Indian Property News on 'November, 2008'

House Prices Dip By 10% In Orissa

Even as the real estate sector in Orissa is stated to not have been affected by the meltdown as in the metros and other parts of India, the builders in the State under Confederation of Real Estate Developers Association of India (CREDAI) have announced a rate cut in house prices by 10 per cent. The rate cuts would be affected in all upcoming projects of developers under the confederation with immediate effect. And with prices of raw materials and land coming down coupled with lowering of interest rates by RBI, the price cuts could even be extended to 20 to 25 per cent in the ensuing days.

Talking to mediapersons here on Tuesday, president of CREDAI Orissa Md Moquim and Secretary D.S. Tripathy said prices of steel have begun to come down from Rs 40,000 per tonne to Rs 26,000 while cement has reduced by Rs 20 to 30 a bag and sliding. Due to the slowdown of economy and the resultant hesitancy of big building companies to enter the fray in Orissa, the price of land has begun to fall by 10 to 15 per cent and is further expected to go down to 20 to 25 per cent. Along with that, the comprehensive development plan (CDP) for Bhubaneswar is expected to come into force from early next year, which will open up new land regions for development thus creating more opportunities, they said.

Retail Sector India Welcomes Self- Service Technologies

The global economic downturn has opened up opportunities for self-service cash transaction and check-out kiosks at retail stores across the country. The self-service kiosk concept, a hit in markets such as the US, the UK and Japan, among others, enables retailers to deploy cashiers on the shop floor to enhance customer experience, apart from helping the cut down costs. In this context, Peter Frielick, vice-president, marketing, Asia Pacific region, NCR Australia Pty Ltd made his first official visit to India to tap opportunities in self-service technologies in the retail sector. NCR Australia Pty Ltd, whose technology solutions are deployed by retail giants like WalMart, Tesco and Home Depot, among others, wants to “empower retail majors in India on self-service technologies,” according to Frielick.

Speaking to FE, Frielick explained the rationale behind the company’s foray into the Indian market. “Self-service technologies at billing counters will enable customers to operate cash transaction kiosks by placing products on the bar code reader. This will help retailers get rid of long customer queues at billing counters,” he said. “Also, retailers will be able to deploy cashiers on the shop floor to enhance customers’ shopping experience. This is the right opportunity to enter the Indian market,” he added. According to Pradeep Sen, managing director, NCR Corporation India Private Ltd, “At the recently held Retail Excellence Technology 2008 seminar, retail majors like Reliance Retail, Pantaloon Retail, Tata’s Trent, Titan and Westside, Café Coffee Day, Barista showed significant interest in installing self-service billing counters and check-out kiosks within their hypermarkets and retail stores. The retail companies witnessed product demos and inquired about the sustainability of the technology.” Reliance Retail officials, requesting anonymity, told FE, “We have experienced the demo (of the kiosks). They will benefit shoppers. Deploying self-service cash transaction kiosks will be a good cost-cutting exercise for us as well, as they will be able to prune employees and shift cashiers on the shop floor.”

Indian Real Estate Market has Enormous Potential Feels Middle East Developer

India’s real estate market could reach a value of $60 billion by 2010, and become an “enormous” economic power, a Middle East developer has said. Abdullah bin Abdulaziz Al Majed, vice chairman of Tanmiyat Group, was speaking ahead of the firm’s participation at property show Cityscape India 2008. Tanmiyat is among a group of international firms expected to make a move in the Indian market when it recovers from a current slump. Al Majed pointed to statistics showing the market will grow from $16 billion to a possible $60 billion in two years, with 21 million new units needed. Al Majed said: “Cityscape India 2008 will shed light on the development of residential units for the poor, who form 70 per cent of the population, along with its main concern of the development of units for medium-income people.

“This draws a clear picture of the future of real estate investments and available opportunities.” He said his company’s presence at the show meant it could “take a detailed look” at everything related to the Indian market. Cityscape India 2008, to be held at the Bombay Exhibition Centre from December 8 to 10, is expected to attract more than 350,000 property professionals and international investors.

Gulf’s Realty Slowdown Affects Indian Firms

Many Indian real estate and construction firms and architects are feeling the heat of a real estate slowdown—in West Asia. Over the past three-four years, developers and construction firms such as the Dheeraj Group, Hiranandani Developers Pvt. Ltd, Ajmera Group and Mayfair Housing (P) Ltd entered markets in West Asia, attracted by relatively low-cost land, rising demand and the scope for striking joint ventures (JVs) with local developers. Dream city? Cranes tower over buildings under construction in Dubai. The UAE government is taking steps to revive the housing market. Over the past six months, however, developers in West Asia have seen their finances hurt by the global economic slowdown that ensued in the wake of the credit crisis. Dubai’s Nakheel PJSC and Emaar Properties PJSC have both been affected.

Engineering and construction firm Gammon Billimoria Plc., a JV between Gammon India Ltd and BE Billimoria and Co. Ltd, had nearly completed the foundation work for eight of the 12 towers of the Forbidden City project at Dubai’s International City when it was informed by developer Nakheel that it would have to suspend work indefinitely. “We were informed that the project has been shelved because the developer was undergoing a cash crunch. We have no idea when and whether it will resume,” said a senior Gammon executive, who asked not to be named because he is not authorized to speak to the media. Nakheel is struggling to execute its projects and shelving the ones that are far from completion, said two property consultants operating out of Dubai on condition of anonymity. In an email response to Mint, a Nakheel spokesperson said: “We are witnessing a global negative economic movement and believe we have a responsibility to help this market maintain healthy momentum, which means reassessing our immediate business objectives.” The next few months would see a “redirecting of activity” around some of the firm’s projects, he added.

Another project, 23 Marina, promoted by Hircon International Llc., a JV between Hiranandani Developers and Dubai’s ETA Star Property Developers LLc., has not been able to attract buyers. Bookings for apartments opened in 2006 at Rs13,000 a sq. ft The price is now down to Rs7,000-8,000. A marketing executive at the firm’s Dubai office said many apartments remained unsold and that the “price was negotiable”. He did not want to be named because he is not authorized to speak to the media. On Wednesday, Abu Dhabi deepened efforts to stave off economic damage from the credit crisis, launching a government-backed lender to revive the housing market as major Dubai developers were reported to halt sales. The lender, called Abu Dhabi Finance, would back mortgages to the emirate’s Top 3 developers as a first step, and would extend its reach countrywide into the United Arab Emirates (UAE), the new firm said.

The UAE suffered a direct hit from the credit crisis after lending to its booming real estate sector dried up and property prices plunged, forcing the government to create a rescue vehicle called Emirates Development Bank that would serve to consolidate and absorb finance firms under pressure. Separately, newspaper Emirates Business reported on Wednesday that two Dubai developers, state-owned Nakheel and Limitless, which is controlled by government-owned Dubai World, would halt property sales until Dubai’s real estate market improves. It also said Emaar had relaxing restrictions on the resale of properties, allowing investors to sell before paying the firm 30% of the property value. The problem isn’t restricted to developers and to Dubai, although Mumbai-based architect Shashi Prabhu, who has designed projects for many developers in Dubai over the past 32 years, says the crisis is worse in the city because every form of development there is primarily targeted at the expatriate population, which is staying away from real estate investments. “Two of my projects have been stalled due to the downturn,” said Prabhu.

Bangalore-based Sobha Developers Ltd, which had announced five-star hotels in Dubai and Oman, has also put them on hold and is now concentrating on executing its domestic projects, said a company official, who did not want to be named as he is not authorized to speak to the media. The slowdown has also affected Bahrain, a market that is still new for Indian developers and architects. Architect Raja Aederi’s first project in West Asia, a mixed-development township in Bahrain, has been shelved. “It was a huge project and my first in that part of the world and I am told that the project is not happening now because of the slowdown,” said Aederi. Ajmera Group’s managing director Bandish Ajmera, however, said the slowdown had impacted Dubai more than Bahrain, where land prices are considerably lower. Ajmera is developing the $150 million Bahrain Bay project with Mayfair Housing. A correction in property prices has just begin with a 25-30% dip in projects in Dubai that are near-completion. Prices will go further down, said Usha Lata Birla, director at Al Firdous Real Estate, a property advisory that operates out of Sharjah and Dubai.

Land Mafia and Corporate Houses Impose Threat to Chandigarh Government Property

The Manimajra Farmers’ Welfare and Environment Protection Society, in association with the Society for Prevention of Crime and Corruption, organised a public interaction and fact evaluation meet on Monday to address the alleged corruption in the real estate dealings in the city. Residents of all age groups, including businessmen, farmers and social activists, had gathered to discuss the rampant corruption in the name of ‘development’ in Chandigarh. Addressing the interaction, the Citizen group presented a ‘Citizen’s Report” to highlight that the quantum of scams in real estate dealings amounted to crores of rupees in the city. The group said government properties like the ISBT in Sector 17, public parks and open spaces were under the threat of being sold to corporate houses, land mafia and builders.

The group appreciated the ‘courage’ and ‘conviction’ exhibited by UT advisor Pardip Mehra to stand up against Administrator General SF Rodrigues (Retd) and highlight corruption worth Rs 2,000 crore in the Medicity project. Social activist Hemant Goswami said officials of the Chandigarh Administration had initiated a slander campaign against Mehra. “There are clear CVC guidelines that no inquiry is to be initiated against any official on anonymous complaints, still an inquiry was initiated against the advisor. Surprisingly, the Chandigarh Administration acted in a selective manner. While scores of credible complaints against the Administrator and some other officials were ignored, action was initiated on the anonymous complaint against the senior most bureaucrat for a flimsy and false allegation of affixing tiles in his government house in Delhi.”

M N Sharma, the first Indian architect of Chandigarh, rued that the planned city was being destroyed due to the arbitrary decisions of Administrators and other executives. “In today’s time, it is the lust for money which seems to be making real estate a lucrative option for all corrupt officials. Most of the so-called land development activities in Chandigarh and projects like Medicity are mindless, ill-conceived and serve no public purpose,” he said. Later, village head of Sarangpur, Sadhu Singh, mentioned how farmers were displaced and their lands grabbed by the land mafia and the builders through the government for a paltry sum, which was actually less than one per cent of its market price. He rued that no official had ever met the affected farmers despite them paying regular visits to their office.

Developers Feel Falling Rupee will Woo NRIs

City’s real estate developers are hoping that the falling rupee would help woo NRI customers and prop up the market here. Stung especially by dropping of sales by about 80% in Mumbai, real estate developers are now going to the UAE in a bid to hardsell to Non Resident Indians (NRIs). The Maharashtra Chamber of Housing Industry (MCHI) is holding its property fair from November 27 to 29. While the MCHI has been organising the property fair in Dubai since 2002, this year holds special significance. The rupee has depreciated from the Rs40-mark a few months ago to the Rs50-mark against the dollar last week, a fall of over 20% in a span of a few months. So, a 2-BHK flat which earlier cost Rs1.25 crore, an NRI will now have to shell out only Rs1 crore.

And if developers offer the NRI discounts such as stamp duty and free parking that they gave at the MCHI Property Fair that concluded two months ago at Bandra Kurla Complex, then buyers could be get benefit of about 40% and the flat could be available for as low as Rs95 lakh. “Prices too have begin to decline. NRIs can get a good deal now and we intend to highlight this,’’ said Zubin Mehta, CEO of MCHI, adding that the rupee depreciation against the US dollar would be a major selling point to NRI buyers. Mehta said the main reason for targeting UAE NRIs was that they were mainly working-class people who have gone to Dubai and other places in the UAE with the aim of earning a living and buying a home in India. “They are not permanent residents like in the United States or the United Kingdom. They primarily earn their living in the UAE and buy a home in India,’’ Mehta said.

Chennai Overshadows Mumbai as an IT and BPO Hub

Chennai has displaced Mumbai as the most preferred destination for ITeS and BPO companies wanting to set up delivery centres in India, according to a study done by Dun & Bradstreet. At fiscal-end 2008, 14.1 per cent of the delivery centres in India were located in Chennai, closely followed by Bangalore with 14 per cent and Mumbai with 13.3 per cent.

Dun & Bradstreet’s study for the previous year saw Mumbai as the most preferred BPO location while Chennai was second in that list. “The growth rate in Mumbai in terms of number of delivery centres has plateaued whereas Chennai has registered a steady year-on-year growth of around 14 per cent ,” Mr Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet – India, told Business Line in an e-mailed statement. The comparative affordability of Chennai (vis-a-vis Mumbai), availability of talent, and a robust academic ecosystem appear to be driving this trend. Chennai is a much more cost-efficient city than Mumbai; moreover, it produces an equally good talent pool as Mumbai, according to Mr Amar Chintopanth, Chief Financial Officer & Executive Director, 3i Infotech.

The people-intensive outsourcing sector in India is facing immense margin pressure due to the global financial crisis. This has prompted these companies to reduce costs on every front, analysts say. “House rentals in Chennai are 40-50 per cent cheaper than Mumbai. Moreover, real estate (for outright sale) in Chennai is 30-40 per cent cheaper than like-to-like property in Mumbai,” said Mr Chintopanth. In terms of concentration, the top five cities – Chennai, Bangalore, Mumbai, Pune and Gurgaon – account for 55.9 per cent of the total delivery centres of ITeS-BPO companies. Like the previous year’s study by Dun & Bradstreeet, the current one too shows that Tier-II cities are making their presence felt in the ITeS-BPO industry.

Allow NRI Currency Hedging- ASSOCHAM to RBI

The Associated Chambers of Commerce and Industry of India (Assocham) has recommended that the Reserve Bank of India (RBI) should allow non-resident Indians (NRIs) to hedge their currency risk in Indian currency and provide regulatory approvals, enabling retail investments in Indian stock markets from NRIs and foreigners.

Regulations relating to NRI investment in Indian stock market are complex, cumbersome and archaic and these need to be simplified, said Sajjan Jindal, president of Asocham in a presentation to RBI. According to Jindal, investments by NRI’s are clubbed with those by FIIs for determining the total FII investment limit in any company, as a result of which NRIs are deprived of an opportunity to invest in many companies even when the market is down, he added.

Hotelex India 2008 Exhibits the Developments in the Hospitality Industry

CMP India, a subsidiary of United Business Media Ltd, a leading global business media company is hosting Hotelex India 2008, an international trade fair for the hospitality industry. The event will be held at the Bombay Exhibition Center In Mumbai from the November 21 to 23 .The event promises to be a one stop shop for hotel and resort developers, purchase and procurement managers, food and beverage managers as well as for interior designers, architects and specialist engineers. The revenues for the Indian Hotel and Restaurant industry in the year 2006-07 exceeded 6 billion rupees, an increase of nearly 22 per cent over the previous year. The industry is poised for rapid growth and is projected to be well worth over 8 billion rupees by the year 2010.To be in sync with this growth and development Hotelex 2008 has grown bigger and expanded its scope to showcase the complete panorama of the hospitality industry.

With a view to cover the complete spectrum of the professional Hospitality sector Hotelex will feature specialized events such as Hotelex Culinary Challenge, Hotelex Bar Challenge, CEO conclave, Procurement Mangers Meet and Green Housekeeping Seminar with it focus on Social and Economic relevance of adopting eco friendly initiatives in the hospitality sector. The Green Housekeeping seminar will see Distinguished Panelists like Margaret Zacharias, Executive Housekeeper, Orchid Hotel will put forth their views on challenges involved in adopting eco friendly housekeeping measures.

The Culinary challenge is being hosted with support and technical guidance of the Western Indian Culinary Association(WICA).The Bar Challenged will be conducted by famed mixologist Shatbi Basu .The CEO conclave will bring together industry leaders and pioneers on one platform for an interactive knowledge sharing session on ‘Investment in the Indian Hospitality Sector -Branding and Franchising’. Eminent Industry captains like Jamshed Daboo, COO, Taj Premium Hotels; Rattan Keswani, President , Trident Hotels will be present to discuss issues and challenges pertinent to the hospitality industry in view of the present economic scenario. Internationally, Hotelex has been staged successfully for the last 17 years in Shanghai and 7 years in Beijing. The brand represents a high value and business friendly approach through its styling and format. (ANI)

Office Market Costs Dip Further in Mumbai and Delhi

While Mumbai’s Nariman Point dropped to 5th place ($170.85 per sq ft per annum), London’s West End ($248.66) and Moscow ($234.73) remain the world’s two most expensive office markets, respectively. Hong Kong’s CBD and Tokyo’s Inner Central District round out the top five, according to CB Richard Ellis Group Inc (CBRE) Research’s semi-annual Global MarketView/Office Occupancy Costs survey. Mumbai, which was second in November 2007, fell to fourth place in May 2008. New Delhi’’s CBD — which was placed at number eight in May 2008 — dropped to 13th place ($122.18) in the report. The report tracks world markets with the highest as well as fastest-growing occupancy costs for the 12 months ended September 30, 2008. The average rate of growth for office occupancy costs among the 172 markets monitored in the survey was 8 per cent, almost double last year’s world Inflation rate.

Anshuman Magazine, chairman & MD, CB Richard Ellis South Asia, says, “India’s office market slowdown is reflective of the global economic slowdown as a majority of the occupiers of quality office space are multinational companies. Office supply too has seen a substantial increase in the past few years. In spite of this, Mumbai and New Delhi continue to be in the top 15 world’s most expensive office markets.” “Our current perceptions are greatly affected by the current economic malaise and we tend to forget how fast rents and occupancy costs were rising over the last 12 months,” said Raymond Torto, CBRE’s global chief economist. “Clearly the rate of change is generally slowing, and in some markets the pricing direction is down. The turn in rent trajectory will provide some relief to occupiers and angst to owners. However, unlike previous downturns, which have occurred simultaneously with extensive overbuilding, the real estate market globally today is in a stronger position to weather the difficulties than in the past.”

Up 94.6 per cent, Abu Dhabi, United Arab Emirates (UAE) had by far the fastest growing occupancy costs, with three of the top five fastest growing countries situated in the Middle East. The rise in occupancy costs in the UAE over the past twelve months has reflected market fundamentals – limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE.