News & Views on Indian Real Estate

Thursday, August 28, 2008

Goa Govt declines land allotment for SEZs

Goa government has recently announced that no land with industrial estates owned by Goa Industrial Development Corporation (GIDC) should be allotted or leased for developing special economic zones (SEZs). Mr. Digamber Kamat, Chief Minister, said that if any land has been leased, the lease should be immediately revoked or cancelled. The state-government run GIDC had earlier issued show cause notice to revoke lands to seven SEZ promoters, which were later revoked forcing developers to approach the high court.

Rs 840 Crore to be raised by Saffron Asset via Property Fund

To tap funds for the cash-starved Indian realty market, Saffron Asset Advisors is planning to raise a $ 200-million (nearly Rs 840 crore), Shariah-compliant and India-specific property fund from international markets in the next 6 to 9 months. Saffron is planning to invest the funds in residential projects in the country, where sales have gone down by 30 per cent in the last six months, tightening funds for property developers. "We will be looking at raising such a fund soon. There is a lot of Shariah fund available and India is well positioned to take advantage of that," said Mr. Ajoy Veer Kapoor, Managing Director of Saffron Asset Advisors, which has raised and invested $425 million in the country, so far. The company is also planning to launch funds focusing on India, with a total mop-up of Rs 4,000 crore in the next couple of years. Starting from real estate, Saffron will launch sector-specific funds such as healthcare, logistics, infrastructure, hospitality and so on.

Official hurdles hamper Gwalior's Urban Plan

Big real estate firms are planning to invest in Gwalior which will give the historical town a facelift in five years. Many companies have plans for Counter Magnet City, which falls under the National Capital Region. Gwalior was designated as Counter Magnet City in the NCR plan, 1989. It is one of the five Counter Magnet Cities that are to play a role in reducing population pressure on the growth of the capital region and Delhi. But red tape is choking investors’ interest. Inordinate procedural delay in land allotment is increasing cost pressure for investors. The officials are now declining big firms' proposals. Though the Special Area Development Authority (SADA) of Gwalior is close to the final stage of land allotment process for developers, there are still a number of issues that still block the development of an area of 30, 000 hectares, where CMC will take shape. The SADA has been accused of delaying land allotments. "We go by rules, there are real estate players who want land but we offer them only through bidding. Big companies like Sahara and the Ansals have allotted land through bidding," said Mr. Jai Singh Kushwala, Chairman of the SADA.

Bandra-Kurla land sold for mere Rs 92 Crore

Another example of cooling real estate market is the land auction at business hub Bandra-Kurla Complex, which fetched Rs 1.55 lakh per sq metre - half the price from the previous auction in March. Ahmedabad based, Talim Research Foundation, a venture of Subhash Chandra's Essel Group of Industries, was the sole bidder, paying Rs 92 crore, only Rs 2 crore over the minimum sale price. The Mumbai Metropolitan Region Development Authority (MMRDA) had to award the 5800 sq m to the only bidder in Talim. Land sales are down since the beginning of the year compared to 2007. "Developers are not willing to pay astronomical prices for a piece of land and waiting and watching for some correction to happen." Mr. Anuj Puri, Country Head, Jones Lang LaSalle, said.

Wednesday, August 27, 2008

Realty Players to develop more economical houses to attract buyers

Increasing interest rates and rising construction costs are changing the mood of many aspiring homebuyers, because of which real estate developers are changing their strategy to keep their business going. They are now switching either to so-called affordable housing projects or high-end customers, who mostly buy cash down or with limited amount of borrowing. Many developers are opting for low-cost housing - the latest to come on board is Bangalore-based Puravankara Projects, which is planning to build 65,500 low-cost flats in five southern cities over the next five years. Realty major, Omaxe is building 1 lakh houses across cities in northern India - the flats would be priced between Rs 1,000 and Rs 1,100 per square foot. "Most large developers have now woken up to the fact that affordable housing projects have the fastest absorption rates and are focusing on this," said Mr. Anuj Puri, chairman of realty consultancy company, Jones Lang LaSalle Meghraj.

A Home in the UK to cost you less, compared to Delhi and Mumbai

The time is right to buy a house in the UK, as the slowdown in the global economy has made residential properties cheaper there. Prices are falling by about one percent every month and it is estimated that there might be a 12% decrease in prices this year. A report by JLLM says that the number of Indians buying houses in the UK is set to increase hugely, by 2017. Currently, property prices in cities like London and Birmingham are between 20 to 60 percent lower than in major Indian cities like Mumbai and Delhi. With prices falling further, it might get easier to afford a house in the UK, than within the country, where in some areas, prices are still bullish.

Salarpuria Group to invest Rs 3, 000 in Pan-India Projects

Real estate developers, the Salarpuria Group is planning to invest about Rs 3,000 crore in 12-14 projects across the country. These projects will be a mix of residential, commercial, retail and hospitality located in Bangalore, Hyderabad, Pune, Kochi, Jaipur, Kolkata and Visakhapatnam. About 13 million sq ft are under construction currently, said Mr Mahesh Khaitan, Director, Salarpuria Group.

Navy intervenes in Worli Building work for security reasons

BMC has stopped construction of a proposed 'landmark' building in Worli because of security concerns raised by the Navy. The Navy said that the plush 47-storey residential high-rise at Sasmira Marg would be a threat to vital defense installation INS Trata. Saumya Buildcon began work on the plot under section 33(7) of the development control rules after getting a No Objection Certificate from the fire brigade and BMC's building proposal allotment. As per the plans submitted by the project’s architect to the fire brigade, the 205.35 meter structure will have nine podium parking floors and 37 residential duplex flats. The structure has been built up to the plinth level. The Western Naval Command objected to the development and approached the state urban development department in June this year. It was decided in the meeting that any development within 300 meters of the defense installation would require a mandatory NoC from the Navy. The meeting was chaired by the department’s principal secretary, Mr. T Benjamin. After residents complained that Mr. Benjamin’s directives were not being implemented, the building proposal department issued a stop-work notice this week.

Ansal and Raheja plan to develop SEZs to fight Realty Slump

Realty developers, Ansal API and Raheja Developers are pursuing special economic zones plans to tide over the gloom in the realty sector. While Ansal is planning to develop six infotech SEZs across three states, Raheja is developing north India’s first engineering SEZ in Haryana. The four SEZs by Ansal would be located in Greater Noida, Gurgaon, Lucknow and Khopoli in Maharashtra. Meanwhile, Rahejas' engineering SEZ will accommodate complexes for light and medium engineering goods exporters and will have approximately 7 million sq ft of residential area.

Anticipating Realty Slump, Banks make Borrowers pay more

Banks are all set for the anticipated correction the realty market and it’s the prospective home loan borrowers who will be hit. Expecting a fall in property rates, lenders have either increased or are planning to increase the borrower’s share in the actual cost of a home (down payment). Until recently, some banks were financing up to 90% of the home purchase value while other conservative ones had been giving out 85-90% of the actual price as loan. But according to a survey, some banks have now started increasing margins on home loans, which means borrowers will have to shell out more while purchasing a house. Even the public sector banks, which are already strict with their margins, might increase the borrower's share. However, big lenders like ICICI plan to stick to current margin levels.

Monday, August 25, 2008

Property prices increase significantly in Punjab

According to experts, the prices of prime locations in Punjab have shot up by 40-55% in the last two years. The cash-strapped state, which needs to push the growth of industrialisation, is facing shortage of land, resulting in increase of prices. The reality can be measured from a fact that recently the state government acquired 300 acres for the upcoming Mohali international airport for which the government paid a compensation of Rs 1.5 crore per acre to farmers whose land was possessed. This was the highest ever compensation paid for acquisition by a state government to farmers which has certainly set a standard. Besides that, Punjab has fertile land and in the previous past various examples have been set where the land has been sold at exorbitant prices, said president of Punjab Builders and Coloniser Association, Mr. Kulwant Singh.

Property Tax to increase in Mumbai

The State government has announced that revision in property tax as in Mumbai would come into effect before the end of the year. For this purpose, instead of waiting till December when the state Assembly is supposed to pass a bill amending the relevant law to change the property tax assessment system, the government will soon promulgate the ordinance. The amendment to the Mumbai Municipal Act would mean the property tax would go up in the city and reduce considerably in the suburbs. Now, the city will have to pay property tax on the capital value instead of rateable system followed until now.

To combat the slump, Developers put projects on fast track

Property companies are rushing projects or cutting down on project completion time, by nearly 20 per cent in an attempt to overcome the liquidity crunch. Companies that took 3 years (36 months) on housing projects are now completing them in around 30 months by boosting efficiencies and using modern technology. One of the most significant reasons for the faster turnaround of projects is the decline in property sales by over 30 per cent in the last six months in Mumbai, national capital region (NCR) and other regions, which were the main revenue streams for developers. To add to their woes, the prices of cement, steel and labour, which account for more than half of the input costs, have risen 50 per cent over the last one year, putting pressure on developers' margins. Construction costs, which vary from city to city, are growing 20-25 per cent every year, said industry experts.

Friday, August 22, 2008

Goa forbids land allotment for SEZs

Goa government has recently stated that no lands within the industrial estates owned by Goa Industrial Development Corporation (GIDC) should be allotted or leased for establishing special economic zones (SEZs). In a written reply tabled on the floor of the house, chief minister Digamber Kamat said that if any land has been leased, the lease should be immediately revoked or cancelled. The state-government run GIDC had earlier issued show cause notice to revoke lands to seven SEZ promoters, which were later revoked forcing the state developers to approach the High Court.The GIDC has issued notices to meditab specialities (pharma), Peninsula Pharma Research Centre Private Limited (Bio-tech), K Raheja Corp Pvt Ltd (service), Paradigm Logistics and distribution pvt ltd (IT), Inox Mercantile co. pvt ltd (Bio-tech), Planetview Mercantile Co Pvt Ltd (Gem and Jewelry) and Maxgrow Finlease Pvt Ltd (IT). The chief minister stated that the six companies have already moved to the high court challenging the show cause notice. The court has granted status quo to the petitioners.

Marriot-Uppal Hospitality to launch hotel in Gurgaon

Marriott International along with Uppal Hospitality plans to launch a 206 room JW Marriott hotel in Gurgaon. The hotel, which is located on the Delhi-Jaipur highway, is expected to open in mid 2009.The hotel will offer a spa and fitness centre with gym, an outdoor swimming pool, pool bar, gift and retail shops, business centre, executive lounge and 1, 220 sq m of meeting space. A 400 sq m ballroom will be available for meetings, as well. F&B options comprise a casual restaurant, two specialty restaurants and a café-deli. Other amenities include a bar and a lobby lounge.Marriott has 24 properties in various stages of development. Five properties will come up under the JW Marriott Hotels luxury brand; one hotel under the Ritz Carlton umbrella; 11 Courtyard by Marriott projects will launch in the upper-moderate segment; three Renaissance hotels and two Marriott hotels are scheduled for the upmarket, deluxe section and two luxury Marriott Executive Apartment properties will cater to long stay travelers.

Largest International Real Estate referral program launched

The International Real Estate Advisory Board has launched the largest International Real Estate referral program in the world and has invited Real Estate Professionals from around the globe to become a registered IREAB Advisor and earn a significant supplemental income via International Real Estate Referrals. IREAB’s Referral Program is destined to become one of the most valuable resources for every Real Estate Professional and Real Estate Developer in the world. The launch of the IREAB Advisor Referral Program benefits Registered IREAB Advisors (Real Estate Professionals) with an extra source of income that actually generates significant income. On the reverse side of the coin, the Referral Program will also provide Real Estate Developers with a meticulously organized (world-wide) referral program.It’s a Win-Win-Win for everyone, especially International Real Estate Investors and Residential Home Buyers of International Real Estate because the majority of Referral Contracts registered with IREAB is considered to be privileged information. IREAB International Real Estate Analysts will only work with select development projects which are deemed to have a high probability for Return on Investment. All referral contract listings have been analyzed and assessed by top IREAB Analysts with focus to the best interest of Investors, Developers, IREAB and registered IREAB Advisors. IREAB’s mission is to provide free advisory that accesses the largest organized international real estate advisory referral program in the world.

Thursday, August 21, 2008

Residents of Dwarka oppose DDA's Plans to develop Megacities

The Dwarka Forum - a collective of residents from residential complexes and the Dwarka Kshetra Gram (DKGK), a group of 20 villages have asked the DDA to put on hold its expansion plans, keeping in mind the depleting water table and shrinking water sources. These residents have joined forces to oppose Delhi government’s move to add five new townships to the city. "Dwarka does not even get half of the water that it should. Villages around Dwarka are dependent on tube-well water. There is no piped-water from the Delhi Jal Board for them and they are forced to use unfit tube-well water. It is impractical to increase the city limits," said Mr. Diwan Singh, a member of the Dwarka Forum.

Tallest building in India

India will get among its first tallest buildings. The tower, to be built in Kolkata, will rise to a height equivalent to 83 storeys. "We will actually construct 54 floors, but at 250 m, it will be easily be the tallest commercial structure in the country, its height corresponding to an 83-storey tower," says Mr. A.N. Shroff, the leader of the consortium Diamond Group that is developing the building. The project is coming up on the vacant land that was once the proposed site for Grand Hyatt. The 54-storey structure will tower over the Chowringhee skyline, housing 10 levels of car parking at the base and a helipad on top. "The Chowringhee building will have many firsts, like a 4.2 m floor-to-ceiling height, a grand entrance lobby 42ft high, a sky garden on the 29th level, restaurants on the 50th and 51st floors and three levels of viewing galleries above that," said Mr. Vinoo Chadha, principal architect for the project. The cost land for the proposed building is Rs 432 crore, construction is estimated to cross Rs 200 crore.

Matheran Realty to come up with Low-Cost Houses

Mumbai-based developer, Matheran Realty has come up with an integrated township at Karjat, 80 kms from Mumbai, where a basic one-room flat would cost as little as Rs 3 lakh. The cost of construction, at Rs 999 per sq ft, is a fraction of the Rs 2, 500-3,500 prevailing in other parts of the city as well as other major metros. At this rate, the bigger flats in the township, in the size of 500 sq ft and 700 sq ft, are priced at Rs 5 lakh and Rs 7 lakh respectively. The booking for the project has already been started and 3, 000 flats will be handed over in the first phase between January and June 2009. The name of the project is Tanaji Mulsure city (TMC).

Dubai-based Developer's Project in Mumbai to take shape in October

Dubai-based based Sternon Real Estate and Mumbai-based Garnet Construction said their NRI township,'Magic Hills Residences' in Navi Mumbai will start construction works in October and complete the first phase in 18 months. Mr. Hussaini F. Nalwalla, Managing Director of Sternon Group, said, "The main benefit for NRIs who booked in the first phase of Magic Hills is that they will enjoy a huge price advantage, as the rate has already appreciated three-fold. We understand the delay in the start of construction has caused concern among some sections of NRIs, but we assure all investors that the project is all set to take off from October." The project is being marketed exclusively to non-resident Indians, especially in UAE. The project has attracted global interest, and Phase 1 has already been sold out.

Wednesday, August 20, 2008

Purvankara plans to foray into Affordable Housing

Bangalore-based developer, Purvankara Projects has announced its foray into the affordable segment in an effort to beat the property sector slump. The company will launch these projects in two phases. In the first phase, they will develop projects in Bangalore, Chennai, Hyderabad, Coimbatore and Mysore with an investment of Rs 8, 000 crore. Purvankara will develop 64,500 homes with a total built-up area of 59.80 million sq ft in the next five years. These apartments are priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh for one, two and three bedrooms respectively.

RIL and Vornado plan to invest $500 Million in Shopping Mall JV

Mukesh Ambani-led Reliance Industries has announced a 50-50 partnership with US-based real estate investment trust, Vornado to invest $500 million in a shopping mall joint venture. Under the venture, RIL and Vornado Realty Trust would commit up to $250 million each to acquire, develop and operate retail shopping centers across key cities in India. "The shopping centers will contain 500,000 to 1,000,000 or more square feet and typically be anchored by a hypermarket to be owned and operated by Reliance," Mr. Vornado said.

UK Realty Developers trying to woo Indian Buyers

The property agents of UK are targeting an estimated 1.25 lakh Indian dollar millionaires, who might invest nearly $30 billion (Rs 1.2 lakh crore) over the next decade in London. Home prices in the UK have fallen due to the loan crisis and it is anticipated that rich Indians could stabilize the market. Some agents like Berkley Homes are flying in senior executives to make direct contacts with would-be buyers in India to woo them to London, particularly to addresses like Knightsbridge and Kensington or places like Hampstead and St. John’s Wood, which have an abundance of Indians. "With relaxed rules in India and the burgeoning economy, middle class in India is now showing keen interest in buying properties here. Over 100 enquiries have come in, in the last few months. Many among them are serious buyers," Mr. Jaideep Singh, who heads the India desk at Knight Frank said.

Tuesday, August 19, 2008

Good news for Property Buyers

For all those who are dreaming to own a house despite the high home loan rates, there is some good news. The costs of residential properties across four major markets of the country have stabilized during the April-June period. According to the report by global realty consultant, Cushman & Wakefield (C&W) on India’s residential sector, the availability of new supply, shrinking demand from investors and increasing rates have led to the stabilization of capital values in both high-end and mid-range residential segments across the National Capital Region (NCR), Bangalore, Mumbai and Pune in the second quarter of 2008.

Chembur to be redeveloped

After living in crumling old structures for about 55 years, the residents of Maharashtra Housing and Area Development Authority (Mhada) colony in Chembur have realized the benefits of redevelopment. Subhash Nagar is undergoing redevelopment as 65 per cent of the 2, 000 residents have opted for redevelopment by a single developer. The colony is spread over 38 acres and houses 57 buildings. "So far, we have built 744 flats for the residents and have finalized plans to build eight more buildings for 546 families who have signed for redevelopment," said Mr. Manoj John, spokesman of RNA Corp, which is undertaking the project through its group company GA Builders. The company aims to create residential and commercial zones for maximum utilization of available space. "It is a win-win situation for the tenants and the developer," said Mr. Anuj Puri, Chairman, Jones Lang LaSalle Meghraj (JLLM), a global real estate consultancy while commenting on the project.

Tatas and Rahejas join hands to build flats in Gurgaon

Tata Housing Development Co and Raheja Builders are planning to invest Rs 700 crore in jointly developing a high-end residential project at Gurgaon. "The project, Raisina Residency is spread over an area of 11.73 acres and it would be jointly developed by the two partners," Mr. Navin M Raheja of Raheja Builders said.

Property Price Graph going downwards in Chennai

Property prices in Chennai in the last two years have shot up by almost 200 percent but currently, the situation seems gloomy. In fact, some realty players have sold only a couple of houses in the last six months. According to experts, there has been a 90 percent drop in demand for residential projects since the start of the year. Office rentals are also seeing a correction. The Central Business District in Chennai has seen a 15 percent drop. Most real estate developers in Chennai say they are struggling to sell flats, with one real estate player admitting he has sold just one flat in the last six months. Analysts say that this is the time for developers to sit back and take a realistic look at prices.

Monday, August 18, 2008

Real Estate Atmosphere Is Getting Gloomy

Thanks to choppy economic conditions, the real estate market continues to slide and some top builders expect a substantial dip in their sales this year. Mr. Niranjan Hiranandani, Managing Director, Hiranadani Constructions said, "Due to a slump in the real estate market, our forward budget planning has come down by 15%. Hence, by this year end, we expect our overall sales to dip by about 20% to 25%." Earlier this year, the company was expecting a rise in its budget by about 35%, but calculations have gone awry. However, he feels that the market dynamics are still strong and there are a number of opportunities available for the realty market to grow in the long term. Mr. Hemant Shah, Chairman, Akruti City believes that only after Diwali, the real estate market will start showing some signs of improvement.

TCI to foray into real estate sector

Transport Corporation of India, so far engaged in movement of cargo over land and sea, is planning to venture into the real estate sector with pan-India presence. The company has 200 properties and would develop a number of them for residential and commercial projects. Apart from the foray, TCI also plans to build a number of large warehouses across the country. It already has 7.5 million sq ft of warehousing facility available which it plans to increase to 12.5 million sq ft in the next 2-3 years. It is also looking at opening offices in China, Thailand and in few European countries in the current financial year. The company would also be investing Rs 200 crore in the next two years for purchase of trucks and ships.

The World's Most Expensive Office Space

The most expensive office market in the world is London. There are three markets within it - the city, West End and Midtown, priced at $129, $259 and $ 119 a sq foot, respectively. In parts of Midtown Manhattan, the going rate for office space is $100 per-sq-ft, per year, according to Cushman & Wakefield. This rate beats London's fourth most expensive market, Canary Wharf, where space is priced at $84 per-sq-ft.

Apply for joint loan and get tax benefits

In case both husband and wife are working or have separate sources of income can apply for a joint loan for purchase of a house. This way, the loan eligibility and amount also increase. Under the Income Tax Act, tax benefits are available on housing loans and the interest paid on them. In case of joint loans also all the co-borrowers can get tax benefits. Co-borrowers, who are also co-owners, are eligible for tax rebate in the proportion of their share in the loan. The repayment capacity of each spouse should be taken into account while deciding on the shares of the loan. The shares may be any ratio. The tax benefits would be shared in that proportion only. One should specify the share of the property and other loan details on a stamp paper.It needs to be ensured that both should be co-owners of the property. The ownership of the co-owners of the house must be co-borrowers as well. It is essential for co-borrowers to be co-owners in order to claim the tax benefits. One cannot get tax benefits if he is just a co-borrower but not a co-owner. In case a borrower pays Rs 1 lakh as interest and Rs 25,000 as principal, in case each has an equal share in the borrowing, each can claim Rs 50,000 against interest and Rs 12,500 against principal in their respective income tax returns. Each borrower needs a copy of the borrower certificate. The borrowers should take the interest and principal certificate from the bank and each can submit copies of the certificates along with a copy of the agreement signed between them to claim tax relief. The co-borrowers should enter into a simple agreement with the spouse on a Rs 100 stamp paper. This agreement should basically contain the share of the ownership along with that of the home loan availed by the couple. If one of the co-owners does not have any income, then the other co-owner should enter into an agreement with the spouse. The agreement should state that the entire repayment is met only by one borrower's income. This would ensure that the main applicant will have 100 percent beneficial home ownership and consequently he can enjoy all tax benefits applicable to a single borrower. The repayment of the loan may be repaid from a joint bank account, where both the husband and wife share the funds. Another option, although less popular, would be to share out the EMIs between husband and wife and both pay a specified number of cheques for the loan repayment. It would need to be ensured that the repayment of the loan is made in the same ratio as the joint borrowing. Further, each of the borrowers should have a demonstrable source of income to justify the repayment of loan. The maximum tax deduction allowed for a single borrower is Rs 1.5 lakhs. This deduction would apply to each borrower. A proper record of the respective shares of borrowings needs to be maintained to prove the shares of each of the borrowers.

Marwari bond is fuelling real estate market in Jodhpur

Jaipur’s loss is Jodhpur’s gain. The downfall in the state capital’s property market post-bomb blasts, which had ripped the city apart in May, has steered investors to look westwards. This apart, the strong Marwari bond is fuelling the real estate market of Jodhpur. Marwari business community from across the globe is investing heavily in their hometown. Marwaris may run their business anywhere in the world but they don’t leave their roots. They prefer to have a base in their home town. This has created a big demand for prime properties in the city which is expanding horizontally on all sides. Apart from that, a large expatriate population working with the armed forces, railways and corporates form the biggest customer base. The simplicity and easy-life of the city never let them off post-retirement. Driven by the local residents’ wish to live outside the congested walled city, the periphery of Jodhpur is witnessing a real estate boom. Even old residents of the main city prefer a house on the outskirts for open space and better infrastructure in terms of water, road, electricity and parking facility. In fact, retail and commercial rates are riding on corporate demand for retail and office space within city limits and the outskirts too. Changing consumption patterns, shopping centres, cineplexes and malls are replacing the old structures which were once the identity of this heritage city. Major players such as Ansals, Tulip in collaboration with Jodhpur royalty, Khalsa Developers and Ashapurna are coming up with mega malls to cash in on the retail boom. Many banks, retail and business houses with a pan-Indian presence have brought their zonal/ regional office spaces here. Zee group’s Ecity Bioscope has already entered the city in Ashapurna Mall, while Reliance Hyper will start functioning soon at the same mall. Being an army and airforce base, Jodhpur offers a safe and secure residential option.

Thursday, August 14, 2008

ETA Star to come up with a township In Sriperumbudur

ETA Star Property Developers Ltd is planning to come up with a mega integrated township on a sprawling 400 acres of land at Sriperumbudur near Chennai with an estimated cost of nearly Rs 7, 500 crore, said Mr. P H M Syed Ismail, Managing Director, ETA Star Property. Of the projected 3 crore sq ft built-up area, nearly 70% would be towards residential and the rest will be for commercial and other purposes. It will house IT SEZ, a medical college with a hospital, hotel, multiplexes, commercial space, school and all basic facilities.

SRK Group planning Major Investment in India

Real estate developers SRK Group is planning to invest Rs 5,000 crore in developing residential and commercial projects in India. The group will undertake work in various cities like Delhi, Gurgaon Ahmedabad, Pune and Chennai over the next five years with plans to expand to new cities. The group has identified many projects in south India and other parts of the country to pump in about Rs 5,000 crore in the next five years in developing residential as well as commercial projects.According to the sources, SRK group plans to invest about Rs 2,000 crore in Kerala in five years. It is also likely to launch 3-4 residential projects in the state within the next six months. Apart from Delhi, where SRK Group plans to develop only commercial projects, in all the other cities it will develop both residential and commercial properties.The group, which is currently developing 20 projects in south India, is also planning to construct 100 housing units for Adivasis and poor people in Kerala free of cost.They will also be launching healthcare facilities and ambulance services in rural Kerala.

Slow growth forces realtors to cut rentals by 10-15%

The commercial real estate market across major cities in India saw a slow performance in the second quarter of 2008. This has forced real estate developers to cut commercial rentals by around 10-15 per cent across India. Mumbai, the commercial capital, witnessed stagnant rental values, while Delhi saw a strong correction after the IT/ITeS industry, the largest consumers of commercial real estate, deferred their expansion plans on fears of a global meltdown.ET on June 17 had reported that commercial rentals across India have started to fall.Noida witnessed the highest vacancy rate of 15 per cent. The supply mismatch in the IT/SEZ segment was reflected through rentals which witnessed a correction in the quarter. The total supply for Mumbai in the second quarter was 4.09 million sq.ft with IT/ITeS specific supply estimated to be 40% of the total. The city recorded a demand of 1 million sq.ft largely driven by absorption with fresh pre-commitments taking a backseat resulting in an overall vacancy of 5 per cent in the quarter. Thus the developers had no option but to cut rentals.

Increasing bad loans a worry for Indian banks

The rising bad loans are set to pose a huge challenge in the next few years for the banking and finance industry. Banks have already stopped or tightened lending norms for consumer finance and auto loans for fear of higher defaults. Rising interest rates have increased the possibilities of defaults, particularly among customers holding credit cards.Analysts say bad loans will be a major challenge for domestic banks even as regulators prepare to ease restrictions on foreign banks operating in India in 2009.Reserve Bank of India has no choice but to hike rates if inflation is at 12% and that will be a problem because if people have taken a loan of Rs 50 lakhs and paying 7% interest two years ago, now they are paying 14% which means paying double the interest now. This in turn, would lead to lesser number of people defaulting on their home loans in India because, unlike the US, the home-loans market in India is a “user’s market.

PE Funds Now Eye Ancillary Businesses In Realty

With the property market going through a slump, private equity investors are shifting their investments to companies engaged in real estate ancillary businesses, where returns are perceived as fairly safe. "Real estate ancillary businesses are attractive," said Mr. Sourav Goswami, the Managing Director of a leading private real estate investment company, Walton Street Capital. "We continue to look at opportunities in this space, but the main challenge is the capability of the managements to carry out expansions. Such companies face shortage of talent and the stretch level is very thin." There are at least six private equity investors who are learnt to be in talks with Pune-based Universal Construction Machinery and Equipment. This company manufactures and sells construction equipment, and had a net profit of Rs 7 crore on sales of Rs 130 crore in 2007-08. Mumbai-based Sankapan Group also revealed that three private equity investors are interested in investing in its four subsidiaries.

Tuesday, August 12, 2008

Property in Noida to cost you more

Buying a property in Noida may cost you more now as the circle rates or the fee the government charges to register a property are likely to go up. For residential sectors in Noida, the hike is between 7 and 33.33 per cent for plots and for apartments, the hike is between 18 and 22 per cent (depending on the sector). For industrial sector in Noida Phase I, the hike is 20 per cent, for Noida's Phase II sectors such 8-, 81, 83, 84 it is 100 per cent and for Phase III sectors it is 33 to 50 percent. The new rates come into effect from August 10.

Tatas to come up with a Residential Property

Tata Housing Development Company Ltd has forayed in to the North Indian market with the launch of a residential property in Gurgaon. The company is coming up with a high-end 11.73 property - Raisina Residency to be jointly developed by Tata Housing and Mumbai-based Raheja Developers. The project has pre-certified 'Green Homes' under the guidance of Indian Green Building Council and comes with 86 per cent open-area around the towers. Mr. Navin M Raheja, Chairman, Raheja Builders, said, "Raisina Residency will be the new luxury address in the Gurgaon metropolis. Air-conditioned condos, penthouses with island bathtubs and a state-of-the-art clubhouse, fluid landscape are some of the luxuries offered."

Low-Cost Houses - The New Real Estate Mantra

Real estate companies are now focusing on the development of low-cost homes targeting the middle and lower-income groups. With the country facing a shortage of 22 million home units, as per a survey by the Housing and Urban Property Allevation Ministry, low-cost projects are the need of the hour. Developers are increasingly venturing into mass-housing or low-cost projects, typically on the periphery of large cities and in Tier-II and III cities. All major developers like Omaxe, DLF, Ansal API and Parsvnath have major plans to venture into low-cost housing.

Dehradun is emerging as a potential Real Estate Destination

Dehradun is emerging as an attractive investment option for realty developers in India. Considering the scenic locales and the various institutes and schools based in and around the area, many builders are exploring their options and setting up projects in commercial as well as residential segments. The state capital has attracted developers from all over the country. Apart from Parsvnath and GTM Builders, other prominent developers operating in the region are Emaar-MGF, which has signed an agreement with the Uttarakhand government to soon build and run a five-star hotel and a convention centre in Dehradun. The Rs 2 billion (US $49 million) new hotel and convention centre will be part of an integrated facility comprising a 10-acre retail and entertainment space. Then there is Prabhatam Buildwell, which is also planning various mega township projects in cities like Bangalore, Kochi, Indore, Bhopal, Ranchi and Dhanbad apart from a project slated in Dehradun as well.

Monday, August 11, 2008

Builders Concerned About Cutting Costs

Akruti City is planning to use pre-fabricated slabs in its buildings, which will help the company in saving 15 to 20 per cent cost over manually-laid slabs. The company is also exploring new techniques to build walls and pillars that could save up to 20 per cent over conventional techniques. However, Akruti is not the only developer trying to cut costs due to the realty slump caused by higher interest rates and capital curbs by the government. All across India, realty companies are sourcing cheaper materials, using more advanced technology and new techniques to reduce construction time even as overheads are being slashed. The drive to cut costs is becoming critical as key input costs - steel, cement and labour - that account for 40 per cent of project costs have escalated 50 per cent over the past year. Mahindra Lifespace Developers has recently set up an innovation cell to explore the use of new construction materials such as fly ash instead of cement, using better mechanisation and technology to cut costs. Now, the company has reduced the time taken to lay slabs from one month to 21 days and plans to cut it to a fortnight. Besides this, there is a buzz is that real estate companies are retrenching staff and cutting salaries but Parsvnath Chairman, Mr. Pradeep Jain said such moves would not serve any purpose. "When you set up a company, employees become part of your growth. You cannot penalise staff in bad times. But we can certainly cut overheads," he said.

Aeren R Enterprises to invest Rs 6, 350 Crore in two projects

The New Delhi-based real estate firm, Aeren R Enterprises is planning to pump in over Rs 6, 350 crore in developing two projects in North India. The company has plans to develop two premium residential projects in Ludhiana, of which one would come up on a 12-acre plot. The other township, to be spread over 175 acres, would also have a nine-hole golf course. "We have acquired 175 acres land for the township-International City – in Ludhiana. It will be developed by 2012 and the construction cost is estimated at over Rs 6, 000 crore," according to Aeren R Enterprises President (Corporate Affairs) and CEO, Mr. Prabhu Dutt. For the other project, he said investment would be around Rs 350 crore.

Builders’ Meeting to discuss Realty Slump

Looking at the softening real estate market, the Maharashtra Chamber of Housing Industry (MCHI), a powerful builders' pressure group, has called its members for a meeting next week to discuss steps to boost sales. "Prospective home buyers are not buying as they are waiting for interest rates to drop and property prices to correct. Genuine developers share a similar view but with the government not reining in the high labour, steel and cement cost, the builders are left to wonder how they could reduce prices to attract purchasers?" said Mr. Pravin Doshi, MCHI President. He added that in the meeting, apart from issues like prices of construction materials and interest rates, they will discuss various methods one could use to reduce the cost of construction.

Houses Galore! Courtesy DDA

After a gap of two years, Delhi Development Authority will not only give a chance to own a house but will also provide an excellent investment opportunity to prospective buyers. DDA is coming up with 5, 020 flats out of which there are 350 three-bedroom flats, 890 two-bedroom flats, 3, 500 one-bedroom flats and 280 flats that can be expanded. Realty experts said that because of the affordable rates, many people who will apply under the scheme would look at it as a form of investment. The fact that all the flats are freehold (one has ownership rights) is also an added boon. Also, it is for the first time that DDA has not categorized the flats as low, medium or high-income group. "This was a conscious decision to not link income to the category of house so that more people get an opportunity to apply under the scheme. Earlier if you had to apply for a LIG house, you had to submit an income certificate," said a DDA spokesperson.

Friday, August 08, 2008

Property Prices May Decline In Mumbai

According to an industry survey, property rates in Mumbai, especially the suburbs might drop by 15 to 20 percent in the coming months. The survey, conducted by real estate consultancy firm, Jones Lang LaSalle Meghraj (JLLM), links the price drop to liquidity crises among builders, high interest rates and inflation. "It's It’s an over-rated market, and builders are facing money crises. We expect a price correction of 15 to 20 percent in the next few months." However, the decline in prices may not happen in up market localities like Bandra, Juhu and Peddar Road as the demand here is higher than supply.

Before Buying a Flat, inform the Police

Mr. Abhishek Sharma, owner of flats 1503, 1504 in Gunani Building, Sector-16, Palm Beach, Navi Mumbai had rented out his property to Mr. Kenneth Haywood, an American citizen. However, despite the orders given by Navi Mumbai police about registering sale, lease or any other dealing of property with the nearby police station, the police have claimed that Mr. Sharma had not registered his lease agreement with Mr. Haywod. "Following increasing terrorist activities all over the country, the Navi Mumbai police had issued an order to builders and developers which states that the owner of the flat or property should inform the nearest police station about the tenant’s name, address and other details," ,” stated a police officer on condition of anonymity. If someone disobeys the order, he/she stands to be punished under Section 188 of Indian Penal Code. The order states that "if such disobedience causes obstruction, annoyance or injury, or risk of obstruction, to any person lawfully employed, the defaulter will be punished with simple imprisonment for a term which may extend to one month or with fine which may extend to Rs 200, or both."

JPMorgan plans $1 bln Asia property spree

JPMorgan plans to invest more than $1 billion in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and lenders and rival investors recoil from property markets.The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to subprime mortgage investments, is using its global special opportunities group to finance Asian property firms and their projects.Many Chinese and Indian developers are struggling to complete ambitious projects because local banks have clamped down on lending to the construction industry and a stock market slump has closed off equity raising through initial public offerings.Foreign investors are also shying away from markets where risks, as well as returns, are traditionally high. But because of a shortage of funds, developers are starting to offer plum deals.

Alchemist Gr looks to PE firms to fund restaurant expansion

Chandigarh-based Alchemist Group is scouting for private equity investments to fund its Rs 800 crore expansion plan of opening 1,200 odd outlets of its quick service restaurant chain Republic of Chicken by 2010. "The total investment in the chain by 2010 will be Rs 800 crore and we could be looking at private equity funding. We are sure the return on investment of each outlet will not be more than 18-22 months," Republic of Chicken Chief Operating Officer Tapan Sinha said. He said the company would be set up around 1,200 'Diner and Deli' counters by 2010 and is seeking the PE route for financing the plan. Sinha did not cite a time-frame for seeking the percentage stake the company would be divesting. The Chandigarh-based Rs 7,000 group diversified into the dining segment this year with the first two Republic of Chicken outlets in Delhi and is now planning a pan-India expansion in the next one-and-half year. "Of the new outlets planned, some will be Diner-cum-Deli stores and some will be just Delis," Sinha said. He said the company would begin expansion from Delhi and NCR region and then move on to the broader North Indian market in the state of Punjab and Haryana before setting up ventures across the country. The stores size would range from between 180 sq ft and 1,000 sq ft.

Cento to sell 500 Indian realty projects in overseas market

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

Economic slowdown impacts commercial real estate uptake: Cushman

The general economic slowdown has started impacting the commercial real estate sector as was evident by slower uptake during the April-June period of the year. During the period, commercial real estate demand was only at 9.74 million square feet as against the supply of 18.07 million sq.ft, commercial real estate services firm Cushman & Wakefield (C&W) said in a report. The IT/IteS sector, which has been one of the largest consumers of commercial real estate, have deferred their expansion plans, leading to a slowdown in the uptake during the period, he said. Most corporations, both Indian and multi-national, have been adopting a wait-and-watch policy throughout most of the period, he added. During April-June quarter rental values across major micro markets in the major cities witnessed rental hikes in the range of 3-5 per cent over the previous quarter. Some peripheral locations in NCR and Chennai also saw a correction in rental values largely due to excessive supply as well as deferred developmnet plans of various proposed projects, it said.

Thursday, August 07, 2008

DLF's Net Profit Rises 23% in the first Quarter

Real estate major, DLF has announced 23% rise in its consolidated net profit for the first quarter ended June 2008, to Rs 1, 864 crore, on the back of strong volume growth. The total revenue of the company, on a consolidated basis, was up 23.2 percent to Rs 3, 846.3 crore compared to the corresponding period of the previous year. Mr. Rajiv Singh, Vice-Chairman, said,"Sales of premium homes have been achieved at higher realizations and projects under execution have increased. While we expect a cautious outlook for the year ahead, our new launches, strong backlog and proven execution allow us to remain optimistic about delivering double-digit growth in all facets of our business."

Foreign-style villas at Indian prices

Do you dream of buying stylish villas at idyllic locations abroad but baulk at the price? Well, a Chennai-based real-estate developer has come out with a project close to hill station Yercaud in Salem district that seeks to meet the aspirations of buyers who would like to own Western style villas at Indian prices. The Rs 80-crore project styled ‘Faber Hills’, by Vijay Shanthi Builders (VSB), jointly with Shekar Coffee offers 99 premium villas in English, Spanish, Belgian and Waterfront style on 22 acres amidst the hills of Kondappanaiyakanpatti. It is a gated community project with premium facilities such as health club, swimming pool and outdoor games. Yercaud is known for its salubrious climate and is a great tourist attraction, but would that in itself be a selling point for villas priced in the range of Rs 75- 85 lakh each? Mr Suresh Jain, Managing Director, VSB, said his company is known as a builder of lifestyle homes with lush landscape. Salem was a gateway to tier-two cities for the company that had for long made Chennai its home. He said the site was selected because of its natural beauty with hills on three sides and a canal flowing close to the project. It is the scenic beauty of the location that is its USP in addition to the proximity to major towns. He pointed out that the Tamil Nadu Government has proposed to extend its thrust on the IT sector to Salem. For the textile hubs of Karur, Tirupur and Erode, Salem and Yercaud acted as a magnet for not only business but relaxation as well. Mr Jain said Salem has not had a project of this type till now. The landscaping around each house would be in sync with the style of the home exterior. The duplex houses would be 3,000-3,500 sq.ft . The site, at the foothills of Yercaud, was about 15 km from the Salem Railway station. He said the project would be completed in two years.

Alchemist Group eyes hospitality

The Chandigarh-based Alchemist Group is planning a big bang foray into the hospitality sector with an investment of Rs 1,300 crore over the next two years. The plan includes a huge fine dining, quick services restaurant chain and five-star hotels. The Rs 7,000-crore conglomerate, which has interests in real estate, food processing, healthcare, pharma and aviation, will build five brands including fine dining restaurants specialising in varied Indian cuisines. The group will open 100 restaurants under these brands in Indian cities and overseas markets like Geneva, Dubai, Los Angeles, New York and Chicago. As a part of its debut in food & beverage (F&B) retail, Alchemist Group is also setting up 1,000 quick service restaurants (QSRs)-Republic of Chicken (ROC)-across the country at an investment of Rs 800 crore. The group claims to be a quality supplier of safe poultry products and wants to carry the same marketing plank for ROC launch. Earlier this year, it had signed up actor Mithun Chakraborty as brand ambassador for the new brand. ROC will be franchise based, with outlets of varied format including takeaways and dine-in. The company has identified locations and will initially focus on the chain's roll out in North India, particularly in NCR. "We see great potential in F&B retail and will go it solo in our foray," says Alchemist Group chairman Kanwar Deep Singh. "The ROC launch will make us a fully integrated player in the business and allow us to control the entire poultry chain from hatching, breeding to retailing. And since the margins after value addition are high, it makes sense for us to get into F&B retail." The group has a poultry processing plant in Banmajra, Punjab and has spent about Rs 125 crore on integrating its poultry processing and selling venture. While all ROC outlets will be leased, the group will leverage its land banks across India to set up five-star hotels in Ludhiana, Udaipur and Kolkata. "We plan to launch real estate SPVs in collaboration with the Renaissance Group. The capital for all initiatives will be generated equally from internal and external sources," adds Singh. According to industry sources, Indian food & beverage retail market is valued at Rs 25,000 crore growing at 25 percent per annum. Also on the anvil is expansion of the Group's hospital chain. Currently, Alchemist operates two hospitals, one each in Gujarat and Punjab set up at a cost of Rs 100-crore each.

HDFC Property to buy into Nitesh Mall

HDFC Property Ventures is investing $20-25 million into South India’s largest central business district (CBD) mall developed by Nitesh Estates in Bangalore. The move probably marks the $900-million HDFC Property Ventures’ foray into retail infrastructure in a rather tight-market environment. HDFC Property Ventures will pick up around 20-25% stake in the 6-lakh sq ft Nitesh Mall, which is being designed by Seattle-based Callison. Nitesh Mall, which is the Bangalore-headquartered real estate firm’s first retail play, is estimated to be a Rs 300 crore project. The Nitesh Mall will come up on a 5.5 acre patch near hotel Leela Palace, off the Indiranagar 100-feet road that is considered one of Bangalore’s high-street retail hubs, with most big brands operating their flagship stores there. When contacted Nitesh Estates’ director, development, LS Vaidyanathan declined to comment on the deal. HDFC Property Ventures CEO KG Krishnamuthy could not be contacted immediately.The development comes at a time when private equity funds are believed to be staying away from real estate/retail investments on account of the weakening consumer sentiments and an economic slowdown. HDFC Property Ventures is Nitesh Estates’ third PE partner. Last year, the firm attracted investments from New-York based Och Ziff Capital and Citigroup Property Investors, with the latter co-developing the Ritz-Carlton hotel in Bangalore with Nitesh.Nitesh Estates had announced that it has identified property in southern cities of Chennai, Thiruvananthapuram and Kochi for similar retails initiatives. Construction of the mall in Bangalore is expected to be completed by 2009-end.The current retail rentals on Indiranagar’s 100ft Road are estimated at Rs 200/350 per square feet. The Nitesh Mall will easily be the biggest retail infrastructure in Bangalore where the other prominent malls are The Forum (3.5 lakh square feet), Garuda (1.5 lakh square feet) and UB City’(1 lakh square feet). It must be mentioned that HDFC Property Ventures has signaled its interest in organized retail in the past, and interestingly, unconfirmed media reports earlier have linked HDFC Property Ventures to global retail biggies like Carrefour.

Wednesday, August 06, 2008

Showing commitment, with brick and mortar

As foreign architecture firms set up more offices in India, they are also bringing back Indian architects who left the country many years back for better opportunities abroad. After designing for Indian real estate developers for the past few years, some marquee names in the world of architecture—such as Burt Hill, Bregman+Hamann Architects and Skidmore, Owings and Merrill Llp., or SOM—have now started expanding their front offices across India to be more accessible and do more work.The trend is accelerating in recent months as both commercial and residential construction slumps in countries such as the US, where a slowing economy is taking a heavy toll on new projects. This has left many firms, including some white-shoe ones, scrambling to find work for their roster of architects, with West Asia and Asia offering new hope.Fuelling demand has been the rush of construction in India, with big builders falling over each other to tout the design and architectural help they are getting from firms based outside the country. A perceived shortage of domestic talent has also helped foreign firms find projects within India in the past couple of years.

FDI in real estate may touch $25 bn in 10 yrs

Foreign direct investment in the country's real estate sector is likely to rise to $25 billion in the next 10 years from the current $4 billion, even as the industry faces a slowdown in the short term due to rising interest rates, an Assocham study said. “Despite real estate market confronting a temporary depression with real interest rates hovering between 12-16 per cent, FDI in real estate market would increase by about $21 billion to touch $25 billion in the next 10 years,'' said industry chamber Asso cham. At present, the domestic real estate market is estimated at $15 billion, of which FDI contributions are about $4 billion. “In future, higher interest rates would subside with India scaling a GDP growth of over 10 per cent for at least a decade, and crea te a huge space for overseas investors in its real estate sector,'' Assocham President Sajjan Jindal said. The sector would grow larger as the IT sector alone is expected to require about 200 million sq ft of space across the major and large townships, it added. It is also estimated that in India's residential sector, housing shortage is around 20 million u nits. About 100 million sq ft is likely to be added by end of 2008 from over 300 mall projects.

QVC Realty to deploy In4Suite

Bangalore-based, In4velocity Systems, India’s leading real estate and property development software firm, announced that QVC Realty, India’s first venture capital funded real estate development company, has selected its market leading ERMS application, In4Suite, for implementation across its various construction projects in India.The overall deal value is expected to be around $90,000 in the first phase of implementation. In4velocity’s unique enterprise resource management system (ERMS) application, In4Suite, is India’s largest selling and the only integrated end-to-end solution for real estate and property development firms.A property developer can automate all key business processes right from land acquisition to engineering, from purchase to sales and from rental to property management. He can further bring all his customers, suppliers, contractors and investors online in a collaborative environment. The application acts as a “business in software” approach for real estate developers and provides web based real time reporting to all key stake holders.

Ahmadabad is hot realty market for NRIs

Ahmadabad is all set to become hot spot of realty business. The NRIs (non-resident Indians) are showing huge interest in the city. This was indicated by the response given to Indian property road show held in the US and UK. Goa and Mumbai are behind Ahmadabad in terms of prospectus of realty business.Chairman and CEO, Axiom Estates, Rajeev Goenka said that Ahmadabad is becoming new hub of realty business. He said that NRI’s account for nearly 15-30% in realty sales. The current road show held in UK revealed that Ahmadabad is becoming major reality destination for the world. It has attracted about 300 realty projects in the international roadshow held in UK as compared to other 20 participant cities.Gujarat Institute of Housing and Estate Developers (GIHED)’s vice chief, Mr. Suresh Patel said that sub-prime crisis in US is a major cause of NRI’s investment in Indian cities. Ahmadabad provides good infrastructure such as road, transport and power to the investors as compared to other tier II/III cities. That’s why, it has become charming destination for realty business.

Real Estate Fund Launched in Oman

An India-centric real estate fund by Cordea Nichani, a joint venture between British property fund manager Cordea Savills and India’s Nichani Holdings, has been launched in Oman to tap into the Gulf nation’s market.“The fund has been launched to tap into the Oman market and also give investment opportunities to the large NRI (non-resident Indian) community here,” India’s Ambassador to Oman Anil Wadhwa, who launched the fund at the third meeting of the India-Oman Business Forum over the weekend, revealed from Muscat. There are around 500,000 expatriate Indians in Oman. “Besides, Omani businesses are also very keen to invest in India’s infrastructure sector,” he added. Called ‘Cordea-Nichani Indian Opportunities No 1′, the fund is primarily intended to be invested in an information technology-focussed special economic zone (SEZ) near Bangalore and a few prestigious real estate projects in south India. Cordea Nichani is looking to raise around $30-40 mn from Omani institutional investors as well as big corporate houses and government pension funds, according to a statement issued by the Indian embassy in Oman. The joint venture expects to secure returns in the range of 25 per cent on investments over a six-year timeframe.

Tuesday, August 05, 2008

Indian Real Estate: Where is it Heading?

Yet another hike in the lending rates by the Reserve Bank of India (RBI) has caused an unprecedented hike in the home loan rates also. Buying a home has just got costlier. Private banks HDFC and ICICI have hike the rates by 75 basis points (100 basis points=1%). This is the third consecutive hike in interest rates this year. On an average, home loans have got costlier by 2% this year as compared to 2007.
The properties in India have been hit by many factors. The global recession had hit the real estate segment hard. The property prices all over the country have stagnated. This is the first such instance in the last five year when property prices have stabalised. Otherwise, the prices for real estate in all segments were rising without any halt. The demand for property had taken off like never before. Besides, property seekers and investors were keenly investing in property segment. Anybody who had little funds to spare found it conducive and profitable to invest in property. At that time, other investment instruments like mutual funds, securities and shares were being neglected by investors.
Home loan rates were affordable and easy payment options like Equated Monthly Installments (EMI) had attracted many home buyers to consider borrowing from banks and financial institutions. The scenario has changed now. Borrowing funds from banks has become a costly preposition. The costs for constructions material is rising. As a result, private property developers have hinted at hiking the prices of property projects. These market conditions are dissuading investors from investing in the property segment. Home seekers too are waiting for the market conditions to improve. As a result, the number of property transactions has dwindled. Property brokers, builders and home seekers are hoping for better times to come.

Downturn in Realty - A Boom Time for Investors

The Indian real estate sector might be going through a major downturn but to some extent it is also making things attractive for foreign investors. The slowdown, in fact, has set in more realistic valuations and growth-oriented investment opportunities for biggies to close in profitable deals. The recession in the US and the fact that China is tightening its FDI policy has aided a remarkable shift in investment. Experts feel that cities like Mumbai, Bangalore and the NCR region are hot investment destinations because of their strategic importance. Considering this, Mr. Donald Trump Junior is all set to launch a $1bn fund to buy property in India and Lehman Brothers Real Estate Partners has recently acquired a 50% stake in Unitech's Mumbai project. Also, TAIB Bank, a leading private bank based in Bahrain has recently picked up a 26% stake into a project of Anant Raj Industries.

Kozhikode Ready to Buck the Realty Downtrend

Rising interest rates and slowing growth may have dampened spirits across the country but Kozhikode (formerly Calicut) realty market is gearing up for another round of boom. The Kozhikode property show, to be held early next month, would see the launch of around 15-20 projects in and around the city. Builders in Kozhikode have placed their hope on the growing importance of the city as an IT destination. In fact, many companies have started looking at Kozhikode seriously while deciding on their future investment plans. A Hungarian company has already announced its plans to open a centre in Kozhikode employing almost 1,000 IT professionals initially. To showcase Kozhikode to the IT investors, an organisation called Calicut IT Initiative is holding a IT Fair in the city. The fair would try to communicate the advantages of investing in Kozhikode to the investors. The city is also witnessing a boom in the IT infrastructure sector. Expansion of Kozhikode airport, the growth of tourism and the potential of the city to emerge as a new IT destination are the aspects on which the builders are pinning hopes on. Taking into account the all-round development of the city, the builders have launched new projects. The growth in general business in the city has also led to a boom in commercial space construction. Hilite Builders are launching a residential project which will have 5 lakh square feet of commercial space. Rates for commercial space are now ruling between Rs 5000 per sq ft and Rs 6000 per sq ft, while for the premium category it would be over Rs 10,000 per sq feet. There are about 40 builders in Kozhikode and its suburbs. They ensure that supply is kept in line with the demand. As a result, there has been a consistency in the rates for built-up space in both residential and commercial categories.

23 People have been duped of Rs 40 Lakh for Mhada Flats

Powai Police in Mumbai have arrested two persons for duping 23 people of Rs 40 lakh. Ms Priyanka alias Priya Sanjay Patil, 41 and Mr. Kanucharan Raghunath Mishra, 58, were arrested last week from their residences in Mhada colony in Powai. According to the police, the duo cheated innocent people by promising them that they could get flats in Mhada buildings on payment of a certain amount. To prevent this in future, the police have cautioned home-seekers in the city not to deal with brokers or agents while hoping to get flats in buildings developed by Maharashtra Housing and Area Development Authority (Mhada).

Monday, August 04, 2008

India's first solar housing complex

Destined to be a dazzling milestone in India's housing complexes, the country's first solar housing project was inaugurated in Kolkata on July 8. Called 'Rabi Rashmi Abasan,' the complex is the brainchild of West Bengal Renewable Energy Development Agency and designed, engineered and managed by Bengal DCL, a joint venture of West Bengal Housing Board & Development Consultants Ltd. It stands on a plot of 1.76 acres in New Town, Kolkata. The construction was undertaken by Mackintosh Burn.
WBREDA Director, Gon Chaudhury, who has spent years of research and experimentation working on this green mission, explains his pet project: "The idea was conceived when I visited Europe and studied eco-friendly buildings. The Kolkata housing complex's every owner will not only have his land, but also generate his own power for domestic use as well as for feeding the grid." The name 'Rabi Rashmi' means sun rays, and the project comprises 25 plush bungalows priced at Rs 43 lakh to Rs 45 lakh each for a built-up space of 1,600 sq. ft. The land area for each house is 2,150 sq. ft. Chowdhury added, "We are extremely pleased to explore the benefits of solar architecture with Conergy in the landmark 'Rabi Rashmi' housing complex, which will inspire other green initiatives and projects in India." The solar PV (photo voltaic) technology has a widespread application and is used to convert solar rays into electricity in these houses. The application of building integrated photovoltaic technology is used effectively in the project. The adoption of solar passive architecture features makes a house cool during summer. With passive concepts, the house will get cool breeze from south though water bodies. It also ensures natural light and better air circulation inside the house. In 'Rabi Rashmi Abasan,' each house will generate 2 kW power from solar tiles on the roof for its own consumption and feed the surplus into the grid. The owner will also get power from the grid as and when necessary. The utility will pay the house owner and vice-versa on net monthly metering. The benefits of energy banking will also be available to the owners. Each house will have solar water heaters, solar signage and area lighting by solar streetlights.

Unitech Plans To Raise $ 1 Billion from PE Funds

The country's second-largest property developer, Unitech, is planning to raise $1 billion (Rs 4, 200 crore) from private equity (PE) players for its hotel, commercial and retail projects across the country. It will raise funds by floating special purpose vehicles (SPVs) in different projects. The company will spend $ 300 million on hotel projects and $ 700 million on commercial and retail projects. These projects will be implemented in cities such as the National Capital Region and Mumbai among others.