Real estate firms revisit plans for smaller cities

Bangalore/New Delhi: Realty firms are revisiting and tweaking strategies for development in India’s smaller cities in a re-run of what was seen during the 2008-09 economic slowdown.

While some large developers are sticking to bigger cities and discontinuing project plans in smaller towns, some are switching from premium to affordable homes to push sales and mixing retail and hotels with pure residential projects to boost demand and spread the risk.

Early last year, a Crisil Research report said smaller cities are likely to offer better growth prospects and price stability for developers and buyers than large markets such as Mumbai that are showing signs of slowing sales and rising prices. Property analysts said the real estate story of smaller cities hasn’t really taken off, causing developers to shrink real estate projects there.

For its planned special economic zone (SEZ) in Kochi in Kerala, Mumbai-based Housing Development and Infrastructure Ltd (HDIL) is looking for a financial and technical partner both for expertise and because the company doesn’t want to take on huge capital expenditure by itself. In Hyderabad, where it has about 150 acres, HDIL may not develop the land and may exit at some point of time.

“With the way the market is functioning and the balance sheet pressures, projects in smaller cities offer returns over a longer period of time. So our focus will be on Mumbai now,” said Hari Prakash Pandey, vice-president, finance and investor relations, HDIL.

Another Mumbai developer that launched a large project in Mangalore last year at a premium price compared with current market prices, is not planning to develop any more projects in other smaller markets.

“The demand waned after selling the first lot of apartments and in retrospect, the pricing seemed to be too high,” said a person familiar with the development, who declined to be named.

In most cases, when large, known names in the real estate industry have entered a specific market, they have often launched projects at a superior price, or tried to develop a project unique to that city, to cash in on their brand.

However, subsequent research has compelled them to play to the demands of property buyers in that market, and getting the pricing right has been the key challenge on this front.

In Ahmedabad, around a year and a half ago, Ajmera Realty and Infra India Ltd launched a project at around Rs. 5,000 per sq. ft.

Now when it is planning to launch another residential project, and is deciding on the pricing, it is likely to be around Rs. 2,500-3,000 a sq. ft.

“Customers are price-sensitive and while we see good potential in a market like Ahmedabad, the pricing has to be right for that market,” said an official at Ajmera Realty, who didn’t want to be named.

Analysts are not so sure about the future of real estate development in smaller cities, and said that like earlier, local developers in these markets will be dominant.

Though many developers such as DLF Ltd, in the aftermath of the slowdown, said that they will concentrate on their core geographies, many again moved towards smaller cities as larger markets showed sign of slowing.

“Large developers have realized that metros are more experienced and mature markets. I believe most of them would sell land and move away from tier II and III cities,” said Anuj Puri, chairman and country head, Jones Lang La Salle, a property advisory.

Mumbai-based Godrej Properties Ltd, which aims to be a national firm with presence in 12 cities, is particularly focussed on building its presence in markets such as Bangalore, Chennai, the National Capital Region and Ahmedabad, said Pirojsha Godrej, managing director and chief executive.

In terms of in real estate development in these markets, Godrej said its “national brand and joint venture business model” would enable it to capture opportunities.

Real estate consultants also say a lack of funding, particularly from private equity (PE) investors and to some extent, non-banking financial companies (NBFCs), has also restrained developers from taking a leap of faith in these markets.

Mahindra Lifespace Developers Ltd, which has projects in Mumbai, Chennai and Pune, launched a premium residential project in Nagpur this February announcing its entry into that city.

Managing director and chief executive Anita Arjundas said the company has selectively, not actively pursued projects in smaller cities.

“Nagpur was more of a test but the response has been encouraging. But it finally it boils down to cost structures to develop in such cities, and we currently don’t have that kind of depth,” said Arjundas.

A number of northern India-based developers such as Omaxe Ltd, Ansal API, Assotech Ltd and Amrapali Group have gone to smaller cities with residential projects. While earlier, these projects were completely residential, later they shifted to developing commercial spaces alongside.

Noida-based Assotech tied up with hotel chains and launched hotel projects along with residential projects.

The company owns a hotel in Rudrapur in Uttarakhand state under the Radisson brand.

It also has residential projects under a joint venture with another Noida-based developer, Supertech Group Ltd.

Crisil Research’s 2011 estimate was of a robust pipeline of 354 million sq. ft of supply planned for the next three years in emerging property markets.

Tata Housing Development Co. Ltd, known for spearheading the low-cost housing initiative among private developers, wants to take the brand to smaller cities, but will restrict itself to markets such as Ahmedabad, Pune and Bhubaneswar.

“Real estate competitiveness in these markets is low but we are not looking at even smaller Tier III and IV cities,” said Tata Housing managing director and chief executive Brotin Banerjee.

madhurima.n@livemint.com

Source: http://www.livemint.com/2012/09/09232055/Real-estate-firms-revisit-plan.html

Tamil Nadu awaits clearance to set up waste management plant

Chennai

The environmental clearance granted by the Tamil Nadu government to the Chennai Corporation’s to set up an integrated solid waste management plant at Perungudi has been set aside by the National Green Tribunal. Times Property has more on the case that will see a new beginning under the jurisdiction of the Union Ministry.

The unending debate surrounding the issue of waste management and garbage clearance in the city, in the past few years, has involved environmentalists, activists, city planners and government officials. While suggestions have been made in the past to shut down the dumping yards at Perungudi and Kodungaiyur and replace them with integrated solid waste management plants, no concrete solution has been arrived at. The Corporation’s suggestion to set up an integrated solid waste management plant at Perungudi was strongly opposed and the case been facing legal hurdles, finally came to a close.

India’s first dedicated environmental court, the National Green Tribunal (NGT) in its first ever hearing in the city on February 24, set aside the environmental clearance granted by the Tamil Nadu government to set up the plant at Perungudi. Hearing the appeal by V Srinivasan against the Tamil Nadu State Level Environment Impact Assessment Authority and others, the tribunal headed by Justice C V Ramulu, passed the judgement stating that the site of the proposed plant was less than 10km from the Guindy National Park and that the project fell within Category A and the Union government (Ministry of Environment and Forests) alone could issue environment clearance (EC).

The appellant, V Srinivasan of the Save Pallikarnai Forum, said, “Following a public hearing in 2010, a case was filed against the Tamil Nadu Pollution Control Board (TNPCB) and a stay order was issued on the commissioning of the plant by the National environment Appellate Authority, which was in-charge prior to the constitution of the NGT.” He explained further, “The Environmental Impact Assessment (EIA) notification of 2006 classifies industrial projects in two categories – A and B.

Any project site within a 10-km radius from a national park or a protected area, falls under category A, such as the case at Perungudi, and permission for a clearance could be obtained only from the Union Environment Ministry.

However, following an incorrect EIA report, the project was considered in category B all along.” The demand of our forum, is to close down the dumping yard as it affects the Pallikarnai marshland and has led to its deterioration over the years. “As per the wetland rules of 2011, ay landfill has to shut down within a period of six months, but no action has been taken against the facility,” he added. Unless the Corporation does not devise a concrete source segregation policy and set up Zonal level plans, the issue will persist.

Ritwick Dutta, counsel for the appellant, strongly argued against the clearance granted by the State Government and proved the EIA report, commissioned by a private consultant, concealed critical facts relating to the commissioning of the plant. “The issue needs to be viewed in terms of environmental governance and the consultants have concealed critical information in the EIA report, which is biased. The report should be nullified under charges of concealment of information,” he argued and appealed to the bench to frame criminal charges against the consultants.

On hearing both sides of the issue, Justice Ramulu, said, “When we entertained a doubt about the distance of this project from the Guindy National Park [GNP], we directed the Principal Chief Conservator of Forests/Chief Wildlife Warden to get the aerial distance [between the project site and the GNP] on October 18, 2011. Following which, the Principal Chief Conservator of Forests (PCCF) and the Chief Wildlife Warden (CWLW) submitted a report on November 25, 2011, stating that the distance between the two nearest points of project site and GNP to be as 5.6 km and 6.2 km.”

“Though the TNPCB tried to justify the distance to be beyond 10 kms and (distance measured along the road connecting the two areas), the case will be heard by the Union Ministry (Moef). The bench is in full agreement with the appellant that the report prepared and accepted by an authority with no jurisdiction cannot be accepted blindly to grant an environmental clearance (EC),” he added.

What is the National Green Tribunal?

The NGT, a multimember judicial body comprising of Judicial and technical members was set up in 2010 and became operational from July 4, 2011. The Chennai Bench has jurisdiction over the States of Tamil Nadu, Kerala, Karnataka and Andhra Pradesh. At present the NGT has two judicial members, Justice A.S Naidu, acting Chairperson and Justice C.V Ramulu, Judicial Member. In addition it has four technical members, Vijay Sharma, Devendra Agrawal, Professor N Nagendran and Dr G K Pandey.

The NGT has jurisdiction over Forest (Conservation) Act, 1980, the Environment (Protection) Act, 1986, the Air Act and Water Act besides the Biological Diversity Act. Among the most significant powers of the NGT is with respect to the power to award compensation and damages to victims of environmental disasters and cost for restoration of the ecology.

Since its inception, the NGT has delivered significant orders/ judgments in a number of cases such as the order requiring mandatory radiation impact assessment for thermal power plants, the need for cumulative impact assessments for dams and proper cost benefit analysis. The NGT is presently hearing appeals against some of India’s most controversial and talked about projects such as Posco’s Steel plant in Orissa, the Lavasa project in Maharashtra, the Jaitapur Nuclear power plant at Maharashtra, the Lower Demwe Project in Arunachal Pradesh.

Nidhi Adlakha, Times Property, Chennai

Source: http://content.magicbricks.com/tamil-nadu-awaits-clearance-to-set-up-waste-management-plant