FAQ'S

You have a notable track record in co-development with many land-owners, many of them celebrities.  What is the future for this  kind of development ? 

Out of the 120 Projects which PS have undertaken during  the last 21 years, more than 100 Projects were in JV (Joint Ventures) with the Land Owners.  It included Celebrities like Ms. Suchitra  Sen, Sir N. N. Sircar, Vice-Admiral Mihir Kumar Roy, Family of Raja Santosh Roy Chowdhury,  Maharaja of Natore etc. We expect more and more properties being developed by us would be in Joint Ventures  because of the  following  reasons :

More and more owners are realizing that it is more beneficial for them to develop the properties through Joint Venture instead of selling because when they sell their existing property and invest the sale proceeds in another property,  the value of their investment is eroded due to application of capital gain tax and Stamp Duty / Registration charges.  However, when they develop the Property through a Developer the value of their investment is enhanced at least by 50%.

We being the multi-locational Developer and having done the largest number of Joint Venture Property Development are likely to get more and more business through Joint Venture model.  We expect most of our growth in future coming through this model of property development.

I have an ancestral property which is partially occupied by our joint family including me, my wife and children and the rest is tenanted.  Our family has expanded and the area in our occupation is not sufficient.  What shall we do?

 In the event the entire FSI / FAR of your land is not utilized by the present building, one of the option available to you may be to demolish the existing old  building and to get a new building constructed in its place through a developer.  The new building may provide independent flats for your expanding family.

In the event of the development of the said property (due to no residual FSI) is not possible what shall we do ? 

You can consider exchanging your existing property with a Flat of your choice in a new apartment of an established Builder.  In which case you may be able to save the payment of Stamp duty if the Builder is agreeable to pay the Stamp duty applicable for purchase (exchange) of your property by him in lieu of the Flat being sold or exchanged with you.  You would also save the hassel and the liability to pay capital gain tax in such a scenario.

I own a land and I am holding on to  my investment in land in hope of appreciation.  What is the advantage of giving the same to a Developer for development? 

If you are holding a property in the form of a land and waiting for the appreciation  which may or may not happen within the targeted period of time,  the better option for you may be to develop that property/land by construction a building (which may leased or rented) through a Joint Development model.

In India, one cannot get finance from bank on land in the event of any personal need or for further investment. But one can easily get finance on a built up property particularly against property which is earning rent. The money so borrowed from the bank can also be utilized to buy another property where the returns in the form of rental income or appreciation is much higher than the interest one pays on borrowed funds. In such cases, the concept of leverage can be used to take the advantage of the arbitrage opportunity available on the differential between the rate of interest one pays on the borrowed funds and the returns one can get on the property investment made out of such borrowed funds in terms of rent plus appreciation and this way built a large property portfolio.

Can’t I do  the development myself of my property?

Why is it prudent to give the property to a Developer? 

The development of a property, construction of a multi-storied building and selling of its apartments is a business which requires time and experience to master. It further requires the competent manpower, and investment to carry out the proposed development. You also require the network of reliable contractors and reputation or brand equity in order to get the best selling price and terms from the intending purchasers of the apartment.

Most of the property owners do not have all these qualifications as well as facilities and therefore it is prudent to get the development of a property through a professional builder of good reputation and experience. If the owner decides to build or develop his own property he shall face all kinds of problems faced by an inexperienced amateur builder and would tend to make several mistakes which would prove to be costly. It is therefore best to get into a Development Agreement with a reputed builder after appraising all the offers for such a development.

How should I consider an offer from a Developer or a Builder?

 As the value of your share of apartments would depend upon the quality of the proposed building which includes the design as well as the specification of construction of the proposed building. A high percentage of the owner's share does not necessarily mean a better offer. While considering an offer, you should consider the reputation of the builder and his architect, together with the specification of the proposed building i.e. the quality of the building materials to be used e.g. windows, flooring, sanitary, plumbing, lifts and facilities like generator, intercom, fire fighting equipment, etc. Further time for completion of the project (i.e. completion of the proposed building) should be the essence of the contract with adequate panel and termination charges. The owner should have the right to terminate the agreement if the developer defaults on any of the terms of the development agreement and in the event the proposed development not completed in time to be able to get it completed through another developer/contractor (if necessary).     

How do I check the track record of the Builder ?

Check the Builder’s reputation for his competence, reliability and commitment by checking in the market or by (a) calling the land owners whose property has been developed in the past by them by (b) physically checking the quality of work undertaken in the past by visiting his already constructed buildings.  Also check with the occupant who has purchased apartments in such buildings including the quality of  post sales services.