Retail Woes: Mall supply to double in 2010

NEW DELHI: The retail party seems to be over, with rentals witnessing a major dip across the country. But what’s adding to the negative sentiment is More Pictures the over supply waiting to come up in the next couple of years. It is estimated that the total mall supply in the country will double in 2010 as compared to the supply slated to come up this year.

SundayET, along with global real estate services firm Cushman & Wakefield, conducted a survey in the top seven cities, which reveals that despite the slowdown this year, there will be more than 16.5 million sq ft of fresh retail space supply. In fact, by 2010, these figures are going to cross a whopping 32.5 million sq ft.

Interestingly, this year the NCR region tops the list with more than 7.5 million sq ft of additional space, while in 2010 the retail supply here will come down to 5.5 million sq ft only. The real growth in the retail supply will come in Hyderabad, which will cross nearly 7 million sq ft in 2010.

Experts things will only get worse. Says Kishore Biyani, CEO of the Future Group: “The risk element of the developers will increase with so much supply slated to come up. To sustain this, we need to look and work at the dynamics of how the market can grow. Till such time the retail market does not grow, it will be very difficult to absorb such kind of space. In the near future, the market has to stabilise as far as rentals are concerned. Productivity is a key factor for any retailer to operate efficiently in a mall, in case of a leased deal. We have changed our business model and are now operating on a revenue-sharing model in the malls.”

Agrees Rajneesh Mahajan, director, retail, Cushman & Wakefield India: “The industry is taking stock of its progress and consumer response to various retail formats. The varying levels of acceptability of modern retail by consumers in different micro markets across India has led both developers and retailers to redraw their business plans. The consolidation or modification is largely to do with aligning the business models to the consumers’ needs, preferences and adaptation. This will lead to alignment of their expansion plans and of course correction in some of the past decisions.”

The supply in these cities may also see a correction in the coming years. The actual supply may be lower than the planned supply, due to delay in the delivery or some developers postponing construction. The large development houses that are going on with their projects may also run behind their timelines due to approval and construction delays.

In certain cases, they may put on hold their projects due to weak consumer confidence in specific micro markets. The retail developers this time are much more cautious and may delay or alter their development plans.

Economictimes.com

Realtors may need more collateral to raise funds

MUMBAI/DELHI: Real estate companies, the darlings of the India’s capital and financial markets for the past two years, will continue to hog the limelight in the coming year as well, but for the wrong reasons.

The global credit crunch which has affected the Indian market has taken the sheen off large property firms, with DLF and Unitech, two of India’s leading real estate companies seeing their market cap eroding almost completely and their fund raising plans hitting a rut due to unavailability of funds.

The situation has also led many non-banking financial companies holding large equity stakes in real estate companies as collateral. Their shareholding is also likely to cross the crucial 15% limit as most realty firms fail to meet payment deadlines.

“A lot of projects announced may not happen ,” a senior investment banker said. “With significant pressure on companies, they are likely to go for restructuring and focus on selective projects in the short- to medium-term . There will be more tie-ups at the project level. For realty players, these will be testing times that will check whether they are strong enough to weather the downturn,” he added.

However, Unitech MD Sanjay Chandra said: “The disbursal of loans has again begun after a freeze of few weeks. We have very recently got the disbursal of a loan from a public sector bank, although the rate was 250 basis points more than the earlier agreed rate.” He added that the company has not defaulted on any loan or fixed maturity plan. “We will continue to service debt as and when they become due. We would soon make some announcement on a PE deal for our hotel business,” Mr Chandra said.

DLF and Unitech have seen their market capitalisation eroding sharply by 81% and 94% respectively in the past few months.

“Till today, DLF has not rescheduled payment of any loan so far. Banks have still not started disbursing loans. The highest rate at which we have borrowed so far has been at 15%. We are confident of raising funds through private placement in DLF Assets. Our construction is not suffering on account of buyback. We are injecting liquidity in the market by buying back shares.” DLF executive director Rajeev Talwar said.

Last week, credit rating agency IRA downgraded the Rs 100 crore fund raising programme of Unitech from A1+ to A2+. “The rating revision has been driven by the increasingly challenging operating environment that real estate players are currently facing, given the slowdown in the market and the difficulty in raising funds, both through the debt and equity route” said ICRA.

Unitech’s total debt had increased significantly from Rs 3,980 crore to Rs 8,552 crore due to difference in its Real Estate Investment Trust(REIT) listing in the overseas market and increase in land purchases.
With stocks of all listed real estate companies plummeting, jittery non banking finance companies are seeking higher margins in the form of pledged shares from borrowers.

Non-banking finance companies such as Reliance Capital, Indiabulls, GE Capital, ECL Finance are believed to have sought higher collateral by way of pledged shares from the promoters of real estate firm such as Parsvnath Developers, Omaxe, Unitech, Akruty City and Lok Housing. It is learnt that almost all reality companies have borrowed cash from private financiers at steep interest rates of 36-48 % per annum.

“The company has started asking for more fresh shares or equivalent cash in order to maintain the margin. Till date we have not a single pledged share as we always maintain highest margins than what they owed to us,” an ECL Finance official told ET.

Margins are generally defined as the difference in value between the security and loan balance. Finance companies usually stipulate that securities should be double the amount of the loan balance to maintain the margin.

A borrower is asked to make up for the margin, if the stock price of the borrowing company falls. If the borrower fails to meet the margin calls, the finance company has the power to sell off the pledged securities. Industry insiders say if share prices keep falling, a promoter is normally asked to pledge more shares with the lending companies.

Market rumours suggest that GE Capital has been selling Unitech shares in the market where the company had pledged its shares. According to sources close to the development, the funding was done at coverage of about two times. But the massive fall in the stock price is due to media reports speculating default by the company.

According to industry sources, many developers have taken at least Rs 250 crore to Rs 1,000 crore from financiers in lieu of their existing projects in the past few months.

TOUGH TIME

The global credit crunch has taken the sheen off large property firms With stocks of all listed real estate cos plummeting, jittery NBFCs are seeking higher collateral for loans The market capitalisation of DLF & Unitech have fallen by 81% & 94%, respectively.

Source : Economictimes.com

Permanent real estate exhibition centre to be established in Dubai

Dubai, UAE – October 25, 2008:  24 GROUP, one of the leading outdoor media specialists and exhibition stand builders, is establishing a permanent exhibition center where real estate players in the UAE and the Middle East can showcase their projects all year-round. The first permanent property and mortgage exhibition in the UAE is dubbed the Property Outlet and will be located at the shopping mall of Crowne Plaza Towers, in the heart of Dubai City’s business district.

Supported by the Real Estate Regulatory Agency (RERA) and managed by 24 GROUP, the Property Outlet introduces a new concept in real estate exhibition in the UAE by creating a permanent display center which puts together the most prominent property developers, brokers, banks and private finance institutions under one roof.

“This is a very timely undertaking as the UAE and the entire Middle East region continue their unabated property development boom,” said Fady Mohammed, Managing Director of 24 GROUP. “We are convinced that establishing a permanent exhibition center solely dedicated to real estate is the best way to keep companies and investors connected, it is small and personal as opposed to massive trade shows,” he added.

Mohammed expects that the Property Outlet will be a great venue for real estate companies to showcase their work and where discerning investors will get up-to-date news on the latest projects, trends and solutions in the ever-growing sector. The finance sector and the RERA will be on hand to provide immediate financing solutions and regulatory advices respectively.

The exhibit’s convenient location makes rates, offers and other information easily accessible to any interested person at anytime. “With the presence of highly-trained customer service professionals, people will walk away feeling more informed about their property investment options and move closer to making that important decision,” added Mohammed.

All exhibitors must comply with the Real Estate Regulatory Authorities. The Outlet offers a fully-equipped exhibition area with ready custom made stands which include high-tech touch screens and other state-of-the-art features in the most strategic part of the mall. Mohammad added that because the overwhelming eagerness by real estate companies to showcase their current and future projects, exhibition space is expected to quickly sell out.

The exhibition will be launched on November 28, 2008 and is organized by 24 GROUP, one of the leading outdoor media specialists and exhibition stand builders, is currently accepting bookings for interested exhibitors.

Source : Middleeastevents.com

Overseas firm to take Indian real estate investors abroad

Kolkata, Oct 26 (IANS) Real estate investors in India have reasons to be happy as very soon they can invest in properties abroad with the help of a consultant. Castlewood Investment Properties, one of the largest real estate developers in Europe and the US, in partnership with the Singapore-based Home Place International and its exclusive Indian associate Land Solutions, is all set for entry into India by showcasing a bouquet of international real estate properties in New Delhi.

“We will enter the Indian market in first week of November. The properties up for investment are mainly based in Hungary, the US and the UK. Initially we are looking at 100 investors every year from India,” Land Solutions chief executive Akshay Jain told IANS.

Land Solutions is an international financial services provider specialising in real estate services and investment management. It provides turn-key real estate and allied investment solutions.

Castlewood Investment is targeting high-income Indians who can buy properties abroad that start from Rs.10 million and can go up to Rs.60-70 million, Jain said.

“We will provide buyers with complete solutions. We will help them in buying the property, getting bank loan through our tie-up with various financial institutions and even getting tenants for their property abroad so that they can repay the loan from the money they earn from the rent,” he said.

The buyer would have to shell out 30 percent of the total value of property and the rest would be arranged by Castlewood through loan.

“Since buying property abroad will involve understanding the rules and regulations of the foreign country, we have our legal team that will help the buyer overcome legal hurdles,” Jain said.

Though Jain is very optimistic of getting 100 customers every year, he admitted selling overseas properties “is a bit tough”.

At the same time, he said he was confident buyers would be able to double the value of the property within three years.

And Jain is unperturbed by the international financial meltdown. “The market has reached its worst, it can’t go beyond this. This is the best time to invest because once this recession is over, the market will start recovering and the real estate price will appreciate.”

In Southeast Asia, investors in countries such as Singapore, Malaysia, Indonesia and China have already begun purchasing properties abroad.

“The Chinese are very keen to purchase property in India, but Indian laws do not allow any foreigner to buy land over here,” Jain said.

“China started investing abroad 10 years back. But I am sure five years down the line Indians will be the biggest investors.”

Source : Thaindian.com

Buy a flat and get another flat, BMW, Merc free

Mumbai-based Cosmos Group has launched the ‘Ghar pe ek Ghar free’ (one house free on every house) offer at its four upcoming housing projects in Thane near Mumbai and Lonawala near Pune.

The buyer will get a 1-BHK flat free with a purchase of a bungalow or a big flat, while with a 2-BHK flat, a bedroom and a kitchen come free.

Another property developer, Sunil Mantri Realty, has launched an ‘assured buy-back offer’ at its housing projects at Mumbai, Gwalior, Solapur and Bangalore. If the property price goes below the purchase value, the company will buy it back at the same price on the condition the buyer holds it for three years.

Delhi-based Jaypee Group is offering BMW-3 Series, Mercedes Benz or Toyota Camry luxury cars free, depending on the size and value of its flats at Noida and Greater Noida. And Ghaziabad-based SVP Group is giving 50 gram gold coins for apartments at Ghaziabad priced between Rs 45 lakh and Rs 2 crore.

Desperate situations, desperate measures. These mind-boggling offers, mind you, have been thrown in during the Diwali and Navratra season, when many buyers think the time is auspicious to invest in real estate properties. But the meltdown in the sector has forced real estate developers to think out of the box.

“We have to look at innovative methods to improve sales when liquidity is tight and banks are not lending to developers,” said Sunil Mantri, the promoter of Sunil Mantri Realty. Mantri has already waived off stamp duty and registration charges for its Goregaon project and has given a discount of 6 per cent for its Bangalore project.

Still, companies and brokers said there are very few enquiries from buyers. “You cannot compare this Diwali with any other Diwali in the last 10 years. Sentiment is totally negative,” said a top DLF executive who did not wish to be named.

REAL BONAZA

Cosmos Group – Thane, Lonawala – One house free on every house
Sunil Mantri – Realty  Mumbai, Gwalior Solapur and Bangalore – Assured buy-back Jaypee Group – Noida andGreater Noida – BMW-3 Series. Mercedes Benz or Toyota Camry luxury cars, depending on the size and value of flats
SVP Group – Ghaziabad – 50 gram gold coins on flats priced between Rs 45 lakh and Rs 2 crore

Sector analysts said a lot of developers need cash desperately and therefore have no option but to sell their existing stock in a hurry. Raminder Grover, the managing director of Homebay Residential, a subsidiary of property consultancy Jones Lang LaSalle Meghraj, said: “Developers have a lot of stock which they need to clear and make money. Diwali is the best time to do that. Unfortunately, nothing much is happening.”

Ironically, these unheard of offers have been launched when advertising budgets of developers are getting pruned. According to a senior executive of a realty publication, realtors have cut their ad spends by 7-8 per cent in recent times.

“Our ad volume from the sector has gone down drastically in the past few months,” says the executive who preferred anonymity. Another media buyer said, “Despite advertising various offers, developers aren’t getting the right response from the consumer. The consumer response has gone down by almost 90 per cent.”

Source : Business-standard

Cash crunch squeeze on home buyers

The budget for a new home is shrinking; there are more people looking to rent a house than buy one; and fewer buyers are picking up property for the purpose of investing.

This is the story that realty portals tell.

As the impact of the global financial crisis trickles down India’s property market, online realty brokers say they are seeing significant changes in preferences of visitors on their websites.

Unlike a year ago when many people would check out deals online for the purpose of investment, most home buyers today are seeking details of property that they would actually use for their stay, said Naresh Malkani, chief executive of indiaproperties.com.

The liquidity crunch and high rates of interest on home loans have also affected the price ranges of the properties searched for.

“Earlier, the Rs 45-70 lakh segment was the most sought for. Now queries are geared more towards affordable housing in the Rs 25-40 lakh segment,” said Prashan Agarwal, business head, allcheckdeals.com.

Also, there is a shift from the purchase of property towards rent.

“In the past quarter, while makaan.com saw queries relating to rent of property rise by 19 per cent, it observed a 16 per cent decline in queries relating to purchase of property,” said Aditya Verma, business head of the portal.

Source : Hindustantimes

On Palm Beach Road, realty rates go south

NAVI MUMBAI: Officially, no one’s blinking. But distress is in the air and a call from a potential buyer may be enough for builders here to sell
swiftly and without too much fuss. A few months ago, these builders were flooded with eager calls from customers ready to put down payments for projects that didn’t even have a plinth to recommend them.

The curving 9 km Palm Beach Road, which lays claim to the title of the Marine Drive of Navi Mumbai, is the most upscale real estate stretch between Vashi and Belapur. On paper, residential sales are still sitting pretty at Rs 7,500 to Rs 9,000 per square foot, but with near-zero sales and a volatile market, panicky developers and regretful investors are selling for as low as Rs 4,500.

Navin Makhija is a director with the Wadhwa Group, which is stuck with the biggest project—six towers of 25 floors each on Palm Beach Road. He tangentially acknowledges the slump in rates. “In these days when the global market is bad, sales are down and so is sentiment. It’s natural that some will offer lower rates to sell houses,” he says.

Makhija adds that for their Palm Beach Residency project, prices have been “internally lowered to Rs 7,000 to 8,000 psf. We are not going to make any sales for the next one-and-a-half months, but hopefully things will pick up”, he says.

Timesofindia

Developers started to offer discounts on homes in range of 10% and above

With the worldwide financial crisis playing havoc in the US and European markets, India too is keeping its fingers crossed. Tremors are being felt everywhere – from the stock markets to the rupee exchange rate, and from the spiralling inflation to homeloan interest rates. People don’t seem to have any idea, especially on the eve of a most important festive season. This festive season, owing to the market meltdown, property developers are offering a lot to by way of special discount bonanzas, which include free covered parking space or exemptions from preferential location charges even free cars.

Looking at the market mood, developers have resorted to more innovative ways. For example, discounts are given on the rate per sq ft of the property, reducing its cost. Main discount offers have come up for corporate employees where the developer has their tie-ups. Recent example for the same is SVP group who has started to offer Rs 40 per sqft discount or 10% discount in booking amounts.

The other offerings by the SVP group are 50GM gold coins, Holiday EMIs, No EMI till possession etc.

Payment of stamp duty and registration fee: Depending on the state in which the property is being registered, stamp duty and registration fee account for 4-10 % of its cost. A sop has been built around these expenses as well. Some developers bear the registration cost either partly or fully. Some developers subsidize a certain per cent of their customer’s electricity bills for some years.

Though the property boom is cooling off in select pockets and builders are offering all kinds of freebies to hook customers, the prospective buyers must be careful about these baits. Freebie discounts can amount to a net worth of 5-10 % in Tier-I cities like Mumbai and Delhi. These tacts are being used as a marketing tool mostly by developers in Delhi, Mumbai and Chandigarh. The trend is likely to continue till the interest rates come down to a moderate level and capital values cool off. But, do we feel that these discounts will actually benefit to us in terms of money paid for homes.

The biggest challenge today is the interest rate on home loans. It has gone up from 7.5% to more than 12% and this has obviously shocked the homebuyers whose budgets have gone haywire. As a result, the buyers are going in for smaller tenements or waiting for interest rates to fall.

In current scenario many developers and industry experts feel that this might be the best time to invest in the real estate but do we feel that it will so? Before one year, we all know that real estate was booming and the rates are on their peak but in present these are going marginally down. In point the recent changes many investors are waiting for correction in market. Till the time we can say that the recent crunch has given a good opportunity to exisiting buyers in terms of cash discounts, freebies, free cars, free car parking, No PLC, No EMI till possession etc.

Americanchronicle.com

Worth the wait

Don’t rush to purchase property now. There could be better deals, sooner than later.

A couple of weeks ago, a number of potential homebuyers went to the Bandra-Kurla Complex in Mumbai to visit the property exhibition. But a lot of them came back disappointed. The reason: most houses were priced way beyond their budgets. And even banks were not offering any special deals, except maybe a 25-basis point discount.

STRATEGIES

Negotiate for a 20 – 30 per cent discount
Offer as much cash as you can
Buy in projects that are near completion or completed

After four heady years, when property prices were moving only northwards, things have started cooling off. And the first sign came a while ago, when builders, who were only making two-three bedroom flats and selling at exorbitant prices, starting talking about targeting the middle-class segment with cheaper flats. And almost a month ago, when builders in Mumbai met before the buying season, they said they would offer cash discounts to buyers. Something that was unbelievable just a year ago.

And it is mainly because the cash flows have dried up for most builders and there is a serious slowdown in sales. Many leveraged ones have to slash prices to boost sales or abandon projects.

Many developers, who had got money from their initial public offers (IPOs) and from private equity funds, have already invested a major chunk in buying additional land at a huge premium. Additionally, banks and financial institutions have reduced lending because of the decline in sentiment. Many of them are tapping high networth individuals (HNIs) at exorbitant rates of 21-36 per cent to complete unfinished projects. No wonder, even the real estate stocks are reflecting the overall negative sentiment.

In fact, since the last year, the real estate sector had started feeling the pressure. Along with shooting prices, rising interest rates had made buying affordable for many buyers. This led to a fall in sales by over 50 per cent in the last buying season. Even this year, buyers have been visiting exhibitions, seeing properties, but are refraining from signing on the dotted line.

If you are a potential buyer, this is an important period. While there has been some correction in property prices, there is a strong likelihood that there is more to come. Also, home loan rates, which are at 11-13 per cent (floating), will see some reduction. But all that will take some more time.

And in such times, it is best to wait. That’s true, even if you are purchasing your first home. Property prices will come down, sooner than later. In such circumstances, it is best that you do not get emotional about any property and think that you will miss an opportunity. Instead, there could be better opportunities available in the coming months.

Remember that in the stock market, everyday price fluctuations are a norm. But in the real estate market, things happen slowly, but stay for a longer period. So, it is relatively easier to time the purchase.

However, for some reason, if you have to buy a property, then follow some clear guidelines.

Negotiate hard with the builder by quoting a price that can be easily 20-30 per cent lower than the going rate. And don’t get swayed by freebies like stamp-duty waiver and free-car parking. Ask for a cut in the rates or cash discount – plain and simple. Just two years ago, it was a seller’s market, but today it is turning into a buyer’s market. That puts you in a significantly strong position. Also, a lower price will bring down your home loan outgo as well.

Another strategy is to offer a higher amount of cash. In today’s market, everyone wants cash and that can get you a much better deal.

Most importantly, unlike earlier times, when getting into an under-construction project was considered great because there was a good chance that prices would double by the time the project was completed, today, things are quite different.

While the really big builders will not risk delaying projects, there could be quite a few who could get stuck in this cash crunch. This means a long wait before the project gets completed. In such uncertain times, the best strategy is to go for projects that are completed or are going to get completed in a month or so.

Finally, go for pre-approved projects by banks. For one, this could help you to easily get a home loan. Also, though banks do not directly guarantee the completion of the project, they do a proper research by looking at the paperwork and reputation of the builder.

The point here is simple. These are troubled times. If you can wait, do so. Otherwise, do the next best thing. Do proper research and run a really hard bargain

Business-standard

Pride focuses on business hotels and the resort category

In a bid to expand its footprint, The Pride Group of Hotels plans to launch a five star hotel in Bengaluru and Jaipur by end 2008. Three 5 star properties in Alibaug, Goa and Mumbai are currently in the planning stages, as well.

The ‘Pride Biznotel’ (business hotel) and ‘Pride Resort’ brands offer three operating hotels and the group is negotiating for three additional properties, which will be added during this year. The Pride Group has already acquired individual hotel properties and started managing and marketing them under its ‘Pride Biznotel’ and ‘Pride Resorts’ brand names. The group plans to add a total of 15 properties under the Biznotel brand umbrella in Nashik, Mysore, Indore, Coimbatore, Raipur, Madurai and Goa. Pride Hotels is negotiating for properties in Kerala, Andhra Pradesh and Gujarat.

With the addition of these hotel properties, Pride Hotel will have a pan India presence; it will offer 1500 rooms in the business hotel category.

Source : hospitalitybizindia.com

Global credit crisis takes its toll on India’s real estate sector

INDIA: October to November is traditionally the biggest shopping time in India. Real estate sales can go up to 60 per cent during this period.

This year, realtors are offering huge discounts as well as freebies like cars and jewellery to attract buyers. But not many are taking up the offer.

B.P Singh, an investor, said: “Everyone is feeling the heat of the economic slump. I am already tensed about how I would manage during this crisis. My business is on a low and I can’t think of spending anymore (on my house construction) right now. This is a sad Diwali for everyone.”

The global economic meltdown has taken its toll on India’s real estate sector.

DLF, the country’s largest developer lost three fourths’ of its value in the past month.

At construction sites, like this one there is little or no activity.

Lalu Shah, a construction worker, said: “Our payments have been drastically reduced and some of us are not even getting paid as the work has stopped (here).”

Real estate developers dependent on foreign investment are also feeling the pinch.

They have had to slow down their projects because foreign buyers are cutting back.

To add to their woes, they’re seeing their funds dry up as banks hold back on disbursement of loans. It’s a squeeze from all sides Harinder Dhillon, general manager, marketing, Raheja Developers, said: “There has been a minor slowdown. No doubt at all. If people are losing jobs, not getting bonuses or getting increments, of course this impacts all markets. It impacts automobiles, civil aviation as well as real estate. No industry in this economy has been left untouched and that is the reality.”

This is a rare occurrence in India.

In the past prices fell negligibly in small towns and sales activity slows down in the suburbs but nobody remembers a nationwide overall fall in home prices.

Some builders said that India has such a huge population, that even if you keep building for 40 years at the current pace, there will still be a shortage of housing.

But there is no denying the fact that house purchase plans have been shelved by middle class India.

Source : Channelnewsasia.com

India’s Country Club to invest Dh1b in region

India’s largest leisure and infrastructure company, Country Club (India) Ltd (CCIL), plans to invest Dh1 billion in the UAE and the Middle East. CCIL opened its first Country Club in Dubai in May this year by acquiring Dubai’s Chelsea Hotel for Dh165 million, as part of the strategy to expand its footprint beyond India where it owns 50 properties.

“We are seeking opportunities in Abu Dhabi, Sharjah and Ras Al Khaimah within the UAE and in the Oman and Bahrain. Egypt, Morocco, Algeria and Fujairah in the UAE are also under consideration. In the next four years, we plan to have four to five hotels in the UAE,” Y Rajeev Reddy, chairman and managing director, CCIL told The Business Weekly.

Dubai is Country Club’s second foreign location after Kandy in Sri Lanka. The Bombay Stock Exchange-listed company has acquired more than 25 properties in India in the past six months. “We expect 100 per cent growth this year on the back of our massive expansion within India, in Sri Lanka and the UAE. Governments in Mauritius, Poland and Malaysia have invited us to start operations. We anticipate similar invitations from governments in this region as well,” he added.

The company is set to introduce new brands such as CK27 and Country Spas in the region. CK27 or Country Klub 2007 is a satellite club model with state-of-the-art infrastructure that targets families.

“We have earmarked Rs1,000 crore to establish a chain of about 100 CK27 properties over the next two years in India. Funds will be raised through debt and equity. We are already in talks with private equity and foreign players to raise the resources,” Reddy said.

“CK27 is a new city-centric club concept set to revolutionise the market. It is a very important development because it is like having a mini-club next door. These will come up in important localities across the city and will be attached to a mother club. The concept has evoked good response in major cities in India. Our clubs currently have 200,000 members and we expect this to increase to 300,000 by next year,” he added.

The company has acquired land and received government approval for a five-star hotel in the Indian city of Hyderabad involving a cost of Dh500 million. “This is a stand-alone project where we propose to divest 40 per cent of the stake and are looking for suitable investors because we want to concentrate on our Country Club expansion,” Reddy added.

Dubai will house CCIL’s international headquarters. Additionally, through acquisitions and joint ventures, CCIL will set up club facilities in other parts of the UAE and the Middle East.

“Being one of the most dynamic cities in the world, Dubai is truly a melting pot of different cultures and is an ideal destination for businesses that cater to an international audience. Dubai’s hospitality sector is highly promising and there’s immense potential for tourism growth in the entire region,” he pointed out.

Source : Zawya.com

Realtors seek relief from PM

MUMBAI/BANGALORE: After financial institutions and aviation companies, it’s now the real estate sector’s turn to approach the government for a relief package. Realty industry bodies such as the National Real Estate Development Council (Naredco) and Confederation of Real Estate Developers Association of India (Credai) are ready to approach Prime Minister Manmohan Singh with their wish-list next week.

Rohtas Goel, vice president of Naredco, and chairman and managing director of Delhi-based Omaxe Ltd, said, “Our main demand is that affordable housing should be withdrawn from section 80 IB (10) and moved to section 80 IA. The government has to make houses less than 1,500 sq ft in area tax-free. Even the stamp duty should be waived for affordable housing projects,” Goel said. Naredco has been set up under the housing and urban poverty alleviation ministry.

Liquidity crunch is a big problem plaguing developers. “Our second demand is that banks restructure the debt they give to builders and lower the rate of interest,” Goel added.

Credai, a real estate body that has 10 member associations from various states, has already dashed off a letter to the PM seeking a meeting.

Lalit Kumar Jain, VP, Credai, said, “We want the government to instruct banks to take proactive measures to create liquidity in the market. We also want the government to do away with taxes it has imposed on developers for building residential properties.” Jain said a developer pays 35% tax for the development of any residential project. Realtors want these taxes cut to zero.

Banks are lending to developers at an interest rate of 18-20%, making loans for construction expensive. Jain said, “Exactly four years ago, interest rate was at 9.5%. Now, banks are shying away from giving us loans. Where will developers take loans from? We want the government to cut interest rates to below 12% so we can get funds.”

Naredco has prepared a 16-page report that will be sent to the government in December. Realtors are hoping that the report is taken into consideration during the next budget.

Thanks to the global financial turmoil, realty stocks have taken a pounding and developers are unable to sell the projects in the premium segment.

Developers say they need government intervention to make housing affordable.
An official with a major north-based developer that has expanded its footprints to different states said, “We have been seeking support to build affordable housing projects but neither the government of Maharashtra nor Uttar Pradesh and Jharkhand has come forward to help.”

Omaxe’s Goel, however, has received positive response from the government of Punjab for the company’s affordable housing project. “The Punjab government is ready to relax the stamp duty for our affordable housing project. We are expecting a positive response from other governments too,” he said.

Omaxe has launched a 100% subsidiary, National Affordable Housing and Infrastructure Ltd (Nafhil), for 10 lakh such homes in tier II and III cities. According to government data, the country has a shortage of 25 million homes in the affordable housing segment.

Among other demands are interest-free loans up to Rs 5 lakh for members of the economically weaker section (EWS) so such people can buy homes. This section is already on the Congress-led United Progressive Alliance’s radar as it approaches general elections and seeks EWS votes. A senior official from the housing ministry said the government would soon announce a plan to give EWS home loan seekers a cut of 5% in prevailing interest rates.

Source – DNA India

Realty submerged in liquidity woes

New Delhi, October 23 : Real estate and infrastructure projects will take a hit in the current liquidity crisis. Even when the Government has injected enough liquidity into the system, bankers are shying away from high-risk lending. According top PSU bank officials, lending will be robust towards SMEs (manufacturing), agriculture, education, retail and other financial institutions.

“We are financing mutual funds and also NBFCs (non-banking finance companies). But bank’s focus will remain on the productive segments and specially those (sectors) that are important to the national economy,” said CMD of PNB.

A senior SBI official told The Indian Express that even though long gestation projects in infrastructure might not be impacted by lack of credit, it was the medium projects that would take a hit. “We have clear guidelines to evade commercial lending in real estate. However, we are playing safe even with some infrastructure projects,” said the official.

“There are no takers in the housing sector at the moment, so lending to real estate sector is going to be slow. But we will be going for all types of private sector loans like agriculture, crop loan, education loans, and loans to small and medium enterprises etc. We will also lend to infrastructure sector companies, that require credit,” said S C Sinha, executive director of Oriental Bank of Commerce.
Last week, RBI reduced the cash reserve ratio by 100 basis.This will make available Rs 40,000 crore to banks for lending and will apply with retrospective effect from October 11, 2008. On the other hand the finance ministry decided to provide Rs 25,000 crore to financial institutions under the farm debt waiver scheme. In line with this decision, the RBI will provide a sum of Rs 7,500 crore to commercial banks and another Rs 17,500 crore to Nabard.
Despite all this money flowing in, cash-starved real-estate developers might find themselves standing last in the priority list of bankers. They may also have to slash housing prices for the market to pick up even though a number of banks have plans to slash home loan interest rates.

Source  : Indianexpress

Realty bites: Unitech defaults on Rs 150-cr payments

New Delhi: Unitech, the country’s second largest real estate company, has defaulted on two payments on a housing project in Greater Noida in Uttar Pradesh.

Sources told CNN-IBN Unitech has not paid two installments worth Rs 150 crore to the Greater Noida Authority for the 100 acres it had purchased for its ambitious Uniworld City project.

The company is trying to reschedule the payment, but risks harming the land deal if it doesn’t pay up, the sources say. The company insists the payment was stopped due to farmer agitation.

CNN-IBN Correspondent Nayantara Rai reports officials of the Greater Noida Authority understand that real estate companies have been hit by liquidity crunch and will be “understanding” to Unitech’s request.

DLF group chairman K P Singh says the financial crisis has hurt the real estate business, particularly “fly-by-night operators”.

“Good clients will pay up, but there are millions of developers who are fly-by-night operators. My feeling is that they will be in trouble and if they are in trouble they won’t be able to pay up and they are going to default,” said Singh.

Source : www.ibnlive.com

REITs offer better opportunities to investors

The Indian real estate market has undergone palpable transformation in the last few years. This change has been led by rapidly rising demand for resi
dential, office, retail , hotels and now warehousing space. Also, India offers higher average rental yields – 8.5 – 10.5% as compared to 3.5% in Japan, 5.2% in Singapore and 5.7% in Hong Kong. Higher yields and a relatively better spread between ten-year government bonds along with strong economic growth, increasing income levels, growing middle class and widespread urbanisation has helped the Indian real estate market attract large investments.

However , despite the growing attractiveness , the Indian markets have been constrained by certain limiting conditions like absence of transparency and lack of institutionalization and liquidity. The issue of transparency is being taken care by way of reforms being undertaken by the state governments . The most effective way to tackle the other two is by allowing Real Estate Investment Trusts (REITs) to be active in the Indian markets.

REITs are investment vehicles that allow institutional as well as retail investors to partake in real estate ownership, management and development. REITs are already present in a number of mature real estate markets across the world like US, UK, Japan, Australia, Singapore, etc. and are now making inroads in emerging markets like India.

In India, REITs will help fill the financing gap as they would provide access to capital , both debt and equity capital from public and private sources at reduced costs. They will also offer an exit route for the developers to revolve funds and improve their margins . Success of REITs in other markets like USA, Australia, Singapore, etc. is a major case in point for their introduction in India.

For example, in Australia REITs play a major part in the commercial property market , with over 50% of the value of institutional quality commercial properties being held by REITs, supported by an active unsecured debt and commercial and mortgage backed securities market. According to CRISIL, REITs in India have the potential to hold atleast a 5% share (more than US$ 70 billion ) of the total realty market by 2010.

This coupled with higher realty returns that the country offers (average development yields in India vary between 20-25 % while it is lower in the US and the UK) spells a great opportunity for the success of REITs in India. Draft guidelines for REITs in India were issued by the Securities and Exchange Board of India (SEBI) in December 2007 and are likely to be approved and enacted in the near future. However, much ground needs to covered and several issues need to be addressed before REITs can find a footing in the country

The current regulations in India involve high transaction costs, present problems in ensuring clear land titles and prolonged delays in obtaining clearances and approvals. Moreover, at present, there is an absence of a credible database on real estate markets as well as standardized, accepted practices for property valuations . In such a scenario, it is very essential that certain regulatory reforms as well as an enabling framework is brought in so as to facilitate REITs to become an effective tool for institutionalizing real estate in India.

In the absence of a liquid market for income-yielding assets and the credit squeeze which has constrained development plans, many Indian developers have been exploring overseas listings through REIT structures in markets like Singapore. However with the recent fall in the global equities market (S-REIT index has fallen nearly 30% since its June ‘07 peak) and the significant drop in risk appetite for Asian assets together with the underperformance of the India Bulls Properties Investment Trust at the Singapore Stock Exchange has led to the postponement of the REITs plans by other major developers like Unitech and DLF. There is no doubt that it is time that the Indian realty markets start to develop on the back of a research-driven , structured investment approach, which has a long-term perspective and REITs would offer the ideal solution.

Economictimes

Aryavrat Plans To Invest In Luxury Housing

Real estate firm, Aryavrat Housing Construction said that the company is planning to invest Rs 1, 000 crore in developing a 58-acres luxury housing complex in Bhopal. “In view of the growing need of fast developing Bhopal, we want to offer luxury and comfort with services that caters to all the day-to-day needs of an Indian family,” Aryavrat Housing Construction (AHCPL) Director, Mr. Jagdish Arora said. The complex, British Park, would be developed for about Rs 1, 000 crore, which would comprise premium residential units, luxury bungalows, villas and mansions.

Realtydigest

Corporates, consulates, culture and cuisine are all marching north

MUMBAI: Residents of this city once treated with aversion all far-flung places: essentially, anything north of Worli. To the less snobby, up to    Bandra was fine. But beyond that stretched a waste land of mosquitoes, no Gothic arches, no fine dining and no NCPA. All this, of course, was a long time ago, before Mumbai began its long march from South to North, pushed farther and farther by killer real-estate prices and postage stamp-sized office space.

Banks, IT firms, diamond merchants and infrastructure companies all opened shop in the new business sprawls of Bandra-Kurla Complex, Andheri-Marol, Malad-Oshiwara and Navi Mumbai. The latest to defect from Nariman Point is the British Deputy High Commission. Next week, the Brits will move to Bandra Kurla Complex (though their visa service will continue to be in town). “We moved to Nariman Point in 1991 and the country has changed so much since then. Our work and staff has nearby doubled. Since there was no scope to expand here, we found a place in BKC which was the perfect combination of space and location for us,” said Shireen Mistry, head of press and public affairs.

In April or May next year, the Americans will leave Lincoln House on upscale Warden Road and move to Bandra-Kurla too. Corporates and consulates apart, culture and cuisine too has joined the migration. The main reason is that there are more footfalls and more money in the suburbs. South Mumbai may have charm, but restaurants and book stores need more than that to keep going.

Himanshu Chakrawarti, COO of Landmark, one of the biggest book stores in Mumbai, located in Lokhandwala, says, “Since we depend on sales from books and music, our target audience is the educated English-speaking middle class. We would have loved to open in South Mumbai but the area is so small that its not feasible to open more than one store there. Plus, there are a lot of catchment areas like Powai, Andheri, Malad-Goregaon and Bandra that we can target by opening in Lokhandwala. I am especially happy when I see the eclectic books picked up by readers of the area.”

Bollywood celebs too prefer to hang out between Bandra and Lokhandwala instead of braving the traffic into town. A senior film journalist says stars can be frequently spied at China Garden in Khar, Piano Bar, Taj Lands End and Royal China in Bandra rather than old haunts such as the Sea Lounge at the Taj. “For celebs, Khar is the new South Mumbai,” she says.

Eyebrows were raised when Indigo, that emblem of SoBo chic, opened in Lokhandwala in August. Proprietor Rahul Akerkar denies that there is any significant difference between north and south. “It was in our plans for some time, so we decided to open the Cafe,” he says. “It has already become popular with television stars who frequent it all the time.”

But Chakrawarti, who lived in the city until three years ago, says north and south Mumbai function in entirely different ways. “Colaba Causeway at 10 am on Sunday is so peaceful you feel as if you’re in the woods,” he says. “But in the suburbs that is the busiest time for people to enjoy themselves. Also, because of travelling distances, suburbs have acquired an identity of their own. Earlier, you could make plans to meet anyone from Juhu to Bandra, but now both suburbs have different hangouts for their population.”

Restaurateur Farhan Azmi, who plans to open a third Basilico at Yari Road in a couple of months (after Colaba and Bandra) says, “Customers are loyal in South Mumbai. A customer in Colaba will come to my place eight times a month compared to a person in north Mumbai who will turn up once a month. It makes sense to shift north though. Geographically, youre targeting a much bigger area which is full of youth whose spending power has increased manifold in the last three to four years. South Mumbai on the other hand, is for older customers and foreigners.”

Source : Timesofindia

DAMAC No2 real estate brand in the region

BANGALORE, INDIA: DAMAC Properties Group, leadingluxury lifestyle provider – has secured its leading position among property developers across the GCC. DAMAC Properties is now rated as number two in the latest Gulf Real Estate Study by Future Brand, the US-based global brand consultancy.

The study was conducted across key GCC markets – Saudi Arabia, Qatar and the UAE. The key drivers behind the ranking were high-quality construction, trustworthiness, responsive customer service, good value for money and focus on reliability.

Based on the overall drivers, only Emaar scored higher than DAMAC. Other factors covered in the study were familiarity, perception and preference, consideration of various home types, amenities and locations.

In last year’s study conducted in the UAE and Bahrain, DAMAC Properties came in third place and DAMAC Properties’ CEO Peter Riddoch said that to make the move to second place was a hugely significant and positive step.

He said: ‘This is a reflection of the hard work, commitment and dedication shown by everyone involved with DAMAC Properties. I would like to thank our staff, our partners and our customers for helping us reach this far.

”The study shows that we are second only to Emaar. We have achieved this in just six years and we are well on the way to achieve our vision of becoming the world’s best luxury property developer”.

‘Last year we were positioned number three. As a result of our customer-centric approach to all aspects of our business and the integrated efforts by our marketing, sales, public relations, customer relations management, development and projects teams to deliver an enhanced customer experience, we are glad to see this reflected in the improved customer confidence towards DAMAC”, continued Riddoch.

‘We are working at redefining the proposition of luxury and creating a niche for ourselves. Identifying the right opportunity at the right time, especially in markets like the UAE, which continue to out-perform global trends, we have capitalized by offering products that appeal to investors and end customers.”

Speaking on the redefining of luxury, Riddoch said: “It is not enough just to talk about luxury anymore – luxury has almost become the standard that investors and residents expect from a property. DAMAC Properties stands out as an organization that takes the wishes & aspirations of its customers and turns them into a reality by focusing on the benefits of luxury and not just the features.

A Significant Year

2008 has been a good year for DAMAC Properties; the company recently announced a new corporate identity with a brand promise of ‘Wish Fulfilment’, which extends the equity that DAMAC Properties has built behind the current luxury positioning, while depicting luxury in a more unique context. At the same time, DAMAC Properties introduced its new vision designed to reflect a new age in the history of the developer and the global property industry.

2008 has also been the ‘Year of Construction’ at DAMAC Properties, during which its businesses have aggressively focused on construction and contract delivery to trusted and quality contractors.  An impressive AED2.5billion worth of contracts have been awarded in the first nine months of 2008. From initial consultants through to enabling and main contractors, the company has awarded more than 60 contracts in the first nine months of the year – showing that it means business when it comes to delivery. So far approximately AED2.1billion worth of contracts have been awarded for projects in Dubai, AED45million for projects in Abu Dhabi and a total of AED320million by DAMAC International for projects in Qatar and Jordan.

In line with this, DAMAC Properties Dubai, is making good progress at its major developments in Dubai and has recently handed over 571 units at Lake Terrace in Jumeirah Lake Towers and with the promise of delivery of 192 units at the Executive Heights project at TECOM, 198 units in its Tera Del Sol developments in Discovery Gardens, 536 units at LakeView in Jumeirah Lake Towers and 847 units at The Crescent, located at IMPZ in Dubai, all before the end of 2008.

DAMAC Properties is expected to hand over approximately a further 7,100 units in 2009/10 across the GCC region.

The fourth Future Brand study was a quantitative survey of respondents, across a sample representative of GCC in five major cities. FutureBrand is a leading brand consultancy that delivers a powerful point of view and designs the tools and methodologies tailored to gauge and analyse the real estate industry.

Source : Ciol.com

Karna govt to handover 40 per cent of acquired land to farmers

Bangalore (PTI): In a novel move by the state government, as much as 40 percent of land to be acquired from farmers for building houses under a mega residential layout here would be handed back to them after developing it.

A decision to this effect was taken at a Cabinet meeting on Wednesday.

The layout in question, to be named after Jnanpeeth awardee late Shivarama Karantha, is the proposed one in Yelahanka-Yeshwantpur where farm land would be acquired in 17 hoblis (below taluka level).

The 3,546 acre land to be acquired and developed by Bangalore Development Authority at a cost of Rs 1847 crore, would have a total of 18,975 residential sites, Karnataka Rural Development and Panchayatraj Minister Shobha Karandlaje told reporters.

The government’s move to hand over 40 per cent land comes after many farmers who sold land in the past for similar residential layouts had complained of “injustice” as real estate prices zoomed after they parted with the property.

The Hindu

No sale: Deserted offices tell the real story

Pune,  The district registration office at Sinhagad Road wears a deserted look these days. A year ago it was so crowded during the day that it took three to four hours for a property deal to get registered.
Even the miniscule number of citizens who visited the office had mostly come for the registration of leave-and-licence agreements and not registration of property.

“The registration of new properties is drastically down compared to last year,” says A B Panmand, joint sub-registrar.

He is unwilling to put a figure to the drop. “It is well below 50 per cent. We had no breathing space last year as the office used to be crowded and the public had to wait for hours to get the documents of new properties registered,” he said.

However, this slump has not made a negative impact on the revenue collection for the government due to increase in valuation charges, Panmand said.

As this comes at a time when city developers are offering a clutch of freebies to those who are willing to sign up new property, the writing is pretty much on the wall. The indirect discounts offered by builders, amounting to 10 per cent of the mark-up price of city apartments, have not brought home the gravy.

The scene is no different at the registration office at Paud Road. In fact, there is not much variation in any of the city’s 20 registration offices.

The joint sub-registrar at the Paud Road registration office, V H Kulkarni, said she took charge of the office three months ago and so could not compare the present situation to that of last year. “Registration of properties do take place, but most are for leave and licences,” she said.

Real estate agent Major (retd) Mathew Oommen, who focuses on the NIBM-Undri region, said developers are maintaining prices despite the slowdown, but the balloon will soon burst as not many have the sustaining capacity.

“Developers are somehow expecting business in the festive season by offering incentives as a desperate measure to continue the ongoing business. This is unlikely to be taken up by customers and the real-estate industry will have to give up and reduce the prices,” he said. Buying of property has almost come to a standstill, he added.

According to Kothrud-based real estate agent Anthony Rajan, developers who used to directly deal with customers are now wooing agents in a bid to get customers. “Despite the incentives being offered by developers, customers are not ready to do business. This means all is not well with the industry,” said Rajan. However, the rental business is doing well as an entire category of genuine buyers is keeping away from the property market, he said. M Kankadri of Ashiyana Services said developers are trying hard to sustain the current rates, but it seems they will have to reduce the rates by at least by 15 per cent.

“Developers were earlier unwilling to budge an inch on rates. Now they are open to negotiations. They have pumped in a lot of money in recent projects and hence cannot afford to keep the business stagnant for long,” he said.

MAILBOX
IT techies used to buy a lot of properties but have now checked the trend. Some advisory emails in circulation between them tell us why:
* Don’t take any loans; buy homes, properties with loans, or even cash
* Pay off as much of personal loans, private loans, as debt collection will be hastened
* If you are selling homes/ properties/ cars, do it now, when you can get good prices; they are going to fall

Chidambaram urges States to lower tax on transfer of property

NEW DELHI: The Finance Minister, Mr P Chidambaram on Wednesday called upon States to reduce tax rates on transfer of property to enhance their tax revenue from this sector.

“I think we must look at taxes on transfer of property in India, reduce the tax rates, reduce the transaction cost and therefore that is a big source of revenue,” Mr Chidambaram said at a USAID function here. He said a large number of transactions in pr operty goes untaxed since the tax rates and the transaction costs are so high.

“As my friend just said there will never be a real estate asset bubble in India because the (revenue from) taxes are so depressed to the real price,” he added. However, tax on property is the one area where States have put some efforts, though not enti rely satisfactory, he said. He said effectively states’ taxing powers are limited.

“There are two kinds of taxes (at the states levels) — one the sales tax and the other taxes on liquor and related products. Although the other tax, that is tax on agricultural income is available to states… it is hardly likely that any state will tax the agricultural income,” he said. He asked states to look at alternative tax policies, make revenue choices and enhance the revenue mobilisation. – PTI

Source : Thehindubusinessline.com

Indian property developers woo Gulf expats amid financial crisis

DUBAI: With property prices and rents spiralling in the Gulf and the rupee depreciating, Indian real estate developers are actively promoting their
products among expatriate Indians in the Gulf.

“Because of spiralling rentals in Dubai and elsewhere in the region, Indians working here prefer to keep their families back home,” Haseeb Ahamed, chairman of the Calicut chapter of the Kerala Builders’ Forum (KBF), told IANS here Wednesday.

“Also because of the depreciation of the rupee, Indians here can invest their disposable income in real estate back home. Given the current global financial crisis, it is better to invest in real estate in India instead of investing in stocks or other investment options,” he added.

KBF Calicut is holding a Malabar Property Show here Oct 23-25 to showcase villas, apartments and commercial space.

“It is a rare region-specific real estate exhibition coming from India,” Ahamed said. The show is bringing 16 builders from the Malabar region of northern Kerala, who will promote projects in Kozhikode, Kannur, Thalassery and Malappuram.

Of the around 1.5 million expatriate Indians in the UAE, a large number hail from Kerala. According to Ahamed, Malabar, a trade and tourism centre of yesteryears, is slowly coming back to the limelight after a period of neglect.

“Malabar has been witnessing a lot of development in the healthcare, education, hospitality, transportation and tourism sectors in recent times,” he said. “The presence of a number of world class hospitals have also come up in the region,” he said, adding Kozhikode was also becoming an educational hub with some premier institutions setting up base.

“Also with the opening of Karipur International Airport, there is good air connectivity with several international airlines coming in,” Ahamed said. According to KBF Calicut secretary Nityanand Kamath, a lot of expatriate Indians are already investing in property back home.

The government has announced a new airport in Kannur. “Also, two IT parks are being set up in Malabar by the Kerala IT Mission and Kinfra (Kerala Industrial Infrastructure Development Corp),” Kamath said. Developers participating at the Malabar Property Show are Ace Structures, Alfaone Builders, Alhind Builders, Apollo Build Tec, Crescent Builders, Cosmos Builders, Galaxy Builders, Hi-lite Builders, Calicut LandMark Builders, Malabar Builders, Prisunic Buiders, PVS Aparments, Queens Habitat, Sea Star Holdings, Seiken Proerties, Skyline Builders and Sreerosh Properties.

Leading Indian banks State Bank of India and HDFC Bank have also been brought into offer finance options to prospective buyers at the show.

Source : Economictimes

Don’t buy unfinished homes

Mumbai: Want to buy a home this festive season? Then don’t go for a one that is still under construction, warn experts in the realty sector. The global slowdown and crash of financial markets has left builders with little money and they are struggling to wrap up even the half-finished projects, let alone going for new ones, according to industry analysts. Experts warn that the financial strain on realtors is causing indefinite delays in the completion of many projects.

“Those who intend to buy property should go for only completed flats. It’ll be too risky to buy properties under construction,” said an analyst with a foreign brokerage who did not wish to be named.

Real estate is an end-user sector where the money mainly comes from home buyers and development happens in phases.

“But developers across the board raked in money from initial public offerings and invested them in buying land parcels paying huge premiums. Now, banks have stopped lending, money from private equity is very costly and unorganised lenders are charging interest rates as high as 30 per cent. So how can developers complete projects profitably,” asked the analyst.

He cited the example of a Mumbai-based realtor whose high-end residential project in Lower Parel, one of the city’s commercial hubs, was to be completed in 2006 but has now been delayed till 2009. Uncertainty looms large over whether even this deadline will be met, he said.

An official of the realtor in question had earlier told DNA that the project would be rolled out before Diwali this year. An email sent seeking clarification on the new deadline remains unanswered.

This isn’t an isolated case. Analysts say delays of three to four years are likely in under-construction projects.

Despite the headwinds, developers have stubbornly stuck to their pricing. This could be one of the reasons why sales have failed to pick up, even though builders are offering freebies such as free stamp duty registration and parking space, modular kitchens and interiors, and interest-free EMIs till the buyer gets possession of the flat.

“A price correction of a minimum of 30 per cent is required for sales to pick up. If this correction does not come in six months then some listed developers will end up being negative cash companies. Even if buyers are desperately looking for houses, they should wait for a minimum of three months before taking the plunge. Also, they should look only for properties that are ready and available for possession,” said an analyst of a domestic brokerage.

Vikas Oberoi, managing director of Mumbai-based developer Oberoi Constructions, agrees. “Buyers should be wary of under-construction projects because developers who are over-leveraged will not be able to complete their projects. So a buyer should look at a developer’s past projects. At these times, it’s all the more important for people to be careful about where they invest,” he said.

And though the slump is pinching, consolidation in the industry is not seen coming. An analyst said, “Even if a developer gets land at a discount of 35-45 per cent, he will not buy it to save money for construction. Those who haven’t seen free cash flows in the last 6-8 months will halt their launches and sit tight till the tides turn in next 18-24 months.”

Source : Sify.com

The global financial crisis seems to have hit the realty business severely

Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India (CREDAI) said, “We are feeling the ripples of global slowdown. There is a 30 per cent drop in new projects this year compared to last year. It will stabilise only if the market returns to its sound health. Otherwise, the entire market will be affected badly.” Bangalore-based tier II developers are the worst hit, as their properties have not been sold in the past six months. Prakash, MD of Frontline Developers said, “I had constructed two apartments, both having 25 flats each and they have been up for sale for the last eight months. So far, I have been able to sell only four apartments.” The situation is the same with many top line builders of the city, though many don’t want to express it in order to maintain their brand equity. Balakrishna Hegde, former president of CREDAI, Karnataka said, “The situation is the same across the state and we have failed to attract many projects in the recent days. The interest rate has gone up on home loans steeply, and buyers are sitting on speculation and expecting prices to come down. This has made the situation worse.” The only silver lining for developers is the possible fall in interest rates on home loans, which has been assured by the Prime Minister and Finance Minister recently after the repo rate cut by the Reserve Bank of India (RBI). United Bank of India and Punjab National Bank have already decided to bring down the interest rates. However, other leading banks are still sitting over it.

Source : Expressbuzz.com

Realtors’ novel strategy to woo flat buyers

CHENNAI: Given the current global economic slowdown and its impact on the Indian economy, real estate developers have hit upon novel marketing strategies to woo reluctant flat buyers.

Real estate players such as Mantri Synergy, Jains Sunderbans, ETA Rosedale and Hirco Palace Gardens have come out with new schemes to attract buyers.

In what is seen as a clear move to shore up the ‘sagging morale’ of prospective buyers, property developers have now come forward to pay pre-EMI (equated monthly instalment) interest on part-money disbursed on the housing loan taken by a flat buyer.

“Given the current situation, builders are taking a conscious decision to bear the interest burden of the consumer,” Prakash Challa, President, Confederation of Real Estate Developers Association of India (CREDAI).

In the current tight liquidity situation, developers find it difficult to raise finances. When one buys a flat on mortgage, the money is disbursed by his/her bank to the developer in stages. This way, the developer gets the money upfront.

This usual practice obviates the need for him to go in for market borrowing to fund his project.

In the changed economic context, the prospective flat buyers have turned cautious and are postponing their buys, anticipating a drop in real estate prices. This has put the developers in a tight corner.

In order to retain the buyer, especially during the slump period, the real estate players are now opting to dish out freebees such as payment of pre-EMI.

“Only few developers are offering this now for their new projects. It seems more developers are set to follow this when they announce their new projects,” according to K. P. Senthil Kumar, Director of roofbird.com, a residential real estate portal and service provider.

This is an added advantage to a buyer as it reduces his/her financial burden to a large extent during the construction phase. This cleverly laid out strategy also helps developers retain price lines in a sliding market.

Retaining customers

The builders are also trying to retain their existing customers by giving freebees (like fittings and special flooring) without actually reducing the price.

This is critical, especially in the case of projects where a part of the flats have already been sold and they are trying to sell the remaining at the same price. Is it an indirect way of reducing the price of a flat?

The Hindu

Developers focus on integrated townships

Amid a depression in demand for residences, builders and international property consultants have started realising that ‘integrated townships’ are the next trend across the country.

Even as DLF Ltd is planning to develop 4,840-unit ‘Dankuni’ township in Kolkata, the Housing Infrastructure Development Corporation (HIDCO) is constructing 9,334-unit ‘Rajarhat’ township in the outskirts of Kolkata.

Emaar Group is planning to develop 520-unit ‘Boulder Hills’ township in Hyderabad. Parsvanath also is planning to develop 2,500-unit township in Chennai. This is according to a recent market overview done by Jones Lang LaSalle Meghraj.

According to the review, Ascendas is planning to set up 5,000-unit township in Chennai. Suncity is also in the process of acquiring land and to develop a 1,500-unit township in Delhi. Uppal Chaddha is acquiring land to construct 2,700-units township in Delhi. Unitech is planning to develop 1,050-unit Unitech township in Chennai. BPTP’s 1,200-unit BPTP Parkland township is fully sold out. Hiranandani Gardens by Hiranadani Constructions in Mumbai with 200-unit is already operational.

Abhishek Kiran Gupta, head – research, Jones Lang LaSalle Meghraj, said, “Integrated townships are efficient vehicles of social integration while offering the necessary infrastructure as it saves commuting time and cost of transport thus offering higher levels of comfort. Residential conditions in our larger cities are on a decline. There is a general shortage of infrastructure along with increased air, water and noise pollution and a rash of illegal and unorganised structures is cropping up. Citizens are facing problems to reach emergency services, finding adequate parking and traversing pothole-raddled roads. If properly planned and executed, integrated townships are definitely the answer to India’s growing housing woes, since they are efficient vehicles of social integration while offering the necessary infrastructure.”

The government of Maharashtra has laid down specific guidelines for township development. It includes 100 acres as minimum requirement area apart from infrastructure and public utilities to be provided by the developer. Provision for water should be to the tune of 140 litres per person. Park, garden, playground should be 20% of total area.

Besides, amenity space should be 5% of total area. Housing component should include minimum of 60% of total area and commercial component should be properly distributed.

The average age of a home buyer has reduced from 35 years in 1980s-90s to 27 years from 2000 onwards. Currently, there are challenges galore in the Indian real estate market.

It includes, demand and supply mismatch whereby in large cities there.

Source : Financialexpress.com

Lack of demand forces builders to freeze rates

Real estate developers in the city and across the country have steadfastly refused to lower property rates, yet they have barely hiked their rates in the last six to eight months – not hiking them at all, in some cases.

Property analysts say this scenario is different from that witnessed between April and October 2007, when developers hiked rates by as much as 24% to 32%.

“The reason is simply the lack of demand,” said an analyst with a foreign institutional equities firm. “The sharp increase in prices, along with rising interest rates, has led to a decline in affordability, and lower sales. Affordability will improve by 15% next year only if developers reduce rates, else it will become a major concern,”’ said Puneet Jain, an analyst with Kotak Institutional Equities.

According to a pan-India survey of local brokers in the residential property market, carried out by global research analysts Edelweiss, almost 80% of brokers across India have witnessed a reduction in enquiries over the past month, and about 90% have seen a drop in transactions over the past month. A hundred brokers in 20 micro-markets like Bandra-Borivii, Mulund-Thane, Gurgaon, Noida, Whitefield-Marathalli and Annanagar, in Mumbai, Delhi, Bangalore and Chennai, were polled.

While Godrej Properties hiked rates for its Riverside project at Kalyan by 24% in 2007, this year, it has increased them by a mere 7%, from Rs 2,000 per sq ft to Rs 3,000 per sq ft. Rates at Rustomjee’s Elanza project in Malad (W) has remained constant, at Rs 9,000 per sq ft, after its hike of 20% at Rs 7,500 per sq ft last year.

Similarly, property rates at RNA Builders’ Royale Park and HDIL’s Dreams project in Bhandup remained at Rs 6,500 per sq ft and Rs 5,750 per sq ft, after jumping 18% and 5% respectively from 2007.

Source : Dnaindia

It’s raining freebies, but no silver lining yet on price front

A property buyer in the city is a rare breed these days. A fact corroborated by the slew of schemes offered by builders to grab customer eyeballs. It ranges from a BMW or 2 kg gold for a high-end bungalow, an Indica for a 3BHK (bedroom, hall kitchen) to a two-wheeler for a one BHK unit. There are also the EMI waivers — you book the apartment, say builders, we pay the banks till you get possession.
In what real estate analysts say could be the last-ditch effort by city developers to salvage the situation before it spirals out of control in the post-Diwali season and a recession gathering momentum, the builders hope the indirect discounts will lure at least a fraction of the reluctant buyers.

A common thread binds all these discount schemes —they all translate into around 10 per cent of the mark-up cost of the property. This at a time when a 20 per cent price correction is what the pundits say is the order of the day.
“These schemes are on offer obviously because the builders are unable to find buyers. A smart customer would negotiate with the builder and reduce the price directly,” said a banker with a leading housing finance institution.

“This is one way for the builders to access cheap finance that can be available for the property market at a time when stocks are down and banking institutions are not easily offering finance. The builder is getting a commercial loan where interest rates hover at over 18 per cent at the home loan rates of 10-11 per cent,” he said.

A scheme such as the offer by Kubix Realties Pvt Ltd of three series BMW car priced at around Rs 33 lakh or 2 kg gold free with a Rs 2.75-crore luxury bungalow would effectively translate into a 12 per cent discount.

On a Rs 55 lakh property, if the EMI waived is around Rs 5-6 lakh, then the discount translates into a direct 10 per cent.

“The advantage for the customers is that they save the EMI money till possession, the bank will get customers and as a builder I will have ready liquidity at my disposal. It is a win-win situation,” said Nainesh Nandu, of Kubix Realities. A bit more complicated than the freebies are the waivers of EMI on the bank loan till the time of possession or the “rate guarantee schemes” to protect the customer from market fluctuations. “If we see that our apartments are selling at a lower rate at the time of possession, we will return the difference money to the people along with interest,” said a marketing person at Belvalkar Housing.

“Unlike in Mumbai, Gurgaon and Bangalore, builders in Pune are still not slashing rates. They fear that direct monetary discounts could lead to things spiralling out of control,” said an analyst with a financial institution tracking the realty sector.

Acording to Ravi Varma, president of the Estate Agents Association of Pune “These are miniscule and convoluted discounts that appear as if the market is falling. Whatever discount you want to give, it

should be done upfront. Such schemes like a free car or an EMI waiver are still not translating into actual relief, as the customer is still paying for it.”

IRRESISTIBLE OFFER?
* Kubix Realities Pvt Ltd: 2 kg gold or a BMW on a Rs 2.75-cr bungalow; EMI waiver for a ‘minimum’ 12 months, ie; till possession for Rs 55-lakh, 2 BHK apartments.
* Belwalkar Housing: Rate guarantee promise to protect against market fluctuations till possession two years down the line.
* Wadhwani Constructions: Tata Indica with a 3 BHK, Honda Activa with a 1 BHK.
* Mont Vert Homes: 40-inch LCD, DVD player, home theatre, fully air-conditioned living room and bedroom and other accessories.
* Trishul Builders: Except for the booking amount of Rs 2 lakh, the balance Rs 7 lakh to be paid after 2 years — effectively an EMI waiver for 2 years.

Source : Expressindia.com

PEs Shift Attention from Real Estate Sector

Uncertainty in the equity market seems to be paving the way for newer investment opportunities. Private equity (PE) players have been quick to recognise these. Of late, their attention seems to have shifted from the most-talked about sectors like real estate and financial services, which were the flavour of the season till some time ago, to sectors like education, healthcare, defence, logistics, warehousing and infrastructure.

These not-so-talked-about sectors are now attracting big private equity players. Though some of these are the very basic sectors of the economy, it is only recently that investment interest has found a place in them.

The key reason is the underlying growth potential of these sectors. As compared to developed economies, India has been lagging far behind in the development of basic sectors like education, healthcare and basic infrastructure. If the Indian economy is to grow at the rate of 9%, the government will have to focus on these key sectors. Hence, it makes good business sense for investors to catch them when they are young.

Source : Indianrealtynews

Disha Direct Launches Bay Vista And Palazzo At Alibaug

Mumbai: Both the projects have been aesthetically designed to ensure maximum comfort and weave a marvellous experience.

Bay Vista is a new world of imaginatively designed 141 Studio Vacation Homes. It is a spacious complex comprising three luxurious stilt plus three storey residential buildings – Pearl, Coral and Shell. These studio apartments are spacious & luxurious single rooms with demarcated areas for a state-of-the-art kitchen, a cosy corner for setting up a bedroom, varying number of closets and a bathroom and an open balcony that inspires one to unwind. Equipped with premium amenities, these apartments can also be rented out to weekenders at Alibaug. Bay Vista is also provided with additional facilities like Club House, Swimming Pool, Restaurant, Gymnasium and Game Plaza.

Neighbouring Bay Vista is Palazzo, a spellbinding world of ten elegantly designed row houses inspired by British architecture. Thoughtfully designed to resemble the thirteen aesthetic colonies ever designed by renowned British architects, Palazzo can be identified the fourteenth in the royal lineage. The elegance of colonial architecture has been recreated creatively with an authentic Indian touch and unparalleled architectural features. Equipped with plush amenities, two separate balconies, private garden and a parking space these Ground plus two storied abodes are like vertical studios presenting a panoramic view of Alibaug’s coconut palm dotted skyline. Residents of Palazzo can avail the facilities of Club House, Swimming Pool, Restaurant, Gymnasium and Game Plaza provided at Bay Vista.

Commenting on the latest offering Mr. Santosh Naik, MD & CEO of Disha Direct says, “Alibaug is an emerging Global Lifestyle Destination; evolving at an exceptional pace. Referred to as the sea-rich ‘Goa’ of Maharashtra, it is the most sought after destination of property buyers from all over India who are looking ahead to live a better life away from the metropolitan clutter. This is the reason that inspired us to launch Bay Vista and Palazzo at Alibaug.”

About Alibaug:
Alibaug is a coastal town with addictive beauty of pristine beaches in Raigad District in the Konkan region of Maharashtra, India. It is well connected with Mumbai by road, 128 kms on Mumbai-Goa highway till Wadkhal and straight beyond. The nearest railway station is Pen which lies at 28 kms. To reach Alibaug by the sea route; one can also avail Catamaran/Ferry services from Gateway of India, Mumbai to Mandwa jetty. It is an ideal destination for ‘Second Home’ alternatives. Extensive plans have also been drawn to create a port-based SEZ in the Rewas-Mandwa region. The upcoming Sewri-Nhava Shewa Sea Link will considerably reduce travelling time between Mumbai and Alibaug. And a dedicated rail freight corridor will be soon connecting Rewas to Delhi, which will enhance trading prospects. Alibaug is picturesque and pleasant city of Sun, Sand, Peace & Growth.

About Disha Direct:
Disha Direct is a leading real estate marketing organisation. It today offers services across the entire spectrum of real estate be it residential properties in cities and towns, 2nd homes away from the city, plots of developed land, commercial properties, expansive acres of land or some rare charismatic homes. Well-equipped with a team of over 200 professionals, 7 brands, 10 offices, 1 international office, 8 completed projects, 28 ongoing projects and 3500 happy customers; Disha Direct is an organisation developing at a fast pace.

Source : 1888pressrelease.com

Indian Hotels serviced apartment plan deferred

MUMBAI: Tata Group’s serviced apartment plans have suffered a set back.

Responding to a DNA Money query while announcing the company’s second quarter results, Anil P Goel, senior vice-president of finance for the group’s hospitality vehicle, Indian Hotels (IHCL), said: “The project could not take off with the same robustness that we were expecting for reasons beyond our control.”

“Reasons, the real estate vehicle that was formed to take the initiative forward has run into its own set of problems,” he added.

Meanwhile, the company on Monday reported a 4.8% fall in Q2 profit y-o-y to Rs 50.66 crore, as operating margins contracted by 710 basis points to 21.9%. It attributed the decline in net profit primarily to foreign exchange losses worth Rs 9.4 crore on mark-to-market foreign currency loans.

IHCL, the country’s leading hospitality chain, had in 2007 entered into a contract with Sansara Hotels India Pvt Ltd (SHIPL) to set up a chain of service apartments in central business districts (CBDs) across the country.

Offering less than 100 rooms across various studio accommodation categories, these service apartments were planned in Mumbai, Bangalore, New Delhi, Chennai and Pune.
The real estate vehicle, Sansara Hotels, was set up as a joint venture amongst US architect firm John Portman & Associates, Citigroup and HDFC to set up five service apartments in Indian metros within the next five years.

Interestingly, Portman has designed the architecture of Taj Wellington Mews which marked IHCL’s luxury residences venture in Mumbai in 2004.

Source : Dnaindia.com

Straightening the Gujarat SEZ model

Recently the Supreme Court ordered a stay on one of the largest special economic zones (sezs) in the country. The stay order on the Mundra sez in Gujarat’s Kutch district came in response to a public interest litigation, which raised several social and environmental issues. The stay was, however, promptly vacated and the case dismissed within a few days with the Chief Justice of India K G Balakrishna remarking: “We cannot look into environment issues of each state. You can approach the High Court”.

In spite of this summary dismissal, the case is likely to turn people’s attention towards Gujarat’s sez experience, which many say has been devoid of conflict. This rosy picture is based on the perception that Gujarat’s sezs have largely been developed on ‘barren’ and ‘wasteland’. So there hasn’t been much opposition from farmers. There are several fallacies in this understanding.

First, not all wasteland in Gujarat—as in other parts of the country—is barren or waste. In Gujarat most of the land categorized as wasteland was, at one time, pastureland. An example is the Mundra sez: revenue wasteland handed over to developers was either grazing land or covered with mangroves, an important part of the marine ecosystem of the Gulf of Kutch. In the strictest sense of the term, local people were not displaced here. But their livelihoods were severely affected and they have found it difficult to determine their rights.

Second, not all the land being used for sezs in Gujarat is wasteland. A large part of this land was under agriculture and acquired by the Gujarat Industrial Development Corporation (gidc) more than a decade ago using the Land Acquisition Act, 1894. Most such land was acquired near cities, ports or areas where infrastructure was available or could be easily built. But more than 50 per cent of the land acquired by gidc was lying unused. Once the sez policy was announced, the government began handing the land over to private developers—or getting into partnerships with them to develop some of the acquired land. The farmers who lost their lands for little compensation find it difficult to fight for a better deal now. The Dahej sez is a case in point.

Third, Gujarat encouraged direct purchase of land by corporate houses long before the central government started talking about it. This has worked against small and landless farmers. Powerful interests, large farmers or political representatives, have often brokered such purchases at the cost of small and landless farmers. As speculation in the land market increased farmers ended up selling their land. In Por near Vadodara and Hazira in Surat, the government forcibly acquired land when the developers failed to directly purchase the land from farmers. Since the compensation was not attractive the large land owners decided to bargain better deals with private companies. They sold their own land but also struck deals for the land of others, receiving hefty commissions. The landless agricultural labourers remained without compensation.

Fourth, Gujarat like most of the country, is facing an agrarian crisis. In parts of coastal areas, land which has remained fallow due to poor productivity and salinity has been categorized as wasteland. Causes of low productivity vary but a common thread is the inability of the state government to address the problems. Such land is now being seen as potential sezs.

The popular belief that in Gujarat sez projects have gone unopposed is not true. An sez proposed at Positra near Dwarka was thwarted after a sruggle by the Waghri farming communities. There have been other anti-sez movements in the state. But they did not sustain due to the various factors. The author, a researcher and environmental activist based in Himachal Pradesh, has been studying SEZs for two years.

Source : Indianrealtynews.com

As demand declines, realtors hold on to expansion plans

With the global economic meltdown taking its toll on the Indian real estate sector, the residential sector market has started witnessing a significant dent in demand, while demand for commercial properties nationwide, has started dipping by 70% to 80%.

Retail developers too are holding on to their expansion plans and are seeing a dent of over 50% in demand, according to international property consultants and developers.

Prakash Gurbaxani, founder and chief executive officer, QVC Realty said, “Oversupply of apartments in major metros coupled with the current market sentiments is getting badly impacted. Demand for IT parks too will remain dented for the next few months. With the result, the sales cycle will get elongated by the next 18 months.”

While demand for ownership of properties in Mumbai (which is available at Rs 40 lakh) has dipped with consumers preferring to stay on rental basis, NCR and Chennai too is witnessing a dip in demand for property being available at Rs 20 lakh, Ashish Bhalla, managing director, Millennium Spire Ltd (a private equity investment company) said.

Moreover, recent attempts by real estate developers to offer 10% to 25% discounts on residential properties prior to Diwali, has failed to attract home buyers as there is absolutely no demand by home buyers in the market, feels international property consultants. For instance, Swastik Developers are offering 12 months free home stay with no rentals and maintenance in Thane prior to buying a flat. However, they have not been able to woo any home buyer for the property so far, say company sources.

Akruti City, which displayed details of its new upcoming projects at the recently held Maharashtra Chamber of Housing Industry (MCHI) property exhibition, has witnessed a number of visitors. However, the projects are yet to attract actual home buyers as two new residential projects, each in Pune as Akruti Countrywood, and, as Akruti Gardenia in Mira Road in November will be formally launched in November, 2008 with prices hovering each at Rs 3,000 per sq ft.

Hemant Shah, chairman, Akruti City told FE , “We expect bookings to start only after the new properties are formally launched and after home buyers personally sees the properties.” Of the 4,000 visitors, which Kanakia Spaces witnessed at MCHI exhibition as one of the participants in four days here, the company has booked two home buyers, its vice president, Subhash Pillai told FE . This is a classic example to prove that there are hardly any actual home buyers left in the market currently.

However, Mumbai-based Lodha Group has not participated in MCHI exhibition this year, unlike last year. According to Abhinandan Lodha, managing director, Lodha Group, home buyers are more cautious in terms of home buying this year as compared to previous year as they are looking for wider range of good products at the right price. We too are currently facing a dent in demand from homebuyers. “Despite the inflationary trends, Lodha Group is offering any discounts to home buyers for the upcoming festival season.”

K Raheja Universal, which is offering discounts of up to 10% to its home buyers is only witnessing inquiries for new properties, as compared to actual home buying deals, as compared to previous corresponding period. Its officials said, “Due to Sensex crashing heavily, demand from investors for buying properties has dented drastically. In fact, they have started selling off their invested properties to large extent”.

As for commercial real estate sector, Indiabulls Real Estate is currently quoting a price of Rs 175 per sq ft for their commercial properties, whereas, HCC is quoting at Rs 80 per sq ft in Vakola. Developers too fear that the demand will further dampen post Diwali. Many commercial properties in city’s commercial hub, Bandra-Kurla Complex is lying 50% to 60% vacant with rent as high as Rs 300 to Rs 400 per sq ft. Delhi-based DLF Ltd spokesperson, Sanjey Roy too said, “We are not offering any discounts on any DLF properties.”

Industry experts also believe that in order to raise further debt for their long-term projects, builders may even look at selling their land and personal assets as well. Raja Kaushal, executive director and chief operating officer, AtisReal Redwoods (a BNP Paribas company), executive director said, “In order to waive off the debts, major listed real estate companies are in the process of selling off their land assets and personal assets as well.”

Pankaj Renjhen, managing director (Mumbai) Jones Lang LaSalle Meghraj opines, “The confluence of various negative market dynamics is largely responsible. Property purchase sentiments are currently depressed because of an all-round shortage of liquidity, relative unavailability of credit and free-floating rumors of large-scale corrections in the offing.” …

Already, sales of residential properties have slowed down dramatically, especially in key areas from Santa Cruz up to Andheri, Goregaon and Kandivali. There has been a 40% dip in sales since the slowdown began, and intending buyers are deferring their decisions until after November. The logic is that developers who are holding on to their asking rates will have to come down on them after the festive season. The rise in interest rates has compounded this scenario further, Renjhen explained.

Renjhen added, “The scenario is different in the Bandra-Khar area, where the cash-cheque component in transactions is far higher. The dip there has been to the tune of 25%. There have been no transactions in south Mumbai since the last four months, even though investors are now selling flats at cheaper rates than builder flats. In areas like Byculla and Prabhadevi, builders are asking for rates like Rs 35,000 to 45,000 per sq ft while investors are asking for Rs 28,000 to 35,000 per sq ft.”

Jai Mavani, executive director, KPMG India sums up, “Real estate market in India is due for correction. Due to credit squeeze, the pace of construction will get delayed. For starting new projects, developers will have to unlock liquidity and will have to reduce property prices.”

Source : Financialexpress.com

Crack in Indian realty firms

Future economic historians may remember the month that just ended as Black September. Lehman Brothers collapsed; the Bank of America acquired Merrill Lynch; AIG was nationalised; banks such as Washington Mutual and Wachovia were wiped out. As credit and finance markets around the world tumbled like ninepins, so did stock markets in India, with the Bombay Stock Exchange Sensitive Index (Sensex) falling 3.35% or 469 points on September 15. The worst affected was the realty index which dropped 7.6% on the same day. Since then, while stocks prices in India have seen massive swings, shares of real estate firms have remained depressed, falling a total of 20% as of October 1.

In addition to housing stocks, home prices are taking a beating. By some estimates, prices have dropped by 25% in certain urban markets. While in the US — and also in Britain — the subprime mortgage mess has seen home prices fall dramatically, in India, such slowdowns have been rare — at least in the past. Prices may soften, sales activity may slow and occasionally a distress sale occurs, but there has not been an overall fall in home prices. “India has not seen a boom-bust cycle in real estate mainly because the industry is still nascent,” says Anurag Mathur, joint managing director of Cushman & Wakefield, a global real estate solutions company. “India has not seen a boom and bust cycle in almost any sector,” adds Rajesh Chakrabarti, a professor of finance at the Hyderabad-based Indian School of Business (ISB). “While there have been variations, we have not had cycles of the kind we see in the developed countries. It is only after liberalisation that the Indian economy has been seeing more cyclical movements.”

According to Irfan Razack, chairman and managing director of the Prestige Group, a Bangalore-based real estate developer: “We have boom and bust cycles in India but because of our huge population, the demand keeps growing and that sustains the industry. You can build for the next 100 years and there will still be demand for housing in this country.”

India has inadequate data on the real estate sector. For instance, no one tracks housing starts, an indicator that is regarded in many countries as an important yardstick of economic health. However, several real estate companies have gone public during the past couple of years, which makes information more transparent. Secondly, equity analysts have begun tracking these companies and the real estate industry.

Still, confusion continues. Consider the reaction of the markets to the Lehman collapse. Real estate was hit for two reasons. Lehman had invested $200 million in DLF Assets, a company belonging to DLF, India’s largest real estate company. It had also acquired a 50% stake in Unitech’s Mumbai project for $175 million. (Unitech is India’s second largest real estate company.) Among other Lehman investments or proposed investments were those in the Mumbai-based Peninsula Land Ltd. and Housing Development & Infrastructure Ltd. (HDIL).

The market was worried that if the money had not already been received, the projects would be in limbo. Most companies (Unitech, for one) claim that the cash is already sitting in their bank accounts so there is no cause for concern. Others, like HDIL, have said the deals were not with Lehman Brothers but with sister companies. These are unlikely to be affected.

The crunch might hit in the future. “With banks reducing their exposure to real estate, coupled with rising interest rates and volatile stock markets diluting the confidence of retail investors over the past one year, private equity investments have emerged as one of the most important sources of capital for real estate developers,” says a FICCI-Ernst & Young (E&Y) report on the Indian real estate market released in early September. “The overall private equity investments reported in the real estate sector in India from August 2007 to July 2008 are estimated to be more than $5 billion.” This tap could be turned off as a result of the financial crisis in the U.S.

Real estate investors in India were also worried that Lehman might resort to a fire sale of its assets. While India has a three-year lock-in period for foreign direct investment (FDI) in real estate, it is unclear whether this applies when a company declares bankruptcy. The government is holding a meeting to decide the norms in such cases. The other issue is that Lehman holds small stakes — bought from the market or in bulk deals — in real estate and infrastructure companies such as IVRCL Infrastructure, Consolidated Constructions, Orbit Corporation and Vijay Shanti Builders. Here, too, there was the possibility of a fire sale, encouraging other investors to bail out.

Indianrealtynews.com

AIG Global Real Estate Invests in Velankani Tech Park, Chennai

An affiliate of AIG Global Real Estate has announced an investment in Velankani Tech Park, a part of the Bangalore-based Velankani Group. Velankani is developing a notified Special Economic Zone (SEZ) in Sriperumbudur, located approximately 50km from Chennai. The proposed development of 8.5 million sq. ft. is aimed to provide plug-and-play space for electronics hardware and telecom component manufacturers and IT/ITES companies. Velankani Tech Park is expected to house around 20-30 global component suppliers and will meet ready-to-move-in space requirements of vendors to telecom original equipment manufacturers & Electronic Manufacturing Services (EMS) giants looking to set-up operations in Sriperumbudur.

Kiron Shah, Director and Founding Member of Velankani Group, commented that the development is uniquely positioned and has a first mover advantage in the region. “The Velankani Tech Park is the only SEZ which will offer a plug & play facility in Sriperumbudur for companies and a seamless experience in commencing operations. Substantial effort has already gone into the conceptualization of the project over the last two years leading to commencement of development at the project site. All basic infrastructure will be provided by Velankani to meet tenant requirements including future expansion.” He further added “AIG Global Real Estate brings tremendous experience in development of industrial parks worldwide and we are excited to partner with them. We will benefit from their global client relationships and hands on design and development expertise. This partnership is a starting point and we believe it will flourish and grow in the future.”

Rajesh Agarwal, Managing Director, AIG Global Real Estate India, stated, “We are excited to partner with the Velankani Group and invest in a project that caters to an unfulfilled demand in the region. We look forward to strengthening and expanding this relationship with Velankani. This investment is a statement of AIG Global Real Estate’s continued commitment to India and our investors, and we are looking forward to expanding its presence in India and building strong relationships with local partners and investing in attractive opportunities in the region.”

Avista Advisory Group were advisors to the Velankani Group on this transaction.

Networkcomputing.in

Real-Estate Major Piyush Group Forays into Construction Business

Piyush Group, a leading real-estate developer has announced the launch of its latest venture Piyush Developers Ltd; thus marking the foray of the company into construction business.

Piyush Group, a leading real-estate developer has announced the launch of its latest venture Piyush Developers Ltd; thus marking the foray of the company into construction business. Through this enterprise, Piyush Group will be addressing the real-estate industry’s need to improve delivery timelines and quality of the building construction in house.

“Construction is a viable sector, now and for the foreseeable future and the launch of Piyush Developers fits perfectly well with our diversification and investment plan. We have decided to create our own construction company because it will allow us to better control the cost and quality of a project.” said Brig. D Satyanarayana (Retd.), Executive Vice President – Projects, Piyush Group.

In the initial stages of its operation, Piyush Developers will handle prestigious projects worth several crores including Piyush City in Bhiwadi, Global i in Faridabad and Piyush Heights in Faridabad. “We have acquired state-of-the-art batch mixing plants and machinery like transit mixers, concrete pumps, etc. for construction related processes. We also have the right kind of expertise which would enable us to fulfill the desired requirements of other companies as well.” Brig. Satyanarayan said.
Recently, Piyush Group has also formed a company named PCL Concrete Pvt. Ltd. with the aim of achieving fifty ready-mix concrete plants in the NCR region in near future. The company has already set up two such plants which are presently fulfilling the needs of several projects undertaken by Piyush Developers. According to Brig. Satyanarayan, “Within five years, Piyush Developers plans to achieve tenders for big infrastructure projects such as flyovers and airports.”

About Piyush Group
Piyush Group is one of India’s young & fastest growing companies with a significant presence in real estate development, infrastructure, hospitality, entertainment construction and financial services. The company, which has a projected turnover of US $ 400 million, aims to develop world-class Integrated Townships, infrastructure projects and commercial establishments to suite the tastes of all cultures across all strata of society and eventually help to improve the lives and aspiration of people. They have successfully implemented projects like Piyush City in Bhiwadi and Piyush Heights in Faridabad. The company has also laid the foundation for its commercial IT project, Global i, in Faridabad.

Sourece : Newswiretoday.com

Build and Earn scheme from TDIL

NEW DELHI: TDI Infrastructure Ltd (TDIL), one of India’s premier real estate developers, has announced a scheme for customers who wish to build their
homes by offering subsidized construction and assured rentals.

A first-of-its-kind scheme – ‘Build and Earn’ — will enable plot owners of TDI City, Kundli, to build their dream house while enjoying a rebate of about 20-25% on the overall construction cost. “Thus, if your plot measures 250 sq. yards, then you will get a rebate to the tune of Rs 2,50,000 on construction,” said Kamal Taneja, managing director, TDIL.

Intended to relieve customers from construction-related worries, the scheme will also offer them rent for a period of 22 months post completion of construction, subject to the customer’s approval. Under the scheme, the company will build the house at an agreed price and handover the premises to the customer.

The company is offering two schemes – ‘Assured rent for 22 months post construction’ and ‘Gross Adjustment in the construction expense’. Various options under both the schemes are offered to customers so as to fit their pockets. The construction time spans between 10 and 12 months in either of the scheme. The plot owner will make the entire payment in four equal installments starting from the day of registration.

Taneja said, “Quality housing at an affordable price has always been our motto. With more and more people signing for this scheme, this will bring life to TDI City, Kundli – the new New Delhi.

“We have received an overwhelming response to the scheme. We will immediately start the construction work. We will continue to launch such innovative schemes that will boost confidence of our customers, who have been associated with TDI for long,” he added.

Source : Economictimes

Rakia signs MoU to develop $5b Hyderabad Economic City

Dubai: Ras Al Khaimah Investment Authority (Rakia), the government body responsible for the socio-economic growth of the emirate, has announced that it has recently signed a memorandum of understanding (MoU) with the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) to establish the $5 billion Hyderabad Economic City, an integrated financial hub and health care city.

The MoU was signed by Wahid Attalla, Member of the Board, Rakeen, the real estate development arm of Ras Al Khaimah Investment Authority (RAKIA), and APIIC Chairman and Managing Director B P Acharya, in the presence of Andhra Pradesh Chief Minister Y S Rajasekhara Reddy.

The financial component of the mega project will include infrastructure facilities to support a full range of financial services, while the state-of-the-art health care city will provide complete facilities for clinical and non-clinical services.

Hyderabad Economic City is part of several large-scale satellite townships being developed by RAKIA and master developer Rakeen in several key cities across India.

Hyderabad Economic City’s financial sector will provide essential infrastructure to support back-office operations for banking, insurance and asset management companies.

It will also provide key facilities to host corporate centres for financial services, product markets, capital market and trading operations, IT services, business processing operations, plug-and-play intelligent buildings and IT parks.

Source: http://www.gulfnews.com

Banks ready to cut home loan rates by Diwali

NEW DELHI: In what may come as a Diwali bonanza for creditworthy borrowers, many commercial banks are planning to cut home loan rates by about 50 basis points after RBI cut the repo rate on Monday.

The country’s largest lender, the State Bank of India (SBI), is likely to reduce retail home loan rates before Diwali while Punjab National Bank (PNB) and Union Bank of India (UBI) have already slashed rates by up to 50 basis points. But the rate cut of 50 basis points may not be applicable to all types of loans.

Although private home loan providers like HDFC and ICICI are planning to wait and watch as of now, a rate cut by market leader, the SBI, often has a ripple effect on many banks. UBI has cut rates by 50 basis points for loans up to Rs 30 lakh.

The rate cut for loans above Rs 30 lakh, however, will be only 25 basis points. Also, there is the possibility that for loans amounting to Rs 75 lakh and above, the rate cut may be even lower. Sources say some banks may even decide against cutting rates for loans above Rs 75 lakh.

Many banks, including SBI, have put a new ceiling of home loans above Rs 75 lakh; they prescribe a different rate structure for these loans. The government, however, recognises only two types of home loans, those below and above Rs 30 lakh. The former comes under priority sector lending. Also, rate cuts would not be applicable to commercial borrowers like real estate companies.

“Our bank is contemplating a rate cut following the recent measures taken by the Reserve Bank. Though the decision to reduce rates may come at any point in time, it’s expected that the bank would take a decision after seeing RBI’s half-yearly monitory policy on October 24,” an SBI official said.

Banks are also following some tough norms. He said the bank is following stringent norms for deciding an individual’s creditworthiness while allocating loans so that the bank does not fall into a subprime-like trap.

Finance ministry sources said the government is in constant touch with commercial banks to ensure easy liquidity for priority sector loans.

“The government and the central bank have taken a series of measures to infuse liquidity into the system and there is no reason that the banks should be wary of providing credit to genuine borrowers even after that,” an official said.

Economictimes

Mirroring the US, India’s Real Estate Sector Melts Down

The new moon of the lunar month of Kartika marks Diwali, the Indian festival of lights, when Hindus across the country worship the goddess of wealth, Lakshmi. But divinities know full well the laws that govern finance, and Lakshmi may now be a little tight-fisted about circulating her riches amid the ongoing global credit crunch.

Indian tradition decrees that it is auspicious to make purchases in the days leading up to Diwali, which falls in October or November. With faith meshing so effortlessly with commerce, the season sees sellers, advertisers and marketers urging the devout to spend money with a religious fervor, as they hawk everything from chocolates and consumer durables to gold and houses. Buying a home is considered especially propitious. What better way to welcome the goddess of wealth into one’s life than by inviting Lakshmi into a new abode? Thus, the period from just before Diwali through March is usually a bonanza for the real estate industry: some 70% of the annual business is conducted then.

Not this year. With just about a week to go until Diwali, the mood is decidedly downbeat. The demon of impending economic doom refuses to die, and as tightened liquidity makes people put off larger purchases, the real estate sector is facing the worst attack. “This time last year, I was selling 10 to 12 properties every day,” says Alok Gupta, who runs Advanced Real Estate in the New Delhi suburb of Noida. “This time, I haven’t sold a single property all month!”

Considered the barometer of its economic growth, the real estate sector in India has grown 30% to 35% during the past five years, reflecting the rapidly increasing demand for office, commercial and industrial space, as well as for bigger homes, now considered within the range of India’s prospering working classes. But the economic juggernaut began slowing earlier this year because of double-digit inflation and a severe liquidity crunch (a fallout from the U.S. subprime crisis). Now economic activity may shrink as part of a global slowdown. The country’s growth estimates of 9% at the beginning of the year have been revised to well below 7%, and the effect is directly visible in the realty sector. “No one’s buying anymore,” says Ashwani Shukla of New Delhi-based Triveni Associates. “Two years ago, 25-year-olds earning fat pay packets from [multinational corporations] were buying high-end apartments. Now there are no takers for flats selling at 20% markdowns. Estate agents are finding it difficult to even meet daily overheads.”

Shukla himself has branched out of real estate. He started selling insurance six months back “to pay the bills,” he says. According to various estimates, sales in cities like Mumbai and Chennai are down 30% to 40%. Hoping to induce buyers during Diwali, realtors are advertising cash discounts of 5% to 10% for down payments, and as much as 25% discounts if buyers are willing to wait two to three years before taking possession of the property. “But there is no liquidity with the end user,” says Arvind Nandan, director of consultancy at real estate company Cushman & Wakefield India. “Home-loan rates have hit the roof, and people’s investments have lost value at the stock market. No one has the money to buy.”

Shukla says if the situation does not improve, there could be distress sales within the next six months. The realty sector was heading for a cyclical slowdown even before the current economic slump. Over the past few years, increasing demand had pushed up prices, with speculators jumping in to further inflate the market. Eventually, inventory piled up when buyers refused to pay unrealistically high prices. “So many transactions were taking place between speculators and investors that no one bothered to find out what the end user, the family who would eventually live in the house, would be willing and able to pay,” Shukla says. And those prospective homeowners are the biggest target of India’s real estate industry: almost 80% of real estate developed in the country is residential space.

This all comes at the worst possible time. Even as buyers refused to bite, inflation passed into double digits in June this year, raising prices of construction material. Realtors overran their budgets and projects stalled, leaving skeletal structures dotting the landscape in big and small cities all over the country. Then came the liquidity squeeze, as the government sponged away cash from the system to control inflation. Home-loan rates went from about 7% to 12% and higher. People who bought struggled to pay, and potential buyers kept away.

Realtors like Shukla and Gupta may have little reason to light firecrackers this Diwali, but their prayers to Lakshmi, the goddess of wealth, will definitely be more fervent, especially as experts predict that things will get worse before they get any better. “This was a much-needed correction,” says Nandan. “And it isn’t complete yet. I expect the market to go down further, and it’s hard to say when the recovery will begin.”

Yet no one is entirely pessimistic. Experts and industry insiders believe that once the storm blows over, demand is bound to rise for the same reasons it did last time — a large, young workforce; gradual but consistent liberalization reforms; and a high rate of consumer and private-sector savings. “The silver lining is that once this phase ends, land and property prices will be corrected to rational levels, speculators will be out, and the sector will have stronger fundamentals,” says Shukla. If everyone’s prayers go right, the goddess will eventually be propitiated and her blessings will issue forth once more.

Source : time.com

Property prices could stabilise

BANGALORE: A two-day real estate conference, Build Up 2008, which started in Bangalore on Tuesday, bore the grim realities of the global financial cr
is and its impact on Indian real estate. Neither of the two major speakers  Union urban development minister S Jaipal Reddy and CM B S Yeddyurappa turned up.

The other prominent speakers painted a somewhat sombre picture. “We are feeling the ripples of the global slowdown.

There’s a 30% drop in new projects compared to a year ago,” said Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India. However, he added pent-up demand will manifest itself once markets stabilise.

Irfan Razack, CMD of Prestige Estates, said, “Prices in the primary market are expected to stabilize. People are not going to make the profits they did before.”

J C Sharma, MD of Sobha Developers, said, “Going forward, people could see a softening in land prices.”

Timesofindia

Home prices may start falling in Jan-March

MUMBAI: Potential home buyers who have been deferring their purchase decisions, may have to wait till April-May to get a good deal.

The ripples of the ongoing financial crunch, coupled with mounting pressure from various other circles, will peak between January and March. That’s when many developers will be forced to sell the unsold stock at a much cheap price, feel industry experts.

“The signals are very much visible. Developers are already offering lots of freebies. I feel, they will hold on to prices till the end of the festive season. If sales are not happening in the current quarter, the Jan-March quarter will see a price crash in some pockets, and in the first quarter of the next fiscal, developers will be forced to sell homes at a much lower rate as their loan repaying capacity will be under challenge,” said Anuj Puri, chairman & country head of Jones Lang Lasalle Meghraj.

He added that in the current market scenario, if developers want to bring some cash flow into their company, that will happen only by selling their residential and commercial properties. “All other routes are drying up,” he said.

India’s property market has been among the hardest hit by the global financial turmoil as high interest rates and gloomy economic prospects have driven out buyers and squeezed funds for real estate developers.

Through this year, property prices have already declined more than 10-20%, though in cities like Mumbai and Delhi, prices are still too high for a middle class consumer. Developers like Orbit Corporation has already cut prices by 20% from Rs 26,000 to Rs 21,000 at Parel in Mumbai.

Broking firm Edelweiss Securities in its recent report on real estate said property prices are likely to decline by 10% in the current calendar and another 15% by the end of the current financial year.

“I feel, by the end of the year, developers will feel the real pinch of the current financial crisis. They have to cut prices to keep the wheel rolling. It would happen early next year,” said Pranay Vaikil, chairman of Knight Frank India.

Industry official said, though the rate cut by RBI will improve the confidence level of consumers, it will not reverse the ongoing trend in the market as most buyers will prefer to wait and watch.

“While the repo rate cut signals the reversal of the interest rate cycle, it might be too early to conclude on its impact on the real estate. With liquidity remaining tight for India Inc, home loans rates might see some softening by select players, as the uptake at current rates for residential borrowers is dwindling. Such a move could revive the demand in residential real estate market, that has seen sudden drop in recent times,” DTZ director Ambar Maheshwari said.

According to industry officials, many realty companies were banking on the stock market and foreign investors for new projects. As those sources dry up with the global meltdown, they will be forced to cash out, even if it means selling existing stock at a lower price.

“Those with a strong financial background would still be able to hold on to the inventory but the ones with leveraged positions will give in to the pressure. The picture would be much clearer by the end of the current year. This period beginning from late December ’08 to March ’09 could provide a good buying opportunity for homebuyers,” said Deloitte Haskins Sells partner Jayesh Kariya.

Developers are admitting that there aren’t too many transactions taking place. The festival season between Dusshera and Diwali has traditionally been the time when most families choose to move into their new homes. “Though enquiry levels are increasing, it is not translating to actual deals. Consumers are still hesitant,” said a Mumbai-based developer.

Economictimes

Royal Orchid to manage 10 Ramada hotels

In a bid to expand its Ramada brand of upper mid-scale hotels in India, Wyndham Group which is headquarted in the US has tied up with Bangalore-based Royal Orchid Hotels to open 10 Ramada hotels across the country.

Royal Orchid will have exclusive development rights for the Ramada brand to manage hotels across Rajasthan, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. Wyndham Group already has 10 properties in India including Delhi, Gurgaon, Mumbai, Jaipur, Varanasi and Goa.

Under the alliance, Wyndham will offer use of the Ramada brand and market the hotels through its international sales network while Royal Orchid will manage the hotel.

The first hotel under the agreement has come up at Bangalore where Royal Orchid’s Hotel Harsha has been brought into the Ramada fold. Royal Orchid has invested Rs 10 crore for renovating the hotel. Royal Orchid will pay a fixed percentage of profits from its Ramada hotels to Wyndham.

“Having a well known international brand name and Indian management makes an ideal proposition in the hospitality industry. With this partnership we are evolving into a management company, “ said Chender Baljee, chairman and managing director of Royal Orchid Hotels. He added the tie-up would see setting up of hotels in Pune, Chennai, Nagpur, Indore, Hyderabad, Jaipur, Coimbatore and Mumbai in the next five years.

Royal Orchid independently operates 11 hotels in Bangalore, Mysore, Pune, Jaipur, Goa and Hyderabad. The group plans to invest Rs 500 crore in the next five years to set up hotels in Delhi, Hyderabad, Jaipur, Mumbai and Ahmedabad among others.

The group is also constructing its first international resort in Dar Es Salaam in Tanzania which would be operational in 2010. Funding for the expansion would be through its internal accruals.

Royal Orchid has debt of Rs 20 crore and has so far spent Rs 150 crore on this expansion. The company added that Rs 100 crore will be from reserves and Rs 250 crore will be through debt.

Royal Orchid in addition to this expansion also has a budget offering – Peppermint.

The Wyndham group operates 850 Ramada hotels in 45 countries and is looking at expanding its presence in India. “We are right now working on the franchise model to bring our midscale and economy brands to India, “ Said Oliver DuPont, senior vice president International development, Wyndham Hotel Group International.

Business-standard

Residential Rentals Rise As Buyers Wait

The outlook for India’s property market is turning gloomier and aspiring home buyers are hoping that they would get a good bargain if they wait. As a result, residential rentals are rising again. Renting a home is already costing 15 to 20 percent more than it did a year ago, according to Mr. Pankaj Renjhen, Managing Director at consulting firm, Jones Lang LaSalle Meghraj. “Buyers feel that property rates will come down and purchasing a flat will be a more feasible option in the coming months.” The US financial crisis, which saw some Wall Street icons collapse, has already begun to affect India’s real estate market, which was betting big on foreign money to sustain its high ride. As per housing experts, foreign institutional investors pumped about $4 billion (Rs 19, 200 crore) into India’s real estate market in the past three years. The inflows have considerably slowed in recent months and some fear these might completely dry up, given the squeeze in the global credit market. The absence of liquidity has made it difficult to hold the price for long. With the supply falling short of demand, rentals will continue to rise until property prices fall to what buyers would see as affordable.

Hindustan Times

Vishakapatnam: Feeling the ripple effect

Real estate prices in the country are witnessing a sharp drop with the US financial sector slowdown spilling over to the rest of the world.

In India, it has also lead to a credit crunch, forcing the builders and infrastructure developers to either go slow or put breaks on their ongoing projects.

Besides, speculators and investors have almost vanished from the market and real customers are finding its hard to finance their property investment plan.

Visakhapatnam, considered to be an emerging investment destination in Andhra Pradesh after Hyderabad is not insulated from the current crisis. Though in the long term, the situation may turn around, at present, the city’s real estate prices are witnessing a 50% downturn.

Though independent analyst reports and builders are trying to put a brave face by citing the city’s inherent advantages in terms of availability of skilled labour, infrastructure and the presence of a number of PSUs, sources say most real estate projects are experiencing a slowdown.

“There are no takers for much of the commercial space though the retail sector is witnessing comparatively better response. However, the standard prices quoted by builders and brokerage houses even two months ago have gone down by almost 50%,” said a local property consultant based in Visakhapatnam.

He adds that during 2004-06, the government also played a major role in jacking up the prices in the city. “The municipal authorities started auctioning the land and they garnered Rs 1,000 crore in the first phase. However, those who bought the land are now finding it difficult to continue the project development due to the high cost of funding,” he said.

Builders on the other hand say that most places in the city are witnessing a price rise. “Places like Rishikonda Madhurwada and Sitammatara are the preferred destinations for commercial and residential projects. In fact, Vizag real estate prices have gone up by at least 15% during the last six months,” says a leading infrastructure company official.

According to a recent property report by Jones Lang LaSalle Meghraj (JLLM), Vizag is expected to be one of the next growth drivers in the coming decade. Development of a greenfield international airport and a new seaport at Gangavarm are a big draw as it will help fuel trading activities.

“Satyam Computer Services for instance has 1 lakh sq ft facility in Vizag. The company is also developing an SEZ in the city. Wipro’s facility is also under development, while HSBC has a large BPO centre operational in the city. Besides, IBM Daksh and EDS are planning to expand operations to Vizag,” said George Johnson, regional director of JLLM.

According to him, demand for real estate by IT companies is expected to go up in the future. “With an expected global slowdown, IT companies will look at reducing cost of operations and Vizag will be an ideal location for them as the real estate prices are cheaper here compared to Hyderabad,”he added.

The report suggests that the state government is also proactive in attracting IT/ITeS companies to Vizag.

The government has planned a 2,000 acre IT layout in Rishikonda, 10 km from the city. The state government has allocated over 20 hectares of land to Satyam for developing IT SEZ in Vizag. Andhra Pradesh Industrial Infrastructure Corporation (APIIC) is setting up two IT SEZs and it has received 16 hectares and 36 hectares of land near the city.

Ramky Group is developing an SEZ — Jawar Pharma city and Biocon has already announced Rs 1,000 crore investment there for opening a facility. The government has also allotted 1,700 acres of land to Unitech to build a knowledge city.

The retail market is showing an upward trend. Currently the city has no operational malls, but there are six malls under various stages of construction expected to be operational by 2010. Out of these, three malls totalling to a built-up area of 4,00,000 sqft will be operational in 15-18 months.

Economictimes

Slowdown hits demand for prime office space in cities: CBRE

NEW DELHI: Office space absorption in the country has gone down by 41.11 per cent cumulatively in the three quarters ended September this year, as a fallout of the global economic slowdown, according to a study.

The total office space take up between January and September this year stood at 5.3 million sq ft as against 9 million sq ft in the corresponding period last year, according to global commercial real estate services firm CB Richard Ellis (CBRE).

“The global economic slowdown has started to show early signs of impact on the offices market. The third quarter of 2008 has seen some decline in the office space take up across the country. Going forward, this is expected to keep office rentals under ch eck,” CB Richard Ellis Chairman and Managing Director (South Asia) Mr Anshuman Magazine said.

In its quarterly ‘India Office Market View’ report, CBRE covered seven cities and found that the cities showed a marked slowdown in demand and office space leasing that had moderated in the first two quarters of the year.

“Many corporate occupiers, especially in the IT/ ITeS sectors have postponed or curtailed their expansion plans. Together with this, the fund availability for the sector which was already constrained due to the inflation control measures of RBI, will be further curtailed by the recent financial crisis in the US and its ripple effect on rest of the world,” it added.

According to the report, rentals in the National Capital Region are likely to remain stagnant for the next few quarters. – PTI

Thehindubusinessline.com

Citibank, IndiaHome contribute customers to find property in India at IndiaHome Exhibition in Dubai

This upcoming weekend of 17th & 18th October will have the reputed real estate developers from India coming together under one roof with Citibank offering attractive options for availing home loans to purchase properties.

NRI community in UAE has shown keen interest for properties in India and this event will provide an attractive opportunity for Non Resident Indians (NRIs) in the entire UAE to look at a variety of home options in various cities across India under one roof and select their ‘Home Back Home’.

The IndiaHome exhibition is being held at Dusit Thani Hotel on Sheikh Zayed Road with participation from the most reputed Indian developers like DLF, Unitech Ltd, Emaar MGF, Jaypee Greens, Hiranandani Constructions, Mahindra Life Spaces , GERA Developers,,Rohan Developers, Kumar Developers,Ekta World, ETA Star, Keppel and Hirco. These developers have residential, commercial and retail projects planned or under execution across various towns and cities in India. The exhibition offers a wide range of property options ranging from INR40 lacs (approx Dhs370000) to INR10 crores (approx Dhs9.8m).

Ashish Mehrotra, Business Manager – Mortgages, Citibank, said:

‘It is our continuous endeavor to provide value added offerings to NRI customers and service their need of home purchase back in India. As part of that endeavor, we are getting the best in class real estate developers from India to their doorstep this weekend.’

Mehrotra added, ‘The developers will provide them with large range of property options suited to wide range of budgets bundled with some very attractive schemes for purchase during this period. This will be supplemented by on-the-spot loan pre-approval and guidance by Citibank mortgage counselors to facilitate the purchase of their dream home in India.’

‘The NRI clients can get loans ranging from Rs 15 lacs to upto Rs 5 crores for ready to move and under construction properties. Loans will also be provided for built-up commercial properties across Metro cities in India. The loans can be taken under flexible repayment schemes with construction linked plans or down payment plan and the EMI payments can be done through the convenient Citibank NRE/NRO account which comes with a host of superior banking features,’ added Mehrotra.

Vipul Kapur, Global Sales Director, Citibank NRI, said: ‘Buying a home is not just an investment; it is an emotional commitment, especially for NRIs. Citibank has rich experience and established presence in the Indian home loans market. To cater to the needs of our NRI customers, we have been offering a dedicated Home Loan programme since 1997. Through our NRI Home Loan Program, we cater to customers based in USA, Canada, Singapore, UAE, Kuwait and Bahrain.’

With over two decades of success, the Citibank NRI Business functions from over 64 centers across the globe. Managing assets worth over $8bn, the Business has been a pioneer in NRI banking, serving as a model for other Indian banks targeting NRIs. The business has four regional hubs in New York, London, Dubai and Singapore. Its comprehensive wealth management services provide specialized solutions through the personalized attention of expert relationship managers.

Ameinfo.com

Indian Banks Tell Developers to Sell Properties, Times Says

Indian banks and other lenders are telling developers to sell properties to prevent defaults on loans, the Economic Times reported, citing bankers it didn’t identify.

The lenders are also telling real-estate companies to lower prices to attract buyers, the newspaper said. Banks and other financial institutions have given 750 billion rupees ($15 billion) and mutual funds another 250 billion rupees as loans to developers, it said.

Borrowing costs at a seven-year high and an increase in real-estate prices are deterring property buyers in India.

The real-estate companies are still resisting lowering prices, the report said, citing an unidentified official at a bank. Most developers paid interest on their loans in the quarter ended Sept. 30 to local banks, though one hasn’t paid interest to an overseas fund, the newspaper said.

Bloomberg.com

Indian Real Estate Scenario in recession period of economy

THE DEVELOPMENT of real estate in India is attributed to the off-shoring and outsourcing businesses, such as high-end technology consultation, call centres and programming houses.

The demand from the information technology sector certainly has changed the urban landscape in India. Several multinational companies (MNCs) continue to move their organizational operations to India to take advantage of lower manpower and other costs. Providing human resources and home at their work place assumes great significance and therefore, the requirement to create space for people to live and work that in turn causes the development of other related infrastructure. It has been a predominant trend to set up the world´s best business centres, often campus-style establishments, bearing a distinguishing corporate stamp. Some of these locations are so distinctive that they are termed as the ´temples of new or modern India´. It is just an indication of the extent to which the development of real estate has been taking place.

The real estate market in India remains unorganized, fairly fragmented, mostly characterized by small players with a local presence. Traditionally, real estate developers were viewed with an element of skepticism. Developers were often identified dealing with large amounts of unaccounted money, lacking transparency and would use unscrupulous mean to acquire a variety of regulatory approvals.

The tremendous growth of the real estate sector is attributed to various fundamental factors such as growing economy, growing business needs, etc. This boom however is restricted to areas such as commercial office space, retail and housing sectors. The impending concerns of this sector namely- skill shortage, non availability of statistics, lack of low cost-affordable housing, lack of sustainability, high RE prices and last, to meet a future that might have downturn due to oversupply.

The industry is presently facing a major resource crunch – an obvious lack of qualified skilled people from construction firms, PMC firms, etc. Coupled with this manpower shortage is the shortage of availability of relevant statistics which has created an ambiguity as to how much construction activity is actually taking place and one can´t gauge the demand and supply trends accurately.

The opportunities and issues of affordable, low cost housing in India are mainly related with tremendous shortfall of middle class housing as majority of the developers are involved in developing high class housing, so there is a dearth of low cost affordable units.

The negative version of Indian real estate industry is “they have complete disrespect for sustainability” and that the concept of green buildings, proper waste disposal methods and the longevity of the product are often dismissed.

Presently, the impact of recession in US economy has impacted Indian Real Estate Market as well as it is also witnessing the recession. Till now the real estate industry was a very booming industry in India which were in pace with IT industry. Accordingly, the demand for IT space and Commercial spaces has been grown. Also the high net worth of individual investors has created a very fast pace of demand in Indian real estate sector which have gain a very high impact image of investing in India.

As the money was coming in terms on investment in India from NRI as well as Private Equity funds, the well known developers and real estate players have grown their portfolio as well many small sized players have also created in Indian market. It has provided a very high supply of real estate segments either in residential or in commercial or in office space. SEZ has also creates a very good opportunities for investors as well as corporate to invest and get benefited from Indian real estate market. So the booming market has created a niche as modern living in India and created a very mass employment in Indian segment.

The recent changes which happened in American market such as Bankruptcy of Lehman Brother an oldest financial firm of American market and sell process of PE Firm Merryl lynch by the largest US bank Bank of America has created a very fast drops/recession in financial industry and created a crisis in all over US economy. Both of these firms were invested their more part of funds in to real estate sector without having the proper analyzing or effect. They also have given the funds for mortgage industry of US which is currently facing the hurdle of Sub prime lending and have impacted many players to bankrupt.

All of these changes in US economy have impacted in Indian economy as well as Real estate segment as most of the Indian players have their liquidity funded by both of these firms. Also the IT segment which was mainly funded by the PE firms or have their export to US markets have noticed very sharp drop of net worth of their firms. This recession also impacted the Sensex which has bullish very sharply and brings down the net worth of the leader of Indian real estate player very low. The impact can be shown in share price of DLF, Unitech, GMR group, Reliance group, Wipro, Satyam etc groups.

All of these sudden changes in Indian and US market created a point of thinking to investors & individuals that where it will go and what will be best option in real estate investment.

The market rates in India are also dropped by 10 to 30% in most of prominent as well as upcoming cities and the trend appears to be still continuing till it will not recover the effects of this financial crisis.

Americanchronicle.com