Nearly 80,000 forms sold on first day of Delhi housing scheme

Now this is a good way to make money by selling forms. 1L x 100 = 1crore. Not bad for a days work.

Times of India reports
NEW DELHI: Nearly 100,000 application forms were sold Wednesday for a Delhi Development Authority (DDA) housing scheme for the sale of 5,020 flats across the national capital.

The DDA Housing Scheme 2008 will provide over 5,000 flats way below the current market prices. The flats would be sold after a computerised lottery draw of the applicants.

“We sold about 80,000 forms today (Wednesday). Many of them were downloaded from our website,” DDA spokesperson Neemo Dhar told IANS. The application forms would be available till Sep 16.

“At least 10,000 forms were sold from the sales counter at Vikas Sadan (headquarters of DDA) and nearly 70,000 forms were sold from branches of various banks which are authorised to sell them,” a DDA official said.

“Nearly 15,000 forms were downloaded from our website,” the official added. The forms cost Rs.100 each.

The DDA is expecting more than 500,000 applications for the flats. “We have got nearly five lakh (500,000) forms printed but if they are sold out then we will get more printed,” Dhar said.

People thronged the sales counter to buy the application forms but many sensed that the odds were heavily against winning the draw.

“I was excited that I will be able to avail the opportunity to have a house in Delhi. But after hearing that five lakh (500,000) forms are being printed, the chances are very bleak,” said Ritu, a resident of Palam.

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What goes up comes down doubly fast

This is not a time to gloat about being right which we are but its time to reflect on how to asses the pitfalls which could encounter if we ever were to step into buying a house at some point in our lives. As the story will unfold we will see small builders being wiped out, projects delayed indefinitely, legal problems between landowners and developers magnified, large mega projects by tier-2 builders getting stalled due to cancellation in bookings, outskirt prices dropping like a rock. redevelopment deals shelved and many more black swan events out of scope of the human mind. The key to a good property is location so the good ones as always the case will suffer the least damage. The sun has stopped shining and most of the bulls have gone to the cow-sheds or tabela's they are called in Hinglish. The occasional bull who is still roaming the fields is going to be dinner for some big bad bear out there.

By CNBC-TV18s research analyst, Niraj Shah

Well, the biggie said it on Friday and it may well set the tone for what could be a full-blown cyclical downturn for the real-estate space.

DLF, in a press conference, mentioned about a possibility of volumes getting impacted due to a hike in interest costs (No wonder Dr Y V Reddy's actions have seemed like a sharp wedge in the hearts of Indian realtors). At the time of its IPO, DLF has mentioned that while residential prices may start to stagnate, the commercial customers will be strong and keep the company in good stead. The company has stated today that it believes that the upside in the rentals is capped and they, at DLF, do not expect rental incomes to go up here on.

Secondly - in an interview earlier, V Hari Krishna, CIO of Kotak Realty Fund came up with an interesting observation. He said that since January 2007, most of the consumers have withdrawn from the market and this is reflected in the fact that when one looks at home loan disbursements, they have declined by 22% on a YoY basis from 2006-07 to 2007-08.

The drop, in fact, would have been more had HDFC and ICICI Bank not increased their disbursement rate in this period. Ex-HDFC and ICICI Bank, the disbursements would have fallen by 50%, which is obviously a worrying factor as it indicates that end users have withdrawn from the real estate market.

Thus, one would be inclined to believe that the meteoric rise that one saw in property prices in regions such as NCR and some Tier-II and tier-III areas was more of investor and/or speculator demand rather than end-user demand. And thus, these prices tapering off have lead to a switching-off in that trade and thus a moderation in demand and prices.

Sure - in select pockets such as Mumbai, Delhi CBD, etc, you would still see the odd expensive land deal, rental increase, etc. But make no mistake about it-the property market is looking south. And the biggest property developer, both in terms of size and repute, coming out and sort of affirming it does speak a lot.

CNBC TV 18's MF team did some digging and figured out that while the number of PE deals, both outbound and inbound, have declined by 60% for Q1 on a YoY basis, there is increased traction in the PE deals in the real-estate space. With the Primary market route closed and the debt becoming expensive, it would either lead to a PE deal at a much lower valuation - or a faster tick of sales leading to increasing cash-flows, which would sustain the highly geared realty companies.

For the faster tick in sales to happen - which essentially means wooing the buyer in a high interest-rate scenario - the prices will have to drop significantly - and that is the way the real-estate space is poised to go, never mind the odd-exception here and there. How soon we get there? Anybody's guess - but from the looks of it, sooner rather than later.

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Secret and lies about housing interest loans

DNA has a good article on how interest payments can exceed capital by a factor of three, thanks to the compounding effect of interest. For those who understand the details, this is a very good reason why high loans don't make sense any more. For those who are caught in this nightmare, not even Bernake or the 'Singh is Kingg' can save them. The effects of leverage and compounding work is reverse the same way as they on the way up.

Borrow Rs25 lakh home loan, repay Rs1 crore

MUMBAI: If the current interest rates stay, you might end up shelling out more than Rs1 crore to pay off a Rs25 lakh home loan. How? Read on.

Six months is a long time, especially if you happened to take a home loan back then.
Banks were charging a floating interest rate of 11% on their home loans. The equated monthly instalment (EMI) on a 20-year loan (or 240 months) of Rs25 lakh would have worked out to Rs25,805 a month.

Around one-month back, banks raised the interest rate on floating rate home loans to 11.5% and have now raised it by another 0.75% to 12.25%.

Last time, hike in interest rates were not accompanied by an increase in EMI. Banks did the smarter thing and increased the tenure of the loan. The remaining tenure of the loan went up from 240 to 269 months.

If banks were to follow the same strategy now and increase the tenure of the loan, instead of increasing the EMI, the remaining tenure of the loan would go up to 394 months. Add to this the six months of EMI you have already paid, and you are looking at a total tenure of 400 months. If you keep paying an EMI of Rs25,805 for a period of 400 months, you would have paid Rs1.03 crore (Rs25,805 x 400 months) by the end of it.

However, the bigger question is will banks allow tenures to shoot up to 400 months?

How it will hurt you
Principal Rs 25 lakh
Initial rate 11%
Tenure 240 months
Initial EMI Rs 25,804
Principal repaid Rs 14,707
in first 5 months
Principal left Rs 24.85 lakh
Rate after 5 months 11.5%
Remaining tenure if 269 months
EMI remains same
Increase in tenure 35 months
at the same EMI
Principal repaid in Rs 4,027
the 6th month
Principal repaid in Rs 1,8734
first six months
Principal left Rs 24.81 lakh
Rate after 6 months 12.25%
Remaining tenure if 393.5 months
EMI remains same
Increase in tenure 159 months
Extra money paid to Rs41 lakh
service the loan (Rs 25,804 x 159)
Total EMI to Rs1.01

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Keep HAL airport open: AAI

Can BIAL oppose the hand which feeds it. ? Just as BIAL used legal recourse to close the HAL airport AAI is now paying back BIAL in the same coin. Legally AAI or the government cannot open HAL unless BIAL is made to offer concessions . Using this newly found data they can turn on the screws on BIAL and Alfred Bruneer who is acting like the most incompetent Swiss national ever to set foot in India. Its about time the Devanhalli speculators exit. If they wait for HAL to open thats the end of all their paper profits and they would be stuck with illquid assets for years to come.

Keep HAL airport open: AAI
Recommends Move Till BIA Builds Additional Terminal
Anshul Dhamija & Sujit John | TNN

Bangalore: The new Bengaluru International Airport (BIA) has landed in a turbulent whirlwind with the Airports Authority of India (AAI).
The AAI has prepared a report that says that BIA’s capacity is less than what its promoters have stated, that the airport is already saturated, and that the promoters have violated a key clause in the concession agreement signed with the government. It has gone on to recommend that the old HAL airport be kept open till BIA builds an additional terminal.
The AAI report, a copy of which is with The Times of India, follows a directive by the civil aviation minister to study the capacity issues at BIA. The AAI had designated a 4-member team to conduct the study in June.
The report says that the Bangalore International Airport Ltd (BIAL) must take “immediate action...to create an additional capacity of 10 million passengers per annum to avoid further congestion and to handle the projected growth.” The report goes on to say, “In view of the saturation of the passenger terminal, import cargo, apron and runway, it is recommended that, in the meantime, the existing HAL Airport may be permitted to operate until the time of commissioning of proposed additional capacity at the new Bengaluru International Airport.”
As per AAI’s calculations, the terminal capacity at BIA can only handle 9.78 million passengers annually as against the city’s passenger traffic of 10.12 million passengers in 2007-08. This means that since the day BIA opened on May 24, the airport has been under capacity. BIAL, on the contrary, has claimed that the airport’s capacity is 11.4 million passengers, which could even go up to handle 14 million passengers annually.
As per recommendations of the International Air Transport Association (IATA), an airport which has to handle passenger traffic of 10 million passengers should have a terminal size of 1,50,000 sqm in area. BIA, according to the AAI report, has a terminal size of barely half that at 71,310 sqm.
The report goes on to state: “BIAL revised its forecast to 11.4 million in November, 2006, for the year 2015 which deviates from the actual traffic drastically. In fact the traffic was growing as high as 43.9% when the revised forecast was made in November 2006.
As per the concession agreement para 14.2 (page-61) BIAL was supposed to provide facilities as per IATA/ICAO standards and was to provide 27.3 sqm of space per peak hour passenger (PHP), whereas the actual area provided is 19.8 sqm per PHP, which is in deviation with the concession agreement.”
As per norms followed by IATA, the capacity of an airport terminal is calculated on the ratio between the total area of an airport terminal to the number of peak hour passengers, which for any airport should be a minimum of 25 sqm/PHP.
In fact the figure of 19.8 sqm/PHP at BIA is way below that of older airports in Chennai and Kolkata which have figures of 23.15 sqm/PHP and 24.15 sqm/PHP respectively. In the new Hyderabad airport terminal, it is estimated to be 35.21 sqm/PHP.
Further,taking the terminal building in its totality,the report states that the “basement area of 18,665 sqm is not used for passenger facilitation, it is used for storage, services and utilities. Therefore, basement area should be excluded from the total terminal area which will reduce area/PHP to 14.6 sqm.”
What AAI report also said
BIA’s peak hour runway capacity is 32 movements as against current peak hour demand of 25. With anticipated annual growth rate of 25%, runway is likely to saturate during 2010-11. Immediate action should be taken for construction of second runway
Existing number of parking bays are 42 as against peak hour demand of 41 bays (26 passenger aircraft, 5 freighter, 10 buffer for contingency). Addition of 30 more bays recommended
There is imbalance between import and export cargo area which needs adjustment, that is import cargo is saturated whereas export cargo and domestic cargo have adequate capacity. It is therefore recommended that an additional import cargo capacity may be created immediately.

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Consumer court ruling : Builders must fulfil promises mentioned in brochures

‘Builders must fulfil promises’
Consumer Forum Directs Them To Deliver What Is Shown In Brochures
TIMES NEWS NETWORK

Pune: Providing relief to flat owners deprived of amenities by builders, the consumer disputes redressal forum, Pune, in a landmark ruling, has held that a builder will have to provide all the required facilities to a purchaser which he had promised in the brochure.

Even if an agreement between the two parties was silent on providing the amenities, it will be binding on a builder to give facilities which he had promised in the brochure, observed forum president Pradip Gaikwad and member Sulabha Joshi on July 16.
The order was passed on a complaint filed by senior citizen Parshuram Redij of Vijaya Rashmi Residency at Warje Malwadi.
Redij had filed a complaint against M/s Vijaya Rashmi Developers and its partners comprising Marathi actor Ravindra Mahajani of Paud road, Arun Nikam and Harishchandra Nikam, both from Kothrud, for deficiency in service. The firm had published an advertisement in a Marathi daily for undertaking a project at S.No. 43/5 at Warje Malwadi, where it had assured several facilities. Lured by the promises, Redij booked flat no. 4 in the A wing of the building for Rs 6,14,250.
After Redij took possession of the flat on October 30, 1999, he discovered that the promises made by the builder in the brochure that he would construct an internal road, garden, club house, swimming pool and security cabin after the completion of the project were not fulfilled. On various occasions, the senior citizen took up the issue with the firm and its partners. He appealed to them in vain that the needful should be done. Moreover, the flat owners suo moto registered the society by shelling out Rs 75,000.
Arguing in person during the final hearing, Redij alleged that the firm had transferred the development rights to M/s Vaishnavi Shraddha Constructions. He said he had filed a criminal case against the partners, which is pending before the magistrate court here.
Redij appealed to the forum to direct the firm and its partners to execute the sale deed in his favour, provide basic facilities and repay Rs 35,000 as expenditure incurred on registering the society with 18 per cent interest with effect from the date of taking possession of the flat.
On the contrary, the firm had argued that the complaint was barred by the law of limitation and that it had transferred all its rights and liabilities to M/s Vaishnavi Shraddha Constructions. The firm contended that the amenities mentioned in the brochure were not part of the agreement. The forum held that the firm could not be allowed to absolve its liability merely by saying that it had executed a deed of assignment in favour of a third party. The forum further observed that the firm and its partners had induced Redij to purchase the flat on pretext of providing facilities.
The forum directed the firm and the partners to jointly pay Rs 35,000 to Redij with nine per cent interest from October 30, 1999. They were further directed to provide all the facilities mentioned in the brochure and register the conveyance deed and sale deed in his favour as per the provisions of the Maharashtra Ownership Flats Act, 1963. The firm partners have being directed to comply with the order within 3 months.

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Sabeer Bhatia's new flop investment

Its been 10 years since Mr Bhatia sold his company to Microsoft but ever since that he's been trying valiantly to build the next sucess story. Unfortunately this new venture like few of his others is a dud from day one. Trying to create a semiconductor fabrication enviroment is easier said then done. Skilled manpower, water, electricty and partnerships with bechtel or similar likes are needed before the groundbreaking crememony. Unfortunately in India lured by the hype of the Sensex and PE firms these morons think they can sucker local Indians into buying apartments in an SEZ mirage. As with other mega deals I expect this one to fail in times to come. Pasvanath has nothing to claim in expetise apart from oiling policiticans and babu's. If this was a sunrise industry Ratan Tata, Premji or the Ambani's would be right at the forefront with solid business plans, not with real estate development hype companies. The ecconomic times press release as usual with no analysis is below


Parsvnath Developers on Wednesday joined hands with Sabeer Bhatia, co-founder of Hotmail, to develop a 11,138 acres knowledge city near Chandigarh, where the company will initially invest Rs 400 crore.

The project, Parsvnath Nano City, valued at Rs 50,000 crore (12 billion dollars), is promoted by the former Hotmail innovator Sabeer Bhatia, whose company holds the majority stake of 52 per cent. The Haryana government holds 10 per cent stake.

"We have already made an investment of Rs 41.5 crore for acquiring 38 per cent stake and the remaining will be invested as debt in future," Parsvnath Developers Chairman Pradeep Jain told reporters here.

To be developed in Panchkula, the project would be completed in two phases over the next 10 years, where the company would develop 5,000 acres in the first phase.

"We have already acquired about 1,500 acres and we are talking to various land owners for acquiring the rest," Jain said.

The realty firm would invest Rs 400 crore initially in the form of equity and debt in the project, he said.

All the stake holders of the project has formed a new entity, Nano City Haryana Ltd, which would raise funds from the capital market within 18-24 month for completing the project.

"We plan to take the company public in 18-24 months, but we have not finalised how much stake will be diluted or how much money we are going to raise," Jain said, adding the company would also dilute some stake to private equity investors.

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Pune builders touting townships.

CNN -IBN has become a builders mouthpiece for touting the Pune builders. All project costs seem to be bogus running into thousands of crores of rupees. Where is the money going to come from for all these mega projects. One success in magarpatta city and all these marketing fellows are trying to ape it.Even in Magarpatta the apt building quality is average whereas the commercial buildings are above par. The reason for the difference is simple. The commercial buildings were constructed by reputed construction firms like JMC/Vascon whereas the apt buildings were constructed by builders who had proximity to the politicians. Lalit Kumar says "how long will be buyer wait ?" Mr Kumar he will wait till the cows come home and he is not going to get carried away by projects built in the boonies. Pune is not a metro city like Mumbai/Chennai therefore it lacks funds for development. Already has a load shedding problem which is getting acute.

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