Pankaj Kapoor: Will the Real Estate Bill see a rise in property prices?
The Bill would result in better regulation of property prices
Jul 09, 2013
Source : The Economic Times


BANGALORE: Pankaj Kapoor, Founder & Managing Director, Liases Foras, a real estate rating and research agency No, The pricing for any product needs to be seen in relation to the demand-supply mechanism. However, real estate is one sector that does not adhere to any rule of economics.

Realty prices in some of the top metros have always risen exponentially at around 3% every quarter even when there was virtually no demand. So,it would be wrong to say that prices will rise only if the Real Estate Regulatory Bill is enforced because prices have always risen regardless of the reasons.

In fact, the Bill would result in better regulation of property prices. Currently, the developer leverages the advance money, which gives rise to speculative activities. For instance, if he gets Rs 100, he pays Rs 10 as token money at 10 places, and to fund the rest, he takes expensive loan at rates as high as 30%. Or, he may call for investors for the 10 places he has paid the token money.

These speculators, too, keep the prices high as they have to recover their costs and make profit. The interest on the loan is ultimately passed on to customers. Once the Bill is passed, such leveraging opportunities will cease to exist as the developer will have limited resources to leverage. For instance, if he were to get Rs 100 as advance money, nearly 70% of this would have to be deposited in an escrow account.

The Bill would also ensure that the project would be completed on time and the developer takes the necessary permissions and clearances before the project is marketed. Another major aspect is the carpet area rate on the basis of which the developer would have to sell his project. The super built-up area, which was around 40-45% of the carpet area, has gone up to 65-70% of the carpet area. Such malpractices would come to an end.

Also, there would be a lot of hidden costs that the developer would add to the cost of the project. So, when such practices are done away with, the customer would get a much cheaper property and would only pay for what is on paper. The Bill would also usher an era of transparency in the real estate sector.

However, the Bill also needs to focus on accountability on the part of the governing authority. It needs to ensure a time frame during which the authorities approve or disapprove the clearances for the project.

Latest Realty News

Karnataka plans to regularise unauthorised buildings in govt land
Jul 09, 2013
BANGALORE: Karnataka government has planned to introduce an amendment to the Karnataka Land Revenue Act 1964, to regularise unauthorised constructions of dwelling houses in government lands in urban areas, official sources said.
Anuj Puri: Will the Real Estate Bill see a rise in property prices
Jul 09, 2013
BANGALORE: Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India May be, The Bill will pave the way for transparency by regulating the housing sector. It covers all projects over 4,000 sq m in size and seeks to cover major private residential developments across the country. It will provide considerable relief to the ordinary buyer/investor who faces innumerable obstacles while buying property and is duped even by small developers, builders and brokers.
Exporters bring luxury touch home with own labels
Jul 09, 2013
BANGALORE: Exporters long used to supplying to global brands such as Calvin Klein and Clarks brands are launching their own labels at home, finding patrons among Indians with a taste for luxury and the willingness to pay for it.
Century Real Estate redeems Rs 100-crore NCDs
Jul 09, 2013
BANGALORE: Bangalore-based realtor Century Real Estate has redeemed Rs 100-crore non-convertible debentures (NCDs) that it raised through Kotak Mahindra Prime.
Ashiana Housing launches its largest Township project
Jul 09, 2013
BANGALORE: Ashiana Housing Ltd., one of the finest real estate developers in India, has today announced the launch of its largest township project “Ashiana Town” in Thara, Bhiwadi. The project has got ‘Non-Residential’ clearance under section 90A of Rajasthan Land Revenue Act in February 2013.
No property tax board yet in Karnataka
Jul 08, 2013
BANGALORE: Ever wondered why we, as citizens, have no say in fixing property-tax slabs? Here’s why. For two years, the Karnataka government has been sitting on the formation of property tax board, which was proposed to ensure transparency in fixing tax slabs for residential, commercial and other establishments.
Real estate developers’ property expo in Bangalore on July 6, 7
Jul 06, 2013
BANGALORE: The Confederation of Real Estate Developers’ Association of India-Bangalore will hold its ‘CREDAI Property Expo 2013’ on July 6 and 7 at Lalit Ashok, Bangalore.
Improved connectivity to Bangalore North fuels growth
Jul 05, 2013
BANGALORE: If someone who has lived here a long time were to tread beyond the boundaries of ‘his city’ as it was in the early 90s, he would actually end up discovering an entirely new Bangalore. Localities which he had never heard of or known existed would be just a Metro ride away or at the end of an expressway.
Bangalore holds potential for investors
Jul 05, 2013
BANGALORE: The National Association of Realtors-India (NAR-India), the national umbrella organisation of realtor associations, is holding its fifth annual convention this year at New Delhi. The convention, also being attended by heads of global realtor organisations, will have discussions on customer service, legal knowledge for brokers, broker-developer interface, finance and tax, excellence in business, real estate investments, emerging challenges, international brokerage practices etc.
Corelogic to buy real estate data analysis firms for $661 million
Jul 02, 2013
BANGALORE: Real estate data analytics company Corelogic Inc said it would buy two units from Decision Insight Information Group for $661 million to expand its property and casualty insurance business.

Latest Realty News Of State

Realty Talk's