NCR Developers Expecting High Sales during Navratri

After a lull of almost six months, real estate developers are once again launching residential projects aggressively to cash on the Navratri festival, considered auspicious for property buying. The festival of Navratri comes after the Shraadh period, considered inauspicious in the Hindu religious calendar, when property buyers do not book houses. The interest from developers was so much that over a dozen residential projects by companies such as Parsvnath, BPTP and Emaar MGF were launched in the National Capital Region in the past week. DLF, the country’s largest developer, is launching the second phase of its Capital Greens in West Delhi on Tuesday. DLF sold 1,356 apartments under its first phase of the project in a single day in April this year, due to competitive pricing.

Emaar MGF, a Delhi-based developer, launched Emerald Floors Premier on Monday after it sold off Emerald Floors and Emerald Estate in the Emerald Hills integrated gated community project in Gurgaon. The same company launched plots and villa floors at Jaipur Greens on September 19, where it has sold 120 plots so far, while Parsvnath Developers also launched Parsvnath City at Saharanpur in UP last Sunday. According to property consultants, this year the new launches were double the number of last year’s Navratri launches, when the property market was in a bad shape. Home sales had fallen by over 50 per cent from the beginning of the year, and developers were offering freebies and discounts to sell their existing projects.

Though on a lower scale, Mumbai also witnessed a couple of launches of luxury projects in South Central Mumbai by companies such as Indiabulls Real Estate and Orbit Corporation last week. “Every day, we are seeing one or two launches and every developer is launching projects. Last year, most of them were selling old products due to the downturn. This year, we have a seen a slew of new projects during Navratri,”said Raminder Grover, chief executive of Homebay Residential, a unit of property consultancy Jones Lang LaSalle Meghraj. Consultants say the increased activity in home sales is giving confidence to developers to launch new projects. Residential prices have gone up by 15 to 20 per cent in the past six months or so, as developers sold projects which were aggressively priced and marketed.

“The last few months were indeed good for the residential market. There is an increased activity due to good launches and better pricing by developers,’’ says Anshuman Magazine, chairman and managing director of CB Richard Ellis, South Asia. Grover says that unlike last Navratri, developers are not giving any freebies and discounts, as they were confident of selling their products without any added attraction. Magazine adds that developers are selling homes with better amenities and designs to prospective buyers. “Though developers are marketing their products aggressively, buyers have a high level of awareness on the available projects. It is certainly a buyers’ market now,’’ said Magazine.

Source : http://www.indianrealtynews.com/real-estate-developers/ncr-developers-expecting-high-sales-during-navratri.html

Real estate firms build hopes on festival sales

NEW DELHI: Property firms are launching housing projects and raising pitch for ongoing ones in the hope of making decent sales going into the  festive season. The mood among builders may be buoyant, but very few believe price hike is possible as demand is still hesitant and new supplies are hitting the market.

The festive season, which usually begins late September with the Hindu festival of Navratra and continues up to Christmas, often sees higher sales of property, cars and other durables.

“Last year’s festive season was a total washout. But this time indications are that we are back to normal,” said Mumbai-based Lodha Developers director Abhisheck Lodha. He said property firms usually make 30% of their sales in one-and-a-half month between Navratra and Diwali, and this time will be no different.

Last festive season though was disastrous. Lehman had collapsed plunging the economy in a crisis and driving away homebuyers.

Mr Lodha is planning to launch two new projects, comprising apartments priced over Rs 1 crore, in Mumbai’s suburbs of Andheri and Thane. So far, the slow return of housing demand was scripted by lower-priced homes. But Lodha’s offerings indicate the builder is confident of getting buyers for high-priced segment as well.

Similarly in Delhi, DLF is preparing to launch over 1,500 apartments in a project in which it sold 1,350 apartments just six months ago.

DLF says it is yet to fix a price or number of apartments to be sold for the project, but brokers on behalf of DLF are offering apartments at a 30% premium to the first phase price. “If a location has a very good demand and not enough supply, prices will go up,” says DLF executive director Rajiv Talwar. Delhi may be one such market as it has lived under state-controlled DDA’s monopoly for long and has not many private developers building homes.

But price rise is not something many are really betting on. “Housing demand is not going to rise dramatically in a hurry. The market remains price-sensitive and any attempt at price hike will adversely impact demand,” says Vipin Aggarwal , principal of $200-million India Industrial Growth Fund. Mr Aggarwal is currently engaged in raising a $600-million India-focused real estate and special situation fund.

Agrees Pradeep Jain, chairman of Delhibased Parsvnath Developers and head of the NCR chapter of industry body CREDAI. “We have requested all  developers not to increase prices. If we increase prices in the next six months, it’s likely that demand will be hurt and we may get into that vicious circle of lower demand and higher debt,” he says. He is also launching more projects in NCR and western UP, as he expects demand to go up in the next few months on housing finance companies further lowering mortgage rates.

But Omaxe chairman Rohtas Goel says prices will go up after Diwali as festive sales will help ease cashflow pressure for developers. But international real estate consultancy DTZ India director Ambar Maheshwari says it’s still a delicate situation in the property market. “Developers still carry a lot of debt despite a string of QIPs and need steady cashflow to service that,” says Mr Maheshwari.

Several listed realty firms, including Unitech, Indiabulls real estate and HDIL, have in the past six months raised funds via qualified institutional placement route.

But this festive season, unlike last year, homebuyers may not get many freebies. “Developers’ margins have shrunk and there is little scope for freebies, even though in some cases, one would see such offers,” says NCR-based Supertech CMD R K Arora, who is offering free ACs in one of his projects.

Source : http://economictimes.indiatimes.com/News-by-Industry/Real-estate-firms-eye-festival-sales/articleshow/5040847.cms

Real-estate companies are now focusing on project execution — Chairman, Parsvnath Developers

Consumer interest seems to be returning to the housing market, albeit slowly, and the real-estate industry is hoping that the ensuing festive season augurs well for the sector. Realtors claim that demand is showing quarter-on-quarter improvement on the back of softening interest rates, Government’s support measures, such as interest subvention, and better market sentiment. Business Line caught up with the Chairman of Parsvnath Developers, Mr Pradeep Jain, for insights into the market mood, the company’s strategy for the festive season and the status of its commercial projects.

Excerpts from the interview:

What are the signals you are getting from the market? Is interest building up on the housing side again?

Yes. Between the fourth quarter (FY 2008-09) and now, I think demand has increased by 100 per cent and it is improving each day, particularly in housing. There was a time when consumers were expecting price correction, and developers realised the market need and made prices and products affordable. In fact, there are a lot of factors that came into play — the capital markets improved, there was support from the Government, and interest rates on home loans also fell. I believe all these helped lift the mood.

But the demand is still largely restricted to the affordable housing space. Your comments…

Today, demand exists in all segments of the housing market. Definitely, there is great interest in affordable projects but we are also starting to see interest in the mid-segment and even luxury housing. Recently, we received the required sanctions and started construction of the Civil Lines project and we are already beginning to get good responses. In the Civil Lines project, the selling price is Rs 10,000 per sq.ft. Overall I am confident that things are looking up. In the festive season I expect further revival.
Real-estate companies have realised their mistake and are now focusing on execution.

We, as a company policy, are not buying any new property, but focusing on execution. The priority at this point is fast-tracking the execution and delivery.

Let me give some numbers… in September we are working on about 80 million sq.ft, of which, we put 42 million sq.ft on fast-track. Out of this, we want to deliver 30 million sq.ft in 24 months.

What is Parsvnath’s strategy for the festive season? Have you lined up new schemes or discounts to attract buyers?

Each year, during the festive season — which starts from Diwali and goes on till the New Year — a couple of things happen. People who live abroad or those living in India but working away from home and family tend to come home on a break. Second, the housing finance companies and banks come out with attractive offerings. Overall, the money circulation improves. This year, a major catalyst will be the revival of the market. I feel that those who are looking to buy a house for themselves will not hold their decision.

In the past, we have come out with various schemes and we may do it this year, as well. Where customers have bought a property but the payment is overdue for some reason, we offer discount on the interest levied for those customers who make their overdue payments in a certain timeframe. Such a scheme gives a breather to the customer and also helps regularise the payment. It also prompts decision-making. Then there are new launches. We have got new licence for a Rohtak project and a township in Saharanpur, so we are planning to launch them during the festive season.

When do you expect the commercial sector to revive? Could you give an update on your commercial plans?

The commercial real-estate market is still a subjective issue. In some areas there is oversupply, and in some, undersupply. I believe that office demand is getting back but retail is still a concern as retailers are looking at confirmed and committed footfalls.

If you look at our metro projects, over the last couple of weeks, we have been receiving a lot of queries as Akshardham station is about to be completed. Similarly, in Model Town, the station is nearly complete, the commercial operations have started and the retail is about to be completed. We are receiving queries for those as well.

Again, in the case of commercial, wherever we have started development, we are pushing to complete those. In Delhi, we are already working on over 2 million sq.ft area, of which, 1.2 million sq.ft will be completed by the end of this fiscal and 8 lakh sq.ft will be completed in the next two years.

We are pushing to complete on fast track all the metro station properties because there is good demand. We hope to complete an overall 2.8 million sq.ft (total area across 13 metro properties) by 2012, so from 2013 onwards we start getting Rs 300 crore in rental.

Source : http://www.thehindubusinessline.com/iw/2009/09/20/stories/2009092050701500.htm

Indian Landscape goes greener

Globalization and free market economy being the order of the day, the landscape activities are no more confined to a few professionals. Landscaping has got the industry status with a lot of activities taking place over the last few years.

“The rapid urbanization and industrialization leading to the ongoing construction boom, malls culture, green belts, amusement parks and residential townships, all these have given a new dimension to the art of landscaping, points out S Jafar Naqvi, President, Indian Flowers and Ornamental Plants Welfare Association (IFLORA)

In fact, Naqvi notes, India is availing itself of the services of landscape professionals from Europe, Malaysia, Singapore and importing all kinds of high value products from all over the world”,

Today, green architecture and energy-efficient landscape designs propose an alternative idea of how the appearance of landscape can integrate more fully with the life processes of plants, rather than remain dependent only on their shape and form, says Professor M Shaheer, Shaheer Associates, a prominent landscape architect, based in Delhi.

Indian real estate developers like Ansal API, DLF Universal Ltd, Omaxe Ltd., Hiranandani Developers, MGF Emaar Properties (Dubai), Prestige Group, Supertech, Unitech Builders, Rizvi Builders, Hafeez Contractors, K Raheja Group, Raheja Developers, Meriton Group, Parsvnath Developers, International Land Developers Ltd., Aashiyana Group, Sahara Group, JMD Ltd., Amrapali Group, Panchsheel Buildtech, M2K, Kalpataru Constructions, Merlin Group, Prestige Builders, Rungta Group and many more have joined the new urbanization revolution in India by creating new “Green Living” concepts.

It is undeniable that plants and trees play a key role in the development of our society and culture. Healthy environment is a boon especially for the growing children. Professor Dario Gamboni puts it even more pithily: “Plants make the shape of life itself visible”,

Naqvi adds, “The concept of using Indoor plants in offices and work places is growing in India rapidly because it enhances the employees’ working capability and creativity, while making the environment more peaceful and friendly.” Alongside, some of these plants are useful in curing many common diseases. Therefore offices of MNCs and many corporate bodies in India are growing them often in their office premises

Secondly Pune is a major production hub of quality plants, trees, shrubs and playing an important role to protect environment by supplying nursery plants to almost all top landscape designers, real estate developers, Urban development departments, and also exporting to other countries.

The following from Pune based companies participated in the expo. Display of Maharashtrian produces in this expo is a major attraction among landscape designers, officers of Urban development departments and nurserymen from all over India coming to source their requirements through this mega platform.

K F Bioplants, a leading tissue cultue lab in the country and a most successful Indo-Dutch joint venture project, supplying and exporting tissue culture plants from India.

Tukai Exotics -one of the prominent nursery project involved in developing of all kinds of trees and plants and placing Pune as a sustainable long term suppliers to green projects.

Tropica Nursery- the collection of different imported and indigenous accessories and inputs is the specialisation of this company supplying all kinds of pots, plants, trees, and other inputs all over India.

Vardhaman Fertilizer -a leading soluble fertilizer company focusing on high quality growing of plants, flowers and other horticulture crops.

Gajra Nursery -Ornamental plants and the variety of big size trees is the specialization of this company and became a reliable supplier to sports complexes and new urban projects coming in different metros.

Jagtap Horticulture-Pune’s one of the oldest nurserymen diversified into gardening centre, landscaping and importers of inputs for landscape and golf course sector.

It is also proven through various surveys that in the developed world the productivity of working staff has increased by 10 to 15 per cent by providing green surroundings or a good green plant nearby.

The country’s landscape industry has devised its own architectural creativity in the last five decades.

In view of the growing consciousness on Redesigning India thorough promotion of environment-friendly concepts, the 4th International Landscape & Gardening Expo 2009, to be held on 2-3-4 October 2009 in Hyderabad, India, will be an ideal destination for the entire landscape industry. It will be a single platform and a meeting place for all stakeholders under one roof. This mega event will be a world class experience for all professionals in this sector to increase their business through interaction and business dealings.

Adding value to the event will be a two-day conference devoted to “Plants, Places and People”. The discussions will focus on improving the quality of life of people by preserving the environment through proper planning of public places, parks and recreation centres. It will open a new chapter in the history of India’s greening movement.

Key speakers, who have been invited, are: the President of Indian Society of Landscape Architects (ISOLA) Ms. Savita Punde and the presidents of IFPRA, GCSMAI, HMDA, IBA, ITC Group, Raheja Group, Tourism Industry, Nursery Industry, Sports Authority, Amusement Park Industry, Lighting Industry and individuals working for Green sector.

Source  : http://www.indiaprwire.com/pressrelease/agriculture/2009091834008.htm

Demand from NRIs, north Indian buyers keeps Goa’s realty mkt abuzz

The tiny coastal state of Goa, known to be the best remedy for one to distress, detox and recoup, has in recent years attracted lot of investment in  holiday homes by non-resident Goans (NRGs), non-resident Indians (NRIs) and domestic buyers mainly from north India.

While the coastal belt with a good ‘sea view’ is always in demand, people are also scouting for inner lands overlooking hills, rivers or valleys with proximity to the city.

For the first time, the state is also witnessing entry of major builders such as Pune-based Gera Developments, Mumbai’s Dynamix Group and Tata Housing and Delhi’s DLF Group and Parsvnath Developers.

So what’s triggering this real estate growth? Better quality of life, higher standard of living and good resale value, say market analysts. Earlier speaking to ET, Dinar Tarcar, proprietor, Landscape Developers, said: “people desire a good life,” which is prompting many from Delhi, Mumbai, Uttar Pradesh, Bihar and Madhya Pradesh “to look at viable options.” The demographic profile pointing to Goa to have consistently the highest per capita income and highest standard of living, is attracting people to the state. Moreover, owning a place in Goa has now become a style statement.

Property prices picked up in Goa in 2004. While many cities saw a decline with recession, in Goa, land prices have only stabilised, say developers. “In the cities, prices have not really fallen. Goa is land locked, which has kept the prices high,” said Dattaprasad Kamat, proprietor — Kamat Developers. While many new constructions are coming up, large-scale public protests against ‘mega developments’ have put many housing projects on hold, thereby hiking prices of land/projects unaffected by the agitation. Besides, many dealers who procured land at very high rates in the past few years are not willing to cut down prices.

Land value in capital Panaji has doubled in the last one year while other places across the state have seen a steady 20% increase. Nearly 75% of buyers in Goa continue to be second home seekers. “Economic meltdown has seen a 15% correction in land prices and this is unlikely to come down. If anything, prices in the interior villages will fall,” a real estate analyst said.

However, sources add that the realty market, which had seen a sudden influx of small-time developers from Delhi and Mumbai making for 25% of the sellers, are dropping rates and leading to ‘panic’ sales, while the seasoned reputed developers still prefer to hold on. According to them, with clear titled saleable land being scarce in Goa, prices will continue to remain high.

Presently Panjim is the most expensive place to acquire land. The average cost in Panjim rose from Rs 25, 000 per sq m to Rs 35, 000 per sq m, with prices ranging from Rs 50, 000-100,000 in Dona Paula and other water fronts.

Calangute and the northern coastal belt, comes a close second with the average price for a property being Rs 30,000 per sq m. Costs, however, increase with proximity to the sea. But head to south Goa, and you’ll probably get a better bargain. Prices here are said to be lower than northern coast with start up rate for a place near Colva beach between Rs 18,000 and Rs 22, 000 per sq m. Beaches in the north are abuzz with activities. In comparison, the coastal belt of southern Goa is known more for its picturesque locale.

Source : http://economictimes.indiatimes.com/Demand-from-NRIs-north-Indian-buyers-keeps-Goas-realty-mkt-abuzz/articleshow/5004637.cms

Realty firms look at PE bailout for hotel projects

Realty majors, left with few avenues to fund their ambitious hotel projects, are now hoping for a private equity (PE) bailout. Developers like Parsvnath, Nitesh Estate and Brigade Group have kicked off negotiations with PE players to bail them out.

New Delhi-based Parsvnath Developers, for instance, recently prepared an information memorandum for the purpose. “We plan to raise money for hospitality projects but currently it is in an early stage of discussion,” said an official on condition of anonymity. The company has expressed its intention to focus on six projects in Hyderabad, Ahmedabad, Lucknow, Goa, Mohali and Shirdi.

“Banks are still a little averse to lending to the hospitality sector even though signs of economic revival are looking imminent,” said K Ramakrishnan, executive director & head, investment banking, Spark Capital.

Technopak Advisors’ principal consultant (hospitality) Tarandeep Singh said, “PE funds are currently more liquid than bank finance and many funds have past experience of investing in hospitality.” He added that there are around 15-20 PE players who are scouting for good bargains in the budget hotel segment.

PE players like S Sriniwasan, CEO, Kotak Realty Fund, say that the hospitality business in India is promising from a long-term perspective despite the current challenges. “Despite the capital-intensive nature and high cost of land, I think the hospitality business is very promising. The need for hotels is only going to pick up as the Indian economy grows,” Sriniwasan said.

According to data provided by Venture Intelligence, a research service focused on PE and M&A deals, in 2007 there were nine PE deals in hotel projects worth $343 million, and in 2008 there were 11 deals worth $246 million. So far this year, there have been five deals worth $74 million.

Arun Natarajan, founder and CEO of Venture Intelligence, said that its real estate and hospitality focused PE funds are looking at investing mainly in hotel projects. “These funds will try and replicate the global hotel management model in India. Under this strategy, it would either build a new hotel or buy an existing property and then strike a deal with hotel firms for branding,” he added.

Realty companies are looking at joint ventures as well as the special purpose vehicle (SPV) model to partner with PE firms. Some PE firms are also looking to buy out assets of distressed hotel projects. Duet India Hotels, a $166.5 million fund that is a part of Duet Private Equity (DPEL), which acquired Dawnay Day Hotels for $33 million last year, is in the hunt for distressed properties.

http://www.dnaindia.com/money/report_realty-firms-look-at-pe-bailout-for-hotel-projects_1288631

Want to buy a home? Shift to a less costly city

A  study of households with an annual income of Rs 3 lakh (Rs 300,000) to Rs 10 lakh (Rs 1 million) in seven cities shows substantial variations in the type of houses they can afford to buy.

The study on affordable housing, done by property consultants Knight Frank, says the Rs 8-10 lakh (Rs 800,000-1 million) income category in Chennai can afford houses up to Rs 45 lakh (Rs 4.5 million), while the same group can afford houses up to only Rs 38 lakh (Rs 3.8 million) in Mumbai [ Images ] and Rs 37 lakh (Rs 3.7 million) in Bangalore. The same category in Hyderabad, Kolkata [ Images ] and Pune could afford between Rs 40 lakh (Rs 4 million) and 43 lakh (Rs 4.3 million).

In terms of apartment sizes, the Chennai households can afford up to 1,200 square feet, while those of Pune and Mumbai can only afford 800 sq ft and 950 sq ft, respectively.

In terms of affordable rates per sq ft, Pune can afford up to Rs 5,900 a sq ft and Bangalore only Rs 3,600 a sq ft, the study said.

“Mumbai’s high cost of living, coupled with the generally higher maintenance lifestyle, has adversely affected the affordability of households in the city. For instance, middle class households in Kolkata, Chennai and Hyderabad can afford houses valued at Rs 14-45 lakh (Rs 1.4-4.5 million), whereas households of similar stature in Mumbai can afford houses valued at Rs 12-38 lakh (Rs 1.2-3.8 million),” the study said.

“Affordable rates are higher if sizes are smaller. If buyers can compromise on size, they can afford higher priced apartments,” said Samantak Das, national head, research, Knight Frank.

The study assumes significance, as top real estate developers such as DLF, Unitech and Parsvnath have shifted their focus towards the Rs 20-60 lakh (Rs 2-6 million) income category in many cities, with the premium housing segment seeing sharp decline in sales after the economic slowdown and stock market decline impacted home buyers.

The report states that not all of the so-called affordable housing projects in the country are really affordable; they are way beyond the means and preferences of buyers.

“Although preferred unit sizes are less than 1,200 sq ft, many projects are offering greater sizes that are unaffordable. Based on consumer preferences, house property beyond Rs 5,900 a sq ft would be unaffordable across all cities covered,” it said.

The consultancy thinks it is premature for developer to raise prices now.

“It is too short a period for developers to increase prices. It is just euphoria after elections and a stable government and not supported by fundamentals,” said Gulam M Zia, national director, research and advisory services, Knight Frank.

Source : http://business.rediff.com/report/2009/aug/13/shift-to-a-less-costly-city-to-buy-a-home.htm

Realtors rebuild hopes on rising home sales

After a long hiatus, home sales are finally back on track. Sales of major real estate developers have more than trebled in the June quarter compared to the preceding three months, amid growing expectations that the good times will continue to roll.

Consider this: DLF, the country’s largest real estate developer by market value, has sold 2,500 apartments in the first quarter of the current fiscal, compared to nearly 600 in the quarter ended March 2009. In the preceding quarter, DLF had sold just about 120 apartments.

Unitech, the country’s second largest property developer, went a step further and sold 5,000 units in the first quarter, compared to 300 to 400 apartments in the preceding quarter.

Delhi-based Parsvnath Developers did 100-odd transactions against 25 to 30 in the previous quarters, and Omaxe reported sales of 700 units, compared to 200 in the same period.

“After a few difficult quarters last fiscal, we have seen a fairly good first quarter of the current fiscal. The economy on the whole has been showing signs of recovery, and activity in real estate has picked up,’’ DLF Vice-Chairman Rajiv Singh said.

Almost all of them are convinced that the future looks bright. While DLF’s Singh said he expected the market to improve, a Unitech spokesperson said the market would pick up in the second quarter, though demand would be mainly for affordable products.

“It is a good time to bargain-pick now,” said Ravi Ramu, director of Bangalore-based Puravankara Projects.

That the first-quarter sales are no flash in the pan is reflected in the fact that developers have lined up around 60 million square feet of new launches this year, more than double last fiscal’s bookings.

DLF plans to launch 8 to 9 million sq ft of city centre projects in Chennai, Kochi, Delhi and Gurgaon and 5 to 8 million sq ft of mid-income housing projects in the National Capital Region and southern cities. Unitech has launched buildings covering 15 million sq ft since April and plans to launch an additional 15 million by March 2010.

Apart from lower interest rates and affordable housing, the reduction in the number of fence-sitters has helped in a major way. ICICI Bank Chief Financial Officer N S Kannan said buyers had been postponing their purchase decisions in the hope that prices would fall further.

“There is a general sense now that prices have stabilised,” he said, adding “our disbursements, month-on-month, have increased and we would like to play in that market based on our current strategy on pricing”.

Though Kannan was not willing to comment on a specific number, sources in the bank said it was expecting a 20 per cent growth in disbursals in the second quarter.

SBI, the country’s largest bank, has set a monthly home loan disbursal target at Rs 2,500 crore compared to Rs 1,500 crore disbursed over the last few months. The bank is targeting a home loan growth of 30 per cent in the current fiscal against 21 per cent in 2008-09.

HDFC, the country’s largest home loan lender, saw its disbursals rise 22 per cent in the first quarter and expects the trend to continue.

While several property developers have ventured aggressively into Rs 20-Rs 60 lakh apartments and launched properties that were 20 to 30 per cent lower than the prevailing rates, interest rates have also softened in the last six months, which eased the monthly loan pay-outs of home buyers.

In December, the Indian Banks’ Association (IBA) and its members in December had announced new rates, under which loans up to Rs 5 lakh was offered at 8.5 per cent and those between Rs 5 lakh and Rs 20 lakh at 9.25 per cent.

Private sector banks have also reduced their retail lending rates 50 to 100 basis points in the December 2008-June 2009 period.

Analysts are also gung-ho. Pankaj Kapoor, chief executive of Liases Foras, a real estate research firm, said the momentum would increase after Diwali. “Now we are seeing a momentum for some time, lull for the next few days and then momentum. This will change as the economic recovery gathers steam,’’ he said.

Source : http://www.business-standard.com/india/news/realtors-rebuild-hopesrising-home-sales/366216/

Realtors see higher pvt equity investments

New Delhi, May 31 Enthused by a strong institutional response to QIP (qualified institutional placement) issues, builders are now anticipating revival of private equity (PE) investments at project level, but real estate funds want to see more sales in the property market before finalising deals.

Mr Pradeep Jain, CMD of Parsvnath Developers, says that PE firms have already started re-entering negotiations.

“With financial institutions responding well to the fund raising by real estate companies, PE firms do not want to be left behind,” he says, adding that Parsvnath would go for PE funding but only if a good opportunity crops up in SEZs and hospitality projects.

Developers argue that return of buyers into the residential market and new launches targeted at affordable and middle-income housing have improved sentiments in the last two months.

This, in turn, is prompting real estate funds to take a fresh look at the sector, they say.

“Yes. The PE firms have started showing interest in the real estate sector. We are in talks with a few of them for project-level funding,” Unitech said in response to an e-mail query.

The company is learnt to be in talks with PE funds for investments in two residential projects. Unitech, last month, had garnered Rs 1,625 crore from a QIP issue, lifting the flagging mood in the property space.

Still a fraction

But PE funds — most of which have not loosened their purse-strings for over six months now — feel that despite all the talk about sales picking up, volumes are still a fraction of the previous euphoric levels.

“The consumer sentiment is looking up but the big question is how much time it would take to translate into sales. Also this time, the PE pie has contracted as many funds are facing balance-sheet problems back home,” says Mr Jagdeep Pahwa, Director, Infinite India Investment Management, which manages $500 million of funds.

Given the tough market reality, the low-hanging fruit would be project-level PE funding. “Investing at the SPV level, particularly residential projects, is easier. Against this, PE investment at company level allows an exit only when the builder goes public, and even then, it carries risk factors like the sales position of the builder and capital market conditions,” Mr Pahwa said, adding that company-level investments also involved more intense portfolio management given that most builders had diverse projects.

According to Mr Om Chaudhry, CEO of FIRE Capital Fund, valuation is another sticky issue that is still holding PE players back. FIRE Capital has not made any fresh commitment in the last 2-3 quarters, and feels that the developers are yet to come to terms with ground realities, where sales cycle is stretched and more effort has to be put into selling of inventories.

“PE funds had made investment in 2007 and early 2008 at high valuation but many are yet to see those projects in development mode. Moreover, I feel that the valuation needs to come down by 50 per cent of 2008 levels, for PE funds to enter the market…What we have seen so far is a 15-20 per cent correction,” he says.

Source : http://www.thehindubusinessline.com/2009/06/01/stories/2009060151500100.htm

Luxury fails to sell

Developers are finding it difficult to push high-end apartments, villas and stand-alone bungalows; even enquiries have dropped by over 60 per cent

Demand for luxury and high-end residential projects, which were the business drivers for developers during the real estate boom, have taken a beating, due to the economic slump that has hit the sector.
Luxury homes come as apartments or villas with golf courses, swimming pools, Jacuzzis, terrace gardens and personal plunge pools. Such houses are priced at a minimum of Rs 2-3 crore, and could go up to as high as Rs 10-15 crore, depending on the location. They generated healthy profit margins for developers when the real estate sector was booming. But after the slowdown, developers are finding it increasingly difficult to push the luxury lifestyle units. Moreover, enquiries for premium homes have plummeted by more than 60 per cent.
“Industries across sectors have witnessed a slowdown. The real estate sector is no exception and there has been a cascading negative impact on customers’ sentiment, forcing them to either defer investment or reduce the investment bracket, given the present liquidity positions. This has, in turn, led to a paradigm shift in customers’ attitude – they prefer basic amenities to luxury,” says Pradeep Jain, chairman of Delhi-based Parsvnath Developers.

Sector watchers say the overheated real estate bubble actually burst because of speculation by developers over the demand for luxury, premium products.

Says Avneet Soni, adviser to chairman and managing director of another Delhi-based developer Omaxe, “Investors, who were cashing out ahead of a possible softening, have exited the market. The segment is now seeing only genuine buyers.”
Some feel that though the numbers have come down, demand is still there.
“The need or want to upgrade is still there, but market sentiment in this segment is weak. Consumers are still waiting for prices to drop in this bracket,” says Kumar Gera, president of Confederation of Real Estate Developers Association of India (Credai).
After the slump, real estate prices have corrected by an average of 25-30 per cent across segments.
Demand for housing in India is expected to touch 7 million by 2012-2013. The affordable housing segment is expected to account for 80 per cent of this demand.

Affordable mantra

As the luxury segment is not generating enough business and the industry is reeling under liquidity crisis, developers have entered the affordable housing sector to push up volumes. So much so that even themed premium projects are being included in this new segment. Even top developers such as DLF and Unitech, who had planned to spruce up their bottom lines through sale of luxury properties, have all jumped on to the affordable housing bandwagon.

Offering sops

Meanwhile, in order to push sale of luxury homes, developers are offering freebies and organising property fairs to liquidate stock. Though most developers are unwilling to go on record admitting the extent of slump in this segment, property consultants say that the high-end units would have to be pushed. “Lowering the bar for entry-level players has definitely resulted in more interest in the segment,” says K Sudarshan, chief operating officer of Bangalore-based Ozone Group.

Adds Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj (JLLM), “The residential market should recover by mid-2010 although near-term demand is expected to be muted, given a weak job market. Offtake for new launches, priced at Rs 2,000 per sq ft levels, remains one of the key data points to watch out for, over the next few months.”

Developers are now eyeing high net worth individuals (HNIs) and non-resident Indians (NRIs) to push the segment.
“HNIs are still interested. The dollar-rupee ratio plus lower rates for the premium segment make it an attractive proposition for NRIs,” says Farook Mahmood, president of National Association of Realtors. For NRIs, the “international look” and privacy offered in scenic settings is still a crowd puller, he added.
“Having projects in locations that are attractive for NRIs is the key,” says Ravi Ramu, director of finance at Bangalore-based Puravankara Developers.

However, according to Credai officials, the premium residential segment would pick up once customer confidence returns and that could happen in the next six months.
Other developers are pinning their hopes on the shortage in housing expected in the future. Says Kumar Mordani, director of Man Infraprojects, which recently launched a high-end residential complex in Mumbai, ”Right now, projects are on hold due to financial constraints faced by developers. This will lead to shortage by 2011. By that time, our project would be completed and we expect units to move.”

Source : http://www.mydigitalfc.com/real-estate/luxury-fails-sell-819

Panipat- Goldmine for Real Estate Developers

Around 90 kilometers away from the nation’s capital Delhi, the city of Panipat has its own colourful history. Known for the three key battles fought in the past, the city is also known internationally for its handloom production. Now, the city is fast changing to adopt forward-looking outlook. Real estate experts believe that the city is a goldmine for developers as well as investors. Even in the recession time, the property prices in Panipat have been on rise. Primarily, a commercial hub, the city has been experiencing a continuous development with major companies opening their offices. However, the government of Haryana is on the forefront to give the city the best possible infrastructure, it’s the private builders who are playing lead roles in brining the city on the global map of real estate development.

The city, witnessed a high growth in real estate sector during the last few years, with a number of construction projects, both in residential as well as commercial segments. Already the mall culture have zoom the outlook of the city with the influx of modern shopping and living experience in the forms of shopping mall, multiplexes, retail stores, apartments, duplexes and penthouses. Some of the city’s renowned structures include Fun City Mall, Raheja Expo Mall, Mittal Mega Mall, DAP Angel Prime Mall, Saraf Mall and Reliance’s Retail Hyper Mall. Parsvnath Developers, a leading realty company, is developing a township near the Devilal Choudhary Park in sector 38-39, which will have all the facilities including schools, multiplex, shopping malls. With an investment of over Rs250 crore, this township will also have plots and group houses.

Best Group, a local realty company, is developing a 10 acre-mini township with the name of Golden Gate, which will highlight 15 towers featuring independent floors with three bedroom units and blocks of two and three bedroom flats. Another developer, Shivam Realtors is developing ‘City Mall’ in Sector 12, HUDA, which will be spread in an area of over 2500 sq. mt. plot and will feature food courts, entertainment zone, ample parking space, and other facilities. The leading realty company of the country, DLF is also developing two exclusive shopping malls in the city. Panipat is also developing several industrial parks making space for leading corporates. The industry fortune-tellers, who are certain about their calculation about Panipat, say that the city will come out as the next Gurgaon in the near future. With the government’s regular initiatives, the city has improved amenities like drainage and sewage systems, roads, power supply, street lights and social infrastructure, such as medical facilities, schools, parks and entertainment and cultural centres. The real estate in Panipat is in receipt of comprehensive management for stable growth, which is certainly an indication of vivid future.

http://www.indianrealtynews.com/real-estate-india/panipat-goldmine-for-real-estate-developers.html

Realty companies on go-slow mode

Promised delivery in September 2007, Pavan Nagaraj saw his dream home turning into a pipe dream. The 30-year-old Bengaluru-based professional had paid Rs 29 lakh for an apartment in Ittina Abha, developed by Ittina Properties near the IT corridor.

When his queries about the status of the apartment went unanswered, Nagaraj petitioned the Consumer Disputes Redressal Commission, which, on February 20, 2009, ordered the developer to hand over the flat in three months along with interest on the money paid and costs of litigation. Till date, there are no visible signs of any activity at the project site. When contacted, Mahabaleshwarappa, Chairman, Ittina Properties, refused to answer BT’s queries.

This is not an isolated case, but one that is symptomatic of the troubles encircling the real estate sector across India as developers get hot under their collars in the ongoing meltdown.

Up north, as one drives down the Gurgaon-Sohna Road in NCR, the irony of the times is unmistakable. It’s a neighbourhood littered with underconstruction projects. A year ago, they were abuzz with activity. Today, most of them are abandoned sites. Says Rajeev Talwar, Executive Director, DLF Group: Projects which are on the drawing board will be reassessed if there is demand, we will certainly go ahead.

DLF, in fact, is also doing soul-searching on its retail projects. Talwar says DLF’s grandiose Mall of India in Gurgaon is having its design reworked to possibly include an office complex.

Unitech, the other major Delhibased developer, is faring no better. It has officially forbidden its employees to speak with the media. The firm’s Karma Lakelands Project, spread over 272 acres on NH 8 and offering independent villas at a starting price of Rs 6.6 crore, is currently an amalgam of unfinished houses and foundations, and the labour force is down to less than a third of the original. This is a far cry from the smug attitude many realtors flaunted not too long ago when the real estate market was booming.

As the virus spreads, realty markets across Mumbai, Chennai and Hyderabad, too, are checking into the sick bay with several stalled or go-slow projects. Points out Sanjay Dutt, CEO, Jones Lang LaSalle Meghraj: There is at least 15 million square feet of commercial real estate blocked across Mumbai and Thane. In the retail space, we estimated that work on around 2-3 million square feet of space has been stalled while residential projects are in go-slow mode.

So, will these houses ever become homes and will these pits see their projects to fruition? It’s a multi-crore question that real estate developers cannot answer right now. If the slowdown gets worse, real estate could be in the pits for some time to come.

Delhi NCR

Mall of India

Type of project: Retail
Developer: DLF
Launched in: 2005
Original completion date: 2009-10
New completion date: 2011-12
Reason for delay: Finalisation of design, according to the company Anybody travelling from Delhi to Gurgaon on NH 8 will find it impossible to miss this gigantic crater located just past the first toll booth on the Expressway.

Hyped as the largest mall in India, this 4 million square feet space is being developed by DLF at an estimated cost of Rs 1,500 crore. But over three years after it was kicked off, Mall of India is nowhere near completion. While the BT team found no signs of any construction activity when it visited the site recently, the company claimed that construction was very much on. In truth, the lot has remained like this for the past year-and-a-half.

There is currently a rethink within the company on the composition of the project. That is, of course, whenever it takes off.

Parsvnath Palacia

Type of project: Residential
Developer: Parsvnath
Launched in: April 2007
Original completion date: 2010
New completion date: N.A.
Reason for delay: Shortage of funds; company claims it’s on schedule From the looks of it, this seems to be a project that was abandoned before it got off the ground. Located at Plot no: 5 in Sector Pi-1 and 2 in Greater Noida, this 9.5-acre area is being developed by Parsvnath at a cost of Rs 200 crore.
Staff at the site claimed that construction for the residential project, which will house 382 units of two and three bedrooms, had been stalled, but only for two months.

However, a visit to the site by BT in November 2008 found construction had already ceased. The company claimed work would restart in March. However, this still hasn’t happened. Lack of funds is what officials on the site attributed the delay to.

Unitech Grande

Type of project: Residential
Developer: Unitech
Launched in: July 2007
Original completion date: 2010 (first phase of 422 apartments)
New completion date: 2012
Reason for delay: Financial crisis Unitech’s brochure quotes Jonathan Swift, who once said: Vision is the art of seeing things invisible a rather prescient quote, considering their current flagship project has made no headway. According to the company’s site office, digging work for seven towers out of a possible 45 is complete, though the BT team could find no evidence to support this claim.

The site office maintains that the project is only slightly delayed with the completion of the first phase now scheduled for early 2012. The company’s external communications agency pleaded a media gag due to a bit of a crisis .

Mumbai

DLF Towers A, B and C

Type of project: Retail-cum-IT park
Developer: DLF
Launched in: 2005
Original completion date: 2011
New completion date: Uncertain
Reason for delay: Change in the original plan
In 2005, realty major DLF acquired Mumbai Textile, a defunct National Textile Corporation (NTC) mill, for an astounding Rs 702 crore. Now, three years on, there is no work happening on this massive 17.5 acre area in Lower Parel. Rajeev Talwar, Executive Director, DLF says: We are going to develop this property as a high-end commercial and retail project and if we give any timeline, it would be very speculative. The plans have changed to include retail with commercial office space.

DB Tower

Type of project: Hotel-cumresidential
Developer: DB Realty
Launched in: 2008
Original completion date: 2011
New completion date: N.A.
Reason for delay: Company officials claim no delay (work is ongoing) With a built-up space of 9 lakh square feet, and a panoramic view of the Arabian Sea, Neelkamal Realtors (a part of DB Realty Group) is coming up with a 75-storey hotel-cum-residential tower in Charni Road.

The building, scheduled to be completed in 2011, is expected to cost Rs 1,100 crore, and will be managed by Park Hyatt. According to a company spokeswoman: The site work is going on. However, a visit to the site shows that the ground has only been excavated and there is no construction activity yet.

The group is also coming up with a second project Orchid Ozone Mall in Dahisar and this, too, is delayed. The mall, being built on 2.5 million square feet of land at a cost of Rs 700 crore is far from being complete. The reason? The project is being re-planned with residential development being introduced, says a company spokesperson.

More Business Today stories

Bengaluru

Ittina Abha

Type of project: Residential
Developer: Ittina Properties
Launched in: 2006
Original completion date: September 2007
New completion date: N.A.
Reason for delay: Funds shortage The project promised delivery to most flat owners by September 2007. But many, like Pavan Nagaraj who had paid Rs 29 lakh for a flat in Ittina Abha, were left empty-handed as construction was delayed. The group is developing this project at Marathahalli in Bangalore on 2 acres of land. When BT visited the project site in February, there were still no signs of construction activity. Ittina Chairman Mahabaleshwarappa was not reachable for his comments.

The Nectar

Type of project: Residential
Developer: Astha Infrastructure
Launched in: 2006
Original completion date: 2007
New completion date: June 2009
Reason for delay: Funds shortage The Consumer Commission had to step in to help a buyer get his money back after this project was stalled for over a year. Astha’s Director Rajesh Keerthi says that the project suffered on account of funding issues but would now be complete in four months. We will give flats to people who wait and give refunds to those who opt out, he said.

Chennai

DLF Garden City

Type of project: Residential
Developer: DLF Southern Homes
Launched in: April 2008
Original completion date: 2012
New completion date: Likelihood of a delay
Reason for delay: Approvals not obtained

The entire project encompassing 32 multi-storey buildings with 19 floors and other amenities such as a school, mini-hospital, mini-mall and a clubhouse is delayed. The project, located on Semmanchery in Old Mahabalipuram Road is being built on 53.5 acres of land.

DLF points to hold-ups in getting approval from local authorities for the delay. However, the company has not yet completed a buyer’s agreement with future occupants though they gave the company advances worth Rs 100 crore a year ago. There have been a number of cancellations from irate buyers.

Riverside Mall

Type of project: Retail
Developer: Marg Constructions
Launched in: October 2007
Original completion date: 2008
New completion date: 2010
Reason for delay: Awaiting Chennai’s second master plan The company says that the project is on and retailers would come in once the anchor store a hypermarket is brought in. Whether the delay is purely because plans were not being approved, or whether it was because the retail market has been faring badly is difficult to say.

Marg is not revealing names of clients who have supposedly evinced interest in the space, but says that the mall will have a pragmatic appeal to buyers wanting value, as in the case of affordable housing buyers.” The project promises a mall covering 6 lakh square feet with space to park 2,000 cars. The estimated cost is around Rs 361 crore.

More India business stories

Hyderabad

Lanco Hills Phase II

Type of project: Mostly offices and a few residential towers
Developer: Lanco Group’s real estate arm
Launched in: Phase II was to be launched now, but its commencement is linked to market conditions Completion date: Phase I in 2010 (on schedule).
Phase II uncertain Coming up at Manikonda, this Rs 3,500 crore project is one of Hyderabad’s biggest in recent years. However, the downturn has affected its fortunes.

Even though the first phase of work here is on schedule , work for Phase II has slowed down. The total project involves around 28 million square feet of built-up space. Of this, Phase I (around 8 million square feet) is on schedule. For this, 13 towers are being built (12 residential and one for offices).

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The second phase of the project, that has been affected, is mostly going to be office towers, entertainment centres and few residential towers. According to L. Madhusudhan Rao, Executive Chairman, Lanco Infratech, the commencement of construction here is now linked to market condition, which, at the moment, is uncertain.

http://sify.com/finance/fullstory.php?id=14875630

Listed realtors start to slash prices

Mumbai: The much-awaited correction in residential realty prices in Mumbai may not have been obvious to start with, but now even the bigger developers that are listed at the stock exchanges have started slashing rates.

For instance, Unitech, the second-largest realty player in the country, has launched a residential project in Dadar West, one of the prime locations in the central suburbs. The project is divided into two categories — one with a price range of Rs 9,900 per square feet and the premium range priced at Rs 14,000 per square foot. Interestingly, the market rate in that area of the city is Rs 18,000 per sq ft! Thus, there’s a 45% reduction in prices.

Similarly, the country’s third-largest realtor, Housing Development and Infrastructure Ltd (HDIL), on March 4, launched its residential project in Kurla, adjacent to the redevelopment site of its Mumbai airport rehabilitation project. The project was initially priced at Rs 5,251 per square feet, but the price was raised to Rs 5,351 per square feet by Monday. However, the going price of the area is approximately Rs 7,500-8,000 per square feet — 33% more than HDIL’s offer.

Hari Prakash Pandey, deputy general manager (finance), HDIL, said, “We had launched 756 flats and, at the end of Monday, we have already booked more than 400 apartments.”

“Fund managers are pretty gung-ho owing to the price reduction by one of the largest realty players in the country,” said an analyst with a domestic brokerage. “Most developers in Mumbai are not yet out in the open and have not slashed prices,” the analyst added. This is despite the fact that residential prices in the city have fallen by 10-15% in December and by a further 15% in January.

The situation is similar in Gurgaon (near Delhi), a market that has rarely seen a price correction even after the downturn.

Indiabulls Real Estate, the Mumbai-based player, last week launched its residential project there. It was priced at Rs 1,950 per sq ft, which is much lower than its peer’s rates of Rs 3,100-3,200 per sq ft.

Traditionally, DLF, Parsvnath, the Jaypee Group and other north-based developers have ruled the Gurgaon market. But Indiabulls’ 40% lower pricing has brought them tough competition.

An analyst from a foreign brokerage based out of Mumbai told DNA Money, “Realty players are tapping new markets and bringing in new price cards, which is hitting developers in that market. But today, developers need to sell each and every project to get money in their kitty as debt repayments dates are coming closer.”

Some major players such as Omaxe, Parsvnath and Unitech have had negligible sales in several of their projects in the last quarter. Any money, even through reduced pricing of projects, could help shore up their balance sheets.

Analysts add that after the reduction in prices by the listed players, even the unlisted players would have to follow suit.

Despite the reductions effected, consultants say, developers are still making margins and no one is selling below the replacement price of the property. Thus, there is always scope for further reduction in prices.

Source : http://www.dnaindia.com/report.asp?newsid=1238250

Parsvnath to build a housing project in Lucknow at Rs 14-27L

Parsvnath Developers today announced that it would build a residential project in Lucknow at an affordable price ranging from Rs 13.95 lakh to Rs 27.5 lakh.

The company is expecting sales realisation of about Rs 100 crore from this project comprising 510 independent floors covering over six lakh sq ft area.

“The total realisation for this project is approximately Rs 100 crore which would be realised over a period of two years,” Parsvnath Developers said in a statement.

The construction work of the project, which is a part of 35-acre township, is expected to get completed in two years.

“At Parsvnath, it has been our constant endeavour to design products to cater on the ongoing demand trends. The need of the hour is quality construction at economical rates,” company’s Chairman Pradeep Jain said.

Real estate developers, including country’s largest realty firm DLF, have started focusing on affordable housing project to beat the slowdown in the property demand, which has affected their sales volumes significantly.

Parsvnath, having presence across 50 cities in 17 states, has a developable area of 209 million sq ft, of which 81 million sq ft is under construction. It has presence in all the verticals of real estate such as residential, office, shopping malls, SEZs, township, hotels and IT parks.

http://www.tradingmarkets.com/.site/news/Stock%20News/2210282/

Parsvnath’s new projects to cost less

Ruling out a rate cut in its existing projects, Parsvnath Developers on Monday said the company would price its upcoming residential projects at a 10 per cent price lower than the prevailing market rate.

“In all our upcoming projects, the prices would be 10-15 per cent lower than the prevailing market prices,” said Pradeep Jain, chairman, Parsvnath Developers.

The company also disclosed that the promoters have pledged over 10 per cent of their 80 per cent holding within the company with public sector banks to repay the loan taken for the Delhi Metro project. “It is over 10 per cent but not majority of our holding has been pledged,” said Jain.

The company said it was currently focusing on completing its ongoing projects. “Our focus is on competing ongoing projects and starting new projects in locations where there is demand,” Jain said.

“We will come up with some drop in prices through cutting down the size of the apartment or bringing down facilities and specifications.” The company has been cutting corners by downsizing staff and reducing salaries for senior officials.

“Salaries of senior level officials have bee reduced by about 20 per cent. Few direc­tors, including me, have taken a slary cut of 50 per cent,” said Jain.

Source : http://propertybytes.indiaproperty.com/?p=3269

Developers Unable to Fulfill Retail Space Target

DLF, Parsvnath and other real estate developers have lagged behind by 54 per cent in their target to open retail space even as retailers’ vacancy climbed to 16 per cent in 2008, according to a study. Cash-strapped real estate developers failed to deliver 11 million sq ft of retail space in 2008, according to a study released by Cushman & Wakefield. Out of the proposed 74 malls in key eight cities at the beginning of 2008, only 34 were delivered through the year, the study showed. Developers in the National Capital Region (NCR) lagged the most with a supply of 4.7 million sq ft compared with the earlier target of 7.1 million sq ft. Developers may continue to restrict their supply, or go slow on retail space by a similar amount in 2009 across key major cities, the study showed.

“For any developer, the vacancy level should not cross over 5 per cent. The vacancy level of 16 per cent suggests that most of the malls across India are finding it difficult to manage their operational cost,” said Rajneesh Mahajan, director of retail services at Cushman & Wakefield. The reason for the shortfall was the mismatch between the potential and actual occupancy. The Indian organised retail sector grew at 25 per cent in 2007. Anticipating the growth of retail sector at above 35 per cent in the coming years, developers had announced big retail projects. However, owing to economic slowdown, the growth of the retail sector has come down to 15 per cent in 2008, resulting in developers deferring their projects for 12-24 months. “From the projected supply of 20.8 million sq ft space in the first quarter of 2008, we will see a spill over of about ten million sq ft development in 2009-10. Lack of funds leading to construction delays and cautious expansion by retailers have resulted in slow absorption of retail space in malls,” said Mahajan.

Owing to high vacancy rates, rentals for retail space have come down between 20 and 40 per cent and a further cut of 10-15 per cent is expected, according to Mahajan. “It is noteworthy that the high streets of Colaba Causeway, Linking Road in Mumbai and South Extension and Greater Kailash in Delhi, which had seen a 100-156 per cent rental appreciation in the first quarter of 2008, witnessed rental drops of almost 40 per cent over the last six months,” said Mahajan. The correction in 2009 would be mainly in non-metros as the ripple effect of the rental correction will reach the tier-II and III cities, said Mahajan.

Interestingly, developers were forced to convert their retail space into office space due to high vacancy. Delhi-based Parsvnath Developers has recently converted one of its metro malls in Shahadra into office space. As the operational cost of the retailers became unviable due to high rentals and lower sales, they began to work on sustaining business through innovative revenue models and retail formats. “A growing trend has seen the consolidation by large retail players of their multiple retail formats under a single roof,” said Mahanjan. According to Cushman & Wakefield, minimum guarantee and revenue sharing models will make for at least a third of all retail deals in the long term. According to Mahajan, most of the deferred projects are under construction and the developers will have to face increased cost overruns for completing these projects.

Source : http://www.indianrealtynews.com/retail-market/developers-unable-to-fulfill-retail-space-target.html

Property firms see buyers back in market

Property developers expect to boost sales of homes and borrow funds at lower rates after the Reserve Bank of India (RBI) today reduced its key benchmark rate and cut the cash-reserve ratio (CRR) requirement in a bid to help banks lower interest rates and lend more to cash-starved sectors, including the real estate. They are hopeful of attracting more overseas investment in projects as demand revives.

Real estate companies were facing a tough liquidity situation as home buyers deferred new purchases due to high interest rates and banks stopped lending to real estate firms due to fear of mounting defaults.

“I expect more people to buy homes now. It will reduce cost of funds for developers and ease the liquidity pressure,” said Ravi Ramu, director of Bangalore-based Puravankara Projects.

A reduction in lending rates may lure home-buyers back into the market. Rohtas Goel, chairman and managing director of Delhi-based Omaxe, said: “We are confident that banks will reduce interest rates for the housing sector, which will help bring back the end-user to the market. This move will further boost the confidence of investors.”

Experts are still sceptical of banks passing on the entire benefit of the reduced rates to their customers. “The RBI has cut rates in the past but we have not seen much from financial institutions. Only when home loan rates come down to 8-8.5 per cent, can we see some difference,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj.

Developers said the government’s move to allow external commercial borrowings (ECBs) in development of integrated townships was a big step. Hitherto, realty developers were prohibited from raising funds through ECBs as foreign funds were considered the main trigger for the rapid increase in property prices.

“When we have land and demand for houses increase, we need liquidity. Interest rates are cheaper abroad and we can tap that now. Today’s measure is great and akin to allowing FDI in real estate. If we can raise money abroad, it will supplement bank funds and customers’ money,” said JC Sharma, managing director of Sobha Developers.

Pradeep Jain, chairman of Parsvnath Developers, said, “When home loan rates are cut, liquidity is made available to developers and their cost of funds comes down. All these developments will help the common man,” Jain said.

However, Hiranandani Constructions Managing Director Niranjan Hiranandani said the relaxation in ECB norms would not immediately help property companies as the liquidity situation abroad was tight. “Not much money is available in the international market. The benefits will come after a couple of months when liquidity improves,” said Hiranandani.

Sanjay Verma, executive MD South Asia, Cushman & Wakefield, said the government could have relaxed ECB norms for the whole real estate sector instead of only integrated townships.

However, the country’s biggest real estate company said the government had avoided taking some key steps to help revive demand in the real estate sector. “The government could have taken more steps like increasing the I-T exemption limit for home-loan borrowers, making bank loans of Rs 20-50 lakh available at lower interest rates and increasing the age limit for eligibility of home loans. Each step matters as the government’s intention is to fight the slowdown, ”said DLF Group Executive Director Rajeev Talwar.

Source : http://www.business-standard.com/india/news/property-firms-see-buyers-back-in-market/15/26/345103/

Buyers take fancy to affordable housing

Alternatives in the real estate sector, especially in the current market situation, are suddenly getting more focus than ever before. Time was when  major developers swore by luxury living and it reflected in their portfolio. Then, it was swanky and high-end apartments which ruled the realty business. Today, however, it’s a different story. Big is no more beautiful. Instead, small and affordable housing is finding favour with most households as well as major realty players.

Developers have realised that the bulk demand lies in this segment and are increasingly turning their attention to units which are affordable. Forget luxurious condos and big, spacious developments, the accent is towards housing which will not create a dent in your pocket! What does act in favour of realtors is the number of government initiatives that have been coming in. Benefits for housing loans up to Rs 20 lakh is one such measure that will make more people come forward to buy property.

Leading players in the industry — DLF, Omaxe, Parsvnath Developers, Unitech and Hiranandani Developers — are echoing this thought as well. Omaxe, for instance, will be looking at properties in the range of Rs 10-Rs 25 lakh in tier II and III cities as well as Delhi NCR.

“We will build low-cost homes wherever land is available. Cities such as Indore, Chandigarh, Lucknow and others will see our projects coming up. Once we get a good response to this initiative, we will create a bigger footprint. In 2009, we will be focussing on this segment,” says Vipin Agarwal, executive director, Omaxe.

Even players who previously were betting big on the luxury and super luxury segment have now shifted attention to homes for the mid-segment. Unitech, which earlier had more luxury housing projects in its portfolio, is also now more inclined towards affordable housing.

Pradeep Jain, chairman, Parsvnath Developers says that demand will be most up to the Rs 40 lakh category. “There is no definition of ‘affordable.’ But mostly if you see it is till the Rs 40 lakh amount. The demand for this segment is robust at this point in time and going forward, there will be a stronger focus to meet these demands.”

Mumbai-based Hiranandani Developers will be looking at locations in Thane and Panvel for constructing these projects. “It is where the demand lies, so it will be hard to find someone not constructing affordable at this point. It will definitely be a focus point,” says Niranjan Hiranandani, MD, Hirandandani Developers. Experts feel that the year 2009 will see a good market revival, with properties being offered at the right price.

“We expect that many of our developers will shift gears and offer the right properties at affordable prices, especially in residential space, where the need to revive demand is most pronounced,” feels Anuj Puri, chairman & country head, Jones Lang LaSalle Meghraj.

With developers looking at low and mid alternatives in housing right now, your dream of owning a home may not be too distant!

Source : http://economictimes.indiatimes.com/Features/The_Sunday_ET/Special_Report/Buyers_take_fancy_to_affordable_housing/articleshow/3834331.cms

Realty cos say govt move not enough to spur demand

MUMBAI (Reuters) – Real estate companies say the recent rate cuts and extra spending announced by the government over the weekend are not enough to spur demand.

Amid a global slowdown and slumping economy, the federal government said it would seek approval for extra spending worth $4 billion in the remainder of the fiscal year, while the Reserve Bank of India (RBI) slashed key interest rates over the weekend.

On Sunday, India said state-run banks are to announce a package for borrowers of home loans up to 2 million rupees.

“This is unlikely to stir demand unless it is being followed by at least 20-25 percent price cuts by developers,” brokerage UBS Securities India Pvt Ltd said in a report on Monday.

Real-estate companies said the loans would help raise demand for homes in small towns and cities as well as for lower-income housing, but were too small to boost demand in India’s metros.

“It’s not enough. You need to be softening the rate of interest across the board and some other concessions to the consumer who will go buy out properties at this point of time,” said Pradeep Jain, chairman of Parsvnath Developers.

“Hardly few properties in tier 2, tier 3 are available.” About 35-40 percent of its housing projects are in the 3.5- 4-million-rupee range, he said.

“Unless you are talking of really low-income housing it really does not provide much. Commercial real-estate needs a lot more impetus,” said Sarang Wadhawan, managing director, Housing Development & Infrastructure Ltd (HDIL).

It does not offer flats in the 2-million-rupee range. 

On Saturday, the RBI said loans by banks to housing finance companies for individuals may be classified under priority sector lending for loans up to 2 million rupees per house, per family.

This, along with Sunday’s announcements, would bolster demand for affordable housing, said Ravi Ramu, chief financial officer, Puravankara Projects Ltd. Its unit plans to develop 60 million sq. ft. of such properties across five cities.

To address the issue of non-performing assets of realty firms, the RBI has extended a regulatory concession to loans disbursed to the sector that are currently dilinquent but can be restructured by June 2009, UBS said.

“The disappointment is they only allowed it up to 30 June. It should be up to 31 December,” Parsvnath’s Jain said.

Real-estate will continue to be under stress if banks are not asked to start lending again, HDIL’s Wadhawan said.

“We maintain that prices have to correct for volumes to revive,” the UBS report said.

Source : http://in.reuters.com/article/businessNews/idINIndia-36928420081208?pageNumber=2&virtualBrandChannel=0

Realty projects delayed by 2 quarters

MUMBAI: With credit repayment dates nearing and banks refusing to refinance their loans, real estate developers are left with no choice but to defer their project launches for the next two quarters.

Pankaj Renjhen, managing director (Mumbai) at international real estate consultant Jones Lang La Salle Meghraj, said the industry is stagnant at the moment. “There will be no new launches till the first quarter of the next fiscal. Right now, developers’ immediate goal is to find buyers and make sales,” he said.

Sobha Developers Ltd, the Bangalore-based realtor, is one of the most leveraged players in the sector and its debts have increased three-folds over last year. The company has now decided to cancel most of its project launches. Last quarter, Sobha deferred the launch of its Kochi project. A senior official from Sobha, on condition of anonymity, said the company would delay new launches for the “next two quarters”.

According to a October 31 report by Chirag Negandhi and Nitin Idnani of Enam Securities, Sobha has also reduced its land bank by 697 acre in the last quarter by exiting some joint ventures and agreements with landowners in Bangalore.

DLF, the country’s largest realtor by market capitalisation, has also deferred its project launches, chairman KP Singh said recently. However, a company spokesperson said DLF would announce two mid-income housing projects in December but steer clear of hospitality and commercial projects. The spokesperson added, “The projects for which we haven’t got approvals or those that are delayed have been cancelled as of now. But projects where we have started construction won’t be deferred.”

Private equity (PE) players too are playing safe, refusing to enter the market for the next six months, Renjhen said. He added that about $2.5-3 billion PE investment that was expected to enter the market has now been postponed. So developers are forced to complete their under-construction projects rather than announce new ones.

Parsvnath Developers, a north-based realtor, is working on completing announced projects. A company spokesperson said, “We have launched five residential projects in September and we will focus on completing them. No new projects have been planned.”

But Unitech, the second largest realtor by market capitalisation and a premium segment player, is now shifting focus to the mid-income arena in the National Capital Region (NCR), Gurgaon, Greater Noida, Kolkata and Chennai. A company official said, “We are focusing on affordable housing projects, which will be launched after a few months in five cities.”

A Mumbai-based analyst with a foreign brokerage, on condition of anonymity, said, “Most of the developers whose debts have doubled will execute existing projects and try to cash them to repay loans. Those who aren’t under the stress of loan repayments won’t touch any new projects.”

Another analyst with domestic brokerage added, “Any mid-cap developer who has leveraged its equity to debt ratio by 1 is facing problems raising capital. It’s better they enter when money is available at low interest rates.”

Source : http://www.dnaindia.com/report.asp?newsid=1211727&pageid=2

LAVA Electronics in talks with realty cos for India entry

NEW DELHI: Sweden-based electronic products maker LAVA Electronics is in talks with real estate firms Ansal API, Omaxe and Parsvnath for a possible
India entry through a franchisee arrangement.

The LCD television maker, which gets 60% of its revenues from the B2B segment, is planning to sell its products to large hotel chains. The company clocked a turnover of e60 million last year. LAVA executives met officials of real estate companies during the weekend.

LAVA Electronics’ managing director Christian Svantesson said: “We are looking for a suitable franchise partner and aim to enter India by the third quarter of 2009.’’

He said his company will have exclusive outlets to cater to consumers directly but five-star hotels would continue to remain its focus area. “We want to position the company as a high-end brand in India,” he added.

The firm has an assembling unit in Southern Sweden. While television cabinets, panels and other hardware are imported from Germany, software programming and product designing is done by the company at its Swedish unit.

The firm intends to replicate similar business models in India. Mr Svantesson said that initially the company would import and sell in India. It will start assembling products in the country after creating a presence among consumers and business houses.

LAVA sold 50,000 LCD televisions world-wide last year and targets to sell 70,000 sets this year. Currently, the firm has operations in countries such as Hong Kong, Australia, Spain, UK, Italy, France and the US.

Source : http://economictimes.indiatimes.com/Corporate_Trends/LAVA_Electronics_in_talks_with_realty_cos_for_India_entry/articleshow/3777259.cms

Parsvnath gets environmental clearance for Delhi project

Leading real estate player Parsvnath Developers received environmental clearance for the construction of office-cum-commercial “Corporate Tower” at Netaji Subhash Place Metro Station, in New Delhi.

The project spreads over an area of 19,400 sq mt and has a total developable area of 2,50,000 sq ft. The project is strategically located with an easy accessibility on the ring road catering to the shopping needs of public travelling by metro and road. The project having multiple pull factors, will offer product mix that will attract footfall across all the age groups, a company statement said.

Parsvnath Developers is developing 114 mega projects spanning 211.32 mn sq ft in 51 cities and 18 states. For the year ended March 31, 2008, the company recorded consolidated revenues of Rs 1837.12 crore and net profit of Rs 424.39 crore.

Source : www.business-standard.com

Property rates to fall further in ’09

Domestic property prices are set to fall by a quarter in ’09 as the global economic crisis saps homebuyer confidence, adding to problems of
capital-strapped developers. A property market boom has been waning for a year, with land prices falling 15% from a mid- ’07 peak. But analysts predict tougher times ahead. “We’re expecting a horrible ’09,” said Anshul Jain, CEO for property services firm DTZ in India . “Prices have already shown signs of coming off, and chinks in the armour are surfacing.”

Property prices doubled in the two years after rules were eased in ’05 on investment in the construction industry, sparking interest in home-building among foreign funds. Developers, often in league with funds run by the likes of Morgan Stanley, Citigroup and Merrill Lynch, snapped up land. Realty majors like DLF and Parsvnath Developers launched huge IPOs to fund new projects. But the sharp rise in prices and interest rates slowed home sales. The global crisis has added to the gloom. “We expect a 20-25 % price correction,” says Anurag Mathur, joint MD at Cushman and Wakefield.

FIIs are now unlikely to jump into the Indian market. But the funds already raised, somewhere between 75 and 100 of them, are waiting for developers to drop their pricing for JVs, so they can get the 30% internal rates of return they hanker for, even in a bad market. Developers are hoping that as inflation softens, falling mortgage rates will make homes affordable again . But financing deals will not happen until developers get a better grasp on how far the market will fall, Mr Jain said.

Source : Economictimes.com

Omaxe cuts some prices, other realty cos hold firm

NEW DELHI, Nov 21 (Reuters) – Real-estate firm Omaxe Ltd (OMAX.BO: Quote, Profile, Research) has cut prices of some of its properties for some customers by up to 5 percent, its chairman said on Friday.

Rohtas Goel, who is also the president of the National Real Estate Development Council, said the council had recommended similar cuts to its members.

But member firms said they were not considering any cuts for now.

Demand for real estate in India has slumped on high costs of home loans and on weakening economic activity. Analysts say prices have to come down before demand revives.

“There is a 1-5 percent discount on the basic sale price … from today, depending on the project and location,” Goel said. “It is not in all projects.”

The cuts will be for customers who pay on the basis of the progress of construction at the project, he said. Goel declined to say what percentage of their projects would be sold at the lower rates.

NAREDCO counts among its members India’s top listed realty DLF (DLF.BO: Quote, Profile, Research), Unitech (UNTE.BO: Quote, Profile, Research), Omaxe, Parsvnath Developers (PARV.BO: Quote, Profile, Research) and Ansal Properties and Infrastructure Ltd (ANSP.BO: Quote, Profile, Research).

A DLF spokesman said prices could come down further only if input costs fell.

Parsvnath Chairman Pradeep Jain said he had not received any letter from the council and was not mulling price cuts. “It is a little difficult to say as a forum to any developer to cut prices,” he said over the telephone.

Ansal’s Chief Executive Anil Kumar said the firm had not taken a decision yet. “We may consider it for new projects,” he said over the telephone.

Source : in.reuters.com

Parsvnath enters infra in JV with San Jose

Delhi-based realty company Parsvnath Developers today announced that it is foraying into the infrastructure sector with a tie-up with Spanish construction company Constructora San Jose SA.

Parsvnath and San Jose would hold equal equity in the joint venture company San Jose-Parsvnath Consortium. The JV would bid for projects in transportation, aviation, power generation and transmission among others.

The company would execute these projects by floating project-specific special purpose vehicles, Parsvnath said in a release.

Parsvnath Developers Chairman Pradeep Jain said, “We want to undertake large construction projects since the infrastructure sector is growing rapidly. It is a value addition for our existing business.”

Jain denied that the company is entering into infrastructure due to slowdown in real estate sector. The consortium has submitted a request for qualification (RFQ) to National Highways Authority of India (NHAI) and has been qualified to submit the financial bids for construction of elevated expressway on NH-4, which has the contract value of Rs 1,220 crore, the company said.

However, real estate analysts say the JV may not start generating revenues immediately as there are no new infrastructure projects announced by the government. “Apart from having a technical support in the long run, the JV will not have a impact on the financials of the company,” said an analyst from Mumbai-based brokerage who did not wish to be quoted.

“Getting funding will be challenging in the current scenario,” he said.

Many realty companies such as DLF, Unitech, Anant Raj Industries and HDIL are already active in the infrastructure space. DLF has tied up with UK company LangO’Rourke for construction projects.

After real estate, Parsvnath is growing its operations in hospitality, retail, SEZs among others. The company is developing 211.32 million square feet of space across the country. The firm’s stock fell as much as 5 per cent to close at Rs 38.95 today.

Source : www.business-standard.com

Real estate cos ask for home loan at 7%

NEW DELHI: Real estate players are not willing to cut prices of apartments and houses as suggested by FM P Chidambaram on Tuesday.

DLF chairman KP Singh said that prices have already been cut in the last one year as the industry was facing a slowdown. At present, the company has decided to defer implementation of projects in residential and commercial sectors, instead of lowering prices to increase revenues.

“In hotels, residential and commercial everywhere, the projects deferred because of lower demand and liquidity crisis,” Singh said. He said that high interest rates have affected the demand, adding that present pricing is competitive and linked to supply and demand.

Singh said government should ensure that home loan is available at 7% to prop up demand in the sector as many projects have been closed down by developers.

Parsvnath CMD Pradeep Jain, who is also the president of Council for Real Estate Developers’ Association of India (Credai, Northern Zone) said that prices of on going projects have already fallen to an extent that the profit margins have reduced to single digit due to high inflation, which has increased the cost of construction by 25 to 30% in the last one year.

However, going forward, he said there could be some correction in prices if that of steel and cement go down. At the same time, the developers are constructing smaller size apartments with comparatively low-grade specification. Such steps will lower the per unit cost of apartments.

Jain said unless price of land comes down, the real estate price will not decline. If the developers would not be able to sell them at profit, they will shelve projects, which is happening all over the country now.

He added that reduction in interest rates will help generate demand as it will help common customers. He said government should bring down the home loan rate to 7%.

Jain also demanded that banks should be asked to lend directly to realty companies with a moratorium on repayment for 18 months. At the same time, the realty sector should be given the industry status, which will enable banks to lend to the sector easily. Jain said as the real estate sector creates demand for almost 200 industries, the government should give it due importance and accord it proper status.

Source : Timesofindia

REALTY BITTEN BY SLOWDOWN BUG

How has the meltdown impacted one of country’s hottest realty destinations, the great Gurgoan? Going by the steep fall in the number of applications from developers in the year 2008, one could say the countdown may well have begun. Against 3,038 applications received for group housing in Gurgaon in the year 2007, the figure is a mere 403 in 2008. Also, against 1,016 applications for commercial projects in 2007, the number this year has plunged to 363, according to figures of the Haryana Country and Town Planning Department.

While it has also to do with area available for high-rise group housing and commercial projects under the new Gurgoan-Manesar master plan nearing their earmarked limits, the spell of hectic construction activity in Gurgaon is likely to continue in the years to come. In fact, the number of licenses granted for group housing, plotted colonies, information technology parks and commercial projects in the Gurgoan-Manesar belt this year itself is a whopping 134 even as some out of a total of 237 licenses issued ever since the realty highpoint of 2005 have still to come on ground.

The slowdown
However, the demand slowdown and liquidity crisis has resulted in developers not being in a hurry to get layout and building plans approved and being content at holding on to their land banks.

“Developers are adopting a wait-and-watch approach. The projects may take off once the liquidity and demand scenario seems favourable,” says S S Dhillon, director, Haryana Town and Country Planning Department. dhillon adds that the real impact of the slowdown will only manifest itself once there is no progress in projects which have been granted licenses.

Also, against the norm earlier, when there were a large number of smaller players in fray, it is now only the bigger ones with some resilience.

Rajeev Talwar, group executive director of DLF, marks this as the worst financial crisis to hit India which is “affecting every sector in the country, not just real estate”.

“This situation is a wake-up call and the government needs to do a lot more than what it has done so far. Mere cuts in SLR and repo rates are not going to lessen the threat of massive closures and huge layoffs.” He proposes two ways of alleviating the current downturn in real estate. “Empower the home loan buyer by lowering interest rates and give real estate level a level playing field. All projects should at least be judged on the basis of merit,” he said.

Faridabad
In the case of Faridabad, Haryana’s next realty hotspot, the boom has finally gone bust. Against 180 applications for group housing in 2007, the figure this year is just 43 while in the case of commercial projects, the number has plunged from 75 in 2007 to nil in 2008. Even in case of plotted colonies, the applications received are a mere 40 against 468 last year. Even the fate of many out of the 62 projects (group housing, plotted colonies, IT parks and commercial projects) granted licenses in Faridabad since 2005, including 13 projects this year, now seems uncertain.

Chandigarh
While land prices in Chandigarh have been recording a new high with every government auction the huge number of private luxury housing projects that have come up in and around the city in the last three years, are finding few takers.

The most hyped luxury project, Pride Asia, a joint venture luxury project of Parsvnath Developers and the Chandigarh Housing Board, is also in trouble with no jump in its sales figure in the last few months and just over 10 per cent of its total dwelling units have been sold so far.

Aimed to cash in on the information technology industry (it is in the IT Habitat area of Chandigarh) and rich Punjabi diaspora, its luxury Rs 6-crore villas and Rs 4-crore penthouses have failed to attract buyers while its one/ two/ three/ four and five-bedroom apartments in the price band of Rs 52 lakh to Rs 3.8 crore are the only ones to be sold off.

Uppal’s high-end Rs 1.6 crore to 1.75 crore luxury flats in Chandigarh have also got a lukewarm response, while big names such as Emaar MGF, TDI, Unitech, Pearls Infrastructure, Ansals and Westend Group which have rolled out high-end projects in Mohali are all been hit by slowdown in demand.

The worst hit, however, are small developers with projects in the periphery areas of Chandigarh such as Zirakpur, Dera Bassi and Kharar. From distress sale of flats to defaults forcing banks to recover property, the crisis has hit both builders and buyers alike in these areas. Many projects are running behind schedule and deadlines for handing over of flats are being extended.

“Many had booked as many as five flats to cash in on the realty boom of 2005-06 but now flats in these areas are available even below their cost to the builder in these areas now,” says the Punjab Builders and Colonizers Association.

“In case of Zirakpur and Kharar and the new sectors of Mohali, there were more investors than end users. Since investors try to wriggle out when real estate markets crash or liquidity crisis worsens, prices of flats crash too. The meltdown has just begun and not only buyers but also many end users may sell off their properties due to high bank interest rates and salary and job cuts,” says Sanjay Arora of Chandigarh-based property portal 123yards.com.

But amid the lows and ups, property prices within Chandigarh have been able to weather the storm. “Chandigarh property prices have not been hit by the recession due to limited availability of land and the good withholding power of its people. They will not sell property till the price is good. Also, those purchasing property here are mostly end users willing to shell out the market price knowing its not going to fall anytime soon, maybe just get higher,” adds Arora.

Source : www.expressestates.in

Realty players face moment of truth

NEW DELHI/MUMBAI: The fresh wave of liquidity crunch is set to worsen problems for the Indian real estate sector. The sector is already facing a cash
crunch on account of diminishing sales, expensive and largely unavailable credit and drying up of private equity funding. And if an economic downturn sets in as feared, many developers may go out of business and others may be forced to drastically cut prices.

Property consultancy firm Cushman & Wakefield estimates that real estate activity in the current fiscal is not likely to be more than half of what it was in the previous year. “If market fears actually come true, we will see a number of small and medium real estate players exiting the business,” says Cushman & Wakefield joint MD Sanjay Dutt.

“SBI has stopped overdraft facility and many banks are not disbursing sanctioned loans. All companies, including those from real estate, will face serious problems,” says DLF CFO Ramesh Sanka. He was also not very sanguine about the prospects of investors shifting their funds from the stock markets to the property market. “Where is the money? Money is getting eroded every day,” he said.

Developers feel liquidity is a must for companies to survive. “RBI had put in restrictions on banks on lending to real estate, fearing an asset bubble. We feel asset bubble is under control and it is time that RBI relaxed lending norms,” says Unitech MD Sanjay Chandra. Adds Mr Sanka: “Ultimately, RBI will have to release cash through relaxation in CRR and SLR.” Parsvnath Developers chairman Pradeep Jain hopes that the RBI will cut repo rate by 150-200 bps.

The biggest challenge for realty firms today is to boost demand for property. And many of them know price cuts are perhaps the only way to do that. “Consumer sentiments are down in the market. We have cut prices by around 20% last week in our two projects. We hope it will revive sales,” a senior executive of Mumbai-based Orbit Corporation said.

At the prestigious Maharashtra Chamber of Housing and Industry property fair, developers offered attractive discounts to woo buyers. While this did lead to the number of enquiries and bookings going up, they were much less compared to the demand that existed last year. “The gloomy news from across the world has made people apprehensive. That’s why, even festive season offers haven’t had great impact on them,” says Parsvnath’s Mr Jain.

Cushman & Wakefield’s Mr Dutt says prices have already corrected by 20-30% in most markets and may see a further correction of 20-30%. As sales refuse to pick up, developers are putting projects on hold and focusing only on a few projects mainly in metro cities, which may over a period of time generate sales.

Sourece : Economictimes

Private equity deals in realty sector down

New Delhi: Private equity (PE) deals in the real estate and infrastructure space grossed about $3 billion in value during the first nine months of 2008, over 9 per cent lower than the year-ago period.

Moreover, PE investors, who had been cherry-picking realty deals earlier this year, appear to have tightened their purse strings now, with September seeing only two transactions worth $12 million compared with August, when $427 million of PE funds was infused into various projects.

According to data compiled by Grant Thornton, while the number of deals during January-September was higher at 45 against last year’s 39 deals, the average ticket size of the transactions has come down substantially in the first three quarters of 2008, reflecting softening valuations across the crisis-ridden real estate sector.

Cash crunch

Realty companies have been facing a severe cash crunch with bank loans drying up. Their problems have been compounded by plunging sales and weak demand. Even the festive season has been laggard with developers witnessing 40-50 per cent lower volumes this season compared to the previous year.

While leading real estate developer Parsvnath has said it would shortly weed out ‘non-performers’ as part of its cost-cutting measures, even Unitech — which categorically ruled out any retrenchments — gave lower increments to employees.

Treading with caution

“With banks going slow on lending to the real estate sector, realtors are turning to PE funds. However, as realty demand is slow, and the projections by builders on selling price and velocity of sales turn out to be less than anticipated, the PE funds too are treading with caution,” said Om Chaudhary, Managing Director of Fire Capital, which has already committed $150 million into seven projects and would invest another $50 million, before raising its next fund of close to $500 million in 2009.

Chaudhary said developers, who had acquired land banks at astronomical rates, are still unwilling to lower valuations, despite the turmoil in the market.

Realty opportunity

“The situation would get even more challenging in the next few months driven by the general downturn in the market. But this also offers a great opportunity for PE investors to look at real estate industry again,” said Harish H.V., Partner, Transaction Advisory Services, Grant Thornton.

In August this year, Atul Ruia-promoted real estate developer of Phoenix Mills raised €200 million (about Rs 1,300 crore) from a German real estate fund MPC Synergy, while September saw BTS India Private Equity Fund announcing an investment in Saisudhir Infrastructures Ltd.

Other PE transactions inked this year include Lehman Brothers Real Estate Partners’ $175-million investment for 50 per cent stake in the initial phase of Unitech’s Western Expressway project in Mumbai; Axis Bank’s investment in Lavasa Corporation, a subsidiary of Hindustan Construction Company, in the form of convertible preference shares and convertible debentures; and Citi Property Investors’ infusion of about $160 million in four SEZ projects of real estate firm BPTP Group

Source : Sify.com

Realtors may need more collateral to raise funds

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TOUGH TIME

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

Source : Economictimes.com

For home buyers, it’s a long wait as builders go slow on projects

High raw material costs, rising interest rates and spiralling inflation have pushed up construction costs, making it difficult for developers to complete projects on time

New Delhi/Bangalore: An investor who had put in Rs3 lakh in a realty project of New Delhi-based Triveni Infrastructure Development Co. Ltd is in a fix.
After launching the project in 2006 and promising to complete it in 24 months, the company has not allotted the apartment to the investor who asked not to be named as he fears the company would not give back his money.
Crunch time: Parsvnath Green Ville in Gurgaon. While low-rise apartments under the project have been handed over to buyers, possession of the high-rises have been delayed, say property brokers, as the financial crunch has forced Parsvnath and other developers to slow construction.The investor, 30, who lives in Rampur, Uttar Pradesh, paid Triveni the money as booking amount for an apartment in Triveni Galaxy, a high-rise complex coming up in Sector 78, Faridabad, a suburb of New Delhi.
“I paid the booking amount when the pre-launch of the project took place in 2005,” he said. “But since then, the allotment of the apartment hasn’t been done, and they insist that I pay up the remaining instalments for it.”
A spokesperson for Triveni said: “Work is in full swing in the sector 78 project. Around 40-45% of the total work has been completed and we are trying our best to give the possession before the start of the Commonwealth Games (to be held in Delhi) in 2010.”

After a three-year boom, developers have slowed construction on projects as they are facing a financial crunch. High raw material costs, rising interest rates and spiralling inflation have pushed up construction costs, making it difficult for developers to complete projects on time.

There are many people who have been left in the lurch by developers who have delayed completing projects they launched during the real estate boom of 2005-06.
There are examples galore especially in New Delhi’s suburb of Gurgaon. Work on the high-rise apartments in Parsvnath Green Ville, a project by Parsvnath Developers Ltd on Gurgaon-Sohna Road, has been delayed by six-eight months, property brokers said. While low-rise apartments under the project have been handed over to buyers, possession of high-rise flats has been delayed by six months, said Rajiv Sinha of Veena Estate, a real estate agency.
Parsvnath’s spokesperson, Neetal Narang, however, denied any delay. “The project is on track,” she said.
Apartments in The Close, a Gurgaon housing project launched by Unitech Ltd, India’s second largest developer, in October 2004 have still not been handed over to buyers. “There are 17 towers in the north wing, of which 10 are close to possession and six towers are over a year behind completion date,” said Sanjay Sharma of real estate agency Gurgaonscoop.com.
Unitech declined to comment on the delay.
The story repeats itself in other cities. An information technology (IT) professional booked a Rs24 lakh two-bedroom flat at Electronic City in Bangalore in early 2007 when the property market was up and about. The project is now delayed by a year. Many of the buyers shot emails to the builder, Ittina Group, seeking reasons for the delay, but there has been no response.
“We know the builder didn’t have the funds to continue with the construction and, therefore, the delay. Now we are promised a December 2008 possession, but we aren’t convinced,” the IT professional, who is 39, said on condition of anonymity.
A senior official at Ittina said buyers would shortly be given possession, but didn’t specify when. The official didn’t wish to be quoted because he is not authorised to speak with the media. Interestingly, the company’s website says possession has already been given for the project.
Property brokers in Bangalore said the Shantiniketan project in Whitefield by the Prestige Group is delayed by two years and will now be completed by mid-2009. “A number of projects in Whitefield are stuck because the area is suffering from oversupply, and builders are cautious to continue construction even after launching them,” said Suresh V., a realty consultant.
A senior Prestige official, who requested anonymity as he is not authorized to speak with the media, had told Mint earlier that most of its projects were delayed due to rising construction costs.

Liquidity problems have also caused realtors to build in phases to bail themselves out from a slow market. Builders are dividing projects into phases, selling one phase and pumping the money from sales into the next.
“It is a wise move because it enables cash flow and allows construction to go on,” said Shailesh Kanani, an analyst with Angel Broking Ltd. “But builders are sitting on huge inventories and are unable to continue building without offloading stock, which is why the delays and projects stopping mid-way.”
Project delays have also propelled many developers to offer a safety net in the form of a penalty clause in the sale agreement. Tata Housing Development Co. Ltd, for example, has introduced this clause for the first time in its 32-storeyed Aquilla Heights project in north Bangalore. “The company pays the customer a penalty amount on a monthly basis if the project is delayed. This also puts pressure on the developer to deliver on time or else they need to pay up,” said a company spokesperson.

Livemint.com

Realty players face moment of truth

NEW DELHI/MUMBAI: The fresh wave of liquidity crunch is set to worsen problems for the Indian real estate sector. The sector is already facing a cash  crunch on account of diminishing sales, expensive and largely unavailable credit and drying up of private equity funding. And if an economic downturn sets in as feared, many developers may go out of business and others may be forced to drastically cut prices.

Property consultancy firm Cushman & Wakefield estimates that real estate activity in the current fiscal is not likely to be more than half of what it was in the previous year. “If market fears actually come true, we will see a number of small and medium real estate players exiting the business,” says Cushman & Wakefield joint MD Sanjay Dutt.

“SBI has stopped overdraft facility and many banks are not disbursing sanctioned loans. All companies, including those from real estate, will face serious problems,” says DLF CFO Ramesh Sanka. He was also not very sanguine about the prospects of investors shifting their funds from the stock markets to the property market. “Where is the money? Money is getting eroded every day,” he said.

Developers feel liquidity is a must for companies to survive. “RBI had put in restrictions on banks on lending to real estate, fearing an asset bubble. We feel asset bubble is under control and it is time that RBI relaxed lending norms,” says Unitech MD Sanjay Chandra. Adds Mr Sanka: “Ultimately, RBI will have to release cash through relaxation in CRR and SLR.” Parsvnath Developers chairman Pradeep Jain hopes that the RBI will cut repo rate by 150-200 bps.

The biggest challenge for realty firms today is to boost demand for property. And many of them know price cuts are perhaps the only way to do that. “Consumer sentiments are down in the market. We have cut prices by around 20% last week in our two projects. We hope it will revive sales,” a senior executive of Mumbai-based Orbit Corporation said.

At the prestigious Maharashtra Chamber of Housing and Industry property fair, developers offered attractive discounts to woo buyers. While this did lead to the number of enquiries and bookings going up, they were much less compared to the demand that existed last year. “The gloomy news from across the world has made people apprehensive. That’s why, even festive season offers haven’t had great impact on them,” says Parsvnath’s Mr Jain.

Cushman & Wakefield’s Mr Dutt says prices have already corrected by 20-30% in most markets and may see a further correction of 20-30%. As sales refuse to pick up, developers are putting projects on hold and focusing only on a few projects mainly in metro cities, which may over a period of time generate sales.

Sourece : Economictimes

CRR cut: Realty players see light at the end of the tunnel

New Delhi (PTI): Undeterred by stock market crash and fall of realty index on the bourses, leading industry players expressed optimism that RBI’s move to cut CRR will help new funds coming into the sector and boost demand with possible softening of interest rates.

“Reserve Bank of India in order to infuse liquidity, has reduced CRR by a total of 150 basis points, which will release additional liquidity. This additional liquidity will give a thrust to the real estate sector and enable execution of projects at a faster rate,” Parsvnath Developers Chairman Pradeep Jain told PTI.

He hoped the banks would now reduce interest rates for home loans, which would encourage and see enhanced demand from home buyers taking mortgage to the tune of Rs 60-70 lakh and below.

National capital-based real estate developer Omaxe’s Chairman and Managing Director Rohtas Goel viewed RBI’s step as a “very good” one, which would help in reviving market sentiment and bring in stability amidst the current financial crisis.

“We are hopeful that this step will make an impact on lending and borrowing rates and we may see a reduction in interest rates on various loans, home loans in particular, which will bring in some relief to real estate sector,” he added.

Expressing similar sentiments, Vipul Ltd’s Managing Director Punit Beriwala said the CRR cut would try to stabilise the volatile financial market, which was otherwise having negative repercussions on the real estate sector as well, and would help in keeping alive the momentum of the sector.

Source : The Hindu

Slowing retail demand hits small Indian developers

MUMBAI – Slowing demand from India’s retailers has thrown plans of smaller developers in disarray, forcing them to look for buyers, industry officials said.

Small builders had hoped to benefit from a half-decade of sharp growth in the retail sector, but dropping rentals, rising vacancies and restricted access to funds is prompting a rethink.

“Many smaller developers are approaching to either sell projects or for joint ventures,” said Pradeep Jain, head of Parsvnath Developers, which has added mall projects in several smaller cities across north India this year.

The real estate industry is struggling with tepid sales as inflated property prices and decade-high interest rates brought an end to the five-year upswing. But, with scores of mall projects underway, demand from retailers is waning.

“The rentals were so unrealistic that no one would make that money in their lifetimes,” said R Subramanian, managing director of discount retailer Subhiksha, who stopped signing properties between December and March because of the high cost of space

“Total vacancy rate in Mumbai malls stood at 13.1 percent, the highest since 2005,” Jones Lang LaSalle said in a April-June report, adding that vacancy was as high as 30-50 percent in some suburban malls.

Vacancy at Delhi’s prime and suburban markets also rose to 16.2 percent and 10.8 percent in the quarter, it added.

OVER-SUPPLY

Nearly 112 million square feet of retail space was expected to be delivered in 3-4 years, and falling demand from retail means a lot of these projects sprouting up in smaller cities by first-time developers are already frozen.

“The oversupply of malls was very apparent, but over estimation of spending power of an average Indian was way off the mark,” Deepak Parekh, head of Housing Development Finance Corp, India’s top mortgage lender said earlier this month.

“Malls are becoming places to hang out or eat, and most retailers with paltry sales are unable to sustain rentals.”

Slowing economic growth and double-digit inflation this year has also forced a tightening of the customer’s purse strings, and sent retailers’ business projections crashing.

“Every rupee employed has to be done smartly, you just can’t waste and get into any unnecessary expenditure,” said Kishore Biyani, head of India’s top retailer Pantaloon Retail.

Last month, Mumbai-based Akruti City said it had cut exposure to retail segment because of oversupply fears and converted seven planned mall projects into commercial space.

The inevitable decline in rentals has begun, said retailers who point to a drop of 10-35 percent in the last six months, especially in the smaller cities.

“Every single rental contract that is falling due for renewal, is being negotiated downwards,” said Pranay Vakil, Chairman at property services firm Knight Frank India Pvt Ltd.

But, large players like Phoenix Mills and Parsvnath see this as opportunity to consolidate in a cashflow-dependent business.

“Shortage of good retail space is still there. A lot more foreign retailers are starting to come in, and they will need large space, which only established players can deliver,” Parsvnath’s Jain said.

Realtors Have Found A New Reason For Falling Sales

Going through a phase of liquidity crunch, falling sales and delayed projects, real estate developers are now blaming the media. At a Ficci-conducted two-day real estate summit, developers took potshots at the media during a panel discussion accusing them of “trying to be stars at the realtors’ expense”. Developers such as Mumbai based-Kalpataru Properties, Bangalore based-Sterling Developers Pvt Ltd, Shriram Properties and Parsvnath Developers – all felt aggrieved by the ‘negative’ coverage in the media. “Journalists are blowing up the issue (of real estate slowdown) to become hot journalists and step into the limelight,” said Mr. Mufatraj Munot, chairman, Kalpataru Properties. He said negative publicity in the media was one of the reasons why properties were not being sold. But there are others who are enjoying the media attention. Mr. M Murali, managing director, Shriram Properties, said, “We (realtors) are now like film stars, journalists run behind us for quotes. We should feel like superstars.”

Parsvnath Residency in Moradabad

Parsvnath Developers (PDL) has launched its group housing project Parsvnath Residency at Moradabad. The project is strategically located at Ram Ganga Vihar, Phase – II. Parsvnath is investing approximately Rs 15 crore in the property for which construction has already begun and is scheduled to be completed by the end of 2010.

The project will offer 34 luxurious dwelling units. It has three bedroom flats on 1,587 sq ft, 1,846 sq ft and 1,906 sq ft. It also offers limited and exclusive four and five bedroom penthouses on 2,868 sq ft and 3,350 sq ft, respectively.

The ongoing rate for the above-mentioned apartments is Rs 1,850 per sq ft. The company has already got residential project Parsvnath Pratibha and a mall in Moradabad.

Cento to sell 500 Indian realty projects in overseas market

Global realty consultant Cento International Investments on Tuesday said it expects to sell 500 Indian real estate properties in the overseas markets within next three months attracting a net worth of over Rs 250 crore by projecting the country as an investment destination. The UK-based consultant is in advanced stages of discussions with many developers, like Parsvnath for its ‘Nano City’, K Raheja Group, DS Kulkarni, Lodha Group and Alpha G Corp, for showcasing their projects in the European markets.
“We are in final stages of talks with them (developers) and will be showcasing their products in London for selling. We expect to sell 500 properties of these developers of at least Rs 50 lakh each in the next three months,” Cento International Investments Director (Sales) Nitesh Alagh said. The company would mainly project both residential and commercial properties in Tier II and Tier III cities, he added. “After a formal tie up, we will also be selling properties of Parsvnath’s recently launched Nano City in Haryana, where Shabeer Bhatia is one of the promoters,” Alagh said. The company would tie up with 40 developers across the country to help in selling their properties and to attract overseas investments into India in the form of joint ventures with the domestic firms, he said. “Investors in the Europe are eagerly waiting to invest in Indian properties, but they can not directly do so because of restrictions. The government should relax the norms so that there will be no obstacles in money inflow into the country’s real estate sector,” Alagh said.

Realty Majors up ad Budget

Despite the downturn, real estate players have increased their advertising budgets, even as other advertisers are cutting ad costs. The reasons for this are manifold.

“This is a result of desperate measures by most of the developers, and second, stakes are very high as most of the projects are not being sold. Developers have gone aggressive with an increase of 20-35% in the advertising budget due to inflation,” said Noshe Oceanic V-P Rajiv Gupta.

The agency handles accounts of real estate developers like Spaze Towers, Rohtas, AMR Infrastructure. Agreed Spaze Towers director Bharat Kumar: “We have increased our advertising budget by another 20% due to recession in the market as well. Our stakes are high at the moment but things are going to get right in the next two-three months.”

Many players have even bought back their sold-out properties and are re-selling them to make out for the losses. Most of the players are using tactical promotional strategies to be high on the recall value. With inflation on the high and property prices on the rise, developers are desperate. “It’s a do or die situation out there due to high recession in the market. Many developers are buying back their projects and re-selling. It is necessary to make a noise at this time to keep the projects on high visibility radar for those who actively trade on the real estate.

The print media is taking up the major chunk while the rest goes to the outdoors. Out of a scale of 10, together advertising in print and outdoor could be rated as seven,” said Noshe Oceanic president Asheesh Sethi.

Despite a desperate situation, most developers see brighter day ahead. “There has been a minor moderation because of liquidity crunch and many internal and external expenses have been re-budgeted. But I don’t think the overall indications would be visible on an annual basis,” said Parsvnath Developers CEO BP Dhaka.

Developers like Unitech, DLF and Ansal API have not cut down on their advertising budgets. “We have increased our promotional budget and see no reason why we should cut costs here. Moreover, in companies such as ours, the ability to fight recession is inbuilt,” said Ansal API president (international market) Kunal Banerji.

Hotmale, Sabeer Bhatia to get a Partner

The Nano City project of the Hotmail man, Sabeer Bhatia will soon partner in Parsvnath Developers. The final decisions are yet to be taken about handing over 30-38% equity stake in the project to Parsvnath Developers. The project which is proposed to come up in Raipur Rani in Haryana, will be spread over 11, 000 acres with about 23 villages falling under it purview. The company plans to acquire about 5000 acres in the first phase over a period of 1.5 years with an investment of Rs 1, 500 crore. It is expected that the project will attract world-class companies involved in the creation of Intellectual Property. It is being viewed as a future hub for companies operating in areas such as Software Development, Nano Sciences, Next Generation Drug Discovery, Bio-Technology, Energy Research and Semiconductor Research.

Parsvnath Close to Deal for Nanocity

Parsvnath Developers, the Delhi-based real estate developer, may bag the development rights for one of India’s biggest infrastructure projects, the Rs 1,850-crore Nanocity, coming up at Panchkula near Chandigarh.

The project, spread over 11,138 acres, being jointly promoted by Hotmail founder Sabeer Bhatia and the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), is modeled on the Silicon Valley and will come up in two phases.

An official told ET that Mr. Bhatia’s Nanocity Haryana Infrastructure Limited (NHIL) is entering into a joint venture with Parsvnath Developers where the realtors may even be offered equity partnership. Currently, Mr. Bhatia holds 90% equity in NHIL while the rest is held by HSIIDC. It is learnt that the NHIL is in the advance stages to acquire around 500 acres for the project in district Panchkula, 20 km east of Chandigarh.

The knowledge city will deal in future technologies like nano-technology, biosciences, software product development, next generation Internet products, materials research and energy. As per the master plan prepared by the College of Environment Design, University of California, Berkeley, 50% of the total land will be earmarked as parks and open space. “The master plan that invoked wide admiration of professors and architects in Berkeley University has been introduced as a topic in a post graduate semester on new cities in the University,” according to a state official. The entire project will be split into four districts: IT, university, airport and biotech.

In November, 2006 Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) and Nano Works Developers (P) Ltd had signed a joint venture agreement to set up city in Panchkula district. Earlier a joint working group set up by Haryana government has identified the picturesque site of for the project. As per plans an area of about 5,000 acres would be covered under the phase-I whereas as rest of the land is supposed to be utilized in the second phase. The city is envisaged to sustain modern lifestyle and would have world-class infrastructure aimed to give fillip to economy of the region.

Enticing Buyers with Freebies

Stung by the bearish realty market, which is reeling under a price correction, real estate developers are now unleashing discounts, freebies and innovative schemes to lure buyers into residential space. Consider these: TDI is offering a free international trip for its Kingsbury Luxury Apartment buyers; Ansal Buildwell has advertised an inaugural discount on its project Florence Abode; scores of players are offering an ‘EMI holiday’ till possession on specific projects; while yet others are willing to waive prime location and such other charges or throw-in complimentary club memberships for new homeowners.

“In various markets, despite a slowdown in demand, developers have refrained from reducing rates. Instead some of them have started offering incentives such as club membership, parking lot, and better amenities to attract buyers,” says Ms Shveta Jain, Associate Director (Residential), Cushman & Wakefield India.

Assotech Ltd is giving buyers the flexibility of taking loans on vanilla flats, which incidentally do not include the cost of modular kitchen, shower cubicle and other so-called ‘frills’.

According to the Assotech’s Managing Director, Mr Sanjeev Srivastva, the company allows customers to pay for the ‘frills’ at the time of possession. This means that the buyers’ loan is reduced substantially and they save that much between the time of booking and possession, and can make the balance payment at the end of the purchase cycle. This works out to about 15 per cent of the price of the house — the payment flexibility could be close to Rs 4.5 lakh on a Rs 30 lakh home.

Parsvnath Developers, Parkwood Developers, JMD, and BPTP offer ‘EMI holiday’ schemes, while Ashiana has announced an ‘EMI-sharing’ scheme for its Bhiwadi project. Others like Uppal Group are contemplating similar offerings for their upcoming projects. “Although none of our existing projects has such offers, we are considering introducing them in certain projects which are in the pipeline. In the prevailing market situation, buyers are looking at solutions that make purchases more affordable for them,” says Mr Harmit Chawla, Vice-President, Sales, Uppal Housing Ltd.

Analysts point out that the generous discounts and sops are reflective of the current sluggishness in the Indian property market. “When the market was hot, everything came at a premium — even an apartment facing a so-called park (small lawn) attracted an extra levy in the form of a PLC. In contrast, some real-estate developers are now bundling-in parking charges and club membership as a package deal to catch consumer interest,” they add.

Signs of correction in the residential market are already becoming evident, and residential prices in some pockets are down by 10-15 per cent, while in other parts it has stabilised, says an industry observer.

A report by Cushman & Wakefield points out that both capital and rental values in Bangalore’s residential sector would ‘continue to stabilise’ during the next quarter, across select micro-markets (Whitefield, Kanakpura Road, Outer Ring Road) with a large number of investment-based properties expected to see softening of rates over the next two quarters.

In Delhi, while prices are expected to remain firm in most parts, a correction is expected in the peripheral locations of Manesar and Greater Noida in the short to medium term — even suburban locations of Gurgaon and Noida are likely to see price movements that are project specific.

The report further points out that capital and rental values in Mumbai would continue to stabilise over the next 3-6 months on account of upcoming supply, increasing interest rates and inflationary pressures — all of which will impact purchasing decisions.

Buyers and investors are in a wait-and-watch mode leading to a slowdown situation. As the sales momentum dips, a section of the market could either resort to price reduction or adopt aggressive approach to close deals through sweeteners, at least for a part of their project, to get the cash flows in place, Mr Kumar Gera, Chairman of CREDAI says.

Mr Anshuman Magazine, Managing Director of CB Richard Ellis feels that while demand continues to be robust for premium and even low-end housing, realtors will primarily target the volume segment in the residential market with such sweeteners.

Recently, a Pune-based builder offered air-conditioners and other fixtures at a significant discount to its customers. This whole business of discounts and freebies had started off in the face of fierce competition in the industry, and the trend is likely to accelerate in case the market remains in the slowdown mode.

Ms Jain of Cushman & Wakefield India agrees that certain high-end projects or apartments in prime locations would continue to see strong demand. These projects would not need to join the freebies bandwagon.

So while the residential market braces for a cool-off, it may be a good idea for prospective homebuyers to negotiate that hot bargain!

Actis buys Vaishnavi Project Stake

Bangalore-based real estate developer Vaishnavi Infrastructures has received an investment of $25 million from private equity investor Actis for its Rs 350 crore Bangalore project, an investment bank official said.

The proceeds of the investment will fund the construction and development of approximately 925,000 square feet of high-end residential and retail space at Yeshwantpur, a Bangalore suburb.

This is the first investment by Actis India Real Estate Fund, a $300 million fund sponsored by Actis.

“Actis has taken a significant minority stake in Vaishnavi’s Bangalore project as it is situated at the perfect location. With current realty market conditions … private equity players prefer to invest in projects as they can get the right valuations,” T R Srinivas, director at o3 Capital told DNA Money from his Bangalore office.

Srinivas added that, for further funding, Vaishnavi would take the “debt route” rather than sell more stake in the project.

With the current turmoil in the real estate market, it is becoming increasingly difficult for realtors to raise debt from banks. Industry experts believe many developers are paying interest of around 30% for new loans.

To address the problem, developers are hunting private equity investors to sell stake in their projects.

Recently, the New Delhi-based Unitech said it would sell a 50% stake in the first phase of its Mumbai project (near Bandra-Kurla complex) to Lehman Brothers for $175 million.

However, another Delhi-based developer Parsvnath Developers said it has no liquidity issues for its current project.

“I have Rs 300 crore in fixed deposits and over Rs 500 crore is unutilised and sanctioned debts available with us. I do not see any liquidity issues and am in a comfortable position,” Parsvnath’s chairman Pradeep Jain said. He added that the average cost of the funding is around 12% for Parsvnath.

MagicBricks.com awarded the ‘Best Property Portal’ 2 years in a row

Times Business Solutions Limited’s leading real estate portal, MagicBricks.com, has won the Real Estate Excellence (REE) Award for the “Best Property Portal” for the year 2008 for its outstanding contribution to the real estate sector. This is the second time that MagicBricks.com – India’s No.1 Property Site, has won this award. The REE Award not only recognizes the contribution of MagicBricks.com in developing the Real Estate sector in India, by bringing in an unparalleled level of interactivity and transparency with its innovative online solutions to the sector, but has also identified and honored MagicBricks.com as a team of professionals who have envisioned and created path-breaking products and services to serve the sector, creating benchmarks for Indian real estate. The REE Awards 2008 were also bestowed upon Parsvnath Developers for the Company of the Year, DLF for the Best IPO and Jaypee Greens for Overall Achievement & Project Award of the Year-2008. The REE Awards have been constituted to recognize developers, builders and the real estate related organisations for their outstanding achievements in developing infrastructure facilities and promoting state of art designs & architecture. The REE Awards 2008 honored and saluted entrepreneurs involved in building and developing the new India.