Ref:MM Dt :25/06/2010
Unrealistic offers can often lead to redevelopment projects being stalled and leave residents in a fix.
After years of being a real estate consultant in Chembur, Venkatesh Aiyer found himself involved in the redevelopment process of his building and he admits that the process was quite tedious. "When it comes to redevelopment, residents have little knowledge of what their building's plot is worth and how best it can be redeveloped. Small-time contractors come up with impossible offers; often, there is political involvement and local goons try to influence residents. The result is sheer mayhem," he complains.
Rarely, do we find a situation where the offer made is viable, and by a developer who knows the business and has the finances to sustain through the entire process. "Getting the right advice from the right individuals, vis-à-vis taxation, legal or architectural issues, is a must before any offer is considered seriously," he insists. "At times, committee members may also look for personal gains, rather than ensuring a fair deal for members," he adds.
In Malad, developer Vivek Abrol agrees. He mentions a redevelopment project that was almost his but ultimately didn't come to his company. "The company that was selected by the committee has not done anything, in terms of demolishing the old building, providing the residents with alternative accommodation, or starting work on the new project," he says. Residents tell him that the chosen developer got the deal by making an offer that was 'too good to be true'. "It is not an isolated instance," says Abrol. "The greed of members and underhand dealings by developers often delay such project - at times, for too long," he points out.
Arun Saxena, president of International Consumer Rights Protection Council, maintains that "The process needs to be made more transparent." He lists some common issues that cause problems: wrong calculation by builders, greed of committee members, non-cooperation from investors, disputes regarding the clauses in the agreements, income tax liabilities, unrealistic expectations of builders vis-à-vis FSI and government policies, etc.
Documentation is important, says CA Tarun Ghia. He suggests that redevelopment agreements need to be iron-clad, from the point of view of the society and its members, and should be drafted by the consultants of society. "Unfortunately, they are generally drafted by the consultants of the developer and are vague," he cautions.
Redevelopment involves dealing with multiple owners, and individual legal issues can stall the entire process, says Sangeet Kumar, CEO of 1stMumbaiProperties. The society members need to be educated about the entire process, to enable them to select the right 'partner in redevelopment'. "The entire process, right from the time the societies initiate the redevelopment process, to identifying, negotiating and selecting/finalising the developer, should be transparent. However, this rarely happens," he adds.
In any real estate deal, due diligence is vital and a redevelopment project is no different, says advocate Vinod Sampat. "The media has reported on almost all issues that lead to stalling of redevelopment projects. In addition to this, with the good work by consumer organisations, I expect fewer delays in redevelopment projects going into the future," he says.
When it comes to redevelopment, it is the members of the society, who are its architects, engineers, financiers and marketers, says Abrol. "If you give away these responsibilities to others - be it the committee or the developer - and find that they worked things out to their benefit, what else one would expect?" he asks in conclusion.
Rarely, do we find a situation where the offer made is viable, and by a developer who knows the business and has the finances to sustain through the entire process. "Getting the right advice from the right individuals, vis-à-vis taxation, legal or architectural issues, is a must before any offer is considered seriously," he insists. "At times, committee members may also look for personal gains, rather than ensuring a fair deal for members," he adds.
In Malad, developer Vivek Abrol agrees. He mentions a redevelopment project that was almost his but ultimately didn't come to his company. "The company that was selected by the committee has not done anything, in terms of demolishing the old building, providing the residents with alternative accommodation, or starting work on the new project," he says. Residents tell him that the chosen developer got the deal by making an offer that was 'too good to be true'. "It is not an isolated instance," says Abrol. "The greed of members and underhand dealings by developers often delay such project - at times, for too long," he points out.
Arun Saxena, president of International Consumer Rights Protection Council, maintains that "The process needs to be made more transparent." He lists some common issues that cause problems: wrong calculation by builders, greed of committee members, non-cooperation from investors, disputes regarding the clauses in the agreements, income tax liabilities, unrealistic expectations of builders vis-à-vis FSI and government policies, etc.
Documentation is important, says CA Tarun Ghia. He suggests that redevelopment agreements need to be iron-clad, from the point of view of the society and its members, and should be drafted by the consultants of society. "Unfortunately, they are generally drafted by the consultants of the developer and are vague," he cautions.
Redevelopment involves dealing with multiple owners, and individual legal issues can stall the entire process, says Sangeet Kumar, CEO of 1stMumbaiProperties. The society members need to be educated about the entire process, to enable them to select the right 'partner in redevelopment'. "The entire process, right from the time the societies initiate the redevelopment process, to identifying, negotiating and selecting/finalising the developer, should be transparent. However, this rarely happens," he adds.
In any real estate deal, due diligence is vital and a redevelopment project is no different, says advocate Vinod Sampat. "The media has reported on almost all issues that lead to stalling of redevelopment projects. In addition to this, with the good work by consumer organisations, I expect fewer delays in redevelopment projects going into the future," he says.
When it comes to redevelopment, it is the members of the society, who are its architects, engineers, financiers and marketers, says Abrol. "If you give away these responsibilities to others - be it the committee or the developer - and find that they worked things out to their benefit, what else one would expect?" he asks in conclusion.
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