Properties, Homes & more

Reference: The Economic Times

Home loan providers are now insisting on construction-linked disbursal of funds to new projects, as they look to make developers more accountable after getting stuck in several stalled projects.

A number of developers have either stopped construction midway or slowed down due to shortage of funds and poor sales in 2008 and 2009. Lending institutions expect the move to help them monitor the progress of construction and make developers accountable, said a senior executive with a public sector bank. “Buyers in such projects are in a difficult situation. They have to pay monthly installments towards the loan without getting the possession of house. They also end up shelling out monthly rents during the period,” he said, requesting anonymity.

HDFC, one of the largest lenders in the home loan segment, has, allegedly, discontinued the practice of upfront disbursals and linked the flow of funds to progress of construction.

Developers initially used to offer homebuyers up to 10% discount on upfront payment. These developers subsequently diverted substantial part of funds to other projects. The delay in completion of work left buyers in a lurch. There is a high probability of default by such borrowers.

In construction-linked payment, the home finance companies or banks do not release the funds up front. They release of around 30% funds initially and the rest is disbursed as per the progress of projects. In such cases since the exposures are not full and the monthly repayment obligation for borrowers will be lower.

Many developers have now changed the payment schedule to construction-linked as against timebound payment. This is good for the industry. However, banks and home finance companies should release 30-35% of the funds towards the land and development cost. The lenders have also become more conservative in disbursal of loans. In a volatile real estate market, they offer lower valuations for the property against which they disburse the funds.

According to industry estimates, disbursements of home loan in the organised system of financing in the first six months of the current fiscal has been around Rs 60,000 crore. In 2008-09, it touched Rs 1,00,000 crore approximately, while in 2007-08 the amount was around Rs 1,30,000 crore.

Celebrate this festival of DIWALI by making a difference in the lives of some young girls who wish to pursue their dreams of being successful and confident like you and me. This is an effort by the team of “Mission Awareness” to help these girls in a way which will make them self independent…

Let me brief you about “Mission Awareness“. This is an organization run by enthusiastic youngsters who want to help the world by giving some time, talent and resources from their lives to make it a better place. They are involved in many activities to spread awareness about global warming, energy & water conservation, fuel conservation, etc. They now have come up with the bright idea of getting Diwali Diya’s made by these underprivileged girls.

The money that will be accumulated from the sale of these Diya’s will be used to conduct handicraft, acting & dancing and educational camps for the underprivileged children in primary schools across Mumbai & Greater Mumbai. With the help of very helpful teachers and friends, they have taught some underprivileged girls the art of painting Diya’s in a unique and different way. And see what they have made… A huge collection of beautiful & eco-friendly Diya’s that can make your Diwali even more colorful and bright. Find below the photographs of some of these awesome Diya’s alongwith their price.

LEAF Single: Rs 30 | Pair: Rs 55	PEACOCK Single: Rs 40 | Pair: Rs 70
FLOWER Single: Rs 20 | Pair: Rs 35	SWASTIC Single: Rs 20 | Pair: Rs 35
FLOWER-2 Single: Rs 20 | Pair: Rs 35	KAIREE Single: 20 | Pair: Rs 35
GANESHJI Single: 30 | Pair: Rs 55	SUN Single: Rs 70 | Pair: Rs 125
FLAT SHANKH Single: 20 | Pair: Rs 35	PLATE Single: Rs 40 | Pair: Rs 70
SHANKH Single: Rs 30 | Pair: Rs 55	TURTLE Single: Rs 40 | Pair: Rs 75
ROSE Single: Rs 20 | Pair: Rs 35	SUNFLOWER Single: Rs 20 | Pair: Rs 35

To order, please email to GUNCHA @ guncha.khare@gmail.com and mention your order & contact details. Guncha manages this Mission and will ensure that you get your Diya’s well in time in nicely wrapped package. I have bought 5 of them and believe me, they are simply superb. So go ahead and place your oder and help underprivileged a little bit in your own way…

Jerry Rao, founder of IT firm Mphasis, is completely immersed into his next business innings: Nano housing. Just like the Nano car, he wants to deliver homes to buyers looking for affordable homes: including drivers, housemaids, plumbers and electricians. Jerry Rao’s new venture, Value and Budget Housing Development Corporation, is targeting building a million homes in 10 years in 17 cities.

In an exclusive interview to Economic Times, Jerry Rao said, unlike conventional developers, his business model would treat land as an inventory and not a capital asset. If he is able to roll out his project and deliver in 12-18 months, the returns would be in the region of 30-40% almost similar to what the IT industry enjoyed in its dream run. Excerpts from the interview:

Interviewer (I): After IT, banking and angel investing, what made you think of housing?

Jerry Rao (JR): I could retire and do nothing. At 57, I have got at least another 5 to 10 years to do something else. I did want to stay away from IT and banking and wanted to do something of scale. I looked at agribusiness, education, health care and it seemed to me that I could leverage my IT and project management skills in housing. And, there was no paucity of demand. So, you could scale this business and create a big impact.

I: What is the difference between your business model and how conventional realty operates?

JR: Unlike conventional realty, we want to think of land as inventory and want to sell it as soon as we can. That is the basic difference that sets us apart. I thought it would be a high risk model. But, the downside here is very low. We are using equity to buy land. We will have access to construction finance and then we also get 25% down payments from buyers. So, even if the project goes bust, we can still repay all the loans and also repay equity. But, if we get it right and build and sell the project in 12-18 months, then the return on equity will be in the 30-40% range. It is actually quite an attractive place to be in.

I: Then, how come nobody else has entered the space?

JR: Why did nobody create a low-cost detergent before Nirma? The high-cost market was profitable enough. One, it is partly a supply side problem that people do not re-engineer. Two, the middle-class and upper-class segment, Rs 0.50-1 crore, has been very profitable. Three, if you are looking at land as a capital asset, you would not do it. This model requires a mindset shift.

Do not forget to read PART 2 of the interview…

I have staying in a rental home since last 3 years. The moving-home process, in my opinion, is a bit difficult and cumbersome. For my first move, I and my wife did all the packaging and transport, all by ourselves. We were, of course, frustrated and decided that we’ll take services of packers & movers (P&M) in my city. Well, for my next relocation, I promptly called up 5-6 P&M’s servicing my area and shortlisted one based on the lowest price. Believe me, I am still regretting my decision! The P&M that I had called (name withheld to protect identity) was absolutely crappy. They were handling items & furniture in my home in a way a kid would handle. I was completely disappointed and hence decided to take services only of a thorough professional P&M and I started my search well in advance before my third relocation came up.

My fierce search led me to MoveMe.com – a end-to-end complete moving-solutions provider. They are thorough professional house-movement experts & provide expert services while moving your homes. I checked their online portal and was immediately impressed by the range of services they provide and customer testimonials. I was though bit taken back by the price but I was convinced that it was worth it. Needless to say, I immediately requested free legal quote as well!

Once I fixed my deal, experts from MoveMe visited my home, took an overall idea of what all items need to be moved, distance and position of “from location” and “to location”, and offered me the best and most convenient way of transport. I must admit that the way they package things is impressive. There were only 2 damages during transport (as compared to over 15 in the earlier case) but these were not critical for me. I was told in advance what their route would be, contact numbers of those present on field, and online monitoring too! To check their fat claims, I logged on to check whether it really works, and I was surprised to see that I could actually track my “consignment” online! Wow!! This is incredible. I was out-n-out satisfied with MoveMe. By the way, did I mention that they insure the “consignment”? I would also refer MoveMe if you are looking for a property solicitor. This conveyancing firm helps you get the best legal aid for all your property-related appraisals / disputes.

Times Property proudly present the most awaited and widely appreciated property exhibition in Mumbai from July 3 - 5. This exhibition, like its earlier sessions, promises big bang in the property market. Various reputed builders (including small to big sharks) would showcase their properties in this exhibition. There would be ready possession, almost ready, and upcoming projects up for grabs. Besides homes, there would be plots, penthouses, second (or weekend) homes, commercial properties (including office space, IT parks, etc.), interior designer shops, and other stalls selling useful home-making materials. One can also book their dream homes in this expo and they would get handsome discounts right there!! Needless to say, there are tens of exciting offers from loan-lenders too. Spot discounts and instant approvals are complimentary.

Do not forget to attend this grand event…