Is Neemrana an investment opportunity?

It has been proposed that Neemrana, Shahjahanpur and Bahrod be included as three sub-metropolitan cities in the National Capital Region (NCR). Surprised?

Not all deserve enough to be included in the Delhi-NCR and hence, there would be strong rationale for that. Here, we will discuss what has led to this being proposed. Our analysis is for the perspective of the retail real estate investor, hoping to make decent returns over a tenure, with some odds in his favour.

In the current recessionary scenario where property prices are heading towards the downward spiral across cities, everyone is scouting for the best option to invest in the real estate space. In this scenario, there are two aspects that a real estate investor should keep in mind – ‘the price point of entry’ and ‘location & type of property‘.

Gurgaon in the Delhi-NCR space has always been on a real estate investment destination map. However, lately with the rising real estate prices and recessionary environment it may no longer be an ideal investment option available or even qualify for being in the first three choices for real estate investments. Amid such a scenario, a real estate investor has to take an objective and long term view of the real estate investment.

From an investment perspective, it is better to identify satellite towns or cities that are coming up around Delhi-NCR with promising prospects. We have heard about the Gurgaon-Manesar-Bhiwadi-Neemrana-Jaipur belt being developed. These satellite cities/towns can be seen as the Dwarka-Gurgaon Expressway of yesteryears, providing an ideal price point of entry. Here, I would cover Neemrana, the least heard about as an investment destination.

Till a couple of years back, Neemrana was known as the tourist destination only with Neemrana Fort attracting foreign and domestic tourists. However, change in the state government policies with respect to setting up of businesses and attracting foreign companies to set up businesses, turned the tide for Neemrana. This was also because the place was marked by the government for setting up of business and supporting residential units, not to speak about necessary infrastructure support that will come up to support both of them.

Here, we are considering the DMIC (Delhi-Mumbai Industrial Corridor), wherein it has been decided to include Neemrana and Kushkheda, in the first phase, with development of industrial townships here on the lines of Noida, Faridabad and Gurgaon.

Rajat Dhar, managing partner, Cogent Advisory

‘The views expressed in this article are author’s own’. The article was published at magicbricks.com and can be accessed here.

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Pointers On Real Estate Bill Passed By Cabinet.

Finally, much awaited bill finds an approval with the Cabinet. It is beter late than never, wil real estate customer woes being over for now. Atleast, the process has been sent in motion.

The Union Cabinet approved the bill to set up a regulator for the real estate sector with provisions for jail term for the developer for putting out misleading advertisements about projects.

Here are 10 things you need to know about the bill:

The Real Estate (Regulation and Development), Bill 2013, seeks to make it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.
It also has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction.
 

The proposed legislation has certain tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of actual site. Failure to do so for the first time would attract a penalty which may be up to 10 percent of the project cost and a repeat offence could land the developer in jail. Moreover, any false advertising implies that buyers will get full refund of the money deposited with interest.
 

The bill also seeks to make it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for a particular project is not diverted elsewhere. According to a CNBC-TV18 report, developers have to keep aside 70 percent of the buyers’ funds in a separate bank account to ensure timely completion of projects. The buyers are entitled to full refund with interest in case of delay in projects.
 

The proposed legislation provides for clear definition of the ‘carpet area’ and would prohibit private developers from selling houses or flats on the basis of ambiguous ‘super area’.
 

Under the proposed new law, builders will be able to sell property only after getting all necessary clearances. Registrations of projects with the regulatory authority is a must. This means developers cannot offer any pre-launch sales without the regulatory approvals. Moreover the authority must approve or reject projects within 15 days.
 

Developers will also be barred from collecting any money from buyers before completing all necessary permits to start construction on the project.
 

Builders cannot take more than 10 percent of the advance from buyers without a written agreement.

The bill also seeks setting up of a real estate appellate tribunal for adjudicating disputes. The tribunal will be headed either by a sitting or a retired judge.

 
It also suggests setting up of a national advisory council to be headed by housing minister Ajay Maken to suggest ways to advise the regulator on crucial matters.

Now, much of the transparency will come into the system that was long due. 

We are following up and keeping track of developments. Stay connected for the updates.

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