Outer Ring Road – A major real estate demand driver in Hyderabad

A view of the Outer Ring Road and its service road in Hyderabad

In older times, rivers were called the cradles of civilization, with many communities initially settling near rivers becoming full-fledged habitations, the Indus Valley Civilization and Egyptian Civilization being prime examples of the same. In modern times, one can say that roads have taken up the old role of rivers. The construction of roads bring the promise of better connectivity and improved infrastructure, which leads to a number of settlements coming up next to or near the new roads. The Outer Ring Road (ORR) in the city of Hyderabad illustrates this phenomenon.

The Hyderabad Outer Ring Road is an 8-laned road, covering a distance of 158 km, connecting the outer suburbs of Hyderabad. Built to decongest the crowded city roads by providing an alternative and faster route to traffic wishing to either avoid the city or reach destinations such as the Hyderabad Airport faster, this expressway has not only come as a boon to customers but has spurred development along its entire stretch. In this article, we assess how this road has impacted the real estate sector in Hyderabad, particularly along its western stretch passing near the city’s main growth corridors.

Outer Ring Road: Location & Connectivity

The Hyderabad Outer Ring Road circles the city and connects all major highways leading to and from it. This allows road users to get from one place to another in quick time, after payment of the appropriate toll. A major benefit of this road is that it connects the major localities of western Hyderabad, which are seeing the greatest real estate growth such as Hitec City, Gachibowli, Manikonda, APPA Junction and Kokapet to the Rajiv Gandhi International Airport in Shamshabad, which is next to the ORR, with the commuting time over this 30-35 km stretch likely to be no greater than around 35-45 minutes.

For inner city travel, one can get off the Outer Ring Road at any of the junctions, which is nearest and take the appropriate road or take the toll-free service road. Rather unsurprisingly, the ORR has helped expand the boundaries of the city, with most new real estate projects (both residential and commercial) coming up around it. Many places, which were little more than villages less than a decade ago, such as Shamirpet, Kokapet, Narsingi and Puppalaguda are now seeing massive construction activity to cater to the increased demand due to the ORR’s proximity to the major IT corridors such as Raheja Mindspace IT Park, Financial District, Cyber Gateway, Cyber Towers and DivyaSree NSL Orion, all of which are within 5-8 km from the ORR. The upcoming Hyderabad Metro project is intra-city connectivity further, complementing this road.

Outer Ring Road: Social Conveniences

The Outer Ring Road has attracted plenty of habitation along both sides, which in turn has attracted many conveniences to benefit residents of these new complexes. If one focuses on the western part of this highway, one can see how service providers have established themselves in all upcoming locations such as Kokapet, Nanakramguda and APPA Junction to benefit from the housing boom.

Rockwell International School in Kokapet near the Outer Ring Road
Rockwell International School in Kokapet

To cater to the children of IT professionals, a number of highly rated schools such as Delhi Public School and Oakridge International School in Manikonda, Phoenix Greens International School and Rockwell International School in Kokapet, and Don Bosco School and T.I.M.E. School near APPA Junction have come up. Medical care facilities, however, still show a bias towards the more developed portions, with big names such as Continental Hospital, Max Cure Hospital and Care Hospital largely present in Gachibowli and Hitec City, though there are a few others such as Shadan Hospital near APPA Junction.

One major positive of the ORR is the excellent connectivity it provides residents and visitors alike to popular destinations such as Osman Sagar Lake, Chilkur Balaji Temple and Ramoji Film City. For a resident of a complex near the ORR, he/she is saved the hassle of navigating the chaotic city traffic and can get to and from their outing spot in double quick time.

Outer Ring Road: Residential Profile

Considering the long span of the ORR, it is not possible to make any generalizations regarding the residential unit profile, which is primarily individual area specific. For instance, while some areas such as Kokapet and Gachibowli are primarily seeing high rise apartment constructions, others such as APPA Junction have both villa and apartment projects. While some projects cater to the crème de la crème of the city, others cater to the economical section of home buyers.

The ORR has attracted major developers with a significant presence and noted track record such as INCOR, Aparna, My Home, Rajapushpa and Prestige, who have come up with some of their highly rated projects around here. For home buyers, who value quality and timeliness of delivery, the options are aplenty. The property prices too show a significant variation, both with regards to area as well as developer. While the average base price of a multistorey apartment in Puppalaguda is ~Rs. 3,000/sq. ft., it is ~Rs. 3500 in APPA Junction, ~Rs. 4000 in Kokapet/Gandipet and ~Rs. 5000 near Gachibowli. Variations from developer to developer are even greater, so a prospective home buyer should check directly with the developer in all cases.

Outer Ring Road: Great opportunities for investors

Due to a combination of the Outer Ring Road’s location, proximity to the airport as well as the major IT hub of Hyderabad and the vast amount of land available for development, the building blocks are in place for a real estate boom. For a discerning real estate investor, it would be advisable to take advantage of the significant variance of land prices between locations and projects and invest wisely, to get the benefit of the expected sharp appreciation in property rates here, particularly if one considers the ever-increasing demand for both commercial and residential real estate as well as the infrastructural developments expected to come up.

Outer Ring Road: Upcoming housing projects

My Home Avatar is an upcoming apartment project by My Home Constructions Pvt. Ltd. in Puppalaguda next to the Outer Ring Road. Scheduled to come up by 2020, this project offers 2 BHK and 3 BHK apartments, with a total of 2800 units in 10 towers of 31 storeys each. Among the amenities provided to residents will be basketball courts, fitness stations and a clubhouse containing a library, crèche and a multipurpose hall.

An almost complete apartment block in SMR Vinay Harmony County project near APPA Junction, Hyderabad
An almost complete apartment block in SMR Vinay Harmony County project

In a similar vein is SMR Vinay Harmony County by SMR Builders Pvt. Ltd. near APPA Junction. Spread over a large 50 acre land parcel, this project comprises 2 BHK and 3 BHK apartments of varying configurations, with the first of 3 phases due to be handed over by May 2017. Residents will be provided amenities such as a yoga/meditation hall, banquet hall and tennis and shuttle (badminton) courts.

Located near it is Incor’s PBEL City. One of the landmark projects in this part of Hyderabad, it offers smart, comfortable homes for its smart residents. This self-sustaining township boasts of the largest sewage treatment plant in a residential complex, which is recycled as well as a large 40,000 sq. ft. clubhouse, ‘The Square’, which has a saloon, spa, crèche and a large air-conditioned gym, with a lot more on the way.

PBEL City (PC : Google Images)
PBEL City (PC : Google Images)

Among the villa projects, one of the most notable ones is Mantri Euphoria by Mantri Developers. Built on a Balinese theme, this project contains 151 triplex luxury villas, boasting of large terraces, spacious rooms and space for a home office/study. The amenities for residents include a swimming pool, meditation lawn, amphitheatre and badminton court.

Conclusion

The Outer Ring Road has clearly been a major contributor towards the emergence of Hyderabad as a major residential and commercial center. Being in a sweet spot of good connectivity to the city and airport, numerous social amenities and vast land availability, it offers good opportunities for end users and investors alike. While most developments have been along its western corridor, its northern and eastern corridors too can be expected to carry on the growth momentum in years to come.

PBEL City – Project Updates as of March 2017

One of the stated aims to the Government of India is to build plenty of smart cities to house the country’s ever increasing population, while providing them all necessities and conveniences at their doorstep. While only time can tell about the success of this promising scheme, it is indeed heartening to note that there are some housing projects that offer ‘smart’ living experiences to residents. This allows the residents to focus on their work and other pursuits. One such complex is PBEL City, near TSPA (APPA) Junction in Hyderabad.

PBEL City is a flagship project of Incor, which is a major player in Hyderabad real estate. Having covered the project from its inception till its current stage, one can say that the developer’s attention to quality and providing effective solutions, without any compromises, is particularly noteworthy. I had the opportunity to visit PBEL City recently (March ’17) and assess for myself the progress this much in demand project has made in the last few months.

PBEL City: Construction Status

Amongst the most eye-catching features in the brochure of PBEL City is that all buildings are named after various precious stones (Platinum, Aurum, Pearl and so on), but are these really jewels worth living in? On the face of it, the answer would be in the affirmative for PBEL City owing to two reasons: the construction quality and meeting delivery timelines. Incor has followed a principle of delivering a home, once it is truly complete in all respects. This works well for customers as well, who would prefer a completed home, considering both the comfort and the safety aspects.

During my visit, I could see that tower F (named Crystal) is nearly complete, with work on the interiors on at full swing. Incor aims to provide possession of the same within a 6-month time frame. The pace of construction of Tower H (named Turquoise) is encouraging and seems to be well on the way to meet its delivery target of 2018. Incor has just announced the pre-launch of its newest tower J (named Amethyst), which will come up next to the clubhouse and swimming pool.

PBEL City project near APPA Junction in Hyderabad
An apartment block under construction in PBEL City

PBEL City: More and better conveniences

Hyderabad has been one of the pioneers of the Indian IT industry, whose techies form the major clientele of PBEL City. This discerning, tech-savvy class of home buyers has a strong need for comfort and convenience for their daily needs and it’s essential that the gated community they reside in is, by and large, self-sufficient in this respect. The planning and execution of PBEL City show how the residents’ needs have been kept at the forefront, with conveniences keeping pace with the buildings coming up and the residents moving in.

Among the stand out features of PBEL City is its large Sewage Treatment Plant (STP), said to be the largest of any residential society in Hyderabad. The treated water is used to maintain the gardens and for other purposes including flushing.

Adding to this is the laundry unit provided by Incor in the complex’s basement, which is currently seeing capacity expansion to address this major need of residents. Incor also has provided an onsite office to help residents in paying bills, arranging for transport facilities for themselves or their guests and other such services, generally provided by a hotel concierge.

PBEL City: Club House and Swimming Pool

The clubhouse of PBEL City is called ‘The Square’, which describes exactly how it will be laid out. Comprising of four blocks each of 10,000 square feet in area (making for a total of 40,000 square feet), the Square, once complete, will be the nerve center of this complex. As of now, two blocks are already up and functional.

Yoga and Zumba room in PBEL City project near APPA Junction, Hyderabad
The newly opened Yoga and Zumba room in the clubhouse of PBEL City

We have already covered the large spacious gymnasium in an earlier article. Alongside it now, is a Yoga and Zumba room as well. However, what really caught my eye was the spacious air-conditioned salon catering to both genders as well as the in-house spa.

The saloon in the clubhouse of PBEL City project near APPA Junction, Hyderabad
The saloon in the clubhouse of PBEL City

The swimming pool is often among the most visited amenities in a gated community and PBEL City’s pool is ready for use. Located in the center of ‘The Square’, both the swimming pool and the kids’ pool looked inviting for a quick splash, probably a necessity in the hot weather the city is currently experiencing.

Swimming Pool in PBEL City project near APPA Junction, Hyderabad
The now complete swimming pool in PBEL City

Some of the amenities due to be housed in the under-construction blocks of the clubhouse, have already been provided for residents of PBEL City, such as a day care center and a supermarket for their grocery shopping. These are currently housed at a separate location within the complex and will be moved as soon as the rest of the blocks of ‘The Square’ are completed.

PBEL City: Miscellaneous updates

Construction work has begun on the new ramp for PBEL City, which will subsequently be used for exit only. Incor continues to host community celebrations of major festivals such as Navratri, New Year and other occasions to get residents to form greater social bonds with each other. PBEL City attracts prospective owners as a beacon, with around 250 families having moved here in the last one year alone, taking the number to over 950 occupied homes.

Conclusion

PBEL City is clearly progressing well on all fronts and 950+ families residing here are an attestation of the same. By providing residents convenience, quality homes, safety and the benefit of being located close to their workplaces, this gated community is thriving in west Hyderabad. With more amenities on the horizon and many interested home buyers waiting in the wings, PBEL City could well emerge as a standout destination near TSPA (APPA) Junction and the Outer Ring Road (ORR).

Read more about the project on the developer’s website.

INCOR One City, Kukatpally – Getting off the ground

Incor One City project in Kukatpally, Hyderabad

The city of the Nizams, Hyderabad, is today synonymous with India’s burgeoning IT revolution, which attracts tens of thousands to the city, looking for work. Hitec City and Gachibowli in the western part of the city have emerged as key IT hotspots and have fostered massive infrastructural development in and around them. Unsurprisingly, both residential and commercial real estate projects are coming up with regularity to meet the ever-increasing demand. INCOR, among the most reputable builders in the city, are coming up with their project, One City, in Kukatpally to cater to this segment.

One City is an ambitious project, comprising residential, recreational and commercial spaces. Located in close proximity to the aforementioned IT hubs, the last few months have seen this new project find its feet (literally and figuratively) and start growing upwards. I recently visited the site of One City to get an idea of the progress of the project as well as how would it look, once complete. In this article, I would like to summarize what I had found.

INCOR One City: Construction Updates

It’s been less than a year since the launch of One City in April 2016, but the buzz around the project is unmistakable. INCOR, as can be evinced from their project PBEL City near TSPA (APPA) Junction, has built a strong reputation for project quality and this remains the key focus of One City. For this project, the builder has tied up with some of the top names in the business. Following a tendering process, Tata Projects has been entrusted with project construction around May 2016. One City boasts of architecture by Edifice, design by Semac Consultants, while for landscaping, FHD Group has assisted.

In this relatively short period of time, the construction has begun well and at the time of my visit, was in full swing. The residential area is planned to comprise of 5 towers, of which towers A and B are currently under construction. For both towers, the foundation is in place and the first two levels of the basement, the podium level and three levels of apartments have been constructed. While events such as the heavy monsoon rains in late September 2016 in Hyderabad and the demonetization of high value currency notes may have acted as dampeners, however, these have been successfully overcome and the project is well on the way to meet its first phase target of December 2018. In fact, encouraged by the response to the first two towers, INCOR has just announced the pre-launch of Tower C of the project.

Incor One City project in Kukatpally, Hyderabad
Site photograph of the construction taking place at INCOR One City

INCOR One City: Apartment Towers Overview

During my visit, I interacted with the onsite team to get an idea of the layout of the towers coming up. Each of the two towers under construction (A and B) as well as C (which is being pre-launched) will comprise of both 2 and 3 BHK homes, built as per the needs of the techies and professionals, who are the main target customer segment of this project.

Towers A and C will comprise 10 apartments per level, while tower B will have 9 apartments per level. In all of these towers, the four corner apartments will each be of 3 BHK configuration. The difference between towers A and C on one hand and tower B on the other lies in the middle apartments: tower B will have 5 (2 units of 3 BHK and 3 units of 2 BHK), while towers A and C will have 6 (comprising 1 additional 2 BHK apartment). In fact, towers A and C can be considered mirror images of each other.

Incor One City project in Kukatpally, Hyderabad
Sales Office at the site of INCOR One City

Another point of difference is the unit size of the 3 BHK apartments, with the ones in tower B being larger (saleable area ranging from 1782 – 1931 sq. ft.) due to an additional terrace deck, as compared to those in towers A and C (saleable area of 1592 – 1740 sq. ft.). The 2 BHK units across all towers have roughly similar sizes (1208 – 1442 sq. ft.). Regardless of apartment size and configuration, residents will get numerous facilities in their homes, such as top quality branded fittings, 100% power backup, Wi-Fi and DTH connections by reputed service providers, allowing for a comfortable lifestyle.

INCOR One City: Infrastructural Developments

When choosing a place to live in, a home buyer does not only take into account the project itself, but also would evaluate its surroundings and the available social infrastructure, before coming to a decision. Hence, a mention must be made of the area around the site around One City as well.

The project has good public transport connectivity, being within 1 km from the Hitec City railway station on Hyderabad’s suburban MMTS network. A major game-changer will be the Hyderabad Metro project, which is inching closer to completion and is expected to commence operations soon. One City is located near two lines/corridors of the Hyderabad Metro. With JNTU and Shilparamam stations within 3-4 kms, it promises to sharply reduce travel time to other parts of the city. The improved connectivity is likely to see the property prices of One City appreciate significantly in the near future, offering a good opportunity for a discerning investor or end user.

With major malls such as Forum Sujana Mall and Manjeera Mall located close by as well as supermarkets such as D-Mart, Hyper City, Spar, Metro and More, options are aplenty for prospective One City residents. Also, top quality schools such as Meridian School, Daffodils Public School, Bubbles Play School, Bachpan Play as well as higher educational institutions such as JNTU, NIFT are all located near One City, offering a wealth of opportunities for the residents’ children.

Conclusion

INCOR One City is considered to be among the flagship projects of INCOR and by all indications, has begun strongly. With the design and construction being carried out by well-regarded names in the sector, the developer’s delivery track record and the ever improving social infrastructure in and around the project are very encouraging signs for a prospective home buyer, who is looking for on-time, quality delivery of their dream home.

Read more about the project on the developer’s website.

Conversations with INCOR Group – What Does RERA Act Mean For Home Buyer – Part 2

Continuing our ‘Conversations with INCOR Group’ series, this is the second part of the questions a prospective real estate customer may have regarding the Real Estate (Regulations and Development) Act, 2016.

Q7. I am planning to purchase an apartment in Phase 3 of a project, of which Phase 1 is complete and Phase 2 is underway. Do the original plans and timelines submitted by the developer hold true for Phase 3?

A. It depends on whether the developer registered the entire property at one go with the Real Estate Regulatory Authority (RERA) or is registering phase wise. In case of the former, the developer cannot change his original plans and/or timelines for Phase 3 without consent of 2/3rd customers of this phase, as well as RERA’s approval.

However, it is most likely that developers will go in for the latter approach, wherein they shall register each phase separately with RERA as a new project. Doing so provides the developers flexibility as well as a hedge against any unforeseen situations at the time of beginning a major multi-phase project, often spanning multiple years. Though this increases the cost of compliance for a developer, its benefits to them outweigh this increase in cost. Large, integrated townships too are likely to see its developers take the same approach.

Q8. The developer, from whom I purchased my unit, has sold it to another developer, with plenty of work still remaining to be done on the project. As a customer, what are my rights?

A. The Act has considered such a scenario where the developer is unable to complete the project and sells it to another developer or consortium midway. Post the Act, the developer cannot take such a decision, without the consent of at least 2/3rd of the project’s customers as well as approval from RERA. Again, should a customer own multiple units, he/she would be considered as a single customer only and will not have any additional voice compared to a single unit owner. The new developer would inherit all the rights, responsibilities and timelines mentioned in the agreement by the original developer and would need to register accordingly with RERA.

Q9. I am planning to purchase an apartment in an upcoming project. I am, however, apprehensive about the quality of construction of the apartment and do not wish to pay for major repairs 2-3 years down the line due to poor quality. Is there any recourse for me?

A. A major feature of the Act is the formulation of a defect liability clause, which states that the developers of all projects covered under RERA are liable for fixing any issues related to the construction of their project for a 5 year period, post-handover. This is good news for both customers and developers. Customers get an assurance that developers will use good quality materials and techniques for construction, hence, ensuring they won’t have to spend a fortune later on for repairs. For developers, this can serve as a key differentiator, helping them attract more customers while driving unscrupulous players out at the same time.

It is likely that apartment prices will increase, as a result of this clause. Customers should look at this increase as an insurance or warranty payment being made to keep their home looking as great as it was when they took possession.

Q10. I am considering purchasing an apartment in an under-construction project in Hyderabad, while my cousin is planning to make a purchase in an upcoming project in Bangalore. Does the same Act and its provisions apply to both our properties?

A. No. Real estate is a state subject under the Constitution and each state will have to, based on its own needs and circumstances, come out with their own version of the central Act. It’s this state version, which will be applicable to all projects within the state’s boundaries. Similarly, the Union Territories of Delhi and Puducherry, which have their own state governments, also need to come out with their own version of the Act, while the remaining Union Territories have to adhere to the central Act.

The central Act lays down a set of guidelines, which states are free to modify. At the same time, the state governments are expected to adhere to the broad essence of the central Act and not tinker with the same. However, one needs to wait for the states to come up with their Acts to assess the impact of the same.

Q11. I am planning to sell my apartment to another buyer. Will the Act apply to this resale transaction and if so, must I too quote the carpet area of the apartment?

A. The secondary (resale) market is out of scope of the Act, which primarily deals with transactions between developers and customers. At the same time, the implications of the Act are far-reaching, prescribing changes to certain existing practices in the sector. Keeping in mind that post-implementation of the Act, all primary transactions are to be sold on the basis of the carpet area, it is quite likely that resale transactions will follow the same practice.

Q12. While purchasing an apartment, the developer has, apart from the basic sales price of the apartment itself, separately charged me for the amenities provided such as the parking, clubhouse etc. which all adds up to the final overall cost for me. Does the Act have any stipulation in this regard?

A. The Act is silent on how such infrastructure facilities (both internal and external) should be charged by the builder. The Act only mentions that the Basic Sales Price (BSP) shall be based on the Carpet Area, instead of the Saleable Area. Hence, one can assume that the infrastructure charges will continue to be part of the overall project cost to be paid by the customer, rather than the BSP. However, one must wait for the respective state’s version of the Act, before coming to a definitive conclusion on this point.

Conclusion

This is a good time to be a home buyer. The Real Estate (Regulations and Development) Act has come up with a number of provisions, which benefit both customers and reputed developers and along with demonetization, should push the fly by night operators out of business. Add to this, the recent reduction in home loan rates by major banks and housing finance companies offers a great financial incentive for home buyers.

Considering the increasing demand for quality housing, the upcoming implementation of the Goods and Services Tax (GST) on 1st July 2017 and the inflation in the economy, home prices are likely to rise in the near future. For a home buyer, this is as good an opportunity as any to go in for their dream home, which they will get with an assurance of quality and at a good rate, provided the right opportunity presents itself.

INCOR Bonsai Homes – Affordable and practical housing in Tellapur

View of Incor Bonsai Homes project complex in Tellapur, Hyderabad

The area of Tellapur in Hyderabad has been in the news time and again. That too for all the right reasons. Once a new kid on the block, Tellapur is now developed enough to take on the areas like Gachibowli, Madhapur and the upcoming Kondapur head on. one will find some of the reputed Hyderabad based developers constructing residential complexes which one can call home in the future. One such project is INCOR Bonsai Homes.

INCOR  is one of the established brands in Hyderabad. After the success of PBEL City, Hyderabadis trust INCOR as a brand and appreciate the professional manner in which the project is executed. Taking advantage of Tellapur’s location, INCOR has set up an apartment complex called Bonsai Homes on the Tellapur road.

INCOR Bonsai Homes: Location & Connectivity

A key factor working to Tellapur’s advantage is the ease of access to Gachibowli (IT and educational hub of Hyderabad) and BHEL (Industrial area), a unique selling point not provided by many other areas in Hyderabad. A little research shows that this land contains a top soil with hard rock located further at the bottom compared to areas like Madhapur and Kondapur. What this means is the water table here is healthier than its counter parts and will be an added advantage during Hyderabad’s harsh summer months and water shortages.

Road leading from Gachibowli to Incor Bonsai Homes project in Tellapur, Hyderabad
Road leading from Gachibowli to INCOR Bonsai Homes

The best way to reach INCOR Bonsai Homes is to take the scenic road from Gachibowli towards Lingampally (trust me its a lovely drive when the traffic is less), go all the way till you hit the first chowrasta and take a left there. Then drive go onto the massive flyover and turn left at the “T” and then take the first right after coming down the flyover. INCOR Bonsai Homes, will come into view on the right, after travelling 5 more mins. The area is green and the air is fresher compared to that of the more populated areas.

INCOR Bonsai Homes: Project Overview

View of Incor Bonsai Homes as one enters the project complex in Tellapur, Hyderabad
View of INCOR Bonsai Homes as one enters the complex

This is a gated community of 215 apartments, distributed across 4 towers (5 floors each) and comprising of 1, 2 & 3 BHK flats ranging from 633 sq. ft. (smallest 1 BHK) to 1850 sq. ft. (largest 3 BHK). With the current base rate of Rs. 3400 / sq. ft. brings the price of purchase to around Rs. 21 Lakhs for the smallest 1 BHK to Rs. 62.9 Lakhs for the largest 3 BHK. These rates are still lower as compared to similar communities located in Madhapur and Kondapur. All the construction is complete, project is handed over to the society and many of the residents have already settled in.

INCOR Bonsai Homes: Amenities Overview

INCOR Bonsai Homes provides various amenities, which are generally only seen in massive gated communities. Some of these are as follows:

  1. Vastu Compliant – The flats are designed considering vastu and most are East of West facing flats, that have plenty of natural sunlight and ventilation.
  2. Piped gas connection – This is the first I have seen in 5 years of researching real estate projects in Hyderabad.
  3. Lovely clubhouse and a gym, swimming pool, toddler’s pool and outdoor games area.
  4. Solar fencing and power backup
  5. Jogging track for the health conscious
View of the Club house at Incor Bonsai Homes project in Tellapur, Hyderabad
View of the Club house at INCOR Bonsai Homes

Conclusion

A walk around the complex of Incor Bonsai Homes in Tellapur, Hyderabad
Incor Bonsai Homes – Walk around the complex

The first impression of INCOR Bonsai Homes, is that of a well maintained gated community and a strong positive vibration of the complex and its surroundings is impossible to miss (for those who believe in it). Walk around inside and one can find a clean, nice and looked after gated community, with many of the inhabitants being from the young and vibrant IT/ITES crowd. The swimming pool was clean and inviting and since some of the residents were enjoying their Sunday morning dip in the pool I didn’t disturb their holiday by taking pics. My wife who accompanied me on this trip defined the complex as a “cute place to live”. Where she has seen cuteness, I found the practicality and comfort of INCOR Bonsai Homes hard to resist.

Conversations with INCOR Group – What Does RERA Mean For Home Buyer

RERA Act 2016

Heightening the anticipation of many (for most of the later part of 2016), were the two processes of India’s biggest Tax Reform, GST, and the Demonetization Drive (announced by the Hon. Prime Minister on the 8th of November, 2016). This anticipation has led to a lot of talk about their impact on the Real Estate Sector (a major driver and important contributor to the economic growth of the country). However, another major law that will have a far greater impact, than the two above, on all concerned is the Real Estate (Regulations and Development) Act, 2016 (also called the RERA Act).

This Act, promulgated by the central Government, which all States and UT’s will have to roll-out in the immediate future, envisages setting out clear roles and responsibilities of all players (developers, customers, government, agents etc.) and a mechanism to keep track of real estate projects. It mandates the setting up of a Real Estate Regulatory Authority (RERA), something like TRAI, which will have powers to regulate the sector and improve its functioning from time-to-time as per prevailing conditions.

However, as a home buyer, what does this Act mean for you in specific and the industry in generic? Here are some pointers in a Question Answer format:

Q1. I am planning to purchase an apartment in a project, which is currently under construction and likely to be completed in a year or so. Will my project be covered under this Act, as it was initiated before the Act?

Yes, all ongoing and new projects at the time that the Real Estate Regulatory Authority (RERA) is installed, will need to register with the said Authority RERA and follow all provisions mentioned thereof. This applies to both residential as well as commercial projects.

In case your project has already received its completion certificate (CC) from the local authorities certifying that the constructed project meets the approved plans as submitted with them prior to implementation of the RERA Act by the state/Union territory government where the project is located, no registration is required with the Authority and the project will be out of the purview of the Act. The same also applies if your project has been granted the Occupancy Certificate (OC) prior to the Authority getting set up, as the OC is given only after the CC.

Real estate (Image credit: The Indian Express)
Real estate (Image credit: The Indian Express)

An important point to be considered is that different states may have different conditions with regards to project coverage under RERA, but in general, the state RERA will be expected to, by and large, keep the essence of the central Act. The states of Uttar Pradesh, Madhya Pradesh and Karnataka have already implemented their own RERA, but while the latter two states have by and large, no conflict with this provision of the Central law, the states of Uttar Pradesh and Gujarat (draft version) have sought to exclude certain ongoing projects from the purview of the Act.

Q2. I own an apartment and am looking to give it out on rent. Do I come under the Act?

No, rentals are outside the purview of the Act.

Q3. A developer is offering good incentives to buyers in the Pre-launch and soft launch phases of his project. Should I go in for the same?

As a concept, a “Pre-Launch” of any project offers a Developer a platform to raise needed funds for kick starting a project, helps in cash-flow and also acts as a gauge to the demand for the project enabling more realistic projections in/of the future. Now, a Developer will have to raise funds from other sources, often at a higher cost, in the absence of these funds from Pre-sales.

However, Developers will have to first secure all approvals and register the project with RERA before any kind of launch, thus bringing down the associated risk factor for a home buyer. It’s likely that the higher cost of capital (raising funds) for Developers could reflect on the price buyers pay for their home later.

Q4. The Act mentions that 70% of the amount collected by the developer from home buyers (like me) are to be deposited in an escrow account. What does this mean for me?

While this practice (utilization of an escrow account) has slowly picked up (and most reliable developers are doing this voluntarily now), RERA requires that the developer deposits a sizable amount (70%) of the amount he receives from customers into an escrow account for greater transparency where funds being used for which they are collected, i.e. construction of the project.

real-estate-regulationQ5. The developer promised me possession by a certain date, but a year on, I am yet to receive it. What does the Act have for me?

Developers will submit project timelines as agreed between the buyers and themselves to RERA and both parties are expected to adhere to their part of the agreement. This means that the Developer needs to compensate the buyer, as per the AOS, in case of delays and at the same time, the buyer will need to pay penalty for delayed payments (as per the agreed Payment Schedule and/or as mentioned in the AOS) from their side too. Hence, this Act ensures transparency and fixes responsibility of both parties in a real estate transaction.

Q6. Can I check the plans, approvals, timelines etc. for my project and get updates on the actual progress of work on site from the developer?

RERA will operate a web-portal, where any viewer can check all details related to a project, including the plans, approvals, timelines, names of contractors, number of units and also disclosure about all areas (including common areas, carpet area and others) etc. Developers will also need to share regular updates on the progress of the project for greater transparency. It is the responsibility of a home buyer to do their due diligence on the project via the portal, so that they are assured of the developer’s credentials and the project’s adherence to quality and time standards.