review n data

CREDAI NCRAnnual Performance Review

2008-09

CREDAI NCR

Annual Performance Review

2008-09

ContentsContentsContents

Aerens Jai Realty P.Ltd.

Halwasiya Development

AEZ Infratech P.Ltd.

CREDAI NCR

President

Pradeep Jain

Parsvnath Developers Ltd.

[email protected]

Vice President

Kailash Gupta

[email protected]

Hony. Secretary

Rohit Raj Modi

Ashiana Homes Pvt. Ltd

[email protected]

Immediate Past President

Surender Gupta

Aerens Gold Souk International Ltd.

[email protected]

Treasurer

Bharat Halwasiya

[email protected]

Executive Members

Ashish Somani

Somani Worsted Ltd.

Ashok Bansal

Odean Builders (P) Ltd.

Getambar Anand

ATS Infrastructure Ltd.

Manish Agarwal

Clarion Properties Ltd.

Sanjeev J. Aeren

Relationship Manager

Dibyendu Choudhuryy

[email protected]

Contact: +91 99109 07673

1411 Chiranjiv Tower

43 Nehru Place

New Delhi-110019 INDIATel: 91-11-46634663

Fax: 91-11-46634613

www.credaincr.org

President's Message .....................................................02

Institutional Profile ...................................................... 03 - 09

‘Realty' Perspectives .....................................................11 - 20

CREDAI Initiatives ....................................................... 21 - 31

CREDAI NCR Initiatives ................................................ 33 - 44

Policy Advocacy ...........................................................45 - 53

Building Synergies ........................................................55 - 57

Forging International Partnerships .................................59 - 61

Engaging the Investor Community ................................ 63 - 70

Reaching out to the world .............................................71 - 79

Innovation Initiatives ................................................... 81 - 84

CREDAI NCR Theme for 2009........................................85 - 87

Dear Friends,

Greetings!!

Firstly, let me thank each one of you on behalf of Confederation of Real Estate Developers'

Association of India, Delhi NCR Chapter (CREDAI NCR) for supporting our actions and initiatives

throughout the year for an all round growth and development of the real estate sector in the

country. It is indeed a pleasure to share with you the developments in CREDAI NCR over the past

one year through the compilation of “Annual Review 2008-09”.

We have all experienced, year 2008 09 with extreme highs and lows in real estate sector. With an

aim of reviewing our various activities, views & opinion on various issues and initiatives during the

good and turbulent months and to identify areas of further progress, we bring to you the Review 2008 - 09. However, beyond this

the intention remains apprising and engaging all the stakeholders through this compilation. We are confident that this would go a

long way towards serving our common interests and pave the way to grow together.

The developments have been compiled as outlined below:

• Quarterly Newsletter CREDAI NCR

• CREDAI NCR signed MoU with University School of Management Studies, Guru Gobind Singh Indraprastha University,

Delhi - February 2008

• CREDAI NCR organised a forum to discuss Tax Issues impacting Real Estate Sector on 10th April 2008 at Ranaq Hall PHD

Chamber of Commerce and Industry, New Delhi.

• Forging International Partnerships - Indian real estate representatives attended Expo Italia Real Estate (EIRE) in Italy

• PHD Chamber and CREDAI NCR jointly hosted a seminar on Tax Issues faced by the Real Estate Sector

• Developing Relationships, On the Global Radar CREDAI NCR Website www.credaincr.org

• Knowledge Creation and Dissemination - CREDAI NCR - Guru Gobind Singh Indraprastha University, Delhi jointly

organized a workshop on Contract Management in Real Estate.

• Policy Advocacy - CII (Northern Region) & CREDAI NCR jointly hosted Real Estate Summit - “The Changing Paradigm in

Indian Real Estate”

• CREDAI's series of Meetings with the Government of India to put across the points concerning the sector and its allied

manufacturing units.

• Initiatives of CREDAI NCR in the Noida & Greater Noida region

• Initiatives of CREDAI NCR in the Delhi region

• Initiatives of CREDAI NCR in the Punjab region

• Initiatives of CREDAI NCR in the Ghaziabad region

• Initiatives of CREDAI NCR in the Haryana Region

We are very happy to bring you the perspectives and valuable insights from our Industry Experts on the sector at large and what

futures our experts forsee for the sector. We are thankful to them for their views and opinion.

With continued support and wonderful association of each of our board members, members, staff, stakeholders, I am confident

we shall together continue our onward journey towards further growth and development of the real estate sector through the

established CREDAI NCR platform.

With this commitment, we invite you all to join CREDAI NCR in this progress.

Best Wishes,

Pradeep Jain

President

CREDAI NCR

President's Message

02

Institutional Profile

The Confederation of Real Estate Developers' Association of India, Delhi-NCR Chapter (CREDAI NCR)

represents around four-fifth of the real estate development business in Delhi and other parts of NCR.

Over the past seven years CREDAI NCR has established stability in the industry and its achievements at

state, national and international levels has contributed immensely to a steady annual growth rate of the

real estate development sector at about 30 percent over the last few years. CREDAI NCR emerged as a

leading platform for addressing the problems of the Real Estate Promoters and Developers of the NCR

including those from Delhi.

CREDAI NCR is driven by the vision of imbibing an environment of 'Best Practices', 'Create and Share

Knowledge' in the domain of real estate and allied sectors, and build 'Strong Partnerships' with

likeminded institutions across the world. To this end, the association has always been open to new

business ideas and practices that promote healthy corporate culture and competition. This assumes

importance more so because real estate sector in India is yet to be recognised as an industry by the

government. In today's age of information, knowledge is critical to survive, sustain and grow in

business. Also, it is necessary that along with knowledge creation, there should be a well defined policy

of dissemination and exchange of knowledge with the stakeholders. Collaboration with technical

institutions and universities dealing with real estate and allied activities is therefore an inalienable part

of the policy agenda for CREDAI NCR. Strong partnerships with like minded organisations sharing

similar values and objectives as CREDAI NCR would pave way towards rigorous learning from each

other on varied approaches to resolve business issues. In order to achieve these goals CREDAI NCR

pursues the mission of 'Inclusive Growth', Policy Advocacy' and 'Networking'. Growth would not

translate automatically into development if it is not sustainable and inclusive. An all round progress

therefore would be in the best interests of the real estate developers community and accordingly this is

practiced in CREDAI NCR. Policy advocacy efforts essentially require a proactive mindset and ability to

appreciate the problems faced by business in the future. 'Networking' is the spirit of engaging with

stakeholders.

CREDAI NCR:The Institution

Mission and Vision

CREDAI NCR Membership grows at almost 60 %

2008-09Annual Performance Review

05

S.No Company's Name Concerned Person Designation

1 A B A Builders P. Ltd. Mr Sunil Totlani Dir

2 Aashiana Homes P.Ltd. Mr Rohit.Raj.Modi MD

3 Aerens Buildwell P.Ltd Mr Davender Gupta MD

4 Aeren R Dr Rajesh J. Aeren MD

5 Aerens Gold Souk International Ltd. Mr S.K.Gupta CMD

6 Aerens Jai Realty P.Ltd. Mr Kailash Gupta Vice Chairman/MD

7 AEZ Infratech P.Ltd. Mr Sanjeev J. Aeren MD

8 Alpha G.Corp Development P.Ltd. Mr.S.K.Sayal CEO

9 Ambience Infrastructure P.Ltd. Mr Raj Singh Gehlot MD

10 Amrapali Mr Anil Sharma CMD

11 Ansal Properties & Infrastructure Ltd. Mr.Pranav Ansal MD

12 Arora & Associates Mr K.J.Arora Chairman

13 Ashiana Housing & Finance (India) Ltd. Mr.Om Prakash Gupta MD

14 Assotech Ltd. Mr Sanjeev Srivastava MD

15 ATS Infrastructure Ltd. Mr Getamber Anand MD

16 BPTP Ltd. Mr. Kabul Chawla MD

17 CHD Developers Ltd. Mr Gaurav Mittal MD

18 Chintels India Ltd. Mr Prashant Solomon MD

19 Clarion Properties Ltd. Mr.Manish Agarwal MD

20 Cogent Enterprises Ltd. Mr A D Bhargav Dir

21 Country Colonisers Private Limited Harvinder Sekhon CEO

22 Crown Buildtech P.Ltd Mr J.P.Gupta MD

23 Divine Developers Ltd. Mr A.K.Singhal MD

24 DLF Universal Ltd. Mr Rajeev Talwar Joint MD

25 Emaar MGF Land Ltd. Mr Shravan Gupta CMD

26 Era Landmarks India Ltd. Mr. H. S. Bharana MD

27 Express Builders Ltd. Mr Vinay Goel Dir

28 Fargo Estates P. Ltd Mr Purushottam Bhageria JMD

29 Gaursons India Ltd. MR. MANOJ GAUR MD

CREDAI NCR Members

06

30 Halwasiya Development Mr Bharat Halwasiya MD

31 Hines India Real Estate P Ltd. Mr Yash Gupta Joint MD

32 International Land Developers Ltd. Mr Alibuddin Chairman

33 IREO Management P. Ltd. Lalit Goyal VC/MD

34 IVRCL Infrastructure & Projects Ltd Mr M S Rao COO

35 Jaypee Greens Ms. Rita Dixit MD

36 Jindal Realty ( P ) Ltd. Mr Naveen Jindal Chairman

37 JMD Realtors P.Ltd Mr Sunil Bedi MD

38 Jones Lang La Salle Meghraj Property Consultants Mr. Anuj Puri Chairman & Country Head

39 Kajaria Infrastructure Mr Ashok K Kajaria CMD

40 Kamal Enterprises Mr.Kamal Choudhary MD

41 Land Craft Developers P.Ltd. Mr Manu Garg MD

42 M3M India Limited Mr Basant Bansal MD

43 Mahagun India P.Ltd. Mr Amit Jain MD

44 Mamram Developers P.Ltd Mr Sanjay Gupta MD

45 Mapsko Builders P.Ltd Mr Rajiv Singla MD

46 Negolice India Ltd. Mr Vikash Bhagchandka President

47 Ninex Developers Mr Raj Khurana CEO

48 Odean Builders P. Ltd. Mr Ashok Bansal MD

49 Omaxe Ltd. Mr Rohtas Goel CMD

50 Orris Infrastructure Pvt. Ltd. Mr Vijay Gupta CMD

51 Parsvnath Developers Ltd. Mr. Pradeep Jain Chairman

52 Pearls Infrastructure Projects Ltd. Mr M L Jaiswal MD

53 Piyush Colonisers P.Ltd Mr Anil Goyal CMD

54 PNB Housing Finance Ltd. Shri V.K. Sood MD

55 Prabhatam Developers Ltd. Mr Dinesh Gupta CMD

56 Pushpanjali Constructions P.Ltd Mr Gaurav Sharma GM

57 Raheja Developers P Ltd. Mr.Navin K. Raheja MD

58 Rajesh Projects ( India ) Pvt. Ltd. Sh. Rajesh Goyal MD

59 Realtech Group Mr Rohit Malhotra CEO

60 RPS Infrastructure Ltd. Mr Rakesh Chandra Gupta MD


07

61 S G Estates Ltd. Mr. Gaurav Gupta MD

62 Sanmati Infraproject Ltd. Mr. A.K.Jaju MD

63 Shipra Estates Ltd. Mr Mohit Singh MD

64 Shourya Towers P.Ltd. Mr Anil Jain CMD

65 Shristi Urban Infrastructure Dev.Ltd. Mr Sujit Kanoria MD

66 Somani Worsted Ltd. Mr Ashish Somani MD

67 Sonia Farms (P) Ltd. Mr Sunil Gupta MD

68 Splendor Landbase Ltd. Mr Hridey Vikram Bhatia CMD

69 SRS Real Estate Ltd. Mr Bishan Bansal Dir

70 Suncity Projects P Ltd. Mr Ajay Aggarwal MD

71 Supertech Constructions P Ltd. Mr R K Arora MD

72 Taneja Developers & Infrastructure Ltd. Mr. Kamal Taneja MD

73 Tulip Infratech P Ltd. Mr. Praveen Jain MD

74 Unitech Ltd. Mr. Sanjay Chandra MD

75 Unity Buildwell Ltd. Mr Govind Aggarwal MD

76 Uppal Developers P Ltd. Mr Gian Bansal CEO

77 Uppal Housing Ltd. Mr Manish Uppal MD

78 Vatika Landbase P Ltd. Mr. Anil Bhalla MD

79 Vipul Ltd. Mr. Punit Beriwala MD

80 Bhiwadi Developers Association ( 18 Members )

08

Pradeep Jain Kailash Gupta

PresidentTel: 011 23310198 / [email protected]

Vice-PresidentTel: 011 [email protected]

Bharat Halwasiya

TreasurerTel: 011 26533468/[email protected]

Surender Gupta

Immediate Past PresidentTel: 0124 4317700/08

[email protected] Raj Modi

Hony. SecretaryTel: 011 [email protected]

Sanjeev J. Aeren

Ashok Bansal Manish Agarwal

Executive MemberTel: 011 26289555

[email protected]

Executive MemberTel: 011 23327735/[email protected]

Getambar Anand

Executive MemberTel: 0120 2516277/78

[email protected] Somani

Executive MemberTel: 011 [email protected]

Executive MemberTel: 011 43538300

[email protected]

CREDAI NCR Governing Council Board (GCB)


09

‘Realty’Perspectives

Anuj Puri

Jones Lang LaSalle Meghraj (JLLM)

In 2008, the Indian real estate sector took an unprecedented body-blow. Until then, it was

definitely a seller's market - developers had no difficulty in finding buyers for their properties and

obtaining funding for new projects.

Today, we are facing a severe slowdown in overall demand. The recent measures taken by the RBI

and further injections of liquidity to effect any significant changes. Until then, domestic demand is

likely to sink even further, and international interest will remain at cautious levels before the situation

gets better. There has already been an overall drop of demand to the tune of between 45-50%.

We expect these figures to reflect a more positive scenario in 2009, at least with respect to residential

real estate. There is still a huge demand for residential and commercial properties in many parts of the

country. The fallout of the ongoing financial crunch and a justified watch-and wait stance by

homebuyers will set some badly needed market adjustments in motion between January and March,

2009.

We also expect that, in 2009, the circumspection currently evident on both the domestic and international

investor fronts will give way to cautious forays. A decisive turnaround phase will come only in another 18

months to two years, but 2009 will see the groundwork for revival being put in place.

In terms of liquidity, we will definitely continue to have a challenging situation on our hands.

However, in 2009, we expect more innovative financial structures and liquidity mechanisms to

ensure that delivery of the development pipeline is not affected. For end users, there has already

been a ray of hope. The repo rate and reverse repo rate have been reduced by 100 basis points, or

1%. For end users this will, of course, reduce the cost of acquisition of property in terms of EMIs.

But, a reduction in interest rates alone will not suffice to bring about a positive reversal in the

negative demand dynamics currently prevalent on the real estate market.

In terms of investment opportunities for 2009, the onus from now on will be on affordable housing in

the residential sector, sustainable, high-quality buildings in the office sector and infrastructure

projects. We are also seeing a decided rise in demand for project management and facilities

management, as developers are now seeing the wisdom and cost-effectiveness of outsourcing such

functions to experts in these fields.

If one times one's entry point into residential and commercial real estate correctly, the first two

quarters of 2009 will be the ideal time to invest for the long term. The market will not see such low

rates again, and the demand for properties is high and will be even higher. Investors should choose

their location carefully and use the interim period to shortlist and research potential properties.

Finding 'Real' Value in a Changing World in 2009


13

Cushman & Wakefield

The year 2008 proved to be quite eventful for India's realty sector. Following the boom of the past

couple of years, the sector was faced with the beginning of a downturn which led to corrections in

prices across all asset classes by end-2008. This correctional phase is likely to continue in the mid-

term; and is likely to trickle down to the land market in due course.

The outlook for real estate in India remains broadly better than other emerging markets across

the globe. Tenants are still occupying space and paying rent, albeit at softer rates. According to

Cushman & Wakefield Research, greater demand from consumers and falling dependency ratios

will provide the basis for growth in India, which in turn will support demand for real estate.

Upcoming Trends in 2009

i. Home buyers will look out for affordable and quality developments in a price-sensitive

market

ii. Township projects with a balanced mix of developments will do better

iii. Companies will base office leasing activities on short-term rather than long-term

expansion plans

iv. The office sector will increasingly turn to subleasing of space

v. Resizing of retail outlets, increasing renegotiations on rentals and even exit from

unviable retail locations will take place

vi. Retail spaces will see conversion into office space for quick revenue returns in certain

micro markets

vii. Consolidation of small-ticket players by bigger, more stable players in the realty sector

The current economic slowdown is forcing companies across the world to formulate strategies

that will help in surviving the downturn. Falling demand and dropping top lines have necessitated

cost optimisation and a disciplined approach to growth. In such a scenario, real estate, given its

share in the operational/capital expenditure of a company, can contribute significantly to

protecting the bottom line. This can be achieved by making real estate a key part of the overall

business strategy of any company. The drivers of real estate strategies for the foreseeable future

will be operational rightsizing, flexible solutions, long-term blueprints and alignment with

business strategy. Given the current pressures on cost and focus on optimisation, the time for

developers in corporate real estate to act is now. Developers will need to review their overall

portfolio and challenge traditional approaches towards space needs, preferred locations and

lease structures. It will be even more compelling to revisit their real estate strategy for land banks

and other owned real estate assets. A number of innovative approaches may be taken instead of

treating owned real estate as dead asset in this market. Developers should also realise that a

leaner corporate is of more use than a dead one. And any tenant looking for renegotiation or

realignment of space, need not be avoided. Increasing opportunity will have to be created for

smaller space takers too.

However, the biggest volume of real estate lies in the residential segment; and various ancillary

What is the need today?

Realty Market Outlook for 2009

14

sectors (retail, hospitality, etc.) depend on this segment's activities. Predominantly mortgage

dependent end-users are being rendered inactive in the present economic and employment

climate. Developers today need to address affordable housing projects on a pan-India basis,

rather than focus on high-end/luxury residential developments in India's metropolitan cities.

Given the changing landscape, developments with a balanced mix of real estate are likely to do

better than most. Developers also need to recognise the risks attached with land banking and

creating purely speculative developments. To survive the sector now needs to return its focus on

quality, efficiency and delivery.

It is exactly in times such as these that the need for an overall regulatory body, supported by

captains of the industry, becomes important. Various notable efforts have been made by

organizations such as the Confederation of Real Estate Developers of India (CREDAI), NCR

Chapter to mitigate the difficulties faced by real estate developers in the current financial

scenario.

A few significant suggestions put forward by the body in 2008:

• Redefining and encourage affordable housing

• Cheaper and faster funding for real estate projects

• Modified FDI and ECB rules

• Increased funding for the sector from banks, while removing the disparity in risk weight-

age

• Incentives to buy home

• Rescheduling of term loans from institutions

Regional chapters of the CREDAI have also worked towards raising important issues for

the relief of the developer community:

• Addressing approval delays faced by developers (NCR)

• Handling recession in the Hospitality Industry (NCR)

• Revising density norms for development of low cost housing (NCR)

• Development of Infrastructure (NOIDA)

• Stamp Duty relief for smaller plots and flats (Haryana)

• Mixed-land use norms for mega township projects (Punjab)

The need for industry bodies like the CREDAI NCR cannot be emphasized enough in times such as

these. But apart from hosting panel discussions, industry events and common dialogue platforms,

there is also an equally pressing need for rigorous follow-up sessions. These will go a long way in

tracking outcomes and ensuring that recommendations are met by all concerned. The focus to

achieve industry status for Real Estate and regulatory bodies to monitor and chalk a road map for

the sector is much required and efforts from associations such as CREDAI NCR could help us attain

the same.


15

Sustainable Growth in Indian Real Estate Anshul Jain

DTZ International Property Advisers

“The pain being felt by the real estate sector won't last beyond a year and the India story will

rebound as fast, if not faster than the rate at which it plummeted. “

A DTZ study reveals that of the 212 mn sq. ft of planned Grade-A office space construction across

six major Indian cities, only 88 mn sq. ft. is likely to hit the market by 2010. Average absorption

across these cities is set to reach its lowest point as it will fall by nearly 60% by Q309. Vacancy

levels will reach a threshold high of 40% with the forecasted lower supply and absorption.

The residential sector is also suffering. While rentals have seen a mixed trend, prices on an

overall level have fallen by up to 25% in 2008. In Delhi NCR, prices have fallen considerably in

micro markets like - Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad, and buyers can

now look forward to some great bargains in the months to come. Mumbai and Bangalore

residential markets tell a similar tale, with prices falling between 25% - 30%. The Mid-income

housing has been the least affected by the current downward trend in prices, and is likely to

emerge as the fastest growing segment amongst private developers as well as investors.

However, the worsening global recession in the US and UK is affecting expansion plans of

corporations resulting in a slower uptake for the Indian property market. A survey done by DTZ on

this trend reveals that 46% of the companies still plan to expand however the pace of expansion

has taken a hit.

While the Indian Government has tried to ease liquidity constraints through a combination of

fiscal and monetary measures in the last few weeks and the announcements made in the Interim

Budget 2009-2010, a stronger and more direct stimulus is required to boost demand.

The following can be done to bring about the much desired momentum in this sector:

·Reducing costs for the end consumer by allowing mass housing to come under Infrastructure

Projects with Public-Private Participation.

·Debt restructuring where the Government along with the banks need to create a more friendly

repayment mechanism in terms of payback time period, so that the developer is left with enough

to plough back into the project.

·Infusing liquidity on two fronts; one by introducing liberal External Commercial Borrowings

(ECB's) to the office segment of real estate in addition to integrated townships, and second by

lending to developers at competitive rates.

·Streamlining tax structure by clarifying STPI tax status as to whether tax benefits will be

extended and if the existing legal structure will allow for shifting of jobs to SEZ's. To reconsider

whether section 80 (I) B, which provides tax holiday for homes less than 1500 sq. ft., can be

introduced for affordable housing.

·Independent regulator to be set up in addition to an Affordable Housing Body to bring greater

transparency and provide planned approach for meeting needs of all stakeholders.

16

Outlook

The forecast for commercial offices is that rents would drop sharply in 2009 with an inflexion point

towards the end of 2009, resulting in improving market conditions by 2Q 2010.

By early 2009, we can look forward to residential prices in the high-end segment dropping by upto

35% from their peak levels, and up to a 20 % - 25 % drop in the mid - end segment prices. This is

close to a third from their peak values, which should spur transaction volumes by the second half

of 2009.

The good news is that the falling prices will ease the pressure on real estate prices, thereby

increasing the competitiveness of India on a global business platform. On residential front, the

end users will dominate the market in 2009 with transactional volume expected to increase in 2Q

2009. The mid to long term fundamentals of India remain strong and forecasted 6.5 per cent to 7

per cent GDP growth will be the envy of the world next year.


17

Real Estate Sector ImperativesSunil Aggarwal

SARE

All are now familiar with the role that affordable housing and the financing can play to improve

that situation that Real Estate industry is facing today. As an investor and developer with sole

focus on the affordable housing (90% of the real estate industry) the stand taken three years ago

stands vindicated. To look at the glass half full, I am more confident than ever that the real estate

industry will now focus to deliver to the real housing demand and not entirely on the 10%

segment alone. Clearly there is more incentive and little choice to do so. Therefore, 2009 will

therefore be a watershed year when affordable housing will become savvy and interesting to do.

Apart from finance on which a lot has been said I believe that without addressing the following

four issues this opportunity is likely to fall flat on it' s face.

·Technology The industry must collaborate to evolve low cost technologies that enable faster

construction. This will be critical to deliver to the affordable housing segment. Without adopting

new technologies the industry will never be able to cater to the demand in an organized manner.

·Regulated Planning with rational development norms There are either states that have very

liberal density or very rigid density norms. As an industry we need to focus on the quality of

development and evolve a matrix in discussion with the planning authorities that is not overtly

focused on increase of FSI and density alone, but also on the urban design and minimum quality

of life as per the location demands. As an industry we have responsibility to not only build but build

a beautiful India that attracts investments.

·Lobby to force government spending on connectivity and urban infrastructure With government

charging crazy development fees and not delivering, it is and extremely difficult situation for

developers. Affordable housing will remain a dream for government if this issue is not addressed.

In some states there are multiple development charges and permission charges. These must be

rationalized. Developers must not pay if Government does not deliver.

·Do not forget other sectors in real estate We seem to as an industry have bouts of a product

mania. This seems to be affordable housing at this point in time, however we should keep pushing

government to un-lock lands and create regulations and create development environment for

delivery of world class commercial, retail, logistics and hotels. There is a lot that industry had by

way of demand in these sectors, but at this time this seems to have got lost. We must not be

myopic and keep this agenda alive and offer true integrated development to customers and

investors.

If as an industry we can self regulate to evolve structures as above , focus on team building and

execution we will be future ready and ride the next train that will take us to achieve real nirvana.

18

19

R. Muralidharan

PricewaterhouseCoopers Pvt. Ltd.

Real estate sector in India grew steadily till Q1 FY 2008-09. The boom was further driven by

positive indicators in the Indian economy. The real estate sector in India became the fifth world

largest investment destinations globally. The sharp growth in the sector was as a result of the

large investments being made in organised retail sector, road, power and other infrastructure

projects. However, over the past few quarters witnessed drastic changes. The sector which was

growing sharply was severely affected due to the global recession and its impact on the Indian

economy.

In order to protect this sector from further downslide and fuel demand in this sector, the

Government has granted fiscal 'stimulus' by rationalizing interest rates for low cost housing

projects and by reducing service tax rate across board from 12.36% to 10.3% w.e.f. 24 February

2009. The recent clarification issued by the Central Board of Excise and Customs (CBEC) vide

Circular (No. 108/02/2009-ST dated 29 January, 2009) clarifying the Board's view on non

applicability of service tax in a scenario where developer/builder/promoter enters into an

agreement, with the ultimate owner for selling a dwelling unit in a residential complex at any

stage of construction (or even prior to that) and who makes construction linked payment has

provided much needed clarity and acted as a further stimulus for this sector.

While the rationalization of service tax, interest rates and the subject circular are welcome moves,

in that they provide for some relief to this sector, it remains to be seen as to how it will boost the

declining demand of real estate in Indian economy which is more or less dependent on other

major sectors like organized retail, IT among others. Organized retail is usually centered in big

malls that are developed by large developers. In spite of aforesaid dispensations these

developers' are facing issues which are still to be addressed in their entirety by the Government.

One such issue is the effect of the clarification issued by Central Board of Excise and Customs vide

Circular (No. 98/1/2008-ST dated 4-01-2008) wherein it has been clarified that input credit on

construction services is not available as set off against service tax on renting of immovable

property on the ground that credit is available only on goods and services used in or in relation to

manufacture of excisable goods or in providing taxable output services. The outcome of

Construction services is an immovable property which is neither a good nor a service and hence

CENVAT credit is not available in such a situation as per the Circular. This Circular hence might

have gone against the cardinal principles of a VAT regime and results in tax cascading. The

Circular is also not in tune with the CENVAT Credit Rules, 2004 (CCR) for following reasons.

§The 'input services' as defined under Rule 2(l) of CCR can be divided into two parts. The first part

of the definition provides the specific meaning of input service and the second part of definition

provides for the inclusive meaning thereof.

a.The specific part of the definition provides that input service is a service used by a provider of

service for providing a taxable output service. In an existing scenario renting of mall space is a

taxable output service for which construction services are being used as input service. Hence,

there is every reason that CENVAT credit of service tax paid on construction service should be

allowed to the developers against rental income of the immovable properties.

Service Tax Issues In Real Estate Sector


20

b.The inclusive part of the definition of input service include the services in relation to the setting

up, modernization, renovation or repairs of premises of provider of output service. This part of the

definition categorically talks about eligibility of construction services as input service for any

taxable output service provider.

•Rule 6(5) of the CCR provides that with respect to 16 golden input services full CENVAT credit is

available to taxable service provider even if part of his output services are exempt or non taxable.

Commercial construction service is one of the 16 golden input services and hence construction

services used in providing any taxable output services are eligible for complete CENVAT credit

provided not used exclusively in exempted or non-taxable output services.

The above provisions of the CCR recognize commercial construction service as an eligible input

service for the purposes of taxable output services and the fact that the direct output which

results from construction services is immovable property does not distort the fact that the purpose

of obtaining such construction service is the provision of an output taxable service. Therefore, the

circular issued by CBEC requires an urgent reconsideration.

Another important issue emanates from the introduction of the new taxable service “works

contract service” introduced w.e.f. 1/6/2007. Under this category of taxable service, in relation to

the execution of a works contract, where the contractor is required to pay sales tax/ VAT, then

services rendered against such contracts are leviable to service tax under the works contracts

service category. The service provider also has an option to pay service tax under the composition

scheme for this category of service. The rate of service tax under the composition scheme which

was 2% was increased to 4% w.e.f 1/3/2008. There is lot of uncertainty among the works

contractors as to the date of applicability of the increased rate of tax. The running contracts as on

1/3/2008 should continue to be taxed at 2% though the services continue to be rendered after

that date. To remove these doubts and clear the confusion in the minds of assesses, Government

needs to issue a circular clearly clarifying the situation under which the enhanced service tax rate

of 4% would apply. Another related issue is that consequent to the reduction of service tax rates

from 12.36% to 10.30% w.e.f. 24 February 2009 the rates of service tax applicable for the

composition scheme would require a review.

The above discussion highlights the main service tax issues in the real estate sector. There are

several other issues which affect the service provider in this sector. It is necessary that the

Government of India engages with the industry and resolve the outstanding issues so that there is

clarity on the applicability of the service taxes which would facilitate better compliance and bring

in the required certainty.

CREDAI Initiatives

Major Initiatives of CREDAIThis section highlights the efforts of CREDAI over the last year to mitigate business issues faced

by Real Estate Developers. CREDAI delegation had met Shri P. Chidambaram, Hon'ble

Finance Minister, Shri Ashwani Kumar, Minister of State for Industry and Shri

Amitabh Verma, Jt. Secretary (Banking) on 12 November 2008. Shri T.K.A. Nair,

Principal Secretary to Hon'ble Prime Minister of India met this delegation on 14 November

2008. Appointments with Shri P. Chidambaram, Hon'ble Finance Minister, Shri Amitabh

Verma, Jt. Secretary (Banking) and Shri T.K.A. Nair, Principal Secretary to Hon'ble

Prime Minister were facilitated by Shri Prakash Challa, Shri Pradeep Jain and Shri Abdul

Azeez and Shri Rafi Mather, respectively. The CREDAI delegation consisted of Shri Kumar

Gera, Shri Rajni Ajmera, Shri Ramani Sastri, Shri Lalit Kumar Jain, Shri Pradeep Jain

and Shri G P Savlani for the meeting on 12 November 2008; and Shri Santosh Rungta, Shri

Abdul Azeez, Shri Rafi Mather, Shri Pradeep Jain, Shri Getamber Anand and Shri G P

Savlani for 14 November 2008 meeting. The following suggestions have been forwarded to

appropriate authorities in the government:

I. Redefine and encourage affordable housing: The proposed definition of affordable

housing from the CREDAI delegation is-“Any accommodation less than 80 sq.mtr. and

projects having tenement density of more than 250 per hectare. Also, it should allow

benefits at par with SEZ to such schemes and have no FSI constraints for such projects.

Such projects are to be treated on priority basis for lending”.

II. Cheaper and faster funding for real estate projects: Housing finance should be

considered with revised eligibility norms

III. Modified FDI and ECB rules: FDI rules and ECB rules be modified to encourage

investment in affordable housing. The upper limit of 50,000 sq.mts./25 acres should be

relaxed for this sector. The slum redevelopment projects and other affordable housing

projects irrespective of size may also be considered similarly

IV. ECB borrowings to be permitted in housing construction particularly for


23

completion of all ongoing projects which already has

equity investments in the form of FDI. ECB or FDI in

housing construction unlike the stock markets are more

long term with average tenure of 3-7 years in tune with

the life cycle of the projects. This source will be

supplemental to the funds from banks and financial

institutions and in the long term will reduce the cost of

finance and thereby the price of housing in the country

V. Banking and Finance: Roll-over provision for loans:

Policy for rescheduling of term/construction loans to

facilitate roll over of existing loans. The NPA norms to be

modified to allow this accommodation by the banks,

housing finance institutions and financial institutions

VI. Increased funding: Banks should be encouraged to fund the developers with fresh

infusion of funds to enable the developers to complete the ongoing projects. This should

be done on a priority basis

VII. Remove the disparity in risk weights: Risk weight assigned to Real Estate projects

should be reduced at par with manufacturing industry for the purpose of credit-disbursal

by banks.

VIII.Facilitate land availability: When land is purchased in an auction/bidding from

Government/Municipal authorities, banks should finance the project cost including land.

IX. Revised priority sector loan limit: Banks and HFIs are enjoying certain concessions

on loans up to 20 lacs which have been classified as priority sector loans. With the rising

inflation and the urgent requirement of credit in the housing sector this norm needs to be

revised upwards to at least Rs. 35 lacs/customer loan.

X. Foreign ownership rule: Consider the feasibility of permitting pre-approved

foreigners from a certain list of countries to own a house in India just as Indians can

today buy houses abroad.

XI. Incentives to buy home: Consider incentives for buyers of homes such as raising

limits for interest deduction from income, incentives for investment to increase the rental

housing stock etc., these could be for a 2-3 year period only till this slow down exists.

XII. Rescheduling of term loans from institutions: The slow down has forced majority

of developers to apply to their respective financial institutions for deferment of their

credit lines. However the present RBI policy to treat this deferment by the banks and

housing finance institutions (HFIs) as NPAs is preventing them from accommodating this

need of the industry. This, if uncorrected, will lead to unnecessary litigation on

defaulting developers and consequently the customers who have invested their hard

earned money will be deprived of their dream houses.

XIII.NPA norms to be reviewed

XIV. Housing sector should be accorded Infrastructure/Priority sector status

XV. Margin Money Contribution: Margin Money Contribution by home loan buyers is now

increased to 30 % which should be 15 % only

24

Apex Group of Ministers consists of Hon'ble Finance Minister, Shri P. Chidambaram,

Hon'ble Minister of Commerce and Industry, Shri Kamal Nath, Deputy Chairman,

Planning Commission, Shri Montek Singh Ahluwalia and Governor, Reserve Bank of

India, Dr. D. Subba Rao.

Apex Group of Secretaries consist of Shri Arun Ramanathan, Secretary (Finance), Shri Gopal

K. Pillai, Secretary (Commerce), Shri Ajay Shankar, Secretary (Industry), Dr. Subas Pani,

Secretary (Planning Commission), Shri Amitabh Verma, Jt. Secretary (Banking)

The Government / RBI have already taken some steps in the form of fiscal and monetary measures

and many more favourable measures in near future are expected. CREDAI is in constant touch with

various Government Authorities and would meet other Ministers /Policy Makers/ Reserve Bank

Governor and officials concerned in order to resolve the issues of the real estate sector.

Members of the 'Apex Group'

Draft EIA Amendment Notification 2009 The Ministry of Environment and Forests, had issued the EIA Notification on 14 September, 2006

requiring that construction of new projects or activities or the expansion or modernization of

existing projects entailing change in process or product mix (for activities listed in the Schedule)

shall need prior environmental clearance from the Central Government or the State level

Environmental Impact Assessment Authority depending on the project. Amendment to the EIA

Notification of 2006 was proposed on 19 January, 2009 and the draft has been placed in the

official Gazette inviting objections and comments from those persons likely to be affected.

CREDAI has been relentlessly following up this matter with concerned Ministries including the

PMO since May 2008. In November 2008, the PMO had informed CREDAI that discussions with the

Ministry of Environment and Forests in this regard had taken place and the later would take

necessary action. Since then CREDAI followed up with the Ministry of Environment and Forests.

A meeting with Shri J.M. Mauskar, Additional Secretary, Ministry of Environment and Forests with

the CREDAI was held, details of which are given below :

• The Additional Secretary conveyed that some

Government Departments and NGOs are against

the proposed increased threshold limit from

20000 sq. metres to 50000 sq. metres. Any

suggestion in this matter should be supported by

facts and figures and sound reasoning.

• According to him with the increase in threshold

limit 90 % of the construction projects would be

out of the purview of Environment Impact

Assessment (EIA).

• He also advised that there should be five

alternate suggestions instead of a single

suggestion as was submitted to the PMO.


25

S.O. 195 (E) dated 19 January 2009 issued by Ministry of Environment and Forests proposed to

make certain amendments and inviting objections / suggestions on the proposals contained in the

Draft Notifications within a period of 60 days i.e., by 18 March 2009. Salient points of the

amendment are as follows:

(Xvii) Against item 8 (a), in column (4), for the entry, the following entry shall be substituted,

namely: “= 50000 sq. metres and 1, 50,000 sq. metres. of built-up area”;

(xviii) Against item 8 (b), in column (4), for the entry “= 50 ha”, Substitute the entry “= 100

ha.”;

(xix) after the Schedule, in the 'Note' for sub-heading relating to 'General Condition (GC)', the

following shall be substituted, namely :-

“Any project or activity specified in Category 'B' will be treated as Category 'A', if located in whole

or in part within 10 km from the boundary of : (i) Protected areas notified under the Wildlife

(Protection) Act, 1972; (ii) Critically polluted areas as notified by the Central Pollution Control

Board from time to time; (iii) Eco-sensitive areas as notified under section 3 of the Environment

(Protection) Act, 1986, such as, Mahabaleshwar Panchgani, Matheran, Pachmarhi, Dahanu, Doon

Valley, etc., and (iv) inter-State boundaries and international boundaries :

Provided that the requirement regarding distance of 10 Km of the inter-State boundaries can be

reduced or completely done away with by an agreement between the respective States or U.Ts.

sharing the common boundary.

Proposed amendments byMinistry of Environment and Forests

Proposed Real Estate Regulation BillCREDAI has also actively advocated for the Real estate Regulation Bill over the last year. The need

for the regulation and the exceptions are listed below:

Rationale:

I. To prohibit fraudulent and unfair trade practices relating to real estate market

II. To protect the interests of end buyers and investors in real estate market and to promote

the development of and to regulate the real estate market

III. To discourage the unscrupulous players from entering the real estate sector

IV. Real estate development industry is fragmented and there is no pre-qualification,

resulting into entry of fly by night operators in the sector

V. Developer while selling his project usually promises a number of things to his buyers. But

some times, he might not be able to deliver those things on time because of changes in

the law or delay in getting statutory permission. Genuine builders can seek redressal

form compensation claims from the buyer

VI. Real estate is considered to be opaque and it is said that builders often break the

26

promises they make to gullible buyers

VII.Besides making the housing sector more transparent it would curb the flood of long-

drawn litigation that usually follows complaints from buyers

It is felt that the regulator for this sector would in be in the interests of the growth of both the

industry members and the consumers. In order to maximise the common benefit following issues

needs to be taken care of:

Reservations

Developers can not be asked to swim with their hands tied. The process of statutory clearances

must be a time based “deemed” event along with a single window system. All processes must be

made online to keep a track of interactions/transactions with various government agencies to

improve transparency

• Comprehensive reform that enables greater supply of housing would be more effective in

making houses affordable than the fiat of a regulator

• Formation of a regulatory body should not end up creating another layer of controls and

licensing, which would promote corruption

• If the regulator is not on the lines of SEBI for financial markets and IRDA for the

insurance sector, it would circumvent the whole issue

• A regulatory body for housing should not be composed of bureaucrats but of urban

planners and representatives from developers association and civil society

• Regulator should not add another layer of bureaucracy

• Land markets are horribly distorted in India and floor-area norms are very conservative

• Procedures and processes for land acquisition and conversion of agricultural land for

urban use are very complex

• To reduce property prices and make them more affordable for the average home buyer,

restrictive land use norms should be removed and urban amenities as well as the

administration of land records should be improved

Salient points of the proposed

regulation

I. Builders should be required to file papers

describing fully their upcoming projects

and obtain a time-bound clearance

(deemed), with a 30 days limit, of the

regulator before advertising them

II. Regulator should have powers to take

developers as well as the government to

task if either of them doesn't deliver within

the time schedule for every activity,

including statutory clearances. It must


27

ensure a level playing field for the developers

III. Property dealers / brokers / agents must also be covered. No property broker, sub-

broker, agent and such other intermediary who may be associated with real estate

market shall facilitate buying, selling or dealing in real estate except under, and in

accordance with, the conditions of a certificate of registration obtained from the

Regulator

IV. Consultancy firms like Knight Frank, Cushman and Wakefield, Jones Lang Lasalle

Meghraj, CB Richard Ellis, etc must also be brought under it to make them liable to

investors

V. Powers of the regulator need to be carefully and precisely defined. It shouldn't get into

areas such as fixing prices of houses or whether they are for rent only rather than sale

VI. There should not be any discretionary power in the hands of the regulator as it would

only set up more points for corruption

VII. Regulator should not have any control over the financial issues pertaining to any real

estate project

VIII. All members (including spouses and dependent children) of the regulator body must

declare their personal assets every year as on 31st of March within one month i.e. by

30th of April

IX. Development Authorities and Housing Development Boards should also come under the

purview of Regulator

X. Penalty provisions for the developer for any delay in handing over possession of the

property to the buyer

XI. Penalty provisions for the government agency for any delay in granting a time bound

sanction/ clearance to the developer. Impact in quantitative terms should be equal for

both the developer as well as the government agency

XII. Any rejection of application from the developer regarding any clearance from the

government agency, must be backed by a lawful and valid order by the government

employee and the same should be personally held responsible for any misdeed

XIII. Some lending institutions (banks, housing finance companies) take advantage of

vulnerable borrowers by charging extremely high interest rates and loan fees, use

aggressive sales tactics to steer consumers into unnecessarily expensive loan products,

and advertise very low "teaser rates" that steeply increase after two or three years.

Abusive loans lead to higher foreclosures, increased vacancy rates, lower home values,

and community deterioration, which erodes confidence in the nation's housing system.

Loans should have a reasonable debt-to-income ratio and an escrow for taxes and

insurance. Borrowers should have a reasonable choice of mortgages priced to reflect the

borrower's creditworthiness. Lending agencies should also be covered under the ambit

of regulator

XIV. Calling for information and record from any bank or any other authority or board or

corporation established or constituted by or under any Central, State or Provincial Act in

28

respect of any transaction in real estate which is under investigation or inquiry by the

Regulator

XV. Summoning and enforcing the attendance of persons including government officials and

examining them on oath

XVI. Inspection of any books, registers and other documents of any developer, government

agency, broker/agent or a consulting company

XVII. Relevant records and annual statement of accounts of the Regulator should be audited

by the Comptroller and Auditor- General of India at regular intervals

Clarification on Applicability of Service Tax Owing to the ambiguity and confusion about service tax applicability to the Construction of

Residential Complex [as defined under Section 65 (105) of the Finance Act], the developers were

experiencing escalating transaction costs. This was over and above the lack of liquidity in the

Indian market due to the credit crisis. After sustained efforts of the CREDAI in this regard, a

clarification was announced by the Government vide circular.

Construction of residential complex was brought under service tax w.e.f. from 01.06.2005. Doubts

arose regarding applicability of service tax in a case where developer / builder/promoter enters into

an agreement, with, the ultimate owner for selling a dwelling unit in a residential complex at any

stage of construction (or even pd.@ to that) and who makes construction linked payment. The

'Construction of Complex' service has been defined under Section 65 (105) of the Finance Act as "any

service provided or to be provided to any person, by any other person, in relation to construction, of a

complex". The `Construction of Complex' includes construction of a 'new residential complex'. For

this purpose, 'residential complex' means any, complex of a building or buildings, having more than

twelve residential units. A complex constructed by a person directly engaging any other person for

designing or planning of the layout, and the construction of such complex intended for personal use

as residence by such person has been excluded from the ambit of service tax.

A view has been expressed that once an agreement of sale is entered into with the buyer for a unit

in a residential complex, he becomes the owner of

the residential unit and subsequently the builder for

construction of residential unit is a service of

'construction of residential complex' to the

customer and hence service tax would be applicable

to it. A contrary view has been expressed arguing

that where a buyer makes construction linked

payment after en' ring into agreement to sell, the

nature of transaction is not a service part that of a

sale, Where a buyer enters into an agreement to get

Salient Features of the clarification:


29

Initiatives with NSDCCREDAI took initiatives over the last year for a thorough interaction among the BoD members

within NSDC. An overall summary of deliberations / discussions the BoD of NSDC had during the

Board level meetings till date:

4 BoD meetings have taken place so far

Representatives from 7 national level associations representing various sectors (such as CREDAI,

CITI, CII, FICCI, ASSOCHAM, SIAM and GJEPC) are on the Board

National Skill Development Trust (NSDT) has been formed with an initial corpus of Rs995.10cr. &

the Chairman of NSDC is one of the Trustees.

NSDT shall be collecting and utilizing the funds of the Trust for the defined purposes and shall

implement programmes through the instrumentality of NSDC to fulfil the objectives of the Trust.

NSDT shall act as custodian of the funds received from the contributors, and shall regulate the

utilization of the funds received from the Contributors and the manner in which the same shall be

utilized.

NSDC has entered into Investment Management Agreement(s) with NSDC for utilization of the

a fully constructed residential unit, the transaction of sale is completed, only after complete

construction of the residential unit. 'MI the Completion of the construction activity, the property

belongs to the builder or promoter and any service provided by him towards consumption is in the

nature of self service. It has also been argued that on if it is taken that service is provided to the

customer, a single residential unit bought by the individual customer would not fall in the

definition of `residential complex' as defined for the purposes of levy of service tax and hence

construction of it would not attract service tax,

The matter has been examined by the Board. Generally, the initial agreement between the

promoters / builders / developers and the ultimate owner is in the nature of 'agreement to sell'.

Such a case, as per, the provisions of the Transfer of Property Act, does net by itself create any

interest in or charge on such property. The property remains under the ownership of the seller (in

the instant case, the promoters/ builders/developers). It is only after the completion of the

construction and full payment of the agreed sum that a sale deed is executed and only then the

ownership of the property gets transferred to the ultimate owner. Therefore, any service provided

by such seller in 'connection with the construction of residential complex till the execution: of such

sale deed would be in the nature of ̀ self service' and consequently would not attract service tax.

tether, if the ultimate owner enters into a contract for construction of a residential complex with a.

promoter / builder / developer, who himself provides service of design, planning and construction;

and. after such constr4ctiort the ultimate owner receives such property for his personal use, then

such activity would not be subjected to service tax, because this case would fall under the

exclusion provided in the definition of 'residential complex'. However, in both these situations, if

services of any person like contractor, designer or a similar service provider are received, then

such a person would be liable to pay service tax. All pending cases may be disposed of accordingly.

30

corpus of the Trust to meet the desired objectives of National Skill Development Mission and

encourage skill development in the country.

Outside consultants who could help the Company design Strategy, Structure and Processes and

prepare concrete course of actions to achieve its objectives shall be engaged by NSDC.

Discussion on the reports submitted by each sector representatives on the number of present

skilled workers, their existing skills level, the deficiencies in the skills and the extent of required

up-gradation of the skills and a road map to achieve the mission of skill up-gradation programmes

in such industries have happened.

Also discussed was the need for an agency like ICRA which could help the Company to assess,

synchronize and evaluate these write-ups, proposals to figure out the exact numbers of the skilled

workforce required at present and also in the future. This is being pursued.

Stress was given on developing business model / business propositions which could attract the

business class/industries/entrepreneurs to undertake themselves in skill up-gradation programs,

training missions for the unskilled and semi skilled youths and resolve the migration related issues

of work force.

In order to promote the Public Private Partnership (PPP) model to achieve the skills development

mission, more and more participation and involvement of potential & interested firms, agencies,

individuals, NGOs etc is to be encouraged. NSDC has received a proposal from a private business

organization for viability gap funding of about Rs 30cr in order to set up a national infrastructure of

100 National Apprenticeship Centres (NACs) across India. This proposal is under active

consideration.

Interactive Session with the IBACREDAI representatives had met with the Chairman of the Indian Banking Association (IBA), Mr

Narayanswami over the lack of funds for the real estate projects. He requested CREDAI to submit

a proposal addressing the issues faced by the developers.

Other matters discussed includes whether Banks would be able to recover the credit amount in

contemporary scenario of uncertainty, how much time market would require to revive and what

has been the track record of the developers in terms of repayment of loans. There is a threat of

accounts going NPA if cash flows do not support repayment. The possibility of developer availing

loans, chances selling at lowers than market price if land was purchased at a higher rate were also

deliberated and whether there are any instances of diversion of funds by the developers.

Mr Lalit Jain, Nainesh Shah, Dharmesh Jain and Rohit Raj Modi from NCR attended this meeting.


31

CREDAI NCR Initiatives

Delhi got statehood about a decade ago and since then formulated a well

planned strategy for development with limited resources. Delhi

Development Authority (DDA), the agency looking after development of

infrastructure in Delhi owns technically vacant land areas in the city. DDA

and the real estate developers who are members of CREDAI NCR undertook

many real estate and infrastructure projects in the city. This is line with the

policy of long term development in the city and also to prepare for the 2010

'Commonwealth Games' hosted by the city. The credit crisis in 2008 brought

immense woes to the real estate development business. Banks had virtually

stopped lending to the real estate development projects that has taken a toll

on the progress of ongoing projects as the requirement for working capital

dried up. In this regard, CREDAI NCR members had submitted a

representation with the DDA to relax deadlines for completion of many

current projects.

A sub-committee for address Delhi related real estate

development issues were formed, the members of whom are:

1)Mr Pankaj Bajaj - (MD, ELDECO) Email- [email protected]

2) Mr Ajay Chandra - (MD, UNITECH) Email- [email protected]

3) Mr Ashok Solomon - (MD, CHINTELS INDIA LTD.) [email protected]

4) Mr Raj Singh Ghelot - (Chairman, Ambience LTD.) E-mail- [email protected]

5) Mr Rajeev Talwar - (Group Executive Director, DLF LTD.) E-mail- [email protected]

6) Mr Manish Uppal - (MD, Uppal Ltd.) E-mail- [email protected]

7) Navin K Raheja - (Chairman, Raheja Developers) E-mail- [email protected]

President CREDAI NCR and Hon. Secretary automatically becomes member of the committee.

In a meeting with the DDA on 22 December, 2008, CREDAI NCR raised certain issues affecting the

developer community. Major issues affecting real estate development sector in NCR have been

listed below:

• Approval Delays

• Possession Issues

• Funding Problems

• Recession in Hospitality Industry CREDAI NCR requested the DDA to consider

extension of the deadline for completion of projects by at least 3 years; also, some kind

of financial incentive was sought for the real estate developers for early completion

(within the next 2 years) to compensate for high costs of funding amidst adverse

business conditions.

Delhi RegionMajor Initiatives of CREDAI NCR


35

Ghaziabad RegionGhaziabad is growing in terms of both residential and

industrial townships. Considering the level of

development that is taking place, to maintain a

sustainable level of demand in this area, CREDAI NCR

has taken up this issue with the Government and is

expecting positive outcome. Members of CREDAI NCR

from Ghaziabad faced many problems particularly due

to the credit crisis. These issues were taken up with the

Hon'ble Chief Minister of UP, Ms Mayawati, and a

representation was submitted on behalf of the CREDAI

NCR members to the UP Chief Minister on 2 January,

2009. Local issues in Ghaziabad were also raised with

the local-level authority, the Ghaziabad development

authority (GDA). CREDAI NCR held intensive

discussions with the GDA on 31 December, 2008. A representation was submitted to the Vice

Chairman, to resolve the problems faced by the developer community in terms of executing

current projects. A committee was formed to look into the areas where CREDAI NCR would

engage with the authorities and a committee was formed in this regard.

Sub- Committee for Ghaziabad related issues

1) Mr. Anil Sharma - (Chairman Amrapali Ltd.) Email- [email protected]

2) Mr Manoj Gaur Gaursons - (MD, Gaursons Ltd.) [email protected]

3) Mr Amit Jain - (MD Mahagun India (P) Ltd.) E-mail- [email protected]

4) Mr R K Arora - (MD Supertech Ltd.) Email- [email protected]

5) Mr Sanjeev Srivastava - (MD Assotech Ltd.) Email- [email protected]

6) Mr Sanjeev Aeren - (Vice President North CREDAI, GCB member CREDAI NCR) (MD, AEZ

Group) Email- [email protected]

7) Mr Manu Garg - (MD Land Craft Developers PVT Ltd.) Email- [email protected]

President CREDAI NCR & Hon. Secretary automatically qualify as members of this committee.

UP has given a stamp duty rebate till December 31 2008, from 8% to 5%. CREDAI NCR has

requested the state Chief Minister to extend this scheme by a year so that demand of housing

does not shrink further.

36

Real estate development has contributed substantially to the

growth of Noida and Greater Noida region over the last few

years. Subsequently, government revenues rose enormously

over this period. The credit crisis as well as certain policy

related issues faced by CREDAI NCR members from this region

was raised with the GNIDA. A representation was submitted to

the GNIDA on 25 November, 2008. Also a representation was

submitted to the Noida Authority on 11 November, 2008. A sub

committee was formed which drafted the agenda for the

meeting with the authority based on feedback provided by the

members.

Members of the Sub Committee for Noida and Greater

Noida related issues:

1) Mr. Anil Sharma - (Chairman Amrapali Ltd.) Email- [email protected]

2) Mr Pankaj Bajaj - (MD,ELDECO) Email- [email protected]

3) Mr Rohtas Goel - (Chairman Omaxe Ltd.) Email- [email protected]

4) Mr Geetamber Anand - (MD, ATS Infrastructure Ltd.) E-mail- [email protected]

5) Mr Kabul Chawla - (MD BPTP Ltd.) E-mail- [email protected]

6) Mr Sanjeev Srivastava - (MD Assotech Ltd.) Email- [email protected]

7) Mr Pranav Ansal - (MD, Ansal API Ltd.) E-mail- [email protected]

President CREDAI NCR & Hon. Secretary automatically qualify as a member of the committee.

On 2 January, 2009, a meeting was held with the CEO of GNIDA on issues impacting developers in

Greater NOIDA. Major issues impacting Real estate development in the state and affecting the

developer community have been listed below:

• Waiver of Interest:

• Moratorium of payments:

• Possession of land:

• Extension of completion time:

• Density norms:

• Airport NOC:

• Pollution NOC:

Greater Noida is growing in terms of both residential and Industrial Township. Considering the

level of development that is taking place the demand for these areas is infrastructure which has

been successfully taken up by CREDAI NCR with the local authority, GNIDA, and positive results

have started showing. GNIDA, is actively trying to facilitate the changes in policies that need to be

brought about the help facilitate the projects that have been taken up by the Real estate

community.

Noida and Greater Noida Region


37

In the representation which was submitted to the CEO, it was highlighted that Real estate

development in Noida was under stress and the authority had to take active steps which would

lead to enhanced development in the satellite township:

• Waiver of Interest:

• Moratorium of payments:

• Possession of land:

• Development of Infrastructure:

• Restoration of civic order:

Different government orders that were passed for the Noida and the Greater Noida region in

response to the advocacy efforts of the CREDAI NCR to redress the issues faced by the real estate

developers from these regions are as follows:

(A) Government Order No 01/77/4/09/142 N/08 dated 06.01.2009 (Audyogic Vikas

Anubhag-4)

Applicable on other Industrial Development Authorities and Awas Vikas Pradhikaran; Not

applicable on Yamuna Expressway & UP Expressways Industrial Development Authorities

Eligibility Norms:

i. Defaulters unable to pay instalments

ii. Application before 30.06.2009 to concerned Authority

iii. Only those who have tried their best to execute

iv. Board of concerned Authority shall have the power to make necessary amendments

Options before defaulter:

• Either Executes his project

• Exits from his project and surrenders

Facilities

i. Capitalisation of interest & penalty on the default amount including future principal

component

ii. Six monthly payments of capitalised instalments

iii. First six-monthly instalments dedicated to interests and second six-monthly instalments

dedicated to principal amount and Interest

iv. Payment period of rescheduled plan shall not exceed twice the period as in original

allotment

v. All calculations to be done from the date of allotment

vi. Rescheduled instalments period shall not exceed 10 years period from the date of

allotment

vii. Any default in rescheduled plan shall attract a penal interest at a rate of 3%

Defaulter opting Exit Clause

i. 10% of the amount against total premium paid shall be deducted and land worth 90% of

the paid premium shall be returned (from the allotted land) to the defaulter

38

ii. Any charges paid against stamp duty, lease rent, processing fees, penal interest, transfer

charges, re-establishment charges or any other statutory charges shall or amount paid

against levied penalty shall not be refunded

iii. Unpaid amount on account of head mentioned under 'ii' shall not be deducted from the

90% value

iv. Any construction/ development on the part of land going back to the Authority/ Board

shall be considered of zero value

v. Calculation of land area returned back to the defaulter shall be done at higher of

allotment rate or current market rate


39

The colonizers have been raising the issues relating to the recovery of External

Development Charges (EDC), duration of licence period, renewal of licence and

density issues related to Gurgaon-Manesar Urban Complex. The CREDAI i.e. the

Apex Body of the real estate developers and other colonizers have also

submitted representation on these issues to the Government. These issues

have been discussed at the highest level on 18.11.2008 at 3-00 PM with Hon'ble

Chief Minister, Haryana. The Hon'ble Chief Minister, Haryana had constituted a

committee comprising of FCTCP, C.I., DTCP and CA, HUDA to examine the issues

raised by the colonizers. The Committee discussed these issues m an informal

meeting held on 8.12 2008. The Financial Commissioner and Principal Secretary

to Government Haryana Town & Country Planning Department also held a

meeting with the representatives of the colonizers on 2.1.09 at Panchkula for

discussion on their demands and to ascertain their views. In order to give final

shape to the decision, a meeting was held on 10.1.2009 at 5-00 PM at Haryana

Bhawan, New Delhi under the Chairmanship of Hon'ble Chief Minister, Haryana.

A detailed memorandum was submitted to the Chief Minister of Haryana, Shri

Bhupinder Singh Hooda, in a meeting held on the 10th of January 2009

regarding the issues faced by the developer community in the state of Haryana. This was

based on the follow ups of major issues which had been highlighted by CREDAI NCR in

separate letters submitted to the Director, Town and Country Planning Dept., in its office memo

dated, 31st December 2008. This memo was based on the major charges that were

incorporated in calculations of EDC charges in the townships of Sonepat, Gurgaon and Rohtak.

Sub- Committee for Haryana Related issues .

1) Mr Lalit Goyal - (MD IREO.) Email- [email protected]

2) Mr Pankaj Bajaj - (MD , ELDECO) Email- [email protected]

3) Mr Anil Bhalla - (MD . Vatika Ltd.) E-mail- [email protected]

4) Mr Laxmi Goyal - (Chairman , Suncity Project Ltd)

5) Mr Kabul Chawla - (MD BPTP Ltd.) E-mail- [email protected]

6) Mr Kamal Taneja - (MD TDI Infrastructure Ltd.) E-mail- [email protected]

7) Mr Pranav Ansal - (MD, Ansal API Ltd.) E-mail- [email protected]

8) Mr Navin K Raheja - (Chairman , Raheja Developers) E-mail- [email protected]

9) Mr Vinay Mittal - (Executive President - Coordination, Emaar MGF Land Ltd.)

E-mail- [email protected]

President CREDAI NCR & Hon. Secretary is automatically member of the committee.

Pursuant to these memoranda these issues were discussed in the meeting with the Principal

Secretary to the Chief Minister. Major issues impacting Real estate development in the state

and affecting the developer community have been listed below:

• Issue Concerning EDC Payment

• Renewal of License every 2 years and rate of renewal

Haryana Region

40

• License Fee

• Present Density Norms

• Acquisition of Land

• Pollution Control Board Notices

• Stamp Duty

• EDC Calculation

41


Developers as joint stake holders in the well being and progress of Punjab, will conduct an urgent

review of its policies to ensure continuity in development across the State.

In order to take up various matters related to the Real Estate Developers in the State and to

closely monitor the action, the CREDAI NCR has formed a Sub- Committee for Punjab Related

Issues, as under.

Sub- Committee for Punjab Related issues

1) Mr. Rohtas Goel - ( Chairman Omaxe Ltd. ) Email- [email protected]

2) Mr Pankaj Bajaj - ( MD , ELDECO ) Email- [email protected]

3) Dr Rajesh Aeren - ( GCB Member CREDAI NCR) ( VC , AerenR ) Email- [email protected]

4) Mr Geetamber Anand - ( MD , ATS Infrastructure ) E-mail- [email protected]

5) Mr Kamal Taneja - ( MD , TDI ) E-mail- [email protected]

6) Mr Mohit Singh - ( MD Shipra Estates Ltd. ) Email- [email protected]

7) Mr Pranav Ansal - ( MD, Ansal API Ltd. ) E-mail- [email protected]

8) Mr Parminder Singh Sehgal - (Executive President, Emaar MGF Land Ltd.)

E-mail- [email protected]

President CREDAI NCR & Hon. Secretary is automatically member of the committee.

Initiatives taken up by CREDAI NCR for its members in Punjab

Initially CREDAI NCR had taken up various issues concerning the State vide our letter dated 8th

December, 2008 to the Hon'ble Chief Minister and met the authorities thru a delegation on 12th

December, 2008. The delegation had a very fruitful talk with the authority.

With our continuous effort we have also organised a meeting with Shri Sukhbir Singh, Hon'ble Dy.

CM Punjab on 13th Feb 2008 and we hope that a fruitful result will come up.

A detailed memorandum was submitted to the Chief Minister of Punjab, regarding the issues

faced by the developer community in the state of Punjab. Major issues impacting Real estate

Punjab RegionDue to liquidity crunch as elsewhere in the Globe and in India, the Real

Estate Developers in the State of Punjab are also facing serious problems in

execution of their ongoing projects on time and also starting the new ones.

Though the Developers have good track record in execution of variety of

projects, which in the past greatly contributed to the growth of the nation

yet they are unable to perform now because of the global melt-down. The

various projects under execution by the Real Estate Developers in Punjab

are as under, which shall contribute amongst other things, the following :-

1. 50,000 houses under planning and construction across various

income categories including lower income groups.

2. 1,00,000 jobs in various segments like construction, retail,

hospitality and allied services.

3. Organized and Planned urbanization of major cities of Punjab.

In view of the above, the Govt. of Punjab, while recognizing Real Estate

42

development in the state and affecting the developer community have been listed below:

• EDC issues:

• EWS issues:

• Mixed Land Use:

• Public and Community Sites/Buildings:

CREDAI NCR appreciate the various initiatives taken by the Government of Punjab after our

meeting on 13th Feb 09 at New Delhi , with the view to attract investments, generate employment

and also for the welfare of the state.

43


CREDAI NCR Quarterly Newsletter CREDAI NCR regularly publishes a newsletter

covering news on the CREDAI NCR activities

in the preceding Quarter. All upcoming

programmes of CREDAI NCR are posted on it.

The newsletter while focussing on the real

estate sector developments in the Delhi NCR

and the adjoining areas like Punjab,

Rajasthan etc., also tracks pan India

developments in the real estate sector.

Important legal updates impacting the real

estate development business are also a part

of the newsletter. Newer regulations,

notifications, announcement for the real

estate development and the allied sectors are

included here. In a nutshell, the broader

objective of the CREDAI NCR Quarterly

Newsletter is to communicate with the outer

world and sensitise the stakeholders on

CREDAI NCR's position on various business

issues impacting the sector.

44

Policy Advocacy

Date & Time: Thursday 10 April 2008 at 7.15 PM

Venue: Ranaq Hall PHD Chamber of Commerce and Industry, New Delhi

Speakers: Mr R Muralidharan, Associate Director in PricewaterhouseCoopers Pvt. Ltd

Mr Ashutosh Chaturvedi Executive Director in PricewaterhouseCoopers Pvt. Ltd

Driven by the booming Indian economy, the real estate sector in India is on a high growth

trajectory. India has emerged as the fifth largest investment destinations globally in this sector.

The construction industry in India is the second largest contributor to the GDP (Gross Domestic

Product) after agriculture. The real estate industry in India is expected to grow to US$ 90 billion by

2015. Sharp growth in this industry can be attributed to large investments in the infrastructure

sector mainly in the road and power sectors.

CREDAI NCR has gone a long way towards a meaningful contribution towards improving the social

and economic infrastructure of the country. The NCR (National Capital Region) chapter of

CREDAI, CREDAI NCR now covers more than 80 per cent of the real estate development

businesses in the region. CREDAI NCR is a leading platform for addressing the problems of real

estate developers of NCR.

The CREDAI NCR President, Mr. Pradeep Jain said, “… the announcements made in the Union Budget

2008-09 are indicative of the developments expected. The budget however is yet to address the

much awaited demand for industry status to the real estate sector in India. CREDAI NCR has

submitted views and suggestions on this issue to the Ministry of Finance through various forums and

will continue to pursue them with the government on behalf of the industry.”

He further said that the spiralling prices of steel and cement have been another area of

concern for CREDAI members that has been taken up with appropriate authorities through

various representations.

CREDAI NCR has recently organized a

workshop on tax issues pertaining to the real

estate sector. Customs Duty, Service Tax, VAT

(Value Added Tax), CST (Central Sales Tax),

Entry Tax, Municipal/Local Taxes, Stamp Duty

and Registration Charges related to the real

estate sector were discussed by participants in

the workshop in great detail.

Service tax liability for a developer of residential

complex, eligibility criteria for CENVAT Credit on

construction services used in relation to renting

of immoveable property, inputs used for

applicability of new rate of 4 per cent under

Composition Scheme of Works Contracts,

classification of composite contracts under

construction services or work contract service

Workshop discuss measures to counter tax burden of the sector

CREDAI NCR takes up Tax Issues impactingReal Estate Sector

47


also came up during the discussion in the workshop.

Service tax issues in Budget 2008 gained attention of the participants in the workshop. In

particular, the participants discussed recent Budget proposals for 12 per cent service tax rate at

present, increase of threshold limit for exemption from 8 lakhs to 10 lakhs rupees for small

service providers, inclusion of seven new services in the service tax net, extension of scope of

existing taxable services,

composition rate of service

tax for works contract

services increased from 2

per cent to 4 per cent,

service tax now to be paid on

transaction with associated

enterprises either on receipt

of payment or making

credit/debit entries in the

books of accounts whichever

is earlier and expansion of

scope of renting for use in

the course of furtherance of

business also featured in the

discussions.

Also major services such as commercial and industrial construction services, construction of

residential complex services, execution of works contract services, renting of immovable property

services etc were also taken up in the workshop to understand their implications for the real

estate industry in India.

Unfortunately, the Tax structure for this sector has been an impediment in the overall sustained

growth. The Real Estate Sector is suffering from the burden of heavy taxes and levies levied by

Central & State Governments. Broadly speaking the present structure of levies is as under:

48

Nature of Tax Rate (%)

A Direct Taxes : In the form of Income Tax, Dividend Distribution Tax,

Fringe Benefit Tax, Wealth Tax 14%

B Registration Charges 8%

C Excise Duty and Service Tax on Input 7%

D VAT on Input 7%

E Entry Tax 0.5%

F Cess 1%

TOTAL : 37.5%

Jointly Organised by

PHD CHAMBER & CREDAI NCR

Date & Time: Saturday, 26th July 2008 at 9.30 AM

Venue: Ranaq Hall PHD Chamber of Commerce and Industry , New Delhi.

Speakers:

Mr. Atul Gupta, Partner, Deloitte Haskins & Sells (Service Tax)

Mr. Ashok Batra, Partner, A K Batra and Associates

Mr. Jayesh Kariya, Partner, Deloitte Haskins & Sells

Mr R. Muralidharan, Associate Director in PricewaterhouseCoopers Pvt. Ltd

Mr. Sunil Malhotra, CFO, Parsvnath Developers Ltd

CREDAI NCR and PHDCCI jointly hosted a seminar, 'Tax Issues Faced by the Real Estate

Sector' at the PHD House on 26th of July, 2008 in Delhi. The high incidence of taxation in the

real estate sector has somewhat put a question mark on the growth of this industry in near future.

This matter assumes importance owing to its social and economic implications for the economy.

Real Estate sector in India is the second largest employment generator in the economy after the

agricultural sector. This sector is projected to grow to US$ 90 billion by 2015, and has the potential

to attract FDI to the tune of US$ 20 billion by 2010. Industry members and experts shared there

views in the seminar and discussed policy options that could be taken up with the government.

Mr Pradeep Jain, President, CREDAI NCR and Chairman, Housing and Urban Development

Committee, PHD Chamber delivered the welcome and keynote address. He noted that the

objective of the seminar was to highlight the fact that tax issues take precedence over many

others for this sector owing to its adverse impact on the growth prospects of the industry.

Stronger and frequent representation to the government, both at the central and the state levels

are an essential part of the policy advocacy efforts of the CREDAI NCR and PHD Chamber.

Technical Session-1 of the seminar took up Service Tax, VAT and other Indirect Tax issues in

the real estate sector. Mr Prashant Deshpande,

Leader, Indirect Tax, Deloitte Haskins & Sells

deliberated on the VAT provisions in different states

of the country. Computational problems relating VAT

liability and credit claims and other practical aspects

of the VAT regime were also discussed by him. Mr Atul

Gupta, Partner, Deloitte Haskins & Sells (Service Tax)

stressed on the need for streamlining various service

taxes imposed on the real estate development sector.

Rationalization of the services list is a priority policy

goal for the real estate sector.

In the Technical Session-2 of the seminar, Mr

Jayesh Kariya, Partner, Deloitte Haskins & Sells spoke

on Direct Taxes in the real estate sector. He said

experts businesses have to structure themselves to

Tax Issues faced by the Real Estate Sector

49


minimize the impact of the 'draconian' tax policy in the real estate sector. Corporatization of the

real estate development businesses is strongly advisable to help this cause. This would promote

'value for projects', facilitate more funding from banks and expand scope for tie-ups with foreign

investors. Another contentious issue is the methodology of determination of business and income

tax.

Since formulation of commercial agreements has a direct bearing on interpretation of tax laws, it

is imperative that professionally crafted agreements are a necessity to deal with this problem. In

order to devise a roadmap for this industry, India needs to prepare for the IFRS and adopt

international best practices accounting standards for this industry.

Transparency and simplification of the legislations and administrative procedures are imperatives

for attracting higher investments, both domestic and overseas, in this sector. All these would

contribute to check the mounting 'transaction costs' and other overheads.

Among other issues that were taken up by the esteemed speakers of the seminar was the issue of

'title and ownership'. Investor confidence might take a hit if clarity does not prevail in this area

thereby preventing higher investments necessary to sustain the growth momentum of this sector,

on the face of global down-turn. This is important especially as very soon REITs (Real Estate

Investment Trusts) and REMFs (Real Estate Mutual Funds) will be allowed to operate in the India.

50

5th Conference on Real Estate: The Changing Paradigm in Indian Real Estate

Organised by

CII (Northern Region) & CREDAI NCR

Date & Time: Friday, 24 - Saturday, 25 October 2008 at 9.30 AM

Venue: Hotel Taj Mahal, New Delhi.

Some of the important Speakers:

Mr Sanjay Chandra, Conference Chairman & Managing Director, Unitech Ltd

Mr Chanakya Chakravarti , Fund Manager, Real estate, Actis Advisors Pvt Ltd

Mr Pradeep Jain , Chairman , Parsvnath Developers Limited & President Credai NCR

Mr Anshuman Magazine, Managing Director , CB Richard Ellis South Asia Pvt Ltd

Mr Sanjay Verma, Executive Managing Director - South Asia, Cushman & Wakefield (I) Pvt Ltd

Mr Arun Khanna , Head - Corporate Real Estate , HSBC Global Resourcing

Mr Harkirat Singh Bedi , Managing Director, IDEB Construction Project Ltd

These Conferences have been successful in ensuring a stable growth environment in the real

estate sector and have been providing an excellent platform to CEOs, Business Heads and Senior

Management personnel involved in the Real Estate decision-making process across the industry

from India and overseas to deliberate on the changing scenario in this booming sector.

Fifth in the series, Realty 2008 had provided a forum to discuss the opportunities and challenges

of FDI in construction and retail industries, SEZs and the key performance indicators of corporate

real estate finance. The Conference had brought together all concerned groups viz. developers

(domestic and international), owners & decision makers (government authorities), service

providers and fund representatives (local and overseas market) to a common platform to provide

impetus to the efforts to restructure the Real Estate industry.

Focus Areas of Discussion

• Discuss the channels to effectively utilize a company's real estate assets by facilities

optimization, portfolio optimization, energy optimization as well as optimizing services

• Dynamics of the commercial and residential market while giving a futuristic view.

• Tourism fuelling hospitality (Medical/ Heritage/ Religious)

• Innovate & Go Green: a sign of maturing markets

• Going beyond commercial development/ importance of diversification

• Evolution of retail (What clicks and what doesn't)

• The capital crunch saga - deal or no deal?

REALTY 2008

51


“Let me first take this opportunity to wish you all a very happy and prosperous Deepawali.

The global economic slowdown and the lack of liquidity in the market are the two aspects that are

affecting the entire economy. The real estate sector that was growing at a fast rate and was

scaling new heights has felt the pain and has been hit hard especially more with the perception of

various communities.

You all must be wondering why I started my speech in this manner. Because I feel this CII stage

offers me an opportunity to share my feeling on behalf of the sector about this temporary phase

which is going on. However I am confident that this will be corrected eventually.

Friends, the real estate sector have been of immense interest to people across the globe. This was

evident from the fact of huge investments made in the sector. However, the sub prime mortgage

crisis had a cascading impact on the Indian financial system. This resulted in a conservative

lending approach followed by banks that inevitably increased the home loans following the impact

of CRR and repo rate hike by RBI. The move dried up the existing liquidity in the markets which is

evident from the current share market fall. The move has given critics a further boost to

question the liquidity positions of the developers and to argue that the growth in the

real estate was mere a bubble which has now burst. They are, now without being

aware of the ground realities, boasting about developers being trapped in a cash

tight situation. This in turn has influenced the spending capacities of publics and has to some

extent restricted the growth of the Indian Real Estate Sector. To add to the misery, higher risk

weight age attached to the Real Estate lending has been dampened the image of the sector's

growth.

We should recall that this is the sector: -

• That provides assistance to 245 ancillary industries,

• Is the highest employer to the Below Poverty Line.

• Second largest employment generator in the economy where the top five real estate

players employ more than 2.00.000 employees at different locations.

• Has been instrumental in changing the face of India from being an under-developed

country towards accelerating its way to a developed country. It is evident from the state

of art infrastructure developments, buildings, townships, shopping malls which are not

only restricted to the urban cities but are also spread in the Tier II & Tier III cities and

make them stand at par with the modern towns.

These concerns have increased the negative sentiments of persons who have over the period

maintained a negative perception about the Real estate sector even when the sector witnessed

• Growth rates to the tune of 30% and is contributing 8.53% of the total GDP

• Has emerged as the fifth largest destination of foreign investment.

However, the negative vibes created have hit back and have been hampering the growth of the

Indian economy and has brought it to a standstill. Envisaging the impact, the RBI in order to

stabilize the Indian financial system has reduced CRR to 6.5% that would infuse additional

liquidity of Rs 1,00,000 crore in the cash starved market. Subsequently RBI for the first time since

2004 has reduced the Bank repo rate by 100 basis points to 8 percent. This would reinforce banks'

‘Realty 2008’: CREDAI NCR President’s speech

52

confidence in lending by infusing more liquidity. But, I

would emphasise on the very fact that the steps taken are

barely sufficient to keep our economy safe in the current

scenario and not grow from the prevailing levels.

In order to steer through these tough times the RBI

needs to further cut the repo rates probably by another

100 basis points and reduce CRR as well. The higher

risk weight on the real estate loans should also go.

Going forward, we do not see any decline in the

demand from the end users as there is a shortage of

27 million units. As the population keeps on

increasing, the demand is further expected to

escalate from current scenario. Even, as of today the

demand is much higher than the government

authorities without the presence of private real estate

developers can fulfil. It appears obvious from the 8.50 lakh applications received for mere 5010

flats on sale by DDA. The recent reports by real estate consultancy firms validate the view point.

The report by Cushman &Wakefield has hit hard on the face of pessimists who questioned the

future of the real estate Sector. As the industry report states that the demand for real estate

across office, retail, residential and hospitality sectors in the country is expected to cross the

1,000-million sq ft bench mark by 2012. The residential segment would contribute 63% of the

total real estate construction during the term under consideration and would continue to drive

real estate demand with 687 million sq ft. The commercial office space is projected to be 243

million sq ft and the retail and hospitality segments are expected to constitute 95 million sq ft (9

per cent) and 73 million sq ft (6 per cent) of this total demand, respectively. Considering the

burgeoning demand we have been offering commercial and residential properties both in the

affordable and the premium luxury segment.

However, we can not meet the needs and keep up to the demands of the customers without the

support of the government. Thus for the prosperity of the sector at general and customers at large

the government should facilitate the efforts of real estate developers by providing

• Minimum infrastructure guarantee under habitation policy,

• Relaxing guidelines on foreign investing in Indian Realty,

• Reducing risk weight age and

• By giving the sector “industry status” coupled with reduction and uniformity in stamp

duty.

• And of course by doing away with the restrictions on real estate loans.

We only hope the second most important sector received due attention and support from all-

government, banks, bureaucrats and media to maintain the growth. To communicate the need

we need the fourth estate to come in the aid of real estate.”

53


Building Synergies

Joint meeting among IndustryChambers, Experts

A meeting of the CREDAI NCR 'Core Committee on Tax in Real Estate' was held on 22nd October

2008 in Delhi. Mr Pradeep Jain, President, CREDAI NCR presided over the meeting.

Representatives from other industry associations (FICCI, ASSOCHAM, and NAREDCO) were also

present in this meeting along with real estate industry members and sectoral experts on various

taxes.

During the discussions, it was noted that the real estate developers in India pay highest amount of

tax (around 37.5 per cent) and yet face a critical situation of mounting tax burdens every year.

Additional taxes are imposed on this sector every now and then. Real estate sector had been

facing tax issues for long now and in spite of several representations to the government, from

CREDAI NCR and other associations, no policy measures or support to correct this situation were

adopted by the government.

Real estate sector is the second largest employment

generator in the economy and have been growing at

more than 30 per cent annually in recent years. It

attracts fifth highest FDI globally. It is in the interest of

the Indian economy that this sector continues to grow

and contribute towards sustaining the economic

growth of the country.

Given the present state of affairs in the real estate

sector, CREDAI NCR believes that a consolidated voice

from the industry should reach the government. This

requires a well-concerted action by the industry

members and hence for the first time probably in the

history of the real estate sector in India, CREDAI NCR

brought all real estate industry associations together

to engage in this critical matter jointly.

It was agreed in the meeting that detailed information

on tax issues in particular faced by the real estate

developers and policy issues in general needs to be recorded. Based on this feedback, a

memorandum on behalf of the real estate industry would be presented to the government and the

matter would be taken forward from there.

57


Forging International Partnerships

Indian real estate representativesattend EIRE in Italy

Maiden participation in such an event

CREDAI NCR along with other Indian real estate

representatives had participated in the Expo Italia

Real Estate (EIRE), held in Milan, Italy. Indian real

estate businesses were showcased before delegates

from across the globe in this fourth edition of EIRE

that took place in June 2008. A separate Indian

Pavilion with Indian theme housed Indian projects

at the event venue. This is the first time that Indian

real estate is participating in such an event.

CREDAI NCR, along with the Indo-Italian Chamber

of Commerce and Industry and ICMQ the Italian

construction certification body jointly organized the

first ever visit by Indian real estate delegation.

There is a US$ 500 billion opportunity for

investments in the infrastructure sector in India over

the next few years. Since March 2005, 100 per cent FDI (foreign direct investments) are allowed

in the housing infrastructure sector in India. This offers an excellent opportunity to Italian

companies, who have a well established reputation of expertise and excellence in this sector.

As a part of the infrastructure sector, real estate business played an important role in India's

growth story. There is a widely held view that a well developed infrastructure is a prerequisite for

making India's growth process sustainable. This therefore can be ably supported by Italian

expertise that has for generations dominated

construction business globally with their

architectural brilliance and competence. ICMQ India

has recently opened an office in India in response to

this newly emerging demand for technical expertise

in our country. Recent public policy developments

emphasize investment promotion on infrastructure

development across the country.

The Indian delegates to EIRE interacted with

potential European and Italian investors as well as

technological and engineering partners through the

B2B (Business-to-Business) meetings that ICMQ

India organized and at a special conference, Indian

real estate companies presented their projects in

India.

61


Engaging the Investor Community

CREDAI NCR, IVCJ jointly organise:'REFs and Infrastructure Forum 2008'

India's economic growth has put pressure on the infrastructure in the country. A sustainable

growth process requires a growing infrastructure so that the positive inter-linkages within the

sectors of the economy are fully utilised. Moreover, as energy and commodity costs surge to

historically highest levels, productivity and cost efficiency are the only long-term solutions to

maintain economic growth for inflation afflicted economy. As policy makers realise the importance

of modern, state-of-art infrastructure in jacking up across-the-board productivity, ample

encouragement have been extended to propel the domestic infrastructure sector through higher

investment expenditures. As a result, the Indian infrastructure sector is attracting significant

interest from the investors.

Also enwrapped in this sanguine atmosphere, is the Indian Real Estate sector. Riding the coattails

of a growing economy, favourable demographics and liberalised foreign direct investment (FDI)

regime, the domestic real estate sector has been growing at an impressive 30 per cent annually.

Despite the financial markets turmoil in the world economy over the last one year, the real estate

industry continues to be investors' safe bet. However, expertise, better understanding of the

current state of markets and networking can channelise investment into competitive industries

like real estate sector. The upcoming 'IVCJ's REFs and Infrastructure Forum 2008' next September

wishes to address these issues.

IVCJ along with CREDAI NCR hosted a two day conference on Real Estate Funds (REFs), Private

Equity and Infrastructure investments scenario in India and the way ahead.

65


Academic Cooperation

CREDAI NCR and University School of Management Studies, Guru Gobind Singh

Indraprastha University, Delhi

This Memorandum of Understanding (MoU) made and executed at Delhi on 18 February 2008

1. Both the parties shall identify areas of common interest by mutual consent for studies &

research and disseminate knowledge jointly through teaching, research programmes and

consultancy works.

2. Both the parties shall jointly organize training and research programmes, seminars,

conferences, workshops on issues related to real estate and other identified areas of

common interest.

3. Both the parties shall exchange publications, newsletters and journals of each of the

parties hereto on reciprocal basis.

4. Both the parties shall assist each other in publication of any reports relating to real estate

and other identified areas of common interest.

5. Both the parties shall inform and invite each other in seminars, workshop etc organized

by any of them relating to real estate and other identified areas of common interest.

6. Both the parties shall allow printing of their respective Logos on all correspondences,

brochures, letters and any other materials relating to training, research programmes, and

seminars organized jointly.

7. Both the party shall allow the access to each others' library resources.

8 The representatives of each of the parties hereto shall meet from time to time to identify

the areas of common interest and to evolve a procedure for undertaking the aforesaid

programmes etc.

Knowledge Creation and Dissemination

66

Technical Collaboration CREDAI NCR and ICMQ Certification India Pvt. Ltd (subsidiary of an Italian company duly

incorporated under Italian law having a registered office at via G. De Castillia 10, 20124 Milan

Italy)

This Memorandum of Understanding aims to describe how the Parties will develop joint activities

to promote the quality improvement of Ready Mix Concrete and the third party certification

scheme for Ready Mix Concrete Manufacturers

67

1 ICMQ shall bring:

a) an internationally recognized

brand, leader in the certification

and inspection services in the

construction and building material

i n d u s t r y w i t h a s t r o n g

specialization in Ready Mix

Concrete manufacturing process

b) a specific know how and

competence in the certification

(both management system and

product), inspection and training

services in the concrete field.

c) the accreditation required for

issuing internationally recognized

certificates (the accreditation process is “on going” with National Accreditation Board for

Certification Bodies - NABCB - and is expected to be concluded in autumn 2008)

d) a training program accredited in India by Quality Council of India (QCI) National

Registration Board for Personnel and Training (NRBPT) for training QMS Lead Auditors

2 CREDAI NCR shall bring:

a) knowledge of the developers and builders needs

b) capability of involving them in information and training activity;


Critical factors in formulating efficientContracts

CREDAI NCR-GGS IPU joint workshop on Contract Management in Real Estate

Date & Time: Friday & Saturday , 26th - 27th September 2008 at 9.30 AM

Venue - SCOPE Complex, , New Delhi.

Speakers- Shri L.R. Gupta, Former Director General of Works, C.P.W.D

Shri Jagmohan Lal, Ex. Add. Director General, CPWD

CREDAI NCR and Guru Gobind Singh Indraprastha University, Delhi jointly conducted a two-day

workshop on the topic- “Contract Management

in Real Estate” on 26th and 27th of September,

2008 at the Scope Complex, Lodi Road in Delhi. The

law of contract is of great significance as all

business transactions are based on contracts. The

theme of the workshop was therefore effective

management of legal issues in contracts to ensure

profitability of business organisations.

Contract management is the process which

ensures that parties to a contract fully meet up their

respective obligations as effectively as possible, in

order to achieve business objectives under the

contract. The purpose of this workshop was to

develop an understanding of legal and managerial

issues in contract formulation, performance and

enforcement to help avoid some of the pitfalls in

contracting and providing an understanding that

makes it easier to deal with lawyers and/or

arbitrators should the need arise.

The workshop was attended by around fifty

participants from diverse backgrounds:

Professionals who are into managing public,

private, PSUs or NGO sector business affairs and

contracts, including executives in Industry,

Government, Entrepreneurs, State-owned

Enterprise Managers, Engineers, Project and Office

Managers, Sales and Marketing Managers,

Contractors, Sub-contractors and Consultants

delivering Contract Services and Support were

among the attendees of the workshop.

The workshop started with a welcome address by

Dr Kuldeep Chander, Professor, Building

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Engineering and Management School of Planning and Architecture and Principal

Consultant, Centre for Research in Real Estate and Infrastructure, Indraprastha

University (IPU), and subsequently a vote of thanks by Shri Kailash Gupta, Vice President,

CREDAI NCR in the Inaugural Session. Both of them noted the increasing importance of

efficient contract management practices in order to control costs, check delays in the completion

of projects and save the contracting parties from the hassles arising out of disputes.

In the Session-1 of the day-one, Shri L R Gupta, Former Director General of Works,

Central Public Works Department (CPWD) said that contracts are a necessity in today's

business world. Numerous laws, regulations and unforeseen events make dealing with business

contracts a complex affair. Managing public, private or NGO sector business affairs and contracts,

require understanding of the intricacies involved in contract formulation, interpretation, review,

performance, enforcement, negotiation, as well as remedies in case of its breach. Various types of

contract documentation followed by the Government of India and The World Bank were also

presented by the speaker in this session. Strengths, weaknesses, risks and the missing terms

before signing a contract agreement so that the final agreement is effective and enforceable were

also elaborately discussed by Shri L R Gupta.

In the Session-2 of the day-one, Shri Jagmohan Lal, Ex-Additional Director, CPWD

discussed the Indian Contract Act and Arbitration and Conciliation Act. The management of

ongoing business contracts require knowledge, skill and experience in order to be able to handle

all the details necessary to ensure getting what is bargained for as well as coverage against claims

that have not been done. Hence, knowledge of rights, remedies and duties regarding the

performance and enforcement of legal and contractual rights is essential. Balancing the exercise

of rights, selection of remedy and ensuring duties are also important.

In Session-3 held on the day-two, Shri Jagmohan Lal, Ex-Additional Director, CPWD

discussed procedure and case studies on resolution of disputes through arbitration. The breach of

contract may have serious consequences both to the business and reputation. Therefore,

companies need to have sufficient evidence should things deteriorate into a breach of contract

and enforcement actions become necessary. Before taking the plunge into a time intensive and

expensive process of dispute settlement, companies should know whether there is a breach at all

and if it is so, then what are the consequences.

Issues like possibility of any scope to avoid

litigation and treat the breach, obligations under

the agreement and costs of an enforcement action

are to be evaluated by companies before any legal

action is initiated to settle the dispute. There are

also possibilities that ADR (Alternate Dispute

Resolution - arbitration, mediation etc.) could be a

better alternative to filing a lawsuit or go for

negotiation or a combination.

There was an Open House discussion towards the

close of the day-two of the workshop moderated

by Dr Kuldeep Chander and the eminent panel

consisted of; Shri H S Dogra, Ex Director General

(Works), CPWD, Shri G S Sharma, Advocate and

Shri Jagmohan Lal. Participants got opportunity to

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put forward their queries to the panellists.

The workshop closed with a Valedictory and Wrap-up Session, and Professor K K Aggarwal, Vice

Chancellor of GGS Indraprastha University addressed the participants and announced at the

success of the workshop programme with the CREDAI NCR. He expressed his desire to continue

conducting workshop with the CREDAI NCR on real estate sector issues and contribute towards

development of the real estate sector. This followed a certificate presentation ceremony.

Academic Cooperation

Between

CREDAI NCR

And

School of Planning, Design and Construction at Michigan State University

We will enter into an "initial collaborative agreement" for the first 2 years

Initial collaborative agreement will be on the following issues.

• Information Sharing

• Collaboration in development of training and educational programs

• Collaborative research

• Collaborative activities in countries other than U.S.A and India

• Exchange visits of the researchers/officials from both sides

Knowledge Creation and Dissemination

70

Reaching out to the world

www.credaincr.org

CREDAI NCR WebsiteUnder the leadership of Mr Pradeep Jain, President, CREDAI NCR several initiatives to promote

organizational image of the Confederation of Real Estate Developers of India (CREDAI), Delhi-

NCR region were taken. In this regard, development of the CREDAI NCR website was the first

step. The purpose of going online is to reach out to a wider audience with the guiding

philosophy: “We are as good as our online visibility”. The vision to usher CREDAI NCR into the

information age and utilise the potential spin-offs for long term growth and development of

the real estate industry in India is summarised in the following points.

(1) Maximum Visibility- Occupying mind-space of the policy makers, media, Indian

industry members and other stakeholders is a prerequisite for building healthy working

relations in an industry association. A well-concerted approach towards resolving real estate

business issues calls for engaging the stakeholders and recognise inter dependencies in

today's networked world. This is important to understand each other's problems so as to move

together towards a win-win situation. Engaging stakeholders regularly requires a common

platform and an online portal suits best for this. Introducing CREDAI NCR present

Membership, inviting potential members, institution profile, role, functions, activities, mission

and vision of CREDAI NCR are posted on the following sections of the website:

I. About Us (CREDAI NCR, CREDAI)

II. CREDAI NCR Membership (wi th

information on essential qualifications &

procedures to become a member)

III. The CREDAI NCR Quarterly Newsletter

(carries news on CREDAI NCR's activities &

real estate sector updates)

IV. Events & Announcements: Seminars,

Conferences, Workshop details (includes

presentation archive, picture gallery, video

archive, registration facility, sponsors'

space)

V. Media: Press Releases & CREDAI NCR in

news

VI. Careers (to develop professionals with real

estate domain knowledge)

VII. Contact Us (to get in touch with the CREDAI

NCR Secretariat)

(2) Creating Knowledge Repository, Sharing

Information- Today's information age has made it

possible to acquire valuable and timely information

on the Internet. Creating a knowledge base and

sharing it with the users adds to intellectual resources

required for real estate development business and

keep abreast with the latest developments. Toward

this end the following sections have been included in

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the website.

I. Industry facts: News & views on real estate business

II. Policy Updates: Articles on current policy issues

III. Research & Analysis: Insights on key issues and dynamics of the sector

IV. Investor's Resources: Topics on finance & investments in real estate sector

V. Featured Articles: Current Issues

VI. Tools: Help for users

VII. Industry Data & Statistics: Facts and Figures on the sector

VIII.Property Indices (RESIDEX)

IX. Daily News Alert & monthly news wrap (on real estate and allied sectors)

X. Custom Bulk Mails from www.credaincr.org (to communicate important updates

with the users)

(3) Building Relationships, Developing Synergy, Aiming Consensus- The 'virtual

world' has thrown open opportunities of communication at the rate of speed of thought. We

sincerely believe this is not an overstatement. Barriers in terms of physical distance, culture

gap and even language difference no longer restrict communication among willing parties.

Mobilizing stakeholders, brainstorming business issues and collective action ensures all round

growth of the industry. The online directory of real

estate on the CREDAI NCR website intends to be a

forum for interaction, not only among developers but

also vendors, investors, technical experts, research

institutions and other professional communities

related to real estate activities. CREDAI NCR and the

prestigious Indraprastha University, Delhi joined hands

to conduct regular workshop on real estate topics and

has collaboration in developing professional courses

attuned to the needs real estate industry. A similar

arrangement with the premier Michigan State

University, the US is being worked out. Over the past

one year real estate developers confronted with

challenging issues like credit crisis, flagging demand in

the real estate market, surging costs etc. Conflict of

interests among stakeholders arises very often in

business. Meaningful and regular communication

among stakeholders prevents uncertainty in the fast

paced modern business world. The following section in

the website attempts to serve this purpose:

I. Join our community: Online Directory of

Real Estate in India

(4) Exchange of Ideas- Blog & Forum sections in the

website are interactive knowledge sharing platforms

for free and constructive discussions among

stakeholders on real estate business and related

issues. Face-to-Face section of the website feature

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interviews with thought leaders and eminent personalities from the real estate industry

I. CREDAI NCR Blog

II. Forum

III. Face-to-Face

(5) On the Global Radar- CREDAI NCR website is visited by people across the world; 10,402

visits came from 52 countries, and 10,402 visits came from 266 cities. Google Analytics reports

on CREDAI NCR website traffic and a comparison with other industry association websites

shows the traffic growth rate for www.credaincr.org has been increasing steadily. We would

like to invite you to visit our website and let us know your views and suggestions on the same.

Table-1: Website Rankings (Source: Google Analytics)

Visits 10,402 (In four months )

Page views 27,436 (In four months )

Bounce Rate 58%

New Visits 40.75%

Avg. Time spent on Site 3.36 min

Traffic Source Direct Traffic: 42.34%

Others (Mainly from daily news mailer): 31.44 %

Top Content Latest News & Updates

Country wise visit 10,402 visits came from 52 countries

City wise visit 10,402 visits came from 266 cities

Daily News Mailer Send across to more than 10000 interested users; this item in the site attracts most traffic. The

list of e-mail IDs is likely to grow by 150 per week

Table-2: TRAFFIC SUMMARY of the CREDAI NCR website (Source: Google Analytics)

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Website Rank (India) Rank(World) %visitors(I) %visitors(OI) Age of website

Assocham.org 14800 286775 94.2 5.8 >15yrs

Ciionline.org 15393 174230 87.7 12.3 >15yrs

Nasscom.org 45404 551784 93.2 6.8 >15yrs

Credaincr.org 64199 938186 97.5 2.5 <4months

Phdcci.in 83666 1668651 100 0 >15yrs

Credai.com 118878 1392022 96.3 3.7 >5yrs

Koapa.net 141288 2290717 100 0 >5yrs

Naredco.org 241214 3492083 93.8 6.2 >5yrs

Mchi.net NA 15080528 NA NA >5yrs

Credaibengal.com NA NA NA NA >5yrs

Pbap.org NA 1918696 NA NA >5yrs


Testimonials: What CREDAI NCRwebsite visitors say

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“Congratulations on the "Silver lining in the gloom” featured in your Nov. 22 newsletter. The story is a valuable

contribution to the current "Global Financial crisis and Indian Real Estate market crisis" debates. The article is a timely

piece of clear thinking and broad perspective. On the supply side (Design & Development) of the property market we can

learn from previous downturns during which those developers with long term commitment and maturity were rewarded

for persisting with the sector. They did so by adopting product and process innovation. One example is the adoption of

internationally proven project cost planning and management techniques which on paper incur a very small overhead

but in practice optimize project value and reduce cost blow out risk. In the recent past market buoyancy neither of these

factors has been given much importance in the rush to get to market "at any price"! Please keep up the good work with

your industry newsletters.”

Peter Cox

Managing Director

Padghams Cost Management

Australia

“The daily news update from you is very informative and useful to us. We would like to receive it regularly from you and

hope to be in touch with you.”

Mousumi

FICCI

Delhi

“It is indeed a quick update of whatever is happening in Industry. Got to appreciate the efforts you and your team are

doing to help us with updated information on one platform.”

Sukhiya Kulkarni

Senior Manager - Planning

Inspira Infrastructures Ltd

Mumbai

“Thanks for your regular updates on Realty News! I must say the effort has been fantastic and positive.”

Pranav Desai

Chief Investment Officer

Usha Realty

Mumbai

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“Thank you for your e-mail. I wish to confirm that my e-mail id [email protected] is correct. We are happy with

the services you provide and look forward to your continued support in the future. I would like to wish you and your team

all the best for 2009.”

Chender Baljee

Chairman & Managing Director

Royal Orchid Hotels Limited.

Bangalore

I thank you for your mails. Please continue to send the news letter

Chandrakant Raipat

Past Chairman

REDAJ

Ranchi

“The mails which you have been sending are quite informative and have helped in keeping abreast with the latest news.

Keep it up.”

Raveendran

Former Director

Kerala Builders F

“Your email news has been of great help in understanding what is unfolding behind the HEADLINES we read in TOI or HT

New Delhi. A great contribution from you in understanding the Realty sector in these troubled times.”

Manjira

“Good service”

Lalit Kumar Jain

Chairman

Kumar Builders

“The service has been very useful to me in providing convenience in terms of presenting major real estate news

appearing in different newspapers and from different sources in one place thus making it easier and quicker to know the

current updated news in the sector. I think CREDAI NCR is doing a good job in providing this service and in appreciation of

the same I shall be happy to continue receiving the same.”

Abhinav Parekh.

Director

Belani Group


78

“The newsletters provide great insight into the RE market. Keep it up.”

T.N. Ravi

Regional Head (North)

ICICI Home Finance Co. Ltd.

New Delhi

You are providing very good service by sending us daily updates. Please continue it.

Punit Chaudhry

Assistant Secretary

PHD Chamber of Commerce & Industry

New Delhi

Thanks for all your efforts in consolidating the news on the Indian Realty Sector.

Sandeep Nargas

ICICI Bank Ltd

New Delhi

It has been a useful compilation for reference.

G B Singh

Chairman & Managing Director

Red Fort Capital Advisors (P) Ltd

New Delhi

Thanks and the updates are really good. Keep up the good work

Suresh Hari

Secretary

CREDAI KARNATAKA

“..your services have been good and it really gives the consolidated news related to the industry.”

Vyomesh (@Vimal) Shah

Managing Director

Akruti City Ltd

“..have been receiving your mails send to this id, appreciate all the efforts taken to update everyone on the industry

latest news. It is very helpful in keeping abreast of the developments”

Dr. NAJEEB ZACKERIA

Managing Director

ABAD Builders Private Limited

ABAD GROUP

The newsletter carries relevant news and acts as a single source to get all the information.

Sandeep Kotak

Kotak Mahindra Bank

Mumbai

Doing a good job!!

Hitesh Mittal

Technopack India

Thank you. I find your emails very informative and useful, so please do keep me on your list!

Karina Lowe

Hypo Real Estate Bank AG

Commercial Real Estate Origination Europe

London

Great service.

Jesal Sanghvi

Westbrook Partners

New York

79


Innovation Initiatives

A direct link between CREDAI NCR and Members

In order to assist the Real Estate Developers[1][1] with their day-to-day operations, and to

provide assistance on Legal, Regulatory, Taxation and other Policy issues, CREDAI NCR in

consultation with area experts, propose to provide a dedicated Membership Helpline Service to its

members. Data, information and advice from various sources would be used towards resolution of

issues.

An integrated database on issues faced by the industry members would enable the Secretariat to

devise a long-term strategy for sustainable growth of the Real Estate Development sector. This

would also facilitate speedy and effective resolution of business issues faced by the developers

through timely and forceful policy interventions.

A sneak preview of what this service package intends to deliver would be as follows:

Updates on

i. CREDAI NCR activities, events and initiatives

ii. Broad industry trends and related data

iii. Government notifications and policies

Understanding on

i. Range of Secretariat services

ii. CREDAI NCR's views on key policy issues

iii. Membership benefits and advantages

iv. Secretariat Rules and Procedures

Communicating

i. Industry specific issues of concern

ii. Changes in membership details, Updating Secretariat records

iii. Suggestions, Ideas and Inputs

These queries would be answered over electronic mail. Select questions will also feature in the

CREDAI NCR Quarterly Newsletters for sharing with the developer community.

Membership Helpline Services

Summary Operations

i. Col lect information from member

companies on various business issues and

maintain records

ii. Collate information with inputs from domain

experts (cost to be borne by the client for

priced resources gathered from external

sources), stakeholders

iii. Channelise the process of Resolution

iv. Escalate issues in relevant circles like

government, bureaucracy, judiciary, public

Institutions etc.

v. Formulating a unified process for redressing

business issues

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While Secretariat queries are to be taken up on pro-rata basis, nominal charges for individual

queries have to be paid. Detailed components of this service and tariff-structure may be decided

after preliminary discussions on this draft.

Disclaimer: The professional services referred herein are strictly facilitative in nature and under

any circumstances do not claim to act as a substitute for consultancy and advisory services by

technically qualified experts. The Helpline Service intends to systematically apply first rate project

management skills to solve live industry problems.

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CREDAI NCRTheme for 2009“housing for all”

Pradeep Jain

CREDAI NCR

Real estate sector - saw a remarkable rise from 2005 to first half of 2008, both in residential and

commercial segment. The period witnessed high economic growth which gave birth to higher

standard of living there by giving rise to demand for high end and premium luxury homes. The

developers in order to fulfil their needs started offering luxury projects and such projects were

huge success. However, the real estate sector was struck in more than one way in the later half of

the year 2008, by the record double digit inflation.

First, the rising cost of inputs has been putting pressure on the cost of real estate projects.

Second, the higher rate of interest caused an increase in cost of funds for real estate projects.

Third, is that due to higher home loan rate and less disposable income due to inflationary pressure

buyers had to cut their budgets. To add to the pain, the collapse of American financial system,

followed by the sub-prime crisis has drained out liquidity from the market, thus leaving people

with less cash in hand. This further had a negative impact on industries across sectors. This

brought a drastic change in the spending habits of consumers, whose focus shifted from luxury to

basic housing facilities. There is a shortage of 27 million dwelling units in India at present; hence,

it is not the demand-supply mismatch that is keeping away buyers from the market. It is the

negative sentiment and declining spending capacities of people that has forced them to postpone

their purchase. Thus, the developers' focus has shifted from Premium/ Luxury housing towards

affordable housing with an aim to provide housing for all.

These homes though would provide basic amenities instead of premium facilities provided in the

luxury apartments but would not compromise on the quality offered as they would be built up

using same construction technologies.

The thrust therefore now is on the affordable housing in Tier I, Tier II and Tier III towns. It is

envisaged that the concept of affordable housing would be a sure shot success in Tier I towns as

there is a near absence of Affordable housing. Needless to say that the demand for affordable

housing in Tier 1I & Tier III would grow steadily, as availability of land at reasonable rates coupled

with high growth and rapid urbanization trends has led to huge demand for affordable housing

everywhere. Along with this the desire to stand at par with the modern towns and urge to have a

better living standard has further given a force to the

demand. Developers will supply as per the demand

and today if the demand is towards Affordable

Housing we are working on various options to bring it

to the customer. Real estate sector is a support

system to 240 ancillary industries and for the

economy as construction industry is the second

largest employer after agriculture sector, thus

economy stimulation in this sector should be the

priority agenda. Joint efforts of government, banks

and developers would definitely help the real estate

sector in catering to the need of affordable housing.

So, let us adopt the motto- “Housing for all” in 2009.

Year of Affordable Housing

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Contact: Dibyendu Choudhuryy

Relationship Manager, 09910907673

1411, Chiranjiv Tower,43, Nehru Place, New Delhi-110019, INDIA

Tel : 91-11-46634663, Fax : 46634613

www.credaincr.org

e-mail: [email protected]

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