Every day that passes sees your building passing through many structural changes. Across Mumbai, there are many buildings that are under severe structural damage. Nearly 500 crores of Rupees is spend each year for restoration of buildings in Mumbai and this figure is likely to go up in the coming years.

The monsoons bring with it additional woes. Leakages are common, collapsing of certain portions of homes and overall damage to buildings.

And so it is necessary to conduct a structural audit of your building. What is a structural audit? In simple terms it is an examination of your building. It’s basically ensuring that your building and its premises are safe and under no risks. It’s extremely helpful as it enables us to analyze the situation of the building and thus we can take any corrective action where necessary.

As per model law number 77, for co-operative housing societies, if the building is 15 to 30 years old, it is mandatory that a structural audit be carried out every five years. For the buildings over 30 years, an audit needs to done every there years. However if one suspects that the condition of the building to be poor, they can go for a structural audit at any time.

During the monsoons the seepage is quite evident and perhaps its the best period to go in for this audit.

What is the procedure for a structural audit? Audits are generally divided into two types. One is the external survey which covers the common areas such as the stair case, compound walls, terrace, water tank etc. The internal survey covers individual apartments, shops etc. And so for these internal surveys, members should be informed about them well in advance, so that they are aware of it and can plan accordingly.

Once the survey is done, recommendations are given and acting on these recommendations is more important.

It’s extremely important that people take the initiative to make sure that these structural audits are done in a timely manner. Co-operative societies need to ensure that these audits are done. How much do these audits cost? A structural audit could cost anywhere from Rs. 250 to Rs. 1000 per flat, however certain other factors are also considered such as the age of the building.

Many societies find it expensive carrying out these structural audits, as they are always short of funds. However given the current climatic conditions such as pollution etc, it’s crucial that these audits be done.

Australia is suddenly talking about modular or pre-built housing. It’s taken a while but suddenly modular housing is seen to be the way of the future, and you would have to say about time too.

There is now chat in the Australian Property Investment magazines that modular housing is the way of the future. Pre-built housing has never been big in Australia. In a country where termites and other nasties love to chomp on houses brick is the traditional building material of choice. Pre-built housing tends to be associated with Park Homes which are low cost small units in holiday parks or purpose built retirement villages. Pre-built houses haven’t been popular with investors either mainly because the reality that capital gain would be less than an equivalent on site build.

The odds are improving for pre-fabricated houses. Their advantages are

• over the 30% cheaper to build and also cheaper to run
• environmentally friendly because of the scale of manufacture
• pre-fabricated houses take 6 to 8 weeks to assembly in the factory; a traditional home can take a year to build
• in the face of serious skill shortages a modular, factory-based build will be easier to get staff for and probably need less skilled staff too.
• modular design mean that houses can be built to order or even added onto as the owner’s requirements changes
• pre-built homes can suit sites with access problems where a crane can maybe lower the building onto the foundations
• pre-built homes are ideal for remote towns where the availability of building skills and materials are limited and expensive

For the investor a house which is 30% cheaper to build than a traditional home but should rent out for the same rent has got to be a no-brainer. Add to that the much quicker build time so lower holding costs: its got to be good. For the potential renter its a great idea too: a house that is cheaper to run can save a fortune in air-conditioning bills in country like Australia where is air-conditioning is pretty much a necessity for most of the year.

The new modular designs are funky and cool too: a far cry from the traditional park home look. Use of new building elements and particularly steel frames means there is a lot of options to create the large open spaces we all want in a modern home.

The continuing weakness of the dollar means the US is more and more attractive as a property investment destination. A recent announcement of a new global investment group based in Switzerland shows the appeal to buyers spending foreign currencies in the US. This is their press release:

Geneva, Switzerland – The M.A. Kharafi Group has created an independent hospitality, tourism and real estate investment company based in Geneva, Switzerland under the name of Sovereign Hospitality Holdings. The new company has been launched to strategically acquire, finance and develop assets in the hotel, real estate and tourism industry in the United States and worldwide.

Through a mixture of organic development and portfolio acquisitions that are financed and, thereafter, proactively managed, Sovereign Hospitality Holdings intends to increase the geographical reach of its hotel, resort and real estate portfolio. Over the next three years, the portfolio is set to grow significantly with the completion of 11 unique hospitality developments which will encompass some 1,800 additional rooms reaching a total of 5,800 and totalling 32 hotels in 10 countries.

Mohamed Fahmy, Chief Executive of Sovereign Hospitality Holdings commented, “Our objective, with the support of the Kharafi Group, is to expand through strategic acquisitions in the United States and worldwide. We have a successful track record and a long term approach to foster strategic relationships with partners to deliver solid returns through high yield opportunities in both emerging and established markets.”

Sovereign Hospitality Holdings’ existing portfolio consists of 21 hotels and resorts with over 4000 rooms which it owns and operates in Egypt, South Africa, The Gambia, Syria, Lebanon and Albania. Further projects are under development in Libya, Senegal, Ethiopia and Mauritania.

In addition to owning and managing its hotels, Sovereign Hospitality Holdings has management agreements in place with a number of well regarded hotel management companies including Four Seasons Hotels & Resorts, InterContinental Hotels Group, Hyatt International, Rotana Hotels and Resorts, Starwood Hotels and Resorts and Six Senses Spa. The company continually seeks to form this type of long term strategic alliance which extends Sovereign Hospitality Holdings’ global reach across a range of markets and products.

Sovereign Hospitality Holdings has seamlessly integrated assets of $800 million to date, and is a member of the M.A Kharafi Group, a Fortune 500 company registered in Kuwait with annual revenue of $4 billion. The M.A. Kharafi Group operates in 25 countries and employs more than 100,000 employees worldwide.

A monsoon property bonanza was held from June 20^th to 22^nd with the Times Property Expo at Bandra. This event was held at Hotel Taj Lands End. Well known developers from the metros such as Pune, Delhi, Hyderabad, Bangalore, Mumbai amongst others displayed all their various projects that they had as well as the projects in the offering.

From Delhi, Mahavir Hanuman Developers made its presence felt with its exciting projects such as River Park I & II, their eco friendly project Anand Farmland, and two other residential projects in NCR, Delhi

Bangalore’s Brigade group, main target was IT employees, and other business class people. Aliens Group represented Hyderabad, who presented properties their various township projects. Kolte Patil Developers Limited, from Pune, presented their multiple projects.

For the middle and higher middle class income groups, Navi Mumbai’s Shree Sawan Builders displayed their various projects at Kharghar.

It was a great crowd puller which saws plenty of people thronging the place in search for the ideal home. Everyone from college students, to young couples made their way to this exhibition looking for the perfect bode for themselves. It’s was a fantastic opportunity for people to explore various, multiple options where real estate is concerned.

Thinking of leasing prime down-town office space in Perth, Western Australia? You might get a better deal in Paris! I am serious. A record of A$900 per sqm has just been set for a lease on the Exhange Plaza building on The Esplanade. According to reports the undisclosed tenant does get prime water views in a top notch buidling: you’d want them for that price: that’s A$500,000 / year for 500 sqm! This rate is a stunning 40 per cent increase o the prvious highest rent of A$650 per sqm this time last year

With vacancy levels near zero in the central city it seems likely that premium grade towers in Perth will hit A$1000 by year end: that’s more expensive than Melbourne and on a par with Paris. The tenants who have negotiated “off the plan” or “pre-commitment deals” of around A$600 per sqm will be pretty happy about now I would say ! However the next generation of Perth skyscapers are still 18 months away at least: and not immune to the lack of skilled workers which is plaguing all large-scale projects in Western Australia at the moment.

With the resource boom showing no signs of slowing down the traditional power base of Melbourne for the mining and exploration industries appears to be moving out of Melbourne and westward to Perth.

Mining heavyweight BHP Billiton has announced that they are is moving head office staff to Perth and will move into a new 72,000 square metre skyscraper at 125 St Georges Terrace, known as City Square. BHP Billiton will effectively shut up shop on Melbourne and relocate its head office to Perth, severing a 123-year-old link with Melbourne. That’s another 1800 odd staff moving into prime office real estate before 2012.

So if you are smaller or lower budget operator looking for prime city or West Perth commercial real estate you may have to think outside the square or at least outside of the central city. Alternatively maybe its time to build your own commercial property?

It looks like the property tax in Mumbai is soon going to be placed on a logical and rational basis. In all likelihood an amendment to the BMC or the Brinanmumbai Municipal Corporation Act of 1888. The amendment will see a shift of the calculation of property taxes from the current ratable value system to one that is based on the capital value of the property.

The two ways of in which property tax can be calculated are the ratable value, which is the rent that the property would be likely to get and the other is the capital value of the property.

The current problem in Mumbai’s case is that acts such as the Rent Control Act, amongst others were creating severe distortions where property rents were concerned. With this Rent Control Act, South Mumbai property rents, especially the older buildings were frozen at the 1940’s level. Thus since this was the case, the BMC were not in a position to charge a higher property tax.

So what was happening is that South Mumbai properties which are several times higher than the suburban properties were hardly paying anything in property tax. While the suburb properties was charged around 115% of the rent that the property would probably get.

This amount was not only obscenely high, it was unfair and also affected the BMC finances. The BMC were hardly making anything as against what they could have been making with such expensive properties.

Ten years ago, there was a move to resolve this imbalance when the Tata Institute of Social Sciences along with the Mumbai University conducted a study and proposed a change to the capital value based system. However the moves was opposed and did not go through.

Now, after a lot of discussions it is believed that the joint committee of the Maharashtra legislature has come out with something that appeases everyone.

According to this new recommendations, the flats that have an area of 500 square feet carpet area, are not going to see any increase in property tax at least for the first give years that the capital value based system is enforced. Thereafter, a hike may be possible, however this will not be more than 40 per cent of the tax in the previous years.

Another thing that will be enforced is that all properties including rented, self owned or leave and license will be assessed at the same rate.

The formula of this capital value system of tax is Rate of Tax multiplied by capital value of the property X the area of the building X usage of the building, along with the age of the building and the type of construction. The rate of tax will be 0.45% of the capital value of the property, per year – under this new system.

This current monsoon session will see the final assent to the bill, its just a matter of time now.

Lies, damme lies and statistics, and seachangers

If you are not from the Land Downunder you may not know what a seachanger is.  Seachangers are baby boomers who sell up in the big cities and move to a smaller coastal town usually relatively close by (that’s up to 500km in Australia!).  If they don’t move to the sea they are called treechangers when they move to rural towns often in the hills.

Unless you have been under a rock recently in Australia you will have heard about how the small towns near major population centres on the East Coast are bursting at the seams with seachangers. Not only do the newcomers, drive up the price of local real estate, and cause long lines in the cafes which have an express o machine, they also put pressure on local services such as rubbish collection, parking and leisure facilities. So it was a little bit of a surprise when The Australian newspaper announced that according to the latest statistics released for the 2006 census; towns such as Lorne, Victoria and Byron Bay, NSW had lost population.

Port Douglas in far north Queensland, had officially lost one third of its population. Now this is indeed passing strange as the last time I drove through Port Douglas there was acre upon acre of new housing developments on what had been fields a few years earlier on my prior visit. In fact developments streatch most of the way north to Mossman now. There is not a parking place to be found on the whole main street of town. Parking restictions limit parking to 1 hour maximum: this crazy for a small town in Australia. So everyone knows, including the local councils, that visitor and resident numbers are up in arms and asking why are the statistics wrong?

The Australian census occurs on a mid-week night when statistically more people are supposed to be home (Tuesday normally). The question’s are pretty simple really around your dwelling and your other personal characteristics. The problem really is the answer to “where do you live?”. Seachangers are stufing up the statistics because they don’t just sell up in Melbourne or Sydney and move to Byron Bay or Lorne, they might plan to move permanently eventually, but in the meanwhile they commute. Or keep the coastal property as a weekender and work in the city Monday-Friday, or just move homes on a regular schedule if they telecommute or have a flexible employment situation.

So everyone is right really: the small towns are loosing permanent full-time residents and gaining part-time residents who still own property and make demands on local services: particularly on the weekends and holidays. In fact in parts of Australia the statistics are even odder: a mine worker who flyes onto site for a number of weeks and then home to a town: usually Perth or Brisbane may be counted either at the mne site at the back of beyond or in the city depending on his shift rotation. Tiny Wiluna in the middle of Western Australia counts nearly 2000 population on census night: but probably 1800 of those will be back in Perth the next week: the permanent residents are the locals: unless they are on walkabout of course.

So be wary when investing internationally its worth taking some time understanding a country and its quirks before jumping into property investment.

Photo credit: garion88

The state government is planning to amend the development control rule 33(9), what this means is that it will allow for redevelopment of old buildings by increasing the FSI (floor space index)from the existing 2.5 to 6. With this increase, Mumbai’s skyline is bound to wear a completely new look. The government is also considering compensating the existing flat owners, by giving them flats at much feasible concessional rates and also at the same time banning the sale of flats in these redeveloped buildings for around 10 years or so.

This cluster redevelopment of old buildings will see nearly 16,000 odd buildings, developed into new towers with planned infrastructure. The proposal for minimum cluster size is 4000 sq mts or around one acre.

It is estimated that the rehabilitation FSI could go up to 4, while the incentive FSI will be around 50 to 75 per cent of that. Now, if the cluster is huge and needs an FSI of 4, the developers could then get an additional FSI of 2 as an incentive.

This proposal is seen by developers as a boost to to mega redevelopment projects. This cluster approach has worked wonders and transformed cities such as Singapore, Shanghai and Hongkong.

Developers are looking to take advantage of the increased FSI, and build towers with as many as 50 to 60 floors. One wonders of this is possible, and will technology be able to support them. While it is definitely possible, its important that builders take the proper clearance for soil strength, environmental and other essential clearances.

Another point of concern is that the fire fighting mechanisms are not able to service such high rise towers. Maximum the machines go up to is about 30 floors. There could also be problems of moving a large number of people from the area.

Developers are aware of the challenges behind this proposal, but are more than ready to face a challenge. Moreover, all have realized the need for redevelopment as some of the buildings are so old and weak, that they pose a threat to the people’s existence.

This proposal will be presented to the cabinet shortly.

The traditional marketing tools of the trade for an Australian real estate agent is a hammer: to help secure the large billboard outside the property. If its an expensive property this used to mean that the sign was bigger, with more pictures: some of the pictures might even feature the property for sale rather than the friendly face of the agent involved. More than one property owner has wondered why so much of the advertising that they often pay for involved the agent, their family, their agency, their dog, in fact anything else but the actually thing that was being sold: their home!

Now their are signs that Australian property marketing has grown up a little and following overseas trends. Instead of tossing the sign up out front and opening the property for viewing for an hour or two on the weekends

To promote their new Allegro development, Mirvac has built a $1.3 million display apartment above Burswood Park Golf Course and convinced 80 prospective buyers and media to inspect the pad. All those present were witness to a domestic drama as a handsome young executiv, Bob, show’s off his slick new apartment, his parentts gasp and gush as they gaze out through floor-to-ceiling windows to the Burswood golf course, the Swan River and the lights of Perth’s CBD. Bob chats with his girlfriend, Carol as she passes him on the way to the kitchen. Later however Bob appears to have forgotten his girlfriend when he seduces another women in the grand master suite.
It is all of course an act: Bob, Carol, his parents and the other women are all actors. Mirvac are very happy with the launch. Mirvac’s West Australian chief executive officer, Evan Campbell says:

the audience was enthralled. “It was good from our point of view because it was an unusual way to showcase the lifestyle and it incorporated two generations of potential buyers – Generation X and their baby boomer parents,” he says. “It’s true the girls in the audience loved the guy, and the guys loved the girl.”

When the first 45 apartments went on sale last December, all were sold on the first weekend for an average $1.2 million.

Pantomimes aren’t all that’s happening with marketing at the top end of the Australian property market though. DVD’s are become de rigeur for the more sophisticated buyers and the probably more pressed sellers. The tactic of course is to sell the lifestyle not just the apartment. Apartment living is still relatively rare in Australia: particularly in Perth which has an average population density closer to that of LA than that of New York city! Perth has it’s share of traffic problems partly because of the pretty Swan River which splits the city in tour. Also partly because the infrastructure of road and commuter rail has just not kept up with the speed of population boom in the West which is driven by the huge Australian resource boom

Photo credit: lissie

Between now and 2015, Dubai will witness nearly 15 square miles added to its urban area from a single development. Dubai World Central

In an effort to attract investors from Asia to the region, property investors will get a preview of all major Dubai real estate offerings with the largest of them – DWC is a 55 square mile US$ 33 billion urban land project – and is currently being offered at the Asian International Investment & Property Show (AIPS) taking place from 25-27 June in Seoul, South Korea.

The show was opened by H.E. Sheikha Lubna Al Qasimi, UAE Minister of Foreign Trade and Chung Jong Hwan, South Korean Minister of Land, Transport and Maritime Affairs, accompanied by Lee Hee Beom, Chairman, Korea International Trade Association (KITA).

DWC has been steadily increasing its sphere of influence and sees the Far East real estate market as a place to attract industry heavyweights to invest in the multi-billion-dollar Dubai property sector.

Khalid bin Harib, CEO, DWC Real Estate said: “Dubai World Central Real Estate has something to offer Asian property developers, government authorities, leading architects, designers, consultants and key senior professionals involved in the real estate industry gathered at this premium event.

“DWC’s three real estate components - DWC Residential City, DWC Commercial City and DWC Golf City - aim to raise over US$ 65 billion over the next decade. We have just scraped the top of the local investor market by raising US$ 2.3 billion within a year through land sales.

“Investors from the Far East have shown huge interest in our property as it provides them easy access to our markets because of the proximity to the world’s largest airport - Al Maktoum International Airport.”

According to DWC, the second phase is expected to be completely sold out, and will generate around $1.6 billion.