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Blackstone-backed India REIT wins over investors amid low rates

Blackstone-backed India REIT wins over investors amid low rates

June 19, 2019 in Blackstone

BY: Dhwani Pandya India’s first ever real estate investment trust has outperformed peers since its debut in late March, helped by a low interest rate environment that’s forcing investors to look elsewhere for yield. Blackstone Group LP-backed Embassy Office Parks REIT has risen 21% since its listing, beating indexes that track REITs in Singapore and Japan. “This kind of return isn’t usual from a REIT,” said K V S Manian, an executive director at Kotak Mahindra Bank Ltd. “A large part has to do with the benign interest rate environment in India now.” Interest rates in India are on a downward trajectory after the central bank cut borrowing costs three times since January. Economists say further easing is expected. REITs offer a fixed return from a pool of rent-yielding assets, along with the prospect of capital appreciation. Embassy operates around 33 million square feet of office space and has marquee tenants including Microsoft Corp. and Rolls-Royce Holdings Plc. The REIT should see compound annual growth in rental income of around 16% through 2023, analysts at Kotak Securities Ltd. wrote in a report last month. Rental income will receive a boost from re-pricing of old contracts at higher amounts and a better mix of occupants as leases are renewed, the report said. Embassy’s securities were rated outperform by Credit Suisse Group AG earlier this month, bringing buy recommendations on the REIT to six, versus one hold and zero sells. Sources: realty.economictimes.indiatimes.com

NAA pulls-up Bengaluru’s Sattva Developer for not passing GST gain to buyers

NAA pulls-up Bengaluru’s Sattva Developer for not passing GST gain to buyers

June 17, 2019 in GST

NEW DELHI: In a setback for real estate developers, the National Anti-Profiteering Authority has held that homebuyers cannot endlessly wait to get the benefit of input tax credit (ITC) for GST payments as the law does not provide that the gain should only accrue on completion of the project. Nearly two years after the launch of GST, several builders have not passed on the benefit of credits earned for taxes paid on inputs such as steel, cement and paint, arguing that the amount will be settled at the time of delivery. In fact, this is one of the key reasons for the government to shift to a new structure where tax credits will not be available. Rejecting Bengaluru-based Sattva Developer's contention that real estate business was market-driven, spread over four-five years and the pricing depended on multiple factors, the anti-profiteering body pointed out that the realtor had itself admitted to a gain of Rs 9 per square foot and said that the right methodology will be to link the ITC benefit as a ratio of turnover. The Director General of Anti-Profiteering (DGAP) had estimated the ITC-to turnover ratio at 7.8% after the introduction of GST, compared to 5.1% in the pre-GST period. Based on these calculations, DGAP had estimated the amount "profiteered" at a shade under Rs 1 crore in the builder's Laurel Heights project, which was questioned by Sattva Developers. The builder was ordered to pass on the gain from the "profiteered" amount to homebuyers. "With this and other recent spate of rulings, it is quite evident that the National Anti-Profiteering Authority is closely monitoring the real estate sector, to ensure that any benefit gained by developers reaches the homebuyers," said Harpreet Singh, partner at consulting firm KPMG. Sources: realty.economictimes.indiatimes.com

Jaypee Infratech creditors to meet on Jun 20 to decide future course

Jaypee Infratech creditors to meet on Jun 20 to decide future course

June 16, 2019 in Jaiprakash Associates

NEW DELHI: Jaypee Infratech's creditors, which include banks and home buyers, will meet on June 20 to assess the progress of the ongoing insolvency process and decide future course of action. The meeting has been called days after majority of banks voted against state-owned NBCC's bid to acquire the debt ridden realty firm. A meeting of Committee of Creditors (CoC) will be held on June 20, 2019, Jaypee Infratech's Interim Resolution Professional (IRP) Anuj Jain said in a regulatory filing. He did not disclose the agenda of the meeting. Sources, however, said that the CoC has been called to discuss the status update of the ongoing insolvency proceedings and the way forward. A majority of lenders voted against NBCC's bid on June 10 but most home buyers wanted the state-owned company to takeover the debt-laden realty firm, sources had said. The National Company Law Appellate Tribunal (NCLAT) had clarified on June 10 that it did not bar lenders from voting against NBCC's resolution plan. It also directed IRP to report the outcome of voting process directly to it. The NCLAT also advanced the date of next hearing to July 17 from July 2. The exact percentage of votes in favour and against the NBCC's takeover plan was not disclosed due to an insolvency court order. The sources had said the bid possibly did not muster the requisite nod of two-third of lenders and buyers. The voting result is to be placed before the NCLAT. In most bankruptcy proceedings, lenders have the right to vote for or against a resolution plan for a debt-laden firm. In the case of realty firms, home buyers also have voting rights at par with lenders. As many as 13 banks and over 23,000 homebuyers have voting rights in the CoC of Jaypee Infratech. Homebuyers represent nearly 60 per cent of voting rights, while banks have the rest. For approval of any resolution plan, at least 66 per cent votes should be in favour. Bankers had reservation with the NBCC's bid because of certain concession sought by the state-owned firm related to future tax liabilities and approval from development authority YEIDA for transfer of land and Yamuna Expressway. This is the second round of bidding process to revive Jaypee Infratech, which went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium. In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. Later in October 2018, the IRP started the second round of bidding process. Early last month, the CoC rejected Suraksha Realty's bid. On May 30, the CoC decided to put on vote NBCC's bid even as bankers had reservations against the proposal. The voting process, which started on May 31, concluded on June 10. Last week, lenders filed a petition before the NCLAT to allow them to vote against NBCC's bid in an ongoing insolvency process. They also pleaded that other options should be explored, including considering of other bids or initiating fresh expression of interest. Adani group recently made an unsolicited and non-binding bid to acquire Jaypee Infratech. Sources: realty.economictimes.indiatimes.com

Gurugram: Nine years on, BPTP’s Park Spacio is still far from completion

Gurugram: Nine years on, BPTP’s Park Spacio is still far from completion

June 15, 2019 in Park Spacio

GURUGRAM: A 23-acre housing society— Park Spacio in Sector 37D by BPTP — launched in June 2010, is yet to be handed over to homebuyers. Hundreds of aggrieved families are still uncertain about getting their houses in the society. After launching the project nine years ago, the developer promised possession to buyers in December 2016. However, only 60 percent of the project has been completed and the deadline is being repeatedly extended every six months. The buyers have alleged that after taking 90 percent of the money, the builder keeps announcing fresh deadlines with no real work on the ground. On top of this, sudden stoppage of construction work due to problems with payment between developer and contractor is a grave concern for the already-stressed buyers. Amit Garg, one of the buyers, said that the developer has been playing games with homebuyers by taking the full amount and not giving anything till date. “The builder-buyers agreement has nothing for buyers. I have to pay both, the EMI and rent. I have been undergoing mental trauma ever since I bought the flat” he said. Another buyer asked, “May I know what the government has done by putting Rera into action without providing any rights to the buyer?” He added, “Going to the Rera office and talking to the people sitting there makes us feel helpless and nothing more”. “They launched the project in the year 2010 and it’s 2019. They haven’t provided possession of flats to a single person. Where are the rules and regulations? Are regulations only meant for buyers, who have to pay hefty penalties when they are unable to pay the amount even with small delays? These fraud builders take all the money and infinite time to deliver,” he said. Neeraj Singh, another buyer, said the work in the project is on hold. “We are getting lots of emails from the developer saying that the possession will be given by November this year, but the work itself has not resumed. Therefore, possession of flats looks difficult as of now,” he said. He further said that he visited the site and saw no progress in the project. When he inquired, he was told that the developer has not paid the contractors since December last year, therefore work hasn’t resumed. Sakshi Molasi, one of the initial buyers, said, “I live in a rented house in Gurgaon for the past 6 years. I purchased a unit in L tower 2 years ago as I wished to have my own house. I have already paid 95 percent of my flat price to the builder, but all seems to have gone in vain”. Meanwhile, VP (marketing & customer service), BPTP, Rohit Mohan said, “The project is registered with Rera Panchkula. We are confident we will be able to deliver the same within 6 to 8 months. We have completed the structure and major electrical and plumbing works. The project is at the final stage.” Sources: realty.economictimes.indiatimes.com

Builder charging exorbitant interest from buyers on delayed payment is unfair: NCDRC

Builder charging exorbitant interest from buyers on delayed payment is unfair: NCDRC

June 14, 2019 in Uncategorized

NEW DELHI: Forcing homebuyers to pay interest in the range of 18 per cent per annum for delay in payment of installment while the builders themselves pay a paltry 1.5-2 per cent for delay in project amounts to unfair trade practice by real estate companies which cannot be enforced, the apex consumer commission has ruled, bringing relief to homebuyers. A bench of National Consumer Disputes Redressal Commission’s president Justice R K Agrawal and member M Shreesha said that such provisions in builder-buyer agreement are unfair and unreasonable and real estate company could not be allowed to bind home-buyers with one-sided contractual terms which protect the interests of the company at the cost of the buyers. It said that there should be parity in the rate of interest to be paid by builders and homebuyers for not complying with the terms of agreement and suggested that the builders should be compelled to pay the same rate of interest as compensation for delay in project which they demand from buyers in case of delay in payment. The court passed the order on a plea of a homebuyer who had booked a flat in 2012 in ‘Winter Hills 77’ residential housing project in Gurugram which was being developed by a real estate company Umang Realtech Pvt Ltd. The buyer was promised possession of the flat by December 2015 and had paid around Rs 83 lakh to the builder in different instalments. As the builder failed to deliver the project even four years after the promised dateline, the buyer sought refund of the money with 18 per cent interest per annum, at a rate at which he had paid penalty to builder for delay in payment on his part. 69358262 The company, however, said that it was liable to pay compensation at the rate of Rs 5 per square feet for delay as per the agreement. Rejecting its contention, the commission said, “It is also an admitted fact that the opposite party (the company) charged interest at the rate 18 per cent per annum for any delayed payments made by the purchasers and there is no justification in offering a meager Rs 5- per square feet, which comes to approximately 1.4 per cent per annum which is only a paltry percentage of what the company was charging for any delayed payments”. “In any case, such a clause, where the seller, in case of default on the part of the buyer seeks to recover interest a 18 per cent per annum but offers only Rs 5 per square feet for any delay in delivery of possession, amounts to unfair trade practice since it gives an unfair advantage to seller over the buyer. We are of the view that such terms in clauses are extremely unfair and one-sided and fall within the definition of unfair trade practice,” the commission said. 69635788 Although the commission said if the seller is charging interest of 18 per cent per annum from buyer then logically buyer should also be paid at the same rate, it, however, directed the company to refund the money with 12 per cent interest taking into account that banks have lowered the interest rate in recent years. It also directed the company to pay compensation of Rs 1 lakh to the buyer. Sources: realty.economictimes.indiatimes.com

Gurugram: Realtech Realtors’ director arrested for duping buyers

Gurugram: Realtech Realtors’ director arrested for duping buyers

June 13, 2019 in Uncategorized

GURUGRAM: One of the directors of a city-based real estate company was arrested on Tuesday for allegedly duping over 60 homebuyers. The developer — Realtech Realtors Private Limited — is accused of collecting money from buyers for the residential project “The Luxurium” in Sector 73 and diverting the money for other purposes without completing the project. The accused has been identified as Atul Kumar (35), a resident of Shivaji Nagar. A case was registered against the company in 2017 at Badshapur police station and according to the police, Kumar despite repeated notices did not join the police investigation and evaded arrest for nearly two years. Police sources said that Kumar is among the three accused in the case. His other two partners are on the run. “We had been conducting raids, for some time, but the accused always managed to give police the slip. On Tuesday, however, we received information about Kumar’s location and arresed him from his house,” said inspector Mukesh Mann, SHO, Badshapur police station. The police had registered a case in 2017 after receiving a complaint from 66 homebuyers who had invested around 24 crore in the residential project. As per the norm, a developer cannot advertise and collect money from buyers before approval of building plan on the name of “pre-launch”. The building plan of the project was approved in February 2012 but the developer had stated collecting money from buyers since October 2011. The homebuyers in their complaint said, “The company was supposed to complete the project by 2015 and hand over the possession. We have already paid the developer more than 60% of the total amount. Later we got to know that the developer has been diverting the money to their other projects.” When contacted, district town planner (planning) RS Batth, said, “Several buyers who have invested in the project have approached us with the complaint. We carried out a probe and then recommended the filing of an FIR against the developer.” Despite several attempts, officials from the builder’s company could not be contacted. Sources: realty.economictimes.indiatimes.com

Gurugram records 22% rise in stamp duty collections

Gurugram records 22% rise in stamp duty collections

June 12, 2019 in Uncategorized

GURUGRAM: Stamp duty collections in Gurugram have risen by approximately 22% in the past two years, despite the ongoing slump in the city’s real estate sector. The numbers are more surprising, considering reports of fewer new project launches and an inventory pile-up. The total stamp duty collected in the district was Rs 1,284 crore in financial year 2016-2017, which rose to Rs 1,303 crore in 2017-18, and to Rs 1,560 crore in 2018-19. The numbers cover all three tehsils and one sub-tehsil of the city, including Gurugram, Manesar, Farrukhnagar and Wazirabad. Wazirabad, covering the whole of Golf Course Road and Southern Peripheral Road was made a sub-tehsil in 2017-18. Not surprisingly, in 2018-19, 43% of the stamp duty collected — approximately Rs 678 crore — came from Wazirabad. According to deputy commissioner Amit Khatri, there are three reasons for the steady increase in stamp duty collections, the major one being stabilisation of circle rates over the past few years. “Circle rates of Gurugram district were regularly lowered in 2016-17 and 2017-18, as the government wanted to give the real estate sector a boost. Circle rates were again raised only in 2018-19.” While the Haryana government kept Gurugram’s circle rates stable between 2014-15 and 2015-16, they were lowered over the next two years — by 10-15% in 2016-17, and again by 5% in 2017-18. Last year, they were again raised by 10-25%. Khatri added that besides stable circle rates, ease of access and improving city infrastructure has ensured continuous investments in land, and hence increase in stamp duty collections. Industry voices, though, differed from Khatri, saying increase in stamp duty collections don’t necessarily mean growth in investment in the real estate sector. Praveen Jain, chairman, NAREDCO and MD, Tulip Infrastructure, said rise in stamp duty collections is a result of many long delayed projects that are now nearing completion. “Many long-pending projects are now nearing completion, and homebuyers are registering their properties, which explains the rise in stamp duty collections,” said Jain. He added that investment by developers in new projects remains extremely low. According to developers, another reason for the rise in stamp duty collections is the increase in floor area ratio (FAR) for independent plots. “Many transactions are happening due to higher FAR on plots, allowing addition of independent floors to plotted houses, which is another reason for the rise in stamp duty transactions. If you look at the purchase of bigger land parcels by developers, they have almost come to a halt,” said a city-based developer. Sources: realty.economictimes.indiatimes.com

Plea in SC for action against Indiabulls Housing for misappropriating 98,000 crore

Plea in SC for action against Indiabulls Housing for misappropriating 98,000 crore

June 11, 2019 in Indiabulls

NEW DELHI: A plea was filed in the Supreme Court Monday seeking legal action against Indiabulls Housing Finance Limited (IHFL), its Chairman and directors for alleged misappropriation of Rs 98,000 crore of public money. The petition alleged that money worth thousands of crores were siphoned off by Sameer Gehlaut, the chairman of the firm, and the directors of Indiabulls for their personal use. Abhay Yadav, the petitioner and one of the IHFL shareholders, alleged that Gehlaut, with the help of one Harish Fabiani - an NRI based in Spain, allegedly created multiple "shell companies" to which IHFL loaned huge sums of money under "bogus and non-existent pretexts". These companies further transferred the loan amount to other companies which were either run, directed or operated by Gehlaut, his family members or other directors of Indiabulls, the plea alleged. "This entire chain of scam would have never been possible without the conniving with the auditors, credit rating agencies and concerned officials of the respective government departments," the plea said. The plea also sought directions to Securities and Exchange Board of India (SEBI), Centre, Reserve Bank of India (RBI), Income Tax Department or the competent authority to restore, protect and conserve the defrauded and misappropriated investors' money. It alleged that Gehlaut was rich, influential, powerful and has extremely strong political connections and he, in conspiracy with the other directors, could leave the country with the money of investors. "Chairman Sameer Gehlaut in conspiracy with the other Directors has mercilessly and heinously taken the public money of approximate more than Rs 98,000 crore for their exclusive personal use," the plea said. It alleged that the "modus-operandi" opted by Gehlaut and the alleged co-conspirators to defraud not only the investors at large but also the public exchequer, was multi-dimensional duly buckled-up with manifold layers of criminal and highly unlawful activities. "Apparently, the sole purpose of this biggest and huge financial scam was to take the entire public money of the innocent shareholders, PSU Banks and Private Banks etc. to make it for the criminally exclusive and unlawful purposes of Gehlaut and his family members. Shockingly, Gehlaut and his Particeps Criminis (co-conspirators) did not leave almost any financial enactments to violate," it said. The plea further claimed that Gehlaut and his wife have also been deliberately involved in taking kickbacks from his alleged borrowers and misled the regulating authorities. "Gehlaut and his Particeps Criminis have, while advancing the alleged loans to the dummy and shell companies, made various bogus entries while taking the interest on annual basis instead of a monthly basis and by this way neither TDS could have been deducted on timely manner nor even a single penny of late penalty has been paid to the public exchequer at Income Tax Department which resulted in further injury of more than hundreds of crores rupees," it claimed. The plea further said that while building the dummy and shell companies, around Rs 1,700 crores from unknown sources were used, which was illegal and forbidden by prevention of money laundering act. "They have also done the gross criminal violation and willful heinous misconduct against the SEBI laws as well by not following of express provision of SEBI & Companies act's Corporate Governance Policy... have also violated the RBI & NHB guidelines and other laws as well," it claimed. The company officials were the directors, promoters and beneficiaries of interconnected Non-Banking finance companies at Delhi, Mumbai, Gurugram, the plea said. Sources: realty.economictimes.indiatimes.com

Buyer moves into unfinished Amrapali Zodiac flat

Buyer moves into unfinished Amrapali Zodiac flat

June 10, 2019 in Amrapali News

NOIDA: A buyer with a flat in Tower A of Zodiac society in Sector 120 — having waited for over a year for the beleaguered builder Amrapali to complete the flat’s construction and fetching the no objection certificate (NOC) from authorities — has moved into the flat with his family. The flat is incomplete, with flooring in one room, kitchen and fittings in bathrooms yet to be completed, but Akhilesh Verma moved in any way, citing financial constraints, becoming the first person to move into Zodiac without an NOC. Living in a flat without NOC is not permitted by law, but Verma said his hand was forced. His decision has been supported by 21 Zodiac residents who have signed an undertaking in his support. There are 200 flats in Tower A and B of the society, where the builder has handed over keys to buyers, but they are unable to move in for lack of NOCs, which are only given to properties after a builder completes a flat and other common area constructions, and submits the fee for the certificate. Out of Amrapali’s 42,000 flats, 25,000 are yet to be completed, leaving thousands of buyers in the lurch. In Zodiac alone, only 1,700 of 2,500 flats are occupied. Even in the completed flats, there are several infrastructure gaps. Verma said he was forced to flout the NOC rule. “I could take this step only because of support from other buyers. The builder had handed me the key as I had paid up in full much before its financial and legal battles spilled over. I was indecisive about shifting as the builder had promised to finish the interiors before applying for NOC, but I finally decided to get it all done on my own. I have got the bathrooms and kitchen completed. The walls need finishing, but we’re relieved to have moved in, instead of having to live on rent. I used to spend Rs 48,000 every month (Rs 25,000 as EMI; Rs 23,000 as rent), which I couldn’t bear any longer,” Verma said. His decision was supported by 21 residents. “We took responsibility for Verma’s family as he was suffering from mental agony from financial stress. I think his decision will encourage others to follow,” said Joginder Singh, former vice-president of Amrapali Zodiac Residents Welfare Association. Sources: realty.economictimes.indiatimes.com

Jaypee Infratech home buyers may stop paying EMIs

Jaypee Infratech home buyers may stop paying EMIs

June 9, 2019 in Jaiprakash Associates

NEW DELHI: As the voting process on the NBCC's bid for Jaypee Infratech (JIL) ends on Monday, with no signs of the public sector enterprise getting through, sources say, home buyers plan to stop paying the ongoing EMIs (equated monthly installment) as many of them have "lost hope of a resolution". The online voting on the NBCC's bid started on May 31. The bid would require 66 per cent votes in its favour to make the cut and acquire the insolvent realty company. The home buyers, who are mostly in favour of the bid, have a vote share of around 58 per cent, but of the total 22,000 home buyers, only 9,000 have voted so far, further declining the weight on the NBCC's bid. IDBI Bank, the prime lender to JIL, which has around 18 per cent vote share is already against the bid on the ground of the resolution plan being "conditional". A member of the home buyers association told IANS: "Now we are telling people (the home buyers) that we should stop paying our EMIs. This is going to be our next step." "There are a couple of hearings, after which I think, we will take this stand... All the home buyers would have to stop paying EMIs, because if only one or two stop... it won't help. It has to be mass step." Around 70 per cent of the 22,000 home buyers took loans, he noted. JIL went into the insolvency process in 2017 after the National Company Law Tribunal (NCLT) admitted an application by IDBI Bank-led consortium seeking resolution of the realty firm. In the first round of insolvency proceedings, a Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. In October 2018, interim resolution professional (IRP) Anuj Jain started the second round of bidding process. In May this year, the Committee of Creditors (CoC) rejected a bid of Suraksha Realty through a voting process, following which, the CoC decided to consider NBCC's offer. The CoC eventually decided to put on vote the revised offer of the NBCC. Although homebuyers favoured the voting process, the IDBI Bank-led lenders dissented as the bid was seen as conditional. The NBCC's bid seeks the cancellation of an estimated income tax liability of Rs 33,000 crore due over a period of 30 years under the concession agreement for the transfer of land from the Yamuna Expressway Industrial Development Authority (YEIDA) to Jaypee Infratech Limited (JIL). The PSU also sought relief from taking consent of the YEIDA for any business transfer between JIL and Yamuna Expressway SPV for transfer of assets as well as land parcels from JIL to the land bank "special purpose vehicle" (SPV). The CoC asked the state-run construction major to clarify on the conditions and also sought their removal from the plan. The NBCC made some minor changes to its bid including reducing the quantity of unsold inventory it plans to give out to the lenders, but did not do away with the contentious clauses related to income tax liability and taking approval of YEIDA for any business transfer between YEIDA and JIL. Following this, although the CoC put the bid on vote starting May 30, it eventually approached the National Company Law Appellate Tribunal (NCLAT) seeking permission to reject the bid, which the Delhi-based appellate tribunal will hear on Monday. For now, the NBCC's bid seems unlikely to make it through and relief for the over 20,000 stranded home buyers does not seem coming anytime soon. Sources: realty.economictimes.indiatimes.com

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