Saturday, November 28, 2009
Dubai World crisis will certainly impact the Indian realty sector which has not even fully recovered from the Lehman Brothers crisis
“It will also adversely affect the sentiments of investors. Indian developers get lots of funds from Dubai that will be severely affected,” Singh said.
Singh said a large number of buyers of high-end projects are from Dubai. If they become reluctant to buy properties following the crisis, the realty companies will be hit, he added.
“However, the severity of the damage is yet to be calculated.”
Added Anuj Puri, chairman of real estate service provider Jones Lang LaSalle Meghraj (JLLM): “There will be certain impact of this crisis in terms of business sentiments even when the indian realty sector seems robust.”
If the default in Dubai turns into a sovereign default, there would be “real economic issues”, which may hit several countries, he added.
According to engineering and construction major Larson and Toubro, the Dubai debt crisis is “worse” than the financial crisis that followed the collapse of Lehman Brothers in September 2008.
Faced with funding crisis, the Dubai government Wednesday asked the creditors of state-owned Dubai World and property group Nakheel for a six-month standstill on interest payment.
To read more, please, visit Indian realtors unfazed by Dubai crisis
Friday, November 27, 2009
Hot picks for investors, say analysts, are companies that have land banks located within city limits in India's seven biggest cities: Mumbai, New Delhi, Kolkata, Bangalore, Chennai, Hyderabad and Pune.Some examples are unlisted Godrej Properties and Oberoi Constructions, which have assets in India's financial capital and the country's most expensive real estate market, Mumbai.
During the IPO boom of 2007, the larger the land bank, the more successful the IPO, said bankers. Now, it's more about cash flow.
Land banks in prime locations and a focused building strategy, where projects can be developed in the next five years, will also be better valued.
“Having a large land bank will go against you this time as it shows that the builder has no focus,” said Shobhit Agarwal, joint managing director at the capital markets division of Jones Lang LaSalle Meghraj.
To read more, please, visit Sceptical market greets $5bn in Indian public offerings | The Australian
Thursday, November 26, 2009
Realty research firm Liases Foras launched its Real Estate Sensitivity Index – RESSEX,( www.ressex.com ) that will provide structured data and property analysis on the country's real estate market.
RESSEX is a product of detailed micro research, which covers every new real estate development excluding secondary supply and enables the user to view the market potential in both micro and market perspectives in the form of an index.
Besides prices, the index comprises sales, inventory, business turnover and an efficiency index, HDFC Joint Manging Director, Renu Sud Karnad, said while launching the index here.
REESEX has been developed to be a source of immense data to developers investors, banks, housing finance companies, FIIs, private equities, analysts and others in their decision-making process, Karnad said.
"RESSEX will enable easier understanding of the finer aspects of the dynamics of real estate trends," Liases Foras's MD, Pankaj Kapoor, said.
The index covers almost every single primary real estate supply across six major Indian cities – Mumbai Metropolitan Region, Pune, NCR, Bengaluru, Chennai and Hyderabad, he said.
The Economic Times
After registration, basic quarterly data for each of the cities covered is available for free on the website www.ressex.comThe Liases Foras measure, the second such index in the country, tracks the sector by region and product type (1 bedroom-hall-kitchen (BHK), 2BHK, etc.). It includes a price index, a sales index (showing demand) and an inventory index (indicating supply) for new houses in a city or area.
“We have 30 people who collect data from builders and brokers on a first-hand basis,” Kapoor said. “We have data from Mumbai, the NCR (National Capital Region), Hyderabad, Pune, Bangalore and Chennai now, and are planning to add Ahmedabad, Kochi and Kolkata next year.”
Around 10,000 projects are covered by the research, he said. The data collected by Liases Foras is validated by HDFC.
Data for the Mumbai region is available since 2004, and from 2007 for the rest, Kapoor said. The company has covered 95% of the new projects in the Mumbai metropolitan region extending up to the suburb of Panvel.
Basic quarterly data for each of the cities covered is available for free after registration on the company’s website ( www.ressex.com ). The company charges a fee of Rs25,000 per quarter for more detailed data, which includes area-wise information on prices, sales and demand in a particular city.
NHB Residex:Kapoor is confident that he will get enough customers willing to pay for the data and is targeting foreign and local investors, builders and financial institutions as clients.
The first real estate index in the country was launched by Reserve Bank of India-owned National Housing Bank (NHB) in 2007.
The NHB Residex covers 15 cities and is restricted to prices, data for which is collected from home loan companies and processed by the New Delhi-based National Council of Applied Economic Research. NHB data is updated once in six months.
The company has already undertaken research for at least 100 clients in the last nine years, including HDFC, US-based University of Miami, Mumbai-based Hiranandani Constructions Pvt. Ltd and the Maharashtra Chamber of Housing Industry.
Niranjan Hiranandani, chairman of Hiranandani Constructions, said lack of data is the main reason for lack of transparency in the sector.
“We didn’t have adequate data, whatever was there was fragmented and inauthentic,” he said. “This data is going to help financiers, developers and consumers, particularly when I expect volumes in this industry to grow by 30-35% in the next five years.” livemint
Wednesday, November 25, 2009
Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investorsTo boost foreign direct investment (FDI) in real estate, the government may remove the mandatory three-year lock-in period for overseas investments in the sector.
The department of industrial policy and promotion (DIPP) has proposed this move, with a draft cabinet note on the proposal being circulated for inter-ministerial consultations. Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investors.
The government had permitted 100% FDI in the sector in 2005. However, this was subject to certain conditions such as a minimum capitalization of $5 million by the foreign investor and non-repatriation of the original investment for a minimum period of three years.
The liberalization of the real estate sector led to FDI inflows increasing from $151 million in 2005-06 to $2.03 billion in 2008-09. DIPP now argues that no sector, except defense, has a lock-in period. “Based on experience, this condition no longer seems necessary,” a DIPP official said on condition of anonymity.
Move to remove FDI lock-in in realty a positive: ExpertsIn an interview with CNBC-TV18, Suman Memani, Associate Vice President of Religare Capital Markets and Sanjay Dutt, CEO of Business at Jones Lang Lasalle Meghraj spoke about the possible relaxation of FDI norms in the real estate sector and the implications the move might have on the sector.
Q: It is good news for investors and for stocks. Would you say that immediately we are going to probably see real estate prices rising even further since the holding power of real estate companies could rise?
Dutt: There could be some movement on that. But clearly looking at from the project side, three years, most residential projects, for example if you really look at townships or indeed such large projects in Mumbai or Delhi, there the approval process, the construction process and a stage phased manner exit from that project, generally takes about 4-5 years.
So, will it really impact those projects? My answer is no. However, there would be some projects which under FDI norms- if you have a 50,000 sq meter built up and indeed the minimum level of investment where they may actually see that opportunity happening. But some of the investors who are not in good shape because of situations back home because of loss of appetite in the investors who want to exit may actually see a situation where they would exit today to align their business objectives.
But at the same time I will see this opportunity and regulatory change will bring other investors who instead of going into a Greenfield project, which are very time consuming and riskier would welcome a portfolio of assets from these investors because the comfort would be that the legal due diligence has already taken place. Everything has been sanitised and therefore it is an easier buy and less riskier proposition.
So I feel while there could be a short term hit, long term benefits will more than outdo the negative impact.
The company’s cautious approach and an asset light model helped it beat the realty slowdown. Going ahead, the company is also looking at acquiring land in western and southern parts of the country. With average cost of land being low at Rs 175 per sq ft, its decision to sell upfront part of its commercial projects has kept it assets light.
Peninsula, which has debt on its books aggregating Rs 400 crore and a cash pile of Rs 175 crore, has also received approvals for its Rs 750 crore QIP. At 0.3 times debt-equity ratio, it is one of the least leveraged real estate companies. The company is currently valued at 13 times its trailing twelve months earnings. This makes it one of the few low P/E companies in this sector.
To read more, please, visit The Economic Times
Completion financing, or last-mile funding, where developers get funds to complete projects stuck midway, is catching on among private equity (PE) funds.Realty developers are facing problem on several fronts. While banks are still shying away from lending to developers, raising money through initial public offerings (IPOs) remains a distant dream for them. In this situation, PE funds are eying completion financing deals as these deals carry lower risk and attractive valuations.
A host of property funds managed by PE players such as Red Fort Capital, Saffron Asset Advisors, ASK Investment Holdings, Kotak Realty Funds Group are in talks with developers in metros such as Mumbai, Delhi, Chennai and Bangalore to for such deals.
Funds say completion financing deals take a lot of work from funds compared to normal financing deals, though return expectations are similar. Normally, funds expect returns of 20-30 per cent in realty projects.
“These kind of deals are not marketed actively, but are done subtly. Hence, these opportunities depend on relations and how prudently and intelligently you pursue them,” says Ajoy Veer Kapoor, managing director of Saffron Asset Advisors.
To read more, please, visit Business Standard
Monday, November 9, 2009
The only yield from gold is its appreciation. In recent years, gold has been a favoured asset even among individual investors because of greater uncertainly in the real estate and stock markets. The international price of gold has been consistently rising since 2003. From $400 an ounce in 2004 it jumped to $700 in September 2007 and to $1000 in September 2009.
Gold as a reserve asset can be, up to a point, a better alternative to government securities in foreign exchange reserves. The price of gold is likely to rise further in future for a variety of reasons.
To read more, please, visit Smart gold deal by RBI | Economy | Reuters
"There is no (real estate) bubble, but the risk is if (property) prices rise faster than average income growth of say 15 percent, it could decelerate demand for homes," said Lodha. "(Real Estate) Bubbles occur when buyers too willingly keep paying higher prices; consumers today want value for their hard-earned money."Lodha Developers Ltd., an Indian property company that’s planning an initial share sale, expects its home sales in India will climb about threefold as a record low benchmark interest rate encourages buyers to take loans.
The Mumbai-based developer expects sales to rise to 9 million square feet by March 31, Managing Director Abhisheck Lodha, 30, said in an interview. The company, which sold 3 million to 3.5 million square feet in the previous fiscal year, has sold 4.2 million square feet in the seven months to October.
To read more, please, visit Bloomberg.com
Indians now account for close to 20% of all realty sales in Manhattan, and 30% of all enquiries made, says Raphael De Niro, ( son of Hollywood star Robert De Niro ) MD of New York’s biggest property broking firm Prudential Douglas Elliman.Prices of residential apartments in Manhattan have slipped 20-25% off their peak in end-2007. Mr De Niro says he is currently negotiating with several Indian buyers who are public figures in India. Sales pitch for a typical Manhattan condo begins at Rs 3 crore-Rs 4 crore, less than what a South Mumbai apartment or a Mehrauli farm house comes for. Average price per square feet for a Manhattan East side condo is $1,249 while that for a South Central Mumbai apartment is $1,319. To read more, please, visit The Economic Times
Sunday, November 8, 2009
Hi-tech township policy of Uttar Pradesh Government:A lot of high-tech townships are coming up in Uttar Pradesh after the state government’s policy in 2003 to promote development of high-tech townships with better quality of living, work and entertainment facilities.
Considering the acute shortage of housing and infrastructure services, the state government announced an open-ended hi-tech township policy in May 2006 to promote private investment through development of varying sizes of such townships.
Difference between High-tech Township and an Integrated Township:The first real proposals for high-tech townships started rolling in around 2005. “At first, they were in direct response to the evolving housing requirements of IT professionals in India.
During the height of the IT boom, a home in a high-tech township was considered de rigueur by the upper echelons of the software industry. The concept has evolved since then and has simply come to stand for technologically-enabled lifestyle homes in a more generic sense. These are considered powerful demand generators that have the potential to attract foreign and domestic investment and boost the general profile of a locality.
Success of High-tech Township depends upon employment opportunities:“These townships will attract buyers provided employment opportunities are available, otherwise they will become part of real estate speculation and people will not prefer to stay in them. Hence, to make these viable, the government of respective states and private developers have to ensure that employment is not a constraint,” feels Manoj Goyal, vice-president, strategic planning and group company secretary, Raheja Developers.
Differentiation will be the key to success:Dutt of JLLM who says that it’s definitely not a sellers market for these right now and they will have to differentiate themselves to succeed. “High-tech residential projects will have to differentiate themselves convincingly to cash in on the mid-to-high market. In the current times, buyers are extremely budget conscious. That said, there is still a class of aspirational buyers with sufficient funds, but they have a lot of options to choose from. Differentiation will be the key.” To read more, please, visit Neha Dewan, The Economic Times
Related Links:1) Omaxe Ltd to develop Hi-Tech Township in Allahabad over an area of 1535.12acres
2) Omaxe to develop approx. 3601 acres of Hi-Tech Township in NCR adjoining Greater Noida at Bulandshahar, Uttar Pradesh
3) Omaxe Ltd.
4) 3c Lotus Boulevard Noida, 2 and 3 Luxury Apartments Noida sec 100
5) Website of Lotus Boulevard: India’s Largest Green Residential project
6) Website of Uppal Chadha Hi-Tech Developers Pvt. Ltd.
With real estate prices going down by a whopping 25-30% and
hitting rock bottom in some geographies and
distress asset sales becoming the order of the day,
there could be no better time than this to pick up a dream home abroad.
And experts confirm that the decision to buy property overseas is driven strongly by an end-use perspective.
Some of the places which now offer good investment opportunities for HNIs include the Middle East, especially Dubai. In USA it's particularly New York City, Virginia and San Francisco.
The others include Singapore and UK,
To read more, please, visit Rich & NRIs eye foreign properties
Saturday, November 7, 2009
From the second year onwards these loans will carry a floating rate of interest based on the bank's Mortgage Reference Rate.
Currently, Axis Bank offer home loan under the floating option at 8.75 per cent for up to Rs 30 lakh and fixed loan at 14 per cent irrespective of tenure.
The bank also extended the repayment period of a standard home loan to the maximum of 25 years, she said.
In another variant of the home loan product called the step down product, the customer will pay a higher EMI when the combined family income is higher and a lower EMI when the family income has reduced over a period of time.
Moreover the customer can close the loan before its maturity with no prepayment penalty being charged by the bank.
The Economic Times
Interview of Anita Arjundas, managing director & chief executive officer, Mahindra Lifespace Developers Ltd
Mahindra Lifespace Developers Ltd (MLDL), formed as a result of a merger between the realty arms of Mahindra and GE Shipping in 2001, has outlined a vision to develop area of 4 million sq ft in the residential real estate space to be launched in the near-to-medium term in Mumbai, NCR, Chennai, and Nagpur.
What are your key real estate projects in the commercial, residential and retail segment?MLDL has till date completed approximately 6 million sq ft of real estate development, in the residential (spanning 5 million sq ft) and commercial (1 million sq ft) sectors. These have been in Mumbai, Delhi, Gurgaon, Chennai and Pune.
We can also take credit for being the pioneers of SEZ development in the country, with our Mahindra World City Chennai, the first, and as yet, only successful private sector integrated business city including SEZs in the country, spread over 1,550 acres.
Our ongoing projects in the residential segment of 3.5 million sq ft are located in Mumbai, Pune, NCR and Chennai.
Through our Mahindra World City brand of integrated large-scale development, we are currently developing the 3,000 acre Mahindra World City in Jaipur.
This is a large-format project, comprising industrial land, ready built IT space, residential and commercial developments. The Grade A IT-office space, called Evolve, involves a development of around 1.5 million sq ft of which the first 2 lakh sq ft is already developed and allotted to Deutsche Bank.
Our customers at the World Cities include marquee names like BMW, B Braun, Deutsche Bank, Cap Gemini, ICICI Bank, Infosys, QH Talbros, Timken, TVS Group and Wipro among others.
To read more, please, visit
With feel-good factor returning, buyer confidence has picked up in realty
Friday, November 6, 2009
Do you think that property buyers will stop booking flats if builders keep on increasing the property rates at this point of time?
possibility of property price rise
works as a stimulus for the property buyer
who is taking too much time to book a flat.
In good times,
property price hike creates a mass hysteria of
booking without thinking.
when most of us are not sure about the end of recession and
are worried about the inflation,
if builders start increasing property rates,
only because bookings are happening,
do you think that property buyers will stop booking flats,
just like they did in the second half of 2008?
Do you agree with Kamlesh Pandya, that builders should hold property rates, at least this point of time?
Do you think that Nanded City Pune should not increase the property rate to Rs. 2,850 per sq.ft.?
Do you think that Barbara should give you some more time to think?
Please, share your views in the comments.
Looks like that 3i and Indiareit, investors in Blue Ridge Hinjewadi are doing well!As per the news in The Financial Express, Indiareit Fund Advisors Pvt Ltd, a real estate fund manager promoted by the $1.8-billion Piramal Enterprises, is preparing to raise a $500-million offshore fund.
To raise this new offshore fund, Indiareit is wooing London-based private equity and venture capital firm 3i, which manages 11.7 billion euros worth of assets globally.
It means that, foreign investors withdrawing from the project was only one of the many rumors circulating in the times of world financial crises.
Virendra D. Mhaiskar, chairman and managing director of IRB Infrastructure Developers Ltd, says the future could be big road projects such as expressways and allied infrastructureIRB can execute projects worth around Rs6,000 crore from internal accruals and has around Rs1,500 crore to Rs2,000 crore of head room to bid for projects.
What next? Mhaiskar says the future could be big road projects such as expressways and allied infrastructure.
IRB had already entered into real estate and airport development after winning the mandate to develop a new airport in Maharashtra’s Sindhudurg, 90km from Goa, at an estimated cost of Rs150 crore. It has also proposed an integrated township of 1,400 acres along the Mumbai-Pune Expressway.
To read more, please, visit livemint.com
Thursday, November 5, 2009
The clarification comes amid media reports that SBI may withdraw the scheme from November 7.
When SBI launched the home loan scheme in February, it was applicable till April-end. However, the lender later extended the deadline to September, which was further extended with no deadline set for its closure.
"Although the concept of second homes was accepted by the Indian audience, as the figures show, everything crashed during the downturn . In the last one year, there have hardly been any takers for this segment .
The market is stagnant as of now," says Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj.
There are two types of buyers, in the second home market, explains Grover.
The first category consists of the affluent buyers who purely look at luxury and the second category is the middle and upper class, which looks at second homes as an investment option.
"The first category has started showing interest, in the last coupe of months, but the second category of buyers is still playing the waiting game," he adds.
Things to consider, while buying a second home:
>> Location of the project (accessibility to medical care and market)
>> Local economy strength
>> Current resale value
>> Residence tax rate
>> Environmental clearances
>> Maintenance assurance
To read more, please, visit The Economic Times
The Munjal family-controled Hero group, better known for its motorcycles, is entering the real estate business, with nearly Rs. 200 crore already investedThe cash-rich Munjals are turning the current slump in real estate into an opportunity as they had no previous exposure in the business historically marked by aggressively priced land deals.
The Ludhiana-based group plans to launch over the next two weeks an integrated township in the pilgrim town of Haridwar.
“The integrated township at Haridwar will be developed over an area of 50 acres and will have close to 2,000 residential units,” Sunil Kant Munjal, chairman, Hero Corporate Services Ltd told Hindustan Times.
To read more, please, visitHindustan Times
After hitting a five-year low in fund-raising globally, real estate funds are back on track. A number of new and existing real estate funds are planning to tap domestic and offshore markets to raise funds.The revival of sentiment globally and in the real estate sector has led to funds chasing high net worth individuals (HNIs) and ultra HNIs flush with liquidity. Domestic real estate funds are using this opportunity to expand their existing funds or do a fresh round of fund-raising.
The Piramal group-promoted Indiareit Fund Adviors is planning to raise a Rs 500-crore real estate fund.
ASK Investment Advisors, which raised a domestic real estate fund recently, is planning to raise a $250-million offshore real estate fund.
Dewan Housing, a player in the housing finance segment, is planning to raise a $250-million real estate fund.
Sources said ICICI Ventures was also looking at launching a real estate fund by the fourth quarter of this year.
Morgan Stanley, which has a global real estate fund in India, might also look at raising an India-focused real estate fund by the end of this year, sources said.
To read more, please, visit Business Standard
Wednesday, November 4, 2009
With demand in the sector reviving, PE funds look beyond affordable, low-cost housing projectsAfter investing in four mid-income and low-cost housing projects in the past one year, Indiareit Fund Advisors Pvt. Ltd, (investor in Paranjape Schemes' Blue Ridge Hinjewadi) promoted by the Ajay Piramal group, wants to refocus its strategy on projects with potential for higher returns.
Indiareit will now look at deploying most of its new Rs500 crore domestic fund announced in October in redevelopment and defunct textile mills projects.
“There are some 25 mills coming up for development and we want to either bid independently or through a special purpose vehicle,” managing director and chief executive Ramesh Jogani said.
“Redevelopment projects, particularly in Mumbai, also have great potential from an investment perspective,” Jogani added.
Indiareit’s revised strategy echoes the sentiments of many private equity (PE) funds with a focus on real estate in India. Funds that had zeroed in on the emerging, affordable housing segment as a demand driver during the economic slowdown believe that with the sector reviving, they should look at other growth areas.
Among such funds are Kotak Realty Fund and Saffron Advisors, (investor in Kolate Patil) which have lined up about $400 million (Rs1,880 crore) and $140 million, respectively, for investments.
Saffron Advisors’ founder and managing director Ajoy Veer Kapoor said his company will seek value in two sectors—warehousing chains and niche, city-centric developments in Mumbai or New Delhi.
“We are not really looking at low-cost real estate projects because it’s still at a very new stage in India and not many developers have the bandwidth to pull it off,” said Kapoor.
The affordable housing story is a recycled version of the integrated township story in India, which never really took off, said V. Hari Krishna, chief investment officer at Kotak Realty Fund.
To read more, please, visit livemint.com
Monday, November 2, 2009
With the Reserve Bank of India (RBI) sending out hawkish signals in its second-quarter review, these banks may have to raise their home loan rates by January to align them with the expected hike in key policy rates. The special schemes offered by public sector banks have resulted in the cost of home loans crashing to the lowest levels in five years.
To read more, please, visit The Economic Times
The slowdown is behind us and the country will grow at around 9-10 per cent, believes Adi Godrej, chairman of the Godrej Group.Could you expand on your plans for Godrej Properties?
This, he adds, spells good news for his fast moving consumer goods (FMCG) business and properties venture, as well as for Godrej Agrovet.
In a chat with Business Standard, he says Godrej Properties will now be a focus area for the group, with an emphasis on affordable housing. Edited excerpts:
We have filed a draft red herring prospectus (DRHP) with Sebi to divest 13.5 per cent stake. The pre-IPO stake sale (of 4 per cent) and IPO should happen by the year end. Money from the IPO will be used for the expansion of Godrej Properties, in which we will continue investing, since we see a strong revival in residential property. Our focus will be on residential -- especially affordable housing -- and commercial properties. Godrej Properties will soon become our fastest-growing business.
To read more, please, visit business-standard