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 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

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.

Country’s largest property firm, DLF, has shuffled it top deck with its CFO Ramesh Sanka being replaced by Ashok Tyagi and hotel division head Shakti Singh leaving the firm.
A circular signed by company’s vice-chairman, Rajiv Singh, on Wednesday said that Mr Sanka, the group CFO, has been “promoted as the managing director of the office business.” He will lead office leasing business, facility management and utilities business. He joins A S Minocha, who now will change his role from executive chairman to non-executive chairman in the office business.
The transition had begun over a month ago, when Ashok Tyagi, who was until recently managing Mr Singh’s office, was asked to prepare for the CFO’s role. The existing finance, accounts, banking, tax and business planning teams across the group will now report to Mr Tyagi, according to the circular sent to employees. Sriram Khattar will replace Mr Tyagi in vice-chairman’s office.
There has been speculation around Mr Sanka’s exit from the group ever since the property market went into a downturn leading to DLF shares touching an all time low. The speculation about his exit coupled with the sale of some of his shares of DLF once sparked a massive sell-off in the market earlier this year. Mr Sanka and the company denied any proposed exit of the CFO, but speculation didn’t die down.
In another significant move, Shakti Singh, who spearheaded DLF’s hotel business has also quit. Mr Minocha will take over the hotel business. Y K Tyagi, an executive director in the hotel vertical, will continue to oversee Amanresorts, a luxury hotel chain DLF purchased in late 2007, and will report directly to the vice chairman.
DLF has recently restructured its entire business by dividing it into sale and lease verticals. The sale vertical includes all homes, and those offices and shops that are slated for sale. Malls and offices slated for leasing are part of the other vertical. The ‘lease’ vertical will now have Mr Sanka as it head, while the other vertical is headed by DLF MD T C Goyal.
In the past six months, DLF has witnessed other exits from its top rung. The company’s residential vertical head, A D Rebello, and SEZ head Yogesh Verma too quit to join other companies earlier this year

Courtesy:- ET dt:- 01-10-09

Activity in the residential property market has increased quite significantly during the last couple of months. As consumer confidence is increasing, the developers are launching many new projects. Many of these projects are being launched with lesser frills to target the middle income segment using the affordable housing tag. As the festival season begins, analysts believe developers will offer some attractive schemes to attract homebuyers and book as many units as possible. Analysts also feel there are many factors that indicate property rates are at the bottom and could start rising in the medium term. The overall economic conditions are improving and the demand in the housing market is slowly picking up, which is expected to drive property rates upward. Also, the interest rates on housing loans are quite low due to the soft monetary policy adopted by the Reserve Bank of India (RBI) . Currently, banks have excess liquidity and the demand in the retail loan segment has been subdued during the last few quarters. Many banks are planning attractive home loan schemes to draw homebuyers during the coming festival season. Therefore, people looking at investing in property can make a serious attempt to get a good property and home loan deal. Usually, an investment in a housing property requires a long-term financial commitment for an individual. The housing loan usually runs for a long term (10 to 15 years) and therefore, it is very important to think through various financial aspects around it. Volatility in interest rates has increased quite a bit during the last few years and the cycles of interest rates- upswings/downswings – have become short (as visible during the last few years). Financial institutions have virtually stopped offering loans with fixed interest rates for the full tenure. Therefore, it is very important for those looking at taking a home loan to plan their monthly inflows and outflows well in order to avoid any defaults.

Courtesy:- ET dt:- 25-09-2009

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

                                                                                                    Source: The Economic Times
                                                                                                    Date: 21 June, 2009

The realty market in the city is seeing a renewed interest after a long time. After a prolonged dry spell in real estate market buyers are now back specially in Residential segment. A big industrial city Ahmedabad is witnessed with a great interest, according to conservative estimates builder in Ahmedabad and Gandhi Nagar have raked in business worth Rs. 1000 Crore in the last one month.

According to estimates, in the last one month builder having projects in Ahmedabad and Gandhinagar would have done business of about Rs. 1000 cr. Mr. Patel Said, Vice president, GIHED (Gujarat Institute of Housing and Estate Developer).

“During the same period, there has been tremendous growth @ rate 20 % rise in bookings across all residential segments including Studio apartment, 2 Bed room, 3 Bed room flats, he added.

BSE Sensex has infused a lot of liquidity in the property market of Ahmedabad. The boom in Primary and secondary markets has infused a lot of liquidity. Those who have been postponing their Home buying decisions have been started making enquiries.” This boom has come after the Lok Sabha elections.

                                                                                                          Source: The Economic Times 
                                                                                                                     Date: 21 June, 2009

The big wait is on. Buyers are all waiting for the lowest point in the real estate cycle where prices bottom out, enabling them to get an attractive deal. Namrata Kohli reports

To buy or not to buy has been the question. There are genuine buyers in the waiting but they are playing a cautious wit-and-watch game, hoping prices will rationalize themselves.

Gagan Gulati, a housewife, says: We have wanted to buy for the last eight to nine months. First, the values were prohibitive as the flat where we are staying on rent in Dwarka was a 3+1 unit, up for sale for Rs 92 lakh. However, the same flat is now available for Rs 86 lakh. We are hopeful that the values will correct further and it should be an affordable proposition for us to buy them within Delhi. We are quite fed up of waiting but as every penny counts, sanity lies in waiting, for the time being.

There was a time when it was an investors market and the end users had got elbowed out of the market what with values reaching unrealistic levels. Now, with market dynamics changing, developers have started lowering prices but values still haven’t reached attractive levels for end users. Hence, further reductions are needed in the interest of completing projects which are in various stages of construction.

The values have dipped but the buying activity has not picked up as popular perception is that values will fall further. There has been sufficient competition in the market amongst developers, with respect to pricing, says S C Jaisimha, Managing Director of Asia Pac International India. Everyday, we have been witnessing developers dropping prices in their ongoing projects and new project launch being launched at corrected price levels. There are new sectors which have come up on account of the new master lanes (in many Tier I cities), which has increased the availability. Jaisimha adds that supply has overtaken demand by almost 200%. Today's mantra for developers is liquidity and cash flows for early and timely completion of projects with reasonable margins, rather than looking at a long horizon for better margins So, in many pockets, we have already witnessed prices generally dropping in the region of 25-30% and in some exceptional cases, close to 50%. With this, we believe the prices have dropped to reasonable levels, which has prompted some genuine buyers to scout for properties of their choice and budgets. Having said this, there is still a perception in the market that the pricing has not bottomed out. So for the time being, it is a wait-and-watch scenario for most of them.

There has been a significant drop in transaction volumes with high interest cost on loans, which has been prevailing free over a year now, also being a reason. But slowly and steadily, this is also coming down, which would generate demand in the medium to long term.

So, what has been the drop in transaction volumes? According to Vivek Dahiya, director of occupational and development markets at DTZ: There was a significant drop in transaction volume in Q4 of CY 2008. Some brokerage firms focusing on residential transactions oly saw volumes come down by 50%-70%.

Today, ready-to-move-in apartments are really selling, albeit with low premiums compared to projects under constriction. The new projects with realistic pricing have attracted genuine buyers.

Significantly, the direction in which demand is moving and the supply is following suit, suits the mid-end housing. Jaisimha says: The hot market today is the middlemen or the affordable housing in a budget range of Rs 20 to 30 lakhs for a decent 2-bedroom accommodation. Some developers visualized the importance of this and have already made inroads into this category. So, today you see various leading builders like DLF and Unitech announcing schemes for affordable housing. The recent response to allotment of flats by DDA is a classic example of genuine buyers waiting to buy at reasonable and realistic pricing nearly 8 lakh applications for just 5000 flats says everything.

The big question is when will real estate prices actually bottom out. Dahiya says: Reduction in rates will carry on through 2009 and in some micro-markets or product types even till 2010. Essentially, markets or segments that witnessed the steepest resin the 24 month during 2006-07 will continue to get rationalized over the next 4 quarters. Transaction activity is beginning to pick up, but only marginally, and in select locations and projects depending on attractiveness of rates.

However, developers would have us believe that whatever correction was possible has already happened and the properties are today available at best prices. Brijesh Bhanote, vice president sales and marketing at Vipul Limited, says: I think the real estate values have already gone through a big correction and the only way now for it is to go up. The margins at which developers are operating today are any way so low that sustenance can become an issue with many who have not regulated their finances.

Rohtaz Goel adds that the residential real estate is offering best deals to its buyers in current scenario. Most developers have already squeezed their margins to the minimum level, and hence we don't see any further price correction in the real estate. The projects are therefore available at the best price to both end users and investors.

At the same time, they recognize that the demand for affordable and mid-income housing is constant. They feel optimistic that the recent cuts in repo rates and CRR rates will further help in softening the interest rates in the coming months and bring the customers back to the market.

                                                                          Courtesy:- Times Property dtd:- 21-02-09

$758 Lifeline For Homeowners, $200b To Freddie Mac & Fannie Mae

US President Barack Obama on Wednesday targeted the housing crisis at the root of the US economic meltdown, with a program which could cost $275 billion and reach nine million homeowners.

The strategy includes $75 billion designed as an incentive for lenders to reduce interest rates to prevent at-risk mortgage debtors joining the millions who have already fallen victim to foreclosures.

The government will also put up an additional $200 billion dollars to bolster confidence in efforts by federal lenders Freddie Mac and Fannie Mae to offer affordable mortgages and bring stability to the housing market.

Obama opened the new front in the broad battle against the economic crisis a day after signing a huge, $787-billion stimulus plan into law, and as he simultaneously attempts to restructure the debilitated US auto industry.

"All of us are paying a price for this home mortgage crisis and all of us will pay an even steeper price if we allow this rises to continue to deepen," Obama said as he unveiled the plan in Arizona, one of the states worst hit by the crisis.

"When the housing market collapsed, so did the availability of credit on which our economy depends. "We will help between seven and nine million families restructure or refinance their mortgages so they can avoid foreclosure," Obama said.

Treasury officials said the plan could reach or make affordable one-and-a-half trillion dollars in mortgage debt and deal with a large proportion of the six million foreclosures expected over the next four years.

The plan includes incentives for lenders to help debtors who cannot make monthly payments but also cannot sell their homes due to negative equity, to lower mortgage payments to no more than 31% of their income.

The plan will see the treasury department double its financial support to troubled mortgage finance giants Fannie Mae and Freddie Mac, to $200 billion each, in an effort to stabilize the real estate sector.

A $75-billion initiative will target those who cannot afford to pay their mortgages and have seen the price of their properties plunge so cannot sell them and move into cheaper accommodation.

The initiative also aims to help families who put money down on homes and met their regular payments, yet cannot take advantage of refinancing made attractive by low mortgage rates because the value of their homes have sharply dropped.

Fed sees unusually prolonged recovery

THE United States' economy would face an "unusually gradual and prolonged" period of recovery as it struggles to climb out of a deep global downturn, the US central bank has warned. Releasing its economic outlook for 2009 on Wednesday the Federal Reserve or Fed said it expected that the economy would contract by 0.5% to 1.3% this year, unemployment would rise to 8.5% to 8.8% and inflation would remain under greater pressure. Bleak economic data reflecting a sharpening slide in housing, trade, industrial production, spending and employment rates "more than offset" any potential impact from an economic stimulus plan, the Fed said, forcing it to cut its economic outlook. — IANS/Washington

                                                                              Courtesy:- ET dtd:- 20-02-09

It may become mandatory for developers to design and construct buildings, which consume more than 500 kw, according to Energy Conservation Building Code. Bureau of Energy Efficiency (BEE), the statutory body under the power ministry, may make it must for developers to adhere to energy-efficiency norms. ECBC sets minimum energy performance standards only for commercial buildings or complexes with a load of 500 kw or more. "By the end of this year, we plan to make it mandatory for the developers to follow Energy Conservation Building Code (ECBC)," BEE director Ajay Mathur said. Mandatory enforcement of ECBC is expected to yield annual saving of 1.7 billion units in the first year itself based on current data. "So far, over 320 buildings in the country have been built as per the code, many more will be added to the list," he said. Earlier, BEE had announced making energy standards mandatory for the consumer durable sector.

                                                                                            Courtesy:- ET dtd:- August 11, 2008