1019 OctOct 2019credaibengal.in/wp-content/uploads/2019/10/19Oct19-CB-Daily-News-Update.pdf · chairman and CEO, HDFC Ltd. The National Capital Region, the largest property market,

10-Oct-2019 19-Oct-2019

CREDAI Bengal Daily News Update | 19.10.19

Realty sector under pressure and outlook is pessimistic, says survey

The current sentiment of the real estate stakeholders on the supply side plummeted further

in the July-September quarter

The real estate sentiment index is based on a quarterly survey of key supply-side

stakeholders

Despite a slew of measures by the government and the Reserve Bank of India (RBI) to boost

liquidity and revive demand, the real estate sector is under immense pressure and the outlook is

pessimistic, according to the Real Estate Sentiment Index Q3 2019, the latest survey by Knight

Frank, FICCI and NAREDCO.

The current sentiment of the real estate stakeholders on the supply side, including developers,

private equity funds, banks and non-banking financial companies (NBFCs) plummeted further

in the July-September quarter, reflecting uncertainty that was witnessed during demonetization

in 2016.

“The real estate stakeholders‟ sentiment has gone in the „pessimistic‟ zone owing to poor

demand side performance, despite measures by the government. However, it is more significant

that they are wary about the next six months for the sector and the overall economy, thus

pushing the sentiment score in the red," said Shishir Baijal, chairman and managing director of

Knight Frank India.

The real estate sentiment index is based on a quarterly survey of key supply-side stakeholders.

A score of over 50 signifies „Optimism‟ in sentiment, 50 means sentiment is „Same‟ or

„Neutral‟, while below 50 shows „Pessimism‟. For the July-September quarter, the current

sentiment score was 42, while the future sentiment score was at an all-time low of 49.

The real estate industry has witnessed over three years now and stakeholders see no immediate

solution for the sector ailed by defaults, weak demand and the drying up of funding because of

the NBFC crisis.

“The restricted flow of liquidity has resulted in many real estate projects being stuck in the past

one year due to lack of funds. The realisation that the slowdown in the economy will further

weaken the demand and in turn impact cash flow issues for the developers has marred the

outlook of the stakeholders for the coming six months," the survey said.

Newspaper/Online Live Mint(online)

Date October 17, 2019

Link https://www.livemint.com/industry/infrastructure/realty-sector-under-pressure-and-outlook-is-pessimistic-says-survey-11571304113663.html

“Affordable housing projects that have got the equation right in terms of unit size, product

configuration, location and developer standing are witnessing good demand even during this

time. Within the residential spectrum, the stress has mounted up on the high-end segment in the

recent period and that is one segment where sales have been slow," said Keki Mistry, vice-

chairman and CEO, HDFC Ltd.

The National Capital Region, the largest property market, will see tough times in the coming six

months, said the survey.

Approximately, 26 developers in NCR have come under the National Company Law Appellate

Tribunal (NCLAT) in the past few months. The sentiment score for the western region has also

gone in the red for the first time. Both the north and west zones have had a fair share of investor

interest in the past, which has now waned from the market, the survey said. ____________________________________________________________________________________

Madurai civic body extends building plan approval period to five

years

Town Planning department officials said while they were giving plan approval with two

years validity, as per the new rules the licence will be issued for five years.

The charges for obtaining approval for construction are set to rise as Madurai corporation has

extended the building plan approval period from two years to five years. The new rule came

into effect on October 14, officials said.

Town Planning department officials said while they were giving plan approval with two years

validity, as per the new rules the licence will be issued for five years. This was approved at the

council meeting held on September 26.

An official said the charges for approval will increase accordingly. For instance, if a building

owner paid Rs 2,000 for two years‟ approval, he will have to shell out Rs 5,000 for the same

building now.

The new rule has come into force complying with the Tamil Nadu Combined Building

Development Rules 2019.

It will take more than two years for constructing apartment buildings as well as other bigger

constructions. In some cases, residential building too get delayed due to the troubles in getting

bank loans sanctioned. Since such people used to renew the licence after two years they stood to

benefit from the extended licence period.

The civic body has also introduced refundable deposits to make sure that rainwater

harvesting structure is in place. The building owner has to pay a refundable deposit of Rs 50 per

square metre, while getting building approval. This means that the owner of a building of 1,000

square feet area would be paying Rs 5,000 as refundable deposit.

“The amount will be refunded on the completion of the building and after an inspection by the

officials to make sure rainwater harvesting structure is in place. Earlier, building owners used to

show only the provision for rainwater harvesting structure in the proposed building drawing,”

the official said.

Similarly, an additional Rs 10,000 needs to be paid towards refundable deposit for installing the

board showing building approval details. It is collected to make sure building owners are

following the rules. The owners of buildings, which are approved by Local Planning Authority,

Newspaper/Online ET Realty(online)


Link https://realty.economictimes.indiatimes.com/news/industry/madurai-civic-body-extends-building-plan-approval-period-to-five-years/71646240

have to pay 50% of the money they pay towards infrastructure and amenity charge to the city

corporation. Again, this also refundable, which will be returned on completion of the building.

________________________________________________________________

Ahmedabad: Maruti Infrastructure to complete PMAY houses

Bank guarantee amounting to Rs 3 crore has been seized by the civic body to finish the

pending work of the project.

After blacklisting an Uttar Pradesh-based company for not completing the construction of

houses under Pradhan Mantri Aawas Yojana (PMAY) within the stipulated

deadline, Ahmedabad Municipal Corporation has proposed the name of another agency to

complete the pending work.

MV Omni company failed to construct 1,456 houses under PMAY near ICB Flora in Gota

within the deadline. The company under the directorship of Mathuraprasad Pandey, erected the

structure and completed the plaster work, but flooring, plumbing, wiring, wall erection, laying

of paver blocks and other work were left unfinished.

As the pending work needed to be completed, the civic body has put up a proposal in the

standing committee to get the work done by Maruti Infrastructure. An estimated cost of Rs 26

crore has been fixed to complete the work.

Bank guarantee amounting to Rs 3 crore has been seized by the civic body to finish the pending

work of the project.

Sources said, "MV Omni company's Mathuraprasad Pandey has become bankrupt. He had taken

up work at Baroda Municipal Corporation, Delhi and Bhopal which he couldn't complete. So,

he was blacklisted everywhere."

Harpalsinh Zala, additional city engineer, Housing Projects, said, "MV did not complete the

work within the deadline. So, AMC issued a notice asking the company to complete the work in

three months, which they failed to. Left with no option, the civic body blacklisted it."

Regarding the money needed to complete the work, Zala said, "We have arrived at an estimate

of Rs 26 crore to complete the pending work. We need to give it to other company. We even

called MV Omni officials to provide us an estimate of the remaining work, but they did not turn

up. We reviewed it ourselves and arrived at the estimated cost. We have put up a proposal in the

Standing Committee to award the contract to Maruti Infrastructure."

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/residential/ahmedabad-maruti-infrastructure-to-complete-pmay-houses/71644577

Tamil Nadu to review housing policy after World Bank

intervention

The development comes after the World Bank expressed reservations over the final report

submitted during a meeting on state’s housing projects with the international agency last

month.

The state government is likely to review a report on framing Tamil Nadu‟s first Urban Housing

and Habitat Policy, which deals with significant aspects such as public private partnership in

housing projects, housing finance and stamp duty.

The development comes after the World Bank expressed reservations over the final report

submitted during a meeting on state‟s housing projects with the international agency last month.

Official sources with the housing and urban development department said that a World Bank

team suggested that the study should be taken forward nonetheless. “A consultant would be

appointed for the purpose and a new report for the policy would prepared. The international

agency was not satisfied with the report and insisted on additions,” a housing and urban

development department official said.

The World Bank is providing assistance of $500 million, largely for Tamil Nadu Slum

Clearance Board (TNSCB) projects, of which, $50 million was meant for various urban

development activities, the official added. However, none of the officials revealed the reason

for the international agency‟s reservations over the report on habitat policy.

Housing and urban development secretary Rajesh Lakhoni did not respond to calls or messages

seeking his comments over the issue.

The state government had engaged a consultant to prepare the Urban Housing and Habitat

Policy that was planned to be notified after the state government gave its approval.

The report dealt with multiple aspects, including housing finance, housing project development,

land and infrastructure availability and planning. The report also stressed the need to slash

stamp duty from 11% to 7% to facilitate the availability of dwelling units more affordable.

Former professor of urban engineering at Anna University K P Subramanian said the housing

and habitat policy should be a holistic document.



Link https://realty.economictimes.indiatimes.com/news/industry/tamil-nadu-to-review-housing-policy-after-world-bank-intervention/71644749

“Housing doesn‟t mean providing just shelter, transportation is also a key aspect that needs to

be considered. TNHB should not be engaged in just building housing units rather it must be a

facilitator providing land for residential constructions,” he said.

________________________________________________________________

Kerala RERA registrations may begin next week

The other states, where RERA has already been set up, had witnessed a mad rush for

occupancy certificates prior to notification, which deals with registration of projects.

With the government setting up the Kerala Real Estate Regulatory Authority (KRERA), the

registration of real estate projects with the authority is likely to begin next week.

The notification on commencement of Section 3 of the Kerala Real estate (Regulation and

Development) Rules, which mandates registration of real estate projects with the authority, is

expected this month itself, according to KRERA chairman P H Kurien.

“All ongoing projects and those pending completion certificates will have to be registered with

the authority once Section 3 commences. There shall not be any advertising or soliciting by

promoters without getting their ongoing projects registered,” said Kurien.

The registrations are done under two categories: Projects for which all approvals and permits

have been obtained on or after the date of notification of commencement of Section 3 and

ongoing projects for which occupancy certificate (OC) has not been issued.

The other states, where Rera has already been set up, had witnessed a mad rush for occupancy

certificates prior to notification, which deals with registration of projects. The officials

anticipate a similar move here as well.

The rules mandate that the promoter will have to pay a registration fee at the time of

application. The amount is calculated at Rs 10 per sq m of plot area. As for buildings, it is

calculated at Rs 25 per sq m of total floor area of residential projects and Rs 50 per sq m of total

floor area depending upon nature of projects awaiting occupancy certificate. The commercial

projects or any other projects will be charged a registration fee of Rs 100 per sq m of total floor

area.

“We hope that rights of both buyers and builders are equally upheld. One of our apprehensions

is that while OC is crucial, service providers like the KWA or the KSEB and local bodies

responsible for issuance of OC are not brought under Rera. We have already recommended it to

the government,” said S Krishnakumar, chairman, Credai Kerala.

In states like Maharashtra, the regulatory authority had come across cases, where it was debated

whether they should insist on registration of projects with Rera, which did not have an OC but

had commenced long before the Act was notified.

KRERA is also likely to come across similar instances and officials might have to grapple with



Link https://realty.economictimes.indiatimes.com/news/industry/kerala-rera-registrations-may-begin-next-week/71641464

unauthorised constructions which are yet to receive occupancy certificate. “We are here to make

sure that builders meet their mandatory obligations with buyers. Wrongful information or

advertisement done contrary to information given at the time of registration would lead to heavy

penalties,” said Kurien.

____________________________________________________________________________________

Give land pattas to poor by Ugadi: Andhra Pradesh CM

The CM ordered officials to allot lands and construct houses for the poor instead of giving

them apartment plots.

Chief minister YS Jaganmohan Reddy, in a review meeting on Thursday, instructed the officials

to give land pattas and construct houses in urban regions for the poor by Ugadi wherever

possible.

The CM ordered officials to allot lands and construct houses for the poor instead of giving them

apartment plots. „The present plots where the poor have been staying are not properly

maintained,” the CM said.

He asked the officials to find a solution to tackle the current problems in the plots. He also

instructed them to prepare regulations for the regularisation of illegal structures. He further

ordered the officials to take only Rs 1 for such identified areas up to two cents.

The officials explained the identification of beneficiaries by grama sabhas to the CM.

According to the details given by the officials, so far 20,47,325 beneficiaries have been

identified and the count may increase.

About 19,389 acres of land has been identified in rural areas and estimated that another 8,000

acres would be required. In urban areas, about 2,559 acres have been identified and estimated

that more 11,000 acres would be required. Officials said that approximately Rs 10,000 to Rs

12,000 crores will be required for this project.

The CM ordered them to display the list at village and ward secretariats. If the applications are

rejected, he asked them to mention the reasons in the notice board.

________________________________________________________________



Link https://realty.economictimes.indiatimes.com/news/industry/give-land-pattas-to-poor-by-ugadi-andhra-pradesh-cm/71651764

Exposure to Sunblink an outcome of market consolidation: DHFL

DHFL was responding to a report Thursday by ET that mentioned the lender had loaned

Rs 2,186 crore to Sunblink Real Estate, which is at the centre of investigations into the

financial operations of the deceased gangster.

Dewan Housing Finance (DHFL) Thursday attributed the quantum of its exposure to property

company Sunblink, currently under a federal probe for its alleged deals with the late gangster

Iqbal Memon, as an outcome of market consolidation that caused several loans to various

companies to be bunched together and Sunblink listed as the borrower.

DHFL was responding to a report Thursday by ET that mentioned the lender had loaned Rs

2,186 crore to Sunblink Real Estate, which is at the centre of investigations into the financial

operations of the deceased gangster.

“DHFL had funded certain projects of various companies,” the home financier said in a filing

with the stock exchanges. “Due to market conditions, the borrowers had streamlined their

internal operations whereby they have, by certain corporate actions undertaken recently, merged

certain of their companies into Sunblink. As a result, as on date, Sunblink is mentioned as a

borrower.”

The ET report had also mentioned, citing officials at the Enforcement Directorate (ED), that

DHFL was not being probed, and that the agency was only investigating the use of funds by

Sunblink. “The amounts mentioned were not lent to Sunblink,” DHFL said in its statement.

“DHFL‟s actions have been only to enhance its security cover and cash flow receivables on the

lending.”

The ED believes that funds worth Rs 2,186 crore were allegedly routed overseas by Sunblink

into the accounts of the late Memon, also known as Iqbal Mirchi, according to media reports.

Q1 results

The company swung to a loss in the first quarter ended June 2019 as income collapsed as the

company continued to gasp for liquidity. In a late evening notice to the stock exchanges, the

company reported a loss of Rs 206 crore in the quarter ended June 2019 from a profit of Rs 435

crore a year ago mainly as revenues collapsed. Total revenue of the company fell 24 per cent to

Rs 2396 crore from Rs 3160 crore as business came to a standstill during the quarter because

the company did not have enough liquidity for fresh lending.

In audit report, CAs KK Mankeshwar & Co pointed out to the uncertainty the company is



Link https://realty.economictimes.indiatimes.com/news/allied-industries/exposure-to-sunblink-an-outcome-of-market-consolidation-dhfl/71646161

facing in continuing as a going concern due to the consistent downgrades in its credit ratings

impacting its ability to raise funds.

________________________________________________________________

Property investment in China boost as new construction rise in

Sept 2019

Property investment in September grew 10.5% from year earlier, unchanged from the

pace of growth in August, according to Reuters calculations based on National Bureau of

Statistics (NBS) data on Friday.

China's property investment stayed buoyant in September, boosted by a rise in new construction

activity, underlining hopes that resilience in the sector will help cushion a broader slowdown in

the world's second-largest economy.

But growth in property transactions slowed during what is traditionally China's "Golden

September" peak season for new home sales, hurt by persistent pressures in the sector as a

crackdown on speculators showed little signs of abating.

Property investment is a significant growth driver for China. A robust real estate market at

home, propped up by elevated home prices, has offered policymakers some relief as factories

struggle to land new orders from abroad amid Beijing's bruising trade war with the United

States.

Property investment in September grew 10.5% from year earlier, unchanged from the pace of

growth in August, according to Reuters calculations based on National Bureau of

Statistics (NBS) data on Friday.

For the first three quarters, property investment also grew 10.5% on year, compared with a

9.9% uptick in the same period last year and 10.5% in the first eight months.

New construction starts measured by floor area in September quickened to a 6.7% rise from a

year earlier, versus August's 4.9% gain, Reuters calculations showed.

"The September figures on property actually were better than expected and showed somewhat

of a rebound," said Yan Yuejing, director of the Shanghai-based E-house China Research and

Development Institution.

The generally upbeat investment readings were in contrast to China's economic growth which

slowed more than expected to 6.0% year-on-year in the third quarter, the weakest pace in almost

three decades, amid a Sino-U.S. trade war and weak domestic demand.

Weak factory activity, exports and a deeper contraction in producer prices last month have

added to worries that China's downturn will raise the risk of a global recession.



Link https://realty.economictimes.indiatimes.com/news/industry/property-investment-in-china-boost-as-new-construction-rise-in-sept-2019/71651629

However, property sales by floor area, a leading indicator of demand, rose 2.9% on year in

September, down from 4.7% growth in August, Reuters calculations showed, although still

better than the 3.6% fall recorded in the same period last year.

For January-September, sales fell 0.1% on an annual basis, narrowing from a 0.6% decline in

the first eight months.

Funds raised by China's real estate developers increased 7.1% from a year earlier in the nine-

month period, higher than a 6.6% rise in January-August, official data showed.

Funding pressure is likely to persist, however, as Beijing has made it clear that no significant

easing will come to developers. The Politburo, a top decision-making body of the ruling

Communist Party, took the unusual step in July of explicitly ruling out using the property

market as a form of short-term stimulus to pull the economy out of its downturn.

China's banks extended more new yuan loans than expected in September, as the government

ramped up support to stabilise the slowing economy.

Household loans, mostly mortgages, rose to 755 billion yuan ($106.71 billion) last month from

653.8 billion yuan in August, central bank data showed.

________________________________________________________________

Pause needed for Dubai real estate recovery: Hussain Sajwani,

DAMAC Properties

The slowdown has squeezed the earnings of the emirate's top developers, including

DAMAC, whose second-quarter profit fell 87% and whose share price has lost nearly

40% so far this year.

The chairman of DAMAC Properties said on Thursday property developers should refrain from

launching any new residential projects in Dubai for at least a year in order to kickstart a

recovery in a market where prices are down sharply.

Dubai has faced a slowing real estate market for most of the decade, barring a brief pickup more

than five years ago. Housing oversupply has driven prices down at least a quarter since 2014.

The slowdown has squeezed the earnings of the emirate's top developers, including DAMAC,

whose second-quarter profit fell 87% and whose share price has lost nearly 40% so far this year.

"Let the market stabilise," DAMAC chairman Hussain Sajwani told Reuters at the company's

office in Dubai.

DAMAC has launched one project so far this year, he said, compared to two in 2018 and the

roughly five or six it had launched annually in prior years.

"We're going very conservative," he said. Sajwani, who founded the company in 2002, said

2019 had been tougher than the previous year but was manageable and that this year's sales

would be like those seen in 2018.

The DAMAC chairman said a large, rival company had been "dumping in the market" with new

launches over the past 18 months.

"It's bad for the country, for the market, and it's going to be bad for them." Sajwani declined to

identify the company. Emaar Properties is the biggest listed developer in Dubai.

He said the market could start to recover in two years' time if there were no new launches over

the same period but warned if no action were taken, the situation could worsen.

"Everybody will be a loser - the customer, the developer and the city," he said. However, he

said projects that had been launched should go ahead.

Sajwani said he had shared his opinion with Dubai's ruler Sheikh Mohammed bin Rashid al-



Link https://realty.economictimes.indiatimes.com/news/industry/pause-needed-for-dubai-real-estate-recovery-hussain-sajwani-damac-properties/71646800

Maktoum, who in September announced the government was setting up a real-estate planning

commission to regulate the sector.

Property is a significant contributor to the economy of Dubai, which has no major oil or gas

resources.

_______________________________________________________________

1019 OctOct 2019credaibengal.in/wp-content/uploads/2019/10/19Oct19-CB-Daily-News-Update.pdf · chairman and CEO, HDFC Ltd. The National Capital Region, the largest property market,

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