The Maharashtra Real Estate Regulatory Authority (MahaRERA) is taking steps to enhance its regulatory oversight of residential projects in the state.
With the Mumbai Metropolitan Region accounting for half of the country’s residential market in terms of value and the highest number of stalled and lapsed projects, MahaRERA is focusing on ensuring that home buyers receive their properties within the stipulated timeframe while having access to construction status information.
MahaRERA chairman, Ajoy Mehta, has mandated that developers across the state update their project status details on the regulator’s website every three months and file annual financial statements. Mehta has made it clear that registration numbers for projects will only be issued after due diligence, and that the regulator will introduce more changes to ensure compliance and transparency.
MahaRERA’s strict regulatory oversight approach includes quarterly scrutiny of developer returns, and the regulator is identifying projects with valid registrations but where things are not going as planned. A team is in place to scrutinize projects worth approximately ₹90,000 crores in the state whose registrations are still valid but with no status updates.
Earlier this month, MahaRERA issued show-cause notices to about 16,000 developers for non-compliance with regulations such as displaying registration numbers and updating project status. The regulator is committed to cracking down on erring developers to safeguard the interests of home buyers.
Chennai has emerged as one of the top five cities in India attracting real estate investments worth 2.88 billion dollars during the period of 2018-22, according to a study conducted by real estate consulting firm CBRE South Asia. The report revealed that the real estate sector across India received investments worth 43.3 billion dollars during the same period.
Chennai recorded investments worth 0.9 billion dollars during 2018-22 into land acquisition, accounting for 8 percent of the total land acquired in the country since 2018. Over 60 percent of the investments in Chennai were in core and core-plus investment strategies.
CBRE’s Chairman and CEO for India, South East Asia, Middle East, and Africa, Anshuman Magazine stated that they expect investment inflows to remain steady over the next two years, with an anticipated cumulative inflow of 16-17 billion dollars. The report also revealed that the office sector would continue to attract the largest share of institutional inflows, while alternative investments in data centers could gain further traction.
The residential market gained the most traction, accounting for 37 percent of the land acquired in India since 2018, with developers acquiring over 900 acres for residential projects, accounting for 43 percent of the total land acquisitions made in 2022. The Delhi-National Capital Region led the land acquisition activity, capturing over one-fourth of the total land acquired since 2018-22. It was followed by Hyderabad and Mumbai, both with a share of about 14 percent each. Mumbai had a share of 31 percent, while Bengaluru and Hyderabad captured 9 and 7 percent of the total land acquisition, respectively.
The Indian government has announced plans to form a committee that will draft a model builder-buyer agreement to protect homebuyers from potential abuses and streamline the homebuying process.
The committee will comprise members from judges, national and state consumer commissions, various consumer bodies, lawyers, and the Ministry of Consumer Affairs. It is expected to be in place within the next three months, according to Consumer Affairs Ministry Secretary Rohit Kumar Singh.
The move aims to resolve disputes between homebuyers and developers by standardizing and bringing uniformity to contracts between the two parties. Singh emphasized the importance of creating a unique document that can be applied nationwide. The model agreement will be developed in consultation with all stakeholders and submitted to the Supreme Court and all states.
Over 5.5 lakh cases are pending across various consumer courts in India, with over 54,000 cases specific to the housing sector alone. The backlog highlights the importance of providing speedy justice and streamlining the process for homebuyers. Key problems for homebuyers include delays in possession of property, biased and unfair builder-buyer agreements, and misleading advertisements by developers and influencers to lure buyers.
During a roundtable conference on the effective redress of grievances pertaining to the real estate sector, hosted by the Department of Consumer Affairs in association with the Government of Maharashtra, the consumer affairs department suggested key measures to address these problems. These measures include sending the draft agreement to buyers before execution, clearly mentioning permissions and sanctions obtained from competent authorities on the first page of the agreement, and prohibiting builders from launching projects before obtaining all necessary permissions and sanctions.
In addition, the department has called a meeting with the top 50 influencers in Mumbai to discuss the issue of misleading advertisements. The government’s initiative to create a model builder-buyer agreement and other measures to protect homebuyers will help restore confidence in the real estate sector and boost the country’s economic growth.
The Department of Consumer Affairs will be hosting a round table conference in Mumbai on April 18 to discuss ways to redress the grievances of property buyers in the real estate sector.
The conference, titled “How to effectively redress the grievances pertaining to the real estate sector,” will be organized in collaboration with the Maharashtra government. The conference will be chaired by Rohit Kumar Singh, Secretary, Department of Consumer Affairs, Government of India.
The real estate sector accounts for approximately 10% of cases in consumer commissions, with 2,30,517 cases filed by consumers, 1,76,895 cases disposed of, and 53,622 cases still pending, according to an official statement. Despite the existence of separate tribunals such as RERA and NCLT to deal with cases related to the housing sector, the number of pending cases in consumer commissions is increasing.
The conference aims to discuss policy interventions required to reduce litigation in the housing sector, analyze cases filed in consumer commissions, and identify major factors that result in consumer cases. The conference will also explore why more cases are filed before consumer commissions, despite the presence of separate authorities like RERA, and how to ensure that housing sector cases are dealt with effectively and expeditiously.
The conference is expected to be attended by members of the National Commission, Presidents of State Commissions from various states, RERA Appellate Tribunal Maharashtra President, RERA Chairmen from Delhi and Maharashtra, Presidents of District Commissions from different cities, representatives from the Ministry of Housing and Urban Affairs, RERA, IBBI, Government of Maharashtra, ASCI, voluntary consumer organizations, and the builders’ fraternity.
The Forum for People’s Collective Efforts (FPCE) President, Abhay Upadhyay, who has been invited to the conference, has welcomed the initiative and hopes that a legal framework will be established to ensure speedy resolution of disputes in the real estate sector.
Priyanka Chopra, the renowned Bollywood actress and global icon, has sold one of her commercial properties in Mumbai for a whopping Rs 7 crore. The property, located on the 2nd floor of Vastu Precinct on Lokhandwala Road, was bought by dentist couple Dr. Nitesh and Dr. Nikita Motwani.
The carpet area of the property is spread over 1781.19 square feet, and it also has a terrace area of 465 square feet and an open car parking space.
Priyanka’s mother, Madhu Chopra, finalized the deal on her behalf. Priyanka, who is currently living in Los Angeles with her husband Nick Jonas and daughter Malti Mary Chopra Jonas, owns several properties in India and abroad.
While Priyanka is making headlines for selling her property, she is also in the news for her upcoming web series Citadel. The spy series, produced by the Russo Brothers, will feature Priyanka and Richard Madden in lead roles. The trailer for the series was recently launched, showcasing Priyanka in an action-packed avatar. The series will stream on Amazon Prime Video from April 28, 2023.
Apart from Citadel, Priyanka is also a part of the movie ‘Love Again.’ With her growing global presence, Priyanka has become a force to be reckoned with in the entertainment industry.
Homesfy Realty Ltd., India’s first publicly traded brokerage, has announced its highest annual pre-sales value to date in FY23. According to the nation’s premier technologically advanced real estate brokerage, their pre-sales value for Q4-FY23 grew by 51% over Q3-FY23, totaling 599 Crores, and by 15% over Q4-FY22, despite the challenging global economy and the growing price of loans on the domestic market.
Additionally, Homesfy Realty reported an average unit price for FY23 of ₹91 Lacs, a 7.5% growth from the previous year’s price of ₹84 Lacs. Furthermore, Bangalore’s and Mumbai’s sales volumes rose by 37% and 42%, respectively, in comparison to FY22. Top developers like Lodha, Runwal Group, Prestige, Godrej, and L&T made considerable contributions to the high sales value and volume growth. Bangalore contributed 20%, followed by Mumbai with around 70% of the overall sales volume.
Homesfy Realty’s broker aggregation platform, mymagnet.io, contributed pre-sales value worth ₹222 Crore, up 53% from ₹145 Crore, and reported a 51% growth rate to ₹47.38 Crore as cash flow from collections. The CEO of Homesfy.in & Mymagnet.io, Mr. Ashish Kukreja, expressed his satisfaction with the results, calling them “transformative years for the sector” and stating that the strong demand for quality tier-1 branded homes is expected to continue despite global uncertainty.
According to data from REA India, there was a 22% growth in housing sales in India across eight cities, from 70,630 units in the Q4 of the previous fiscal year to 85,850 units in the last quarter, January-March 2023. New launches surged by 86% to 1,47,780 units, which was the highest for a quarter from 79,530 units, suggesting that the Indian housing market is expanding significantly.
Mr. Kukreja also believes that the Indian government’s infrastructure mega-projects, such as highways and new airports, and significant policy initiatives like “Housing for All,” will stimulate both quantitative and qualitative growth in the real estate market, including Tier 2 and Tier 3 markets, generating substantial returns for investors.
Real estate stocks are presenting an attractive investment opportunity due to a combination of factors. After a long down cycle, the Indian residential real estate market has turned the corner, with the unsold inventory at multi-year lows and new home bookings strong.
This trend is being driven by urbanization, nuclear families, and a desire for larger homes. The winners in this market are a few large and branded players who have grown new home bookings at an annualized rate of 33% between FY20 and FY22.
The real estate industry has undergone significant changes since the early 2000s. The industry was once like the wild west, with hundreds of players catering to strong demand driven by rapid urbanization, massive cash dealings, and cheque-based investors looking for robust returns with a negligible downside. However, regulatory changes, such as the introduction of the real estate regulatory authority (Rera), followed quickly by demonetization and the goods and services tax, led to a brutal shakeout, with only a handful of players surviving. The industry is now well-regulated, with leading players having strong balance sheets and access to cheap loans. EMIs are much lower now, adjusted for rising take-home salaries.
Post-consolidation, barely 30-40 large players meet the success criteria of brand, balance sheet, execution, and sales engine. It’s a classic bull market set-up, with strong demand and weaker supply leading to ‘pricing power’. The biggest entry barrier or moat is trust, built over the years of consistent delivery. The operating characteristics of realty firms are quite attractive, with project IRRs in the range of 20-22% annualized and healthy ‘pre-sales’ growth of roughly 18-20%. Coupled with high entry barriers, this is a potent business proposition. Since these companies also develop commercial offices and retail malls, the three segments taken together have a long runway of growth.
Valuing real estate stocks can be challenging. Revenue is only booked on the handover of the property, not on ‘percentage completion’. This results in project margins appearing depressed and working capital seeming inflated in the initial years, even though pre-sales continue to happen. However, thoughtful investors can use an assumed percentage completion method and estimated profit margin for deriving the ‘modified’ EBITDA, and compare it as a ratio with the company’s enterprise value (EV). This results in a ‘modified’ EV/EBITDA multiple, which makes real estate stock valuation comparable to the valuation of ‘regular’ stocks.
Despite offering a better combination of growth and profitability, real estate stocks trade at modest multiples. Some people believe these stocks should trade at the net present value (NPV) of all their projects (NAV). However, others point out that since revenue is booked on completion of the project, cash is received regularly based on milestone completion, so NPV is not so relevant. Real estate prices are much more sensitive to unsold inventory, which is currently at a 10-year low. Another fear is that rising interest rates will raise EMIs and reduce demand for apartments. Home loan rates have recently risen, but they are still close to pre-covid levels, and demand remains very strong.
Experienced investors know that the best returns are made when there is a wide disconnect between attractive fundamentals and poor investor perception. With robust revenue growth, healthy IRRs, wide moat, and cheap valuations, real estate stocks offer an attractive investment opportunity.
The Shapoorji Pallonji (SP) Group, a leading infrastructure and real estate company, is planning to raise $2.5 billion by selling some of its assets to reduce debt and improve leverage metrics.
The group is looking to sell its stake in Afcons Infrastructure, a company it acquired from ICICI Bank, and Gopalpur Ports, an asset it acquired from metal trader Sara International and entrepreneur Mahimananda Mishra of Orissa Stevedores.
In addition, the group is considering selling a portion of its interests in real estate assets with a development size of over 100 million square feet. The proceeds from asset monetization will be used to reduce its debt of Rs 21,000 crore and for other purposes. The SP Group declined to comment on the matter.
The group had previously attempted to list Afcons Infrastructure on Indian stock exchanges, but the proposal was shelved despite receiving regulatory approvals. The group is now reviving its plans to sell Gopalpur Ports due to the improved business environment. Cargo movement at the port was previously impacted by export duty on certain commodities like iron ore, but this tax has since been eliminated.
The SP Group, led by Shapoor Mistry, has been exploring various fundraising options to address rising interest rates and leverage metrics. It has already divested several assets, including water purifier maker Eureka Forbes, the Jammu-Udhampur highway asset, Forbes Facility Services, and Sterling & Wilson Renewable Energy, to reduce loan obligations.
The group had also raised $1.3 billion by pledging half of its 18.37% stake in Tata Sons with Farallon Capital and Ares SSG Capital. These moves helped SP exit RBI’s Covid debt-restructuring scheme without any haircut to lenders ahead of the timeline. SP and related parties still own 33% in Sterling & Wilson Renewable, which they plan to exit in the future. Majority-owned by Reliance Industries, the renewable company has a market cap of Rs 7,000 crore.
Apart from the fresh asset sale plans, the SP Group is also raising $1.75 billion from pledging its remaining Tata Sons stake. The group is currently holding roadshows in Singapore and Hong Kong with foreign fund managers to raise funds.
The NCR city’s boundaries would be extended towards Meerut, Hapur, and Delhi by building additional townships on land that will be purchased by the Ghaziabad Development Authority (GDA) and UP Housing Board. A proposal to expand the city by the UP government, and will soon release Rs 4,000 crore for funding. According to officials, the GDA and the housing board were anticipated to receive a large sum of money.
According to GDA officials, land purchases were planned for Looni, Modinagar, and Dasna. The population is increasing, and it has become necessary to expand the boundaries of the NCR city as more people are likely to move there with the inauguration of the RRTS later this year and other commuter options
The plan to expand the new limits of cities throughout the state was approved by the UP cabinet. The development authorities in various districts will purchase property to build new townships as a result of this initiative. The authorities will likely receive about 4,000 rupees for the land purchase
Together with allocating money, the government will also pay 50% of the cost of acquiring land over a 20-year period. There won’t be any interest assessed by the government. For every development authority, land acquisition is the most time-consuming and expensive operation. Authorities will undoubtedly be encouraged by the government’s action
Townships haven’t been a big success for the GDA. Madhuban Bapudham, the authority’s most recent project, nearly depleted its financial reserves when it was forced to pay an additional Rs 1,100 crore in compensation to farmers whose land was confiscated as a result of a 2016 Supreme Court judgment
To create a township, the GDA will now be required to purchase at least 25 acres under the new policy. The central city region is congested. As a result, we will focus on the city’s periphery, specifically Loni, Modinagar, Muradnagar, and Dasna, where land is still for sale. With the opening of the RRTS, there will be a paradigm shift in how people commute, and as a result, Ghaziabad’s population and housing projects are expected to grow significantly, according to Tripathi.
There are two other townships in the city besides Madhuban Badpudham, however, they were both created by either individual developers or partnerships. The UP government introduced a Hi-Tech township programme in 2005, with a minimum need of 1,500 acres of land. 25 acres were required by the government for an integrated township strategy. Crossing Republik was built as a result of the integrated township. In the interim, the cabinet also authorized the expenditure of Rs 547 crore under the Amrut-2 plan for the building of 68 MLD STP that will benefit 10 municipal wards.
The Maharashtra Housing Authority and Area Development Authority (MHADA) has extended the deadline to apply for the MHADA lottery, allowing buyers to purchase homes under Rs 50 lakh near Mumbai. The new deadline is April 19, as MHADA officials have upgraded their software to accommodate more applicants.
The new system eliminates the need for a Pradhan Mantri Awas Yojana registration certificate and instead requires an income tax return certificate to be uploaded into the system to show the applicant’s income. The revised schedule allows for applications to be made until April 19 and earnest money to be deposited until April 21. The results of the lottery will be announced on May 10.
The homes available in the lottery range in price from Rs 14 lakh to Rs 50 lakh and are located in areas surrounding Kalyan, Thane, and Virar near Mumbai, and parts of Raigad district. The ready-to-move-in apartments come with standard amenities, including basic sanitary and electrical fittings, 24×7 water supply, elevators, and solar panels for electricity. MHADA has received 22,380 applications for 4,640 apartments and 14 plots in the annual lottery, and 11,693 applicants have deposited the earnest money.
MHADA’s rules state that any Indian citizen can apply for a house in the lottery provided they come under the prescribed income slab. The annual income cap for the Economic Weaker Sections category is Rs 6 lakh for those residing in Mumbai, Pune, and the Nagpur metropolitan region, and Rs 4.5 lakh for the rest of the state. For the Lower Income Group segment, the annual income is Rs 9 lakh for Mumbai, Pune, and the Nagpur metropolitan region, and Rs 7.5 lakh for the rest of the state. For the Middle Income Group, the income cap is Rs 12 lakh per annum across the state. Those with an annual income of over Rs 12 lakh are in the Higher Income Group category, for which there is no upper limit.
MHADA has made changes to the registration system page, addressing difficulties faced by female applicants while registering due to change of name, surname, or other reasons after marriage. The new option given to the applicant on the application registration system page will facilitate a smoother registration process.
Of the 4,640 apartments, 2,048 are available on a first-come, first-served basis, and are located in the Virar area of the Palghar district near Mumbai. These homes are available for lower- and middle-income groups in the price range of Rs 23 lakh to Rs 49 lakh. The carpet area of these homes ranges from 320 square feet to 670 square feet.
The MHADA lottery offers a much-needed opportunity for low and middle-income groups to own homes in Mumbai and its surrounding areas. The previous deadline for applications was April 10, but the extension will provide more time for interested buyers to apply for the lottery. The lottery has seen a massive response, with over 22,000 applications already received. The changes made by MHADA are expected to make the application process smoother and more accessible for applicants.
The MHADA lottery presents an excellent opportunity for buyers to purchase affordable homes near Mumbai. The extended deadline provides more time for interested buyers to apply, and the changes made by MHADA are expected to make the application process smoother and more accessible.
