In Another Jolt To Gurgaon-Based Realty Major In The South, BBMP Says Project Is Illegal
BANGALORE’S civic authority has come out with a public notice warning future buyers from buying apartments in DLF’s Bannerghatta Road project in a move that extends the Gurgaon-based realty player’s nightmarish run in the southern markets.

The Bruhat Bangalore Mahanagara Palike (BBMP) cautioned prospective buyers from purchasing apartments in the project in a strongly worded and unprecedented buyers beware’ public notice on Thursday. “Prospective buyers are advised against purchase of such illegal apartments as such apartments are liable for all lawful action that will be initiated against such illegalities including demolition,” it said.

DLF’s apartment complex — Westend Heights at New Town, BTM Extension — had claimed, in its ad seeking bookings, that it had got the Bangalore Development Authority approval to build up to four floors while the project comprises 18 floors. The BBMP public notice points out that BBMP was the only competent authority to approve building plans in its jurisdiction and that DLF had not obtained any approval or sanction from it. The company has already been at the receiving end of irate buyers for its Chennai project from where many have even exited. In recent months, DLF even reduced prices.

A senior BBMP official told ETthat DLF had not sought approvals from the agency. “The job of an agency like BDA is to create residential layouts. All accompanying activity like registration, approval of construction plan, issuance of khata, payment of taxes, issuance of occupancy certificate and the like will be done by BDA till the said layout is handed over to BBMP subsequent to which the layout would be under BBMP limits,” the official clarified. He said BTM extension was part of the BDA, but in 2007, the area was handed over to BBMP subsequent to which all the paper work had to be carried out after permission from BBMP. But the Delhi-based builder has apparently overlooked this, the official said.

In a press statement, DLF Southern Homes Karnataka says the project will commence only after obtaining detailed plan approval from BBMP and other relevant clearances, for which application is in process. DLF has obtained due approval for the developmental plan through its subsidiary Annabel Builders & Developers for S+4 level from BDA, it says. It has paid khata amount of Rs 14.6 crore to BBMP towards betterment charges on August, 2008. “The intention of obtaining Khata from BBMP is in itself an indication that DLF would seek approval for building plans from BBMP,” it says, in its clarification.

DLF executive director (southern region) J Subrahmaniam says, DLF has sought bookings from buyers after seeking legal opinion. “At all stages, we have kept the buyers informed about the project approval status,” he added. DLF’s immediate priority will be to reach out to the 500-odd buyers and appraise them of the situation. DLF claims that it has not seen any rush for cancellations or buyers seeking exit from the project.

Brokers and realtors that it is a normal practice for builders to market their projects before they get all the approvals. A public notice from the government has literally sent shudders down the spine of city realtors, who are possibly witnessing one of the worst times. “This incident will further depress buying sentiment. Getting approvals in any city is an arduous task. Even the best of projects can drag,” said one realtor, who did not wish to be identified.

The good times are back for buyers in the real estate market. Some developers have begun to drop prices far more than the 10-20% done so far. And with interest rates clawing back to single digit levels, there looks to be good buying options emerging.

Four days ago, Bangalore based Alliance Group launched a premium mixed development project in Chennai’s Annanagar Extension at Rs 3,100 per sqft. That’s about 45% less than the rate (Rs 5,800/sqft) at the peak of the real estate boom.

The strategy is said to have worked. The company says in less than 60 hours over 300 units were sold. This at a time when sales for developers are down by almost 60% compared to last year.

The project comprises of over 2,000 housing units with a multiplex, and retail space.

Manoj Namburu, chairman of the Alliance Group, said that a similar marketing strategy was being considered for an upcoming project near Electronics City in Bangalore.
An industry analyst said that this discount would be on the peak price, and the actual discount to the prevailing price may be in the range of 20 per cent.

Developers are looking to cash in on the lower interest rates, and as many have put on hold their expansion plans they can afford to lower prices. Besides, if developers start seeing cash flows now, then by the next two quarters they would have created adequate liquidity, which would then enable them to re-start their expansion plans.

DLF was amongst the first major developers to bite the bullet and lower prices by 20% in Bangalore a month ago. But that clearly wasn’t sufficient to interest buyers. The company has now returned all buyer deposits and has deferred the project indefinitely. Only around 50 units had been sold. Their Cochin and Chennai projects too have met the same fate.

Bigger price drops is probably the answer to correcting the lean demand situation.

DLF plans retail expansion, to open 600 stores in five years
DLF, india's largest real estate company, plans to become a major retail player by opening 600 stores in less than five years through its retail management subsidiary DLF Brands. Planning a major expansion, DLF Brands has unveiled the plan of opening these stores by 2012-13 with an investment of Rs 7,500 crore. It also plans to bring around 15 international labels in the country in five years. DLF Brands has formed a JV with Italian menswear brand Boggi and Italian luggage brand Piquadro. It has franchise agreement with Italian apparel and accessories brands Alcott, Sia Home Fashion of France and Sun Glass Hut.