Arun Developers, Pune

Arun Park, Opp. Aditya Birla Hospital,
Chinchwad, Pune - 411033

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MahaRERA grants six-month extension to builders to deliver projects

"All MahaRERA registered projects where completion date, revised completion date or extended completion date expires on or after April 15, 2021, the period of validity for registration of such projects shall be extended by six months," the Authority said in a notification.MahaRERA grants six-month extension to builders to deliver projectsMUMBAI: The Maharashtra Real Estate Regulatory Authority on Friday allowed a six-month relief to builders to deliver projects by accepting their demand for invoking the 'force majeure' clause because of the second wave. This is the second time in the pandemic that the authority has granted such a relief for the builders in the state. "All MahaRERA registered projects where completion date, revised completion date or extended completion date expires on or after April 15, 2021, the period of validity for registration of such projects shall be extended by six months," the Authority said in a notification. The Authority added that it will accordingly issue project registration certificates with revised timelines for such projects at the earliest and also made it clear that the extension will not apply to projects that were to be completed before April 15. The notification said the state government had on April 13 issued directions regarding restrictions on the movement of people because of the second wave of infections and added that this wave was more lethal. The lockdowns led to construction activities coming to a standstill due to non-availability of labour and impact on the movement of building material, it said. "A force majeure period of six months from April 15 to October 14 is being declared," the notification said. The order has been issued in order to aid government efforts in controlling the damage caused due to COVID-19 and ensure that completion of projects does not get adversely affected, it added. The time limits for projects, which became due anytime during the force majeure period, will automatically stand extended for a period till the expiry of the period, it said clarifying that the rights of the allottees will not get affected through the order. The notification said promoter organisations had represented before the Authority requesting for this relief in the wake of the second wake crippling the industry. "It is a move in the right direction and the real estate hopes for authorities other than MahaRERA to follow the same thought process and grant similar relief," developer Niranjan Hiranadani, national president of realty industry body Naredco, said.Follow and connect with us on Twitter, Facebook, Linkedin
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Policy regime nudged fence-sitters to be first-time homebuyers: Niranjan Hiranandani

Policy regime nudged fence-sitters to be first-time homebuyers: Niranjan HiranandaniHe believes that the regulatory aspects have also brought in a safe and secure environment to the sector.Rajesh KurupThe need for secured assets and aspirations to own spacious homes as remote working is fast becoming the new norm is driving sales of residential properties across the country. Further, investors are also warming up to Real Estate Investment Trusts (REITs), Niranjan Hiranandani, national president at National Real Estate Development Council (NAREDCO).In an interview withBusinessLine, Hiranandani, who is also the managing director of real estate firm Hiranandani Group, is of the opinion that the regulatory aspects have also brought in a safe and secure environment to the sector. Edited excerpts:This year, housing sales across major cities have been on the rise? Where is this demand coming from?The disruptive pandemic has predominantly reinforced the value of owned houses. The need for a secured asset that offers stability and safety in crisis is a goldmine investment against volatile assets. The remote working trend further fuel the urge to own a large spacious home in peripheral cities at attractive price points to integrate new normal living conditions.In addition, market dynamics and policy regime are skewed towards nudging the fence-sitters to convert into the first-time home buyers and existing ones to upgrade into luxury homes catalysed by fiscal growth levers.After the initial hesitation, REITs are gaining ground, and despite the pandemic, there were two successful public issues?REITs are an alternative option for investment in real estate at a low unit price entry point. It reflects growing confidence in commercial real estate as an asset class. The Indian real estate investor has gradually warmed up to REITs. The two successful public issues are just the beginning of what will gradually grow in investor confidence.Recently Maharashtra Urban Development ministry has amended the Unified Development Control and Promotion Regulations, allowing 5 per cent amenity space for construction in plots. Your comments?The recent amendment (notification is awaited) aims to infuse positivity for commercial real estate development. If up to 5 FSI is allowed for commercial business districts, then the move will be perceived to augment more commercial real estate spaces to be developed, which will create more employment opportunities. This will also foster the development of more commercial business districts (CBDs) in the state, ensuring equal development across and not just the leading commercial cities like Mumbai and Pune. The move should augur well for the state’s economic growth. It will also allow economies of scale to positively impact the viability of commercial projects.A lot of residential projects in the country, including ultra-luxury ones, are marred by delays?The Indian real estate sector was rebooted with structural policy reforms, and the pandemic was a nail in the coffin. The industry suffered from liquidity starving, muted demand, subdued investment, hindered sales velocity, disrupted supply chain, skyrocketing prices of essential raw materials, and acute migrant labour crisis. These challenges uprooted many developers in crisis and stalled up the designated timelines.With mission unlocking, the industry witnessed excellent sales velocity in lieu of fiscal stimulus but the resurgence of the second Covid wave derailed the growth trajectory. The authorities have been considering a timeline extension to cope up with the delays. Many of the branded developers with strong financial discipline and proven track records will fast-track the work progress and assure timely delivery.Covid-19 has shuttered smaller players across various industries, while the stronger, larger entities have survived. Did the pandemic have a similar effect on real estate as well?Any economic crisis – and the Covid-19 pandemic fits the description perfectly – first impacts smaller players across industries, as surviving such challenging situations needs ‘deep pockets. For financially weak players, recent regulatory jolts led to a difficult ground for navigating, and Covid-19 impacted many projects’ profitabilities and viability of the business.The over-leveraged players opt to deleverage by consolidation, joint development, asset-light model, monetisation, mergers to re-anchor the sinking ship.RERA has brought in some amount of transparency and accountability to the sector?RERA is moving in the right direction and is taking the industry to the right aspects of accountability. The regulatory aspect has brought in a safe and secure environment, one in which we see unscrupulous elements being weeded out. Obviously, this also leads to enhanced customer confidence.On Greenbase’s, an industrial and warehousing platform of Hiranandani Group, future plans?Greenbase has been working at delivering a holistic slew of offerings for end-users, and there are geographies where we are already working on creating logistics and light industrial parks.As the vaccination drive gains pace, we are bullish on the Indian economy and the sustained demand for logistics and light industrial parks. Some locations (near Pune, Nasik and Oragadam, Chennai) are ‘work in progress’, while in some other locations, the parks are still on the drawing board.
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PE investment in real estate touch $2.9 billion in H1 2021: Report

PE investment in real estate touch $2.9 billion in H1 2021: ReportThe total private equity inflows in the real estate sector are expected to be about USD 5 billion in 2021, a 4.1% increase from 2020, according to the company.PE investment in real estate touch $2.9 billion in H1 2021: ReportNEW DELHI: Private equity investment in Indian real estate touched USD 2.9 billion in the first half of 2021, more than a two-fold increase from H1 2020, according to recent report by Colliers.The total private equity inflows in the real estate sector are expected to be about USD 5 billion in 2021, a 4.1% increase from 2020, according to the company.Office assets accounted for 35% of the total investments in H1 2021, followed by industrial and warehousing assets with a share of 27%. Investors are viewing the current scenario as an opportunity to snap up properties at attractive valuations."The investment trends reflect an interest in broader classes of assets and structures. Deal types include, forward purchase of office assets, formation of platforms and acquisitions with development risks in office assets, opportunistic acquisitions of retail assets, industrial assets including warehousing and data centers, large credit transactions for portfolio acquisitions, and development financing," said Piyush Gupta, MD, Capital Markets & Investment Services (India), Colliers.During H1 2021, about 86% of the total investments in the office sector were in land or projects under-construction. Investors continue to scout for either land or assets in under-construction stage, as they look to build their portfolio for a future REIT listing. This is due to limited availability of quality rent-yielding assets at attractive valuations, as most of the large developers are already in partnerships with institutional investors.Investments in retail assets accounted for 29% of the total investments in H1 2021. Despite Covid posing a significant disruption to retail businesses and causing a major drop in rental revenues, investor appetite remained intact for exposure to stabilized retail assets as well as for investments in ground-up developments in partnership with selective developers."For the remainder of the year, we also believe that last-mile funding and investments into distressed housing assets will gain traction whilst many investors are also looking at investing in attractively priced assets, which may not be the current flavour but are expected to witness increasing demand post covid-19 as demand picks up for them," said Siddhart Goel, senior director & head, Research at Colliers India.
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Real estate market to touch $1 trillion by 2030: Housing secretary

Real estate market to touch $1 trillion by 2030: Housing secretary​The number of people employed in the sector is also expected to rise to 7 crore in coming years, from 5.5 crore in 2019, he said while addressing a CII event on the real estate sector.Real estate market to touch $1 trillion by 2030: Housing secretary NEW DELHI: The Indian real estate market is estimated to touch USD 1 trillion by 2030 driven by rising demand and various reforms in the past seven years like new realty law RERA, Housing and Urban Affairs Secretary Durga Shanker Mishra said on Wednesday.The number of people employed in the sector is also expected to rise to 7 crore in coming years, from 5.5 crore in 2019, he said while addressing a CII event on the real estate sector. The secretary further said that the states have been asked to soon implement the Model Tenancy Act, which was passed by the Union Cabinet in June this year. Mishra also clarified that the law once implemented by the states will be prospective in nature and all disputes related to rent agreements will be dealt under the old laws of respective states. He pointed out that the real estate sector suffered a "setback" during the first and second wave of the COVID-19 pandemic but said the housing demand has revived. "The size of the real estate sector was around USD 200 billion 2-3 years ago. We expect the real estate market to touch USD 1 trillion by 2030," the housing secretary said. "It is not mere talk and guess work. The trend clearly shows that the real estate sector of our country will touch the figure of USD 1 trillion in the next 7-8 years," Mishra said, while emphasising the importance of this industry in the Indian economy. Citing various reports of property consultants, the secretary said housing demand in the first quarter of this fiscal year has risen as compared to the year-ago period. Talking about the importance of this sector in employment generation, he said: "Around 5.5 crore people were employed in the sector as per 2019 figure. Our predictions for the future is that around 7 crore people will be employed in this industry." That apart, Mishra said the real estate sector creates demand for about 270 other industries, including cement and steel. "Therefore, real estate is an important sector of the economy. Nobody should have any doubt about it," he stressed. Hence, Mishra said, the government has given a lot of focus on this sector in the past seven years and has taken measures in every budget since 2014. The secretary said it is estimated that around 88 crore people will be living in urban areas by 2051 as against the current 46 crore, creating huge potential for real estate development. Describing the enactment of new realty law RERA as the biggest reform, he said the new legislation has taken the industry to another level. "RERA has transformed this sector and changed the perception of this industry. Consumers now have confidence that their investments are safe," Mishra said. Sharing the success story of RERA, he said around 67,000 projects and 52,000 property agents are registered under this law. More than 70,000 cases have been disposed of by the real estate authorities established under this law. All states, except West Bengal have implemented this law, he said, adding that the ministry has written to the state government regarding this. He listed Model Tenancy Act as another reform that would create a lot of demand for rental housing in the country. The secretary said the ministry has asked all states to implement this law at the earliest. Referring to media reports raising concerns related to the fate of traditional 'Pagdi agreements' in Mumbai, Mishra said the new law will be prospective and not retrospective. Therefore, he said the existing rent agreements will not come under its ambit. "It will be prospective in nature." The provisions of this Model Tenancy Act clearly mention that all disputes related to existing rent agreements will be dealt under the old laws even after their repealment, the secretary emphasised. Mishra also talked about reforms for ease of doing business in the real estate sector. He said the government has taken steps to provide online permission for construction, which will eliminate delays and corrupt practices. The secretary highlighted other reforms like introduction of Real Estate Investment Trust (REIT) and the launch of stress fund named SWAMIH to complete stalled housing projects. Mishra said the Affordable Rental Housing Complex (ARHC) scheme launched by the government to develop homes for migrant workers will also create business opportunities for the sector. The secretary asked the real estate industry to focus on affordability of residential properties to attract buyers from lower and middle income group. Neel Raheja, Co-Chair, CII National Committee on Real Estate and Housing and Group President of K Raheja Corp, talked about high government charges and finance cost in the sector that impacts affordability. Anshuman Magazine, Deputy Chairman of CII Northern Region and Chairman and CEO - India, SE Asia, Middle East & Africa at CBRE, expressed confidence about the future growth of all the segments of the real estate sector. Mohit Malhotra, Managing Director & CEO of Godrej Properties Ltd, said the industry needs to attract equity capital to fuel growth. He also stressed on improving productivity by use of latest technology. Malhotra said the real estate sector is getting consolidated from highly fragmented. Amit Gossain, Chairman, CII Urban Development and Smart Cities Council and Managing Director of KONE Elevators India Ltd, said the COVID-19 pandemic has brought "short-term blip" in the sector and felt that long-term growth potential remains intact.Follow and connect with us on Twitter, Facebook, Linkedin
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Mumbai real estate: Respect all religions. But only from a distance

Mumbai real estate: Respect all religions. But only from a distanceA key inference from the Pew survey is that while Indians say it is important to respect all religions, major religious groups feel they have little in common, and want to live separately.Representational image of Powai, Mumbai. The Pew survey 'Religion in India: Tolerance and Segregation' crystalized something we've known all along: people prefer neighbours from similar religious backgrounds, even in Mumbai.Representational image of Powai, Mumbai. The Pew survey 'Religion in India: Tolerance and Segregation' crystalized something we've known all along: people prefer neighbours from similar religious backgrounds, even in Mumbai.At the peak of the COVID-19 crisis last year when developers in Mumbai were in utter panic, a prospective home buyer decided to take the plunge and buy an apartment. His preferred project was one which was close to completion and had sold only one-third the inventory, causing the developer a challenge in servicing his loans. The buyer showed interest but the desperate builder rejected the buyer. The builder was not foolish or delusional in his price expectations. He merely faced a challenge that has been almost impossible to penetrate in Mumbai real estate – a Muslim homebuyer.I was reminded of this episode after reading a recent report by the Pew Research Centre titled ‘Religion in India: Tolerance and Segregation’. The key inference of the Pew survey was that while Indians say it is important to respect all religions, major religious groups see little in common and want to live separately.For me, one data set is worth delving into from a housing perspective. That data set is – Indians who say they would not be willing to accept people from another religious group as neighbours.The finding is clear – there is resistance to seeing people from another community stay next to you: 36% of Hindus and 33% Sikhs would not be willing to accept a Muslim as a neighbour. Additionally, 25% of Muslims and Sikhs would similarly not want a Christian living next-door to them; 54% of Jains would not want a Muslim neighbour; while 47% would not be willing to have a Christian neighbour. The Buddhists seem the most flexible in their choice of neighbours.In one way, the survey has broken new ground in bringing out a reality that has long existed. In another way, from a Mumbai real estate perspective, I have to concede that a survey done exclusively for the city – would throw substantially higher numbers. By national benchmarks, it is believed that Mumbai is an outlier where religion matters for little. It’s a good narrative. There is only one problem: It’s not true. And it is definitely untrue when it comes to housing.Parsis and Christians try to enable their own cocoons which permit sale or rent often only to people from their own community. The Jains prefer being only around other Jains, to the extent that there are localities that have restaurants which don’t even dare to serve non-vegetarian food. Muslims prefer having members of their own community in a locality.Due to a combination of demographics and poverty, the biggest discrimination is often faced by members of the middle and upper middle-class Muslim community. They are torn between not wanting to reside in the chaotic ghettos while being rejected from housing opportunities in localities that they want to reside in. It is tough to arrive at a specific number on this but I would reckon that at least 50% of Hindus would be uncomfortable with a Muslim neighbour. And that number would go as high as 70% with Jains. Remember, 66% of Mumbai’s population is Hindu and 4.1% follow Jainism.On the principle of fair and equal housing, it is undeniable that the Muslim community has received a raw deal over the years. At the same time, it is hard to argue against the concerns that several people have with regards to Muslims.I’m aware that there are reservations over food habits that act as a thorn in the flesh for a few communities. To be honest, I am not sure if that is a major reason for the discrimination. There are bigger reasons at work in my view. On one extreme is the perception that members of the Muslim community can be a security and safety threat, and need to be shunned. At the centre is a view that has been fostered by looking at the shoddy conditions of Muslim-dominated localities. On the other extreme is the financial point of view that says ownership of apartments by a meaningful number of Muslims in a particular project or locality often results in a decline in property values.It’s a complex phenomenon, and I take no decisive view on the subject. However, I will say that the perception against Muslims is exaggerated in comparison to ground reality. The problem is that there appears to be no solution in sight. At the public housing level there is little that can be done, given how compromised Mumbai’s housing administration is. Countries like Singapore promote inclusivity through public housing where residents of different communities are given allocation in the same premises. On the other hand, private housing is now a victim of a virtuous cycle where discrimination is so entrenched that it appears almost impossible to penetrate. The only solution, albeit slow, is if developers and societies evaluate each buyer on their individual merit and approve those that fit the sensibilities of that particular society.In the end – the Pew Survey shows us the mirror to who we have always been. We respect other religions – as long as it is from a distance.
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Developers raise supply in city peripheries

Developers raise supply in city peripheries: ReportLivemintDevelopers are increasing launches in peripheries of cities post covid as people are preferring to buy houses outside congested locations, a study by Anarock Property Consultants said.Of the total 1.49 lakh units launched in the top seven cities in FY21, 58% were in the peripheries compared to 51% in the pre-covid era in FY19, said the report.In Pune, 76% of the new launches were in peripheral areas, including Mulshi, Pirangut, Ravet, Chakan, Chikhali, Wadgaon Budruk, Talegaon Dabhade and Undri, among others. In FY2019, the new launches in these areas accounted for only 67%.In the Mumbai Metropolitan Region (MMR), 67% of the new supply was in Panvel, Palghar, Vasai, Virar, Badlapur, Bhiwandi and Dombivli among others. While in FY2019, 60% of the new launches were made in these areas.In the National Capital Region, around 19,090 units were launched in FY21, of which at least 57% were in the peripheral areas such as Sohna, Sohna Road, Greater Noida West, and Yamuna Expressway. In FY19, the peripheral supply share was 49% of a total of 29,500 units launched then.Anuj Puri, chairman, Anarock Property consultants said, “Homebuyer preferences changed perceptibly post the pandemic. The previous ‘walk-to-work’ concept no longer led home buying decisions – instead, bigger and more affordable properties in greener, less polluted areas found favour, driven by work-from-home and e-schooling compulsions as well as safety concerns. Developers quickly changed track and those with land banks in the peripheries, and even otherwise, saw it an opportune time to launch new projects there."“It is very likely that some of the major office occupiers will soon de-centralize and bring their offices closer to their employees’ homes in these peripheries," added Puri.
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Hints of 'uplift' in market, says Finolex Industries

Hints of 'uplift' in market, says Finolex IndustriesFinolex reported a 16% year-on-year increase in its revenues for 2020-21 fiscal, standing at around Rs3,463 crore. Its YOY EBITDA and profits were also significantly up, with the former up by 122% to around Rs1,062 crore, and the latter jumping by around 125% to Rs 728 crore.Hints of 'uplift' in market, says Finolex IndustriesPUNE: City-based PVC pipes and fittings maker Finolex Industries said there were signs of improvement in sectors it has an interest in, despite localized lockdowns across the country. The company said, however, that high input prices were a cause for concern.Finolex reported a 16% year-on-year increase in its revenues for 2020-21 fiscal, standing at around Rs3,463 crore. Its YOY EBITDA and profits were also significantly up, with the former up by 122% to around Rs1,062 crore, and the latter jumping by around 125% to Rs 728 crore.“The March quarter of FY20 and the first quarter of FY21 were hit by the lockdown. We got good volumes across sectors in Q3, especially over Diwali and the New Year. Q4 was going well when the second wave hit,” Niraj Kedia, deputy CFO, told TOI. The company shares closed 1.4% higher, at Rs173.65, on BSE on Friday evening. Kedia said that the company’s plants, including the one near Pune, did not have to shut during the recent restrictions. Kedia said despite the company making its own PVC, the high prices for the commodity — up 60-80% in the past year — are worrisome. He said the lack of a nationwide lockdown was a ray of hope in FY22. “There are hints of uplift in some sectors, like construction. There has been less of that uplift in agricultural sector as shops have been closed and customers generally go to dealers,” he added.
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How to buy a property on which home loan is pending

How to buy a property on which home loan is pendingA buyer needs to procure no-dues and other approvals from banks and government authorities before buying a property on which there is an existing home loan.How to buy a property on which home loan is pendingNEW DELHI: Buying a resale property appears much simpler than buying an under-construction unit. However, there are some crucial checks and documents requirements before you enter into a legal contract. Every property transaction involves two key components - one is the physical verification of a property and the second is its legal due diligence. Sometimes, the second part is more important than the first as it ensures your investment is safe and without any legal dispute.If you are planning to buy a resale property from a seller who has already taken a home loan on the property, then it is important for you to perform certain due diligence. Firstly, check whether the existing owner has any pending home loan, electricity and water charges or other dues on the property. You also need to check whether the property is owned by a single owner or it is shared. One should also check whether the property is leasehold or freehold. If the property is leasehold, then the seller needs NOC from the government authority.You can either choose to ask the existing buyer to clear the home loan or if you are also planning to take loan to buy the property then you can apply for transfer of seller’s loan to your name. The bank will take your KYC and check your eligibility and then check the seller’s file and transfer the loan to your name.Deepak Chowdhury, partner, Induslaw, explains, “The buyer must insist on a copy of all the title documents of the property for conducting a title due diligence to identify the risks, if any, on the property. The buyer will also require the title documents if he intends to obtain a loan for financing the acquisition of the property. The buyer should also request the seller to obtain a statement of loan outstanding (principal and interest (including penalty interest if any)) due from the bank wherein the home loan is pending, and a confirmation of the property documents mortgaged with the bank.”Documents to checkThe buyer has to verify all title documents in relation to the property:(i) Deed of transfer in favour of seller and the property tax certificate issued by the concerned municipality in the name of the seller. In case the property is a flat/apartment situated in a high-rise building, check if the undivided share of the land over which the building has been transferred in favour of the seller;(ii) Title documents for the past 30 years so that the title of the vendor/builder of the property can be established. Also procure a certificate of encumbrance from the concerned sub-registrar to assess all the previous title transfers and encumbrances on the property.(iii) Sanction Layout, Building Permit, Occupancy Certificate, Zoning Regulation, Fire NOC (in case of high-rise building), permission for lifts installed at the building wherein the property is located.(iv) No objection certificate for transfer of ownership and No-dues certificate from the Cooperative Housing Society/RWA of the building or the builder if he maintains the society.(iv) Municipal taxes pending against the property. It would be advisable to also check the dues against the property that may be pending towards the electricity and the water departments. Also, obtain receipts to verify the tax paid by the present owner.(v) An independent search needs to be conducted on show-cause/demand notices pending against the property or the building wherein the property is located.(vi) Check if any litigation is pending against the property or the building wherein the property is located is a subject matter of a litigation against the builder/developer.Is it safe to buy a property mortgaged to a bank?Unless the property is subject to any litigation or exercise of mortgage rights by the bank, it is safe to buy a resale property pending mortgage. However, the buyer needs to insist on the closure of loan and a no dues certificate from the bank prior to purchasing the property. In case the buyer intends to take a loan for acquiring the property it is mandatory that the buyer moves a proposal to the bank from which it intends to avail loan and get a legal and technical clearance as well as obtain a sanction letter from the bank prior to the transaction.Nikhil Varma, founding partner, MVAC-Advocates, Solicitors and Consultant, says, "The procedure to purchase a mortgaged property is not complex and in order to purchase such a property, the purchaser may either close the existing loan, or get a new loan from the same bank to close the existing loan or get a loan from another bank. It is imperative that the purchaser ensures that the seller provides them with the no-dues and no-objection certificates both from the bank and builder/RWA. There are instances wherein the agreement for such a transaction is a tripartite agreement making sure that the bank is aware of such sale and an active party to the same."Getting all the relevant documents is very important as then you can get bank approvals easily and also be able to register your property without any issue.“Buying a house (be it a flat or an independent house) with an existing bank loan requires patience and time. If you are borrowing from a different bank, then one bank can pay to the other bank and take over the existing loan. However, if the bank is the same then internal loan transfer takes place, and you become the new owner after registering the property,” adds Aditya Chopra, managing partner, Victoriam Legalis - Advocates & Solicitors.Make a checklist of the documents you have and then create a list of documents you require from the existing sellers before buying a bank mortgaged property. Pay only the token/booking amount when you have verified the owner, the property and have made sure it is good to buy.Follow and connect with us on Twitter, Facebook, Linkedin
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India expected to grow at 8.3%, says World Bank

The growth rate forecasted for India for 2021-22, the World Bank is an upward revision from its January forecast of 5.4%.Sriram LakshmanIndia's economy is expected to grow at 8.3% for Fiscal Year 2021-22 as per the World Bank's latest projections. This rate, however, masked the damage caused by the "enormous" second wave of COVID-19, the Bank said ...
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California eyes shuttered malls, stores for new housing

California eyes shuttered malls, stores for new housingEven before the pandemic, big-box retail stores were struggling to adapt as more people began buying things online. In 2019, after purchasing Sears and Kmart, Transformco closed 96 stores across the country - including 29 in California.California eyes shuttered malls, stores for new housingSACRAMENTO: California state lawmakers are grappling with a particularly 21st-century problem: What to do with the growing number of shopping malls and big box retail stores left empty by consumers shifting their purchases to the web.A possible answer in crowded California cities is to build housing on these sites, which already have ample parking and are close to existing neighborhoods.But local zoning laws often don't allow housing at these locations. Changing the zoning is such a hassle that many developers don't bother trying. And it's often not worth it for local governments to change the designations. They would prefer to find new retailers because sales taxes produce more revenue than residential property taxes.However, with a stubborn housing shortage pushing prices to all-time highs, state lawmakers are moving to pass new laws to get around those barriers. A bill that cleared the state Senate last week would let developers build houses on most commercial sites without changing the zoning. Another proposal would pay local governments to change the zoning to let developers build affordable housing."There has always been an incentive to chase retail and a disincentive to build housing," said Sen. Anthony Portantino, a Los Angeles-area Democrat who authored the bill to pay local governments. "There is more dormant and vacant retail than ever."If successful, it's believed California would be the first state to allow multi-family housing on commercial sites statewide, said Eric Phillips, vice president of policy and legislation for the California chapter of the American Planning Association. Developers who use the law still would have to obey locally approved design standards. But Phillips said the law would limit local governments' ability to reject the projects.That's why some local leaders oppose the bill, arguing it undermines their authority."City leaders have the requisite local knowledge to discern when and which sites are appropriate for repurposing and which are not," wrote Mike Griffiths, member of the Torrance City Council and founder of California Cities for Local Control, a group of 427 mayors and council members.It's a familiar battle in California. While nearly everyone agrees there is an affordable housing shortage, state and local leaders face different political pressures that often derail ambitious proposals. Last year, a bill that would have overridden local zoning laws to let developers build small apartment buildings in neighborhoods reserved for single-family homes died in the state Senate. Sen. Anna Caballero, a Democrat from Salinas and author of this year's zoning proposal, said her bill is not a mandate. Developers could choose to use the bill or not. The Senate approved the measure 32-2, sending it to the state Assembly for consideration."It's always a challenge when you're trying to do affordable housing, because there are entrenched interests that don't want to negotiate and compromise, and we're working really hard to try to break through that," she said. "I'm trying to give maximum flexibility to local government because the more that you start telling them how they have to do it, the harder it becomes for them to actually do it."Even before the pandemic, big-box retail stores were struggling to adapt as more people began buying things online. In 2019, after purchasing Sears and Kmart, Transformco closed 96 stores across the country - including 29 in California.The pandemic, of course, accelerated this trend, prompting major retailers like J.C. Penney, Neiman Marcus and J. Crew to file for bankruptcy protection. An analysis by the investment firm UBS shows online shopping will grow to 25% of all retail sales by 2025. The analysis predicted that up to 100,000 stores across the country could close.Local governments and developers in California are already trying to redevelop some retail sites. In Salinas, a city of about 150,000 people near the Monterey Peninsula, city officials are working to rezone a closed Kmart. In San Francisco, developers recently announced plans to build nearly 3,000 homes in the parking lot that surrounds Stonestown Mall - a sprawling, 40-acre site that has lost some anchor retail tenants in recent years.Still, the idea of repurposing shopping centers has divided labor unions and affordable housing advocates, putting one of the Democratic Party's core base of supporters against backers of one of their top policy goals.Housing advocates love the idea, but they don't like how Democrats want to do it. Both proposals in the Legislature would require developers to use a "skilled and trained" workforce to build the housing. That means a certain percentage of workers must either be enrolled or have completed a state-approved apprenticeship program.Developers have said while there are plenty of trained workers available in areas like San Francisco and Los Angeles, those workers are scarce in more rural parts of the state, potentially delaying projects in those areas.California needs to build about 180,000 new housing units per year to keep up with demand, according to the state's latest housing assessment. But it's only managed about 80,000 per year for the past decade. That's one reason the state's median sales price for single-family homes hit a record high $758,990 in March."At a time when we're trying to increase production, we don't believe we should be limiting who can do the work," said Ray Pearl, executive director of the California Housing Consortium, a group that includes affordable housing developers.Robbie Hunter, president of the State Building and Construction Trades Council of California, dismissed that argument as just greedy developers trying to maximize their profits. He said there is no construction project in California that has been delayed because of a lack of workers, adding: "We man every job.""When there is a demand for workers, we rise with the demand," Hunter said.Labor unions appear to be winning. A bill in the state Assembly that did not initially require a "skilled and trained" workforce stalled in committee because it did not have enough support.Follow and connect with us on Twitter, Facebook, Linkedin
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