Global Real Estate Giant IREO to Pump $500 million in Indian Real Estate and Infrastructure

Global real estate giant IREO will pump in $500 million in various infrastructure projects in India over a period of seven years, the company said Thursday. IREO, which has invested $1.5 billion in India, is already one of the largest investors in the country’s real estate sector. “Having already invested $1.5 billion, we still have another $500 million available in cash for further investments in our projects,” Lalit Goyal, vice-chairman and managing director IREO, told reporters here.

The company currently has 13 projects and is in the process of constructing an IT SEZ (special economic zone) in Pune. “We have already commenced construction of a five million square feet IT SEZ (Pune) and a three-million-square-feet housing project,” Goyal said. Added Anurag Bhargava, chairman IREO: “The Pune SEZ should be completed by next year.” The company has projects in many states including Haryana, Punjab, Tamil Nadu, Maharashtra and Delhi. The company said it would develop an eight-million-square-feet housing project in the next 12 months.

Source : http://www.indianrealtynews.com/real-estate-india/global-real-estate-giant-ireo-to-pump-500-million-in-indian-real-estate-and-infrastructure.html

Gift of properties to be taxable soon

As per the Budget proposal , tax planning around gifting of immovable and movable properties will soon turn out to be a difficult task for taxpayers. The Government plans to amend the income-tax law to curb “black money” transactions in the property market.

From October 1, 2009, the value of any property received without consideration or received with an inadequate consideration will be included in the computation of total income of the recipient. Such transactions would be taxable at the hands of the recipient under the head “income from other sources”.

The proposed change in law would cover immovable property (land, building), shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art.

However, the proposed change will not apply when the property is received from any relative or on occasion of marriage of the individual, or under a will or by way of inheritance or in contemplation of death of the payer or donor or from any local authority or certain registered trust.

Also, money or property received from any fund or foundation or university or other educational institution or hospital or medical institutions will be excluded from the purview of the proposed change.

Source : http://www.pwindia.in/

Budget hotels, serviced apts sprouting fast

Bangalore: Mid-market hotel brands and serviced apartment chains are fighting tooth and nail for the keys to growth, and perhaps, the same customers.

Both segments are on an expansion spree to cash in on the slowdown that has thrown up good demand for cheaper hotel rooms.

The high average room rates (ARR), despite the current slump, have reduced hotel occupancies by 57% in cities like Bangalore, Hyderabad and Pune for star hotels.

But budget hotel chains and serviced apartments have benefited from this. Not surprisingly many of them have charted out aggressive plans including expanding in the hinterland.

For instance, Roots Corporation Ltd, a wholly owned subsidiary of the Indian Hotels Company, plans to launch 30 more properties by 2010 under the Ginger brand. The firm will add hotels in Guwahati, Durg, Surat, Chennai, Jamshedpur and Pune among others.

“We have identified the locations after detailed studies across various parameters such as market potential, clusters of clientele and peak periods,” Prabhat Pani, chief executive officer & director, Roots Corporation Ltd, said.

Likewise, Fortune Hotels Pvt Ltd, a wholly owned subsidiary of ITC Ltd, is planning 26 hotels across India by mid-2011. “There had been minor hiccups but there is still a huge opportunity to add new property in the mid segment. All the properties are in different stages of development and Fortune is the fastest growing brand for ITC Hotels,” ITC Ltd – Hotels Division senior executive vice president, Pawan Verma, said.

The firm has signed management contracts for 55 hotels with a total room inventory of 4,400 rooms. It is also in talks with Bangalore based JP Group to operate and manage its luxury hotel in Mysore. Fortune has 29 hotels in operation comprising an inventory of 2,400 rooms.

Mumbai based Sarovar Hotels Pvt Ltd, one of the largest budget and mid-market chains, is looking at garnering higher business by adding 800 more rooms in eight hotels to its existing 4,500 in 35 hotels by the end of this year.

Sarovar will invest about Rs 250 crore, excluding land cost, to develop hotels in Bangalore, Jaipur, Gurgaon, and Chandigarh among others, said Ajay Bakaya, executive director, Sarovar Hotels.

With competition increasing in the affordable stay segment, average room rates will stabilise by 2010, said Tarandeep Singh, principal consultant (hospitality), Technopak Advisors.

“There will be excess inventory and hotels will be cautious while revising rates,” he said, adding the industry will pick up by September 2010.

Serviced apartment players are letting go of their cautiousness and are re-looking at the market to close deals on affordable rates. Many of the operators are in talks with developers to enter into management contracts and are bargaining hard to add rooms.

Priyadarshi Samal, director, operation, Chalet Hospitality, a leading serviced apartment player in Bangalore said he believed this is the right time to get value for money property. “The value of good property has come down and we plan to add another 100 rooms in next three to six months.”

Keshav Baljee, co-promoter Royal Orchid Hotel, said, “We are not much affected by the downturn and are currently operating on healthy occupancy.” The firm is adding extended holiday concept in Hyderabad, and is in talks with several developers to build and operate properties in Mumbai, Chennai and National Capital Region. It is also eyeing distressed property which can be converted into serviced apartments.

Source : http://www.dnaindia.com/money/report_budget-hotels-serviced-apts-sprouting-fast_1272389

Real estate loans may get cheaper

The Reserve Bank of India (RBI) on Wednesday issued draft guidelines on the classification of bank exposures under which loans to hotel & hospital projects and special economic zones (SEZs) will not be considered as commercial real estate. However, investments in real estate funds will be considered as capital market exposure.

RBI had earlier issued guidelines for such loans on January 7. It has called for comments from banks and the public on the new draft.
“If lending to hospitals and hotels is kept outside the purview of commercial real estate lending, then banks will be left with more funds for commercial and residential projects. Most banks have an internal limit of 3 to 7 per cent of their total advances as real estate exposure. If the draft guidelines are finally adopted, more money can be allocated to commercial and residential real estate,” said a senior Bank of India official.
The exposures to entrepreneurs who buy real estate as a carry-on- business, which is serviced out of the cash flows generated by the business, will also not be regarded as commercial real estate exposure.

B Ravi Ramu, finance director of the Bangalore-based Puravankara Projects, said this would allow greater scope to banks to lend to real estate projects. “Loans for hotel projects are usually long term, and the repayment usually begins only after their commissioning,” he said.

“The recommendations, if and when notified, will ensure cheaper credit to developers,” said Naveen Raheja, managing director of the Gurgaon-based Raheja Developers. He said the move would lead to lower risk ratings of projects and finance would become easier not only for building hotels and hospitals but other commercial and residential projects as well.

Loans given for construction of cinema halls, amusement parks, hotels & hospitals, cold storages, educational institutions, beauty parlours & saloons, restaurants and gymnasiums will also be exempted. Such loans will generally be secured by these properties, according to RBI.

For instance, in the case of hotels & hospitals, the source of repayment in the normal course will be the cash flows generated by services offered by these establishments. In the case of a hotel, the cash flows will be largely sensitive to factors influencing tourist flows and not directly to fluctuations in real estate prices.

In the case of a hospital, the cash flows in the normal course will be sensitive to the quality of doctors and other diagnostic services. The hospital’s source of repayment may also depend, to some extent, on changes in real estate prices. But this is a minor factor in determining the overall cash flows.

In case of default, if the exposure is secured by the commercial real estate, the recovery would depend on the sale price of the asset.

Similarly, investments in the equity of a real estate company or a mutual fund, venture capital fund (VCF) or private equity fund (PEF) – which, in turn, invest such companies — will be sensitive to real estate price changes, in addition to having a correlation with the general equity market. Hence, these will be reckoned both as ‘capital market exposure’ (for the purpose of compliance with the regulatory ceiling fixed by RBI) and the internal ceiling for ‘real estate exposure’ fixed by the lending bank itself.

The RBI ceiling on banks’ capital market exposure is 40 per cent of their tier-I capital, which is the core capital and includes capital and reserves.

(With inputs from Shilpa Shree in Bangalore and Vivek Sinha in New Delhi)

Source : http://www.mydigitalfc.com/banking/real-estate-loans-may-get-cheaper-767

Coming soon, cheaper loans for SEZ developers

NEW DELHI: The government may soon release a new set of rules that will make domestic borrowing cheaper for developers of special economic zones  (SEZs), thereby boosting investment in these tax-free manufacturing hubs.

The Reserve Bank of India (RBI) recently granted infrastructure status to projects in these SEZs that will let them access cheaper funds. The central bank will now release revised commercial real estate exposure (CREE) guidelines for banks to identify activities that can be classified as infrastructure.

The draft norms have been circulated for comments to banks and general public, and once they are finalised, SEZ developers will be able to source funds at about 2% cheaper rates for most activities in the processing areas that are likely to be classified as infrastructure, a government official said.

The move will benefit both small and big SEZ developers such as Reliance, Adani and Essar, and IT companies such as Infosys and Wipro.

“The development is definitely positive as SEZs have been facing a cash crunch due to the global slowdown. Once banks adopt the new guidelines, SEZs will get access to funds earmarked for infrastructure projects at lower interest rates, giving them a much-needed boost,” the official added.

As per the draft guidelines, the exposure of banks towards purchase and development of land for SEZs that will be repaid from the sale proceeds or rental of the plots given on lease to the units in SEZs will be classified as CREE exposure. The cost of plots would include the cost of land acquisition as well as the cost of land development.

However, if a single company is developing an SEZ completely or partially for its own use and its repayment will depend on the cash flow generated by economic activities of the units in the SEZ along with the general cash flow of the company rather than the level of real estate prices, it should not be classified as CREE but as infrastructure lending.

Similarly, if there are co-developers in an SEZ who undertake a specific job such as provision of sewerage and electrical lines, among others, and are paid by the main developer based on the work in progress, such exposure will be classified as infrastructure lending, the draft notification said.

Source  : http://economictimes.indiatimes.com/Economy/Coming-soon-cheaper-loans-for-SEZ-developers/articleshow/4755404.cms

Increased Infrastructure Spending will Benefit Real Estate

While most real estate developers were disappointed with the Budget, a few realtors and global property service provider Jones Lang LaSalle (NYSE:JLL) Meghraj stated that increased infrastructure spends would indirectly benefit real estate. Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, said, of late, increasing number of infrastructure projects had a real estate component by virtue of a cross-subsidisation principle. Therefore, boosting infrastructure projects would give an impetus to real estate.

Similarly, a higher allocation to NHAI (National Highways Authority of India) would ensure improved and accelerated connectivity, which in turn would raise the value of real estate along the routes and open up new areas for development. A larger allocation for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was also good news for urban infrastructure. The programme has been instrumental in improving road and rail connectivity in urban and suburban areas, and this would boost mass housing schemes on the fringes of the metros. A higher outlay for the rural electrification scheme, besides rural housing fund and roads might serve to improve the realty markets in far-flung areas and help reduce inward migration from the villages by providing industrial growth in the hinterlands.

On the negative side, Mr Puri said STPI (Software Technology Parks of India) units would have a higher burden of Minimum Alternative Tax (MAT). This was an indirect endorsement of SEZs, and in line with the Government’s stance to phase out benefits to STPI projects, thereby encouraging migration to SEZs. Mr Pradeep Jain, Chairman, Parsvnath Developers, said though it was a non-event Budget specifically for the real estate sector, there were certain announcements which would indirectly support the sector. The Budget provides stimulus worth Rs 2,000 crore to the rural housing which was a welcome move as it would complement efforts to provide good quality housing in rural India.

Refinancing 60 per cent of commercial bank loans for PPP projects in critical sectors by IIFCL would infuse liquidity in the system and boost infrastructure development. Increase in allocation under JNNURM by 87 per cent to Rs 12,887 crore would be instrumental in reviving the urban infrastructure. The total excise duty exemption from pre-fabricated concrete slabs would help reduce the cost of construction in projects using pre-fabricated materials.

Mr Kapil Wadhawan, Vice-Chairman and Managing Director, Dewan Housing Finance Corporation Ltd, said the Budget clearly focused on improving rural housing and developing infrastructure in urban and rural India. The allocation of Rs 2,000 crore for Rural Housing Fund through the National Housing Bank to boost the resource base of NHB for refinance operations in rural housing was a significant announcement and would help organisations such as DHFL, which primarily focused on the lower and middle-income segment. The Confederation of Real Estate Developers Association of India said it was utterly disappointed, particularly because the Budget completely ignored the substantial contribution of the housing and real estate sector to GDP and employment of 10 million workers, which was second only to the agriculture industry.

Mr Kumar Gera, Chairman, CREDAI, said he was also upset as the real estate sector that has an impact on over 200 services and industries, with forward and backward linkages, had been let down. However, referring to the allocation for JNNURM scheme and enhancement outlay for housing and provision of basic amenities to urban poor, he said it would provide some relief through Government authorities without much participation by the private sector.

Source : http://www.indianrealtynews.com/real-estate-india/increased-infrastructure-spending-will-benefit-real-estate.html

Mumbai Based Developer Plans Hotels in the City

Royal Palms, Mumbai-based real estate developer aims to expand its footprint in the city’s hospitality market. Currently, the company operates two properties at its Royal Palms Estate located at Goregaon in Mumbai — the Palms Tower and Villas and the recently launched Imperial Palace with a total inventory of about 750 rooms. Plans are in the pipeline to build three more hotels and a convention centre within the estate. The new development is expected to be operational in the next three to five years making a total portfolio of about 2200 rooms under the company’s management.

Divulging the company’s plans to TravelBiz Monitor, Dilawar Nensey, Joint Managing Director, Royal Palms, stated, “Our overall plan is to develop an offering across every price point, as well as to create unique offering for our clientele. We have accomplished the same with our villa property and the palace hotel.” The company plans to develop a mid-market segment hotel of 400 rooms, a four-star property of 600 rooms and a five-star property of around 280 rooms. It plans to develop the five-star property dedicated to the airline crew. Nensey expects the properties to be operational from second quarter of 2012. It will develop its own brand with the new hotels.

The real estate firm will develop a convention centre having an area of 140000 sq. ft., which will be operational by end of 2010. It aims to strongly tap the MICE segment post development. “We have the room inventory to sustain the MICE events of international standard. Besides, with the new inventory getting operational, corporates will be offered with rooms by us according to their budget,” opined Nensey.

The company has recently launched its palace hotel the Imperial Palace. While the hotel’s total inventory will be about 422 rooms, it has presently started operations with 279 rooms. The property is primarily targeted to the business clientele with a major traffic driven from airline crew, corporates and FITs and conference business. According to Nensey, the property has the advantage to target leisure clientele during weekends due to its location.

Source : http://www.indianrealtynews.com/real-estate-india/mumbai/mumbai-based-developer-plans-hotels-in-the-city.html

No Additional Tax and Duties is a Good Move- Real Estate Sector

The real estate sector leaders believe that no additional burden of taxes and duties in the Union Budget is good news for them as input costs will remain the same. “No negative news for the sector which is seeing signs of revival now is by itself good news. We are happy with the structural directions that this Budget has provided,” says Mr J.C. Sharma, Managing Director, Sobha Developers. (OOTC:SBDRF) As a developer, “we are happy that costs have not escalated, which is a good thing,” he adds. What is welcome and something to look forward to is higher disposable income in the hands of the consumer, who would have extra money now thanks to the increase in income-tax exemption. “Extra money in the consumer’s hands means a lot for us,” says Mr Koshy Varghese, Managing Director, Value Designbuild, a Bangalore-based real estate developer. That India Infrastructure Finance Company (IIFCL) will be given more flexibility and has been authorised to raise Rs 1 lakh crore for the development of the infrastructure sector is an indirect boon to the real estate industry, says Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle (NYSE:JLL) Meghraj, a real estate services firm, in a press release. He pointed out that an increasing number of infrastructure projects have a real estate component by virtue of a cross-subsidisation principle. “Therefore, boosting infrastructure projects gives an impetus to real estate, as well,” he added. According to Mr Puri, the intended clearing of regulatory bottlenecks for infrastructure projects will help bring forward many pending projects, thereby boosting the construction sector. The increased allocation for the National Highways Authority of India will mean improved and accelerated connectivity, raising the value of existing real estate along these routes, thus opening up new areas for development, he says. Mr Varghese draws attention to the fact that the Government would come out with the new direct tax code in 45 days, which could also impact the real estate sector. Source : http://www.indianrealtynews.com/real-estate-india/no-additional-tax-and-duties-is-a-good-move-real-estate-sector.html

Delhi and Mumbai Dominate Residential Market

The rest of India almost doesn’t matter – at least when it comes to realty. Think property and you think capital Delhi and financial capital Mumbai. These two metros, along with their suburbs, comprise the largest pie of real estate in the country. No surprise that they are undoubtedly the most sought after destinations for an investor looking at attractive residential locations. These markets are significant from the perspective of sheer administrative strength and as centres of business as well as growth. And numbers bear out this fact as well. According to Rajiv Sahni, partner, real estate practice, Ernst & Young, while in terms of office space absorption, NCR comes second after Bangalore, it commands nearly 35% share of the top 8-10 residential markets in India. Mumbai comes second, with a 15% share of residential market.

So which are the best places to invest in Delhi and Mumbai? Aditi Vijayakar, executive director, residential services India, Cushman & Wakefield, advises that investments should usually be targeted towards destinations that have a stronger prospect of appreciating in the future, offer leasing potential and have the inherent strength to sustain demand. “Locations such as central Mumbai (Parel, Mahalaxmi), Bandra (West & East), Kalina and JVLR in Mumbai and NOIDA-Greater NOIDA expressway, Indirapuram, Golf Course extension road, in Delhi offer such opportunities. They are ideally located from the perspective of accessibility and have growing commercial hubs in the vicinity. These are emerging as strong changing markets.” Aditi adds that as far as return on investment is concerned, these will vary depending on projects, acquisition cost, leasing potential, supply pressure, promoter’s brand equity and maintenance quality. “Average returns from rental may vary from 4% to 6% and capital values may appreciate at the rate of 8% to 10% per annum. Returns are dependent on the capital and rental value cycle and currently both values have dipped given the economic environment.”

What also makes these cities attractive for owning a residential space is the fact that they are buzzing with economic activity. According to Anshuman Magazine, CMD, CB Richard Ellis, a lot of improvement has taken place in these cities in terms of business opportunities and infrastructure which makes them extremely viable destinations. Developers also agree that Gurgaon and Indirapuram are attractive markets in Delhi NCR whereas it is Navi Mumbai, Vasai, Virar, and Kandivali in Mumbai which will see increased development.

Says Harinder Dhillon, GM, Marketing, Raheja Developers, “These two markets make up at least 30% of the entire market. Gurgaon is lucrative due to the upcoming developments in accordance with the new Gurgaon masterplan. The Indirapuram area and beyond will remain in demand because of the revised floor area ratio (FAR) and population density norms. In Delhi, the areas under new master plan which will open up under the new R zone such as Chattarpur, Nangloi, Alipur, Najafgarh blocks will see heightened activity. In Mumbai, it is Navi Mumbai, Vasai, Virar, Kandivali which are likely to witness hectic transactions in the near future.”

“If one is looking at the futuristic development of the place, then places in Ghaziabad are NH24 and NH58, and if you move further then Faridabad is also coming up well. Some of these places might look deserted but think of places like Dwarka some 10 years back. It is now in demand primarily because of infrastructural developments. In the financial capital, locations such as Navi Mumbai and Thane are attractive,” he says. Some are of the view that the genesis of Delhi and Mumbai is different altogether as one is a political centre and the other a business hub. Brijesh Bhanote, senior V-P, sales and marketing of The 3C Company, a Delhi-based real estate firm feels that as the cost of construction and land prices in Delhi are relatively lower than Mumbai, hence return on investment could be better in the capital.

A few things should, however, be kept in mind while seeing the investment potential of a given location. Various aspects such as infrastructural developments, connectivity, power, roads etc should be considered so that one can get maximum returns of the investment. “Neighbourhoods with a strong employment base, proximity to educational, health and shopping centres, ideal external connectivity through mass transportation system, closeness to golf course and natural garden are essential features of a property having appreciation potential. If such a property is backed by a developer having reputation for high quality construction, it is destined to give handsome return on a medium to long term basis,” says Rajeev Rai, vice-president, corporate, Assotech.

With developers coming up with many projects in and around new developments in Delhi NCR and Mumbai, you can expect a lot of supply in these cities in the near future. But do study the pricing basics and micro examine the investment potential of a given location in these two real estate markets. Make a good choice and be sure of a profitable bargain.

Source : http://www.indianrealtynews.com/real-estate-india/delhi/delhi-and-mumbai-dominate-residential-market.html

Royal Palms to expand hotel portfolio within Mumbai estate

Royal Palms, Mumbai-based real estate developer, aims to expand its footprint in the city’s hospitality market. Currently, the company operates two properties at its Royal Palms Estate located at Goregaon in Mumbai — the Palms Tower and Villas and the recently launched Imperial Palace with a total inventory of about 750 rooms. Plans are in the pipeline to build three more hotels and a convention centre within the estate. The new development is expected to be operational in the next three to five years making a total portfolio of about 2200 rooms under the company’s management.

Divulging the company’s plans to Hospitality Biz, Dilawar Nensey, Joint Managing Director, Royal Palms, states, “Our overall plan is to develop an offering across every price point as well as to create unique offering for our clientele. We have accomplished the same with our villa property and the palace hotel.” The company plans to develop a mid-market segment hotel of 400 rooms, a four-star property of 600 rooms and a five-star property of around 280 rooms. It plans to develop the five-star property dedicated to the airline crew.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=5465&sid=1

Wadas of Pune ripe for redevelopment

R. Savitha

Residents of Pune’s wadas, the 16th century-style tenements in the heart of the city, are fast waking up to the need to do something about their crumbling edifices. That redevelopment of wadas has to happen, and fast, has hit both the tenants and the owners alike.

Repairs needed

The Pune Municipal Corporation (PMC) records that of the nearly 18,000 properties located in Kasba Peth, Budhwar Peth, Shaniwar Peth, Nana Peth, Bhavani Peth and Narayan Peth, around 8,000 are very old and need immediate repairs.

Many are considered dangerous to live in but repairs have not always been possible because of technical and legal issues, including ownership issues of a majority of the wadas. Even if a tenant wants to repair the wada, it is necessary for him to get a no-objection certificate from the owner, who would invariably refuse to give it.

A wada is a typical 16th century construction style, originally meant for the society’s elite, where joint families could live in the many rooms on the same premises.

Over time the same style of construction was practised allowing for many families to live in as tenants and share common utilities such as toilets and bathrooms.

Mr Shantilal Kataria, Chairman and Managing Director of Aditya Developers, is of the view that wada redevelopment would help Pune and although late , the builders would welcome the idea. He said the idea of redevelopment had been on in Pune for a long time, and as recently as two months back the Promoters and Builders Association of Pune (PBAP) and the Confederation of Real Estate Developers Association of India (CREDAI) had met with Mr T. C. Benjamin, the State Urban Development Department (UDD) Principal Secretary, and had put forward the proposal.

For overall betterment

Mr Benjamin had wanted Pune to follow the footsteps of Mumbai where old building had been redeveloped, helping the owners as well as the tenants alike. “Eight years ago, we used to develop wadas within the given FSI, but this would happen only when the tenants as well as the owners had an agreement.

Not all wadas in Pune are heritage structures and most of the wadas do not get redeveloped as the tenants and owners are invariably at loggerheads.

But there are plenty of wadas which only require redevelopment but the PMC has to give us a good FSI, else it would not be financially viable.”

If a wada is redeveloped, it is for the betterment of both the tenant as well as the owner, for none of them alone can look at repairs or maintenance of the dilapidated wada.

According to builders and developers, hardly 20 per cent of these wadas are in a liveable condition. These wadas were made out of clay, bricks and wood, which have deteriorated over the years, due to lack of maintenance. As the rents too are pretty low and cannot be raised due to the Rent Act, the owners too are not interested in maintenance .

Mr K. P. Baney, Chairman and Managing Director of Devi Constructions, noted that all the builders and developers would like to help in the development of the wadas.

There are many concessions being offered and the area has not been developed so far. The wadas should be redeveloped as a mix of residential and commercial complexes. As the people have been staying there for a long time, development of residential building would be a priority, but commercial space should also be allowed for viability.

He noted that Devi Constructions had been approached about three times for redevelopment but it has always got deferred because the residents did not cooperate.

The owners are looking at the financial aspect as well as getting more built-up space in the same area, he added.

Incentive FSI

Mr Kishore Wani, Director of Amit Enterprises, notes that that redevelopment of the wadas had begun eight years ago — being built up as apartments with an FSI (floor space index) of 1.5 and for commercial space at an FSI of two. But commercial buildings could come up in the place of a wada only if the wada was on a 30 ft road, where an FSI of two was possible.

If there are a large number of tenants the limit of 1.5 FSI is not feasible for redevelopment, he saidThe State Government needs to bring in ‘incentive FSI’ in Pune as it did in Mumbai.

Incentive FSI is the component of FSI that can be used for free-sale. The incentive FSI admissible ranges from 50 to 75 per cent of the total area of amalgamated plots.

Ms Punam Gadgil, resident of Sadashiv Peth, used to live in a wada which had been around since the time of her great grandfather.

The area was 675 sq.ft, consisting of six rooms. Today, she owns an apartment of 1,030 sq.ft of two bedroom-hall-kitchen. The redevelopment happened, she said, as a couple of more tenants mutually agreed to leave.

In May 2008 they handed the wada over to the local builder and this September she will be shifting into her new home.

Source : http://www.thehindubusinessline.com/iw/2009/07/05/stories/2009070550571500.htm

Sea link hits Worli property prices

Mumbai: With the Bandra-Worli Sea Link now open to the public, real-estate prices in the once tony residential area of Worli Sea Face are set to change.

Bandra Worli Sea LinkAccording to real-estate experts, increasing traffic and the consequent noise and air pollution are bound to have a negative impact on property prices along the promenade.

“Individuals who may have wanted to shift to Worli Sea Face will be put off,” said Anuj Puri, managing director, Jones Lang LaSalle Meghraj, a real-estate consultancy firm. “There are many issues like pollution, easy access to buildings, and security of children due to the increase in vehicular traffic.”

Residents are already complaining that noise levels and air pollution have gone up. Moreover, the exit of the sea link has created a bottleneck, ruining the peace of the locality. The press of the National School for the Blind is on this road which, interestingly, is designated a silence zone.

While Puri did not think that prices would crash, he said they would stabilise, “they won’t appreciate. The impact will be such that if anyone wishes to sell their property, they won’t get a good price.”

Even the hitherto quiet hillock of Pochkhanwala Road will now suffer heavy vehicular traffic. In fact, some residents anticipated this problem some months ago and moved into the western suburbs, selling off their properties when prices were still good.

“A CEO of a top information technology firm sold his property a few months ago as he anticipated noise and traffic problems,” said Pranay Vakil, chairman of Knight Frank India. “The fact is that the value of properties along the Sea Face has now gone down.”

On the other hand, experts say the sea link has brightened real-estate prospects in the western suburbs. “The key word is infrastructure,” said Vakil. “It increases connectivity and with better spread comes better prices.”

N Raghunathan, a former chief secretary of Maharashtra and resident of Priya building on Worli Sea Face, is now spearheading a campaign against the exit of the sea link. Raghunathan and other residents have written to the state government and even the prime minister about the problems.

Their claims are not unfounded. Town-planning expert Chandrashekhar Prabhu said he had read the note prepared by Raghunathan and agreed that the area, once an open space, is now a hub of pollution.

“They are cent per cent correct in the assessment of the aftermath of the sea link,” Prabhu said. “Worli Sea Face is surely becoming the most polluted area for no fault of the residents.”

Source : http://www.dnaindia.com/mumbai/report_sea-link-hits-worli-property-prices_1271182

Delhi, Mumbai command 50% of top residential markets

The rest of India almost doesn’t matter – at least when it comes to realty. Think property and you think capital Delhi and financial capital Mumbai. Land as investment

These two metros, along with their suburbs, comprise the largest pie of real estate in the country. No surprise that they are undoubtedly the most sought after destinations for an investor looking at attractive residential locations.

And not without reason. These markets are significant from the perspective of sheer administrative strength and as centres of business as well as growth. And numbers bear out this fact as well. According to Rajiv Sahni, partner, real estate practice, Ernst & Young, while in terms of office space absorption, NCR comes second after Bangalore, it commands nearly 35% share of the top 8-10 residential markets in India. Mumbai comes second, with a 15% share of residential market.

So which are the best places to invest in Delhi and Mumbai? Aditi Vijayakar, executive director, residential services India, Cushman & Wakefield, advises that investments should usually be targeted towards destinations that have a stronger prospect of appreciating in the future, offer leasing potential and have the inherent strength to sustain demand.

“Locations such as central Mumbai (Parel, Mahalaxmi), Bandra (West & East), Kalina and JVLR in Mumbai and NOIDA-Greater NOIDA expressway, Indirapuram, Golf Course extension road, in Delhi offer such opportunities. They are ideally located from the perspective of accessibility and have growing commercial hubs in the vicinity. These are emerging as strong changing markets.”

Aditi adds that as far as return on investment is concerned, these will vary depending on projects, acquisition cost, leasing potential, supply pressure, promoter’s brand equity and maintenance quality. “Average returns from rental may vary from 4% to 6% and capital values may appreciate at the rate of 8% to 10% per annum. Returns are dependent on the capital and rental value cycle and currently both values have dipped given the economic environment.”

What also makes these cities attractive for owning a residential space is the fact that they are buzzing with economic activity. According to Anshuman Magazine, CMD, CB Richard Ellis, a lot of improvement has taken place in these cities in terms of business opportunities and infrastructure which makes them extremely viable destinations.

Developers also agree that Gurgaon and Indirapuram are attractive markets in Delhi NCR whereas it is Navi Mumbai, Vasai, Virar, and Kandivali in Mumbai which will see increased development.

Says Harinder Dhillon, GM, Marketing, Raheja Developers, “These two markets make up at least 30% of the entire market. Gurgaon is lucrative due to the upcoming developments in accordance with the new Gurgaon masterplan. The Indirapuram area and beyond will remain in demand because of the revised floor area ratio (FAR) and population density norms. In Delhi, the areas under new master plan which will open up under the new R zone such as Chattarpur, Nangloi, Alipur, Najafgarh blocks will see heightened activity. In Mumbai, it is Navi Mumbai, Vasai, Virar, Kandivali which are likely to witness hectic transactions in the near future.”

Agrees Vijay Jindal, CMD, SVP Group who says that some of the best places to invest are in Delhi NCR and the new developments in Mumbai. Land as investment

“If one is looking at the futuristic development of the place, then places in Ghaziabad are NH24 and NH58, and if you move further then Faridabad is also coming up well. Some of these places might look deserted but think of places like Dwarka some 10 years back. It is now in demand primarily because of infrastructural developments. In the financial capital, locations such as Navi Mumbai and Thane are attractive,” he says.

Some are of the view that the genesis of Delhi and Mumbai is different altogether as one is a political centre and the other a business hub. Brijesh Bhanote, senior V-P, sales and marketing of The 3C Company, a Delhi-based real estate firm feels that as the cost of construction and land prices in Delhi are relatively lower than Mumbai, hence return on investment could be better in the capital.

A few things should, however, be kept in mind while seeing the investment potential of a given location. Various aspects such as infrastructural developments, connectivity, power, roads etc should be considered so that one can get maximum returns of the investment.

“Neighbourhoods with a strong employment base, proximity to educational, health and shopping centres, ideal external connectivity through mass transportation system, closeness to golf course and natural garden are essential features of a property having appreciation potential. If such a property is backed by a developer having reputation for high quality construction, it is destined to give handsome return on a medium to long term basis,” says Rajeev Rai, vice-president, corporate, Assotech.

With developers coming up with many projects in and around new developments in Delhi NCR and Mumbai, you can expect a lot of supply in these cities in the near future. But do study the pricing basics and micro examine the investment potential of a given location in these two real estate markets. Make a good choice and be sure of a profitable bargain.

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Property/Delhi-Mumbai-command-50-of-top-residential-markets/articleshow/4739137.cms?curpg=2

In realty, the worst is over

Moumita Bakshi Chatterjee

The near lull in the housing sector just months ago has been replaced by a slew of project launches touting affordable price tags, and a fund-raising spree by leading realtors. Developers are keeping their fingers crossed that sustained improvement in consumer sentiments – coupled with Government’s thrust on urban housing, a bigger Jawaharlal Nehru National Urban Renewal Mission (JNNURM) outlay, and the Union Budget for 2009-10 – would speed up the recovery in the sector and drive up demand for property.

Business Line spoke to Mr Kumar Gera, President, Confederation of Real Estate Developers Association of India, and Chairman & Managing Director, Gera Developments, on issues relating to recovery, challenges, and expectation from the Government.

Real estate companies are claiming that housing sales have picked since March-April. In your view, is the worst behind us and have the prices bottomed out?

Yes, I do believe that the worst is behind us and sales will now be inching forward in terms of velocity and price. My reason for saying this is largely due to the change in sentiment that is being witnessed, which seems to be related to the growth of the economy being at a healthy 6-plus per cent.

But is the demand restricted to specific segments of the property market, primarily the affordable housing space? In your opinion, are real estate players catering adequately to this segment ?

Currently revival is seen mainly in the residential sector, albeit at lower price points, and in the less-than-1,500 sq.ft segment. Real estate development often sees a herd mentality among developers.

The current mantra seems to be affordable housing and it is this segment where maximum sales are happening while commercial sales and residential units with price tags in crores of rupees are sluggish, at the moment.

Meanwhile, the improvement in the secondary housing market is not as obvious as is the case in the primary market – this is because the drop in prices in the secondary market has generally been less than the drop witnessed in the primary housing market.

Has the cash crunch, for players, eased over the last quarter. Do you expect the cash flows to improve in the coming months?

The cash crunch has eased to an extent as a result of offloading inventory at low prices, disposal of NPAs, reduction of land banks, arranging finance through private investors, holding back or delaying new launches, and so on. It is expected that the overall liquidity in the markets will see improvement, going forward. But there still are challenges.

These relate to depressed prices and low sales velocity, which though better than March-April levels, are far lower than those witnessed in the year-ago period.

For instance, if the prices dropped by, say, 35 per cent in the period October to December 2008, and increased today by a mere 10 per cent, the actual rise is still a fraction of the previous levels.

The impact is bigger when you see the fall and the relative rise in the context of the slow sales velocity. We still have a long way to go to recover the earlier growth rates.

The Parliamentary Standing Committee on urban housing, in its latest report, has taken note of the benefits of having Special Residential Zones (SRZs) and has asked the Centre to consider such programmes. Do you think the concept of SRZs is even more critical, in the wake of the current affordability push?

Yes, setting up SRZs could be the answer to issues of affordability and kick-starting the economy. The Government can stipulate the minimum size of the land – say, 50 acres and above – and have these SRZs bonded by compound walls just like an SEZ.

In this model, the Government should not get into land acquisitions, and the same can be done directly by the private sector.

SRZs would be areas that are excluded from domestic taxes and levies, with specific rules to promote large-scale affordable housing. For instance, each SRZ could have 3,000-4,000 affordable dwelling units.

Government support to development of these zones through concessions means that these fiscal benefits will bring down the cost of the units that are located within these SRZs. I think creation of SRZs is the need of the hour, more so in the current context.

Could you outline specifically the three most important things that industry wants from the Government?

We would like to see the three categories — affordable housing-projects with over 100 units, below 90 sq.mt of space each; integrated townships -any development that is over 20 acres; and SEZs — being accorded infrastructure status.

Secondly, we are hoping that the Government would raise deduction permissible on interest repayment for housing loan from Rs 1.50 lakh to Rs 3 lakh.

Thirdly, exemptions should be provided for affordable housing projects below 90 sq.mt on the lines of the erstwhile 80Ib (10) scheme.

Source : http://www.thehindubusinessline.com/iw/2009/07/05/stories/2009070550581500.htm

The Park Hotels to launch luxury cruise, property in Hyderabad

The Park Hotels will launch a new property in August and a luxury cruise in September 2009. The Park Hotel Hyderabad will open in August and will be a certified green building offering 285 guest rooms. It will offer three restaurants, two lounges and two entertainment venues, as well as retail halls and art galleries.

Apsara, a luxury cruise will be launched in Kerala in September 2009. Aspara is a 28-metre lake cruiser with capacity for 24 delegates. The vessel will offer ten luxury rooms, a tented spa, restaurant, bar and pool.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=5458&sid=1

Decline in Demand of Service Apartments

The demand for service apartments has declined in the last few months due to the slowdown. This apart, real estate experts feel that lack of dedicated players and lower hotel room prices too have impacted the demand in this segment. This, however, was not the scene a year ago. “Last year, the boom had resulted in corporates offering a lot of privileges like frequent travels, which had seen a rise in demand for service apartments. However, lately, with the domestic travel reducing and even hotels offering cheaper prices, the demand has dropped a bit. Nevertheless, the industry expects demand for service apartments to rise again in the next six months,” says Jaxay Shah, director, Savvy Infrastructure Limited.

Real estate analysts agree that the option of service apartment is better than hotels as far as corporates are concerned. “Service apartments carry facilities that support stay with a duration of 15 days as well as over six months. Compared with that, staying in hotels tend to be costlier. Longer stay, however, is being ruled out by corporates as of now. Rather, they are now relying on video conferencing and other cost effective means,” says Ashutosh Limayi, associate director, strategic consulting at John Lang LaSalle Meghraj (JLLM), a real estate consulting firm.

According to SK Sayal, chief executive officer and director of Delhi based Alpha G: Corp Development Private Limited, the segment also lacks seasoned players. “Since service apartments require more facilities that can be offered over a period of time, ranging from 15 days to over six months, there are not many specialists in the industry. As compared with global markets, India still lacks dedicated service apartment providers and hence, hospitality players are complementing it with their hotels. Even our upcoming hotel project in Ahmedabad might complement service apartment need in the market,” points out Sayal.

Ahmedabad-based Neesa Leisure, which operates service apartments in Gurgaon and Jaipur, is also wary of the market. “We have a couple of properties in Ahmedabad and one in Gandhinagar. However, another service apartment is yet to be planned,” says Arvind Gupta, managing director of Neesa Leisure Limited. Industry estimates reveal that the investment in service apartment is over Rs 20 lakh per room.

Source : http://www.indianrealtynews.com/real-estate-trends/decline-in-demand-of-service-apartments.html

Indian HNIs Make Realty Investment in India

The Indian HNI (high net worth individual) is being aggressively wooed by foreign developers . With the balance of economic power shifting towards Asia, and with India projected to be the world’s third largest economy by 2050, and a subsequent increase in the number of wealthy individuals, property consultants from across the globe are making a sales pitch, and also getting the HNI segment interested enough to buy.

HNIs are people with net financial assets (liquid assets) of at least $1 million, excluding primary residence and consumables. Data from consultants like Cap-Gemini and Merrill Lynch suggests that India has the youngest HNI population in the Asia-Pacific region, with the club having even 28-year-olds on their rolls.

Strong GDP growth, robust figures in industrial and service sectors, high market capitalization , and steady FII inflows are some factors contributing to the rise in HNI wealth. In 2006, India’s HNI population crossed the 1 lakh figure, which made it the second-fastest growing HNI segment in the world, after Singapore, where the growth was 21%. If one were to analyse the asset allocation of Indian HNIs, data suggests that while equities make up the greatest portion of India’s HNIs’ portfolio at 31%, 17% of their investibles are in real estate.

“If you were to look at the total pie of investment by Indian HNI, only 2% of the investment from Indian HNIs is going in overseas real estate ,” says Samantha Jerath, a director at Jerath Properties, Delhi-based real estate consultant having a portfolio of many HNIs.

Also accessing and monitoring one’s investment becomes so much more difficult when it is an overseas investment, as there is paperwork involved, making payments from time to time, and with many real estate investment options available back home with even better appreciation profiles, Indians any day prefer their home country. Vikram Baidyanath, a HNI, says out of all global property destinations, London is most attractive to him. “I’ve spent more than six years in London and it is more of a second home. Besides , it gives a comfort level to be in London and see our products displayed in famous stores. The Asian community has a strong presence.”

Though well travelled, he feels he would not be exactly tempted to invest elsewhere – “To invest in a foreign real estate, either one has to have business interest in a place that makes you travel frequently to that country or be really attached to that place. Also, the appreciation in property is not all that phenomenal to attract anyone to casually.”

Lack of awareness about foreign projects and foreign laws is another deterrent for HNIs from investing in foreign real estate. As per RBI regulations , the maximum limit allowed in investments outside India is $200,000 per year. For any higher investments, RBI needs to be approached .

Dubai has been a popular choice with Indian HNIs and that is corroborated by Dubai-based real estate consultant Mansoor from Spring Rose Real Estate consultants, “HNIs from India, Pakistan and Bangladesh like to have a foothold in Dubai due to citizenship, tax rebates etc.”

With recession, property prices have depreciated globally. But this has not translated into attractiveness towards overseas properties. On the contrary , according to Dr Devinder Gupta, CEO & CMD of Century 21 India, “Due to the global meltdown and uncertainty in realty sector, many projects have become unviable. Even bankers are not willing to lend. All this has led to Indian HNI being wary of investing overseas.”

There are enough accounts of developers being faced with credit crunch, globally, who have stalled construction work, delaying most of their projects in the pipeline. Developer’s cash flow problems and credit crunch has in turn impacted delivery deadlines of projects.

Source : http://www.indianrealtynews.com/fdi-india/indian-hnis-make-realty-investment-in-india.html

Housing sector sees a silver lining, sales up 25%

A cross section of banks, property developers and real estate consultancies that SundayET spoke to confirmed that the rise in activity levels since the start of the year had picked up momentum in the last three months, with some in the sector saying that sales were up by as much as 25-30% since April, after witnessing a growth of 10-15%  during the first quarter of 2009.

India’s property market started showing signs of serious trouble nearly a year ago with first the American sub-prime crisis and later the Lehman bankruptcy playing havoc. The overpriced projects by builders found few takers which was worsened with the IT industry facing a major setback. Builders were stuck with high-end apartments which had no takers. There was a severe drop in sales with people wanting to conserve resources. As a result, property prices too fell 30-45% since peak of 2007, according to industry estimates. But today the scenario is different, with builders getting a mix of mid end and affordable housing into their portfolio. Raminder Grover, CEO – Homebay Residential, Jones Lang LaSalle Meghraj, says the revival in sales has been, conservatively speaking, to the tune of around 25% across the mid-to-high income segments, according to his company’s sales records.

Rohtas Goel, CMD of Delhi-based Omaxe too says there has been a 30% increase in sales thanks to factors such as a reversal in general economic sentiment after the elections and more options available in affordable housing. Statistics too would appear to bear this out. India’s largest real estate developer DLF says it has sold almost 1,500 flats in various cities since April, notably some 400 flats in its mainstay market Gurgaon, 700 in Bangalore, 100 plots in Indore, 200 flats in Hyderabad and 50 in Cochin. Rival Unitech has managed to sell more than 4,000 units in the last two and a half months in the National Capital Region, Chennai and Mumbai. Omaxe has also sold almost 500 apartments in its Omaxe Eternity project in Vrindavan. Niranjan Hiranandani, MD of Hiranandani Developers says there had been a sale of 7,000 apartments across the industry, mainly in Mumbai suburbs, over the last 60 days..http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=Articles

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http://www.pr-inside.com/housing-sector-sees-a-silver-lining-r1360901.htm

ICICI puts Rs 200 cr realty on sale

Mumbai: ICICI Bank is selling a clutch of commercial and residential properties. The space, totalling 1.39 lakh sq ft, is spread across Mumbai, starting with a 6,800 sq ft commercial space in Apeejay House, Fort.

Brokers value the total property at over Rs 200 crore. The biggest chunk is the 65,845 sq ft ‘A’ wing building of Mafatlal Chambers at N M Joshi Marg in Lower Parel.

Another 31,773 sq ft in the basement and third floor of the ‘B’ wing of the same building has also been put on the block.

Also for sale are 32 residential flats in Sundaram-I, Raheja Complex in Malad East, totalling 26,660 sq ft built-up area.

ICICI confirmed the properties were being sold by them. “Among the commercial properties — Apeejay House, Mafatlal Chambers (Wing A & B) and Laxmi Towers (Gala 5 and Gala 2) are currently occupied. The Borivali West property Abhilasha is vacant,” a bank spokesperson said via email.

The bank had earlier sold 10,000 sq ft of office space in Laxmi Towers at Rs 21,000 per sq ft to Federal Bank in March, broking sources said.

The bank is selling 2,275 sq ft plus basement of 485 sq ft in Borivali. A spokesperson from the bank said the sale of commercial properties has been planned to achieve “operational efficiencies.”

“There will be no retrenchment of staff. They would be relocated. The residential property Sundaram, Malad (32 flats) has been vacant for the last 2 years,” the spokesperson said, replying to a questionnaire by email.

The spokesperson said commercial space in Apeejay House was being sold because they had office space in the same area after taking over Sangli Bank in late 2006.

“The time taken for completion of the sale process will depend on the market opportunity,” the spokesperson said.

Sources said the bank has also moved or is in the process of moving people from departments as a part of this ‘rationalisation’ strategy.

The bank has been under pressure to get its house in order after poor results recently. In the quarter ended March, the bank’s profit fell 35% to Rs 744 crore from Rs 1,150 crore in the same period last year.

Analysts said ICICI Bank’s efforts to rationalise costs will bear fruits in the next one year, and will probably help the lender get back on track.

Vaibhav Agarwal, vice-president of banking research at Angel Broking, said that though a few hundred crores extra from selling this property may not have a sizeable impact on the bank’s profits, the steps taken together with these sales are already showing results.

“They have taken a number of steps like restructuring departments, workforce and land. They are also planning to hive off ATMs, brought the investment banking division back into the bank, have changed reporting standards and have avoided high-risk lending. So there has been this comprehensive rationalisation, results from which will be seen in the next one or one-and-a-half years,” he said.

Agarwal said this rationalisation will help ICICI to add more branches till March 2010 without increasing operational costs. The bank has 1,438 branches and is in the process of opening 580 branches till March 2010.

Source : http://www.dnaindia.com/money/report_icici-puts-rs-200-cr-realty-on-sale_1270246

Jones Lang LaSalle tops in corporate real estate services provider

Jones Lang LaSalle has been recognised as the best overall provider of corporate real estate services by the Watkins 2009 Survey of Corporate Real Estate Service Providers.

Of the 19 providers evaluated by the largest users of commercial real estate services, Jones Lang LaSalle was rated No 1 in every category, including delivery of results, adaptability of services, pricing, reputation and financial strength.

“Real estate is often the third largest cost for many companies. Many are seeking to outsource these functions to reduce costs whilst maintaining similar or higher levels of service delivery. The Watkins survey is a clear indicator of what companies require and value,” said John Forrest, CEO of Jones Lang LaSalle’s Corporate Solutions business in Asia Pacific.

“It is a combination of these things that enable us to maintain our position as a market leader in Asia Pacific. In fact, we are continuing to grow and in the first six months of 2009, we have expanded our portfolio under management by over 30 million sq ft with clients from the banking, technology, industrial and consumer goods industries,” said Forrest.

The survey, conducted every two years by the Watkins Research Group Inc., in a joint project with Flaspöhler Research Group, interviewed 204 corporate real estate (CRE) decision-makers from 182 companies, representing North America’s largest users of CRE services—including 59 Fortune 500 companies, 37 Financial Times Global 500 companies and eight government agencies.

Jones Lang LaSalle Meghraj is the Indian operations of Jones Lang LaSalle (NYSE: JLL), the only real estate money management and services firm named to FORTUNE magazine’s “100 Best Companies to Work For” and Forbes magazine’s “400 Best Big Companies”.

It is the premiere and largest real estate services company in India, with an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and staff strength of over 3800.

The company provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory.

With 2007 global revenue of USD2.7 billion, Jones Lang LaSalle has approximately 180 offices worldwide and operates in more than 700 cities in 60 countries. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.2 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the worlds largest and most diverse in real estate with more than $54 billion of assets under management.

Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 16,000 employees operating in more than 70 offices in 13 countries across the region.

Source : http://www.business-standard.com/india/news/jones-lang-lasalle-tops-in-corporate-real-estate-services-provider/66399/on

LIC Housing Finance cuts interest rates for new customers

Mumbai (PTI): LIC Housing Finance on Thursday said that it has cut interest rates for new customers.

It has introduced a new scheme, a three-year ‘Fix-o-Floaty’ scheme, which offers flexibility to customers as well as protection against the volatilities of interest rate momvement.

Under this scheme, borrowers will pay a fixed interest rate of 8.9 per cent for loans up to Rs 75 lakh and 9.5 per cent for loans above of Rs 75 lakh for a period of three-years, a press release issued here stated.
Thereafter, a floating rate prevailing at the end of three-years will have to be paid, the release said.

This scheme for new customers comes into effect from today.

At any time during the three-year initial period, the customer has a choice of shifting to the floating interest rate without any additional charges, the release said.

For home loan borrowers preferring floating rates ab-initio, the special offer rates for new customers for loans up to Rs 75 lakh will be 8.50 per cent, as against 8.75 per cent to 9.75 per cent. For loans above Rs 75 lakh, the rates will be 9.50 per cent as against 10.25 per cent earlier.

Source : http://www.hindu.com/thehindu/holnus/006200907030344.htm

Finlay Mill land put on the block again

MUMBAI: After two abortive attempts, National Textile Corporation (NTC) has again put its Finlay Mill land in Parel up for sale with one-third  reduction in reserve price.

NTC has reduced the reserve price of its 10.3 acres in central Mumbai from Rs 1,065 crore to Rs 708 crore, and is expecting bids from prominent real estate players, including Lodha Developers, Tata Realty and Infrastructure and DB Realty, said a real estate player. NTC, however, is yet to make the reserve price public. The bidding will take place on July 16 and the name of the winning bidder will be announced the next month.

While senior officials of Lodha and Tata Realty confirmed their intention to take part in the bidding, officials at DB Realty declined to comment on this. Interestingly, DB Realty had put in the highest bid of Rs 405 crore during the first round of bidding of the land parcel. However, the bidding exercise was cancelled as the highest bid was much lower than the reserve price.

NTC chairman K Ramchandran Pillai said: “As a policy, we do not announce the reserve price in advance. This time around, we are quite optimistic to find a buyer as the real estate sector looks good.” He added that the earnest money for the bidding has been maintained at Rs 100 crore.

Industry experts said Lodha Developers and Tata Realty might be aggressive in acquiring the land parcel.
Lodha Developers has presence in this part of the city and it seems to have overcome its liquidity problems. Being a part of the Tata group, fund mobilisation will not be an issue with Tata Realty, they said.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Finlay-Mill-land-put-on-the-block-again/articleshow/4730730.cms

Office, retail space is hot property

Lower real estate prices have triggered some big-ticket sales in recent months in the commercial segment

Bangalore: Some six months after they fled the real estate sector, investors are gradually making their way back. This time around, high networth individuals (HNIs) and domestic funds are putting money mainly into office and retail spaces.
As the economic meltdown unfolded in late 2008, commercial realty became the worst hit segment in the sector and lease rental and property rates fell by 30-40% in the metros and the bigger cities. The lower prices, in turn, have triggered some big ticket sales in recent months.
Big catch: The DLF tower in Gurgaon. The cash-strapped realty firm sold its 66% stake in a private mill property in central Mumbai to an undisclosed Chennai-based investor for Rs310 crore in May. Ramesh Pathania / MintIn May, Unitech Ltd, India’s second biggest listed developer, sold a 200,000 sq. ft office property in Saket, New Delhi, to an investor for Rs450 crore, nearly Rs200 crore cheaper than in 2007-08. Unitech didn’t disclose the identity of the buyer.
The same month, a cash-strapped DLF Ltd, the country’s top realty firm, sold its 66% stake in a private mill property in central Mumbai to an undisclosed Chennai-based investor for Rs310 crore. DLF had bought the property for Rs350 crore in 2007, at the peak of a realty boom in India.
In April, three investors from Kolkata bought 50,000 sq. ft of an office property near Bangalore’s Outer Ring Road for Rs35 crore, about 20% lower than the asking price till mid-2008, said a property consultant who brokered the deal. He didn’t want to name anyone involved in the deal. The developer had earlier leased the property to companies.
“Many HNIs and funds are now returning, looking at only commercial properties…to take advantage of the falling rates. The returns for such properties are as high as 12-13% compared to 3-4% in residential projects,” said Farook Mahmood, chairman of Bangalore-based advisory Silverline Group Inc.
For example, a Hyderabad investor with Rs300 crore is scouting for commercial properties in Bangalore, said Mahmood, without elaborating.
There is huge demand from HNIs for buying office properties, said a Unitech spokesman. “We are in contact with a group of HNIs with a portfolio of Rs1,000 crore each, who are looking at lucrative deals,” he said.
Unitech, also cash-starved, has been selling office properties and hotels the past two quarters in and around New Delhi and Mumbai. Domestic property-focused funds, which earlier targeted residential projects, too, are looking at commercial properties now. Red Fort Capital Advisors Pvt. Ltd, for example, has invested Rs400 crore in three commercial properties in New Delhi and Mumbai and is looking for more.
“In the current scenario, most developers are looking to sell their commercial properties. There are many such distressed assets and the pressure of liquidity is still there on them. For us, it’s a good deal because property rates have dipped,” said Subhash Bedi, director of Red Fort Capital.
Research and rating firm Crisil Ltd, the Indian arm of Standard and Poor’s, said in a June report that while the overhang of commercial property was enormous, demand was still slow.
In the first three months of 2009, there was a fresh supply of 11.5 million sq. ft of space, outstripping absorption of 5.78 million sq. ft, according to property advisory Cushman and Wakefield’s report in April, based on a survey of eight major cities.
The combination of over supply, poor demand and a liquidity crunch pushed many developers to focus on selling commercial properties.
Developers such as DLF and Unitech, which adopted the build-and-lease model the past two-three years when rental costs had skyrocketed and technology firms were expanding, now prefer to sell their stock.
“We are only keen on selling office space now. The focus will also be on developing non-IT space like pharma and telecom, where demand still exists,” Unitech’s spokesman said. Unitech has about 4 million sq. ft of commercial space under development. Its spokesman didn’t disclose how much of this would be up for sale.
Investors are also keen on buying pre-leased properties from developers who are in a hurry to sell, said Kaustuv Roy, head of tenant strategies and solutions, Cushman and Wakefield. “It’s much easier to sell pre-leased properties. There are more takers for them and they fetch better rates.”
“Going forward, most developers will adopt a mixed model where 80% would be sold and 20% will be leased out,” said a senior official of Maker group, who can’t be named as he is not authorized to speak to the media.
In April, the group sold 4,300 sq. ft of space at Maker Chamber VI, an office building in Nariman Point, Mumbai, to a pharma company for Rs12.5 crore at Rs30,000 per sq. ft. The price was Rs40,000-45,000 per sq.ft. in 2008, said S.G. Maheshwari, a property consultant in Mumbai.
“The thing to look out for in the coming quarters will be if there is a revival of interest among corporates for commercial space,” said Anirudh Wahal, national director, business development, Jones Lang LaSalle Meghraj, a property consultancy.

Source : http://www.livemint.com/2009/07/01234720/Office-retail-space-is-hot-pr.html?h=B

Mumbai Developers Look to Increase Property Prices

Real estate developers have begun to increase property prices in some pockets of Mumbai like Ghatkopar, Thane and Andheri, after emerging unscathed from a severe liquidity crunch. “I think the correction (in real estate price) has almost bottomed out. In fact in some places I find that real estate developers have started increasing the rates as their cash flows improve,” said R R Nair, chief executive of LIC Housing Finance, a subsidiary of Life Insurance Corporation (LIC).

The government had ensured easy flow of credit to the real estate developers. Banks increased their exposure and also extended repayment period of loans to developers during 2008-09 to help them tide over liquidity crunch. “The demand for real estate has started picking up as people who had deferred their buying decision are now coming forward to buy homes,” said Nair.

Source : http://www.indianrealtynews.com/real-estate-india/mumbai/mumbai-developers-look-to-increase-property-prices.html

Banks woo new borrowers with lower rates

At a time when there is ample liquidity in the system and business confidence is none too high, banks are making every effort to give a fillip to Budget and home loan rates Choose schemes that suit you
economic activity. Lenders are launching new schemes to woo customers to borrow, giving concessions on interest rates, waiver on processing fee, free insurance cover, et al. And, in the process of wooing new borrowers, banks are offering lower rates to new customers while old customers continue to be saddled with higher rates, despite both having opted for floating rate loans.

Banks justify their stand on the grounds that they are trying to build their loan portfolios, but old customers say they have to pay a higher price for no fault of theirs. Even the new deputy governor of Reserve Bank of India (RBI), KC Chakrabarty, in his former avatar as CMD of Punjab National Bank, advocated the pass-through of the benefits of a lower interest rate to old customers.

“Existing customers should always be pampered and given preferential treatment because ultimately they are the brand ambassadors for the bank,” said MV Nair, chairman of Indian Banks’ Association and CMD, Union Bank of India. “Even if banks offer a concessional interest rate to new customers, they should ensure convergence of rates for both new and old clients. Also, it is unfair to old customers, especially since they do not have bargaining power.”

Although the interest rates paid by both old and new customers are linked to a bank’s prime lending rate (PLR), rate to which all loans are benchmarked, the variation is aimed at protecting a bank’s margins. “If a lower interest rate was applicable on a bank’s entire retail loan portfolio, its overall yield on the portfolio would reduce,” Hemindra Hazari, head of research at Karvy Securities, said. “Hence by doing this (charging a differential rate of interest), banks can acquire new customers without lowering the yield on their entire retail loan portfolio.”

A bank typically protects its margin by varying the spreads, the difference between PLR and rate charged to customers, on loans at different periods of time. This may be driven by factors such as competition, liquidity conditions, a desire to increase market share and political exigencies. For instance, all banks currently offer home loans below PLR. But, loans to old customers are at a narrow spread below PLR while those to new customers are at a wider spread below the benchmark rate.

However, AC Mahajan, CMD of South-based Canara Bank, strongly feels that banks have not been unfair to their old customers. “In a non-volatile situation, the rates should ideally remain same for all customers. In other words, spreads above and below BPLR should not vary. But in a volatile market condition, where credit demand and resources determine interest rates, banks, at times, take a commercial decision to forgo profit margins instead of losing revenue by not deploying funds. And that is why spreads change at different points in time and from one customer to the other,” explains Mr Mahajan.

Bankers say the risk premium changes from time-to-time, depending on the business confidence in an economy and that is why spreads cannot remain constant for all customers in a particular segment at all times. “That is the beauty of floating rates of interest and that is why they are called market-determined rates,” says Mr Mahajan.

Concurring with him, KR Kamath, CMD of Kolkata-based Allahabad Bank, says it is not possible for banks to charge the same rate to all customers of the same portfolio all the time.

“At times, banks offer lower rates to new retail customers because they want to build their retail loan portfolio or at times they increase the Budget and home loan rates Choose schemes that suit you
rate for new customers (as it happened in the case of NBFCs and real estate, a few years ago) because RBI asks banks to provide higher risk weightages on a particular sector. So, there will be anomalies. But, broadly, customers who have opted for floating rate loans will get the benefit of lower rates when interest rates fall.”

No matter how justified banks might be, RBI will take a closer look at the differential rates offered to new and old customers. The recently-constituted committee on BPLR will have to decide whether banks can continue this practice forever.

Most bankers right now point fingers at the opaqueness in computing PLR. Nearly three-fourths of the loans given by banks are at rates which are below PLR. By definition, PLR is the rate banks should charge their prime customers. However, in current times, PLR is the rate banks often charge customers with an average credit rating.
“The biggest culprit here is a sub-PLR loan. That banks are allowed to lend below PLR itself means that PLR is not a fair rate,” pointed out G Narayanan, executive director of Indian Overseas Bank.

Echoing his view, Mr Nair of Union Bank of India, says, “PLR does not give a fair indication of the rate banks are actually charging their prime customers. Once we move towards a system where the benchmark rate actually reflects the rate prime customers are paying, some of these issues can be resolved.”

Source : http://economictimes.indiatimes.com/Opinion/Money–Banking/Banks-woo-new-borrowers-with-lower-rates/articleshow/4722379.cms?curpg=2

SBI launches two new home loan products at attractive rates

With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months

Mumbai: The country’s largest lender State Bank of India on Tuesday introduced a new home loan scheme under which it offer loans up to Rs30 lakh at fixed rates of 8% for the first year and 9% for the next two years.

The bank’s earlier offer of home loans at a fixed rate of 8% for the first year ended Tuesday.
Under the new scheme, customers will have two options in the fourth year: a floating rate at 2% below State Bank Advance Rate (SBAR), which is currently at 11.75%,, or a fixed rate of 1% below SBAR with a five year re-set. A re-set means new rates will come into effect at the end of the specified period.

For loans above Rs30 lakh, the interest rate charged from the fourth year will be either a floating rate at 1% below the existing SBAR or a fixed rate of 0.5% below SBAR with a five year re-set.

SBI has a home loan portfolio of at least Rs56,000 crore.
The Indian Banks’ Association (IBA) and member public sector banks in December had announced home loans, in which borrowing of up to Rs5 lakh was offered at 8.5%, and between Rs5 lakh and Rs20 lakh at 9.25%. Both rates were fixed for five years. However, SBI launched its own scheme instead of the five-year fixed rate scheme, offering a lower rate of 8% fixed for only one year.

The IBA scheme also ended Tuesday. According to a senior banker with a large public sector bank, IBA will likely come up with a new home loan scheme within a day or two similar to the scheme introduced in December last year.
In a separate development, LIC (Life Insurance Corporation) Housing Finance on Tuesday announced a reduction in interest rates for its existing home loan borrowers. The floating interest rates for existing customers will now be reduced by 50 basis points on EMIs due on 1 July and payable on 1 August, a company statement said. One basis point is one hundredth of a percentage point.
With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months.

The company had earlier reduced 1.50% for existing home loan borrowers in two tranches of 75 basis points each in January and April.

http://www.livemint.com/2009/06/30170440/SBI-launches-two-new-home-loan.html?h=B

25% Upswing in India’s Housing Market

Activity levels are gaining traction in the near moribund housing market as a flurry of interest rate cuts, price drops and the building industry’s focus on affordable housing start to lure buyers back into the market. A cross section of banks, property developers and real estate consultancies that SundayET spoke to confirmed that the rise in activity levels since the start of the year had picked up momentum in the last three months, with some in the sector saying that sales were up by as much as 25-30% since April, after witnessing a growth of 10-15% during the first quarter of 2009. India’s property market started showing signs of serious trouble nearly a year ago with first the American sub-prime crisis and later the Lehman bankruptcy playing havoc. The overpriced projects by builders found few takers which was worsened with the IT industry facing a major setback.

Builders were stuck with high-end apartments which had no takers. There was a severe drop in sales with people wanting to conserve resources. As a result, property prices too fell 30-45% since peak of 2007, according to industry estimates. But today the scenario is different, with builders getting a mix of mid end and affordable housing into their portfolio. Raminder Grover, CEO—Homebay Residential, Jones Lang LaSalle Meghraj, says the revival in sales has been, conservatively speaking, to the tune of around 25% across the mid-to-high income segments, according to his company’s sales records. Rohtas Goel, CMD of Delhi-based Omaxe too says there has been a 30% increase in sales thanks to factors such as a reversal in general economic sentiment after the elections and more options available in affordable housing.

Statistics too would appear to bear this out. India’s largest real estate developer DLF says it has sold almost 1,500 flats in various cities since April, notably some 400 flats in its mainstay market Gurgaon, 700 in Bangalore, 100 plots in Indore, 200 flats in Hyderabad and 50 in Cochin. Rival Unitech has managed to sell more than 4,000 units in the last two and a half months in the National Capital Region, Chennai and Mumbai. Omaxe has also sold almost 500 apartments in its Omaxe Eternity project in Vrindavan. Niranjan Hiranandani, MD of Hiranandani Developers says there had been a sale of 7,000 apartments across the industry, mainly in Mumbai suburbs, over the last 60 days. Despite indications of improving demand, builders don’t seem to be in a hurry to raise prices. They are conscious that demand was up due to price cuts and the affordable housing strategy. Builders are loathe to do anything that could incipient recovery.

“We will not be looking at a price increase,” says DLF’s group executive director Rajeev Talwar. The company says it has cut prices by up to 30% from peak levels of 2007. Others point out that the demand is coming from the low-end housing segment comprising houses prices under Rs 25 lakh. “Buyers have come out of the waiting mode…By December, the situation is expected to become much better,” said Mr. Goel of Omaxe. Mr. Hiranandani of Hiranandani Developers also agreed that affordable housing was selling the most right now, saying that while the overall market had improved, this particular segment was doing really well as buyers realised that the market has bottomed out. Bank officials SundayET spoke to also confirmed the trend of rising demand, and noted an increasing demand for home loans.

“Largely the demand is coming from the sub Rs 30-40 lakh category. Resale market is also showing high growth. However, there is lesser demand for new projects as well as in yet to be completed ones,” said Kamlesh Rao, senior vice president at Kotak Mahindra Bank. “While during January-March, there was a growth of 10-15%, now it is around 15-20%.” He is not alone. Officials at UCO Bank, Axis Bank and the country’s top mortgage lender HDFC too agree that an improving sentiment had helped drive housing sales. “We are witnessing an increased interest from our clients. The condition has definitely improved over the last 3-4 months,” says Sujan Sinha, senior VP and head of retail assets at Axis Bank. An HDFC spokesperson felt the growth is up month on month mainly due to decline in interest rate and the growth of affordable housing. “We are confident that we will achieve the 20% annual target growth,” he said.

Source : http://feedproxy.google.com/~r/Indian-Realty-News/~3/r71BjpVplMg/25-upswing-in-indias-housing-market.html

Real Estate Still a Good Investment Option

The real estate sector plays a significant role in India’s economy. Almost 5% of the country’s gross domestic product (GDP) is contributed by housing alone and an unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times the increase in expenditure. According to Dun and Bradstreet Corp., a provider of credit information on businesses and corporations, the total value of real estate development in India was estimated to be around $14 billion (Rs67,480 crore), growing at an annual pace of 30%. This growth is fuelled by the growth in realty development in organized retail, followed by housing and information technology and information technology-enabled services.

While such statistics are praiseworthy, it is also relevant to remember that the ongoing slowdown had started with a bursting of a bubble in US real estate, driven by reckless demand and supply conditions. Real estate in India has been characterized by an increasing presence of a large number of public companies, along with the opening up of this sector to foreign direct investment (FDI) and private equity firms. This has increased the discipline and accountability of businesses undertaking large-scale real estate developments. On demand, Indians have an innate propensity to own homes. This, with rising income levels following India’s rapid growth, has resulted in a phenomenal increase in the demand for homes.

Moreover, the country has started viewing property as a preferred investment option, given that returns are pegged between 11% and 15%, compared with bank deposits, which seldom offer returns over 10% a year. Prices of homes, therefore, have increased at a steady pace in the past decade. In recent times, real estate has been seeing a plunge in demand with retail shying away from exorbitantly priced spaces or paying high rentals. Reduced consumer spending has also translated into a retail slowdown. Many firms have also decided to relocate from high to lower cost locations, leading to vacancies going up in retail and office space. Interestingly, a careful look at the performance of the sector reveals that the pace of activity has been shifting to smaller cities. Several reasons could cause this shift. First, speculative investments in real estate, which have been largely confined to the metros, resulted in greater price volatility in these cities.

Secondly, the high price of real estate in large cities has caused a number of offshore companies setting up operations in India to expand into smaller cities, resulting in a substantial increase in demand. Thirdly, builders and developers have mainly focused on high-end housing projects in large cities. The recent economic slowdown has meant large stock of unsold inventory. They have, therefore, shifted focus on developing projects aimed at medium-income, middle-class households. Lastly, the special economic zone policy has also resulted in a shift of activity from large to smaller cities. So, where are we headed? The advent of the private sector in real estate and the government’s proposal to offer fiscal concessions and creating an enabling environment for housing development have led to rapid growth in private investment in housing, with the emergence of developers mainly in metropolitan centres and other fast-growing towns. The growth has been fuelled by rising business opportunities in new and emerging enterprises, increasing income levels, low interest rates, employment generation and demographic changes.

The real estate market has also been boosted by a proposal to permit 100% FDI in the sector. Also, a significant factor that drove the growth of the housing market was easy availability of bank finance at affordable interest rates. Finally, it is important for policymakers to be vigilant and track the pace and economics driving the evolution of the sector. There should be adequate supervision to prevent reckless credit growth to fund its expansion. India’s favourable demography, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the retail real estate downturn from being protracted. The fundamentals of the sector are good and its growth should continue in the foreseeable future.

Source : http://www.indianrealtynews.com/real-estate-india/real-estate-still-a-good-investment-option.html

SBI sees revival in home loan demand with low-interest schemes

State Bank of India’s home loan disbursements under its ‘New happy home loan scheme’ have grown at Rs1,500 crore monthly. This is about Rs400 crore more than the monthly average of Rs1,100 crore it did in the first two months since the scheme was announced.
“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs1,500 crore every month,” P Nandakumaran, chief general manger, personal banking, reportedly said.

Banks which have made aggressive rate cuts have begun to reap the benefit of a revival in home loan demand. They have been able register a jump in their home loan disbursal in the last couple of months by attracting new home buyers as well as existing customers from the other banks and institutions. (See: Public sector banks woo customers with ‘balance transfer’ on home loans)

”About 40 per cent of the new customers that the bank is attracting are those migrating from other banks and institutions that have higher rate of interest. The home loan market is reviving with prices having corrected particularly in tier II and tier III cities. With signs of recovery in the economy, and with people being more certain of their jobs, so many enquiries are translating into sales,” said Nandakumaran.

In the first week of February, SBI had announced an interest rate of 8 per cent for one year – the lowest so far among lenders. In the second year, the rates applicable will be the prevailing rates then.

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs5 and 20lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore. This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Banks say home loan disbursals will gather greater momentum in the second quarter of the current financial year after the budget, as they expect major tax breaks for the housing sector.

More than 85 per cent of the home loan market is accounted for by three players – HDFC, ICICI Bank and State Bank of India.

Source : http://www.domain-b.com/finance/banks/SBI/20090629_home_loan_2.html

Shreya Developwell offers world-class lifestyle

The two projects of Shreya Developwell -Hindon Heights and Hindon Valley offers newer lifestyle opportunities to the people of India

Shreya Developwell is a prominent real estate organization based in Delhi, India. With its distinctive market specific policy, the company has been taking a lead role in the development of real estate in India. Today Shreya Developwell has started a host of world-class projects in various strategic locations. A professional management and goodwill of the customers, associates and financial institutes have resulted in an unprecedented growth of the company. In the recent time Shreya Developer is one of the most trusted name in the realm of real estate.

Hindon Heights:

This project offered by Shreya Developer is a world-class project. Commenting on this project, Mr. K.M. Joshi, a renowned analyst of the real estate industry says that this project will emerge as the hottest property in North India. The inhabitants of the project will discover a new abode of their dreams. In Hindon Heights Shreya Developwell, all the modern facilities will be made available within the reach of everyone.

Hindon Valley

This project is another expression of Shreya Developer’s endeavor to offer newer avenues of lifestyles to the people of Modern India. Hindon Valley Shreya Developwell will attract the affluent families who are searching for a destination to reside amidst luxury and pleasure. All the projects of the companies are planed to offer something unique and distinctive to the people.

Source : http://www.bignews.biz/?id=805023&keys=Shreya-Developwell-Hindon-Developer

Luxe India to build portfolio of 12 properties in two years

Luxe India, a JV between US-based Luxe Worldwide Hotels and Indian hospitality company Tian Serrai Group, plans to develop its hospitality portfolio in the four-star boutique hotel segment. Under the arrangement, the Tian Serrai Group will develop, manage and market hotels under the Luxe brand in India. The company aims to develop a portfolio of 12 properties in the next two years. This also marks Luxe Hotel group’s foray into the Indian market.

Speaking with Hospitality Biz about the company’s India plans, Kishore Luthria, Director, Luxe India states, “We aim to design unique business properties for the business traveller; also, we want to develop the boutique hotel concept in this country. There are several five-star developments or low key properties coming up. However, there are few boutique properties under development. Our products are different in their look and offering.” The company has signed up two properties, which are presently under construction in India; an 80 room property in Pune and a 120 room hotel at Chaul Village in Raigad District. The properties are expected to start operations by end 2010. The company is also in negotiations with developers in Delhi, Mumbai, Bengaluru and Chennai. It is considering resort locations, like Kochi for development, as well. The average room inventory size Luxe India aims to develop will be under 150 rooms per property.

However, investments made into hospitality development do not form part of the joint venture. Currently, only Tian Serrai Group will focus on investments. It has earmarked about Rs 100 Crore as investment in the Indian hospitality sector, with about Rs five to 10 Crore per project. Luxe Hotels may consider investment into the Indian hospitality sector at a later stage. Luxe India will adopt the joint venture route providing the partners with capital and expertise required to manage the properties. The hotels that are taken over by the group will be branded under the Luxe Hotels brand. This will provide the property with access to the Luxe hotels’ central reservation system and marketing and promotional initiatives. The company is also open to co-branding the properties in India.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=5385&sid=1

Navi Mumbai real estate prices rise

Notwithstanding the concerns over the proposed international airport in Navi Mumbai, real estate prices around the satellite city have rising for the past one month.

During the past 30 days, prices of medium residential apartments rose by Rs 300-500 per square feet across various nodes in the city. The present prices range at Rs 2,500-3,000 per square foot across nodes like Kamothe, Panvel, Kharghar, Khandeshwar and CDB Belapur, said Srikanth Puduval, a real estate agent.

The prices at nodes far from the proposed airport site — like Airoli, Koparkhairane and Nerul — managed to hold steady at around Rs 3,000 per square  foot(medium residential apartments), despite the financial crisis. This also varies, as prices are different for different builders, while high-end and premium complexes are priced higher.

“The soaring of prices is based on speculation that the airport would eventually get clearance.

The price rise is across residential and not in retail or commercial structures, but as the area develops (with proposed Special Economic Zone and airport), the hike will spill over to commercial establishments also,” Cushman & Wakefield Executive Director (Occupier Solutions) Arvind Nandan told Business Standard.

Real estate prices are determined by certain benchmarks, and prices of Rs 2,500-3,000 for suburbs seem to be on the right side.

Source : http://www.business-standard.com/india/news/navi-mumbai-real-estate-prices-rise/362494/

Indiabulls to spend $500 mn for new projects

India’s third-largest listed developer, Indiabulls Real Estate has planned to use more than $500 million raised from a recent share sale to launch projects.

According to Gagan Banga, chief executive of the group’s flagship, Indiabulls Financial Services, the company will launch 6-7 residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

In the month of May, the company raised $556 million through a share sale to institutions including TPG Capital and Fidelity.

The company, with a market value of $1.7 billion, is targeting housing demands in second-tier Indian cities such as Baroda, Ahmedabad and Indore.

Source : http://www.expressestates.in/full_story.php?content_id=93849

Happy home scheme: SBI loans Rs 1,500 cr a month

State Bank of India’s disbursements on home loans under its ‘New happy home loan scheme’ have grown at Rs 1,500 crore monthly. This is about Rs 400 crore more than the monthly average of Rs 1,100 crore it did in the first two months since the scheme was announced.

“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs 1,500 crore every month,” P. Nandakumaran, Chief General Manger, Personal Banking, SBI, told Business Line.

In the first week of February, SBI had announced that it will offer an interest rate of 8 per cent for one year – the lowest so far in the industry. In the second year, the rates applicable will be the prevailing rates then.

To stimulate demand

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs 5 and 20 lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore.

This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Source : http://sify.com/finance/fullstory.php?a=jg3klpaicdf&title=Happy_home_scheme_SBI_loans_Rs_1_500_cr_a_month&?vsv=TopHP2

19 Indian realty firms showcasing projects in London

London, June 28: Nineteen Indian realty developers are showcasing their housing projects to NRIs here at a two-day ‘India Homes Fair’, which began on Sunday.

The realty firms participating in the event include Ansal Properties and DLF Home Developers. The 19 developers showcasing their projects are from the Indian cities like Bangalore, Chandigarh, Chennai, Hyderabad, Jaipur, Mumbai and New Delhi.

“Almost all major developers from India are participating in the fair attracting good response from the NRI investors,” Renu Sud Karnad, joint Managing Director of India’s leading housing finance firm HDFC, the organiser of the event, said.

The price range of properties being showcased at the fair vary from Rs 21 lakh to a couple of crores, Karnad said.

“Through this event, we are bringing NRI home-seekers and leading developers from major cities across India together under one roof.

“We hope to provide a platform where both of them can interact freely so that the developers are exposed to the NRIs, their needs and preference,” she said.

M Subhashini, Minister, Press and Information in the High Commission of India to the UK, inaugurated the fair.

Source : http://www.zeenews.com/news542821.html

‘Property brokers expect prices to increase’

Residential property builders have something to cheer if the result of a poll of property brokers conducted by Edelweiss Capital is any indication. The pan-India poll shows that property brokers expect prices of residential property, especially i n the Mumbai and NCR region, to increase around the Budget, Edelweiss said in a press release issued here.

“Throughout India, property brokers have turned positive on the Indian residential realty market, in the last three months,” the poll said. There has already been an increase in the number of transactions in the past one month against nil in the preceding five months, it said.

The poll was conducted amongst 100 odd property brokers in the first-half of June in the four cities of Mumbai, NCR, Bengaluru and Chennai and 20 micro-markets. A significant change in sentiment post-elections and preceded by strong stimulus measures have contributed to a strong recovery in volumes and prices, the release said.

According to the poll, nearly 87 per cent of the brokers surveyed endorsed that transactions had indeed increased in the last one month

Source : http://sify.com/finance/fullstory.php?a=jg2q31hcedf&title=’Property_brokers_expect_prices_to_increase’&scategory=real%20estate

Sluggish Growth in Real Estate Coimbatore

Laxity in promoting Coimbatore as next IT destination after Chennai,time-consuming approval process, speculative land prices, conservative nature of people and lack of political clout are some of the key reasons identified behind the sluggish growth in real estate in the techcity. Speakers at a forum organised by Confederation of Indian Industry (Coimbatore) and Jones Lang LaSalle Meghraj (JLLM) here on Tuesday. However, believed the realty sector has enough potential and it is poised to pick up growth in about six months to one-year.

In his presentation on Coimbatore Edge, Ramesh Nair, managing director of JLLM, Chennai and Hyderabad regions said branding Coimbatore, as a single entity is very important for the growth of the city. Also, the city has the capabilities to be promoted as a highly promising alternative IT/ ITES and a biotech destination. “There is a huge potential for local, national as well as international developers in the real estate sector in Coimbatore,” Abhishek Kiran Gupta, Head – Research, JLLM said. He cited high literacy rate, more number of people graduating out of many renowned colleges and the city’s contribution to the growth in the per capita income of the country.

“Coimbatore is a self-made city and we haven’t had a trigger point yet. If only the city had got an IT park five years ago when Chennai got it in 2000, it would have propelled a greater growth today,” said Ashok Bakthavathsalam, managing director, KG Information Systems. D R Sekar, chairman, Builders Association of India (BAI), Coimbatore Chapter added that getting approvals for land and buildings have been a difficult and laborious process in Coimbatore and whole of Tamil Nadu.

“Compared to other neighbouring states, the approval process takes a long time in TN and therefore all promoters are shying away from investing in the state,” he said, adding a single window system is the need of the hour. Rajesh B Lund, vice president of Confederation of Real Estate Developers Association of India (TN) said, apart from the delay in approvals, the market fell when the new projects were about to take-off. “It led to a lull in the construction industry,” he added.

Of the proposed seven SEZs in Coimbatore, only three including Tidel Park are under construction now. Likewise, many companies evinced interest to build malls in the city but today only two projects – Brooke Fields and Fun Republic are getting ready. “The lack of night life in Coimbatore and the delay in IT infrastructure has led to slowdown among retail mall developers,” said A Sridharan, managing director, Covai Propery Centre. “Coimbatore is not a modern city and it is also conservative and not used to mall culture. But, after these two malls start operations, people will get used to it,” added Mr Sekar. Also, with the new generation starting to work, the city is bound to catch up with experiencing a new culture”, he said.

On land values, Mr Rajesh Lund said though prices have dropped drastically compared to the all-time high in 2007-08, the landowners still stick to the high prices and are not willing to sell lands. About the city attracting big investments, he added, once infrastructure falls in place investments would automatically flow in. He also hoped that non-resident Coimbatoreans would return to the city and invest here. Mr Ashok added that with the opening of the Tidel Park and the IT-SEZ in Keerenatham village, nearly 16,000 seats would be created in another 1 to 1.5 years time. “If these new professionals are to come to the city, then there would be huge demand for affordable housing and also serviced apartments,” he added. Already leading promoters in the city have planned to construct budget houses costing Rs 15 lakh to Rs 20 lakh each.

HDFC branch head S Ramesh Kumar expected the market to pick up since the costs have come down. “Also with the fall in interest rates, a large number of people would be attracted to real estate now,” he said, adding the future trend also points to a reduction in interest rates.

Source : http://feedproxy.google.com/~r/Indian-Realty-News/~3/vJQ6jxVE5Bk/sluggish-growth-in-real-estate-coimbatore.html

Low-cost housing’s slow rise

While the affordable housing segment is in the limelight, generating some demand in an overall sluggish real-estate market, low-cost housing, essentially for the low-income group and economically weaker sections, appears to be making little headway.

The Government estimated a shortage of about 25 million houses in urban area at the beginning of the Eleventh Plan, of which 97 per cent is in the low-income group.

Mumbai has seen a few launches in the last two to three months, one of them being the Tata Housing project at Boisar, about 100 km from the city. The company received such a good response for its initial offer of 1,000 units that it raised the number to 1,300. The apartments, in the 283-465 sq.ft range, cost between Rs 3.9 lakh and Rs 6.7 lakh. Tata Housing has also tied up with Micro Housing Finance Corporation to provide easy finance to its customers.

LAND COST

Mr Brotin Banerjee, Managing Director and Chief Executive Officer, Tata Housing, feels land cost is a major issue and it should be understood that low-cost housing is high volume and lower profits, compared to high-end formats. When it comes to joint ventures, the philosophy of the landowner should be in harmony with that of the company, he says.

FUNDING, key ISSUE

Matheran Realty, among the first to launch low-cost homes in the price bracket of Rs 3-7 lakh in Karjat, which is also 100 km from Mumbai, says its buyers are finding it difficult to get finance. According to Mr Pravin Banavalikar, CEO, though his project has been pre-approved by 10 banks, only about 250 of over 1,800 applicants who sought loans have received sanctions. It has more to do with the eligibility criteria and loan ticket size, besides the high number of applicants, he says.

The Maharashtra Housing and Area Development Authority, which put up 3,863 flats in the affordable segment, received a tremendous response for its offering. But then, the number on sale was miniscule compared to the over four lakh applications it attracted.

Early this month, Housing Development and Infrastructure Ltd signed a joint venture agreement with the Mumbai Metropolitan Region Development Authority (MMRDA) to develop 525 acres in Virar. The company intends to build and hand over 13 million sq.ft to the MMRDA for rental housing and construct 39 million sq.ft for sale. The project would come under the affordable category and is scheduled for completion in six years.

PRO-POOR

In a recent development, DHFL Property Services Ltd, a 100 per cent subsidiary of housing finance company Dewan Housing Finance Corporation Ltd, tied up with developers to market affordable projects for low-wage earners. It will market a 2,400-unit project in Boisar. The apartments are of 380-500 sq.ft and priced at Rs 1,300 a sq.ft.

Mr B.K. Madhur, CEO, DHFL Property Services, says the company has always “focused on enabling access to home ownership for the lower and middle income groups across India through our mortgage finance company DHFL.”

The company intends to launch similar projects in other far-flung Mumbai suburbs such as Virar, Karjat and Badlapur, besides promoting such ventures in Ahmedabad, Chennai and Hyderabad in the coming months.

RISK FREE

Mr Ashutosh Limaye, Associate Director – Strategic Consulting, Jones Lang LaSalle Meghraj, says high land cost is a deterrent for developers to offer affordable homes. Otherwise, low-cost housing, especially in the metros, is virtually a risk-free proposition. Importantly, even in affordable housing, a developer would have certain minimum profit expectations and if the cost of land does not make these expectations feasible, there is no incentive for the developer to venture into the low-budget home segment.

Buyers of affordable housing can avail themselves of bank funding. But then, the affordable housing segment also brings in certain unique limitations with it.

In the case of mid-to-high-end housing, most buyers can readily produce proof of income, whereas only about 50 per cent of buyers in the affordable housing segment would be able to do so.

Nevertheless, due to the high rate of demand, this would not prevent a healthy absorption rate if such projects are launched.

Source : http://www.thehindubusinessline.com/iw/2009/06/28/stories/2009062850591500.htm

Premium demand outstrips middle-class wants

The National Capital Region is witnessing frenzied activity again. This time round, it is across segments and in all categories including plots,  floors and apartments. The elections were a big driver. Affordable housing has caught the fancy of private developers in Delhi, and large developer groups from the NCR, such as DLF have launched affordable housing in Moti Nagar.

Values have gone up by 8-10 per cent across the board in established areas of Delhi and another 5-7 per cent hike is expected in capital values after the budget. The buyer profile includes end users, investors , builders and High Net Worth individuals .

In premium residential areas such as Defence Colony, Vasant Vihar and Greater Kailash there has been a significant number of transactions. As a result there is very little stock waiting to be sold in the market. Only those sellers who are asking for unreasonably high values are left with stock. According to a real estate consultant , “In a rising market the expectation of the owners rises faster than the market. In a falling market, on the other hand, their expectations fall slower than the rest of the market.”

In the less premium market such as Saket, Hauz Khas and Green Park the rate of transactions has been low with values falling 15-20 per cent from peak values. In middle class areas such as Moti Nagar and Vikas Puri values have registered a steep fall of almost 30 per cent.

Mayur Vihar and much of East Delhi is riding the crest of the Commonwealth Games and the advent of the Metro. Areas which had previously recorded very low capital and rental values have already witnessed a 100 per cent rise. The reason for shifting of population from expensive Noida to the more affordable Mayur Vihar has been the rental values and the steadily rising demand for rental housing. The advent of the Metro will enhance these values further.
The demand for builder floors saw a drop of 37-50 percent across Delhi in the last few weeks. With active trading in plots across South and West Delhi, the builder floors market is expected to rebound .

Rental values of builder flats and apartments did not undergo any major change in Q3-Q 4 2008-2009 . They are more or less stable with just a marginal change of 5-15 per cent in the prices depending on the location and deal. As per the local real estate agents in Delhi, people living on rent are the end users and hence there is always a demand for rental homes in Delhi.

Delhi retail market has been slow with a mere 10 per cent transactions happening in the last few months. Retail malls are fetching rental values of Rs 225-250 per sq ft on lower floors and Rs 100-125 per sq ft for the upper floors. On high streets rental values ranged between Rs 700-800 per sq ft, down from Rs 1100 per sq ft an year ago.

In neighbourhood markets, such as Lajpat Nagar and Sarojini Nagar small format units were available at Rs 350-400 per sq ft. However, these come without any power back-up or maintenance. Super to carpet area ratio in small format stores is a mere 10 per cent compared to the 40-50 per cent loading in large format store and malls.

Delhi market has been witnessing a weakening sentiment because of the global economic slow down and consequent job losses. Today the active buyer segments are traders and businessmen. According to experts there is money with potential buyers but they are holding back, either waiting for market to bottom-out or because they are waiting for the economic scenario to improve. For serious end user buyers this is probably the right time to buy. After this once the Metro advances from across Delhi to the NCR, values are bound to rise. Today it is possible to negotiate with sellers but after a few months this may not be possible.

The retail market will take more time to stabilise. Neighbourhood markets and Local Shopping Complexes have scored over shopping malls which have seen a drop in footfalls.

Source : http://economictimes.indiatimes.com/News-by-Industry/Premium-demand-outstrips-middle-class-wants/articleshow/4709403.cms

HOUSE RULES | Property For Sale

Real estate is not a happy business in this cringing economy. The Gurgaon glamour and Bangalore boom have deflated, leaving that ‘3BHK.w/ Jczzi   & club, swmg pool in prestigious IT enclave only 80 km from City Hall’ anything but desirable. I love, though, the idea of open houses in countries like the US or Canada. These are typically held on Sundays, when the property up for sale opens its door to visitors to take a peek. Paradoxically, few of the guests are really interested in a purchase but walk in with the sole purpose of copying bathroom ideas or furniture arrangements for their living room.
A handful show up to assess what their property should be priced at for putting up on sale next spring. Most wander in motivated solely by the desire to see how other people live. Right before the big show, the owners would have made themselves scarce, since a buyer-seller interaction would be considered sacrilegious in such situations. The seller’s broker receives you at the entrance asking you to sign in, and hands you a flyer that describes the house and a list of its features.

Meticulous planning goes behind such houses readying up for sale. At the outset, a clutter consultant helps organise items of domestic interest and shed excess luggage. A house inspector would suggest repairs to make the property sellable and an appraiser would tell you how much bang for the buck each home improvement idea would provide. A staging consultant points out how the furniture needs to be arranged in a vignette formation and how best to set up your fruit-bowl on the table.

They would also recommend turning on all the lights and heating up some cookies before the actual showing to give the place that ‘homey’ feeling. In contrast, the Indian property-visit scene is less structured but much more personal. There may be no fancy open events but there are no walls and pretences either. You get to meet the host family in the domestic ambience of their 2BHK apartment with no airs other than enticing aromas wafting from their kitchen. Discussions are held over hospitable coffee and if you are truly interested, you get to join them for lunch and to munch on the delectable fare you smelt earlier.

Source : http://timesofindia.indiatimes.com/Opinion/Editorial/HOUSE-RULES–Property-For-Sale/articleshow/4702689.cms

RE/MAX Plans Entry into Gujarat

India, a part of the world’s largest Real Estate franchising network has announced its plans of entering into the state of Gujarat. As the first step, RE/MAX India is organizing a formal meet in the city on June 26th & June 27th, 09 to introduce it’s concept and working pattern. After the recent foray in Chennai, Ahmedabad venture will be another feather in the company’s hat of well listed expansion plans for establishing strong footprints in the Indian real estate market. RE/MAX India is on its way towards organizing and bringing professionalism in this unorganized but compelling market.

Ahmedabad, among the top five famous cities of the country is prospering due to the huge growth in the industrial sector. Seventh largest and one of the most populated cities of the country, it has continuously witnessed a demand for real estate. Since the dawn of the development phase in India, Real Estate in Ahmedabad has been receiving maximum exposure and has witnessed high developments. The real estate sector is also flourishing because of the major developments by builders in Ahmedabad. Majority of the big builders are constructing properties which are not only for residential but also for commercial purposes. It means every kind of property need is being catered for. With 10 new real estate projects in the pipeline, it has witnessed growth despite the slow down.

RE/MAX India has entered this market to meet the potential available and make real estate matters transparent, in order to reduce risk and ensure certainty. Delighted to announce its foray into Gujarat, Mr. Samir Chopra, Chairman & Managing Director, RE/MAX India said that “The biggest impending concern of the real estate sector is the lack of accurate statistics and transparency, and the need of the hour is to place trust amongst investors and buyers. We at RE/MAX India, are really looking forward to building great long term partnerships in the city and help it maximize its growth potential”.

Providing a one-stop solution to all the realty requirements of its customers worldwide, RE/MAX provides access to 74 nations in which the company is operational. RE/MAX strongly believes in the notion that construction is one sector where relationships with the customers are cemented through values like trust, integrity and transparency. RE/MAX franchise network avails numerous benefits which combine maximum commissions and the best support services to attract the top agents of the Real Estate industry.Agents share office overheads and pay management fees, and in return receive a wide variety of traditional real estate franchise services and high commissions apart from benefiting from advertising campaigns, superior training and growing market share. That is why RE/MAX Realtors on an average outstand all competitors nationally, giving competitive edge to the customers. These realtors lead the industry with experienced and advanced professional designations, which indicate excellence in various categories of real estate service and expertise.

In order to empower the real estate brokers and to spread knowledge of its fundamentals, RE/MAX India is organizing a brokers’ meet on 26th & 27th June, 09 at ‘Comfort Inn President’, opposite Municipal market, Navrangpura which indeed will be a must to attend for anyone in the Real Estate market who wants to gain from the new order of things.

Source : http://feedproxy.google.com/~r/Indian-Realty-News/~3/Iv6TrZVjlFk/remax-plans-entry-into-gujarat.html

Is it low-cost or just affordable housing?

Affordable housing has been in the picture for the past few months since recession hit the economy . Developers who were busy profiting from  high-end and luxury projects, were suddenly struck by a liquidity crunch when they realised that the global economy has come crashing down. That is when the concept of affordable housing came into being in India. Till some time ago, it was hard for the common man to buy a home for himself. Today , it probably cannot be said that it is easy, but there certainly is hope for the many.

But what is the range of price for affordable housing anyway? Raminder Grover, CEO, Homebay Residential (A subsidiary of Jones Lang LaSalle Meghraj) explains, “Affordable housing is budget housing which offers quality homes at affordable prices, roughly in the range of Rs 18 lakh to Rs 40 lakh, depending on the size and location.” Turns out, that the affordable housing mantra because it isn’t just a few of the developers who have entered the arena, its number is quite large. Bhim Yadav, CEO, Falcon Realty Services Pvt Ltd explains, “Rates differ from one developer to the other, and location to location. But the current trend suggests that the individual unit prices under the affordable housing projects in India are touted to be around Rs 5 to 10 lakh for a one bedroom unit, Rs 11-25 lakh for two and three bedroom units, Rs 27 to 40 lakh for four bedroom units. The range from five lakh to 20 lakhs is what is honestly affordable. Anything beyond Rs 20 to 25 lakh for a three bedroom house is the affordability of a few only.”

Affordable housing has not only proved to be the saviour for the developers, it has brought opportunities for many to buy their dream home. Most developers are rather happy about the kind of response they have received during the booking time. Manu Garg, Director, Landcraft Developers exclaims, “We are providing all the modern facilities that are needed for contemporary living, like club, parking, parks, common security , just to name a few and the booking has already started and the response is very good.”

Affordable housing does not necessarily serve the purpose of the Economically Weaker Sections (EWS) of the society such as the Low Income Groups (LIG) and the Medium Income Groups (MIG). For them it is the low-cost housing that needs to be pushed further . “Low cost housing comes under the range of below Rs 10 lakh while offering one to two bedroom units,” explains Grover.

But why is it that affordable housing costs more than low cost housing projects? That is because affordable housing does not mean the bare minimum , it means the bare minimum facilities that can be provided for the price the buyer is ready to pay. Navin M Raheja, managing director, Raheja Developers says, “We provide all the basic amenities including community facilities and services , shopping area, parking, play areas and schools for children . Wherever there is a need for power back-up , we provide that too apart from other basics .” But that’s not it. Some of the affordable housing projects provide a facilities like, gymnasiums , swimming pools, multipurpose jogging tracks and more. However, it doesn’t seem that the EWS would actually need all these facilities. Instead, all they probably need is a home of their own. In the past few months, developers have realised that the majority of demand comes from affordable housing and they can’t only sustain with the high-end projects. So, now they are adopting a mix of affordable housing and high-end projects. Also, government has introduced a series of fiscal measures , including reduction of stamp duty rates, registration charges and income tax benefits for developers engaged in low-cost housing, which shall keep them interested in lowcost housing.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-Trends/Is-it-low-cost-or-just-affordable-housing-/articleshow/4705291.cms

Vipul plans four-star business hotel in Bhubaneswar

Gurgaon-based real estate firm Vipul Limited, one of the leading real estate developers in the country, plans to invest Rs 80-100 crore in setting up a four-star business hotel in Bhubaneswar .

Vipul Limited had identified Bhubaneswar as one of the 5-6 strategic locations in the country where it intends to set up three-star and four-star business hotels.

Apart from Bhubaneswar, these business hotels are set to come up in the states of Punjab, West Bengal and Andhra Pradesh. Each of these business hotels would cost Rs 80-100 crore.

“We have identified two to three plots of land in Bhubaneswar, including one close to the airport for setting up a four-star business hotel. ]

The proposed hotel would come up on an area of 2-3 acres”, Punit Beriwala, managing director, Vipul Limited told Business Standard.

He declined to comment on the time-frame of setting up of the business hotel as the details were yet to be worked out.

Asked on the status of the residential cum commercial project being developed by Vipul in collaboration with the Orissa State Housing Board (OSHB), Beriwala said, “We are going to negotiate with the officials of the OSHB within 10-15 days.”

Vipul expected to commence construction work on the Rs 400-crore housing cum commercial project being taken up on the PPP (public private partnership) mode in association with the Orissa State Housing Board (OSHB) by the end of this year.

The PPP housing project is being developed on 18 acres of land at Patrapada on the outskirts of the city. While 15 acres would be earmarked for residential apartments, the remaining three acres would be devoted to commercial development.

Meanwhile, Vipul was also going ahead with its Rs 250-crore group housing project in the city being developed on 9.8 acres of land at Shankarpur mauja.

The entire project consisting of 578 apartments in 10 towers was scheduled for commissioning within four years.

Vipul’s group housing project would offer a mix of 2 BR (bedroom), 3 BR and 4 BR apartments which would be priced at Rs 31 lakh, Rs 37 lakh and Rs 45 lakh respectively.

Source : http://www.business-standard.com/india/news/vipul-plans-four-star-business-hotel-in-bhubaneswar/361998/

Ozonegroup announces Chennai residential project

CHENNAI: Real estate firm Ozonegroup is all set to commence its Rs 2,500 crore residential project in the city on 42 acres of land.

The project, ‘The Metrozone’ at Anna Nagar, would have 1,600 apartments across 29 towers. “This is our flagship project in city and the total project cost is Rs 2,500 crore”, Ozonegroup Managing Director Mr S Vasudevan told reporters here.

He said the project would have three basement levels to park 6,000 cars and a piped gas network. As part of promoting ‘Green’ power, the project would have solar lighting and the rainwater storage systems, he said.

The residential units range between 1,555 square feet for double bedroom apartments (Rs 95 lakh) to 4,818 square feet for penthouses (Rs 1.5 crore), he said.

The first phase of the project is likely to be completed by 2011.

“Construction is expected to begin by June 29 and the entire project should be completed by 2013-2014”, he said.

Mr Vasudevan said the Metrozone would have 15-17 screen multiplexes and one lakh square feet area had been allotted for food and entertainment.

“We are talking with the multiplexes and will be signing agreements on this very soon”, Ozonegroup Chief Operating Officer Mr K S Sudarshan said.

The group is also constructing two residential projects in Bangalore at a total cost of Rs 400 crore, he said.

“About 1,000 apartments are likely to come up in both these projects and the minimum price of an apartment would range between Rs 26 – Rs 28 lakh”, he said.

The company also planned to set up a leisure project in Goa on 180 acres, he said, but declined to divulge further details. – PTI

Soruce : http://www.thehindubusinessline.com/blnus/02251592.htm

India’s residential sector likely to see oversupply – Crisil

MUMBAI (Reuters) – India’s realty companies will struggle to find buyers for about a fourth of their residential space between 2009 and 2011, the research arm of rating agency Crisil said in a report on Wednesday.

During 2009-2011, Crisil Research said it expects absorption of 506 million sq. ft. over the three years based on its expectation of a GDP growth of 6-6.5 percent in 2009/10, according to its study of 10 cities across India.

Although planned supply has been estimated at 1,202 million sq. ft., this supply “is unlikely to materialise in full due to the credit crunch and relatively sluggish demand,” and the actual supply will be around 700 million sq. ft., it said.

This indicates 28 percent will be in oversupply while much of the planned projects will be delayed by up to two years and others in the planning stage, shelved.

Indian real estate saw demand for housing collapse in the second half of 2008 amidst a global credit crunch and the local market became stressed with buyers fearing job losses, Sudhir Nair, head-Crisil Research said.

The market is expected to stabilise in 2010, he added, “the Indian economy will stabilise and start accelerating and there will be stability in the global economy and fund constraints will be eroded.”

Builders had also reduced unit sizes and cut prices, which will help stabilise demand, he said.

Residential prices are expected to fall further by 8-10 percent in 2009 before stabilising the next year and Crisil Research expects investors to maintain a cautionary approach until values stabilise, it added in the report.

Real estate companies have been launching newer residential projects at lower prices that are located in “far-flung” locations from the central business districts of cities.

“There is going to be an issue of sales,” Nair said. “The fact is they are new products, slightly lower-priced products and they are completely in the outer skirts of the city.”

Supply of these products is expected about three years from now, but not all planned will come up owing to an oversupply, Nair added.

Source : http://in.reuters.com/article/businessNews/idINIndia-40571820090624?pageNumber=2&virtualBrandChannel=0

Home loan rates go down

Bangalore: With the inflation in the negative territory and the liquidity crunch alleviating, banks are slashing the home loan interest rates. Taking the lead, ICICI Bank has reduced its home loan rates from 13 percent to 11.5 percent. The rate cut will be applicable on home loans of less than Rs 20 lakh.

HDFC Bank has announced that it is planning to reduce its interest rates post-budget and it also plans to cut the deposit rates by 25 bps (basis points). It was early in the year that HDFC had reduced its lending rates to offer home loans up to Rs 30 lakh at a rate of 9.75 percent, while loans above Rs 30 lakh were set to be extended at 10.75 percent to the new borrowers.

Dewan Housing Finance Corporation (DHFL), which provides home loans to the lower and middle class categories, plans to slash the interest rates by 25-50 bps in the near-term. DHFL also expects the interest rates to remain lower for some more time, because of the relief in liquidity.

The decision by the banks comes on the heels of the rate cuts announced by the Reserve Bank of India (RBI). The Repo rate, at which the RBI lends to banks, was reduced by 100 bps to 6.5 percent. The Reverse Repo rate, at which banks deposit their money with the RBI, was also cut by 100 bps to 5 percent. The government is also pressurizing RBI to lower interest rate further to ensure credit flow for all productive economic activity.

Earlier this month, the Union Finance Minister, Pranab Mukherjee in a meeting with the top executives of public sector banks (PSBs) urged the bankers to cut the lending rates further. State-run Union Bank of India has indicated a reduction in the lending rates by July, when it expects the related cost of funds to lower. The current benchmark prime lending rate of the bank is 12 percent.

Source : http://www.siliconindia.com/shownews/Home_loan_rates_go_down_-nid-58422.html

‘Affordable housing is a misnomer’

MUMBAI: Suddenly, affordable housing is the buzzword in India’s real estate sector. Almost every developer who got hit badly in last year’s market  meltdown is talking of getting into this segment that involves putting up houses for the masses.

Not everyone, however, is impressed. Deepak Parekh, chairman of HDFC, the company credited with setting up the housing finance market in India from the scratch, feels that in its present form, affordable housing is a `misnomer’.

In his letter to HDFC shareholders, Parekh said that although developers are now reintroducing one-bedroom apartments and, in the current falling interest rate scenario, buyers are making a comeback, the real issues are not being addressed.

“Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work places and little surrounding infrastructure,” Parekh wrote. “Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to work place. The agenda for affordable housing requires a combined public-private collaboration and a strong political will to enforce change,” Parekh wrote.

There is serious shortages of urban land at affordable prices in India, where encroachments, irrational land use and absence of urban spatial plans are the norm. The total urban land stock in India is 2.3% of its geographical area and it houses 30% of the country’s population, Parekh wrote. So, for the regular expansion of urban land area, “the process of land acquisition and conversion of agricultural land for urban use need to be simplified”. Secondly, the floor space index (FSI) should be increased–even if it means imposing an impact fee on those benefiting from higher FSI. And above all, with higher FSI, urban infrastructure also needs to be upgraded.

Parekh also called for the revival of state housing boards. He pointed out that the recent success of mass housing projects by MMRDA in Mumbai and DDA in Delhi proved that there is huge demand for good housing, provided the price is realistic and within the common man’s reach. “One is hopeful that state housing boards will reassess their role and performance. In the recent period, many housing boards have shifted their focus to merely selling land for profit and sitting on cash surpluses. Such profits should be mandatorily ring fenced and deployed only for affordable housing,” Parekh wrote.

Acknowledging that the housing agenda is a daunting task for the new government, Parekh said the challenges of rural housing are very different from urban housing and hence solutions are also different. “For instance, key reforms such as permitting mortgage of agricultural land for residential purposes and introducing title insurance could give rural housing the much-needed thrust,” he wrote. “One is hopeful that this government will be more sensitive to both the rural and urban housing needs of the aam aadmi (the common man).”

The HDFC chief also looks forward to a real estate regulator. “There is such a compelling need for state level real estate regulators whose role would be to oversee and monitor the affordable housing agenda, promote real estate reforms, ensure transparency, especially by mandating that flats be sold only based on carpet area, and, most importantly, act as a platform to protect buyers from real estate fraud,” Parekh wrote to his shareholders.

Parekh also brought to notice a growing trend of developers asking homebuyers for full upfront payment on start up housing projects “under the guise of offering a substantial discount”. Calling them “hawa mahal (castles in the air)”, Parekh said, “There are instances where homebuyers have made the entire payment despite the developer not having commenced construction at all.” He warned that this seemingly attractive proposition could come with high risk.

Although real estate prices have come down, Parekh feels it could fall further. “Some correction in prices has happened but real estate prices are still high,” the HDFC chairman wrote.

Source : http://timesofindia.indiatimes.com/Business/India-Business/India-Business/Affordable-housing-is-a-misnomer/articleshow/4694225.cms

Reduce tenure, not EMI, when home loan rates dip

It saves a lot in final calculation.

Home loan borrowers would now be heaving a sigh of relief. After over three years, home loan rates are beginning to come down as the Reserve Bank of India (RBI) has brought down benchmark rates and has been persuading banks to do so.

In the last five-six months, all major banks such as State Bank of India (SBI), ICICI Bank and HDFC Bank have cut their prime lending rates (PLRs) and consequently, home loan rates.

As a result, many borrowers now have the option of either reducing their equated monthly instalments (EMIs), or loan tenure. Reduced EMIs may be very appealing to borrowers because of a lesser burden on a monthly basis, but there is a catch to it. If the tenure remains unchanged, there is a higher interest outgo. An example should make this clear. If you have taken a loan of Rs 50 lakh at 10 per cent interest for 15 years, the EMI would be Rs 53,730. Now, say, the interest rate falls to 8 per cent at the end of the third year. The bank gives you an option to either reduce the EMI or the tenure. Here’s how your options work out: With an outstanding principal of almost Rs 45 lakh at 8 per cent for 12 years, the revised EMI would be Rs 48,667 — a reduction by Rs 5,063 per month. But continuing with an EMI of Rs 53,730 would lead to winding up of the loan in 123 months (10 years and 3 months). That is, a saving of interest payment of 21 months (12 years = 144 months). The saving is a huge Rs 4.10 lakh (approximately).

This is the reason why financial planners say that reducing the tenure should be of prime importance. “One should always look at the lowest tenure possible and then take a call on the EMI,” said Gaurav Mashruwala, a certified financial planner.

According to him, even if tax deductions were good, a big loan could always hurt because of unpredictable interest rate movements.

Source : http://www.business-standard.com/india/news/reduce-tenure-not-emi-when-home-loan-rates-dip/361893/

Indian HNIs prefer realty investment in India than abroad

The Indian HNI (high net worth individual) is being aggressively wooed by foreign developers. With the balance of economic power shifting towards Buying a house?

Asia, and with India projected to be the world’s third largest economy by 2050, and a subsequent increase in the number of wealthy individuals , property consultants from across the globe are making a sales pitch, and also getting the HNI segment interested enough to buy.

HNIs are people with net financial assets (liquid assets) of at least $1 million, excluding primary residence and consumables. Data from consultants like Cap-Gemini and Merrill Lynch suggests that India has the youngest HNI population in the Asia-Pacific region, with the club having even 28-year-olds on their rolls.

Strong GDP growth, robust figures in industrial and service sectors, high market capitalization , and steady FII inflows are some factors contributing to the rise in HNI wealth. In 2006, India’s HNI population crossed the 1 lakh figure, which made it the second-fastest growing HNI segment in the world, after Singapore, where the growth was 21%.

If one were to analyze the asset allocation of Indian HNIs, data suggests that while equities make up the greatest portion of India’s HNIs’ portfolio at 31%, 17% of their investibles are in real estate.

“If you were to look at the total pie of investment by Indian HNI, only 2% of the investment from Indian HNIs is going in overseas real estate ,” says Samantha Jerath, a director at Jerath Properties, Delhi-based real estate consultant having a portfolio of many HNIs. He adds, “Barring Dubai and London, I do reckon (investment taking place in) any other place due to cultural differences, unfamiliarity with local laws, language issues.”

Also accessing and monitoring one’s investment becomes so much more difficult when it is an overseas investment, as there is paperwork involved, making payments from time to time, and with many real estate investment options available back home with even better appreciation profiles, Indians any day prefer their home country.

Vikram Baidyanath, a HNI, says out of all global property destinations, London is most attractive to him. “I’ve spent more than six years in London and it is more of a second home. Besides , it gives a comfort level to be in London and see our products displayed in famous stores. The Asian community has a strong presence and English is understood and spoken by all, so even language is not a barrier.”

Though well travelled, he feels he would not be exactly tempted to invest elsewhere – “To invest in a foreign real estate, either one has to have business interest in a place that makes you travel frequently to that country or be really attached to that place. Also, the appreciation in property is not all that phenomenal to attract anyone to casually invest in any and every global locale.”

Lack of awareness about foreign projects and foreign laws is another deterrent for HNIs from investing in foreign real estate. According to Sandip Sen of Calcutta Skyline who has a good network of HNI clients in the eastern part of the country, “We have found that Indians are not investing a lot in foreign markets, if at all they are investing, it is restricted to UK and the Middle East. Primary constraints in making overseas property investments include unfamiliarity with local laws of that country, fear of being stuck in litigation in another country, plus lack of awareness in general. Also there are regulatory issues.” As per RBI regulations, the maximum limit allowed in investments outside India is $200,000 per year. For any higher investments , RBI needs to be approached.

Dubai has been a popular choice with Indian HNIs and that is corroborated by Dubai-based real estate consultant Mansoor from Spring Rose Real Estate consultants, “A lot of Indian, especially HNIs from South India are investing in retail, while HNIs from Delhi and Mumbai are purchasing apartments from well established brand names in real estate. As a matter of fact, HNIs from India, Pakistan and Bangladesh like to have a foothold in Dubai due to citizenship , tax rebates etc.”

With recession, property prices have depreciated globally. But this has not translated into attractiveness towards overseas properties. On the contrary, according to Dr Devinder Gupta, CEO & CMD of Century 21 India, “Due to the global meltdown and uncertainty in realty sector, many projects have become unviable. Even bankers are not willing to lend. All this has led to Indian HNI being wary of investing overseas.”

There are enough accounts of developers being faced with credit crunch, globally, who have stalled construction work, delaying most of their projects in the pipeline. Developer’s cash flow problems and credit crunch has in turn impacted delivery deadlines of projects.

Samantha Jerath sums it, “Real estate investment is all about perception, trust, and ease of accessing and monitoring projects.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-Trends/Indian-HNI-making-realty-investment-on-home-turf/articleshow/4679997.cms

BoA grants extension to Orion SEZ despite delay

Orion proposes to build an SEZ for information technology firms at Bandhwari near Gurgaon, Haryana

New Delhi: Setting a precedence, the commerce ministry’s board of approval (BoA) on special economic zones (SEZs) on Friday granted an extension of an in-principle approval to Orion Infrastructure Pvt. Ltd even though the developer approached the board 20 days after the expiry of the validity period.
Slowdown factor: Commerce secretary Rahul Khullar.Harikrishna Katragadda / Mint Orion proposes to build an SEZ for information technology firms at Bandhwari near Gurgaon, Haryana. The developer has submitted that it has acquired the entire 130 ha of land for the project. It had obtained the approval in 2006.

An SEZ is an enclave aimed at increasing investment and exports. Companies based in SEZs are eligible for tax and other incentives.
According to SEZ rules, 2006, an in-principle approval is valid for one year and an extension of validity could be granted for another two years. A second extension could be granted for a sector-specific SEZ if the developer is in possession of 60% of the required land.
“This is the first such instance. Even if the rules do not permit extension after the validity period expires, the board has exercised its power and waived off the rule in this particular case,” a consultant with an audit firm said on condition of anonymity. He, however, said that the board is unlikely to make this a normal practice.

Among other proposals, the board agreed to denotify an information technology SEZ in Navi Mumbai by realty firm K Raheja Universal Pvt. Ltd and allowed the passage of metro rail through the Cyber City SEZ in Gurgaon being developed by DLF Cyber City Developers Ltd. In its previous meeting, the board had agreed to de-notify four zones of real estate firm DLF Ltd, with the rider that the company would repay all tax benefits it availed of in developing the SEZs.

The board ratified extension of time to 23 developers, including Satyam Computer Services Ltd in the wake of economic slowdown for building these enclaves. The government has so far granted 576 approvals to set up SEZs, out of which 319 have been notified. The Friday meeting, chaired by commerce secretary Rahul Khullar, informed the board that Rs1.09 billion have been invested in the SEZs and direct employment of 387,439 persons has been generated. Exports in SEZs registered around 50% growth in rupee terms in 2008-09, amounting to Rs99,689 crore.

Source : http://www.livemint.com/2009/06/19224210/BoA-grants-extension-to-Orion.html?h=B