Indian Property News on 'March, 2009'

Slump in Retail Sector Expected for Another 12-18 Months

The organised retail sector in the country has witnessed an 11 per cent decline in sales in 2008 and the slowdown is likely to continue for the next 12-18 months, says global consultancy firm KPMG. The report prepared by KPMG stressed that the government incentives such as increased spending in infrastructure could help the retail sector. “Falling footfalls and poor conversion ratio has lead to a decline in sales growth to 11 per cent in December 2008 compared to 35 per cent in December 2007,” the study said.

According to the report titled ‘Indian Retail: Times to Change Lanes’, the current slowdown is expected to last for 12-18 months “conditional on government incentives in increasing spends on infrastructure, development initiatives and other activities to stimulate the economy”. “Slowing sales resulting in lower inventory turnover and increasing working capital requirements to fuel growth have resulted in liquidity pressures for many domestic retailers. Companies have been trying to reduce the inventory and shorten working capit al cycles,” KPMG India National Industry Director Consumer Markets, Mr Ramesh Srinivas said. The report said that around 70 per cent of the retailers have reported a decline in footfalls or number of visitors and customers in the stores.

Delhi Convention Centre Project Dumped

The mega convention centre to be built by real estate firm, DLF in New Delhi, has been scrapped as the government is unwilling to let the company seek a foreign equity partner for the project. Speaking on the matter, DLF group chairman KP Singh said, “We are ready to revisit the project if we are allowed to rope in foreign partners for funding, including private equity players.” The Delhi convention centre is one of four state-of-the-art facilities announced in Union Budget 2007-08. Singh said that unless Delhi Development Authority (DDA) allowed a special purpose vehicle for the project to include additional equity players, the project was unlikely to take off. DLF bagged the development, being the sole bidder, in July 2007. Its financial bid was Rs 901.8 crore, against a reserve price of Rs 900 crore.

Spread over an area of 14 hectares, the mega convention centre was slated to come up at Dwarka, near the city’s airport, and was billed as one of DDA’s most ambitious projects. The complex was to have an integrated built-up area of 1.83 lakh sq m, comprising an 86,400-sq m convention and exhibition complex, a 60,000-sq m built-up area for a hotel complex, and 36,600 sq m for a commercial complex. Read More »

SBI Launches Green Home Project at Lower Rates

State Bank of India has introduced a new home loan product that will make other banks go green with envy. By launching ‘Green Homes’, the country’s largest bank wants to support rated environment friendly residential projects by offering concessions - reduced margin, softer interest rate, and zero processing fee - on home loans to discerning buyers. In case you are planning to buy a house with a loan from SBI in an environment friendly residential project, which has been rated by the Indian Green Building Council (IGBC), then the bank is willing to woo you with concessions. The concessions: the upfront margin that you will have to stump up will be lower at 15 per cent of the loan amount instead of the normal 20 per cent; interest rate on the loan will be 25 basis points lower than the card rate; and no processing fee will be charged.

A ‘Green Building/ Home’, according to the IGBC, is one that uses less energy, water and natural resources, creates less waste and is healthier for the people living inside compared to a standard building. The council is a part of the Confederation of Indian Industry - Sohrabji Godrej Green Business Centre. “As part of our endeavour to promote rated eco-friendly residential projects, we have announced easy loan terms for prospective home buyers. Our move will also encourage builders to come up with such projects,” said a senior SBI official. The bank, which introduced the ‘Green Homes’ product a couple of months back, is currently supporting ‘green’ residential projects by Tata Housing and Mahindra’s. Read More »

Real Estate Slump Affects Poor Workers in the Construction Sector

The real estate sector, once a flourishing business avenue, has literally been grounded by the global economic slump. And with it the woes of poor migrant construction workers too have increased. Many new flats and deluxe houses are waiting for buyers and several developers and builders have been forced to stall their future projects. “No survey has been done so far to estimate the exact number of unsold flats. But looking at the effect of global economic recession in the city’s real estate market, the figures could be in hundreds,” said Raj Menda, president of the Confederation of Real Estate Developer’s Associations of India (CREDAI). CREDAI is the apex body of organised real estate developers and builders across India. “As there is no business, there is no work. Thousands of construction workers are jobless now,” Menda added.

Most of the skilled and unskilled labourers in Bangalore’s construction industry come from Tamil Nadu, Orissa, Rajasthan, Uttar Pradesh, West Bengal and Bihar. Moreover, thousands of people from the north Karnataka region, including Raichur, Bidar and Gulbarga districts, migrated to the city to work in the once booming industry. This led to the mushrooming of labourer colonies on the periphery of construction areas in the city’s northeastern, eastern and southeastern parts. “But slowly these labourer ‘ghettos’ too are disappearing from the city’s landscape,” said R.M. Palanna, director of Outreach Onsite, the only NGO working for children of migrant labourers in Bangalore. According to an estimate by Outreach Onsite, Bangalore until recently had 500,000 migrant construction workers. “But in the last six months, half of Bangalore’s construction workers have left the city as there is no work for them,” he said. Read More »

Panipat- Goldmine for Real Estate Developers

Around 90 kilometers away from the nation’s capital Delhi, the city of Panipat has its own colourful history. Known for the three key battles fought in the past, the city is also known internationally for its handloom production. Now, the city is fast changing to adopt forward-looking outlook. Real estate experts believe that the city is a goldmine for developers as well as investors. Even in the recession time, the property prices in Panipat have been on rise. Primarily, a commercial hub, the city has been experiencing a continuous development with major companies opening their offices. However, the government of Haryana is on the forefront to give the city the best possible infrastructure, it’s the private builders who are playing lead roles in brining the city on the global map of real estate development.

The city, witnessed a high growth in real estate sector during the last few years, with a number of construction projects, both in residential as well as commercial segments. Already the mall culture have zoom the outlook of the city with the influx of modern shopping and living experience in the forms of shopping mall, multiplexes, retail stores, apartments, duplexes and penthouses. Some of the city’s renowned structures include Fun City Mall, Raheja Expo Mall, Mittal Mega Mall, DAP Angel Prime Mall, Saraf Mall and Reliance’s Retail Hyper Mall. Parsvnath Developers, a leading realty company, is developing a township near the Devilal Choudhary Park in sector 38-39, which will have all the facilities including schools, multiplex, shopping malls. With an investment of over Rs250 crore, this township will also have plots and group houses. Read More »

Govt to buy Flats from Emaar MGF

The government will buy up to 1 billion rupees ($20 million) worth of flats from real estate firm Emaar MGF Land, the Business Standard newspaper reported on Sunday, citing a senior ministry official. Emaar MGF, a joint venture between Dubai’s Emaar Properties and India’s MGF Developments Ltd is developing the Commonwealth Games village project to be held in 2010 in New Delhi, and planned to use proceeds from selling these flats to finance the construction, the paper said.

M. Ramchandran, secretary at the Ministry of Urban Development, has asked the Delhi Development Authority to examine the possibility of allowing it to buy flats to provide liquidity support to the firm, the paper reported. The amount is a third of what the real-estate firm initially sought, and a committee set up by the ministry is analysing the actual price of the flats, the paper said, citing Ramchandran.

Real Estate Crisis Badly Hits Retail Sector

The impact of recession in US economy has badly hit Indian real estate market along with sectors like retail, steel, cement, hospitality and logistics. Till October 2008 the real estate industry was a very booming industry in India. Also the high net worth of individual investors especially those involved in retail and IT had created a very fast pace of demand in Indian real estate sector which have gain a very high impact image of investing in India. But the downturn produced shocking waves in the real estate market, which further impacted sectors like retail, cement and iron. The result is unavoidable.

Relating only retail to real estate, the scene is bad. Its pace is equivalent to zilch today. In the time of recession, no retail company wants to buy exorbitantly high priced spaces, neither they want to pay highly charged rents. While just a year ago, the retail industry was the next big hope for India’s economy. Stores were opening everywhere, with sprawling malls and tony boutiques holding glitzy launch parties across the country. Retailers bought up every inch of space in India’s largest cities, sending real estate prices through the roof. Even India’s small towns caught mall-mania . But as India’s economy feels the impact of the global recession, Indian consumers are cutting back on spending, and retailers are facing a major slowdown and hence, real estate. For a deeper insight into the industry, Financial Times sought comments of people on - “Are retail real estate blocked funds nowadays ?” Read More »

Parsvnath Decides to Sell Hotel Projects Due to Severe Cash Crunch

Realty major Parsvnath Developers has put its four hotel projects on the block as it is facing severe cash crunch due to a slowdown in the real estate sector, people familiar with the matter said. These projects, spread over Hyderabad, Goa, Ahmedabad and Lucknow, are currently under construction. A spokeswoman for Parsvnath Developers denied any plan to sell hotel projects. “There is no such initiation of talks on any hotel projects from Parsvnath Developers,” she said. But people familiar with Parsvnath’s plans said the Delhi-based realty firm is looking for buyers for its projects as it doesn’t have enough cash to continue construction and it also needs to raise funds to continue operation and pay salaries. The company is sending feelers to potential buyers for selling hotel projects, they said.

Like many other realty companies, Parsvnath, too, had entered the hospitality sector when the real estate sector was booming. It aimed to build 100 hotels in seven years with an inventory of 10,000 rooms, as per company’s website. The website says the company has finalised 20 hotel and service apartment projects across the country under different star categories in standalone and mixed use model. The hotel projects at Hyderabad, Ahmedabad and Goa have received government approval and obtained five-star rating, while the project at Lucknow is rated four-star. The construction work has already begun on these projects, but lack of liquidity has held back much progress. The company has tied up with ITC’s subsidiary Fortune Park Hotels to manage its proposed 50 hotels, including these four properties. Parsvnath, as many other real estate firms, have put on hold construction on several residential, commercial, hotel and SEZ projects. Read More »

Mumbai to Conduct Property Exhibition in April

The Maharashtra Chamber of Housing Industry (MCHI), the association of real-estate builders and developers are to conduct Property 2009, touted as the largest property exhibition of the season in Mumbai between April 9 and 12. According to a press release from MCHI, the fair will offer the best opportunity for every home buyer. This mega exhibition will be on at the MMRDA Grounds, Bandra Kurla Complex, between 11 a.m. to 8 p.m. Property 2009 will be a one-stop destination offering a wide range of affordable properties to suit all budgets. Lifestyle residential properties, budget homes, second homes, commercial properties ranging from Rs 5 lakh to Rs 5 crore along with various home loan options from leading financial institutions, the release said.

Property 2009 is an ideal option to reach out to the end-users all across Mumbai with properties from Island City, Western/Central Suburbs and beyond, including Thane, Mira Road, Vasai, Virar, Kalyan, Dombivli, Navi Mumbai, Panvel, Karjat, Pune, Lonavala and other cities such as Bangalore, Nagpur, Nasik and Goa, the release said. MCHI was formed in 1982 brings together real-estate developers to address issues facing the industry. Members of MCHI account for 80 per cent of new residential accommodation in Mumbai and its vicinity. With over 400 member builders and developers, MCHI is affiliated with leading industry associations such as FICCI, IMC and CREDAI. Read More »

DLF Slashes Apartment Prices in Gurgaon

After slashing prices in Bangalore, Hyderabad and Chennai, DLF Ltd, India’s largest developer by market value, is offering a discount of 20% on apartments in its New Town Heights project in Gurgaon, on New Delhi’s outskirts, for both existing and new customers. Wooing customers: A DLF project in Gurgaon. The firm said the price cut was to pass on the benefit of lower material costs to the buyers. Harikrishna Katragadda / Mint DLF sent a letter to its customers on Wednesday announcing the price cut. But, unlike the flat cuts on DLF’s projects in the three south Indian cities, the discount on apartments in New Town Heights is structured in a complicated fashion and comes with caveats.

In February, DLF cut prices of some projects under way in Bangalore, Hyderabad and Chennai by about 20-30%. That price cut was for both existing and new customers. Real estate developers are cutting prices to retain and attract buyers after a property market slump in the face of slowing economic growth caused land and apartment valuations to drop sharply, dampening demand. New Town Heights is a 23-acre project consisting of three- and-four-bedroom apartments in Sector 86, 90 and 91 of Gurgaon. The apartment size ranges from 1,760 sq. ft to 2,505 sq. ft, priced between Rs2,250 and Rs2,350 per sq. ft. DLF said in the communication to buyers that the price cut was to pass on the benefit of lower raw material costs to them. Read More »