Affluent Indians Seek a Home Abroad

What’s the worst kept secret in Mumbai’s real estate industry? Answer: Over two-thirds of the projects are delayed by at least six months. That has left behind irate buyers and developers struggling to find a way to pay for the increased cost of construction.

In city after city in India, this story plays itself out. Developers overcharge for projects, their construction quality is at best shoddy and they rarely deliver on time.

In the past, there was very little buyers could do. Projects often got sold out within days of being launched and developers knew they could get away with delays.

But a rise in income levels, coupled with increasing awareness about avenues for buying property overseas, has resulted in an increasing number of Indians buying a house outside the country. They’re buying everything from studio apartments and weekend homes to villas and chalets.

While traditional hotspots like London, Singapore and Dubai usually top the list, the more adventurous have bought space in beachfront developments in Muscat, Oman, and ranch-style houses outside Nairobi, Kenya.

In 2004, the Reserve Bank allowed Indians to invest abroad with an initial limit of $50,000, later raised to $200,000. In 2005, the first full year for which data is available, Indians invested $1.9 million in real estate overseas. Last year, the number had increased to $62.2 million.

Add to this outflows from companies that invest in real estate overseas. Diamond traders from Mumbai have bought houses in Macau, another diamond hub, for their personal use when they travel there on business. Another investment avenue is available through the corporate route. Companies with business subsidiaries abroad can invest in property that is then used for their business.

To be sure, the number of buyers investing overseas is still small, but large property consultants such as Jones Lang LaSalle, Cushman & Wakefield, CB Richard Ellis and Knight Frank say they receive at least a dozen enquiries a week asking for information on investing in property abroad. Knight Frank has set up a dedicated group headed by Mona Jalota to tap this business opportunity.

These buyers are not first timers feeling their way around the property market. They’re smart, well-travelled and have already done a great deal of research on the internet. Aged between 30 and 50, they’re on average making their third property investment. They already own the house they live in and a holiday home is a short drive from where they live. They’re either successful businessmen or entrepreneurs who run their own companies. And now they’re looking for a foreign address.

Sure, it’s as much for the ease and convenience of owning property abroad as it’s for the returns. Oh and don’t forget the snob value!

For a young IT professional in Bangalore, investing in a house in Singapore was as much about his business need as it was about taking his family there for short breaks. He’d just sold his company and needed some place to park the surplus cash.

At the same time, while working on the idea for this next venture, he travelled to Singapore 10-12 times a year. After a few visits, he decided this was an ideal place for short breaks for his wife and children and he ended up buying a two-room house in Singapore.

Or take the case of a middle-aged professional who invested in London, as her children went to college there. According to her, the London property market is one that is very organised. She could do most of the initial research over the internet. Data is easily available and government sites will tell you how much the last house in a particular apartment block sold for. Thereafter, one has to get in touch with any of the large property brokers, such as Foxtons and Winkworth, who charge sellers a flat 2 percent fee.

The first steps
Perhaps the first question a would-be buyer needs to answer is: How am I going to fund my purchase? In the case of property in India, the answer is twofold: Personal savings or a loan.

When investing abroad, the loan option goes out of the window. Banks in India do not lend for property abroad. Likewise, banks abroad do not lend for property in their country unless one is a citizen or has assets there. So, a bank in the UK will only lend for property in London if the buyer has assets in that country. This means that the vast majority of foreign real estate transactions take place through personal savings, says Pranay Vakil, former chairman of Knight Frank India.

But don’t bother saving too much for that dream house abroad, as Indians are allowed to invest a maximum of $200,000 a year abroad. That means a husband and wife can invest $400,000 abroad, but buying million-dollar properties in central London or penthouses in Singapore and Dubai remain out of reach.

It’s here that a good property agent can help. For instance, you can invest in your children’s name to increase the limit. Or two brothers can partner and buy a house together.

Builders fall in line, now sell flats based on carpet area

After years of dilly-dallying, many builders have started quoting prices of apartments on the basis of carpet area, instead of the super built-up area, which had become the norm. Though this has not resulted in price reduction, the move has been welcomed by buyers as they will now pay for the actual area of their property.

Take the case of Bombay Realty, which is quoting Rs38,000 per square feet for its project, Island City Centre, at Naiguam.

“We have to make more efforts to sell the apartments as our price seems to be high. We explain our rates by comparing them with those of competitors, and convince buyers by informing them that we are selling on carpet area,” said Durgesh Mehta, chief executive officer, Bombay Realty. Mehta says that such a move enhances the reputation of the builder as it ensures transparency.

Despite the state government’s diktat, builders have been flouting the rule of selling flats on carpet area.

They have been charging on super built-up area, which also includes the common areas like staircases and common open spaces. The problem arose as builders started calculating common areas on whim, which ranged from 33% to 50% more space.

Hiranandani Builders offers a price chart detailing both the carpet as well as the super built-up area, along with the rates for both. Its Lavina project at Ghodbunder Road in Thane is being sold at Rs13,768 per square feet for the 421-square-feet carpet area, while it is Rs9,200 for the 630-square-feet super built-up area.

Other builders quoting on carpet area include United Infra, which has priced its product at Rs45,000 per square on carpet for its Khar project which has apartments from 800 square feet onwards. Manchester Builder is selling at Rs55,000 per square feet for houses from 700 square feet onwards at Khar.

“The best thing about carpet area is that buyers know exactly how much space they will get as every builder used to have his own calculations, and buyers would feel cheated many times,” said Vibhoo Mehra, CEO, Mumbai Properties, a real estate consultancy firm.

However, many feel just charging on carpet will not work until prices drop.

“This is a good move, but it hardly makes a difference as builders recover the money anyway. The need of the hour is to reduce the price and make flats affordable,” said real estate expert Ajay Chaturvedi.

DLF may sell Rs.5,000 cr non-core assets by March

Bangalore: DLF Ltd, India’s largest property developer by market value, expects to sell Rs.5,000 crore of non-core assets by March, having already sold Rs.3,129 crore’s worth.

The firm is in advanced talks to sell its Aman Resorts project, it said in an investor presentation. The firm’s other major transaction, to sell its wind energy business, has the approval of shareholders, and will be closed by March along with some other sale of assets worth Rs.500 crore, it said.

The Gurgaon-based developer, which announced September quarter results on Monday, posted a 62.9% annual drop in net profit to Rs.139 crore. Revenue fell 19.5% to Rs.2,039 crore.

In the September quarter, DLF closed a significant deal with Mumbai-based Lodha Developers Ltd, selling a prime defunct textile mill land for Rs.2,727 crore. The land was bought by DLF’s subsidiary Jwala Real Estate Pvt. Ltd in a 2005 auction by National Textile Corp. Ltd.

The sale of the hospitality business at Aman Resorts and the wind energy business will together bring in Rs.2,600-2,700 crore. The proceeds from the sale of the non-core assets will be used primarily to repay debt.

DLF’s net debt stood at Rs.23,220 crore on 30 September. The realtor said it will achieve the target of reducing its debt to Rs.18,500 crore by 31 March.

DLF’s divestment plan is of great importance to the company to reduce debt, said Param Desai, senior research analyst at Nirmal Bang Securities Ltd, a brokerage. “However, this also has to be complemented by launching more projects,” Desai said.

Summing up how much the company has achieved by changing its strategy since the global downturn of 2008-09, DLF said in the investor presentation that it has managed to revise its business model, consolidate businesses and operations, and outsource certain key operations to domain experts.

On returning to its core business and selling non-core assets and re-designing of balance sheet and reducing net debt, it is proceeding as per plan, the company said.

Property analysts said DLF’s project launches are typically skewed towards the latter half of the year.

After a rather slow spate of launches this year, DLF plans to launch 9-10 million sq. ft of projects in the next six months.

The projects are spread across price segments, including 8.5 million sq. ft of premium housing in Gurgaon and 1 million sq. ft each of group housing in Bangalore and sale of plots in Lucknow.

In an earnings call with analysts, DLF’s management indicated a positive guidance on sales, expecting to garner around Rs.3,500 crore from the new projects to be launched in Gurgaon alone, real estate experts said.

DLF bars the media from participating in the earnings call.

“We are bullish about DLF’s guidance, and if what is being promised is delivered, then the company would be operationally strong,” said Sandipan Pal, associate vice-president at brokerage Motilal Oswal Securities Ltd.

Ikea’s consumer challenge in India

If news reports are to be believed, next week the Foreign Investment Promotion Board (FIPB) is likely to clear Swedish furniture maker Ikea’s application to invest €1.5 billion (over Rs.10,000 crore) in opening stores in India. Ikea, the popular chain selling furniture and all things needed to set up a home, is entering the country through the 100% foreign direct investment route allowed in single-brand retail.

Over the years, the privately held furniture chain present in several countries in Europe, North America, the Asia Pacific, West Asia and the Caribbean has consumed a lot of ink and newsprint in the Indian media rife with speculation on its plans. FT.com recently said that the retailer is keen to become the “world’s biggest furniture retailer by increasing the number of stores by 50% by the end of the decade and almost doubling its sales and customer numbers.” Back in India, news on the multinational company’s recruitment activities, vendor negotiations and CSR (corporate social responsibility) initiatives supporting United Nations Development Programme projects is trickling in.

Yet, those familiar with the Ikea systems say that the much-awaited brand may need to tweak its ways for this market. For a start, even the shopping experience at the do-it-yourself furniture store is one of its kind. There is little human assistance and it is arrows and glow signs all around that help you navigate the byzantine multi-storey shopping arena. The good news is that you can touch, feel and explore the furniture and related accessories required for every room, nook or corner of the house.

How this format will match up to the genuflection that the Indian consumers expect from shop assistants remains to be seen. At the end of your shopping spree that entails pushing pushcarts through long corridors, you are left alone to package your own stuff and carry it to the car. There is wrapping paper, tape and a pair of scissors to pack your delicate glassware, for instance. The flat-pack furniture, fortunately, comes in cardboard boxes. Indians are used to their large shopping bags being reached to their cars by helpful shop assistants. Even the furniture makers home deliver beds, book cases and sofas.

The other worry is the lack of self-regulation or sense of discipline among Indian consumers, especially those who go shopping with little children. The scale of the shopping space, in case Ikea plans to replicate its model in India, could be a quiet consumer’s worst nightmare come true with rowdy children jumping over display furniture and running across corridors. Recall any one of your painful train journeys, flights or theatre experiences to get the drift. Hope the retailer will ensure a safe and peaceful shopping experience for its customers with the help of support staff who will enforce order.

Last but not the least the furniture itself may need to be re-worked to suit Indian tastes. Ikea creates clean, functional designs. Although Indians are used to heavy teakwood furniture with intricate design, retail experts claim that that may be changing. What hasn’t changed still, however, are the cleaning habits of Indian households.

Unlike in Europe where houses are vacuum-cleaned once a week, obsessive Indian households move, shift and even lift furniture daily to sweep and mop their floors. Clearly Ikea needs sturdy furniture that can withstand such daily onslaught.

B Narayanaswamy, consumer insight expert and a consultant with Ipsos Research, agrees that Indians like being served and find sales staff in stores abroad a bit stiff. But he says that there may be pent-up demand for a brand like Ikea. Besides, consumer behaviour at a branded store versus an unbranded retail store may not be hugely different. And that behaviour is improving.

The former chief executive of an apparel retail chain that sells a clutch of foreign brands does not agree that Indians make for badly behaved consumers. Shoppers at the modern retail outlets show that people now enjoy doing their own thing and are not looking to be served. “I have seen consumers with old money in Bangalore push their own carts in malls. Besides, isn’t the Delhi Metro proof that we are better behaved as consumers? The Indian consumer has evolved. We are ready for all kinds of brands and formats,” he concludes.

Wal-Mart Bharti Enterprises Retail Foreign exchange India launches probe against Wal-Mart: source

New Delhi: Indian authorities are investigating allegations that Wal-Mart Stores Inc. violated foreign exchange rules when it invested $100 million into a domestic unit owned by its wholesale joint-venture partner, Bharti Enterprises Pvt. Ltd, a senior law enforcement official told Reuters on Friday.

The decision to probe Wal-Mart comes after an Indian lawmaker wrote to the prime minister earlier this year, raising allegations of potential violations of investment rules, and the complaint was subsequently passed from one government department to another.

“Yes, the Enforcement Directorate has initiated an investigation into the allegations against Wal-Mart,” said the official, who declined to be named.

“The probe is at an early stage and therefore (it is) difficult to say what the outcome will be.”

Wal-Mart has denied the allegations since they first surfaced last month.

“We are in compliance with India’s FDI (foreign direct investment) laws. All procedures and processes have been duly followed and details filed with relevant Indian government authorities, including the Reserve Bank of India (RBI),” a Wal-Mart spokesman said.

“The central government has sought certain information and clarification, which has been provided by us. We are not in a position to offer further comments as the matter is before the courts.”

The lawmaker accused Wal-Mart of “clandestinely and illegally” investing $100 million in the multi-brand retail business of its wholesale joint venture partner, Bharti Enterprises, as early as 2010, before India allowed foreign companies to operate front-end stores. Reuters

‘Re depreciation spurring NRI investment in property’

The decline in the value of the rupee over the last one year is luring NRIs living in the UAE to buy property in India even if the price stretched up to Rs 1 crore or more, according to a survey.

According to the survey conducted here by Sumansa Exhibitions who are organisers of the Indian Property Show, 89 per cent of NRIs (non-resident Indians) in the UAE are planning to leverage the power of their additional income by investing in properties worth up to Rs 1 crore and beyond.

The weakening rupee gives more power to dirham currency that they have and the current sluggish market enables them to buy properties at a cheaper rate in India, it said.

It added that 26.7 per cent NRIs are looking to buy properties as additional investment, a sharp rise of 6 per cent in one year.

NRIs in the UAE mostly prefer investing in property as it is one of the safest options and gives good return as the capital value of any property appreciates, Sumansa Exhibition CEO Sunil Jaiswal said.

“Plus, there is always a feeling of returning home since NRIs don’t get citizenship in this region, so property investment becomes a natural choice. We can support this further as the survey also reveals that Mumbai, Bengalore and Delhi feature in the list of top five destinations,” he said.

This shows that they are looking for cities which will give them good returns, he said. “Even if the NRI takes a home loan, his payouts are much cheaper as compared to last year. Hence, overall, investing in this sector when the rupee is low makes sense,” Jaiswal added.

Honey Katiyal, CEO of the Dubai-based Indian real estate consultancy Investors Clinic, said over the last year, his company has witnessed demand for properties which are higher in value as NRIs want to cash in on this situation and invest more to get better returns in future.

The trend is to invest in additional property in metro cities and enjoy capital appreciation in four-five years’ time, he added.

A representative of Indiabulls said with the rupee depreciating in the past couple of years, there has been a good amount of remittance going back to India.

Additionally, bank deposits have also started yielding good returns making that a good investment alternative.

“However properties continue to be a preferred choice for expat Indians for investment and asset creation. What they look for is a good brand to invest in and a price point which is good to enter. For NRIs, a reputed developer with good track record, quality and possible price appreciation is an important factor,” he said.

Xander to buy 35 per cent stake in Indiabulls Realty for Rs 1000 crore

The real estate private equity arm of global investment firm Xander Group is close to acquiring a 35% stake in a unit of India BullsReal estate BSE-3.97% for 1,000 crore, according to a person involved in the deal.

Indiabulls Infra Estate owns two land parcels in Mumbai’s Worli area. It had bought 8.37 acre of land that used to house Bharat Mills for 1,580 crore and 2.39 acre of Poddar Mill’s land for 474 crore in an e-auction of National Textile Corporation in 2010.

The term sheet for the deal has been signed and the deal is expected to close in the next two weeks, the person quoted above said. Spokesmen for both Indiabulls and Xander said they do not respond to market speculation.

Indiabulls recently launched a high-rise residential project called Blu on the combined 10.76-acre land parcel in central Mumbai, one of the largest plots to be developed in the area. Apartments in the project, spread over 1,480-2,940 square feet, are priced between 7 crore and 15 crore. Apartments in Worli range between 40,000 per sq ft and Rs 50,000 per sq ft.

An IL&FS real estate fund had picked up a 10% stake in the same company for 200 crore in January this year. The current transaction is being done at a 35% premium to the price at which the lands were bought in two years, said the person involved.

Private equity funds have slowed down their investments in the real estate space in the last one year. According to a report by property advisory firm Cushman & Wakefield, the sector saw investments worth 3,500 crore between January and September this year against 4,110 crore a year ago.

While investments in commercial real estate have fallen drastically, some funds are continuing to invest in residential projects because home sales in certain parts are still doing well. The report pointed out that maximum private equity investment happened in the residential segment in India in the first three quarters of 2012. Mumbai was the preferred market for private equity investments followed by Bangalore and the National Capital Region.

IDF Takeoff may Ensure Steady Funds for Infrastructure Projects

Cash-strapped infrastructure projects may soon find reliable sources of long-term financing, with the finance ministry championing modifications in the investment norms for pension and provident funds to channelise their large cash inflows into infrastructure debt funds. Infrastructure debt funds or IDFs are the government’s big idea to provide long-term funds for India’s $1 trillion (about . 55 lakh crore) infrastructure development target over the next five years.

The finance ministry is working on ensuring a smooth take-off of IDFs, a senior official told ET, adding that the move has been prompted by the ministry’s plan to route pension and insurance savings into infrastructure projects at a time when banks and business houses have little room for fresh investments in the sector.

While the department of economic affairs is steering the changes in investment norms for provident funds, the department of financial services has asked the insurance regulator Irda to relax its restrictions on infrastructure investments by insurers. The finance ministry is in advanced talks with the labour ministry to allow provident funds (PFs) to invest in IDFs since retirement funds can act as a steady source of long-term, and more importantly, domestic funds. The labour ministry administers over . 5 lakh crore (nearly $100 billion) through the Employees’ Provident Fund Organisation, which manages the retirement savings of nearly 60 million formal sector workers. At least another Rs 2 lakh crore is estimated to be managed by gratuity, pension funds run by India Inc and the new pension scheme (NPS) run by the Pension Fund Regulatory and Development Authority (PFRDA). “We hope we will be on board for IDF investments,” said Sanjay Kumar, EPFO’s chief accounts officer and financial advisor. “Active negotiations are under way between the ministries of finance and labour to create a separate category for IDFs in our investment pattern,” he said, adding that a positive decision could be expected soon. Apart from creating a new window for infrastructure debt, the finance ministry is also trying to convince the labour ministry to raise the ceiling for PF investments in private sector bonds from 10% to 40%. The secretaries of the two ministries are expected to meet separately on this issue later this month.

The EPFO follows an investment pattern notified by the finance ministry in 2003. In 2005, the finance ministry issued a new pattern that allowed 5% equity investments, raising this ceiling to 15% in 2008. Similar relaxations were made in the corporate debt window from 10% of PF portfolios in 2003 to 40% in 2008. But verbal sparring between the two ministries over equity investments prevented progress on reforming the other components of PF portfolios. “The question now is – can we accept the 2008 (pattern) in parts, if our board of trustees is not ready to dabble in equities,” said Kumar.

He said the secretaries’ meeting would look to resolve the issue of utilising the modified window of 40% for private sector debt, without adopting the equity aspect of the 2008 pattern. Strict IRDA norms, which restrict life insurers’ investments in an infra firm’s debt to 20% of the investee firm’s net worth, prevent players such as the Life Insurance Corporation of India from funding infrastructure projects. IRDA also requires that such bonds must have a minimum credit rating of AA with tenure of over 10 years. “The IRDA norms really limit us, so funds are available but not getting channelled into infrastructure projects,” said Sadhana Dhamane, LIC’s chief of investments, pointing to the global norm of mandating insurance funds to invest in long-gestation infrastructure projects.

SUN-Apollo Questions Rustomjee’s Move to Partition Virar JV Plot

Private equity firm SUN-Apollo has questioned realty developer Rustomjee Group’s move to partition part of the over 217-acre project in Virar with its joint venture partner Evershine Builders “in haste”, intensifying the simmering tussle between them.
SUN and Rostomjee are locked in a legal tussle since the PE firm accused the realty firm of selling floor space index at its projects without the fund’s consent and not respecting the rights of investors. SUN has now questioned the developer’s intentions as the deal for nearly 3 million sq ft was concluded over the weekend in two days between an order of the CLB on October 12 and SUN’s further appeal on the same on the following Monday. Rustomjee Group is now seeking to sell its share of Virar land partition admeasuring 1.47 million sq ft for . 220 crore.
“Execution of this demarcation in haste seems to be aimed at allowing Evershine to be outside the scope of any court order that may be passed,” said Anand Desai, managing partner, DSK Legal that is representing SUN-Apollo. “Matters like this (the SUN-Rustomjee conflict) could affect investor sentiment and thereby foreign direct investment.”
But Rustomjee says the bifurcation is in the interest of all stakeholders, including SUN and Evershine Builders. It has invited SUN to be a signatory to an escrow account that will be maintained for
any monetary transaction on this land parcel. According to Rustomjee, the developer and Evershine are 50:50 joint venture partners in the Virar project. As part of the agreement, both are entitled to equal share from the project’s sales, after accounting for the infrastructure development charges.
“In furtherance to the original JV agreement, Rustomjee and Evershine have now demarcated their share of balance FSI (only about 3 million sq ft out of total about 9 million sq ft) in the Virar project. The infrastructure development and responsibility of the entire land is with the Rustomjee-Evershine joint venture, as per the original agreement,” a Rustomjee spokesman said in an email response to queries from ET.
According to Rustomjee, the demarcation defines the individual shareholding of balance available holding and does not negatively impact the economic right of Rustomjee in the Virar project in anyway. “The sale of FSI will be undertaken by the company as a part of its business plan, which has the approvals,” the Rustomjee spokesman said. In a related development, the Supreme Court on Thursday asked Rustomjee Group to intimate the investor SUN-Apollo if it wishes to sell any land parcel and development potential thereon at any of its projects. If SUN-Apollo gets a better offer price after Rustomjee’s notice on any bid for such sale, both parties will have to accept the higher bid, the court said in an interim order.
The SC will start hearing the case after four weeks, the time provided to both the parties to file their rejoinders.

Developer’s SC plea may put 18 city buildings under lens

 

Eighteen multistorey buildings in the western suburbs have come under cloud after the developer of a controversial Juhu building told the Supreme Court that, just like his 11-storey JVPD high-rise, these buildings too had plans with car parking decks on habitable floors.

Pappu Satra, the developer of the Juhu residential tower, was dragged to the Bombay high court for large-scale violations, including having car parking decks outside flats that allegedly could be later amalgamated into the flats’ carpet areas. Satra has spilled the beans to the SC on 18 allegedly similar projects in Mumbai’s western suburbs
to justify his case.

Satra’s JVPD Scheme project has become a test case for builders who build car parking slots adjoining apartments on higher floors. Civic activists allege that these slots are not really for parking, but are sold illegally at market rates and later surreptitiously amalgamated into the flat by the owner in connivance with the developer.

A legal battle has been on between Juhu’s Gulmohar Area Society’s Welfare Group and Satra’s Shravan Developers, and it has now reached the Supreme Court. Earlier this month, Satra’s Special Leave Petition presented the list of 18 buildings sanctioned by the BMC and which are located from Bandra to Jogeshwari.
PROBLEM BLUEPRINT

• Plan for 11-storey JVPD building draws flak as it includes nine car parking decks on each floor

• Activists say the parking space was sold at market rates and would be added to flats

• Total car deck area fetched builder an additional Rs 150cr

• Last year, the BMC ordered the demolition of certain portions of the tower, but HC said the BMC should have heard flat buyers first

• The builder has now told the Supreme Court that 18 other buildings are similar to his Juhu group wants BMC to probe 18 buildings

Last week, the Juhu residents’ group wrote to civic chief Sitaram Kunte asking him to verify the status of these 18 buildings and find out if the car parking areas on each floor had been misused. “The builder (Satra) has produced a list of proposals sanctioned by you (BMC) to support its case that the car parking space has not been included as usable area or to extend the flat. Kindly order an inquiry,” said the welfare group in its letter.

Residents said they have “reliable information that parking space in several of these buildings has been misused and included as the drawing room or usable area of the flat, contrary to the permission granted by the BMC”. “Please forward a copy of the list to each ward to enable them to carry out an expeditious inquiry and provide a report so that we can place your report before the Supreme Court,” said the letter addressed to Kunte.

Of the 196 parking slots in Satra’s building, as many as 99 are on habitable floors (stilt and podium), with nine on each floor. The average size of a flat in the tower was shown as around 2,000 sq ft. However, the builder provided an equivalent space outside each flat for car decks.

Last year, the then municipal commissioner ordered the demolition of certain portions of the high-end tower and directed the builder to pay a security deposit as a “deterrent against possible misuse of these car decks in future”. The deposit, based on the stamp duty ready reckoner rates of developed land, worked out to over Rs 50 crore. The order also said that no occupation permission or water connection would be granted to the building unless the deposit was paid to the corporation.

The BMC said the total car deck area in the building was around 75,000 sq ft, which fetched the builder an additional Rs 150 crore (sold at the prevailing rate of about Rs 20,000 per sq ft in Juhu). Besides basement and podium parking, the builder was allowed to construct nine car park decks on each
floor of the building, which has three wings of 11 floors each and 33 flats. The project was approved when Jairaj Phatak was BMC chief.

Kumar’s report also ordered the demolishing of either the lily ponds and adjacent deck areas or equivalent areas of the building’s upper floors. It also directed the extended portion of toilets, which are beyond the approved plan, to be demolished. The commissioner also said the 11th floor can be constructed within the permissible floor space index (FSI, or the ratio of total built-up area vis-a-vis the plot size). “It may be regularized by charging premium/ penalty. Else the same shall be demolished,” said the order.

However, the Bombay high court last year said the municipal commissioner should have given a hearing to flat purchasers before directing the demolition of lily ponds and deck areas in the tower.

But the builder approached the Supreme Court, stating that the high court had “erred” in sending the matter back to the commissioner. “The high court failed to appreciate that grave prejudice is being caused to various flat purchasers who have invested large amounts of money to buy the flats,” said the builder.