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22-Oct-2019
10-Oct-2019 22-Oct-2019
CREDAI Bengal Daily News Update | 22.10.19
WEST BENGAL NEWS
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Newspaper/Online The Times of India
Date October 23, 2019
OTHER NEWS
PE funds pump $3.8 billion into Indian real estate
That’s 19% higher than the investment of $3.2 billion during the same period a year ago,
according to ANAROCK Property Consultants data.
With banks and NBFCs turning their back on real estate, private equity funds are coming to the
rescue of the cash-starved sector. On the backdrop of the liquidity squeeze, private equity funds
have invested $3.8 billion in Indian real estate in the first nine months of the calendar year, 19%
higher than the $3.2 billion invested during the same period a year ago.
That’s 19% higher than the investment of $3.2 billion during the same period a year ago,
according to ANAROCK Property Consultants data. Most of it went to commercial real estate
and close to half to Mumbai. Investment in the National Capital Region (NCR) however
declined.
As much as 95% of the money, or $3.6 billion, flowed in as equity investment at a time when
other financiers are either avoiding exposure to the sector or have increased the risk weight
associated with it. The remaining 5% was in the form of structured debt.
“Commercial real estate continues to be the hot investment target for private equity investors in
2019 and the trend will most likely continue in the quarters ahead,” said ANAROCK Capital
managing director and CEO Shobhit Agarwal. “To add to it, the success of India’s first Reit
(real estate investment trust) is a major draw for global investors who are keen to capitalise on
the country’s high demand for Grade A commercial real estate.”
He reckons many investors are eyeing similar Reit opportunities, which in turn will open up
more funding avenues for the sector as and when several large developers begin to list their
commercial assets. India’s first Reit, the Embassy Office Parks Reit, was launched in March.
NBFCs have been hit by a liquidity crunch in the wake of defaults by Infrastructure Leasing &
Financial Services (IL&FS) last year.
While domestic investors’ appetite for the real estate sector has weakened, overseas investors
are reposing their faith in it and also taking advantage of the ongoing liquidity scenario. Of the
$3.8 billion invested so far, the third quarter alone has attracted nearly half of this amount.
Foreign private equity funds continued to dominate the real estate investment scene. Top
investors included Blackstone, Hines, Ascendas and Brookefield.
Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/pe-funds-pump-3-8-billion-into-indian-real-estate/71701056
“Rise in equity investment points at institutional investors’ confidence in underlying growth in
the Indian economy,” said Bhairav Dalal, real estate tax leader, PwC India. “The ongoing
transformation in Indian real estate sector is expected to push long-term returns upward even
though it is facing short-term hiccups right now.”
According to Bhairav, institutional investors will continue to prefer commercial real estate
assets given the robust demand and more monetisation avenues including Reit market opening.
Commercial real estate continued to lead the funds inflow, attracting 79% of the total
investment or $3 billion, in the first three quarters, up 43% from $2.1billion in the year-ago
period.
The residential segment attracted $295 million against $210 million a year ago. Retail and
logistics and warehousing have seen total inflows of around $260 million and $200 million so
far in 2019, respectively.
Among key markets, the Mumbai Metropolitan Region (MMR) saw the maximum inflows at
$1.59 billion, up 3%. Neighbouring Pune registered more than a 200% rise in investments to
nearly $390 million from $125 million. Hyderabad saw a 76% decline to $190 million.
Bengaluru had a 17% yearly gain at nearly $490 million in 2019. Private equity funding in
NCR, however, fell further in 2019 to $115 million from $150 million.
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Law to make rainwater harvesting mandatory for buildings soon:
UP Jalshakti minister
Mahendra Singh, UP's Jalshakti minister said the government was revamping the
traditional water system in villages to recycle household water and use it for irrigation
purposes.
UP's Jalshakti minister Mahendra Singh said on Monday that a new law making it mandatory
for all housing complex, residential colonies, educational institutions, to do rainwater
harvesting will come into effect soon.
"Any violation would involve penal provisions, including jail term," he said at a national
conference on Water Crisis, Public Health and Sustainable Solutions in New Delhi on Monday.
Singh said the government was revamping the traditional water system in villages to recycle
household water and use it for irrigation purposes.
He said PM Narendra Modi put the maximum emphasis on water conservation and water usage
under the Jal Jeevan Mission in the next five years.
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Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/law-to-make-rainwater-harvesting-mandatory-for-buildings-soon-up-jalshakti-minister/71706309
Goa: Only construction projects close to airport need clearance
from Navy
“Thus the apprehension that the Navy will require NOCs from areas as far as Dona Paula
and Agacaim for small buildings is unfounded,” said the Indian Navy in a statement.
With the finalization of the Colour Coded Zoning Map (CCZM) for the area within 20
kilometers around Goa International Airport, only those construction projects which are in the
vicinity of Goa International Airport and in the approach path of the airfield have to obtain a
height clearance no-objection certificate from the Indian Navy, naval authorities said in a
statement.
The CCZM separates areas into various categories based on varying height restrictions. Based
on the CCZM, state government authorities can grant clearance for all residential and
commercial projects that are within a 20 km radius of the airport but which do not fall into the
core area and approach path of the airfield.
“Thus the apprehension that the Navy will require NOCs from areas as far as Dona Paula and
Agacaim for small buildings is unfounded,” said the Indian Navy in a statement.
Local politicians, especially Dabolim MLA and transport minister Mauvin Godinho and former
deputy chief minister Vijai Sardesai accused the Indian Navy of trying to interfere in the state
administration affairs. Politicians have blamed the Navy for implementing the union ministry of
civil aviation’s 2015 notification which stipulates the need for a no objection certificate (NOC)
from the operating authority of an aerodrome, which in Goa is the Indian Navy.
Chief minister Pramod Sawant is expected to convene a meeting of government agencies and
the Indian Navy to resolve the issue on October 22.
Godinho had also claimed that builders find it difficult to obtain NOCs from the Navy since
entry into the naval area is restricted. The Navy has denied this and pointed out that applications
for height clearance is submitted to the local panchayat, which then formally submits the
application to the Indian Navy.
"A person does not need to visit naval premises for NOC purpose, since NOC applications are
forwarded to the Navy through local administration i.e., panchayat and municipality. Hence,
restricted entry into naval areas does not impose any constraints or cause any difficulty to the
applicant," the Indian Navy said in the statement.
Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/goa-only-construction-projects-close-to-airport-need-clearance-from-navy/71700587
Lodha Developers shifts focus from luxury to affordable housing
Macrotech Developers, earlier known as Lodha Developers, will cut the share of premium
housing from its portfolio to about 17% from 30%, said Managing Director Abhishek
Lodha.
A Trump Tower developer in Mumbai, India’s financial hub, is shifting focus to cheaper
apartments and office space as a credit squeeze crimps demand for posh properties.
Macrotech Developers, earlier known as Lodha Developers, will cut the share of premium
housing from its portfolio to about 17% from 30%, said Managing Director Abhishek Lodha.
It’s also looking to increase contributions from so-called affordable housing to about 50% of
revenue over the next three to four years from 40%.
“All our new investment is going in affordable and office,” Lodha said in an interview at the
company’s premium World Towers residential project in Mumbai on Thursday. “We are
managing our liquidity very, very carefully. It is something which we need to watch more
carefully now than we would even 18 months ago.”
India’s real estate market has been battered over the past three years by a series of policies from
Prime Minister Narendra Modi’s government and more recently by a collapse in lending by
non-bank financial companies. While unsold premium homes pile up across the country,
builders are relying on Modi’s home-for-all push to keep demand for budget apartments robust
even as the broader economy decelerates.
Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/lodha-developers-shifts-focus-from-luxury-to-affordable-housing/71702510
The cash crunch comes months before Macrotech is due to repay a $325 million U.S. dollar-
denominated bond it had raised to develop two premium residential properties in London.
Rating companies downgraded the company’s ratings twice this year citing weak sales and
liquidity and its narrowing refinancing options.
One London project is complete, the other will be completed in the next six months, and the
cash flows will help repay the bond, Lodha said. At least until then he doesn’t expect to divest
any more stakes to private equity firms after earlier selling 28% of the company’s holding.
“We are well on track to make the arrangements to make the payment in March 2020,” Lodha
said, declining to share details. “We are available as a secondary source if there is a shortfall.
We don’t expect a shortfall, though.”
Back home in India, Macrotech’s smaller peers are struggling to survive. To help combat the
downturn, Lodha recently started a new business line that would offer apartments at as low as
Rs 25 lakh ($35,000).
India’s property slump
— For homes priced above 40 million rupees, the so-called premium segment, about half have
been unsold since 2013 in the Mumbai metropolitan region, according to Anarock
— Unsold luxury homes costing more than 15 million rupees rose 5% from a year earlier to
86,400 units by the end of September across cities in India; unsold stock across various budget
segments fell 5% to 655,710 units, Anarock data show
— The number of developers in India has plunged by 46% between 2012 and 2018, according
to Edelweiss Securities Ltd.
Authorities must do more to improve demand, and that includes lowering borrowing costs in an
economy where mortgage rates are above 8% despite the central bank reducing its policy rate to
5.15% and inflation running at about 4%, Lodha said.
He also plans to boost the share of Macrotech’s rent-yielding portfolio and list it as a real estate
investment trust in the next two to three years. India can raise more than $25 billion through
REITs over this period, Anarock estimates.
The company has sold almost 80% of the apartments in the 78-story Trump Tower that it is
developing in south Mumbai. The luxury homes — priced at Rs 7.5 crore ($1.1 million) or more
— will be handed over to buyers starting December, Lodha said.
Lodha, the 39-year-old son of Macrotech’s founder, said the three-decade-old company has
seen sales rise 6% in the first half of the financial year that started in April. That’s somewhere
in the middle when compared to its historical performance, he said.
“I would not say I am happy but we are okay,” he said. “It’s a tough time, but it’s not an
insurmountable situation.”
Chennai civic body collects about Rs 84 crore from regularisation
of unapproved plots
The civic body has collected Rs 83.5 crore through issuing permits, Rs 17 crore through
development charges and Rs 7 crore from taxes imposed for vacant land.
For the cash-strapped Greater Chennai Corporation (GCC), the regularisation of unapproved
plots in the city is turning out to be a sizeable source of revenue. Sources said more than 16,000
people in the city have applied for regularisation with the GCC, of which the local body has
issued around 6,800 permits (42.5%).
The civic body has collected Rs 83.5 crore through issuing permits, Rs 17 crore through
development charges and Rs 7 crore from taxes imposed for vacant land.
“Majority of the unapproved plots are on the fringes of the GCC limits which were annexed in
2011. These include ones in Ambattur, Valasaravakkam and Alandur. We are completing the
work at a fast clip,” said a senior official. This is mainly because these areas had large swathes
of agricultural land, which would have been converted into plots or layouts without taking
approval of the government, the official added.
Government sources said though this process was initiated throughout the state, few local
bodies have been as proactive as the GCC in finishing the work. Regularisation of plots is an
important step as without this, GCC or Chennai Metropolitan Development Authority (CMDA)
will not give building permits. This would impede construction of buildings for residential or
commercial purposes. The land also can’t be kept idle as the GCC would collect vacant land
tax.
Sources said more than 22,000 applications for regularisation were received through the online
portal. However, only around 16,000 applicants have submitted documents.
Once residents apply for regularisation, GCC officials would come for a site inspection after
vetting the documents. Important parameters checked before permits are issued include whether
the land abuts a road, if the land is earmarked for land acquisition or mired in court disputes.
Moreover, the land should not be classified as water body, poramboke or agriculture land. “In
that case, we ask for a no-objection certificate from relevant government bodies such as the
public works department (PWD) before the permit is issued,” the official said.
If no issues crop up in the inspection, GCC notifies the fee to be paid for regularisation and
provides one month’s time for payment.
Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/regulatory/chennai-civic-body-collects-about-rs-84-crore-from-regularisation-of-unapproved-plots/71700905
In case of unapproved layout frameworks, the files are forwarded to the CMDA for grant of in-
principle approval. Of the 2,650 such applications it received, the CMDA has approved 1,715
layout frameworks and sent it to GCC, official statistics show. Around 140 frameworks have
been returned stating that it does not require layout framework.
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About 80% properties in Surat are now fire safety compliant
Since May, the fire and emergency department of SMC has conducted surveys at nearly
six lakh properties including residential and commercial complexes and sealed several of
them for not adhering to fire safety norms.
The Surat Municipal Corporation (SMC), which woke up from its slumber over compliance
to fire safety norms only after 22 young lives were lost in the Takshshila Arcade fire in May
this year, has now claimed that they have achieved 80% compliance in last five months.
Since May, the fire and emergency department of SMC has conducted surveys at nearly six lakh
properties including residential and commercial complexes and sealed several of them for not
adhering to fire safety norms.
Surat city has 14 lakh residential properties, 3 lakh commercial properties, apart from 1,500-odd
schools and colleges and another 8,000 tuition classes and about 2,000 industrial units located
in and around the city.
SMC deputy commissioner of police, U N Upadhayay said, “We have been able to achieve 80%
fire safety compliance in last five months. However, to maintain it year after year, the onus is
on people.” He added, “According to the new law, the onus of keeping their residential
premises fire complaint lies with the occupant and people have to ensure that they get their
NOC’s renewed every year.”
Although much work has been done in schools, tuition classes, commercial properties, shopping
complexes, textile markets and hospitals, the fire department has not initiated action on
residential properties in the city.
The civic officials have inspected 1,228 residential properties which are high rise and issued
notices to 955 of them.
Chief fire officer Basant Parikh said, “Action against erring residential premises will be taken
up immediately after Diwali. We have asked respective zonal officials to start disconnecting
drainage and water connections of complexes that have not complied with fire safety
regulations.”
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Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/about-80-properties-in-surat-are-now-fire-safety-compliant/71700651
About 32% unoccupied units in Chennai are ready-to-move in
flats: Study
As per the study by ANAROCK Property Consultants, Chennai leads in the country with
regard to the number of ready-to-move-in units among the unsold inventories.
About 32% of the total unsold stock in Chennai's residential real estate market is ready-to-move
in apartments, a study by a property consultant has found.
As per the study by ANAROCK Property Consultants, Chennai leads in the country with regard
to the number of ready-to-move-in units among the unsold inventories.
According to a press release, Iyyappanthangal, OMR and Perambur in Chennai have around
4,450 unsold ready units.
Seven cities, including Mumbai Metropolitan Region, Pune, Kolkata and Hyderabad, were
taken for the study.
"On studying the overall share of the ready units out of the total unsold stock in each of seven
cities, Chennai tops. Out of the total 31,380 unsold units in the city (as on September 2019),
32% is ready to move in ones (approx. 10,160 units)," the release said.
Bengaluru follows with nearly 10,640 units ready for possession out of a total 63,540 units - a
17% share, it added.
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Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/residential/about-32-unoccupied-units-in-chennai-are-ready-to-move-in-flats-study/71697626
Panaji civic body snaps water supply of over 20 houses for polluting
rivers & streams
A total of 147 notices were issued by the urban health department to residents in
Ribandar, Mala and St Inez for polluting rivers and streams in their neighbourhoods with
domestic sewage, 47 of which were sent to residents of Ribandar.
The Corporation of the City of Panaji (CCP) has disconnected the water connections of seven
houses in Ribandar, seven houses in Mala and 11 in St Inez for releasing sewage into water
bodies, CCP mayor Uday Madkaikar said on Monday.
A total of 147 notices were issued by the urban health department to residents in Ribandar,
Mala and St Inez for polluting rivers and streams in their neighbourhoods with domestic
sewage, 47 of which were sent to residents of Ribandar.
Earlier this month, health minster Vishwajit Rane had said the department had begun to crack
down on release of sewage into water bodies, with action already taken against almost 100
violators. “The government received directions from the NGT to issue notices to 4,240
households letting out sewage water into rivers. “NGT has told us to be very strict as this is
leading to health issues and pollution of the rivers,” he had said.
Rane had also said that the government had disconnected the water connections of 82 domestic
households and 17 commercial establishments.
The corporation has also begun construction of four toilets in the vicinity of the handicrafts
department at Mala and will build six toilets in the bundh area at St Inez, Madkaikar added.
“These are only temporary measures. The government has already issued a work order for new
sewage lines to be laid at Mala and St Inez,” he told TOI.
Panaji MLA Atanasio Monserrate on Monday assured the residents of Ribandar that he would
build septic tanks for them.
“It is a very lengthy procedure for the corporation to provide individual soakpits. The
corporation has asked for a month’s time, within which the septic tanks should be ready,” the
CCP mayor further said.
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Newspaper/Online ET Realty(online)
Date October 22, 2019
Link https://realty.economictimes.indiatimes.com/news/regulatory/panaji-civic-body-snaps-water-supply-of-over-20-houses-for-polluting-rivers-streams/71706911
Credit markets are gradually improving on govt, RBI steps: CEO,
LIC Housing Finance
This year, we have disbursed more than 25,000 loans worth around Rs 5,000 crore under
PMAY, constituting 26% of number of loans and 24% of the loan amount in the total
portfolio.
Developer loans have contributed the most. Home loan NPAs have seen a marginal rise by
0.2%.
Developer loans contributed the most to the quarterly NPAs of LIC Housing Finance,
CEO Siddhartha Mohanty tells Hariprasad Radhakrishnan, in an interview. Excerpts:
NPAs and provisions have gone up in Q2. Which segment contributed the most?
The NPA has gone up to 2.38% from 1.98% in Q1, and that is a concern for us. We are getting
payments in some NPA accounts, and some are in the final stages of negotiation. In the coming
days, I believe there will be an improvement. Developer loans have contributed the most. Home
loan NPAs have seen a marginal rise by 0.2%.
What was the reason behind rise in NPAs and is there a major stress building up in home-
loan/mortgage?
For developers creating premium and luxury projects, there is some problem in selling the units.
Developers creating affordable housing such as under PMAY, there is no issue in repayment.
Our experience has been excellent in this segment.
How easy or difficult is it today for a company like yours to raise money? How much have
your borrowing costs risen?
For us, the borrowing cost has gone down and the margin has improved slightly. The
composition of funds includes NCD, bank loan and public deposit. Loan rates have come down.
It is competitive for us, so we are able to make some margin.
How would you describe the state of the credit markets nearly a year since IL&FS?
Credit markets are gradually improving because of various steps taken by the government. The
supply side of credit is showing signs of improvement. Consumption demand will also improve
in the coming days.
To what extent have the steps taken by the Centre and the RBI to ease the flow of credit to
NBFCs helped companies?
Newspaper/Online Financial Express(online)
Date October 23, 2019
Link https://www.financialexpress.com/industry/credit-markets-are-gradually-improving-on-govt-rbi-steps-ceo-lic-housing-finance/1743368/
The government has taken a slew of measures and the RBI has also softened the norms,
enhancing the supply side of credit and it will gradually pass on to developers. For us, on the
retail side, incentives under PMAY, including interest subsidy of Rs 2.67 lakh and additional
tax incentive (on housing loan principal repayments up to) of Rs 1.5 lakh have improved the
demand on the retail side.
Under PMAY, over the last year, the number of loans has risen by 68% and 77% in loan
amount. This year, we have disbursed more than 25,000 loans worth around Rs 5,000 crore
under PMAY, constituting 26% of number of loans and 24% of the loan amount in the total
portfolio. ____________________________________________________________________________________
