Indian Property News on 'September, 2008'

Kerela Govt gives green signal to SEZ policy

The Kerala Government cleared the road for private special economic zones. The Government has brought in a state-specific SEZ policy which would be binding on all SEZs, including the 11 which had already got the Centre’s clearance.

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Banks unlikely to offer festival discounts to home buyers

Banks in India will not be providing discounts to home buyers this festival season. Between October and December, when almost 60 per cent of home-buying happens, banks offer discounts like reduced rates and waivers on administrative and processing fees to lure customers. Most of the banks admit that tight monetary conditions are making things very difficult for them. “Given that there is a tight liquidity situation, there is very little chance of banks offering anything special this season,” said a senior manager in a housing finance company. Another home loan head of a private sector bank said that the banking sector’s cost of borrowing was as high as 12-13 per cent. “In such circumstances, it is hard to think of any drop in rates,” he added.

There could be some relief for buyers from builders though. At a recent meeting of the Maharashtra Chamber of Housing Industry (MCHI), a body of builders, proposals were mooted that developers should bear stamp duty, registration and floor rise charges. Also, it was advocated that builders should take upon themselves a part of the interest cost in the initial years to kick-start home buying. In other parts of the country as well, developers are moving towards building cheaper houses. A large number of developers are offering houses for the middle class at Rs 25-35 lakh. However, property experts believe that buyers will not be too enthused with just sops if the rates do not go down. “Given that property rates have really shot up, unless there is a fall in the per square feet rate of flats, it is unlikely that buyers will come in,” said a banker. Read More »

Parsvnath launches ‘Parsvnath Pratishtha’ at Pune

Parsvnath Developers announced the launch of Parsvnath Pratishtha, a Group Housing project at Pune. The project is located at Pimpri Chinchwad, 10 kms away from the Mumbai-Pune expressway and 25 kms from the upcoming New International Airport at Chakan. It is spread over an area of approx. 11, 000 sq mt., has a built up area of approx. 1.23 lac sq. ft. The project comprises of 96 apartments, has basement parking plus four floors and is equipped with two and three BHK apartments with an offering of forty eight houses each for two and three BHK apartments with a lucrative price tag of approx. 3 million and 42 million respectively.

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Berggruen eyeing Dawnay Days hotel chain in India

Berggruen Holdings, a New York-based investment company is in talks with UK investment group Dawnay Day to acquire its four-star hotel chain Ten Hotels in India. The deal will be worth over $50 million. Dawnay Day had initiated the process to sell its investments in financial services, hotels and real estate ventures in India as the UK firm fell victim to post-subprime credit crunch following which an administrator, BDO Stoy Hayward, was appointed. The administrator is now disposing the firm’s assets across the world.

Leading hotel and real estate developers such as ITC, Royal Orchid, Pride Hotels, Sarovar group, Lemon Tree, DLF and Paraswanath were part of the race to buy out Dawnay Day’s three hotel properties and other real estate assets in India. Dawnay Day controls its real estate and hotel subsidiary in India through its two subsidiaries—Dawnay Day Hotels India and Dawnay Day India Land Read More »

Indian realty goes ‘Green’

The Indian Real estate sector is taking the initiative to contribute to the save the environment by developing green buildings. Jones Lang LaSalle Meghraj, in its research report titled, ‘Greenomics,’ states that the Indian construction industry is growing at 10% as compared to the world average of 5.2%, and that the country is expected to develop 110 million sq ft of green space over the next few years. The report focuses on the cost benefit analysis for green buildings. One of the major findings from the analysis is that a green building aiming for LEED (Leadership in Environment and Energy Design) – GOLD certification can recover its additional costs in a payback period of 2-3 years.

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, says, “The challenges faced inherent in the development of green buildings in India are the extra investment in an unstable real estate market scenario, and the difficulty in sourcing green building material and sustainability consultants. Extra investments can be recovered in the medium-to-long term from the non-sustainability discount, which gives green buildings a higher rental value than conventional buildings in their vicinity, and via the carbon credits that can be earned from the reduced GHG emissions.” Read More »

Realty stocks tumble, record 52week low

Realty stocks took a tumble on the bourses and many logged their 52-week low The BSE Realty Index closed at a 52-week low at 3,407.87, down 5.26 per cent. It had dropped 16.79 per cent over the week from 4,095.50, and 31.78 per cent over the month. Over the week, almost all real estate company stocks have taken a hammering, dovetailing the Sensex’s fall with the negative market sentiment at an all-time high, which this week is compounded by the wait for the US congressional nod for the $700-billion bailout package for bankrupt investment firms there.

Delhi-based DLF Ltd stock closed at Rs 350. 60, 5.12 per cent lower than its previous close. The DLF issue was priced at Rs 525. Sobha Developers’ stock suffered a 9.59 per cent drop, closing at Rs 171.55. At close, Omaxe stock traded at Rs 96.05, down 4.38 per cent, far below its issue price of Rs 310 (Rs 613, Rs 93.60). Housing Development and Infrastructure Ltd was at Rs 166.05, down 13.72 per cent lower than its previous close (Rs 1,432, Rs 160.20). Parsvnath Developers was down 7.04 per cent at Rs 89.85 (Rs 598, Rs 86.60).Among the marginal declines, was Ansal Infrastructure at Rs 77.30, down 4.13 per cent, and Unitech, which lost 1.98 per cent at Rs 108.85, but recovered from day’s of low Rs 97.5, which is its 52-week low. Of the many investments Lehman Brothers made in India, Delhi-based Unitech received about $175 million (Rs 740 crore). Read More »

Sliding realty prices forcing retailers to renegotiate rentals

Indian retailers are facing tough times as the realty prices are falling. They have been left with no choice but to renegotiate rentals. In some cases, they are even shutting and relocating stores to offset the drag on profitability. Kishore Biyani, managing director of Pantaloon Retail (India) Ltd, India’s biggest publicly traded retailer, said store rentals are down by 25-50%. “We are renegotiating the rentals in some cases,” he said, but declined to elaborate.

The latest to join the pack is The MobileStore Ltd, a venture of the Essar Group that sells telecom products such as mobile phones. “We have signed deals on high rentals a year back and now the rentals are coming down by almost 50%,” said chief executive officer Rajiv Agarwal. “We are renegotiating with the owners and whoever is refusing to revise the prices, we are relocating the store to a viable location having lesser rentals.” The company currently operates some 1,200 stores and plans to shutter 5% of those — primarily in metros — if rentals can’t be renegotiated, Agarwal said. Three stores have already been shut, even as the company plans to add another 600 shops across India, because volumes have gone up, he said. The company is not alone in walking away from contracts signed at a time when the economy looked better; oil had yet to cross $100 (Rs4, 640) a barrel and inflation was in single digits. Read More »

DLF to Invest Rs.1250 Crores in Multiplex Business

Real estate developer DLF will be expanding its multiplex business by investing about Rs 1,250 crore. About 500 screens will be added to DT cinemas in the next four to five years. Currently, DLF is at a pre-operative stage with about seven screens. Once these initial projects start, the mid-term aim is to have about 150 screens operational within two years.

Apart from north Indian cities, DT Cinema plans to set up multiplexes in Hyderabad, Chennai, Kochi, Bangalore, Mumbai, Pune, Ahmedabad, Goa and Kolkata. The size of each multiplex could be between 35,000 sq ft to 90,000 sq ft. DLF believes that the multiplex business offered a big opportunity as there is a shortage of nearly 40,000 screens in India.

Oversupply to affect realty revenue

The number of information technology parks and special economic zones in the 21-km Old Mahabalipuram Road — popularly known as OMR — in Chennai has exceeded the demand in the entire IT industry in India. “It will be difficult for builders to raise finances for their other developments and in subsequent phases, projects will also be postponed,” Nipun Sahni, director and global head of commercial real estate at Merrill Lynch Capital, stated.

Two other plum areas that are likely to face the same fate, they said, are Lower Parel in Mumbai and Noida in the National Capital Region, both of which are hotspots for A-grade office space. Lower Parel has a ready office space of 4.5 million sq ft and will add a minimum 5 million sq ft by 2009, taking the total commercial space to 9.5 million sq ft. Of this, DLF, India’s largest realtor, alone will add 3.8 million sq ft through office space and a mall. Indiabulls Real Estate, Peninsula Land and Orbit Corporation are also busy completing their projects in the locality. To boot, top players such as DLF, Unitech, Emaar-MGF, Akruti City, Puravankara and others have expanded to states they were not present in, and have ended up in close proximity to each other, creating oversupply pockets. Read More »

Realty firms hit by FMPs exit

The Mutual Funds’ fixed maturity plans (FMPs) are avoiding investment in the cash-strapped realty firms due to the global economic slowdown. This has made investors doubtful about credit repayment by Indian firms. They are turning risk averse in this scenario of global turmoil which is worsening situations for the developers. A slowdown in demand, price correction and increasing inventory are factors causing pain to real estate developers.

Fitch recently claimed the short-term outlook for India’s real estate sector to be negative. He said, “Growing liquidity concerns may lead to a possible negative impact on the credit profiles of real estate companies.” In fact all this has also graded down the short-term debt rating of Sobha Developers and Parsvnath from F1 to F2 and from A to A - respectively. Ramanathan K, the head of Fixed Income at ING Mutual Fund, said, “Now, one can get good rates in normal bank CDs (certificates of deposit). Earlier, when rates were low, people were willing to take higher credit risk.” Read More »