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TIMES NEWS NETWORK [ SUNDAY, MARCH 25, 2007 12:59:14 AM]

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NRIs! 10 Years No Minimum Balance! Last week the Supreme Court (SC) acted on a Public Interest Litigation (PIL) filed by NGO Sanrakshak highlighting the misleading and false campaigns by real estate developers. The SC issued orders to the central and state governments and the law ministry seeking guidelines on mass media advertisements by real estate operators and builders, to protect consumers. The NGO sought a direction to the ministry of urban development, ministry of law and justice and the Press Council of India to constitute a statutory or regulatory body to examine every aspect of the claim made in such public advertisements. Today, the more a consumer asks for information, the more he's fed with irrelevant and meaningless claims he has no means of checking out. The frenzy of meeting consumer demands started in 2001 when the Bhuj earthquake exposed the fact that plush residential condominiums sold at a premium could have shaky foundations. And so the newly aware consumer asked for earthquake resistance. But what the consumer did not bargain for is getting an earthquake proof house! Today a prominent developer in Gurgaon has advertised an earthquakeproof villa. No residential apartment or house can be earthquake-proof, it can only have degrees of earthquake resistance, which provides for safety of the building and people in the event of earthquakes, says V Suresh, vice-chairman National Building Code Committee and chairman of the Part on Administration and General Building Requirements. Recently, a large number of small investors were wooed with pre-launches of projects. Pre-launches typically are developments that have not received sanctions from the development authority. The developer may have decided on the location or even signed a memorandum of understanding with the land owners. The proposed development is sold to investors at a price lower than market values. The money so raised is often used to either purchase the land or start the construction process after the approvals are obtained. After the project receives government approvals, the same project is sold by the developer at a higher price. The pre-launch investors exit the project by selling off the property to a new investor at the current market value. The differential amount is the profit booked by the pre-launch investor. As a prominent North India developer said on condition of anonymity: Earlier I used to sell properties. Now I sell pieces of paper that are traded many times over before the end user comes in at the stage where the property is nearing completion.

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http://economictimes.indiatimes.com/Magazines/The_Sunday_ET/Property/Believe_it... 25/03/2007