can start construction right away. The FSI-based sale would help DLF mop up more than twice what a normal sale would have got, sources were quoted as saying. Today, developers either sell land from their existing bank or sell their end-use properties.

It is understood that DLF will now sell land with respective FSIs wherever it has the option to do so. FSI is a ratio of the area of construction allowed on a plot against the available land. In the Gurgaon deals, with an FSI of 2.5, buyers have the option of building more than double the plot size. With 10.8 acres, after leaving the mandatory space, a builder can construct commercial units on nearly 18 acres, experts said.

DLF has a land bank of close to 370 million sq ft, of which 10 per cent is non-core. All the Gurgaon land parcels, Noida and Pune IT park are part the ‘non-core assets’. The company is in the process of identifying more such non-core land for monetisation in other cities. It has so far realised over Rs 3,600 crore from sale of non-core assets including hotel plots.

DLF has again started looking for a strategic partner for its luxury hotel chain Aman Resorts, which it acquired for Rs 3,500 crore in 2007. The search has resumed after a year’s hiatus as the company feels the burden of mounting debt. DLF reported a 12.81 per cent decline in its consolidated net profit at Rs 358.36 crore during the first quarter ended June 30.

The government has given more time to as many as 37 special economic zone developers, including Navi Mumbai SEZ, DLF Commercial Developers and Tata Consultancy Services, to execute their projects.
At a meeting on September 19, the Board of Approval (BoA) headed by Commerce Secretary Rahul Khullar also allowed five SEZ developers to surrender their projects. The BoA is a 19-member inter-ministerial body that deals with Special Economic Zones (SEZs) and related issues.

However, the developers surrendering their projects have to obtain a certificate from the respective Development Commissioners that “they have refunded all the tax/duty benefits availed under SEZ Act/Rules,” a senior Commerce Ministry official said.
SEZ developers, including Maharashtra Industrial Development Corporation and Benchmark Realty, had approached the BoA to surrender their projects.
According to an industry expert, uncertainty over whether new SEZs will be eligible for tax exemptions — which are proposed to be confined to existing units in the latest draft of the Direct Taxes Code Bill — has dampened interest in the tax-free enclaves.

Other developers that got more time to execute their projects include Raheja SEZ, Parsvnath SEZ, and Wockhardt Infrastructure Development.
It has deferred the extension of two applications — Peninsula Pharma Research Centre and Meditab Specialties — as the issues were sub-judice before the apex court.
The BoA also approved three new proposals, including one for setting up a sector-specific SEZ for the petroleum and oil and gas industry in Visakhapatnam.
Regarding the revision of guidelines for power generation, transmission and distribution in SEZs, the board gave two weeks’ time to the Department of Revenue for their comments.

Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned in the first five years of operation, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.
SEZ developers, on the other hand, get 100 per cent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.
Merchandise exports from the 143 operational SEZs in the country totalled Rs 72,255 crore in the April-June period, an increase of 23 per cent vis-a-vis the same period last year.

Real estate developer Parsvnath today said it has received shareholders’ approval to raise up to Rs 2,000 crore through the issue of securities to qualified institutional buyers. In a filing to the Bombay Stock Exchange (BSE), the company said it has received approvals to raise up to Rs 2,000 crore in long-term funds through the issuance of securities. The company will raise the amount “by way of Qualified Institutional Placement (QIP) to Qualified Institutional Buyers (QIB),” it added.

The board of the company had earlier sanctioned the implementation of the fund-raising plan over a 12-month period in August, subject to shareholders’ approval. Parsvnath Chairman Pradeep Jain had said the company would raise this amount primarily to reduce its debt. The company’s debt stood at about Rs 1,200 crore as of June 30. Earlier, Jain had said the company plans to reduce its debt to Rs 500-700 crore by the end of 2011. Since 2009, Parsvnath has raised Rs 410 crore through the sale of stake in four projects being developed in the Delhi-NCR to private equity players.

In addition, the company has raised nearly Rs 440 crore through two rounds of private placement of equity with institutional investors to reduce debt. Delhi-based Parsvnath Developers has a land bank of 193 million square feet, which is spread over 44 cities in 15 states. It is focusing on execution of 54 projects covering 80 million square feet of saleable area. In February, the company had said it would invest Rs 4,700 crore over the next three years to complete its existing projects. It expects a sales realisation of over Rs 14,000 crore during this period.

Parsvnath had reported a 19.04 per cent fall in its consolidated net profit for the quarter ended June 30 to Rs 25.76 crore. The consolidated total revenue of the company also declined by 15.75 per cent to Rs 216.57 crore. Shares of the company were trading 2.38 per cent lower at Rs 65.50 apiece in the late afternoon today on the BSE.

Home sales are far and few, but a section of Gujarat builders is planning to raise prices by 10% post-Diwali. Real-estate experts however, feel that the move could possibly boomerang in the present market conditions. Rising construction and labour costs are the main reasons for a possible hike being considered by the developers most of whom operate in Ahmedabad and Gandhinagar. “Profit margins of the developers are being heavily dented by the rising costs. Therefore, we may consider a 10-12% rise in prices after Diwali,” Suresh Patel, president of GIHED (Gujarat Institute of Housing and Estate Developers), told ET.

“Of the total home bookings that happen throughout the year, 35% happen between Navratri (September 28 onwards) and Diwali (October 26),” Mr Patel said about the realty market in Gujarat which is worth Rs 60,000 crore. Of this, 40% share belongs to Ahmedabad. When asked if the builders were considering to offer any discounts to buyers who visit GIHED exhibition between September 30 and October 2, Mr Patel said, “There was no mention of discounts in our last meeting. The prices are not expected to go down. There could be an increase after Diwali,” he added. The builders’ body is organising a property show in Ahmedabad that will showcase over 500 projects worth about Rs 12,000 crore. Even the invites for the exhibition carry the phrase “now or never”, cajoling the buyers to go for an immediate buy.

Real-estate experts who did not wish to be named pointed out the possible move considered by GIHED was “irrational” and could back fire. “It is not possible to hike prices. At present there are no buyers in the market. Except for apartments costing Rs 25 lakh and below and some plotted developments, the sales are poor. For instance, the sales of three bedroom-hall-kitchen apartment and bungalows are down by over 60% in Ahmedabad,” the expert said.

Since Diwali, last year, there has been hardly any rise in real-estate prices in Ahmedabad. While prices have remained stagnant for the last several months, the sales have nose-dived. “Real-estate prices are their peak in Ahmedabad. Any further attempt to raise it will dry up whatever little demand remains in the market. However, if a discount of 15% is offered, the lost demand could be revived,” said a developer on conditions of anonymity.

Earlier while addressing a press conference on Monday, Mr Patel seemed to be in a denial mode. “The happenings in the global economy have never touched the property markets in Gujarat. In 2008, during the slowdown, the property markets in Delhi and Bangalore corrected by 12%, while Ahmedabad grew by 8%. This time too we don’t not see any effect on the local markets,” Real-estate experts point out otherwise. During the global slowdown, certain micro-markets in Delhi and Mumbai corrected by a maximum of 40%, while those in Ahmedabad saw a dip between 15-20%.

He also went ahead and compared Ahmedabad with Pune. “While homes costs a maximum of Rs 5,700 per square feet in Ahmedabad, in Pune they cost between Rs 4,200 and Rs 16,000 per square feet,” Mr Patel said. However a glimpse at only the office space market (which is a smaller market compared to residential) in both the cities shows that Pune with a supply of close to 3 lakh square feet of office space in the just the second quarter of calendar year 2011, was three times the size of Ahmedabad.