Builders revive stalled commercial projects on early signs of recovery

Bangalore: Realty firms, encouraged by early signs of a revival in the market, are dusting off shelved or deferred projects and testing their financial viability to gauge which of these can be resurrected.

Solid foundation: A commercial complex under construction at DLF Cybercity, Gurgaon. Developers who had shifted focus from commercial projects to residential sales during the slowdown are restarting them. Rajkumar / Mint

DLF Ltd and Unitech Ltd, India’s top two developers by market value, which had suspended most of their commercial projects earlier this year, said they are in the process of redeveloping them because of a return in demand.

Unitech, which is more upbeat about the potential of commercial development, said on Monday that it has started developing many projects which had been suspended before. DLF, however, plans to remain cautious and wants to launch only in selective markets such as New Delhi and Hyderabad that it thinks have revived faster than others, a senior DLF official said on condition of anonymity.

Large developers such as Housing Development and Infrastructure Ltd (HDIL), Orbit Corp. Ltd, Ozonegroup and Prestige Estates Projects Pvt. Ltd are also launching or firming up plans to build offices and shopping malls.

“This is a good time because most of us have repaired balance sheets and can afford to start construction and can hold on if needed,” said Hari Pandey, vice-president of finance and investor relations at HDIL. “We are also observing a rise in interest from healthcare, financial services and IT (information technology) companies.”

HDIL, the country’s third largest developer by market value, in September and October launched 3.5 million sq. ft of commercial and retail development projects in two Mumbai suburbs that were initially scheduled for a 2010 launch. HDIL’s capital outlay for these projects is Rs600-700 crore over the next four years.

Improved cash flows from sales and a rise in the so-called transfer of development rights (TDR) rates, too, propelled the company’s decision to start building these projects. Slum TDR is a tradable paper issued by state governments in exchange for free development of slums by builders. They, in turn, use the paper to develop other sites.

Analysts, however, remain sceptical and say the commercial and retail segments, unlike residential housing, may be far from a turnaround. Real estate consultancy Cushman and Wakefield said in a 27 October report that the estimated absorption of office space in the first three quarters of 2009 was 4 million sq. ft and is expected to be 5 million sq. ft for the entire year—a 50% drop from the 10.36 million sq. ft sold in 2008.

Developers had shifted their focus from commercial, retail and hospitality projects to residential sales during the slowdown. DLF and Unitech led the way, saying they would concentrate on mid-income homes, and suspended other projects. While a Unitech official said on condition of anonymity that the company has changed its stand and gotten back to commercial development, DLF is also developing about 2.5-3 million sq. ft of commercial space.

Overall, DLF is trying to clean up whatever commercial space was launched by beginning construction as well as delivering what was promised, said a DLF official, who also did not want to be identified.

“The revival of the commercial sector will be a slow process, and the initial trends emerging after the lull include the gradual return of demand from non-IT companies as well as from investors,” said Anshuman Magazine, managing director at property advisory CB Richard Ellis.

Bangalore-based Ozonegroup is back at the drawing board, deliberating the format of its Urbana project—a 162-acre sprawl in Bangalore. The company, which had earlier considered building an IT special economic zone (SEZ) here, may instead build a large IT park with retail spaces.

Similarly, Orbit, after turning its premium commercial projects into residential formats, plans to launch two commercial projects in the coming months in the Bandra-Kurla Complex and Andheri, both Mumbai suburbs.

“The launches are in anticipation of demand picking up as companies begin to expand again,” said Pujit Aggarwal, managing director of Orbit.

India’s retail property market has recorded the highest correction in the world, according to a 22 September report by Cushman and Wakefield. The biggest fall in rentals globally was in Colaba Causeway, a high street in Mumbai, where rentals fell by 63.5%.

In the past couple of months, many mall developers have restarted projects they had given up on.

A Bangalore-based developer, requesting anonymity, said he is redesigning a 2 million sq. ft mall off Bellary Road in north Bangalore, which he had shelved late last year. “We had even dissolved our entire retail team but now we are again at it, though we have to rethink our mix of retailers, etc.,” he said.

From the complete silence that reigned in the retail sector in the past two quarters, sign-ups have started though retailers are more demanding this time, said two retail analysts.

“The current set of mall developers are long-term players and are more cautious because retailers want to see that construction has begun, unlike earlier,” said Susil Dungarwal, founder of Beyond Squarefeet Advisory Pvt. Ltd, a mall advisory.

Retail investors, too, are hopeful of seeing more movement in an otherwise dull sector. Ivanhoe Cambridge Investment Advisory (India) Pvt. Ltd, a Canadian retail-focused fund, is close to signing a joint venture with a leading developer, almost a year-and-a-half after it announced its India plans.

“We see India as a long-term strategy, and the recent economic downturn has not impacted our interest in investing in quality shopping centre projects with competent local partners,” said Phil McArthur, senior vice-president, India, Ivanhoe Cambridge.

Source:http://www.livemint.com/2009/11/02214640/Builders-revive-stalled-commer.html

Realty builds on affordable homes

NEW DELHI: Ekam and Roma Bansal’s (names changed on request) dream of owning a home came true last month when they booked a 12th-floor

two-bedroom apartment on the Greater Noida Expressway, near Delhi. They will be paying about Rs 30 lakh, of which some Rs 20 lakh will financed by a loan.

The Bansals are thanking their stars that they failed to seal a deal in the past two years they were looking to buy an apartment. Prices in the National Capital Region (NCR) are currently down a third from their peak at the end of 2007 and the slowdown has forced property developers to drop prices and build cheaper, compact homes that fit the budget of those such as the Bansals. Their builder Unitech was down in the dumps earlier this year as real estate prices crashed and buyers disappeared. The company is now patting itself on the back after deciding to launch so-called affordable homes, the relatively lower-priced apartments that are attracting buyers such as the Bansals.

Unitech says it sold 8.16 million sq ft of residential space between March and September out of a total of 10.11 million sq ft, helping it post revenues of Rs 3,913 crore that are higher than in the boom years of 2006 and 2007. And all the apartments it sold were in the affordable category, costing less than Rs 30 lakh apiece.

For Unitech and other real estate developers, building affordable homes is paying rich dividends. A survey of India’s top property firms and estimates from industry body Confederation of Real Estate Developer’s Associations of India (Credai) show that over 70 million sq ft of residential space was sold in the first six months (March-September) of the fiscal 2010). Bulk of the sales happened in the last 90 days and majority of the homes sold were in the affordable segment.

By the end of the fiscal in March 2010, builders hope they will have sold close to the 190 million sq ft they managed in 2007.

Across the expressway, where the Bansals plan to shift in about two years, Jaypee is building Wish Town, a 1,162-acre swish golf township with premium homes, malls, school, colleges and hospitals. It originally launched apartments with a view of a golf course and priced these at a minimum of around Rs 1 crore. But over the past few months, it has launched smaller flats starting Rs 25 lakh.

“In six months, we sold 10,000 affordable homes, while we also managed to sell another 2,000 luxury apartments around the golf course,” says Manu Goswami, head, sales and marketing, Jaypee Greens.

Unlike three years ago, when most developers were not offering affordable houses, now everyone is in that segment, says Hiranandani Group chairman Niranjan Hiranandani. Mumbai, where Hiranandani is based, has seen close to 8.4 million sq ft of housing sold in the past 6 months.

“Sanctions have picked up and we are already at 70% of the peak. We expect home loan disbursals to reach the peak levels of 2007 by the end of this fiscal, subject of course, to the fact that developers do not increase rates further,” says SN Nagendra, senior general manager, HDFC, one of the country’s largest housing finance companies
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Developers say enquiries for homes began around March 2009 and conversions started to happen July onwards, with bulk of the demand in the affordable segment.

There was latent demand but it was not converted into sales due to economic uncertainty, observed Mr Hiranandani.

“The sudden spurt in demand due to perceptible change in the economic environment in the past three months, combined with lower interest rates, has bolstered the confidence of home buyers.”

Among the major developers who have ridden this new real estate wave are Unitech, the Jaypee group, DLF, BPTP and Omaxe, witnessing a sharp rise in demand, particularly for new projects.

Home loan trends bolster this claim. In the first six months, State Bank of India’s disbursements were in excess of Rs 10,000 crore, compared to Small is beutiful

Rs 3,900 crore in 2007-08 and Rs 4,900 crore in 2008-09 for the April-September period.

“We are sanctioning much higher volumes now for home loans. The growth in home loans has been even higher than in 2007,” says P Nandakumaran, head retail banking, SBI.

However, due to lower pricing, average realisations for most real estate players is down 25-30% per sq ft in comparison to 2007-08. Unitech has seen its average sales price coming down from Rs 4,000 per sq ft before September 2008 to Rs 3,234 per sq ft in the past 6 months.

The profitability of these companies will surely come down due to the decline in realisation, says Aditi Vijayakar, executive director, residential service at real estate consultancy Cushman & Wakefield.

“The profit margin of these companies depends upon when and at what price these developers bought the land,” she added.

Jaypee, which has sold close to 11.5 million sq ft of residential space in six months, has seen a decline of 25-30% in average basic sale price, primarily because it is selling more affordable homes.

Unlike during the last boom period when developers concentrated solely on luxury housing, this ongoing surge is seeing a mix of both affordable and luxury housing.

“The market was overheated and people were waiting for it to come back to a realistic level. The expectations of developers and buyers were mismatched. Everyone was working on the wrong product, including us,” says Manu Goswami.
A senior official of DLF, the largest real estate player in the country, said that the company has sold 2.5 million sq ft of space in the past three months. Of this, about 2.1 million sq ft has been sold in the past 30 days.

“The confidence of the people is back as the economy is turning around. This has led to robust demand for housing at good locations and affordable prices,” says Rohtas Goel, CMD, Omaxe. The company has sold close to 1.8 million sq ft of housing space over the past three months.

Delhi-based developer BPTP has sold about 6,800 homes across three properties in Faridabad totalling about 7.76 million sq ft. According to Prakash Challa, vice-president (south) at Credai, the southern region has seen sales of around 20 million sq ft in the past 6 months. The eastern region saw close to 3 million sq ft of sales.

Ashish Puravankara, director of Puravankara Projects, says that while demand was always there, it is sentiment that has changed.

“Now, with companies showing great results, hiring again and even giving a 8-10% hike in salaries, the sentiment is getting better.”

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-Trends/Realty-builds-on-affordable-homes/articleshow/5147148.cms?

Unitech leaves customers high and dry

Unitech, one of the biggest property developers in India, which volubly claims to have turned barren landscapes into housing landmarks, has left several hundred middle-class buyers in the lurch. This second largest player in the real estate sector had promised to provide 850 residential flats under the Unitech Habitat project in Greater Noida by July 2009, but so far not a single flat has been fully constructed. All the customers who are trapped in this deal are feeling cheated by this. They can’t withdraw their money since allotments have been done and customers have no exit route.

Unitech Ltd had sold 850 residential flats in July 2006 with a promise to deliver these apartments by the beginning of July 2009. All unit holders (combined) have paid a total amount of approximately Rs 450 crore to the company. But Unitech has failed to fulfil its commitment for timely delivery of flats.

Unitech had painted a rosy picture of the entire project to lure the common man but unfortunately this picture is still on paper. The Unitech Habitat project is spread across 23 acres in Sector Pi of Greater Noida. It offers 2- and 3-bedroom apartments, duplexes and penthouses, equipped with fully fitted modular kitchens. Under this project, the developers had promised to provide 100 per cent power backup with 24×7 security, sufficient car parking facility per apartment and earthquake resistant building structure.

The residential area is supposed to include children’s park, event lawn, open air theatre, picnic garden, exercise garden and play courts for recreational activities. Apart from this, there it is supposed to have a club comprising two swimming pools, children’s pool, gymnasium, indoor games room, kids’ play room and multipurpose hall.

Drawn by this mesmerising picture, a large number of people invested their lifelong savings in this project. Unitech demanded entire payment for the residential apartments in advance, ranging from Rs 60 lakh to Rs 80 lakh. “All the buyers have disbursed around 90 per cent of the flat price, but Unitech has failed to complete more than 50 per cent of the work during the span of three years,” said one of the buyers.

The construction work of the Unitech Habitat project was put on hold for 10 months and only recently the work has restarted, but that too at a very slow pace. Many of the other residential projects started by Unitech have been postponed, thus causing frustration and anger among those waiting for delivery of the promised flats.

On the one hand, most of the unit holders are paying rents of their current residential requirements, and on the other, they are paying EMIs to banks. Moreover, Unitech had charged 18 per cent penalty on the installment amount even for a single day’s default in payment. But in return, Unitech agreed to provide a meagre compensation of Rs 5 per sqft per month for any delay, and that too only at the time of handing over possession to the unit holders.

Some unit holders met the senior staff of Unitech in June 2009 to discuss the issue; however the officials were unsympathetic and reluctant to take any action on this matter.

Around 250 buyers have formed Unitech Habitat Greater Noida Owners’ Association and decided to take up the issue in a big way. One of the members of the association said: “Has Unitech utilised the project money for some other venture? If it is in bank, then how much interest is Unitech earning on the money, since the money has not been utilised towards the delivery of the project?”

Association members are planning to visit its corporate office next week and raise the matter with its senior management.

Source : http://www.dailypioneer.com/207348/Unitech-leaves-customers-high-and-dry.html

Unitech Launches Worli Project at A Massive 36% Discount

Unitech Ltd has launched its new residential project (a part of the slum rehabilitation scheme) in upscale Worli, at a massive 36% discount to the prevailing market price. The project would be launched at Rs 12,800-13,800 per square feet, compared with a on-going market price of around Rs 20,000 per square feet. The unit size of the project would range anywhere between 1,750-3,750 sq feet for 2-3 bedroom flats, which means that each flat would cost between Rs 2.5 crore to Rs 6 crore. The company might start the pre-launch sale of the project by next month before Diwali.

Source : DNA Money

Below-market price attraction in Delhi, Mumbai home market

DLF, the country’s largest property developer, sold all the 1,250 apartments on offer in the second phase of its Capital Greens project near the Moti Nagar area of Shivaji Marg (Najafgarh Road) in West Delhi, within two hours of launching the booking on Tuesday evening.

While the prices were lower than the market, the lowest effective price was 39 per cent higher than the lowest price it had charged during the first phase of the project this April. At the time, DLF had sold all 1,356 apartments on offer under the first phase in a single day; a prime factor was that their lowest effective price was 32 per cent lower than the market price. This time, claimed a company spokesman, it was more than 25 per cent lower than the market one.

Apartment prices are upwards of Rs 6,000 a sq ft in the area. In the second phase, the company charged Rs 6,750, Rs 7,500 and Rs 8,000 a sq ft, respectively, for the apartments, which ranged from 1,210 to 2,720 sq ft each. There was a discount of Rs 500 a sq ft for timely payment and a 8.5 per cent discount on down payment. Hence, the effective selling price, which includes both discounts, is about Rs 5,677, Rs 6,363 and Rs 6,820 a sq ft, respectively. The company additionally charged for parking and for those wanting a preferred location.

A spokesman said the increased charges were due to the better location of the second phase, with a 90 per cent view of greenery and inclusion of four-bedroom apartments, which did not exist in the first phase.

“If buyers lap up the properties with increased prices so quickly, it shows there is a still an appetite in them to absorb that franchise,’’ said Anuj Puri, chairman of property consultancy Jones Lang LaSalle Meghraj (JLLM).

However, Puri said if speculators had participated in the project, then it is bad for the property market, as they could go in for arbitrage later. However, the company spokesman said it had imposed a restriction of one apartment per PAN card holder and a lock-in period of one year within which the buyers cannot sell the apartments.

“We are committed to give value for money for our buyers and rates are still 25 to 30 per cent lower than the prevailing market prices,’’ the spokesman said.

Unitech’s Mumbai launch
In a first of sorts in the Mumbai property market, Unitech, the country’s second largest developer, is planning to launch a new residential project in the Worli area of south-central Mumbai, which is expected to be 35 per cent lesser than prevailing prices in the area, sources in the company said.

But the catch is that the buyer of the apartments should pay 75 per cent of the apartment cost in one go, as against the construction-linked payment plans prevailing in the real estate market, wherein the buyer pays some money as booking amount and the rest in installments linked to each stage of completion.

‘’But the project is in its very initial stages and is expected to be launched in a year’s time,’’ sources said. The company is also expected to return buyers the entire amount with 12 per cent interest if it is unable to finish within a year from the launch.

Ashok Kumar, managing director of Cresa Partners, a realty consultancy, said: “It will certainly put pressure in the south-central Mumbai market, where a number of new projects are coming up, resulting in oversupply.’’

Source : http://www.business-standard.com/india/news/below-market-price-attraction-in-delhi-mumbai-home-market/370986/

Housing sector is shining again

Last August, Gurgaon real-estate broker S Karan was planning to move out of his tiny basement office in a small building to a fancy new one in one of the tall steel-and-glass buildings that have become the signature of this booming Delhi suburb.

Then, Lehman Brothers, one of the Big Four investment banks in the US, collapsed on September 15, sparking off a global recession, an Indian economic slowdown, and a slump in the once booming real-estate sector.

Karan (34) then thought his dreams would remain still-born — till the first signs of a recovery in the first quarter of 2009-10.  “Usually, we seal 70 per cent of our deals around Diwali. Last year, that figure dropped to 30 per cent.”
There were many reasons for the death of his dream.

The global recession took the Indian stock markets down with it. The BSE Sensex fell from 14,001 on September 12, the last trading day before the Lehman collapse, to a low of 8,198 on March 5, this year.

So, the supply of speculative money that had mainly fuelled the 2005-08 real estate boom, in which house prices doubled and rentals soared more than 75 per cent, stopped.

Rising inflation also forced the Reserve Bank of India to hike interest rates. Result: interest rates on housing loans rose from 7-8 per cent levels at the end of 2007 to 12 per cent a year later.

Housing was no longer attractive for speculators, and out of reach of the middle class.

The bubble had burst.

Between October last year and March this year, housing sales dropped from 10,000-12,000 units per month in the National Capital Region to less than a third of that number.

“Earlier (prior to the Lehman collapse), I used to conduct two to three transactions in the resale category and three to four original bookings every month. After October, that number fell by half,” says Karan.

Transaction values also fell as realtors, who had got used to net profit margins of more than 50 per cent, cut prices to lure buyers back.

But the double whammy of lower prices and plunging sales took its toll. DLF, India’s largest real estate company, saw its January-March 2009 sales and profits plunge 96.6 per cent and 95.3 per cent, respectively, to Rs 55.5 crore and Rs 29.8 crore.

Unitech, India’s second-largest real estate developer, and a host of other biggies like Omaxe, Parasvnath, Prestige, Puravankara, etc., also suffered similar setbacks.

Then the tide began to turn in the first quarter of 2009-10. The global recession brought down crude oil and commodity prices worldwide.

The wholesale price-based inflation rate began to ease – and even entered negative territory for a while. Interest rates started falling once again.

Realtors cut prices, by up to 30 per cent, and launched a slew of affordable housing projects (priced at Rs 15-50 lakh per apartment).

And the release of arrears to government employees, following the Sixth Pay Commission Report, thus, putting massive sums of money in the hands of government employees, provided the icing on the cake.

Buyers returned to the market.

Unitech Managing Director Sanjay Chandra says the company booked nearly 4,000 housing units in the first two-and-a-half months of 2009-10.

The number of registration agreements signed has also seen a healthy improvement. In Mumbai and Pune, registrations increased 24 per cent and 21 per cent month on month, respectively, said a June 2009 report, On the road to recovery, by Religare, Hitchens Harrison.

“The residential property market has been driving this recovery,” says Aditi Vijayakar, director, residential services, Cushman & Wakefield India, a large real estate consultant. The commercial and retail segments, though, have not yet picked up.

“The worst is over,” says Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India, the apex body of realtors in India.

So, Karan can probably breathe easier now, even though his dream office may still be out of reach.

Source : http://www.hindustantimes.com/Housing-sector-is-shining-again/H1-Article1-455508.aspx

Haryana eases building norms, makes room for cheaper homes

New Delhi:  Homebuyers can now look forward to buying homes for as low as Rs 4 lakh to Rs 16 lakh in Gurgaon, thanks to a recent policy initiative by the Haryana government. The state government’s new scheme caps the price of the homes built by developers in return for permission to builders to make more housing units of smaller sizes in the same area.

Developers say the scheme will help launch new projects and increase cashflow . “Projects under the scheme would give minimal margin. Nevertheless , developers would be encouraged to launch homes under the scheme, as there is a great demand for low-cost homes,” says Navin Raheja, chairman of Delhi-based Raheja Developers that plans to shortly launch some projects in Gurgaon under the scheme.

The incentives for developers include a relaxed density norm (from current 250 people per acre in Gurgaon to 600 people per acre) and higher ground coverage area from 35% to 50%. “The move to relax density norms will help us build smaller homes and thus make them more affordable ,” Unitech head of corporate planning R Nagraju said, adding that it was impossible to build homes of less than 1,500 sq ft on average under present density norms. Under the new scheme, a 10-acre plot will be able to house over 1,200 dwelling units as against 450 units at present, Mr Raheja estimates.
A larger ground coverage means concrete structure could occupy larger area on the ground thus lowering project costs. Construction cost is usually lower in low-rise buildings.

Under the scheme, which will be open for developers until November 20, the low-cost homes with a minimum carpet area of 25 sq mt (approx 350 sq ft) will have a maximum price tag of Rs 4 lakh all over the state. Dwelling units with a minimum 48 sq mt (approx 700 sq ft) carpet area, defined as affordable category by the government, will be sold for Rs 16 lakh in Gurgaon-Manesar urban complex, Rs 14 Lakh in Faridabad, Panchkula and Ballabhgarh complex and Rs 12.50 lakh for rest of the state.

Below poverty line (BPL) families as well as the class IV staff of the state government will be eligible for the Rs 4-lakh homes, which will be at least 15% of the total dwelling units built in a project. The allotment will be made through a draw of lots and allottees can’t sell their property before five years of possession.

Haryana government’s new scheme caps the price of the homes built by developers in return for permission to builders to make more housing units of smaller sizes in the same area

Incentives for developers include a relaxed density norm (from current 250 people per acre in Gurgaon to 600 people per acre) and higher ground coverage area from 35% to 50%

Under the new scheme, a 10-acre plot will be able to house over 1,200 dwelling units as against 450 units at present.

Source : http://content.magicbricks.com/haryana-changes-building-norms-to-make-room-for-cheaper-homes

Unitech to pump Rs 600 cr into affordable housing

New Delhi: Unitech Ltd, India’s second largest real estate developer, is looking at investing Rs 600 crore to develop and launch affordable houses under its Uni Homes brands across seven cities in the country.

The developer would launch these homes in the price range of Rs 10-30 lakh in Noida, Greater Noida, Chennai, Kolkata, Rewari, Bhopal and Mohali.

The total area in the phase one of the launch would be about 4.5 million square feet with about 5,000 flats. The company would fund the development with a combination of debt and internal accruals.

The developer had earlier said it would launch 30 million sq ft of development of commercial and residential properties in the current fiscal, which included 20 million sq ft of residential projects. By August it has been able to launch 17 million sq ft of projects, mostly in the affordable housing segment and has already sold 6,000 flats.

However, analysts covering the company believe that Unitech’s margins would go further go down with its concentration in the lower-margin affordable housing segment.
“We expect the profit margin to reduce going forward as affordable and mid housing are low-margin segments compared to commercial, retail and luxury housing segments,” K R Choksey analysts said in a note to clients.

The company plans to launch 40 projects, and would develop 35 million sq ft properties in the next two years. The company may require Rs 6,000 crore over the next two years for funding the expansion, and would use the cash generated from two qualified institutional placements (QIP) of shares, asset sale and internal accruals.

The developer has already raised about Rs 4,410 crore through QIPs. It is also looking to raise Rs 500 crore by selling about 20-25 hotel land parcels as its hospitality expansion plans have been deferred due to low demand.

The realtor currently has debt of around Rs 7,000 crore, which is expected to go down to Rs 4,000 crore by the fiscal end.

Source : http://www.dnaindia.com/money/report_unitech-to-pump-rs-600-cr-into-affordable-housing_1281927

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 may not gain from tax benefit extension

The government’s decision to extend the time limit for claiming tax exemption on profit earned from projects may not give the desired benefits to Buying a house?

Instead of giving benefits to ongoing projects, the government chose to extend a tax waiver to ‘affordable’ housing projects that were approved till March 31, 2008.

“A change in any regulation with retrospective effect doesn’t seem to address either the pricing or the supply issue in the real estate sector,” said Kumar Gera, chairman, CREDAI, a builder’s association.

The current provision is unlikely to have any impact on the prices or on the sale of stock. Had it been an exemption for ongoing projects, it would have been an incentive for developers to build more such projects.

Though there is a shortage of 24 million dwelling units in India, there is not enough supply, especially in bigger cities that cater to middle-income segment. “Such an announcement would have no impact on the overall sector,” said E Sudhir Reddy, chairman, IVR Prime, a south-based developer.

Since projects are already under construction, we will check their eligibility status only when tax is due, said R Nagaraju, corporate strategy planning head at Unitech. For developers, project completion is more important than the checking whether it will benefit from any regulatory change.

As per the new regulation, all projects which were approved by March 31, 2008 against the earlier deadline of March 31, 2007, would be eligible for the benefits of Section 80 IB (10). This section provides tax waiver for a project, which is on a minimum one-acre plot of land and the residential unit, and has a maximum built up area of 1,000 sq ft in Mumbai or Delhi and 1,500 sq ft at any other place. Besides these, there are certain other criteria that need to be fulfilled.

“Most builders preferred large units during April 2007 to March 2008, as they were in high demand at that time,” said A Shyamsunder, executive director, marketing agency Disha Direct.

All big builders, such as DLF, Unitech, Sobha, Omaxe and Parsvnath, had launched their luxury projects those days. One of the few listed players that had launched mid-housing projects during that time was Indiabulls Real Estate and DLF.

However, experts say that this relaxation could benefit a few developers, but not the entire industry. “The overall effect of the announced provisions will only be noticeable in smaller cities, where homes costing below Rs 20 lakh are still procurable. In larger cities such as Mumbai, a flat of 1,000-1,500 sq ft can by no yardstick be considered affordable,” said Anuj Puri, chairman, real estate consultancy firm Jones Lang LaSalle Meghraj.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Realtors-may-not-gain-from-tax-benefit-extension/articleshow/4858000.cms

Big-ticket land buys on realty radar again

With a boost in sales and better cash flows from the June quarter, the appetite for land has improved

Bangalore/New Delhi: With the first signs surfacing of a revival in the realty sector, several developers have resumed buying large plots of land for building luxury and budget housing projects as well as to enter new markets.

India’s largest residential developer, Hiranandani Group, Lodha Group, Indiabulls Real Estate Ltd, Provident Housing Ltd and Anant Raj Industries Ltd have purchased tracts of land in cities such as Mumbai, Kochi and Pune at lower valuations following a boost in sales and improved cash flows from the June quarter.

The Mumbai-based Lodha Group, which last year had kept away from land deals worth more than Rs50 crore, came out of its sabbatical in July when it bid Rs710 crore for the 10.4-acre defunct Finlay property in Mumbai, auctioned by National Textile Corp. Ltd (NTC).

NTC now plans to put the Kohinoor Mill No.1 property in central Mumbai on the block for Rs1,100 crore. The Lodha Group may bid for this property as well, said a top executive.

“We bid for Finlay because we are planning new supply, more projects,” said Abhisheck Lodha, director, Lodha Group. “We may buy more land if the deal is good. We would build high-end homes in one part of it.”

In 2005, when land prices were beginning to peak, Lodha had bought Apollo mill, another NTC property in Mumbai, for Rs180 crore.

“The appetite for land transactions has improved. And if that continues, we can say the market has revived,” said Hari Pandey, deputy general manager (finance), Housing Development and Infrastructure Ltd, or HDIL.

The economic downturn had pushed developers such as DLF Ltd, Unitech Ltd—India’s top two realty firms—and Sobha Developers Ltd to sell land and non-core assets such as hotels.

This lull in buying land, which began sometime in mid-2008, followed a three-year realty boom that saw a spate of expensive transactions and continuous land assembling by developers.

Realty firms say they are now buying land for specific purposes. Land prices have not climbed down on par with property prices, but have dipped by 10-20% in certain markets such as Mumbai, Pune, Bangalore and Chennai.

Hiranandani Upscale, founded by Surendra Hiranandani, managing director of Hiranandani Group, intends to buy land in smaller cities such as Pune and Kochi to build townships.

“We are in talks with four private equity players—three foreign and one domestic—to raise about Rs800 crore to develop these projects,” said Hiranandani.

The company also plans to launch three projects in Bangalore, Chennai and Hyderabad, where it already owns land.

Indiabulls Real Estate, the country’s third largest developer by market value, is set to buy land in the metros and large cities after selling small parcels in the past eight months, primarily non-core assets such as 2-3% of a 150-acre plot in Sonepat, Haryana.

“We want to buy land in the heart of the city and are looking at Mumbai, Delhi and Chennai. We are also interested in buying through the government auction route and are looking for attractive deals,” said Gagan Banga, chief executive, Indiabulls Financial Services Ltd, and group spokesman.

Developers are in a relatively better position to buy land after restructuring debt and offloading part of their inventory, said Ashutosh Limaye, associate director (strategic consulting), Jones Lang LaSalle Meghraj, a property advisory.

“We will now see a lot of developers roping in a partner to buy land. Developers will also tie up with private equity funds at the land buying stage, which was not very common earlier,” Limaye said.

As it became more difficult to buy land due to a severe cash crunch, many developers resorted to joint venture projects with landowners to cut costs. But many projects didn’t take off because the landowners demanded more money, he added.

Another set of developers is scouting for cheaper land parcels far from city centres for low-cost and mid-segment housing projects.

After launching two low-cost residential projects in distant suburbs in Chennai and Bangalore, Provident Housing, a subsidiary of Bangalore-based Puravankara Projects Ltd, is negotiating with landowners in Kochi and Coimbatore. Typically, Provident’s apartments are priced at Rs15-20 lakh, excluding taxes.

“We have restrictions in cost because we need to build the homes in a lower price bracket,” said Jayakar Jerome, managing director of Provident Housing, at the launch of the Bangalore project this week.

For other builders, the worst is clearly behind them. Anant Raj Industries, which has a land bank of 990 acres, has set aside Rs400 crore for buying land in prime locations as prices have fallen, Anant Raj is looking at launching houses near New Delhi in the Rs15-18 lakh range, said Amit Sareen, executive director.

http://www.livemint.com/2009/08/02214942/Bigticket-land-buys-on-realty.html?h=B

Commercial realty market on upswing

MUMBAI: The commercial property market, which had seen one of the biggest falls till May, is slowly reviving as higher government incomes and an  improving economy are prompting customers to invest in such asset classes. Developers who had slashed prices of their commercial projects by 40-50% due to slow demand, say there are now more enquiries from retail investors, while institutional buyers have closed some deals.

Many developers, instead of trying to sell off properties are signing rental deals with customers and institutional customers. In one recent deal, global consultant KPMG signed a deal with Lodha Developers for renting out a 130,000 sq ft property at Mahalaxmi in central Mumbai, for a monthly rental of Rs 160 per sq feet.

“This is one of the biggest deals in the commercial property market this year, not just for us but also for the sector,” said Lodha Developers director Abhisheck Lodha. “Though rates have fallen in the past three quarters, there is now a lot of interest from customers.” The company has five commercial projects in Mumbai, in areas such as Parel, Worli and Thane. Recently, Lodha also bid Rs 710 crore for National Textile Corporation’s (NTC) 10.3-acre Finlay Mill land in central Mumbai.

Similarly, in a recent transaction in the commercial property space, investor C Sivasankaran acquired a 66% stake in a commercial property SPV from DLF for Rs 310 crore. Ackruti City is the other investor in the SPV.

Explains Ambar Maheshwari, director investments at DTZ, an international property consultancy firm, “While commercial property rates have been at an all-time low, customers are slowly returning. Many prominent developers are going for lease rent discounting, which not only helps them raise liquidity but also helps them sell the property at a later stage for better valuation.”

Under lease rent discounting, developers borrow from financial institutions on the basis of an agreement between the owner and the tenant. The rent from the tenant is then directly deposited with the lender and not with the owner. Industry observers say several realty players who have commercial projects, have adopted lease rent discounting. Market leaders such as DLF and Unitech are known to favour such a model. Both firms had almost stopped work on their commercial property developments in Mumbai. However, according to people familiar with these companies, work has restarted through lease rent discounting.

Said a Unitech executive: “Commercial properties give better returns, but there is lot of risk as rates are volatile. But our company is now better placed to manage these risks as far as funds are concerned.” Rates on commercial properties are more sensitive to market conditions than those of residential units, as they depend on returns or rentals. So when rentals in India dropped, so did the rates for commercial properties. Like the office-cum-commercial Bandra Kurla Complex in Mumbai, which enjoyed a premium tag for commercial market. Rentals here were around Rs 450-500 per sq feet last year; now for the same property, the rates are at around Rs 250 per sq feet.

Though even as the revival in the commercial property is still beginning, a majority of developers are still cautious. Says Kamal Khetan, chairman, Sunteck Realty: “Capital values of commercial properties are dependent largely on rentals. We believe rents have bottomed out and are already seeing upward movement. A number of investors have started picking up commercial property as it makes good investment sense; it gives a rental return as well as capital appreciation when the markets pick up,” he added.

Source : http://economictimes.indiatimes.com/News-by-Industry/Commercial-realty-market-on-upswing/articleshow/4849782.cms

Developers Start New Projects Leaving Old Projects Midway

Home sales in India may be on the rebound, with real estate firms launching new projects to tap a revival in housing demand, but Ajay Jain remains an angry customer of DLF Ltd, the country’s largest property developer by sales. Singapore-based Jain, 49, who signed up in August 2006 for a four-bedroom apartment in DLF’s Belaire project in Gurgaon, a satellite town south-east of New Delhi, is upset that he has paid the developer at least 85% of the cost of the flat—Rs2.4 crore—but only half the work has been completed so far at the site. At the time of booking, Jain said, he was told that the project would be completed in three years—by August 2009. After paying two-three instalments, DLF gave Jain the buyer agreement in February 2007, which said that possession would be given within three years of signing the agreement.

“Though DLF has collected the money for this project, they are not bothered about completing it and instead, they keep investing in other projects,” Jain said in a phone interview with . Belaire is likely to be delayed by 15 months, say real estate consultants. Buyers such as Jain—those who bore the brunt of the downturn along with developers—are in plenty. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. Average delays have ranged from six months to a year. But what irks buyers even more now is that while several existing projects are stuck mid-way, developers have started launching new ones. These projects, mostly in the budget range, promise possession to buyers within two years, yet there are few signs that the pace of construction at existing, delayed projects will be accelerated.

DLF declined to comment as it was in the mandatory silent period ahead of its first quarter results, likely to be released later this month. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. In November, the company’s chairman K.P. Singh had said its assets under construction spread over hotels, residential and commercial projects were delayed because of lower demand and an industrywide liquidity crisis. DLF’s Belaire and Park Place projects in Gurgaon are likely to be delayed by 15-18 months, say consultants. Belaire was to be ready by August and Park Place by October. A visit to the sites showed that both projects are far from completion. At both sites, only the structure of the towers are ready. The DLF website reflects as much: Structural work is in progress both at Park Place and Belaire, it says.

With these projects lagging, DLF launched 2.8 million sq. ft of residential projects in the first quarter of fiscal 2010, compared with 2.1 million sq. ft launched during the first quarter of fiscal 2009, according to a July report by Motilal Oswal Financial Services Ltd, a brokerage firm. This is true of other developers, too, who have launched new projects—mostly in the budget or affordable housing category—to generate cash flows even as their existing projects await completion. According to Motilal Oswal, real estate developers, including DLF, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd, have launched 36 million sq. ft of residential space in the quarter gone by, compared with 2.6 million sq. ft in the year-ago quarter, across cities such as Mumbai, New Delhi, and its suburbs, Bangalore, Chennai and Hyderabad. Of this, developers have already sold 44%, or 16 million sq. ft, of homes.

Unitech’s Fresco, Escape and Harmony projects, all within a 300-acre township, Nirvana Country in Gurgaon, look delayed as well. According to Unitech’s website, Escape and Harmony are to be delivered in the January-March quarter of 2010 and the first phase of Fresco is expected to be completed by the last quarter of 2009. But during a visit to the Escape construction site last week, site workers said construction had just restarted after a lull and it would take at least a year-and-a-half to finish the project. At Escape, only the structure is ready, but the landscaping within the project is still not done. Arvind Panwar, a buyer at the project, is visibly worried. He had bought a three-bedroom apartment in Escape for around Rs1 crore in July 2006. He had opted for a down payment plan, paying 95% of the cost of the flat at one time in return for a 10-11% discount on the base price of the flat.

Panwar, 35, who works with a tech firm in California, US, feels weighed down by loan instalments of around Rs70,000 every month. “I am worried because I am paying my (loan) EMIs regularly, but there is no clarity on when the possession of the apartment will be given,” he said. Panwar’s buyer agreement says the flat would be delivered within three years—a deadline that matures next month. “The penalty for delay that they have said they will pay (Rs5 per sq. ft per month) is nothing compared with the EMIs I am paying,” he said. “I have been getting lots of emails from Unitech and brokers on the new projects they have launched. I get frustrated when I see those mails.” Unitech had not responded to’s queries on email and text messages until late Wednesday. In Mumbai, with five projects still at various stages of construction and far from completion, local realty firm Neptune Developers Pvt. Ltd has launched two more this year.

A 125-acre affordable housing project was launched in March near Kalyan, about 50km north of south Mumbai, and an upmarket, 30-storey twin tower project in Bhandup, a northern suburb of the port city, in April. The developer is clear about the urgency to do so. “One needs to run the show and for that, one needs to keep adding cautiously to one’s portfolio even when times are not that good. We are only launching projects that will sell and ensure cash flow,” said Nayan Bheda, managing director of Neptune. The firm has sold 2,000 of 2,100 apartments in its budget housing project at Kalyan, said Bheda, and expects the development at Bhandup, priced at Rs5,000 a sq. ft, to sell out,too. The quantum of sales at the Kalyan project could not be independently verified by . A realty consultant seconds Bheda’s candidness. “Some developers are launching new projects in a particular price category to ensure cash flow to fund construction of its delayed, existing projects even at a lower profit margin,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj, a property advisory.

Construction at Neptune’s projects running behind schedule has picked up after slowing down, Bheda said, without giving any more details. It doesn’t help, as a spokesman for Parsvnath Developers Ltd said, that realty firms see further liquidity pressure as buyers at older projects default or delay their instalments due to the developer. Bangalore developer Brigade Enterprises Ltd has nearly 20 projects at different stages of construction, each of which is lagging behind by at least six months from completion dates expected earlier, M.R. Jaishankar, chairman and managing director of the company, said at a press meet earlier this month. The Brigade Gateway-branded luxury apartments project in north Bangalore, for instance, is at least 10 months behind schedule and several blog sites on the Internet are flooded with complaints on the delay from customers there. The company has plans to enter the budget housing segment.

Source : http://www.indianrealtynews.com/real-estate-developers/developers-start-new-projects-leaving-old-projects-midway.html

Go and grab your dream home

A house for Mr Surinder Sharma  will now cost less with markets correcting approximately 10-30 per cent in Delhi NCR, Mumbai, Bangalore and Chennai. The next three months, say real estate watchers, are the best time to close a deal.

Where property buying goes, the buzz is that it’s no longer the worst of times. For instance, real estate worth Rs 50 lakh six months ago, will now cost 40 lakh. And with interest rates down to 8 per cent from 13-14 per cent, what the consumer shells out effectively is Rs 32 lakh. In other words, this is the best time to buy.

Indirapuram based finance  professional  Rakesh Mishra  started his search for a house four months ago.  He zeroed in on a project which was launched last month. It’s at a prime location, and comes for a good price. “With the Navratra discount, the house cost me Rs 26 lakh,” he says.

Deals like this are bringing realty back to life again. “This is the right time to do your research and consider buying a  house at the right and real price. Developers are more than willing to give in to the demands of a serious buyer,” Dr. Devender Gupta CMD, Century 21 India. Many who aren’t buying are window shopping. Average buyer interest over the last two months has risen to 30-40 per cent. Experts anticipate an upward trend in the market between May and July. With prices rationalising in many pockets across the country, the dream house is looking affordable for a significant corpus of aspiring buyers. Those who have identified a suitable property and have the financial means to take the plunge should do so now. A deferred decision, say experts, might mean passing over the best bargains.

Developers are wooing customers like never before. “The buyers, chiefly end users are back into the market. There are realistic bookings happening today,” said Alimuddin Rafi Ahmad, managing director of prestigious ILD group. PK Jain,Executive Vice President,PNB housing finance Ltd agrees. “Developers this season are seeing a lot of inquiries, the phones have started to ring again and that is very encouraging. With interest rates dropping enough to take a home loan and prices correcting by almost 10-30 per cent, it’s a good time to get back to the market.”

Even top developers DLF and Unitech who focus on luxury apartments are now coming up with affordable housing projects. Rajeev Rai,vice president, Assotech group, says that the prices have corrected by almost 30 per cent. Developers are tailoring products according to customer needs across all segments, instead of the earlier stress on high-end housing.

Moreover, as Sunil Jindal,director, SVP group points out, “Besides the interest rates and prices moving downwards, consumer fatigue has also set in. How long will a buyer wait? He may as well come forward and buy.” The market is seeing a new movement because of the pent-up demand from end users —  people who typically plan to buy a property for their children and see a future in real estate, says an executive of Cushman & Wakefield. Those with a budget of Rs 20-30 lakh should seal the deal as any further correction is unlikely, points out Jindal.

According to Chaitanya Manohar, director & COO, L.J. Hooker India, Bangalore, “We have seen increased level of activity (enquiries) across Bangalore specifically in projects that are close to completion (possession in 6-8 months). There has been tremendous interest especially in the Rs 20-45 lakh range from first-time homebuyers.” Buyers today have plenty of choice; there are properties under construction for which possession is due in the next three to nine months. “He can expect reasonable returns as the market would be up and moving when he finally gets his house,” says Anil Makhijani of Mak Realtors of South Delhi.

So does that make it a bad time to sell? Well, perhaps. Rizwan, a senior manager with a job portal, recently sold his apartment in Faridabad for the same price at which he had bought it. “I had to dispose of the Faridabad house to take possession of my house in Indirapuram. The house cost me Rs 1,690 per sq ft two years ago. I did incur a loss in terms of the EMI and the foreclosure charges I had to pay the bank,” he said.The market is not favouring the seller, but he can use it to his advantage. He may be able to sell his house to move to a better location or upgrade from a two-bedroom house to a three-bedroom at the same price. A person who bought property more than 3-4 years ago may make a profit if he sells now

http://www.mynews.in/fullstory.aspx?storyid=22058

Premium residential properties again on buyers’ list

There is good news — and it’s coming from above. Across the country, cities are reporting a revival of sales interest in premium residential Land as investment

properties. In many cases, this is happening, even though the values have remained mostly unchanged. A few cities, however, have attributed the revival to a marginal fall in prices.

In the premium segment, most of the interest revolves around main city areas and resale properties. “Yes there is a movement in the premium segment but it still stands lower than in the Rs 30-40 lakh segment. Part of the demand for premium buys is coming from the secondary market and partly from the under-construction properties,” says Anshuman Magazine, CMD of global real estate consultancy CB Richard Ellis.

In fact, this time round it is not speculators but end-users who are bargain hunting. An example is the COO of a leading multinational company in Delhi who had been looking for her dream home for three years within a budget of Rs 1.5 cr. But when she found the 3,000 sq ft apartment within her budget, she did not think twice about putting her money in.

Another buyer bought a property for Rs 18 cr in the upmarket Vasant Vihar area of the Capital for use by his family. This trend has kept realtor Ashok Kumar on his toes as he has done brisk sales in the Rs 3 crore per floor in premium South Delhi areas as well as the Rs 6 crore to Rs 30 crore sales in premium residential areas such as Vasant Vihar, Panchsheel Park, Greater Kailash and Defence Colony areas. In the suburban areas of Gurgaon, per sq ft rates of premium property is between Rs 3,000 and Rs 3,500 on Sohna Road to Rs 15,000 on the Golf Course Road.

The asking rates were about 10-15% higher during the boom. Realtor Ravi Pundir says in Noida, Sectors 93, 50 and 62 have apartments of 1000-9000 sq ft each by developers such as Jaypee, Unitech, Amrapali and Mahagun at Rs 4,400-8,000/ sq ft.

Harinder Dhillon, GM, marketing, Raheja Developers, also agrees that demand in this segment has picked up. “Our Atlantis project in Gurgaon is in the range of Rs 1.5-1.6 cr, which has been seeing a good response. The fact is that end-users have realised that the market has already bottomed out and the price movement from here will only be upwards.”

Brix Research, the research arm of magicbricks.com, has been conducting a series of multi-city surveys to assess the demand of premium housing in the country since December 2008. Multiple sources, including developers, realtors and consumers, have been contacted on a sustained basis to arrive at these conclusions. The survey has found that the premium luxury apartments and bungalow market of Rs 1.5 crore to Rs 3.5 crore and above, has witnessed a revival across India since May 2009.

In Mumbai sale of premium property in areas such as Cuffe Parade, Carter Road, Andheri East, Juhu, Film City Road, Bandra, Pali Hills, Four Bungalows and Juhu Road Versova side did take place, though at 10% rate of transactions at values upwards of Rs 25-30 crore each. Row houses in Bandra and Carter Road areas sold during the reported slump at Rs 2- 2.5 crore each and values are unchanged. A few villa projects in the Royal Challenge area by developers such as Oberois and Rahejas are finding takers at Rs 8-9 crore each. Less premium developers are finding buyers at Rs 6-7 crore each, according to Chandan Chowdhary, a leading city realtor.

In Bangalore, the slump in the market continues. Premium localities along the Ring Road such as Cox Town, Indirapuram and Koramangala, have witnessed sale at 10% lower prices. Transactions have risen from the near zero to about 30-40% of peak numbers at Rs 50 lakh to Rs 1.3 crore, according to city-based realtor Nadim Munjawar. However, in peripheral premium localities such as Whitefield, Electronic City and Sarjapur Road, prices have dipped by almost 30-40%.

In Chennai, in premium areas of Aryapuram, Besant Bagar, East Coast Road, Perungudi, Adyar, T Nagar, Ashok Nagar, KK Nagar and Boat Club prices Land as investment

range from Rs 50-60 lakh to Rs 5 crore and demand has dropped 95%. With values down by 10-15%, transactions have started picking up in luxury apartments, bungalows and individual houses. Local realtor Madhusudanan expects the situation to continue till 2010-11.
In Ahmedabad, luxury apartments of around 2,000 sq ft come at Rs 50 lakh to Rs 2 crore. The rate of transactions are rising. Premium localities include Prahlad Nagar, Science City Road, Vastrapur, Satellite, Mani Nagar, Shahi Bagh, in and around Lajpat Club and upcoming localities such as Sanathan. Major developers in this segment include Pacifica Builders, Goyal, Savvi Infrastructure, Bakeri and Saffal groups. Realtor Anand Varani maintains that premium buyers are not impacted by falling interest rates or dropping property values. Only those scouting in the main city areas are looking for bargains.

In Kolkata, premium properties that have been launched 3-4 months ago, are selling since May-June 2009. Transactions are at 75% of peak numbers, says realtor Sandeep Sen. Transactions in the Rs 70 lakh to Rs 3 crore for 2,000-2,500 sq ft, 3 BHK apartments are taking place. Premium projects are coming up in Ballyganj Circular Road, Guru Sadi Road and Maysir Road. The shine is back in the premium real estate market. So this may be just the right time for you to scout for a good deal!

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Property/Premium-residential-properties-again-on-buyers-list/articleshow/4794274.cms?curpg=2

Office, retail space is hot property

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

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

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

25% Upswing in India’s Housing Market

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

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

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

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

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

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

Realtors cash in on the great Indian affordable home rush

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

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

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

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

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

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

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

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

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

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

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

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

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

Developers build on low margins, high volumes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Developers Resort to Discounts to Sell Commercial Properties

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

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

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

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

Unitech launches Uni-Homes in Sector-117,Noida

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

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

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

Realty companies resorting to discounts

MUMBAI: Realty companies are resorting to discounts to sell commercial properties in order to improve cash flows and reduce mounting debts.

DLF, the country’s biggest real estate firm by market capitalisation, has recently sold its 66% stake in a special purpose vehicle that owns eight acres at Prabhadevi in Mumbai for Rs 310 crore, which analysts feel was at a discount.

It is also eyeing to raise around Rs 2,000 crore by selling two commercial properties in the city. Unlisted firm K Raheja Universal recently sold a plot in Santa Cruz in north Mumbai for around Rs 60 crore.

Mumbai is not the only city witnessing distress deals in the commercial property space. Bangalore-based Sobha Developers is learnt to have put a plot in the country’s IT capital on the block with a ticket size of Rs 100 crore. India’s second-largest firm by market cap Unitech, too, is going all out to sell some of its commercial properties to pay down debt.

In the past few months, it has sold its Marriott Courtyard Hotel in Gurgaon for Rs 232 crore and an office property in Saket, New Delhi, for Rs 500 crore.

The combined debt of DLF, Sobha and Unitech is estimated to be at Rs 25,000 crore. Vimal Shah, managing director, Akruti City, a city based real estate firm, said: “While the residential space has started looking up, commercial properties do not have buyers. Many big builders all over India are cautious with their commercial complexes.”
In the past three months the commercial property rates in New Delhi, Mumbai and Bangalore have witnessed a 30-45% decline in price. Rates could fall further if analysts are to be believed.

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

http://economictimes.indiatimes.com/Market-News/Realty-cos-resorting-to-discounts/articleshow/4633546.cms

Unitech sells office complex for Rs 500 cr

New Delhi: In a boost to the company’s plans to lower debt obligation, real estate firm Unitech Ltd has sold an office complex in Saket, New Delhi, to an high networth individual (HNI) for about Rs 500 crore. The company is hoping that the latest transaction, along with the recent sale of the Marriott Courtyard, and other assets currently on the block, would enable it to raise Rs 1,000 crore by the end of the quarter.

Sources close to the development said that the office complex – which was initially intended for Unitech’s use till a cash-crunch prompted it to put-up the property in the market – has 2.10 lakh sq ft of space.

The source refused to divulge the identity of the new owner, but said that the money from the current transaction would come by June-end.

This is the second asset sale by Unitech.

Earlier this year, the realtor sold-off its hotel project in Gurgaon for Rs 235 crore to Roop Madan, Managing Director of the Delhi-based Sanya Motors.

Of the total proceeds from that sale, Unitech has already received 45 per cent of the payment, while balance 55 per cent is expected to flow in this month, sources claimed.

The company is also scouting for a buyer for its serviced apartment project – Marriott Executive Apartments; and has also put on the block yet another hotel property in Gurgaon.

Serviced apartment project

The serviced apartments project is located in Gurgaon near the Unitech Cyber Park and the Unitech Greenwood City on 3.39-acre of land; the serviced apartments along with an office block has been designed by the Seattle-based Callison Inc and will be operated by Marriott as Marriott Executive Apartments.

Unitech’s current debt is pegged at Rs 7,800 crore and it has stated its intention to reduce the debt position to Rs 6,000 crore-6,500 crore by the end of the current financial year.

As part of the asset sale strategy, the company is also looking to sell plots (hospitals and schools) in its townships.

Source : http://sify.com/finance/equity/fullstory.php?a=jfvjGsecejb&title=Unitech_sells_office_complex_for_Rs_500_cr

Signs of Revival for Real Estate India

When Mumbai-based developer Nahar Group of Companies opened booking for two new buildings at its Nahar Amrit Shakti project in Powai, a central suburb in Mumbai, it was surprised by the demand it received from buyers. Nahar says it managed to sell 150 of the 320 flats it had on offer on the second day of booking itself. “We have now sold close to 300 flats,” says Manju Yagnik, Nahar’s vice-chairperson. “We never expected so much demand.”

What worked in Nahar’s favour was what the developer calls “compact” houses of 925-975 sq. ft and payment terms that allowed buyers to pay one-fifth the cost of the flats on booking and 80% on possession. The houses were priced competitively at Rs52-58 lakh in an area where the average price hovers between Rs5,500 and Rs7,500 per sq. ft. Developers, who had frozen the launch of new projects till end-2008, have in the last few months launched several projects that suit mid-income budgets—clubbing them under an all-inclusive “affordable” housing segment. Realty firms say such projects are seeing good demand. The experience of top developers such as DLF Ltd, Unitech Ltd and Housing Development and Infrastructure Ltd, with have offered flats at prices lower than prevailing market rates in the past three months, suggests that demand is spreading to new projects.

DLF launched Capital Greens in west Delhi at an inaugural price of Rs4,500-5,500 per sq. ft and the project, consisting of 1,356 flats, has been sold out, it says. Similarly, Unitech launched Uniworld Garden II in Gurgaon, south-east of New Delhi, at prices between Rs28 lakh and Rs40 lakh a flat. The project of 750 was sold out in 45 days, the company says. Encouraged by the response, Unitech has launched another project, The Residences, also in Gurgaon, with prices at Rs35-45 lakh. It has so far sold 180 of 200 flats in that project. Parsvnath Developers Ltd launched a 510-flat project in Lucknow in March, pricing each flat between Rs12.5 lakh and Rs24 lakh; around 480 has been sold out, the firm says. A price cut of up to 30% by developers, launch of projects at key locations and a reduction in home loan rate seems to be attracting buyers for some projects.

R. Karthick, vice-president, marketing, of Lodha Group, a Mumbai developer, claims that his company has sold nearly 2,500 flats in five months. Lodha has launched five projects in suburban Mumbai, under the mid-segment brand Casa, priced at Rs30-35 lakh. Lodha, which is typically known for its luxury projects in Mumbai, launched this brand after seeing slow demand in the last few months of 2008. Puravankara Projects Ltd has said it has 600 flats in its maiden budget housing venture, Provident Cosmo City in Chennai, since its launch in March. Three-bedroom flats there are priced at between Rs16.9 lakh and Rs18.9 lakh. “The sales in the Provident project were so good that we are planning to launch 4,200 flats in the same category in north Bangalore now and expand further,” says Ravi Ramu, director, finance, at the Bangalore-based firm.

Some experts say though demand is slow to return to the market, it is likely to be more sustained this time because demand for housing is from buyers who intend to live in the flats rather than those buying them as investments. “The good news is that it is mostly end users who are buying,” says Shruti Gupta, head of real estate consultancy Hamptons International’s India unit. Lodha said it sold 600 units in 10 days in one of the projects, Casa Bella, in March in Mumbai’s Dombivali area. “There may be some investors, but 63% of the buyers are mid-management professionals and 7% are self-employed,” says Karthick. Anshuman Magazine, managing director of realty consultant CB Richard Ellis, says: “I will not say that sales are picking up, but the thaw has started to happen. A developer who has a project at a lower rate has been able to get buyers.” The first quarter of the calendar year has brought some relief for developers, who are finally seeing some demand compared with last year, when buyers had virtually disappeared.

Mumbai-based Akruti City Ltd told Reuters on 15 May that it has seen sales going up by 30% in the first quarter of the current fiscal after a near 80% fall in the last two quarters of the year to 31 March. Magazine agrees that it is the pricing and the location that are bringing back buyers into the market. “Developers have repositioned their projects,” says Magazine. “They are launching projects at good locations to halfway good locations.” Firms such as DLF, India’s largest realty company by market value, now plans to focus on city-centric and mid-income residential projects, and plans to launch 17-18 million sq. ft of residential projects in fiscal 2010. Earlier, most developers focused on developing luxury homes in far-off locations. Lower interest rates for housing finance—down from 12% in fiscal 2008 to 8% in recent months—have helped.

The fact that developers are offering construction-linked payment plans is a huge incentive for buyers, says Sanjay Sharma, managing director of Gurgaonscoop.com, a real estate brokerage. “Buyers now feel assured that they would not need to make payment if the construction is stalled,” says Sharma. A spokesman for mortgage lender Housing Development Finance Corp. Ltd said enquiries and applications for home loans have been increasing every month. In the fourth quarter of last fiscal year, “loan approvals have gone up by 21% and loan sanctions have increased by 16%” from the year-ago quarter, the spokesman said. “There is sporadic demand for projects though it is far from a revival.” HSBC Holdings Plc.’s India operations does not see a significant uptake in the home loans sanctioned in the last few months, according to Ravi Subramanian, head, retail assets and cards, at the lender.

Source : http://www.indianrealtynews.com/real-estate-india/mumbai/signs-of-revival-for-real-estate-india.html

Unitech Likely to Pull Out its Rs 211 crore Project From Orissa

Real estate major Unitech is likely to pull out of its proposed Rs 211 crore residential cum commercial complex which was to be developed over an area of 11 acres in one of the prime locations of the city. Sources familiar with the development said, “Unitech had sought an extension of about two years from the Bhubaneswar Development Authority (BDA) for its proposed residential cum commercial complex in the city as its cash position was not comfortable. However, BDA turned down Unitech’s proposal as a result of which the real estate player was mulling to pull out of the project.”

It may be noted that DLF, India’s biggest real estate developer was also contemplating a pull-out of its proposed Rs 1,000 crore Infopark project. Asked on the status of Unitech’s project, a senior BDA official said, the BDA is yet to take any decision on Unitech’s proposal for extension and a decision is expected to be taken after the elections. “Unitech which had paid Rs 52.7 crore in March 2008 for the plot had sought a period of three months for paying the balance amount as a lump sum. However, the company had defaulted in paying the requisite amount as its cash position was not favourable”, added sources.

As such no deadline has been imposed on Unitech by BDA for paying the pending amount for the plot but if Unitech chose to pull out of the project, then the company would forfeit Rs 52.7 crore which it had paid initially. As per the terms of agreement between Unitech and BDA, the real estate player was to develop the 11-acre plot by the end of 2010. In April 2007, Unitech had emerged as the highest bidder for the 11-acre plot auctioned by the BDA. Unitech had agreed for a price of Rs 20 crore per acre and DLF which had offered a bidding price of Rs 11 per acre was the second highest bidder.

Source : http://www.indianrealtynews.com/real-estate-developers/unitech-likely-to-pull-out-its-rs-211-crore-project-from-orissa.html

Developers to launch green residential projects

The concept of green buildings has influenced real estate developers to the extent that a number of developers are planning green residential projects.

Among first to announce the green residential projects is the 3C Group, with two green residential projects in Noida this year at a cost of Rs 2,600 crore.

According to Vidur Bharadwaj, director, 3C Group, the first project includes an affordable luxury homes spread in 40 acres in Sector 100 of Noida, with an investment of 2,000 crore, project will be launched in July and will offer 500 flats. The second green residential project will be a 57 acre luxury development with a 9-hole golf course and a health spa in Greater Noida, which will be launched in the fourth quarter of 2009. It will offer 100 luxury villas of 1,000 yds to 3,500 yds area.

Puravankara aims pan-India presence
Puravankara Projects, the Bangalore-based realtor, is planning to develop projects across the country. The Group is looking at acquiring lands in other parts of the country for Provident Housing and Infrastructure, its mid-income housing subsidiary.
Ravi Ramu, director, Puravankara, announced, “We are looking at new regions and evaluating projects. We have learnt that valuation of the land is 30-40 per cent cheaper than last two years’ prices. Even the payment terms are better, which is making the deals feasible.”
The developer is all set to launch a project in Bangalore under the Provident brand, for which approvals have been obtained and the price will be in range of Rs 20 lakh.

Unitech gets into sub-Rs 10 lakh segment
Unitech Ltd, the country’s second largest developer, has planned to launch over 40 new projects, mostly in the housing sector in sub-Rs 10 lakh residential segment.
These projects will be spread across all the major cities and will be launched in next 12 months
The company has a debt of over Rs 8,400 crore in its book. “Regardless of massive challenge, we are ready to raise funds for projects. Also, the presales would meet project costs,” said a company official.

Market looks sanguine now: Pune builders
The Promoters and Builders Association Pune (PBAP) has expressed that due to improved interest among home buyers and the softer approach of banks and financial institutions towards financing projects, the realty market has started looking positive now. Satish Magar, the newly-elected president of PBAP said that the organisation’s members have seen bookings in new projects rise by at least 20 to 30 per cent since February. He said that the new projects are attracting more customers, which shows that even, demand exists at the right price and buyers are willing to purchase. “Prices have rationalised and interest rates have also gone down, which has also renewed the buyers’ interest,” he said.

Source : http://www.expressestates.in/full_story.php?content_id=93765

Buyers fight back, exit stalled housing project

Consumer awareness in an economic downturn has made big builders bow to small buyers. On Friday, DLF, the country’s biggest builder, agreed to give an exit option to buyers pressuring the property giant for the slow pace of construction of its New Town Heights project. In a letter to buyers, DLF said it would refund their money within six months.

“We have done our best to keep you happy and satisfied in the project and are doing our best to start the construction within a month’s time,” the letter says. “If you are still not happy to continue, you may exercise the exit option.”

The trend is not limited to DLF buyers alone. The letter could inspire other harassed consumers to hold builders accountable for project delays. The Vatika group and Unitech are just two other builders facing the buyers’ ire.

Just last month, DLF had allowed buyers of its Garden City residential project in Chennai to exit. A DLF spokesperson told Hindustan Times that the option was made available only to buyers who were financially distressed owing to job losses.

The New Town Heights project, with over 3,000 mid-sized apartments priced at Rs 45-75 lakh, was announced in March 2008 with completion due in 2011. However, a group of around 600 buyers expressed concern that construction had not begun and environment clearance was not in place.

In a March 26 letter, DLF said it would complete construction within three years from the booking date. However, protestors maintained that a majority wanted to exit the project.

The anger is spreading. On Thursday, a 30 people who had booked apartments valued between Rs 38-55 lakh in Vatika Group’s 500-acre township off the Gurgaon Expressway, staged sit-ins at the builder’s office to protest slow construction. In some cases the builder allegedly changed the location of the project from what was promised.

“We want the booking amount back,” said a buyer.

A Vatika official insisted construction would begin in June and brokers had misled some buyers about the location. “Only those who had invested in the project expecting a rise in the prices want to exit,” said Pankaj Paul, vice president, Vatika Group.

Last week, dozens of apartment buyers from India, the US, UK and Singapore and their families camped at Unitech’s Gurgaon office to make company officials commit on the completion of the World Spa project. For the project, apartments of 4,000-5,000 sq ft were sold by invitation to top business honchos in 2004 with a promised completion time of 30 months.

Unitech officials said that the project got delayed as buyers asked for structural changes.

“The payments are under the construction-linked payment plan,” a senior Unitech official told Hindustan Times. “Also, buyers are duly compensated for delays, if any.”

Source : http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=b70d8ce2-51ed-48d8-813e-60e1ced91078&Headline=Buyers+fight+back%2c+exit+stalled+housing+project

Real estate market down, apt time for your dream home

Real estate prices have fallen remarkably in the last few months. The reasons for it are not unknown. The prices were being affected even before Top Ten Global Financial Centers Bandra-Worli Bridge

Lehman brothers collapsed or Citibank had to be bailed out. When inflation reached the peak in India, so did the cost of buying a home. Property prices were at an all time high, interest rates had been much higher than the rates that many could afford, and buying a house in the city was a mammoth task to achieve.

But all this has changed now. Due to the global financial crisis, property prices have fallen to approximately 10% to 30% in different areas in Delhi and NCR as compared to last year. In Delhi, certain areas like Golf links, Westend, New Friends Colony have seen marginal decline of approximately 5% in their prices as compared to last year, prices have reduced by 10% in Gurgaon and approximately 20% in Indirapuram, Vaishali and Greater Noida. But it isn’t over yet it seems.

Kamal Taneja, MD, TDI Infrastructure Ltd. points out, “The economic slump will last till another two quarters at least. But, there is hope for the market to pick up after the elections.”

A report from JLLM had suggested that two scenarios might present themselves in front of the residential real estate market in 2009. The residential market was lying low in 2008, while the developers were enjoying the profits out of selling luxury properties, but 2009 is a different story. Even the top developers like DLF and Unitech which were only looking at profitability from luxury properties, have now come up with announcements of their plans to bring up affordable housing over the next few years.

While DLF plans to invest Rs 15,000 crore to build up 40,000 affordable housing units, Unitech made an announcement of 10,000 apartments with an investment of Rs 2,500 crore over the next couple of years. Even Omaxe has announced an astronomical investment of Rs 80,000 crore in the next five years to come up with 10 lakh housing units, for sale at Rs 3 lakh to Rs 15 lakh. In its report, JLLM had suggested that the buyers, who have been waiting to purchase their dream home because the rates were high, would be able to buy their own home in the year 2009 as the prices will drop.

If the volume of buying is high enough, then, with the money that the developers will draw in, they can move on to finish other projects on hold. However, if the buyer continues to wait for the prices to fall to a desirable level in order to get the best rates, there is a possibility that the ‘best rates’ might even come and go, without the buyer being aware of it, said the report.

In the NCR region, especially in Gurgaon and Noida, the prices that were touching the sky, have also come down substantially by 25-30 %. And it is estimated that the market will further dive to another 10-15 %. Navin M Raheja, MD, Raheja Developers states, “According to me, it is the best time for homebuyers to buy property now, since prices are extremely low.

The banks rates on home loans too have come down to single digit. One must not delay the buying decision since the market is already showing signs of revival and will bounce back certainly September onwards.” Raheja’s advice can only second the report from JLLM that points out that buyers might miss out on the opportunity to buy their dream home at an affordable price if they keep waiting for the prices to come down further more.

But there is good news, prices might not have touched the lowest yet as developers have another advice, “We shall advice that people should wait till the results of elections now and see whether our electorate would be able to give us a stable government,” says Raheja. However, elections are not far away and the residential real estate prices have already started showing sings of revival and it is only over the next two quarters that the buyers should wait to buy their own home.

Focal Point
Due to the global financial crisis, property prices have fallen to about 10 percent to 30 percent in different areas in Delhi and NCR as compared to last year. In Gurgaon and Noida, the prices have come down substantially by 25-30 percent The economic slump will last till another two quarters at least. But, there is hope after the elections.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/News-/Real-estate-market-down-apt-time-for-your-dream-home/articleshow/4352911.cms?curpg=2

Kolkata retail demand down, new projects on hold

Kolkata: About 100 small and large retail and real estate projects in Kolkata are being delayed or defered due to the financial credit crunch.

According to analysts and industry insiders, increased retail development in Kolkata and in its suburbs had nearly doubled real estate prices over the last few years. However, although 40-50 projects are lined up in the city currently, around 100 projects are delayed or defered due to credit crunch as well as because of uncertainty over projects’ viability and sustainance.

Projects like City Centre II, Lake Mall, Terminus Mall, Axis Mall and Avani Riverside mall in Howrah, are already running behind schedule.

As retail sales are down by 50 per cent, depending on discount or lifestyle retail categories, and consumers’ discretionary spends are also down 15-20 per cent, developers are now cautious about new projects.

Real estate prices in Kolkata are also down 15 per cent, and a further correction of 10 per cent is expected, on the back of slowed retail activities and consumers going into savings mode.

According to Mayank Saksena, head of transactions in Kokata, Jones Lang LaSalle Meghraj, around 40-50 projects are lined up for Kolkata while around 100 have been delayed.

On an average, each of these projects is of approximately 2 lakh square feet, priced at an average of Rs 3,000 per sq ft.

“The best performing local developer is currently Bengal Ambuja. Local developers deliver very satisfactory products at lower prices. For instance, Bengal Unitech is charging Rs 3,200 per sq ft in Rajarhat, while other local developers charge Rs 2,500 per sq ft for comparable projects”, Saksena added.

Due to increased retail development, real estate prices had increased till the better part of 2008, and this includes the suburbs. Right now, the situation is doubtlessly in stagnation, but the downward movement is minimal.

In the suburbs of Durgapur, Asansol, Bardhhaman, Siliguri, Guwahati and Bhubaneshwar, demand movement was upward because of an increasing retail presence and all the associated boosts to these markets. Retail rentals started at Rs 50 per cent sq ft in these areas and are even now at approximately Rs 100 per sq ft, Saksena informed.

Kolkata’s real estate prices are generally lower than in the other metros.

It is an emerging market that took off only 2000 in terms of residential. Retail development followed in 2003 when the first mall was launched.

“It is still a young market, but is nevertheless all about appreciation,” Saksena added.

Rates started with Rs 1,000 per sq ft and are now at 5,000 sq ft.

Also, the average real estate price drop in Kolkata is the lowest in India at 15 per cent, pointed out Jones Lang LaSalle Meghraj.

“Right now consumers are deferring real estate purchase decisions and the upper budget limit has sunk to Rs 20-40 lakh in the last six months from the earlier budget of upto Rs 60 lakhs,” Saksena said.

Prices are likely to come down by another 15 per cent, mainly in developing areas such as Rajarhat, Salt Lake, Howrah and the CBD zones of Park Street, Camac Street and Elgin Road.

Rates have appreciated unreasonably in these areas and there is now a deadlock in transaction in these locations.

The deadlock has resulted in several store closures in these developing areas.

For instance, the 3,500-sq ft flagship Adidas lifestyle store on Camac Street that had opened less than two years ago, has been closed, on grounds of ‘irrationally high’ rentals. Bangalore-based Primus, the franchisee of the Adidas lifestyle store on Camac Street, had reportedly sought a 25 per cent reduction in rent but the landlord did not agree. High rentals, coupled with ‘hardly any’ sales, had made Adidas on Camac Street ‘non-viable’. Primus has also closed its Adidas, Nike, Levi’s and Reebok factory outlets on VIP Road.

The Adidas store in Mani Square has been temporarily shut and negotiations with the mall management on rentals is ongoing.

RPG Group’s Spencer’s Retail has also taken a hit, especially at its large-format store in Mani Square.

Another large-format retail address — Khadim’s 28,000-sq ft departmental store Egaro — is on the brink of closure.

It has been running a 75 per cent ‘clearance sale’ for over two months now.

Other bleeding retailers in the city include British retailer Marks & Spencer, The Body Shop, Guess, Next and Accessorise, both at Avani Heights near the Exide crossing and in South City Mall.

E-mall, the electronics market on CR Avenue, has seen Future Group’s Depot, the stationery and gifts store, shutting shop, as has the Kodak outlet.

Source: Business Standard

Houses in the Range of Rs 5-10 Lakh to be Developed by Unitech

Unitech is planning to launch mid-segment residential projects in the range of Rs 5-10 lakh in metro and suburban cities like Gurgaon, Chennai and Kolkata over the next few months. “We are amazed at the success of our recently launched projects and have realized that in today’s market, a project within the right price range will sell,” said Mr. R Nagaraju, General Manager, Corporate Planning, Unitech, said. Currently, the company is charting a strategy to come up with such low-cost apartments. “The inspiration to develop smaller and cheaper apartments comes from the Nano car, which is eliciting a tremendous response. I am sure our project will see a similar response, given the fact that we will come up with such low-cost apartments in metro cities,” Mr. Nagaraju added.

20 March 2009 Business Standard

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

Is realty demand showing signs of picking up?

Since last September, top builders froze the launch of new projects. But after cutting prices by as much as 40%, it seems consumers are beginning to bite. Sales are picking up for some developers and Priyanka Ghosh checks if this is indeed a turnaround.

Homebuyers back?

From virtually no sales for real estate developers last quarter, February and March seem to have been marginally better. Project launches, which had been frozen since last September, are seeing the light of the day but at least 30-40% cheaper. And that is triggering some sales.

Some cases in point:

- In March, HDIL sold 350–400 flats in one single day when it launched Premier Residences in Kurla at 30% lower prices.

- A month earlier, DLF’s New Town, launched at a 45% discount, sold 230 flats of the 440 units launched.

- Unitech’s Uniworld Garden II in Gurgaon launched at 20-30% discount and sold nearly 80 of the 156 units launched.

Inside details

However, the fine print of these transactions is significantly different now. For one, payment obligations are now linked to construction schedule and not to time. Even banks are now insistent on this method of payment. More importantly, clauses are being worked out in the agreement to compensate buyers for any future price cuts. This is interesting as several developers could not bring down prices in existing projects as a part of the project was already sold at a particular price point.

The launches are also happening in small phases, testing the market and avoiding any speculative demand. It is perhaps too early to say whether it will significantly impact the results but certainly, at a good price, the end-user demand will kick in like it has for these companies.

Source : http://www.moneycontrol.com/india/news/business/is-realty-demand-showing-signspicking-up/388499

Developers build smaller offices as demand slows

To cater to the non-IT market, developers are discounting future rentals to generate cash flows during the downturn.

Developers of work places are shifting their focus to non-infotech companies and building smaller offices to buck the slowdown in the commercial property market, realty companies and consultants said.

“The demand for IT space has come down substantially, and we are focusing more on non-IT space.We are developing 2.5 million sq ft of commercial space, of which 1.5m sq ft has already been delivered and the rest will be completed in the next few months,’’ said R Nagaraju, deputy general manager, corporate planning, Unitech, a Delhi-based developer.

Unitech has dropped plans to develop two of the proposed six information technology parks, due to the slump in demand from the IT industry. At least 38 per cent, or 8.3m sq ft of its projected commercial space of 21.4 m sq ft, is on hold.

IT firms, which absorbed 70-80 per cent of office space a couple of years earlier, had cut their requirement sharply as the global economy slowed, consultants said.

DLF, the country’s largest developer, has halted construction work on nearly 16m sq ft of office and mall space out of 62m sq ft of planned construction. In the office space category, the developer has stalled construction on nearly 12m sq ft of the 36m sq ft planned, the company said recently.

Due to lower demand from IT firms and corporates, office rents have fallen 20-30 per cent in cities such as Mumbai, the National Capital Region and Bangalore, among others. Despite this, the percentage of vacant properties has shot up. Vacancy levels, under 5 per cent in 2007, have moved up to 8-9 per cent in 2008. Property consultancy JLLM expects it to reach 16-17 per cent if the projected space gets completed this year.

To cater to the non-IT market, developers are doing everything from building smaller offices, selling properties floorwise and discounting future rentals to generate cash flows during the downturn.

“Non-IT firms are demanding smaller spaces today. We are thinking of cutting sizes of our big offices, so that we can provide customised products to our clients”, said Neetal Naarang , assistant general manager, corporate communication, Parsvnath Developers.

Said Naveen Raheja, managing director, Raheja Developers: ‘’There was a time when clients used to demand 350,000 sq ft space and we did not cater to customers that required office space less than 2,000 sq ft. However, we are ready to deliver even 500 sq ft of office space today.’’

Analysts say developers cannot change their product mix overnight as they have to revise plans and change operations. “It will take at least a couple of months. Just as affordable housing is the norm today, they have turned to affordable offices,’’ said Akshaya Kumar, chief executive of Park LaneProperty Advisors.

Source : http://www.business-standard.com/india/news/developers-build-smaller-offices-as-demand-slows/351181/

Buyers under pressure as builders begin to default

Another developer, Parsvnath Developers Ltd, says it has already reduced prices on a project-to-project basis. ‘I can’t tell you the percentage reduction but we have reduced prices,’ chairman Pradeep Jain said. ‘In the case of new projects we are coming out with affordable housing in the Rs15-30 lakh range, so that is a price reduction.

‘Unitech Ltd, India’s second-largest developer by market value, said it did not want to comment on price reductions.One expert said DLF’s decision to extend the price reduction to buyers who had signed in at a higher price would help boost consumer sentiment. ‘They are basically telling their buyers that if they buy from DLF, even if prices come down in  the next six months, buyers will benefit,’ said Anshul Jain, chief executive officer-India, DTZ International Property Advisers. In new projects, a 35% decline in prices is warranted, he added.Jain expects the residential real estate market to bottom out by the middle of the year as demand revives with lower prices and easier financing.Another industry consultant said there was scope for reduction in prices of in-construction projects where buyers had not signed an agreement, but only paid a booking amount that is typically 10% of the price of the apartment.’A lot of buyers are talking of exiting from projects because they have only paid the booking amount and not signed any agreement with the developer,’ said Aditi Vijayakar, executive director, residential, Cushman and Wakefield India. ‘Wherever registration of apartment has taken place it is not possible to reduce prices for existing buyers.’The amount of reduction in prices will also depend on the stage of construction of the project, she said. The reduction in prices will have an impact on profit margins, DTZ’s Jain said. ‘Developers will have to realign margin expectations…in the next three-five years margins will be normalized and we could see a standard margin of 15%,’ he predicted.

Source : http://www.pr-inside.com/buyers-under-pressure-as-builders-begin-r1093459.htm

Unitech re-enters market with launch of 2 projects

Country`s second-largest real estate developer, Unitech has launched two projects after a gap of almost 5 months, reports Business Standard.

This move comes as an indication of improved consumer confidence and a tough reply against low demand.

The company launched a 1 million square feet mid-income housing project in Gurgaon`s Sector-47 on February 28 and a commercial project in Mumbai with its joint venture partner.

Source :http://www.myiris.com/newsCentre/newsPopup.php?fileR=20090304082148193&dir=2009/03/04&secID=livenews

More banks cut car, home loan rates

Mumbai: Following market leader State Bank of India’s move to slash interest rates, public sector Union Bank of India today cut its interest rate on home loans by 25-100 basis points and car loans by 125-150 basis points. Another state-run lender Punjab National Bank has reduced rates on car loans and term deposits by 50 basis points.

UBI said its new home loan rates will be available in the range of 9.75-10.75 per cent interest rate, while rates on new car loans are in the range of 11-11.25 per cent. Mumbai-based UBI has also launched a separate scheme, under which it will offer home loans up to Rs 20 lakh at lower interest rates. The scheme also carries special features like free life insurance cover and will be offered free of prepayment and processing charges, the bank said.

Under the scheme, loans up to Rs 5 lakh will carry an interest rate of 8.5 per cent, while for Rs 5-20 lakh, the new rate will be 9.25 per cent, UBI said. The scheme will be valid till June 30 and the rates will be reset after a period of five years, the bank said.

With the latest reduction, PNB’s interest rate on car loans will be in the band of 10.50% to 11.00% as against 11.00% to 11.50% at present. PNB has also realigned the interest rates on retail term deposits by reducing interest rates by 50 bps in the time slabs of “46 to 90 days” and “180 days to less than 1 year”. “The above changes will be effective from March 1, 2009. There is no change in interest rates on other time slabs with peak rate of 8% being offered for deposits of ‘1 year to less than 5 years’,” it said.

Source : http://www.indianexpress.com/news/more-banks-cut-car-home-loan-rates/429268/

Realty prices fall by 10-40 per cent

It’s here. After talking of a rebound, putting up with stagnation and offering freebies and discounts, developers hit by a demand crunch and economic slowdown are biting the real bullet, lowering prices in key apartment zones in or around Delhi, Mumbai, Bangalore and Hyderabad.

Real-estate prices across the country have fallen by 10-40 per cent. And while prices vary depending on location, size, quality, amenities and time of possession, there are clear indications that the earlier price surge created by speculation and high growth has petered down. Developers are generally still not cutting prices of existing projects, but they face a market in which re-sales could do much the same thing.

The country’s second-largest builder, Unitech, is planning new projects in the suburbs of Noida and Greater Noida at Rs 2,000-2,500 per sq foot (psf), according to a spokesperson. This is the same area where market players say prices were roughly twice as much a couple of years ago.

“It makes perfect sense for industry leaders to rationalise project prices,” said Anuj Puri, country head at real-estate consultancy firm Jones Lang LaSalle Meghraj. “That is the need of the hour.”

Market players say in the Gurgaon area, well-developed zones have over the past year seen rates slump by 8-12 per cent, but remote areas are seeing a crash of 20-35 per cent.

For example, a plot in Sushant Lok Phase II today sells at about Rs 23,000 per sq yard compared to Rs 30,000 only six months ago, a fall of 23 per cent.  However, genuine deals are few because buyers are waiting for a further fall, while sellers are hoping for a rise.

In Noida, flats that went at Rs 5,000-6,000 psf a year ago now come for Rs 3,500-4,200, while in Greater Noida, the fall has been from Rs 3,000-3,800 psf to Rs 2,000-2,800 psf.

DLF is already selling a project in the New Gurgaon area that covers locations like Manesar at Rs 2,200 psf. A company spokesman said prices had dropped by at least 10 per cent in Chennai and by 25 per cent in Bangalore. Developers are not sure if there would be a similar fall in the North.

Buyers in Mumbai and Pune could expect a further 10 per cent reduction in prices, Puri said. In the Mumbai-Pune zone, realty prices for ongoing projects have already crashed by 25 to 40 per cent in the past six to nine months, say local market players.

“It’s difficult to predict the bottom (of prices),” said Niranjan Hiranandani, managing director, Hiranandani Constructions. “I don’t think prices will reduce further.”

In Pune, prices have come down to  Rs 2,200-3,000 psf from about Rs 4,000 earlier. “The market has touched more or less 2005-06 price levels and unlike other places the conversion (deal) rate is high in Pune,” said Lalit Kumar Jain, chairman, Kumar Builders, a developer from Pune.

Prices in Navi Mumbai were zooming till 2007 with escalations in the region of 70-100 per cent in two years. But over the past year, a 20-30 per cent fall is clearly visible. “We have reduced our rates from Rs 7,000 psf, at which we sold six months ago, to Rs 4,700 now,” said Om Gehlot, whose project Gehlot Majesty is situated on Navi Mumbai’s Palm Beach Road.

Source : http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=a2b277d8-45a0-4d46-aeb1-3893a5a40e39&MatchID1=4934&TeamID1=3&TeamID2=1&MatchType1=1&SeriesID1=1248&MatchID2=4925&TeamID3=4&TeamID4=2&MatchType2=1&SeriesID2=1244&PrimaryID=4934&Headline=Realty+prices+fall+by+10-40+per+cent

DLF withdraws from Dankuni township project

Kolkata , Feb 12 Real estate developer DLF has withdrawn from the Rs 5000-crore Dankuni township project near the metropolis citing the current economic recession.

After a cabinet sub-committee meeting on industry here today, Principal Secretary with the CM&aposs secretariat Subesh Das said that DLF had intimated that the it would not undertake the project due to the economic downturn.

The DLF, he said, had also asked the government to return Rs 270 crore deposited with it.

He said that DLF would not be given partial stake in the project when it was set up by a different company.

NKID Pvt Limited, a SPV floated by Indonesia&aposs Salim group, Universal Success and Unitech, has expressed interest to undertake the project jointly with KMDA, he said.

The government also approved the coal linkage to JSW Bengal Steel plant at Salboni, acquisition of 166 acre for a cement plant in the area, acquisition of 252 acre for the second phase of the Kharagpur industrial growth centre and 300 acre for a paper mill at Burdwan.

Industry Minister Nirupam Sen, who was present at the meeting chaired by Chief Minister Buddahdev Bhattacharjee, said that private companies would now have to deposit 100 per cent of compensation and land cost with the government and conversion and mutation would be done in a day.

He said that the union cabinet&aposs clearance for the Nayachar petrochemical hub was yet to be obtained.

Source : http://www.indopia.in/India-usa-uk-news/latest-news/501013/Business/4/20/4

Buying a home much more affordable

For the past few years, the desire among millions of middle-class Indians to own a home remained just a pipe-dream as soaring prices and builders’  keenness to focus on exclusive gated communities shut them out of the market.

But that could be about to change. More middle-class Indians can hope to get a step on the housing ladder in 2009 as bank loans become cheaper and desperate builders, chastened by last year’s property market slump, cut prices to move unsold stock and build cheaper homes.

The past few years have seen houses become just another financial asset, as punters and wealthy investors, buoyed by surging stock market earnings, trooped into the property market in the blind faith that the only direction to house prices was up. Their faith was rewarded, and house prices were driven up to surreal levels. Builders were only happy to play along, and many of them focused on high-margin exclusive developments, almost oblivious to the fact that such properties were beyond the reach of the vast majority of India’s 300-million middle class.

But sometime last year, realty discovered reality. High prices together with double-digit interest rates put off genuine buyers and many families abandoned their search for a home. And the stock market collapse turned the tables on the speculators, and with them, the building trade.

“Developers have understood that affordable or relatively lower-priced homes are the solution to the current mess,” says R Nagraju, head of corporate planning and strategy at Unitech, the country’s second-biggest property company.

In the mess also lies the solution to their misery. Many builders are rediscovering a basic truth: the bread-and-butter of real estate in India comprises simple, affordable houses bought with bank loans at reasonable interest rates. The demand is there — according to government data, India needs 26.5 million homes for 75 million households — but pricing has been out of synch with reality.

A fall in prices may be the secret to reviving the market. The recent rush to get a low-cost dwelling in Delhi – 800,000 applications for 5,000 houses being offered by state-run Delhi Development Authority – is a sign that the appetite for properly-priced houses remains huge.

Builders will have to drop prices if they have capitalise on it. And if they do it, help is at hand from the banking sector. Several state-run banks have slashed interest rates to single-digit levels for housing loans up to Rs 20 lakh in recent weeks, albeit after being nudged by the government which views sentiment in the housing market as a bellwether for the economy and is keen to inject life back into the sector. “The package announced by the government would trigger home sales in the affordable housing segment and in smaller cities,” says Niranjan Hiranandani, chairman of Mumbai-based Hiranandani Developers.

But the impact of recent government actions won’t be limited just to smaller towns and cities. Several developers are launching homes that cost between Rs 20 lakh and Rs 30 lakh (Rs 2-3 million) in bigger centres too.

Ramesh Sanka, chief financial officer of India’s biggest property company DLF says it is a move dictated by the market. “Companies can’t build homes according to their own desire. They build homes for customers and is a if there demand in that segment, we will certainly have more launches in that category,” he said.

Meanwhile, price corrections in Indian realty have been quite stark. Prices of luxury homes have corrected by almost 30%, while houses priced below Rs 50 lakh are cheaper by 10-15%, analysts say. They feel prices need to drop another 20-25% in the latter category for customers to walk in. One reason holding back customers could be hope that prices would drop further. Builders disagree. They believe the housing market has already scraped its bottom. Now it is only a matter of waiting for customers to accept it. The market will revive by April or May this year, says Raheja Developers chairman Navin Raheja.

Source : http://economictimes.indiatimes.com/Personal_Finance/Buying_a_home_much_more_affordable/articleshow/3935080.cms

2009 can be Worse for Real Estate

Unitech is the worst performing Nifty stock of 2008 — the stock has crashed 92 per cent. Peer DLF hasn’t fared too much better, it has fallen 80 per cent while developers such as Parsvnath and Sobha too have lost 90 per cent. All in all, real estate has been the worst performing space last year with the BSE Real Estate Index giving up more than 80 per cent. Can the fundamentals of the sector recover in 2009? Unlikely.

The first half of 2009 is likely to be even tougher than 2008 as demand across segments —commercial, retail and residential continues to remain weak. Already, in 2008-09 so far, almost every developer has reported a fall in leases. According to a report by India Infoline,Unitech has more than 30 per cent vacancy on its portfolio held jointly with Unitech Corporate Parks and has managed to pre-lease only 18 per cent of the anticipated completions over H1CY09. The same report notes that cancellations have outweighed new leases at IBREL’s One Indiabulls Centre, since the REIT listing. Analysts expect rentals to fall further by 10-20 per cent in addition to the drop of 10-15 per cent already seen, given the subdued hiring plans of the IT industry and the high vacancies, coupled with lower rentals, could hurt cash flows, they point out.

According to Jones Lang Lasalle, pan-India grade A office vacancies are expected to rise from 5 per cent in 2007 to 17 per cent in 2009. In the retail space too supply will continue to outstrip demand — malls will be the hardest hit with high vacancies. Moreover, prices for residential property are likely to come down in 2009 and while there is demand, buyers are waiting for realistic prices. Consumers though may refrain from making purchases until fears of job losses and pay cuts recede. What’s worrying the Street is the high level of borrowings that many property firms have.

A recent report by Merrill Lynch noted, “We are increasingly worried about weakening credit ratios and the ability of companies to meet interest and debt obligations.” Merrill Lynch expects sales volumes for the sector to fall 10 per cent and the average selling price to decline 33 per cent in 2009-10 and as a consequence, it expects the average sector earnings to fall 42 per cent in 2009-10.

Source : http://www.indianrealtynews.com/real-estate-developers/2009-can-be-worse-for-real-estate.html

ITC, Accor eye Unitech hotels

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

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

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

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

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

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

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

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

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

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

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

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

Builders Ask Govt to Buy Unsold Flats at Current Rate

In the first of its kind bailout demand, real-estate companies are planning to ask the Government to buy out their unsold flats at current market prices and sell these at a later date. The proposal floated by one of the big Delhi-headquartered and listed real-estate companies is one of the many ideas to be hard sold at the Planning Commission tomorrow.

According to Jaskirat Singh, owner of Delhi-based real estate broking firm Grand Real Estates, about 30-45 per cent of properties worth Rs 50 lakh and above launched over the last six months remain unsold for DLF and Unitech. In the case of Omaxe, it is 25-30 per cent, he said. These companies do not disclose their ready but unsold assets. When contacted, a promoter of another leading Delhi-based and listed developer said this was not the only proposal on the table to bail out the sector. “We want states to enter into joint ventures with big real-estate players by offering land as equity. State-owned banks must also be directed to start disbursing home loans now that they do not have a problem of funds,” he said.

To boost consumer demand and give a fresh stimulus to the sector, the companies are also seeking a further cut in interest rates on home loans. “It should be slashed to 6 per cent for loans up to Rs 5 lakh and to 7-7.5 per cent for loans up to Rs 30 lakh. What the public sector banks have done is grossly inadequate,” a developer said. Tax incentives to home buyers must be enhanced and rental income be made tax-free to incentivise purchases, he added. Stung by the liquidity crisis, real estate companies also want the Reserve Bank of India to refinance the cash gap in existing projects. Most companies are borrowing at rates over 20-22 per cent to complete ongoing projects. “But, now, loans from banks have virtually dried up,” a promoter said.

Source : http://www.indianrealtynews.com/real-estate-india/delhi/builders-ask-govt-to-buy-unsold-flats-at-current-rate.html

PSU banks cut rates on home loans up to Rs 20 lakh

Major real estate players today gave a thumbs down to the announcement by public sector banks to cap interest rates at different slabs of housing loan, saying it was not enough, though they felt the step could spur demand in smaller towns.

“Rate of interests are still very high… There will not be many takers,” said DLF Group Executive Director Rajeev Talwar, adding that the rate of interest should have been around 7-8%.

“This package will give a miss to super metros, metros and Tier-I cities, which are the major segments for demand drivers,” they said.

Public sector banks today announced that home loans up to Rs 5 lakh would be given at a maximum interest rate of 8.5%, while those between Rs 5 lakh and Rs 20 lakh would be offered at 9.25%.

Parasvnath Developers Chairman Pradeep Jain said: “The disappointing part is the rate of interest. We were expecting a much higher cut in the rate of interest.”

However, he said low margin money and charging of no processing fee were welcome steps. “For loans over Rs 5 lakh, we were expecting 6% and between Rs 5 lakh and Rs 20 lakh we were expecting 7.5%,” he said, adding, “overall it will give a partial push to the real estate sector, particularly in the affordable housing segment.”

Airing similar views, Omaxe CMD Rohtas Goel said: “We were expecting more sops from banks for the housing sector… for loans up to 50 lakh, interest rates should have been 9% and and for Rs 5 lakh, 5%.”

Unitech Managing Director Sanjay Chandra, however, hailed the package as an “excellent thing” that would boost the realty sector.

Source :  http://www.business-standard.com/india/news/psu-banks-cut-rateshome-loansto-rs-20-lakh/13/24/51198/on

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

Unitech Plans to Invest 2,500 Cr in Hotel Industry India

Realty major UNITECH LTD (BSE:507878) plans to invest about Rs 2,500 crore (US$508 million) to develop 35 hotels across India over the next seven years. Unitech managing director Sanjay Chandra said the firm would develop 35 hotels in the next six to seven years and already had land in many cities at prime locations.

The hotels would be located in the national capital region (NCR), Kolkata, Chennai, Goa, Mysore, Bangalore, Hyderabad, Chandigarh, Siliguri and Assam.Of the total planned hotels, about 50 per cent would be located in Kolkata and the NCR, Chandra said.

Source :  http://www.indianrealtynews.com/hotel-industry/unitech-plans-to-invest-2500-cr-in-hotel-industry-india.html

Unitech nears hotel deal

Mumbai : Unitech, the country’s second-largest listed real estate player, is close to finalising a deal with the Ashok Hinduja group for the sale of its Gurgaon-based hotel for Rs 226 crore.

The real estate player has been facing a cash crunch for almost a year. Last month, it decided to sell The Courtyard — its hotel property in Gurgaon — along with five other properties that are in various stages of construction.

The Courtyard is a 198-room hotel built on 1.99 acres. The deal with the Hindujas roughly translates into a price of just over Rs 1 crore per room.

Sources close to the deal said, “We are in the final stages of the transaction. However, we have not reached closure yet.”

The real estate developer was looking at a price between Rs 250 crore and Rs 300 crore for The Courtyard which is to be managed by the Marriott group.

Sources said the price of Rs 226 crore was reached during a series of negotiations between the two promoter groups.

The Ashok Hinduja group, which owns truck maker Ashok Leyland, has been dabbling in real estate for a while now and has a stake in JW Marriott hotel in Mumbai.

It has consolidated its real estate assets under one entity.

According to the group’s website, it is planning big real estate projects through the formation of a property trust that will channel investments from government agencies, overseas investors and infrastructure companies.

Unitech is one of the real estate players badly hit by the slowdown in the sector.

It has even put its 2-million-square-foot Saket headquarters on the block. Sources said that the sale would take some more time.

Late last month, the company said it expected to raise Rs 1,500 crore through the sale of offices, land and a hotel which would help ease its cash woes.

The company has been in talks with private equity players to sell residential properties to raise roughly $100 million.

It is also mulling a fresh issue of shares to an investor to mop up another $100 million.

In the full year ended March 31, Unitech had posted net sales of Rs 4,140.4 crore and a net profit of Rs 1,669.19 crore. Its net debt had risen by Rs 1,100 crore to Rs 8,400 crore.

Source : http://www.telegraphindia.com/1081209/jsp/business/story_10226507.jsp

Unitech To Reduce Rentals At Delhi Retail Mall

Realty major, Unitech is planning to cut rental prices of its Unitech Metro Walk Mall at Rohini, Delhi by about 15 percent. Presently, the 2, 20, 000 sq ft mall has a rental of Rs 100-150 per sq ft. “The mall does not have full retail occupancy despite higher footfalls because of high rentals,” said an official. “To rationalize our operation, we plan to switch to a revenue sharing model with retailers.” Revenue sharing is a strategy by which the retailer has to share a fixed percentage of his revenue, usually 3 to 10 percent, with the realtor. But Unitech is looking at 6 to 12 percent of the revenue share, the official added.

Source : Hindustan Times

Realtors look at ‘affordable’ flats for cash flows

After launching mid-income houses, real estate companies are now targeting low-priced homes in the sub-Rs 10 lakh category to improve cash flows and beat the slump in the property market that has been driven by high borrowing rates.

Unitech, the Delhi-based property major, has applied to the Haryana government to develop houses in the Rs 7 lakh to Rs 15 lakh range in Gurgaon. These are high-density, four-storied buildings in the 450 to 800 square feet range.

“Affordable housing is the new mantra for developers now because it is much easier to get loans below Rs 20 lakh,” said Raminder Grover, managing director, Homebay Residential, a subsidiary of Jones Lang LaSalle

India’s central bank counts loans of Rs 30 lakh and below given by lenders to home borrowers as priority sector lending. The classification means that banks can also access refinancing at concessional rates and fulfil norms of directed lending.

The Union government is also expected to promote low-cost housing in its stimulus package for the economy to be announced Saturday. It is expected to give some relief in interest rates for low-cost housing for loans not exceeding Rs 10 lakh.

“The slump in demand in the real estate can be reversed if we provide affordable housing in the range of Rs 20 lakh to Rs 30 lakh. Unitech’s new projects will factor in this and we intend to reduce the ticket size to make the houses more affordable,” said Ramesh Chandra, chairman, Unitech.

The country’s largest listed realtor DLF, on the other hand, is focusing mainly on mid-income, rather than low-income, housing in the Rs 2,700 to Rs 3,000 per sq ft bracket, a company official said. The company has sold over 2,600 apartments in this segment in the last six months.

“Affordable housing is witnessing a steady increase at an all-India level. This includes major cities like Bangalore, Mumbai, Delhi and Chennai,” said J Murugavel, chief executive of Consim Info Pvt Ltd, which manages property portal IndiaProperty.com.

Smaller property companies are not far behind. For instance, Delhi-based property developer Falcon Realty Services has launched apartments priced at Rs 5.5 lakh at its Gulmohar Woods in Global Eco-City near Delhi.

Mumbai-based Matheran Realty launched houses priced between Rs 3 lakh and Rs 7 lakh category in Karjat, nearly 100 km from Mumbai, and is looking to launch similar projects in the central and western suburbs outside Mumbai.

Another Mumbai-based realtor, Sunil Mantri Realty, is launching a housing project in the bracket of Rs 5 lakh to Rs 15 lakh in Gwalior, Madhya Pradesh, in February next year. The developer is also launching projects in the Rs 10 lakh to Rs 15 lakh segment in Sholapur in Maharashtra, Mumbai and the outskirts of Bangalore next year.

Other property majors such as Omaxe and Puravankara have set up separate companies to launch the affordable housing projects. Omaxe has set up National Affordable Housing & Infrastructure Limited (NAFHIL), in which it recently divested a majority stake, and Puravankara has set up Provident Housing.

Matheran Realty saw nearly 66,000 aspiring home-buyers applying for 3,000 apartments to be handed over in mid-2009 in Tanaji Malusare City. The realtor sells houses here at Rs 1,000 to Rs 1,400 per square foot even as it spends Rs 1,200 to Rs 1,300 per sq foot on land and construction.

The developer is looking to sell shops and other commercial properties at Rs 5,000 to Rs 6,000 a sq foot by way of cross-subsidies on the housing project.

Pravin Banavalikar, chief executive officer, Tanaji Malusare City, Matheran Realty’s Karjat project, said: “There is no dearth of demand for houses below Rs 10 lakh whether it is boom or recession because there is a huge demand-supply mismatch.”

Planning Commission estimates suggest that India has a shortage of 24.7 million homes and economically weaker sections and low income group (LIG) segments account for 99 per cent of that gap. The shortage is expected to touch 26.5 million houses by 2012.

The investment required to bridge the gap at the beginning of the eleventh five year plan was pegged at Rs 1,47,200 crore and is expected to rise to Rs 2,14,100 crore by 2012.

Though margins in low-priced apartments are lower than in mid- and premium housing, companies are eyeing higher volumes to drive the business. Low-cost houses have a margin of 10 to 15 per cent against margins above 25 per cent for higher-priced housing.

Source : http://www.business-standard.com/india/news/realtors-look-at-affordable-flats-for-cash-flows/00/46/342300/