Indiabulls to spend $500 mn for new projects

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

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

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

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

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

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

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

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

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

To stimulate demand

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

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

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

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

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

19 Indian realty firms showcasing projects in London

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

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

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

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

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

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

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

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

‘Property brokers expect prices to increase’

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

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

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

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

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

Sluggish Growth in Real Estate Coimbatore

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

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

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

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

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

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

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

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

Low-cost housing’s slow rise

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

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

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

LAND COST

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

FUNDING, key ISSUE

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

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

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

PRO-POOR

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

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

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

RISK FREE

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

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

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

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

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

Premium demand outstrips middle-class wants

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

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

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

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

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

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

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

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

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

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

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

HOUSE RULES | Property For Sale

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

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

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

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

RE/MAX Plans Entry into Gujarat

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

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

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

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

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

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

Is it low-cost or just affordable housing?

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

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

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

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

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

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

Vipul plans four-star business hotel in Bhubaneswar

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

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

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

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

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

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

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

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

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

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

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

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

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

Ozonegroup announces Chennai residential project

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

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

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

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

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

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

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

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

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

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

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

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

India’s residential sector likely to see oversupply – Crisil

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

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

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

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

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

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

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

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

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

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

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

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

Home loan rates go down

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

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

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

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

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

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

‘Affordable housing is a misnomer’

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

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

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

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

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

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

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

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

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

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

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

Reduce tenure, not EMI, when home loan rates dip

It saves a lot in final calculation.

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

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

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

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

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

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

Indian HNIs prefer realty investment in India than abroad

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BoA grants extension to Orion SEZ despite delay

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

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

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

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

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

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

Over 25% Surge in House Rentals in Delhi

Naresh Behl, a realtor active in IP Extension in East Delhi, works even on his weekly off days. Reason ? Those looking for rented accommodations keep on calling him to remind him about their requirement – this is something , Naresh says, he has not encountered in his decade-long career as a realtor. “The demand for rented accommodation has really gone up in a big way as many people, who were looking for a house of their own, have shelved their plans due to the current insecurity in their jobs,” explains Naresh. The other reason is that many people are shifting from South Delhi to East and West Delhi for the simple reason that rentals in South Delhi are at least 20-25 % higher compared to other parts of the capital. The economic slowdown has hit home sales and sent prices plummeting. The flip side – house rents have shot up. Rents went up by around 30% in major cities including Delhi and the National Capital Region (NCR) last year, as more and more consumers, hit by the slowdown, preferred living in rented houses to investing huge sums in properties, industry officials say.

“The slowdown has fuelled rental market. On an average, the residential rental has gone up 25% in the last one year in Delhi and NCR. In many areas, it went up by even 40%,” says Anu Gupta of Century 21 India. Ashok Chauhan, a North Delhi-based broker adds: “The rental for a two-bedroom set in Delhi was about Rs 8,000 per month a year ago. However, today, it is very difficult to get a decent two-room set on the same rent even in remote localities.” According to industry officials, the high cost of properties and slackening supply of houses have fuelled rentals in Delhi. “People need a house to live in, and not everyone can buy one. With prices still beyond the reach of a large section of the middle class, staying in a rented accommodation is the only option left,” Anu Gupta says.

CMD of ILD group Alimuddin Rafi Ahmad , on the contrary, is of the opinion that prices of flats are now well within the reach of working class. “There is enough correction in realty prices. However, prospective buyers are not going for kill as they are expected to do because there is an element of job insecurity. Nobody is sure whether his/her job is secure. And, it is these fence sitters who are fuelling rentals in Delhi and NCR.” On the other hand, SVP group CEO Sunil Jindal says the realty market is fast improving . Now, many serious buyers are apparently coming to their office. “The best thing is that there are many who are buying flats purely for investment purpose. Most want to give out their flats on rent.”

Subodh Mishra, a Web journalist, says he had to shift home from Pitampura to Rohini because of high rents. “I was paying Rs 8,000 for a two-room set in the Pitampura. However , this year my landlord asked for Rs 10,000. This was out of my budget, so I shifted to Rohini , where I got a similar house for Rs 8,500,” Mishra said. The trend in commercial and official rental markets is just the obverse of the housing rental sector – here prices fell 30% last year, according to reports by global real estate consultant Cushman and Wakefield. Anil Makhijani, head of Mak Realtors, said supply was more than the actual demand in the office rental sector. “Office rentals are going down because the supply is more than the actual demand. However, in the residential property sector, the demand is much higher. Naturally, the rents will go up,” Makhijani added.

Source : http://www.indianrealtynews.com/real-estate-india/over-25-surge-in-house-rentals-in-delhi.html

Chennai Plans New IT SEZ

Tamil Nadu government is planning a special IT industry economic zone spanning 1,000 square kilometres, according to T Willington, director of projects, Tamil Nadu Industrial Development Corporation (TIDCO). The project, worth about thousands of crores of rupees, is likely to attract investments of more than Rs one lakh crore and is being termed as ‘IT investment region’. Willington was speaking at a FICCI-MIBC (Malaysian-Indian Business Cooperative) conference on real estate and infrastructure here. He said the petroleum, chemicals and petrochemicals investment region at Cuddalore which had planned investment of Rs 19,000 crore, and the IT investment region near Chennai, were major projects apart from the 69 SEZs being planned in the State.

He told Express that the project report had been sent to the Centre. “We expect the approval by the end of this year, after which we will begin work on phase 1 of the project. The project will be many times larger than the Cuddalore project,” he added. The project, he said, would be executed in two phases wherein the first phase covering not more than 20 per cent of the project area would be completed within five years and the next phase within 15 to 20 years. The identified region spans from the outskirts of Chennai to its North and extends upto Kancheepuram and Chengalpet to its South and will be bordered by the East coast road to its East.

In phase one, development will start in the Kancheepuram and Chengalpet areas, “The idea is to take the pressure off the metro. Since the Northern side with Chennai is developing, we will focus initially on the southern side of the project area,” Willington noted. “Around 250 square km should be sufficient for such a project but we are going in for 1000 square km because we don’t want to congest development within a small area,” he added. This region would be administered by a development authority on the lines of Chennai Metropolitan Development Authority. Two new townships of 2,000 acres and housing capacity of 2.5 lakh people each would be created in phase one. Willington said that once the project was notified, developers would be free to acquire land and start developing land. “There will be no compulsory acquisition by the government except to create social infrastructure such as roads.”

Source : http://www.indianrealtynews.com/real-estate-india/chennai-plans-new-it-sez.html

23 SEZ Proposals Get BOA Approval

The Board of Approvals (BoA), chaired by Commerce Secretary Rahul Khullar, today approved K Raheja Universal’s request to scrap its Navi Mumbai SEZ and also allowed 23 developers more time to develop the tax-free industrial enclaves. In addition, the board also gave its nod to partially scrap another special economic zone (SEZ) developed by the Mumbai-based realtor K Raheja Universal. The company cited economic slowdown as the reason for its inability to develop both the zones, which were notified by the commerce ministry. Though there are no provisions for denotification of zones in the SEZ Act or rules till now, the law ministry had told its commerce counterpart that the board has the power to denotify SEZs with the condition that the developer will have to give back the government all the benefits it availed while constructing it.

K Raheja Universal’s told the board that it had not developed the zones and hence, had not availed any duty benefits. In its earlier meeting on June 2, the board had given conditional approval to DLF for scrapping four of its notified SEZs. In today’s meeting, which took up the leftover agenda of the previous meeting, the board also gave additional time of one year to 23 developers to build the SEZs. These include three SEZs proposed to be developed by fraud-hit Satyam Computer Services that has been recently acquired by Tech Mahindra. The pace of development of the zones have slowed down considerably, owing to lesser demand for SEZ space, high cost of borrowing and land acquisition problems. Prospective clients of the zones have put their expansion plans in the back burner, which has made developers go slow on their construction. The board also approved proposals by Shyam Steel Industries and Limitless Properties for building two zones related to information technology in West Bengal.

At the moment, there are 90 functional zones out of about 570 SEZs, which have been formally approved since February, 2006. The BoA today gave its nod to a proposal by DLF Ltd, the Delhi-based realtor, to let the metro corridor from National highway-8 to Sikandarpur to pass through the Cyber City SEZ in Gurgaon. The corridor will be built through a public-private partnership by the Haryana Urban Development Authority (HUDA) and a consortium of ITNL ENSO Rail Systems Ltd. (IERS), IL&FS Transportation Networks (India) Limited (ITNL) and DLF. The developer has assured that no tax benefits will be availed while building the elevated corridor through the zone. Moreover, the corridor will not lead to problem in contiguity — a mandatory condition for SEZs — because of its elevated status.

Source : http://www.indianrealtynews.com/sezs-india/23-sez-proposals-get-boa-approval.html

Airport shift to affect Navi Mumbai property prices

With the crash-landing of the Navi Mumbai Airport, experts believe that the real estate bazaar will also suffer. According to experts, if the proposed second airport is shunted out from Navi Mumbai, real estate prices will drop up to 20 per cent further. G S Gill, vice chairman of the City and Industrial Development Corporation (CIDCO) even said, “The airport will make Navi Mumbai a metro city or it will be like another Dombivili or Kalyan.”

Most developers in Navi Mumbai, while advertising for their projects, had proximity to the airport as one of the major points in their brochures and advertisements. If the proposed airport doesn’t come up, real estate prices in areas like Kharghar, Kamothe, JNPT and other important areas will fall by more than 20 per cent. Rupesh Parekh of Bhagya Kootir, a real estate brokerage firm situated in Navi Mumbai, said, “The rates in Navi Mumbai have already come down by 40 per cent, but if the proposed airport is shifted, the rates will further drop by 20 per cent.”

Manohar Shroff, Secretary, Navi Mumbai Chamber of Housing, also echoed the same emotions. “If the airport in Navi Mumbai is dropped, the sentiments of the buyers will be shaken. It will result in low sales,” added Shroff.

However, builders claim that it will not have much effect on their sales. Vineet Malhotra, chairman of Arrow Manhattan Engineering that has projects near the Navi Mumbai SEZ nearly nine kilometres away from the proposed airport, said, “The airport is for the classes and not for the masses. It will affect only two to three per cent of clients. Projects at Kharghar and nearby areas will be affected.” However, Malhotra’s project caters mostly to NRIs, who, as he puts it, belong to “the classes”.

Rajesh Prajapati, founder president of the Builders Association of Navi Mumbai, says proximity to the airport was one of the plus points for purchasing real estate in this area, but not the only one. “The airport is an attraction, but people haven’t bought real estate because of it.

“Infrastructure and education are the biggest attractions. The government should decide whether to dump or clear the airport plan. It’s been more than 15 years now,” said Prajapati. Apart from builders, the farmers whose lands are being priced at Rs 1 crore per acre will suffer. “We won’t find any takers,” said Parekh.

The letter
Environment minister Jairam Ramesh wrote a letter to the chief minister, suggesting that the state should look for another site for a second international airport. The airport, if ever developed, will be through the public-private partnership and is estimated to cost Rs 3,200-4,000 crore. It will handle 50-55 million passengers annually. The letter from the environment minister points out that the chosen site includes 150 hectares of mangrove land and 340 hectares of coastal marshy lands, including 118 hectares of water body.

Source : http://www.mid-day.com/news/2009/jun/210609-Airport-shift-Navi-Mumbai-real-estate-20-percent-drop-Mumbai-news.htm

Builders jack up rates with market handle

Mumbai:

The real estate price graph has moved upward once again with developers in Mumbai having started to jack up their rates, capitalising on the recent stock market recovery.

Amid the economic downturn in the last ten months, investors had exited the market while buyers could not afford the prevailing rates. This had forced developers to reduce prices month after month, sending rates 30 per cent below peak levels.

The revival comes amid the stock market rally and the return of some investors in the sector. Cashing in on the speculation, many developers have increased their rates by Rs 100 to Rs 1,000 per square foot (psf) over the last one month.

Lodha Developers, which had priced its Casa Bella Project at Dombivli at Rs 1,998 psf in March this year, has now increased it to Rs 2,088 psf. The rate for its under-construction Thane Casa Univis Project has also gone up, while Rustomjee Builders has increased the rates for its Urbania Project at Thane. Other developers to raise their prices include Akruti for its Thane project, Raheja and Gundecha at Andheri, Lokhandwala, Ekta at Kandivli, and Nirmal Lifestyle at Mulund.

Source : http://www.indianexpress.com/news/Builders-jack-up-rates-with-market-handle/479593

LIC plans Rs 500cr real estate PE fund

Life Insurance Corp (LIC) and its subsidiary, LIC Housing Finance, together are launching a domestic private equity fund dedicated to real estate ventures. The fund will have an initial corpus of Rs 500 crore.
The two companies are looking for a third partner, but will retain the management control of the fund.
This is the first time that the country’s largest life insurer, LIC, also the largest investor in the stock market, will get into the private equity business. The new entity will be called LIC HFL Trustee Company.
A senior LIC official told Financial Chronicle that a lot of opportunity existed in real estate. “We will identify a number of mid-to large-sized housing and commercial projects. We will also fund home finance firms, which are in need of funds. LIC has an investment portfolio of
Rs 900,000 crore, a part of which will get diverted to the realty fund,” he said.
So far, LIC has channeled a bulk of its invest-ible surplus into debt and equity. The portfolio will now be diversified in the hope of better returns by tapping the potential of the real estate sector.
LIC is also considering an international private equity fund. Asian invest-ors will be roped in for this. The fund will invest in Indian ventures. LIC is yet to decide on the contours of the international fund, the official said.
LIC owns 40.84 per cent in LIC Housing Finance, which has a portfolio of Rs 28,000 crore and 8 per cent of the home loan market in India.

Source : http://www.google.com/url?sa=X&q=http://www.mydigitalfc.com/companies/lic-plans-rs-500cr-real-estate-pe-fund-314&ct=ga&cd=moJsAG8UDlM&usg=AFQjCNG5buGkBpnujm6qxxoWHIc4GaUN2w

DLF Seeks GOVT Approval to Build Apartments & Commercial Complexes in SEZs

Realty major DLF has sought government approval for building service apartments and commercial complexes in four special economic zones, of which two are located in Gurgaon. The Board of Approval (BoA) in the Commerce Ministry will consider requests from the developers for building apartments and commercial space in the non-processing areas of the four IT/ITeS SEZs at Gurgaon, Chennai and Hyderabad, an official said. The non-processing area includes non-core activities.

The BoA is meeting here on June 17 to take up the request, along with other agenda. DLF has informed the ministry that it wants to build service apartments on 15,000 square metre and commercial space on 12,000 sq m at one of its Gurgaon SEZ. The total notified area for SEZ is 10.73 hectares (1,07,300 sq m). At the height of the SEZ ontroversy, it was alleged that the land was being acquired for real estate gains by the developers. However, the Commerce Ministry has denied these claims stating the commercial activities would be restricted to non-core areas. The SEZ developers have been demanding that they should be granted an infrastructure status for availing the bank finance. However, the Reserve Bank has not acceded to the demand taking a view that it is a real estate activity.

Source : http://www.indianrealtynews.com/sezs-india/dlf-seeks-govt-approval-to-build-apartments-commercial-complexes-in-sezs.html

Punjab GOVT comes up with Stimulus to Boost Real Estate and Affordable Housing

Keeping in view the slowdown and recession in economy, the Punjab government has come out with an economic stimulus package to give boost to affordable housing and real estate sector. Disclosing this here Thursday a spokesman of the Punjab government said that the Confederations of Real Estate Developers Association of India (CREDAI) and National Real Estate Development Council (NARDECO) had recently submitted a memorandum to the Punjab Chief Minister Parkash Singh Badal and Deputy Chief Minister Sukhbir Singh Badal separately urging them to immediately announce some incentives/concessions to real estate developers in order to put the real sectoral growth back on the track on one hand and to encourage group housing for weaker sections on the other.

The spokesman further said that the stimulus package included waiver of Change in Land Use (CLU) charges for industrial land use in entire Punjab, moratorium on payment of External Development Charges till December 31, 2009 and promoters who make prepayment of EDC installments would be entitled for discount of 5%. Reduction in penal interest on over due charges from 18% per annum to 3% per annum over and above the normal interest @10% compound per annum w.e.f. September 19, 2007. Wherever Zonal/Sector Plan have been notified, the minimum area for developing a colony would be 25 acres. In low potential zone, the minimum area for residential colony would be reduced from 25 acres to 10 acres. However, no minimum area norm would apply in case of the left over pocket, i.e. where on all the sides construction had already been taken place.

The spokesman further mentioned that to promote affordable housing, it was also decided that in the earmarked industrial land use zones in the master plans across Punjab, the affordable housing as envisaged under JNNURM mission of Government of India shall be permissible and it was decided to waive CLU charges, External Development Charges and license fee/permission fee for financially weaker section houses. Stamp duty / Registration fee / Social Security cess on purchase of land for such houses would also be exempted. The stimulus package further stipulated if any promoter creates any infrastructure with prior permission of concerned Urban Development Authority outside his project that falls within the definition of external development and then he would be given credit at PWD rates. Phasing in the super mega projects has also been allowed as already permitted in other projects.

In case of Group Housing Projects outside GMADA (Greater Mohali Area Development Authority) area, the minimum area for projects would now have been reduced from 10 acres to 5 acres. In case of housing for financial weaker sections, as notified in the policy of Local Government in November, 2008, this minimum area would be 2.5 acres. It was also decided that in case of commercial pockets within municipal committee/ Corporation limits (excluding GMADA), the norms for minimum area would be the same as notified by the Department of Local Government. However outside municipal committee/ Corporation limit (excluding GMADA region), the minimum area norms would be reduced from 2 acres to 1000 sq. meters. Such plots must have a front of at least 20 meters.

The state government also decided that in case of parking for commercial projects, having no multiplexes, the minimum parking norms would be 2 ECS/100 sq. meters area. In case of commercial projects having multiplexes/ cinemas/ theatres, the minimum parking required would be 3 ECS/100 sq meters of covered area in respect of multiplexes/ cinemas/theatres component + 30% of total covered area of that component and 2 ECS/100 sq meters of covered area in respect of the balance commercial component + circulation area. Parking norms within Municipal Committee limits shall be the same as notified by the Department of Local Government. Similarly parking norms in case of group housing shall be reduced to 1.5 ECS/ 100 Sq meters from existing 2.0 ECS / 100 Sq meters. In case of any excess payment paid by any promoter to any Urban Development Authority, the authority would pay interest to the developer at the rate fixed by State Bank of India for Fixed Deposit of 180 days, as on 1st April of that financial year, the spokesman added

Source : http://www.indianrealtynews.com/real-estate-india/punjab-govt-comes-up-with-stimulus-to-boost-real-estate-and-affordable-housing.html

MMRDA relaxes norms to attract builders for Iconic Tower

Mumbai , Jun 18 Mumbai Metropolitan Region Development Authority (MMRDA) today decided to relax a few pre-qualified conditions laid down by it for the convenience of developers, who evinced interest in construction of the ambitious tower in Wadala area.

The date for submission of the pre-qualified documents has been extended till July 31.

MMRDA and the Maharashtra government have proposed the 500-meter-tall Iconic Tower Project, to be built at a cost of Rs 2,500 crore, to match the majesty of the Petronas Twin Towers (88 storeys in each tower) in Malaysia and the Taipei 101 (101 storeys) in Taiwan.

Twelve prospective developers, who were willing to build the tower, met MMRDA officials and requested them to relax some pre-qualified conditions.

“We agreed to the request of developers as we want better competition,” Metropolitan Commissioner Ratnakar Gaikwad said.

Earlier, one of the eligibility criteria for the developers included that they should have track record of constructing a building of at least 400 meters height in the last five years. This condition has been relaxed to 300 meters, he said.

In view of the revised eligibility criteria the sale of pre-qualified document has been extended up to July 2, Gaikwad said.

Source : http://www.indopia.in/India-usa-uk-news/latest-news/602408/National/1/20/1

Stimulus Expected for Real Estate Sector in Budget 09- Experts

Although, Indian economy as a whole has largely been insulated against the global economic slowdown, the Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector. Demand dynamics of one large industry decide the fortune of its ancillary industries. The ups and downs of the real estate market have serious implications on companies whose future is linked to the housing and infrastructure demand in India.

The risk straddle includes industries such as furniture, granites, ceramic tiles, paints, power cables, glass, electrical equipments and interior designers among others, which exemplifies the significant backward and forward linkages that the real estate sector has with the economy. There is a need for the Government to provide a stimulus for the industry so as to revive this ailing spectrum of sectors. And what better time can there be, than the forthcoming budget!

Some of the measures that should be taken by the Government are as follows:

• Given the demand for and emphasis of the Government of India on affordable housing (through lower interest rates on loans upto Rs 30 lakhs) there is a need to reintroduce tax holiday under section 80IB for housing.

• Tax holiday available to hotels under section 80ID to be extended 10 years from existing time limit of 5 yrs. The gestation period in hotel industry, itself, stretches from 4 to 5 yrs. • To garner resources for providing liquidity to the Indian real estate industry, there is a need to:

Re-introduce ‘tax pass through’ status for domestic venture capital funds that invest in the Indian real estate sector; Clarify that the Real Estate Mutual Funds are to be treated as equity oriented fund; Extend the external commercial borrowing scheme to the entire Indian real estate sector including Special Economic Zones and not just 100 acre township, hotels, hospitals in view of the moderate international costs of borrowing;

• Encourage states to reduce stamp duty to 5 percent and to provide a system of credit for each stage of sale i.e. levy on value addition. • Increase in deduction available under section 24(b) to Rs 300,000, against, existing limit of Rs 150,000 for self occupied houses. • Increase the basic exemption limit under provisions of Wealth tax Act to Rs 50 lakhs against existing limit of Rs 15 lakhs keeping in perspective the price of property, etc. • Service tax provisions should be amended as follows:

It has been clarified that no service tax should be levied in case pre-construction sale of residential complex where the seller and the buyer enter into an ‘agreement to sell’. Similar clarification should be issued for pre-construction sale of commercial complex. Service tax on renting immovable property should be abolished • To reduce the cost of procurement of capital equipments for construction purposes there should reduction/ rationalization of customs duty (exemption from special additional duty) and excise duty (8 percent to 4 percent)

Source : http://www.indianrealtynews.com/real-estate-india/stimulus-expected-for-real-estate-sector-in-budget-09-experts.html

Slowdown in SEZs

When the Board of Approval for special economic zones (SEZs) meets on Friday, liaison and corporate affairs executives will jostle for space in the narrow corridors on the ground floor of Udyog Bhavan, which houses the commerce department. In stark contrast to last year, however, few of them will be pushing proposals for new zones. Demand dynamics brought on by the global slowdown and persistent land acquisition problems are forcing developers to alter their plans.

As a result, almost half the proposals that the inter-ministerial panel headed by Commerce Secretary Rahul Khullar will consider have to do with extensions to acquire land or cancellations of these tax-free enclaves that were supposed to catapult India’s exports into the big league. Of the 58 SEZ proposals on the agenda, only two are for setting up new zones; 23 zones are applying for an extension of the validity period and two — from K Rajeha Universal — are seeking de-notification on the grounds that the economic downturn has resulted in lower demand. Then there is Mansarovar Industrial Development Corporation that has decided to expand the focus of its zone from handicrafts to information technology-enabled services (ITES), and to split the 131 hectare-zone.

“The developer has requested that due to the present downturn in the economy, the additional sectors (ITES) may kindly be permitted to be included in the SEZ,” the commerce ministry said in its note for the BoA meeting. Similarly, financial constraints have forced Diamond Software Developers, which was setting up an SEZ focused on information technology (IT) and ITES in Noida, to drop its plans. Meanwhile, companies such as Parasvnath SEZ have had to move the proposed 10.11 hectare Biotech SEZ from Ranga Reddy district in Andhra Pradesh to Medak in the southern state owing to legal hurdles in land acquisition.

Similarly, with only 63 per cent of the land acquired, Rajasthan Explosives and Chemicals has sought more time for developing a multi-product zone. Plagued by insufficient demand for space, land acquisition problems and the liquidity crunch in the first half of 2009, nearly 27 developers with all approvals in place had already sought more time to operationalise SEZs. Ministry officials said the number could go up to 50 at Friday’s BoA meeting and much more at subsequent meetings. According to the norms, an SEZ has to be up and running within three years of receiving the formal approval, which is only given after land is in the developer’s possession. When the economy was growing at 9 per cent, there was a rush to set up SEZs. Between February 2006 and May 2009, the government gave formal approvals to 568 proposals, nearly 60 per cent for IT. Of these, 315 have been notified, which means they can claim tax and duty benefits.

But work has been completed and exports are taking place in only 90 zones. So, only 16 per cent of the formally approved proposals are contributing to India’s exports. Exports from these 90 operational SEZs are projected to grow 38 per cent to over Rs 1,25,000 crore in 2009-10, as against Rs 90,000 crore last year. This will, however, be just a quarter of the Rs 5,00,000 crore projected if all the formally approved zones were to become operational. Government officials, however, said this was only to be expected. “When we started giving approvals, we expected at least one-third of the approved SEZs to fall by the wayside. But the slowdown and restrictions on state governments acquiring land could see more projects not seeing the light of the day,” said an official who was associated with SEZ policies and approvals for over five years.

“The number of approved zones is already high. The serious players are here to stay and our focus will be to facilitate SEZ-related matters,” added another official. Experts said with prospective clients putting their expansion plans on hold, developers do not want to take risk and build zones. This is because, unlike the real estate business model, SEZs require a long gestation period before developers see any financial gains. “Scrapping unviable zones is a systemic correction. When the business cycle is on an upturn, the zones will bounce back,” said Aradhana Agarwal, senior fellow at ICRIER and reader at Delhi University’s Department of Business Economics. PricewaterhouseCoopers Executive Director Vivek Mehra, who is advising many developers, said the downturn had lowered demand for space in the IT zones. Besides, the extension of the Software Technology Park scheme also meant that the rush for SEZs has come down.

“There are pressures on timeline and builders, who have put in more than the requisite 25 acres, are looking at other options. Even if you de-notify now, you have the option to seek a re-notification later or a set up a zone with a smaller land area,” he said. Developers seeking extensions include fraud-hit Satyam (three zones), Infosys (two zones), NIIT, and ONGC-promoted Kakinada SEZ in Andhra Pradesh. The former commerce ministry official said the manufacturing sector-related SEZs, which have not shelved their plans, could stage a comeback over the next eight to 10 months if production shifted to low cost destinations. For the moment, the absence of demand and liquidity crunch has also forced real estate major DLF to get conditional approval to scrap four of its notified zones, while its plea to get another of its Delhi-based zone has already been accepted.

Gitanjali Gems, which has permission to set up nine SEZs, has also applied the brakes on its plans. Although the company has decided against going ahead with a proposed zone in Nanded, the development of six zones in Gujarat and Maharashtra is yet to pick up. Only one SEZ in Hyderabad is expected to be operational, but that is one-and-a-half years away. In pharmaceuticals, chemicals and biotech, most of the 16 notified SEZs have been non-starters. Apart from the projects of Divi’s Laboratories, Biocon and Serum Institute of India – the first among the notified SEZs in 2006 – the others are still under implementation. Issues such as land acquisition, delays in developing physical infrastructure, setting up of plants and regulatory approvals from the US and Europe are delaying the projects, sources said.

“The development of a pharmaceutical SEZ may take three-seven years as pharmaceutical plants need quality water, effluent treatment plants and good physical infrastructure,” said Hitesh Gajaria, head – pharmaceuticals and executive director, KPMG India. Even government-promoted projects such as development of Kandla Port Trust’s Rs 7,000 crore port-based SEZ is in pause mode. “A majority of the developers want to see how the situation evolves in the coming days. So, they do not want to scrap their plans for the zones as of now. But there is an oversupply issue in zones,” said Abhishek Goenka, partner at consulting firm BMR & Associates.

Source : http://www.indianrealtynews.com/sezs-india/slowdown-in-sezs.html

Jaipal Reddy favors cheaper housing loans to poor

(RTTNews) – India’s Urban Development Minister Jaipal Reddy pitched for affordable housing to the poor at 6.5 percent interest to help revive the ailing real estate industry which generates considerable employment opportunities. In a pre-budget meet with the finance minister Pranab Mukherjee, he favored cheaper loans for buying houses in the below Rs.5-lakh category and sought the extension of 7.5 percent interest scheme presently available for flats up to Rs.20 lakh to those priced at Rs.30 lakh in cities.

Additionally, he urged the finance minister to increase the income-tax limit exemption on rental income from house to 50 percent, sought more budgetary provisions for the 2010 Commonwealth Games projects and requested to sanction more money for extension of the Metro network in the national capital, and for projects under the Jawaharlal Nehru National Urban Renewal Mission, the flagship program for developing basic urban infrastructure and urban slum development.

Source : http://www.rttnews.com/ArticleView.aspx?Id=981422&SMap=1

Mysore realty market shows recovery signs

After a continous setback since October last, the realty market in Mysore has begun to take a brighter note from last April.

Between October and April, the worst affected segment was the apartments, where builders had to resort to cut rates to attract customers. A few major builders abandoned their mega projects, while a few put on hold their proposals.

Seeing the booming market in the tier 2 city, which is seeing huge investments in infrastructure development under the Jawaharlal Nehru National Urban Reconstruction Mission (JNNURM) and as the city next in growth to Bangalore, a couple of major builders had planned huge investments in the housing sector.

More than the locals, outsiders and NRIs were into investments in the market. The recession in the US deterred the NRIs in particular from making long-range investments, which affected the Mysore realty market.

“The demand had fallen almost 100 per cent. Now we see 40-50 per cent improvement from April onwards,” observed Builders’ Association of India Mysore branch president S R Swamy, speaking to Business Standard.

“The market, which had gone down in the last 3-4 months, is picking up from April onwards. Enquiries are trickling in and getting converted,” added M B Nagakumar of Premier Properties.

Price offers of flats offered by developers range from Rs 9 lakh to Rs 60 lakh. There are flats of Rs one crore too. However, the upper range flats have taken a nosedive in the market, investors preferring moderately priced medium range flats of Rs 20-25 lakh. Flats between Rs 10 and 15 lakh range are available, but they lack long-range facilities, said Swamy.

“The question before us is how affordable we can make properties which people will buy. Keeping this target, we have cut down expenses. However, the state government should come to our support like abolishing VAT, a double taxation on apartments, which the Centre has abolished,” Nagakumar said commending the state for reducing registration fee from 7.5 to 6 per cent.

The state should also increase the floor area ratio and this will bring down the cost of apartments. More buyers mean more revenue to the government, he said.

The setback was in a way good for the realty market, as it has settled down at realistic level, they said and added, “Now we see a healthy market with genuine buyers.” The boom last year and prior to it had seen a large number of agents operating, particularly in the site segment where the demand by investors and NRIs was more. The scenario now is “real buyers and less middlemen,” says another builder. “The abnormal boom has neutralised now,” added Swamy.

Developers and builders responded better than last year in the recent “Myreality” property show to market their property. It attracted over 20 developers and 20 other participants, banks offering loans at attractive rates. The annual showcasing saw more footfalls from genuine buyers, said Organising Committee Secretary Srihari Pathak.

Source : http://www.business-standard.com/india/news/mysore-realty-market-shows-recovery-signs/361261/

Resale home market fails to attract buyers

MUMBAI: The increase in the demand for housing in the past one month appears to be restricted to new projects. According to industry trackers, Make home loan repayment easy resale properties do not have too many takers, at least not in the large cities. In the case of new projects, developers have been offering attractive discounts, while prices in the resale segment have remained high.

Typically, resale properties come with a larger unaccountable component (also referred to as “black”). This, as a proportion of the total price, was earlier between 25% and 30%, while it is now as much as 40%. For instance, in Goregaon, a suburb in western Mumbai, the property price of a one bedroom apartment that is six years old, was around Rs 40 lakh with the seller demanding Rs 16 lakh in black compared with not more than Rs 12 lakh late last year.

Sellers have held on to the price in cities such as Delhi, Mumbai and Bangalore. These tier-I cities saw prices rise sharply in the midst of the boom. Praful Joshi, a Mumbai-based real estate agent, said: “With the sellers of older property not reducing the rates, the number of transactions have reduced substantially.”

Agreed Sunil Bajaj, another city-based property consultant, “The asking rate for old property market is not in line with the prevailing market rate. In Kandivali (a suburb in western Mumbai), the price of an apartment on the first floor on a per square foot basis was as expensive as the one on the penthouse in the same building.” He added that the flat has remained unsold.

Potential buyers have not been finding the going easy. Amit Desai, a Mumbai-based professional employed in a large business group, is one such person. “For a salaried employee, the rates for older property is out of reach since sellers ask for at least 30% of the price in black. This means you get a loan only on the white component (the price after deducting the black component).”

Industry observers said new property has witnessed a price drop of 30-50% in the past six months that is the result of developers facing a liquidity crunch and falling demand. Some buyers have chosen not to go ahead with the purchase, as they feared the property might not be completed. This has led developers to offer schemes like getting the buyer to make a partial payment initially and pay the rest at the time of possession.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/News-/Resale-home-market-fails-to-attract-buyers/articleshow/4664787.cms

Hike expected in Income Tax Exemption on Home Loans

The government is considering a proposal to hike income-tax exemption available for interest payment on home loans to Rs 2.5 lakh a year, to boost demand and rebuild the slowdown-hit housing industry. The ministry of housing and urban development has urged finance minister Pranab Mukherjee to make an announcement to this effect as part of his Budget presentation in early July, a government official said on condition of anonymity.

At present, taxpayers taking housing loans are eligible for income-tax exemption on interest payment of up to Rs 1.5 lakh every year. Besides this, the repayment of principal amount is part of investments eligible for benefit under Section 80(C) of the Income-Tax Act, which has a ceiling of Rs 1 lakh. The government has already identified housing as one of its focus areas, a fact highlighted by President Pratibha Patil in her address to both the houses of Parliament. The existing tax exemption limit is considered inadequate at a time when a two-bedroom house in big cities costs at least Rs 25 lakh. Considering a person takes a loan of Rs 20 lakh at an interest rate of 9.5%, he would pay Rs 1,88,493 towards interest alone in the first year. His annual interest payment in the first five years would be more than Rs 1.5 lakh.

If the exemption limit is hiked to Rs 2.5 lakh, then a person paying that much home loan interest in a year will save an additional Rs 31,000 in tax every year. This saving of over Rs 2,500 a month would be significant for most borrowers, making home purchases more affordable. However, as per existing norms, the tax benefits start flowing in only after the construction of the house is completed, which usually takes 2-3 years in case of builder flats.

The housing industry has urged the government to allow for the deduction as soon as loan repayment starts, as it would give substantial relief to home buyers and boost demand. The Budget documents do not provide an estimate of the revenue forgone on account of this exemption, but it is unlikely to be very significant. Of the total Rs 38,107-crore tax revenue forgone on account of tax exemptions to individuals in 2007-08, nearly Rs 30,000 crore is on account of Section 80C benefit, one component of which is principal repayment on housing loan.

The housing sector in the country has been hit hard by demand slowdown, following a rise in interest rates. Besides lowering of home loan interest rates, the industry has been continuously pitching for greater tax benefit, as it had the potential of stimulating demand.

Source : http://www.indianrealtynews.com/real-estate-india/hike-expected-in-income-tax-exemption-on-home-loans.html

Indian cities should make space for low-cost housing

In the next six years, urban India needs to build at least 10.5 million houses to meet the demand for housing that accompanies rising levels of urbanization. With the financial crisis bringing affordable housing back on the radar of promoters and builders, it is worthwhile to estimate the extent of unmet demand for low-cost houses.

As much as 65% of the demand in India’s top 112 cities is for houses measuring less than 1,000 sq. ft. This translates into approximately 6.8 million new homes. Interestingly, about 70% of the demand would be for houses with two rooms or less. This means 7.4 million new houses need to meet these specifications. This is because 90% of the urban households have incomes under Rs5 lakh per annum.

Thus, the demand for majority of the urban housing would be in this category. The rising slum and squatter settlements in cities is a clear sign that this demand is not being met through formal housing stock.

Greater housing demand originates from two sources—those who have arrived earlier and residing in makeshift tenements, shacks and slums, and those who are expected to migrate into these areas. The requirements are different. Typically recent in-migrants require smaller areas, but as they stay on, their families join them and expand, and their incomes and wealth also increase. This translates into requirements for marginally larger carpet areas.

The cities that have the largest requirement for such housing are those that attract migrants—Mumbai and New Delhi and their surrounding areas, Bangalore, Pune, Surat, Coimbatore, etc. These cities either saw large migration in the recent past but are slowly stagnating (for instance, Mumbai), or continue to have great levels of in-migration (New Delhi, Surat and Pune, for example). Either way, these cities are already bursting at their seams.

The need to expand opportunities in other cities is paramount, as is the need to get a better grip on land utilization within these cities. Typically, government bodies have almost monopolistic control over land, and this is a serious problem as land management is riddled with bureaucracy and poor governance. What is needed is a much more aggressive and forward-looking approach that looks at the requirements for each city specifically. Ensuring there is regular availability of land for low-cost housing within a city is among the first and foremost steps.

The supply side constraints for provision of low-cost housing are well known and these problems have been made worse due to the rapid increase in real estate values.

As a result, the largest action in urban housing has been in suburban areas surrounding the large cities— rural Bangalore, Ranga Reddy near Hyderabad, the Gurgaon, Noida, Faridabad and Ghaziabad quadrilateral surrounding New Delhi, and Howrah and North and South 24 Parganas near Kolkata are well-known examples. The bulk of new housing is occurring on converted agriculture land around these cities.

This need not have been the case, had local governments been more responsive to emerging requirements. Unfortunately, unplanned and unstructured development is a hallmark of urban India and is unlikely to change very soon. Demand Curve is a weekly column by research firm Indicus Analytics Pvt. Ltd on consumer trends and markets.

Source: http://www.livemint.com

After DLF, Rahejas want to surrender SEZ

Real estate developer K Raheja Universal Private Ltd wants to scrap one of their notified special economic zones (SEZs) and also surrender a part of another zone, citing lack of demand from the information technology sector.

The Mumbai-based developer has approached the Board of Approval (BoA) regarding this, which will decide on the matter on June 17. This is the second realtor after DLF Ltd, which too sought cancellation of notified SEZs. Notification is the final clearance for a SEZ, after which it starts enjoying the direct and indirect tax benefits prescribed under the SEZ Act.

K Raheja has asked for denotification of its 13 hectares IT zone based in Navi Mumbai. In addition, the company also wants to surrender about half of the 20.65 hectares of another infotech SEZ in the same area. These are the only two notified SEZs for the Mumbai-based realtor.

When contacted, K Raheja officials declined to comment.

While asking the BoA to denotify the zones, the company has blamed the lack of demand for space for IT-related zones. It also said that prospective clients have halted their expansion plans indefinitely due to the ongoing economic slowdown. Both the zones were notified in mid-2007.

The company has told the BoA that both the plots are vacant, and no construction activity has taken place. Thus, no duty or tax benefits were availed by the company.

The BoA has taken up de-notification requests of five zones till now, all belonging to DLF. While one of the Delhi-based zones has been de-notified, the BoA has given in-principle approval to scrap four other notified zones, under the condition that DLF will have to pay back all the duty benefits it availed from the government.

All these notified SEZs, which the developers have surrendered, belong to the infotech sector.

Though there are no provisions related to de-notification in the SEZ Act, the law ministry has told the commerce ministry that since the board has power to notify zones, it also can also scrap it, if developers want to exit the zones.

DLF seeks permission for building commercial space

Even as DLF got conditional approval for scrapping four infotech zones, it has asked the BoA under the commerce ministry to build 2,28,000 sq feet of commercial space, service apartments and housing for employees in four SEZs at Gurgaon, Hyderabad and Chennai, which the company is developing. All this construction activity has been proposed in the non-processing area of the zones, where supporting infrastructure for units in the processing area is built.

Source : http://www.business-standard.com/india/news/after-dlf-rahejas-want-to-surrender-sez/360966/

Tatas to develop 1,000 acres of surplus land, unlock value

MUMBAI: The Tata group is working on a plan to unlock value from unused land belonging to various group companies by developing them through its two  realty subsidiaries, Tata Housing and Tata Realty.

According to two persons familiar with the situation, an internal study by the salt-to-telecom conglomerate has identified excess land parcels of 800-1,000 acres across the country on which the group’s two realty companies may develop commercial and residential properties. Companies, such as Tata Motors, Tata Tea, Tata Steel and TCS, among others, have considerable land which could be developed.

Tata Housing has already initiated discussions with some group companies for this purpose, said one of the persons, adding that the process will take some time, as most of the firms are listed entities, which necessitates approval from the respective boards.

It is learnt that some of the major group companies could announce their plans by the end of this year. Though it is difficult to put an exact price tag on this land, as it is spread across the country, estimates suggest that it could be anywhere between Rs 30,000 crore to Rs 50,000 crore. Importantly, a significant part of the total land bank is housed in prime locations across India.

Earlier on February 14, ET, had reported that Tata Housing plans to leverage its tie-up with banks and financial institutions by developing properties on surplus land owned by other Tata group companies. Now after the internal study it is believed that the total excess land bank owned by Tatas would be developed after raising capital through the private equity route in the case of Tata Housing and for Tata Realty, it would use the $1 billion that it raised recently.

A mail sent to Tata Realty did not elicit a response, while Brotin Banerjee, managing director, Tata Housing, refused to share details and merely said: “We are studying various options, though it would be premature to comment.”

According to the plan charted out by the group, the process of developing the land could be done in three major ways. Elaborating on this, one of the officials said: “One option could be Tata Housing working with the company that owns the land. Tata Housing can also take the SPV route and then decide on the profit sharing ratio. Finally, the option of purchasing the land outright is also possible.”

According to the official, one company in the group has said it had 10 big land parcels that it wanted to develop. “Initially, Tata Housing could make a payment of around 20% of the land cost,” he added.

Once the project is completed, the property could either be sold or leased. A senior official at Tata Realty said, “The proposal from the group company would vary depending on the project and the land parcel. That company would get at least 30%, if there is a profit sharing model.” The funding requirement for Tata Housing could be met through the infusion of a private equity investment. Tata Realty has just raised $1 billion.

Source : http://economictimes.indiatimes.com/Market-News/Tatas-to-develop-1K-acres-of-land/articleshow/4656496.cms

DLF seeks nod for apartments, commercial complexes in SEZs

New Delhi (PTI): Realty major DLF has sought government approval for building service apartments and commercial complexes in four special economic zones, of which two are located in Gurgaon.

The Board of Approval (BoA) in the Commerce Ministry will consider requests from the developers for building apartments and commercial space in the non-processing areas of the four IT/ITeS SEZs at Gurgaon, Chennai and Hyderabad, an official said. The non-processing area includes non-core activities.

The BoA is meeting here on June 17 to take up the request, along with other agenda.

DLF has informed the ministry that it wants to build service apartments on 15,000 square metre and commercial space on 12,000 sq m at one of its Gurgaon SEZ. The total notified area for SEZ is 10.73 hectares (1,07,300 sq m).

At the height of the SEZ controversy, it was alleged that the land was being acquired for real estate gains by the developers. However, the Commerce Ministry has denied these claims stating the commercial activities would be restricted to non-core areas.

The SEZ developers have been demanding that they should be granted an infrastructure status for availing the bank finance. However, the Reserve Bank has not acceded to the demand taking a view that it is a real estate activity.

Source : http://www.hindu.com/thehindu/holnus/006200906141012.htm

Affordable houses may come up on govt land

Grappling with high land prices that come in the way of providing affordable housing for millions in urban areas, the UPA government is now considering providing state-owned land to private players at a pre-determined price with certain riders.

The concept paper for such a ‘reverse tendering’ plan is being formalised by the housing and urban poverty alleviation ministry. According to the concept note, land will be provided at a pre-determined price and expressions of interest will be invited from the private sector for building houses at the lowest possible price on the land.

While the ministry will issue broad guidelines, individual tenders will define the type and specifications for each housing project.

“The common thread in our discussions with various stakeholders was the high prices of land which discouraged developers from launching low-cost housing projects. Through this model, the land price can be pre-determined and housing market can also be regulated,” said a government official. The model will be developed by the housing ministry and the states may then adopt it and implement.

Source : http://www.indianexpress.com/news/Affordable-houses-may-come-up-on-govt-land/476371

Realtors cash in on the great Indian affordable home rush

A fortnight ago, Jaypee Greens started bookings for its housing project — Aman — at the 70-acre residential township on the Greater Noida Expresssway. All the 3,000 flats, priced at Rs 2,100 a sq ft, were sold out by the first day. Exactly a year ago, the Jaypee Group company was offering flats along the same expressway for Rs 4,500-6,000 a sq ft.

Two days later, another Delhi-based developer, BPTP, announced that it had received bookings nearly four times more than its offer of 1,000 flats at its 1,500-acre township at Faridabad.

Welcome to the great Indian home rush at a time when the glitter of the premium segment has faded. Real estate companies are now going to the other extreme and falling over each other to offer affordable housing at a price range of Rs 5 lakh to Rs 50 lakh.

The varied pricing is a function of affordability being a relative term, depending on the location. For instance, a Rs 50 lakh apartment in Mumbai is considered affordable housing. In a city like Nagpur, the same price will qualify for premium housing. There is no confusion, however, with the huge target consumer base: 23 million Indians earning at least Rs 5,000 a month who do not own a house but aspire to do so, according to a study by Asish Karamchandani, CEO of Monitor India, a management consultancy firm.

That’s a good enough reason for Unitech’s GM (Corporate Planning) R Nagaraju to say the company would be “churning out affordable flats just like a factory produces goods”.

The country’s second-largest developer has shelved all premium housing projects for now. Poor response from buyers also prompted the company to recently convert its luxury project, Unitech Grande in Noida, to a mid-income project.

If Jaypee and BPTP hit the jackpot in the National Capital Region, others weren’t far behind. The Lodha Group, for example, has broken the sub-Rs 2,000 per sq ft price barrier in Mumbai by launching a 6,500 unit affordable home project at Dombivli at Rs 1,998 a sq ft. The integrated township will be spread over 125 acres with 3,500 houses.

The scene is the same elsewhere in the country. Bangalore-based CSC Constructions has launched three projects in the IT city, offering 2,000 apartments at Rs 5-13 lakh. Encouraged by the response, CSC has six more such projects in the pipeline.

Chennai hasn’t escaped the low-cost housing bug either. A subsidiary of Puravankara Projects, for example, sold 2,500 such homes in the Tamil Nadu capital within days and is now planning to develop 60 million sq ft of such properties over five years across five cities.

There are no firm estimate of the total number of such affordable flats on offer, but back-of-the-envelope calculations show top developers such as DLF, Unitech, HDIL and others are planning over 55 million sq ft of new launches this financial year, around 90 per cent of their total number of new projects.

According to a study by PropEquity Research, 74 per cent of residential apartment sales in Mumbai in the first quarter of 2009 came from the low-cost segment. The trend was the same in Gurgaon and Chennai, too, where the corresponding numbers were 60 and 58 per cent. In all these cases, the apartment sizes were reduced and the average prices corrected 15-25 per cent, PropEquity data show.

This shift towards low-cost or affordable housing started after home sales fell up to 70 per cent in the early part of this calendar year from their peak in 2007-08. “People were earlier going for aspirational houses, as their salaries were going by 20 to 25 per cent every year. But now they have realised that salaries are not going to go up any time soon and those who have reached the top levels have already bought houses,” said Anshul Jain, chief executive officer, India, DTZ International Property Advisors.

Source : http://www.business-standard.com/india/news/realtors-cash-inthe-great-indian-affordable-home-rush/360492/

Developers build on low margins, high volumes

Does low-cost housing make economic sense? It seems to. Developers believe the loss in margins (20 per cent in affordable housing, against 50-300 per cent in case of premium housing) can be made up somewhat by the sheer volumes of sales. Rajeev Talwar, group executive director of DLF, says: “Every group has to chart out its strategy. We have decided to take on the market by pricing our products 30 per cent lower than others, even if it means less margins.”

In any case, as Rashesh Shah, chairman of brokerage firm Edelweiss points out, the days of making a killing are over. “Sales weren’t happening anyway and developers have finally realised that they would survive only if they brought prices down,” Shah says. That realisation has prompted developers to tweak their strategies and reduce apartment sizes to attract home buyers. For instance, Unitech has stopped giving modular kitchens and is laying vitrified tiles instead of expensive marbles in its affordable housing projects, apart from cutting parking and basement space. It also restricts the total floors in a building to three-four to save on construction costs.

“The average cost of our land is Rs 200 a sq ft and construction cost varies from Rs 900-1,500 a sq ft. In affordable projects, we keep construction cost to the bare minimum. We design our buildings and use materials accordingly,” says a Unitech official.

Besides, Unitech has reduced the size of its apartments to 800-1,000 sq ft, on an average, from 2,000-2500 sq ft a couple of years ago, even as the price per sq ft has come down to Rs 3,000 from Rs 4,500 a sq ft earlier.

DLF, too, is changing its housing designs in Gurgaon to squeeze in more two-bedroom units. Scores of property developers, such as Akruti City and Parsvnath Developers, use pre-fabricated slabs in their buildings, which help them save 15-20 per cent in costs against manually-laid slabs in their buildings. While others, such as Unitech, Ansal API and Omaxe, import sanitaryware and fittings from countries such as China, Malaysia and others, as these are 10-15 per cent cheaper than Indian products.

Most developers are also focusing on completing their housing projects in 30 months instead of the earlier 36 months, using advanced technology.

Tata Housing, which is building 15,000 low-cost homes in the country, is keeping construction cost to about Rs 700 a sq ft by sharing returns with the land owners, according to Managing Director Brotin Banerjee.

The company is in advanced stages of talks with the Delhi-based Raheja Developers (which owns the land) to initiate a similar low-cost project at Manesar near Gurgaon. The apartment size will range between 283 sq ft and 465 sq ft each. Plans are on the anvil to start similar projects, called Shubh Griha, in Chennai and Kolkata and, subsequently, in other Tier-I and Tier-II cities.

What also helps are the measures announced by the government — special interest rates for sub-Rs 20 lakh home loans. Public sector banks charge a maximum interest rate of 8.5 per cent for loans below Rs 5 lakh and 9.25 per cent for those between Rs 5 lakh and Rs 20 lakh. A marginal part was also played by the lower input costs of steel and cement, which has seen some softening in the last 12-18 months.

All’s not over for premium
Unitech’s GM (Corporate Planning) R Nagaraju could have been exaggerating when he said premium housing had become extinct. The fact is quite a few companies are still operating at different price-points and the real estate market has got segmented,though with a bias towards low-cost projects.

For instance, just seven days after Tata Housing announced its Shubh Griha project, group company Tata Realty announced a high-end residential project in the Chennai special economic zone. At Rs 13,000 a sq ft, the price tag for the smallest apartments would be Rs 2.6 crore and the largest Rs 3.9 crore.

The complex would have about 180-200 apartments and is getting an encouraging response. For Tata Housing, too, Shubh Griha is just one of the eight projects the company is taking up. But, going forward, the company expects low-cost housing to have a 20-25 per cent share in the total mix, while another 25-30 per cent would be accounted by mid-income homes, with high-end products taking up the balance.

Abhishek Lodha, director of the Lodha group, says the company would build premium housing for margins, and mid-income housing for volumes.

The company has launched five mid-income housing projects in Mumbai and an equal number of high-end projects in South Central Mumbai. The Lodha Bellissimo in Mumbai’s Mahalaxmi area, for example, is offering super-luxury apartments spread across 48 floors.

Or, take Emaar MGF, for example. The company recently launched ‘The Terraces’ with an aim to cater to the growing mid-market segment. Phase-I of the project is expected to be completed by 2010, with units priced at Rs 36 lakh onwards. It would house three independent dwelling units, with the ground floor priced at Rs 46 lakh, first floor at Rs 38 lakh and the second floor at Rs 36 lakh — not exactly low-cost, but affordable for the mid-income population. The company, however, is also operating at a much higher price-point too — Commonwealth Village, for example, despite the temporary hiccups.

Many also say it’s just a matter of time before the premium housing market comes alive. Aditi Vijayakar, executive director (residential), Cushman & Wakefield, says: “In the future, as the demand for luxury projects gains momentum, big players will once again change their portfolio to high-end apartments.”

Then there are, of course, recession-proof areas, like Mumbai’s Bandra or Santa Cruz. Prices continue to rule high at Rs 20,000-40,000 a sq ft, mainly because of the demand-supply mismatch and the aspirational value. Real estate developers all over the country must be hoping the tag extends to many other areas as well.

Source : http://www.business-standard.com/india/news/developers-buildlow-margins-high-volumes/360489/

Kolkata, Chennai prices drop the least among major cities

Kolkata’s real estate market has historically remained far more stable than those in other large Indian cities

Kolkata: Real estate rates in Kolkata and Chennai didn’t rise as rapidly as those in Mumbai, Delhi and Bangalore in the heady years of the boom. Now, as prices plunge in these cities, rates in the two metros aren’t falling as much, say international property consultants including the local arms of Cushman and Wakefield and Jones Lang LaSalle Meghraj.

The reason: better balance between demand and supply.
Less volatile: A building under construction in Kolkata. Property prices in the city fell by 14%, against 35% in Mumbai and 24% in Bangalore. Indranil Bhoumik / MintBetween January and March, when real estate developers were reeling under the impact of the credit crunch and slowing demand, and property prices dropped sharply across the country, prices of new homes in Kolkata fell by up to 14% from September last year, whereas they fell by up to 35% in Mumbai and up to 24% in Bangalore, according to Cushman and Wakefield. In Chennai, too, the decline wasn’t as sharp—prices fell by up to 18% but only in some neighbourhoods; in others, there was no change at all.

In Chennai, according to the consultancy, buyers are more sensitive to design and functionality than prices because of which developers weren’t forced to offer hefty discounts—like they were in other cities.
And in Kolkata, the prices didn’t rise as high as they did in some other cities. “In markets such as Mumbai and Delhi, builders overestimated the demand for residential properties, especially in the high-income segment, or properties worth Rs1 crore and above,” said Kaustuv Roy, executive director of Cushman and Wakefield. “This led to an oversupply of such properties in these cities and prices crashed. But that didn’t happen in Kolkata.”
And during the peak of the real estate boom in 2006, prices of residential properties in the upscale Ballygunge area of south Kolkata were Rs3,200-5,500 per sq. ft whereas in comparable areas of Delhi such as Vasant Vihar, the rates were Rs12,000-14,000 per sq. ft, according to Jones Lang LaSalle Meghraj.

Kolkata’s real estate market has historically remained far more stable than those in other large Indian cities. According to a recent report by investment bank Goldman Sachs, even in 1996, when there was a major correction in property prices across the country, prices of residential and commercial properties in Kolkata fell only by 26% and 35%, respectively, whereas in cities such as Mumbai and Bangalore, the drop was at least 50%.
“There’s not been much speculative play in Kolkata properties, which is another reason why prices didn’t go up fast,” said Abhijit Das, joint managing director of Kolkata-based real estate broking firm Lemongrass Advisors Pvt. Ltd. “Also, Kolkata-based developers weren’t as leveraged as the leaders in the industry, who were forced to cut prices sharply when things weren’t selling.”
“The typical debt-equity ratio of real estate developers in Kolkata is 1:1, but for bigger developers, the ratio is much higher—even 4:1 or 5:1 in the case of some companies,” said Pradeep Sureka, director of the Sureka Group, a leading real estate developer in Kolkata.

Source : http://www.livemint.com/2009/06/09224724/Kolkata-Chennai-prices-drop-t.html?h=B

India’s special estate zones

The government should review SEZ policy for the unintended effects: Instead of manufacturing clusters, India seems to be getting real-estate developers

The government’s policy on special economic zones (SEZs) has come under fire many a time this decade. It’s again back in the media spotlight, with the Supreme Court’s refusal last week to grant Mukesh Ambani’s Maha Mumbai SEZ more time to acquire land. Botched land acquisition is a central problem, but that’s not the only one: There’s a good case to be made that the government isn’t achieving what it set out to do.

When India started on the SEZ track earlier this decade, it meant to imitate China. There, SEZs—free-trade areas with a liberalized environment that help form business clusters focusing on particular activities—have provoked the envy of the world. But instead of getting manufacturing clusters, India seems to be getting real-estate developers masquerading as SEZs.

Illustration: Jayachandran / MintFirst, too many SEZs have been granted approval. With 568 proposals okayed since 2005, India has lost a lot of potential tax revenue, which the government claims is offset by higher employment. If that’s the case, then it’s doing poorly: Since 2006, SEZs have seen investment worth Rs77,058 crore, but have employed only an extra 214,499 persons—that’s Rs35 lakh for every person hired.

Second, as Partha Mukhopadhyay at the Centre for Policy Research in New Delhi has argued, most of the jobs seem to be generated in only five states—that too in districts already well industrialized or urbanized.

Third, the size and nature of SEZs also raise questions. Mukhopadhyay has shown that as of 2008, 94% of SEZs are less than 3 sq. km in size, most of them in the information technology (IT) sector.

These are, then, not manufacturing clusters. They don’t hire the low-skilled workers who need to be integrated into the labour force, and they don’t build new centres for commerce. If anything, they capitalize—like the Maha Mumbai SEZ—on existing urban centres that will only serve to worsen urban imbalances.

All this lends credibility to the theory that SEZ developers are looking to make a fast buck with real estate. After all, the SEZ Act 2005 only requires 35% of a zone to be devoted to productive activity. For the rest, residential buildings, hotels and office space are attractive diversions from producing goods. The Reserve Bank of India has generally treated SEZs as real estate ventures, not allowing them access to certain foreign credit.

If not for all the controversy SEZs have sparked, the government should at least review its policy for all the unintended effects generated.

Source : http://www.livemint.com/2009/06/09214020/India8217s-special-estate-z.html?h=B

Demand for homes inching up, but recovery likely to take months

Buyers say the ground reality hasn’t changed much, prices still high

Mumbai: Home sales in India are trickling back in some sections of the market, but industry watchers say a rebound is months away as buyers await further price corrections.

Builders have begun new projects after a year-long hiatus, and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch.
“While the market has turned up, I don’t expect it to be back to 2007 or 2008-beginning levels for another six months or eight months,” said Rajesh Goenka, chairman, Axiom Estates, a real estate agency servicing overseas Indians, mostly in the earning bracket of $100,000-300,000 (around Rs47.5 lakh-Rs1.5 crore) a year.

Indian realtors have spent months battling a severe cash crunch as high interest rates and a slowdown kept buyers away and funding from investors dried up. But, a spate of interest rate cuts and a sentiment revival have encouraged builders to focus on middle-income buyers by launching new projects or re-marketing older ones as mid-income properties.

Unitech Ltd, Parsvnath Developers Ltd and India’s top listed real estate firm DLF Ltd redesigned projects and cut costs to appeal to a wider consumer base. Demand is swaying towards affordable housing.

In the quarter to March, half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Leases Foras Real Estate Rating and Research.

Even though builders say new projects are being lapped up, home loans are not picking up as fast, suggesting that the homes were picked up by investors, said Pankaj Kapoor, founder and chief executive, Leases Foras.

Homebuyers say that the ground reality hasn’t changed much. Prices haven’t fallen as anticipated with builders’ standing guard, hoping prices will continue to firm and investors, too, hope for a return in pricing.

Source : http://www.livemint.com/2009/06/10004920/Demand-for-homes-inching-up-b.html?h=B

Rents down across NCR, owners look to sell: report

Gurgaon:

Residential and commercial rents have been on a downward trend in Gurgaon in the aftermath of the slowdown the IT and financial sectors have been experiencing of late.

According to quarterly reports and analysis released by real estate analysts, 2009 “is expected to be challenging with credit being tight, fewer buyers, higher expectations of better deals and sluggish business models across sectors in Delhi and NCR”.

Sanjay Dutt, CEO (Business) Jones Lang LaSalle Meghraj (JLLM), said the residential rental market has slowed down in Delhi and NCR. “There are transactions happening but they are certainly not yielding the kind of rent they did during the peak phase. There are significant time lags between transactions and volumes have dipped. Expatriate movement is also at an all-time low,” he said.

According to CB Richard Ellis’s India Office market view, the first quarter in 2009 witnessed an increase in supply (around 0.25 m sq ft) of furnished space and availability of sub lease options in Gurgaon.

Source : http://www.indianexpress.com/news/Rents-down-across-NCR–owners-look-to-sell–report/474038/

Realty firms focus on ‘affordable’ homes to boost sales, profits

Unitech launched its new initiative branded Uni Homes, which will have apartment sizes starting at 660 sq. ft

New Delhi: To boost slowing demand in the realty sector and tap the growing market for affordable housing, realty firm Unitech Ltd will build 20,000 homes this year, priced between Rs10 lakh and Rs30 lakh, launching its first such project in Chennai this month.
India’s second largest property developer by market value on Tuesday launched its new initiative branded Uni Homes, which will have apartment sizes starting at 660 sq. ft.

The realty firm said its second such project will be constructed in Manesar in Haryana, on the outskirts of New Delhi. The apartments in Chennai would cost around Rs10 lakh and those at Manesar around Rs15 lakh, it said.

Faced with falling sales on the back of an economic slowdown, India’s realty companies have been launching what they call affordable housing because they say there is robust demand in this segment.
Earlier this year, Unitech had launched a project in Gurgaon, south-east of New Delhi, where apartments are priced between Rs28 lakh and Rs40 lakh. All 750 homes were sold in 45 days, the firm said. Encouraged by the response, it launched another project, also in Gurgaon, with prices at Rs35-45 lakh. It has so far sold 180 of the 200 flats in that project.

In May, Mumbai-based Tata Housing Development Co. Ltd launched a low-cost housing project branded Shubh Griha in Boisar, around 50km north of Mumbai. The apartments of 283 sq. ft, 360 sq. ft and 465 sq. ft would cost between Rs3.9 lakh and Rs6.7 lakh, the company said.

In March, Mumbai-based developer Lodha Group launched Casa Bella, an integrated township project in Dombivalli, a Mumbai suburb, where apartments would cost between Rs11.7 lakh and Rs24.3 lakh.

In August, Bangalore-based realtor Puravankara Projects Ltd launched a unit called Provident Housing and Infrastructure Ltd to construct apartments priced at Rs10-20 lakh in cities such as Bangalore, Chennai, Hyderabad, Coimbatore and Mysore.
In May last year, Omaxe Ltd, another New Delhi-based developer, set up a subsidiary called National Affordable Housing and Infrastructure Ltd to build homes in the Rs3-15 lakh category in smaller cities such as Sonepat in Haryana, and Nimrana and Bhiwadi in Rajasthan.
“There is a demand in the affordable housing segment. Interest rates have come down and that helps because people can take loan at a cheaper cost,” said Anshuman Magazine, managing director of CB Richard Ellis, a real estate consultancy firm. “There is also a renewal of confidence among buyers.”

Unitech expects to start its Uni Homes projects in Hyderabad, Bangalore, Kolkata and Lucknow.

The company said these projects will all be well located. “The project in Chennai will not be very far away from the city.”
Unitech plans to invest Rs1,700 crore this year to build these homes.
“This is just the construction cost,” the spokesperson said. “Land for the projects has already been paid for,” the spokesperson said.
The real estate company says it owns around 8,000 acres of land in various cities, on which it can develop some 500 million sq. ft of residential and commercial space.

Source : http://www.livemint.com/2009/06/10004958/Realty-firms-focus-on-8216a.html?h=B

Loans likely to get cheaper as Govt prods banks to cut rates

New Delhi, June 10 (PTI) Home and other retail loans and industrial lending may become cheaper soon as public sector banks are likely to cut interest rates after the government today prodded lenders to provide credit at reasonable rates to spur the economy.
“Our bank will decide on lowering interest rates by the end of this month,” country’s largest lender SBI’s Chairman O P Bhatt told reporters after a meeting between PSU bank heads and Finance Minister Pranab Mukherjee here.

Expressing concern over non-availability of credit at affordable prices from banks, Mukherjee said, “As a financial intermediary, the banks have to stand-by to provide credit at reasonable rates. This is an area of concern in many quarters both within the government and outside,” he said.

He said reduction in key rates by RBI is not getting adequately reflected in the reduction of prime lending rates by banks. “I would urge the banks to address these concerns expeditiously and in adequate measure. This will help restore the environment for rapid growth and ensure that the growth process benefits all our people,” Mukherjee said.

To a query as to how much the rates could be cut, the finance minister told reporters, “All possibilities will be explored.I can’t quantify it (rates cut).” PTI

Source  : http://www.ptinews.com/pti/ptisite.nsf/0/F7FA005069D1F8F3652575D1003F7D5E?OpenDocument

Developers Resort to Discounts to Sell Commercial Properties

Realty companies are resorting to discounts to sell commercial properties in order to improve cash flows and reduce mounting debts. DLF, the country’s biggest real estate firm by market capitalisation, has recently sold its 66% stake in a special purpose vehicle that owns eight acres at Prabhadevi in Mumbai for Rs 310 crore, which analysts feel was at a discount. It is also eyeing to raise around Rs 2,000 crore by selling two commercial properties in the city. Unlisted firm K Raheja Universal recently sold a plot in Santa Cruz in north Mumbai for around Rs 60 crore.

Mumbai is not the only city witnessing distress deals in the commercial property space. Bangalore-based Sobha Developers is learnt to have put a plot in the country’s IT capital on the block with a ticket size of Rs 100 crore. India’s second-largest firm by market cap Unitech, too, is going all out to sell some of its commercial properties to pay down debt. In the past few months, it has sold its Marriott Courtyard Hotel in Gurgaon for Rs 232 crore and an office property in Saket, New Delhi, for Rs 500 crore. The combined debt of DLF, Sobha and Unitech is estimated to be at Rs 25,000 crore. Vimal Shah, managing director, Akruti City, a city based real estate firm, said: “While the residential space has started looking up, commercial properties do not have buyers. Many big builders all over India are cautious with their commercial complexes.”

In the past three months the commercial property rates in New Delhi, Mumbai and Bangalore have witnessed a 30-45% decline in price. Rates could fall further if analysts are to be believed. Anuj Puri, country head, Jones Lang LaSalle Meghraj (JLLM), a property advisory firm, said: “It seems that the commercial property market will take at least a year to revive. Presently only the residential market looks stable and their rates may not fall for some time while commercial property could still see some correction in prices.” “Many big builders have come up with proposals of selling commercial properties in Mumbai and New Delhi,” opined Pravin Doshi, chairman, Acme Group, a Mumbai-based real estate developer.

Source : http://www.indianrealtynews.com/real-estate-india/mumbai/developers-resort-to-discounts-to-sell-commercial-properties.html

Big Malls Make a Comeback

The global financial meltdown and its concomitant effect on India’s real estate industry had forced developers to defer supply of mall space in 2008. However, in what could be seen as early signs of revival of retail real estate, as many as 100 malls, spread over 30 million sq ft, are expected to come up in 2009 and 2010, according to a report. Though this figure is much lower than what was projected a couple of years ago, analysts say this is finally a positive development, realtors are now more keen on matching supply with demand, placing themselves in strategic locations and offering greater differentiation. An additional 31,846,504-sq ft of mall space will be created across India, according to a report, Mall Realities India 2010, released by retail research group Images in association with the Shopping Centres Association of India, Jones Lang LaSalle Meghraj and Cushman & Wakefield (C&W) India.

The north zone would see the development of 14,790,000 sq ft, of which, Delhi NCR alone is expected to account for 7,645,000 sq ft of mall space. This translates into 45 malls expected in the north zone with 24 in Delhi NCR itself. “The NCR region is huge in terms of area, and residential areas give way to markets. Malls nowadays are not just about shopping. They are leisure centres, with cinema halls, restaurants, beauty parlours and other entertainment avenues. Only malls with a multi-faceted role to suit every pocket will survive,” says Rajeev Talwar, group executive director of New Delhi-based real estate firm DLF. West zone is expected to supply 7,438,504 sq ft through 47 malls. South and east zones would account for 29 malls over 5,865,000 sq ft and 13 malls over 3,753,000 sq ft, respectively.

Says Vikas Oberoi, managing director of Oberoi Constructions, “I think any mall above half a million sq ft will be the order of the day in future. On the outskirts of the city, the size could be over one million sq ft. The advantage of big size is that one can have everything under one roof — food, cinema, fashion, home wear and personal care. Customers would get a wider choice and they would consider it to be a destination mall.” In 2008, 54 per cent of expected mall supply was deferred to 2009-10. Of the proposed 74 malls at the beginning of first quarter of 2008-09, only 34 were delivered by the year-end. At 9.7 million sq ft, Delhi NCR had the largest share of this supply. The credit crunch hit the developers hard, forcing them to put their mall development plans on hold.

“Construction was put on hold because of lack of funding, but as long as there is demand for residential units, there will be a demand for malls. It’s all about the location and positioning of the mall,” explains Snehal Mantri, director (marketing) of Banglaore-based Mantri Developers. The country’s retail sector as a whole has been experiencing significant pressures in terms of cash crunch and depressed sentiments. “Lower or negative revenue growth over last year on same store basis and high rental costs of the stores added in 2007-08 have forced brands/retailers to take a re-look at their real estate portfolio. The main challenge for the sector over the past few quarters has been sustainability,” says Tanuja Pradhan, national head (research services), C&W. Malls across the country have seen a drop of 25-30 per cent in footfalls and 10-15 per cent dip in sales. Mall operators and builders are looking at various options to push profits.

Big retail companies are forging revenue sharing arrangements with mall owners and developers. This is expected to be the model of business relationships between organised retail and property owners in the future. Spencer’s of the RPG group, the People Store chain of the Aditya Birla group and independent retailer Vishal have been able to win over developers who have now agreed to lower rents in lieu of a part of store revenues. Others are looking at various marketing ploys to boost revenues. Automobile company Bhasin Group’s real estate arm has announced a theme mall by the end of March 2010 year in Greater Noida (Delhi’s NCR). The mall, The Grand Venezia is to be built at a cost of Rs 500 crore. It recreates the ambience of Venice with Italian gondolas sailing through a canal located in the heart of the mall with each shop having access to it. It will have a 1.5 million sq ft shopping mall, an office tower, 2-lakh sq ft commercial tower, a 5-star luxury hotel, lifestyle clubs, gaming zone, multiplex and an amphitheatre. In Kolkata, Ambuja Housing Development is planning a mall with a 1,000-sq ft butterfly park on the second level, housing 40 species of butterflies.

Besides, there would also be a 4-screen cineplex, entertainment and food courts, banquet halls, 1,500-car parking area and around 200 small and big retail outlets. The mall will also have a 3-4 star budget hotel with 150 rooms to take advantage of the proximity to the airport, although no brands have yet been finalised. The built-up area of City Centre New Town is 6.8 lakh sq ft and the expected date of completion is September 2009. C&W’s Pradhan advises those looking at the retail sector to focus on 5 Ps — positioning for the brand, pricing for the right tenant mix, packaging for design and interiors, product for the perfect merchandise mix and promotion for malls and brands within malls. Dharmesh Jain, managing director of Mumbai-based Nirmal Lifestyle, sums up the future of India’s mall growth, “At least 80 per cent reduction in mall space is because of slowdown and turmoil in real estate. People who want to enter the business will find it difficult to survive, because the existing ones want to grow bigger. However, I think there will be a shortage of mall space from 2011-12. The economies of scale will come in handy for big malls, the reason why people will be looking for big malls,” he says.

Source : http://www.indianrealtynews.com/real-estate-trends/big-malls-make-a-comeback.html

Unitech launches Uni-Homes in Sector-117,Noida

Unitech Uni-Homes Project
Unitech Group Soon Launching New Affordable Residential Housing Project Uni-Homes Sector 117 FNG Express Highway Noida. Apartments ranging 2BHK around 23 Lacs, 3BHK around 31 Lacs Rs pre register your self not to miss life time opportunity. Unitech Uni-Homes is beautiful well planned Housing Township in Delhi NCR and is spread over 25 acres of land. Uni-Homes are luxury Affordable Residential Housing Apartments with all Modern Amenities.
Location of Unitech Uni-Homes Sector – 117 FNG Expressway Noida, Well connected to Delhi, 10 Minutes drive to nearest Metro Station in Sector 32, 2 Minutes drive from FNG Express Highway, 12-15 Minutes drive from Atta Market Sec 18 Noida, 7-10 Minutes drive to Fortis Hospital, 35 Km from Indira Gandhi International Airport, 10 Minutes drive from Shipra Mall Common Amenities of Unitech Uni-Homes Shopping Arcade, Temple, Schools, Medical facility, ATM, Banks, Transport to City Centre, Landscaped Green Area, Children play area, Ample Parking Area, Community Hall, Party Hall, Clubhouse, Solar Water Heating, Water Treatment Plant, Power Back-up for Utilities, Round the Clock Security, Fire fighting system, Gymnesium, Swimming Pool, Tennis Courts
Types———–Size————Price
1BR-1T————580————2146000
2BR-2T————776————2871200
3BR-2T————951————3518700
3BR-2T————990————3663000
Booking Amount of Unitech Uni-Homes
Rs 2 – 3 Lacs
About Developer
Unitech Group is one of the major township planning and real estate development companies in India. Unitech entered civil engineering in 1974 with its sights firmly set on the future. It has an impressive mélange of heavy construction, leisure and entertainment projects, hospitality business and development of mini cities/townships construction of residential and commercial complexes, including shopping malls and various types of dwelling units. Unitech commands strong brand equity as also a pan India presence with focus on residential development – the most profitable real estate segment.
Loans & Property Curry

116-B, Shahpur Jat,
Khelgaon Marg, Delhi-110049,

Source : http://www.pressreleasepoint.com/unitech-launches-unihomes-sector117noida-9999432002-9873333348

Public sector banks woo customers with ‘balance transfer’ on home loans news

Public sector banks have started aggressively wooing home loan customers away from private sector banks and HFCs with ‘balance transfer’ facilities to encourage them to make the switch. However, in the process they are not letting their guard down even as they seek to build their retail loan book. Caution in respect of the quality of assets remains the key concern even as the banks go all out to attract potential switch prospects.

What public sector banks have going for them is the interest rate differential on the home loans they offer and that of private sector banks and housing finance companies. When this is large enough, the customer has a good incentive for making a switch. For example on a Rs30-lakh home loan with a 20 year tenure, public sector banks currently charge a floating interest rate of about 9.25 per cent, while select private sector banks / HFCs are quoting between 9.75  and 10.50 per cent.

According to a senior public sector bank official, customers would do well to first do a cost-benefit analysis before opting for a transfer of their outstanding home loans from one bank to another. The reduced EMI instalments should far outweigh the processing fee charged by the new bank and the penalty charges that the closing of the loan account with the old bank would attract.

According to another senior official of a different public sector bank, customers opt for balance transfer due to the extremely competitive rates vis-à-vis rates charged by private banks. However the transfer process is preceded by a due diligence exercise on the customer.

The State Bank of India, the country’s largest bank, has reportedly received a huge number of applications for takeover of home loans, ever since the launch of its special home loan scheme offering loans at 8 per cent. According to an official the response has been very positive and offers the bank a way to enhance its position in the home loans market.

Andhra Bank too has taken over home loans from private sector banks and is known to be aggressively pushing to up its retail loan share. However, according to a senior bank official it is not that the bank takes any customer who wishes to switch over, rather there is a rigorous process that is followed which includes checking the title deeds and carrying out all due diligence. The customer stands to benefit as the bank charges a lower rate of interest than its competitors in the private sector.

However, not all public sector banks encourage takeover of loans as there is much uncertainty and risk involved. For instance, if the interest rates were to fall again, the customer shifting out cannot be ruled out. Several public sector banks therefore remain wary of loan acquisitions and agree to in on a selective basis.

Banks that have made deep rate cuts have started reaping the benefit of a revival in home loan demand. They have been able to ramp up their home loan disbursals in the last couple of months, attracting new home buyers as also customers from other banks and institutions.

According to banks loan disbursals will gather traction in the second quarter of the current financial year. They expect the budget provisions to offer major tax breaks for the housing sector.

Three large players – HDFC, ICICI Bank and State Bank of India account for more than 85 per cent of the home loan market with SBI disbursing Rs2,358 crore of home loans in the first two months of the launch of its Happy Home scheme that offers loans at 8 per cent interest. The scheme was launched in February 2009 and has enabled the bank to post a 15 per cent growth in its home loan portfolio. The scheme offers the cheapest home loans in the market today.

Source : http://www.domain-b.com/finance/banks/20090608_public_sector_bank.html