Indian Property News on 'February, 2009'

DLF raises Fund from Bond sale

DLF, the nation’s biggest real estate developer, has raised Rs 720 crore from selling bonds to insurance companies as part of its plan to raise Rs 5,000 crore from such sales.

DLF on February 24 raised the funds through issue of non-convertible debentures maturing in five years which offered as much as 14 per cent interest, sources in the company said. The bonds were sold to Life Insurance Corporation (LIC) of India and a few others. DLF officials were not available for comments. Read More »

Real Estate Sector- potential for more sophisticated Infrastructure

Anecdotal reports are that activity in the property market has been slowing - but that does come after an especially frenetic couple of years.

The real estate sector in India has grown by 30% to 35% during the past five years, reflecting the rapidly increasing demand for office, commercial and industrial space, as well as for bigger homes, that coincided with the economic boom.

To some extent, property development may have failed to keep pace with demand because of an underdeveloped investment market. Read More »

Real Estate Developers Face Risk of Cancellations

DLF Ltd. and other Indian developers are cutting prices on increasing risks that buyers will back out of purchases made at the market’s “peak,” forcing developers to write off earlier profits, Credit Suisse Group said.

DLF, along with Parsvnath Developers Ltd. and Orbit Corp., have more than 20 percent of their revenue booked since 2006 as outstanding, Mumbai-based analyst Anand Agarwal wrote in a report today. The company, India’s largest real-estate company, has lowered prices for a project in Chennai by as much as 14 percent, the report said. Read More »

Corrupt’ projects upset Goa’s peace

Simmering resentment against major developments in rural Goa - famous for its exotic beaches and idyllic rural countryside - has exploded in protests against allegedly corrupt local administrators.

The former Portuguese enclave, which merged with the Indian Union in 1961, has a rich heritage, and its people have a term susegaad (take it easy) that typifies their laid-back culture.

Attracted by the ambience, millions of visitors, mainly foreigners, come to Goa each year. That is helping to attract real-estate developers seeking huge profits in large projects in the area’s villages, permission for which is given by the panchayats, or local administrative offices, each of which encompasses several villages. Read More »

Banks seek up to 150% collateral against Loans

In spite of ample liquidity, banks are treading cautiously as far as lending to the real estate sector is concerned, and are seeking collateral as high as 150 per cent of the loan amount as security deposit from them.

This apart, banks are cushioning themselves by seeking more equity participation from the developers, ranging between 40 and 50 per cent of the project cost, and providing loan not more than 50 per cent of the cost in commercial real estate projects. Read More »

SBI’s interest subvention scheme to trigger sales in the Realty market

Home loan borrowers in the eastern metropolis may have a reason to smile: the country’s largest lender, the State Bank of India, has introduced an interest subvention scheme that hopes to trigger sales, (and not prices) in the badly-bruised real estate sector.

The scheme is a special arrangement between SBI and a few builders, wherein the interest component of a home-loan would be borne by the builder, until the project is complete. In effect, it would mean that buyers of under-construction homes would not have to shell out the interest on their EMI until they get physical possession of the home. Read More »

Aditya Birla expands into Real Estate

Aditya Birla Management, the Mumbai based conglomerate best known for its metals and materials businesses, is to set up a real estate and private equity arm for its wealth management units.

According to a report by the Asian Investor, chief executive of Aditya Birla Management’s financial unit in Mumbai, Ajay Srinivasan said the poor performance of Indian equities prompted the group to offer its clients alternative products for investment. Read More »

RBI expects lending rates to fall further

The Reserve Bank of India (RBI) expects the banks to slash the lending rates further over a period of time but non-performing loans could rise in a slowing economy.

Anand Sinha, an executive director at the RBI, said the RBI would continue to maintain ample liquidity in the banking system using conventional and unconventional tools. He said lending rates have come down in recent weeks. “Over a period of time we expect the lending rates to come down,” Sinha added. At its quarterly monetary policy review, the RBI kept its key rates steady and said banks had significant room for cutting lending and deposit rates.

Haryana plans floor-wise registrationThe real estate sector in the state of Haryana gets a boost following the state government’s decision to allow floor-wise registration of the houses falling under municipal limits, Huda sectors and Town and Country Planning licensed areas. Read More »

Correction in Realty Market is bound to come

Expecting correction in real estate prices, country’s largest housing finance company HDFC Ltd today said it would cut interest rates in case costs of fund comes down.

“Where flats are more expensive, the drop will be sharper than where the flats are cheaper… correction is bound to come,” HDFC Chairman Deepak Parekh told reporters here.

Asked whether HDFC would cut interest rates, he said, “if the availability of money…if our cost of fund comes down, we will certainly reduce rates.” Read More »

Realtors likely to divert surplus FDI to Realty Projects

Commerce and industry ministry is likely to waive end-use restrictions and allow realty developers to divert surplus foreign direct investment to real estate projects where it was not allowed so far. According to the norms, FDI is allowed only in projects with a minimum investment of $10 mn (in wholly-owned subsidiaries) or $5 million in joint ventures, and which has a minimum area of 10 hectares.

As per the proposal, which will require a Cabinet approval before being implemented, a real estate company which has brought in FDI in a project meeting the mandated conditions can now use the surplus funds in another project which may not meet the prescribed conditions. Read More »