October 2017 Vol 01
Office space vacancy falls on higher demand, lower supply
Commercial office space vacancy has almost halved in the last six years due to robust demand from corporates. Office space absorption is not only strong but pre-leasing is also at an all-time high, which is an indication of sustained demand and occupiers’ interest in commercial spaces. “India remains a major outsourcing destination with annual office absorption continuing to be robust, led by a growing number of mid-sized and smaller transactions. Earlier, there was lot of speculative office space being constructed but that stopped post the economic slowdown of 2008,“ said Anshuman Magazine, CMD of property consultancy CBRE.
Annual absorption of office space continues to be robust, led by a growing number of mid-sized and smaller transactions, with the segment clocking 18 million sq ft of absorption in the first half of 2017. Another report by global property expert Cushman & Wakefield showed that Bengaluru led the pack, with a share of about 27% at 4.8 million sq ft. Hyderabad was second on the list at 3.2 million sq ft. The commercial real estate sector is also witnessing increased interest from global investors including Blackstone Group, Singapore’s sovereign fund GIC, Canada Pension Plan Investment Board (CPPIB), Goldman Sachs and Qatar Investment Authority.
Developer has to form society after 51% home buyers book apartments
Unlike in the past, the recently implemented Maharashtra Real Estate Regulatory Authority (RERA), a quasi-judicial body, will make it mandatory for developers to form a legal entity or a society once a project has 51 percent allottees or home buyers. Once formed, the society will be able to oversee the progress of the project by monitoring the updates the developer will have to upload onto the RERA website every quarter.
Speaking at a workshop organised by the Urban Design Research Institute on Thursday, RERA chairperson Gautam Chatterjee said that the provision in the act will allow home buyers to make informed choices with access to all the relevant information of the project. “Earlier, the builder would form a society only after the building was complete and occupation certificate had been issued. But now, builders are required to form a legal entity (or society) once 51 per cent of the allottees have booked apartments. The society can then oversee the project sitting at home on their computer without having to visit the site at all,” said Chatterjee.
Living in a high-rise forest in the city
As balconies bristle with tree branches and sunshine dapples the leaves of plants, two apartment buildings in Milan have almost disappeared under lush forest. The brainchild of local architect Stefano Boeri, the `Vertical Forest’ uses more than 20,000 trees and plants to adorn the high-rises from top to bottom – a project now being exported all over the world, from China to the Netherlands.
Boeri said the idea came from his obsession with trees and determination to make them `an essential component of architecture’, particularly as a weapon to combat climate change. He has not patented the idea, and even written a book revealing the secrets and techniques behind it.
City to get 100 acres open space
Closed mills will soon turn into open spaces for Mumbai, thanks to a new proposal that the state’s urban development department and the BMC are working on. Soon, when any mill land goes for redevelopment, one-third will be converted to open spaces, one-third will go to affordable housing, and the rest can be redeveloped by the mill owners.
As per these new norms, Mumbai could get nearly 100 acres of open space, as well as another 100 acres of affordable houses under the Maharashtra Housing And Development Authority (MHADA). To redistribute the mill land in this manner, the BMC will have to amend the Development Control Regulations, specifically DCR (58), which pertains to mill land development.
Flat buyers will now be covered in case builder goes `bankrupt’
The Insolvency & Bankruptcy Board of India (IBBI) has amended rules to mandate that any resolution plan for a company has to explicitly state how it has dealt with interests of all stakeholders – a move aimed at protecting the interests of home buyers of real estate players such as Jaypee Infratech and some of the entities of Amrapali Group.
The revised rules were notified by the regulator for insolvency and bankruptcy proceedings last week and will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action. Banks are part of the creditors’ committee, the key decision-making body after a company is admitted for bankruptcy.
Talks on getting real estate under GST next month: FM
Finance minister Arun Jaitley has decided to kick off a discussions on expanding goods and services tax (GST) to the real estate sector, a move aimed at checking tax evasion in the sector known for cash-based transactions and lowering prices for flat buyers in the long-run. Delivering a lecture at Harvard University, Jaitley said, the matter will be discussed in the next meeting of the GST, which is scheduled on November 9. The finance minister said the move would benefit the consumers who will only have to pay one “final tax“on the whole product.
While under-construction flats from buyers are already under GST, inclusion of the entire value chain will mean that land purchase will face the indirect tax instead of stamp duty that varies across states. “Including the real estate under GST will increase the tax base, reduce the cascading of taxes and bring further transparency in the system. However, most international VAT jurisdictions struggle to find the right mechanism to tax all aspects of this sector, “ said Bipin Sapra, partner at Ernst & Young.
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