Saturday, 28 June 2014


Amongst the measures taken by the Reserve Bank of India in recent weeks, a special importance has been placed on the real estate sector as an engine of economic recovery. Concessions have been given on the interest charged on home loans below Rs 20lakh and repayment terms made more liberal for developers who had borrowed from banks. The price initiatives and regulatory forbearance have evoked a market response; some banks have recently lowered its interest rates on new home loans. This should be welcome news to policymakers, who will be keenly watching for signs that the stimulus measures are translating into lower costs for borrowers and, consequently, greater incentives to spend. 

On the evidence so far, however, these steps have not improved the scale of transactions in the real estate market. Most buyers continue to hold back in the hope of further drops in prices, while developers find that financial succors give them the power to withhold price cuts. The result may, therefore, prove to be the opposite of what was intended, by delaying the price adjustment that is essential if demand and supply are to balance once again. The continuing uncertainties in the job market would also be holding back potential buyers, who would not like to make substantial long-term payment commitments.

A revival in the real estate market is, therefore, linked to confidence spreading that the worst of the downturn is over. Also, new homes are bought on trust; the buyer pays the seller for a promise of future delivery. The market depends heavily, therefore, on the credibility of the seller. 

Even with low borrowing costs, buyers will be wary of making commitments to sellers who show signs of not being able to live up to their commitments. Unitech, a prominent Delhi-based developer, has been trying to raise large amounts of cash to keep its operations going, even as its share price tumbles. And IFCI, to whom Unitech had pledged shares against a loan, decided to sell the shares because falling prices were eroding their collateral value. 

As the uncertainty about its ability to complete projects due to funding constraints increases, people will be even less willing to either buy from it or lend to it. Similar stories are being played out across the sector with small and large developers. The prospects of the market reviving in these conditions are grim. 

There is a clear need for further selective intervention. Projects that are close to completion should be encouraged with funding.Some of the funds being raised through special purpose vehicles like IIFC could be made available to developers who qualify on this basis. Simultaneously, moves to consolidate fragmented projects to increase their viability should be explored, once again with strict conditions on the rationalization of prices. 

From the macro economic perspective, construction is far too important a sector to be left unattended in today's difficult environment.Targeted action is needed to get buying and selling back on track.


Friday, 27 June 2014


(Bangalore property|2bhk apartments for sale in bangalore|flats|lands for sale in Bangalore)

Though apartment culture has picked up in most of the metros and a large number of people live in apartments, if option is given to the people while investing their money on residential property, a large number of people prefer to purchase plots and get the house constructed according to their taste and style instead of buying an apartment or ready built house.

However, it would be a difficult task for the owner to get his house constructed from a contractor unless every minute care is taken by him to protect his interest. The deed of construction should be a well thought over document and should contain all the terms and conditions explicitly stated. The following are the some general guidelines which may be of some help while entering into a construction contract.

Before undertaking construction of a house, the property owner has to plan out his requirements and the method he has to adopt for successful completion of construction after taking into consideration the various options available for him. He has to select a building contractor after market survey, enter into a written construction contract putting forth all the terms and conditions in an unambiguous manner which shall be signed by both the owner and the contractor. To avoid disputes and misunderstandings, doubts and confusion, the terms and conditions should be clearly mentioned in simple language in the deed of contract.The contract should be drawn up with the minute details and should be to the point. 

Basically, the terms of the contract should contain details of the parties involved, quality of the materials to be used, time frame within which the different phases of construction of the house are to be completed, schedule and mode of payment, escalation clauses, penalty terms, liability of the parties, authority for appointment of sub-contractors, if any, source of supply of construction materials, specifications of fixtures and fittings to be provided in the house, provision for inspection by the owner or his agent or representative of the progress of construction and the quality of materials used, authority who shall decide the quality of the material used, compensation, if any to be paid for the loss of life and for the body injury for the labor force while at work, arbitration clause etc.

It is the normal practice that the contractor shall submit his quotation after he goes through the specifications and the quality of materials required for construction. The quotation should clearly mention the make, brand and other particular specifications of the materials to be used. The owner should make sure that the base rates for the tiles utilized, granite, marble, lights, tubes, glass, pipes, windows, grills, basins etc are mentioned separately. It may be kept in mind that the cost of construction is normally quoted on square foot basis and the structural and working drawings prepared by the architect will be the basis of the contractor's quotations. It is better to get the quotation on item rate basis for the fittings, fixtures and furnishings.

Broadly, there are two ways of awarding the construction contract - Construction on a turn key basis and construction on the basis of a labor contract.

For construction under turnkey method, the entire construction work is assigned to the contractor /builder, including providing of fittings and fixtures and the building so constructed would be delivered by the contractor / builder to the owner only upon the total work is executed and the house is ready for occupation. The contractor / builder shall be collecting the agreed sum from the owner as per the terms of agreement at different intervals as and when the work progresses and the final installment due shall be collected at the time of handing over of the house or after a lapse of certain period after handing over of the building to the owner. Under this type of contracts, a two part contract is referable. The first part pertains to the type and quality of structure that is to be built while the second part relates to the type and quality of fittings, fixtures and furnishings to be provided by the contractor. 

There is, however, an option available to the owner to purchase the type and quality of material of his choice than agreed upon while entering into a construction contract. For example, as far as flooring is concerned, it could be granite, marble or tiles and the owner is entitled to reduction from the total contracted sum payable to the builder for the materials supplied by him. For instance, if the base rate quoted for the marble is Rs.150 per sq.ft for a 600 sq ft area, and the owner desires to choose better quality marble or wood flooring he can purchase it and then get reduction from the sum due to the contractor. He can apply a similar strategy for other items such as fittings, fixtures and furnishings.

Labor contract method 
For construction under labor contract method, a labor contract agreement is entered into between the owner and the contractor. Under this system, the property owner shall make arrangements for regular and systematic supply of all the materials required by the contractor at different stages of construction while the contractor shall utilize the material so supplied for construction of the house through his labor. This method would be preferable where high quality of construction is expected since the property owner shall take minute care to select the material of his choice for being used in the construction. Under this method, the owner will be able to get his house constructed keeping in mind his budget, needs, resources and tastes. In both the methods of contract, the property owner should be vigilant and should visit the construction site as frequently as possible to set right the deficiency if any the progress of construction.


Thursday, 26 June 2014


Property market saw a boom all over the country during the last few years, and the prices of properties made it impossible for a common man to think of buying any property in Bangalore during this period. Seeing this sudden boom in the real estate market, many developers entered into the real estate market in Bangalore, since Bangalore was considered to be the fastest growing city in the country.
No doubt, Bangalore is one of the fastest growing cities of the country as could be seen from the launch of major infrastructure projects,like construction of flyovers, widening of major and primary roads, construction of grade separators, under passes, Metro rail, Mono rail etc.The city has grown not only in area but also in population. Bruhat Bangalore Municipal Corporation now has within its jurisdiction 110 villages, seven city municipalities and one town municipality surrounding Bangalore and thereby the area which was just 250sqkms is now almost 900sqkms.

The population which was about 40lakhs is now about 80lakhs. The entry of a number of multinational and IT, BT companies has also contributed to the growth of the city in the past two decades. The growth has not only attracted the young job seekers, but many educational institutions have been established in and around the city of Bangalore wherein students hailing from various parts of the country and abroad seek admission in various technical and managerial academic courses..

As the Bangalore city is now considered to be the destination for investment in trade and industry and the increase in population has automatically created a greater demand for accommodation both in commercial and residential sectors. Most of the owners of residential/commercial properties in Bangalore are expanding their built up area by constructing many upper floors to meet this greater demand. To some extent this step may meet the demand for accommodation in the city.

When this upward trend in the real estate sector was in full swing, then the came the global recession and the recession has greatly affected the real estate industry, particularly the construction sector. Buyers were forced to defer their investments strategies for various reasons. As a consequence thereof, there remained a large number of flats vacant awaiting the prospective purchasers. This trend continued till recently and the property developers were under great strain. However, the situation is now slowly improving. The demand for accommodation, both for commercial and residential, is now much improved. Developers, who have developed the properties and were not able to sell their end products, will now be able to dispose them off.

To off load their finished products, the developers who are ready with their completed projects are offering various incentives like concessions in prices, provision of  swimming pools,clubs, gyms, small markets, gardens, playgrounds, easy payment schedules, etc within their project area. With these incentives and facilities it is expected that the buyers will now get motivated to  invest their money in real estate market.The present situation seems to be quite favorable for middle and higher middle class people for investment. The demand for residential accommodation being very high the developers hope to sell their properties. In addition to this, the authorities, though late, have realized that the needs for basic infrastructure in all the localities have to be met expeditiously and are now responding favorably to such demands of the people.

Now that the infrastructure development activities are in full swing and the property developers too are providing some of the basic infrastructure needed within their project areas, banks are offering required funds in the form of long term housing loans, it is hoped, the prospective investor in real estate would come forward to invest their money on the immovable property to own property of his in the city of Bangalore.The real estate pundits also feel that it is the appropriate time for investment in the real estate since the real estate market seems to be steady and investor friendly.


Wednesday, 25 June 2014


(Bangalore property|2bhk apartments for sale in bangalore|flats|lands for sale in Bangalore)

People with different culture, taste and habits living in separate dwelling units situate within a compound is not new to the country as it was prevalent in the past under the name and style as Vatara houses wherein small dwelling units were constructed within a compound for occupation and use by different families as their residence.Vatara houses were constructed in horizontal or in L shape rows with single storey structures unlike the present day multiple storey vertical apartments

Apartment culture 
Apartment culture, though of recent origin, has gained tremendous acceptance by the people in a very short time.Generally, it is seen that in apartments, people of different back- grounds, origin and culture live in good harmony and brotherhood. Shalimar Apartment, built in early seventies was probably the first Apartment that was constructed in Bangalore.Apartment culture further gained acceptance in early eighties when several apartments were built in Malleshwaram and other places. Since-then construction of apartments is in full swing in Bangalore and a large number of reputed builders and Promoters are busily engaged in the development of different Apartment Projects in and round Bangalore to meet the ever increasing demand for commercial and residential apartments.

Merits of apartments 
Apartments have certain advantages in comparison with the independent houses. The first and foremost advantage the purchaser of an apartment will enjoy is that he need not have to worry about the issues like obtaining plan sanctions, finding a building contractor, supervising the construction work, obtaining basic amenities such as water, power, sewerage facilities for the building and so on which is taken care of by the Developer.The purchaser of apartment need not have to worry for any civic problems which he may encounter after his occupation of the apartment, since these problems are tackled by the Apartment Owners Association/Builder for which a nominal charges are levied. 

The next advantage an apartment owner gets would be the social harmony he would get due to community living. A sort of bondage is developed amongst the 
residents of apartments.Further, for the exclusive use of apartment owners / occupants almost all the apartments now-a-days, do have facilities like gym, health-club, recreational center, sports club, swimming pool, private security system within the premises for which again a nominal fee is charged.

Demerits of Apartments 
Even though living in apartments do have many advantages, they are not totally free from disadvantages. A Person who lives in an apartment generally is deprived of his privacy. Further, the apartment owner is prevented from carrying out any major addition, alteration or modification to his apartment to suit his needs. All such repairs, alterations and modifications are to be carried out with least inconvenience to other apartment owners and any damage or loss caused to the other apartment owners are to be compensated. The amount collected by the Apartment Owners Association to meet the expenses for general maintenance and upkeep may be more than what a person would have spent had he owned an independent house and could be much more than what is required for such maintenance. There is every likelihood of such a common fund being misused by the office bearers of the Association or over which there could be some misunderstanding amongst the apartment owners leading to unsavoury situation.

Apartments would fetch a much lower price compared to an independent house during its second sale. Further, any dilapidated single apartment would fetch no buyers since the land on which such apartment is built is owned by all the apartment owners and the seller does not have the exclusive ownership right over the land on which such apartment is situate.On the contrary, a dilapidated independent house would generally get prospective buyers irrespective of the condition of the structure since new structures could be put on such sites after demolishing the existing ones and the seller of such a dilapidated house will transfer his right, title and ownership of the land as well.

How to proceed? 
As in the case of purchase of any other property, verification of ownership title is one of the pre-requisites for purchase of an apartment also. Though the builder of apartments provides legal opinion given by his advocate regarding subsistence of marketable and valid title of the vendors, it is always better that the intending purchaser of an apartment gets the title report of the property scrutinized from an advocate of his choice having vast knowledge and experience in property dealings.The legal scrutiny report shall contain detailed information regarding the origin, flow of title, present status of the owner, validity of the OPA, Joint Venture, if any, entered into between the owner and the Developer. 

Another very important aspect which requires consideration is to ascertain whether the approval for construction of apartments and the plan has been obtained form the competent authority and to find out whether commencement and completion certificates have been issued by such an authority. 

Location of the building is another important aspect which one has to consider before 
purchasing an apartment.This is mainly because any building which has no proper access to main roads with insufficient public transport and other civic amenities such as water, electricity supply, proper, sanitation, parks, market place, hospitals, schools, etc. would put the purchaser of flat to a great hardship and inconvenience.Apart from all these, the previous history and record of the Builder is necessary to be verified for which purpose, it is always advisable to visit some of the4 projects executed by the builder in advance.

Powers of the Sanctioning Authority 
For grant of approval for building construction and the plans, different authorities are delegated with this power under different statutes. While, the village Panchayats are empowered to give license for construction of building consisting of ground and first floor, the City Municipal Corporation can approve plans for ground plus three upper floors. The BMP or BDA can approve building plans of land for construction of multistoried buildings apart from constructing an independent house. In the case of high rise buildings consisting of more than four floors, No Objection Certificates form BWSSB, BESCOM, Fire force authority, BSNL, Airport Authority of India and Karnataka State Pollution Control Board are to be compulsorily obtained. 

It must be kept in mind that anyone who violates the building bye-laws and zonal regulations would expose himself to the risk of demolition of such structure any time in the future.

Conveyance / Sale Deed 
Normally, before purchase of an apartment, a sale agreement is executed by the Owner, [represented by the OPA Holder where there exists a OPA holder] and the Builder, agreeing to sell an undivided share in the land in favour of the intending purchaser. While at the same time, a construction agreement is also executed by the Builder in favor of the intending purchaser agreeing to construct an apartment for him. Once construction of apartment is complete, a sale deed is executed jointly by the vendor of the land and the builder/Promoter in accordance with the terms and conditions of the Joint Development Agreement, if any, in favor of the purchaser. The sale deed specifically recites the duties and responsibilities of the buyer and the seller. As regards sale consideration, it is arrived at upon consideration of the various aspects such as location, specification of the work, carpet area and percentage of Carpet area to Super Built up Area and as agreed to between the parties.

Undivided Share of Land 
Undivided share is the percentage of share conveyed in the total land along with the apartment to the purchaser.This percentage depends upon the built up area of an apartment and the actual extent of land upon which the apartments are constructed. As the built up area increase the undivided share over the land also increases. 

Super Built-Up Area 
Super built up area is the saleable area generally applicable to apartments. Super built up area consists of actual flat area plus proportionate common areas like staircase cum verandah, balcony, lift area and other common areas etc. Since the price of an apartment depends upon the super built up area, it is advisable for the purchaser to have some knowledge about Carpet area, plinth area and super built up area before purchase of an apartment. Generally super built up area should not be more than 25% of the carpet area.

Purchaser shall bear registration expenses 
It is obligatory on the part of the purchaser to bear the expenses incurred towards stamp duty, registration charges and other incidental expenses to be incurred in connection with the registration of the apartment. Infact, the Builders are collecting Sales tax, service tax, statutory deposits for Bescom and BWSSB. 

Registered sale deed 
Registered sale deed is the primary document which establishes ownership title of the apartment in favour of the purchaser. Relying on the sale deed the concerned Revenue authorities issue other supporting documents of title such as Khatha Endorsement, Khatha Extract and the Tax paid receipts.

Registration under Apartment Owners' association 
After completion of construction and handing over of the apartments to the purchasers, the owners of such apartments are required to form an association for the general well-being of the owners or residents of the apartments and for maintenance of common areas. Upon formation of such an association, the builder is duty bound to hand over originals of all the relevant title deeds, detailed drawings of electrical, water and sanitary lines to enable the Association to utilize the same for the common good whenever required.

A word of caution 
Do not go by glossy advertisements and tall claims of the builder. There are several instances wherein the apartments purchased by a few are inflicted with certain latent defects which remain unattended to by the builder when once the sale transaction is complete pushing the purchaser to suffer both in terms of comfort and finance.There are many reputed builders available in the market with impressive track records.Choose anyone of them and have a peaceful enjoyment of your apartment.