Send Your Comments on Newly Drafted Land Acquisition Bill to Government

The Union Government has brought Draft Land Acquisition and Resettlement and Rehabilitation (LARR) Bill, 2011 in public domain for pre-legislative consultative process. Now the Government is inviting suggestions/comments on the draft bill from the stakeholders including general public, farmers, land owners, builders, developers, real estate professionals, property consultants, rural and urban experts etc.

You can download the copy of the draft bill from here in English and Hindi.

You can send your comments directly to the Ministry of Rural Development, Government of India.

Alternatively, you can write your specific comments to NIREM. We will in turn edit and summarize all the comments and will send across to the Ministry of Rural Development for necessary action. You can mail your views to nirem.india@yahoo.com Please mention Comments for Land Acquisition Bill in the subject line of the mail. Please send your comments till 25^th August, 2011.

Property in NCR may Get Dearer

NCR real estate may get costlier The draft Land Acquisition and Resettlement and Rehabilitation Bill, 2011 will have a direct impact on real estate prices in Delhi and neighbouring Gurgaon, Faridabad and Noida — if it becomes law. The bill’s proposals that no irrigated and multi-crop land can be acquired and compensation must be much higher than present will impact land prices in Noida, Gurgaon and Faridabad, making it more expensive. A Noida authority source said, “Since most of the land in this belt is irrigated, if this draft becomes law, there will be scarcity of land for housing and other commercial projects.”

Since the government will have to pay a minimum two times the market price for any land to be acquired, this will also have a domino effect on land bought by private builders. There is already a dispute in the Greater Noida area over compensation, which has put several thousand housing units in limbo. Gurgaon and other Haryana towns are likely to be less affected. The state government has already kept itself away from any acquisition for private projects. The builders deal with the farmers directly. But if the bill becomes law, increased compensation — and a likely shortage in Noida — could hike prices here as well.

In Delhi, senior Delhi Development Authority (DDA) officials said they have a sufficient land bank for development projects. DDA sources said Delhi Masterplan 2021 envisaged the creation of a land pool by builders themselves for all future housing projects. But former DDA officials pointed out that the authority will have to work out a plan to get one-third of land required for roads, social infrastructure like police stations and physical infrastructure like waterline, drainage and solid waste management.

Money into Property Asia Pacific 2011: Engine of World Growth

Recently, DTZ launched its latest Money into Property research that also covers results and analysis from DTZ Fair Value Index™. The report also covers major issues facing the real estate industry globally and Asia Pacific. The main findings of Money into Property 2011 are:

Global: 

• 2010 was a turnaround year, as global stock and volumes returned to growth

• But, the big opportunity in property is now behind us, forcing investors to become more selective going forward

• The solid funding environment supports DTZ’s forecast of a continuation of the two-speed recovery.

Asia Pacific:

• Asia Pacific (APAC) property markets had another great year in 2010 with growth in invested stock and record investment volumes. In fact, APAC has been the engine for a return to growth in global markets.

• APAC showed 14% growth in contrast with no growth in the US and European stock, illustrating the two-speed global recovery. As a result, global stock increased by 3.4% in 2010 after a 3.0% decline in 2009, in fixed US dollar terms.

• Within APAC, we also saw a two-speed recovery, as China grew by 22% while Japan declined by 4%, in local currencies. Both countries now have invested stock in excess of US$1 trillion.

• For the first time, APAC passed Europe to become the most actively traded region, as volumes more than doubled in 2010. On the back of record APAC volumes, global transactions rebounded by 76%.

• Despite last year’s strong growth, most APAC markets remain attractive across property types in both developed and developing countries.

• This attractiveness is evident from the DTZ Fair Value Index^TM (FVI) score of 65 for APAC. Well over 80% of markets remain at or above fair value, with 45% HOT and 37% WARM. The Hong Kong markets are a notable exception and rated COLD.

• In contrast, the big opportunity in property globally is behind us. The global FVI score of 50 implies that property is broadly at fair value across the markets.

China and India

• China and India’s growth way out in front: The developing markets of China and India have led the growth rates in invested stock in Asia Pacific over the last decade. But each market remains at opposite ends of the invested stock size spectrum. China’s invested stock topped US$1 trillion in 2010, with India’s stock at only US$38 billion. This means that Indian growth rates are calculated from a low base and look very high.

• Opportunities exist across the region: The Indian and Chinese cities have great opportunities as these developing markets continue to benefit from both capital and rental growth.

Prospects

• Looking forward, we expect that in 2011 APAC will continue to perform well. Its invested stock is forecast to surpass the US by year-end 2011.

• Stock and capital value growth is supported by a strong in-place development pipeline, the increase in available equity and the lack of legacy debt issues in the region.

• Transaction volumes are expected to stay at record highs in APAC. But, its share of global volumes is projected to decline as US and European volumes continue to recover.

• Deleveraging is anticipated to continue globally. But gearing levels in APAC continue to rise from a low base, with China leading the way. Property companies and developers, particularly in China and Hong Kong, are circumventing restrictive lending policies by issuing property bonds. This type of innovation is expected to further APAC markets’ momentum, especially in developing countries.

• Investors are able to take advantage of market opportunities for some time to come. But, future re-pricing will render more markets COLD, joining Hong Kong and Taipei.

Read the complete report HERE.

Money into property is a flagship research report of TDZ for last 35 years. The report analyses invested stock and capital flows into real estate markets across the world including Asia-Pacific and measures the development and structure of the global investment market.

Govt Finalises New Bill on Land Acquisition

To take on the discontentment against land acquisition process, rural development minister Jairam Ramesh has cleared a draft bill for public comments. The minister’s land acquisition and rehabilitation bill will be up on the ministry website just a fortnight into his term at Krish Bhawan. The Bill proposes a compensation of more than six times the circle rate of land, acquired for industrial and real estate projects. This is in line with the recomendations of the National Advisory Council but given the time constraint is unlikely to be cleared by Parliament in the next monsoon session.

The Bill sticks to the NAC script in its other major recommendations which is mandatory consent for atleast 80% of the affected people as a pre-requisite for commencing land acquisition. Since land is a concurrent subject, the Act will however have only an advisory status unless accepted by the state legislatures. “It would be the state government who would decide on whether the private sector or the state government, who would initiate land acquisition drive,” an official said. The new bill also proposes compliance with all existing laws on tribal welfare. The bill has also suggested inflation linked annuity to those who had given up their land.

The bill also suggests that if the acquired land belongs to a tribal person, then an additional compensation would have to be worked out. Besides the Bill would also have separate norms for land acquired around urban and rural areas. After a final meeting with National Advisory Council (NAC) members and other key ministry officials on Wednesday, Jairam gave the final touch to the bill which for the first time combines both land acquisition and rehabilitation under one law.

This would be the second attempt by the UPA government to formulate a national policy on land acquisition after series of violence protests against forceful occupation of land for industries were reported from Uttar Pradesh, Orissa, West Bengal, Maharashtra and other states in the last few years. Earlier the National Rehabilitation and Resettlement Policy, 2007 were passed by the Lok Sabha in February 2009 and had been tabled in the Rajya Sabha subsequently. However, both bills lapsed with the dissolution of the 14th Lok Sabha.

Singapore Plans to act as Facilitator to bring China’s savings into Indian Real Estate

Singapore plans to act as a facilitator to bring in China’s savings into the Indian economy and other South Asian countries. Similarly, it has evinced interest in promoting the concept and practices of real estate investment trust (REIT) in India, reports Business Line. These were some of the immediate spin-off ideas that emerged during the South Asian Diaspora Convention (SADC), which was held here late last week. Hosting the first-ever global event under the SADC banner, Gopinath Pillai, chairman of the Singapore-based Institute of South Asian Studies (ISAS), said the conference was designed as a confluence of scholars, businessmen, thinkers and the doers.

Speaking at the Diaspora meeting, Chong Siak Ching, president and chief executive officer of the Singapore-based Ascendas, said the adoption of a REIT model came into worldwide vogue as a doable business practice in early 2000. On the moves towards a REIT regime in India, Chong said: “I think the Indian Government did look into the possibility of coming up with REIT regulations but I don’t think that it has developed to a stage where it is ready. “We had given our suggestions to the Indian Government officials in terms of what would be some of the critical success-factors for a good REIT regime to be in place. There has been no response, not yet. I believe China is now more advanced than India in terms of studying this possibility of adopting a REIT regime.”

On a macro-level, economic prospect on the China-India front, Piyush Gupta, Chief Executive Officer of Singapore’s DBS Group Holdings and DBS Bank, said the City-State could play a “definite” role as a “conduit for [China's] RMB (Renminbi) flows into South Asia.” Gupta said, “China and India have tremendous sources of savings and will continue to have in the foreseeable future. For obvious reasons the flow of money does not work directly very well. Working through Singapore, for that flow to be intermediated, is a savings management issue. Independent of this, China is now carefully pacing out the internationalisation of RMB as a reserve currency”.

Housing Sector will face Funding Gap of USD 70 billion in Next 5 Years: CREDAI

The Confederation of Real Estate Developers’ Association of India (CREDAI), an apex body of organised real estate developers in the country, has estimated that the sector will face a funding gap to the tune of USD 70 billion over the next five years. CREDAI President Lalit KumarJain said such a situation might create hurdles for the industry to grow if the Reserve Bank of India is not “proactive”.

“The housing that is required in the current Five-Year Plan is 24.6 million and it is 37 million in the next Five-Year Plan. We require USD 3.2 trillion (to meet the target). Funding gap in housing will be around USD 70 billion in the next five years. The USD 70 billion is among the current developers only,” Jain told PTI. He was speaking ahead of the third edition of the National Association of Realtors (NAR)-India Convention 2011, a two-day convention and exposition set to begin here today.

“Foreign investments do not solve the problem. They are very costly and cannot be affordable. There has to be generation of funds internally and RBI has to be proactive on this issue,” Jain added. He said any FDI into the country would expect a 30 per cent return on investment, which is not possible in real estate projects and hence not advisable.
The RBI only allows real estate companies to tap external commercial borrowings (ECBs) for township projects spread over a minimum 100 acres of land, Jain said, adding that small players cannot go for ECBs.

India ranks 14 on FDI inflow index in 2010

According to a UN survey inflows declining to US $25 billion as against US $36 billion last year

New Delhi: India's ranking on the list of countries attracting the highest foreign direct investment (FDI) in 2010 fell to 14th position with inflows declining to US $25 billion as against US $36 billion last year, according to a UN survey released on Tuesday.

The US tops the list of countries with overseas fund inflows at US $228 billion, followed by the Chinese mainland, which attracted inflows of US $106 billion, and Hong Kong at US $69 billion. Belgium was the fourth largest FDI inflow destination at US $62 billion.

According to the UNCTAD's annual investment survey — World Investment Report 2011 —the FDI to South Asia declined to US $32 billion, reflecting a 31 per cent slide in inflows to India and a 14 per cent drop in flows to Pakistan.

India ranked fourth on the list of top 10 recipients and sources of FDI inflows in developing Asia in 2009 and 2010 behind China and Singapore.

In contrast, inflows to Bangladesh, a rising low-cost product location, increased by nearly 30 per cent to US $913 million, reports IANS.

"The desire to invest in India is still there but we need to put in a system to ensure that the deal that is given will stand for sometime," Research and Information System for Developing Countries Director General Biswajit Dhar said.

"We are rolling out a number of policies; we are also reviewing some of our FDI policy. For the moment investors will just wait and watch," Dhar, who was speaking on investor sentiments, added.

RBI’s Move to Raise Repo Rates by 50 bps is Shocking: CREDAI

The Reserve Bank of India’s move to raise repo rate by 50 basis points comes as a shock for the real industry as the burden on account of increased rates of interest will hit the developers as well as home buyers, says Lalit Kumar Jain, National President CREDAI. “The cost of funding is going be higher as banks are bound to increase their lending rates,” Jain, who is also the chairman and managing director of Mumbai-Pune realty firm Kumar Urban development (KUL), said. The industry, he said, is facing a crunch and the fund gap over the next five years alone would be as high as USD 70 billion. “The RBI announcement, therefore, could be detrimental to the growth of the industry and economy,” he added.

Estimates are that the housing that is required in the current five-year Plan is 24.6 million and it is 37 million in the next five-year Plan and the country would need USD 3.2 trillion for this. Funding gap in housing will be around USD 70 billion in the next five years among the existing developers alone. The material costs have already gone up by over 35% and the wages have doubled over the past three years. “Any increase in the rate of interest will, thus, be counterproductive and my fear is that it will give rise to inflation instead of curbing it,” Jain pointed out. The multiple effect of this is that buyers would continue to be wary of fulfilling their dream houses and developers would find it difficult to tap funds at reasonable rates of interest.

Jain appealed to the RBI Governor to see the reality of the day that both buyers and developers are under a tremendous stress and they need immediate relief. With the ever increasing cost of inputs, couple with the rise in cost funding, would make affordable housing and the much touted “housing for all” a far cry, he added. He called for a close coordination among various government departments such as finance, housing, urban development, commerce and environment to ensure that the real industry that supports over 200 other industries comes back into full swing to restore the speedy growth of the economy. He drew the government’s attention to the reforms suggested by CREDAI that are aimed at bringing down prices and increasing GDP growth. He warned of an economic disaster and chaotic urban explosion, if corrective measures are not taken.