Sunday, June 29, 2008

Why Private Equity Funds find no cause to worry over the perceived slowdown in Indian real-estate market?

Consumers in the real-estate sector may complain about increasing interest rates and property prices going out of reach.

And developers may complain about increasing costs, tightening fund flow and a slowdown in the market.

But private equity funds still find enough scope in the market for high returns on their investments in real-estate projects and are optimistic in their forecast over the next few years.
The Hindu Business Line : Private equity optimistic

Friday, June 27, 2008

HT Media Limited acquires 0.65 per cent stake in real estate major Sunil Mantri Realty for Rs 20 crore

Sunil Mantri Realty has residential and commercial developments in Mumbai, Hyderabad, Pune, Bangalore, Solapur, Kolhapur, Nagpur and Gwalior.

The company had recently signed an MoU with MSC Cyberport Sdn Bhd Malaysia to jointly collaborate in the development, construction, marketing and funding of Bandar MSC Cyberport, a 150-acre project.
-The Economic Times

Wednesday, June 25, 2008

Nearly all Indian real estate stocks hits new life time lows since last two-three weeks

Even recently listed real estate IPOs have slipped below their issue price. Today Housing Development and Infrastructure, HDIL also joined that group, touched a low of Rs 486.05, which is 2.79% below its issue price of Rs 500.

80% stocks listed in real estate stocks (IPOs) are trading below issue price, which includes Brigade Enter, Puravankara Proj, Parsvnath, Kolte-Patil, Omaxe, Sobha Developer, DLF and HDIL.
Moneycontrol India: HDIL slips below IPO price; DLF, Omaxe at life-time low :

Sunday, June 22, 2008

Why the secondary market for premium residential property in NCR has suddenly become very active?

Most developers launched a spate of such properties largely aimed at investors who put in the initial deposit and also the next two installments but waited to exit till the values went up substantially. With the property market hitting a trough in 2006-2007, most of the investors found it difficult to get the profits that they had envisaged and therefore held on to the properties till possession when values were expected to rise.

The NCR market had a peculiarity of its own, explains an investment adviser. Developers launched project after project but did not start projects. Payments were time-based and not construction linked. As a result developers had already collected between 40-60% of the payments even before breaking ground. When the slowdown happened in 2006-2007, strategies changed and developers started completing projects in hand rather than creating new projects. Hence the market is flooded with ready-to-use premium residential property.
Property pangs: Indian rental market zooms- Property-The Sunday ET-Features-The Economic Times

Friday, June 20, 2008

Where to buy a house in 2008

Want to buy a home? Don't wait!

If you want a place to live in 2008, you should go for it! The reason for this according to Harsh Roongta, CEO is,' Timing the prices in property market is not only difficult but very risky as well.' Of course, provided you fulfil any of these three conditions, suggested by Roongta:

1. You are sure that you would like to live in the city long enough to justify the purchase.

2. You are confident about a steady income and an increase in it in the coming years.

3. You can afford the purchase and repay loan EMIs with ease.

Roongta believes that the real estate prices are going to go up eventually, and waiting for correction may not be a great idea

Handy list for you when you go property shopping

Guwahati Real Estate Market

Chandigarh Real Estate Market

Nagpur Real Estate Market

Pune Real Estate Market

Navi Mumbai Real Estate Market

Vizag Real Estate Market

Vadodara Real Estate Market

Dehradun Real Estate Market

Indore Real Estate Market

Nashik Real Estate Market
Moneycontrol India:

Sensing a correction in the real estate sector, commercial banks become selective in lending to new residential and commercial real estate projects

Besides increasing the lending rates, some banks have asked the promoters to increase their share in project funding in an attempt to mitigate the associated risks.

The economic uncertainty and runaway inflation is likely to impact the real estate prices, and this is already evident in some pockets in Mumbai. The decline indicates tough times ahead for the real estate industry, according to bankers. Banks have already turned selective in taking up new funding proposals.
Banks Turn Choosy on Realty Loans

Monday, June 16, 2008

Real Estate Mutual Funds - 2 independent valuers to protect the interest of the investors and to ensure fairness in valuations

Real Estate Mutual Funds should invest minimum 35 per cent in real estate projects, while the rest could be invested in mortgage- back securities, shares of real estate companies, debentures issued by such companies.

The valuers would look at whether the mutual fund has invested at the correct price.
A P Kurian, Chairman, Association of Mutual Funds in India (AMFI).

Foreign Direct Investment in India - issues - Assocham study

India is the only country which offers return on commercial and residential
properties which range between 20-25 per cent against 15-18 per cent in rest of Asia.

No wonder Indian real estate sector is witnessing a steady growth of more than 30 per cent and Foreign Direct Investment (FDI) worth 30 billion dollars is expected to flow into the domestic market in the next 10 years, as Assocham study says.

1) Ceiling of 50,000 sq ft: Lift the ceiling of 50,000 sq ft and increase it to 2 lakh sq ft in next 10 years in a gradual manner for much higher foreign capital absorptions.

2) Remove Multiple Approvals from number of Centre and state agencies for setting up townships

3) FDI to be routed through private equity instead of institutional mechanism.

4) Housing shortage is around 20 million units of which nearly seven million units are estimated for urban India.

A comparison between investments in physical property and real estate mutual funds

The real estate boom in the country in the last two years has turned the sector into an exciting investment option. With property prices escalating, investments in real estate have fetched returns that can even rival the stock markets’.

While not many can invest directly in real estate because of the huge money required for property purchases, the launch of realty mutual funds has made it possible even for small investors to have access to a diversified portfolio.

The options are open to all — whether to invest in a physical property or buy mutual fund units. While taking the plunge, an investor needs to consider a number of factors, including the tax aspects, the liquidity and long-term prospects of such investments.

Real estate investment can be either through property purchase or mutual funds. Subhash Lakhotia studies the pros and cons. Subhash Lakhotia is a leading Delhi based chartered accountant for the last 35 years. He is an expert in tax planning and money management. Along with his regular practice, he is also keenly involved in the activities of various publications and investors' clubs.
Roads to realty:

Sunday, June 15, 2008

Real estate shares likely to fall 10-15 per cent more even from their current lows

Real estate shares are best avoided as they are likely to fall 10-15 per cent more even from their current lows.

The real estate sector is a high beta space, and most realty shares hit new 52-week lows this week in line with the fall in the broader market.

"DLF could actually come down around Rs 100 from current levels. So it is not an advisable time to enter the realty sector yet," says Neppolian Pillai, head-institutional equity, Modern Shares and Stock Brokers.
Choppy times ahead with a downward bias

HSBC Infrastructure and Real Estate Fund and SBI Real Estate Equity Fund: how will they fare?

The Securities and Exchange Board of India (Sebi) had, a few weeks ago, announced the rules of the game for real estate funds. At least two real estate funds are already awaiting Sebi’s approval. These funds will not directly invest in real estate projects as they are ordinary equity funds and invest in shares of real estate and construction companies.

Given the serious damage to the prices of realty stocks this year, it is unclear how many investors will buy the idea now. But, the likely launch of two realty-focused stock funds clearly shows that fund houses want to help investors chase the momentum in these stocks, or they truly believe in the long-term prospects of the sector. Read More

Promoters and Builders Association of Pune launches Realty Fund to enable smaller developers to access equity funds

The first series of the PBAP Realty Investment Fund has a total corpus of Rs 25 crores and has been fully subscribed by around 50 of the PBAP members.


1) First priority to the contributors to the fund

2) followed by other members of the PBAP

3) lastly to projects of non-PBAP members.

B) The investment committee of the fund, which comprises industry stalwarts, will assess the financial feasibility of projects under consideration.

C) The fund would invest up to Rs 5 crore per residential project in Pune to help the small developers to complete their projects quickly and raise standards.

D) PBAP Realty Investment Fund has a lock-in period of seven years. However, investors can transfer their stake to another PBAP member.

E) Aim to disburse funds within one month of the application.

F) Investment in projects that have time line of 18-24 months.

F) Once the project is ready, the investments will be diverted to some other project.

G) Returns will be shared by the investors.

Speaking at a press conference, Lalit Kumar Jain, President, PBAP said, "No one currently offers equity funding to smaller developers. Foreign and domestic equity funds look at large projects or projects with a scale of five lakh sq feet. We will look at providing equity to projects that small, from half an acre to two acres.

Ranjit Naiknavare , a PBAP member and managing director said, "The investment would be done in land cost as funding is easily available from banks for construction activities. The second and third series of this fund would be launched later."

PBAP has formed a Trust, which will have a separate company to run the fund activities. PBAP expects the fund to grow to Rs 300 crore by 2009 and to Rs 4,000 crore in another three years. "After Pune, we will cover Maharashtra and later spread to western India," Naiknavare added.

Related News:

1) "Pune can absorb up to $2-3 billion in Foreign Direct Investment annually" Lalit Kumar Jain, president, Promoters and Builders’ Association of Pune

However, according to the president of PBAP, not all 400 members of his organization have the skill sets required to execute such projects, so that only 10 members have been able to attract under $1 billion investment from abroad. Read More

2) Indian Real Estate and Real Estate Investment Trust

A."REIT rhymes with ‘sweet’":
The right pronunciation of 'REIT' in English rhymes with "sweet" says Mr.D. Murali in The Hindu. I pronounced 'REIT' several times but it never sound 'sweet'! "Every morning I am going to do loud reading of The Hindu to improve my diction" I announced. But, my wife found out the other article by the same author. There she found out, 'REIT' is pronounced as 'REET'! So sweet of her. Read More

Sunday, June 1, 2008

Sharad Pawar to launch Nanded City, 700 acre mega township on Sinhagad road in Pune, today

Based on the participation of original farmer - land owner - popularly known as 'Magarpatta Model', Nanded City will be launched at the hands of Hon. Shri Sharadraoji Pawar, Union Minister for Agriculture, Food & Civil Supplies, Consumer Affairs and Public Distribution.

Chief Minister, Govt. of Maharshtra, Hon. Shri Vilasraoji Deshmukh will be the Chief guest of the celebration which will start at 10 a.m. at Nanded City on Sinhagad road in Pune and Hon. Shri R. R. Patil, Chhaganrao Bhujabal, Ajit Pawar - Guardian minister of Pune, Mayor of Pune Shrimati Rajlaxmi Bhosale and many more leaders will be the guests of Honor.

Nanded City Development and Construction Company Limited' Nanded City is designed by the same architects who have designed Magarpatta City, Prakash Deshmukh and Shaikh Zuber Rashid, popularly known as Space Designers.

To know more about this historic moment please visit Ravi Karandeekar's Pune Real Estate Market News Blog.