After the slowdown in demand for residences, developers and international property consultants have realised that 'integrated townships' are the next trend across the country. Many realty majors are focusing on the development of integrated townships. Even as DLF Ltd is planning to develop 4,840-unit ‘Dankuni’ township in Kolkata, the Housing Infrastructure Development Corporation (HIDCO) is developing 9,334-unit 'Rajarhat' township in the periphery of Kolkata. Emaar Group is planning to develop 520-unit 'Boulder Hills' township in Hyderabad. Parsvanath also is planning to develop 2,500-unit township in Chennai. This is according to a recent market overview done by Jones Lang LaSalle Meghraj.

Single-family housing starts fell more than anticipated in September, falling to the lowest level in a quarter century and indicating the real-estate slump intensified even before the recent credit meltdown. Construction began on 817, 000 houses last month, down 6.3 percent from Augusts’ 872, 000 level that was lower than previously estimated, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.3 percent to 786, 000 pace, the lowest level since November 1981. Starts were projected to fall to an 872, 000 annual pace from a previously estimated 895, 000 million in August, according to the median forecast of 74 economists polled by Bloomberg News. Estimates ranged from 840, 000 to 935, 000. Compared to September 2007, work began on 31 percent fewer homes. Construction of single-family homes dropped 12 percent to a 544, 000 rate, the fewest since February 1982. Starts of single-family houses dropped to record lows in three of four regions in September, led by a 24 percent slump in the Midwest.

The new mantra for city malls is to entice customers into staying at the mallsonly. For instance, the Select City Walk Mall in Saket, recently unveiled 83 plush suites spread across five levels, complete with living room, kitchenette and designer bedrooms, called Svelte Suites. These suites are classified as Executive, Royal, Grand, Deluxe and Presidential suites. Their rates range from Rs 12, 000 to Rs 30, 000 per night, with room sizes ranging from 450 sq ft to 1,100 sq ft. The Ambience Group will soon have a luxury 319-room hotel and 90 service apartments by the Leela Group in the Ambience Mall in Gurgaon. The hotel will cater to the tourist inflow expected during the 2010 Commonwealth Games. Sun City Developers, builders of the Cross River Mall, are also planning a mega project of 40 lakh sq ft in Greater Noida, which will house retail space, offices, a five-star hotel and an entertainment island. As real estate developers fight to offer better amenities, the customer is spoilt for choice.

Considering the current global economic slowdown and its impact on the Indian economy, realtors are coming up with novel marketing strategies to woo reluctant flat buyers. Realty players such as Mantri Synergy, Jains Sunderbans, ETA Rosedale and Hirco Palace Gardens have come out with new schemes to attract buyers. To lift up the 'sagging morale' of prospective buyers, property developers have now come forward to pay pre-EMI (equated monthly installment) interest on part-money disbursed on the housing loan taken by a flat buyer. In the changed economic context, the prospective flat buyers have turned cautious and are deferring their buying decisions, anticipating a drop in real estate prices. This has put the developers in a fix. In order to retain the buyer, especially during this period, the developers are now opting to dish out freebees such as payment of pre-EMI.

All those who are looking at buying property are now faced with a different kind of situation with regard to payments. Earlier, a buyer had to pay the builder a specific percentage of the total price as various stages of construction were completed. Many builders are now abandoning this mode of payment in favour of time-based payments. One should be aware of the working of this system, because it impacts their finances. In this form of payment, one pays the builder specific sums at certain pre-decided intervals. But it presents higher risk for buyers because they will need to make the necessary payment as per the schedule, but have little control over the construction of property. Due to this, there is a fair chance of delay creeping into the process. This is especially true if the builder gets into some kind of financial trouble and has to slow down construction activity. In such a situation, there is little that buyers can actually do because they have made the payment and can only wait for the delivery of the completed premises. So, this kind of payment should be efficiently monitored because of the higher risk element involved. If there are reputed parties at the other end of the transaction, there is some relief for buyers because they will not disappear with the money. However in other cases, buyers have to take necessary care and precaution before entering into such agreement. This would ensure that they are not chasing builders after sometime when the construction is not yet complete and they are yet to see the benefit of their investment.

Merrill Lynch has invested $2.65bn in the Asian Real Estate market. This is the third Asian property fund of over $2.5bn that has been raised this year, despite the continuing disturbance in the global banking market. It follows a $3bn fund raised by LaSalle Investment Management earlier this month and a $3.9bn fund raised by MGPA in June. Merrill Lynch is likely to invest across all property sectors, as well as in property companies and developers, many of which have found financing increasingly difficult to source. Having completed a first $140m equity raising for the fund in May, it is aiming to increase this to between $200m-$250m by the end of the year.

Sales at Parsvnath Developers' in the festival season of Diwali are down to half from a year ago, but the company does not plan price cuts to boost sales, its chairman said. High interest rates on home loans and central bank rules forcing banks to assign a higher risk weight to real estate loans have dented property demand in India. Analysts say property prices are still high and need some correction before demand picks up. But Parsvnath has no such plans, Mr. Jain said, citing rising input costs. The company would instead focus on reducing costs by reducing salaries and firing 'non-performing staff,' and would speed up projects to improve cash flows, he added.

The global meltdown seems to have hit the Indian realty business severely, especially in Bangalore. Uncertainty in the Indian equity market and speculation over property prices have put the developers in a depressing situation. More than 450 flats in Bangalore’s outskirts are still vacant despite advertisements and other promotion campaigns. Bangalore-based small developers are the worst hit, as their properties have not been sold in the past six months. The situation is pretty much same with many top line builders of the city, though many don’t want to express it in order to maintain their brand equity. The only hope for developers is the possible fall in interest rates on home loans, which has been assured by the Prime Minister and Finance Minister recently after the repo rate cut by the Reserve Bank of India (RBI). United Bank of India and Punjab National Bank have already decided to bring down the interest rates. However, other leading banks are yet to provide the good news to this effect.

Real estate developers have hardly hiked their rates in the last six to eight months and some of them have not hiked them at all. Property analysts say this scenario is different from that witnessed between April and October 2007, when developers hiked rates by as much as 24% to 32%. According to a pan-India survey of local brokers in the residential property market, carried out by global research analysts Edelweiss, around 80% of brokers across India have witnessed a reduction in enquiries over the past month, and about 90% have seen a drop in transactions over the past month. A hundred brokers in 20 micro-markets like Bandra-Borivili, Mulund-Thane, Gurgaon, Noida, Whitefield-Marathalli and Annanagar, in Mumbai, Delhi, Bangalore and Chennai, were polled. Godrej Properties hiked rates for its Riverside project at Kalyan by 24% in 2007, but this year, it has increased them by a mere 7%, from Rs 2,000 per sq ft to Rs 3,000 per sq ft. Rates at Rustomjee's Elanza project in Malad (W) has remained constant, at Rs 9,000 per sq ft, after its hike of 20% at Rs 7,500 per sq ft last year. Similarly, property rates at RNA Builders' Royale Park and HDIL's Dreams project in Bhandup remained at Rs 6,500 per sq ft and Rs 5,750 per sq ft, after jumping 18% and 5% respectively from 2007.

After shoring up the banking system with Rs 1, 45,000 crore funds, the Reserve Bank of India has paved the way for cheaper home, consumer, corporate and personal loan rates by reducing its key-short term lending rate (repo) by 100 basis points. The cut in repo would allow banks to immediately borrow short-term funds from the apex bank at a cheaper eight percent as against nine percent till now. Mr. Ashish Parthasarathy, Deputy Treasurer, HDFC Bank said, "It is a welcome step and clearly shows that the interest rate regime is now on a decent curve." Earlier, the RBI cut the mandatory cash deposits that banks must keep with it (CRR) by 250 points after five years, along with other measures.

Information technology space has resulted in reduced demand for office space in India in the second quarter of the current financial year. As per the report, many companies, especially in the IT/ITes sectors, have curtailed their expansion plans, which has hit office space sales in the last three-months. Another reason was the unavailability of funds for the sector, it says. The report also said that the current global conditions are likely to impact Mumbai the most as it is the financial capital of India, and the rentals and capital values across most micro-markets in the city will see a further correction. "The global economic slowdown has started to show early signs of impact on the office rental market. Going forward, this is expected to keep office rentals under check," said Mr. Anshuman Magazine, Managing Director, CB Richard Ellis, South Asia.

Following the footsteps of financial institutions and aviation companies, the real estate sector also plans to approach the government for a relief package. Realty industry bodies such as the National Real Estate Development Council (Naredco) and Confederation of Real Estate Developers Association of India (Credai) are all set to approach Prime Minister, Mr. Manmohan Singh with their wish-list next week. Mr. Rohtas Goel, Vice-President of Naredco, and Chairman and Managing Director of Delhi-based Omaxe Ltd, said, "Our main demand is that affordable housing should be withdrawn from section 80 IB (10) and moved to section 80 IA. The government has to make houses less than 1,500 sq ft in area tax-free. Even the stamp duty should be waived for affordable housing projects," Mr. Goel said. "Our second demand is that banks restructure the debt they give to builders and lower the rate of interest," he added. Credai, a real estate body that has 10 member associations from various states, has already dashed off a letter to the PM seeking a meeting. Mr. Lalit Kumar Jain, VP, Credai, said, "We want the government to instruct banks to take proactive measures to create liquidity in the market. We also want the government to do away with taxes it has imposed on developers for building residential properties." Mr. Jain said a developer pays 35% tax for the development of any residential project. Realtors want these taxes cut to zero.

Want to buy a new home this Diwali? Then don't go for a house that is unfinished, warn experts in the realty sector. The global financial crisis has left builders with little money and they are struggling to finish off even the half-finished projects, let alone going for new ones, according to industry analysts. Experts warn that the financial strain on realtors is causing indefinite delays in the completion of many projects. 'Those who intend to buy property should go for only completed flats. It'll be too risky to buy properties under construction," said an analyst with a foreign brokerage. He cited the example of a Mumbai-based realtor whose high-end residential project in Lower Parel, one of the city's commercial hubs, was to be completed in 2006 but has now been delayed till 2009. Uncertainty looms large over whether even this deadline will be met, he said. This isn't an isolated case. Analysts say delays of three to four years are likely in under-construction projects.

Nothing seems to be going right for Delhi's realty market this festival season. Even discounts and freebies have failed to tide over sluggish sales. The global financial crisis has resulted in a severe credit squeeze, leaving aspiring home buyers with unaffordable rates on mortgages and expectations that property prices might fall significantly in the coming months. "Builders are offering big discounts but buyers are not relenting," said Mr. Suresh Dalal, a real estate agent. Free or subsidized clubhouse memberships, cars or other lifestyle accessories like air-conditioners, enhanced security features, reduction for waiver on premium of floor-rise, free car parking slots and complimentary school buses, are some of the other things being offered by builders. Still, buyers are determined to wait, most anticipating that prices will drop further.

Shares of real estate firms were the worst hit on Friday after concerns of a liquidity crunch in the business drove the sectoral index, the Bombay Stock Exchange’s (BSE) realty index, down nearly one-fourth.
Shares of Unitech Ltd, India’s second largest developer by market value, fell by a record 51.29% to close at Rs30.10 each after intra-day trading took it down to an all-time low of Rs26.60.
Bangalore-based real estate developer Puravankara Projects Ltd, which saw its shares closing 44.32% lower, also touched a record low of Rs42.20 in day trade.
“People are concerned about cash provisions and where will real estate companies get money from,” said Sandeep Mathew, an analyst at BNP Paribas Securities in Mumbai.
An analyst with a domestic brokerage firm, who did not want his or his employer’s name to be used, said, “...people are exiting at any price because there are no buyers for realty stocks”.
There is an aversion towards real estate stocks among “investors (who) are now shifting from net asset value-based valuation to cash flows of the company”, he added.
Shares of DLF Ltd, the largest developer in the country, shed 23.96% to close at Rs203.90. Parsvnath Developers Ltd fell by 20.70% to close at Rs45.20.
BSE’s benchmark index, the Sensex, shrank 10.96% while BSE’s realty index, which consists of 14 real estate stocks, fell by 562.31 points or, 24.4%.
“Real estate stocks have been correcting mainly because developers have not reduced home prices despite a slowdown in sales,” said another analyst with a domestic brokerage firm. “In Unitech’s case, the stock has corrected because the company is heavily leveraged.”

The lucrative long-term return on land plots may tempt you to buy, even at a time when the real estate sector is reeling under the impact of a slowdown. In such a market scenario, can investing in land still assure you of good returns in the future? What is the best way to invest in this precious asset and what are the crucial determinants to assess your prospective buy?

There are various ways to invest in land. Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) shares some key factors that are necessary to consider. “Identifying a piece of land that is in close or reasonable proximity to future market drivers is important.

Next, one should inquire into the legal status of the land and establish if it is for sale. Finally, locate the owners and make a purchase proposal. For maximum future returns, its is important to make one’s investment while entry costs are low,” says Anuj Puri, chairman and country head of JLLM.

One must especially keep in mind certain aspects to avoid any legal hassles later. For instance, land may be under litigation or may be earmarked for a government project. It could be categorised as forest land or could even be in a Coastal Regulation Zone.

It may also lack basic facilities such as water and power supply or fall in a politically or socially challenged sector. Any or a combination of these factors can subtract or nullify the investment potential of land. Hence all negative possibilities should be covered before purchase.

Another aspect which cannot be neglected is the paperwork needed. A number of documents are necessary in land purchase and need to be checked. The title deed (a legal document proving a person’s right to property), the encumbrance certificate (which proves that the land is not under some sort of legal dispute), the release certificate (in case the land was previously pledged to someone else), the surveyor’s report (to establish its exact dimensions) and — if the owner is an NRI — the power of attorney that gives his representative the legal right to act on the NRI’s behalf, are all significant documents that should be given careful consideration.

But is it profitable to invest in land in the current market situation? Some advise caution. “The current economic recession is leading to unprofitable business for everyone, whether it be a company or an investor. The downturn is obviously not the right time to invest in property as it is not going to reap any positive or profitable results. To make a profitable deal, the investor should wait for at least 2-4 years,” advises Vijay Jindal, CMD of SVP Builders India.

Property developer, Akshaya Homes announced its plans to foray into the fully automated housing sector with the construction of four flats, each of 3000 sq ft in Adyar in the heart of Chennai. These flats would cost Rs 4.5 crore each, said Mr. Chitty Babu, Chairman and Managing Director of Akshaya Homes. The flat would be equipped with a home sever box rpt box, which would make it digital, he added. Wifi connectivity, digital answering machines, small card based access to the home, main gate security and visitor tracking system, stand alone video surveillance, and tracking of events are some of the features. These features are being used for the first time in residential flats in Tamil Nadu, he said.

Real estate developer, JMD Group, is planning to develop two township projects in Punjab and Haryana with an estimated investment of Rs 750 crore. The Group, which had floated a company JTPL Townships Private Limited for its real estate business, would develop luxurious housing projects in Mohali (Punjab) and Karnal (Haryana) over the next four years. "We will be investing Rs 450 crore on the Mohali project and Rs 300 crore in the Karnal project. Both these projects would be packed with international class amenities which will be within the reach of the common man," JTPL Townships, Director, Mr. Siddhant Gupta said. The first township project 'JTPL City Mohali' would be spread over 85 acres. Another township project in Karnal spread over 77 acres would be developed and the work on its development would start within next 4 months, he added.

Real estate firm, Aryavrat Housing Construction said that the company is planning to invest Rs 1, 000 crore in developing a 58-acres luxury housing complex in Bhopal. "In view of the growing need of fast developing Bhopal, we want to offer luxury and comfort with services that caters to all the day-to-day needs of an Indian family," Aryavrat Housing Construction (AHCPL) Director, Mr. Jagdish Arora said. The complex, British Park, would be developed for about Rs 1, 000 crore, which would comprise premium residential units, luxury bungalows, villas and mansions.

India's fund starved real estate industry, which is already reeling under dropping sales, high interest rates and drying up of private equity sources, has to grapple now with credit squeeze created by this quarter. According to Mr. Anuj Puri, Chairman and Managing Director, Jones Lang LaSalle Meghraj, the RBI restriction on Indian banks from financing real estate companies is playing a role. As per industry sources, several realty majors have decided to go slow on their projects, especially in large cities, because of shortage of working capital, as banks have not only withdrawn overdraft facility but also decided not to process any more corporate loans.

While banks do not see any immediate decrease in lending rates after the 150 basis-point cut in Cash Reserve Ratio by the Reserve Bank of India, realtors anticipate the move to reduce home loan rates for their consumers. Demand for real estate property has decreased by nearly 25-30 percent in the country over the last 18 months, when home loan rates increased from an average of 7 percent to as high as 12-13 percent. "The home loan rate in India is among the highest in the world and we expect it to be reduced by at least 100 basis points after the cut in CRR," said Mr. Pradip Kumar Chopra, Chairman, PS Group. Mr Abhijit Das, Regional Executive Director, Jones Lang LaSalle Meghraj Meghraj said, "The recent move by RBI is expected to enhance liquidity to the primary and secondary real estate funding, while arresting further de-growth in real estate investments in the country."

Larsen & Tourbo (L&T), the country's largest engineering and construction conglomerate, is planning to establish a real estate mutual fund (REMF) to expand its portfolio of financial services to the construction industry, a top official said. The company might take a decision only after the financial markets stabilize. "We are considering expanding our financial support to the real estate sector. REMFs are an opportunity that we will pursue at an appropriate time," president (Operations), Mr. J P Nayak said. L&T also has a real-estate division implementing two large residential projects - one of those is in Bangalore.

Thanks to lower travel spends by enterprises, the serviced apartment players in major cities in India have seen a drop in occupancy rates. Even as global recession looms, companies are exploring cheaper alternatives such as owning apartments and resorting to video conferencing. Except for Delhi, all other major cities have seen a slide in demand for serviced apartments. Tariffs in these cities are expected to fall by 15%-20% in 4-5 years. The market in Delhi and Gurgaon has, however, managed to stay buoyant. Demand has perked up by 60-70% in the last one year and the upcoming Commonwealth Games (in 2010) are expected to drive up revenues in the medium term.

The slowdown in the real estate sector has forced developers in Mumbai to move cautiously. Several developers have cut down on work on their under-construction projects. Besides that, some developers have even postponed launch of new projects. To overcome such a situation, builders are just hoping and waiting for the real estate market to revive, said an insider. Currently, those developers that have large chunks of land for many years, and who have little exposure to banks, are in a comfortable position. The rest are finding the going tough while some who had purchased land at unrealistically high rates, are finding the noose tightening.

The outlook for India's property market is turning gloomier and aspiring home buyers are hoping that they would get a good bargain if they wait. As a result, residential rentals are rising again. Renting a home is already costing 15 to 20 percent more than it did a year ago, according to Mr. Pankaj Renjhen, Managing Director at consulting firm, Jones Lang LaSalle Meghraj. "Buyers feel that property rates will come down and purchasing a flat will be a more feasible option in the coming months." The US financial crisis, which saw some Wall Street icons collapse, has already begun to affect India's real estate market, which was betting big on foreign money to sustain its high ride. As per housing experts, foreign institutional investors pumped about $4 billion (Rs 19, 200 crore) into India's real estate market in the past three years. The inflows have considerably slowed in recent months and some fear these might completely dry up, given the squeeze in the global credit market. The absence of liquidity has made it difficult to hold the price for long. With the supply falling short of demand, rentals will continue to rise until property prices fall to what buyers would see as affordable.

Real Estate industry is talking on correction period all over India. Brokers, especially, are absolutely convinced that the market is set to fall. In many areas the property rates have already started falling. Accordingly, Goregaon, Malad, Mira Road, Vasai and Virar on western suburbs and Mulund, Bhandup, Kurla, Chembur and Govandi on central side have started stagnating the level of property prices.

Pune, Nashik, Noida, Jaipur, Bangalore, Chennai and Hyderabad are also feeling the cold wave in the property market. Reason for the same is related with hike in housing finance interest rates and unaffordable property rates.

Investors are, now, not buying and have stopped going in for more investments. Commercial stock is in the market for anything above the cost of investment. Practically, when no one buys, rates are stagnated at some particular point. That is what is happening today. The sale price has stopped further climbing up since there are no takers. Malls are worst hit. The recession started with them, while the exhibiting rates were much less then the actual investments made. Cash and Cheque portion of mall space deals are known to everyone in the trade. The market for commercial properties has already been started to correct its baseless pricing.

It may be a recess. For the time being, investors want market to show its actual colour. And after they sell off certain non moving stock, buying spree may start again afresh. It is also linked with the liquidity crunch in the economy and falling stock exchanges in the country. A lobby of investors does not want share market money to go easily from the real estate market. People who have invested in real estate from earning of share market wants an exit to pay off the liabilities created by them in the share market. Player in real estate market wants the rates to stop climbing up for some time so that they can capitalize on such panic sale. Big game plan is on the hands of few groups of individuals and few finance companies that have entered recently in the trade.

Builders, today, have already started to reduce its price everywhere in the country. Ready stock is still not available as the builders have already sold 30 to 50 % of his stock during under construction to investors. As the Investors want handsome returns on the finished stock while they do not sale in the open market but through the builder only. That stock again sold by the builders to the actual buyers by mounting another profit margin. Hence when the actual user buys the property, he has to pay investor´s hidden margins which change hands five times during the time of construction.

It is nothing but a recess for the players. The rates may go up by the second quarter of the next year 2009. Builders have holding capacity since the project is financed by venture fund people and Mutual funds are searching for the projects. The sale price will be certainly include the interest rates or Return on investment money (22% to 25% of total project). Land and FSI cost is higher and purchasing is already finished for the second rally of property market boom.

As in current market, liquidity has reduced and the funding by the PE firms or Mutual funds has mostly stopped and hence, the construction & launching of the project has just held up or been delayed by one to two quarters some time a year as well.

So in view of current market scenario, we can easily understand that the Real Estate market has effected very much with the recession of Economy.

Indians have been splurging huge money on securing their houses and new-found wealth, pushing demand for security gadgets by over 50% to Rs1,200 crore.

Burglar alarm systems, video surveillance and doorphones, access control, wall mount air sensors, motion detectors, two- way key fobs, Wi-Fi camera, wireless external siren and wristband transmitters are some of the ultra-smart devices that are in demand with increasingly affluent Indians.

“While the total security market is growing at the rate of 25-26%, the real estate and residential security market is almost double at almost 52% annually,” Honeywell director, security, South Asia, Deepak Thakur said.

The real estate security market is worth Rs1,200 crore and the security gadgets industry is expecting to piggy back on this growth, Thakur said.

Manufacturers unveiled nearly 25 new products at a security fair - IFSEC India-2008 - that underlines the demand for home security and automation devices. “Also, 30% of the stalls at the fair were visited by real estate developers and individual end users who wanted security and home automation devices,” IFSEC India-2008 project coordinator Anindiya Sarangi said.

The crisis in the international economic scene is bound to have its repercussions in the State economy as well. The NRIs, the export and import-based companies and the real estate sector may suffer if the global economic meltdown continues. The NRIs will have to share the burden of measures being implemented by their host countries to ward off the crisis. The result will be a slowdown in the remittances from abroad which is likely to affect a spectrum of activities in the State. The boom in the real estate sector was driven by the money supply in the market.

The soaring prices in the real estate and the rise in construction activity had been supported by the steady arrival of foreign remittances. The real estate sector grew to new heights as cities like Kochi started implementing infrastructure projects like the Vallarpadom transhipment terminal and LNG terminal. It was the NRI segment that sustained this growth. A meltdown in the real estate sector would mean that the sale of the building materials would decline, resulting in a fall in the tax revenues to the government.

The large number of migrant labourers currently employed by the construction sector would become redundant and they would be forced to return to their native States, according to real estate managers. The global crisis might affect the lives of Keralites too, said State Planning Board Vice-Chairman Prabhat Patnaik at a recent meeting in Kochi. The recession could affect the farmers of Wayanad if they do not get remunerative prices. The slowdown in the U.S. economy had hit several financial and IT companies with business links in the State.

CMRL has invited real estate firms with a minimum experience of five years in rendering real estate valuation in India, and Rs 50 crore as turnover. For the Rs 10,000-crore first phase of the project, CMRL is planning to acquire around 10 hectares of private land mainly for construction of stations and depots. The railway line would pass through government lands in most of the places.

“Though the government has mandatory powers to acquire private land, we want to take the land with the consent of the landowner. For this, we want guidence from experts to arrive at a reasonable compensation. We would invoke provisions of compulsory land acquisition only if the negotitations are unsuccessful,” a senior official told The Times of India.

An ongoing study by Delhi Metro authorities to assess the extent of land needed for each station and depot has identified 36 stations, but the exact locations are yet to be marked. “The assessment is expected to be over in three months and we are trying to minimise the extent of land acquisition,” the official said.

Senior officials said that the project is on schedule and there is “not even a week’s delay.” Tamil Nadu government will formally sign the loan agreement in two months with the Japanese Bank for International Cooperation, which has already expressed its willingness to fund 60% of the total cost. Responding to the demands from various quarters to extend the Metro line to Thiruvotriyur in north Chennai, the official said such pleas are being considered.

The Industry Interaction Cell of Indian Institute of Management, Kozhikode organized Horizons 2008 - its annual management conclave Horizon’s 2008 on October 10-12, 2008. The conclave revolved around the theme – ‘Looking East – Redefining Global Dynamics’. The primary focus of this three day event was on the Real Estate, Retail and Media & Entertainment Sectors.

“The event saw a record number of twenty five speakers across three industries come together – the highest to congregate for any event across all B-schools”, shared IIM K.Mr. K Thiagarajan, CEO, Maytas Properties was the Chief Guest at the conclave, delivered the inaugural address on emerging real estate opportunities. Starting with a brief history of the realty sector in India, Mr. Thiagarajan spoke about the current scenario and emerging trends and formats of realty products. He lamented about the talent dearth in the industry and opportunities in terms of career in the realty sector.

Ms. Sathya Saran Editor, DNA-ME, former editor of Femina 1993-2005, a women’s journalist since 1979, shared her experiences on the various phases of change of the Indian women and the role of media in the same. Citing numerous examples from her long career, she related the success and failure of many international luxury brands in India with their media partnerships. Ms. Sathya also emphasized on important factors as distribution channel, customer service and understanding the buying patterns of Indian consumers which, according to her, many reputed international brands failed to understand making them unsuccessful.

Property developers are looking towards real estate funds as funds from banks and capital markets have become difficult to access. This year, only 42 companies have raised Rs 19,396 crore through initial public offerings - and more than half the amount was garnered by Reliance Power Ltd alone. As a result, realty funds are virtually the only source of raising large amounts of money for real estate companies. Consequently these funds are calling the shots and getting a better deal for themselves. "While the risk is entirely borne by the developer, the first returns come to the fund," said Mr. Ramesh T. Jogani, Managing Director and Chief Executive Officer of Indiareit Fund Advisors Pvt. Ltd, the real estate fund division of the Piramal Group that has $450 million (Rs 2,191.5 crore) under management across three funds. He added that the new deals also ensure the developer does not use the capital to 'cash out', or pay for the land that he has previously bought. Rather it's used to fund the development of the project. Besides Indiareit, other large domestic entities include HDFC Property Fund, ICICI Venture Funds Management Co. Ltd's realty fund and Kotak Realty Fund.

Film actor, Mr. Shah Rukh Khan has announced the launch of his real estate development, Shah Rukh Khan Boulevard, which is to be located in the emirate of Ras Al Khaimah in the United Arab Emirates (UAE). The 8-billion Dirham ($2.2-billion) development will come up on Dana Island off the Ras Al Khaimah coast and will comprise studio and one and two-bedroom apartments. "I have a strange fetish for home. It's close to my heart," Mr. Shah Rukh Khan said. The project will be designed by a well-known architect, Mr. Toni Ashai and it will also comprise an underwater discotheque, a public square on the beach and a theatre. The development will cover three million square feet. The film star has associated himself with the project through TSA International Investments, a leading real estate financial consultancy in the UAE.

As per a recent survey, there has been a slowdown in realty demand by 6% to 7% in Bangalore. Bangalore South is a preferred area for investment followed by Bangalore North and East. Together, these three account for 77 per cent of the demand from Bangalore. When taken as a percentage of total demand, there has been absolutely no variance in the demand within sub-cities, indicating that the property hotspots and the demand equation within different sub-cities had stabilized in the last few months. Another finding on the demand for properties on rent indicates the demand for rental properties is maximum in Bangalore South (33 per cent of total), followed by Bangalore East (29 per cent) and Bangalore North (17 per cent). The demand for residential properties on rent in Bangalore South is thrice the demand in Bangalore Central and twice the demand in Bangalore North. There has been a drop in the demand for rent in most of Bangalore sub-cities during the review period, ranging between 1-10 per cent.

The Mumbai Metropolitan Regional Development Authority () is planning to seek international help for its rental housing project, a 'slum prevention programme' under which the authority intends to create five lakh houses for the urban poor in the Mumbai Metropolitan Region (MMR). The Rs 20, 000 crore project is to be completed with the next five years. Chief Minister, Mr. Vilasrao Deshmukh met officials of UK during his visit to Europe. There was a series of discussion among them. The federation has experience of constructing about 20 lakh tenements, which includes affordable houses as well as rental houses across the UK. As per a report given by the MMRDA, population growth in Mumbai is two lakh on an average per annum while growth in slums is around 1.20 lakh per year. Fifty percent of this growth is by migration and the balance is natural growth. The project will be implemented in MMR except municipal corporation area of Mumbai as the corporation has expressed its inability to provide land for these houses.

Investment by NRIs in India can be broadly classified as investment on repatriation basis and on non repatriation basis. Repatriation basis means the income/dividend/ interest earned from the investment and the sale/maturity proceeds of investment can be repatriated outside India at any time or can be credited to NRE account of the investor subject to deduction/payment of Income Tax.

Non repatriation basis denotes that the amount invested and its capital appreciation will not be allowed to be repatriated. However, the interest/dividend/income earned may be permitted to be repatriated/credited to NRE account of the investor, subject to terms prescribed by RBI.

Investment on repatriation as well as non repatriation basis is permitted in the following categories.

Government dated securities (other than bearer securities) /treasury bills.

units of domestic mutual funds.

bonds issued by a public sector undertaking (PSU) in India.

shares in Public Sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.

shares and convertible debentures of Indian companies under FDI scheme (including automatic route & FIPB).

shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.

(1) Other Investments on non-repatriation basis:

units of Money Market Mutual Funds in India.

Deposits with Indian companies (including non-banking finance companies registered with RBI), or a body corporate created under an Act of Parliament or State Legislature or a proprietorship concern or a firm in India.

These deposits shall be only by debit to NRO Accounts and shall not represent inward remittances or transfer from NRE/FCNR(B) Accounts into the NRO account.

the capital of a firm or proprietary concern in India, not engaged in any agricultural / plantation activity or real estate business.

Exchange Trade Derivative Contracts approved by SEBI

(2) Immovable Property

NRIs and PIO can acquire immovable property in India other than agricultural/plantation property or a farmhouse.

NRIs and PIOs can repatriate sale proceeds of immovable property acquired in India –

(Immovable property acquired out repatriable foreign funds) to the extent of repatriable funds paid for acquiring the property, without any lock-in period. In case of residential property, the repatriation is restricted to two residential properties. (Immovable property acquired out of rupee funds) to the extent of USD 1 million per calendar year out of balances held in their NRO account, with a lock-in period of 10 years.

NRIs/ PIOs can also repatriate-

1. refund of application/earnest money/purchase consideration made by house-building agencies/seller on account of non-allotment of flats/plots/cancellation of booking/deals for purchase of residential/commercial properties, together with interest, net of taxes, provided original payment is made out of NRE/FCNR(B) account/inward remittances.

In all the cases of direct investment the concerned investor company has to take the necessary permission from Reserve Bank of India wherever required and in view of this the investor need not seek RBI approval.

As per a recent survey, the Middle-East real estate market could outperform all other regions over the next two years. The study, conducted in conjunction with the ongoing Cityscape Dubai property event, pooled the views of more than 350 developers and property investment businesses. Jones Lang LaSalle’s ‘Investor Sentiment Survey’ is the first of its kind for the region and was hailed as a 'critical benchmark' by analysts. Key findings from the report showed more than 50 per cent of respondents thought the real estate market in the Middle East will see the strongest performance of any global region in the next 12 to 24 months. The Asia Pacific area, including India and China, also got strong backing with more than 20 per cent of professionals saying it will be the best performing region. Investors were less enthusiastic when it came to Western European property investment potential, with only three per cent of those polled expecting this to be the strongest performing region.

The concept of affordable housing is now also attracting a lot of attention from the real estate funds fraternity. The First Indian Real Estate (FIRE) Capital Fund Ltd is making its first deal in the segment. While the name of the real estate developer is being guarded by the realty fund, it has been learnt that it is a firm operating out of the eastern region of India. "In all likelihood, the affordable housing project is being developed in West Bengal," said a source. The ticket size of the project will be between Rs 8 lakh and Rs 15 lakh for different apartment sizes.

Bangalore-based developer, MetroCorp is reportedly close to raising $300 million (about Rs 1,400 crore) from leading global financial institutions, including Prudential Corporation Asia and Warburg Pincus. The developer has three projects under execution, and has lined up a bouquet of 21 projects across India, ranging from residential and commercial to integrated townships to special economic zones.

With strong economic growth, the residential real estate in India is growing. Rising incomes and impressive home loan options have fuelled the demand for second homes. Over the years, the variety of newly built second homes in India has increased substantially. These days, one can choose from a host of options, both in terms of geography as well as the format. Urban fringe homes or suburban homes present an option beyond the limited inner-city residence options. Suburbs across the country have emerged as a preferred location for homebuyers for premium residences, given the better land availability in these areas as compared to city centres. Looking ahead, it is anticipated that the depth and size of the second homes market would improve further owing to the sophistication of buyers as well as the pro-activeness of developers to meet the burgeoning demand for such products across the country.

Real estate firm, Tata Housing Development Company, has signed Kapil Dev for endorsing its residential project 'Raisina' in Haryana. The project is being developed by Tata Housing in partnership with Raheja Developers in Gurgaon. The construction of the 11.73 acres high-end residential project is going on with an estimated investment of about Rs 500 crore. Speaking about his association with the project, Mr. Dev said: "I am very privileged to be associated with Raisina Residency and Tata Housing. I am glad that they have announced this project in my homeland Haryana and would like to lend my complete support to their premium and luxurious offering."

Merrill Lynch & Co. announced Tuesday it has raised US$2.65 billion to invest in Asian real estate, betting that cooling property markets will rebound despite slowing regional economies and global financial turmoil.

The fund will focus primarily on Japan, China, South Korea and India, with Australia and Southeast Asia of secondary consideration, the U.S. bank said in a statement.

It represents Merrill's first fund dedicated to real estate investment in Asia.

"We see exceptional opportunities in Asian real estate over the medium and longer term," said Tim Grady, a managing director who heads commercial real estate in Asia.

Investors include pension funds, endowments, foundations and private individuals from around the world, the company said.
The Asian Real Estate Opportunity Fund will invest directly in real estate assets and real estate companies, among other investments. The company did not release additional details.

Merrill was taken over by Bank of America last month as the financial crisis caused a seismic shift on Wall Street.

There is some good news for the elderly, the finance ministry has notified the Reverse Mortgage Scheme, which would exempt from tax the income they earn by mortgaging their property. This comes after finance minister, Mr. P Chidambaram's statement in this year's Budget that, "Reverse mortgage would not amount to transfer and the stream of revenue received by the senior citizen would not be income."Accordingly, the Central Board of Direct Taxes (CBDT) has now said that under the scheme, a capital asset would mean a residential house property which is located in India and individuals or married couples above 60 years of age will be considered as senior citizens. This means that the scheme will not be regarded as transfer of a capital asset and so would not attract capital gains tax. Also, the loan amount will be exempt from income tax for the borrower. "Reverse Mortgage means mortgage of a capital asset by an eligible person against a loan obtained by him from an approved lending institution," the CBDT said in its notification. Further, the loan under reverse mortgage should not be for more than 20 years. The CBDT notification comes into action from 15 April, 2008 and loans given in 2007-08 will also be given exemption.

Realty has seen a sharp slump and this has sent the world economy into a dizzying cycle, the question on everybody`s mind is . Is it time yet to invest in Real Estate? The simple rule across all investment markets is `Buy low; Sell high`, it holds good even in the Real Estate market. But what one waits for is the cycle to bottom out which will enable us to buy at the lowest point, this could be crucial as one could often miss the same. Especially in case of Real Estate where the trend reversal would happen in leaps and bounds and the cycle is long term, the trend reversal could mean significant opportunity loss.

Current Market Scenario

According to a survey made by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), real estate boom will further roll down in 2008 and it is only the beginning of a mega fall which is awaited. In the year 2007, this sector was key in contributing to the phenomenal growth the GDP, the sector alone notched between 40-45% growth. The Chamber is also of the view that India has already emerged as the 5th world`s largest investment destinations globally because of its market and potential which is made up of India`s population base. These facts are contradictory by nature and hence could be misleading, but one needs to understand the Real Estate as an investment needs to be looked at with a 5 - 15 years perspective

This is simply indicative of the fact that not all is over as yet, and the current slump could well be a silver-lining for a person who is contemplating an investment. However, it could well be a bad news for one who has already made the investment right at the peak and could end up sitting on a pile of book losses; this would be a bad situation especially in the real estate market, given that the market cycle in this case is relatively of a longer period.

Trend over the years

The era of Nineties witnessed frenzied boom in residential property on the back of a booming stock market and a liberalization process that was kicked off in 1991. The stock market and real estate market crashed in quick succession between 1994 and 1995, real estate cycle inherently prone to the longest market cycle, it took a whooping 8 years of little or no appreciation in real estate. Biggies like Donald Trump saw major wealth being eroded, this was an era where the myth that real estate never slumps was shattered. There are many analysts drawing stark similarities in the current scenario. In fact globally realty has led the way in sending the other key economic indicators into a whirlpool of turmoil.

On an average Real Estate sector is instrumental to the development of 269 other industries and hence, could have an impact on the overall economy as well. This in turn leads to lower demand for real estate compounding the impact.

Final word

Real Estate can be viewed in multi facets; one can buy real estate (Residential) for staying or from a mere investment perspective. The downtrend is very likely and on an average the turnaround could take a couple of years`. This simply means that there is about 12%-15% correction well within the lap of current real estate scenario, this is indicative that there is time left for the cycle to bottom out. The impact in India is not expected to be as significant as it has been in the rest of the world where prices have corrected up to 50%.

Real Estate from a residential property (for self-stay) perspective, need not categorically be timed. One can go ahead with the stipulated plans over the next few months, considering the tax benefits that one also has and the real need that one has. However, real estate from a purely investment perspective can be stalled for next couple of months, and invest if the market falls. Considering the turmoil, a fall if any could happen over the next 3 months.

If one is considering Real Estate from an Investment perspective .We suggest a Wait `n Watch approach! The period could be about 6-12 months since even if the Realty market does not fall; one does not expect returns to be high over the next 12-24 months.

The prices of up-market residential localities in big metros have witnessed a 20-25% rise in the last four months. Markets such as Greater Kailash I & II, Jorbagh, Golf Links, Amrita Shergil Marg, Sunder Nagar, Vasant Vihar and Shanti Niketan in Delhi, Napean Sea Road, Peddar Road, Breach Candy, Malabar Hills in Mumbai and Richmond Town, Lavelle Road, Cunningham Road in Bangalore have a witnessed a spurt in prices. In Mumbai, the prices in posh areas such as Altamount Road, Napean Sea Road, Nariman Point and Churchgate have gone up by 20-25%. But South Delhi is leading, the market quoted prices as high as Rs 5 lakh to Rs 10 lakh per sq yard. Mr.Vikram Sabharwal, MD of SABH Infrastructure, said, "The prime localities in South Delhi are commanding a huge premium as there is virtually no land available in these posh areas. There is hardly any construction activity taking place. The only activity seen is in large villas being converted into luxury apartments. This has further jacked up demand and the corresponding prices."

To buy your new home, this festival season maybe a good time as developers are offering interesting discounts. Many realtors are already advertising cash discounts of 5-10 percent on upfront payment and buyers can get up to 25 percent discount if they book properties and are willing to wait for two to three years until possession. According to consultants, developers may even give 15-20 percent discount on the price as they are eager to clear inventories. Usually, the October to December period accounts for 60 percent of the home sales. The main cause of concern this year is that home sales have halved because of high interest rates and a sharp rise in the monthly loan payouts of borrowers. Considering this, the Maharashtra Chamber of Housing and Industry (MCHI), a trade body of realtors has already advised its members to bear the stamp duty charges and pay a part of the interest cost on loans to improve declining sales. Though big developers such as DLF, Ansal API, Parsvnath Developers have not advertised discounts, they are launching their new projects, mostly in the mid-income segment. However, some developers and consultants said the discounts and offers would not help in increasing the sales since home loan rates are high and property prices are out of reach of buyers.

VGN Group, a real estate player, announced its plans to launch residential and township projects in Chennai and its outskirts. The company had already acquired 250 acres of land in and around Chennai. Mr. Pratish Devadoss, Managing Director, said the projects would come up in Padikuppam, Mogappair, Velappanchavady, Vandalur, Ambattur and Melpakkam. The projects in Ambattur and Vandalur would be more in the nature of mini townships.

Real estate developers have taken the severest hit from the funds shortage banks are going through. DLF Ltd and Unitech Ltd, the country’s two of the largest real estate developers, have not been able to draw on loans sanctioned by their bankers.

Standard Chartered Bank, the second largest foreign bank in India after Citigroup, has held back disbursement of loans sanctioned to DLF and Unitech. The bank declined to comment on the development. Spokespersons of the two real estate developers also did not want to comment on the issue.

Industry sources said Standard Chartered’s decision against increasing their exposure to the real estate sector is in view of a slowdown in home sales as property prices have reached unaffordable levels, particularly in the metros.

StanChart is not the only one pulling out of financing real estate developers.

Almost all banks have withdrawn from funding real estate developers, a segment considered as “sensitive” by the Reserve Bank of India (RBI).

Banks want to limit or reduce their exposure to real estate developers because this sector could be in severe trouble in the event of a prolonged slowdown in home sales. All the financial crises in the last 30-odd years have had their origins either in the equity markets or the real estate sector. The current financial crisis too had its origin in the crash of the US housing market.

The total exposure of banks to real estate developers at the end of March 2008 was Rs 62,276 crore. The growth in these loans in 2007-08 had dropped to 37 per cent from 69 per cent in 2006-07.

The increase in housing loans extended by commercial banks too slowed significantly in 2007-08. During the year, the increase in home loans was just 10.7 per cent against 24.7 per cent in 2006-07.

Despite the US slowdown, realty developers across the country are launching new residential apartments during the ongoing Navratri festival hoping that they will get higher sales from prospective home buyers, who have been postponing their buying plans so far. Home sales across the country have fallen more than 40 per cent in the last nine months due to high interest rates and increase in monthly loan payouts by borrowers. “Developers are launching projects during Navratri and Diwali in the hope that there will be takers for new flats after the Shraadh period is over. However, we think Diwali will not be very exciting this time around due to poor market conditions,” said Mr. Raminder Grover of Homebay Residential of property consultancy Jones Lang LaSalle Meghraj (JLLM).

QVC Realty announces the launch of its first project, QVC Hills. The project is spread over 26 acres of land with the first phase consisting of 100 luxury residences. The plot sizes range upto 11,000 sq ft, and the built-up sizes will range between 3,500 sq ft and 6,500 sq ft. The project will contain 16 different designs of various sizes. In addition, QVC will offer customers the opportunity to customize the floor plan as per their specific requirements.

Parsvnath Developers Ltd announced the launch of a group housing project, Parsvnath Pratishtha, at Pimpri Chinchwad, Pune. "Presence of educational institutes, universities, IT and major automobile companies has resulted in an influx of population Pune. This increase in population has lead to burgeoning demand for qualitative residential properties in close vicinity of their work places," ,” said Mr. Pradeep Jain, Chairman, Parsvnath Developers. The project, Parsvnath Pratishtha is spread over 11, 000 sq mt area and built up area of 1.23 lakh sq ft. It is scheduled to be completed by 2010.

The enormous 30-residential project by Aliens Group in Hyderabad has been approved by the Hyderabad Urban Development Authority. The residential complex, christened Aliens Space Station 1, is coming up on more than 18.5 acres of land with nearly 80% of the remaining area being developed as landscaped greens. Expected to go up to a height of 87 meters, this residential development will house 2,205 apartments including duplexes and penthouses. The highlights of the project are its home automation features such as biometric security access systems, touch pad switches with lift buttons inside home, Wi-Fi connectivity, shopping mall, multiplex theatre and entertainment facilities.

India's first solar power housing complex is being developed at Rajarhat. Real estate developer, DLF and the West Bengal Green Energy Development Corporation (WBGEDC) have entered into an agreement for the proposed project. A total of 200 acres has been acquired in Rajarhat by DLF for the project and work is expected to start soon. The high-rise complex will provide housing solutions to all three categories - lower, middle and higher income - and contain 8,000 apartments. Photovoltaic cells will be fitted on rooftops, terraces, refuge areas, balconies and window panes to generate power. The power generated by the solar panels will directly flow into the grid, owned by West Bengal State Electricity Development Corporation Limited (WBSEDCL ) and this will be purchased by WBSEDCL at market price. That will then be registered as the complex’s own output.

The ambitious plan of Maharashtra Government to re-develop the Dharavi could stall because property firms that have bid for the project said the global financial crisis had made it very hard for them to raise money. Although builders did not say they would pull out of the project, they said they were waiting and watching. The project envisions that property firms will build new homes for the 500 acre slum’s residents. The firms are expected to fund this through money they will raise by selling new commercial building they will be allowed to construct on the same plot. The project is expected to cost Rs 15, 000 crore. The 19 firms that made it through the first, technical round of bidding are to submit financial bids in November. Five firms will be chosen. The government plans to allow the winning five firms to start construction in December.

During January-June 2008, new housing project launches in the national capital region (NCR) slumped by 20%. This is explained by the slowdown in demand due to increase in real estate prices and rising interest rates for borrowers. The first six months of this year also saw a shift in developers'strategy towards mid-income houses, as the high-end segment witnessed resistance from buyers. Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37%. According to a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high-end houses are selling at a slower pace than the mid income segment. "Affordability is the single biggest factor that influences a home buyer's decision," says DTZ director (consulting and research) Mr. Abhilash Lal, adding that a series of interest rate hikes has almost doubled the equated monthly installment (EMI) outflow for a home buyer in the past few years. He added, "Buyers are increasingly shifting to mid-income homes as they can't afford a higher EMI." Lately, several developers, including India's largest real estate firm DLF, Ansals, Parsvnath, Omaxe, BPTP, Raheja and Gaursons have been actively building mid-income homes.