Housing finance companies to cut rates from January

Following the leaders, the second-tier housing finance companies (HFCs) are also lining up special schemes for the sub-Rs 20 lakh loan category. This will bring cheer to a wider section of fresh borrowers.

Second-rung HFCs planning to reduce interest rates are Dewan Housing Finance Corporation (DHFL), GIC Housing Finance Company and DHFL Vysya Housing Finance among others. They may reduce interest rates by 1-1.5 percentage points on loans up to Rs 20 lakh. These lenders also plan to reduce rates for existing borrowers, albeit by a lesser extent.

GIC Housing Finance, which has a home loan portfolio of Rs 2,800 crore, has decided to reduce interest rates by 1-1 .5 percentage points for fresh borrowers . Accordingly, for loans below Rs 20 lakh, it will charge 10.25% per annum for 5-15 years and 10.5% a year for over 15 years.

DHFL, which has a home loan portfolio of around Rs 5,000 crore, is yet to finalise its plan. It may offer special interest rates for both sub-Rs 20 lakh and sub-Rs 5 lakh loan categories. Its subsidiary DHFL Vysya Housing Finance also plans to introduce special rates for new home loan takers.

These players have taken the cue from public sector banks and the market leader Housing Development Finance Corporation. Following the government’s diktat, public sector banks have created a concession rate of 9.25% for home loans below Rs 20 lakh and 8.5% for loans less than Rs 5 lakh. HDFC has announced a floating interest rate of 10.25% for loans up to Rs 20 11.25% lakh and for loans above Rs 20 lakh.

The National Housing Bank (NHB), which offers refinance support to HFCs, has introduced a special Rs 4,000-crore refinance facility at 8% annual rate. It has also announced a Rs 2,000 crore refinance support for loans against rural housing projects.

“As we will get refinance from NHB at easy terms, we have decided to pass on the benefit to new customers from January 1,” GICHF managing director M Sivaraman told ET. Industry players, however, believe the NHB facility would be available only against fresh lending. So, the benefit of the soft rates will be limited to fresh loans. GICHF, for instance, will reduce its interest rates for existing customers by 0.25 percentage points.

According to DHFL Vysya Housing Finance managing director R Nambirajan , the company will cut its rates by 0.5 percentage points for existing borrowers across the spectrum. “Besides offering the special refinance scheme, NHB has reduced its normal refinance rates too. Both the moves will help lowering interest rates,” he said.

NHB chairman and managing director S. Sridhar said here on Tuesday: “As we have reduced rates, we also expect HFCs to reduce rates and pass on the benefits to end-customers.”

Source : http://economictimes.indiatimes.com/Housing_finance_cos_to_cut_rates_from_Jan/articleshow/3917356.cms

Makeover of Surat on cards with setting up of two SEZ

Surat, the second biggest city of Gujarat, India is known for its manmade textile and diamond polishing industry. Surat also has to its credit the largest number of multi-head embroidery machines in the world (over 40,000) installed in last 3 years. The city manufacturers over 2,500 million meters of fabrics per day.

The diamond industry contributes to Rs 700 billion in exports per year and nearly 90 percent of all diamonds processed in the country are done so in Surat. Now, the city of Surat is now on the verge of a mammoth makeover. On the cards are two SEZ, one meant for the apparel industry and the other for the diamond industry.

To get a better perspective on the industry development activities, fibre2fashion.com spoke to two torch bearers of the textile and apparel associations, Mr. Devkishan Maghani, General Secretary of Federation of Surat Textile Traders Association (FOSTTA) and Mr. Bhimaraj Pawar, President of Gujarat Garment Manufacturers Association (GGMA).

We asked them to comment on the SEZ activity, to which Mr Maghani replied by saying that, “Apparel Park is ready in Sachin area of Surat. A few units have commenced and others are in the process of doing so and the second SEZ is a Gems & Jewellery Park which is under development and will take around one year to complete. Surat is famous for diamonds, textiles and zari used in decorative clothing and items.”

Speaking to Mr Pawar, he said, “In month of July we have urged Ministry of Textiles to provide us closed mills and their land to accelerate the development of textile and garment industry in Gujarat. Ministry had asked us to provide a roadmap for the same. We had invited applications from our members and we have received around 400 forms from members who are interested and which we have forwarded to the ministry.”

He added by saying that, “We are also receiving support from Gujarat Government under Vibrant Gujarat Special project and the employment department. Employment to tune of around 25000–30000 is expected to be generated from this project.”

Source : http://www.fibre2fashion.com/news/apparel-news/newsdetails.aspx?news_id=67691

Govt mulling 0.5% cess to fund affordable housing

NEW DELHI: The housing ministry is considering a proposal to impose a cess of 0.5% on all central taxes to establish a dedicated “Shelter Fund” to  meet the ambitious target of “affordable housing for all” and to make India slum-free by 2020.

The ministry is also considering broadening parameters of affordable housing to include flats with carpet area of upto 1,200 sq feet, which would benefit lower and middle income groups.

These reccomendations are contained in a report of a high-powered task force on affordable housing, which submitted its findings to housing minister Kumari Selja on Monday. The panel headed by HDFC chairman Deepak Parekh suggested the dedicated fund be managed by National Housing Bank and government provide budgetary support of equal amount to the fund.

As part of its bid to put housing within the reach of the lower and middle classes, the panel has suggested that affordable housing be brought under the infrastructure definition, stamp duty rates and registration fees for such units be pegged at just 2% in all states. Some of these recommendations are clearly in the domain of states, but a populist push from the Centre will be hard to ignore ahead of general elections.

While admitting that any attempt to fix a definition of affordable housing for a country as large and diverse as India, using the concept of one-size-fits-all, would be counter-productive, the panel has sought to redefine parameters. It said EWS/LIG flats could be those between 300-600 sq feet, up from the earlier 250 sq feet for EWS and 300-325 sq feet for LIG. It suggested enhancing MIG limit to carpet area of 1,200 sq feet, upfrom 650 sq feet.

The task force estimated that alleviating the urban housing shortage could raise the rate of GDP growth by at least 1-1.5% and have a huge impact on improving the quality of life.

The panel urged permitting housing finance institutions (HFIs) to access long-term external commercial borrowing market, considering the HFIs required long-term funding sources at low cost to pass on benefits to the ultimate borrowers.

The panel recommended that funds raised through sale of land by state housing boards must be ring fenced, with a defined proportion to be redeployed only for affordable housing.

In an effort to bridge the housing gap for lower and middle income groups, the panel suggested reinstating income tax deduction under section 80 (1)B of the IT Act which was available in respect of exempting 100% profit from building residential projects for LIG/MIG houses may be restored for two years.

The task force suggested establishing a housing finance company focusing only on micro-finance loans and to promote household savings in the informal sector to enable a down payment for a loan.

To ensure land availability for affordable housing, the panel recommended upward revision in the FAR/FSI across cities commensurate with investment in infrastructure and imposition of impact fee on those benefiting from additional FAR/FSI to fund housing for low and middle income groups.

Emphasising treating affordable housing as a public purpose, the panel suggested simplifying procedures and processes for land acquisition and conversion of agricultural land for urban use.

The panel was not in favour of auction of public land and suggested development of such land for affordable housing.

The panel also recommended setting up a real estate regulator and pending the legislative process for having real estate regulators in place in the states, consideration should be given to set up ombudsman-type bodies at the state level.

The task force suggested increasing JNNURM funds for affordable housing by 100% and a part of the funds be used for direct provisioning of housing for urban poor.

Source : http://timesofindia.indiatimes.com/India/Govt_mulling_05_cess_to_fund_affordable_housing/articleshow/3910369.cms

Real estate prices in Maharashtra may dip to refect slowdown

Indicative property rates, based on which Maharashtra levies its stamp duty in Mumbai and other key cities of the state, may fall marginally for the first time in about a decade as real estate transactions drop, according to sources in the revenue ministry.

The property rates in the ready reckoner for Mahrashtra may drop marginally reflecting the subdued sentiments, sources said. A final decision may be taken tomorrow.

The property ready reckoner is prepared by the office of the inspector general of registration and stamp duties (IGR) on the basis of transactions in real estate sector in respective areas.

Property prices across key cities of the state have witnessed a decline owing to an economic slowdown that has forced companies to curb expansion plans. Reflecting depressed sentiments property, transactions have also dipped as buyers anticipate a further softening of prices.

Still, the assurance given by Minister of State for Revenue Rana Jagjit Singh in the state legislature to maintain status quo has created a piquant situation. Pune-based Maharashtra Lawyers Association’s President M P Bendre this week filed a petition in the Bombay High Court requesting the court to direct the state government to publish rates that reflect the market sentiments. The petition pointed out that the assurance given by Singh amounts to injustice to consumers.

Source : http://www.business-standard.com/india/news/real-estate-prices-in-maharashtra-may-dip-to-refect-slowdown/09/12/344838/

Assembly okays Bill to change property tax system

The Maharashtra Assembly on Saturday passed the Bill to allow the Brihanmumbai Municipal Corporation (BMC) to shift to the capital value base property tax system from the present ratable value system.
 
The Bill will become a law once the legislative council gives its nod to it, which is expected on Monday. An obvious fallout of the new law would be that it would increase the property tax bill for those who live in the island city and reduce the burden on those who live in the suburbs.

However, those whose tenements are less than 500 sq ft will continue to pay the tax at the present rate.

Currently, property tax in Mumbai is charged on the ratable value (ratable value is fixed on the rent a property can fetch). However, as rents are freezed according to the Rent Control Act of 1948, there has been no revision in the ratable value since then. This system will put those living in the island city in an advantageous position as despite property prices skyrocketing in South and South-Central Mumbai, ratable value of properties was never revised.

Those living in the suburbs have to pay higher property tax as in the year which the property had been assessed for tax purpose, the ratable value was much higher compared to the properties in island city where rent is freezed at the 1948 levels.

Any attempt to change the property tax structure is being opposed by the elected representatives from the island city as they fear that they will have to face a backlash from nearly 2 million residents of 12,000 properties which are protected by the Rent Control Act.

These properties, which are known as Chawls, are mostly inhabited by the lower-middle class families whose bread-winners are employed in Mumbai’s mills, port trust, police, BMC or in small trades like plying taxi, running tobacco shop, etc.

However, the state government was forced to shift from the ratable value system to the capital value system as it was an important pre-condition for getting grants under the central government’s Jawaharlal Nehru Urban Renewal Mission (JNURM).

After the Bill was introduced in the state legislature last year, it was sent to a joint select committee of both the Houses as elected representatives from both the ruling and Opposition coalitions wanted safeguards to be introduced in the Bill for those living in the Chawls.

Congress MLA from Khetwadi in South Mumbai and a member of the joint select committee Bhai Jagtap said, “As we wanted to protect the interests of lower-middle class and middle class residents of these Chawls, the property tax structure is not being changed for those who are living in tenements of up to 500 sq ft. The amendment suggested by the joint select committee was accepted by the government and it is now part of the Bill passed by the Assembly.”

The other major highlight of the Bill passed by the Assembly is that even in the case of properties of more than 500 sq ft, property tax will not be more than double of the exisiting property tax burden for five years and it could not be increased by more than 40 per cent for next five years.

Source : http://www.business-standard.com/india/news/assembly-okays-bill-to-change-property-tax-system/01/26/344755/

ICICI to cut home, auto loan rates

Housing, auto and personal loan customers of ICICI Bank will get their new year gift in the form of a cut in interest rates, its CEO and managing director K V Kamath said on Monday.

“We are looking at cutting interest rates very early in January for our housing and other loan customers,” Kamath told PTI over telephone from Mumbai.

“The lowering of interest rate would be in new year,” he said when asked if the bank was all set to give a new year gift to its customers.

The extent of the rate cut is being calibrated and would be announced soon, he said when asked if the rate could be more than 100 basis points.

ICICI had earlier this month reduced home loan rates for new customers by up to 1.5 percentage point.

There are indications that the fresh cut in interest rates would benefit both existing and new customers.

The prime lending rate of the bank currently stands at 17.25 per cent. The bank last revised the benchmark lending rate by effecting 75 basis points hike in August this year.

SBI [Get Quote] has cut its prime lending rate by 75 basis points to 12.25 per cent with effect from January 1.

Home loan major HDFC [Get Quote] has also cut its prime lending rate by 50 basis points, while a number of other private and public sector lenders such as HDFC Bank, Punjab National Bank [Get Quote] and Bank of Baroda [Get Quote] have also announced rate cuts.

Earlier in the day, two leading public sector lenders Punjab National Bank and Bank of Baroda said they would reduce their prime lending rates by 50 and 75 basis points respectively, with effect from January 1.

Besides, PNB also announced a reduction in its peak deposit rate by 100 basis points to 8.5 per cent for deposits of one year to less than three years beginning 2009.

Earlier this month, the bank had reduced its peak deposit rate to 9.50 per cent from 10.5 per cent.

Separately, Bank of Baroda said: “The bank has decided to reduce its prime lending rate by 75 basis points from existing 13.25 per cent to 12.50 per cent with effect from January 1, 2009.”

The PLR of PNB would stand reduced to 12 per cent, from the existing 12.50 per cent, effective from January 1.

PNB has also reduced interest rates on various retail lending schemes like floating rate housing loans, car and education loans by 50 bps.

“The interest rates on fixed rate housing loans have been reduced by up to 175 bps with effect from January one,” the bank added.

Further, the bank has introduced a housing loan scheme — PNB Special Housing Loan Scheme– for new accounts from January 1, 2009 till June 30, 2009.

Under the fixed housing loan of up to Rs 500,000 for maximum period of 20 years, PNB would charge interest rate at 8.5 per cent.

Also fixed rate housing loans of above Rs 500,000 to Rs 20 lakhs (Rs 2 million) for a maximum period up to 20 years would attract interest of up to 9.25 per cent.

“The interest rate will be subjected to reset on July 1, 2014 for the scheme,” PNB added.

State-owned lender Union Bank of India [Get Quote] has also reduced its deposit rates and Canara Bank [Get Quote] has cut its deposit as well as MSME lending rates.

Source : http://inhome.rediff.com/money/2008/dec/29bcrisis-icici-to-cut-home-auto-loan-rates.htm

Indian real estate market a safe bet, say consultants

Cash invested in the Indian real estate market “is safe”, a property consultancy firm has insisted.

Affinity Solutions said putting money into property was one of the most secure ways of protecting against the global recession.

People now have become “quite sceptical” over investing and dealing with shares, meaning real estate was now seen as safer, the company added.

Affinity specialises in helping investors buy and sell in Indian cities like Noida, greater Noida and Gurgaon.

Company director A K Jain said:

“One of the important reasons why people choose to invest in real estate over stock markets is that real estate is tangible – you can touch it.”

The recent crash of the Indian stock market is also thought to be the main reason behind changed investor attitudes, the company added.

Confidence in Indian property was further boosted this week by real estate advisers Investment Square, which unveiled two “high potential projects”.

The company claimed Windmill Heights at New Mahabhaleshwar and ColorScape at Kasgaon offer property buyers an assured 50 per cent appreciation in value in 24 months.

A Shyamsunder, Investment Square chief executive, said:

“This scheme will enable investors to reap high returns in future if they opt to retain the plot.”

Source : http://www.offplanpropertyexchange.com/news/2008/12/indian-real-estate-market-a-safe-bet-say-consultants/573

Housing ministry proposes bonanza for small home buyers

NEW DELHI: The housing ministry has proposed a veritable bonanza for first-time house buyers in the low and middle income groups, suggesting tax  breaks, cap on prices and freeze on interest rates. It has also suggested a one-time debt-restructuring for realtors.

Keeping an eye on the `aam-aadmi’ vote ahead of general elections, the government wants to benefit the urban lower income groups and also open up supply of low and middle income housing.

The housing ministry, headed by Kumari Selja, has recommended to the PMO that the government should encourage dwelling units between 1,000-1,200 sq ft that cost a maximum of Rs 1,000 per sq feet.

For those wishing to take a housing loan, the ministry has proposed an additional deduction of Rs 50,000 under section 80C of the IT Act. The section already provides for deduction up to Rs 100,000 for investments made in specific areas including housing loan. The relief would be applicable only on loans taken for the first house. If approved, the benefit will be available for the next two financial years.

The ministry has also recommended that for loans up to Rs 7.5 lakh taken for houses of 400-1,000 sq ft, interest rate be maintained at 8%. The government may ask the National Housing Bank and HUDCO for a refinance window to ensure the low rate if banks do not lower their rates, the ministry suggested.

For realtors and builders, the ministry has proposed one-time debt-restructuring, a demand that the real estate sector has been making since the business hit a demand trough. The government will consider asking RBI to provide a restructured debt scheme for a period of one year.

This has already been done for the manufacturing sector, and could see funds flowing smoothly for ongoing projects.

In an effort to bridge the housing gap for lower and middle income groups, the ministry suggested that income tax deduction under section 80 (1) B of the IT Act, which was available in respect of exempting 100% profit from building residential projects for LIG/MIG houses, may be restored for two years.

However, the ministry wants a rider that projects to be built under the concession should not have houses above a carpet area of 1,500 sq ft and atleast 15% are below 260 sq ft.

“This would encourage construction for the targeted beneficiaries by those builders who have land already available,” said an official.

The package could also grant permission for 100% FDI under automatic route for integrated township projects up to 5 acres in which at least 15% houses are for EWS and 10% for LIG/MIG ranging from 400 sq ft to 1,000 sq ft carpet area.

Source : http://timesofindia.indiatimes.com/India/Housing_ministry_proposes_bonanza_for_small_home_buyers/articleshow/3905671.cms

Pune realty firm pitches a cheaper retail model as alternative to malls

Naiknavare Developers Pvt. Ltd ties up with Michael Lloyd, Australia’s leading retail expert, to design and build shopping centres in residential colonies

Pune: Pune-based real estate developer, Naiknavare Developers Pvt. Ltd, has tied up with Michael Lloyd, Australia’s leading retail expert, to design and build shopping centres in residential colonies that it has constructed in Pune’s suburbs of Hadapsar and Viman Nagar. Being low-cost models, the projects will cost about Rs19 crore and are expected to be completed by the end of 2009.

Lloyd heads the Tomlik group, a private investment firm, and publishes retail industry magazine Shopping Centre News in Australia and New Zealand.

The Hadapsar and Viman Nagar projects will roll out an affordable retail model that can be an alternative to conventional malls, said Hemant Naiknavare, director of the Pune firm. Most of the merchandise available at the centres will be private label, non-branded goods, which people with an eye on their family budget can afford, he said.

The two projects are expected to be completed by the end of 2009 and will cost Rs19 crore

Lloyd said these centres will modernize the local specialty retailer as well as the home-grown retail industry.

He said Indian and Chinese mall developers are in financial trouble because they follow the US model which works on luxury, leisure-based retail, while there is only a very small population here that can actually afford to shop at such malls.

The shopping centres, on the other hand, are designed to have everything that families need on a daily basis, from a grocery store to salons, cobblers, clothes and such like, he said.

The two shopping centres will serve a population of 50,000-75,000 residents each; while the Hadapsar project is already under way, the one is Viman Nagar is scheduled to start in January, Naiknavare added.

Source : http://www.google.com/url?sa=X&q=http://www.livemint.com/2008/12/28221653/Pune-realty-firm-pitches-a-che.html%3Fh%3DB&ct=ga&cd=mA597WPzNDE&usg=AFQjCNG6-8Q9uUEmxPIqfKqtxvhBOI_EKA

Govt may adopt Indonesian model for affordable housing, hints panel

new delhi: To meet the Indian dream of providing a home for every family, the country may adopt the model of south-east Asian countries towards providing affordable housing, noted a Government panel.

Emphasising on a major role to be played by the state to provide housing for all, the panel has advocated the model adopted by the Indonesian government. In Indonesia, developers are required to compulsorily build a minimum of three middle class houses and six simple houses per HIG housing unit. “The government may consider adopting a similar approach in India,” the report said. For financing such projects by the state-owned lending entity, Housing and Urban Development Corporation Limited (HUDCO), the company could adopt the cross-subsidization model whereby the profits from commercial financing projects can be used to subsidize social housing.

The former finance secretary Ashok Jha-led panel was set up by the housing and poverty alleviation ministry to look into the housing needs of the economically-weaker section, lower income group and middle income group in early 2008.

So far, the housing sector which is growing at a compound annual growth rate of 26 per cent has not been able to keep up with the demand for housing in this sector. The report has also lashed out at private developers and state development authorities, responsible for fulfilling housing needs. “The building industry has failed to professionalize. There is fragmentation with respect to tenure (owned versus rental), between urban and rural areas, between gated communities and those outside. Clearly, this can not be allowed to continue,” the report said.

The public housing solutions by way of a lottery amongst thousands looking for housing and hundreds that are actually built by various state agencies points towards acute shortage. Recently, Delhi Development Authority held a draw for around 5,000 flats in the city in the range of Rs 7 – 77 lakh, for which over 5 lakh people applied.

It has blamed poor planning approach towards housing on the unavailability of statistical data related to housing in India. “Even after six decades of independence we do not know the status of housing developments in cities… though statistics are collected it is rarely aggregated to give us the information we need for planning purposes,” said the report. It has outlined the need for four key data indicators — housing starts, housing completions, size of units and location and number of units per building — for forecasting the growth of a city and its economic potential.

Source : http://www.indianexpress.com/news/govt-may-adopt-indonesian-model-for-affo…/403920/

Confident group carries on with hotel projects

Confident group is a conglomerate with interest in infrastructure , hospitality, airlines and Entertainment. Confident Group is a zero debt group. 
The group has large real estate projects in Bangalore, Kochi, Trivandrum and Dubai. The group is the largest selling brand amongst developers with Projects in Bangalore, Kochi, Trivandrum and Dubai.

It is diversifying into hospitality industry. The total targeted investment in this segment is Rs 1,200 crore. The group is putting across 10 hotels and resorts in Bangalore. These hotels and resorts are in the three star to five star category. These 10 hotels and resorts are at different stages of execution. The land acquisition for all the projects have been completed and many of the hotels and resorts are different stages of construction and completion.

Confident Cascade is already operational and one of the favorite party spot for multinational companies for stay and conferences. This resort has already completed over 2200 corporate outing and conferences. This resort is located on Bannerghatta main road and is very close to Bannerghatta National Park. Iris, the four star hotel is next to be launched recently . Iris, located in the heart of Bangalore city on Brigade Road has 60 rooms with three restaurants and all other facilities.

To be launched by August end, is Propus at Langford town, again in the heart of the city. This hotel has 50 suites and rooms with three restaurants and all other facilities.

Confident Aquraii, an upmarket spa and resort on Old Madras Road, Bangalore. This Spa and Resort would provide South-East Asian and Kerala Ayurvedic treatments apart from high end stay. This resort has tied-up with Derma Health Care of Dubai for anti-aging treatment and stay. This resort is five-star category with 15 presidential cottages, 21 luxury cottages and 51 suites. This resort is slated to open by this year end. The current status is civil construction is completed and the interior works and in progress.

Confident is also putting up its most prestigious project Confident Champion Reef, a 18-hole golf course. Planned by world famed Ron Fream. This project consists of 600 high end villas and exclusively designed by Edward, SAA Architects, Singapore. This project is spread over 201 Acres and just 30 minutes drive from the new International Airport. This golf course would also consists of high end resort and hotel facility.

Confident Group would be running all the properties under its own brand and management team. The brand has over seven years experience in running hotels and resorts. Confident Group is the only hospitality brand to own its own airlines. Confident Group has recently launched its own chartered airline called Confident Airlines. The company already owns a P68 plane and is in the process of acquiring another five small planes and helicopters. The basic objective of this division is to cater to chartered and fractional ownership of planes. This division would also support the hotel and resorts to ferry high end customers . The long term objective of Confident Group includes health-tourism whereby the high end customers from abroad are ferried in its own chartered plane and sent for treatment to leading hospitals. Pre and post care is provided in Confident’s own hotels and resorts.

The first four hotels and resorts would be operational in the next six months and the chain of 10 hotels and resorts would be fully operational in the next 30 months.

Until then, the rest of the hospitality industry has to rest without the Confident group’s competition.

Source : http://economictimes.indiatimes.com/Features/Financial_Times/Confident_group_carries_on_with_hotel_projects/articleshow/3902531.cms

Give builders more room and Metro will boost real estate, says impact report

Mumbai The first corridor of the Mumbai Metro rail project will generate built-up space worth hundreds of crores for commercial and residential complexes.
According to the findings of an ‘impact assessment study’ on granting higher Floor Space Index (FSI) to areas adjoining the length of the first three proposed corridors of the Metro rail, a varying FSI of 2 to 4 will result in real estate supply worth several hundred crores being released in the market over a period of time.

Mumbai Transformation Support Unit (MTSU) project director U P S Madan said the report on the centre of influence (along the length of the Charkop-Bandra-Mankhurd line) will be submitted to the Maharashtra chief secretary within a fortnight.

MTSU has suggested various options which include allowing a higher FSI in areas that are in 200 sq mt, 300 sq mt or 500 sq mt radius of the Metro stations. The fourth option is to allow higher FSI in strips along the length of the Metro rail. In all cases, areas closest to the corridor will get the highest FSI of 4, while those farther away in radius will get about 2 FSI.

The distance between each station along the Metro is approximately 1 km.

“Though this has not been implemented in case of Delhi Metro, the international practice is to grant more FSI near transport corridors and express roads. In Mumbai, people continue to travel to work in cars, as taking train would mean having to change their mode of transport more than once in a day,” said Madan.

He added that if more offices are allowed to come up in areas close to the Metro, it would decongest the roads and minimise the need for feeder traffic.

Certain areas like the slum pockets of Kurla, those that come under the airport funnel in Juhu and areas with reservations will not get the benefit of increased FSI.

“Since there are very few vacant plots, most of the revenue will come in as and when the buildings in the area go in for re-development. This could take up to 10 years. We have recommended that the state government enforce an Act whereby a Mumbai development fund is created for consolidating funds from such sources, primarily land and FSI,” said Madan.

He said the dedicated funds thus collected can be used for infrastructural development in the Mumbai Metropolitan Region.

Source : http://www.expressindia.com/latest-news/give-builders-more-room-and-metro-will-boost-real-estate-says-impact-report/403949/

LIC Housing plans to disburse Rs 10,000 cr this fiscal

MUMBAI: LIC Housing Finance (LICHF) is planning to disburse loans worth Rs 10,000 crore this fiscal, up from the Rs 7,100 crore last year. 

“During the last financial year, we disbursed loans worth Rs 7,100 crore and our annual target for this year is Rs 10,000 crore,” LIC Housing Finance Director and Chief Executive R R Nair told PTI.

LIC Housing Finance, a fully-owned subsidiary of the Life Insurance Corporation of India, has so far approved over Rs 5,500 crore and already disbursed around Rs 4,500 crore, Nair said.

The company also expects to bring down its Non-Performing Assets (NPA) by fiscal end, he said.

“We have been maintaining our Non-Performing Assets (NPA) year after year. Last year, it was 1.7 (gross) and a net of 0.63. This year we expect it to come down to atleast 1.6,” he said.

Referring to the slowdown in the real estate sector, he said the company was not facing any problem, adding, “there may be a slowdown for builders targeting investors or speculators. I don’t think there is slowness for those who are focusing on genuine end-users,” he said.

“We have been operating in the end-user segment and so have not experienced any slowdown,” he said adding that the end-user segment had a vast potential due to a demand-supply gap of 27 million dwelling units in the country.

“We have a growth rate of 30 per cent plus compared to corresponding period last year. This growth rate is considered to be decent in the current scenario,” Nair said.

Source : http://economictimes.indiatimes.com/Personal_Finance/LIC_Housing_plans_Rs10Kcr_this_fiscal/articleshow/3903870.cms

LIC Housing Finance to launch Care Homes for aged

It would build about 90-100 dwelling units on a 5 to 7 acre complex, complete with a gym, walking track, library, community centre and a kitchen apart from medical facilities

Mumbai: LIC Housing Finance (LICHF) has come out with a novel scheme pan-India of providing community dwelling units to benefit the aged as part of its social responsibility initiative.
LICHF would build about 90-100 dwelling units on a five to seven acre complex called ‘Care Homes´, complete with a gym, walking track, a library, a community centre and a kitchen apart from medical facilities.
The minimum age for taking a dwelling unit in a Care Home is 50 years.
Care Homes are separate from the reverse mortgage scheme, which LICHF plans to launch shortly for the benefit of senior citizens.
Reverse mortgage is a financial product that enables senior citizens (above 60 years) who own a house to mortgage their property with a lender and convert part of the home equity into tax-free income without having to sell the house.
LICHF, a 100% subsidiary of LIC, had started its first Care Home in the southern metropolis about three years back and following its success, plans to replicate the model pan-India.
“We already have one such Care Home in Bangalore and plan to open two more in Bhubaneswar and Jaipur for which we have already acquired land,” LICHF director and chief executive RR Nair said.
“Once we cover major cities, then possibly we will go for secondary ones…,” he said.
“We will begin construction of homes in both places after certain formalities are completed,” Nair said.

Source : http://www.livemint.com/2008/12/28104341/LIC-Housing-Finance-to-launch.html

Good news for home buyers: 3863 flats at affordable prices

Mumbai Application forms for buying these houses will be available at selected 15 HDFC branches from January 12 to January 30
The New Year may bring some cheer to home buyers who have been unable to buy their dream homes presently because of the unaffordable prices. The Maharashtra Area and Housing Development Authority (MHADA) has decided to release as many as 3,863 of its newly constructed flats in Mumbai in January 2009.

The application forms for buying these houses will be available at selected 15 HDFC branches from January 12 to January 30. These houses will be handed over to persons beloging to the economically weaker sections (EWS) as well as the lower, middle and high income groups. The MHADA has constructed flats at Pratiksha Nagar in Sion, Sahakar Nagar at Chembur, Canara Engineering at Ghatkopar , Shailendra Nagar at Dahisar, Bimbisar Nagar and Siddharth Nagar at Goregaon, Chandivli, Tagore Nagar and Kannamwar Nagar at Vikroli, and Versova in Andheri.

The initial payment for the application forms would be Rs 10,000 for homes in the EWS category, Rs 15,000 for LIG, Rs 25,000 for MIG, Rs 50,000 for HIG. The application forms will cost Rs 1 lakh for HIG flats at Versova. HK Javale, chief officer of the MHADA’s Mumbai Board said that the slump in the realty market would not lead to any reduction in MHADA’s rates. “Our rates are already 50 per cent less than the market rates. The prices for the flats have been decided taking into account the cost for the land acquisition, land development and construction cost,” said Javale.

Flats constructed by the MHADA for the lower, middle and high income groups command a heavy demand as they are reasonably priced in an otherwise exorbitant Mumbai’s real estate market. In July 2008, the authority had announced its decision to release 870 houses at Malvani in Malad, each flat measuring not more than 180 sq ft. The scheme received an overwhelming response with over 2 lakh applicants trying their luck. The houses are yet to be handed over to the winners even as they were selected through the lottery system in last month.

Source : http://www.expressindia.com/latest-news/good-news-for-home-buyers-3863-flats-at-affordable-prices/403811/

Realty switch: more and more opt to rent rather than buy a house

Mumbai: The steep decline in the number of home buyers in Mumbai has given a boost to the rental sector. According to statistics gathered by a property portal, the percentage of property seekers choosing to go in for rental accommodation has increased by 12 per cent over the three months beginning September this year.

In its report, the portal Makaan.com notes that there is an increasing trend among property seekers to postpone their decision to buy homes and live in rented accommodation for the time being. In the same three-month period, there has been a 19 per cent fall in demand for property.

Newly wed advertising professional Pallavi Nayak joined the increasing crowd of those choosing to rent apartments for the time-being when six months ago, she abandoned her hunt for a home in Mumbai. “I will wait for a few months for the prices to drop. And if they still don’t fall, I will wait till they do. Property rates have escalated to unaffordable levels as of now,” said Nayak who is at present staying in a rented apartment at Chembur.

Hamptons-International.coAds By GoogleWhile the relentless wait for buyers anticipating a further drop in prices has brought down both sales and prices in Mumbai’s overheated realty market, residential rentals in the metropolis continue to hold steady — fuelled by growing demand.

The report also notes that the most preferred localities for buying houses in Mumbai currently are affordable localities like Kandivali east, Mira Road, Kharghar and Ghodbunder Road whereas the most favoured localities for renting a house are Bandra West, Kandivali East, Andheri East and Goregaon East.

Makaan.com Business Head Aditya Verma explained that the current slowdown in global and domestic economic activity has shaken people’s confidence, prompting them to postpone any long-term, high-value purchases. “There is also a popular perception that property prices are going to fall by another 20-25 per cent. Another factor is the high home loan interest rates,” said Verma. “All these are together putting downward pressure on the sector in the short and medium term. Till these factors play out, rentals will rule the market.”

On the supply side, Makaan.com observes that from September to November 2008, the supply of properties to be sold has increased by 14 per cent while the supply of properties on rent has increased by 8 per cent. This further substantiates the fact that there are more unsold properties in the market while the rental segment seems to be less affected by the slowdown, at least till now.

Source : http://www.indianexpress.com/news/realty-switch-more-and-more-opt-to-rent-rath…/403569/

Property Market turns Buyer friendly

The year 2009 will lift the gloom in the real estate market as the property market turns buyer friendly with the cuts in property rates and home loan rates. Developers for their part would benefit as they will focus on creating volumes at affordable price points.

The government move to boost home loans will definitely rejuvenate the low-segment borrowers borrowing loans upto Rs 20 lakh. Public sector banks have made their loans cheaper and private banks and HFCs are expected to follow suit. “The important thing now is for the supply side to catch up with the increasing demand in this segment,” say experts.

According to Sanjay Dutt, CEO Business, India, Jones Lang LaSalle Meghraj, the thrust given by the Central Government to bring the economy to its full momentum is encouraging. The correction in real estate prices supported by lower interest is a trigger that would lead to many positive things.

Ravi Iyer, looking to buy a home, says he is enthusiastic about the home loan incentives given but is waiting for property prices to correct further to come in line with his expectations. “There is money in the market but people are waiting till January-February as they expect prices to correct further and more conducive policy announcements,” say experts. Gulam Zia, Director, National Advisory Services, Knight Frank expects the market will correct itself further by another 15 % and almost 30- 40 % from its peak. There will still be a wait and watch until all of that evens out, he says.

Developers point out that it would be a good bargain for buyers as most players would bring down their prices. Boman Irani, Chairman and MD, Rustomjee Group, says there will be more of smaller, value for money homes without compromising on the quality. “For instance , we are developing Rustomjee Urbania in Thane, a walk-to-work township with residences, schools, hospitals and convenience shopping.”

Ram Yadav from Orbit Corporation explains that home loan rates are expected to see a further 150 to 200 basis point cut, which will further boost demand. Once inflation comes down, home loan rates for all segments will come down. 2009 will also be the toughest year for developers as they will have to work on lower margins and not increase prices. If stock markets can fall from 20,000 to 10,000, developers too have to take a hit in their margins. It would be a phase of consolidation for developers and 2010 for most part will see prices remain stable and appreciate by maximum 10%, he says.

Pravin Doshi, Chairman, Acme Group and President, Maharashtra Chamber of Housing Industry (MCHI) says prices have already come down and become realistic. “The movement has started in the market and there are good enquiries. The government must come out aggressively to increase the incentives for loans up to Rs 40 lakh which would make it more meaningful in places like Mumbai besides further reduction in interest rates.”

Dutt emphasises that the success of real estate projects or sales in 2009 would depend on how quickly developers align prices to the market, offer attractive financial packages, differentiate themselves in quality, demonstrate delivery or keep time lines. The next tipping point would come when job confidence is restored along with all other factors and forces, says Dutt, and adds that he is hopeful sales would start by quarter 3 (calendar year) with 15% to 20% growth over 2008.

Balaji Rao, MD, Starwood Capital, observes that since it is a free market there is no formula that a 30% or 20% cut would help. If a developer does not sell at a particular price he will automatically come down. There is also scope for buyers to insist on more transparency, be it in area calculations, provision of amenities within the time line or insisting on escrow accounts for under construction projects, says Rao.

R V Verma, executive director, National Housing Bank says the June 2009 deadline set for availing these concessional rates for home loans is meant to quickly revive the sector. “Only if the supply side is available will it add comfort. There should be a powerful message from the developers that there is such supply available for responding to these demands. This would help stimulate the economy. “

Source : http://www.indianrealtynews.com/real-estate-india/property-market-turns-buyer-friendly.html

Interest rates to slip to single digits in 2009

NEW DELHI: Volatility in lending and deposit rates witnessed during the year is expected to end in 2009 with interest rates seen to be going down, 
due primarily to an easy monetary stance being pursued by the Reserve Bank of India to push growth.

Interest rates on home and auto loans, which touched a 10-year high in the beginning of 2008, continued to go up till the global meltdown manifested itself, prompting monetary authorities across the world to intervene and reverse the trend.

Making a case for further reduction in interest rates, the Mid-Year Review of the Economy, tabled by the Government in Parliament, said: “There is considerable scope for monetary policy easing over the next six to 12 months to offset the global increase in demand for money that is being transmitted to India.”

ICICI Bank Managing Director K V Kamath also said “single digit lending rate and double-digit growth is what we should look forward to one year from now. Clearly, we see an environment of what we saw in 2001-02.”

So what does this mean for a consumer? Home, auto and personal loans are expected to get cheaper next year while corporate borrowers too will also get credit at lower interest rates.

Interest rates peaked around August this year as the RBI tightened money supply to tame the spiralling inflation rate, which rose to 12.91% for the week ended August 9.

The key short-term lending (repo) rate touched a high of 9 per cent while the borrowing (reverse repo) rate moved up to 6.5%.

Source : http://timesofindia.indiatimes.com/Business/Interest_rates_to_slip_single_digits_in_09/articleshow/3894607.cms

Property Market turns Buyer friendly

The year 2009 will lift the gloom in the real estate market as the property market turns buyer friendly with the cuts in property rates and home loan rates. Developers for their part would benefit as they will focus on creating volumes at affordable price points.

The government move to boost home loans will definitely rejuvenate the low-segment borrowers borrowing loans upto Rs 20 lakh. Public sector banks have made their loans cheaper and private banks and HFCs are expected to follow suit. “The important thing now is for the supply side to catch up with the increasing demand in this segment,” say experts.

According to Sanjay Dutt, CEO Business, India, Jones Lang LaSalle Meghraj, the thrust given by the Central Government to bring the economy to its full momentum is encouraging. The correction in real estate prices supported by lower interest is a trigger that would lead to many positive things.

Ravi Iyer, looking to buy a home, says he is enthusiastic about the home loan incentives given but is waiting for property prices to correct further to come in line with his expectations. “There is money in the market but people are waiting till January-February as they expect prices to correct further and more conducive policy announcements,” say experts. Gulam Zia, Director, National Advisory Services, Knight Frank expects the market will correct itself further by another 15 % and almost 30- 40 % from its peak. There will still be a wait and watch until all of that evens out, he says.

Developers point out that it would be a good bargain for buyers as most players would bring down their prices. Boman Irani, Chairman and MD, Rustomjee Group, says there will be more of smaller, value for money homes without compromising on the quality. “For instance , we are developing Rustomjee Urbania in Thane, a walk-to-work township with residences, schools, hospitals and convenience shopping.”

Ram Yadav from Orbit Corporation explains that home loan rates are expected to see a further 150 to 200 basis point cut, which will further boost demand. Once inflation comes down, home loan rates for all segments will come down. 2009 will also be the toughest year for developers as they will have to work on lower margins and not increase prices. If stock markets can fall from 20,000 to 10,000, developers too have to take a hit in their margins. It would be a phase of consolidation for developers and 2010 for most part will see prices remain stable and appreciate by maximum 10%, he says.

Pravin Doshi, Chairman, Acme Group and President, Maharashtra Chamber of Housing Industry (MCHI) says prices have already come down and become realistic. “The movement has started in the market and there are good enquiries. The government must come out aggressively to increase the incentives for loans up to Rs 40 lakh which would make it more meaningful in places like Mumbai besides further reduction in interest rates.”

Dutt emphasises that the success of real estate projects or sales in 2009 would depend on how quickly developers align prices to the market, offer attractive financial packages, differentiate themselves in quality, demonstrate delivery or keep time lines. The next tipping point would come when job confidence is restored along with all other factors and forces, says Dutt, and adds that he is hopeful sales would start by quarter 3 (calendar year) with 15% to 20% growth over 2008.

Balaji Rao, MD, Starwood Capital, observes that since it is a free market there is no formula that a 30% or 20% cut would help. If a developer does not sell at a particular price he will automatically come down. There is also scope for buyers to insist on more transparency, be it in area calculations, provision of amenities within the time line or insisting on escrow accounts for under construction projects, says Rao.

R V Verma, executive director, National Housing Bank says the June 2009 deadline set for availing these concessional rates for home loans is meant to quickly revive the sector. “Only if the supply side is available will it add comfort. There should be a powerful message from the developers that there is such supply available for responding to these demands. This would help stimulate the economy. “

Source : http://www.indianrealtynews.com/real-estate-india/property-market-turns-buyer-friendly.html

LICHF’s reverse mortgage likely soon

State-run home finance company LIC Housing Finance is awaiting the National Housing Bank’s tie-up with insurance companies before launching its reverse mortgage scheme for senior citizens.

“We have the product but we are waiting for certain clarifications on tax issues and the insurance tie-up. The taxation issue has been cleared and once the insurance tie-up is done, we will launch the product,” LIC Housing Finance Director and Chief Executive R R Nair told PTI here.

The National Housing Bank (NHB) is tying-up with insurance companies, including LIC, for restructuring of reverse mortgage.

Reverse mortgage is a financial product that enables senior citizens (60-plus) who own a house to mortgage their property with a lender and convert a part of the home equity into tax-free income without having to sell the house.

“We do not have any date fixed for launching as we do not know how much time this (insurance) tie-up will take,” Nair said, adding there was no upper limit in reverse mortgage as it was the percentage of property prices.

The percentage depends on discounting and age of the owner (life expectancy), amongst others, he said.

Reverse mortgage would prove very beneficial for those senior citizens residing in India but whose children were settled abroad, he said.

“For an NRI, spending a few lakhs on a property which can help his parents live in comfort and with which they could also generate income was not a big thing.”

Reverse mortgage would gather momentum as more and more young Indians were taking up jobs abroad and through this scheme they could help their parents get a regular income.

“Now, more and more Indians are becoming world citizens and in the coming years or so, majority of the global workforce is going to become Indian. So, even if one wants to take care of his parents he can’t do it because of his location,” Nair said.

“The remittance from overseas would be one of his options for taking care of parents. To avoid this, he himself can buy a property in the name of the parents and arrange with a home finance company for a reverse mortgage,” he said, adding this would help his parents obtain a regular income.

While conceptually, reverse mortgage was very welcome, it had so far not picked up momentum in India because it was a new idea in the domestic market, Nair said.

“Traditionally, Indians believe in passing on their legacy to the next generation. Besides, there were some taxation issues as well which were cleared only recently.”

The taxation issue has been resolved with the then Finance Minister P Chidambaram declaring that “reverse mortgage would not amount to transfer and stream of revenue received by senior citizen would not be (treated as) income.”

“Precisely, reverse mortgage is a function of interest rates because there is a discounting principal involved in the income generation for that segment of people. If interest rate is low the person will get a lower income,” he said.

It (discounting) was not the real problem for the unpopularity of reverse mortgage, Nair added.

“There has been another issue pending. Now the product is for a 20-year term. If it has to be life-long, then there has to be some kind of interest… the NHB is working on it,” Nair said.

The proposal is that insurer takes care of the payment either from the inception of the scheme or beyond 20 years, he said.

“The housing finance company has to pay consideration amount to the insurer and that will be annuity. It will be a guaranteed payment to the house owner,” Nair said.

Under the reverse mortgage scheme, if property owner wants to exit from these arrangements he can pay back and have the property released.

“The relatives or nominees of the owner can also pay up and get the property released,” Nair said.

“The company can itself sell it (property) after the expiry of the contractual period and the excess amount would be paid to middlemen or the nominees, depending upon what arrangements have been made,” he said.

Source : http://profit.ndtv.com/2008/12/25145224/LICHFs-reverse-mortgage-likel.html

Govt mulling another package for realty sector

There is good news for homebuyers . Government is considering another round of home loan package to make purchase of a house within the reach of  middle class end users. This time, it is learnt, the package will include both the monetary as well as fiscal incentives to make home loan cheap.

Last week, public sector banks announced a home loan sweetener for the homebuyers. But, it was found the package was far short of expectations of both the public and developers . According to the package, home loan up to Rs 5 lakh will attract an interest rate of 8.5%. Loan beyond Rs 5 lakh and up to Rs 20 lakh will be available from public sector banks at 9.25%.

But, there is hardly any house available for up to Rs 25 lakh in large cities, which are badly affected because of the slowdown . Builders and developers feel the scheme would not fetch the desired result in fighting the slowdown .

The country is facing one of the worst industrial slowdowns in the last 15 years. If effective measures are not taken soon, it is felt in the power corridors that the economy might get affected badly. To avoid such a situation , government is planning to adopt concerted strategies to arrest the slowdown. The good news for real estate sector is the government feels it can play a vital role in turning around the sentiment. A senior officer said there is a huge shortage in housing sector. A measure to revive the housing sector will help in reviving a large number of related sectors.

It is felt that making funds cheaper for end users could play an important role in this regard. Therefore , it is learnt the government is planning to increase the present ceiling of Rs 20 lakh for the concessional rate to Rs 30 lakh. This will meet the requirements of a large number of homebuyers in the cities of National Capital Region, in Mumbai , Bangalore, Pune, Chennai and Hyderabad. If the ceiling is raised to Rs 30 lakh, one can buy a house up to Rs 35 lakh with the cheap loan.

Besides, it is learnt the government is also planning to increase the tax rebate on payment of interest on home loan. At present, an interest amount up to Rs 1.50 lakh paid on the home loan taken to buy a house for self-use is deducted from the taxable income.

The ceiling is likely to be increased to Rs 2 lakh. This will help reduce the cost of fund further. At present, if one takes a loan of Rs 30 lakh at the concessional rate of 9.25%, the interest payment in the first year comes to around Rs 2,77,500. Out of this, you can take a tax benefit on Rs 1.50 lakh only, which will be deducted from your income , enabling you to save a tax outgo of Rs 45,000. Which means, net interest one pays in the first year is only Rs 2,32,500. This brings down one’s net interest rate on loan to 7.75% from 9.25%.

But, if the tax benefit is increased to Rs 2,00,000 from Rs 1,50,000, the net interest outgo will be reduced by Rs 60,000 to Rs 2,17,500 on a loan of Rs 30 lakh at 9.25%. That means, the net interest rate on one’s home loan comes to 7.25%. If the interest rate on home loan comes down to 8%, the net effective interest rate will come down to 6% if the deduction against the interest amount paid on home loan is increased to Rs 2 lakh.

Source : http://economictimes.indiatimes.com/News_by_Industry/Second_stimulus_package_for_realty/articleshow/3893271.cms

Dishman plans JVs with up to 10 foreign cos

AHMEDABAD: Dishman Pharmaceuticals is planning joint ventures with 8-10 global mid-sized companies through joint ventures. As per the plan,  Dishman’s upcoming pharma SEZ near Bavla, Gujarat will house manufacturing facilities of the JV companies.

The pharma major has reserved 40% of the SEZ area (15 lakh sq ft) for the upcoming facilities. Nearly 20% land in the pharma SEZ has been earmarked for setting up captive units. The foundation stone of Dishman’s two SEZs — pharma and engineering — was laid by chief minister Narendra Modi on Tuesday.

Talking to ET, Dishman Pharma managing director JR Vyas said: “Almost 40% land at our SEZ is kept reserved for our future JV projects, which the company intends to start in the next few years.”

According to Mr Vyas, the JVs will be based on an outsourcing format where Dishman would hold a minority stake. “We would use our expertise in manufacturing and management of these units, as per the requirements of our partner,” he added.

According to Mr Vyas, with most international pharma companies scouting for future joint venture partners in India, Dishman’s strategy will help them to leverage the low-cost advantage. Globally, pharma multi-national companies are under pressure to reduce drug prices, following government pressure as well as competition from generic companies.

Dishman’s Pharma and Fine Chemicals SEZ is spread across 15 lakh sq ft, out of which it has occupied about 2 lakh sq ft (20%) for its own pharmaceutical production. The company has already received expressions of interest (EOI) from eight pharma companies, who are keen on setting up their units in the SEZ. These units are likely to take up to 30% space in the pharma SEZ.

Dishman Infrastructure, a wholly-owned subsidiary of Dishman, will execute both the SEZ projects. The company has already pumped in Rs 1,000 crore for both projects and will invest another Rs 750 crore for setting up its own pharma units at the SEZ.

The company expects to begin work by January 2009 and plans to complete it by May 2011. The pharma major also plans to dilute equity in its Swiss subsidiary — Carbogen Amcis — through IPO. “We plan to raise $100 million through IPO,” Mr Vyas added.

Currently, Dishman is one of the major players in the Contract Research and Manufacturing Services (CRAMS) segment in the country with a market capitalisation of Rs 2,258 crore.

“We have set a target to achieved $1-billion turnover by 2013 and believe we are on track to achieve the goal,” Mr Vyas added.

Source : http://economictimes.indiatimes.com/News/News_By_Industry/Healthcare__Biotech/Pharmaceuticals/Dishman_plans_JVs_with_up_to_10_foreign_cos/articleshow/3892557.cms

Hospitality sector: Present tense, future uncertain

For hospitality sector, which began the year with uncorking of champagne, is closing 2008 on a dry note, jolted not only by the global economic downturn but also to a great extent by the Mumbai terror attacks.

Looking back, the year had a perfect start with the then Finance Minister P Chidambaram announcing special five-year tax holidays for setting up of two, three and four-star hotels in his Budget speech.

What followed was investments worth Rs 34,000 crore by as many as 25 companies — existing hospitality groups and new real estate player entrants — through the course of the year, not only for lower segment hotels but also for five-stars and luxury hotels.

The happy state of affairs for the sector in the start of the year was also reflected by the increase in the number of foreign tourist arrivals in India. According to the Ministry of Tourism, January saw a rise of 10.4 per cent, February 11.9 per cent and March 14.6 per cent in foreign arrivals.

The party was, however, short-lived as the global financial crisis cast its long shadow over the industry thereafter. In April itself, the arrivals came down to 9.6 per cent and got worse with each passing month to an all-year low of 1.8 per cent in October, though slightly improving to 2.1 per cent in November.

Adding to the problems was the 60-hour siege of Mumbai by terrorists, in which three of the city’s top hotels – Taj Mahal Palace & Towers, The Oberoi and The Trident – turned into battlefields.

Even travel advisories by various countries, including Canada, Australia, Israel and the US, after the attacks did little to help the sector that was already shaken. However, on December 21, in a typical resilient Indian style, the Trident and the Tower wing of the Taj re-opened.

While it will take a while for inbound tourists volumes to swell after the attacks, thankfully foreign tourist arrivals during the January November 2008 stood at 4.84 million as compared to 4.48 million during the corresponding period of 2007.

In terms of foreign exchange earnings, 2008 also fared better as compared to last year. The January-November period saw a total of Rs 45,647 crore this year as against Rs 39,281 crore in the same period in 2007, up 16.2 per cent.

Despite the setbacks, India managed to attract global firms to invest in its hospitality sector. French hotel group, Accor signed a joint venture pact with InterGlobe Enterprises to set up a series of economy hotels.

UK-based InterContinental Hotels Group also announced plans to open 20 hotels in India with over 5,000 rooms under its different brands, including the InterContinental, Crowne Plaza and Holiday Inn, to complement its existing portfolio of 13 hotels.

Also, US hospitality major Hilton entered into an agreement with India’s largest real estate developer DLF Ltd for managing seven new hotels. Besides, Sri Lanka’s leading conglomerate Aitken Spence acquired four Indian hotels and four resorts with 1,400 rooms in Delhi, Madurai, Trivandrum, Cochin and the Andaman Islands.

Homegrown real estate developers also saw the opportunity and announced plans to enter the sector. Parsvnath Developers tied up with ITC Welcomgroup for developing 50 hotels over a three to five year period with an investment of Rs 2,500 crore across the country.      Unitech also said it would invest Rs 2,500 crore for setting up 35 hotels.

Emaar MGF has announced a Rs 15,000-crore spend for developing hotels in value, mid-market and luxury segments with a total of 26,000 rooms by the end of 2010, besides signing an agreement with the Marriott Group for developing properties in Kolkata and Amritsar.

In their bid to outdo the industry rivals, existing hospitality players announced plans for as many as 250 new properties in various segments with investments to the tune of of Rs 11,000 crore.

These include The Leela Group (Rs 2,000 crore for six hotels), Bird Group (Rs 1,600 crore for 10 hotels), Landmark (Rs 700 crore for three hotels), The Oberoi Group (10 hotels, investments not disclosed), Lemon Tree (Rs 2,150 crore for 18 hotels), Royal orchid (Rs 500 crore for 10 hotels), Ginger Hotels (Rs 100 for 70 properties) and Uppal Group (Rs 500 crore for seven hotels).

Even the government was not far behind saying it would invest Rs 500 crore in developing 20 tourist destinations across the country over the two-three years, apart from initiating steps to improve security arrangements.

The question that remains to be answered is at a time when travelers have tightened their purse string due to the economic slowdown and security concerns, how would the Indian hospitality sector fare in the year to come? Well, that only time will be able to tell.

Source : http://profit.ndtv.com/2008/12/25143039/Hospitality-sector-Present-te.html

Disha Direct’s Investment Square presents two new property projects with 50% returns in 24 months

Disha Direct announces the launch of 2 new real estate investment projects at New Mahabaleshwar & Kasgaon
 
PRLog (Press Release) – Dec 24, 2008 – Mumbai : Investment Square, the real estate expert advisory wing of Disha Direct Marketing Services Pvt. Ltd., is  presenting new real estate  investment opportunities of a lifetime in the form of two extremely high-potential projects: Windmill Heights at New Mahabhaleshwar and ColorScape at Kasgaon.  

The projects, located at two relatively-unexplored yet highly promising destinations  New Mahabaleshwar near Satara and Kasgaon near Shahapur (77km from Mumbai) in Maharashtra, offer property buyers an assured 50% appreciation in value in 24 months.

The New Mahabaleshwar project offers plots of around 10,000 sq. ft at Rs. 30/- per sq. ft., while the plots at Shahapur measuring 3000 sq.ft. each are being offered at a price of Rs. 100/- per sq. ft.

A minimum investment of Rs.3,00,000/- [Rupees Three Lakhs] only is required to book this attractive investment. All investments will be secured by a Memorandum of Understanding (MoU) on a stamp paper acknowledging the investment and duly allotting the area of land against the amount paid by the buyer.

Experts at Investment Square have also devised an irresistible scheme that will make an investment in these two projects a totally win-win proposition for the property buyer. Under the scheme, property buyers will be assured of a buy-back option after 24 months. The iron-clad guarantee from Investment Square goes one step further-property buyers will be issued a cheque, post-dated to the completion of the 24th month from the date of signing of the MoU, bearing value equivalent to 50% higher than the original cost for plot paid by the buyer. Therefore, an investor investing Rs. 3,00,000 will receive a post-dated cheque for Rs. 4,50,000/-. The scheme not only assures buyers that their investment is absolutely safe and secure but also bears testimony to the confidence that Investment Square has on the appreciation potential of these projects.

A. Shyamsunder, CEO, Investment Square says, “This scheme will enable investors to reap high returns in future if they opt to retain the plot and at the same time guarantees a minimum return to those who opt for a buy back of the plot. The product conforms to Disha Direct’s age-old philosophy of presenting destinations that hold great promise and potential of growth and development in the near future. We are confident that the projects presented here will definitely further reinforce our indisputable status as a pioneer and leader in the ‘Second Home’ segment of the highly-competitive realty sector.”

About Investment Square Promoted by Disha Direct, the trusted and reputed name in real estate, ‘Investment Square’ is a real-estate expert advisory that rules out the major risks and strives to change the established thumb rule “high risk-high returns” to “low risk-high returns”. For information on ‘Investment Square’, log on to www.investmentsquare.in

About Disha Direct

Disha Direct is a leading real estate marketing organisation. Its name is synonymous with 2nd homes and leisure properties away from the city. Today it 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 and investment opportunities. Well-equipped with a team of over 180 professionals, 7 brands, 10 offices, 1 international office, 8 completed projects, 28 ongoing projects and 3500 happy customers; Disha Direct is not just an ensemble but a philosophy etched in the minds of many.  For more details, log on to www.dishadirect.in

Source : http://www.prlog.org/10159392-disha-directs-investment-square-presents-two-new-property-projects-with-50-returns-in-24-months.html

SBI: Home loan rates to slash down

The country’s largest lender has given a reason to respite to a huge number of existing and prospective borrowers by reducing its PLR followed by a reduction in its loan rates.

The rate cut has made SBI home loans rates fall to as low as 9%. Home loans of up to Rs 30 lakh with tenures ranging between 15 and 25 years are extended at 9.5% where as loans of Rs 30 lakh to Rs 75 lakh and those above Rs 75 lakh are available at 10.75% and 11% respectively. The most interesting factor in the slab is a 5-year home loan of up to Rs 30 lakh which it will be available at only 9% against the 9.25% rate offered by all public sector banks on government’s command.

However public sector banks are seeking for an interest subsidy for home loans extended to economically weaker sections of the society. They claim that their average cost of deposits which estimate to around 9% is much higher than the lending rates.

In the latest home loan package announced by the government, PSU banks are mandated to offer home loans up to Rs 5 lakh at 8.5% and those between Rs 5 lakh and Rs 20 lakh at interest rate of 9.25%. Hence banking sources say that an interest subsidy of 100 to 150 basis points is required to balance on the low interest rates forced by the government.

A senior executive with PSU said, “The government is already extending a 3 percent subsidy for short-term agriculture loans, while a similar support is being provided for export credit.”

Meanwhile, LIC Housing Finance has also announced a cut of 75 to 225 basis points in its interest rates of home loan up to Rs 20 lakh.

With inflation coming down and cost of fund easing, future prospects for the hosing sector look brighter.

Source : http://www.rupeetimes.com/news/home_loans/sbi_home_loan_rates_to_slash_down_1974.html

Morgan Stanley starts India PE deals

By Narayanan Somasundaram

MUMBAI (Reuters) – Morgan Stanley’s private equity unit has invested $37.5 million (25.2 million pounds) in an unlisted firm in its first transaction in India, and a top official said the firm expected a busy 2009 as the need for capital drives deals.

Morgan Stanley Private Equity Asia took a “significant minority” stake in Indian castor oil maker Biotor and was focusing on healthcare, education, financial services and consumer products, said Srinavasa Rao Aluri, managing director of its India PE unit.

“We have the dry powder, a good team in place and a healthy pipeline, which makes the coming year look interesting,” he told Reuters. “I do hope the activity will be feverish for us next year.”

Two-thirds of a dedicated $1.5 billion Asia fund raised last year was still available, and the firm hopes to deploy a good part of it in India over the next two years, he said without elaborating.

“This is a good time for PEs to make an investment in the country,” said Aluri, who joined Morgan Stanley in May after six years at ICICI Ventures, the private equity arm of No.2 lender ICICI Bank (ICBK.BO).

“You still need to push for a change in the organisation but at least you don’t have the valuation pressures.”

The benchmark share index has tumbled 53 percent so far this year as the global credit crisis cripples market values.

The sharp fall has also depressed share sales, pushing capital-thirsty companies to look to private equity firms with money to spend. 

Private equity and venture capital investments in India rose to $9.7 billion in the first nine months of this year from $9.5 billion a year earlier, according to Venture Intelligence, an Indian deal-tracking firm.

Morgan Stanley would help Biotor, a profitable firm with revenue of about 10 billion rupees, develop and market substitutes for petrochemicals that are used in autos, paints and lubricants, Aluri said.

“Even in this slowdown, we still see growth coming. Its products are drivers of green substitutes for petrochemicals and are used across sectors.”

Source : http://uk.reuters.com/article/stocksNews/idUKLNE4BM05Y20081223?pageNumber=2&virtualBrandChannel=0

Duet acquires three new hotel ventures

According to a report in the Economic Times, UK-based private equity fund, Duet Group acquired three new hotel ventures in India from their bankrupt British owners Starlight Investments and Insureprofit, recently. The acquisition of three companies that owned hotels in Pune, Jaipur and Ahmedabad was made by Duet’s real estate investment arm, Duet India Hotels and it was concluded on December 12. In a distress sale by the UK owners, the assets came at a discount from their current market price, which, according to analysts, is close to Rs 200 Crore.

The two hotel projects in Pune and Ahmedabad are under construction and are likely to be completed next year while the one in Jaipur is almost ready to be opened. Duet acquired majority stake (over 90 per cent) in the three companies owning the hotels from the receiver appointed by a British bankruptcy court. The minority stake was purchased from Alok Vajpayee, chief of financial advisory firm Dawnay Day AV Financial Services, which is a joint venture between Vajpayee and Dawnay Day International. Starlight Investments and Insureprofit owned hotel companies in India directly or through their 100 per cent owned Dawnay Day Group of Companies. Dawnay Day had planned to promote the hotels under the brand ‘Ten Hotels’. Now Duet will take a decision on the branding.

Source : http://propertybytes.indiaproperty.com/?p=3113

Venture Funding in Bihar

A substantial part of India has not benefited from it’s economic growth during the previous 18 years. For instance, Bihar’s economic growth that was very close to the national average in the 1980s, became far lower subsequently.

A World Bank report on Bihar states, that the state experienced zero growth in the first half of the 1990s, and since 1994, when data for divided Bihar became available, annual growth has averaged around 3.8% or about 1% per annum in per capita terms[1].

As a result income and consumption growth in Bihar have lagged seriously thereby increasing the gap between Bihar and the rest of India. Lagging social infrastructure and poor law and order situation have meant that the state has not been able to productively utilize its agricultural as well as human resource base. The total value of output of Agro-based industries in Bihar is less than 1% of the national output, despite the fact that Bihar produces about 10% of India’s total output of common fruits and vegetables. The availability of banking services in Bihar is much below the national average. The Credit to Deposit ratio of banks in Bihar is extremely low (measured at 31.4% in 2004-05), and banks are very reluctant when it comes to providing project financing in the state.

The investment climate in the state is gradually improving. While challenges remain in terms of high regulatory burden,[2]poor power situation and road networks, opportunities exist because of improving law and order perception as well as higher investments in infrastructure. The World Bank is reported to have sanctioned a US$ 225 million debt to the state to support implementation of structural reforms in governance, road infrastructure and agriculture among others. The state has been focusing on building a supportive industrial infrastructure. The table below presents some of the initiatives in the state.

The state has also sought to make investment friendly policies to encourage investments. The Industrial Policy of 2006 aims to ensure accelerated industrial development, with special focus on key industries, catalyze economic growth and ensure balanced regional growth[3]. Its objectives include promoting industries specifically identified as thrust areas – Pharmaceuticals, Drugs and Biotech Industries, Food Processing and Agro-based Industries, IT and IT-enabled services, Eco Tourism/Heritage Tourism/Adventure Tourism/Event Tourism/Medical Tourism and Entertainment Industry. It also puts in place Single Window Clearance systems for the benefit of potential investors.

In all probability, the state will now witness improved growth and entrepreneurial opportunities will emerge. However, given the state of financial services and capital market in the state, financing of entrepreneurial initiatives will present a key challenge. Readily available risk-capital financing is critical for enterprises (and industry) to flourish, more so in areas that are under developed. There has been a growing excitement in microfinance circles about the “microfinance market” in Bihar. Microfinance plays an important role by enabling the poor to build sustainable local scale livelihoods. This augurs well as a substantial proportion of enterprises in the state are unregistered and informal. Infact unregistered units dominate the overall industrial sector in the state, accounting for more than half of its total income. The number of large and medium industries is only 259. Its an imperative that investments be made in scalable businesses in the state for it to move on to a higher cycle of economic activity and income. The average size of a micro-loan is small, and insufficient for promoting a formal enterprise.

It is in this context that a Bihar focused venture fund can serve to promote enterprises and benefit from the potential returns that can be made. Assuming an average investment size of Rs 3 million (US$ 75,000), a Rs 60 million (US$ 1.5 million) fund can support twenty such investments and serve to demonstrate the latent economic potential the state possesses. Importantly, these investments will also help in generating comfort among banks and this will possibly facilitate the flow of loan funds. The key challenges for creating such a fund are:

Finding investors
Creating a Special Investment Vehicle (SIV) with the required regulatory clearances
Advocacy with the government in order to get a “buy-in” from the state
Simultaneously creating a management team that can seek investment proposals or business plans from interested entrepreneurs. 
A fund of this kind will face several challenges in order to provide returns to its investors. Even after investments are made, local enterprises will need hand holding support as well as professional advice on an on-going basis, so that they can scale up. Finding an exit for the fund will remain another challenge. The Securities and Exchange Board of India has approved setting up of a SME stock exchange. Such a stock exchange may provide an exit for the fund, provided the enterprises are able to scale up to listing levels. Trade sales or buy-outs by larger funds are other alternatives that could provide an exit. There is no denying that equity investments made in enterprises in Bihar carry double the risk as compared to equity investments elsewhere. However, the potential returns that could be had not only in Financial ROEs but also in terms of the socio economic benefits these investments could generate is immense.

[1] Bihar – Towards a Development Strategy, 2005, The World Bank

[2] The World Bank defines regulatory burden as onerous regulations and intrusive and disruptive visits from Government officials.

Source : http://jaibihar.com/venture-funding-in-bihar/1493/

HDFC Bank reduces floating interest rate on home loans

Home loan borrowers of HDFC Bank may see a reduction in their EMIs as the bank has reduced floating home loan rates by 50 basis points.

Not only will the existing borrowers avail this benefit but also the new borrowers of up to Rs 20 lakh will get a reduced interest rate by as much as 150 basis points. On the other hand, existing borrowers with loans up to Rs 20 lakh and new as well as old borrowers of loans above Rs 20 lakh will be charged 50 basis points lower than the old rates.

The reduced interest rate will translate an individual’s EMI by a only nominal amount. For a loan of Rs 20 lakh with 20 years of repayment period, EMI would come down by Rs 680. Similarly EMI for loans with same amount and tenure of 15 years and 10 years will be reduced by Rs 660 and Rs 600 respectively.

The move is likely to benefit about 90% of the bank’s retail customers which count to nearly 9 lakh borrowers. The bank official suggest that prospective buyers should opt for a floating rate home loan as there are expectations of further dip in the rates. MD and VC of HDFC, Keki Mistry said, “Earlier this week, we raised medium-term funds at an annualised rate of 9.5-9.6%. If there is a further reduction in the cost of funds, we will pass that on to our borrowers.” Fixed rate home loan of the bank stand unchanged at the original position.

The high value loans of the bank that are termed to be above Rs 20 lakh will be offered at 11.25% against 10.25% rate charged for loans below Rs 20 lakh.

Source : http://www.rupeetimes.com/news/home_loans/hdfc_bank_reduces_floating_interest_rate_on_home_loans_1973.html

Desi retailers set to cash in on realty slump

KOLKATA: A clutch of big-ticket retailers, such as the Future Group, Landmark and Essar Retail, have accelerated expansion plans, taking advantage  of a 30-40% slump in real estate rentals. At a time when much of the organised retail is downsizing amid poor consumer sentiment, these companies are using the opportunity to acquire prime space cheaply and position themselves for an eventual upturn.

More so, since real estate accounts for the largest portion of a retailer’s operating cost. Analysts claim the less leveraged retailers, who have remained conservative in their expansion plans over the past few months due to high rentals, are now going ahead full steam.

“True retail spending has slowed down in India, but still it is not so much affected as in the West, considering the fact that India’s growth story is largely intact. The current rental correction provides the best opportunity for retailers to keep their operating costs under tight control,” retail consultancy Technopak Advisors chairman Arvind Singhal said.

Landmark has started signing up property for six new stores. “This is nearly double the number of stores we usually set up in a year. We are even looking at up-market areas which previously didn’t even made much sense. All the six stores will come up in metros,” said Landmark COO Himanshu Chakrawarti.

Mr Singhal says the realty cost needs to be less than 10% of the turnover for apparel retailers to maintain profitability. For book and music retailers, realty costs need to be less than 7-8% of turnover and less than 4-5% for food and grocery retailers.

Future Group has plans to add some 6 million sqft by June 2009 to its existing 11 million sqft area of operation. Essar Telecom Retail CEO and director Rajiv Agarwal said the current realty market provides a lot of opportunity to rationalise cost.

Source : http://economictimes.indiatimes.com/News/News_By_Industry/Services/Retailing/Desi_retailers_set_to_cash_in_on_realty_slump/articleshow/3876785.cms

Pune’s Kumar Builders raises PE funding of Rs 239 crore

Kumar Builders is looking at PE investment for the third tower of its IT park.

Kumar Builders, a leading real estate group in Pune, has received private equity investments worth Rs 239 crore for two of its projects. It has received an investment of Rs 139 crore from IL&FS and the Milestone Group for Kumar Cerebrum, a 10 lakh-square-foot IT park. IL&FS and the Milestone Group have invested in the second tower of Kumar Cerebrum.

Earlier, the developer received a private equity funding of Rs 100 crore from Gaurav Dalmia’s Landmark Holdings for its 124 acre IT SEZ project in Hinjewadi. Landmark Holdings picked up 10% stake in the in the project for the investment.

The project coming up in Kalyani Nagar, a high-end locality in Pune, plans to build three huge towers with a total space of 10 lakh quare foot. Pune based Zavaray Poonawalla invested in Tower 1 and Kumar Builders is looking at PE investment for the third tower as well. The third tower is the largest of the three buildings and is currently under completion. The second tower has been leased out to Reliance Communications, Vodafone Cellular, Finserv and Redknee India Technologies,” a press release said.

The SEZ/ township project in Hinjewadi is a Rs 1,500-crore project, expected to be launched in April 2009. The development is equally divided into an IT/ hardware SEZ and a residential complex. This will be launched in phases with Phase I, comprising IT buildings in the SEZ, coming up in 15 months from the launch.

Source : http://in.reuters.com/article/indiaDeals/idINIndia-37157420081223

Banks Allure NRIS into Real Estate with New Schemes

The booming real estate market in the country has prompted industry players to introduce a slew of innovative products to people willing to pay. From real estate developers to real estate fund managers, from banks to housing finance companies, it’s a party time for all. But behind those euphoric times, some banks, with operations in India and outside, are offering innovative products to non-resident Indians (NRIs), which could turn tricky in case Indian real estate market falls into a trough, sources said.

It involves the foreign and Indian operations of the same bank, the NRI and his friends, relatives and associates based in India. To start with, NRI, with the help of his friends and others, establishes an Indian company that could do business in the real estate sector. Now the bank in India gives some loan to the company to buy land in India.

On the other hand, the NRI keeps a fixed deposit with the wealth management division or private banking arm of the same bank’s overseas operation. Unofficially, the foreign branch of the bank, with FD in its books, stands guarantee to the loan given by the bank’s Indian operation to the company set up by the associates of the NRI. But the same is not officially shown as a guarantee in the books of the two branches involved. As per current FDI rules in real estate, any residential project in which foreign money in invested, should be on a land measuring 25 acres or more. For commercial properties, the minimum stipulated area should be 50,000 square metres.

However, market players said with the realty boom, NRIs find it tough to get land at market rate. Whenever the seller gets to know foreign money is involved, they demand prices higher than the market rates. The rates go up further when sellers get to know that the buyer wants adjoining plots which should aggregate at least 25 acres.

In such a situation, the company established by the associates of NRI buys smaller plots of adjoining land without raising the rates much or even raising suspicion of the sellers that an aggregation is on play or even foreign money is involved. Once enough number of plots are bought, those are aggregated (to at least 25 acres) and the company then transfers the same to the NRI to comply with FDI rule. While the NRI pays back the bank in India, his FD kept in the bank overseas is also released at the same time.

Source : http://www.indianrealtynews.com/nri/banks-allure-nris-into-real-estate-with-new-schemes.html

Private equity funds expect tougher year ahead

Private equity (PE) deals in India may further slow down in 2009 as raising funds is getting tougher and marginal players are feeling the pressure of exits.

According to Grant Thornton, the global accountancy firm, the value of PE deals is expected to shrink over 40 per cent during 2008. Between January and December 15, 2008 the value of PE deals was estimated at $10.42 billion, as against $19.03 billion in 2007.

“Marginal players and hedge funds are already on their back foot,” said Kotak Private Equity Group Nitin Deshmukh. “Next year the number of deals will be fewer as the number of players will come down,” he said suggesting that the small players will exit the business.

The economic crisis in the US and its global consequences has brought down the value of stocks in almost all markets. It has made the high net worth individuals and other contributors to private equity funds re-align their portfolio and only PE players with a long and proven record are able to raise funds. “It is not an easy time to raise funds. Everyone is worried about the fate of his money,” said an executive who is hoping to raise $1 billion corpus.

This year there were 306 PE deals down from 405 achieved in 2007, according to Grant Thornton data.

“Extreme volatility has made the life of investors difficult. If the stock markets remain stable for the next six months, with not more than 10-15 per cent growth, PE deals will come back as the expectation of promoters (in terms of valuations) will also get rationalised,” said Ambit Pragma CEO Rajeev Agarwal.

“Vauations have come down and we expect more deals next year from the players who have money,” added India Equity Partners Managing Director Sudarshan Sampathkumar.

PE players expect the realistic picture on investment to emerge from the second quarter of next year.

Source : http://www.business-standard.com/india/news/private-equity-funds-expect-tougher-year-ahead/00/11/344035/

Go for floating-rate home loan

MUMBAI: Home loan customers are finally heaving a sigh of relief. They have been waiting for interest rates to soften. Many of them have been  planning to switch over to a fixed rate regime from floating one. That would ensure peace of mind in the time of uncertainties, they hope. Ditto for prospective home buyers who have been waiting for both real estate prices and interest rates to ease a bit. Here too many are keen to avail of a loan with a fixed interest rate. Again, for peace of mind.

But is it the right strategy? Opting for or converting to a fixed rate loan when the interest rates are showing signs of easing don’t look a great idea, though. “The interest rate cycle has peaked and rates are showing a downward trend at the moment. Going for fixed rate at this juncture would be a very bad idea,” says Kartik Jhaveri, director, Transcend Consulting, a private wealth management firm. “The rates will continue to fall in the next two to three years. If you go for a fixed rate now, you would miss out on the benefits of further falls in interest rates,” he adds. According to him, the rule applies to prospective buyers as well. “If they can afford, buyers should wait for some more time. The real estate prices should fall more, as builders are holding on to their rates and offering indirect discounts,” says a housing industry expert who doesn’t want to be named. “It’s only a matter of time before they blink. By that time interest rates would also ease further,” he adds. He also hastens to add that even if a person wants to buy right away, he or she should not go for a fixed rate. “There would be many sharp reductions in the future,” he adds.

Several financial experts share that opinion. But what makes them think the rates are going to come down drastically in the coming months. “There is scope for more policy rate cuts by the Reserve Bank of India, including the repo and reverse repo cut. Though RBI has taken some monetary easing measures earlier, banks haven’t passed on the benefits to customers in the same proportion,” says Sachidanand Shukla, chief economist, Enam Securities. “Due the RBI intervention in the foreign exchange market, bankers were not sure about the liquidity position. However, in the next quarter there would be a fall in demand for funds and banks would respond more aggressively,” he adds.

According to financial advisors, the signs of it are already there to see. “Banks have started reducing the deposit rates to bring down their borrowing cost. Now, they will pass on that benefit to customers in the form of aggressive cuts in their lending rates,” says Shukla.

Source : http://timesofindia.indiatimes.com/Business/India_Business/Go_for_floating-rate_home_loan/articleshow/3876226.cms

BoI, BoB reduce lending, deposit rates

Shortly after India’s largest lender, SBI slahsed its interest rates, two more public-sector banks – Bank of India and Bank of Baroda on Monday reduced their lending, deposit rates from January 1.

Both banks today reduced their prime lending rates by 0.75 per cent each to 12.5 per cent.

The reduction in PLR will provide relief to both the existing and new customers of these banks including education, auto and home loan borrowers, bank officials said in Mumbai.

The banks have also reduced their deposit rates in the range of 0.5-1 per cent across various maturities.

Other state-owned lenders, which have cut their interest rates in the recent period include Union Bank of India and Canara Bank.

In the private sector, the country’s largest housing loan financer, Housing Development Finance Corporation and leading private sector lender, Bank of Rahasthan had cut their lending rates last week.

BoR today announced a cut in its deposit rates except in the 91-120 days maturity.For 91-120 days maturity deposits, customers will now get 1.25 per cent more interest effective from December 22, the bank said.

State Bank of India had announced a 0.75 per cent cut in its prime lending rate and a 0.25-1 per cent reduction in deposit rates last week.

With this, State Bank’s PLR now stands reduced at 12.25 per cent.

Source : http://profit.ndtv.com/2008/12/22174600/Bank-of-India-cuts-lending-de.html

RBI nod to foreign VCs, but sectors limited to 10

The restrictions may hamper the growth of VC activity and discourage foreign investment in India

Mumbai: The Reserve Bank of India, or RBI, recently started approving applications from foreign venture capital investors (FVCI) that were kept on hold for a considerable period of time. While this led to some excitement among the applicants, it was short-lived.
In what has surprised the venture capital (VC) firms, the approval letters issued by RBI to FVCIs provide for a new clause that significantly curtails the investment horizons for such entities to a narrow band of 10 investible sectors. These include infrastructure, biotechnology, information technology, nanotechnology, research in new chemical entities in the pharmaceuticals sector, dairy and poultry industry, among others.

The sectors prescribed are similar to those provided under section 10 (23FB) of the Income Tax Act, 1961, for availing tax pass-through treatment for domestic VC funds.
Illustration: Jayachandran / MintThe intention behind introducing the FVCI regime was to provide such investors a favourable investment environment in India, in comparison with foreign direct investment (FDI), as envisaged by the KB Chandrasekhar Committee Report of January 2000. The report emphasized the importance of sectoral flexibility for FVCIs and noted sectoral restrictions for investment by VC funds are not consistent with the start-up ventures that are built on innovation and technology and can emerge in any business.

Then, the sectoral restrictions prescribed are likely to create unnecessary obstacles and hamper the growth of VC activity. Further, it seems that the regulators do not wish to promote VC investment in several other sectors, including manufacturing, media, outsourcing, among others, many of which are still in a growth phase, have dearth of capital, and have high employment generation capabilities.

If FVCI investment in the real estate sector was indeed a concern to the regulators, we believe that the same is unfounded as RBI has been disallowing applicants from investing in real estate since 2006. To our understanding, it has not cleared any real-estate-focused FVCI applications.

The regulator may have intended to bring the investment opportunities open to FVCIs on the same footing as domestic VC funds, but effectually this is not the case. In fact, this has led to the creation of more disparity between offshore and local funds since domestic VC funds are allowed to invest in all sectors, except a small negative list of sectors.

Some of the offshore funds have been sector-specific and target a few industries. Had such funds known at the time of making the application that such restrictions will be prescribed, they may not have continued with the applications, assuming they do not focus on the sectors prescribed by the regulators. However, several other funds have been sector agnostic and typically spell out broad investment horizons as their investment strategy. The intent being to invest in sectors that provide growth opportunities and the VC is able to provide a value addition through management support, and to take the investee entity to the next level. It is highly unlikely that these funds alter their sectoral focus based on the regulator’s move.
Specifying sectors without any definition ascribed to them further adds to the investors’ woes. While infrastructure is recognized as a crucial input for economic development, lack of clear definition leaves it omnibus and deters investors who are unclear about what it includes and, critically, excludes.

Globally, there is a fight for capital and given the present scenario in financial markets, it is imperative that VC investors be encouraged as they bring long-term capital to portfolio companies. The new restrictions may discourage foreign investment in India by sending negative signals in terms of consistency of the regulations and the regulators’ willingness to attract foreign investment.

Source : http://www.livemint.com/2008/12/23001331/RBI-nod-to-foreign-VCs-but-se.html

DLF unveils retail plans, targets $lb revenue in 5 yrs

DLF is targetting a billion dollar in revenue from its retail operation in five years, DLF Brands MD Kelvin Coyle said on Thursday, as the company unveiled its retail plans and tie-ups with five international brands Boggi, Alcott, Piquadro, Sia Home fashion and Sun Glass Hut.

DLF, which plans to have a portfolio of 15-16 brands, 600 stores and generate 15,000 jobs in five years, says the current slowdown hasn’t impacted its retail plans.

“It’s going to be tough times and we will be very cautious. But our initial plan hasn’t changed. The slowdown also represents an opportunity for retailers to do things differently. And India still remains an attractive destination compared to a recession-hit developed world,” said DLF Brands vice-chairman Timmy Sarna.

DLF Brands, a wholly-owned subsidiary of the largest listed real estate company DLF, has formed joint ventures with Italian menswear brand Boggi and Italian luggage brand Piquadro. It has franchise agreement with Italian apparel and accesories brand Alcott, Sia Home Fashion of France and leading sunglass retailer Sun Glass Hut. ET had first reported on DLF’s tie-ups with these international brands in previous months. DLF plans to shortly finalise tie-ups with other foreign brands in kidswear and toys categories.

DLF has had no experience in retail, but still managed tie-ups with several international brands purely because of its real estate strength. “DLF Brands doesn’t get any concessional rentals in DLF malls. But we get preferred locations,” said Mr Sarna. The added advantage for foreign brands is that they always get majority stake or the driver’s seat in alliance with DLF.

Source : http://propertybytes.indiaproperty.com/?p=3106

Realty Market Ripe for NRIs

For the Gulf NRIs weighing his options diligently and with foresight, some attractive opportunities are on offer in the real estate sector. Consider these facts: Lenders are slashing home loan rates; Prices of real estate have slipped in tandem with the stock indices; Recession in the United States and Europe has forced many NRIs to rethink their property investment plans in India leaving thousands of plush homes in ‘NRI colonies’ without buyers. There has been a drop of 50-60 per cent bookings by the NRIs over the last three months owing to tight liquidity conditions in the international markets, top realty players told Sunday Economic Times. If 100 bookings were being made earlier, today that’s not more than 30. There have been atleast 15-20 percent cancellations over the last few months. Developers expect the situation to continue till the liquidity situation improves in foreign markets.

This one time at least, NRIs in the Gulf have an advantage over those in the West as the GCC economies have been much less affected by the meltdown. Apart from some layoffs, there has not been much adverse action such as slashing of earnings. Unlike those in the West, it is unavoidable for the Gulf NRIs to have a home of their own – not necessarily their ancestral home which they left behind, but a more modern and better-equipped place like the homes available in the many housing complexes developed exclusively for NRIs across the country.

NRIs, even those in the Gulf, get accustomed to certain amenities which they wouldn’t mind having back home as well. They need to have malls, multinational restaurants, high-end entertainment areas, good hospitals and schools and maybe even a golf course when they return to settle here permanently. And, that may be sooner than one had planned. At this point, with the US and UK biggies pulling out, such homes may be available at heavy discounts. Then, the second bit of good news. Home loan rates have begun their southward journey, following a fresh initiative from the Reserve Bank of India (RBI). HDFC (Housing Development Finance Coporation), India’s biggest home loan provider, has taken the lead and lowered the rate it charges for all loans and deposits by 50 basis points.

The Mumbai-based finance company will charge 10.25 percent for loans of up to Rs 2 m effective Dec. 22. The rate on loans of more than Rs 2 m was reduced to 11.25 percent. The lending rates have been cut as a result of a reduction in funding costs. State Bank of India and other banks have cut rates after the central bank lowered a key interest rate three times since October to 6.5 percent. Interest rates are headed down and the cost of borrowing bulk deposits has fallen by 200 basis points over the past two weeks.

India’s public sector banks said earlier this week that they plan to offer home loans of up to Rs500,000 at 8.5 percent. The rate will be limited to 9.25 percent for borrowers seeking loans of Rs500,000 to Rs2m for a five-year term. NRI home loans are loans available to Non-Resident Indians for the purposes buying houses that are under construction or for sale. They can also be availed to buy a plot of land or to renovate/improve an existing property. The home loan rate charged by an NRI does not differ much by the interest rate charged by an Indian for his home loan but the tenure for such loans differs to a great extend. NRI home loans are extended for much shorter period as compared to the normal home loan. The loans tenure for NRIs extends from 7years up to a maximum tenure of 15years where as the maximum tenure for a resident is from 25 to 30 years. Also an NRI cannot opt for a loan tenure that exceeds beyond his retirement age or 60years, which ever is earlier.

Besides an NRI can only get 85 per cent of the loan amount and the remaining 15 percent has to be brought himself by the borrower. The loan amount depends on the individual’s gross monthly earnings. This amount is normally up to 36 times of the gross monthly income but there is also a maximum limit on this amount.

The real estate market in India might be facing one of its worst slowdowns, but its position relative to markets in the rest of the Asia Pacific region remains promising. In terms of investment, Bangalore, Mumbai and New Delhi are all new entrants to the top 10 markets in the Asia Pacific at fourth, seventh and ninth place respectively by PricewaterhouseCoopers.

Yes, prices are low. So, it is wise to start planning a real estate investment now or wait for the market to bottom out. Quite obviously, the latter would seem logical. However, how can one tell where’s the bottom? “The problem is that everyone is trying to catch the bottom, and that is what needs to change,” says Anshuman Magazine, Managing Director of CB Richard Ellis in India, a global real estate consultant. Prices may or may not drop further. Unlike the United States or the United Kingdom, there is no 30 years old data that is available here for prediction purposes. Also, whatever data is available; it is difficult to verify its authenticity. Therefore, the consumer should not go by the expectation that prices will fall further, because there is no way to know for certain.

Source : http://www.indianrealtynews.com/nri/realty-market-ripe-for-nris.html

PE investment fires up Pune’s realty market

The city’s cooling real estate market has witnessed two major transactions recently. Kumar Builders, a leading city-based developer, has  received Rs 139 crore investment for its one building — part of a three-tower development — from IL&FS Milestone Group, a private equity fund.

Additionally, the developer-builder has received private equity funding of Rs 100 crore for its 124-acre development at Hinjewadi from Sanjay Dalmia’s Landmark Holdings, giving the latter a 10% stake for the investment. Analysts said this was part of the emerging trend — of builders bringing in investors to take completed projects off their hands.

The funds, thus raised, provide them the much-needed liquidity to complete other projects in hand, with bank funds drying up. Moreover, builders would rather sell the building than go for continuing revenue streams in the form of rentals, in a declining rental scene. Kumar Builder’s chairman Lalit Kumar Jain said: “This infusion of funds will help us service current projects.”

Kumar Builders’ three-tower IT Park at Kalyaninagar is a 1 million sq ft development. IL&FS and the Milestone Group have invested in Tower 2. City-based Zavaray Poonawalla has invested in Tower 1. Talks are on for a similar deal for Tower 3.

The entire three-tower development comprises 10 lakh sq ft, the first two towers being 3 lakh sq ft each and the third tower alone comprising 4 lakh sq ft.

“Tower 3 is the largest of the three buildings and it is under completion. We are in talks with other Indian PE funds and expect to close the deal soon. The funds we raise through these investments in completed projects will be used for the SEZ / township project,” Mr Jain said.

The 124-acre proposed SEZ / township at Hinjewadi is a Rs 1,500-crore project, slated to be launched in April 2009. The development is equally divided into an IT/ hardware SEZ and a residential complex. Landmark Holdings has invested in this project.

“Our plot is centrally located, across Infosys and adjoining Cognizant Technologies,” Mr Jain said, explaining the location. “This will be launched in phases with Phase I, comprising IT buildings in the SEZ, coming up in 15 months from the launch,” he said.

Source : http://economictimes.indiatimes.com/Market_News/PE_investment_fires_up_Punes_realty_market/articleshow/3871676.cms

Housing demand to pick up in New Year: LIC HF

MUMBAI: Housing demand, which has remained subdued in 2008 due to high prices and interest rates, is likely to pick up in the New Year in the backdrop of a declining interest rate regime, a leading home finance company said.

“Although there is a temporary slowdown, the demand for housing will increase in 2009,” LIC Housing Finance Director and Chief Executive, Mr R R Nair said here.

While he would not predict price movements in the realty sector, Mr Nair said that there was a “possibility” of them increasing.

Advising buyers not to delay their home purchases in the hope of a fall in prices, Mr Nair said, “Builders may start jacking up prices once they liquidate their inventories. “Now, rates have started falling. Builders might wait for a while, for two mont hs or so, to liquidate their inventories. After that, it is anybody’s guess (on a likely price increase),” Mr Nair said.

“To me, it appears that this is the right time (for home-buys),” he said.

Asked whether the sector was facing a slowdown pan-India, Mr Nair said that this phenomenon was confined only to a few pockets and was not an all-India problem.

“There might be slowdown in a few pockets, including Mumbai and Bangalore, but there is no problem elsewhere,” he said. Asymmetric price hikes in a few regions was the main reason for the slowdown, he said. – PTI

Source : http://www.thehindubusinessline.com/blnus/17211508.htm

Affordable housing next focus for developers

New Delhi (IANS): The slowdown in property market will see developers focusing more on mid-range and affordable housing with a considerable correction in prices of existing residential projects, says a recent survey by an industry lobby.

The Federation of Indian Chamber of Commerce and Industries’ (FICCI) survey on ‘Impact of Global Financial Crisis on Indian Real Estate Market’ says while scarcity of funds has affected the supply side, high interest rates have led to demand dwindling.

“The corporates are postponing their expansion plans as they are expecting the prices to fall further. There is time and cost overrun in the existing projects, while new projects are being deferred. This would eventually lead to a reduction in price in the coming four quarters and the market is expected to turn in favour of the end user,” the survey report says.

The survey says developers also seem to have finally realised the need for affordable and mid-range housing with emphasis on the quality of product to survive the current slowdown, as there is a dearth of low-cost affordable units that will be the main focus of investors.

“Due to higher risks of investing in real estate, the real estate sector will witness lower PE (private equity) deals in the next 12 months, as funds will not be easily accessible, valuations are expected to go down further and the costs are going to be very high for developers,” the survey says.

“PE funds will put forward their own terms and conditions like guarantees and assured rates of return. In view of higher risks due to adverse market conditions and the ongoing financial crisis, investors expect internal rate of return (IRR) of above 25 percent from Indian real estate projects,” it says.

To fight the impact of slowdown, FICCI has proposed an eight-point agenda to boost the realty sector and help the foreign direct investment in this sector.

The FICCI agenda includes policy changes like availability of adequate and cheap long-term finance, simpler legal framework, single-window clearance, land reforms, incentives for housing projects, check on speculation in land prices and stricter laws for defaulting developers to boost confidence of consumers.

Home loans under this scheme should be offered till March 2010 and not till June 30, 2009 to encourage buyers to return to the market.

Private sector banks should also follow suit by cutting down interest rates on home loans significantly to benefit both existing and potential home loan customers.

FICCI is of the view that as the right climate for a revival of real estate sector has set in now, banks should consider lending funds to developers selectively so that existing and new projects do not face significant delays.

Source : http://www.hindu.com/thehindu/holnus/006200812211431.htm

Corporates now prefer service flats to hotels

AHMEDABAD: At a time when the effects of recession have left the hotel industry battered and bruised, its younger cousin, service apartment India’s best hotels Weird attractions business, has continued to remain an attractive option for corporates, especially for those who cannot dispense with executive travel.

Already on a cost-cutting mode, a number of corporates have preferred tying up with operators of service apartments which are 20-40% cheaper compared to hotels. According to global real estate consultant, Jones Lang LaSalle Meghraj (JLLM), there has been a 7% increase in such tie-ups in the last six months, when recession took root in the country. Eyeing the future potential, some of the organised players in this segment like Royal Orchid and Signature Crest have also chalked out expansion plans.

“There has been a marginal increase of about 7% in such tie-ups. The economic slowdown has given pause to most cross-border business activities, but service apartments are still a popular option with corporates that cannot dispense with executive travelling,” says JLLM managing director (west) Pawan Swamy.

Though business travel has reduced in the last few months, Mr Swamy feels that the service apartments have remained a relatively attractive option because of the its advantage compared to hotels.

“There can be between 20-40% saving, especially with corporate discounts. Moreover, service apartments offer business travellers facilities such as fully-equipped kitchen with self-catering facilities, various bedroom choices, lounge and relaxation areas, etc. Another cost-effective factor is that in service apartments, occupants save on the bar bills, inflated internet and telephone charges as well as restaurant bills that typify most hotels in the 4-5 star category,” Swamy remarked.

Organised player Mumbai-based Signature Crest plans to open 400 more rooms in the next two years, which will be in addition to the 160 rooms its currently operate in 18 destinations.

“In the past couple of months, there has been a fresh inflow of guests. Our occupancy rates, which had dipped to 40%, has now bounced back and is now about 75%. The credit goes to inflow of corporate clients who have opted for service apartments instead of the more-expensive hotel, said Travelorg Holidays’ CEO Venkatesh K.

The parent company operates service apartment chain under the brand Signature Crest.The firm which largely operates on a lease and franchisee model and offers facilities that can be compared with 3-4 star category hotels (with rentals in the range of Rs 1,500-Rs 2,500) has tied up with about 25 corporate clients in the last three months.

“Of the total 120 tie-ups we have with corporates, about 22-25 have happened in the last three months,” said Venkatesh, adding that his company plans to capture the high frequency of business travellers to Gujarat by opening 80 rooms in the state (in next two years), most of which will be spread across Ahmedabad, Vadodara and Surat.

Meanwhile, in order to tap the growing demand for service apartments among expatriates and corporates, Bangalore-based Royal Orchid Hotels is launching a 96-room service apartment project at Whitefield. “These apartments, which will become operational by the end of this month or the first week of January, will offer services that are comparable with four-star category hotels,” said Keshav Baljee, vice-president , Royal Orchid that currently operates 12 hotels.

According to Mr Baljee, though Bangalore offers a huge potential for the growth of service apartments, but they lack in quality. “Most of the apartments are in the unorganised sector, are unbranded and offer poor quality of services,” he added.

Source : http://economictimes.indiatimes.com/Corporates_now_prefer_service_flats_to_hotels/articleshow/3872717.cms

ITC, Accor eye Unitech hotels

Diversified business group ITC, international hotel chain Accor and some high net worth individuals are in the race to acquire six hotel 
properties owned by real estate major Unitech.

The country’s second-largest real estate player after DLF wants to exit the hotel business as a severe financial crunch has hit the company’s core business activity and crimped its plans to raise funds.

According to a banking official close to the development, ITC, which is currently sitting on healthy cash reserves of about Rs 15,000 crore, plans to acquire hotels in most categories ranging from three-star to seven-star. The group’s inorganic growth strategy has been prompted by attractive valuations in the sector, the sources added.

When contacted, an ITC spokesperson said, “We don’t comment on market speculation.” Sanjay Chandra, managing director, Unitech, said, “No deal has been yet concluded as far as our hotel properties are concerned. Some high net worth individuals and business houses have shown an interest.” He however denied any direct negotiations with the ITC group.

The realty major has reportedly mandated I-Sec to scout for a buyer, although the company didn’t comment on this matter.

The increased interest comes amid recent reports that auto components major Amtek Auto is in the race for Unitech’s hotels. Amtek has stoutly denied the report. Banking sources said while companies in unrelated areas may not be interested, a proprietary investment company owned by the promoters could be a vehicle for such an investment.

It is learnt that international hotel chain Accor is keen to enter the race, while Delhi-based high net worth individual Ashok Kapoor has also thrown his hat into the ring.

Unitech is looking at divesting its entire stake in the six properties comprising 1,000 rooms. It has scaled down its planned investments in the hotel business from 15 hotels with 2,500 rooms to a mere six hotels consisting of 1,000 rooms.

ITC chairman YC Deveshwar had recently said the group is weighing options to buy hotel assets and has earmarked Rs 15,000 crore over the next five years to expand its hotels, FMCG and agri-businesses.

Unitech’s first hotel project, scheduled to open by 2009, will be a 199-room mid-market property to be managed by Marriott. It will sport the Courtyard brand.

Two other hotels, for which Unitech has management tie-ups with the Marriott and Carlson chains, will be ready in one-and-a-half years. The company had planned to raise $350 million for the hotel business through the private equity route. However, the global credit crisis has made it difficult for real estate firms to raise funds.

Source : http://economictimes.indiatimes.com/News_by_Industry/ITC_Accor_eye_Unitech_hotels/articleshow/3871873.cms

State Bank to offer cheaper loans from New Year

Mumbai, Dec. 20 Come New Year, State Bank of India’s borrowers, both retail and corporate, will have something to cheer about. India’s biggest bank has decided to slash its benchmark prime lending rate (BPLR) by 75 basis points to 12.25 per cent with effect from January 1, 2009.

Depositors, however, will be disappointed as the bank has decided to cut interest rates on deposits by 25-100 basis points across various maturities beginning New Year.

“The cut in BPLR will benefit all floating interest rate loan borrowers. Within the retail segment, home loans, auto loans and personal loans will see a downward revision. Even corporate loans across-the-board will get re-priced,” said a senior official from the bank.

SBI’s BPLR is currently the lowest in the Indian banking sector. BPLR is the benchmark interest rate at which the highest-rated corporate can borrow from the bank.

The bank is likely to take a hit of about 4-5 basis points on its Net Interest Margin, he said. In the quarter ended September, the NIM was at 3.16 per cent.

The highest interest rate that a depositor can get from SBI from January 1 is 9 per cent on the 1,000 days deposit. This deposit currently earns 10 per cent interest.

SBI has cut interest rate by 25 basis points on deposits in two maturity buckets – two years to less than 1,000 days and 1,001 days to less than three years to 8.75 per cent each.

The bank has cut interest rate by 50 basis points on deposits in three maturity buckets – 15 days to 45 days (4.25 per cent), 91 days to 180 days (6.50 per cent), and five years and up to 10 years (8.50 per cent). In the case of two maturity buckets, the interest rates have been pared by 75 basis points –181 days to less than one year (7.25 per cent) and three years to less than five years (8.50 per cent).

SBI has slashed interest rates by 100 basis points in the case two maturity buckets – one year to less than two years (8.50 per cent) and the 1,000 days deposit (9 per cent).

Among other banks that cut lending rates were Union Bank of India, which also cut PLR by 75 basis points to 12.50 per cent with effect from December 8, 2008. The bank also decided to reduce its deposit rates across various maturities by 50 to 150 basis points with effect from January 1, 2009. The maximum interest rate is capped at 8.75 per cent for the term one year and above.

Private sector HDFC Bank, too, announced a two-tranche cut of 25 basis points each in its BPLR to 16 per cent, on December 15 and January 1, 2009.

Earlier this month, the RBI Governor, Dr D. Subbarao, announcing the ‘Growth Stimulus’ package, had said, “We hope that the measures announced today encourage banks to cut lending rates. The financing cost, transaction cost, and administrative cost of passing on this money should be as small as possible.”

Taking the cue from RBI, banks have started cutting lending and deposit rates.

BANKs CUT MSME loans
Canara Bank, Corporation Bank, Allahabad Bank and Syndicate Bank have reduced the rate of interest on loans and advances to Micro, Small and Medium Enterprises.

For micro enterprises, these banks have reduced the interest rate by 100 basis points and for SMEs, by 50 basis points.

Source : http://www.thehindubusinessline.com/2008/12/21/stories/2008122150840100.htm

SBI to give home loans for as low as 9%

NEW DELHI: Come new year, home loans will get cheaper, but you will also have to settle for lower interest on bank deposits. SBI on Saturday 
announced cuts in prime lending rates (PLR) by 0.75 percentage point and deposit rates by upto one percentage point effective January 1, 2009.

The cut in PLR means that even existing customers who have borrowed at floating rate will see a dip in EMIs. After the rate cuts, SBI home loans of up to Rs 30 lakh, for tenures between 15 and 25 years, will be available at 9.5%, loans of Rs 30 lakh to Rs 75 lakh at 10.75% and those above Rs 75 lakh at 11%. Interestingly, for 5-year home loans up to Rs 30 lakh the rate will come down to 9%, which would be lower than even the concessional rate of 9.25% offered by public sector banks at the behest of the government.

The rate cuts announced by SBI are bound to lead to similar cuts by others in the home loan business, which is good news not just for prospective home buyers, but also the beleaguered real estate sector.

Meanwhile, LIC Housing Finance too announced a 0.75-2.25 percentage point cut in its lending rates for home loans upto to Rs 20 lakh from December 17. A CMD of a public sector bank said that as inflation falls, the deposits and lending rates will continue to move downwards. The cut in rates is a result of the recent fall in cost of funds from the market, a senior SBI official said, and also indicated that the rates could fall further.

SBI also cut deposit rates downwards by 0.25 to one percentage point across various maturities effective from January 1, 2009. The maximum cut was in special deposits of 1,000 days, where the rate has been cut by one percentage point to 9%. For 3-5 years maturity, the deposit rate has been cut by 75 basis points to 8.5%.

Top bankers said the current spate of rate cuts was the outcome of a drastic fall in the rate of inflation as well as a series of concerted efforts by the government and the Reserve Bank of India to infuse liquidity into the economy. Over the past three months, RBI has not only pumped in large quantities of money into the economy but has also cut key policy rates.

The government, on its part, also infused Rs 4,000 crore into the housing sector through National Housing Bank (one of the reasons for LIC Housing Finance cutting its rates) and forced PSU banks to slash home loan rates for new loans of up to Rs 20 lakh.

The steps taken by the government and the RBI were also aimed at reviving the housing sector which is struggling because of the slowing economy.

Source : http://timesofindia.indiatimes.com/Business/India_Business/SBI_to_give_home_loans_for_as_low_as_9/articleshow/3867304.cms

LIC Housing Finance slashes lending rates

MUMBAI: On the heels of public sector banks slashing home loan rates, LIC Housing Finance has announced a 1.75-2.25 percentage point cut in lending rates for home loans up to Rs 20 lakh from December 17.

“We have reduced our lending rates with effect from December 17. For a five-year term, our lending rate for loans up to Rs 20 lakh is 9.25 per cent and for those beyond five years, the rate will be 9.75 per cent,” LIC Housing Finance Director and Chief Executive R R Nair told PTI here.

For loans above Rs 20 lakh, the rate has been reduced from 11.50 per cent to 11.25 per cent, Nair said. Public sector banks recently cut their lending rates on home loans up to Rs 5 lakh to 8.5 per cent and loans of Rs 5-20 lakh to 9.25 per cent for the first five years, after which the lending rates will be reset.

The scheme, which is applicable for loans taken till June 30, also offers free life insurance cover and exemption from pre-payment penalties to borrowers in these categories.

LIC Housing Finance is offering floating rates for home loans. Within six months it will be linked to prime lending rates (PLR) minus 3 percentage points, or 2.5 per cent, depending upon the customer profile, Nair said. The rates will be reviewed on Apr il 1 or July 1 next, he said.

“Though the Government has directed public sector banks to give a five-year fixed rate, we cannot give fixed rates for five years because of possible uncertainties in market trends,” Nair said. – PTI

Source : http://www.thehindubusinessline.com/businessline/blnus/17201680.htm

Discounted property launched in Chennai

Alliance Property has launched its second development in Chennai, the Orchid Springs in Annanagar Extension with the first brace of units discounted by up to 45 per cent, a news provider has claimed.

Chennai Online reported that the first 150 units out of a total of 2,000 will have their prices reduced in a bid to encourage ‘early-bird’ buyers.

Manoj Namburu, Alliance Property managing director, stated the offer amounted to reducing the price Rs 2999 ($60) per square foot in the project.

With the apartments located in a 20-acre campus, they are a five minute drive from Thirumangalam Circle, Annanagar and are equipped with a golf club house, swimming pool, retail mall with a four-screen multiplex and 100 business rooms.

Meanwhile, DLF, a real estate development firm, has announced it is to invest up to Rs 15,000 crore in affordable housing in India over the course of the next three years.

According to the company, it is looking to develop 40,000 real estate units in the middle-income earners bracket.

Source : http://propertybytes.indiaproperty.com/?p=3107

Pune-based Metropolis to develop the 1st five-star hotel in Navi Mumbai

Pune-based Metropolis Hotels (Joint venture between Avinash Bhosale Group and Sun-N-Sand), bagged a sprawling 47000 sq. mt. plot auctioned by City and Industrial Development Corporation (CIDCO) to build a five star hotel. Metropolis Hotels won the plot located off Palm Beach drive at a whopping bid of Rs.60, 085.15 per sq. mt.

The net deal is around Rs.283 crores which is the biggest ever plot CIDCO has auctioned for the 1st Five-Star Hotel in Navi Mumbai.

Commenting on this prestigious deal, Mr. Amit Bhosale, Director, ABIL Group (Avinash Bhosale Group) said, “We at ABIL are jubilant at this success and plan to bring in a well known international hotel brand at this site, the first five star hotel in Navi Mumbai with 500 luxurious rooms.”

The plot is strategically located at a distance of just 6km from the new proposed international airport and approximately the same distance from Trans-Harbour link connecting South Mumbai to Navi Mumbai. Along with a good road access the site also has a pleasant view of the CIDCO developed golf course.

- End -

The Avinash Bhosale Group (www.abilgroup.com) is one of Pune’s leading business conglomerates with diversified business interests in Real Estate, Infrastructure and Hospitality and operates under the name ABIL Group. Established in 1979 by Mr. Avinash Bhosale, Founder & Chairman, the ABIL Group is a dominant player in all the sectors in which it operates. The Group is engaged in the business of Construction, Roads and Infrastructure Developments, Irrigation Projects, Hospitality, Energy and Information Technology. The Group has recently also made successful forays into the IT and BPO sectors. With a resource pool of talented and exceptional professionals, the Group maintains enviable standards of efficiency and excellence.

Source : http://www.indiaprwire.com/pressrelease/real-estate/2008121817081.htm

India’s HDFC cuts home loan rates by 50 bps

MUMBAI, Dec 19 (Reuters) – India’s Housing Development Finance Corp (HDFC.BO: Quote, Profile, Research) said on Friday it had cut its retail lending rates by 50 basis points, effective Dec. 22.

Rates on new home loans up to 2 million rupees ($42,370) will drop to 10.25 percent, while those on bigger loans will attract a rate of 11.25 percent, it said in a statement.

“We have been able to bring down our costs due to improved operational efficiency and good quality portfolio,” Joint Managing Director Renu Sud Karnad said in the statement.

The reductions will apply to all existing floating rate customers over the next three months, the mortgage company said.

It was also reducing deposit rates by 50 basis points across all maturities, with effect from Dec. 23, it said.

High home financing costs have depressed demand for housing, leading several realty companies to shelve projects.

The Reserve Bank of India has cut its main lending rate by 250 basis points to 6.5 percent since October in an economy showing signs of slowing more than many had expected, and policy makers have urged lenders to pass on the reductions.

Source : http://in.reuters.com/article/domesticNews/idINBOM36834520081219

PNB to decide on interest rate cut by month-end

NEW DELHI: The country’s second largest public sector lender Punjab National Bank is likely to cut interest rates further by the end of this month.

“We will review the rates by month-end. We may cut deposit and lending rate further,” PNB Chairman and Managing Director K C Chakrabarty told reporters on the sidelines of a CII function here.

Soon after the Reserve Bank of India cut its signaling rates and the government announced a stimulus package to revive the slowing economy, leading lenders like HDFC Bank and Union Bank of India reduced their benchmark prime lending rates (PLR) early thi s week.

HDFC Bank, the second largest privately-run lender in the country, cut its rates in two tranches to 16 per cent and leading state-run lender Union Bank effected a 0.75 per cent reduction in the PLR.

Union Bank, which reduced its PLR to 12.5 per cent, said the bank has effected the cut “in order to ensure credit to productive sectors at lower rates for sustaining growth momentum”.

Last week, the central bank had announced a slew of measures to further ease liquidity situation in the market. It reduced the repo rate and the reverse repo rate by one per cent each.

Public sector banks have already slashed home loan rates for a limited period up to June 30, 2009 and capped interest rates at 8.5 per cent for loans up to Rs five lakh to encourage low-income housing.

Reset rates for past borrowers

For middle-income loans of Rs 5-20 lakh, the interest rate has been capped at 9.25 per cent. Home Minister P Chidambaram, answering on behalf of the Prime Minister yesterday, informed the Lok Sabha that the government is talking to bankers to cut the len ding rates for home loans even for existing borrowers.

“Yes, we are talking to bankers as their prime lending rate (PLR) is refixed… They (banks) must reset the loan rates for past borrowers also. As PLR is brought down, even floating rates must come down,” he said. – PTI

Source : http://www.thehindubusinessline.com/blnus/17191380.htm