Indian Property News on 'May, 2007'

Unitech Profit Soars Beyond High Expectations

The net profit of Unitech, a prominent name in Indian real estate, has shot up to Rs 357.09 crore in the quarter ended March 2007 from Rs 35.46 crore in the corresponding  period as compared to 2006.  The company has seen a considerable rise in its revenue by more than four times to Rs 848.71 crore from Rs 208.05 crore.

Talking about consolidated profit of the Unitech, it has risen to Rs 1,305 crore in 2006-07 from Rs 87.65 crore in 2006 thereby marking the profit by 14 times.

The company has announced its second bonus issue in the last 1 year.  The Unitech scrip reached to Rs 48.85 or 8.9 per cent, to close at Rs 595.90 on the Bombay Stock Exchange (BSE). The board announced a 25 per cent dividend for the financial year ended March 2007.

Unitech is planning to make a whopping investment of Rs 10,000 crore in the hospitality and India’s booming retail sector over the next four years.  The company will come up with 28 hotels with a cumulative 4,900 rooms in the first phase. Unitech alone will not be managing these hotels and will go by brand-cum-management contracts with top hotel chains.

The company may sell some of the chosen hotel properties in case it gets a good price in exchange, says Sanjay Chandra, managing director Unitech.

Unitech owns around 11,000 acres of land and it will bring 10-12 percent of it under development every year. This will make for round 30 million sq ft of built-up area.

Real Estate Regulator After a Meet With Builders

The plans regarding bringing a regulator for Indian real estate may slip into limbo for sometime. The government will device the nuances of the regulatory bill only after it deliberates with builders and chief officers of housing banks at a national level conference to be held in Mumbai in the first week of June, 2007.

All stakeholders will be called for a meet for a thorough discussion before bringing in a regulatory authority for the real estate sector, says an official of the ministry of housing and poverty alleviation.

Other key issues that will be raised at the conference include social housing, problems related to acquisition of land, ownership title, problems related to finance and home loans etc.

Also, the conference will deal with critical matters like the UPA’s government’s charter of inclusive development further and the minister of state for housing and poverty alleviation, will try to encourage builders to bring more construction for the weaker section of society.

Undoubtedly, private sector also plays an important role in the economic development of the country.  Thus, involving their interests is equally necessary. Convincing real estate developers regarding an emerging market in the EWS and LIG Housing category is the main concern of the conference, explains an official of the ministry.

2nd International Airport to Push Property Prices in G Noida

Real estate players are soon to get a next prospect to jostle one another. It is regarding none other than the proposed second international airport at Greater Noida. The development is likely to give a push to prices of residential and commercial property projects in twin cities of Noida and Greater Noida.

However, the drive may force prospective investors to divert their attention from Gurgaon to Noida in the long term, observes Mr Ankur Srivastava, managing director, DTZ India, a real estate consultancy firm.

For the past few months, there has been no major real estate transaction or development in Noida and Greater Noida. One of the major reasons behind the scene is ongoing political upheaval in the state. The conditions are expected to improve soon, with Prime Minister Manmohan Singh responding positively to the request of the new chief minister for giving a nod to a Rs 15,000 crore development package for the state’s infrastructure.

Many prominent names in both domestic and international hospitality sector are to initiate exclusive five-star hotel projects in Greater Noida. The list includes Unitech, Carlson, ITC, Bharat Hotels, and NRI hotelier Sant Chatwal. To be located in the close proximity to the proposed international airport, these commercial establishments will enjoy an added advantage.

India’s IT and BPO sector is looking forward to Noida as a preferred location to establish their operation centers. Commercial lease rentals in Noida are believed to be 30% lower than the rentals in Gurgaon.

The demand for residential property in Noida and Greater Noida is likely to shoot up in very near future, feels industry watchers. In the wake of better infrastructure facilities, Greater Noida already gains preference over Gurgaon. A direct metro link with Delhi and the Expressway will further improve accessibility of Noida.

If take a look at infrastructure facilities of developed cities like New York and London, each of them have at least two international airports. Given the traffic growth in Delhi airport, a second airport in the city seems to be a feasible prospect, without affecting the bottom line of the first one.

DLF Among Top 10 Cos In M-Cap Chart

DLF, a prominent name in Indian real estate, has made an entry in the chart of the top 10 companies in terms of market capitalization. Its total enterprise value is estimated to be Rs 85,221 crore on the lower side of the price band of Rs 500 a share on the total equity capital of Rs 340.88 crore of Rs 2 paid up equity share.

On the higher side, the company’s current enterprise value is determined to be Rs 93,743 crore. The company has recently been successful in getting SEBI nod for IPO of Rs 9,625 crore. Regarding the same, DLF has announced a price band of Rs 500-550 per share.

DLF is all set to grab the eight position as far as the market capitalization ranking is concerned. The company’s enterprise value at lower side includes 50 per cent of the total market capitalisation of property stocks listed on the Bombay Stock Exchange (BSE).

The realty sector is likely to cross the market capitalisation of Rs 1, 70,000 crore after the DLF listing. This will help it to hold a good place among the top-ten sectors after telecommunication, oil exploration and power and ahead of pharmaceuticals, steel and engineering sectors.

Flats to Replace Slums in Haryana

The Haryana Development Authority Area (HUDA) proposes to raise multi storied apartments to relocate slum communities, and use the land for value added developments. The project will be taken up in two phases. Of this, the construction of 2,040 flats will fall under the first phase with an investment of Rs 51.56 crore. The flats will come up in Sector-56, as a part of the housing scheme.

The new residential colonies would be developed at Dabua Colony and Bapu Nagar on Municipal Corporation of Faridabad (MCF) plots. The development work will come under the Jawaharlal Nehru Urban Renewal Mission (JNURM).

The drive to remove slum area will not only help the concerned authorities to get the vacated land but will also render cleaner look to the city, says HUDA and has already viewed estimates of the water supply, storm water drains, roads and electrification.

Two rooms set will be built in four storied buildings in Sector 56 in the first phase which is expected to be over in next six months. The Centre has also come forward to extend financial help for the project.

Flats will be allotted at an economical rate with the option of easy payments, adds Pankaj Kumar, superintendent engineer of HUDA.

HUDA has already invited tenders from contractors. According to the terms and conditions, the annual turnover of the company should not be less than Rs 25 crore in the past five years. Also, the company should be financially sound. The cash credit limit of the company to be furnished with the application should not be less than Rs 5 crore.

HDFC Real Estate Fund Buys 10% in Paranjape Schemes

HDFC India Real Estate Fund has acquired 10% stake in Pune realty company Paranjape Schemes for Rs 75 crore. Also, GE Capital has signed a contract worth Rs 250 crore with the company for construction of a mega Township in Pune.

The capital will be used for development of upcoming projects of the company. The investments made by GE Capital are believed to be specifically for project in Pune, as told by Shrikant Paranjape, one of the promoters of Paranjape.

The company has gained good rapport as a construction company in Pune and is also considering raising IPO in the future. Paranjape Schemes has completed over 100 real estate projects since its establishment. It also has its international branch in Singapore.

HDFC India Real Estate Fund (HI-REF), the first scheme HDFC Property Fund, was formed to make investments in three broad categories of companies-projects: under planning, under-development stage and completed ones. These real estate projects can belong to any segment of the real estate.

The fund was launched in 2005 and has a corpus of Rs; 1,000 crore. The fund has bought stake in another Pune based builder Vascon Engineers. The fund is managed by HDFC Venture Capital, in which SBI has a 19.5% shareholding apart from HDFC.

Understanding the Home Mortgage Process

Nowadays, building a house without availing any home loan can be an uphill climb for any middleclass man. Generally, banks and house finance companies (HFCs) have a number of lucrative options to offer for the best home loan. Despite there being several of such lending institutions, shopping for home loans in India is no simple.

The expertise of the banks and HFCs actually lies in providing a positive approach in matters concerning easy housing loans. However, they never entertain any application that does not meet their specific criteria and until the applicant has good title over the property. Therefore, any individual buying home loan must comply with the procedural requirement of the lending institution. And, the next important thing is to prove the marketable title of the property.

Types of Home Loan

Applications requesting the funding for buying residential property and the purchase if site generally fill delight cup of banks and HFCs. Apart from ready to built house or flat, the financial institutions lend loan for renovation and construction of the house. Let’s have a vista in each of the options clearly:

• Loan for constructing the house – Generally, a large number of people get loan from the banks and financial institutions for the construction of a building as per the sanction plan.
• Loan for purchasing the land – Most banks do not consider the applications for buying house sites since the risk involved in such transactions is higher than granting other type of bank loans. Still, there are some banks which lend for house sites.
• Loan for renovation – You can take up your house renovation with the help of a loan. The banks that provide such loans give major attention towards the applicant’s property documents and credit report.
• Composite Loan – As the name signifies, composite Loan allows an individual to avail loan for both buying the site and for construction of a house thereon under a single application.

Financial Profile of the Individual

In the case of salaried people, loan is granted on the basis of the present net salary and only 50% of the salary will be considered by the bankers for loan repayment. The bank will also check out the total number of dependents of the applicant to ensure his/her repayment ability. Also, nearly all banks insist on providing a gurantor for the loan sanctioned.

Property Falling Within Negative Areas

There are a few negative areas defined by banks and lending institutions. If any individual wants to buy property in such an area, then he will not be granted a loan. Likewise, the property also has to fall within the geographical limits defined by the banks for it to grant the home loan.

Individual’s Age

The banks generally overlook the home loan application of any individual above 65 years. For the applications requesting higher loan amount than normally admissible, banks prefer joint applications and sanction home loans by considering the income factors of both the borrowers.

Margin Money

An individual can avail the loan up to 85% of the total estimated value of the plot. The left out amount has to bear by the applicant who requires giving confirmation regarding his capability of mobilizing the remaining amount. The actual market value and the percentage of depreciation of the property will also be taken into account before sanctioning the loan.

Anil Ambani’s SEZ Hits a Roadblock

The proposed 1,200 acre Special Economic Zone, promoted by Anil Ambani Group, has fallen into limbo due to the current political tug-of-war in Lucknow. The project was scheduled to come up in Noida.

The Uttar Pradesh Cabinet, chaired by new CM Mayawati, on Thursday put hurdles into the ongoing work of the project. The Cabinet decided to inform the Centre that the proposal did not meet the specific guidelines of a ‘contiguous land’.

The SEZ had earlier got a nod from Mulayam Singh government and was awaiting the approval from Central Government. The state government has expressed its reservations to the Centre over the project. The land norms did not meet the specifications under the proposed land acquisition for the project. Indeed, a road passes through the identified land, says UP cabinet secretary Shashank Shekhar Singh.

A three member committee headed by the principal secretary was formed to analyze by all the SEZ projects to come up in the state. There are a number of concessions given to SEZs comprising both the custom, excise, and tax breaks. If the shift in manufactured goods and services to be included in SEZ can be monitored, it can help in offering the concessions, adds Singh.

However, the Centre was in initial stages to determine its decision regarding the approval for the proposed SEZ. As far as the final approval is concerned, the Centre has not come as yet.  The government has sent reservations to the Centre on the proposed land site, explains Singh. Other projects to be taken up by the Hi-Tech City policy (as brought by the previous government) would also be analyzed.

Anil Ambani has some plans to come up with other projects in UP. The project concerning the 3,740 mw gas based power plant in Dadri, has already been put on hold due to some niggling issues over gas supply from Mukesh Ambani controlled Reliance Industries’ gas fields.  He had bought the Rosa Power Pant from the Aditya Birla Group last November.  REL has also signed a power purchase agreement (PPA) with the state government for the set up of the 600 MW Rosa Power Plant on 12 November 2006 itself.

Home Loan Scenario in India

There have been major up and downs in home loan market in India, but the Centre has taken some steps to offer relief to borrowers. With increasing interest rates on home loans, the common man carries the burden of fat EMIs.

Since March, the interest rates fluctuations have been puzzling public and even to some experts. The floating interest rate is now around 11.25-12% while the fixed rate is hovering around 13.25-14%. The beginning of 2007 saw floating and fixed rates at 9.75% and 11%, respectively. If the loan is taken for the short term, the increase in rates – by 150 basis points – changes to a 9% rise in the EMI bill in the last three months.

Adding to the woes came floating and fixed rates which were only 7.75% and 8.25%. This translates to more than one-fifth increase in EMI for the borrowers narrowing down on floating rate loans. In case of fixed rate home loans, it could be one-fourth.

New Guidelines to Cut on Prices

Foreign companies have been trying hard to make big in Indian real estate. Many local real estate developers had been availing the opportunity to raise money from abroad to invest here. Easy money was pushing the property prices and leaving home buyers at the receiving end.

The finance minister cracked the whip on raising foreign funds from May 1. Coupled with the directives released by the Reserve Bank of India (RBI), the foreign fund leash is likely to stem the increasing property prices.

Investment Guidelines

The Government simply wants to keep a sharp eye over speculations in real estate and arrest volatility. No one raises finger on the long term growth potential of the sector. In case, the market continues to witness upward trends, small time investors can ask for their shares as well. The market regulator, SEBI, is learnt to give final touches to directives for realty mutual funds.

Pune Realty Gets New Push by Rs 9,000 crore Township

Earlier, Pune real estate was seeing no appreciation but the scenario has suddenly changed. Thanks to the City Corporation Limited Promoted Amanora Township project, which has already begun fetching prospective investors. Even before the launch was formally announced, the project saw a multitude of investors lining up for bookings.

The project boasts of selling off 50 apartments in a week at an average rate of 3,600 per sq ft. An apartment falling under the range of 1,200 sq ft – 3,900 sq ft. costs in between the range of Rs 50 lakh – Rs 1.5 crore. The construction of the first flat will not be over even 20 months from today. Amanora is a 16,000 apartment project, yet selling does not seem a major problem.

The Township will feature its own infrastructure facilities including water, electricity, and other utility services, school, and hospitals.  Amanora is in progress to work out the agreement regarding this. The company is in talks with Tata Power and Reliance Energy for generation of 120 MW of power.

For the development of hospitals, the company is planning to establish a new 75:25 JV company: Amanora Healthcare in a JV with six UK-based doctors.

The City Group is considering developing two more residential projects in Wagholi across 200 acres and near the Pune-Mumbai Expressway spread over 500 to 600 acres.