Smart Cities in India Archives - PROP Reality

Financing smart cities

Prop Reality — Sat, 12 Dec 2015 06:47:07 +0000

The High Power Expert Committee (HPEC) on Investment Estimates in urban infrastructure has assessed a Per Capita Investment Cost (PCIC) of Rs 43,386 for a 20 year period. Their estimates cover water supply, sewerage, sanitation and transportation related infrastructure. Using an average figure of 1 million people in each of the 100 smart cities, the total estimate of investment requirements for the services covered by HPEC comes to Rs7 lakh crore over 20 years (with an annual escalation of 10% from 2009-20 to 2014-15). This translates into an annual requirement of Rs 35,000 crores. However, it is expected that most of the infrastructure will be taken up either as complete private investment or through PPPs. The contributions from the Govt. of India and States/ULBs/parastatal will be largely by way of Viability Gap Support (VGF). Of the funds allocated to each Smart Cities by the Central Government, roughly 60% will be earmarked for investment in infrastructure and 10% for e-governance initiatives. The remaining funds will be in the form of equity contribution of the government in two integrated township projects (in partnership with a private developer), as well as one greenfield project and one redevelopment project. Looking at all the investment and expenses needed to develop the smart cities in the country, it is expected that the living should also be likable and affordable.

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Instruments for making smart cities

Prop Reality — Thu, 10 Dec 2015 06:31:35 +0000

Before developing smart cities, few instruments are needed to make the project possible, viable and feasible. Information and communication technology (ICT) is the must instrument for making a smart city. The extensive use of ICT is a must and only this can ensure information exchange and quick communication. Most services will need to be ICT enabled, and this often helps reduce the need for travel. The ability to shop on-line or book tickets on-line or converse online is very powerful ways of reducing the need for travel, thereby reducing congestion, pollutants and energy use. An extensive use of ICT enabled services will need a sound communications backbone. In this context, it is important to note that ICT is not the “end” but only the “means” to an “end” – the end being improved service quality and information availability. For citizen friendly smart city and IT based platform will be created and involvement of social media will be maximum. A 24×7 call centre will be established at each ULB/Parastatal. A Smart city also communicates well with its people and enlists their support in everything it is doing. The culture of working in a closed environment needs to end as people are often the biggest support base for any initiative a city takes up, if they have been informed of the efforts and the reasons for the same. Social pressure on other citizens can often remove resistance and facilitate a greater degree of civic discipline.

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Smart Cities Infrastructure

Prop Reality — Thu, 10 Dec 2015 06:01:34 +0000

Institutional Infrastructure It refers to the activities that relate to governance, planning and management of a city. The new technology (ICT) has provided a new dimension to this system making it citizen-centric, efficient, accountable and transparent. It includes the participatory systems of governance, e-governance, inclusive governance, the sense of safety and security and the opportunities for creativity. Physical Infrastructure It talks about its stock of cost-efficient and intelligent physical infrastructure such as the urban mobility system, the housing stock, the energy system, the water supply system, sewerage system, sanitation facilities, solid waste management system, drainage system, etc. which are all integrated through the use of technology. Social Infrastructure Social Infrastructure relate to those components that work towards developing the human and social capital, such as the education, healthcare, entertainment, etc. It also includes performance and creative arts, sports, the open spaces, children’s parks and gardens. These together determine the quality of life of citizens in a city. It is also necessary that city promotes inclusiveness and city has structures which proactively bring disadvantageous sections i.e. SCs, STs, socially and financially backwards, minorities, disabled and women into the mainstream of development. Economic Infrastructure For a city to attract investments and to create the appropriate economic infrastructure for employment opportunities, it has to first identify its core competence, comparative advantages and analyse its potential for generating economic activities. Once that is done, the gaps in required economic infrastructure can be determined. This would generally comprise the following:

Incubation centres
Skill Development Centres
Industrial Parks and Export Processing Zones
IT / BT Parks
Trade centers
Service Centres
Financial Centers and Services
Logistics hubs, warehousing and freight terminals
Mentoring and Counselling services

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Why is a Smart City a necessity?

Prop Reality — Fri, 27 Nov 2015 07:58:24 +0000

Why is a Smart City a necessity?

India has a population of over 125 crore, and the most densely populated areas in the country are its top 50 cities. Then why the need to create 100 new smart cities when India already has these many? The answer follows. Urbanization accompanies economic development as countries move from being primarily agrarian economies to industrial and service sector dominant ones. It is the urban areas that provide the agglomerations required by the industrial and service sectors. This trend of urbanization is an unremitting process. Urbanization in India

Total Population- 125 crore
Urban population – 31%
Urban areas contribution to GDP – 60%
In 15 years, urban areas expected contribution to GDP – 75%

The above facts prove why cities are referred to as the ‘engines of economic growth’, and ensuring that they function as efficient engines is critical to our economic development. It is believed that 90% of the world’s urban population growth will take place in developing countries, with India taking a significant share of that. The trend of urbanization that has been seen in India over the last few decades is expected to continue for some more time. And hence, the center has comes up with this idea of developing 100 new smart cities in the country.

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Know Smart Cities Various Definitions

Prop Reality — Fri, 27 Nov 2015 07:55:14 +0000

The various definitions: Many countries around the world have either developed smart cities or are in the process of developing them. Depending on the needs and demography of the region, many countries and organizations have created their own definition of ‘Smart City’. Let’s look at a few: Innovation and Skills considers smart cities a process rather than as a static outcome, in which increased citizen engagement, hard infrastructure, social capital and digital technologies make cities more livable, resilient, and better able to respond to challenges. -The UK Department of Business Smart City is the effective integration of physical, digital and human systems in the built environment to deliver sustainable, prosperous, and inclusive future of its citizens. -The British Standards Institute A smart city makes optimal use of all the interconnected information available today to better understand and control its operations and optimize the use of limited resources. – IBM A smart city adopts scalable solutions that take advantage of information and communications technology (ICT) to increase efficiencies, reduce costs, and enhance the quality of life. – CISCO A city is Smart when investments in human and social capital and traditional (Transport) and modern (ICT) communications infrastructure fuel sustainable economic development and a high quality of life, with a wise management of natural resources, through participatory action and engagement (Caragliu et al, 2009). – Wikipedia A Smart City delivers public and civic services to citizens and businesses in an integrated and resource efficient way while enabling innovative collaborations to improve quality of life and grow the local and national economy. – Accenture

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What is a Smart City?

Prop Reality — Fri, 27 Nov 2015 07:40:47 +0000

According to the concept note on Smart Cities issued by Union Ministry of Urban Development, smartness in a city means different things to different people. “It could be smart design, smart utilities, smart housing, smart mobility, or smart technology. Thus it is rather difficult to give a definition of a smart city,” says the note. For a layman to understand what Smart Cities are, the Union Urban Development Ministry has tried to decode it. It says that smart cities should be able to provide good infrastructure (such as water, sanitation, reliable utility services, health care), attract investments, keep transparency in processes that make it easy to run commercial activities, provide simple and online procedures for obtaining approvals, and offer various citizen centric services to make citizens feel safe and happy. For its sustainability, a Smart City needs to offer economic activities and employment opportunities to a wide section of its residents, regardless of their level of education, skills and income. It also needs to support the development of skills required for such activities in a big way.

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Law related to Real Estate

Prop Reality — Sat, 21 Nov 2015 10:03:57 +0000

Transfer of Property Act, 1882
The Indian Contract Act, 1872
The Indian Easements Act, 1882
The Indian Stamp Act,1899
The Registration Act, 1908
The Land Acquisition Act, 1894
The Land Acquisition, Rehabilitation and Resettlement, Act, 2013
Draft Real Estate (Regulation & Development) Bill, 2011
Rent Control Act
Property Tax
FEMA

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All you wanted to know about Stamp Duty

Prop Reality — Sat, 21 Nov 2015 09:46:38 +0000

Stamp Duty, in simple terms, is nothing but a type of tax collected by the government under its jurisdiction for transaction of a property. The duty is levied in every state in India but the rates vary. Different types of non-postal stamps are available for making legal recognition of the documents of the property. And different types of non-postal stamps are used for different types of dealings. Every state has one point of distribution, and non-postal stamps are distributed to other districts from this point only. In Ahmedabad, such stamps are available at the office of M.S. Building in Lal Darwaja. While this particular office is declared as the ‘Nodal Point’ for non-postal stamps, the head of the Nodal Point is known as the Superintendent of Stamps. This non-postal stamp stock is received from the India Security Press at Nasik, and thereafter it is distributed to the different district treasuries across the state. The duty is levied on sale deeds on non-judicial stamp papers and it is as per the rates determined by the state government. Moreover, for agreements, affidavits, loan security, and such other dealings, non-judicial stamp paper is needed. The non-judicial stamp papers are available in different denominations starting from Rs. 5 to Rs. 25,000. Franking print: There are government authorized stamp vending offices. These offices have stamp machines. You only have to submit your document and a franking print of the necessary amount is impressed and given to you. In case a bank or any other financial institution needs it, special adhesive stamps franking licenses are issued by the Superintendent of Stamps- Gandhinagar, Gujarat. The range of the denominations of franking print is from Re. 1 to Rs. 5,000. E-stamping: The state government has made e-stamping available through the Stock Holding Corporation of India Ltd. This facility is available in all the Districts and Taluka Head Quarters at the office of the Sub-Registrar throughout the state. Notary Stamps: It is necessary to notarise documents (such as affidavit, power of attorney, etc.) from the Executive Magistrate or a government appointed Notary. The Notary stamps are available for Rs. 5. Revenue Stamps: For transactions worth Rs. 5,000 or more, revenue stamps are pasted and the document is executed. The revenue stamps worth Re. 1 are available at all post offices around the state. Agreement Stamps: In the case of marriage registration, the duty agreement stamp as determined by the government has to be affixed and recovered. An Agreement of Rs. 10 or Rs. 100 is available. Insurance Stamps: The insurance stamps are used by the insurance companies wherein the companies affix these stamps after selling the insurance policies. However, the franking of the insurance stamps is also possible. The value of the insurance stamps ranges between Re. 1 and Rs. 1,000. Share Transfer Stamps: Whether you sell, purchase or transfer a share, you will need a Share Transfer Stamp. These stamps are available in price range of Re. 1 to Rs. 200. Foreign Bill Stamps: When any Indian private company is dealing with any overseas company, Foreign Bill Stamps are used in making agreements. These stamps are available in denominations of Re. 1 to Rs. 100. Brokers Note – Stamp & Hundi Papers: In Cabala Document dealings the Brokers Note stamps are used. Many decades ago, as promisory notes, Hundi papers were used. These have now been replaced by adhesive stamps. The Broker Note stamps are available from Re. 1 to Rs. 500. And for Hundi papers, adhesive stamps worth Re. 1 to Rs. 10 are available. Judicial Stamp Paper and Court Fees Stamp label: Judicial Stamp Papers are to be affixed while making applications before the court, collector, and additional collector. For this purpose, stamps are available from 25 paisa to Rs. 20. On the other hand, in court proceedings, the Court Fees Stamp Papers are used. These are available from Rs. 50 to Rs. 25,000.

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Now for the Six Easy Steps for conducting Due Diligence

Prop Reality — Sat, 21 Nov 2015 09:11:52 +0000

Step 1: Legal capacity of the seller It is necessary to ensure whether the current owner of the property or any of the predecessor title holders is a minor or of unsound mind. In case the property owner is a minor, the property can neither be purchased nor be taken on lease without prior permission of competent authorities. In case the seller is a person of unsound mind, only their legal guardian can sell the property on their behalf. Step 2: Nature of current owner’s right over the property It is necessary to identify the nature of the right that the seller has over the property and the transferability of such right. The types of rights that an owner can have over the property can be classified as – free hold/absolute ownership, right of perpetual lease, tenancy right, or land allotted by State Government /Central Government under various enactments. Step 3: Source of right or title of the current owner: In case the title was acquired by purchase, then one needs to examine the registered sale deed/ conveyance deed along with the title documents of predecessor title holders of the property. If it has been inherited, the entries are made in mutation register (jamabhandi), which is maintained by Revenue Office for every village or check court orders. If the current owner has acquired title over the property by way of partition, one needs to examine the deed of partition to ascertain whether there were any conditions or restrictions in the deed which may affect the enjoyment/ transferability of property. If the title was acquired by way of gift, then the registered gift deed needs to be examined to check if there are any conditions, like reservation of life interest, restrictions for alienation, payment of maintenance, pre-emption etc. In case, the title has devolved upon the current owner by virtue of a Will, it is advisable to examine the Will as well as the order passed by the probate court granting probate/ letters of administration of the property, if any. And if the title was acquired by perpetual lease, then the deed of lease has to be examined to determine the transferability of the right and the conditions to such transfer. The extent of the rights of the lesser should also be examined. Step 4: Legality of the construction: This is one of the most important steps of due diligence. It becomes imperative to examine the legality of the construction. Each state government and the relevant local authorities have laid down their own rules and regulations which govern the manner in which civil constructions need to be carried out in that particular state. Hence, a lawyer, undertaking due diligence of land having a structure on it, needs to first get familiar with the local construction laws applicable in the region in which the building is situated, and then, to determine whether these have been complied with in undertaking the construction of the building in question. Nowadays, acquiring environment clearances have become a big challenge before constructing any building. The aspects which would need to be examined in this process would be the footprint area (including set-backs), the extent of constructed area, the number of units constructed, the height of the construction, etc. Step 5: Encumbrances over the property: It is important to verify whether there are any encumbrances, charges, or mortgages on the property in question. The records of the concerned Sub-Registrar of Properties should be examined to ensure that the property is free from all sorts of registered encumbrances or charges or mortgages. It is also advisable to obtain an encumbrance certificate issued by the concerned Sub-Registrar of Properties. This certificate may be obtained from the office of the Sub-Registrar for Properties, where the property is situated. In addition, since a mortgage could also be created over the property by way of deposit of title deeds, the original title documents of the property should be inspected to ensure that there are no such unregistered mortgages. The thumb rule says that if there is an existing encumbrance, charge or mortgage over the property, it should either be cleared prior to the purchase or provided for in the consideration. Step 6: Whether the land is a part of any acquisition process: It is also important to learn if the property is under the process of acquisition by any government authority. For instance, if a farmer sells a property which has already been acquired by the government for maybe constructing a highway on it, the investment is in vain. If the property has been acquired by the government, it ceases to belong to its original owner and becomes the property of the acquiring authority. The property so acquired cannot be sold or alienated further by the original owner, unless the property has been released from the acquisition process. The Due Diligence exercise is thus relevant only when you thoroughly consider each of the above detailed aspects; the absence of even one of which could render the process inadequate to address the concerns of the participants. It is expected that, over the years, the process would get more streamlined and organized and thus mitigate the challenges currently faced by real estate lawyers while undertaking a land due diligence exercise. However, as it stands today, the process is not only time consuming but also weighed down with uncertainties and obstacles.

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RBI’s Rate Cut to Push Realty Demand Upwards

Prop Reality — Thu, 12 Nov 2015 10:44:41 +0000

The much awaited decision was finally taken by end of September of 2015. The central bank, Reserve Bank of India (RBI) had cut the rates, surprisingly, by 50 basis points. This will boost the real estate industry of the country. Now getting finance has become bit affordable. This decision will generate demand for housing as well as for housing loan. The RBI’s decision was much more than expected. As an impact, all the banks including public sector and private are forced to reduce their lending rates and interestingly they did it. After the reduction in lending rates, the demand for liquidity will increase. This will give a boost to the sentiments end users as well investors of real estate in the country. Even the 0.50% reduction in lending rates matters a lot. Either the number of EMIs comes down or the amount paid every month shrinks marginally. In the policy presented by RBI, the repo rate was cut down by 50 basis points to 6.75%. Further, the banks have reduced their lending rates in range between 0.25% and 0.50%. At present, the lending base rates of banks are around 9%. The bankers across country have been witnessing fall in demand for housing loan but with finance becoming economical, the demand for housing loan is expected to go up. With this cut the repo rate has come to 4-year low from 7.25% to 6.75%. RBI projects GDP to grow in the second half of the fiscal year. The central bank is projecting 7.4% GDP growth precisely after getting push from second half of the year. The reduction in rate will not only boost the demand in real estate but in overall manufacturing as well as service sector. The new projects will begin, the halted projects will move ahead towards commissioning and the recently commissioned projects too will get boost. Meanwhile, the festive season is around. The buying capacity of the consumer too will rise exponentially. Thanks to under controlled inflation rate, the spending will be higher and even savings will grow. RBI says inflation is expected to reach 5.8% in January 2016. With higher GDP growth and controlled inflation rate, recruitment will be in full swing. New jobs will take place and growth in salaries will increase the demand for housing in coming years. The days are not far when there will be mad rush for booking the new houses even in sub-urban areas of cities across country. The demand is likely to exceed supply of number of units being developed in couple of years. However, there will be a few challenges or hurdles standing in between the growth of real estate. The less-than-normal monsoon rainfall may be the dampener. There is risk of food inflation rising. Meanwhile, tepid global demand, soft commodity prices coupled with postponement of policy normalisation by the US Fed have created additional fear. The uncertainties will always be there. But if believed to the experts, RBI’s decision to cut interest rates by 50 basis points amidst stable inflation indicators, augers well for steady economic growth and is expected to bolster investment demand. This should act as a catalyst to revive sentiments in the real estate sector. At a time when Indian cities are witnessing subdued housing sales, this correction in prime lending rates would help stimulate home buyers’ interest and spur home-buying decisions. Although demand from end-users may take a bit longer to transform to active buying, buyer inquiries may increase in the short-term in expectation of lenders passing on the benefits of reduced interest rates. However, the extent to which lenders pass on the benefits to customers would determine the actual magnitude of increased housing sales. On the developers’ part, the cost of borrowing could also decrease marginally, who have been reeling under high funding cost and increasing costs of construction.

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