Latest Real Estate News |
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REALTORS WOO MFS TO THEIR IPOS WITH GOODIES |
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While most of the large to mid-sized recent offerings have received a lukewarm response, the buzz is that quite a few real estate companies are bent on going ahead with their initial public offering (IPO) plans. Grapevine in market circles is that quite a few fund managers are being tempted with apartments at concessional rates in the projects of these companies in return for subscribing to the issues. This kind of arrangement will not be very expensive for real estate firms either, given the fat margins in the business and the fact that these projects are yet to be completed. After all, what are a few crores when hundreds of crores are at stake? Market watchers say at least two companies that came out with IPOs in the recent past had such an arrangement with some fund managers. Needless to say, both the offerings had witnessed a strong response from institutional investors despite expensive valuations. With banks cutting down their lending to the real estate sector, and the stock market, too, lukewarm to property developers, it has become a desperate situation for many cash-starved builders.
Courtesy:- ET dt:- 18-03-2010 |
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A WEEKLY SNAPSHOT OF SOME BIG-TICKET CITY DEALS |
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MUMBAI
A residential apartment spread across an area of 5,800 sq ft was sold at a total value of Rs 12,52,37,500 at Lower Parel in Central Mumbai. The apartment features a plunge pool and a terrace garden, while the complex offers a club house, along with other amenities. This under–construction high-end apartment commanded an average capital value of Rs 21,500 per sq ft and will be ready for possession in 34 months. The commanded range for ready apartments in this area is Rs 34,000 – 55,000 per sq ft. Lower Parel is likely to witness an increase in the number of new project launches for high end as well as mid-ranged projects over the next three to six months.
PUNE
An apartment covering an area of 2,800 sq ft in Kalyani Nagar was leased out to a corporate for a rental of Rs 1.6 lakh per month. This rental for this high-end apartment was well within the commanded range of Rs 1,10,000 – 2,10,000. It happens to be amongst the most sought after buildings in the expat community. While prices in this micro-market have remained stable over the past two quarters, they are expected to appreciate on account of the growing demand from expatriates and corporates, mainly due to its proximity to the airport, railway station as well as the central business district.
CHENNAI
A beach house spread across 3500 sq ft, located on the East Coast Road was leased for a monthly rental value of Rs 1.75 lakh. This apart, another apartment admeasuring 3500 sq ft at Boat Club was leased out for a rental of Rs 1.4 lakh per month. This highend apartment’s rental is well within the prevalent range of Rs 80,000–2,25,000 per month. Properties on the East Coast Road, which are closer to the city limits, have been witnessing a buoyant demand in the recent past.
BANGALORE
An apartment covering an area of 3,000 sq ft was sold at a total value of Rs 2,24,00,000 in the highly sought-after Koramangala area. This high-end apartment commanded an average capital value of close to Rs 7,466 per sq ft, which is well within the commanded range of Rs 6000– 8500 per sq ft in the locality. A villa in Whitefield, spread across 4,000 sq ft, was sold for a total cost of Rs 1,75,00,000. This high-end villa commanded an average capital value of Rs 4,375 per sq ft, which was below the prevalent range of Rs 5,600– 7,000 per sq ft. The demand in the city of Bangalore has been largely driven by affordable housing projects and smaller sized-apartments.
Cushman & Wakefield, a commercial real estate services firm with offices worldwide, delivers solutions including advising, implementing and managing on behalf of landlords, tenants, and investors.
Courtesy: - 19-03-2010 |
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BUDGET BLUES FOR THE REALTY SECTOR |
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Service tax burden imposed by the Union Budget on realty transactions will affect the sector. Read on to know what are the pluses and the minuses of the new budget
The Union Budget 2010-11 is a big disappointment to the middle-class urban housing sector. However, it has bet on the economic growth to drive demand in the sector. By tweaking the income slab, finance minister Pranab Mukherjee has put some extra money into the pocket of middle-class tax payers. A person having an income of Rs 5 lakh per annum is likely to gain Rs 20,600 per annum from the provision. But, if his income is more than Rs 8 lakh, his annual gains will be around Rs 51,500. These are a big booster to the economy as they will increase the purchasing capacity of individuals. Ultimately, tax saving is equivalent to money earned.
Service tax on apartments under construction
But at the same time, the finance minister has imposed service taxes on a number of services related to the real estate sector. Anshuman Magzine, MD of global consultancy firm CBRE Asia, says that these provisions will be a dampener and affect the revival of the real estate sector. Another realty consultancy firm,
Knight Frank also said that it would affect the sector adversely. According to a budget provision, in cases where a property under construction is bought and a consumer makes payment over a period of time, then it will attract service tax. "In the 'Construction of complex service', it is being provided that unless the entire consideration for the property is paid after the completion of construction (that is, after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly," reads the provision.
A senior tax consultant of KPMG says that this clearly means that if a house or apartment is sold before the completion of the construction, a buyer will have to pay the service tax. In fact, Sunil Mitra, revenue secretary, said that even if a house is already sold but the completion certificate could be secured from the concerned authority in 2010-11 or after March 31, 2010, the service tax would be levied on such transaction. According to tax experts, this will lead to a tax outgo of 3.4% of the sale value of the house. Mitra also confirmed that the department would allow an abatement of 67% on the value of house to calculate the service tax at the rate of 10.3%.
This means, if you have bought a house for Rs 50 lakh at the time of launch of a project, your tax liability would be Rs 1.70 lakh. However, with the service tax levied from service provider, a senior builder said they would pass on the liability to the customer. He said that since they have started launching affordable apartments, the margin is so thin that they would not be able to absorb them. The budget has also included the renting of immovable property under the service tax net. Knight Frank says that this will have a negative impact on the real estate sector. The levy of service tax will impact rented commercial property with retrospective effect from June 1, 2007. Even in cases where a developer takes land on lease and pays lease rent, the lease rent will attract service tax.
Preferred location will be taxed
Interestingly, the differential charges for higher floor, or for preferential view, better spaces, etc will also attract service tax. "Certain additional services provided by a builder to prospective buyers like providing preferential location or external or internal development of complexes on extra charges. However, service of providing vehicle-parking space would not be subjected to tax," the new provision says. However, there are some positive aspects also, which will benefit the construction sector as a whole.
Hotel industry gets a boost
According to a new provision, all new hotels of 2-star and above category will be benefited because of the investment-linked deduction - 100% of the capital expenditure incurred by a hotel can be reduced from taxable income. This will enhance the returns for developers of hotel projects, says Knight Frank. "The provision will enable investments in the hospitality segment and boost supply in the organized sector. It aims to provide support to the hospitality sector in expectation of growth in tourism and both business and leisure travel," says Anurag Mathur, MD of Cushman & Wakefield India.
Relief under 80 IB
The budget has also given relief to developers under Section 80 IB (10). It has provided the extension of income tax exemption for housing projects by one year. It will give a relief to projects that were delayed during the slump. These projects should have been sanctioned on or before March 31, 2008 and be completed in five years. Similarly, the provision for commercial establishments has been increased from 5% or 2,000 sq ft of built-up area, whichever is less, to 3% or 5,000 sq ft of built-up area, whichever is higher. Therefore, at least 5,000 sq ft of shop establishments can now be developed in these projects while continuing to remain eligible for income tax exemption, says Knight Frank.
The relief to developers by allowing extension for claiming deduction of their profits within a period of five years under the section, says Mathur, would help those developers who were impacted by the global financial crisis last year. This announcement is likely to provide a breather for developers who were finding it difficult to complete projects due to liquidity crunch.
However, on the other hand, the announcement may be a cause of concern for the consumer/end user as relief extended to developers might result in further delay in project completion.
In addition, it is suggested that the norms for built-up area of shops and other commercial establishment in housing projects will be relaxed to enable basic facilities for the residents.
Courtesy:- ET Realty dt:- 19-03-2010 |
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HNI INVESTING IN COMMERCIAL PROPERTIES |
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Unlike in the past, the New Age Indians are not confined to investing in residential properties. They are now setting their sights on commercial property as well. Read on to know what attracts them to commercial properties
If you imagine that commercial properties are only purchased by companies to expand their business prospects, think again! Now high net worth individuals (HNI) too invests in commercial properties. As recently as a few years ago, commercial property was an investment option for select individuals. Apart from the issue of a large investment, it required a different mindset from the investment point of view as well. But, over the years, a large number of Indians have begun to earn huge salaries while many others are also making a lot of money through freelance jobs, which they are investing in commercial properties.
Unlike in the past, the New Age Indians are not confined to investing in residential properties. This trend is picking up fast. "If banks do not show reluctance to give loans to individuals in order to buy commercial properties, more and more HNI will come forward to buy commercial properties. It is now no secret that banks hardly show any positive attitude to sanction loans to individuals in order to buy commercial properties. This happens all over the world. That is why you cannot blame only our banks," says Samir Jasuja, CMD of PropEquity.
An official of PNB Housing Finance Ltd also admitted that while banks happily give loans for residential properties, they are not that forthcoming when it comes to loans for the purchase of commercial properties. Reason? He said that compared to residential properties, the rate of default is very high in this segment. That is precisely the reason banks avoid disbursing loans to individuals in buying commercial properties.
"As far as Ansal API is concerned, we have got bookings from a sizable number of such individuals (HNI) in our malls (Ansal Plaza in various locations), as also in small to medium office spaces in our commercial projects in Delhi NCR, Punjab, Lucknow, Kundli (near Sonipat in Haryana), among other projects," says the company's official spokesman.
Anu Gupta, director of Century 21 India, says that HNIs should make investments in commercial properties as these investments could maximize their return. The reason being, while they could go for bank loans up to 75-80% for such investments, the repayment of such loans could be set off against the rental incomes from such commercial properties. Thus, by investing a portion of the total price (say 25%), an investor can acquire a high-value asset, which will not only give maximum return (thanks to the set off provision in IT against rentals), but could see a significant appreciation over a period as the retail/commercial industry grows.
Giving his own example as to how he is earning less because he has invested in residential property while his friend is earning far more than him for investing in commercial property, a Delhi based financial professional, Narinder Gambhir, says that both he and his friend invested in residential and commercial properties in 2004 in East Delhi. Both invested close to Rs 30 lakh each. "While I am getting a rent of Rs 15,000 per month, my friend is earning Rs 25,000 from his property. This is a huge difference," Gambhir rues.
Discussing about the factors which are crucial for HNI to look before buy commercial properties, a realty expert says that they should not invest where there is a deluge of supply. In that case, the investment would not fetch good returns. HNI also invest in commercial property, as they are not restricted to a dingy market area. Today, swanky malls enable an individual to look at commercial property as a viable investment option. Moreover, the emergence of semi-commercial property in residential locations has made the investment financially viable.
RK Arora, CMD of Supertech group, says that there is nothing wrong if you invest in commercial property, but one must invest after taking all the pros and cons into consideration. "I feel that if you invest in some commercial space in NCR, then you have to wait for a long period before earning anything as there is a massive supply of such commercial property in NCR, unlike in Delhi. If you can invest in Delhi, then it is great."
However, Alimuddin Rafi Ahmed, CMD of ILD realty group, feels that as our economy is improving after tiding over a really tough time during the market slum of 2008-09, corporates are looking for commercial spaces on lease, hence it is a perfect time to invest in commercial properties. "This is just the right time to invest as the property is available at rockbottom prices. The crash in property prices led to downward revision of prices by developers. The reduction was to the tune of 30% or so. Hope things go better in the times to come and everyone benefits from the property," Ahmed concludes.
Courtesy:- ET Realty dt:- 19-03-2010
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News Headlines |
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Norwegian major yesterday has released last fourth installment of Rs 2000cr of Unitech wireless and increased his stake up to 67.25% and rest with Unitech but Telenor has got approach from Indian regulator to increase its stake up to 74% but it has no plans to hikes its holdings from current 67.25.
Hospital chain, Fortis Healthcare will raised Rs 1250 cr from domestic and international markets to meet its funding requirements by global depository receipts, American depository receipts and foreign currency convertible bonds, said in a filling to the Bombay Stock Exchange. |
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REAL ESTATE: SOME LIKE IT ‘OUGHT, SOME LIKE IT SOLD. SOME LIKE IT IN THE FINANCING POT, NINE EMIS OLD -- SOME POST B BLUES |
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REAL ESTATE: SOME LIKE IT ‘OUGHT, SOME LIKE IT SOLD. SOME LIKE IT IN THE FINANCING POT, NINE EMIS OLD -- SOME POST B BLUES
Did Pranab Mukherjee get it right this time according to our real estate players? Pallavee Dhaundiyal Panthry spoke to real estate developers about their opinion on the subject and their industry. Paradigm shift or run-of-the-mill?
Developers have welcomed the increased time limit for the completion of projects from four years to five years for claiming a deduction of their profits. However, they are not really for the increase in excise duty because, according to them, this move will increase input prices and the burden will eventually be on developers as well as buyers. The 10 per cent service tax in real estate, as per many, will prove more unfavorable to the buyers. Besides, the changes in the real estate sector included allocation of huge funds in the rural area and property rights to slum developers and increase in the set time limit for accomplishing a project from four to five years.
GAURAV MITTAL, DIRECTOR, CHD DEVELOPERS
The up side of the budget includes, surcharge on corporate tax decreased from 10 per cent to 7.5 per cent, which will prove beneficial for all corporates. Besides, extension of subsidy for home loans less than Rs 10 lakh for one more year more is again welcoming. However, the unfavorable point in budget 2010-11 is the service tax, which will be applicable on all under construction properties. At one side the government talks about promoting affordable housing and at the same time making this tax applicable would only make these houses more expensive, which is ironic. Increase in excise duty from eight per cent to 10 per cent, means increase in the price of raw material, will eventually lead to costlier construction and costlier houses. I feel some initiatives should be taken to make affordable housing, economical to construct in true sense and not just as an eye wash. This may not prove to be fruitful.
SANJEEV SRIVASTVA, MANAGING DIRECTOR, ASSOTECH
Allocation of Rs 1,270 crores for the FY11 under the Rajiv Awas Yojna along with special emphasis on low cost housing and slum rehabilitation will help buyers of low cost housing in the rural and semi-urban area. Five years extension in the time-limit for completion of projects eligible for deduction under section 80-IB and extension of one per cent interest subvention for low cost housing to 31.03.2011 along with increase in the IT slab rates for individuals would boost demand for budget homes. Proposed service-tax at 10.3 per cent on the value of additional services provided by the builder and lease of vacant land (if construction is undertaken thereon) would make the cost of home dearer to the buyer. Imposition of service tax on rentals with retrospective effect from 1st June 2007 would cost one percent to 1.25 per cent of the retailer's turnover, which is neither in the interest of the owner of the commercial space nor the retailer using that space.
Talking from the developers' perspective, developers undertaking low cost high volume mass housing projects will be benefitted. Investment-linked tax holiday for all new hotels in the two-star plus categories would help developers undertaking hospitality projects.
But applicability of service tax as detailed above and increased indirect taxes on raw materials such as steel and cement will increase the end cost and project costs would go up by four to five per cent, which would adversely affect the developers. This may not be a good sign for the times to come for this industry. Anyway, we have to make the best of the good points from this.
R K ARORA, CHAIRMAN & MANAGING DIRECTOR, SUPERTECH
The budget, this year talks of both positive and negative aspects for the real estate developers as well as the buyers. There is a revision in personal income tax slabs, which will strengthen the purchasing power of the buyers affecting the demand of the residential sector. The common man will also be benefited by the continued subsidy of one per cent for affordable housing loans, which will help this sector to grow. On the other hand, a two per cent increase in excise duty of cement and steel might not prove profitable for the real estate developers as the cost of construction would be expensive which will ultimately result in the increased cost of the project and hence the buyers will be affected. Also, it would have been a great support to the real estate sector if Section 80I (B) would have been renewed to thrive the demand of affordable housing.
ABHISHECK LODHA, MANAGING DIRECTOR, LODHA DEVELOPERS
The finance minister has taken a pro-active measure by reducing the income tax burden on the middle class and hence, increasing disposable income and consequently leading to increased demand for consumables and housing. The focus on development of infrastructure is crucial as the world is looking at India as an important member of the global community. While there are no major initiatives for real estate, the lack of extension of 80 IB benefits to new projects started after March 2008 is a missed opportunity, since it would have led to creation of large volumes of affordable housing for the "Aam Aadmi' and also spurred economic growth due to strong cross industry linkages of the construction chain. We hope that the intent of the government to continue the economic momentum through a combination of consumption growth and fiscal discipline will be further enhanced through the coming year by concrete initiatives on increasing productivity in our country - this would ensure that the goal of double digit growth rates is achieved soon.
ANIL KUMAR SHARMA, CHAIRMAN & MANAGING DIRECTOR, AMRAPALI GROUP
While extending measured benefits to the realtors, the proposed budget visions its commitment to promote "Aam Aadmi" housing by proposing major allocations for it. Developers and real estate companies, however, were looking for much more than what the finance minister had to offer. The real-estate sector is all about demand and supply. In India, demand far outstrips supply. Budget 2010 is positive, balanced and growth oriented. By raising the exemption limits in the income tax, the government has sought to financially empower the consumers, which would boost real estate sales. Although government has increased the cost of raw material, yet the budget this time can be viewed in a positive way. The industry will witness an upsurge shortly marking a benchmark of recovery from the ongoing worldwide recession as the government has sought to financially empower the consumers, which would boost real estate sales.
AMAR AMBANI, VICE PRESIDENT RESEARCH, INDIA INFOLINE LTD
One major devil in the budget detail is for the real estate sector. Service tax has been levied on additional services provided by a builder to buyers like preferential location, internal and external development of complexes (except vehicle parking). Furthermore, unless the entire consideration for a property is paid after completion of construction, the construction activity will be charged service tax. Renting of property, rent of vacant land under agreement to undertake construction of building or other structures will be charged service tax -- a drag on the bottom-line.
MANISH PERIWAL, CHAIRMAN & MANAGING DIRECTOR, PIONEER URBAN LAND AND INFRASTRUCTURE
The Government has treaded a line of fine balance to lead the economy to high GDP growth rate by investing in infrastructure sector, yet keeping the fiscal deficit within manageable limits which has already undergone a substantial deviation at 6.8 per cent from 6.1 per cent at the time of interim budget. In the backdrop of ambitious 'housing for all' and `Slum free India' agenda, the rural and urban housing sectors have been given importance, largely through Government's flagship programmes rather than the incentives real estate companies were hoping for. We feel investment in infrastructure will have a cascading impact on the residential and commercial projects as the development foot print can expand. The concessions in Direct Taxes on the salaried class should have a positive impact on the mid to premium residential housing segment in which we operate. But launched projects will suffer as the top line is locked and thin margins will erode further. The buyer will be impacted.
Courtesy:- FT dt:- 07-Mar-2010 |
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Recovery in realty |
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Recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010, a report says, but cautions that it would be premature to predict a bounce-back for the entire sector. Prabhakar Sinha writes
Residential markets across major cities of India have seen significant appreciation in values towards the close of 2009. This trend is most prominent in NCR and Mumbai, the two key residential markets in India, where values in Oct-Dec 2009 appreciated, compared to the same period the year before, says Cushman and Wakefield in a report.
The report said that recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010. However, it would be premature, the report adds, to predict a bounce-back for the entire sector. The other markets which are still witnessing some correction are expected to stabilize only in the next 3-6 months. These are expected to see positive signs of recovery by the middle of this year, when values across the board would stabilize but will remain within acceptable range. The average increase in capital values in various micro-markets in these two metro areas has been in the range of 3 % to 25% over the previous year, the report shows (see chart). Most micro-markets in these two cities have recorded stable to appreciating capital values over the last quarter as well. NCR and Mumbai have shown a faster recovery than other cities due to the fact that these are high-demand markets, both from end users and investors, who were holding back their requirements as a result of economic slowdown, which created a kind of uncertainty in the
job markets. The best outcome of the slowdown is the emergence of affordable housing in the country. At the same time, the strong recovery in the economy led to sharp upward correction in the capital values for mid-ranged housing due to the quantum of demand and affordability.
Certain broad trends that were noticed across cities were that peripheral and the suburban markets witnessed the highest correction but were also one of the first markets to bounce back, C&W says. Another shift in the trend is the rise in demands for properties under construction. The report said, there was a clear shift towards ready to-move-in properties during the beginning of the year, when there was uncertainty on the capability of a developer to complete a project. But that has receded now resulting in a rise in risk appetite for properties under construction.
In the NCR region, demand for affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood from the fact that a number of projects completely sold out within a couple of days of their launches. Recently, in Noida, Supertech, which launched apartments for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could sell around 500 apartments in a couple of days. The new trend has led to increase in the volume of transactions. Supertech CMD, R K Arora, says that the developers have now shifted to high-volume business from high margin ones. However, he also pointed out that this became possible because of the relaxation in the density norms (number of apartments allowed to be constructed on a given area). Therefore, the construction activities are set to rise in 2010.
Due to focus by developers in 2006 and 2007 on luxury housing, high-end properties in most cities suffered a steep correction when slowdown impacted the sector, as compared to mid-end properties. This left a large unmet demand in the mid-end market. As favourable conditions have come back, the sector has witnessed resurgence of demand.
However, for the trend to continue, the government should not put extra burden on it. The budget announcement of 10.3% service tax on the sale of apartments before completion is expected to have the highest impact in the real estate market. This may hamper the attractiveness of the projects under construction. The scope of service tax is extended to the construction of complex service, wherein the developer/builder is likely to pay service tax on construction services while the project is under construction. The levy would cover all construction of complex service or commercial or industrial construction services resulting in higher cost of properties under construction. The service tax of 10.3% will be levied and also be charged on additional services provided in residential developments such as preferential location charges, internal or external development charges, etc. It is estimated that service tax of 10.3% will be levied on approximately 33% of the value of an apartment, which is likely to escalate the price of real estate and put further pressure on the housing affordability. In the short term, the report says, real estate prices across most cities are expected to continue to strengthen. However, it also warns that a significant increase could result in demand drying up and lead to stagnation or further correction. Rental values are expected to remain stagnant, especially in the luxury/high-end segment with certain mid-end properties witnessing buoyancy.
Developers are likely to remain cautious and launch new projects at attractive price points, the report says. Due to prevalent demand for mid-income housing, most developers are expected to focus on new projects in this category, over short- to medium-term, with very few niche projects in luxury category with strong differentiation factors.
Courtesy:- TP dt:-13-Mar-2010 |
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SERVICE TAX MAY TAKE TOLL ON REALTY |
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After many months in the dumps, the housing sector was finally sniffing at a recovery as buyers returned gradually, lured by sharp price cuts and teaser loans.
But a Budget proposal to levy service tax on houses under construction is threatening to crimp the sector’s fragile recovery as the resultant price hike is certain to dissuade fresh buyers. The proposal, a bolt from the blue, purported to spur builders into completing projects faster after rampant complaints of long delays.
Though that remains to be seen, an immediate effect will be the prices of incomplete houses rising by 3% after a service tax of 10.3%, including surcharge, is imposed. The levy is based on an earlier Income Tax Department circular, held up due to resistance from developers, which set 33% of the house price as services.
Housing project comprises land, raw material, labor and services. Though services include branding and selling of a project, there is an unwritten understanding that no ‘service’ was being provided till a developer passed a property title to a buyer.
Back-of the- envelope calculations show that an Rs 30-lakh housing property will see a price hike of at least Rs 1 lakh after the service tax is affected.
“Affordable housing will be impacted the worst,” said Niranjan Hiranandani, chairman of Mumbai-based developer Hiranandani Constructions, adding that everyone in that category must now pay developers in installments.
The Budget proposal, coming after the Reserve Bank of India’s incessant frowning on teaser loans, will wane demand further, say realty watchers.
Most houses are typically sold during construction with buyers paying in phases. The Budget proposal means that even buyers who have to pay, say, the remaining 5% of the overall cost during possession, will have to cough up more.
The proposal could also pose problems in calculating remaining payments though it will ratchet up demand for ready-to-move properties, say realty watchers.
As for developers, the market’s response to the proposal will determine their long-term plans. “Affordable housing will now become unaffordable,” said Rajeev Talwar, managing director of DLF, the country’s largest developer.
“Housing is a state subject and the move is impinging.”
Real estate was among the worst hit sectors in the global downturn as buyers kept away and banks became wary of lending. But teaser loans, some even as low as 8.25% much below their prime lending rate (PLR), last year stalled the decline.
But builders fear that the introduction of a service tax and absence of teaser loans will compound the problem of oversupply of residential and commercial properties in several parts of the country.
Courtesy:- ET dt:- 04-Mar-2010 |
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NO TAXING TIME FOR REAL ESTATE: GOVT |
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Says construction attracts service tax only on 33 per cent of the value.
The government today said the net impact of the service tax on real estate construction would be only 3.3 per cent, since construction attracts service tax only on 33 per cent of the value.
The government had last week clarified through the Budget that transactions such as leasing vacant land and commercial spaces, payment made to developers before the grant of completion certificate and imposing preferred location charges, among others, would come under the service tax net.
Developers said the proposal could push home prices up by 10 per cent in Tier-II and Tier-III towns and 0.5-4 per cent in big cities such as Mumbai and Delhi which have higher land prices. However, a senior finance ministry official here said the net impact of the service tax would be only 3.3 per cent, since there is an abatement of 67 per cent.
“There is a false impression being created that prices will go up by 10 per cent but the fact is that 10 per cent service tax is levied only on 33 per cent of the value,” said the official.
The budgetary clarification has been issued with retrospective effect from 2007, when real estate transactions were brought under service tax. Abatement scheme, under notification number 1/2006 dated March 1, 2006, says that the contractor is entitled to claim abatement to the extent of 67 per cent of the value of services rendered by him. In effect, the contractor would have to pay service tax only on 33 per cent of the value.
Stung by new service tax proposals on property transactions, real estate bodies such as the Confederation of Real Estate Developers Associations of India and Maharashtra Chamber of Housing and Industry plan to approach the finance ministry to seek rollback of some proposals.
Developers have already increased prices by 15-20 per cent in the last nine months as demand for homes picked up. This resulted in demand tapering in January and February.
Courtesy:- BS dt:- 04-March-2010
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FOREIGN DEBT STILL SEEPING INTO REALTY |
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Foreign debt, banned in real estate, is finding its way into property firms as bankers and lawyers help builders cobble together new deals to raise money.
Even though foreign loans—better known as external commercial borrowings—are not permitted in construction, property firms have spotted a mechanism where the debt can be provided by foreign institutional investors (FIIs) registered with Sebi. No rules are broken and the deals, involving a three-way transaction, come across as normal private placements in the corporate bond market.
The process begins with a real estate company placing nonconvertible debentures (NCDs) with a local entity, such as a nonbanking finance company (NBFC). The next step involves listing the debt security, soon after which an FII steps in. Once the NCD is listed on a stock exchange, the NBFC offloads the paper to a foreign fund. Since FIIs cannot invest in unlisted debt, the NBFC warehouses the NCD till the paper is listed and then recovers the money by selling the debentures to a foreign fund.
The two transactions are part of a back-to-back deal struck between the firm issuing the NCD, the local NBFC and the FII. At least four developers—three from Mumbai and one from Bangalore—have risen over Rs 1,000 cr in the past few months through this route.
“It does not directly violate the Press Note on foreign investment in property, and such FII investment is within the overall corporate bond ceiling applicable to foreign funds... but it’s against the spirit of the regulation,” admitted a senior banker who has advised one such NCD issue.
Indeed, a few foreign banks have made presentations to property firms on the convenience of such fund-raising which has become more attractive since the government plugged a loophole on the foreign direct investment (FDI) regulations in the real estate sector.
Courtesy:- ET dt:- 04-Mar-2010 |
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INVESTORS SPARED OF SPECIFIC NORMS |
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In the past few years, FDI worth billions of dollars came in as overseas investors subscribed to equity and quasi-equity products — often with put options — sold by real estate firms which were starved of bank finance. But a chunk of this inflow was based on an interpretation that the three-year lock-in on the FDI applied only to the ‘original’ amount brought in and not the full quantum of FDI in a project. Many investors took advantage of this: an offshore fund which decided to put in, say, $25 million split the inflow, by first bringing in $5 million, the minimum amount, and then bringing in the balance $20 million subsequently. The understanding was that the lock-in applied only to $5 million and not $25 million. This flexibility in interpretation disappeared after the government clarified last year that the full amount, irrespective of whether the money comes in tranches, would be locked in for three years. The move, which came as a jolt to several foreign investors, paved the way for the more recent NCD route that’s catching on among local developers.
“There are advantages. First, there is no lock-in because the FII can sell the NCD as and when it wants. Second, the debt is secured against mortgage of assets, pledge of shares, etc. Third, unlike FDI, here the foreign investor can fund even those projects which are not FDI-compliant,” said a lawyer familiar with such debt-raising. For a project to receive foreign equity or FDI, it should not have less than 50,000 square meters of built-up area, among other things. “These conditions don’t come in the way when a foreign fund buys NCDs,” he said. Interestingly, such NCDs have also been issued by a leading NBFC which, like property firms, are restricted from tapping the ECB market.
According to a real estate fund manager, some foreign investors reluctant to increase their equity exposure post the downturn, prefer secured debts with a decent interest return. Sebi’s listing regulations extend to debentures that have been privately-placed; and, the NCDs can be listed even if the real estate company or a project specific special purpose vehicle floated by it is a private firm or an unlisted public entity.
Courtesy:- ET dt:- 04-Mar-2010 |
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DLF CONVERTS MUMBAI MALL PROJECT INTO RESIDENTIAL ONE |
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DLF, the country’s largest realtor by market value, is planning to build a premium residential apartment complex at Worli in Mumbai instead of a high-end mall project, as demand for retail spaces has come down sharply, according to a company executive.
“We felt residential will do well here, and we will fix the price depending on market conditions,” he said. According to DLF website, the project is under “planning and development” under the high-end mall brand Emporio.
Rents of retail spaces are down by 25-30 per cent from their peak in 2007-08 as demand slowed. Though demand for office spaces have picked up slowly, property consultants expect lukewarm demand to continue for retail developments.
Worli, which was a former hub of textile mills, is witnessing modern office developments by realtors such as Indiabulls, Bombay Dyeing and Century Textiles, and residential apartments command a price of Rs 22,000 per sq ft and above.
DLF made news in 2005 when it bought a 17-acre Mumbai Textile Mill land from National Textile Corporation (NTC) for Rs 702 crore. The company at that time announced it would build a futuristic retail-cum-entertainment complex on the land.
The new project is expected to be launched in the next four-five months after taking all the necessary approvals, the executive said.
According to property consultants, the company changed the plan several times as real estate market went through a prolonged slowdown.
However, DLF is not alone which converted its mall project into a residential one. Host of others such as DB Realty in Dahisar area of Mumbai, West Pioneer in Kalyan near Mumbai and TTK group in Bangalore also changed their plans to build mall to apartment projects.
Apartment prices have raised 15-20 per cent since mid-2009 as home buyers returned to the market. Earlier, prices had declined by around 40 per cent as home buyers stayed away.
Buoyed by response for its apartment projects, DLF is expected to launch 8-10 new residential projects in the next one year, according to sources. DLF, which stalled some of its office projects during the slowdown, is planning to launch two-three commercial projects in Gurgaon and Hyderabad.
DLF today sold 1,200 units of independent floors in its Panchkula Valley housing project in Chandigarh within a week of its launch.
The units were priced between Rs 30 lakh to Rs 60 lakh. The company is aid to have made around Rs 500 crore from the sale of units. The company originally planned to launch 500 units, but later increased it to 1200 due to good response, a release from the company said. The project was launched on Feb 18, 2010.
The company, which had plans to book these units in 45 days till March 31, 2010, closed bookings within seven days of launch as the bookings crossed 1200 units within 15 days.
Courtesy:- BS dt:- 26-feb-2010 |
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US NEW HOME SALES FALL IN DEC FOR 2ND MONTH IN A ROW |
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Sales of newly built US single-family homes fell unexpectedly in December, data showed on Wednesday, the latest indication that the government-led housing recovery might be losing some steam. The Commerce Department said sales fell 7.6% to a 342,000 unit annual rate from an upwardly revised 370,000 units in November. It was the second straight month that new home sales declined. US stock indexes fell on the data, while government bond prices held at higher levels.
“This isn’t good news. It should put some pressure on the market, especially coming after the disappointing outlooks we saw,” said Dan Cook, senior market analyst at IG Markets in Chicago. New home sales for the whole of 2009 fell 22.9% to a record low 374,000 units, the department said.
The data came as the Federal Reserve deliberated on monetary policy. The US central bank is expected to leave overnight lending rates near zero.
At its meeting in December, the Fed announced it would end purchases of agency mortgage-backed securities in March. The program has depressed mortgage rates, contributing to the housing market’s healing in recent months.
But the housing market recovery is showing some signs of fatigue after a surge in sales as first-time buyers rushed to take advantage of a popular tax credit, which had been scheduled to expire in November.
It has since been expanded and extended until June this year and while analysts expect home sales to pick up as a result, they reckon the pace will not be as strong as witnessed with the initial tax credit.
Courtesy:- ET dt:- 28-jan-2010 |
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CONSTRUCTION SERVICES TAX TO RAISE COST OF APARTMENTS |
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The Budget proposals have thrown up a dampener for the housing industry. Construction services have now been brought under the ambit of the service tax in an unexpected move that would raise cost of apartments that are still under construction. As per the Budget proposal, the finance ministry has suggested that construction would be deemed to be a taxable service if the building or complex is still under construction and approval from the concerned regulatory authority — which in most cases is the resident municipal authority — hasn’t yet been granted. The levy would cover all construction of complex service or commercial or industrial construction services, the Finance Bill suggested.
The service tax levy would be 10.3% and would also apply to additional services such as those offering preferential locations for flats in multi-storey buildings where flats in each floor are priced at a premium due to their location. This too has been described as a service and hence taxable, according to the proposal which was tabled in Parliament on Friday by finance minister Pranab Mukherjee. The premium is typically levied on categories such as flats or apartments that are above a certain floor rise or have other high value locations such as being in front of a garden or a sea or any other preferred locality.
“The proposal is to tax construction if the entire payment for the flat is made before completion of construction,” said consulting firm RSM Astute executive director K H Viswanathan. “This would increase the cost of the apartment and may discourage potential buyers.” The service tax would be 10% on 33% of the price of the apartment, while on the remaining 67%, tax won’t be levied.
Till now, for all apartments under construction, customers paid in instalments based on plinth level construction and also on the progress in building activity. Banks too lent money to the customers according to the requirement of the builder. Now most developers would ask customers to pay the entire value of the building if they sought to lock in at a certain value. This would mean paying the entire sum before the construction. Typically, in cities such as Mumbai, where there is a pressure on space and hence apartments and flats are much sought after, customers booking for flats in an under-construction building, is very common. “The service tax and excise duty hike on cement would increase the overall cost of apartment by about 10%,” said Dharmesh Jain, managing director of Nirmal Lifestyles, a Mumbai-based developer. “It’s a negative step and we are considering to meet the finance minister to plead for a relook on this measure,” he added. But there are other positive measures that the Budget proposes such as allowing pending projects to be completed within a period of 5 years instead of 4 years, for claiming deduction of profits, as one time interim relief. There is also a suggestion that the commercial area included in a housing project would now be 3% of the aggregate built-up area of the housing project or 5,000 sq. ft, whichever is higher, compared to the existing limit of 2% and 2,000 sq.ft. respectively. This would help developers and real estate companies to make their projects more viable.
Courtesy:- ET dt:- 01-march-2010 |
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SOME FORMS OF DEEMED TENANCY |
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A tenant can continue holding possession even after the lease is determined
Deemed tenancy is a 'tenancy by holding over'. It is an implied tenancy. Under the Transfer of Property Act 1882, some circumstances lead to a tenancy by holding over.
When tenancy by holding over is created:
• The lessee or underlessee of the property remains in possession after the determination of the lease granted by the lessor
• The lessor or his legal representative either accepts rent from the lessee or underlessee, or otherwise assents to his continuing in possession
• There is no agreement to the contrary
The expression 'holding over' refers to retaining possession. There is a distinction between a tenant continuing in possession of a property after the determination of the lease, without the consent of the landlord, and a tenant doing so with the consent of the landlord. The former is called a tenant by sufferance. On the other hand, the latter is called a tenant holding over.
A lessee holding over with the consent of the lessor is in a better position than a mere tenant at will. The assent of the landlord to the continuance of the tenancy after the determination of the tenancy creates a new tenancy.
In such a case, the lease is renewed from year to year, or from month to month, according to the purpose for which the property is leased. For example, say A lets-out a house to B for three years. B underlets the house to C at a monthly rent of Rs 2,000. The three years expire, but C continues in possession of the house and pays the rent to A. So C's lease is renewed from month to month. Similarly, in case A lets his house to B for the life of C. If C dies, but B continues in possession with A's assent, then B's lease is renewed from year to year.
A statutory tenancy is distinct from a tenancy by holding over in the sense that the former is more specific. Most rent control acts recognize statutory tenancy - either expressly or by implication. In case a tenancy is given protection under a statute, it is called a statutory tenancy.
In case of a statutory tenancy, the rights of a tenant who retains possession by holding over is defined by the statute. All rent control acts recognize and afford protection to tenants against eviction despite termination of tenancy except on the grounds recognized by the acts.
Courtesy:- FT dt:- 29/11/2009 |
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HOME LOAN RATES STABLE, SAY ANALYSTS |
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HOME LOAN RATES STABLE, SAY ANALYSTS
Vikas Agarwal outlines some significant factors that indicate stability in home loan interest rates
Home loan interest rates have come down quite significantly over the last one year as the Reserve Bank of India (RBI) cut the key policy rates (repo and reverse repo rates) and the cash reserve ratio (CRR). The RBI adopted a soft monetary policy by reducing its policy interest rates. The RBI adopted the soft interest rate regime to promote spending and stimulate economic activities, and prevent the economy from getting into a recession in line with the global economic conditions.
In general, the economic conditions have improved significantly over the last few quarters and the liquidity situation is good in the system. Many felt the home loan interest rates would start going up soon as the RBI exits from its soft monetary policy. However, analysts say the decision to tighten the policy depends on many factors and the RBI will act only after taking those factors into consideration. A premature exit from the soft monetary policy may lead to slowing down the pace of the economic growth. On the other hand, a delayed exit may result in a higher inflation rate in the economy.
Here are some significant factors that will drive the monetary policy stand in the near to medium terms:
Macroeconomic and financial parameters
The RBI has to balance the risks associated with inflation, fiscal consolidation and capital inflows. Its decision to continue or exit from the low interest rate regime depends on several factors associated with these risks. Analysts believe the RBI's policy largely depends on macroeconomic and financial market conditions.
Factors like strong aggregate demand conditions and a well-functioning domestic banking system will pave the way for a gradual exit from the soft monetary policy. Analysts believe the rates will remain stable for some more time. This policy will be in place till the various parameters give strong indications that a tightening will not hamper the economic recovery process and inflation will stay in control.
Inflation rate
The Wholesale Price Index (WPI) based inflation rate is quoting at a low level. But it is rising at an alarming pace and analysts believe it will reach the six percent levels by the end of the current fiscal. A concern at the moment is the inflation rate in primary articles, especially in the food index. The inflation rate in the food index is reported in double digits at the moment.
However, analysts believe a tightening of the monetary policy will have little effect on food inflation as its cause lies in supply shortage. The debate around this indicates there are remote chances of an immediate increase in interest rates.
Credit off-take situation in home loan segment
The credit off-take for banks in the home loan segment had been low during the last few quarters. However, with the economic recovery and improved market conditions, the demand in the housing industry is picking up. Consumer sentiments have improved, and the festival offers and schemes floated by various banks increased demand. The home loan rates are expected to remain soft and stable in the near term as most of the leading banks have extended their festival offers for some more time to attract more borrowers and increase their credit off-take.
External factors
Due to globalisation and strong interdependence of economies, central banks have to consider the global factors before taking any policy decisions within the country. There is uncertainty on the global economic recovery front. The huge stimulus packages announced by central banks across the world have pushed up the inflation rate in many countries.
However, in the US, the inflation rate is still quite low and the Federal Reserve has recently reiterated that the soft interest rate regime will continue for an extended period of time. Given the overall global situation, the policymakers are taking a cautious stance before changing the monetary policy. Therefore, the interest rates are expected to remain stable and soft in the near term.
Courtesy:- FT dt:- 29/11/2009 |
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Unitech again approach to DIPP for fund raising |
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The Second Largest Real Estate Company Unitech again approached to Govt. (DIPP) for approval for Real Estate fund raising
via FCCBs near about $700m (Rs. 3200 cr) in a single year third time.
Already in march of this year company raised $325m at price Rs 38.50
per share and in june Rs. 82 per share through External Commercial
borrowings (ECSs) which permitted by Govt in Jan 2009.
In jan 2009 the value of the Real Estate Company Unitech is one third of total debt
10,000/- cr and toady Real Estate Company Unitech shares closed at Rs 79.95, valuding the
firm at around Rs. 19,910 cr. At its peak, the firm was valued at
around Rs 87,370 cr. |
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Parsvnath Developers Ltd |
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Parsvnath Developers Ltd have recently performed ‘bhoomi pujan’ and announced the launch of Parsvnath City Saharanpur. The project, spread over 107 acres, will offer plotted development, independent floors and expandable villas at affordable rates starting from Rs9.5 lakh.
Parsvnath Developers Ltd, a real estate company, is doing multi-facet construction activities for over two decades. It has attained the status of one of the leading real estate companies of India. The company has transformed barren tracts of land into landscaped green belts housing world-class commercial, residential and recreational properties. With pan-India presence across 47 cities in 16 States, Parsvnath Developers Ltd has a diversified portfolio which includes Integrated Townships, Group Housing, Commercial Complexes, Hotels, IT Parks and SEZs. As on date, the company has 98 ongoing projects and a total developable area of over 193 million sq. ft. across all real estate verticles. Through the length and breadth of the country, Parsvnath group has successfully completed 37 projects. Today, Parsvnath with its high commitments has become synonym for perfection, innovation, customer satisfaction and transparency. They are an ISO 9001, 14001 and OHSAS 18001 certified company. |
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THE VIEW’ (RAMPRASTHA GROUP) |
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The View’ residential project has been launched by Ramprastha Group. ‘The View’ project is strategically located in Sector 37 D, Ramprastha City Gurgaon - a township spread over 45 acres of land. Other specifications of the ‘The View’ project are – 0-km from Dwarka Expressway & Metro Station, 15 minutes drive from IGI Airport, right opposite to Reliance SEZ, a premium residential experience of luxurious villas, group housing, penthouse, plotted row houses & town houses, complete with ultra modern amenities like school, hospital, hotel, shopping mall, multiplex, golf club, post office and a temple. ‘The View’ has a great planned infrastructure to boast of.
Ramprastha group is a renowned real estate company, operating in Delhi/NCR for almost four decades. The company has planned and developed many prestigious projects including townships, plotted housing colonies, and a large number of group housing dwelling units. This is the first construction company to foray into building of self-sufficient colonies. Ramprastha group, with its innovative construction techniques and unique craftsmanship, has set inimitable benchmark for its competitors. Ramprastha group’s vision is to create and promote developments that are forward looking, innovative and tailored for specific markets, to promote Ramprastha development - a good place to live, work and enjoy life, to optimize personal development of staff through quality training and establishing and maintaining the highest standards of professionalism and ethics. |
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RBI tells banks to do a realty check |
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Central Bank Ask Them To Guard Against Reators’ Exposure To Arms
NO CENTRAL bankers wants to repeat the mistakes of Alan Greenspan, the former US Fed chief, whose loose monetary policies are blamed for the subprime mess. With the first hint of a bubble in the local property market, the Reserve Bank of India has told banks to watch out for pitfalls while giving loans to builders.
In a communiqué to bank CEOs on Thursday, RBI has said, “It has been observed that some of the companies operating in the real estate sector have significant exposure in the form of advances, investment, etc to their subsidiaries and other group or related entities ….As a matter of prudence, banks may meticulously assess the inherent group risk of their borrowal account falling under the purview of real estate sector.”
Real estate firms, whose stocks have rebounded as property prices firmed up in key market like Mumbai, often lend to and invest in group companies – a practice that makes such loans risky for banks. These less credit – worthy group entities also raise money against guarantees from the parent firm or promoters, pledge of stocks and through structured deals with foreign investors who get the right to take over the company in the event of defaults.
But the regulator, according to one of India’s biggest builders, Niranjan Hiranandani, may be worried about certain isolated cases. “RBI is an efficient regulator. This circular addresses a particular problem rather than a general sectoral trend,” said the MD of Hiranandani Constructions.
Indeed, there have been cases where local banks have been kept in the dark about deals that the realtors have struck with foreign investors.
The RBI note comes at a point when banks have resumed lending after a year-long lull. New loans given by banks rose Rs 56,000 crore between July and September against a drop of Rs 7,400 crore from April to June. According to a city-based loan broker, a slice of this money has gone to property developers.but senior bankers think that lenders are doing the necessary due diligence. “This is just cautionary note from RBI. Most banks are already following this philosophy,” said Canara Bank chairman AC Mahajan.
RBI, widely perceived as one of the world’s most conservative central banks, has been apprehensive of property bubbles since the Asian meltdown of ’97. As property emerged as an asset class among Indian investors in recent years, RBI hiked the loan risk weightage for banks – a measure that required lenders to have more capital to give the same loan. It also tightened home loan margin norms, which led banks to cap the loan at 80% of the property value.
In the coming weeks, realtors will try to figure out the possible reasons that led RBI to issue the circular. “Since RBI has come out with a directive, industry bodies like NAREDCO and BAI would look to know the root cause behind it,” said Rajeev Talwar, group executive director of DLF. “Some banks,” Abhisheck Lodha, director, Lodha Developers, “may have a large exposure to a particular real estate group and this can expose the whole system to a big risk.” It’s evident that RBI is closely monitoring the stunning recovery by real estate companies, many of which are back from the brink. A year ago, these companies had forced mutual funds to rolls over bonds, made banks restructure loans and borrowed at as high as 25% interest to stay afloat. A few which had borrowed against stocks almost lost control of the company. Today, they are back in business.
The RBI note is specially aimed at the large firms. It says,”…while assessing the loan requirements of large builders/land developers, they(bank) may carefully analyse the financial credential/viability of the borrowers on a consolidated basis supported by the consolidated accounts/position of the group. They may also examine the financial credential/viability of the relevant unconsolidated related entities such as special purpose vehicles (SPVs)”
The RBI’s unstated concern may be the nature of deals that these SVPs have entered into. In the past five years, the Indian real estate sector has received around $20 billion in foreign direct investment, a chunk of which has come into multiple SPVs that builders floated to promote special projects. Tagged with this money, mostly in the form of quasi-debt, are tough conditions which local builders have to meet to avoid loan recall and litigations.
ET dtd: 25/09/09 |
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BANKS TOLD TO COME CLEAN ON RETAIL LOAN CHARGES, PRICING |
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Home loan borrowers can now look forward to more transparent pricing from banks, with the Banking Codes and Standards Board of India (BCSBI) directing its member-banks to come clean on their lending policies and its other services upfront.
Henceforth, those who avail of floating rate home loans will have to be informed of the reference rate to which the floating rate is anchored. Bank will also have to disclose on their websites of changes in such reference rate as and when they take place on a real-time basis. This was indicated by KJ Udeshi, chairperson of BCSBI, a joint initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) while unveiling revision in banking codes on Tuesday.
The revised codes will be applicable to almost all major commercial banks in the country. These banks have been persuaded by the regulator to voluntarily accept the banking codes which force banks to announce minimum service standards. Banks will now have to come clean on charges and the pricing mechanism and they can’t charge anything more than what they have put out in public domain. If member banks do not follow publicly-announced policies, then the Board could intervene and ensure that they comply with the public announced policies, Ms Udeshi added. Speaking on the occasion, RBI deputy governor KC Chakrabarty said the codes would essentially help those vulnerable sections of the society who do not have any other platform for redressed. Going forward, customer services will assume more importance in regulation. “As a regulator, we have the responsibility towards customers,” he said.
The revised code has called for banks to bring greater transparency, further enhancements in systems in banking practices relating to customer service, a more responsive grievance redressed system in banks and provide additional protection to customers.
Banks will also have to explain the provisions of the Income Tax Act, applicable to interest income and obtain form 15G/H at the time of opening a term deposit account, besides not insisting on insisting on an insurance cover for securities lodged. The banks are also directed to dispose customer complaints in 30 days, among other things. Banks now have to come out with the most important terms and conditions (MITC) for credit cards and loans that are more simple and concise.
Customers can now refer to banks’ websites for policies relating to cheque collection, compensation, collection of dues and grievance redressed. BCSBI will also start its credit counseling services from its premises at Bandra-Kurla Complex in Mumbai, from October 1, 2009. The services will be free of cost to any retail borrower and micro and small enterprise customers of member banks. However, the cases of willful defaulters will not be pursued by the Board.
Courtesy:- ET dt:- 23-09-09 |
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LUXURIOUS APARTMENTS AT EAST OF DELHI |
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Max City Developers brings to you state of-the-art architectural and engineering excellence called "Park Sapphire". Strategically located, just 2 km east of Delhi (Anand Vihar) in an integrated township spread over 100 acres of Ramprastha Greens in the very heart of Vaishali, the project has three high-rise 15-storey towers with luxurious two and three bedroom apartments and penthouses. The construction is in full swing with December 2010 the project completion time.
Courtesy:- HT Estates dt:- 19-09-09 |
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HI-TECH TOWNSHIP IN LUCKNOW |
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Omaxe Ltd. will develop a hi-tech township spread over 2700 acres (approx) in the heart of Uttar Pradesh in Lucknow. Garv Buildtech Private Ltd, a subsidiary of Omaxe, has signed a Memorandum of Understanding with Lucknow Development Authority to develop the Hi-tech Township in Lucknow.
The Hi-tech Township will be executed over a period of five-seven years. It will cater to the growing demand of quality living space in the city. The township is strategically located on the proposed Lucknow Ring Road, close to Lucknow Airport and an half-an-hour's drive from Hazratganj, center of Lucknow city.
Courtesy:- HT Estates dt:- 19-09-09 |
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BEST TIME TO GO HOME SHOPPING |
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INFLATION UP RBI MAY ALLOW HOME INTEREST RATES TO BE RAISED LATER |
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If you are planning to buy a house, now is the time. Do it now, because a rise in interest rates might not be too far away.
Ending a 13-week streak of contraction, the wholesale prices based inflation rate returned to the positive zone in figures relating to the week ending September 5, triggering speculation about when the Reserve Bank of India (RBI) would announce a rise in lending rates.
Inflation measured by the wholesale price index (WPI) rose by 0.12 per cent for the week.
It had fallen by 0.12 per cent in the previous week.
The RBI faces the dilemma of containing prices without making loans costlier for individuals and corporations in an uncertain economy.
One way to contain inflation is to reduce the amount of money circulating in the economy.
The RBI usually does this either by sucking out liquidity from banks by raising the cash reserve ratio (CRR, or the percentage of deposits commercial banks have to park with the RBI) or by raising interest rates and reducing demand for money.
A rise in interest rates could upset plans of realty firms as people defer plans to buy homes.
"Borrowing rates may go up in three months' time and that may result in a rise in lending rates," said R.R. Nair, CEO, and LIC Housing Finance.
The government said the rise in inflation rate was not unexpected. "This is a trend we were expecting," finance minister Pranab Mukherjee told reporters.
Courtesy:- HT dt:- 18-09-09 |
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EMERALD ESTATE GURGAON |
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MGF Development Limited of India and Emaar Properties, a Public Joint Stock Company (PJSC) of Dubai have made a joint venture and have developed a company in the name of ‘Emaar MGF Land Limited’ to make it one of India’s leading real estate company. Emaar MGF Land Limited started real estate activities in India in 2005. Emaar MGF has developed many projects in residential, commercial and hospitality sector across lengths and breadths of the country. Company’s vision is to be India’s leading and most admired real estate company. Their mission is to develop and deliver unique lifestyle and work place environments in India through world-class quality, integrated infrastructure and master-planned development.
‘Emerald Estate’ project is being developed by Emaar MGF Land Limited in Sector 65 Urban Estate Gurgaon. The project is ideally located in proximity of National Capital. Emerald Estate Gurgaon is a part of the larger master planned gated community of Emerald Hills, Emerald Estate, a 25-acre mid-rise group-housing development. In the project area, clean crisp air, clubhouse, state-of-the-art security, centralized piped cooking gas system, wide internal roads and shopping make it a great place to live in. |
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COS WITH LAND BANK TURNING REALTORS |
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Upsurge In Real Estate Sector Prompts Bombay Dyeing, Century Textiles & Golden Tobacco To Develop Property
The revival of fortunes in the real estate sector has encouraged textile companies with huge land banks to foray into property development. Among such companies are textiles major Bombay Dyeing and Century Textiles. To date, most of the textile firms sold their land to developers.
Golden Tobacco, manufacturer of the Panama and Chancellor Cigarette brands, is also mulling to have its real estate arm to utilize its land assets across the country.
Earlier, groups like Tata, Mahindra and Godrej also entered the realty space. The Tata group has Tata Housing and Tata Realty while Mahindra’s venture is called Mahindra Life space Developers. Godrej’s venture goes by the name of Godrej Properties.
Nusli Wadia, Bombay Dyeing’s chairman, at the recent annual general meeting (AGM) said the progress on the real estate business was encouraging. Later, he told ET, “We have a land bank of 64 acres in Mumbai and we will develop this in a phased manner. The plan is to develop the land ourselves without involving a developer. We do not intend putting our land on the block.” Bombay Dyeing’s property is situated in central Mumbai. The real estate business for the company clocked revenues of over Rs 250 crore for FY 09. Apartments have been developed in Worli and Lower Parel.
Bombay Dyeing does not have a separate company in place for the realty foray. The company spokesperson declined to comment on the possibility of floating a real estate company.
BK Birla Group’s Century Textiles, which has a land bank of around 20 acres in Worli, will be the other company to enter the real estate space. “The company is considering real estate development and there could be some concrete development in the next couple of months,” said Century Textiles president RK Dalmia.
Meanwhile, Golden Tobacco, a Sanjay Dalmia group company, is also mulling the option of having a separate real estate arm. The company has land in many parts of India. Its 7.5-acre property in Mumbai was intended to be developed with a real estate company. However, it is learnt that Golden Tobacco will now go alone on this project. “We are looking to optimize our real estate resources and would do the needful in that regard,” said the company’s spokesperson.
Said Amber Maheshwari, director, investments, DTZ, an international property consultant, “The sector is looking better by the day and it is a good thing that corporates are venturing into it. This would not only improve the domestic framework but also bring in some good corporate governance practices. There will be more supply of land.” It is estimated that if the plans of these companies fructify, land worth $1.5 billion will come in as fresh supply.
Courtesy:- ET dt:- 16-09-09 |
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Bhumi Pujan by KLJ Town Planners in Bahadurgarh (Haryana) |
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KLJ Town Planners has performed a ‘bhumi pujan’ for their group housing project – KLJ Heights – in Bahadurgarh. Within the first phase of the group housing project, the company proposes to develop 300 flats each in the two and three bedroom category.
KLJ Group was founded by Shri K L Jain long back in 1968. KLJ Group is now the upcoming leader in construction/real estate sector having completed number of projects. The company is striving ahead to give its consumers better commercial and corporate space with world-class standards. They are in the process of developing Integrated Townships/Group Housing projects at Faridabad and Bahadurgarh (Haryana) and IT Park at the most prime location in Gurgaon and Greater Noida.
The vision of KLJ Group is to contribute significantly to building the new India and become most valuable realtor. The company has developed an impeccable goodwill and enjoys leadership in India in real estate sector.
Their other upcoming projects of KLJ Group are – La Vista, Sector 77, Faridabad and KLJ NTWork City, Greater Noida
Their completed projects are – KLJ Tower North Delhi, Park Centra Gurgaon, Shop’in Park North Delhi, Centra Square Noida, Shop’in Park CBD (Central Business District) East Delhi.
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REAL ESTATE REVIVAL STORY BEING SCRIPTED BY INVESTORS: ANALYSTS |
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The real estate revival story is being driven by the residential segment, but contrary to the claims made by a number of developers that end-users are their main buyers, the current trend is being driven by investors.
“These are investors who are taking an opportunistic view of the situation where prices have corrected considerably in many locations,” says Sanjay Dutt, CEO business at Jones Lang LaSalle Meghraj (JLLM). He estimates that a good 40% of the stock sold in the last few months would have gone to investors. In Delhi-NCR, this figure might be higher at 50%.
“Investors are back in good numbers and before the curve goes up, they want to buy. Some who have bought are already hoping to book profits during this Diwali,” he adds. This could be a precursor to further improvement in investor sentiments, since investors would take this as a sign to look towards a sustainable run in the future.
Investors took flight from the residential real estate market when the market crashed last year and many have been shy of venturing back. The last few months though have seen a number of affordable launches at price points, which have stimulated the market. Most developers have launched mid-income housing in the Rs 20-40 lakh range, which has created a movement.
While the short-term investor is there, interestingly, a good number of the investors are medium to long-term investors. “These investors are flocking to real estate because of the lack of other investment opportunities in the market at the moment,” says Ajit Krishnan, partner, real estate practice at audit firm Ernst and Young who feels the trigger for these investors was the drop in price points in the residential segment in the last eight months.
These investors are not purely speculative and are investing in real estate as a shelter against inflation, he says. Other investment opportunities today do not yield the same results.
Developers on their part are insisting that a majority of the buyers in their projects are end-users. As there is no set way to differentiate investors from end-users, Unitech looks at consumer behaviour to judge one from the other. “Investors usually are not too bothered about specification details, do not go for site visits too often. We have not seen such behaviour at our projects. It appears that a large majority are end-users,” says R Nagaraju, general manager of corporate planning at Unitech.
Wherever prices have been brought down to attract customers, there have been investors but Aditi Vijayakar, executive director, residential services at Cushman & Wakefield says these investors are mostly long term. “These investors are using this decline in the market to buy another property which they can decide on selling after the project is delivered,” she adds.
Alongside investors are endusers who are mainly interested in completed homes. “The question is of consumption. We are definitely seeing movement in completed properties which are being picked up end-users,” explains Krishnan.
Prices in the residential market in NCR-Delhi and Mumbai have started to climb up in the last months or so and Vijayakar warns that it is a little too early to raise prices. “In the medium term, it will not be sustainable for developers,” she says. There is a concern that the few end-users who have started to show interest might be deterred from making purchases if the prices of homes keeps rising.
Courtesy:- ET dt:- 08-09-2009 |
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DLF NEW PARTNER OF MOTHERCARE |
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UK Retailer Forms 51:49 JV With Indian Realty Co, Present Franchise Deal With Shoppers Stop To Coexist
Mother care, a UK retailer for kids and expectant mothers, is forming a 51:49 joint venture with India’s largest real estate company DLF, two people close to the development said.
While the company would continue its existing franchise agreement with department store chain Shoppers Stop, it hopes that the new JV will give it greater control over its Indian operations and ability to expand quickly in one of the fastest growing economies, they said requesting anonymity.
Both DLF and Mothercare refused to confirm the developments brushing it off as “market speculation”.
Mothercare spokeswoman Catriona McDermott said in a statement that the company was committed to its ongoing expansion in the Indian market. She said the company has 21 stores in affiliation with Shoppers Stop, which will remain a Mothercare franchisee in India.
“Shoppers Stop continues to be a valuable partner in Mothercare’s ongoing Indian strategy,” she said.
The UK retailer had been in discussions with DLF and Tata group retailer Trent for a possible equity partnership in India.
In the past, many foreign retailers, who nurtured a long-term view on India, have shunned the franchise route to form JVs with Indian partners. Last year, UK’s largest apparel retailer Marks & Spencer entered into a joint venture with Reliance Retail ending its franchise agreement with Planet Retail. Indian laws make it compulsory for a foreign retailer selling a single brand to take on Indian partner as the former can’t own more than 51% equity in a retail business. Foreign investment is still not allowed in companies that sell more than one brand.
A JV in India traces Mothercare’s recent move in China, which saw it breaking from its tradition of growing overseas only by franchising to local organisations. It has formed a joint venture with local partner Goodbaby in China.
“We envisage that we may engage in more joint ventures in future, though we will remain mindful of political, cultural and economic risks which attend international investment,” chairman Ian R Peacock said in the latest annual report, talking about China joint venture.
The UK retailer, which has 1,014 stores in 50 countries, including 609 stores outside the UK, sees the international market as “the biggest single growth opportunity”, as per its annual report. Mothercare reported an International retail sales growth of 41%, as against 6.9% overall sales growth for FY09 to £723 million. Similarly, international same store sales were up 6%, as against UK’s 1.4% for FY09.
A joint venture with Mothercare further diversifies DLF’s portfolio of brands, which already has Giorgio Armani, Dolce & Gabbana, Salvatore Ferragamao, Sunglass Hut and Sia Home. The realty firm, which has been partnering foreign retailers—usually as junior ally—aims to have a stream of clients for its malls through these tie-ups.
A typical standalone store of Mothercare in India is 3,000-6,000 sqft, while a shop-in-shop is 1,800-2,000 sqft. The retailer offers a range of products, including clothing, hardware and toys in India for mothers-to-be, infants and pre-school kids and sources over 70% of products sold in the country from global vendors.
Courtesy:- Et dt:- 08-09-2009 |
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REAL ESTATE SECTOR - SIGNS OF RECOVERY |
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Lower home loan rates, property price cuts, apartment downsizing and a recovery in the job market have helped to increase demand for residential projects. On showing interests by buyers, developers and builders have launched many new affordable projects across the cities. During early period of this year, interest in properties were being shown by business class and professionals whereas service class was not showing any interest owing to risk of job layoffs. Now on diminishing the risk of job layoffs, service class has also started showing interest in properties. Low property price is another aspect which has attracted the service class to real estate sector leading to a strong revival in demand for residential apartments.
With the return of liquidity to the real estate sector in form of FDI (Foreign Direct Investment), QIPs and bank loans in recent months, the financial position of realty players has started improving. Motivated by this, the developers and builders have started launching new affordable apartments to boost the real estate sector.
RBI has relaxed certain norms for realty companies. Loans granted by banks to housing finance companies for further lending to individuals for purchase/construction of dwelling units, may be classified under the priority sector if the loan amount granted is less than Rs 20 lakh. Priority sector lending attracting lower rate of interest will boost real estate sector.
Price reduction by 20-40% depending on project location and reduction in apartment size have brought a greater section of buyers into the fold. The increasing demand has induced many builders and developers to launch many new projects. The new launch tally is on increase. Downsizing apartments has reduced the cost of dwelling units by 50% enabling a lower segment of society to select a house at a better location or at the same location but at a lower cost. Cheaper home loans have further attracted more and more home buyers.
All these aspects have shown signs of recovery in real estate sector. |
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THE REIT WAY |
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Are Indian REITs ready to make a mark or are they losing business to those from overseas markets? Kamlesh Pandya analyses
In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.
REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. "The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate," he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels.
REITs in the Indian scenario, are yet to take off, says Ashok Kumar, principal and managing director, CresaPartners India. "Certainly, we are losing out on such opportunities to overseas REITs, as it does not seem to be a priority for the government," he regrets. The real estate sector in India is still complex and the regulators have to fix a lot of policies and valuation issues, in advance, for REITs to become functional, he adds. "If one considers the union budget 2009-10, there was no mention about FDI in real estate or REITs and REMFs. However, we hope that the FM will announce some relief for the sector, post the budget," adds Kumar.
Realtor Bharat Mailk points to a paper, 'Indian REITs: Are We Prepared', by the ASSOCHAM and CRISIL and says that REITs in India would have the potential to hold at least five per cent share of the total global real estate market, by 2010. The size of this global market would touch US $ 1,400 billion, according to the paper. "According to the paper, by 2010, REITs alone would hold a market size of US $ 70 billion of the total real estate market, as the concept is gaining ground in countries like India and other developing nations," he says, laying out the statistics. In the Indian context, REITs can help provide an exit route for developers, to revolve funds more efficiently. It will also provide opportunities to retail investors to participate in the real estate sector and provide asset diversification to corporate investors, besides building a vibrant secondary real estate market, adds Malik.
REMFs are the Indian version of the international REITs, adapted to the Indian mutual funds platform, explains Shobhit Agarwal, joint MD (capital markets), Jones Lang LaSalle Meghraj. "In the current context, while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed,'' he points out. The leveraging allowed in the case of Indian REITs is the lowest (at 20 per cent of the value), compared to 35 per cent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in the case of Korea. This could result in a lower yield and because it is not really leveraged, the risk taken is also more," he cautions.
Mihir Dhruva, CEO of Siddharth Group is of the opinion that REITs should be more preferred by the 'low-risk, low-return' investor segment. "Sentiments, which contributed significantly to the depressed market in FY 08-09 are now reversing," says Dhruva. "This has been reflected in reports coming from different cities, showing revival of real estate transactions and REITs should have a positive response as a result," he concludes.
Courtesy:- ET dt:- 31-08-09 |
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REALTY TRIES TO PUT DOWNTURN TO BED WITH 10-15% HIKE IN PRICES |
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Developers Jack Up Prices In Mumbai & NCR; Move Likely To Dampen Demand
With residential property buyers gradually returning to the market, especially in key regions like New Delhi-NCR (National Capital Region) and Mumbai, realty prices in these areas have moved up 10-15%. While some developers have increased prices across projects, others are doing it on a project-specific basis.
Industry trackers say the hike in prices could result in demand moving southwards. Realty fund Kotak Investment Advisors’ director, Vikas Chimakurthy, said, “There was a substantial demand, especially in the mature markets, after prices dropped a few months ago. Today, potential customers are not willing to buy properties at these (higher) prices.”Developers, meanwhile, confirmed the decision to hike prices. “We have increased prices across all our properties by 10%. It is not much and is the result of the improved market conditions,” said Abhishek Lodha, director, Lodha Developers, a Mumbai-based company that has projects in and around the city.
Delhi, like Mumbai, is witnessing a hike in prices of realty projects. DLF, the country’s largest real estate company by market capitalisation, is one of those whose properties will be dearer. “Yes, there has been a price increase though it is still limited to some projects nearing completion,” said DLF executive director Rajeev Talwar.
How long these prices will hold out is hard to determine. “Mumbai and some parts of New Delhi have been witnessing some rise in price and it will be interesting to see if these prices are sustainable. In other markets like Bangalore, supply still exceeds demand,” said real estate consultant Saffron Asset Advisors managing director Ajoy Veer Kapoor.
As realty gets pricier, there has been concern among buyers about whether this is purely on account of the economic scene improving or due to builders reaching an understanding among themselves. Though prices have not reached the 2007 levels, the hike has been enough to make buyers think twice. “We are still a while away from the 2007 levels, which could take two more years. In our case, we have increased prices by around 5% for our projects and are hopeful of a recovery by the end of this year,” said Hiranandani Constructions managing director Niranjan Hiranandani.
Courtesy:- ET dt:- 03-09-09 |
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ICICI CUTS HOME LOAN RATES TO REMAIN COMPETITIVE |
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Joining the battle being fought in the market for mortgages, India's second-largest lender, ICICI Bank, has cut rates for home loans from August 20.
Accordingly, the rate for home loans up to Rs 20 lakh will now be 8.75 per cent, while loans between Rs 20-50 lakh will be charged 9.25 per cent. For loans above Rs 50 lakh, the rate has been fixed at 9.75 per cent. Earlier, loans below Rs 30 lakh were charged 9.25 per cent while the rate for loans above Rs 30 lakh was 9.75 per cent.
The battle in the home-loan market was sparked by the country's largest lender, State Bank of India (SBI), which announced a competitive package early this month. Now, loans from SBI are available for 8 per cent for the first year and 8-9 per cent for the next two years depending on the size of the scheme.
Two weeks ago, India's largest mortgage lender, Housing Development and Finance Corporation (HDFC), reworked its interest rate slabs, resulting in a 50 basis points (bps) cut to 9 per cent for loans of Rs 30-50 lakh. In mid-July, HDFC had cut interest rates on loans of up to Rs 15 lakh by 50 basis points to 8.75 per cent.
The last mortgage player to cut home-loan rates was LIC Housing Finance. The country's second-largest mortgage player cut floating rates by 50 bps from 9.25 per cent to 8.75 per cent for loans of Rs 30-75 lakh.
ICICI Bank, which has seen high losses on its unsecured loans portfolio, has indicated that it wants to continue growing its mortgage and auto loans portfolios.
As of June 30, 2009, the lender's outstanding housing loans portfolio was Rs 53,472 crore.
Courtesy:- BS dt:- 28-08-09 |
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HOUSING AFFORDABILITY MORE ACCESSIBLE |
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Housing units, now available at affordable price, have become more accessible for middle income group people across seven cities in the country. The fall in interest rates for home loans in the last eight months, has given momentum to Housing Affordability. During the period, interest rates on home loans upto Rs30 lakh have come down by three percentage points from 12% to 9%. This has improved the capacity of the borrowers. For instance, at 12% the EMI on Rs10 lakh loan to be repaid in 20 years is Rs11,010/- whereas with interest rate at 9%, a person can borrow Rs12.30 lakh with the same EMI. This means, now he can buy a house with 20% higher value than what he could have done in 2008.
Since January 2009, prices of residential units have fallen by 30%. This has brought housing within the reach of large number of buyers.
It is expected that total housing requirement in affordable section across seven cities – Mumbai, National Capital Region (NCR), Channai, Bangalore, Hyderabad, Kolkatta and Pune – will be approximately 2.06 million dwelling units by 2011. The group earning Rs3 lakh to Rs6 lakh would drive this demand.
As per the Housing Development Finance Corporation (HDFC), the maximum affordability of a household has been computed to be 5.1 times its annual income. In other words, for a household earning Rs3 lakh a year, an affordable house should cost Rs15 lakh. In the NCR, the average budget of buyers varies between Rs19 lakh to Rs31 lakh.
Keeping in mind factors influencing choice of location, buyers in the NCR prefer Noida, Ghaziabad and Gurgaon.
Affordable housing has helped the builders and developers to come out of their liquidity crunch as affordable dwelling units are attracting much demand in the market. |
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BPTP MULLS PUBLIC OFFER |
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Delhi-Based privately held realty firm BPTP, which shot into limelight last year after winning the bid for the country’s largest-ever land deal in Noida and slid into a financial mess thereafter, says it has seen off the financial troubles but remains cautious on growth. The company intends to raise funds through an initial public offer (IPO), but has not decided on the timing or the amount to be raised, a senior executive said.
“We are out of this mess (Noida land deal). Home sales have picked up and we have received bookings for around 5,500 homes,” said BPTP director Sudhanshu Tripathi, explaining how things were improving at the firm.
In March 2008, BPTP placed a big bet by outbidding realty giant DLF to win the Rs 5,000-crore land deal in a government auction. The property market went into a slump soon after the land deal. To add to the company’s woes, one of the financial investors — Citi Property Investors (CPI) — reduced its commitment of $160 million in BPTP’s special economic zones (SEZs) to just $100 million. This was in line with many other private equity deals that either got scrapped or scaled down in the downturn.
Eventually, BPTP acquired only a part of the land (23 acres of the total 95 acre) that it won in the auction. It shelled out Rs 1,300 crore for the transaction, half of which was raised through stake sale to J P Morgan and Citi Property Investors and rest came from promoter Kabul Chawla.
BPTP, which claims to have a landbank of over 2,000 acres in the national capital region, may soon revive its plans to raise capital and give exit route to its foreign stakeholders Citi Property Investors and JP Morgan, which together hold close to 9% in the company. “We will contemplate an IPO in 2-3 months to raise funds for our growth. But right now we haven’t charted a growth plan. We still remain cautious,” Mr Tripathi says.
Courtesy:- ET dt:- 27-08-09 |
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U.S. HOUSING, DATA SHOW SEEDS OF RECOVERY |
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Larger-than-expected improvements in U.S. housing prices and consumer confidence on Tuesday lent new weight to signs the economy is emerging from the longest and deepest recession since the 1930s.
U.S. home prices rose for the second month in a row in June, according to a closely watched S&P index, and consumer confidence jumped in August.
In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds as the decision promised a consistent approach to monetary policy in the years ahead.
The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War II. "The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.
Major U.S. equities indexes climbed to new 2009 highs on the day's events, while bond prices fell as signs of a resurgent economy reduced interest in safer investments.
The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily outpacing forecasts, on an improved outlook for the job market and the overall economy.
The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away. "Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.
The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.
Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but those saying jobs were plentiful were just 4.2 percent.
"Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco
Other data supporting recovery hopes came from the Standard & Poor's/Case-Shiller index, with prices of U.S. single family homes rising by 1.4 percent in June from May, after creeping up by 0.5 percent in April.
The data gave fresh evidence that the three-year housing slump is finally easing. The housing market is considered a critical component to a broad economic recovery.
Courtesy:- BS dt:- 26-08-09 |
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REALTY COS BACK IN DEMAND AS INVESTORS SEE OPPORTUNITY |
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Never mind the fact that the smartest of investors on Dalal Street lost a fortune on their investments in realty stocks when the market nosedived last year. Shares of property developers are back in demand with market operators, who feel there is a good trading opportunity in this segment for the next couple of weeks. First quarter numbers of most realty firms were dismal, and any improvement in the current quarter, could only be incremental, say brokers. On their part, the bulls are peddling anecdotal evidence pointing to an improvement in demand and pricing power. Some of the early birds in the sector seem to be using the current frenzy to book profits. The fund manager of one of the largest long only India-dedicated funds, who shares his first name with the actor who played the role of Thakur in Sholay, is said have been cutting exposure to some of the realty stocks that he had picked up in March this year.
Courtesy:- ET dt:- 26-08-09 |
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AFTER THE OVERWHELMING RESPONSE TO MY FLOOR, TDI BRINGS YOU MYFLOOR 2 |
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Now own your 3bhk from Rs. 16.50 lakhs onwards.
TDI is proud to present ‘My Floor 2’ your own independent floor in TDI City, Kundli. Just 2 minutes from NH1.
* My Floor complex is a part of a 1600 acre township with schools, hospitals and clubs
* TDI City is only 2.5 kms from the Delhi Border
* Adjacent to Rajiv Gandhi Education City of 5000 acres
* Next to proposed KMP and KGP Expressways
* Metro connectivity nearby
Home Loan Facility Available From Leading Banks
Courtesy:- HT dt:- 23-08-09 |
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TDI TO INVEST RS 1K CR IN NCR |
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After successful phase 1, co to build 350 low-cost houses in kundli
Delhi-based realty firm TDI is planning to invest Rs 1,000 crore to build lowerpriced homes in the national capital region in the next three years, a senior company executive said.
“The demand for homes is coming back slowly,” said TDI managing director Kamal Taneja, adding that the company was focusing on lower priced homes to attract buyers. TDI, which has its real estate projects spread over Delhi, Kundli and Panipat in Haryana and Mohali in Punjab, recently launched 350 residential units in Kundli and claims to have sold all of it in just a month. The company is now planning to launch another 350 homes over the weekend in Kundli, around 35 kms from central Delhi. The 900-sqft independent floor homes will be priced between Rs 16.50-19.50 lakh. The company will invest around Rs 1,000 crore to build a total of 700 homes in Kundli over the next three years, Mr Taneja said.
TDI has tied up with architectural firms Drew Dickson Associates of Australia and HO Partners of Hong Kong for development of its 1600-acre Kundli township. Following a revival in the capital market, many listed real estate companies, including Unitech, HDIL and Sobha, have raised funds via QIP, while some other unlisted firms such as Lodha Developers and Emaar MGF, are lining up their initial share sale. But Mr Taneja says the market is still volatile and an IPO is not on the cards for TDI immediately.
He says his company is relatively less leveraged and doesn’t intend to go in for any private equity deals either immediately and would focus on selling homes to raise cash. “There is very little private equity money available and there are too many developers chasing it. Also, private equity investments made these days are actually debt structured as equity,” he says, explaining why he is not excited about getting PE fund infusion in his company.
Courtesy:- ET dt:- 21/08/2009 |
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SAHARA PRIME CITY PLANS TO RAISE RS 5,000 CR IN IPO
Sahara group’s realty arm Sahara Prime City is planning to raise up to Rs 5,000 crore by this year-end through an initial public offer (IPO) and will approach market regulator SEBI later this month in this regard.
The company is believed to have engaged investment bankers, including Kotak, Enam and JM Financial, for the public issue, market sources said.
The draft prospectus for the IPO is being readied and the same could be filed with the Securities and Exchange Board of India by the end of this month.
No comments could be obtained from the Sahara group spokesperson, but sources said the group would wish to launch the IPO by the end of this year, subject to Sebi approval.
Sahara Prime City will be the third Sahara group entity to enter the capital market after Sahara Housingfina Corp Ltd and Sahara One Media and Entertainment Ltd. It is present in over 200 cities with its housing and commercial projects. However, the group’s ambitious Ambey Valley project is not part of the company
Courtesy:- BS dt:- 21-08-09 |
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DLF BAGS GURGAON LAND FOR RS 1,750 CR
DLF, the country’s largest realty firm, today bagged a 350-acre plot for Rs 1,750 crore in Haryana for developing a recreation and leisure project, making it one of the costliest land deals in recent times.
“The letter of acceptance has been issued to the successful bidder (DLF) after getting the approval from the state government,” Haryana State Industrial & Infrastructure Development Corporation Ltd (HSIIDC) Deputy General Manager Priya Sardana said.
Earlier this week, DLF emerged as the sole bidder for the 350-acre project after the bids of other parties — Unitech and Malaysia-based Consortium comprising Country Heights, Country Club of South Africa and Rajarhat IT Park — did not qualify on technical grounds.
The qualified bidder, DLF, had quoted its bid at Rs 12,000 per sq mt against the reserve price of Rs 11,978 per sq mt for the project.
Earlier, BPTP had bagged a 95-acre plot in Noida for Rs 5,006 crore in 2008, but later surrendered because of inability to arrange funds for the payment.
DLF had acquired 38 acres in the heart of Delhi for Rs 1,675 crore. Unitech had bagged 1,750 acres in Vizag for Rs 3,350 crore, while the company won 340 acres in Noida at Rs 1,582 crore in 2006.
HSIIDC had invited competitive bids in January this year for allotment of 350 acres of prime land on freehold basis, at village Wazirabad in Gurgaon, for setting up of a recreation and leisure project comprising commercial and residential buildings and golf courses.
The corporation reinvited the bids after the sole bidder at that time — DLF — pointed out certain difficulties in project implementation.
In the second round of bidding, Unitech was disqualified as its partner was found ineligible for developing the project, while the bid of the third party did not qualify as the net worth of the Malaysia-based company Country Heights was less than the required amount of Rs 500 crore.
Courtesy:- BS dt:- 21-08-09
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Our group company is located at:
460, 3rd Floor,
Kohat Enclave, Pitampura,
Delhi-110034. |
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Phone: 011-47082733, 42470622, Telefax: 011-47082736.
E-mail : info@zameen-zaidad.com, info@propertycafeteria.com
Websites: www.zameen-zaidad.com, www.propertycafeteria.com |
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Real Estate India - Online Real Estate - buy sell rent commercial residential properties in India - Zameen-Zaidad.com
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