Indian Property News on 'June, 2008'

Real Estate Developers Bet on Eco-Friendly Buildings to Woo Buyers

Call it green revolution in the real estate business. Top developers are now betting on green buildings - that use less energy, water and natural resources, creates less waste and is healthier for the people living inside compared to a standard building - to woo large tenants. Even though green buildings involve an incremental cost of 7-10% over traditional buildings, developers see it as an opportunity for differentiation in a growing market.

The trigger is a growing environment consciousness among topnotch tenants, particularly the multinationals. In the request for proposals (RFPs) that are coming in, many MNCs are starting to ask the question about the green quotient. “It may not be mandatory today but going forward, many MNCs will make it mandatory,” says Jones Lang Lasalle-Meghraj chairman and country head Anuj Puri. Developers such as K Raheja and RMZ have decided to go all green. Read More »

Realty at its Premium Best

With an aim to help discerning customers realise their dreams, Vancouver-based Royal Indian Raj International Corporation (RIRIC) plans its foray into the Indian market. With Manoj C Benjamin at the helm of affairs, the group comes to Bangalore with a pioneering concept of self sustained townships, under its Royal Garden City projects and its Royal Garden Villas & Resorts’ brand.

The Royal Garden Villas and Resort in Bangalore is a master-planned gated community with exclusive amenities, including a chateau winery, opulent club house, world-class spa and pool. Besides these, the property also boasts a five-star hotel, Vijay Amritraj Tennis & Fitness Center, internationally renowned shops, restaurants , an equestrian center and supermarkets. Read More »

Real Estate FDI inflow up Nearly Five-Fold

The Indian real estate and housing space emerged as the darling of foreign investors in 2007-08, clinching FDI equity inflows of about Rs 8,749 crore, a near five-fold increase over FY07.

“The investors have seen that the real estate potential in India is huge. The returns are quite attractive. In fact, we see the trend picking up even further this year as the prices are getting more attractive for investors,” Ramesh Sanka, Chief Financial Officer at DLF said. Read More »

Developers take to new routes as loans get costlier

Real estate developers, who are already straddled with stagnant demand for housing and high costs of construction, have now to reckon with a major liquidity crunch in the banking system and high interest rates on loans. While developers are optimistic that the current phase is temporary and the market is likely to rebound after the general elections, they are also seeking alternative funding methods including private equity players to fund their projects.

Currently, real estate developers pay interest rates as high as 18% on funds, due to their shortage. Niranjan Hiranandani, managing director, Hiranandani Constructions told FE, “I feel this is a temporary phenomenon and the liquidity crunch in the banking system will not have a major impact in the long term on the real estate market. Such ups and downs have happened earlier, too. There are many people who are still willing to invest and the years 2008 and 2009 will see more investors investing in the real estate market. Hence, we now need more construction. This is despite the fact that the cost of construction is going up due to rising inflation and limited supply.” Read More »

Rate hike to delay realty projects

Real estate developers see further slowdown in demand and price correction due to RBI’s move to raise interest rate. Caught between sluggish demand and rising cost of capital and construction, developers are deferring launch of new projects. Some even fear that ongoing projects may get delayed.

“Interest rate hike has dampened the sentiment in the real estate market, which will result in further slowdown. We see 5-15% price correction in the real estate sector in the next few months depending on the project and its location,” says real estate player Indiabulls’ group spokesperson Gagan Banga. Read More »

State govt to build Mumbai sea link on its own

The Maharashtra government has decided to scrap the bidding process for the 22-km sea link between Sewri and Nhava Sheva and build the project on its own. The government said the decision was taken as it didn’t want to delay the Rs 6,000-crore project further because of the warring Ambani brothers, the main contenders for the contract.

“One can’t deny the fact that the project has been delayed because of the two warring brothers. If we had decided to go for re-bidding, we would have faced the same problem. So, we decided to do it on our own,” Public Works Minister Anil Deshmukh said after a meeting of the Cabinet Committee on Infrastructure (CCI). Read More »

Moneylenders funding Realty Boom in Hard times

They could be dismissed as a nondescript group of people chatting on the lawns of an exclusive club or strolling down Marine Drive in Mumbai. Their clothes are quiet, their gait without swagger. Indeed, it’s hard to believe that these are the very men who have a vice-like grip over some of the biggest builders in the country. They are India’s wealthiest moneylenders who, even as the banks tighten their belts, loosen their own purse-strings.

With financial institutions and banks increasingly restricting loans to developers, these moneylenders — primarily belonging to the Sindhi, Marwari and Kutchi communities — have stepped in to play their part. Read More »

Real Estate to feel the Heat as Inflation Soars

The recent fate of real estate stocks on the bourses mirrored the first signs of trouble ahead for the industry. Fuel price hike and lower IIP (Index of Industrial Production) numbers were recent setbacks to the sector and now with a 11.05% growth in WPI (wholesale price index), inflation has emerged as a serious threat to the sector, which has been cooling off in recent times.

Market experts predict further softening of prices. “Even though prices have corrected by 10-20% and even beyond in some regions, it has not yet touched the bottom. It is advisable to wait till at least the year-end to buy homes,” says Jai Mavani, real estate practice head, KPMG. Read More »

Rs 8,000 Crore Premium Realty Projects Face Delay

According to industry estimates, around Rs 8,000 crore of real estate projects covering over 40 million square feet are facing delays.

Analysts said the construction cost for large commercial projects was Rs 2,000 per square foot, on average.

In the process, developers are facing huge cost overruns. According to analysts, construction cost is growing 20 per cent every year and the developers are carrying a compounded interest burden of 30 to 40 per cent after three years. Read More »

Langham Hotels forays into India with Wadhwa Developers

Hong Kong-based Langham Hotels International (LHI) is all set to foray into the Indian hospitality segment. It has recently tied up with Mumbai-based real estate developer Wadhwa Developers for the same. The hotel chain entered into a management agreement with the developer for a five-star property being developed in Pune. It will introduce its five-star brand Langham Place Hotel for the same. The property located near Koregaon Park, one of the prime locations in Pune, is slated for operations by 2010 end.

The property will consist of around 180 rooms, a coffee shop and a speciality restaurant. It will also house Chuan Spa, the group’s spa brand. The group will also focus on developing an extensive conferencing facility to cater to the meetings, incentives, conferences and exhibitions (MICE) segment. Read More »