Good morning, Niantic, the maker of Pokémon GO, has just raised fresh funds at a USD9 billion valuation. Its goal is to build the “real-world metaverse.”
Haha. Now whatever could a real-world metaverse mean?
Ask the blokes who just spent millions of dollars to buy a premium property in one such metaverse.
We hope someday there's a metaverse for newsletters too. 🤷♀️
Hi Assured Return, Meet RERA
The Real Estate Regulatory Authority(RERA) is akin to a massive braking system for runaway real-estate-builder-trains and one big reason for the home buyer's sentiment revival is the assurance that RERA brings to the transaction table today.
The Indian Assured Returns Googly
Here's a quick overview of an old real estate transaction that went haywire for the home buyer.
Back in 2010, Madhushree Khaitan had booked a unit in Gurugram's Vatika Inxt City Centre project after paying a total price of INR 20 lakh.
Shortly thereafter, a builder-buyer agreement was signed on September 3, 2010, where the delivery of the unit was promised by the end of 2013.
Almost a year later, an addendum agreement between the two sides was signed, stating the builder will pay a certain amount as assured return every month to Ms. Khaitan till the completion of the project - say hello to the assured returns scheme.
And The Classic U-Turn
After a little time, without any communication, the builder allotted a different unit to the buyer and stopped paying the assured returns.
When Ms. Khaitan raised a red flag, the builder claimed protection under the BUDS** Act, which prevents the payment of assured return and stated that the buyer is merely an ‘investor’ and not an ‘allottee’.
** FYI, BUDS is short for Banning of Unregulated Deposit Act, 2019
Haryana RERA Hits It Out Of The Stadium
HRERA passed an order in the case of Madhushree Khaitan vs Vatika Limited in favour of homebuyers for failure of payment of assured returns by the builder.
HRERA directed the blokes at Vatika to pay the amount of assured returns as agreed between the two parties and made it clear that a real estate developer cannot avoid paying the assured returns;
- either by taking recourse under the BUDS Act - that says that such a pay out is banned,
- or by rewriting its contractual obligations.
In One Sip
The regulator also reiterated that where the payment of assured return is a part and parcel of the builder-buyer agreement or by way of a clause in a memorandum of understanding or a clause in the addendum, the builder cannot take a plea that it is not liable to pay the assured return.
It clarified that allottees are investors who have chosen a committed return plan.
Before RERA
📌 Just so that we know, before RERA came into the scene, the amounts raised by the developers under assured return schemes had the commercial effect of a borrowing.
Hence the allottees of such assured returns were treated as financial creditors within the meaning of Section 5(7) of the IBC code.
Now Growing At 75% YoY
After a generally bad run since demonetisation and the brake checks that the pandemic pulled off, Indian real estate finally seems to be on a sustained recovery path.
Zooming In
The sector has been witnessing a sort of paradigm shift over the past two years.
Very quickly, while the Covid induced 'work from home' model reduced the demand for commercial spaces, it increased the demand for residential spaces and the shared economy to an extent.
Per Infomerics Valuation and Rating (RBI Accredited), real estate should grow at a rate of 75% YoY through the next three years.
Housing
The report said that with regard to demand for housing, the interest rates on home loans (October 2021) is likely to act as an incentive for prospective buyers.
📌 Along with that, the buying decisions now factor in adverse impact on income, 'thriftiness' caused by unforeseen emergencies, 'access to large green areas' and 'access to good healthcare'.
The projected 3-year growth in housing rides on favourable policies by the government, like tax holidays for affordable housing projects, registration fee discounts, and tax deduction on interests on housing loans in the Union Budget 2021-22.
Also, Capital expenditure (Capex) of INR 5,43,559 crore is committed by governments combined, for affordable housing over the period 2020-25.
Commercial (CRE)
The commercial real estate (CRE) segment has witness a mixed bag period. Among dominant markets, Bengaluru, Chennai, and Delhi NCR recorded the highest recovery in the September 2021 quarter.
📌 Information Technology (IT) remains the largest consumer of space during the quarter, occupying 34% of the space transacted.
In a boost to CRE, SEBI lowered the minimum application value for Real Estate Investment Trusts (REITs) from INR 50,000 to INR 10,000 -15,000, making the market more accessible to small and retail investors.
Zooming Out
About 58% folks consider real estate as a mode of safe investment, with a notion that its prospects are likely to see an upswing once the pandemic recedes.
😷 the report also mentions that the possibility of the third wave of Covid-19 and the emergence of delta variant, is a big cause of concern.
Half A Cup Extra
- 🦄 Realty startup Nobroker.com is now a unicorn and is also the first of its kind.
- Property portal Housing.com has launched a legal assistance service for homebuyers.
Iconic Facelift
Per Reuters, Big Ben's dials will emerge from a shroud of scaffolding after over three years, in time to ring in the New Year for thousands on the streets of London and millions more watching on television.
Indian Central Vista project - we are eagerly waiting. ⏳
Virtual Fashion-Street Plot Sells For A Record $2.4 Million
When real estate sales went online, it got us really excited.
With standardised quality and a WYSIWYG approach to sales, it meant that part of the housing industry was finally, truly organised.
But when a virtual (reminder: not online, this virtual plot exists only on the internet) plot just sold for a record 2.4 million dollars, it's blown our minds to metaverse come.
A Piece Of Fashion Street
The Metaverse Group, a subsidiary of Tokens.com, just bought a patch of real estate that doesn't exist anywhere in the universe, for 618,000 MANA on Monday, which was around USD2,428,740 at the time.
The land 'thing' is in the "Fashion Street" area of Decentraland's map and its new owner said that it would be used to host digital fashion events and sell virtual clothing for avatars.
It is made of 116 smaller parcels, measuring 52.5 square feet each, making the land 6,090 virtual sq. ft. in area.
Well, Where Is It?
Decentraland is an online environment - also called a "metaverse" - where users can buy land, visit buildings, walk around and meet people as avatars.
Using blockchain, land and other items in Decentraland are sold in the form of non-fungible tokens (NFTs), a kind of crypto asset.
Crypto enthusiasts buy land there as a speculative investment, using Decentraland's cryptocurrency, MANA. Btw, MANA is a highly volatile cryptocurrency.
Has Such A Sale Happened Before?
To our surprise, yes. In June this year, another plot of virtual land in Decentraland sold for 1,295,000 MANA, worth USD913,228 at the time.
🎙 Andrew Kiguel, CEO of Tokens.com, said the assets would complement the real estate already held by Metaverse Group. -- 👀 - DLF, Godrej Properties and The Phoenix Mills.
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Have a great day. 💚
☕ The Crew@Ginger Chai