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Affordable Housing blog Indian real estate round-up 2019 Real Estate Smart Residential Living

Real Estate Round-up 2019: How India’s Real Estate Sector has Performed in Year 2019?

Jan 20,2020 / By / No Comment
Indian Real estate round-up 2019

Indian Real Estate 2019 Round Off

Real Estate is one of the key driving factors behind the growth of the Indian Economy and plays a pivotal role in the nation’s GDP growth. It is among the most recognized sectors globally. It creates millions of direct and indirect employment opportunities and supports the country’s development. It consists of 4 sub-sectors – Housing, Commercial, Retail, and Hospitality. The growth of this sector is well complemented by the growth of the corporate sector and the demand for office space as well as urban and semi-urban houses. The real estate sector of India ranks 3rd among the 14 major sectors that have a direct and indirect impact on all sectors of the economy.

The year 2019 has been a period of ups and downs for the Indian Real Estate Sector. There have been various policy and taxation related announcements in the last year. The market experienced the impact of the ongoing Non-Banking Financial Company (NBFC) crisis which resulted in a liquidity crisis and a slow pace of recovery in sales. On the other hand, the successful launch of India’s first Real Estate Investment Trust (REIT) opened new avenues for investments in real estate while multiple government SOPs provided much relief to the housing sector.

Post the policy reforms of 2017 such as demonetization, RERA, and GST, the residential market is absorbing the impact of these changes and is on the path to recovery. India continues to retain its position as the world’s fastest major growing economy on the back of improved investor confidence and better policy reforms.

The growth of the Indian Real Estate Market in 2019 has been driven by numerous factors including technology, improved ease of doing business, dust settling post the implementation of reforms such as GST and RERA, and demand-supply dynamics, among others.

It is also expected that the real estate sector will incur more and more NRI Investments in both the short and long term.

In the year 2019, the realty sector has experienced its highs and lows. Affordable Housing performed beyond expectations within the residential segment, while the luxury apartments continued to witness subdued sales. On the other hand, the commercial segment saw most of the investment flowing in as the year comes to an end. Whereas, other asset classes such as warehousing, Coworking, and Co-living gained momentum.

Initiatives are taken By The Government

If we look back at 2019, we can not deny that the government did not make sincere efforts to strengthen the sector. A series of reforms and policy changes were adopted. Some of them are:

  • Reducing GST rates to 1% for affordable homes and 5% for under-construction flats/apartments
  • The announcements about NHB raising liquidity to the housing finance companies
  • Relaxation of External Commercial Borrowing (ECB) funds
  • Creation of Alternative Investment Fund of Rs 25,000 crore for Stalled Housing Projects
  • Successive Repo Rate cut coming to 9-years low (total 135 basis points in 2019)
  • Tax holiday to first time home buyers
  • Relaxation in FDI norms for a single brand retail
  • The government slashed the corporate tax rate to 25.17% from 30% for existing companies, and to 15% from 25% for new manufacturing companies.
  • In 2019, consolidation continued in the residential segment. Those developers who are either on the verge of insolvency or have their project stalled continued to re-enter the market through joint development, or mergers.
  • Technological advancement in real estate too increased in the last year.

Post-2017 reforms such as Real Estate (Development & Regulation) Act (RERA), the inventory pile-up kept increasing across markets. New launches had taken a hit. Increasing unsold inventory became a cause of concern as liquidity challenges coupled with RERA deadlines made it tougher to deliver the project. In spite of the odds, those with deep pockets or leading names in the realty sector continued to outperform in 2019.

Since the start of this calendar year, there is a decrease in unsold inventory, which is a positive sign for the industry’s revival. In 2020, this is likely to reduce further to healthy levels. Another crucial factor for improved sales was largely stagnant property prices. Going forward, we may witness investors, funds, and lenders showing confidence to finance future projects. If employment levels improve and inflation kept under check, the revival of the sector isn’t distant. The year 2020 may well be the turnaround year.

Market Size

The real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13% of the country’s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs.

Housing Sector

As per the CBRE report, it is expected that out of the 2.3 lakh new unit launches in 2019 in the top 7 cities, nearly 40% or approximately 92,000 units were in the affordable segment, followed by mid-segment with a 33% share. The luxury and ultra-luxury segments amounted to the least share with 10% (approximately 23,000 new units). Apart from that, Center Approves 3.31 Lakh More Houses Under PMAY(U) to fulfill the housing needs of the Urban poorer.

  • Housing sales in 2019 saw a modest 4-5% annual growth with over 2.58 lakh homes sold during the year.
  • New housing launches in 2019 saw an 18-20% annual growth with over 2.3 lakh units.

Commercial Sector

As per the CBRE report, office leasing increased by more than 30% annually to cross 47 million sq.ft. during the first three quarters of 2019, exceeding its previous high of 2018. The leasing exercise reached about 15.4 million sq.ft. during Q3 2019, rising by nearly 23% on an annual basis.

Commercial office space continued to be the most sought-after asset class.

Forecast

Since the start of the year 2020, there is a drop in unsold inventory, which is a positive sign for the industry’s recovery. And it will probably see a growing trend in 2020. We expect the hurdles in the real estate sector to get resolved. Stagnant property prices was another factor for improved sales. Going ahead, we may clearly see investors, funds, and lending houses showing confidence to finance future projects. If employment levels improve and inflation remained under control, the recovery of the sector is not very far.

 

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AMRUT Mission: Only 15% Funds Utilised In Last 4 Years

Aug 28,2019 / By / No Comment
Amrut-Mission

AMRUT Mission: Only 15% Funds Utilised In Last 4 Years

  • Before moving ahead on the project issues, I would like to figure out some information on AMRUT. The AMRUT was launched by Prime Minister Narendra Modi on June 2015 in 500 cities across the country, covering about 60% of the total urban population.
  • Looking forward to this, the BJP-led NDA government under Prime Minister Narendra Modi has launched 3-major urban flagship schemes in 2015. These are  Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and the Pradhan Mantri Awas Yojana-Urban (PMAY-U) to enhance the infrastructure of Indian cities. The project was accepted and honoured by the industry experts, and if accomplished with a will, the mission could change the appearance of cities and towns where even basic facilities are lacking.
  • With the Budget 2019 that brought bundles of packages for these schemes. But the government still lagging behind its targets, development in the sector remains shadowy.
  • However, even after 4-years of its implementation, out of the total budget, only 15% fund has been used according to the data provided by the Ministry of Housing and Urban Affairs. Around 1,885 projects worth Rs 5,075 crore (15% usage of total mission target) have been completed. More than half of the projects are under implementation (cost Rs 62,201 crore).

What Government Data says:

  • As per the Ministry of Housing and Urban Affairs, around Rs, 1,768 crores was allocated for the green spaces and parks sector, and a total of 2,355 park projects costing Rs 1,522 crore was engaged under the AMRUT mission.
  • Along with the completed projects, 990 projects cost Rs 812 crore are under headway.

How Indian Cities Contribute To country’s GDP?

  • Indian cities are more urban than admitted and share between 59% and 70% of India’s Gross Domestic Product (GDP). The three-month-old NDA government in their budget for FY 2019-20 has estimated about 48,000 crore for the ministry of housing and urban affairs which is an 11.8% increase since last year’s budget.

Why Is This Project Legging Behind?

  • AMRUT Cities are experiencing overlook due to unfamed development. Air quality and congestion are worsening, house prices continue to rise, and amenities and services like clean water, public spaces, public transport, and solid waste management are badly unsatisfactory. The local bodies committed to controlling cities do not have sufficient funds, skill, or staffs to plan for and face these difficulties.

How The Funding Is Distributed Among The States?

  • Being a central approved scheme, the funding support is given to the amount of 50% of the project cost in case of cities with a population of less than 10 lakh each and up to 1/3rd in the case of cities with a population of above 10 lakh each. The total cost being Rs 77,640 crore (including central assistance of Rs 35,990), the funds are being issued in parts to the states keeping in mind the developmental work being done. Until now, 14 states which include  Chattisgarh, Tamil Nadu, Karnataka, Andhra Pradesh, Bihar, Jharkhand, Gujarat etc., have received 20% of the budgeted amount under the scheme AMRUT.

After four years of its implementation here is our main findings:

  • While the union budget expenditure on urban development in 2018-19 was the highest ever, as a share of the grand total this had actually declined by 0.2 percentage points to 1.7% of the budget.
  • Barely 7-20% of the central assistance earmarked for the three flagship schemes have been used since their launch, indicating that states remain chronically underfunded.
  • In the three schemes, work has been sanctioned for not more than a 3rd of the set targets which will meet their deadlines in 2019-20 and 2021-22. The number of works actually completed is even lower.
  • Over 1,100 parks developed across the country under Amrut Mission as per the Housing Ministry.
  • According to the housing ministry, more than 4,288 acres of land is being developed as green spaces and parks under the AMRUT mission. Until now, over 1,159 parks have been developed under the mission across the country. These parks have children friendly provisions, disabled-friendly features, open gyms, etc.

Latest reforms on AMRUT:

  • Out of 97,93,386 lakh target, 62,78,571 lakh street lights have already been replaced with LED lights.
  • Energy audit of water pumps has been completed in 358 cities; MoUs have been signed for another 446 cities.
  • The online building permission system (OBPS) has become functional in Delhi and Mumbai. It has also been implemented in 439 AMRUT cities.

Mission Under Progress:

  • Sewerage projects work is in progress.
  • AMRUT Water Pipeline work is in progress.
  • Until now, Rs 5,077 crore has been spent on 1,891 projects.
  • Rs.62,200 crore awarded for 3,133 projects.
  • NITs issued Rs.7,646 crore for 289 projects.
  • DPR approved Rs.6,025 crore for 265 projects.
  • Total State Annual Action Plan was for Rs.77,640 crore.

Focus Areas Of The Scheme With The Budget Output:

  • As AMRUT Mission targets on the basic infrastructure, the following were the target areas of the scheme with the budget output:
  • The centre has spent Rs 9,011 crore on water supply.
  • Rs 1,436 crore spent on Pedestrian, non-motorised and public transport facilities, parking spaces etc.
  • Rs 2,969 crore spent on stormwater drains to reduce flooding.
  • Rs 1,768 crore spent on improving the amenity value of cities by creating and promoting green spaces, parks and recreation centres, especially for children.
  • Rs 32,456 crore spent on sewerage facilities and septage management.
  • For all that AMRUT mission fixed timelines for each of the target areas, some of the states are advancing of the timelines and have completed most of the works like strengthening e-governance policies, digitisation of Urban Local Bodies, the professionalization of municipal bodies, revision by building by-laws, municipal tax and fees and Swachh Bharat Mission which is popular among all.

Suggestion:

  • Indian cities need urgent reform in order to unlock their economic potential and transform the quality of life. So, the NDA government requires to connect on observing the amount of urban growth, enhance land usage, legitimize urban local bodies and spend in public transport networks.

Image Sources: RajRAS

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What is DDA’s Land Pooling policy says?

May 8,2019 / By / No Comment
DDA_01

Land Pooling Policy:

I have experienced consistent queries on DDA’s Land Pooling Policy asked by buyers who are interested in purchasing a property, particularly in Delhi. Some of them are what does Land Pooling Policy mean? How does it affect property buying and selling? Should you invest in a pooled land property?

Land Pooling is an idea where small pieces of land are owned by a group of owners who group for the development of infrastructure as per the plans of the Delhi Development Act 1957.

The idea behind land pooling is to combined small pieces of land into a large piece, develop necessary infrastructures such as water supply, drainage, and sewage system, make a plan for wider social and other infrastructure, including transportation and main roads, and return the developed land to owners or developers in a fixed ratio.  This is to assure the development of urban land parcels available in the city, particularly on its outskirts, in an effective, supportable or livable and equal manner. It will help to develop and extend the city in a planned manner by boosting the supply of new land and fulfilling the demand for housing.

According to Minister of State (I/C) for Housing & Urban Affairs has stated that the land pooling is a new model for the urban development of Delhi, where the private sector will play an active role in collecting land and developing physical & social infrastructure.

Land Pooling is a concept that where small chunks of land are owned by a group of owners who assemble for the development of infrastructure as per the provisions of the Delhi Development Act 1957.

Recently, Delhi has launched a web portal for the Land Pooling Policy. Under the new Land Pooling Policy, the role of DDA will be that of a coordinator and planner.

As a first step towards its functioning of the policy on fast track mode, the web-enabled interface on DDA’s website is for inviting Expression of Willingness for participation where any landowner of any land size falling in planning Zones K-1, L, N, and P-II may come forward to register on the website.

The policy grants a Floor Area Ration (FAR) of 200 for group housing/residential purpose, considering the availability of resources and services.  It is expected to generate about 17 Lakh housing units for 76 lakh people. In order to promote affordable housing, FAR of 15% over and above the maximum permitted residential FAR has also been allowed for EWS/ affordable housing. This will meet all the goals of Housing for All. Out of a total of 17 lakh housing units, more than 05 lakh housing units will be for the economically weaker sections of the society.

The new developments under the land pooling policy shall adhere to the mandatory green building standards as directed in the Delhi Master Plan (MPD) and building bye-laws by organizing policies like maximum use of recycled water for non-potable purposes, storage of rainwater, double pipeline, zero waste technology, etc.  Minimum 10% of all energy use shall be renewable through solar power or through other renewable energy sources.

Keeping in mind the goal of ‘Ease of Doing Business’ the complete process of development by Developer Entities/Organization will be through the Single Window System, which has been launched in February 2019, within the given time period.  Through this portal available on DDA’s website, Expression of Willingness would be encouraged for participation in the policy.

Under this new policy, single owner/multiple co-owners are required to register online and make payment of prescribed charges/fees, based on which a unique registration ID shall be provided to the applicant for future use.

The Khasra/land details and other uploaded documents shall be checked by DDA from the respective departments/custodian of the records. On joining/pooling of minimum 70% adjacent land of the sector and on completion of verification of revenue records, DDA will issue a Notice to agreed landowners of the sector, to form a single association called the Consortium. Under the policy terms, the consortium formed will be asked to prepare an Implementation Plan in discussion with all agreed landowner and sign a lawful contract agreement with them before applying to DDA as a single entity for initiating development within the sector.

The portal will continue open for a period of 6 months to assure maximum participation/pooling in the named sectors so that planning and execution of infrastructure can be initiated in a combined way.

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